Where is Cassandra?

Bow down to me ye proud kings...you are all carrion for me to feast upon...

2012-01-11T19:56:00.000-08:00

THE TOWER OF IDOLATRY

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Voter Fraud or Voter Suppression?

2012-01-08T17:44:00.000-08:00

Does voter fraud exist or is it used as a pretext for voter suppression? And do voter ID laws constitute a poll tax, which was abolished by the 24^th amendment?

Recently the ACLU brought a federal lawsuit against Wisconsin on constitutional grounds. It alleged that the Wisconsin voter ID law strictly limiting the acceptable forms of identification which enabled a citizen to exercise his or her right to vote violated the Equal Protection Clause of the 14^th amendment.

Wisconsin will only accept:

State Photo ID
Wisconsin Driver’s License
Passport

It will not accept:

Driver’s license issued by another state

Veterans ID cards

Public assistance benefit cards

Employer-issued photo IDs

A spokesman for Wisconsin Governor Walker said that its voter ID law is constitutional. The Supreme Court opened the floodgates in 2008 when it upheld Indiana’s strict voter ID law in Crawford v. Marion County, stating that the burden on voters was offset by the benefits of reducing the risk of fraud.

Many states are simultaneously instituting new voter ID laws, including Wisconsin, Texas, South Carolina and Mississippi, mostly requiring state issued photo ID cards. They will take effect right before the states’ primaries.

Is the burden negligible compared to voter fraud prevention? A cursory look at the facts shows that the burden can be high indeed and the chance of voter fraud unlikely.

The obstacles can be considerable, particularly for someone without a car or a birth certificate. In many cases you cannot get a birth certificate without a photo ID, so you have to navigate a maze of bureaucracies which may extend to different states. You may not have to pay for a state-issued photo ID but you can incur other fees along the way.

Wisconsin offers free state IDs but you have to pay $20 for a certified copy of your birth certificate.

Plaintiff Ruthelle Frank, 84, has voted in every election since 1948. She doesn’t have a birth certificate and her birth records show her name is misspelled. It might cost $200 or more to straighten out the situation.

The new voter ID laws act as de facto poll taxes because of the fees and other costs incurred, including time, which may require absence from employment in order to obtain the highly specific forms of identification necessary in order to vote.

For the elderly or the disabled this can be an almost insurmountable obstacle. Often students can’t use their college-issued photo IDs so they too will have to navigate the bureaucracy. This is at a time when government spending for the very departments necessary to process such records has been slashed.

The only conceivable type of voter fraud that voter IDs can prevent is someone impersonating someone else.

As the Brennan Center for Law and Justice pointed out in an exhaustive study, impersonations at the polls are:

[A]n occurrence more rare than getting hit by lightning,” or about one in 280,000. Actual cases of double-voting are even rarer:

For example, the study found that actual fraud rate among several hundred alleged New York State double-voters between 2000 and 2004 was 0.0000009%.

“Voter fraud” is used as a rallying cry to impose strict voting requirements which disproportionately affect traditional core Democratic voters, who are less likely to possess state-issue photo IDs: 15% of citizens earning less than $35,000 and 25% of African Americans, for example. Those earning more than $35,000 are twice as likely to possess IDs; whites are nearly 3x as likely. Voter ID laws disproportionately affect students, women, seniors and communities of color. An analysis of voting patterns in the 2004 election showed the attrition:

Recently, election experts at Rutgers and Ohio State universities found that states that had implemented voter ID laws saw a 3 percent across-the-board reduction in voter turnout during the 2004 presidential election. The drop was worse among minorities: African-American turnout was depressed by 5.7 percent and Hispanic turnout was depressed by 10 percent.

You may wonder, why are so many states attempting to impose voter ID laws at the same time? That is because the politicians in those states owe their allegiance not to the voters but to their benefactors, particularly ALEC.

According to its website, ALEC (American Legislative Exchange Council) purports to be a nonpartisan individual membership organization of state legislators which favors federalism and conservative public policy solutions. ALEC is actually a Koch (and other corporate)-financed group which creates and disseminates legislation through its hand-picked politicians.

This is why the attempts to implement these voter ID laws are occurring simultaneously. Their minions move in lockstep. During the standoff in Wisconsin against Governor Walker’s ultimately successful attempt to strip public workers of their right to collective bargaining, the only person whose call Gov. Walker took was that of a David Koch impersonator.

ALEC and its tribunes will not rest until the entire Democratic party constituency is eliminated. The ACLU is a lone, brave organization. Unless the Department of Justice gets involved in upholding enfranchisement, voter suppression will continue.

Strategic Defaults Will Save the Housing Market

2011-12-29T23:31:00.000-08:00

Walking away from a lousy, money-losing deal is lauded in the business world as a smart thing. That is, if the walking is done by a corporation.

In the case of the drowning homeowner groaning under a mortgage that costs far more than his house will ever be worth, walking away is branded as irresponsible and un-American.

American Airlines decided to declare bankruptcy as a strategic move even though it could still afford to pay its bills. It was losing money and didn’t want to “throw good money after bad.” Its move was hailed as a smart business decision.

If a homeowner kept paying off debt attached to an asset that tumbled in value and would never recover, he/she would also be throwing "good money after bad." Same situation, opposite outcome.

Candidate Barack Obama promised to set up bankruptcy courts for primary residence homeowners to restructure their mortgages when he became president. That never happened.

The banks’ attitude is do what I say, not what I do. To paraphrase the business writer James Surowiecki in his article, “Living By Default” in the 12/19-12/26/11 issue of the New Yorker:

Banks] could have kept people in their homes by writing down mortgages, just as American’s restructured debt will reduce payment to its lenders.

Read “restructuring” as “reduce to manageable size".

There are ideas floating around that can ease the plight of underwater homeowners without involving taxpayer subsidies or rewarding irresponsible borrowers. Eric Posner and Luigi Zingales of the University of Chicago suggest that banks:

[I]n exchange for writing down mortgages [reducing principal] in hard-hit areas [like Detroit, where 1 out of every 4 homes is a foreclosure], lenders would take an ownership stake in a house, getting a percentage of the capital gains when the house is eventually sold.

The “walk away” double standard burns homeowners’ dwindling cash reserves. Banks count on social pressure to keep their borrowers from doing the smart thing.

To their delight, they keep collecting monthly mortgage payments from faithful underwater borrowers. Therefore, they have no incentive to modify mortgages, whether allowing them to be refinanced at a lower fixed rate or reducing principal.

Why should they, when they can take it all? The status quo bleeds the homeowner dry at a quicker pace and gives the banks more money to leverage and loan.

All homeowners and sympathetic citizens [we’re in this together] have got to realize that it’s them or us, and do the smart, effective thing. Strategic default as policy!

Bank of America's $335 Million Settlement Is the Cost of Doing Business

2011-12-24T13:21:00.000-08:00

Bank of America agreed to pay the largest award in history for violations of fair housing laws. Even so, the amount doesn’t come close to the injuries suffered. I can only hope that the agreement spurs Eric Holder and the Department of Justice onward as opposed to resting on their laurels.

