While once fairly regular in church attendance, President Obama now has little occasion to join others at church services. He prefers to worship in private, it is said in large part to spare others the “disruption” of his attendance.
I should think so.
First of course, the church would have to be searched and swept from top to bottom, and the priest or pastor and lay leaders vetted by the FBI.
Then there is the problem of the other worshipers. Who knows who might be lurking in the congregation? It might be tough to spot an Islamic terrorist in a crowd of American Southern Baptists or Roman Catholics.
The terrorists are very clever. It is reported that there are training camps in Afghanistan where, at this moment, Islam fanatics are being taught to sing Amazing Grace, sign themselves with the cross and genuflect.
And as you or I, ordinary citizens are at daily risk from the terrorists swarming America, imagine the threat to the president.
Homeland Security would insist that worshipers arrive to the church parking lot at least two hours prior to the service, and then proceed to the church door no less than forty- five minutes prior to the service, with documents in hand.
“Please remove your shoes and have your baptismal certificates out and ready for inspection.”
Again, it would be unthinkable that parishioners, choir members and all the other possible threats not be subject to the full body scan, pat down and – if necessary – strip search, although like airline pilots, pastors would probably get an expedited clearance.
I mean, what kind of signal would it send to the American people if the president were seen not to fully appreciate the dangers and set the proper example?
“What’s that your wearing ma’m? It looks kind of foreign.”
“It’s a choir robe.”
“Right. Step over here.”
Then there is the problem of the Host, should there be a communion or mass. Exceptions are dangerous. We can’t let our guard down one moment. It would almost certainly be necessary to national security that the wine and wafer or bread be brought into the church clearly visible in plastic bags, 500 ml of liquid to the plastic bottle.
“What’s this, padre?”
“Communion wine.”
“Right. And that?”
“It’s a chalice.”
“It’s metal.”
“Yes, it is.”
“Sorry, we’ll have to confiscate that. Could be used as a weapon.”
And of course a cross for the procession would be absolutely out of the question. I mean, talk about a weapon.
Now, you may think I’m being facetious. Not a bit. If aircraft are targets for Islamic fanatics, it’s only a matter of time until they start to target Christian churches. It’s only logical.
And by that same logic, it has already been proposed that these security measures and the body scanners and staff and budget that go with them be introduced in railway, bus terminals and subway stations.
The scanners are sold at about $500,000 each by a company represented by the former head of Homeland Security.
A few days ago, it took really bad weather to bring the northeast to a standstill. But with constant vigilance and an absolute determination to crush the ever expanding network of terrorists in the United States now infiltrating our cub scouts, senior citizens and churches that welcome anybody (for God’s sake !!), we can do that every day, and all do our part to keep Americans safe in the homeland, while we keep blasting apart villages of mud huts in Afghanistan.
Peace on earth, American style.
Tuesday, December 28, 2010
Tuesday, December 14, 2010
Democracy on the ropes
Patsies in power, democracy on the ropes
By: MIKE KRAUSS
Bucks County Courier Times
Political power follows money. The wealth of America is now concentrated in the hands of the few as never before. Those few govern. Democracy in America is on the ropes.
So powerful is this concentration of wealth in America, that the only way to ensure that millions of the unemployed are not abandoned to despair at Christmas was for the Congress to agree not to raise the taxes on the income of wealthy Americans, and further reduce taxes on the estates their low taxes help create.
You can see the logic. I mean, having funneled trillions of dollars to Wall Street, American corporations and even foreign banks to rescue the global club of parasites in pinstripes, what sense does it make to take some of that back in taxes? Duh!
And I do mean trillions of dollars.
As reported only days ago after a year of concealment by the Federal Reserve, the hundreds of billions of dollars the U.S. Congress funneled to the barons is "chump change," compared to the many trillions of dollars it provided, all to the account of the American people.
As reported in this newspaper, "Newly released documents show that the most (Fed) loan money over time went to Citigroup ($2.2 trillion), followed by Merrill Lynch ($2.1 trillion), Morgan Stanley ($2 trillion), Bank of America ($1.1 trillion), Bear Stearns ($960 billion), Goldman Sachs ($620 billion), JPMorgan Chase ($260 billion) and Wells Fargo ($150 billion)."
The banks which got these fantastic sums argue that much of it has been "paid back." How, exactly?
One strategy was to take this no-interest and low-interest money and loan it out at higher rates. The banks biggest customer? The U.S. Treasury.
Another was to trade it for assets the banks held. Which assets? According to the Financial Times of London, their junk.
"More than 36 percent of the cumulative collateral pledged ... in return for overnight funding under the Primary Dealer Credit Facility was equities or bonds ranked below investment grade. A further 17 percent was unrated credit or loans, according to a Financial Times analysis of Fed data released this week. Only 1 percent of the collateral was Treasury bonds, which are normally used in transactions between banks and the monetary authorities."
As the president observed, the barons are indeed "savvy" businessmen. Of course, it helps to have patsies in positions of political power.
Independent U.S. Sen. Bernie Sanders of Vermont was instrumental in forcing the release of the Fed records. He has raised some "issues."
"At a time when big banks have nearly a trillion dollars in excess reserves parked at the Fed, the Fed did not require these institutions to increase lending to small and medium-sized businesses as a condition of the bailout.
"At a time when large corporations are more profitable than ever, the Fed did not demand that corporations that received this backdoor bailout create jobs and expand the economy once they returned to profitability.
"...these secret Fed loans in some cases turned out to be direct corporate welfare to big banks that used these loans not to reinvest in the economy but rather to lend back to the federal government at a higher rate of interest...
"At a time when millions of Americans are paying outrageously high credit card interest rates, why didn't the Fed require credit card issuers to lower interest rates as a condition of the bailout?
"The four largest banks in this country (Bank of America, JP Morgan Chase, Wells Fargo, and Citigroup) issue half of all mortgages in this country... How many Americans could have remained in their homes, if the Fed required these bailed-out banks to reduce mortgage payments as a condition of receiving these secret loans?"
The senator is of course being rhetorical. He knows the answer to the questions he has posed.
There are now about 14,000 federal lobbyists. In the decade 1998 to 2008 the finance industry alone provided its lobbyists more than $3.2 billion to buy influence in the halls of Congress, the offices of regulators and the White House. This does not include campaign contributions.
How much did you spend?
In the last election, the Supreme Court let loose in the elections a wave of direct corporate spending and anonymous contributions that will grow to tidal wave proportions for 2012.
It is already producing results. The barons, hedge fund managers and corporate execs who live like kings on the stolen prosperity of the American people will not have their taxes raised.
It is often observed that diversity is the enduring strength of the United States. But that is true only so long as that diversity is enabled, given means and opportunity to express itself.
Democracy is the enabler. Today, democracy in the United States is on the ropes.
For the sake of America, the American people must democratize the economy, bypass the Fed and Wall Street and assume control of the supply of money and credit by the creation of public banks at the state and local level.
For the sake of America, the American people must democratize their politics and government, and build a majority in Congress to serve their interests by writing and enforcing the rules for campaigns for Congress which Congress will not.
Mike Krauss, an international logistics executive and writer, is a former officer of county and state government and former director of the Pennsylvania Republican Party. E-mail: mike@mikekrausscomments.com
December 09, 2010 02:30
By: MIKE KRAUSS
Bucks County Courier Times
Political power follows money. The wealth of America is now concentrated in the hands of the few as never before. Those few govern. Democracy in America is on the ropes.
So powerful is this concentration of wealth in America, that the only way to ensure that millions of the unemployed are not abandoned to despair at Christmas was for the Congress to agree not to raise the taxes on the income of wealthy Americans, and further reduce taxes on the estates their low taxes help create.
You can see the logic. I mean, having funneled trillions of dollars to Wall Street, American corporations and even foreign banks to rescue the global club of parasites in pinstripes, what sense does it make to take some of that back in taxes? Duh!
And I do mean trillions of dollars.
As reported only days ago after a year of concealment by the Federal Reserve, the hundreds of billions of dollars the U.S. Congress funneled to the barons is "chump change," compared to the many trillions of dollars it provided, all to the account of the American people.
As reported in this newspaper, "Newly released documents show that the most (Fed) loan money over time went to Citigroup ($2.2 trillion), followed by Merrill Lynch ($2.1 trillion), Morgan Stanley ($2 trillion), Bank of America ($1.1 trillion), Bear Stearns ($960 billion), Goldman Sachs ($620 billion), JPMorgan Chase ($260 billion) and Wells Fargo ($150 billion)."
The banks which got these fantastic sums argue that much of it has been "paid back." How, exactly?
One strategy was to take this no-interest and low-interest money and loan it out at higher rates. The banks biggest customer? The U.S. Treasury.
Another was to trade it for assets the banks held. Which assets? According to the Financial Times of London, their junk.
"More than 36 percent of the cumulative collateral pledged ... in return for overnight funding under the Primary Dealer Credit Facility was equities or bonds ranked below investment grade. A further 17 percent was unrated credit or loans, according to a Financial Times analysis of Fed data released this week. Only 1 percent of the collateral was Treasury bonds, which are normally used in transactions between banks and the monetary authorities."
As the president observed, the barons are indeed "savvy" businessmen. Of course, it helps to have patsies in positions of political power.
Independent U.S. Sen. Bernie Sanders of Vermont was instrumental in forcing the release of the Fed records. He has raised some "issues."
"At a time when big banks have nearly a trillion dollars in excess reserves parked at the Fed, the Fed did not require these institutions to increase lending to small and medium-sized businesses as a condition of the bailout.
"At a time when large corporations are more profitable than ever, the Fed did not demand that corporations that received this backdoor bailout create jobs and expand the economy once they returned to profitability.
"...these secret Fed loans in some cases turned out to be direct corporate welfare to big banks that used these loans not to reinvest in the economy but rather to lend back to the federal government at a higher rate of interest...
