10 reasons Wall Street will hit bottom, crash
by Paul B. Farrell
MarketWatch
March 13, 2012

SAN LUIS OBISPO, Calif. (MarketWatch) — Yes, Wall Street will crash. Has to. They’re gambling addicts. Dodged the bullet in 2008. But learned nothing. Now killing reforms. Teamed up with the Super Rich, CEOs, lobbyists, and crony politicians. It’s only a matter of time.

Yes, they’ll crash, again. No matter how anemic the recovery. No matter how much more debt they pile on taxpayers. No matter who’s president. Crash.

How do I know Wall Street will hit bottom? First off, most American know somebody who’s trapped in addictive behavior. I got a front-row seat years ago as a professional helping a few hundred addicts, alcoholics and gamblers getting help from the Betty Ford Center and others like it.

Guess what: Wall Street’s behavior is exactly like all other addicts, trapped in denial, they’ll risk destroying family, friends, health, careers and even America before stopping. They’re obsessed, hooked, blind, addicted to gambling.

Second, the Treasury secretary and his wife warned us. Seriously, Tim Geithner highlighted her in a recent Wall Street Journal op-ed, “Financial Crisis Amnesia,” that made clear how addictive and clueless Wall Street and their team are: “My wife looks up from the newspaper with bewilderment at another story about people in the financial world or their lobbyists complaining about Wall Street reform.”

Yes, amnesia. Wall Street’s got a bad case of denial, blind to “the lessons of the crisis and the damage it caused to millions of Americans.” So it’ll happen again. And soon. Why? Mr. Secretary’s diagnosis: “Amnesia is what causes financial crises.” Look closely.

Wall Street has all 10 self-destructive traits of a gambling addict.

Yes, Wall Street insiders need treatment. They’re like addicts who will resist treatment till the bitter end, insisting there’s no problem, protecting their business as usual high-life. Their addiction has control of them, they’re in denial, in amnesia, blind to the long-term damage they’re doing to America.

So yes, Wall Street must crash, will hit bottom. America cannot reset the economy because Wall Street won’t go willingly. So here, you do the full diagnosis. Here are 10 characteristics of this self-destructive addictive personality type. Think about what is happening on Wall Street today, stuff like their war against the Volcker Rule. See why Wall Street’s collective mental state is so damaged it’s on track to hit bottom, crash and burn, in a meltdown more damaging than 2008, as they take down the rest of America.

Don’t believe me? Check out Wall Street’s 10 personality traits today:

1. Amnesia: Since the 2008 meltdown, Wall Street’s memory erased

Begin with Geithner diagnosis Wall Street’s addiction: Banks have “no memory of extreme crisis, no memory of what can happen when a nation allows huge amounts of risk to build up outside of the safeguards all economies require.” Amnesia makes Wall Street deaf. Can’t hear. Remember, bank insiders are short-term thinkers who naturally discount long-term costs to zero, pass them on to taxpayers and future generations.

2. Overoptimistic: Wall Street casino’s blowing another megabubble

Since the dot-com crash of 2000, when the Dow peaked at 11,722, to today with the market hovering around 13,000, Wall Street’s lost an inflation-adjusted return of about 20% of your retirement money. And economist Gary Shilling sees no growth through the next decade ... Nouriel Roubini warns of a decade of dark days ... Pimco’s Bill Gross sees a long “new normal” of lower returns … GMO’s Jeremy Grantham predicts “Seven Lean Years” … Martin Weiss warns that a “historic world-changing event is about to crush the U.S. economy and stock market.” Still, Wall Street lives in a fantasy land, ignores warning signs, pushing mega-IPOs, risky junk. Protect yourself.

3. Immature: totally narcissistic, the ‘King Baby’ syndrome

Yes, Wall Street’s an immature child. Members of AA call this the “King Baby” syndrome: People who never grow up. They want what they want when they want it. Now. No compromise, like today’s politicians. In “The Coming Generational Storm,” Larry Klotnikoff and Scott Burns warn of the massive debt we’re leaving for our “kids.” Eventually these kids will rebel against the $70 trillion burden. Wall Street’s addictive spenders are at risk of a revolution that will make the Arab Spring look like a picnic.

4. Greedy: Yes, “greed is still good” … for Wall Street’s gamblers

Michael Douglas’ famous indictment is truer today than ever. Vanguard’s founder Jack Bogle confronted the toxicity of out-of-control greed in his “Battle for the Soul of Capitalism.” Wall Street has become a soulless, amoral culture that cares nothing about the rest of America. Wall Street has sunk back deep into their business-as-usual culture of greed, blind to the public consequences of their behavior. Ethics? Integrity? Fiduciary duty? No. Investors come second. Insiders first. Always. And nothing will change till Wall Street hits bottom, crashes. Then we can truly reform Wall Street as we did in the 1930s.

5. Compulsive liars: Never trust Wall Street to tell the truth

Members of AA use a simple test: “How can you tell when an alcoholic or addict’s lying?” Answer: “His lips are moving.” You can’t believe anything said on Wall Street. Why this culture of lying? Simple: To create illusions, like “investors come first,” “you can trust us,” and “we the best interests of America at heart.” Wrong. Their sole loyalty is to insiders. Period. Carole Geithner sees through the illusions.

6. Insatiable: Wall Street’s hooked on ‘more is never enough’

Wall Street is past the point of no return, an addict incapable of stopping, must hit bottom. In “American Mania” psychiatrist Peter Whybrow says we’re a nation of addicts, we’re insatiable, “more is never enough.” Trillions in new debt annually, big bonuses, zero savings, as bank bailouts roll on, with the Fed feeding Wall Street cheap money. Forget reforms. No change till the banks hit bottom. A return to the Glass-Steagall might help, but Wall Street hates that as much as addicts hate Betty Ford.

7. Macho-macho: Regardless of the facts, they can’t admit failure

Addicts cannot see their weaknesses. In “Confronting Reality” Larry Bossidy and Ram Charan warn: “The greatest consistent damage to businesses and their owners is the result not of poor management but of the failure, sometimes willful, to confront reality.” Like Wall Street insiders, they simply cannot admit the gross mistakes, moral lapses and catastrophic errors in judgment that triggered the 2008 crash. They’re blind to their faults.

8. Unpredictable: Wall Street gamblers haven’t a clue about the future

In “Stocks for the Long Run” Jeremy Siegel studied market history from 1801 to 2000, comparing the biggest up and down days. Bottom line: Markets are random. There were no obvious reasons for 75% of the moves that trigger either long-term gains or long-term losses. Wall Street cannot predict crashes. But they can create them. Finance professors Terrance Odean and Brad Barber did some long-term research on both American and China investors. Conclusion: The “more you trade the less you earn.” Yes, returns for buy-and-hold investors are a third higher than heavy traders. No wonder Wall Street pushes active trading.

9. Irrational: Wall Street gets rich off investor irrationality

Behavioral economics is the psychology of investment decisions, based on Nobel Economist Daniel Kahneman who proved investors are irrational. That was 2002. Investors are still irrational, Wall Street as well as Main Street. And yet we still assume we’re making rational decisions! Admit it, investors are irrational. As behavioral finance guru Richard Thaler once admitted: Wall Street “needs investors who are irrational, woefully uninformed, endowed with strange preferences, or for some other reason willing to hold overpriced assets.” Main Street’s naive irrationality makes Wall Street very rich.

10. Myopic: Failure to think long-term guarantees another crash

Wall Street’s addiction to short-term thinking guarantees another crash. But worse, Wall Street’s shortsightedness is setting up an inevitable global catastrophe and self-destruction of their capitalist ideology. In “Collapse: How Societies Choose to Fail or Succeed” Jared Diamond warns that throughout history surviving cultures are always the ones that focus on long-term planning, far in advance of crises. Failed societies are the ones whose leaders “focus only on issues likely to blow up in a crisis within the next 90 days.” And that fits Wall Street’s blind obsession with quarterly earnings, annual bonuses, 1% rates, no Volker Rule, no reforms, ever, more is never enough.

So how did your “Addictive Personality Rating Score” add up? Chances are you diagnosed Wall Street with a perfect 10 out of 10. No wonder Wall Street’s insiders need treatment for their gambling addiction, at a Betty Ford Center.

It's the Interest, Stupid! Why Bankers Rule the World
by Ellen Brown
Truthout
November 8, 2012

Interest charges are a strongly regressive tax that the poor pay to the rich. A public banking system could realize savings up to 40 percent - allowing taxes to be cut, services increased and market stability created - with banks feeding the economy rather than feeding off it.

In the 2012 edition of Occupy Money released last week, Professor Margrit Kennedy writes that a stunning 35 percent to 40 percent of everything we buy goes to interest. This interest goes to bankers, financiers, and bondholders, who take a 35 percent to 40 percent cut of our GDP. That helps explain how wealth is systematically transferred from Main Street to Wall Street. The rich get progressively richer at the expense of the poor, not just because of "Wall Street greed," but because of the inexorable mathematics of our private banking system.

This hidden tribute to the banks will come as a surprise to most people, who think that if they pay their credit card bills on time and don't take out loans, they aren't paying interest. This, says Dr. Kennedy, is not true.

Tradesmen, suppliers, wholesalers and retailers all along the chain of production rely on credit to pay their bills. They must pay for labor and materials before they have a product to sell, and before the end-buyer pays for the product 90 days later. Each supplier in the chain adds interest to its production costs, which are passed on to the ultimate consumer. Dr. Kennedy cites interest charges ranging from 12 percent for garbage collection, to 38 percent for drinking water, to 77 percent for rent in public housing in her native Germany.

Her figures are drawn from the research of economist Helmut Creutz, writing in German and interpreting Bundesbank publications. They apply to the expenditures of German households for everyday goods and services in 2006; but similar figures are seen in financial sector profits in the United States, where they composed a whopping 40 percent of US business profits in 2006. That's more than five times the 7 percent made by the banking sector in 1980. Bank assets, financial profits, interest and debt have all been growing exponentially...

 

My Statement Regarding Greg Smith's Goldman Resignation
by Nomi Prins
on her blog
March 14, 2012

Today, I have received dozens of media requests and hundreds of emails regarding former Goldman Sachs executive, Greg Smith's gutsy, and internationally resonating, public resignation.

I applaud Smith's decision to bring the nature of Goldman's profit-making strategies to the forefront of the global population's discourse, as so many others have been doing through books, investigative journalism, and the Occupy movements over the past decade since my book, Other People's Money, was written after I resigned from Goldman. It would be great if Smith's illuminations would serve as the turning point around which serious examination and re-regulation of the banking system framework would transpire...

Public Rebuke of Culture at Goldman Opens Debate
by Susanne Craig and Landon Thomas Jr.
The New York Times
March 14, 2012

Mr. Smith resigned in an e-mail message to his bosses at 6:40 a.m. London time, laying out concerns that Goldman’s culture had gone haywire, putting its own interests ahead of its clients.

What the e-mail didn’t say was that about 15 minutes later, an Op-Ed article he had written detailing his criticisms was to be published in The New York Times. “It makes me ill how callously people still talk about ripping off clients,” he wrote in the Op-Ed article.

The Op-Ed landed “like a bomb,” inside Goldman, said one executive who spoke on the condition of anonymity.

The article reignited a debate on the Internet and on cable television over whether Wall Street was corrupted by greed and excess. By noon, television crews crowded outside Goldman’s headquarters in Lower Manhattan. More than three years after the financial crisis, the perception that little has changed on Wall Street — and that no one has been held accountable for the risk-taking that led to the crisis — looms large in the public consciousness. While it was an unusual cry from the heart of a Wall Street insider, many questioned whether it would prompt any change...

Still, the ripple effects were felt beyond Wall Street. Shares of Goldman fell 3.4 percent. And media coverage was worldwide. “Goldman Boss: We Call Our Clients Muppets,” screamed the front page of The London Evening Standard...

OCC Probing JPMorgan Chase Credit Card Collections
by Jeff Horwitz
American Banker
March 12, 2012
 

JPMorgan Chase & Co. took procedural shortcuts and used faulty account records in suing tens of thousands of delinquent credit card borrowers for at least two years, current and former employees say...

The bank's errors could call into question the legitimacy of billions of dollars in outstanding claims against debtors and of legal judgments Chase has already won, current and former Chase employees say...

Company documents, court filings, and interviews with seven current and former employees reveal that Chase's credit card litigation operation was allegedly plagued by unreliable external attorneys, management's disregard for accuracy, and patchy technology.

The bank's computer systems frequently disagreed about how much debtors actually owed, several of the Chase sources say.

The employees' stories corroborate allegations made by Linda Almonte, a former mid-level business process executive in Chase's San Antonio-based Credit Card Litigation Support Group. Dismissed in November 2009 after six months on the job, Almonte filed whistleblower complaints and a wrongful termination suit claiming that she was fired for objecting to the sale of credit card debts with erroneous balances...

Other things were falling through the cracks. Borrower correspondence sent to the San Antonio facility, such as bankruptcy notifications, address changes, and hardship requests were being dropped on an unmanned desk, according to a 2009 printout from Chase's troubleshooting log...

Documents weren't simply misplaced: Chase shredded incoming correspondence such as records of borrower payments and counter-judgments extinguishing debts, Almonte alleged in her wrongful termination suit...

"This is not an accident anymore," Almonte now says. "The same people who created this problem at Chase are still in charge. They aren't going to fix it unless they're forced to."

Why I Am Leaving Goldman Sachs
by Greg Smith
The New York Times
March 14, 2012

TODAY is my last day at Goldman Sachs. After almost 12 years at the firm — first as a summer intern while at Stanford, then in New York for 10 years, and now in London — I believe I have worked here long enough to understand the trajectory of its culture, its people and its identity. And I can honestly say that the environment now is as toxic and destructive as I have ever seen it.

To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money. Goldman Sachs is one of the world’s largest and most important investment banks and it is too integral to global finance to continue to act this way. The firm has veered so far from the place I joined right out of college that I can no longer in good conscience say that I identify with what it stands for...

Too Big to Jail
by Simon Johnson
February 22, 2012

WASHINGTON, DC — Among the fundamental principles of any functioning justice system is the following: Don’t lie to a judge or falsify documents submitted to a court, or you will go to jail. Breaking an oath to tell the truth is perjury, and lying in official documents is both perjury and fraud. These are serious criminal offenses, but apparently not if you are at the heart of America’s financial system. On the contrary, key individuals there appear to be well compensated for their crimes...

In fact, the Obama administration’s settlement with the mortgage lenders is consistent with its track record on all of its policies related to the financial sector, which has been abysmal. But it is also puzzling. Why would the administration continue to bend over backwards to be lenient towards top bankers under these circumstances?

I honestly do not believe that the administration’s stance reflects any form of corruption — payments made to individuals or even to political campaigns. And, in this case, it does not even appear to reflect the lobbying power of big financial players. That power certainly explains why the Dodd-Frank financial reforms enacted in 2010 were not stronger, and why there is now so much opposition to effective implementation of that legislation (for example, there is currently a huge fight around the “Volcker rule,” which would limit proprietary trading by megabanks). But mortgage lenders’ criminal activities are another matter.

Indeed, at stake in the mortgage settlement are fundamental and systemic breaches of the rule of law — perjury and fraud on an economy-wide scale. The Justice Department has, without question, all of the power that it needs to prosecute these alleged crimes fully. And yet America’s top law-enforcement officials have consistently — and now completely — backed off.

The main motivation behind the administration’s indulgence of serious criminality evidently is fear of the consequences of taking tough action on individual bankers. And maybe officials are right to be afraid, given the massive size of the banks in question relative to the economy. In fact, those banks are bigger now than they were before the crisis...

The message to bank executives today is simple: build your bank to be as big as possible — and then keep growing. If you manage to become big enough, you and your employees are not just too big to fail, but also too big to jail.

The Obama administration has just made everyone else the sucker.

Drew Westen is a professor of psychology at Emory University and the author of "The Political Brain: The Role of Emotion in Deciding the Fate of the Nation."

In similar circumstances, Franklin D. Roosevelt offered Americans a promise to use the power of his office to make their lives better and to keep trying until he got it right. Beginning in his first inaugural address, and in the fireside chats that followed, he explained how the crash had happened, and he minced no words about those who had caused it. He promised to do something no president had done before: to use the resources of the United States to put Americans directly to work, building the infrastructure we still rely on today. He swore to keep the people who had caused the crisis out of the halls of power, and he made good on that promise. In a 1936 speech at Madison Square Garden, he thundered, "Never before in all our history have these forces been so united against one candidate as they stand today. They are unanimous in their hate for me - and I welcome their hatred."


The Bush Deficit
by Jonathan Cohn
The New Republic
July 26, 2011

Critics of President Obama never tire of blaming him for today's high deficits. But if blame belongs with one president, it belongs with Obama's predecessor, George W. Bush. The chart in this article, which the New York Times created based upon figures from the Center on Budget and Policy Priorities, illustrates this point very clearly. But it's worth reviewing the history here, because while it's familiar to most of us who follow politics it doesn't seem to get a lot of attention in the political debate.

Chris Kluwe: Here’s what’s wrong with Ayn Rand, libertarians

So I forced myself to read “Atlas Shrugged.” Apparently I harbor masochistic tendencies; it was a long, hard slog, and by the end I felt as if Ayn Rand had violently beaten me about the head and shoulders with words. I feel I would be doing all of you a disservice (especially those who think Rand is really super-duper awesome) if I didn’t share some thoughts on this weighty tome.

Who is John Galt?

John Galt (as written in said novel) is a deeply flawed, sociopathic ideal of the perfect human. John Galt does not recognize the societal structure surrounding him that allows him to exist. John Galt, to be frank, is a turd...

Detroit, the New Greece
By PAUL KRUGMAN
Published: July 21, 2013

When Detroit declared bankruptcy, or at least tried to — the legal situation has gotten complicated — I know that I wasn’t the only economist to have a sinking feeling about the likely impact on our policy discourse. Was it going to be Greece all over again?...

The important thing is not to let the discussion get hijacked, Greek-style. There are influential people out there who would like you to believe that Detroit’s demise is fundamentally a tale of fiscal irresponsibility and/or greedy public employees. It isn’t. For the most part, it’s just one of those things that happens now and then in an ever-changing economy.

Greece and You
NYT house editorial
June 21, 2011

The euro-zone bailout of Greece is, in good part, a bailout of European banks. In France and Germany alone, banks hold some $90 billion worth of public and private Greek debt. The European Central Bank also holds Greek government debt, and the fear is that if Greece defaults, cascading losses could threaten all of Europe.

Are American banks also vulnerable? No one is sure. They are not big lenders to Greece, but they are big players in the derivatives markets. If Greece defaulted, a European bank holding a credit-default swap on Greek debt from an American bank would be entitled to a payout from that bank...
 

Greece and the Euro: Fifty Ways to Leave Your Lover
by Ellen Brown
Truthout
June 6, 2012

For the Greeks, the euro love affair is over, but breaking up is hard to do. Defaulting on their debts will force them out of the euro zone and back to issuing drachmas, which could get brutally devalued by speculators as soon as they are traded on foreign exchange markets.

Fortunately, there are alternatives to an ugly divorce. The treaties binding the 17 member nations are just a set of rules, entered into by mutual agreement, and rules can be bent, broken or stretched, especially in crises. The European Central Bank (ECB) has already broken a litany of rules to save the banks, and so has the Federal Reserve, which found multiple ways to do what it initially said it couldn't do to save Wall Street in 2008. Rules that can be bent for banks can be bent for the people — not just the Greeks, but the Irish, Italians, Spaniards, Portuguese and others lined up behind them.

Here are some creative alternatives that have been proposed...

Greeks flock to German language classes: institute 

People in crisis-hit southern European countries like Greece, Spain and Italy are scrambling to learn German to boost their chances of a job in Europe's top economy, an institute said Friday.

The Goethe Institute, which organises German language classes around the world, said demand had shot up by 50 percent in Greece in the first quarter of this year compared to the same period in 2011...

Eighty-four percent more Greeks moved to Germany in the first half of 2011 than in the same period in 2010 and 49 percent more Spaniards, the figures showed.

With such low unemployment, Germany is actively seeking to recruit skilled labour from beyond its borders.

Earlier in the week, the government launched two websites aimed at attracting workers, one of which (www.make-it-in-germany.com) was designed specifically for foreigners.

Worry for Italy Quickly Replaces Relief for Spain
By LIZ ALDERMAN and ELISABETTA POVOLEDO
NYT Published: June 11, 2012

VENICE — Concerns grew on Monday that Italy could be the next victim of Europe’s financial infection, leading nervous investors to sell Italian stocks and bonds and damping euphoria over a weekend deal to bail out Spain’s banks.

Italian officials privately expressed concern that the 100 billion euros, or $125 billion, that Europe pledged to Spanish banks might not stop the troubles from spreading.

Why Berlin Is Balking on a Bailout
By HANS-WERNER SINN
The New York Times
June 13, 2012

It is unfair for critics to ask Germany to bear even more risk. Should Greece, Ireland, Italy, Portugal and Spain go bankrupt and repay nothing, while the euro survives, Germany would lose $899 billion. Should the euro fail, Germany would lose over $1.35 trillion, more than 40 percent of its G.D.P. Has the United States ever incurred a similar risk for helping other countries?

