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Posted at 6:02 AM ET, 02/22/2011

Wonkbook: Are Republicans overreaching? Or just negotiating effectively?

By Ezra Klein

imperialwalker.jpg

The showdown in Wisconsin continues, and the one in Washington is just beginning. In Wisconsin, Democrats and unions have offered Gov. Scott Walker the benefit concessions he's asked for, but not the end to collective bargaining he's demanded. Thus far, he's said no -- and he's threatened to let a Friday deadline for restructuring the state's debt come and go, at a cost to Wisconsin of more than $160 million, if Democrats don't agree to return and allow the full passage of his proposed law.

In Washington, we're getting closer and closer to a government shutdown. There's now talk of a continuing resolution to push the deadline back by a couple of weeks, but Republicans will only accept it if it includes many of the cuts they're asking for in their full spending bill. A shutdown isn't a sure thing yet, but many who were dismissing the idea of it a month ago are taking it seriously today.

Republicans and Democrats, it seems, govern rather differently. Republicans are proving themselves willing to do what liberals long wanted the Obama administration to do: Play hardball. Refuse compromise. Risk severe consequences that they'll attempt to blame on their opponent. The Obama administration's answer to this was always that it was important to be seen as the reasonable actor in the drama, to occupy some space known as the middle, and to avoid, so much as possible, the appearance of dramatic overreach. This is as close as we're likely to come to a test of that theory. In two cases, Republicans have chosen a hardline and are refusing significant compromise, even at the risk of terrible consequences. Will the public turn on them for overreach? Applaud their strength and conviction? Or not really care one way or the other, at least by the time the next election rolls around?

Top Stories

The fight in Wisconsin is spreading to Ohio and Indiana, report Neil King, Thomas Burton, and Kris Maher: "The clash between Republicans and unions that caught fire in Wisconsin last week escalated Monday: Labor leaders planned to take their protests to dozens of other capitals and Democrats in a second state considered a walkout to stall bills that would limit union power... On Monday, thousands of steelworkers, autoworkers and other labor activists surrounded the Indiana state capitol to protest a bill before the legislature to dramatically weaken the clout of private-sector unions...In Ohio, union officials are expecting 5,000 or more protesters Tuesday at the state house, where a legislative panel is considering a Republican-backed bill that would restrict collective-bargaining rights for about 400,000 public employees."

Even some union workers in Wisconsin back the governor's ban on state employee collective bargaining, report A.G. Sulzberger and Monica Davey: "A simmering resentment over those lost jobs and lost benefits in private industry -- combined with the state’s history of highly polarized politics -- may explain why Wisconsin, once a pioneer in supporting organized labor, has set off a debate that is spreading to other states over public workers, unions and budget woes. There are deeply divided opinions and shifting allegiances over whether unions are helping or hurting people who have been caught in the recent economic squeeze. And workers themselves, being pitted against one another, are finding it hard to feel sympathy or offer solidarity, with their own jobs lost and their benefits and pensions cut back or cut off."

The House GOP will not pass even a two-week spending extension without cuts, reports Janet Hook: "House Republican leaders, facing a crucial budget face-off with the White House and Senate Democrats, are scrambling for ways to avoid a government shutdown--or at least the blame for one...GOP leaders now are preparing a short-term spending measure to keep the government open for about two additional weeks while broader budget talks are conducted...In exchange for extending the deadline, Republicans want Democrats to agree to cut spending even in that short-term measure, and will try to put the onus on Democrats if they oppose it...Sen. Charles Schumer of New York, a member of the Democratic leadership, conceded no ground."

The White House is reviewing the impact of a government shutdown, reports Damian Paletta: "White House officials have begun reviewing the potential impact of a brief lapse in new government funding if Congress doesn't pass a temporary spending measure by March 4, people familiar with the matter said. The administration's review, led in part by the Office of Management and Budget, has looked at a range of issues, including the protocol to keep key government functions operational if Congress fails to pass a temporary spending measure by the end of next week. 'As part of the executive branch charged with overseeing the management of the federal government, OMB is prepared for any contingency as a matter of course,' OMB communications director Kenneth Baer said. The current temporary spending law expires March 4."

