The creation of fiat official government money has had a profound effect in history and on our nation and the world today. “Fiat” means it is worth whatever the government says it is (its face value), although the material of which it is made may have more or less intrinsic market value. Examples would include both valuable silver dollars and worthless paper, each declared to be worth $1; and today’s American Eagle bullion coin with a face value of $50 for one ounce of gold.
Normally, when a country creates too much fake money, sellers avoid it for payment, or stop buying its bonds due to its falling value, and the party is soon over. However, the U.S. is in a unique positionnever seen in the history of the world. Our fiat paper money is the primary de facto world’s “reserve currency” (anyone will accept it for payment and keep it as cash, or as a dollar-denominated asset; banks keep it as their reserves, like gold). We can create new money out of thin-air, and sellers of goods and services worldwide will accept it. We can also pay our debts with it, even as the federal government spends to excess.
We have abused the privileged status of the U.S. dollar in many immoral and counterproductive ways. It is the underlying cause of our major problems, such as jobs being exported due to excess imports of goods (other countries would run out of money; the U.S. can create more as needed!), strange banking and securities deals based on loose money, excess personal spending and debt, and wars.
One cannot underestimate the importance of our ability to pay debts to other nations, and not be required to convert to their money. This conversion would normally trigger market valuation, which could collapse the value of the U.S. dollar. Conversely, other nations must buy dollars to pay for most imports, and face declining exchange rates if they have expanded their money supply too much. We have abused this reserve status, and as of mid-2009 other nations started seeking alternatives (yuan, yen, a basket of currencies, etc.).
Most people are not aware that the reserve currency is used for most payments between other nations; for example, India pays Brazil for coffee with U.S. dollars. Hence, allnations keep a supply of U.S. dollars to use in trade. All banks are required to have sufficient reserves in order to show a strong asset base for the bank’s obligations (mainly demand and time deposits). Since the USD has been valued by the world system to be “as good as gold,” it is known as a reserve currency and used instead of gold to fund these bank reserves. The Dollar has been used in about 90% of international transactions since its ascendancy in the 1920s, but has become weaker since 2000, and declined to 70% or less by 2009. About 30% of international deals are now done in Euros and Yen, but that is increasing as the economies and currencies of China and others grow stronger. Indeed, China started using its yuan for international transactions in 2010, and also allowed foreign firms to create yuan-denominated private equity funds.
If you want to know what tyranny is like, look around.
The national government — specifically the executive branch — can do pretty much what it wants. It could bomb Iran tomorrow without a declaration of war from Congress. It can — and does — conduct secret wars and covert operations against countries that have done nothing to us. Of course, they are secret only to the ignorant taxpayers who must finance them and perhaps suffer when the provoked retaliation occurs. It can have men behind PlayStation consoles in Nevada fire Hellfire missiles from aerial drones on people in Pakistan, Yemen, and elsewhere.
This tyrannical government can send any foreigner picked up anywhere in the world to third countries known for torturing prisoners. It can hold people accused of nothing indefinitely in prisons in Cuba and Afghanistan and torture them into making false confessions. It can conduct a war crimes trial in a military kangaroo court for a man, Omar Khadr, held captive for eight years after he was picked up at the age of 15 during a U.S. assault on villagers near Kabul. His torture-induced “confessions” will be admissible. All this is in violation of commitments under the Optional Protocol on the Involvement of Children in Armed Conflict not to treat children in war as though they were adults.
It can assassinate even American citizens abroad without a scent of due process.
It is a government that can write its own warrants without judicial review — and call them national security letters — in order to conduct fishing expeditions in anyone’s electronic records. But that isn’t enough power for the present Progressive administration, which wants the freedom to examine our browser histories and email correspondents’ names. The Bill of Rights, like the Geneva Convention, has become “quaint” and obsolete.
Like any self-respecting tyranny, it tries to keep the truth from its subjects. Comforting words camouflage the 50,000 armed and combat-ready troops that will remain in Iraq after “withdrawal.” Their “primary” mission is to train an army whose own general says won’t be ready for years. This gross deception follows on the heralded “surge,” which supposedly turned things around in Iraq. What “worked,” however, was not U.S. military prowess or Gen. David Petraeus’s brilliance, but the spreading of American taxpayers’ cash to buy off Sunni insurgents and the denouement of ethnic cleansing in Baghdad.
And, again, like any self-respecting tyranny, it bridles at leaks of classified documents that tell the people the truth. Solemn administration officials condemn Wikileaks and its sources for supposedly jeopardizing U.S. troops and Afghan collaborators, while adding that nothing new had been revealed. With no sense of irony, the same officials find blood on the hands of Wikileaks’ Julian Assange, ignoring the rivers of blood their policies and weapons have produced in the Middle East and South Central Asia. Without those policies, there would be nothing to leak. Some call for the assassination of Assange, and for all we know he is on President Obama’s kill list. Meanwhile a courageous young soldier, Bradley Manning, who apparently leaked video of American troops committing cold-blooded murder in Baghdad, faces 52 years in prison.
Now we are being softened up for the next war, against Iran. As in 2002 with Iraq’s phantom WMDs, the empire advance men tell us Iran is building nuclear weapons, and Obama and Secretary of State Clinton say “all options are on the table,” which phrase includes hydrogen bombs. Once again a Big Lie is repeated without proof. The reason is simple: all evidence runs the other way. The government’s own intelligence agencies say Iran has no nuclear-weapons program, and the International Atomic Energy Agency is on the scene. But no matter. If it suits the tyrannical administration or its partner in empire, Israel, bombs of some kind will fall. The consequences all around will be horrible.
Can it really be tyranny if we get to vote? Yes. Thomas Jefferson warned of “elective despotism.” How valuable is your one vote when the government manipulates and distorts the flow of information, when Congress capitulates, and when the “adversarial” mainstream media act like government press agents, if not adoring lapdogs. The ugly truth is out there, but you have to want to know it.
In this June 2009 speech in the U.S. House, Congressman Paul described the threat posed by continuing to follow failed policies and described how America can return to prosperity.
The American middle class is on the verge of disappearing, while the United States, itself, is in danger of becoming a third world country, a leading German newspaper says.
According to an article appearing in the German newspaper, Der Spiegel, the negative consequences of the global financial crisis include a widened social class rift and the elimination of the middle class in the US.
The article states that many Americans are beginning to realize that the American Dream has now become a nightmare as people are having to face the bitter reality of a shrinking job market along with decades of stagnating wages and dramatic increases in inequality.
More than a year after the official end of the recession, the overall unemployment rate remains consistently above 9.5 percent. But this is just the official figure. When adjusted to include the people who have already given up looking for work — or are barely surviving on the few hundred dollars they earn with a part-time job and having to use their savings to supplement their income — the real unemployment figure jumps to more than 17 percent.
In its current annual report, the US Department of Agriculture notes that “food insecurity” is on the rise, and that 50 million Americans were unable to buy enough food to remain healthy at some point last year. One out of every eight American adults and one out of four children now survive on government food stamps. These are unbelievable numbers for the world’s richest nation
Last week, leading online columnist Arianna Huffington issued the almost apocalyptic warning that “America is in danger of becoming a Third World country.”
In a recent cover story titled “So Long, Middle Class,” the New York Post presented its readers with “25 statistics that prove that the middle class is being systematically wiped out of existence in America.”
“What do you expect when you make a deal with the devil. Like Obama’s Financial “Reform” Bill… which greatly expands power to the Federal Reserve and puts more toxic derivatives in the market. You know… the two things that got us into this whole mess in the first place. Ummm… ranting on Friday.”
Fred Face 8/20/10
By MARTIN CRUTSINGER (AP)
WASHINGTON — Nearly half of the homeowners who enrolled in the Obama administration’s flagship mortgage-relief program have fallen out.
A new report issued Friday by the Treasury Department said that approximately 630,000 people who had tried to get their monthly mortgage payments lowered through the effort have been cut loose through July. That’s about 48 percent of the 1.3 million homeowners who had enrolled since March 2009. That is up from more than 40 percent through June.
The report suggests foreclosures could rise in the second half of the year and weaken the ailing housing market, analysts say.
Another 421,804, or 32.3 percent of those who started the program, have received permanent loan modifications and are making their payments on time.
Many borrowers have complained that program is a bureaucratic nightmare. They say banks often lose their documents and then claim borrowers did not send back the necessary paperwork.
The banking industry said borrowers weren’t sending back their paperwork. They also have accused the Obama administration of initially pressuring them to sign up borrowers without insisting first on proof of their income. When banks later moved to collect the information, many troubled homeowners were disqualified or dropped out.
Obama officials dispute that they pressured banks. They have defended the program, saying lenders are making more significant cuts to borrowers’ monthly payments than before the program was launched. And some of the largest mortgage companies in the program have offered alternative programs to those who fell out.
The Obama plan was designed to help people in financial trouble by lowering their monthly mortgage payments. Homeowners who qualify can receive an interest rate as low as 2 percent for five years and a longer repayment period.
The United States by every measure is hanging on by a thread to its First World status. Saddled by debt, engaged in wars on multiple fronts with a rising police state at home, declining economic productivity, and wild currency fluctuations all threaten America’s future.
The general designations of the ranking system for world status date back to the 1950s, and have included countries at various stages of economic development. Since the Cold War, the definition has come to be synonymous with repressive countries where a wealthy class of ruling elites segment society into the haves and have-nots, many times capitalizing on the conditions that follow an economic crisis or war.
While much of the world is still mired in poverty, the reduced cost of innovative tools such ascomputing and connectivity ironically puts traditional Third World countries at the forefront of a new lean-and-mean economy that is based on ideas of empowerment for the disenfranchised. For better or worse, the world is leveling due to Globalism. However, America and other over-leveraged countries face this re-balancing of the globe at a time when they have dwindling resources. We can speculate about who and what is to blame for America’s fantastic fall, but for the purposes of this article we shall focus on the obvious signs that the United States is beginning to resemble a Third World country.
1. Rising unemployment and poverty: Unemployment numbers, food stamps, and home foreclosures continue to reach new record highs. The ugly reality of those numbers was recently on display when 30,000 people showed up to apply for public housing in East Point, GA for 455 available vouchers. Fights broke out, people were fainting from the heat while in line, and riot police showed up to handle the angry poor.
2. Economic dependence: The United States finished 2009 with a debt-to-GDP ratio of 85%, according to the International Monetary Fund (IMF). The current trend projects the United States to finish 2010 at 94% and 2011 at 98%. The 90% level has become the IMF’s make-or-break point for countries hoping to grow their way out of debt. If the government debt load climbs above 90% of GDP, economic growth slows so much that growth is no longer a viable solution for reducing that debt, and the IMF insists on austerity measures. Surpassing this debt threshold has also caused China’s lead credit rating agency to cut America’s credit rating.
3. Declining civil rights: Everyday freedoms are often a casualty of a society in collapse. As the anger of the populace mounts in response to declining economic conditions and political corruption, the government counters by increasing draconian measures that restrict the political rights and civil liberties of its citizens.
America is becoming a country like China, which has one of the lowest scoresaccording to Freedom House. In America, private discussions and movements aremonitored, free speech is corralled, the freedom to assemble for protest is bygovernment decree, and independent thought that questions the political system is increasingly looked upon with suspicion. A final indicator is when the government insists upon secrecy for its own actions, while new laws and systems are created to put the individual under nearly constant surveillance.
4. Increasing political corruption: When political corruption becomes the accepted norm, as opposed to the exception, then there’s a good bet your country resembles the Third World. Congress and all major institutions face a growing crisis in confidence, where a record-low 11% of the population believe Congress is doing a good job. It now seems obvious to all observers that big corporations directly control the agenda in Washington — much like typically corrupt Third World countries.
