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Rich Cause the Crisis, Workers Get the Blame July 14, 2009

Posted by rogerhollander in Canada, Economic Crisis, Labor.
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Published on Tuesday, July 14, 2009 by The Toronto Star by Linda McQuaig

For a while, the Wall Street meltdown gave the rich a bad name.

Even they seemed embarrassed by their own excess. There were reports of designer shops packaging purchases in plain paper bags.

But as going downscale lost its novelty, the rich have grown weary of their own embarrassment. Gratuitous extravagance is making a comeback. I noticed a Tiffany’s ad in a Toronto newspaper last week for a “diamond solitaire on a platinum band of channel-set diamonds. From $3,550 to $1,000,000.”

Clearly the rich are feeling good in their own skin again. Public wrath, having briefly nipped at the heels of the well-to-do, has moved on to the heels of the less well-heeled – who also carry plain paper bags, but ones you can eat lunch out of.

And so, as the Wall Street-generated economic storm has squeezed public finances, Toronto’s city workers find themselves in the crosshairs.

The striking workers are demonized for wanting to hold onto their benefits, including the right to bank sick days, even though they won this fair and square at the bargaining table. It’s just one of dozens of concessions the city is now demanding from them.

Although the strike is a terrible drag for all of us, the city workers are in some ways doing us a service – holding the line against employers taking advantage of the recession to demand concessions (if unions simply give in, emboldened employers will go for more), and taking a stand against further erosion of public services.

Of course, in the media narrative, the workers are the villains. The role of the financial elite in triggering the economic storm is omitted, as is the elite’s relentless campaign over the past three decades for tax cuts, which set the stage for today’s financial shortfalls.

Responding to this campaign, Ottawa kept cutting taxes (more than $160 billion since 2003), rather than using its massive surpluses for public reinvestment. That meant cuts in transfers to provincial and municipal governments, even as extra responsibilities were downloaded onto them.

By August 2007, crash-strapped Toronto announced an array of cuts that threatened to diminish life in the city: less snow removal, shorter library hours, delayed openings for skating rinks, etc. Further down the food chain, struggling school boards were closing swimming pools.

In fact, the crunch could have easily been alleviated – if the Harper government had been willing to transfer the revenue from a planned one percentage point reduction in the GST, as municipal leaders across the country pleaded. His October 2007 budget gave the answer: no.

Business groups never mention that tax cuts necessitate cuts in public services. For the rich, it’s often a good trade-off; they can buy their own high-end services. But it’s rarely good for the rest of us.

As economists Hugh Mackenzie and Richard Shillington showed in a study last April, Canadian families typically get about $41,000 in public services for their taxes, which amounts to “the best bargain they’ll ever get.”

Meanwhile, provincial Conservative Leader Tim Hudak, sensing the frustrated public might be ready for a Mike Harris revival, has gone after the strikers, suggesting they should “get a grip.”

Hudak wants to direct your anger at the people who pick up garbage, rescue animals, run daycare centres – not at those who’ve spent years pushing for tax cuts that have left our public services underfunded and who now chase the recession blues with million-dollar shopping sprees at Tiffany’s.

© Copyright Toronto Star 1996-2009

Linda McQuaig’s column appears every other week in The Star.

Bailout Plan Hits the Poor June 25, 2009

Posted by rogerhollander in Economic Crisis, Poverty.
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Published on Sunday, June 14, 2009 by ColorLines by Victor Corral

When Congress hastily created and passed the Troubled Asset Relief Program (TARP) last fall to bail out the financial sector, the program didn’t offer any consumer protection against the type of predatory lending practices that led to the financial crisis. It came as no surprise, then, when Santa Barbara Bank & Trust, a self-described “community bank” in California, announced in January that it was intending to use its $180 million in bailout money to make high-priced refund anticipation loans, known as RALs.

RALs are short-term loans borrowed against a consumer’s tax refund. They’re often advertised as “quick cash,” because they allow people to get their tax refund in days instead of waiting for the IRS, which can take at least 10 days. Historically, poor communities have been targeted for these loans. According to the IRS, 85 percent of the people who took RALs in 2006 had incomes of $37,300 or less, and nearly two-thirds were recipients of the Earned Income Tax Credit. On average, a person pays between $200 and $500 in fees for a RAL.

This tax season, it’s expected that low-income taxpayers will pay more than $1 billion in fees and triple-digit interest rates associated with RALs.

Refund anticipation loans are made by a handful of banks, including HSBC, JP Morgan Chase and Santa Barbara Bank & Trust. The banks give tax preparers—including H&R Block and Jackson Hewitt, as well as preparers found at places like used car lots—a share of
the hundreds of dollars in “application,” “processing” and “e-file” fees that can be made from a single loan.

“These multimillion dollar corporations are basically skimming off another layer of taxpayer money with these loans,” said Chi Chi Wu, a staff attorney with the National Consumer Law Center, an organization that specializes in consumer law issues on behalf of low-income people.

While refund anticipation loans can be classified as abusive, predatory loans, they escape government regulation because they are bank loans, Wu said. National banks are immune to state consumer protection laws. Other than requiring full disclosure about RALs, all most states can do is sue for the fraud frequently associated with these loans.

Recently, the IRS began to implement the initial phase of a new system to process tax returns and issue refunds within 48 to 72 hours. “While this is significant, the refund anticipation loan business is anticipating this,” said Kimberly S. Jones of the California Reinvestment Coalition, a group that advocates for fair access to banking and financial services. “Now, some preparers provide RALs where you can walk out of there with a check or a check card. But it’s still a good thing, because it shortens the amount of time that they can accrue interest.”

Staff from the California Reinvestment Coalition and other groups recently met with Congress members to alert them to how bailout money was being used. “There was a lack of awareness on how TARP funds were being used” said Jones, who added that the groups are going to keep pressing Congress and the media about this “because there is a genuine, and appropriate, disgust with how TARP has been spent.” © 2009 ColorLines

Obama a Very Smooth Liar June 18, 2009

Posted by rogerhollander in Barack Obama, Economic Crisis, Foreign Policy, Iraq and Afghanistan, Labor, War.
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(Roger’s note: this article only begins to touch on some of the major aspects of Obama’s phony “change” presidency.  What should be added are: the torture cover-up, the support for the Israeli massacre in Gaza, the broken promises to the Gay community, the regressive education policy, the tepid at best support for pro-choice, etc. etc.)
 
