My Recessionary Confessional

Now that the economic data have stopped cliff diving we can all catch our breath and reflect on the current recession.   Better yet, the purveyors of NPR's Planet Money podcast have set up a phone line where we can leave a recessional confession: 

Did you help break the global economy, or even the local one? Planet Money has a new call-in line for your confessions. It's (202) 371-1775.

If anything the call-in approach provides the platform for a great thought experiment.  Most of us observing the financial system cratering under its own gruesome weight feel (rightfully so) like hapless bystanders.  Digging deep enough reveals a thread to the current crisis in just about everyones' personal life.

The cynical Fausto is willing to admit his role.  I didn't run a hedge fund nor did I leverage a PhD in mathematics into developing synthetic CDO's or credit default swaps.  No, my story is a lot like yours.

I am guilty of turning my home into an ATM by way of a home equity line.  Sure we spent the majority of the credit on "capital improvements" but there was plenty of discretion on our part. A few niceties here and there quickly added up.  I'm not proud of my role in running up the U.S. trade deficit while helping to scuttle personal savings rates.  

I'm one of the more fortunate consumers traversing the real economy.  The equity line is almost paid off and the home value was spared the fate of other declining neighborhoods, keeping the underlying mortgage in the money so to speak.  All I can do is resolve to keep the personal debt to a minimum and maintain a glide path of more prudent savings, and all that.  There is it is, not very sexy.  That's how I contributed to the mess. 

State Revenue Reprise

A belated tip of the hat is in order for Beacon Journal opinion page editor Michael Douglas. Mr. Douglas picked up my theme about the real problem with Ohio's budget outlook in his Sunday column. The one-time revenue being used to balance the next budget is a patch for the gaping hole created by the shortsighted tax reforms championed by the GOP several years ago:

Neither do Taylor and her fellow Republicans take responsibility for their ample share of the shortfall. In 2005, they engineered changes in the state tax code that reduced revenues by a projected $4.4 billion in the next biennium. They slashed individual income tax rates by 21 percent. The state's regimen for taxing businesses required much reworking. What wasn't necessary was lowering further the share of taxes paid by businesses,the percentage having fallen from 40 percent in 1975 to 26.5 percent today.

Governor Ted is left with a fiscal shit sandwich and not many options other than temporarily plugging the deficit with one time money.

I second Douglas' call for some mature members of the General Assembly to step up and begin looking for some solutions for Ohio's revenue pickle. There is a measured approach that can be employed to restore some of the tax reductions without creating undue pressure on taxpayers of Ohio.

Death By Optionality

The next phase in preventing potentially insolvent banks (C and BOA) from backsliding into the abyss appears to be another accounting trick. The Treasury plan revealed earlier this week will seek to convert government shares of preferred stock held in beleaguered institutions to common stock. Whoopee! I've read that Geithner likes to preserve optionality,to leave as many doors open as possible. In this case Summers and Geithner both are not willing to concede that some form of nationalization is requisite in the case if C and BOA. They prefer to not exercise that option.

There may be some rationalization for the planned common stock conversion but not everyone agrees what that is. Coincidentally, a mention of the plan Treasury wants to implement can be found in the latest IMF GFSR report . The use of a stock conversion plan is mentioned in the section of the executive summary that discusses bank capitalization:

Most capital injections from governments thus far have come as preferred shares and these have carried with them a high cost that may impair the banks’ ability to attract other forms of private capital. Consideration could be given to converting these shares into common stock so as to reduce this burden.

My favorite members of the loyal opposition school of economics including Paul Krugman and Simon Johnson have cast doubt on this maneuver. I see their point on the seemingly futile nature of the stock conversion. The IMF report does provide some counterbalance to the critical outlook on the Treasury plan. This is the same IMF that Johnson used to work for.

Update:I recently purchased a Kindle and find it very conducive to reading dry and lengthy policy papers. More so than if I were to try to read them online. For what that's worth, I'm not quite sure.

One Time Revenue Ain't The Problem

Mary Taylor has unveiled her latest check on the Strickland administration's budget plan.   Auditor Taylor has stepped out of the normal role of the elected position she holds to evaluate what she thinks is the true deficiency in the governor's plan.  

The resulting opinion includes another admonishment of using one time revenues to to balance the budget. It seem the State Auditor doesn't believe the State  budget should depend on any one time revenue to cover an operating deficit.  Perhaps in an effort to lend some of her officialdom to the Tea Party movement Taylor criticizes the use of Federal Stimulus dollars in the budget as well.  This is becoming a frequent theme emanating from the AOS offices.

