You are hereEconomy
On Monday, April 27th we will follow up our nationwide End the Fed! rallies with an "Audit the Fed! Melt the Switchboard Day".
We must all call in on that day and get EVERYONE we know to also call in to our Congressional Representatives.
The Congressional Switchboard number is: 1-877-851-6437.
Let's focus particularly on the members of the House Financial Services Committee, listed below. The Democratic Staff phone number is: (202) 225–4247. Linked listing of Committee Members below. Read the petition below. Sign the petition here.
In recent weeks, President Obama has gotten great press for winning speeches and handshakes globally, as well as for setting a new tone for American policy abroad, while administration figures, including Secretary of the Treasury Geithner and the President himself, have begun talking up "glimmers of hope" on the economic horizon. The International Monetary Fund (IMF) was setting another tone entirely, however -- no smiles, no handshakes, no glimmers, lots of gloom.
It issued a sobering report last week indicating that the global financial sector has lost a staggering $4.1 trillion (yes, you read that right) in value in the last 20 months. The report also predicted a global "credit famine," and sharply lowered its previous predictions of global economic health. The IMF now expects the world economy to contract by 1.3% in 2009 (previously it had suggested a 0.5% growth rate). It also suggested that 30 of the world's 34 most advanced economies would actually shrink this year. It indicated as well that it believes the U.S. economy is set to contract by 2.8% and the European Union's by a startling 4%, far worse than expected.
Closer to home, U.S. job losses and cutbacks continue to pour in as "mass layoffs" rose to record levels and initial claims for unemployment insurance jumped for the 12th straight week. There are now a total of 6.1 million applicants and the official U.S. unemployment rate, now at 8.5%, is expected to crest above 10% early next year, if not before. (The unofficial rate, including all those out of work or significantly underemployed, is far higher.) Similarly, rents and apartment occupancy nationwide dropped for the third straight quarter.
Warning: Graphic language
Wall Street’s Best Investment: Ten Deregulatory Steps to Financial Meltdown
By Robert Weissman and James Donahue | Multinational Monitor
Wall Street has no one but itself to blame for the current financial crisis. Investment banks, hedge funds and commercial banks made reckless bets using borrowed money. They created and trafficked in exotic investment vehicles that even top Wall Street executives — not to mention firm directors — did not understand. They hid risky investments in off-balance-sheet vehicles or capitalized on their legal status to cloak investments altogether. They engaged in unconscionable predatory lending that offered huge profits for a time, but led to dire consequences when the loans proved unpayable. And they created, maintained and justified a housing bubble, the popping of which has thrown the United States and the world into a deep recession, resulted in a foreclosure epidemic ripping apart communities across the country, and caused the financial crisis itself.
But while Wall Street may not have anyone else to blame, and is culpable for the financial crisis and global recession, others do share responsibility.
For the last three decades, financial regulators, Congress and the executive branch have steadily pulled back the regulatory system that restrained the financial sector from acting on its own worst tendencies. The post-Depression regulatory system aimed to force disclosure of publicly relevant financial information; established limits on the use of leverage; drew bright lines between different kinds of financial activity and protected regulated commercial banking from investment bank-style risk taking; enforced meaningful limits on economic concentration, especially in the banking sector; provided meaningful consumer protections (including restrictions on usurious interest rates); and contained the financial sector so that it remained subordinate to the real economy. This hodge podge regulatory system was, of course, highly imperfect, including because it too often failed to deliver on its promises.
But it was not its imperfections that led to the erosion and collapse of that regulatory system. It was a concerted effort by Wall Street, steadily gaining momentum until it reached fever pitch in the late 1990s and continued right through the first half of 2008. Even now, Wall Street continues to defend many of its worst practices. Though it bows to the political reality that new regulation is coming, it aims to reduce the scope and importance of that regulation and, if possible, use the guise of regulation to further remove public controls over its operations.
Mike Farrell Videos Done: Put Them on TV Now
Mike Farrell ("BJ Hunicutt" from TV's MASH) supports Medicare For All
You can support Medicare For All too. Send a fax to the White House and to key Senators and Congressmen by clicking on the "send a fax" link in the video or just send your fax to Congress and the White House right now.
