Still Banking on Fraud

William K. Black | Wednesday 26 January 2011

A truly amazing thing has happened in banking. After the worst financial crisis in 75 years sparked the “Great Recession,” we have

• Failed to identify the real causes of the crisis
• Failed to fix the defects that caused the crisis
• Failed to hold the CEOs, professionals, and anti-regulators who caused the crisis accountable—even when they committed fraud
• Bailed out the largest and worst financial firms with massive public funds
• Covered up banking losses and failures—impairing any economic recovery
• Degraded our integrity and made the banking system even more encouraging of fraud
• Refused to follow policies that have proved extremely successful in past crises
• Made the systemically dangerous megabanks even more dangerous
• Made our financial system even more parasitic, harming the real economy

And pronounced this travesty a brilliant success.

Of Pensions, and Piggybanks: The Challenges of Ensuring a Secure Retirement

Ellen Dannin | Thursday 27 January 2011

Imagine that every week, decade after decade, you faithfully put aside part of your pay in a special piggy bank to provide for your golden years. But when you are ready to retire, your employer takes all your savings back.

Or imagine that, instead of money, your employer deducts money from your paycheck in exchange for IOUs stamped: "Money to paid upon retirement." But when you retire, your employer says no money has been put aside for you.

You did nothing wrong, but you will not have a secure retirement.

The Children Must Play

What the United States could learn from Finland about education reform.

Samuel E. Abrams
January 28, 2011 | 12:00 am

While observing recess outside the Kallahti Comprehensive School on the eastern edge of Helsinki on a chilly day in April 2009, I asked Principal Timo Heikkinen if students go out when it’s very cold. Heikkinen said they do. I then asked Heikkinen if they go out when it’s very, very cold. Heikkinen smiled and said, “If minus 15 [Celsius] and windy, maybe not, but otherwise, yes. The children can’t learn if they don’t play. The children must play.”

In comparison to the United States and many other industrialized nations, the Finns have implemented a radically different model of educational reform—based on a balanced curriculum and professionalization, not testing. Not only do Finnish educational authorities provide students with far more recess than their U.S. counterparts—75 minutes a day in Finnish elementary schools versus an average of 27 minutes in the U.S.—but they also mandate lots of arts and crafts, more learning by doing, rigorous standards for teacher certification, higher teacher pay, and attractive working conditions.

Banking `Toxic Cocktail' Is Too Big to Forget: Simon Johnson

By Simon Johnson - Jan 26, 2011

Bloomberg Opinion

As a senator from Delaware in 2009- 10, Ted Kaufman fought long and hard against the systemic dangers posed by large, highly leveraged U.S. banks. When he left the Senate, at the end of the last Congress, there were some who supposed that his arguments would now get less attention at least from mainstream thinking.

But far from dying out, the points Kaufman made seem to have taken hold within influential government circles.

The latest quarterly report from Neil Barofsky, the special inspector-general for the Troubled Asset Relief Program, is the best official articulation yet of why too big to fail is here to stay. In its executive summary, the document, which was released this week, discusses “perhaps TARP’s most significant legacy, the moral hazard and potentially disastrous consequences associated with the continued existence of financial institutions that are ‘too big to fail.’”

AP Passes Off Dishonest Editorial About Social Security's Finances as a News Story

The insidious ways that conservative narratives bleed into our mainstream economic discourse as objective truths is a dominant theme in my book, and this story by the Associated Press's Stephen Ohlemacher -- ostensibly a piece of reporting rather than opinion -- is one of the most egregious examples I've encountered. Check out the lede:

Sick and getting sicker, Social Security will run at a deficit this year and keep on running in the red until its trust funds are drained by about 2037, congressional budget experts said Wednesday in bleaker-than-previous estimates.

Is it "sick"? Social Security has $2.5 trillion in T-Bills sitting in a trust fund, is financed through 2037 and if nothing were to change it would still be able to pay out higher benefits than it does today, indefinitely.

What Would Ronnie Do?

Obama starts the second half of his term with a set of obstacles similar to those that bedeviled Ronald Reagan. On Reagan’s centennial, the president is looking to the past for inspiration.

by Rick Perlstein
January 23, 2011

Ronald Reagan scored a comfortable victory in 1980, promising a new day in Washington and the nation. Then Reaganomics ran into brick wall. Unemployment—7.4 percent at the beginning of his term—was heading toward 10 percent by the summer of 1982. The gross domestic product declined 1.8 percent. On Election Day, voters punished him by taking 27 House seats from his Republican Party, including most of the ones gained in 1980. That gave the Democrats a 269–166 seat advantage—far greater than the 51-seat advantage Republicans enjoy today.

The day after that woeful election, Reagan’s aides sent him into a press conference with defensive talking points. He tore them up. “We’re very pleased with the results,” he said, claiming that the GOP had “beat the odds” for off-year elections (he went back to 1928 to make the claim). “Wasn’t he in worse shape for 1984?” he was asked. “I don’t think so at all,” he replied. Hadn’t it been a historically uncivil campaign? He agreed—because of all the opposition did to “frighten voters.”

Obama's "Sputnik Moment"

The lesson from the 1950s is that it takes more than private enterprise to revive American innovation. It takes lots of government spending.

By Fred Kaplan
Posted Tuesday, Jan. 25, 2011, at 11:02 PM ET

President Barack Obama didn't say much about foreign or military policy in Tuesday night's State of the Union address. To the extent he did talk about it, he spent more time on economic agreements with India, South Korea, and China than on the wars in Afghanistan and Iraq—and, given the state of the economy and the nature of the political battles ahead, the balance was probably right.

A call to protest ignites a call to arms

The reaction to Frances Fox Piven's essay urging the unemployed to protest for change shows that we are no longer a democracy but a tyranny of the heavily armed.

By Barbara Ehrenreich
January 26, 2011

Why are Americans such wusses? Threaten the Greeks with job losses and benefit cuts and they tie up Athens, but take away Americans' jobs, 401(k)s, even their homes, and they pretty much roll over. Tell British students that their tuition is about to go up and they take to the streets; American students just amp up their doses of Prozac.

The question has been raised many times in the last few years, by a variety of scholars and commentators -- this one included -- but when the eminent social scientist Frances Fox Piven brought it up at the end of December in an essay titled "Mobilizing the Jobless," all hell broke loose. An editor of Glenn Beck's website, theblaze.com, posted a piece sporting the specious headline "Frances Fox Piven Rings in the New Year by Calling for Violent Revolution," and, just two weeks before the Tucson shootings, the death threats started flying. Many of the most provocative comments have been removed from the site's comment section, but at one time they included such charming posts as: "Bring it on biotch [sic]. we're armed to the teeth." Or: "We're all for violence and change, Francis [sic]. Where do your loved ones live?"

Wall Street Destroyed $8 for Every $1 Earned

Lindsay Beyerstein | Tuesday 25 January 2011

Tonight, President Barack Obama will deliver his State of the Union address. A major theme of the speech will be jobs and the economy. Let's hope the president spares a few minutes for Wall Street reforms that might prevent a repeat of the economic collapse that we're slowly starting to recover from.

As Kai Wright points out in ColorLines, the State of the Union is the unofficial kickoff of the 2012 election season:

The still churning foreclosures and mounding debt in black and brown neighborhoods don’t suggest a stabilized economy anywhere except Wall Street, but let’s set that familiar fight to the side for now. The point is that whether we’re talking about creating jobs or seating district court judges, the time for making policy is gone. Starting tomorrow night, it’s all talk until we vote next.

Financial Crisis Was Avoidable, Inquiry Finds

By SEWELL CHAN

WASHINGTON — The 2008 financial crisis was an “avoidable” disaster caused by widespread failures in government regulation, corporate mismanagement and heedless risk-taking by Wall Street, according to the conclusions of a federal inquiry.

The commission that investigated the crisis casts a wide net of blame, faulting two administrations, the Federal Reserve and other regulators for permitting a calamitous concoction: shoddy mortgage lending, the excessive packaging and sale of loans to investors and risky bets on securities backed by the loans.

“The greatest tragedy would be to accept the refrain that no one could have seen this coming and thus nothing could have been done,” the panel wrote in the report’s conclusions, which were read by The New York Times. “If we accept this notion, it will happen again.”

