Oh yeah – this is just exactly right. Thank You MyBudget360.com for this excellent piece. And yes, it does boggle the mind. Indeed it does…
Banks are showing their true colors and what little regard they have for the average American. As they advertise with cute and friendly faces assuring consumers they are looking out for their best interest, behind their backs they send in a locust of lobbyist onto Washington to do everything in their power to gut any sensible financial regulation. The vultures are picking off every piece of what used to be the middle class. This is the model of the new banking and financial system that many will have to contend with. Americans have seen their access to loans and credit contract at the fastest pace in history while banks have now opened up an unlimited credit card with the taxpayer paying the bill for too big to fail. Banks are doing their best to create a narrative that “if we didn’t bailout the banks then the world would have ended storyline” but the vast majority of Americans did not support the banking bailout.
If you want to see how quickly credit is contracting take a look at this:
The chart above merely highlights what you already know. Banks no longer trust the average American. While they based all their bailouts on the idea that taxpayer money was needed to keep banks lending this has been a lie. In fact, banks need the money to plug the hole that their toxic assets are burning on their balance sheets. You can also look at the amount of credit card offers you are getting in the mail to gauge how quickly the market has changed. No longer do banks want to give credit out (that is, unless it is government backed like mortgages which they are all the more willing to lend out).
The U.S. has over 8,000 banks with the large concentration of assets in 10 banks. These banks continue to use bailout funds to plug the problems from the boom years. But this is not in the best interest of average Americans. If Wall Street and politicians were honest, the bailouts would have been labeled as a massive charity to the elite of the country who made disastrous bets over the past decade. The public takes the lumps while Wall Street actually gets richer. While banks don’t want to reel in their spendthrift ways, Americans are pulling back:
Americans are now having to save more and more of their money as is expected in a tough economy. Yet banks are back to gambling in the stock market while shutting down lending to consumers. Banks are playing the poor me card by arguing that with too much tight regulation, they can’t make loans because they are worried about future balance sheet problems. Thanks for telling us after you took the public money under false pretenses! But this is all a political ploy to steal from the working class. With so many people just unable to even service the debt and rising bankruptcies, banks are now going after good customers who pay their bills on time each month just because they are running out of “options.” Don’t be fooled. They are reaping billion dollar profits because they are using excuses to squeeze the golden goose dry. How about we allow the typical American to borrow at the subsidized low rate from the Federal Reserve directly? Why in the world do we need banks to operate as loan sharks in between? What we need is to transform the banking industry into a utility model. A model designed to serve the people, not the banks. After all, why should they get the privilege of borrowing at criminally low rates while everyone else has to pay the interest and subsidize their gambling adventure?
Even after all the correction in the market American households still carry an inordinate amount of debt:
A giant portion of income simply goes to pay off debt. A large part of the debt is interest or money the banks can suck out of the neck of middle class Americans. Banks live off this margin. Take for example a $100,000 30 year fixed rate mortgage at 6 percent:
Principal: $100,000
Total Interest: $115,838
In the end, you are paying more than the initial cost and all that interest goes to who? What purpose does it serve? Banks are delusional and want the public to believe in the propaganda that they need to charge a higher rate because of “risk” in the loan. Are they kidding? We already know that they are being supported by the entire Federal Reserve and U.S. Treasury. They can make the most insane kind of bets and ultimately the taxpayer will eat the bill. And keep in mind many of these banks are borrowing at low levels from the Federal Reserve. Why not allow the public to keep some of that interest? How is this bad? If banks were lending their own money it would be a different story but they are not. They are creating a dishonest narrative and most Americans are not buying it because they operate in reality and not some parallel universe where you can create something out of nothing.
Just think of the billions charged in overdraft fees. This is criminal. Why not just default debit cards to stop once the account is dry? Instead they want people that charge a $2 burger a $39 over draft “convenience fee” for this nonsense. Are you kidding? Most people don’t want this. They find out the hard way and now billions have left the wallet of consumers for this nice little loan shark fee. $39 can buy you lunch for a few days so this is nothing to laugh at when 38,000,000 Americans find themselves on food assistance. The bulk of the billions are paid by the poor. Good job banks for helping your fellow Americans. Yet banks are leeches sucking the productive life blood out of the economy with gimmicks like this. Time to break the banks up and turn them into utilities.
