Friday, April 20, 2012
Will Americans get their "Irish" up?
Where democracy took a stand and the bankers and barons paid
By Mike Krauss
Bucks County Courier Times
It’s not much in the news in the U.S., because people might get the wrong idea about all the good things austerity can do for a nation, but Greece is falling apart and democracy is dying there.
Some will argue that democracy is not doing all that well in the U.S., but Greece points to how bad it can get. Shops are shuttered, beggars wander aimlessly, hospitals report rising and alarming rates of suicide and mental illness. The Orthodox Church in Athens reports a food emergency, children starving.
In order to protect the banks and bondholders from losses on the debt they piled on Greece — much of it artfully concealed in complicated transactions that misled investors and even European regulators — the Greek people no longer have a democratic government. Like Italy, and soon perhaps Spain, the “prime minister” was appointed by — well, that’s not clear.
The Financial Times describes it this way: “In exchange for the most recent financing, the Greek government has had to cede part of its sovereignty to the Troika (the European Union, European Central Bank and International Monetary Fund).
“The lobby of the elegant Hotel Grande Bretagne on Syntagma Square swarms with north European lawyers and bureaucrats and their assistants laden with files. It is they who now determine Greece’s future. Many come from the law firms that advise the giants of global finance and the EU, the very institutions that helped create the Greek debt crisis.”
But the appointed Greek prime minister has excellent credentials. Like his opposite number in Italy, as well as the president of the European Central Bank and at least a dozen high ranking European ministers, he came up through the ranks on the flagship of the Wall Street pirate fleet, Goldman Sachs.
And what has the new Greek management done? They have laid off enough workers to drive official unemployment to 21.5 percent, cut pensions by 25 percent and state salaries by 60 percent. Unemployment is even more catastrophic among the young, as it is throughout Europe as austerity works its magic — about 50 percent.
Have a nice future.
But not all was lost. As European newspapers have reported, while European governments, led by the Germans, were telling the Greeks their credit was shot unless they agreed to cannibalize their economy, they financed more than $1.2 billion in military hardware to Greece — German aircraft, a French submarine, etc — and are demanding that the contracts may not be canceled, but must be paid for out of the “rescue” package imposed on the Greek people.
On both sides of the Atlantic, the military contractors get a pass on austerity.
The Irish are next in the bankers’ sights, but they are proving less amenable to coercion and have scheduled a referendum; partly because having already bowed once to the bankers’ demands, their economy is in a rapid descent to ruin.
Ireland may be where democracy makes a stand in Europe.
But if it is, it won’t be the first. Ireland is thought of by many as the frontier of Western Europe, the last island past England on the way to the New World. But it isn’t. Far out in the North Atlantic, little Iceland has already fought the bankers — and won. And while this may be news to Americans, the Irish know the story.
The same Wall Street special that blew up Ireland, then Greece and now threatens Italy and Spain, even as it devastates families and communities across the U.S., hit Iceland first. But while the rest of Europe, led by the U.S. rushed to bail out the bankers, Iceland let its big banks go down and defaulted on its debt to the big English and Dutch banks.
Today, Iceland’s economy is actually recovering, and three weeks ago, after three years of preparation, Iceland’s equivalent of the Wall Street barons went on trial — after the former prime minister was put on trial.
Iceland’s new prime minister sees this as therapeutic, and said in a recent speech that “the wide-ranging criminal investigation that is being conducted against reckless financiers” will help bring about “a national reconciliation” and “heal the wounds that the collapse inflicted.”
An Icelandic businessman who lost his 20-year-old construction company in the collapse put it differently, saying, “What is important is that this is the year when the bankers hopefully are made to pay.”
No such day of reckoning appears on the horizon in the U.S. The GOP and Democratic candidates for president, and most candidates for Congress seem determined only to talk about the twin catastrophes of unemployment and foreclosures and a rising tide of human misery, and focus on “fiscal responsibility” and protecting the wealth of their major donors in the 1 percent. The U.S. Department of Justice gave the barons on Wall Street a pass.
Certainly, there is nothing in the U.S. news about the trial of the bankers in Iceland. I mean, we wouldn’t want to send the wrong message to the American people.
But who knows? If little Iceland can tell the bankers where to get off, and the Irish people say “No” to more punishment for the sins of the bankers, maybe Americans will finally get their “Irish” up.
Mike Krauss, formerly of Levittown, is an international logistics executive and chairman of the Pennsylvania Project. www.papublicbankproject.org Email: mike@mikekrausscomments.com
Thursday, April 5, 2012
Horse and Buggy Banking
Too-Big-To-Fail: The sequel
By Mike Krauss
The creation of the Federal Reserve in 1913 was a fateful end-run around democratic government. It gave control of the supply and cost of the nation’s money and credit to what is in fact a private banking cartel — Wall Street.
It was sold as a great reform — taking these vital matters out of the hands of those elected in the political process, and giving them to the experts.
“In experts we trust.”
But this set-up made it possible for a small number of people in the private banking industry to accumulate fantastic wealth and political power at the expense of the whole of the American people. That was, of course, the intent.
Now, as Americans survey the wreckage of the economy and deride Fed Chairman Ben Bernanke as the greatest failure in the history of modern economics, the experts don’t look so good.
So they have doubled down, arguing that the U.S. has a “horse and buggy” regulatory system for a 21st century financial system, and what we really need is a more centralized and interconnected regulatory system, run by the experts, to manage a centralized and interconnected banking system.
This puts the American people between a rock and a hard place.
When Wall Street wanted to change an accounting rule, so that the banks’ near-worthless mortgages could be booked at several times their value, or wanted to exclude liabilities from the balance sheets altogether in order to mislead investors, boost the stock price and insure the gigantic bonuses, they had to deal with an agency that reports to Congress.
