You are hereEconomy
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.
Charles Ganske of Russia Blog excerpted a portion of Simon Johnson's May 2009 article at the Atlantic Monthly titled, "The Quiet Coup." The author, Professor Johnson, served as director of the International Monetary Fund from 2007 to 2008, and currently is an academic economist at MIT's Sloan School of Management. Here are a few provocative excerpts:
...at the outset of the crisis, the oligarchs are usually among the first to get extra help from the government, such as preferential access to foreign currency, or maybe a nice tax break, or—here’s a classic Kremlin bailout technique—the assumption of private debt obligations by the government. Under duress, generosity toward old friends takes many innovative forms. Meanwhile, needing to squeeze someone, most emerging-market governments look first to ordinary working folk—at least until the riots grow too large....
Instead, the American financial industry gained political power by amassing a kind of cultural capital—a belief system. Once, perhaps, what was good for General Motors was good for the country. Over the past decade, the attitude took hold that what was good for Wall Street was good for the country. The banking-and-securities industry has become one of the top contributors to political campaigns, but at the peak of its influence, it did not have to buy favors the way, for example, the tobacco companies or military contractors might have to. Instead, it benefited from the fact that Washington insiders already believed that large financial institutions and free-flowing capital markets were crucial to America’s position in the world.
Freshman Democrat Alan Grayson Attacks Obama's War Policy
by Christopher Bateman | Vanity Fair
In 2007, Vanity Fair’s David Rose wrote about an ambitious lawyer and entrepreneur named Alan Grayson, who at the time was suing KBR and other defense contractors in Iraq for alleged fraud on behalf of whistleblowers and American taxpayers. Grayson, who ran for Congress unsuccessfully in 2006, ran again in 2008, and this time was elected to represent Florida’s 8th district, which encompasses part of Orlando....
Have you been pleased at all with the Obama administration’s policies in Iraq and what they’ve done there so far?
By David Swanson
If you're like me you find it at least a bit disturbing that we're giving trillions of dollars to save the economy to the very people who wrecked it, and more disturbing that we're doing so without any solid basis for expecting to get much of it back and without making fundamental changes to prevent a repetition. But if you're like me, you also aren't 100 percent certain how a credit default swap works with a cubed collateralized debt obligation, much less whether such a monstrosity needs to be eliminated or reformed. What to do?
Greenspan Says Banks Still Have a ‘Large’ Capital Requirement
By Alison Fitzgerald | Bloomberg
Former Federal Reserve Chairman Alan Greenspan signaled that the financial crisis has yet to end even as borrowing costs tumble, warning that U.S. banks must raise “large” amounts of money.
“There is still a very large unfunded capital requirement in the commercial banking system in the United States and that’s got to be funded,” Greenspan said in an interview yesterday in Washington. He also said that “until the price of homes flattens out we still have a very serious potential mortgage crisis.”
Greenspan’s comments suggest he sees a bigger capital shortfall in the banking system than reflected in regulators’ stress tests on the 19 biggest U.S. lenders. Treasury Secretary Timothy Geithner told lawmakers yesterday that banks have issued more than $56 billion in new stock or debt since the tests found 10 firms needed to raise about $75 billion. Read more.
US financial institutions will repay $25bn (£16bn) of bail-out funds over the next year, the US Treasury says.
Treasury Secretary Timothy Geithner told US Congress the money will be used to further assist institutions in need of financial help.
Including the anticipated repayment, he estimated that $123.7bn was left from the the $700bn financial bail-out fund approved by Congress in October. Read more.
It would be an exaggeration to say that Congress has a once-in-a-lifetime opportunity this week to reform the policies of the International Monetary Fund. If the future is like the past, if Congress misses this opportunity, another one will come along - in about 10 years or so.
This week, House and Senate leaders are meeting in a conference committee to work out the differences between the House and Senate versions of the supplemental appropriations bill. The Senate version of the bill is likely to include $100 billion and new authorities for the IMF, but the House version of the supplemental bill did not include funds for the IMF. The Senate is debating amendments now as I write. The conference committee will almost surely meet soon after Senate passage; the stated goal is to pass the supplemental before the Memorial Day recess.
"Over the Rainbow"
By Stephen Lendman
This writer just completed a six-part series on Ellen Brown's remarkable 2007 book titled "Web of Debt." This article follows from it by picking up on the theme she struck, using L. Frank Baum's "The Wonderful Wizard of Oz" as a combination parable, monetary allegory, and political manifesto for change at a time it's most needed.
