There’s been a lot of discussion about the causes of our current financial crisis. I, for one, do not ever care to hear the Wall Street/Main Street framing again. Really, is that the best we can do? Have we no sense of language?

The “credit contraction” or “credit crunch” involved, among other things, financial institutions that were “shot through with short-termism, deceptive practices and self-dealing.” I can’t help but think that unrestrained (dare I say “unregulated”?) greed is at the root of quite a lot of what has happened.

In this regard, one thing I haven’t really heard much about lately are the predatory mortgage lending practices that have flourished under this administration. Predatory lending practices are abusive, stripping borrowers of home equity and threatening families with bankruptcy and foreclosure.

Abusive loan practices include:

• Intentionally steering you to a higher cost loan when you qualify for a lower one
• Putting you into a loan you cannot afford based on your income or assets
• Charging high interest rates and fees
• Breaking verbal promises & terms or “bait and switch” at closing (we saw this one ourselves in the difference between the “good faith estimate” and the reality of the mortgage payment amount)
• Getting inflated appraisals to loan you more than your home is worth
• Loans with balloon payments
• Coaching you to lie or be dishonest on your loan application
• Putting you into a “stated income” or “no document loan”
• Loan “flipping” or constant refinancing
• “Hard Money” lending
• Loans with payments that start low and go high (my student loan does this)
• Including prepayment penalties
• Failing to properly credit loan payments in a timely way
• Charging escrow fees when not provided by the note or deed of trust
• Issuing loan payoff statements full of inflated and improper fees

Let me tell you about the practices that have led to the ballooning of my student loan debt… but no, if I think about it I get heart palpitations and I’m already not feeling well today.

Something that seems to have made everything worse was the overturning of some regulatory safeguards. For some, the spotlight for this is on Sen. Phil Gramm, McCain campaign adviser and a lobbyist for a Swiss bank:

Eight years ago, as part of a decades-long anti-regulatory crusade, Gramm pulled a sly legislative maneuver that greased the way to the multibillion-dollar subprime meltdown. Yet has Gramm been banished from the corridors of power? Reviled as the villain who bankrupted Middle America? Hardly. Now a well-paid executive at a Swiss bank, Gramm cochairs Sen. John McCain’s presidential campaign and advises the Republican candidate on economic matters. He’s been mentioned as a possible Treasury secretary should McCain win. That’s right: A guy who helped screw up the global financial system could end up in charge of US economic policy. Talk about a market failure.

I’m interested in the fact that there is very little real discussion (that makes any sense to me, anyway) about the effects of abstract speculation (gambling), or in the practices of usury (it used to be considered a sin) that surround every consumer every day.

Institutions that put too much of their working capital on the line with speculation and excessive risks went down – and shouldn’t they? But we’re so interconnected anymore that the markets have become like clusters of artificial intelligence with everything affecting everything else, so what can be done?

Paul Krugman usually has something interesting to say:

Paulson grabbed hold of the wrong end of the stick — he should have been seeking to expand bank capital, taking an ownership share in compensation, rather than trying to push up the value of toxic paper.

I just don’t know. A couple of days ago, my bank Wachovia was aquired by… Citi. Since I swore several years ago never to deal with them again, I turned to Washington Mutual (WaMu). Oops! Too late.

Meanwhile, there was the whole inflation of house prices… and then its decline.

Some are blaming immigrants. Economic crisis brings out the scapegoating impulse. Some are blaming anti-racist policies. Some are blaming poor people.

Lots of blame to go around, for sure. Blame war, blame the national deficit and the resulting increase in the mind-boggling national debt, blame corporations who send their money to Dubai after landing lucrative if wasteful and corrupt contracts (not naming names or anything), blame inflation, the average household debt, rising energy and food and healthcare costs, more productivity for less wages, the class warfare from the super-rich to the middle class…

There were a lot of people here in Atlanta that were pushed out of their homes because the neighborhood values went up, and so did their taxes. In some neighborhoods here, you could send a kid to a rather nice college for the yearly tax bill. I would like to see some figures on how that escalated in newly-gentrified neighborhoods.

There was also the optimism about jobs that led to unrealistic assessments of homeowner affordability (what happened to the 30% of your income rule?). Add to this the emergence of the professional home-flippers. I think that took a toll among the middle class.

