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Obama Economic Program Increases America's Bondage to Wall Street Billionaires: It’s Time for a New Monetary System
Obama Economic Program Increases America's Bondage to Wall Street Billionaires: It’s Time for a New Monetary System
by Richard C. Cook
This article previews the author’s new six-part video series scheduled for release April 2: “Credit as a Public Utility: The Solution to the Economic Crisis.”
The Obama administration is spending hundreds of billions of dollars trying to persuade the banking system to restart lending. Federal Reserve Chairman Ben Bernanke plans to create hundreds of billions more of new bank reserves by purchasing mortgage-related debt. With Bernanke and Treasury Secretary Timothy Geithner working together, “the initiative will seek to entice private investors, including big hedge funds, to participate by offering billions of dollars in low-interest loans to finance the purchases. The government will share the risks if the assets fall further in price.” (Martin Crutsinger, AP) Finally, President Obama is taking over the distinction of being the biggest Keynesian in history with a fiscal year 2009 deficit of $1.75 trillion.
The cancer of debt grows by the day. According to Michael Hodges’ famed “Grandfather Economic Report”: “America has become more a debt ‘junkie’ than ever before, with total debt of $57 trillion, and the highest debt ratio in history. That's $186, 717 per man, woman and child.”
"Down the Memory Hole," Alan Greenspan Style
by Stephen Lendman
He's back and in denial in a March 11 Wall Street Journal op-ed headlined: "The Fed Didn't Cause the Housing Bubble." He lied, the way he did throughout his career and for 18.5 years as Fed chairman. How else could he have kept the job, be knighted in the UK for his "contribution to global economic stability, wisdom and skill," then afterwards be extolled by the Money Trust he enriched.
So now he's preserving his "legacy" by expunging its dark side the way Orwell described in 1984 - "down the memory hole," a convenient slot for "any document....due for destruction," politically inconvenient truths to be erased to preserve only sanitized versions for the public. It's called historical revisionism, but even some on the right aren't convinced.
David Walker: Plan B Move to Vancouver
Former Comptroller General for the United States says that he believes things can be turned around economically with a lot of work, or Plan B move to Vancouver.
Wall Street's Economic Crimes Against Humanity
By refusing to consider the consequences of their actions, those who created the financial crisis exemplify the banality of evil, writes Shoshana Zuboff
By Shoshana Zuboff | Business Week
As in war, that emotional distance made it easier to operate in one's own narrow interests, without the usual feelings of empathy that alert us to the pain of others and define us as human. The narcissistic business model provided the modern day "circumstances" that enabled individuals to ignore the poisonous consequences of their choices. This paved the way for a full-scale administrative economic massacre.
The financiers at AIG were awarded millions in bonuses because their contracts were based on the transactions they completed, not the consequences of those transactions. A 32-year-old mortgage broker told me: "I figured my job was to get the transaction done ... Whatever came after the transaction - that was on him, not me." A long list of business executives have reaped sumptuous rewards even though they fractured the world's economy, destroyed trillions of dollars in value, and disfigured millions of lives.
By Dave Lindorff
Six months after the failed Bush administration effort to "rescue" the US financial system, and after two months of failed efforts by his own new administration, at an expense to the American public of several trillion dollars and counting, the Obama administration is announcing plans to blow another $1 trillion in a massive taxpayer giveaway to investors who will be subsidized in an effort to get them to buy the so-called toxic assets on the books of the nation's biggest banks.
The problem with this plan is that its goal--getting these zombie banks to start lending again--is not going to work.
The Real AIG Scandal, Continued!The Transfer of $12.9 Billion from AIG to Goldman Looks Fishier and Fishier
The AIG scandal is getting ever-more disturbing. Goldman Sachs' public conference call explaining its trading relationship and exposure with AIG established once again that Goldman knows how to protect itself. According to Goldman, even if AIG had failed, Goldman's losses would have been minimal.
How did Goldman protect itself? Sensing AIG's weakening capital position through 2006 and 2007, Goldman demanded more collateral from AIG and covered outstanding risk with instruments from other firms.
Forget the bonuses: AIG can't repay its loans, GAO says
By Kevin G. Hall | McClatchy Newspapers
Lost in all the shouting over the $165 million in bonuses paid to executives of disgraced insurer American International Group was this sober message delivered to Congress on Wednesday by a government watchdog: AIG's ability repay its $170 billion in loans from taxpayers has eroded significantly.
