STOCK MARKET WATCH -- Monday, 22 April 2013 -- Earth Day

[Tansy_Gold]

[font size=3]STOCK MARKET WATCH, Monday, 22 April 2013[font color=black][/font]

SMW for 19 April 2013

AT THE CLOSING BELL ON 19 April 2013
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Dow Jones 14,547.51 +10.37 (0.07%)
S&P 500 1,555.25 +13.64 (0.88%)
Nasdaq 3,206.06 +39.70 (1.25%)


[font color=red]10 Year 1.70% +0.01 (0.59%)
30 Year 2.90% +0.01 (0.35%) [font color=black]


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[font size=2]Market Conditions During Trading Hours[/font]
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[font size=2]Euro, Yen, Loonie, Silver and Gold[center]

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[font color=black][font size=2]Handy Links - Market Data and News:[/font][/font]
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Economic Calendar
Marketwatch Data
Bloomberg Economic News
Yahoo Finance
Google Finance
Bank Tracker
Credit Union Tracker
Daily Job Cuts
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[font color=black][font size=2]Handy Links - Economic Blogs:[/font][/font]
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The Big Picture
Financial Sense
Calculated Risk
Naked Capitalism
Credit Writedowns
Brad DeLong
Bonddad
Atrios
goldmansachs666
The Stand-Up Economist
The Automatic Earth
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[font color=black][font size=2]Handy Links - Government Issues:[/font][/font]
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LegitGov
Open Government
Earmark Database
USA spending.gov
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[font color=black][font size=2]Handy Links - Videos:[/font][/font]
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Charlie Rose talks with Roubini
Charlie Rose talks with Krugman
William Black: This Economic Disaster
Bill Moyers with Kevin Drum and David Corn
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[font color=red]Partial List of Financial Sector Officials Convicted since 1/20/09 [/font][font color=red]
2/2/12 David Higgs and Salmaan Siddiqui, Credit Suisse, plead guilty to conspiracy involving valuation of MBS
3/6/12 Allen Stanford, former Caribbean billionaire and general schmuck, convicted on 13 of 14 counts in $2.2B Ponzi scheme, faces 20+ years in prison
6/4/12 Matthew Kluger, lawyer, sentenced to 12 years in prison, along with co-conspirator stock trader Garrett Bauer (9 years) and co-conspirator Kenneth Robinson (not yet sentenced) for 17 year insider trading scheme.
6/14/12 Allen Stanford sentenced to 110 years without parole.
6/15/12 Rajat Gupta, former Goldman Sachs director, found guilty of insider trading. Could face a decade in prison when sentenced later this year.
6/22/12 Timothy S. Durham, 49, former CEO of Fair Financial Company, convicted of one count conspiracy to commit wire and securities fraud, 10 counts of wire fraud, and one count of securities fraud.
6/22/12 James F. Cochran, 56, former chairman of the board of Fair, convicted of one count of conspiracy to commit wire and securities fraud, one count of securities fraud, and six counts of wire fraud.
6/22/12 Rick D. Snow, 48, former CFO of Fair, convicted of one count of conspiracy to commit wire and securities fraud, one count of securities fraud, and three counts of wire fraud.
7/13/12 Russell Wassendorf Sr., CEO of collapsed brokerage firm Peregrine Financial Group Inc. arrested and charged with lying to regulators after admitting to authorities he embezzled "millions of dollars" and forged bank statements for "nearly twenty years."
8/22/12 Doug Whitman, Whitman Capital LLC hedge fund founder, convicted of insider trading following a trial in which he spent more than two days on the stand telling jurors he was innocent
10/26/12 UPDATE: Former Goldman Sachs director Rajat Gupta sentenced to two years in federal prison. He will, of course, appeal. . .
11/20/12 Hedge fund manager Matthew Martoma charged with insider trading at SAC Capital Advisors, and prosecutors are looking at Martoma's boss, Steven Cohen, for possible involvement.
02/14/13 Gilbert Lopez, former chief accounting officer of Stanford Financial Group, and former controller Mark Kuhrt sentenced to 20 yrs in prison for their roles in Allen Sanford's $7.2 billion Ponzi scheme.
03/29/13 Michael Sternberg, portfolio mgr at SAC Capital, arrested in NYC, charged with conspiracy and securities fraud. Pled not guilty and freed on $3m bail.
04/04/13 Matthew Marshall Taylor,fmr Goldman Sachs trader arrested, charged by CFTC w/defrauding his employer on $8BN futures bet "by intentionally concealing the true huge size, as well as the risk and potential profits or losses associated."
04/04/13 Matthew Taylor admits guilt, makes plea bargain. Sentencing set for 26 June; faces up to 20 years in prison but will likely only see 3-4 years. Says, "I am truly sorry."
04/11/13 Ex-KPMG LLP partner Scott London charged by federal prosecutors w/passing inside tips to a friend in exchange for cash, jewelry, and concert tickets; expected to plead guilty in May.




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[font size=3][font color=red]This thread contains opinions and observations. Individuals may post their experiences, inferences and opinions on this thread. However, it should not be construed as advice. It is unethical (and probably illegal) for financial recommendations to be given here.[/font][/font][/font color=red][font color=black]

[Demeter]

1. Whatever you say, boss.

The manipulations continue.

[Demeter]

2. Obama’s Expanding Kill List By Paul Craig Roberts

Dictatorship is Government Unconstrained by Law

http://www.informationclearinghouse.info/article33931.htm

Prosecutors always expand laws far beyond their intent. Attorneys in civil cases do the same. For example, the 1970 Racketeer Influenced and Corrupt Organizations Act was passed in order to make it easier for the government to convict members of the Mafia. However, the law, despite its intent, was quickly expanded by prosecutors and attorneys and used in cases against pro-life activists, Catholic bishops, corporations accused of hiring illegal immigrants, and in divorce cases. “Junk bond king” Michael Milken, a person with no ties to organized crime, was threatened with indictment under the RICO Act. Prosecutors have found that the asset freeze provision in the Act is a convenient way to prevent a defendant from being able to pay attorneys and, therefore, makes it easier for prosecutors to coerce innocent defendants into a guilty plea.

We are now witnessing the expansion of Obama’s Kill List. The list began under the Bush regime as a rationale for murdering suspect citizens of countries with which the US was not at war. The Obama regime expanded the scope of the list to include the execution, without due process of law, of US citizens accused, without evidence presented in court, of association with terrorism. The list quickly expanded to include the American teen-age son of a cleric accused of preaching jihad against the West. The son’s “association” with terrorism apparently was his blood relationship to his father. As Glenn Greenwald recently wrote, the power of government to imprison and to murder its citizens without due process of law is the certain mark of dictatorship. Dictatorship is government unconstrained by law. On February 10 the Wall Street Journal revealed that the Obama dictatorship now intends to expand the Kill List to include those accused of acting against foreign governments. Mokhtar Belmokhtar, an “Algerian militant” accused of planning the January attack on an Algerian natural gas facility, has been chosen as the threat that is being used to expand Obama’s Kill List to include participants in the internal disputes and civil wars of every country.

If the Obama regime is on the side of the government, as in Algeria, it will kill the rebels opposing the government. If the Obama regime is on the side of the rebels, as in Libya, it will kill the government’s leaders. Whether Washington sends a drone to murder Putin and the president of China remains to be seen. But don’t be surprised if Washington has targeted the president of Iran. The elasticity of the Kill List and its easy expansion makes it certain that Washington will be involved in extra-judicial executions of those “associated with terrorism” over much of the world. Americans themselves should be alarmed, because the term “association with terrorism” is very elastic. Federal prosecutors have interpreted the term to include charitable contributions to Palestinians. The next time former US Representative Cynthia McKinney gets on an aid ship to Palestine, will Washington give the green light to Israel to kill her as a terrorist agent for her association with aid to Gaza, ruled by the “terrorist organization,” Hamas?

Already a year or two ago, the director of Homeland Security said that the federal police agency’s focus had shifted from terrorists to “domestic extremists,” another elastic and undefined term. A domestic extremist will be all who disagree with Washington. They also are headed for the Kill List. Where is the government going with this? The most likely outcome is that everyone disliked or distrusted by those who have the power to add to the Kill List will find themselves on the list. The government can expand the Kill List beyond the original intent as easily as the RICO Act was expanded beyond its original intent. As the Founding Fathers knew and the American people have forgot, no one is safe in a dictatorship. Clearly, the American public lacks sufficient comprehension to remain a free people. All indications are that the large majority of Americans fear alleged terrorists in distant lands more than they fear their government’s acquisition of dictatorial powers over them--powers that allow government to place itself above the law and to be unaccountable to law. This is despite the fact that 99.999% of all Americans will never, ever, experience any terrorism except that of their own government. According to a recent poll of registered American voters, 75% approve of Washington’s assassination of foreign citizens abroad based on suspicion that they might be terrorists, despite the fact that the vast majority of the Gitmo detainees, declared by the US government to be the most dangerous men on earth, turned out to be totally innocent. Only 13% of registered voters disapprove of the extra-judicial murders carried out by Washington against foreign citizens, whether based on wrong intelligence, hearsay, or actual deeds. http://www.ahherald.com/newsbrief-mainmenu-2/monmouth-county-news/14849-public-says-its-illegal-to-target-americans-abroad-as-some-question-cia-drone-attacks

Registered voters have a different view of the extra-judicial murder of US citizens. In what the rest of the world will see as further evidence of American double-standards, 48% believe it is illegal for Washington to murder US citizens without due process of law. However, 24% agree with the Obama regime that it is permissible for the government to murder its own citizens on accusation alone without trial and conviction of a capital crime. As The Onion put it, “24% of citizens were unequivocally in favor of being obliterated at any point, for any reason, in a massive airstrike.” http://www.theonion.com/articles/american-citizens-split-on-doj-memo-authorizing-go,31207/ Are we to be reassured or alarmed that 24% of registered voters believe that the terrorist threat is so great that suspicion alone without evidence, trial, and conviction is sufficient for Washington to terminate US citizens? Should not we be disturbed that a quarter of registered voters, despite overwhelming evidence that Washington’s wars are based on conscious lies--”weapons of mass destruction,” “Al-Qaeda connections”--are still prepared to believe the government’s claim that the person it just murdered was a terrorist? Why are so many Americans willing to believe a proven liar?

MORE--THE COSTS, THE GOVERNMENT--A MUST READ!

Paul Craig Roberts was Assistant Secretary of the Treasury for Economic Policy and associate editor of the Wall Street Journal. He was columnist for Business Week, Scripps Howard News Service, and Creators Syndicate. He has had many university appointments. His internet columns have attracted a worldwide following.

[Demeter]

3. The Real State Of The Union Is Bleak By James Kunstler

http://www.informationclearinghouse.info/article33929.htm

The fog of chatter about Federal Reserve money-printing shenanigans, currency wars, fiscal intransigence, exchange rates, and alphabetized rescue operations conceals the central reality of the historical moment: that all industrial economies now face epic contraction, even rip-roaring China in its absurd and spectacular bid to become the latest drive-in utopia. The so-called advanced nations of the world are all sliding toward something less than they wish to be, and the so-called developing nations will backslide further into poverty and anarchy where development will never happen. The implacable contraction underway is the simple result of growing scarcity of cheap oil, the master resource. Thus, in a world where fantasy has replaced analysis, the propaganda channels brim with false news of America's coming "energy independence" and the rebirth of domestic manufacturing, the coming electric car fleet, and space tourism.

There is also chatter among the paranoid that an imagined elite has deliberately engineered American collapse for fun and profit, with sideshows about the Department of Homeland Security promoting social upheaval in order to make a show of putting it down. This is all b.s. concealing the futile machinations of people so unfortunate as to hold political office in an unraveling they can't control. Where control is no longer possible, paranoid fantasies fill the vacuum of wishing for control. One thing you can be sure of: the current sociopolitical weather will change. A front will blow through and sweep the fog away. So many circles of hazard are spinning around events that some fast-turning object will come off its axis and start smashing all the fantasies. When that happens, it will be every community for itself, and where there are no real communities -- for instance, the vast matrix of suburban noplaces that America emergently composed itself out of in a tragic quest to become its own televised fantasy -- we'll discover the dark side of the "liberty" that so-called conservatives endlessly invoke, in all its screaming eagle iconography.

Not since the Civil War (1861 - 65) has anything bad of this scale happened within the United States itself and the public is unprepared despite our total immersion in the on-screen ersatz heroics of avatars such as Dwayne Johnson. The terrible convulsion of the 1860s was preceded by a political time much like ours is now, with figures (calling them leaders is inaccurate) of no conviction backpedaling furiously toward strife....You can have plenty of economic activity -- especially if you re-form (literally) the systems we depend on, such as farming, commerce, medicine, and transportation -- but it won't be expressed favorably in the GDP stats or the balance sheets of CitiGroup and Morgan Stanley. At the core of this contraction is the disappearing act of real capital -- that is, accumulated wealth -- for the excellent reason that we are squandering what remains of it in the futile effort to keep living the way we do. But it will be vanishing fast, contrary to the view of such fantasists as David Leonhardt, Washington bureau chief of The New York Times -- catch him on the current Slate Political Gabfest -- who thinks that the Growth Fairy is about to land on the south lawn of the White House.

...The fortunate few will be those who have already established themselves in an authentic community of helping hands, who have some tools -- and I don't mean Adobe Photoshop or the latest iPhone app -- and laid in some bits of silver and gold.


James Kunstler is the editor of www.Kunstler.com

[Demeter]

4. Another Giveaway to the Banksters: Obama, Housing and the Next Big Heist By Mike Whitney

http://www.informationclearinghouse.info/article33961.htm

For those who missed President Obama’s latest giveaway to the Bank Mafia, we’ll repeat what he said here. This is an excerpt from 2013’s State of the Union Speech:

“Part of our rebuilding effort must also involve our housing sector. Today, our housing market is finally healing from the collapse of 2007. Home prices are rising at the fastest pace in six years, home purchases are up nearly 50 percent, and construction is expanding again.

But even with mortgage rates near a 50-year low, too many families with solid credit who want to buy a home are being rejected. Too many families who have never missed a payment and want to refinance are being told no. That’s holding our entire economy back, and we need to fix it. Right now, there’s a bill in this Congress that would give every responsible homeowner in America the chance to save $3,000 a year by refinancing at today’s rates. Democrats and Republicans have supported it before. What are we waiting for? Take a vote, and send me that bill. Right now, overlapping regulations keep responsible young families from buying their first home. What’s holding us back? Let’s streamline the process, and help our economy grow.”

First of all, whenever you hear a politician talk about “streamlining the process”, run for cover. The term is a right-wing formulation that means “remove all the rules which inhibit profitmaking”. Naturally, Wall Street’s favorite son, President Hopium, is more than comfortable with the expression and uses it to great effect. But what are the rules that Obama wants to eliminate, that’s the question? Obama answers that himself when he says: “Too many families with solid credit who want to buy a home are being rejected.” This is pure baloney. Borrowers with good credit who can meet the standard down payment requirement (usually 10 percent) can secure financing without too much trouble. The problem is that the banks don’t want to be limited to creditworthy applicants alone, because there aren’t enough creditworthy applicants interested in buying a house. That’s why they want Obama to loosen regulations on “government insured” mortgages so they can lend money to anyone they want knowing that Uncle Sam will pay the bill when the loans go belly-up. That is what this is all about; Obama wants congress to slap their seal of approval on a new regime of crappy loans that will eventually be dumped on US taxpayers. Here’s the story from Bloomberg:

“U.S. Realtors and mortgage bankers say they’re hoping President Barack Obama’s call for streamlining mortgage rules will lend new momentum to efforts to prevent imposing a strict minimum down payment for home loans.

… bankers and real estate agents …are angling for changes to a proposed regulation requiring lenders to keep a stake in risky loans say they hope Obama’s comments will help their cause.

At issue is the so-called Qualified Residential Mortgage rule, which six banking regulators including the Federal Deposit Insurance Corp. and the Federal Reserve are aiming to complete this year. The regulators drew protests in 2011 when they released a preliminary draft requiring lenders to keep a stake in mortgages with down payments of less than 20 percent and those issued to borrowers spending more than 36 percent of their income on debt…(“Housing Industry Pins Hopes on Obama to Soften Down-Payment Rule, Bloomberg)

Can you believe this hogwash? Regulators are asking the banks to retain a lousy 5% of the value on high-risk mortgages (so they can cover the losses in the event of another meltdown) and the stinking bankers are whining about it! Unbelievable. In other words, they’re being asked to put some “skin in the game” so they can pay off defaulting loans when they blow up the financial system again, and they don’t want to do it. The banks are fighting so-called “risk retention” tooth and nail, because they don’t want to tie up their capital. Imagine if your insurance company ran its business the same way? So, then your house burns down, and the claims agent tells you, “Sorry, Mr Jones, we can’t pay your claim because all our money is tied up in structured investment vehicles and dodgy debt instruments.” Are you okay with that? But that’s what the banks are doing, and they’re doing it because they want to be leveraged “N”th-degree to maximize profits. Besides, they know from experience, that when the system goes down again, the USG will ride to the rescue and pay off their debts. So why hold capital? ...Keep in mind, that the banks can lend whatever amount they want to whomever they want. No one is stopping them. But if they want the government to guarantee the loan (or if they want government financing), they have to follow certain rules. And the rules have to be clear because the banks have shown that they can’t be trusted. Here’s more from Bloomberg:

“Housing industry participants want the regulators writing QRM to drop the down payment requirement and raise borrowers’ allowable debt load to 43 percent, essentially setting the same requirements in both the QM and QRM rules.” (Bloomberg)

This is so stupid it boggles the mind. “No, Mr Bankster, Uncle Sam will not guarantee your putrid loan if the applicant can’t come up with a measly down payment or if his monthly payments exceed the standard 36 percent of income to debt.” This is so tiresome. There’s no point in putting people into loans that they can’t repay. We tried that. It doesn’t work...Now ask yourself this: Why are the banks so adamantly opposed to what-they-call the “stringent down payment requirement”? Down payments have been SOP for decades. A 10 or 20 percent down is an indication that a borrower is responsible enough to set aside some of his income for the future, which reflects positively on his creditworthiness. It’s also an indication that the borrower is not going to cut-and-run at the first sign that prices are falling. Stakeholders typically stay with the ship even after it’s hit the iceberg, which helps to stabilize the market and prevent prices from falling off a cliff. The banks know this, which is why they typically demand a down payment on loans that are NOT guaranteed by the government. It’s only when the government’s on the hook for the loss that they don’t give a rip.

Bloomberg again: “Groups including the Mortgage Bankers Association have been warning about the impact of rulemaking in an already tight market.”

Now there’s a surprise. So bankers hate rules and regulations? Really? And they also think its terrible that borrowers need to have decent credit scores to qualify for “government backed” loans? Will wonders never cease. Well they won’t have to wait much longer, will they, because Obama has promised to loosen those “onerous” rules so they can get back to business and start fleecing people like the good old days. Let’s not kid ourselves, the banks have figured out what many analysts have known all along; that low rates, mortgage modifications, and massive private investment (speculation) are not going to be enough to reflate prices and generate another housing bubble. No way. It’s going to take a total breakdown in lending standards so the banks can, once again, provide hundreds of thousands of dollars to anyone who can sit upright and scratch his John Hancock on a mortgage app. That’s what it’s going to take to erase the 30% loss in the value on the stockpile of garbage mortgages the banks still hold on their balance sheets.

Here’s Obama again:

“Too many families who have never missed a payment and want to refinance are being told no. That’s holding our entire economy back, and we need to fix it. Right now, there’s a bill in this Congress that would give every responsible homeowner in America the chance to save $3,000 a year by refinancing at today’s rates. Democrats and Republicans have supported it before. What are we waiting for? Take a vote, and send me that bill.”

So Obama doesn’t just want to loosen regulations for new home buyers (No down payment, high debt-to-income ratio), he also wants to help refinance underwater homeowners who’ve been making their monthy payments regularly. But why? After all, the administration’s aggressive mortgage modification program (HAMP) is already providing low-interest refis for people who are as much as 125% LTV (underwater) What’s different about this program? Ahh, that’s where it gets interesting. Here’s the scoop from Bloomberg:

“The U.S. Treasury Department and members of Congress are preparing to move forward with plans to expand government-backed refinancing programs to underwater homeowners whose loans are packaged in private-label securities.” (“U.S. Mortgage Refinancing Push Said to Advance in Congress”, Bloomberg)

“Private label”? So now the USG is going to guarantee the mortgages the banks concocted in their boiler rooms that didn’t even conform to standards that would allow them to be financed by Fannie and Freddie? That’s what Obama is pushing for? Yeegads! Here’s more from Bloomberg:

“Senator Jeff Merkley, an Oregon Democrat, is drafting a bill modeled on a proposal he outlined last year to set up a federal trust to purchase or guarantee refinanced mortgages….

The trust, as described in Merkley’s earlier proposal, would provide relief to borrowers with privately owned loans and probably would be set up under the oversight of an existing housing agency. If Congress doesn’t pass such a measure, the Treasury is drafting a plan to step in to pay for rate modifications for those homeowners.” (Bloomberg)

What? So if Congress doesn’t approve the bailout, then the Treasury will implement the plan anyway? Is that it? That doesn’t sound very democratic.

Bloomberg again:

“Under that option, the government would pay the difference between the new and original interest rates to the owners of the loans for five years. Investors in private-label securities have sometimes objected to mortgage modifications because of concerns their income could be reduced.” (Bloomberg)

Wait a minute. Shouldn’t the investors or the banks take the haircut instead of taxpayers? After all, whose fault is it that 5 million families have lost their homes to foreclosure since 2007 and 11 million homeowners are presently underwater? Not the taxpayer. Let the responsible parties bear the costs. That’s the way the system is supposed to work, right? And Merkley’s proposal is just one two bills now awaiting congressional action. The other is the Boxer-Menendez bill which “promises lenders they won’t be forced to absorb the loss on refinanced loans that default.” (Bloomberg) Great. So, while the Boxer-Menendez bill will not refi loans that are not backed by Fannie Mae and Freddie Mac, (no “private label” loans) it will move (an estimated) one million high-risk mortgages off bank balance sheets and onto the public’s ledger. This is how the free market capitalism works in the US today; all the profits go to Wall Street and all the red ink goes to Main Street. Obama doesn’t care if struggling homeowners get a break on their refis or not. It’s all a joke. He’s just helping his bank buddies cut their losses while they set the stage for their next big heist.

Mike Whitney lives in Washington state. He is a contributor to Hopeless: Barack Obama and the Politics of Illusion (AK Press). Hopeless is also available in a Kindle edition. He can be reached at [email protected].

[Demeter]

5. The Great Wealth Robbery By Richard Eskow

Two important events took place this week. One was President Obama’s call for a higher minimum wage, which got a lot of attention. The other was a new report which showed just how much of our nation’s wealth continues to be hijacked by the wealthiest among us.

That didn’t get much attention.

There’s a Great Robbery underway, although most of its perpetrators don’t see themselves as robbers. Instead they’re sustained by delusions that protect them from facing the consequences of their own actions.

Heads I Win …

An updated report from economist Emmanuel Saez details the loss of income suffered by 99 percent of Americans, and the parallel gains made by the wealthiest among us. Its most startling finding may be this: The top 1 percent has captured 121 percent of the increases in income since the worst of the financial crisis, while the rest of the country has continued to fall behind.

If you thought the rich recovered from the crisis just fine but everybody else got the short end of the stick, relax: You’re not crazy. And since the financial crisis was caused by members of the 1 percent – not all of them, of course, just the ones we spent so much to rescue – it’s understandable if the injustice still rankles you.

You rescued them. Now they’re drinking your milkshake.

Tails You Lose

But this wealth shift is not a new phenomenon. As Saez notes in his paper, “After decades of stability … the top decile share has increased dramatically over the last twenty-five years.” In fact, the top 10 percent’s share of our national income is higher than it’s been since 1917 - and maybe longer. (The figures don’t go back any farther than that.)

Although it began during the Reagan years, to a certain extent this wealth shift has been a bipartisan phenomenon. During the Clinton boom years (more of a bubble, actually; Dean Baker has the details) the top 1 percent saw their real income grow by 98.7 percent, while the other 99 saw a smaller increase of 20.3 percent. They lost more during the recession that followed – a little over 30 percent, as opposed to 6.5 percent for everyone else – but more than made up the difference again during the Bush years.

The same thing happened during the Great Recession: The top 1 percent lost more during the initial shock, but they’re rapidly making up the difference now. Government policy’s been designed to help them. (Meanwhile, underwater homeowners still don’t have the help they need.)

The disparities are even greater when you include capital gains. (Saez uses pre-tax income for his figures. Given the generous tax breaks for capital gains and the many loopholes used by the wealthy,the after-tax differences could be even greater.) There’s even economic injustice at the top. Gains for the one percent have far outstripped those of the top five and top ten percent.

As the old song says: Them that has, gets.

If you can remember the sixties you weren’t there … or can’t afford to remember

The minimum wage has been falling since 1968. As John Schmitt notes in his paper, “The Minimum Wage Is Too Damn Low,” “By all of the most commonly used benchmarks – inflation, average wages, and productivity – the minimum wage is now far below its historical level.”

It’s currently $7.25. What would it have been if it had been tied to a commonly-used benchmark? Schmitt ran the numbers:

Consumer Price Index (CPI-I): $10.52

Current CPI methodology (CPI-U-RS): $9.22

As a percentage of average production worker’s earnings: $10.01

And if it had been tied to productivity gains the minimum wage would be $21.72 today. But that cream was skimmed off at the top.

Magical Thinking

There’s a myth in this country that enormous wealth doesn’t come from anywhere or anyone, that it’s self-creating and self-sustaining, thriving on pure oxygen like an epiphyte or a garden fairy. In reality, highly concentrated wealth is caused by actions – human actions with human consequences.

Saez: “A number of factors may help explain this increase in inequality, not only underlying technological changes but also the retreat of institutions developed during the New Deal and World War II – such as progressive tax policies, powerful unions, corporate provision of health and retirement benefits, and changing social norms regarding pay inequality.”

Wealth inequity is created whenever an employer lowers his employees’ wages, replaces a full-time worker with several part-timers, busts a union, cuts corners on workplace safety, or pays a lobbyist to change the rules.

It’s created whenever a job is shipped overseas, and when investments are shifted from job-producing industries to the non-productive financial sector. It’s created when GE outsources its manufacturing operation and gets into the banking (read, “gambling with taxpayers’ money”) business. Or when AIG stops insuring risk and starts betting on it.

And the process isn’t slowing down. In fact, it seems to be accelerating.

As Saez says, “We need to decide as a society whether this increase in income inequality is efficient and acceptable and, if not, what mix of institutional and tax reforms should be developed to counter it.”

Up

President Obama’s proposal is modest, and there’s no reason not to enact it immediately. For those who believe that businesses “can’t afford” to pay higher wages, some key facts:

Most low-wage workers work for large corporations, not Mom-and-Pop businesses.

A Data Brief from the National Employment Law Project finds that 66 percent of low-wage employees work for companies with more than 100 employees. A handful of very large corporations collectively employ nearly 8 million low-wage employees.

There’s no evidence minimum wage increases mean fewer jobs.

Opponents say a higher minimum wage means fewer jobs. But the official U.S. unemployment rate in 1968, when the real minimum wage was highest, was 3.6 percent. Today it’s 7.8 percent – and the unofficial numbers are even worse. At the state level, the Fiscal Policy Institute recently concluded that “states with minimum wages above the federal level have had faster small business and retail job growth.”

Ninety-two percent of the 50 largest low‐wage employers in the country were profitable last year.

As the NELP notes, big corporations more than recovered from the recession: 75 percent are collecting more revenue, 63 percent are earning higher profits, and 73 percent have higher cash holdings than they did before the crisis.

Bringing It All Back Home

The real “job creators” aren’t the ultra-wealthy. If they could create jobs with all their added wealth, they would have done it already. The real job creators are working people with jobs.

They don’t invest their money in hedge funds or stash it in offshore accounts. They spend it: on food, transportation, their kids’ education, maybe a night at the movies … And then other people get jobs making those things possible.

We have a working model to follow: The USA in the 35 years after World War II. As Paul Krugman says, “To the extent that people say the economics is confusing or uncertain, that’s overwhelmingly because people want it to be.” We know how to do this.

Raising the minimum wage is a start. A maximum wage would help, too, by reducing CEOs’ incentives to emphasize quarterly gains over long-term growth and leaving more to be shared with employees.

We also need a national strategy for regaining the more reasonable distribution of income this country had in the 1950s. We need to ensure that the door of opportunity, which is closing every day for millions of young people, is opened again. And we need to ask the wealthiest to really pay their fair share – at something closer to the top tax rates of the 1950’s or 1960’s. (Elvis Presley’s manager “Colonel” Tom Parker once said “I consider it my patriotic duty to keep Elvis in the ninety percent tax bracket.”)

Most of all, we need to educate those around us so they understand what’s happening. That includes the well-intentioned well-to-do, who might do more to end the problem if they knew it existed. After all, you can’t stop a robbery until you know it’s happening.

This article was originally posted at Campaign for America's Future

http://blog.ourfuture.org/20130214/the-great-wealth-robbery

[Demeter]

6. Homeland Security's New $3.9 Billion Headquarters

http://www.businessweek.com/articles/2013-04-12/the-department-of-homeland-securitys-new-3-dot-9b-headquarters#r=read

WITH PICTURES!

[Demeter]

8. How To Get Filthy Rich in Obamaworld By Yves Smith

http://www.alternet.org/economy/how-get-filthy-rich-obamaworld?akid=10349.227380.WDojb4&rd=1&src=newsletter827805&t=11&paging=off

The growing list of folks getting a juicy return on their association with the President.






When I was in DC about a month ago, speaking at the Atlantic Economy conference, the keynote speaker was Paul Volcker. Tall Paul could not refrain from starting his remarks by commenting on how prosperous the capital looked and made it clear he regarded it as unseemly. And indeed, at least to someone breezing in and out, the town is ostentatiously well turned out, with lots of new construction and upscale stores and restaurants. The cab driver pointed out a new commercial building which he said had been built on spec and was leasing up well.

It has become depressingly normal to hear of senior Administration officials going immediately for the golden ring when they leave public service. But for every Mary Shapiro joining Promontory and Lanny Breuer returning to Covington & Burling for $4 million a year, there are even more operatives at similar or lower levels who make a very juicy return on their association with Obama but don’t get the same level of attention in the mainstream media. Norm Scheiber, in a must-read article in The New Republic, “Get Rich or Deny Trying: How to make millions off Obama,” chronicles how this process works. It’s even uglier than you might imagine. In theory, there are some bounds of propriety:

Within Obamaworld, there are a few unwritten rules about how to parlay one’s experience into a handsome payday. There is, for example, a loose taboo against joining a K Street lobbying shop and explicitly trading on administration connections. And while joining a consulting firm is acceptable, those who do are reluctant to work for clients reviled by liberals: gun makers, tobacco companies, Big Oil, union busters. Above all, there is a simple prohibition against excessive tackiness. “It’s like: Don’t embarrass yourself. You were part of something special,” says a longtime Obama adviser. “I think if [Obama] were to send an all-staff e-mail, it would be along the lines of Ron Burgundy—‘Stay classy, San Diego.’ ”

But of course, these protocols are often violated in practice. One assumes that as long as one isn’t too flagrant about it, no real harm done, right? Scheiber uses major Obama fundraiser, former UBS chairman Richard Wolf as an example. Wolf never held an Administration post, so he can’t necessarily be expected to hew tightly to the unwritten code. But one of the no-nos is trading, or being perceived to trade, on one’s connection to Obama. Wolf has staffed his consulting firm 32 Advisors with Obama luminaries such as Austan Goolsbee and important insiders like Kevin Varney, the former chief of staff of Ex-Im Bank. Wolf maintains that Obama would never lift a finger to help him while also saying the President is supportive and playing up official relationationships in his website and marketing materials. While Scheiber discusses some of the places that offer a lucrative landing for former Obama team members, like SKDKnickerbocker, he makes clear how easy it is to profit if you’ve acquired the right connections:

But it turns out the highest-profile White House grads don’t so much join consulting firms these days; they found them. A boldfaced Obama name can rake in upward of $25,000 per month from a client just by dialing into a conference call and drafting a memo from time to time. Four clients means more than a million dollars a year with virtually no overhead. “You can run a business like that on an iPad and a cell phone,” says the former administration official. The godfather of this approach is ex-Clinton strategist Doug Sosnik, famous for conducting his business meetings in jeans from coffee shops and hotel lobbies. David Plouffe and Stephanie Cutter have both adopted the Sosnik model.

The alternative is to rent out office space and staff up, in hopes of one day growing into a consulting powerhouse. This is the Glover Park Group model, based on the firm a group of former Clinton and Gore hands opened in 2001 and nurtured into a 160-person juggernaut. Jim Messina appears to have ambitions in this vein, having procured office space and hired support staff. Former Obama press secretary Robert Gibbs, who briefly flirted with trying to return to the White House, is in the process of launching a similar firm with Ben LaBolt, the 2012 campaign press secretary.

Oh, and if you care about inside baseball, Scheiber also describes some of the rifts among the Obama alumni. But of course, if there is any problem with propriety, it isn’t the other guys who have it:

Of course, this being the Obama tribe—a group of people who promised the most ethical, transparent administration in history; who gave themselves migraines by refusing to hire lobbyists (except when they did); who, during the 2008 primaries, held up the influence-peddling ex-Clintonite Lanny Davis as a shorthand for everything wrong with Washington—there is more than a little anguish over all the newfound riches. “Axe [David Axelrod] thinks all of us are lobbyists,” says one Obama campaign adviser. In conversations with other Obamans, several were willing to damn former colleagues as ethically suspect. (Naturally, they downplayed their own transgressions.)

There are paths outside the Beltway too, such as tech consulting firms, big technology companies, and Hollywood. But one “protected zone is Organizing for Action, which is a permanent campaign apparatus, now focused on Obama’s legislative agenda (catfood futures!) and one presumes, early legacy-building. It managed to earn a rebuke from the New York Times over its post-campaign fundraising. But it’s such a powerhouse that former operatives curry its favor. This story makes the outrage over the Clintons’ selling the Lincoln bedroom seem so…quaint. For every anecdote Scheiber presents, it’s certain there are a dozen more like it. No wonder people like Gene Sperling, director of the National Economic Council, use the phrase “middle class” as if it was an alien phenomenon. The people in the Beltway money bubble don’t need to care about ordinary Americans, and so they don’t.


Yves Smith is the founder of Naked Capitalism and the author of 'ECONned: How Unenlightened Self Interest Undermined Democracy and Corrupted Capitalism.'

[Demeter]

13. Shine a Light on the Poverty Creation Industry: The global shadow economy

http://truth-out.org/opinion/item/15726-its-time-to-shine-a-light-on-the-poverty-creation-industry

...What we find is a two-tier system comprised of,

1) a global mainstream economy where basic rules of fairness and transparency apply, and

2) a global shadow economy where fairness is an irrelevant concept, transparency a state to be avoided at all costs and the social contract is ignored.

This shadow economy has been steadily and systematically created through a series of very clear strategies. Its sole purpose is to provide a place above national tax laws, where profit and capital can be hoarded without limit. It is extremely popular with those who can afford to access it. It is vast. It is comprised of over 80 tax havens, innumerous trade agreements and legal frameworks, and employs a small army of people to lobby policymakers, provide legal defence, manage and buy-off elected officials. Somewhere between $21 and $32 trillion – or 10%-15% of all privately held wealth – is hidden behind the great walls of secrecy. Of the 100 largest companies on the London Stock Exchange, 98 routinely use tax havens. Over half of all global trade flows between and within them so that profits can be siphoned off untaxed.

In other words, the shadow economy is not only immense, but it is intricately sewn into the mainstream economy. Like a parasite, it is attached to the body of its host and drains its financial lifeblood at a rate and scale that is large enough to perpetuate global inequality and poverty. There could not be a clearer case of an industry designed to benefit through active and willful exploitation, and at the expense of the majority of the world’s people. An industry designed with rules that enrich some through the impoverishment of others: the Poverty Creation Industry...

...we have helped create one avenue for action: /The Rules is a new global citizens movement aimed at tackling these root causes of inequality and poverty. By coming together in common purpose and with a common understanding, using smart organising and global communication networks, we believe ordinary people have the power to stand up to the Poverty Creation Industry, and bring about new rules. Our first step is to demand transparency in the global hub of the tax haven system, the City of London. It will take a massive and ongoing global effort – to paraphrase Martin Luther King, the arc of history is long, but it bends toward justice. We believe change is possible only if the citizens of the world demand change.

*******************************************************


Joe Brewer

Joe Brewer an innovation strategist who weaves together brilliant people and ideas to create high-impact projects and a change agent who synthesizes broad multidisciplinary knowledge into useful tools and insights for the empowerment of others. His writings on social change can be found at Chaotic Ripple.

Martin Kirk

Martin is the Global Campaigns Director at /The Rules and has worked extensively across private, public and NGO sector on government relations and engaging the public on global issues.

Alnoor Ladha

Alnoor is the lead figure behind a the global anti-poverty initiative /The Rules, which aims to address the root causes of poverty.

[Fuddnik]

7. From the "We don't care if we're ass backwards wrong! We're standing by it" Department.

Unbelievable! Bowles and Simpson Release New Deficit-Reduction Plan Based on Discredited Austerity Research by Rogoff and Reinhart

The deficit duo tries to poison the public with more bad policy based on bad math.

http://www.alternet.org/news-amp-politics/unbelievable-bowles-and-simpson-release-new-deficit-reduction-plan-based




The Campaign to Fix the Debt was founded by former White House official Erskine Bowles (R) and former senator Al Simpson, pictured here in 2011, whose deficit plan issued two years ago was not adopted by Congress and the White House.
April 21, 2013 |



On April 19th, just after I had written about how the key academic research used to bolster austerity policies was exposed by a 28-year-old grad student at U Mass, Amherst, I got a surprise in my email box.

In the email, Erskine Bowles and Alan Simpson giddily announced their new deficit-reduction plan, which includes, among other things, a recommendation to increase the eligibility age for Medicare. Their plan would reduce debt as a share of GDP below 70 percent by 2023 and, as the Washington Post reports, “seeks far less in new taxes than the original, and it seeks far more in savings from federal health programs for the elderly.”

What’s incredible is that over the last week, the study by Harvard economists Carmen Reinhart and Ken Rogoff that famously warned of the dangers of government debt has been proven to be riddled with errors and questionable methodology. To recap: R&R’s paper purported to show that countries with public debt in excess of 90 percent of gross domestic product suffered negative economic growth. Austerity hawks everywhere used it to justify cuts that have cost people jobs and vital services. The original spreadsheet used by R&R was obtained by a U Mass grad student, who found that in addition to the mistakes already noted by several economists, there was a coding error in their Excel spreadsheet that significantly changed the results of their study.

As New York Magazine’s Jon Chait has pointed out, that same discredited research has been used by Bowles and Simpson to formulate their deficit-reducing austerity plans.

Let’s take a look at some ugly chronology.

January, 2010: Reinhart and Rogoff release their famous paper, “Growth in the Time of Debt” (early versions of the paper had been circulating since 2009) to widespread acclaim.

February, 2010: President Obama announces the “Bipartisan National Committee on Fiscal Responsibility” otherwise known as the “Simpson-Bowles Commission” (also the Catfood Commission), chaired by Erskine Bowles and Alan Simpson.

June, 2010: The notorious 2010 Toronto Summit takes place, in which G-20 leaders agree to pursue austerity policies instead of addressing the jobs crisis in the wake of the 2007-2008 financial meltdown.

December, 2010: Bowles and Simpson release “The Moment of Truth: Report of the National Commission on Fiscal Responsibility and Reform” which warned of increased government spending and called for cuts in benefits for the elderly, veterans, and many government employees.

There is no question that Bowles and Simpson were doing their dirty work as the influence of Rogoff and Reinhart’s paper had given rise to a misguided Washington consensus on deficit reduction, and that they regularly cited the paper to add an academic sheen to their political recommendations.

There is also no question that Bowles and Simpson, two wealthy white men equipped with an outsized sense of their own entitlement, have always appeared shockingly out of touch as they have tried to foist “shared sacrifice” on the public (Simpson famously sneered that Social Security was a "milk cow with 310 million teats&quot . But do they not even turn on the news? Do they not employ some staff person who could warn them of beclowning themselves by sending out their package the same week as the Reinhart and Rogoff revelations?

Apparently, their prejudices and mental confusion are blithely immune to reality. Once reporters started to ask for explanations, Bowles came out with a breezy dismissal of those unpleasant incumbrances known as "facts." As reported on The Hill, he said, “I have obviously read the report and have referenced it a number of times,” Bowles said. “I know they had a worksheet error in the report and my understanding is that does make a difference.”

Undaunted, Bowles and Simpson have launched a campaign to reignite congressional interest in a $2.5 trillion package of spending cuts and tax increases. Their plan represents the height of fiscal irresponsibility and moral insensibility given the current and growing retirement crisis Americans are facing, and it is particularly egregious given the new revelations about the academic underpinnings of their economic theory. There has never been any economic justification for their cynical attempts to rob ordinary people of more of their hard-earned money, but now, as the intellectual dishonesty of cutting government spending in the name of deficit hysteria is on full display, Bowles and Simpson should be booed off the national stage once and for all.

How many people have suffered, indeed, how many people have died, as a result of deficit hysteria promoted by the likes of Bowles and Simpson?

Lynn Parramore is an AlterNet senior editor. She is cofounder of Recessionwire, founding editor of New Deal 2.0, and author of 'Reading the Sphinx: Ancient Egypt in Nineteenth-Century Literary Culture.' She received her Ph.d in English and Cultural

[Warpy]

15. Sadly, although the paper by Reinhart and Rogoff has been

ripped to well deserved shreds and the funny math fully exposed, its effect will continue to be felt because so few read the original paper and relied on the rave reviews from economists who should have known better. Much better.

This garbage that is designed to allow the rich to hang onto their ill gotten loot while the rest of us are pinched so hard it's leaving bruises has a life of its own. It continues to be touted as gospel by all the people who don't read, and that's most of them in our government.

[Demeter]

9. GOOD NEWS ANTIDOTES: Worker-Owned Cooperatives: Direct Democracy in Action By David Morgan

http://www.nationofchange.org/worker-owned-cooperatives-direct-democracy-action-1366380176

...The cooperative movement is experiencing a string of these moments now, and is burgeoning with renewed activity. I see this first-hand as a co-owner of the Toolbox for Education and Social Action (TESA), a worker-owned cooperative that participates in many co-op networks. We’ve facilitated hundreds of co-op workshops around the country, and taught thousands with our resource Co-opoly: The Game of Cooperatives. It’s our philosophy that cooperatives enable direct democracy and local control over the economy. As participants in the co-op movement, we help to turn flashpoints into lasting social change. Fortunately, the path to a community-controlled economy is well worn, and the adaptive responsive networks of the movement are buoying this energy. Over decades, these movement-based networks have quietly built support structures to transition us to a new economy. And with renewed demands for economic justice, they are springing to life.

The Model

As many look for ways out of the capitalist morass of boom-bust cycles, worker cooperatives have taken center stage. Cooperatives are democratic enterprises where both ownership and decision-making power are democratically shared. As a result, they keep money and power in the hands of the community. There are many types of co-ops—credit unions, housing co-ops, food coops, and so on — and though they abide by the the same Cooperative Principles, all coops operate differently. Worker cooperatives involve everyone in decision-making on a one vote, one share-per-member basis. All also equally owns the company. Even though only 1 percent of the cooperatives in the United States are worker owned, their organizing success has recently made them a focal point in the struggle for economic justice. Indeed, Occupy Wall Street participants launched a worker-run co-op print shop in Brooklyn called OccuCopy.

These organizations are inspired by successful historical examples, like the Mondragon system in Spain, and Emilio Romagno in Italy, which provide a model for economic transition and sustainability. Today’s co-ops are also guided by an earnest, evidenced solidarity—in other words, they put their money where their mouth is—which provides support for members and fellow organizations alike. Guided by cooperative principle number six, which promotes cooperation amongst cooperatives, partnerships between co-ops were easily realized. They multiplied and soon turned to regional alliances, which snowballed into national networks...

MORE GOOD NEWS AT LINK

[Demeter]

10. A Tax System for the 99 Percent

http://www.yesmagazine.org/blogs/john-cavanagh-and-robin-broad/how-about-a-tax-system-for-the-99-percent?utm_source=wkly20130418&utm_medium=email&utm_campaign=titleBroad

...three ways the people are pushing back....

...More and more of us are saying that corporations, Wall Street, and the wealthy should pay their fair share. The good news is that rising numbers of organizations and people are involved in struggles for a more just tax system. Below we share the contours of three such campaigns, all of them winnable before the next U.S. president is elected.

Corporations: Daily newspaper headlines remind us that corporations are making record profits while their workers’ paychecks have been frozen for decades. These same corporations complain that the corporate tax rate, pegged at a mere 35 percent, is one of the highest in the world. And, corporations are lobbying furiously to cut that rate. Among the things that these corporations don’t tell you is that, thanks to the thousands of loopholes their lobbyists have peppered throughout the tax code, large numbers of them actually pay little or no taxes at all. Last fall, the Institute for Policy Studies (IPS) pointed out that 25 of the largest U.S. corporations paid their CEOs more than they paid Uncle Sam. As a result, the corporate share of overall U.S. tax revenue has fallen to near its lowest share in over half a century. Perhaps the biggest tax advantage that giant globe-girdling corporations enjoy is that the Cayman Islands, Bermuda, and several other offshore “tax havens” charge little or no corporate taxes. Thanks to clever accountants, such corporations can declare large portions of their profits in these countries with low tax rates and thereby minimize corporate tax payments to Uncle Sam. In fact, U.S. corporations avoid paying an astounding $90 billion in U.S. taxes a year by taking advantage of these tax havens. Needless to say, this also puts at a relative disadvantage locally rooted small businesses that have no such tax loophole.

The good news: A coalition of groups called the Financial Accountability and Corporate Transparency (FACT) Network is rallying support behind the Cut Unjustified Tax Loopholes Act. The bill, introduced by Senators Carl Levin (D-MI) and Sheldon Whitehouse (D-RI), would significantly close these loopholes.

Wall Street: Occupy Wall Street was right on the money as it lambasted the casino-like financial activities of Wall Street firms, activities that helped crash the economy in 2008. Indeed, a huge share of trades of stocks and derivatives in the United States are handled by so-called “high speed” trading firms whose sole purpose is to make money for corporate and individual clients via purely speculative activity that has nothing to do with a productive Main Street economy.

The good news: A set of groups in the United States has joined allies in Europe and around the world to call for financial speculation taxes to curb speculation while raising hundreds of billions of dollars to fund jobs, climate-saving innovations, public health, and the like. In the United States, groups as far-ranging as National Nurses United, HIV/AIDS activists, and climate justice groups have come together behind such a tax, often called a Robin Hood tax. In early April, activists dressed as polar bears joined others clad in the Robin Hood green to protest a meeting of financial officials in Washington. This is hardly a pipe dream. Citizen pressure has compelled eleven European Union nations to agree to initiate such a tax as early as 2014.

Individuals: The top tax rate on individuals was lowered from 91 percent under President Eisenhower to a mere 35 percent under George W. Bush. With pressure from unions and other groups, the U.S. Congress pushed it back up to 39.6 percent for the top 1 percent in early January 2013. Yet, among the richest U.S. citizens who still make out like bandits are the CEOs of the largest firms. Thanks to yet another outrageous and gaping tax loophole, corporations can deduct CEO pay over $1 million as long as they can claim it is performance-based—something that it turns out is quite easy to do. Hence, there is no real check on today’s staggering pay packages that offer CEOs, on average, more than 380 times their average worker’s pay.

The good news: A number of unions and social justice groups are rallying together to close this tax loophole on CEO pay. Even Senator John McCain favors reducing this perverse ratio. And, there is an important recent precedent for such action: In Obama’s first term, both the bank bailout and the health care reform legislation included a $500,000 cap on pay deductibility with no performance pay exemptions.

Bottom line: Each of these three fights is winnable as public outrage grows, and as other revenue-hungry governments point the way to sensible tax reform. To create decent jobs and thriving Main Streets, our local, state and federal governments need revenue. A fair tax system can deliver that with no cuts in vital government programs. The United States is not broke; its rules and tax system are simply unfair.

**************************************************

John Cavanagh and Robin BroadJohn Cavanagh and Robin Broad wrote this article for YES! Magazine, a national, nonprofit media organization that fuses powerful ideas with practical actions.

Robin is a Professor of International Development at American University in Washington, D.C. and has worked as an international economist in the U.S. Treasury Department and the U.S. Congress. John is director of the Institute for Policy Studies, and is co-chair (with David Korten) of the New Economy Working Group. They are co-authors of three books and numerous articles on the global economy, and have been traveling the country and the world for their project Local Dreams: Finding Rootedness in the Age of Vulnerability.

[Demeter]

11. Remaking the Federal Reserve, Building Public Banks and Opting Out of Wall Street

http://www.truth-out.org/opinion/item/15781-remaking-the-federal-reserve-public-banks-and-opting-out-of-wall-street

By Margaret Flowers and Kevin Zeese, Truthout
Creating a Finance System That Serves the People, Part II

In Part I of this series, we examined breaking up the too-big-to-fail-or- jail banks, regulating them - especially their massive and risky derivatives trading - and more aggressively enforcing laws and regulations against security fraud.

In Part II, we examine how to remake the Federal Reserve into a transparent, democratic institution that serves the necessities of the people and the economy, not just the bankers; how to develop public banks in every state and many cities throughout the nation; and how people can opt out of Wall Street right now.

In other articles and on our web site, we examine the broader economy and how to remake it by putting in place economic democracy so that people have greater control over their economic lives and more influence over the direction of the economy.

It is worth restating that we do not see the proposals here as final, but more as an opportunity to continue the discussion so Americans can develop a finance system that serves and protects them.

Transform the Federal Reserve

A fundamental question for the new finance system is the role of the Federal Reserve and whether it should remain in private hands. The Federal Reserve is a privately owned US central bank that acts behind closed doors to create money and set interest rates, and it presently puts the interests of the big banks first. The Federal Reserve was originally created by Congress in 1913 and can be altered, nationalized or even dismantled by Congress.

The Fed is a private entity that is controlled by the banks. The 12 Regional Reserve Banks issue shares of stock to its member banks. The Fed is not operated for profit, and the stock may not be sold, traded or pledged as security for a loan. It does pay dividends that are, by law, 6 percent per year. But more importantly, the stock provides banks with votes to elect six of the nine members of the board of governors of the regional banks.

As Leo Panitch told The Real News Network, it is "not just that the banks are too powerful outside the Treasury and Fed. The Treasury and Fed are part of the Wall Street nexus, and they are organized in such a way, and the people who work in them are trained in such a way, as to be reproducing the current system."

There is widespread agreement among economists that there is a need for a central bank to regulate the money supply by setting interest rates and to be a lender of last resort in a financial crisis. However, Bill Black argues that the Fed can be made very small and mechanical in its setting of interest rates, rather than maintaining the current approach, which depends on what members of the Federal Reserve Board of Governors decide.

Further, the Fed needs to be made utterly transparent. "There is no reason for anything the Fed does to be opaque" says Black. In 2010, an "audit the Fed" bill passed in Congress despite aggressive opposition by the Fed. It was not the broad, open audit originally proposed by former Texas Republican Congressman Ron Paul and Rep. Alan Grayson (D-Florida), but it did provide a snapshot audit of a limited time of Fed activity.

As a result of the Government Accountability Office (GAO) audit of the Fed, Senate sponsor Bernie Sanders of Vermont said, "We now know that the Federal Reserve provided more than $16 trillion in total financial assistance to some of the largest financial institutions and corporations in the United States and throughout the world." Among the investigation's key findings was that the Fed unilaterally provided trillions of dollars in financial assistance to foreign banks and corporations from South Korea to Scotland. These decisions were all made without the public, media or elected officials' knowledge, and they would have remained secret without an audit.

In addition, the audit found conflicts of interest. For example, the CEO of JPMorgan Chase served on the New York Fed's board of directors at the same time that his bank received more than $390 billion in financial assistance from the Fed. Sanders urged that "No one who works for a firm receiving direct financial assistance from the Fed should be allowed to sit on the Fed's board of directors or be employed by the Fed."

But the fundamental question is: who should control the money supply? The control of the money supply may be one of the most important functions of government, but currently it is controlled by the Federal Reserve. The Fed creates funds digitally and makes them available to private banks at a low interest rate, which the banks can then use as they like to invest, add to their personal reserves and/or make loans of up to ten times the amount of their holdings.

At present, the government can only issue bonds that are sold to the Fed, banks or investors with the funds raised by those bond issues used for federal spending. These bonds are loans that must be repaid with interest by the government. So in effect, the government places itself in a position of debt by borrowing money from the banks, and then taxpayer dollars are used to pay the debt with interest. If the government created its own (debt-free) money instead, taxpayers would get more value for their dollars and the system could be more democratic and transparent, and could function for the public good.

Henry Ford said, "It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning." Why? Because, as Thomas Edison pointed out, "If our nation can issue a dollar bond, it can issue a dollar bill. The element that makes the bond good, makes the bill good ... It is absurd to say our country can issue $30 million in bonds and not $30 million in currency. Both are promises to pay, but one promise fattens the usurers and the other helps the people."

As part of the economic track of the 2011 Democracy Convention, Greg Coleridge argued that the US Constitution gives the government the power to create money; Article I, Section 8 says: "The Congress shall have power ... to coin money, regulate the value thereof, and of foreign coin." The creation of money is a public function, perhaps more important than any other part of the commons. As Coleridge points out, public money means we create our own money debt-free rather than borrowing from banks and building up debt.

The American Monetary Institute has put forward a thorough model of remaking the finance system to take power from the banks and give it to the people through the government. The institute point to a bill introduced by former Congressman Dennis Kucinich (D-Ohio), HR 2990, which dismantles the Federal Reserve and puts the necessary functions in the Department of Treasury, where a monetary authority is created to prevent inflationary and deflationary impacts. It would prevent banks from creating money through fractional reserve lending. Instead, money would be created by the government, which spends it into circulation for necessary programs - for example, infrastructure, education, health care.

Economist Jack Rasmus also urges that we "democratize" the Fed and require it to function as a national, Bank of North Dakota-like "public banking institution that would provide cost-only loans to the consumer sector (mortgage, auto, student, installment, etcetera), finance public investment corps for alternative energy, lend to community infrastructure projects, and totally remove the private banks from its board of governors and open market committee decision-making process."

Moving the money creation function into the federal government would place it within the US constitutional system of checks and balances to work for the whole society, not only for the bankers and the privileged. Rather than the banker's corporation, the Federal Reserve, creating money, the Fed would be replaced by a US Central Bank operating within the Department of the Treasury (as one option) which would create money.

Further, Coleridge argues, that there is good reason for governments to control the money supply because there are times when more money is needed in the economy and times when the money supply needs be slowed. When money is created by government, it is an asset and not debt to banks. We should be funding necessary projects and paying our debts with debt-free money. Money should be made for the benefit of the entire economy, not for the benefit of bankers.

Under such a system, the creation of money would be used to serve the interests of society. The money would be created and spent into circulation by the federal government for infrastructure, including the human infrastructure of education and health care. For example, the American Society of Civil Engineers grades US infrastructure D+ and sees an urgent need for over $3.6 trillion in spending to bring existing infrastructure to safe levels by 2020. As the federal government spends money on infrastructure and other urgent needs and funds local and state governments, this money is paid out to contractors, who pay their suppliers and laborers, who pay for their living expenses, and, ultimately, that money gets deposited into banks, which are then in a position to make loans.

Some creative thinking is needed to develop a new central banking system. We should open our minds to a wide range of options. For example, in addition to the approach described here, the finance system could be a fourth branch of government, elected directly by the people; or with a combination of elected and appointed governors to represent different parts of society, for example: energy, housing, health care, workers, transportation. The current system is not working and needs rethinking so that it serves the needs of the people and the society, not only the desires of financiers.

Public Banking: A Public Bank in Every State

Ellen Brown, the president of the Public Banking Institute, argues that we need a public bank in every state and major city. The United States has one model for public banking: the bank of North Dakota. When North Dakota farmers were losing farms to Wall Street, they organized a populist movement, and in 1919, set up the bank of North Dakota. The publicly owned bank recycles state revenues into credit for the state. Thus, North Dakotans keep their money in their community.

The result has been an ongoing success. Even during the current economic collapse, North Dakota escaped the credit crisis and has maintained a budget surplus since 2008, low unemployment and no public debt.

Imagine how different California could be if it had public banks. Brown summarizes: "At the end of 2010, it had general obligation and revenue bond debt of $158 billion. Of this, $70 billion, or 44 percent, was owed for interest. If the state had incurred that debt to its own bank - which then returned the profits to the state - California could be $70 billion richer today. Instead of slashing services, selling off public assets, and laying off employees, it could be adding services and repairing its decaying infrastructure."

How does public banking work? All of the revenues of the state go into the state's public bank, which, like other banks, leverages those deposits into credit. The state bank partners with local banks to fund local projects. For example, when there is a flood or other disaster, the bank quickly helps provide funds to rebuild homes and infrastructure. It is a bank focused on serving the public interest and which returns the profits to the public.

According to Brown, there have been two recent studies that show public banks are less corrupt than private banks and that they are more efficient and more profitable. The North Dakota public bank has complete transparency and accountability - including routine audits by several agencies. It does not pay executives exorbitant salaries and bonuses. It does not reward people for churning out risky loans. And it does not engage in casino investing in risky derivatives. It has lower costs because no advertising is necessary; instead, the government guarantees the bank easy access to liquidity.

The most obvious reason for a public bank is to allow a state to use its resources to build the economy of the state by keeping resources in-state and not sending them to Wall Street, but there are other reasons. The events in Cyprus, where depositors were forced to bail out the banks through seizure of their savings, show there needs to be a banking system that protects people. Cyprus-like seizures of accounts can happen in the United States.

In fact, Ellen Brown reports that as part of the "living wills" banks are required to prepare under Dodd-Frank - which describe how they will survive an economic crisis - the banks include "bail-in" provisions. These plans require depositors (who are unsecured creditors, with fewer rights than derivative investors) to bail out the banks by turning their savings into bank stock, which could be worth only pennies on the dollar in a crash.

Marc Armstrong, executive director of the Public Banking Institute, asks of the states: "What is their plan to prevent city, county and state governments from becoming creditors for the too-big-to-fail banks, the next time these banks lose a multi-billion dollar bet? Because of their fiduciary responsibility to the public, we request that our public finance officials answer the question: what is the risk we have in doing business with too-big-to-fail banks that are apparently now able to seize deposits and convert them to capital?"

The living wills of the big banks make them too risky for city, county and state government money, as well as pension funds' money.

Another concern is that at least 1,350 school districts and government agencies across the nation have turned to a controversial form of borrowing called capital appreciation bonds to finance major projects. These bonds allow the government to avoid paying anything now and pass the debt on to future generations, but at a much greater cost. For example, $22 million borrowed now with no payments due for 21 years would cost the taxpayers $154 million, seven times the amount borrowed, when it is repaid in 2049.

This practice raises questions. Armstrong summarizes: "Why are state and local governments, school districts and public hospitals paying Wall Street banks billions of dollars of interest on municipal bond and capital appreciation bond debt, when we could be paying that same interest to ourselves by issuing credit with a public bank?"

Michael Hudson, a former Wall Street economist, sees the private banking system as cannibalizing the economy and supports public banks to fund the needs of the nation. When the banks failed, the FDIC should have taken them over, essentially made them into public banks, says Hudson:

If the government would have taken over Citibank it would not have done the kind of things that Citibank did. The government would not have used depositors' money and borrowed money to gamble. It wouldn't have gone down the casino capitalism route. It wouldn't have played the derivatives market. It wouldn't have made corporate takeover loans. None of these are productive from the vantage point of economic growth and raising productive powers and living standards. They would not be the proper behavior of a public bank.

Hudson points to the differences between public and private banking. Private "banks are supposed to make money. And unfortunately, they can make money most easily ... by being parasitic, not by being productive." On the other hand, a public bank "would make loans for long-term purposes to serve the economy and help the economy grow."

With the risks of Wall Street banks increasing and dislike of their banking practices mounting, the public banking movement is growing. It is also being spurred by the US Treasury Department and the Federal Reserve's refusal to assist states with their budget problems. Brown reports that 20 states are considering public banks, as are a growing number of cities. Brown says, "We need to get more information out there and develop a groundswell of popular support. Populist movements start with a lot of study, learning about the monetary system." One place to do that is at the June 2-4 public banking conference in California.

Brown would like to see states remove the middleman, the private banks that profit from their deposits, by creating a public bank in every state so states could "bring their money back home and leverage it for their own purposes." There is no good reason for states and cities not to develop public banks and many good reasons to do so.

Change Is Already Happening as People Opt Out of Wall Street

There are a variety of vehicles being developed to help people move their money out of Wall Street banks and the current finance system.

The Move Your Money Project encouraged people to move their money from the big banks to community banks and credit unions. The Occupy movement held a Bank Transfer Day on November 5, 2011, as part of this campaign. The campaign was assisted by banks whose corrupt practices became notorious and who had started adding fees, like ATM card fees. Three months after Bank Transfer Day, more than 5.6 million customers had moved their money. The campaign continues at Switch Your Banks, which has a consistently excellent blog on banking. Credit unions, a form of cooperative finance, now have assets of over $1 trillion and are becoming major financial players.

People have also been creating time dollars and time banks. This concept, originated by Edgar S. Cahn, allows people to give time to get time; that is, if someone takes an hour to teach someone to read, they can get an hour for a massage from someone else participating in the time bank, and the masseuse can get an hour from a local participating plumber. This work is conducted outside of the tax system and allows people who have skills, but perhaps are unemployed or underemployed, to use their skills in a dignified way to purchase the skills of other people. TimeBanks.org provides a directory of Time Banks in the United States. If you cannot find one in your community, you can create a time bank.

Another opt-out is local currency. Across the world, 1,900 local communities, including over a hundred in the United States, are now issuing their own currency. Some communities, such as Ithaca, New York, issue paper currency; others in Canada, Australia, the UK or France issue complementary electronic money.

The new Internet currency, Bitcoin, has become popular very quickly. Bitcoin is already bigger than many sovereign currencies and this month broke the $1 billion value mark. Bitcoin is not tied to any particular financial institution and is independent from world governments. Some view Bitcoin as a safe haven for people trying to protect their money from corrupt Wall Street banking, but large investors have begun buying up Bitcoin to avoid taxes. The outcome is uncertain at this time.

More and more questioning has arisen regarding the current debt-based finance system. Occupy Wall Street offshoot Strike Debt is building popular resistance to all forms of debt imposed on us by the banks. They produced the Debt Resistor's Operations Manual, which provides specific information and tactics for understanding and fighting against the debt system. It provides information on how to deal with personal debt, as well as how to work collectively to challenge the way debt undermines communities. Strike Debt also organized a Rolling Jubilee where participants buy debt at pennies on the dollar, as debt collectors do, but rather than collecting the debt, they forgive it. So far, they have raised over $578,000 to abolish over $11.5 million in debt.

People are also examining ways to invest locally rather than on Wall Street. Michael Shuman, in Local Dollars, Local Sense points out that Americans have $30 trillion invested in stocks, bonds, mutual funds, pension funds and life insurance funds, but not even 1 percent of these savings touch local small business. He shows how people can profit by putting money into building their local businesses and creating resilient local and regional economies. Shuman describes many ways to opt out of Wall Street and opt in to local investment, among them investment clubs and networks, local investment funds, community ownership, direct public offerings, local stock exchanges and crowd funding.

Tying It All Together

In his current book, What Then Must We Do?, political economist Gar Alperovitz argues that banking is one of two major areas where game-changing, systemic change might develop (the other is health care). As the Wall Street finance system fails us and places us at great financial risk, people are looking for alternatives and thinking about ways to create a finance system that will serve the people. A lot has been done in this area, and a cohesive set of principles is beginning to be developed. These include:

Investigation and enforcement of the finance system.

Breaking up the big banks and limiting their size so they are not a systemic risk.

Remaking the Fed into a small, transparent, mechanical controller of interest rates.

Transferring the power to create money to the government in a new central bank.

Creating public banks in cities and states throughout the country.

Creating systems outside of the finance system that allow for barter, time banks and other alternatives.

Encouraging community banks and credit unions.

Encouraging local investment in communities instead of Wall Street investment.

This article does not attempt to cover all aspects of finance. For example, the international systems dominated by the World Bank and International Monetary Fund require major transformation, but that topic would require an article of equal length. We also do not deal with the economy beyond finance, where we see worker-self-directed enterprises or worker cooperatives as the foundation of a new democratic economy that spreads wealth and power more equitably among the people and where a progressive tax system would fund the government.

Finance is the center of the US economy. The current system does not function for most people - or for small- and medium-sized businesses. It is a system that is addicted to casino-like investment, is corrupted by unprosecuted security fraud and funnels money to the wealthiest.

The 2008 collapse had devastating consequences, and since the system remains quite opaque, we do not know whether another collapse is near. It is time to develop an alternative system of finance designed to support the needs of the people and the country, not the needs of bankers. We hope this article adds to an ongoing conversation, and we look forward to your comments so the conversation can be advanced further.

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This article was first published on Truthout and any reprint or reproduction on any other website must acknowledge Truthout as the original site of publication.

Margaret Flowers and Kevin Zeese

Kevin Zeese JD and Margaret Flowers MD co-host ClearingtheFOGRadio.org on We Act Radio 1480 AM Washington, DC and on Economic Democracy Media, co-direct It's Our Economy and are organizers of the Occupation of Washington, DC. Their twitters are @KBZeese and @MFlowers8.

[Demeter]

12. The People Are a Superpower By Kevin Zeese and Margaret Flowers

http://www.informationclearinghouse.info/article33977.htm

“Every wave on the ocean that has ever risen up and refused to lay back down has been dashed on the shore, but it is the very purpose of a wave to rise up, once it rises up above the horizon it finally has the perspective to see that it's not just a wave, that it's a part of a mighty ocean. And the sharpest rock on the wildest shore can never break that ocean apart, they can never wear that ocean down, because it's the ocean that shapes the shore.”

Tim DeChristopher, March 3, 2011, after being convicted for an act of climate justice.

Tim DeChristopher’s words ring true as we look at the resistance movements that fight for justice – economic, social and environmental – against the corporate power that brings injustice on all fronts. If you have not heard DeChristopher’s remarkable speech on the courthouse steps you can listen to it AT LINK.

DeChristopher was briefly among the core organizers of October211/OccupyWashington,DC before he went to prison. He is due to be released from a halfway house this April.

We were reminded of DeChristopher’s wave this week when we published an article by long-time antiwar and anti-corporate power activist Mike Ferner. Ferner was writing about another wave we should not forget, the global revolt against the invasion of Iraq. Thirty million people around the globe said ‘no’ to a war before it began. The New York Times wrote the next day that there were two superpowers in the world, the United States and the people. We did not stop that war, but history has proved us right. We should know from that experience and so many others that the people can rule better than the elites.

We are now seeing waves of protest in so many areas on so many issues, as the recent issues of this newsletter have shown. People ask where has Occupy gone? If they look, they will see people fighting on so many critical issues: health care because 120 adults die every day in the United States due to lack of health care, housing because millions have lost their homes, millions of homes are underwater and hundreds of thousands are homeless, poverty and hunger which effect 45 million, challenges to the unnecessary austerity and corporate tax breaks being pushed in DC and on and on. On issue, after issue, people are making waves.

One wave that will take center stage this weekend is climate change. The largest climate rally in US history will be held this weekend in Washington, DC, at the same time people are fighting on the front lines against tar sands in Utah, the Keystone XL pipeline in Oklahoma and Texas – where the Tar Sands Blockade is calling for a week of national actions from March 16-23. In Washington, DC yesterday 48 people were arrested outside the White House, including the executive director of the Sierra Club, which for the first time endorsed civil disobedience. The Boston Phoenix has an excellent article on climate being the new abolition movement, urging Americans who understand the threat it poses to embrace their radicalism. The article quotes Tim DeChristopher making points that apply to all of us working for peace, justice and ecology:

“Weeks before his sentencing, DeChristopher told Rolling Stone's Jeff Goodell: ‘I'm a climate-justice activist. . . . We want a radically different world. We want a healthy, just world.’ But first, he said, ‘we need to get the fossil fuel industry out of the way. First we've got to overthrow the corporate power that is running our government.’ He understands what that requires. ‘It will involve confrontation and it will involve sacrifice.’

“At his sentencing, standing before the federal judge, DeChristopher concludes a long, eloquent statement that spreads across the Internet and galvanizes a growing climate-justice movement: ‘This is not going away. At this point of unimaginable threats on the horizon, this is what hope looks like. In these times of a morally bankrupt government that has sold out its principles, this is what patriotism looks like. With countless lives on the line, this is what love looks like, and it will only grow. The choice you are making today is what side are you on.’”

DeChristopher points to the issue that unites us “corporate power that is running our government.” And, the choice we make every day: which side are you on? On every issue we face it the power of big business, often transnational corporations, which block progress and increase suffering and destruction.

People are standing up, getting organized and mobilizing. This week we posted an occupy document, "The Activist's Handbook: 1000 Ways to Politically and Socially Activate Your Life." It is not just about protest and resistance. Fun should always be on the agenda as was shown at the Direct Action Fashion Show 2013 at the Museum of Reclaimed Urban Space, an alternative to New York’s fashion week. It is also about building an alternative economy as the people in Occupy Winchester, MA are exploring on March 9 – Community Reinvestment Day, including socially responsible investing, creating a public bank in Massachusetts and creating sustainable businesses. And, Occupy The Roads, which has traveled 25,000 miles visiting 149 cities has announced a plans to occupy retail space, loft apartments and offices, totaling 12,000 sq ft. in Southern Ohio. This could become a great center for organizing. They are looking for people to participate – everyone has to be a serious worker to join.

Of course, protest and resistance are essential to creating the transformation we seek. Here are two more protests we want to highlight: a monthly protest against drones outside the CIA headquarters and an ongoing protest against drones outside of the Hancock Air Force base near Syracuse, NY, which included a “War Crimes Indictment.”

We are learning more and more about the extreme law enforcement response to the resistance movement. Documents from the Pacific Northwest Grand Jury show that police targeted activists merely because of their anarchist political views. In Charlottesville, VA the police finally shared video tapes, photos and other materials with Occupy Charlottesville, after fighting the release in court. Police say they will destroy the materials. In Boston, the prosecutors avoided a trial by dropping charges against all occupy cases, much to the dislike of many occupiers who wanted their day in court. The police would not act this way, if we were not having an impact.

To remind us how long the arc of justice is, and how many waves of movements have advanced the cause of progressive justice, we close with commemoration of a birthday this week – the birthday of Frederick Douglas. Douglas was one of the greatest social justice activists of our history for abolition of slavery, women’s rights and worker rights. His message of taking action is as true today as when he said it in 1857:

“If there is no struggle there is no progress. Those who profess to favor freedom and yet deprecate agitation are men who want crops without plowing up the ground; they want rain without thunder and lightning. They want the ocean without the awful roar of its many waters. This struggle may be a moral one, or it may be a physical one, and it may be both moral and physical, but it must be a struggle. Power concedes nothing without a demand. It never did and it never will.”

There is no question that the future economy and government we seek will be defined by the struggle that gets us there. This is the struggle of which we are all a part.

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This article is based on the weekly newsletter of October2011/ OccupyWashingtonDC.org. You can sign up to receive this free newsletter here:
http://october2011.org/pledge

Kevin Zeese JD and Margaret Flowers MD co-host ClearingtheFOGRadio.org on We Act Radio 1480 AM Washington, DC and on Economic Democracy Media, co-direct It's Our Economy and are organizers of the Occupation of Washington, DC. Their twitters are @KBZeese and @MFlowers8.

[Demeter]

14. Create Finance System That Serves Public, Part I: Shrink, Regulate Banks, and Enforce Law

http://truth-out.org/news/item/15638-before-next-crash-create-finance-system-that-serves-public-part-i-shrink-regulate-banks-and-enforce-law

Big finance - the too-big-to-jail banks that dominate the economy and government - is designed for financiers and does not benefit most people. That is why many are in rebellion against the looting class of Wall Street. But if we don't like Wall Street finance, what would we replace it with? What would a finance system that served and protected the people look like?

It is time to put together a new kind of financial system. Since the crash of 2008, not only do fraud and high-risk investments continue with little regulation and lax enforcement, but policies that protect people have weakened. Experts predict that another collapse of the big banks is very possible. In our fragile economy, another crash could have devastating consequences.

The ideas we put forward in this series of articles are not final, but are a work in progress. In part I, we focus on approaches to regulation and breaking up the too-big-to-fail banks, as well as on the risk that derivatives pose to depositors. In part II, we will discuss the Federal Reserve, public banks and ways to opt out of Wall Street now.

We see this series as part of ongoing dialogue and action to remake our cannibalistic finance system. Thankfully, many people have been thinking in depth about pieces of a new financial system, and we bring some of these ideas together here.

Enforcement Will Be Central No Matter What We Do

We live in a time of cheater economics. In fact, the failure of enforcement in response to the current economic collapse has been staggering when compared to the response during the savings and loan crisis of the 1980s and 90s. The history of banking shows that corruption is a problem when enforcement is inadequate. As financial crimes investigator Bill Black points out, "Bad ethics drive good ethics out of the marketplace because cheaters prosper."

Conservative economists say that if you do not deter white-collar crime, you will get more of it. In criminal justice theory, the concept of "no more broken windows" has become an excuse to arrest and jail people who wash car windows at intersections, petty marijuana offenders and those who engage in minor criminal behavior. But in the case of the economic collapse, Black says, "We do not have broken windows; we have broken banks and broken countries."

The prediction of widespread fraud due to lack of enforcement has come true. A recent study of the mortgage crisis confirmed that control fraud, committed by people responsible for the legitimacy of loans, was endemic within the most elite financial institutions. Black summarizes, "The key conclusion of the study is that control fraud was 'pervasive.'"

Black pointed out that the actual policy of the Department of Justice (DOJ) was not to prosecute the big banks because they could have a systemic impact if they collapsed. The joke of "too big to prosecute" actually became the policy of the federal government.

The number of investigators working on white-collar crime is inadequate. Black points out that we have about 1 million people working in the criminal justice system, but only 2,500 who investigate white-collar crime. Those 2,500 cover 1,300 industries - fewer than two FBI agents per industry. They cannot really investigate, or even understand, an entire industry, so the only way enforcement occurs is when there are criminal referrals by regulatory agencies such as the FBI, the Securities and Exchange Commission (SEC) and the Federal Deposit and Insurance Corporation (FDIC).

During the savings and loan scandal, which Black says was 1/80th the size of the current crisis in terms of losses and criminality, his previous agency, the Office of Thrift Supervision, made over 30,000 criminal referrals and produced over 1,000 felony convictions in major cases. The top 100 list of the worst S&L frauds involved 300 institutions and 600 individuals. Virtually all were prosecuted, with a 90 percent conviction rate. This same agency which was supposed to regulate the banks made zero referrals in the current collapse.

Even banks that are involved in laundering illegal drug profits have not undergone criminal prosecution. Referrals have essentially ended and there have been no serious criminal prosecutions by the federal government. In fact, the media interviewed whistleblowers - another possible source for criminal investigations - and Black reports that none were even contacted by the FBI.

Black writes that the SEC enforcement has also been inadequate. He says the commission's web site:

showcases its record of crisis-related actions against more than 150 firms and individuals, with sanctions totaling $2.7 billion. The $2.7 billion figure is supposed to sound enormous. It is orders of magnitude too small. Losses caused by the fraud epidemic in the U.S. are well in excess of $15 trillion. A trillion is a thousand billion.

Not only have the SEC's civil enforcement and fines been woefully inadequate, but the SEC does not require any useful admissions of guilt nor has it referred any cases to the DOJ for criminal prosecution.

The FDIC has also been inadequate. At the request of rule-breaking bankers, the FDIC, which insures bank deposits in the United States and shuts down failing banks, has, since 2007, repeatedly settled charges of banker wrongdoing by agreeing to "no press release" clauses that keep the settlements a secret, The Los Angeles Times reports. Further, so far the agency has been able to recover only $787 million of the $92.5 billion lost to bank collapses between 2007 and 2012.

One major reason for this failure is the revolving door in Washington. Regulators come from the finance industry and return to it after their time in government. This is most recently exemplified by Lanny Breuer, who was responsible for banking enforcement at the DOJ and made no bank prosecutions. He just left the DOJ to work for the corporate law firm, Covington and Burling, where he is expected to earn a roughly $4 million annual salary. The recent appointments of Jacob Lew as Treasury Secretary and Mary Jo White as the head of the SEC continue the Wall-Street-on-the-Potomac revolving door. Lew's appointment maintains the control of Treasury by Wall Street in the tradition of Bob Rubin, Larry Summers, Henry Paulson and Timothy Geithner.

How widespread is securities fraud? Black points out that by 2006, 40 percent of all the loans made were "liar's loans." This was the term used by the financial industry to describe loans that were based on false incomes and false appraisals. That is over 2 million fraudulent loans. These fraudulent loans grew by over 500 percent between 2003 and 2006 and were an important factor in the hyperinflation of the housing bubble.

Studies have repeatedly shown it was the lenders who put the lies in liar's loans. Testimony, which you can read in the Financial Crisis Inquiry Commission Report, details how loan officers and brokers were taught that the quality of the loans did not matter; if they led to default, it was irrelevant. Making one single jumbo loan ($600,000 house) would result in a fee for the loan broker (who is at the bottom of the finance chain) of $20,000. Brokers only got the fee if the loan was approved and sold, so they made sure that the borrower's income was inflated. Black notes a study which showed that in 60 percent of the cases, borrowers' income was inflated by at least 50 percent. So, the system invited fraud and the lack of enforcement ensured it became widespread.

No matter what kind of finance system we have, there is a need for strong, independent enforcement with transparency and audits.

Break Up the Big Banks and Prevent Them From Getting Too Big Again

The first problem that must be confronted is to break up the big banks, the systemically dangerous institutions that are too big to fail or jail. These banks corrupt the system to the point where Sen. Dick Durbin (D-Illinois) said: "And the banks - hard to believe in a time when we're facing a banking crisis that many of the banks created - are still the most powerful lobby on Capitol Hill. And they frankly own the place."

Neil Barofsky, the former overseer of the government's Troubled Asset Relief Program (TARP), said on The Daily Show that one reason TARP failed to bail out homeowners was, "A lot of the biggest banks did and still do hold the guns to our heads."

In addition to corrupting the political and regulatory system, these banks dominate the economy and prevent competition in the finance industry. As George Will writes in The Washington Post:

In 2011, the four biggest U.S. banks (JPMorgan Chase, Bank of America, Citigroup and Wells Fargo) had 40 percent of all federally insured deposits. Today, the 5,500 community banks have 12 percent of the banking industry's assets. The 12 banks with $250?billion to $2.3?trillion in assets total 69?percent. The 20 largest banks' assets total 84.5?percent of the nation's gross domestic product.

This concentration of wealth in the largest banks has gotten worse under the reign of President Obama and former Treasury Secretary Geithner. Their legacy is that the 0.2 percent now control 69 percent of everything.

Black points to three critical interrelated problems that all stem from the systemically dangerous institutions, the too-big-to-fail-or- jail banks which have a long history of crimes. When the next one fails - not "if," but "when" - we have to shrink these banks so they no longer pose a systemic risk. Three problems with the big banks:

1. They get a huge, inherent subsidy (without which they would not be profitable). There is no chance for competition or markets because big banks crush the opposition

2. They are too big to prosecute, according to the government leadership, which destroys integrity and the concept of justice.

3. Crony capitalism cripples democracy because banks have so much economic power that they get immunity and are able to dominate and corrupt politics.

So the top priority in creating a finance system that serves the people has to be to get rid of systemic institutions that are massively criminal institutions. Our most supposedly "reputable" banks are pervasively criminal.

Once the banks are broken up, they need to be prevented from getting too big. Black suggests passing laws that forbid them from getting too large by putting an absolute limit on their size, perhaps based on a percentage of GDP; currently, Black suggests a limit of $50 billion to prevent banks from posing a systemic risk. Dallas Fed Chair Richard Fisher suggests $100 billion. This change would transform the global financial system so that there is room for public banks, credit unions and community banks to compete with commercial banks.

There is a lot of support for breaking up the big banks. Fisher has called for the break-up of the systemically important banks, as has Daniel Tarullo, a member of the Fed Board of Governors. In addition, many former bank executives see the big banks as too big, including former CEO of Citigroup and father of the modern too-big-to-fail bank Sandy Weill, former Merrill Lynch CEO David Komansky, former CEO of Citicorp John Reed, Chairman and CEO of M&T Bank Robert Wilmers, Chief Researcher of the Dallas Federal Reserve Harvey Rosenblum, former CEO of Morgan Stanley Phil Purcell, former Citigroup CFO Sallie Krawcheck, former partner at Goldman Sachs Roy Smith, and Former Chairman of Citigroup Richard Parsons. Sen. Sherrod Brown (D-Ohio) introduced legislation to break up the big banks.

Half of Americans support breaking up the big banks and only 23 percent oppose it. according to a 2013 Rasmussen Poll. And an IMG Forum survey of 39 US economists shows that a majority, 54 percent, either agreed or strongly agreed that we should shrink the big banks. Only 10 percent disagreed, and no one strongly disagreed.

Others, like Leo Panitch, the Canada research chair in comparative political economy and a distinguished research professor of political science at York University in Toronto, suggest that rather than breaking up the big banks, we take them "into the public domain and turn them into public utilities and have them serve the functions that are needed, in terms of a financial market, in a way that is determined by state policy and by a system of democratic planning."

Big Risk on the Horizon: The Unregulated, Massive Derivatives Market

There are many areas of regulation needed, such as the return of Glass-Steagall to separate commercial banking and investment banking. One area where there is a lack of regulation that deserves special attention is the derivatives market.

Derivatives are "a financial product derived from another financial product." They are not traded on well-regulated markets (like the Chicago Board of Trade) but are contracts between parties who want to trade risks outside of a recognized exchange. According to this report from America Blog, "The contracts are not standardized" and "the parties aren't vetted by any controlling institution." Further, "the only guarantee that either party will get paid is trust ... or the naked belief that they just can't lose on this one."

Another way to define derivatives as the blog Demon-ocracy would have it: "Pick something of value, make bets on the future value of 'something,' add contract and you have a derivative." Derivatives really are a form of betting on the future in an unregulated casino market:

A derivative is a legal bet (contract) that derives its value from another asset, such as the future or current value of oil, government bonds or anything else. Ex- A derivative buys you the option (but not obligation) to buy oil in 6 months for today's price/any agreed price, hoping that oil will cost more in future. (I'll bet you it'll cost more in 6 months). Derivative[s] can also be used as insurance, betting that a loan will or won't default before a given date. So it's a big betting system, like a [c]asino, but instead of betting on cards and roulette, you bet on future values and performance of practically anything that holds value. The system is not regulated [whatsoever], and you can buy a derivative on an existing derivative.

So, these unstandardized, off-market, unregulated gambles (a k a "investments&quot are highly risky. And here is the scary part: the size of the derivatives market. Based on 2010 data, according to America Blog, it has "$1.2 quadrillion in notional value; at least $12 trillion in cash at risk." The notional value of the derivatives market is 20 times the size of the world economy. The world's annual GDP is between $50 trillion and $60 trillion. The $12 trillion actually at risk (credit exposure) is 20 percent of the world economy and just under the $16 trillion US economy. So, if the derivatives market crashes, who is going to bail out the banks that collapse as a result?

The recent collapse in Cyprus revealed who will be at risk when the next collapse occurs: the depositors. Ellen Brown reports Cyprus can happen in the United States: "A joint paper by the US Federal Deposit Insurance Corporation and the Bank of England dated December 10, 2012, shows that these plans have been long in the making; that they originated with the G20 Financial Stability Board in Basel, Switzerland (discussed earlier here); and that the result will be to deliver clear title to the banks of depositor funds."

Further, she told us in a radio interview that in US banks' living wills, which they are required to develop under Dodd-Frank to explain how they will survive an economic collapse, they include transforming deposits into bank stock. As we saw when Lehman Brothers failed, bank stock was worth only pennies on the dollar. This puts not only every person who has accounts in the big banks at risk, but also state and city governments and pension funds that do.

The global derivatives market comes primarily from big banks in the United States. According to the Office of the Comptroller of the Currency's third quarter report, the total amount of derivative exposure at just the top four banks is now some $212 trillion (notional exposure) or 93.2 percent of the total $227 trillion in outstanding US derivatives. With a national economy of $15.8 trillion, if the big banks lose derivatives bets of 10 percent of this notional value, it will be bigger than the entire US economy. Here are some charts that show what is at risk, the banks that are at risk and some of the security fraud they have been involved in.

The collapse that comes from this unregulated market could come very quickly because, says a Demon-ocracy writer, "derivatives are traded in microseconds by computers, we really don't know what will trigger the crash, or when it will happen, but considering the global financial crisis, this system is in for tough times, that will be catastrophic for the world financial system."

Derivatives put the world economy at serious risk, and the too-big-to-fail banks betting in the derivative casino do not have a record for being corporations we can trust. Indeed, their record is one of "pervasive" fraud. Derivatives need to be aggressively regulated, quickly! But right now the government is moving to weaken the already inadequate regulation that exists.

Regulation of big finance is going to get more difficult if the Trans-Pacific Partnership becomes law. It will protect big finance by, one, preventing regulation of the finance industry by locking in a model of extreme financial-service deregulation; and, two, allowing capital to move in and out of countries without restrictions. This prevents countries from controlling the flow of capital, which has many negative consequences. It will also make it more difficult to create public banks because the agreement is opposed to state-owned enterprises.

Continuing the Discussion

This article is the first of a two-part series. The issues examined here - shrinking the banks, regulating their practices (especially the derivative market) and enforcing the law against the white-collar crimes of the finance industry - are only the beginning of remaking the finance system. In Part II, we will describe how the Federal Reserve can be re-made and central banking designed to serve the people, not the bankers and how every state and many cities should have their own public banks to build local economies, as well as outline the many steps you can take right now to opt out of Wall Street finance.

Remaking the finance system so it serves and protects the people is foundational to creating a new economy. And the deep corruption in the Wall Street finance system, corruption the participants are well aware of, presents an opportunity for transformative change. The American public, elected officials and even those involved in the finance system know that change is urgently needed and may be forced on us sooner than expected if the system collapses again. It is hard to imagine not looking back at this time period, where there was inadequate enforcement, corrupt regulation and virtually no regulation of the massive derivatives market, and not saying "we knew it would collapse." The path to disaster that the country is on seems obvious, but the future beyond Wall Street finance is not yet determined. Creating the economy we want is the responsibility of all of us.

**********************************************************

PREVIOUS POST ABOVE, in Part II, we examine remaking the Federal Reserve, creating public banks throughout the country and opting out of Wall Street now. You can listen to "Big Finance Fraud and Public Banks" with Bill Black and Ellen Brown on Clearing the FOG Radio.

This article was first published on Truthout and any reprint or reproduction on any other website must acknowledge Truthout as the original site of publication.

[Hugin]

16. Well, the stupid "drug testing for welfare" meme is flying over the social networking sites... AGAIN

I've had to talk down a few idiots.

[kickysnana]

17. Everybody please think about the storm coming in to slow down a piece...

It is scheduled to come in with another 6" of snow about 4pm when I am scheduled to have three MRI procedures about 20 minutes away by freeway and my full size van loves to slide around on slick streets.

I am going to stop by and see my grandkids before hand, they live on the route there.

On tap this morning is the local Fire Department inspecting for fire hazards between 9-3pm They always show up at naptime for us.

Thanks

[Hugin]

22. Aw, please be careful, kickysnana.

Sounds like a doozy of an April storm.

[Demeter]

18. Nailed it!

[xchrom]

19. The end of macro magic

http://www.washingtonpost.com/opinions/robert-samuelson-the-end-of-macroeconomics-magic/2013/04/21/7408d628-a924-11e2-a8e2-5b98cb59187f_story.html

The International Monetary Fund recently held a conference that should concern most people despite its arcane subject — “Rethinking Macro Policy II.” Macroeconomics is the study of the entire economy, as opposed to the examination of individual markets (“microeconomics”). The question is how much “macro” policies can produce and protect prosperity. Before the 2008-09 financial crisis, there was great confidence that they could. Now, with 38 million unemployed in Europe and the United States — and recoveries that are feeble or nonexistent — macroeconomics is in disarray and disrepute.

