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Kucinich Asks ‘Is the Fed Paying Banks NOT to Loan Money?’ | Press Release
Domestic Policy Subcommittee Chair Announces New Probe of TARP
WASHINGTON (JULY 21, 2009) - - Representative Dennis Kucinich (D-OH), who has led the effort challenging the use of TARP funds through two administrations, today questioned whether or not “banks are parking a historic amount of taxpayers’ money in the Federal Reserve while the businesses and consumers across America are starved for credit” and whether the Federal Reserve is “paying banks not to make loans.”
Kucinich raised the question in a hearing this morning before the Government and Oversight Committee at which the Special Inspector General for TARP, Neil Barofsky, testified.
Kucinich cited today’s Fed news report on Bloomberg.com:
I woke up one morning late last week to the news that taxpayers, already $149 billion in the hole in the Treasury Department's TARP bailout program, are set to lose even more. As rescued banks now try to extricate themselves from the government's control, they must buy back stock warrants proffered at the time of the bailout, which, as the New York Times described it, offer "the right to purchase shares in each of the companies at roughly the price of their shares at the time of the deals."
As it happens, thanks largely to that taxpayer-funded bailout, bank stocks have risen since last fall's meltdown. Selling those warrants, then, should mean a tidy profit for taxpayers. But no such luck, it seems. Almost a dozen small banks have already bought back their warrants, and for a considerable discount -- a mere 66% of their value -- costing taxpayers upwards of $10 million. If this were to continue when giant firms like JPMorgan Chase, Goldman Sachs, and Morgan Stanley come up to bat, taxpayers could be out up to $2.1 billion. Think of that as a small potential thank-you note from the banking business to Americans for helping it out of a jam.
Right behind that bit of sprightly news was a report from the Associated Press that the giant insurance firm AIG, almost 80% owned by taxpayers, was now back in consultation with the Obama administration over just how much more it should pay out in further retention bonuses -- this after multi-millions in such bonuses were already paid -- including "about $235 million for employees at AIG's financial products unit." AIG's near collapse, added the AP, "was not due to its traditional insurance operations, but instead risky derivatives contracts written by the financial products division." In addition to those traders, for 40 top execs of the dismally failed company, there is to be a payout of a mere $9 million in further bonuses for 2008. What a comedown!
Of course, who can be surprised by this sort of thing these days? Not, I assume, Barbara Garson, known in the Vietnam era as the author of the satiric play "MacBird," who has since gone on to write books on American work life (All the Livelong Day) and on a single bank deposit as it made its dizzying way around our planet (Money Makes the World Go Around). For TomDispatch, she's written a little mystery story about those financial-products types, what's happened to them, and -- most strikingly -- their possible rebirth. Think of her as this site's equivalent of Miss Marple, set loose on our financially melted-down planet. Tom
The Mystery of the Missing Unemployed Man
On Jobs and Banks
By Barbara Garson
For the book I'm writing about unemployed Americans, I had no trouble finding accountants, brokers, cashiers, or die casters. Admittedly, I had to go out of town to interview the die casters. But when I arrived, alphabetically, at unemployed editors, I had only to look in my address book.
Financiers were further from my life experience than either die casters or editors. Yet the "do you know anyone who…?" method still proved an effective way of turning up unemployed hedge-fund analysts and bank loan officers -- and within a week at that. It was only when I refined my search to ferret out unemployed financiers who had actually handled those infamous "toxic assets" that I hit the proverbial brick wall.
Swiss ready to seize UBS data to stifle Washington
By BALZ BRUPPACHER, Associated Press Writer | Yahoo! News
Switzerland's government said Wednesday it would forbid the Swiss bank UBS AG from complying with any court-ordered transfer of data on tens of thousands of American clients to the U.S. government, and would consider seizing documents to prevent that.
The statement was the strongest yet by Swiss authorities locked in a battle with the U.S. Justice Department over the identities of more than 50,000 American clients at UBS.
