Naomi Klein on Anti-Union Bills and Shock Doctrine American-Style: "This is a Frontal Assault on Democracy, It’s a Kind of a Corporate Coup D’Etat"

Naomi Klein on Anti-Union Bills and Shock Doctrine American-Style: "This is a Frontal Assault on Democracy, It’s a Kind of a Corporate Coup D’Etat"
Democracy Now

As a wave of anti-union bills are introduced across the country following the wake of Wall Street financial crisis, many analysts are picking up on the theory that award-winning journalist and author Naomi Klein first argued in her 2007 bestselling book, The Shock Doctrine: The Rise of Disaster Capitalism. In the book, she reveals how those in power use times of crisis to push through undemocratic and extreme free market economic policies. “The Wisconsin protests are an incredible example of how to resist the shock doctrine,” Klein says.

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Julie L. MacArthur: From Fenians to financiers -- James Connolly and the Irish meltdown

(Originally read a revised edition "Mortgaging Ireland: Financial Crisis & Socialist Resistance" published in the March 2011 issue of Monthly Review)

From Fenians to financiers: James Connolly and the Irish meltdown
By Julie L MacArthur
Rabble (Canada)

A spectre is haunting Ireland -- the spectre of James Connolly.

Connolly was executed by a British firing squad for his role in Ireland's 1916 Easter Rising for home rule. Celebrated as a hero of Irish independence by political parties of both the left and right in Ireland, his socialism is all too conveniently overlooked.

It is vital, however, to consider it, for the Irish struggle is one that speaks to the challenges of independence, sovereignty and democratic freedom, both at that time and now. And it is significant for the people of Ireland and of all countries. What value is formal political independence if it is not backed up by economic control; if the real decisions of public policy are made in boardrooms and backrooms rather than main streets and parliaments?

For Connolly:

"If you remove the English army tomorrow and hoist the green flag over Dublin Castle, unless you set about the organisation of the socialist Republic your efforts would be in vain. England would still rule you. She would rule you through her capitalists, through her landlords, through her financiers, through the whole army of commercial and individual institutions she has planted in this country and watered with the tears of our mothers and the blood of our martyrs." (Socialism and Nationalism, p25)

Now back to present-day Ireland.

A who's who of global finance descended upon Dublin in November to "hoist their flags," from the International Monetary Fund (IMF) and the European Central Bank (ECB), to the Rothschild investment bank, Merrill, Barclays, JP Morgan and Goldman Sachs. These power brokers arrived to prevent "contagion" from the financial crisis in this small country of 4.5 million people by lending the Irish state billions of euros to recapitalize insolvent banks and shore up the country's finances.

Unfortunately for the Irish, these actors came armed with the same ideological and policy tools that caused the crisis: a commitment to neoliberal growth models, open markets and the primacy of financial interests over those of labour, sovereignty or independence. Moreover, alternative ideas and paths are lacking from elites in Ireland's two major parties, Fianna Fáil and Fine Gael, as both are proven devotees of this free-market fundamentalism. It was their desire, proclaimed loudly through the 1990s and 2000s, to be "closer to Boston than Berlin" in regulation and finance.

Debt: to infinity, and beyond

The reasons for Ireland's economic collapse have been well covered by the global press in recent weeks. These include: an unsustainable growth model built on extremely low corporate taxes (12.5 per cent) and multinational inward investment, a property bubble fueled by cheap international credit, and politicians far too cozy with domestic banks and developers to regulate them sufficiently.

What is rarely highlighted in the press is the fact that Irish public spending was the casualty -- not the cause -- of the crisis. When Lehman Brothers investment bank collapsed in 2008 and credit markets seized up, Ireland's property bubble burst. As a result, a significant portion of bank assets became worthless and the country's construction and property sectors came to a standstill. The Irish government recapitalized banks with government bonds (totaling more than 176 per cent of GDP in 2009) in return for worthless property assets.

Dublin announced the deepest spending cuts in the history of the Republic to meet the conditions of the Nov. 28 €85 billion IMF and European Central Bank (ECB) loan. The state plans to raise income and sales taxes by €5 billion and cut spending by €10 billion by: reducing welfare payments by €3 billion, eliminating 25,000 public sector jobs and raising sales taxes by two per cent (to 23 per cent) by 2014.

According to economists Simon Johnson and Peter Boone "each Irish family of four will be liable for €200,000 in public debt by 2015." In all, €20.7 billion from the public pension fund was funneled to the banks over the last year and a half.

Perhaps most significantly, the Nov. 24 national budget plan outlined no change in the corporate tax rate of 12.5 per cent (one of the lowest corporate tax rates in Europe) "under any circumstances."

