REPUBLICAN REPORT ... STILL A JOKE

In my last post on the bi-partisan Financial Crisis Inquiry Commission (FCIC) I wrote about Republican commission members. They decided to issue their own report on the causes behind the 2008 market collapse, which the FCIC is supposed to do. I explained why I thought the Republican report - which they like to call a "primer" - was a joke.

In a few words I wrote that Republican commissioners wanting to remove words like "Wall Street" and "deregulation" from the commissions final report was like wanting to remove the words "welfare" and "fraud" from a report on welfare fraud.

I called the commission on December 20th and asked if someone would get back to me on this. The last time I checked, there were no messages on my office phone. But two days later a Republican operative - Peter J. Wallison - did come out with a general response to emerging questions and criticisms.

The Huffingtonpost's R.J. Eskow does an excellent job of taking apart Wallison's nonsense here. Suffice it to say, if you ever wanted to know what George Orwell's "doublespeak" means, or what "looking trough the looking glass" is all about, you want to read Wallison's post and Eskow's response.

Now, if you'll excuse me, I'm going to write a primer on what's been going on with Republican members on the FCIC ...

But I'm going to do it without using the terms  "Washington,"  "politics," "lobbyist," or "influence peddling" - because, you know, these terms are so imprecise.

- Mark

MERRY CHRISTMAS

OK, I won't be posting for a couple of days. So here are a couple of Christmas favorites (again) ...





This is the Peanuts' Christmas Dance (I dance like the guy in Orange) ...




Merry Christmas.

- Mark

WHAT CHRISTMAS IS ALL ABOUT

What Christmas is all about (click to enlarge) ...

- Mark

REPUBLICAN REPORT IS A JOKE

We know that with the helping hand of favorable legislation from Washington that Wall Street gambling and greed are primarily to blame for the 2008 market meltdown. Still, as the Huffington Post's Shahien Nasiripour wrote about last week, all four Republican members on the the Financial Crisis Inquiry Commission voted to exclude the following terms from the commission's report: “Wall Street,” “deregulation,” “shadow banking,” and “interconnection.”

This is like saying we're going to study welfare fraud but we're not going use the words "welfare" or "fraud." It doesn't make sense.

The good news is that the rest of the commission members didn't want to go along with the Republican charade. The bad news is that the Republican commission members - which includes our previous local Congressman, Bill Thomas - decided to write their own Republican report.

Don't believe me? Check it out here.

For those of you who don't have the time to read the Republican Report, or who are unfamiliar with Washington-speak, let me break the report down for you: The market collapse was the government's fault ... but mostly it was Fannie Mae and Freddie Mac's fault.

Even though blaming Fannie Mae and Freddie Mac for the market collapse has been thoroughly discredited (as I pointed out here, here, and here) the Republican Report says nothing about the evidence that debunks their points. Worse, there was no mention of the unspeakable words noted above in the Republican Report - no "shadow banking" system ... no references to "deregulation" (which Bill Thomas voted to approve numerous times when he was a member of Congress) ... and there were definitely no references to Wall Street's stupidity and greed.

Everything was the government's fault. End of story.

As for final words of wisdom the Republican Report provides us with this classic ending: "We caution our nation's leaders to learn the appropriate lessons from history and take seriously the need to reduce our federal deficit."

Huh?

No mention of favorable legislation, deregulation, agency capture, irresponsible lenders, speculation run rampant, etc. It simply was the government's fault. Paul Krugman discusses the Wall Street Whitewash here. 

I'm going to post on the simplistic arguments used by the Republican commission members later (which you can also read about in my book) but, for now, let's just say the Republican Report is a cruel joke.

Why the Republican Report is a Joke ...
After the 1929 stock market crash many Americans wanted to know what happened. Just like Americans in 2008 they were understandably angry and wanted answers. So after Franklin D. Roosevelt came to office the Senate banking committee created an investigative commission to look at the causes behind the 1929 market collapse and the Great Depression.

To get answers a former Manhattan Deputy District Attorney with experience in financial crimes, Ferdinand Pecora, was hired as chief counsel.

Born in Sicily, Pecora was a hard nosed, no nonsense, kind of guy who believed in the spirit of the American Dream. He saw corrupt Wall Street "banksters" (a term he coined) as enemies of that dream. While FDR gets credit for saving the system, history will record Pecora as the man who did the grunt work that saved American capitalism. As Mary Bottari put it:

The vigorous Pecora commission interviewed hundreds, including financial magnates, their underlings, brokers and analysts, compiled 12,000 pages of testimony and paved the way for a major financial services overhaul. The 1933 Glass-Steagall Act, the 1934 Securities and Exchange Act and other legislation protected the economy for the next 60 years. When these reforms unraveled in the 1980s and 1990s, the ground was laid for a “boom and bail" economy.

To understand how our "boom and bail' economy" collapsed in 2008 Congress authorized the creation of another commission, The Financial Crisis Inquiry Commission. Unfortunately, today's commission - in spite of the presence of Brooksley Born and Phil Angelides - doesn't seem to have the same cohesion, or sense of urgency that the Pecora Commission had.

As we are seeing today - and as I noted over a year ago - while there are several people on the commission who could perform Pecora-like roles, the commission has been stocked with Wall Street sycophants and partisan ringers. Their goal is not to find answers. Their goal is to stonewall, and keep Wall Street from being regulated, like they were after the Pecora Commission. Former Congressman Bill Thomas, in particular, has a stake in keeping the world from looking at all the deregulation he pushed through and signed off on.