"At a time when millions of Americans are paying outrageously high credit card interest rates, why didn't the Fed require credit card issuers to lower interest rates as a condition of the bailout?
"The four largest banks in this country (Bank of America, JP Morgan Chase, Wells Fargo, and Citigroup) issue half of all mortgages in this country... How many Americans could have remained in their homes, if the Fed required these bailed-out banks to reduce mortgage payments as a condition of receiving these secret loans?"
The senator is of course being rhetorical. He knows the answer to the questions he has posed.
There are now about 14,000 federal lobbyists. In the decade 1998 to 2008 the finance industry alone provided its lobbyists more than $3.2 billion to buy influence in the halls of Congress, the offices of regulators and the White House. This does not include campaign contributions.
How much did you spend?
In the last election, the Supreme Court let loose in the elections a wave of direct corporate spending and anonymous contributions that will grow to tidal wave proportions for 2012.
It is already producing results. The barons, hedge fund managers and corporate execs who live like kings on the stolen prosperity of the American people will not have their taxes raised.
It is often observed that diversity is the enduring strength of the United States. But that is true only so long as that diversity is enabled, given means and opportunity to express itself.
Democracy is the enabler. Today, democracy in the United States is on the ropes.
For the sake of America, the American people must democratize the economy, bypass the Fed and Wall Street and assume control of the supply of money and credit by the creation of public banks at the state and local level.
For the sake of America, the American people must democratize their politics and government, and build a majority in Congress to serve their interests by writing and enforcing the rules for campaigns for Congress which Congress will not.
Mike Krauss, an international logistics executive and writer, is a former officer of county and state government and former director of the Pennsylvania Republican Party. E-mail: mike@mikekrausscomments.com
December 09, 2010 02:30
Saturday, December 4, 2010
The Federal Reserve
This three column series was first published in November in the Bucks County Courier Times, and on line in a three newspaper edition, www.phillyburbs.com.
The Federal Reserve
Part I: A dagger to the heart of democracy.
Voter turnout in many congressional districts was far greater than in many years. It is the enduring myth of American democracy - the people speaking out in free and fair elections to make known and enforce their will on their elected representatives.
But it is a myth. Federal elections in the United States are no longer either free or fair, and the results will have little impact on the economic policies that will determine the future well being or, alternatively, misfortune of the American people.
For several decades, the reforms of the political parties, election and campaign finance laws meant to empower ordinary Americans (“open up” the political process) have had the opposite effect.
Vast sums of money now flow not through the political parties accountable to the American people, but instead through a maze of pseudo-political organizations, accountable to no public constituency, donors increasingly anonymous or untraceable, to select the candidates for federal office, buy their votes and keep them bought.
And no one spends more money in U.S. politics than the people who have it.
This is the reality of America almost never discussed, much less taught in American schools: there are only two classes of Americans, those who have money and those who do not, and they have always been at war. And those Americans who have no money – the great majority of the American people - are getting clobbered.
While it has always been the case that the great majority of Americans have no money, it has not always been the case that their economic circumstances were so dire, or their chances to move up to the ranks of the “moneyed” class were so limited.
To understand how this is so requires an understanding of what “money” is in the language of American politics and economics.
Money is not the bills in your wallet or purse, or the coins in your pocket or the balance in your checking or savings account, which is all the money most Americans have. Money in political and economic terms is accumulated wealth, the surplus beyond the costs of living that an individual or family can invest and bequeath.
This distinction has always been the one important divide that defines the two classes of Americans. And today, the money in America, accumulated wealth, is concentrated as never before in the hands of a few, managed by their agents in the finance industry and protected by the Federal Reserve.
The Federal Reserve was created in 1913 by act of Congress after a series of banking crisis from the 1800s through 1907 wiped out farms, businesses and banks and at one time left one in six Americans unemployed. At a time when 6 in 10 Americans lived on farms, the liquidation of those farms had the same effect as the current wave of foreclosures in the suburbs and cities – a lot of Americans lost their homes and moved down the ladder.
These were crisis of “liquidity” – there was not enough money in circulation or reserve to meet the needs of large portions of the economy. The legislation to address this ongoing problem was supported by an unlikely combination of the Wall Street barons and populists. The latter were ardent democrats.
The barons realized that the U.S. economy had grown so large that the capital formation required to support it meant taking risks that they could no longer cover if they failed. They wanted an agency to be available to cover their bets when they crapped out.
The populists – mostly from the predominantly agricultural south and west – realized that without available and affordable credit, the cycle that every farmer knows is a part of the inherent risk of agriculture would keep on wiping them out: in the bad years of crop failure, or the hopeful years when they acquired expensive debt to increase production, or years of overproduction, accompanied by depressed crop prices and predatory pricing from banks, grain storage facility and railroad operators.
Both preached the same solution: federal regulation of the supply of money and its cost. But the solution of President Wilson and the experts who had come to power in America in a wave of “progressive” thinking that sought to lessen the “corrupt” practices of elected American politicians, was to take the regulation out of the hands of politicians elected by and accountable to the people – the Congress and president - and give it to a newly created, autonomous and independent central bank, the Federal Reserve.
It was a dagger to the heart of democratic government in the United States.
The Federal Reserve
Part II: The rich get richer
The legislation that created the Federal Reserve is intentionally vague as to its purposes. But from the beginning, bankers and a few astute politicians understood the enormous power conferred in the authority to control the nation’s supply of money and its cost.
This control impacts on every decision made by the American people to loan, borrow, invest, buy or sell. It determines winners and losers.
The Federal Reserve creates money with a data entry, adding debt to the American people, and provides this money to the banks at low interest or no interest. These banks then loan it to their customers at higher interest rates. One of their biggest “customers” is the Federal government. What a racket!
Yet the Fed operates apart from the elected government of the people and is accountable to no one. Unlike the central banks of most developed nations, no one from the elected government of the United States has a voice in its deliberations or a vote among its governors.
The Fed raises its own revenue and neither its budget nor its multi-billion dollar transactions are reviewed by the Congress or audited by any other agency of the elected federal government.
The Fed operates in great secrecy. Minutes of many important meetings are released only years after the fact. For some of the most important, no minutes of any kind are kept!
And its public pronouncements are made in the deliberately obfuscating language of the pseudo-science of modern economics that most Americans do not speak or understand
I say pseudo-science because, pretend as modern economic experts will that their profession is a science, the hallmark of science is the ability to predict according to fixed laws, and the Fed consistently fails this test, doing damage control after the economy crashes.
But while the Fed may be accountable to no one, it nevertheless has a constituency.
This was made brutally clear by former Fed Chairman Paul Volcker, when in the midst of the crushing recession brought on by the Fed’s anti-inflation campaign of the early Reagan presidency, a group of state legislators from some of the most distressed farm states came to plead for relief.
Volcker heard them out and turned them down saying, “Look. Your constituents are unhappy, mine aren’t.”
Critics often charge that the Fed is owned by the banks and point to the fact that local banks are all shareholders in the regional Federal Reserve Banks. This ownership of shares is not about control, it is about cover.
The power in the Fed is held by the seven governors in Washington appointed by the president to fourteen year terms. And the five other governors selected on a rotating basis from among the presidents of the fifteen regional reserve banks, while sometimes willing to pull in different directions, do not have the votes, and in fact are excluded from voting on crucial matters.
But, when the Fed is sometimes attacked by critics in the Congress of one party or the other, the governors can rally the “shareholder” banks and local bankers to apply pressure – and campaign cash – directly to the complaining member of Congress.
Nevertheless, the characterization of the Fed as “owned” by the banks is apt, and it works to protect the accumulated wealth which they represent. The Fed’s never ceasing fight against inflation is but one example.
Americans are taught that inflation is a bad thing. This is always true for accumulated wealth. It is not always true for those hoping to acquire wealth.
Home ownership, until recently one of the few opportunities of the vast majority of Americans to acquire wealth is an example.
If you buy a home with a thirty year fixed mortgage and there is any significant inflation, over time that fixed monthly payment of say $1,000 becomes worth progressively less each month in constant dollars, and you may be making that $1,000 payment with only $800 worth of dollars – for years. Conversely, if you are the lender, with inflation your monthly $1,000 income from the loan becomes worth only $800.
So the Fed can use its power as it did in the 1980s to restrict the money supply or drive up interest rates, which protects the value and income earning potential of existing wealth, but restricts the ability to prosper for the vast majority of Americans who have no accumulated wealth to invest.
Sometimes the contractions induced by the Fed are severe, and millions lose their jobs or homes, as businesses throughout the real economy cut back or fold in manufacturing, mining, agriculture, retail and virtually every sector of the real economy.
The Fed defends these hurtful decisions in the impenetrable language of their pseudo-science, but the message is always the same: “Don’t blame us. This disaster for millions is the result of ‘market forces’ over which we have no control.”
It is a complete sophistry. Human beings, the governors of the Fed and each with a vote make the call, and in fact unleash those forces. And they have historically sided with accumulated wealth, which is the past.
The Fed is like the dead hand of the past laying on the future of most Americans, snuffing out hope and opportunity as it insures that the rich get richer.
The Federal Reserve
Part III – Reverse the flow
It was the era of “trickle down” economics. Congress and the administration “devised tax credits, refunds and abatements to benefit private corporations, and they enacted four major reductions in income tax rates, skewed to benefit the upper income brackets.”
Inflation was defeated and the stock market roared. But there were signs of trouble.
Families “were working longer hours for the same wages and borrowing more heavily to keep up… the struggling labor movement was decimated; unions lost nearly 30 percent of their membership.”
It reads like recent history, but is in fact a description of the 1920s, when the term trickle down was coined, the decade before the First Great Depression.
Then as now, the Fed failed.
