Sunday, April 1, 2012
Public Banking and the Post Wall Street Era
Public banking: A new era in state and municipal finance
By Mike Krauss
Bucks County Courier Times
Like state and municipal financial officers across the nation, Ohio Treasurer Josh Mandel is charged with the stewardship of a lot of other people’s money, including more than $41 billion in pension funds of Ohio workers.
Two weeks ago he announced plans to remove Bank of New York Mellon and State Street Bank as custodians of those funds, and transfer that responsibility, and business, to JP Morgan and CitiBank.
In a written statement, Mr. Mandel cited allegations of fraud against the present custodians as the basis for his decision. But his alternative leaves a lot to be desired.
The new custodians, JP Morgan and Citibank, are at this moment themselves the target of numerous lawsuits and legal actions on the part of state attorneys general, the SEC, investors, other banks, municipalities and pension funds. Allegations include mismanagement, deception, conflict of interest and fraud. The damages sought range from many millions to many billions of dollars.
And JP Morgan is the Wall Street leader ($1.4 billion in 2011 revenue) in the market of the interest rate swaps that have blown up municipal finances across the United States.
As Ellen Brown, author of “Web of Debt” explains, “The swaps were entered into to insure against a rise in interest rates; but instead, interest rates fell to historically low levels. This was not a flood, earthquake, or other insurable risk due to environmental unknowns or ‘acts of God.’ It was a deliberate, manipulated move by the Fed, acting to save the banks from their own folly in precipitating the credit crisis of 2008 ... rewarding them for their misdeeds at the expense of the taxpayers.”
Brown concludes, “This ‘financial engineering’ is sold, not by disinterested third parties, but by the very sharks who stand to profit from their counter-parties’ loss. Fairness is thrown out in favor of gaming the system.”
From New England to California, municipal governments and authorities have lost billions. Reading, Pa., already reeling from collapsing revenue, a vanishing middle class and jobs sent off-shore, lost $21 million — more than a year’s worth of real-estate taxes.
With the switch from NY Mellon and State Street to JP Morgan and Citibank, the Ohio treasurer may have done no more than take Ohio retirees from the proverbial frying pan and into the fire. It is a dilemma faced by state and municipal financial officers across the U.S.
Where does a steward of public funds — charged to do more than simply stuff money in a mattress and stand guard — bank and invest those funds?
The alternative to the Wall Street casinos is now emerging among state legislators and state and municipal financial officers nationwide. It is to place those funds in publicly owned state and municipal banks, where risk-taking is controlled and 100 percent of the substantial income generated is retained by local communities.
One model is the very successful Bank of North Dakota, which is managed by salaried civil servants with banking experience. The managers charged with day-to-day operations and decision making have no incentives for risk taking — no super-sized salaries, no fabulous bonuses, no recurring commissions for a short-term focus on boosting profit for quarterly statements.
Treasury officers across the nation generally have similar criteria to judge where to bank the funds of which they have stewardship. Safety of principal is foremost, but there must be sufficient liquidity to insure all anticipated demands on the funds are met, and a reasonable return.
Wall Street fails on two out of three. The safety of public funds has taken a back seat to private profit, and the return is diminished by commissions and fees to Wall Street managers, who all are paid — it is fair to say — a lot more than any manager in a state treasury or municipal finance department.
In fact, a public bank can return many times more on principal than Wall Street could hope to match, because capital, assets and deposits of the public bank can be leveraged — as with any bank — to create credit directed into the community in partnership with community banks, credit unions, savings and loans and local authorities, to generate economic development, jobs and tax revenue.
This is the real “multiplier effect” that never materialized when Congress and the Federal Reserve funneled first hundreds of billions, and then trillions into rescuing Wall Street from its premeditated recklessness.
With respect to municipal bonds and “hedging” in the complicated world of modern finance and interest-rate fluctuation, a public bank could buy municipal bonds at the market rate (And taxpayers would pay the debt service to themselves); and if it were deemed prudent, hedge the interest rates on their own bonds — cutting out the Wall Street middleman who is now playing everybody, as even Wall Street insiders have now begun to attest.
Seventeen states and a growing number of municipalities are now taking a serious look at public banking: keeping their substantial assets close to home, invested locally and managed prudently.
The first national Public Banking In America Conference takes place in Philadelphia at the end of April. We encourage state and municipal treasury officials to join this discussion and take an active role in shaping the post-Wall Street era in state and municipal finance.
