Doom Cycle

Feb 25, 2010

dictionary-150

[Note: updated on 8.10.10]

What does it mean when someone refers to the "Doom Cycle," or "Doom Loop"?

dictionary-150

[Note: updated on 8.10.10]

What does it mean when someone refers to the "Doom Cycle," or "Doom Loop"?

The "Doom Cycle" is a phrase often used to refer to the current boom-bust-bailout structure of the financial sector that leads to economic crises. Simon Johnson has been a major proponent of shedding light on this cycle, which he believes begins with risky investments and dangerous financial practices that lead to increased growth and profitability, but soon bust -- bringing the financial sector to its knees after its inevitable collapse. After the bust comes the bailout, which, although may be necessary at the time, is more harmful in the long run because it does not address the fundamental structural flaws of our financial system. This vicious cycle only continues to grow, and with no salient regulation will continue in perpetuity, bringing with it crisis after crisis.

The "Doom Loop" has been defined in the New York Times as: "a virtueless circle in which banks take ever-greater risks to boost returns (secure in the knowledge the state will underwrite them), and governments are forced to break their promises "never again" to bankroll losses (further encouraging banks to take dangerous risks)."

What is the significance?

The "Doom Cycle" is one of the most significant ideas within the discourse on the current economic crisis. What the "Doom Cycle" offers is an explanation and a solution to the current financial crisis and the conditions which helped to create it. The "Doom Cycle" serves as a framework through which we can begin to address the economic condition of America in the twenty-first century. If we are to avoid another financial meltdown, leading thinkers believe that serious reforms are necessary. Without them, another, worse crisis may be inevitable. Through this idea, we gain a paradigmatic view of the financial system, and are able to understand the attitude and atmosphere that fosters a cycle of risk, gain, and collapse.

Who's talking about it?

Simon Johnson has been outspoken on this issue, and has written extensively on the "Doom Loop," and the next impending financial crisis. The "Doom Loop" has also gained popularity due to a paper published by Andrew G Haldane, Executive Director, Financial Stability, Bank of England, and Piergiorgio Alessandri. Johnson often refers to this paper as an invaluable resource for understanding the "Doom Loop." This concept was discussed in detail at the Roosevelt Institute's conference in New York, 'Make Markets Be Markets', and in an accompanying report written by Simon Johnson, Rob Johnson (Director of the Roosevelt Institute's Project on Global Finance), Nobel Laureate Joe Stiglitz (Chief Economist of the Roosevelt Institute), Elizabeth Warren, and others.

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DREAM Act

Nov 10, 2010

dictionary-150[Note: Updated on 2.16.2011]

What is the DREAM Act?

dictionary-150[Note: Updated on 2.16.2011]

What is the DREAM Act?

The DREAM (Development, Relief and Education of Alien Minors) Act is proposed federal legislation that would allow the children of undocumented immigrants who graduate from high school to earn conditional permanent residency if they complete two years in the military or at college. Eligible students must have entered the US before the age of 16, been living in the US for at least five consecutive years, be between the ages of 12 and 35 at the time of applying, and have good moral character. The legislation was first introduced in the Senate in August 2001 and most recently re-introduced in the Senate and House in March 2009.

What's the significance?

Children brought into the country without immigration visas have no method to obtain permanent citizen status other than through their parents. Normally they have to return to their country of birth to apply for a permanent visa, with no guarantee of eventual citizenship and many potential roadblocks to returning to the US. The Act would give them a chance to stay in the country while giving back through education and service.  It was brought to a vote during the 2010 lame duck session, but failed to achieve cloture.

Who's talking about it?

Harry Reid fulfilled his promise to bring the DREAM Act to a vote during the lame duck session, but it failed, 55-41...A group of Hispanic Republicans came out in favor of the act, saying it is not an entitlement program...Mike Huckabee defended DREAM Act students after Ann Coulter claimed it will subsidize illegitimacy...Daniel Altschuler drew some lessons from the DREAM Act's defeat...Harold Meyerson wondered how long Republicans can afford to keep blocking reform.