Some critics have argued that Germany, having benefited from the Marshall Plan, now owes it to Europe to undertake a similar rescue. Those critics should look at the numbers.

Greece has received or been promised $575 billion through assistance efforts, including Target credit, E.C.B. bond purchases and a haircut after a debt moratorium. Compare this with the Marshall Plan, for which Germany is very grateful. It received 0.5 percent of its G.D.P. for four years, or 2 percent in total. Applied to the Greek G.D.P., this would be about $5 billion today.

In other words, Greece has received a staggering 115 Marshall plans, 29 from Germany alone, and yet the situation has not improved. Why, Mr. Obama, is that not enough?

by Amy Goodman
truthdig
July 11, 2012 

As Spain’s prime minister announced deep austerity cuts Wednesday in order to secure funds from the European Union to bail out Spain’s failing banks, the people of Spain have taken to the streets once again for what they call “Real Democracy Now.” This comes a week after the government announced it was launching a criminal investigation into the former CEO of Spain’s fourth-largest bank, Bankia. Rodrigo Rato is no small fish: Before running Bankia he was head of the International Monetary Fund. What the U.S. media don’t tell you is that this official government investigation was initiated by grass-roots action.

The Occupy movement in Spain is called M-15, for the day it began, May 15, 2011. I met with one of the key organizers in Madrid last week on the day the Rato investigation was announced. He smiled, and said, “Something is starting to happen.” The organizer, Stephane Grueso, is an activist filmmaker who is making a documentary about the May 15 movement. He is a talented professional, but, like 25 percent of the Spanish population, he is unemployed: “We didn’t like what we were seeing, where we were going. We felt we were losing our democracy, we were losing our country, we were losing our way of life. ... We had one slogan: ‘Democracia real YA!’—we want a ‘real democracy, now!’ Fifty people stayed overnight in Puerta del Sol, this public square. And then the police tried to take us out, and so we came back. And then this thing began to multiply in other cities in Spain. In three, four days’ time, we were like tens of thousands of people in dozens of cities in Spain, camped in the middle of the city—a little bit like we saw in Tahrir in Egypt.”

The occupation of Puerta del Sol and other plazas around Spain continued, but, as with Occupy Wall Street encampments around the U.S., they were eventually broken up. The organizing continued, though, with issue-oriented working groups and neighborhood assemblies. One M-15 working group decided to sue Rodrigo Rato, and recruited pro bono lawyers and identified more than 50 plaintiffs, people who felt they’d been personally defrauded by Bankia. While the lawyers were volunteers, a massive lawsuit costs money, so this movement, driven by social media, turned to “crowd funding,” to the masses of supporters in their movement for small donations. In less than a day, they raised more than $25,000. The lawsuit was filed in June of this year...

Another Bank Bailout
by Paul Krugman
The New York Times
June 11, 2012

Oh, wow — another bank bailout, this time in Spain. Who could have predicted that?

The answer, of course, is everybody. In fact, the whole story is starting to feel like a comedy routine: yet again the economy slides, unemployment soars, banks get into trouble, governments rush to the rescue — but somehow it’s only the banks that get rescued, not the unemployed.

Just to be clear, Spanish banks did indeed need a bailout. Spain was clearly on the edge of a “doom loop” — a well-understood process in which concern about banks’ solvency forces the banks to sell assets, which drives down the prices of those assets, which makes people even more worried about solvency. Governments can stop such doom loops with an infusion of cash; in this case, however, the Spanish government’s own solvency is in question, so the cash had to come from a broader European fund.

So there’s nothing necessarily wrong with this latest bailout (although a lot depends on the details). What’s striking, however, is that even as European leaders were putting together this rescue, they were signaling strongly that they have no intention of changing the policies that have left almost a quarter of Spain’s workers — and more than half its young people — jobless...

The Austerity Agenda
by Paul Krugman
The New York Times
June 1, 2012

“The boom, not the slump, is the right time for austerity.” So declared John Maynard Keynes 75 years ago, and he was right. Even if you have a long-run deficit problem — and who doesn’t? — slashing spending while the economy is deeply depressed is a self-defeating strategy, because it just deepens the depression.

So why is Britain doing exactly what it shouldn’t? Unlike the governments of, say, Spain or California, the British government can borrow freely, at historically low interest rates. So why is that government sharply reducing investment and eliminating hundreds of thousands of public-sector jobs, rather than waiting until the economy is stronger?

Over the past few days, I’ve posed that question to a number of supporters of the government of Prime Minister David Cameron, sometimes in private, sometimes on TV. And all these conversations followed the same arc: They began with a bad metaphor and ended with the revelation of ulterior motives...

Europe's biggest fear — A run they cannot stop
The Economist
May 26, 2012

IT'S been a week since shares in Bankia plummeted on reports, later denied, that customers were pulling deposits out of the Spanish lender. Fears of a full-scale bank run in Greece have not yet materialised. But the possibility of a deposit run in Europe's peripheral states is still very much alive. It is also the thing that policymakers are least prepared for...

Eurodämmerung
Paul Krugman on his blog on the NYT
May 13, 2012

Some of us have been talking it over, and here’s what we think the end game looks like:

1. Greek euro exit, very possibly next month.

2. Huge withdrawals from Spanish and Italian banks, as depositors try to move their money to Germany.

3a. Maybe, just possibly, de facto controls, with banks forbidden to transfer deposits out of country and limits on cash withdrawals.

3b. Alternatively, or maybe in tandem, huge draws on ECB credit to keep the banks from collapsing.

4a. Germany has a choice. Accept huge indirect public claims on Italy and Spain, plus a drastic revision of strategy — basically, to give Spain in particular any hope you need both guarantees on its debt to hold borrowing costs down and a higher eurozone inflation target to make relative price adjustment possible; or:

4b. End of the euro.

And we’re talking about months, not years, for this to play out.

Martin Luther and the Eurozone: Theology as an Economic Destiny?
by Stephan Richter
The Globalist
May 14, 2012

If a European country turned from Catholicism to Lutheranism (or, more broadly, to Protestantism) after the early 1500s, when Martin Luther (and a few other reformers, such as Zwingli and Calvin) launched the Reformation, that would have been a good indication that the nation would qualify for the adoption of the common European currency about five centuries later. If it had stayed predominantly Catholic, or even Greek Orthodox, then not.

With few exceptions, that simple rule would have saved hundreds of millions of people around the world a lot of despair, along with much of the animosity and frustration that now prevails — never mind trillions of euros in asset value.

Obviously, Germany would have been in the eurozone under that rule, as would Denmark, Sweden and Norway. Interestingly, financially solid Switzerland would have been in, too. So would, even more tantalizingly, the United Kingdom.

Ireland? Spain? Portugal? Italy? No. Never mind Greece, that highly (un-)Orthodox country when it comes to conducting a clean and proper economic policy.

Luther, if asked at Maastricht, would have nixed any suggestion of including these countries straight away. "Read my lips: No unreformed Catholic countries," he would have chanted. The euro, as a result, would have been far more cohesive — and the European economy in far less trouble...

Global Economy Faces a 'Perfect Storm' in 2013— Roubini
9 May 2012
By: Jeff Cox
CNBC.com Senior Writer

LAS VEGAS — A "global perfect storm" looms for 2013 in which the U.S. economy could fall back into recession and the euro zone will begin to break up, according to the latest gloomy forecast from economist Nouriel Roubini.

Four primary factors will come together, according to the famed "Dr. Doom," to create worldwide turbulence: In addition to the troubles in the U.S. and Europe, Roubini sees military conflict in Iran and a slowdown in emerging markets, particularly China, as the added elements to create the storm.

"You put it together — the euro zone troubles with the US slowdown, China...you could have a train wreck next year," Roubini said during the opening day of the Skybridge Alternative Conference, or SALT, a gathering of a few thousand hedge fund managers concerned about global economic direction...

Roubini— EU To Break Up Once Contagion Hits Italy And Spain
Agustino Fontevecchia
Forbes
May 9, 2012

Their fate may be sealed, if famed NYU economist Nouriel Roubini is right, though. In a televised interview with CNBC, the man dubbed Dr. Doom said Greece will probably be out of the monetary union in 2013, possibly followed by Portugal and Cyprus. Calling the European situation a “slow motion train wreck,” Roubini noted he expects other peripherals will have to restructure their debt, while failing to improve competitiveness, as the Greek exit would fuel contagion.

Over a 2 to 3 year time span, Spain and Italy will have to face the music. Spain, Roubini explained, will lose market access by the end of the year, requiring a troika bailout and, if this fails to bring the economy back to growth, will have to leave the Eurozone.

“If a small group of countries, Greece, Cyprus, Portugal, restructure and exit, the Eurozone survives,” said Dr. Doom, “but if down the line the problems of debt, growth and sustainability spread to Spain and Italy, they lose market access, the bailout doesn’t work, they have to restructure the debt and eventually they might have to exit, that would be a breakup of the Eurozone,” added Roubini...

 
 

Rebuilding Through Reform: How to Ensure Global Financial Stability
by Esther L. George
The Globalist
May 9, 2012

They had become convinced that we had entered a new era in which lower credit standards could simply be priced into the terms of a subprime loan, or that bank leverage ratios were a thing of the past because institutions and regulators could risk-weight assets and off-balance-sheet exposures and use quantitative risk models to come up with "better" and, invariably, lower measures of capital needs.

We also have had numerous changes in the structure of our financial markets over the past few decades, which have left us with a much different corporate culture in banking and finance. In fact, the new structure has brought with it a greater focus on short-term performance and more aggressive attitudes regarding risk-taking.

These changes include a rapidly rising concentration in the banking industry, the withering away of the Glass-Steagall constraints on banks engaging in securities activities and the growth of securitization and money and capital markets.

The outgrowth of all these changes was a complacency and false confidence in new risk-management practices and a substantial and largely unrecognized build-up in leverage and risk that laid the groundwork for this crisis.

If we are to construct a stronger financial system, we must address the significant problems and obvious shortcomings that led to the crisis. First and foremost is correcting the misaligned incentives and the improper expansion of the public safety net that encouraged and enabled institutions to take excessive risks.

The crisis has illustrated an ongoing pattern in which the response of public authorities is to expand the public safety net for too-big-to-fail institutions. This in turn facilitates even more risk-taking and sets the foundation for the next crisis to follow...

Those Revolting Europeans
by Paul Krugman
The New York Times
April 6, 2012

The French are revolting. The Greeks, too. And it’s about time.

Both countries held elections Sunday that were in effect referendums on the current European economic strategy, and in both countries voters turned two thumbs down. It’s far from clear how soon the votes will lead to changes in actual policy, but time is clearly running out for the strategy of recovery through austerity — and that’s a good thing.

Needless to say, that’s not what you heard from the usual suspects in the run-up to the elections. It was actually kind of funny to see the apostles of orthodoxy trying to portray the cautious, mild-mannered François Hollande as a figure of menace. He is “rather dangerous,” declared The Economist, which observed that he “genuinely believes in the need to create a fairer society.” Quelle horreur!

What is true is that Mr. Hollande’s victory means the end of “Merkozy,” the Franco-German axis that has enforced the austerity regime of the past two years. This would be a “dangerous” development if that strategy were working, or even had a reasonable chance of working. But it isn’t and doesn’t; it’s time to move on. Europe’s voters, it turns out, are wiser than the Continent’s best and brightest...

The Germans, needless to say, don’t like this conclusion, nor does the leadership of the central bank. They will cling to their fantasies of prosperity through pain, and will insist that continuing with their failed strategy is the only responsible thing to do. But it seems that they will no longer have unquestioning support from the Élysée Palace. And that, believe it or not, means that both the euro and the European project now have a better chance of surviving than they did a few days ago.

Death of a Fairy Tale
by Paul Krugman
The New York Times
April 26, 2012

This was the month the confidence fairy died.

For the past two years most policy makers in Europe and many politicians and pundits in America have been in thrall to a destructive economic doctrine. According to this doctrine, governments should respond to a severely depressed economy not the way the textbooks say they should — by spending more to offset falling private demand — but with fiscal austerity, slashing spending in an effort to balance their budgets.

Critics warned from the beginning that austerity in the face of depression would only make that depression worse. But the “austerians” insisted that the reverse would happen. Why? Confidence! “Confidence-inspiring policies will foster and not hamper economic recovery,” declared Jean-Claude Trichet, the former president of the European Central Bank — a claim echoed by Republicans in Congress here. Or as I put it way back when, the idea was that the confidence fairy would come in and reward policy makers for their fiscal virtue.

The good news is that many influential people are finally admitting that the confidence fairy was a myth. The bad news is that despite this admission there seems to be little prospect of a near-term course change either in Europe or here in America, where we never fully embraced the doctrine, but have, nonetheless, had de facto austerity in the form of huge spending and employment cuts at the state and local level.

So, about that doctrine: appeals to the wonders of confidence are something Herbert Hoover would have found completely familiar — and faith in the confidence fairy has worked out about as well for modern Europe as it did for Hoover’s America. All around Europe’s periphery, from Spain to Latvia, austerity policies have produced Depression-level slumps and Depression-level unemployment; the confidence fairy is nowhere to be seen, not even in Britain, whose turn to austerity two years ago was greeted with loud hosannas by policy elites on both sides of the Atlantic...

The question now is what they’re going to do about it. And the answer, I fear, is: not much...

Europe’s Economic Suicide
by Paul Krugman
The New York Times
April 16, 2012

On Saturday The Times reported on an apparently growing phenomenon in Europe: “suicide by economic crisis,” people taking their own lives in despair over unemployment and business failure. It was a heartbreaking story. But I’m sure I wasn’t the only reader, especially among economists, wondering if the larger story isn’t so much about individuals as about the apparent determination of European leaders to commit economic suicide for the Continent as a whole.

Just a few months ago I was feeling some hope about Europe. You may recall that late last fall Europe appeared to be on the verge of financial meltdown; but the European Central Bank, Europe’s counterpart to the Fed, came to the Continent’s rescue. It offered Europe’s banks open-ended credit lines as long as they put up the bonds of European governments as collateral; this directly supported the banks and indirectly supported the governments, and put an end to the panic.

The question then was whether this brave and effective action would be the start of a broader rethink, whether European leaders would use the breathing space the bank had created to reconsider the policies that brought matters to a head in the first place.

But they didn’t. Instead, they doubled down on their failed policies and ideas. And it’s getting harder and harder to believe that anything will get them to change course...

What Greece Means
by Paul Krugman
The New York Times
March 12, 2012

So Greece has officially defaulted on its debt to private lenders. It was an “orderly” default, negotiated rather than simply announced, which I guess is a good thing. Still, the story is far from over. Even with this debt relief, Greece — like other European nations forced to impose austerity in a depressed economy — seems doomed to many more years of suffering...

But what Greek experience actually shows is that while running deficits in good times can get you in trouble — which is indeed the story for Greece, although not for Spain — trying to eliminate deficits once you’re already in trouble is a recipe for depression...

What Ails Europe?
by Paul Krugman
The New York Times
February 26, 2012

Things are terrible here, as unemployment soars past 13 percent. Things are even worse in Greece, Ireland, and arguably in Spain, and Europe as a whole appears to be sliding back into recession.

Why has Europe become the sick man of the world economy? Everyone knows the answer. Unfortunately, most of what people know isn't true — and false stories about European woes are warping our economic discourse.

Read an opinion piece about Europe — or, all too often, a supposedly factual news report — and you'll probably encounter one of two stories, which I think of as the Republican narrative and the German narrative. Neither story fits the facts...

Greece: The Epicenter of Global Pillage
By Steven Lendman
The Progressive Radio News Hour
February 24, 2012

Predatory bankers make serial killers look good by comparison. Their business model creates crises to facilitate grand theft, financial terrorism, and debt entrapment.

They steal all material wealth and then some. They systematically rob investors and strip mine economies for self-enrichment.

They demand they get paid first. They hold nations hostage to assure it. They turn crises into catastrophes.

They leave mass impoverishment, high unemployment, neo-serfdom, and human wreckage in their wake.

Their Federal Reserve/ECB/IMF/World Bank/political class lackeys do their bidding.

They're more dangerous than standing armies. They wage war by other means. They cause "demographic shrinkage, shortened life spans, emigration and capital flight," explains Michael Hudson.

They're a malignancy ravaging societies and humanity. Greece is the epicenter of what's metastasizing globally. The latest bailout deal highlights out-of-control pillage...
Pain Without Gain
by Paul Krugman
The New York Times
February 20, 2012

Last week the European Commission confirmed what everyone suspected: the economies it surveys are shrinking, not growing. It's not an official recession yet, but the only real question is how deep the downturn will be.

And this downturn is hitting nations that have never recovered from the last recession. For all America's troubles, its gross domestic product has finally surpassed its pre-crisis peak; Europe's has not. And some nations are suffering Great Depression-level pain: Greece and Ireland have had double-digit declines in output, Spain has 23 percent unemployment, Britain's slump has now gone on longer than its slump in the 1930s...

Posted: Dec 1, 2010 - 10:12am in politics: European Union

Europe Examines Ways to Quell Its Debt Crisis

Fears over the European financial crisis began to spread Tuesday from the weaker countries to healthier ones, including Italy and Belgium, and even much stronger Germany, spurring a stepped up search for a solution to the economic problems putting a strain on Europe's decade-old monetary union.

"Ireland and the Euro— Is It Time to Part?"  by Paul Krugman

This is the way the euro ends. Not with a whimper, but with a bank run.

By DAILY MAIL REPORTER
25 November 2010

So who's next for financial meltdown? Spain, Portugal and Belgium set to follow Ireland into abyss as debt crisis threatens to destroy the euro 

 

Wishing Krugman Story Were True
By ROSS KAMINSKY on 3.11.13
The American Spectator

Earlier this morning, Breitbart News had posted an article about Paul Krugman filing for bankruptcy after years of lavish spending, seeming to show the irony of someone recommending big spending being done in by those policies on a personal level.

It is a story that has been making its way around the web for a few days, and was picked up at the relatively reputable Boston.com except that it appears to have been posted by a blogger rather than a reporter. That blogger picked up the story from an Austrian magazine, Format. The Austrian magazine noted at the end of the piece that they got the story from the web site The Daily Currant which is a satire site, like an online version of The Onion.

In short, the story about Krugman going bankrupt is an amusing bit of satire, one which many non-leftists might hope to be true — but which isn’t true.

If you see the story being passed around as fact, you are now armed with the truth. I don’t like seeing “our side” passing around untruths because it makes us seem less credible. To be clear, the story was obviously explicitly satire given the source, and the fault with making it seem as if it were a real story lies with those who aren’t doing the one minute of fact-checking needed to recognize where it came from.

Turns out yesterday would have been Ronald Reagan's 101st birthday. In all the excitement over the tsunami of Santorum that engulfed the country, it plumb got right by me. So, let me say, in my own belated way, and because behind-the-times was the basis for Reagan's entire career, happy birthday, ya silly old coot.

How do you like your party now, Ronnie? A Mormon everyone hates, a world-historical balloon animal 10 years past his sell-by date, a survivalist crank from Texas, and a guy who is pretty much a dick. That's the party you and your boys created. That's the end product of the "conservative movement" of which you were the amiable and occasionally coherent figurehead, a prop in your own life. You know how you know that's the case, Ronnie? Look how hard they're trying to memorialize you in concrete and marble. They stuck your name on National Airport, and on the biggest and ugliest building in Washington, D.C., to celebrate your devotion to smaller government...

Reagan, Class and Organized Labor: "One Of The Most Damaging Presidents In American History"

In the late 1940’s, as president of the Screen Actors’ Guild union, Ronald Reagan testified before the House Un-American Activities Committee on so-called "subversive activity" in Hollywood, reporting on actors, directors, and screenwriters deemed Communist sympathizers.

And in the 1960’s and 70’s, as Governor of the State of California, Reagan fought the efforts of migrant farm workers to win union contracts, vetoing the Agricultural Labor Relations Act, a bill granting farm workers collective bargaining rights. In one well-publicized episode, then-Governor Reagan appeared on television eating grapes in defiance of a union-sponsored boycott against miserable working conditions in California’s vineyards.

In August of 1981, thirteen thousand members of the Professional Air Traffic Controllers Organization, or PATCO, ignored federal laws prohibiting strikes and walked off the job in protest of long shifts and mandatory overtime...

Two days later, Reagan made good on his promise, firing more than eleven thousand air traffic controllers, jailing strike leaders and ultimately abolishing the union. It was the first time in U.S. history that permanent replacement workers had been used on such a wide scale to break a strike...

Reagan Was a Keynesian
by Paul Krugman
The New York Times
June 8, 2012

There’s no question that America’s recovery from the financial crisis has been disappointing. In fact, I’ve been arguing that the era since 2007 is best viewed as a “depression,” an extended period of economic weakness and high unemployment that, like the Great Depression of the 1930s, persists despite episodes during which the economy grows. And Republicans are, of course, trying — with considerable success — to turn this dismal state of affairs to their political advantage.