There were alternatives. The government could have required creditors to bear a share of the costs by allowing defaults and some bank failures. They could also have required the companies who have benefitted for years from the corporate tax policy to pay an equal share. Google, for example, reportedly saved $3.1 billion in taxes over the last three years by setting up in Ireland.

More recently, calls to withdraw from the European Monetary Union (EMU) have emerged in order to follow Iceland's lead of currency devaluation (an option denied Ireland). They chose to draw from the public purse instead.

While the IMF is asserts that its work pushing austerity in Ireland is ‘technical not political' the Irish public disagrees, and so do I. What could be more political than the socialization of bank debts and transfers of public wealth in to private hands?

Popular backlash

As the costs of propping up corrupt officials, developers and international bankers becomes increasingly unpalatable, politics in the Republic is shifting left; according to a Dec. 2 poll, Sinn Fein - "we ourselves" in Irish -- is two points higher than the ruling party Fianna Fáil. They won a historically unprecedented by-election seat in Donegal on Nov. 25 and their support in the south has doubled in the past month, from 8 per cent to 16 per cent. Political heavyweight Gerry Adams is giving up his seat in Westminster to run in the Republic's early 2011 election. These gains have opened up the possibility of a coalition with the Irish Labour Party in the New Year. This represents a colossal swing in post-independence Irish politics dominated by 60 years of rightist Fianna Fáil and Fine Gael.

Political opposition to the status quo also transcends electoral politics. On Nov. 27, 2010 close to 100,000 people (the equivalent of 785,000 in Canada) marched through the streets of Dublin. The banners and placards quoted Connolly and other heroes of Irish independence. These protests have been growing in size and frequency over the past year.

Such political developments may be short lived. Free-market party Fine Gael is also gaining politically as more conservative voters swap one establishment party for another.

Furthermore, nearly one in three Irish youth are predicted to leave the country in coming years, to make ends meet in countries like Canada and Australia, thus eroding some momentum for change. Finally the Congress of Irish Trade Unions (CITU) -- the organizer of the largest and most recent rally -- is seen as tainted by years of "social partnership" with ruling parties. Taken together, these factors may undermine the development of a cohesive and coherent political countermovement.

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History for the Future: Rick Wolff on Housing and the Economy

Rick Wolff on Housing and the Economy
History for the Future



This week, guest Richard D. Wolff returns to HFTF. A professor of economics emeritus at the University of Massachusetts-Amherst, and most recently the author of Capitalism Hits the Fan: The Global Economic Meltdown and What To Do About It (2009), Rick was on the show in April discussing the economic crisis and the changes that have taken place in the way capitalism works since the 1970s. In this new episode Rick talks about the origins and significance of the housing crisis facing the United States.

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Matt Taibbi: Why Isn't Wall Street in Jail?

[Courtesy of Democracy Now's interview with Taibbi]

Why Isn't Wall Street in Jail? Financial crooks brought down the world's economy — but the feds are doing more to protect them than to prosecute them
by Matt Taibbi
Rolling Stone

Over drinks at a bar on a dreary, snowy night in Washington this past month, a former Senate investigator laughed as he polished off his beer.

"Everything's fucked up, and nobody goes to jail," he said. "That's your whole story right there. Hell, you don't even have to write the rest of it. Just write that."

I put down my notebook. "Just that?"

"That's right," he said, signaling to the waitress for the check. "Everything's fucked up, and nobody goes to jail. You can end the piece right there."

Nobody goes to jail. This is the mantra of the financial-crisis era, one that saw virtually every major bank and financial company on Wall Street embroiled in obscene criminal scandals that impoverished millions and collectively destroyed hundreds of billions, in fact, trillions of dollars of the world's wealth — and nobody went to jail. Nobody, that is, except Bernie Madoff, a flamboyant and pathological celebrity con artist, whose victims happened to be other rich and famous people.

...

Here's how regulation of Wall Street is supposed to work. To begin with, there's a semigigantic list of public and quasi-public agencies ostensibly keeping their eyes on the economy, a dense alphabet soup of banking, insurance, S&L, securities and commodities regulators like the Federal Reserve, the Federal Deposit Insurance Corp. (FDIC), the Office of the Comptroller of the Currency (OCC) and the Commodity Futures Trading Commission (CFTC), as well as supposedly "self-regulating organizations" like the New York Stock Exchange. All of these outfits, by law, can at least begin the process of catching and investigating financial criminals, though none of them has prosecutorial power.

