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Newt Gingrich is right: "It is European socialism transplanted to Washington." How else to describe an economy in which the government controls the entire financial center and is now supplying life support for the auto industry? That's on top of the existing socialist economy run by the military-industrial complex, which, thanks to George W. Bush, now absorbs upward of 60 percent of the non-entitlement federal budget.
Although we still have a way to go to catch up with the good parts of the European system, including universal healthcare, high-quality public education and decent working conditions, we do have a system that is now as socialist in budget size as Europe's. That part I get when I listen to the right-wingers on Fox News bemoaning the reversal of the Reagan Revolution. But what I don't understand is how in the world they can blame this startling turn of events on Barack Obama.
The vast majority of money allocated so far on President Obama's watch is an extension of Bush's banking bailout, which has committed trillions to failed Wall Street conglomerates. I certainly don't want to defend the bailout and personally think the banks and stockbrokers deserve to go belly up, but what does that mess have to do with Obama, who was in college when the Reagan Revolution launched the deregulation that allowed Wall Street to run wild?
Seven states posted unemployment rates larger than 10 percent in January, according to figures released Wednesday morning by the U.S. Bureau of Labor Statistics.
Michigan was saddled with the nation's highest jobless rate in January, 12.5 percent in statistics that were not seasonally adjusted. It had been the only state to rise above 10 percent during the previous month, December 2008.
Also topping the 10-percent mark in January were Rhode Island (11.4 percent unemployment), Oregon (10.9 percent), South Carolina (10.9 percent), California (10.6 percent), North Carolina (10.3 percent) and Nevada (10.2 percent).
Many of the biggest mortgage lenders in the U.S. have engaged in widespread, systematic schemes that ripped off hundreds of thousands of families seeking to buy a home, refinance or foreclose, according to lawsuits filed on behalf of consumers.
Scores of class-action lawsuits, from the 1990s and up to today, detail the illegal and questionable practices used by mortgage-lending companies that pushed millions into bad mortgages, then into bad refinancing loans and then into foreclosures with unfair fees.
The lawsuits have been filed by private attorneys and state attorneys general, and on behalf of NGOs.
By John F. Wasik, Bloomberg
March 11 (Bloomberg) -- It's time to stop kicking sand in the face of single-payer health care. It may be the strongest solution around to insure every American at a lower cost.
After decades of industry campaigns against this model -- dubbed by its critics as "socialized" medicine -- it's important to stop whining and evaluate the many economic benefits. Health care is a fundamental human right.
If President Barack Obama wants real change in American health care, he will have to get over the fear of even mentioning single-payer concepts. At his health-care summit last week, only the threat of a demonstration garnered late invitations for Oliver Fein and Congressman John Conyers, two leading proponents of the single-payer plan.
As the health insurance corporation lobbyists met in DC yesterday, doctors, nurses, and would-be patients protested outside, some of them for a mishmash of vague reform, most of them, including Congressman Eric Massa and the people in this video for single-payer healthcare, HR 676:
Of course the likely best outcome of a principled push for single-payer, the only solution with much chance of actually working, will be the inclusion of a public option in a hybrid reform bill. Moveon.org is, of course, going to promote whatever the president wants, but has produced the following advertisement that at least pretends to have complete confidence that a substantial public option will be part of it:
An auction of foreclosed homes in New York City on Sunday drew protesters who blamed banks for an epidemic of home losses and called for a moratorium on evictions and foreclosures.
Two dozen people marched outside a Manhattan convention center where Real Estate Disposition Corp was auctioning off several hundred foreclosed homes, chanting and carrying signs reading "Banks get bailed out, people get thrown out."
The group, Bail Out the People, plans to stage a major demonstration on Wall Street on April 3.
The International Monetary Fund warned on Tuesday that the world economy will likely contract this year in a "Great Recession" and African leaders said the financial crisis could undo hard-won social-economic gains.
"The IMF expects global growth to slow below zero this year, the worst performance in most of our lifetimes," IMF Managing Director Dominique Strauss-Kahn told African political and financial leaders in the Tanzanian capital.
