‘Socialism’ rises in the polls — but do Americans even know what it means?
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Wall Street’s Best Investment: Ten Deregulatory Steps to Financial Meltdown
By Robert Weissman and James Donahue | Multinational Monitor
Wall Street has no one but itself to blame for the current financial crisis. Investment banks, hedge funds and commercial banks made reckless bets using borrowed money. They created and trafficked in exotic investment vehicles that even top Wall Street executives — not to mention firm directors — did not understand. They hid risky investments in off-balance-sheet vehicles or capitalized on their legal status to cloak investments altogether. They engaged in unconscionable predatory lending that offered huge profits for a time, but led to dire consequences when the loans proved unpayable. And they created, maintained and justified a housing bubble, the popping of which has thrown the United States and the world into a deep recession, resulted in a foreclosure epidemic ripping apart communities across the country, and caused the financial crisis itself.
But while Wall Street may not have anyone else to blame, and is culpable for the financial crisis and global recession, others do share responsibility.
For the last three decades, financial regulators, Congress and the executive branch have steadily pulled back the regulatory system that restrained the financial sector from acting on its own worst tendencies. The post-Depression regulatory system aimed to force disclosure of publicly relevant financial information; established limits on the use of leverage; drew bright lines between different kinds of financial activity and protected regulated commercial banking from investment bank-style risk taking; enforced meaningful limits on economic concentration, especially in the banking sector; provided meaningful consumer protections (including restrictions on usurious interest rates); and contained the financial sector so that it remained subordinate to the real economy. This hodge podge regulatory system was, of course, highly imperfect, including because it too often failed to deliver on its promises.
But it was not its imperfections that led to the erosion and collapse of that regulatory system. It was a concerted effort by Wall Street, steadily gaining momentum until it reached fever pitch in the late 1990s and continued right through the first half of 2008. Even now, Wall Street continues to defend many of its worst practices. Though it bows to the political reality that new regulation is coming, it aims to reduce the scope and importance of that regulation and, if possible, use the guise of regulation to further remove public controls over its operations.
Law enforcement sources said David Kellermann, acting chief financial officer of mortgage company Freddie Mac, was found hanging in the basement of his Reston, Va., home, dead from an apparent suicide early this morning.
The death was "an active investigation" and there were "no signs of foul play," Fairfax County police officer Sabrina Ruck said.
Local police said they were called to Kellermann's home at 4:48 a.m., but would not say who'd placed the call to 911.
Kellermann, 41, and a 16-year veteran of Freddie Mac, had been the company's CFO since September, after a government takeover of the company following the housing crisis.
Freddie Mac had been criticized for reckless business practices that some argued contributed to the housing and financial crisis. The company is controlled by the government and owns or guarantees about 13 million home loans.
Freddie Mac and sibling company Fannie Mae, which together own or back more than half the home mortgages in the United States, have been hobbled by skyrocketing loan defaults and have received about $60 billion in combined federal aid.
Kellermann was named acting chief financial officer in September 2008, after the resignation of Anthony "Buddy" Piszel, who stepped down after the government takeover.
Geithner Defends Bank Rescue Program Amid Warnings
Geithner faces questions about bailout amid warning it could expose taxpayers to losses
By Jim Kuhnhenn | ABCNews
Treasury Secretary Timothy Geithner defended the bank rescue program devised by the Obama administration Tuesday as the International Monetary Fund predicted U.S. financial institutions could lose $2.7 trillion from the global credit crisis.
Geithner, testifying before the rescue plan's Congressional Oversight Panel, faced several questions about how Treasury is using the $700 billion Troubled Asset Relief Program and how it intends to help rid financial institutions of their bad loans and securities.
His testimony came in the wake of a watchdog agency report that warned Obama administration initiatives could increasingly expose taxpayers to losses and make the government more vulnerable to fraud.
A special inspector general assigned to the bailout program concluded in a 250-page quarterly report to Congress that a private-public partnership designed to buy up bad assets is tilted in favor of private investors and creates "potential unfairness to the taxpayer."
Geithner said the new plan "strikes the right balance" by letting taxpayers share the risk with the private sector while at the same time letting private industry use competition to set market prices for the assets.
"If the government alone purchased these legacy assets from banks, it would assume the entire share of the losses and risk overpaying," Geithner said in his remarks. "Alternatively, if we simply hoped that banks would work off these assets over time, we would be prolonging the economic crisis, which in turn would cost more to the taxpayer over time."
Putting Finance Capitalism "Back in Its Box"
by Stephen Lendman
So writes Philip Augar in an April 13 Financial Times (FT) op-ed. He's a former UK investment banker/broker and author of The Death of Gentlemanly Capitalism, The Greed Merchants, and most recently Chasing Alpha: How Reckless Growth and Unchecked Ambition Ruined the City's Golden Decade. More on his newest book below.
He quotes Nicolas Sarkozy, a questionable choice, at the G 20 summit saying "The all-powerful market that is always right is finished," then on departure adding "a page has been turned." For Augar, that depends on whether a "free-market" successor is constructed, something "entrenched interests in America and Britain would be well-advised to encourage if they wish to remain centre stage."
SF, CA Holds 'Bail-Out Working People - Not the Banks' Teach-In, May 5th As A Powerful Model for Public Action
A Powerful Model for Public Action
When: SATURDAY, MAY 9, 2009 - 1 to 5 p.m. - (registration begins at 12:30 p.m.)
Where: Plumbers Hall
1621 Market St. @ Franklin St.
(3 blocks from Civic Station BART stop; @ Van Ness MUNI stop)
San Francisco, CA 94103 - Map
What: TEACH-IN & MASS MOBILIZATION PLANNING MEETING
Without joining together for our common interests, we don't have the strength to change our government's priorities. We must begin to build a massive movement that will have the power to impact government policy and give people genuine hope for a better future.
Help organize a mass mobilization and ongoing action campaign around the following demands:
- No layoffs. Massive job-creation program.
- Tax the rich -- don't bail out the banks.
- Pass the Employee Free Choice Act.
- Single-payer healthcare for all.
- Affordable housing for all. Tenants' rights. Moratorium on foreclosures & evictions.
- Funding for jobs and for social services & infrastructure, not for war.
- Stop the ICE raids and deportations. Legalization for all!
Barack Obama: Crime Boss
by Stephen Lendman
Since taking office, Obama, wittingly or otherwise, has headed the largest criminal enterprise in history - the mass looting of national wealth to enrich his Wall Street benefactors. He assembled a rogue economic team of Clinton/Robert Rubin retreads - to fix the current crisis they engineered.
In a March 13 article, (author and former Republican strategist) Kevin Phillips called them "recycled senior (Clinton administration) Democrats (responsible for the) tech mania, deregulation binge and (1997 - 2000) stock market bubble and crash. (Obama) extend(ed) the (disastrous) mismanagement and pro-Wall Street bias of the 2008 Bush regime bailout."
He called Geithner and Bernanke "hapless," the result of their ruinous misjudgments (and, along with Alan Greenspan, complicit) with finance-sector malfeasance."
Mr Barofsky said he was investigating whether banks had “cooked their books” to get some of the $700bn (€540bn, £475bn) in Tarp fund bailout money. He declined to go into specifics but said possible criminal offences included “securities fraud, wire fraud, false statement”....“One of our strongest recommendations of the last report was do not expand the Talf to buying legacy assets. If its structure is not changed considerably it’s very, very dangerous,” he said. “We know the triple A rating [ascribed to the securities by credit rating agencies] was a sham. We could be buying securities that are backed with assets that we know were likely riddled with fraud.”
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."