The Russian-Ukrainian dispute over gas is a mess of economical, political and geostrategical dilemmas. It tears at conflicts both open and latent between the two countries, between both countries and the EU, and between large and small countries inside the EU.

But in the meantime, ordinary people in Serbia, Macedonia, Bulgaria, Romania and Bosnia are left in the cold – literally. The AP report telling the story has the quote of the day:

“People are fed up with thinking globally but freezing locally,” said Valeri Naidenov, a newspaper columnist.

"Soup line", part of Franklin D. Roosevelt Memorial (Image used under CC license from Flickr user Gabriel Millos)

If the erupting economic crisis hasn’t already led to soup lines and double digit unemployment, Kevin Drum argued yesterday, it is only thanks to the safeguards that were put in place since the crash of 1929.

Without Social Security, Medicare, unemployment insurance and deposit insurance; without the Treasury pumping capital into the banking system and the abandonment of the gold standard, we would already have reached that point.

So “thanks, FDR,” Drum writes*, “thanks, modern mixed economy” – and thank you LBJ as well, Eisenhower too, and all their counterparts here in Europe for that matter. Add those to your reasons to be cheerful. If it had been up to the Goldwater-Reagan ideology, this crisis would already have incurred much more suffering.

_____

* Though it’s an interesting afterthought that Roosevelt, “concerned about the moral hazard” involved, actually opposed creating the deposit insurance system, along with banking industry groups. Seems like the idea actually came from his left: he thought it went too far and even threatened to veto the legislation.

I’m guessing this might be a first: a dub reggea track about the international financial crisis. Called “The international financial crisis”. Could someone please explain to me / this problem with liquidity? Should be #1 in the guy’s MySpace playlist.

Mr Brown he acted quickly
for that we must give him thanks,
He made a Big Decision
and he nationalised the Banks,

France and Germany
they quickly followed suit,
It’s a tempory solution
now we got to get to the root
of this …

International Financial Crisis
International Financial Crisis

Then again, JC Carroll isn’t your average rastaman. Once upon a day, in 1976, he was a trainee merchant banker. Then he joined The Members, which were good for a couple of definite UK punk classics. I still play their Solitary Confinement and Sound of the Suburbs – infectiously simple songs that combined the punk spirit with an irresistible guy-next-door vibe. Check their Wikipedia page for an odd little rundown of events that feels like one of the band members must have had a hand in it – judging on all the talk about “the Tesco-Carroll axis that .. dominate[d] the band” maybe JC himself?

Fast forward 30 years: Tesco’s been in a couple of bands, including the hilarious Leningrad Cowboys, and become a journalist at Music Week, while Carroll established a clothing shop or two and is now online on sites like these. I’m a sucker for obscure post-rock fates and all the idiosyncrasies involved in journeys like the one from here to here. For curiosity value, then, check out the YouTube vid of Carroll announcing and performing the “World Exclusive” of International Financial Crisis on “the legendary Manhattan Cable Show” Rant and Rave too. The MySpace version is definitely better, but … yeah, I’m a sucker for meandering life paths.

Anyway, Carroll may have the first dubby take, but there is, apparently, already something called “recession pop”. And I had to hear it from my septuagenarian father, who got it from the Freakonomics blog. The couple who sent in a home video of their song Fannie Mae Eat Freddie Mac and Cheese surely rival Carroll’s Rant and Rave performance, and Casey Shea’s “hushed and hopeful” Everybody’s Getting Bailed Out (Except for Me) brings romance to the economic angst. But the “noisy and apocalyptic” third exhibit will have to be the poster child for recession pop for now:

Constantines – Credit River

This is Josh Moulitsas-Soros, acting CEO of Observationalism.com.

Most readers know that the views expressed on this blog are…

OK, just joking.

Ezra Klein uses the progressive blogosphere’s shitstorm in a teacup of the day to reflect on the agenda of the Third Way think tank, and how events since 2004 have overtaken it and made it irrelevant. It’s a good way to consider just how different things could have gone – and while we’re at it, to consider the looming reversal of roles between US liberals and European lefties.

