Glenn Greenwald highlights this episode of Bill Moyer’s Journal, where Rep. Marcy Kaptur and economist Simon Johnson tell us that the big banks on Wall Street “own” Congress. An excerpt:

BILL MOYERS: Let me show you an excerpt from the speech President Obama made on Wall Street last month, September. Here is the challenge he laid down to the bankers.

PRESIDENT OBAMA: We will not go back to the days of reckless behavior and unchecked excess at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses. Those on Wall Street cannot resume taking risks without regard for consequences, and expect that next time, American taxpayers will be there to break their fall.

BILL MOYERS: A reality check. Not one CEO of a Wall Street bank was there to hear the President. What do you make of that?

SIMON JOHNSON: Arrogance. Because they have no fear for the government anymore. They have no respect for the President, which I find absolutely extraordinary and shocking. All right? And I think they have no not an ounce of gratitude to the American people, who saved them, their jobs, and the way they run the world.

Why don’t they fear Obama? Because Obama’s top advisors are their own people, and they own Congress:

While the industry has scaled back its political spending in the wake of last year’s economic collapse, data from the Center for Responsive Politics show that it’s still investing heavily in the Senate, where it’s likely to have its best shot at stopping — or at least shaping — the crackdown on Wall Street that President Barack Obama has proposed.

And it’s clearly looking to Democrats to do it.

Of the $10.6 million the industry has given to sitting senators this year, more than $7.7 million has gone to Democrats.

The clue as to why our government struggles to deal with any substantial problem facing our country today is right there. So long as politicians must run massively expensive campaigns to get themselves elected, they will be in thrall to those who give them the most money. Between that and a media that’s incapable of either understanding or addressing the problems that face our nation, it’s hardly any wonder that some (myself included) find ourselves thinking that our nation is doomed.

Adam and I were talking about this yesterday, about how real unemployement isn’t being reported in most news outlets. The most-quoted figure I’ve seen is the 9.5% seasonally adjusted U-3, and when a number is that qualified you know it’s not quite natural. I just looked up the U-6 measure (the most inclusive measurement) in the current statistics. The percentage of all employable people not working full-time jobs is 16.8%. The U-6 includes part-timers who are looking for full-time work as part of the figure, which is reasonable because a lot of them are part-time because of the economy. The number being reported in the news is the 9.7% U-3, which as you can see is a much more limited measurement.

Now, one thing to note is that the difference between June ’08 and June ’09 using these two indices tell two different stories. From June ’08 to June ’09, the U-3 went from 5.7% to 9.7%, a 4% change. The U-6 changed from 10.3% to 16.8%, a change of 6.5%. So the net change in employment is also worse than is being reported. Some of this is people being shunted into part-time jobs, but the U-1 is a measure of how many people have been unemployed more than 15 weeks or longer, and that has risen from 1.8% to 4.8%. Jobs have really just vanished.

The question is, even when the economy starts growing again, how many full-time jobs are going to come back for people? Even when the economy was supposedly so great back in the Bush years (coming off the Clinton high, that is), people were struggling. Just read Nickel and Dimed by Barbara Ehrenreich. Actually I think I’ve blogged on that subject plenty of times. We keep hearing about how the recession is supposed to end this year or that we may already be at the tail and the economy is starting to recover; we hear that jobs lag behind the economy in general. Either of these things may be true; neither of them means that Americans will be getting well-paid full-time jobs with benefits. Is there any way to change that?

I don’t know the answer to that, but it lies in what industries are going to make the biggest turnaround. I honestly don’t think that even if the automakers come around and turn profitable, they’ll end up re-hiring a lot of people. They’re cutting back as much as possible and if their salvation lies in competing with the foreign auto makers, they’re going to be making more of fewer kinds of vehicles, which means less workers. America needs growth industries that we can take the lead in. We need to invest in an infrastructure to produce new kinds of goods and services that other countries can’t compete with. Things like clean energy, health care and medicine, or eco-science, that the world needs but which can also be profitable industries. It’s time to do something new.