I have a news flash for Auditor Taylor, those one time revenues are not the real problem.  If she were to probe her memory she may recall one change she helped enact back in 2005 that preordained the need to depend on one time revenues. 

I am referring to the tax reforms enacted in HB66.  The reforms that Taylor and others supported included a sizable 21% decrease in income tax rates over a five year period. The last phase of cuts occurs this year barring any last minute acts of common sense from the General Assembly. The alteration of the tax regime has contributed significantly to Ohio's revenue woes.  A politically motivated rush to tamp down income tax rates has left the State with a insufficient level of tax revenue.  So much for the Laffer curve inspired myth of increasing tax revenue via tax cuts.

The revenue numbers themselves speak to the short sighted nature of the changes enacted in HB66. Until the change was made the State had never had consecutive years of revenue declines in the last fifty years of experience.  The loss trend started as soon as the income tax reforms began to phase in.  Can that be coincidental . 

Yes, the down turn in the economy is a factor in the revenue decline but, the tax reforms have contributed to the shortfalls that have placed Ohio in perilous budget territory.  Consider this, in the fifty years prior to the tax reforms, there were eight  recessions. In those eight periods of economic decline Ohio's tax revenue had never experienced two consecutive years of decreasing collections.

Taylor's memory is either suppressed or she would rather not admit that the actions taken several years ago by her and her Assembly colleagues and Governor Taft have contributed to Ohio's fiscal woes.  Instead Taylor has opted to be the Ohio GOP's factotum on all things critical of Strickland.  From her lofty perch as Auditor of State she can direct her staff to pop out reports focusing on the perceived shortfalls of the adminstrations handling of the budget and finances. 

In order to take on this role it is conceivable that resources have been redirected on churning out Strickland critiques in lieu of focusing on auditing local governments.  County governments alone could use a good deal of oversight, just look at what's transpiring in Cuyahoga County. In fact large entities like Cuyahoga have to pay a few million dollars a year to contract with a large accounting firm though the State to have the annual audit completed.  The AOS claims they don't have the staff to do the largest audits. 

Unfortunately Taylor has decided to provide lip service to local governments that need more audit and performance oversight analysis and go full bore on hunting down the weaknesses in Stickland's budget plan. Why not through in a few invectives about the use of federal ARRA dollars while your at it?  

We shouldn't expect politicking not to be force in shaping the way policy is sculpted by state office holders. The Auditor's role is much more prescient at overseeing local government finances where the lions share of State dollars actually get spent.  The technocrat veneer once imbued by Taylor is wearing thin.  When a candidate runs for office on her finance acumen and CPA credentials that she possesses it's dissappointing to see them cast aside in favor of the tea party antics currently on display.  I guess we can assume she is running for governor .

Whiteguys and Wingers and Birthers, Oh My

I surveyed the attendees assembling for the Cleveland Tea Bag Festival from my fourth floor perch on Lakeside Avenue.   From this vantage point I could surmise some basic themes emerging in the gathering crowd pf proto-revolutionaries. From the signs people where carrying there was a definitive animus towards the federal government, Obama, taxes of any kind and liberals.

Here are some things I didn't see:

Crispus Attucks - Let's face it, this is a white man's movement.

Non Partisans - The whole tea party theme is a cover for the ant-Obama / Democratic party slant on display at every location I've seen coverage of.

The Independently Wealthy - Let the middle class do the work of shilling for the rich guys.

NPR - Can't imagine the anti-Fox News will do to much to acknowledge today's rallies.

History Majors - The original Tea Party was to protest the actions of a large corporation, this one intends to do their bidding.

Empty Hands - Flags or poster board signs with witty or paranoid sounding slogans were mandatory to gain entrance.

CoExist Bumper Stickers - Doubtful this was a crowd willing to embrace people of all backgrounds.

The Ability to Detect Irony

Far Right Hucksters

A Democrat is president again which means political lunacy is back in vogue.  Just like the cicadas swarm in great numbers every seventeen years reactionary fools converge to the local sports bars to plan the latest peoples' uprising when a liberal leaning president is elected.

A clip of one of one of the meetings is making rounds on the internet.  Local readers will be proud to notice the Copley High School memorabilia in the background.  I'm assuming this was the local gathering of the Glenn Beck 912 viewing party in Fairlawn.

