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The Economy, Workers, and Financial Markets Table



Economy Overview

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Money As Debt (video)  Modern Money Mechanics   America’s Total Debt Report  Grandfather Economic Report 

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Books by William Greider

Secrets of the Temple: How the Federal Reserve Runs the Country / One World, Ready Or Not: The Manic Logic of Global Capitalism

Who Will Tell the People: The Betrayal of American Democracy / The Soul of Capitalism

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Study Shows Blacks Will Never Gain Wealth

Parity With Whites Under the Current System

By  Glen Ford

The Brandeis study, conducted by the university’s Institute on Assets and Social Policy, showed that upper income Blacks fell even farther behind their white peers than lower income Blacks. During the survey period, higher income Blacks saw their wealth drop from $25,000 to just $18,000, while their white counterparts wealth soared to $240,000.

Black folks have been integrated long enough to know that the white family didn’t get richer by a quarter million dollars because they were smarter than the Black family. Privilege, especially cumulative privilege over generations, works wonders, like compound interest only better. Whites are both collectively privileged and capable of bestowing an endless stream of privileges on each other, while Blacks are deliberately positioned outside of the stream, and are preyed upon as a group by powerful (white) financial forces that profit from the wealth differential.

The Brandies report recognizes the “powerful role of persistent discrimination in housing, credit and labor markets”—that is, the institutionally racist crimes of finance capital. Had the survey continued past 2007, the carnage of the Great Recession would have revealed even more dramatically the incredibly shrinking nature of Black wealth in the current era.—Glen Ford

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Racism: A History, the 2007 BBC 3-part documentary explores the impact of racism on a global scale. It was part of the season of programs on the BBC marking the 200th anniversary of the abolition of slavery in the British Empire. It’s divided into 3 parts.

The first, The Colour of Money . . . Racism: A History [2007]—1/3

Begins the series by assessing the implications of the relationship between Europe, Africa and the Americas in the 15th century. It considers how racist ideas and practices developed in key religious and secular institutions, and how they showed up in writings by European philosophers Aristotle and Immanuel Kant.

The second, Fatal Impact . . . Racism: A History [2007] – 2/3

Examines the idea of scientific racism, an ideology invented during the 19th century that drew on now discredited practices such as phrenology and provided an ideological justification for racism and slavery. The episode shows how these theories ultimately led to eugenics and Nazi racial policies of the master race.

And the 3rd, A Savage Legacy . . .  Racism: A History [2007] – 3/3

Examines the impact of racism in the 20th century. By 1900 European colonial expansion had reached deep into the heart of Africa. Under the rule of King Leopold II, the Belgian Congo was turned into a vast rubber plantation. Men, women and children who failed to gather their latex quotas would have their limbs dismembered. The country became the scene of one of the century’s greatest racial genocides, as an estimated 10 million Africans perished under colonial rule.

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Economic Emancipation of Africa

and the Way Forward

Speech by Tom K. Alweendo

Negroes and the Crisis of Capitalism

 in the United States

By W.E.B. Du Bois


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Why the Right-Wing Bullies Will Hold the Nation Hostage Again and Again

By Robert Reich

The President continues to legitimize the Republican claim that too much government spending caused the economy to tank, and that by cutting back spending we’ll get the economy going again. Even before the bullies began hammering him [Obama] his deficit commission already recommended $3 of spending cuts for every dollar of tax increase. Then the President froze non-defense domestic spending and froze federal pay. And he continues to draw the false analogy between a family’s budget and the national budget.

He is losing the war of ideas because he won’t tell the American public the truth: That we need more government spending now—not less—in order to get out of the gravitational pull of the Great Recession. That we got into the Great Recession because Wall Street went bonkers and government failed to do its job at regulating financial markets. And that much of the current deficit comes from the necessary response to that financial crisis.

That the only ways to deal with the long-term budget problem is to demand that the rich pay their fair share of taxes, and to slow down soaring health-care costs. And that, at a deeper level, the increasingly lopsided distribution of income and wealth has robbed the vast working middle class of the purchasing power they need to keep the economy going at full capacity.

“We preserved the investments we need to win the future,” he said last night. That’s not true. The budget he just approved will cut Pell grants to poor kids, while states continue massive cutbacks in school spending — firing tens of thousands of teachers and raising fees at public universities. The budget he approved is cruel to the nation’s working class and poor. It is impossible to fight bullies merely by saying they’re going too far.—

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Chomsky refutes “libertarian” “anarcho”—capitalism  /  Chomsky on Capitalism & Anarchism

Free enterprise and the economics of slavery / The Zong Massacre—29 November 1781

The Responsibility of the Artist (Maritain)  / RSA Animate—Crises of Capitalism

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The ABCs of Class Struggle

Aquinas, Smith, Jefferson, Malthus, Marx, Keynes

Atlantic Slave Traffic (Munford)

Bankster Coup d’etat (Stanton)

Benefits of Whiteness (Munford)

The Big End of the American Economy? 

Black Freedom Fighters in Steel

Bridging the Racial Gap in Education  

Brief Economic History of Modern Baltimore 

Bush Proverbial Corner

Business, Industry, and Education for Success (Moses)

Capitalism and the Ideal State: Marcus Garvey 

Capitalism the Beautiful: Bean Bags and Goldilocks (Lewis)

Castrating the Whistle Blower  (Moses)

Chickens Are Come Homing to Roost: US Credit Downgrade (Campbell)

Choosing Sides  

Colonial and Early National Financial History

Comments on Addae’s “ABCs”

Corporate Colony and Civic Virtue 

Destroying Homes for the Holiday

The Dropout Challenge

Dying for Growth 

Economic Emancipation of Africa (Alweendo)

Economic status of African Americans

Eighteen Months After Katrina

Eliot Spitzer, Sub-Prime Loans & Whistle Blowing

Globalization means Income Distribution (Weisbrot)

If this be Lynching . . . (As in Merrill-Lynch)   (Moses)

General Motors and General Petraeus  (Moses)

In-Dependence from Bondage

Investors in Limbo

It’s the Economy Stupid 

James Loewen on telling the truth about Confederates

Joe the Plumber and Adam Smith

King Sugar Obituary

Manley’s Legacy

Moratorium on Theory

Mortgage Crisis Lesson  

Myths of Low-Wage Workers 

Nagin’s Reelection as Mayor of New Orleans 

Negroes and the Crisis of Capitalism (Du Bois)

Neo-Liberalism: Dictatorship of the Market (M.P. Parameswaran)

The New Paradigm for Financial Markets

Obama and Bitterness

On Capitalism: Noam Chomsky

Points to Paradise

Politics of Knowledge  (Hayes)

Regulators, Obfuscators, and Inflators

Responses to an American Speculator

Responses to Jean Baudrillard 

Ron Paul, Paul Craig Roberts, and the Constitution

Sanctions on Zimbabwe

Scholarship of Indictment 

Sheila Johnson: America’s First Black Woman Billionaire

Speech by President Hugo Chávez  

Study Shows Blacks Will Never Gain Wealth

Tear Down the Ghetto 

Thomas Friedman and Benjamin Franklin

US Credit Downgrade (Campbell)

The Venezuelan Revolution

Wall Street Bailout, New Orleans Recovery (J.B. Borders)

Walter Reuther

The Wealth of the Poor  

What Ails the Black Body Politic  (James Thindwa)

What to Do with Deception and Deviltry

When the Master’s Big House Burns


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Jim Yong Kim to Dartmouth—23 March 2012: “I write to share the news that President Barack Obama has asked me to stand for nomination as president of the World Bank. This is one of the most critical institutions fighting poverty and providing assistance to developing countries in the world today. After much reflection, I have accepted this nomination to national and global service.”When I assumed the presidency of Dartmouth, I did so with the full and deep belief that the mission of higher education is to prepare us for lives of leadership and service in our professions and communities. While President Obama’s call is compelling, the prospect of leaving Dartmouth at this stage is very difficult. Nevertheless, should the World Bank’s Board of Executive Directors elect me as the next president, I will embrace the responsibility.” If approved, Jim Kim would become the first Asian-American, first physician, and first development professional to lead the Bank since its founding in 1944—Wikipedia

 Obama Taps Jim Yong Kim for World Bank / The bank provided $57.4 billion in support to low-income and middle-income countries last year. Under Robert B. Zoellick’s leadership, the bank raised an additional $90 billion for its fund for the world’s poorest. It also opened up huge troves of data to the public to aid research on development and poverty.—NYTimes

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‘Greece Doomed, Economy Total Farce & Fiction!’—Video By RT—3 February  2012—The Greek parliament has approved new harsh austerity legislature needed to secure a 130-billion-euro bailout from the EU and the IMF in efforts to avoid devastating default. This comes amid violent riots against the vote in Athens.

The lawmakers voted early Monday in favor of the bill that will cut 15,000 public-sector jobs and lower the minimum wage by 20 per cent. Patrick Young, from investment consultants, DV Advisors, says whatever happens in Greece, there’s no saving it from a collapse that will be felt across Europe.—YouTube

Athens Burning: Austerity Vote Ignites Greece—Edited by Adel Alsalman—The Greek parliament, early Monday, approved new harsh austerity legislature needed to secure a 130-billion-euro bailout from the EU and the IMF. 199 MP voted in favor of the bill that will cut thousands of public-sector jobs and decrease the minimum wage by 20%. The vote was met by public refusal, as hundreds of thousands marched to Syntagma Square to protest against the passing of the law. Demonstrations turned violent as protesters clashed with riot police leaving hundreds injured and tens of buildings in flames.—Al-Akhbar

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Greedy Bastards: How We Can Stop Corporate Communists

 Banksters, and Other Vampires from Sucking America

By Dylan Ratigan

This country, now more than ever, needs passionate debate and smart policy, a brazen willingness to scrap what doesn’t work, and the entrepreneurial spirit to try what does. Ratigan has compiled brash and fresh solutions for building a new and better America, and with this book he has started the debate America deserves. With you, he wants to take back the country from the six vampires sucking this nation dry: • A political system in which lobbyists write legislation, lawmakers place “secret holds” to create more pork for their districts, and money drives the whole process. • A banking system that uses capital for speculation and debt creation, rather than productive investment. • A “master-slave” relationship with our Chinese bankers, making our corporations and politicians complicit in a system that rigs our currency and leaves us with permanent joblessness and massive trade deficits.

• A health care system that is among the priciest and least sustainable in the industrialized world. • An educational system that prizes prestige but produces mediocrity. • An addiction to foreign oil that has sapped us of our willingness to innovate, made us reliant on inefficient technologies, and left us supportive of corrupt governments.

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Remarks by the President in State of the Union Address—And I will not go back to the days when Wall Street was allowed to play by its own set of rules.  The new rules we passed restore what should be any financial system’s core purpose:  Getting funding to entrepreneurs with the best ideas, and getting loans to responsible families who want to buy a home, or start a business, or send their kids to college.

So if you are a big bank or financial institution, you’re no longer allowed to make risky bets with your customers’ deposits.  You’re required to write out a “living will” that details exactly how you’ll pay the bills if you fail—because the rest of us are not bailing you out ever again. And if you’re a mortgage lender or a payday lender or a credit card company, the days of signing people up for products they can’t afford with confusing forms and deceptive practices—those days are over.  Today, American consumers finally have a watchdog in Richard Cordray with one job:  To look out for them. 

We’ll also establish a Financial Crimes Unit of highly trained investigators to crack down on large-scale fraud and protect people’s investments.  Some financial firms violate major anti-fraud laws because there’s no real penalty for being a repeat offender.  That’s bad for consumers, and it’s bad for the vast majority of bankers and financial service professionals who do the right thing.  So pass legislation that makes the penalties for fraud count. 

And tonight, I’m asking my Attorney General to create a special unit of federal prosecutors and leading state attorney general to expand our investigations into the abusive lending and packaging of risky mortgages that led to the housing crisis.  This new unit will hold accountable those who broke the law, speed assistance to homeowners, and help turn the page on an era of recklessness that hurt so many Americans. 

Now, a return to the American values of fair play and shared responsibility will help protect our people and our economy.  But it should also guide us as we look to pay down our debt and invest in our future.—


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The Looting of America: How Wall Street’s Game of Fantasy Finance

Destroyed Our Jobs, Pensions, and Prosperity—and What We Can Do About It

By Les Leopold

How could the best and brightest (and most highly paid) in finance crash the global economy and then get us to bail them out as well? What caused this mess in the first place? Housing? Greed? Dumb politicians? What can Main Street do about it? In The Looting of America, Leopold debunks the prevailing media myths that blame low-income home buyers who got in over their heads, people who ran up too much credit-card debt, and government interference with free markets. Instead, readers will discover how Wall Street undermined itself and the rest of the economy by playing and losing at a highly lucrative and dangerous game of fantasy finance. He also asks some tough questions:  Why did Americans let the gap between workers’ wages and executive compensation grow so large? Why did we fail to realize that the excess money in those executives’ pockets was fueling casino-style investment schemes? Why did we buy the notion that too-good-to-be-true financial products that no one could even understand would somehow form the backbone of America’s new, postindustrial economy? How do we make sure we never give our wages away to gamblers again? And what can we do to get our money back?

In this page-turning narrative (no background in finance required) Leopold tells the story of how we fell victim to Wall Street’s exotic financial products. Readers learn how even school districts were taken in by “innovative” products like collateralized debt obligations, better known as CDOs, and how they sucked trillions of dollars from the global economy when they failed. They’ll also learn what average Americans can do to ensure that fantasy finance never rules our economy again.

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Housing Discrimination Settlement with Bank of America

Illinois Attorney General Lisa Madigan is welcoming a $335 million settlement with Bank of America to resolve allegations of discriminatory loans. Madigan’s office filed suit against Bank of America subsidiary Countrywide Financial Corp. in 2010.—WJBC / Lisa Madigan: So, if you were an African-American or a Latino borrower, you were likely put into a subprime loan, when you qualified for a prime rate loan, so a lower-rate loan. In addition, even if you were an African-American or a Latino American borrower who was put in a prime loan, you were still charged a higher price for that loan through higher interest rates or higher fees. . . . So it’s both what we would call steering claims, as well as pricing claims, so discrimination not just in the state of Illinois, but across the country. . . .

And so what we found in our investigation, which involved not just a statistical analysis of the loans that they did in Illinois, but it also involved us looking at what were the policies in place when somebody came in, we learned by talking to brokers and various other Countrywide employees that they were given the discretion to be able to, you know, decide what the interest rate was going to be, what the fees were going to be, what the terms were going to be. And, in fact, there was a company policy that gave Countrywide employees an incentive to put people into higher-interest loans with these toxic features, so, therefore, those loans are more likely to go bad and end up in foreclosurePBS

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The Price of Civilization

Reawakening American Virtue and Prosperity

By Jeffrey D. Sachs

The Price of Civilization is a book that is essential reading for every American. In a forceful, impassioned, and personal voice, he offers not only a searing and incisive diagnosis of our country’s economic ills but also an urgent call for Americans to restore the virtues of fairness, honesty, and foresight as the foundations of national prosperity. Sachs finds that both political parties—and many leading economists—have missed the big picture, offering shortsighted solutions such as stimulus spending or tax cuts to address complex economic problems that require deeper solutions. Sachs argues that we have profoundly underestimated globalization’s long-term effects on our country, which create deep and largely unmet challenges with regard to jobs, incomes, poverty, and the environment. America’s single biggest economic failure, Sachs argues, is its inability to come to grips with the new global economic realities.

Sachs describes a political system that has lost its ethical moorings, in which ever-rising campaign contributions and lobbying outlays overpower the voice of the citizenry. . . . Sachs offers a plan to turn the crisis around. He argues persuasively that the problem is not America’s abiding values, which remain generous and pragmatic, but the ease with which political spin and consumerism run circles around those values. He bids the reader to reclaim the virtues of good citizenship and mindfulness toward the economy and one another.

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Stop Coddling the Super-Rich

By Warren E. Buffett

Last year my federal tax bill— the income tax I paid, as well as payroll taxes paid by me and on my behalf—was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income—and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent. If you make money with money, as some of my super-rich friends do, your percentage may be a bit lower than mine. But if you earn money from a job, your percentage will surely exceed mine—most likely by a lot. To understand why, you need to examine the sources of government revenue. .  . . But for those making more than $1 million—there were 236,883 such households in 2009—I would raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains.

And for those who make $10 million or more—there were 8,274 in 2009—I would suggest an additional increase in rate. My friends and I have been coddled long enough by a billionaire-friendly Congress. It’s time for our government to get serious about shared sacrifice.