Published on Wednesday, June 17, 2009 by The Providence Journal

by John R. MacArthur

It isn’t quite fair to call Barack Obama a liar. During the campaign he carefully avoided committing to much of anything important that he might have to take back later. For now, I won’t quibble with The St. Petersburg Times’s Obamameter, which so far has the president keeping 30 promises and breaking only six.

And yet, broadly speaking, Obama has been lying on a pretty impressive scale. You just have to get past his grandiloquent rhetoric — usually empty of substance — to get a handle on it. I offer a short, incomplete list, which I’m sure others could easily enlarge.

  • Obama portrayed himself as the peace candidate, or at least the anti-war candidate. He is not a peace president, nor is he stopping any wars. True, he promised military escalation in Afghanistan (to blunt John McCain’s accusations of wimpishness), but well-meaning folks believed their new hero would genuinely move to end the occupation of Iraq and seriously try to negotiate with the Taliban. Instead, he has not only increased the number of troops and attacks against the Afghan insurgency, he has also expanded on George Bush’s cross-border raids into Pakistan, which have killed many civilians. The way things are going, Pakistan could become the new Cambodia and Obama the new Nixon.In Iraq, Obama has promised to withdraw all the troops . . . unless, which means that we’re not leaving. Whether it’s 50,000 troops remaining at the “invitation” of the so-called government of Iraq, or just enough to man the 14 permanent military bases, or some combination of U.S. military personnel and private mercenaries that exceeds 50,000 soldiers, our army will almost certainly stay in Iraq past the stated deadline of Jan. 1, 2012.
  • Obama said he wanted to reform Washington and “fix” its “broken” system of corrupt lobbying. But Obama is neither a reformer nor a skilled legislative mechanic. Hatched from the Daley Machine in one-party Chicago, Obama wouldn’t be president today if he rocked boats. Witness the appointment of Roland Burris by the corrupt former Gov. Rod Blagojevich to fill Obama’s Senate seat: not a word of public protest from the new administration because Burris is a made man in the Chicago Democratic organization. So what if “Tombstone Roland” can be heard on the U.S. attorney’s wiretaps of Blagojevich, dancing around the delicate question of how to raise money for Blago without appearing to be buying his seat.As for pork-barrel politics, Obama named one of its greatest champions, Chicago’s own Rahm Emanuel, as his chief of staff, and the new budget (as well as the “stimulus” package) is loaded with pork. Meanwhile, have you heard anything serious about campaign-finance reform from Obama? Not very likely from someone who refused public financing and still has about $10 million left over from record receipts of $745.7 million. It’s just a detail, I know, but Obama’s naming of former Raytheon lobbyist William Lynn III as deputy secretary of defense seems to be at odds with the president’s alleged crusade against special interests and the “revolving door” between private business and government. He has also “sold” ambassadorships to campaign donors. The biggest plum, London, is slated for Lou Susman, a Chicagoan and former Citigroup executive who bundled $239,000. Paris has been reserved for Charles Rivkin, who raised about $500,000 for Obama.
  • Obama, with his Arabic middle name and his big Cairo speech, wants people to think that he is the Muslim world’s new best friend. Well, the photograph of a cheery Obama with Saudi King Abdullah and a smiling Emanuel with Saudi Foreign Minister Saud al-Faisal, proves the contrary. The Saudi royal family hates the idea of representative government for ordinary Muslims and is cruelly indifferent to the fate of the Palestinians. A democratic, independent, partly secular Palestine could only make the Saudi oligarchy look bad. Thus, the House of Saud is perfectly happy with the status quo, and so, evidently, is Obama.Without Saudi pressure, there will be no resolution of the Israeli-Palestinian conflict, since Saudi oil is the only lever that would cause America to press Israel into making real concessions. Indeed, the president doesn’t mean for one minute to force Israel into anything more than symbolic withdrawals of its illegal settlements on the West Bank. Meanwhile, the Saudi elite continues to play its double game, paying protection money to extremist Islam and granting pensions to the relatives of suicide bombers. It’s just politics, say Barack and Rahm, grinning ear-to-ear with their sleazy new friends from Riyahd. Just keep the oil pumping around election time and all will be well.
  • Obama makes like he’s a friend of organized labor, at least he did during the Ohio primary when he needed to beat Hillary Clinton. At the time, he put out a flier headlined “Only Barack Obama fought NAFTA and other bad trade deals” and charged that “a little more than a year ago, Hillary Clinton thought NAFTA was a ‘boon’ to the economy.” In a debate with Clinton on Feb. 26, 2008, he said, “I will make sure that we renegotiate [NAFTA] in the same way that Senator Clinton talked about” and “use the hammer of a potential opt-out as leverage” to get “labor and environmental standards that are enforced.”But two months ago, U.S. Trade Rep. Ron Kirk said such a blunt instrument was no longer necessary and that the leaders of Canada, the U.S. and Mexico were now “of the mind that we should be looking for opportunities to strengthen [the North American Free Trade Agreement].” And, of course, there is no discussion at all about renegotiating Permanent Normal Trade Relations with China, a “bad trade deal” that has done even greater harm to American workers and unions than has NAFTA.

Meanwhile, as I noted in my April 15 column, “Wall Street sharks circle the UAW,” Obama and his banker friend Steven Rattner are liquidating the United Auto Workers even as they liquidate the American auto industry. Robert Reich, Bill Clinton’s pseudo-secretary of labor, said as much. “The only practical purpose I can imagine for the bailout is to slow the decline of GM to create enough time for its workers, suppliers, dealers and communities to adjust to its eventual demise,” he wrote last month in the Financial Times — no surprise, considering that Obama’s chief economic adviser remains Lawrence Summers, a champion of deregulation and “free-market” economics in the Clinton administration and very much the enemy of labor unions.

Yes, of course it’s nice to have a president who speaks in complete sentences. But that they’re coherent doesn’t make them honest. 