Mike Kraussis a director of the Public Banking Institute and chair of the Pennsylvania Project. www.papublicbankproject.org Email mike@mikekrausscomments.com
Sunday, March 25, 2012
The New Religion
Seasons of light, seasons of darkness
By Mike Krauss
Bucks County Courier Times
There have been times in which the human spirit soared and civilization flourished: the Athenian democracy, the Renaissance, the Enlightenment and Age of Reason.
The last two led to the epoch changing declaration sent forth from Philadelphia to the world in 1776, and the creation of modern western democracy.
Seasons of light.
But there are also seasons of darkness. We are in one now.
This is an era in which the powerful exploit the powerless with ruthless impunity — grasping, gouging, cheating and stealing, using and abusing. Democracy was thought to be a check on the descent of humankind into another dark age, but it has not worked out that way.
Democracies, we have learned, can be subverted and devolve into oligarchic tyrannies. Concentrations of wealth lead to concentrations of power that tend to ever more concentration of the resources and wealth of nations in the hands of the few, the arrogant, the self absorbed.
But the memory of the seasons of light lingers in the collective human consciousness, and the purveyors of darkness always feel compelled to offer up some reasons, some philosophy or ideology to explain why darkness is the “natural” and therefore just state of human affairs.
These are excuses for indifference.
In this season of darkness, as millions are reduced to ever expanding poverty and insecurity, and the cherished rights and liberties of Americans are subverted by their government, the powerful justify their privilege with a new gospel: material riches are the measure of all worth, people without such riches are worthless, and their rights are of no consequence.
The new god of American idolatry, exported globally, is private profit, to which every knee must now bend: presidents and prime ministers, congresses and parliaments, and the peoples of the nations.
The most notable prophet of this new gospel is the now dead iconoclastic sociopath, Ayn Rand. But it has been embraced and proclaimed by a host of her disciples, from former Fed Chairman Alan Greenspan — chief architect of the expropriation of the wealth of the middle class — to leaders in Congress and a multitude of “post partisan” priests and acolytes positioned throughout American government, business and media to enforce this brave new world of the self-sanctified “Masters of the Universe.”
What is remarkable about the ascent of this new religion is how little resistance it has met from the one it is displacing — Christianity. And I keep wondering, where is the American church in all this?
By “the American church,” I do not mean the pseudo-Christian tribalism of contemporary American politics, left and right. That is no more than majority social custom dressed up as the Law: the long canon of do’s and don’ts appended to the Ten Commandments, laws which God apparently meant for us, but never got around to.
Every generation adds new ones.
Thou shall not dance. Thou shall not have long hair. Thou shall not wear fur or eat meat. Thou shall not occupy public property or public attention.
They lead to absurdities. Thou shall oppose abortion, but support capital punishment. Thou shall oppose war, but support women in combat.
Some are new interpretations of old favorites. In ancient times, an “unruly” son could be stoned to death. Now, for some Christians, it’s the gay son.
And now as then, women are treated as chattel, objects to be controlled.
By “the American church,” I mean the church of the Gospels and the example of Christ — the continuous act of reaching out to the other. The Christian church.
Unlike earlier times in our history, when Christian abolitionists, suffragettes, civil rights and peace advocates spoke loud and clear with iron resolve, the Church today seems strangely mute.
Who in the Church now stands to demand, without equivocation or excuse, a government and policies that embrace the absolute and unequivocal equality of every man, woman and child; an equality bestowed freely by the loving God of all, and not dependent on any human authority or institution, or sanctified by material wealth?
To be sure, there are voices raised. But many are secular, and make their case based on the “human rights” said to be inherent in the “Natural Law.” But that is not compelling.
The “Natural Law” is not our refuge. There is nothing benign about nature. A tsunami destroys in its path the just and the unjust alike. The stronger infant must be taught not to take the food or the toy of the weaker. In the jungle, predators kill off the young, old and infirm.
As governments do today.
The Christian Gospels are a call to neither codes of behavior nor nature, but to the example of godliness above both social custom and nature. A call to the light.
Indifference is the heart of the darkness that now threatens the lives, liberty and security of many millions. Christians should be leading by example to the light that overcomes that darkness.
Mike Krauss was a pupil of the late Rev. Stanley A. Powell Jr., long time Rector of St. Paul’s Episcopal Church, Levittown. Email: mike@mikekrausscomments.com
By Mike Krauss
Bucks County Courier Times
There have been times in which the human spirit soared and civilization flourished: the Athenian democracy, the Renaissance, the Enlightenment and Age of Reason.
The last two led to the epoch changing declaration sent forth from Philadelphia to the world in 1776, and the creation of modern western democracy.
