‘Socialism’ rises in the polls — but do Americans even know what it means?
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The Securities and Exchange Commission is examining whether Bank of America improperly failed to tell shareholders about $3.6 billion in bonuses that Merrill Lynch gave employees before the companies merged and may penalize the bank if it finds wrongdoing, SEC Chairman Mary L. Schapiro said in a letter to Cleveland Democratic U.S. Rep. Dennis Kucinich.
"Where the SEC believes that there has been an omission of material facts necessary in order to make the statements not misleading, we will carry out our enforcement responsibilities with vigor and vigilance," said the letter, which Kucinich released on Monday.
Tucked away inside the small print of the latest Federal Reserve report on its balance sheet is a jaw-dropping nugget of information. A year ago, American banks had $1.8 billion on deposit with the Fed above and beyond the regulatory requirements. This month, these excess deposits have soared to $771.2 billion.
This is not just massive evidence of hoarding of funds by the banks. It also means that the banks are undermining the Obama administration's attempts to stimulate the economy. Just as President Obama pumps $787 billion of deficit spending into the economy, the banks take $771 billion out of it and sock it away in the Fed's vaults.
Marylanders Invited to David Korten's "Agenda for a New Economy" - Tomorrow Evening, April 13, 7:30 PM
Agenda for a New Economy - Video and Discussion
David Korten discusses how pouring money back into the "phantom wealth" of Wall Street will not heal all our economic woes. The "new economy" he envisions is locally based, community oriented, and devoted to a better life for all - not simply increasing the profits of the rich. It is a compelling agenda for our time, as we question how we should change the direction of our country.
When: Monday, Apr 13, 7:30 pm
Location: Paint Branch Unitarian Universalist Church, 3215 Powder Mill Road, Adelphi, Maryland 20783 Map
Does it strike you as odd that the American government has invested $115 billion in TARP money alone in Citibank, JPMorgan Chase, and Bank of America, fully 70 percent of their market cap ($164.5 billion, as of March 30), yet we have virtually no say in the management or behavior of these banks? Does it seem even odder that these banks are getting along extremely well with the government regulators who should be picking them apart for having destroyed the economy and financial system?
There is a grand, implicit bargain being struck in our multitrillion-dollar bailout of the financial-services sector. Those in power in D.C. and New York are pretending the bargain is: You give us trillions, and in return, we fix this industry so the economy recovers and this never happens again. In fact, the bargain is much more alarming: Trillions of dollars of taxpayer money will be invested to rescue the banks, without the new owners—taxpayers—being allowed to make any of the necessary changes in structure, senior management, or corporate behavior. In return, the still-private banks will help the D.C. regulators perpetuate the myth that regulators didn't have enough power to prevent the meltdown. In sum, banks get bailed out with virtually no obligations imposed; regulators get more power and a pass on their past failures. The symbiosis of the past decade continues.
Not long ago, a group of skeptical Democratic senators met at the White House with President Obama, his chief economic adviser, Larry Summers, and Treasury Secretary Tim Geithner. The six senators—most of them centrists, joined by one left-leaning independent, Vermont's Bernie Sanders—said that while they supported Obama, they were worried. The financial reform policies the president was pursuing were not going far enough, they told him, and the people Obama was choosing as his regulators were not going to change things fundamentally enough. His appointed officials and nominees were products of the very system that brought us all this economic grief; they would tinker with the system but in the end leave Wall Street, and its practices, mostly intact, the senators suggested politely. In addition to Sanders, the senators at the meeting were Maria Cantwell, Byron Dorgan, Dianne Feinstein, Carl Levin and Jim Webb.
That March 23 gathering, the details of which have gone largely unreported until now, was just a minor flare-up in a larger battle for the future—one that may already be lost. With the financial markets seeming to stabilize in recent weeks, major Wall Street players are digging in against fundamental changes. And while it clearly wants to install serious supervision, the Obama administration—along with other key authorities like the New York Fed—appears willing to stand back while Wall Street resurrects much of the ultracomplex global trading system that helped lead to the worst financial collapse since the Depression.
By Tobin Harshaw | NYTimes | Submitted by Michael Munk | www.MichaelMunk.com
Perhaps the most telling line in the Oxford English Dictionary’s definition of “socialism” is this one: “The range of application of the term is broad.” That’s something to bear in mind as we consider a much-discussed poll, released by Rasmussen on Thursday, that found that “Only 53% of American adults believe capitalism is better than socialism.” For the record, here is the primary O.E.D. definition:
A theory or system of social organization based on state or collective ownership and regulation of the means of production, distribution, and exchange for the common benefit of all members of society; advocacy or practice of such a system, esp. as a political movement. Now also: any of various systems of liberal social democracy which retain a commitment to social justice and social reform, or feature some degree of state intervention in the running of the economy.