The case in the federal district court in Miami has become a focal point of Washington's efforts to crack down on tax evasion and the foreign banks that help wealthy Americans send money overseas. But UBS and the Swiss government say handing over the names would violate Swiss law and subject bank employees to criminal prosecution in Switzerland. Read more.
House Finance Committee Members Took $62.9 Million From Industry Interests
By Sam Stein | Huffington Post | H/T Liam Hughes
Members of the House Financial Services Committee, which is playing a critical role in restructuring the nation's reeling financial, banking and housing sectors, have received nearly $63 million in campaign contributions from the industries they oversee.
A new analysis of campaign finance data by Public Campaign Action Fund, which provided an advance preview to the Huffington Post, shows that financial, insurance and real estate interests donated a combined $62.9 million to the 71 members of the House Financial Services Committee.
The hefty donations reflect the extent to which key companies and individuals of the financial sector have attempted to exert their influence on legislative debates even before the recent economic collapse. For good-government groups, the findings also raise a bevy of questions over just how neutral lawmakers have been in crafting solutions toward getting the financial markets and Wall Street on more stable footing. Read more.
Amazingly, San Francisco Fed Chair Jessica Yellen doesn't think the Fed's policy is dangerous...
Edward Harrison at Naked Capitalism has her recent speech:
Let me now turn to an issue that has lately garnered a great deal of attention—inflation. Just a short time ago, most economists were casting a wary eye on the risk of deflation—that is that prices might drop, perhaps falling into a downward spiral that would squeeze the life out of the economy. Now, though, all I hear about is the danger of an outbreak of high inflation....
I’ll put my cards on the table right away. I think the predominant risk is that inflation will be too low, not too high, over the next several years. I take 2 percent as a reasonable benchmark for the rate of inflation that is most compatible with the Fed’s dual mandate of price stability and maximum employment. This is also the figure that a majority of FOMC members cited as their long-run forecast for inflation, according to the minutes of the committee’s April meeting.
First of all, this very weak economy is, if anything, putting downward pressure on wages and prices. Read more.
Payrolls Fall More Than Forecast, Unemployment Rises
By Shobhana Chandra | Bloomberg
Employers in the U.S. cut 467,000 jobs in June, the unemployment rate rose and hourly earnings stagnated, offering little evidence the Obama administration’s stimulus package is shoring up the labor market.
The payroll decline was more than forecast and followed a 322,000 drop in May, according to Labor Department figures released today in Washington. The jobless rate jumped to 9.5 percent, the highest since August 1983, from 9.4 percent.
Unemployment is projected to keep rising for the rest of the year just as the income boost from the stimulus package fades, undermining prospects for a sustained rebound in household purchases, analysts said. As companies from General Motors Corp. to Kimberly-Clark Corp. cut costs, the lack of jobs will limit any recovery.
“Payrolls will be going down the rest of the year and the unemployment rate will be rising,” John Silvia, chief economist at Wachovia Corp. in Charlotte, North Carolina, said before the report. “The challenge for the Obama administration is that we’ll have positive economic growth but still no job growth. It’s going to be tough on them.” Read more.
Fannie, Freddie to Refinance Larger Underwater Loans
By Dawn Kopecki | Bloomberg
Fannie Mae and Freddie Mac will begin refinancing mortgages with loan-to-value ratios of as much as 125 percent as the Obama administration seeks to boost participation in its anti-foreclosure programs.
Housing and Urban Development Secretary Shaun Donovan made the announcement in a statement today. Currently Fannie Mae or Freddie Mac, through President Barack Obama’s Home Affordable program, can refinance mortgages they own or guarantee when the loan is worth as much as 105 percent of the home’s market value.
The continuing slide in home prices has pushed millions of Americans beyond that 105 percent loan-to-value ratio, limiting participation in Obama’s initiative. Fannie Mae and Freddie Mac have refinanced 80,000 loans under that program, which set out to help as many as 5 million people who may owe more than their homes are worth, Federal Housing Finance Agency Director James Lockhart said at a real estate conference on June 18.
