Tagrecession

US cities may have to be bulldozed in order to survive

The government looking at expanding a pioneering scheme in Flint, one of the poorest US cities, which involves razing entire districts and returning the land to nature.

Local politicians believe the city must contract by as much as 40 per cent, concentrating the dwindling population and local services into a more viable area.

The radical experiment is the brainchild of Dan Kildee, treasurer of Genesee County, which includes Flint.

Having outlined his strategy to Barack Obama during the election campaign, Mr Kildee has now been approached by the US government and a group of charities who want him to apply what he has learnt to the rest of the country.

Mr Kildee said he will concentrate on 50 cities, identified in a recent study by the Brookings Institution, an influential Washington think-tank, as potentially needing to shrink substantially to cope with their declining fortunes.

Most are former industrial cities in the “rust belt” of America’s Mid-West and North East. They include Detroit, Philadelphia, Pittsburgh, Baltimore and Memphis.

Telegraph: US cities may have to be bulldozed in order to survive

Previously: Parts of Flint May Go Feral

Laid Off Traders Try to Get Jobs as High School Math Teachers

He happens to live in New Jersey, where state education authorities have long worried about a dearth of math teachers.

Last week he heard about a new program called “Traders to Teachers” being set up at Montclair State University to retrain people in the finance industry who have been laid off in the deepest crisis to hit Wall Street since the Great Depression. […]

The university’s 101-year-old College of Education received 146 applications for 25 spots in the first round of the program, which offers three months intensive training followed by a job at a high school in January. The first year on the job includes close mentoring, and after two years probation they can become fully certified math teachers. […]

“If we’re successful … we could change in a very significant way the quality of math instruction in the state of New Jersey,” said university President Susan Cole, noting that many schools rely on substitute teachers because there are not enough certified math teachers to fill the positions.

Reuters: New Jersey seeks laid-off traders to teach math

(via Cryptogon)

See also: Dean Baker: Wall Street Follows the Path of the Steel Industry in Pittsburgh (“By eliminating the Wall Street path, other relatively high-paying jobs will look much better”)

New Yorker Summit Video: Nassim N. Taleb and Robert Shiller

(via Alex Burns)

Tent cities continue to boom, ranks of desperate grow

Tent cities and shelters from California to Massachusetts report growing demand from the newly homeless. The National Alliance to End Homelessness predicted in January that the recession would force 1.5 million more people into homelessness over the next two years. Already, “tens of thousands” have lost their homes, Alliance President Nan Roman says.

The $1.5 billion in new federal stimulus funds for homelessness prevention will help people pay rent, utility bills, moving costs or security deposits, she says, but it won’t be enough.

“We’re hearing from shelter providers that the shelters are overflowing, filled to capacity,” says Ellen Bassuk, president of the National Center on Family Homelessness. “The number of families on the streets has dramatically increased.”

USA Today: Economic casualties pile into tent cities

(Via Breaking Time)

Douglas Rushkoff on Richard Metzger’s Dangerous Minds

Turns out there’s already another Dangerous Minds episode. This one features Douglas Rushkoff and covers some familiar terroritory for readers of Rushkoff’s columns (which I link to frequently).

I agree with quite a lot of what Rushkoff has to say, and I respect him a lot. But there are a few important things he gets wrong or doesn’t account for.

There’s a contradiction in his assertion that the government/corporate complex will be too broke to enforce monopolies – but he also mentions, when questioned about US foreign debt, that we still have the strongest military. And that’s the thing. Entrenched powers aren’t going to roll over and die as long as they’ve got the bomb and the gun.

Alternative currencies are great. But governments tend squash them as soon as they start disrupting the status quo. See The New Currency War and George Monbiot’s history of alternative currency. There’s a really question of how much the “powers that be” will let “us” get away with – in terms of growing our own food, creating our own currency, and anything else that reduces their power over us.

