Trash-talk

So — my head exploded about three minutes into the CNN pundit discussion of Obama’s speech; I had to turn off the TV. I’m tired of people telling me how I should feel based on the latest poll or corporate media idea. And if somebody says something that isn’t true or pitches flawed scenarios, you’d think someone on the panel would be sharp enough to rebut. The only person attempting to get the country on the same page tonight was Barack Obama — everybody else was looking out for themselves.

Thumbs Down to 60 Minutes that wants me believing that the Prez is ‘punch drunk’ and too cheerful … or the Pubs who think he’s scaring us all into socialism with bogus fear tactics. Obama wasn’t talking enough the other day, now he’s ‘overexposed.’

Pfffft! to this idiot who had the audacity to say there’s “trash” in the White House or the Limbaugh’s of the world that make vicious commentary or send me pictures of the WH lawn growing thick with rows of watermelons.

I’m tired of mean and insistent and cynical and bloated. It’s all I can do to listen to one more ‘analysis’ … since nobody knows where any of this is going, anyhow.

I feel a lot like Jon Stewart, wanting to offer them all, as he did Uncle Dick, a nice cup of “shut the fuck up!” I’d like to erupt all over those who make this more painful than it needs to be, more hateful than it might have been and more tedious than it could have been … but will continue to be because corporate-schlepped-opinions are flying in like ducks from the South; erupt kind of like the Alaskan volcano that spread ash all over Palin’s home town, just weeks after Bobby Jindal made fun of early warning systems. My [Washington state] experience with volcanic ash is that it stops frivolous conversation and forces you to get serious quick.

But nothing is going to stop the 24 hour shitstorm that is our economic discussion — even as Obama tried to convince us tonight that we’re pushing in the right direction. Since nobody knows how it will all turn out, he’s asking for our faith. I’d rather give him than than the misspent rage that I hear all around me or the useless palaver that seems not to remember anything about the last political cycle that brought us here.

At some point down the line I’d like to see a massive decentralization of banks — too big to fail is too big, period. I’d like not to have to feel sorry for Tim Geithner, who … traditionalist that he is … is a foot soldier in a losing war of popular opinion and partisan attack. I’d like most of Wall Street talent impaled on their swizzle sticks, replaced by bright, competent people who work for a living. I’d just like to get on with it.

Let’s look at ‘he who must not be named,’ in this post; that’s another thing I’d like us to trash … our need to make saints out of politicians in order to let them do what they do — being denied Spitzer’s brain and experience because of our childish preoccupation with scandal is another of those barrier’s put in the way of good sense and applauded by those in the back room, smoking fat cigars and counting our money. You’ll find a couple of articles out of the archives, too.

Really interesting collection of reads, and the bonus is lovely … I know you’ll think so too.

Jude

Spitzer for Treasury?
Katrina vanden Heuvel, The Nation
03/22/2009

Frank Rich is right. Firing Treasury Secretary Timothy Geithner won’t get us out of the economic disaster we’re in. But at this time of righteous rage, deploying Geithner and Lawrence Summers as the administration’s chief economic messengers displays an astonishing tone-deafness. These are men who, as Rich puts it, ” are too marinated in the insiders’ culture to police it, reform it or own up to their past complicity with it.”

Or as The Nation’s William Greider explains in Sunday’s Washington Post, the anger roiling the nation could “devour his presidency.” Yet Obama “does not seem to grasp that the tone-deaf technocrats are leading him into a dead-end.”

Action, and action now, to restructure bank bailouts so they benefit taxpayers– not preferred shareholders, and classes of creditors, ranging from foreign bondholders to the counterparties of exotic derivative contracts– may be the only way to ensure passage of the administration’s needed recovery and budget programs. That probably means some form of government receivership, supervision, short-term nationalization–call it what you will. The real danger is not nationalization but that Obama and his economic team continues to muddle through on the financial front. If they do, Obama’s job-creation and public investment programs are at risk; they will be conflated in the public mind with deeply unpopular bank bailouts, bonuses and crony capitalist excesses.

As head of the NY Federal Reserve, Geithner was complicit in the opaque and questionable bailout of AIG. So how then can he effectively carry out the kinds of policies needed at this defining moment of crisis and fury? On a more symbolic level, even his training sessions with elite media and messaging guru Michael Sheehan haven’t helped Geithner become a strong or plausible communicator of whatever that day’s plan is. The country sees a shrinking Secretary–which leads to loss of confidence.

We deserve a Treasury Secretary who hasn’t been a player in Wall Street’s lifestyle of bonuses and legalized corruption. Nobel Prize winning economists Joseph Stiglitz or Paul Krugman would be strong choices; yet they are increasingly valuable as watchdogs and constructive critics working outside the Administration. I’ve also thought that Obama would be smart to promote former Economic Policy Institute Fellow Jared Bernstein, who is currently serving as Biden’s chief economic adviser.