Put another way, Republican commission members are not honest brokers.

Finally, I called the commission and asked if anyone could get back to me to discuss the excluded words, among other topics. I'll be checking my messages tomorrow.

- Mark

UPDATE: One of the joys I get from writing this blog is finding out how many smart people tune in from time to time. I've learned from the authority on Pecora - Michael Perino - that the Wall Street investigation actually started in March 1932 while Herbert Hoover was still President. Perino points out that the invesigation basically went nowhere until Ferdinand Pecora was appointed counsel in January 1933, before FDR assumed office in March. Pecora turned the hearings around that winter just as the banking crisis of 1933 was in full swing. He put on the stand Charles Mitchell, chairman of the National City Bank (today’s Citigroup) and revealed massive wrongdoing at the bank in the run-up to the Great Crash. When FDR took office, Pecora was re-appointed as the committee’s counsel. For more on this check out Perinos book, The Hellhound of Wall Street: How Ferdinand Pecora’s Investigation of the Great Crash Forever Changed American Finance (Penguin Press 2010). I encourage you to buy the book.

THE ONLY PROFESSIONAL AT FOX, SHEPARD SMITH

Last week I posted on the Republicans in the Senate who are blocking health care funding for Twin Tower first responders. I called them a bunch of pricks - because they are. So I was pretty happy to see Jon Stewart take Republican Senators to task by highlighting the plight of the first responders during his entire show a couple of days ago (which I happened to watch).

Well, today I was pleased to see Smith, who is perhaps the only person at Fox News who doesn't consistently pander to a misinformed mob, asking:

How do [Republican Senators] sleep at night after this vote on Ground Zero first responders from 9/11? Are they going to get that done, or are we going to leave these American heroes out there to twist in the wind?

While the rest of Smith's colleagues at Fox News Corpse continues to ignore the health problems of the Twin Tower responders - while falling over themselves to carry water for Republicans and their Tea Bagging splinter group - Shepard Smith deserves kudos for being the only person at Fox who takes his role as a commentator and journalist seriously (as I've pointed out here, here, here, here, and here).

Seriously, his presence at Fox is like teaming Joe Friday with the Keystone Kops. The foolishness blocks the talent.

Shepard Smith really should get another job at a real news organization.

- Mark

FOOTBALL FUN

This is from the University of Hawaii. It's cool ...



- Mark

DREAM ACT WEEKEND?

The Senate is set to cast final votes this weekend — passing the DREAM Act, and repealing "Don't Ask, Don't Tell." If you live outside of California, call your U.S. Senator and ask them to vote yes on the Dream Act and to repeal DADT.

Here's what I wrote on the DREAM Act for the Bakersfield Californian almost three months ago. It sill applies. This time I'm posting it as it appeared in the Californian below. I've supplied the pictures.

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Revolutionaries, squatters and 'illegals'


The Bakersfield Californian
Friday, Sep 24 2010 07:25 PM

Last Updated Friday, Sep 24 2010 07:25 PM

One of the great things about our nation is how we turned our back on "preserving an old economic order" that had contributed to making Europe a shallow and stagnant environment. To do this America has consistently embraced those who once lived outside of the law.

In the 18th century our Founding Fathers took it upon themselves to defy the King's Law, in the process becoming revolutionary icons. In the 19th century America granted homestead rights to outlaw squatters, which made them pioneers. In the 20th century America embraced the civil disobedience of Rosa Parks and Dr. Martin Luther King. And the list goes on.

Of these, taking illegal squatters and turning them into yeoman farmers by granting them legal title to the land they farmed was one of the greatest acts Congress could have taken. Congress not only took advantage of a group of people who farmed and developed the West, but their foresight did much to create America's first middle class. Anchored to the notion that illegal squatters were actually doing our growing nation a favor, Congress found it both convenient and necessary to legitimize the efforts of those who were once viewed as a public nuisance.

By offering squatters first right to purchase the private or public land they had worked in the West, the policy of preemption made it clear that the U.S. government understood the benefits it would reap by embracing -- rather than criminalizing or fighting -- a group of people who had demonstrated that they were disciplined, productive and committed to the promises this nation had to offer.

Just as importantly, this policy fell in line with Abraham Lincoln's belief that the purpose of the U.S. government was "to 'clear the path' for the individual to labor and get ahead."

Unfortunately, this very simple Lincolnian principle was not evident last week in the U.S. Congress.

With the Republican Party promising to filibuster proposed legislation that carried the Dream Act, the "Party of Lincoln" showed it has little tolerance for the ideas of opportunity and unity that Lincoln promoted when he lived. As a result of the GOP's decision to come out against the DREAM Act, more than 65,000 undocumented high school graduates a year -- most of whom came to the United States as young children and grew up here -- will not get the opportunity to prove themselves by going to college, or serving in the U.S. military (though most are already doing so).

Interested in little else beyond pandering to a xenophobic and race-baiting crowd, Republican lawmakers on Tuesday stalled a Senate measure that would have allowed the children of "illegal" or undocumented immigrants to earn a path to citizenship by going to college or serving in the U.S. military.

