You are hereEconomy
Forget the bonuses: AIG can't repay its loans, GAO says
By Kevin G. Hall | McClatchy Newspapers
Lost in all the shouting over the $165 million in bonuses paid to executives of disgraced insurer American International Group was this sober message delivered to Congress on Wednesday by a government watchdog: AIG's ability repay its $170 billion in loans from taxpayers has eroded significantly.
Testifying before Congress, Orice Williams, the director of the Government Accountability Office's financial markets division, said that AIG has had only limited success in restructuring itself, despite more than $170 billion in federal aid in four separate bailouts since last September.
As a Goldman Sachs lobbyist, Mark Patterson once worked against a bill to curb executive compensation. The legislation's sponsor: Barack Obama.
On Wednesday afternoon, as President Barack Obama was leaving the White House for a town hall meeting in California, he spoke for 15 minutes to reporters about the AIG controversy. Responding to the rising rage over the $165 million or so in bonuses paid to executives at the bailed-out insurance firm, Obama noted that he was quickly developing policies to prevent future AIG-like catastrophes. And he slammed Wall Street's culture of "excess greed, excess compensation, excess risk taking." To demonstrate that he's committed to battling such greed, the president cited his work in the Senate to rein in executive compensation. Noting that he and Rep. Barney Frank (D-Mass.) had each introduced legislation on this front in 2007, Obama declared that "there were some people who attacked us, saying government has no business doing that."
It's over — we're officially, royally fucked. no empire can survive being rendered a permanent laughingstock, which is what happened as of a few weeks ago, when the buffoons who have been running things in this country finally went one step too far. It happened when Treasury Secretary Timothy Geithner was forced to admit that he was once again going to have to stuff billions of taxpayer dollars into a dying insurance giant called AIG, itself a profound symbol of our national decline — a corporation that got rich insuring the concrete and steel of American industry in the country's heyday, only to destroy itself chasing phantom fortunes at the Wall Street card tables, like a dissolute nobleman gambling away the family estate in the waning days of the British Empire.
Jobless rate at 11.2% for veterans of Iraq, Afghanistan
By Gregg Zoroya | USA TODAY
The economic downturn is hitting Iraq and Afghanistan veterans harder than other workers — one in nine are now out of work — and may be encouraging some troops to remain in the service, according to Labor Department records and military officials.
The 11.2% jobless rate for veterans who served in Iraq and Afghanistan and who are 18 and older rose 4 percentage points in the past year. That's significantly higher than the corresponding 8.8% rate for non-veterans in the same age group, says Labor Department economist Jim Walker.
Army records show the service has hit 152% of its re-enlistment goal this year. "Obviously the economy plays a big role in people's decisions," says Lt. Col. Christopher Garver, an Army spokesman.
With Washington carrying out war, occupation and intervention on expanding fronts, the anti-war movement is more necessary than ever. It is needed by the workers and oppressed people abroad who are the direct targets of the Pentagon and also by the masses of people in the U.S. who will pay for these military operations and have to carry them out.
The anti-war struggle is developing in the midst of the most severe economic crisis in generations. This creates a new situation for the movement and raises two burning questions: what should be the character of the movement and what should be the relationship of the struggle against the war to the struggle against the economic crisis?
Much Bigger Deficits Seen in Budget Office Forecast
By David Stout | NYTimes
President Obama’s budget proposals, if carried out, would produce a staggering $9.3 trillion in total deficits over the next decade, much more than the White House has predicted, the Congressional Budget Office said on Friday.
The office’s estimates of deficits in the fiscal years 2010 through 2019 “exceed those anticipated by the administration by $2.3 trillion.”
The deficits under the Obama plan would be $4.9 trillion more than the projected deficits if there were no changes in current laws and policies — what the nonpartisan budget office calls its baseline assumption.
A.I.G. Sues U.S. for Return of $306 Million in Tax Payments
By Lynnley Browning | NY Times
While the American International Group comes under fire from Congress over executive bonuses, it is quietly fighting the federal government for the return of $306 million in tax payments, some related to deals that were conducted through offshore tax havens.
A.I.G. sued the government last month in a bid to force it to return the payments, which stemmed in large part from its use of aggressive tax deals, some involving entities controlled by the company’s financial products unit in the Cayman Islands, Ireland, the Dutch Antilles and other offshore havens.
By Dave Lindorff
The actions of Obama's Chief Financial Adviser Larry Summers and his Treasury Secretary Tim Geithner in permitting the payment of $165 million in bonuses to AIG executives (Summers, according to the Wall Street Journal, actually pressed Sen. Chris Dodd, D-CT, to secretly remove a bar to the payment of such bonuses from the bailout bill) and storm of public outrage that has followed public disclosure of those payments, provides President Obama, whose administration is stumbling badly on many fronts, to turn things around and avoid political disaster.
