The Death of Glass-Steagall: a former top banking exec's "Mea Culpa" and a former Senator's "I told you so!"

Bill Moyers interviews John Reed, the former head of Citigroup - who was personally involved in the extinction of the Glass-Steagall Act, which for 70 years separated traditional banks from speculative investment banking, and now regrets it - and former Senator Byron Dorgan - who was one of the few in Congress to forcefully oppose the change and warn of great risks, predicting with almost eery prescience in 1999 that "within ten years" the country would come to regret this landmark deregulation.

Moyers & Company Show 103: How power and influence helped big banks rewrite the rules of our economy. from BillMoyers.com on Vimeo.

Thought for the day...on the GOP's Newtron Bomb

From John Heileman, who's been following Newt Gingrich on the campaign trail for New York magazine:

(S)o much has he come to despise Romney and the Republican Establishment that has brought down on him a twenty-ton shithammer in Florida, and so convinced is he of his own Churchillian greatness and world-historical destiny (that t)he same antic, manic, lunatic bloody-mindedness that has made him such a rotten candidate in the Sunshine State may be enough to keep him the race a good long time.

 You go, guy!

State and Local Budget Cuts Are Stalling Recovery

Jared Bernstein:

Sources: BEA, BLS

Last year, state and local squeeze shaved about 0.3% off of GDP and cost 266,000 jobs.  A simple regression of state/local job losses on the GDP contribution finds that for every point of growth that the states and locals take off of GDP, employment in the sectors falls around 700,000.

We generally recognize that GDP losses map onto job losses but the fit is not usually this tight—there are lags in the generalized relationship between growth and jobs and lots of other moving parts.  But that’s less the case in state and local governments.  Here, the chain of events is pretty obvious and pretty clear.  You squeeze their budgets, it shows up quickly and directly in growth and jobs.

Conversely, and here’s the policy part, were we to use federal stimulus to help relieve their budgets, we could get this relationship running in a better direction.

Update: The always righteous Larry Mishel (president of the Economic Policy Institute) points out that the job losses I’m citing above are only part of the story.  States and cities buy private services and contract with private firms.  Ethan Pollack writes: “For each dollar of budget cuts, over half of the jobs and economic activity lost are likely to be in the private sector.”

We need more federal assistance (aka "stimulus") to state and local governments. Of course, given the current Congress it's not going to happen.

Bill Maher wants to know: Who the F*** Is Saul Alinsky?

Newt Gingrich, trying to keep incoherent fear alive on the GOP campaign trail:  “The centerpiece of this campaign, I believe, is American exceptionalism versus the radicalism of Saul Alinsky,”

Once more: Fannie and Freddie did NOT cause the housing bubble!

"Fannie & Freddie's fault" fabulists.

Worth repeating, because the false narrative keeps getting recycled cynically - most recently by Mitt Romney in his desperate desire to become President at any cost to whatever integrity he might have had - another  debunking of the "Fannie and Freddie caused the housing bubble" Big Lie.  This one comes from, interestingly, Mark Zandi who is chief economist for the credit ratings agency, Moody's, which was itself a key player in marking up junk sub-prime mortgage securities so that unwitting investors would buy them. From the horses mouth, Zandi comments at the Washington Post:

There is plenty of blame to go around for the U.S. housing bubble, but not much of it belongs to Fannie Mae and Freddie Mac. The two giant housing-finance institutions made many mistakes over the decades, some of them real whoppers, but causing house prices to soar and then crater during the past decade weren’t among them.