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Family and Medical Leave Act of 1993

Oct 28, 2010

dictionary-150[Note: Updated on 2.16.2011]

What is the Family and Medical Leave Act of 1993?

dictionary-150[Note: Updated on 2.16.2011]

What is the Family and Medical Leave Act of 1993?

The Family and Medical Leave Act was signed into law by President Bill Clinton and required covered employers to allow employees to take unpaid, job-protected leave for family and medical reasons. Eligible employees are entitled to twelve workweeks of leave in a 12-month period for the birth or adoption of a child, a serious medical condition or a family member who has one, as well as military caregiver needs.

What's the significance?

The law applies to employees of covered employers, but only slightly more than half of all workers fall into this category, according to a 2000 estimate by the Labor Department. Critics have also suggested that by mandating leave that women use more than men, it makes women more expensive to employ and leads to subtle hiring discrimination. And while the Act protects workers from discrimination based on sex or pregnancy status, it doesn't explicitly protect them based on caregiving responsibilities. Some state and local governments have passed laws that counteract this loophole.

Who's talking about it?

June Carbone and Naomi Cahn call for changes in the Act to promote more family friendly workplaces...Secretary of Labor Hilda Solis explains how the Labor Department clarified the law to cover caregivers for children who share no biological connection...Labor Solicitor Patricia Smith announced that the Labor Department will be focused on enforcing the Act, "which ground to a halt'' under President bush...Democrats want to offer federal employees paid parental leave.

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FAT Tax

May 10, 2011

dictionary-150What is the FAT tax?

dictionary-150What is the FAT tax?

The FAT tax, or financial activities tax, can refer to a number of similar proposals intended to curb excessive speculation and bank profit. One popular variation is a tax on individual financial transactions, such as stock trades, while others include direct taxes on bank profits and salaries.

What's the significance?

Proponents of a FAT tax argue that it would discourage banks and other high-volume traders from the kinds of short-term, high-risk speculation that can seriously distort financial markets.  It would also support broader financial reform efforts by reining in the runaway profits that help make some institutions too big to fail.  Finally, it would help cash-strapped governments close their budget gaps, as even taxing transactions at a quarter of a percentage point could generate over $100 billion a year in revenue.

Who's talking about it?

Paul Krugman argued that taxing speculation would reduce bloat in the financial sector... Jack Metzgar noted that FAT tax revenue could pay off the combined deficit of all 50 states... Dean Baker made the case for a tax to keep traders from treating the market like a casino... CEPR dispelled some myths about the transactions tax... Democrats considered a FAT tax to support new spending programs... the IMF proposed a global FAT tax to help prevent another round of bailouts.

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FDIC: Federal Deposit Insurance Company

Jul 5, 2011

dictionary-150What is the FDIC?

dictionary-150What is the FDIC?

The Federal Deposit Insurance Corporation (FDIC) preserves and promotes public confidence in the U.S. financial system by insuring deposits in banks and thrift institutions for at least $250,000; by identifying, monitoring and addressing risks to the deposit insurance funds; and by limiting the effect on the economy and the financial system when a bank or thrift institution fails.

What's the significance?

An independent agency of the federal government, the FDIC was created in 1933 in response to the thousands of bank failures that occurred in the 1920s and early 1930s. The FDIC helps to prevent bank runs by assuring depositors that they have access to their money. Since the start of FDIC insurance on January 1, 1934, no depositor has lost a single cent of insured funds as a result of a failure.

Who's talking about it?

Bloomberg Businessweek discusses an evaluation of the FDIC... Huffington Post reports on the FDIC's concern/involvement for economic climate(s) overseas... the Wall Street Journal highlights Chairman Bair on capital rule.

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Federal Music Project (FMP)

Aug 20, 2010

dictionary-150What is the Federal Music Project?

dictionary-150What is the Federal Music Project?

The Federal Music Project (FMP) was a federally funded arts initiative committed to the employment of displaced musicians and composers. It was an aspect of the Works Progress Administration of the New Deal and was established in July of 1935 by FDR.

