Krugman: Washington has lost interest in the unemployed

COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary SEE LIVINGLIES LITIGATION SUPPORT AT LUMINAQ.COM

EDITOR’S COMMENT: Krugman is right. Policy has been hijacked by ideology. It is as though we were eating our young. What do we expect them to do when they grow old enough to become part of the workforce? Poorly educated, broke, in debt from the day they were born, living in a third world country that once boasted of its infrastructure but is already not only an embarrassment but poses a substantial risk of disaster.

The Forgotten Millions


More than three years after we entered the worst economic slump since the 1930s, a strange and disturbing thing has happened to our political discourse: Washington has lost interest in the unemployed.

Jobs do get mentioned now and then — and a few political figures, notably Nancy Pelosi, the Democratic leader in the House, are still trying to get some kind of action. But no jobs bills have been introduced in Congress, no job-creation plans have been advanced by the White House and all the policy focus seems to be on spending cuts.

So one-sixth of America’s workers — all those who can’t find any job or are stuck with part-time work when they want a full-time job — have, in effect, been abandoned.

It might not be so bad if the jobless could expect to find new employment fairly soon. But unemployment has become a trap, one that’s very difficult to escape. There are almost five times as many unemployed workers as there are job openings; the average unemployed worker has been jobless for 37 weeks, a post-World War II record.

In short, we’re well on the way to creating a permanent underclass of the jobless. Why doesn’t Washington care?

Part of the answer may be that while those who are unemployed tend to stay unemployed, those who still have jobs are feeling more secure than they did a couple of years ago. Layoffs and discharges spiked during the crisis of 2008-2009 but have fallen sharply since then, perhaps reducing the sense of urgency. Put it this way: At this point, the U.S. economy is suffering from low hiring, not high firing, so things don’t look so bad — as long as you’re willing to write off the unemployed.

Yet polls indicate that voters still care much more about jobs than they do about the budget deficit. So it’s quite remarkable that inside the Beltway, it’s just the opposite.

What makes this even more remarkable is the fact that the economic arguments used to justify the D.C. deficit obsession have been repeatedly refuted by experience.

On one side, we’ve been warned, over and over again, that “bond vigilantes” will turn on the U.S. government unless we slash spending immediately. Yet interest rates remain low by historical standards; indeed, they’re lower now than they were in the spring of 2009, when those dire warnings began.

On the other side, we’ve been assured that spending cuts would do wonders for business confidence. But that hasn’t happened in any of the countries currently pursuing harsh austerity programs. Notably, when the Cameron government in Britain announced austerity measures last May, it received fawning praise from U.S. deficit hawks. But British business confidence plunged, and it has not recovered.

Yet the obsession with spending cuts flourishes all the same — unchallenged, it must be said, by the White House.

I still don’t know why the Obama administration was so quick to accept defeat in the war of ideas, but the fact is that it surrendered very early in the game. In early 2009, John Boehner, now the speaker of the House, was widely and rightly mocked for declaring that since families were suffering, the government should tighten its own belt. That’s Herbert Hoover economics, and it’s as wrong now as it was in the 1930s. But, in the 2010 State of the Union address, President Obama adopted exactly the same metaphor and began using it incessantly.

And earlier this week, the White House budget director declared: “There is an agreement that we should be reducing spending,” suggesting that his only quarrel with Republicans is over whether we should be cutting taxes, too. No wonder, then, that according to a new Pew Research Center poll, a majority of Americans see “not much difference” between Mr. Obama’s approach to the deficit and that of Republicans.

So who pays the price for this unfortunate bipartisanship? The increasingly hopeless unemployed, of course. And the worst hit will be young workers — a point made in 2009 by Peter Orszag, then the White House budget director. As he noted, young Americans who graduated during the severe recession of the early 1980s suffered permanent damage to their earnings. And if the average duration of unemployment is any indication, it’s even harder for new graduates to find decent jobs now than it was in 1982 or 1983.

So the next time you hear some Republican declaring that he’s concerned about deficits because he cares about his children — or, for that matter, the next time you hear Mr. Obama talk about winning the future — you should remember that the clear and present danger to the prospects of young Americans isn’t the deficit. It’s the absence of jobs.

But, as I said, these days Washington doesn’t seem to care about any of that. And you have to wonder what it will take to get politicians caring again about America’s forgotten millions.

13 Responses

  1. Some of you may not be aware that Mers has a forum, where they spin straw into gold. Non-existent VP’s are explained away, like dragons at the end of a fairy tale.

    Here’s a lively discussion from someone asking a direct question, and R. K. Arnold (former Mers Pres), who presents the case that Mers is all about butterflies and puppies and for homeowners. It’s all good.