The measure would not have automatically granted citizenship or property rights to anyone. It simply said if you have lived here from a young age, work hard in school, and/or serve this country, you're eligible to become a U.S. citizen. By looking at how we dealt with illegal squatters, and what we gained by legalizing their status, we get a better understanding of how we are now working against our national interests.

By ignoring absentee land owner claims to property, and giving up government claims as well, the policy of preemption departed fundamentally from European land practices, which protected its aristocratic elite. This enabled America to do three things crucial for building our middle class.

First, it made pioneers out of those previously viewed as illegal squatters or, worse, labeled as "criminals" (yes, many pioneers were also viewed as part of the criminal element at one time). Second, as opposed to supporting a titled or leisure class, preemption encouraged others to go and develop the West by rewarding hard work and individual initiative. Finally, it helped set the stage for America's yeoman farming middle class to emerge, which became the cornerstone of American democracy.

If congressional Republicans had acted with a greater degree of foresight, instead of pandering to a mob, they would have also done three things.

First, in the name of justice, by putting an entire generation of disciplined and committed young people on the path to citizenship, it would legitimized a group that had little to nothing to do with its status in this country. Second, as opposed to feeding a xenophobic mob mentality, supporting the DREAM Act would encourage many more to go to school or serve our nation in the military. Third, supporting the DREAM Act would have done much to take the hate and fear out of our public square by prompting Americans to focus on positive elements of our undocumented class.

Perhaps more importantly, it would have demonstrated that while we are a nation of laws -- in the spirit of the Enlightenment -- we are also a practical people that still rewards hard work and discipline.

At the end of the day, if Congress can pass legislation that encourages U.S. firms to take jobs overseas, hide profits in the Cayman Islands and lets Wall Street rewrite financial codes so that failed investment firms can become eligible for bailout funds as "banks" after markets collapse, it should be able to find the common sense to allow hard-working undocumented children to put themselves on the path to citizenship.

I have to think that many of our early pioneers and yeoman farmers would no doubt agree.


Mark A. Martinez, Ph.D., is a professor in the Department of Political Science at CSU Bakersfield.

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- Mark

CHIVALRY, STILL EXISTS?

Wow. Check this out. The estate of one of Bernie Madoff's former clients is going to return $7.2 billion to help the victims of Madoff's market schemes. Specifically, the estate “will return every penny received from almost 35 years of investing with Bernard Madoff.”

This is good stuff. Especially coming on the heals of my "What Real Patriots Do" post.

Perhaps chivalry is not dead.

- Mark

TAX CUT DEAL, FOR DUMMIES (seriously, it's for dummies)

Congress and the President have finally agreed on a tax deal to save the day. This is what it looks like ...

If you want to see the details of the $800+ billion deal by the numbers click here. If you want to see how your member of Congress voted click here. If you want to see how Congress arrived at the agreement just imagine how they arrive at budget agreements ...

- Mark

Note: OK, I have a few more comments ... The Senate abandoned it's effort to vote on a $1.2 trillion spending bill that would finance the federal government through the first nine months of 2011. You can bet that President Obama will spend the first half of 2011 fighting off Republican attempts to cut and privatize the budget, arguing that we need to find ways to fund the tax cut agreement. This will run into the spring and the summer, with Republicans blaming President Obama for massive deficits all along - but, at the same time, making calls to make social security tax cuts and tax cuts for the rich permanent. Democrats will be accused of wanting to "raise taxes" for not going along, and will get blamed for massive deficits "under Obama's watch."

If President Obama's strategy is to hope for recovery and to throw this agreement back in the Republicans collective faces by saying, "You voted for it too", it could work. But there's a couple of problems here - America's memory, and Obama's track record on confrontation. Oh, and the fact that hope is not a plan, especially since tax cuts for the rich don't work.

In simpler terms, it appears President Obama just handed the Republicans his lunch. They're going to eat it over the next two years.

I hope I'm wrong, but if you're a Democrat pray that Sarah runs.

BAILOUT NATION ... HOW IT REALLY WORKS (South Park Style)

One of the best ways to get someone to understand a concept is to tell a story. The story doesn't necessarily have to be true to convey what you're trying to explain. It just has to have a moral, a lesson, or a logical set of consequences (most often associated with fables). For example, if you you want to teach kids about the importance of hard work and paying attention to the details you tell the story of The Three Little Pigs.

I always liked this story.

But if you want to teach America how Wall Street manipulated sheep-like consumers, and then built an economy dependent on debt and financial gimmicks to extract wealth you really should watch this South Park episode. Here's a snippet (click here for the entire episode, with a 15 second commercial intro) ...





The episode ("Margaritaville") helps convey the criminal stupidity that has overtaken our financial system, and pokes fun at all the finger pointing, the conspiracy theories, and the feigned spiritual concern over the excesses and consumerism that dominate our national debate on the topic. It really does a good job of mocking our current reality by explaining how we've been sold a bill of goods by con men financiers for the better part of a generation.

Ultimately the episode (which has nothing to do with The Three Little Pigs) reminds us all how getting Americans into debt was always the goal of Wall Street's financiers, and how bailouts have become the magic potion behind our Wall Street created Ponzi scheme.

Kudos to Rafa for sending it to me.

- Mark

P.S.: If you're insulted by the language in the South Park episode, but not upset by the reality we're currently living, your indignation is misplaced. No apologies.

P.S. to my P.S.: I should point out that in Chapter 2 of my book (p. 39) makes it clear that since the 1980s the business plan for Wall Street's biggest financial companies has been to "produce" debt that can be bundled and sold as securities (Collateralized Debt Obligations). It's what got us into this mess, and continues today.

WHAT REAL PATRIOTS DO ...

It looks like more than a few millionaires aren't happy with President Obama's tax deal with Senator Mitch McConnell (R-KY). But unlike the greedy and false patriot Republican gazillionaires who want us to keep borrowing from the Chinese so they can get even more tax breaks, these million dollar earners don't want all of President Bush's tax cuts for the rich extended. Instead, they think like this ...

Check out this open letter penned by Millionaires for Fiscal Strength ...

Mr. President:

We are writing to urge you to stand firm against those who would put politics ahead of their country.

For the fiscal health of our nation and the well-being of our fellow citizens, we ask that you allow tax cuts on incomes over $1,000,000 to expire at the end of this year as scheduled.

We make this request as loyal citizens who now or in the past earned an income of $1,000,000 per year or more.

We have done very well over the last several years. Now, during our nation’s moment of need, we are eager to do our fair share. We don’t need more tax cuts, and we understand that cutting our taxes will increase the deficit and the debt burden carried by other taxpayers. The country needs to meet its financial obligations in a just and responsible way.

Letting tax cuts for incomes over $1,000,000 expire, is an important step in that direction.

But wait. These fiscal patriots aren't done. They've provided a list of facts that "You Should Know ..." on their site. Here they are ...

Only 375,000 Americans have incomes of over $1,000,000

Between 1979 and 2007, incomes for the wealthiest 1% of Americans rose by 281%

During the Great Depression, millionaires had a top marginal tax rate of 68%

In 1963, millionaires had a top marginal tax rate of 91%

In 1976, millionaires had a top marginal tax rate of 70%

Today, millionaires have a top marginal tax rate of 35%

Reducing the income tax on top earners is one of the most inefficient ways to grow the economy according to the non-partisan Congressional Budget Office

44% of Congress people are millionaires

The tax cuts were never meant to be permanent

Letting tax cuts for the top 2% expire as scheduled would pay down the debt by $700 billion over the next 10 years

While I'm not sure that I agree with their million dollar target as the abrupt cut off point for letting tax cuts expire (I would have no problem creating a graduated schedule up through $1 million), I like the way these guys think.

- Mark

WIKILEAKS DID US ALL A FAVOR

This is funny. I always enjoyed how Yosemite Sam got hot and bothered over trespassers getting "footy prints" all over his desert. It's a classic. Best of all, the clip reminds me of how people are getting hot and bothered over the WikiLeaks document dump that's all over the Internet. Seriously.

Why beat up the camel on Julian Assange for dropping "footy prints" all over when there's all kinds of "footy prints" already out there?

I've been watching the WikiLeaks-National Security drama unfold for the past week and see Yosemite Sams and political theater all around. Indeed, cries of treason and terrorism are almost as absurd as are suggestions that we should consider both the death penalty and the censorship of private media groups for those who helped publish WikiLeaks' documents.

What a bunch of drama queens. Here's why.

What About Scooter Libby (and Iraq)?
Remember I. "Scooter" Libby? He was convicted of lying to conceal the involvement of the Bush White House in leaking the identity of an active CIA agent. Curiously, the same people who either gave Libby a free pass or provided propaganda cover are now suddenly concerned over national security secrets. Why is that?

And what about all the lies and corruption that led us into war in Iraq in the first place? Where's the indignation here? The last time I looked, going to war on a pack of lies has produced far more death, destruction, and debt than what WikiLeaks has done.

State Secrets Exposed? Hardly
Still, I'm particularly amused by the absurd claims of damage to our national secrets. As I pointed out months ago, starting with the cold war our nation has slowly become an overly militarized and secretive state. The events of 9/11 only made this trend worse.

How bad is it? Think about this:

* We now have over 10,000 counter terrorism, homeland security and intelligence locations across the country.

* We have over 850,000 intelligence personnel with "top secret" access.

* We also produce over 50,000 intelligence reports (no doubt all "top secret") every year.

What this means is that most of the cables that were downloaded and transferred to WikiLeaks were already accessible to around 3 million diplomats, military people, agencies, and private security companies (and their staff) at many levels. In addition, most of the stuff we've seen from WikiLeaks we've known about for years. As John Allen Paulos put it, "Something is not all that secret ... if millions of people can pull it up on their computers."

(And, besides, according to George Bush's Attorney General, Michael Mukasey, "not every wrong, or even every violation of the law, is a crime.”)

But Let's Kill the Messenger Anyways ...
Just as I'm concerned by the absurd claims of damage to our national secrets, I'm equally concerned over the equally absurd notion that killing the messenger, Julian Assange, will somehow make us safer (or send a message). Just as Yosemite Sam did himself a disservice by beating the heck out the poor camel, going after Julian Assange and WikiLeaks will not make anyone safer.

This is the 21st century. Because there are lots of "footy prints" out there we will have more WikiLeaks. What our diplomatic corps needs to keep in mind is what I tell my students - don't write or post anything that would prove embarrassing if it were put on the front page of a newspaper.

Concluding Comments
As we privatized and expanded our military apparatus the result has been that we've ended up with more and more national security crazies. Their level of importance (in their minds) is tied to the amount of top secret stuff they work with. Many of them think they're the second coming of James Bond. They're not.