The decision to change the allowable ratio is part of an effort to “adapt to an ever-changing housing market,” Treasury Secretary Timothy Geithner said in the HUD statement. “By expanding refinance eligibility, we can bring relief to more struggling homeowners more quickly.” Read more.
Read Matt Taibbi's expose on Goldman Sachs, "The Great American Bubble Machine: From Tech Stocks to High Gas Prices, Goldman Sachs has engineered every major market manipulation - and they're about to do it again!" here.
Your bank wants more of your money, and it's found a way to get it: by jacking up the fees on your account.
Customers are paying more to maintain a checking account and withdraw cash from an out-of-system ATM, and when they bounce a check. To make up for declining revenue, many banks are boosting fees and are requiring higher minimum balances for many accounts.
The institutions also have made it easier for customers to spend more than is in their accounts -- and then hit them with substantial fees, a practice so vexing to consumer advocates that the Federal Reserve is thinking of regulating it.
Bank revenue has plummeted on the back of foreclosures and rising credit card delinquencies. Now Congress has passed a law cracking down on arbitrary and excessive credit card fees. So the banks have been fighting back.
"There is an economic storm that has made revenue fall," said Michael Moebs, an economist and chief executive of Moebs Services, an economic research firm in Lake Bluff, Ill. "Fee income is basically where banks and credit unions can offset both loan- and investment-related losses." Read more.
It's good that Barack Obama is an agile basketball player because on financial regulatory reform he's having to straddle an ever widening chasm between his words and his deeds.
Obama said: "Millions of Americans who have worked hard and behaved responsibility have seen their life dreams eroded by the irresponsibility of others and by the failure of their government to provide adequate oversight. Our entire economy has been undermined by that failure."
"Over the past two decades, we have seen, time and again, cycles of precipitous booms and busts. In each case, millions of people have had their lives profoundly disrupted by developments in the financial system, most severely in our recent crisis."
Strong words, even though he didn't include "corporate crime, fraud and abuse" to replace the euphemism "irresponsibility." One would think that his 88 page reform proposal to Congress would be up to his words. Instead he provides Washington aspirins for Wall Street brain cancer.
The anemic nature of these reforms ostensibly designed to prevent or deter another big bust on Wall Street and its hostage grip on the nation's savings and investments immediately drew the ire of well-regarded business columnists. Read more.
The first Black president has racked up some impressive victories. Barack Obama has quarantined single-payer healthcare advocates, crushed dissent against the war in Congress, and transferred more money to the finance capital class than at any time in planetary history. Not bad for just five months in office. "At some point in the near future Barack Obama will become inextricably associated in the public mind with Big Capital – and deservedly so." The 'Obama Effect' has led to the near-total collapse of the Left."
As of this writing, the Progressives for Obama website still exists, a relic of Left delusion that should have died of embarrassment months ago. Barack Obama has, indeed, grown in the presidency – but not into the FDR-like figure of his leftish supporters’ imaginations. Nor has his presence in the Oval Office served to spur Blacks and progressives to dramatic action, creating the “push” that Left Obamites had predicted would allow their champion to act on his more “liberal” instincts. Quite the contrary. The “Obama Effect” has led to the near-total collapse of the Left– both its white and Black wings – and made the nation safe for rule by finance capital and militarists.
The military, finance capital and healthcare corporations (insurers are a branch of finance capital) are winning every important battle because, on fundamental issues, President Obama is on their side. It is he who crushed the anti-war bloc in the US. House; who silenced and marginalized single payer advocates, while fawning over health profiteers; who engineered the greatest transfer of wealth in human history to bankers, leaving them free to once again ruin themselves and the rest of us.
So let us give President Obama his due. He not only smashed the Left opposition, he humiliated them. Read more.