It’s just four years ago, when Third Way was announced on November 11th, 2004, that this seemed like a good idea:

This was a week after John Kerry lost the presidential election, and the young organization was sold as a DLC for the next-generation. “As Democrats continue to stagger from last week’s election losses, a group of veteran political and policy operatives has started an advocacy group aimed at using moderate Senate Democrats as the front line in a campaign to give the party a more centrist profile,” wrote The Washington Post.

In other words, Third Way was formed under the theory that the Democrats’ problem in 2004 was that they were too far to the left, and as such, had lost middle class voters. The organization focused on upper middle class voters and followed the Mark Penn strategy of machine gun bursts of small, bite-sized policies meant to attract professional whites and rural voters.

Ezra does a good job in briefly sketching how quickly the Third Way’s strategy became an anachronism:

This year, Barack Obama was, on domestic policy, the most moderate of the major Democrats, which put him substantially to the left of every major Democrat running for president in 2004. His health care plan was more universal than Gephardt’s, his Iraq plan was more aggressively focused on withdrawal than Dean’s, and he was a black liberal from an urban center. Clinton and Edwards ran on similar platforms. None of them bore any obvious resemblance to the office park bait Third Way advocated. [..]

Third Way [..] were built as the vessel for a particular argument about the path to a Democratic resurgence, and their side of that debate lost. [..] Democrats have won atop something like the opposite of their advice and very different from their predicted majority coalition, which may explain why they’re acting so defensive.

All of which provides a good Zen moment to consider, even amidst my kind of bellyaching about Obama’s appointees, the blessings there are to count. You could have ended up with the Third Way recipe. Instead, the Democratic Party’s has moved left even as it gained political dominance.

This doesn’t just hold up in comparison with what the future looked like in 2004, either. Take the 850 billion euro economic stimulus plan the Democrats are preparing. That’s 6% of America’s GDP, more or less. Now compare the €200-billion stimulus plan that EU leaders eventually agreed on last week that involves the member states pumping the equivalent of 1.5% of GDP into their economies.

Alternatively, consider the £20-billion British stimulus package that Gordon Brown is proposing. On the eve of the EU summit, it stirred the German finance minister into a frenzied tizzy in Newsweek about “tossing around billions,” a deplorable “breathtaking switch” to “crass Keynesianism,” and the “breathtaking and depressing … speed at which proposals are put together .. that don’t even pass an economic test” – and that’s a plan that involves, if I’m getting the numbers right, all of 1.6% of British GDP.

Basically, after years in which European lefties like me groaned about a Democratic Party so milquetoast it would be a right-wing party in our countries, we’re suddenly faced with American peers who are moving more boldly to tackle the economic crisis than any EU government seems able or willing to do. While Obama’s party appears to be prepping a rapid shift of perspective to rediscover the wisdom of Keynesianism, the European governments are shackled by the EU’s deficit rules. It might not be long before we actually cast a jealous eye on those American peers we disdained just a few years ago.

After I passed on John Judis’ take on the auto bailout here, we had a bit of a discussion in the comments section. So who could sketch my amazement to see, via TNR, that Bill Kristol – that Bill Kristol – gets it. Here he was, last Monday:

Last week, Senate Republicans picked a fight with the U.A.W. on union pay scales — despite the fact that it’s the legacy benefits for retirees, not pay for current workers, that’s really hurting Detroit, and despite the additional fact that, in any case, labor amounts to only about 10 percent of the cost of a car. But the Republicans were fighting Big Labor! They were standing firm against bailouts! Some of the same conservatives who (correctly, in my view) made the case for $700 billion for Wall Street pitched a fit over $14 billion in loans for the automakers.