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Joseph Stiglitz’s Simple, 4-Step Plan to Solving America’s Debt Crisis—By Peter Gorenstein—Joseph Stiglitz is . . . calling for a Chapter 11 of sorts for homeowners. Just as a corporation remains in control of its business operations as a debtor in possession in Chapter 11, in this scenario, homeowners restructure their debt but stay in their home AND keep paying the mortgage. Banks have been reluctant to accept any principle write-down but if the economy deteriorates and home prices drop they might be out of options. . . .

 When it comes closing the gap on the country’s $1+ trillion deficit on $14+ trillion in debt, Stiglitz says the country can turn things around in 4 relatively easy steps: 1. Repeal the Bush-Obama tax cuts for the richest Americans. 2. End the wars in Afghanistan and Iraq, “that have not improved our security” and are costing trillions of dollars. In 2010 Stiglitz published the book: The Three Trillion Dollar War: The True Cost of the Iraq Conflict.  3. Get Americans back to work. Stimulus and works programs are politically untenable right now but Stiglitz says spending on these programs will ultimately reduce the debt because if we put people to work and “our tax revenues will increase enormously.” 4. Reform Medicare Part D—Under the current law, big pharma sets their own prices. Stiglitz says if that provision is eliminated and the government can negotiate drug prices it would save taxpayers $1 trillion over the next 10 years.—Finance The ideological Crisis of Western Capitalism

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Government Cuts Heating Assistance to 1 Million Homes—Claudio E. Cabrera—7 January 2012—It’s going to be a cold winter for many across the nation. Congress and the White House have cut heating assistance to nearly 1 million homes in the Low Income House Energy Assistance Program [LIHEAP]. The program, which provides families with incomes up to 150 percent of the poverty line, or 60 percent of a state’s median income, will be reduced in funding by 25 percent. Most households receive an average of $417 a month for heating expenses.

LIHEAP reached nearly 9 million households in 2011, and at least one member of each family who applied for the subsidy was older than 60, younger than 18 or disabled. A gallon of heating oil costs $3.83 and is at the highest its been since 1990. . . . A few members of Congress battled the cuts in this bill.

Sen. Jack Reed (D-R.I.) and Sen. Olympia Snowe (R-Maine) urged the White House to set funding at $4.7 billion for his forthcoming 2013 budget proposal. The senators wrote a letter to the president that included the following: Even though the number of households eligible for the program continues to exceed those receiving assistance, this funding has been a lifeline during the economic downturn and rising energy costs, helping to ensure that people do not have to choose between paying their energy bills and paying for food or medicine.” The cut in funding in this legislation is just another example of the have-nots being shafted by the government.—TheRoot

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The Wizard of Lies: Bernie Madoff and the Death of Trust

By Diana B. Henriques

Riveting reading. . . . [Henriques] probably knows more than anyone outside the FBI and the Securities and Exchange Commission about the mechanics of the fraud. As a consequence, in The Wizard of Lies she is able to add significant detail to the story. . . . In the end the story holds us not because of the engrossing details of the scam, but because of the human dimension.—Liaquat Ahamed, The New York Times Book Review

“Henriques offers an impressive, meticulously reported postmortem not only of the Ponzi scheme but also of Madoff’s entire career. . . . The Wizard of Lies is the definitive book on what Madoff did and how he did it.—Bloomberg Businessweek

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The Collapse of Monetarism and the Irrelevance of the New Monetary Consensus

25th Annual Milton Friedman Distinguished Lecture

at Marietta College, Marietta, Ohio, March 31, 2008.

By James K. Galbraith

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The Predator State: How Conservatives

Abandoned the Free Market, and Why Liberals Should Too

By James K. Galbraith

Galbraith, noted economist and son of the late economist John Kenneth Galbraith, offers his views on the gap between conservative ideology and its use and abuse to cover up the George W. Bush administration’s Predator State, which takes advantage of the public sector and undermines public institutions for private profit. Galbraith reports that although most academics have abandoned conservative principles such as free trade, deregulation, and tax cuts for the wealthy, politicians from both parties continue to advance policies that, in reality, have turned regulatory agencies over to business lobbies, allowed the subprime mortgage foreclosures and banking crisis, and created Medicare’s drug plan, which legislates monopoly pricing for drug companies.

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Galbraith’s solutions include planning (contending that the U.S. does not plan); standards for wages, product and occupational safety, and the environment; and stabilizing financial and security policy. Not everyone will agree with Galbraith’s progressive beliefs, but he offers an important perspective in this thought-provoking book written in plain English. Excellent resource for library patrons.—Mary Whaley, Booklist

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Banks Get Big Bucks, Consumers Get Bupkis—by Lindsay Beyerstein, Media Consortium blogger— 9 November 2010—Last week, the Federal Reserve announced a plan to buy an additional $600 billion worth of Treasury bonds in an attempt to stimulate the economy. On Democracy Now!, economist Michael Hudson argues that the $600 billion T-bill buy will help Wall Street at the expense of ordinary Americans.—Commondreams

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Our Banana Republic—by Nicholas D. Kristof—November 6, 2010—The richest 1 percent of Americans now take home almost 24 percent of income, up from almost 9 percent in 1976. As Timothy Noah of Slate noted in an excellent series on inequality, the United States now arguably has a more unequal distribution of wealth than traditional banana republics like Nicaragua, Venezuela, and Guyana.

C.E.O.’s of the largest American companies earned an average of 42 times as much as the average worker in 1980, but 531 times as much in 2001. Perhaps the most astounding statistic is this: From 1980 to 2005, more than four-fifths of the total increase in American incomes went to the richest 1 percent.

That’s the backdrop for one of the first big postelection fights in Washington—how far to extend the Bush tax cuts to the most affluent 2 percent of Americans. Both parties agree on extending tax cuts on the first $250,000 of incomes, even for billionaires. Republicans would also cut taxes above that.

The richest 0.1 percent of taxpayers would get a tax cut of $61,000 from President Obama. They would get $370,000 from Republicans, according to the nonpartisan Tax Policy Center. And that provides only a modest economic stimulus, because the rich are less likely to spend their tax savings.—NYTimes

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New Job Means Lower Wages for Many— August 31, 2010—With the country focused on job growth and with unemployment continuing to hover above 9 percent, comparatively little attention has been paid to the quality of the jobs being created and what that might say about the opportunities available to workers when the recession finally settles. There are reasons for concern, however, even in the early stages of a tentative recovery that now appears to be barely wheezing along.

For years, long before the recession began, job growth had become increasingly polarized in this country. High-paid occupations that require significant amounts of education and training grew rapidly alongside low-wage, service-type jobs that do not, according to David Autor, a labor economist at the Massachusetts Institute of Technology.

The growth of these low-wage jobs began in the 1980s, accelerated in the 1990s and began to really take off in the 2000s. Losing out in the shuffle, Dr. Autor said, were jobs that he described as “middle-skill, middle-wage” — entry-level white-collar positions, like office and administrative support work, and certain blue-collar jobs, like assembly line workers and machine operators.

The recession appears to have magnified that trend, Dr. Autor wrote in a recent paper, released jointly by the Center for American Progress, a left-leaning policy group, and the Hamilton Project, which has a more centrist reputation.—NYTimes

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The Top Seven Suppliers of Oil to the US—8 July 2010—The top seven countries on the following list account for more than $140 billion worth of oil every year—1. Canada 2. Mexico 3. Saudi Arabia  4. Venezuela  5. Nigeria 6. Angola 7. Iraq—Truth-Out

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Federal Report Faults Banks on Huge Bonuses—In a report to be released on Friday, Kenneth R. Feinberg, the Obama administration’s special master for executive compensation, is expected to name 17 financial companies that made questionable payouts totaling $1.58 billion immediately after accepting billions of dollars of taxpayer aid, according to two government officials with knowledge of his findings who requested anonymity because of the sensitivity of the report.

The group includes Wall Street giants like Goldman Sachs, JPMorgan Chase and the American International Group as well as small lenders like Boston Private Financial Holdings. Mr. Feinberg’s report points to companies that he says paid eye-popping amounts or used haphazard criteria for awarding bonuses, the people with knowledge of his findings said, and he has singled out Citigroup as the biggest offender. Even so, Mr. Feinberg has very limited power to reclaim any money. He can use his status as President Obama’s point man on pay to jawbone the companies into reimbursing the government, but he has no legal authority to claw back excessive payouts. Mr. Feinberg’s political leverage has been weakened by the banks’ speedy repayment of their bailout funds. Eleven of the 17 companies that received criticism in the report have repaid the government with interest, so they have no outstanding obligations to reimburse.—NYTimes

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Keynes Hayek: The Clash that Defined Modern Economics

By Nicholas Wapshott

Can government fix a broken economy? Two great economists disagreed eighty years ago, and their debate dominates politics to this day. As the stock market crash of 1929 plunged the world into turmoil, two men emerged with competing claims on how to restore balance to economies gone awry. John Maynard Keynes, the mercurial Cambridge economist, believed that government had a duty to spend when others would not. He met his opposite in a little-known Austrian economics professor, Freidrich Hayek, who considered attempts to intervene both pointless and potentially dangerous. The battle lines thus drawn, Keynesian economics would dominate for decades and coincide with an era of unprecedented prosperity, but conservative economists and political leaders would eventually embrace and execute Hayek’s contrary vision.  

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White Privilege Shapes the U.S.—I am as white as white gets in this country. I am of northern European heritage and I was raised in North Dakota, one of the whitest states in the country. I grew up in a virtually all-white world surrounded by racism, both personal and institutional. Because I didn’t live near a reservation, I didn’t even have exposure to the state’s only numerically significant non-white population, American Indians. I have struggled to resist that racist training and the ongoing racism of my culture. I like to think I have changed, even though  I routinely trip over the lingering effects of that internalized racism and the institutional racism around me. But no matter how much I “fix” myself, one thing never changes—I walk through the world with white privilege.—Robert Jensen 


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Banished: How Whites Drove Blacks Out of Town in America

How did three U.S. towns make African Americans disappear?

Marco Williams, award-winning filmmaker of Two Towns of Jasper, visits some of the whitest counties in the country to confront the legacy of “banishment”—a wave of racial purging that tore through the South 100 years ago.  Williams sits down with KKK leaders, white residents of these all white communities, as well as descendants of the banished alike, opening the wounds of history.  Will he help these communities heal? Is reconciliation possible? Or reparations? Or both?

At the signal from the whistle Aeroplanes were seen to fly, Dropping bombs and high explosives, Hell was falling from the sky.

On all sides the mob had gathered Talking in excited tones With machine guns, ready. mounted, Trained upon a thousand homes.

from “Tulsa Race Riot and Massacre” by A.J. Smitherman (1922)

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Bill Will Not Help Black People

By News One March 18, 2010 9:03 am

From The Hill: The jobs bill on its way to the president’s desk will not help the black community, Rep. Elijah Cummings (D-Md.) said today.The $18 billion legislation, which the Senate passed this morning, consists mainly of tax breaks for small businesses. “The problem in the African-American community I don’t think will be helped a lot by that bill,” Cummings, a member of the Congressional Black Caucus, told MSNBC’s Andrea Mitchell.

The Maryland Democrat said that while he supports the tax credits, the Black Caucus will also be pushing for legislation sponsored by Rep. George Miller (D-Calif.), chairman of the House Education and Labor Committee, that focuses on impoverished communities and helps retrain workers.The CBC has expressed frustration that the administration’s priorities haven’t done enough to help the minority unemployment rate. Cummings said Obama reassured the caucus in a meeting last week that he understands their concerns. “I think the president is very supportive of our efforts based upon what he said,” Cummings said. NewsOne

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US wealth gap grows between races—A new study has found that the gap in wealth between white and black Americans increased by more than four times between 1984 and 2007. The study released by the Institute on Assets and Social Policy (IASP) found that African-Americans who earn substantial incomes have been unable to increase their net worth. In 23 years, the gap rose by $75,000 (£52,000), from $20,000 to $95,000. The study suggested these figures reflected public policy in the US. IASP found that public policies in the US benefited the wealthiest people, through tax cuts on investment income and inheritances, and disadvantaged others through discrimination in housing, credit and labour markets. BBC

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There is a need for Jobs, Jobs and more Jobs!

We need  JOB Training, JOB Creation and JOB Placement programs—a Stimulus II. I advise President Obama to collect the one Trillion Dollars and any interest back as soon as possible from those recipients who owe before 1 mega bonus is given out. . . . I advise President Obama to implement Stimulus II and claim his spot in history stimulating the recovery of the US Economy and relieve the heavy economic pressure on the Obama supporters in many cases who are the most in need of a hand up in this time of suffering by the lower levels of American Society. Nation building like charity begins locally—at home. Stimulus II could help turn things around and be the difference in second term prospects and winning in 2010 by mobilizing the base! Momentum for Stimulus II could also receive a boost and be the next priority or second step to winning the health care overhaul legislation with a robust public option! If not $400 Billion or $1 trillion President Obama then propose some significant figure and go to work on it!— Larry Johnson-Redd

With 16 Million Jobless, Should the Feds Pay People to Work?

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Sheila Johnson: America’s First Black Woman Billionaire

Interviewed by Kam Williams 

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The triumph of greed—There are two linked economic arguments for greed. The first is that it is necessary; the second is that it can be isolated and transformed into a virtue. They amount to the proposition that accumulation is the necessary subjective dynamic for the virtue of wealth creation. This carries the implicit rider that accumulation is the goal with which the economy is principally concerned.

So axiomatic is this understanding that it has no theoretical place in economics. But it is, of the essence, what we need to address if we are to begin to think seriously again about markets and wealth creation (rather than leaving it to the economics profession and the financial industry, both of which are naturally delighted to be left alone to think of such matters).

In fact, neither premise stands close scrutiny. Greed is scarcely necessary for motivation. We work to secure our livelihood; we work as part of a process of exchange; we work sometimes for fulfillment. But while most of us would like to have some accumulation at the end of our working life, greed is simply not our motivation. Society would be unsupportable if it were.

As for the idea that greed can be isolated and transformed into a virtue, the world religions would argue vehemently—as one on this issue as on no other—that it cannot. . . .

Stepping on to the field, Greed “sets out to harvest the scene of battle and its dead for all their trinkets”. As she does so—and this is the key image—she “is accompanied in this endeavour by Care, Hunger, Fear, Anxiety, Perjury, Dread, Fraud, Fabrication, Sleeplessness and Sordidness . . . As this unholy company does its work of salvage, it is joined by all the crimes that are, as Prudentius says . . . ‘the brood of their mother Greed’s black milk’. Murder, pillage, scavenging of the dead, civil war, pride of possession . . . the list goes on and on . . . ‘like ravenous wolves, her young prowl across the field’.” . . . .

It is worth thinking about the potential cost of this stress on accumulation. If it will cost $700bn (a figure no one thinks sufficient: it has risen almost every day) to “solve” the crisis we are now dealing with – the failure of a tiny marginal market, substantively irrelevant to the real economy – what will be the real cost of dealing with unsustainability? What will be the price that we will have to pay for defining our “common good” as accumulation?

Greed matters, we can now realise, much more than we might have thought. It matters economically—the long-term costs of the meltdown in the financial industry will have generational and global impacts, let alone the immediate economic and human costs of repair and recession. It matters in terms of the future. It matters ethically—do we really want a global, national or local economy that stresses accumulation at any cost? And it matters conceptually—how we conceive and understand what an economy is, and what it should be.

So, the crisis that is upon us is a challenge, not just for economic management, but also in terms of how we think about the economy as a whole. What it challenges in the short term is the adequacy of our understanding of what we call the economy. What it challenges in the longer term is how we can devise the kind of economy (meaning also the kind of moral and social economy) we would like to see in a mature world. That means a very serious act of thinking. However, the definition of our common good—which is the real basis of an economy—is far too important to be left to economists. Newstatesman

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A Matter of Life and Debt

As for what will happen to us next, I have no safe answers. If fair regulations are established and credibility is restored, people will stop walking around in a daze, roll up their sleeves and start picking up the pieces. Things unconnected with money will be valued more — friends, family, a walk in the woods. “I” will be spoken less, “we” will return, as people recognize that there is such a thing as the common good. On the other hand, if fair regulations are not established and rebuilding seems impossible, we could have social unrest on a scale we haven’t seen for years.—Margaret Atwood

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Geithner’s dirty little secret—What Geithner does not want the public to understand, his “dirty little secret”, is that the repeal of Glass-Steagall and the passage of the Commodity Futures Modernization Act in 2000 allowed the creation of a tiny handful of banks that would virtually monopolize key parts of the global “off-balance sheet” or OTC derivatives issuance. Today, five US banks, according to data in the just-released Federal Office of Comptroller of the Currency’s Quarterly Report on Bank Trading and Derivatives Activity, hold 96% of all US bank derivatives positions in terms of nominal values, and an eye-popping 81% of the total net credit risk exposure in event of default.

