A New Way Forward – Restore the Economy in the Public's Interest

A Report from A Front That May Soon Be Shut Down

Before you read on, watch this: a video from the base camp of the #OccupyWall Street protest that is now in its seventh day. It’s called “No One Can Predict the Moment of Revolution.”  (The video was produced by HYPERLINK “javascript:void(0);”Martyna Starosta and her  friend Iva)

These are the faces of a wannabe revolution, more than a protest but not yet quite a major Movement, The spirit is infectious perhaps because of the sincerity of the participants and their obvious commitment to their ideals.

Occupy Wall Street is more than a protest; it is as much an exercise in building a leaderless, bottom-up resistance community with a more democratic approach to challenging the system where everyone is encouraged to have a say.

But saying that also leads to a conflict between my emotional identification with the kids that have rallied in this small park/public space on Liberty Street to exercise some liberty,  with a despairing analysis that wishes this enterprise well but harbors deep doubts about its staying power and impact.

This privately owned park, devastated by debris on 9/11 and then rebuilt by a real estate magnate who named it after himself, is also a place that is under 24 hour surveillance from a hostile New York City police Department which has put up a fence on one side of the park, and brought down a spy tower from Times Square to track the participants from on high, sprinkled infiltrators into the crowd.

By the time I left, late on Saturday afternoon, the police  arrested 70 people who had joined a march that went from Wall Street to Union Square, New York’s traditional gathering place for political rallies for nearly l00 years.

You can watch it all on a live stream.

In many ways this is a 2011 style protest modeled after Tahrir Square in Cairo. It is non-violent, organized around what’s called a “General Assembly” where the community meets daily to debate its political direction and discuss how it sees itself. There are no formal leaders or spokespeople, no written down political agenda and no shared demands.
They focus on using social media. Twitter is their megaphone.’

They have no soundsystem. When participants want to make an announcement, they yell “Mike Check” which is repeated by the whole crowd. They also repeat the announcement, a few words at a time so everyone can hear it.

This bottom-up anarchist sensibility and ideology conflicts with the mass mobilizations of old where an organization issues a call and a coalition of groups carries it out.

I ran into some of yesterday’s movement leaders, Leslie Cagan who ran United for Peace and Justice and organized the massive anti-Iraq war protests and marches in New York and Washington before and after. She was as intrigued as I was about this gathering of the committed. She found the focus a bit vague but seemed willing to give it a chance to grow and learn by making its own mistakes.

Other 60’s activists like Aron Kay, known as the “pie man” for all the famous and infamous people he pied in the face to protest their crimes and misdemeanors—including Andy Warhol for dining with the Shah of Iran—was also showing his solidarity by turning up and squatting in the park.

Lower Manhattan on a Saturday is usually a Mosque less Mecca for tourists visiting Ground Zero, a crime scene if there ever was one. It is a symbol of a national failure to defend this country as well.

It’s also the place where the 911 Truth Movement shares its findings weekly about what “really happened” with visitors

Just a few blocks away is another crime scene: Wall Street, which symbolizes an ongoing economic failure. In this past week, access has been limited and in this free country of ours protestors could not parade in front of the NY Stock Exchange, another privately run financial institution. That led Yves Smith of the Naked Capitalism blog to opine, “I’m beginning to wonder whether the right to assemble is effectively dead in the US.”

Many banks like Chase doubled their security forces and put up fences to protect themselves from the people the NY media has labeled “kids and ageing hippies.”

The panic in the exchange is mirrored in the insecurity in the streets where surveillance cameras, private police forces and NY cops defend the bastions of privilege.

The police went on the offensive Saturday with mass arrests of activists. Scott Galindez filed this report on Reader Supported News, “ While the live feeds were up I witnessed a very powerful arrest of a law student whose parents were recently evicted from their home. He dropped to his knees and gave an impassioned plea for the American people to wake up! There are reports of police kettling protesters with a big orange net, at least five maced, and police using tasers.”

There were also reports of the use of mace,  tear gasm and pepper sprat which hit, two old women. We are so used to these storm trooper tactics that most expect them. There had been fewer arrests last week although the police seem to now have identified key organizers and are singling them out

On Saturday, police gave out a notice saying that it is now illegal to sleep in the park. They then put up a sign on a park wall. I watched a member of the police command, a “white shirt” named Timoney, marched into the park and gruffly ordered the communications team that spends most of its time tweeting out the latest news, to take down some large umbrellas the activists were using to protect their computers from rain.

The police consider these “structures” and prohibit them. Earlier in the week, they arrested people for using tarps to protect their gear. (They don’t see the irony in that term given the way the TARP law bailed out the banksters.)

Many of the people in park believe the end may becoming with the police eager to end what they see as a Woodstock on Wall Street complete with topless teens and long hairedmilitants. This assemblage clearly affects their macho identity as upholders of law and order, as they define it.  The probably agree with the right wing Red State website that calls the protesters a “menagerie.”

I wouldn’t rule out mass arrests once a provocation, theirs or the protests, provides the pretext.

Will the Occupy Wall Street collectives be able to continue to occupy a zone that has been occupied for years by the greedsters of the finance world?

More importantly, will the issues they are trying to draw attention to, however symbolically, be taken up by others?

Will it take more cracked heads or even a police killing to move New Yorkers to support a campaign to rein in Wall Street?

Where are the unions and New York’s progressive democrats and organizations?  Why aren’t they in the streets?

Why don’t they realize that economic justice issues are essential to transforming this oligarch driven country?

I having been calling for years for more protests on Wall Street to put the issues of Wall Street crime on the agenda, But with media barely covering this “occupation,” with the activists being denigrated for their youth and inexperience, will this one have the impact I was hoping for.

It seems unlikely.

News Dissector Danny Schechter directed Plunder The Crime of Our Time, and wrote a companion book about the financial crisis as a crime story. (Plunderthecrimeofourtime.com) Comments to Dissector@mediachannel.org

Both liberty and democracy are seriously threatened by the growth of big business. Today the need is not so much for freedom from physical restraint as for freedom from economic oppression. Already the displacement of the small independent businessman by the huge corporation with its myriad of employees, its absentee ownership, and its financier control, presents a grave danger to our democracy. The social loss is great; and there is no economic gain. Political liberty, then, is not enough; it must be attended by economic and industrial liberty. — Louis Brandeis

When speaking of wealth redistribution, the conversation, if it can be started at all, begins and ends with taxes. Taxing the concentration of wealth in America today is certainly necessary, but it is in no way sufficient. A century ago, at the birth of the Progressive Movement, the burgeoning industrial era brought with it the concentration of wealth under the industrial corporate structure. The Progressive Movement brought forth many ideas, including higher wages and the forty hour work week, but the most democratic and least implemented was anti-trust — to breakup the concentration of wealth by breaking up large corporations.

Today, any conversation on wealth redistribution, let’s be more accurate and call it democratic revitalization certainly begins with taxing wealth and breaking up the big corporations, none more so important then the big banks, and remember, there’s really six of them who hold your government subservient. But, in speaking of wealth redistribution for the 21st century, we must bring in our knowledge of technology, and the role it plays in wealth concentration, and how technology, but certainly not it alone, can be used to counter what is an increasingly fatal stranglehold, as wealth tightens its grip on our collective democratic necks.

Industrial technologies concentrated wealth. The two easiest examples are fossil fuel electricity generation and the oil powered internal combustion engine. Taxing and breaking up the corporate structure of the utilities, oil, and auto companies, while necessary are not sufficient policies for wealth redistribution, technology must also be used to redistribute, not create new wealth. For example in the electric industry, the 500 megawatt coal plant, using advancing solar technologies needs to redistributed onto thousands of rooftops in Los Angeles, giving the home and business owner the ability to generate their own power, and network together to deliver power to others.

The same goes with oil and the internal combustion engine. Mass transit, car pooling, and the redesign of communities to make them more conducive to walking and biking, disperses the concentrated power of the oil and auto industries. Again, this is not about creating new wealth, but redistributing existing wealth.

Most importantly we must stop the concentration of wealth in our developing information culture. Microsoft, Amazon, The Google, and most obscene yet, Facebook, are the industrial corporate structure being used to concentrate wealth with new technologies. Paradoxically, they use new technologies which could provide the opportunity to create a new democratic distributed networked order, if, we used the more deeply qualitative value of information, not its cruder quantitative value, simply accounted as product. Microsoft used its control of the operating system to ruthlessly concentrate wealth for its top brass. Google has used the openness of the Net’s architecture to give it a more centralized order, while Facebook incredulously mines the data of its users to sell to others.

What we have learned in the brief history of the networked microprocessor is that technology may have certain determinant factors, and of course its very adaption changes the society which preceded it, but without a politics, even the most inherently distributed technologies can be used to concentrate power. And if the networked microprocessor is to reach its democratic promise, those concerned about its evolution are going to have to become much more concerned with the evolution of the society of which it is part. As Mr. Brandeis would well have understood, to gain political liberty we must attend not just economic and industrial liberty, but technological liberty.

THE WAR OF THE KAMIKAZES AS THE DEBT CEILING DEBATE TAKES CENTER STAGE AND APPEARS SUICIDAL

New York: During World War 2, the Japanese deployed units of pilots who turned their planes into bombs, and sacrificed themselves in the name of their emperor in a holy war against US ships. They would aim for the deck of aircraft carriers and do as much damage as they could at a cost of their equipment and their lives.

Guerilla armies refined the tactic and made it less pricey. Much lower cost suicide belts with explosives are now used by individuals to terrorize their enemies without having to sacrifice weapons systems.

Now, American politics has spawned its own kamikazes in the persona of ultra-right wing fanatics in suits who were ready to blow up the world financial system if they don’t get their way.

The use of the $14.3 debt ceiling was carefully calculated as a political weapon to terrorize financial institutions and governments by playing a game of their own version of apocalypse now. Concede to our political demands to shrink the government, no matter what the cost to the poor and or benefit dependent and even federal employees, or we will further destabilize the system.

Our issues trump yours say these contemporary kamikazes because we have the votes. We don’t care of the nation defaults on its financial obligations. Take no prisoners is their approach; ‘Let it all fall apart’ is the threat, ‘our way or the highway’ is their mantra.

In response, the Administration has been offering what it calls “a grand bargain” which was off the table and is now back on after the they agreed to accept a short term debt ceiling hike. This approach, however, assures that this issue will stick around like a club to keep the battle going.

The new deal will allow for $4 trillion in budget cuts over the next decade. It will cut Medicare and Social Security in the name of “closing loopholes.”

The tension is overheating in a Washington drenched in the sweat of summer humidity. National Public Radio compares the discussions to a game of high stakes poker:

“If you remove the politics, the talking points and the media from the debt-ceiling showdown, you end up with something that looks like a high-stakes, no-limit Texas Hold ‘em poker game. You’ve got posturing, risk taking, betting and, of course, bluffing.”

“It’s a war zone. You can’t be a top-notch poker player without bluffing,” says Antonio Esfandiari, a champion poker player who has won millions at the tables.”

The Atlantic Wire reports: “ As the deadline approaches, both parties will start flexing less and compromising more…. According to The New York Times, the Republican hard-line stance on raising taxes is starting to splinter. Some have “appeared more willing to consider a deal locking in spending cuts that Mr. Obama has said he would take if balanced by new revenues.”

The relentless righteousness of the ideologically driven Tea Party backed ‘caucus of the crazy’ freaked out not just the President and the Democrats but many Republicans who, like them, depend on financing by Wall Street.

In a world of crashing currencies and defaults on the European horizon they don’t want the same here as trigger happy hardliners dictate to the country, and by extension the world.

Their political coup threatens to turn into an economic coup even though economic issues are being used for partisan political purposes.

Wall Street is doing some political bombing of its own to get the GOP leadership to try to rein in their renegade factions out to please a base, which is, in turn, funded by the billionaire Koch brothers and others with self-interested agendas of their own.

Schoolyard bullies have nothing on these guys who have been holding the political debate hostage to their simplistic message points, which are then drilled into the nodding minds of their base over the years by the likes of the Fox Views Network and their rightwing radio brigade.

The politicians will keep dancing and prancing until the music stops.

Our fearless President who has rarely seen a compromise he won’t embrace is playing his usual double game, telling his supporters how firm he will be, and telling his avowed enemies he is willing to play in their pigpen if they would just be more “reasonable.”

The whole point of their exercise is to posture at not being reasonable, to maintain the appearance of a united front to get as much as they can by way of concessions and goodies for their own districts while lambasting all government spending.

New York Times points out that many of the Tea Party boosters on the hill are not shy about seeking government pork while they are blasting government excess,

“WASHINGTON: Freshman House Republicans who rode a wave of voter discontent into office last year vowed to stop out-of-control spending, but that has not stopped several of them from quietly trying to funnel millions of federal dollars into projects back home.”

Progressive Democrats are furious and smell betrayal. Here’s what MoveOn had to say:

“Reports that the White House is negotiating a secret debt deal directly with House Republicans that could include deep cuts to Medicare, Medicaid and Social Security with limited or no immediate revenue increases are deeply troubling. Any deal that slashes programs for seniors and working families while doing nothing to make the rich and corporations pay their share is a total non-starter and Democrats in Congress should rule it out immediately.?

“The Democratic base did not work night and day to elect Democrats so that they could cave to Tea Party extremists who are intent on gutting the social safety net millions of us fought to establish and protect.”

At the same time, Obama is following in Bill Clinton’s footsteps, according to former Labor Secretary Robert Reich:

“After a bruising midterm election, the president moves to the political center. He distances himself from his Democratic base. He calls for cuts in Social Security and signs historic legislation ending a major entitlement program. He agrees to balance the budget with major cuts in domestic discretionary spending. He has a showdown with Republicans who threaten to bring government to its knees if their budget demands aren’t met. He wins the showdown, successfully painting them as radicals. He goes on to win re-election.

Barack Obama in 2012? Maybe. But the president who actually did it was Bill Clinton.”

This debt issue has been calculated to focus attention on government as the fount of all evil, and distract attention away from out of control corporate enrichment, Wall Street crimes and looting in form of higher and higher CEO bonuses and greed driven compensation schemes. There is little mention about how the failed and deceptive wars in Iraq and Afghanistan drove the deficit up–with GOP backing of course!

A new poll shows public outrage at the government at their highest levels ever. (Some of this is fueled by the stalemate on the hill.)

This jihad on debt was hatched by right wing think tanks and the studies commissioned by billionaire Pete Peterson paint alarmist scenarios about the government going broke through a combination of reckless entitlement programs like Social Security and Medicare and runaway spending. There’s no mention of the amount wasted on wars or the debt that finances programs spawned by the Pentagon and the private sector that they believe can do no wrong.

It is in sharp contrast to the debt issue I explored in my 2006 film In Debt We Trust: America Before The Bubble Burst. I focused on mounting consumer debt and how it turned so many families into serfs, living to pay off high interest credit cards, crushing student loans and fraudulent sub prime mortgages.

Not only is this debt crisis that so many American feel deeply and personally not on the Republican agenda, but the kamikazes have fought successfully to neuter proposed reforms to protect consumers and have managed to force the Administration to abandon Harvard Professor Elizabeth Warren who led the fight for government agency to stop the abuses by banks and credit card companies.

These Republicans have no shame in weakening attempts to make the octopus of loan companies more transparent and less predatory.

Protecting people is not one of their priorities. Defending the privileged is.

While their narrative of negativity became dominant, progressives either became a cheering squad for corporate democrats or over focused on the machinations of the flamboyant Michelle Bachman’s, Sarah Palins and Glenn Becks.

They mostly reacted instead of acting.

They did not fight their narrative with another one attacking the economic powers in a crusade for justice. They watched as community organizations like ACORN were driven into the ground and only woke up when the Governor or Wisconsin went after the collective bargaining rights of unions.

Instead of organizing and united around campaigns based on program for substantive change, they went on the defensive designed to hold on existing rights instead of also fighting for new ones for all Americans.

As a result, the left has left itself out of this polarized political war even as the economy worsens while the media focuses on the clash of the gladiators in the hill. Reich reminds us these are not Clinton times:

“When the Great Recession wiped out $7.8 trillion of home values, it crushed the nest eggs and eliminated the collateral of America’s middle class. As a result, consumer spending has been decimated. Households have been forced to reduce their debt to 115% of disposable personal income from 130% in 2007, and there’s more to come. Household debt averaged 75% of personal income between 1975 and 2000.

We’re in a vicious cycle in which job and wage losses further reduce Americans’ willingness to spend, which further slows the economy. Job growth has effectively stopped. The fraction of the population now working (58.2%) is near a 25-year low—lower than it was when recession officially ended in June 2009.”

Who is talking about this disaster?

News Dissector Danny Schechter directed the DVD Plunder The Crime of Our Time to expose Wall Street Crimes. (PlundertheCrimeOfOurTime.com)
Comments to dissector@mediachannel.org

What we face in the West is the bankruptcy of our politics. There’s many reasons for it, it’s a process that has been engaged for decades, the culmination of mega-corporate and financial control over society, where the supposed ethos of supply, demand, and interest supplants all others. A system supposedly providing the greatest benefits for all, increasingly continues to fail for more and more, while our political class simply become louder shills, “Do you believe us, or your lying eyes?”

The latest example is Ms. Merkel, the ex-commie, who just like an ex-drunk is now the greatest proselytizer for all things capital. Bowing to the whimpering pleas of the latest bad joke of the French, Mr. Sarkozy, Ms Merkel has agreed to kick the can a little further down the road:

The leaders of Germany and France have agreed that private creditors should participate in a new rescue programme for Greece by voluntarily agreeing to roll over their holdings of Greek government bonds.

Why not just get rid of the middleman, and the Germans directly pay the French banks?

So it goes, for awhile longer anyway.

High water risin’—risin’ night and day
All the gold and silver are bein’ stolen away
Nothing standing there, highwater everywhere
High water risin’, the shacks are slidin’ down
Folks lose their possessions—folks are leaving town
Bertha Mason shook it—broke it, then she hung it on a wall
Says, “You’re dancin’ with whom they tell you too or you don’t dance at all”
It’s tough out there, high water everywhere
High water risin’, six inches ’bove my head
Coffins droppin’ in the street like balloons made out of lead
“Don’t reach out for me,” she said “Can’t you see I’m drownin’ too?”
It’s bad out there, high water everywhere
– B. Dylan(for Charlie Patton)


Home Prices Decline, Hit Post-Bubble Low – WSJ
U.S. home prices fell 4.2% in the first quarter, hitting their lowest levels since mid-2002, according to the S&P Case-Shiller data. Separately, the mood among U.S. consumers fell steeply in May.

Growth Slowdown a Concern — WSJ
After a disappointing first quarter, economists largely predicted the U.S. recovery would ramp back up. But there’s little indication that’s happening.

Throwing good after bad – Asia Times
Not all credit is created equal. Over the years, I’ve differentiated between “productive” and “non-productive” credit… I would argue that the capacity to produce real economic wealth matters a great deal – in terms of sustainable economic recoveries, stable currencies, and robust credit systems. The nature of bubble economy economic distortions matters greatly in how a system is able to respond to credit crisis. Will the post-bubble response emphasize ramping up production, trade and savings to work one’s way through a crisis? Or, instead, will it be more a case of depending largely on additional credit creation/inflation?

Financial systems and bubble economies in time become increasingly dependent upon increasing amounts of credit expansion to sustain inflated price structures and to ensure sufficient system-wide spending levels. And if the bias is to de-industrialize and move toward a services and consumption-based economy, loose finance and inflating asset prices definitely grease the wheels of economic restructuring. At the end of the day, the resulting economic structure will have developed a gluttonous appetite for ongoing credit creation. Eventually, a credit bust will entail staggering amounts of ongoing credit assistance.

Thus far, we’ve received important confirmation of the thesis that there’s no simple prescription for resolving sovereign credit busts. They will surely prove incredibly expensive, controversial, and be resolved over many difficult years. The conventional view that a recapitalization of the banking system will go a long way towards sustainable recovery is proving overly optimistic – and much too simplistic.

Indeed, inadequate bank capital is not the greatest source of system fragility. Instead, the key issue is the amount of ongoing additional system credit required both to stabilize inflated price levels and to ensure expenditures sufficient to hold economic collapse at bay.

Going unappreciated was the extent to which previous bubble excess had inflated receipts and distorted the true underlying fiscal situation of most governments – along with the extent to which bubble economy structures had become credit gluttons. Unbeknownst to policymakers at the time – and remaining unappreciated, especially here at home – is how aggressive (fiscal and monetary) stimulus packages set a course for severely impairing the creditworthiness of the underlying sovereign debt. What was thought to be a couple of years of elevated spending to resolve post-bubble issues has evolved into ongoing public-sector borrowing and spending that does little more than hold the next crisis at bay.

The unprecedented expansion of sovereign debt throughout the “developed” world is all that sustains the entire private and public debt pyramid. I see overwhelming support for the bubble thesis, with (Minsky) “Ponzi finance” footprints all over credit systems, the markets and real economies.

Big U.S. Firms Shift Hiring Abroad – WSJ
U.S. multinational corporations, the big brand-name companies that employ a fifth of all American workers, have been hiring abroad while cutting back at home, sharpening the debate over globalization’s effect on the U.S. economy.

The companies cut their work forces in the U.S. by 2.9 million during the 2000s while increasing employment overseas by 2.4 million, new data from the U.S. Commerce Department show. That’s a big switch from the 1990s, when they added jobs everywhere: 4.4 million in the U.S. and 2.7 million abroad.

Global capitalism isn’t working for the American middle class — Reuters(tx yves)
Spence and his co-author, Sandile Hlatshwayo, examined the changes in the structure of the U.S. economy, particularly employment trends, over the past 20 years. They found that value added per U.S. worker increased sharply during that period – 21 per cent for the economy as a whole, and 44 per cent in the “tradable” sector, which is geek-speak for those businesses integrated into the global economy. But even as productivity soared, wages and job opportunities stagnated.

The take-away is this: Globalization is making U.S. companies more productive, but the benefits are mostly being enjoyed by the C-suite. The middle class, meanwhile, is struggling to find work, and many of the jobs available are poorly paid.

Secret memos expose link between oil firms and invasion of Iraq — The Independent(tx t. ferguson)

The minutes of a series of meetings between ministers and senior oil executives are at odds with the public denials of self-interest from oil companies and Western governments at the time.

In March 2003, just before Britain went to war, Shell denounced reports that it had held talks with Downing Street about Iraqi oil as “highly inaccurate”. BP denied that it had any “strategic interest” in Iraq, while Tony Blair described “the oil conspiracy theory” as “the most absurd”.

But documents from October and November the previous year paint a very different picture.

Five months before the March 2003 invasion, Baroness Symons, then the Trade Minister, told BP that the Government believed British energy firms should be given a share of Iraq’s enormous oil and gas reserves as a reward for Tony Blair’s military commitment to US plans for regime change.

The papers show that Lady Symons agreed to lobby the Bush administration on BP’s behalf because the oil giant feared it was being “locked out” of deals that Washington was quietly striking with US, French and Russian governments and their energy firms.

On March 30, 2011, if you’re in Wisconsin, you can do something about the awful economic and governance mess we are in.

Here are the details:

Tired of Wall Street  crashing our economy,  trashing our public sector,  buying elections,  then becoming more monopolistic than ever?     Frustrated that  financial services lobbyists spent a million dollars per day to defeat even mild regulations of their gambling  habits?    And how about the 6 “Too Big to Fail” firms that now  control  60% of our GDP,  putting us at greater risk than ever?      If you thought the housing bubble and commodities speculation were outrageous,   wait for the next bubble/meltdown cycle…..

You CAN take things into your own hands… MOVE YOUR MONEY out of national banks,  and into local banks and credit unions.      JOIN US for a  “Move Your Money” action day,  presented by the Personal Finance Group of Transition Whatcom,  dedicated to improved community financial resilience.

New economy speaker Kristi Laguzza-Boosman of KLB Community Consulting,  author of “Plan B, Recalibrating an Economy in Decline:  Building and Economy in Balance”,    and Jared Gardner, of “Real Wealth” of Portland,  will speak on the re-localizing of our economy.      A panel of local banks and credit unions will answer your questions about their services,  and participants may switch their accounts at that time.

Imagine what Bank of America’s  holdings of $347.1 million of Whatcom County money could do for our local economy if the profit was kept here instead of North Carolina!

Co-sponsors:     Bellingham Unitarian Social Justice Committee,   Jobs with Justice,    Community Food Co-op,   Whatcom Progressive Grassroots Network

WHERE:        Bellingham Unitarian Fellowship,      1708   “I” St.       Contact: 671-3590
WHEN:         Saturday,   April 16th,   2011         1:00-3:30pm

“We aren’t broke,   Wisconsin is not broke.     The country is awash in wealth and cash.   It’s just not in your hands.  It has been transferred in the greatest heist in history,  from the workers and consumers,  to the banks and portfolios of the uber-rich.”              Michael Moore   3/21/11     Moveyourmoney.org

Sources:    Johnson,  Simon and James Kwak, “13 Bankers, the Wall Street Takeover and the Next Financial Meltdown”;
Taibbi,  Matt, “Griftopia”,   “Bubble Machines”,  “Vampire Squids, and the Long Con That is Breaking America”.

Gillian Tett has a good piece in the FT about the Swiss National Bank:

After all, the balance sheets of central banks are always somewhat theoretical, the SNB has a spare capital cushion to (just) offset this blow – and, in any case, that SFr21bn paper loss may yet disappear, if currencies swing again. Indeed, since the SNB reported its numbers in late 2010, global markets have been so volatile that its “p&l” has already moved quite wildly (something which is not entirely obvious since the SNB only reports every quarter.) But these paper losses have already sparked a flood of all-too-tangible criticism of the SNB from Swiss bankers and politicians; indeed, there have recently been demands that Philipp Hildebrand, SNB governor, should resign. One reason for this anger is that the SNB has used the “profit” it booked on its gold holdings to distribute SFr2.5bn each year to the local cantons and Federal government – and those cantons fear they will now lose that income because of the 2010 losses.

But another crucial issue is that many local bankers are furious with the tough regulatory stance that Hildebrand (quite rightly) took towards them during the financial crisis. As a result, they are trying to use the debacle as a weapon to force Hildebrand out.

This is where the story gets potentially interesting – and cautionary – for the non-Swiss world. The losses at the SNB have come to light partly because it is relatively transparent – and currency swings can be monitored more easily than, say, price moves on bonds. But the SNB is not the only central bank that has recently taken bold gambits. The European Central Bank, for example, holds an (ever-swelling) pile of periphery eurozone bonds; the Fed’s balance sheet has more than doubled in size, to $2,500bn, as it has gobbled up mortgage-backed bonds and Treasuries; and the Bank of England also holds a large pile of gilts and mortgage assets.

…In the coming years, the price of Treasuries or gilts could plunge; some peripheral eurozone bonds could even default, creating losses. If that ever occurred, some central bankers think that any pain could still be offset. The Fed, for example, currently receives so much “income” from seigniorage that it may have considerable room for manoeuvre. But, there again, the Fed already faces virulent domestic political criticism; and at the ECB there is no clear agreement about who would indemnify it in event of losses. It is not impossible to imagine a scenario, then, where losses might stir up a row; particularly if political groups already had an axe to grind – as in Switzerland.

In a world where central bankers and politicians are now moving into uncharted waters, that row in Zurich may yet turn into the leading edge of a trend. Western central bankers had better hope that Hildebrand survives; even as SNB officials cross their fingers that Mideast tensions – or Irish woes – do not push the franc too much higher.

Two simple points on this: 1)The actions of the global central banks in the last few years have laid bare for anyone who cares to look of the completely undemocratic structure of these institutions and the entire money creation process; 2)The real money of the modern world is oil, and if the global oil supply begins contracting by millions of barrels a day, you’ll get massive inflation for a New York second, followed by tremendous  economic “deflation”. No one’s printing any oil. In regards to this latter point, who knew Muammar had in his last years become a Republican, blaming the revolt in Libya on Osama and hallucinogenic drugs?

“L’audace, l’audace. Toujours l’audace!”

It’s hard to imagine the present American economy getting healthy without the housing market being fixed. Even a Dow at 36,000 would have limited impact with housing prices down another 10-20%, as very few in America have any wealth in the stock market, if they have any savings at all, much of it is in their homes, and that continues to get eaten away. So, Chris Whalen’s Reuters piece accompanying his downgrading of Wells Fargo due to the continuing mortgage fiasco — Yves Smith continues with best coverage on this issue — is well worth the read.

Whalen makes an excellent point on the courts and mortgage crisis. He writes,

The US banking industry would have been far better off if they had allowed sane bankruptcy reform to be enacted with respect to restructuring of first mortgages. Over-burdened home owners could discharge unsecured debt and modify mortgage loans under the watchful eye of bankruptcy judges, who understand how to balance debtor and creditor rights.

Instead banks seeking foreclosure now face state court judges, who are elected by the people in their communities and not used to the intricacies of Wall Street finance. State courts are taking a much harsher line with banks than would federal bankruptcy judges. Banks seeking to conduct foreclosures are being met by a phalanx of judges that now say “show me the mortgage note and prove you are the one with the right to foreclose or I will not act on your pleadings.”

This is a lesson in democracy in America 101 — separation of powers. The genius of the American system was not to centralized power, but separate it, in DC — with three branches of government, but also balancing DC with the states, localities, and finally the ultimate power in the citizen — We the people. Now, the agrarian era architecture of our government set up by America’s founders always had a hard time dealing with the new industrial era, and its most powerful and insidious creation the corporation. In the 1930s, in response to crisis of the national/global economy, created by the industrial corporation, the New Deal was born, and liberals en masse headed to DC to rule briefly for a few decades, until the modern corporation and its entrenched interests could gain control, making present DC both eminently corrupt and dysfunctional, a fact our remaining liberals, continue to either ignore or discount.

Matt Taibbi has an excellent piece documenting the most open and not even the most egregious of crimes committed by banking and finance, which the complicit powers of DC ignore. No one goes to jail. It reminds me of the California Energy scam 10 years ago, where again no one went to jail, and the Clinton FERC sat on its hands as the people of California were fleeced by multiple energy companies and Wall Street. The fact is the American system is broken, paradoxically its redemption lies in restoring and evolving the American system. At this point, what is missing most is courage.

It is time to think much larger than worrying every day about what happens in DC, and to liberals, I can only point to a piece in the LA Times yesterday regarding Egypt,

Not wanting to be left out of the future government, two competing groups of young activists are meeting with the military and distancing themselves from longtime opposition figures they regard as inept and weakened from years of oppression by Egyptian security forces.

Obama’s big Goldman Sachs moment.. Up until this point, Obama has not felt like we could forget Goldman Sachs’ involvement in the crash. I guess now he thinks we have forgotten.

I’m an Asian American (0th generation) with some serious identity issues. I am offended Lloyd Blankfein, of Goldman Sachs fame, was at the White House dinner for China’s President Hu Jintao. Llyod? How about a banker who has done some good. Who the heck is this Obama? Nice pics – Lloyd is so smug and happy as if any and all criticism of Goldman Sachs’ work doesn’t factor into his conversation at all with Pres. Obama, doesn’t hurt a single White House fly.

Simon Johnson has a piece in Economix that sums up why it’s ridiculous to have Lloyd represent what our American financial system has and can do for China, the US, and the world. Johnson has had his voice in the financial crisis debate, helped to lead us to policies around limiting bank size for safety and efficiency in our economic system, and helped to get pass the many structural and stronger measures passed with the big financial regulation bill called the Dodd-Frank Act (and we so heavily worked on ourselves). I bring up Johnson’s remarks because it seems like China should be worried about the collapse / leadership of our financial system since they have a lot of US bonds, etc.

Johnson is reacting to a report by the Treasury Secretary Timothy Geithner, as chairman of the Financial Stability Oversight Council, who “has released an assessment on the costs and benefits of potentially limiting the size of banks and other financial institutions.”

Analytically weak, this report presents a skewed and incomplete assessment of the evidence. Given that the paper was prepared by some of the country’s top experts, who are well aware of the facts, the only reasonable inference is that our leading relevant officials prefer not to take the Dodd-Frank Act seriously with regard to reducing systemic risk.

Johnson points out that the big 6 banks are just as fiercely undercapitalized and fragile as they were, and maybe even more so, bloated with hidden taxpayer subsidies, in the run up to the crash and recession of our recent times. President Obama has certainly has done an about face on his position during the big debate on the economy when he was running for president against the backdrop of a crashing economy overseen by President George W. Bush and Republican Free Market Extremist Ideology. Obama made sense we he rallied people around sound regulatory practices, and worrying about whatever “Main Street” is. It arguably won him an election (he was trailing McCain in September – October, then the economy crashed and he started soaring to the finish line) over a Republican who more squarely represented the excesses of deregulation.

Now, he has certainly gone back on the biggest campaign promise he made to win the election –reforming our economy away from the Republican extremist ideological practices.