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By Dave Lindorff
My bank, a small regional institution that was not involved in sub-prime lending, and that was not a recipient of any TARP bailout money, cut off my home equity line of credit two weeks ago. They did it abruptly, with no notice—I only discovered it had happened when I tried to get a $500 advance from it to cover a payment I was making on my credit card. When I asked what was going on, the local branch manager informed me that “we are closing out a lot of credit lines while we reassess the value of houses in this region, which have been falling.”
This ersatz capitalism, where losses are socialised and profits privatised, is doomed to failure. Incentives are distorted. There is no market discipline. The too-big-to-be-restructured banks know that they can gamble with impunity — and, with the Federal Reserve making funds available at near-zero interest rates, there is ample money to do so. Some have called this "socialism with American characteristics". But socialism is concerned about ordinary individuals. By contrast, the US has provided little help for the millions of its people who are losing their homes. Workers who lose their jobs receive only 39 weeks of limited unemployment benefits, and are then left on their own. And, when they lose their jobs, most also lose their health insurance.
With all the talk of "green shoots" of economic recovery, America's banks are resisting efforts to regulate them. While politicians talk about their commitment to regulatory reform to prevent a recurrence of the crisis, this is one area where the devil really is in the details — and the banks will muster what muscle they have left to ensure that they have ample room to continue as they have in the past.
The old system worked well for the banks so why should they embrace change? Indeed, the efforts to rescue them devoted such little thought to the kind of post-crisis financial system we want, that we will end up with a banking system that is less competitive, with the large banks that were "too big to fail" even larger.
It has long been recognised that the US banks that are too big to fail are also too big to be managed. That is one reason the performance of several has been so dismal. When they fail, the Government engineers a financial restructuring and provides deposit insurance, gaining a stake in their future. Officials know that if they wait too long, zombie or near-zombie banks — which have little or no net worth, but are treated as if they were viable institutions — are likely to "gamble on resurrection". If they take big bets and win, they walk away with the proceeds, if they fail, the Government picks up the tab. Read more.
House Oversight and Government Reform Committee Subpoenas Federal Reserve to Obtain BofA-Merrill Lynch Documents
Towns, Issa, Kucinich Demand Documents for Hearing This Week
Washington D.C. (June 8, 2009) -- House Oversight and Government Reform Committee Chairman Edolphus Towns (D-NY) and Ranking Member Darrell Issa (R-CA) today served a subpoena on the Federal Reserve (the Fed) to compel it to turn over documents related to Bank of America’s acquisition of Merrill Lynch.
The full committee and Domestic Policy Subcommittee, under the leadership of Chairman Dennis Kucinich (D-OH), have been investigating the circumstances surrounding the federal government’s bailout of the Bank of America-Merrill Lynch transaction. Specific documents subpoenaed include emails, notes of conversations and other documents.
Financial regulator seeks powers to curb excess speculation
By Kevin G. Hall | McClatchy Newspapers
If Congress grants the commission's wishes, big Wall Street players such as Goldman Sachs, Morgan Stanley, JP Morgan Chase and others would be subject to capital requirements, new business-conduct rules and more extensive reporting and recordkeeping requirements.
Firing the opening shot in a likely battle with Wall Street, the federal regulator who's overseeing the trading of oil contracts asked Congress on Thursday for broad powers to regulate the exotic private contracts that are thought to contribute to rising oil prices and the global financial crisis.
Testifying before the Senate Agriculture Committee, Commodity Futures Trading Commission Chairman Gary Gensler told lawmakers that he needs broad authority to bring all derivatives contracts under regulatory supervision. Derivatives involve bets that derive their value based on future prices of some underlying asset, such as oil contracts, interest rates, currency or even bonds and other forms of credit.
The new commission chief also called for an additional set of rules for swaps dealers, big global financial institutions that dominate activity in these markets. These rules would force players on both sides of a transaction in these markets to set aside cash to cover potential losses.
The global financial system nearly collapsed during the last four months of 2008 after the Federal Reserve and the Treasury Department rescued insurance giant American International Group. AIG was rescued because it had issued trillions of dollars in insurance-like private derivatives contracts and had insufficient reserves to cover its losses.
