Hank Paulson

A Theme Song for Capitalism

davidswanson — Sun, 04 Oct 2009 19:10:57 -0400

By David Swanson

Michael Moore's movie motivated me to bring this out. Here's a theme song for Capitalism that I wrote at the time of Paulson's Plunder. Here it is sung by Timbrewolf:

And sung by leading Mad As Hell Doctor, Margaret Flowers:

And here is audio by Great Rain: The Day Hank Paulson Lied (Audio)
Original Song by Don McLean
Lyrics by David Swanson
Performed by Great Rain, Vashon Island's "acoustic insurgents," Frank Hein, Greg Parrott, and introducing Hannah Smith on Vocals. Visit their website: http://www.greatrain.com

A long, long time ago...
I can still remember
Seeing houses used to make me smile.
And I knew if I got a loan
That I could call some house my own
And, maybe, we’d be happy for a while.

But the predatory lies and fees
Left me shaking on my knees
Locked out on the doorstep;
I couldn’t take one more step.

I can’t remember if I cried
When we first had to sleep outside,
But something touched me deep inside
The day Hank Paulson lied.

So bye-bye, oh America why?
For jobs, health, and education,
All the wells have run dry.
And friends of Henry Paulson, not a tear in their eye
Singin’, "nothing kills as good as a lie.
Now watch this old democracy die."

Now did you write the Emergency Economic Stabilization Act of 2008?
And is your soul filled up with hate?
My family has no place to go.
Do you believe in trickle down?
Did the speaker buy you a plastic crown?
Where should my children sleep when there's snow?

Well, I know that you’re in love with cash
I saw lobbyists shoving it up your
As soon as you're done playing the fool
Man, can you try to recall the golden rule?

I was a lonely teenage broncin’ buck
With two jobs, a mortgage, and a pickup truck,
But I knew I was out of luck
The day Hank Paulson lied.

I started singin’,
bye-bye, oh America why?
For jobs, health, and education,
All the wells have run dry.
And friends of Henry Paulson, not a tear in their eye
Singin’, "nothing kills as good as a lie.
Now watch this old democracy die."

Now for eight years we’ve been on our own
Living in a Bushville, missing our home,
But that’s not how it used to be.
When the Congress sang for the beauty queen,
Palin jumped into the scene,
And nobody gave a damn for you and me,

Oh, and while the king was looking down,
The Alaskan stole his thorny crown.
The Republic was adjourned;
The Kingdom was returned.
And while wars happen with a spark,
There's lighter fluid in the park,
And we sang dirges in the dark
The day Hank Paulson lied.

We were singing,
bye-bye, oh America why?
For jobs, health, and education,
All the wells have run dry.
And friends of Henry Paulson, not a tear in their eye
Singin’, "nothing kills as good as a lie.
Now watch this old democracy die."

Helter skelter in a summer swelter.
There ain't no bankers in the homeless shelter,
Stock market's high and falling fast.
It landed foul on the grass.
The Congress tried for a forward pass,
The Constitution on the sidelines in a cast.

Now the half-time air was sweet perfume
While the sergeants played a fascist tune.
We all got up to dance,
Oh, but we never got the chance!
`cause the people tried to take the field;
The ninja turtles wouldn't yield.
Do you recall what was revealed
The day Hank Paulson lied?

We started singing,
bye-bye, oh America why?
For jobs, health, and education,
All the wells have run dry.
And friends of Henry Paulson, not a tear in their eye
Singin’, "nothing kills as good as a lie.
Now watch this old democracy die."

Oh, and there we were all in one place,
Pinnned in by cops from outer space
With tasers, guns, and pepper spray.
So come on: Jack be nimble, Jack be quick!
The blood and smoke have made Jack sick,
Cause fire is Dick Cheney's only friend.

Oh, and as I watched him on the stage
My hands were clenched in fists of rage.
No angel born in hell
Could break that Fuhrer’s spell.
And as the flames climbed high into the night
To light the sacrificial rite,
I saw Cheney laughing with delight
The day Hank Paulson lied.

