Town Hall Meeting

An informative chart, where does this bear market stand? (Click on it for a better view)

Thanks G for the link!

Due to global economic weakness, St. Nick does not have enough money to pay his elves, reindeer, or packaging costs. In this light, Santa has gone to Washington, DC to ask for a slice of the bailout pie.

“Although many of you have been naughty, authorizing the bombing of innocent people in Afghanistan and Pakistan, Iraq and Somalia, I am willing to give you a gift anyway, in return for $12 billion,” Santa said, speaking in front of the House Committee on Financial Services.

It remains to be seen whether Congress will okay the Santa bailout. “We have given over $1 trillion already to banks, insurance companies, and mortgage lenders,” House Rep. Barney Frank said. Multiple congressmen admitted they would probably pass this bailout, because they would miss their Christmas gifts too much. When asked why Santa should be considered for a bailout, House Rep. Spencer Bachus said, “It’s one thing for gross, poor kids to not get any toys on Christmas, but when my kid is affected by Santa’s financial struggles, well, it’s time to take action.”

It was noted that Santa did fly his usual private sleigh and team of reindeer. There were only 8 reindeer however, as Blitzen was sold to Donald Trump in Santa’s first tranche of liquidating his assets.

Eat your heart out Onion!

From the beaten down regular US citizen…

I tend to pick emotionally unavailable governments…So even though America steals my money to pay off gambling debts, beats me senseless, kicks my cat through a window, then goes out on power-drunken binges, bombing people, poisoning the planet, and annihilating whole civilizations — I know that, deep down, America really loves me

http://mrzine.monthlyreview.org/day131008.html

From a 37 year old hedge fund manager….

The boss of a successful US hedge fund has quit the industry with an extraordinary farewell letter dismissing his rivals as over-privileged “idiots” and thanking “stupid” traders for making him rich….All of this behaviour supporting the aristocracy only ended up making it easier for me to find people stupid enough to take the other side of my trades. God bless America.

http://www.guardian.co.uk/business/2008/oct/18/banking-useconomy

Thanks G for the links!

Alan Greenspan, who led the Federal Reserve for 18 years and pushed through the Gramm-Leach-Bliley Act that led to the expansion of banks into the brokerage, insurance, and investment banking businesses.

According to his testimony to Congress today, Greenspan was “shocked, shocked” that he was wrong to believe “banks in operating in their self-interest would be sufficient to protect their shareholders and the equity in their institutions.” Suuure, we believe you Greenspan, just as we all believed Captain Renault in the film Casablanca.

I’m really disappointed that people think that a law meant to help poor people own their homes is the cause of this systemic financial crisis. I want to lay out why this is not only wrong according to all data out there, but is reprehensible to even bring up. And I know that this is a right wing talking point lately, so it must be addressed.

The Community Reinvestment Act (created in 1977 and updated in 1995) is not the problem here. Other than just being racist code for saying blacks can’t pay their bills, its flat out wrong. THE DATA IS VERY CLEAR ON THIS.

Here is one link that may just explain it all. It actually has data and links to data, so I’m not sure if people who believe this stuff will actually read it, but here it is: http://www.businessweek.com/investing/insights/blog/archives/2008/09/community_reinv.html

The main quote from this article: “Not surprisingly given the higher degree of supervision, loans made under the CRA program were made in a more responsible way than other subprime loans.”

Here is a quote from an interview on Bill Moyers show that dealt with this right wing talking point…

[Using sub-prime borrowers and minorities] as a wedge issue to make people who pay their mortgages believe that the people who are getting the benefit of the 700 billion dollars, that we’re being asked to pay, are poor, minority people who caused the crisis.

This is unconscionable. This problem is not a problem that was caused by the Community Reinvestment Act. The data is very clear that the Community Reinvestment Act loans were being offered in a way to people that were much more responsible and had none of the characteristics of
default that are being attributed in this discussion. And what this does is to say, this problem is a problem that was caused by black people.

And it means that it gives an opportunity to bring up that old wedge. But I think the people in the country are smarter today. I just don’t think it’s going to fly. I think that people understand that the enemy is not a person who got a home loan and was tricked into getting that loan by a fast-talking broker who originated the loan but that the problem was the securitization process, the high leveraging that Wall Street was doing, the lack of regulation.

