Tuesday, March 13, 2012

The new "Untouchables"

Moving on with an election sham

By Mike Krauss
Bucks County Courier Times

Perhaps like you, I’m on the mailing list of all sorts of organizations, whether I particularly agree with their stated purposes or not. MoveOn is one of those. It’s one way to keep track of what’s going on in American politics and government.

I just received another invitation to a MoveOn event, this one urging me to a rally in Bensalem Township this week, to “join us in calling on President Obama to stand with the 99 percent and take on the housing crisis.”

The invitation goes on to explain that “President Obama has the opportunity to be a homeowner hero — by pushing Fannie Mae and Freddie Mac to reduce mortgages to their fair market value. This will help millions of underwater homeowners and help get our economy back on track.”

It left me wondering, are the organizers at MoveOn hopelessly naive, or hopelessly cynical?

The administration has already taken a stand to address the tidal wave of foreclosures that still rolls across America: protect Wall Street and the 1 percent, whatever it takes.

The protection began when candidate Obama closed ranks with the 1 percent to push the Wall Street bailout through Congress.

The protection continued when President Obama installed Wall Street’s man as secretary of the Treasury, who as chairman of the Federal Reserve in New York had already collaborated with Bush Treasury Secretary Paulson to make sure Wall Street was rescued, whatever the cost to the American people and no matter the magnitude of the criminal fraud that caused the collapse.

Mr. Obama went on protecting Wall Street and the 1 percent when he re-appointed Fed Chairman Bernanke, who showered Wall Street with trillions of almost interest-free money, while Main Street collapsed.

And while Main Street was starved of the credit vital to a growing economy and jobs creation, the Fed pushed interest rates to near zero, in turn destroying the savings of millions of Americans — many senior citizens on fixed incomes, who now receive nothing for their savings, as prices rise.

And for three years, the Obama Justice Department has protected the criminals on Wall Street, as did the Bush administration.

In September 2004, The FBI warned in testimony before Congress that there was an “epidemic” of mortgage fraud and predicted that it would cause a “financial crisis” if it were not stopped.

It was not stopped, and the mortgage fraud exploded. Then, as noted by former regulator William Black and others, in 2008 the FBI geared up to do its job and go after the frauds, but “the Department of Justice (DoJ) deliberately, and successfully, sabotaged this effort to investigate the major frauds.”

Black, who led the effort that successfully prosecuted more than 900 criminals in the finance industry at the heart of the Savings and Loan Scandal of the 1980s, summed up the heart of the matter of the current scandal — a scandal of a magnitude never before seen.

He wrote, “The elite banking frauds who caused the Great Recession through their looting have done so with impunity.”

The new “Untouchables.”

Not one has been indicted on criminal charges — just a few civil suits and meaningless fines covered by insurance or picked up by shareholders.

Finally, and perhaps MoveOn missed it, there has been an announcement of the administration’s final solution to the housing crisis. It’s a one-two punch to the middle class.

First, the jab. A deal was cut to let Wall Street off the hook in exchange for a $25,000 reduction in mortgage principal for about 1 of 12 million homeowners still “underwater;” and about 750,000 of the many millions who lost homes will get a check for $2,000.

I can’t wait for the photos of members of Congress or mega-bank CEOs handing out checks to joyful homeowners and the now homeless dispossessed, sometime before the November elections.

Well, maybe not the homeless. First, you would have to find them; and second, someone might see them.

Then, the hook. The huge inventory of foreclosed and vacant homes of formerly middle class Americans which the federal government bought at above market prices to protect the big banks’ balance sheets, will now be sold off to “qualified investors” — in bulk — who will rent them back to those formerly middle class Americans.

The 1 percent will grow fatter still on the paychecks of renters, while they wait for the value of these assets to once again appreciate. Then they will sell them at a profit taxed at 15 percent as capital gains, and stuff themselves on yet another massive transfer of wealth from the 99 percent to themselves.

So, is the “team” at MoveOn who sign these invitations I receive naive or cynical? I vote naïve.

These invitations are written with all the eagerness of a freshman preening for an invite to the senior prom. They want so desperately to believe they have not been jilted.

And to prove they have not been jilted, they are eagerly helping to orchestrate a program of bought federal elections that will change nothing.

If there is to be a restoration of the prosperity of the American middle class, it will not be led by anybody or any organization now in Washington or party to this election sham.

1 comment:

  1. Excellent article, Mike.
    I recently read a not-so-excellent article on something called Complexity Economics - as the "economy specialist" at Op Ed news, it was my job to edit and approve it. I did, but that doesn't mean I agree with the premise that it's possible to devise hyper-complex formulas, based loosely on chaos theories, with a large and indispensable dollop of computing power, to determine market direction. This is just another version of quantitative analysis - the same sort of thing that nearly brought down the banking sector in 1998 with the inaptly named Long-term capital management. Only the Fed, by strong-arming the banks to bail out the over-leveraged bets, was able to save the system, that time. This has been the pattern since 1990, when Bill Black was the chief S&L regulator. After that, financial institutions have been able to grow to TBTF and know they would be bailed out, somehow, and not even be punished. Of course they took on greater risks! Who wouldn't when the upside is billions and the downside is, well, just millions?
    We have to return to first principles. Recognize that Land bubbles will always exist unless tempered by Land Value Taxation that takes most of the appreciation out from Land and returns it to the people whose demand created it, justly and fairly, through their governments, while untaxing labor and fixed capital (like houses), so we get more of that. We need to move money out of the centralized bank-legislative complex in Washington by opening State Banks in all 50 states, and decentralize the money power. Finally, we need to re-allow Congress to issue debt-free money* so they are not dependent on, and complicit with, the banking-finance establishment for their money. The governments now make more on their market investments than they do in taxes, so of course they will do everything they can to goose these markets, and look the other way when there's criminality. This is the mother of all conflicts of interest.

    * We already do this with coins, stamps (for a limited usage), and did it with United States Notes from 1862-1972 (14 series), and the constitution allows Congress (and only Congress" to "coin Money" (Art. 1, Sec. 8).