Los Angeles libraries will now all be closed on Sundays and Mondays. Jacket Copy has the Central Library’s new hours and a few quotes on what access to books meant to philanthropist Andrew Carnegie.

The cutbacks are occurring less than a year after Los Angeles completed a 10-year branch library building program, culminating in the Gold-LEED certified Silverlake Branch.

Marilyn Johnson’s LA Times commentary on impending library cuts is a wake-up call. Our municipal libraries are a free source of learning, research, information, job training, and all-around civic improvement, an “engine of democracy” which should not be dismantled or run on fumes.

Glendale is already hosting more Los Angeles residents who find their local libraries closed. Join the Friends of the Glendale Public Library, and speak up to make sure our residents and their children continue to have access to this vital civic resource for all.

For interested readers, here is the KPCC audio of the March 2010 interview with Matthew Bishop, discussing general principles for financial reform and recovery.

The book concludes that while this is not just an American crisis, but a global crisis, no single rival is yet able to knock America off the top leadership spot in the global economy:

“In the future, American leadership will depend on its ability to remake capitalism in a way that is not only more productive but also sustainable, socially and environmentally…no other country is better placed to provide the leadership we need to get out of this crisis.

…America can rise to meet today’s challenges.

Sunroom Desk readers: A very happy (belated) Independence Day!

The Road to Ruin concludes that government action must be effective, bold, and quick, in order to stop downward economic spirals (this week’s market numbers seem to reflect lower confidence in governments’ ability to deal with the financial crisis).

Taking on large deficits to restore liquidity and restrictions on credit has been governments’ habit for at least two thousand years. But doing it right is “easier said than done,” according to author Matthew Bishop:

“…after the 2008 crisis began, fearing the speed and depth of the recession, governments in many countries increased public expenditures as never before.

There was thus much debate about what the policy of stimulus would do to the credibility of various countries in the capital markets. Would investors be willing to finance ballooning government deficits?

…the longer governments wait to act decisively, the more uncertainty and pessimism builds up among consumers and investors that can delay a recovery.

I learned this and other fascinating facts about financiers’ finaglers’ reliance on “moral hazard” to backstop investments, reading The Road from Ruin during travel to and from Washington, D.C., coincidentally as financial reforms were being hammered out in Congress.

The subtitle of the book, whose author was interviewed at KPCC back in March, is “How to Revive Capitalism and Put America Back on Top.” More on the book’s recommendations for financial reform legislation, and a comparison to what is now before the Senate, later this week.

The initial package was passed during an early summer heat wave, which I experienced first-hand. Senator Robert Byrd (D-WV) was initially hospitalized with symptoms of dehydration and heat exhaustion; his death has thrown passage of the financial reform bill into doubt.

California faces a $20 billion deficit in the 2010-2011 fiscal year. Liu is Chair of the Senate Human Services Committee and Chair of the Senate Budget Subcommittee on Education, and represents close to 850,000 people in the 21st district, including Burbank, Glendale, Pasadena, La Cañada Flintridge, San Gabriel, Temple City, and several City and County of Los Angeles communities.

Senator Liu’s online announcement. The Glendale Central Library is located at 222 E. Harvard Street in Glendale.

First, Define the Problem – The Economist; Back to Basics on Financial Reform – Wall Street Journal; and Senate probe: Goldman planned to profit from housing bust, made billions at clients’ expense – LA Times.

Within The Economist’s link, but also in other articles over the past months, “innovation” is defended in either a neutral or positive sense with respect to financial instruments that contributed to this Great Recession. What is innovative about hedging a bet, or devising clever ways to con others into losing bets? Could Goldman Sachs and other investment houses have lost as much money, and caused as much economic pain, if they had made big bets in real innovations, such as research and technology leading to clean, cheap, renewable energy?

In the book just purchased, author Robert Heilbroner explains the observations of the great economists he profiles. Thorstein Veblen posited that exploiting breakdowns in information, and creating what sounds like bubbles, were the main ways to make profits. Veblen’s main examples were 19th century robber barons, who competed with each other to maximize profits at the expense of the public. John Maynard Keynes showed that in an economy that separates savings from investment, there is “nothing automatic” that channels savings toward productive investment. Has anything changed?

