Questions On Geithner Plan

Quick question(s):
When an investor group takes advantage of the new plan, doesn’t that set a market price for assets of the type they buy?
If that sets a market price, doesn’t that mean that all the banks have to mark their own assets of that type to that price?
And doesn’t that mean that many of them might find out they are insolvent?
And, since they are all banks for, doesn’t this force the hand of the FDIC?
Since the plan is designed to create a market, does the plan have something in it to prevent mark-to-market?

Loans That Don’t Have To be Paid Back

The new Obama Treasury Dept plan to fix the banks boils down to giving loans that do not have to be paid back to people to buy the bad assets from the banks. If the assets turn out to be valuable, huge profits ensue. But if it turns out that they aren’t worth much the government picks up the tab.
Hey this is a GREAT deal — how can I get one of these loans? Turns out I can’t. MY loans have to be paid back.
Wall Street really really likes the plan. Of course, Wall Street gets the money. Our money. To them.

This IS The Return To Normal.

Take a look at No Return to Normal – James K. Galbraith.
My thoughts — this economic collapse IS the return to normal. We have been in a bubble since the early 80′s. A reality bubble, too.
As I wrote below, Markets Can Recover Downward, Too. And that is what we are starting to go through.
No more using credit cards as if everything was free.
No more living like everyone is a millionaire.
No more buying things to use for a few days and throwing them away.
No more chewing up the planet and thinking you can get away with it forever.
Trust me, it’s better for everyone to live within their means. It’s better for the person, better for the country, better for the world.

Corporate Media — NO Representatives Of Labor Allowed

Media Matters – AP quotes "labor lawyer" who is really an anti-labor lawyer,

Earlier, I noted that the Washington Post failed to quote a single labor representative in its Employee Free Choice article today, though it quoted three CEOs. Turns out the AP is even worse. This article doesn’t quote any labor sources, though it does quote a Starbucks spokesperson, the vice president of the anti-labor National Right to Work Legal Defense Foundation, a Whole Foods spokesperson, a Chamber of Commerce official, a representative of the anti-labor Coalition for a Democratic Workplace, and “Washington labor lawyer Jay Krupin.”
. . . Here’s a 2000 restaurant industry newsletter that says Krupin “represents a range of restaurant and other foodservice companies dealing with unions” and quotes him calling unions a “cancer”:

Click through to follow links and read the rest…
When was the last time you saw or heard someone in the corporate media talking about teh benefits of joining a union?

Markets Can Recover Downward, Too

Brad DeLong defends the current Geithner plan, in Grasping Reality with Both Hands: The Geithner Plan FAQ,

Q: What if markets never recover, the assets are not fundamentally undervalued, and even when held to maturity the government doesn’t make back its money?
A: Then we have worse things to worry about than government losses on TARP-program money–for we are then in a world in which the only things that have value are bottled water, sewing needles, and ammunition.

I hear a lot about how the markets need to “recover” and how they are trying to “stabilize” the housing and stock markets.
I submit that they are recovering. The markets are recovering from huge bubbles, and they are stabilizing to pre-bubble trend lines.
This means they have a ways to go – down – and then they will be “recovered” and “stabilized.”
For example, the other day I had a post, A Long Way To Go Still,

Stocks have fallen to where they were in 1996/7. Here is a chart that shows where stocks were in 1996/7.

stockchart.jpg

Does anyone else see the problem?

Specifically, that chart shows where the market was in 1996/7. It was in a bubble, and it still needs to recover to the trendline that preceded that bubble.

Things The Corporate Media Won’t Let People Know

You don’t know what you don’t know.
In 1998 Saturday Night Live aired this video about corporate control of the media. The network censored it, preventing it from being shown on the later broadcast on the West Coast.

Go read the story at La Figa.
What else do people “know” or not know, as a result of corporate control of the information channels? For example: When was the last time you saw anything on corporate media promoting the benefits of joining a union?
When was the last time you heard through corporate media that democracy is a better way then corporate decision-making to govern the country?

The Math Of A Sustainable American Way Of Life… or, How Much Less Do We Need To Consume To Avoid Global Ecosystem Collapse?

This article emerges out of a number I tossed out in a posting on Facebook a day or two ago, suggesting that the average American would need to consume something on the order of 5% of the resources they presently consume (collectively) if their standard of living were to be equalized with the rest of the world’s population without destroying the planet’s ecosystem (i.e., how much less would we need to consume for the rest of the world to be able to consume an amount equal to what we do).
A friend asked me where I got that number from, and I’m somewhat embarassed to admit (since I’m such a data driven person) that I can’t actually recall at this point – I did the math in my head a while ago. I did some research for real numbers, mostly searches and reading on ecological footprint figures, as I vaguely recall basing the calculation on something along those lines; at this point, while the 5% number may actually have been based on some other metric entirely, the footprint metric seems the most reasonable one to use for the purpose of discussion.

Continue reading

Stop Corporate Lobbying With Taxpayer Money

This post originally appeared at the Commonweal Institute’s Uncommon Denominator blog

Why are recipients of the Troubled Assets Relief Program (TARP) – better known as the Banking Bailout – allowed to continue to lobby? Taxpayer dollars should not be used to influence our government. We, the People should be telling them what to do, not the other way around.

TARP recipients spent $114 million on lobbying last year as the financial crisis emerged. In just the last quarter of the year eighteen bailout recipients spent $14.8 million to influence the government, as the TARP funds were distributed.

The lobbying has paid off. According to the Center for Responsive Politics, “The companies’ political activities have, in part, yielded them $295.2 billion from TARP, an extraordinary return of 258,449 percent.”

TARP recipients are currently lobbying against compensation caps at companies receiving TARP, against increasing bank regulation – and even against increased oversight of the use of TARP funds in the TARP Reform and Accountability Act! They are also lobbying against the Arbitration Fairness Act, the Fairness in Nursing Home Arbitration Act, the Mortgage Reform and Anti-Predatory Lending Act and the Helping Families Save Their Homes in Bankruptcy Act, Credit Card Holders Bill of Rights and the Stop Unfair Practices in Credit Cards Act!

But these companies are not just lobbying in favor of their own(ers) interests; they are lobbying against those of the rest of us. Recently it has come to light that Bank of America, Citigroup and other TARP recipients are organizing efforts to oppose the Employee Free Choice Act – federal legislation that would enable workers to organize unions, which results in increased income and benefits for working people, thereby enabling them to make their credit card and mortgage payments.

Use of corporate funds to influence our government is a larger problem than just this current misuse of TARP. In fact, this BofA and other companies’ use of TARP funds to oppose the Employee Free Choice Act supports an argument that the current economic crisis is a result of corporate lobbying. A corporate-funded assault on government has resulted in de-legislation and deregulation, enriching a few at the expense of the rest of us, while eroding the foundations of our economy and our democracy. Now the public has been harvested in one scheme after another, plundered for every dollar as incomes stagnated, debt skyrocketed and savings fell. Consumption fell off the cliff as the work- and debt-load tapped out people’s ability to participate in the economy. The resulting crisis has led to taxpayer dollars propping them all up.

And now millions of those taxpayer dollars are being used for … even more lobbying.

Whether or not this collapse occurred as a direct result of lobbying and other influence buying, it was not a grassroots movement that led to repealing the Glass-Steagall Act of 1933, allowing financial giants to trade mortgage-backed securities and collateralized debt obligations. It was not citizens holding politicians’ feet to the fire that killed the Financial Services Antifraud Network Act. At the same time the lobbying-bought deregulation and suspension of oversight allowed these companies to sell trillions in credit default swaps without the necessary reserves to cover the potential downside. And here we are.

Companies understand lobbying as a way to profit, not to advance policies that serve all of us. A 2006 New York Times article discusses how Google felt it had “no choice but to get into the arena” to start “spreading its lobbying dollars” around to politicians and quotes a Google lobbyist saying the “policy process is an extension of the market battlefield.” According to the Washington Post, a lobbyist explosion occurred in the last decade, doubling to 34,750 between 2000 and 2005, the result of “wide acceptance among corporations that they need to hire professional lobbyists to secure their share of federal benefits.”

This lobbying does not bring We, the People any benefit, it only boosts the financial interests of certain individuals. This is not competition to improve a product or service or the efficiency of the company. It is paying off politicians to gain unfair competitive advantage or to receive subsidies or tax breaks.

Clearly it is time to demand that TARP recipients stop using corporate funds for anything other than operating their companies, and get their noses out of our business.

Lobbyists say they serve a necessary function, providing information to legislators. But corporations can’t have it both ways. If lobbying is purely informational and not intended to sway favor for particular corporations, then the funds are not being used to generate profit for the shareholders and the use of funds and resources is theft from the company. But if the lobbying is intended to tilt the playing field and gain benefits for a company over others it is really just bribery, an affront to our democracy and laws, corrupting our system. If the use of corporate funds to lobby is for the financial gain of a few executives, this is also theft from the company by those few for their personal gain.

We should immediately prohibit companies from engaging in lobbying while accepting taxpayer dollars. Restricting lobbying by TARP recipients would be a bipartisan solution, as Republican lawmakers have called for exactly this approach in the past. The 1981 Heritage Foundation Mandate for Leadership called for a ban on lobbying by recipients of federal funds, as did the 1995 Republican “Istook Amendment.”

And it is time to open a discussion about whether any corporate funds – whether the company is a recipient of TARP funding or not – should be used to influence our government. We should be telling them what to do, not the other way around.

Click through to the Commonweal Institute’s Uncommon Denominator blog