"The wealthy, not only by private fraud but also by common laws, do every day pluck and snatch away from the people some part of their daily living. Therefore, when I consider and weigh in my mind these commonwealths which nowadays do flourish, I perceive nothing but a certain conspiracy of rich men in procuring their own commodities under the name and authority of the commonwealth.
They invent and devise all means and crafts, first how to keep safely without fear of losing that which they have unjustly gathered together, and next how to hire and abuse the work and labor of the people for as little money and effort as possible."
Have you tired yet of the bullshit spin in the US MSM regarding Israel's ongoing war crimes in Gaza? I thought so. So without further ado let's get a peek at the straight dope from (as usual) Chris Floyd. Bare in mind that much of what you read in Floyd's piece is available from mainstream sources within Israel itself such as the leading daily Ha'aretz but not in the US. Another critical source of analysis on the wholly US-sponsored atrocity is from the Angry Arab.
The inauguration is but a few short weeks away and all will be well again in the land of milk and honey. President Barack Obama will make it so, just you wait and see. American Leftist offers a brief refresher course for those who weren't following along closely as Team Obama worked their magic this past spring in this repost from July 10th of this year:
Thursday, July 10, 2008 Election Ennui
Nothing is more enervating for people that actually care about the substance of political and social issues than a presidential campaign year. During the primaries, the candidates, like circus magicians, purvey the illusion that the campaign is really about issues of importance, that we face electoral decisions of grave importance, even as they creatively repackage predictable positions.
Once the nominees become apparent, however, the dialogue, such as it was, is even more circumscribed. Recognizing the power of the corporate media in regard to framing the issues and defining the candidates for a credulous public, any pretense of engaging the public about fundamental questions that affect our lives is abandoned. After all, a presidential campaign is primarily a media driven exercise in mythology. It is more important to present oneself to the media as innocuous, as yet another in a line of safe, conformist political figures, so that the media can, paradoxically, present the candidate as larger than life, capable of forging a profound emotional bound with the public so that he can comfortably assumes powers of near omnipotence.
This is what we observe transpiring on a daily basis with Barack Obama. He's getting tougher on Iran, he's signalling a willingness to be flexible about how he will withdraw US troops from Iraq, he's now for the death penalty even in instances without the loss of life and he wasn't willing to fight to prevent Congress from granting immunity to telecommunications companies that illegally wiretapped US citizens at the direction of the White House. It's all about showing how reasonable he is, you see. It's a long way from working as a community organizer in Chicago, but Obama probably draws upon similar skills to effectively disarm his media critics.
Obama closed the deal as they say when he willingly played the game of stigmatizing black men for social dysfunctionality found across the racial spectrum. Whites are allowed to have children out of wedlock without comment, but blacks are not, and Obama displayed his knowledge of this double standard, and the essential role that it plays in justifying racial bias towards African Americans. Tim Russert and his mentor, Daniel Patrick Moynihan, would have been proud.
For a brief period, there was an opening that suggested that this stale politics could be shattered, but Obama's defeat in Texas and Ohio, primarily at the hand of working class whites, closed it. It did not deny him the nomination, as I thought it would, but it did force him to abandon any radical notions that he may have had about transforming the US political system. Since then, Obama has scrupulously followed the rules, as he will do when he enters the White House. Obama recognizes that he cannot pursue even a palled progressive agenda of demilitarization, an agenda that is an unavoidable precondition to confronting the declining standard of living for middle income, lower middle income and poor Americans, if it is opposed by the proletarian base of the Democratic Party.
As for the rest of us, it means millions of more American foreclosed out of their houses, driven to the unemployment lines and pushed to the margins of this credit dependent economy, with an increasing likelihood that Obama will be just as willing to attack Iran as McCain to divert attention from this catastrophe. Because, having left the forces within this country dictating these interrelated outcomes unexposed and untouched, Obama will soon discover that he is just as much a prisoner of them as you and I. Like Bush, he will govern symbolically instead of realistically, because the alternative is politically suicidal in the absence of a social movement to support it.
Just got through a rather busy stretch of my life that's taken me away from the blog as you may have noticed. On top of that the kids have both been under the weather a bit lately but I'm finally noticing shades of light at the other end of the tunnel so there'll be some interesting posts around here soon. Happy Holidays.
Right on schedule Team Obama, right on schedule. Jeremy Scahill has compiled a superb reference list of The One's new team of Clintonistas and other assorted DLC hacks and it's all in accord with an agenda the President-Elect has been signaling since he wrapped up the nomination: to the center-right we go. Change? Silly chumps.
Gotta love the spectacle of our congress critters and the MSM getting their shorts in a bunch over the auto chieftains having the nerve to use company jets for the purpose in which they were intended, namely to carry executives swiftly and safely to their destinations (presumably having to do with company business). Don't get me wrong, the Big Three need to address some structural issues with their business model but few can deny that they are integral to the real economy. Unlike Wall Street the US auto industry creates something of tangible value and utility as well as providing millions of American workers with living-wage jobs which then enables them to pay their mortgages, send their children to college, or otherwise participate in the economy. Losing the nation's most important domestic manufacturing component in the face of a quarter century of off-shoring that has all but de-industrialized what was once an industrial powerhouse is a systemic threat to our well-being as a nation.
One would be hard pressed to get this impression from MSM coverage of the proposed 25 billion dollar bridge loan to the US auto industry. Instead we get theater about private jets. Did it occur to anyone in Congress or the MSM to ask the same question of the Wall Street banksters who lined up one month ago for 700 billion in taxpayer obligations with no strings attached? I wonder what the odds are that the heads of Goldman Sachs, JP Morgan Chase, Morgan Stanley, Merrill Lynch, Bank of America, or Bank of New York Mellon fly commercial?
For those of us who are still curious about what Hank Paulson and his merry band of Wall Street thieves have been up to while the MSM performs its primary function of distracting the public from issues of importance, Glen Ford has this gem to help us keep things in perspective:
The rule of law has been cast aside in the mad frenzy to loot the wealth of a nation before George Bush leaves office. "Wall Street has succeeded in establishing a kind of privatized martial law economic regime," in which trillions of dollars are secretly transferred to unnamed corporations.