5. Military patrolling the streets: The rise of a militarized police state is a hallmark of most Third World countries, particularly in times of rapid economic collapse. America’s declaration of the War on Terror has created a constant threat to National Security that has allowed for themilitary to be deployed on American soil. Building upon the War on Drugs, this has created a fusion between the military and local police, where military-grade weapons and tactics are being used against American citizens in a cascade of violent confrontations over non-violent offenses. Militarycheckpoints are moving farther inland, away from meaningful border control functions, and a full-blown military presence in American cities has been planned by the U.S. Army War College.
6. Failing infrastructure: As 46 of 50 states are on the verge of bankruptcy, cities are going dark, asphalt roads are returning to the stone age, and nationwide budget cuts are leaving students without teachers, supplies, or a full-time education. These are common features one will see as they travel through the poorest of Third World countries.
7. Disappearing middle class: During the last presidential debate season, they argued that a family income of $250K was solidly middle-class. Well, Census data shows less than 15% of families make over $100K, and only 1.5% of families make over $250K. The income gap between the rich and poor has increased at a staggering pace, while many more middle-class folks join the ranks of the poor every day. Cavernous income gaps may be what Third-World nations are best known for.
8. Devalued currency: The value of the Federal Reserve Note (U.S. dollar) hasdeclined 96% since the inception of the Federal Reserve in 1913. The value of the dollar is based on its supply in circulation and, to a lesser extent, the demand for those dollars. For the last three years, the money supply has spiked literally off the charts. It can be argued that the dollar has become America’s top export as the world’s reserve currency, and if the volatile dollar is scrapped, which the U.N. and IMF now suggest, then demand will plummet, killing the currency.
9. Controlling the media: A government-influenced media that censors information is a key component of Third World countries. In some countries it is openly owned by the State. In America, privately-owned major media is not as balanced or as diverse as it seems; the concentration of ownership has led to censorship when national and corporate interests have sometimes overlapped. The persecution of high-profile investigative journalists such as WikiLeaks is set amid a backdrop of the proposed Internet censorship of bloggers who wish to remain anonymous. The end of net neutrality creates a pay-to-play system that can lead to further corporate and government control of information and opinion. Cybersecurity initiatives are the final nail in the coffin, as the entire free flow of information can be vetted in a China-style system of “identity management.” On the street, the police state and media control have converged in the recent rise of arrests for those who videotape the police. This is a huge blow to First Amendment rights and the role of photojournalists who wish to document public police behavior.
10. Capital Controls: Many nations have enforced capital controls as their economies collapse. It most recently happened in Argentinaand Venezuela as they sought to keep the remaining wealth within their borders. The SEC already has adopted policies to allow money market funds to suspend withdrawals during a financial crisis, while the recent HIRE bill (HR 2487) puts restrictions on Americans moving capital to foreign countries. Some economists suggest that the national debt has gotten so high that the government must now force investment of private capital into U.S. Treasury debt.
Key economic indicators point to a situation potentially worse than the Great Depression. The land of opportunity for so many is devolving into a system of government corruption, corporate looting, and military rule that threatens to sink the American Dream. The capital flight from America has left a dwindling middle class holding an empty bag. This style of underinvestment in the foundation of society is similar to what already has led to the exodus from the rural Midwest. Now, there are ominous signs of a silent exodus of young, intelligent professionals seeking opportunities to realize their dreams outside of America; they are becoming known as Generation Xpat. Lastly, many skilled immigrants have returned to their home countries to seek a better quality of life, which might be the scariest indicator of all.
“They make a desolation and call it peace.” -Tacitus
Was Alan Greenspan really as dumb as he looks in creating the late housing bubble that threatens to bring the entire Western debt-based economy crashing down?
Was something as easy to foresee as this really the trigger for a meltdown that could destroy the world’s financial system? Or was it done, perhaps, “accidentally on purpose”?
And if so, why?
Let’s turn to the U.S. personage that conspiracy theorists most often mention as being at the epicenter of whatever elite plan is reputed to exist. This would be David Rockefeller, the 92-year-old multibillionaire godfather of the world’s financial elite.
The lengthy Wikipedia article on Rockefeller provides the following version of a celebrated statement he allegedly made in an opening speech at the Bilderberg conference in Baden-Baden, Germany, in June 1991:
“We are grateful to the Washington Post, the New York Times, Time magazine, and other great publications whose directors have attended our meetings and respected their promises of discretion for almost forty years. It would have been impossible for us to develop our plan for the world if we had been subject to the bright lights of publicity during these years. But the world is now more sophisticated and prepared to march towards a world government which will never again know war, but only peace and prosperity for the whole of humanity. The supranational sovereignty of an intellectual elite and world bankers is surely preferable to the national auto-determination practiced in the past centuries.”
This speech was made 17 years ago. It came at the beginning in the U.S. of the Bill Clinton administration. Rockefeller speaks of an “us.” This “us,” he says, has been having meetings for almost 40 years. If you add the 17 years since he gave the speech it was 57 years ago—two full generations.
Not only has “us” developed a “plan for the world,” but the attempt to “develop” the plan has evidently been successful, at least in Rockefeller’s mind. The ultimate goal of “us” is to create “the supranational sovereignty of an intellectual elite and world bankers.” This will lead, he says, toward a “world government which will never again know war.”
Just as an intellectual exercise, let’s assume that David Rockefeller is as important and powerful a person as he seems to think he is. Let’s give the man some credit and assume that he and “us” have in fact succeeded to a degree. This would mean that the major decisions and events since Rockefeller gave the speech in 1991 have probably also been part of the plan or that they have at least represented its features and intent.
Therefore by examining these decisions and events we can determine whether in fact Rockefeller is being truthful in his assessment that the Utopia he has in mind is on its way or has at least come closer to being realized. In no particular order, some of these decisions and events are as follows:
The implementation of the North American Free Trade Agreement by the Bill Clinton and George W. Bush administrations has led to the elimination of millions of U.S. manufacturing jobs as well as the destruction of U.S. family farming in favor of global agribusiness.
Similar free trade agreements, including those under the auspices of the World Trade Organization, have led to export of millions of additional manufacturing jobs to China and elsewhere.
Average family income in the U.S. has steadily eroded while the share of the nation’s wealth held by the richest income brackets has soared. Some Wall Street hedge fund managers are making $1 billion a year while the number of homeless, including war veterans, pushes a million.
The housing bubble has led to a huge inflation of real estate prices in the U.S. Millions of homes are falling into the hands of the bankers through foreclosure. The cost of land and rentals has further decimated family agriculture as well as small business. Rising property taxes based on inflated land assessments have forced millions of lower-and middle-income people and elderly out of their homes.
The fact that bankers now control national monetary systems in their entirety, under laws where money is introduced only through lending at interest, has resulted in a massive debt pyramid that is teetering on collapse. This “monetarist” system was pioneered by Rockefeller-family funded economists at the University of Chicago. The rub is that when the pyramid comes down and everyone goes bankrupt the banks which have been creating money “out of thin air” will then be able to seize valuable assets for pennies on the dollar, as J.P. Morgan Chase is preparing to do with the businesses owned by Carlyle Capital. Meaningful regulation of the financial industry has been abandoned by government, and any politician that stands in the way, such as Eliot Spitzer, is destroyed.
The total tax burden on Americans from federal, state, and local governments now exceeds forty percent of income and is rising. Today, with a recession starting, the Democratic-controlled Congress, while supporting the minuscule “stimulus” rebate, is hypocritically raising taxes further, even for middle-income earners. Back taxes, along with student loans, can no longer be eliminated by bankruptcy protection.
Gasoline prices are soaring even as companies like Exxon-Mobil are recording record profits. Other commodity prices are going up steadily, including food prices, with some countries starting to experience near-famine conditions. 40 million people in America are officially classified as “food insecure.”
Corporate control of water and mineral resources has removed much of what is available from the public commons, and the deregulation of energy production has led to huge increases in the costs of electricity in many areas.
The destruction of family farming in the U.S. by NAFTA (along with family farming in Mexico and Canada) has been mirrored by policies toward other nations on the part of the International Monetary Fund and World Bank. Around the world, due to pressure from the “Washington consensus,” local food self-sufficiency has been replaced by raising of crops primarily for export. Migration off the land has fed the population of huge slums around the cities of underdeveloped countries.
Since the 1980s the U.S. has been fighting wars throughout the world either directly or by proxy. The former Yugoslavia was dismembered by NATO. Under cover of 9/11 and by utilizing off-the-shelf plans, the U.S. is now engaged in the military conquest and permanent military occupation of the Middle East. A worldwide encirclement of Russia and China by U.S. and NATO forces is underway, and a new push to militarize space has begun. The Western powers are clearly preparing for at least the possibility of another world war.
The expansion of the U.S. military empire abroad is mirrored by the creation of a totalitarian system of surveillance at home, whereby the activities of private citizens are spied upon and tracked by technology and systems which have been put into place under the heading of the “War on Terror.” Human microchip implants for tracking purposes are starting to be used. The military-industrial complex has become the nation’s largest and most successful industry with tens of thousands of planners engaged in devising new and better ways, both overt and covert, to destroy both foreign and domestic “enemies.”
Meanwhile, the U.S. has the largest prison population of any country on earth. Plus everyday life for millions of people is a crushing burden of government, insurance, and financial fees, charges, and paperwork. And the simplest business transactions are burdened by rake-offs for legions of accountants, lawyers, bureaucrats, brokers, speculators, and middlemen.
Finally, the deteriorating conditions of everyday life have given rise to an extraordinary level of stress-related disease, as well as epidemic alcohol and drug addiction. Governments themselves around the world engage in drug trafficking. Instead of working to lower stress levels, public policy is skewed in favor of an enormous prescription drug industry that grows rich off the declining level of health through treatment of symptoms rather than causes. Many of these heavily-advertised medications themselves have devastating side-effects.
This list should at least give us enough to go on in order to ask a hard question. Assuming again that all these things are parts of the elitist plan which Mr. Rockefeller boasts to have been developing, isn’t it a little strange that the means which have been selected to achieve “peace and prosperity for the whole of humanity” involve so much violence, deception, oppression, exploitation, graft, and theft?
In fact it looks to me as though “our plan for the world” is one that is based on genocide, world war, police control of populations, and seizure of the world’s resources by the financial elite and their puppet politicians and military forces.
In particular, could there be a better way to accomplish all this than what appears to be a concentrated plan to remove from people everywhere in the world the ability to raise their own food? After all, genocide by starvation may be slow, but it is very effective. Especially when it can be blamed on “market forces.”
And can it be that the “us” which is doing all these things, including the great David Rockefeller himself, are just criminals who have somehow taken over the seats of power? If so, they are criminals who have done everything they can to watch their backs and cover their tracks, including a chokehold over the educational system and the monopolistic mainstream media.
One thing is certain: The voters of America have never knowingly agreed to any of this.
Richard C. Cook is a former U.S. federal government analyst, whose career included service with the U.S. Civil Service Commission, the Food and Drug Administration, the Carter White House, NASA, and the U.S. Treasury Department. His articles on economics, politics, and space policy have appeared on numerous websites. His book on monetary reform entitled We Hold These Truths: The Promise of Monetary Reform is in preparation. He is also the author of Challenger Revealed: An Insider’s Account of How the Reagan Administration Caused the Greatest Tragedy of the Space Age, called by one reviewer, “the most important spaceflight book of the last twenty years.” His website is at www.richardccook.com
“No shit. Our government is trying to destroy this country… not fix it. It’s hard to swallow but through their “actual” actions, (not rhetoric), there is no other way to interpret it.”
-Fred Face 8/12/10
By MARCY GORDON
WASHINGTON (AP) – The $700 billion U.S. bailout program launched in response to the global economic meltdown had a far greater impact overseas than other countries’ financial rescue plans did on the U.S., according to a new report from a congressional watchdog.