"The current financial crisis has taught us that the derivatives trading activities of a single firm can threaten the entire financial system and that all such firms should be subject to robust federal regulation," Gensler said. Read more.
The Great U-Turn: Global Migration Flows Reverse for the First Time Since the Depression as Work in the Rich World Dries Up
The Great U-Turn: Global Migration Flows Reverse for the First Time Since the Depression as Work in the Rich World Dries Up
By Patrick Barta and Joel Millman | WSJ
Brígido de Jesús González lived in Queens, N.Y., for the past 20 years, working as a landscaper to support his wife and kids back in El Salvador. But with the recession clobbering his business, the illegal immigrant decided to pack up and return to his native country -- for good.
"I was thinking [of opening] a mechanic's shop for cars, or maybe a gas place, where my neighbors can come and fill up their propane tanks," says Mr. González, 50. The new businesses could be a good way to help his two sons, who now live in New York, if things get worse north of the border. "I can give them jobs if they want to come home," he says.
The developed world, which for decades has offered a difficult but promising path to upward mobility, appears to be losing its allure. Unemployment is rising, and backlashes against foreign workers are mounting.
The result is potentially the biggest turnaround in migration flows since the Great Depression, economists say. Read more.
Though employment losses have slowed in May, many have already lost large numbers of jobs over this recession and therefore have fewer jobs left to lose.
The economy lost another 345,000 jobs in May. For the first time in a year, there were upward revisions to the past months’ data, with March and April’s combined employment revised upward by 72,000 jobs. The establishment survey reports 1.5 million jobs lost over the last three months. With this report, employment is now down 6.0 million jobs from its peak in December 2007— the 4.3 percent decline reflecting the largest relative loss of jobs in over 50 years. With fewer jobs left to lose, job loss is now occurring only at the fast pace of September and October of 2008.
The household survey showed a sharp rise in the unemployment rate to 9.4 percent from 8.9 percent in April—the highest rate in nearly 26 years. After showing a gain of 120,000 jobs in April, the household survey showed a loss of 437,000 jobs in May....
Adjusted for age composition and survey, the unemployment rate would now be equal to 10.7 percent, compared to a post-World War II peak of 10.8 percent in 1982. When internationally comparable data is released next month, the rate of unemployment in the United States will almost certainly be higher than that in the Euro Area.
WE DON'T NEED THE GENERAL MOTORS CORPORATION
by Mike Ferner
Times are anxious indeed, but simultaneously we are face-to-face with an extremely rare chance to replace our transportation system with something we can literally live with.
To take advantage of this uncommon opportunity we will have to do something far more profound, yet less costly, than a government bailout or an act of Congress. We will have to, as Paul Newman said in Cool Hand Luke, "get our minds right" on one simple fact: what we need is reliable, sustainable transportation. That does not mean we need General Motors Corporation or even cars. Contemplate the freedom implied in that statement for just a moment: we do not need General Motors Corporation.
The results of eight years of Bush-Cheney at the helm make the demise of the Republican Party an easy call. Our financial system is on life support. The major banks are insolvent, according to banking and legal authority William K. Black. If they’re not, they’re in intensive care. No matter how many trillions of dollars worth of infusions they receive, they’re not making loans. The economy is in a free fall with growth down 6% a quarter and job losses running at nearly 600,000 a month. We’re stuck in two catastrophic wars. Despite President Obama’s election, we’re viewed with suspicion and disregard throughout the world.
Saturday, June 6th, 5-7 pm Central, Truth Jihad Radio, presents:
Brad Friedman of BradBlog.com and Andy Worthington, author, The Guantanamo Files
Saturday, June 6th, 5-7 pm Central (6-8 p.m. Eastern), on American Freedom Radio:
First hour: Brad Friedman, The Brad Blog, discussing efforts to expose and rectify the Bush Administration's bogus prosecutions of its political enemies, including Alabama Governor Don Siegelman; disbar the torture lawyers; and restore justice at Justice. See: Velvet Revolution US, Restore Justice at Justice.
Second hour: Andy Worthington, author, The Guantanamo Files: http://www.andyworthington.co.uk/
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.