The major federal agency on the Wall Street beat is the Securities and Exchange Commission. The SEC watches for violations like insider trading, and also deals with so-called "disclosure violations" — i.e., making sure that all the financial information that publicly traded companies are required to make public actually jibes with reality. But the SEC doesn't have prosecutorial power either, so in practice, when it looks like someone needs to go to jail, they refer the case to the Justice Department. And since the vast majority of crimes in the financial services industry take place in Lower Manhattan, cases referred by the SEC often end up in the U.S. Attorney's Office for the Southern District of New York. Thus, the two top cops on Wall Street are generally considered to be that U.S. attorney — a job that has been held by thunderous prosecutorial personae like Robert Morgenthau and Rudy Giuliani — and the SEC's director of enforcement.

The relationship between the SEC and the DOJ is necessarily close, even symbiotic. Since financial crime-fighting requires a high degree of financial expertise — and since the typical drug-and-terrorism-obsessed FBI agent can't balance his own checkbook, let alone tell a synthetic CDO from a credit default swap — the Justice Department ends up leaning heavily on the SEC's army of 1,100 number-crunching investigators to make their cases. In theory, it's a well-oiled, tag-team affair: Billionaire Wall Street Asshole commits fraud, the NYSE catches on and tips off the SEC, the SEC works the case and delivers it to Justice, and Justice perp-walks the Asshole out of Nobu, into a Crown Victoria and off to 36 months of push-ups, license-plate making and Salisbury steak.

That's the way it's supposed to work. But a veritable mountain of evidence indicates that when it comes to Wall Street, the justice system not only sucks at punishing financial criminals, it has actually evolved into a highly effective mechanism for protecting financial criminals. This institutional reality has absolutely nothing to do with politics or ideology — it takes place no matter who's in office or which party's in power. To understand how the machinery functions, you have to start back at least a decade ago, as case after case of financial malfeasance was pursued too slowly or not at all, fumbled by a government bureaucracy that too often is on a first-name basis with its targets. Indeed, the shocking pattern of nonenforcement with regard to Wall Street is so deeply ingrained in Washington that it raises a profound and difficult question about the very nature of our society: whether we have created a class of people whose misdeeds are no longer perceived as crimes, almost no matter what those misdeeds are. The SEC and the Justice Department have evolved into a bizarre species of social surgeon serving this nonjailable class, expert not at administering punishment and justice, but at finding and removing criminal responsibility from the bodies of the accused.

The systematic lack of regulation has left even the country's top regulators frustrated. Lynn Turner, a former chief accountant for the SEC, laughs darkly at the idea that the criminal justice system is broken when it comes to Wall Street. "I think you've got a wrong assumption — that we even have a law-enforcement agency when it comes to Wall Street," he says.

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Frontline: The Warning

The Warning
Frontline (PBS)

In The Warning, veteran FRONTLINE producer Michael Kirk unearths the hidden history of the nation's worst financial crisis since the Great Depression. At the center of it all he finds Brooksley Born, who speaks for the first time on television about her failed campaign to regulate the secretive, multitrillion-dollar derivatives market whose crash helped trigger the financial collapse in the fall of 2008.

"I didn't know Brooksley Born," says former SEC Chairman Arthur Levitt, a member of President Clinton's powerful Working Group on Financial Markets. "I was told that she was irascible, difficult, stubborn, unreasonable." Levitt explains how the other principals of the Working Group -- former Fed Chairman Alan Greenspan and former Treasury Secretary Robert Rubin -- convinced him that Born's attempt to regulate the risky derivatives market could lead to financial turmoil, a conclusion he now believes was "clearly a mistake."

Born's battle behind closed doors was epic, Kirk finds. The members of the President's Working Group vehemently opposed regulation -- especially when proposed by a Washington outsider like Born.

"I walk into Brooksley's office one day; the blood has drained from her face," says Michael Greenberger, a former top official at the CFTC who worked closely with Born. "She's hanging up the telephone; she says to me: 'That was [former Assistant Treasury Secretary] Larry Summers. He says, "You're going to cause the worst financial crisis since the end of World War II."... [He says he has] 13 bankers in his office who informed him of this. Stop, right away. No more.'"

Greenspan, Rubin and Summers ultimately prevailed on Congress to stop Born and limit future regulation of derivatives. "Born faced a formidable struggle pushing for regulation at a time when the stock market was booming," Kirk says. "Alan Greenspan was the maestro, and both parties in Washington were united in a belief that the markets would take care of themselves."

Now, with many of the same men who shut down Born in key positions in the Obama administration, The Warning reveals the complicated politics that led to this crisis and what it may say about current attempts to prevent the next one.