NEW YORK (Reuters) - Nobel Peace Prize winner Muhammad Yunus, known as the "banker to the poor" for making small loans in impoverished countries, is now doing business in the center of capitalism -- New York City.
In the past year the first U.S. branch of his Grameen Bank has lent $1.5 million, ranging from a few hundred dollars to a few thousand dollars, to nearly 600 women with small business plans in the city's borough of Queens.
People around the country are struggling to repay mortgages and credit card debts, but Grameen America says its loan repayment rate is more than 99 percent.
Law enforcement sources said David Kellermann, acting chief financial officer of mortgage company Freddie Mac, was found hanging in the basement of his Reston, Va., home, dead from an apparent suicide early this morning.
The death was "an active investigation" and there were "no signs of foul play," Fairfax County police officer Sabrina Ruck said.
Local police said they were called to Kellermann's home at 4:48 a.m., but would not say who'd placed the call to 911.
Kellermann, 41, and a 16-year veteran of Freddie Mac, had been the company's CFO since September, after a government takeover of the company following the housing crisis.
Freddie Mac had been criticized for reckless business practices that some argued contributed to the housing and financial crisis. The company is controlled by the government and owns or guarantees about 13 million home loans.
Freddie Mac and sibling company Fannie Mae, which together own or back more than half the home mortgages in the United States, have been hobbled by skyrocketing loan defaults and have received about $60 billion in combined federal aid.
Kellermann was named acting chief financial officer in September 2008, after the resignation of Anthony "Buddy" Piszel, who stepped down after the government takeover.
Geithner Defends Bank Rescue Program Amid Warnings
Geithner faces questions about bailout amid warning it could expose taxpayers to losses
By Jim Kuhnhenn | ABCNews
Treasury Secretary Timothy Geithner defended the bank rescue program devised by the Obama administration Tuesday as the International Monetary Fund predicted U.S. financial institutions could lose $2.7 trillion from the global credit crisis.
Geithner, testifying before the rescue plan's Congressional Oversight Panel, faced several questions about how Treasury is using the $700 billion Troubled Asset Relief Program and how it intends to help rid financial institutions of their bad loans and securities.
His testimony came in the wake of a watchdog agency report that warned Obama administration initiatives could increasingly expose taxpayers to losses and make the government more vulnerable to fraud.
A special inspector general assigned to the bailout program concluded in a 250-page quarterly report to Congress that a private-public partnership designed to buy up bad assets is tilted in favor of private investors and creates "potential unfairness to the taxpayer."
Geithner said the new plan "strikes the right balance" by letting taxpayers share the risk with the private sector while at the same time letting private industry use competition to set market prices for the assets.
"If the government alone purchased these legacy assets from banks, it would assume the entire share of the losses and risk overpaying," Geithner said in his remarks. "Alternatively, if we simply hoped that banks would work off these assets over time, we would be prolonging the economic crisis, which in turn would cost more to the taxpayer over time."
Selected Audio of Panel Discussions from the Left Forum April 18, 2009
- Panel Chairman: Suzi Weissman, St. Mary's College (off mike, not included in -audio)
- Jack Rasmus, Economics and Politics, St. Mary's College
- Nomi Prins, Author, "Other People's Money"
- Michael Hudson, Institute for the Study of Long Term Trends
- Hillel Ticktin, Critique
- "The Obama Campaign & Presidency: Lesson for the Left"
- Panel Chairman: Bill Fletcher Jr., Center for Labor Renewal
- Gihan Perera, Miami Workers Center, Right to the City Alliance
- Stanley Aronowitz, Sociology, Graduate Center, CUNY
- Barbara Epstein, History of Consciousness, University of California, Santa Cruz
It's natural, whether as a website or an individual, to get caught up in issues that are immediate and urgent. The wars in Iraq and Afghanistan that have been the focus of so many TomDispatch columns are happening right now. People are dying now. The economy is melting down now. The foreclosed and homeless are waking up now in ever-growing numbers. Unemployment lines are getting longer as you read this. Children are hungry this very minute, and the anxiety of a middle-class in freefall is palpable right now almost anywhere you go.
