Atrios links to Felix Salmon's discussion of Tim Geithner's argument against a foreclosure moratorium:

I think it’s important to recognize, Charlie, that if you — a national moratorium would be very damaging to exactly the kind of people we’re trying to protect, because the consequence of that would be in neighborhoods that have been most affected by the foreclosure crisis, where you see lots of houses on the block empty, unoccupied, what it means is those communities will be living longer with houses unoccupied, with more pressure on their house price with the people still in their houses.

Salmon recognizes that foreclosure is in fact the process by which many of these homes are emptied. In response, Geithner argues:

Bank of America today announced it will stop foreclosures in all fifty states.

The bank said the foreclosure process on delinquent borrowers will continue, but it will not proceed to judgment or a foreclosure sale.

"Robosigning" allegations are mounting and Sen. Chris Dodd said he will hold a hearing on foreclosure practices November 16. State attorney generals are also investigating and initiating or contemplating fraud suits. Here's more on the prevalence of robo-signing.

"We started instructing people to pull their documents from the clerk of the court," says Anne Batte, who runs a foreclosure-assistance group in Georgia called Operation Restoration. "And the more we instructed, the more we saw. Nearly every document I have seen has been improperly signed."

Bloomberg has an interesting column describing how even a man who had no mortgage had his home foreclosed on due to the robo-signing.

NYTimes:

Don’t look to Jan Hatzius, the highly respected chief economist at Goldman Sachs, for a pep talk on the near-term state of the economy. As he writes in a client note today:

We see two main scenarios for the economy over the next 6-9 months — a fairly bad one in which the economy grows at a 1½%-2 percent rate through the middle of next year and the unemployment rate rises moderately to 10 percent, and a very bad one in which the economy returns to an outright recession. There is not much probability of a significantly better outcome. The reason is that “short-cycle” factors such as the inventory cycle and the impulse from fiscal policy are likely to continue deteriorating through early 2011, keeping G.D.P. growth very sluggish.

(Emphasis supplied.) Welcome to your new reality.

Speaking for me only

Now that actual effective economic policy for our current economic conditions (fiscal stimulus) is off the table, a lot of Center Leftists are focusing on the Fed. But as Paul Krugman explains, while more Fed action can't hurt, it simply won't do the job of steering the economy back to health:

I wanted and still want fiscal expansion because it’s relatively certain in its effect: if the government goes and buys a trillion dollars’ worth of stuff, that will create a lot of jobs. [. . .] The truth is that it’s very hard for central banks to get traction in a zero-rate world. This doesn’t mean that [the Fed] shouldn’t try. [. . .] I didn’t and don’t think that we can count on monetary policy to do the job; blithely declaring that the Fed should target nominal GDP misses the difficulties. And that means we need fiscal policy.

Of course, at this point, with the loss of political will, it looks as if we’re going to see an attempt to do the trick with quantitative easing alone. I hope it works, but I wouldn’t bet on it.

Two points - actually there is no information I know of that in fact the Fed is going to expand quantitative easing. So I think Krugman is optimistic that there will even be an attempt. More importantly, it simply will not work. The policy that WILL work, fiscal stimulus, will not happen. So we're doomed to a Lost Decade. At least my children are young and may see better days when they reach employment age. We sure won't.

Speaking for me only

Alan Grayson discusses the foreclosure mills issue:

Atrios pithily describes the problem with the Obama Administration approach - "the banksters f**king suck." The NYTimes more genteely says - "it is folly to rely on banks that got us into this mess to get us out." FULL DISCLOSURE - I am advising some parties related to this issue (the little guys for once.)

Speaking for me only

While The Hill titles the article Dems, Obama Divided Over Locking In Bush Tax Cuts, the real news out of this article for me is the emergence of honest to goodness deficit hawks in the Senate (as opposed to the phony ones you see on Sunday talk shows. From the article:

Several senators, including Democratic Policy Committee Chairman Byron Dorgan (N.D.), are hesitant about giving up an estimated $1.5 trillion in revenue over the next decade, when the federal deficit is unsustainable and there are no obvious spending cuts to fix it. They say it would be smarter to pass a short-term extension of the expiring Bush tax cuts for families earning less than $250,000, then re-evaluate tax policy in a year or two when the economy is stronger.

“I think a far better approach is to extend the middle-income tax cuts for two years and then make a judgment,” said Dorgan. “I don’t think we should get locked into any specifics. It locks us in to say this is going to be permanent,” added Sen. Tom Udall (N.M.). [. . .] Sen. Dianne Feinstein (Calif.), an influential member of the Senate Democratic Conference, said a temporary extension is “worth talking about.” [. . .] Sen. Sheldon Whitehouse (D-R.I.) said he would support a short-term extension of the middle-class cuts. “I think that’s a good idea,” he said. “As long as we get them extended now, so we get past the early part of next year with the economy still in extremis in a lot of states like my own.