"It'll happen again if we don't take the appropriate steps," Born warns. "There will be significant financial downturns and disasters attributed to this regulatory gap over and over until we learn from experience."

To Watch the Episode

CrimethInc: Egypt Today, Tomorrow the World

Egypt Today, Tomorrow the World
CrimethInc

What is happening—first in Tunisia and now in Egypt—is the beginning of the wave of full-scale revolutions that will inevitably follow the global financial crisis of 2008. Taking place in the wake of the failed “War on Terror,” these revolutions combine the latent force of massive numbers of unemployed youth with the dynamism of modern communication networks. They signal the conclusion of the decade of counter-revolution that followed September 11, 2001. Although they continue the exploration of new technologies and decentralized forms of organization initiated by the anti-globalization movement, the form and scale of these new revolutions is unprecedented. Largely anonymous groups are using the ubiquitous World Wide Web to spark leaderless rebellions against the pharaohs of the global empire of capital.

The self-styled rulers of the world are truly at a loss as to how to understand the new social and technological forces at play; the aging dictator Mubarak is a perfect example of this, but he is hardly the only one of his kind. One can almost smell the fear, not only amongst the despots of China and Saudi Arabia but also the supposed leaders of representative democracies. The contortions the US government has been going through are the most grotesque of all; it isn’t lost on the Egyptian people that the bullets striking down their comrades came from the USA. Egypt receives $1.3 billion dollars of military aid from the US every year. The suppression of “democracy” in the Middle East has been a deliberate policy of the US government: they know popular sentiment would never support their agenda as the military enforcement of global capitalism.

The best efforts of Mubarak’s dying regime to put its fingers in the ears of the world have not silenced the people on the streets of Cairo. Even blocking cell phones and trying to turn off the entire Internet have proved futile. For generations, Arabs and Africans have been silenced, represented by various colonial governments and portrayed as “primitive” and “terrorist” in Europe and the US. Now the people of Egypt are speaking in thunderous unison for freedom—not for political Islam, as demagogues from Iran to Israel would have the world believe. In doing so, they are realizing the ideals to which the US government pays only hypocritical lip service.

Today, the common condition from Egypt to Tunisia is approaching universal unemployment—especially among the younger generations, which comprise the vast majority of population. This is increasingly the case in the United States and Europe as well. Unemployment is no accident, but the inevitable result of the last thirty years of capitalism. Capitalism reached its internal limits at the end of the 1970s; now the factories of every industry produce ever more commodities, while increasing automation renders workers less and less necessary. The only way to make profits off these commodities is to eliminate workers or pay them next to nothing. To discipline the skyrocketing unemployed population and prevent revolt, the police wage a never-ending war on the population. We live in a world overflowing with cheap shit, in which human life is the cheapest of all.

In these conditions, people have nothing to left to lose. Nothing, that is, but their dignity—and it turns out they will not surrender that. It was precisely this innermost core of dignity that led Mohammed Bouazizi to light himself on fire rather than face humiliation at the hands of the police, who in seizing his fruit-selling cart took away the only way he could feed his family. The blaze lit by Mohammed Bouazizi has spread, carried by other unemployed people who thereby transform themselves from abject beggars into world-historical heroes. The people of Egypt are not only burning police cars, they are organizing popular committees to clean the police and other trash off the street, and the streets of Cairo have never felt safer.

It is not surprising that a wave of revolutions should begin now. Not since the days of pharaohs and monarchs has the world been controlled by as senseless a force as the global financial market. As capitalists became less and less able to produce profit from industrial production over the past decades, they had to invent means of profiting based on expected future returns. But in a world of increasingly cheap commodities and poor consumers, how could capitalists keep people buying stuff and still make a profit? They had to invent a way for consumers to continue buying even when they weren’t paid living wages: thus the invention of mass debt. When the sale of real goods can no longer produce profit, profits must be made on increasingly fantastic expected future returns—in other words, on finance.

Yet like any house of cards, debt cannot be built up forever. Eventually, someone wants to be paid back—and so the entire house of cards collapsed under its own weight in 2008. The financial crisis signals a deeper metaphysical crisis of our present order: capitalism is unable to provide for the real material needs of the global population. The high poverty rates in Egypt are not simply the result of mismanagement by Mubarak, but the inevitable consequence of the contradictions of our era.

