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A short foreward from TomDispatch:
Here's a snapshot in words of Treasury Secretary Tim Geithner when he was still president of the New York Federal Reserve Bank from a recent portrait in the New York Times:
"He ate lunch with senior executives from Citigroup, Goldman Sachs and Morgan Stanley at the Four Seasons restaurant or in their corporate dining rooms. He attended casual dinners at the homes of executives like Jamie Dimon, a member of the New York Fed board and the chief of JPMorgan Chase. Mr. Geithner was particularly close to executives of Citigroup, the largest bank under his supervision. Robert E. Rubin, a senior Citi executive and a former Treasury secretary, was Mr. Geithner's mentor from his years in the Clinton administration, and the two kept in close touch in New York."
Small world, don't you think? This catches something of the lifestyle of Wall Street's rich and financially powerful as well as those who "regulate" them. It's no longer news that the revolving door from Wall Street to Washington and back now spins endlessly. Hence, the increasingly popular moniker "Government Sachs."
"Crony capitalism" was once a term applied to the powerful oligarchs of "emerging economies" or -- a term not heard so much these days -- banana republics. Now, however, as economist Simon Johnson has written, the U.S. is beginning to look startlingly more like one of those "emerging economies" in meltdown. And overseeing the response to the crisis are, of course, representatives of the same crony capitalists and oligarchs who helped create it.
Not surprisingly, the "solution" to the crash of '08 crafted by former Goldman Sachs chairman Henry Paulson, Jr. -- Rubin held the same job before going to Treasury in the Clinton years -- and former New York Fed chief Tim Geithner (who made Mark Patterson, a former Sachs lobbyist, his chief of staff and kept on Sachs alum Neel Kashkari to lead the bailout effort) is clearly meant to staunch the wounds of their world, not ours. TomDispatch regular Andy Kroll, who's read all the latest economic reports so you wouldn't have to, suggests below just what an instrument of Wall Street their rolling bailout program has really been. Tom
The Greatest Swindle Ever Sold
How the Financial Bailout Scams Taxpayers, Subsidizes Wall Street, and Props Up Our Broken Financial System
By Andy Kroll
On October 3rd, as the spreading economic meltdown threatened to topple financial behemoths like American International Group (AIG) and Bank of America and plunged global markets into freefall, the U.S. government responded with the largest bailout in American history. The Emergency Economic Stabilization Act of 2008, better known as the Troubled Asset Relief Program (TARP), authorized the use of $700 billion to stabilize the nation's failing financial systems and restore the flow of credit in the economy.
Time to Look Past Obama’s Words and Face-up to His Actions
U.S. Foreign Policy Continues Rapidly in the Wrong Direction
The Peace Movement Needs to Escalate Anti-War Actions
By Kevin Zeese | Voters for Peace, Prosperity Agenda.US
There is long-time saying about politicians: you cannot trust their words, but must judge them by their actions.
President Obama is very good with words, perhaps the best communicator we have seen in the White House in a generation. But now he has been in office long enough that he should be judged on his actions.
The direction of U.S. foreign policy is moving rapidly in the wrong direction on many fronts. It is time for the peace movement to step up its activities throughout the country and demand a change in course.
By Dave Lindorff
Just imagine for a moment that you are a retired contractor, struggling to get by on your pathetically shriveled 401(k). when your ne-er-do-well child suddenly comes to you saying he’s got this idea to start buying derelict homes and rehabbing them for resale. He asks you to stake him with a $100,000 loan (about half of what you’ve got left in your retirement fund), promising to repay you when he sells his first couple of houses. You know the kid’s flat busted and has been laid off from his job as a dishwasher, so you want to help, but you’ve also seen his carpentry skills: The doghouse he build in high school fell apart on a windy day, and his own house has a leaking roof, needs repainting, and all the plumbing leaks. You’ve also seen his business skills: He plays the Lotto excessively, hasn’t saved a penny, and buys most of his supplies at the local 7-Eleven.