They love, in particular, to contrast President Obama’s record with that of Ronald Reagan, who, by this point in his presidency, was indeed presiding over a strong economic recovery. You might think that the more relevant comparison is with George W. Bush, who, at this stage of his administration, was — unlike Mr. Obama — still presiding over a large loss in private-sector jobs. And, as I’ll explain shortly, the economic slump Reagan faced was very different from our current depression, and much easier to deal with. Still, the Reagan-Obama comparison is revealing in some ways. So let’s look at that comparison, shall we?...

OBAMA AND THE BUSH LEGACY: A SCORECARD
by John Cassidy
The New Yorker
June 1, 2012
 

With two George Bushes and their wives visiting the White House today for the unveiling of George W.’s official portrait, how much of the Bush legacy remains in place? The election of 2008 was a classic “time for a change” contest, in which Americans picked a fresh-faced young senator to replace an increasingly haggard and unpopular President. Three and a half years later, what’s different?

Some things are; some aren’t. Here is a quick (and far from definitive) scorecard. But first, a warning: this isn’t an exercise in judging Obama. In some areas, such as dealing with the Supreme Court, he was powerless to undo Bush’s handiwork. In other areas, such as Afghanistan, he set out to complete Bush’s agenda rather than overturn it. But it’s always interesting to compare Presidencies and to try and figure out what, if anything, they leave behind that’s lasting. So here goes...

Let Detroit Go Bankrupt
by Mitt Romney
The New York Times
November 18, 2008

IF General Motors, Ford and Chrysler get the bailout that their chief executives asked for yesterday, you can kiss the American automotive industry goodbye. It won’t go overnight, but its demise will be virtually guaranteed.

Without that bailout, Detroit will need to drastically restructure itself. With it, the automakers will stay the course — the suicidal course of declining market shares, insurmountable labor and retiree burdens, technology atrophy, product inferiority and never-ending job losses. Detroit needs a turnaround, not a check...

America’s Leftward Tilt?

by Drew Westen
The New York Times
November 3, 2012

The obvious story line of this election, whoever wins, is that Americans want pragmatic solutions to the relentless distress they have experienced for over a decade, whether that means a more active or a more passive government. They are looking for anyone who can provide a coherent vision of how to fix an economy that is not working for people who work for a living. But rather than a victory for pragmatism, we may well see both the winners and losers take away a very different lesson: that this election was a mandate for another shift to the right...

The reality is that our government hasn’t become this dysfunctional because the parties are so “polarized.” It’s because there is only one pole in American politics today, and its magnetic field is so powerful that it has drawn both parties in the same direction — rightward. And it is in that same direction that the magnetic field of contemporary American politics is likely to pull the stories the two parties tell after the election — and the policies the winner pursues...

A majority of Americans still holds Bush accountable for the Great Recession, and with good reason. We are still breathing the fumes of his toxic brew of deregulation, massive transfers of wealth to the rich and a doubling of the national debt. His policies, and those of a Republican Congress that had its way with the economy for six years, were in fact the culmination of a right-wing ideological revolution led by Ronald Reagan, which changed the way Americans view their government. Mr. Reagan’s shadow continues to loom large, because Democrats have yet to make the case for a compelling alternative and have too often accepted the premises of the right...

But too often the consensus among the parties is that the solution to what ails us is deficit cutting and attacks on, or failure to support, the unions that gave us the weekend, 20th-century benefits and the eight-hour day. Both candidates have implicitly or explicitly blamed “public employees” with their “bloated pensions” and waste-filled jobs for our economic woes (with Mr. Obama sending a signal by freezing the pay of federal workers, as if tightening their belts would somehow loosen the noose around the Treasury)...

Austerity has been a failure almost everywhere governments have tried it, with Spain, where one in four working people is no longer working, being the most recent example. Both parties preach the gospel of free trade, which polls poorly because ordinary Americans can see with their own eyes how we have freely traded the good American wages and benefits away...

When Americans saw the scope of the savings and loan scandal in the 1980s, which today seems like just a bad day on the unregulated derivatives market, Ronald Reagan’s attorney general, Edwin Meese III, put nearly a thousand bankers behind bars. In contrast, Mr. Obama’s attorney general, Eric H. Holder Jr., can’t seem to smell the stench of a fraud that cost millions of people their jobs or homes...

For years, even Republicans accepted the premises of the New Deal, which drew them leftward just as today’s political winds blow everything in their path rightward. President Dwight D. Eisenhower created the Interstate highway system. President Richard M. Nixon created the Environmental Protection Agency. Neither believed in the radical dismantling of programs that protected ordinary Americans, and both believed that a crucial role of government is to provide the infrastructure that makes economic prosperity possible.

Then came the conservative movement that ushered in Reagan, whose ideology has dominated our political discourse ever since, even after its proven failure.

Fed Board Member Conflicts Detailed by GAO: Banks and Businesses Took $4 Trillion in Bailouts

WASHINGTON, June 12 — More than $4 trillion in near zero-interest Federal Reserve loans and other financial assistance went to the banks and businesses of at least 18 current and former Federal Reserve regional bank directors in the aftermath of the 2008 financial collapse, according to Government Accountability Office records made public for the first time today by Sen. Bernie Sanders.

On the eve of Senate testimony by JPMorgan Chase CEO Jamie Dimon, Sanders (I-Vt.) released the detailed findings on Dimon and other Fed board members whose banks and businesses benefited from Fed actions...

To read a report summarizing the new GAO information, click here.

Egos and Immorality
by Paul Krugman
The New York Times
May 24, 2012

In the wake of a devastating financial crisis, President Obama has enacted some modest and obviously needed regulation; he has proposed closing a few outrageous tax loopholes; and he has suggested that Mitt Romney’s history of buying and selling companies, often firing workers and gutting their pensions along the way, doesn’t make him the right man to run America’s economy.

Wall Street has responded — predictably, I suppose — by whining and throwing temper tantrums. And it has, in a way, been funny to see how childish and thin-skinned the Masters of the Universe turn out to be. Remember when Stephen Schwarzman of the Blackstone Group compared a proposal to limit his tax breaks to Hitler’s invasion of Poland? Remember when Jamie Dimon of JPMorgan Chase characterized any discussion of income inequality as an attack on the very notion of success?

But here’s the thing: If Wall Streeters are spoiled brats, they are spoiled brats with immense power and wealth at their disposal. And what they’re trying to do with that power and wealth right now is buy themselves not just policies that serve their interests, but immunity from criticism...

Dimon’s Déjà Vu Debacle
by Paul Krugman
The New York Times
May 21, 2012

Sometimes it’s hard to explain why we need strong financial regulation — especially in an era saturated with pro-business, pro-market propaganda. So we should always be grateful when someone makes the case for regulation more compelling and easier to understand. And this week, that means offering a special shout-out to two men: Jamie Dimon and Mitt Romney.

I’ll come back shortly to the troubles at JPMorgan Chase, the bank Mr. Dimon runs. First, however, let me talk about Mr. Romney, whose remarks about those troubles were so off-point that they constitute a teachable moment...

Needy States Use Housing Aid Cash to Plug Budgets
by Shaila Dewan
The New York Times
May 16, 2012
 

Hundreds of millions of dollars meant to provide a little relief to the nation’s struggling homeowners is being diverted to plug state budget gaps.

In a budget proposed this week, California joined more than a dozen states that want to help close gaping shortfalls using money paid by the nation’s biggest banks and earmarked for foreclosure prevention, investigations of financial fraud and blunting the ill effects of the housing crisis. California was awarded more than $400 million from the banks, and Gov. Jerry Brown has proposed using the bulk of that sum to pay the state’s debts.

The money was part of a national settlement valued at $25 billion and negotiated with five big banks over abuses in their mortgage and foreclosure processes.

The settlement, reached in February after a year of talks and intervention by the Obama administration, was the second-largest in history involving the states, trailing the tobacco industry settlement, and represented the first large-scale commitment by banks to provide direct aid to borrowers.

As part of the settlement, the banks agreed to pay the states $2.5 billion, money intended to help homeowners and mitigate the effects of the foreclosure surge. But critics complained that this was the only cash the banks were required to pay — the rest comes in the form of “credits” for reducing mortgage debt and other activities. Even that relatively small amount has proved too great a temptation for lawmakers...

Why We Regulate
by Paul Krugman
The New York Times
May 14, 2012
 

One of the characters in the classic 1939 film “Stagecoach” is a banker named Gatewood who lectures his captive audience on the evils of big government, especially bank regulation — “As if we bankers don’t know how to run our own banks!” he exclaims. As the film progresses, we learn that Gatewood is in fact skipping town with a satchel full of embezzled cash.

As far as we know, Jamie Dimon, the chairman and C.E.O. of JPMorgan Chase, isn’t planning anything similar. He has, however, been fond of giving Gatewood-like speeches about how he and his colleagues know what they’re doing, and don’t need the government looking over their shoulders. So there’s a large heap of poetic justice — and a major policy lesson — in JPMorgan’s shock announcement that it somehow managed to lose $2 billion in a failed bit of financial wheeling-dealing.

Just to be clear, businessmen are human — although the lords of finance have a tendency to forget that — and they make money-losing mistakes all the time. That in itself is no reason for the government to get involved. But banks are special, because the risks they take are borne, in large part, by taxpayers and the economy as a whole. And what JPMorgan has just demonstrated is that even supposedly smart bankers must be sharply limited in the kinds of risk they’re allowed to take on.

Why, exactly, are banks special? Because history tells us that banking is and always has been subject to occasional destructive “panics,” which can wreak havoc with the economy as a whole. Current right-wing mythology has it that bad banking is always the result of government intervention, whether from the Federal Reserve or meddling liberals in Congress. In fact, however, Gilded Age America — a land with minimal government and no Fed — was subject to panics roughly once every six years. And some of these panics inflicted major economic losses...

Easy Useless Economics
by Paul Krugman
The New York Times
May 11, 2012

A few days ago, I read an authoritative-sounding paper in The American Economic Review, one of the leading journals in the field, arguing at length that the nation’s high unemployment rate had deep structural roots and wasn’t amenable to any quick solution. The author’s diagnosis was that the U.S. economy just wasn’t flexible enough to cope with rapid technological change. The paper was especially critical of programs like unemployment insurance, which it argued actually hurt workers because they reduced the incentive to adjust.

O.K., there’s something I didn’t tell you: The paper in question was published in June 1939. Just a few months later, World War II broke out, and the United States — though not yet at war itself — began a large military buildup, finally providing fiscal stimulus on a scale commensurate with the depth of the slump. And, in the two years after that article about the impossibility of rapid job creation was published, U.S. nonfarm employment rose 20 percent — the equivalent of creating 26 million jobs today.

So now we’re in another depression, not as bad as the last one, but bad enough. And, once again, authoritative-sounding figures insist that our problems are “structural,” that they can’t be fixed quickly. We must focus on the long run, such people say, believing that they are being responsible. But the reality is that they’re being deeply irresponsible...

Anyway, John Maynard Keynes had these peoples’ number more than 80 years ago. “But this long run,” he wrote, “is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past the sea is flat again.”

I would only add that inventing reasons not to do anything about current unemployment isn’t just cruel and wasteful, it’s bad long-run policy, too. For there is growing evidence that the corrosive effects of high unemployment will cast a shadow over the economy for many years to come. Every time some self-important politician or pundit starts going on about how deficits are a burden on the next generation, remember that the biggest problem facing young Americans today isn’t the future burden of debt — a burden, by the way, that premature spending cuts probably make worse, not better. It is, rather, the lack of jobs, which is preventing many graduates from getting started on their working lives.

So all this talk about structural unemployment isn’t about facing up to our real problems; it’s about avoiding them, and taking the easy, useless way out. And it’s time for it to stop.

The following is excerpted from a new book by Paul Krugman called End This Depression Now!

CHAPTER ONE: HOW BAD THINGS ARE

I think as those green shoots begin to appear in different markets and as some confidence begins to come back that will begin the positive dynamic that brings our economy back.

Do you see green shoots?

I do. I do see green shoots.

—Ben Bernanke, chairman of the Federal Reserve, interviewed by 60 Minutes, March 15, 2009

 

In March 2009 Ben Bernanke, normally neither the most cheerful nor the most poetic of men, waxed optimistic about the economic prospect. After the fall of Lehman Brothers six months earlier, America had entered a terrifying economic nosedive. But appearing on the TV show 60 Minutes, the Fed chairman declared that spring was at hand.

His remarks immediately became famous, not least because they bore an eerie resemblance to the words of Chance, aka Chauncey Gardiner, the simpleminded gardener mistaken for a wise man in the movie Being There. In one scene Chance, asked to comment on economic policy, assures the president, "As long as the roots are not severed, all is well and all will be well in the garden. . . . There will be growth in the spring." Despite the jokes, however, Bernanke's optimism was widely shared. And at the end of 2009 Time declared Bernanke its Person of the Year.

Unfortunately, all was not well in the garden, and the promised growth never came.

To be fair, Bernanke was right that the crisis was easing. The panic that had gripped financial markets was ebbing, and the economy's plunge was slowing. According to the official scorekeepers at the National Bureau of Economic Research, the so-called Great Recession that started in December 2007 ended in June 2009, and recovery began. But if it was a recovery, it was one that did little to help most Americans. Jobs remained scarce; more and more families depleted their savings, lost their homes, and, worst of all, lost hope. True, the unemployment rate is down from the peak it reached in October 2009. But progress has come at a snail's pace; we're still waiting, after all these years, for that "positive dynamic" Bernanke talked about to make an appearance.

And that was in America, which at least had a technical recovery. Other countries didn't even manage that. In Ireland, in Greece, in Spain, in Italy, debt problems and the "austerity" programs that were supposed to restore confidence not only aborted any kind of recovery but produced renewed slumps and soaring unemployment...

Austerity Is So Wrong!
by Paul Krugman
The Daily Beast
May 6, 2012

In the scary months that followed the fall of Lehman Brothers, just about all major governments agreed that the sudden collapse of private spending had to be offset, and they turned to expansionary fiscal and monetary policy—spending more, taxing less, and printing lots of monetary base—in an effort to limit the damage. In so doing, they were following the advice of standard textbooks; more important, they were following the hard-earned lessons of the Great Depression.

But a funny thing happened in 2010: much of the world’s policy elite—the bankers and financial officials who define conventional wisdom—decided to throw out the textbooks and the lessons of history, and declare that down is up. That is, it quite suddenly became the fashion to call for spending cuts, tax hikes, and even higher interest rates even in the face of mass unemployment...

Why the Economy is Heading for a Stall
by Robert Reich on his blog
May 3, 2012

What’s going on? Europe is sliding into recession, and gas prices are still high. But the real problem lies closer to home. Cuts in government spending are reducing domestic demand precisely at the time when consumers are reaching the end of their ropes and can’t spend more.

Consumers did all the spending they could in the first quarter. Household purchases increased 2.9 percent between January and March. That was the biggest increase since the last quarter of 2010.

Absent real wage gains, that spending pace can’t possibly continue. Consumer savings are down and their debt is up. Consumer confidence dropped last week to a two-month low.

The only people left spending are in the top 5 percent, whose stock portfolios have been doing so well they feel even richer. But the top 5 percent can’t pull the entire economy out of the doldrums. Besides, if demand continues to slide the stock market will follow.

The real problem is political, not economic. Republicans in Congress insist on cutting public spending even before the economy has mended...

Paul Krugman on How to Fix the Economy — and Why It's Easier Than You Think
by Julian Brookes
RollingStone
May 2, 2012

We've been here before, Krugman argues, during the Great Depression, and the actions that got us out of that crisis will get us out of this one, too.

The basic issue, says Krugman, is a lack of demand. American consumers and businesses, aren't spending enough, and efforts to get them to open their wallets have gone nowhere. Krugman's solution: The federal government needs to step in and spend. A lot. On debt relief for struggling homeowners; on infrastructure projects; on aid to states and localities; on safety-net programs. Call it "stimulus" if you like. Call it Keynesian economics, after the great economic thinker (and Krugman idol) John Maynard Keynes, who first championed the idea that government has an essential role in saving the free market from its own excesses. Whatever you call it, it worked in the late nineteen-thirties and forties, when the U.S. government started shelling out on the military in the build-up to World War II, bringing an abrupt end to years of economic misery and laying the foundation for decades of prosperity. Krugman is not calling for an increase in military spending, much less a global war! But the WWII example shows that large-scale government spending can kick-start the economy. It worked then, he says, and it will work now...

Welcome to the Asylum
by Chris Hedges
Truthdig
April 30, 2012

When civilizations start to die they go insane. Let the ice sheets in the Arctic melt. Let the temperatures rise. Let the air, soil and water be poisoned. Let the forests die. Let the seas be emptied of life. Let one useless war after another be waged. Let the masses be thrust into extreme poverty and left without jobs while the elites, drunk on hedonism, accumulate vast fortunes through exploitation, speculation, fraud and theft. Reality, at the end, gets unplugged. We live in an age when news consists of Snooki’s pregnancy, Hulk Hogan’s sex tape and Kim Kardashian’s denial that she is the naked woman cooking eggs in a photo circulating on the Internet. Politicians, including presidents, appear on late night comedy shows to do gags and they campaign on issues such as creating a moon colony. “At times when the page is turning,” Louis-Ferdinand Celine wrote in “Castle to Castle,” “when History brings all the nuts together, opens its Epic Dance Halls! hats and heads in the whirlwind! Panties overboard!”

The quest by a bankrupt elite in the final days of empire to accumulate greater and greater wealth, as Karl Marx observed, is modern society’s version of primitive fetishism. This quest, as there is less and less to exploit, leads to mounting repression, increased human suffering, a collapse of infrastructure and, finally, collective death. It is the self-deluded, those on Wall Street or among the political elite, those who entertain and inform us, those who lack the capacity to question the lusts that will ensure our self-annihilation, who are held up as exemplars of intelligence, success and progress. The World Health Organization calculates that one in four people in the United States suffers from chronic anxiety, a mood disorder or depression—which seems to me to be a normal reaction to our march toward collective suicide. Welcome to the asylum...

Earth to Ben Bernanke
by Paul Krugman
The New York Times Magazine
April 24, 2012

The Bernanke Conundrum — the divergence between what Professor Bernanke advocated and what Chairman Bernanke has actually done — can be reconciled in a few possible ways. Maybe Professor Bernanke was wrong, and there’s nothing more a policy maker in this situation can do. Maybe politics are the impediment, and Chairman Bernanke has been forced to hide his inner professor. Or maybe the onetime academic has been assimilated by the Fed Borg and turned into a conventional central banker. Whichever account you prefer, however, the fact is that the Fed isn’t doing the job many economists expected it to do, and a result is mass suffering for American workers...

An ugly foreclosure story, starring Bank of America
by Gale Holland
Los Angeles Times
April 13, 2012

Dirma Rodriguez had five minutes to gather her things and vacate the West Adams house she and her severely disabled daughter had lived in for more than 25 years.

As a property manager changed the locks, Rodriguez fluttered back and forth from the yard — where a pile of stuff lay by the kitchen stove — to her car, where her daughter, Ingrid Ortiz, sat screaming and crying.

How Rodriguez and Ortiz ended up in this predicament is a long, messy story that resounds with a misery all too common in this age of foreclosure.

Rodriguez took out a loan to retrofit her house for her special-needs daughter. After she fell behind on her payments, the Bank of America lowered her monthly obligation, but then sold the house at a foreclosure auction last September. The new owner, a house flipper from El Segundo called West Ridge Rentals, moved to evict the family...

Occupy's Plans to Take Down Bank of America
by Allison Kilkenny
The Nation Magazine
April 9, 2012

As part of a “Spring Preview” back in late February, about fifty protesters stood in the rain during a teach-in at Bryant Park to hear Rolling Stone’s Matt Taibbi explain that if enough people pulled their money from Bank of America and stock prices dipped for more than a month, the bank would be “kaput.” (In classic Taibbi fashion, he also compared BoA selling bad mortgages to a dealer selling oregano as weed)...

Americans brace for next foreclosure wave
by Nick Carey
Reuters
April 4, 2012

Half a decade into the deepest U.S. housing crisis since the 1930s, many Americans are hoping the crisis is finally nearing its end. House sales are picking up across most of the country, the plunge in prices is slowing and attempts by lenders to claim back properties from struggling borrowers dropped by more than a third in 2011, hitting a four-year low.

But a painful part two of the slump looks set to unfold: Many more U.S. homeowners face the prospect of losing their homes this year as banks pick up the pace of foreclosures.

"We are right back where we were two years ago. I would put money on 2012 being a bigger year for foreclosures than 2010," said Mark Seifert, executive director of Empowering & Strengthening Ohio's People (ESOP), a counseling group with 10 offices in Ohio.

"Last year was an anomaly, and not in a good way," he said.

In 2011, the "robo-signing" scandal, in which foreclosure documents were signed without properly reviewing individual cases, prompted banks to hold back on new foreclosures pending a settlement.

