Bankruptcy

There Are Really Two Questions: 1) Which Side are the Democrats on? and 2) Which Side are the Labor Unions on?

dlindorff — Wed, 02 Sep 2009 16:03:30 -0400

By Dave Lindorff

It is refreshing to hear the new head of the AFL-CIO, former
mineworker and Mineworkers President Richard Trumka, get mad at
sell-out Democrats and make a threat not to “support” them next year.

As Trumka pointed out in a talk to the Center for American Progress
this week, for years, Democratic politicians, and the Democrats as a
Party, have counted on the labor movement to get out the vote of its
membership on Election Day, only to turn on workers after getting to
Washington, on the issues that really matter, like jobs-killing free
trade agreements, the gutting of bankruptcy law and credit law
protections, and, most recently, the undermining of needed labor law
reform.

Trumka, quoting from a famous Florence Reece mineworkers song popularized by Paul Robeson and Pete Seeger, said that going
forward, Democrats will have to make it clear to labor “Which side are
you on?”

But really, that’s only half the question. Reece, in her song,
was asking that question of workers themselves. And indeed, the reason
Democrats have become such traitors to working class interests in
recent decades is that the labor movement itself has not answered Reece’s musical question resolutely or honestly.

The hard reality is that, despite years of betrayal by Democratic
politicians and by the Democratic Party, labor unions have continued
year after year to answer the call to rally their ever diminishing
members during campaign seasons to go door to door doing the hard work
of rallying voters for ever more treacherous candidates, and to do
massive “get-out-the-vote” campaigns on Election Day, as they did this
past November to assure the election of solid Democratic majorities in
both houses of Congress and the election of President Barack Obama.
Labor has also donated princely sums collected from members to
Democratic candidates and to the Democratic National Committee.

And just as predictably, Congressional Democrats, and the new
president, have been betraying their labor base. After vowing to pass
the Employee Free Choice Act this year, which as written would have
ended years of weakening of labor’s right to organize unions by ending
the cumbersome requirement for “secret ballot” elections to establish
union representation, in favor of just obtaining signed cards
supporting a union from a majority of workers, Obama and the Democrats
in Congress caved in to pressure from the business lobby, and trashed
the bill. If it passes at all in its present form (which is pretty
iffy), it will leave secret ballot elections in place—a process which
managements have long ago figured out how to delay endlessly, and to
subvert, to the point that it is now next to impossible to unionize new
workplaces.

It’s fine to say, as Trumka is doing, that labor will no longer
support politicians who sell-out labor on its issues, but what good is
that really, if those politicians simply replace labor with more money
from business interests? It doesn’t help things that once the sell-outs
get elected, instead of attacking their betrayals, labor gets sucked
into compromises. Just look at health care “reform.” For decades, the
labor movement has advocated a single-payer approach, yet when
President Obama and the Democrats began putting together a health
“reform” package this spring, most of organized labor started backing
the pathetic “public option” plan, buying into Obama’s pre-emptive
compromise approach. Now health care reform appears to be pretty much a
dead letter. The same thing is happening to labor law reform, with
labor caving in and backing a weakened version of the EFCA.

The only way to really make Democrats stop these kinds of betrayals
is for labor to decide “which side it is on” and to actively oppose those who sell labor out.

Trumka, as head of the AFL-CIO, is in a position to make a
fundamental change in labor’s relationship with the Democratic Party.
He should announce plans to encourage the formation of a new labor
party, which would run its own candidates for office in key districts.
Labor, uniquely, is in a position to do this. It has the money and the
numbers to be able to easily get on the ballot in every state even by
as early as next year.

In some states, like New York, parties are able to cross list
candidates, so instead of just endorsing a Democratic candidate who
seemed to be supportive, a labor party could nominate that person as
its own candidate. Votes for the candidate could be made either on the
Democratic line, or the labor party line. But to get on the labor party
line, a candidate would have to be a genuine labor party candidate.
Failure to back labor once in office would mean no more labor party
line.

And in states where there is not such cross listing allowed,
running candidates on a labor party ticket would be a much bigger
threat to sell-out Democrats than just running candidates in the
Democratic Primary. And with good candidates, some labor party
candidates would certainly win their races, becoming a third force in
Congress.

The time is ripe for a labor party. Polls report that more and more
people are quitting the Republican and Democratic Parties in disgust.
They have no home at this point, and labor party would offer them that
home, which would accelerate the decline of the two major
parties—basically hollowed out husks that only manage to stand up
because they are stuffed with corporate swag.

So what’s the answer President Trumka? Which side are you on?
______________
DAVE LINDORFF is a Philadelphia-based journalist and long-time
labor writer and activist. A founder of the National Writers Union, he
also organized a labor union of food service workers at Sarah Lawrence
College and worked on the United Farmworkers Union grape boycott in New
York City. He is author of “The Case for Impeachment” (St. Martin’s
Press, 2006) and his work can be found at www.thiscantbehappening.net

Politicized Accounting: No End to the Scams

dlindorff — Tue, 07 Apr 2009 11:55:46 -0400

By Dave Lindorff

The accounting profession might seem like the last place that you’d
find serious political hanky-panky going on, and it’s probably not on
very many people’s A-list of fun subjects to read about, but the
Financial Accounting Standards Board, a quasi-governmental body that
has statutory authority to regulate and establish the rules by which
public companies, including banks, do their books, has just caved in to
pressure from those banks and from the large number of members of
Congress who pocket huge piles of campaign swag and perks from those
banks and other public companies, and gravely undermined the integrity
of corporate balance sheets.

This may sound incredibly arcane, but what the FASB has done is
declare that assets held by companies (including banks) on their books
will no longer have to be valued at their current market value. Under
new guidelines, effective retroactively to March 15, these assets can
now be valued at what the corporate managers think (or pretend to
think) they will be worth at some time in the future when they might
try to sell them.

Think about it for a minute. Say you own a house, which you might
have bought 10 years ago for $200,000, using a $180,000 mortgage.
Today, depending on where you live in the country, that house might be
worth as little as $100,000. If you still owe $100,000 on your
mortgage, that would give you a net worth of 0 (a lot more than what
Citibank and Bank of America are worth today). Now let’s say you want
to go out and buy a $20,000 car on credit. The auto dealer, before
extending you a car loan, will want to know what your net worth is.
Under market-to-market accounting rules, you would have to say that
your net worth is 0, and you probably wouldn’t get a loan—especially if
your employment, like that of many Americans, is iffy, and you’re
carrying a big balance on your credit cards. But under the new FASB
guidelines, if you were to be treated like a bank, you could estimate
the value of your house as $200,000 (the price you paid for it), or
perhaps even $250,000 (the price you “expect” it to get when you decide
to sell it). You have no real way of knowing whether your house will
ever return to being worth $200,000. For all you know, it could fall
further over the next five years to $75,000 or $50,000, but that
doesn’t matter. You, the owner, are saying that your “reasonable
expectation” is that this asset of yours is “worth” $200,000. And
bingo, thanks to the magic of modern FASB-approved accounting, your net
worth, instead of being 0, is now $100,000. You can buy your car.