Lawless Capital, Rushing to Armageddon
The fundamental law of capital - the system's need to extract by any means possible ever increasing returns on investment, or die - brought the world to the current catastrophe. Inevitably, despite all the noise about the need for transparency and tightening of regulations on the behavior of capital, the system's response to its crisis is to descend into even greater depths of lawlessness.
The frenzy of unchecked illegality pulsates outward from the chaotic center of crisis and criminality: Wall Street, which has succeeded in establishing a kind of privatized martial law economic regime in the waning months of the Bush kleptocracy. The $700 billion "bailout" is revealed as a brazen bait-and-switch bamboozlement, in which Goldman Sachs Family Don Hank Paulson, under color-of-law as Treasury Secretary, ignores the terms of congressional legislation to dispense mountains of public wealth to his bankster friends as he sees fit. In return for their cut of the loot, the banking mafia give the public - nothing! No recycling of the billions into loans to small business or college-bound students or any of the intended beneficiaries. Instead, the Lords of Capital hijack the people's money to expand their territory, buying up the turf of smaller banksters in order to make themselves more indispensable, more untouchable, more removed from the elementary rule of law. Paulson attaches no strings of public obligations to his gifts, demands no voting stakeholder position in the banks.
Then, the master criminal, in secrecy and with total contempt for a spineless and utterly compromised Congress, rewrites the laws of the land, to forgive $140 billion in taxes due from the banks' merger deals, accomplished with the public's money. But Congress fails to protest this theft of its core legislative duty: to make the laws that govern society. Paulson and his banksters are above the law - mega-thieves operating with total impunity.
Meanwhile, Paulson's partner in crime at the Federal Reserve, Ben Bernanke, has distributed two trillion dollars in "loans" to a list of corporations whose identities are secret, for purposes that are also secret. Even the billionaire Michael Bloomberg's news agency is in the dark, and has sued to find out where the two thousand billion dollars has gone. Few lawmakers on Capitol Hill seem to even want to know, fearing they would be blamed for the panic that might break out if the public were aware of who had pocketed their trillions.
If there is one person who possesses the moral capital to demand an accounting from the conspirators, it is Barack Obama. But the president-elect behaves as if it is none of his business if the Bush gang loots the national wealth on its way out. But then, Obama fought for the bailout, has had the kindest words for Paulson, and gets his economic advice from Robert Rubin, a former Goldman Sachs Godfather and Treasury Secretary, and Larry Summers, another former Treasury chief who teamed with Rubin during the Clinton administration to cast a cloak of silence over questions surrounding derivatives, the exotic financial instruments that finally wrecked the global system. Obama says he wants a "smooth transition." But his silence on the lawlessness at the heart of the transition calls his own motives, competence and integrity into question.
Now that President-Elect Barack Obama has done away with Maverick and the Snow Queen, he and his rapidly forming team can go about the important business of tamping down the expectations of his base. Yes, the poor suckers who've been drinking the O'laid for the past 21 months are in for a very rude awakening quite soon. The One hinted as much during his victory speech in Grant Park on Tuesday night, but for those not paying close attention the selection of brass-knuckle Zionist partisan and corporate-centrist Rahm Emanuel as Chief of Staff should have put them on notice. Sorry folks but given these difficult economic times it's critical that we accept that every promise made during the campaign, no matter how seemingly sincere, cannot possibly be met. It really does come down to addressing the right priorities.
It's really been fascinating the last few days to watch the highly paid clowns on CNBC mumble and stutter as the obvious bankruptcy of capitalism is further exposed. Their clown prince, Jim Cramer of Mad Money, has been especially entertaining. Trillions in theoretical wealth has vanished into the dark void of nothingness from whence it came and no one in elite circles really knows what to do. Every "remedy" that US Treasury Secretary Hank Paulson and his counterparts in Europe have implemented so far have had but one goal: rescuing insolvent financial institutions. Meanwhile, the real economy of productive work in which tangible things of value and utility are created is being left to die on the vine. The rot on Wall Street has not yet fully infected the real economy or "Main Street" in popular parlance, but that may change quickly if the buffoons now calling the shots are not reined in--and soon. Even hardcore self-professed conservatives and true believers of capitalism such as investment professional Karl Denninger are utterly disgusted with the Paulson Gang.
What I'm not seeing anywhere on bubble-vision or reading in the Wall Street Journal is criticism which fundamentally questions the efficacy of capitalism itself as the best means of addressing a modern society's needs. This should hardly be surprising given that the mainstream corporate media's primary function is maintaining the status quo while preaching the gospel of consumerism. No, as always one must look to other sources.
Sj D'Arcy, a writer with whom I've only recently become aware, has laid out a compelling proposal for dealing with the crisis from a Left perspective and sees the current discrediting of capitalism at the systemic level as a unique opportunity for true progressives to leave the sidelines so to speak and get into the game. Infamous neo-liberal economist Milton Friedman once noted that during a crisis the ideas that are generally adopted to cope with it are the ones that "happen to be laying around". Naturally it helps if the ideas "laying around" were placed there by elites who are at or very near the levers of power. For the Right this has nearly always been the case over the past half century, however, the current crisis has the Right on the ropes, disoriented and reeling as opposed to the Left as is the usual pattern. Capitalism as a theory hasn't tumbled to these depths since 1930's--the last time the Left was resurgent in the US. This presents a unique opportunity for the Left to be relevant again in the US and shouldn't be squandered on sectarian squabbling (a Left staple).
D'Arcy's essay is a must read for those unfamiliar with the mechanics of this crisis and are unsure of how the Left fits in the present debate regarding a way forward.
[PS. The links that follow D'Arcy's essay are extremely valuable as well.]
What follows is a recent TomDispatch post on the sorry Team Bush report card. They have so much with which to be proud:
On the brief occasions when the President now appears in the Rose Garden to "comfort" or "reassure" a shock-and-awed nation, you can almost hear those legions of ducks quacking lamely in the background. Once upon a time, George W. Bush, along with his top officials and advisors, hoped to preside over a global Pax Americana and a domestic Pax Republicana -- a legacy for the generations. More recently, their highest hope seems to have been to slip out of town in January before the you-know-what hits the fan. No such luck. The rest...
