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Politics : President Barack Obama -- Ignore unavailable to you. Want to Upgrade?

To: geode00 who wrote (52427)	3/21/2009 6:47:04 PM
From: stockman_scott	Respond to of 149317

Starbucks and Whole Foods Seek Deal on Union Bill (Update1) By Holly Rosenkrantz March 21 (Bloomberg) -- Starbucks Corp., Whole Foods Market Inc. and Costco Wholesale Corp. are discussing a potential compromise on union-backed “card-check” legislation that U.S. business groups are spending millions of dollars to defeat. Starbucks, the world’s largest coffee-shop chain, has had “conversations with like-minded companies” and is “open to exploring alternative solutions” to the measure, said Deb Trevino, director of corporate communications for the Seattle- based company in an e-mail yesterday. The companies didn’t provide details about an alternative to the so-called Employee Free Choice Act. That bill, backed by President Barack Obama and Democratic leaders in Congress, would make it easier for unions to organize. It would let workers form a union when a majority of company employees sign a card requesting representation, rather than permitting their employer to require a secret-ballot election run by the National Labor Relations Board. Whole Foods of Austin, Texas, the largest natural-foods grocer in the U.S., has “been having conversations with other companies who have the same outlook that we do, and we’ve talked about finding a fair alternative,” said Libba Letton, a company spokeswoman. Costco, the biggest U.S. warehouse-club chain, is also involved in the talks, according to a person working with the company who declined to be identified discussing the private discussions. Issaquah, Washington-based Costco wouldn’t comment. Wal-Mart Stores Inc. is among companies that have opposed the measure, which is organized labor’s top legislative goal this year. Several Democrats in the U.S. Senate, including Blanche Lincoln and Mark Pryor from Wal-Mart’s home state of Arkansas and Mark Warner of Virginia, have said they aren’t sure they would support it. ‘Overwhelming Majority’ Randel Johnson, vice president of labor issues for the U.S. Chamber of Commerce, said it is “not surprising” that a few companies would float new ideas on the bill. “The overwhelming majority of the business community remain opposed,” Johnson said in a phone interview yesterday. Mark Mix, president of the National Right to Work Committee, a group opposing the legislation, said some of the measure’s opponents were exploring the idea of requiring that 70 percent of workers sign cards to unionize, rather than the 50 percent currently proposed in the bill. The Washington Post reported today, without citing its sources, that the alternative legislation would tighten some organizing rules in favor of workers while keeping the secret ballot and leaving out provisions for mandatory arbitration of organizing disputes. ‘Phony’ Compromise “These huge companies are apparently willing to sell out hundreds of thousands of small ones under the guise of making some phony and misguided compromise with Big Labor,” Mix said in a statement. “We believe we have this draconian bill defeated outright, so these actions may well lead to the bill’s passage.” Labor unions also expressed opposition to the Starbucks-led effort to find an alternative. “What we have consistently heard from the business community is that there is no compromise,” said Stewart Acuff, an assistant to AFL-CIO President John Sweeney. “We expect to pass it the way it is now.” The card-check legislation would amend the National Labor Relations Act of 1935, the Depression-era law that helped build the modern labor union movement in the U.S. Two Democratic lawmakers, Representative George Miller of California and Senator Tom Harkin of Iowa, introduced the card- check legislation on March 10. Senate Majority Leader Harry Reid, a Nevada Democrat, has said his chamber may consider it before the August recess. To contact the reporter on this story: Holly Rosenkrantz in Washington at hrosenkrantz@bloomberg.net Last Updated: March 21, 2009 10:45 EDT

To: geode00 who wrote (52427)	3/22/2009 6:09:31 AM
From: stockman_scott	Respond to of 149317