But since Wall Street owns Congress, this was no big problem.
Similarly, Wall Street is now spending millions in lobbying and campaign contributions to protect its gigantic derivative business. The latest quarterly report from the Office of the Comptroller of the Currency reports that four banks hold $250 trillion in the gross notional amount of derivative contracts outstanding, a whopping 95.9 percent of all derivative exposure.
One shock, one failed gamble of the kind that brought down AIG and Lehman Brothers, and there won’t be enough money in the world to cover the losses — not that they won’t try.
This is “Too-Big-To-Fail,” the sequel.
Incredibly, these same banks want more risk and are buying Congress to get it. As the New York Times lamented in an editorial, one bill would exempt a host of derivatives transactions from almost all regulation. Another would water down pending rules to require that most derivatives be traded on open exchanges, where investors can at least see what is going on. A third would let the banks trade derivatives through foreign subsidiaries and away from the scrutiny of U.S. regulators, which the Times accurately called “a loophole that would virtually invite banks to engage in unregulated transactions on a potentially vast scale.”
So, there’s the rock. A bought Congress and unbridled risk taking on Wall Street, with the capacity to sooner or later deliver another shock to the American economy — this time possibly fatal.
Now here’s the hard place. Give the Fed more control.
The Dodd-Frank “reform” creates the Consumer Financial Protection Bureau (CFPB). This sprawling new bureaucracy will be as reported, “an independent unit located inside and funded by the United States Federal Reserve.”
Independent of what and who? Well, of the Congress and the American people.
The CFSB will be funded, managed and staffed by the Fed. It won’t need to ask the Congress for nothin’. And that is precisely what Congress and the American people will get from them in the way of information and accountability.
The CFSB will “write and enforce bank rules (and) conduct bank examinations.” The Fed owns the CFSB and Wall Street owns the Fed. Think the Wall Street banks will pass the test?
The idea that the “expert” regulators cannot also be bought is laughable. In its least crude form, the purchase price is called the “round trip ticket” — depart Wall Street to Washington from a $500,000 a year job, to a few years of “public service” as a regulator at maybe $175,000 a year, and return Washington to Wall Street for $5 million a year.
There is a way out of this trap. It is to bypass the American central banking system and its incestuous relationship between the regulated and the regulators — whether the politicians or the experts — and create a network of locally authorized, autonomous, democratically operated and locally accountable public banks at the state and municipal level, to partner as “mini-Feds” with local banks and financial institutions in the business of banking and not speculation.
The U.S. banking and economic crisis was not brought on by antiquated banking regulation. Its cause is antiquated banking — the same “horse and buggy,” centralized banking system of 1913, organized now as a century ago to insure Wall Street against the certain losses of reckless speculation, at whatever the cost to the American people.
And it fails to create the affordable credit which in modern societies is an absolute necessity for economic development and the creation of widespread wealth and prosperity.
Public banking can address both these needs and bring American banking into the 21st century
Mike Krauss is a director of the Public Banking Institute and chairman of the Pennsylvania Project. www.papublicbankproject.org Email mike@mikekrausscomments.com
By Mike Krauss
The creation of the Federal Reserve in 1913 was a fateful end-run around democratic government. It gave control of the supply and cost of the nation’s money and credit to what is in fact a private banking cartel — Wall Street.
It was sold as a great reform — taking these vital matters out of the hands of those elected in the political process, and giving them to the experts.
“In experts we trust.”
But this set-up made it possible for a small number of people in the private banking industry to accumulate fantastic wealth and political power at the expense of the whole of the American people. That was, of course, the intent.
Now, as Americans survey the wreckage of the economy and deride Fed Chairman Ben Bernanke as the greatest failure in the history of modern economics, the experts don’t look so good.
So they have doubled down, arguing that the U.S. has a “horse and buggy” regulatory system for a 21st century financial system, and what we really need is a more centralized and interconnected regulatory system, run by the experts, to manage a centralized and interconnected banking system.
This puts the American people between a rock and a hard place.
When Wall Street wanted to change an accounting rule, so that the banks’ near-worthless mortgages could be booked at several times their value, or wanted to exclude liabilities from the balance sheets altogether in order to mislead investors, boost the stock price and insure the gigantic bonuses, they had to deal with an agency that reports to Congress.
But since Wall Street owns Congress, this was no big problem.
Similarly, Wall Street is now spending millions in lobbying and campaign contributions to protect its gigantic derivative business. The latest quarterly report from the Office of the Comptroller of the Currency reports that four banks hold $250 trillion in the gross notional amount of derivative contracts outstanding, a whopping 95.9 percent of all derivative exposure.
One shock, one failed gamble of the kind that brought down AIG and Lehman Brothers, and there won’t be enough money in the world to cover the losses — not that they won’t try.
This is “Too-Big-To-Fail,” the sequel.
Incredibly, these same banks want more risk and are buying Congress to get it. As the New York Times lamented in an editorial, one bill would exempt a host of derivatives transactions from almost all regulation. Another would water down pending rules to require that most derivatives be traded on open exchanges, where investors can at least see what is going on. A third would let the banks trade derivatives through foreign subsidiaries and away from the scrutiny of U.S. regulators, which the Times accurately called “a loophole that would virtually invite banks to engage in unregulated transactions on a potentially vast scale.”
So, there’s the rock. A bought Congress and unbridled risk taking on Wall Street, with the capacity to sooner or later deliver another shock to the American economy — this time possibly fatal.
Now here’s the hard place. Give the Fed more control.
The Dodd-Frank “reform” creates the Consumer Financial Protection Bureau (CFPB). This sprawling new bureaucracy will be as reported, “an independent unit located inside and funded by the United States Federal Reserve.”
Independent of what and who? Well, of the Congress and the American people.