Stephen Lendman with a few cheerful words about the current crisis:
Since 9/11, the notion of an October surprise has been around. The idea going something like this. Another real or manufactured terror attack. The dominant media stokes fear. The public is again traumatized. The Bush administration pledges all effective measures to protect national security. Formerly seizes total power. Suspends the Constitution and declares martial law. Mass detentions follow. Beginning with dissenters and elements of the public considered "dangerous." the rest...
I recently stumbled upon the following essay by Rowan Wolf over at Cyrano’s Journal (Thomas Paine’s Corner) and, for the layman, it is by far the most assessable description I’ve found to date on the derivatives beast that threatens to swallow us whole. Of course this is all made possible by “our” elected representatives who would have us sit on the monster’s dinner plate in place of the Wall Street hustlers who nurtured and fed it.
Until recently, most people had never even heard of derivatives; but in terms of money traded, these investments represent the biggest financial market in the world. Derivatives are financial instruments that have no intrinsic value but derive their value from something else. Basically, they are just bets. You can “hedge your bet” that something you own will go up by placing a side bet that it will go down. “Hedge funds” hedge bets in the derivatives market. Bets can be placed on anything, from the price of tea in China to the movements of specific markets.
“The point everyone misses,” wrote economist Robert Chapman a decade ago, “is that buying derivatives is not investing. It is gambling, insurance and high stakes bookmaking. Derivatives create nothing.” 1. They not only create nothing, but they serve to enrich non-producers at the expense of the people who do create real goods and services. In congressional hearings in the early 1990s, derivatives trading was challenged as being an illegal form of gambling. But the practice was legitimized by Fed Chairman Alan Greenspan, who not only lent legal and regulatory support to the trade but actively promoted derivatives as a way to improve “risk management.” Partly, this was to boost the flagging profits of the banks; and at the larger banks and dealers, it worked. But the cost was an increase in risk to the financial system as a whole.
2. Since then, derivative trades have grown exponentially, until now they are larger than the entire global economy. The Bank for International Settlements recently reported that total derivatives trades exceeded one quadrillion dollars - that’s 1,000 trillion dollars. 3. How is that figure even possible? The gross domestic product of all the countries in the world is only about 60 trillion dollars. The answer is that gamblers can bet as much as they want. They can bet money they don’t have, and that is where the huge increase in risk comes in...
As predicted in many quarters the Wall Street cretins and their sycophants in Congress have succeeded in laying the ground work for the looting of our children's future. The Giveaway Plan sailed through the House after the Senate slathered honey & cream on Paulson's turd. Where will things go from here you wonder? Well London Banker paints a scenario that is frighteningly plausible [note: this was written before the House vote]:
Financial Eugenics: The Paulson Plan for Survivor Bias
By “London Banker”
As I write this I don’t know the outcome of the attempt to ram through legislation for looting the US Treasury of $700 billion before the end of the Bush administration. I suspect that Congress will force the passage of the bill in some form because the media and political narrative on the necessity of the measure is unremitting and so horribly biased.
No alternatives will be considered.
No constraints on the unilateral executive authority of Hank Paulson will be considered.
No assurances that funds will be used to unlock credit markets or promote lending to the real economy (as opposed to the financial robber barons) will be considered.
Instead, the bill will get laden with an additional 300 pages of pork to sway the dissenters, adding to the tab imposed on the American taxpayer.
Having listened to all 42 minutes of the late night Treasury briefing of investment banks on Sunday, there is no doubt in my mind that this legislation represents the sort of federal largesse for Goldman Sachs, Morgan Stanley, Citibank and JPMorgan Chase that the Iraq war provided for Halliburton and Blackwater.
The most cynical moment in the call is when the Treasury official confirms, ”our preference would be to help the healthy banks become even healthier” rather than helping troubled banks or illiquid banks.
America is now a centrally planned economy where the Treasury will determine which firms survive and prosper through allocation of scarce capital to an undercapitalised financial sector.
Clearly what is going on here has nothing to do with kick starting the credit markets or stabilising the equity markets or restoring depositor confidence in banks. (Treasury official: “No provision in the legislation that mandates re-lending.”) What is going on here is a blatant attempt to provide government funds to a select cadre of firms (not all banks) which are chosen to be the survivors feasting off the carcasses of their less fortunate and less well-connected brethren as the downturn intensifies in the years to come.
The crash in equities will still happen. The debt deflation of the economy leading to mass commercial and consumer credit defaults will still happen. The collapse of many national, regional and local financial institutions will still happen. The bankruptcy of many municipalities and shortfalls in state budgets will still happen.
This bill is about engineering survivor bias to friends of the Bush administration so that they profit disproportionately from the collapse of these markets using the funds provided by the taxpayer via the unreviewable and unconditional authority of the Secretary of the Treasury.
The basic plan is to set up a federal money laundering operation. Bad assets come in, get laundered by the Treasury and put in a new AAA “wrapper” (as it’s termed on the call), and good assets go out, issued as Treasury guaranteed securities. Whether the final value of the legislation this week is $700 billion or $150 billion is irrelevant as long as the laundering operation can accommodate the throughput, as that number is only a cap on total extensions at any one time.
The SEC will support the plan and survivor bias by relaxing FASB 157 on mark to market accounting. If there is no agreement on what an asset is worth, it is worth whatever the firm holding it says in its Level 3 accounts or the Treasury Secretary accepts in buying it.
The Federal Reserve will support the plan by relaxing the definition of “control stake” in US banks and bank holding companies to allow secretive cabals to hold through private equity and offshore hedge funds. No one knows the beneficial owners of these ill-transparent private equity investors, and so it is the ideal way to reward loyal and helpful insiders, legislators and officials – as well as cede further ownership of American assets to foreign stakeholders who would be politically unacceptable if publicly acknowledged. Many foreign creditors are irate at the losses their funds, banks and pensioners have sustained from investments in the United States, and this plan provides a secret way to buy them off and keep them lending and investing as their own economies are roiled by the deflation to come.
