Friday, December 26, 2008
Wednesday, December 24, 2008
Saturday, December 20, 2008
Bailout craze of 08’. Where were you? First the banks and investment houses. Now automanufacturors. What’s next, Wendy’s, Home Depot? Where does it end. What gives you the right Detroit Three, to be handed a bailout loan because you don’t know how to properly run a company. The only difference between you and my uncle bert who closed up shop last year, is that you, Detroit employ directly and indirectly so many, some say up to 2.5 million could be lost in 2009, while my cousin bert only employs two.
On the surface it doesn't seem fair. You cant run a business. Tough shit. Fold up shop and try something else, like my nephew Bert. Remember that saying dont quit your day job. Time to quit that day job son.
But there is a compelling arguments against Detroit folding up shop. With our economy in the tank can this country afford to lose a million jobs. With the country’s manufacturing sector pretty much non-existent should we close down our last niche of manufacturing.
These are hard choices. And our congressional leaders and our president are inept, corrupt, and not strong enough to handle issues of such magnitude.
On the surface it appears that the elite class that runs this country is imploding. They cant run companies, they cant run government agencies (katrina), they cant run war (Iraq). They cannot watch over wall street (sec). They forgot how to watch over and protect our airspace (FAA on 9-11). Is the elite class going through a mid life crisis? Is the conservative ideology right that whatever government touches turns to shit. Or have conservatives been waging a battle, letting katrina fail, letting FAA fail, letting the sec fail, in order to prove their point, see we told you, the government cant work, must not be trusted, so lets shrink it down. (small enough to put it in a bathtub and drown it. this last part is something a radical conservative Grover Norquist truly believes.)
If my gut reaction is true, the elite class is imploding. So throwing money at them in wall street or in Detroit is not going to solve core problems. Just like America must look her soul in the mirror and question if her policies overseas is moral, America’s elite must look themselves in the mirror and ask is there ideology, their system of picking only Harvard educated rich kids from the in crowd to run the country, is that the right way to go.
A professor of mine taught me that the upper crust of society must continually call up others from others classes to join the upper crust. For fresh ideas, and a new perspective. Once the upper crust stops doing this they become surrounded by men who think like they do, who have the same experiences, and who all agree on decisions.
I think President W. Bush’s inner circle was a great example of this. After the first few years he was basically surrounded by yes men, who all believed the same things. The result was more disasters than any other presidency, at least in the modern error.
Generals not agreeing with a simple number like how many soldiers it would take to conquer and secure Iraq were fired. Government auditors who didnt agree with the “team” about how much the Medicare Part D Drug bill would cost and had the gaul to talk about it publicly were fired. What ever happened to allowing variety of views? I thought that was democracy? Could it be that for a long time we have not lived in a Democratic nation, or a Republic? Could it be that very powerful men that run this nation hate the notion of Democracy or Republic? It appears that way.
The proof is in the fruit of the tree. I am going to take you to a little area known as Israel right now. I hope not to many Jewish people are reading this. Because even though I am one, most I meet tend to side with the Israeli's and put humanity and morals on the back burner.
Under President W. our theme has been to spread democracy. Yet our actions and our fruit show otherwise. During the early years of president W.’s first term the people of Palestinian territory had a democratic election, I believe their first. Great news right. If you love humanity it was. But the men that run this country did not like the results. The election chose Hamas to run the government ousting the long running PLO organization. So our elite rewarded democracy by cutting off our funding for the Palestinian government. Funding that is like life support to a people who have no jobs, are not allowed to work in Israel, have no food, cannot grow food. These people have nothing and are living in ghettos, they rely on the world for survival and our elites cut that life line off because we didn't like democracy in action.
Our next move was to start funding and arming the PLO and war broke out between the PLO and Hamas. This is the fruit of our tree. After the fighting stopped Israel built a wall around the territory. Today the territory is so closed off and such little food and medical supplies are delivered that many are calling it a humanitarian crisis. Smells like rotten fruit to me.
Or how about the Sudan, in Africa. The government there recently found oil under tribal land in the south of the country. After a few payments to move the people off the land the Sudan government backed by western elites and the oil cartels began arming and funding militias to kill and destroy villages. When that slowed the airforce carried out large air-force strikes on villages. The government of Sudan, in the funniest statement I have ever heard (kinda funny bc the people of Sudan are definitely not laughing), said they are not bombing villages but that the villagers are moving but its because they are nomads, and thats what nomads do. Nice try. Again, more fruit from the tree of western elite cabal.
Iraq. Which had no terrorists there before 9-11. Every piece of evidence used was false. But we have caused so much violence and destruction that we have caused more recruits to join al queda than Osama could ever get on his own. Again, more fruit.
So Detroit. Who is at fault? How can this be solved? Should we just mourn the corpse of the once strong Detroit manufacturing sector. This will be the subject of part two.
Many are blaming the union. They wont make concessions we are told. They make 78 dollars an our we are informed. Or is it a civil war between the northern American autos who have the support of the Democrats vs. the Southern foreign manufacturing plants who have bought off the Republican leaders. I will break this down in a second, but from what i have learned even if Detroit doesn't pay any labor cost at all that will not change the view Americans have of Americans cars. It wont make people buy more of something they dont like. That my friends falls at the feet of management and the board. Americans typcally buy more Japanese because of reliability issues.
Just read an interesting plan in an article written by the documentarian Michael Moore, who began his career reporting on the Detriot auto industry. He is against giving any money to the industry because he thinks it will be flushed down the toilet, and it the companies will still cut thousands of jobs.
1.Just as FDR ordered car manufacturing plants to stop producing cars and begin producing tanks for WWII we should order the car plants to stop producing cars that run primarily on oil,and start building envirnmentally friendly cars, trains, buses, subways, and light rail.
2. Why give GM tens of billions of dollars when you guy buy all the company stock for 3 billion dollars? If your worried about government running the companies, Michael argues there are many qualified men for the job. He also points out this strategy brought success to the national rail system that was crumbling in the 70's. This strategy will not only save detriot, but create national jobs to help jump start our economy.
Ponzi scheme. Thats what everyone is calling the curious case of Bernard L. Madoff. The quick story is that he owned a hedge fund that he ran basically single handedly. For years he paid out handsome profits of 10- 17%. Until recently when he declared the fund had been empty for some time.
One individual, Harry Markopolos has been calling Madoff a fraud for decades.
Sunday, November 16, 2008
Jonathan weil over at bloomberg news
Naomi Klien over at naomiklein.org/main
Naomi Prins over at demos.org
Monday, November 10, 2008
The bailout seems to be just as murkey and illegal and greedy as the wall street bananza that got us into this mess.
According to Naked Capitolism, the fed's lending has topped 2 trillion dollars last week(with bernake promising loans up to 7 trillion today november 24), even though congress only approved 700 billion. The reason for this is that the 2 trillion dollars is a loan from the FED, which does not have to be approved by congress, i guess. And the 700 billion is the congressional approved tarp program, handed out by Treasury.
The Banks are not lending money like they said they would once they recieved this much needed capitol injection from Washington. The Fed and Treasury who lent the money attached no strings. They could have. The Government in England did.
And while the Fed is not pushing banks to lend, they are pushing banks to merge.
A little side note. While the Fed is lending money to the banks, the Fed is actually a private bank, composed of 12 banks. Guess who is getting all the bailout out money? The 12 banks that own the Fed. Just to clarify, 12 banks that own the Fed are printing money to loan to, umm, themselves.
And, Just released today by Naked Capitolism is news that in the bailout, the Treasury secretary snuck something in. Im not sure if its actually in the bill or some executive order approved by bush. But it is a law that allows banks to write off losses on their tax returns, basically saving money in taxes, or paying zero taxes. Its estimated the law will save banks 110 billion dollars in taxes. This is not a new law, but overiding a law passed by congress, that congress deemed illegal, and now Bush has found a way to change laws without congress.
In a time when our economy is hurting and our government is up to its eyeballs in debt, treasury secretary Paulson deems it necessary to cut taxes for big banks.
Another aspect of the story is how the treasury promised transparency in its bailout plan. Remember the problem with wall street was a 60 trillion dollar derivatives market, where little information is available. So far the treasury has yet to live up to this promise, prompting bloomberg news outfit to sue in court, under the freedom of information act to obtain information on 1. how much contracts are worth that the treasury department outsourced to manage the bailout, and 2. what the collateral is for the Fed loans to the banks.
Another part of the Economic story is the risky loans to those with no collateral, and how banks leveraged against these risky mortgage backed securities because standards and poors rating agency blindly gave them AAA/ no risk rating. So for years, until the collapse, wallstreet used bad collateral ( mortgage backed securities) for loans. And now treasury refuses to tell the public what type of collateral it has accepted in return for loans from the same public.
On the AIG front, once again Naked Capitolism reports in a great story how sweet of a deal AIG is getting. There originaly loan of 85 billion has doubled to 140 billion. And there payment plan has been changed from a 2 year loan at 8.5% interest to a 5 year loan at 3% interest. NC wants to know if homeowners will also get a 60% decrease in there interest rate.
A quote used from Naked Capitolism and analized:
Friday, October 31, 2008
-Republicans ran there 2004 campaigns on the idea that democrats cant stomach war. Why would anyone want to be able to stomach war. I go to veterans hospitals all the time and see iraq vets with limbs blown off, and lives destroyed and republicans are proud that they can stomach these things? I hope i am never able to stomach these things. I went back to a hotel after my visit to the vet hospital and cried for hours. Republicans say Democrats cannot stomach war and i say good , but i also say republicans cant stomach peace.
-Our nation is the biggest seller of weapons to the world. Peace will negatively affect our economy.
-Rollins met a man in Laos and instead of the man greeting henry with, whats up, how are you , whats going on, he used the phrase what is your life. Rollins said it took him a minute to think about how to answer it. the man from Laos said to Rollins that he used the odd phrase because it provokes thought, and is different.
This reminds me of my trainer, and friend dave. He is a straight up warrior of life. In every category. I cannot recommend him enough. http://www.basketballstrength.com/ and http://www.kegconditioning.com/ , check him out if you ever thought about dominating life itself.
Anyway Dave talks about the greeting. In general when most people meet they say how are you. But are they just saying hello? Are they looking for a longer answer than good, i am good? And isnt it true that when you actually answer this question with more than a sentence you catch the person who asked you, off guard. As if they truly did not want to know the essence to the answer of the question, how are you. Really. Tell me whats going on in your life. Tell me whats new. And i think he is dead on. Most people are being curteous and could care less how you are. What about your freinds and family? If you told them how your truly are every time they asked, all the depth and detail, glories and pain, how would they react?
I think about this all the time now. At every greeting. And since i now know what i know, if you ask me how i am im going tell you, especially dave. But i really like Rollins friend from Laos,and his greeting, WHAT IS YOUR LIFE? If you never thought about this do it. One of the most famous philosophies throught history once said and unexamined life is not worth living. And a modern day civil rights warrior said an examined life is painful.
Monday, October 27, 2008
Saturday, October 25, 2008
Case in point the economy. Welfare for the rich. No competition. Free market when in times of boom Socialism in times of bust. No accountability. Market forces are supposed to set prices, not corporate giants in collusion with each other.
But I'm confused, I thought our country practices capitalism, and free market principles so why is the government bailing out firms? Isn't a tenet of the free market theory to not interfere and let the weak die and the strong survive. Your not the only one who is Confused.
Many confusing ideas have grown more evident over the years. For example, are we a Democracy? If so why did the supreme court select the President of the United States in the year 2000 while stopping the vote count, and expressing in its opinion that it would be safer to pick someone that leave doubt while searching for the truth. Oh and they also ruled that no where in the constitution is their a right to vote for president.
Or do we have Fascist tendencies. Everyone hears the word Fascist and immediately thinks of Hitler and concentration camps for Jews. But that was the philosophy of a crazy man. The idea behind Fascism is the merging of Business and State. To me this idea is seen in America where corporations are said to control congress. They sponsor elections. They not only see most bills they support become law they usually help right them in order to increase business. And usually once the author of a bill passes the law for say the telecommunications industry, said congressman gets a meaty offer to quit congress and work for the telecommunications industry. Bribe? Corruption? Coincidence? Or the natural order of a Fascist state?
Or should we all hang our heads and admit that we live under a dictatorship? A prison with goodies. If i put you in jail, but give you a huge cell, like the size of a house. And I give you a job so you can pay for that nice house. And I let renovate the house. And I let you get a nice job. So you can buy a nice car, an ipod, and a laptop. Maybe take a vacation here and there. And I let you have newspapers (run by my prison guards). I supply your children with schools run by my prison guards. Your job is run by my prison guards. Cross my guards and I take it all away. Praise and support my guards and you get more goodies and a bigger house and better vacations and a nicer car.
This sounds like a system that will support the weak and handicap the strong.
Basically what i wanted to say was about the economy. Were most people shocked even me, yes. Should we have been, no. Forgetting about the mortgage crash for a second and look at the obvious.
As a nation we buy more than we sell. We have more credit than savings. Our government borrow money everyday just to function. If we followed this plan on an individual level we would all be in a soup kitchen and sleepy on the sidewalk. As a nation we have lived like a college kid with his first credit card and not like an adult.
The phrase we should leave our kids a better nation/world than we inherited seems lost. What happened?
As individuals and as a nation we need to grow up an start acting like adults. If your name is Bear Sterns, AIG, or Bank of America and you cannot manage your company you are weak and you should fail. Just like all those mom and pop shops that were put out of business when Walmart rolled into town. No one cried for them and they were our blood. Yet our Congress cries for these corporate monsters that have grown larger than some nations. They have no national loyalty yet we are told they are too big to fall. Borrowing from my favorite phrase, REALLY?
If I was in charge and some used the phrase to big to fall around me I would tell them to shrink. If you are too big to fall than you are too freakin big.
Last year when Joe the plumbers cousin, Susan the Walmert clerk, when she got sick had to be hospitalized and couldn't pay her credit card bills or mortgage and is now homeless was she not big enough to fall? When did the corporate machine become more valuable to our nation than an individual down on their luck?
Bear Sterns took excessive risk, gambles like anyone would go to Vegas to do, and they lost. Susan the Walmart clerk was struck by an act of god. She got sick.
Why is it that France has faster Internet service than America? And better cell phone service? Its because they still practice a little something called competition. If two guys own a deli on the same block in a natural world they will compete to win the customer. Service goes up. Deals pop up. Quality goes up. Innovation shows its face. But what we have in America is only two huge deli's that have gotten together and teamed up against the consumer. They keep prices high, service down, and innovation and quality go out the window.
They believe they are doing good. There stock might even go even and they might even turn a profit. But inside their spirit grow weak. Challenges make men, and complacency makes men weak. Weak men create weak nations. Weak nations attract weak leaders, building weak bridges, creating weak dreams, and creating weak schools, to indoctrinate the next generations for the weak culture.
The weak men have conformed and have been chosen to lead the next generation. And they have been rewarded with stock options and islands, and imported vehicles.
Could you are I create a start up bank today to compete with JP Morgan/Chase/ Bear Sterns, or whatever that gigantic company is called now.
Is it any surprise that our Detroit auto makers cannot compete with foreign car makers. They know no matter how bad business is our government will help them out. What kind of motivation is this for them to innovate and improve.
Why is it that there is still a law on the books from the 70's when oil companies couldn't make money that paid them to stay in business. Subsidies. So that last year when the oil companies made record profits quarter after quarter, breaking new records, these oil companies were still getting subsidies from the government.
Why is it that our Government also subsidizes the farm industry. If left on its own, the farming industry in the U.S. would not survive. But instead of making them take responsibility to live or day the Government pays them enough to continue growing so they can stay in business while putting foreign farmers that they compete with out of business.
What is the worry with giving them the opportunity to sink or swim. We are so afraid of sinking that no one is swimming anymore. We are a nation floating with safety tubes on our arms and its time we grow up and take them off. I mean how silly would it be to see a grown man in the pool with swimmies on his arms. Even my 5 year old daughter would giggle(if i had one). (if i had two they both would giggle)(a lot) ( because one would feed off the other one's giggle, which would create a cyclical effect feeding the other one, and so on an so forth, until both would giggle at maximum giggle capacity).
Where are all our innovators? Where have all our leaders gone? The last ones I remember have been taken out, JFK, Bobby Kennedy, Malcolm and Martin.
Remember when the Brooklyn Bridge was built? Remember when we landed men on the Moon? That was magic. That was innovation. Where has all the magic gone? China made magic at the Olympic games during the opening ceremony. It was glorious to watch.
I want my country to make magic again. I want to make magic. Don't tell me I cant. And I better not here you say you cant either.
Tuesday, September 30, 2008
Wow. Where to start. While over the summer we had economic problems plaguing the country, now we have disaster, or so we are told. By the White House, the Federal Reserve Bank, the Congress, the Network News, all very reputable sources who would never create a fake crisis in order to force a bill down our throats as quick as possible, while not allowing our elected representatives to read it, very similar to the patriot act after 9-11. Well that was my sarcasm, because actually they have and they are trying again.
700 billion dollar bailout. We need it now or face a complete meltdown. No oversight by congress, judicial system, or any future president ever. This is the Mantra you have heard if you have been watching corporate news. Run by and for the interests of powerful men in this country. Read the Internet and you get a different picture. You get to read opinions of economists, and many who saw this mess coming 5 years ago. And some who saw these trends coming as far back as carter, and some who see this mess through lens of globalization.
So lets go through this mantra one by one. 700 billion dollars is needed. Why? They admit they have not used any formula and have merely picked a large random number. They( treasury Secretary paulson and fed chairman Bernake) admit they wont have time to spend all that money anyway before the next president arives.
Who gets the 700 billion? Well Paulson and Bernake would like to hand it over to wall street banks who are in the mess. There argument is that because of all this bad debt( in the form of mortgages not being paid and investment in mortgages that were packaged as stocks that have declines sharply) on the books of these banks, that they are refusing to lend out any new money thus freezing the economy. So the 700 billion would by the bad debt, taking it off the banks books while giving them cash to begin lending and get the economy flowing again. That is the corporate media side of the story and we all know there are 3000 sides to every story.
Another side of this story is the homeowner. If they are given the money, in theory, it will solve the economic slowdown as well. They pay their mortgage, banks get paid off, banks begin to get of rid of the bad debt, stocks prices go up also as mortgages are paid and the bad investments look better, and the debacle is reversed.
Why has the corporate media reported so favorably for one story, lets give the money to the banks, while painting the homeowner as the wicked witch from the west who should have known better and should not have taken on a mortgage he could not afford. One solution i describes helps everyone, the latter. While the former solution saves the banks, actually rewarding some like JP Morgan Chase who was able to by Bear Sterns and Washington Mutual at bargain basement prices, and Bank of America who bought Meryl Lynch. But in the former solution the homeowner is left in the dust, as is the average investor who was tricked into buying bad stock.
How were they tricked? Well the mortgages of bad credit people were lumped together with mortgages of good credit people and made into a stock, this stock was falsely and illegally given a triple a rating by the two rating agencies who were paid mighty sums by the investment houses.
So for our fraud tally we have bankers 1, homeowner/stock owner 0
So why were these mortgages packaged as stocks anyway? Well as a Bank or a Mortgage firm you are limited with how many mortgages you can have on your books based on a few factors. One factor for a savings and loan bank like Bank of America is how much money in deposits they have on hand. So by bundling up mortgages as stocks and selling them banks and mortgage firms were able to remove the mortgages from their books, thus freeing up room for more mortgages, and more fees.
Fraud tally bankers 2, homeowner/stock owner 0
In an update on the fraud front, today (November 3rd 2008) it was released that operations at Wamu approved every single loan that came through the company. When underwriters refused to approve loans that looked fraudulent workers were reprimanded and put on probation. A few months ago Wamu closed up shop, as the biggest US bank to ever fall. It was later sold to JP Morgan for 1.9 billion dollars. The race to approve mortgages was promoted by executives by offering free vacations to whoever sold the most mortgages each month. One employee won a free month in Jamaica for approving 3.5 million in mortgage loans in one month.
In one particular case, one underwriter remembers denying a very fraudulent loan, getting reprimanded, and her boss approving the loan only for it to go into default 4 months later. Not one months payment was paid.
Fraud tally, Bankers 3, homeowners 0
What about all those people who qualified for prime mortgages, based on their good credit but were sold sub prime so the mortgage lendor could clean up in fees? I read one case in particular of a returning Iraq Vet who qualified of for the best rates yet he was fooled into signing up for the subprime, no interest, no money down loan, and boom he lost his house. How is an average person supposed to know what he qualifies for? Are we not supposed to trust the numbers that mortgage houses crunch?
Fraud tally, bankers 4, homeowner 0
The next part of the mantra we are hearing is this needs to be solved now, using our 700 billion dollar plan, or else you haven't seen nothing yet( in terms of crisis). Really? To me it seems like they are rushing into this, like they want this rushed through, with out review or oversight. Why else do it so close to a congressional recess? But Ian they didn't DO anything, the economy is its own beast and it just crashed. I am not buying that either, the bankers of this country have long history of creating crashes to benefit themselves.
A great great great documentary on this is called money master and can be seen on Google video for free. and One example they give is the farming industry around the 1800's, i forget the year. But the plan was to loan and loan and loan to farmer, (side note is that 95% of farming in this country used to be family owned farms), and than one day all these loans were called in and when most couldn't pay, which was expected, the banks took over huge areas of land. This was done for a few reasons. One was to end family farms and create the rise of corporate farming run by a few companies. And we have we seen from this current economic crisis merging of huge banks, becoming more and more concentrated.
Another result of the farming crisis of the 1800's was now that we have taking away a large portion of the nations jobs, farming. Most Americans have no jobs, and so they were ushered into factories and mines to work for someone else. This is one of the most fascinating times in America for me to study because i see it as the turning point of when Americans stopped sustaining themselves by working for themselves (farming) and were moved like cattle into factories to work for someone else, to rely on someone else for food, money, for life. This is when Americans lost a huge amount of power they had. Now they could be abused, being told "do this if you want to feed your family, do this if you want to pay your mortgage". I read something once that talked about the pride of an American before this farming crisis, and an American would not be caught dead working in a factory, why anyone would sweat all day with their labor for someone else to make a profit was looked upon as crazy, and i agree. But one day this all changed, and i would like to know why and how, and how we get back to that mindset.
So how is 700 billion dollars going to help? If an individual was in trouble with debt from one credit card would opening a new card to pay off the old one solve anything? No, So why try this on a Macro level? Why is only one plan being talked about on the news, and whats the rush? Where is a new deal type plan? Why are we throwing money at the wall street men who got us into this mess? Why is there no talk of jail time? Why was the bush justice department attacking state attorney generals who tried to arrest corrupt bankers? Why are small banks throughout America saying that they are benefiting from this wall street mess? And why wont the corporate media tell us this fact and other facts to paint the whole picture? Do people believe the Bush administration when they tell us this is a buy in and not a bailout, and one day we can sell this debt we are buying with the 700 billion dollars for a profit? Sound like a story I once heard about about a war in the middle east paying for itself and not costing us a billion dollars a month, in a country that rhymes with istack.
One part of the bailout bill that is hardly being discussed says that the 700 billion dollars can be invested in anything on wallstreet not simply banks that are in trouble. This is kind of odd, i thought the point of this is to save banks and mortgage firms that are in trouble? The treasury secratary also has the power to invest in foreign banks. This is the best line of them all. The US economy is in trouble and to save it we will use US taxpayer money to invest in foreign banks, hmmm? To take this further one economist on cnbc claimed that Paulson and the President would veto any bill that did not allow the 700 billion to be spent on foreign banks. This does not make sense to me, the only explanaition i heard is that foreign governments must be making large threats against the US Government to force this administration to act this way.
A solution proposed by Thom Hartmann, and others im sure, is to reinstate a tax on wall street for every trade. The argument goes that Wall Street's main purpose was to raise capitol and give investors a way to make money over a long period of time. But recently speculators have changed the way wall street operates by buying large amounts of stock to raise the price than to dump it all in a few days time. This is called speculative traiding and many blame this for the housing bubble now and before the 1929 collapse.
Historically, from the founding of our country until the last century, most people invested rather than speculated. When rules limiting speculation were cut during the first big Republican deregulation binge during theadministrations of Warren Harding, Calvin Coolidge, and Herbert Hoover(1921-1933), it created a speculative fever that led directly to the housingbubble of the early 20s (which started in Florida, where property values weregoing up as much as 70 percent per year, and then spread nationwide, only toburst nationally starting in 1927 as housing values began to collapse), thenthe falling housing market popped the stock market bubble and produced thegreat stock market crash of 1929. That speculation aggregated enormouswealth in a very few hands, crashed the housing and stock markets, and producedthe Republican Great Depression of 1930-1942. Franklin D. Roosevelt, as part of the New Deal, put into place a series ofrules to discourage speculation and promote investment, including maintaining –and doubling – the Securities Transaction Excise Tax. Other countriesfollowed our lead, and the UK, France, Japan, Germany, Italy, Greece,Australia, France, China, Chile, Malaysia, India, Austria, and Belgium have allhad or have STETs.
This tax is not a completely new idea we used it in the United States from 1914 to 1966, and to fund the civil war and the spanish american war. Other countries right now are using this policy. If we were to instate a .25 percent STET (tax) on everystock, swap, derivative, or other trade today, it would produce – in its firstyear – around $150 billion in revenue.
The Republican Bush Administration is currently suggesting that we borrow$700 billion (or more) from China and Saudi Arabia and other countries and investors, add that to our national debt, and repay it with interest (makingthe actual cost over the next 20 years over $1.4 trillion). This is whatRepublican Herbert Hoover tried in 1931 when he first created the Reconstruction Finance Corporation (later totally reinvented by FDR) to bail out the banks in1931. Hoover’s RFC bailed out the bankers, paid off huge salaries in the banking and investment world, bought him a few months (maybe that’s the realgoal of the Bush/McCain Republicans now – just hold things together until afterthe elections), but ultimately led to the failure within two years of virtually all the banks in the United States.
How do they use the same play from the same play book year after year? How do we fall for it year after year? How do they pass bailouts against the will of America year after year? How do these elected officials who fuck America year after year, continue to be reelected year after year? And does half of America not care, year after year.
If we don't change this here is my prediction, one day we will have One of everything, One bank, One credit card, One store to buy everything, One Media company, One news paper, One health care plan, One retirement plan, One stock to invest in, One utility to buy electricity and oil from, One place to get a mortgage from. A world without choices a world without competition means the shit with stay at the top by force.
Thursday, August 14, 2008
Monday, July 14, 2008
Banks—and many homeowners—made a lot of bad bets on the
assumption that housing prices would always go up.
The shadow banking system—including the off-balance sheet
entities set up by the commercial banks—borrowed massively to make those bets. They invented exotic securities and over the counter, unregulated credit swaps and the like to add layers and layers to the house of cards. Now it’s collapsed. The real economy is in trouble. Consumers have lost trillions in home equity and are tightening their belts."
Hidden deep within the fine print is the word variable, and initial. low interest initially, with steep rises very soon.
Some other shadiness included; firms that rent assets to people to help them fraudulently qualify for a mortgage - like loaning them money to keep in their bank account for a couple months so they can fool the lender with documented savings that evaporate the day after the mortgage is signed. Another popular ruse: The borrower pays an employer to pay him a lot of money in a fake job for a month or two so he can show a fat paycheck in his loan docs. Some real estate agents and mortgage brokers actually refer buyers to these services.
Should home buyers have know better yes, but the people peddling them knowingly broke laws, or treaded very close to the line.
Practices that allowed these tactics to operate under this present Bush administration were illegal under Clinton. Additionally when lines were crossed and local district attorney's pursued the case they were harassed by the Bush administration. Bush not only allowed these illegal practices to occur but he let them FLOURISH by attacking any state that tried to pursue criminal prosecutions against those that broke the law.
Bush's shady tactics can be seen most visibly with the fall of Elliot Spitzer, NY Governor, who was the strongest critique of bush, and was in the process of organizing the governors of all 50 states to file a suit in court against Bush's illegal tactics.
On to the ponzi scheme, low income people were sold a shady illegal bill of goods, i.e a mortgage they could afford temporarily, before rates increased.
The mortgages were sold to bigger mortgage outfits, and bigger, ones, and the initial seller of the mortgage closes his shop door and is long gone by now. One reason the mortgages were packaged and sold quick to other lenders or to investment houses as stock, was because of a federal law limiting how many mortgages a mortgage lender could hold, by moving them quick they could be involved in more sales and more money
Next the mortgages are packaged together and sold as stocks on the NY stock exchange. But who would buy a stock if it was not given a AAA rating by the top ratings firms in the U.S. The stocks were given fake AAA ratings, meaning they were perfectly sound investments. These ratings firms were being paid billions of dollars by U.S. investment banks like Goldman and Sachs, who also sold the bundled mortgage stocks.
So who were the suckers that bought the stocks, normal investors, foreign investors, foreign banks and governments, cities and towns in the USA, pension funds.
And one day when the invisible ink of those mortgage contracts became visible, and interest rates and monthly payments went through the roof. This along with house prices falling in 2006 for the first time in forever, lead to many, many people, not able to pay their mortgages. And that's all it took for the entire house of cards to fall.
Soon enough the AAA rated stocks began to drop and drop and drop. And for all those companies who invested hefty sums in these AAA stocks big trouble was on the way, for some. And if your mortgage firm invested a large amount in these volatile mortgage's than you are also in trouble. And god for bid your state invested your pension in these funds, like Florida teachers.
When Bear sterns collapsed, they could not really allowed to collapse because a company that size falling could tear down the whole American economy, right? Or so we are told.
So usually the govt via the federal reserve bank (The bank lends the govt money so the govt can give it away to the bank, and the taxpayer pays the bill) will hand over money to the failing banks as kind of an economic I.V. In total close to 400 billion dollars was handed out since Summer 2007 to ensure large banks would not collapse.
Yet Bear Sterns was not given a bail out like many other banks, and like Freddie mac, and Fannie Mae will get this week. Instead JP Morgan was given a bailout in order to buy the dead Bear Sterns. Why not just give the loan to Bear? Well it just so happens that the federal reserve bank of new york, the organization who saved the day with the bail out money is run by a board, who sits at the chairmanship of the board, the CEO of JP Morgan bank. Sweet. and i know what your thinking, who else sits on the board, the CEO of Lehman brothers.
Now if you follow the situation, family cant pay mortgage, bank does not get paid, stock prices fall, banks in trouble, banks restrict loans, housing prices fall, more people in trouble.
The governments solution? Banks get bailed out with 400 billion dollars and counting, And for the people losing homes,they get bail a 2 billion dollar bailout. Why wouldn't the people losing their homes get the bailout? Wont everyone win like that? People pay mortgage, banks get their money and operate normal, stocks go up, investment firms have no problems, no one loses a home.
Yet the government, an institution set up by and for the people, once again chose to help corporations over people. This has been the choice time after time. Will it ever change?
Another theory for the govt backed bailout of large investment houses is, layed out by attorney Sean Olender, is, "The sole goal of the freeze is to prevent owners of mortgage-backed securities, many of them foreigners, from suing U.S. banks and forcing them to buy back worthless mortgage securities at face value – right now almost 10 times their market worth. The ticking time bomb in the U.S. banking system is not resetting subprime mortgage rates. The real problem is the contractual ability of investors in mortgage bonds to require banks to buy back the loans at face value if there was fraud in the origination process. "
Another issue is that home prices are depreciating so rapidly that many find it financially beneficial to simply default on there mortgage payment and lose the downpayment which was nothing. It makes sense, why pay your mortgage for a house you pay a total of 500,000 dollars for if its now worth 300,000 dollars a few months later? And California law, where home depreciation reached a staggering 40%, has laws that allow banks to keep only the deposit on defaulted mortgages.
Well the good news is that many states and towns who invested in these shady stocks are suing investment banks. For example, meryl lynch is being sued for for fraud and misrepresentation, of stocks sold to the city of Springfield Massachusetts.
The city of Baltimore sued Wells Fargo Bank for damages from the subprime debacle, alleging that Wells Fargo had intentionally discriminated in selling high-interest mortgages more frequently to blacks than to whites, in violation of federal law.
Cleveland Mayor Frank Jackson has filed suit against 21 major investment banks, for enabling the subprime lending and foreclosure crisis in his city
June 2008, California Attorney General Jerry Brown sued Countrywide Financial Corporation, the nation’s largest mortgage lender, for causing thousands of foreclosures by deceptively marketing risky loans to borrowers. Among other things, the 46-page complaint alleged that:
"‘Defendants viewed borrowers as nothing more than the means for producing more loans, originating loans with little or no regard to borrowers’ long-term ability to afford them and to sustain homeownership’ . . .
"The company routinely . . . ‘turned a blind eye’ to deceptive practices by brokers and its own loan agents despite ‘numerous complaints from borrowers claiming that they did not understand their loan terms.’". . .
Underwriters who confirmed information on mortgage applications were ‘under intense pressure . . . to process 60 to 70 loans per day, making careful consideration of borrowers’ financial circumstances and the suitability of the loan product for them nearly impossible.’
"‘Countrywide’s high-pressure sales environment and compensation system encouraged serial refinancing of Countrywide loans.’"7
In a 2007 ruling in Wisconsin that is now on appeal, U.S. District Judge Lynn Adelman held that Chevy Chase Bank had violated the Truth in Lending Act by hiding the terms of an adjustable rate loan, and that thousands of other Chevy Chase borrowers could join the plaintiffs in a class action on that ground.
-So far 6 lenders have failed this year
-90 banks are considered to be in trouble
-the current secretary of the treasury is henry paulson, who's last job was ceo of goldman and sachs, the only investment house not hurt by this housing bubble