Breaking Free From Wall Street

Public banking: Breaking free of Wall Street and the boom-bust cycle


By Mike Krauss
Bucks County Courier Times

The Bucks County Commissioners have unveiled a preliminary budget for 2013, and like county, city and state elected officials across the nation, they are looking at a deficit. In this case, $2.7 million.

The cause of the deficits is largely the same everywhere: in the wake of the man-made catastrophe of the collapse and bailout of Wall Street, the economy remains in recession, unemployment high and tax revenues decreased, combined with cutbacks in state and federal funding.

State funding has been cut back because of the same declining revenues, no relief in sight. And with Washington focused on what many consider a propaganda-induced crisis — the “fiscal cliff” — there will be no relief there.

The options touted to close the gap are about the same in Bucks County as across the nation: raise taxes, reduce services (when unemployment and foreclosures increase the demand for those vital services), lay off employees and add to unemployment or borrow, adding yet more debt to already burdened taxpayers.

Those are the only tools state and local governments have, tools to share the pain. Or are they?

While Americans view the economic contraction and recession as global, it isn’t. It is highly localized to the economies of the United States and Europe, which are most closely tied to the central bank cartel of Wall Street and Federal Reserve private banking system. But in many other nations, where on the average 40 percent of the market is in public banks, economies are growing.

These are the so called BRIC nations (Brazil, Russia, India and China), as well as Australia, New Zealand, Canada, Iceland, South Africa and Japan; and the healthiest economy in Europe, Germany, where public banks have existed for decades and provided much of the credit and investment for West Germany’s recovery from World War II. The public “Post Office Bank” in Japan played the same role there.

This is not to say that these nations have not felt the impact of declining exports to the sick economies of the U.S. and Europe. They have. But no one in China, or Brazil or India is talking austerity.

Just the failed central bankers and the 1 percent in the U.S. and Europe who caused the catastrophe.

But there are cracks in the wall. Iceland told the predatory bankers to get lost, prosecuted, went after the money they stole and now its economy is recovering while the U.S. and Europe languish. Members of the English Parliament are considering real limits on the private banks.

And last week in Scotland, the finance minister, members of Parliament and civil servants heard from advocates of a public bank as they consider legislation to create a public bank on a national scale.

But public banks are unknown in the U.S., except for one state, North Dakota, where the Bank of North Dakota (BND) has played a major role in sustaining the strongest economy and banking industry in the nation: lowest unemployment, rising wages, continued budget surpluses and no bank failures.

In addition to a current loan portfolio of $2.9 billion invested throughout the state’s economy (businesses, mortgages, student loans), the BND invests in municipal infrastructure, supports disaster relief and has returned an annual average profit of $30 million a year over 10 years to the state’s general fund — revenue without taxes.

The BND is also partnering in North Dakota’s strong energy and agriculture sectors — for example, helping to finance the first new refinery in the United States in decades — multiplying those sectors’ contributions to the economy.

So what about Pennsylvania, which has energy and agriculture and a whole lot more, in a far more diversified economy than North Dakota? The impacts of a state public bank in Pennsylvania could well exceed those of North Dakota. And a public bank of Bucks County could help diversify its economy and end its decades long dependence on residential real estate taxes and state and federal handouts.

Small wonder that now 20 states and a growing number of municipalities across the country. are exploring how public banking can grow their economies, create jobs, boost tax revenues in an expanding economy, halt cuts to vital services, end layoffs and reduce taxpayer debt.

Of course, the benefits of any new public bank will not be felt immediately. The best studies to date (by the Center for State Innovation) project a three to five year period until public bank profits begin to flow, depending on how the bank is capitalized. But the creation of affordable credit to invest in the local economy can begin almost immediately.

The Commonwealth of Pennsylvania and counties like Bucks have more than sufficient assets and access to capital to form a public bank. This innovation deserves the attention of our elected officials.

Because one thing is certain. As long as the creation and cost of credit is controlled by Wall Street and the Fed, recessions will come and go and come again. The time to begin breaking free of that cycle is now, so we don’t get stuck again in a few years with the same bad choices.