Five major banks eventually struck that settlement with 49 U.S. states in February. Signs are growing the pace of foreclosures is picking up again, something housing experts predict will again weigh on home prices before any sustained recovery can occur...

If You Took the Greed Out of Wall Street, All You’d Have Left Is Pavement: Why Greg Smith’s Critique is Way Too Narrow
by Robert Reich on his blog
March 16, 2012

Greg Smith, a Goldman Sachs vice president, resigned his post Wednesday with a stinging public rebuke of the firm on the oped page of the New York Times — accusing it of no longer putting its clients before its own pecuniary goals.

But if Mr. Smith believes his experience at Goldman is something new, he doesn’t know history. In 1928, Goldman Sachs and Company created the Goldman Sachs Trading Corporation, which promptly went on a speculative binge, luring innocent investors along the way. In the Great Crash of 1929, Goldman’s investors lost their shirts but Goldman kept its hefty fees.

If Mr. Smith believes such disregard of investors is unique to Goldman, he doesn’t know the rest of Wall Street. In the late 1920s, National City Bank, which eventually would become Citigroup, repackaged bad Latin American debt as new securities which it then sold to investors no less gullible than Goldman Sachs’s. After the Great Crash of 1929, National City’s top executives helped themselves to the bank’s remaining assets as interest-free loans while their investors and depositors were left with pieces of paper worth a tiny fraction of what they paid for them.

The problem isn’t excessive greed. If you took the greed out of Wall Street all you’d have left is pavement. The problem is endemic abuse of power and trust. When bubbles are forming, all but the most sophisticated investors can be easily duped into thinking they’ll get rich by putting their money into the hands of brand-named investment bankers...

As a result of these union-busting laws, unions have ceased to function and workers earn less. The average worker in a right-to-work state earns anywhere from $1,500 to $5,000 less per year than workers in other states. They receive less in health benefits, less in pension benefits and less protection from unsafe conditions or unfair dismissal...

The war on labor does not end with Right to Work. Having decimated labor in the private sector (as of January 2011, according to Bureau of Labor Statistics, the number of union workers in the private sector fell to a 100-plus-year low of 6.9 percent), anti-labor forces have taken aim at the public sector. The tactic of choice against police, firefighters, teachers and other government employees is attacking the right to collective bargaining and binding arbitration.

To fully comprehend this attack, you need to understand that government employees are often prohibited by law from striking to achieve fair treatment in negotiations with their employers. In those cases where it is legal to strike, conscientious employees are loath to do so because of the harm it would do to students and communities. Binding arbitration by an impartial body is an alternative to the strike.

When you take away the right to fair arbitration, you leave workers at the mercy of their employers and you cut the union off at its knees...

We are all in this fight together. If we wish to push back the most powerful force the world has ever encountered, corporate greed, we must unite against the tide. The right to organize the workplace, the right to unionize, must be fought for and defended.

We are under siege. We are the victims of a devastating fifty-year war against workers that is relentless and without mercy. The corporations have taken control of our government with unlimited sponsorship of elected officials. They have moved our industries to China, Malaysia, Indonesia and elsewhere, without any concern for the welfare of our nation or its people. They have outsourced our technology service, drafting and infrastructure planning jobs to India. They have reduced their share of tax responsibility to a minimum with offshore accounts and favorable legislation, forcing a beleaguered workforce to pick up the tab. And they have done all this with a sense of entitlement.

We are just beginning to fight back. We are beginning to understand that if we speak out in one voice, the 99 against the one, our politicians will begin to listen. We are beginning to understand that fighting for labor rights overseas will bring the jobs that are rightfully ours back home...

The corporations that have taken control of our government will cry foul. They will accuse us of class warfare to which we will reply: yes, but now we are fighting back.

Modern Republicans are very, very conservative; you might even (if you were Mitt Romney) say, severely conservative. Political scientists who use Congressional votes to measure such things find that the current G.O.P. majority is the most conservative since 1879, which is as far back as their estimates go...

Many readers of The Times were, therefore, surprised to learn, from an excellent article published last weekend, that the regions of America most hooked on Mr. Santorum's narcotic — the regions in which government programs account for the largest share of personal income — are precisely the regions electing those severe conservatives. Wasn't Red America supposed to be the land of traditional values, where people don't eat Thai food and don't rely on handouts?...

Now, there's no mystery about red-state reliance on government programs. These states are relatively poor, which means both that people have fewer sources of income other than safety-net programs and that more of them qualify for "means-tested" programs such as Medicaid...

But why do regions that rely on the safety net elect politicians who want to tear it down? I've seen three main explanations...

Lately inequality has re-entered the national conversation. Occupy Wall Street gave the issue visibility, while the Congressional Budget Office supplied hard data on the widening income gap. And the myth of a classless society has been exposed: Among rich countries, America stands out as the place where economic and social status is most likely to be inherited.

So you knew what was going to happen next. Suddenly, conservatives are telling us that it's not really about money; it's about morals. Never mind wage stagnation and all that, the real problem is the collapse of working-class family values, which is somehow the fault of liberals.

But is it really all about morals? No, it's mainly about money...

In a better world — specifically, a world with a better policy elite — a good jobs report would be cause for unalloyed celebration. In the world we actually inhabit, however, every silver lining comes with a cloud. Friday's report was, in fact, much better than expected, and has made many people, myself included, more optimistic. But there's a real danger that this optimism will be self-defeating, because it will encourage and empower the purge-and-liquidate crowd...

And the inflation hawks at the Fed and elsewhere seem undeterred either by the way the predicted explosion of inflation keeps not happening, or by the disastrous results last April when the European Central Bank actually did raise rates, helping to set off the current European crisis.

But there's also a sort of freestanding opposition to low interest rates, a sense that there's something wrong with cheap money and easy credit even in a desperately weak economy. I think of this as the urge to purge, after Andrew Mellon, Herbert Hoover's Treasury secretary, who urged him to let liquidation run its course, to "purge the rottenness" that he believed afflicted America.

And every time we get a bit of good news, the purge-and-liquidate types pop up, saying that it's time to stop focusing on job creation.

Sure enough, no sooner were the new numbers out than James Bullard, the president of the St. Louis Fed, declared that the new numbers make further Fed action to promote growth unnecessary. And the sad truth is that the good jobs numbers have definitely made it less likely that the Fed will take the expansionary action it should.

So here's what needs to be said about the latest numbers: yes, we're doing a bit better, but no, things are not O.K. — not remotely O.K. This is still a terrible economy, and policy makers should be doing much more than they are to make it better.

The supercommittee was a superdud — and we should be glad. Nonetheless, at some point we'll have to rein in budget deficits. And when we do, here's a thought: How about making increased revenue an important part of the deal?...

So raising taxes on the very rich could make a serious contribution to deficit reduction. Don't believe anyone who claims otherwise...

Now, the tax ideas I've just mentioned wouldn't be enough, by themselves, to fix our deficit. But the same is true of proposals for spending cuts. The point I'm making here isn't that taxes are all we need; it is that they could and should be a significant part of the solution.

"We are the 99 percent" is a great slogan. It correctly defines the issue as being the middle class versus the elite (as opposed to the middle class versus the poor). And it also gets past the common but wrong establishment notion that rising inequality is mainly about the well educated doing better than the less educated; the big winners in this new Gilded Age have been a handful of very wealthy people, not college graduates in general.

If anything, however, the 99 percent slogan aims too low. A large fraction of the top 1 percent's gains have actually gone to an even smaller group, the top 0.1 percent - the richest one-thousandth of the population.

And while Democrats, by and large, want that super-elite to make at least some contribution to long-term deficit reduction, Republicans want to cut the super-elite's taxes even as they slash Social Security, Medicare and Medicaid in the name of fiscal discipline.

Before I get to those policy disputes, here are a few numbers...

And these people — the people who bullied Europe into adopting a common currency, the people who are bullying both Europe and the United States into austerity — aren't technocrats. They are, instead, deeply impractical romantics.

They are, to be sure, a peculiarly boring breed of romantic, speaking in turgid prose rather than poetry. And the things they demand on behalf of their romantic visions are often cruel, involving huge sacrifices from ordinary workers and families. But the fact remains that those visions are driven by dreams about the way things should be rather than by a cool assessment of the way things really are.

And to save the world economy we must topple these dangerous romantics from their pedestals...

The truth is that Europe's march toward a common currency was, from the beginning, a dubious project on any objective economic analysis. The continent's economies were too disparate to function smoothly with one-size-fits-all monetary policy, too likely to experience "asymmetric shocks" in which some countries slumped while others boomed. And unlike U.S. states, European countries weren't part of a single nation with a unified budget and a labor market tied together by a common language.

So why did those "technocrats" push so hard for the euro, disregarding many warnings from economists? Partly it was the dream of European unification, which the Continent's elite found so alluring that its members waved away practical objections. And partly it was a leap of economic faith, the hope — driven by the will to believe, despite vast evidence to the contrary — that everything would work out as long as nations practiced the Victorian virtues of price stability and fiscal prudence...

Inequality is back in the news, largely thanks to Occupy Wall Street, but with an assist from the Congressional Budget Office. And you know what that means: It's time to roll out the obfuscators!

 

Bombs, Bridges and Jobs
by Paul Krugman
The New York Times
October 30, 2011

Right now the weaponized Keynesians are out in full force — which makes this a good time to see what's really going on in debates over economic policy.

What's bringing out the military big spenders is the approaching deadline for the so-called supercommittee to agree on a plan for deficit reduction. If no agreement is reached, this failure is supposed to trigger cuts in the defense budget.

Faced with this prospect, Republicans — who normally insist that the government can't create jobs, and who have argued that lower, not higher, federal spending is the key to recovery — have rushed to oppose any cuts in military spending. Why? Because, they say, such cuts would destroy jobs...

But there are also darker motives behind weaponized Keynesianism.

For one thing, to admit that public spending on useful projects can create jobs is to admit that such spending can in fact do good, that sometimes government is the solution, not the problem. Fear that voters might reach the same conclusion is, I'd argue, the main reason the right has always seen Keynesian economics as a leftist doctrine, when it's actually nothing of the sort. However, spending on useless or, even better, destructive projects doesn't present conservatives with the same problem...

So I welcome the sudden upsurge in weaponized Keynesianism, which is revealing the reality behind our political debates. At a fundamental level, the opponents of any serious job-creation program know perfectly well that such a program would probably work, for the same reason that defense cuts would raise unemployment. But they don't want voters to know what they know, because that would hurt their larger agenda — keeping regulation and taxes on the wealthy at bay.

Has market turmoil left you feeling afraid? Well, it should. Clearly, the economic crisis that began in 2008 is by no means over.

But there's another emotion you should feel: anger. For what we're seeing now is what happens when influential people exploit a crisis rather than try to solve it.

Think about what's happening right now. We have a crisis in which the right is making insane demands, while the president and Democrats in Congress are bending over backward to be accommodating - offering plans that are all spending cuts and no taxes, plans that are far to the right of public opinion.

So what do most news reports say? They portray it as a situation in which both sides are equally partisan, equally intransigent - because news reports always do that. And we have influential pundits calling out for a new centrist party, a new centrist president, to get us away from the evils of partisanship...

If you were shocked by Friday's job report, if you thought we were doing well and were taken aback by the bad news, you haven't been paying attention. The fact is, the United States economy has been stuck in a rut for a year and a half.

Yet a destructive passivity has overtaken our discourse. Turn on your TV and you'll see some self-satisfied pundit declaring that nothing much can be done about the economy's short-run problems (reminder: this "short run" is now in its fourth year), that we should focus on the long run instead.

This gets things exactly wrong. The truth is that creating jobs in a depressed economy is something government could and should be doing. Yes, there are huge political obstacles to action - notably, the fact that the House is controlled by a party that benefits from the economy's weakness. But political gridlock should not be conflated with economic reality.

Our failure to create jobs is a choice, not a necessity - a choice rationalized by an ever-shifting set of excuses.

ALBANY, N.Y. — New York's attorney general accused some of the nation's largest banks yesterday of deceit and fraud in using an electronic mortgage registry that he said puts homeowners at a disadvantage in foreclosures while saving banks over $2 billion.

Eric Schneiderman sued Bank of America, JPMorgan Chase, and Wells Fargo over their use of the Mortgage Electronic Registration Systems Inc., or MERS, asserting the banks submitted court documents containing false and misleading information that appeared to provide the authority for foreclosures when there was none...

U.S. Sues Wells Fargo: Yet Another Bailed-Out Bank Accused of Fraud
by Matt Taibbi
RollingStone
October 10, 2012

Wells Fargo is being sued by the State for vast fraud in the mortgage markets. The U.S. Attorney in the Southern District of New York, Preet Bharara, yesterday brought a case against WF seeking "hundreds of millions of dollars" in damages for what it says is a decade of fraudulent behavior, in which WF wrongfully certified more than 100,000 mortgages as being eligible for federal mortgage insurance. Basically, Wells Fargo screwed the FHA and HUD by mass-approving loans without regard for whether they were defective or not...

JOBS Act Fallout: More Fraud, Fewer IPOs
by Matt Taibbi
RollingStone
June 7, 2012

Well, eight weeks after the passage of the law, we're finding some unexpected results. Among the more controversial provisions of the JOBS Act, remember, was a sort of blanket regulatory exemption for so-called "Emerging Growth Companies," which were loosely defined as public companies with less than $1 billion in annual revenues. Among other things, the new law allows such companies to avoid independent accounting requirements for the first five years of their existence.

According to the WSJ, what's happening now is that the JOBS Act is being used to facilitate what are known as "reverse mergers." Because it's traditionally been difficult for new companies to meet the regulatory requirements for going public, what's often happened is that young companies look for dormant or dead corporations that are already registered. They then merge with those "empty shell" companies, use their corporate structures, and thusly avoid the IPO process altogether. This process is called a "reverse merger."

Oftentimes those empty shell companies — also called "blank check" firms or "special purpose acquisition companies" — are dead for a reason. Otherwise honest new companies that merge with those firms often find themselves in bed with unexpected, and unexpectedly shady, partners. In other cases, the problem goes the other way: the government has had issues in recent years, for instance, with Chinese startups that use American empty shell firms to establish businesses here.

So why does this matter? Well, the JOBS Act was ostensibly designed to make it easier to launch actual IPOs, and theoretically should have made the darker, more problem-ridden reverse merger process less appealing. But what we're finding now is that companies are using the JOBS Act to designate those "blank check" firms as "emerging growth companies."...

SEC: Taking on Big Firms is 'Tempting,' But We Prefer Picking on Little Guys
by Matt Taibbi
RollingStone
May 30, 2012

If you want to see a perfect example of how completely broken our regulatory system is, look no further than a speech that Daniel Gallagher, one of the S.E.C.’s commissioners, recently gave in Denver, Colorado.

It’s a speech whose full lunacy is hard to grasp without some background.

It’s by now been well-established that the S.E.C.’s performance in policing Wall Street before, after, and during the crash has been comically inept. It would be putting it generously to say that the top cop on the financial services beat has demonstrated particular incompetence with regard to investigations of high-profile targets at powerhouse banks and financial companies. A less generous interpretation would be that the agency is simply too afraid, too unwilling, or too corrupt to take on the really dangerous animals in this particular jungle.

The S.E.C.’s failure to make even one case against a high-ranking executive involved in the mass frauds leading to the 2008 crash — compare this to the comparatively much smaller and less serious S&L crisis twenty years earlier, when the government made 1,100 criminal cases and sent 800 bank officials to jail — became so conspicuous that by the end of last year, the “No prosecutions of top figures” idea became an accepted meme in mainstream news media coverage of the economic crisis...

Accidentally Released — and Incredibly Embarrassing — Documents Show How Goldman et al Engaged in 'Naked Short Selling'
by Matt Taibbi
RollingStone
May 16, 2012

It doesn’t happen often, but sometimes God smiles on us. Last week, he smiled on investigative reporters everywhere, when the lawyers for Goldman, Sachs slipped on one whopper of a legal banana peel, inadvertently delivering some of the bank’s darker secrets into the hands of the public.

The lawyers for Goldman and Bank of America/Merrill Lynch have been involved in a legal battle for some time – primarily with the retail giant Overstock.com, but also with Rolling Stone, the Economist, Bloomberg, and the New York Times. The banks have been fighting us to keep sealed certain documents that surfaced in the discovery process of an ultimately unsuccessful lawsuit filed by Overstock against the banks.

Last week, in response to an Overstock.com motion to unseal certain documents, the banks’ lawyers, apparently accidentally, filed an unredacted version of Overstock’s motion as an exhibit in their declaration of opposition to that motion. In doing so, they inadvertently entered into the public record a sort of greatest-hits selection of the very material they’ve been fighting for years to keep sealed...

It's bad enough that the banks strangled the Dodd-Frank law. Even worse is the way they did it — with a big assist from Congress and the White House.

Two years ago, when he signed the Dodd-Frank Wall Street Reform and Consumer Protection Act, President Barack Obama bragged that he'd dealt a crushing blow to the extravagant financial corruption that had caused the global economic crash in 2008. "These reforms represent the strongest consumer financial protections in history," the president told an adoring crowd in downtown D.C. on July 21st, 2010. "In history."

This was supposed to be the big one. At 2,300 pages, the new law ostensibly rewrote the rules for Wall Street. It was going to put an end to predatory lending in the mortgage markets, crack down on hidden fees and penalties in credit contracts, and create a powerful new Consumer Financial Protection Bureau to safeguard ordinary consumers. Big banks would be banned from gambling with taxpayer money, and a new set of rules would limit speculators from making the kind of crazy-ass bets that cause wild spikes in the price of food and energy. There would be no more AIGs, and the world would never again face a financial apocalypse when a bank like Lehman Brothers went bankrupt.

Most importantly, even if any of that fiendish crap ever did happen again, Dodd-Frank guaranteed we wouldn't be expected to pay for it. "The American people will never again be asked to foot the bill for Wall Street's mistakes," Obama promised. "There will be no more taxpayer-funded bailouts. Period."

Two years later, Dodd-Frank is groaning on its deathbed. The giant reform bill turned out to be like the fish reeled in by Hemingway's Old Man — no sooner caught than set upon by sharks that strip it to nothing long before it ever reaches the shore. In a furious below-the-radar effort at gutting the law — roundly despised by Washington's Wall Street paymasters — a troop of water-carrying Eric Cantor Republicans are speeding nine separate bills through the House, all designed to roll back the few genuinely toothy portions left in Dodd-Frank. With the Quislingian covert assistance of Democrats, both in Congress and in the White House, those bills could pass through the House and the Senate with little or no debate, with simple floor votes — by a process usually reserved for things like the renaming of post offices or a nonbinding resolution celebrating Amelia Earhart's birthday.

The fate of Dodd-Frank over the past two years is an object lesson in the government's inability to institute even the simplest and most obvious reforms, especially if those reforms happen to clash with powerful financial interests. From the moment it was signed into law, lobbyists and lawyers have fought regulators over every line in the rulemaking process. Congressmen and presidents may be able to get a law passed once in a while — but they can no longer make sure it stays passed. You win the modern financial-regulation game by filing the most motions, attending the most hearings, giving the most money to the most politicians and, above all, by keeping at it, day after day, year after fiscal year, until stealing is legal again. "It's like a scorched-earth policy," says Michael Greenberger, a former regulator who was heavily involved with the drafting of Dodd-Frank. "It requires constant combat. And it never, ever ends."

That the banks have just about succeeded in strangling Dodd-Frank is probably not news to most Americans — it's how they succeeded that's the scary part. The banks followed a five-point strategy that offers a dependable blueprint for defeating any regulation — and for guaranteeing that when it comes to the economy, might will always equal right...

Austerity Can't Be Just for Regular People
by Matt Taibbi
RollingStone
May 8, 2012

Markets all over the world freaked out over the prospect of having ignorant European voters meddling in the recovery process the geniuses of the high finance world had already painstakingly laid out for them. The model for economic progress in the financial bubble era, after all, is supposed to go something like this:

1. Let banks inflate massive asset bubbles with the aid of cheap or even free government cash, and tons of leverage;
2. Before it all explodes, carve out gigantic sums for bonuses and compensation for the companies that inflated those bubbles;
3. After it explodes, get the various governments to bail those companies out;
4. Pay for it all by slashing services to what’s left of the middle class.

This is the model we used in America. We had a monster asset bubble based on phony mortgages, which Wall Street was allowed to inflate to spectacular dimensions with minimal reserve capital, huge amounts of leverage, and tons of fraud for good measure. When that bubble exploded, we first rescued the banks who inflated the thing in the first place, and then our plan for paying for it mostly revolved around folks like Paul Ryan and Chris Christie, who made great political hay by trying to take an ax to "entitlements" like health care and retirement benefits...

Free $10 Million Loans For All! and Other Wall Street Notes
by Matt Taibbi
RollingStone
April 19, 2012

Every time I watch a Republican debate, and hear these supposedly anti-welfare crowds booing the idea of stiffer regulation of Wall Street, I wonder how many audience members know that Bair's plan is more or less exactly the revenue model for all of America’s biggest banks. You go to the Fed, get a buttload of free money, lend it out at interest (perversely enough, including loans right back to the U.S. government), then pocket the profit.