Nobel Prize winner Paul Krugman on Geithner's plan... krugman.blogs.nytimes.com March 21, 2009, 12:30 pm More on the bank plan Why was I so quick to condemn the Geithner plan? Because it’s not new; it’s just another version of an idea that keeps coming up and keeps being refuted. It’s basically a thinly disguised version of the same plan Henry Paulson announced way back in September. To understand the issue, let me offer some background. Start with the question: how do banks fail? A bank, broadly defined, is any institution that borrows short and lends long. Like any leveraged investor, a bank can fail if it has made bad investments — if the value of its assets falls below the value of its liabilities, bye bye bank. But banks can also fail even if they haven’t been bad investors: if, for some reason, many of those they’ve borrowed from (e.g., but not only, depositors) demand their money back at once, the bank can be forced to sell assets at fire sale prices, so that assets that would have been worth more than liabilities in normal conditions end up not being enough to cover the bank’s debts. And this opens up the possibility of a self-fulfilling panic: people may demand their money back, not because they think the bank has made bad investments, but simply because they think other people will demand their money back. Bank runs can be contagious; partly that’s for psychological reasons, partly because banks tend to invest in similar assets, so one bank’s fire sale depresses another bank’s net worth. So now we have a bank crisis. Is it the result of fundamentally bad investment, or is it because of a self-fulfilling panic? If you think it’s just a panic, then the government can pull a magic trick: by stepping in to buy the assets banks are selling, it can make banks look solvent again, and end the run. Yippee! And sometimes that really does work. But if you think that the banks really, really have made lousy investments, this won’t work at all; it will simply be a waste of taxpayer money. To keep the banks operating, you need to provide a real backstop — you need to guarantee their debts, and seize ownership of those banks that don’t have enough assets to cover their debts; that’s the Swedish solution, it’s what we eventually did with our own S&Ls. Now, early on in this crisis, it was possible to argue that it was mainly a panic. But at this point, that’s an indefensible position. Banks and other highly leveraged institutions collectively made a huge bet that the normal rules for house prices and sustainable levels of consumer debt no longer applied; they were wrong. Time for a Swedish solution. But Treasury is still clinging to the idea that this is just a panic attack, and that all it needs to do is calm the markets by buying up a bunch of troubled assets. Actually, that’s not quite it: the Obama administration has apparently made the judgment that there would be a public outcry if it announced a straightforward plan along these lines, so it has produced what Yves Smith calls “a lot of bells and whistles to finesse the fact that the government will wind up paying well above market for [I don't think I can finish this on a Times blog]” Why am I so vehement about this? Because I’m afraid that this will be the administration’s only shot — that if the first bank plan is an abject failure, it won’t have the political capital for a second. So it’s just horrifying that Obama — and yes, the buck stops there — has decided to base his financial plan on the fantasy that a bit of financial hocus-pocus will turn the clock back to 2006.

To: geode00 who wrote (52427)	3/22/2009 6:34:33 AM
From: stockman_scott	Read Replies (2) \| Respond to of 149317

James K. Galbraith Responds to Geithner’s Toxic Asset Plan firedoglake.com

To: geode00 who wrote (52427)	3/24/2009 1:20:36 AM
From: stockman_scott	Read Replies (1) \| Respond to of 149317

The Bank Rescue ____________________________________________________________ Editorial The New York Times March 24, 2009 President Obama’s long-awaited plan to revive the banks could work if certain assumptions about the future are right. But there is not much, beyond faith, to believe those assumptions will pan out — and even if there were, it is hard to see how the plan is the best way to go. In the near term, the plan would provide financing to buy $500 billion of banks’ bad assets — and possibly up to $1 trillion over time. Most of the financing would be in the form of low-cost government loans and loan guarantees for private investors who buy the troubled assets. The first assumption is that those battered assets will recover handsomely, thus allowing the government loans to be repaid with interest. There has, however, been no independent assessment of the assets or their underlying collateral, so there’s no way to know that they will recover by much, if at all from their beaten-down state. The Times has reported that investors are currently offering 30 cents on the dollar for certain toxic assets. Banks are unwilling to sell at that price, but that doesn’t mean the offer price is too low. It may only indicate their fear that taking such losses might render the banks insolvent. With government subsidies, investors will presumably offer a price that is more to the banks’ liking. But that, in turn, could expose the government to big losses. Government loans are huge compared with the sums that investors must put up, so even a modest decline in the value of the purchased assets would endanger repayment of the loans. Even if we assume that the assets do increase in value, allowing the government to be repaid, there are still unsolved problems. Successful sales will rid banks of some of their toxic assets, but not necessarily all or even most of them. To restore the banks to health, the sums expended would have to be enough to balance the banks’ assets and liabilities, and provide a reasonable cushion to resume lending and absorb future losses. No one knows with any certainty how much that is, though some estimates put it north of $2 trillion, much more than what the administration is contemplating. And even if you assume that the sums put up by the government are enough to cleanse the banks entirely, restoring the banks to health by throwing money at them — even with a sheen of private capital — would not be fair. It would be one big transfer of wealth from the government to bank investors. That would be better than an apocalyptic crash, but it is a near complete socialization of losses, with little value flowing to taxpayers. A better way would be to base the rescue on current reality, not assumptions about the future. What would an examination of the banks’ assets reveal about their value? What is the size of the hole in the banking system? In the absence of good-faith measurement, taxpayer-financed purchases of bad assets could court huge unnecessary risks. In other banking crises, both in this country and abroad, resolution of a systemwide problem has sooner or later involved separating solvent banks from insolvent banks. In the end, there is no getting around firing the executives at failing banks, acknowledging the losses, wiping out the shareholders and then deciding how the government can best restructure the institutions. The Obama administration has yet to explain why its approach is better than that. Copyright 2009 The New York Times Company