In-store appearance interlude: The xx play "Intro" and "Crystalised" live.

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Still to come: Wisconsin's governor is standing his ground; states are trying different tactics to block health care reform; Democrats are attacking border security cuts in the Republican spending bill; and four cats fall asleep with noodle cups on their heads.

Economy

Wisconsin Gov. Scott Walker is not giving any ground, reports Meredith Shiner: "Wisconsin Gov. Scott Walker continued to stand his ground Monday night, challenging the 14 Democratic senators who have fled to Illinois to return to 'where they belong' so Republicans can move forward with his budget-cutting plan. Over the chants of 'Resign! Resign!' heard through the marble walls of the governor’s conference room from protesters in the rotunda mere yards away, Walker calmly delivered a defense of his controversial plan to eliminate the collective bargaining rights of many of Wisconsin’s public workers. He reiterated the need to balance the budget, weighed down by a deficit of more than $3 billion. And he accused his state’s Democrats of shirking their responsibilities and being opaque in the process."

Public workers need unions for the same reason private sector workers do, writes Nelson Lichtenstein: "Public employees are legally protected from managerial caprice. But as anyone who has dealt with a government bureaucracy knows, such rules require enforcement. You can hire a lawyer, but for the vast majority of low- and middle-income public servants, a union is far more powerful and effective. The most famous public-sector strike in the 20th century demonstrates this. In 1968, sanitation workers in Memphis, Tenn., were public employees covered by civil service rules. But they were also all African Americans, humiliated on the job daily by white supervisors and other officials. A typical grievance: When it rained, they had no place to take shelter."

Indefinite stagnation doesn't have to be the new normal, writes Timothy Noah: http://slate.me/i2mj5z

Public and private sector unions are fundamentally different, writes David Brooks: "Private sector unions push against the interests of shareholders and management; public sector unions push against the interests of taxpayers. Private sector union members know that their employers could go out of business, so they have an incentive to mitigate their demands; public sector union members work for state monopolies and have no such interest. Private sector unions confront managers who have an incentive to push back against their demands. Public sector unions face managers who have an incentive to give into them for the sake of their own survival. Most important, public sector unions help choose those they negotiate with."

Wisconsin is about power, not money, writes Ezra Klein: "America's various governmental entities are looking for ways to avoid defaulting on their debt - or at least defaulting on their debt to the powerful. That addendum is important, because one of the strategies that's emerging is to default on debt to the less powerful, the people who don't have the power to wreck our economy. This is a crucial fact about the economy: Power matters. It's worth more, in many cases, than money. And that's what's really at issue in Wisconsin. It's why Gov. Scott Walker (R) is uninterested in taking concessions from the unions on wages and benefits if they don't come alongside concessions on collective bargaining. What he wants isn't a change in the balance of payments. It's a change in the balance of power."

Neil Irwin interviews Dallas Fed president Richard Fisher: http://wapo.st/fQF59V

George Will takes three lessons from Wisconsin, and puts Walker in some very heady company: "Walker's calm comportment in this crisis is reminiscent of President Reagan's during his 1981 stand against the illegal strike by air traffic controllers, and Margaret Thatcher's in the 1984 showdown with the miners' union over whether unions or Parliament would govern Britain. Walker, by a fiscal seriousness contrasting with Obama's lack thereof, and Obama, by inciting defenders of the indefensible, have made three things clear: First, the Democratic Party is the party of government, not only because of its extravagant sense of government's competence and proper scope, but also because the party's base is government employees. Second, government employees have an increasingly adversarial relationship with the governed. Third, Obama's "move to the center" is fictitious."

Great moments in video editing interlude: Radiohead's Thom Yorke dances to "Single Ladies".