Considering that we now know that the Fed gave out something like $16 trillion in secret emergency loans to big banks on top of the bailouts we actually knew about, you might ask yourself: How are these guys in financial trouble? How can they not be making mountains of money, risk-free? But they are in financial trouble:

• We’re about to see yet another big blow to all of the usual suspects – Goldman, Citi, Bank of America, and especially Morgan Stanley, all of whom face potential downgrades by Moody’s in the near future.

We’ve known this was coming for some time, but the news this week is that the giant money-managing firm BlackRock is talking about moving its business elsewhere. Laurence Fink, BlackRock’s CEO, told the New York Times: "If Moody’s does indeed downgrade these institutions, we may have a need to move some business around to higher-rated institutions."

It’s one thing when Zero Hedge, William Black, myself, or some rogue Fed officers in Dallas decide to point fingers at the big banks. But when big money players stop trading with those firms, that’s when the death spirals begin.

Morgan Stanley in particular should be sweating. They’re apparently going to be downgraded three notches, where they’ll be joining Citi and Bank of America at a level just above junk. But no worries: Bank CFO Ruth Porat announced that a three-level downgrade was "manageable" and that only losers rely totally on agencies like Moody’s to judge creditworthiness. "A lot of clients are doing their own credit work," she said.

• Meanwhile, Bank of America reported its first-quarter results yesterday. Despite that massive ongoing support from the Fed, it earned just $653 million in the first quarter, but astonishingly the results were hailed by most of the financial media as good news. Its home-turf paper, the San Francisco Chronicle, crowed that BOA "Posts Higher Profits As Trading Results Rebound." Bloomberg, meanwhile, summed up results this way: "Bank of America Beats Analyst Estimates As Trading Jumps."

But the New York Times noted that BOA’s first-quarter profit of $653 million was down from $2 billion a year ago, and paled compared to results of more successful banks like Chase and Wells Fargo...

In other words, Bank of America described nearly two billion dollars of crap on their books as performing loans, until the government this year forced them to admit it was crap...

• Speaking of BOA, you can help the bank improve its website....

Fighting BAC
by Matt Taibbi
Occupy.com
hours ago

There are two things every American needs to know about Bank of America.

The first is that it’s corrupt. This bank has systematically defrauded almost everyone with whom it has a significant business relationship, cheating investors, insurers, homeowners, shareholders, depositors and the state. It is a giant, raging hurricane of theft and fraud, spinning its way through America and leaving a massive trail of wiped-out retirees and foreclosed-upon families in its wake.

The second is that all of us, as taxpayers, are keeping that hurricane raging. Bank of America is not just a private company that systematically steals from American citizens: it’s a de facto ward of the state that depends heavily upon public support to stay in business. In fact, without the continued generosity of us taxpayers, and the extraordinary indulgence of our regulators and elected officials, this company long ago would have been swallowed up by scandal, mismanagement, prosecution and litigation, and gone out of business. It would have been liquidated and its component parts sold off, perhaps into a series of smaller regional businesses that would have more respect for the law, and be more responsive to their customers...

Matt Taibbi: Bank of America is a “raging hurricane of theft and fraud”

There are two things every American needs to know about Bank of America.

The first is that it’s corrupt. This bank has systematically defrauded almost everyone with whom it has a significant business relationship, cheating investors, insurers, homeowners, shareholders, depositors, and the state. It is a giant, raging hurricane of theft and fraud, spinning its way through America and leaving a massive trail of wiped-out retirees and foreclosed-upon families in its wake.

The second is that all of us, as taxpayers, are keeping that hurricane raging. Bank of America is not just a private company that systematically steals from American citizens: it’s a de facto ward of the state that depends heavily upon public support to stay in business. In fact, without the continued generosity of us taxpayers, and the extraordinary indulgence of our regulators and elected officials, this company long ago would have been swallowed up by scandal, mismanagement, prosecution and litigation, and gone out of business. It would have been liquidated and its component parts sold off, perhaps into a series of smaller regional businesses that would have more respect for the law, and be more responsive to their customers...

Gangster Banks Keep Winning Public Business. Why?
by Matt Taibbi
RollingStone
March 22, 2012

A friend of mine sent this article from Bloomberg, along with the simple comment: "Perfect." What's perfect? That the banks that have been caught repeatedly ripping off communities and munipalities — banks that have paid hefty settlements for rigging bids, bribery and other sordid misdeeds — keep winning the most public business. Apparently, our public officials aren't concerned about whom they hire to serve as the people's investment bankers...

Bid-rigging is an old-school crime of machine pols and gangsters. In the old days, it was parceling out garbage collection or construction contracts to each of the proverbial five mafia families, who would patiently pantomime real bids for government contracts. They would take turns "winning" the state's business with artificially low bids, guided by a corrupted insider who usually took a bribe to rig the auction.

In modern times, it's the same thing, except that it's banks now doing the pantomiming. Here a circle of organized crooks (read: banks) gets together, parcels out territories so that each party gets to "win" business in certain areas, and then they all get together and agree to a rigged bid system.

Typically, a subcontracted-out private broker/bidding agent takes all the bids for a municipal bond issue, and then quietly tells the "winner" whether he needs to jack up or reduce his bid. The broker might tell the bank, for instance, that its bid was too "aggressive," i.e. too high — allowing the bank to come in with a lower bid that would still win.

If you read through these bid-rigging lawsuits/settlements, you'll find a striking commonality in the evidence collected by these states and municipalities. All across the country, the same banks use the same code words with the same bidding agents to win business with artificially lowered bids...

Another Hidden Bailout: Helping Wall Street Collect Your Rent
by Matt Taibbi
RollingStone
March 19, 2012

In con artistry parlance, they call this the "reload." That's when you hit the same mark twice — typically with a second scam designed to "fix" the damage caused by the first scam. Someone robs your house, then comes by the next day and sells you a fancy alarm system, that's the reload.

In this case, banks pumped up the real estate market by creating huge volumes of subprime loans, then dumped a lot of them on, among others, Fannie and Freddie, the ever-ready enthusiastic state customer. Now the loans have crashed in value, yet the GSEs (Government Sponsored Enterprises) are still out there feeding the banks money through two continuous bailouts...

By now we've come full circle. Banks create the loans, make money selling them off on the market at high prices, then come back and buy them again when they're low. When the GSEs are in the middle of this transaction, it makes mortgage lending a basically risk-free proposition: Banks get paid for creating home loans and they end up owning valuable property on the cheap, but in between, they offshore the market risk to a government entity and/or to the idiot individual who bought the home mortgage in the first place...

Bank of America: Too Crooked to Fail
by Matt Taibbi
RollingStone
March 14, 2012

The bank has defrauded everyone from investors and insurers to homeowners and the unemployed. So why does the government keep bailing it out? 

At least Bank of America got its name right. The ultimate Too Big to Fail bank really is America, a hypergluttonous ward of the state whose limitless fraud and criminal conspiracies we'll all be paying for until the end of time. Did you hear about the plot to rig global interest rates? The $137 million fine for bilking needy schools and cities? The ingenious plan to suck multiple fees out of the unemployment checks of jobless workers? Take your eyes off them for 10 seconds and guaranteed, they'll be into some shit again: This bank is like the world's worst-behaved teenager, taking your car and running over kittens and fire hydrants on the way to Vegas for the weekend, maxing out your credit cards in the three days you spend at your aunt's funeral. They're out of control, yet they'll never do time or go out of business, because the government remains creepily committed to their survival, like overindulgent parents who refuse to believe their 40-year-old live-at-home son could possibly be responsible for those dead hookers in the backyard...

Anyone who wants to know what the Occupy Wall Street protests are all about need only look at the way Bank of America does business. It comes down to this: These guys are some of the very biggest assholes on Earth. They lie, cheat and steal as reflexively as addicts, they laugh at people who are suffering and don't have money, they pay themselves huge salaries with money stolen from old people and taxpayers – and on top of it all, they completely suck at banking. And yet the state won't let them go out of business, no matter how much they deserve it, and it won't slap them in jail, no matter what crimes they commit. That makes them not bankers or capitalists, but a class of person that was never supposed to exist in America: royalty...

Affirming what anecdotal evidence has suggested about the mortgage crisis, an audit out of San Francisco has found that more than 80% of foreclosures broke some kind of law.

City officials requested the audit that examined 382 randomly chosen foreclosures that occurred from January 2009 through October 2011. The findings revealed that 84% of the files involved "what appear to be one or more clear violations of law." The violations included not giving homeowners warning that they were in default on their loans (6%), not giving homeowners adequate legal warning their property was being sold (10%), backdating of documents (59%) and transfers of loans by entities that had no business doing so (45%).

Another disturbing discovery related to the Mortgage Electronic Registry System (MERS). In 1995 the bigger banks created MERS as a privately owned electronic system for registering mortgage sales that was supposed to replace local county recording. In the words of the New York Attorney General's Office, they did so "to allow financial institutions to evade local county recording fees, avoid the hassle and paperwork of publicly recording mortgage transfers, and facilitate the rapid sale and securitization of mortgages." The San Francisco audit found that in 58% of cases, the loan beneficiary listed on the deed of sale was different from the one listed in the MERS database...

So the foreclosure settlement is through.

A few weeks back, I was optimistic about it — I had been worried that it was going to contain broad liability waivers for all sorts of activities, and I was pleasantly surprised when I heard that its scope had essentially been narrowed to robosigning offenses.

However, now that the settlement is finalized, and I've had time to think about it and talk to people who know far more than I do about this, I'm feeling pretty queasy.

It feels an awful lot like what happened here is the nation's criminal justice honchos collectively realized that a thorough investigation of the problem would require resources they simply do not have, or are reluctant to deploy, and decided to accept a superficially face-saving peace offer rather than fight it out.

So they settled the case in a way that reads in headlines like it's a bite out of the banks, but in fact is barely even that. There will be little in the way of real compensation for stuggling homeowners, and there are serious issues in the area of the deal's enforceability. In fact, about the only part of the deal we can be absolutely sure will be honored in full is the liability waiver for the robosigning offenses...

As readers may know by now, 49 of 50 states have agreed to join the so-called mortgage settlement, with Oklahoma the lone refusenik...

As we've said before, this settlement is yet another raw demonstration of who wields power in America, and it isn't you and me. It's bad enough to see these negotiations come to their predictable, sorry outcome. It adds insult to injury to see some try to depict it as a win for long suffering, still abused homeowners.

If there was ever a news story that crystalized the moral dementia of modern Wall Street in one little vignette, this is it.

Newspapers in Colorado today are reporting that the elegant Hotel Jerome in Aspen, Colorado, will be closed to the public from today through Monday at noon.

Why? Because a local squire has apparently decided to rent out all 94 rooms of the hotel for three-plus days for his daughter's Bat Mitzvah.

The hotel's general manager, Tony DiLucia, would say only that the party was being thrown by a "nice family," but newspapers are now reporting that the Daddy of the lucky little gal is one Jeffrey Verschleiser, currently an executive with Goldman, Sachs.

At first, I couldn't remember how I knew that name. But then I looked it up and saw an explosive Atlantic magazine story, published last year, called, "E-mails Suggest Bear Stearns Cheated Clients Out Of Millions." And then I remembered that piece, and it hit me: Jeffrey Verschleiser is one of the biggest assholes in the entire world!...

It's a complex tale, but the gist of it is that the credit-card companies invoked arcane provisions of operating contracts with the merchant, and unilaterally "fined" the restaurant for enormous sums of money without proving any of the charges. Some of that money was actually debited from the merchants' account before they managed to close it.

When a restaurant opens for business, it signs service contracts with middleman firms that allow them to accept charges from Visa and MasterCards. These middleman firms process the charges on behalf of the issuing cards, and also debit the accounts of merchants for things like debit fees.

The problem is that when merchants like these restaurant owners in Utah sign their service contracts, they also have to agree to a series of draconian security rules, under which they are automatically liable to the card companies if the card companies suspect fraud or lax security procedures.

In the case of the Utah restaurant, Visa and Mastercard both claimed that the restaurant allowed charges from fraudulently used cards, and also violated security rules by keeping the data for too many customer accounts on their company computer...

The credit companies never proved any of these allegations, never gave the restaurant an opportunity to answer the charges, and simply moved, through their middleman firms, straight to debiting the restaurant's account...

Nobody minds banks and creditors being greedy. But we can't live with big firms simply taking money out of bank accounts for no reason, and daring people to sue to get the money back. That's theft by bureaucratic force, not mere greed.

Towns and cities and states lose billions of dollars every year allowing financial services companies to overcharge them for underwriting.

It gets even worse in the derivatives markets, where banks routinely overcharge state and local governments for things like interest rate swaps, for one very obvious reason — swaps are not traded on open exchanges, so only the banks know how to price them.

Imagine what NFL gambling would be like if the casinos didn't publish the point spreads every week, and you'll get a rough idea of how the swap market works. If you couldn't look it up, how many points would you give the Dolphins against the Jets next week? Two? Five? Seven? The big casinos know, because they're taking all that action, that the real number is one point.

In the same vein, exactly how accurately do you think some local county treasurer might be able to guess the cost of an interest rate swap for his local school system? Answer: he'd probably do about as well as you or I would, guessing the odds on a Croatian soccer match.

The big banks know this, which is why there should never, ever be non-competitive bids for those sorts of financial services. In a sole-source contract for a swap deal, you're trusting a (probably corrupt) Too-Big-To-Fail bank to give you a good deal for a product whose price is not publicly listed anywhere...

And in 2008, in that moonlighting capacity, he orchestrated a deal in which the Fed provided $29 billion in assistance to help his own bank, Chase, buy up the teetering investment firm Bear Stearns. You read that right: Jamie Dimon helped give himself a bailout. Who needs to worry about good government, when you are the government?

Dimon, incidentally, is another one of those bankers who's complaining now about the unfair criticism. "Acting like everyone who's been successful is bad and because you're rich you're bad, I don't understand it," he recently said, at an investor's conference.

Hmm. Is Dimon right? Do people hate him just because he's rich and successful? That really would be unfair. Maybe we should ask the people of Jefferson County, Alabama, what they think.

That particular locality is now in bankruptcy proceedings primarily because Dimon's bank, Chase, used middlemen to bribe local officials - literally bribe, with cash and watches and new suits - to sign on to a series of onerous interest-rate swap deals that vastly expanded the county's debt burden.

Essentially, Jamie Dimon handed Birmingham, Alabama a Chase credit card and then bribed its local officials to run up a gigantic balance, leaving future residents and those residents' children with the bill. As a result, the citizens of Jefferson County will now be making payments to Chase until the end of time.

Do you think Jamie Dimon would have done that deal if he lived in Jefferson County? Put it this way: if he was trying to support two kids on $30,000 a year, and lived in a Birmingham neighborhood full of people in the same boat, would he sign off on a deal that jacked up everyone's sewer bills 400% for the next thirty years?...

What makes Obama's statements so dangerous is that they suggest an ongoing strategy of covering up the Wall Street crimewave. There is ample evidence out there that the Obama administration has eased up on prosecutions of Wall Street as part of a conscious strategy to prevent a collapse of confidence in our financial system, with the expected 50-state foreclosure settlement being the landmark effort in the cover-up, intended mainly to bury a generation of fraud...

In other words, Geithner and Obama are behaving like Lehman executives before the crash of Lehman, not disclosing the full extent of the internal problem in order to keep investors from fleeing and creditors from calling in their chits. It's worth noting that this kind of behavior — knowingly hiding the derogatory truth from the outside world in order to prevent a run on the bank — is, itself, fraud!

This is exactly the mindset that led Lehman to the abuses of the "Repo 105" accounting trick, in which loans were disguised as revenues in order to prevent the outside world from knowing the dire state of the bank's balance sheet.

Now Obama and Geithner are engaged in the same sort of activity, only they're trying to prevent a run not on an individual bank, but the entire American financial services sector. Geithner seems really to believe that if fraud were aggressively policed, and the world made aware of the incredible extent of the illegality in our markets, that international confidence in the American financial sector would plummet and our economy would suffer — and suffer, incidentally, on Barack Obama's watch.

Better, apparently, to Band-Aid the problem now, and let the real mess happen later on, on someone else's watch, or at least in a second term, when there's no need to worry about re-election...

For those saying that Occupy Wall Street hasn't had a concrete effect, take a look at this. It's not much, but it's a little something. The leaders of the House Financial Services Committee announced yesterday that they will be holding hearings on the SEC's practice of concluding settlements with Wall Street defendants without forcing the accused to admit to wrongdoing...

With OWS and populist anger generally filling that messaging void, there are going to be a lot of politicians who will look to capitalize by doing things like, for instance, beating up on the SEC in a few days of well-publicized but ineffectual hearings...

But now, everybody is trying to find a way to ride the wave. It's too early to celebrate any of this, but it can't be a bad thing.

Federal judge Jed Rakoff, a former prosecutor with the U.S. Attorney's office here in New York, is fast becoming a sort of legal hero of our time. He showed that again yesterday when he shat all over the SEC's latest dirty settlement with serial fraud offender Citigroup, refusing to let the captured regulatory agency sweep yet another case of high-level criminal malfeasance under the rug...

Federal Judge Pimp-Slaps the SEC Over Citigroup Settlement
by Matt Taibbi
RollingStone
November 29, 2011

Just a quick update on a big piece of news that came through yesterday. In one of the more severe judicial ass-whippings you'll ever see, federal Judge Jed Rakoff rejected a slap-on-the-wrist fraud settlement the SEC had cooked up for Citigroup...

Rakoff's 15-page final ruling read like a political document, serving not just as a rejection of this one deal but as a broad and unequivocal indictment of the regulatory system as a whole. He particularly targeted the SEC's longstanding practice of greenlighting relatively minor fines and financial settlements alongside de facto waivers of civil liability for the guilty — banks commit fraud and pay small fines, but in the end the SEC allows them to walk away without admitting to criminal wrongdoing.

This practice is a legal absurdity for several reasons. By accepting hundred-million-dollar fines without a full public venting of the facts, the SEC is leveling seemingly significant punishments without telling the public what the defendant is being punished for. This has essentially created a parallel or secret criminal justice system, in which both crime and punishment are adjudicated behind closed doors...

Last week, a federal judge in Mississippi sentenced a mother of two named Anita McLemore to three years in federal prison for lying on a government application in order to obtain food stamps.

Apparently in this country you become ineligible to eat if you have a record of criminal drug offenses. States have the option of opting out of that federal ban, but Mississippi is not one of those states. Since McLemore had four drug convictions in her past, she was ineligible to receive food stamps, so she lied about her past in order to feed her two children.

The total "cost" of her fraud was $4,367. She has paid the money back. But paying the money back was not enough for federal Judge Henry Wingate...

Compare this court decision to the fraud settlements on Wall Street. Like McLemore, fraud defendants like Citigroup, Goldman Sachs, and Deutsche Bank have "been the beneficiary of government generosity." Goldman got $12.9 billion just through the AIG bailout. Citigroup got $45 billion, plus hundreds of billions in government guarantees.

All of these companies have been repeatedly dragged into court for fraud, and not one individual defendant has ever been forced to give back anything like a significant portion of his ill-gotten gains. The closest we've come is in a fraud case involving Citi, in which a pair of executives, Gary Crittenden and Arthur Tildesley, were fined the token amounts of $100,000 and $80,000, respectively, for lying to shareholders about the extent of Citi's debt.

Neither man was forced to admit to intentional fraud. Both got to keep their jobs.

Anita McLemore, meanwhile, lied to feed her children, gave back every penny of her "fraud" when she got caught, and is now going to do three years in prison. Explain that, Eric Holder!

Here's another thing that boggles my mind: You get busted for drugs in this country, and it turns out you can make yourself ineligible to receive food stamps.

But you can be a serial fraud offender like Citigroup, which has repeatedly been dragged into court for the same offenses and has repeatedly ignored court injunctions to abstain from fraud, and this does not make you ineligible to receive $45 billion in bailouts and other forms of federal assistance.

This is the reason why all of these settlements allowing banks to walk away without "admissions of wrongdoing" are particularly insidious. A normal person, once he gets a felony conviction, immediately begins to lose his rights as a citizen.

But white-collar criminals of the type we've seen in recent years on Wall Street - both the individuals and the corporate "citizens" - do not suffer these ramifications. They commit crimes without real consequence, allowing them to retain access to the full smorgasbord of subsidies and financial welfare programs that, let's face it, are the source of most of their profits.

Why, I wonder, does a bank that has committed fraud multiple times get to retain access to the Federal Reserve discount window? Why should Citigroup and Goldman Sachs get to keep their status as Primary Dealers of U.S. government debt? Are there not enough banks without extensive histories of fraud and malfeasance that can be awarded these de facto subsidies?