Would you front this kid half your money?
Amendment Would Open the Books of the Federal Reserve’s Recent Intervention in Financial Markets
Washington D.C. (June 4, 2009) – Congressman Dennis Kucinich (D-OH) today won adoption of an amendment to H.R. 2646, The Government Accountability Office (GAO) Improvement Act of 2009. The Kucinich amendment would grant the GAO the authority to audit the Federal Reserve’s response to the financial crisis. The amendment was adopted unanimously in a committee markup of H.R. 2646 by the Oversight and Government Reform Committee.
General Motors Corp. took a key step toward its downsizing on Tuesday, striking a tentative deal to sell its Hummer brand to a Chinese manufacturer, while also revealing that it has potential buyers for its Saturn and Saab brands.
China's Sichuan Tengzhong Heavy Industrial Machinery Co. said Tuesday afternoon that it reached an agreement to acquire the brand from GM for an undisclosed ammount. The Detroit automaker had announced Tuesday morning that it had a memorandum of understanding to sell the brand of rugged SUVs, but it didn't identify the buyer.
Sichuan Tengzhong deals in road construction, plastics, resins and other industrial products, but Hummer would be its first step into the automotive business.
GM said the sale will likely save more than 3,000 U.S. jobs in manufacturing, engineering and at various Hummer dealerships. Tengzhong said it will assume GM's existing agreements with Hummer dealers.
"We will be investing in the Hummer brand and its research and development capabilities, which will allow Hummer to better meet demand for new products such as more fuel-efficient vehicles in the U.S," Chief Executive Yang Yi said in a statement.
As part of the proposed transaction, Hummer will continue to contract vehicle manufacturing and business services from GM during a transitional period. For example, GM's Shreveport, La., assembly plant would continue to contract to assemble the H3 and H3T through at least 2010, GM said. AM General LLC in Mishawaka, Ind., makes the larger H2 under contract for GM. Read more.
Last month, 60 Members of the House of Representatives, including 51 Democrats, voted against the war supplemental for Afghanistan, Pakistan, and Iraq. But this week, when the House is expected to consider the agreement of a House-Senate conference on the war funding, the supplemental could well be defeated on the floor of the House - if most of the 51 anti-war Democrats stick to their no vote - which they might, if they hear from their constituents.
The key thing that's changed is the Treasury Department's insistence that the war supplemental include a $100 billion bailout for the International Monetary Fund - a bailout for European banks facing big losses in Eastern Europe, the international version of the Wall Street bailout.
Web Organized Participatory Movement Plans Teach-ins to Build Democratic Control over Money and the Market
The week of June 10, over 18 educational events are planned by a new group called “A New Way Forward” and sponsored by Alternet and Democrats.com. A New Way Forward is a movement organized via the web and founded by young people who want to take back the power of the ordinary citizen to affect our economic structure. Alternet and Democrats.com have been instrumental in helping young organizers connect to a broader audience. As the banking industry continues secret lobbying in DC, "A New Way Forward" is trying to begin a serious discussion at the grassroots level. Volunteers around the country are planning their own protests and teach-ins and are ready to start a serious fight with the big players in the financial sector.
Six major health care organizations submitted a 28-page proposal Monday to President Barack Obama detailing how they could save $2 trillion over 10 years.
Some of the savings proposed Monday mirror ideas already under consideration in Congress, including reducing the number of hospital readmissions, increasing the use health information technology and preventing chronic diseases. They also propose streamlining administrative processes, reducing medical errors and promoting comparative effectiveness research.
...The six groups include the American Medical Association, the American Hospital Association, the Pharmaceutical Research and Manufacturers of America, Advanced Medical Technology Association and Service Employees International Union.
Health care coverage in this country has become a tightrope walk for too many Americans who struggle to balance the high cost of health care and the cost of supporting a family on a thin budget.