Billions of dollars in U.S. rescue funds wound up in big banks in France, Germany and other nations. That was probably inevitable because of the structure of the Treasury Department’s program, the Congressional Oversight Panel says in a new report issued Thursday.
The U.S. program aimed to stabilize the financial system by injecting money into as many banks as possible, including those with substantial operations overseas. Most other countries, by contrast, focused their efforts more narrowly on banks in their nations that usually lacked major U.S. operations.
But the report says that if the U.S. had gotten more data on which foreign banks would benefit the most, the government might have been able to ask those countries to share some of the cost.
“There were no data about where this money was going,” panel chair Elizabeth Warren said in a conference call with reporters on Wednesday. “The American people have a right to know where the money went.”
An example: Major French and German banks were among the biggest beneficiaries of the U.S. rescue of American International Group Inc., yet the American government shouldered the entire $70 billion risk of pumping capital into the crippled insurance titan. The report compares that with the $35 billion that France spent on its overall financial rescue program and the $133 billion that Germany spent.
Much of the $182 billion in federal aid to AIG – the biggest of the government rescues – went to meet the company’s obligations to its Wall Street trading partners on credit default swaps, a form of insurance against default of securities. The partners included French banks Societe Generale, which received $11.9 billion in AIG money, and BNP Paribas, which got $4.9 billion, and Germany’s Deutsche Bank, $11.8 billion.
Of the 87 banks and financial entities that indirectly benefited from the U.S. aid to AIG, 43 are foreign, according to the report. In addition to France and Germany, they include banks based in Canada, Britain and Switzerland.
In addition to AIG, many of the U.S. banks and automakers that received billions in bailout aid derive a large proportion of their revenue from operations outside the U.S., the report noted.
The watchdog panel was created by Congress to oversee the Treasury Department rescue program that came in at the peak of the financial crisis in the fall of 2008. It has said it’s unclear whether U.S. taxpayers will ever fully recoup the cost of the AIG bailout. The Congressional Budget Office estimates that taxpayers will lose $36 billion.
Although the law creating the U.S. rescue program called for Treasury to coordinate its actions with similar efforts by foreign governments, “the global response to the financial crisis unfolded on an … informal, country-by-country basis,” the new report says. “Each individual government made its own decisions based on its evaluation of what was best for its own banking sector and for its own domestic economy.”
The U.S. program wound up injecting capital into around 700 banks, while all other governments combined aided fewer than 50, according to the oversight panel.
At the same time, the report suggests that the Treasury program, known as the Troubled Asset Relief Program, or TARP, may have played a constructive role.
“It appears that the existence of the TARP might have served to enhance the negotiating position of the U.S. government (at least in a limited way), as it demonstrated the willingness of U.S. officials to be aggressive and forceful in committing a significant amount of resources to confront a deepening crisis,” the report says.
Treasury Department spokesman Mark Paustenbach said the report “shows that Treasury worked effectively with its overseas partners in a number of ways to address the global financial crisis.”
The report says the financial crisis revealed the need for an international plan “to handle the collapse of major, globally significant financial institutions.”
“Truth persists and illuminates, even if there is no one to utter it.“ Government is not the solution; rather, it is causing the problems. The below slides (view atScribd, backup PDF) highlight the economic situation, updated from a May presentation. I’ve written about the solutions to the unemployment problem, the deficit, Social Security, and the high costs of health care which are linked below.
Will the real national debt please stand up?The national debt published in the papers and online — which is closely tied to the USTreasury market is now over $13.3 trillion. Current government plans include massive deficit spending through 2013, and the government’s optimistic projections of a return to “normalcy” after 2013 are not anchored in reality. Source of budget data. However, the true national debt is hidden by the cash-based accounting method government uses. The true national debt is over $120 trillion when GAAP (Generally Acceptable Accounting Principles) are used to identify futuretaxation sources and future debts such as Social Security and Medicare. That’s around $400,000 for every man, woman, and child in the country. Massive reductions in spending and taxation are necessary if America is to regain its financial sovereignty, my proposals are outlined here and in “Guns or Health Care?”
As seen in the official USTreasury report on page 178/254, the total unfunded liabilities for Medicare and Social Security is a jaw-dropping $107 trillion over the future of these programs. While I predict the Democrats may bear the brunt of the blame for the collapse of Medicare, one must not forget that it was the Republican’s massive expansion of Part D’s prescription drug plan under Bush that severely worsened Medicare’s fiscal situation. While the situation in Medicare is worse — and changing daily due to the new healthcare legislation — some of my proposals to maintain Social Security are outlined in “Social Security or Insecurity?”
“He has erected a multitude of New Offices, and sent hither swarms of Officers to harass our People, and eat out their substance.“ — Declaration of Independence, 1776 The quote above from the Declaration is far more true in 2010 than it was in 1776. Not counting the millions of government contractors, the government’s Republocrat-controlled work force is currently 22.8 million bureaucrats. This is America’s largest single job sector, and remember, the taxpayer bears the full cost to keep these bureaucrats employed. Like something out of an Orwell novel, the Washington Post estimates 854,000 bureaucrats are employed to spy on and keep tabs on the rest of us and the world. Lisa Benson’s cartoon says it all.
Keep in mind bureaucrats make nearly twice the average wage of the private sector, and have better benefits. My solution? Lead by example. I will refuse the elite congressional pension and healthcare plans when elected, and keep just the median income for a salary and donate the rest of the $116,000 to local non-profit hospitals.
Next, notice that more than 1 in 8 Americans are on food stamps, or 40.4 million people. USDA link here. Note the strong rise in number of SNAP food stamp recipients during the past year. One would expect to see this number dropping or even flat-lining — along with employment rising — if a recovery were underway. The annual projected cost is now $66 billion, paid for by the ever-diminishing work force.
What the great French historian Alexis de Tocqueville would make of today’s Obama administration were he alive today is anyone’s guess. But I would wager that the author of L’Ancien Régime and Democracy in America would be less than impressed with the extravagance and arrogance on display among the White House elites that rule America as though they had been handed some divine right to govern with impunity.
It is the kind of impunity that has been highlighted on the world stage this week by Michelle Obama’s hugely costly trip to Spain, which has prompted a New York Post columnist Andrea Tantaros to dub the First Lady a contemporary Marie Antoinette. As The Telegraph reports, while the Obamas are covering their own vacation expenses such as accommodation, the trip may cost US taxpayers as much as $375,000 in terms of secret service security and flight costs on Air Force Two.
The timing of this lavish European vacation could not have come at a worse moment, when unemployment in America stands at 10 percent, and large numbers of Americans are fighting to survive financially in the wake of the global economic downturn. It sends a message of indifference, even contempt, for the millions of Americans who are struggling just to feed their families on a daily basis and pay the mortgage, while the size of the national debt balloons to Greek-style proportions.
While the liberal-dominated US mainstream media have largely ignored the story, it is all over the blogosphere and talk radio, and will undoubtedly add to the President’s free falling poll ratings. As much as the media establishment turn a blind eye to stories like this, which are major news in the international media, the American public is increasingly turning to alternative news sources, including the British press, which has a far less deferential approach towards the White House.
The First Lady’s ill-conceived trip to Marbella and the complete disregard for public opinion and concerns over excessive government spending is symbolic of a far wider problem with the Obama presidency – the overarching disdain for the principles of limited government, individual liberty and free enterprise that have built the United States over the course of nearly two and a half centuries into the most powerful and free nation on earth.
It is epitomised above all by the President’s relentless drive towards big government against the will of the American people, and the dramatic increases in government spending and borrowing, which threaten to leave the US hugely in debt for generations. It is also showcased by Barack Obama’s drive towards a socialised health care system, which, as I’ve noted before, is “a thinly disguised vanity project for a president who is committed to transforming the United States from the world’s most successful large-scale free enterprise economy, to a highly interventionist society with a massive role for centralized government.”
There is however a political revolution fast approaching Washington that is driven not by mob rule but by the power of ideas and principles, based upon the ideals of the Founding Fathers and the US Constitution. It is a distinctly conservative revolution that is sweeping America and is reflected in almost every poll ahead of this November’s mid-terms. It is based on a belief in individual liberty, limited government, and above all, political accountability from the ruling elites. The Obama administration’s mantra may well be “let them eat cake”, as it continues to gorge itself on taxpayers’ money, but it will be looking nervously over its shoulder as public unease mounts.
As the first of the 80 million Baby Boomers have begun to retire, it has become increasingly apparent that the United States is facing a pension crisis of unprecedented magnitude. State and local government pension plans are woefully underfunded, dozens of large corporate pension plans either have collapsed or are on the verge of collapsing, Social Security is a complete and total financial disaster and about half of all Americans essentially have nothing saved up for retirement. So yes, to say that we are facing a retirement crisis would be a tremendous understatement. There is simply no way that we can keep all of the financial promises that we have made to the Baby Boomer generation. Unfortunately, the crumbling U.S. economy simply cannot support the comfortable retirement of tens of millions of elderly Americans any longer. The truth is that we are all going to have to start fundamentally changing the way that we think about our golden years.
Once upon a time, you could count on getting a big, fat pension if you put 30 years into a job. But now pension plans everywhere are failing. State and local governments are cutting back and are raising retirement ages. A majority of Americans have even lost faith in the Social Security system, which was supposed to be the most secure of them all.
The reality is that we are moving into a time when there is not going to be such a thing as “financial security” as we have known it in the past. Things have fundamentally changed, and we are all going to have to struggle to stay above water in the economic nightmare that is coming.
Part of the reason we have such a gigantic economic mess on the way is because we have promised vastly more than we can deliver to future retirees. When you closely examine the numbers, it quickly becomes clear that a financial tsunami is about to hit us that is going to be so devastating that it will change everything that we know about retirement.
The following are 22 statistics about America’s coming pension crisis that will make you lose sleep at night….
Private Pension Plans And Retirement Funds
1 - One recent study found that America’s 100 largest corporate pension plans were underfunded by $217 billion at the end of 2008.
2 – Approximately half of all workers in the United States have less than $2000 saved up for retirement.
6- Pension consultant Girard Miller recently told California’s Little Hoover Commission that state and local government bodies in the state of California have $325 billion in combined unfunded pension liabilities. When you break that down, it comes to $22,000 for every single working adult in California.
7 – According to a recent report from Stanford University, California’s three biggest pension funds are as much as $500 billion short of meeting future retiree benefit obligations.
8 – In New Jersey, the governor has proposed not making the state’s entire $3 billion contribution to its pension funds because of the state’s $11 billion budget deficit.
9 – It has been reported that the $33.7 billion Illinois Teachers Retirement System is 61% underfunded and is on the verge of total collapse.
10 – The state of Illinois recently raised its retirement age to 67 and capped the salary on which public pensions are figured.
11 – The state of Virginia is requiring employees to pay into the state pension fund for the first time ever.
12 – In New York City, annual pension contributions have increased sixfold in the past decade alone and are now so large that they would be able to finance entire new police and fire departments.
13- Robert Novy-Marx of the University of Chicago and Joshua D. Rauh of Northwestern’s Kellogg School of Management recently calculated the combined pension liability for all 50 U.S. states. What they found was that the 50 states are collectively facing $5.17 trillion in pension obligations, but they only have $1.94 trillion set aside in state pension funds. That is a difference of 3.2 trillion dollars.
Social Security
14 – According to one recently conducted poll, 6 out of every 10 non-retirees in the United States believe that the Social Security system will not be able to pay them benefits when they stop working.
15 – A very large percentage of the federal budget is made up of entitlement programs such as Social Security and Medicare that cannot be reduced without a change in the law. Approximately 57 percent of Barack Obama’s 3.8 trillion dollar budget for 2011 consists of direct payments to individual Americans or is money that is spent on their behalf.
