6:58 PM

This article began as a set of notes for a presentation I gave at the Up From Debt meeting organized by Washington CAN. http://washingtoncan.org/wordpress/5828/up-from-debt-march-14-2015-2/ [Link is no longer available]

Disclaimer: I am a member of the 1%. Instead of wealth or title, I inherited good health, a world [...]]]> Thursday, May 7, 2015

6:58 PM

This article began as a set of notes for a presentation I gave at the Up From Debt meeting organized by Washington CAN. http://washingtoncan.org/wordpress/5828/up-from-debt-march-14-2015-2/ [Link is no longer available]

Disclaimer: I am a member of the 1%. Instead of wealth or title, I inherited good health, a world class education, integrity, and a robust moral compass.  I am here to tell you brutal truths, because truth is empowering, and because I am morally outraged at what has been done. A friend calls me a traitor to my class. I am in good company: Tony Benn, Ivor Montagu.

The economic and political plight in which we find ourselves is a natural consequence of unregulated corporate capitalism.

Let me tell you how that plays out.

The financial crisis did not just “happen”. It was done, and there are people who did it. They did it knowingly and for profit.

In the past, there were industrial magnates like Rockefeller and Carnegie, who amassed great wealth while the people struggled. Today, it is corporations and their masters, together with the heirs of earlier fortunes, who have wealth and power.

A corporation has no morals. A corporation has no empathy for people who are affected by its actions. A corporation’s only goal is to enrich its bosses and shareholders. Corruption and pollution are simply ways to reduce cost; economists call this an externality.

If a person behaved like a corporation, we would call them dangerously insane.

Let’s talk about financialization. Along with corporatization, we have seen increasing control of the economy being concentrated in the financial industry (aka Wall St). Corporations’ share prices become subject to the opinions of financial analysts, who favor short term returns over long term sustainability. Corporations behave accordingly.

Every tangible asset has been mortgaged so that Wall St can take a percentage off the top of every piece of economic activity. Homes, commercial buildings, factories, tractors.

Now Wall St is allowed to trade in tangible goods on their own behalf, not just for their clients. They trade in metals, oil,  rice, wheat, you name it. Market manipulation has become the rule rather than the exception. As an example, there is a law limiting the length of time that aluminum may be held in a warehouse, to prevent withholding supply to drive up the price. Wall St buys multiple warehouses and moves the aluminum between them, to defeat the law.

Wall St has become a place of illegal collusion in rigging markets. When a few institutions can manipulate market prices, and do so through collusion, it is no longer a free market, and such behavior is illegal. There is no market that I know of that is not manipulated in this way. Libor, forex, rate swaps, tangibles, it goes on.

The housing bubble and the resulting mortgage crisis was the tipping point where the fraud became part of the real world that the rest of us live in, and it exposed the fragility of the fraud-based financial system.

The federal government has chosen not to bring criminal charges against individuals or corporations, instead settling for large financial settlements (9 or 16 billion). However these are a percentage of the profits made by those institutions, and in the end banks are very good at not actually paying all that money. At the same time, the government is pumping money into these banks to keep them afloat, in fear of the entire system collapsing.

Wall St institutions are corporations (see immoral, above).

An investment advisor who deals with high net worth individuals (100 million and up) said that 90% of her clients worked in the financial industry. The big names like Gates, Buffet, Zuckerberg are the exceptions. Almost all the money is going to the bosses of Wall St.

It is hard to comprehend the degree of inequality that exists. These are people who have never been to a grocery store, never flown in a commercial plane, never driven a car except for sport. There may be some who have never set foot in a public space.. Most of these are the ones who inherited wealth, but even some newly-made billionaires share this trait.

What to do:

At every opportunity, fight for equality: minimum wage, unions, benefits, progressive taxation, corporate taxation.

Deal with local banks or credit unions instead of big banks.

Campaign to get your city to move money out of big banks. After all, they are not in fact safe as claimed.

Think local. Your neighbors might help you. Nobody else will.

If you are in a foreclosure fight with a bank, recognize that you are in an abusive relationship. Everything they do has all the characteristics of abuse. You can’t win, and trying to stop them hurting you won’t work. Get out as soon as you can.

In summary, Wall St is a government sponsored organized crime syndicate. It will not reform itself unless the perpetrators go to jail, and even that might not be enough. Wall St needs to be dismantled.

WASHINGTON — Last year, the Obama administration vowed to stop for-profit colleges from luring students with false promises. In an opening volley that shook the $30 billion industry, officials proposed new restrictions [...]]]> From the New York Times, another example of what happens when education goes from being a vocation to being a for-profit industry:

WASHINGTON — Last year, the Obama administration vowed to stop for-profit colleges from luring students with false promises. In an opening volley that shook the $30 billion industry, officials proposed new restrictions to cut off the huge flow of federal aid to unfit programs.