This is what the FASB is now saying banks and other companies can do.

If you are an investor, or a potential investor, you now have to be
very wary. After all, how are you top establish what a company is
really worth, if the management is able to play games with the value of
its assets? The answer is you really can’t know. Things get much worse
when it comes specifically to banks, which after all, are all about the
assets.

Remember those “toxic” assets—the alphabet soup of debt products
with initials like CDO, CDS, SIV, all composed of diced and sliced debt
that for the most part is close to worthless? Well, thanks to the
FASB’s accommodating change in the rules, instead of valuing those debt
holdings (remember, loans are assets to a bank) at what they are worth
on the market today, the banks are now able to value them at what they
supposedly think they will be worth at some future date when the bank
might want to sell them. This is a wholly fictional figure, of course.
Nobody knows what, if anything, these crap debt instruments are going
to be worth, but it’s a fair bet that most of them won’t be worth any
more a decade hence than they are worth today (and maybe less). But who
cares? The important thing is that now the banks, who have huge black
holes in their balance sheets, can now fill those holes with
artificially inflated assets and make themselves look a whole lot
better financially than they really are.

There’s an irony here. The big banks that hold most of the toxic
debt (and especially the five largest banks that hold 96% of the
garbage) desperately wanted this FASB rule change because they wanted
to prettify their balance sheet in hopes of boosting their share values
and of maintaining the pretense that they are not zombies. But in doing
this, they are undermining a key goal of the Obama administration and
of Treasury Secretary Tim Geithner and Federal Reserve Chair Ben
Bernanke, who wanted to have the government and private investors start
buying those trillions of dollars’ worth of toxic assets off of the
banks’ hands.

Remember, if the banks declare that the toxic assets on their books
are worth some fictitious amount, they have to sell them at that price,
or stand accused of faking their books, i.e. fraud. But investors, like
hedge funds and other institutional investors, are not going to want to
buy those assets at anything but distressed bargain-basement prices,
because even with the government assuming 92 percent of the risk, they
are not going to buy these trash assets unless they see the chance for
a significant upside.

So with the new rule, the banks will end up being stuck holding the
very toxic assets that have sent them into a tailspin in the first
place.

The vote to end market-to-market accounting rules was controversial
even on the five-member FASB board, which ended up narrowly voting 3-2
in favor of the measure. One member who voted against the change,
Thomas Linsmeier, decried what he said was “pressure” on the board to
act. A House committee had threatened to introduce legislation that
would force the change if the FASB didn’t act on its own.

The US budget has long been a work of fiction. Now the books of the
nation’s banks and of many of its public companies will also be pure
works of fiction.

As columnist Jonathan Weil wrote in Bloomberg.com last month as the
FASB was considering making this change in its rules, “The FASB ought
to change its name to the Fraudulent Accounting Standards Board.”

The road to ruin, it turns out, is not paved with good intentions
after all. It is paved by powerful lobbyists buying short-term benefits
at the public’s expense.

By the way, if you think Citigroup is solvent, I have a great deal on a house for you.
________________________

DAVE LINDORFF is a journalist based in Philadelphia. His latest
book is “The Case for Impeachment” (St. Martin’s Press, 2006). His work
is available at www.thiscantbehappening.net

Treasury and the Fed Don't Need New Powers, They Need to Use the Power They Have

dlindorff — Tue, 24 Mar 2009 14:33:36 -0400

By Dave Lindorff

Wait a minute! Did I hear correctly? Did Treasury Secretary and
former New York Federal Reserve Bank screw-up Tim Geithner really tell
a House Financial Services Committee today that he needed “new powers”
to allow the federal government to take control of non-bank financial
corporations whose actions threaten the financial system or the economy
and “break them up”?

The subject under discussion at the hearing was AIG, and Geithner
and Fed Chairman Ben Bernanke, under attack for those AIG “bonus
payments” to executives, were trying to talk tough about the evil
insurance giant.

But aren’t the powers that Geithner is calling for exactly the
powers that he and Bernanke already have in the case of the banking
industry?

Yes they are.

So why aren’t we seeing the Obama administration and the Fed going
after the banking giants that have been co-conspirators with AIG in
wreaking havoc with the US and the global economy by creating dodgy
structured financial instruments that allowed banks and other financial
companies to make huge off-balance-sheet bets that virtually guaranteed
a future collapse?

Good question, but not one that the House Finance Committee was asking.

Instead of doing the obvious—which would be to use the Fed’s and
the Federal Deposit Insurance Corporation’s powers to take over failed
banking institutions, break them up, and sell the healthy parts off to
stronger institutions—Geithner, Bernanke and the Obama financial team
have been pouring dollars into a group of zombie banks that are already
technically insolvent by any honest accounting standards, and that have
no chance of standing on their own. They are borrowing money at such a
prodigious rate that the Chinese government, America’s major creditor,
and the United Nations, are talking about the need to do away with the
dollar as the global currency, to be replaced by some basket of
currencies, and in the process virtually assuring that the US currency
will shrink dramatically in value, They are putting a colossal debt
upon future generations of Americans. And they are putting at risk all
the progressive goals that voters sent Obama to Washington expecting
him to enact: health care reform, energy reform, education reform, etc.

If Geithner and Bernanke think it is important, and appropriate, to
break up dangerously large and threatening enterprises like AIG, why
are they not even talking about breaking up Citigroup, Bank of America,
Wells Fargo, Goldman Sachs and other overlarge large banking firms?

Too big to fail should simply mean too big to exist. It’s that simple.

Not one more dollar should be spent trying to rescue these zombie
banks. In fact, they should be ordered to give back the hundreds of
billions of dollars that were already poured into them, most of which
they have reportedly simply invested in Treasury notes, since there was
nobody creditworthy who wanted to borrow the money. Then the regulators
should move in and shut all the big banks down, and begin the process
of tearing them apart. Those parts that are deemed hopelessly in debt
because of huge holdings of Credit Default Swaps and other toxic
financial products should be shut down, with shareholders and
bondholders taking the hit. The healthy parts—the banks with all the
deposits—can be auctioned off in pieces to smaller state and regional
banks.