Take for example JP Morgan. They announced a Q4 profit of $3.28 billion. Where did they make their money?
“(Huff Po) JPMorgan’s biggest trouble spots were in consumer banking and credit card lending. The bank’s retail financial services division, which includes its mortgage operations, lost $399 million. That was worse than the final quarter in 2008, when credit markets had essentially shut down because of the collapse of banks including Lehman Brothers.
The company reported increases in mortgages that were charged off, or classified as uncollectible, including prime mortgages, the highest quality home loans. It also reported an increase in home equity loan charge-offs.”
Wait. So mortgages are being charged off as foreclosures remain high. And this has spread to so-called prime mortgages as the unemployment and underemployment rate remains at 17.9 percent. So let us write off mortgages to average Americans. Where in the world did they get those billions? Maybe they made good money in their credit card unit:
“The credit-card lending division lost $306 million during the final three months of 2009. Results would’ve been worse had the bank not had a payment holiday in the period.”
More losses here? So we’ve ruled out credit cards and mortgages which have become the life blood for Americans. We’re running out of places to look for where they can make a $3 billion profit:
“Despite the ongoing problems with consumer banking, JPMorgan is still performing well because of its robust investment banking unit. As long as stock and bond markets continue to improve, the bank will be able to churn out profits and reward its employees handsomely.
JPMorgan’s investment bank earned $1.9 billion during the fourth quarter, while its asset management division generated $424 million in net income.
Fees from financing debt and stock offerings continued to surge in the fourth quarter. Debt financing fees jumped 58 percent to $732 million from the same quarter a year earlier, while stock financing fees climbed 66 percent to $549 million.”
And there you have it. We are financing Wall Street’s wonderful gambling casino once again while the traditional banking model has collapsed. How this isn’t the number one priority for the government and the people to fix is simply astounding. How we have had no serious financial reform after 26 months of the Great Recession boggles the mind.
Whenever I try to explain off book accounting to people – to tell them what it is the banks are doing – or, for instance, why they would rather not take the short sale, do the loan mod or ‘help’ the homeowner…
I get blank looks, blank stares and shrugging shoulders. It’s not so easy to understand because it is so blatant that it just doesn’t seem as if something like this could really be going on in the good old US of A…
People say things like “Well, they can’t do that can they?” or “Isn’t that illegal?” or, one of my personal favorites: “Why hasn’t the government done anything to stop this?”
Of course the answer is that the government is the one who told the banks they could play this game – back in Spring of ‘09 when they allowed the banks to ‘adjust their accounting’ for the ’stress tests’. Uh huh. Yeah, that… so that they could continue to show defaulting mortgages at PAR (that means being paid as expected and current, up to date payments on book) even though they had not received payments, in say, two years…
This is the underlying truth about why no one can tell what is happening with their own mortgage by looking at their neighbors’ houses or mortgages. The answer depends on how the bank has decided to handle the books on each individual loan and they clearly handle them differently for reasons no one can fathom from the outside.
The latest interesting wave of these odd ball experiences of homeowners is the Notice of Cancellation and Rescission of Notice of Default – this new creature began showing up just before the end of 2009 in the mail of homeowners who were still behind, had no loan modifications completed, were still trying to work out how to save their homes or do short sales or what have you – and in cases where the homeowner had made no significant change in their status as behind on the subject loan(s).
Turns out there was another way the lenders could get paid – through insurance policies, and homes in default got a smaller insurance payoff than those that were not marked with the big red D.
This little piece by Mr. Denninger sheds some light on the bigger picture to help everyone see it more clearly:
ADMISSION By FDIC: Massive Balance Sheet FRAUD
Remember this Ticker from a few days ago?
I am constantly amused by those people who claim there is some vast “conspiracy” in this country when it comes to banks, balance sheets, and fraudulent lending and accounting.
There is no conspiracy.
It is, in fact, “in your face” fraud.
Well, one of the people on the forum emailed The FDIC to ask about what I had alleged. This was their response:
That’s the value the bank had them on their books on their year-end financials, but the true value is much less. It is similar to someone in Las Vegas saying that their house is worth $300,000 because that’s what they paid for it three years ago, but the reality is, if they had to sell it in today’s market, they’d only get $250,000 for it. The FDIC has to sell assets in today’s market.