Their eyes hopelessly clouded by their own ideology and lack of vision, heads of state can only stand dumb and surprised as the crisis goes on and on. They lamely hope to re-start the financial markets through “austerity” or “green” capitalism, refusing to consider systemic change despite the fact that the system cannot even deliver jobs and affordable commodities to people—much less a good life. Just as it took an era of revolution to overthrow the divine right of kings, it will take new revolutions to overthrow the divine right of things: the power of financial capital and its puppet dictators.

Revolutions are never brought about by technology, but rather by the collective action of human beings who radically transform their relationships with each other and the world they share. However, one cannot deny what an important role the World Wide Web has played in Egypt and Tunisia. Especially among cybernetically skilled and predominantly unemployed youth, it enabled people to call for and participate in mass mobilizations without any need of leaders. The demonstrations in Egypt on January 25 were called for by a Facebook page called “We Are All Khaled Said,” named for a victim of police brutality much like Alexis Grigoropoulos in Greece. The page itself was set up by the anonymous “El-Shaheed”—that is, “martyr” in Arabic. Meanwhile, youth throughout the world are mobilizing as Anonymous; in the battle over Wikileaks and more recently in actions against the Tunisian government, Anonymous has showed itself to be a potent new international with an awakening political maturity beyond the message boards of 4chan. Demonstrators’ ability to communicate with large numbers of people and react immediately to events via mobile phones, Twitter, and Facebook is swiftly making previous forms of Leftist and industrial-based political organization obsolete, along with other hierarchical formations such as political Islam.

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Where Are The Jobs? For Many Companies, Overseas: Corporate profits are up. Stock prices are up. So why isn't anyone hiring?

Where Are The Jobs? For Many Companies, Overseas: Corporate profits are up. Stock prices are up. So why isn't anyone hiring?
by Associated Press
Common Dreams

Actually, many American companies are — just maybe not in your town. They're hiring overseas, where sales are surging and the pipeline of orders is fat.

More than half of the 15,000 people that Caterpillar Inc. has hired this year were outside the U.S. UPS is also hiring at a faster clip overseas. For both companies, sales in international markets are growing at least twice as fast as domestically.

The trend helps explain why unemployment remains high in the United States, edging up to 9.8 percent last month, even though companies are performing well: All but 4 percent of the top 500 U.S. corporations reported profits this year, and the stock market is close to its highest point since the 2008 financial meltdown.

But the jobs are going elsewhere. The Economic Policy Institute, a Washington think tank, says American companies have created 1.4 million jobs overseas this year, compared with less than 1 million in the U.S. The additional 1.4 million jobs would have lowered the U.S. unemployment rate to 8.9 percent, says Robert Scott, the institute's senior international economist.

"There's a huge difference between what is good for American companies versus what is good for the American economy," says Scott.

American jobs have been moving overseas for more than two decades. In recent years, though, those jobs have become more sophisticated — think semiconductors and software, not toys and clothes.

And now many of the products being made overseas aren't coming back to the United States. Demand has grown dramatically this year in emerging markets like India, China and Brazil.

Meanwhile, consumer demand in the U.S. has been subdued. Despite a strong holiday shopping season, Americans are still spending 3 percent less than before the recession on essential items like clothing and more than 10 percent less on jewelry, furniture, electronics, and big appliances, according to MasterCard's SpendingPulse.

"Companies will go where there are fast-growing markets and big profits," says Jeffrey Sachs, globalization expert and economist at Columbia University. "What's changed is that companies today are getting top talent in emerging economies, and the U.S. has to really watch out."

With the future looking brighter overseas, companies are building there, too. Caterpillar, maker of the signature yellow bulldozers and tractors, has invested in three new plants in China in just the last two months to design and manufacture equipment. The decision is based on demand: Asia-Pacific sales soared 38 percent in the first nine months of the year, compared with 16 percent in the U.S. Caterpillar stock is up 65 percent this year.

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Robert Scheer: Payback at the Polls

In this live chat session, Robert Scheer responded to readers’ questions and comments about his latest column, “Payback at the Polls,” dealing with the 2010 midterm election.
TruthDig



...

Anderson: The first question is from Bob from Fulton, Mo.: With the president already on record more or less intending to govern as a moderate Republican, what should progressives do in the next two years to influence the conversation?

Scheer: Well, a moderate Republican in the mode of Dwight Eisenhower, who was far better than any of the presidents who came after him, would be welcome. You know, even Richard Nixon favored a guaranteed annual income. What I’m worried about is Obama may do what Clinton did, which was move to the right—to the right of Richard Nixon, to the right of Dwight Eisenhower. And it was Bill Clinton, in response to his reversal in the ’94 election, who ushered in the disastrous radical financial deregulation that caused this whole problem. And Obama, in his extreme stupidity—and I use those words advisedly—turned to the same fools that created this mess under Clinton, to Lawrence Summers and Timothy Geithner, the protégés of that raging genius, Robert Rubin, and gave us this stupidity that said that Wall Street did not need any brakes on the system, any road rules, any rules of engagement.