He should promptly demand Geithner's and Summers' resignations, and should also fire the CEO of AIG, Edward Liddy (as 80% owner of AIG, the US has the power to do that anytime). It would also be a good idea at the same time to fire the CEOs of all the leading banks that are at this point surviving on government bailouts.
In his opening statement today, Chairman of the House Ways and Means Subcommittee on Oversight, Rep. John Lewis (D-GA) said it was “shameful” and “a disgrace” that a number of private corporations who received a portion of the billions in capital infusion through the controversial Troubled Asset Relief Program (TARP) owe back taxes. Two of the firms owe over $100 million each. The Oversight Subcommittee researched 23 of the top TARP recipients out of the 470 companies that received federal support. Chairman Lewis suggested a complete review of the tax status of these companies might be very revealing.
The Iraqi government has more than $70 billion in hard cash reserves thanks to two years worth of oil sales, Iraqi Finance Minister Baqer Jaber Solagh says.
Solagh said during the last two years, Iraq has managed to save $44 billion with the Central Bank (OTCPK:CBSU), along with up to $30 billion in a Finance Ministry-administered fund, the newspaper Azzaman reported Wednesday.
The Finance minister credited a temporary increase in the cost of oil for the size of the financial reserves.
Solagh said Iraq has been averaging 1.9 million gallons of exported oil a day and is working toward increasing export production.
The Iraqi official told Azzaman that without the hard cash reserves, 94 percent of which are made up of oil revenues, Iraq would be struggling amid the ongoing economic crisis.
Tomgram: Robert Eshelman, The Other War on Workers | TomDispatch.com
A.I.G. is, of course, back in the news -- and how! Not that it was ever too far off the radar screen. Having received yet one more massive infusion of federal tax dollars, as everyone from here to hell now knows, the insurance giant handed out yet another round of lucrative bonuses. Over the last year, company management has doled out about $1 billion in such payments, roughly half to employees in the financial products subsidiary that concocted the type of high-risk, highly-leveraged deals in derivatives which helped send the company, and Wall Street, and most of the rest of us into steep decline last year.
Here are the costs for the stimulus as seen this afternoon, 3/18/2009, on MSNBC-TV:
AIG: $180 Billion:
On Average, at least:
1 Person: $590
Family of 4 $2,400
$2.3 Trillion to Stimulate Economy:
On Average, at least:
1 Person: $7,600
Family of 4 $30,300
I say "at least" because it doesn't include interest, as far as I know, or as reported.
The Federal Reserve said today that it will deploy an additional $1.2 trillion to try to lower interest rates and stimulate the economy, an aggressive move aimed at containing the recession.
The central bank will increase its purchases of mortgage-backed securities by $750 billion, on top of a previously announced $500 billion. It also will double its purchases of debt in Fannie Mae and Freddie Mac to $200 billion. Those steps are intended to lower mortgage rates. The announcement of the previous purchases pushed mortgage rates down a full percentage point.
By Dave Lindorff
For years, advocates of open government, mostly on the left, but also on the right, have railed against the growing secrecy of the US government. But the focus, particularly of left critics, has been on the Intelligence budget, a $40+ billion “black box” that is completely protected from public and even congressional scrutiny, and on large swaths of the Pentagon budget, which are kept hidden allegedly for “national security” reasons.
For the most part, the American public has adopted an ovine attitude towards such secrecy, assuming that the “government knows best.”
Now, however, with the economic crisis, and the collapse of AIG, Citibank, Bank of America, Merrill Lynch, Bear Stearns, Lehman Brothers, General Motors, Chrysler and other leading US firms, and with bailouts that are putting taxpayers on the hook to the tune of trillions of dollars, the people are waking up, or at least are starting to get restless in their slumber.
Political science majors can be forgiven for recycling Karl Marx's prediction, made 160 years ago, that capitalism would sow the seeds of its own destruction by widening the gap between workers and "capitalists." Since the end of the Cold War and the defeat of communism 20 years ago, boardroom-authorized CEO emoluments in the Fortune 100 have gone from 40 times to 300 times factory-floor wages.
The United States has always paid for its wars. For 200 years we paid for the Revolution, World War I, World War II, Korea, Vietnam, even LBJ's Great Society, and had yet to reach a national debt of $1 trillion -- until 1982. Now our government in the past eight years has borrowed, spent, and added to the national debt $5 trillion.
The Congressional Budget Office reported that in the first four years of the Bush term, deficits were caused by: 48% tax cuts, 37% wars, and 15% increased spending. We kept the government on steroids during the Bush years and household debt of $7 trillion joined the binge.