After an investigation of Countrywide Financial that focused on the years 2004-2008, the DoJ found a widespread pattern of blatant discrimination.

Bank of America, which absorbed Countrywide in 2008, agreed to pay $335 million to settle claims that it discriminated against minority borrowers by making them pay higher fees and placing them into costly subprime mortgages when they had the same credit histories as non-Hispanic whites who received prime mortgages.

Because subprime mortgages offered a higher yield, investment banks snapped them up to bundle, tranche and resell them to eager investors. Countrywide brokers received a higher commission for signing borrowers to subprime contracts and independent brokers contracting with Countrywide were paid even higher commissions than that.

This settlement wasn’t a matter of ideological bias. It was based on statistics; in other words, counting heads. The Department of Justice compared the number of minority borrowers with non-Hispanic white borrowers who shared the same proximate credit background:

The odds of a minority applicant being steered into such a loan were more than twice as high as those for a non-Hispanic white borrower with a similar credit rating, the department said. About 2/3s of the victims were Hispanic and one-third were black, the department said.

If a judge approves the settlement, victims will receive between several hundred and several thousand dollars, with larger amounts going to those who were steered into subprime mortgages despite qualifying for regular loans.

Even though this was by far the largest amount paid by a violator of fair housing laws, the monies paid to aggrieved parties will barely dent their injuries. Most of the victims were placed in ARMs (adjustable rate mortgages). As opposed to a fixed-rate mortgage where a borrower paid the same amount of interest over the life of the loan, an ARM started with a low “teaser” rate.

If it was a 2/28 ARM (a very popular form of subprime mortgage) after two years the interest rate could ratchet up 3-4 times higher. To give an example, a 30-year 4% fixed-rate mortgage on a $500,000 loan averages out to about $2,400 monthly. If the ARM jacks up to 10% after two years, the monthly payment becomes $4,220.

Conservatively speaking, using the figures supplied by the Justice Department investigation, 10,000 homeowners were put into subprime mortgages under false pretenses. According to the above calculations, each borrower paid an excess of $21,840 annually (the difference between 4220 and 2400 [1820] x 12).

$21,840 x 10,000 homeowners is an eye-popping $218,400,000, 65% of the total settlement. In other words, the settlement for Countrywide’s malfeasance (now Bank of America’s liability) would barely make the injured homeowners whole for one year.

Countrywide’s criminal practices allowed it to accumulate $200 billion in assets until it collapsed and was taken over by Bank of America for $2.8 billion. Don’t mean to compare apples with oranges, but while Bernie Madoff’s victims howl to be made whole, management at these mortgage lending criminal enterprises skimmed hundreds of millions off the top and walked away, possibly suffering small fines (the cost of doing business), while their bleeding victims fight desperately to forestall homelessness.

Cassandra's Predictions: Financial Tips to Pick Off Spoils from 1%

2011-12-10T09:03:00.000-08:00

If you believe in psychic powers and/or future forecasting, you ignore Cassandra at your peril.

1) Mario Draghi, head of the ECB, will never allow "Club Med", etc. debt to be monetized. If you haven't already, buy credit default swaps on eurozone sovereign bonds. Even Merkel wouldn't dare prevent all holders from qualifying and collecting.

2) Facebook pre-IPO stock at artificially bargain-basement prices has already been allocated in the secondary market (or through some other opaque mechanism). Short it for a month after the IPO.

$7.7 Trillion to Banks Minus $7.4 Trillion from Homeowners = Debt Slavery

2011-12-08T03:15:00.000-08:00

IDEAS ARE MORE POWERFUL THAN MONEY.

THAT’S WHY THE OCCUPY WALL STREET, ETC. PEACEFUL DEMONSTRATORS ARE TREATED SO HARSHLY.

THEY LAY BARE THE HYPOCRISY AND HOLLOW FOUNDATIONS OF OUR “DEMOCRACY”.

An unelected group accompanied by bankers as their board of directors, The Federal Reserve secretly lent $7.7 trillion to financial institutions during the economic collapse, according to Bloomberg News, which has been trying to get Fed records since 2009. The Fed and the banks have fought disclosure all the way to the Supreme Court, which turned down the case. Congress didn’t know about the money, even when it was debating TARP, the controversial $700 billion bank bailout pushed by then-Treasury Secretary Hank Paulson. Many Treasury employees under Hank Paulson didn’t know about the secret lending program. Even some Fed governors didn’t know about it:

The amount of money the central bank parceled out was surprising even to Gary H. Stern, president of the Federal Reserve Bank of Minneapolis from 1985 to 2009, who says he “wasn’t aware of the magnitude.”

$7.7 trillion is more than half the U.S. annual GDP. One can only conclude:

a)      The too-big-to-fail banks were in much worse shape than they told their shareholders, depositors and the world;
b)      If the extent of their insolvency was known, Congress might have pushed for greater restrictions, such as breaking up the banks.
c)   We should have shut them down and started new banks like the North Dakota State Bank.

During one day (12/5/2008) banks required a $1.2 trillion infusion.

The six “too-big-to-fail” banks (JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley received $160 billion from TARP but borrowed as much as $460 billion from various Fed lending facilities, including the Term Auction Facility (TAF).

In a letter to shareholders, Jamie Dimon, the CEO of JPMorgan Chase, said the only reason it borrowed any money from the Fed was to encourage other banks to borrow to lessen the “stigma”:

He didn’t say that the New York-based bank’s total TAF borrowings were almost twice its cash holdings or that its peak borrowing of $48 billion on 2/26/2009 came more than a year after the program’s creation.

The Fed justified its actions by claiming that its programs prevented a collapse of the financial system and “[kept] credit flowing to American families and businesses.” This was not true. Most businesses had trouble borrowing even with good credit. Despite their easy access to funds, banks became extremely risk-averse. The credit lines of small businesses and individuals were cut. The Fed also said, “all loans were backed by appropriate collateral.” If the collateral was “appropriate”, why would the banks need so much money?

At the same time that they were accepting so much money and lying to their shareholders and the world, the big banks fought fiercely against regulation, particularly the idea that they should be broken up. The epithet “too-big-to-fail” meant that a collapse in one sector would cause a chain reaction leading to systemic financial meltdown.

By keeping the true nature of their insolvency secret, the Fed and the banks conspired to maintain and enhance their monolithic power. This is moral hazard on a global scale. The market perceives that the government won’t let these banks fail because of their size. Therefore, the big banks borrow money at lower rates than other businesses that don’t jeopardize the world financial system. The bankers speculate wildly because they know the losses will be borne by the taxpayers, thus ensuring a future collapse.

The Federal Reserve, an unelected body, basically decided which businesses would live or die.

Here are two figures:

The Fed acting in secrecy plugged a $7.7 trillion hole in the rapidly collapsing banks. At the same time,

$7.4 trillion was lost in housing wealth by the middle class when bubble burst.