16 – 35% of Americans over the age of 65 rely almost entirely on Social Security payments alone.
17 – According to the Congressional Budget Office, the Social Security system will pay out more in benefits than it receives in payroll taxes in 2010. That was not supposed to happen until at least 2016. The Social Security deficits are projected to get increasingly worse in the years ahead.
19 - In 1950, each retiree’s Social Security benefit was paid for by 16 U.S. workers. In 2010, each retiree’s Social Security benefit is paid for by approximately 3.3 U.S. workers. By 2025, it is projected that there will be approximately two U.S. workers for each retiree.
20 – The shortfall in entitlement programs in the years ahead is mind blowing. The present value of projected scheduled benefits surpasses earmarked revenues for entitlement programs such as Social Security and Medicare by about 46 trillion dollars over the next 75 years.
21 – According to a recent U.S. government report, soaring interest costs on the U.S. national debt plus rapidly escalating spending on entitlement programs such as Social Security and Medicare will absorb approximately 92 cents of every single dollar of federal revenue by the year 2019. That is before a single dollar is spent on anything else.
22 – Right now, interest on the U.S. national debt and spending on entitlement programs like Social Security and Medicare is somewhere in the neighborhood of 15 percent of GDP. By 2080, those combined expenditures are projected to eat up approximately 50 percent of GDP.
When historians look back on the period between 2001 and 2011, they will be amazed that a nation that professed to hate bureaucracy produced so much of it.
During the first part of this period, the Republicans were in control. They expanded a vast national security bureaucracy. In their series in The Washington Post, Dana Priest and William M. Arkin detail the size of this apparatus. More than 1,200 government agencies and 1,900 private companies work on counterterrorism, homeland security and intelligence programs at around 10,000 sites across the country. An estimated 854,000 people have top-secret security clearance. These analysts produce 50,000 reports a year — a flow of paper so great that many are completely ignored.
In the second part of the period, Democrats were in control. They augmented the national security bureaucracy but spent the bulk of their energies expanding bureaucracies in domestic spheres.
First, they passed a health care law. This law created 183 new agencies, commissions, panels and other bodies, according to an analysis by Robert Moffit of the Heritage Foundation. These include things like the Quality Assurance and Performance Improvement Program, an Interagency Pain Research Coordinating Committee and a Cures Acceleration Network Review Board.
The purpose of the new apparatus was simple: to give government experts the power to analyze and rationalize the nation’s health care system. A team of experts on the newly created Independent Medicare Advisory Council was ordered to review and streamline Medicare. A team of experts within the Office of Personnel Management was directed to help set standards for insurance companies in the health care exchanges. Teams of experts serving on comparative effectiveness boards were told to survey data and determine which medical treatments work best and most efficiently.
Democrats also passed a financial reform law. The law that originally created the Federal Reserve was a mere 31 pages. The Sarbanes-Oxley banking reform act, passed in 2002, was only 66 pages. But the 2010 financial reform law was 2,319 pages, an intricately engineered technocratic apparatus. As Mark Perry of the American Enterprise Institute noted, the financial reform law is seven times longer than the last five pieces of banking legislation combined.
The law calls upon government experts to make some heroic judgments. For example, it calls upon regulators to break up banks that might be about to pose a risk to the country’s economy. That is to say, investors may believe a bank is stable. The executives of the bank may believe it is stable. But the regulators are called upon to exercise their superior vision and determine which banks are stable and which are not.
When historians look back on this period, they will see it as another progressive era. It is not a liberal era — when government intervenes to seize wealth and power and distribute it to the have-nots. It’s not a conservative era, when the governing class concedes that the world is too complicated to be managed from the center. It’s a progressive era, based on the faith in government experts and their ability to use social science analysis to manage complex systems.
This progressive era is being promulgated without much popular support. Already this effort is generating a fierce, almost culture-war-style backlash. It is generating a backlash among people who do not have faith in Washington, who do not have faith that trained experts have superior abilities to organize society, who do not believe national rules can successfully contend with the intricacies of local contexts and cultures.
This progressive era amounts to a high-stakes test. If the country remains safe and the health care and financial reforms work, then we will have witnessed a life-altering event. We’ll have received powerful evidence that central regulations can successfully organize fast-moving information-age societies.
If the reforms fail, then the popular backlash will be ferocious. Large sectors of the population will feel as if they were subjected to a doomed experiment they did not consent to. They will feel as if their country has been hijacked by a self-serving professional class mostly interested in providing for themselves.
If that backlash gains strength, well, what’s the 21st-century version of the guillotine?
David Brooks is a columnist for The New York Times.
July 20 (Bloomberg) — U.S. taxpayers may be on the hook for as much as $23.7 trillion to bolster the economy and bail out financial companies, said Neil Barofsky, special inspector general for the Treasury’s Troubled Asset Relief Program.
The Treasury’s $700 billion bank-investment program represents a fraction of all federal support to resuscitate the U.S. financial system, including $6.8 trillion in aid offered by the Federal Reserve, Barofsky said in a report released today.
“TARP has evolved into a program of unprecedented scope, scale and complexity,” Barofsky said in testimony prepared for a hearing tomorrow before the House Committee on Oversight and Government Reform.
Treasury spokesman Andrew Williams said the U.S. has spent less than $2 trillion so far and that Barofsky’s estimates are flawed because they don’t take into account assets that back those programs or fees charged to recoup some costs shouldered by taxpayers.
“These estimates of potential exposures do not provide a useful framework for evaluating the potential cost of these programs,” Williams said. “This estimate includes programs at their hypothetical maximum size, and it was never likely that the programs would be maxed out at the same time.”
Barofsky’s estimates include $2.3 trillion in programs offered by the Federal Deposit Insurance Corp., $7.4 trillion in TARP and other aid from the Treasury and $7.2 trillion in federal money for Fannie Mae, Freddie Mac, credit unions, Veterans Affairs and other federal programs.
Treasury’s Comment
Williams said the programs include escalating fee structures designed to make them “increasingly unattractive as financial markets normalize.” Dependence on these federal programs has begun to decline, as shown by $70 billion in TARP capital investments that has already been repaid, Williams said.
Barofsky offered criticism in a separate quarterly report of Treasury’s implementation of TARP, saying the department has “repeatedly failed to adopt recommendations” needed to provide transparency and fulfill the administration’s goal to implement TARP “with the highest degree of accountability.”
As a result, taxpayers don’t know how TARP recipients are using the money or the value of the investments, he said in the report.
‘Falling Short’
“This administration promised an ‘unprecedented level’ of accountability and oversight, but as this report reveals, they are falling far short of that promise,” Representative Darrell Issa of California, the top Republican on the oversight committee, said in a statement. “The American people deserve to know how their tax dollars are being spent.”
The Treasury has spent $441 billion of TARP funds so far and has allocated $202.1 billion more for other spending, according to Barofsky. In the nine months since Congress authorized TARP, Treasury has created 12 programs involving funds that may reach almost $3 trillion, he said.
Treasury Secretary Timothy Geithner should press banks for more information on how they use the more than $200 billion the government has pumped into U.S. financial institutions, Barofsky said in a separate report.
The inspector general surveyed 360 banks that have received TARP capital, including Bank of America Corp., JPMorgan Chase & Co. and Wells Fargo & Co. The responses, which the inspector general said it didn’t verify independently, showed that 83 percent of banks used TARP money for lending, while 43 percent used funds to add to their capital cushion and 31 percent made new investments.
Barofsky said the TARP inspector general’s office has 35 ongoing criminal and civil investigations that include suspected accounting, securities and mortgage fraud; insider trading; and tax investigations related to the abuse of TARP programs.
PRINCETON, NJ — Gallup’s 2010 Confidence in Institutions poll finds Congress ranking dead last out of the 16 institutions rated this year. Eleven percent of Americans say they have “a great deal” or “quite a lot” of confidence in Congress, down from 17% in 2009 and a percentage point lower than the previous low for Congress, recorded in 2008.
The Gallup poll was conducted July 8-11, shortly before Congress passed a major financial regulatory reform bill, which President Obama signed into law this week.
Underscoring Congress’ image problem, half of Americans now say they have “very little” or “no” confidence in Congress, up from 38% in 2009 — and the highest for any institution since Gallup first asked this question in 1973. Previous near-50% readings include 48% found for the presidency in 2008, and 49% for the criminal justice system in 1994.
This year’s poll also finds a 15-point drop in high confidence in the presidency, to 36% from 51% in June 2009. Over the same period, President Barack Obama’s approval rating fell by 11 points, from 58% to 47%. However, confidence in the presidency remains higher than in 2008 — the last year of George W. Bush’s term — when the figure was 26%.
Survey Methods
Results for this Gallup poll are based on telephone interviews conducted July 8-11, 2010, with a random sample of 1,020 adults, aged 18 and older, living in the continental U.S., selected using random-digit-dial sampling.
For results based on the total sample of national adults, one can say with 95% confidence that the maximum margin of sampling error is ±4 percentage points.
Interviews are conducted with respondents on landline telephones (for respondents with a landline telephone) and cellular phones (for respondents who are cell phone-only). Each sample includes a minimum quota of 150 cell phone-only respondents and 850 landline respondents, with additional minimum quotas among landline respondents for gender within region. Landline respondents are chosen at random within each household on the basis of which member had the most recent birthday.
Samples are weighted by gender, age, race, education, region, and phone lines. Demographic weighting targets are based on the March 2009 Current Population Survey figures for the aged 18 and older non-institutionalized population living in continental U.S. telephone households. All reported margins of sampling error include the computed design effects for weighting and sample design.
In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.
With the financial system on the verge of collapse in late 2008, a group of troubled banks doled out more than $2 billion in bonuses and other payments to their highest earners. Now, the federal authority on banker pay says that nearly 80 percent of that sum was unmerited.
In a report to be released on Friday,Kenneth R. Feinberg, the Obama administration’s special master forexecutive compensation, is expected to name 17 financial companies that made questionable payouts totaling $1.58 billion immediately after accepting billions of dollars of taxpayer aid, according to two government officials with knowledge of his findings who requested anonymity because of the sensitivity of the report.
The group includes Wall Street giants like Goldman Sachs, JPMorgan Chase and theAmerican International Group as well as small lenders like Boston Private Financial Holdings. Mr. Feinberg’s report points to companies that he says paid eye-popping amounts or used haphazard criteria for awarding bonuses, the people with knowledge of his findings said, and he has singled out Citigroup as the biggest offender.
Even so, Mr. Feinberg has very limited power to reclaim any money. He can use his status as President Obama’s point man on pay to jawbone the companies into reimbursing the government, but he has no legal authority to claw back excessive payouts.
Mr. Feinberg’s political leverage has been weakened by the banks’ speedy repayment of their bailout funds. Eleven of the 17 companies that received criticism in the report have repaid the government with interest, so they have no outstanding obligations to reimburse.
As a result, Mr. Feinberg will merely propose that the banks voluntarily adopt a “brake provision” that would allow their boards to nullify or alter any bonus payouts or employment contracts in the event of a future financial crisis. All 17 companies have told Mr. Feinberg that they will consider adopting the provision, though none has committed to do so.
Mr. Feinberg is expected to call the payouts ill advised but not unlawful or contrary to the public interest, the people with knowledge of his report said.
On Wall Street, meanwhile, profits and pay have already rebounded. Goldman Sachs is on pace to hand out an average of $544,000 per worker in salary and bonuses, though many could earn several times that amount. JPMorgan Chase’s investment bank is on track to pay its workers, on average, about $425,000, while the average Morgan Stanley employee could collect about $260,000.
If the second half of 2010 plays out like the first half, Wall Street bonuses will be paid out at about the same level as last year and similar to 2007 levels, when the crisis had just started to unfold.