The top three are, in declining order of importance: JPMorgan Chase, which holds a staggering $88 trillion in derivatives; Bank of America with $38 trillion, and Citibank with $32 trillion. Number four in the derivatives sweepstakes is Goldman Sachs, with a mere $30 trillion in derivatives; number five, the merged Wells Fargo-Wachovia Bank, drops dramatically in size to $5 trillion. Number six, Britain’s HSBC Bank USA, has $3.7 trillion.. . . .

Geithner and Wall Street are desperately trying to hide this dirty little secret because it would focus voter attention on real solutions. The federal government has long had laws in place to deal with insolvent banks. The Federal Deposit Insurance Corporation (FDIC) places the bank into receivership, its assets and liabilities are sorted out by independent audit. The irresponsible management is purged, stockholders lose and the purged bank is eventually split into smaller units and when healthy, sold to the public. The power of the five mega banks to blackmail the entire nation would thereby be cut down to size. Ooohh. Uh Huh? This is what Wall Street and Geithner are frantically trying to prevent. The problem is concentrated in these five large banks. The financial cancer must be isolated and contained by a federal agency in order for the host, the real economy, to return to healthy function. This is what must be put into bankruptcy receivership, or nationalization. Every hour the Obama administration delays that, and refuses to demand a full independent government audit of the true solvency or insolvency of these five or so banks, costs to the US and to the world economy will inevitably snowball as derivatives losses explode. That is pre-programmed, as a worsening economic recession mean corporate bankruptcies are rising, home mortgage defaults are exploding, unemployment is shooting up. This is a situation that is deliberately being allowed to run out of (responsible government) control by Treasury Secretary Geithner, Summers and ultimately the president, whether or not he has taken the time to grasp what is at stake. F. William Engdahl  AsiaTimes

F. William Engdahl (August 9, 1944 in Minneapolis) is an American-German freelance journalist, historian and economic researcher. Engdahl began writing about oil politics with the first oil shock in the early 1970s.  . . . His first book was called A Century of War: Anglo-American Oil Politics and the New World Order; and discusses the role of Zbigniew Brzezinski and George Ball and of the USA in the 1979 overthrow of the Shah of Iran, which was meant to manipulate oil prices and to stop Soviet expansion. Engdahl claims that Brzezinski and Ball used the Islamic Balkanization model proposed by Dr Bernard Lewis.

In 2007, he completed Seeds of Destruction: The Hidden Agenda of Genetic Manipulation. . . . Engdahl stated in 2007 that he had come to believe that petroleum is not produced from remains of prehistoric zooplankton and algae, which had settled to a sea or lake bottom in large quantities under anoxic conditions (the theory supported by physical evidence as well as the majority of petroleum geologists and engineers). Instead he now believes in the hypothesis that petroleum is produced underground by unknown materials, conditions and forces deeper down in the Earth’s core. Engdahl calls himself an “ex peak oil believer”, stating that peak oil is actually a political phenomenon. Wikipedia

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Court has allowed CEOs to rule

By Jeff Kern

Thursday, Feb. 11, 2010

The 14th Amendment was created at the end of the Civil War to grant basic rights to freed slaves. Over the years it has been used by corporate interests to extend additional rights to businesses far more frequently than to freed slaves. Before 1886, U.S. law called corporations “artificial persons.” After a series of cases concerning rail-road interests, an “activist” Supreme Court ruled that corporations were “persons” and entitled to the same rights granted to people under the Bill of Rights. Since this ruling, America has steadily lost the legal structures that allowed people to have some control of corporate behavior.

As a result, corporations exercise a role today that was once limited to kings and feudal lords. Trans-national corporations, including those infamous Wall Street banks, control most of the world’s wealth and exert power over the lives of most of the world’s citizens.These corporations have no allegiance to nation, culture or moral value. Their executives are unapproachable and lead lives of nearly unimaginable wealth and luxury. Their focus is only on wealth—growth and profit at any expense. . . .  Centre Daily

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The New Color of Success

Twenty Young Black Millionaires Tell You How They’re Making It

By Niki Butle Mitchell

The New Color of Success accomplishes the feat of educating what I hope will be a large multicultural readership about the talent we have always known exists in our community, while providing role models and inspiration for everyone.—Earl G. Graves, founder, editor, and publisher of Black Enterprise magazine This book is a must read for those who understand that the challenges of the twenty-first century will be both DuBois’s color line and the post-industrial dollar sign.—Julianne Malveaux, economist and author of Wall Street, Main Street, and the Side Street

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Obama’s Ersatz Capitalism—What the Obama administration is doing is far worse than nationalization: it is ersatz capitalism, the privatizing of gains and the socializing of losses. It is a “partnership” in which one partner robs the other. And such partnerships — with the private sector in control — have perverse incentives, worse even than the ones that got us into the mess. So what is the appeal of a proposal like this? Perhaps it’s the kind of Rube Goldberg device that Wall Street loves — clever, complex and nontransparent, allowing huge transfers of wealth to the financial markets. It has allowed the administration to avoid going back to Congress to ask for the money needed to fix our banks, and it provided a way to avoid nationalization. But we are already suffering from a crisis of confidence. When the high costs of the administration’s plan become apparent, confidence will be eroded further. At that point the task of recreating a vibrant financial sector, and resuscitating the economy, will be even harder. NYTimes

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The Conscience of a Liberal : Reclaiming America from the Right by Paul Krugman—Economist and New York Times columnist Krugman’s stimulating manifesto aims to galvanize today’s progressives the way Barry Goldwater’s The Conscience of a Conservative did right-wingers in 1964. Krugman’s great theme is economic equality and the liberal politics that support it. America’s post-war middle-class society was not the automatic product of a free-market economy, he writes, but was created . . . by the policies of the Roosevelt Administration. By strengthening labor unions and taxing the rich to fund redistributive programs like Social Security and Medicare, the New Deal consensus narrowed the income gap, lifted the working class out of poverty and made the economy boom. Things went awry, Krugman contends, with the Republican Party’s takeover by movement conservatism, practicing a politics of deception [and] distraction to advance the interests of the wealthy. Conservative initiatives to cut taxes for the rich, dismantle social programs and demolish unions, he argues, have led to sharply rising inequality, with the incomes of the wealthiest soaring while those of most workers stagnate.

Krugman’s accessible, stylishly presented argument deftly combines economic data with social and political analysis; his account of the racial politics driving conservative successes is especially sharp. The result is a compelling historical defense of liberalism and a clarion call for Americans to retake control of their economic destiny.— Publishers Weekly

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Recommendations to the Congress to Curb Monopolies and the Concentration of Economic Power—The first truth is that the liberty of democracy is not safe if the people tolerate the growth of power to a point where it becomes stronger than the democratic state itself. That, in its essence, is Fascism—ownership of Government by an individual, by a group, or by any other controlling private power. The second truth is that the liberty of a democracy is not safe if its business system does not provide employment and produce and distribute goods in such a way to sustain an acceptable standard of living.

The rise of the corporate state has grave political consequences, as we saw in Italy and Germany in the early part of the 20th century. Antitrust laws not only regulate and control the marketplace, they serve as bulwarks to protect democracy. And now that they are gone, now that we have a state that is run by and on behalf of corporations, we must expect inevitable and perhaps terrifying political consequences.—Franklin Delano Roosevelt on April 29, 1938

We need facts figures precision and skill. It is work and study that will change the world. The rest is clearly bullshit. Immau Amiri Baraka (1973)  “Geithner vs. the American Oligarchs”? (Paul Simon interviewd by Bill Moyers)

President Barack Obama has achieved a great victory over Republican opposition with his The American Recovery and Reinvestment Act, which was signed in Denver, Colorado, Tuesday, 17 February. Mr. Obama sketched out his achievement in a speech. This stimulus package includes investments, aid to states, and tax cuts. How quickly the nearly $800 billion can be infused into the economy is uncertain. But that problem can be righted in months. In any case Mr. Obama should be greatly applauded for this extraordinary legislation. Rudy

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The American Recovery and Reinvestment Act

Where is your money going?

Turning Crisis into Opportunity

Revitalizing the Economy

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House Majority Whip Jim Clyburn describes the new  [Stimulus Package] plan as “bold action that President Obama called for. It will create and save 3.5 million jobs, cut taxes for 95 percent of American workers, and strategically transform our economy for years to come.” But, the mission is daunting, he concedes. “Our economy is shedding 20,000 jobs a day. Just last month nearly 600,000 jobs were slashed, marking the deepest cut in payrolls in 34 years. The unemployment rate in January reached 7.6 percent, the highest level in more than 16 years. Of the top 20 highest months of job loss in America’s history, five occurred in the last seven months. It’s time to turn those statistics around,” he said in a statement.

Among the primary focuses of Black legislators has been the Black unemployment rate, which is 12.9 percent and more than 14 percent for Black males. CityNewsOhio

Lawmakers Can Defy Governors to Get the Stimulus Money—Representative James Clyburn, Democrat of South Carolina and the House majority whip, insisted on a passage in the law that includes this caveat:

If funds provided to any state in any division of this act are not accepted for use by the governor, then acceptance by the state legislature, by means of the adoption of a concurrent resolution, shall be sufficient to provide funding to such state.

Some state entities may not even need the concurrent resolution. We’re told that Representative Clyburn has reassured South Carolinian officials, Democrats and Republicans alike, that money will flow to the state.  The Caucus

Seat_at_the_Table—Memo from John D. Podesta, Co-chair—The Obama-Biden Transition Project—Revitalizing the Economy / Ending the War in Iraq  Providing Health Care for All / Protecting America / Renewing American Global Leadership.


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“High Noon: Geithner vs. the American Oligarchs”?  

(Simon Johnson interviewed by Bill Moyers)

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Obama Says Failing to Act Could Lead to a Catastrophe—The stimulus bill advanced in the Senate Monday evening by a vote of 61 to 36; three centrist Republicans and two independents joined 56 Democrats to move the legislation forward, with a vote on final passage expected Tuesday. But the bill passed by the Senate differs substantially from its counterpart in the House, and the two versions will have to be reconciled before Mr. Obama can [sign] the legislation into law.

“There have been a lot of bad habits built up here in Washington,” Mr. Obama said, explaining why he thought so few Republicans have voted for the plan, despite overtures that included inviting them to the White House and including three Republicans in his cabinet. “All those were designed not simply to get some short-term votes, they were designed to build up trust over time,” he said.As the stimulus debate monopolizes Capitol Hill, the administration is looking ahead to the bank bailout plan, to be announced on Tuesday by Mr. Obama’s Treasury secretary, Timothy F. Geithner. NYTimes  (10 February 2009)

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Job Losses Hint at Vast Remaking of U.S. Economy—As government data revealed that 651,000 more jobs disappeared in February, a sense took hold that growing joblessness may reflect a wrenching restructuring of the American economy. The unemployment rate surged to 8.1 percent, from 7.6 percent in January, its highest level in a quarter-century. . . Since the recession began, the economy has eliminated a net total of roughly 4.4 million jobs, with more than half of those positions — some 2.6 million — disappearing in the last four months alone. . . . American car sales have dropped to an annual pace of nine million, from some 17 million in 2007. Even if sales increase considerably, that is likely to leave a lot of unneeded auto factories. . . . In February, 168,000 more manufacturing jobs were eliminated, bringing losses over the last year to 1.2 million. In Michigan, where the troubles of the auto industry have been particularly traumatic, the unemployment rate sits at 10.6 percent, the highest of any state in the nation. . . . Much the same can be said for financial services, which gave up 44,000 jobs in February. During the housing boom, banks hired tens of thousands of well-compensated traders, analysts and marketers to sell mortgage-backed securities and other investments. That industry is unlikely to return to its former shape. . . .The economy lost 39,500 retail jobs in February, and has eliminated more than 500,000 in the last year. . . . In current dollars, the nation devoted the equivalent of $20 billion a year to job training in 1979, compared with only $6 billion last year, Mr. Stettner said. . . . Transportation and warehousing lost 49,000 jobs in February. Employment services shrank by 88,000 jobs. Hotels and restaurants lost 32,000 jobs. Health care remained a rare bright spot, adding 30,000 jobs.  NYTimes (6 March 2009)

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‘Vulture’ Investors Eye Bad Assets, but Warily—Distressed investors — “vultures” is the Wall Street term for them — aim to buy investments on the cheap in hopes of reaping big returns. Yet even for the vultures, the risks — political as well as financial — seem daunting. Some worry about being seen as profiteers who benefit at taxpayers’ expense, even though the economy could get worse unless they swoop in. . . .

That is where the vultures come in. Hedge funds and other institutions dominate the field of distressed investing, and they are known for driving hard bargains. In recent weeks, several prominent hedge fund managers met with Lawrence H. Summers, the head of the National Economic Council, to discuss their interest in the planned public-private partnership.

Few of these investors were willing to discuss their plans publicly on Tuesday. Some worried their own investors, which include large public pension funds, might view the potential investments as too risky. And some would not be allowed to buy such assets under their own investment guidelines. But if the vultures do alight, their rewards could be enormous. Funds specializing in distressed investments earned annual returns of more than 30 percent in the early 1990s as the economy pulled out of recession. . . .

Others, like the Blackstone Group, the large buyout firm run by Stephen A. Schwarzman, and Paulson & Company, whose chief, John Paulson, made billions betting against subprime mortgages, have told their investors they are hunting for the bargains in the ruins of the financial sector.

Still others, like the Pacific Investment Management Company, the big bond fund, and BlackRock, another money management firm, could also emerge as big buyers of the troubled assets. . . . But competing interests are bound to bedevil this kind of deal, said Campbell R. Harvey, a professor at the Fuqua School of Business at Duke University.  “Given the conflicting objectives, I’m not sure I’d be interested in this kind of altruistic investing,” he said.

And the potential political costs, money managers said, are real. Some managers said that if they did their job well, they could earn double-digit returns and, with them, public scorn. “We can’t really win,” one private equity executive said. “When we made money, people criticized us. This year, we lost money, and people are criticizing us.” NYTimes

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In Congress, Aides Start to Map Talks on Stimulus—Formal talks will not begin before the Senate passes its $827 billion version of the plan; the House bill costs about $819 billion.

The Senate agreement on a scaled-down bill was reached on Friday when three Republicans signaled that they would back the legislation. Their support would give the Democratic majority the 60 votes needed to clear a procedural hurdle. But Congressional Democrats and the White House were still hoping to pick up more Republicans. . . . “The overlap is 90-plus percent,” Lawrence H. Summers, a top economic adviser to Mr. Obama, said on “Fox News Sunday.” “We’ve got to work through the differences, find the best bill we possibly can, and get it in place as quickly as possible to contain what is a very damaging and potentially deflationary spiral.”

While the bills have many of the same elements, the exact amounts spent on similar items and programs vary. The House version provides $40 billion more in aid to local governments and is slightly more generous with a middle-class tax credit, while the Senate bill offers tax incentives for home and car purchases. . . . House Democrats are unhappy with aspects of the Senate bill, particularly cuts in state aid, education and law enforcement, and Mr. Schumer said he favored the House approach. But all sides expect a final agreement to come together quickly, given the state of the economy and the fact that the measure is the top priority of the new president.

Most Republicans remain strongly opposed to the bills, arguing that they represent grossly excessive spending and do not get at the root causes of the economic crisis. NYTimes (9 February 2009)

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Potomac’s Postpartisan Depression—Republicans, pulled out of their existential lethargy and re-energized by the president’s charm offensive, immediately mounted an offensive against him. Just as Michael Bloomberg learned the perils of cuddling a groundhog when it bit him, Mr. Obama learned the perils of coddling conservatives. . . . “I would rather do the right thing and have one term than be mediocre and have two,” Mr. Obama told House Democrats at their Williamsburg retreat Thursday night. The lawmakers had been feeling disillusioned that they were carrying Mr. Obama’s water on the bill, while Obama aides triangulated and promised that the bill would “improve” in the Senate.

Nancy Pelosi told her leadership team that she had told the president, “I don’t mind you driving the bus over me, but I don’t appreciate your backing it up and running over me again and again.”

The Obama wizards’ tactical skills seemed to desert them. The White House often ends up making its inhabitants tone-deaf (or even nuts), but this was an unusually quick trip into the cognitive third dimension. NYTimes (9 February 2009)

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The Senate agreement on a scaled-down bill was reached on Friday when three Republicans signaled that they would back the legislation. Their support would give the Democratic majority the 60 votes needed to clear a procedural hurdle. But Congressional Democrats and the White House were still hoping to pick up more Republicans. . . . “The overlap is 90-plus percent,” Lawrence H. Summers, a top economic adviser to Mr. Obama, said on “Fox News Sunday.” “We’ve got to work through the differences, find the best bill we possibly can, and get it in place as quickly as possible to contain what is a very damaging and potentially deflationary spiral.”