Never again should there be federal banks whose branches and
brokerage and insurance subsidiaries span the nation and the globe.

There is no need for such entities. For one thing, they are too
powerful politically, with operations in every congressional district,
much like the Pentagon and the arms industry, and we’ve seen where that
gets us. For another, particularly when it comes to insurance, the
regulators are state based, making national companies largely out of
reach. Finally, national banks have little or no interest in small
businesses and their credit needs.

If large global firms need bank loans, let the banks organize
syndications to accommodate them. That has always worked in the past,
and in fact, is still done for big global firms.

Geithner should be forced to explain why he needs new powers to
break up non-bank financial companies, if he is unwilling to use the
powers he already has to break up too-large banks.

Then he should be fired and someone should be brought in to replace him who will demand the breakup of those banks.

While we’re at it, President Obama should also be asked why his
Treasury Secretary needs “new powers” to go after companies like AIG
that are too large for the good of the country. That power already
resides in the Federal Trade Commission and the Justice Department,
both of which can use their anti-trust authority to break up companies
that are deemed anti-competitive—surely an apt characterization of AIG.

While average Americans all know that corporations have become far
big and too powerful, making the old Rockefeller Standard Oil Trust
look quaint by comparison, anti-trust in Washington has become almost a
dirty word. It needs to be dusted off and trotted out as a major policy
tool, if this country is to return to economic health.
_________________
DAVE LINDORFF is a Philadelphia-based journalist. His latest book
is “The Case for Impeachment” (St. Martin’s Press, 2006). His work is
available at www.thiscantbehappening.net

Obama Administration Careening Towards Disaster (and Taking the Country With It)

dlindorff — Sun, 22 Mar 2009 18:36:09 -0400

By Dave Lindorff

Six months after the failed Bush administration effort to "rescue"
the US financial system, and after two months of failed efforts by his
own new administration, at an expense to the American public of several
trillion dollars and counting, the Obama administration is announcing
plans to blow another $1 trillion in a massive taxpayer giveaway to
investors who will be subsidized in an effort to get them to buy the
so-called toxic assets on the books of the nation's biggest banks.

The problem with this plan is that its goal--getting these zombie banks to start lending again--is not going to work.

It doesn't matter how good the balance sheets of the banks are. Good
companies, and even individuals and families with good credit, are
simply not borrowing. As I wrote last month in the magazine Treasury and Risk,
the problem isn't that banks are too weak to lend (though the zombie
banks certainly are), it's that the strong banks don't want to throw
money at bad borrowers.

It is the nature of economic downturns like this current one that
companies and ordinary families don't borrow, but rather cut back on
their spending and try to reduce their debt, the better to ride out the
hard times. It is only the companies that are in trouble, like General
Motors, Ford and Chrysler, that are looking for loans, and no bank is
going to want to lend to them regardless of how much money the
government pumps into it. (And if the public decides that it is in the
national interest to prop up such companies, it is much more effective
to have the government loan them the money directly, rather than try to
get banks to lend it to them at much higher interest.)

What this means is that all the Obama administration, the US
Treasury and the Federal Reserve are doing by buying the toxic assets
off the books of banks like Citigroup, Bank America or Wells Fargo is
giving a taxpayer handout to those banks' investors and
bondholders--the very people who enabled those companies to invest in
the corrupt credit default swaps and other shady derivatives in the
first place.

What should happen? Citibank, Bank of America, Goldman Sachs, and
the other financial institutions that made bad bets on these structured
financial instruments, should be allowed to fail, taking with them the
investors who played this dirty game, and the managers who decided to
gamble instead of run conservative banking operations.

The government would protect the assets of depositors in those
failed banks, which would be sold to healthier, better run banks,
making those banks much stronger and better capitalized in the
process--and thus ready to start lending as needed. This is standard
operating procedure for the Federal Deposit Insurance Corp.

Note that this process would mean no crisis in the economy, since
the ability to access credit would not be crimped in the least by the
failure of some of the country's larger banks. It would, in fact,
probably be enhanced.

The toxic assets would be eliminated through the bankruptcies, and
the government--and taxpayers--would be $1 trillion less in the red.

Why isn't the Obama administration doing this? Because Obama has put
his trust in the advice of men--Treasury Secretary Tim Geithner, Chief
Economic Advisor Larry Summers, and, informally, former Clinton
Treasurer Robert Rubin, all linked to the investment bank Goldman
Sachs, which was also the corporate home of Bush Treasury Secretary
Henry Paulson. The same Goldman Sachs which was given $10 billion in
Troubled Assets Relief Program funds directly, and which then snagged
another $13 billion in TARP funds in secret, which was laundered
through the now-government-owned insurance company AIG.

It should be clear at this point that the Goldman cabal burrowed
deep inside the Washington apparatus is working not to rescue the US
economy, but rather to ensure the survival and enrichment of the big
banking establishment, and of course Goldman Sachs.

What we are witnessing in the policies of the Obama administration
is not the creative experimentation of a modern-day Franklin Roosevelt,
but rather the greatest heist in the history of mankind, as trillions
of dollars in public funds are shifted from taxpayers' pockets into the
hands of the very banks and bankers and bank investors who brought us
this financial debacle.

Instead of decrying the bonus payments to AIG executives, the
American public should be demanding the indictment of Paulson, Summers,
Geithner and Co. for IGL: Incomprehensibly Grand Larceny.

Instead of trying to rescue the nation's giant banks, we should be demanding that they be shattered into little harmless pieces.

Come to think of it, maybe it's time for a run on the banks--not
because your money is not safe at Chase or Citibank or B of A, but
because these institutions need to be killed off for the good of the
nation.

If you have an account at any national bank, go there tomorrow and
take it out. Transfer it to a local bank in your community. You'll get
better service, your money will still be just as safe, and you won't be
propping up institutions that have been stealing the country blind.
_____________
DAVE LINDORFF is a Philadelphia-based journalist and columnist. His
latest book is "The Case for Impeachment" (St. Martin's Press, 2006 and
now available in paperback from www.thiscantbehappening.net). His work is available at www.thiscantbehappening.net

Who's Calling the Shots Now: The Death of American Empire

dlindorff — Tue, 17 Mar 2009 15:59:11 -0400

By Dave Lindorff

It may not be obvious today, and certainly it’s not how the corporate media reported it, but future historians are likely to look back at March 13, 2009 as the day that American imperialism began it’s inexorable decline. That’s the day that Chinese Premier Wen Jiabao announced that his country was “worried” about its holdings of over $1 trillion in US treasury securities, and warned that he wanted the US to assure China that it would maintain its good credit and “honor its promises” and “maintain the safety of China’s assets.”

