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

Last year’s Dodd-Frank financial reform bill didn’t directly fix the too-big-to-fail problem that necessitated the 2008 bailouts. Instead, it allowed the big banks to grow even bigger, but gave regulators new authority to require the big banks to report more information to the government and force them to follow stricter rules. It also gave regulators new guidelines to consider when deciding whether or not to allow bank mergers that could create new too-big-to-fail entities. Basically, the bill took a noncommittal approach to addressing issues of bank size and interconnectedness. Congress punted the big decisions off to regulators and made it possible for regulators to take drastic action, but gave them a lot of leeway to maintain the status quo if they so choose.

These provisions of the bill are about to get their first big test. Capital One, currently the ninth largest bank-holding company in the U.S., has reached an agreement with the Ducth ING Groep to purchase their U.S. arm, ING Direct. They are planning to then turn around and leverage assets gained in that deal to purchase HSBC’s subprime credit card division. The acquisitions would make Capital One the fifth largest bank in the U.S., right behind such infamous too-big-to-fail giants as Bank of America, Chase, Citigroup, and Wells Fargo. It would mean that financial assets and power in the U.S. would become even more concentrated in a small group of top corporations.

In Section 163 of Dodd-Frank, the Federal Reserve Board of Governor’s is given new guidelines to consider when deciding whether or not to approve the acquisition of one large bank by another large bank. “The Board of Governors shall consider the extent to which the proposed acquisition would result in greater or more concentrated risks to global or United States financial stability or the United States economy,” the bill states.

This language is typical of the bill. Far from being a dictate from Congress (i.e. no mergers that will create new banks with more than $xxx in assets), it doesn’t even give the Fed a specific directive to reject an acquisition that would result in more concentrated risks. But it clearly does provides them with justification to reject it on those grounds.

In June, Fed Board of Governors member Daneil Tarullo said that regulators should oppose mergers that increase risk in the financial system unless there is a significant public benefit. “The regulatory structure for SIFIs [systemically important financial institutions] should discourage systemically consequential growth or mergers unless the benefits to society are clearly significant.” So far, though, it’s not clear what the public benefit of a bigger Capital One might be. Recent research from the New York Times shows that Capital One has basically eliminated their small business lending in recent years. In 2006, they approved $228 million in small business loans, but by 2010 that lending had been reduced to just $600,000 nationwide. It’s by far the most dramatic drop-off in small business lending by any of the top-25 banks the Times looked at.

The National Community Reinvestment Coalition is running a letter-writing campaign asking the Federal Reserve to extend the public comment period on the acquisition by 60 days and to hold public hearings in at least 5 major cities before the deal is approved or rejected. “If the Capital One acquisition is approved without substantial regulatory review, it will signal a continuation of a regulatory culture that brought us the foreclosure crisis, the financial crisis and financial institutions that were Too-Big-to-Fail and are even bigger today,” they write. They’re asking for letters to be submitted by August 22nd.

Cross-posted from Open Congress.

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.

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

The conclusions will probably come as a surprise exactly none of you, but a new study from the International Monetary Fund on the influence of campaign donations and lobbying politics is worth a mention because of the completeness of the research and the authority of its source. Two IMF economists, Deniz Igan and Prachi Mishra, have been examining how the targeted political activities of financial corporations between 1999 and 2006 affected how Congress voted on bills that strengthened or loosened regulation of Wall Street leading up to the 2008 crisis. They found — surprise! — that the more the corporations spent on campaign donations and lobbying, the more likely Congress was to vote in favor of deregulation. Furthermore, they found that the money Wall Street spent on lobbying members of Congress who were connected to Wall Street, either from having worked there in the past or through a former staff member who had gone through the revolving door to K Street, had a much stronger effect on their voting than on those who had no Wall Street connections.

A preliminary version of the economists’ research paper, replete with detailed methodology information, can be found here (happy to see OpenCongress mentioned as a data source). Some of their key findings were summed up recently in an article for the June edition of the IMF’s Finance & Development magazine, here. And Dan Froomkin written it up at HuffPost, here.