Watch the whole interview here. The discussion on the Community Reinvestment Act starts 8 minutes in.

The Gramm-Leach-Bliley Act, passed in 1999, was a huge part of this whole crisis. It is the main reason that banks are failing, because it allowed real banks, subject to regulation, to combine with unregulated investment banks. The problem with that is the investment bank side of the business can become so toxic that it can take down the normal bank part of the conglomerate. The risky, unregulated companies are the ones going down: Lehman, Bear Stearns, Morgan Stanley, etc. The regulated ones that are still mainly just banks: Bank of America, Wells Fargo, Chase, are still standing, for now. The deal, made in the Glass-Steagall Act passed in 1933, was that if you are a bank and want to be FDIC insured, you must follow regulations. One of which is you must maintain a minimum amount of capital in order to be able to pay back your customers. The ratio was 8 to 1, I think. Gramm of Gramm-Leach-Bliley, is the Phil Gramm who was chief economic advisor to McCain until he made his “whiners” and “mental recession” comments. He ran UBS bank which is now going down in flames. He was McCain’s front runner for Sec. of Treasury and may still have been until this whole financial crisis blew up.

Some of what they say about the Democrats is true. Obama does have Fannie Mae and Freddie Mac problems. Bill Moyers (once again did the leg work on this) shows how both our beloved Presidential saviors have their hands dirty…

Obama is second among members of Congress in donations from Fannie Mae and Freddie Mac’s employees and political action committees, even though he’s only been in the Senate since 2005. The former chairman of Fannie Mae originally led Obama’s vice presidential search committee but had to step down in a controversy over favorable loans he received, while at Fannie, from a company doing business with Fannie. Among Obama’s contributors are three directors and one senior vice president of the two companies. Furthermore, Obama’s fellow Democrats in Congress have long been enablers of both corporations.

And what about John McCain? His entire campaign team stepped right out of a predator’s ball. His confidante and top adviser lobbied several years for Freddie Mac. His deputy fundraiser lobbied Fannie Mae, and his campaign manager (Rick Davis) lobbied for both of them, leading a coalition of beltway insiders whose goal was to “stave off regulations” that might have short circuited this nightmare. One wealthy member of Freddie Mac’s board has contributed more than $70,000 to McCain and Republican Party members working for McCain’s election. Even the guy who vetted John McCain’s vice presidential options is a former lobbyist for Fannie Mae.

Obama also has Robert Rubin and Larry Summers on his team, and they supported Gramm-Leach-Bliley. Clinton signed that terrible bill at their request. Republican Alan Greenspan also pushed hard for that bill. Democrats are not guilt free in this. Dodd was a part of it too, and so is Barney Frank. But I would say 40-50% of Democrats are complicit, while 90% of Republicans are complicit.

THE REAL PROBLEM: “A housing bubble, a mortgage bubble, an equity bubble, a bond bubble, a credit bubble, a commodity bubble, a private equity bubble, a hedge funds bubble are all now bursting at once in the biggest real sector and financial sector de-leveraging since the Great Depression” (quote from NYU professor Roubini). In housing, greedy companies gave out all these crappy loans so they could make their $2000 commission (called closing costs). Note that the higher the price of the house, the higher the commission, so high prices were in their favor too. They also didn’t care if the loan was even paid back because Wall Street had created a new thing in the 80’s where home loans could be bought from the primary lenders and sold as securities in bundles. The bundles sounded great because when you pool all these loans together, the risk is spread. So lots of folks bought these things on the promise they were “safe,” such as the School Boards in Kansas and pension funds in Iceland. Wall Street in the meantime made billions on commissions for selling these stupid things, again, whether or not anyone defaulted on their loan. So the problem is a lack of regulation, it is so blatantly clear. Go research the funding of US regulatory bodies, such as the SEC. Their budgets are amazingly small, even after the debacle of Enron and others just 7 years ago. THESE ASSHOLES JUST WANT TO BLAME POOR BLACK PEOPLE.

If you want the whole housing thing explained in cartoon form, see this.