For the past year the survivor bias has been orchestrated from the Federal Reserve, with its extension of innovative credit facilities and selectively engineered rescues or forced mergers. That has been very useful, but that well is now dry. The Fed has no more good assets to trade for the bad assets the banks can offer. And the supply of bad assets just keeps growing as market illiquidity spreads further from the core of the mortgage backed securities market. Instability is now leading to a realistic threat that the Fed and Treasury could lose control of the deflationary process.
Part of the reason the Paulson Plan is so attractive is that it recapitalises the Fed by promoting the unwinding of repos and lending facilities which left the Fed holding toxic assets. As the repos and credit facilities gradually unwind, these toxic assets can now be taken back by the banks and exchanged for good cash. The Fed gets its balance sheet Treasuries and cash back to restore its flexibility to intervene anew.
Favoured private equity and insiders who swap US dollars for equity in the banking system will presumably be aware of the survivor bias being engineered on their behalf. Sovereign wealth funds, investment funds and private equity investors ripped off in the first round of recapitalisation may be willing to come back in once it is clear to them that the next round will benefit from official favouritism. Warren Buffett’s timely stake in Goldman Sachs is clearly linked to his confidence the Paulson Plan will benefit them disproportionately.
A factor which is probably critical but has received little discussion is that literally thousands of Bush administration apparatchiks will need jobs come January, and a fair selection of GOP House and Senate legislators and their aides too. What better way to enahance their CVs in their final months in power than to distribute $700 billion or so in pre-Christmas largesse to the most remunerative employers in the world? And what better way to ensure the corporate largesse is returned to the GOP to win back the White House and Congress in 2012 as the recession fuels public anger? And then there is a huge arbitrage opportunity as well so that everyone makes money. According to the conference call, the pricing on offer from the Treasury will be a bit below Level 3 pricing. The toxic assets will be repackaged and resold with a new AAA wrapper, possibly priced well below what the Treasury paid, assuring a huge profit on both immediate liquidation by the banks and ultimate maturity by investors. The Fed gets its cash and Treasuries back; the banks make huge profits; the foreigners and off-shore tax avoiders get disguised ownership of the American financial system; the taxpayer gets ripped off. What’s not to love?
Think back to Fisher’s Theory of Debt Deflation in Great Depressions. Dollars become “bigger” as deflation takes hold because each dollar can buy more assets as assets deflate. That means that as these clowns crash the markets, their $700 billion of liquid cash funnelled to their friends and recycled through the Treasury laundrymat can progressively buy up the rest of the pieces on the gameboard at low discount prices. Game over with those who caused the crash and robbed the bank winning.
Deflation is going to happen – globally. Either we can use the course of deflation to shape healthy economies that will provide growth and employment and productive returns on investment in future, or we can allow deflation to further enrich those miscreants whose irresponsible policies led to the violent financial collapse we are about to experience.
There is a fundamentally healthy economy in America – somewhere underneath all the financial excess and chicanery and all the financial/oil/military/healthcare/developer corruption of local, state and federal politics. It will be a painful and slow process to kill off the metastasising cancerous growths on the economy, but if Americans achieved that, they could embrace a healthier and more productive and more prosperous future.
I would like to believe Americans expressed the courage to change over last weekend when they 25 to 1 rejected an unconstrained and unconditional bailout of Wall Street in favour of cold turkey deleveraging of the economy. I wish I could believe that it mattered in the political calculus, but the result of the House vote on the bill will tell us that.
Fight the survivor bias. It’s not your survival they’re engineering.
The following is another interesting take on Paulson's shenanigans from a thread over at Common Dreams:
Paulson’s Great Depression:
It is difficult to believe that Paulson is not intentionally destroying the world economy, since his company, Goldman Sachs has been so intimately involved in setting the stage for this fiasco.
Goldman Sachs was involved in many sub-prime securitizations, and then was instrumental in setting up the ABX index, which Goldman then shorted to death after selling the index to its clients. By shorting the ABX index, Goldman not only made huge profits, but also eliminated all financing for real estate securities by spreading the notion that they had no resale value, because the value “indicated” by the ABX index was so low. The notion of “toxic securities” was sold to the world by Goldman and their confederates. Once new real estate lending was substantially restricted, a broad decline in real estate prices was a certainty, and recently adopted “mark-to-market” accounting rules forced lenders to report balance sheet losses even for loans that were current. Goldman also helped develop and sell complex securities, that have magnified the extent of the damage done. Collateralized debt obligations and credit default swaps can magnify any actual loss, since there are many more credit default swaps sold than actual loans made. A $1 actual loan loss can become $10 or more of losses to one side of the swap transaction, and $10 or more of gain to the other side of the transaction. Paulson has made the financial crisis much worse by his publicly stated intention to “punish” some companies. While Bear Stearns was “bailed out”, Lehman was allowed to fail. Fannie and Freddie were “rescued” in a way that arbitrarily removed $10 to $15 billion of capital from banks that had invested in the preferred stock, which then reduced those banks’ lending capacity by $100 billion, making the “credit crisis” much more severe than it was before the “rescue”. Instead of stopping a run on Washington Mutual by providing cash loans, Washington Mutual was unnecessarily liquidated, to demonstrate the urgency to authorize $700 billion to Paulson’s Treasury.
Of course because of credit default swaps sold around the world, financial institutions’ losses on the Washington Mutual liquidation are vastly larger than the cost of keeping Washington Mutual open as an independent entity.
Now we come to the $700 billion. If this is used SOLELY to purchase whole loans, then the institutions now holding those loans do not experience losses that get magnified by credit default securities, and the government is in a position to rework the loans with affordable payment terms, so that people keep their homes, and the government recovers its entire investment. If this money is used to purchase “downstream securities”, such as securitization interests, CDOs, and credit default swaps, then vastly more money is required, and homeowners still lose their homes.
Why would Paulson seek the authority to buy “downstream securities”? Could it be that Goldman and its confederates hold these securities, and make vastly more money at taxpayer expense by selling these securities than by allowing people to remain in their homes, eliminating the defaults that make these credit default swaps so valuable to one side of the contract, and so costly to the other side of the contract, the US taxpayer, if Paulson gets his way.