What's the significance?

The FMP employed musicians who had been hit particularly hard by the Great Depression. The program created new orchestras, musicianship courses, and encouraged a revival of traditional music and folk songs. Low cost or free concerts for children and adults provided venues for arts exposure. Retrained musicians could now not only support themselves but increase the supply of talented Americans.

Who's talking about it?

Barbara L. Fredrickson, a reporter at the St. Petersburg Times, argues in favor of a revived WPA and federal arts initiative. Its revival would offer work to thousands of displaced musicians, rather than a stimulus bill that, in her estimation, will go toward more "trinkets and tchotchkes...made in China and paid for with money borrowed from China." Similarly, Bob Gill, Media Manager at St. Charles Community College in Missouri, believes that a resurrected arts initiative might be the appropriate remedy for the economy. Lynn Parramore acknowledges the inspiration difficult times can be for the growth of arts. Perhaps, she argues, a renewed Federal Music Project could discover and nurture the next great style of music, as it did with blues and rock'n'roll.

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Federal Theatre Project (FTP)

Jul 23, 2010

dictionary-150What is the Federal Theatre Project?

The Federal Theatre Project (FTP) was a federally funded arts initiative committed to the employment of artists and directors. It was an aspect of the Works Progress Administration of the New Deal and was established on August 27, 1935 by FDR.

dictionary-150What is the Federal Theatre Project?

The Federal Theatre Project (FTP) was a federally funded arts initiative committed to the employment of artists and directors. It was an aspect of the Works Progress Administration of the New Deal and was established on August 27, 1935 by FDR.

What is the significance?

The FTP employed thousands of displaced artists under the direction of Hallie Flanagan. Chapters of the FTP were given autonomy in the creation of art, often scripting politically and socially relevant plays open to the public for free. These works were often considered to lean to the left, inspiring controversy among the politicians who had originally supported its funding.

Great works of the era included the musical The Cradle Will Rock by Marc Blitzstein and It Can't Happen Here, a political novel written originally by Sinclair Lewis and then adopted for the stage by both Lewis and John C. Moffitt. The Cradle Will Rock, performed for nearly a quarter of the U.S. population, employed thousands of artists using less than 1% of the WPA budget. Famous playwrights who became established with the aid of the FTP included Arthur Miller and Orson Welles.

Who's talking about it?

The Lost Colony, a Pulitzer Prize-winning play written by Paul Green, was a product of the FTP. Considered the longest-running outdoor symphonic drama in the United States, The Lost Colony tells the tale of the original settlements of the United States. It continues to be shown today in an outdoor amphitheater on Roanoke Island, off the shores of North Carolina.

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Federal Writers' Project (FWP)

Jul 9, 2010

dictionary-150[Note: updated on 2.16.2011]

What is the Federal Writers' Project?

dictionary-150[Note: updated on 2.16.2011]

What is the Federal Writers' Project?

The Federal Writers' Project (FWP) was a federally funded arts initiative committed to the employment of writers and the creation of written work. It was an aspect of the Works Progress Administration of the New Deal and was established on July 27, 1935 by FDR.

What is the significance?

FWP employed over 6,600 Americans, ranging from writers and editors to archeologists and geologists. Each state, entitled to its own chapter, hired from the unemployment rolls.

While the main purpose of the FWP was to provide labor, it spurred the creation of great American works, including John Steinbeck's The Grapes of Wrath. One of the notable large-scale products of the FWP was the American Guide Series, which offered detailed histories of every state, city, and town. Notable authors associated with the Federal Writer's Project include John Steinbeck, John Cheever, Nelson Algren, Saul Bellow, Zora Neale Hurston, Ralph Ellison, and Richard Wright.

Who's talking about it?