There is no way that the US can accommodate Premier Wen and still finance and operate a global military system with over 1000 overseas bases, massive aircraft carrier battle groups, and with hundreds of thousands of men and women armed to the teeth with the latest high-tech military hardware, not to mention fight endless wars on the far side of the globe.

What China is doing is pulling the rug out from under America’s six decades of global military dominance. It is no coincidence that the weekend before Wen’s statement, Chinese naval vessels aggressively harassed a US intelligence ship, the Impeccable, that was operating in the South China Sea.

The implied threat in Wen’s seemingly mild comment was that if the US doesn’t trim its deficit spending dramatically, and get its economic house in order—which means dramatically reducing the American standard of living, and reducing wasteful spending of its military, China will simply cut back on its funding of the US deficit, in the form of buying US Treasury issues, an act which would cause the collapse of the US dollar and what’s left of the US economy.

Now this decline of the US as an economic and military power is not going to be an overnight thing, because China needs to keep selling manufactured goods to the US market—the largest in the world—and in order to do that, it needs to keep recycling dollars spent on Chinese goods back into the US, which to date has meant buying US debt issues.

But there are other ways to recycle dollars back to the US, most notably by investing in actual US assets. To date, China has done this cautiously, in part to avoid arousing political concern in the US. Typically China, when it has purchased shares of US companies, has done so by buying small minority stakes, as it did in the case of the Blackstone Group, a private equity investment firm. But if China were to decide to stop funding America’s massive deficit, this could change. It could decide to just let the dollar slide, and take advantage of the slumping value of US assets to start buying the US up on the cheap.

There is already talk of Chinese auto companies buying up General Motors and Chrysler, and why not? They could have those companies, not to mention most of the national banks, for a song now. But China wouldn’t have to limit itself—nor would it—to buying up dying companies. It could also buy entities like General Electric, Boeing and IBM, or it could buy agricultural assets and mines—or oil companies and oil reserves.

In fact, China has been using its vast trade-surplus-fueled currency reserves of dollars and Euros to lock up at cheap prices on long forward contracts for oil and other critical commodities. This is just the beginning. (It would be ironic and incredibly foolish if the US, which has spent several hundred billion dollars in borrowed money, and as much as $3 trillion if interest costs are factored in, on conquering and controlling Iraq, really did so to gain control of oil, since China has accomplished the same thing peacefully for a small fraction of that cost, by just buying forward supply contracts.)

It is likely that India, whose economy is doing even better than China these days, will do much the same thing.

The end result will be a vast permanent weakening of America, as its economy becomes increasingly subservient to the interests of its new owners.

There is a delicious irony here, since the US, for decades, has done precisely this kind of thing around the world to developing nations, buying up their industries and their resources, and manipulating and controlling their political systems, to its own advantage, always with the backing, or threatened use, of America’s powerful military. Now the once-might US (remember Dick Cheney’s “world’s lone superpower” and George H.W. Bush’s “New World Order”?) is reduced to pleading with China to leave its warships alone, and to shamelessly begging, as Hillary Clinton did in one of her first public statements as secretary of state, for China to “keep buying” US Treasuries.

From the point of view of the majority of the world’s people, who have lived for too long under the American jackboot, this is all a good thing. But forcing the new “Rome” to retreat back within its own borders will also be good for us Americans, who have had to pay for all those military adventures in the name of empire and corporate profits over the years with our blood and taxes.

The problem, for us, however, is that all this military and economic comeuppance will also be accompanied by a dose of reality about our own real living standard. As long as China, India and the oil-producing states were willing to just keep buying American government securities to finance our multi-generational spending binge, it was possible for the US government to keep us citizens all fat and happy by creating a series of bubble economies, pushing up our salaries and the value of our homes to absurd levels, while interest rates remained comfortably low and the US dollar, as the world’s reserve currency, remained strong enough for us to continue to buy goods, the production of which was increasingly being moved overseas.

Suddenly, however, in one brief speech, Chinese Premier Wen has made it clear that the US is no longer calling the shots. Nobody’s saying it out loud here in America, but behind the scenes, it’s clear that increasingly US economic policy is going henceforth to be dictated by governments in places like Bejing, Tokyo, New Delhi and Brazilia. Those same places will also increasingly be telling us where and even if we can use our once mighty military forces.

Given our post-WWII history, that can’t be a bad thing.
_______________________
DAVE LINDORFF is a Philadelphia-based journalist. He spent five years reporting on China and Hong Kong for Business Week magazine in the 1990s and is author, most recently, of “The Case for Impeachment” (St. Martin’s Press, 2006 and now available in paperback). His work is available at www.thiscantbehappening.net

Kiss the Banks Goodbye and Refocus on Rebuilding the American People

dlindorff — Wed, 04 Mar 2009 16:46:19 -0500

By Dave Lindorff

The futility and stupidity of the Fed’s and the Obama
administration’s policy of pumping ever more money into failing banks
and insurance companies in a vain effort to get them lending again was
demonstrated—if anyone was paying attention—by the collapse in auto
sales this past month, with all the leading companies, Ford, GM and
Toyota, reporting sales down by about 40%.

This fall off in car buying was despite record discounting by the auto industry, and offers of 0% financing.

Clearly, obtaining financing is not the reason people are not buying cars.

People are not buying cars because they are worried about having a job to enable them to pay back the loan.

It’s the same reason people aren’t buying houses. It’s not that you
cannot get a mortgage. There are plenty of smaller banks that would be
happy to lend money to buy a house these days. But who’s going to go
out and buy a house in this economy? First of all, to buy a house,
unless you are a first-time buyer, you have to sell your current house,
but that would mean taking a huge loss. Indeed, one in five homes in
America today is technically “underwater”—that is, it is worth less
than the outstanding mortgage on the property. Probably another one in
five are worth little more than the outstanding mortgage. No one would
sell a house under either such circumstance.

The point here is that if people aren’t willing to spend money,
then what good is it to give more money to banks and their
shareholders, in hopes that they will start lending it? The lending
business has two sides—those offering to make a loan, and those wanting
to borrow. If there’s no borrower, no amount of money available for
lending is going to change the fact that there will be no loans written.

Commercial lending is not that different in this regard. Companies
generally borrow money to expand. You don’t need to borrow money when
your business is shrinking, unless it is to try and stave off collapse.
What a company does when its markets contract and its sales and
earnings fall is it cuts back on production and lays off workers. It
doesn’t need to borrow money to do this. Of course, if sales collapse
too fast, the company could be caught owing back wages to workers.
That’s true. And in that case, a company might want to borrow in order
to meet its obligations, but that’s hardly the kind of loan a bank
would want to make—to a dying enterprise unable to meet payroll.