Testifying before Congress, Orice Williams, the director of the Government Accountability Office's financial markets division, said that AIG has had only limited success in restructuring itself, despite more than $170 billion in federal aid in four separate bailouts since last September.
As a Goldman Sachs lobbyist, Mark Patterson once worked against a bill to curb executive compensation. The legislation's sponsor: Barack Obama.
On Wednesday afternoon, as President Barack Obama was leaving the White House for a town hall meeting in California, he spoke for 15 minutes to reporters about the AIG controversy. Responding to the rising rage over the $165 million or so in bonuses paid to executives at the bailed-out insurance firm, Obama noted that he was quickly developing policies to prevent future AIG-like catastrophes. And he slammed Wall Street's culture of "excess greed, excess compensation, excess risk taking." To demonstrate that he's committed to battling such greed, the president cited his work in the Senate to rein in executive compensation. Noting that he and Rep. Barney Frank (D-Mass.) had each introduced legislation on this front in 2007, Obama declared that "there were some people who attacked us, saying government has no business doing that."
It's over — we're officially, royally fucked. no empire can survive being rendered a permanent laughingstock, which is what happened as of a few weeks ago, when the buffoons who have been running things in this country finally went one step too far. It happened when Treasury Secretary Timothy Geithner was forced to admit that he was once again going to have to stuff billions of taxpayer dollars into a dying insurance giant called AIG, itself a profound symbol of our national decline — a corporation that got rich insuring the concrete and steel of American industry in the country's heyday, only to destroy itself chasing phantom fortunes at the Wall Street card tables, like a dissolute nobleman gambling away the family estate in the waning days of the British Empire.
“By a technicality, the biggest giveaway on Wall Street will evade this bill,” said Michael Garland, a spokesman with Change to Win, a federation of seven unions.
Merrill Lynch’s $3.6 billion bonus pool has been among the most controversial payouts on Wall Street. But most of those bonuses, which included some 700 awards of over $1 million, would not be affected by a new bonus tax being considered in Congress.
The tax, which passed in the House on Thursday, would affect only bonuses paid during 2009. Typically, Merrill’s bonuses are paid in January, along with the rest of Wall Street’s. But the investment bank pushed $2.5 billion of the bonuses out the door in December in advance of its merger with Bank of America.
A.I.G. Sues U.S. for Return of $306 Million in Tax Payments
By Lynnley Browning | NY Times
While the American International Group comes under fire from Congress over executive bonuses, it is quietly fighting the federal government for the return of $306 million in tax payments, some related to deals that were conducted through offshore tax havens.
A.I.G. sued the government last month in a bid to force it to return the payments, which stemmed in large part from its use of aggressive tax deals, some involving entities controlled by the company’s financial products unit in the Cayman Islands, Ireland, the Dutch Antilles and other offshore havens.
By Dave Lindorff
The actions of Obama's Chief Financial Adviser Larry Summers and his Treasury Secretary Tim Geithner in permitting the payment of $165 million in bonuses to AIG executives (Summers, according to the Wall Street Journal, actually pressed Sen. Chris Dodd, D-CT, to secretly remove a bar to the payment of such bonuses from the bailout bill) and storm of public outrage that has followed public disclosure of those payments, provides President Obama, whose administration is stumbling badly on many fronts, to turn things around and avoid political disaster.
He should promptly demand Geithner's and Summers' resignations, and should also fire the CEO of AIG, Edward Liddy (as 80% owner of AIG, the US has the power to do that anytime). It would also be a good idea at the same time to fire the CEOs of all the leading banks that are at this point surviving on government bailouts.
In his opening statement today, Chairman of the House Ways and Means Subcommittee on Oversight, Rep. John Lewis (D-GA) said it was “shameful” and “a disgrace” that a number of private corporations who received a portion of the billions in capital infusion through the controversial Troubled Asset Relief Program (TARP) owe back taxes. Two of the firms owe over $100 million each. The Oversight Subcommittee researched 23 of the top TARP recipients out of the 470 companies that received federal support. Chairman Lewis suggested a complete review of the tax status of these companies might be very revealing.
Tomgram: Robert Eshelman, The Other War on Workers | TomDispatch.com
A.I.G. is, of course, back in the news -- and how! Not that it was ever too far off the radar screen. Having received yet one more massive infusion of federal tax dollars, as everyone from here to hell now knows, the insurance giant handed out yet another round of lucrative bonuses. Over the last year, company management has doled out about $1 billion in such payments, roughly half to employees in the financial products subsidiary that concocted the type of high-risk, highly-leveraged deals in derivatives which helped send the company, and Wall Street, and most of the rest of us into steep decline last year.