There is, of course, plenty in his column to take issue with as well. But there don’t seem to be many nits to pick with this summary:

So Senate Republicans chose to threaten to filibuster the House-passed legislation embodying the George Bush-Nancy Pelosi deal. The bill would have allowed President Bush to name a car czar, who could have begun to force concessions from all sides. It also would have averted for now a collapse of the auto industry, and shifted difficult decisions to the Obama administration.

Instead, Bush will now probably have to use the financial rescue funds to save G.M. [..]. And Senate Republicans now run the risk of being portrayed as Marie Antoinettes with Southern accents.

Read John Judis on how the Republicans torpedoed the auto bailout.

Almost thirty years ago, an automotive CEO appeared before Congress to ask for help.  His company was failing due to poor management decisions, run away gas prices and an overall economic slowdown.  If only he could get enough money to stay in business, his company’s next generation of small, fuel efficient cars would hit the market and lead to the company’s success.  His company employed 40,000 US workers and laying them off would be a disaster at a time when the economy was already struggling.  He’d even work for a dollar a year.  Sound familiar?

Again with the caveat that I haven’t really caught up yet with the transition news of the last week, the confirmations from before surely mean that there’s one man who must not be happy. On the day after Obama’s victory, Dissent‘s Mark Engler celebrated:

Obama rose to the top of a Democratic pool that, as a whole, positioned itself notably to the left of what we had come to expect in the Clinton-Gore years, when top officials scrambled to prove their pro-corporate bona fides and to declare their allegiance to the Democratic Leadership Council. Today’s contenders, while far from perfect from a progressive perspective, campaigned as opponents of an unjust war and of faulty trade agreements such as NAFTA, as advocates of pro-worker labor law reform and of serious national health care.

But he already warned:

To be sure, the .. more contemporary fight to thwart the rightward-pushing forces within the Democratic Party .. is not over. The likes of Robert Rubin and Larry Summers hover over Obama’s victory.

Larry Summers at the World Economic Forum in Davos, 2007

I bet he didn’t realise just how much they’d “hover”. With the appointments of Geithner, Summers and Orszag, I’m guessing Engler must have gotten a lot more worried still. As Ezra Klein noted:

For critics of so-called Rubinomics, [..] watching Rubin’s proteges step into every major economic staffing position in the new administration has been concerning. Watching them do so as Goldman-Sachs, which Rubin once led, and Citigroup, which Rubin recently advised, get buffeted by the subprime collapse is almost perverse.

To be fair, however, the opposition within the Democratic Party between the neoliberal, Rubinite cheerleaders of deregulation and the progressive sceptics of free market solutions no longer has the bitter edge it had in the 90s. And the main reason for that is that experience has taught Summers et al. to be more sceptical themselves.

Consider what The American Prospect’s Robert Kuttner, himself a progressive critic of Rubinomics, wrote about Geithner last September:

CEO’s see the benefit so early they never even notice it.  For the very successful, the key date may have been in May or June.  But for most very successful Americans, when the cool weather rolls in and the Christmas music starts, they have another reason to celebrate: their pay increases.  Their employers haven’t decided to be extra generous in November or December, but their pay will step up by over 6% for a few weeks or months.  The more you make, the longer your pay increases.  Why does this happen?  They exceed the Federal Insurance Corporation of America (Social Security) tax threshold.

I’ve always wanted to be a Sun headline writer.

Soon it will be grape juice of wrath for mistresses, as the Moët’s off the table now multimillionaires are moved to downsize their despicable deeds of decadence. This shocking scoop comes courtesy of the Wall Street Journal (h/t TNR), which has its finger all over the pulse:

According to a new survey by Prince & Assoc., more than 80% of multimillionaires who had extra-marital lovers planned to cut back on their gifts and allowances. [..]

“Rich people are getting hit, and they’re all expressing the need to curtail unnecessary spending,” said Russ Alan Prince, president of Prince & Assoc., a wealth-research firm based in Connecticut. “Lovers are part of the same calculation.” [..]