It's not working. The Bush-Obama strategy of throwing trillions at the banks to solve the mortgage crisis is a huge bust. The financial moguls, while tickled pink to have $1.25 trillion in toxic assets covered by the feds, along with hundreds of billions in direct handouts, are not using that money to turn around the free fall in housing foreclosures.
As the Wall Street Journal reported Tuesday, "The Mortgage Bankers Association cut its forecast of home-mortgage lending this year by 27% amid deflating hopes for a boom in refinancing." The same association said that the total refinancing under the administration's much ballyhooed Home Affordable Refinance Program is "very low."
Aside from a tight mortgage market, the problem in preventing foreclosures has to do with homeowners losing their jobs. Here again the administration, continuing the Bush strategy, is working the wrong end of the problem. Although President Obama was wise enough to at least launch a job stimulus program, a far greater amount of federal funding benefits Wall Street as opposed to Main Street.
State and local governments have been forced into draconian budget cuts, firing workers who are among the most reliable in making their mortgage payments--when they have jobs. Yet the Obama administration won't spend even a small fraction of what it has wasted on the banks to cover state shortfalls. Read more.
Obama's Financial Reform Proposal: A Stealth Scheme for Global Monetary Control
By Stephen Lendman
When politicians plan reform, it's wise to be skeptical and hold on to your wallets. So fixing the economy by bailing out Wall Street is wrecking it, and Obama's proposed health care reform taxes more, provides less, places profits above human need, avoids the most vital solutions, and leaves a broken system in place.
Now there's "Financial Regulatory Reform, A New Foundation: Rebuilding Financial Supervision and Regulation" - announced June 17 with Obama saying he'll send Congress a plan to create new government agencies, give the private banking cartel Federal Reserve more power, and address five major problems needing regulatory and legislative measures to fix.
Addressing business executives in the White House East Room, he said:
Momentum Builds For Ron Paul's "Fed Transparency" Act
Joe Weisenthal | Business Insider
For years, Ron Paul has been a lone voice in Congress, questioning the wisdom of the Federal Reserve -- both its various chairmans and the institution itself. His dogged questioning of Alan Greenspan, and then Ben Bernanke, make for great TV (otherwise, those hearings are total snoozefests).
But now, as America wakes up to its dire financial situation and average people talk about things like "fractional reserve lending", the gold standard, and Zimbabwe-like inflation, he's finally getting some momentum.
It's baby steps, of course. Paul is the sponsor of the Federal Reserve Transparency act of 2009, which demands a GAO audit of the Fed, and a full report to Congress sometime next year. And it's gaining steam. It already has 175 co-sponsors in the House, and now a major Democrat, Rep. Alan Grayson (ironically, the same one who's proposing that stupid France vacation bill we mentioned this morning has joined on, and is urging his party colleagues to join them. Read more.
US House to debate Ron Paul’s ‘Audit the Fed’ bill
By Stephen C. Webster | Raw Story
“To understand how unwise it is to have the Federal Reserve, one must first understand the magnitude of the privileges they have. They have been given the power to create money, by the trillions, and to give it to their friends, under any terms they wish, with little or no meaningful oversight or accountability. Thus the loudest arguments against greater transparency are likely to come from those friends, and understandably so.”
After months of activism and lobbying by Congressman Ron Paul’s supporters, House Resolution 1207, the Federal Reserve Transparency Act, will move out of committee to be debated by the full House of Representatives.
In a show of cross-party unity, Ohio Democratic Congressman Dennis Kucinich became the bill’s 218th co-sponsor, pushing it over the threshold for debate in Congress. Read more.
Check here to see whether your House Representative has signed on to the bill yet.
Swindlers, con men, and thieves could siphon off as much as $50 billion of the government's planned stimulus package as the money begins flooding the economy in coming months, according to David Williams, who runs Deloitte Financial Services Advisory and counsels clients on fraud prevention.