The following comments are courtesy of a poster over at the New Republic blog and it is perhaps the clearest and most accessible synopsis yet of the Wall Street debacle and what's at stake:
(September 30, 2008 9:07 AM)
Very few people in or out of government understand what this crisis is about. The simple answer is that highly levered financial companies that participate in the credit/money supply have lost their equity due to the market decline in their mortgage-backed assets and related derivative contracts. That freezes the flow of credit/money supply. So, something needs to be done if the economy is not going to tip into sharp recession because credit/money are essential lubricants for transactions.
However, there is a correct and visceral negative reaction to the notion that the best or only way to stabilize the credit system is for the public to eat the losses generated by rapacious finance types by buying up their bad paper at above market values -- which is what the Paulson plan is about. Dress it up how you will, it is nothing more than a giant handout to the very people who are to blame for the problem at the expense of everyone else.
It is simply unnecessary to do this in order to stabilize the system. The right way to do it is a variation on what has occurred at AIG and WaMu, which is that the investors, both debt for money borrowed and equity, get wiped out in the course of the recapitalization of the operating assets. It isn't even necessary to wipe out the debt and equity. They can be left in a position to realize the full value, and more, of what they own today. How can this be done?
It can be accomplished with a law that, by fiat, removes from the books of the operating companies their bad assets, their indebtedness for borrowed-money, and their derivative contracts (which combine both an asset and a liability) and spins them off to a parent or trust that is free to realize them as a pass-through tax entity (meaning there is no taxation at that level, only at the level of the ultimate owners). The trade/operating liabilities (deposits, customer accounts, and such) are left undisturbed. The owners and investors have exactly the same pool of assets and liabilities that they did before this maneuver, but now there is an unlevered operating subsidiary that is free to do business, borrow money, and raise capital without the burden of past mistakes. In those cases where the operating entity is still under-capitalized (too many liabilities for its good assets), THEN the Treasury can be authorized to inject capital by purchasing a combination of preferred stock and warrants (the same deal Warren Buffet got at Goldman).
In this manner, the investors are left free to realize the pool of assets, liabilities, and fresh equity that they hold, but without invading the capital of the new subsidiary to do it. They are no worse off in financial terms, other than the fact they they cannot liquidate the operating company, and are likely better off as the market as a whole returns to equilibrium. They can hold instruments to maturity for their cash flow, sell them in the market, sell the equity of the subsidiary, whatever they want, without clogging up the flow of credit. It reorganizes the situation so that it is the shareholders and investors who bear the losses, not the operating entity, as if, for example, the shareholders of Lehman had gone bankrupt, not Lehman itself. Best of all, this "recapitalization on the fly" does not redistribute losses from those who produced them to anyone else.
Now, you tell me why the Bush administration prefers just to hand out money to the very people who caused the problem -- the dying gasp of the Bush kleptocracy. People may not understand the intricacies, but their visceral negative reaction to the Bush/Paulson plan is spot on. It is a pity that the Dems seem to have no one who can figure out what is wrong with the Bush plan and how to fix it. -roidubouloi
It would appear that in one last dying grasp the Banksters are attempting to blackmail Congress and the rest of the country into signing off on the Paulson/Wall Street Heist of the century. The so-called "liquidity crisis" is in fact a shabbily disguised insolvency issue in which the reckless are demanding that the taxpayer pay the price. As always on Wall Street, their profits are their profits but their losses are our losses. Mike Whitney explains further...
Lehman Brothers survived the Panic of 1857, The Civil War, the Panics of 1873, 1893, 1907, and the Great Depression. But it couldn't survive the Bush presidency. — Robert Hammer, Pittsboro, NC Oh the horror!
Oh no! The presumptive crown appears to slip ever so slightly from St. Obama's blessed head. Beads of sweat now grace his brow and frankly the faithful are worried. They should be. The Barockstar can't shake McCrazy and Sarah "The Diplomat" Palin no matter how much he panders to the right wing crowd which the polls seem to now confirm.
We've all seen this movie before of course. The Democratic wing of the Business Party would rather wither and die than inspire a class revolution, but then you knew that of course. Unsurprisingly the GOP knows how to play this game, how to tap into America's inner crazy and they're off to a fine start. The problem is largely twofold really. First, the Democratic Party is collaborationist in every sense not an agent of fundamental change and, secondly as IOZ points out, huge swaths of the American population ain't ready for no chang'in.
I would be remiss if I didn't share some notes from Professor Juan Cole on the "surge" that has been so prominently featured in the calculations of both challengers in the race for Chief Imperial Manager. Though this essay is from way back in July of this year, every word of it is still highly relevant today. In fact, It would behoove you to refer to it whenever you next encounter some hack blathering on about the success of the surge. The comments section of this piece contains some very good analysis as well. Read on...
Yes, there can be little doubt that Obama and the powerful elite sector which supports and funds his campaign are feeling good about their chances this November. Why shouldn't they? Hasn't McCain foolishly staked his run on the thoroughly discredited Team Bush agenda of aggressive militarism abroad and rapacious, winner-take-all, the devil gets the hindmost, "free-market" capitalism at home that has embarrassingly revealed itself in our cratering financial sector and imploding housing market? Of course Team Barack Obama (hereafter, Team B.O.) has no serious fundamental or moral objection to this agenda per se, however, they do raise tactical objections about its execution by the outgoing team. It is here where Team B.O. has sought to distinguish itself from the Bushistas. So, you'll hear nothing from Obama's camp that seriously addresses the desire of perhaps 90% of Iraqis that US occupying forces and accompanying mercenaries leave their decimated lands. Team B.O. has every intention of maintaining the 14 massive mega-bases and the Vatican City-sized "embassy" that garrison this illegally occupied country. Furthermore, Obama has been explicit in his determination to expand the war in Afghanistan and Pakistan. Is there anyone who seriously thinks that Team B.O., filled to the brim with free-market true believers, will work to rescind NAFTA and the other investor rights agreements that have decimated the labor movement (and the worker protections and living wages that went with it) both here and abroad? Let's grow up people.
Even knowing all of this It's still gratifying when one is surreptitiously given a peek inside the citadel of power by an insider. What follows is an important essay by a contributer to Joe Bageant's wonderful blog. This political insider wisely chooses to remain anonymous (and thus employable):
By an anonymous political consultant
Over the last many weeks we have all been subjected to endless news stories about Senator Obama's campaign "Move to the Center". Leaving aside the political illiteracy which underlines this phrase, the use of it reveals important clues about the rhetoric of electoral campaigns, whom they target and what they are trying to communicate. Put simply, what "Moving to the Center," means is: moving towards power and money...
