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Dispatches from the Front Lines of Economic Crisis
by Stephen Lendman
The more they do, the worse it gets, and world headlines confirm it. Recent ones include:
- The New York Times, February 17: "After Manhattan's Office Boom, a Hard Fall;"
- Washington Post, February 17: "Obama signs $787 billion stimulus bill; Dow Jones industrial average drops nearly 300 points;"
Dow theorist, Richard Russell, called it "one of the damnedest closes I've ever seen," within one point of the November 20 low, and added: "I thought President Obama outlawed torture in the US. Wall Street is not listening."
The next day both the Dow and Transportation averages hit new bear market lows. For Dow theorists like Russell and others, it's confirmation of lower ones to come.
Obama's Fiscal Sideshow | By John Perry
Manhattan High-End Housing in for Shock
Kucinich: Who Told SEC to "Stand Down" on Stanford Probe?
Chairman of Domestic Policy Subcommittee Opens Inquiry
Washington, Feb 20 -
Chairman of the Domestic Policy Subcommittee, Congressman Dennis Kucinich (D-OH) today sent a letter to Ms. Mary Schapiro, Chair of the Securities and Exchange Commission (SEC) requesting documents that could reveal which government agency told the SEC to "stand down" rather than take enforcement action against the Stanford Group in October 2006 as has been reported by the New York Times.
Recent media reports have indicated that the SEC was aware of improprieties at Stanford Financial Group as early as October 2006, but withheld action at the request of another government agency.
Renowned investor George Soros said on Friday the world financial system has effectively disintegrated, adding that there is yet no prospect of a near-term resolution to the crisis.
Soros said the turbulence is actually more severe than during the Great Depression, comparing the current situation to the demise of the Soviet Union.
He said the bankruptcy of Lehman Brothers in September marked a turning point in the functioning of the market system.
"We witnessed the collapse of the financial system," Soros said at a Columbia University dinner. "It was placed on life support, and it's still on life support. There's no sign that we are anywhere near a bottom."
A recent column on the legacy of disaster left by the Bush Administration brings to mind some of the history behind that legacy, for the truth is, Bush didn’t sink the country on his own. His stealth attacks on both the economy and the bill of rights were prepared by previous administrations, in particular the two terms of the Reagan Administration. This is made clear by several things I’ve read recently, in particular, Thom Hartmann’s 2006 book, Screwed: The Undeclared War Against the Middle Class, and Katherine Austin Fitts’ stunning account of her time as a mortgage banker and later a high official in HUD, “Dillon Read and the Aristocracy of Profits.” Both shed important light on the staggering economic crisis the United States now faces.
Same Old Smoke and Mirrors
By John Perry
This scandal involves just one county in the U.S., and one relatively small private prison company. According to The Sentencing Project, “the United States is the world’s leader in incarceration with 2.1 million people currently in the nation’s prisons or jails—a 500 percent increase over the past thirty years.” The Wall Street Journal reports that “[p]rison companies are preparing for a wave of new business as the economic downturn makes it increasingly difficult for federal and state government officials to build and operate their own jails.” For-profit prison companies like the Corrections Corporation of America and GEO Group (formerly Wackenhut) are positioned for increased profits. It is still not clear what impact the just-signed stimulus bill will have on the private prison industry (for example, the bill contains $800 million for prison construction, yet billions for school construction were cut out).
Thirty states have struck such deals with banks that include Citigroup Inc., Bank of America Corp., JP Morgan Chase and US Bancorp...With the national unemployment rate now at 7.6 percent, the market for bank-issued unemployment cards is booming. In 2003, states paid only $4 million of unemployment insurance through debit cards. By 2007, it had ballooned to $2.8 billion, and by 2010 it will likely rise to $10.5 billion, according to a study...
First, Arthur Santa-Maria called Bank of America to ask how to check the balance of his new unemployment benefits debit card. The bank charged him 50 cents.
He chose not to complain. That would have cost another 50 cents.
UBS AG, Switzerland’s largest bank, will pay $780 million and disclose the names of some secret account holders to avoid U.S. prosecution on a charge that it helped thousands of wealthy Americans evade taxes.
The Justice Department accused UBS of conspiring to defraud the U.S. by helping 17,000 Americans hide accounts from the Internal Revenue Service. The U.S. will drop the charge in 18 months if the bank reforms its practices, helps prosecutors and makes payments. UBS will immediately turn over names of about 250 clients, according to people familiar with the matter.
I Want Some TARP!
In the fall of 2001 I attended a private investment conference in London to give a paper, The Myth of the Rule of Law or How the Money Works: The Destruction of Hamilton Securities Group.
The presentation documented my experience with a Washington-Wall Street partnership that had:
- Engineered a fraudulent housing and debt bubble;
- Illegally shifted vast amounts of capital out of the U.S.;
- Used “privitization” as a form of piracy - a pretext to move government assets to private investors at below-market prices and then shift private liabilities back to government at no cost to the private liability holder.