Williams predicted that about $500 million of the total $787 billion stimulus would be channeled into the traditional procurement network for government contracts, while the rest will be spent directly by the government or outside the corporate network.
"The rule of thumb typically is that of the about $500 billion worth of money that's going to run through the procurement process, somewhere between 5% and 10% of that usually finds it way into potential problems," Williams said. "That's sort of the benchmark that I use."
Companies will face increased pressure to try to stem the tide, and need to be prepared to safeguard data as well as the cash, according to Williams.
Williams said this week that the money flowing from the current stimulus package is particularly vulnerable to fraud because almost all movement of money is now done electronically. Read more.
Dollar’s Reserve Status May Deteriorate, Roubini Says
By Natalie Weeks and Mark Deen | Bloomberg
The dollar’s status as the world economy’s sole reserve currency may deteriorate, said Nouriel Roubini, the New York University economics professor who predicted the financial crisis.
“We may see complementary reserve currencies,” Roubini said at a conference today in Athens. While it’s “not going to happen overnight,” the development “will diminish the role of the dollar over time.”
The dollar’s status has come into question as leaders of Brazil, Russia, India and China discuss substituting other assets for their dollar holdings amid a ballooning budget deficit that keeps the U.S. dependent on foreign financing. China alone owns about $744 billion of U.S. Treasury bonds among its $2 trillion of foreign-exchange reserves. Read more.
Jean Johnson is 81 years old and suffering from diabetes. But instead of relaxing in retirement, she recently started a new job.
"I need money. My social security check just doesn't make it, with rent and the gas bill to pay," said Johnson, who took a job in March at a library in Danforth, Illinois. "I need to work."
Amid the economic downturn, shrinking retirement accounts, increasing costs for food and medicine, and stiff competition for even entry-level jobs, evidence is building that the dream of a comfortable retirement is dying for many Americans.
The ranks of the elderly looking for work has swelled more than 120 percent to more than 1.8 million in the last year. Among that group, those who were 75 and older increased by 80 percent, according to data from the National Council on Aging.
There are some 29 million seniors - those 55 and older - employed or actively looking for work in the United States, which is about 18 percent of the civilian labor force.
And their numbers are expected to grow. Read more.
By Dave Lindorff
My bank, a small regional institution that was not involved in sub-prime lending, and that was not a recipient of any TARP bailout money, cut off my home equity line of credit two weeks ago. They did it abruptly, with no notice—I only discovered it had happened when I tried to get a $500 advance from it to cover a payment I was making on my credit card. When I asked what was going on, the local branch manager informed me that “we are closing out a lot of credit lines while we reassess the value of houses in this region, which have been falling.”
This ersatz capitalism, where losses are socialised and profits privatised, is doomed to failure. Incentives are distorted. There is no market discipline. The too-big-to-be-restructured banks know that they can gamble with impunity — and, with the Federal Reserve making funds available at near-zero interest rates, there is ample money to do so. Some have called this "socialism with American characteristics". But socialism is concerned about ordinary individuals. By contrast, the US has provided little help for the millions of its people who are losing their homes. Workers who lose their jobs receive only 39 weeks of limited unemployment benefits, and are then left on their own. And, when they lose their jobs, most also lose their health insurance.
With all the talk of "green shoots" of economic recovery, America's banks are resisting efforts to regulate them. While politicians talk about their commitment to regulatory reform to prevent a recurrence of the crisis, this is one area where the devil really is in the details — and the banks will muster what muscle they have left to ensure that they have ample room to continue as they have in the past.
The old system worked well for the banks so why should they embrace change? Indeed, the efforts to rescue them devoted such little thought to the kind of post-crisis financial system we want, that we will end up with a banking system that is less competitive, with the large banks that were "too big to fail" even larger.