Published in 1900 as an American fairytale, it became a popular staple, later made into the classic 1939 film staring Judy Garland, the 1975 award-winning Broadway musical, The Wiz, featuring the first-ever all-black cast, followed by a hit film on the stage production.
As Brown explained, who would have thought this "charming tale....was drawn from that most obscure and tedious of subjects, banking and finance," and (in the wrong hands) the chokehold they have on societies. Who understood that it was "all about people power, manifesting your dreams, (and) finding what you wanted in your own backyard." Who also could have imagined that "the real-life folk heros who inspired (Baum's) plot may have had the answer to" today's global economic crisis.
Brown began by quoting Hans Schicht in a 2005 editorial headlined "The Death of Banking and Macro Politics" in which he stated:
"Through a network of anonymous financial spider webbing only a handful of global King Bankers own and control it all....Everybody, people, enterprise, State and foreign countries, all have become slaves chained to the Banker's credit ropes."
By Dave Lindorff
A new study of 1004 union organizing drives conducted by the director of labor education research at Cornell University’s School of Industrial and Labor Relations has found that two-third of the companies involved were violating US labor law by holding one-on-one interrogations of workers, by threatening workers about their union support, by firing union organizers or using half a dozen other illegal tactics to defeat unionization campaigns.
Prof. Kate Bronfenbrenner, author of No Holds Barred: The Intensification of Employer Opposition ot Organizing, says that these illegal tactics by employers have been used to drive union representation at American companies down to only 12.4 percent from a level of 22 percent just 30 years ago.
Host: Basima Farhat
Ellen Brown developed her research skills as an attorney practicing civil litigation in Los Angeles. In Web of Debt, her latest book, she turns those skills to an analysis of the Federal Reserve and “the money trust.” She shows how this private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Brown developed an interest in the developing world and its problems while living abroad for eleven years in Kenya, Honduras, Guatemala and Nicaragua. She returned to practicing law when she was asked to join the legal team of a popular Tijuana healer with an innovative cancer therapy, who was targeted by the chemotherapy industry in the 1990s. That experience produced her book Forbidden Medicine, which traces the suppression of natural health treatments to the same corrupting influences that have captured the money system. Brown’s eleven books include the bestselling Nature’s Pharmacy, co-authored with Dr. Lynne Walker, which has sold 285,000 copies.
Reviewing Ellen Brown's "Web of Debt:" Part VI
By Stephen Lendman
This is the sixth and final article on Ellen Brown's superb 2007 book titled "Web of Debt," now updated in a December 2008 third edition. It tells "the shocking truth about our money system, (how it) trapped us in debt, and how we can break free." This article focuses on establishing a people-oriented banking system. It's high time we had one and reclaimed what's rightfully ours.
Restoring National Sovereignty with A Truly National Banking System
One serving everyone, not powerful moneychangers alone, the so-called Money Trust cartel of Wall Street bankers looting the national wealth for themselves and heading the country for bankruptcy, tyranny and ruin. Stopping them is Job One, and only mass activist outrage can do it.
At the Chicago Democratic National Convention, William Jennings Bryan won the nomination saying:
"(W)e believe that the right to coin money and issue money is a function of government....I stand with Jefferson (and say), as he did, that the issue of money is a function of the government and that banks should go out of the governing business....(W)hen we have restored the money of the Constitution, all other necessary reforms will be possible, and....until that is done there is no reform that can be accomplished."
Yes, you can pay off all your personal debts -- as I have, with 100% of my mortgage paid off and zero credit card or any other debts. But that won't save you from the ravages of bailout-based inflation. When money loses its value due to inflation -– as it will very shortly -- it's almost as bad as paying interest, or high taxes.
D.C. Area Residents Opposed to Af-Pak War Hold Sunday Rally | Press Release
On the heels of a Congressional vote for more war funds, passed at the behest of the White House, local peace and justice activists will hold a Sunday afternoon rally calling for an end to continual war and occupation of Afghanistan, and drone bombings of Pakistan.
Following a House of Representatives vote Thursday approving $96.7 billion in additional war funding, local activists organized an anti-war rally to be held Sunday, 1:30 PM in Lafayette Park. Among the speakers are Ray McGovern, a former senior CIA analyst; Medea Benjamin, co-founder of Code Pink Women for Peace and Global Exchange; and Erik Leaver a senior policy analyst with the Institute for Policy studies.