But now and then, it's also useful to take a step back and ask some longer term questions. Even if we could stop the wars, put people back to work (and back into their homes), even if we could get consumers spending again, there's always the "what-for" question. What have we accomplished if all we've done is reset the clock on the next war, the next bubble, the next bust... and if, all the while, the ice is melting and the globe warming?
Chip Ward, a TomDispatch contributor since 2003, spent 16 years confronting corporations that pollute and run, leaving sickness and suffering in their wake. He was focused on urgent and immediate tasks that made a difference right away (and, while he was at it, running a library system in Salt Lake City that was slowly filling up with homeless people). Recently, he took a break and retreated to the remote canyons of southern Utah where he's been reflecting on that bigger picture and, as it happens, on the nature of bigness itself at a moment when "too big to fail" is the phrase du jour. Tom
Too Big to Fail
Ecological Ignorance and Economic Collapse
By Chip Ward
"Too big to fail." It's been the mantra of our economic meltdown. Although meant to emphasize the overwhelming importance of this bank or that corporation, the phrase also unwittingly expresses a shared delusion that may be at the root of our current crises -- both economic and ecological.
In nature, nothing is too big to fail. In fact, big is bound to fail. To understand why that's so means stepping away from a prevailing set of beliefs that holds us in its sway, especially the deep conviction that we operate apart from nature's limits and rules.
Here's the heart of the matter: We are ecologically illiterate -- not just unfamiliar with the necessary scientific vocabulary and concepts, but spectacularly, catastrophically, tragically dumb. Oh yes, some of us now understand that draining those wetlands, clear-cutting the rainforests, and pumping all that CO2 into the atmosphere are self-destructively idiotic behaviors. But when it comes down to how nature itself behaves, we remain remarkably clueless.
Putting Finance Capitalism "Back in Its Box"
by Stephen Lendman
So writes Philip Augar in an April 13 Financial Times (FT) op-ed. He's a former UK investment banker/broker and author of The Death of Gentlemanly Capitalism, The Greed Merchants, and most recently Chasing Alpha: How Reckless Growth and Unchecked Ambition Ruined the City's Golden Decade. More on his newest book below.
He quotes Nicolas Sarkozy, a questionable choice, at the G 20 summit saying "The all-powerful market that is always right is finished," then on departure adding "a page has been turned." For Augar, that depends on whether a "free-market" successor is constructed, something "entrenched interests in America and Britain would be well-advised to encourage if they wish to remain centre stage."
SF, CA Holds 'Bail-Out Working People - Not the Banks' Teach-In, May 5th As A Powerful Model for Public Action
A Powerful Model for Public Action
When: SATURDAY, MAY 9, 2009 - 1 to 5 p.m. - (registration begins at 12:30 p.m.)
Where: Plumbers Hall
1621 Market St. @ Franklin St.
(3 blocks from Civic Station BART stop; @ Van Ness MUNI stop)
San Francisco, CA 94103 - Map
What: TEACH-IN & MASS MOBILIZATION PLANNING MEETING
Without joining together for our common interests, we don't have the strength to change our government's priorities. We must begin to build a massive movement that will have the power to impact government policy and give people genuine hope for a better future.
Help organize a mass mobilization and ongoing action campaign around the following demands:
- No layoffs. Massive job-creation program.
- Tax the rich -- don't bail out the banks.
- Pass the Employee Free Choice Act.
- Single-payer healthcare for all.
- Affordable housing for all. Tenants' rights. Moratorium on foreclosures & evictions.
- Funding for jobs and for social services & infrastructure, not for war.
- Stop the ICE raids and deportations. Legalization for all!
Barack Obama: Crime Boss
by Stephen Lendman
Since taking office, Obama, wittingly or otherwise, has headed the largest criminal enterprise in history - the mass looting of national wealth to enrich his Wall Street benefactors. He assembled a rogue economic team of Clinton/Robert Rubin retreads - to fix the current crisis they engineered.