SOTU: Obama Makes a Muscular Defense of Social Security, But Aligns with Wall St. on Exporting Our Jobs

By John Nichols, TheNation.com
Posted on January 25, 2011, Printed on January 26, 2011
http://www.alternet.org/story/149675/

President Obama used his second State of the Union Address to deliver a muscular defense of Social Security, the crown jewel program of the New Deal that progressives had feared was under threat as the president triangulated to the right following November, 2010, election setbacks for Democrats.

Explicitly acknowledging disagreement with key recommendations made by his own bipartisan Fiscal Commission, Obama told the assembled members of Congress that it was necessary to "find a bipartisan solution to strengthen Social Security for future generations. And we must do it without putting at risk current retirees, the most vulnerable, or people with disabilities; without slashing benefits for future generations; and without subjecting Americans’ guaranteed retirement income to the whims of the stock market."

Planned Parenthood May Have Busted Conservative "Sting" Attempt Reminiscent of ACORN Smear Campaign

According to the Child Obscenity and Exploitation section of the United States Department of Justice (DOJ), sexual exploitation and trafficking of youth in the United States are problems of "epidemic proportions." The majority of young American victims of commercial sexual exploitation, according to one DOJ report, tend to be "runaway or thrown away" youth who live on the streets and who become victims of prostitution. These children "generally come from homes where they have been abused, or from families that have abandoned them. They often become involved in prostitution as a way to support themselves financially or to get the things they want or need."

Power, Baby, Power

— By Kevin Drum

| Sat Jan. 22, 2011 4:34 PM PST

Tim Lee says that American liberalism has incorporated libertarian critiques at a striking rate over the past few decades:

Libertarians have had a pretty impressive winning streak in recent decades, especially on economic policy. Income tax rates are way down. Numerous industries have been deregulated. Most price controls have been abandoned. Competitive labor markets have steadily displaced top-down collective bargaining. Trade has been steadily liberalized....This isn’t to say there are no longer disagreements about economic policy; clearly there are. But what’s striking is that the left’s smartest intellectuals and policy advocates now largely make their arguments from libertarians’ intellectual turf.

He's right! And there are both benefits and drawbacks to this.

Newsflash: Founders favored "government run health care"

By Greg Sargent

Forbes writer Rick Ungar is getting some attention for a piece arguing that history shows that John Adams supported a strong Federal role in health care. Ungar argues that Adams even championed an early measure utilizing the concept behind the individual mandate, which Tea Partyers say is unconsittutional.

I just ran this theory past a professor of history who specializes in the early republic, and he said there's actually something to it. Short version: There's no proof from the historical record that Adams would have backed the idea behind the individual mandate in particular. But it is fair to conclude, the professor says, that the founding generation supported the basic idea of government run health care, and the use of mandatory taxation to pay for it.

Turbulence Ahead

Joseph E. Stiglitz | Monday 24 January 2011

Another year of malaise along the Atlantic.

By the numbers, the great recession's long gone. The World Bank forecasts that developing countries -- chugging along at an average growth rate of 6 percent -- will expand the global economy by more than 3 percent this year. In the last six months, London's FTSE 100 is up more than 15 percent, and Wall Street's Dow Jones index is up nearly as much. It's just about enough to say the good times are back.

Paul Krugman: The Competition Myth

Meet the new buzzword, same as the old buzzword. In advance of the State of the Union, President Obama has telegraphed his main theme: competitiveness. The President’s Economic Recovery Advisory Board has been renamed the President’s Council on Jobs and Competitiveness. And in his Saturday radio address, the president declared that “We can out-compete any other nation on Earth.”

This may be smart politics. Arguably, Mr. Obama has enlisted an old cliché on behalf of a good cause, as a way to sell a much-needed increase in public investment to a public thoroughly indoctrinated in the view that government spending is a bad thing.

The GOP's Campaign Finance "Sneak Attack"

Boehner and Co. fast-track a bill to kill the presidential public finance system and privatize election fundraising.

