We are supposed to be a representative democracy where We, the People are in charge, but we allow these companies and the government agencies propping them up to continue to operate with secrecy, refusing or even to let our own elected representatives know what is being done with our money!
And then I saw this. Just watch.
Alan Grayson: "Which Foreigners Got the Fed's $500,000,000,000?" Bernanke: "I Don't Know."
Sometimes you don't find out who your friends are until the bear in the woods hits the Pope's fan.
In the last year We, the People have been finding out who our friends are and aren't. (Actually mostly just aren't.) We especially have been finding out what the priorities are and where the power lies. And lies and lies.
Since the financial crisis began we have been seeing as clear a display of raw power being used against the interests of the people as I imagine can be seen. We were given hours to put up all of the money we have to bail out a few large financial institutions because they were "too big to fail," but we did nothing about how big they were -- and still are! We allowed the use of our tax money to pay incredibly fat paychecks and bonuses while more and more of the rest of us have been laid off, lost our retirement, houses, etc. We complained about the use in these bailed out companies of private jets by a select few and their families because it "looked bad" but not because of what it was. Who is this "we" anyway? I didn't want those things to happen, but "we" let them happen.
Paul Krugman makes the case that big government deficits saved the world. He says that our economic problems were actually worse than what we encountered in the 1930's, and the reason we haven't spiraled down the drain was that Obama's stimulus package picked up the slack in demand and kept even more people from being laid off, even more companies from going under, even more financial institutions from collapsing.
Aside from the deficits I can't even imagine where we would be today without FDIC insurance on bank accounts, or unemployment benefits. I think everyone with money in a bank would have lost it. And just imagine how it would be for the unemployed. (Well, actually we're on the edge of finding out about that because unemployment is running out for a lot of people...)
President Barack Obama is scheduled to unveil his agenda for revamping financial regulation later this week. As the economy struggles though a recession created by the banking industry, it's crucial that Obama and his advisers craft a set of rules ensuring that the financial sector strengthens our economy instead of destroying it.
by Zach Carter, Media Consortium MediaWire Blogger
It's official: The U.S. economy has been in a recession for a year and a half and many of the economic troubles worrying progressives in 2007 have yet to be addressed. While the Obama administration has taken steps to relieve some problems, a series of counterproductive bailouts, woefully inadequate labor laws and rampant inequality are still in urgent need of attention.
Earlier this month, President Barack Obama rolled out a new plan to limit the use of offshore tax havens and crack down on corporate abuse of the tax system. These tax havens siphon over $100 billion a year from the government, and have allowed many U.S. banks to duck paying taxes despite receiving massive, taxpayer-funded bailouts. The president's plan is far from perfect, but comes as a welcome acknowledgment of the unfairness embedded in the current tax code.
Obama's Thursday "town hall" featuring questions submitted online produced some interesting comments from our president. In response to a question from college students he explained that making student loans directly from the government, without passing them through banks and giving profits to banks from public money, makes more sense. But he claimed that giving far more money than we've ever loaned to students to banks in hopes that they will loan it to businesses is the only way to save our economy.
by Zach Carter, Media Consortium MediaWire Blogger
Treasury Secretary Timothy Geithner rolled out his new Wall Street bailout plan on Monday and the progressive verdict is already in: This bailout doesn't look much better than the last one. In fact, Geithner's latest plan isn't much different from several other flawed proposals policymakers have floated over the past year. At its core, Geithner's program is just another attempt buy up "toxic assets" from banks at inflated prices.
The Federal Reserve said today that it will deploy an additional $1.2 trillion to try to lower interest rates and stimulate the economy, an aggressive move aimed at containing the recession.
The central bank will increase its purchases of mortgage-backed securities by $750 billion, on top of a previously announced $500 billion. It also will double its purchases of debt in Fannie Mae and Freddie Mac to $200 billion. Those steps are intended to lower mortgage rates. The announcement of the previous purchases pushed mortgage rates down a full percentage point.
The Fed also said it will buy $300 billion in long-term Treasury bonds, a step it had previously considered but had been reluctant to act on.
I have no problem with the bond purchases, and I don't mind more money for Fannie Mae and Freddie Max now that they are publicly owned. However, I do have a problem with a $750 billion investment in toxic assets that more than doubles the size of TARP, and which took place without congressional approval.
Keep in mind that the Obama administration has included $250 billion in projected losses on the purchase of $750 billion in toxic assets in the budget:
The $250 billion in funds, should the administration seek it out, would support $750 billion in asset purchases as part of a public-private partnership fund the administration has yet to roll out, according to a budget blueprint document.
I always thought it was strange that they were only budgeting in the losses without asking Congress for more money. Kind of makes me wonder if they coordinated this move with the Federal Reserve, so that they could sink another $750 billion into toxic assets without actually having to ask Congress for they money. The numbers match up strikingly well.
