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.

Here's another Elizabeth Warren article with the link at the bottom—

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...

Special Interest — by James Surowiecki

"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!?'"...

Private Prison Company to Demand 90% Occupancy
by Noel Brinkerhoff and David Wallechinsky
AllGov
February 16, 2012

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...

Bonds Backed by Mortgages Regain Allure
by Azam Ahmed
The New York Times
February 18, 2012

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.

Manufacturing Illusions
Robert Reich on his blog
February 17, 2012

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...

Walker, Van Hollen: Chunk of mortgage settlement going to state budget
by Jason Stein and Paul Gores
Journal Sentinel
February 9, 2012

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...

Bubbles and Economic Potential
by Paul Krugman
The New York Times
February 11, 2012

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?

America's Jobs Deficit, and Why It's Still More Important than the Budget Deficit
by Robert Reich on his blog
February 3, 2012

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...