(T)he tanking real estate market “shifted from subprime loans made to borrowers with poor credit to homeowners who had solid credit but took out exotic loans with ballooning monthly payments.” Bloomberg reported that 3 million American homeowners are holding prime (or, actually, semi-prime) “alt-A” loans (don’t ask) worth about $1 trillion, or $150 billion more than the entire outstanding subprime market. As those loans — many of which were taken on investment properties by people expecting a nice, quick turnover — started to go belly-up, a panic ensued. …That posed a risk to the mammoth and wholly unregulated market in insurance on bad loans that had grown up around these new kinds of investments. The market in what are known as “credit default swaps” is of unknown size, but it’s estimated to be worth as much as $60 trillion, most of it essentially paper backed by too little in the way of hard assets.

I’m not an economist, and I must admit that I don’t understand all the complicated workings of the financial sector. I do, however, have a very deep suspicion toward this administration, and some of the family background alone on these topics is a little chilling before you even look at the real power-players like the visible Cheney (and the less-visible ones, too).

Document uncovers details of a planned coup in the USA in 1933 by right-wing American businessmen. The coup was aimed at toppling President Franklin D Roosevelt with the help of half-a-million war veterans. The plotters, who were alleged to involve some of the most famous families in America, (owners of Heinz, Birds Eye, Goodtea, Maxwell Hse & George Bush’s Grandfather, Prescott) believed that their country should adopt the policies of Hitler and Mussolini to beat the great depression.

In light of all I know and suspect about imperial neocons and fascists in our government, I do feel pretty secure with the strategy of tracking and analyzing the flow of capital and power if you want to understand what’s happening. And, in this regard, I’m rather fond of Noam Chomsky. This is what he had to say at a recent summit on the problems of Latin America and the Caribbean:

We might also take note of the striking similarity between the structural adjustment programs imposed on the weak by the International Monetary Fund, and the huge financial bailout that is on the front pages today in the North. The US executive-director of the IMF, adopting an image from the Mafia, described the institution as “the credit community’s enforcer.” Under the rules of the Western-run international economy, investors make loans to third world tyrannies, and since the loans carry considerable risk, make enormous profits. Suppose the borrower defaults. In a capitalist economy, the lenders would incur the loss. But really existing capitalism functions quite differently. If the borrowers cannot pay the debts, then the IMF steps in to guarantee that lenders and investors are protected. The debt is transferred to the poor population of the debtor country, who never borrowed the money in the first place and gained little if anything from it. That is called “structural adjustment.” And taxpayers in the rich country, who also gained nothing from the loans, sustain the IMF through their taxes. These doctrines do not derive from economic theory; they merely reflect the distribution of decision-making power.

The designers of the international economy sternly demand that the poor accept market discipline, but they ensure that they themselves are protected from its ravages, a useful arrangement that goes back to the origins of modern industrial capitalism, and played a large role in dividing the world into rich and poor societies, the first and third worlds.

This wonderful anti-market system designed by self-proclaimed market enthusiasts is now being implemented in the United States, to deal with the very ominous crisis of financial markets. In general, markets have well-known inefficiencies. One is that transactions do not take into account the effect on others who are not party to the transaction. These so-called “externalities” can be huge. That is particularly so in the case of financial institutions. Their task is to take risks, and if well-managed, to ensure that potential losses to themselves will be covered. To themselves.

Under capitalist rules, it is not their business to consider the cost to others if their practices lead to financial crisis, as they regularly do. In economists’ terms, risk is underpriced, because systemic risk is not priced into decisions. That leads to repeated crisis, naturally. At that point, we turn to the IMF solution. The costs are transferred to the public, which had nothing to do with the risky choices but is now compelled to pay the costs – in the US, perhaps mounting to about $1 trillion right now. And of course the public has no voice in determining these outcomes, any more than poor peasants have a voice in being subjected to cruel structural adjustment programs.

A basic principle of modern state capitalism is that cost and risk are socialized, while profit is privatized. That principle extends far beyond financial institutions. Much the same is true for the entire advanced economy, which relies extensively on the dynamic state sector for innovation, for basic research and development, for procurement when purchasers are unavailable, for direct bail-outs, and in numerous other ways. These mechanisms are the domestic counterpart of imperial and neocolonial hegemony, formalized in World Trade Organization rules and the misleadingly named “free trade agreements.”

Hey, you knew I was a liberal, right?

I’m thinking about the Federal Reserve.

So, here’s a question for you: How much money is the U.S. government printing up right now? Can anyone give me a link to a chart that shows the history of that for the last ten years? I can’t find one -can you?

Wow – fantastic video. Americans – do not despair.

How You Ended The War

My Liberal Identity:

You are a Working Class Warrior, also known as a blue-collar Democrat. You believe that the little guy is getting screwed by conservative greed-mongers and corporate criminals, and you’re not going to take it anymore.

Take the quiz at www.FightConservatives.com

(thanks to Michael at Discourse.net)

Halliburton and KBR have broken up – and breaking up is hard to do. But no sad faces, y’hear? Everything’s A-OK for the billionaire war and oil profit set.

They are diggin’ the new headquarters in Dubai – way better than Houston. Texas is so over. Everything’s bigger in the United Arab Emirates.

Halliburton’s second quarter profits more than doubled.

Halliburton Co.’s profit more than doubled in the second quarter, getting a $933-million lift from the separation of former subsidiary KBR Inc. But even without that gain, the results still beat the consensus Wall Street forecasts for the oilfield services contractor. Its shares rose 4 percent. Earnings were $1.5 billion for the April-to-June period, which amounted to $1.62 per share, compared with income of $591 million, or 55 cents a share, in the year-ago period, Halliburton said yesterday. Revenue in the quarter rose 20 percent, to $3.7 billion from $3.1 billion a year ago.

Despite various scandals, the war profiteering and corruption continue. It’s such a great feeling to know that we support such great causes with our tax dollars – we are so lucky that they get all those no-bid contracts…

And what a relief! A federal judge has decided that whistleblowers may not sue U.S. companies for fraud if payment for services was made in Iraqi (not U.S.) money. That’s going to save a LOT of aggravation.

Oh, yeah, and good ole’ Dick Cheney is still drawing one and a half million dollars a year from Halliburton for his excellent work – no conflict of interest there, nope. Nope.

Must-Reads

• 
  Former KBR employee pleads guilty in Kuwaiti kickback case
• KBR Gets $8.5M Navy Contract Boost – Iraqi oil platforms
• Algeria, KBR Sign $2.88 Billion Gas Deal
• Justice Dept. opts out of whistle-blower suits
• U.S. judge limits use of fraud law against Iraq contractors
• Female ex-employees sue KBR, Hallburton
• KBR Completes Sale of Devonport Mgmt
• Halliburton Spies Profits to the East
• The Banality of Greed
• Iraq Vets Break Silence on Devastating Realities of War

Previous Posts

• US Concentration Camps
• Corporate Violators
• Plea for Help from a Soldier in Iraq
• Halliburton Audit
• Way Beyond Republican

Where are we, America?

March 20th will be the four-year anniversary of the Iraq invasion and subsequent occupation. We’ve succeeded in making a bad situation worse for the people of Iraq. We’ve killed and been killed. We’ve drained our financial resources for the foreseeable future, and handed out contracts to such ilk as Halliburton. The oil profits are still being debated, but does anyone believe that the Iraqi people will benefit? A majority of the soldiers themselves thought they should be out by the end of 2006. In a number of ways, our own government has shown how little they care for the lives of our military “volunteers,” or generally for any human lives – except for embryonic tissues, and that only to get votes. They have attempted to destroy the checks and balances of our system. They have illegally withheld information, they have deceived us, they have replaced our land of freedom with executive abuse of power, spying and surveillance systems, massive corruption, crony capitalism, and the cynical manipulation of religion for power. They have worked to legalize torture and undermine human rights, and have even passed legislation to provide themselves retroactive immunity for war crimes prosecution.

To the extent that the American people have allowed all this to happen, and even participated in it, we are also accountable (or in biblical terms, “blood-guilty“). Our extreme self-insulation, limitless self-adoration, self-congratulatory arrogance, over-worked fatigue and apathy, lack of access to or interest in relevant information and intelligence and so on all work against meaningful changes. We appear to lack understanding about even our own self-interest. Yes, we have a pseudo-religious fanaticism here, but even that pales in comparison to our own suicidal down-spiral.