George Soros  Interview—how he expects President-elect Barack Obama to respond to the economic disaster and the responsibilities borne by speculators—

 SPIEGEL: What are your expectations for the next Secretary of the Treasury?

Soros: I think we need a large stimulus package which will provide funds for state and local government to maintain their budgets—because they are not allowed by the constitution to run a deficit. For such a program to be successful, the federal government would need to provide hundreds of billions of dollars. In addition, another infrastructure program is necessary. In total, the cost would be in the 300 to 600 billion dollar range.

SPIEGEL: In addition to the $700 billion bailout for the financial industry?

Soros: Definitely. I think this is a great opportunity to finally deal with global warming and energy dependence. The US needs a cap and trade system with auctioning of licenses for emissions rights. I would use the revenues from these auctions to launch a new, environmentally friendly energy policy. That would be yet another federal program that could help us to overcome the current stagnation.

SPIEGEL: Your proposal would be dismissed on Wall Street as “big government.” Republicans might call it European-style “socialism.”

Soros: That is exactly what we need now. I am against market fundamentalism. I think this propaganda that government involvement is always bad has been very successful—but also very harmful to our society.

SPIEGEL: In addition to the $700 billion bailout for the financial industry?

Soros: Definitely. I think this is a great opportunity to finally deal with global warming and energy dependence. The US needs a cap and trade system with auctioning of licenses for emissions rights. I would use the revenues from these auctions to launch a new, environmentally friendly energy policy. That would be yet another federal program that could help us to overcome the current stagnation.

SPIEGEL: Your proposal would be dismissed on Wall Street as “big government.” Republicans might call it European-style “socialism.”

Soros: That is exactly what we need now. I am against market fundamentalism. I think this propaganda that government involvement is always bad has been very successful—but also very harmful to our society. Spiegel

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Brown’s spending plans like ‘addict returning to the drug’, says archbishop—The Archbishop of Canterbury, Rowan Williams, today condemned the prime minister’s response to the economic crisis, describing his efforts to boost spending in a downturn as like “the addict returning to the drug”. Williams said the credit crunch had been a “reality check” in a climate of unsustainable greed, and it should be used to provoke a fundamental rethink of the pursuit of wealth. It demonstrated that the country had been “going in the wrong direction” by relying on financial speculation rather than “making things”, he said. It was “a reminder that what I think some people have called fairy gold is just that – that sooner or later you have to ask: ‘What are we making or what are we assembling or accumulating wealth for?’.” Guardian

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A Global New Deal—Barack Obama may well seek a new New Deal to right a profoundly dysfunctional American economy. But he faces one constraint that Franklin Roosevelt didn’t have to confront in the 1930s: The economy that Roosevelt saved was fundamentally a national economy that could be altered by national policies. The economy that Obama must fix, by contrast, has national dimensions that can be altered by national policies, but in matters ranging from corporate conduct to consumer safety to Americans’ incomes, not to mention global warming, purely national solutions no longer suffice. To fix America today requires fixing global systems. The next New Deal won’t work if it’s only American. . . . At the end of the Civil War, Americans lived within local economies. Then railroads, steel and oil companies, meatpackers, and eventually automakers, with the considerable assistance of the nation’s largest banks, began functioning on a national level, bending state and local governments to their will. Largely unregulated and in the absence of national countervailing powers, these institutions were unassailable until the crash of 1929 and the ensuing depression stripped them of much of their clout. Only then did Franklin Roosevelt’s New Deal create national regulations on their conduct, and the agencies to enforce them. Only then did genuinely national unions arise that won national contracts from employers.

Taking government from the state to the national level was necessary to save the economy and build American prosperity. . . .

Today, Obama faces a similar challenge to Roosevelt’s—and has a similar opportunity. Over the past several decades, the same asymmetry of power that characterized America between 1865 and 1932 reappeared—but on a larger scale. Finance and corporations have become global, outstripping the regulatory and bargaining powers of merely national governments and unions. Now, as in 1933, it is suddenly possible to globalize at least some standards and regulations, just as Roosevelt once nationalized them. The changes will come more haltingly and piecemeal than they did in Roosevelt’s New Deal, because the leap from nation-state to global order is far greater than that from state capitols to Pennsylvania Avenue. But as in Roosevelt’s time, the changes will come because the asymmetry of power led to an unregulated economy that collapsed of its own weight and folly — and because the only way out of the collapse may be to regulate that power on the global scale where, until recently, it was unchallenged. Prospect

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Hope Amid the Gloom—President-elect Obama [chose] Representative Hilda Solis of California, a fierce advocate of workers, to be his labor secretary. The Obama administration also is committed to moving quickly on an economic stimulus package that could reach $1 trillion over two years. . . .

As Andy Stern, president of the huge Service Employees International Union, told me on Friday: “We’ve had a 25-year experience with market-worshipping, deregulating, privatizing, trickle-down policies, and it has ended us up with the greatest economy on earth staggering, and with the greatest amount of inequality since the Great Depression.”  The contempt for workers over this long period has hardly been hidden. . . .

Working people have been treated like enemies, a class to be preyed upon. Labor unions were ferociously attacked. Jobs were shipped overseas by the millions. People were hired as temps or consultants so benefits could be denied.

All of this may finally be changing. It remains to be seen how strong a voice Ms. Solis will have in the Obama administration, but she is pro-worker to her core, a politician who actually knows what it’s like to walk a picket line. . . . A more substantial victory occurred in Tar Heel, N.C., last week when workers, after a brutal 15-year struggle, succeeded in organizing the notorious Smithfield Packing slaughterhouse, the largest hog-killing and processing plant in the world.  NYTimes

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Related files


Black Labor 

Boukman and His Comrades (Munford)

Lil Joe Table

Moratorium on Theory

N’COBRA   (Munford)

John Maxwell Table

Portraits of Blacks & Labor

Race, Racism & Reparations (J. Angelo Corlett)

Race and Reparations (book review)

Rudy’s Amazing Facts 

Toussaint Table 

Work, Labor, and Business


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More Recommended Books

Black Freedom Fighters in Steel

The Economy of Colonial America

Financing Anglo-American Trade: The House of Brown, 1800-1880

Financial Founding Fathers: The Men Who Made America Rich

The First Wall Street: Chestnut Street, Philadelphia, and the Birth of American Finance

Origins of Commercial Banking in America, 1750-1800

Race and Civilization: The Rebirth of Black Centrality

Race, Racism, & Reparations (Corlett, 2003)

Race and Reparations: A Black Perspective for the 21st Century

Unruly Americans and the Origins of Constitution

The Wealth of Nations Rediscovered: Integration and Expansion in American Financial Markets

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Guided by An Invisible Hand— Make no mistake: we are witnessing the biggest crisis since the Great Depression. . . . There are several reasons for my pessimism. The extreme credit crunch is a result of the banks having lost a lot of capital. And there is still uncertainty about the value of the toxic mortgages and other complex products on their balance sheets. The US economy has been fuelled by a consumption binge. With average savings at zero, many people borrowed to live beyond their means. When you cut off that credit you reduce consumption. This, in turn, will dampen the US economy, which helps keep the global economy growing. The American consumer has not only sustained the US economy, he has sustained the global economy. The richest country in the world has been living beyond its means and telling the rest of the world it should be thankful because America fuelled global economic growth. .  .  . Adam Smith (photo left)

This crisis is a turning point, not only in the economy, but in our thinking about economics. Adam Smith, the father of modern economists, argued that the pursuit of self-interest (profit-making by competitive firms) would lead, as if by an invisible hand, to general well-being. But for over a quarter of a century, we have known that Smith’s conclusions do not hold when there is imperfect information – and all markets, especially financial markets, are characterised by information imperfections. The reason the invisible hand often seems invisible is that it is not there. The pursuit of self-interest by Enron and WorldCom did not lead to societal well-being; and the pursuit of self-interest by those in the financial industry has brought our economy to the brink of the abyss. New Statesman

Read also Joe the Plumber and Adam Smith  and Aquinas, Smith, Jefferson, Malthus, Marx, Keynes

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How the markets really work (from 2007): How did these comedians see it coming when financial reporters did not? 

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Crisis allows us to reconsider left-wing ideas—Although this is undoubtedly a grave crisis for finance capitalism, with deep effects on the real international economy, it is not—as yet—a systemic collapse. The extraordinary speed and depth of the events and the $1.8 trillion response to them, especially this week in the European Union, have helped avoid the meltdown heralded at the weekend by Dominique Strauss-Kahn at the International Monetary Fund meeting in Washington. French president Nicolas Sarkozy, British prime minister Gordon Brown, German chancellor Angela Merkel and Spanish prime minister José Luis Rodríguez Zapatero are taking the lead to create a “refounded capitalism” more capable of withstanding such cyclical shocks by better global regulation.                             Karl Marx (photo right)

In an audacious initiative, Sarkozy and EU Commission president José Manuel Barroso are meeting US president George Bush this weekend to seek a G8 summit next month on a new agreement to regulate global finance. Presumably it would include the president-elect. If that is Barack Obama, he will be confronted with a dramatic adjustment of US power to a more multipolar world, for which he is better prepared and which he is more willing to accept than John McCain. .  .  .

Big events revive these debates, but they need to be reinvented for new times. Conventional sociological post-industrialism accounts rendering left ideologies and movements redundant badly need revision in the light of falling living standards and growing inequalities.

So does Fukuyama’s notion of the end of ideology and the triumph of market capitalism—as he now admits. Big names too: Keynes, Polanyi, Kondratieff, Galbraith and now Paul Krugman are deployed by social democrats against those who want to resurrect Marx and Engels.  IrishTimes

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Twin giants of postwar liberalism—The economist John Kenneth Galbraith, who died in 2006 at the age of 97, lived so long that he spent the last several decades of his life as an anachronism. . . . Galbraith served in FDR’s New Deal as a young man and JFK’s New Frontier in middle age.

He spent his old age in acerbic but mostly ineffectual dissent from the Age of Reagan, Gingrich and Bush. He would have turned 100 last Wednesday.

That was the same day his lifelong friend, the historian Arthur Schlesinger Jr., who died last year, would have turned 91. The two men, though separated by nine years and nearly a foot in height (Galbraith was 6-foot-8), were the fraternal twins of postwar liberalism — national figures at a time when public intellectuals were celebrities and cultural tastemakers in a way they are not today.. . . I am old enough to recall what appeared to be the last gasp of the idea that a giant national economy could be managed from Washington. That was the 1979 Chrysler bailout. Soon, the notion of “industrial policy”—that government investment could select winners in the economy while rationally reconciling the interests of capital and labor—was the object of general mockery. . . .

Galbraith’s son, the University of Texas economist James Kenneth Galbraith, highlights a less-noted idea underlying the financial rescue: the belief that government intervention can be an ally of economic efficiency. That is, business is accepting — indeed, pleading for — a robust government role in the belief that the free market on its own is not behaving rationally.

That is a stark reversal from the past generation’s conservative creed. Having made this concession once, to the tune of $700 billion, conservatives will find it difficult to turn back to the posture of government as enemy. More likely, they will find themselves practicing the same brand of defensive politics that liberals did in the conservative ascendancy. That is, on problems from health care to global warming to international finance, many conservatives find themselves accepting liberal premises about the need for government intervention but asserting that they can do so in a more disciplined and sensible way. . . . Some of Galbraith’s ideas did not travel so well across the decades, such as his argument in “The Affluent Society” that large corporations, not the marketplace of consumers, use advertising to manipulate demand as well as supply. But his basic belief—that business served the public interest only when checked by a robust regulatory state—is the essential message that Democrats hope will bring a sweep this fall.

Books by John Kenneth Galbraith: The Affluent Society / The Great Crash of 1929  / Money: Whence It Came, Where It Went

The Economics of Innocent Fraud: Truth For Our Time

James Galbraith. The Predator State: How Conservatives Abandoned the Free Market and Why Liberals Should Too (2008)

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$2 Trillion Handed out by Paulson and Bernanke, But Who Got It, Nobody Knows—With his latest policy switch to buying stock in banks and other companies, Henry Paulson has more zigs and zags to his credit than a fox trying to escape a pack of hounds.

The fox and the hounds, of course, have a clear idea of what they want to do and how they want to do it, which is more than you can say of Paulson. Sums of incalculable size are being spent or pledged by Paulson and his playmate, Ben Bernanke, chairman of the Federal Reserve Board, and nobody outside their organizations, or maybe inside them either, knows who got what, how much they got, and under what conditions they got it. In the past couple of months Bernanke has loaned out $2 trillion to unnamed companies under eleven different programs and all but three of them were slapped together in the past fifteen months of financial crisis. Alternet

Bail-out Vote Fails (9/29/08)—Total (205): Yes (Democrats, 140; Republicans, 65); Total (228) No (Democrats, 95; Republicans, 133)

House of Representatives Bail-out Vote Passes (3 October 2008) –Total (263): Yes (Democrats, 172; Republicans, 91); Total (171) No (Democrats, 63; Republicans, 108) 

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Debt: The First 5,000 Years

By David Graeber

Before there was money, there was debt. Every economics textbook says the same thing: Money was invented to replace onerous and complicated barter systems—to relieve ancient people from having to haul their goods to market. The problem with this version of history? There’s not a shred of evidence to support it. Here anthropologist David Graeber presents a stunning reversal of conventional wisdom. He shows that for more than 5,000 years, since the beginnings of the first agrarian empires, humans have used elaborate credit systems to buy and sell goods—that is, long before the invention of coins or cash. It is in this era, Graeber argues, that we also first encounter a society divided into debtors and creditors.  Graeber shows that arguments about debt and debt forgiveness have been at the center of political debates from Italy to China, as well as sparking innumerable insurrections.

He also brilliantly demonstrates that the language of the ancient works of law and religion (words like “guilt,” “sin,” and “redemption”) derive in large part from ancient debates about debt, and shape even our most basic ideas of right and wrong. We are still fighting these battles today without knowing it. Debt: The First 5,000 Years is a fascinating chronicle of this little known history—as well as how it has defined human history, and what it means for the credit crisis of the present day and the future of our economy.   Economist Glenn Loury  / Criminalizing a Race

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Bush Aids Detroit, but Hard Choices Wait for Obama—WASHINGTON — The emergency bailout of General Motors and Chrysler announced by President Bush on Friday gives the companies a few months to get their businesses in order, but hands off to President-elect Barack Obama the difficult political task of ruling on their future. The plan pumps $13.4 billion by mid-January into the companies from the fund that Congress authorized to rescue the financial industry. But the two companies have until March 31 to produce a plan for long-term profitability, including concessions from unions, creditors, suppliers and dealers.

In February, another $4 billion will be available for G.M. if the rest of the $700 billion bailout package has been released. . . . . Under the Bush administration plan, G.M. and Chrysler would each have immediate access to $4 billion upon the signing of the emergency loan agreements with the Treasury. G.M. would then have access to an addition $5.4 billion on Jan. 16 and another $4 billion on Feb. 17 provided that Congress has released the remaining $350 billion for the Treasury’s rescue program.

The companies would be required to limit executive pay, eliminate “golden parachute” severance packages and sell their corporate jets. While the loans are outstanding, the companies would be barred from paying shareholder dividends.

The loan deal also requires the companies to quickly reduce their huge debt obligations by two-thirds, mostly through debt-for-equity swaps, and to reach agreements on wage and benefit cuts with the unions by Dec. 31. NYTimes

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Democrats Set to Offer Loans for Carmakers—Faced with staggering new unemployment figures, Democratic Congressional leaders said on Friday that they were ready to provide a short-term rescue plan for American automakers, and that they expected to hold a vote on the legislation in a special session next week. Seeking to end a weeks-long stalemate between the Bush administration and House Speaker Nancy Pelosi, senior Congressional aides said that the money would most likely come from $25 billion in federally subsidized loans intended for developing fuel-efficient cars. . . . G.M. is seeking $18 billion in loans, but says it needs $4 billion immediately to survive past the year. Chrysler, which is also running out of cash, wants $7 billion. Ford, the healthiest of the three, is asking for a $9 billion line of credit. NYTimes

From left, Richard Wagoner, chief executive of General Motors, Robert L. Nardelli, chief executive of Chrysler, Alan R. Mulally, chief executive of Ford, and Ron Gettelfinger, head of the United Automobile Workers, during a House hearing on Friday.

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Bailout Ballpark—The Bush administration and its Wall Street minions continue on their way of injecting more federal money to save banks from themselves and heal their self-inflicted wounds. The purpose, Treasury Secretary Paulson contended, was to free up frozen credit markets. But after running up a tab of more than $4 trillion, the credit markets remain mostly frozen. The Financial Times reported in January that Citigroup had raised $14 billion from foreign nations and public investors to shore up its bad debts. The Chinese bought up $9 billion. And no alarm bells rang in Washington or on Wall Street. . . . Meanwhile, Paulson seems oblivious—or is it unconcerned?—with the future of American automobile workers, who have seen their jobs shrivel because of more bad management.