The most significant finding is the extent to which the revolving door influences Congress’ voting patterns. According to the study, Wall Street companies that used lobbyists who had worked for the member of Congress they were lobbying made the targeted lawmaker 20% more likely to vote how the firm wanted than the average lawmaker, and about 9% more likely than lawmakers who were lobbied by unconnected lobbyists (column 1 at right). Furthermore, when companies used lobbyists who were connected to the member of Congress they were targeting, they were able to spend less to have the same impact. The amount of money spent by companies with connected lobbyists did not affect voting (column 3). Apparently it’s just the connection that matters, not the number of trips to the Hill.

Coincidentally, Talking Points Memo has just updated their “Shadow Congress” database, tracking former members of Congress who now work for lobbying shops, and the revolving door is definitely trending up. By TPM’s count 195 former lawmakers now work on K Street — up from 172 one year ago — including several very powerful Democrats who were defeated in the 2010 midterms.

Given the influence of the revolving door, there has been very little discussion in Congress on reforming the system. In 2007, as part of a larger ethics overhaul bill, Democrats passed a loophole-laden two-year “cooling off” period before ex-lawmakers and staff members could become registered lobbyists. In the past 6 years, only one bill has been introduced to expand those restrictions. Sen. Michael Bennet’s [D, CO] “Close the Revolving Door Act of 2010” proposed, among other things, to permanently ban members of Congress from ever joining lobbying firms. It attracted one co-sponsor before dying in committee.

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.

One is the loneliest number that you’ll ever do
One is the loneliest number that you’ll ever know
– Nilsson

WSJ:

The widely watched trial exposed the behind-the-scenes dealings of a once-prestigious hedge fund that gained access to highly sensitive information about, among other things, Goldman Sachs Group Inc. at the height of the financial crisis. The government put at $63.8 million the amount in illegal profits and avoided losses Galleon realized through the scheme.

Once jury foreman Robert Jirmnson confirmed they had reached a verdict, the judge’s deputy read the results. As the deputy, William Donald, announced 14 times that he was guilty, Mr. Rajaratnam looked straight at him without flinching.

14 counts! Don’t stop their Eric, tell the White House you need more attorneys. Insider trading — Phew — you could have half the Street behind bars in no time. Yes, it will hurt campaign fundraising, but tell them for every ten in jail, you guarantee another point in the election. Two points for Lloyd and Jamie alone.

As the Journal states,

The verdict marks one the most high-profile successful prosecutions of a financial giant since the convictions of Bernard Ebbers and Jeffrey Skilling, former top executives at WorldCom and Enron, respectively, last decade.
We now all know it was wrong to stop there, in fact it was tragic.

So, the Fed is having its first news conference, which should tell you everything about the Fed. I think even the pope’s had new conferences at this point? Anyway, it shows you what a secretive unaccountable place the Fed is. However I wouldn’t get too excited, in this era of corporate rule, where PR is a major mechanism of control, the press conference is just another aspect of manipulation.

Dylan Ratigan is doing a nice thinking exercise.(tx stoller) What sort of questions should we really be asking about the money system, you can participate here.

So, when you watch Mr. Bernanke today, realize Fed chairmen lie more than presidents, and that’s saying something. When he’s deliberately obfuscating and you have no understanding what he’s saying, realize this is all part of the game of keeping the money system away from you peasants, and in America that has been a very long one-sided fight. When you watch Mr. Bernanke, you’ll have an understanding of Professor Goodwyn’s line at the beginning of his seminal work “The Populist Moment“, “Why Americans have far less democracy than they like to think.”

The question remains, what are we going to do about it?

Gas at the pump is up, and going higher. Food prices are following.

The consequences are catastrophic for the global poor as their costs go up while their income doesn’t. It’s menacing American workers too, who in large part have not seen a meaningful raise since the days of Reagan (keeping it this way is clearly behind the current flurry of attacks on unions).