— By Andy Kroll

Mon Jan. 24, 2011 3:00 AM PST

On Wednesday, House Republicans plan to rush to the floor a bill that would eliminate the federal government's presidential financing system—in the process, violating recent pledges by the GOP's leadership of increased transparency and debate in Congress. Not one hearing has been held on the legislation, nor has a single commitee debated its merits. If it passes, it will roll back more than 30 years of law born out of the Watergate scandal, eviscerating one of the few remaining protections stopping corporations from heavily influencing, if not outright buying, American elections, reform experts say.

Banks Want Pieces of Fannie-Freddie Pie

By LOUISE STORY

As the Obama administration prepares a report on the future of Fannie Mae and Freddie Mac, some of the nation’s largest banks are offering a few suggestions.

Wells Fargo and some other large banks would like private companies, perhaps even themselves, to become the new housing finance giants helping to bundle individual mortgages into securities — that would be stamped with a government guarantee.

The banks have presented their ideas publicly through trade groups. Housing industry consultants and people familiar with recent meetings at the Treasury Department say these banks view the government’s overhaul of the mortgage market as a potential profit opportunity. Treasury officials have met with executives from several institutions, including Wells Fargo, Morgan Stanley, Goldman Sachs and Credit Suisse, according to a public listing of the meetings.

The Illusion of Money

Real wealth or phantom assets? David Korten explores the difference between the kind of wealth that makes life better and the phantom wealth created by financial speculation.

by David Korten

In business school, we were taught to assess investment options to maximize financial return. I don't recall that the professor ever mentioned that this meant maximizing returns to people who have money-to make rich people richer. Or that money is a system of power and that the more our lives depend on money, the greater our subservience to those who control the creation and allocation of money.

Nor do I recall asking my professors, "What is money?" "Why do we assume that maximizing financial return maximizes the creation of real value?" "How does the conversion of natural living wealth to financial wealth create real value?" "What about the many fortunes built through financial speculation, fraud, government subsidies, the sale of harmful products, and the abuse of monopoly power?" I may have had some doubts, but kept them to myself for fear of being dismissed as hopelessly stupid.

Budget Hawks Are “Excited” by the Thought of Cutting the Social Security COLA—Only Don’t Ask Why

By Daniel Marans

Created 01/21/2011 - 7:12pm

One of the lesser known, but most devastatint Social Security cuts being discussed in Beltway circles is the adoption of a new, less generous version of the Consumer Price Index (CPI) for calculating the yearly cost-of-living adjustment (aka COLA) in Social Security benefits. It is called the “Chained”-CPI, which is fitting, because it will chain you to your parents when they have to move in with you for their golden years. Most importantly, it is the only proposed benefit cut that will whack current and future retirees.

When advocates challenge the new formula though, the conservatives and pseudo-Democrats hawking this proposal are no longer even bothering to defend the “Chained” CPI on its merits. (In fact, the current CPI is, if anything, too modest.) They simply coo at how brilliant and “exciting” of a new policy tool it is. Maya MacGuineas’s cheerful performance at a Senate briefing this morning was a case in point.

Terrorism directed at 'liberal' and 'government' targets since July 2008: An interactive map

by David Neiwert

Since all those isolated incidents involving terroristic violence directed at "liberals" and the "government" keep adding up into a serious trend, we've decided it's time to start keeping systematic track of the problem -- especially because mainstream media seem intent on refusing to recognize the trend.

Here's the text for the 20 events we've enumerated so far:

-- July 2008: A gunman named Jim David Adkisson, agitated at how "liberals" are "destroying America," walks into a Unitarian Church and opens fire, killing two churchgoers and wounding four others.

-- October 2008: Two neo-Nazis are arrested in Tennessee in a plot to murder dozens of African-Americans, culminating in the assassination of President Obama.

Frank Rich: The One-Eyed Man Is King

A month before John Wayne won the 1969 Best Actor Oscar for “True Grit,” Richard Nixon wrote him a “Dear Duke” fan letter from the Oval Office: “I saw it in the W.H. with my family and for once we agree with the critics — you were great!” Some four decades later, his rave was echoed by another Republican warrior, this time in praise of the “True Grit” remake with Jeff Bridges in the role of the old, fat, hard-drinking, half-blind 19th-century United States marshal Rooster Cogburn. Shortly after New Year’s, Liz Cheney told The Times that her parents saw “True Grit” at the Teton Theater in Jackson, Wyo., and gave it “two thumbs up.”