Among economists, there is no consensus on policies. Is “austerity” (government spending cuts and tax increases) self-defeating or the unavoidable response to high budget deficits and debt? Can central banks such as the Federal Reserve or the European Central Bank engineer recovery by holding short-term interest rates near zero and by buying massive amounts of bonds (so-called “quantitative easing”)? Or will these policies foster financial speculation, instability and inflation? The public is confused, because economists are divided.

Perhaps the anti-economist backlash has gone too far, as George Akerlof, a Nobel Prize-winning economist, argued. The world, he said, avoided a second Great Depression. “We economists have not done a good job explaining that our macro policies worked,” he said. Those policies included: the Fed’s support for panic-stricken financial markets; economic “stimulus” packages; the Troubled Assets Relief Program (TARP); the auto bailout; “stress tests” for banks; international cooperation to augment demand.

Fair point. Still, the subsequent record is disheartening. The economic models that didn’t predict the crisis have also repeatedly overstated the recovery. The tendency is to blame errors on one-time events — say, in 2011, the Japanese tsunami, the Greek bailout and the divisive congressional debate over the debt ceiling. But the larger cause seems to be the models themselves, which reflect spending patterns and behavior by households and businesses since World War II.

[Demeter]

29. Is the Depression Avoided, or Just Kicked Down the Road?

If they keep up with that Austerity nonsense...it will be bigger and deeper than it is already.

And I think most people would claim it's a depression and has been for quite some time, because they live in the real world, not on paper covered with made-up numbers and arcane and irrelevant theories.

[Fuddnik]

32. Typical Samuelson gibberish.

"Is “austerity” (government spending cuts and tax increases) "

They're trying to keep taxes lower than they should be, and fighting inreases tooth and nail.

[xchrom]

20. We still have a health-care spending problem

http://www.washingtonpost.com/opinions/we-still-have-a-health-care-spending-problem/2013/04/21/2e105bbc-a854-11e2-8302-3c7e0ea97057_story.html

With every new report about the recent slowdown in health-care spending there is speculation in the media that the problem of rising health costs has somehow been solved or cut down to size.

We have seen this movie before. On a number of occasions in the past several decades we have been led to believe that the challenge of containing the growth in health-care costs has been met. In the mid-1990s, it was the managed-care revolution. That was followed by the managed-care backlash, when the trend line for health-care costs headed back up.

The idea that we have licked the problem of health-care cost increases is no more probable today than it was in the past.

Our nation has made no fundamental change in how health care is paid for or delivered.

Congress has not passed sweeping legislation to contain health costs, although it did make inroads into moderating the growth in Medicare and health-insurance premiums through the Affordable Care Act (or Obamacare, as it is sometimes known). Increases in Medicare payments to insurance companies, hospitals and other health-care providers are getting trimmed. And the law is fostering a number of small-scale experiments around the country that are showing promise in delivering health care more efficiently. Big increases in insurance premiums for individuals and small businesses are now scrutinized by federal and state officials, and insurers are required to provide rebates if their administrative overhead and profits are too high.

[kickysnana]

25. +1

[xchrom]

21. Philips sees booming LED lighting sales

http://www.bbc.co.uk/news/business-22244564

Philips, the world's biggest lighting maker, has reported a 38% jump in first quarter LED sales from a year earlier.

The pricey but long-life and energy-efficient bulbs now represent 23% of its lighting sales.

The Dutch healthcare and consumer appliances group said it made 162m euros ($211m; £139m) in the first three months of the year.

Appliances sales were up 10% from a year earlier, but other parts of the business were stagnant.

[xchrom]

23. Caterpillar Profit Misses Analysts’ Estimates on Mining Slowdown

http://www.bloomberg.com/news/2013-04-22/caterpillar-profit-misses-analysts-estimates-on-mining-slowdown.html

Caterpillar Inc. (CAT), the world’s largest maker of mining and construction equipment, reported first-quarter earnings and sales that trailed analysts’ estimates as mining companies slowed orders.

Net income fell to $880 million, or $1.31 a share, from $1.59 billion, or $2.37, a year earlier, Peoria, Illinois-based Caterpillar said today in a statement. The average of 20 estimates compiled by Bloomberg was for profit excluding one- time items of $1.38 a share. Sales declined to $13.2 billion from $16 billion, less than the average estimate of $13.7 billion.

The company forecast 2013 earnings of about $7 a share, compared with a January projection of $7 to $9. Sales will be $57 billion to $61 billion, compared with an earlier forecast of $60 billion to $68 billion. The average estimates were for profit of $7.70 a share on sales of $62.7 billion.

“The clear headwind is mining,” Andy Kaplowitz, a New York-based analyst for Barclays Plc who has a buy rating on the shares, said in an April 12 telephone interview. “Globally, miners have remained under pressure. Demand is anemic.”

[DemReadingDU]

24. Wall Street betting billions on single-family homes in distressed markets

4/21/13 Wall Street betting billions on single-family homes in distressed markets

Big investors are pouring unprecedented amounts of money into real estate hard hit by the housing crash, bringing those moribund markets back to life but raising the prospect of another Wall Street-fueled bubble that won’t be sustainable.

Drawn by the prospect of double-figure profit margins on rents and the resale of homes whose prices plummeted in the crash, hedge funds, Wall Street investors and other institutions are crowding out individual home buyers.

If the chain of easy credit and dangerous leverage that started on Wall Street fanned the housing bubble and eventual crash, some analysts find it disturbing that major investors are the ones snapping up the bargains — and eventual big profits — left in its wake.

“There is the possibility that Wall Street and the banks and the affluent 1 percent stand to gain the most from this,” said Jack McCabe, a real estate consultant based in Deerfield Beach, Fla. “Meanwhile, lower-income Americans will lose their opportunity for the American Dream of building wealth through owning a home.”

more...
http://www.washingtonpost.com/business/economy/wall-street-betting-billions-on-single-family-homes-in-distressed-markets/2013/04/21/ac4bdefc-a2e1-11e2-9c03-6952ff305f35_story.html

[kickysnana]

26. The youngers cannot play that game no $$$, no future, a lot of us oldsters won't..

What I want is for when they speculate like this they take the loss. Who exactly decided the rest of us have to pay their gambling debts and how did they convince everyone else to let them do it?

[Demeter]

30. No jobs, no renters

These people are slow learners. Maybe they are completely incapable of learning.

I sure hope they have a Plan B. Preferably one that doesn't include a public bailout by taxpayers.

[xchrom]

27. Ireland’s budget deficit for 2012 comfortably inside troika target

http://www.irishtimes.com/business/economy/ireland/ireland-s-budget-deficit-for-2012-comfortably-inside-troika-target-1.1368564

Ireland's budget deficit for 2012 was 7.6 per cent of GDP, comfortably inside the EU-IMF troika's target of 8.6 per cent, according to the Department of Finance's Maastricht Returns.

The figures, filed twice yearly by each member state to Eurostat - the EU's statistics office, represent a considerable improvement on the Government's Budget 2013 deficit forecast of 8.2 per cent.

The department said the revised forecast deficit for 2013 was 7.4 per cent of GDP, broadly in line with the 7.5 per cent projected at Budget time and within the programme target of 7.5 per cent.

The debt/GDP ratio essentially measures a country’s ability to carry its national debt.The troika programme for Ireland has set a deficit target of 3 per cent of GDP by 2015.

*** oh lets just cut the crap -- stop calling it Europe and start calling it Troika.

[xchrom]

28. EUROPEAN AUSTERITY YIELDS MEAGER RESULTS IN 2012

http://hosted.ap.org/dynamic/stories/E/EU_EUROPE_FINANCIAL_CRISIS?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2013-04-22-11-52-45

LONDON (AP) -- The austerity pain pursued by a number of European countries led to very little gain in 2012.

Figures Monday from Eurostat, the European Union's statistics office, showed that many of the countries hit hardest by Europe's financial crisis, such as Portugal and Spain, saw their budget deficits increase last year - even though they have pursued strict austerity policies designed to get their public finances back into shape.

Though Europe's combined deficit level fell during the year - largely thanks to Germany swinging into a budget surplus - countries continue to reel from the impact of austerity. The overall debt of the 17 EU countries that use the euro rose from 8.2 trillion euros ($10.7 trillion) to 8.6 trillion euros as the region sank back into recession.

After the European crisis over too much debt broke out in late 2009, the region's governments slashed spending - either to meet conditions for bailout loans, or to reassure jittery bond markets. But austerity has also inflicted severe economic pain. Slashing spending and raising taxes have proved to be less effective at reducing deficits than initially thought - and perhaps counter-productive. As economies shrink, so do their tax revenues, potentially making it harder to close budget gaps.


***color me shocked

[Fuddnik]

31. From the Hooda Thunked It Dept.--Obama to attend the Bush overdue library book dedication.

Obama Is Comfortable With Bush's Inferno

By Ralph Nader, Common Dreams

22 April 13



eorge W. Bush is riding high. A megamillionaire, from the taxpayer-subsidized Texas Rangers company, he makes $150,000 to $200,000 per speech, receives a large presidential pension and support facilities and is about to dedicate the $500 million George W. Bush Presidential Library and Museum on April 25.

President Obama will be at the dedication, continuing to legitimize Mr. Bush, as he did from the outset by announcing in 2009 there would be no investigations or prosecutions of the Bush officials for their crimes.

In an interview with the New York Times, Mr. Bush continued to say he has no regrets about his Presidency. "I'm comfortable with what I did," he said, "I'm comfortable with who I am." He added, "Much of my presidency was defined by things that you didn't necessarily want to have happen."

But he and Dick Cheney made them happen, although Mr. Bush attributed some military events to Providence. One of the "things" he is comfortable with was his criminal, unconstitutional invasion and occupation of Iraq, which took over one million Iraqi lives - children, women and men - created 5 million refugees and committed overall sociocide on that country which posed no threat to the U.S. The carnage continues to this day by a militarized al-Qaeda-in-Iraq that didn't exist before his invasion.

Apparently, Mr. Bush is "comfortable" with the price paid by the U.S. soldiers and their broken families - over 5,000 fatalities and suicides, 200,000 injuries, illnesses and traumatic syndromes - and by U.S. taxpayers, who over time will pay an estimated 3 trillion dollars according to Nobel Laureate and economist, Joseph Stiglitz.

Former Rep. Ron Paul (R-Texas) has said repeatedly that Bush and Cheney "lied us into invading Iraq." Such an understatement. Bush and Cheney not only lied about Saddam's weapons of mass destruction, they also deceived, covered-up, corrupted or intimidated the mass media, bullied an abdicatory Congress, and delivered a false address to the United Nations with the now regretful Secretary of State Colin Powell.

(snip)

http://readersupportednews.org/opinion2/277-75/17066-obama-is-comfortable-with-bushs-inferno

[xchrom]

33. Spain’s deficit hit 10.6 percent of GDP last year, EU says

http://elpais.com/elpais/2013/04/22/inenglish/1366654318_846647.html

Spain posted the biggest public deficit within the European Union last year as a result of the EU bailout it was granted to clean up its banks. The task of taming the shortfall was exacerbated by the ongoing recession, which, the government acknowledged on Monday, could be up to three times deeper than it initially forecast.

The EU’s statistics office Eurostat estimates that Spain’s deficit last year came in at 10.6 percent. The second-biggest shortfall was posted by Greece at 10 percent followed by Ireland (7.6 percent) and Portugal (6.4 percent). Germany posted a surplus of 0.2 percent of GDP.

Without counting the bailout the shortfall in Spain’s accounts dropped from 9.4 percent in 2011 to 7.0 percent of GDP last year, when the government had targeted a figure of 6.3 percent.

The target for Spain’s deficit agreed with Brussels for this year is 4.5 percent of GDP, with the government committed to bringing the shortfall back within the EU ceiling of 3 percent of GDP in 2014. However, given the sclerotic state of the economic, Brussels is expected to grant the government more time to meet the 3 percent target. Whether it gets one or two years will depend on Brussels’ assessment of the government’s new macroeconomic scenario for the next three years and a new batch of reforms, which are expected to be unveiled this Friday.

[xchrom]

34. Mexico’s states struggle with soaring debts left by their outgoing governors

http://elpais.com/elpais/2013/04/22/inenglish/1366650935_697435.html

When Humberto Moreira took office as governor of Coahuila in December 2005, the northern Mexican state had a debt of 300 million pesos ($24.4 million). Today, the residents of Coahuila owe the banks some 36.5 billion pesos ($3 billion).

As the state tries to pull itself out of its debt, Moreira – whose Institutional Revolutionary Party (PRI) administration used false documents to continue to apply for loans – spends his days in Spain where he is studying for a master’s degree.

Coahuila is a paradigmatic case, but it is far from being the only one in Mexico. In Jalisco, Tabasco, Chiapas and Michoacán states – or in other words, in any corner of the country, regardless of the party running the government – unchecked growth, secrecy on the part of officials and corruption allegations surrounding debts have become the main threats for the future of the country’s 32 states.

According to Mexico’s Finance and Public Credit Department, state debts have surged by 148 percent over the last six years, reaching more than 400 billion pesos ($32.5 billion) this year.