To me, this is Michael Bloomberg's Marie Antoinette moment, his own personal "Let Them Eat Cake" line. This one series of comments allows us to see under his would-be hip centrist Halloween mask and look closely at the corrupt, arrogant aristocrat underneath...

Well, you know what, Mike Bloomberg? FUCK YOU. People are not protesting for their own entertainment, you asshole. They're protesting because millions of people were robbed, by your best friends incidentally, and they want their money back. And you're not everybody's Dad, so stop acting like you are.

So now that Wall Street has ripped off this segment of society three times, it makes all the sense in the world that Mitt Romney — a former Wall Street superstar who was a chief architect of the modern executive-compensation-driven corporation — is coming back and telling us that we need to cut their Medicare and Social Security benefits in order to defray the cost of the previous three scams.

(Actually, it makes sense. If we don't cut health care and retirement benefits for old people, how can we pay for the carried-interest tax break that allows private equity guys like, well, Mitt Romney to keep paying 15 percent tax rates?).

There's another aspect to all of this that boggles the mind...

My good friend Nomi Prins has a great new piece out that I just caught on Zero Hedge, chronicling 10 reasons why depositors should pull out of Bank of America.

Obviously Goldman, Sachs has become the great symbol of investment banking corruption, and other companies like AIG and Countrywide have become poster children for problems with businesses like insurance and mortgage-lending. But when it comes to commercial banking, Bank of America is as bad as it gets.

The markets, of course, have lately come to agree, as B of A has lately been downgraded again to just above junk status. The only reason the bank is not rated even lower than that is that it is Too Big To Fail. The whole world knows that if Bank of America implodes - whether because of the vast number of fraud suits it faces for mortgage securitization practices, or because of the time bomb of toxic assets on its balance sheets - the U.S. government will probably step in to one degree or another and save it.

The government's patronage of the bank was never clearer than in recent weeks, when B of A quietly decided to move trillions of dollars (trillions, not billions) in risky Merrill Lynch derivatives contracts off Merrill's books and onto the books of the parent/retail arm, Bank of America.

This decision was done at the behest of counterparties to those transactions, who wanted those contracts placed under the aegis of Bank of America, whose deposits are insured by the FDIC. The move was made, according to reports, so that Bank of America could avoid posting $3.3 billion in collateral to satisfy the company's creditors. In other words, Bank of America just got You the Taxpayer to co-sign as much as $53 trillion worth of dicey derivative contracts...

This is exactly why the Glass-Steagall Act needs to be reinstated: without a separation of Investment Banks and Commercial Banks, what we end up getting is taxpayer-guaranteed gambling. Instead of encouraging prudence and savings by insuring deposits in commercial banks, the FDIC is now being turned into a vehicle for socializing speculative losses.

So our government is not only no longer encouraging fiscal conservatism, it is doing exactly the opposite, i.e. encouraging speculation and risk-taking. That this is happening in the fever of the OWS movement, and at a time when top politicians from Barack Obama on down are paying lip service to public complaints against Wall Street, should tell you everything you need to know about whether or not we can expect this government to voluntarily enact real changes, and stop making the taxpayer eat Wall Street's pain...

If you're a Bank of America customer, Nomi is right: find another bank. Try a local credit union. Keeping your money in this TBTF behemoth is very unsafe sex.

Incidentally, this kind of suggestion might prove a real help to OWS. One definite tactic that Occupy Wall Street can adopt, going forward, is educating people about the perfidy of certain financial institutions and convincing people to do what they did back in the days of apartheid, which is disinvest. If everyone were to start pulling their money out of the worst-offending banks, that would have a profound effect on the markets and may function as a great short-cut to political change.

Cain said he believed that the protesters are driven by envy of the rich.

"I find the one thing the protesters have in common revolves around the human emotions of envy and entitlement," he said. "What you have is more than what I have, and I'm not happy with my situation."

Cain seems like a nice enough guy, but I nearly blew my stack when I heard this. When you take into consideration all the theft and fraud and market manipulation and other evil shit Wall Street bankers have been guilty of in the last ten-fifteen years, you have to have balls like church bells to trot out a propaganda line that says the protesters are just jealous of their hard-earned money.

Think about it: there have always been rich and poor people in America, so if this is about jealousy, why the protests now? The idea that masses of people suddenly discovered a deep-seated animus/envy toward the rich — after keeping it strategically hidden for decades — is crazy.

Amidst all the bad news coming out of Wall Street and the economy, here's something good: California has backed out of the talks for the long-awaited foreclosure settlement, now making it far from likely that the so-called "Attorneys General" deal will happen anytime soon.

California Attorney General Kamala Harris sent a letter to state and federal regulators explaining that she pulled out because the proposed settlement amount for banks guilty of bad securitization practices leading up to the mortgage crisis — said to be in the $20 billion range — was too small...

So this is bankers from Deutsche and Goldman and Bank of America essentially stealing the retirement nest eggs of firemen, teachers, cops, and other actors, as well as the investment monies of foreigners and hedge fund managers. To repeat: this was Wall Street hotshots stealing money from old ladies...

 

The news that a "rogue trader" (I hate that term - more on that in a moment) has soaked the Swiss banking giant UBS for $2 billion has rocked the international financial community and threatened to drive a stake through any chance Europe had of averting economic disaster. There is much hand-wringing in the financial press today as the UBS incident has reminded the whole world that all of the banks were almost certainly lying their asses off over the last three years, when they all pledged to pull back from risky prop trading...

But the reality is, the brains of investment bankers by nature are not wired for "client-based" thinking. This is the reason why the Glass-Steagall Act, which kept investment banks and commercial banks separate, was originally passed back in 1933: it just defies common sense to have professional gamblers in charge of stewarding commercial bank accounts.

Investment bankers do not see it as their jobs to tend to the dreary business of making sure Ma and Pa Main Street get their $8.03 in savings account interest every month. Nothing about traditional commercial banking - historically, the dullest of businesses, taking customer deposits and making conservative investments with them in search of a percentage point of profit here and there - turns them on.

In fact, investment bankers by nature have huge appetites for risk, and most of them take pride in being able to sleep at night even when their bets are going the wrong way. If you're not a person who can doze through a two-hour foot massage while your client (which might be your own bank) is losing ten thousand dollars a minute on some exotic trade you've cooked up, then you won't make it on today's Wall Street.

Nonetheless, thanks to the Gramm-Leach-Bliley Act passed in 1998 with the help of Bob Rubin, Larry Summers, Bill Clinton, Alan Greenspan, Phil Gramm and a host of other short-sighted politicians, we now have a situation where trillions in federally-insured commercial bank deposits have been wedded at the end of a shotgun to exactly such career investment bankers from places like Salomon Brothers (now part of Citi), Merrill Lynch (Bank of America), Bear Stearns (Chase), and so on.

These marriages have been a disaster. The influx of i-banking types into the once-boring worlds of commercial bank accounts, home mortgages, and consumer credit has helped turn every part of the financial universe into a casino. That's why I can't stand the term "rogue trader," which is always tossed out there when some investment-banker asshole loses a billion dollars betting with someone else's money.

They're not "rogue" for the simple reason that making insanely irresponsible decisions with other peoples' money is exactly the job description of a lot of people on Wall Street. Hell, they don't call these guys "rogue traders" when they make a billion dollars gambling...

The idea behind this federally-guided "settlement" is to concentrate and centralize all the legal exposure accrued by this generation of grotesque banker corruption in one place, put one single price tag on it that everyone can live with, and then stuff the details into a titanium canister before shooting it into deep space...

the broadest and most destructive fraud scheme in American history, one that makes the S&L crisis look like a cheap liquor store holdup...

stealing is pretty much the worst thing that a bank can do - and these banks just finished the longest and most orgiastic campaign of stealing in the history of money...

The banks are going to claim that all they're guilty of is bad paperwork. But while the banks are indeed being investigated for "paperwork" offenses like mass tax evasion (by failing to pay fees associated with mortgage registrations and deed transfers) and mass perjury (a la the "robo-signing" practices), their real crime, the one Schneiderman is interested in, is even more serious.

The issue goes beyond fraudulent paperwork to an intentional, far-reaching theft scheme designed to take junk subprime loans and disguise them as AAA-rated investments. The banks lent money to corrupt companies like Countrywide, who made masses of bad loans and immediately sold them back to the banks.

The banks in turn hid the crappiness of these loans via certain poorly-understood nuances in the securitization process - this is almost certainly where Scheniderman's investigators are doing their digging - before hawking the resultant securities as AAA-rated gold to fools in places like the Florida state pension fund.

They did this for years, systematically, working hand in hand in a wink-nudge arrangement with clearly criminal enterprises like Countrywide and New Century. The victims were millions of investors worldwide (like the pensioners who saw their funds drop in value) and hundreds of thousands of individual homeowners, who were often sold trick loans and hustled into foreclosure when unexpected rate hikes kicked in.

In a larger sense, even the (often irresponsible) people who simply bought more house than they could afford were victims of this scam. That's because in many of these cases, credit simply would not have been available to those people had the banks not first discovered a way to raise vast sums of money dumping crap loans on an unsuspecting market...

For the past two decades, according to a whistle-blower at the SEC who recently came forward to Congress, the agency has been systematically destroying records of its preliminary investigations once they are closed. By whitewashing the files of some of the nation's worst financial criminals, the SEC has kept an entire generation of federal investigators in the dark about past inquiries into insider trading, fraud and market manipulation against companies like Goldman Sachs, Deutsche Bank and AIG. With a few strokes of the keyboard, the evidence gathered during thousands of investigations - "18,000 ... including Madoff," as one high-ranking SEC official put it during a panicked meeting about the destruction - has apparently disappeared forever into the wormhole of history...

Many of the destroyed files involved companies and individuals who would later play prominent roles in the economic meltdown of 2008. Two MUIs involving con artist Bernie Madoff vanished. So did a 2002 inquiry into financial fraud at Lehman Brothers, as well as a 2005 case of insider trading at the same soon-to-be-bankrupt bank. A 2009 preliminary investigation of insider trading by Goldman Sachs was deleted, along with records for at least three cases involving the infamous hedge fund SAC Capital.

The widespread destruction of records was brought to the attention of Congress in July, when an SEC attorney named Darcy Flynn decided to blow the whistle. According to Flynn, who was responsible for helping to manage the commission's records, the SEC has been destroying records of preliminary investigations since at least 1993...

But even if SEC officials manage to dodge criminal charges, it won't change what happened: The nation's top financial police destroyed more than a decade's worth of intelligence they had gathered on some of Wall Street's most egregious offenders. "The SEC not keeping the MUIs - you can see why this would be bad," says Markopolos, the fraud examiner famous for breaking the Madoff case. "The reason you would want to keep them is to build a pattern. That way, if you get five MUIs over a period of 20 years on something similar involving the same company, you should be able to connect five dots and say, 'You know, I've had five MUIs - they're probably doing something. Let's go tear the place apart.'" Destroy the MUIs, and Wall Street banks can commit the exact same crime over and over, without anyone ever knowing.

Regulation isn't a panacea. The SEC could have placed federal agents on every corner of lower Manhattan throughout the past decade, and it might not have put a dent in the massive wave of corruption and fraud that left the economy in flames three years ago. And even if SEC staffers from top to bottom had been fully committed to rooting out financial corruption, the agency would still have been seriously hampered by a lack of resources that often forces it to abandon promising cases due to a shortage of manpower. "It's always a triage," is how one SEC veteran puts it. "And it's worse now."

Courtesy of good friend and Supreme Court of Assholedom justice David Sirota comes this revolting list of Marie Antoinettoid moments from recent years, in an article called "The New 'Let Them Eat Cake!'"

Some of the moments on the list are easily recalled - Berkshire Hathaway gazillionaire Charlie Munger's famous "suck it up and cope" quote, coming from a guy whose company was heavily invested in bailed-out banks, was an obvious inclusion - but others are quite shocking.

For instance, I was completely floored by the New York Times' pseudo-ironic take on the government's response to the financial crisis, a piece entitled "You Try to Live on $500K in This Town."

Corporate Tax Holiday in Debt Ceiling Deal— Where's the Uproar?
by Matt Taibbi
RollingStone

Have been meaning to write about this, but I'm increasingly amazed at the overall lack of an uproar about the possibility of the government approving another corporate tax repatriation holiday...

Evil Corporate Tax Holiday Gains Bipartisan Support
by: Matt Taibbi
RollingStone

The madness that is the proposed tax repatriation holiday is continuing and gathering steam. More and more members of congress are coming out of the woodwork, scratching their chins in contemplative consideration as it were, pretending that they've just realized what a great day a corporate tax holiday would be - not that they've taken gazillions of dollars from the firms lobbying for it or anything.

by Matt Taibbi
This article appears in the April 28, 2011 issue of Rolling Stone.

America has two national budgets, one official, one unofficial. The official budget is public record and hotly debated: Money comes in as taxes and goes out as jet fighters, DEA agents, wheat subsidies and Medicare, plus pensions and bennies for that great untamed socialist menace called a unionized public-sector workforce that Republicans are always complaining about. According to popular legend, we're broke and in so much debt that 40 years from now our granddaughters will still be hooking on weekends to pay the medical bills of this year's retirees from the IRS, the SEC and the Department of Energy.

Most Americans know about that budget. What they don't know is that there is another budget of roughly equal heft, traditionally maintained in complete secrecy. After the financial crash of 2008, it grew to monstrous dimensions, as the government attempted to unfreeze the credit markets by handing out trillions to banks and hedge funds. And thanks to a whole galaxy of obscure, acronym-laden bailout programs, it eventually rivaled the "official" budget in size - a huge roaring river of cash flowing out of the Federal Reserve to destinations neither chosen by the president nor reviewed by Congress, but instead handed out by fiat by unelected Fed officials using a seemingly nonsensical and apparently unknowable methodology...
 

It took more than two years, but there might finally be some capital sentences handed out for crimes committed during the financial crisis. That's metaphorically speaking, of course. Like the accounting firm Arthur Anderson, whose head was sacrificed during the Enron debacle, the once-proud financial auditing firm Ernst and Young now looks poised to take a spin down the toilet of history thanks to its role in the Lehman Brothers debacle.

U.S. Commodity Futures Trading Commission (CFTC) - home website about the Dodd-Frank Act

“The Wall Street reform bill will – for the first time – bring comprehensive regulation to the swaps marketplace. Swap dealers will be subject to robust oversight. Standardized derivatives will be required to trade on open platforms and be submitted for clearing to central counterparties. The Commission looks forward to implementing the Dodd-Frank bill to lower risk, promote transparency and protect the American public.” — CFTC Chairman Gary Gensler

U.S. Commodity Futures Trading Commission (CFTC) – data from wikipedia

The stated mission of the CFTC is to protect market users and the public from fraud, manipulation, and abusive practices related to the sale of commodity and financial futures and options, and to foster open, competitive, and financially sound futures and option markets.

On October 26, 2012 Eliot Spitzer said on Bill Maher HBO that the OCC is owned by the banks—
Office of the Comptroller of the Currency (OCC) — from wikipedia

The Office of the Comptroller of the Currency (OCC) is an independent bureau within the United States Department of the Treasury that was established by the National Currency Act of 1863 and serves to charter, regulate, and supervise all national banks and thrift institutions and the federal branches and agencies of foreign banks in the United States...
Headquartered in Washington, D.C., it has four district offices located in New York City, Chicago, Dallas and Denver. It has an additional 48 field offices throughout the United States, and a London office to supervise the international activities of national banks. It is an independent bureau of the United States Department of the Treasury and is headed by the Comptroller of the Currency, appointed to a five-year term by the President with the consent of the Senate. The OCC fulfills a number of main objectives:
1) ensures the safety and soundness of the national banking system;
2) fosters competition by allowing banks to offer new products and services;
3) improves the efficiency and effectiveness of OCC supervision especially to reduce the regulatory burden;
4) ensure fair and equal access to financial services to all Americans;
5) enforces anti-money laundering and anti-terrorism finance laws that apply to national banks and federally-licensed branches and agencies of international banks; and
6) is the agency responsible for investigating and prosecuting acts of misconduct committed by institution-affiliated parties of national banks, including officers, directors, employees, agents and independent contractors (including appraisers, attorneys and accountants).
The OCC participates in interagency activities in order to maintain the sanctity of the national banking system. By monitoring capital, asset quality, management, earnings, liquidity, sensitivity to market risk, information technology, consumer compliance, and community reinvestment, the OCC is able to determine whether or not the bank is operating safely and soundly, and meeting all regulatory requirements. The OCC was created by Abraham Lincoln to fund the American Civil War but was later transformed into a regulatory agency to instill confidence in the national banking system and protect consumers from misleading business practices.
The OCC regulates and supervises about 2,000 national banks and 50 federal branches of foreign banks in the U.S., accounting for over thee-quarters of the total assets of all U.S. commercial banks (as of 2011).
Other regulatory agencies like the OCC include: the Federal Deposit Insurance Corporation (of which the Comptroller serves as a director), the Federal Reserve, the Office of Thrift Supervision, and the National Credit Union Administration. The OCC routinely interacts and cooperates with other government agencies, including the Financial Crimes Enforcement Network, the Office of Foreign Asset Control, the Federal Bureau of Investigation, the Department of Justice, and the Department of Homeland Security.
The Comptroller also serves as a director of the Neighborhood Reinvestment Corporation, and the Federal Deposit Insurance Corporation.

Bye Bye American Pie: The Challenge of the Productivity Revolution
by Robert Reich at his blog
March 1, 2012

Here’s the good news. The economic pie is growing again. Growth in the 4th quarter last year hit 3 percent on an annualized rate. That’s respectable – although still way too slow to get us back on track given how far we plunged.

Here’s the bad news. The share of that growth going to American workers is at a record low.

That’s largely because far fewer Americans are working. Although the nation is now producing more goods and services than it did before the slump began in 2007, we’re doing it with six million fewer people.

Why? Credit technology. Computers, software applications, and the Internet are letting us produce more with fewer people.

In theory, this is a huge plus. We can live better and have more time off.

But as Tonto asked the Lone Ranger, “who’s ‘we,’ kemosabe?”

The challenge at the heart of the productivity revolution – and it is a revolution – is how to distribute the gains. So far, we’ve been failing miserably to meet that challenge...

Gary Weiss, long time Wall Street reporter and author, has written a new book, due out this week from St. Martin's Press, on the rising influence of Ayn Rand in modern politics. Titled Ayn Rand Nation: The Hidden Struggle for America's Soul, the book removes the propaganda mask that has been so adroitly affixed to Alan Greenspan's page-boy coiffed goddess of laissez-faire capitalism and the Tea Party's mother ship...

Rand, and her supporters, including Alan Greenspan, viewed altruism as evil: altruism is evil, selfishness is good. And tens of millions of dollars of corporate money is backing that philosophy today in America, no doubt to give obscenely paid CEOs a sip of Rand's guilt-free narcissism while stoking the fires for more deregulation of a country just crawling back from the crippling effects of deregulation. This is the mindless irrationality of Rand's brand of rationality.

According to Weiss, Ayn Rand built her Objectivist philosophy that permeates today's Tea Party around individual self interest and eliminating government run social welfare programs, but she herself was on Medicare and Social Security.

Even after the attack at Pearl Harbor, Rand was against the U.S. entering World War II. She viewed government force as evil, but her own followers were regularly purged, shunned and vilified. She was an atheist, as are all true Objectivists, according to the grande dame of radical capitalism.

Alan Greenspan, the man who chaired the Federal Reserve Board for 18 years, guiding U.S. monetary policy under four presidents, was a member of Rand's Collective in New York City, which Weiss likens to a cult: "For much of its existence the Collective was for all intents and purposes a cult. It had an unquestioned leader, it demanded absolute loyalty, it intruded into the personal lives of its members, it had its own rote expressions and catchphrases, it expelled transgressors for deviation from accepted norms, and expellees were ‘fair game' for vicious personal attacks."...

Occupy Wall Street exposes judicial double standards
by Naomi Wolf
The Guardian
March 7, 2012

I had been waiting with apprehension for our court date, Monday, at which Avram Ludwig and I would have to go on to trial. We were arrested on 18 October for standing on a sidewalk in Tribeca, though obeying the law, while informing Occupy protesters of their legal rights to walk peacefully in single file under the terms of the permit that was in force outside the Huffington Post GameChangers Awards that night. The allegations written on my summons were:

"At t/p/o (shorthand for the 'time and place of the offense') observed deft (defendant) refuse a lawful order to disburse (sic) (given by Lt Zielinski) from sidewalk that was provided for per (pedestrian) traffic at all times. Had permit issued for Huffington Post Games Changes allowing at least 5ft of unobstructed sidewalk, for pedestrians, but deft refused to comply."...

 

Why Occupy Needs to Start Making Demands
by Rick Perlstein
RollingStone
March 22, 2012

Visionary radicalism can be galvanizing. But it can be enervating, too. For here is something that is also radicalizing: a sense of accomplishment. Of momentum. Of changing the world – even if only, at first, a little bit. We need both, to the exclusion of neither. Otherwise, the 1% will keep winning the game.