Fully 82% of men in the study said they planned to lower the allowances to their mistresses, while more than three quarters planned to provide fewer gifts, less expensive gifts and fewer perks, like jet rides, resort vacations and top restaurant meals. [..]

“What we found in talking to the respondents is that the magic of the relationship with their lover fades after a while, so they’re more willing to let them go,” Mr. Prince says.

In my post, after the third presidential debate, about McCain’s efforts to make “spreading the wealth around” sound like the most ominous thing, I quoted Ezra Klein as saying that “for most folks, spreading the wealth around probably seems like a good idea” right now.

This is correct, Brian Schaffner of the CCPS argued yesterday at his new home on pollster.com. Taking as lead how the ABC/WaPo poll hasn’t shown any movement this month on the question which candidate is trusted more on the question of taxes, he digs up data showing so from a 2003 survey conducted by NPR, the Kaiser Family Foundation and the Kennedy School of Government.

Moreover, in case you’re feeling doubtful about those sponsors, the same thing is largely confirmed by Gallup data, which the polling firm’s in-depth look at the issue on Thursday revealed.

Schaffner argues that the McCain camp’s insistence that Obama’s proposal to raise taxes on the top 5% of income-earners smacks of class struggle and socialism doesn’t drill into much of a popular perception. It isn’t surprising “that McCain hasn’t gotten much traction by criticizing the fact that Obama wants to increase taxes for high income Americans,” Schaffner writes, because the 2003 survey actually showed that most Americans believe “high income people pay less than their fair share”. Over 60% of Independents, over 70% of Democrats and even a plurality of Republicans  agreed. Barely over 10% of independents and some 30% of Republicans, on the other hand, thought that high income people “pay more than their fair share”:

The Gallup polling data doesn’t directly address the question whether wealthy Americans pay enough taxes, but it does show a majority of Americans believing that “the distribution of money and wealth in this country” isn’t “fair”. Throughout intermittent polls in the last twenty-odd years, an ample majority opined that wealth should be “more evenly distributed among a larger percentage of the people,” while just 27-37% believed that the current distribution is fair:

Two details strike me in this graph. The opinion that “spreading the wealth around” seems like a good idea isn’t just something that’s coming up “right now”, in the face of a financial crisis; it’s actually been pretty consistent through the years. But there’s two kinds of variations over time.

This one comes via Kevin Drum at Mother Jones:

Yes – between the beginning of 2002 and the end of 2006, the United States GDP grew by over 15% – while the median wage flatlined, not going up by a single percent. In short, the country got ever richer – but the middle class saw nothing of that wealth. It was pocketed in its entirety by the wealthiest, with an assist from the tax cuts that the Bush administration heavily slanted in their favour.

Are there any recent historic precedents of such a disconnect, in which double-digit national economic growth was not accompanied by any improvement whatsoever for the average American? Was it this bad under Reagan, or Thatcher?

Pondering these numbers, Drum approvingly quotes an article by Joe Klein on Time’s blog Swampland: “We have had 30 years of class warfare, in which the wealthy strip-mined the middle class.” He adds:

For three decades we’ve artificially kept middle class wage increases far below the growth rate of the economy, and this trend has been even more pronounced over the past eight years. This has created an enormous pool of extra money that’s been — yes — strip mined and redirected to the rich, and fixing this is Barack Obama’s biggest and longest-term challenge.

If we restore the normal growth of middle class wages, it provides a sustainable consumer base for the entire economy; it reduces the demand for endless credit card debt; it brings down income inequality naturally; and it goes a long way toward keeping the financial sector under control and reining in Wall Street salaries without putting in place a bunch of artificial (and probably fruitless) regulations. [..] Stop the strip mining and economic vigor will follow. It’s at the core of everything.

UPDATE: Lane Kenworthy, a Professor of Sociology and Political Science at the University of Arizona, had a blog post earlier this month that traces the trend further back, to the Reagan era: Slow Income Growth for Middle America (h/t to A2K user Hawkeye). The pattern is pretty devastating – and he’s got a telling graph too: