Category Archives: Bailouts

Trump Isn’t The Collapse, Trump Is A Consequence Of The Collapse

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This post first appeared at Government Cheese – Chronicling the collapse of democracy.

People say America and its democracy are being collapsed by Trump. I have come to believe that what we have been calling “late-stage capitalism” was a system that had already collapsed.

Trump isn’t the collapse, Trump is the consequence of the collapse.

The Rule of Law had departed some time ago. The Constitutional system was nonfunctional. The economic system was rigged. The political system benefited only the wealthy and their corporations. That was collapse.

Accountability had long ago disappeared. (A pardon for Nixon? What?) Executives at corporations are never prosecuted. Instead the company itself would be fined – as if companies are sentient entities that can make decisions and do things. White-collar criminals were rarely prosecuted. This is how Trump was able to even be on the scene in the first place to run for office, instead of imprisoned for sex crimes, money laundering, fraud, etc.

The collapse was how Reagan was able to get away with the deal with Iran, and the later Iran/Contra deal.

The collapse was how the Supreme Court was able to make Bush president.

The collapse was how the Iraq War happened.

The collapse was how the climate crisis came about in the first place, how the companies were allowed to continue to put carbon into the air after scientists warned us of the harm it was causing, and how the executives at the companies that caused it got rich instead of being prosecuted.

The collapse was how tax cuts for the rich & corporations, with budget cuts for things government does to make people’s lives better happened.

The collapse was how no bankers were prosecuted for fraud after the financial collapse, and Wall Street but not the public was bailed out.

Rule of Law and accountability had long since disappeared from the United States. That was the collapse.

This wasn’t “late stage capitalism,” it was collapse.

People called these things “late stage capitalism.” This wasn’t late stage capitalism at all. We were already living with the collapse of the Constitutional system, the collapse of Rule of Law, the collapse of accountability. It was corruption taking over. It had been happening for decades.

Trump is just a consequence of that collapse.

In 2017’s Democracy and Corruption I wrote about “democracy off the rails” and democracy “corroded,” not realizing Trump was only possible was because the collapse had already happened.

Trump didn’t just come out of nowhere. The road to Trump goes back a long way. Trump comes out of a steady and intentional undermining of rule of law, norms, equality, civility and democracy.

They say these things happen slowly, then all at once. The collapse was happening for decades, then all at once with Trump.

Healthcare CEO Killed

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United Healthcare apparently was the worst of the insurance companies for profiting from systematically denying claims. You pay an insurance company to cover you if you get sick, then when you get sick they refuse to cover you. As Bernie said about Wall Street, the business model is fraud. Except Wall Street takes away your house and life savings. Health insurance companies take away your health and sometimes your life.

These companies continue to be allowed, even encouraged to operate this way. Everyone knows this is because they pay politicians to do nothing that might keep the profits rolling in. Everyone knows this.

Top executives who pay politicians have impunity. Everyone saw this with Wall Street, when not one Wall Street executive was prosecuted after financial fraud caused the 2008 crash. (The ‘W’ administration got more than 2600 convictions of bankers for the S&L Crisis and 1706 bankers went to prison.)

Even when government is obviously and visibly absolutely corrupted, and refuses to prosecute the most horrific, egregious crimes, giving citizens no justice and no recourse, it remains wrong to “take the law into your own hands.” 

Even when the entire system is corrupted and everyone sees executives enriching themselves at the expense of the public and the planet, and “public servants” refusing to do anything about it and then when they leave “public services” they get lavishly compensated “jobs” or “consulting fees” “speaking fees” or “book advances” or other methods of payoff, it still is wrong to “take the law into your own hands.”

HOWEVER,
When in the Course of human events, it becomes necessary for one people to dissolve the political bands which have connected them with another, and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature’s God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.–That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, –That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness.

PS Trump SAID he was that, but he ain’t that.

Today’s Housing Bubble Commercial Real Estate Bubble Post

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In the years leading up to the 2008 crash I was posting a series called “Today’s Housing Bubble Post.” (Scroll down, it starts in March, 2005.)

Quick summary: Wall Street was bundling mortgages into “bonds” with a good interest rate. The money was made on selling these bonds, called Collateralized Debt Obligations (CDO). When a bank makes money from the loans themselves they look carefully at how risky the loans are. But when a bank makes money from passing along as many loans as they can to someone else they don’t care how risky the loans are, they only care how many they can pass along.

So Wall Street was doing everything it could to give as many loans to people as possible, no matter how risky. The knew it was risky, but didn’t tell the customers for those loans. They told the customers there was very little risk. This is known as fraud.

Those fraudsters made many, many billions from this scheme. The entire economy blew up. No one was held accountable for what happened. No one.

When you let people make billions from fraud and not hold anyone – anyone – accountable, guess what happens. They do it again. They call it a business model.

When the tide goes out that you learn who’s been swimming naked

Commercial real estate is office buildings, retail, etc. This is an industry that lives on loans.

Do you think office buildings are worth what they were worth before COVID? Do you think that financial institutions learned their lesson from the 2008 crash, when no one was held accountable?

Take a look at this, from The Intercept, THE BIGGER SHORT:

A longtime industry analyst has uncovered creative accounting on a startling scale in the commercial real estate market, in ways similar to the “liar loans” handed out during the mid-2000s for residential real estate, according to financial records examined by the analyst and reviewed by The Intercept.

… This time, the issue is not a bubble in the housing market, but apparent widespread inflation of the value of commercial businesses, on which loans are based.

Uh oh.

Now it may be happening again — this time not with residential mortgage-backed securities, based on loans for homes, but commercial mortgage-backed securities, or CMBS, based on loans for businesses. And this industrywide scheme is colliding with a collapse of the commercial real estate market amid the pandemic, which has business tenants across the country unable to make their payments.

Overstating borrower income, inflation of past financials, misstated financial fundamentals … and selling bundles of loans to pension funds, etc, to offload the risk. Just like 2008.

Read THE BIGGER SHORT, it’s all there. Trump’s real estate practices are mentioned, too.

Also, you can listen to the story on the Deconstructed podcast, THE WHISTLEBLOWER TRYING TO STOP THE NEXT FINANCIAL CRISIS

I’m Locked Down – Local Businesses Will Be Gone

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I’m in one of those “shelter-in-place” counties in the Bay Area. I suspect a lot of people don’t get it until they’re actually in it. Every business is closed except certain essential services like groceries. You need to see it to believe it (risking being puled over if you drive to see it, though.)

The first thing to say about it is, we’re in lockdown and most of the country is not. That means the virus will continue to spread and until everyone is locked down it can circle back to us, so we’ll be staying in lockdown. (I’m sure China feels this way right now.)

The second thing I see that I think people not in lockdown don’t see, a significant number of local businesses are going to run out of money very soon. They’re closed. Lots of smaller businesses are notoriously undercapitalized, just like how lots of people can’t come up with $500 for an emergency. So this means sending cash to people is NOT going to help these businesses because “more people with money coming through the door” doesn’t work if the door is closed in a lockdown. Again: A significant number of local businesses will not be coming back.

Remember how financiers bought up foreclosed houses after the 2008 crash? And now we have a rent crisis? That is what will happen to local/regional businesses if we don’t have a plan ready to put the local owners back in business. The giant companies will be getting bailouts. Wall Street is itching to use their bailout money to buy up these businesses. We need a plan.

Democracy and Corruption

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I wrote this in May, June 2017 but it was never published. I’m getting around to posting it now.

How Did Trump Happen To Us?

How did Trump happen to us?

We are experiencing a shock and awe attack. Every single day we face a flood of terrible things being pushed at us so fast that we do not have time to react. Our system and commons and norms and standards and protections and rule of law are rapidly being dismantled. We are overwhelmed, exhausted, our spirits wear down, we don’t know what to do. Worse, the country risks normalization and eventual acceptance of the cruelty and insanity coming from the top.

Will we get out of this? With the nuclear codes in the hands of a crazy, egomaniacal, racist, malignant narcissist, will we live another year? If we’re alive will we be in jail?

Continue reading →

The Damage From Free Trade Helped Elect Trump

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It seems that lots of media/political/business people “on the coasts” don’t get how big a deal trade played in Tuesday’s election.

Sold On Free Trade

In the late 70s the country was told that “protectionism” — protecting wages and key industries and — is bad for the economy and was sold “free trade” as a way to bring prosperity and jobs. “Trade” in this usage meant one and only thing: close a factory here and lay off the workers. Open a factory “there” to make the same goods, bring those goods back here to sell in the same stores to the same customers. It’s called “trade” because now those goods cross a border. The “sell” was that all those laid-off workers would be “freed up” to get better jobs.

Well, they never got better jobs — those were also outsourced or privatized or relabeled as low-wage “contractors” with no protections or benefits. So instead they had their homes foreclosed, their local stores forced out of business and their downtowns boarded up. Local and state tax bases dwindled so schools became terrible, infrastructure crumbled, public services cut and cut and cut. Meanwhile the investor class that pushed this and executive class that managed it pocket the wages these regions used to generate for themselves. (They also got huge tax cuts.)
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The Thing In The Budget Bill That No One Supports But Won’t Be Taken Out

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The budget bill called the “Cromnibus” (for Continuing Resolution and OMNIBUS budget bill) contains a provision that undoes an important part of the Dodd-Frank Wall Street regulation bill. It would allow banks to gamble on derivatives using money from taxpayer-protected accounts. Citibank literally wrote the provision and paid someone to put it in the bill.

No one in the House or Senate will say who was paid to put it in the bill. No one will admit to putting it in the bill. No one will say that support this provision. But it will not be taken out of the bill.

OK this is not a rhetorical question, it is a question to broadcast. This was written word-for-word by Citibank, to benefit Citibank, putting the taxpayers at great risk. How can something like this be in a bill if no one put it in the bill and no one indicates support for it? How can we not get it taken out if no one will say they put it in and no one will say they support it?

Someone was obviously paid to put it in the bill. People are obviously being paid to keep it in the bill.

How FAR from the principles of democracy, transparency, accountability and everything the country, the Constitution and the Congress are supposed to stand for can we go here?

Please click here now to call your senators and tell them to stand up against this dangerous attempt to rig the rules for Wall Street – and against us.

Full Employment: First Principle Of New Populism

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Word is there’s an economic recovery going on. The New Populism ConferenceBut approximately 99 percent of us have no reason to believe that.

The public sees that the government bailed out the biggest banks and that the “recovery” is going really well for a very few people. But most Americans are actually falling behind, and know it. Wages are still stagnant at best and the minimum wage has fallen so far behind that people working full time remain in poverty. Unemployment is down largely because of people “leaving the workforce.” And all along government services are being cut and cut and cut.

People see the government working for a wealthy few at the top, and against the rest of us. People see the rigged game at work against them. This is not just an economic and human catastrophe. With an election coming, key Democratic constituencies have simply been left behind during the Obama administration. “Are you better off now than you were 4 or 8 years ago? HELL NO!”

So this could become a political catastrophe as well, potentially bringing the return of the very people and conditions that got the country into this mess.

An Ongoing Catastrophe For Regular People

What Washington has done since the “Reagan Revolution” and especially since the 2008 crash has benefited the few, usually at the expense of the general public. Washington rescued the big banks, and left homeowners and the rest of us to fend for ourselves.

Anti-inflation monetary policy has been a catastrophe for regular people. (Protecting Wall Street at the expense of Main Street? Really?)