With so many top secret clearances, and with so many hands and eyes in the national security pot, many of them are doing little more than looking for Boris and Natasha ...

This is why so many work to classify everything that crosses their desks as "top secret" - even when the information is run of the mill stuff that can be easily accessed on the Internet. While much of the stuff our analysts see is important, they don't want to appear insignificant by missing anything or, worse, be accused of overlooking some thing.

Put another way, our evolving cloak and dagger culture is increasingly making a mockery of national security. 

Still, we're urged to kill the messenger of leaked national security documents because the documents are considered so "top secret" that only a few million should have access to them. The reality is the WikiLeaks document dump revealed petty gossip, and proved more embarrassing than many are comfortable with. Worse, they show how we've become an overly secretive and militarized culture - which allowed us to be lied into a war of choice that we still don't know how to leave.

WikiLeaks did us all a favor by reminding us all of this.

I'm with Rep. Ron Paul on this one. If it's not WikiLeaks today, there are plenty of "footy prints" and wannabe WikiLeaks out there. I guarantee it.

- Mark

Update: This piece from Arianna Huffington argues that the WikiLeaks that were posted revealed little because they were limited and vetted by Julian Assange's group. Put another way, they provided no national security threat (unlike George Bush's wars). It also underscores my point that we live in the 21st century, and that there will be more WikiLeaks coming down the pike. Just because the U.S. gets embarrassed by inconvenient stories - many of which should not even be classified - should not be the basis for turning exposed lies into protected speech (while the truth becomes criminal). This is especially pertinent for the Obama administration, who turned its back on their opportunity to expose and prosecute extraordinary lies when they had the opportunity. At the end of the day, Huffingtonpost reminds us, we should be focusing on transparency and what the government is doing, instead of protecting the lies that make Washington insiders uncomfortable.

WHY THE BANKS ARE STILL IN TROUBLE

I've been saying this for some time now. In spite of trillions in aid the banks are still in trouble and the Federal Reserve is doing their level best to cover for the banks.

Specifically, the Federal Reserve is flooding Wall Street's biggest market players with money by keeping interest rates low. But, instead of being called Wall Street's Trillion Dollar Money Flood, or Wall Street's Bailout in Perpetuity Program (BPP), like it should be, the media is going along with the Federal Reserve's misleading and mind-numbingly opaque "quantitative easing" (QE) terminology.

They're doing this because, you know, Wall Street hates it when they get money virtually for free and we call it what it is - Corporate Welfare.

Interestingly, even though we are deep into the second phase of the Federal Reserve's trillion dollar QE/Money Flood for Wall Street, the Fed knows full well that their first two QE programs aren't working. How do they know this? Because the economy stinks and, in spite of having trillions of dollars dumped in their laps (a process that actually began in 2007), the banks still aren't lending because they don't trust one another.

As a result, the Federal Reserve is moving beyond QE II and is now preparing to push through QE III - or, more appropriately, they're preparing another money dump for Wall Street.

There are four reasons that the banks are in trouble. I've been blogging on these reasons for some time now, but Shah Gilani, contributing editor for Money Morning, has done us all a favor and put them into a nice little list.

Banks Still Carrying Toxic Assets: In spite of being able to dump hundreds of billions in toxic assets on the American taxpayer Federal Reserve the banks still have toxic assets on their balance sheets - for starters, $2.4 trillion in mortgages and more than $1 trillion in mortgage-backed-securities.


Industry Accounting Gimmicks: The banks have been able to juggle accounting rules to make their books look better than they really are.

Bank Smoke & Mirror Profits: The banks have made their recent profitability look robust by moving loan-loss reserves back over into the revenue columns of their income statements - booking that as top-line growth.

Banks Facing Lawsuits: And the onslaught of litigation banks now face that could force them to mark down their assets at the same time that they will have to buy back tens of billions of dollars of non-performing mortgages they originated and securitized.

There you have it. Trillions of dollars handed over Wall Street's biggest banks. Still, in spite of using dishonest accounting standards, and dumping hundreds of billions of their toxic assets on the American taxpayer, the banks are still in trouble. They know it ... The Fed knows it ... The Obama administration knows it. Yet, we're going to do it all over again with QE III.

For what we've gotten in return I'd say this is like dumping money down a drain.

- Mark

THE WALL STREET TAX MAN COMETH (for your home)

When Wall Street found they didn't have the cash to pay off their stupid bets and other financial obligations they ran to Uncle Sam and the American taxpayer for trillions in loans and other guarantees. But when a homeowner finds that they don't have the cash to pay their tax obligations Wall Street has no sympathy.

Put another way, Wall Street got a financial parachute for it's role in the creating the market crash. The homeowner, however, is told to pull himself up by his cement bootstraps.

But wait. It gets even worse. Check this out.

After stabilizing their financial position with a taxpayer funded bailout some of Wall Street's biggest financial institutions have created a new money-making scheme - they are now bidding on the tax debts of strruggling homeowners. If they win the bidding process they then turn around and sell the debt elsewhere.

Making money on homeowner debt is really pretty simple. Here's how it works.

1. Once a financial firm has purchased a tax lien debt of, say, $5,000 Wall Street's finest add interest charges and fees to the debt amount (just like they do with credit card debt).