Business borrows when it is expanding, because that’s a great
investment. If you know that you can earn a 15% return on your
investment in a period of economic growth, and you can borrow money for
expanded production at 4%, that’s a great deal. It’s also a great deal
for the bank, since lending to a company that is expanding is a pretty
low-risk proposition. The central government wouldn’t have to press
banks to lend to such companies. The banks would do it on their own.

So, with the economy still in free fall, with companies laying off
American workers at a rate of over 20,000 per day, with real
unemployment soaring past 18 percent—one in six American workers are
now either out of work and looking for a job, out of work and giving up
looking, or involuntarily working part-time—and with family wealth more
than 50% eroded away, there is simply no way that Americans are going
to turn around and start borrowing and spending again. And given that
the American economy is 72% composed of consumer spending, there is no
way that the economy is bouncing back anytime soon.

That means that the hundreds of billions of dollars that are being
poured into the likes of Citibank and AIG are being completely wasted.
It is simply a pointless and scandalous transfer or wealth from the
American public to the shareholders of these companies—the very
companies and people who caused this catastrophe in the first place.

It’s time to put a stop to this farce.

Restoring the American economy is not going to be a matter of
simply jump-starting consumer spending, or even business investment.
It’s going to take a long, hard, focused effort to move away from a
parasitic consumer economy in which profits are largely made through
speculation, and towards a real economy that actually makes things that
people both here and around the world need.

The sooner this truth is recognized, the more resources the
government will still have left to put into the kind of investments
that can help make that happen—things like job creation, income
supports, home refinancings and medical system reform that could help
Americans get back on their feet. Of course, it would also be necessary
to end the wars overseas and to dramatically slash military spending.

When former companies like Citicorp and AIG are history, and when
former Lehman Brothers, Citibank and AIG managers, as well as most of
the Pentagon Brass, are out working at civilian conservation corps
camps helping to restore watersheds or replant forests, we will know
that the government has finally “gotten” it.

DAVE LINDORFF is a Philadelphia-based journalist. His latest work is
“The Case for Impeachment” (St. Martin’s Press, 2006). His work is
available at www.thiscantbehappening.net

Obama's Address: Smooth? Yes. Transformative? No.

dlindorff — Wed, 25 Feb 2009 18:34:32 -0500

By Dave Lindorff

Barack Obama’s first address to Congress provided Americans with
yet another example of competent speechmaking, and I suppose, given
that we’ve just endured eight painful years of oratorical farce, being
able to listen to your president without wincing is something.

The problem is that the way forward proposed by the president as
laid out in this address was almost always half-hearted, wrong-headed
or doomed.

Obama declared at the outset of his address that the economic
crisis was the major issue confronting the country, and while one could
argue that this crisis is merely a symptom of much bigger issues, like
the nearly completed deindustrialization of the nation, the death grip
of militarism, and the growing political power of corporations, one
could also concede that there is an urgent need to deal with the
deepening recession.

But clearly, the proposals offered by the president for tackling
the crisis are not up to the task. He spoke primarily of the need to
“get banks lending” again, explaining that this would require pouring
still more hundreds of billions of dollars into these failing
institutions. You’d think that with a whole stable of bankers at his
elbow, the president would by now have heard from at least someone that
this is nonsense, but apparently not. Nobody in the White House or the
Cabinet seems to want to point out to the boss that the reason banks
aren’t lending is because most people—and companies—aren’t interested
in borrowing. The economy is tanking and assets are sinking in value by
the day. Why would anyone want to borrow to invest in such an economy?
Furthermore, even if someone did? want to borrow, banks will
not want to lend unless they think there’s a reasonable prospect of
having the money repaid. That means they want to see income, they want
to see a full order book, they want to see, in the case of a mortgage,
an asset that is fairly valued. None of this exists.

That’s why the first $350 billion that was given to the banks last
fall was simply pissed away and lost, not lent out, and it’s why the
same thing is likely to happen to the next $350 billion Obama is
preparing to give away. It won’t matter if he establishes a monitoring
system for the second tranch of the Troubled Assets Relief Program
bailout funds, or a mandate that they be used for making loans.

What is needed to fix this crisis is job security, and the only way
to create that is by creating jobs. Obama talks of creating 3-3.5
million jobs, but most of these won’t even be created, even in smaller
numbers, until the end of this year, by which time the official rate of
unemployment could be above 9%, and the real unemployment rate above
20% (that would be including people who’ve given up looking for work,
or who are involuntarily working part time).

If the president really wanted to kick-start the economy, he would
have announced a massive government program to directly hire the
unemployed, by both the federal government and state and local
governments (through block grants to the states), which would put
people to work right now as teachers’ aides, park workers, school
crossing guards, library assistants, companions for the elderly, city
and rural clean-up crews, housing renovation project workers, mural
painters, etc. If he wanted to get really creative, he could establish
teams of people, working under skilled contractor supervisors, to serve
as an army of disaster relief workers, who could speed to the scene of
future disasters to help local residents rebuild. Millions of
out-of-work people could be put productively to work with far fewer
dollars than what is about to be shoveled out to contractors to
construct or repair bridges and highways a year from now or more.

But that’s just the start of the problem with Tuesday’s address to
Congress. Obama then turned to what he said were the nation’s three
great challenges—energy, health care and education. He’s right that
these are all serious problems, but his solutions are not up to the
challenge.

On energy, he proposed spending $15 billion on research and
development and for programs to improve efficiency. If he really wanted
to reduce US reliance on foreign energy, and to significantly reduce US
greenhouse gas emissions, though, instead of funneling money to huge
corporations and utilities, he would have called for a major national
program, through tax credits, to subsidize the retrofitting of homes
with geothermal heating systems. These systems, which use the earth’s
internal heat to warm water, can reduce the use of oil for home heating
to zero, could be installed for as little as $10,000 per home on
average if done in volume, and would pay for themselves over time. A
federal tax credit of $5000 would probably be enough to convince many
homeowners to do it, and the work would provide endless numbers of jobs
across the country to plumbers and plumbers’ helpers and well drillers,
besides massively reducing reliance on fossil fuels. Heck, he could
kill two birds by calling for a massive training program to train
unemployed people to do geothermal conversion work. Credits could also
be offered to massively expand the installation of home rooftop solar
water heaters, again a major potential source of employment for
laid-off workers.