Maybe Paulson believes the current urban legend that auto workers make $70,000 a year, plus all that luxuriant medical care and those lucrative pensions. No need for a bailout of their companies. Meanwhile, the UAW is trying to help, offering contract changes to prevent the Big Three from collapsing. Those concessions include suspending the jobs bank, which requires employers to pay some laid-off employees, and allowing the carmakers to delay payments to the new retiree health fund.

It is staggering when one thinks of what Paulson and the administration have delivered to the financial community in the past few weeks. The 2008 bank bailout tab so far is more than $4.6 trillion, which is more than the total expenditures (in current dollars) for the Marshall Plan, the Louisiana Purchase, the S&L failures of the 1980s, the New Deal, the Korean War, the Vietnam War, the Iraq war, the moon landing, and all NASA budgets combined. There you have it: Republican small government redefined. . . .

Why doesn’t the government fault Citigroup and similarly situated fellow bankers for their total irresponsibility in accumulating their bad debts? Why doesn’t Henry Paulson offer a plan to prevent such malpractice again? He might start by recommending restoration of the Glass-Steagall Act, repealed in 1999 with the sage sponsorship of Phil Gramm, Robert Rubin and Alan Greenspan. That’s the kind of “bipartisanship” the business community loves. Glass-Steagall, for nearly 70 years, prevented banks from much of the activity that resulted in our present problem. The proponents of the repeal undoubtedly will defend themselves with the “free market” nonsense they have peddled so successfully for the past generation. TruthDig

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US surrenders power to appoint World Bank president—The US is to lose its power to appoint the president of the World Bank after the UK’s development secretary, Douglas Alexander, brokered a deal to throw open the post to candidates from any country. . . . Washington has had the right to hand-pick the president of the World Bank since the institution was founded after the second world war, with Europe choosing the managing director of the International Monetary Fund. . . .  Developing countries have grown increasingly frustrated at the stranglehold of rich nations on the two Washington-based multilateral bodies, with pressure for change accelerating after the controversial presidency of Paul Wolfowitz, who was forced to step down after a scandal involving his partner’s promotion. Guardian

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Gordon Does Good—At a special European summit meeting on Sunday, the major economies of continental Europe in effect declared themselves ready to follow Britain’s lead, injecting hundreds of billions of dollars into banks while guaranteeing their debts. And whaddya know, Mr. Paulson — after arguably wasting several precious weeks — has also reversed course, and now plans to buy equity stakes rather than bad mortgage securities (although he still seems to be moving with painful slowness).

As I said, we still don’t know whether these moves will work. But policy is, finally, being driven by a clear view of what needs to be done. Which raises the question, why did that clear view have to come from London rather than Washington?

It’s hard to avoid the sense that Mr. Paulson’s initial response was distorted by ideology. Remember, he works for an administration whose philosophy of government can be summed up as “private good, public bad,” which must have made it hard to face up to the need for partial government ownership of the financial sector.

I also wonder how much the Femafication of government under President Bush contributed to Mr. Paulson’s fumble. All across the executive branch, knowledgeable professionals have been driven out; there may not have been anyone left at Treasury with the stature and background to tell Mr. Paulson that he wasn’t making sense.

Luckily for the world economy, however, Gordon Brown and his officials are making sense. And they may have shown us the way through this crisis.—NYTtimes

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Paulson Bailout Plan a Historic Swindle— If Wall Street gets away with this, it will represent an historic swindle of the American public—all sugar for the villains, lasting pain and damage for the victims. My advice to Washington politicians: Stop, take a deep breath and examine what you are being told to do by so-called “responsible opinion.” If this deal succeeds, I predict it will become a transforming event in American politics—exposing the deep deformities in our democracy and launching a tidal wave of righteous anger and popular rebellion. As I have been saying for several months, this crisis has the potential to bring down one or both political parties, take your choice. . . .

The scandal is not that government is acting. The scandal is that government is not acting forcefully enough—using its ultimate emergency powers to take full control of the financial system and impose order on banks, firms and markets. Stop the music, so to speak, instead of allowing individual financiers and traders to take opportunistic moves to save themselves at the expense of the system. The step-by-step rescues that the Federal Reserve and Treasury have executed to date have failed utterly to reverse the flight of investors and banks worldwide from lending or buying in doubtful times. There is no obvious reason to assume this bailout proposal will change their minds, though it will certainly feel good to the financial houses that get to dump their bad paper on the government. . . .

A serious intervention in which Washington takes charge would, first, require a new central authority to supervise the financial institutions and compel them to support the government’s actions to stabilize the system. Government can apply killer leverage to the financial players: accept our objectives and follow our instructions or you are left on your own—cut off from government lending spigots and ineligible for any direct assistance. . . If government acts responsibly, it will impose some other conditions on any broad rescue for the bankers. First, take due bills from any financial firms that get to hand off their spoiled assets, that is, a hard contract that repays government from any future profits once the crisis is over. Second, when the politicians get around to reforming financial regulations and dismantling the gimmicks and “too big to fail” institutions, Wall Street firms must be prohibited from exercising their usual manipulations of the political system. Call off their lobbyists, bar them from the bribery disguised as campaign contributions. . . .

More important, if the taxpayers are compelled to refinance the villains in this drama, then Americans at large are entitled to equivalent treatment in their crisis. That means the suspension of home foreclosures and personal bankruptcies for debt-soaked families during the duration of this crisis. The debtors will not escape injury and loss—their situation is too dire—but they deserve equal protection from government, the chance to work out things gradually over some years on reasonable terms. TheNation

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Goldman Sachs Socialism—Wall Street put a gun to the head of the politicians and said, Give us the money—right now—or take the blame for whatever follows. The audacity of Treasury Secretary Henry Paulson’s bailout proposal is reflected in what it refuses to say: no explanations of how the bailout will work, no demands on the bankers in exchange for the public’s money. The Treasury’s opaque, three-page summary of plan includes this chilling statement:

Section 8. Review. Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

In other words, no lawsuits allowed by aggrieved investors or American taxpayers. No complaints later from ignorant pols who didn’t know what they voted for. Take it or leave it, suckers. . . .

If Paulson’s gamble fails—just as possible—then maybe government will finally undertake forceful intervention rather than friendly solicitude for Wall Street. Washington should literally take control of the banking and finance sector and employ its emergency powers to oversee and direct these private, profit-making enterprises. If any bankers do not wish to play, cut them off from any public assistance (and wish them good luck). Then government can exercise temporary supervisory powers that force banking to cooperate with economic recovery by sustaining lending and investment to the real economy. Washington can put profit on hold.

Order full stop to the many financial gimmicks and accounting illusions that led to inflated lending and falsified asset valuations. Unwind the complicated time bombs known as credit derivatives and shut down this lucrative line of business. Meanwhile, instead of throwing millions of homeowners and debtors out of their homes and into bankruptcy, hold them harmless temporarily so people can work out reasonable terms for recovery. Finally, force-feed new life into the real economy with government spending on public projects and capital formation. How much spending? Rescuing America from irresponsible Wall Street is worth whatever it costs to save the bloodied bankers. TheNation

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Vast Bailout by U.S. Proposed in Bid to Stem Financial Crisis—The scale and complexity of the project are almost certain to create huge philosophical differences among the parties, which could make negotiations difficult to say the least. Still, lawmakers said the goal was to work through the coming weekend and to have both the House and Senate vote on a measure by the end of next week.

As they exited the session, grim-faced lawmakers said they would await proposals from the Treasury Department. The Senate majority leader, Harry Reid, said he expected to see a proposal within hours, not days.

“What we agreed to do is sit down together on a bipartisan basis and work together to solve the problem,” said Senator Mitch McConnell of Kentucky, the Republican leader, who said no specific approach was advocated by the administration officials.

Henry Paulson, Nancy Pelosi, and Ben Bernanke (left to right)

President Bush and his top advisers have adamantly opposed bailouts, but the mortgage crisis has already forced the Treasury and the Fed to bail out four of the country’s most prominent financial institutions — Bear Stearns in March; Fannie Mae and Freddie Mac earlier this month; and American International Group, the insurance conglomerate, just this week.

Created in 1989, the Resolution Trust Corporation disposed of bad assets held by hundreds of crippled savings institutions. The agency closed or reorganized 747 institutions holding assets of nearly $400 billion. It did so by seizing the assets of troubled savings and loans, then reselling them to bargain-seeking investors.

By 1995, the S.& L. crisis had abated and the agency was folded into the Federal Deposit Insurance Corporation, which Congress created during the Great Depression to regulate banks and protect the accounts of customers when they fail.

By any reckoning, Mr. Paulson and Mr. Bernanke were desperate for a way to stem the crisis once and for all by Thursday evening. Over the previous 10 days, they had allowed one Wall Street firm, Lehman Brothers, to collapse; and an even bigger Wall Street firm, Merrill Lynch, to be sold to Bank of America. Then, on Tuesday, the Federal Reserve abruptly took over the nation’s biggest insurance conglomerate, the American International Group, and began bailing it out with an $85 billion loan. NYTimes

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Talks Implode During Day of Chaos; Fate of Bailout Plan Remains Unresolved—The day began with an agreement that Washington hoped would end the financial crisis that has gripped the nation. It dissolved into a verbal brawl in the Cabinet Room of the White House, urgent warnings from the president and pleas from a Treasury secretary who knelt before the House speaker and appealed for her support. “If money isn’t loosened up, this sucker could go down,” President Bush declared Thursday as he watched the $700 billion bailout package fall apart before his eyes, according to one person in the room. It was an implosion that spilled out from behind closed doors into public view in a way rarely seen in Washington. NYTimes  (26 September 2008)

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In Bailout Vote, a Leadership Breakdown— The collapse of the proposed rescue plan for the teetering financial system was the product of a larger failure — of political leadership in Washington — at a moment when the world was looking to the United States to contain the cascading economic crisis. From the White House to Congress to the presidential campaign trail, the principal players did not rally the votes they needed in the House. They appeared not to comprehend or address in a convincing way an intense strain of opposition to the deal among voters. They allowed partisan politics to flare at sensitive moments. NYTimes

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House of Representatives Bail-out Vote Fails

(29 September 2008)

Total (205): Yes (Democrats, 140; Republicans, 65);

Total (228) No (Democrats, 95; Republicans, 133) 

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Bush Signs Rescue Bill After House Vote—The House of Representatives gave final approval on Friday to the $700 billion bailout for the financial system, reversing course to authorize what may be the most expensive government intervention in history.

At 1:21 p.m., applause and cheers echoed through the House chamber as the number of “aye” votes crossed the threshold needed for passage with just seconds remaining in the official 15-minute voting period. The vote was 263 to 171.

And in a sign of the urgency surrounding the package, Congressional staff rushed the newly printed legislation into a news conference where Democratic leaders gathered after the vote and Speaker Nancy Pelosi, Democrat of California, signed it, at exactly 2 p.m.Within an hour, the legislation had been conveyed to the White House and signed by President Bush. Standing in the Rose Garden shortly before signing the document, the president thanked Congressional leaders of both parties by name and said they had achieved something “essential to helping America’s economy weather the financial crisis

Earlier, Ms. Pelosi said the measure was essential to “begin to shape the financial stability of our country and the economic security of our people.”

Representative John A. Boehner of Ohio, the Republican minority leader, had urged passage by warning that “if we do nothing, this crisis is likely to worsen and to put us into an economic slump like most of us have never seen.”  Most Democrats favored the bill (172 yeas to 63 nays), while a slighter majority of Republicans voted against (91 yeas to 108 nays). Every member of the House voted. (There is one vacancy, created by the recent death of Stephanie Tubbs Jones, a Democrat of Ohio. NYTimes

House of Representatives Bail-out Vote Passes

(3 October 2008)

Total (263): Yes (Democrats, 172; Republicans, 91);

Total (171) No (Democrats, 63; Republicans, 108) 

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The Reckoning: Taking Hard New Look at a Greenspan Legacy—The derivatives market is $531 trillion, up from $106 trillion in 2002 and a relative pittance just two decades ago. Theoretically intended to limit risk and ward off financial problems, the contracts instead have stoked uncertainty and actually spread risk amid doubts about how companies value them.

If Mr. Greenspan had acted differently during his tenure as Federal Reserve chairman from 1987 to 2006, many economists say, the current crisis might have been averted or muted.

Over the years, Mr. Greenspan helped enable an ambitious American experiment in letting market forces run free. Now, the nation is confronting the consequences.                              Robert E. Rubin and Alan Greenspan (l to r)

Derivatives were created to soften — or in the argot of Wall Street, “hedge” — investment losses. For example, some of the contracts protect debt holders against losses on mortgage securities. (Their name comes from the fact that their value “derives” from underlying assets like stocks, bonds and commodities.) Many individuals own a common derivative: the insurance contract on their homes.

On a grander scale, such contracts allow financial services firms and corporations to take more complex risks that they might otherwise avoid — for example, issuing more mortgages or corporate debt. And the contracts can be traded, further limiting risk but also increasing the number of parties exposed if problems occur.

Throughout the 1990s, some argued that derivatives had become so vast, intertwined and inscrutable that they required federal oversight to protect the financial system. In meetings with federal officials, celebrated appearances on Capitol Hill and heavily attended speeches, Mr. Greenspan banked on the good will of Wall Street to self-regulate as he fended off restrictions.

Ever since housing began to collapse, Mr. Greenspan’s record has been up for revision. Economists from across the ideological spectrum have criticized his decision to let the nation’s real estate market continue to boom with cheap credit, courtesy of low interest rates, rather than snuffing out price increases with higher rates. Others have criticized Mr. Greenspan for not disciplining institutions that lent indiscriminately.

But whatever history ends up saying about those decisions, Mr. Greenspan’s legacy may ultimately rest on a more deeply embedded and much less scrutinized phenomenon: the spectacular boom and calamitous bust in derivatives trading. NYTimes

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U.S. Sheds 159,000 Jobs; 9th Straight Monthly Drop—Only a few weeks ago, some economists still held out hopes that the economy might recover late this year or early next. But with the job market now swiftly deteriorating and fear dogging the financial system, what optimism remained has given way to the broad assumption that 2008 is a lost cause.

Most economists have concluded that, even in the rosiest outlook, the economy will continue to struggle well into next year. As anxiety spreads that banks may continue to hoard their dollars regardless of a rescue package from Washington, depriving businesses of capital needed to expand, more pessimistic forecasts call for the economy to remain weak through all of next year, before a hesitant recovery in 2010.

“This is an economy in recession, and every dimension of the report confirms that,” said Ethan S. Harris, an economist at Barclays Capital. “This has been preceded by a slow-motion recession. Now we’re going into the full-speed recession that will last somewhere between three and five quarters.” NYTimes

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A shattering moment in America’s fall from power— The dire condition of America’s financial markets is the result of American banks operating in a free-for-all environment that these same American legislators created. It is America’s political class that, by embracing the dangerously simplistic ideology of deregulation, has responsibility for the present mess. . .  . In present circumstances, an unprecedented expansion of government is the only means of averting a market catastrophe. The consequence, however, will be that America will be even more starkly dependent on the world’s new rising powers. The federal government is racking up even larger borrowings, which its creditors may rightly fear will never be repaid. It may well be tempted to inflate these debts away in a surge of inflation that would leave foreign investors with hefty losses. In these circumstances, will the governments of countries that buy large quantities of American bonds, China, the Gulf States and Russia, for example, be ready to continue supporting the dollar’s role as the world’s reserve currency? Or will these countries see this as an opportunity to tilt the balance of economic power further in their favour? Either way, the control of events is no longer in American hands.

The fate of empires is very often sealed by the interaction of war and debt. That was true of the British Empire, whose finances deteriorated from the First World War onwards, and of the Soviet Union. Defeat in Afghanistan and the economic burden of trying to respond to Reagan’s technically flawed but politically extremely effective Star Wars programme were vital factors in triggering the Soviet collapse. Despite its insistent exceptionalism, America is no different. The Iraq War and the credit bubble have fatally undermined America’s economic primacy. The US will continue to be the world’s largest economy for a while longer, but it will be the new rising powers that, once the crisis is over, buy up what remains intact in the wreckage of America’s financial system.

There has been a good deal of talk in recent weeks about imminent economic armageddon. In fact, this is far from being the end of capitalism. The frantic scrambling that is going on in Washington marks the passing of only one type of capitalism—the peculiar and highly unstable variety that has existed in America over the last 20 years. This experiment in financial laissez-faire has imploded. While the impact of the collapse will be felt everywhere, the market economies that resisted American-style deregulation will best weather the storm. Britain, which has turned itself into a gigantic hedge fund, but of a kind that lacks the ability to profit from a downturn, is likely to be especially badly hit.