Here is my nightmare: Most of us will not pay with our lives in any sort of splashy symbolic way (as do desperate terrorists), but we will pay instead by meaningless steps, by degrees, into our deaths (and the deaths of those we love) as the euthanasia of unnecessary lives takes hold. We’ll have workers with no rights or access to accountability or fairness; that’s why Bush wants the guest worker program and the union-busting. The profitable private prison systems will also be a source of labor. There will be no regard for real global systems such as the environment, but only for the big game of capital – a game for the few. You and I are hardly necessary except insofar as we can habitate our role as consumers. The profits will continue to go to the top; we will work more and more for less and less (remember the debate about the four-day work week? ha ha). Privatization, such as what occurred at Walter Reed hospital and elsewhere, will reward profitable incompetence. The medical crisis will get worse. As poverty increases and the gap between the rich and everyone else widens, the social safety net – such as it is – will be cut off, a result of “hard choices.” Safety standards of any kind – gone. The economy collapses. People lose their jobs and then their homes. As desperation and anger escalate violent crimes will exponentially increase. More and more people will simply entrench and cocoon – with the aid of killer drugs like meth, or by a withdrawal of engagement from reality. Neighbor will turn against neighbor. We will lose everything that so many have fought for. We will fail to thrive, we will be unable to thrive.

I fear that we are already past the tipping point. Perhaps the American experiment will end in spectacular (or simply dreary) failure. After the Cold War, can we really still say we “won”? It used to seem so, but there is a kind of return of the repressed here. The Orwellian bad points of the USSR seem to have been rebirthed in the USA, under corporate fascism and governmental abuse of power.

We have a policy of “preemptive war” now. Why isn’t that more shocking to the American people? Really. Have you understood nothing of history?

No matter what happens, we always seem to be able to get up the money for war. Other issues are for some reason not as sexy to the national psyche. Will we be able to count on medical insurance, retirement funds, education for our children and grandchildren? We don’t know. How much money are we printing? We don’t know; they don’t report that anymore. Was the stock market drop a warning from the nations who hold much of our national debt? We don’t know. What could be paid for if we could even just reduce the interest we have to pay on our debt? Have you looked? Will we be able to trust the food we eat, the air we breathe, the land upon which we walk?

Ironically, I see one possibility for a hopeful future coming from the very corporations whose greed extends the international slash-and-burn zone. Corporations who want to survive into the future (and not just cut and run from the country once they’re raped it) will be forced to offer ethics and fairness in order to continue to attract consumers and knowledgeable workers. They have to have consumers. And – they really have to have skilled workers. A massive skilled workforce shortage is on the way in this country as boomers retire or die. Long-range planning would dictate that they not kill off their number-one asset: their people.

Limiting education only to those of the upper financial classes will not be enough to keep the machine going. However, I think that education in America will tilt more and more into technical training rather than education, a kind of Spartan techno-culture. No history, no literature, no cultural understanding, no real analysis, no skill in debate or dialogue. All spin. Like Bush, “all hat, no cattle.”

I want to work through various events, such as the firings, and Halliburton going to Dubai, but at this point I feel as though I have at once too much information and not enough information. I’m slowing down a notch. I’m percolating. I need to steep. Or soak. Or wallow. Or consider. Or something like that. I’ll let you know.

Silly observation: Why is General Petraeus’s name pronounced everywhere as “Betray us”?

I’m not saying it means anything, but it’s kind of like the mouthpiece of the White House being named Tony Snow(job). Just one of those things it’s hard not to notice. I’ve been trying to hope that he knows what he’s doing, but every time I hear the news I can only hear “betray us.” It’s disconcerting.

On a more serious note, I’m disappointed in Speaker Pelosi. There were good ideas and plans on the table, like requiring targets rather than timetables. The Iraq Study group report (despite its ties to the oil industry) came up with some ideas that were summarily ignored by the White House. There have been additional plans, some of them with very good recommendations, which have also gone nowhere. The supplemental bill proposed by Speaker Pelosi will give Bush another $100 billion for the war in Iraq, with hardly any questions asked.