I wonder what conservation in California would look like under a McCain/Palin administration. Do you? Given the fact that both of the crackpots bearing the GOP standard are unabashed supporters of oil drilling in the ecologically sensitive Arctic National Wildlife Refuge (ANWR) for crude that, for starters, doesn't come close to sustaining America's rate of consumption and, in any event, wouldn't come on line for another decade--at stupendous cost to the environment--we probably shouldn't be encouraged. As it turns out California, the nation's most populated state and the WORLD'S sixth largest economy, faces an existential threat to its continued viability due to a combination of short-sighted water-management policies, extreme population growth, and climate change. Try visualizing McCain in the White House as the following challenges to California and the southwest region in general evolve:
The Silence of Collapse by Rachel Olivieri
There is no landmass on Earth quite like California. Here one finds the world’s most ancient trees, bristlecone pines, more than 4,700 years old, in the White Mountains; the tallest and largest trees, the coast redwood and giant sequoia, respectively; the highest point in the lower 48 states, Mount Whitney; the lowest and hottest place in the Western Hemisphere, Death Valley; the largest western hemisphere estuary, the Bay Delta; an 800-mile coastline; the most irrigated acres; the most endangered species in the U.S.; the most diverse geology and biodiversity in the U.S.; and the greatest, most ecologically destructive water projects on Earth...
For a country that "doesn't do empire" the US has an awful lot of forward military bases garrisoning the globe which would seem to belie this assertion. Tom Engelhardt of TomDispatch.com has the disturbing details [Note: be sure to follow the Mother Jones links at the end]:
Going on an Imperial Bender How the U.S. Garrisons the Planet and Doesn't Even Notice By Tom Engelhardt
Here it is, as simply as I can put it: In the course of any year, there must be relatively few countries on this planet on which U.S. soldiers do not set foot, whether with guns blazing, humanitarian aid in hand, or just for a friendly visit. In startling numbers of countries, our soldiers not only arrive, but stay interminably, if not indefinitely. Sometimes they live on military bases built to the tune of billions of dollars that amount to sizeable American towns (with accompanying amenities), sometimes on stripped down forward operating bases that may not even have showers. When those troops don't stay, often American equipment does -- carefully stored for further use at tiny "cooperative security locations," known informally as "lily pads" (from which U.S. troops, like so many frogs, could assumedly leap quickly into a region in crisis).
At the height of the Roman Empire, the Romans had an estimated 37 major military bases scattered around their dominions. At the height of the British Empire, the British had 36 of them planetwide. Depending on just who you listen to and how you count, we have hundreds of bases. According to Pentagon records, in fact, there are 761 active military "sites" abroad...
I made a promise to myself that I wouldn't invest a great deal of time shouting at my t/v over the sham in Denver and, for the most part, I've been faithful to that commitment. Besides, Dennis Perrin and Barry Crimmins have it pretty well covered as far as I'm concerned. This is not to say that I haven't been paying attention to developments mind you, it's just that I've found the whole sordid spectacle marginally more palatable when I've filtered most of the white noise from Mile High through the lenses of a relative handful of writers whose instincts I've come to trust. I don't have the patience I once had for political theater anymore, of this I'm certain.
So while I've watched some of the bullshit from Denver It's rarely for any extended amount of time for the hackneyed clichés became tiresome rather quickly. I swear, I could almost finish some of Hillary's sentences. The only breath of fresh air was of course Dennis Kucinich whose speech, predictably enough, was prominently displayed... on YouTube. DK in prime-time offering fundamental criticism of US political culture? Please. Silly rabbit, tricks are for kids.
It's extremely gratifying to see that a pundit and cultural observer of Barry Crimmins' caliber has managed to fully purge himself of the Obamalaid. Earlier in the campaign season he showed distressing signs of infection which had him agitating on the Barockstar's behalf. Clearly he's recovered.
Everyone knows how to find the best deal at Costco or Target, but very few understand how to make contacts and politically organize in an attempt to influence policy. It is difficult even at the local level, and almost impossible when the issue is national or international in scope. Furthermore, they perceive institutions with people that have such skills as discredited, with labor unions being the most well known example. The exception is when the issue directly involves the family. The most vociferous opponents of the war in Iraq have been veterans, members of their families and families of children, with the parents fearful that their military will somehow persuade their child to volunteer when they aren't around -American Leftist
That little quote sums up rather succinctly what's been bugging yours truly of late. Yes, I'm afraid things will have to get a lot worse for most Americans before they make substantive demands for change. I must admit, however, that I derive a small bit of consolation from how thoroughly Putin & Co. just fucked Team Bush's plans in Central Asia (at least for the time being). I guess we'll all see soon enough if the Bushistas are reckless enough to up the ante. Russia ain't Haiti.
Update: Chris Floyd has a great deal more as well on the Russia-Georgia conflict.
Been in somewhat of a funk lately and I can't quite put my finger on its exact cause. I have long learned to internalize the futility of working within our plutocratic political system to effect meaningful change and I had never climbed aboard the Good Ship Obama so his inevitable lurch to the right was not for me the crushing disappointment it has been for the foolish Obamabots. No, for me I suspect it's something a bit deeper, a lingering fear if you will that the current apathy and willful ignorance of many Americans concerning issues of grave importance may in fact be a permanent feature of our landscape. There are flickers of recognition here and there but on the whole I don't get the sense that people are connecting the dots fast enough or even trying to. Maybe I'm reading too much into what are my admittedly limited personal observations and casual research, but it sure seems that despite the rapidly approaching meteor on course to crater the US economy for the foreseeable future and the Bushista's mad designs on Iran, Americans remain largely oblivious. Again, perhaps it's just me.
In any event I happened upon this incredible essay from Chris Floyd the other day and, while it didn't lift my spirits entirely, it put some issues regarding human nature into context for me that were truly revelatory.