    Chain Of Assignments

    Will MERS make known to individual borrowers, without the need for court subpoena, the assignment of all beneficial interests, servicing rights and transfers or pledges to a borrower’s note so that a concerned borrower, concerned about fraud on their account or mortgage can notify everyone in the chain of assignments as to their concerns and for them to request an examination of their claims?

    Also, can we look to MERS to provide opeN records of all transfers in foreclosure actions so that all parties which may have some or all assignee liability be notified or brought into each case as necessary as a party in interest or defendant?

    Will MERS provide all the electronic records for assignments is a borrower makes such a request in a QWR letter to his or her servicer under RESPA? Thanks in advance for answering!
    September 26, 2003
    12:00 AM

    R.K. Arnold Re:Chain Of Assignments

    Let me say thank you for your interest in MERS. I appreciate your concerns and admire your passion for the issues you’ve raised.

    With all due respect, many of your statements about mortgage lending and the secondary market just don’t seem to fit. In particular, your assertion about the role MERS plays for the mortgage industry is wrong. MERS was created to reduce the cost of borrowing, which makes it easier to buy a home, especially for lower-income families. It’s an important national goal and we’re proud to be part of that!

    We do it by serving as mortgagee of record in the appropriate public land records on behalf of our member companies. This makes it much easier to find the proper parties because MERS is always the definitive source for contact information about the loan.

    MERS makes information more available, not less. And we make information more accessible for homeowners, mortgage lenders and title agents than it was before we came along. Moreover, that information is the very thing you say you want. We’re a very open company as you can see from our website and we’re here to serve anyone associated with a MERS-registered loan, including homeowners.

    With MERS, all you have to do to find out who currently services a MERS-registered loan is make a telephone inquiry to the MERSÒ System. That will put you in contact with the mortgage company who knows everything there is to know about the loan. That’s what we do. We reduce something that used to be very cumbersome (sometimes impossible) down to something that takes a few seconds (very accurately).

    We’re not perfect, but there’s nothing sinister about who we are and what we do. We reduce the cost of homeownership by making the mortgage industry more efficient.

    I’ve reviewed each of your questions and the answers to them posted by Sharon Horstkamp and Dan McLaughlin. Their answers are responsive and accurate. Much of what you’ve asked has nothing to do with us. To the extent you’re not satisfied with our answers we can’t help you further.

    R.K. Arnold
    President & CEO
    September 26, 2003
    12:00 AM

    Nye Lavalle Re:Chain Of Assignments

    I don”t think you all get it. We don”t care about whom is servicing the loan. They are just bill collectors and money transferors for borrowers and investors. Unless, you”re going to tell us and lie to us in this forum that MERS or the servicer is the investor or owns all beneficial rights to the mortgage and notes from origination to payoff, then what we are asking is not to know who is servicing the loan, but who is also subservicing the loan and to what trust, REMIC, SPV, entity etc. actually owns the loan and is the holder in due course of the note and to where the note may have been assigned to or any part thereof other than the servicing which the borrower already knows.

    We want to know what loan pools and trusts the mortgage is in. We want to know whom the document custodian is and where the note is being held and is physically located.

    We want to know all sub-servicers, special servicers; everyone that is in your records in any capacity that is touching a particular note.

    We want to put everyone, trustees, rating agencies rating the particular MBS transaction, Fannie, Freddie, custodians, investors such as mutual funds, pensions funds, trust funds, the FHLBs, OTS, OCC and the SEC as to what is going on here and how everything is being accounted for.

    We really don”t care about the servicer. If your records show that a loan has been kicked back, we want to see this. If there are implicit, implied or moral recourse agreements that are being used behind the scenes allowing the repurchase of loans going bad, we want to know and we want to trail, audit and document how that affects the “true sale” nature of the transaction as well as any REMIC or other tax consequences.

    In GA, and other states, we want to see that upon refinancing that those entities that are assigning rights “privately” and then publicly using MERS as a nominee are paying their dutiful and rightful intangibles taxes

    In essence, we want to see you completely open up your entire system to the public for scrutiny so that we can determine all parties to a mortgage loan transaction along the entire chain so that when fraud occurs, as it often does, all parties can be put on notice, defenses can be raised, liabilitie4s can be determined and assessed and those responsible can be held accountable as well as take steps to remedy each particular circumstance.

    If we are unable to resolve these questions and issues, then it will be our recommendation to lawyers and class action counsel to make MERS and each and everyone of its members a party to litigation so that proper discovery can be conducted.

    This shell game and 3 card Monte tricks of who owns the note and where the notes are located are up. Adjust your policies and make the information public or suffer the consequences of expensive and extensive litigation and regulator oversight in that we will propose legislation and focus media attention on the scams being employed to conceal and protect the beneficial owners and investors.

    Please via a notice, put them all on notice as well as provide each and every servicer, member, trustee, custodian, investor, Fannie, Freddie and the ratings agencies the context of this notice in that we will soon be taking the actions referenced above if you do not make all information in your system public.