Elizabeth Warren: ‘That’s the strongest argument for a modern Glass-Steagall’
by Ezra Klein
The Washington Post
May 14, 2012

EK: I agree that complexity is where lobbyists and lawyers work their dark magic. But when I talk to people in the industry about this, they say that simple rules sound great, but they’re not really possible. It’s hard to distinguish a hedge from a bet, or a speculative trade from a legitimate one. The world is complex, and that’s why regulators and politicians who don’t like Wall Street and don’t like being browbeaten by lobbyists end up allowing complex rules, too.

EW: Here’s another way to look at what you just described: That’s the strongest argument for a modern Glass-Steagall. Glass-Steagall said in effect that hedge funds should be separated from commercial banking. If a big institution wants to go out and play in the market, that’s fine. But it doesn’t get the backup of the federal government. If it’s too complicated to implement the Volcker rule, do you say we give up and let the largest financial institutions do what they want? Or do you say maybe that’s the reason we need a modern Glass-Steagall?

EK: Do you support a modernized Glass-Steagall law?

EW: Yeah! I’ve talked with Sen. Maria Cantwell from Washington State. She’s been working on that, and I think the debate should be on the table...

EK: And the thing that worries me about that, at least when applied to this crisis, is that if you think about the appetite for risk being a contributor to bubbles and blowups, we’re not even five years out from Lehman. Regulators are looking over everyone’s shoulder. You’d expect the appetite for risk to be very low right now. And even in this atmosphere, JP Morgan managed to blow up billions of dollars in insanely complex derivatives.

EW: And when Jamie Dimon is holding himself out as the hero of the day for having been the world’s most prudent banker. All of that is going on at the same time. The moment of once-burned, twice-shy, passed quickly! The bankers have been ready to get right back into playing with matches and firecrackers and every other combustible thing they can find. That’s why I think this is really about the system, not Dimon. If JP Morgan has to admit to taking on risks that would cause a $2 billion loss, what’s happening at the other financial institutions, the ones that haven’t held themselves out as models of prudence? No one knows because there is no effective oversight.

EK: Can Dodd-Frank work if it’s effectively implemented?

EW: I think Dodd-Frank is a strong bill that moves in the right direction. But the market keeps changing. The practices keep changing. The idea that we’ll pass one law and then declare that problem is solved, we’ll be back again in 50 years, just doesn’t work anymore. We had a double problem here: Both deregulation and the failure to adapt to new financial conditions and products and practices. That’s what permitted risk to multiply in the system until it nearly brought the economy to its knees.

Today, one in five Americans is unemployed, underemployed or just plain out of work. One in nine families can't make the minimum payment on their credit cards. One in eight mortgages is in default or foreclosure. One in eight Americans is on food stamps. More than 120,000 families are filing for bankruptcy every month. The economic crisis has wiped more than $5 trillion from pensions and savings, has left family balance sheets upside down, and threatens to put ten million homeowners out on the street.

Families have survived the ups and downs of economic booms and busts for a long time, but the fall-behind during the busts has gotten worse while the surge-ahead during the booms has stalled out. In the boom of the 1960s, for example, median family income jumped by 33% (adjusted for inflation). But the boom of the 2000s resulted in an almost-imperceptible 1.6% increase for the typical family. While Wall Street executives and others who owned lots of stock celebrated how good the recovery was for them, middle class families were left empty-handed.

The crisis facing the middle class started more than a generation ago. Even as productivity rose, the wages of the average fully-employed male have been flat since the 1970s.

But core expenses kept going up. By the early 2000s, families were spending twice as much (adjusted for inflation) on mortgages than they did a generation ago — for a house that was, on average, only ten percent bigger and 25 years older. They also had to pay twice as much to hang on to their health insurance.

To cope, millions of families put a second parent into the workforce. But higher housing and medical costs combined with new expenses for child care, the costs of a second car to get to work and higher taxes combined to squeeze families even harder. Even with two incomes, they tightened their belts. Families today spend less than they did a generation ago on food, clothing, furniture, appliances, and other flexible purchases — but it hasn't been enough to save them. Today's families have spent all their income, have spent all their savings, and have gone into debt to pay for college, to cover serious medical problems, and just to stay afloat a little while longer...

The contrast with the big banks could not be sharper. While the middle class has been caught in an economic vise, the financial industry that was supposed to serve them has prospered at their expense. Consumer banking — selling debt to middle class families — has been a gold mine. Boring banking has given way to creative banking, and the industry has generated tens of billions of dollars annually in fees made possible by deceptive and dangerous terms buried in the fine print of opaque, incomprehensible, and largely unregulated contracts.

And when various forms of this creative banking triggered economic crisis, the banks went to Washington for a handout. All the while, top executives kept their jobs and retained their bonuses. Even though the tax dollars that supported the bailout came largely from middle class families — from people already working hard to make ends meet — the beneficiaries of those tax dollars are now lobbying Congress to preserve the rules that had let those huge banks feast off the middle class.

Read the whole article by my hero Elizabeth Warren...

"Carried interest is a quintessential example of this: when the law governing partnerships was passed, back in 1954, the goal was to make it easier for people to run what one law professor has termed 'simple ventures.' No one imagined that the law would end up covering an industry that manages trillions of dollars in assets, and would cost the government billions in tax revenue. You can see the same problem at work in the case of farm subsidies, which have morphed from a way to keep small farmers afloat during the Great Depression into a multibillion-dollar handout to huge agribusiness companies. And something similar happened during the financial crisis, when outmoded regulations left the government ill equipped to deal with the collapse of huge financial institutions like A.I.G. and Lehman Brothers. (Remarkably, those regulations are still in place.) Too often, we're using horse-and-buggy laws to deal with a Formula One world. We shouldn't be too surprised when we get run over."

from my post in the forum  Can we prevent America from crashing?
Check this out...  I think you might find it interesting...  even though the public is pissed about the bankster bailouts, quite a few economists are warming up to Geithner—  most with some degree of surprise...  I wrote some stuff about Geithner about a year ago, and I was very neutral— mostly just emphasizing that he is fluent in Chinese...  but now, I am impressed with the dude...  one extreme wanted him to nationalize the banks, and your camp wanted the banksters sorted out by moral hazard ideology, but Geithner created the stress test that everyone on both sides ridiculed, and it seems to have worked quite well, because it gives people a clear idea of how secure individual banks are and how much capital they hold to cover the exact sort of defaults you point out in your post here...  check this out—
NO CREDIT by John Cassidy

"We saved the economy, but we kind of lost the public," Geithner said.

Joseph Stiglitz: The Price of Inequality
June 11, 2012

Markets have clearly not been working in the way that their boosters claim. Markets are supposed to be stable, but the global financial crisis showed that they could be very unstable, with devastating consequences. The bankers had taken bets that, without government assistance, would have brought them and the entire economy down. But a closer look at the system showed that this was not an accident; the bankers had incentives to behave this way.

The virtue of the market is supposed to be its efficiency. But the market obviously is not efficient. The most basic law of economics—necessary if the economy is to be efficient—is that demand equals supply. But we have a world in which there are huge unmet needs—investments to bring the poor out of poverty, to promote development in less developed countries in Africa and other continents around the world, to retrofit the global economy to face the challenges of global warming. At the same time, we have vast underutilized resources—workers and machines that are idle or are not producing up to their potential. Unemployment—the inability of the market to generate jobs for so many citizens—is the worst failure of the market, the greatest source of inefficiency, and a major cause of inequality.

As of March 2012, some 24 million Americans who would have liked a full-time job couldn’t get one.

In the United States, we are throwing millions out of their homes. We have empty homes and homeless people.

But even before the crisis, the American economy had not been delivering what had been promised: although there was growth in GDP, most citizens were seeing their standards of living erode. For most American families, even before the onset of recession, incomes adjusted for inflation were lower than they had been a decade earlier. America had created a marvelous economic machine, but evidently one that worked only for those at the top...

The 1 Percent’s Problem
by Joseph E. Stiglitz
Vanity Fair
May 31, 2012

Let’s start by laying down the baseline premise: inequality in America has been widening for dec­ades. We’re all aware of the fact. Yes, there are some on the right who deny this reality, but serious analysts across the political spectrum take it for granted. I won’t run through all the evidence here, except to say that the gap between the 1 percent and the 99 percent is vast when looked at in terms of annual income, and even vaster when looked at in terms of wealth—that is, in terms of accumulated capital and other assets. Consider the Walton family: the six heirs to the Walmart empire possess a combined wealth of some $90 billion, which is equivalent to the wealth of the entire bottom 30 percent of U.S. society. (Many at the bottom have zero or negative net worth, especially after the housing debacle.) Warren Buffett put the matter correctly when he said, “There’s been class warfare going on for the last 20 years and my class has won.”

So, no: there’s little debate over the basic fact of widening inequality. The debate is over its meaning. From the right, you sometimes hear the argument made that inequality is basically a good thing: as the rich increasingly benefit, so does everyone else. This argument is false: while the rich have been growing richer, most Americans (and not just those at the bottom) have been unable to maintain their standard of living, let alone to keep pace. A typical full-time male worker receives the same income today he did a third of a century ago.

From the left, meanwhile, the widening inequality often elicits an appeal for simple justice: why should so few have so much when so many have so little? It’s not hard to see why, in a market-driven age where justice itself is a commodity to be bought and sold, some would dismiss that argument as the stuff of pious sentiment.

Put sentiment aside. There are good reasons why plutocrats should care about inequality anyway—even if they’re thinking only about themselves. The rich do not exist in a vacuum. They need a functioning society around them to sustain their position. Widely unequal societies do not function efficiently and their economies are neither stable nor sustainable. The evidence from history and from around the modern world is unequivocal: there comes a point when inequality spirals into economic dysfunction for the whole society, and when it does, even the rich pay a steep price.

Let me run through a few reasons why...

How J.P. Morgan Chase Has Made the Case for Breaking Up The Big Banks and Resurrecting Glass-Steagall
by Robert Reich at his blog
May 10, 2012

J.P. Morgan Chase & Co., the nation’s largest bank, whose chief executive, Jamie Dimon, has led Wall Street’s war against regulation, announced Thursday it had lost $2 billion in trades over the past six weeks and could face an additional $1 billion of losses, due to excessively risky bets.

The bets were “poorly executed” and “poorly monitored,” said Dimon, a result of “many errors, “sloppiness,” and “bad judgment.” But not to worry. “We will admit it, we will fix it and move on.”

Move on? Word on the Street is that J.P. Morgan’s exposure is so large that it can’t dump these bad bets without affecting the market and losing even more money. And given its mammoth size and interlinked connections with every other financial institution, anything that shakes J.P. Morgan is likely to rock the rest of the Street.

Ever since the start of the banking crisis in 2008, Dimon has been arguing that more government regulation of Wall Street is unnecessary. Last year he vehemently and loudly opposed the so-called Volcker rule, itself a watered-down version of the old Glass-Steagall Act that used to separate commercial from investment banking before it was repealed in 1999, saying it would unnecessarily impinge on derivative trading (the lucrative practice of making bets on bets) and hedging (using some bets to offset the risks of other bets).

Dimon argued that the financial system could be trusted; that the near-meltdown of 2008 was a perfect storm that would never happen again.

Since then, J.P. Morgan’s lobbyists and lawyers have done everything in their power to eviscerate the Volcker rule — creating exceptions, exemptions, and loopholes that effectively allow any big bank to go on doing most of the derivative trading it was doing before the near-meltdown.

And now — only a few years after the banking crisis that forced American taxpayers to bail out the Street, caused home values to plunge by more than 30 percent, pushed millions of homeowners underwater, threatened or diminished the savings of millions more, and sent the entire American economy hurtling into the worst downturn since the Great Depression — J.P. Morgan Chase recapitulates the whole debacle with the same kind of errors, sloppiness, bad judgment, and poorly-executed and excessively risky trades that caused the crisis in the first place.

In light of all this, Jamie Dimon’s promise that J.P. Morgan will “fix it and move on” is not reassuring...

 

Goldman Stunned by Op-Ed Loses $2.2 Billion for Shareholders
by Christine Harper
Bloomburg News
hours ago

Goldman Sachs Group Inc. saw $2.15 billion of its market value wiped out after an employee assailed Chief Executive Officer Lloyd C. Blankfein's management and the firm's treatment of clients, sparking debate across Wall Street.

The shares dropped 3.4 percent in New York trading yesterday, the third-biggest decline in the 81-company Standard & Poor's 500 Financials Index, after London-based Greg Smith made the accusations in a New York Times op-ed piece.

Smith, who also wrote that he was quitting after 12 years at the company, blamed Blankfein, 57, and President Gary D. Cohn, 51, for a "decline in the firm's moral fiber." They responded in a memo to current and former employees, saying that Smith's assertions don't reflect the firm's values, culture or "how the vast majority of people at Goldman Sachs think about the firm and the work it does on behalf of our clients."

Former Federal Reserve Chairman Paul Volcker, 84, whose "Volcker rule" would limit banks like New York-based Goldman Sachs from making bets with their own money, called Smith's article "a radical, strong" piece. "I'm afraid it's a business that leads to a lot of conflicts of interest," Volcker said at a conference in Washington sponsored by the Atlantic.

Goldman Sachs slid $4.17 to $120.37 yesterday. The shares are still up 33 percent this year...

"The argument that Goldman has become increasingly profit- driven, sometimes at the expense of clients' best interests, and that some employees use vulgar and disrespectful language, is hardly news," Whitney Tilson, founder of hedge fund T2 Partners LLC, wrote in an e-mailed commentary. "What's the next 'shocking' headline: 'Prostitution in Vegas!?'"...

The nation's largest private prison company is offering cash-strapped state governments to buy up their penitentiaries and manage convicted criminals at a cost-savings. But there's a catch...the states must guarantee that there are enough prisoners to ensure that the venture is profitable to the company.

Corrections Corporation of America (CCA) has reached out to 48 states as part of a $250 million plan to own existing prisons and manage their operations. But in return CCA wants a 20-year contract and assurances that the state will keep the prisons at least 90% full...

Some Wall Street investors made money as the mortgage market boomed; others profited when it fell apart.

Having reaped big gains during both of those turns, Greg Lippmann, a former star trader at Deutsche Bank, is now catching the next upswing: buying the same securities built from mortgages that he bet against before the financial crisis erupted.

Mr. Lippmann is joined by other big-money investors — mutual funds like Fidelity as well as hedge funds — in riding a wave of interest in the same complex loan pools that nearly washed away the financial system...

Like his rivals, Mr. Lippmann cites his experience in the housing market — including its boom and bust — as a principal selling point for his fund.

"Because we have a trading history, I think we understand very well how the street works, better than perhaps people who didn't work in trading before that haven't had that experience," he said at a Bloomberg hedge fund conference in 2010.

Suddenly, manufacturing is back — at least on the election trail. But don't be fooled. The real issue isn't how to get manufacturing back. It's how to get good jobs and good wages back. They aren't at all the same thing.

Republicans have become born-again champions of American manufacturing. This may have something to do with crucial primaries occurring next week in Michigan and the following week in Ohio, both of them former arsenals of American manufacturing.

Mitt Romney says he'll "work to bring manufacturing back" to America by being tough on China, which he describes as "stealing jobs" by keeping value of its currency artificially low and thereby making its exports cheaper.

Rick Santorum promises to "fight for American manufacturing" by eliminating corporate income taxes on manufacturers and allowing corporations to bring their foreign profits back to American tax free as long as they use the money to build new factories.

President Obama has also been pushing a manufacturing agenda. Last month the President unveiled a six-point plan to eliminate tax incentives for companies to move offshore and create new lures for them to bring jobs home. "Our goal," he says, is to "create opportunities for hard-working Americans to start making stuff again."

Meanwhile, American consumers' pent-up demand for appliances, cars, and trucks have created a small boomlet in American manufacturing — setting off a wave of hope, mixed with nostalgic patriotism, that American manufacturing could be coming back. Clint Eastwood's Super Bowl "Halftime in America" hit the mood exactly.

But American manufacturing won't be coming back. Although 404,000 manufacturing jobs have been added since January 2010, that still leaves us with 5.5 million fewer factory jobs today than in July 2000 — and 12 million fewer than in 1990. The long-term trend is fewer and fewer factory jobs...

Wisconsin will use a chunk of its $140 million share of a national settlement over foreclosure and mortgage-servicing abuses to help the state budget rather than assist troubled homeowners, Gov. Scott Walker and state Attorney General J.B. Van Hollen said Thursday.

Walker and Van Hollen said the majority of the settlement amount earmarked to Wisconsin under a $25 billion proposed nationwide agreement announced Thursday still would go to aid consumers in Milwaukee and other communities struggling with the specter of home foreclosure.

But of a $31.6 million payment coming directly to the state government, most of that money — $25.6 million — will go to help close a budget shortfall revealed in newly released state projections. Van Hollen, whose office said he has the legal authority over the money, made the decision in consultation with Walker.

"Just like communities and individuals have been affected, the foreclosure crisis has had an effect on the state of Wisconsin, in terms of unemployment. . . . This will offset that damage done to the state of Wisconsin," Walker said.

The news that part of the money would be used to reduce the state budget deficit drew criticism from Milwaukee Mayor Tom Barrett, who said "not one dime should be used to fund the unbalanced state budget."

Barrett, who lashed out at Walker and Van Hollen during a City Hall news conference, has contended that most of the $31.6 million should go to foreclosure mitigation programs in his city, which has had the most foreclosures in the state.

Barrett said "hundreds and possibly thousands have lost their homes because of this bait-and-switch" by lenders who pushed subprime mortgages during the housing bubble.

"The worst thing that can happen now is for the state of Wisconsin to employ its own bait-and-switch," Barrett said...

The ongoing discussions of economic policy and principles since the Great Recession struck have, I have to say, been a source of continuing revelation. Again and again one sees people with seemingly sterling credentials — Federal Reserve presidents, economists with Ph.D.s from good schools — propounding views that I thought were obvious fallacies, at least to anyone who had studied the subject a bit. And the hits just keep coming...

At a basic level, this is all kind of terrifying. If top financial officials and credentialed economists can't even avoid getting confused about the difference between asset prices and productive capacity, what hope is there for rational policy discussion?

When they're not blaming Obama for a bad economy, Republicans are decrying the federal budget deficit and demanding more cuts. But America's jobs deficit continues to be a much larger problem than the budget deficit.

In fact, we can't possibly achieve the growth needed to reduce the budget deficit as a proportion of the total economy unless far more people are employed. Workers are consumers, and consumer spending is 70 percent of economic activity. And cutting the budget means fewer workers, directly (as government continues to shed workers) and indirectly (as government contractors have to lay off workers) and therefore fewer consumers.

Yet deficit hawks continue to circle. State and local budgets are still being slashed. The federal government is scheduled to begin major spending cuts less than a year from now. Republicans are calling for more cuts in the short term. Austerity economics continues to gain traction...

The Perils of 2012
by Joseph E. Stiglitz
Project Syndicate
January 12, 2012

The year 2011 will be remembered as the time when many ever-optimistic Americans began to give up hope. President John F. Kennedy once said that a rising tide lifts all boats. But now, in the receding tide, Americans are beginning to see not only that those with taller masts had been lifted far higher, but also that many of the smaller boats had been dashed to pieces in their wake...

The dark underbelly of the previous decade's financial boom has been fully exposed in Europe as well. Dithering over Greece and key national governments' devotion to austerity began to exact a heavy toll last year. Contagion spread to Italy. Spain's unemployment, which had been near 20% since the beginning of the recession, crept even higher. The unthinkable — the end of the euro — began to seem like a real possibility.

This year is set to be even worse. It is possible, of course, that the United States will solve its political problems and finally adopt the stimulus measures that it needs to bring down unemployment to 6% or 7% (the pre-crisis level of 4% or 5% is too much to hope for). But this is as unlikely as it is that Europe will figure out that austerity alone will not solve its problems. On the contrary, austerity will only exacerbate the economic slowdown. Without growth, the debt crisis — and the euro crisis — will only worsen. And the long crisis that began with the collapse of the housing bubble in 2007 and the subsequent recession will continue...

The good news is that addressing these long-term problems would actually help to solve the short-term problems. Increased investment to retrofit the economy for global warming would help to stimulate economic activity, growth, and job creation. More progressive taxation, in effect redistributing income from the top to the middle and bottom, would simultaneously reduce inequality and increase employment by boosting total demand. Higher taxes at the top could generate revenues to finance needed public investment, and to provide some social protection for those at the bottom, including the unemployed.

Even without widening the fiscal deficit, such "balanced budget" increases in taxes and spending would lower unemployment and increase output. The worry, however, is that politics and ideology on both sides of the Atlantic, but especially in the US, will not allow any of this to occur. Fixation on the deficit will induce cutbacks in social spending, worsening inequality. Likewise, the enduring attraction of supply-side economics, despite all of the evidence against it (especially in a period in which there is high unemployment), will prevent raising taxes at the top...