Seasons of light.
But there are also seasons of darkness. We are in one now.
This is an era in which the powerful exploit the powerless with ruthless impunity — grasping, gouging, cheating and stealing, using and abusing. Democracy was thought to be a check on the descent of humankind into another dark age, but it has not worked out that way.
Democracies, we have learned, can be subverted and devolve into oligarchic tyrannies. Concentrations of wealth lead to concentrations of power that tend to ever more concentration of the resources and wealth of nations in the hands of the few, the arrogant, the self absorbed.
But the memory of the seasons of light lingers in the collective human consciousness, and the purveyors of darkness always feel compelled to offer up some reasons, some philosophy or ideology to explain why darkness is the “natural” and therefore just state of human affairs.
These are excuses for indifference.
In this season of darkness, as millions are reduced to ever expanding poverty and insecurity, and the cherished rights and liberties of Americans are subverted by their government, the powerful justify their privilege with a new gospel: material riches are the measure of all worth, people without such riches are worthless, and their rights are of no consequence.
The new god of American idolatry, exported globally, is private profit, to which every knee must now bend: presidents and prime ministers, congresses and parliaments, and the peoples of the nations.
The most notable prophet of this new gospel is the now dead iconoclastic sociopath, Ayn Rand. But it has been embraced and proclaimed by a host of her disciples, from former Fed Chairman Alan Greenspan — chief architect of the expropriation of the wealth of the middle class — to leaders in Congress and a multitude of “post partisan” priests and acolytes positioned throughout American government, business and media to enforce this brave new world of the self-sanctified “Masters of the Universe.”
What is remarkable about the ascent of this new religion is how little resistance it has met from the one it is displacing — Christianity. And I keep wondering, where is the American church in all this?
By “the American church,” I do not mean the pseudo-Christian tribalism of contemporary American politics, left and right. That is no more than majority social custom dressed up as the Law: the long canon of do’s and don’ts appended to the Ten Commandments, laws which God apparently meant for us, but never got around to.
Every generation adds new ones.
Thou shall not dance. Thou shall not have long hair. Thou shall not wear fur or eat meat. Thou shall not occupy public property or public attention.
They lead to absurdities. Thou shall oppose abortion, but support capital punishment. Thou shall oppose war, but support women in combat.
Some are new interpretations of old favorites. In ancient times, an “unruly” son could be stoned to death. Now, for some Christians, it’s the gay son.
And now as then, women are treated as chattel, objects to be controlled.
By “the American church,” I mean the church of the Gospels and the example of Christ — the continuous act of reaching out to the other. The Christian church.
Unlike earlier times in our history, when Christian abolitionists, suffragettes, civil rights and peace advocates spoke loud and clear with iron resolve, the Church today seems strangely mute.
Who in the Church now stands to demand, without equivocation or excuse, a government and policies that embrace the absolute and unequivocal equality of every man, woman and child; an equality bestowed freely by the loving God of all, and not dependent on any human authority or institution, or sanctified by material wealth?
To be sure, there are voices raised. But many are secular, and make their case based on the “human rights” said to be inherent in the “Natural Law.” But that is not compelling.
The “Natural Law” is not our refuge. There is nothing benign about nature. A tsunami destroys in its path the just and the unjust alike. The stronger infant must be taught not to take the food or the toy of the weaker. In the jungle, predators kill off the young, old and infirm.
As governments do today.
The Christian Gospels are a call to neither codes of behavior nor nature, but to the example of godliness above both social custom and nature. A call to the light.
Indifference is the heart of the darkness that now threatens the lives, liberty and security of many millions. Christians should be leading by example to the light that overcomes that darkness.
Mike Krauss was a pupil of the late Rev. Stanley A. Powell Jr., long time Rector of St. Paul’s Episcopal Church, Levittown. Email: mike@mikekrausscomments.com
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.
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.
Friday, March 2, 2012
The Future of the GOP and Democrats
Do the GOP and Democratic Parties have a future?
By Mike Krauss
Bucks County Courier Times
Let’s have some fun, get out the crystal ball and predict the future of the Republican and Democratic parties.
The GOP is easy. It doesn’t have a future.
This is not because its leading candidates for president are (in order) hopelessly artificial, a religious fanatic and a swollen vanity — although that doesn’t help, of course.
The death of the GOP can be read not in a crystal ball, but in the tea leaves, or more precisely the demographics. Demographics are destiny, and the GOP has for decades been the party of the old, white America. And it is going.
Now, as I am one of those — an older, white American, descendent from the German and English speakers who first settled most of the original American colonies — you might think I find this cause for alarm, but I don’t.