That’s the amount of wealth that’s been lost from the bursting of the housing bubble according to the Federal Reserve’s comprehensive Flow of Funds report. It’s how much homeowners lost when housing prices plunged 30% nationwide.

Nobody stood by to bail out the homeowner. The middle class, the engine of prosperity, was being destroyed. Wage gains over the past few decades were negligible or declining. Households kept up with spending with two working adults instead of one. Then housing came into play as a tradeable asset and asset prices rose. Values soared far beyond objective touchstones. You couldn’t get a raise or make money in the stock market, but you could refinance your house in order to spend. That bubble spending spawned auxillary businesses and jobs, all of which are now gone with the wind.

“[O]n average, American homeowners lost 55% of the wealth in their home.” :

For the 22 million families right in the middle of the income distribution (those making between $39,000 and $62,000 before taxes) about 90% of their assets was in the house. Now half of their wealth is gone and it will never come back as long as they live.

The engine has sputtered to a stop. The middle class is mired in debt. 28% of all U.S. mortgages are underwater. People are faithfully making their mortgage payments with no hope they will get out from under their enormous overhang of debt, praying that they don’t get sick or fired. There is no extra money to spend. The American consumer, responsible for 70% of GDP, is tapped out.

Our leaders aren’t acting or even talking seriously about this crisis. But why should they?

With the upper classes prospering and global markets booming, they don’t need the U.S. middle class anymore. The market is up, profits are soaring and the corporate jet is fueled and ready for takeoff.

And the middle class can’t buy bread? Let them eat cake.

When the bubble burst for the homeowner, the value of his house went down. His mortgage, however, stayed the same. Commercial real estate debt could be restructured in the courts; not so for residential mortgages. Ordinary market rules don’t apply. William C. Dudley, the president of the Federal Reserve Bank of New York (Tim Geithner’s old haunt) contrasted the separate systems of working out troubled debts:

”In contrast to the efficient mechanisms in place in the commercial property market…the infrastructure of the residential mortgage market is wholly inadequate to deal with a systemic shock to the housing market. Left alone, this flawed structure will destroy much more value in housing than is necessary.”

Many homeowners resent any sort of substantial mortgage modification or heaven forbid, principal reduction because they perceive themselves as responsible and the others irresponsible. They did not borrow more than they could afford. Others lied about their income, bought McMansions on a janitor’s salary and were otherwise profligate. This is the same moralizing that cuts off your nose to spite your face.

The housing story is a tawdry one, starting with poorly explained and badly underwritten subprime mortgages given to unqualified borrowers sometimes financing 100% of the cost. Wince while following the chain of private-label securitizations which enriched every link with fat fees starting with the mortgage broker who was paid for every loan he made however rotten, the investment banks pooling the toxic mortgages together and slicing the sausage slapped with a phony triple-A rating and sold to investors who didn’t do their due diligence. The securitization machine was so fast and sloppy that proper recordkeeping wasn’t done and papers proving ownership were lost or forged. However, if you focus on the tree, you can’t see the forest. Take another case: Germany’s self-righteousness may lead it into poor bond auctions and credit rating downgrades:

[F]ocusing on such outrages can obscure what needs to be done. By now we should understand that the problems went far beyond the subprime market. There are many prime loans, made to responsible borrowers with good credit, that are in deep trouble. Property values did not collapse only in the neighborhoods where dubious loans were being made.

Housing prices are still falling. Banks are still making fees servicing mortgages, delinquencies and foreclosures. Over the last two quarters the percentage of underwater homeowners has increased by 25%. As housing equity declines, the homeowner groans under more and more debt until it becomes “unsustainable”; that is, all his excess income is going to pay the mortgage. He has no job mobility because he can’t sell his house. Federal, state and local governments are slashing their budgets, laying off millions of workers. The private sector has moved its operations overseas to emerging markets, local labor and consumers with discretionary income. They’re hiring over there, and cutting jobs here.

Moral superiority and righteousness can drag us down the road of austerity just as it’s doing in the Eurozone. Just as the Fed made its choice with its unlimited secret trillion-dollar lending program, so too do unelected banking representatives put in place in the Troika, Greece and Italy make their decisions based on austerity for the underclass. As an economic growth engine, austerity is genocide for the people. For the banksters seeking to wring every dime from a pauper, it’s manna from heaven. For the self-righteous like Jens Weidmann, head of the Bundesbank, it’s tough love and just desserts for the wastrel “Club Med” countries.

It’s as though The Merchant of Venice had a new ending: Shylock gets his pound of flesh on a platter. In exchange for a neat billion-dollar package, the dutiful country will slash salaries and hike taxes on the working and middle class.

You can see an example of the two sides of the coin within Ireland:

The German chancellor, Angela Merkel, recently praised the Irish prime minister, Enda Kenny, for setting an “outstanding example” while the French president, Nicolas Sarkozy, declared that Ireland was already “almost out of the crisis.”

The Troika and other financial powerhouses (I’m sure Geithner and the president are there, too) are happy. But the Irish people are suffering:

Salaries of nurses, professors and other public sector workers have been cut around 20% [that’s in 1 year]. A range of taxes, including on housing and water, have increased. Investment in public works is virtually moribund.

On Monday and Tuesday, Mr. Kenny’s government is announcing an additional 3.8 billion euros in tax increases and spending cuts for 2012 that will affect health care, social protections and child benefits.

There are glimmers of statistical recovery which are belied by the lack of demand and unemployment ticking up to 14.5%. The rate would be even higher if it weren’t for so many natives leaving for other countries and the hope for more opportunities. Highly trained professionals such as accountants, engineers and dentists are moving with their families for Australia and Canada and they’re not looking back.

The Economic and Social Research Institute, based in Dublin, “cited an expected recession in the wider euro zone, in part because the austerity being pressed on much of Europe by German and the ECB is seen as worsening the prospect for recovery rather than improving them.”:

”The present situation contains elements reminiscent of policy during the Great Depression, when a mounting crisis was confronted by an orthodoxy that resulted in great poverty that could have been avoided,” the institute wrote in a report.

The only thing the powerful care about in the developed world, the U.S., the UK and Europe, is reverse Robin Hood. Take from ordinary folk, the taxpayer, to pay off the creditor. Everything else has no importance. Only money and debt have value. In this cruel, cold, pitiless and deadly world, only the vulnerable are attacked because in essence the power structure is craven and cowardly. It goes after the easy marks, the powerless and gladly bends on its knees to those who can shower it with gold. Simon Johnson, the professor at MIT’s Sloan School of Management and a former economist at the IMF, predicted the global takeover of predatory finance in his essay The Quiet Coup, comparing the capture by financial oligarchs to emerging market behavior and emerging market-crises:

”The euro zone is entering a very serious slump…Why Ireland would want to send its time being a model student in the context of the broader European mishandling of the situation, I don’t know.”

In the meantime, the Irish are shining their lights on the Occupy movement:

On a recent frosty night in Dublin, David Johnson, 38, an IT consultant, stepped outside a makeshift camp set up by the Occupy Dame Street movement in front of the Irish Central Bank.

“This is all new to Ireland,” he said, pointing to tarpaulins and protest signs that urged the government to boot out the IMF and require bondholders to share Irish banks’ losses that have largely been assumed by taxpayers. “The feeling is that the people who can least afford it are the ones shouldering the burden of this crisis.”

Here ye, here ye! An I.T. consultant sympathetic to the Occupy movement! How can that be, when we are all told that we are ignorant and must be reborn as software engineers or else we cannot stay? Well, what kind of system is this?

It's Not Speculation, It's a Sure Thing: When the Treasury Secretary is in charge of inside information

2011-11-30T16:38:00.000-08:00

The financiers of Wall Street believe fervently in Social Darwinism. They make so much money (watch out for those January 2012 bonuses) because they are better. [Circular reasoning: also, they are better because they make so much money.] Not that they’re lucky. Or that they have a sure thing in a rigged game.

Take Goldman Sachs. It can’t resist dividing up the world into winners and suckers. In the late aughts GS had John Paulson, the notorious hedge fund manager enriched by shorting subprime mortgage market, choose a portfolio of lousy mortgage backed securities to create a synthetic collateralized debt obligation (CDO). Then he bet against it. He made $1 billion on this one transaction. GS got a $15 million fee. It promoted the CDO as a great investment, telling buyers that an independent third party chose the portfolio. If an investor got a whiff of Paulson’s hand in the mix, the CDO would’ve been toast. So GS made out on the front and the back end, telling one story to its clients/suckers while enriching itself with the other.

After years of FOIA filings, Bloomberg News got the inside dope on similar Goldman Sachs double-dealing, which went all the way to the top. On the same day that Treasury Secretary Henry Paulson told the New York Times that Fannie Mae and Freddie Mac were being vetted by the Federal Reserve and the Office of the Comptroller of the Currency and the results would cheer the market, he told a group of hedge fund managers at a meeting at the office of the hedge fund Eton Park in NYC that Fannie and Freddie were hemorrhaging losses, they’d be put into a structure called a conservatorship where the government would pump them with money to replace the heavy losses they were suffering from mortgage defaults, and their equity would be wiped out. (Fannie Mae and Freddie Mac were private corporations with implicit government backing. They bought and guaranteed 50% of the mortgages in the U.S. but they didn’t control the lax underwriting standards of the securitization daisy chain.)

The short version:

July 21, 2008 am--Paulson told the New York Times that Fannie/Freddie would be just fine

July 21, 2008 pm--Paulson told hand-picked hedge fund managers, many former GS employees, that Fannie/Freddie would tank.

July 21, 2008--Fannie Mae share price = $14.13; Freddie Mac share price = $8.75

September 6, 2008--Fannie/Freddie go into conservatorship; stock worthless.

Before Paulson was Bush’s Treasury Secretary, he was CEO and Chairman of Goldman Sachs (1999-2006).

Paulson gave his buddies a gift of insider information, defined as “material, non-public information”. Straight from the horse’s mouth. In essence the Treasury Secretary told a select group of people to short the hell out of Fan/Fred and walk away with wheelbarrows of money. Their activity would have been buried within the plethora of investors shorting Fan/Fred anyway.

Records show that many investors were betting against Fannie Mae and Freddie Mac at the time. According to Data Explorers Ltd., a London-based research firm, short interest in Fannie Mae shares rose sharply in July, from 86.3 million shares on July 9 to 163 million shares on July 14. Short interest continued to rise, to 240 million shares, on the day of the Eton Park meeting: it hit 262 million on July 24, its high for the year. Freddie Mac’s short interest showed a similar trajectory.

Isn’t what Hank Paulson did illegal? Well, no. As far as anyone can prove, he didn’t profit financially. And “the rules for what can or cannot be disclosed by government officials are often either unclear or nonexistent.” As Adam Zagorin, a senior fellow at the Project on Government Oversight, a Washington watchdog group, says:

”You can’t prosecute them for insider trading if they didn’t trade the shares. You may not even be able to reprimand them. What the hell are the rules?”

Paulson consulted with his Wall Street buddies many times during his tenure.

The question is: how brilliant do you have to be to make a bundle when the Treasury Secretary is spoon feeding insider information?

The Bloodless Coup in the Eurozone: Financial Totalitarianism Disguised as Democracy

2011-11-27T05:34:00.000-08:00

Thousands of years and countless rivers of blood and treasure to decide European hegemony. Athens was the birthplace of democracy. Italy was the Renaissance capital of feuding royal states.

Now there is no need for bloody wars to decide the fate of European sovereignty. The all-powerful Troika (the European Commission, the ECB and the IMF) has pulled off a bloodless coup , pushing out democratically elected officials in both Greece and Italy to replace them with unelected “technocrats” from a cozy financial network.

The word “technocrat” is efficient and innocuous. It hides illegitimate leadership. The word also disguises the incestuous relationships between the money men and women.

The bankers are in charge because the elected leaders of the Greek and Italian people couldn’t meet the demands of investors in their government bonds. It’s not that the leaders didn’t try. They were willing to face riots, strikes and vociferous opposition to do their bidding. But all their efforts couldn’t calm the markets. So the Troika put their own people in charge.

Lucas Papademos replaced Greek Prime Minister Papandreou, who had the temerity to suggest that the Greek people vote on austerity. Papademos had been head of the Greek Central Bank when it joined the Eurozone:

Papademos was in charge when Greek officials lied about their fiscal position to the EU authorities and he presided over the failure of the Greek government to collect taxes from rich Greeks (like himself)…Greece is to be run by the very man responsible for getting them in this mess.

Even though Italy didn’t get a bailout, Prime Minister Berlusconi was pushed out and Mario Monti, another “technocrat”, took his place. Monti worked briefly for Goldman Sachs, then became EU Commissioner for years, where he insisted on “liberalizing and deregulating” markets. He is a close friend of the new head of the ECB, Mario Draghi, another Italian banker:

In the 1990s, when a number of countries, including Italy and Greece, engaged deliberately in credit swap transactions to take part of government debt and deficits off the official accounts with the connivance and help of Goldman Sachs in particular, Draghi was director general of the Italian Treasure and then joined Goldman Sachs (2002-2005). Not even two degrees of separation: Draghi and Papademos both got their doctorates in economics at MIT in 1978.

Ex-French finance minister Christine Lagarde leads the IMF. She headed up a global law firm that advised on “creative accounting” schemes for government debt. Her deputy, David Lipton, used to work at Moore Capital, a global hedge fund. Klaus Regling, who also worked at Moore Capital, runs the European Financial Stability Facility (EFSF), an entity created to provide bailouts.

There is barely a quarter of the money needed for a true bailout fund in the EFSF (440 billion euros versus an estimated 2 trillion euros) but many investment houses have imaginative ideas of how to create a structured, tranched vehicle leveraged at four times the size of the fund. These are the same ideas that demolished the housing market. But no matter:

Fees from EFSF bond issuance will be worth 1% of a likely $100-billion of issuance to the big European banks and the likes of Goldman Sachs. So they will be making good money out of the “bailout” funding.

