Everything you always wanted to know about CDOs in 6 minutes
What are CDOs (collateralized debt obligations), anyway? Paddy Hirsch of Marketplace explains how financial institutions used them to build the house of cards that came tumbling down five years ago and plunged the world into the worst economic crisis since the Great Depression.
Source: http://www.marketplace.org/topics/business/whiteboard/crisis-explainer-uncorking-cdos
The free market myth
Robert Reich peels away the layers of an ideological onion:
One of the most deceptive ideas continuously sounded by the Right (and its fathomless think tanks and media outlets) is that the “free market” is natural and inevitable, existing outside and beyond government. So whatever inequality or insecurity it generates is beyond our control. And whatever ways we might seek to reduce inequality or insecurity — to make the economy work for us — are unwarranted constraints on the market’s freedom, and will inevitably go wrong.
By this view, if some people aren’t paid enough to live on, the market has determined they aren’t worth enough. If others rake in billions, they must be worth it.
Read more here.
Economy malfunction
Nobel laureate Joe Stiglitz doesn’t mince words:
Let us be clear: our economy is not working the way a well working economy should. We have vast unmet needs, but idle workers and machines. We have bridges that need repair, roads and schools that need to be built. We have students that need a twenty-first century education, but we are laying off teachers. We have empty homes and homeless people. We have rich banks that are not lending to our small businesses, but are instead using their wealth and ingenuity to manipulate markets, and exploit working people with predatory lending.
Read excerpts from his speech at the AFL-CIO here.
Time for new code
Peter Buffett, co-chair of the NoVo Foundation, writing in the Times on the limits of philanthropy:
As more lives and communities are destroyed by the system that creates vast amounts of wealth for the few, the more heroic it sounds to “give back.” It’s what I would call “conscience laundering” — feeling better about accumulating more than any one person could possibly need to live on by sprinkling a little around as an act of charity…
It’s time for a new operating system. Not a 2.0 or a 3.0, but something built from the ground up. New code.
Read more here.
Who’s afraid of rooftop solar?
Wanting to preserve the centralized electric power system and guaranteed returns of 10%, the nation’s electric utilities are ramping up to quash the threat posed by rooftop solar panels, writes Diane Caldwell in the New York Times:
For years, power companies have watched warily as solar panels have sprouted across the nation’s rooftops. Now, in almost panicked tones, they are fighting hard to slow the spread.
Read more here.
Greed today, gone tomorrow
Lynn Parramore, writing for Alternet, explains why investment in innovation has declined in America:
There’s a motto on Wall Street: “I.B.G.-Y.B.G.” or “I’ll Be Gone, You’ll Be Gone.” As long as you’re making money right now, what happens tomorrow is not your problem.
It’s everyone else’s problem. Witness the decline in the number and quality of jobs, the middle class evaporating, and the financial instability that brought about the Great Recession.
Read more here.
Top dogs and low lifes
Check out this new research on the psychology of privilege and greed (or what some economists dub “rational behavior”):
Source: PBS News Hour.
Student loan profiteering
Senator Elizabeth Warren stands up for students:
Making billions and billions in profits off the backs of students is obscene.
Why GDP fails to measure economic well-being
A primer on the defects of GDP as a measure of economic well-being, from Econ4’s James Boyce:
Source: The Real News Network.
Bankrupt politics hits Detroit
Robert Reich breaks down the local politics behind the Detroit bankruptcy:
Much in modern America depends on where you draw boundaries, and who’s inside and who’s outside. Who is included in the social contract? If “Detroit” is defined as the larger metropolitan area that includes its suburbs, “Detroit” has enough money to provide all its residents with adequate if not good public services, without falling into bankruptcy. Politically, it would come down to a question of whether the more affluent areas of this “Detroit” were willing to subsidize the poor inner-city through their tax dollars, and help it rebound. That’s an awkward question that the more affluent areas would probably rather not have to face.
In drawing the relevant boundary to include just the poor inner city, and requiring those within that boundary to take care of their compounded problems by themselves, the whiter and more affluent suburbs are off the hook. “Their” city isn’t in trouble. It’s that other one – called “Detroit.”
Read his blogpost here.