But after a ferocious response that administration officials called one of the most intense they had seen, the Education Department produced a much-weakened final plan that almost certainly will have far less impact as it goes into effect next year.

We have reported previously on for-profit K-12 providers, or Education Management Organizations (EMOs). The businesses, dubbed EMOs by Wall Street analysts, “emerged in the early 1990s in the context of widespread interest in so-called market-based school reform proposals,” according to a report from the National Education Policy Center at the University of Colorado at Boulder.

Imagine Schools, Inc., Connections Academy, Einstein Academy, and Charter Schools USA are among the largest for-profit primary education EMOs to watch. Named in the Times report, Kaplan University, University of Phoenix, and ATI, a college network based in Dallas, are among the providers pursuing “tens of billions of dollars in federal student aid” for higher education. Ninety percent of their revenues comes from federal aid. The schools mean to defend their “beachhead” in the education industry from what Avy Stein, a partner in the equity fund that owns Education Corporation of America, called “Armageddon for the industry.”

It only took $16 million for the industry to hire A-list help such as Anita Dunn (Obama friend and former White House communications director); Jamie Rubin (major Obama campaign bundler with a stake in ATI); Richard A. Gephardt (former House majority leader); John Breaux (former Louisiana senator); and Tony Podesta (brother to John Podesta, Obama’s transition team leader) to get the administration to “narrow the scope of the original plan.” While describing the lobbying effort as “extreme,” the official in charge of White House rule making, Cass R. Sunstein, claims “the haranguing had zero effect.” But enough to describe as haranguing.

The Times continues:

The industry was on the defensive after a series of federal investigations portrayed it as rife with abuse. They found that recruiters would lure students — often members of minorities, veterans, the homeless and low-income people — with promises of quick degrees and post-graduation jobs but often leave them poorly prepared and burdened with staggering federal loans.

During hearings led by Senator Tom Harkin (D-Iowa), the schools challenged the motives of witness and hedge-fund trader Steve Eisman who likened their profit margins to those of subprime mortgage lenders. When Eisman admitted holding positions in industry shares, the for-profit schools accused him of hoping to make millions by short-selling their stocks after badmouthing their businesses.

Readers should remember that amidst the fights over federal tax dollars, shareholder dividends and Wall Street profits, the industry has just one mission: education. Appearances notwithstanding.

[h/t Crooks and Liars]

(Cross-posted from Scrutiny Hooligans)

Immediately and Henceforth, Naked aggression shall be called “preemptive war” Propaganda shall be called “news” State kidnapping shall be called “extraordinary rendition” Water torture shall be called “enhanced interrogation” Arbitrary imprisonment shall be called “extrajudicial detention” Kleptocracy shall be called “privatization” Securities fraud shall be called [...]]]>

Immediately and Henceforth,

• Naked aggression shall be called “preemptive war”
• Propaganda shall be called “news”
• State kidnapping shall be called “extraordinary rendition”
• Water torture shall be called “enhanced interrogation”
• Arbitrary imprisonment shall be called “extrajudicial detention”
• Kleptocracy shall be called “privatization”
• Securities fraud shall be called “derivatives trading”
• Sitting on the ground shall be called “active resistance”
• Chemical attacks against sitting civilians shall be called “pain compliance.”

That is all.

IGNORANCE IS STRENGTH

Citing UCLA corporate law [...]]]> As cities around the country trade notes on how to crack down on peaceful Occupy protesters, a chant goes up: ‘Who do you protect? Who do you serve?’ As the empire strikes back, Chris Hayes offers a plausible answer. It’s the reason for Occupy in the first place.

Citing UCLA corporate law professor (and Republican) Lynn Stout, David Kay Johnston writes [emphasis mine]:

Against $15 trillion of mortgage bonds, Stout said, Wall Street marketed credit default swaps in 2008 with a notional value of $67 trillion. Worldwide, traded swaps at their peak equaled $670 trillion or $100,000 for each person on the planet, vastly more than all the wealth in the world. Those numbers make it a mathematical certainty that the swaps were mostly speculation, not hedging.

There is a reason people have taken to the streets — in London, in Madrid, in Athens, in Dublin, in Reykjavik, in hundreds of cities across the planet. In Europe, see IMF austerity measures that require the public to cover the gambling losses of a financial industry unaccountable for committing massive fraud in derivatives. In the U.S., see the deal to immunize banks from prosecution: With few exceptions, state attorneys general want to hand the banks “get out of jail free” cards and sweep the crimes under the rug. See Kelo v. City of New London or Citizens United v. Federal Election Commission. In literature, see Orwell: All “persons” are equal but some “persons” are more equal than others.