The Greek people are not happy with their plight. Says Alexandros Moraitakis, president of the Nuntius stock brokerage firm, most of whose employees have been laid off (in the past two years, the Greek stock market has lost 75% of its value):

“Greece does not decide, now the troika people decide, and they make experiments in the Greek market,” he says. “Up to now they were unsuccessful. Without growth, nothing will be done.”

Unemployment has doubled. Even after two years of harsh measures, Greece is in recession and spiraling downward. Not only has the Troika demanded austerity in exchange for bailouts, it has also put its own people in the indebted countries to oversee their progress:

[T]here’s widespread criticism that the troika is going to have a permanent office in Athens for the rest of the decade.

German Chancellor Angela Merkel has made clear that over-indebted eurozone countries must be closely overseen by international inspectors.

To lose sovereignty because of economic bumbling leading to German domination is the kind of poisonous tonic that topples governments.

Newspaper publisher and journalist George Kirtsos points out that statements by German politicians disparaging the Greek people have revived old memories of the brutality of the German occupation during World War II.

The Troika’s severe, almost punitive quid pro quo demanding not merely creditor sovereignty but crippling austerity is in stark contrast to the Marshall Plan (aka The European Recovery Plan or ERP), which was a large-scale American program to aid European economies devastated by World War II. The U.S. allotted $13 billion for the plan. In addition to the $12 billion it spent as a bridge covering the time until the plan came into affect, its cost was 10% of U.S. GDP of $258 billion. 17 countries were included. The

European recipients didn’t receive the goods and services as a gift; they were loans to be paid back in local currency, usually on credit.

The Marshall Plan money was in the form of grants that did not have to be repaid. In addition to ERP grants, the Export-Import Bank (an agency of the U.S. government) at the same time made long-term loans at low interest rates to finance major purchases in the U.S., all of which were repaid.

In the case of Germany there also were 16 billion marks of debts from the 1920s, which had defaulted in the 1930s, but which Germany decided to repay to restore its reputation. This money was owed to government and private banks in the U.S., France and Britain. Another 16 billion marks represented postwar loans by the U.S. Under the London Debts Agreement of 1953, the repayable amount was reduced by 50% to about 15 billion marks and stretched out over 30 years, and compared to the fast-growing German economy were of minor impact.

As Kirstos said, “[I]f you want to do nation-building and force the Greeks to pay the price for the German nation-building in Greece, this is something that cannot be done in political terms.”

Anti-German statements are everywhere:

There are growing fears that Germans are plotting to buy Greek monuments and islands on the cheap, and there’s a revival of anger over Greek demands for compensation for Nazi atrocities

The occupying overseer from the Troika is referred to as the Gestapo.

Now that the “technocrats” are in charge, what’s the plan? More public sector spending cuts, higher taxes, massive privatization of state assets and other measures to ensure that all the bonds held by the European financial sector are paid back in full and there is no default.

Even though Greek private sector debt got a 50% haircut, the average Greek will still suffer a 30% reduction in living standards over the next decade. And government debt will be at least 120% of GDP by the end of the decade at best, burdening the next generation with repayment into the following generation.

The same problem besets Italy. As 58-year-old Pietro Pappagallo, an Italian citizen from Bari, said:

”I’m worried about my savings that could become waste paper. All the efforts to put something aside and I won’t get anything for it. I’ve already faced four changes of my pension. I had planned my life out and now they say I have to work more. As a father, I worry for my children, who will probably never have a pension.”

The Troika (de facto, German Chancellor Merkel) wants many things: financial capital paid in full, no default, punitive measures against profligate nations “to toe the line on fiscal prudence and run balanced budgets and get their debt down so that the burden of taxation on the profits of the capitalist sector can be reduced.”

Does it matter that the very people calling the shots today were the ones helping these governments hide their debts for fat fees? It should be recognized and shouted to the rooftops that democracy is merely a cover for financial totalitarianism. A sharp rebuke from the Troika and both democratically-elected Papandreou and Berlusconi were ejected. Generations of the lower 99% who had little or nothing to say about complex financial transactions disgorgin fees here and there will live out diminished lives with little expectation of change.

The sick joke of it all is that austerity as a program of economic growth doesn’t work:

The reality is that, despite all the efforts of the social democrat leaders in adopting “neoliberal” policies of fiscal austerity, privatization, reduction in pension benefits and the destruction of labor protection laws, Greece will still not meet the targets set by the Troika.

Maybe the endgame isn’t austerity. Maybe it’s privatization: picking off priceless assets for fire sale prices. The vultures are circling.

Wall Street vs. OWS: Do the crime and don't do the time

2011-11-22T19:17:00.000-08:00

What’s the score? Let’s go to the videotape:

In one corner, thousands of Occupy demonstrators evicted, pepper sprayed, violently yanked, penned like animals, and arrested.

In the other corner, there’s the FIRE (financial, insurance & real estate) sector. Recent example: MF Global hedge fund racing to bankruptcy in the last week of October. Nothing to see here. Move along. No arrests, no convictions, no perp walks. Just massive looting. It couldn’t keep its hands off all that luscious customer money.

First $600 million of customer money was missing. Now as much as $1.2 billion may be gone. What’s a few 100 millions between newly minted enemies? It seems that MF Global is guilty of sloppy bookkeeping.

The FBI and federal prosecutors are mobilized and they have an answer. How does the NY Times put it?:

[Their] inquiries have increasingly homed in on the theory that much of the customer money had left the firm.

That sounds like customer greenbacks sprouted legs and arms, sauntered into the street and hailed a cab.

That money left and it ain’t coming back:

No one at MF Global, including its former chief executive, Mr. Corzine, has been accused of wrongdoing.

You know what’s coming back? History, in the form of repeating itself. Despite the obvious mountains of evidence that Wall Street caused the 2008 economic collapse that’s still playing out as a massive redistribution of wealth from the bottom to the top, no one was held accountable:

The fallout from the collapse of MF Global has renewed calls for tougher regulation of the futures industry, which has long relied on the principle that customer money is always safe.

In other words, trust the fox to guard the hen house. Any regulator (think Elizabeth Warren) or politician (think Dodd-Frank) who remotely hints at oversight is crushed in an extortionate vise.

Days before its Chapter 11 filing…MF Global was taking what amounted to free loans from its clients.

No one at MF Global is charged with any crime. Sloppy bookkeeping. The customer money marched out the door. If you park your money on Wall Street, you’re a sucker.

The ECB Puts the Screws On the Italian People

2011-11-15T12:28:00.000-08:00

From the beginning, the European Central Bank (ECB) made its choice: Euro banks get unlimited liquidity while sovereign nations must institute painful austerity programs in exchange for bailout crumbs. GDP growth is declining in general but in “good” countries like Ireland, which did everything the Troika asked for, unemployment increased exponentially and the misery index went vertical.