Here are the costs for the stimulus as seen this afternoon, 3/18/2009, on MSNBC-TV:
AIG: $180 Billion:
On Average, at least:
1 Person: $590
Family of 4 $2,400
$2.3 Trillion to Stimulate Economy:
On Average, at least:
1 Person: $7,600
Family of 4 $30,300
I say "at least" because it doesn't include interest, as far as I know, or as reported.
The Federal Reserve said today that it will deploy an additional $1.2 trillion to try to lower interest rates and stimulate the economy, an aggressive move aimed at containing the recession.
The central bank will increase its purchases of mortgage-backed securities by $750 billion, on top of a previously announced $500 billion. It also will double its purchases of debt in Fannie Mae and Freddie Mac to $200 billion. Those steps are intended to lower mortgage rates. The announcement of the previous purchases pushed mortgage rates down a full percentage point.
By Dave Lindorff
For years, advocates of open government, mostly on the left, but also on the right, have railed against the growing secrecy of the US government. But the focus, particularly of left critics, has been on the Intelligence budget, a $40+ billion “black box” that is completely protected from public and even congressional scrutiny, and on large swaths of the Pentagon budget, which are kept hidden allegedly for “national security” reasons.
For the most part, the American public has adopted an ovine attitude towards such secrecy, assuming that the “government knows best.”
Now, however, with the economic crisis, and the collapse of AIG, Citibank, Bank of America, Merrill Lynch, Bear Stearns, Lehman Brothers, General Motors, Chrysler and other leading US firms, and with bailouts that are putting taxpayers on the hook to the tune of trillions of dollars, the people are waking up, or at least are starting to get restless in their slumber.
Political science majors can be forgiven for recycling Karl Marx's prediction, made 160 years ago, that capitalism would sow the seeds of its own destruction by widening the gap between workers and "capitalists." Since the end of the Cold War and the defeat of communism 20 years ago, boardroom-authorized CEO emoluments in the Fortune 100 have gone from 40 times to 300 times factory-floor wages.
United States of AIG
Monetary and Fiscal Failure, Fraud, and Fear of What's Next
by Stephen Lendman
Even the powerful are worried with the IMF on February 7 saying advanced economies are in "depression (and) the worst cannot be ruled out." Forecasting a 2010 recovery is "very uncertain" at this time as further financial turmoil may disrupt it regardless of policies adopted, and trouble is outpacing resources to alleviate it.
On March 10, its Managing Director Dominique Strauss-Kahn forecast "below zero" 2009 global growth - what he termed "the worst performance in most of our lifetimes."
In a March 8, report, the World Bank expressed similar gloom saying:
By Dave Lindorff
It may not be obvious today, and certainly it’s not how the corporate media reported it, but future historians are likely to look back at March 13, 2009 as the day that American imperialism began it’s inexorable decline. That’s the day that Chinese Premier Wen Jiabao announced that his country was “worried” about its holdings of over $1 trillion in US treasury securities, and warned that he wanted the US to assure China that it would maintain its good credit and “honor its promises” and “maintain the safety of China’s assets.”
There is no way that the US can accommodate Premier Wen and still finance and operate a global military system with over 1000 overseas bases, massive aircraft carrier battle groups, and with hundreds of thousands of men and women armed to the teeth with the latest high-tech military hardware, not to mention fight endless wars on the far side of the globe.
The TARP investment is a very special type of capital that is provided by the US Treasury and is segregated in the form of preferred stock. For the Boards of Directors of the 214 banks to pay out bonuses is nothing but an embezzlement of American citizens’ capital. It is now the obligation of the new Attorney General, Eric Holder, to arrest and indict every board member and senior management of every financial company that paid out the $18.4 billion bonus.
Bizarre, weird, grotesque, outrageous, crime committed by the super elite is being called normal business mistakes and corporate irresponsibility. That might sound like a brash comment to the completely uninformed, but if I could think of even more brash adverbs to describe the mainstream, established society in America I would. We Americans elected a Congress that gave $700 billion of welfare to banks that went broke. The executives of those banks ripped off that welfare.