And as a result, we have 50 million Americans that have either lost their homes or have their mortgages underwater and are thinking of walking away from their homes. We have 44 million Americans living under the official poverty line. We have a disaster going on here, and the people who call themselves progressives, that have sold their soul to the Democratic Party, seem to have an inability to recognize this. They’re yapping cheerleaders. Even Jon Stewart, who I’ve respected in the past, would have Obama on just before the election, and accept this nonsense that, oh, “Summers did a heckuva job.” He only quibbled about the word? This is a disaster that we’ve had. And as a result, the right wing, which can be very dangerous—if they start blaming immigrants, if they cut back needed social programs, yeah, they’re a real danger. And if we don’t do what we have to do to get out of this mess, it’s a really big problem.

Anderson: [Question from Truthdig member chacaboy]: There’s a preamble here. It says, “If Obama had not shown so much deference to Wall Street and the military and such eagerness for an exorbitantly expensive occupation of Afghanistan and excessive military budget, I could have sympathy. But as it is, I cannot distinguish Obama from most Republicans, including George W. Bush.” So now he says: “I would like to ask if there is any truth to the idea that we have something to lose by our critique?” I guess progressives critiquing Obama is the context there. “Is there anything to the argument (i.e. columnist Ruth Marcus) that Obama passed a stimulus package, he got health care done, and he passed financial regulations, and to withdraw support from him now would be to lose more ground by throwing the baby out with the bathwater?”

Scheer: Well, you know, we live in a democracy, and the key to democracy is that we not surrender our common sense or our ability to think. And what she [Marcus] said in that article was just gibberish. I mean, what are we talking about? First of all, the American people have rejected health care. At least half of them find it terrible, and the other half seem to be quite tepid about it. I’m tepid about it. You know, yeah, there are some good things in the health care thing, but there’s no cost control. It forces people to buy health insurance from insurance companies that are not going to do us any favors. This administration gave us something called health reform which is really, at best, mild, and at worst quite costly and disastrous. It certainly is not the thing they should have moved on when they had a banking meltdown, when we had a disaster in the economy. It was a feint. It was an attempt to find some win-win thing which didn’t work out. Health care should not have been the big item on the agenda; it was done for opportunistic reasons, you know, because they didn’t want to confront Wall Street. And instead of spending his capital on making the Wall Street system correct and putting sensible regulations in, he settled for very mild regulations on Wall Street and a very weak consumer agency; he couldn’t even push through Elizabeth Warren as a confirmed appointee with some real power. And as a result, you know, health care basically did not help him, and it’s been mostly a distraction. And the right wing has used it—you know, “socialized medicine” and all that garbage; of course, it’s nothing of the sort.

And so the real problem is that Obama has not only failed to deal with our meltdown; he’s exacerbated it. The stimulus was not effective. An enormous amount of money has been spent making the banks whole. I don’t know why these columnists can’t look at the numbers—the apologists for Obama—why don’t they talk about the over $2 trillion that were spent to take toxic assets off the books of the banks, but not a penny—not a penny really being spent to make people whole who are hurting. Where is the mortgage forgiveness, where is the moratorium on mortgage foreclosures? We don’t even know who owns these homes, 65 million homes, thanks to a system that Bill Clinton helped put in place, with the great liberals at Fannie Mae and Freddie Mac cooperating with the swindlers at Countrywide Mortgage, put in place this Mortgage Electronic Registration Systems so 65 million American homes are owned by a computer bank in Reston, Va., owned by the banks, and we don’t even know who owns these homes.

And so last month we had the highest number of foreclosures, people are in great pain, and progressives still blindly support the president out of some idea that he’s the lesser evil. That’s a betrayal of democracy. We’ve got to call it the way we see it. And the best thing you can do for Obama is to have sharp criticism from the progressive side, and he hasn’t been getting it. He was able to roll over the progressives, he was able to take them for granted, and unfortunately some of those very same progressives were the victims of this folly, like [Sen.] Russ Feingold in Wisconsin. My God, I mean the poor guy was one of the few people who stood against this, and he got overwhelmed by this rage out there. So I really have no sympathy at all for this position. We keep going this way, and it’s going to be a real, a bigger Republican sweep in two years.