Already, unrest in the Middle East and many African countries is being blamed for these dramatic increases. It seems as if this threat to global stability is being largely ignored in our media, one that treats the oil business as just another mystical world of free market trading.

Why is it happening? Why all the volatility? Is oil getting scarcer, leading to price increases? Is the cost of food, similarly, a reflection of naturally increasing commodity prices?

While it’s true that natural disasters and droughts play some role in this unchecked price inflation, it also seems apparent that something else is attracting increasing attention, even if most of our media fails to explore what is a political time bomb while most political leaders shrug their shoulder and ignore it.

President Obama recently said there is nothing he can do about the hike in oil and food prices.

Critics say the problem is that government and media outlets alike refuse to recognize what’s really going on: unchecked speculation!
Not everyone buys into this suspicion. In fact, it is one of more intense subjects of debate in economics. Princeton University economist Paul Krugman pooh-poohs the impact of speculation counter posing the traditional argument that oil prices are set by supply and demand.
The Economist Magazine agrees, summing up its views with a pithy phrase, “Speculation does not drive the oil price. Driving does.”
Others, like oil industry analyst Michael Klare of Hampshire College in the US see demand outdistancing supply:
“Consider the recent rise in the price of oil just a faint and early tremor heralding the oilquake to come.  Oil won’t disappear from international markets, but in the coming decades it will never reach the volumes needed to satisfy projected world demand, which means that, sooner rather than later, scarcity will become the dominant market condition.”

Usually you hear this debate in scholarly circles or read it in political tracts where orthodox views collide with more alarmist projections about the oil supply “peaking.”
But officials in the Third World don’t see the subject as academic. Reserve Bank of India Governor Duvvuri Subbarao charges “Speculative movements in commodity derivative markets are also causing volatility in prices,” he said.

The World Bank is meeting on this issue this week because it is seen as a matter of “utmost urgency.”

“The price of food is a matter of life and death for the very poorest people in the world,” said Tom Arnold, CEO of Concern Worldwide, the international humanitarian agency, ahead of his participation at The Open Forum on Food at World Bank headquarters.

He adds, “…with many families spending up to 80% of their income on basic foods to survive, even the slightest increase in price can have devastating effects and become a crises for the poorest.”

Journalist Josh Clark argues on the website “How Stuff Works” that much of the oil speculation is rooted in the financial crisis, “The next time you drive to the gas station, only to find prices are still sky high compared to just a few years ago, take notice of the rows of foreclosed houses you’ll pass along the way. They may seem like two parts of a spell of economic bad luck, but high gas prices and home foreclosures are actually very much interrelated. Before most people were even aware there was an economic crisis, investment managers abandoned failing mortgage-backed  securities and looked for other lucrative investments. What they settled on was oil futures.”

The debate within the industry is more subdued, perhaps to avoid a public fight between suppliers and distributors who don’t want to rock the boat.  But some officials like Dan Gilligan, president of the Petroleum Marketers Association, representing 8,000 retail and wholesale suppliers has spoken out.

He argues, “Approximately 60 to 70 percent of the oil contracts in the futures markets are now held by speculative entities. Not by companies that need oil, not by the airlines, not by the oil companies. But by investors who profit money from their speculative positions.”

Now, a prominent and popular market analyst is throwing caution to the wind by blowing the whistle on speculators.

Finance expert Phil Davis runs a website and widely read newsletter to monitor stocks and options trades. He’s a professional’s professional, whose grandfather taught him to buy stocks when he was just ten years old.

His website is Phil’s Stock World, and stocks are his world. He’s subtitled the site, “High Finance for Real People.”

He is usually a sober and calm analyst, not known as maverick or dissenter.

When I met Phil the other night, he was on fire, enraged by what he believes is the scam of the century that no one wants to talk about, because so many powerful people armed with legions of lawyers want unquestioning allegiance, and will sue you into silence.