Prior to each failure, money was flowing up in the U.S. to its richest citizens. With the New Deal, FDR and his newly appointed Fed Chairman, a Republican banker from Utah, reversed the flow and the nation began to recover.
They understood that the spending of the rich few cannot sustain a great economy. The sale of thousands of $500 a pair sneakers and $300,000 cars cannot generate the same volume and velocity of money moving through the economy – economic activity - as the sale of millions of less expensive shoes or cars.
That flow of money to the many was the foundation of the remarkable prosperity of post World War II America . It lasted until Ronald Reagan, with the support of a Democratic Congress and the Fed combined to shut it down.
Reagan and Congress revived regressive tax cuts for the wealthy and trickle down economics, allowed the combinations that led to “too-big-to-fail” banks and legalized usurious interest rates on consumer credit.
The Fed crushed inflation with interest rates that devastated the real economy but protected accumulated wealth, and bailed out Wall Street when their bubble of bad loans to the third world burst.
Historically, when the Fed thinks the wealthy will not be unduly burdened and decides to expand the economy or overcome an economic contraction, one of its tools is to “flood the street with money;” that is, to pump a lot of cash into the system where it is loaned, used, circulated and exchanged in the many millions of transactions that add up to a recovery.
With the crash of 2008, the Congress and the Fed did indeed “flood the street.” But the money never got past Wall Street to your street. This was intentional.
As the Fed pumped trillions into the banks and finance companies, it risked massive inflation in the U.S. (remember that inflation destroys accumulated wealth). The remedy to this threat was to simultaneously keep interest rates low. But much of the rest of the world’s major and developing economies have higher interest rates.
The money that flows through the world’s financial system has a property similar to liquid, and like water money seeks its own level. And the level money seeks is the highest interest and rate of return
So the money of America has been flowing in a massive flight of capital into the rest of the world, protecting accumulated wealth while beggaring the future of most Americans.
The Ford Motor Company is about to open its newest and most modern plant – in China, where the government is raising wages and pumping billions into infrastructure; while across America workers are forced to accept wages cuts to keep their jobs and infrastructure begins to resemble the third world.
What to do? Reverse the flow.
Interest rates in the U.S. must rise from their historic lows to attract capital and investment in the U.S. Funds must flow massively into jobs creating, taxpayer creating, revenue creating U.S. infrastructure. The first stimulus was unfocused and insufficient. The president’s proposal for a $50 billion transportation infrastructure initiative is inadequate.
A fair share of the accumulated wealth of America must be made to flow down into many more hands. Income, capital gains and inheritance must be taxed at higher rates. The argument that this will choke investment is a patent fraud. That wealth has been protected from meaningful taxation for decades, but do you see a new washing machine or tractor plant going up nearby?
The out-of-control U.S. military must be disciplined. Wars and by some reports as many as a thousand U.S. military bases in 152 foreign nations are a huge flow of dollars and tax revenue out of the U.S.
Federal taxes on gasoline must be increased. There will be an immediate reduction in the import of foreign oil and the massive out-flow of dollars to buy it. But exempt, subsidize and invest in all mass transit systems (including school bus fleets), and rebate the mostly suburban, auto dependent middle class.
But above all, the Federal Reserve must be brought inside the American democracy and Constitution and made part of the Treasury Department, its accounts audited, so that the elected government of the United States may assume the authority and responsibility for the decisions about money that determine the future well being of every American man, woman and child.
This is what must be done, but will not soon be done. The new Congress will be as bought as the current Congress; because there is one other flow that must be halted - the tidal wave of lobbying and campaign cash that buys and sells U.S. federal elections for America ’s established, accumulated wealth.
The Federal Reserve
Part I: A dagger to the heart of democracy.
Voter turnout in many congressional districts was far greater than in many years. It is the enduring myth of American democracy - the people speaking out in free and fair elections to make known and enforce their will on their elected representatives.
But it is a myth. Federal elections in the United States are no longer either free or fair, and the results will have little impact on the economic policies that will determine the future well being or, alternatively, misfortune of the American people.
For several decades, the reforms of the political parties, election and campaign finance laws meant to empower ordinary Americans (“open up” the political process) have had the opposite effect.
Vast sums of money now flow not through the political parties accountable to the American people, but instead through a maze of pseudo-political organizations, accountable to no public constituency, donors increasingly anonymous or untraceable, to select the candidates for federal office, buy their votes and keep them bought.
And no one spends more money in U.S. politics than the people who have it.
This is the reality of America almost never discussed, much less taught in American schools: there are only two classes of Americans, those who have money and those who do not, and they have always been at war. And those Americans who have no money – the great majority of the American people - are getting clobbered.
While it has always been the case that the great majority of Americans have no money, it has not always been the case that their economic circumstances were so dire, or their chances to move up to the ranks of the “moneyed” class were so limited.
To understand how this is so requires an understanding of what “money” is in the language of American politics and economics.
Money is not the bills in your wallet or purse, or the coins in your pocket or the balance in your checking or savings account, which is all the money most Americans have. Money in political and economic terms is accumulated wealth, the surplus beyond the costs of living that an individual or family can invest and bequeath.
This distinction has always been the one important divide that defines the two classes of Americans. And today, the money in America, accumulated wealth, is concentrated as never before in the hands of a few, managed by their agents in the finance industry and protected by the Federal Reserve.
The Federal Reserve was created in 1913 by act of Congress after a series of banking crisis from the 1800s through 1907 wiped out farms, businesses and banks and at one time left one in six Americans unemployed. At a time when 6 in 10 Americans lived on farms, the liquidation of those farms had the same effect as the current wave of foreclosures in the suburbs and cities – a lot of Americans lost their homes and moved down the ladder.
These were crisis of “liquidity” – there was not enough money in circulation or reserve to meet the needs of large portions of the economy. The legislation to address this ongoing problem was supported by an unlikely combination of the Wall Street barons and populists. The latter were ardent democrats.
The barons realized that the U.S. economy had grown so large that the capital formation required to support it meant taking risks that they could no longer cover if they failed. They wanted an agency to be available to cover their bets when they crapped out.
The populists – mostly from the predominantly agricultural south and west – realized that without available and affordable credit, the cycle that every farmer knows is a part of the inherent risk of agriculture would keep on wiping them out: in the bad years of crop failure, or the hopeful years when they acquired expensive debt to increase production, or years of overproduction, accompanied by depressed crop prices and predatory pricing from banks, grain storage facility and railroad operators.
Both preached the same solution: federal regulation of the supply of money and its cost. But the solution of President Wilson and the experts who had come to power in America in a wave of “progressive” thinking that sought to lessen the “corrupt” practices of elected American politicians, was to take the regulation out of the hands of politicians elected by and accountable to the people – the Congress and president - and give it to a newly created, autonomous and independent central bank, the Federal Reserve.
It was a dagger to the heart of democratic government in the United States.
The Federal Reserve
Part II: The rich get richer
The legislation that created the Federal Reserve is intentionally vague as to its purposes. But from the beginning, bankers and a few astute politicians understood the enormous power conferred in the authority to control the nation’s supply of money and its cost.
This control impacts on every decision made by the American people to loan, borrow, invest, buy or sell. It determines winners and losers.
The Federal Reserve creates money with a data entry, adding debt to the American people, and provides this money to the banks at low interest or no interest. These banks then loan it to their customers at higher interest rates. One of their biggest “customers” is the Federal government. What a racket!
Yet the Fed operates apart from the elected government of the people and is accountable to no one. Unlike the central banks of most developed nations, no one from the elected government of the United States has a voice in its deliberations or a vote among its governors.
The Fed raises its own revenue and neither its budget nor its multi-billion dollar transactions are reviewed by the Congress or audited by any other agency of the elected federal government.
The Fed operates in great secrecy. Minutes of many important meetings are released only years after the fact. For some of the most important, no minutes of any kind are kept!
And its public pronouncements are made in the deliberately obfuscating language of the pseudo-science of modern economics that most Americans do not speak or understand
I say pseudo-science because, pretend as modern economic experts will that their profession is a science, the hallmark of science is the ability to predict according to fixed laws, and the Fed consistently fails this test, doing damage control after the economy crashes.
But while the Fed may be accountable to no one, it nevertheless has a constituency.
This was made brutally clear by former Fed Chairman Paul Volcker, when in the midst of the crushing recession brought on by the Fed’s anti-inflation campaign of the early Reagan presidency, a group of state legislators from some of the most distressed farm states came to plead for relief.
Volcker heard them out and turned them down saying, “Look. Your constituents are unhappy, mine aren’t.”
Critics often charge that the Fed is owned by the banks and point to the fact that local banks are all shareholders in the regional Federal Reserve Banks. This ownership of shares is not about control, it is about cover.
The power in the Fed is held by the seven governors in Washington appointed by the president to fourteen year terms. And the five other governors selected on a rotating basis from among the presidents of the fifteen regional reserve banks, while sometimes willing to pull in different directions, do not have the votes, and in fact are excluded from voting on crucial matters.
But, when the Fed is sometimes attacked by critics in the Congress of one party or the other, the governors can rally the “shareholder” banks and local bankers to apply pressure – and campaign cash – directly to the complaining member of Congress.
Nevertheless, the characterization of the Fed as “owned” by the banks is apt, and it works to protect the accumulated wealth which they represent. The Fed’s never ceasing fight against inflation is but one example.
Americans are taught that inflation is a bad thing. This is always true for accumulated wealth. It is not always true for those hoping to acquire wealth.
Home ownership, until recently one of the few opportunities of the vast majority of Americans to acquire wealth is an example.
If you buy a home with a thirty year fixed mortgage and there is any significant inflation, over time that fixed monthly payment of say $1,000 becomes worth progressively less each month in constant dollars, and you may be making that $1,000 payment with only $800 worth of dollars – for years. Conversely, if you are the lender, with inflation your monthly $1,000 income from the loan becomes worth only $800.