“It’s healthier than I would have ever expected a year ago,” said Alan Johnson, a longtime compensation consultant who specializes in financial services.
Mr. Feinberg was named last month as the independent administrator for claims tied to the BPoil spill, making it likely that the release of his findings on the financial firms will be his final act as the overseer of banker pay.
The review, mandated by the 2009 economic stimulus bill, broadened the scope of Mr. Feinberg’s duties to include examining the pay packages of top earners at 419 companies that accepted bailout funds. However, it did not give him the power to demand changes to the compensation arrangements, as he did in each of the last two years at seven companies that received multiple bailouts.
Mr. Feinberg spent five months reviewing compensation paid to each company’s 25 highest earners between October 2008, when the first bailouts were dispensed, and February 2009, when the stimulus bill took effect. He narrowed his scrutiny to about 600 executives at 17 banks, with payouts totaling $2.03 billion.
Mr. Feinberg’s criteria for identifying the worst offenders were large payouts, in aggregate or to specific individuals; overly generous exit packages; or a failure to provide clear performance criteria or other rationale for extra pay.
Among the banks that have not fully repaid the government, Citigroup was identified by Mr. Feinberg as having the most egregious compensation packages during the bailout period, according to officials with knowledge of his report. The bank handed out several hundred million dollars in pay in 2008 as it struggled to stay afloat.
Roughly two-thirds of the outsize payouts were from bonuses awarded to Andrew Halland another trader who were part of the bank’s Phibro energy trading unit. Citigroup sold that business to Occidental Petroleum last fall, under pressure from Mr. Feinberg, after the disclosure that Mr. Hall had received a $100 million payout.
Mr. Feinberg is not expected to name individual executives who received the highest awards.
His review is among several compensation initiatives scrutinizing banker pay. In June, the Federal Reserve ordered about two dozen of the biggest banks to address several pay practices that, even after the crisis, it said encouraged excessive risk-taking.
European banking regulators introduced tough new standards for bonus payments earlier this month. And the Federal Deposit Insurance Corporation is developing a plan that would partly tie bank insurance premiums to the perceived risk of their executive pay packages. That proposal could be reviewed by the agency’s board as early as next month.
On Wednesday, Congressman Paul discussed the business cycle and government contributions to our economic turmoil at the Joint Economic Committee hearing.
The Obama-Dodd-Frank financial regulation bill, a miserable excuse for real Wall Street reform, is now about to gain final approval in the Senate. This wretched bill is now supported by the New England liberal (meaning Wall Street) Republican clique including Olympia Snow, Susan Collins, and Scott Brown, who are joined by the notoriously corrupt reactionary Democrat, Ben Nelson of Nebraska. This bill will create a multitude of new regulations and a number of large new bureaucracies, but it is utterly devoid of any bright-line prohibitions against the causes of the financial panic which struck the United States in 2008, and which continues to the present day in the form of a world economic depression.
The cause of the 2008 banking panic was that zombie banks and hedge fund hyenas were speculating with toxic and highly leveraged derivatives. The new bill does virtually nothing to attack the causes of this ongoing financial disintegration. It is a total defeat for the interests of the American people, and an historic victory for the Wall Street financier oligarchy which owns both the Democratic and Republican parties.
Stockbrokers and investment bankers have battled mightily to avoid any legal compulsion to act in the best interests of their clients, who are often the retail investors which both parties claim to care so much about. The new bill will not prevent unscrupulous used-car dealers from ripping off their customers through inflated financing costs. There is nothing in the bill to stop the plague of foreclosures, which last year turned almost 4 million American families into displaced persons on the home front. There is no ban on the disastrous use of Adjustable Rate Mortgages (ARMs), the financial equivalent of time bombs, which are ruining the lives of so many millions of Americans. There is no cap on leverage banks can use in financial transactions. Despite widespread complaining about the Federal Reserve, this bill gives the Fed more regulatory power rather than less. It represents the complete triumph of the Wall Street derivatives lobby, so much so that even hardened cynics are astounded by the impudence and insolence of Obama and both parties in the Congress.
The graveyard of Hope and Change
Senator Dorgan proposed an amendment to abolish the concept of banks that were too big to fail. His amendment was rejected. Senator Kaufman tried to limit the size of banks, but his amendment was deleted. Senator Whitehouse tried to limit interest rates on credit cards and predatory payday loans, or at least to allow states to regain their regulatory role in this area, but he was defeated. Granted, many of these amendments were mere public relations exercises that were always virtually doomed to failure.
Senators McCain and Cantwell tried to restore the firewall, contained in the landmark Glass-Steagall Act of 1933-1999, which rigorously separated commercial banks with FDIC insured deposits on the one hand from investment banking and stock-jobbing on the other. Glass-Steagall was one of the signature legislative achievements of the New Deal, and there are few better illustrations of the deep hostility of the modern Democratic Party and of Obama in particular to the heritage of Franklin D. Roosevelt than the stubborn refusal of the degenerate Democrats of today to force through the necessary restoration of the Glass-Steagall protections – even in the wake of a breakdown crisis of the entire Anglo-American banking system.
Senator Blanche Lincoln of Arkansas, who is fighting for her own political survival because of her record of subservience to Wall Street, tried to redeem herself with paragraph 716 of title VII of the bill, an attempt to ban trading in credit default swaps (derivatives) by FDIC banks. Notice that by this point there was no effort whatsoever to prevent these banks from dealing in collateralized debt obligations (CDOs), which were the toxic derivatives which destroyed Bear Stearns, Lehman Brothers, Merrill Lynch, and Citibank. Nor was there any effort to curb the use of structured investment vehicles (SIVs), toxic instruments which are often used as the final packaging of a mass of CDOs and other kited derivatives. Still, since credit default swaps had been the main culprits in the bankruptcy of AIG, costing the American taxpayer $182 billion and counting, it would have been a meritorious project to keep commercial banks away from these diabolical instruments.
But it was not to be. In a dirty deal negotiated far away from the C-SPAN cameras, Dodd, Frank, and Rahm Emanuel completely gutted any effort to get commercial banks out of the business of placing side bets using credit default swaps. At a certain point in the televised reconciliation hearings, Congressman Peterson of Minnesota, the chairman of the House Agriculture Committee, came forward with a compromise which made paragraph 716 into a macabre joke. The infamous Peterson demanded that banks be allowed to trade credit default swaps in the form of foreign exchange swaps ( thought to be the largest category of swaps), interest-rate swaps, and credit derivatives – provided that the underlying securities were investment-grade. Since these categories represent the vast majority of swaps, and since it is not hard to procure an investment grade rating on junk paper from corrupt agencies like Standard & Poor’s, Fitch, and Moody’s, this alleged compromise meant that nothing was left of Senator Lincoln’s attempt. Treasury Secretary Tiny Tim Geithner had vehemently proclaimed the irreducible hostility of the Obama regime to any interference with this type of derivative. Interestingly, the German government had already explicitly banned naked credit default swaps issued as bets on government securities denominated in euros.
Since the restoration of the real Glass-Steagall firewall had been defeated early in the process, Senator Cantwell attempted to provide a weak face-saving substitute in the form of the so-called Volcker rule, which posited that commercial banks were not allowed to engage in speculation and other proprietary trading for their own account. This Volcker rule was already vitiated by the obvious gray area between speculation and so-called market-making, which entities like Goldman Sachs and Morgan Stanley were sure to exploit to circumvent any new legislation. However, zombie banks like State Street Bank and Bank of New York-Mellon (the latter the back-office of the TARP program. i.e. the October 2008 Wall Street bailout) found even the weak Volcker rule to be too onerous.
Demagogue Scott Brown Drives His Truck Through the Volcker Rule
Senator Scott Brown of Massachusetts won election last January by duping gullible voters with a cultural populist prop in the form of a pickup truck. At this point in the haggling, Senator Brown documented his subservience to Wall Street by driving his truck through what remained of the Volcker role. He forced through a provision allowing commercial banks to use 3% of their capital for speculation through hedge funds. It might seem that 3% is a minute fraction of a bank’s Tier I capital, and that Brown’s amendment might not be so dangerous after all. But this is not the case.
If you buy stocks and their price falls to zero, you can lose 100% of your investment, but no more. But when you are dealing with derivatives, your losses can be geometrically pyramided into interplanetary space. This proposition is not a matter of theory, but has been documented through a decade and a half of bankruptcies by hedge funds which had been speculating with derivatives, all the way back to Long-Term Capital Management of Connecticut in 1998.
Cantwell Recants
In the case of two Bear Stearns hedge funds which imploded in 2007-8, losses of about 50 times the original capital were attained. Under Scott Brown’s loophole, losses of 50:1 would already be enough to bankrupt the bank. But the 2008 crisis offers cases in which derivatives losses might attain or exceed 100:1 on the capital being wagered. These cases occur when debt instruments are wrapped into a mortgage-backed security or other asset-backed security. These latter are then included in a collateralized debt obligation, which together with other collateralized debt obligations can be made into a super CDO or CDO². Credit default swaps can be attached to these super CDOs. A number of super CDOs thus equipped can then be wrapped up in a structured investment vehicle (SIV). At every level of this cancerous mass of kited derivatives, leverage comes into play geometrically. The investment of 3% of capital in such a poisonous concoction can easily bankrupt any financial institution many times over. This phenomenon is one of the basic reasons why losses were so great in 2008, despite the fact that subprime mortgages are a relatively marginal area of the financial world. The losses became so monstrous because derivatives are the most effective tools yet devised for magnifying and multiplying financial destruction. As for Senator Cantwell, she capitulated and announced that she would support the resulting phony bill anyway.
Perhaps the members of the Massachusetts Tea Party would like now to contemplate their own roles as dupes and useful idiots for the Mitt Romney faction of Wall Street asset strippers and hedge fund hyenas, who are the people who put Scott Brown into office. From now on, Brown should be referred to on Capitol Hill as the senator from Bank of New York-Mellon, since he has no regard for the welfare of the people of Massachusetts.
But even this 3% loop hole, big enough to drive a truck through, was still too restrictive for Wall Street. The army of Gucci-clad lobbyists decided that even these nominal restrictions had to be postponed for more than a decade, quite possibly in the hopes that they may be overturned by some future reactionary majority likely to emerge amid the shipwreck of the feckless and treacherous Obama regime.