As for Rasmussen’s definition, well, there isn’t one: “The question posed by Rasmussen Reports did not define either capitalism or socialism.”
Some of the healthier banks want to pay back their bailout loans to avoid executive pay and other restrictions that come with the money. But the banks are balking at the hefty premium they agreed to pay when they took the money....there is increasing anxiety in the industry that the administration could use the stress tests of the 19 biggest banks, due to be completed in the next three weeks, to insist on management changes...Both large and small banks have pressed the Obama administration to make it less costly for them to exit the bailout program by waiving the right to exercise stock warrants the banks had to grant the government in exchange for the loans.
Assessing Treasury’s Strategy: Six Months of TARP
The April oversight report for COP is entitled Assessing Treasury’s Strategy: Six Months of TARP. In this report, COP offers a preliminary look at Treasury’s strategy and offers a comparative analysis of previous efforts to combat banking crises in the past. Over the last six months, Treasury has spent or committed $590.4 billion of the TARP funds. Treasury has also relied heavily on the use of the Federal Reserve’s balance sheet which has expanded by more than $1.5 trillion (not including expected TALF loans) in conjunction with the financial stabilization activities it has undertaken beyond its monetary policy operations. This has allowed Treasury to leverage TARP funds well beyond the funds appropriated by Congress.
The total value of all direct spending, loans and guarantees provided to date in conjunction with the financial stability efforts (including those of the FDIC as well as the Treasury and the Federal Reserve) now exceeds $4 trillion. This report reviews in considerable detail specific criteria for evaluating the impact of these programs on financial markets. (Bolding mine).
Obama's New World Order
by Stephen Lendman
This article addresses Washington's financial coup d'etat in the context of discussing Michael Hudson's important, very lengthy and detailed April 5 Global Research.ca one titled: "The Financial War Against Iceland - Being defeated by debt is as deadly as outright military warfare." It reviews its key information in advance of Hudson's April 14 scheduled appearance on The Global Research News Hour to discuss.
What's true for Iceland holds everywhere, including the developed world, the idea being to enrich finance capitalism through state-sponsored debt bondage and neo-feudal impoverishment. The global economic crisis was no accident. It was long ago hatched, and has been brewing for years, gestating, percolating, then bubbling into the 2000 tech crash, a mere prelude for today's greater one spreading everywhere like a cancer but hitting the developing world and most indebted nations hardest.
Tiffiniy Cheng, 29, never imagined she'd help spark a populist movement influenced by a former IMF banker. Three weeks ago Cheng and her co-founding partners launched A New Way Forward, a volunteer-run website that advocates for a new approach to bank bailouts and is organizing a nationwide protest on April 11. Cheng and her friends are not new to online organizing. In 2006, some of them launched OpenCongress.org, a nonpartisan website that lets people track legislation in Congress, and Downhill Battle, a music activism website, but they never had a burning desire to study and reform the financial system. Then, as 350 billion dollars of taxpayer money went to the same CEOs who helped bring the global economic system down, Cheng and her friends, like many in America, became angry. Why reward the same people who broke the system, they asked.
On February 19, the co-founders of A New Way Forward heard the former chief economist of the International Monetary Fund (IMF) interviewed on PBS's Bill Moyers' Journal argue for an alternative bailout plan. Simon Johnson spent 20 years at the IMF working on international bank bailouts, among other things. Dissatisfied with the current bailout process, he decided to show his ex-colleagues at the IMF the balance sheets of some of America's leading banks receiving bailouts (concealing their names). Every one of his former colleagues gave a similar prescription: Recovery will fail unless America breaks up the financial oligarchy. In the short term, that means the failing banks would have to be temporarily taken over by the government, cleaned up, broken up and sold off in the private markets. The board members and CEOs of those banks would have to be fired and replaced. This is not the administration's current plan.
Marxist Geographer David Harvey on the G20, the Financial Crisis and Neoliberalism
By Amy Goodman | Democracy Now! | Watch Video | Submitted by Michael Munk | www.MichaelMunk.com
For some analysis on the G20 summit and the financial crisis, we speak to a leading thinker on the global economy. David Harvey is a Marxist geographer and distinguished professor of anthropology at the Graduate Center of the City University of New York. He is the author of several books, including The Limits to Capital and A Brief History of Neoliberalism.
By Dave Lindorff
The accounting profession might seem like the last place that you’d find serious political hanky-panky going on, and it’s probably not on very many people’s A-list of fun subjects to read about, but the Financial Accounting Standards Board, a quasi-governmental body that has statutory authority to regulate and establish the rules by which public companies, including banks, do their books, has just caved in to pressure from those banks and from the large number of members of Congress who pocket huge piles of campaign swag and perks from those banks and other public companies, and gravely undermined the integrity of corporate balance sheets.