It has long been recognised that the US banks that are too big to fail are also too big to be managed. That is one reason the performance of several has been so dismal. When they fail, the Government engineers a financial restructuring and provides deposit insurance, gaining a stake in their future. Officials know that if they wait too long, zombie or near-zombie banks — which have little or no net worth, but are treated as if they were viable institutions — are likely to "gamble on resurrection". If they take big bets and win, they walk away with the proceeds, if they fail, the Government picks up the tab. Read more.
Financial regulator seeks powers to curb excess speculation
By Kevin G. Hall | McClatchy Newspapers
If Congress grants the commission's wishes, big Wall Street players such as Goldman Sachs, Morgan Stanley, JP Morgan Chase and others would be subject to capital requirements, new business-conduct rules and more extensive reporting and recordkeeping requirements.
Firing the opening shot in a likely battle with Wall Street, the federal regulator who's overseeing the trading of oil contracts asked Congress on Thursday for broad powers to regulate the exotic private contracts that are thought to contribute to rising oil prices and the global financial crisis.
Testifying before the Senate Agriculture Committee, Commodity Futures Trading Commission Chairman Gary Gensler told lawmakers that he needs broad authority to bring all derivatives contracts under regulatory supervision. Derivatives involve bets that derive their value based on future prices of some underlying asset, such as oil contracts, interest rates, currency or even bonds and other forms of credit.
The new commission chief also called for an additional set of rules for swaps dealers, big global financial institutions that dominate activity in these markets. These rules would force players on both sides of a transaction in these markets to set aside cash to cover potential losses.
The global financial system nearly collapsed during the last four months of 2008 after the Federal Reserve and the Treasury Department rescued insurance giant American International Group. AIG was rescued because it had issued trillions of dollars in insurance-like private derivatives contracts and had insufficient reserves to cover its losses.
"The current financial crisis has taught us that the derivatives trading activities of a single firm can threaten the entire financial system and that all such firms should be subject to robust federal regulation," Gensler said. Read more.
Though employment losses have slowed in May, many have already lost large numbers of jobs over this recession and therefore have fewer jobs left to lose.
The economy lost another 345,000 jobs in May. For the first time in a year, there were upward revisions to the past months’ data, with March and April’s combined employment revised upward by 72,000 jobs. The establishment survey reports 1.5 million jobs lost over the last three months. With this report, employment is now down 6.0 million jobs from its peak in December 2007— the 4.3 percent decline reflecting the largest relative loss of jobs in over 50 years. With fewer jobs left to lose, job loss is now occurring only at the fast pace of September and October of 2008.
The household survey showed a sharp rise in the unemployment rate to 9.4 percent from 8.9 percent in April—the highest rate in nearly 26 years. After showing a gain of 120,000 jobs in April, the household survey showed a loss of 437,000 jobs in May....
Adjusted for age composition and survey, the unemployment rate would now be equal to 10.7 percent, compared to a post-World War II peak of 10.8 percent in 1982. When internationally comparable data is released next month, the rate of unemployment in the United States will almost certainly be higher than that in the Euro Area.
A short foreward from TomDispatch:
Here's a snapshot in words of Treasury Secretary Tim Geithner when he was still president of the New York Federal Reserve Bank from a recent portrait in the New York Times:
"He ate lunch with senior executives from Citigroup, Goldman Sachs and Morgan Stanley at the Four Seasons restaurant or in their corporate dining rooms. He attended casual dinners at the homes of executives like Jamie Dimon, a member of the New York Fed board and the chief of JPMorgan Chase. Mr. Geithner was particularly close to executives of Citigroup, the largest bank under his supervision. Robert E. Rubin, a senior Citi executive and a former Treasury secretary, was Mr. Geithner's mentor from his years in the Clinton administration, and the two kept in close touch in New York."
Small world, don't you think? This catches something of the lifestyle of Wall Street's rich and financially powerful as well as those who "regulate" them. It's no longer news that the revolving door from Wall Street to Washington and back now spins endlessly. Hence, the increasingly popular moniker "Government Sachs."