You may worry when you get sick because you are one of the 45 million people in this country who have no health insurance at all. Or you may worry because you don’t have adequate health insurance and can’t afford the necessary treatments to help you get better. Or you may worry that if you lose your job, you’ll lose your insurance and not be able to take your sick child to the doctor. Or you may have been in the same job for years without a raise because you are paying more each year to keep the insurance that protects your family.
You are not alone. According to a study at Harvard University, medical costs play a role in as many as 46 percent of all personal bankruptcies. Many parents fear that they are only one major illness away from not being able to put food on the table for their children, losing their home or risking their family’s future financial security.
One of the biggest weaknesses of our system is that since health insurance coverage typically comes with employment, people cannot take their coverage with them when they leave their jobs, or they are simply without health insurance. So I have developed a proposal that helps to unlock access to affordable health coverage by requiring insurance companies in every state to offer a low-cost health insurance policy to every person, regardless of his or her health or what job he or she has.
This plan is not like the phony insurance you’ve seen advertised on TV. It is real major-medical insurance that covers the most significant health problems any one of us may face. It provides coverage for the preventive care we all need to stay well, and it includes incentives to encourage healthful behavior. Most important, it is guaranteed to be available to everyone.
To ensure that premiums, co-payments and deductibles are affordable, this plan includes subsidies for low-income individuals. Of course, some will want to purchase more generous coverage, and nothing in my private market plan prevents that option. In fact, the roughly 160 million Americans who have insurance through their employers will not even notice a change in their coverage or benefits. Finally, those without any insurance will find a new peace of mind that affordable health care coverage is now within reach.
What's the Administration's specific aim in bailing out GM? I'll give you my theory later.
For now, though, some background. First and most broadly, it doesn't make sense for America to try to maintain or enlarge manufacturing as a portion of the economy. Even if the U.S. were to seal its borders and bar any manufactured goods from coming in from abroad--something I don't recommend--we'd still be losing manufacturing jobs. That's mainly because of technology.
When we think of manufacturing jobs, we tend to imagine old-time assembly lines populated by millions of blue-collar workers who had well-paying jobs with good benefits. But that picture no longer describes most manufacturing. I recently toured a U.S. factory containing two employees and 400 computerized robots. The two live people sat in front of computer screens and instructed the robots. In a few years this factory won't have a single employee on site, except for an occasional visiting technician who repairs and upgrades the robots.
Factory jobs are vanishing all over the world. Even China is losing them. The Chinese are doing more manufacturing than ever, but they're also becoming far more efficient at it. They've shuttered most of the old state-run factories. Their new factories are chock full of automated and computerized machines. As a result, they don't need as many manufacturing workers as before. Read more.
Last month, a little-known company where Summers served on the board of directors received a $42 million investment from a group of investors, including three banks that Summers, Obama’s effective “economy czar,” has been doling out billions in bailout money to: Goldman Sachs, Citigroup, and Morgan Stanley. The banks invested into the small startup company, Revolution Money, right at the time when Summers was administering the “stress test” to these same banks.
A month after they invested in Summers’ former company, all three banks came out of the stress test much better than anyone expected -- thanks to the fact that the banks themselves were allowed to help decide how bad their problems were (Citigroup “negotiated” down its financial hole from $35 billion to $5.5 billion.)
The fact that the banks invested in the company just a few months after Summers resigned suggests the appearance of corruption, because it suggests to other firms that if you hire Larry Summers onto your board, large banks will want to invest as a favor to a politically-connected director.
Last month, it was revealed that Summers, whom President Obama appointed to essentially run the economy from his perch in the National Economic Council, earned nearly $8 million in 2008 from Wall Street banks, some of which, like Goldman Sachs and Citigroup, were now receiving tens of billions of taxpayer funds from the same Larry Summers. It turns out now that those two banks have continued paying into Summers-related businesses. Read more.