He was singing,
bye-bye, oh America why?
For jobs, health, and education,
All the wells have run dry.
And friends of Henry Paulson, not a tear in their eye
Singin’, "nothing kills as good as a lie.
Now watch this old democracy die."

I met a girl who sang the blues
And I asked her for some happy news,
But she just smiled and turned away.
I went down to the barren shore
Where I’d heard the truth told years before,
But the man there said the truth just didn't pay.

And in the streets: the children screamed,
The lovers cried, and the poets dreamed.
But not a word was spoken;
Democracy was broken.
And the three men this delighted most:
Dubya, Poppy, and Prescott's ghost,
They drove their limos to the coast
The day Hank Paulson lied.

And they were singing,
bye-bye, oh America why?
For jobs, health, and education,
All the wells have run dry.
And friends of Henry Paulson, not a tear in their eye
Singin’, "nothing kills as good as a lie.
Now watch this old democracy die."

They were singing,
bye-bye, oh America why?
For jobs, health, and education,
All the wells have run dry.
And friends of Henry Paulson, not a tear in their eye
Singin’, "nothing kills as good as a lie.
Now watch this old democracy die."

-david swanson, afterdowningstreet.org

TRAILER: Michael Moore's 'Capitalism: A Love Story'

davidswanson — Fri, 21 Aug 2009 09:38:38 -0400

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

Now We Can See Why Open Government Is the Only Way to Go

dlindorff — Wed, 18 Mar 2009 12:53:41 -0400

By Dave Lindorff

For years, advocates of open government, mostly on the left, but
also on the right, have railed against the growing secrecy of the US
government. But the focus, particularly of left critics, has been on
the Intelligence budget, a $40+ billion “black box” that is completely
protected from public and even congressional scrutiny, and on large
swaths of the Pentagon budget, which are kept hidden allegedly for
“national security” reasons.

For the most part, the American public has adopted an ovine
attitude towards such secrecy, assuming that the “government knows
best.”

Now, however, with the economic crisis, and the collapse of AIG,
Citibank, Bank of America, Merrill Lynch, Bear Stearns, Lehman
Brothers, General Motors, Chrysler and other leading US firms, and with
bailouts that are putting taxpayers on the hook to the tune of
trillions of dollars, the people are waking up, or at least are
starting to get restless in their slumber.

Perhaps there will be a new awareness soon of the importance of transparency in all parts of government.

For now, the Obama administration, the Federal Reserve and Congress
are all trying desperately to ease the citizenry back into a state of
torpor by adopting a position of mock outrage at the $135 million in
bonuses paid out by AIG to the very employees who created the
disastrous and crooked Credit Default Swap market that precipitated the
global economic collapse.

What they don’t want to happen is for people to start thinking
about the $183 billion that Congress and the Fed approved for AIG,
which we now have learned was simply a devious scheme for passing more
money in secret through to troubled banks and investment banks – among
them Citigroup, Bank of America, Goldman Sachs, Morgan Stanley and
others – that had bought these CDOs.

Recall that back in September, when the crisis first hit in earnest
and Treasury Secretary Henry Paulson first called for a bailout
program, he asked—in a three-page proposal to Congress which he
insisted they must pass or risk total economic collapse and the
imposition of martial law!—for absolute authority as Treasury Secretary
to hand out the $700 billion and for protection against any legal
action for whatever he might choose to do with it.

Congress didn’t accede to his imperious request, though it did give
him half the money he wanted: $350 billion, saying it would provide the
second $350 billion later (the new Congress did hand the second half of
the money over just before President Obama took office). A sizeable
chunk of that huge sum of taxpayer money went to AIG, the giant
insurance company that had devised a scheme to sell “insurance” for the
mortgage-backed securities that banks were gorging on. The term
insurance has to be placed in quotes, because since these contracts
were not backed by any assets, they were really not insurance at all.