"Crony capitalism" was once a term applied to the powerful oligarchs of "emerging economies" or -- a term not heard so much these days -- banana republics. Now, however, as economist Simon Johnson has written, the U.S. is beginning to look startlingly more like one of those "emerging economies" in meltdown. And overseeing the response to the crisis are, of course, representatives of the same crony capitalists and oligarchs who helped create it.
Not surprisingly, the "solution" to the crash of '08 crafted by former Goldman Sachs chairman Henry Paulson, Jr. -- Rubin held the same job before going to Treasury in the Clinton years -- and former New York Fed chief Tim Geithner (who made Mark Patterson, a former Sachs lobbyist, his chief of staff and kept on Sachs alum Neel Kashkari to lead the bailout effort) is clearly meant to staunch the wounds of their world, not ours. TomDispatch regular Andy Kroll, who's read all the latest economic reports so you wouldn't have to, suggests below just what an instrument of Wall Street their rolling bailout program has really been. Tom
The Greatest Swindle Ever Sold
How the Financial Bailout Scams Taxpayers, Subsidizes Wall Street, and Props Up Our Broken Financial System
By Andy Kroll
On October 3rd, as the spreading economic meltdown threatened to topple financial behemoths like American International Group (AIG) and Bank of America and plunged global markets into freefall, the U.S. government responded with the largest bailout in American history. The Emergency Economic Stabilization Act of 2008, better known as the Troubled Asset Relief Program (TARP), authorized the use of $700 billion to stabilize the nation's failing financial systems and restore the flow of credit in the economy.
By Dave Lindorff
Just imagine for a moment that you are a retired contractor, struggling to get by on your pathetically shriveled 401(k). when your ne-er-do-well child suddenly comes to you saying he’s got this idea to start buying derelict homes and rehabbing them for resale. He asks you to stake him with a $100,000 loan (about half of what you’ve got left in your retirement fund), promising to repay you when he sells his first couple of houses. You know the kid’s flat busted and has been laid off from his job as a dishwasher, so you want to help, but you’ve also seen his carpentry skills: The doghouse he build in high school fell apart on a windy day, and his own house has a leaking roof, needs repainting, and all the plumbing leaks. You’ve also seen his business skills: He plays the Lotto excessively, hasn’t saved a penny, and buys most of his supplies at the local 7-Eleven.
Would you front this kid half your money?
Last month, 60 Members of the House of Representatives, including 51 Democrats, voted against the war supplemental for Afghanistan, Pakistan, and Iraq. But this week, when the House is expected to consider the agreement of a House-Senate conference on the war funding, the supplemental could well be defeated on the floor of the House - if most of the 51 anti-war Democrats stick to their no vote - which they might, if they hear from their constituents.
The key thing that's changed is the Treasury Department's insistence that the war supplemental include a $100 billion bailout for the International Monetary Fund - a bailout for European banks facing big losses in Eastern Europe, the international version of the Wall Street bailout.
What's the Administration's specific aim in bailing out GM? I'll give you my theory later.
For now, though, some background. First and most broadly, it doesn't make sense for America to try to maintain or enlarge manufacturing as a portion of the economy. Even if the U.S. were to seal its borders and bar any manufactured goods from coming in from abroad--something I don't recommend--we'd still be losing manufacturing jobs. That's mainly because of technology.
When we think of manufacturing jobs, we tend to imagine old-time assembly lines populated by millions of blue-collar workers who had well-paying jobs with good benefits. But that picture no longer describes most manufacturing. I recently toured a U.S. factory containing two employees and 400 computerized robots. The two live people sat in front of computer screens and instructed the robots. In a few years this factory won't have a single employee on site, except for an occasional visiting technician who repairs and upgrades the robots.
Factory jobs are vanishing all over the world. Even China is losing them. The Chinese are doing more manufacturing than ever, but they're also becoming far more efficient at it. They've shuttered most of the old state-run factories. Their new factories are chock full of automated and computerized machines. As a result, they don't need as many manufacturing workers as before. Read more.
