"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."

Thomas More, Utopia

Tuesday, September 30, 2008

In a nutshell...

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.


Cut it, paste it and pass it along.

Sunday, September 28, 2008

The Plot Thickens

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...

Saturday, September 27, 2008

Change We Can Believe In

Only fools blinded by irrational fear of change and progress make the claim that there's no fundamental difference between Obama and McCain on the issues.

Friday, September 26, 2008


Visible backbone sighting in Washington.

Monday, September 15, 2008

Heads Up! Falling Bankers!

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!

Friday, September 12, 2008

Random Notes on Georgia

Chomsky with the straight dope as usual...

Dems in Danger

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.

Thursday, September 11, 2008

Welcome to the USSRA

Economist Nouriel Roubini works up a righteous anger over the recent nationalization of Freddie/Fannie. Well it's about time.

Tuesday, September 09, 2008

Surge Fables

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...

Friday, September 05, 2008

The Irresistible Centrifugal Force of Power

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...

The rest

Thursday, September 04, 2008

California Dreaming

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...

The rest

America's Global Empire of Bases

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...

The rest.

Wednesday, September 03, 2008