U.S.: NGOs Oppose Nearly 100-Billion-Dollar Pledge to IMF
By Danielle Kurtzleben | IPS
A broad coalition of civil society groups, as well as some U.S. lawmakers, is fighting what they call a "blank cheque" from the U.S. to expand funding for the International Monetary Fund (IMF).
On May 22, the Senate passed a 91.3 billion-dollar-wartime spending bill that included 108 billion dollars for the Washington-based Fund. The bill will now have to be reconciled in a conference committee between the Senate and the House of Representatives whose own version omitted any IMF funding.
The funding was the U.S. part of a larger package agreed by the G20 leaders at their April meeting in London, where they pledged to provide 1.1 trillion dollars in additional funding to the IMF.
This publication offers a look at federal budgets spanning 2008 to 2010, including the Obama administration's first budget. Since the values embedded in the budget set the parameters for action while reflecting our nation's approach to the common good, citizens are urged to reconcile the numbers presented here with the President's words.
In order to stabilize the U.S. economy and decrease our reliance on unsustainable sources of energy, the administration identified three main objectives: reduce health care costs, improve education and embrace conservation efforts and renewable energy.
Daniel Estulin's "True Story of the Bilderberg Group" and What They May Be Planning Now By Stephen Lendman
Note: Estulin will be the featured guest on The Global Research News Hour Tuesday, June 2. He can be heard live or afterwards through the program archive.
For over 14 years, Daniel Estulin has investigated and researched the Bilderberg Group's far-reaching influence on business and finance, global politics, war and peace, and control of the world's resources and its money.
I just got this Email from Michael Moore who's not here at America's Future Now!:
I write this on the morning of the end of the once-mighty General
Motors. By high noon, the President of the United States will have made
it official: General Motors, as we know it, has been totaled.
As I sit here in GM's birthplace, Flint, Michigan, I am surrounded by
friends and family who are filled with anxiety about what will happen to
them and to the town. Forty percent of the homes and businesses in the
city have been abandoned. Imagine what it would be like if you lived in
a city where almost every other house is empty. What would be your state
It is with sad irony that the company which invented "planned
obsolescence" -- the decision to build cars that would fall apart after
a few years so that the customer would then have to buy a new one -- has
now made itself obsolete. It refused to build automobiles that the
By Greg Palast
They may be crying about General Motors' bankruptcy today. But dumping 40,000 of the last 60,000 union jobs into a mass grave won't spoil Jamie Dimon's day.
Dimon is the CEO of JP Morgan Chase bank. While GM workers are losing their retirement health benefits, their jobs, their life savings; while shareholders are getting zilch and many creditors getting hosed, a few privileged GM lenders - led by Morgan and Citibank - expect to get back 100% of their loans to GM, a stunning $6 billion.
The way these banks are getting their $6 billion bonanza is stone cold illegal.
I smell a rat.
Stevie the Rat, to be precise. Steven Rattner, Barack Obama's 'Car Czar' - the man who essentially ordered GM into bankruptcy this morning.
On the Street and On Facebook: The Homeless Stay Wired
By Phred Dvorak | WSJ
Like most San Franciscans, Charles Pitts is wired. Mr. Pitts, who is 37 years old, has accounts on Facebook, MySpace and Twitter. He runs an Internet forum on Yahoo, reads news online and keeps in touch with friends via email. The tough part is managing this digital lifestyle from his residence under a highway bridge.
"You don't need a TV. You don't need a radio. You don't even need a newspaper," says Mr. Pitts, an aspiring poet in a purple cap and yellow fleece jacket, who says he has been homeless for two years. "But you need the Internet."
Mr. Pitts's experience shows how deeply computers and the Internet have permeated society. A few years ago, some people were worrying that a "digital divide" would separate technology haves and have-nots. The poorest lack the means to buy computers and Web access. Still, in America today, even people without street addresses feel compelled to have Internet addresses.