–db
Or tomorrow’s market.
The simple fact of the matter is that there it is, right in front of you.
A raw admission that the banks are carrying these loans at dramatically above their actual value.
Yes, this means that essentially all balance sheets must now be considered fraudulent, and thus the valuations assigned by the market to them are also fraudulent.
Extending this to the stock market as a whole you now have a market that is intentionally overvalued as a direct and proximate consequence of fraud, permitted and endorsed by the government, of somewhere between 25-40%.
Now you know why the market rallied off the SPX 666 lows to where it is now. 1139 (where we are now) * .60 (a 40% haircut) = 683.40, or awfully close to that 666 bottom.
Of course this “valuation” expressed in the market can only be maintained for as long as the fraud is. If the ability to maintain that fraud is lost for any reason then values will instantly collapse back to reflect reality.
Still sleeping well with your investments?
There’s a reason that states like California passed Non Recourse Loan laws – It was to protect homeowners from speculative lending which could strip their communities of their homes with exotic, over inflated and predatory lending practices – remember them? Seems like no one is talking about them anymore – and this article from CNN money is no exception -
Here’s the best quote from the whole piece I think:
The head of Citigroup’s mortgage division recently told CNNMoney.com that principal reductions were not under consideration because it raises the risk of moral hazard, meaning those who don’t deserve it would try to take advantage of the program.
Really??? Who might that be, who might ‘take advantage’ of the opportunity to not be over-encumbered in useless unsupportable debt? Seems it was not an issue when JP Morgan Chase wanted to give back those suddenly not so nice office buildings in San Francisco…
That being said, why should any homeowner who is willing to stay and pay the mortgage not be provided an equally fair finding? Particularly when that homeowner has lost their job, had a massive change in income, and or is simply unclear as to why they should pay for an inflated value mortgage on a property that is not worth the note.
What is to say a homeowner should continue to carry a burden that has no rational relevance other than that the banks got everyone to pay way too much for way too little for a little while before they pulled the rug out?
Since when do we owe lenders who supposedly believed housing prices would always go up just because they say they believed this nonsense? Since when do historical patterns of boom and bust suddenly transform into magical golden ages of never ending expansion and not go from boom to KAboom?
Who the hell are we trying to kid here?
So CNN tells us the banks would rather take longer terms and lower interest than reduce principal – NO KIDDING! Really? Me TOO if I were the CREDITOR!
This has become a fast moving game of strip naked and the ones being stripped are the people if you have not yet figured that out – and it is not showing any signs of stopping.
Loan modifications with front end requirements of 7, 8, 10 12, 18 20 thousand dollars cash or MORE – not to GET the loan mod – but to ‘be considered’ for one -
Short sales ONLY if the homeowner cannot AFFORD the payments! What if the homeowner has figured out he doesn’t want to OWN that liability? If the lenders can GIVE THEIRS BACK why can’t the homeowner sell his for what it will bring and let the lender who was so financially astute as to be the professional at the table making the loan PAY for his GREED?
That is how the REAL world works.
But we don’t live in the real world anymore.
Sure we need to help those who need it – and in that regard this article is right – but in regards to what needs to be done really, and how to do it – the associate law professor has it right – force them to take the principal write downs; but not just for the insolvent – FOR EVERYONE WHO IS UPSIDE DOWN due to the banks predatory lending practices of bubble inducement.
They created this mess – let them eat it – it was their profit bubble and now they have to pay for it. What? The banks have a better idea? They say instead we just keep handing them all the rest of our hard earned assets like a bunch of sheep. Makes no more sense than working hard all week and then burning your own paycheck. But then if the debtor gets his advice and instruction from the creditor, what else do you expect?
Insanity.
Housing help for unemployed, underwater borrowers
NEW YORK (CNNMoney.com) — Under pressure to do more for troubled homeowners, President Obama announced Friday a $1.5 billion program to help borrowers in the five states hit hardest by the housing crisis.
The initiative calls for pumping money into state housing agencies in California, Arizona, Nevada, Florida and Michigan to fund programs to prevent foreclosure for people who are unemployed or who owe more than their homes are worth.
Also, the agencies can assist homeowners having trouble securing loan modifications because of second liens, as well as promote affordable housing opportunities.