The population and birth rates of American racial and ethnic groups have hit critical mass. The former white, mostly north European mainstream will become but one of many tributaries that feed the current, shift the mainstream and cut a new channel in history.
Get over it.
And more, the new America is younger and able to swim in the deeper end of the gene pool, and finds differences of race, religion, culture and social custom less of a threat than many of the older Americans — the GOP base — wading in the shallow end.
This if itself should not have been the death of the GOP. But unlike political parties with a future, the GOP never made an outreach to the future, never made any accommodation with reality. Instead, beginning with Nixon’s “Southern Strategy” and the exodus of southern whites from the Democratic and into the Republican Party, the GOP has bet on the past.
Nixon was a shrewd politician. But his short-term electoral strategy sealed the fate of the GOP. George Bush tried to make the outreach to the fastest growing population of the United States — Hispanics — but he was beaten back.
Now the party is in its death throes. Interestingly, the GOP has decided not so much to circle the wagons for one last stand, but rather to go out guns blazing in one last suicidal, Picket’s Charge.
So the GOP in Congress opposes any compromise, makes no deals, doubles down on its shrinking base and produces a leading candidate for president who surely knows better, plus the afore mentioned fanatic and a puffed up ego.
Mr. Obama is easily the luckiest man to ever run for president. Which brings us to the Democrats.
Clearly, this is a party with a future, if only by default. But wait, what do I see in the crystal ball?
Mr. Obama has built his presidency on the alliance made by Bill Clinton with Wall Street and the 1 percent, and because his party in Congress is as dominated by Wall Street and the established interests of the 1 percent as is the GOP, the Democrats are losing the younger voters that flocked to the Obama banner in 2008.
You’ll find them at Occupy meetings and Ron Paul rallies, because they have no jobs, may never own a home as their parents did, and see the U.S. still chasing after war all over the world as ever more Americans move down the ladder of social mobility. They know they’ve been had.
The Democrats have a civil war on their hands. The party may have a short future.
Professional Democrats like the organizers of MoveOn are trying desperately to move Obama away from his sponsors and paper over the divide, but I don’t see it happening. Although I must caution, as any carnival fortune teller can tell you, the future is murky.
The GOP, in its last charge, is hitting first at the Democrats’ supply lines, trying by any and all means to disenfranchise as many young and non-white voters as possible, and also a lot of senior citizens. (That last makes sense if you want to gut Social Security and Medicare, as the GOP does.)
So the party further narrows its base from older, to older and well-to-do whites. The GOP will fail, Mr. Obama will be re-elected, and nothing will change.
No, wait. I see something.
There is something unclear. I see people who have taken a beating. A lot of them. Is there someone in your past called “middle class?” They are almost all white. And they are angry.
But, it doesn’t matter. I see another market crash again sometime shortly after the November election, all hell will break loose and the elections of 2014 will see the emergence of a new political party in the United States.
Or not.
As I said, it’s murky.
That’ll be two bucks, and thank you.
Tuesday, February 28, 2012
Homes, jobs and a future
Washington has failed us: Where to turn?
By Mike Krauss
Bucks County Courier Times
Home ownership has been the defining characteristic of the American middle class. It has been the basis of physical and economic security; and in turn, the foundation of a stable society.
According to Realty Trac, the trade group most often cited in news reports, in 2006 there were about 267,000 home foreclosures in the United States. In 2007 the number jumped to 405,000. In 2008 it soared to 2.2 million. In 2009, 2.8 million foreclosures were reported; and in 2010, 2.9 million.
Last year the number dropped to 2.6 million as the banks held off on foreclosures while they negotiated a deal with the administration to pardon the colossal fraud in the industry.
But now that the administration has given the biggest banks and their executives a “get-out-of-jail-free” deal, industry experts forecast another tidal wave of foreclosures in 2012. The AP reports that more than 12 million mortgages in the U.S. are now “underwater.”
Let’s say the number of foreclosures for 2012 comes in at “only” at 3 million. That means that in the five years, 2008-2012, 13.5 million homes will have been foreclosed.
On the assumption that most of these were not the homes of individuals, but of families — say two adults and one child — that means that even by this conservative estimate, 40.5 million Americans will have lost their homes over the past five years.
The American middle class is being destroyed.
The deal with the banks heralded by the administration is hopelessly inadequate to the dimension of the need. Only one million out of the 12 million whose mortgages are underwater today may receive a $25,000 reduction in the principal of their loan. And perhaps 750,000 who have already lost their homes will get a check for $2,000.