So the Fed can use its power as it did in the 1980s to restrict the money supply or drive up interest rates, which protects the value and income earning potential of existing wealth, but restricts the ability to prosper for the vast majority of Americans who have no accumulated wealth to invest.
Sometimes the contractions induced by the Fed are severe, and millions lose their jobs or homes, as businesses throughout the real economy cut back or fold in manufacturing, mining, agriculture, retail and virtually every sector of the real economy.
The Fed defends these hurtful decisions in the impenetrable language of their pseudo-science, but the message is always the same: “Don’t blame us. This disaster for millions is the result of ‘market forces’ over which we have no control.”
It is a complete sophistry. Human beings, the governors of the Fed and each with a vote make the call, and in fact unleash those forces. And they have historically sided with accumulated wealth, which is the past.
The Fed is like the dead hand of the past laying on the future of most Americans, snuffing out hope and opportunity as it insures that the rich get richer.
The Federal Reserve
Part III – Reverse the flow
It was the era of “trickle down” economics. Congress and the administration “devised tax credits, refunds and abatements to benefit private corporations, and they enacted four major reductions in income tax rates, skewed to benefit the upper income brackets.”
Inflation was defeated and the stock market roared. But there were signs of trouble.
Families “were working longer hours for the same wages and borrowing more heavily to keep up… the struggling labor movement was decimated; unions lost nearly 30 percent of their membership.”
It reads like recent history, but is in fact a description of the 1920s, when the term trickle down was coined, the decade before the First Great Depression.
Then as now, the Fed failed.
Prior to each failure, money was flowing up in the U.S. to its richest citizens. With the New Deal, FDR and his newly appointed Fed Chairman, a Republican banker from Utah, reversed the flow and the nation began to recover.
They understood that the spending of the rich few cannot sustain a great economy. The sale of thousands of $500 a pair sneakers and $300,000 cars cannot generate the same volume and velocity of money moving through the economy – economic activity - as the sale of millions of less expensive shoes or cars.
That flow of money to the many was the foundation of the remarkable prosperity of post World War II America . It lasted until Ronald Reagan, with the support of a Democratic Congress and the Fed combined to shut it down.
Reagan and Congress revived regressive tax cuts for the wealthy and trickle down economics, allowed the combinations that led to “too-big-to-fail” banks and legalized usurious interest rates on consumer credit.
The Fed crushed inflation with interest rates that devastated the real economy but protected accumulated wealth, and bailed out Wall Street when their bubble of bad loans to the third world burst.
Historically, when the Fed thinks the wealthy will not be unduly burdened and decides to expand the economy or overcome an economic contraction, one of its tools is to “flood the street with money;” that is, to pump a lot of cash into the system where it is loaned, used, circulated and exchanged in the many millions of transactions that add up to a recovery.
With the crash of 2008, the Congress and the Fed did indeed “flood the street.” But the money never got past Wall Street to your street. This was intentional.
As the Fed pumped trillions into the banks and finance companies, it risked massive inflation in the U.S. (remember that inflation destroys accumulated wealth). The remedy to this threat was to simultaneously keep interest rates low. But much of the rest of the world’s major and developing economies have higher interest rates.
The money that flows through the world’s financial system has a property similar to liquid, and like water money seeks its own level. And the level money seeks is the highest interest and rate of return
So the money of America has been flowing in a massive flight of capital into the rest of the world, protecting accumulated wealth while beggaring the future of most Americans.
The Ford Motor Company is about to open its newest and most modern plant – in China, where the government is raising wages and pumping billions into infrastructure; while across America workers are forced to accept wages cuts to keep their jobs and infrastructure begins to resemble the third world.
What to do? Reverse the flow.
Interest rates in the U.S. must rise from their historic lows to attract capital and investment in the U.S. Funds must flow massively into jobs creating, taxpayer creating, revenue creating U.S. infrastructure. The first stimulus was unfocused and insufficient. The president’s proposal for a $50 billion transportation infrastructure initiative is inadequate.
A fair share of the accumulated wealth of America must be made to flow down into many more hands. Income, capital gains and inheritance must be taxed at higher rates. The argument that this will choke investment is a patent fraud. That wealth has been protected from meaningful taxation for decades, but do you see a new washing machine or tractor plant going up nearby?
The out-of-control U.S. military must be disciplined. Wars and by some reports as many as a thousand U.S. military bases in 152 foreign nations are a huge flow of dollars and tax revenue out of the U.S.
Federal taxes on gasoline must be increased. There will be an immediate reduction in the import of foreign oil and the massive out-flow of dollars to buy it. But exempt, subsidize and invest in all mass transit systems (including school bus fleets), and rebate the mostly suburban, auto dependent middle class.
But above all, the Federal Reserve must be brought inside the American democracy and Constitution and made part of the Treasury Department, its accounts audited, so that the elected government of the United States may assume the authority and responsibility for the decisions about money that determine the future well being of every American man, woman and child.
This is what must be done, but will not soon be done. The new Congress will be as bought as the current Congress; because there is one other flow that must be halted - the tidal wave of lobbying and campaign cash that buys and sells U.S. federal elections for America ’s established, accumulated wealth.
Friday, May 14, 2010
Mining the middle class
Save the children! Protect the rich.
By: Mike Krauss
Bucks County Courier Times
You can see it coming a mile away.
President Obama's blue-ribbon, bipartisan commission to reduce the deficit and debt is going to recommend cutting what is left of federal spending that is not eaten up by Wall Street, the war machine and corporate welfare.
Expect the "painful choices" to be announced by a sad but stern president about three months after the congressional elections.
And the justification? It is the "grasshopper" argument trotted out again last week by New York Times columnist Thomas Friedman: We Americans, especially the baby boomers, have been too good to ourselves and eaten up our children's future. Bad people! Shame on you.
It is a lie and a diversion.
Unlike many Europeans, average Americans do not have a four-day work week, six weeks of paid vacation, months of maternity leave, free day care, affordable health care, low-cost college education or fully paid retirement at 55 and 60.
What American families have is two jobs or more - if they can find one - low wages, wiped out savings, high costs of everything and expensive credit debt from Wall Street to mask the reality of their growing poverty.
And the administration, congressional leaders and the Federal Reserve - Wall Street's bank - are working in sync to dupe the American people into supporting more of the same.
There is an alternative.
One part of that alternative is for the states to bypass the federal government and form state banks, modeled on the hugely successful Bank of North Dakota, to create a river of new, locally directed credit, investment and jobs, and generate unprecedented new revenues for the states' general funds.
But while some states are now following North Dakota's lead out of the trap of either higher taxes or slashed services and crumbling infrastructure, the first and scattered results are a year or more away. Something must be done now to address the nation's most urgent need - jobs.
Only the federal government can focus the resources required to create the jobs needed now, on the scale required.
Fiscal hawks, small government advocates and tea party patriots who think an across-the-board attack on government is what is now most urgently needed must think twice, and decide where to focus their attack.
Yes, the federal government spends too much; but on what? The inescapable answer is Wall Street, the war machine and corporate welfare.
The "slap-on-the-wrist" fines of Wall Street proposed by the administration are chump change. They are about headlines, not justice.
Tax Wall Street and take back the nation's stolen wealth - all of it, with interest. This alone would be sufficient to put millions back to work in productive infrastructure projects of lasting value, with billions left over to start paying down the debt.
Don't stop there.
The U.S. "defense" budget is now as large as that of all other nations combined. (You must, as the wild spending defense establishment does not, add to defense appropriations the billions buried in the budgets of other federal departments)
The Defense Department lists officially more than 700 bases in 152 foreign nations. But independent experts such as former CIA analyst Chalmers Johnson put that figure at as many as 1,000 bases.
There are 12 U.S. bases in Columbia, and Johnson reports an incredible 38 on the Japanese island of Okinawa, and dozens now ringing the former Soviet Union. To what purpose?
The demise of the Soviet Union ought to have yielded a "peace dividend," an opportunity to scale back U.S. forces in those regions, not increase them. And what is the threat from Columbia? An army of Hugo Chavez' thugs marching through Mexico to invade Texas?
As for the U.S. forces on Okinawa, do we expect the Chinese to sail a several million man army across the Pacific to invade California? All China need do to overcome the United States is wait while we go bankrupt for the sake of Wall Street, the war machine and corporate welfare.
An example of this corporate welfare is about to make news. The Oil Pollution Act of 1990 set up a federal fund to clean up oil "spills." ("Oops! We got a little oil on the floor there. Sorry.") But it limited the liability of the oil companies for damages to $75 million in each event.
Will Mr. Obama and Congress insist that BP and its contractors pay the hundreds of millions, perhaps billions of dollars in damages caused by their catastrophe in the Gulf of Mexico, or will that bill get passed to U.S. taxpayers, like the bailout?
To save the children and the nation, this generation must indeed take action to pay down the deficit and debt, but not on the backs of a beleaguered middle class, retirees and those now hanging by a thread from the so-called "safety net."
The productive alternative is to cut the mindlessly out-of-control "defense" budget, go after the stolen loot on Wall Street, hold corporations accountable, harness the states' assets in state banks and put America back to work at good wages.
But this is not what this administration, Congress and Wall Street's "widely respected" talking heads and media flacks will propose.
Their policy? Save the children, protect the rich!
By: Mike Krauss
Bucks County Courier Times
You can see it coming a mile away.
President Obama's blue-ribbon, bipartisan commission to reduce the deficit and debt is going to recommend cutting what is left of federal spending that is not eaten up by Wall Street, the war machine and corporate welfare.
Expect the "painful choices" to be announced by a sad but stern president about three months after the congressional elections.