As rumors spread that much of the so-called Troubled Assets Relief
Program (TARP) money that was provided to AIG was actually passed
through to banks and investment banks that were already receiving TARP
funds directly (including nearly $50 billion to foreign institutions),
Congress and some news organizations, notably Bloomberg, sought to
learn what firms were actually receiving the cash. AIG, the Treasury
Department and the Bush and later the Obama administration initially
fought such disclosure, as did all the bank recipients, claiming that
releasing the names of the recipients would make investors doubt their
stability.

Finally, thanks to the efforts of New York State Attorney General
Andrew Cuomo, whose office has been pursuing the issue in the courts,
we have the answer: the money was going primarily to the nation’s
biggest banks.

But most troubling is that a disproportionate amount of the AIG
bailout money--$13 billion -- went to Goldman Sachs, a company that
until July 2006 was headed by Treasury Secretary Paulson himself. No
wonder Paulson, AIG, Goldman Sachs and others wanted to keep this all
under wraps. No wonder too that Paulson initially tried to get Congress
to immunize him from the legal consequences of his bailout actions.

The truth is that Goldman Sachs and Paulson should be prosecuted
for corruption. The deal that Paulson engineered in secret for
shoveling taxpayer money into his former firm is surely one of the
largest acts of official larceny of public funds in the history of the
country.

Goldman Sachs even publicly announced in early February that it was
returning $10 billion in TARP funds it had received last fall, saying
it didn’t need the money. Well sure the company didn’t need the
money—because it was getting even more in secret via the AIG conduit.

With this backdrop, the rest of the bailout might well be seen as a
hugely expensive cover: give enough money to the rest of the big banks
and investment banks, and nobody in the industry will squeal about the
sweet deal Goldman Sachs was getting.

Of course, the corruption goes much deeper. While public money was
being funneled into the banks and other financial institutions, those
same institutions were using some of this taxpayer largesse to lobby
Congress to do even more. Just between October 1 and the end of 2008,
18 recipients of TARP funds reported spending nearly $15 million on
lobbying efforts in Washington. Among the biggest
bailout-recipient/lobbyists: American Express ($1.1 million), AIG ($1.1
million), B of A ($$880,000), Citigroup ($1.5 million), Goldman Sachs
($720,000), JPMorgan Chase ($1.1 million), Wells Fargo ($580,000).
These amounts represent quite an investment considering that these
firms all received, in return for their TARP lobbying efforts, billions
of dollars in bailout money.

Remember, Paulson’s original plan was to have even the TARP direct
bailout grants kept secret from the public. That idea didn’t fly. But
many of these companies that used their public funds to lobby for more
public funds also received secret bonus bailouts via AIG.

So here’s what happens when you have secret government. The public gets royally shafted.

Now that the story is coming out, the crooks in Congress, the White
House and at Treasury and the Fed are desperately trying to lull us all
back to sleep by feigning anger at the relatively paltry sums AIG is
handing out in bonuses to some of the crooks and scheisters on its
staff.

We should not put our heads down on the pillow being offered, though.

The lesson here is that we need open government, and that we need
to demand that our media not go for the cheap and easy story being
handed out by government press release.

Also, there’s this last thought: If you thought that the banking
mess was a horrible rip-off, just try to imagine what level of
corruption there must be in the Pentagon and the Intelligence programs
that have been operating in absolute secrecy and with no scrutiny for
decades!

Baa-a-a-a-a-a-a.
_________________
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 edition). His work is available at www.thiscantbehappening.net

Paulson and Bush Stole $78 Billion from You and Me

Bob Fertik — Fri, 06 Feb 2009 00:30:28 -0500

Harvard Law School professor Elizabeth Warren, who chairs the 5-member TARP oversight committee, told the Senate Banking Committee that Hank Paulson paid banks too much for their ~~worthless~~ troubled assets last fall. How much too much?

Treasury paid $254 billion for assets worth approximately $176 billion, a shortfall of $78 billion.

In other words, Hank Paulson and George Bush stole $78 billion from taxpayers to directly enrich the banksters. When will the prosecutions begin, and when will we get the stolen loot back?