As one commentator observed, it is as if someone stole your car, and offered to give back the hubcaps.
It is rapacious. And it is virtually unopposed by the nation’s political elite. For example, the GOP candidates for president have met the deal with — silence. Why?
For the same reason all the talk of jobs in 2008 faded with the election. Our federal elections are a sham. The White House and the Congress are for sale.
Until 2010, there were some restraints on the selling and buying of elections. The maximum amount one person could give to a candidate was $2,500; to a political action committee, $5,000, and for a political party committee, $30,800.
But with its high regard for “free speech,” the U.S. Supreme Court ruled that for the new “Super Pacs” and other so called “civic leagues or organizations not organized for profit,” there is no limit to what one person can contribute; and more, the contribution may be kept secret.
The big money started to flow. The price tag for federal elections (president and Congress) in 2008 was about $5 billion. Watchdog groups estimate the price for 2012 at $7 billion.
Do you actually believe that “small donors” in a nation in which 40.5 million people have recently lost their home and millions can find no work are going to provide that kind of money?
It will come from people like the corporate take-over specialist who has contributed $12 million to a GOP Super Pac, and the casino owner who has ponied up $10 million for Newt Gingrich, so far.
Who will the elected then represent? The same people they do now: the less than 1 percent. And what will those they represent get for their money?
More.
More indifference to the unemployed and the homeless, the ill-fed, ill clothed and just plain ill; more ill-advised and fruitless (but money making) military adventures, more license to cheat buyers and investors, and more of what the 1 percent already have in abundance: physical and economic security, and opportunity.
The world will be their oyster.
At the same time, the one third of American young people who do not graduate high school, the one third who graduate with no useful skills, and a generation of college graduates already saddled with huge debt will be lucky to get a job, shucking oysters in the swell restaurants where the 1 percent dine.
There is only one way for the American middle class to begin to take back our democracy and recover its stolen prosperity. People must be put back to work and back in homes.
Homes and jobs will provide the initial relief from the physical and economic insecurity that now afflict tens of millions of Americans, and give the nation an opening to the future.
But don’t look to Washington, Congress or the president for help. To one degree or another, they have all bought into more subsidies for business as a way to “stimulate” the private sector and jobs creation, and a sweetheart deal for the banks that will do nothing to deal with homelessness, and has sold out justice.
The key to the future is local housing initiatives and jobs creation on a heroic scale; to unlock the diversity, talent, industry and faith of the American people.
Washington has failed the American people, and will go on failing for the foreseeable future. Time to look elsewhere.
By Mike Krauss
Bucks County Courier Times
Home ownership has been the defining characteristic of the American middle class. It has been the basis of physical and economic security; and in turn, the foundation of a stable society.
According to Realty Trac, the trade group most often cited in news reports, in 2006 there were about 267,000 home foreclosures in the United States. In 2007 the number jumped to 405,000. In 2008 it soared to 2.2 million. In 2009, 2.8 million foreclosures were reported; and in 2010, 2.9 million.
Last year the number dropped to 2.6 million as the banks held off on foreclosures while they negotiated a deal with the administration to pardon the colossal fraud in the industry.
But now that the administration has given the biggest banks and their executives a “get-out-of-jail-free” deal, industry experts forecast another tidal wave of foreclosures in 2012. The AP reports that more than 12 million mortgages in the U.S. are now “underwater.”
Let’s say the number of foreclosures for 2012 comes in at “only” at 3 million. That means that in the five years, 2008-2012, 13.5 million homes will have been foreclosed.
On the assumption that most of these were not the homes of individuals, but of families — say two adults and one child — that means that even by this conservative estimate, 40.5 million Americans will have lost their homes over the past five years.
The American middle class is being destroyed.
The deal with the banks heralded by the administration is hopelessly inadequate to the dimension of the need. Only one million out of the 12 million whose mortgages are underwater today may receive a $25,000 reduction in the principal of their loan. And perhaps 750,000 who have already lost their homes will get a check for $2,000.
As one commentator observed, it is as if someone stole your car, and offered to give back the hubcaps.
It is rapacious. And it is virtually unopposed by the nation’s political elite. For example, the GOP candidates for president have met the deal with — silence. Why?
For the same reason all the talk of jobs in 2008 faded with the election. Our federal elections are a sham. The White House and the Congress are for sale.
Until 2010, there were some restraints on the selling and buying of elections. The maximum amount one person could give to a candidate was $2,500; to a political action committee, $5,000, and for a political party committee, $30,800.