Health Care

GOP state governments are experimenting with ways of blocking health care reform, report N.C. Aizenman and Amy Goldstein: "With battles over the president's signature health legislation underway in the courts and on Capitol Hill, a third line of attack is forming in the states: Practically every week, a Republican governor or lawmaker announces a new effort to kill the health-care law or undercut its implementation. Some have returned federal funding to prepare for the rollout and halted early planning work. But others are moving forward even as they pursue efforts to overturn the law... After a federal judge in Florida not only struck down the health-care law but suggested that his judgment was the 'functional equivalent of an injunction,' officials in three of the 26 states party to the suit - Alaska, Florida and Wisconsin - declared the law 'dead.'"

Provisions in the health law will force a reduction in hospital readmissions: http://bit.ly/f5SAvN

The White House wants to change how the health law handles long-term care, reports Robert Pear: "One of Senator Edward M. Kennedy’s legacies in the new health care law, intended to allow the chronically ill and people with disabilities to continue living in their homes, is too costly to survive without major changes, Obama administration officials now say. Republican lawmakers, who have vowed to repeal the health care law, cite the administration’s acknowledgment as yet another reason to do so. But the health and human services secretary, Kathleen Sebelius, says the law gives her plenty of authority to make the necessary changes to the program without Congressional action. To make the program viable, Ms. Sebelius said, she is considering changes in the eligibility criteria."

Domestic Policy

Democrats are objecting to border security cuts in the GOP spending bill, reports Julia Preston: "Preparing for the fight next week in Congress over federal spending legislation, Democratic leaders in the Senate said they will not support a bill with $60 billion in budget cuts that passed the Republican-led House on Saturday because it reduces funding for border security. In a letter sent on Monday to House appropriations leaders, Senator Charles Schumer of New York and two other Democrats said the House bill would shrink the Border Patrol by 870 agents and cut $272 million in funds for surveillance systems to monitor the border with Mexico. They said those cuts would cancel gains from a bill adopted last August, with virtually unanimous bipartisan support, that increased border funding by $600 million, adding 1,000 new agents to the Border Patrol."

The Koch brothers are active players in the Wisconsin dispute, reports Eric Lipton: "State records show that Koch Industries, their energy and consumer products conglomerate based in Wichita, Kan., was one of the biggest contributors to the election campaign of Gov. Scott Walker of Wisconsin, a Republican who has championed the proposed cuts. Even before the new governor was sworn in last month, executives from the Koch-backed group had worked behind the scenes to try to encourage a union showdown...To union leaders and liberal activists in Washington, this intervention in Wisconsin is proof of the expanding role played by nonprofit groups with murky ties to wealthy corporate executives as they push a decidedly conservative agenda."

A newly replicated study shows elite colleges don't give an earnings boost, writes David Leonhardt: http://nyti.ms/hIgfBG

Adorable animals sleeping in a group interlude: Four cats sleep while wearing noodle cups as hats.

Closing credits: Wonkbook is compiled and produced with help from Dylan Matthews and Michelle Williams. Photo credit: Darren Hauck/Reuters.

By Ezra Klein  | February 22, 2011; 6:02 AM ET
Categories:  Wonkbook  
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Next: Column: Wisconsin is about power, not money

Comments

The republicans are doing a great job. They get their way pretty much all the time and can still accuse Obama of being a socialist.

Posted by: Maxxxxx | February 22, 2011 7:21 AM | Report abuse

Obama is a socialist and yes Republicans are pushing back hard....about time.

Posted by: thebink | February 22, 2011 7:41 AM | Report abuse

Government employee unions are an abomination that should have NEVER occurred. Meticulous attention should be paid to the special relations and obligations of public servants to the public itself and to the Government. The process of collective bargaining, as usually understood, cannot be transplanted into the public service. A strike of public employees manifests nothing less than an intent on their part to obstruct the operations of government until their demands are satisfied. Such action looking toward the paralysis of government by those who have sworn to support it is unthinkable and intolerable.

Posted by: illogicbuster | February 22, 2011 8:02 AM | Report abuse

Republicans have completely won the critical debates.