No Longer Home Sweet Home: The Ongoing Housing Crisis and the End of an Era
by Robert Reich on his blog
February 28, 2012

Economic cheerleaders on Wall Street and in the White House are taking heart. The US has had three straight months of faster job growth. The number of Americans each week filing new claims for unemployment benefits is down by more than 50,000 since early January. Corporate profits are healthy. The S&P 500 on Friday closed at a post-financial crisis high...

Yet the biggest continuing problem for most Americans is their homes.

Purchases of new homes are down 77 per cent from their 2005 peak. They dropped another 0.9 per cent in January. Home sales overall are still dropping, and prices are still falling — despite already being down by a third from their 2006 peak. January's average sale price was $154,700, down from $162,210 in December.

Houses are the major assets of the American middle class. Most Americans are therefore far poorer than they were six years ago. Almost one out of three homeowners with a mortgage is now "underwater", owing more to the banks than their homes are worth on the market...

For class warfare, there’s the 1%, and then there’s the 0.1%
by Henry Banta
Nieman Watchdog
April 17, 2012

The problem of income inequality has at last become a subject for political discussion. Commendable as this is there is something misleading about the current discussion that the press needs to help correct.

There is a point where sheer magnitude can change the fundamental nature of a thing – when something becomes so big, so large, so immense, that it morphs into something very different from all else that otherwise would be in the same category. The staggering growth in the wealth and income of the top 0.1% is just such a thing. It is not just bigger than the gap between the 1% and all the rest, it is so big that it presents a vastly different set of problems.

I’m not suggesting that the difference between the top 1% and the other 99% is not a problem or even that the differences between the top 5% or even top 10% and all the rest of us is not a problem. They are very serious problems. But the difference between the extremely rich – the top 0.1% – and all the rest of us has turned into something with the potential for destroying the fabric of our society and reducing our democracy to a hollow shell.

This is not a new idea. Some time ago David Cay Johnston (who won a Pulitzer for his tax reporting) suggested that the really important gap was not between the top 1% and all the rest of us, but rather between the top 0.1% and everyone else. Indeed, looking at the gap between the top 1% and all the rest is misleading because it hides how insanely large a share is taken up by this tiny 0.1% – even when compared with the share of the bottom half of the top 1%...

As Occupy Arrestees Arraigned, Iris Scans Affect Bail
by Nick Pinto
The Village Voice
March 19, 2012

The first of the more than 70 Occupy Wall Street protesters arrested Saturday afternoon and evening were arraigned yesterday in Manhattan Criminal Court...

But protesters and their legal advisers were surprised yesterday to learn that the size of their bail was being affected by whether defendants were willing to have the distinctive patterns of their irises photographed and logged into a database...

The idea of the state collecting distinctive biometric information from people who haven't even been charged with a crime yet, much less convicted of one, makes civil libertarians nervous, though, and over the last two years they've pushed back. Unlike fingerprints, they argue, no law was ever passed to require iris photographs — it's just a policy. And while police regularly tell arrestees that the photographs are mandatory, and that failing to be photographed will prolong their stay in jail, defendants have often refused to comply without serious consequence.

That appears to be changing. Yesterday, a defense lawyer had told Judge Abraham Clott she was under the impression that her client — not affiliated with Occupy Wall Street, facing charges of marijuana possession — was not legally bound to submit to an iris photograph. Clott responded in no uncertain terms: Iris photographs may be optional in the sense that the court can proceed without them if it has to, he said, for example if the photographic equipment breaks down. But they are not optional for defendants...

Last night, Wikileaks revealed a massive trove of e-mails from the firm Stratfor. The e-mails show that the company, working on behalf of chemical giant Dow Chemical, closely monitored news coverage of the Occupy Wall Street movement. Stratfor relayed the activities of people seeking redress for the 1984 Dow Chemical/Union Carbide gas disaster in Bhopal, India, which resulted in the death of thousands and lasting environmental damage.

Many Bhopal activists joined the ranks of the Occupy movement in recent months, a trend that was noticed by Stratfor:

— Dec. 9, 2011: Stratfor e-mailed a monitoring report to Dow Chemical noting that Bhopal activists had rallied with Occupy Boston members, passed out literature, and hosted a film screening. Activists discussed how Dow is "avoiding responsibility for remediation of former UCIL factory site and compensation to gas accident victims, and greenwashing its image with the London 2012 Olympics sponsorship."

— Oct. 14, 2011: A Stratfor analyst e-mailed an update noting that a member of the "Yes Men," active in the Bhopal movement, traveled to Los Angeles and New York to participate in Occupy events.

From the e-mails, it does not appear that Stratfor worked to undermine the Occupy movement, an allegation leveled at other corporate intelligence firms. But the e-mails do serve as a reminder that powerful corporate interests are spending money to monitor the Occupy movement and its attempt to hold businesses accountable for their abuses.

Most major Occupy encampments have been dispersed, but they live on in a flurry of lawsuits in which protesters are asserting their constitutional rights to free speech and assembly and challenging authorities' mass arrests and use of force to break up tent cities.

Lawyers representing protesters have filed lawsuits — or are planning them — in state and federal courts from coast to coast, challenging eviction orders and what they call heavy-handed police tactics and the banning of demonstrators from public properties.

Some say the fundamental right of protest has been criminalized in places, with protesters facing arrest and charges while doing nothing more than exercising protected rights to demonstrate.

"When I think about the tents as an expression of the First Amendment here, I compare it to Tahrir Square in Egypt," said Carol Sobel, co-chairwoman of the National Lawyers Guild's Mass Defense Committee.

"Our government is outraged when military forces and those governments come down on the demonstrators. But they won't extend the same rights in this country," she said. "They praise that as a fight for democracy, the values we treasure. It comes here and these people are riffraff."...

12:12 PST SAN FRANCISCO — Police raided the Occupy SF camp early today, arresting 70 campers and protesters at Justin Herman Plaza and clearing out the 2-month-old encampment.

Officers, sheriff's deputies, firefighters and public works crews converged on the camp at the foot of Market Street at about 1:30 a.m. and gave protesters five minutes to clear out, said Officer Albie Esparza, a San Francisco police spokesman...



Occupy protesters take over foreclosed homes
by Les Christie
CNN Money
about three hours ago
NEW YORK (CNNMoney) — In more than two dozen cities across the nation Tuesday, an offshoot of the Occupy Wall Street movement took on the housing crisis by re-occupying foreclosed homes, disrupting bank auctions and blocking evictions.

Occupy Our Homes said it's embarking on a "national day of action" to protest the mistreatment of homeowners by big banks, who they say made billions of dollars off of the housing bubble by offering predatory loans and indulging in practices that took advantage of consumers...

In the early days of Occupy Boston, Ford, a 30-year-old bookstore owner from the white, blue-collar town of Plymouth, Massachusetts, and Alex Ingram, a 22-year-old African-American from Georgia who served in the Air Force as a linguist, would stay up late into the night in Occupy Boston's library. Enveloped by Rousseau and Chomsky, they'd ponder big ideas about how to change the system. But tonight they're grappling with a different set of issues: How do we deal with Henry, who's drunk and pissed off again and recently threatened another Occupier with a hammer? What do we say to the furious young woman who's on a manhunt for the guy who promised her forty bucks for sex and then ran off? And what the hell are we going to do about Phil?

"We're all at that stage in our lives where we should be building our careers and it's not been an option for a lot of us," says Wiley. "I often say that's why I think this movement popped up overnight and exploded, and it has so many deeply committed people.... I think maybe some of us are realizing that maybe what we'd hoped for in life isn't going to happen."...

The mud endlessly creeps up around the bottom of the jammed-together tents, and walkways made of pallets cut the camp into sections. Each walkway is named; Main Street bisects the camp, Gandhi Way leads to Dewey Square's now-decorated Gandhi statue, with its thin and irregular curves.

Gandhi's dower and determined face remains perpetually overshadowed by the skyscraping white Federal Reserve building across from Dewey, which has a kind of Stalinist Lego architecture to it...

What's next? That's the question being asked as cities close down Occupy encampments and winter approaches.

The answer is simple. Just as the Tea Party gained power, the Occupy Movement can. The Occupy movement has raised awareness of a great many of America's real issues and has organized supporters across the country. Next comes electoral power. Wall Street exerts its force through the money that buys elections and elected officials. But ultimately, the outcome of elections depends on people willing to take to the streets — registering voters, knocking on doors, distributing information, speaking in local venues. The way to change the nation is to occupy elections...

McKibben, who is an author and an environmental activist (and a former New Yorker staff writer), had been alarmed by a conversation he had had about the proposed Keystone XL oil pipeline with James Hansen, the head of NASA's Goddard Institute for Space Studies, and one of the country's foremost climate scientists. If the pipeline was built, it would hasten the extraction of exceptionally dirty crude oil, using huge amounts of water and heat, from the tar sands of Alberta, Canada, which would then be piped across the United States, where it would be refined and burned as fuel, releasing a vast new volume of greenhouse gas into the atmosphere. "What would the effect be on the climate?" McKibben asked. Hansen replied, "Essentially, it's game over for the planet."...

McKibben concluded that the pipeline couldn't be stopped by conventional political means. So, in June, he and ten other activists sent an open letter to the environmental community saying, "It's time to stop letting corporate power make the most important decisions our planet faces. We don't have the money to compete . . . but we do have our bodies." Beginning in August, the letter said, volunteers would be needed to help provoke mass, nonviolent arrests at the White House. The activists called for civil disobedience, with the emphasis on the "civil": "Come dressed as if for a business meeting—this is, in fact, serious business." Waves of neatly outfitted people started showing up at the White House, and by the time the action ended, on September 2nd, more than a thousand had been arrested at the front gate for trespassing...

In the following weeks, while the President was on his jobs tour, he was confronted at practically every stop by people wearing Obama buttons and carrying signs that quoted him saying that we can "be the generation that finally frees America from the tyranny of oil." Major environmental groups, who had been working against the pipeline from the beginning—among them the Sierra Club, Friends of the Earth, and the National Resources Defense Council—led a broader campaign. Volunteers swarmed Obama campaign offices in almost every state, and placed calls to the finance chair of the Democratic National Committee. Ranchers and indigenous people—cowboys and Indians—whose lands would be affected united in opposition at public hearings. Nobel laureates denounced the project. The Republican governor and both senators from Nebraska, whose vulnerable water supply stood to be crossed by the pipeline, sided against it...

On November 6th, exactly a year before the election, the protest returned to Washington. This time, twelve thousand people encircled the White House. President Obama was reportedly out, playing golf, but the message evidently got through to him. Four days later, he issued a statement saying that the decision on the pipeline permit would be delayed until at least 2013, pending further environmental review...

Yet the Occupy movement could do worse than to learn from the pipeline protest. The difference between the focussed, agenda-driven campaign fought by the environmentalists and the free-form, leaderless one waged by the Occupiers, the historian Michael Kazin says, is that the environmentalists grasped the famous point made by Dr. King's political forebear, Frederick Douglass: "Power concedes nothing without a demand. It never did and it never will."

But because Bloomberg is Wall Street, the stakes and symbolism were exponentially heightened, and these eight weeks will take on outsize significance in how his twelve years in office are judged. Bloomberg ran on the premise that his money put him above politics...

Ten years later, as we move from the terror era to the income-inequality era, it is an absolutely fitting twist of fate that New York, home of Wall Street and birthplace of Occupy Wall Street, is ruled by a $20 billion man...

Bloomberg claimed it was big bad Congress that forced the poor innocent banks to make all those booby-trapped loans, and blamed Freddie Mac and Fannie Mae for fueling the bubble. Never mind that everyone from the nonpartisan Government Accountability Office to the St. Louis Federal Reserve has debunked that simplistic reasoning with actual evidence...

But one consequence of electing a mayor as wealthy as Michael Bloomberg is that he would have difficulty engaging with the mind-sets of people less well-off. And one of the victories of Occupy Wall Street is that he's had to work at it.

A funny thing happened to the First Amendment on its way to the public forum. According to the Supreme Court, money is now speech and corporations are now people. But when real people without money assemble to express their dissatisfaction with the political consequences of this, they're treated as public nuisances and evicted...

But there's another alternative. If Occupiers are expelled from specific geographic locations the Occupier movement can shift to broad-based organizing around the simple idea at the core of the movement: It's time to occupy our democracy.

This Is What Revolution Looks Like
by Chris Hedges
truthdig
November 15, 2011

Welcome to the revolution. Our elites have exposed their hand. They have nothing to offer. They can destroy but they cannot build. They can repress but they cannot lead. They can steal but they cannot share. They can talk but they cannot speak. They are as dead and useless to us as the water-soaked books, tents, sleeping bags, suitcases, food boxes and clothes that were tossed by sanitation workers Tuesday morning into garbage trucks in New York City. They have no ideas, no plans and no vision for the future.

Our decaying corporate regime has strutted in Portland, Oakland and New York with their baton-wielding cops into a fool's paradise. They think they can clean up "the mess"-always employing the language of personal hygiene and public security-by making us disappear. They think we will all go home and accept their corporate nation, a nation where crime and government policy have become indistinguishable, where nothing in America, including the ordinary citizen, is deemed by those in power worth protecting or preserving, where corporate oligarchs awash in hundreds of millions of dollars are permitted to loot and pillage the last shreds of collective wealth, human capital and natural resources, a nation where the poor do not eat and workers do not work, a nation where the sick die and children go hungry, a nation where the consent of the governed and the voice of the people is a cruel joke.

Get back into your cages, they are telling us. Return to watching the lies, absurdities, trivia and celebrity gossip we feed you in 24-hour cycles on television. Invest your emotional energy in the vast system of popular entertainment. Run up your credit card debt. Pay your loans. Be thankful for the scraps we toss. Chant back to us our phrases about democracy, greatness and freedom. Vote in our rigged political theater. Send your young men and women to fight and die in useless, unwinnable wars that provide corporations with huge profits. Stand by mutely as our bipartisan congressional supercommittee, either through consensus or cynical dysfunction, plunges you into a society without basic social services including unemployment benefits. Pay for the crimes of Wall Street.

The rogues' gallery of Wall Street crooks, such as Lloyd Blankfein at Goldman Sachs, Howard Milstein at New York Private Bank & Trust, the media tycoon Rupert Murdoch, the Koch brothers and Jamie Dimon at JPMorgan Chase & Co., no doubt think it's over. They think it is back to the business of harvesting what is left of America to swell their personal and corporate fortunes. But they no longer have any concept of what is happening around them. They are as mystified and clueless about these uprisings as the courtiers at Versailles or in the Forbidden City who never understood until the very end that their world was collapsing. The billionaire mayor of New York, enriched by a deregulated Wall Street, is unable to grasp why people would spend two months sleeping in an open park and marching on banks. He says he understands that the Occupy protests are "cathartic" and "entertaining," as if demonstrating against the pain of being homeless and unemployed is a form of therapy or diversion, but that it is time to let the adults handle the affairs of state. Democratic and Republican mayors, along with their parties, have sold us out. But for them this is the beginning of the end.

The historian Crane Brinton in his book "Anatomy of a Revolution" laid out the common route to revolution. The preconditions for successful revolution, Brinton argued, are discontent that affects nearly all social classes, widespread feelings of entrapment and despair, unfulfilled expectations, a unified solidarity in opposition to a tiny power elite, a refusal by scholars and thinkers to continue to defend the actions of the ruling class, an inability of government to respond to the basic needs of citizens, a steady loss of will within the power elite itself and defections from the inner circle, a crippling isolation that leaves the power elite without any allies or outside support and, finally, a financial crisis. Our corporate elite, as far as Brinton was concerned, has amply fulfilled these preconditions. But it is Brinton's next observation that is most worth remembering. Revolutions always begin, he wrote, by making impossible demands that if the government met would mean the end of the old configurations of power. The second stage, the one we have entered now, is the unsuccessful attempt by the power elite to quell the unrest and discontent through physical acts of repression...

The media blackout was especially remarkable given that issues like jobs and corporate influence on elections topped the list of concerns for most Americans.

Occupy Wall Street changed that. In fact, it may represent the best hope in years that "we the people" will step up to take on the critical challenges of our time. Here's how the Occupy movement is already changing everything...

The videos taken by protesters, journalists and casual observers show UC Berkeley police and Alameda County sheriff's deputies in riot gear ordering students with linked arms to leave a grassy area outside the campus administration building Wednesday. When the students didn't move, police lowered their face shields and began hitting the protesters with batons.

University police say the students, who chanted "You're beating students" during the incident, were not innocent bystanders, and that the human fence they tried to build around seven tents amounted to a violent stance against police.

But many law enforcement experts said Thursday that the officers' tactics appeared to be a severe overreaction.

Both the ACLU and the National Lawyers Guild said they had "grave concerns about the conduct" of campus police...


UC Berkeley Riot Police Use Batons to Clear Students from Sproul Plaza
by Conor Friedersdorf
The Atlantic
November 10, 2011

In iconic Sproul Plaza, many hundreds or perhaps thousands of UC Berkeley students and Occupy Oakland activists clashed with university police late into the night Wednesday, after officers carried out instructions from administrators to clear Occupy Cal protesters from their makeshift encampment. "We formed a human barricade around our tents, and they just beat their way through it with batons," said one student. "It really, really hurt - I got the wind knocked out of me," another protester, doctoral student Shane Boyle, told the San Francisco Chronicle, showing the reporter a red welt on his chest. "I was lucky I only got hit twice," he added...

The video at the top of this post captures a violent clash that occurred earlier in the day, when police aggressively pummeled student protesters with their batons. Said Matt Welch, editor ofReason magazine, "Watch cops at Occupy Berkeley launch coordinated baton attack against unarmed students."

NEW YORK — The protest movement that began in Tunisia in January, subsequently spreading to Egypt, and then to Spain, has now become global, with the protests engulfing Wall Street and cities across America. Globalization and modern technology now enables social movements to transcend borders as rapidly as ideas can. And social protest has found fertile ground everywhere: a sense that the "system" has failed, and the conviction that even in a democracy, the electoral process will not set things right — at least not without strong pressure from the street...

Do many of our big-city mayors and police chiefs believe American citizens living in a democracy should have fewer rights than protesters in foreign lands do when they take to the streets to challenge their undemocratically-chosen governments? Do they believe that citizens living in this country with a Bill of Rights should be able to engage in continuing political protests, the same as citizens in non-democratic countries with no First Amendment guarantees? Do they believe that mere city ordinances, such as curfews and bans on sleeping in parks, should trump the U.S. Constitution? Do they believe that our Constitutionally-guaranteed rights of free speech, free assembly and to peaceably petition the government stop when the sun goes down and the curfew and no-camping rules kick in?

Noam Chomsky Speaks to Occupy: If We Want a Chance at a Decent Future, the Movement Here and Around the World Must Grow
November 1, 2011

In a speech to Occupy Boston, the linguist and icon hailed the "unprecedented" first weeks of OWS. He cautioned protesters to build and educate first, strike later.

Q: I hear that Adbusters organized Occupy Wall Street? Or Anonymous? Or US Day of Rage? Just who put this together anyway?
 
A: All of the above, and more. Adbusters made the initial call in mid-July, and also produced a very sexy poster with a ballerina posed atop the Charging Bull statue and riot police in the background. US Day of Rage, the mainly internet-based creation of IT strategist Alexa O'Brien, got involved too and did a lot of the early legwork and tweeting. Anonymous-in its various and multiform visages-joined in late August. On the ground in New York, though, most of the planning was done by people involved in the NYC General Assembly, a collection of activists, artists and students first convened by folks who had been involved in New Yorkers Against Budget Cuts. That coalition of students and union workers had just finished a three-week occupation near City Hall called Bloombergville protesting the mayor's plans for budget cuts and layoffs. They had learned from the experience and were itching to do it again, this time with the hope of having a bigger impact. But no one person or group is running the Wall Street occupation entirely...

Americans have been watching protests against oppressive regimes that concentrate massive wealth in the hands of an elite few. Yet in our own democracy, 1 percent of the people take nearly a quarter of the nation's income-an inequality even the wealthy will come to regret.

by Joseph E. Stiglitz — illustration by Stephen Doyle
for the May issue of Vanity Fair

$30.1 Trillion Dollars Worth of Value Was Lost From the Global Markets in 2008

and this—

By September 2008, average U.S. housing prices had declined by over 20% from their mid-2006 peak. This major and unexpected decline in house prices means that many borrowers have zero or negative equity in their homes, meaning their homes were worth less than their mortgages. As of March 2008, an estimated 8.8 million borrowers - 10.8% of all homeowners - had negative equity in their homes, a number that is believed to have risen to 12 million by November 2008.

And this if from them there ivy league elites—

Conclusion. Determining how that equity gap will be satisfied, and by whom, will be a major challenge over the next few years. If borrowers cannot raise the funds, then lending institutions, particularly local and regional banks and thrifts, will be confronted with severe losses. Government action will then likely be needed to prevent commercial real estate debt from derailing our fragile economic recovery. Given the potential political and economic impact, it is important that empirical work be done to fully investigate the factors that have contributed to a commercial real estate debt crisis.

It will take at least a decade to recover in real estate value from the subprime mortgage crisis...  the disaster will probably echo through history...