"Continued deleveraging by world financial institutions, combined with a collapse in consumer and business confidence is depressing domestic demand across the globe, while world trade is falling at an alarming rate and commodity prices have tumbled," Strauss-Kahn added.
By Dave Lindorff
A few days ago, I sent off an article I had just written on assignment to the editor of a magazine which was preparing to run it. A few moments later, I got an email back: he had just been fired and the magazine was being shut down by the publisher. My story, for which I had expected to be paid $1500, was toast.
When I tried to write back a reply to the editor, I got a message saying that my email message was “undeliverable.”
I called the editor (who worked from home) on his cell phone and, still sounding shell-shocked, he informed me that immediately after notifying him, with no warning, that he was being axed, the publisher had eliminated his company email account and had blocked him from accessing the company’s server, thus effectively cutting him off from all the contacts he had developed over his years at the company.
By Jonathan Tasini
If you believe that a society cannot be truly democratic without a strong labor movement, and if you believe that the only way to build a fair economy is by making sure people can belong to unions, then, this is where a line must be drawn: Democratic Senators who block or undercut the Employee Free Choice Act should face well-funded primary challenges.
Today, Tom Harkin (D-IA), a member of the Senate Health, Education, Labor and Pensions Committee, and George Miller (D-CA), the chairman of the House Education and Labor Committee, will announce that they are introducing EFCA. There is no doubt that EFCA will pass the Congress and reach the president's desk. The question, in my mind, is: what will the bill say? Will it bear any resemblance to the version Miller and Harkin are introducing? Or will it be watered down? And that's where the primary threat comes in (by the way, I will be on CNBC today at 11:30 a.m. to discuss EFCA).
On CNN today I saw a report on the new phenomenon of tent cities, but the reporter later mentioned that a whole 10% of the people in the tent city in Sacramento were newly homeless. Then they interviewed one of the newly homeless who was careful to distinguish himself from the kind of people who are homeless by choice. Why no mention of the other 90% of the people there? Why no reporting on how they got there? And why has there been no reporting over the years?
Here's a newspaper article that follows the CNN approach:
'Tent cities' of homeless on the rise across the US
Homeless encampments dubbed "tent cities" are springing up across the US, partly in response to soaring numbers of home repossessions, the credit crunch and rising unemployment, according to a report.
An AIG report to the Treasury Department last month warned that if the government didn't come to its rescue again, its collapse would trigger a "chain reaction of enormous proportion" that would "potentially bankrupt or bring down the entire system" and make it impossible for AIG to repay the billions it already owed the U.S. government.
Four days later, AIG was given $30 billion in federal aid on top of the $130 billion it had already received.
Too big to fail? 5 biggest banks are 'dead men walking'
By By Greg Gordon and Kevin G. Hall | McClatchy
America's five largest banks, which already have received $145 billion in taxpayer bailout dollars, still face potentially catastrophic losses from exotic investments if economic conditions substantially worsen, their latest financial reports show.
Citibank, Bank of America , HSBC Bank USA , Wells Fargo Bank and J.P. Morgan Chase reported that their "current" net loss risks from derivatives — insurance-like bets tied to a loan or other underlying asset — surged to $587 billion as of Dec. 31 . Buried in end-of-the-year regulatory reports that McClatchy has reviewed, the figures reflect a jump of 49 percent in just 90 days.
According to a report on home foreclosure issued Mar. 6, 2009 by the Congressional Oversight Panel charged with monitoring the use of bailout funds, the rate of home foreclosure is now three times its historic rate — "so large that it threatens the entire economy."
Panel chairwoman Elizabeth Warren joins Fresh Air to discuss the foreclosure problem — and what can be done about it.
The Congressional Oversight Panel was created in October 2008 to oversee the $700 billion Troubled Asset Relief Program (TARP). Warren was appointed chairwoman in the panel's first meeting. In December 2008, Warren criticized the bailout program for lacking a clear direction or approach.