The bank stress tests currently underway are “a complete sham,” says William Black, a former senior bank regulator and S&L prosecutor, and currently an Associate Professor of Economics and Law at the University of Missouri - Kansas City. “It’s a Potemkin model. Built to fool people.” Like many others, Black believes the “worst case scenario” used in the stress test don’t go far enough.
America is devolving into a third-world nation. And if we do not immediately halt our elite’s rapacious looting of the public treasury we will be left with trillions in debts, which can never be repaid, and widespread human misery which we will be helpless to ameliorate. Our anemic democracy will be replaced with a robust national police state. The elite will withdraw into heavily guarded gated communities where they will have access to security, goods and services that cannot be afforded by the rest of us. Tens of millions of people, brutally controlled, will live in perpetual poverty. This is the inevitable result of unchecked corporate capitalism. The stimulus and bailout plans are not about saving us. They are about saving them. We can resist, which means street protests, disruptions of the system and demonstrations, or become serfs.
What to make of Spitzer's public re-emergence? As he appears on the Today show this morning, Justin Frank, psychiatrist and author of Bush on the Couch, asks who could know better about the failure of self-regulation than someone with a sexual addiction?
“All the cops are criminals and all the sinners saints.” -Mick Jagger
Five years after Time magazine declared him “The Crusader of the Year,” Eliot Spitzer was known simply and infamously as “Client #9.” The man dedicated to public service was equally dedicated to private servicing – and the link between these two parts provided him with a leg up, as it were, on being able to spot others’ delinquent behavior far more successfully than public servants less delinquent than himself.
Spitzer was felled by his own arrogance and sexual hunger, yet it may have been precisely the qualities that drove his private life that enabled him to recognize more than anyone the damage that arrogant, greedy financial institutions were doing to our nation.
Obama's War on Labor
by Stephen Lendman
Voters expecting change keep getting rude reminders of what kind, none they can believe in reiterated again on March 30 in Obama's remarks to the auto giants. While stating "We cannot....must not (and) will not let (this) industry vanish," he laid down a clear marker. Labor, not business, is targeted. More on that below.
"We (won't) excuse poor decisions," he said. "We cannot make the survival of our auto industry dependent on an unending flow of taxpayer dollars." In rejecting their aid request, he added: "These companies - and this industry - must ultimately stand on their own, not as wards of the state....What we are asking is difficult. It will require hard choices by the companies. (Their plan doesn't go) far enough to warrant the substantial new investments these companies are requesting."
'A Failure to Communicate'? Administration Tries to Explain Financial Crisis
New Treasury Web site 'Decodes' Complicated Economic Terms
By Matthew Jaffe | ABCNews
With the nation's recession nearing a year-and-a-half in duration, critics from Capitol Hill to Main Street say the Obama administration has not succeeded in helping the general public understand how the financial crisis occurred and what the government is doing to solve it.
"To even help people understand what is going on, they haven't done a good job," said professor George Lakoff a linguistics professor at the University of California-Berkeley. "They haven't been able to explain what the problems are."
"They need to find a way for people to understand it," he said. "That is extremely urgent."
Analysts warn that if the administration, specifically the Treasury Department, cannot better communicate its programs to the general public, then it runs the risk of a lack of understanding fueling public outrage as hundreds of billions of taxpayer dollars get dished out.
"This is a very real concern and I have seen it firsthand," said Scott Talbott, vice president at the Financial Services Roundtable. "What happens is the average person focuses on one concept like 'Treasury bailing out bad banks' and then they stop listening. This incomplete conclusion leads to anger and frustration. These reactions are understandable, but if Treasury increases the public's understanding of its actions, the level of anger and frustration will decrease."
Last Wednesday, the front page of the Wall Street Journal pulled no punches. The lead headline was: "Global Slump Seen Deepening." ("The outlook for the global economy worsened on the eve of a summit of the world's 20 biggest economic powers…") A chart just beneath that headline, labeled "Gloomier Outlook" and showing World Bank economic projections, was nothing short of dramatic. The graph line for world trade simply plunged off a visual cliff and, like an arrow heading for a target, went straight down. The last paragraph of the piece quoted World Bank President Robert Zoellick this way: "In London, Washington, and Paris, people talk of bonuses or no bonuses. In parts of Africa, South Asia, and Latin America, the struggle is for food or no food."
The Obama administration is engineering its new bailout initiatives in a way that it believes will allow firms benefiting from the programs to avoid restrictions imposed by Congress, including limits on lavish executive pay, according to government officials.
Administration officials have concluded that this approach is vital for persuading firms to participate in programs funded by the $700 billion financial rescue package.
Bank bailout cost nearly doubles, agency says | MSNBC
Congressional Budget Office: Taxpayers will pay $1.67 billion more
Bailing out the financial sector will cost taxpayers $167 billion more than originally anticipated, according to a Congressional Budget Office estimate.