Or, the situation could be even worse, and the $750 billion from the Fed is on top of the $750 billion in the public-private partnership plan. So, that is now $1.5 trillion in bad assets, or more than 10% of our GDP. Awesome.
There is a sentiment out there that the media and political furor over the AIG bonuses (and soon, the much larger Merrill Lynch bonuses) is a distraction from the real issue: getting the financial system back on track. President Obama himself apparently subscribes to this viewpoint:
As angry as the president is at the news about A.I.G., which he learned Thursday, Mr. Emanuel said, "his main priority is getting the financial system stabilized, and he believes this is a big distraction in that effort."
I disagree. The bonuses are not a distraction, because they are putting the bailouts back in the spotlight. The $165 million in bonuses to AIG are a hook allowing the country to refocus on the main act of kleptocracy that took place last fall and early this year: funneling hundreds of billions of dollars to the financial institutions that wrecked the economy in the first place. If it weren't for the bonuses, we wouldn't be talking about bailouts right now. As such, rather than a distraction, it is a move toward properly refocusing our attention.
The bonuses are also revealing that the bailout, no matter how well intentioned by lawmakers and the Obama administration, is actually being used by the financial institutions receiving bailout money only to enrich themselves. The people running these companies don't care about saving their firms, or saving the economy. We know this, because massive personal enrichment is emerging as a necessary condition for decision-makers at financial institutions to participate in the bailout program:
Officials at the Federal Reserve and the Treasury Department are increasingly worried that the controversy could discourage investors from joining a new government effort to revive consumer lending as well as a separate plan that relies on private money to buy toxic assets from banks, sources familiar with the matter said.(...)
A senior executive at one of the nation's largest banks said he had heard from several hedge funds that they would not partner with the government for fear that lawmakers would impose retroactive conditions on their participation, such as limits on compensation or disclosure requirements.
That's right: no matter the shape their company is in, and no matter the shape the economy is in, financial institutions will only take the government money if they can use it to give themselves huge compensation packages. For the people running these companies, the compensation packages are the necessary condition for their participation, not the state of the economy or of financial institutions. The people running the financial firms don't care whether or not their firms actually need the money, and whether or not the Obama administration's bailout program will actually work in turning the country around. If their bonuses or compensation packages are touched in any way, then they won't participate, no matter if doing so will save their firm or the economy.
The details of AIG's bonuses are pretty appalling: 73 employees took home at least $1 million, while one person got a whopping $6.4 million. What's more, NY Attorney General Andrew Cuomo proved AIG's excuse about needing these "retention" bonuses to keep employees at its Financial Products subsidiary was (believe it or not) complete and utter bullshit, since 11 of these bonus recipients have since left the company.
Now, Congress can try to rectify this situation by putting a 100% surtax on these bonuses. They can impose stricter limitations on the subsequent $30 billion bailout for AIG--if you can believe AIG is even getting another bailout! Still, this news is too infuriating to just sit back and wait for Congress to check Wall Street's ridiculous hubris.
This Thursday, March 19, SEIU and a slew of other organizations will be holding demonstrations at bailed-out banks and corporations in over 100 cities across the country, demanding fiscal repsonsibility. Sign up at TakeBacktheEconomy.org and join a demonstration in your community for a national day of protest. No more sitting around yelling at the TV screen when Obama's Press Secretary pretends like we should have any sort of confidence whatsoever in Geithner as Treasury Secretary. Enough is enough, it's time to take back the economy!
It seems that another bank on the public dole is using its taxpayer-subsidized time and resources to lobby against the Employee Free Choice Act.
Today, Sam Stein of the Huffington Post reports that Citigroup hosted a private conference call yesterday to bolster opposition to the Employee Free Choice Act that included a senior executive at the U.S. Chamber of Commerce, a business lobbying group that has put tens of millions of dollars into the anti-Employee Free Choice disinformation campaign. Jane Hamsher at Firedoglake notes that the Citi stock analyst who downgraded Wal-Mart over fears of the Employee Free Choice Act passing was on the call, too.
by Zach Carter, Media Consortium MediaWire blogger
As Congress finally winds down what House Financial Services Committee Chairman Barney Frank, D-Mass., refers to as "the session that will not die," most of us have already contracted cases of outrage exhaustion from the barrage of Wall Street-related absurdities that the government has embroiled itself in over the past year.
First, Josh Orton points out that if the Bush Administration steps in and uses TARP funds, it will be a big victory for Senate Democrats. After all, Senate Democrats originally just wanted to use already approved TARP money to pay for the auto industry loan, but the Bush administration refused. If the auto industry loan is paid for by TARP then, among other things, the punitive measures against the unions don't apply, money is taken away from Wall Street, and the fund to promote fuel efficient vehicles remains intact. In other words, as Josh notes, Harry Reid and Senate Democrats will have actually won a game of chicken with Senate Republicans, not the other way around. Clearly, it helps a whole lot to have the White House on your side. Hopefully, this is a harbinger of legislative fights to come.
Second, Joseph Stiglitz points out that Wall Street is actually to blame for the demise of the Big three, not unions or even executives:
The debate about whether or not to bail out the Big Three carmakers has been mischaracterised. It has been described as a package to help the undeserving dinosaurs of Detroit. In fact, a plan to bail out the carmakers would benefit shareholders and bondholders as much as anybody else. These are not the people that need help right now. In fact they contributed to the problem.
Financial markets are supposed to allocate capital and monitor that it is used to good effect. They are supposed to be rewarded when they do that job well, but bear the consequences when they fail. The markets failed. Wall Street's focus on quarterly returns encouraged the short-sighted behaviour that contributed to their own demise and that of America's manufacturing, including the automotive industry. Today, they are asking to escape accountability. We should not allow it.
In the rest of the article, Stiglitz goes on to call for a Chapter 11 restructuring of the Big Three.
It is refreshing to see these different perspectives. Any more good auto industry thoughts out there?
I'm pretty disappointed at the outcome over the Homeland Security and Governmental Affairs leadership fight. Denying Lieberman the chair would have been a sign that the Senate Democratic caucus was willing to stand up for itself over the next two years, but instead we were given another sign that the legislative branch no longer matters that much in the United States.
However, given the focus on how this vote means that "the left has been foiled again," I want to push back against the idea that the last two weeks has not somehow been a string of defeats for progressives. There have been setbacks, such as today's Lieberman vote, but there have also been real victories. In the extended entry, I accentuate the positive.
Long discussions in the previous two threads. Here is a new one.
I feel satisfied. Polls show Biden won, and there won't be any republican whambulance. Then again, an unexpected political benefit of the financial "crisis" is that I don't think Republican faux outrage over dubious interpretations of Democratic comments would fly right now. Such coordinated fits of hyperventilation would appear trivial beyond belief (I mean, you know, even more trivial).
The bailout vote tomorrow. It will almost certainly pass.
Closing thought: it really sucks for the Cubs. I'm not a fan, but this is unfortunate.
Among others, The New York Times, Wall Street Journal, and AP are all reporting that a bailout deal is close on Capitol Hill. Congressional Democrats and Barack Obama say the same thing. McCain, however, says otherwise:
It has become clear that no consensus has developed to support the Administration's proposal to meet the crisis. I do not believe that the plan on the table will pass as it currently stands, and we are running out of time. So I am returning to Washington to seek five fundamental improvements to this critical legislation.
What's going on here? I can think of a few possibilities:
Delaying tactic? McCain is simply lying about the state of the deal in order to justify his move and skip the debate. Maybe he just really, really wants to skip the debate, or push the foreign policy debate until closer to the election, or get Palin out of her debate, or as Americablog reports, keep people from seeing his droopy eye. If a deal is close, then he can't skip, and the move makes even less sense that it currently does (which isn't much). So, he has to claim that no deal is close.
Undermining tactic? McCain is seeking to torpedo the current version of the deal, and then be the guy who forges a new deal, thereby taking credit. Perhaps congressional Republicans are in on this one.
Supporting Tactic? Maybe McCain is trying to ratchet up the sense of crisis even more, thereby helping the bill pass. $700 billion is, after all, a lot of money for McCain's friends, and a good way to make President Obama look bad. Maybe this is simply a continuation of the shock doctrine tactics on this bill.
Just plain nuts? McCain could also be lying, or out of it, or just kind of nuts. This is a possibility that is always worth considering with McCain.
Hard to say for sure, but McCain is coming off as more of an unstable wackjob every day. The debate is scheduled for just 33 hours from now, and the University of Mississippi, Commission on Presidential Debates, and Barack Obama all say it's on. Will they go forward with a one-person panel if McCain doesn't show up? Along with trying to figure out what McCain is doing, that is the other big question I have right now.
From TPM, McCain campaign chief operating officer Steve Schmidt:
"Whatever the New York Times once was, it is not today by any standard a journalistic organization,"
What's he talking about? That would be this NYT report:
Loan Titans Paid McCain Adviser Nearly $2 Million
By DAVID D. KIRKPATRICK and CHARLES DUHIGG
Senator John McCain's campaign manager was paid more than $30,000 a month for five years as president of an advocacy group set up by the mortgage giants Fannie Mae and Freddie Mac to defend them against stricter regulations, current and former officials say.
But that's just the tip of the iceberg on both sides. McCain's mad as hell that he's no longer completely free to disavow his entire past at a moment's notice, and it's starting to get to him. While the bailout battle itself is tremendously important--a potential Shock Doctrine-style turning point, in which the shocked start shocking back--it's impossible to extricate this from simultaneous presidential race posturing, and here John McCain is perilously close to losing his footing altogether, and plunging headlong into the Bushian abyss. The Abyss!