Follow the Money: Are Taxpayers on the Hook for Hundreds of Billions of Dollars for a Credit Crisis that Was Overblown?

dlindorff — Sat, 31 Jan 2009 18:24:27 -0500

(NOTE: This article appears in the current issue of the magazine Treasury & Risk)

By Dave Lindorff

Key members of Congress were stunned to hear Federal Reserve Board
Chairman Ben Bernanke and Treasury Secretary Hank Paulson say on Sept.
18 in a closed-door meeting on Capitol Hill that the country was “days
away” from a complete financial meltdown—one that could lead to
Depression-like runs on banks, widespread violence and ultimately even
to a possible declaration of martial law. It was a vision of
Armageddon, but, of course, 10 days later, the House rejected a Wall
Street bailout package sent over by Paulson, only to pass one in a more
limited form—the Emergency Economic Stabilization Act—a week later that
gave Paulson less power and only half the money he wanted.

Meanwhile, the financial system did not collapse and while a few
banks were failing, there were no runs on them, and martial law wasn’t
invoked. One reason things didn’t fall apart when Congress didn’t
immediately act as Paulson and Bernanke demanded, may be that there
wasn’t any danger of a meltdown in the first place. So say three senior
economists working at the Federal Reserve Bank of Minneapolis, who in
October examined the Fed’s own data, and concluded in an article titled
Facts and Myths About the Financial Crisis of 2008 that the claims that
interbank lending and commercial lending had seized up were simply not
true. “Bank lending to consumers and to non-financial companies had not
ceased, and banks were lending to each other at record levels,” says
V.V. Charri, an economist at the Minneapolis Fed. “Maybe Bernanke and
Paulson had information that they were not making public, but the
available data simply did not support what they were saying.” Charri
and his colleagues and co-authors Lawrence Christiano and Patrick Kehoe
agree that with companies like Lehman Brothers, AIG and Citigroup
foundering because of toxic debt instruments, there was a sense of a
financial crisis brewing, but they say it wasn’t a credit freeze. “This
was a lot like the run-up to the Iraq invasion in 2003,” says Charri.
“You had people in government saying: 'We’re smart guys, trust us.’ But
they were either wrong or they were lying.”

Adds Kehoe: “Normally, when you’re going to spend a lot of money,
you present the data and the economic theory to support it, yet here’s
the biggest non-military government intervention in history since the
Great Depression, and there was no evidence presented to support it,
and no detailed economic argument made about what market failures this
$700 billion was going to fix.”

(For the rest of this article, please go to Treasury & Risk magazine.

Only Rats Get Fat as Misdirected Bailout and Stimulus Funds go Down the Rat Hole

dlindorff — Wed, 14 Jan 2009 11:33:04 -0500

By Dave Lindorff

Congress should do now what it should have done back in the fall: kill the Wall Street bailout program.

After wasting $350 billion on a program that was misrepresented
from the outset, and investing hundreds of billions of dollars in
failing financial institutions that it could have bought outright for
less than it was investing in them (AIG was worth only a few billion
dollars in total at the time that the government bailed the company out
with an initial investment of $85 billion and Citicorp today is worth
less than the $45 billion the government has invested in that failing
firm), the Treasury Department, now acting at the direction not of the
Bush administration and outgoing Treasurer Hank Paulson, but the Obama
administration, is asking for the other half of the Troubled Assets
Relief Fund (TARP).

Aside from the corrupt aspect of this $700-billion boondoggle—the
handing over of borrowed taxpayer money to the very bankers and
investors who created the mess we’re in today—the whole TARP program is
premised on a false assumption: namely that the US economy’s problem is
a freeze in bank lending.

This is simply untrue.

Three economists at the Minneapolis Fed, in an article published on the Minneapolis Federal Reserve’s website,
show using the Fed’s own data that at the very point in September that
Paulson and Fed Chairman Ben Bernanke were warning Congressional
leaders in a secret session that the bank lending had entirely seized
up and that US was “days away” from a meltdown that would lead to riots
in the streets and the possible need to impose martial law, in fact
interbank lending was at record levels, and that commercial lending was
also flowing normally. True, long-term bond interest rates were
unusually (though not unprecedentedly) high, but then, that’s what you
would expect when the treasury is borrowing enormous sums and lowering
interest rates, and thus raising inflation expectations long term.