In a March 13 article, (author and former Republican strategist) Kevin Phillips called them "recycled senior (Clinton administration) Democrats (responsible for the) tech mania, deregulation binge and (1997 - 2000) stock market bubble and crash. (Obama) extend(ed) the (disastrous) mismanagement and pro-Wall Street bias of the 2008 Bush regime bailout."
He called Geithner and Bernanke "hapless," the result of their ruinous misjudgments (and, along with Alan Greenspan, complicit) with finance-sector malfeasance."
Florida food stamp jobs in India aggravate recipients, officials
By Michael C. Bender | Palm Beach Post
After selling real estate for two decades in Palm Beach County, Michelle Brown picked up a baby-sitting job when the housing market tanked. Then the children's parents had their hours cut at work, so she turned to the state for help in buying food.
When Brown called the customer service line for the state's food stamp program, a phone rang in India.
"It's like a slap in the face," said Brown, 52, of Jupiter. "That's a job I'd be qualified for."
Under pressure for questionable industry practices, top executives of 14 of the nation's largest credit card companies are heading to the White House on Thursday for a meeting with senior administration officials.
The executives plan to talk about their efforts to increase transparency and help the economy, according to an industry official and a Capitol Hill aide, both of whom spoke on condition of anonymity because the meeting has not been announced.
Mr Barofsky said he was investigating whether banks had “cooked their books” to get some of the $700bn (€540bn, £475bn) in Tarp fund bailout money. He declined to go into specifics but said possible criminal offences included “securities fraud, wire fraud, false statement”....“One of our strongest recommendations of the last report was do not expand the Talf to buying legacy assets. If its structure is not changed considerably it’s very, very dangerous,” he said. “We know the triple A rating [ascribed to the securities by credit rating agencies] was a sham. We could be buying securities that are backed with assets that we know were likely riddled with fraud.”
Robert Corsini sent this note:
I've run across several things focusing on the relationship between AIG and the Iraq and Afghan occupations. AIG insures over 80%, that's OVER EIGHTY-PERCENT of the non-military, military contractors in Iraq! ie KBR, Blackwater, Haliburton (NYT article 2007). Since well over 1200 contractors have been killed and thousands more wounded and with all the other liabilities going on over there, if AIG is insolvent, what's going to happen with all the claims? Clearly AIG drank its own koolaid believing that the occupation was going to be a cake-walk. They never imagined the scope of the liabilities. It's striking that AIG has underwritten all the construction in Iraq as well. If virtually none of the public infrastructure is functional -- AIG is essentially liable for every dollar that has already been spent.
Here is a link to an AIG document that drips with gorgeous irony: PDF.
Donald Duck and Taxes You Pay to International Bankers
By Kurt Nimmo | InfoWars
It’s that time again, time to pay the bankers what is owed at gunpoint. Back in the day, when fear of the IRS was not as prevalent as it is today, the government employed Hollywood propaganda to make the plebs feel good about forking over their hard-won earnings.
In the cartoon here, produced in 1943 during the Second World War, Donald Duck is pressed into service to make Americans feel good about paying taxes. Donald’s cartoon was rolled out the same year Milton Friedman, a Treasury Department economist at the time, came up with the idea of imposing a withholding tax.
Believe it or not, this is from NPR.
Fresh Air from WHYY, April 15, 2009 · Former International Monetary Fund chief economist Simon Johnson has advised many countries in financial crisis. When it comes to America's current economic woes, Johnson says that U.S. suffers from "financial oligarchies" — government officials and elite members of the financial sector that run the country like a profit-seeking company.
In his article "The Quiet Coup" in the May issue of The Atlantic Monthly, Johnson explains that the close connections between government officials and financial leaders are a major part of the U.S.'s economic problems:
"We face at least two major, interrelated problems," Johnson writes. "The first is a desperately ill banking sector that threatens to choke off any incipient recovery that the fiscal stimulus might generate. The second is a political balance of power that gives the financial sector a veto over public policy, even as that sector loses popular support."