Obama unveiled the initiative, which will be funded with money from the TARP bank bailout, at events in Nevada, which has the highest number of underwater homeowners at 65% and the nation’s second-highest unemployment rate at 13%.
How the effort will help people, however, remains to be seen. The administration did not provide many details on the agencies’ programs, saying it was leaving it to them to come up with the solutions. At least three of the agencies, in Florida, Arizona and Michigan, were surprised by the announcement and are still assessing how they will utilize the money.
The move is the administration’s latest attempt to fix its signature foreclosure-prevention effort, the Home Affordable Modification Program, which has been widely panned for not doing enough.
The year-old initiative, which lowers qualified borrowers’ monthly payments to no more than 31% of pre-tax income, has placed more than one million people in trial modifications. But it has given lasting help to only 116,000 homeowners, mainly by lowering their interest rates.
Denied! No long-term mortgage help
Consumer advocates and housing experts for months have called on Obama to expand the program to help the jobless and those suffering steep declines in their home value, two sectors that have received relatively little assistance from the modification effort.
Also, many homeowners with second liens have had difficulty getting into the loan modification program. In April the administration had announced a program that provided incentives for these lenders to work with borrowers, but only Bank of America signed up — and it did so only last month.
A senior Obama official cautioned that the new program is just another tool in the White House arsenal, not a full solution to the housing woes facing the unemployed and underwater.
“As important as $1.5 billion will be to these five states, it’s not going to solve what is a catastrophically large problem,” said the official, speaking to reporters on a conference call. “It’s going to help, as many of the other programs do.”
Reaction to the announcement was mixed, with some housing experts praising the administration for addressing these issues and others saying it’s still not enough.
State housing agencies
Traditionally, state housing agencies — which are state chartered but mostly operate independently — focus on affordable housing, providing assistance to first-time homebuyers and those with low incomes.
Several, however, also administer programs that cater to those facing foreclosure. For instance, Pennsylvania’s housing agency lends money to the jobless and those suffering temporary financial hardships to help them cover their mortgage payments. Created in 1983, it currently provides loans of up to $60,000 for as long as 36 months. The program, which sends money directly to the lenders, can cover both arrears and monthly payments.
Since its inception, it has distributed a total of $450 million and helped more than 43,000 people. Last year, it received about 14,000 applications — about twice the average — and assisted 3,250 people. The average loan is $10,500 and is paid back with 5.25% interest once the homeowner gets reestablished.
Close to 80% of those helped by the program have avoided foreclosure, said Mark Schwartz, a board member of the finance agency.
“The program shows that giving short-term temporary assistance can be successful in helping people retain their homes,” he said.
The senior administration official was vague about how these agencies would help the target audiences, saying mainly that these groups are intimately involved in their local housing markets.
They could develop programs that assist the unemployed until they find jobs, help the underwater negotiate principal reductions with their loan servicers and pay incentives to second-lien holders to get them to agree to loan modifications, according to the White House. The official pointed to the Pennsylvania program, as well as those in Connecticut and Massachusetts, as examples of promising initiatives.
“We want this to be a fund that amplifies the things that are working well and gives license for more innovation,” the official said.
Walking away
Some housing experts say that homeowners who owe more than their homes are worth are more likely to walk away from the properties. Still, loan servicers have been reluctant to reduce borrowers’ principal balances, preferring to lower interest rates or lengthen the term of the loan.
The head of Citigroup’s mortgage division recently told CNNMoney.com that principal reductions were not under consideration because it raises the risk of moral hazard, meaning those who don’t deserve it would try to take advantage of the program.
The majority of underwater mortgages are heavily concentrated in five states being targeted by the president: Nevada, at 65%; Arizona, at 48%; Florida, at 45%; Michigan, at 37%; and California, at 35%, according to the research firm First American CoreLogic.
These states also have among the highest unemployment levels as well, with Michigan at 14.6%, Nevada at 13%, California at 12.4%, Florida at 11.8%. Arizona has a jobless rate of 9.1%, which is better than the national 9.7% rate for January, according to the Bureau of Labor Statistics.
Housing experts were divided in their view as to whether the president’s new initiative would make a significant dent in these troubled sectors.
Brent White, an associate law professor at University of Arizona, does not think it will. “$1.5 billion is just not going to address the problem,” said White, an expert in underwater mortgages who advocates forcing banks to write down principal.