New York City has put 42 computers in five of the nine shelters it operates and plans to wire the other four this year. Roughly half of another 190 shelters in the city offer computer access. The executive director of a San Francisco nonprofit group, Central City Hospitality House, estimates that half the visitors to its new eight-computer drop-in center are homeless; demand for computer time is so great that users are limited to 30 minutes....
Cheap computers and free Internet access fuel the phenomenon. So does an increasingly computer-savvy population. Many job and housing applications must be submitted online. Some homeless advocates say the economic downturn is pushing more of the wired middle class on to the streets. Read more.
Earlier this week Mayor Michael Bloomberg announced the appointment of former Lehman Brother's economic strategist, John B. Rhea to head the New York City Housing authority which administers public housing. For those of you who are keeping score, Rhea held his previous position at the time of the failed investment firm's collapse. The move seems to fall in line with the Mayors plan to marry public housing and the private sector and, if what we've seen from the rent guidelines board is any indication, then we could all be in for a bumpy ride. We're already seeing similar signs of such a marriage being proposed by the mayor's office, including his affordable housing plan (see link below). Here is closer look at what Rhea and what his appointment will mean for NYC's affordable housing.
After the collapse of Lehman brothers John B. Rhea, stayed on with the new owners at Barclay's. The 43 year old Wall Streeter also has worked for JP Morgan where he was involved in overseeing several mergers and acquisitions worth 50 billion dollars, according to the NY Times. His biggest merger was that of RJ Reynolds and smokeless tobacco products. His connection to politics has been as money man for the Democrats, often being responsible for Wall Street's contributions to both president Obama and Senator Chuck Schumer. For Obama, Rhea brought in a reported $500,000, mostly from Wall Street. And for Schumer he has been a liaison between the Senator's campaign and Wall Street.
But John B. Rhea has no experience in housing - none. So it seems a bit puzzling why Mayor Bloomberg would put him in charge of an agency which oversees 178,000 apartments throughout the five boroughs, which house just under 408,000 residents. The office is is also in charge of Section 8 housing and runs the federal voucher program. The two programs combined make up 8% of all New York City housing, and which largely serves those earning $23,000 dollars and less a year. Rhea's disconnect from the population that he will be serving become only too clear when, while speaking at an event announcing his new position he joked about "not taking the job for the money". He'll be making $189,700 a year.
To be fair, however, there is little doubt that the former Lehman Brother's executive will be making less than he was during his Wall Street days. But the crime of hiring someone so inexperienced on the issue and is so close to the marketplace is that the office of NYCHA has been a lighting rod for scandals for decades. This under-funded agency, whose annual budget is 3.4 billion dollars, is currently running an 177 million deficit and the public housing itself has been allowed to deteriorate to the point that the buildings themselves are deemed unsafe and, in many cases, are actually condemned. Read more.
- Lehman Brothers Holdings | Rank: 1 | Date of bankruptcy filing: 09/15/08 | Assets: $691 billion | Now trading pink at less than a nickel
- Washington Mutual | Rank: 2 | Date of bankruptcy filing: 09/26/08 | Assets: $327.9 billion
- WorldCom | Rank: 3 | Date of bankruptcy filing: 07/21/02 | Assets: $103.9 billion
Editorial comment: Those first 3 add up to more than a trillion, folks.
- General Motors | Prospective Rank: 4 | Likely date of bankruptcy filing: June 2009 | Assets: $91 billion
- Enron | Rank: 5 | Date of bankruptcy filing: 12/02/01 | Assets: $65.5 billion
- Conseco | Rank: 6 | Date of bankruptcy filing: 12/17/02 | Assets: $61 billion
- Chrysler | Rank: 7 | Date of bankruptcy filing: 04/30/09 | Assets: $39 billion
- Thornburg Mortgage | Rank: 8 | Date of bankruptcy filing: 05/01/09 | Assets: $36.5 billion
- Pacific Gas and Electric Co. | Rank: 9 | Date of bankruptcy filing: 04/06/01 | Assets: $36 billion
- Texaco | Rank: 10 | Date of bankruptcy filing: 04/12/87 | Assets: $34.9 billion
Editorial comment: The last 7 largest bankruptcies add up to $364 Billion, so Lehman Brothers darn near doubled the remaining seven largest bankruptcies in American capitalist history. Way to go! (Not!)