Johnson insists the U.S. must temporarily nationalize banks so the government can "wipe out bank shareholders, replace failed management, clean up the balance sheets, and then sell the banks back to the private sector." But, Johnson adds, the U.S. government is unlikely to take these steps while the financial oligarchy is still in place.
Unless the U.S. breaks up its financial oligarchy, Johnson warns that America could face a crisis that "could, in fact, be worse than the Great Depression — because the world is now so much more interconnected and because the banking sector is now so big."
Johnson was the chief economist at the International Monetary Fund during 2007 and 2008. He is a professor at MIT's Sloan School of Management.
Related NPR Stories
Lehman Brothers Sitting on a Stockpile of Uranium 'Yellowcake'
The rump of the bankrupt bank Lehman Brothers is sitting on a stockpile of 450,000 lb of uranium "yellowcake" which could be used to power a nuclear reactor or, theoretically, to make a bomb.
Lehman's potentially explosive asset is a hangover from a commodities trading contract undertaken before the Wall Street bank went bust in September. The substance, yellowcake, is a solid form of mined uranium which is yet to be enriched.
Liquidators have been trying to offload the stuff for months. But the price of uranium has been dropping steadily, leaving Lehman's yellowcake languishing in a variety of secure storage facilities, some of which are in Canada.
Bryan Marshal, Lehman's chief executive, who was appointed to salvage value for creditors, told Bloomberg News that the stockpile, which is worth about $18m, would be sold responsibly.
"We plan on gradually selling this material over the next two years," he said. "We are not dumping this on the market and have no fire-sale mentality."
The price of uranium has slumped from $65 per pound to $40.50 over the last six months as pressure on recession-hit commodity investors to liquidate their assets has eased.
Yellowcake can be purified and enriched to fuel nuclear reactors or, notionally, weapons. A lively financial market in uranium trading has developed in recent years. While commodities such as oil and precious metals are dealt in futures contracts which rarely see delivery, the relative immaturity of uranium trading means that trading firms sometimes end up taking ownership of the stuff.
"Uranium is a liberalising marketplace. It's not as mature as most other exchange-traded commodities," said Scott Lawrence, head of nuclear fuel trading at MF Global in London. "It's certainly not unusual for a wide range of parties to have legal title to the material."
Lehman's ownership is governed by tight regulations. Its yellowcake must be stored at licensed facilities and the substance cannot be transported around freely. One trader said:
The Securities and Exchange Commission is examining whether Bank of America improperly failed to tell shareholders about $3.6 billion in bonuses that Merrill Lynch gave employees before the companies merged and may penalize the bank if it finds wrongdoing, SEC Chairman Mary L. Schapiro said in a letter to Cleveland Democratic U.S. Rep. Dennis Kucinich.
"Where the SEC believes that there has been an omission of material facts necessary in order to make the statements not misleading, we will carry out our enforcement responsibilities with vigor and vigilance," said the letter, which Kucinich released on Monday.
By Rinku Sen, Huffington Post
Last week, the New York Times reported that President Obama intends to push immigration reform, welcome news to the millions of undocumented people who need legalization in that package. Cecilia Muñoz, the Adminstration's Director of Inter Governmental Affairs, is managing this project for the White House. Muñoz was known as a dogged advocate while she was VP of Policy at the National Council of La Raza, and her experience of the five-year immigration debate that ended with no change in 2007 is some of the most moving stuff in my book, The Accidental American.
Tucked away inside the small print of the latest Federal Reserve report on its balance sheet is a jaw-dropping nugget of information. A year ago, American banks had $1.8 billion on deposit with the Fed above and beyond the regulatory requirements. This month, these excess deposits have soared to $771.2 billion.
This is not just massive evidence of hoarding of funds by the banks. It also means that the banks are undermining the Obama administration's attempts to stimulate the economy. Just as President Obama pumps $787 billion of deficit spending into the economy, the banks take $771 billion out of it and sock it away in the Fed's vaults.