The real point of the damning report by the Minneapolis Fed’s
plucky trio of economists, is that banks aren’t lending not because
they don’t have enough capital, but because for the first time in a
decade, bankers are being prudent the way banks are supposed to be.
They are looking at companies seeking loans and saying, “show me your
balance sheet and your order book.” Companies that are in trouble
financially, or that are seeing their sales plummet are being rightly
turned away, but companies with solid balance sheets and sales are able
to borrow what they need.

The other point is that contrary to the claims being made by both
Bush and Obama economic teams about the allegedly urgent importance of
the keeping credit flowing so that, as Paulson put it, companies will
be able to meet payroll and so that they won’t start laying off
employees, what is needed is not looser or cheaper credit but programs
to protect the incomes of millions of workers who are losing their
jobs. (Unemployment, officially now at 7.2 percent, would actually be
closer to 17 percent using the more honest methodology in use prior to
1980, before the Reagan administration altered it to hide the impact of
the recession of the early '80s.)

The record shows that even as the government has blown $350 billion
on a Wall Street bailout, unemployment has soared, housing price
declines have accelerated, and retail sales have continued on a
six-month death march into the ground. While administration touts are
claiming that if there had been no bailout, things would be worse,
there is no evidence to support this claim. Things are terrible as it
is—in fact the economic collapse is being called the worst since the
onset of the Great Depression of the 1930s. How the hell much worse
could it have been?

Which brings us back to the current Obama administration demand for the other $350 billion in TARP funds.

It seems clear that what the country is facing is not a unique
credit freeze, but rather a classic recession (or depression), in which
spiraling industry layoffs of workers is leading to a collapse in
spending, which in turn leads to a further slowdown in business and
more layoffs. Because the social safety net in America has been
systematically shredded, with unemployment benefits only covering a
minority of laid-off workers, and then only for a short period and at
only a small fraction of their prior wages, the rise in unemployment is
crippling the economy. Being laid off in America is an unmitigated
disaster: no health care, no income, and a nightmare struggle even to
obtain food stamps. (People with homes and savings can be screwed out
of assistance because they have too many assets, for example.)

Nor is the other Obama rescue measure—the proposed $800-billion
so-called “stimulus” package--adequately addressing the problem.
Focusing on tax breaks (especially tax breaks for business) and on
large infrastructure projects, is once again wasting precious stimulus
resources. In the case of tax cuts, studies have repeatedly shown that
business tax cuts do nothing to stimulate business activity but rather
just enrich managers and shareholders, while tax cuts to consumers do
not even return a dollar-for-dollar stimulus. Meanwhile, investing in
infrastructure projects only provides incomes to relatively skilled
heavy equipment operators these days, not to the broad masses of people
who need help. Moreover, because the pool of workers trained to work on
such projects is limited, all boosting that spending does is push up
wages in that sector. (Besides, the last thing America needs is more
and better roads; it needs a wholly revitalized and expanded mass
transit system, inter- and intra-city, and that’s getting short shrift
in this proposal.)

A stimulus package that works would expand welfare and food stamp
benefits for the chronically unemployed, would boost funding for
education—K through college--would provide grants to states and local
governments to compensate for declining tax bases, with stipulations
that the money be used to hire more teachers, more teachers’ aides,
more librarians, more trash collectors, etc., not just lower taxes. It
would expand unemployment insurance coverage to all workers and extend
those payments for the duration of the recession while raising the
payments to provide a real subsistence wage. It would fund government
run programs to hire the unemployed, creating jobs that meet the
skill-set of the unemployed. The excellent CETA program, part of the
grotesquely maligned War on Poverty of the late 1960s, would be a good
model for this.