Obama’s health care plans, as they’ve been explained, are a recipe
for failure. There is no way that this nation’s health care cost and
access problems can be solved that includes the insurance industry as a
part of it. The key to solving them is having the government become the
paymaster, as every other modern society in the world has long since
realized. While Obama was whizzing through Canada, he should have
stopped at a local Canadian health clinic and asked the locals how they
like their health care system. He would have gotten an earful! There is
no need for him to convent meetings of “business and labor, experts and
health providers” to figure out what to do. Instead of trying to
reinvent the wheel, he need only ask some Canadian health officials to
come down and set up a version of their system here. For that matter,
he could ask the executives at Canadian subsidiaries of US companies
operating in Canada—they love the Canadian health care system too!

Finally, on education, the president missed the point. It’s true
that education in the US is a disgrace, that it is grossly unequal in
both availability and quality depending upon the race and class of the
local students, and that the educational standard of the nation as a
whole is in decline. But simply pouring money into schools and into
college loan programs won’t solve all this. One answer is to end the
crazy idea of having local government be the primary source of funding
for education. A second problem is that Americans have been discovering
that getting an education is no ticket to success. Jobs are being
shipped overseas so fast these days—including good jobs like
engineering and math, and lately even law—that it makes no sense for
students to borrow a king’s ransom to pay tuition and learn a trade. If
they’re lucky people who earn a PhD in physics may end up managing a
Burger King outlet. Worse yet, those Americans who decide to pursue
education for reasons of passion rather than earning potential are also
often dismayed to learn that subjects like literature, art, music and
other “soft” subjects are not valued at all in our crass, commercial
society. In China, talented students fight to enroll in state-run
conservatories to study the arts. In Taiwan, the government just opened
a striking new high school and university of the arts. In Europe,
students study musical instruments as part of their state curriculum.
Here in the US, meanwhile, school districts are killing off their art
and music programs, and focusing on the “Three Rs” (forget creative
writing). Even history gets short shrift.

If the president wants to revive education, he should stop talking
about it as a job-training program, and start talking about it as the
essence of a civilization. Instead of men in uniform being honored in
the Capitol peanut gallery during his speech, or at least along with
them, he should have invited some teachers so he could ask them to
stand up and take a round of applause. (Even Connecticut Senator Joe
Lieberman, the turncoat Democrat who backed Obama’s opponent John
McCain last fall, and who looked like he was sucking on a lemon as the
president spoke, would have had to clap then.)

Finally, of course, there were the wars in Iraq and Afghanistan.
And here Obama was particularly disappointing, though this was no
surprise. He promised have most US troops out of Iraq by August
2010—but not all. US forces will continue to be there, fighting and
supporting fighting, indefinitely. Meanwhile, instead of coming home,
many American soldiers will simply be moved to Afghanistan, where Obama
is expanding the war, with plans likely to have 60,000 troops there by
this summer, and no doubt far more by the time Iraq has (hopefully)
wound down. If the president thinks he is going to help cut the federal
deficit by ending the war in Iraq, as he claimed in his address, he
doesn’t know much about accounting. The War in Afghanistan will
certainly eat up any savings he gets out of Iraq, particularly if it
leads to a wider conflict in Pakistan.

It was finally, both tragic and ironic that the most forcefully
delivered line of the evening was shamelessly and without citation
lifted by the president from his predecessor. His assertion that "The
United States of America does not torture" was a repeat of an identical
statement made by President George W. Bush, and since Obama has merely
told the military to abide by the military field manual in that regard,
and has declined to prosecute the torture crimes of the past
administration, it is just about as empty.

No amount of smooth talking gets around it: this was not the program of a “transformative” presidency.
________________
DAVE LINDORFF is a Philadelphia-based journalist and columnist. His
latest book is “The Case for Impeachment” (St. Martin’s Press, 2006 and
now available in paperback). His work is available at www.thiscantbehappening.net

Whatever Happened to Antitrust?

dlindorff — Tue, 17 Feb 2009 15:12:38 -0500

By Dave Lindorff

Now here’s a word you’re not hearing in America these days: anti-trust.

The country is being dragged down by monstrous businesses, all of
which, we’re told, are just “too big to fail.” As a consequence of
this, the nation’s taxpayers, and their progeny born and yet unborn,
are having trillions of dollars sucked away to prop up these giant
rotting corporate corpses.

Zombie banks, zombie automakers, zombie insurance companies, all bigger than nation states, and all on life-support.

There is a simple answer to this problem. Bust them up.

Looking at the nation’s largest banks—Bank of America, Citicorp, JP
Morgan Chase, Wells Fargo and others—it’s clear that some parts of them
are functional. They have, for example, massive deposits. They also
have massive debts, many of these toxic and pretty much worthless.
Instead of bailing these failed institutions out, which is not going to
work anyhow, and which only delays and makes more costly the final day
of reckoning, the answer is to have the government carve out the
profitable banking parts of these financial institutions, and set them
up as free-standing banks, and then let the rest of the carcass of each
bank go down the tubes, taking gullible shareholders and bondholders
with them.

Then the remaining banks left from this process should be broken up by anti-trust actions into regional or even state entities.

There is simply no need for national banks. Such institutions are a
disaster for smaller companies and individuals, since they are only
really interested in lending to big national or multinational
companies. I remember years ago, back in the early 1980s, when bank
consolidation was just getting underway, how Citibank began adding fees
to its checking services simply because it wanted to drive away small
customers. It was an indication of what was coming. Screw the little
guy.

It doesn’t matter to large companies if there are no national banks.
When they want a big loan, they simply arrange for a syndicate of
smaller regional banks to put a package together. That is the way
things used to be done, and it can be done again.

Insurance companies too should be broken up. It is ridiculous to
have companies the size of AIG or Aetna or Prudential, any of whose
failures can threaten the global economy. Again, there is simply no
rationale for the existence of such mega-corporations. Insurance
companies have ways of sharing risk through reinsurers, so that smaller
companies are no more vulnerable to disaster than larger firms. They
may, in fact, be less vulnerable, since their managers will be closer
to their customers and probably more careful about what they insure and
what they invest in.

Finally, let’s look at what used to be called “Detroit.” In its
heyday, there were many more car companies than simply three. There
were American Motors, Hudson, Packard, and Studebaker, there was Mack
Trucks. Then we had a wave of consolidation and bankruptcy. In the end,
several companies—Ford, GM and Chrysler—won the day, but not because
they had better products. Rather, they were bigger, and had bigger
marketing budgets and more extensive dealership networks. Unable to
compete, good companies went bust.

As the number of car companies dwindled, so did the need to
innovate. With Chrysler just a shadow of its former self, there are
really only two domestic carmakers today, and they have spent much more
time and money using their political clout to block efforts in Congress
to force them to make better, more efficient and more socially
responsible products, than they have devoted to actually competing in
the marketplace. They have become “too big to fail.”