Today's flavor of movement conservatism is a collection of two-bit t-shirt salesman.  Relegated to a series of depraved cottage industries built around a culture of fear and loathing

Here's what they're selling;

• The Tea Party movement is like the new Tupperware party fad. Find the house party nearest to you and show up with a bad attitude about government and a DIY sign. The sale of merchandise is the real pay off. Let's face it these posers will all end up paying their taxes on time.
  

• Your local gun store owner can't hear you over the din of that cash register ringing up sales. A guns and ammo boom is building via the persistent story of a looming federal gun ban. Of course rational people who actually read know that there is no serious move on a gun ban being considered at the national level. At the State level, well just look at what Ohio has done to see the right to bear lots of guns is in no way threatened.
  

• Anything that capitalizes on the fear that Obama is a socialist, communist or the second coming of Hitler is the other growth industry. A hallmark of the loony right is to label anyone diametrically opposed to their world view as a Nazi or Hitler-like. Check out the coverage of the from last week of the Knob Creek Machine Gun Shoot in Kentucky. to see the latest product line in Obama-is-a-fascist gear.
  

The purveyors of this fringe accoutrement know their prospective buyers can't help themselves. 

There is an entire class of consumers that need to accessorize their paranoia with shirts, books and specialty weapons.  Just marketing the product around buzzwords like collectivism, re-education, brainwashing and sleeper candidate gets the cash registers ringing up sales like it was 1995 all over again.  

I actually yearn for the black helicopter days of yore.  There's a fringe movement you can believe in.

Obama Avoids First Base

The right wing has been doing their best to read sinister meaning into President Obama's bow to Saudi King Abdullah.    

It was more likely a slip of decorum or protocol as result of being green around foreign leaders.  Or it could be as some righty prognosticators have suggested a sign of submission to our Saudi overlords.  Would there have been a controversy if he bowed a Japanese head of state?

How quickly memories fade.  It wasn't that long ago that our leaders expressed their admiration to our Saudi friends in an entirely different manner.

I hear the King has sweaty palms.  Maybe that's why Obama opted out of the hand holding.

The Unsinkable Ken Blackwell

You have got to credit Ken Blackwell for his unwavering fealty to the tenets of hard right conservatism.  The man who brought us the Patriot Pastor movement and capitalism through Christ surfaced for air time on cable network MSNBC this week.

The latest chapter of the world according to Ken had him debating Christopher Hitchens on the role of Christianity in American politics.  That point was lost on Blackwell who spent most of his response time defending Christianity as the official religion of the United States.

I do appreciate the MSNBC producer who came up with the idea of pitting Blackwell against Hitch.   The segment contrasts the dogmatic persistence of Blackwell's nutter philosophy with the cynical contrarianism of Hitchen's intellectual conservatism.

Catch the highlights here.  Blackwell manages to remind us of the fanatic viewpoint of his movement's governance style in two distinct sound bites.  The first is at 3:20 into the segment where he explains how Judeo-Christian precepts and principles lay the moral foundation to allow for a free market enterprise.  From what I understand Jesus wasn't too big on the power of capitalism.  

At around 7:50 in he extols movement conservatism's favorite red herrring argument that Christianity is perpetually the underdog of America's religions.  He attempts to quote someone named W. E. Archer when he  says:

"...it might take a crucified church to take a crucified Christ into the view of the eyes of the world.."

I can't figure out what Blackwell is calling for here.  I think he means his buddy Rod Parsley needs you to quickly pick up the phone and buy a DVD to prepare for the end of days.  I'm not quite sure.  

It was good to see Ken get some exposure none the less. I didn't realize he had a gig with the Family Research Council .  It reminds me just how blessed Ohio was when we were granted a reprieve from his theocratic master plan for our State.

TARP Prognosis

The first of several assessments of the TARP program by the Congressional Oversight Panel has been released . The take away number is available without even clicking on the report link:

The total value of all direct spending, loans and guarantees provided to date in conjunction with the financial stability efforts (including those of the FDIC as well as the Treasury and the Federal Reserve) now exceeds $4 trillion. 

You want fries with that?   That represents about 28% of current GDP. We are throwing a monumental amount of resources at the financial crisis. Keep in mind that 4 large doesn't even include the dollars allocated to ARRA spending ($787 billion) which would bring the total effort to a third of GDP. 

One can only hope that Bernanke's green shoots are the real thing.