To get congressional votes, Nancy Pelosi seems to have become mired in compromises that would allow the war to drag into 2008. While I can understand the hard realities of her position, there is no excuse for removing the only amendment to the supplemental spending bill that would have forced Bush to get authorization from Congress before attacking Iran. It’s frightening to me. I can see that this White House would lose little sleep over another preemptive war, even if it included nuclear weapons. I would like to see a whole separate bill, requiring that they either call Iraq a “police action” or else be required to formally “declare war” so that they couldn’t avoid constitutional laws. Congress has to approve going to war. That’s the Constitution. The very fact that they feel they have to remind the President about that in the case of Iran is very ominous to me. After all, they know things we don’t know.

If things can still be changed, I doubt that the change will occur on the terrain of issues of war funding or authorizations for war. It seems as though that would be the leverage point, but I don’t think so. It seems as though we can only actually get moving on the less important issues. It is no surprise to me that the voters’ priorities are not really at issue. Hey, the illegal war in Iraq already abuses the terms of the authorization it got from Congress. No, it will have to be something else, something that goes deeper into the systems and networks that have built up to rob and control us.

I have to admit that I’m also disappointed in CodePink, a group of women for peace. I support them, along with the ACLU, the Feminist Majority, and a host of other groups who often work together. Still, this was kind of sad.

Here’s the song parody that CodePink members sang at Nancy Pelosi’s office (from the Beatles’ “Can’t Buy Me Love” – alternate lyrics by Rae Abileah).

Can’t buy me war, war
Can’t buy me war

Bush wants billions more for war to keep up the bloody fight
Bush wants billions more for war but we know that it’s not right!
‘Cause I voted for you Pelosi, Pelosi can’t buy me war

Our schools are broke, our parks are bare, and we need insurance too,
Our hearts are broke, our soldiers killed, and we’re all counting on you
I voted for you Pelosi, Pelosi can’t buy me war

Can’t buy me war, everybody knows it’s so
Can’t buy me war, no no no, no

Say you aren’t going to fund the war and I’ll be satisfied
Tell me that you want diplomacy, which bombing just can’t buy
I voted for you Pelosi, Pelosi can’t buy me war

Can’t buy me war, war
Can’t buy me war…no!

So that’s the endpoint, something specific, a real action: women singing a parody of a Beatles tune at the Speaker’s office, wearing pink statue-of-liberty hats and camping out in her home driveway. I guess we each do what we can, if we still care. Although I applaud the effort, the execution seems so dated and pathetic. I like what some women are doing in other countries a lot more. More on that on another occasion.

So, then, what?

Americans love images. That’s why camera-phones aren’t allowed in some areas. That’s why journalists can only be “embedded.” Let’s find more of the photographs and footage. Show it.

Let’s hear and tell the stories of all sides. Ethics requires that.

Let’s have the international debates. Real debates.

Let’s also have multi-pronged dialogue. Real dialogue.

There are possibilities. But I think that if anyone left of Attila the Hun wants to be elected President of the United States, s/he had better start doing more. Start with the actions now; those will speak far louder than your little platitudinous speeches and little sideways sniping. I’m so utterly sick of it.

If Rudy G is the best that the reichright-wing can come up with, there is a real chance here.

Let’s get some real investigations going. Journalists, academics, detectives, everyday people – whatever is needed. We have to have a better idea of what is really going on. I want to see money trails, forensic accounting, real oversight. I want to see governmental watchdog organizations headed up by people who are not inextricably tied to the industries they are supposed to be watching. That sort of thing. It’s not rocket science. The conflicts of interest are glaring. Just start looking, and you’ll see.

I want a national discussion and debate among the Presidential candidates. Not this fake thing they do, but an actual debate that goes into some depth on each issue. Each night, debate on one topic – the specifics. If people are too bored by that, then they don’t have to watch. Then I want mainstream network television coverage of the results of fact-checking by at least 2-3 reputable groups.

Ideally, we’d get rid of the two-party system that has served only to reinforce one another’s foibles and drive both sides further from the real issues and priorities of the people they claim to represent. I dream of a more representative (even parliamentary) democracy, where coalitions would need to be formed among several parties. Let’s have a dozen candidates and vote for the top three. The top two winners would be the President and VP.

America is just too diverse for the limited vision and power politics of the duo-party structure.

Well, I don’t expect to see that any time soon. But spring is coming, and I always seem to feel more hopeful when I can feel things – despite everything – still growing at the proper time.

Stay attuned.