Mark I. Pinsky, author at The New Republic, suggests that Obama consider the Federal Writers' Project when developing better infrastructure and safety for the media sphere...Similarly, Steve Rosen of CityBeat argues that a revived FWP would help curb the number of unemployed journalists because of the recession...ND20 editor Lynn Parramore notes the ecological disaster of the dust bowl prompted Steinbeck to literary greatness; with the massive failure of BP to properly handle the oil spill, there may be a writer out there looking to capture such a pivotal and altering moment in nature's history...War veterans are being encouraged to tell their stories by the Library of Congress, similar to the slave narratives captured by FWP volunteers.

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Filibuster

Aug 16, 2010

dictionary-150[Note: updated on 2.16.2011]

What is a filibuster?

dictionary-150[Note: updated on 2.16.2011]

What is a filibuster?

The Founding Fathers meant the Senate to be the cooling chamber for legislation, as opposed to the more nimble House. Therefore in the Senate, unlike in the House, debate on a bill can be endless. A filibuster occurs during debate when a Senator refuses to yield the floor and prevents a roll call vote from happening, often killing the bill. Filibusters give a minority of Senators, or even a single Senator, a chance to be heard. Think Jimmy Stewart in "Mr. Smith Goes to Washington."

What's the significance?

While in the past filibusters were used sparingly, coming up in extreme cases such as the defeat of the Costigan-Wagner anti-lynching bill of the 1930s and to stop civil rights legislation in the 1950s and 1960s, they are now used against a wide variety of bills. About two thirds of all filibusters have taken place just in the last thirty years. Even the threat of a filibuster can now derail pending legislation. Richard Kirsch, previously the National Campaign Manager of Health Care for America Now and now a Senior Fellow at the Roosevelt Institute, explains two types of filibuster: the first is a Senatorial line-item veto, such as when "Joe Lieberman single-handedly killed a compromise on the public option that would have expanded Medicare to age 55 for some people. Lieberman in effect exercised a line-item veto on the bill." The second is the "tail wagging the dog": "The filibuster allows a minority of senators to dictate legislation, so that a handful of senators can overrule the wishes of the majority of the Senate or their party."

Some are calling for filibuster reform, but such a move requires 67 votes and getting there will take some heroic vote whipping.

Who's talking about it?

Matthew Yglesias thinks filibusters are the biggest roadblock to making reforms to the systems that sorely need it...Katrina vanden Heuval points to GOP obstructionism as a clear case for filibuster reform...George Packer writes an exposé on the filibuster and other arcane rules that keep the Senate broken...Ezra Klein outlines a way to get filibuster reform with only 51 votes...Jamelle Bouie says filibusters are "bad for reform, period"...Robert Creamer writes that in order to pass the most important parts of the progressive agenda, the filibuster rules must change...An attempt by Senators Jeff Merkley and Tom Udall to significantly change filibuster rules fell flat in January of 2011 after Majority Leader Harry Reid and Minority Leader Mitch McConnell struck a deal that did away with a few minor impediments...Ezra Klein analyzes what Senator Bernie Sanders' filibuster shows about how it works (or doesn't).

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FIRE Sector

Jan 26, 2010

dictionary-150What does it mean when someone refers to the FIRE Sector?

dictionary-150What does it mean when someone refers to the FIRE Sector?

The "FIRE Sector" (also often referred to as the "FIRE Economy") is an acronym that denotes the industries of Finance, Insurance, and Real Estate. FIRE economies are able to generate huge profits without exhausting productive resources, since they rely almost exclusively on labor to conduct their most important work, which is making deals and securing agreements.

What is the significance?

The FIRE Sector has been at the heart of President Obama's economic agenda. From the government bailout of Fannie Mae and Freddie Mac to caps on executive compensation at major banks, and of course health insurance reform, the FIRE sector has been a stalwart recipient of government funds as well as government regulation following the start of the recession.

Who's talking about it?

On New Deal 2.0, Michael Hudson referred to the Democrats' failure to properly regulate or stabilize the FIRE sector as an issue in the mid-term elections in 2010. Writing for Think Progress, Matthew Yglesias examines how we might make sense of the financial collapse of 2008 by focusing on the pragmatics and nuances of the American economy such as reforming the FIRE sector and having a plan for financial institutions--even those "too big"--that will inevitably fail.

 

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