But with its high regard for “free speech,” the U.S. Supreme Court ruled that for the new “Super Pacs” and other so called “civic leagues or organizations not organized for profit,” there is no limit to what one person can contribute; and more, the contribution may be kept secret.
The big money started to flow. The price tag for federal elections (president and Congress) in 2008 was about $5 billion. Watchdog groups estimate the price for 2012 at $7 billion.
Do you actually believe that “small donors” in a nation in which 40.5 million people have recently lost their home and millions can find no work are going to provide that kind of money?
It will come from people like the corporate take-over specialist who has contributed $12 million to a GOP Super Pac, and the casino owner who has ponied up $10 million for Newt Gingrich, so far.
Who will the elected then represent? The same people they do now: the less than 1 percent. And what will those they represent get for their money?
More.
More indifference to the unemployed and the homeless, the ill-fed, ill clothed and just plain ill; more ill-advised and fruitless (but money making) military adventures, more license to cheat buyers and investors, and more of what the 1 percent already have in abundance: physical and economic security, and opportunity.
The world will be their oyster.
At the same time, the one third of American young people who do not graduate high school, the one third who graduate with no useful skills, and a generation of college graduates already saddled with huge debt will be lucky to get a job, shucking oysters in the swell restaurants where the 1 percent dine.
There is only one way for the American middle class to begin to take back our democracy and recover its stolen prosperity. People must be put back to work and back in homes.
Homes and jobs will provide the initial relief from the physical and economic insecurity that now afflict tens of millions of Americans, and give the nation an opening to the future.
But don’t look to Washington, Congress or the president for help. To one degree or another, they have all bought into more subsidies for business as a way to “stimulate” the private sector and jobs creation, and a sweetheart deal for the banks that will do nothing to deal with homelessness, and has sold out justice.
The key to the future is local housing initiatives and jobs creation on a heroic scale; to unlock the diversity, talent, industry and faith of the American people.
Washington has failed the American people, and will go on failing for the foreseeable future. Time to look elsewhere.
Friday, February 17, 2012
A Real Political Party?
Serving Wall Street and the 1 percent
By Mike Krauss
Bucks County Courier Times
In an agonizingly disingenuous oped, New York Times columnist Thomas Friedman recently made the case that America urgently needs a “second” political party.
His argument is that the GOP has become so “captive to conflicting ideological bases” that there can be no agreement on basic policy issues within the party that is sufficient to form a majority with which the Democrats — a “real” political party — can do the nation’s business.
Here “we” are, Friedman worried, six months from the GOP nominating convention, and still no agreement on its candidate for president. A real political party, Friedman suggests, would be like the Democrats and have these things settled by now.
Rubbish.
How did the Democrats achieve the unity and cohesion that Friedman implies? Beginning with Bill Clinton, by subordinating every constituency in the party to a policy of abject servitude to what once was one of many voices in the party, and now is the only voice the administration and Democrats in Congress represent: the profits of Wall Street and the welfare of the 1 percent.
The Democrats are themselves no longer a political party, but merely a unit in Wall Street’s business model, fitting into the organizational chart somewhere below the Federal Reserve and above the Congress, like an accounts payable department, dispersing a share of the profits to the politicians and pundits on the payroll.
Now, there is no denying that the GOP has become a sorry excuse for a political party, its candidates lost in a bidding war for its 1 percent: the increasingly few, anxious and older voters who dominate the early primaries and caucuses.
But today most Americans have little interest in a dog fight over abortion, gay marriage, candidates’ marital infidelities or where the capitol of Israel should be, and so take no part in that process.
Making a living and keeping their families out of the poor house now takes up most of the time of the middle class that is the former majority of the GOP. (Actually, for millions of Americans, the streets and not the poor house are increasingly the only option to hanging on.)
And the GOP primary process is of no interest to them. But what Friedman avoids is that large numbers of Democrats have no interest in “their” party’s nominating process.
There is huge unhappiness with Mr. Obama’s policies throughout the Democratic Party. And his nomination is assured only because his Wall Street and special interest patrons — energy, defense, the national security industry, health care and the rest — are rewarding his service with massive campaign contributions and the promise of more.
So like the former middle class majority of the GOP, the former middle class majority of the Democrats figure — why bother?
And this produces apologists like Friedman who pretend that what is wrong with our politics is well funded pitchmen in the GOP, fawning over a handful of voters, as opposed to the bought bag men in both parties doing the bidding of the crowd that can pony up individual contributions of the tens of millions of dollars, to serve those Americans who can pony up tens of millions of dollars.