SECOND ROUND OF HOMELESSNESS FOR KATRINA VICTIMS AS FEMA PREPARES TO ENFORCE JUNE 1 EVICTION DATE | Press Release
US Human Rights Network Condemns Federal Government’s Move to Repossess Trailers and Leave Thousands Homeless
Atlanta, May 29, 2009 - In response to the Federal Emergency Management Agency’s decision to repossess temporary housing from survivors of Hurricane Katrina on June 1, the US Human Rights Network issued the following statement:
The move by FEMA to enforce the June 1st eviction date for Gulf Region residents who live in temporary trailers not only lacks basic compassion but is also a derogation of the government’s responsibilities to uphold fundamental human rights. If FEMA moves forward with the Bush administration's plan to forcefully evict people living in temporary housing, it will make a mockery of the Gulf Region recovery promised by President Obama and Congress.
Earnest Hammond is a 70 year-old retired truck driver who received no assistance after Hurricane Katrina destroyed his home. He took matters into his own hands and by collecting aluminum cans, raised thousands of dollars to repair his badly damaged house. He is eager to move back but can’t restore his home by the June 1st deadline, and is facing eviction. “I have nowhere to go if they take my trailer. It’s hard to believe I have to go through this again.”
Manipulation: How Markets Really Work
By Stephen Lendman
Wall Street's mantra is that markets move randomly and reflect the collective wisdom of investors. The truth is quite opposite. The government's visible hand and insiders control markets and manipulate them up or down for profit - all of them, including stocks, bonds, commodities and currencies.
It's financial fraud or what former high-level Wall Street insider and former Assistant HUD Secretary Catherine Austin Fitts calls "pump and dump," defined as "artificially inflating the price of a stock or other security through promotion, in order to sell at the inflated price," then profit more on the downside by short-selling. "This practice is illegal under securities law, yet it is particularly common," and in today's volatile markets likely ongoing daily.
Ending Today's Economic Crisis Simply and Easily, in America and Globally
By Stephen Lendman
Some of the best ideas are often the simplest. When applied to the global economic crisis, the solution is easier than imagined. What's hard, in fact a Gordian Knot, is the political will to embrace it. But even matters that great can be solved by a bold stoke, and according to legend, Alexander the Great's "Alexandrian solution" was achieved with one stroke of his sword, cutting the Knot in half. Applied to the global economic crisis, it means addressing it with effective policies, not ones wrecking America and other troubled nations worldwide.
Economist Michael Hudson explains that "debt leveraging is what caused our economic collapse," so piling on more ("The Recovery Plan from Hell" he calls it) makes things worse, especially the way it's done:
As usual, the humanities were allowed to wither. Don't know much about history? Go ahead and authorize waterboarding, even though the U.S. prosecuted it as a war crime after World War II. Don't know much about geography? Go ahead and send our troops into mountainous Afghanistan, that "graveyard of empires," and allow them to be swallowed up by the terrain as they fight a seemingly endless war.
Can there be any doubt that education matters not just in how we view the world, but in what kind of world we create -- or simply accept? And can there be any doubt that, despite a massive educational infrastructure (admittedly now fraying badly), Americans remain remarkably poorly informed about the world? Last year, Rick Shenkman, the editor of the History News Network website, published a book (now out in paperback), Just How Stupid Are We? Facing the Truth About the American Voter, excerpted at this site. Stupid enough (or ill-informed) was the answer.