And the justification? It is the "grasshopper" argument trotted out again last week by New York Times columnist Thomas Friedman: We Americans, especially the baby boomers, have been too good to ourselves and eaten up our children's future. Bad people! Shame on you.
It is a lie and a diversion.
Unlike many Europeans, average Americans do not have a four-day work week, six weeks of paid vacation, months of maternity leave, free day care, affordable health care, low-cost college education or fully paid retirement at 55 and 60.
What American families have is two jobs or more - if they can find one - low wages, wiped out savings, high costs of everything and expensive credit debt from Wall Street to mask the reality of their growing poverty.
And the administration, congressional leaders and the Federal Reserve - Wall Street's bank - are working in sync to dupe the American people into supporting more of the same.
There is an alternative.
One part of that alternative is for the states to bypass the federal government and form state banks, modeled on the hugely successful Bank of North Dakota, to create a river of new, locally directed credit, investment and jobs, and generate unprecedented new revenues for the states' general funds.
But while some states are now following North Dakota's lead out of the trap of either higher taxes or slashed services and crumbling infrastructure, the first and scattered results are a year or more away. Something must be done now to address the nation's most urgent need - jobs.
Only the federal government can focus the resources required to create the jobs needed now, on the scale required.
Fiscal hawks, small government advocates and tea party patriots who think an across-the-board attack on government is what is now most urgently needed must think twice, and decide where to focus their attack.
Yes, the federal government spends too much; but on what? The inescapable answer is Wall Street, the war machine and corporate welfare.
The "slap-on-the-wrist" fines of Wall Street proposed by the administration are chump change. They are about headlines, not justice.
Tax Wall Street and take back the nation's stolen wealth - all of it, with interest. This alone would be sufficient to put millions back to work in productive infrastructure projects of lasting value, with billions left over to start paying down the debt.
Don't stop there.
The U.S. "defense" budget is now as large as that of all other nations combined. (You must, as the wild spending defense establishment does not, add to defense appropriations the billions buried in the budgets of other federal departments)
The Defense Department lists officially more than 700 bases in 152 foreign nations. But independent experts such as former CIA analyst Chalmers Johnson put that figure at as many as 1,000 bases.
There are 12 U.S. bases in Columbia, and Johnson reports an incredible 38 on the Japanese island of Okinawa, and dozens now ringing the former Soviet Union. To what purpose?
The demise of the Soviet Union ought to have yielded a "peace dividend," an opportunity to scale back U.S. forces in those regions, not increase them. And what is the threat from Columbia? An army of Hugo Chavez' thugs marching through Mexico to invade Texas?
As for the U.S. forces on Okinawa, do we expect the Chinese to sail a several million man army across the Pacific to invade California? All China need do to overcome the United States is wait while we go bankrupt for the sake of Wall Street, the war machine and corporate welfare.
An example of this corporate welfare is about to make news. The Oil Pollution Act of 1990 set up a federal fund to clean up oil "spills." ("Oops! We got a little oil on the floor there. Sorry.") But it limited the liability of the oil companies for damages to $75 million in each event.
Will Mr. Obama and Congress insist that BP and its contractors pay the hundreds of millions, perhaps billions of dollars in damages caused by their catastrophe in the Gulf of Mexico, or will that bill get passed to U.S. taxpayers, like the bailout?
To save the children and the nation, this generation must indeed take action to pay down the deficit and debt, but not on the backs of a beleaguered middle class, retirees and those now hanging by a thread from the so-called "safety net."
The productive alternative is to cut the mindlessly out-of-control "defense" budget, go after the stolen loot on Wall Street, hold corporations accountable, harness the states' assets in state banks and put America back to work at good wages.
But this is not what this administration, Congress and Wall Street's "widely respected" talking heads and media flacks will propose.
Their policy? Save the children, protect the rich!
Friday, May 7, 2010
Go back to sleep, things are fine
The monster under the bed
By: MIKE KRAUSS
Bucks County Courier Times
The headlines keep coming about the U.S. economic recovery, the bogus statistics fed by worried leaders to a national media, meant to put an anxious nation back to sleep.
"Now, now. Don't you worry. Mommy and Daddy are here. There's no monster under the bed."
Except there is.
Another tidal wave of home foreclosures is building. One in eight once creditworthy Americans are now behind in their mortgages - a record high number. As states slash spending, more layoffs will follow. Public education will take the biggest hit. U.S.
Secretary of Education Arne Duncan warned that between 100,000 to 300,000 public education positions are in danger.
And that is the estimate from the capital of feel good news.
In a few weeks, the 700,000 census workers hired with stimulus funds will be out of work.
While Whirpool announces another U.S. factory closing, moving 1,100 more jobs to Mexico, there is another wave of outsourcing building, reaching beyond already decimated U.S. manufacturing.
In a new book, Outsourcing America published by the American Management Association, the authors cite a University of California study which concludes that 14 million white-collar jobs are vulnerable to being outsourced.
"These are not only call-center operators, customer service and back-office jobs, but also information technology, accounting, architecture, advanced engineering design, news reporting, stock analysis, and medical and legal services."
Without jobs creation, the U.S. economy will continue to collapse, as massive U.S. foreign debt puts the nation at frightening risk of economic blackmail - if not all out economic war - at the hands of the nation's biggest creditor, China.
That's the monster under the bed. And Mommy Washington and Daddy Wall Street know it. And their plan? A White House/congressional commission to go after what little of the people's taxes that is not spent on Wall Street, the war machine and corporate welfare.
Tough love, Washington style.
"We told you about all those treats you gave yourself - good wages, homes, savings. Now see what you've done! You behave, and go to bed."
"But, Mommy, Daddy! That was my allowance money. And remember that nice man from the bank you introduced me to, with the credit cards? You said it was OK."
"Now that's enough! You do as you're told and right this minute."
But Mommy and Daddy are worried. So are their friends.
At a cocktail party in March with the Moodys ("Wasn't it sad when they got into all that trouble with those 'inaccurate' credit ratings they gave the Morgans and the Sachs?") Mommy and Daddy heard the Moodys say that their friends in the U.K., Germany, France and Spain "are all at risk of soaring debt costs and will have to implement austerity plans that threaten 'social cohesion'."
They put it out of their minds. But then their friends from Greece called, desperate for a loan.
Then they remembered that when they went on vacation to Europe just last year to a castle Mommy really liked ("Maybe next year with your bonus, we can buy a castle like that," Mommy pleaded with Daddy), their hosts at the International Monetary Club and the Bank for International Settlements Club warned of "adjustments of a magnitude that, in some cases, will test social cohesion," and that "violent protests could break out in countries worldwide."
That really worried Mommy and Daddy, but then they talked to that nice couple, the Pentagons, and found out they weren't worried at all.
"Well, they were worried, dear, but they have a plan," Daddy reminded Mommy.
And the Pentagons do have a plan. Turns out they already have their kids in training all over the world - they have a really big family - learning how to deal with undisciplined children.
The Pentagons' cousins at the War College told their grandfather the admiral, "An economic crisis in the United States could lead to massive civil unrest and the need to call on the military to restore order." To that end, 20,000 soldiers are under the U.S. Northern Command (NORTHCOM), including 4,000 already in the United States "to work with civilian law enforcement in homeland security."
Mommy and Daddy didn't mind that they had to get rid of an old law that prevented U.S. armed forces from deploying inside the United States, or that the president gave himself the authority to take over the states' National Guard units.
"Only those noisy, tea party types worry about the Constitution any more," Daddy explained to Mommy. "That's just a piece of paper."
Mommy doesn't like those tea party people. She read in the papers that most of them are white, older, and have more money and education than many of the other parents she likes now.
"I mean, really! The nerve of those people," she told Daddy.
So Mommy Washington and Daddy Wall Street will do what good parents do and make sure their kids behave, even if it hurts them -the kids, that is.
Go back to sleep. Things are fine.
By: MIKE KRAUSS
Bucks County Courier Times
The headlines keep coming about the U.S. economic recovery, the bogus statistics fed by worried leaders to a national media, meant to put an anxious nation back to sleep.
"Now, now. Don't you worry. Mommy and Daddy are here. There's no monster under the bed."
Except there is.
Another tidal wave of home foreclosures is building. One in eight once creditworthy Americans are now behind in their mortgages - a record high number. As states slash spending, more layoffs will follow. Public education will take the biggest hit. U.S.
Secretary of Education Arne Duncan warned that between 100,000 to 300,000 public education positions are in danger.
And that is the estimate from the capital of feel good news.
In a few weeks, the 700,000 census workers hired with stimulus funds will be out of work.
While Whirpool announces another U.S. factory closing, moving 1,100 more jobs to Mexico, there is another wave of outsourcing building, reaching beyond already decimated U.S. manufacturing.
In a new book, Outsourcing America published by the American Management Association, the authors cite a University of California study which concludes that 14 million white-collar jobs are vulnerable to being outsourced.
"These are not only call-center operators, customer service and back-office jobs, but also information technology, accounting, architecture, advanced engineering design, news reporting, stock analysis, and medical and legal services."
Without jobs creation, the U.S. economy will continue to collapse, as massive U.S. foreign debt puts the nation at frightening risk of economic blackmail - if not all out economic war - at the hands of the nation's biggest creditor, China.
That's the monster under the bed. And Mommy Washington and Daddy Wall Street know it. And their plan? A White House/congressional commission to go after what little of the people's taxes that is not spent on Wall Street, the war machine and corporate welfare.
Tough love, Washington style.
"We told you about all those treats you gave yourself - good wages, homes, savings. Now see what you've done! You behave, and go to bed."
"But, Mommy, Daddy! That was my allowance money. And remember that nice man from the bank you introduced me to, with the credit cards? You said it was OK."
"Now that's enough! You do as you're told and right this minute."
But Mommy and Daddy are worried. So are their friends.