Pizza Begets Violence

What is it about the pizza business that has made it a focal point of the local police blotter? Just in anecdotal terms there's an indication of an entire class of crime has sprung up around pizza shops and the delivery of pizzas around the Akron area. Maybe its the latest iteration of youth gangs and street criminals exploiting the latest weakness in the community they victimize.

The latest and most troubling episode in the pizza crime chronicles is playing out in West Akron. The fallout from the "pizza guy fights back" shooting continues to stir up the sediment of the social and racial divide that exists in our town.  There is of course more to the incident than the incident itself.

A follow up on the aftermath of the shooting in the Beacon Journal attempts to add more layers to the story.  A business owner did shoot and kill a twenty year old robber in what was most likely a solid case of self defense.  A family is left to wonder why their son and brother made such a foolish and life altering choice  They say he was raised to respect his fellow citizens so how did he end up in that pizza shop wearing a mask and brandishing a sawed-off?  

A man who was exercising his right to protect his life and property ended up killing the would be assailant.  As much as you may feel gratified over the outcome, taking another person's life is a profound event.  It doesn't matter if its on the street or on the battlefield.

Addressing the real societal problems at play requires a certain level of maturity and sincerity. Brush aside the the gun-slinger machismo and race baiting from the fools on local talk radio and the corrosive effect of gun violence and youth crime is left revealed.  The issue is much more complex and is undermined by a society enamored with guns and a city that is awash in youth crime.  Akron like many urban areas has to contend with this problem before this latest generation succumbs to the unrelenting wave of despair and recklessness brought on by economic disparity and lack of positive influences.

I hope we spend less time dwelling on the white man shoots black man dialectic and try really hard to think about how we establish more solidarity against the growing epidemic of violent crime in Akron. Making headway on containing the spread of gang related crime comes first. This may be tied to the enhancement of policing trouble spots, shifting enforcement tactics (one good example here ) and getting the community more involved in pushing back against the hoodlums living in their midst. 

The corollary to this is continuing to prioritize education as the great equalizer and expanding opportunities for self sufficiency for all of Akron's residents.  I don't know of any other way.  Relying on more guns in the streets is not going to get us there. 

Husted's Creative Destruction Gambit

Former Republican House Speaker Jon Husted has announced his intent to save us by destroying an elected State Office.  The on again off again "resident" of Kettering has offered an ageless right wing tennet of governance as a campaign promise,

“I may be the first person in Ohio history to run for an office with a plan to eliminate it," Husted, 41, now a state senator, said in announcing his candidacy today at Ohio Republican Party headquarters.

Husted is going to save the Office of Secretary of State by deconstructing it and replacing it with a weak kneed version of a bi-partisan committee.  Don't they ever learn?  That "I must eliminate government in order to save it" has lost it's luster.  

This looks like an act of desperation or a political Hail Mary pass by Husted.  It's got to be one of the worst ideas since Ken Blackwell announced stringent specifications for voter registration forms.  It is on par with the hapless proposal to phase out the income tax being thrown around by prospective gubernatorial candidate John Kasich.

The fact that Husted's main campaign promise is to abolish the position of SOS is an indication of   the GOP's recognition of the sea change in Ohio politics.  Gone are the days in which the GOP could rest assured they would hold a majority of the executive offices, the governorship and both houses of the general assembly at once.  One way to slow the influence of a more progressive leaning electorate is to decapitate the position that has been instrumental in neutralizing Ohio's voting impediments.  Free and unfettered elections are the true objective of SOS oversight.  So take that away and we're back to the problems experienced in the Blackwell years.

We saw the difference in how election law and voter protection are carried out under Jennifer Brunner as compared to her insincere predecessor Lord Blackwell.   To further that point just look at the impetus for and success of the Secretary of State Project implemented nation wide.  That  initiative was based on the realization that equal protection of voter rights and providing unhindered access to the polls free of absurd rules and red tape are vital to increasing voter turn out.  Removing the Secretary of State position would hamper the ability to act swiftly and directly in matters of protecting voters and the voting process.

Now you could say the Ohio GOP has never been fond of high voter turn out. It doesn't mesh well with their priorities.  So what John Husted has proposed is a Bizzaro Secretary of State Project.  He wants to replace the one strong leadership position that can assure fair electoral results (when they want to) with a gimmicky government by committee.  

Cloaking this work of right wing fancy in a bi-partisan veneer is just a way of making it seem palatable for unsuspecting voters.  As much as Husted and the Ohio GOP may laud the idea there is no real need for this State Committee. The County Boards of Elections already have leadership by committee and that always works out well.

Story courtesy of the Daily Briefing