Update: Xanthippas just let me know about this article, pointing out estimates of the real number of unemployed, which is well above even the U-6. Read the article for an explanation of how these numbers are arrived at:

By adding these folks back in, William’s SGS-Alternate Unemployment Measure rose to a jaw-dropping 20.6%. Separately, the Center for Labor Market Studies in Boston puts U.S. unemployment at 18.2%. Any way you cut the numbers, the situation is very bad. According to David Rosenberg, one-in-three among the unemployed have been looking for a job for more than six months and still can’t find one.

That’s about 1 in 5 employable people either unemployed or underemployed. This recession is far from over.

I’m really enjoying the reporting of David Leonhardt, economics reporter for the NY Times. In today’s column he explains how the recession is both broad and deep, but how it also presents an unparalleled opportunity to reduce income inequality in this country not only by redistributing wealth, but by putting people back in school. And there’s going to be a lot of “opportunity” in the coming months.Read it and learn something.

Remember the good old days of summer, when we were debating merely whether the U.S. was actually in a recession or not? Not such much anymore; these days, the “D” word is being tossed around to justify a “do whatever it takes” approach to the economy:

To a degree that would have been unimaginable two years ago, economists and politicians from across the political spectrum have put aside calls for fiscal restraint and decided that Congress should spend whatever it takes to rescue the economy.

A startling range of name-brand economists — Martin Feldstein of Harvard and a top adviser to Republican presidents; Mark Zandi of Moody’s Economy.com and a former adviser to Senator John McCain’s presidential campaign; and Robert B. Reich, secretary of labor under President Clinton — urged Democratic lawmakers on Wednesday to think more boldly than ever before.

“It pains me to say that because I am a fiscal conservative who dislikes budget deficits and increases in government spending,” Mr. Feldstein told the lawmakers. But he said, “Reviving the economy requires major fiscal stimulus from tax cuts and increased government spending.”

The NY Times doesn’t mention it, but their own Nobel Prize winning economist/pundit is telling us we’re facing a crisis as severe as the one that presaged the Great Depression, and bloggers like Kevin Drum are saying the only reason we aren’t already in a depression is because of lessons we learned from the last one. Yeah folks, it’s that bad.

In the New York Times, Michael Lewis and David Einhorn on our broken financial system and how it can be fixed, and Paul Krugman on why the Obama administration and Congress had better get to it quickly before we find ourselves in a sequel to the Great Depression.

They ain’t just sending us checks this time:

President-elect Barack Obama’s advisers hope to finish an economic recovery blueprint by Dec. 25 so that Democratic Congressional staff members can draft legislation by the new year, as the two branches of government try to converge on a two-year plan by late January that could total just under $1 trillion.

Democrats familiar with the early deliberations say the preliminary price tag has grown to about $800 billion from the roughly $600 billion that House Speaker Nancy Pelosi had estimated in recent days.

Mark Zandi, a Republican economist who is advising the Democrats, said in an interview that the worsening economy could push his updated recommendation in January up to $1 trillion for a two-year government stimulus.

About a fifth of the Obama package could go toward health care, Democrats say. The biggest piece would be up to $100 billion to subsidize the states’ growing Medicaid caseloads of the poor. Mr. Obama also will call for a down payment on the $50 billion he proposed during his campaign to help medical providers buy information technology and save costs on health records.

Mr. Obama is considering roughly $200 billion in tax relief for low-wage and middle-class workers, including a payroll tax holiday to fatten paychecks and encourage Americans to spend more and spur economic activity, according to several people with knowledge of the options he is weighing.

The Obama plan has five main parts, according to Democrats in Congress and the Obama transition office. Besides the health care financing, it would propose billions of dollars for energy-saving programs, public works projects, school construction and renovation, and expanded jobless aid and food stamps for “the most vulnerable,” as well as tax cuts.

The scale and speed of the emerging package could exceed anything in recent memory, according to White House and Congressional veterans, in keeping with Mr. Obama’s admonition that the size of the stimulus must be proportionate to the economy’s ills.

One trillion dollars. That is some serious money.