The CFSB will be funded, managed and staffed by the Fed. It won’t need to ask the Congress for nothin’. And that is precisely what Congress and the American people will get from them in the way of information and accountability.
The CFSB will “write and enforce bank rules (and) conduct bank examinations.” The Fed owns the CFSB and Wall Street owns the Fed. Think the Wall Street banks will pass the test?
The idea that the “expert” regulators cannot also be bought is laughable. In its least crude form, the purchase price is called the “round trip ticket” — depart Wall Street to Washington from a $500,000 a year job, to a few years of “public service” as a regulator at maybe $175,000 a year, and return Washington to Wall Street for $5 million a year.
There is a way out of this trap. It is to bypass the American central banking system and its incestuous relationship between the regulated and the regulators — whether the politicians or the experts — and create a network of locally authorized, autonomous, democratically operated and locally accountable public banks at the state and municipal level, to partner as “mini-Feds” with local banks and financial institutions in the business of banking and not speculation.
The U.S. banking and economic crisis was not brought on by antiquated banking regulation. Its cause is antiquated banking — the same “horse and buggy,” centralized banking system of 1913, organized now as a century ago to insure Wall Street against the certain losses of reckless speculation, at whatever the cost to the American people.
And it fails to create the affordable credit which in modern societies is an absolute necessity for economic development and the creation of widespread wealth and prosperity.
Public banking can address both these needs and bring American banking into the 21st century
Mike Krauss is a director of the Public Banking Institute and chairman of the Pennsylvania Project. www.papublicbankproject.org Email mike@mikekrausscomments.com
Sunday, April 1, 2012
Public Banking and the Post Wall Street Era
Public banking: A new era in state and municipal finance
By Mike Krauss
Bucks County Courier Times
Like state and municipal financial officers across the nation, Ohio Treasurer Josh Mandel is charged with the stewardship of a lot of other people’s money, including more than $41 billion in pension funds of Ohio workers.
Two weeks ago he announced plans to remove Bank of New York Mellon and State Street Bank as custodians of those funds, and transfer that responsibility, and business, to JP Morgan and CitiBank.
In a written statement, Mr. Mandel cited allegations of fraud against the present custodians as the basis for his decision. But his alternative leaves a lot to be desired.
The new custodians, JP Morgan and Citibank, are at this moment themselves the target of numerous lawsuits and legal actions on the part of state attorneys general, the SEC, investors, other banks, municipalities and pension funds. Allegations include mismanagement, deception, conflict of interest and fraud. The damages sought range from many millions to many billions of dollars.
And JP Morgan is the Wall Street leader ($1.4 billion in 2011 revenue) in the market of the interest rate swaps that have blown up municipal finances across the United States.
As Ellen Brown, author of “Web of Debt” explains, “The swaps were entered into to insure against a rise in interest rates; but instead, interest rates fell to historically low levels. This was not a flood, earthquake, or other insurable risk due to environmental unknowns or ‘acts of God.’ It was a deliberate, manipulated move by the Fed, acting to save the banks from their own folly in precipitating the credit crisis of 2008 ... rewarding them for their misdeeds at the expense of the taxpayers.”
Brown concludes, “This ‘financial engineering’ is sold, not by disinterested third parties, but by the very sharks who stand to profit from their counter-parties’ loss. Fairness is thrown out in favor of gaming the system.”
From New England to California, municipal governments and authorities have lost billions. Reading, Pa., already reeling from collapsing revenue, a vanishing middle class and jobs sent off-shore, lost $21 million — more than a year’s worth of real-estate taxes.
With the switch from NY Mellon and State Street to JP Morgan and Citibank, the Ohio treasurer may have done no more than take Ohio retirees from the proverbial frying pan and into the fire. It is a dilemma faced by state and municipal financial officers across the U.S.
Where does a steward of public funds — charged to do more than simply stuff money in a mattress and stand guard — bank and invest those funds?
The alternative to the Wall Street casinos is now emerging among state legislators and state and municipal financial officers nationwide. It is to place those funds in publicly owned state and municipal banks, where risk-taking is controlled and 100 percent of the substantial income generated is retained by local communities.
One model is the very successful Bank of North Dakota, which is managed by salaried civil servants with banking experience. The managers charged with day-to-day operations and decision making have no incentives for risk taking — no super-sized salaries, no fabulous bonuses, no recurring commissions for a short-term focus on boosting profit for quarterly statements.
Treasury officers across the nation generally have similar criteria to judge where to bank the funds of which they have stewardship. Safety of principal is foremost, but there must be sufficient liquidity to insure all anticipated demands on the funds are met, and a reasonable return.
Wall Street fails on two out of three. The safety of public funds has taken a back seat to private profit, and the return is diminished by commissions and fees to Wall Street managers, who all are paid — it is fair to say — a lot more than any manager in a state treasury or municipal finance department.
In fact, a public bank can return many times more on principal than Wall Street could hope to match, because capital, assets and deposits of the public bank can be leveraged — as with any bank — to create credit directed into the community in partnership with community banks, credit unions, savings and loans and local authorities, to generate economic development, jobs and tax revenue.
This is the real “multiplier effect” that never materialized when Congress and the Federal Reserve funneled first hundreds of billions, and then trillions into rescuing Wall Street from its premeditated recklessness.
With respect to municipal bonds and “hedging” in the complicated world of modern finance and interest-rate fluctuation, a public bank could buy municipal bonds at the market rate (And taxpayers would pay the debt service to themselves); and if it were deemed prudent, hedge the interest rates on their own bonds — cutting out the Wall Street middleman who is now playing everybody, as even Wall Street insiders have now begun to attest.
Seventeen states and a growing number of municipalities are now taking a serious look at public banking: keeping their substantial assets close to home, invested locally and managed prudently.
The first national Public Banking In America Conference takes place in Philadelphia at the end of April. We encourage state and municipal treasury officials to join this discussion and take an active role in shaping the post-Wall Street era in state and municipal finance.
Mike Kraussis a director of the Public Banking Institute and chair of the Pennsylvania Project. www.papublicbankproject.org Email mike@mikekrausscomments.com
Sunday, March 25, 2012
The New Religion
Seasons of light, seasons of darkness
By Mike Krauss
Bucks County Courier Times
There have been times in which the human spirit soared and civilization flourished: the Athenian democracy, the Renaissance, the Enlightenment and Age of Reason.
The last two led to the epoch changing declaration sent forth from Philadelphia to the world in 1776, and the creation of modern western democracy.
Seasons of light.
But there are also seasons of darkness. We are in one now.
This is an era in which the powerful exploit the powerless with ruthless impunity — grasping, gouging, cheating and stealing, using and abusing. Democracy was thought to be a check on the descent of humankind into another dark age, but it has not worked out that way.
Democracies, we have learned, can be subverted and devolve into oligarchic tyrannies. Concentrations of wealth lead to concentrations of power that tend to ever more concentration of the resources and wealth of nations in the hands of the few, the arrogant, the self absorbed.
But the memory of the seasons of light lingers in the collective human consciousness, and the purveyors of darkness always feel compelled to offer up some reasons, some philosophy or ideology to explain why darkness is the “natural” and therefore just state of human affairs.
These are excuses for indifference.
In this season of darkness, as millions are reduced to ever expanding poverty and insecurity, and the cherished rights and liberties of Americans are subverted by their government, the powerful justify their privilege with a new gospel: material riches are the measure of all worth, people without such riches are worthless, and their rights are of no consequence.
The new god of American idolatry, exported globally, is private profit, to which every knee must now bend: presidents and prime ministers, congresses and parliaments, and the peoples of the nations.
The most notable prophet of this new gospel is the now dead iconoclastic sociopath, Ayn Rand. But it has been embraced and proclaimed by a host of her disciples, from former Fed Chairman Alan Greenspan — chief architect of the expropriation of the wealth of the middle class — to leaders in Congress and a multitude of “post partisan” priests and acolytes positioned throughout American government, business and media to enforce this brave new world of the self-sanctified “Masters of the Universe.”
What is remarkable about the ascent of this new religion is how little resistance it has met from the one it is displacing — Christianity. And I keep wondering, where is the American church in all this?
By “the American church,” I do not mean the pseudo-Christian tribalism of contemporary American politics, left and right. That is no more than majority social custom dressed up as the Law: the long canon of do’s and don’ts appended to the Ten Commandments, laws which God apparently meant for us, but never got around to.
Every generation adds new ones.
Thou shall not dance. Thou shall not have long hair. Thou shall not wear fur or eat meat. Thou shall not occupy public property or public attention.
They lead to absurdities. Thou shall oppose abortion, but support capital punishment. Thou shall oppose war, but support women in combat.
Some are new interpretations of old favorites. In ancient times, an “unruly” son could be stoned to death. Now, for some Christians, it’s the gay son.
And now as then, women are treated as chattel, objects to be controlled.
By “the American church,” I mean the church of the Gospels and the example of Christ — the continuous act of reaching out to the other. The Christian church.
Unlike earlier times in our history, when Christian abolitionists, suffragettes, civil rights and peace advocates spoke loud and clear with iron resolve, the Church today seems strangely mute.
Who in the Church now stands to demand, without equivocation or excuse, a government and policies that embrace the absolute and unequivocal equality of every man, woman and child; an equality bestowed freely by the loving God of all, and not dependent on any human authority or institution, or sanctified by material wealth?
To be sure, there are voices raised. But many are secular, and make their case based on the “human rights” said to be inherent in the “Natural Law.” But that is not compelling.
The “Natural Law” is not our refuge. There is nothing benign about nature. A tsunami destroys in its path the just and the unjust alike. The stronger infant must be taught not to take the food or the toy of the weaker. In the jungle, predators kill off the young, old and infirm.
As governments do today.
The Christian Gospels are a call to neither codes of behavior nor nature, but to the example of godliness above both social custom and nature. A call to the light.
Indifference is the heart of the darkness that now threatens the lives, liberty and security of many millions. Christians should be leading by example to the light that overcomes that darkness.
Mike Krauss was a pupil of the late Rev. Stanley A. Powell Jr., long time Rector of St. Paul’s Episcopal Church, Levittown. Email: mike@mikekrausscomments.com
By Mike Krauss
Bucks County Courier Times
There have been times in which the human spirit soared and civilization flourished: the Athenian democracy, the Renaissance, the Enlightenment and Age of Reason.
The last two led to the epoch changing declaration sent forth from Philadelphia to the world in 1776, and the creation of modern western democracy.
Seasons of light.
But there are also seasons of darkness. We are in one now.
This is an era in which the powerful exploit the powerless with ruthless impunity — grasping, gouging, cheating and stealing, using and abusing. Democracy was thought to be a check on the descent of humankind into another dark age, but it has not worked out that way.
Democracies, we have learned, can be subverted and devolve into oligarchic tyrannies. Concentrations of wealth lead to concentrations of power that tend to ever more concentration of the resources and wealth of nations in the hands of the few, the arrogant, the self absorbed.
But the memory of the seasons of light lingers in the collective human consciousness, and the purveyors of darkness always feel compelled to offer up some reasons, some philosophy or ideology to explain why darkness is the “natural” and therefore just state of human affairs.
These are excuses for indifference.
In this season of darkness, as millions are reduced to ever expanding poverty and insecurity, and the cherished rights and liberties of Americans are subverted by their government, the powerful justify their privilege with a new gospel: material riches are the measure of all worth, people without such riches are worthless, and their rights are of no consequence.