Plenty of Time for More Financial Catastrophes Before 2022
At the time of the reconciliation hearings, the remaining Volcker rule provisions were apparently supposed to take effect after seven years, allegedly to give the swaps-jobbers time to unwind their positions. But after the C-SPAN televised reconciliation proceedings were over, dark forces loyal to Wall Street revisited the conference report and introduced even longer delays in implementing even the meager restraints on credit derivatives. This crime appears to have occurred on June 28-29. On the Bloomberg Business Week website we read a report dated June 29:
Goldman Sachs Group and Citigroup Inc. are among U.S. banks that may have as long as a dozen years to cut stakes in in-house hedge funds and private- equity units under a regulatory revamp agreed to last week. Rules curbing banks’ investments in their own funds would take effect 15 months to two years after a law is passed, according to the bill. Banks would have two years to comply, with the potential for three one-year extensions after that. They could seek another five years for ‘illiquid’ funds such as private equity or real estate, said Lawrence Kaplan, an attorney at Paul, Hastings, Janofsky & Walker LLP in Washington. Giving banks until 2022 to fully implement the so-called Volcker rule is an accommodation for Wall Street in what President Barack Obama called the toughest financial reforms since the 1930s…. Partly as a result of last-minute changes to the wording of the bill, analysts, lawyers and congressional staffers say it’s unclear whether the extension period for illiquid funds would run concurrently with the other transition periods. That could mandate full compliance in less than 12 years. 1
The London Guardian also detailed the ingenious dilatory tricks for stalling, dodging, and postponing which the Wall Street lobbyists had built into the bill:
Language in the act …allows for a six-month study and a further nine months of rule-making. The measure is supposed to become effective 12 months after the final rule is laid, then banks have two years to conform. But if they need to, they can apply for a three-year extension. On top of that, a five-year moratorium is available for ‘illiquid’ funds that are hard to unwind. 2
The Revenge of The SIVs
Encoded in the 12-year delay are most emphatically those structured investment vehicles which cause so much damage in the second half of 2008. AsBusiness Week pointed out:
The Volcker rule forbids banks from stepping in with capital infusions or other forms of support when their own funds fail. In December 2007, Citigroup agreed to assume $59 billion of assets bought by ‘structured investment vehicles’ sponsored by the bank. During the following two years, Citigroup lost more than $3 billion on the SIVs, which were a kind of hedge fund that invested in mortgage bonds, credit-card securities and other assets that soured amid the financial crisis. 3
No account of these tragic events would be complete without some attention to the systematic betrayal of the national interest by the reactionary Republicans. The Republicans are in practice more fanatically committed to derivatives than even the Democrats, and they wear their love of derivatives on their sleeves. At one point in the reconciliation process, Senator Shelby of Alabama proposed an amendment which would have removed any and all destructions on the use of derivatives by anyone whatsoever, period. The Republican method is to pretend that derivatives are used exclusively for the traditional hedging which has been carried out from time immemorial by the users of certain commodities, specifically to protect themselves from price fluctuations during the time these raw materials are being turned into finished commodities. The GOP simply ignores that 99% plus of the notional value of today’s $1.5 quadrillion derivatives bubble has nothing to do with the end users of any commodities. If the Republicans were acting in good faith, it would be easy to craft a narrowly defined exemption for the end-users of raw materials and other commodities, but this is not their real purpose. The GOP serves the derivatives-mongers and the swap-jobbers cynically and blatantly, while the Democrats do this under a veil of deception and anti-Wall Street rhetoric.
As Senator Harkin pointed out, Shelby was really arguing that a hedge fund of the first magnitude was really a mom-and-pop Main Street business. Shelby’s goal of opening the barn door wide to any derivatives to be issued by anybody at any time was not successful, but the Peterson amendment and similar Democratic betrayals substantially accomplished the same goals under a cloak of deception. Intervening along the same lines in defense of Wall Street come out hedge funds, and derivatives were hardened reactionary Republicans like Senators Corker, Gregg, and Chambliss. Caught between these Republicans and their own venal Dodd-Frank leadership, the small positive initiatives of figures like Blanche Lincoln, Cantwell, Harkin, and Kanjorski were surrounded and crushed.
The last Democrat in the Senate: Feingold
The one principled no vote of a Democratic senator is now likely to come from Feingold of Wisconsin, who is fighting for political survival against a reactionary Republican opponent. Feingold says that his litmus test for the bill is simply the question of whether this measure can stop the next financial meltdown. Since the answer is so obviously no, and since the fingerprints of Wall Street are all over the bill, he promises to oppose it. Feingold has voted in the past against the Iraq war powers resolution of 2002, against the Patriot Act of 2001, and against the Wall Street bailout of October 2008. He points with pride to his opposition to the Interstate Banking Act of 1994, which would have prevented the emergence of “too big to fail” by maintaining the sensible New Deal ban on commercial banks operating in more than one state. He also voted against the catastrophic Graham-Leach-Bliley Act of 1999, which opened the door to the derivatives bubble by completely deregulating these toxic instruments.
The utter failure of Wall Street reform means that the door is now wide open for the second wave of the current world economic depression to continue, as the world descends still further into the financial maelstrom. As for the Obama regime, they are preparing an austerity program of unprecedented savagery which they intend to impose on the American people with the help of large numbers of defeated Congressmen during the lame duck session of November-December of this year. You were warned: Obama is a Wall Street puppet, and the events of this year are a first installment of the tragic consequences of such an administration.
It may have been a record fine for a financial institution but it appears investment bank Goldman Sachs got off lightly. The whole affair brings in to question the strength of the Securities and Exchange Commission’s case.
The “great vampire squid wrapped around the face of humanity” agreed to pay $550 million to settle fraud charges. But crucially it did not admit guilt for misleading clients over subprime mortgage products.
Even the SEC appears to have decided no fraud was committed and accepts the Goldman made a “mistake” in its marketing material. It has failed to hold Goldman’s feet to the fire, even if no one can question the size of the fine.
What is $550 million to Goldman Sachs? Well, two weeks earnings or the total compensation for about 1000 of its 32,000 employees.
“They pay $550 million and they get an $800 million pop in their share price,” Kevin Caron, market strategist at Stifel, Nicolaus & Co. told Reuters.
“The implication of the math is that the market had discounted a more harsh treatment and relative to what the market was looking for they got a pass – they got of easy.”
So the market was expecting worse – by the end of Thursday Goldman’s market value had soared $6.6 billion.
The victims of this “mistake” do get compensated.
Germany’s IKB and the Royal Bank of Scotland get $150 million and $100 million respectively.
Others will be forming a orderly queue, but Goldman and its Wall Street brethren will be heaving a sigh of relief that the penalty won’t be larger.
WASHINGTON—Congress approved a rewrite of rules touching every corner of finance, from ATM cards to Wall Street traders, in the biggest expansion of government power over banking and markets since the Depression.
The bill, to be signed into law soon by President Barack Obama, marks a potential sea change for the financial-services industry. Financial titans such as J.P. Morgan Chase & Co., Goldman Sachs Group Inc. and Bank of America Corp. may be forced to make changes in most parts of their business, from debit cards to the ability to invest in hedge funds.
The Senate passed the bill 60-39 Thursday, following House passage last month. Earlier in the day, three northeastern Republicans joined with Democrats to block a filibuster, allowing the bill to squeak through.
Now, the legislation hands off to 10 regulatory agencies the discretion to write hundreds of new rules governing finance. Rather than the bill itself, it will be this process—accompanied by a lobbying blitz from banks—that will determine the precise contours of this new landscape, how strict the new regulations will be and whether they succeed in their purpose. The decisions will be made by officials from new agencies, obscure agencies and, in some cases, agencies like the Federal Reserve that faced criticism in the run-up to the crisis.
The Commodity Futures Trading Commission has designated 30 “team leaders” to begin implementing its expansive new authority over derivatives, and has asked for $45 million for new staff. The Federal Reserve, Federal Deposit Insurance Corp. and Securities and Exchange Commission are also in the thick of the implementation.
J.P. Morgan Chase, one of the biggest U.S. banks by assets, has assigned more than 100 teams to examine the legislation.
Democrats say the bill will cut the odds of another crisis and better handle one when it arrives. They also contend it will restore confidence in U.S. financial markets, protect consumers and spur growth. White House officials said it will put an end to taxpayer-funded bailouts of banks, addressing the scars of the financial crisis of 2008.
The legislation creates a council of regulators to monitor economic risks; establishes a new agency to police consumer financial products; and sets new standards for the way derivatives are traded. “These reforms will benefit the prudent and constrain the imprudent,” Treasury Secretary Timothy Geithner said in a press conference. “Strong banks, the well-managed financial innovators, will adapt and thrive under the new rules of the road.”
Republicans said the bill could jeopardize the recovery by constraining credit and crimping the banking industry, and chided the expansion of government power it envisions.
The bill “is a 2,300-page legislative monster…that expands the scope and the powers of ineffective bureaucracies,” said Sen. Richard Shelby (R., Ala.).
The measure is the latest sweeping law to emerge from the 111th Congress. But the financial revamp, the 2009 stimulus act and this year’s health-care overhaul—by any measure significant legislative achievements—haven’t translated into support for the White House. Mr. Obama’s approval ratings have sunk to some of their lowest levels in some polls amid a gloomy economic picture and rising doubts that his economic policies are working.
Once this bill is signed into law, lawmakers and the Obama administration are expected to pivot to another contentious issue: the future of government-run mortgage-finance giants Fannie Mae and Freddie Mac. Republicans like Sen. Mitch McConnell (R., Ky.) complain that the failure to tackle these companies in the finance bill was a glaring omission. The administration has begun work on a proposal to redesign the mortgage-finance system, and Congress could take up the issue in 2011.
The finance overhaul will be implemented in a volatile environment. Profits on Wall Street are soaring, with J.P. Morgan reporting $4.8 billion in net profit in the second quarter. But the banking sector is contracting, with close to 300 banks failing since January 2008. Many businesses and borrowers are struggling to obtain loans.
Supporters and critics agree the impact of the bill will be determined over several years.
The law’s passing “is the beginning of the process and not the end,” says Satish Kini, co-chair of the banking group at law firm Debevoise & Plimpton LLP. “The shape of the reform won’t be known until the regulators have spoken.”
Treasury Department officials have taken initial steps to prepare the new consumer agency, called the Bureau of Consumer Financial Protection and housed within the Federal Reserve. Regulators are in the process of creating a system so that large, complex and failing financial companies can be broken up and liquidated without disrupting markets.
Despite creating the new consumer watchdog, the bill leaves America’s patchwork regulatory framework largely intact, and most of the players will be familiar. That has irked critics on the left and right who say one of the bill’s key flaws is that it relies on the judgment of officials rather than hard rules.
Conservatives worry regulators will throttle the industry. Liberals worry they’ll be co-opted by banking lobbyists.
“The same regulators who ignored consumer advocates’ warnings about predatory lending have veto power over the consumer agency,” said John Taylor, chief executive of the National Community Reinvestment Coalition. “That club of regulators is very insular, and usually in agreement.”
In a sign of the challenge, at a congressional hearing Thursday to approve her nomination as Fed vice chairman, Janet Yellen acknowledged that the Fed’s regulatory approach was insufficient for years.
“We failed completely to understand the complexity of what the impact of the national decline in housing prices would be in the financial system,” said Ms. Yellen, currently president of the Federal Reserve Bank of San Francisco. “We saw a number of different things, and we failed to connect the dots.”
Regulators will have multiple questions to answer. What types of trades can banks conduct, and what types will be illegal? At what level should regulators cap the fees that retailers pay to banks to process debit-card transactions? On which companies will the Fed apply stricter regulations? What will be the new standards for mortgages, credit cards and ATM fees?
By next summer, regulators could have many answers. The new consumer agency should be established, with its own staff and director. A new council of regulators will be monitoring emerging risks to the economy. There will be new rules on golden parachutes for employees at public companies, policies for ATM cards, the abolishment of the Office of Thrift Supervision, new derivatives rules and hedge-fund registration.
Administration officials and lawmakers have been talking about who should head the new consumer agency, as well as whom to appoint as chief regulator for national banks.
Bank outreach to regulators began in earnest months ago. French bank BNP Paribas hosted a dinner at Manhattan’s Le Bernadin at which representatives from U.S. hedge funds and investment firms grilled a Federal Reserve Bank of New York official about how the derivatives rules would be applied.
Over striped-bass tartare, some participants told Patricia Mosser, the Fed official attending, that they didn’t want much to change in the current model of derivatives trading.
Ms. Mosser said pushing more derivatives onto exchanges, as the law demands, would make the market more transparent and safer, people familiar with the matter said. Still, it was clear the rules wouldn’t be put in place overnight. The law would take months, maybe years, to implement, Ms. Mosser told the group.
Another cycle of conversation on the bitter disappointment that is the Obama presidency appears to be taking place once again among liberals or progressives. Writers for prominent progressive media like The Nation and leaders in prominent progressive organizations like Progressive Democrats of America (PDA) are expressing their discontent and offering suggestions to dismayed Americans who had hoped change would actually come from the Obama Administration.