Then there’s a novel idea. Why not bring in the man who took on Wall Street and AIG long before it was trendy? Eliot Spitzer. Call me crazy. But he foresaw the bubbles and disasters resulting from deregulatory frenzy and the financial service industry’s creation of toxic credit default swaps and derivatives. As the Sherriff of Wall Street, Spitzer launched investigations and lawsuits deploying the creative cudgel of the previously-obscure 1921 Martin Act. Yes, he acted miserably toward his wife and family and he should pay the price for that. But some believe Spitzer was taken down by certain “masters of the universe” seeking vengeance for his aggressive policing of their financial fraud and corruption.

In his first television interview since resigning as Governor, on CNN”s Fareed Zakaria’s “GPS” program, Spitzer offered a compelling analysis of how we got into this mess and spoke clearly about the need for new regulations to rein in Wall Street’s “recklessness and greed.” He criticized Wall Street’s former masters for their “hot dog cowboy mentality which leveraged everything up.” (And he praised old fashioned Wall Street types like Felix Rohatyn for not falling prey to that mentality.)

While acknowledging the outrage of AIG’s bonuses, Spitzer focused on the larger outrage: the use of billions in taxpayer dollars to prop up AIG and various counterparties, including Goldman Sachs (which received $12 billion plus of the government’s original infusion). He also castigated the media, including CNBC, for failing to ask the tough questions, and the SEC and other relevant government agencies for lacking the will and creativity to do their job. When asked about how he’d handle the legal issue of retrieving AIG ’s bonuses, Spitzer referred to tort law and the theory of unjust enrichment–along with other creative ideas–to get justice for taxpayers.

Spitzer took on Wall Street’s metastasizing corruption before the meltdown. He defended consumers’ and taxpayers’ rights. He speaks with passion and clarity about what went wrong and what needs to be done to restore integrity to our system. He is chastened by personal scandal, yet untouched by complicity in Wall Street’s public scandals which have obliterated peoples’ savings and devastated our country.

Spitzer for Treasury Secretary? ++

The Real AIG Scandal, Continued!
The transfer of $12.9 billion from AIG to Goldman looks fishier and fishier.
Eliot Spitzer, HuffPo
March 22, 2009

The AIG scandal is getting ever-more disturbing. Goldman Sachs public conference call explaining its trading relationship and exposure with AIG established once again that Goldman knows how to protect itself. According to Goldman, even if AIG had failed, Goldman’s losses would have been minimal.

How did Goldman protect itself? Sensing AIG’s weakening capital position through 2006 and 2007, Goldman demanded more collateral from AIG and covered outstanding risk with instruments from other firms.

But this raises two critical questions. The first is why did $12.9 billion of taxpayer money go from AIG to Goldman? What risk-systemic or otherwise-was being covered? If Goldman wasn’t going to suffer severe losses, why are taxpayers paying them off at 100 cents on the dollar? As I wrote earlier in the week, the real AIG scandal is that the company’s trading partners are getting fully paid rather than taking a haircut.

Goldman’s answer is that it was merely taking a commercial position-trying to avoid any losses at all on its AIG positions. I suppose we can hardly expect Goldman to reject government assistance in the form of pure cash that seems to have had no strings attached.

But what were the government officials possibly thinking? The only rationale for what we should call the “hidden conduit bailout” to AIG’s trading partners is that the cascading effect of AIG’s inability to pay would have been devastating. But Goldman has now said very clearly there would have been no cascade. Not even a ripple.

Is the same true of AIG’s other counterparties, including several foreign banks? What examination of the impact of an AIG failure did federal officials undertake before making their decision to spend countless billions bailing out AIG and its trading partners?

The government decision to bail out AIG was made after the private parties supposedly at risk had declined to structure a private series of investments that might have avoided the need for use of public money. Perhaps they knew the impact of an AIG default would be small, or perhaps they knew that the federal officials in the room would blink and ante up. In a post-Lehman moment when panic not reason was dominating the discussion, perhaps they figured they could walk away with extra billions-and indeed they did.

This issue cries out for immediate government inquiry. Maybe one or two of the more than two dozen government entities now beating their chests about bonuses can redirect their energies to this much larger issue confronting us: Who signed off on this $80 billion bailout-now approaching $200 billion-and why?

The second question, of course, is why was Goldman wise to AIG’s declining position two years ago, but nobody else appears to have known? There is always the operating premise that Goldman is better than the rest in the field, but where were the federal agencies that should have been taking a look at AIG’s leverage situation and general financial health?

And were AIG’s public statements accurate in revealing a decline? Or did Goldman, with its multiple trading relationships with AIG, get an early warning? This series of questions also demands immediate inquiry and resolution.

What continues to be fundamentally disappointing is that the “too big to fail” institutions continue to absorb enormous sums of taxpayer support without either demonstrating the genuine need for such support, or altering their behavior after receiving it.

After getting $12.9 billion in what now seems to be a mere gift, has Goldman begun to lend in a way that will restore the credit markets? Were they asked to do so?

It is time the government realizes it has two simple options: tightly regulate entities that are too big to fail, or break them up so they aren’t. ++

Was Eliot Spitzer Taken Out Because He Was Going to Bust AIG?
America is known for its great second acts, and we may be witnessing the curtain rising on Spitzer’s.
Melina Ripcoco, Brilliant at Breakfast via Alternet
March 19, 2009

~ from Top 25 Censored Stories for 2009
# 25 Bush’s Real Problem with Eliot Spitzer
Truthout, February 2008
Title: “Predatory Lenders’ Partner in Crime”
Global Research, March 17, 2008
Title: “Why the Bush Administration ‘Watergated’ Eliot Spitzer”
Author: F. William Engdahl
Student Researchers: Rob Hunter, Elizabeth Rathbun, and Rebecca Newsome
Faculty Evaluator: Mickey S. Huff, MA

The exposure of New York State Governor Eliot Spitzer’s tryst with a luxury call girl had little to do with the Bush administration’s high moral standards for public servants. Author F. William Engdahl advises that, “in evaluating spectacular scandals around prominent public figures, it is important to ask what and who might want to eliminate that person.” Timing suggests that Spitzer was likely a target of a White House and Wall Street operation to silence one of its most dangerous and vocal critics of their handling of the current financial market crisis.

Spitzer had become increasingly public in blaming the Bush administration for the subprime crisis. He testified in mid-February before the US House of Representatives Financial Services subcommittee and later that day, in a national CNBC interview, laid blame squarely on the administration for creating an environment ripe for predatory lenders.

On February 14, the Washington Post published an editorial by Spitzer titled, “Predatory Lenders’ Partner in Crime: How the Bush Administration Stopped the States From Stepping In to Help Consumers,” which charged, “Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye.”

In this editorial, Spitzer explained:

The administration accomplished this feat through an obscure federal agency called the Office of the Comptroller of the Currency (OCC). The OCC has been in existence since the Civil War. Its mission is to ensure the fiscal soundness of national banks. For 140 years, the OCC examined the books of national banks to make sure they were balanced, an important but uncontroversial function. But a few years ago, for the first time in its history, the OCC was used as a tool against consumers.

In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government’s actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules.

But the unanimous opposition of the 50 states did not deter, or even slow, the Bush administration in its goal of protecting the banks. In fact, when my office opened an investigation of possible discrimination in mortgage lending by a number of banks, the OCC filed a federal lawsuit to stop the investigation.”

The editorial appeared the day after Spitzer’s ill-fated rendezvous with the prostitute at the Mayflower Hotel. With that article, some Washington insiders believe, Spitzer signed his own political death warrant.

On March 4, 2008, Spitzer furthermore proposed legislation that would have imposed penalties for mortgage fraud and predatory lending.1

Curiously, Spitzer, who had been elected governor in 2006, defeating a Republican by winning nearly 70 percent of the vote, has been not charged with any crime. His case went into the hands of Washington and not those of New York State authorities, underscoring the clear political nature of Spitzer’s “offense.” New York Assembly Republicans immediately announced plans to impeach Spitzer or put him on public trial if he were to refuse resignation. Although prostitution is illegal in most US states, clients of prostitutes are almost never charged, nor are their names typically released while a case is in process.

Spitzer’s editorial concluded, “When history tells the story of the sub-prime lending crisis and recounts its devastating effects on the lives of so many innocent homeowners, the Bush administration will not be judged favorably . . . it will be judged as a willing accomplice to the lenders who went to any lengths in their quest for profits. The administration was so willing, in fact, that it used the power of the federal government in an unprecedented assault on state legislatures, as well as on state attorneys general and anyone else on the side of consumers.” ++

Eliot’s Mess
The $200 billion bail-out for predator banks and Spitzer charges are intimately linked
Greg Palast, Reporting for Air America Radio’s Clout
March 14th, 2008

While New York Governor Eliot Spitzer was paying an ‘escort’ $4,300 in a hotel room in Washington, just down the road, George Bush’s new Federal Reserve Board Chairman, Ben Bernanke, was secretly handing over $200 billion in a tryst with mortgage bank industry speculators.

Both acts were wanton, wicked and lewd. But there’s a BIG difference. The Governor was using his own checkbook. Bush’s man Bernanke was using ours.

This week, Bernanke’s Fed, for the first time in its history, loaned a selected coterie of banks one-fifth of a trillion dollars to guarantee these banks’ mortgage-backed junk bonds. The deluge of public loot was an eye-popping windfall to the very banking predators who have brought two million families to the brink of foreclosure.