So now we’re being asked to bail them out to the tune of tens of
billions, and ultimately probably hundreds of billions of dollars.

Okay, I’m willing to agree that it is a good idea for the US to
have a domestic car industry, but there is no reason why it should
consist or two or three giant companies.

Let’s break these companies up into smaller enterprises, each
making one nameplate, and let them compete. With smaller, nimbler car
companies, we would see quality electric cars at affordable prices in
no time, and gas mileage would soar.

While we’re at it, let’s not stop there. The Federal Trade
Commission and the Justice Department should conduct a broad study of
the US economy, looking at every industry, with an eye to busting up
every company that is deemed “too big to fail” because of the impact
such a failure could have on the broader economy.

“Too big to fail” should mean “too big to exist.” It’s not just
that giant companies put the economy at risk. Their size makes them way
too powerful economically and politically, too. (Just look at how
Microsoft, a company that has a mediocre product line, has been able to
succeed in killing off its competition not by making a better
mousetrap, but by simply crushing or buying up those firms that do make
better ones.) Politically, breaking up mega companies prevents such
monopolistic behavior. It also creates more diversity of interest
within each industry, thus providing openings for other political
groups—like trade unions, environmentalists, etc.-- to play companies
off against each other on particular issues.

While we're at it, let's also break up the huge companies that dominate three crucial sectors of the economy, to the detriment of the public good: energy, the media and the military. Does anyone doubt that the phenomenal rise in energy prices we have been experiencing is related directly to the mergers that have occurred over the last decade in the energy industry? Or that America's endless wars, and its military budget--now equal in size to that of all other military budgets in the world combined--are a direct result of the dominance of several giant military companies--GE, Westinghouse, Boeing, Northrop-Grumman and Raytheon? Finally, if it weren't for all those media mergers, we wouldn't have newspapers closing down all over the place, and we wouldn't have the homogenized, sanitized network news we're stuck with now, either.

The tools are already at hand to tear all these anti-democratic,
anti-social and uneconomic corporate monstrosities apart. So let’s fire
up the legal chainsaws and start cutting them down to size. Instead of
bailout, we need to start hearing the word anti-trust in Washington.
____________
DAVE LINDORFF is a Philadelphia-based journalist. His latest book
is "The Case for Impeachment" (St. Martin's Press, 2006 and now
available in paperback). His work is available at www.thiscantbehappening.net

Workers of America: Wake Up! We All Need a Union!

dlindorff — Wed, 10 Dec 2008 08:07:26 -0500

By Dave Lindorff

` We workers of America, white collar, pink collar, blue collar, and
no collar at all, have just gotten a wonderful example of the power of
having a union. It’s an example that should have every unorganized
employee in America looking for a union organizer.

With the recession deepening, it’s clear that major layoffs are in
store, and that employers are going to be putting the squeeze on
employees, even if they don’t drop them. Individually, workers have
little leverage in such a situation.

Look what happened to the workers at Chicago-based Republic Windows
and Doors. The company was losing business, and according to some of
its employees, had been in recent weeks secretly moving some heavy
equipment out of the plant, possibly in preparation for relocation to
some lower-wage location. Then its bank, Bank of America, one of the
nation’s largest financial institutions, and a recent recipient of $25
billion in federal bailout funds from the US Treasury and the Federal
Reserve Bank, informed the company that it would not supply credit for
the firm to meet payroll. The workers were told by management that the
plant would be shut down in three days.

At many companies across America, such news would be met by groans
and tears, but by little else. What can an employee do when the boss
says the company is closing its doors? Well, Republic’s workers,
members of the United Electrical Workers union, didn’t take the news
lying down. They took it sitting down…on the factory floor.

The company’s 300 workers quickly organized a round-the-clock
sit-in occupation of the plant, vowing to stay until they got the 60
days notice that the law requires in the event of relocations. They
also demanded that they be paid accrued vacation pay, which the company
had said would be lost.

Bank of America was initially unmoved, but the workers began a
national publicity campaign that was leading to protests at B of A
offices across the country (one was planned for tomorrow here in
Philadelphia). Boycotts were also being organized of the bank.

Then this afternoon, Bank of America folded, announcing that in the
face of all the protests and the bad publicity, which focused much on
the fact that the bank that was refusing to lend to a troubled American
manufacturing firm had just received $25 billion from taxpayers that
was intended to “unfreeze” credit at the banks, it would after all
extend credit to Republic Windows and Doors.

This is a happy ending story for the workers at Republic, who will
at least get paychecks through the holidays, even if the future of
their company remains iffy.

But more importantly, it is a powerful message to America’s
workers: united we can win. Divided and unorganized, we are going to be
trampled.

There is a second message here too. Americans across the nation
need to contact their congressional representatives and senators, and
President-Elect Barack Obama (who backed the workers at Republic), and
demand that as one of the first acts of the new Congress, they pass
into law the Employee Free Choice Act—a labor law reform that would end
the ability of employers to stall off union elections for years, and to
refuse to bargain a first contract with a new union. The act, which
Obama, during his campaign, vowed to support, as did nearly all
Democratic candidates for Congress, would require employers to accept
the certification of a union whenever a majority of workers at a
workplace signed cards saying they want a union, and would require them
to negotiate and reach a first contract within 90 days.

Such an act would finally restore some semblance of fairness into
the union organizing process, which has been skewed over the last 40-50
years to be almost impossibly in management’s favor. Little wonder that
union membership in the private sector has fallen to below 9% (from
over 30% back in the early 1950s), even as polls repeatedly show that a
majority of Americans would want to have a union at their job if they
could get one.

The Republic Windows and Doors victory is a victory for all workers
in America, and is a clarion call for more unions everywhere.

Let’s get to work and organize.

__________________
DAVE LINDORFF is a Philadelphia-based journalist. His latest book
is “The Case for Impeachment” (St. Martin’s Press, 2006 and now
available in paperback). His work is available at www.thiscantbehappening.net

A Car Dealer Explains Why the Bailout is a Raw Deal

dlindorff — Sun, 07 Dec 2008 11:52:05 -0500

By Dave Lindorff

A brief conversation I had earlier this week with a car dealership
executive while standing in a post office line demonstrated simply both
why the bank deregulation and consolidation process of the past two
decades has been a screw job for ordinary people, and why the
Washington bailout has been both a taxpayer rip-off and a failure (if
it was even intended to work!).