Economist Michael Hudson breaks down in devastating detail the looming financial crisis facing the nation in this essay originally posted on Counterpunch.org. Ever wonder why this kind of perspective never leads on 60 Minutes or Nightline?
I've been watching in wonder and amazement at the level of cognitive dissonance on display among Barack Obama's remarkably resilient supporters. There's apparently no line Obama can cross or previous position on which he reverses himself that effects their unshakable faith in this agent of "change". His cave-in on FISA and its ramifications are neatly summed up by Arthur Silber here and most recently by Chris Floyd here.
What's remarkable about all of this is that the rhetoric of the Obamaniacs is virtually unchanged. No need to lose faith in the Hope Crusade for this minor deviation (in fact a brutal ass-fucking of the Fourth Amendment) is merely tactical you see, things will be put right once Obama is elected. Then the Democrats who've been working so tirelessly to reverse Team Bush's legacy since they gained the majority in November 2006 by counterintuitively supporting Bush's initiatives in Iraq and elsewhere, can go about the business of restoring our constitutional republic.
As far as Jesse Jackson's recent unguarded comments regarding Obama's nether regions at Fox studios are concerned, no one who understands the context of this issue (i.e Obama throwing black males under the bus for political expediency during his Father's Day address at the Apostolic Church of Christ in Chicago) should be surprised in the least at the reverend's anger. For some perspective on this "controversy" I highly recommend this recent essay by Kevin Grey Alexander.
Dennis Perrin sums up this loss pretty well I thought. Carlin was simply one our best social commentators period. And, like Perrin, I too would put him in a class with Richard Pryor or, as the late comedian Bill Hicks used to say of himself, Noam Chomsky but with jokes. I'll miss this kind of stuff: Update: George Carlin's final interview.
If we let them, the big telecommunications giants and internet service providers (along with their vassals in Congress) will irrevocably alter the internet as we now experience it. If you think the telecoms and ISPs have given up on their mission to slay net neutrality, I'd suggest that you think again. Pass this on... often.
Ralph Nader on just why it is Ralph Nader has my vote, courtesy of The Beast:
“The American people have got ask themselves a serious question: Why is it that a majority want single payer health insurance—that is government insurance, private delivery, with full, free choice of doctor and hospital—and they haven’t been able to get it since Harry Truman proposed it to congress in 1950? Every year, according to the National Academy of Science, 18,000 Americans die because they can’t afford health care...
“The American people want a change. None of the other candidates—McCain, Obama or Clinton—come close to a full government insurance, full Medicare for all system. They’ll leave in place the wasteful, inefficient, corrupt, redundant health care industry, gouged by a health care insurance system whose only energy seems to be paying its CEOs...
“The American people would never had voted to invade Iraq had there been a free flow of public information instead of Bush/Cheney’s propaganda, unrebutted by the cowardly Democratic Party...
“Bunch of gangsters hijacked our government, plunged us into a war of aggression, violated our constitution, our statutes and our international treaties. Result: tens of thousands of American soldiers disabled for life, over 4,000 have lost their lives, over a million Iraqis have lost their lives and the country’s destroyed. And we’re spending 14 million dollars an hour, 24 hours a day, on the Iraq War. Most of the American people would want their schools, clinics and drinking water systems, highways and bridges—they would want them repaired. They’d want their sewage treatment systems upgraded, they’d want the pollution controlled, but that money’s going to destroy Iraq. Or going into expensive weapons systems that were designed for the Soviet Union era of hostility, which are still in the pipeline, bleeding the American public, because Lockheed Martin and General Dynamics, and others, want more sales and profits...
“And now, one half of our entire federal operating budget is going into the military budget. And that military budget is being outsourced to corporations that cost us three to five times more to perform the function than if it was performed by government employees or government soldiers... Blackwater and Halliburton...
“The American people don’t want that. They have the votes; they keep losing. The American people want accountability in government. But there’s no impeachment drive against Bush and Cheney, the most multiply impeachable presidency in history...
“Corporate cheating of Medicare, corporate cheating of defense contracts, corporate looting of our natural resources, corporate tax shelters in the Bahamas, while they get all the benefits of tax supported services here...
“The people have the votes. You think they would approve of 61% of the corporations last year paying no federal income tax? You think they would approve of corporations paying their CEOs 500 times the entry-level wage, when in 1940 it was only 12 times? People have the votes. They keep losing. How could people who have the votes keep losing in a country that thinks of itself as a democracy? It doesn’t square, does it? That’s because it’s not a democracy. In operation, it’s a plutocracy, ruled by the rich and powerful. The two parties are basically representatives, indentured servants, of the rich and powerful, the giant corporations...
“As if that isn’t enough, these corporations are violating the moral code of parents by direct commercial marketing to young children, violent programming, pornographic programming, junk food, junk drink, undermining parental authority. These corporations have become electronic child molesters. And they don’t have any sense of shame...
“The whole commercialization of our society will spell the death knell of our democracy...
“The consequences of concentrated wealth and power, where the few decide for the many, are rooted in the lessons of history. When the few decides for the many, the many lose and the few prevail. The many lose and the few prevail...
“The question the American people have to ask themselves is: Why have most of them dropped out of democracy? Why have most of them given up on themselves, and accepted the old cliché, ‘You can’t fight city hall,’ or the more modern one: ‘You can’t fight Exxon.’ That’s the question we have to ask ourselves. Watching American Idol doesn’t quite cut it. Spending your time updating your profile on Facebook doesn’t quite cut it. Endless gossiping on cell phones and messaging about the most trivial of trivial things in daily life doesn’t quite cut it.
“I want to make a contrast with Western Europe. Sixty years ago, Western Europe was rubble. Rubble. It was the end of World War II. Sixty years ago, the American people were a part of the most powerful country in the world, by every economic and military indicator. Now watch what happened. Sixty years ago, people in Western Europe demanded a living wage. And they got it. They demanded that they have universal health insurance. And they got it. They demanded that they had four to eight weeks of paid vacation, depending on the country. And they got it. They demanded to be paid for maternity leave, by law. And they got it. They demanded that they be able to easily form trade unions. And they got it...