Liberals need to understand this.

Obama has surrendered in the debate on the debt issue, and this means he has undermined any ability of his admin to pursue ANY progressive cause while the GOP controls the house. For this surrender, Obama has undercut his arguments on all his initiatives, including HSR and ACA.

Wars: will continue. Obama has not undercut these.

Unions: they lose. Republicans have won this debate. Rightly or wrongly, most Americans side with the GOP on this. HOW MANY OF THESE PROTESTERS WERE APATHETIC VOTERS IN 2010 (i.e. did not vote)? This battle will decide the 2012 Presidential election if the GOP is smart enough to nominate a moderate candidate because these unions are going to be broken or weakened.

ACA: it is going to be defunded or repealed.

Wealth and power: Even as the middle east lurches toward freedom, the USA lurches to further domination by its corporate masters as the GOP (through Gov Walker, et al) continues to redistribute more middle class money to the wealthy and attack the ability of ordinary American workers to act as counterweight to big money interests. I.e. Arabs and Americans are headed on opposite paths for the first time in our lifetime.

Deficits: will go up now that the GOP is further institutionalizing more high end tax cuts at the expense of pay and benefits of average Americans and now that ACA is defunded.

Post-2012: Whether Obama wins or loses, Democrats are basically extinct as a major force in American politics for the next decade. The GOP bankrupted this country and created this Great Recession, and within six months of Obama's election convinced America it was the Democrats fault. It will take at least 10 years, maybe longer, of severe pain until Americans start realizing they have been hoodwinked by the big lies of the GOP. Republicans across the country are actually HOPING Walker and other governors fire all the gvmt union members and these ordinary Americans are viewed as "scum" by conservatives. Conservatives have fallen into the same "them/us" crap that Hitler foisted on Germany, and even after 65 years many Germans still can't accept that, and that is why it may take a generation at least for Americans to start waking up and accepting what has happened and who the real culprits are. Indeed, a recent poll picks Reagan as the greatest President, even above Lincoln. Totally mind numbing. I predict a steady sabotage of progress for the next decade. And every protest will be met with scorn and hatred, and every new street beggar with disdain. Get used to it.

Posted by: lauren2010 | February 22, 2011 8:17 AM | Report abuse

Public Employees pay TAXES too that ends up in their pay checks as well as Vote in Elections and have the same rights as any other Worker.

Why Take Bargaining Rights away from every State Employee except Police and Firemen.

Police and Fire unions predominately Support Republicans.

Posted by: ddoiron1 | February 22, 2011 8:47 AM | Report abuse

"Police and Fire unions predominately Support Republicans."

Not sure that is true.

Police want gun control.

I've seen many such orgs support Dems.

Even so, those unions will be the next to go after the GOP wins the current round.

And later still, more unions will fall, if any are left.

And later still, wages and benefits in non-union factories and big businesses will start declining more rapidly after the THREAT of unionization disappears and Dem power wanes as their union supporters are fragmented and diminish.

This all falls under the "be careful of what you wish for" category, and conservatives have indeed wished for GOP power, and now they are going to understand what that entails, and they aren't going to like it.

Posted by: lauren2010 | February 22, 2011 9:03 AM | Report abuse

the reason collective bargaining rights have become an issue is because Governor Walker seems like he wants to fix the issue once and for all. If they didn't take collective bargaining rights away for issues relating to pension and benefits then when Dems got back in power unions would simply expect their payback in the forms of the unaffordable systems currently in place. Note he didn't attack their rights regarding wages as that's not the predominant issue here (benefits and pensions are).

I'm sure the unions will lose their deals now but then once Dems eventually get back in power (when republicans screw something up which they always do) those same deals will be put right back into place through the legislature and no one around here will be the wiser and then 20 years from now we'll ask why their is this same problem again.

Posted by: visionbrkr | February 22, 2011 9:06 AM | Report abuse

I don't know if Americans are the MOST ignorant of their own history of any people, but they certainly are trying to lead the league. It is a fact however that relatively nothing is taught about labor history in our schools and the movie industry almost never makes films about it except the bad side, so I guess it's understandable.