And it allows Friedman to get away with an utterly unimportant litany of what is wrong with America. And here is his list.
No. 1: a failure to prepare America for the competition between “high imagination enabling” and “low imagination enabling” countries (“HIEs” and “LIEs”).
Yeah, that keeps me up at night.
No. 2: debt and entitlements.
The debt is the price tag of unending war and an obsession with projecting American power — as opposed to American beliefs — and the entitlements are corporate subsidies.
No. 3: The need to find energy in a way that does not destroy the environment.
OK, we can agree on that. Of course, even a stopped clock is right twice a day.
But are any of these more important at this time than jobs, homes, a decent diet, health care and education, and a measure of economic security for the many millions of Americans who lack some or all of these?
Are Friedman’s priorities more urgent than reviving a belief that justice still matters in this nation?
Only if you are a very well-to-do, expense-account-supported columnist for the New York Times whose world view is bounded by the East and Hudson rivers.
So Friedman disingenuously points to the failure of the GOP to find a partner with whom the Democrats can do business, to address his list of pressing long-term challenges, while ignoring completely the present dire circumstance of tens of millions of struggling Americans in every class but the 1 percent.
There is a long shot developing in the GOP primary circus, but not so long as it was six months ago, and it is possible that the GOP may get to its convention with no candidate having the nomination locked up.
If that happens, there is a chance for a “brokered” convention, meaning the delegates will do what they used to, and in a democratic process these elected representatives of the GOP rank and file will nominate someone who can represent the broad majority of those needed to both win the presidency and lead the nation in an attack on the urgent problems of the people.
Then the American people might see a real political party once again.
Friday, February 3, 2012
Democracy Under Assault
The Austerity Gulag
By Mike Krauss
Bucks County Courier Times
Almost 70 years after the victory of democracy in Western Europe, and two decades after Eastern Europe loosed itself from the grip of Soviet totalitarianism, the people of the continent are threatened by another assault on self-government.
But no foreign army threatens their hard won rights or prosperity. The threat instead is the far smaller but equally menacing army of the global banking cartel — the parasites in pinstripes.
The prime ministers of both Italy and Greece are bankers, appointed not elected, and put in power by the threat of the cartel: that it will withhold credit and plunge those nations into social chaos unless they pay off existing credit — and plunge themselves into social chaos. These are debts the cartel encouraged and facilitated.
Understandably, Europeans are resisting because they know that if the debt — mostly the debt service (interest) — is paid in the manner being demanded by the cartel, their economies will be destroyed. There will simply be no tax revenue or asset income for the productive purposes that grow economies and sustain vital public services.
“Austerity” is the seemingly virtuous sounding word preferred by the cartel, technocrats, compliant politicians and much of the media to describe a policy that is in fact the impoverishment of the people and their subjugation by the cartel — the global less than 1 percent.
A general strike in Belgium, the first in 20 years and timed for a meeting of European finance ministers — a who’s who of Goldman Sachs alumni — tied up the capitol and major port earlier this week. It is just the beginning.
In one of history’s ironies, the conflict is coming to a head in Greece; the nation where school children are taught (or were taught) democracy was born.
To be sure, in ancient Greece democracy was more of a concept than the practice. Then as now political power flowed from wealth, and wealth in ancient Greece was expressed primarily in land, so the actual practice of democracy was limited to landowners who had the means to arm their families and workers to defend their city.
But the ancient commodity-based economies of land, and the gold, silver or precious jewels it produced — the foundation of the inherited wealth still enjoyed by European aristocracy — were inadequate to provide the expanding economic opportunity that the people of emerging democratic nations demanded as their right.
Short of the murder of the aristocracy and confiscation of their property and wealth — the French and Soviet model — the emerging democracies of the West found another way to let the common people in on the wealth.
Credit. In modern economies, credit replaced land and commodity-based currency as the key to creating prosperity and wealth, to satisfy the growing awareness of the common people of their “inalienable” rights.
With affordable and available credit, the common person has the opportunity to invest in his or her life and that of the family to create some prosperity and build some wealth.
But now credit and the wealth it generates is controlled in the United States and European democracies by the few, the Wall Street-led global banking cartel. Control of credit has become so absolute that a private banking monopoly — the issuers of credit — can topple governments it can’t otherwise buy or bully, and demand the extraction of what wealth remains among the common people — homes, savings, pensions, health care, police services, adequate diet, education and jobs.
The Guardian newspaper calls the impact on European youth “devastating.” In Greece, 43 percent of those between the ages of 16 and 24 are jobless; in Italy more than a quarter (28 percent). In Spain the figure is a shocking 51.4 percent.