Meanwhile, of course, since we’re talking about big bucks here, the
new administration should be looking to the future and figuring out how
to get the budget deficit back in check. And there, a first target has
to be the military, now chewing through well over $1 trillion a year,
most of it wasted and wrongheaded. For starters, the war in Iraq should
be ended. Period. Ditto for Afghanistan—a doomed venture. Then too, the
800 overseas military bases should be closed down, along with the
nation’s nuclear missile and bomb program (okay, as long as China,
Russia, France, the UK, Israel, India, Pakistan and a few other
countries have the bomb, we could keep a few nukes for negotiating
purposes, pending a global nuclear disarmament agreement, which should
be a top priority). The truth is, the US military budget could be cut
in half or even more, without anyone really noticing. The US would be
the stronger for it, not weaker or more vulnerable. Even at half
strength, no potential enemy would want to threaten the US. (In fact,
arguably, a US that had pulled back from its current global stance
would be far more formidable an opponent if directly threatened.)

We are facing a grave economic crisis, but the boneheads in the
Bush and Obama economic teams are either clueless, or are too busy
protecting their friends on Wall Street (or in New York Fed Chief and
Treasury Secretary nominee Timothy Geithner's case, too busy figuring
out ways to cheat on his taxes), to either know or care.

Only mass public action will set this right. Hopefully, the public
is getting scared enough now to pry their eyes away from the tube and
start demanding that it be done, before another trillion dollars is
thrown down a rat hole.
_____________________________
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 edition). His work is available at www.thiscantbehappening.net

Time for Obama and Us to Face the Economic and Political Music

dlindorff — Thu, 08 Jan 2009 15:48:20 -0500

By Dave Lindorff

The real cost of the Bush Administration’s trillion-dollar bailout
of Wall Street is becoming painfully apparent as the incoming Obama
administration attempts desperately to make a case for its own
$800-billion economic stimulus package, while warning about “trillion
dollar deficits as far as the eye can see.”

On its own merits, all other considerations aside, with the
economy slipping into a sinkhole, President-elect Barack Obama’s call
for $800 million in stimulus spending should be a slam dunk for
Congress. The problem is, Congress already caved in a hurry and
approved nearly that same amount--$700 billion—in a matter of days when
Bush’s Treasury Secretary Hank Paulson and his Federal Reserve Board
Chair Ben Bernanke said they needed the money to prevent a collapse of
the financial industry, as the nation’s biggest banks, investment banks
and insurance companies teetered on the brink of insolvency last fall.

In fact, there was no need for panic. Paulson reportedly warned
assembled Congressional leaders in late September that a financial
Armageddon loomed, which would lead to mass runs on the banks, rioting
in the streets, and ultimately martial law. Although the number of
Americans who have more than the insured amount of $100,000 in a bank
is not enough to make for one small staged bank run, the Congress
blinked, and gave him essenntially a blank check to spend $350 billion
right away. Paulson and Bernanke took that authorization and ran with
it, spending most of it to invest in those institutions, and adding
even more money using all kinds of tricks that ultimately could put the
taxpayer on the hook for as much as $8 trillion dollars. They cranked
up the printing presses too, and, like a North Korean counterfeiting
ring, ran off an extra $2 trillion in greenbacks, just for good measure.

No wonder that now that Obama comes in asking for another $800
billion over the next two years—just a tenth of the sum the Bush/Cheney
regime has pissed away over a couple of months—Congress is balking.

In fact, Obama actually caved before he even began, making half his
request for stimulus money actually a in the form of a proposed
$500/per/taxpayer tax rebate. We already saw how successful that idea
was when we got the Bush tax rebate last year. The money was used by
most hard-strapped citizens to pay down debt. When they actually went
out and bought stuff with their rebate—which was the intent of the
program—since almost nothing is actually made in the US, the money
ended up just being shipped abroad to Mexico, China, Sri Lanka and
India. Some stimulus!

The same thing will happen to the Obama tax rebate. It will go to
paying down debt, or it will be spent on imports. But unless he talks
straight to the American people, politically, Obama has to include a
rebate in any bailout, or he won’t get any Republican support in
Congress for his stimulus package.