A century and a half ago it was at the centre of the Californian gold rush, with hopeful prospectors pitching their tents along the banks of the American River.
Today, tents are once again springing up in the city of Sacramento. But this time it is for people with no hope and no prospects.
With America's economy in freefall and its housing market in crisis, California's state capital has become home to a tented city for the dispossessed.
The revised and upgraded unemployment figures released on Friday were nothing short of staggering: almost two million jobs lost in the past three months as the official unemployment rate rose to a quarter-century high of 8.1%. Nearly three million Americans are now officially unemployed for six months or more, while another 8.6 million are "working part time because they cannot find full-time employment." Just the previous day, the government released figures showing, not surprisingly, that food stamp recipients had also soared by another 700,000 in February -- 651,000 jobs had been lost that same month -- to a record total of 31.8 million.
While the nation’s economy flounders, business is booming for The GEO Group Inc., a private prison firm that is paid millions by the U.S. government to detain undocumented immigrants and other federal inmates. In the last year and a half, GEO announced plans to add a total of at least 3,925 new beds to immigration lockups in five locations. The Immigration and Customs Enforcement (ICE) agency and the U.S. Marshals Service, which hire the company, will fill the beds with inmates awaiting court and deportation proceedings.
What can $5 billion buy in Washington?
Quite a lot.
Over the 1998-2008 period, the financial sector spent more than $5 billion on U.S. federal campaign contributions and lobbying expenditures.
This extraordinary investment paid off fabulously. Congress and executive agencies rolled back long-standing regulatory restraints, refused to impose new regulations on rapidly evolving and mushrooming areas of finance, and shunned calls to enforce rules still in place.
Does anybody in the federal government know or could know “who, what, where and when” of the massive, complex, vertical, horizontal, global collapse of Wall Street and its planetary tentacles in over 100 countries abroad? Step forward if you exist! Uncle Sam needs you!
Is the multi-million dollar bailout of this financial mess and house of cards, this phantom wealth mummy hitting air beyond the federal governments’ salvage capability?
It is relatively easy to announce hundreds of billions of dollars of corporate rescue programs here and hundreds of billions of dollars of guarantees of corporate recklessness there and trillions of dollars of assorted stimulus, loan availabilities and foreclosure prevention initiatives in all directions. Now comes the rubber hitting the road.
A top UBS official told a Senate hearing on tax havens that the Swiss bank, which has been subpoenaed to turn over information on as many as 52,000 U.S. account holders, would not turn over the identities of possible U.S. tax cheats.
"UBS cannot disclose information to the IRS that would put its employees at serious risk of criminal prosecution under Swiss law," said Mark Branson, UBS' chief financial officer of wealth management.
"Because Swiss law prohibits UBS from producing responsive information located in Switzerland ... we believe that UBS has now complied with the summons to the fullest extent possible without subjecting its employees to criminal prosecution in Switzerland." Branson said.
Treasury Refuses to Identify Banks Taking $2.2 Trillion Taxpayer Bailout Bucks
Fed Refuses to Release Bank Data, Insists on Secrecy
By Mark Pittman and Craig Torres | Bloomberg
Here's how a typical TALF deal would work: A hedge fund uses $1 million of its own money and gets a $9 million loan from the Fed, payable after three years, to buy a $10 million asset-backed security, which finances consumer loans. Hoping that the market for these assets recovers, the hedge fund would hold the asset for three years.
If the security rises in value to $11 million, the investor would keep the profit, essentially doubling the initial investment. The government, meanwhile, would consider the deal a success because consumer lending was spurred.
If the value fell below $9 million, the hedge fund would lose its down payment but nothing more. The Treasury, using bailout funds approved by Congress, would cover the next set of losses, with the Fed ultimately on the hook for anything more.
There's a $700 trillion elephant in the room and it's time we found out how much it really weighs on the economy.
Derivative contracts total about three-quarters of a quadrillion dollars in "notional" amounts, according to the Bank for International Settlements. These contracts are tallied in notional values because no one really can say how much they are worth.
