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Kiss the Banks Goodbye and Refocus on Rebuilding the American People

By Dave Lindorff

The futility and stupidity of the Fed’s and the Obama administration’s policy of pumping ever more money into failing banks and insurance companies in a vain effort to get them lending again was demonstrated—if anyone was paying attention—by the collapse in auto sales this past month, with all the leading companies, Ford, GM and Toyota, reporting sales down by about 40%.

This fall off in car buying was despite record discounting by the auto industry, and offers of 0% financing.

Clearly, obtaining financing is not the reason people are not buying cars.

People are not buying cars because they are worried about having a job to enable them to pay back the loan.

Geithner's Folly

Geithner's Folly
By Robert Kuttner | Huffington Post

Why is Geithner dithering? Because he is asking the wrong question. The question he is posing is: how can the government save Citigroup? The right question is: how can the government rebuild the banking system?

President Obama deserves immense credit for being willing to spend serious money to prevent recession from becoming depression. He has resisted pressures from fiscal conservatives to put budget balance first, or to make social insurance bear the brunt of spending cuts down the road. And he has used his gifts as a teacher to enlist the broad support of the American people for a far-reaching strategy of public investment.

The Flaw in the System: The Bankers Don't Care About the Banks

The Flaw in the System: The Bankers Don't Care About the Banks
By Cenk Uygur | Huffington Post

These days, the way executives make money instead is in the form of bonuses for years where they bring in a lot of return (and often times for years they don't), but the threat of being fired for too much risk taking is minimal. The more risk you take, the more money everyone makes. And it's not the partner's money you're playing with anymore. You're playing with house money. No one is minding the store anymore....These executives did not actually fail. They succeeded wildly. It's just that they had a different goal - to take home as much money as they possibly could for themselves. Mission accomplished!

Carlyle Group Presentation on the World Financial Crisis, 15 Oct 2008

Carlyle group presentation on the world financial crisis, 15 Oct 2008

This is dated, but I decided to post it here for just that reason: "If we knew then, what they knew..." It's graph-intensive, and the source notes at the bottom of the screens are noteworthy, too, given the bailouts.

Here's a bit of background on Carlyle:

Ron Paul to Submit Bill Calling for Audit of Federal Reserve

Ron Paul to Submit Bill Calling for Audit of Federal Reserve | Economic Policy Journal

Remarkably, one of the most powerful organizations of the federal government, the Federal Reserve, is not subject to audit. Congressman Ron Paul wants to change that. He announced yesterday that he will be submitting a bill in the House of Representatives calling for an audit of the Fed. Paul states:

The Fed is now pledging to reveal to the public more about its economic predictions, and calls this greater transparency. This is little more than window-dressing, at best, utterly useless at worst...

Now, The Details: Treasury to Give Banks Unlimited Refills

Now, the details: Treasury to give banks unlimited refills
By Kevin G. Hall | McClatchy Newspapers

Taking the wraps off its much anticipated bank-rescue plan, the Obama administration on Wednesday announced that it will provide a virtually unlimited solvency guarantee to the nation's 19 largest banks.

Shortly after Treasury unveiled details of its plan, President Barack Obama appeared before TV cameras with congressional leaders to launch what he hopes will be a quick move to replace what he called a 20th century financial regulatory system.

"This financial crisis was not inevitable," Obama said, noting that his goal wasn't to inhibit the free market but to regulate it better to prevent a repeat of the global meltdown now occurring.

Obama's Address: Smooth? Yes. Transformative? No.

By Dave Lindorff

Barack Obama’s first address to Congress provided Americans with yet another example of competent speechmaking, and I suppose, given that we’ve just endured eight painful years of oratorical farce, being able to listen to your president without wincing is something.

The problem is that the way forward proposed by the president as laid out in this address was almost always half-hearted, wrong-headed or doomed.

Obama declared at the outset of his address that the economic crisis was the major issue confronting the country, and while one could argue that this crisis is merely a symptom of much bigger issues, like the nearly completed deindustrialization of the nation, the death grip of militarism, and the growing political power of corporations, one could also concede that there is an urgent need to deal with the deepening recession.

Wall Street and Bernanke: The Blind Leading the Blind

By Dave Lindorff

Free market aficionados, particularly in the media, have long been wont to tell us that the "market knows best." That was always the line when progressives (remember when there used to be progressives in government?) would come up with some do-good scheme like a public jobs program during the Johnson War on Poverty, or Medicare, or bigger subsidies for urban mass transit. If the stock market sank, they'd pronounce whatever program or bill it was as a bad idea, because "the market" (meaning investors), had nixed it by selling shares.

The same kind of analytical brilliance has been routinely ascribed by economic pundits to investors when it comes to business decisions--particularly mergers and acquisitions, or divestments and breakups. If Bank of America announces that it is going to buy the foundering Merrill Lynch and shares of B of A fall, then the merger is a bad idea. If the shares rise, it's a good idea. And so it goes.

Bernanke Says Recession Should End in 2009

Bernanke Says Recession Should End in 2009 | WSJ.com


Earlier this month, the Fed increased by fivefold the size of its Term Asset-Backed Securities Loan Facility, or TALF, to as much as $1 trillion. The program is designed to improve credit in markets backed by consumer-linked assets including credit cards, automobile and student loans, and small business loans.
(Bolding mine.)

U.S. Federal Reserve Chairman Ben Bernanke said Tuesday that the recession should end this year and 2010 "will be a year of recovery," if actions taken by the government lead to some stabilization in financial markets.

But that's a mighty "if" given recent severe declines in equity markets to levels not seen in more than a decade despite repeated announcements of government bank and housing rescue plans.

Economist Dean Baker on Book TV: "Plunder and Blunder"

Economist Dean Baker on Book TV: "Plunder and Blunder"

Dean Baker gives a great 1-hr. dissection of our economic plight.

Mr. Baker discusses the growth and "predictable" collapse of the housing and stock market bubbles and is critical of both the Reagan and Clinton administrations. He details the mistakes of Alan Greenspan and Robert Rubin. He offers suggestions for preventing additional financial crises and advocates massive government spending to combat the recession.

to watch Dean Baker on Book TV, click here.

Dispatches from the Front Lines of Economic Crisis

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

Obama's Fiscal Sideshow | By John Perry

Manhattan High-End Housing in for Shock

Manhattan High-End Housing in for Shock

1:20 mins.

Kucinich: Who Told SEC to "Stand Down" on Stanford Probe?

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.

Soros Sees No Bottom for World Financial "Collapse"

Soros sees no bottom for world financial "collapse" | Yahoo!News

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."

Financial Fraud

Financial Fraud
By Lawrence DiStasi | Splinters-Splinters

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

Same Old Smoke and Mirrors
By John Perry

Jailing Kids for Cash

Jailing Kids for Cash
By Amy Goodman | Truthdig

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).

Jobless Hit with Bank Fees on Benefits

Jobless hit with bank fees on benefits
Unemployed workers outraged over charges to inquire on benefits | MSNBC

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 Will Disclose Names, Pay $780 Million to U.S.

UBS Will Disclose Names, Pay $780 Million to U.S.
By David Voreacos, Carlyn Kolker and David Scheer | Bloomberg

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!

I Want Some TARP!

Financial Coup d’Etat

Financial Coup d’Etat
Catherine Austin Fitts | Solari Real Channel

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

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.

Conservative Group Sues for TARP Details

Conservative group sues for TARP details
By Walter Alarkon | The Hill

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.

Whatever Happened to Antitrust?

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’

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

America's Controlled Economic Implosion

World of Trouble

World of Trouble

13:14 mins.

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