It is simple minded stupidity on the part of the entire broadcast and print media to characterize flagrant crime (in the words of Mr. Cuomo) to be “corporate irresponsibility”. Only $3.6 billion of the $18.4 billion was embezzled by Merrill Lynch.
While Mr. Summers wants us to remember that we are a nation of laws when it comes to paying huge bonuses to A.I.G. executives, who will apply the law to former Bush administration officials who approved torture? If law dictates payment of bonuses, what law addresses money laundering? And is that law less important than the one that insures payment of bonuses? What could be more corrupt than asking banks that have been bailed out by the American taxpayer - expressly to address their loses from mortgage failures - if they approve of a foreclosure bill that would in turn bailout the taxpayer/homeowners themselves?
Still no end in sight to the corruption in Washington. While the Democrats now control both houses of Congress and the White House, the raging wildfire of corruption continues unabated.
A.I.G. bailed out to the tune of 165 billion taxpayer dollars and proceeds to pay executives what is now approaching 300 million in bonuses? The White House and Congress are "outraged, but can't do anything"?
$8 Billion dollars from CitiGroup to Dubai
$7 Billion dollars from Banks of America to China
$1 Billion dollars from JP Morgan/Chase to India
More information = Read more.
Bill would help schools, nonprofits teach financial literacy
By Les Blumenthal | McClatchy Newspapers
The numbers are startling. More than half of high school seniors have debit cards and nearly one-third have credit cards.
One-third of college students have four credits cards apiece when they graduate, and more than half of graduates have piled up $5,000 each in high-interest debt. The number of 18- to 24-year-olds who've declared bankruptcy has increased 96 percent in 10 years.
Surveys show that many of these young people also are financially illiterate: They don't understand such things as interest, minimum payments, credit reports, identity theft or that they may be paying off their school loans for years.
A.I.G. to Pay $100 Million in Bonuses After Huge Bailout
By Edmund L. Andrews and Peter Baker | NYTimes
Despite being bailed out with more than $170 billion from the Treasury and Federal Reserve, the American International Group is preparing to pay about $100 million in bonuses to executives in the same business unit that brought the company to the brink of collapse last year.
An official in the Obama administration said Saturday that Treasury Secretary Timothy F. Geithner had called A.I.G.’s government-appointed chairman, Edward M. Liddy, on Wednesday and asked that the company renegotiate the bonuses.
Administration officials said they had managed to reduce some of the bonuses but had allowed most of them to go forward after the company’s chief executive said A.I.G. was contractually obligated to pay them.
In a letter to Mr. Geithner, Mr. Liddy wrote: “Needless to say, in the current circumstances, I do not like these arrangements and find it distasteful and difficult to recommend to you that we must proceed with them.”
The bonuses will be paid to executives at American International Group’s Financial Products division, the unit that wrote trillions of dollars’ worth of credit-default swaps that protected investors from defaults on bonds backed by subprime mortgages.
Newt Gingrich is right: "It is European socialism transplanted to Washington." How else to describe an economy in which the government controls the entire financial center and is now supplying life support for the auto industry? That's on top of the existing socialist economy run by the military-industrial complex, which, thanks to George W. Bush, now absorbs upward of 60 percent of the non-entitlement federal budget.
Although we still have a way to go to catch up with the good parts of the European system, including universal healthcare, high-quality public education and decent working conditions, we do have a system that is now as socialist in budget size as Europe's. That part I get when I listen to the right-wingers on Fox News bemoaning the reversal of the Reagan Revolution. But what I don't understand is how in the world they can blame this startling turn of events on Barack Obama.
The vast majority of money allocated so far on President Obama's watch is an extension of Bush's banking bailout, which has committed trillions to failed Wall Street conglomerates. I certainly don't want to defend the bailout and personally think the banks and stockbrokers deserve to go belly up, but what does that mess have to do with Obama, who was in college when the Reagan Revolution launched the deregulation that allowed Wall Street to run wild?
Many of the biggest mortgage lenders in the U.S. have engaged in widespread, systematic schemes that ripped off hundreds of thousands of families seeking to buy a home, refinance or foreclose, according to lawsuits filed on behalf of consumers.
Scores of class-action lawsuits, from the 1990s and up to today, detail the illegal and questionable practices used by mortgage-lending companies that pushed millions into bad mortgages, then into bad refinancing loans and then into foreclosures with unfair fees.
The lawsuits have been filed by private attorneys and state attorneys general, and on behalf of NGOs.