Up until Wednesday, there was one single, lonely politician who stood in the way of this creepy little assignation at the bankers’ bordello: Eliot Spitzer.

Who are they kidding? Spitzer’s lynching and the bankers’ enriching are intimately tied.

How? Follow the money.

The press has swallowed Wall Street’s line that millions of US families are about to lose their homes because they bought homes they couldn’t afford or took loans too big for their wallets. Ba-LON-ey. That’s blaming the victim.

Here’s what happened. Since the Bush regime came to power, a new species of loan became the norm, the ‘sub-prime’ mortgage and its variants including loans with teeny “introductory” interest rates. From out of nowhere, a company called ‘Countrywide’ became America’s top mortgage lender, accounting for one in five home loans, a large chunk of these ‘sub-prime.’

Here’s how it worked: The Grinning Family, with US average household income, gets a $200,000 mortgage at 4% for two years. Their $955 monthly payment is 25% of their income. No problem. Their banker promises them a new mortgage, again at the cheap rate, in two years. But in two years, the promise ain’t worth a can of spam and the Grinnings are told to scram - because their house is now worth less than the mortgage. Now, the mortgage hits 9% or $1,609 plus fees to recover the “discount” they had for two years. Suddenly, payments equal 42% to 50% of pre-tax income. The Grinnings move into their Toyota.

Now, what kind of American is ‘sub-prime.’ Guess. No peeking. Here’s a hint: 73% of HIGH INCOME Black and Hispanic borrowers were given sub-prime loans versus 17% of similar-income Whites. Dark-skinned borrowers aren’t stupid – they had no choice. They were ‘steered’ as it’s called in the mortgage sharking business.

‘Steering,’ sub-prime loans with usurious kickers, fake inducements to over-borrow, called ‘fraudulent conveyance’ or ‘predatory lending’ under US law, were almost completely forbidden in the olden days (Clinton Administration and earlier) by federal regulators and state laws as nothing more than fancy loan-sharking.

But when the Bush regime took over, Countrywide and its banking brethren were told to party hearty – it was OK now to steer’m, fake’m, charge’m and take’m.

But there was this annoying party-pooper. The Attorney General of New York, Eliot Spitzer, who sued these guys to a fare-thee-well. Or tried to.

Instead of regulating the banks that had run amok, Bush’s regulators went on the warpath against Spitzer and states attempting to stop predatory practices. Making an unprecedented use of the legal power of “federal pre-emption,” Bush-bots ordered the states to NOT enforce their consumer protection laws.

Indeed, the feds actually filed a lawsuit to block Spitzer’s investigation of ugly racial mortgage steering. Bush’s banking buddies were especially steamed that Spitzer hammered bank practices across the nation using New York State laws.

Spitzer not only took on Countrywide, he took on their predatory enablers in the investment banking community. Behind Countrywide was the Mother Shark, its funder and now owner, Bank of America. Others joined the sharkfest: Goldman Sachs, Merrill Lynch and Citigroup’s Citibank made mortgage usury their major profit centers. They did this through a bit of financial legerdemain called “securitization.”

What that means is that they took a bunch of junk mortgages, like the Grinning’s, loans about to go down the toilet and re-packaged them into “tranches” of bonds which were stamped “AAA” - top grade - by bond rating agencies. These gold-painted turds were sold as sparkling safe investments to US school district pension funds and town governments in Finland (really).

When the housing bubble burst and the paint flaked off, investors were left with the poop and the bankers were left with bonuses. Countrywide’s top man, Angelo Mozilo, will ‘earn’ a $77 million buy-out bonus this year on top of the $656 million - over half a billion dollars – he pulled in from 1998 through 2007.

But there were rumblings that the party would soon be over. Angry regulators, burned investors and the weight of millions of homes about to be boarded up were causing the sharks to sink. Countrywide’s stock was down 50%, and Citigroup was off 38%, not pleasing to the Gulf sheiks who now control its biggest share blocks.

Then, on Wednesday of this week, the unthinkable happened. Carlyle Capital went bankrupt. Who? That’s Carlyle as in Carlyle Group. James Baker, Senior Counsel. Notable partners, former and past: George Bush, the Bin Laden family and more dictators, potentates, pirates and presidents than you can count.

The Fed had to act. Bernanke opened the vault and dumped $200 billion on the poor little suffering bankers. They got the public treasure – and got to keep the Grinning’s house. There was no ‘quid’ of a foreclosure moratorium for the ‘pro quo’ of public bailout. Not one family was saved – but not one banker was left behind.

Every mortgage sharking operation shot up in value. Mozilo’s Countrywide stock rose 17% in one day. The Citi sheiks saw their company’s stock rise $10 billion in an afternoon.

And that very same day the bail-out was decided – what a coinkydink! – the man called, ‘The Sheriff of Wall Street’ was cuffed. Spitzer was silenced.

Do I believe the banks called Justice and said, “Take him down today!” Naw, that’s not how the system works. But the big players knew that unless Spitzer was taken out, he would create enough ruckus to spoil the party. Headlines in the financial press – one was “Wall Street Declares War on Spitzer” - made clear to Bush’s enforcers at Justice who their number one target should be. And it wasn’t Bin Laden.

It was the night of February 13 when Spitzer made the bone-headed choice to order take-out in his Washington Hotel room. He had just finished signing these words for the Washington Post about predatory loans:

“Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye.”

Bush, Spitzer said right in the headline, was the “Predator Lenders’ Partner in Crime.” The President, said Spitzer, was a fugitive from justice. And Spitzer was in Washington to launch a campaign to take on the Bush regime and the biggest financial powers on the planet.

Spitzer wrote, “When history tells the story of the subprime lending crisis and recounts its devastating effects on the lives of so many innocent homeowners the Bush administration will not be judged favorably.”

But now, the Administration can rest assured that this love story – of Bush and his bankers - will not be told by history at all – now that the Sheriff of Wall Street has fallen on his own gun.

A note on “Prosecutorial Indiscretion.”

Back in the day when I was an investigator of racketeers for government, the federal prosecutor I was assisting was deciding whether to launch a case based on his negotiations for airtime with 60 Minutes. I’m not allowed to tell you the prosecutor’s name, but I want to mention he was recently seen shouting, “Florida is Rudi country! Florida is Rudi country!”

Not all crimes lead to federal bust or even public exposure. It’s up to something called “prosecutorial discretion.”

Funny thing, this ‘discretion.’ For example, Senator David Vitter, Republican of Louisiana, paid Washington DC prostitutes to put him in diapers (ewww!), yet the Senator was not exposed by the US prosecutors busting the pimp-ring that pampered him. Naming and shaming and ruining Spitzer – rarely done in these cases - was made at the ‘discretion’ of Bush’s Justice Department.

Or maybe we should say, ‘indiscretion.’ ++

The Real Criminals are Neither Lynndie England nor the AIG Traders
Thom Hartmann

Whenever a politician or commentator bloviates about the brokers at AIG who are getting bonuses, we should all be remembering Lynndie England and Charles Granger. AIG brokers are to the financial meltdown what England was to the Iraq war.

Certainly she did things that were deplorable. But she thought they were legal (England, operating under orders to “soften up terrorists,” even thought she was helping defend our nation). And to the extent that John Yoo’s memos were law, arguably her actions were legal (although the Bushies never wanted it tested, so threw them to the wolves).

But the important point is that the real criminals of the Iraq War were not those like Lynndie England: they were George W. Bush, Dick Cheney, and Donald Rumsfeld (and their neocon buddies).

Like Lynndie England, the brokers at AIG are the small fish. Sure they
shouldn’t have been doing what they did, and it’s insane that they were
compensated the way they were. And even worse is the fact that those
compensation packages were worked out in September and October of last year by the Bush administration, and that that convenient little fact is almost always ignored by politicians and commentators in their faux populist outrage.

But the real criminals of the AIG mess - and the entire financial meltdown that was set up between 1999 and 2006 and crashed starting in 2007 - were Grover Norquist, Phil and Wendy Graham, Tom Delay, and, sadly, Bill Clinton.

The philosophy that it’s possible to bomb people into democracy and torture them into being on our side drove the Bushies. It was wrong, flawed, and frankly insane, and we’re paying a huge price for it.

Similarly, the philosophy that playing the game of business and investment without rules (the technical term is Laissez-faire Capitalism) has driven our government since the election of Ronald Reagan, and went on steroids during the last two years of the Clinton administration and throughout the Bush administration. It’s equally wrong, flawed, and insane, and we’re paying a multi-trillion dollar price for it not unlike we are for the war.

The intellectual forefathers and mothers of the insane conservative economic policies that have brought us to where we are include Ludwig Von Mises, Freidrich Von Hayeck, Milton Friedman, Alan Greenspan, Tom Freidman, Robert Rubin, Larry Summers, and Ayn Rand. Phil and Wendy Gramm pushed through the Gramm/Leach/Bliley Act (which allowed banks to get into the gambling business) and the Commodity Futures Moderinization Act (also known as “the Enron Loophole”), and Bill Clinton merrily signed them into law.

But just as it’s inconvenient to hold the defense contractors and the senior politicians responsible for the Iraq debacle, and instead blame it on Lynndie England, our sound-bite corporate media prefer to focus on a few IAG traders, instead of the people who made what they did both possible and legal.

Instead of passing a 90 percent tax that is limited to the traders, let’s be realistic. Ever since Ronald Reagan rolled back the top marginal income tax rate on millionaires and billionaires from 74 percent to 29 percent, our government has been disastrously in debt, sliding deeper each and every year (the so-called “Clinton surplus” was a mirage created with phony numbers, although it was still a hell of a lot better than what we have now).

David Stockman bragged, back during the Reagan administration, that the goal of Republicans was to rack up such a huge federal debt that Democrats would never be able to push forward the “socialist” programs that Americans want, like stable Social Security and single-payer national health care. He called it “starving the beast.” Grover Norquist suggested it would force government to become so small it could be “drowned in a bathtub,” leaving the corporations in charge. George W. Bush actually, finally, made it happen.

Thus here we are, ten-plus trillion dollars in debt, and trying to blame our problems on Lynndie England and a few traders at AIG.

Let’s call out and name the real criminals, and get about the simple and
straightforward solutions of putting our country back together.

Roll back the Reagan tax cuts that have done so much damage over the past 28 years. Pull out of insane trade agreements. Re-regulate banks so they’re functionally public utilities again. Give oversight to the SEC on all forms of speculative investment and bring back the .25 percent STET tax on each unit of investment vehicle traded.

None of this is rocket science. From 1937 until Ronald Reagan began his
wrecking-ball efforts at the stability and solidity of our nation’s economy, we didn’t have a single bank panic. Reagan dropped income tax rates and the almost immediate result was a bubble and crash in the stock market followed by the S&L crisis, which has been repeated over and over again with startling regularity ever since (just as they were during the 150 years preceding Roosevelt putting into place the regulatory structures and high marginal income tax rates of the New Deal that stabilized us).

Republican President Dwight D. Eisenhower embraced a 91 percent top marginal tax rate on millionaires and billionaires and strong regulation of banks, including the STET tax, and the nation prospered.

It’s time to return to sanity and quit swatting at the little guys, while
the real criminals and thieves walk away with our nation and our wealth. ++

Break Up These Banks
Mike Lux, Open Left
Thu Mar 12, 2009

Excellent news from the NYTimes the other day: banks which are getting nervous about pesky government oversight are starting to ask to return government bailout money. As I wrote a while back in a fit of outrage when news reports indicated that Geithner wanted to go down the same sorry path that Paulson had been going down- handing government money to bankers with no strings attached to make sure they weren’t just pocketing it while doing nothing for the economy - I think that if bankers, don’t want accountability, they shouldn’t take our money. If they are in such bad shape that they have to take our money to survive, there needs to be tough accountability on how they do business.

I also fundamentally agree with David Sirota that if these corporations are too big to fail, then they are too big to exist: a proposition also agreed to by the populists and progressives of the late 1800s/early 1900s, by Abe Lincoln, by Teddy Roosevelt, by FDR, by Harry Truman. Progressives of all eras have understood that corporations that grow too enormous threaten our economy and our democracy, and should be woken up into smaller entities that can’t do so much damage when they are mismanaged. The era of bank consolidation has to come to an end, and these monsters need to be broken into smaller companies just like Standard Oil was in the early 1900s.

Ironically, some of our tax dollars were actually used by these bank conglomerates to buy other banks, instead of, say, giving out loans to consumers and businesses trying to buy things or make investments that would create jobs.

The mess these big bankers have created for our economy is stunning, and it will take many years to work our way out of it. Every day dealing with the wreckage of all this is going to be harrowing. But we can start by doing what our progressive forbearers did: breaking up the big financial trusts, regulating them with vigor, holding them accountable. When a class of people has screwed up as terribly as big bankers have, we should take away their power and watch them like hawks for the rest of their time on this earth. ++

The President Needs to Hear Millions of Second Opinions on His Economic Plans
Obama is trapped between the governing elites who decide things and the people who are governed. Which side is he on?
William Greider, The Washington Post via Alternet
March 23, 2009

The president is getting what he asked for, but perhaps not what he had in mind. During the campaign, Barack Obama beckoned Americans to put aside their cynicism about politics and re-engage as active citizens. They are now doing so with red-hot anger. They are outraged by events and forcing their way into congressional affairs and behind closed doors where policy wonks discuss issues with cerebral civility. The president is now trapped between these two realms — the governing elites who decide things and the people who are governed. Which side is he on? If he does not choose wisely, the anger could devour his presidency.

The immediate impetus is the latest outrage from the financial sector. AIG, the failed insurance giant on government life support, proceeded to hand out $165 million in employee bonuses. Because Washington has pumped $170 billion into this zombie corporation, people quickly grasped that AIG was redistributing their tax money. On March 13, the White House sent out Larry Summers, the president’s economic adviser, to explain things. Government has no choice, Summers said, because this is a government of laws and we must honor contracts. On Monday, the president scrapped that line, hoping to dodge the outrage.