Before the New Deal, the unions stood alone in the US for workers. The Federal government was cmpletely OWNED by the business community. What the GOP wants to do is go back to that day. It's not an accident that they want to end Social Security, and end virutally all the rights created by FDR and his successors.

If you have health insurance at work, no matter where you are, or what your occupation, thank the unions.

If you work only a 40 hour week, thank the unions.

If you company goes bankrupt, and you're unpaid wages have priority over lien holders, so that you don't get left out, thank the unions.

If you've ever been paid overtime for any job in your life, thank the unions.

If you think that using organized crime to intimidate workers is ancient history, look up Frank Perdue.

Only an ignorant fool, of which there are several writing on this board, think that union benefits only go to the union members, OR that if the unions are busted, companies won't try to take advantage of ALL
workers.

For a preview of a post-union world, go see how the workers have faired in any of the PE/LBO company takeovers the last 20-30 years.

And, if you have even the slighest fairness about you, you might ask how a worldwide near depression, that was caused solely and completely by fraud on Wall Street, and the real estate industry, is now being used as an excuse to break unions.

Crazy world isn't it?

Posted by: johnmarshall5446 | February 22, 2011 9:30 AM | Report abuse

What's beginning to happen is very simple. Democrats have used class warfare effectively for decades and Republicans are taking a page from their playbook, also effectively as the polling numbers regarding Wisconsin shoe. No matter the lofty rhetoric, people vote their own wallets. It will become much more interesting over the year as salaries, benefits, vacation times etc. come out and the private sector is made aware of these facts and figures.

Posted by: thebink | February 22, 2011 9:31 AM | Report abuse

Hey Thank the Unions,
If it were not for Obama and the Unions in his pockets.... we would have had better clean up of the Gulf if he had overturned the Jones Act (like other presidents have, Clinton, Bush, etc) which allows other countries WHO OFFERED TO HELP AND HAD BETTER TECHNOLOGY to clean it up.... but Obama was against it due to the Unions. A lot of the Unions have Medical for free for the rest of their lives. It's a drain on the government, much less unfair to the rest of America that pays for it. It also takes 10 TIMES the amount of people to do one job in a lot of cases.... example California.

I pray the Governor holds out and does the right thing, which he is doing. Stand strong.... I have never heard of people who are being PAID for a job, hiding out in another state.... sounds like spoiled babies oh... Union workers to me.

Posted by: mjones1303 | February 22, 2011 9:47 AM | Report abuse

Thank you JohnMarshall , you said it best !

Posted by: sligowoman | February 22, 2011 10:00 AM | Report abuse

Liberals are just making up stuff.

Under the Wisconsin bill, unions are permitted to collectively bargain for wage increases over the CPI.

It merely requires a majority vote from the union to certify itself, and the taxpayers to ratify the wage increases.

Why so scared of democracy?

Posted by: krazen1211 | February 22, 2011 10:01 AM | Report abuse

The financial mess this country is in was not caused only by Wall Street, corporations or either political party or president. It's far more complicated, global and goes back decades. One should be careful when using the word ignorant. As I remember, banks were forced by the government to make bad loans. Thank you Frank and Dodd. What's positive is that Americans are learning more about the workings of this country. Of course while blame will be placed according to ones political views only ignorant fools will place full blame on one party or the other. There's plenty of blame to go around.

Posted by: thebink | February 22, 2011 10:02 AM | Report abuse

krazen:

What you don't say is as important as what you do. The bill would require the unions to effectively decertify and hold a new vote for unionization EVERY year.

You're also incorrect. Wage increases would be LIMITED to CPI, unless voters approved anything else by referendum. Finally, the bill would prohibit the mandatory collection of union dues from union workers. It's an attempt to strip the ability of the union to function as an entity.

The unions have already agreed in principle to the financial give backs the governor has requested. He's doing this to break the unions, not to save money.