The irony of the post-Cold War period is that the fall of communism was followed by the rise of another utopian ideology. In American and Britain, and to a lesser extent other Western countries, a type of market fundamentalism became the guiding philosophy. The collapse of American power that is underway is the predictable upshot. Like the Soviet collapse, it will have large geopolitical repercussions. An enfeebled economy cannot support America’s over-extended military commitments for much longer. Retrenchment is inevitable and it is unlikely to be gradual or well planned .Guardian

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We Have the Money— On Wednesday, September 24th, right in the middle of the fight over billions of taxpayer dollars slated to bail out Wall Street, the House of Representatives passed a $612 billion defense authorization bill for 2009 without a murmur of public protest or any meaningful press comment at all. (The New York Times gave the matter only three short paragraphs buried in a story about another appropriations measure.) The defense bill includes $68.6 billion to pursue the wars in Iraq and Afghanistan, which is only a down-payment on the full yearly cost of these wars. (The rest will be raised through future supplementary bills.) It also included a 3.9% pay raise for military personnel, and $5 billion in pork-barrel projects not even requested by the administration or the secretary of defense. It also fully funds the Pentagon’s request for a radar site in the Czech Republic, a hare-brained scheme sure to infuriate the Russians just as much as a Russian missile base in Cuba once infuriated us. The whole bill passed by a vote of 392-39 and will fly through the Senate, where a similar bill has already been approved. And no one will even think to mention it in the same breath with the discussion of bailout funds for dying investment banks and the like. Truthout

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The Monster That Ate Wall Street—By the mid-’90s, JPMorgan’s books were loaded with tens of billions of dollars in loans to corporations and foreign governments, and by federal law it had to keep huge amounts of capital in reserve in case any of them went bad. But what if JPMorgan could create a device that would protect it if those loans defaulted, and free up that capital?

What the bankers hit on was a sort of insurance policy: a third party would assume the risk of the debt going sour, and in exchange would receive regular payments from the bank, similar to insurance premiums. JPMorgan would then get to remove the risk from its books and free up the reserves. The scheme was called a “credit default swap,” and it was a twist on something bankers had been doing for a while to hedge against fluctuations in interest rates and commodity prices. While the concept had been floating around the markets for a couple of years, JPMorgan was the first bank to make a big bet on credit default swaps. It built up a “swaps” desk in the mid-’90s and hired young math and science grads from schools like MIT and Cambridge to create a market for the complex instruments.

Within a few years, the credit default swap (CDS) became the hot financial instrument, the safest way to parse out risk while maintaining a steady return. “I’ve known people who worked on the Manhattan Project,” says Mark Brickell, who at the time was a 40-year-old managing director at JPMorgan. “And for those of us on that trip, there was the same kind of feeling of being present at the creation of something incredibly important.” . . .

Soon, companies like AIG weren’t just insuring houses. They were also insuring the mortgages on those houses by issuing credit default swaps. By the time AIG was bailed out, it held $440 billion of credit default swaps. AIG’s fatal flaw appears to have been applying traditional insurance methods to the CDS market. There is no correlation between traditional insurance events; if your neighbor gets into a car wreck, it doesn’t necessarily increase your risk of getting into one. But with bonds, it’s a different story: when one defaults, it starts a chain reaction that increases the risk of others going bust. Investors get skittish, worrying that the issues plaguing one big player will affect another. So they start to bail, the markets freak out and lenders pull back credit. NewsWeek

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Government Seizes WaMu and Sells Some Assets—Washington Mutual, the giant lender that came to symbolize the excesses of the mortgage boom, was seized by federal regulators on Thursday night, in what is by far the largest bank failure in American history. Regulators simultaneously brokered an emergency sale of virtually all of Washington Mutual, the nation’s largest savings and loan, to JPMorgan Chase for $1.9 billion, averting another potentially huge taxpayer bill for the rescue of a failing institution.

The move came as lawmakers reached a stalemate over the passage of a $700 billion bailout fund designed to help ailing banks, and removed one of America’s most troubled banks from the financial landscape.

Customers of WaMu, based in Seattle, are unlikely to be affected, although shareholders and some bondholders will be wiped out. WaMu account holders are guaranteed by the Federal Deposit Insurance Corporation up to $100,000, and additional deposits will be backed by JPMorgan Chase.

By taking on all of WaMu’s troubled mortgages and credit card loans, JPMorgan Chase will absorb at least $31 billion in losses that would normally have fallen to the F.D.I.C.

JPMorgan Chase, which acquired Bear Stearns only six months ago in another shotgun deal brokered by the government, is to take control Friday of all of WaMu’s deposits and bank branches, creating a nationwide retail franchise that rivals only Bank of America. But JPMorgan will also take on Washington Mutual’s big portfolio of troubled assets, and plans to shut down at least 10 percent of the combined company’s 5,400 branches in markets like New York and Chicago, where they compete. The bank also plans to raise an additional $8 billion by issuing common stock on Friday to pay for the deal.

Washington Mutual, with $307 billion in assets, is by far the biggest bank failure in history, eclipsing the 1984 failure of Continental Illinois National Bank and Trust in Chicago, an event that presaged the savings and loan crisis. IndyMac, which was seized by regulators in July, was one-tenth the size of WaMu.NYTimes (25 September 2008)

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William Greider on the Corporate State—Usury, to be clear about it, is rich people taking advantage of poor people by lending them money on terms that are sure to make them fail. All three of the great religions, Judaism, Christianity, Islam, had a moral prohibition against usury because they recognized that society can’t function like that. People of great wealth and their institutions like banks naturally have the power to overwhelm people of lesser means. And you can’t allow that in a decent society. It won’t survive. . . .To make the story overly crude, Congress repealed the law against usury. It was done in 1980 by a Democratic Congress, Democratic President. And, of course, the Republicans all piled on and voted for it. And that was the first stroke, only the first of many, in which they stripped away the regulatory laws from the financial system and from banking.

And that allowed the free market modernized gimmicks of one kind or another, all these things we’re now reading about, to flourish. And that’s where we are. I mean, the gatekeepers said to the banking industry and to the financial industry, “We don’t think federal control or regulation is good for you, so we’re, therefore, liberating you to do your own thing.” . . . . Well, the driver then, and it was a powerful driver, was inflation. And through the ’70s, for lots of reasons inflation, which tends to undermine the value of financial wealth and money, was out of control. The Federal Reserve had lost control of it, not entirely its fault. But that set up a political climate that said the government is not working and that wasn’t wrong at the moment. Let’s get the government out of the way.

And that was very appealing as framed by Ronald Reagan and other conservatives. But I think it’s fair to say most Democrats yielded to it against whatever their original instincts were because of political necessity. And then the third dimension, maybe the most important, was that you had this very powerful industrial sector, that is banking and finance, that wanted and had pushed for years to get out from under the regulatory controls, limits on interest rates, the law against usury, the merger of commercial banks with investment banks, which had been prohibited in the New Deal because it caused the disaster of 1929.

I can go on and on. But you see the pattern. And the point I keep trying to make to people is that history learned the hard way that you do need prudential controls on industries like banking ’cause they’re so central to everybody’s well being. . . .Yeah. They will use their power to their own advantage. And that’s what we’re witnessing now, a kind of recklessness that was set free by political retreat and people, some of them were sincere. Some of them were just on the make. But here’s our great American tension. We want an economy that’s dynamic, that’s growing, puts more jobs out there for people to get, rising wages, all that good stuff. And at the same time, we want an economy that’s stable. And that means no inflation, steady as you go, so forth and so on.

And this is the, you know, this is the mortal condition. You’re not going to escape that tension. Government is a powerful intervener that tries, ought to try, to balance those two desires. For many years, the Federal Reserve served that role and tried to strike a balance. . . .

During the last generation, 25, 30 years ago, the Federal Reserve, the central bank that regulates money and credit, tipped hard in one direction. . . .

Crudely put, toward capital, in favor of capital and against labor. It not only hardened the value of money by suppressing inflation, but it participated very aggressively in the role of stripping away regulatory breaks on financial system and banks. Declined to enforce many of its own regulatory powers that exist in law. And meanwhile, sort of kept a foot on the brake about economic growth and full employment and all those good things that might help working people by encouraging rising wages.  / (video)

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Bailout Plan Talks Advance in Congress—”I am concerned that Treasury’s proposal is neither workable nor comprehensive despite its enormous price tag,” Senator Richard C. Shelby of Alabama, the senior Republican on the banking committee, said in a statement. “It would be foolish to waste massive sums of taxpayer funds testing an idea that has been hastily crafted.”

While Congressional leaders in both chambers said they were confident that they could reach a quick deal, it was also clear that Mr. Paulson and Mr. Bernanke would face rough questioning and that initial support for the bailout had begun to fray. Some Democrats said they simply did not trust the president, and drew a parallel to Mr. Bush’s request for authority to wage war in Iraq. . . .

“I walked down LaSalle Street on Friday, a great street in Chicago lined with banks and big office buildings,” said Senator Richard J. Durbin of Illinois, the No. 2 Democrat. “A lot of people came up and said ‘hi.’ But a lot of them came up and said: ‘Are you really going to do this? $700 billion bailing out the banks? And I said: ‘I don’t know. At the end of the day, I just don’t know.’ ”

Mr. Durbin, in a speech on the Senate floor, angrily recalled that the administration had similarly requested swift approval of its plan to attack Iraq. “Just as we should have asked more questions about weapons of mass destruction six years ago before we found ourselves in this war,” Mr. Durbin said, “we need to ask questions today about where this is leading.”

Representative Henry A. Waxman, Democrat of California who leads the Oversight and Government Reform Committee, said: “The taxpayer is being asked to risk billions to protect the bonuses of investment bankers.”

The scepticism was equally palpable at the other end of the ideological spectrum. “This is going way too fast,” said Representative Mike Pence, Republican of Indiana and a conservative leader who said constituents he met this weekend were flabbergasted at the plan. “The American people don’t want Congress to make haste with the financial recovery legislation; they want us to make sense.”

And Mr. Shelby, of the banking committee, said: “Congress must immediately undertake a comprehensive, public examination of the problem and alternative solutions rather than swiftly pass the current plan with minimal changes or discussion. We owe the American taxpayer no less.”NYTimes

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Rescue Wall Street—and the Rest of Us— Bernie Sanders is a US senator from Vermont.— his proposal as presented is an unacceptable attempt to force middle-income families (and our children) to pick up the cost of fixing the horrendous economic mess that is the product of the Bush administration’s deregulatory fever and Wall Street’s insatiable greed.

If the potential danger to our economy was not so dire, this blatant effort to essentially transfer $700 billion up the income ladder to those at the top would be laughable. Let us be clear. If the economy is on the edge of collapse we need to act. But rescuing the economy does not mean we have to just give away $700 billion of taxpayer money to the banks. (In truth, it could be much more than $700 billion. The bill only says the government is limited to having $700 billion outstanding at any time. By selling the mortgage-backed assets it acquires–even at staggering losses—the government will be able to buy even more resulting is a virtually limitless financial exposure on the part of taxpayers.) Any proposal must protect middle income and working families from bearing the burden of this bailout. I have proposed a four part plan to accomplish that goal . . . TheNation

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Last major investment banks change status—The Federal Reserve said Sunday it had granted a request by the country’s last two major investment banks — Goldman Sachs and Morgan Stanley — to change their status to bank holding companies.

The Fed announced that it had approved the request of the two investment banks. The change in status will allow them to create commercial banks that will be able to take deposits, bolstering the resources of both institutions. The change continued the biggest restructuring on Wall Street since the Great Depression. Shares of both institutions had come under pressure ever since the bankruptcy filing last week by investment bank Lehman Brothers and the forced sale of investment bank Merrill Lynch to Bank of America. Investors feared that the last remaining independent investment banks would not be able to survive in their current form. There had been speculation that both institutions would be acquired by commercial banks, whose ability to take deposits would give them a stable source of funding. The decision by the two giants of finance to get approval from the Fed to change their own status represented another dramatic development in one of the most turbulent periods in Wall Street history. In the surprise announcement late Sunday, the central bank said that to provide increase funding support to the two institutions during the transition period, they would be allowed to get short-term loans from the Federal Reserve Bank of New York against various types of collateral. Yahoo

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Paulson urges quick action on $700 billion bailout— The Bush administration insisted Sunday that Congress must move quickly to approve what one lawmaker called the “mother of all bailouts” — a $700 billion proposal to buy a mountain of bad mortgage debt in an effort to unfreeze the nation’s credit markets. Congressional leaders endorsed the plan’s main thrust, saying passage might occur in a matter of days. But they said it must be expanded to include help for people on Main Street as well as the big Wall Street financial firms who have lost billions of dollars through their bad investment decisions.

The proposal “does not include the necessary safeguards,” said House Speaker Nancy Pelosi, D-Calif. She called for “independent oversight, protections for homeowners and constraints on excessive executive compensation.”

Congressional Democrats said they understood the need for urgency but insisted that the measure needed to provide help for homeowners threatened with losing their homes. And some GOP leaders told the White House on Sunday to prepare to accept more oversight and guarantees that the Treasury will recoup some of the bailout money. Republicans, however, appeared less eager to support several other Democratic proposals. One would change bankruptcy laws to allow for mortgages to be modified, something financial companies have strongly opposed. Another would cap benefit packages for executives at the huge Wall Street firms that will be selling their bad debt to the government.

“It would be a grave mistake to say that we’re going to buy up a bad debt that resulted from bad decisions of these people and then allow them to get millions of dollars on the way out,” said House Financial Services Chairman Barney Frank, D-Mass. “The American people don’t want that to happen and it shouldn’t happen.”

Senate Banking Committee Chairman Christopher Dodd, D-Conn., told reporters at a Capitol Hill news conference on Sunday that while he hoped Congress could pass the legislation this week “if it takes a little longer, then so be it.” He said financial markets should be reassured that Congress was moving toward a significant response and a few more days to “get it right” should not trigger a renewed nosedive on Wall Street.

The whole congressional debate is occurring just weeks before voters go to the polls. Both Democratic presidential candidate Barack Obama and Republican John McCain have given grudging support to the bailout effort. Obama has also called on Congress to pass a second economic stimulus bill given the economy’s weak state, with unemployment at a five-year high of 6.1 percent.

While Paulson gave no indication during the interview shows of what changes the administration would be willing to accept, the administration did modify an early draft obtained by The Associated Press in a significant way. A later version expands the definition of the financial firms that would qualify to sell their bad debt to the government to include not just U.S. firms but also foreign firms doing business in the United States if the government decides debt purchases from those firms are needed to stabilize the financial system.

Sen. Charles Schumer, D-N.Y., said that he believed there would be changes to Paulson’s plan and that agreement could still be reached quickly. Schumer said that he was pushing to get a provision where the government would receive stock warrants in return for the bailout relief and for creation of a government oversight board to supervise the huge operation, which under Paulson’s plan would be run out of the Treasury Department. He said Paulson seemed receptive to changes when he had discussed his ideas with him.

Republicans warned against too many amendments. “This would be the most serious financial crisis that the world has ever dealt with. It is not a time to be playing games,” said House Republican Leader John Boehner.

Paulson said in his round of interviews that the nation’s outdated regulatory system for financial markets must be overhauled but the first job is to get the rescue package through Congress and then deal with a comprehensive regulatory overhaul next year.

The administration’s proposal seeks an increase in the limit on the national debt from $10.6 trillion to $11.3 trillion to make room for the massive rescue. But Paulson said that the government would recoup a part of the $700 billion when the housing market recovers and the mortgage assets rebound in value.Yahoo

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China paper urges new currency order after “financial tsunami”—Threatened by a “financial tsunami,” the world must consider building a financial order no longer dependent on the United States, a leading Chinese state newspaper said on Wednesday.

The commentary in the overseas edition of the People’s Daily said the collapse of Lehman Brothers Holdings Inc . . . “may augur an even larger impending global ‘financial tsunami’.” . . . “The Chinese government is well aware of the fact that the United States, which is the world’s largest developed country, and China, which is the world’s largest developing country, should have constructive and cooperative economic and trade relations,” he said.

China is a major buyer of U.S. Treasury bonds, and through its sovereign wealth fund it has taken stakes in two large U.S. financial institutions. In July 2005, China revalued the yuan and freed it from a dollar peg to float within managed bands. But the yuan and China’s trade remains tightly linked to the fortunes of the dollar. Reuters

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The economy discriminates against blacks, Latinos—In 2005 the median per capita income in the United States stood at $16,629 for blacks and $28,946 for whites. At this slow rate of progress, we will not achieve income equality for 537 years.