(Emphasis supplied.) I think that President Obama has played the issue shrewdly - demanding permanent tax cuts for the middle class and vehemently opposing tax cuts for the rich. Real deficit hawks now have a position they can flock to - temporary middle class tax cuts and NO tax cuts for the rich. This can work.

Speaking for me only

AP:

Most Americans simply don't apply for jobs harvesting fruits and vegetables in California, where one of every eight people is out of work, according to government data for a federal seasonal farmworker program analyzed by The Associated Press.

And the few unemployed Americans who apply through official channels usually don't stay on in the fields, a point comedian Stephen Colbert — dressed as a field hand — has alluded to in recent broadcasts on Comedy Central.

Anyone familiar with farm work can tell you - it is impossibly taxing physically. No one would wish it on their kids.

Speaking for me only

Paul Krugman ably tackles the issue:

[W]hat should we be seeing if [structural unemployment existed]? The answer is, there should be significant labor shortages somewhere in America — major industries that are trying to expand but are having trouble hiring, major classes of workers who find their skills in great demand, major parts of the country with low unemployment even as the rest of the nation suffers. None of these things exist.

Let me add a common sense observation - in September 2008, the unemployment rate, after a steady rise, was 6.1%. In August 2009, just a year later, the unemployment rate was 9.8%. To believe that this rise was a result of structural unemployment is to accept that the American economy became completely dislocated in terms of its labor market in just 12 months. The precipitous drop in demand and the financial meltdown were not the cause in the rise in unemployment but merely the result of structural unemployment. This would be an event without precedent in economic history. It simply is false.

Speaking for me only

Americans oppose tax cuts for the wealthy:

A majority of Americans favor letting the tax cuts enacted during the Bush administration expire for the wealthy. While 37% support keeping the tax cuts for all Americans, 44% want them extended only for those making less than $250,000 and 15% think they should expire for all taxpayers.

81% support the Obama tax cuts for the middle class. This is a winning issue for Dems and, incidentally, good policy. Gallup:

[T]he middle ground of extending tax cuts for low- and middle-income Americans but allowing them to expire for wealthy Americans -- the Democrats' most likely proposal -- is the specific option the public prefers most.

Speaking for me only

Demand is the bottom line. I'll hire more people when there is more demand for my product. - New Jersey small business owner

I spent some time yesterday with a small business owner in New Jersey and I asked him about the different tax incentive proposals being bandied about by the Obama Administration. His reaction? He'll take the the extra money but it won't spur him to hire workers or make capital investments. What will? He said "demand is the bottom line. When demand for my product goes up, then I'll increase capacity, by hiring or making capital investments."

This sentiment echoes the expressions of former Bush Treasury Secretary and Alcoa chairman Paul O'Neill ("I had a rule when I was in the private sector for 25 years, including 13 running Alcoa, and that is, don't hire people unless you have somebody demanding goods that you can't produce with the people you already have.") Robert Reich makes a similar point:

Since actual fiscal stimulus (government spending)is out according to Robert Gibbs, let's hope the next best thing, tax cuts targetted to job creation and the incomes of the working class and the middle class will be the Obama proposal. WaPo reports:

With just two months until the November elections, the White House is seriously weighing a package of business tax breaks - potentially worth hundreds of billions of dollars[. . . .] Among the options under consideration are a temporary payroll-tax holiday and a permanent extension of the now-expired research-and-development tax credit, which rewards companies that conduct research into new technologies within the United States.

Coupled with new middle class income tax cuts (and the expiration of Bush tax cuts for the wealthy), this could be good policy. The issue here though is, Atrios explains, this could be creating raionales for Obama's Catfood Commission to cut Social Security.In any event, the BEST policy options have been taken off the table, real fiscal stimulus. A Lost Decade awaits us.

Speaking for me only

Krugman:

Why do people like me feel the need to revisit the fateful decision to go for an underpowered stimulus right at the beginning of the Obama administration? It’s not about “I told you so”, or at least not mainly. It’s about the economic narrative, which will matter long after the current players are off the scene. [. . .] So I’m trying to keep the record straight here. It may not matter for the immediate political debate, but I think it does matter for the long game.

When you fight for the issues, and not the pols, that's what you do. If you are all in for Obama, then you pretend the stimulus was a "progressive triumph."

Speaking for me only