“We didn’t get it. We didn’t get any of these things, by law. Sometimes we got the exact opposite, like the anti-union Taft-Hartley law, that is now 61 years old. It’s still on the books. The harshest anti-worker law in the western world, obstructing the formations of trade unions. All change does not start with knowledge. Knowledge is not enough. All change starts with shame or guilt. I prefer shame...
“The most deplorable phenomenon in our country today is the expressed concern the people have about where our country’s going—81% in last month’s poll say it’s going in the wrong direction—and the contrast between that expressed concern and the feeling of despair, demoralization and a general sense that nothing can be changed.
“Our collective mission has got to be to get the American people righteously angry enough to change. That doesn’t mean they go out of control. That doesn’t mean they abandon their reason—just the contrary. They fuel their reason with a level of self-confidence that they matter, they count and they’re going to change this country—in the right direction.
“The corporations will be our servants, not our masters, as they were designed to be our servants when they were chartered in the early 19th century in New England, and held on a tight leash. Corporations are not created by investors; they are funded by investors. They are created by state governments, who give them the charter to exist. They have been given far too much power over our lives. And most of the American people, in poll after poll, agree with that assertion.
“So it behooves all of us not to allow our country to continue to be run on behalf of these giant corporations, who’ve turned Washington into corporately controlled territory... not to allow a two-party elected dictatorship to propagandize us, as if we’re a functioning democracy...”
It gets tricky this business of righteous saber-rattling over weapons proliferation. What is an imperial colossus to do when one of its trusted allies goes and violates the Geneva Conventions prohibiting attacks on civilians with the weapons it has been provided? Well, the matter's forgotten of course.
I hadn't planned on posting for another few days but I couldn't resist sharing this gem from Dennis Perrin wherein he wipes the floor with Marc Cooper's ass over the Samantha Power Affair. As most who have been watching the Clinton-Obama spat over Power's recent comments about the Hillerator know by now, Power stepped down from her advisory position with Obama's campaign over comments that, quite frankly, were rather tame and a no brainer when one briefly reviews Hillary's record--the bitch is a monster. So what? Anyway, I'm not sure if many people caught Perrin's piece which, for this reader, was the best response so far to all the liberal hand-wringing over Power's "banishment" to her comfortable post at Harvard.
One more brick-bat is in order for the recently departed clown prince of conservatism, William F. Buckley Jr. and it's a treasure from the Way-Back Machine. The following is Robert Sherrill's review of John Judis's William F. Buckley Jr.: Patron Saint of the Conservatives as it appeared in the Nation magazine back in 1988. This comes courtesy of Barry Crimmins who received it himself via e-mail from Dennis Perrin. Did you get all that? Enjoy.
Conservatives lost their most gifted showman today when William F. Buckley Jr. was found dead in his residence by an assistant. Buckley would be the man credited with wresting conservatism from the John Birch Society fringes and bringing it to respectability on the American political scene. He did this primarily through two vehicles, the first of which were his influential essays in his magazine National Review and his television interview program "Firing Line". Let's sit back and enjoy the spectacle of Buckley getting his ass kicked on his own show back in 1969 by Noam Chomsky.
Isn't it refreshing to know that the eagle eyes over at the Wall Street Journal, in fact, the US financial media in general is looking out for those of us who rely on our banking system? The collapse of the sub-prime mortgage market and its attendant ill effects have negatively impacted US banks to such an extent that they were recently forced to secretly borrow money from the Fed, as much as 50 billion dollars to date. That's Fed as in taxpayer. This disturbing fact was a "secret" because it wasn't published in the US. Unless you were a subscriber to the London Financial Times you missed it.
Howard Zinn manages, as usual, to put his finger on what ails America in this (and every) political season. An exerpt:
"Today, we can be sure that the Democratic Party, unless it faces a popular upsurge, will not move off center. The two leading Presidential candidates have made it clear that if elected, they will not bring an immediate end to the Iraq War, or institute a system of free health care for all.
They offer no radical change from the status quo."
I'm remiss to have not formally introduced to those few who visit this space the source that first inspired my efforts and nom de plume. I speak of Coldtype.net which offers, free of charge, the writing of progressive thinkers the world over. What follows is but a sample of their outstanding offerings to those of the left persuasion, in this instance the latest from Edward S. Herman & David Peterson on America's so-called "war on terror". You'll find the link to this incredible site on my blogroll to your right ["My Inspiration"]. This Herman & Peterson essay is lengthy but I think you'll find it well worth your time. Read on.
You guessed it, the Obama faithful are at it again and they've recently released this slick video tribute to their hero. After you catch your breath, check out the proper response to this crapola over at A Tiny Revolution.
Economist Dean Baker made some rather interesting points the other day regarding the sub-prime crisis as well as the related mess in the upscale prime market in an essay which appeared on Truth Out. No matter how hard I try, however, I can't seem to work up any tears over the looming prospect of banks left holding the bag.
It's been five years since Colin Powell's bruva performance before the UN Security Council in his role as Team Bush's most credible official. Sitting before the Security Council, his props carefully organized beside him, Powell passionately spun the Iraqi/WMD lies that bamboozled the nation into supporting a war of aggression. Jon Schwarz lays it all out in devastating detail.
Of all the mainstream candidates for the Democratic Party nomination, John Edwards at least gave serious lip-service to progressive issues. His insistent focus on the rampant poverty afflicting America's majority under-class was the bane of elite opinion in the corporate media universe, and made it clear almost from the start that his campaign was doomed. You see Edwards failed to grasp that public opinion and public policy in this country do not align. So while his positions were (at least superficially) in accord with public opinion on issues such as the need for single-payer universal health-care, ending the criminal occupation of Iraq, reigning in the so-called "free-trade" agreements, and reforming tax policies which further enriched the wealthy, these positions were anathema to the elite class who actually implement and influence US foreign and domestic policy. Thus he never had a prayer, despite the fact that he polled better than every Democratic challenger against the Republicans currently in the race.
For more on Edward's demise, I found this gem from Weldon Berger over at BTC News, though I must add that his advice to "vote Obama" is clearly absurd.
Found a great post on Jon Schwarz's blog today that kind of puts into perspective how people throughout history have rationalized their comparative advantages no matter the means employed. I think you'll find some of the responses in the comments section rather interesting, particularly the apologetics of one "Ashley". Read on.