Wealth disparities are even greater.

African-American families in the United States have a median net worth of $20,600, only 14.6 percent of the $140,700 median white net worth. The median net worth for Latino families is $18,600, only 13.2 percent of median white net worth. Between 1983 and 2004, the most recent year for which official federal data are available, median black and Latino wealth inched up from 7 percent to 10 percent of median white wealth. At this rate, we will not achieve wealth equality for 634 years.

As the subprime mortgage meltdown continues to spread, blacks and Latinos are taking a disproportionate hit. Blacks are three times as likely as whites to have received a subprime loan and four times as likely to have refinanced from a subprime lender, according to Home Mortgage Disclosure Act data,

Latinos will lose between $75 billion and $98 billion in home-value wealth from subprime loans, according to the Center for Responsible Lending. And blacks will lose between $71 billion and $92 billion. The nonprofit group United for a Fair Economy has called this family net-worth catastrophe the “greatest loss of wealth for people of color in modern U.S. history.” Progressive

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The Challenge of the Changing Face of America—

• The highest rates of poverty are among children, especially children of color. The poverty rate for white children is 10 percent, while it is 28 percent for Latino children, 27 percent for Native-American children, and 33 percent for African-American children.

• African Americans, Latino Americans, and Native Americans are about three times as likely to live in poverty as are whites. While the poverty rate for non-Hispanic whites is 8 percent, the rate for African Americans is 24.1 percent, for Hispanics, 21.8 percent, and for Native Americans, 23.2 percent.

• The most extreme poverty in the United States is concentrated in specific geographical areas such as the urban cores of major cities and Native American reservations. These areas of concentrated poverty are the result of decades of policies that confined the impoverished to these economically isolated areas.

• Finally, we also noted the stark racial disparity in the distribution of wealth in the United States. White families not only have on average 10 times the net worth of families of color, but also between 1998 and 2001, their wealth grew by 20 percent, while the net worth of African American households actually declined during that same period. CatholicCharitiesUSA

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The New Paradigm for Financial Markets The Credit Crash of 2008 and What It Means — Book Review by Kam Williams

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The Legacy of the Clinton Bubble—The Mother of All Deregulation—The Clinton administration’s free-market program culminated in two momentous deregulatory acts. Near the end of his eight years in office, Clinton signed into law the Gramm-Leach-Bliley Financial Services Modernization Act of 1999, one of the most far-reaching banking reforms since the Great Depression. It swept aside parts of the Glass-Steagall Act of 1933 that had provided significant regulatory firewalls between commercial banks, insurance companies, securities firms, and investment banks. . . . Wall Street had been lobbying for years for an end to Glass-Steagall, but it had not received much support before Clinton. Among those with a personal interest in the demise of Glass-Steagall was Robert Rubin, who had months earlier stepped down as treasury secretary to become chair of Citigroup, a financial-services conglomerate that was facing the possibility of having to sell off its insurance underwriting subsidiary. Although Rubin openly boasted of his lobbying efforts to abolish Glass-Steagall, the Clinton administration never brought charges against him for his obvious violations of the Ethics in Government Act.

Rubin also appealed to liberal sentiment. He claimed to have urged Congress and the White House to preserve the Community Reinvestment Act (CRA), which sought to prod banks to channel a portion of their lending to poor, inner city areas. But there was already widespread evidence that CRA was falling short by permitting banks to engage in meaningless reporting requirements in place of substantive investment in low- and moderate-income communities. The real action was not CRA renewal but the demise of the Glass-Steagall firewalls. Banks were suddenly free to load up on riskier investments as long as they did so through affiliated entities such as their own hedge funds and special investment vehicles. Those riskier investments included exotic financial innovations, such as the complex derivatives that were increasingly difficult for even experts to understand or value. . . . 

Then in December 2000, in his final weeks in office, Bill Clinton signed into law the Commodity Futures Modernization Act, which shielded the markets for derivatives from federal regulation. Since then, derivatives have grown in size and become gigantic wagers on the movement of interest rates, commodity prices, and currency values. First came the CDO bubble, which acted as a transmission belt by which the subprime mortgage cancer metastasized and spread through financial institutions around the globe. Warren Buffett, legendary investor and chair of Berkshire Hathaway, would soon refer to such derivatives as “weapons of mass destruction.” DissentMagazine

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Speculation Tax is the obvious solution to rising oil prices—For those who actually want to crack down on speculators in a meaningful way, there is a much more practical solution: tax it. A modest tax on all financial transactions will impose a serious cost on those who actively speculate in oil futures, or any other commodity, while having almost no impact on those who use these markets for hedging. It can also raise an enormous amount of money.

A 0.02% tax on the sale or purchase of commodity futures, and a comparably sized tax on options and other derivatives, the tax could easily raise more than $10bn a year, even assuming large declines in trading. If a comparably small tax were applied to all financial transactions, including stock and bond trades, the revenue could exceed $150bn a year, a take that is equivalent to 10% of the federal income tax. Such a tax would be extremely progressive because the overwhelming majority of trading is done by the wealthiest people. While middle-class families would bear some of this tax, the cost to the typical family saving for their retirement or kids’ education would be almost invisible.

Essentially, a transactions tax would be treating gambling by the wealthy in the same way that we now treat gambling by ordinary working people. Bets placed in casinos, horse races, or state lotteries are subject to taxes as high as 30%. Why shouldn’t we tax gambling on oil futures at a rate of 0.02%? Guardian

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The Fading American Economy—According to the Bureau of Labor Statistics, the US economy lost 98,000 private sector jobs in March, half of which were in manufacturing. Today 13,643,000 Americans are employed in manufacturing, of which 9,849,000 are production workers. Government employs 22,387,000 Americans, 8,744,000 more than manufacturing. Even the category leisure and hospitality employs 13,682,000 Americans, slightly more than manufacturing. There are as many waitresses and bartenders as production workers. Wholesale and retail trade employ 21,467,000 Americans. Professional and business services employ 18,036,000 Americans of which 8,368,000 are in administrative and waste services. Education and health services employ 18,699,000 Americans. Financial activities employ 8,228,000 Americans. The information sector employs 3,010,000. Transportation and warehousing employ 4,532,000. Construction employs 7,338,000, and natural resources, mining and logging employ 751,000. Other services such as repair, laundry, and membership associations employ 5,516,000 Americans. This is the portrait of the US economy according to the Bureau of Labor Statistics. It is an economy in which government is the largest employer. Manufacturing employment comprises just under 10% of total employment and about 12% of private sector employment. Everything else is services, and not particularly high level services.

Is this a portrait of a super economy? . . . The US unemployment rate is creeping up, and according to John Williams, the official unemployment rate greatly understates the real rate of unemployment. Williams has followed the changes that government has made to the official indices over the years in order to spin a more politically palatable picture. Williams uses the original methodology prior to the decades of spin. The original way of measuring unemployment indicates the current rate of unemployment in the US to be 13%, much higher than the 5.1% official number. CounterPunch

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Wherever interest-bearing capitalism exists, someone, somewhere, will have to pick up a gun and shoot someone else. Karl Barth

What else is new? Tom Paxton wrote, during the bail out of Chrysler, “I think I’ll change my name to Chrysler and get me some money, too.” Or Bear Stearns, or Freddie Mac? Ralph,

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Books by William Greider

Secrets of the Temple: How the Federal Reserve Runs the Country / One World, Ready Or Not: The Manic Logic of Global Capitalism

Who Will Tell the People: The Betrayal of American Democracy / The Soul of Capitalism

Economic Free Fall?

By William Greider

July 30, 2008

Washington can act with breathtaking urgency when the right people want something done. In this case, the people are Wall Street’s titans, who are scared witless at the prospect of their historic implosion. Congress quickly agreed to enact a gargantuan bailout, with more to come, to calm the anxieties and halt the deflation of Wall Street giants. Put aside partisan bickering, no time for hearings, no need to think through the deeper implications. We haven’t seen “bipartisan cooperation” like this since Washington decided to invade Iraq.

In their haste to do anything the financial guys seem to want, Congress and the lame-duck President are, I fear, sowing far more profound troubles for the country. The Nation

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The US dollar is in trouble because the Fed opted to act to save the Wall Street banks that own it (The Federal Reserve is a consortium of privately owned for profit banks that Congress gave permission to set US monetary, credit and interests policies). By keeping interest rates low  coupled with the excesses, greed and fraud engendered by the deregulation of the banking industry the Fed is continuing the very actions that helped cause the crisis in the first place. This is only a short term solution. All this will do is put off for a  little while longer the collapse of one or both of these entities. A serious day of reckoning is coming. The government’s actions will: “saddle taxpayers with even more debt, increase indebtedness and pose a threat to America’s AAA credit rating which will mean higher rates in the long run and lower prices for current holders of U.S. Treasury bonds, higher rates are bad for anyone with a mortgage, credit card debt, a home equity loan, a margin account, etc. higher rates also increase the government’s debt burden via higher interest payments on outstanding debt. This is bad news for the U.S. dollar for all the reasons above. This is bad news for oil prices since a weaker dollar helps drive up all commodity prices.” A Sad Day for U.S. Taxpayers and Investors by Chris Ciovacco, Ciovacco Capital Management, LLC. July 14, 2008 (FinancialSense).

Nor will the proposed Congressional action really solve the problem. All it will do is ensure the “bail out” burden is placed on the already bent-backed taxpayers, the ones most vulnerable to a major economic downturn, the working poor and the middle class while the super rich oligarchs who caused the problems get off scot free. Junious Ricardo Stanton 

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Freddie and Fannie in turmoil—Shares in Freddie were down 17.7 per cent and Fannie’s were off 10 per cent by mid-afternoon in New York, their lowest levels since 1991. Other participants in the mortgage market, including Lehman Brothers, also suffered steep falls, although the overall stock market climbed higher. Investors were unnerved by a warning from Bill Poole, former president of the Federal Reserve Bank of St Louis, that the chances that a bail-out of Fannie and Freddie might be needed were increasing. . . . Fannie and Freddie account for nearly three-quarters of new US mortgages, and their difficulties add to worries about the US economy. Many investors assume that the US government would have to take action to prevent a collapse of Fannie and Freddie, potentially at a big cost to taxpayers. . . . Both Lehman and Morgan Stanley were downgraded to ”deteriorating” by Gimme Credit as the bond research fund said both banks could face more losses in the third quarter. Lehman has been attacked by short-sellers who argue it could face the same liquidity crisis that sank Bear Stearns in March.

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Free-Trade Era May Be Nearing End Amid Food, Growth Concerns—New Barriers—The 60 percent increase in the price of rice, wheat, corn ,and other food commodities since the beginning of 2007 has led some nations to erect new barriers to exports to make sure they have adequate supplies at home.

India, the world’s second-biggest producer of rice and wheat, has banned shipments of the food grains. Egypt, Vietnam and Indonesia have also banned certain food exports. And Philippines President Gloria Macapagal-Arroyo said her country wants to become self-sufficient in food production by 2010.

“For a long time, it made sense to buy food from the international market,” Arthur Yap, the Philippines agriculture minister, said in an interview. “The situation has changed.”

Doug Irwin, an economic historian at Dartmouth College in Hanover, New Hampshire, and author of “Free Trade Under Fire,” said much of the current opposition to trade may subside when commodity prices fall and the U.S. economy recovers. Bloomberg News

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Oil Summit to Take on Speculators

By BERND RADOWITZ and REEM SHAMSEDDINEJune 21, 2008 10:42 a.m.

JEDDAH, Saudi Arabia — A joint working paper ahead of an oil summit here Sunday between energy producers and consumers is set to raise the heat on oil market investors by calling for tighter regulation and more data on the role of index funds, though the tone may rankle major free-market consumers such as the U.S. and U.K. The document, seen by French news agency AFP and which could, if agreed, form the basis of the summit’s final communiqué, is to be presented to energy ministers, chief executives from the oil majors and leaders Sunday. It calls for action to “improve the transparency and regulation of financial markets through measures to capture more data on index fund activity and to examine cross exchange inter-actions in the crude market.”

The document says that index funds and other investors have “unrealistic assessments” of the future value of oil.The summit Sunday between oil producers and consumers was arranged at short notice by Saudi Arabia. Surging oil prices are contributing to rampant inflation in parts of the world and are causing unwelcome headwinds to the sputtering economies of the U.S. and the U.K. . . .Wall Street Journal

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Paul Craig Roberts [Why Oil Prices Are So High] former asst. Secy of Treasury and a WSJ editor (i.e. conservative) attributes the economic condition to “A Weak Dollar, Bad Fed Policies and Hedge Fund Speculators,” and says “In an effort to forestall a serious recession and further crises in derivative instruments, the Federal Reserve is pouring out liquidity that is financing speculation in oil futures contracts.

Hedge funds and investment banks are restoring their impaired capital structures with profits made by speculating in highly leveraged oil future contracts, just as real estate speculators flipping contracts pushed up home prices. The oil futures bubble, too, will pop, hopefully before new derivatives are created on the basis of high oil prices.”

This is my analysis exactly!  I am glad to see the professional economists are catching up with me!  Real estate is still too highly leveraged, and so too are oil futures speculations. 

Slavery before the Civil War was overcapitalized.   College educated working people who take out interest-only, adjustable rate sub-prime loans, and who piggy-back mortgages are the ones who create over-capitalized markets.  

This includes artists and intellectuals, who are also borrowing too much and pretending that their cases are special or justifiable.  Barney Frank is a supporter of a good bill, which Bush will veto if it ever gets out of Congress.Barney Frank is the only politician honest enough to point out that some people simply cannot afford to own a home. In my opinion many of the victims are eminently blameworthy. Wilson

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Anatomy of a Price Surge—It follows, then, that while the hike in prices is due largely to ever increasing demand chasing insufficiently expanding supply, the Bush Administration’s energy policies have greatly intensified the problem. By seeking to preserve our oil-based energy system at any cost, and by adding to the “fear factor” in international speculation through its bungled invasion of Iraq and bellicose statements on Iran, it has made a bad problem much worse. . . .

And if this Administration truly wanted to spare Americans further pain at the pump, there is one thing it could do that would have an immediate effect: declare that military force is not an acceptable option in the struggle with Iran. Such a declaration would take the wind out of the sails of speculators and set the course for a drop in prices. The Nation 

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The Face of a Prophet—At the age of 77, Mr. [George] Soros, one the world’s most successful investors and richest men, leapt out of retirement last summer to safeguard his fortune and legacy. Alarmed by the unfolding crisis in the financial markets, he once again began trading for his giant hedge fund—and won big while so many others lost. . . .Mr. Soros, whose daring, controversial trades came to symbolize global capitalism in the 1990s, is now busy promoting his book, The New Paradigm for Financial Markets, which goes on sale mid-May. An electronic version is already available online. . . . And yet this is not the first time that Mr. Soros has prophesied doom. In 1998, he published a book predicting a global economic collapse that never came. Mr. Soros . . . he yearns to be remembered not only as a great trader but also as a great thinker.