But others were more hopeful. Paul Willen, a senior economist with the Federal Reserve Bank of Boston who has studied the impact of unemployment on foreclosures, said the state agencies can do more to help.
He was not troubled by the fact it may take time for the efforts to get off the ground since he said the foreclosure crisis will continue for a while. “The HFAs have the flexibility to construct a program that will help the people who really need it,” Willen said.
Who else can get away with calling this the evidence of Goldman’s doing ‘God’s work’?
Thanks for keeping us laughing, Stephen.
| The Colbert Report | Mon – Thurs 11:30pm / 10:30c | |||
| Greece’s Economic Downfall – Scheherazade Rehman | ||||
|
||||
What on earth has happened to logic and rational thought? Why on EARTH would ANY population of people of ANY nation pay the debts of PRIVATE BANKS who never even have had to make ANY reparations?
The wealthy men who stripped the assets of the peoples of Netherlands and the U.K. for their own purposes still hold their wealth, and in fact the head of one of the former banks now lives in London – no prosecution, no retribution – while the people of Iceland have their nation’s credit ratings stripped by the VERY SAME RATINGS AGENCIES WHO OVERSAW AND APPROVED THE RATINGS OF THE INSTRUMENTS RESPONSIBLE FOR THE COLLAPSE AS TRIPLE A RATED SECURITIES!? Why aren’t the ratings agencies in jail with the bankers and the wealth so stolen returned from the private accounts of all of these unholy thieves?
Surely, Alice, the world has gone mad as a hatter. Completely and utterly mad… I think we have arrived here at last:
“If I had a world of my own, everything would be nonsense. Nothing would be what it is, because everything would be what it isn’t. And contrary wise, what is, it wouldn’t be. And what it wouldn’t be, it would. You see?
— The Mad Hatter”
Congratulations to the people of Iceland for Rejecting the insanity. Now let’s see if their government can keep up with them, or if they too are lost in the Mad Hatter’s world…
“Voters rejected the bill because ordinary people, farmers and fishermen, taxpayers, doctors, nurses, teachers, are being asked to shoulder through their taxes a burden that was created by irresponsible greedy bankers.”
It is interesting that the government of Iceland had already declared the vote of the people as ‘obsolete.’ One has to wonder when the voters will declare their current government and their representatives as obsolete. One would give them credit for at least allowing a vote on a referendum.
Iceland is a victim of the neo-liberal economic deregulation of the 1990’s, in which a few bankers can buy the government, and rack up enormous profits for themselves in Ponzi like leverage, and then attempt to socialize the debt back to the people when their schemes collapse.
Neo-Liberalism is a system of economic thought embracing the efficient markets hypothesis, the inherent good of deregulation and the natural impediment of government regulation, the necessity of free trade and globalization, the supremacy of the corporation over the individual person in the social economy, and supply side economics. It most likely favors a one world currency and consolidation of production into large corporate combinations or ‘trusts’ under the principle oflaissez-faire.
Neo-liberalism may degenerate into crony capitalism, or even corporatism, as its theoretical idealism of perfect rationalism and virtue falters against the reality of human behaviour. In times of financial crisis, for example, neo-liberalism ironically turns to centralized economic planning by allegedly private banks which appropriate public funds and the power of the monetary license to socialize private debts, and, in a strikingly Orwellian twist, eviscerate the discipline of the markets and the individual to preserve their freedom, and the well being of the private corporations. Although now largely repudiated, neo-liberalism has strong roots in the public consciousness, and its adherents hold considerable power in Western governments and among the ‘freshwater school’ of American economics.
What makes neo-liberalism and neo-conservatism ‘neo’ or new is their attitude towards the relationship of the individual to the state. Both tend to denigrate and diminish the condition and rights of the inividual as compared to the consideration of the corporate system or the centralized command state.
In the States, the Congress and the President have just ignored the massive protests against their own bank bailouts. The US was able to cloak its own debt assumptions through accounting frauds, claiming that the bailouts were repaid by the banks. The bailouts are wrapped in AIG, Fannie and Freddie, and the Federal Reserve. This is the advantage of owning the currency, the IMF and ratings agencies. And of course your media.