Revised several times, the author concludes in the 1980s edition I purchased with a list of basic questions economic thinkers posed about society, politics, and economics, that are unresolved to this day. Resolved in my mind, though: the Friends of the Library book sale purchase was a good investment.

The local partnership created Verdugo Power Academy to address the impending shortage of utilities workers. Fast-tracked with federal stimulus funds, the Verdugo Power Academy started up in fall 2009 and celebrated with its first graduating class in January 2010. According to the association:

The whole process went from concept to reality in five months with the excellent leadership of the award winners. Three 16-week, 600-hour classes were offered in 2009 and will continue in 2010. The class covers necessary skill sets for utility workers such as electrical line mechanics, technicians, craft workers and station electricians.
…The program was endorsed by a local consortium of 13 utility and power companies from Southern California, the Southern California Public Power Authority.

Verdugo Power Academy’s specialized training and collaboration with GWP is attracting students throughout the region. The Academy has also just received word that Southern California Edison approved its program, so graduates will have a range of employment opportunities.

September 2008 was a defining moment; but now the real danger is sliding back into a comfort zone without enacting needed changes in the financial system.

The capitalist system has serious flaws that the September 2008 crisis revealed, but the debate on these flaws isn’t happening.

No one in an important policymaking position now is independent from the problem – “They got us into this mess, and they aren’t the people to get us out.”

Patt Morrison asked “How do you change what is essentially a Cro-Magnon incentive system?” Bishop’s answer: “There is nothing natural about capitalism: it is a product of the rules we set. Markets work best when they have clear rules and the rules are well-designed.”

Patt Morrison asked “What’s anticapitalist?” then went on the argue that average American interests aren’t being served by the export of jobs to countries with lower labor costs.

Bishop countered that financial literacy needs to be raised in this country, and that the financial sector profited in a very scientific way off the ignorance of consumers. Individual pension plan owners must insist that managers adopt a Warren Buffet strategy of long-term holdings and investing only in attractive companies with good bottom lines. Wall Street will change strategy only if led by the large pension funds.

A future post will cover the substance of the interview. Today’s post is to congratulate KPCC and Southern California Public Radio on the completion of a beautiful new facility, including the Crawford Family Forum, the community meeting space where the interview took place.

The Glendale News-Press weekend editorial, A Tale of Two Districts, contrasts recent Glendale Community College staff concessions with the Glendale Teachers Association’s refusal to accept reduced benefits. I heard the GTA president speak last week, and was struck by the union’s lack of awareness. Almost everyone else these days is making do with fewer health benefits and paying more for health insurance.

Class War: How public servants became our masters shows (with most examples in California) that benefits and pensions allocated to public employee unions are more generous than private-sector packages, often politically motivated, and clearly unsustainable.

Public Employee Unions Are Sinking California, according to the Wall Street Journal, which reports the following data to back its claim -

Approximately 85% of the state’s 235,000 employees (not including higher education employees) are unionized. As the governor noted during his $83 billion budget roll-out, over the past decade pension costs for public employees increased 2,000%. State revenues increased only 24% over the same period. A Schwarzenegger adviser wrote in the San Jose Mercury News in the past few days that, “This year alone, $3 billion was diverted to pension costs from other programs.” There are now more than 15,000 government retirees statewide who receive pensions that exceed $100,000 a year, according to the California Foundation for Fiscal Responsibility.

Meanwhile, the LA Times reported this past week that CalSTRS is facing a $43 billion shortfall; the Orange County Register Watchdog blog continues its series on retired educators receiving more than $100,000/year in CalSTRS payments; California Pension Reform maintains a list of “top ten” CalSTRS recipients (number one gets $285,460.92 yearly); and CalPERS held a one-day forum on “ensuring future retirement security”, attended by public pension managers, union representatives, and government officials (one pension reform advocate was invited).

So many articles have been published just in the past week on this subject that they won’t all fit under the Sunroom Desk Paperweight. Pension Tsumani’s sidebar, with an extensive daily archive, is a good source for more reading on the subject.