At a cocktail party in March with the Moodys ("Wasn't it sad when they got into all that trouble with those 'inaccurate' credit ratings they gave the Morgans and the Sachs?") Mommy and Daddy heard the Moodys say that their friends in the U.K., Germany, France and Spain "are all at risk of soaring debt costs and will have to implement austerity plans that threaten 'social cohesion'."
They put it out of their minds. But then their friends from Greece called, desperate for a loan.
Then they remembered that when they went on vacation to Europe just last year to a castle Mommy really liked ("Maybe next year with your bonus, we can buy a castle like that," Mommy pleaded with Daddy), their hosts at the International Monetary Club and the Bank for International Settlements Club warned of "adjustments of a magnitude that, in some cases, will test social cohesion," and that "violent protests could break out in countries worldwide."
That really worried Mommy and Daddy, but then they talked to that nice couple, the Pentagons, and found out they weren't worried at all.
"Well, they were worried, dear, but they have a plan," Daddy reminded Mommy.
And the Pentagons do have a plan. Turns out they already have their kids in training all over the world - they have a really big family - learning how to deal with undisciplined children.
The Pentagons' cousins at the War College told their grandfather the admiral, "An economic crisis in the United States could lead to massive civil unrest and the need to call on the military to restore order." To that end, 20,000 soldiers are under the U.S. Northern Command (NORTHCOM), including 4,000 already in the United States "to work with civilian law enforcement in homeland security."
Mommy and Daddy didn't mind that they had to get rid of an old law that prevented U.S. armed forces from deploying inside the United States, or that the president gave himself the authority to take over the states' National Guard units.
"Only those noisy, tea party types worry about the Constitution any more," Daddy explained to Mommy. "That's just a piece of paper."
Mommy doesn't like those tea party people. She read in the papers that most of them are white, older, and have more money and education than many of the other parents she likes now.
"I mean, really! The nerve of those people," she told Daddy.
So Mommy Washington and Daddy Wall Street will do what good parents do and make sure their kids behave, even if it hurts them -the kids, that is.
Go back to sleep. Things are fine.
Tuesday, April 27, 2010
Feeble Reform
Break up the big banks
By: Mike Krauss
Bucks County Courier Times
The six largest Wall Street firms now control assets equal to 60 percent of the entire U.S. gross domestic product (GDP). The gap between the incomes and wealth of the richest and poorest Americans is now greater than in any developed nation, and many third world, third rate nations. The wealth of the United States is daily more concentrated in the hands of ever fewer Americans.
This concentration of wealth has led inevitably to a concentration of political power in the same hands, now accompanied by an arrogance of power not seen in the United States since the days of the last robber barons.
The legalized bribes funneled to federal office holders through the system of lobbying and campaign finance regulations are but one example of this breathtaking arrogance.
Now Americans are learning that widespread criminal fraud born of this arrogance - and not the workings of a free market, as has been fatuously argued by the crooks - crashed the lives of tens of millions of Americans.
So what do we do?
The obvious place to start is by attacking the concentration of wealth and the resulting concentration of political power. There is an opportunity at hand: the financial “reform” legislation pending before the Congress.
Sadly, this opportunity is being turned the same way health care “reform” was turned.
At the start of the health care debate, Mr. Obama invited the health care industry to join him. When he did, he gave up half the field. The industry then poured millions into lobbying and campaign contributions in the Congress and pushed reform back to its own goal line.
The result was legislation that will drive tens of millions more Americans into the same failed system – under threat and penalty of law – and leaves health care costs and industry profits unchecked.
Mr. Obama is repeating the same failed strategy with reform of the finance industry. He has invited his “friends” on Wall Street to join him; possibly because he is a slower learner than widely believed, or possibly because his administration is staffed top to bottom with Wall Street agents.
One indication of how close are the ties between Obama and Wall Street: Goldman Sachs has hired Gregg Craig to defend it against the recent civil indictment brought (By one vote!) by the Securities and Exchange Commission (SEC). Until January, Mr. Craig was White House counsel, the president’s personal lawyer.
But however Mr. Obama settled on his financial “reform” strategy, the one essential measure is off the table – breaking up the big banks.
The lobbyists are pouring millions into the GOP to fight any change, so that what little emerges from the Democrats, who are getting even more millions, can be passed off as a “victory” for reform.
Worse, whatever watered down new regulation survives will be enforced by the Federal Reserve, which is not just figuratively in the pocket of the banks, but is actually owned by the banks, which are in fact its shareholders!
In the end, all the underlying incentives and causes of the crash of 2008 will be preserved. Writing in the New York Times, Gretchen Morgansen explains the inadequacy of the proposed legislation.
“The central problem is that neither the Senate nor House bills would chop down big banks to a more manageable and less threatening size. The bills also don’t eliminate the prospect of future bailouts of interconnected and powerful companies.
“Too big to fail is alive and well… Indeed, several aspects of the legislative proposals sanction and codify the special status conferred on institutions that are seen as systemically important… The bills would encourage smaller companies to grow large and dangerous so that they, too, could have a seat at the bailout buffet.”
She concludes, “The leading proposals would do little to cure the epidemic unleashed on American taxpayers by the lords of finance and their bailout partners.” By “bailout partners” Morgansen means the Bush and Obama administrations, the congressional leadership and Federal Reserve.
The first and essential step to restoring the prosperity of the American people is to break up the six big banks that now control 60 percent of the wealth of America. Limits must be set on the total assets and wealth any bank controls and taxes placed on the profits they generate from financial “products” that produce only vast private gain, but nothing of use to the American people.
The freed up capital and taxes can then be re-directed into creating jobs that produce goods and services of real use for the American market – which is still an enormous asset.
When Wall Street’s control of the wealth of America is finally limited - and not before - it will be possible to confront its control of the U.S. government. Americans can then begin to undo the transformation of the most productive nation on earth into a nation of anemic consumers, to be preyed upon by profiteering, transnational corporations and all the Wall Street wanna be’s in London, Zurich, Dubai, Delhi and Hong Kong – the global club of parasites in pinstripes.
First things first: break up the “big six” banks and put an end to the “too big to fail” blackmail. If this Congress cannot find the backbone to get the job done, Americans must replace it with one that will.
April 27, 2010
***************
By Barry Grey
Global Research
President Barack Obama went to lower Manhattan Thursday to deliver a message to Wall Street: Your profits and bonuses will not be disturbed by the regulatory overhaul making its way through Congress.
In a deferential speech pitched to top bankers in the Cooper Union audience, Obama urged what he called the “titans of industry” to call off their lobbyists and “join us” in passing his so-called reform. The subtext was that the White House and congressional Democrats had already removed most of the provisions to which the bankers objected, and were prepared to go even further in accommodating them.
The speech came less than a week after the Securities and Exchange Commission (SEC) indicted Goldman Sachs, the most profitable Wall Street bank, for defrauding its clients in order to cash in on—and encourage—the collapse of the subprime housing market in 2007. Obama did not mention the indictment. Nor did he suggest that what he called a “failure of responsibility” on Wall Street included criminal activities.
Among those in the audience to whom Obama appealed was Lloyd Blankfein, the CEO of Goldman, who attended the event to underscore his contempt and defiance of the SEC.
It was also a week in which the top five banks reported combined profits of more than $15 billion for the first three months of 2010—a huge increase over the previous year.
As the Goldman indictment makes clear, these profits are bound up with rampant fraud that helped crash the financial system--driving millions in the US and around the world into unemployment and poverty—followed by trillions of dollars in taxpayer bailouts and virtually free credit from the Federal Reserve.
Obama took pains to affirm his obeisance to capitalism. “I believe in the power of the free market,” he declared. “I believe in a strong financial sector …” To reassure Wall Street that his financial overhaul would not impose serious restrictions, he said, “We do not have to choose between markets that are unfettered by even modest protections against crisis, or markets that are stymied by onerous rules that suppress enterprise and innovation.”
There was no suggestion that a single banker or trader should be held accountable for the social catastrophe he helped create. Yet less than two months ago, addressing the US Chamber of Commerce, Obama hailed the mass firing of teachers in an impoverished school district in Rhode Island as a positive educational “reform” measure. “There’s got to be a sense of accountability,” Obama said.
With complete cynicism, Obama and congressional Democrats, with the assistance of the media, are presenting their regulatory proposals as a sweeping reform comparable to the banking measures implemented by the Roosevelt administration in the Great Depression.
In reality, the Senate measure, like the bill passed last December by the House of Representatives, proposes certain marginal changes in the way government agencies monitor financial firms, but does nothing to reverse the deregulation of banking carried out over the past three decades, which dismantled the restrictions imposed during the 1930s. It introduces no structural reforms to limit, let alone ban, the speculative practices that have become central to the accumulation of profit and personal wealth by the American ruling class.
Obama and the congressional Democrats have rejected capping executive pay or banning credit default swaps, collateralized debt obligations, structured investment vehicles and other exotic forms of speculation that played a major role in the financial crash and global recession.
Provisions to regulate derivatives markets, a major source of profits for the top Wall Street banks, are loaded with loopholes and exemptions. A financial consumer protection body will have no power over 98 percent of banks or any car dealerships, and will be subject to a Federal Reserve veto.
The most important innovation in the House and Senate bills is the establishment of a procedure for the government to wind down large financial firms, including insurance companies and other non-bank entities, whose failure could trigger a systemic collapse. This is being billed as an end to “too-big-to-fail” financial companies and a guarantee against future taxpayer-funded bailouts.
It is nothing of the kind. The proposal would institutionalize government rescue operations to protect the interests of bank executives, shareholders and creditors and the wealth of the financial elite as a whole, ultimately at public expense. It is designed to keep the banking system in private hands while preparing for the inevitable consequences of allowing the banks and big investors to continue “business as usual,” i.e., another financial crisis on the order of the crash of 2008.