United States of AIG
Monetary and Fiscal Failure, Fraud, and Fear of What's Next
by Stephen Lendman
Even the powerful are worried with the IMF on February 7 saying advanced economies are in "depression (and) the worst cannot be ruled out." Forecasting a 2010 recovery is "very uncertain" at this time as further financial turmoil may disrupt it regardless of policies adopted, and trouble is outpacing resources to alleviate it.
On March 10, its Managing Director Dominique Strauss-Kahn forecast "below zero" 2009 global growth - what he termed "the worst performance in most of our lifetimes."
In a March 8, report, the World Bank expressed similar gloom saying:
By Dave Lindorff
It may not be obvious today, and certainly it’s not how the corporate media reported it, but future historians are likely to look back at March 13, 2009 as the day that American imperialism began it’s inexorable decline. That’s the day that Chinese Premier Wen Jiabao announced that his country was “worried” about its holdings of over $1 trillion in US treasury securities, and warned that he wanted the US to assure China that it would maintain its good credit and “honor its promises” and “maintain the safety of China’s assets.”
There is no way that the US can accommodate Premier Wen and still finance and operate a global military system with over 1000 overseas bases, massive aircraft carrier battle groups, and with hundreds of thousands of men and women armed to the teeth with the latest high-tech military hardware, not to mention fight endless wars on the far side of the globe.
By Dave Lindorff
Back in 1966 when I was a 17-year old and just finished with my junior year in high school, I spent part of the summer working as a dishwasher and busboy at a couple of restaurants on Cape Cod. It was grueling and low-paid work, and by the time I’d done it for about five weeks, I was ready to give it up.
The road beckoned, and so I contacted a friend, Charlie Vidich, and proposed that we hitch-hike to Alaska, it being the most remote place I could think of that we could get to overland without a passport.
The idea didn’t sit well with our two respective mothers, but we prevailed on them with the help of our fathers, who I think were happy to see us out of the house, and so we packed knapsacks and bedrolls, went out on the road, stuck out our thumbs, and headed north and west.
The TARP investment is a very special type of capital that is provided by the US Treasury and is segregated in the form of preferred stock. For the Boards of Directors of the 214 banks to pay out bonuses is nothing but an embezzlement of American citizens’ capital. It is now the obligation of the new Attorney General, Eric Holder, to arrest and indict every board member and senior management of every financial company that paid out the $18.4 billion bonus.
Bizarre, weird, grotesque, outrageous, crime committed by the super elite is being called normal business mistakes and corporate irresponsibility. That might sound like a brash comment to the completely uninformed, but if I could think of even more brash adverbs to describe the mainstream, established society in America I would. We Americans elected a Congress that gave $700 billion of welfare to banks that went broke. The executives of those banks ripped off that welfare.
It is simple minded stupidity on the part of the entire broadcast and print media to characterize flagrant crime (in the words of Mr. Cuomo) to be “corporate irresponsibility”. Only $3.6 billion of the $18.4 billion was embezzled by Merrill Lynch.
While Mr. Summers wants us to remember that we are a nation of laws when it comes to paying huge bonuses to A.I.G. executives, who will apply the law to former Bush administration officials who approved torture? If law dictates payment of bonuses, what law addresses money laundering? And is that law less important than the one that insures payment of bonuses? What could be more corrupt than asking banks that have been bailed out by the American taxpayer - expressly to address their loses from mortgage failures - if they approve of a foreclosure bill that would in turn bailout the taxpayer/homeowners themselves?
Still no end in sight to the corruption in Washington. While the Democrats now control both houses of Congress and the White House, the raging wildfire of corruption continues unabated.
A.I.G. bailed out to the tune of 165 billion taxpayer dollars and proceeds to pay executives what is now approaching 300 million in bonuses? The White House and Congress are "outraged, but can't do anything"?
$8 Billion dollars from CitiGroup to Dubai
$7 Billion dollars from Banks of America to China
$1 Billion dollars from JP Morgan/Chase to India
More information = Read more.
Bill would help schools, nonprofits teach financial literacy
By Les Blumenthal | McClatchy Newspapers
The numbers are startling. More than half of high school seniors have debit cards and nearly one-third have credit cards.
One-third of college students have four credits cards apiece when they graduate, and more than half of graduates have piled up $5,000 each in high-interest debt. The number of 18- to 24-year-olds who've declared bankruptcy has increased 96 percent in 10 years.
Surveys show that many of these young people also are financially illiterate: They don't understand such things as interest, minimum payments, credit reports, identity theft or that they may be paying off their school loans for years.
Former President George W. Bush is preparing for one final struggle against the odds: raising $300 million for a presidential library, museum and policy institute at a time when dollars are tight and skepticism about his presidency runs high.