UBS Said to Pay $780 Million to Settle U.S. Tax Investigation
By Carlyn Kolker and David Scheer | Bloomberg
UBS AG, Switzerland’s largest bank, will pay $780 million to settle U.S. investigations related to whether clients at the Zurich-based bank avoided taxes, two people with knowledge of the matter said.
'King Size Combo:' New Report Reveals Broad Toll on Taxpayers by Bailed-Out Bank Goldman Sachs and Its Holdings in Burger King
'King Size Combo:' New Report Reveals Broad Toll on Taxpayers by Bailed-Out Bank Goldman Sachs and Its Holdings in Burger King
Goldman paid nearly double the average bonus on Wall St; Burger King costs taxpayers estimated $273 million a year
As Congress and the Obama administration look to hold major banks that have received billions in federal bailout funds better accountable for their corporate practices, a report released today by the Service Employees International Union (SEIU) on Goldman Sachs and its holdings in Burger King finds that the true total of taxpayer subsidies some of the banks are enjoying extends well beyond the monies they've taken through the Troubled Assets Relief Program (TARP).
The report finds that one of Goldman Sachs' major investments, Burger King, costs taxpayers more than a quarter billion dollars a year as Burger King employees are forced to rely on public health and income support programs as a result of the lack of affordable employer health coverage and sub-poverty wage levels at Burger King.
A conservative legal group is suing the Treasury Department and the Federal Reserve to reveal exactly how the first $350 billion of the financial services bailout was spent.
Larry Klayman and his organization, Freedom Watch, said they're concerned money from the Troubled Assets Relief Program (TARP) was given to investment firms on the basis of the banks' political influence. The group noted that that jobs have been lost and that stock prices haven't recovered since the bailout. But Freedom Watch hasn't provided specific evidence of wrongdoing.
By Dave Lindorff
Now here’s a word you’re not hearing in America these days: anti-trust.
The country is being dragged down by monstrous businesses, all of which, we’re told, are just “too big to fail.” As a consequence of this, the nation’s taxpayers, and their progeny born and yet unborn, are having trillions of dollars sucked away to prop up these giant rotting corporate corpses.
Zombie banks, zombie automakers, zombie insurance companies, all bigger than nation states, and all on life-support.
There is a simple answer to this problem. Bust them up.
Michael Moore plans film about ‘biggest swindle in American history’
By Carol Eisenberg | Muckety
Filmmaker Michael Moore is looking for “a few brave people who work on Wall Street.”
The muckraking director of films about the auto and health-care industries and America’s love of guns is now working on a movie about what he calls “the biggest swindle in American history.”
But he says in his letter that he needs a couple of informants to help guide him.
“Your identity will be protected and you will decide to what extent you wish to participate in telling the greatest crime story ever told,” Moore says in an open letter posted last week on his website.
If the CEOs of Bank of America, Citigroup and Merrill Lynch think that members of Congress have been tough on them, they have no idea what awaits.
The 54-year-old filmmaker born in Flint, MI , the son of an auto assembly-line worker, made his reputation as a populist bomb thrower in Roger & Me, which documents his unsuccessful efforts to confront then-General Motors CEO Roger Smith about his management of what was then the world’s largest automaker.
America's Controlled Economic Implosion
World of Trouble
Toxic Plans for Toxic Assets
by Stephen Lendman
Exit Paulson, enter Geithner with the latest "no banker left behind plan" - aka whatever Wall Street wants, Wall Street gets. Yet, the reception was underwhelming. The Dow plummeted 382 points while investors took shelter in bonds and gold. AP reported that "the new bank rescue plan landed with a thud on Wall Street" as investors worried that no end to the crisis is in sight. Editorial and op-ed commentaries were near unanimously negative and some especially critical.
At a February 9 congressional briefing, lawmakers greeted Geithner with laughter and sarcasm, but most of it is just politics. Bailout opponent Brad Sherman (D, California) asked for details and a dollar amount, but instead got generalities about what he announced the next day - a plan to:
After getting $125 billion in taxpayer bailouts, the top officers at Citigroup, Merrill Lynch, Goldman Sachs, and three other banks agreed to forgo their 2008 bonuses. Now they’re awarding billions to their troops. Can government “claw back” that money?
On December 8, The Wall Street Journal reported that John Thain, the 53-year-old chairman and C.E.O. of Merrill Lynch, had let it be known he wanted a $10 million bonus.
The interview was nearly over. on the Fox News Channel last Wednesday evening, Sean Hannity was coming to the end of a segment with Indiana Congressman Mike Pence, the chair of the House Republican Conference and a vociferous foe of President Obama's nearly $1 trillion stimulus bill. How, Pence had asked rhetorically, was $50 million for the National Endowment for the Arts going to put people back to work in Indiana? How would $20 million for "fish passage barriers" (a provision to pay for the removal of barriers in rivers and streams so that fish could migrate freely) help create jobs? Hannity could not have agreed more. "It is … the European Socialist Act of 2009," the host said, signing off. "We're counting on you to stop it. Thank you, congressman."