Posted by: johnmarshall5446 | February 22, 2011 10:12 AM | Report abuse

thebink wrote:

"One should be careful when using the word ignorant. As I remember, banks were forced by the government to make bad loans. Thank you Frank and Dodd."

Not really, your second sentence proves that it applies very well.

Posted by: johnmarshall5446 | February 22, 2011 10:15 AM | Report abuse

"What you don't say is as important as what you do. The bill would require the unions to effectively decertify and hold a new vote for unionization EVERY year.

You're also incorrect. Wage increases would be LIMITED to CPI, unless voters approved anything else by referendum."


That's exactly what I said. Unions obviously do not have trust in the voters.

Posted by: krazen1211 | February 22, 2011 10:21 AM | Report abuse

Touche'johnmar, we're both guilty. However I stand by what I said in that there is plenty of blame to spread around. The more informed we all become even if it rocks our faith in our own political beliefs, the better.

Posted by: thebink | February 22, 2011 10:22 AM | Report abuse

krazen:

My apology on the referendum part. You did refer to it and I just missed it.

However since contracts are limited to one year, and referndums are expensive, it effectively ends the right to bargain for wage increases, even though it may technically allow them.

Posted by: johnmarshall5446 | February 22, 2011 10:27 AM | Report abuse

thebink:

A lot of people, probably the vast majority of people in the country, don't understand that making sub prime type loans is something that goes on every day in business.

We give them fancy names like high yield bonds, etc. but all they really are is above market loans made to people or entities with credit impediments.

What transferred those loans into a worldwide danger was fraudulent ratings put on those loans by credit rating agencies like Moody's, and then the fraudulent packaging of those loans into MBS (sold around the world) with a risk that was substantially underpriced. Then were sold as AAA investments when they rated a grade substantially below that.

That's why John Paulson made more than a billion dollars because he bought what was effectively hurricane insurance in Florida, in hurricane season, priced as if there would never be another hurricane in Florida!

Probably less than one-half of one percent of the American public understands that.

Posted by: johnmarshall5446 | February 22, 2011 10:37 AM | Report abuse

"The bill would require the unions to effectively decertify and hold a new vote for unionization EVERY year."

So the union only exists if members vote in favor of it? Seems fair to me.

"You're also incorrect. Wage increases would be LIMITED to CPI, unless voters approved anything else by referendum."

So the union can keep wages fixed in terms of purchasing power, and if they want inflation adjusted raises they have to go to the taxpayers for approval. Seems fair to me.

"Finally, the bill would prohibit the mandatory collection of union dues from union workers. It's an attempt to strip the ability of the union to function as an entity."

If the union can't collect its own dues, it probably shouldn't be an entity.

As someone who believes in voluntary transactions, this is in fact more than fair.

Posted by: justin84 | February 22, 2011 10:44 AM | Report abuse

msoja wrote:

"If it were not for Obama and the Unions in his pockets.... we would have had better clean up of the Gulf if he had overturned the Jones Act (like other presidents have, Clinton, Bush, etc) which allows other countries WHO OFFERED TO HELP AND HAD BETTER TECHNOLOGY to clean it up...."

See how reality can be twisted by political viewpoint?

There are somewhere shy of 4000 platforms in the Gulf of Mexico, owned and operated by at least 12 different major producers most of whom make billions in profits collectively. Yet there was not even ONE emergency response plan among all those companies combined to deal with this situation, and no pre-positioning of equipment whatsoever!

It was as if the only firefighting equipment serving the Washington DC region was a single fire engine, located in Baltimore.

Yet, the Jones Act was the problem! LOL

Posted by: johnmarshall5446 | February 22, 2011 10:51 AM | Report abuse

justin:

You're a libertarian, so your views are consistent. I don't share them in this case, but you always get credit for your consistency.