But valuing them correctly is exactly what we should be doing because these comprise the viral disease that has infected the financial markets and the economies of the world.
World Bank Group leaders said the United States and China should balance out their economic dysfunctions, which are paradoxically dissimilar.
Referring to the Group of 20 industrialized nations, World Bank Group President Robert Zoellick and its Chief Economist Justin Yifu Lin, in a report published in The Washington Post Friday, said "without a strong G-2, the G-20 will disappoint."
The United States, Lin and Zoellick said, "must rebalance saving and consumption. It cannot afford a return to the days of maxing out credit cards to finance unfettered consumption. It must regain control over expanding budget deficits, which are driven largely by entitlement spending," the article said.
On Wednesday, the Obama administration released guidelines on its plan to stem the collapse of the housing market with its "Making Home Affordable" initiative, or Homeowner Affordability and Stability Plan (HASP). The plan claims to offer "assistance to as many as 7 to 9 million homeowners."
Part of the program, costing $75 billion, pertains to private lenders, providing funds to them if they agree to renegotiate home loans. A separate $200 billion component will make funds available to Fannie Mae and Freddie Mac, the two federally-backed mortgage lending giants, so that they can modify a share of the home loans they control.
The U.S. Financial System Is Effectively Insolvent
Nouriel Roubini | Forbes | Submitted by Peter Trottam
For those who argue that the rate of growth of economic activity is turning positive--that economies are contracting but at a slower rate than in the fourth quarter of 2008--the latest data don't confirm this relative optimism. In 2008's fourth quarter, gross domestic product fell by about 6% in the U.S., 6% in the euro zone, 8% in Germany, 12% in Japan, 16% in Singapore and 20% in South Korea. So things are even more awful in Europe and Asia than in the U.S.
Fresh off a U.S. victory over Swiss bank UBS AG, which admitted in a recent plea deal with the Justice Department that it aided tax evasion by wealthy American clients, Congress and the White House are trying to press a wider crackdown on the lucrative tax haven business.
UBS last month agreed to pay $780 million in fines as part of a deferred prosecution agreement with federal prosecutors. The bank is outing clients attached to about 250 accounts that the Justice Department alleges were set up as shell entities in tax avoidance schemes. The bank admitted to violating regulations set under a treaty that requires banks to submit information about their U.S. clients' tax obligations.
Last year, the Government Accountability Office reported that cost overruns on the Pentagon's 95 largest weapons acquisitions system totaled about $300 billion, even though the government cut quantities and reduced performance expectations. "A train wreck is coming," McCain said at a hearing yesterday on the bill.
A bill to end cost overruns in major weapons systems would create a powerful new Pentagon position -- director of independent cost assessments -- to review cost analyses and estimates, separately from the military branch requesting the program.
"AIG is a huge, complex, global insurance company, attached to a very complicated investment bank hedge fund that built -- that was allowed to build up without any adult supervision, with inadequate capital against the risks they were taking, putting your government in a terribly difficult position," Geithner said. "And your government made the judgment back in the fall that there was no way that you could allow default to happen without catastrophic damage to the American people....On Monday, AIG announced a loss of $61.7 billion for the fourth quarter of 2008, the biggest quarterly corporate loss in U.S. history. The federal government simultaneously announced that it would once again restructure the terms of the AIG bailout, which began in September and had grown to a $152 billion total package."
Bair Says Insurance Fund Could Be Insolvent This Year (Update1)
By Alison Vekshin | Bloomberg
Federal Deposit Insurance Corp. Chairman Sheila Bair said the fund it uses to protect customer deposits at U.S. banks could dry up amid a surge in bank failures, as she responded to an industry outcry against new fees approved by the agency.
“Without these assessments, the deposit insurance fund could become insolvent this year,” Bair wrote in a March 2 letter to the industry. U.S. community banks plan to flood the FDIC with about 5,000 letters in protest of the fees, according to a trade group.