And young Americans, who unlike their European counterparts are in many cases saddled with huge debt for their education, are not faring much better.
A truly lost generation, or as one reader of this column put it, the “Austerity Gulag,” consigned to an economic detention center from which they may never emerge.
Such is the control of credit today in the Western democracies that the U.S. Federal Reserve can dole our many trillions of dollars of almost no-cost credit to a handful of U.S. and foreign banks, and stand by shedding crocodile tears as Main Street — your street — disintegrates.
Is there a way to take back democracy short of the looming civil strife on both sides of the Atlantic? Yes. Take control of credit.
But don’t look for a bought Washington to lead that charge in the U.S. Look to the states, counties and cities for the restoration of credit as a public utility, and not a private monopoly, and an end to the serial abuses of Wall Street and Washington.
By Mike Krauss
Bucks County Courier Times
Almost 70 years after the victory of democracy in Western Europe, and two decades after Eastern Europe loosed itself from the grip of Soviet totalitarianism, the people of the continent are threatened by another assault on self-government.
But no foreign army threatens their hard won rights or prosperity. The threat instead is the far smaller but equally menacing army of the global banking cartel — the parasites in pinstripes.
The prime ministers of both Italy and Greece are bankers, appointed not elected, and put in power by the threat of the cartel: that it will withhold credit and plunge those nations into social chaos unless they pay off existing credit — and plunge themselves into social chaos. These are debts the cartel encouraged and facilitated.
Understandably, Europeans are resisting because they know that if the debt — mostly the debt service (interest) — is paid in the manner being demanded by the cartel, their economies will be destroyed. There will simply be no tax revenue or asset income for the productive purposes that grow economies and sustain vital public services.
“Austerity” is the seemingly virtuous sounding word preferred by the cartel, technocrats, compliant politicians and much of the media to describe a policy that is in fact the impoverishment of the people and their subjugation by the cartel — the global less than 1 percent.
A general strike in Belgium, the first in 20 years and timed for a meeting of European finance ministers — a who’s who of Goldman Sachs alumni — tied up the capitol and major port earlier this week. It is just the beginning.
In one of history’s ironies, the conflict is coming to a head in Greece; the nation where school children are taught (or were taught) democracy was born.
To be sure, in ancient Greece democracy was more of a concept than the practice. Then as now political power flowed from wealth, and wealth in ancient Greece was expressed primarily in land, so the actual practice of democracy was limited to landowners who had the means to arm their families and workers to defend their city.
But the ancient commodity-based economies of land, and the gold, silver or precious jewels it produced — the foundation of the inherited wealth still enjoyed by European aristocracy — were inadequate to provide the expanding economic opportunity that the people of emerging democratic nations demanded as their right.
Short of the murder of the aristocracy and confiscation of their property and wealth — the French and Soviet model — the emerging democracies of the West found another way to let the common people in on the wealth.
Credit. In modern economies, credit replaced land and commodity-based currency as the key to creating prosperity and wealth, to satisfy the growing awareness of the common people of their “inalienable” rights.
With affordable and available credit, the common person has the opportunity to invest in his or her life and that of the family to create some prosperity and build some wealth.
But now credit and the wealth it generates is controlled in the United States and European democracies by the few, the Wall Street-led global banking cartel. Control of credit has become so absolute that a private banking monopoly — the issuers of credit — can topple governments it can’t otherwise buy or bully, and demand the extraction of what wealth remains among the common people — homes, savings, pensions, health care, police services, adequate diet, education and jobs.
The Guardian newspaper calls the impact on European youth “devastating.” In Greece, 43 percent of those between the ages of 16 and 24 are jobless; in Italy more than a quarter (28 percent). In Spain the figure is a shocking 51.4 percent.
And young Americans, who unlike their European counterparts are in many cases saddled with huge debt for their education, are not faring much better.
A truly lost generation, or as one reader of this column put it, the “Austerity Gulag,” consigned to an economic detention center from which they may never emerge.
Such is the control of credit today in the Western democracies that the U.S. Federal Reserve can dole our many trillions of dollars of almost no-cost credit to a handful of U.S. and foreign banks, and stand by shedding crocodile tears as Main Street — your street — disintegrates.
Is there a way to take back democracy short of the looming civil strife on both sides of the Atlantic? Yes. Take control of credit.
But don’t look for a bought Washington to lead that charge in the U.S. Look to the states, counties and cities for the restoration of credit as a public utility, and not a private monopoly, and an end to the serial abuses of Wall Street and Washington.
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