    I am sure that many foreclosures will be delayed or in fact dismissed since many of your pleadings seem to reflect parties claiming to have an interest who have no interest or cannot prove their interest.
    Assess the situation and then get back to me or one of my counsel. Your company”s cooperation and not run around the answers is what I want to see.

    We have the evidence of the fraud. Would you and your respective counsel be willing to meet and review the evidence and answer the questions

  2. Believe me, as I am an in sider. This BofA action will fail if not to reveal a critical missing legal component from every one of these cases. The rights and entitlements to the loans in question are afforded to the banks as in Bof A under the D’Oenshe Duhme Doctrine. The matter is lost if this critical element of the law is not met . There is one and only one means to beating this overwhelming advantage the lender has over consumers. It’s an argument that involves material misrepresentations, capitation, divestiture of assets and restoring book value to assets charged to a loss by the FDIC owns admission.

    I am an accountant by background and not an attorney . Attorneys are struggling with basis general ledger accounting that is key to evidentiary needed to bring into a court. I have spent long hours in the phone with the FDIC and once again spoke to them on Thursday.They reserve no comment. It is a fact.


  3. so my question here is, what president or I guess member of the congress or government does this not apply to?

  4. E Tolle, I like this one:

    Then, once the money starts flowing again, just to add to the glee, every night on Fox we execute the assholes who ruined the American economy for their personal gain, starting with that sicking Jabba the Hut stand-in from Exxon:

  5. cubed2k, good article….

    At this point, the sanest economic policy we can enact is to weld the doors of Wall Street shut, and toss a few cluster bombs through the windows. If our economic system is so far divorced from the free market that the normal actions of supply and demand no longer function- hell, are no longer even considered, then the system is terminally ill, and should be scrapped.

  6. And, here we go again. I knew it when gas spiked and everybody was screaming, and it fell and I knew it would creep up again sort of slowly and we would be “used to it” now.

  7. Our whole entire government is corrupt. All they do is try to come up with another plan to bury all the fraud and keep the american people on their knees. The only real hope we have now is GOD –for those of us who still cherish the words “in God we trust”— Other than the almighty- we are surrounded by the most corrupt government since the beginning of government. These times are not only hard for almost everyone but we have to adopt a new plan — never trust the banks or anyone in government or wall street. I hope I covered all the grounds where clearly; the devil resides. Only God can help us now — the devil got everyone else. Debi

  8. Oh, I’m guessing our first ecological disaster will do it. Nuclear is my best guess – prolly in S.C – but it could be a major economic breakdown, possibly when they change the currency.

    Thanks for all you do to help us understand what is going on.


    And you have to wonder what it will take to get politicians caring again about America’s forgotten millions.

  9. Jan:

    The politicians which I voted for this last go round were in my court up until the election then, they are now moving back to suppport the banks because Shelby and others do not want the banks penalized. This was a very disheartening action on the part of the repubicans and even though I gave it much thought about who to vote for, let’s face, you cannot trust the politicians so why do we keep looking for help from them.

    Also, moving your money is the only way to hit them and then perhaps it could make a difference because you are no longer giving them the on going power to rule us. Course they will probably say well, we cannot honor the homeowners settlement which the AG’s and republicans are attempting to work out.

    See, why do we need politicians – think about it.

  10. The HELOC shout down , was playing a big rule in the economy .I like to ad 2 new worker and was in the middle of construction , when CHASE closed my account , so everythink stops.All my building permits are expired ,so I can put them in the garbage . I know some friends who use the HELOC also for the business and until now there are not done. At least we will have about 300 more CHASE branches in Florida by next year , that is what the bailout money paid for.
    May be we should send the St. Pete Times to Washington .

  11. Mr. Krugman’s writing is all very nice, but let us remember: these politicians were elected through a voting process. If you want a different policy then you have to vote for the candidate who is prepared to offer a different policy. Sure, the current crop prattles ideology; but so do the voters, who also adopt that ideology – or segments of it.

  12. I don’t need a politician to help get me a job and obviously they can’t do it anyway. Get with the program people, form your own organizations between employers and forget the government and the politicians.

    If employers want to flourish and their businesses to succeed, then they need to join with the American people direct and come up with the enterprises that will make it happen.

    WE can start by making and selling our own products here in America and rather than our own companies pushing their sales of their products in other companies. Yes, I know it has its effect, but who is it benefiting = Without hostile approach, build our own committees, not unions, and begin to do that which is necessary – fee the mouth of big business so they can inturn become fat enough with earnings retained for distributing job opportunities, not the wealth itself of those few who have been the recipents of a lesser employee approach. I hope this made sense. I think it does.

Contribute to the discussion!

%d bloggers like this: