Wednesday, November 30, 2011

Something's gonna give

About to blow...
By Mike Krauss
Bucks County Courier Times

The American people have been asleep. That’s over.

The people are wakening and engaging in an expanding discussion about the present circumstances and future prospects of our nation.

The discussion began with the tea party patriots. But their protest at the injustice of the Wall Street bail out was turned to a focus on health care and taxes, as the money of the Republican right moved in to occupy the tea party.

The same way the money of the Democratic left hopes to occupy Occupy.

It’s all about money and power.

Americans are wakening to the reality that as wealth in America has been concentrated in the hands of the few, so too has political power.

Led by the Wall Street cartel, that power is used to preserve, protect, defend and — above all — increase the wealth of the 1 percent at the expense of the 99 percent of the American people.

Something’s gonna give.

As it does, it is essential to understand the actions of government that brought the nation to this moment, so that the barricades to equality of opportunity and upward economic mobility can be torn down and the path forward cleared of the debris.

Creation of the so called “Federal” Reserve gave control of the nation’s public money and credit to a private banking cartel, which conferred on itself what it wanted — immense wealth and power.

The birth of the banksters.

While wages for most Americans were kept flat, taxes on the rising income of the wealthiest and their capital gains have been steadily reduced, further concentrating wealth and power.

Wages were attacked by a combination of “free” trade, which opened American markets to the goods produced in low wage paying countries, and no taxes on the profits of American companies abroad, which made it even more profitable to export American jobs. Unchecked immigration of the unskilled swelled the supply of labor far above demand to further depress wages.

Private credit, which Wall Street controls and sells, was substituted for rising wages and Congress over-rode state laws and allowed banks and finance companies to gouge Americans with unconscionable interest rates.

The rich got richer and the poor got poorer.

Congress allowed America’s banks to combine and the hard assets of the American people were concentrated in the “too-big-to-fail banks,” and then Congress allowed the combination of the investment and retail operations of the banks, providing speculators access to those assets, which they gambled away.

The middle class was devastated.

Congress allowed the regulatory agencies tasked to police the financial markets to be gutted and staffed with Wall Street and corporate front men. No cops on the beat. Fraud and abuse ran rampant.

Nobody did anything about it. Justice was subverted.

Congress turned the lobbying and campaign finance laws into a system of legalized bribes. The political parties became brand names to be bought and sold, stripped of any real power to shape public policy or advance candidates accountable to their members, and the Congress was put up for sale.

Not satisfied to enrich only corporate America and miss out on the good times, members of Congress now enrich themselves by trading on private information acquired in the course of their public duties.

Finally, in a breathtaking example of intellectual sophistry, the Supreme Court “piled on” the already downed American people, turned common sense on its head and decided that corporations which exist only in the law that the people create, are no longer subordinate to the people, but in fact have the same rights as people.

This is a crisis of justice and democracy.

Wall Street career men and acolytes of the central banking bureaucracy now dominate governments in Europe as they dominated the Clinton, Bush and now Obama administrations.

They are there to enforce “austerity measures” which subsidize and protect the banks that constructed the current crisis — in which they made hundreds of billions — and continue the transfer of wealth to the wealthy.

It is the same fate to which many present leaders of both political parties want to deliver the American people, targeting Social Security and Medicare as the drivers of the national debt, while sidestepping completely the drain of war, a grotesquely over fed and under-taxed oligarchy, corporate welfare — and the cost of the Wall Street monopoly on credit.

The Federal Reserve’s website lists interest paid on the U.S. federal debt for the last 24 years — $8.2 trillion, much of that “earned” by Wall Street by borrowing from the Fed at almost no interest, and lending back to the Treasury at higher interest.

And now we’re learning the full extent of Wall Street’s colossal failure and the Fed’s bail out, kept secret even from the Congress.

But the American people are stirring, beginning to sort out how we got where we are, and how we get back to what we want our nation to be. Occupy and others have emerged to deliver the message the governing elite do not want delivered to the American people: it’s all about money and power, and the Wall Street led 1 percent now have a despotic monopoly on both.

How do we recover a just society with opportunity for all? While the candidates for president debate anything else, that is the question the American people are forming.

Monday, November 14, 2011

America has unfinished business

Tea partiers and Occupiers sharing a common cause?

By Mike Krauss
Bucks County Courier Times

Within the space of three years, two powerful popular protests have risen up in the United States — first the Tea Party and now Occupy. They are in one regard similar, but in another quite different.

Like Occupy, the Tea Party was also a spontaneous and democratic protest against the injustice of the Wall Street bailout, which the American people overwhelmingly opposed.

Yet, both political parties, their presidential candidates and Congress supported it.

At that point, the Tea Party should have been expected to redouble its attack on that injustice. It did not.

The Tea Party was in effect diverted, some might say hijacked, and its energy and anger were instead focused on the proposed health care legislation, and the members of Congress and the president who supported it.

Occupy has not lost focus. Despite the inability of fatuous talking heads to discover its “message” and an orchestrated defamation of its activities, polls indicate that Occupy remains broadly supported, while the tea party has lost support.

The American people well understand the larger issue from which the tea party was turned: the government of the people, by the people and for the people has been subverted, and become a government of, by and for the corporate establishment, led from Wall Street.

The other place at which the tea party and Occupy diverge is how each relates to the first American Revolution. The Tea Party adopted the symbols, while Occupy has taken the form.

The first tea partiers were, and some still are fond of donning the attire of 18th century American patriots and brandishing muskets and colonial flags. None of that is to be seen among the Occupiers.

And while the Tea Party quickly gained a central organization, staff and command, the Occupiers remain a loose confederation of independent communities, with one binding message.

“We’ve had it.”

The parallel to the first American Revolution is striking.

Occupy organizes and communicates through local and autonomous “General Assemblies,” a term which harkens back to the days of the Quaker founders of Pennsylvania, and their embrace of the concept of the common wealth.

And these General Assemblies function as did the Committees of Correspondence that spread throughout America before the Revolution, and led to a Continental Congress that eventually declared its independence from an oppressive and unrepresentative central government, then in London, but which like the central government in Washington today represents the overbearing and oppressive commercial interests of the age.

Now as then, there is as much or more communication among these independent local organizations within Occupy than there is with the external and increasingly anxious central authority of the established interests.

Now as then, those established interests, mostly corporate and led from Wall Street treat the American people as little more than servants to their wealth and power, deserving no voice in their government or future.

This is what Occupy seeks to replace, and the Tea Party initially challenged.

Now the pundits are waiting for some kind of “declaration” from Occupy. But Mr. Jefferson’s original will be hard to improve upon. It has rightly been called “American Scripture.”

In it we declared the rights of the people (“life, liberty and the pursuit of happiness”), declared that the purpose of government is “to secure” those rights, and further declared “That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness.”

What Occupy is getting at is a need to update the U.S. Constitution, which in fact was suggested by President Roosevelt in an address to Congress at the close of World War II. FDR called it the “Second Bill of Rights.”

“It is our duty now to begin to lay the plans ... of an American standard of living higher than ever before known. We cannot be content, no matter how high that general standard of living may be, if some fraction of our people-whether it be one-third or one-fifth or one-tenth-is ill-fed, ill-clothed, ill-housed, and insecure.

“This Republic had its beginning, and grew to its present strength, under the protection of certain inalienable political rights... They were our rights to life and liberty.

“As our nation has grown in size and stature, however-as our industrial economy expanded — these political rights proved inadequate to assure us equality in the pursuit of happiness.

“We have come to a clear realization of the fact that true individual freedom cannot exist without economic security and independence.”

The American people are now in the early stages of the Second American Revolution.

At some point, perhaps tea partiers and Occupiers will understand they all started out from the same place, will come together, and together end up at the same place: one nation, indivisible, with liberty, justice and economic security and independence for all.

The American people will need each other to prevail against the rank economic oppression and tyranny of the present age.

America has unfinished business.

Monday, November 7, 2011

Tied up and held for ransom

Betrayal of justice

By Mike Krauss
Bucks County Courier Times

There is a cancer in American government. It is aggressive and spreading.

The cancer was first diagnosed by the FBI in 2004, when it warned of “rampant” mortgage fraud. But the warning was ignored. No action was taken and the cancer spread.

Now, after a congressional investigation and the work of a few courageous journalists, we know the extent of the fraud. One of those journalists, Greg Hunter summarized it.

“There was real estate document fraud when the original Promissory Notes and loan documents were ‘lost.’ The Promissory Notes were required to create tens of thousands of mortgage-backed securities (MBS). No ‘note,’ no security. That is security fraud. No security means the special IRS tax treatments for the MBS’s were fraudulently obtained. That is IRS tax fraud. Because there were no documents, the rating agencies fraudulently made up triple ‘A’ ratings for the securities. When the whole mess blew up, big banks hired foreclosure mill law firms to create forged documents. That phony paperwork was and is being used to wrongfully remove homeowners from their property. That is foreclosure fraud.”

From the local loan originators and their managers up to the CEOs, rating agencies and foreclosure mill law firms — fraud as a business model.

Hunter and others point out that after the savings and loan scandal of the 1980s, which cost taxpayers more than $160 billion, there were more than 1,000 felony convictions, and even more prosecutions.

The cost of the mortgage fraud that brought on the collapse of the American economy, and has ruined the lives and destroyed the futures of tens of millions of Americans, is at least 40 times greater than the S&L fraud, according to William Black, now an economics and law professor who helped investigate and prosecute that earlier criminal wrongdoing.

Yet there has not been one criminal prosecution by the U.S. Justice Department related to the monstrous mortgage fraud; only a few fines and settlements that paper over the crimes. Why?

Gretchen Morgenstern, writing for the New York Times and recently Richard Cohen at the Washington Post have asked the question, but obliquely. Both can only go so far.

As documented by the independent public policy organization Global Research, the boards of directors of the Times, Post and Time Warner, which owns CNN and Time Magazine, are a virtual Who’s Who of the nation’s corporate and financial elite, and they do not want that question asked or answered.

The technical answer, provided by Black, is that the Office of Thrift Supervision, the regulator which in the S&L scandal referred more than 9,000 investigations to the FBI, has in this case referred none.

So the regulators are AWOL, the attorney general of the United States is missing in action and no one asks the president why that is, nor does anyone ask that question of the GOP front runner presidential wanabes, nor the members of Congress who have oversight of the Justice Department.

Because the honest answer would expose the extent of the cancer and the degree to which justice in the United States has been subverted.

It is difficult to get campaign contributions, donations to post-presidential foundations, lucrative sinecures on boards of directors or in academia, invitations to Davos or the regulators’ “round trip ticket” back to the big bucks on Wall Street from people you prosecute for criminal fraud.

The Sunlight Foundation tracks the maze of campaign contributions, and reported that executives of Goldman Sachs, the flagship of the pirate fleet that looted America, are splitting their campaign contributions 50-50 between Mr. Obama and Mr. Romney, the likely GOP presidential candidate.

The finance industry has spent nearly $4 billion lobbying Congress since 1998, apart from campaign contributions. The regulators have been silenced and the revolving door is fully greased.

There was a moment of hope, when the state attorneys general proposed to collectively take action on the fraud. But that moment may have passed. The cancer has metastasized.

With furious lobbying from Wall Street and under enormous pressure from the White House, as reported by Ms. Morgenstern and others, the effort of the state attorneys general was turned away from any investigation and prosecution and a deal has been proposed.

In exchange for paying some billions in fines, those who committed the fraud that has cost the middle class trillions of lost wealth and destroyed lives and futures, will get immunity from criminal prosecution and any future claims for damages.

Call it the first class action sell out.

But now six of the 50 state attorneys general are opposing this betrayal of justice: New York, Delaware, Kentucky, Minnesota, Nevada and California. They are demanding a full investigation and criminal prosecutions where warranted.

Profiles in courage. And in a hopeful sign, these courageous public servants are gaining more support daily.

If you want to fight the cancer eating at the American democracy, now is the time. There is a web site for a statement of support for these attorneys general.

Americans hope that justice is blind; but, tied up and held for ransom?

Mike Krauss, is chairman of The Pennsylvania Project, a non partisan public policy advocacy organization.

Tuesday, November 1, 2011

Drowning in sea of debt

Pennsylvania to Harrisburg: "Sorry."

By Mike Krauss
Bucks County Courier Times

Harrisburg is going under, drowning in a sea of municipal debt.

Like many American cities, the Pennsylvania capitol’s tax base has steadily eroded over many decades. Jobs have been lost as industry has died or gone offshore, and much of the middle class long ago fled the city.

With the Wall Street crash of 2008, tax revenues took another dive. And an expensive investment in a new trash incinerator has failed to produce anticipated revenues.

City Council members want to file for bankruptcy to buy time to work the city’s way out of this mess. The mayor disagrees, and now the governor with the support of the Legislature is stepping in.

The city will be put in receivership. One recent newspaper editorial headlined, “State had to act to spare Harrisburg.”

But that is not what’s happening.

As the story under the headline explained, the state is moving quickly “to reassure worried bond-holders,” and the state will take control of the city’s finances “to meet its financial obligations by selling off revenue-generating assets and raising taxes.”

In other words, the bond holders get a life boat and the city drowns. Already strapped for revenue, the city will be forced to divest of revenue generating assets, among them the municipal incinerator and parking garages.

These assets will almost certainly be snapped up at fire sale prices, another transfer of wealth to the already wealthy who will raise fees at these facilities and pocket the loot, while for the 45,000 residents of the city, a reported 29 percent of whom already live in poverty, life will get worse in already hard times.

It is doubtful that the legislators will be riding to the city’s rescue. State lawmakers just went through a gut wrenching exercise in slashing state spending. There is little appetite for spending money or raising taxes to save the people of Harrisburg — or anywhere else.

In fairness to Pennsylvania Gov. Corbett, when it comes to paying off the bondholders, he is in a bind.

Almost every public project in America, from roads and bridges to port expansion, parking garages and municipal incinerators is financed with private money.

And it is expensive. Nationwide, the debt service is in the trillions of dollars, to be paid by taxpayers over generations. And now, a growing number of municipalities are in the same sinking boat as Harrisburg.

The governor’s bind is, if the bond holders don’t think they will always get their profits out, they may not invest. Where then will the money come from for vital public projects?

The answer is a new idea emerging in states and cities across the nation: public banks to provide affordable credit for public purposes.

Actually, it is an old idea, first practiced in America by the Quaker founders of the Commonwealth of Pennsylvania, who thought that the common wealth should serve the common good.

But the concept did not survive Alexander Hamilton, the first darling of New York bankers, and by the time the Federal Reserve gave control of the nation’s money and credit to a private banking cartel, the idea was extinguished altogether.

Except in North Dakota, where lawmakers responded to the creation of the Fed private banking monopoly by creating the state’s own bank, a public bank owned by the people of North Dakota..
The state of North Dakota does business as the Bank of North Dakota (BND). By state law, the BND holds all the state’s revenue and other assets. Then, as with any bank, these reserves are leveraged to create credit.

That credit is invested in Main Street and not Wall Street.

The BND is not a retail bank and does not compete with private banks. It is a partner in loans made by those banks, savings and loans and credit unions. And it provides a second level of risk assessment.

Only after a community bank approves a loan is the BND approached for participation; for example, to provide a larger loan amount than the local bank can offer, or to “buy down” the interest to the borrower. And then the loan has to pass the BND’s tests for credit worthiness.

For almost 100 years, the Bank of North Dakota (BND) has been an engine of prosperity.

In 2010 the BND reported: $30 million in profits returned to the state general fund without any taxes; a current loan portfolio of $2.8 billion in commercial loans and residential mortgages, including 255 business and industrial projects; student loans of over $1 billion; a $10 million loan program in partnership with the North Dakota Housing Finance Agency; and a disaster relief program with a fixed rate at 4 percent for five years and a variable rate currently at 2.75 percent.

Pennsylvania has a population almost 19 times greater than North Dakota and a far more varied economy. It is reasonable to project that a public Bank of Pennsylvania could produce some very large results.

And had there been a public Bank of Pennsylvania, to invest in cities like Harrisburg and offer low cost alternatives to municipal finance, the governor, state legislators, city officials and the people of Harrisburg might not be dealing with the present catastrophe.