The original figure in January was $189 billion, but it is now $356 billion — $152 billion more for 2009 and $15 billion more next year, the CBO says in its March report updating the budget and economic outlook.
The CBO raised its projection because yields have increased on securities issued by the bailed-out financial institutions under the $700 billion Troubled Asset Relief Program.
That means there will be an increase in the cost of the subsidy from the U.S. Treasury's purchase of preferred stock, asset guarantees and loans to automakers, the CBO said.
The Smooth Criminal Transition from Bush/Cheney to Obama
Corrupt new administration deepens and expands systemic criminalization and war agenda
by Larry Chin | Global Researcher.CA
To sober, clear-eyed observers of history and political deception, the ascension of Barack Obama held the promise for unprecedented new dangers: a revitalized New World Order, led by the Anglo-American empire’s neoliberal criminal faction and an iconic, deceptive new facilitator; and a continuation of Bush/Cheney criminality and war, under smarter and much more effective management.
Now, just months into their tenure, the Barack Obama administration has more than fulfilled the promises he made to his elite constituency, deepening the mass destruction of Bush/Cheney, while charming its victims all over the world into enjoying their own demise.
View the show here.
BILL MOYERS: Yeah. Are you saying that Timothy Geithner, the Secretary of the Treasury, and others in the administration, with the banks, are engaged in a cover up to keep us from knowing what went wrong?
WILLIAM K. BLACK: Absolutely.
BILL MOYERS: You are....
...WILLIAM K. BLACK: I don't know whether we've lost our capability of outrage. Or whether the cover up has been so successful that people just don't have the facts to react to it.
BILL MOYERS: Who's going to get the facts?
WILLIAM K. BLACK: We need some chairmen or chairwomen--
BILL MOYERS: In Congress.
WILLIAM K. BLACK: --in Congress, to hold the necessary hearings. And we can blast this out. But if you leave the failed CEOs in place, it isn't just that they're terrible business people, though they are. It isn't just that they lack integrity, though they do. Because they were engaged in these frauds. But they're not going to disclose the truth about the assets.
The "dirty little secret" that Geithner is going to great degrees to obscure from the public is very simple. There are only at most perhaps five US banks that are the source of the toxic poison causing such dislocation in the world financial system. What Geithner is desperately trying to protect is that reality. The heart of the present problem, and the reason ordinary loan losses are not the problem as in prior bank crises, is a variety of exotic financial derivatives, most especially credit default swaps....This is what must be put into bankruptcy receivership, or nationalization. Every hour the Obama administration delays that, and refuses to demand a full independent government audit of the true solvency or insolvency of these five or so banks, costs to the US and to the world economy will inevitably snowball as derivatives losses explode.
Barack Obama's chief economic adviser, Larry Summers, received hundreds of thousands of dollars in speaking fees last year from firms that have direct financial interests before the government or are intimately involved in the White House's bank relief programs.
The White House released late Friday the personal financial disclosure forms of many high-ranking administration officials. The document provided for Summers, who serves as one of the president's closest confidants, underscores just how close some of these officials are to the industry over which they now have oversight.
Among the firms that paid Summers large amounts in speaking fees include J.P. Morgan Chase. That bank offered the former Harvard president and Treasury Secretary $67,500 for a February 1, 2008 engagement. It has received $25 billion in government bailout funds.
Treasury Secretary Tim Geithner has called for "sweeping regulation" of the financial community, beginning a discussion of how we restructure the banking system—in and out of the shadows—as we emerge from what Robert Kuttner calls the Great Collapse. Literally trillions have already been committed in loans, guarantees, swaps, direct equity to stave off a complete financial collapse, even as the real economy declines.
But before we decide on the salvation, we need a public probe of the fall. What caused the Great Collapse? We need a grand inquest—either a special congressional committee or an independent commission like the 9/11 Commission armed with subpoena power—to expose misbegotten policies, malpractices, and mistaken ideas that allowed the wizards of Wall Street to transport us over the cliff.
...Greider thinks, "People at large, I don't care whether they're middle class or upper class or working poor or union, non-union, have to find ways to come together themselves, perhaps in very small groups at first, and talk about their own stuff. Their experiences, their ideas their convictions, their aspirations for the country, themselves, their families, and then broaden out a bit, laterally. And have more people in the discussion. They don't have to become a giant organization, but they have to convince themselves that they're citizens..."That's kind of the mystery of democracy. People get power if they believe they're entitled to power."
Too Big to Fail or Too Dumb to Survive
By John Cooper
Unfortunately, the efforts to save weak banks by forcing them to merge with larger ones is worsening the "too big to fail" problem. Government agencies and policies failed to protect and in some cases contributed to the financial crisis. It is not clear that the reforms the Administration is requesting of Congress will be affective in preventing future crises.