Eric Alterman of The Nation published an article recently calling the Obama presidency “a big disappointment.” Katrina vanden Heuvel, also ofThe Nation, suggested that people aren’t just disappointed in Obama but really wonder where this country is headed. And, Norman Solomon, on the executive board of Progressive Democrats of America, recently told Real News’ Paul Jay, “The Obama Administration is more and more moving towards policies that many who worked to elect Obama have worked to oppose in recent years.”
The emerging consensus, which has been present over the past year and a half as more and more progressives confess frustration with President Obama, is that the presidency has taken a turn away from progressivism, a turn that many didn’t expect or hoped would not occur. There are a few progressive minds who are being asked what to do next that appear willing to admit they held their nose and voted for a centrist Democrat, but an overwhelming amount continue to cling to their history of delusions and maintain Obama could have been progressive.
The consensus also religiously clings to the reality that Republicans are becoming increasingly dangerous for the country and hold that reality up as an excuse for why Obama has “failed” progressives tremendously. To them, the power of the minority has made it near impossible for any progressive agenda, any major social reforms to get through. This would be a valid argument if plenty of evidence of Democratic Party leaders allowing or quite often colluding with the toxic talk and agenda of the Republican Party did not exist.
Not extending unemployment benefits and not raising more of a fuss as Republicans obstruct the renewal of these jobless benefits, appointing Petraeus to replace McChrystal in Afghanistan and continuing a war in a country often regarded as “the graveyard of empires,” maintaining a permanent troop presence in Iraq, contributing to culture which led to the BP oil disaster by indicating renewed support for offshore drilling one month before the disaster, keeping the option of a national public-financed healthcare system off the table as Republicans cried foul about a socialist takeover of healthcare and talked death panels, refusal to advance the minor reform that labor unions have desired, the Employee Free Choice Act (pretty much the only real demand they have had for Obama), the continued use of rendition, believing the truth will endanger soldiers and lead to increased deaths and instability in the Middle East and refusing to investigate torture or release photos of the abuse that soldiers inflicted on detainees— These are just some of the victories Republicans have won from Obama. These are just some of the many examples of continuity that Republicans have enjoyed.
Progressives have gradually woken up from their hope-induced coma and begun to realize more and more the folly that they have been engaging in. They had been dithering on what to do as social movements stumbled (e.g. the antiwar movement, which Cindy Sheehan has tried to re-ignite without much success). That’s why more and more editorial writers and more and more leaders and organizers are being critical.
The questions must be asked: What level of responsibility should progressives take for the fact that they were swept up in Hope-a-Palooza ‘08? How much are progressive writers, media makers, organizers, and leaders to blame for the current impact the Obama presidency has had on society, if any?
While it is uncomfortable and in some respects unreasonable to take to task the people who should be the biggest allies of social movements and, in fact, an ally of this writer (who considers himself to be progressive), the cycle with which progressives have the Left going in is incredibly destructive to the future of this country, the world and in fact the whole of humanity. The strategy and tactics of progressives increasingly look like the definition of insanity–doing the same thing again and again and expecting a different result.
Norman Solomon and Jeff Cohen each appear in two different series produced by Real Newson progressives and the Democratic Party. One set particularly addresses the dynamics between progressives and Obama and the other addresses the corporatism of the Democratic Party, which has made it about impossible for real change to occur.
Both offer a further understanding of what the role of progressives is in society. Solomon reminds progressives “the Democratic Party base is appreciably more progressive than those who get elected and that needs to be rectified. Primaries exist for a reason, they’re rarely utilized to the extent they could and should be.” Cohen expresses his belief in the idea that progressives can “take over” the Democratic Party “through social action and grassroots politics and money” just like the Republican Party did after the Eisenhower Administration.
Solomon and Cohen display faith in the tying of social movements and independent political action to electoral activity. Fundamentally, there is little wrong with this concept. The best movements understood they had to have a presence in the street and had to have an electoral arm of the struggle. But, all too often, those movements, which had presences in elections, were running on a single issue as a candidate for a smaller party that was not Democrat or Republican, an electoral strategy that Solomon and Cohen do not support.
Given the massive shortcomings of the past four decades, it is time for those who speak for progressives and who purport to know ideas on how to best move forward toward a more egalitarian, more socially responsible and less corporate-controlled country to explain why not just progressives but Americans are to believe that their so-called “inside-outside strategy” can work or should work.
Why should we who have visions of a world that the Democratic Party is not willing to push for, why should we support the efforts of groups like Progressive Democrats of America to keep all concerned, socially-minded and oftentimes left-leaning people in one big tent?
Lance Selfa writes in his book, Democrats: A Critical History, takes a close look at what groups like PDA and examines whether the left can take over the Democratic Party. He quotes PDA founder Kevin Spidel who told William Rivers Pitt, “The most important thing we do is that inside-outside strategy. Pulling together members of the Green Party, the Independent Progressive Politics Network, the hip-hop community, the civil rights community, our allies in Congress, the anti-war community. We are bringing together all the social movements within the Democratic Party under on effective tent, and we will do it better if people can contribute to our cause.”
Essentially, Spidel (and I imagine anyone who celebrates the “potential” of PDA) would like all those discontent to not let their discontent create alternatives to working with the Democratic Party. In fact, they would like people to help deter creations of alternatives; PDA did not do anything to denounce or deter the Democratic Party’s funded campaign to force Nader/Camejo off the ballots in the 2004 Election.
The examples of Dennis Kucinich’s campaigns, Jesse Jackson’s Rainbow Coalition, writer Upton Sinclair’s 1934 primary victory, and Howard Dean’s eventual demise in 2004 are all bitter indications of the shenanigans and uphill battles candidates have to face as they organize and run as a Democrat. And, with Kucinich, candidates not only are forced out of the race but are tasked with the duty of herding progressives into the center of the Democratic Party and inspiring them to support a much less robust progressive agenda and much more corporate Democrat like current President Obama.
This writer is very cognizant of the dismal state of the Left. There currently exists no surefire way for any progressives, Greens, socialists, communists, Marxists, or whatever label members of key social movements anoint themselves with to win state power. Ballot access laws effectively make it a chore for candidates from parties not Democrat or Republican to run. Media corporations effectively refuse to cover politics that is not Democrat or Republican. And, the people of this country are conditioned to believe politics is only Democrat or Republican and, actually, that’s why so many Americans are angry and upset with the state of this country.
Many recognize how similar the Democratic and Republican Parties are in this country. The characterization is no longer simply that there isn’t a dime’s worth of difference (as Ralph Nader has said) but much deeper. It’s that what Americans are faced with is a corporate party with a left and right wing. Or, it’s that we have a war party that splits off in a left and right direction (or something similar to these characterizations).
What is the answer? Where do we go? How willing are we to raise our expectations?
At forums all over the world like the World Social Forum, at summits organized by movement leaders all over the world and at conferences held here in the United States, there are people willing to make the cogent analyses necessary to understand the objective reality we face as a people. There are scholars and thinkers and concerned citizens and sharp, energetic organizers willing to develop and work to get this country turned around so it is no longer going in the destructive downward spiraling direction that it had been going in for decades.
But, what has to be done so this can translate into the political arena? When do social movements get to grow up and actually run this country? When leaders from social movements get to lead? And, when do we stop using the Democratic Party as a measuring stick for what’s possible in American politics?
I don’t have the answers to the problems this country faces because of the broken electoral system, the control corporations have over politics in this country, the influence that corporatism and it’s fiendish offspring militarism have over the agenda and policies of America, but I do have the unwavering interest in a better future one that my children, their children and their children and so on and so forth should be able to enjoy–a future where generations won’t have to confront the levels of contempt, exploitation and injustice toward humanity that seem to be increasing because of the policies of an elite few who run this country.
One wonders if a future focus is enough to take on the sharp contradictions of society. But, if that doesn’t push us to mature politically and socially, what will?
“Well Obama has hit a milestone with me. Like W Bush… just the sight of Obama in pictures or video annoys the shit out of me. Doesn’t even have to speak any more.”
-Fred Face 7/10/10
Kurt Nimmo
Infowars.com
July 10, 2010
Let’s put Lindsay Lohan’s fear of jail aside for a moment and turn to Obama’s Summer Recovery Tour 2010. Obama’s apparatchiks “will fan out across the country over the next few days to spread the message to voters about how effective their $787 billion recovery plan has been,” The Hill reported earlier this week. “Obama and the White House take comfort the economy is moving in the right direction. They point out that the economy has added jobs in six of the last seven months and stress that when Obama took office the economy was losing 750,000 jobs a month.”
Has it really? Less than a month ago Joe Bite Me said jobs have gone away and they are never coming back. Biden said “there’s no possibility to restore 8 million jobs lost in the Great Recession” and folks should get used to it. “We inherited a godawful mess,” he said and glibly added that there was “no way to regenerate $3 trillion that was lost. Not misplaced, lost.”
It wasn’t lost and Joe knows it. It was stolen. Trillions went directly to the banksters. They defiantly refused to tell Congress and the American people where it all went. In December of 2008, as the engineered Greatest Depression was gaining steam, the Federal Reserve refused a request by Bloomberg News to disclose the recipients of more than $2 trillion of “emergency loans” billed to future generations of American debt slaves.
In July of 2009, Fed mob boss Ben “Helicopter” Bernanke was grilled about this money disappearing act by Congressman Alan Grayson. Asked which European financial institutions received the money, which was handed out by The Federal Open Market Committee, a component of the Federal Reserve System, Bernanke responded, “I don’t know.”
Ben and Bite Me know where they money went. Well, maybe Bite Me doesn’t but Helicopter Ben sure does. It went into a black hole owned and operated by international bankers.
So, what about Joe’s commentary on lost jobs? It does not square up with Obama’s road tour rhetoric. A couple weeks ago the White House put out a Recovery and Reinvestment Act update claiming that between 2.2 million and 2.8 million jobs were either saved or created because of the stimulus as of March 2010. But even Obama’s wonks can’t seem to get the numbers right. Mostly because they make this stuff up as they go along.
Speaking at a trucking company outside Washington on June 4,Obama embraced the Labor Department’s new employment figures. Obama said the addition of 431,000 new jobs the previous month shows “the economy is getting stronger by the day.” But there is a big problem with this — most of the jobs cited by the anointed one were created by the Census Bureau and they are temporary.
It is all smoke and mirrors and like the Lindsay Lohan media circus designed to distract you. “Putting true numbers to the economic crisis is difficult because the government issues more flattering numbers than what the real America experiences,” writes Bill Sardi. “The Bureau of Labor Statistics says unemployment is around 15 million, or 9.7% of the workforce, but in reality, government numbers only reflect the short time period when people have recently been laid off of work and are seeking jobs or applying for unemployment.”
In fact, the real unemployment rate is around 21.7%, only a couple points off the level during the last engineered Great Depression. Add to this the sharpest decline in the M3 money supply since the 1930s banking crisis and you have all the ingredients for compounded misery and hardship, not only for the unemployed but for most of us.
Oh, and we should not ignore the fact the Dow Jones Industrial Average is repeating a pattern that appeared just before markets fell during the first scientifically created Great Depression. “Those who don’t remember history are doomed to repeat it,”Daryl Guppy, CEO at Guppytraders.com, told CNBC earlier this week. “There was a head and shoulders pattern that developed before the Depression in 1929, then with the recovery in 1930 we had another head and shoulders pattern that preceded a fall in the market, and in the current Dow situation we see an exact repeat of that environment.”
“Ee-gads! By two measures the economy is sinking, not growing. The stock market could tumble downward beyond belief, and all the pension plans, mutual funds and 401(k) plans with it,” warns Sardi. The first measure is a complete lack of economic growth as reflected by the GDP. If the GDP declines significantly two quarters in a row says Peter Morici of The Street, it will be gone for good. “Unemployment would rise into the teens, and the economy would sink into a depression — a deep and painful slump from which it cannot soon recover,” he writes.
