Tuesday, December 14, 2010

Democracy on the ropes

Patsies in power, democracy on the ropes

Bucks County Courier Times

Political power follows money. The wealth of America is now concentrated in the hands of the few as never before. Those few govern. Democracy in America is on the ropes.

So powerful is this concentration of wealth in America, that the only way to ensure that millions of the unemployed are not abandoned to despair at Christmas was for the Congress to agree not to raise the taxes on the income of wealthy Americans, and further reduce taxes on the estates their low taxes help create.

You can see the logic. I mean, having funneled trillions of dollars to Wall Street, American corporations and even foreign banks to rescue the global club of parasites in pinstripes, what sense does it make to take some of that back in taxes? Duh!

And I do mean trillions of dollars.

As reported only days ago after a year of concealment by the Federal Reserve, the hundreds of billions of dollars the U.S. Congress funneled to the barons is "chump change," compared to the many trillions of dollars it provided, all to the account of the American people.

As reported in this newspaper, "Newly released documents show that the most (Fed) loan money over time went to Citigroup ($2.2 trillion), followed by Merrill Lynch ($2.1 trillion), Morgan Stanley ($2 trillion), Bank of America ($1.1 trillion), Bear Stearns ($960 billion), Goldman Sachs ($620 billion), JPMorgan Chase ($260 billion) and Wells Fargo ($150 billion)."

The banks which got these fantastic sums argue that much of it has been "paid back." How, exactly?

One strategy was to take this no-interest and low-interest money and loan it out at higher rates. The banks biggest customer? The U.S. Treasury.

Another was to trade it for assets the banks held. Which assets? According to the Financial Times of London, their junk.

"More than 36 percent of the cumulative collateral pledged ... in return for overnight funding under the Primary Dealer Credit Facility was equities or bonds ranked below investment grade. A further 17 percent was unrated credit or loans, according to a Financial Times analysis of Fed data released this week. Only 1 percent of the collateral was Treasury bonds, which are normally used in transactions between banks and the monetary authorities."

As the president observed, the barons are indeed "savvy" businessmen. Of course, it helps to have patsies in positions of political power.

Independent U.S. Sen. Bernie Sanders of Vermont was instrumental in forcing the release of the Fed records. He has raised some "issues."

"At a time when big banks have nearly a trillion dollars in excess reserves parked at the Fed, the Fed did not require these institutions to increase lending to small and medium-sized businesses as a condition of the bailout.

"At a time when large corporations are more profitable than ever, the Fed did not demand that corporations that received this backdoor bailout create jobs and expand the economy once they returned to profitability.

"...these secret Fed loans in some cases turned out to be direct corporate welfare to big banks that used these loans not to reinvest in the economy but rather to lend back to the federal government at a higher rate of interest...

"At a time when millions of Americans are paying outrageously high credit card interest rates, why didn't the Fed require credit card issuers to lower interest rates as a condition of the bailout?

"The four largest banks in this country (Bank of America, JP Morgan Chase, Wells Fargo, and Citigroup) issue half of all mortgages in this country... How many Americans could have remained in their homes, if the Fed required these bailed-out banks to reduce mortgage payments as a condition of receiving these secret loans?"

The senator is of course being rhetorical. He knows the answer to the questions he has posed.

There are now about 14,000 federal lobbyists. In the decade 1998 to 2008 the finance industry alone provided its lobbyists more than $3.2 billion to buy influence in the halls of Congress, the offices of regulators and the White House. This does not include campaign contributions.

How much did you spend?

In the last election, the Supreme Court let loose in the elections a wave of direct corporate spending and anonymous contributions that will grow to tidal wave proportions for 2012.

It is already producing results. The barons, hedge fund managers and corporate execs who live like kings on the stolen prosperity of the American people will not have their taxes raised.

It is often observed that diversity is the enduring strength of the United States. But that is true only so long as that diversity is enabled, given means and opportunity to express itself.

Democracy is the enabler. Today, democracy in the United States is on the ropes.

For the sake of America, the American people must democratize the economy, bypass the Fed and Wall Street and assume control of the supply of money and credit by the creation of public banks at the state and local level.

For the sake of America, the American people must democratize their politics and government, and build a majority in Congress to serve their interests by writing and enforcing the rules for campaigns for Congress which Congress will not.

Mike Krauss, an international logistics executive and writer, is a former officer of county and state government and former director of the Pennsylvania Republican Party. E-mail: mike@mikekrausscomments.com

December 09, 2010 02:30

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