#Occupy is asking the right question — a dangerous question — not only of police, but of the entire system: ‘Who do you protect? Who do you serve?’

The crowds chant,“WHO DO YOU PROTECT, WHO DO YOU SERVE?”

(Cross-posted from Scrutiny Hooligans.)

Very few things are certain in life other than life and death. In the middle we work roughly 50 years of our life and pay taxes. That much we know for sure. For the most part we are a tough working people -- dedicated to [...]]]> Originally posted at my own site.

Very few things are certain in life other than life and death. In the middle we work roughly 50 years of our life and pay taxes. That much we know for sure. For the most part we are a tough working people -- dedicated to the task and sweating the day away.

It might be nice to cut to the chase and just hoard together all the money we will make in our lifetime at the beginning -- sort of like a down payment if you will. If you want to do that -- join Wall Street and work for a hedge fund. They make as much money in an hour as John and Jane Doe down the street do in a lifetime of blood, sweat and tears.

Paul Krugman conducted some analysis of IRS data (boring stuff but important nonetheless)

But I was struck by something else: in several years during the last decade the top 400 accounted for more than 10 percent of all capital gains income in America. Just 400 people!

Conservatives often try to sell the notion that reducing the capital gains tax is about helping small business people. But you really want to think of the fact that a significant chunk of that tax break is going to just 400 people.

These are the same people who are hoarding the money and making it hand over fist in a matter of hours -- not days, months or even years -- hours!

All the while they are paying a capital gains tax of 15% instead of income taxes like the rest of us, like John and Jane Doe down the street. Instead of trying to realize we need job programs and better policies for the middle class -- conservative politicians and pundits try to sell us on tax cuts but as Krugman notes above, a large chunk of it will benefit just 400 people in a country of more than 300 million.

We are sold the idea of an American Dream as well as policies that simultaneously benefit those who already live on cloud nine.

Clergy members in the New York Metropolitan Area offered a new theory – maybe they’re possessed.  That’s why Thursday afternoon, ministers from churches throughout the area joined New York Communities for [...]]]> Is JP Morgan Chase ignoring homeowners’ pleas for help because they feel they’ve done enough already?  Or that they just don’t care?

Clergy members in the New York Metropolitan Area offered a new theory – maybe they’re possessed.  That’s why Thursday afternoon, ministers from churches throughout the area joined New York Communities for Change to perform an exorcism outside JP Morgan Chase’s headquarters on Park Avenue.

“JPMorgan Chase did you figure in your calculations that the hundreds of thousands of us who have lost our homes did not lose our souls? And did you figure in your calculations that we are rising up like a great storm that will trouble your executive sleep?” asked Reverend Billy, leader of the revivalist activist group The Church of Earthalujah.

Throughout the financial crisis, JP Morgan Chase has often been portrayed as “the good bank”, which is more than just generous….it’s flat-out wrong.  As reported by loan counseling operations in New York to the Center for New York City Neighborhoods, of the 1,027 homeowners with Chase mortgages who came to get help, only 6% now have a permanent modification.  A full 80% of these homeowners who asked for a modification have not received any offer of a modification whatsoever.

Members of New York Communities for Change have been working with Chase victims for several months now, pressuring the bank to put in place a mortgage modification process which produces permanent, affordable, transparent, timely modifications whenever these have a positive net present value.  Last month, the United Federation of Teachers and Transit Workers Union Local 100 stood with NYCC to announce that if Chase doesn’t change it’s ways, the unions will direct their pension systems to pull all investments from Chase (which are estimated to be over $300 million).  Two weeks ago, New York City Council Member Jumaane Williams marched to a Chase branch with dozens of NYCC members to shut down his Chase account (security at the branch tried to tell him the bank was closed.  It was 10 AM on a Thursday).  Thursday, it was the leaders of several prominent Churches that descended on a local Chase branch to shut down their accounts.

Over the next few months, New York Communities for Change Members will keep relentlessly applying the pressure on JP Morgan Chase through their Not The Way Forward campaign.  On March 18th, hundreds of NYCC members will be joined by United Auto Workers and many NYC elected officials to rally outside Chase headquarters. And let’s just say that employees at Chase branches throughout NYC should be prepared for some interesting events throughout the spring.

“The Good Guy Bank” gives its CEO a $17 million bonus and benefits from ridiculous tax breaks while teachers are being fired, homeowners are getting kicked to the curb, and working families foot the bill.  It really does sound demonic.  Or at the very least, criminal.