I’m not happy that we’re in a recession, I’m just happy that I was right that we were going into a recession. Yeah, I know, these guys said it started in December and I didn’t flat out call it a recession until the end of January, but hey, I don’t even have a degree in economics, much less the expert counsel of the leading economic scholars in the US. I’d say I was doing alright!

Do I need to round up some links quoting Bush saying we’re not in a recession or going into a recession, since, well, sometime last year? Do I need to round up links showing how that probably wasn’t true since, well, sometime last year? Well, they’re the same posts anyway, but no, I won’t do that. Unless you’re Anne Coulter you should be able to rely on your own memory to recall at least a couple of times where he reassured us that the economy was ok or “the fundamentals of the economy are strong”. Oh wait, was that McCain? Anyway, the point is that I’m nobody special. I didn’t actually figure anything out that anybody else couldn’t have. The only thing I’ve got going for me is I pay attention and I’m skeptical of people who tell us what we want to hear. Truth pretty much shines through, no matter how many layers of BS are laid on top of it. All you have to do is look for it.

That title reminds of the very bad horror movie, “Deep Rising”. Like that movie, this story sucks, but unlike the movie you can’t just get up and leave. As Xanthippas posted recently (like, this morning), the Treasury has decided to focus more on the consumer side of the economy. I’m not an expert, but I’m just really skeptical that this kind of plan will work. I know there are different theories of what part of the economy is the most important to keep it growing. Well, the American economy’s growth was definitely pushed by consumer spending, more than just about any European or Asian country’s. The reason for that, of course, was the ease of availability of credit. But that credit is exactly why we’re in the situation we’re in now. We know that in real terms, American wages have not been growing. People just don’t make as much as they used to compared to the cost of living. Credit came in to help fill the gap between how people could live and how they wanted to live. Unfortunately, that’s had a ruinous effect on the economy. I’m saying that perhaps the answer is not to try to lubricate the economy with credit, but rather that we find a way to free people’s income up from debt to begin with. This will take a bit of work, sure, but in reality people just need to be paid enough to live and buy plenty of goods with cash. We don’t need auto dealers selling cars again to people who can’t really afford them.

Besides which, consumer optimism is going down. How many people are going to walk into the car dealership right now and try to get a new car? It’s not just that the money’s not there, it’s that even people who have money are thinking twice about spending it on something they may not really need. Check out the latest jobless numbers:

The number of newly laid-off individuals seeking unemployment benefits has jumped to a level not seen since just after the Sept. 11, 2001, terrorist attacks, as companies cut more jobs in the face of a slowing economy.

The Labor Department on Thursday reported that jobless claims last week increased by 32,000 to a seasonally adjusted 516,000. That nearly matched the 517,000 claims reported seven years ago, and is only the second time since 1992 that claims have topped 500,000.

The total also was much higher than analysts expected. Wall Street economists surveyed by Thomson Reuters expected claims to increase only slightly to 484,000. Initial claims from two weeks ago were revised upward Thursday by 3,000 to 484,000.

The increase puts jobless claims at levels similar to the recession of the early 1990s. The four-week average of claims, which smooths out fluctuations, increased to 491,000, the highest in more than 17 years.The number of newly laid-off individuals seeking unemployment benefits has jumped to a level not seen since just after the Sept. 11, 2001, terrorist attacks, as companies cut more jobs in the face of a slowing economy.

The Labor Department on Thursday reported that jobless claims last week increased by 32,000 to a seasonally adjusted 516,000. That nearly matched the 517,000 claims reported seven years ago, and is only the second time since 1992 that claims have topped 500,000.

The total also was much higher than analysts expected. Wall Street economists surveyed by Thomson Reuters expected claims to increase only slightly to 484,000. Initial claims from two weeks ago were revised upward Thursday by 3,000 to 484,000.

The increase puts jobless claims at levels similar to the recession of the early 1990s. The four-week average of claims, which smooths out fluctuations, increased to 491,000, the highest in more than 17 years.The number of newly laid-off individuals seeking unemployment benefits has jumped to a level not seen since just after the Sept. 11, 2001, terrorist attacks, as companies cut more jobs in the face of a slowing economy.