The former president and first lady have already begun holding small private dinners to persuade wealthy friends to invest in a monument and incubator based on the values and events of his presidency. By this fall, he’ll be armed with architect’s renderings and will hold travel around the country to meet with groups and build support for the complex on the campus of Southern Methodist University in Dallas.
Black homebuyers have been 3½ times more likely to receive a subprime loan than white borrowers, and six times more likely to get a subprime rate when refinancing, Tighe said. Blacks still were disproportionately steered into subprime loans when their credit scores, income and down payment were equal to those of white homebuyers, he said.
Melissa Murray, vice president of corporate communications for Wells Fargo & Co., called the lawsuit "totally unfounded and reckless." The bank is receiving federal bailout funds.
While Bush was still President, President Obama weighed in against impeachment, saying that impeachment should be reserved for only the most serious crimes. Now that he is President he has thus far given little or no indication that he intends to have his Justice Department prosecute George Bush or any other high level Bush administration official for their crimes. But if widespread torture, an illegal war of aggression, spying on American citizens, suspending of the right of habeas corpus, and numerous other violations of our Constitution don't constitute serious crimes, then what does?...If we think that these things are important we have a great deal of work to do, lest our country sinks into a tyranny from which it may never recover.
The Democratic Underground was born on one of the worst days in U.S history - the day that the worst President in U.S. history took office.
Now, here we are 8 years later, and we've managed to remove that cancer from our nation and replace it with something much better. Notwithstanding my many ambivalent feelings towards President Obama, I have do doubt that he will be infinitely better for our country than his predecessor.
Yet despite that, our country has been terribly scarred from the events of the past eight years, and it continues to suffer from all of the root problems that brought us the worst President in our history in 2000 and 2004. Therefore, it is worth taking a look at the root problems that brought us to this sorry state of affairs.
A.I.G. to Pay $100 Million in Bonuses After Huge Bailout
By Edmund L. Andrews and Peter Baker | NYTimes
Despite being bailed out with more than $170 billion from the Treasury and Federal Reserve, the American International Group is preparing to pay about $100 million in bonuses to executives in the same business unit that brought the company to the brink of collapse last year.
An official in the Obama administration said Saturday that Treasury Secretary Timothy F. Geithner had called A.I.G.’s government-appointed chairman, Edward M. Liddy, on Wednesday and asked that the company renegotiate the bonuses.
Administration officials said they had managed to reduce some of the bonuses but had allowed most of them to go forward after the company’s chief executive said A.I.G. was contractually obligated to pay them.
In a letter to Mr. Geithner, Mr. Liddy wrote: “Needless to say, in the current circumstances, I do not like these arrangements and find it distasteful and difficult to recommend to you that we must proceed with them.”
The bonuses will be paid to executives at American International Group’s Financial Products division, the unit that wrote trillions of dollars’ worth of credit-default swaps that protected investors from defaults on bonds backed by subprime mortgages.
Is the Economic Mess Going to Kill 100,000 Non-Profits?
By Eyal Press | Alternet
The intensifying economic crisis is crushing the budgets of vital non-profits across the country, and the consequences are devastating.
In the days between Christmas and New Year's Eve, Anthony Romero, executive director of the American Civil Liberties Union, sat at his desk in Lower Manhattan and reached out to people who had lavished generous donations on his organization during the long, benighted tenure of George W. Bush. It was a heady moment: the era of Dick Cheney, John Ashcroft and Alberto Gonzales was winding to a close, and Barack Obama was about to assume office, having vowed to rescind some of his predecessor's more egregious assaults on civil liberties.
But Romero wasn't phoning his supporters to share the joy -- he was calling to plead for cash after a season (actually, several seasons) of thwarted solicitations. Throughout the spring and summer, would-be donors had explained, over and over again, that they were too busy writing checks to the Obama campaign. By the time Obama mounted the stage to deliver his acceptance speech in Chicago on election night, many had become preoccupied with something else: the implosion of the economy. As Romero worked the phone from his office on the nineteenth floor of the downtown high-rise, around the corner from the New York Stock Exchange, he could feel the aftershocks of the collapse.
The Swiss government said Friday it would cooperate on cases of international tax evasion, breaking with a long-standing tradition of protecting wealthy foreigners accused of hiding billions of dollars in the Alpine nation.
The government insisted it would hold onto its cherished banking secrecy rules, but said other countries could now expect Swiss cooperation in cases where they provide compelling evidence of tax evasion.
"We want assistance to be restricted to individual cases to prevent fishing expeditions," President Hans-Rudolf Merz told a news conference, referring to the practice of seeking information about many individuals in the hope of discovering a few tax evaders.