Reviewing Ellen Brown's "Web of Debt:" Part V
By Stephen Lendman
This is the fifth of several articles on Ellen Brown's superb 2007 book titled "Web of Debt," now updated in a December 2008 third edition. It tells "the shocking truth about our money system, (how it) trapped us in debt, and how we can break free." This article focuses on taking back our money power.
Recapturing What's Ours and Turning Scarcity to Abundance
In 1952, Norman Vincent Peale (1898 - 1993) first published his most famous book - "The Power of Positive Thinking." It sold about five million copies and was a New York Times bestseller for 186 consecutive weeks delivering messages like: "Never talk defeat. Use words like hope, belief, faith, victory." FDR struck the same theme in saying: "The only thing we have to fear is fear itself."
In 1900, Frank Baum's The Wizard of Oz was first published, conveying "the notion that a life of scarcity could be transformed in an instant into one of universal abundance...." In real life, the secret is by taking back our money power from the private bankers who stole it in 1913, in the middle of the night, two days before Christmas, and kept it ever since.
Today's real cause of scarcity is that "somebody is paying interest on most of the money in the world all of the time," and by so doing enslaves nearly everyone in perpetual debt bondage. Meeting America's huge debt burden requires the money supply to keep expanding, "and for that to happen, borrowers must continually go deeper into debt, merchants must continually raise their prices, and the odd men out in the bankers' game of musical chairs must continue to lose their property to the banks."
The result - inevitable wars, competition, strife, inflation, deflation, recessions, depressions, debt bondage, poverty, and despair, while at the same time bankers get fabulously richer and more powerful.
A New Way Forward is encouraging people to hold "teach ins", video screenings on June 10th! Go here!
Here's a terrific 35 minute video to download and show at home (or at the public library or other event location).
Reviewing Ellen Brown's "Web of Debt:" Part IV
By Stephen Lendman
This is the fourth in a series of articles on Ellen Brown's superb 2007 book titled "Web of Debt," now updated in a December 2008 third edition. It tells "the shocking truth about our money system, (how it) trapped us in debt, and how we can break free." This article focuses on America's "web of debt" entrapment.
The Debt Spider Captures America - American Workers Consigned to Debt Serfdom
America has been trapped for over two centuries, with today's debt level way exceeding developing nations. Like bankrupt people staying "afloat by making the minimum payment(s) on (their) credit card(s), the government (avoids) bankruptcy by paying just the interest on its monster debt" - now double in size since Brown's first edition and onerous enough for Controller of the Currency David Walker to warn earlier of its unaffordability by this year. If America can't service the amount, it's officially bankrupt and the economy will collapse. If it happens, IMF austerity will follow and turn America into Guatemala. Other vulnerable economies as well - permanent debt bondage and worker serfdom.
Catherine Austin Fitts was a former high-level Wall Street and government insider. She points to a "financial coup d'etat" conspiracy between the two to hollow out America, centralize power and knowledge, shift wealth to the top, destroy communities and local infrastructure, create new wealth by rebuilding them, and leave human wreckage in its wake.
The Federal Reserve and Current Crisis of our Democracy
By Time for Change | Democratic Underground
Can people really handle their responsibilities as citizens? Or must our "betters", who claim to know what is best for us, forever lead us around like children? We need to cut through their fog and condescension. We must reclaim our power as citizens.
The Federal Reserve System originated in a highly secret meeting of seven of the wealthiest men in the world, taking place at Jekyll Island, off the coast of Georgia in 1910. The seven men included one of our nation's most powerful U.S. Senators, Nelson Aldrich, and six bankers. An article written by one of its participants, Frank Vanderlip, 22 years after the passage of the Federal Reserve Act, documents the aura of secrecy that surrounded the creation of the Federal Reserve:
Senate Rejects Limit on Credit-Card Interest Rates
By Carl Hulse | NY Times
Despite complaints that banks and credit card companies are gouging customers by charging outrageous interest rates, the Senate on Wednesday easily turned back an effort to cap interest rates at 15 percent.
The effort by Senator Bernie Sanders, the Vermont independent, drew only 33 votes and needed 60, with a bipartisan group of 60 senators opposing it as the Senate pushed its credit card overhaul toward the finish line. Some Democrats and consumer groups have said that an interest cap is needed to put real teeth into an otherwise solid bill.