The new god of American idolatry, exported globally, is private profit, to which every knee must now bend: presidents and prime ministers, congresses and parliaments, and the peoples of the nations.
The most notable prophet of this new gospel is the now dead iconoclastic sociopath, Ayn Rand. But it has been embraced and proclaimed by a host of her disciples, from former Fed Chairman Alan Greenspan — chief architect of the expropriation of the wealth of the middle class — to leaders in Congress and a multitude of “post partisan” priests and acolytes positioned throughout American government, business and media to enforce this brave new world of the self-sanctified “Masters of the Universe.”
What is remarkable about the ascent of this new religion is how little resistance it has met from the one it is displacing — Christianity. And I keep wondering, where is the American church in all this?
By “the American church,” I do not mean the pseudo-Christian tribalism of contemporary American politics, left and right. That is no more than majority social custom dressed up as the Law: the long canon of do’s and don’ts appended to the Ten Commandments, laws which God apparently meant for us, but never got around to.
Every generation adds new ones.
Thou shall not dance. Thou shall not have long hair. Thou shall not wear fur or eat meat. Thou shall not occupy public property or public attention.
They lead to absurdities. Thou shall oppose abortion, but support capital punishment. Thou shall oppose war, but support women in combat.
Some are new interpretations of old favorites. In ancient times, an “unruly” son could be stoned to death. Now, for some Christians, it’s the gay son.
And now as then, women are treated as chattel, objects to be controlled.
By “the American church,” I mean the church of the Gospels and the example of Christ — the continuous act of reaching out to the other. The Christian church.
Unlike earlier times in our history, when Christian abolitionists, suffragettes, civil rights and peace advocates spoke loud and clear with iron resolve, the Church today seems strangely mute.
Who in the Church now stands to demand, without equivocation or excuse, a government and policies that embrace the absolute and unequivocal equality of every man, woman and child; an equality bestowed freely by the loving God of all, and not dependent on any human authority or institution, or sanctified by material wealth?
To be sure, there are voices raised. But many are secular, and make their case based on the “human rights” said to be inherent in the “Natural Law.” But that is not compelling.
The “Natural Law” is not our refuge. There is nothing benign about nature. A tsunami destroys in its path the just and the unjust alike. The stronger infant must be taught not to take the food or the toy of the weaker. In the jungle, predators kill off the young, old and infirm.
As governments do today.
The Christian Gospels are a call to neither codes of behavior nor nature, but to the example of godliness above both social custom and nature. A call to the light.
Indifference is the heart of the darkness that now threatens the lives, liberty and security of many millions. Christians should be leading by example to the light that overcomes that darkness.
Mike Krauss was a pupil of the late Rev. Stanley A. Powell Jr., long time Rector of St. Paul’s Episcopal Church, Levittown. Email: mike@mikekrausscomments.com
Tuesday, March 13, 2012
The new "Untouchables"
Moving on with an election sham
By Mike Krauss
Bucks County Courier Times
Perhaps like you, I’m on the mailing list of all sorts of organizations, whether I particularly agree with their stated purposes or not. MoveOn is one of those. It’s one way to keep track of what’s going on in American politics and government.
I just received another invitation to a MoveOn event, this one urging me to a rally in Bensalem Township this week, to “join us in calling on President Obama to stand with the 99 percent and take on the housing crisis.”
The invitation goes on to explain that “President Obama has the opportunity to be a homeowner hero — by pushing Fannie Mae and Freddie Mac to reduce mortgages to their fair market value. This will help millions of underwater homeowners and help get our economy back on track.”
It left me wondering, are the organizers at MoveOn hopelessly naive, or hopelessly cynical?
The administration has already taken a stand to address the tidal wave of foreclosures that still rolls across America: protect Wall Street and the 1 percent, whatever it takes.
The protection began when candidate Obama closed ranks with the 1 percent to push the Wall Street bailout through Congress.
The protection continued when President Obama installed Wall Street’s man as secretary of the Treasury, who as chairman of the Federal Reserve in New York had already collaborated with Bush Treasury Secretary Paulson to make sure Wall Street was rescued, whatever the cost to the American people and no matter the magnitude of the criminal fraud that caused the collapse.
Mr. Obama went on protecting Wall Street and the 1 percent when he re-appointed Fed Chairman Bernanke, who showered Wall Street with trillions of almost interest-free money, while Main Street collapsed.
And while Main Street was starved of the credit vital to a growing economy and jobs creation, the Fed pushed interest rates to near zero, in turn destroying the savings of millions of Americans — many senior citizens on fixed incomes, who now receive nothing for their savings, as prices rise.
And for three years, the Obama Justice Department has protected the criminals on Wall Street, as did the Bush administration.
In September 2004, The FBI warned in testimony before Congress that there was an “epidemic” of mortgage fraud and predicted that it would cause a “financial crisis” if it were not stopped.
It was not stopped, and the mortgage fraud exploded. Then, as noted by former regulator William Black and others, in 2008 the FBI geared up to do its job and go after the frauds, but “the Department of Justice (DoJ) deliberately, and successfully, sabotaged this effort to investigate the major frauds.”
Black, who led the effort that successfully prosecuted more than 900 criminals in the finance industry at the heart of the Savings and Loan Scandal of the 1980s, summed up the heart of the matter of the current scandal — a scandal of a magnitude never before seen.
He wrote, “The elite banking frauds who caused the Great Recession through their looting have done so with impunity.”
The new “Untouchables.”
Not one has been indicted on criminal charges — just a few civil suits and meaningless fines covered by insurance or picked up by shareholders.
Finally, and perhaps MoveOn missed it, there has been an announcement of the administration’s final solution to the housing crisis. It’s a one-two punch to the middle class.