© 2009 The Providence Journal

John R. MacArthur, publisher of Harper’s Magazine. Among other books, he is the author of Second Front: Censorship and Propaganda in the Gulf War

Grand Theft Auto: How Stevie the Rat Bankrupted GM June 8, 2009

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Monday 01 June 2009

by: Greg Palast  |  Visit article original @ GregPalast.com

Screw the autoworkers. They may be crying about General Motors’ bankruptcy today. But dumping 40,000 of the last 60,000 union jobs into a mass grave won’t spoil Jamie Dimon’s day.

    Dimon is the CEO of JP Morgan Chase bank. While GM workers are losing their retirement health benefits, their jobs, their life savings; while shareholders are getting zilch and many creditors getting hosed, a few privileged GM lenders – led by Morgan and Citibank – expect to get back 100% of their loans to GM, a stunning $6 billion.

    The way these banks are getting their $6 billion bonanza is stone cold illegal.

    I smell a rat.

    Stevie the Rat, to be precise. Steven Rattner, Barack Obama’s “Car Czar” – the man who essentially ordered GM into bankruptcy this morning.

    When a company goes bankrupt, everyone takes a hit: fair or not, workers lose some contract wages, stockholders get wiped out and creditors get fragments of what’s left. That’s the law. What workers don’t lose are their pensions (including old-age health funds) already taken from their wages and held in their name.

    But not this time. Stevie the Rat has a different plan for GM: grab the pension funds to pay off Morgan and Citi.

    Here’s the scheme: Rattner is demanding the bankruptcy court simply wipe away the money GM owes workers for their retirement health insurance. Cash in the insurance fund would be replaced by GM stock. The percentage may be 17% of GM’s stock – or 25%. Whatever, 17% or 25% is worth, well … just try paying for your dialysis with 50 shares of bankrupt auto stock.

    Yet Citibank and Morgan, says Rattner, should get their whole enchilada – $6 billion right now and in cash – from a company that can’t pay for auto parts or worker eye exams.

    Preventive Detention for Pensions

    So what’s wrong with seizing workers’ pension fund money in a bankruptcy? The answer, Mr. Obama, Mr. Law Professor, is that it’s illegal.

    In 1974, after a series of scandalous take-downs of pension and retirement funds during the Nixon era, Congress passed the Employee Retirement Income Security Act. ERISA says you can’t seize workers’ pension funds (whether monthly payments or health insurance) any more than you can seize their private bank accounts. And that’s because they are the same thing: workers give up wages in return for retirement benefits.

    The law is darn explicit that grabbing pension money is a no-no. Company executives must hold these retirement funds as “fiduciaries.” Here’s the law, Professor Obama, as described on the government’s own web site under the heading, “Health Plans and Benefits.”

    

“The primary responsibility of fiduciaries is to run the plan solely in the interest of participants and beneficiaries and for the exclusive purpose of providing benefits.”

    Every business in America that runs short of cash would love to dip into retirement kitties, but it’s not their money any more than a banker can seize your account when the bank’s a little short. A plan’s assets are for the plan’s members only, not for Mr. Dimon nor Mr. Rubin.

    Yet, in effect, the Obama Administration is demanding that money for an elderly auto worker’s spleen should be siphoned off to feed the TARP babies. Workers go without lung transplants so Dimon and Rubin can pimp out their ride. This is another “Guantanamo” moment for the Obama Administration – channeling Nixon to endorse the preventive detention of retiree health insurance.

    Filching GM’s pension assets doesn’t become legal because the cash due the fund is replaced with GM stock. Congress saw through that switch-a-roo by requiring that companies, as fiduciaries, must

    

“… act prudently and must diversify the plan’s investments in order to minimize the risk of large losses.”

    By “diversify” for safety, the law does not mean put 100% of worker funds into a single busted company’s stock.

    This is dangerous business: The Rattner plan opens the floodgate to every politically-connected or down-on-their-luck company seeking to drain health care retirement funds.

    House of Rubin

    Pensions are wiped away and two connected banks don’t even get a haircut? How come Citi and Morgan aren’t asked, like workers and other creditors, to take stock in GM?

    As Butch said to Sundance, who ARE these guys? You remember Morgan and Citi. These are the corporate Welfare Queens who’ve already sucked up over a third of a trillion dollars in aid from the US Treasury and Federal Reserve. Not coincidentally, Citi, the big winner, has paid over $100 million to Robert Rubin, the former US Treasury Secretary. Rubin was Obama’s point-man in winning banks’ endorsement and campaign donations (by far, his largest source of his corporate funding).

    With GM’s last dying dimes about to fall into one pocket, and the Obama Treasury in his other pocket, Morgan’s Jamie Dimon is correct in saying that the last twelve months will prove to be the bank’s “finest year ever.”

    Which leaves us to ask the question: is the forced bankruptcy of GM, the elimination of tens of thousands of jobs, just a collection action for favored financiers?

    And it’s been a good year for Senor Rattner. While the Obama Administration made a big deal out of Rattner’s youth spent working for the Steelworkers Union, they tried to sweep under the chassis that Rattner was one of the privileged, select group of investors in Cerberus Capital, the owners of Chrysler. “Owning” is a loose term. Cerberus “owned” Chrysler the way a cannibal “hosts” you for dinner. Cerberus paid nothing for Chrysler – indeed, they were paid billions by Germany’s Daimler Corporation to haul it away. Cerberus kept the cash, then dumped Chrysler’s bankrupt corpse on the US taxpayer.

    (“Cerberus,” by the way, named itself after the Roman’s mythical three-headed dog guarding the gates of Hell. Subtle these guys are not.)

    While Stevie the Rat sold his interest in the Dog from Hell when he became Car Czar, he never relinquished his post at the shop of vultures called Quadrangle Hedge Fund. Rattner’s personal net worth stands at roughly half a billion dollars. This is Obama’s working class hero.

    If you ran a business and played fast and loose with your workers’ funds, you could land in prison. Stevie the Rat’s plan is nothing less than Grand Theft Auto Pension.

    It doesn’t make it any less of a crime if the President drives the getaway car.

    ——-

    Economist and journalist Greg Palast, a former trade union contract negotiator, is author of the New York Times bestsellers “The Best Democracy Money Can Buy” and “Armed Madhouse.” He is a GM bondholder and card-carrying member of United Automobile Workers Local 1981. Palast’s latest reports for BBC Television and Democracy Now! are collected on the newly released DVD, “Palast Investigates: From 8-Mile to the Amazon – on the trail of the financial marauders.” Watch the trailer here.

Stealth Move in Washington Aims to Get $100 Billion for IMF Without Congressional Debate May 14, 2009

Posted by rogerhollander in Economic Crisis.
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“You don’t have to do this.” Those are the near-last words of several victims in the Coen brothers’ classic film No Country for Old Men, as they try to convince the movie’s unrelenting assassin that he should spare them. The assassin, played by Javier Bardem, finds this annoying, because in his mind these murders are pre-determined.

So it is with the IMF’s continuing confrontations with its borrowers, with one government after another pleading: “You don’t have to do this.” Turkey and Latvia were in the news last week, having joined the roster of governments whose IMF disbursements are being withheld because they find it politically impossible to impose the required punishments on their citizens.

The IMF sees these measures as necessary and pre-determined – in most cases by the borrowing countries’ having run-up unsustainable external or budget imbalances. But in fact the IMF has a long track record – dating back decades – of imposing unnecessary and often harmful conditions on borrowing countries.

Latvia missed a 200 million euro disbursement from the IMF in March for not cutting its budget enough. According to press reports, the government wants to run a budget deficit of 7% of GDP for this year, and the IMF wants 5%. Latvia is already cutting its budget by 40%, and is planning to close some public hospitals and schools in order to make the IMF’s targets, prompting street protests. Latvia’s GDP crashed by 18% in the first quarter of this year, after a 10.3% drop in the preceding quarter. These are among the worst declines in the world. This indicates that the IMF’s prescription is serious overkill. The purpose of IMF aid is supposedly to make any necessary adjustment easier, not worse.

In Pakistan, it would be surprising if the US Treasury, which is the principal overseer of the IMF, did not see a need to ease up on the contractionary IMF conditions there. The government of nuclear-armed Pakistan is facing serious political problems right now, having recently launched a major offensive against a growing Taliban insurgency. Slowing Pakistan’s economy at a time when the global economic crisis is already doing that may not be the best policy from the point of view of political stability. The IMF has negotiated an increase in Pakistan’s fiscal deficit from 3.4% to 4.6% of GDP, but is holding the line against lowering interest rates.

In almost all of its standby arrangements negotiated over the last year, the IMF has included conditions that will reduce output and employment in situations where economies are already shrinking.

Yet here in Washington there is a rush to get the IMF more money without any congressional hearings or debate. We are told that poor countries will suffer if the IMF does not get a $108bn appropriation from Congress immediately. But this is nonsense.

If we add up all of the IMF’s commitments under the 16 standby arrangements negotiated since the crisis intensified last year, the total is less than $46bn. The poorest countries will not be allowed to borrow anywhere near that amount.

The IMF already has $215bn on hand, plus more than $100bn in gold reserves. It plans to create another $250bn in SDR’s, ie the IMF’s currency. Even if we include the $67.5bn that Mexico ($47bn) and Poland ($20.5bn) together can tap under the IMF’s flexible credit line, it is clear the IMF is trying to get hundreds of billions of dollars more than it is likely to need. And it has at least ten times the money that the poor countries – whose needs are pocket change compared to IMF resources – will ever be allowed to borrow.

Yet the Obama administration, in a surprise move out of nowhere on Tuesday, decided to try and attach the $108bn for the IMF to another spending bill in order to circumvent the normal legislative process. The reason for this stealth maneuver is that they might run into trouble in the House, where legislators are wary of voting for multi-billion blank cheques after the backlash against the Tarp financial bailout. They will try to convince Congress to approve this money without hearings or debate with the idea that it must be done in order to save poor people in poor countries.

Congress should be met with a chorus of opposition: “You don’t have to do this.”

Mark Weisbrot is Co-Director of the Center for Economic and Policy Research (CEPR), in Washington, DC.

Obama Preserves Entrenched Power, Sidesteps Racial Disparities May 12, 2009

Posted by rogerhollander in Barack Obama, Economic Crisis, Race.
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wong side
 
 
by BAR executive editor Glen Ford
Barack Obama actually said it: a truncated form of the hackneyed rich man’s expression, “a rising tide lifts all boats.” The cliché was a fixture of trickle-down Reaganics and the Bush I and II permutations, as well as the Clinton deregulationathon. Now Obama employs it to justify his refusal to offer any programs to “address historical and emerging racial disparities.” The twisted logic goes something like this: “The deeper Blacks sink into the abyss, the more they are eligible for general assistance – therefore, the Obama plan already contains everything African Americans need as a group, and will be of more use to them than to more advantaged groups.” Thus, the nation’s first Black President turns the misery index on its head.

 

Obama deploys the same twisted logic as generations of white, corporate politicians.”
In his own clichéd words, President Obama reveals himself to be, at best, ambivalent on the need to confront historical and current racial disparities in the United States. Behind the awesome hype and intellectual façade lies your garden variety corporate-bought politician whose worldview is no deeper than the shallowest catchphrase in long-discredited American economic discourse: a rising tide lifts all boats.
Widely believed to have been coined by President John Kennedy in defense of his support for a pork barrel project, the platitude was quickly embraced by every corporate shill touting schemes to make the rich richer, while ignoring the specific plights of the poor and oppressed. President Ronald Reagan’s “trickle-down” economics was justified by the imagined hydraulics of rising tides, as were the Bush I and II permutations. Bill Clinton’s administration let loose a tsunami of speculative tidal forces that finally came crashing down on the entire planet, last year, submerging African Americans in the deepest recesses of the muck. The mad bankster behind that rising tide was Clinton’s then-Treasury Secretary Robert Rubin, assisted by his protégé and successor, Larry Summers. The two are now the right lobes of Barack Obama’s economic brain, along with current Treasury Secretary Tim Geithner, another Rubin mentee.
Obama is reluctant to even acknowledge the greatly disproportionate damage inflicted on African Americans in the current crisis.”
Obama displayed his corporate colors (and trite bent of mind) at his 100th day press conference, April 29, in response to a pointed question by BET reporter Andre Showell. The brief interchange, which came near the end of the session, reveals the coreObama, a man who is reluctant to even acknowledge the greatly disproportionate damage inflicted on African Americans in the current crisis, and who offers nothing whatsoever to address historical and emerging racial disparities. The question and response bear repeating, in full:

SHOWELL: “As the entire nation tries to climb out of this deep recession, in communities of color, the circumstances are far worse. The black unemployment rate, as you know, is in the double digits. And in New York City, for example, the black unemployment rate for men is near 50 percent.
My question to you tonight is given this unique and desperate circumstance, what specific policies can you point to that will target these communities and what’s the timetable for us to see tangible results?”
OBAMA: “Well, keep in mind that every step we’re taking is designed to help all people. But folks who are most vulnerable are most likely to be helped because they need the most help.
So when we passed the Recovery Act, for example, and we put in place provisions that would extend unemployment insurance or allow you to keep your health insurance even if you’ve lost your job, that probably disproportionately impacted those communities that had lost their jobs. And unfortunately, the African-American community and the Latino community are probably over represented in those ranks.
When we put in place additional dollars for community health centers to ensure that people are still getting the help that they need, or we expand health insurance to millions more children through the children’s health insurance program, again, those probably disproportionately impact African-American and Latino families simply because they’re the ones who are most vulnerable. They have got higher rates of uninsured in their communities.
My general approach is that if the economy is strong, that it will lift all boats….”
So my general approach is that if the economy is strong, that it will lift all boats as long as it is also supported by, for example, strategies around college affordability and job training, tax cuts for working families as opposed to the wealthiest that level the playing field and ensure bottom-up economic growth.
And I’m confident that that will help the African-American community live out the American dream at the same time that it’s helping communities all across the country.”
No Pretense of a Racial Policy
So confident is Obama that his personal Blackness is all that is required to offset horrific realities such as New York City’s nearly 50 percent Black male non-participation in the formal job market – statistics from 2003 that have certainly worsened in the current crisis – he offers not a single programmatic response. Obama is quick to point out that his plan is “is designed to help all people” – another way of saying there’s nothing in it to address the specific problems of people of color.
Obama claims there is no need for specific programs.”
He deploys the same twisted logic as generations of white, corporate politicians, who pointed to Black overrepresentation on welfare rolls as proof of the government’s deep concern for African Americans. In fact, concentrated levels of public assistance, food stamps and unemployment checks are elements of the misery index that, especially when dramatically skewed by race, cry out for specific programs and policies of remediation. Obama claims there is no need for specific programs because “folks who are most vulnerable are most likely to be helped because they need the most help.” Thus, he turns logic and language on their heads. The deeper Blacks sink into the abyss, the more they are eligible for general assistance – therefore, the Obama plan already contains everything African Americans need as a group, and will be of more use to them than to more advantaged groups. According to this line of reasoning, the worse things get, the more responsive the Obama plan is. There’s no need to deal directly with the underlying causes of disproportionate misery, such as institutional racism.
Presidential Denial
Obama is not even willing to fully acknowledge that Blacks and Browns have actually suffered disproportionately in the meltdown. In three successive sentences, he three times uses the word “probably” to describe what are solid facts. African Americans have not “probably” lost a disproportionate amount of jobs – Obama’s own Labor Department figures show that to be the case, on top of previously existing, horrendous rates of structural unemployment.
African American children are not “probably” over-represented among those lacking health insurance. They are, in fact, disproportionately uninsured. Obama belatedly corrects himself on this point, but his reflexive reluctance to give voice to the glaring racial disparities that are fundamental markers of American life, is deeply disturbing.
President Obama served definitive notice that he has no intention of tackling structural racism.”
Then Obama drops his inane line that a strong economy “will lift all boats,” with the caveat that it be “supported by…strategies around college affordability and job training, tax cuts for working families as opposed to the wealthiest that level the playing field and ensure bottom-up economic growth.” Nothing there to deal with specific Black problems, which means they will remain “intractable” – a word used to describe conditions that the powerful refuse to ameliorate.
In 240 words, President Obama served definitive notice – for those who still didn’t get it – that he has no intention of tackling structural racism. Ever. That is his “general approach,” which should be understood as his principled position. The only change in the racial status quo we can expect from Obama has already happened: the integration of the White House.
The Big (Fat Cat) Picture
President Obama is consistent – consistently conservative, in the broad sense of the word. He is no more interested in reshaping U.S. society’s basic economic contours, than its racial ones. His consuming project is to resurrect the finance capitalist class through formulas conjured up by the denizens of his right brain lobe, Robert Rubin, Larry Summers, and Tim Geithner. Toward that end, something around $10 trillion of the national treasure has been committed. Every other project of domestic revitalization is subordinate, and ultimately expendable.
The Obama presidential bully pulpit is reserved for banking interests. As the Associated Press reported in the wake of Senate defeat of legislation that would have allowed hundreds of thousands of homeowners to escape foreclosure through bankruptcy – the “cram-down” bill dreaded by bankers – “Obama did little to pressure lawmakers” to support the measure, despite having endorsed the idea since campaign days. Moreover, “the bankruptcy option got only a tepid endorsement from Treasury Secretary Timothy Geithner,” who was busy trying to figure out how to take toxic securities off his banker friends’ books by providing public subsidies to private sharks that might be enticed to buy them. “As it became clear the bill would fail,” wrote the AP, “the administration did little to counter the aggressive lobbying by banks fighting the bill and focused its efforts instead on a more popular bill targeting credit card companies” – a very limited measure that is, as of this writing, in doubt.

The Obama presidential bully pulpit is reserved for banking interests.”

Obama insists that health care is one of his irreducible priorities. Yet he cuts supporters of single payer plans out of the loop to embrace congresspersons friendly to the insurance and pharmaceutical industries, who will ultimately sabotage his own jury-rigged health scheme. New York Democratic Sen. Charles Schumer is already scuttling the boat, with an industry-written alternative to the Obama plan. The kiss-of-death proposal would require any “public” health insurance program to operate precisely as if it were a private insurance plan, effectively negating its reason for being.
The lessen settles in, slowly. President Barack Obama’s administration is not only “race-neutral” – it is essentially change-neutral, as well.
BAR executive editor Glen Ford can be contacted at Glen.Ford@BlackAgendaReport.com.

Subprime Prosecution Stops Foreclosures But Lets Goldman Sachs Off Hook May 12, 2009

Posted by rogerhollander in Criminal Justice, Economic Crisis, Housing/Homelessness.
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(Roger’s note: read this then tell me why the Bailout funds could not be used to help homeowners pay subprime mortgages so that the Attorney General could pursue criminal charges against Goldman Sachs for the sake of justice and future deterrence; instead of letting Goldman Sachs get away with breaking the law with impunity and buy their way out with the taxpayers dollars.  I am guessing that the Massachusetts AG is taking her cue from Barack Obama and his AG, Eric Holder, who would rather “reconcile” and “look forward” rather than comply with their oaths of office to defend and uphold the U.S. Constitution.)

Ryan Grim, www.huffingtonpost.com, May 12, 2009

Massachusetts Attorney General Martha Coakley won a victory against the Goldman Sachs Group Monday, forcing the financial firm to cut a $10 million check to the state and pony up $50 million to help around 700 homeowners pay subprime mortgages.

“Goldman Sachs is pleased to have resolved this matter,” says Michael DuVally, a Goldman spokesman, declining to comment further.

They were also pleased, no doubt, by the terms in the settlement that allowed Goldman to avoid admitting any wrongdoing. Letting Goldman off excuses what could have been criminal behavior, but it also brings relief to hundreds of homeowners and offers a roadmap to some sort of law-enforcement-driven solution where lawmakers have come up short.

Massachusetts Congressman Barney Frank, chairman of the House Financial Services Committee, said he wouldn’t “second guess” Coakley’s decision to settle short of criminal convictions. “I don’t know what other avenues she had available, but I will say this: Getting significant relief for 700 people is very important, both for them and for the economy. Now, that’s a legitimate consideration in getting it done more quickly than waiting for a couple years to go through the criminal procedure,” he tells the Huffington Post.

Rep. Bill Delahunt was a Massachusetts District Attorney for 23 years. He said balancing immediate justice for victims with bringing the white-collar criminals to justice can be difficult.

“You almost have to judge those on an ad hoc basis. There’s no formula,” he says in general, adding that he didn’t know enough about Coakley’s investigation to comment on her specific course of action.

“Clearly, there’s a preference to pursue them criminally because I think that creates deterrence,” he says. “You know, it’s difficult to deter a kid who’s going to rob a 7-11 store for 25 bucks but for people who are purportedly educated, or at least sophisticated, who defraud others, they’re more susceptible to being deterred.”

But the most sophisticated they are, the more they can drag out a prosecution. By the time they’re found guilty, half the victims may be out on the street, their homes foreclosed.

“It’s not always a perfect world and you can’t always secure the perfect justice,” says Delahunt. “It would appear that our attorney general did some good work that resulted in a very significant sum of money for redress by their behavior.”

Frank agrees. “I can’t tell exactly what the considerations were, but I’m inclined to think the value of getting immediate relief for 700 people and saving their homes, yeah, I’d trade off a little for that,” he says.

Goldman Sachs was not accused of originating the subprime loans in question, but rather investigated for facilitating the process by buying them and bundling them into securities without regard to whether the borrowers would be able to pay them back — or whether the borrowers or originators had followed reasonable lending practices or filed the appropriate paperwork.

“We will continue to investigate the deceptive marketing of unfair loans and the companies that facilitated the sale of those loans to consumers in the Commonwealth,” Coakley said in a statement. (Coakley’s press office did not return a call.)

The state attorney general’s office has previously pulled in more than $75 million from settlements with UBS, Morgan Stanley, Citibank, and Merrill Lynch, all related to the financial crisis.

But the U.S. attorney general would have a hard time making a similar case nationally. Coakely relied on stricter rules on subprime lenders who make “unfair” loans under state law.

Congressional Democrats hope to give the federal government the power some states now have. Last week, the House passed anti-predatory lending legislation that Coakley helped Frank’s committee draft.

“What we do in our bill is to go beyond any set of state laws,” says Frank, citing a requirement that five percent of the loan portfolio be kept by the company that originates the loan. Having that amount of skin in the game, he hopes, will persuade a lender to take a loan seriously.

The bill is now, like much else, stalled in the Senate.

Banking Committee Chairman Chris Dodd (D-Conn.) says that subprime lending reform is a lesser priority because the credit freeze has inadvertently dried up the business.

“That’s true right now but we cannot count on that being true forever,” says Frank. “You couldn’t count on getting a non-predatory loan a little while ago and it is true that the freeze has helped some. That’s true in some other areas as well. There aren’t a lot of credit default swaps being written.”

But, says Frank, the financial industry won’t have forgotten how to write a bad loan once the market thaws.

“It is important to get laws on the books, because this de facto moratorium isn’t going to last forever,” he says.

Ryan Grim is the author of the forthcoming book This Is Your Country On Drugs: The Secret History of Getting High in America

Mortgaging the White House May 2, 2009

Posted by rogerhollander in Economic Crisis.
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by Bill Moyers and Michael Winship

Finally, here we are at the end of this week of a hundred days. As everyone in the western world probably knows by now, this benchmark for assessing presidencies goes back to Franklin Delano Roosevelt, who arrived at the White House in the depths of the Great Depression.

In his first hundred days, FDR came out swinging. He shut down the banks, threw the money lenders from the temple, cranked out so much legislation so fast he would shout to his secretary, Grace Tully, “Grace, take a law!” Will Rogers said Congress didn’t pass bills anymore; it just waved as they went by.

President Obama’s been busy, but contrary to many of the pundits, he’s no FDR. Our new president got his political education in the world of Chicago ward politics, and seems to have adopted a strategy from the machine of that city’s longtime boss, the late Richard J. Daley, father of the current mayor there. “Don’t make no waves,” one of Daley’s henchmen used to advise, “don’t back no losers.”

Your opinion of Obama’s first 100 days depends of course on your own vantage point. But we’d argue that as part of his bending over backwards to support the banks and avoid the losers, he has blundered mightily in his choice of economic advisers.

Last week, at a hearing of the Congressional Oversight Panel (COP) monitoring the Troubled Asset Relief Program (TARP), Treasury Secretary Timothy Geithner tried to correct AFL-CIO General Counsel Damon Silvers. “I’ve practiced law and you’ve been a banker,” Silvers said. Never, Geithner replied, “I’ve only been in public service.”

We beg to differ. Read Jo Becker and Gretchen Morgenson’s front-page profile of Secretary Geithner in Monday’s New York Times, and you’ll see how Robert Rubin protégé Geithner, during the five years he was running the New York Federal Reserve, fell under the spell of the big barons of banking to whom he would one day help shovel overly generous sums of money at taxpayer expense.

During “an era of unbridled and ultimately disastrous risk-taking by the financial industry,” the Times reported, “… He forged unusually close relationships with executives of Wall Street’s giant financial institutions.

“His actions, as a regulator and later a bailout king, often aligned with the industry’s interests and desires, according to interviews with financiers, regulators and analysts and a review of Federal Reserve records.”

Wined and dined at the Four Seasons, and in corporate dining rooms and fine homes by the very men whose greed and judgment helped bring on the Great Collapse, Geithner became so much a favorite of the Club that former Citigroup chairman Sandy Weill talked with him about becoming the bank’s CEO.

According to Becker and Morgenson, “Even as banks complain that the government has attached too many intrusive strings to its financial assistance, a range of critics — lawmakers, economists and even former Federal Reserve colleagues — say that the bailout Mr. Geithner has played such a central role in fashioning is overly generous to the financial industry at taxpayer expense.”

The two reporters write that Geithner “repeatedly missed or overlooked signs” that the financial system was self-destructing. “When he did spot trouble, analysts say, his responses were too measured, or too late.”

In choosing a man to manage the bailout of the banks who’s so cozy with its players, and then installing as his White House economic adviser Larry Summers, who in the Clinton administration took a laissez-faire attitude toward the financial industry which would later enrich him, the president bought into the old fantasy that what’s best for Wall Street is best for America.

With these two as his financial gatekeepers, President Obama’s now in the position of Louis XVI being advised by Marie Antoinette to have another piece of cake until that rumble in the streets has passed on by.

In fact, other Wall Street insiders — many of them big contributors to the Obama presidential campaign, and progressive in their concern for the public interest — privately are expressing serious concerns that Geithner, Summers and their associates are leading the president and America’s taxpayers down a path toward further economic disaster.

This week, as Senate Majority Whip Richard Durbin of Illinois unsuccessfully fought for a congressional amendment he said would have helped 1.7 million Americans save their homes from foreclosure, the senator told a radio station back home that, “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.”

He could say the same of the White House.

Bill Moyers is managing editor and Michael Winship is senior writer of the weekly public affairs program Bill Moyers Journal, which airs Friday night on PBS. Check local airtimes or comment at The Moyers Blog at www.pbs.org/moyers.

Banksters on the War Path: How Wall Street Is Fighting Back and Winning Their Fight for the Status Quo May 2, 2009

Posted by rogerhollander in Economic Crisis.
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by Danny Schechter

Dick Durbin knows his way around the Senate. He’s been there a long time, long enough to know how things really work. Over the years, the man from Illinois has come to realize that it’s not the elected officials who are in charge. Last week, he said it was the bankers “who run the place” acknowledging that Senators may be in office, but not necessarily in power.

Usually, the people who pull the strings stay in the background to avoid too much public exposure. They rely on lobbyists to do their bidding. They prefer to work in the shadows. They may back certain politicians, but coming from a world of credit default swaps as they do, they hedge their bets by putting money on all the horses.

They have so much influence because they have been reengineering the American economy for decades through “financialization,” a process by which banks and financial institutions gradually came to dominate economic and political decision-making. Kevin Phillips, a one time Reagan advisor and commentator, says our deepest problem is “the ascendancy of finance in national policymaking (as well as in the gross domestic product), and the complicity of politicians who really don’t want to talk about it.”

Curiously, despite the journalists like Bill Moyers and Arianna Huffington who have been blowing the whistle on the role of the “banksters” in our political life, criticizing the Republicans and Democrats who deregulated the financial system, this issue seems to float above the heads of most of the public, much of the press, and even the activist community more drawn to punishing the torture inflicted on a few by a former Administration than the economic duress being imposed on the majority of Americans by a minority of the super rich.

Demonstrators are still drawn more to the White House than the banks that have proliferated on every corner of the country.

Last week, a Zogby poll found that a majority of the public believes the press made things worse by reporting on the economic collapse. Not only is that blaming the messenger, it also overlooks the fact that much of the media was complicit in the crisis by not covering the forces that caused the collapse when it might have done some good.

Exacerbating the problem is that the Obama Administration has, in Robert Scheer’s words, enlisted “the very experts who helped trigger the crisis to try to fix it.”

“Obama,” he writes “seems depressingly reliant on the same-old, same old cast of self-serving house wreckers who act as if government exists for the sole benefit of corporations and executives.”

The team of Tim Geithner and Larry Summers has been carrying Wall Street’s water as Robert Rubin did before them. No wonder that Obama’s Attorney General Eric Holder told the Street last February, “We’re not going to go on any witch hunts.”

That was before we learned that Wall Street forced US regulators to delay the release of stress test results for the country’s 19 biggest banks until next Thursday, because some of the lenders objected to government demands that they needed to raise more capital. They are trying to rig the results.

That was also before the public learned of the obscenely huge bonuses the firms benefiting from the TARP bailout were shelling out to their executives. That was before we saw how the bankers with help from Democrats, including new convert Arlen Specter, managed to kill a bill to help homeowners stop foreclosures.

“The Senate on Thursday rejected an effort to stave off home foreclosures by a vote of 51 to 45. It was an overwhelming defeat, with the bill’s backers falling 15 votes short — a quarter of the Democratic caucus — of the 60 needed to cut off debate and move to a final vote. Across the United States, the measure is estimated to have been able to prevent 1.69 million foreclosures and preserve $300 billion in home equity.”

Commented the Center for Responsible Lending, “Instead of defending ordinary Americans, the majority of Senators went with the banks. Yes, the same banks who have benefited so richly from the TARP bailout.”

