Monday Buzz: Pragmatic Pessimism, Polarizing 'Pubs, Public-Private Partnerships?, More
Despite the President's more optimistic tone of late, many people remain gravely worried about the state of the U.S. and global economies. Rob was quoted in an exellent Huffington Post piece by Sam Stein criticizing Treasury Secretary Geithner's bank plan. From the article:
...But for many economists, the invitation for risk inherent in Geithner's plan is simply too great. Indeed a second critique being forcefully raised by economists is that the system Treasury is putting in place can easily be gamed.
In his Monday column, Sachs outlined this very prospect: Citibank, theoretically, has a toxic asset on its books with a face value of $1 million but no probability of payout. The bank sets up a Public-Private Investment Fund (PPIF) to bid the full $1 million for that worthless asset. That PPIF borrows $850,000 from the FDIC, gets an additional $75,000 from Treasury, and puts up $75,000 of is own money to make up the bid. In the end, Citi gets a profit of $925,000 (the $1 million it receives of the bid minus the $75k its related entity had to put up).
Such a scenario is indicative of the flaws in the Geithner plan, argued former senior Clinton commerce official Rob Shapiro. There is, in fact, a guarantee.
"The Feds guarantee the 5/6 leverage used to buy the assets," he said, "so if the assets tank and the buyer defaults on the loan (no $ to pay it back, since the assets really were worthless), the feds (taxpayers) make it up to the lender."
Rob also had his own essay, "Time to Face the Facts: The Economy Probably Won't Get Better For Quite a While," published in the Huffington Post last week.
Next, NDN fellows Morley Winograd and Mike Hais had a post on MyDD, which then made its way into the "Best of the Blogs" section of Real Clear Politics. Here's a quote from their piece:
...The polarization between Democrats and Republicans in the Pew survey has much less to do with President Obama's personal and political style, as they are suggesting, than it does with the inability of his own Republican Party to adapt to this new era. From the earliest Pew survey conducted in 1989, the first year of George H.W. Bush's administration, through 2005, there was near parity in the distribution of party identifiers within the electorate; no more than three or four percentage points ever separated the Democrats from the Republicans. By contrast, since 2006 the percentage of Americans identifying themselves as Democrats has risen significantly while the number saying they are Republican has fallen. In the most recent Pew study, conducted early this month, the Democrats held a clear 52% to 35% lead over the Republicans in party ID, a 13-percentage point shift toward the Democratic Party since 2004. And, only 21-percent of American voters are "pure" Republicans, a group that consists only of those willing to call themselves Republicans and does not include independents that say they lean toward the GOP. This is the smallest number of "pure" partisans for either party in any survey ever conducted by Pew.
Our good friend and NDN Fellow Joe Garcia was quoted in The Hill about Obama's plan to lift some restrictions on Cuba. From the Hill piece:
...If the younger Cuban-American voters are looking for a different approach to U.S. policy toward Cuba, as the Obama administration and Democrats think, lifting some of the travel restrictions could help Obama grow his popularity with this community.
Joe Garcia, a fellow at the NDN think tank, said Obama made it clear he would lift these restrictions and change U.S. policy with Cuba during the presidential campaign. Restricting travel and remittances by Cuban-Americans makes little sense in terms of policy or politics, said Garcia, a Democrat who last fall unsuccessfully challenged Rep. Mario Diaz-Balart (R-Fla.), one of Congress’s staunchest supporters of the embargo.
Simon was quoted in a New York Times Syndicate piece by Marcela Sanchez about perceptions of President Obama in Latin America:
...Recent polls show Obama is more highly regarded in Latin America than in the United States. With an event such as the town hall meeting in Strasbourg, France, or the roundtable discussion with students in Istanbul, Turkey, Obama could chip away at the less than casual anti-American sentiment that festers in the region.
"We haven't had a global leader with Obama's appeal in a very long time," said Simon Rosenberg, president of the center-left Washington think tank NDN, who added that the president's power to reach out is aided not only by today's communications but also by his desire to speak straight and openly to people everywhere. "The politics of the bottom up we saw in the election is going global," Rosenberg said.
Finally, Simon was featured extensively in an ABC News story about immigration and how it actually affects the job security of U.S. citizens:
Simon Rosenberg, president and founder of NDN, a Washington, D.C.-based progressive think-tank and advocacy group that is pushing for change in immigration law, also agreed. He said that letting illegal immigrants move down the path to legal work and citizenship will help all workers.
"If anything, it will help low-end workers across the country because it would remove the trapdoor under the minimum wage," he said. Right now, these workers are "driving down wages for you. They are creating unfair competition."
Rosenberg said immigration reform is not going to cause an influx of new immigrants into the country.
"You against an illegal worker, you lose that fight every time," he said. "The worst possible thing for American workers is to have a vast pool of undocumented immigrants in the United States."
There are some business owners who say immigration changes would only increase the cost of doing business and drive up prices for all.
Rosenberg says to them: "I think the idea that we are accepting illegal exploitation of workers to prop up businesses, there's a question as to whether those businesses should be in business in the first place.
Ultimately, Rosenberg believes that change in immigration law reform would be good for the country, economically and socially.
"It will take the air out of the balloon of some of the most virulent racism that we've seen in America in generations," he said. "There is publicly sanctioned racism against Hispanic-Americans in this country today in a way that is very unhealthy and morally unacceptable in the age of a bi-racial president."
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