Something fundamental has been altered in American politics. Encouraged by Obama’s message of hope, agitated by darkening economic prospects, many people have thrown off sullen passivity and are trying to reclaim their role as citizens. This disturbs the routines of Washington but has great potential for restoring a functioning democracy. Timely intervention by the people could save the country from some truly bad ideas now circulating in Washington and on Wall Street. Ideas that could lead to the creation of a corporate state, legitimized by government and financed by everyone else. Once people understand the concept, expect a lot more outrage.

Public anger is likely to be a recurring episode, because the president has budgeted another $750 billion to rescue the financial system from its troubles. If Congress gives him the money, people will be watching where it goes. Obama is vulnerable to the blowback. In his address to Congress last month, he promised, “This is not about helping banks, it’s about helping people.” The first half of his statement is demonstrably not true, as people see for themselves and as bankers parade their arrogant excess. The second half is merely wishful.

“Populist anger” is a condescending label pundits use to suggest an irrational, unruly temperament. But what’s really going on is deeper and potentially more forceful. It will not be contained with good rhetoric or symbolic gestures.

Populism was the highly creative, self-made movement formed by desperate farmers in the late 19th century. It is disparaged in elite circles, but it generated vital ideas that ultimately reshaped government and democracy. We are not there yet, not even close. But the impulse for small-d democracy could be very healthy — if the political system learns to listen and respond.

At the center of this story is Obama, who inherited the Democratic Party’s awkward straddle between monied interests and working people. I voted for him joyfully and sympathize. His message to the nation last week reflected his dilemma. “I don’t want to quell anger. People are right to be angry. I’m angry,” he told reporters on Wednesday. Then he pivoted: “What I want us to do is channel our anger in a constructive way.”

What’s changed the president’s situation? During the past nine months, gigantic financial bailouts amid collapsing economic life made visible the crippling divide between governing elites and citizens at large. People everywhere learned a blunt lesson about power, who has it and who doesn’t. They watched Washington rush to rescue the very financial interests that caused the catastrophe. They learned that government has plenty of money to spend when the right people want it.

“Where’s my bailout,” became the rueful punch line at lunch counters and construction sites nationwide. Then to deepen the insult, people watched as establishment forces re-launched their campaign for “entitlement reform” — a euphemism for whacking Social Security benefits, Medicare and Medicaid.
Of course, popular alienation has been around a long time. But the stakes for the country are now far more grave. My new book — “Come Home, America: The Rise and Fall (and Redeeming Promise) of Our Country” — asserts that we’re at the end of the long and mostly triumphant era that started with victory in World War II. We are going to change as a country, for better or worse, like it or not.

If people and the president do not stand up for just solutions, politics as usual will prevail. Congressional leaders are once again rushing to enact hasty “reforms” that might get the financial monkey off their back, but will permanently damage our democracy. Elite opinion wants to empower the Federal Reserve to act as the “super-cop” protecting the financial system against systemic risk in the future.

This idea is another instance of rewarding failure. The Fed was blind to the systemic risk accumulating during the past two decades and it failed utterly to head off the excesses — the explosion of debt and Wall Street’s fraudulent valuations. The central bank, in fact, with its erratic monetary policy, was a central source of what destabilized the economy.

Why would politicians make this cloistered and unaccountable institution more powerful, when the Fed has been derelict in its historical obligation to protect the “safety and soundness” of the system? Reforms ought to head the opposite way — forcing the Fed into daylight and the same regular order required of government agencies.

A few weeks ago, a freshman congressman, Rep. Alan Grayson (D-Fla.), became an Internet celebrity with the video of him grilling the Federal Reserve vice chairman at a House hearing. The Fed is in the process of handing out almost $3 trillion. Can you tell us which firms and banks are getting money? Grayson asked. Donald Kohn said that would be inappropriate. It might discourage some banks from taking the public’s money. More outrage ensued and last week, after a good pounding from citizens, the Fed folded and named some names.

A new regulatory regime that puts the secretive central bank in charge of everything would sanctify the policy of “too big to fail” that Fed officials have long followed but never honestly acknowledged. It would also revive the Wall Street club, albeit smaller than before, with which the Fed has been so cozy. If the largest bank holding companies are given privileged proximity to the source of government protection, then everyone in finance and commerce will want to become a bank holding company, too. We are already seeing this happening as former investment houses like Goldman Sachs and non-bank financial firms decide to join the system. Why not General Electric and Microsoft? Where does this end?

What does it mean for smaller enterprises that lack the scale and influence?

Whatever the intentions, this “reform” would effectively legitimize the existence of a corporate state. This concentrated power would be neither socialism nor capitalism, but a grotesque hybrid that combines the worst qualities of both systems. Government and politics would become even more responsive to big money, but also able to tamper intimately with private enterprise, picking winners and losers based on political loyalties, not on performance. Capitalism with its inherent tendency toward monopoly would have the means to monopolize democracy.