To Read the Entire Live Chat and/or Listen To It

History for the Future: Doug Henwood on Politics and the Economic Crisis

Doug Henwood on Politics and the Economic Crisis
History for the Future

... Doug Henwood, editor of the Left Business Observer, host of the radio show, “Behind the News,” and author of Wall Street and After the New Economy. The LBO is a wonderful source for sane analysis of truly troubling, and often baffling, economic and political developments. In the episode we discuss the origins of the economic collapse, the bailout, the significance of health care “reform,” the lack of progressive pressure on the Obama administration, and more.

To Listen to the Episode

Democracy Now: Michael Moore on His Life, His Films and His Activism

Michael Moore on His Life, His Films and His Activism
Democracy Now



In a Democracy Now! special broadcast, we spend the hour with one of the most famous independent filmmakers in the world: Michael Moore. For the past twenty years, Michael has been one of the most politically active, provocative and successful documentary filmmakers in the business. His films include Roger and me; Fahrenheit 9/11; Bowling for Columbine, for which he won the Academy Award; and his latest, Capitalism: A Love Story.

To Watch/Listen/Read the Episode

David Harvey: Crisis of Capitalism

RSAnimate

Simon Johnson: The Quiet Coup

The Quiet Coup
by Simon Johnson
The Atlantic Monthly

...

In its depth and suddenness, the U.S. economic and financial crisis is shockingly reminiscent of moments we have recently seen in emerging markets (and only in emerging markets): South Korea (1997), Malaysia (1998), Russia and Argentina (time and again). In each of those cases, global investors, afraid that the country or its financial sector wouldn’t be able to pay off mountainous debt, suddenly stopped lending. And in each case, that fear became self-fulfilling, as banks that couldn’t roll over their debt did, in fact, become unable to pay. This is precisely what drove Lehman Brothers into bankruptcy on September 15, causing all sources of funding to the U.S. financial sector to dry up overnight. Just as in emerging-market crises, the weakness in the banking system has quickly rippled out into the rest of the economy, causing a severe economic contraction and hardship for millions of people.

But there’s a deeper and more disturbing similarity: elite business interests—financiers, in the case of the U.S.—played a central role in creating the crisis, making ever-larger gambles, with the implicit backing of the government, until the inevitable collapse. More alarming, they are now using their influence to prevent precisely the sorts of reforms that are needed, and fast, to pull the economy out of its nosedive. The government seems helpless, or unwilling, to act against them.

Top investment bankers and government officials like to lay the blame for the current crisis on the lowering of U.S. interest rates after the dotcom bust or, even better—in a “buck stops somewhere else” sort of way—on the flow of savings out of China. Some on the right like to complain about Fannie Mae or Freddie Mac, or even about longer-standing efforts to promote broader homeownership. And, of course, it is axiomatic to everyone that the regulators responsible for “safety and soundness” were fast asleep at the wheel.

But these various policies—lightweight regulation, cheap money, the unwritten Chinese-American economic alliance, the promotion of homeownership—had something in common. Even though some are traditionally associated with Democrats and some with Republicans, they all benefited the financial sector. Policy changes that might have forestalled the crisis but would have limited the financial sector’s profits—such as Brooksley Born’s now-famous attempts to regulate credit-default swaps at the Commodity Futures Trading Commission, in 1998—were ignored or swept aside.

The financial industry has not always enjoyed such favored treatment. But for the past 25 years or so, finance has boomed, becoming ever more powerful. The boom began with the Reagan years, and it only gained strength with the deregulatory policies of the Clinton and George W. Bush administrations. Several other factors helped fuel the financial industry’s ascent. Paul Volcker’s monetary policy in the 1980s, and the increased volatility in interest rates that accompanied it, made bond trading much more lucrative. The invention of securitization, interest-rate swaps, and credit-default swaps greatly increased the volume of transactions that bankers could make money on. And an aging and increasingly wealthy population invested more and more money in securities, helped by the invention of the IRA and the 401(k) plan. Together, these developments vastly increased the profit opportunities in financial services.

Not surprisingly, Wall Street ran with these opportunities. From 1973 to 1985, the financial sector never earned more than 16 percent of domestic corporate profits. In 1986, that figure reached 19 percent. In the 1990s, it oscillated between 21 percent and 30 percent, higher than it had ever been in the postwar period. This decade, it reached 41 percent. Pay rose just as dramatically. From 1948 to 1982, average compensation in the financial sector ranged between 99 percent and 108 percent of the average for all domestic private industries. From 1983, it shot upward, reaching 181 percent in 2007.