Italy is now the focus. Investors are demanding ever higher yields on Italian debt, which leads to dropping asset prices and collateral calls, and then Italy has to pay even higher yields until it can no longer cover the cost of running its government. If Italy goes, there goes the eurozone.

Even with Berlusconi gone, replaced by Prime Minister-designate Mario Monti who cut his teeth at Goldman Sachs, on Monday Italy had to pay almost 100 basis points more (6.29%) than it did a month ago for a 5-year bond (5.32%). Its 10-year bond yields at 6.77% increased to more than three times that of the 10-year German bonds.

Popular sentiment is that the southern euro countries are getting what they deserve for profligate spending and widespread corruption. But Italy has been a solvent nation with the economic resources to service its 1.9 trillion euro ($2.6 trillion) debt. Italians save at a higher percentage of income than Americans. As events escalate, facts fall by the wayside and investor fear and distrust take over.

The Federal Reserve in the U.S. acts as lender of last resort if necessary and puts the full faith and credit of the United States behind its massive IOUs. Buyers still flock to the perceived safety of Treasury bonds despite its recent ratings downgrade from AAA to AA. The 10-year U.S. Treasury bond yield is 2%. The ECB emphatically refuses to expand its single mandate, fighting inflation, to include issuing Eurobonds, which would lower bond yields for suffering nation-states. It fights fiercely to dispel the impression that it might backstop the debt of a country whose bankruptcy could drag other countries down with it. French banks, for instance, have large holdings of Italian sovereign bonds.

The ECB is not above manipulating markets to achieve the results it wants.

There are memos indicating that it held back on purchasing Italian bonds in order to force out Berlusconi. The ECB could float the perception that it would backstop accelerating debt. That might be enough to calm investor fears and drive down bond yields. Since last year it bought 187 billion euros’ worth ($256 billion) of sovereign bonds on the open market. That’s a drop in the bucket.

The financial-industrial complex is firmly in place. The Troika has already installed their own people as overseers to police the austerity program. Mario Monti, economic technocrat, has already

outlined plans to upend the Italian system:

In Italy, Prime Minister-designate Mario Monti began talks to create a new government of non-political experts as a letter has appeared outlining Italy’s plans for austerity including plans to cut 300,000 public-sector jobs by 2014, raise the pension age and cap the amount of debt local governments can carry.

Without an ECB nod in the direction of Eurobonds or operating as the lender of last resort, a psychologically-driven endgame can lead to countries falling like dominos into bankruptcy. But the Germans are in charge. Their people are vociferously opposed to any accommodations for its southern neighbors even if they bring themselves down in the interim. They fear inflation. Historically, it’s hurt them badly. Most economists dismiss that result as the entire eurozone, impacted by overwhelming debt and austerity programs head into double-dip recessions, higher unemployment, higher taxes, spending cuts and lack of demand. However, without the consent of Germany, the strongest economy in the euro area, there doesn’t seem to be a force strong enough to prevent Ferraris from driving straight into a brick wall.

Standard & Poor's shoots France in the head, then says it's sorry. Time for a duel.

2011-11-12T11:51:00.000-08:00

In the midst of the Eurozone/Euro mess, as the troika (the European Commission [EC], the European Central Bank [ECB] and the International Monetary Fund [IMF]) work furiously to contain (didn't Bernarke claim “containment” re: subprime disaster in 2007?) the contagion of investor panic and debt yields rising to unsustainable levels, Standard & Poor’s “accidentally”sent out an "erroneous" email on Thursday suggesting that it lowered France's triple-A rating. Not that it was planning to lower it, but that it already had.

Hmmm. Can it be a coincidence that the EC is planning to issue new rules on credit ratings agencies in a few days?

In the U.S. we've already seen the damage wrought by the three Stooges, Standard & Poor's, Moody's and Fitch's. They plastered triple-A ratings all over toxic waste mortgage-backed securities (MBSs) and collateralized debt obligations (CDOs--which entail pooling MBSs and slicing them up). As the true nature of these putrid instruments revealed itself, the credit ratings agencies downgraded the obtuse structured financial vehicles to junk bond status, sometimes dropping them several notches within a week.

Because the issuers of the "debt" pay the agencies to rate them, the conflict of interest was (and still is) evident. The agencies have strong incentive to lie upwards and they did to a fantastic degree. Unfortunately, the damage was done. Pension funds and other fixed income cash cows were caught holding the bag.

In the U.S. the credit ratings agencies hide behind the First Amendment. Their legal argument is that they cannot be held accountable because they are merely issuing "opinions". It's your tough luck if you take them seriously. You rock the financial world, not them.

The European regulators are trying to put protections in. A draft released earlier this week made that clear:

European supervisory authorities would be able to temporarily prevent the issuing of ratings on countries in "a crisis situation."

Investors would also gain a framework to take legal action against agencies "if they infringe intentionally or with gross negligence" on their obligations. A ratings agency would also have to disclose information about is rating methodologies.

Standard & Poor's errant email went out on Thursday just before 4pm Paris time when the European markets were still open. Its "opinion" thrust a knife into "containment". The yield for France's 10-year bond jumped 25 basis points to 3.48% and the spread between 10-year French and German bonds hit 1.7%, a euro-era record. S&P waited 2 hours to issue a correction, after the European markets had closed.

A shot across the bow, eh? A bit of nasty extortion.

"Calling All Liberals: It's Time to Fight"

2011-11-02T03:01:00.000-07:00

We need a coherent, muscular liberal narrative. The Occupy Wall Street movement, quickly spreading globally and heroically taking on all challenges, has lit the match. Now it’s time for the rest of us to stand together. We have to stitch together the disparate movements and rumblings: Fighting to defend teachers, cops and other public sector workers; battles in Wisconsin and Ohio; organized movements like Rebuild the Dream and Tavis Smiley’s Poverty Tour.

People say, what’s wrong with President Obama? Why isn’t he standing up for the progressives? (Of course, people have been saying that since he was President-elect.) In the 11/7/11 issue of The Nation, Benjamin R. Barber builds his Fighting Liberal theory in a concrete foundation:

We need to recall what FDR said to A. Philip Randolph when the Pullman Porters Union president complained bitterly about how Roosevelt wasn’t backing the union’s struggles. “Make me do it!” said Roosevelt. Liberals need to stop blaming Obama and make him do it.

The Zuccotti Park (Liberty Plaza) congregation fights for liberty as a public good. Humans live in social relationships. They are citizens, not consumers, and in a democracy citizens are the government:

Taxation, far from being a bureaucratic scam to steal our hard-won earnings by some alien “them” or “it”, is the way citizens pool resources to do public things together they can’t do alone. Attacking the power to tax is attacking the power of the people to spend their money in concert to achieve important public goals, whether national defense, public education or social justice. The anti-tax ideologues pretend to protect us, but in truth they disempower us.

If you don’t think we’re the tail wagging the dog of technology, chew on this bone:

A Chinese company that partners with Apple plans to replace thousands of its Chinese Foxconn workers with up to a million robots.