In his speech on Thursday, Obama declared that “a vote for reform is a vote to put a stop to taxpayer-funded bailouts.” This is a lie. The administration-backed bill passed by the House would give the Federal Deposit Insurance Corporation, with the consent of the treasury secretary and the Federal Reserve, the power to “extend credit or guarantee obligations … to prevent financial instability during times of severe economic distress.” This amounts to a blank check to use taxpayer funds for future bailouts.
Obama has continued Bush administration policies that, far from reining in Wall Street, have strengthened the power of the biggest financial firms. The share of all banking industry assets held by the top 10 banks rose to 58 percent in 2009, from 44 percent in 2000 and 24 percent in 1990.
Nothing other than a license for Wall Street to continue stealing from the American people could possibly emerge from a political system dominated by an all-powerful financial aristocracy and awash in corruption and bribery. The financial industry has to date spent $455 million to lobby Congress on the financial overhaul.
The securities and investment industry has thus far handed out $34 million for the 2010 election cycle. Goldman Sachs is the second biggest corporate donor to political campaigns, after AT&T.
Since 1989, the bank’s political action committee and employees have given $31.6 million in campaign contributions, two-thirds of the total to Democratic candidates.
The financial industry funded Obama’s presidential election campaign to the amount of $15 million. Goldman was Obama’s single biggest donor, giving nearly $1 million.
One indication of the ties between Wall Street and the White House: Gregg Craig, who until January was Obama’s White House counsel, has been hired by Goldman Sachs to defend the firm against the SEC indictment.
Barry Grey is a frequent contributor to Global Research.
By: Mike Krauss
Bucks County Courier Times
The six largest Wall Street firms now control assets equal to 60 percent of the entire U.S. gross domestic product (GDP). The gap between the incomes and wealth of the richest and poorest Americans is now greater than in any developed nation, and many third world, third rate nations. The wealth of the United States is daily more concentrated in the hands of ever fewer Americans.
This concentration of wealth has led inevitably to a concentration of political power in the same hands, now accompanied by an arrogance of power not seen in the United States since the days of the last robber barons.
The legalized bribes funneled to federal office holders through the system of lobbying and campaign finance regulations are but one example of this breathtaking arrogance.
Now Americans are learning that widespread criminal fraud born of this arrogance - and not the workings of a free market, as has been fatuously argued by the crooks - crashed the lives of tens of millions of Americans.
So what do we do?
The obvious place to start is by attacking the concentration of wealth and the resulting concentration of political power. There is an opportunity at hand: the financial “reform” legislation pending before the Congress.
Sadly, this opportunity is being turned the same way health care “reform” was turned.
At the start of the health care debate, Mr. Obama invited the health care industry to join him. When he did, he gave up half the field. The industry then poured millions into lobbying and campaign contributions in the Congress and pushed reform back to its own goal line.
The result was legislation that will drive tens of millions more Americans into the same failed system – under threat and penalty of law – and leaves health care costs and industry profits unchecked.
Mr. Obama is repeating the same failed strategy with reform of the finance industry. He has invited his “friends” on Wall Street to join him; possibly because he is a slower learner than widely believed, or possibly because his administration is staffed top to bottom with Wall Street agents.
One indication of how close are the ties between Obama and Wall Street: Goldman Sachs has hired Gregg Craig to defend it against the recent civil indictment brought (By one vote!) by the Securities and Exchange Commission (SEC). Until January, Mr. Craig was White House counsel, the president’s personal lawyer.
But however Mr. Obama settled on his financial “reform” strategy, the one essential measure is off the table – breaking up the big banks.
The lobbyists are pouring millions into the GOP to fight any change, so that what little emerges from the Democrats, who are getting even more millions, can be passed off as a “victory” for reform.
Worse, whatever watered down new regulation survives will be enforced by the Federal Reserve, which is not just figuratively in the pocket of the banks, but is actually owned by the banks, which are in fact its shareholders!
In the end, all the underlying incentives and causes of the crash of 2008 will be preserved. Writing in the New York Times, Gretchen Morgansen explains the inadequacy of the proposed legislation.
“The central problem is that neither the Senate nor House bills would chop down big banks to a more manageable and less threatening size. The bills also don’t eliminate the prospect of future bailouts of interconnected and powerful companies.
“Too big to fail is alive and well… Indeed, several aspects of the legislative proposals sanction and codify the special status conferred on institutions that are seen as systemically important… The bills would encourage smaller companies to grow large and dangerous so that they, too, could have a seat at the bailout buffet.”
She concludes, “The leading proposals would do little to cure the epidemic unleashed on American taxpayers by the lords of finance and their bailout partners.” By “bailout partners” Morgansen means the Bush and Obama administrations, the congressional leadership and Federal Reserve.
The first and essential step to restoring the prosperity of the American people is to break up the six big banks that now control 60 percent of the wealth of America. Limits must be set on the total assets and wealth any bank controls and taxes placed on the profits they generate from financial “products” that produce only vast private gain, but nothing of use to the American people.
The freed up capital and taxes can then be re-directed into creating jobs that produce goods and services of real use for the American market – which is still an enormous asset.
When Wall Street’s control of the wealth of America is finally limited - and not before - it will be possible to confront its control of the U.S. government. Americans can then begin to undo the transformation of the most productive nation on earth into a nation of anemic consumers, to be preyed upon by profiteering, transnational corporations and all the Wall Street wanna be’s in London, Zurich, Dubai, Delhi and Hong Kong – the global club of parasites in pinstripes.
First things first: break up the “big six” banks and put an end to the “too big to fail” blackmail. If this Congress cannot find the backbone to get the job done, Americans must replace it with one that will.
April 27, 2010
***************
By Barry Grey
Global Research
President Barack Obama went to lower Manhattan Thursday to deliver a message to Wall Street: Your profits and bonuses will not be disturbed by the regulatory overhaul making its way through Congress.
In a deferential speech pitched to top bankers in the Cooper Union audience, Obama urged what he called the “titans of industry” to call off their lobbyists and “join us” in passing his so-called reform. The subtext was that the White House and congressional Democrats had already removed most of the provisions to which the bankers objected, and were prepared to go even further in accommodating them.
The speech came less than a week after the Securities and Exchange Commission (SEC) indicted Goldman Sachs, the most profitable Wall Street bank, for defrauding its clients in order to cash in on—and encourage—the collapse of the subprime housing market in 2007. Obama did not mention the indictment. Nor did he suggest that what he called a “failure of responsibility” on Wall Street included criminal activities.
Among those in the audience to whom Obama appealed was Lloyd Blankfein, the CEO of Goldman, who attended the event to underscore his contempt and defiance of the SEC.
It was also a week in which the top five banks reported combined profits of more than $15 billion for the first three months of 2010—a huge increase over the previous year.
As the Goldman indictment makes clear, these profits are bound up with rampant fraud that helped crash the financial system--driving millions in the US and around the world into unemployment and poverty—followed by trillions of dollars in taxpayer bailouts and virtually free credit from the Federal Reserve.
Obama took pains to affirm his obeisance to capitalism. “I believe in the power of the free market,” he declared. “I believe in a strong financial sector …” To reassure Wall Street that his financial overhaul would not impose serious restrictions, he said, “We do not have to choose between markets that are unfettered by even modest protections against crisis, or markets that are stymied by onerous rules that suppress enterprise and innovation.”
There was no suggestion that a single banker or trader should be held accountable for the social catastrophe he helped create. Yet less than two months ago, addressing the US Chamber of Commerce, Obama hailed the mass firing of teachers in an impoverished school district in Rhode Island as a positive educational “reform” measure. “There’s got to be a sense of accountability,” Obama said.
With complete cynicism, Obama and congressional Democrats, with the assistance of the media, are presenting their regulatory proposals as a sweeping reform comparable to the banking measures implemented by the Roosevelt administration in the Great Depression.
In reality, the Senate measure, like the bill passed last December by the House of Representatives, proposes certain marginal changes in the way government agencies monitor financial firms, but does nothing to reverse the deregulation of banking carried out over the past three decades, which dismantled the restrictions imposed during the 1930s. It introduces no structural reforms to limit, let alone ban, the speculative practices that have become central to the accumulation of profit and personal wealth by the American ruling class.
Obama and the congressional Democrats have rejected capping executive pay or banning credit default swaps, collateralized debt obligations, structured investment vehicles and other exotic forms of speculation that played a major role in the financial crash and global recession.
Provisions to regulate derivatives markets, a major source of profits for the top Wall Street banks, are loaded with loopholes and exemptions. A financial consumer protection body will have no power over 98 percent of banks or any car dealerships, and will be subject to a Federal Reserve veto.
The most important innovation in the House and Senate bills is the establishment of a procedure for the government to wind down large financial firms, including insurance companies and other non-bank entities, whose failure could trigger a systemic collapse. This is being billed as an end to “too-big-to-fail” financial companies and a guarantee against future taxpayer-funded bailouts.
It is nothing of the kind. The proposal would institutionalize government rescue operations to protect the interests of bank executives, shareholders and creditors and the wealth of the financial elite as a whole, ultimately at public expense. It is designed to keep the banking system in private hands while preparing for the inevitable consequences of allowing the banks and big investors to continue “business as usual,” i.e., another financial crisis on the order of the crash of 2008.
In his speech on Thursday, Obama declared that “a vote for reform is a vote to put a stop to taxpayer-funded bailouts.” This is a lie. The administration-backed bill passed by the House would give the Federal Deposit Insurance Corporation, with the consent of the treasury secretary and the Federal Reserve, the power to “extend credit or guarantee obligations … to prevent financial instability during times of severe economic distress.” This amounts to a blank check to use taxpayer funds for future bailouts.