Mike Krauss, formerly of Levittown, is a former officer of Bucks County and Pennsylvania government and chair of the Pennsylvania Project. www.papublicbankproject.org Email: mike@mikekrausscomments.com

The fiscal cliff sell out

The thanks of a grateful 1 percent

By Mike Krauss

Bucks County Courier Times

Many weeks ago in this column I forecasted an Obama victory. It was an obvious call.

Mr. Romney was and is a poster boy for Wall Street and the 1 percent. He represented a party – at least those who have done its talking for thirty years – that veers between indifference and hostility to gays, Hispanics, African Americans, the unemployed, uninsured, homeless and women.

Who was left to disdain?  

So Obama’s victory was assured. Now the question is, what will he do with that victory? The answer is again obvious. He will do as he did after his first election, and protect the interests of the 1 percent.

Obama came to the presidency with more good will and political capital among the American people than any new president in modern times. But even before he took office, he and House Speaker Pelosi ran to Wall Street’s rescue and rounded up the votes to pass the bail out.

Then as president, Mr. Obama stood up for Wall Street. He surrounded himself with Wall Street’s minders and errand boys, legitimized Wall Street’s greed and fraud, put Wall Street’s boys at Treasury, Justice and the Fed. He stood up for Wall Street as he sat down on unemployment and foreclosure, and instead led the nation off into the health care wilderness.

Not that health care is unimportant. But even a second rate political strategist could have told you that if Obama had gone after Wall Street, put the barons on the run and in the dock, his approval rating would have gone from 60 plus percent to about, well, about 99 percent.

The president could then have gotten any jobs and foreclosure bills he wanted, the American people and economy would have come roaring back, and he could finally have gotten the health care reform most Americans have long supported - a single payer system for all Americans.

He didn’t want to. His re-election should have been impossible. But the GOP and the 1 percent served up Romney and Obama won – big.

And it was a big victory. Not just the contest for president, but across the board in the Senate and House, the GOP got hammered, and Obama immediately stepped up to talk  - compromise.

It is as if, when the treaties were signed to end World War II, the U.S. had then asked the Germans and Japanese how much of Europe and Asia they would like back.

Do you think, if Romney and the GOP had won, they would be talking compromise? Of course not.  They would be talking “mandate” 24/7. And there would be bills tomorrow to “save” what is left of the safety net by cutting more holes in it, complete with continued historic low taxes for the already wealthy and more corporate subsidies.

And there will be such bills and soon. Mr. Obama will give cover to those Democrats in Congress who Wall Street and the 1 percent have already purchased, and an opportunity for the true believing predators in the GOP to push for cuts in the safety net that will make the coming sell out sound reasonable.

It is the same drill that got the bail out through Congress in 2008, led by Democrats Obama and Pelosi and a national media that hectored the American people night and day with the specter of a “credit freeze” and collapse of the economy.

The bail out was enacted and Americans got – an economic collapse. This time it is the even more ominous sounding “fiscal cliff” which is trotted out day and night to frighten Americans into burning down their own house. And the result will be more hardship and poverty for most Americans, and more wealth for the already wealthy.

It is time to ask, if you have not yet, whether the two major national political parties in the U.S. any longer can make a claim to represent average Americans; or whether both have been reduced to puppet parties, the strings of each pulled by Wall Street and the 1 percent, going through election “extravaganzas” as scripted as any professional wrestling match, outcome predetermined: the 1 percent win and the 99 percent lose.

There were some hopeful signs in the elections for Congress, most notably the election of Elizabeth Warren as Senator from Massachusetts. But that is one reason why Wall Street and the 1 percent are trying to stampede the nation now, and get this deal done with the lame duck Congress, before anybody is in place to head them off.

It does not take a political genius to forecast harder times still for most Americans. Likewise, it is obvious that the fight for simple justice and the prosperity of the 99 percent will not be led from Washington. It will be led from America’s municipalities, counties and states, rebuilding an American community, or it will not be led at all.

And four years from now Mr. Obama will retire with the thanks of a grateful 1 percent and we can try again to elect a president of the people, by the people and for the people.

Road to Ruin

Only jobs can stop the drift

By Mike Krauss
Bucks County Courier Times

It was a throw away, seven words in a sentence at the end of a recent editorial in this newspaper encouraging a write in vote for former Pennsylvania Gov. Ed Rendell for U.S. Senate.