Much of Rushkoff’s optimism stems from romanticizing a future where Americans break free from our cubicles and start actually “doing stuff.” I’ve noticed a tendency for a lot of people to think that jobs need to be more like what they think their ideal job should be like. Some people say “people need to be out doors” or “people need to work with their hands” or “people need more creative jobs.” They miss the fact that a lot of people genuinely like working with numbers, or programing computers, or doing detailing oriented office work.

Anyway, the millions of people who work in (or have recently worked in) the health care, education, restaurant, hotel, farming, gardening, manufacturing, trucking, rail road, utility, and construction industries may be surprised to hear that all the economy needs is for Americans just need to get off their fat cubicle dwelling asses and “do something.” What percentage of the population is actually employed in just pushing numbers around and managing outsourced labor?

I’m fairly confused on this point because Rushkoff also talks about how the financial industry is essentially extracting value from the rest of us. So are we producing value or not?

Rushkoff is correct in tracing the modern collusion of government and corporations back to the very beginnings of corporations, but he falls into a certain trap that libertarians tend to fall into: the idea that getting rid of the government influence would solve the problem of megacorporations (or other large institutions) would stop their meddling in the market and lead to a laissez faire utopia.

The problem is that the government is not the only way large institutions (be they for-profit corporations, religious institutions, unions, professional organizations, or non-profit organizations) manipulate the market. We could try splitting up megacorproations – but that requires government intervention and gets sticky quick (for all the reasons that libertarians warn against government intervention).

The typical libertarian assumption, as I understand it, is that without government intervention the market would quickly self-correct – all those decades of entrenched power and influence would cease to matter as real competition came to the fold. Needless to say, I don’t share this belief. And actually, I rather doubt Rushkoff does either.

I look forward to Rushkoff’s book. I suspect many of my points will at least be addressed.

Rest of the episode after the jump.

Wyatt Cenac on the Horrors of Socialism in Sweden

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Very interesting bit: the Swedish MP explains that Sweden has a trade surplus and lends money to the US (we, of course, have a massive trade deficit).

There is, of course, a contrarian view: that the trade deficit is not a bad thing. That it is, in fact, a good thing:

The Causes and Consequences of the U.S. Trade Deficit


Are Trade Deficits Really Bad News?

(a case that seems less and less reality-based every day)

Richard Metzger’s new show: Dangerous Minds, episode one

Since I’ve been a little soft of socialism lately, here are some thoughts on this episode: they talk a lot about the problems with capitalism and the need for more welfare to support the large numbers of people who will be unemployed long term as the economy continues to change.

However, they do not propose any real solutions (granted, this is just a short interview). The Welfare State needs a tax base to fund its social programs. Metzger mentions that he doesn’t see the market proposing any solutions to our problems. “The market” (a dubious term in its own right – what we should actual say is “private industry”) is perhaps the only thing proposing solutions – alternative energy, biotechnology, and other initiatives to increase actual, non-fictitious capital. Even solutions like permaculture, co-ops, credit unions, and alternative currency are “market” solutions, in that they are they are the private undertakings.

The good news is that McCain was, probably inadvertently, right when he said that the “fundamentals of our economy are strong.” We remain amongst the largest manufacturing countries in the world and one of the biggest exporters in the world. (Here’s an interesting article about the modern US manufacturing industry)

The bad news of course, we’re all familiar with: heavy debt both as a nation and as individuals, lack of individual savings, a serious trade deficit, etc. Some of these problems may have some governmental solutions. But redistribution of wealth require wealth to redistribute, and tariffs and trade regulation require commerce to regulate (whatever the advantages and disadvantages may be). This is what “the market” is good for.

Rest of the episode after the jump.

1,500 farmers commit mass suicide in India

Over 1,500 farmers in an Indian state committed suicide after being driven to debt by crop failure, it was reported today.

The agricultural state of Chattisgarh was hit by falling water levels.

“The water level has gone down below 250 feet here. It used to be at 40 feet a few years ago,” Shatrughan Sahu, a villager in one of the districts, told Down To Earth magazine

“Most of the farmers here are indebted and only God can save the ones who do not have a bore well.”