Obama has continued Bush administration policies that, far from reining in Wall Street, have strengthened the power of the biggest financial firms. The share of all banking industry assets held by the top 10 banks rose to 58 percent in 2009, from 44 percent in 2000 and 24 percent in 1990.
Nothing other than a license for Wall Street to continue stealing from the American people could possibly emerge from a political system dominated by an all-powerful financial aristocracy and awash in corruption and bribery. The financial industry has to date spent $455 million to lobby Congress on the financial overhaul.
The securities and investment industry has thus far handed out $34 million for the 2010 election cycle. Goldman Sachs is the second biggest corporate donor to political campaigns, after AT&T.
Since 1989, the bank’s political action committee and employees have given $31.6 million in campaign contributions, two-thirds of the total to Democratic candidates.
The financial industry funded Obama’s presidential election campaign to the amount of $15 million. Goldman was Obama’s single biggest donor, giving nearly $1 million.
One indication of the ties between Wall Street and the White House: Gregg Craig, who until January was Obama’s White House counsel, has been hired by Goldman Sachs to defend the firm against the SEC indictment.
Barry Grey is a frequent contributor to Global Research.
Thursday, April 22, 2010
Missing: An Employment Strategy
State Banks
By: Mike Krauss
Bucks County Courier Times
The collapse of the American middle class continues.
While administration officials and members of Congress running for re-election peddle bogus unemployment statistics and claims of recovery the way Wall Street peddled worthless mortgage securities, another tidal wave of home foreclosures is rolling past the subprime borrowers and deep into the once credit worthy.
As CNBC’s Diana Olick reported, almost 8 million Americans are now behind in their mortgage payments. The real estate industry monitor, Irvine Housing blog reported that one bank alone, “Bank of America, which currently forecloses on 7,500 homes every month will see that number rise to 45,000 by December 2010.”
No wages and low wages are taking a fearful toll in the U.S.
Based on the official Department of Labor unemployment rate of 9.7 percent, there are 14.8 million unemployed. But add in those who have stopped looking for work, or are getting by on part time work, and the dimension of the catastrophe comes into view. The AFL CIO puts it at 25.5 million Americans.
A sobering analysis in The Atlantic magazine recently described how long term, widespread unemployment is resulting in “a slowly sinking generation, a remorseless assault on the identity of many men; the dissolution of families and the collapse of neighborhoods.” The author concluded, “(Americans) are living through a slow-motion social catastrophe.”
To arrest this collapse, America needs jobs. It is the most urgent national priority.
Jobs create taxpayers and tax revenue, a demand for goods and services and more jobs. Jobs reduce the costs of unemployment, welfare and health care. Jobs shrink the deficit and debt. Jobs keep families in their homes, protect children and maintain communities. Jobs create hope.
America needs jobs. Infrastructure on a massive scale – the forgotten promise of both political parties in 2008 – is the place to start. Millions can be trained now for jobs in infrastructure and the supply chain of goods and services.
Partnerships of community colleges and the private industry which will need the new hires can provide the training.
The growing legion of the unemployed who are already better educated and trained – veterans coming home to no job, recent college graduates – will find jobs in the management and professional services required to support a large scale, long term infrastructure initiative.
America needs jobs, but it does not need to wait for Washington to create them. There is an alternative.
While almost every state in the nation is in dire financial straits and slashing spending for the needs of people, North Dakota is posting $1 billion surpluses. Since 2000, the state’s GNP has grown 56%, personal income is up 43%, and wages up 34%.
How does North Dakota manage to swim against the tide? The answer is that North Dakota is the only state with its own bank. Apart from returning about a third of a billion dollars to the state’s general fund in the past ten years, it has invested in businesses, infrastructure, start-ups and education.
The bank has on its books all the assets of the state, which are leveraged to create new credit and investment. Most states have similar assets to put in play.
For example, the State of California owns about $200 billion in real estate, roughly $62 billion in investments and has more than $100 billion in projected 2010 revenues. Reasonably leveraged, that asset base could support almost $4 trillion in loans – a river of new credit and investment.
California is instructive because the City of Los Angeles is now asking the feds for a loan guarantee backed by a voter approved sales tax – not another unfunded hand out – to get going on an ambitious plan to expand an electric rail line. The Washington Post reported that this project will create 150,000 jobs.
This is the scale of job creation America needs. But Washington has no such program to help California or any other state. Again as reported in the Post, efforts to create a National Infrastructure Bank have gone nowhere since first proposed in 1994.
There are no photo-ops for check-bearing members of Congress, just that boring banking stuff.
A State Bank of California could provide the loans, loan guarantees or direct investment needed by LA. State banks all over the nation could do the same.
The implication is revolutionary. The American people can bypass Wall Street and Washington and get on with a decentralized, locally directed recovery of the nation's stolen prosperity.
Even if smaller states such as Pennsylvania or New Jersey (where this column appears) had access to only one tenth of California’s state assets, it would generate $400 billion in credit and investment in each.
Pennsylvanians can rebuild unsafe bridges, crumbling highways and dilapidated water treatment facilities, renovate parks and cherished national monuments to world class status, modernize transportation systems, transform waterfronts, blighted urban neighborhoods and abandoned small town centers, build or renovate schools and health centers - and put people to work on the scale required.
The idea is catching fire. The legislatures of half a dozen states are taking steps to create a state bank. As of today, candidates in Florida, Oregon, Illinois, California, Washington State, Vermont, and Idaho have platforms which contain this game changing proposal.
Americans need jobs. They do not need and cannot afford to wait for Washington to create them.
State banks now!
By: Mike Krauss
Bucks County Courier Times
The collapse of the American middle class continues.
While administration officials and members of Congress running for re-election peddle bogus unemployment statistics and claims of recovery the way Wall Street peddled worthless mortgage securities, another tidal wave of home foreclosures is rolling past the subprime borrowers and deep into the once credit worthy.
As CNBC’s Diana Olick reported, almost 8 million Americans are now behind in their mortgage payments. The real estate industry monitor, Irvine Housing blog reported that one bank alone, “Bank of America, which currently forecloses on 7,500 homes every month will see that number rise to 45,000 by December 2010.”
No wages and low wages are taking a fearful toll in the U.S.
Based on the official Department of Labor unemployment rate of 9.7 percent, there are 14.8 million unemployed. But add in those who have stopped looking for work, or are getting by on part time work, and the dimension of the catastrophe comes into view. The AFL CIO puts it at 25.5 million Americans.
A sobering analysis in The Atlantic magazine recently described how long term, widespread unemployment is resulting in “a slowly sinking generation, a remorseless assault on the identity of many men; the dissolution of families and the collapse of neighborhoods.” The author concluded, “(Americans) are living through a slow-motion social catastrophe.”
To arrest this collapse, America needs jobs. It is the most urgent national priority.
Jobs create taxpayers and tax revenue, a demand for goods and services and more jobs. Jobs reduce the costs of unemployment, welfare and health care. Jobs shrink the deficit and debt. Jobs keep families in their homes, protect children and maintain communities. Jobs create hope.
America needs jobs. Infrastructure on a massive scale – the forgotten promise of both political parties in 2008 – is the place to start. Millions can be trained now for jobs in infrastructure and the supply chain of goods and services.
Partnerships of community colleges and the private industry which will need the new hires can provide the training.
The growing legion of the unemployed who are already better educated and trained – veterans coming home to no job, recent college graduates – will find jobs in the management and professional services required to support a large scale, long term infrastructure initiative.
America needs jobs, but it does not need to wait for Washington to create them. There is an alternative.
While almost every state in the nation is in dire financial straits and slashing spending for the needs of people, North Dakota is posting $1 billion surpluses. Since 2000, the state’s GNP has grown 56%, personal income is up 43%, and wages up 34%.
How does North Dakota manage to swim against the tide? The answer is that North Dakota is the only state with its own bank. Apart from returning about a third of a billion dollars to the state’s general fund in the past ten years, it has invested in businesses, infrastructure, start-ups and education.
The bank has on its books all the assets of the state, which are leveraged to create new credit and investment. Most states have similar assets to put in play.
For example, the State of California owns about $200 billion in real estate, roughly $62 billion in investments and has more than $100 billion in projected 2010 revenues. Reasonably leveraged, that asset base could support almost $4 trillion in loans – a river of new credit and investment.
California is instructive because the City of Los Angeles is now asking the feds for a loan guarantee backed by a voter approved sales tax – not another unfunded hand out – to get going on an ambitious plan to expand an electric rail line. The Washington Post reported that this project will create 150,000 jobs.
This is the scale of job creation America needs. But Washington has no such program to help California or any other state. Again as reported in the Post, efforts to create a National Infrastructure Bank have gone nowhere since first proposed in 1994.
There are no photo-ops for check-bearing members of Congress, just that boring banking stuff.
A State Bank of California could provide the loans, loan guarantees or direct investment needed by LA. State banks all over the nation could do the same.
The implication is revolutionary. The American people can bypass Wall Street and Washington and get on with a decentralized, locally directed recovery of the nation's stolen prosperity.
Even if smaller states such as Pennsylvania or New Jersey (where this column appears) had access to only one tenth of California’s state assets, it would generate $400 billion in credit and investment in each.
Pennsylvanians can rebuild unsafe bridges, crumbling highways and dilapidated water treatment facilities, renovate parks and cherished national monuments to world class status, modernize transportation systems, transform waterfronts, blighted urban neighborhoods and abandoned small town centers, build or renovate schools and health centers - and put people to work on the scale required.
The idea is catching fire. The legislatures of half a dozen states are taking steps to create a state bank. As of today, candidates in Florida, Oregon, Illinois, California, Washington State, Vermont, and Idaho have platforms which contain this game changing proposal.
Americans need jobs. They do not need and cannot afford to wait for Washington to create them.
State banks now!
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