Barack Obama can resist all this, if he chooses, but he seems conflicted. Obama’s approach so far is devoted to restoring Wall Street’s famous names, and his economic advisers tell him this is the “responsible” imperative, no matter that it might offend the unwashed public. Obama evidently agrees. He does not seem to grasp that the tone-deaf technocrats are leading him into a dead-end.

The president needs to hear a second opinion — millions of them.

People are angry, but they want this president to succeed. Mobilized citizens can help him to prevail. If he goes with the other side, they will bring him down. ++

bonus

White House Kitchen Garden Starts Friday
AP via HuffPo
3/19

WASHINGTON — The White House is getting a new garden.

First lady Michelle Obama is scheduled to break ground Friday on a new garden near the fountain on the South Lawn that will supply the White House kitchen.

She will be joined by students from Bancroft Elementary School in the District of Columbia. The children will stay involved with the project, including planting the fruits, vegetables and herbs in the coming weeks and harvesting the crops later in the year.

Mrs. Obama spent time earlier this week at an exhibit on rooftop gardening.

“We’re going to get a big one in our back yard, the South Lawn,” she promised the volunteers.

Such a White House garden has been a dream of noted California chef Alice Waters, considered a leader in the movement to encourage consumption of locally grown, organic food. She has been appealing for change through the taste buds since the 1960s.

She organized a series of fundraising dinners in Washington before President Barack Obama’s inauguration in January that served foods purchased from local producers at an area farmer’s market to show how it can be done.

Reached Thursday at her Berkeley, Calif., restaurant, Chez Panisse, Waters said she was thrilled by the news.

“It just tells you that this country cares about people’s good health and about the care of the land,” she said. “To have this sort of ‘victory’ garden, this message goes out that everyone can grow a garden and have free food.”

Victory gardens were vegetable gardens planted during the world wars with encouragement from the government to make sure there was enough food for civilians and the troops. Waters says her family had such a garden.

Waters has been lobbying for a vegetable garden at the White House since 1992. Recent White Houses have grown some herbs and have practiced limited container gardening on the mansion’s roof to supply it with tomatoes, peppers and other vegetables.

The new garden will be the first on the White House grounds in many decades, Waters said.

She said Michelle Obama always has been receptive to the idea.

“She talks about food in connection with children, and it’s a beautiful thing,” Waters said.

Waters also has pushed the administration to adopt her Edible Schoolyard project in which children plant their own produce to eat in the school cafeteria. Most public schools are serving too much processed food that is contributing to the childhood obesity epidemic, she argues. ++

Associated Press writers Nancy Benac and Mary Clare Jalonick contributed to this report.

The Recession (R) Diet
Jamie Lee Curtis, HuffPo
March 22, 2009

This week was the first time I realized that the recession that we have all been getting used to has hit us all where we live — in our stomachs. The cover image in the New York Times of Michelle Obama tilling the garden plot brought it all out. We are what we eat and what we don’t. I love the idea of a White House garden. Why hasn’t there always been one? I mean, come on, Bush had a ranch. How come the rancher in him didn’t turn out the White House lawn to some grazing cattle.

A White House garden. Self-sustainability in the People’s House. What a wonderful example. How about an orchard, vineyard and compost heap, greywater-irrigated and solar-powered greenhouse. Paging Alice Waters and José Andrés. The phrase “tightening our belts” has been misconstrued. It is not a deterrent to eating, except to those young starlets with eating disorders, but tightening our belt is a result of losing weight because of eating less.

Now, in a nation with an obesity and Diabetes epidemic, losing some weight is not a bad thing. “The Gilded Age is over,” my dear friend exclaimed as we ate beans and rice — delicious, by the by. What we need to do is even out the food distribution, feed those who need it — yes here in America there are many hungry people — and take less off our plates. The image of the First Lady getting her hands dirty with the touching of the very earth that sustains us is a good start. We can all do something about this if nothing else. Hunger. Human hunger.

One of the sad aspects of the R Diet is the shrinking of our news. The Seattle Post-Intelligencer… gone to my hands. This weekend the anorexic New York Times magazine came weakly out from the noticeably thinner paper.

The poor darling. Both my husband and I held it in our hands, smiling tentatively at its condition. We both realized that someday it too would be gone, a memory of another place, another time. It is a sad, long goodbye. I will miss it but I won’t miss the greed, avarice, gluttony, grossness, selfishness, deceit and cruelty of the last eight years and beyond.

I want growth, healthy growth. Grassroots growth. Seeds planted and taking root in front of a hungry America. Give him time. Give them time. Give it all time. Yes we can. Wait and wonder. ++

“I’m asking you to believe. Not just in my ability to bring about real change in Washington … I’m asking you to believe in yours.”
~ Barack Obama

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