Mr Sahu lives in a district that recorded 206 farmer suicides last year. Police records for the district add that many deaths occur due to debt and economic distress.

In another village nearby, Beturam Sahu, who owned two acres of land was among those who committed suicide. His crop is yet to be harvested, but his son Lakhnu left to take up a job as a manual labourer.

The Independent: 1,500 farmers commit mass suicide in India

(via Cryptogon)

Newsweek profile of Paul Krugman

Krugman generally applauds Obama’s efforts to tax the rich in his budget and try for massive health-care reform. On the all-important questions of the financial system, he says he has not given up on the White House’s seeing the merits of his argument—that the government must guarantee the liabilities of all the nation’s banks and nationalize the big “zombie” banks—and do it fast. “The public wants to trust Obama,” Krugman says. “This is still Bush’s crisis. But if they wait, Obama will be blamed for a fair share of the problem.”

Obama administration officials are dismissive of Krugman’s arguments, although not on the record. One official made the point that pundits can have a 60 percent chance of being right—and just go for it. They have nothing to lose but readers, and Krugman’s many fans have routinely forgiven his wrong calls. The government does not have the luxury of guessing wrong. If Obama miscalculates, he could truly crash the stock market and drive the economy into depression. Krugman’s suggestion that the government could take over the banking system is deeply impractical, Obama aides say. Krugman points to the example of Sweden, which nationalized its banks in the 1990s. But Sweden is tiny. The United States, with 8,000 banks, has a vastly more complex financial system. What’s more, the federal government does not have anywhere near the manpower or resources to take over the banking system.

Newsweek: Attack from the Left: Paul Krugman’s Poisonous Pen

(via Disinfo)

The Big Takeover: How Wall Street Insiders are Using the Bailout to Stage a Revolution

Full text of Matt Taibi’s recent Rolling Stone article on the bailout:

So that’s the first step in wall street’s power grab: making up things like credit-default swaps and collateralized-debt obligations, financial products so complex and inscrutable that ordinary American dumb people – to say nothing of federal regulators and even the CEOs of major corporations like AIG – are too intimidated to even try to understand them. That, combined with wise political investments, enabled the nation’s top bankers to effectively scrap any meaningful oversight of the financial industry. In 1997 and 1998, the years leading up to the passage of Phil Gramm’s fateful act that gutted Glass-Steagall, the banking, brokerage and insurance industries spent $350 million on political contributions and lobbying. Gramm alone – then the chairman of the Senate Banking Committee – collected $2.6 million in only five years. The law passed 90-8 in the Senate, with the support of 38 Democrats, including some names that might surprise you: Joe Biden, John Kerry, Tom Daschle, Dick Durbin, even John Edwards.

The act helped create the too-big-to-fail financial behemoths like Citigroup, AIG and Bank of America – and in turn helped those companies slowly crush their smaller competitors, leaving the major Wall Street firms with even more money and power to lobby for further deregulatory measures. “We’re moving to an oligopolistic situation,” Kenneth Guenther, a top executive with the Independent Community Bankers of America, lamented after the Gramm measure was passed.

The situation worsened in 2004, in an extraordinary move toward deregulation that never even got to a vote. At the time, the European Union was threatening to more strictly regulate the foreign operations of America’s big investment banks if the U.S. didn’t strengthen its own oversight. So the top five investment banks got together on April 28th of that year and – with the helpful assistance of then-Goldman Sachs chief and future Treasury Secretary Hank Paulson – made a pitch to George Bush’s SEC chief at the time, William Donaldson, himself a former investment banker. The banks generously volunteered to submit to new rules restricting them from engaging in excessively risky activity. In exchange, they asked to be released from any lending restrictions. The discussion about the new rules lasted just 55 minutes, and there was not a single representative of a major media outlet there to record the fateful decision.

CommonDreams: The Big Takeover: How Wall Street Insiders are Using the Bailout to Stage a Revolution

This is the most comprehensive, clear, and funniest article I’ve read on the bailout yet.

It’s curious that Taibi doesn’t even mention Fannie and Freddie in this article, however.

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