First, the jab. A deal was cut to let Wall Street off the hook in exchange for a $25,000 reduction in mortgage principal for about 1 of 12 million homeowners still “underwater;” and about 750,000 of the many millions who lost homes will get a check for $2,000.
I can’t wait for the photos of members of Congress or mega-bank CEOs handing out checks to joyful homeowners and the now homeless dispossessed, sometime before the November elections.
Well, maybe not the homeless. First, you would have to find them; and second, someone might see them.
Then, the hook. The huge inventory of foreclosed and vacant homes of formerly middle class Americans which the federal government bought at above market prices to protect the big banks’ balance sheets, will now be sold off to “qualified investors” — in bulk — who will rent them back to those formerly middle class Americans.
The 1 percent will grow fatter still on the paychecks of renters, while they wait for the value of these assets to once again appreciate. Then they will sell them at a profit taxed at 15 percent as capital gains, and stuff themselves on yet another massive transfer of wealth from the 99 percent to themselves.
So, is the “team” at MoveOn who sign these invitations I receive naive or cynical? I vote naïve.
These invitations are written with all the eagerness of a freshman preening for an invite to the senior prom. They want so desperately to believe they have not been jilted.
And to prove they have not been jilted, they are eagerly helping to orchestrate a program of bought federal elections that will change nothing.
If there is to be a restoration of the prosperity of the American middle class, it will not be led by anybody or any organization now in Washington or party to this election sham.
By Mike Krauss
Bucks County Courier Times
Perhaps like you, I’m on the mailing list of all sorts of organizations, whether I particularly agree with their stated purposes or not. MoveOn is one of those. It’s one way to keep track of what’s going on in American politics and government.
I just received another invitation to a MoveOn event, this one urging me to a rally in Bensalem Township this week, to “join us in calling on President Obama to stand with the 99 percent and take on the housing crisis.”
The invitation goes on to explain that “President Obama has the opportunity to be a homeowner hero — by pushing Fannie Mae and Freddie Mac to reduce mortgages to their fair market value. This will help millions of underwater homeowners and help get our economy back on track.”
It left me wondering, are the organizers at MoveOn hopelessly naive, or hopelessly cynical?
The administration has already taken a stand to address the tidal wave of foreclosures that still rolls across America: protect Wall Street and the 1 percent, whatever it takes.
The protection began when candidate Obama closed ranks with the 1 percent to push the Wall Street bailout through Congress.
The protection continued when President Obama installed Wall Street’s man as secretary of the Treasury, who as chairman of the Federal Reserve in New York had already collaborated with Bush Treasury Secretary Paulson to make sure Wall Street was rescued, whatever the cost to the American people and no matter the magnitude of the criminal fraud that caused the collapse.
Mr. Obama went on protecting Wall Street and the 1 percent when he re-appointed Fed Chairman Bernanke, who showered Wall Street with trillions of almost interest-free money, while Main Street collapsed.
And while Main Street was starved of the credit vital to a growing economy and jobs creation, the Fed pushed interest rates to near zero, in turn destroying the savings of millions of Americans — many senior citizens on fixed incomes, who now receive nothing for their savings, as prices rise.
And for three years, the Obama Justice Department has protected the criminals on Wall Street, as did the Bush administration.
In September 2004, The FBI warned in testimony before Congress that there was an “epidemic” of mortgage fraud and predicted that it would cause a “financial crisis” if it were not stopped.
It was not stopped, and the mortgage fraud exploded. Then, as noted by former regulator William Black and others, in 2008 the FBI geared up to do its job and go after the frauds, but “the Department of Justice (DoJ) deliberately, and successfully, sabotaged this effort to investigate the major frauds.”
Black, who led the effort that successfully prosecuted more than 900 criminals in the finance industry at the heart of the Savings and Loan Scandal of the 1980s, summed up the heart of the matter of the current scandal — a scandal of a magnitude never before seen.
He wrote, “The elite banking frauds who caused the Great Recession through their looting have done so with impunity.”
The new “Untouchables.”
Not one has been indicted on criminal charges — just a few civil suits and meaningless fines covered by insurance or picked up by shareholders.
Finally, and perhaps MoveOn missed it, there has been an announcement of the administration’s final solution to the housing crisis. It’s a one-two punch to the middle class.
First, the jab. A deal was cut to let Wall Street off the hook in exchange for a $25,000 reduction in mortgage principal for about 1 of 12 million homeowners still “underwater;” and about 750,000 of the many millions who lost homes will get a check for $2,000.
I can’t wait for the photos of members of Congress or mega-bank CEOs handing out checks to joyful homeowners and the now homeless dispossessed, sometime before the November elections.
Well, maybe not the homeless. First, you would have to find them; and second, someone might see them.
Then, the hook. The huge inventory of foreclosed and vacant homes of formerly middle class Americans which the federal government bought at above market prices to protect the big banks’ balance sheets, will now be sold off to “qualified investors” — in bulk — who will rent them back to those formerly middle class Americans.
The 1 percent will grow fatter still on the paychecks of renters, while they wait for the value of these assets to once again appreciate. Then they will sell them at a profit taxed at 15 percent as capital gains, and stuff themselves on yet another massive transfer of wealth from the 99 percent to themselves.
So, is the “team” at MoveOn who sign these invitations I receive naive or cynical? I vote naïve.
These invitations are written with all the eagerness of a freshman preening for an invite to the senior prom. They want so desperately to believe they have not been jilted.
And to prove they have not been jilted, they are eagerly helping to orchestrate a program of bought federal elections that will change nothing.
If there is to be a restoration of the prosperity of the American middle class, it will not be led by anybody or any organization now in Washington or party to this election sham.
Friday, March 2, 2012
The Future of the GOP and Democrats
Do the GOP and Democratic Parties have a future?