The Labor Department on Thursday reported that jobless claims last week increased by 32,000 to a seasonally adjusted 516,000. That nearly matched the 517,000 claims reported seven years ago, and is only the second time since 1992 that claims have topped 500,000.

The total also was much higher than analysts expected. Wall Street economists surveyed by Thomson Reuters expected claims to increase only slightly to 484,000. Initial claims from two weeks ago were revised upward Thursday by 3,000 to 484,000.

The increase puts jobless claims at levels similar to the recession of the early 1990s. The four-week average of claims, which smooths out fluctuations, increased to 491,000, the highest in more than 17 years.The number of newly laid-off individuals seeking unemployment benefits has jumped to a level not seen since just after the Sept. 11, 2001, terrorist attacks, as companies cut more jobs in the face of a slowing economy.

The idea behind the new plan is that if people start buying stuff, the economy will at least halt the decline in actual growth. But I say let’s not be short-sighted here. It was not the freezing of the credit markets that popped the bubble that started all this. It was the fact that at some point, a critical mass of people erupted who couldn’t live up to all the debt they’d taken on. And now, what, we want to start lending mortgages again and selling cars? To whom, may I ask? I’ve kept my job but I’m certainly no better off now than I was 3 months ago. And my next pay raise ain’t gonna bring me up to that magical next socio-economic level. In short, at best, we’re right where we were when the bubble popped: people are still over-stretched and cash-short. Credit can’t help that. Not for must of us, anyway. Millions of people have been saying, “Hey, if we can bail out the giant companies who were so irresponsible, why not bail me out?” And why not indeed? If we’re going to waste that kind of money, just cut me a $2,000 check.

Or better yet, use it to begin an agency that helps people renegotiate their debts, with the power to mandate changes in principal to lenders and set interest rates, and also minimum payments. If you want people spending more on consumer goods, well, they need to have cold, hard cash. Cut their debt payments in half, make them unable to take on so much as a $100 store card at Kohl’s, and let them go. Deduct their debt payments straight from their pay. Make sure they’re getting groceries and other necessaries, and that they have enough cash to waste some on consumer goods. Also, create a federal job force (yes, just like the WPA) to put some actual cash in people’s pockets. It may sound like an enormous expenditure, but even many conservative economists say it’s ok to run up a deficit to get the economy going in a recession (or depression). As a side note, Congress shut down the WPA in 1943 because there was no need for it. With the onset of the war economy, employment ran at nearly 100%. So, why, in all these years since, has no one thought to reinstate a federal work program to keep employment high? It would exert a positive pressure on wages, as people in low-paying jobs could always defect to the federal workforce. Just my thoughts.

In a related story, Business Week tells us that in this recession, you are more likely to lose your job than take a pay cut. Take that as good or bad, whatever you will.

Pay hikes may fall below current expectations, and while employers are planning to raise pay, they are simultaneously cutting jobs. The jobless rate hit 6.5% in October, and many economists think it could reach 8% by late 2009. Employers are also looking for less conspicuous ways to save on benefits, such as reducing 401(k) matches or increasing deductibles and co-payments in health plans. A Watson Wyatt Worldwide survey in mid-October showed that 26% of employers were planning layoffs or other reductions in force in the coming 12 months, while 25% planned to raise employee contributions for health care. In contrast, only 4% were planning to cut salaries. “Firms are cutting workers instead of wages,” says Ethan S. Harris, co-head of U.S. economics at Barclays Capital in New York.

By raising pay while cutting jobs, companies can “thin the herd” while giving remaining workers “the big corporate hug they need,” says William C. Yoh, CEO and president of Yoh, a unit of Day & Zimmerman Group that supplies high-tech temps. Starbucks (SBUX) recently announced it was cutting jobs but isn’t cutting pay or benefits. “We have to take care of our partners [i.e., employees] and keep them engaged,” says spokeswoman Tara Darrow.

Uh, thanks, that’s mighty gracious of you. Well, at least they’re not saying they’re going to start paying people in coffee.

Anyway, now you know more than you did. What say you?

Update: Krugman repeats that drastic times call for drastic measures.