Since Barack Obama's election, many readers wrote Shenkman asking him if he still believes that "the voters are uninformed. Didn't Obama's election mean they were pretty smart?" In a recent post, he answered regretfully in the negative and here's just a little of what he had to say:
"The highlights of the 2008 election included controversies over Obama's bowling score, his middle name Hussein, and Hillary's crying. These were not exactly issues of much weight at a time when the financial collapse of the country was happening before our eyes. And yet they drew extended media commentary...The media was to blame for the deplorable low quality of much of the campaign. But I am firmly convinced that you get the campaign you deserve...
I've just interviewed Les Leopold, who blames the recent financial disasters on trends that began over 30 years ago, explains how a great deal of Wall Street's "investing" has had as much connection to the real economy as fantasy baseball has to baseball, diagnoses the failures of labor and the left to resist the financialization of the economy, views the current situation with genuine optimism as a rare moment in which we might be able to make necessary changes to regulate finance and to shift money from a tiny group of billionaires to the rest of society, and explains why that latter step is needed to stabilize any economy.
With teach-ins planned everywhere on June 10th and people trying to educate each other on exactly what just happened to trillions of our children's dollars, you could do a lot worse than to gather some friends together, read or listen to, and discuss, this interview, and then take appropriate actions.
Here's the audio in an mp3. It's a little under an hour.
David Swanson interviewing Les Leopold:
By Jordan Flaherty
The video grabs your attention immediately. Young people in the Lower Ninth Ward hold up signs that read: “looter,” “we’re still here,” and “America did this.” Amid empty lots and damaged houses, poet Nik Richard delivers this message: “Hurricane Katrina was the biggest national disaster to hit American soil, and nearly two years later, this area is still devastated. But you know what? We made sure we preserved it strictly for your tourism. For about $75, you can take one of these many tour buses.”
Tourists drive by and people with cameras gawk. Richard looks directly at the camera and says, “It looks like there’s more money to be paid in devastation than regeneration. If y’all keep paying your money to see it, should we rebuild it?”
US Army gets eco-conscious, preps mega solar plant
By Austin Modine | The Register
You know the "go green" push is reaching a zenith when the fuel-slurping US Army wants to get serious about having a daintier environmental footprint.
The Army said it's enlisting several big new energy projects to promote less energy waste in local and overseas bases. Among its ambitions are rolling out a fleet of electric vehicles, establishing biomass fuel demonstrations at select Army posts, and constructing what could be one of the most powerful solar power plants in the world.
"We spend over $3bn every year on energy and the majority of it is spent on our installations. We can significantly reduce our energy consumption by partnering within government and with the private sector to capitalize on the great strides in proven technology that have been developed and implemented across the country," said Secretary of the Army Pete Geren. Read more.
Banking is the industry that failed. Banks are meant to allocate capital to businesses and consumers efficiently; instead, they ladled credit to anyone who wanted it. Banks are supposed to make money by skilfully managing the risk of transforming short-term debt into long-term loans; instead, they were undone by it. They are supposed to expedite the flow of credit through economies; instead, they ended up blocking it.
The costs of this failure are massive. Frantic efforts by governments to save their financial systems and buoy their economies will do long-term damage to public finances. The IMF reckons that average government debt for the richer G20 countries will exceed 100% of GDP in 2014, up from 70% in 2000 and just 40% in 1980.
Despite public rage over bank bail-outs, the industry has also comprehensively failed its owners. The scale of wealth destruction for shareholders has been breathtaking. The total market capitalisation of the industry fell by more than half in 2008, erasing all the gains it had made since 2003 (see chart 1).
Employees have scarcely done better. The popular perception of bankers as Porsche-driving sociopaths obscures the fact that many of the industry’s staff are modestly paid and sit in branches, information-technology departments and call-centres. Job losses in the industry have been savage. “Being done” used to refer to hearing about your annual bonus. Now it means getting fired. America’s financial-services firms have shed almost half a million jobs since the peak in December 2006, more than half of them in the past seven months. Many have gone for good. Read more.