Posted by: johnmarshall5446 | February 22, 2011 10:53 AM | Report abuse

johnmar, I admit that I don't fully understand all things involved in the collapse. What I do understand is when push comes to shove, human nature dictates that when push comes to shove one will almost always protect oneself and can be termed greedy in doing so. From what I gather, banks were forced to make lousy loans to people, many of which were greedy, that couldn't afford to pay them back. The greedy banks bundled up the loans and sold them to probably greedy investors worldwide. More greedy investors took out the questionable loans and started rapidly flipping properties but then the whole ball of wax unraveled when housing prices collapsed. It seems that most from the buyers, to the banks to the mortgage sellers, to the investors lost their shirts. To be honest, I don't really believe that taking risks on investments is necessarily greedy but it is how it's being portrayed. My definition of greed is someone that expects something for nothing and so I don't feel that the American taxpayer that wasn't involved should pick up the bill for any of it. In any case, the housing collapse is only one piece of the whole puzzle.

Posted by: thebink | February 22, 2011 10:55 AM | Report abuse

"What transferred those loans into a worldwide danger was fraudulent ratings put on those loans by credit rating agencies like Moody's, and then the fraudulent packaging of those loans into MBS (sold around the world) with a risk that was substantially underpriced. Then were sold as AAA investments when they rated a grade substantially below that."

I agree we should break the cartel.

Instead of requiring fixed income securities to have ratings issued by several approved ratings agencies and paid for by issuers, we should go back to the old business model - buyers can go to any rating agency of their choice and pay for credit analysis from the rating agency.

Consider the following for Moody's:

2005 Revenue: $1.731 billion
2010 Revenue: $2.032 billion

Can you imagine the equivalent at, say, a car company (perhaps thousands of cars randomly explode in 2007-2008)? Revenue increasing despite an absolute disaster?

After the company says that in its defense, it does its best trying to build cars but it really can't guarantee they won't explode?

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aQzRB3sWOivE

Posted by: justin84 | February 22, 2011 11:01 AM | Report abuse

A new headline just popped up on Drudge, "Two Thirds of Wis. 8th Graders Can't Read Proficiently". There are those that will only blame the teachers, only blame the teacher union, only blame the parents, only blame genetics and on and on. All I know is that it's not my fault and I'm unwilling to pay for it in any way. Guess I'm greedy.

Posted by: thebink | February 22, 2011 11:10 AM | Report abuse

thebink:

I'm sorry, you don't understand what happened. It doesn't make you a bad person just a normal American. For instance when you write:

"From what I gather, banks were forced to make lousy loans to people, many of which were greedy, that couldn't afford to pay them back. The greedy banks bundled up the loans and sold them to probably greedy investors worldwide"

you get the whole thing backward.

The orginators of the loans you speak of were in many cases not banks at all, and in virtually all cases the firms that bundled and sold the loans as MBS were not in the mortgage business at all. So how could the government have forced companies not even in the mortgage business to make bad loans?

You didn't see me use the word "greed" in any of my posts.

Posted by: johnmarshall5446 | February 22, 2011 11:12 AM | Report abuse

oh and you missed the continuing historic healthcare news coming out of MA.

http://www.boston.com/business/healthcare/articles/2011/02/22/a_healthy_debate/

They key word there: PRICE CONTROLS.

Posted by: visionbrkr | February 22, 2011 11:17 AM | Report abuse

It's my understanding that Clinton dictated where mortgage lenders could lend. Many lenders were forced into high risk areas via the Community Reinvestment Act. Is this false?

Posted by: thebink | February 22, 2011 11:26 AM | Report abuse

To the extent the gvmt had any affect on the way private lenders and banks gave loans, it was that those businesses were the ones that compelled gvmt to change the rules so they COULD do business in the way they did.

Gvmt was indeed the problem, and that was because we let big business dictate how gvmt works.

We have arrived in an era in which, when we elude to "gvmt", what we are actually referring to is "big business". I.e. they are becoming synonomous.

Posted by: lauren2010 | February 22, 2011 11:57 AM | Report abuse

thebink:

I'm not sure, because you are combining several different concepts. The CRA essentially outlawed the practice of redlining, or refusing to lend in areas deemed unprofitable, usually as a disguise for racial discrimination.