By Mike Krauss
Bucks County Courier Times
Let’s have some fun, get out the crystal ball and predict the future of the Republican and Democratic parties.
The GOP is easy. It doesn’t have a future.
This is not because its leading candidates for president are (in order) hopelessly artificial, a religious fanatic and a swollen vanity — although that doesn’t help, of course.
The death of the GOP can be read not in a crystal ball, but in the tea leaves, or more precisely the demographics. Demographics are destiny, and the GOP has for decades been the party of the old, white America. And it is going.
Now, as I am one of those — an older, white American, descendent from the German and English speakers who first settled most of the original American colonies — you might think I find this cause for alarm, but I don’t.
The population and birth rates of American racial and ethnic groups have hit critical mass. The former white, mostly north European mainstream will become but one of many tributaries that feed the current, shift the mainstream and cut a new channel in history.
Get over it.
And more, the new America is younger and able to swim in the deeper end of the gene pool, and finds differences of race, religion, culture and social custom less of a threat than many of the older Americans — the GOP base — wading in the shallow end.
This if itself should not have been the death of the GOP. But unlike political parties with a future, the GOP never made an outreach to the future, never made any accommodation with reality. Instead, beginning with Nixon’s “Southern Strategy” and the exodus of southern whites from the Democratic and into the Republican Party, the GOP has bet on the past.
Nixon was a shrewd politician. But his short-term electoral strategy sealed the fate of the GOP. George Bush tried to make the outreach to the fastest growing population of the United States — Hispanics — but he was beaten back.
Now the party is in its death throes. Interestingly, the GOP has decided not so much to circle the wagons for one last stand, but rather to go out guns blazing in one last suicidal, Picket’s Charge.
So the GOP in Congress opposes any compromise, makes no deals, doubles down on its shrinking base and produces a leading candidate for president who surely knows better, plus the afore mentioned fanatic and a puffed up ego.
Mr. Obama is easily the luckiest man to ever run for president. Which brings us to the Democrats.
Clearly, this is a party with a future, if only by default. But wait, what do I see in the crystal ball?
Mr. Obama has built his presidency on the alliance made by Bill Clinton with Wall Street and the 1 percent, and because his party in Congress is as dominated by Wall Street and the established interests of the 1 percent as is the GOP, the Democrats are losing the younger voters that flocked to the Obama banner in 2008.
You’ll find them at Occupy meetings and Ron Paul rallies, because they have no jobs, may never own a home as their parents did, and see the U.S. still chasing after war all over the world as ever more Americans move down the ladder of social mobility. They know they’ve been had.
The Democrats have a civil war on their hands. The party may have a short future.
Professional Democrats like the organizers of MoveOn are trying desperately to move Obama away from his sponsors and paper over the divide, but I don’t see it happening. Although I must caution, as any carnival fortune teller can tell you, the future is murky.
The GOP, in its last charge, is hitting first at the Democrats’ supply lines, trying by any and all means to disenfranchise as many young and non-white voters as possible, and also a lot of senior citizens. (That last makes sense if you want to gut Social Security and Medicare, as the GOP does.)
So the party further narrows its base from older, to older and well-to-do whites. The GOP will fail, Mr. Obama will be re-elected, and nothing will change.
No, wait. I see something.
There is something unclear. I see people who have taken a beating. A lot of them. Is there someone in your past called “middle class?” They are almost all white. And they are angry.
But, it doesn’t matter. I see another market crash again sometime shortly after the November election, all hell will break loose and the elections of 2014 will see the emergence of a new political party in the United States.
Or not.
As I said, it’s murky.
That’ll be two bucks, and thank you.
Tuesday, February 28, 2012
Homes, jobs and a future
Washington has failed us: Where to turn?
By Mike Krauss
Bucks County Courier Times
Home ownership has been the defining characteristic of the American middle class. It has been the basis of physical and economic security; and in turn, the foundation of a stable society.
According to Realty Trac, the trade group most often cited in news reports, in 2006 there were about 267,000 home foreclosures in the United States. In 2007 the number jumped to 405,000. In 2008 it soared to 2.2 million. In 2009, 2.8 million foreclosures were reported; and in 2010, 2.9 million.
Last year the number dropped to 2.6 million as the banks held off on foreclosures while they negotiated a deal with the administration to pardon the colossal fraud in the industry.
But now that the administration has given the biggest banks and their executives a “get-out-of-jail-free” deal, industry experts forecast another tidal wave of foreclosures in 2012. The AP reports that more than 12 million mortgages in the U.S. are now “underwater.”
Let’s say the number of foreclosures for 2012 comes in at “only” at 3 million. That means that in the five years, 2008-2012, 13.5 million homes will have been foreclosed.
On the assumption that most of these were not the homes of individuals, but of families — say two adults and one child — that means that even by this conservative estimate, 40.5 million Americans will have lost their homes over the past five years.
The American middle class is being destroyed.
The deal with the banks heralded by the administration is hopelessly inadequate to the dimension of the need. Only one million out of the 12 million whose mortgages are underwater today may receive a $25,000 reduction in the principal of their loan. And perhaps 750,000 who have already lost their homes will get a check for $2,000.
As one commentator observed, it is as if someone stole your car, and offered to give back the hubcaps.
It is rapacious. And it is virtually unopposed by the nation’s political elite. For example, the GOP candidates for president have met the deal with — silence. Why?
For the same reason all the talk of jobs in 2008 faded with the election. Our federal elections are a sham. The White House and the Congress are for sale.
Until 2010, there were some restraints on the selling and buying of elections. The maximum amount one person could give to a candidate was $2,500; to a political action committee, $5,000, and for a political party committee, $30,800.
But with its high regard for “free speech,” the U.S. Supreme Court ruled that for the new “Super Pacs” and other so called “civic leagues or organizations not organized for profit,” there is no limit to what one person can contribute; and more, the contribution may be kept secret.