There it was, just before the commercial: the S word, a favorite among conservatives since John McCain began using it during the presidential campaign. (Remember Joe the Plumber? Sadly, so do we.) But it seems strangely beside the point. The U.S. government has already—under a conservative Republican administration—effectively nationalized the banking and mortgage industries. That seems a stronger sign of socialism than $50 million for art. Whether we want to admit it or not—and many, especially Congressman Pence and Hannity, do not—the America of 2009 is moving toward a modern European state.
There is certainly a great deal of slack-jawed shock going around these days, especially in progressive circles, where pundits, commentators, analysts and kibitzers continually find themselves reeling from yet another "inexplicable" move by the Obama Administration to uphold the core principles of their predecessors: enriching the rich, extending the empire, and enhancing the authoritarian power of a thoroughly militarized state.
Congressional Offices Don't Have the Stimulus Bill, Lobbyists Do
February 12, 2009 04:14 PM ET |
By Paul Bedard | Washington Whispers | US News & World Report
Investigation looks into political pressure in bailout distribution
A special inspector at the Treasury Department is auditing the Troubled Asset Relief Program after reports that members of Congress exerted pressure and that banks actively lobbied for the money.
By Ralph Vartabedian | LATimes
Amid growing public consternation with the federal banking bailout, the Treasury Department's special inspector general has opened an examination of political influence in handing out some of the $350 billion in federal bank bailout funds, The Times has learned.
The audit, which has just begun, is broad in scope but will focus on lobbying activities by financial institutions and what the special inspector general, Neil Barofsky, has called "outside influences."
A Short History of US Government Handouts
by Stephen Lendman
Global economies are withering while Washington conceives "Financial Recovery Plan(s) from Hell," according to economist Michael Hudson in his latest February 11 article. Bankers demand more trillions, "or (they'll) plunge the economy into financial crisis." What they want they'll get, and here's where things now stand.
On February 10, Bloomberg.com reported that Treasury Secretary Geithner "pledged government financing for as much as $2 trillion....to spur new lending and address banks' toxic assets, seeking to end the credit crunch hobbling the economy." Hudson calls it "Stage One of a two-stage plan," so far unannounced, to transfer trillions more to corrupt bankers who caused the problem in the first place, yet taxpayers will get little more back than the bill.
Fraud 'Directly Related' to Financial Crisis Probed
FBI Agents Could be Reassigned from National Security Due to Booming Caseload
By Jason Ryan | ABCNews
TARP IG...Barofsky currently only has around four FBI and IRS agents to oversee how $700 billion is tracked.
The FBI has opened investigations into more than 500 cases of alleged corporate fraud, including 38 that involve major firms and are "directly related" to the national economic crisis, FBI Deputy Director John Pistole told Congress today.
The surge in white-collar investigations is putting such a strain on the FBI that Pistole said the bureau is considering reassigning agents from national security, which has been the bureau's priority since the 9/11 attacks.
"The FBI has more than 530 open corporate fraud investigations, including 38 corporate fraud and financial institution matters directly related to the current financial crisis," Pistole told the Senate Judiciary Committee today.
The 38 companies, he said, "are significantly large companies, businesses everyone knows about but I cannot comment publicly."
Unapologetic CEOs: What Did the Banks Do With Your Cash?
Bank CEOs, With $125 Billion in Taxpayer Money in Hand, Testify and Defend Before Congress
By Matthew Jaffe and Scott Mayerowitz | ABCNews
The heads of eight major banks that received $125 billion in taxpayer bailout funds were largely unapologetic for their role in helping to create the worst financial crisis since the Great Depression as they testified before Congress this morning.
The CEOs said they are trying to lend out more money and pledged to return to profit, be more transparent and repay taxpayers as soon as possible.
Yet they warned that there was still much work to do and that it would take time for the financial system to right itself.
For four decades, the world experimented with Keynes’ theories and the result was oversized States, punished by inflation, in which waste and a lack of efficiency grew apace with excessive public spending and bureaucracy, until the world began to return to civil society the vigor and role stolen by the governments.
Kucinich: "Save Homes" FOX 02-10-09
Congressman Dennis Kucinich (D-OH) today made the following statement on the ongoing foreclosure crisis:
“According to today’s Wall Street Journal, Moody’s economy.com claims that nearly five million families could lose their homes to foreclosure between 2009 and 2011. Now is the time for our government to take a controlling interest in mortgage-backed securities and then direct loan modification, lowering principle and interest rates, extending terms of payments and keeping people in their homes.
“Banks are not lending money. They are hoarding money, because they fear their own balance sheets understate their losses. Instead of giving the banks more of taxpayers’ money in the hopes that banks will loan the money to keep people in their homes, the government must take charge to save the homes of so many American families. Keep people in their homes, the banks will get their money as well.
“Its time to stand up for the dream of American home ownership by saving the homes that are in jeopardy.”