There have been adjustments made in the 30+ years since but the mission has not substantially changed.

The sub prime lenders who wrote the most egregiously bad loans you speak of were never covered under the Act. So yes, your description is false.

It's never too late to get an education on these things, but American pre-college level schools teach virtually nothing about finance and money, so only someone who makes an individual effort will ever learn about it.

Posted by: johnmarshall5446 | February 22, 2011 12:10 PM | Report abuse

"Republicans and Democrats, it seems, govern rather differently. Republicans are proving themselves willing to do what liberals long wanted the Obama administration to do: Play hardball. ... This is as close as we're likely to come to a test of that theory."

Well, it might be close, but it's imprecise, because the issues are not the same.

You win if you play hardball with an issue that is supported by the public (or with which you can drum up support). So whether hardball works also depends on the issue.

Obama and the Democrats either (a) weren't confident in their own arguments or (b) were wimps. Or both. That's always a possibility.

Posted by: dpurp | February 22, 2011 12:33 PM | Report abuse

Switching subjects a bit, reluctantly I say it's time to leave the dollar. I have been long the dollar on dips for some time now. However the currency market reaction today is stunning, in that the dollar has barely moved an inch. It should have been strong today on the traditional flight to quality due to international uncertainty.


I'm probably reading more into this than necessary, but it seems to me the final nail in the argument about the inflationary policies of this government. The market has spoken, and the dollar is not in favor.

Posted by: johnmarshall5446 | February 22, 2011 2:39 PM | Report abuse

johnmar, I'm sorry but I don't agree. Dodd and Frank had ties to the mortgage meltdown. Personally, I don't care what color a borrower is, if a purple person has no assets, no long term positive credit history and foremost no ability to pay, don't give that person a loan. As far as the dollar goes, I believe it's not worth much more than the paper it's printed on. I believe that as a country we're broke. I actually had an Illinois jury duty check bounce on me. The responsible states are not willing to bail the irresponsible states at this point. Responsible people are not willing to bail irresponsible people. It's not all about technical charts and graphs anymore, I learned that long ago from Chernobyl. Oil is obviously doing well as are gold and silver which gives an idea of the trust in the dollar. Food commodities and I feel copper are good, get out of stocks. Obviously you believe you're far smarter than I am and it may be so, however I think I may have an edge in the common sense department. If the government, the Fed, JP Morgan and Goldman Sachs are exposed for who they are and what they have done, it will hit the fan and there are a great many that are chomping at the bit to expose them.

Posted by: thebink | February 22, 2011 4:50 PM | Report abuse

thebink:

Not smarter than you, just more willing to look into things than you. For instance your insistence on writing about Dodd and Frank, when those in the financial industry have treated them like stooges for years.

I just tried to explain the CRA and the sub-prime loans have no connection to one another, but the information just rolls off your back.

You shouldn't believe me. I'm just a homeless guy on a public library computer.

However you also shouldn't believe the sources who gave you the factually incorrect information that you have been putting forth all day.

Thanks for the replies though, because discourse is always interesting.

Posted by: johnmarshall5446 | February 22, 2011 5:38 PM | Report abuse

" Dodd and Frank had ties to the mortgage meltdown"

And you probably think the actual players are blameless.

Fannie/Freddie did not cause that.

And bush and the GOP congress never offered an opportunity to vote to reform f/f. So who's to blame?

Posted by: lauren2010 | February 22, 2011 6:22 PM | Report abuse

So, john if you're actually homeless, why are you concerned about being invested in the dollar?

Posted by: thebink | February 22, 2011 6:51 PM | Report abuse

And Lauren, I voted for bush and blame him for being such a wuss.

Posted by: thebink | February 22, 2011 7:16 PM | Report abuse

thebink:

Because us homeless are the foremost currency traders around! LOL

See you on another thread.

Posted by: johnmarshall5446 | February 22, 2011 10:33 PM | Report abuse

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