I was chatting with the guy standing behind me who works at one of
the 14 dealerships in a Philadelphia-area regional family-owned chain
of GM dealerships called Bergey’s. Noting that a number of big dealers
like Knopf (a Chrysler Dealer) and McGarrity’s (Ford) had been closing,
I asked this Bergey’s manager if the problem was that the banks had
frozen lending, making it hard for people to buy new cars.

He laughed. “There’s no problem getting car loans from the small
community banks around our dealerships,” he said. “They’ve got plenty
of money to lend, and they’re happy to lend it to car buyers. The
problem is that people are too worried about the economy and about
their jobs to go out and buy a new car.”

And that’s it in a nutshell. The so-called “credit freeze” is a
problem afflicting the giant national and global banks, like Citibank
and B of A, which went on a tear with all of those derivative
investments and loans, like CDOs and subprime mortgages, and which have
been pushing credit on consumers with usurious rates that could only
lead to default eventually. Most smaller community banks, many of them
family owned or privately held, credit unions, and S&Ls (which were
suitably chastened by their own disastrous scandals of two decades
ago), have been lending responsibly and are fully solvent and happy to
extend credit to people who are credit-worthy.

The big banks may be technically insolvent, and in desperate need of
federal bailouts lest they go under and leave their investors holding
the empty bag, but the small banks that serve most of the nation’s
ordinary folks have a different problem. They themselves aren’t
insolvent, but their clients are—or at least they are worried that they
might become that way.

That’s why they aren’t buying houses and seeking mortgages, and it’s why they aren’t buying cars.

What’s needed, clearly, is not money for the big commercial banks
that got greedy and ran into a ditch. It’s support for the American
people, so that they don’t have to hunker down into a crouch and not
continue to participate in the economy.

When you see foreclosed signs going up along your own street, it
makes you start worrying about making your own mortgage payments. When
one in eight people are losing their jobs, just about everyone with a
job starts to have friends and relatives who are out of work, and that
paycheck starts to seem pretty precarious.

The hundreds of billions of dollars paid to and invested in big
commercial banks that don’t do much for the little guy anyway is doing
nothing at all to ease that pain and anxiety among the grassroots.
Instead, it’s just being pocketed by bank managers and rich investors,
to be put to a “higher” use somewhere else than on a depressed “Main
Street.” (Note that the government has put no strings on the money,
much of which is being used to buy other banks, or even to lend
overseas.)

That’s why all those car dealerships are folding.

This brings me to that feeding frenzy of bank deregulation I
mentioned earlier. The whole idea of allowing the creation of national
banks like Citibank and Bank of America and Wells Fargo, and of going
one step further and allowing banks to merge with brokerages and
insurance companies, which began in earnest during the Clinton
administration and went ballistic in the Bush administration, was
deceptively marketed to the public as being “good for the consumer.”
The come-on was that by allowing state and regional banks to merge into
national institutions, and by allowing them to add investment banking
and insurance operations, consumers would get more services from their
bank and have the supposed "advantage" of “one-stop shopping” at their
bank.

Anyone who watched it happen, however, saw how bogus that claim was.
I lived in New York City as it was going on, and as banks like Citibank
bought up their competitors, fees began to appear for services that had
no fees before, like checking and even passbook savings, savings
accounts began to require minimum deposits, CD interest rates fell as
penalties proliferated, and small loans became harder to get. Some
banks actually began to state, at least to analysts and to reporters in
the financial press, that they were no longer interested in serving
“small” clients, and were instituting measures designed to discourage
them or drive existing small clients away.

Soon, it was impossible in many neighborhoods of New York to find a bank to serve ordinary people.

As a matter of fact, these big banks don’t even help when it comes
to “big bank”-type stuff. Consider international finance activities
like foreign currency exchange. When my wife, a harpsichordist, came
home last week from a month-long tour of performances in China, Taiwan,
Hong Kong and Macau, she had with her $1000 worth of Taiwanese
currency—the fee for a gig that she had not had time to change into US
currency while in Taiwan or Hong Kong, where such transactions are
commonplace and inexpensive. Back in Philadelphia, we called around to
the big commercial banks—all global institutions—to see if they could
change the money. They could, but at absurd cost. Take Citibank. That
institution said it would only change up to $700 worth of bills unless
my wife had an account with them, and in any event, it was offering a
rate of 39.5 Taiwanese dollars to one US dollar—way worse than the
posted rate that day of 33.5/1. In other words, they were willing to
change up to $700 worth of currency, but at a cost of 18%, plus a $10
fee! That means they’re making 35% on a two-way conversion of currency!
Thanks a lot! The other banks were no better.

Want another example. Bank of America was a big recipient of taxpayer
funded bailout money from the US Treasury and the Federal Reserve Bank.
But it has refused to lend money to Republic Windows & Doors Co., a
factory in Chicago, that has been forced to close and lay off its 300
workers with only three days' notice, foregoing the legally required
60-days' pay and earned vacation pay. This is a story that will be
repeated more and more. At Republic, the workers, members of the United Electrical Workers union, are fighting back with a sit-down strike
demanding their money. If you want to support them, go to:
Union Voice Campaign

It’s all been a scam, and now we’re seeing the result: banks have
become so huge and their tentacles have been allowed to reach into so
many parts of the economy, that all of the national ones are deemed
“too big to fail.” Hence the outrageous bailout, which now has the
government pledged to back over $8 trillion in bank debts. (We’re
talking about a government, remember, that is itself was already
technically insolvent).

So back to my car d
ealer in the post office line. “We’re not going to see things get
better until people are confident enough in their incomes to invest in
a new car,” he said.

How will we get there? Certainly not by keeping Citibank or B of A
afloat. Those big banks should all be busted up, with the fragments
left to compete, and to sink or swim along with the rest of the
nation’s banks. No bank should be national in scope, and no banking
institution should be able to extort federal aid by claiming it is “too
big to fail.”

Instead of bailing out the big banks and their investors, the
government should be expanding and making more generous the nation’s
unemployment compensation program, which has always been scandalously
inadequate both in the percentage of the unemployed who are covered,
and in the size of the checks paid out, as well as the duration of the
benefit. It should be expanding welfare benefits. It should be
establishing a program to help people in danger of foreclosure to stay
in their homes (note: only the wealthy get tax subsidies, in the form
of 100% deductibility of mortgage interest rate payments—those too poor
to use itemized deductions get no help). And it should be establishing
a major program of publicly funded jobs for those whose employers have
gone bust.
___________________
DAVE LINDORFF is a Philadelphia-based journalist and columnist. His
latest book is “The Case for Impeachment” (St. Martin’s Press, 2006 and
now available in paperback). His work is available at www.thiscantbehappening.net