Meanwhile, the evidence is that the Bush/Cheney boondoggle, while
it enriched the owners and investors in the big banks that got the
investments (many used the federal largesse to pay executive bonuses,
or to buy other banks at firesale prices), did nothing to loosen up
credit. Banks that found themselves with more cash on hand, instead of
lending it out to businesses or homeowners, reportedly simply deposited
it at the Fed to collect the interest. Company financial executives and
industry economists say nothing has really changed in credit markets in
response to the blowing of hundreds of billions of dollars on the
financial industry.

So what we have here is either a monumental and unprecedented
rip-off of the taxpayer, which has now jeopardized the ability of the
incoming administration and Congress to do what needs to be done:
namely to relieve the financial distress of ordinary people and to try
and kick-start the economy, or an example of true financial stupidity
on the part of the current administration, compounded by the gutless
acquiescence of a Congress that already showed, in the run-up to the
Iraq War, that it is no longer up to the task of monitoring and
challenging the executive.

Either way, we’re in a heap of trouble going forward. The Obama
administration, even if it wants to, will not have the resources to
finance a recovery. Take away the $400 billion that Obama wants to
waste on tax rebates, and you have left a paltry $400 billion, to be
spread over two years, which we’re expected to believe is going to
revive a depressed US economy that last year was running at $15
trillion.

The other thing to consider is the impact of all this incredible
borrowing on he soundness of the US dollar. We know that China is
thinking more and more seriously about unloading its trillions of
dollars of reserves. If it does, Japan and other major holders of US
currency will likely do the same thing, as will the oil producing
states in OPEC and outside of OPEC. (If you thought buying oil in
dollars was painful last year, wait until you see how expensive it is
when you are paying in Euros or Renminbi or Yen!). Some economists are
warning that because of all the US borrowing of recent months, the
dollar could take a 40-percent hit in value against other key
currencies in the coming year or two. That would slam consumers hard,
since so much of what we need for our daily lives—food, clothes, cars,
furniture, etc.—is produced overseas and would become instantly 40
percent more expensive. It would also be a death blow to any economic
recovery, because the Federal Reserve would be compelled to raise US
interest rates in hopes of slowing down the decline of the dollar.
Higher interest rates would cripple any Obama administration economic
stimulus efforts.

What we need at this point is a new realism. The US economy is in a
shambles because we Americans have been living in a fool’s paradise,
with the government boosting domestic incomes and consumer spending by
inflating housing prices to absurd levels, and pumping up the Wall
Street casino with easy credit and a blind eye to scandal. Now that it
has all come crashing down, there will not be the usual rebound. The
housing market will not recover. Neither will the stock market.
Americans will not, in a year or two or three, feel as wealthy as they
did before it all fell apart. The wealth people thought they had last
year was an illusion, and now it’s gone, like a morning mist.

The remaining unspent Treasury Assets Relief Program (TARP) money
Congress authorized should be withdrawn and applied to a real stimulus
program, and the tax rebate Obama is proposing should be dropped. If
the new president wants to help lower income individuals, that’s one
thing, but just giving everyone a tax credit is nonsense.

Economist James Galbraith, a professor of economics in Texas, has
proposed some good uses for federal stimulus dollars—a Home Owners Loan
Corp. that would refinance bad mortgages at the true value of the homes
in question, and grants to struggling state and local governments that
are otherwise going to be laying off workers and killing critical
programs like health and education. He is also calling for a supplement
to Social Security for people nearing retirement whose private 401(k)
funds and IRAs have been killed.

These are all good ideas. A better one would be to slash military
spending by 50 percent and to close the 800 or more US military bases
that are scattered across the globe.

Do all this and the country has a shot at avoiding a new depression and a slow slide into third world status.
______________
DAVE LINDORFF is a Philadelphia-based journalist and columnist. His
latest book is “The Case for Impeachment” (St. Martin’s Press, 2006).
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

Cummings Calls Kashkari a Chump, Kucinich Proposes Congress Undo Paulson's Plunder

davidswanson — Fri, 14 Nov 2008 21:34:40 -0500