2. If the homeowner can't pay the new debt amount (of say, $10,000), the financial institution forecloses on the home. This is done rather quickly, especially if the home has equity. This has become extremely easy now with our collapsing foreclosure standards.

3. Once foreclosure happens Wall Street's financial firms then bundle up and sell thousands of these tax debt contracts to investors (as securities), selling or extracting the equity from the house to pay 7-10% interest (and pocketing what remains). 

You know, when people like me said we need to take over struggling banks (instead of stuffing them with trillions of bailout dollars) critics said that this couldn't be done because it was socialism. And besides, we needed to keep banks afloat or else the entire system would sink ...

Tell me, if taking over a troubled bank with mounting debts is called socialism, what should we call taking over a struggling debtor's home who had their tax debt sold out from under them? Lawful racketeering?

 

Just asking ...

- Mark

"NEVER FORGET" 9/11? ... GOP FORGETS

We're all familiar with the "never forget" 9/11 rah, rah that always comes out of our Super Patriot Republican Party. The GOP is especially mindful of reminding America about 9/11 whenever they need funding for defense budgets and local Homeland Security pork. This is what makes the events of today so poignant - the GOP apparently forgot about 9/11.

Specifically, the GOP forgot who responded, and who is now paying the price for responding, to the attacks on the Twin Towers. This afternoon every Senate Republican forgot about those who served our nation on 9/11 and blocked a bill that would have provided funds for ailing Twin Tower rescue workers. The GOP blocked the bill because, you know, what the rescue workers did that day, and in the days after, really wasn't that difficult or dangerous ...

Still, there is hope.

The GOP has made it clear they will have a sudden memory jolt, but under one condition - if President Obama extends the Bush tax cuts for millionaires and billionaires. That's right. Republicans will consider funding Twin Tower rescue workers, with rescue-related health conditions, but ONLY if they can get tax breaks for America's richest 2% ...

Talk about false patriotism. What a bunch of pricks.

- Mark

WHAT OBAMA SHOULD HAVE DONE ...

With two-thirds (67%) of Americans saying that we shouldn't extend tax cuts to the rich, President Obama has the country behind him on the issue. Still, he caved into Mitch McConnell's unprecedented threat to block any legislation in the senate unless the Republicans got their way on extending tax cuts for the top 2% of Americans (in spite of their failed results).

While pundits debate President Obama's decision, for my money, I would have liked to see President Obama push Senator McConnell and his Republican colleagues into going through with their juvenile threat to hold their breath until the super rich got more tax breaks.

Then, as they yelled and screamed at him for not working in a bi-partisan fashion, I would have liked to see President Obama do the political equivalent of this ...



I know, I know ...

- Mark

WHY LIBERALS ARE PISSED ABOUT THE TAX BILL

Want to know why Liberals and Progressives are pissed off over President Obama's capitulation on the proposed tax bill? It's not just because he traded 13 months of paltry benefits for millions of Americans in exchange for 2 years of tax cuts for the rich ... which will become permanent once the Republicans clean his clock on the issue in 2012 (if President Obama couldn't win this fight when had super majorities, and Wall Street's back to wall in 2009, how the hell does he expect to win on this issue in 2012?).

Liberals and Progressives in America are pissed off because this capitulation is one in a long line of capitulations on major issues that have seen the Obama administration:

Cover Wall Street's stupid bets at 100 cents on the dollar, with trillion dollar loans and other guarantees, while asking for no concessions.

Cave into Wall Street extortion and other market demands to guarantee future profits, while asking for no concessions.

Allow Wall Street to use the Federal Reserve to cover their ass, while asking for no concessions.

Give President Bush and his administration presidential cover for lying us into a war and Gitmo, and asked for no concessions.

Fail to push Congress to allow cheaper medicines to enter from countries, like Canada, then caved in on a single-payer system and the public option without a fight.

Allow Republican demands for 60 yest votes in the Senate to become the standard without a fight.

Allow the banks - who received trillion dollar guarantees - to determine the terms of his $75 billion Making Homes Affordable Program, which has left millions of homeowners hanging, and in distress.

Do little after the House passed foreclosure legislation, which would have helped stem record foreclosures by allowing bankruptcy judges to rewrite mortgages (the bill died in the Senate).

Allow budget deficits to grow with this piece of legislation, which Republicans will use to go after Medicare and Social Security.

And I haven't even said anything about (1) President Obama not putting up a fight when Republicans blocked legislation that would have encouraged companies to bring jobs back from overseas (by eliminating their tax breaks), (2) how the poorest Americans will actually see a slight tax hike, or (3) how the current tax proposal also includes the neat trick of allowing America's wealthiest to transfer at least $5 million of their family fortune to heirs without paying taxes (as if the Paris Hilton's of the world need more money).

So, in a nutshell, President Obama has already given Wall Street and America's richest class trillions of dollars in tax breaks, with few to no strings attached. Now he's granting America's richest class hundreds of billions more in tax breaks, in exchange for allowing Main Street to grovel for 13 more months of crumbs from Wall Street's table.

No, this isn't about one tax break. Nor is it about about one capitulation. It's about one more tax break, and yet another capitulation in a long line of capitulations.

Sigh ...

- Mark

Addendum: For more on this, see Keith Olbermann's Special Comment here.

BUSH TAX CUT FACTS ... JUST THE FACTS, MA'AM

As Jack Webb (aka Joe Friday) would say, "Just the facts ma'am, just the facts ..."