The editors found insufficient reason to endorse either incumbent U.S. Senator Bob Casey or his GOP challenger Tom Smith, and suggested that Rendell could bring much needed leadership to a dysfunctional U.S. Senate, immobilized by partisanship — and here are the seven words — “even as the nation drifts toward ruin.”

And there it is: the truth, the whole truth and nothing but the truth, in black and white and right between the eyes.

We are drifting toward ruin.

It begins at the beginning, with the oath the president took to “preserve, protect and defend the Constitution of the United States against all enemies, foreign and domestic.”

Mr. Obama has foresworn that oath and is trashing our constitution, shredding the rights to due process, habeus corpus and the protection against unreasonable search and seizure.

The war on terror has become a war on liberty.

Americans may now be arrested at will — that of the president, urged on by some nameless functionary, and imprisoned indefinitely without evidence before a judge or a warrant. The president has taken upon himself the power to execute alleged “bad guys,” including American citizens, without recourse to any judge or trial.

His opponent, Mr. Romney has had this to say about this Caesar-like power grab by the nation’s chief executive — nothing.

So we drift away from our constitution, as we drift away from our democracy.

The election for president and members of Congress will hit new spending records, of itself not all that surprising. It takes a lot of money to stage a two year circus.

But there is almost no way to know where all the money comes from and no way to limit the influence of the corporate elite that now buy elections as they buy votes in Congress.

The nation drifts as the unemployed and homeless drift. God only knows how this faceless army is faring in the aftermath of “The Storm.” It was bad enough before the storm hit.

Better Markets (www.bettermarkets.com) is a non-profit and non-partisan organization that promotes transparency, efficiency and integrity in the nation’s finance industry and markets. Its director is a high power lobbyist, Dennis M Kelleher, who has been described as “Occupy’s suit wearing cousin.”

In late September they released a report that quantified the damage inflicted on the nation in the other catastrophic storm of recent memory, the collapse of Wall Street. The report puts its message in its title: “The Cost of the Wall Street-Caused Financial Collapse and Ongoing Economic Crisis Is More Than $12.8 Trillion.”

The report describes the reality of America: five years since Wall Street failed and was rescued, the nation is stuck in “the worst economy since the Great Depression, which touches every corner of our country.”

The $12.8 trillion represents the losses that can be quantified: “destruction of human capital from long-term unemployment, lost household wealth, foreclosures, government bailouts, emergency spending measures, and the other actions that were necessary to prevent a second Great Depression.”

But the report also notes the difficult to quantify, but very real losses that all the “feel good” propaganda in the world cannot mask: the “widespread human suffering that has resulted from the surge in poverty, homelessness, and hunger.”

“Surge.” Like the tide that hit Lower Manhattan and the Jersey shore, with similarly devastating consequences.

The report concludes that this suffering and deprivation will continue “for many years to come.” Or, as another report put it some months ago, the nation is in the midst of a “slow moving social catastrophe.”

Drifting toward ruin.

What will arrest the drift and get the nation moving forward again?

A psychological lift would help, something we could all cheer, like jailing some of the banskters on Wall Street or a moratorium on home foreclosures. But more is needed: jobs — good paying jobs.

Jobs are everything. Jobs for the middle aged Americans now out of work for years, unemployment exhausted, home foreclosed, future bleak, winter coming on.

Jobs for the debt shackled and unemployed recent college grad. Jobs for the 50 percent unemployed minority youth. Jobs for the laid off teachers, cops and firefighters. Jobs.

It is so achingly obvious.

Jobs eliminate the need for public assistance and create taxpayers, economic activity, local tax revenue and hope. Jobs create buyers for products and services and the need to increase production, capacity and employment that all the tax breaks and corporate profit serving deregulation in the world can never produce.

Where will those jobs come from? Washington? Wall Street? The Federal Reserve?

Doubtful.

Perhaps, in the aftermath of “The Storm” there will be funds to rebuild and some will be put to work in the areas affected. But expect the Congress to cry poor, as cover to legislate a windfall for major donors and the one percent. It’s the new American Way.

Maybe, by some miracle, the elections will produce a president and a Congress who are on fire to put America back to work, the deficit be damned. But again, don’t hold your breath.

To arrest the drift, jobs must be created on a massive scale. New models are needed. The old and failed must be discarded.