Last month, a little-known company where Summers served on the board of directors received a $42 million investment from a group of investors, including three banks that Summers, Obama’s effective “economy czar,” has been doling out billions in bailout money to: Goldman Sachs, Citigroup, and Morgan Stanley. The banks invested into the small startup company, Revolution Money, right at the time when Summers was administering the “stress test” to these same banks.
A month after they invested in Summers’ former company, all three banks came out of the stress test much better than anyone expected -- thanks to the fact that the banks themselves were allowed to help decide how bad their problems were (Citigroup “negotiated” down its financial hole from $35 billion to $5.5 billion.)
The fact that the banks invested in the company just a few months after Summers resigned suggests the appearance of corruption, because it suggests to other firms that if you hire Larry Summers onto your board, large banks will want to invest as a favor to a politically-connected director.
Last month, it was revealed that Summers, whom President Obama appointed to essentially run the economy from his perch in the National Economic Council, earned nearly $8 million in 2008 from Wall Street banks, some of which, like Goldman Sachs and Citigroup, were now receiving tens of billions of taxpayer funds from the same Larry Summers. It turns out now that those two banks have continued paying into Summers-related businesses. Read more.
Daniel Estulin's "True Story of the Bilderberg Group" and What They May Be Planning Now By Stephen Lendman
Note: Estulin will be the featured guest on The Global Research News Hour Tuesday, June 2. He can be heard live or afterwards through the program archive.
For over 14 years, Daniel Estulin has investigated and researched the Bilderberg Group's far-reaching influence on business and finance, global politics, war and peace, and control of the world's resources and its money.
Earlier this week Mayor Michael Bloomberg announced the appointment of former Lehman Brother's economic strategist, John B. Rhea to head the New York City Housing authority which administers public housing. For those of you who are keeping score, Rhea held his previous position at the time of the failed investment firm's collapse. The move seems to fall in line with the Mayors plan to marry public housing and the private sector and, if what we've seen from the rent guidelines board is any indication, then we could all be in for a bumpy ride. We're already seeing similar signs of such a marriage being proposed by the mayor's office, including his affordable housing plan (see link below). Here is closer look at what Rhea and what his appointment will mean for NYC's affordable housing.
After the collapse of Lehman brothers John B. Rhea, stayed on with the new owners at Barclay's. The 43 year old Wall Streeter also has worked for JP Morgan where he was involved in overseeing several mergers and acquisitions worth 50 billion dollars, according to the NY Times. His biggest merger was that of RJ Reynolds and smokeless tobacco products. His connection to politics has been as money man for the Democrats, often being responsible for Wall Street's contributions to both president Obama and Senator Chuck Schumer. For Obama, Rhea brought in a reported $500,000, mostly from Wall Street. And for Schumer he has been a liaison between the Senator's campaign and Wall Street.
But John B. Rhea has no experience in housing - none. So it seems a bit puzzling why Mayor Bloomberg would put him in charge of an agency which oversees 178,000 apartments throughout the five boroughs, which house just under 408,000 residents. The office is is also in charge of Section 8 housing and runs the federal voucher program. The two programs combined make up 8% of all New York City housing, and which largely serves those earning $23,000 dollars and less a year. Rhea's disconnect from the population that he will be serving become only too clear when, while speaking at an event announcing his new position he joked about "not taking the job for the money". He'll be making $189,700 a year.
To be fair, however, there is little doubt that the former Lehman Brother's executive will be making less than he was during his Wall Street days. But the crime of hiring someone so inexperienced on the issue and is so close to the marketplace is that the office of NYCHA has been a lighting rod for scandals for decades. This under-funded agency, whose annual budget is 3.4 billion dollars, is currently running an 177 million deficit and the public housing itself has been allowed to deteriorate to the point that the buildings themselves are deemed unsafe and, in many cases, are actually condemned. Read more.