Washington’s austerity, budget-cutting fixation has been a catastrophe for regular people. (Laying off hundreds of thousands of public employees, cutting public investment and cutting back on the safety net during an unemployment crisis? Really?)

Washington’s “free trade” policies have been great for giant, multinational corporations but have been a catastrophe for regular people, sending millions upon millions of jobs out of the country. (Not even confronting blatant currency manipulation that is costing 5.8 million jobs? Really?)

Washington’s corporate tax policies have been a catastrophe for regular people. (Giving companies huge tax breaks for moving jobs, factories and profit centers out of the country? Really?)

One catastrophe after another hitting regular people. And people see it coming from a system that is rigged against them, working just fine for a wealthy few.

We did get the “stimulus.” The stimulus reversed the terrible plunge in jobs and showed that our government could fix the jobs emergency.

But that was all it did, and that was it. It worked but it was just not enough to get things going again. And now it’s five years later. As most people can see, after the stimulus the Obama administration capitulated to Republican/Wall Street demands for austerity – and outright budget blackmail. The President even at times reinforced the right’s ideological position by boasting about government progress in balancing its books rather than emphasizing the human cost of not boosting government resources to drive job creation. Democrats even voted to cut food stamp spending and the president signed the bill! (Cutting Food Stamps in the middle of a national jobs and poverty emergency? Really?)

We Demand Full Employment

The New Populism Conference on Thursday will demand full employment as the first principle of the new populism.

We demand full employment! Full employment means there is a job for everyone who wants a job. There is simply no reason whatsoever that we can’t have full employment – except for policies that are intentionally keeping us from having full employment.

We demand full employment! Why isn’t our government stepping up and just hiring all of the people who need jobs? It’s not as if there are not enough things that need to be done. Our infrastructure is in serious need of repair. We need to retrofit millions of buildings and homes in the country to be energy efficient. We need to build a modern energy grid to bring energy from wind farms that we need to build in the plains states (where the wind is) to the cities and industrial centers (where the need is). We need to cut the number of children per classroom in half. We need to do … so many things. Why isn’t our government the employer of last resort, just hiring people to do those things we need done – in the middle of an employment emergency?

We demand full employment! Unemployment is a human and economic catastrophe. There are so many things our government could do besides direct hiring (which they should be doing). Our government could fix our job-sucking trade deals and balance the trade budget. Our government could demand that corporations return the trillions of dollars they are holding outside of the country to avoid paying the taxes due on that money. That’s a double whammy; take away the huge incentive to move jobs out of the country because of the tax break – and use the money they already owe to just hire millions of people!

The New Populism Conference

Two speakers at this week’s New Populism Conference, Rep. Keith Ellison (D-Minn.) and economist Jared Bernstein will talk about the importance of growth and jobs in order to bring about a rapid change in inequality.

Rep. Ellison will talk about the Progressive Caucus investment strategy for full employment. Bernstein will talk about full employment and his recent book, “Getting Back to Full Employment: A Better Bargain for Working People,” co-written with economist Dean Baker.

The New Populism Conference on May 22 in Washington (featuring Sen. Elizabeth Warren) will discuss ways to fight for an agenda for economic change that strong majorities of Americans already support. (See the Populist Majority website containing polling numbers showing that Americans support this New Populist agenda.) Click here to register or to watch the conference live online.

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This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF. Sign up here for the CAF daily summary and/or for the Progress Breakfast.

Compare Detroit And Wall Street

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Compare the Detroit bankruptcy with the Wall Street bailout. The banks got trillions for bailouts. The bankers even got huge bonuse out of that bailout money

But in Detroit old people will lose pensions.

It’s about priorities.

Compare how the different situations were handled, who was helped, who paid. Detroit will have to “restructure” and sell off public property. Which banks were restructured, had to change the way they did business, give their property to the government, etc?

Will people in Detroit get bonuses like the bankers got?