David Fiderer does a pretty good job of debunking the myth that "keeping the Bush tax cuts will generate wealth/growth" in this article. At the same time he helps us understand that what we're really seeing is a massive transfer of (unfunded) wealth to America's richest class.
 
In terms of promoting economic growth, the Bush tax cuts were a complete failure.

Average Annual GDP Growth

Bush: 2.1%

Clinton: 3.9%

Reagan/Bush: 3.0%

Carter: 3.2%

Nixon/Ford: 2.8%

Kennedy/Johnson: 4.8%

In terms of promoting job growth, the Bush tax cuts were a complete failure.

Number of Jobs Added

Bush: 1.1 million

Clinton: 22.7 million

Reagan/Bush: 18.7 million

Carter: 10.3 million

Nixon/Ford: 11.3 million

Kennedy/Johnson: 15.7 million

In terms of fiscal prudence, the Bush tax cuts were a complete failure.
 

(For those of you looking at the 2008 numbers, keep in mind that $1.86 trillion in 2008 - in inflation adjusted terms - is worth $1.49 trillion in 2000)
President Bush (like previous presidents) took the surplus cash paid by you, me, and our employers into Social Security and used it to reduce his current operating deficits.

Still, there are many people that will benefit from extending the Bush tax cuts. Here's how much the Bush tax cuts will benefit some of President Bush's most ardent supporters, and other conservative icons:

Rush Limbaugh - $2,689,135
Glenn Beck - $1,512,352
Sean Hannity - $1,006,352
Bill O’Reilly - $914,352
Sarah Palin - $638,352
Newt Gingrich - $247,352
George W. Bush - $187,552

Here's Rep. Alan Grayson (D-FL) explaining the logic behind extending the Bush tax cuts as he goes through the numbers ...



Just the facts, ma'am ...

- Mark

WE HAVE A TAX DEAL, AND THE RICH WIN (again)

It looks like we have a tentative agreement on the tax bill. There was a lot of horse trading going on. This is what I see ...

If previous CBO projections are correct, extending unemployment benefits for those down on their luck will cost the U.S. taxpayer about $25 billion (give or take a few billion) over the next year.

Extending the Bush tax cuts for the rich, however, will cost the U.S. taxpayer at least $70 billion per year (if not more) over the next two years.

So, in order to get $25 billion into the pockets of millions of unemployed Americans over the next year we have to cough up at least $140 billion to America's richest class over the next two years.

Sounds fair to me.

Sigh ...

- Mark

P.S. To give you an idea how much extending the unfunded Bush tax cuts for the rich will cost think about this. If the tax cuts for the rich end up costing us $83 billion per year - which many think is the real number - we're looking at enough to pay for all veterans’ hospitals, doctors, and the rest of the Veteran’s Affairs health system, plus the United States Coast Guard, plus the Food and Drug Administration, plus the operation and maintenance of every single national park for the entire 10-year period ... with more than $100 billion left over.

WALL STREET'S TRILLION DOLLAR MONEY FLOOD

I've been saying this for some time now, but it bears repeating since most of America doesn't seem to be interested in much beyond Sarah Palin's latest Tweet and who's on American Idol. So let me make this perfectly clear, again: The $750 billion bailout that George W. Bush signed off on, and the subsequent $700 billion stimulus package that President Obama coughed up, were only the beginning.

Drops in the bucket, as it were.

What we should have been looking at - as I pointed out in my book, and have posted on my blog- are the trillions of dollars that were made available, loaned on the cheap, or effectively handed over to Wall Street's banks and other financial players.

Now, as a result of a forced transparency rider attached to the Wall Street reform bill (thank you Sen. Bernie Sanders) we have some numbers and names. Check out the trillions of dollars that were transferred to Wall Street by the Federal Reserve as our market collapsed ...

Goldman Sachs ... $600 billion
Bear Stearns ... $1 trillion
Citigroup ... $1.8 trillion
Merrill Lynch ... $1.5 trillion
Morgan Stanley ... $2 trillion

And this is just the easy stuff to pick out from the numbers. No wonder Wall Street's been making record profits. The U.S. taxpayer Federal Reserve essentially flooded Wall Street's accounts with cash so they could pay off each others bad bets.

This money, my friends, explains why Wall Street was able to pay 100 cents on the dollar for ill-conceived contracts, and then made good on billions in bonus payouts (to each other) for their incompetence.

 

At the same time, by looking at the figures on the Federal Reserve's new site we're able to confirm that the market collapse began a long time before September 2008. Worse, what we're able to see from the data is that the geniuses on Wall Street, and their errand boys in Washington, knew what was happening long before September 2008!

In fact, as I pointed out in December of 2007, Wall Street and the Federal Reserve began setting up the bailout "facilities" that would transfer trillions to Wall Street's biggest banks way back in 2007 (be sure to play with the graphs on the site to see what I mean).

But wait. It gets worse. Today the NY Times is confirming what I've been writing about for a while now.

Not only did Wall Street effectively extort money and guarantees from Washington but the Federal Reserve was either playing dumb or deliberately covering up for Wall Street during the bailout. Like Sargent Schultz in Hogan's Heroes, they knew or saw nothing as trillions were flying out the door.