Foxconn workers, eh? Sigh. All those suicides and deprivations gone with the wind.

A fighting Liberal Narrative must oppose radical marketization—the predatory capitalism that increases productivity and profits without creating jobs.

There has to be a new metric, a new blasphemous paradigm along the lines of the sun as the center of the universe around which the earth rotates as opposed to the centuries-old belief that the earth was the center of the universe. Get rid of the politicized, shopworn accounting tricks calculating the GNP:

The social dimensions of employment maybe be an externality [an externality is something apart from an agreement yet derives from it], but it is crucial as to why work matters and should be at the center of a fighting liberal vision. It also explains why liberals should propose a new metrics that includes indicators of social goods and human happiness when we measure, for example, GNP.

Why are the creative contributions of artists, teachers and scientists not part of national product? Why aren’t environmental costs a debit? The current system in effect socializes the invisible public costs of capitalism, spreading them across the backs of taxpayers while privatizing the visible profits. This is not capitalism but corporate welfare—socializing risk for the rich and powerful while leaving the poor to the social Darwinism of a pitiless marketplace.

We liberals want to rebuild the dream and the Occupy Wall Streeters are marching for it. Freedom is public—a shared product of strong democracy. More money is not one man, one vote. It’s Orwell’s Animal Farm, “Some are more equal than others.”

The Unlimited Corruption of Citizens United: What to do about campaign financing?

2011-10-23T06:11:00.000-07:00

Citizens United v. FEC threw the rule book out the window. It blew everyone's mind, not the least of which were corporate executives. Now, instead of sending candidates and parties voluntary donations from employees to run advertisements, they could send millions scooped out of their multi-billion dollar businesses, Of course, it was the company's money, meaning the shareholders, but that didn't seem to bother anyone in 2010.

The Campaign Legal Center reported on financing behavior and reporting in 2010 in the wake of Citizens United. The arena had become increasingly deregulated and opaque, a regular free-for-all. For the first time in 60 years, corporations and unions could spend their own funds on ads expressly advocating the defeat or election of a candidate. They could spend it directly or direct the money to an outside group like a tax-exempt foundation which didn't have to disclose donors.

Psychologically corporate executives behaved very differently than they had in the past. Armed with the SCOTUS seal of approval, they felt little worry about shareholders or consumers and had tax-exempt vehicles as safe houses guaranteeing their anonymity:

[C]orporate executives are feeling freer to act on their perceived economic and ideological interests and to spend corporate funds--rather than money from their own pocket--to support business-friendly candidates.

How do you stuff the reckless forces unleashed by Citizens United back into Pandora's box? One suggestion is greater disclosure. Who is funding these "special interests"? How are they benefiting? Are foreign interests involved? Do oil and gas men supply seed money for the new Chair of the Energy Committee?

Unfortunately, disclosure rules are looser than ever. Corporations can funnel their advocacy money into 501(c)(4)s or 501(c)(6)s, tax-exempt groups which can run election ads without revealing their donors. In most cases, the FEC requires disclosure only when a donor targets a particular ad. Because the fundraising is done before specific ads are created, the need for disclosure is negligible.

In 2004, 71% of disclosure reports filed with the FEC detailed the names and associations of donors. In 2010, only 15% of disclosure reports gave the source of their funds. Most of the 501(c) groups didn't disclose at all. No one knows who's giving to whom or what. Another neutered FEC rule: 501(c) groups cannot have political activity as their primary focus but in practice they often do.

Without enforceable and rigorous disclosure rules, how will we know whose buying our representatives and how much they cost? Who is benefiting from "special interest" spending? What's the quid pro quo? Make public who the beneficiaries are in hopes they may be embarrassed and behave (although that's dubious). Another suggestion is to reveal how politicians vote in response to the business interests their lobbyists represent. Perhaps we can try a go-round with public financing, especially for Presidential candidates. Big-money influence is very powerful in Washington, but cynicism and corruption is costing the American people a fortune.

Citizens United v. Federal Election Commission (2010): Its Meaning and Implications

2011-10-23T02:31:00.000-07:00

To sum it up:

CORPORATE SPENDING = FREE SPEECH

Anything that regulates corporate spending on political advocacy either of a candidate or a cause has a chilling effect on the First Amendment, that of Freedom of Speech.

Holding: Political spending is a form of protected speech under the First Amendment, and the government may not keep corporations or unions from spending money to support or denounce individual candidates in elections.

By removing existing restraints on what and when profit-making and non-profit corporations may say during federal election campaigns, the Court has significantly raised the financial stakes for all such elections.

SCOTUS struck down previous law that restricted corporations from using their own in-house cash to spend on politics. It seems that corporate spending on politics is equal to free speech. Political spending gets more constitutional protection because more money is greater (not equal) to less money..

Analysis: This was a constitutional decision, laying down (essentially for the first time), a sweeping free-speech right in politics for “special interest” bodies of all types with the concept of “speech” clearly embracing spending money to influence election outcomes. If individuals have considerable freedom to express themselves politically, corporations, labor unions, and other “special interest” entities now do, too.

Citizens United reversed a previous holding that federal law prevents corporations and unions from using their general treasury funds to make independent expenditures for speech that is an “electioneering communication” or for speech that expressly advocates the election or defeat of a candidate. 2 U.S. C. 441b.

An “electioneering communication” is “any broadcast, cable or satellite communication” that “refers to a clearly identifiable candidate for Federal office” and is made within 30 days of a primary election, and that is “publicly distributed” which in “the case of a candidate for nomination for President…means” that the communication “[c]an be received by 50,000 or more persons in a state where a primary election…is being held within 30 days.”

Corporations and unions may establish a political action committee (PAC) for express advocacy or electioneering communications purposes. In McConnell v. FEC, this Court upheld limits on electioneering communications, relying on the holding in Austin v. Michigan Chamber of Commerce, that political speech may be banned based on the speaker’s corporate identity.

As Roberts wrote in the majority reversing the previous precedent, a communication “is the functional equivalent of express advocacy only if [it] is susceptible of no reasonable interpretation other than as an appeal to vote for or against a specific candidate”. [B]ecause speech itself is of primary importance to the integrity of the election process, any speech arguably within the reach of rules created for regulating political speech is chilled.

As a result of the Citizens decision, for all intents and purposes the free flow of other people’s money (OPM) in the self-interest of the corporation filling an unlimited amount of cash in the coffers of candidates that will do its bidding is constitutionally protected. The more money spent, the greater the impact.

The St. Petersburg PoliFact.com blog quoted an Occupy Wall Street sign, “94% of winning candidates in 2010 had more money than their opponents” (10/5/11) in order to dissect it to get to the truth. Even if the year and percentage given don’t align precisely, the PoliFact background check proves that more money in the campaign till gives political candidates a huge advantage over their opponents. At the very least, 85% have prevailed since 2000.

The importance of campaign money and fundraising cannot be overestimated. By allowing unlimited spending because it is constitutionally protected free speech, it cannot be regulated as “electioneering communications”. The protections afforded such spending under the First Amendment outweigh any petty concerns about the corrupting influence of money on politics.