There was one small victory with the House approving a bill to protect consumers from credit card abuses. It’s not clear if the Senate will pass it too. “It’s one step forward and one step backward,” said Travis Plunkett, of the Consumer Federation of America. “Congress is moving in fits and starts to re-regulate the financial services industry and the banking lobby still has tremendous clout.”

“Tremendous clout” is an understatement.

In this past week, we also saw how a few hedge funds undermined the attempt to save Chrysler from bankruptcy by holding out for more money even after the unions and big banks agreed to compromise to save jobs.

The President was furious but apparently powerless: “A group of investment firms and hedge funds decided to hold out for the prospect of an unjustified taxpayer-funded bailout,” Obama said. “They were hoping that everybody else would make sacrifices, and they would have to make none. Some demanded twice the return that other lenders were getting.”

Explains the blog Naked Capitalism, “the banksters are eagerly, shamelessly, and openly harvesting their pound of flesh from financially stressed average taxpayers, and setting off a chain reaction in the auto industry which has the very real risk of creating even larger scale unemployment than the economy already faces. It’s reckless, utterly irresponsible, over-the-top greed.”

Will they be allowed to get away with it? A “captured” Congress is doing their bidding. There is no doubt that class antagonism is stewing, says the editor of the blog. He expressed a fear of a reaction that will go way beyond flag-wavng tea parties.

“… I am concerned this behavior is setting the stage for another sort of extra-legal measure: violence. I have been amazed at the vitriol directed at the banking classes. Suggestions for punishment have included the guillotine (frequent), hanging, pitchforks, even burning at the stake. Tar and feathering appears inadequate, and stoning hasn’t yet surfaced as an idea. And mind you, my readership is educated, older, typically well-off (even if less so than three years ago). The fuse has to be shorter where the suffering is more acute.”

One is reminded of the title of that movie, “There will be blood.” Rather than show contrition or compassion for its own victims, Wall Street is hoping to jack up its salaries and bonuses to pre-2007 levels. The men at the top are oblivious to the pain they helped cause. And so far, they’ve only occasionally been scolded by politicians that have mostly enabled, coddled, bankrolled, funded, rewarded, and genuflected to their power.

Wall Street’s behavior may be predictable, but how can we account for the silence of so many organizations that should be out there organizing the outrage that is building? Knock, Knock, Obama supporters, bloggers, trade unionists, out of work workers and fellow Americans. Will we fight back or roll over?

Pitchforks anyone?

Mediachannel’s News Dissector Danny Schechter is making a film about Wall Street based on his book Plunder (newsdissector.com/plunder). Comments to dissector@mediachannel.org 

Thievery Under the TARP April 22, 2009

Posted by rogerhollander in Economic Crisis.
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by Robert Scheer

We are being robbed big-time, but you can’t say we haven’t been warned. Not after the release Tuesday of a scathing report by the Treasury Department’s special inspector general, who charged that the aptly named Troubled Asset Relief Fund bailout program is rife with mismanagement and potential for fraud. The IG’s office already has opened 20 criminal fraud investigations into the $700 billion program, which is now well on its way to a $3 trillion obligation, and the IG predicts many more are coming.

Special Inspector General Neil M. Barofsky charged that the TARP program from its inception was designed to trust the Wall Street recipients of the bailout funds to act responsibly on their own, without accountability to the government that gave them the money. 

He pointed to the example of AIG, which has acted as a conduit of funds to the banks it had insured without being required to tell the government what it is doing: “Failure to impose this requirement with respect to the injection of yet another $30 billion into AIG would not only be a failure of oversight, but could call into question the credibility of the government’s efforts.”

AIG is just one example in a bailout that has left the financial conglomerates unsupervised as they spend taxpayer money in what the report termed a government program of “unprecedented scope, scale and complexity,” putting the public and the Treasury Department in the dark as to how the money is being used by the very tycoons who got us into this mess. “The American people have a right to know how their tax dollars are being used,” Barofsky wrote in the report, which sharply criticized the government for failing to hold financial institutions accountable.

For all of its criticism of the original program, designed by the Bush administration, the report was equally severe in denouncing the Obama administration’s plan to partner with hedge funds and other private capital groups to buy up the “toxic” holdings of the banks. Charging that the plan carries “significant fraud risks,” the inspector general’s report pointed out that almost all of the risk in this new trillion-dollar plan is being borne by the taxpayers. The so-called private investors would be able to put up money they borrowed from the Fed through “nonrecourse” loans, meaning if the toxic assets purchased prove too toxic and the scheme failed, the private investors could just walk away without repaying the Fed for those loans.

The reason those loans may prove even more toxic than expected and the price paid by this government-underwritten partnership far too high is that the government is purchasing the most suspect of the banks’ mortgage packages. In addition, the plan is to accept at face value the evaluation of those packages by the very same credit-rating firms whose absurdly wrong estimates of the dollar worth of these securities helped create the problem that now haunts the world’s economy. “Arguably, the wholesale failure of the credit rating agencies to rate adequately such securities is at the heart of the securitization market collapse, if not the primary cause of the current credit crisis,” the report found.

As with the entire banking bailout, the new plan of Obama’s treasury secretary, Timothy Geithner, is likely to enrich the very folks who impoverished the rest of us, as the report notes: “The significant government-financed leverage presents a great incentive for collusion between the buyer and seller of the asset, or the buyer and other buyers, whereby, once again, the taxpayer takes a significant loss while others profit.”

At the heart of this potentially massive fraud was the original decision of Henry Paulson, President Bush’s treasury secretary and a former Goldman Sachs chairman, to not require the recipients of the bailout, such as his old firm, to account for how the money was spent. Unfortunately, President Obama’s administration continued that practice. 

The only difference is that the amount of public money being put at risk is now far greater, and the hedge funds, which are totally unregulated, have been brought in as the central players. One of the largest of those hedge funds, D.E. Shaw, carried Obama’s top economic adviser, Lawrence Summers, on its payroll to the tune of $5.2 million last year. He may have reason to trust these secretive enterprises that operate beyond the law, but the public does not.

Robert Scheer is editor of Truthdig.com and a regular columnist for The San Francisco Chronicle.