He studies the oil/food issue carefully and has concluded,  “It’s a scam folks, it’s nothing but a huge scam and it’s destroying the US economy as well as the entire global economy but no one complains because they are ‘only’ stealing about $1.50 per gallon from each individual person in the industrialized world.”
“It’s the top 0.01% robbing the next 39.99% – the bottom 60% can’t afford cars anyway (they just starve quietly to death, as food prices climb on fuel costs).  If someone breaks into your car and steals a $500 stereo, you go to the police, but if someone charges you an extra $30 every time you fill up your tank 50 times a year ($1,500) you shut up and pay your bill. Great system, right?”

Phil is just getting started, as he delves into the intricacies of the NYMEX market that handles these trades:

“The great thing about the NYMEX is that the traders don’t have to take delivery on their contracts, they can simply pay to roll them over to the next settlement price, even if no one is actually buying the barrels. That’s how we have developed a massive glut of 677 Million barrels worth of contracts in the front four months on the NYMEX and, come rollover day – that will be the amount of barrels “on order” for the front 3 months, unless a lot barrels get dumped at market prices fast.”
“Keep in mind that the entire United States uses ‘just’ 18M barrels of oil a day, so 677M barrels is a 37-day supply of oil. But, we also make 9M barrels of our own oil and import ‘just’ 9M barrels per day, and 5M barrels of that is from Canada and Mexico who, last I heard, aren’t even having revolutions.  So, ignoring North Sea oil Brazil and Venezuela and lumping Africa in with OPEC, we are importing 3Mbd from unreliable sources and there is a 225-day supply under contract for delivery at the current price or cheaper plus we have a Strategic Petroleum Reserve that holds another 727 Million barrels (full) plus 370M barrels of commercial storage in the US (also full) which is another 365.6 days of marginal oil already here in storage in addition to the 225 days under contract for delivery. “
These contracts for oil outnumber their actual delivery, a sign of speculation and market manipulation, as oil companies win government authorizations for wells but then don’t open them for exploration or exploitation. It’s all a game of manipulating oil supply to keep prices up. And no one seems to be regulating it.
What Phil sees is a giant but intricate game of market manipulation and rigging by a cartel—not just an industry—that actually has loaded tankers criss-crossing the oceans but only landing when the price is right.
“There is nothing that the conga-line of tankers between here and OPEC would like to do more than unload an extra 277 Million barrels of crude at $112.79 per barrel (Friday’s close on open contracts and price) but, unfortunately, as I mentioned last week, Cushing, Oklahoma (Where oil is stored) is already packed to the gills with oil and can only handle 45M barrels if it started out empty so it is, very simply, physically impossible for those barrels to be delivered.  This did not, however, stop 287M barrels worth of May contracts from trading on Friday and GAINING $2.49 on the day. “
He asks, “Who is buying 287,494 contracts (1,000 barrels per contract) for May delivery that can’t possibly be delivered for $2.49 more than they were priced the day before?  These are the kind of questions that you would think regulators would be asking – if we had any.”
The TV news magazine 60 Minutes spoke with Dan Gilligan who noted that, investors don’t actually take delivery of the oil. “All they do is buy the paper, and hope that they can sell it for more than they paid for it. Before they have to take delivery.”
He says they make their fortunes “on the volatility that exists in the market. They make it going up and down.”
Payam Sharifi, at the University of Missouri-Kansas City, notes that even as the rise in oil prices threatens the world economy, there is almost total silence on the danger:

“This issue ought to be discussed again with a renewed interest – but the media and much of the populace at large have simply accepted high food and oil prices as an unavoidable fact of life, without any discussion of the causes of these price rises aside from platitudes.”
What can we do about that?

News Dissector Danny Schechter made the film Plunder The Crime of Our Time (Plunderthecrimeofourtime.com) on the financial crisis as a crime story. He wrote an introduction to the recent reissue of a classic two-volume expose of John D. Rockefeller’s The Standard Oil Company, one of the top ten works of investigative reporting in American history.  (Cosimo Books) Comments to dissector@mediachannel.org