Another SCOTUS decision, Reynolds v. Sims (1964), seems to contradict the implications of Citizens United. The justices were deciding an apportionment case in Alabama where in some counties there was 1 representative per x amount of voters and in another there were 14 per x. They struck down state senate inequality based on the principle of "one person, one vote" , voting 8-1.

In his majority opinion, Chief Justice Earl Warren said, "Legislators represent people, not trees or acres. Legislators are elected by voters, not farms or cities or economic interests."

I doubt that Chief Justice Warren (who is probably considered a judicial activist by many on the right, although he was appointed by the Republican President Dwight Eisenhower) would equate corporate spending with free speech. Under the Citizens United decision, some free speech is wealthier and more powerful than others.

If you take into account history and statistics, the fact that unlimited corporate spending on politicians and their causes is protected under the first amendment can seriously undermine our representative democracy of "one person, one vote". The politician will be more beholden than ever to a large corporate donor with business interests before Congress. It's as though the justices cannot fathom that dangling unlimited funds without restriction in front of politicians can corrupt them and the process.

The Citizens United decision will only increase the public's distrust and dislike of politicians, politics and the political process. Congress's approval rating currently is so low it is barely perceptible. Citizens United seems to take the voter out of the political equation entirely. He is merely an afterthought, a thorn in the side of the beautiful relationship between a politician and his donor.

Timeline for One Party Rule--A Look Back

2011-10-22T23:35:00.000-07:00

Sorry for the slithering shape of the chart. It's legible enough. It's not comprehensive enough. Add your own thoughts.

1964 Goldwater Republican nominee-Reagan delivers fiery speech at convention.

1976 Buckley v. Veleo: No restrictions on contributions from individuals and groups could be set so long as the contributions were not directly part of an election campaign.

1978 First National Bank of Boston v. Bellotti: Corporations had a first amendment right to make contributions in an attempt to influence political processes. Prohibiting the expenditure of corporate funds for “influencing or affecting”voters’ opinions infringed on corporations’ “protected speech in a manner unjustified by a compelling state interest.”

1980 Reagan elected—“The gov’t is the problem, not the solution”—Reagan lowers marginal tax

rate from 70% to 28%. Deregulation—“Trickle-down theory”—Voodoo Economics

1986 Greed is good—Private citizen Grover Norquist starts Taxpayer Protection Pledge. All Republicans must sign loyalty oath to survive.

1992-2000 Clinton President; Robert Rubin Treasury Secretary; Larry Summers Ass’t TS

The great triangulator—the third way

NAFTA

Ended welfare

Ended Glass Steagall

Giant budget surplus

2001-2008 George W. Bush President

9/11 pretext for everything: 2 wars; revocation of habeas corpus; enemy combatants

Tax cuts for the rich—tremendous wage gains for top 1% (esp. 5 of 1%); all other wages flat

or decline.

Giant budget deficit—unfunded mandates

Unitary president—the president is absolute monarch—signing statements; torture memos.

Alan Greenspan (1987-forever): Ayn Rand acolyte; the market knows best.

Real estate bubble bursts—Lehman goes bankrupt—TARP—Trillions spent to bailout banks

Foreclosures begin/unemployment keeps going up.

2008-Present Obama President

                        Obama wins presidency with 56% of the popular vote and a clear mandate for change.
                        Passes $787 billion stimulus package derided as "too big" and "too little".
                        Passes Affordable Care Act amid slurs of "death panels".
                        Foreclosures continue.

Unemployment doubles.

2010 Citizens United vs. Federal Election Commission: Political spending is considered a form of protected speech under the First Amendment and the government may not keep corporations or unions from spending money to support or denounce individual candidates.

While corporations or unions may not give money directly to campaigns, they may seek to persuade the voting public through other means, including ads, especially when those ads were not broadcast.

Tea Party starts up funded by Koch Brothers, multi-billionaire mineral excavators descended from John Birch Society

Necessary for super-majority (60 votes) in Senate under threat of filibuster.
Obama's legislation is obstructed across the board.

Every Obama initiative blocked including judicial confirmations.

Osama Bin Laden eliminated.
Qaddafi eliminated.

Mitch McConnell-Senate Minority Leader: Defeat Obama at all costs.
Republicans refuse to bring any Obama initiatives to the floor, let alone put them to a vote.
Republicans veto raising the debt ceiling, causing an S&P currency downgrade to AA status.
Republicans' strategy is to destroy the economy to win the election.

Republican Blueprint for One Party Rule

2011-10-22T23:15:00.000-07:00

What they learned:
No universal draft.
No more Bork SCOTUS nominations: Stealth idealogues take the Fifth to promote corporate interests.
Plug like-minded judges in every state and local slot.
Every Republican marches in lockstep spouting the same talking points.

Blanket Media Disinformation/Dissemination:
Fox News
Rush Limbaugh
Glenn Beck
Sarah Palin
Little Green Footballs

FULL COURT SOBRIETY PRESS

Think Tanks

Heritage Foundation

American Enterprise Institute

Cato Institute (founded by

the Koch Bros.)

"Free Market" Enforcement

Deregulation

Trickle down theory (aka voodoo economics)

Privatized profits, socialized losses

Buy the politicians and write the legislation

Make the Laws-Establish Your Own Law School

Regents Law School-inventor of the Unitary Executive theory constitutionally supporting the Executive Branch as absolute monarchy (especially prevalent during George W. Bush reign)

Treat Americans like vampires except instead of wooden stakes drive fear into their hearts.

Protect dirty tricksters. They have a distinguished lineage: Donald Segretti, Lee Atwater, Karl Rove, Roger Stone, and the media giants, James O'Keefe and Andrew Breitbart. Who can forget Willie Horton? Or John McCain's illegitimate black baby? Or Hillary killing Vince Foster?

How to Get to One Party Rule

2011-10-22T22:47:00.000-07:00

I have documents, incontrovertible proof, that there is a systematic, decades-old project to move the country to One Party Rule. It's been engineered by concentrated wealth and single-minded pursuit of the goal to funnel all public money into private hands under the mantle of "one hand washes the other".

In 2001, at the time Congress passed the Bush tax cuts (estimated cost $1.3 trillion and there was no talk of "pay as you go"), Grover Norquist, he of the "No Tax Increase" loyalty oath, famously crowed, "I don't want to abolish government. I simply want to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub."

The plan is not to get rid of all government institutions and civil servants: the EPA, the NLRB (well, maybe that one), the Department of Education (that one, too), the Post Office (that one, too), teachers, firemen, policemen, sanitation workers, transportation workers, infrastructure programs, etc.

The idea is to defund these government institutions and civil servants so that government cannot work effectively; thereby demonstrating that government fails so we should sell off public space/assets to private entities. The Republicans don’t have to shut down government, they just have to starve it to get everyone to agree that it doesn’t function.

The next post will illustrate what lessons the Republicans learned and their resulting tactics.