Specifically, the NY Times is confirming that thousands of private firms and other market players who had their hand out received trillions in low interest loans AND other market guarantees from you and me the Federal Reserve during the bailout.

That's right. It wasn't just Wall Street's biggest banks that looted the treasury. Wall Street's biggest market players - a.k.a. America's super rich - also had their hand in our trillion dollar bailout cookie jar.

Try sticking this in your conservative friends' Christmas stocking, and then see if they want to hold a Tea Bag rally over it during our Christmas holidays. My guess is that they'll be more concerned over President Obama's birth certificate, or whine about more tax breaks for the super rich because they're the ones who "create jobs" in America.

Idiots.

- Mark

HOW PRESIDENT OBAMA EXACERBATES PONZI ECONOMICS & EASY STREET POLITICS

In "Why Exactly Is President Obama Acting Like George McFly?" Bob Cesca does a good job of outlining what's wrong with President Obama's agenda for working with the Republicans: Cheap talk, followed by capitulation. As I put it in my previous post, not only has America become the land of Charles Ponzi Economics and Easy Street Politics, but we now have a president who may not be up to the task of confronting either.

But wait, there's more (or is that less?).

According to Cesca the primary problem we face now is that we now have a president who is capitulating in the name of bi-partisanship when the political rules have changed and Republicans have no intention of working with him, ever. Like some character in a hazing ritual it appears that President Obama is more interested in being one of the guys instead of leading.

Think about it. The Republicans have shown their hand over and over, yet President Obama insists that extending his hand, again, will generate new results. It won't. Why? Because Republicans have learned that there are financial benefits to being corporate America's Oompa Loompas, and that there are no penalties for operating in a fact-free world. This is the case because Rupert Murdoch, Rush Limbaugh, et. al. have ...

constructed a political and media machine that allows [conservatives] to function with impunity. All of cable news is packed wall-to-wall with Republicans who robotically repeat the same false, fact-free ideas over and over -- and they're given complete latitude because of the press's self-flagellation over the "liberal media" myth.

Pop politics, rather than serious policy analysis, is the result. Headlines are now dominated by "analysis" that fails to rise above the level of the bumper sticker. The shallow, but many, rants of Sarah Palin and Glenn Beck thrive in this environment. Think about it. The political right has ...

... managed to guilt the press into supporting and repeating unvarnished bullshit like "tax cuts stimulate the economy and unemployment benefits don't" and "allowing the Bush tax cuts to expire will hurt jobs" and "the stimulus didn't work" and "the Democrats are spending us into oblivion."

As Cesca points out, none of this is true. And we know it's not.

We know this because thirty years of Reaganomics - or deregulation and tax cuts for the wealthy - have not rejuvenated the economy and have not reduced deficits as promised. Instead, we've gotten record deficits and market players more interested in wealth extraction rather than wealth creation.

But, even after the 2008 market collapse, failed Republican policy prescriptions are not dead. Not by a long shot. Like crippled zombies in a horror flick they keep coming back. Think about this ignored fact. The Bush tax cuts are still in place. Unemployment is hovering around 10%. The economy is still a wreck. Oh, did I already say the Bush tax cuts are in place? If the Bush tax cuts didn't create any jobs in ten years - and then helped to double our national debt - why the hell do we want to extend them now?

Then we have these little nuggets, which are also ignored. After ten years of Bush tax cuts - and thirty years of Reaganomics - middle class wages have stagnated while wealth gaps in America are at record levels. Yet, our political dialogue today is dominated by "Let's keep the tax cuts, and do more of the same!".

Don't feel bad. I want to bang my head into a wall too.

The really sad part, however, is that those who recognize that the Republican emperors in Congress have no clothes, and that trickle down economic policies are ruining the country, are regularly shouted down. As Cesca points out:

... whenever a Democrat -- say, Bernie Sanders or Anthony Weiner or the outgoing Alan Grayson, for example -- steps up and forcefully tells the truth, they're assaulted by political hipsters who harrumph and bitch about "both sides" acting insane and shrill and why can't we all just be nice! You know, nice like the glorious olden days when there weren't witch hunts or duels or beatings or civil wars.

While this is going on "the Republicans line up in lockstep on television and repeat the same lines over and over and over ... The Democrats concede. And the Republicans win the debate -- usually by grinding it into the ground with nonstop crazy and by filibustering everything." And this has all happened with the Republicans making no secret of their scorched earth policy, admitting that their only goal is to make President Obama (and America) fails. Nice.

All of this is "unbelievable" to Cesca because:

Eight years ago, these were the same people who insisted that merely criticizing the commander-in-chief during wartime would endanger the troops. Now these same bastards are not just criticizing the president, but they're questioning his religion, his citizenship, his loyalty to America -- and they're endeavoring, as their primary goal, to make him fail by dragging the economy down.

Yet, President Obama thinks he can work with the Republicans and their failed policies, and that he needs to try harder to meet the Republicans in middle ... if they'll only give him another chance. How pathetic.

Meeting the likes of Charles Ponzi on his terms in the middle of Easy Street is not leadership. It's capitulation, and a recipe for disaster. If President Obama caves on tax cuts for the rich, and continues to allow the Republicans to filibuster and bully their way on policy matters he'll lose what's left of his credibility, and his base.

Worse, he'll be just as guilty as anyone else in perpetuating, and then exacerbating, our emerging system of Ponzi Scheme Economics and Easy Street Politics.

- Mark