The great wealth that the financial sector created and concentrated gave bankers enormous political weight—a weight not seen in the U.S. since the era of J.P. Morgan (the man). In that period, the banking panic of 1907 could be stopped only by coordination among private-sector bankers: no government entity was able to offer an effective response. But that first age of banking oligarchs came to an end with the passage of significant banking regulation in response to the Great Depression; the reemergence of an American financial oligarchy is quite recent.

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John Bellamy Foster and Hannah Holleman: The Financial Elite

(I just got a subscription to Monthly Review and articles like this is why I support their efforts)

The Financial Power Elite
John Bellamy Foster and Hannah Holleman
Monthly Review Press

You mean to tell me that the success of the [economic] program and my reelection hinges on the Federal Reserve and a bunch of fucking bond traders?

—President Bill Clinton

Only twice before in the last century—after the 1907 Bank Panic and following the 1929 Stock Market Crash—has outrage directed at U.S. financial elites reached today’s level, in the wake of the Great Financial Crisis of 2007-2009. A Time magazine poll in late October 2009 revealed that 71 percent of the public believed that limits should be imposed on the compensation of Wall Street executives; 67 percent wanted the government to force executive pay cuts on Wall Street firms that received federal bailout money; and 58 percent agreed that Wall Street exerted too much influence over government economic recovery policy.2

In January 2009 President Obama capitalized on the growing anger against financial interests by calling exorbitant bank bonuses subsidized by taxpayer bailouts “shameful,” and threatening new regulations. Journalist Matt Taibbi opened his July 2009 Rolling Stone article with: “The first thing you need to know about Goldman Sachs is that it’s everywhere. The world’s most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.” Former chief economist of the International Monetary Fund, Simon Johnson, published an article in the May 2009 Atlantic entitled “The Quiet Coup,” decrying the takeover by the “American financial oligarchy” of strategic positions within the federal government that give “the financial sector a veto over public policy.”3

The Financial Crisis Inquiry Commission, established by Washington in 2009, was charged with examining “the causes, domestic and global, of the current financial and economic crisis in the United States.” Its chairman, Phil Angelides, compared its task to that of the Pecora hearings in the 1930s, which exposed Wall Street’s speculative excesses and malfeasance. The first hearings in January 2010 began with the CEOs of some of the largest U.S. banks: Bank of America, JPMorgan Chase, Goldman Sachs, and Morgan Stanley.4

Meanwhile, the federal government has continued its program of salvaging the banks by funneling trillions of dollars in their direction through capital infusions, loan guarantees, subsidies, purchases of toxic waste, etc. This is a time of record bank failures, but also one of rapid financial concentration, as the already “too big to fail firms” at the apex of the financial system are becoming still bigger.

All of this raises the issue of an emerging financial power elite. Has the power of financial interests in U.S. society increased? Has Wall Street’s growing clout affected the U.S. state itself? How is this connected to the present crisis? We will argue that the financialization of U.S. capitalism over the last four decades has been accompanied by a dramatic and probably long-lasting shift in the location of the capitalist class, a growing proportion of which now derives its wealth from finance as opposed to production. This growing dominance of finance can be seen today in the inner corridors of state power.

The Money Trust
Anger over the existence of a “money trust” ruling the U.S. economy reached vast proportions at the end of the nineteenth century and the beginning of the twentieth. This was the time when investment bankers midwifed the birth of industrial behemoths, launching the new era of monopoly capital. In return, the investment banks obtained what the Austrian Marxist economist Rudolf Hiferding, in his great work, Financial Capital (1910), called “promoter’s profits.”5 Hilferding and the radical economist and sociologist Thorstein Veblen in the United States were the two greatest theorists of the rise of the new age of monopoly capital and financial control. Veblen declared that “the investment bankers collectively are the community custodians of absentee ownership at large, the general staff in charge of the pursuit of business….[T]he banking-houses which have engaged in this enterprise have come in for an effectual controlling interest in the corporations whose financial affairs they administer.”6 In the prototypical merger of the period, the creation in 1901 of the U.S. Steel Corporation, the syndicate of underwriters that J.P. Morgan and Co. put together to float the stock, received 1.3 million shares and over $60 million in commissions, of which J.P. Morgan and Co. got $12 million.7

The 1907 Bank Panic, during which J.P. Morgan himself intervened in the absence of a central bank to stabilize the financial sector, led to the creation in 1913 of the Federal Reserve System, aimed at providing banks with liquidity in a crisis. But it also led to charges, first issued in 1911 by Congressman Charles A. Lindbergh (father of the famous flier), of a “money trust” dominating U.S. finance and industry. Woodrow Wilson, then governor of New Jersey, declared: “The great monopoly in this country is the money monopoly.”

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