Fraudulent banking, lending and hedging schemes brought us to where we are now, confronting the abyss. The corporate media likes to say it was the fault of greedy investment bankers and a destructive Me Generation ethos running wild on Wall Street. Joe Bite Me and the Obamaites blame the Bush administration. It’s all a distraction. Or willful stupidity.
The Obama Road Show will not be able to paper over the obvious facts with feel-goodism propped up by cooked stats. A second bail-out is not in the works. “Governments may not be able to repeat such a bailout in the event of a second crisis,” warns Businessweek. The bankster bank — the Nazi-foundedBank of International Settlements in Basel, Switzerland — has warned the Bank of England that repeating a bailout in the UK may very well be impossible.
Don’t get any funny ideas about taking your complaints to the street during the Greatest Depression.
Oh, and we should not ignore the fact the Dow Jones Industrial Average is repeating a pattern that appeared just before markets fell during the first scientifically created Great Depression. “Those who don’t remember history are doomed to repeat it,”Daryl Guppy, CEO at Guppytraders.com, told CNBC earlier this week. “There was a head and shoulders pattern that developed before the Depression in 1929, then with the recovery in 1930 we had another head and shoulders pattern that preceded a fall in the market, and in the current Dow situation we see an exact repeat of that environment.”
“Ee-gads! By two measures the economy is sinking, not growing. The stock market could tumble downward beyond belief, and all the pension plans, mutual funds and 401(k) plans with it,” warns Sardi. The first measure is a complete lack of economic growth as reflected by the GDP. If the GDP declines significantly two quarters in a row says Peter Morici of The Street, it will be gone for good. “Unemployment would rise into the teens, and the economy would sink into a depression — a deep and painful slump from which it cannot soon recover,” he writes.
Fraudulent banking, lending and hedging schemes brought us to where we are now, confronting the abyss. The corporate media likes to say it was the fault of greedy investment bankers and a destructive Me Generation ethos running wild on Wall Street. Joe Bite Me and the Obamaites blame the Bush administration. It’s all a distraction. Or willful stupidity.
The Obama Road Show will not be able to paper over the obvious facts with feel-goodism propped up by cooked stats. A second bail-out is not in the works. “Governments may not be able to repeat such a bailout in the event of a second crisis,” warns Businessweek. The bankster bank — the Nazi-foundedBank of International Settlements in Basel, Switzerland — has warned the Bank of England that repeating a bailout in the UK may very well be impossible.
So, what to expect? Austerity. That’s why we are seeing a ramping up of the police state around the country and indeed around the world. It has nothing to do with al-CA-duh or homegrown patsies or even hurricanes and the disaster in the Gulf of Mexico. It has to do with pushing back the coming food riots. It’s about stopping angry mobs from burning down the banks and lynching the criminal banksters. There is a reason the partners at Goldman Sachs are packing heat.
The NSA is not vacuuming up phone calls, emails, and web destinations at an unprecedented rate in order to monitor feeble protests against the forever war in Afghanistan. The government is drawing up digital profiles on the real threat — those of us opposed to one world government and the impending police state slave grid. The DHS does not give a hoot about a foundation funded Code Pink or even Anarchists on Bikes. It is worried about “rightwing extremists,” that is to say folks who are determined to return the nation to a constitutional republic, dismantle the Federal Reserve, and arrest and put on trial the criminal banksters and their minions.
The three ring circus featuring Lindsay Lohan and LeBron James will lose its ability to distract as more people are thrown out of work and off the government unemployment “insurance” teat. Obama’s Road Show may placate a few Democrats in the short run and provide fodder for the talking head teleprompter readers on MSNBC and CNN, but it will not hide the 800 pound gorilla in the room — a massive, unprecedented economic depression of the likes never witnessed before.
Congressman Ron Paul discusses the latest in the efforts to get a full and complete audit of the Fed as well as the future of Fed transparency.
See a list of H.R. 1207 cosponsors who voted against the motion here:http://www.campaignforliberty.com/mat…
You don’t usually expect radical neo-Marxism from the International Monetary Fund – the last great bastion of capitalism, spreading the gospel about the free market to the furthest reaches of the world. And yet, hidden away in an obscure IMF report a few years back is a short sentence that explains precisely the problems that Britain, and the rest of the Western world, have been sleepwalking towards for years.
At the time, the idea received little attention. But it has truly radical implications for economics and politics around the world. This is not merely about the financial crisis, but something more deep-seated: the way in which wealth is distributed around society. It is about the middle classes, and why they have become the biggest victims of all.
The problem is that families face a threefold threat to their prosperity. The first issue – the one that the IMF was originally focusing on – is pensions. Not so long ago, households were lucky enough to receive gold-plated pensions that would guarantee a certain pay-out upon retirement. Most companies have closed their schemes after realising they are simply unaffordable. The public sector at last looks like following suit, if the BBC’s decision this week to reduce the generosity of its pension plan is anything to go by.
This is, in the IMF’s words, a “quantum leap”. Suddenly households have gone from being able to rely on a constant stream of legally protected income from their employer to having to manage their own investments (as they technically do under the new breed of pensions).
This would be fine if one could be assured that most people would have either the time or the inclination to understand these new responsibilities. But every piece of evidence – academic and anecdotal – suggests that they do not. The result is that the majority of households are heading blindly towards a future of relative poverty.
The second issue is that the welfare state has become unaffordable, and yet many of Britain’s poorest families have become overly reliant on it. Here, too, there is to be a reckoning. Whereas Gordon Brown used his first Budget to save money by grabbing an annual £6 billion from pension funds (and the middle class), George Osborne used last month’s emergency Budget for a similar-sized grab on the welfare class. Re-indexing tax credits against a lower measure of inflation will cost Britain’s poorest families billions by the end of this parliament.
And it is not merely that the middle class and the poorest have found themselves squeezed so hard: it is that so much of the extra cash generated during the boom years (and even after them) has been actively funnelled towards the most wealthy. The median wage in the US, adjusted for inflation, has been stagnant for pretty much three decades. But the figures at the high end of the scale have soared; whereas in 1970 the average US chief executive made $25 for every dollar of their typical employee’s salary, today the figure is more like $90.
Much of this disparity is down to globalisation. When the world is changing fast, those qualified to deal with the technology du jour (be it the steam engine or the internet) will earn more than their peers. But the fact remains that not only is inequality at the highest level since the Thirties, the pension and welfare systems set up then for the express purpose of levelling this divide are in an exponential decline, threatening to widen the gulf further.
Moreover, there is good reason to suspect, as Raghuram Rajan points out in his new book, Fault Lines, that policy-makers have only been able to persuade people to live with this manifestly unfair situation by pumping up ever bigger booms in the property and stock markets to give them the impression that they are actually making money. Now that the bubble has burst and debt is harder to procure, that illusion has evaporated.
All this before one even takes into account the third problem for households – that they are having to bear the costs of the clean-up for the financial crisis. The austerity budgets being imposed across Europe will mean that families are taxed more and receive less in the way of welfare and public services. Police numbers will be cut; university fees are likely to rise further. In other words, the cost of trying to live a stable, contented middle-class life will balloon.
So I have one simple question: when do the politicians intend to let the public know about the fate that awaits them? The longer they put it off, the nastier the reaction, the bigger the strikes and the greater the chance that governments will fall. Don’t say you weren’t warned.
“Well, he should know because he helped create it. Little toilet licking scum-bag. He’s a sick man… look at him.”
-F.F.
By Zoe Schneeweiss and Andrew MacAskill
Billionaire investor George Soros said “we have just entered Act II” of the crisis as Europe’s fiscal woes worsen and governments are pressured to curb budget deficits that may push the global economy back into recession.
“The collapse of the financial system as we know it is real, and the crisis is far from over,” Soros said today at a conference in Vienna. “Indeed, we have just entered Act II of the drama.”
Soros, 79, said the current situation in the world economy is “eerily” reminiscent of the 1930s with governments under pressure to narrow their budget deficits at a time when the economic recovery is weak.
Concern that Europe’s sovereign-debt crisis may spread sent the euro to a four-year low against the dollar on June 7 and has wiped out more than $4 trillion from global stock markets this year. Europe’s debt-ridden nations have to raise almost 2 trillion euros ($2.4 trillion) within the next three years to refinance, according to Bank of America Corp.
“When the financial markets started losing confidence in the credibility of sovereign debt, Greece and the euro have taken center stage, but the effects are liable to be felt worldwide,” Soros said.
Soros gained fame in the 1990s when he reportedly made $1 billion correctly betting against the British pound. He also wagered that Germany’s mark would appreciate after the collapse of the Berlin Wall in 1989 and that Japanese stocks would start to fall in the same year. His firm, Soros Fund Management LLC, manages about $25 billion.
Credit default swaps, which aim to protect bondholders against the risk of a default, are dangerous and a “license to kill,” Soros said today. CDSs should only be allowed if there is an insurable interest, he said.
Dr. Ron Paul urged Congress to restore our economic stability and strengthen our national security by rejecting failed big government policies in this speech before the House from June 2009…
More than three years into one of the worst housing crashes in economic history, Americans remain wedded to a dysfunctional ideology that leaves citizens perpetually at the mercy of predatory bankers. Even after witnessing a gigantic wave of abusive lending drown the life savings of millions, most citizens still believe that borrowers, not bankers, are to blame for
unaffordable loans, while a staggering majority believes it is morally wrong for troubled borrowers to walk away from their mortgages—even amid conditions of financial distress.
These figures and plenty of other distressing data come from a little-noticed survey published in April by mortgage giant Freddie Mac (in addition to serving as bonus factories for reckless executives, Freddie and its sister company Fannie Mae produce some of the most reliable housing data available, particularly on consumer sentiments). The reason for the survey’s relatively small splash is easy to understand—almost nothing about consumer attitudes toward housing has changed since 2003, right before the eruption of the subprime boom.
Let’s start with the worst news—blame for bad loans. Despite all of the stories proliferated about fraud (80 percent of which is committed by lenders, according to the FBI) and other forms of banker abuse, a full 53 percent of Americans believe that borrowers are responsible for taking out unaffordable loans, not the lenders who push the loans. This simply does not make sense. Let’s imagine the best-case scenario for the lender, in which both the borrower and the lender have an educated, sober view of housing options, and nobody is being defrauded. This view is essentially presented by J.P. Morgan Chase Chief Economist James Glassman in a recent note to clients:
Folks may like to hear that someone else is to blame for the mistakes they made, but everyone knows–including those who bought houses far beyond what they could afford and then walked . . . that Wall Street isn’t the only culprit in the housing debacle.
Glassman’s best defense of the banks is, in essence, that it takes two to tango. But unlike the borrower, the banker is supposed to be a professional—it’s the banker’s job to make sure that he isn’t extending loans that cannot be repaid, and he gets paid very well to exercise this judgment. Personal responsibility is all well and good, but it’s absurd to argue that it only extends to one party in a transaction—especially the party who isn’t getting paid.
This belief that personal responsibility does not extend to bankers creates an unfair and irrational moral burden on borrowers who find themselves in over their heads. A full 80 percent of the general population believes that it is not acceptable for a borrower to stop paying his or her mortgage, even under conditions of financial distress. Even more astonishing, 61 percent of borrowers who have already missed payments on their mortgage believe the same thing.
Bankers intentionally propagate this insane ideology in order to profit from it. That’s why high-ranking people like Glassman publish “research notes” castigating his bank’s own customers. The Wall Street bonus machine feeds on irrational borrower guilt. If you’re stuck in a mortgage you can’t afford, refusing to pay is your only real defense against that machine.