The market theory he has promoted for two decades and espoused most of his life — something he calls “reflexivity” — is still dismissed by many economists. The idea is that people’s biases and actions can affect the direction of the underlying economy, undermining the conventional theory that markets tend toward some sort of equilibrium. Mr. Soros said all aspects of his life — finance, philanthropy, even politics—are driven by reflexivity, which has to do with the feedback loop between people’s understanding of reality and their own actions. Society as a whole could learn from his theory, he said. “To make a contribution to our understanding of reality would be my greatest accomplishment,” he said. . . . The more Mr. Soros learned about the crisis, the more certain he became that he should rebroadcast his theories. In the book, Mr. Soros, a fierce critic of the Bush administration, faults regulators for allowing the buildup of the housing and mortgage bubbles. He envisions a time, not so distant, when the dollar is no longer the world’s main currency and people will have a harder time borrowing money. NYTimes

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Black Freedom Fighters—Thousands of African Americans poured into northwest Indiana in the 1920s dreaming of decent-paying jobs and a life without Klansmen, chain gangs, and cotton. Black Freedom Fighters in Steel: The Struggle for Democratic Unionism by Ruth Needleman adds a new dimension to the literature on race and labor. It tells the story of five men born in the South who migrated north for a chance to work the dirtiest and most dangerous jobs in the steel mills. Individually they fought for equality and justice; collectively they helped construct economic and union democracy in postwar America. George Kimbley, the oldest, grew up in Kentucky across the street from the family who had owned his parents. He fought with a French regiment in World War I and then settled in Gary, Indiana, in 1920 to work in steel.  He joined the Steelworkers Organizing Committee and became the first African American member of its full-time staff in 1938. The youngest, Jonathan Comer, picked cotton on his father’s land in Alabama, stood up to racism in the military during World War II, and became the first African American to be president of a basic steel local union.  Reviews

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Ten Reasons We Don’t Have the Economy We Thought We Had—1. The Federal Reserve dropped the ball big time. . . . 2. Outlandish Wall Street bonuses really aren’t good for New York. . . . 3. The “You’re On Your Own” economy does not apply to giant banks. . . . 4. Credit card debt is no substitute for broad-based wage gains. . . . 5. Low unemployment wasn’t all good news. . . .  6. Sub-prime lending did not give us record home ownership. . . . 7. Government spending, it turns out, is pretty useful. . . . 8. A college education might not get you a good job after all. . . . 9. Having succeeded in keeping wages down, the White House is doing all it can to push prices up. . . .  10. Ever-higher trade deficits do matter. Gotham Gazette

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Labor’s Opening to China—The policy shift by the ITUC, the AFL-CIO, and other global unions is long overdue. Three decades of rapid economic growth have transformed China from an economic backwater into the world’s workshop.  Workers, trade unions, communities, and countries throughout the world are confronting the challenges posed by China’s growing role in the world. Today, about 25% of all the workers employed in the global economy are Chinese.  The “China price” sets the global norm for wages and working standards up and down the value chain, from inexpensive garments to sophisticated electronics.  As a result the hard-won gains of workers in the global North are being rapidly undermined, while the aspirations of workers in the developing world are being dashed, as China becomes the wage setting country in industry after industry. China’s export oriented development model has had a particular impact on trade unions everywhere. Multinational corporations—the very firms that employ millions of union members around the world—have flocked to China seeking to take advantage of its low wage workers and business friendly policies, reducing labor’s bargaining leverage and the number of union jobs. These firms have been central to China’s development. Roughly 66% of the increase in Chinese exports in the past 12 years can be attributed to foreign owned global companies and their joint ventures. (Stephen Roach, Business Times, Singapore, 8/8/06) These companies account for 60% of Chinese exports to the US. Despite all of the talk in the current presidential campaign, the “Chinese threat” is less about trade with China than it is about “trade” with US based companies like Wal-Mart, GE, or any of the other of the hundreds of Fortune 500 companies that have set up shop in China to cut labor costs and avoid environmental regulations. Ways, however imperfect, must be found to reach out to Chinese workers to find mutually acceptable ways to halt a global race to the bottom, which in end, hurts all workers.Labor Strategies

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Defining Free Trade—Trade is a war of the wits, in which the stronger witted are as sure to succeed as the stronger armed in a war with swords. Strength of wit has this great advantage over strength of arm, that it never tires, for it gathers new strength by appropriating to itself. the spoils of the vanquished. And thus, whether between nations or individuals, the war of free trade is constantly widening the relative abilities of the weak and the strong. It has been justly observed that under this system the rich are continually growing richer and the poor poorer. The remark is true as well between nations as between individuals. Free trade, when the American gives a bottle of whiskey to the Indian for valuable furs, or the Englishman exchanges with the African blue-beads for diamonds, gold and slaves, is a fair specimen of all free trade when unequals meet.”

—George Fitzhhugh, Sociology for the South (1854)

Second Line Santa by Chuck Siler >>>>>>>>>>>>>>>

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Vulture Capitalism—In the African country of Zambia, over 70 percent of people live in poverty. The average wage is just over a dollar a day, one in five people are infected with HIV/AIDS and life expectancy is merely 37.7 years. Yet, in the midst of qualifying for debt cancellation by G-8 nations, the Donegal Corporation, owned by American businessman Michael Sheehan, bought Zambian debt from Romania. In April, British courts awarded Donegal 15 million dollars, almost five times the value Donegal paid for the debt.The morally bankrupt actions of vulture funds render the commitments to debt relief made by the U.S. and other wealthy nations meaningless. U.S. taxpayer money, pledged to provided relief and assistance through debt relief, will fall into the hands of these greedy corporations. At the upcoming G-8 Summit President Bush should call for a commitment by world leaders to address debt relief and vulture funds. The U.S. Treasury should follow the lead of U.K. Chancellor Gordon Brown and limit the awards vulture funds can claim for these debts. Congress must examine this practice and its impact on our overall foreign policy interests. The international community must employ effective means to protect countries like Zambia who have fallen prey to these vulture funds, including implementing fair and transparent international mechanisms to resolve these matters. Danny Glover and Nicole Lee. Poverty Scavengers

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Black American males inhabit a universe in which joblessness is frequently the norm: ‘Seventy-two percent jobless!’ said Senator Charles Schumer, chairman of Congress’s Joint Economic Committee, which held a hearing last week on joblessness among black men. ‘This compares to 29 percent of white and 19 percent of Hispanic dropouts.’ Senator Schumer described the problem of black male unemployment as ‘profound, persistent and perplexing.’ Jobless rates at such sky-high levels don’t just destroy lives, they destroy entire communities. They breed all manner of antisocial behavior, including violent crime. One of the main reasons there are so few black marriages is that there are so many black men who are financially incapable of supporting a family. ‘These numbers should generate a sense of national alarm,’ said Senator Schumer. . . . Robert Carmona, president of Strive, an organization that helps build job skills, told Senator Schumer’s committee, ‘What we’ve seen over the last several years is a deliberate disinvestment in programs that do work.’  Bob Herbert. The Danger Zone March 15, 2007

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Wages Continue to Fall

Rise of the Have-Nots—It’s no great achievement for a people to recognize that their nation’s economy has tanked, but recognizing that their nation’s class structure has slowly but fundamentally altered is a more challenging task. It’s harder still for a people who are conditioned, as Americans are, not to see their nation in terms of class. Which is why a poll released this month by the Pew Research Center reveals a transformation of Americans’ sense of their country and themselves that is startling. Pew asked Americans if their country was divided between haves and have-nots. In 1988, when Gallup asked that question, 26 percent of respondents said yes, while 71 percent said no. In 2001, when Pew asked it, 44 percent said yes and 53 percent said no. But when Pew asked it again this summer, the number of Americans who agreed that we live in a nation divided into haves and have-nots had risen to 48 percent — exactly the same as the number of Americans who disagreed. Americans’ assessment of their own place in the economy has altered, too. In 1988, fully 59 percent identified themselves as haves and just 17 percent as have-nots. By 2001, the haves had dwindled to 52 percent and the have-nots had risen to 32 percent. This summer, just 45 percent of Americans called themselves haves, while 34 percent called themselves have-nots. Harold Meyerson (WP, 27September 2007

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Ten Days That Changed Capitalism—Officials Improvised To Rescue Markets; Will It Be Enough?—The past 10 days will be remembered as the time the U.S. government discarded a half-century of rules to save American financial capitalism from collapse. On the Richter scale of government activism, the government’s recent actions don’t (yet) register at FDR levels. They are shrouded in technicalities and buried in a pile of new acronyms. But something big just happened. It happened without an explicit vote by Congress. And, though the Treasury hasn’t cut any checks for housing or Wall Street rescues, billions of dollars of taxpayer money were put at risk. A Republican administration, not eager to be viewed as the second coming of the Hoover administration, showed it no longer believes the market can sort out the mess. “The Government of Last Resort is working with the Lender of Last Resort to shore up the housing and credit markets to avoid Great Depression II,” economist Ed Yardeni wrote to clients.

First, over St. Patrick’s Day weekend, the Fed (aka the Lender of Last Resort) and the Treasury forced the sale of Bear Stearns, the fifth-largest U.S. investment bank, to J.P. Morgan Chase at a price so low that a shareholder rebellion prompted J.P. Morgan to raise the price. Wall Street Journal   

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Make Oil a Public Utility—A public utility regulated by the state or federal government, or the two working together, is entitled to charge reasonable rates for its products and services. It also is entitled to earn a reasonable profit. . . . Public utilities are corporations that distribute dividends to their shareholders amounting to perhaps 5 percent a year of the stock’s value. Oil energy fits squarely into the criteria for a public utility. How can it be distinguished from electricity and natural gas? It can’t be. But right now, it’s a political “untouchable.” The oil industry recently posted record earnings for 2007, as it had for the previous two years. Exxon Mobil, known as the industry gold standard, had a net income of $40.6 billion, attributed to surging oil prices. For every blink of a second in 2007, that amounted to $1,287. Exxon Mobil’s sales exceeded $404 billion, which was more than the gross domestic revenue of 120 countries. Chevron and other big oil companies also announced the largest profits in history. . . .

And while our government wrings its hands, what is it really doing, geopolitically, to bring down prices? Given the political implications and the strength of the oil industry’s influence, the chances of regulating it are presently nonexistent. However, the inordinate profits in the past several years, regardless of the explanations, cry out for demanding that oil be treated as a public utility. It is an indispensable commodity, and the opportunity for abuse at the public’s expense is undeniable. The industry has demonstrated that it will not regiment or control itself. If the industry were confronted with even the mere possibility of becoming a government-regulated utility, gasoline and heating oil prices would come tumbling down in a hurry. Common Dreams   

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A Bankrupt Superpower—The Collapse of American Power— In his famous book, The Collapse of British Power (1972), Correlli Barnett reports that in the opening days of World War II Great Britain only had enough gold and foreign exchange to finance war expenditures for a few months. The British turned to the Americans to finance their ability to wage war. Barnett writes that this dependency signaled the end of British power. From their inception, America’s 21st century wars against Afghanistan and Iraq have been red ink wars financed by foreigners, principally the Chinese and Japanese, who purchase the US Treasury bonds that the US government issues to finance its red ink budgets. The Bush administration forecasts a $410 billion federal budget deficit for this year, an indication that, as the US saving rate is approximately zero, the US is not only dependent on foreigners to finance its wars but also dependent on foreigners to finance part of the US government’s domestic expenditures. Foreign borrowing is paying US government salaries—perhaps that of the President himself—or funding the expenditures of the various cabinet departments.

Financially, the US is not an independent country. The Bush administration’s $410 billion deficit forecast is based on the unrealistic assumption of 2.7% GDP growth in 2008, whereas in actual fact the US economy has fallen into a recession that could be severe. There will be no 2.7% growth, and the actual deficit will be substantially larger than $410 billion. Just as the government’s budget is in disarray, so is the US dollar which continues to decline in value in relation to other currencies. The dollar is under pressure not only from budget deficits, but also from very large trade deficits and from inflation expectations resulting from the Federal Reserve’s effort to stabilize the very troubled financial system with large injections of liquidity. . . . The US has squandered $500 billion dollars on a war that serves no American purpose. Moreover, the $500 billion is only the out-of-pocket costs. It does not include the replacement cost of the destroyed equipment, the future costs of care for veterans, the cost of the interests on the loans that have financed the war, or the lost US GDP from diverting scarce resources to war. Experts who are not part of the government’s spin machine estimate the cost of the Iraq war to be as much as $3 trillion. The Republican candidate for President said he would be content to continue the war for 100 years. With what resources? When America’s creditors consider our behavior they see total fiscal irresponsibility. They see a deluded country that acts as if it is a privilege for foreigners to lend to it, and a deluded country that believes that foreigners will continue to accumulate US debt until the end of time. Counterpunch

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Fed up with Wall Street—The politicians will try to do their best to obscure the first point. They say “we aren’t giving them money – we’re lending money and we’re getting interest, so the government can make a profit.”  . . . . No private bank would have lent money to JP Morgan Chase or Bear Stearns at the same interest rate and under the same terms as the Fed. . . . When the government makes a loan at below market interest rates, it is giving away money. . . . If they can’t get away with the “no bailout” nonsense, the Wall Street welfare boys will then try the route of claiming that we have to bail them out in order to prevent the whole financial system from collapsing. Such a collapse could turn the recession into a depression, leaving millions unemployed for years. This is also nonsense. We know how to keep banks operating even as they go into bankruptcy. The UK just did this with Northern Rock, a major bank that managed to get itself into huge trouble because of its holding of bad mortgage debt. After it was clear that the bank was insolvent, the Bank of England stepped in and essentially took over the bank. It replaced the incompetent managers who had ruined the bank and brought in a new team to straighten out the books.

The plan is to resell the bank to the private sector once the books are in order. In the mean time, the bank keeps operating. The depositors can continue to make deposits and withdrawals just as before. This prevents any chain reaction from bringing down the financial system. The difference between the Northern Rock route and what happened with Bears Stearns last week is that in the Northern Rock, the highly paid managers that ruined the bank are sent packing. Guardian.

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More than one in 10 people in the United States go hungry—according to new official figures that suggest government food programs are falling short in the world’s wealthiest country. More than 35 million people in a country of some 294 million went hungry last year, 390,000 more than in 2005, according to the U.S. Department of Agriculture’s latest Household Food Security report. Of the total, 12.63 million were children. Put another way, nearly one in five U.S. children either went without enough food during the course of the year or had food but could never take future meals for granted. The report, released Wednesday, comes as Congress debates the 2007 Farm Bill, a five-year piece of legislation affecting everything from agricultural subsidies to nutritional programmes for the poor. . . . The elderly accounted for much of last year’s improvement and, as a group, were better off than they were in 2001. By contrast, poverty rates for children and for adults of working age remained statistically unchanged from 2005 and higher than in 2001, when the last recession bottomed out. Overall, some 36.5 million people were deemed poor in 2006, about as many as in 2005, the census bureau said. AlterNet

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Our Black Year One Family’s Quest to Buy Black

in America’s Racially Divided Economy 

By Maggie Anderson

Maggie and John Anderson were successful African American professionals raising two daughters in a tony suburb of Chicago. But they felt uneasy over their good fortune. Most African Americans live in economically starved neighborhoods. Black wealth is about one tenth of white wealth, and black businesses lag behind businesses of all other racial groups in every measure of success. One problem is that black consumers—unlike consumers of other ethnicities—choose not to support black-owned businesses. At the same time, most of the businesses in their communities are owned by outsiders. On January 1, 2009 the Andersons embarked on a year-long public pledge to “buy black.” They thought that by taking a stand, the black community would be mobilized to exert its economic might. They thought that by exposing the issues, Americans of all races would see that economically empowering black neighborhoods benefits society as a whole.

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Scorched Earth: Legacies of Chemical Warfare in Vietnam

By Fred A. Wilcox  and  Introduction by Noam Chomsky

Scorched Earth is the first book to chronicle the effects of chemical warfare on the Vietnamese people and their environment, where, even today, more than 3 million people—including 500,000 children—are sick and dying from birth defects, cancer, and other illnesses that can be directly traced to Agent Orange/dioxin exposure. Weaving first-person accounts with original research, Vietnam War scholar Fred A. Wilcox examines long-term consequences for future generations, laying bare the ongoing monumental tragedy in Vietnam, and calls for the United States government to finally admit its role in chemical warfare in Vietnam. Wilcox also warns readers that unless we stop poisoning our air, food, and water supplies, the cancer epidemic in the United States and other countries will only worsen, and he urgently demands the chemical manufacturers of Agent Orange to compensate the victims of their greed and to stop using the Earth’s rivers, lakes, and oceans as toxic waste dumps.

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Civilization: The West and the Rest

By Niall Ferguson

The rise to global predominance of Western civilization is the single most important historical phenomenon of the past five hundred years. All over the world, an astonishing proportion of people now work for Western-style companies, study at Western-style universities, vote for Western-style governments, take Western medicines, wear Western clothes, and even work Western hours. Yet six hundred years ago the petty kingdoms of Western Europe seemed unlikely to achieve much more than perpetual internecine warfare. It was Ming China or Ottoman Turkey that had the look of world civilizations. How did the West overtake its Eastern rivals? And has the zenith of Western power now passed? In Civilization: The West and the Rest, bestselling author Niall Ferguson argues that, beginning in the fifteenth century, the West developed six powerful new concepts that the Rest lacked: competition, science, the rule of law, consumerism, modern medicine, and the work ethic. These were the “killer applications” that allowed the West to leap ahead of the Rest, opening global trade routes, exploiting newly discovered scientific laws, evolving a system of representative government, more than doubling life expectancy, unleashing the Industrial Revolution, and embracing a dynamic work ethic. Civilization shows just how fewer than a dozen Western empires came to control more than half of humanity and four fifths of the world economy.

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The White Masters of the World

From The World and Africa, 1965

By W. E. B. Du Bois

W. E. B. Du Bois’ Arraignment and Indictment of White Civilization (Fletcher)

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Ancient African Nations

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The Death of Emmett Till by Bob Dylan  The Lonesome Death of Hattie Carroll  Only a Pawn in Their Game

Rev. Jesse Lee Peterson Thanks America for Slavery

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The Journal of Negro History issues at Project Gutenberg

The Haitian Declaration of Independence 1804  / January 1, 1804 — The Founding of Haiti 

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posted 12 April 2008 




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