If you have some time, check this speech out, I think she represents the best of the future for the Left. She was asked by faculty to speak at the University of Chicago last week to counter the proposed $200 million “Milton Friedman Institute.” The speech is excellent, and directly relates the Milton Friedman ideas with what is happening to the economy today. You may have run across her before. Here are some really good excerpts:

His thoughts were enormously profitable. And he was rewarded. His work was rewarded. I don’t mean personally greedy. I mean that his work was supported at the university, at think tanks, in the production of a ten-part documentary series called Freedom to Choose, sponsored by FedEx and Pepsi; that the corporate world has been good to Milton Friedman, because his ideas were good for them.

…what we are seeing with the crash on Wall Street, I believe, should be for Friedmanism what the fall of the Berlin Wall was for authoritarian communism: an indictment of ideology.

Read the transcript here:
http://www.democracynow.org/2008/10/6/naomi_klein#
Or watch the video here. Her speech starts about 11 minutes into the program.
http://www.democracynow.org/2008/10/6/stream

One of my biggest worries about Obama is that his economic policies will be as right wing as Bill Clintons. And the fact that Obama taught at the University of Chicago and has some “chicago boys” on his economic team is scary. But of course Obama is miles ahead of McCain on most issues, even economic ones, so what can we do?

I was watching The News Hour with Jim Lehrer tonight to get some sane discussion and analysis of the debacle going on right now in the U.S. This quote from Politico.com’s Jeanne Cummings made my blood boil:

And I was hearing that their calls were like 99 percent to 1, you know. It was the local community bankers who were saying, “Please do this, because we’re next.” But otherwise it was very negative public response to this. And then, of course, we had some partisan petulance. I mean, it was sort of Washington at its worst. It was a really toxic mix.

So, Jeanne, of a company called POLITICO, you say the fact that congress actually responded to the will of the people was “Washington at its worst!” This is exactly what is wrong with this country since its founding. The leaders in Washington, and their surrogates that are sent out to “analyze” for we the people, have disdain for popular opinion. Alexander Hamilton referred to the American people as “the great beast.” That is why the people were not allowed to vote for their Senator until 1913! And here we find ourselves in a very serious national problem, where a democracy should let the people decide our destiny. Yet the powers that be, and their surrogates like Jeanne Cummings, the Cato Institute, the Heritage Foundation, AEI, the Wall Street Journal, etc, etc must wrest power from the people for our own sake.

Democracy is a form of government, capitalism is a form of economics. If we vote for socialism, or for the investment banks to pay for their crimes, or for anything, then so be it. That is the will of the people. All you who want to spread democracy around the world, that is how it works. Lets start here at home, and the House rejecting this bailout was a great start.

Even our little blog has had 3 entries on the giant red alarms leading us up to this point, post 1, post 2, and post 3, dating back to early July. So ANYONE who says they had no way of seeing this coming is completely full of it. I repeat, this financial meltdown was expected.

To stay a little ahead of the game, check out one of our recommended blogs by NYU professor Nouriel Roubini. He has been sounding the alarm on this since at least early 2007. Oh, and for those who say where was Congress to sound the alarm? the guy who wrote this article is Michael Hudson, Dennis Kucinich’s chief economic adviser. People have been sounding the alarm, it’s just that the national media has completely dropped the ball, (think WMD). They are only interested in one thing: profit, and therefore ratings, NOT NEWS. Speaking of not in the news, the proposed defense budget for 2009 is over $600 billion. That is more than the defense budget of all other nations combined! You’ll have to learn about this from the Asia Times. If you don’t believe them, check it out on the white house website. We the people have got to stop reckless privatization and an insane war budget, let’s start now!

Again, quietly, on a Friday after the stock market is closed and all the cable news networks are running repeats, another bank is shut down

http://www.newsday.com/business/nationworld/ats-ap-bank-closure-silver-statesep05,0,7776187.story

Note that McCain’s son was on the board of this bank and was a member of their accounting committee until 1 month ago. And perhaps more significantly, it appears Fannie Mae and Freddie Mac are going to be taken over by we the people by Monday…all $5 trillion in loans they have outstanding.

http://news.yahoo.com/s/ap/20080906/ap_on_bi_ge/mortgage_giants_crisis

On the west coast Friday afternoon, when most people just want to get home from work and relax, something major happened – a major US bank failed. This means that anyone with more than $100,000 in their account will not see their money since it is not covered by the FDIC. Thanks G for the links below:

“The takeover of IndyMac came amid rampant speculation that the federal government would also have to take over lenders Fannie Mae and Freddie Mac, which together stand behind almost half of the nation’s mortgage debt.”:
http://thinkprogress.org/2008/07/12/indymac-seized-by-regulators-marking-second-largest-bank-failure-in-us-history/

….
“The federal government took control of Pasadena-based IndyMac Bank on Friday in what regulators called the second-largest bank failure in U.S. history. Citing a massive run on deposits, regulators shut its main branch three hours early, leaving customers stunned and upset.”:
http://www.latimes.com/business/la-fi-indymac12-2008jul12,1,7375643.story

….
“No advance notice is given to the public when a financial institution is closed.”:
http://indymac.com/
http://www.fdic.gov/bank/individual/failed/IndyMac.html

I think it’s also informative to see who is on IndyMac’s board which the LA Times article did a good job of at least mentioning.

“IndyMac’s board boasts a number of California luminaries. Among the directors, according to a proxy statement the company filed in March, is Pat Haden, 55, a former star quarterback for USC and the Los Angeles Rams, who has been a partner of Riordan, Lewis & Haden, the investment firm founded by former Los Angeles Mayor Richard Riordan, since 1987.

Other directors include Lyle E. Gramley, 81, a former governor of the Federal Reserve; Bruce G. Willison, 59, former dean of the Anderson Graduate School of Management at UCLA; and Lydia H. Kennard, 53, former executive director of Los Angeles World Airports, which operates Los Angeles International.”

And I’ll bet a dollar to a dime that all of them will never have any problems finding another swanky board job even with this disaster under their watch

I am going to miss his insights a ton, we all lost a very important comedian yesterday. Check out this routine analyzing the first Bush, first Iraq War…We Like War

A group of folks at a dinner on New Year’s Eve in 2005 decided to “unplug from the matrix” and stop being a conspicuous consumer for one full year. This compact has gained a lot of traction because it not only does good for the community, but it also feels good to do things other than going to the mall. And saving a lot of money helps too! Check out one of the original newspaper reports here.

The basic rule is not to buy anything new for one year. They feel the current climate crisis and economic and socioeconomic crises are a result of out of whack consumerism. They have a blog, and a yahoo group.

Check out their original blog post from 2006: http://sfcompact.blogspot.com/2006/01/new-years-resolution.html

Here is the main picture on “The Compact” Yahoo Group web page, it explains it all…

Get ready for all you need to know about what is going on in the unregulated, uber free market economy we have going, in the subprime primer.

You can download the power point slides here by right clicking this link.

…and get angry!

and this doesn’t even mention the deaths and lives ruined.

-Thanks Narda and Topy for the link!

Another mass protest in Los Angeles, one of many around America this weekend. Here are some pictures. The war is 4 1/2 years old now. It is unbelievable how the reasons for the war were all completely proven false, yet the war goes on. WTF! I estimate the crowd at around 7500.

In April 2006 at Johns Hopkins University, a student asked a question about what the legal status of private military contractors is in Iraq. Bush dodged the question, see the video below in case you never saw this. The current situation with Blackwater and the other 120,000 to 180,000 private military contractors in Iraq shows you just how little has actually been done in this area. One theory on why Bush answered the way that he did here (specifically the word “delegation”) is so he could avoid any problems during war crimes trials. No matter what his reason is, the answer is unacceptable and the mainstream media is complicit by not getting the answer to this question back in 2003, let alone 2006 or 2007.

Video clip from the Onion News Network: Are Americans Rich?

Thanks G for the link!

Check out this short film (about 7 minutes). The film was made to supplement Naomi Klein’s new book, “The Shock Doctrine.” Klein is an excellent writer and is one of the smartest leaders of the young movement for peace and democracy.

Or as some prefer to call it, the anti imperialist or anti capitalist movement?

If you listen to nothing else from that excellent interview by Hudson, start at minute 40. Find out what Greenspan and the big moneymen know about keeping people in line. And note that Hudson is presidential candidate Kucinich’s new chief economic advisor.

reposted: http://www.kpfa.org/archives/index.php?arch=21767

-Thanks G for the link!

I got a Bachelor’s degree in Economics, and I think this cartoon gave me plenty more to think about. How many of us really understand how our monetary system works? Maybe 1% or fewer? Check out the cartoon here. The title is “In Debt We Have Trusted,” For over 300 years

Here are some images I like…