The big money started to flow. The price tag for federal elections (president and Congress) in 2008 was about $5 billion. Watchdog groups estimate the price for 2012 at $7 billion.
Do you actually believe that “small donors” in a nation in which 40.5 million people have recently lost their home and millions can find no work are going to provide that kind of money?
It will come from people like the corporate take-over specialist who has contributed $12 million to a GOP Super Pac, and the casino owner who has ponied up $10 million for Newt Gingrich, so far.
Who will the elected then represent? The same people they do now: the less than 1 percent. And what will those they represent get for their money?
More.
More indifference to the unemployed and the homeless, the ill-fed, ill clothed and just plain ill; more ill-advised and fruitless (but money making) military adventures, more license to cheat buyers and investors, and more of what the 1 percent already have in abundance: physical and economic security, and opportunity.
The world will be their oyster.
At the same time, the one third of American young people who do not graduate high school, the one third who graduate with no useful skills, and a generation of college graduates already saddled with huge debt will be lucky to get a job, shucking oysters in the swell restaurants where the 1 percent dine.
There is only one way for the American middle class to begin to take back our democracy and recover its stolen prosperity. People must be put back to work and back in homes.
Homes and jobs will provide the initial relief from the physical and economic insecurity that now afflict tens of millions of Americans, and give the nation an opening to the future.
But don’t look to Washington, Congress or the president for help. To one degree or another, they have all bought into more subsidies for business as a way to “stimulate” the private sector and jobs creation, and a sweetheart deal for the banks that will do nothing to deal with homelessness, and has sold out justice.
The key to the future is local housing initiatives and jobs creation on a heroic scale; to unlock the diversity, talent, industry and faith of the American people.
Washington has failed the American people, and will go on failing for the foreseeable future. Time to look elsewhere.
By Mike Krauss
Bucks County Courier Times
Home ownership has been the defining characteristic of the American middle class. It has been the basis of physical and economic security; and in turn, the foundation of a stable society.
According to Realty Trac, the trade group most often cited in news reports, in 2006 there were about 267,000 home foreclosures in the United States. In 2007 the number jumped to 405,000. In 2008 it soared to 2.2 million. In 2009, 2.8 million foreclosures were reported; and in 2010, 2.9 million.
Last year the number dropped to 2.6 million as the banks held off on foreclosures while they negotiated a deal with the administration to pardon the colossal fraud in the industry.
But now that the administration has given the biggest banks and their executives a “get-out-of-jail-free” deal, industry experts forecast another tidal wave of foreclosures in 2012. The AP reports that more than 12 million mortgages in the U.S. are now “underwater.”
Let’s say the number of foreclosures for 2012 comes in at “only” at 3 million. That means that in the five years, 2008-2012, 13.5 million homes will have been foreclosed.
On the assumption that most of these were not the homes of individuals, but of families — say two adults and one child — that means that even by this conservative estimate, 40.5 million Americans will have lost their homes over the past five years.
The American middle class is being destroyed.
The deal with the banks heralded by the administration is hopelessly inadequate to the dimension of the need. Only one million out of the 12 million whose mortgages are underwater today may receive a $25,000 reduction in the principal of their loan. And perhaps 750,000 who have already lost their homes will get a check for $2,000.
As one commentator observed, it is as if someone stole your car, and offered to give back the hubcaps.
It is rapacious. And it is virtually unopposed by the nation’s political elite. For example, the GOP candidates for president have met the deal with — silence. Why?
For the same reason all the talk of jobs in 2008 faded with the election. Our federal elections are a sham. The White House and the Congress are for sale.
Until 2010, there were some restraints on the selling and buying of elections. The maximum amount one person could give to a candidate was $2,500; to a political action committee, $5,000, and for a political party committee, $30,800.
But with its high regard for “free speech,” the U.S. Supreme Court ruled that for the new “Super Pacs” and other so called “civic leagues or organizations not organized for profit,” there is no limit to what one person can contribute; and more, the contribution may be kept secret.
The big money started to flow. The price tag for federal elections (president and Congress) in 2008 was about $5 billion. Watchdog groups estimate the price for 2012 at $7 billion.
Do you actually believe that “small donors” in a nation in which 40.5 million people have recently lost their home and millions can find no work are going to provide that kind of money?
It will come from people like the corporate take-over specialist who has contributed $12 million to a GOP Super Pac, and the casino owner who has ponied up $10 million for Newt Gingrich, so far.
Who will the elected then represent? The same people they do now: the less than 1 percent. And what will those they represent get for their money?
More.
More indifference to the unemployed and the homeless, the ill-fed, ill clothed and just plain ill; more ill-advised and fruitless (but money making) military adventures, more license to cheat buyers and investors, and more of what the 1 percent already have in abundance: physical and economic security, and opportunity.
The world will be their oyster.
At the same time, the one third of American young people who do not graduate high school, the one third who graduate with no useful skills, and a generation of college graduates already saddled with huge debt will be lucky to get a job, shucking oysters in the swell restaurants where the 1 percent dine.
There is only one way for the American middle class to begin to take back our democracy and recover its stolen prosperity. People must be put back to work and back in homes.
Homes and jobs will provide the initial relief from the physical and economic insecurity that now afflict tens of millions of Americans, and give the nation an opening to the future.
But don’t look to Washington, Congress or the president for help. To one degree or another, they have all bought into more subsidies for business as a way to “stimulate” the private sector and jobs creation, and a sweetheart deal for the banks that will do nothing to deal with homelessness, and has sold out justice.
The key to the future is local housing initiatives and jobs creation on a heroic scale; to unlock the diversity, talent, industry and faith of the American people.
Washington has failed the American people, and will go on failing for the foreseeable future. Time to look elsewhere.
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