Although Europeans and the markets are looking at the ‘PIGS’ for the next serious default as the economic hitmen are moving from Iceland to Greece, the real test of globalization in financial markets and the dominant control of the private banks will come in the UK, a sovereign people too proud and strong to go down into feudal servitude and the rule of tyrants easily. Or at least one would hope.
Bloomberg
Iceland Rejects Icesave Depositors Bill in Referendum
By Omar R. Valdimarsso
March 7 (Bloomberg) – Icelanders rejected by a massive majority a bill that would saddle each citizen with $16,400 of debt in protest at U.K. and Dutch demands that they cover losses triggered by the failure of a private bank.
Ninety-three percent voted against the so-called Icesave bill, according to preliminary results on national broadcaster RUV. Final results will be published today.
The bill would have obliged the island to take on $5.3 billion, or 45 percent of last year’s economic output, in loans from the U.K. and the Netherlands to compensate the two countries for depositor losses stemming from the collapse of Landsbanki Islands hf more than a year ago. The island’s political leaders say they’ve already moved on to talks over a new accord.
“The government’s survival doesn’t rest with this Icesave vote,” Prime Minister Johanna Sigurdardottir told RUV after the preliminary count was announced. “The government coalition remains solid,” Finance Minister Steingrimur Sigfusson told RUV.
Failure to reach an agreement on the bill has left Iceland’s International Monetary Fund-led loan in limbo and prompted Fitch Ratings to cut its credit grade to junk. Moody’s Investors Service and Standard & Poor’s have signaled they may follow suit if no settlement is reached.
‘Obsolete’
Iceland’s leaders are trying to negotiate a new deal with the U.K. and the Dutch that focuses on the interest rate payable on the loan, making the bill in yesterday’s vote “obsolete,” Sigurdardottir said on March 4.
Dutch Finance Minister Jan Kees de Jager in a statement posted on the Internet last night said he is “disappointed” the agreement hasn’t yet come into effect. The U.K. was “obviously disappointed,” while “not surprised,” said a Treasury official who declined to be identified in line with departmental policy.
Iceland’s government pointed to “steady progress toward a settlement” in the past three weeks in a statement.
“The British and Dutch Governments have indicated a willingness to accept a solution that will entail a significantly lower cost for Iceland than that envisaged in the prior agreement,” the statement said.
The U.K. and Netherlands have offered an interest rate of the London Interbank Offered Rate plus 2.75 percentage points, according to the U.K. Treasury official. That’s the same as the rate for the loan from the Nordic countries that the Icelandic Government accepted in July 2009. The new offer also gave relief on the first two years of interest for the loan, amounting to 450 million euros.
‘Ordinary People’
The three governments have declared their intention to continue the talks, the Iceland statement said.
Voters rejected the bill because “ordinary people, farmers and fishermen, taxpayers, doctors, nurses, teachers, are being asked to shoulder through their taxes a burden that was created by irresponsible greedy bankers,” said President Olafur R. Grimsson, whose rejection of the bill resulted in the plebiscite, in a Bloomberg Television interview on March 5.
The Icesave deal passed through parliament with a 33 to 30 vote majority. Grimsson blocked it after receiving a petition from a quarter of the population urging him to do so. The government has said it’s determined any new deal must have broader political backing to avoid meeting a similar fate.
Icelanders used the referendum to express their outrage at being asked to take on the obligations of bankers who allowed the island’s financial system to create a debt burden more than 10 times the size of the economy.
Protests
The nation’s three biggest banks, which were placed under state control in October 2008, had enjoyed a decade of market freedoms following the government’s privatizations through the end of the 1990s and the beginning of this decade.
Protesters have gathered every week, with regular numbers swelling to about 2,000, according to police estimates. The last time the island saw demonstrations on a similar scale was before the government of former Prime Minister Geir Haarde was toppled.
Icelanders have thrown red paint over house facades and cars of key employees at the failed banks, Kaupthing Bank hf, Landsbanki and Glitnir Bank hf, to vent their anger. The government has appointed a special commission to investigate financial malpractice and has identified more than 20 cases that will result in prosecution.
Economic Impact
The island’s economy shrank an annual 9.1 percent in the fourth quarter of last year, the statistics office said on March 5, and contracted 6.5 percent in 2009 as a whole.
Household debt with major credit institutions has doubled in the past five years and reached about 1.8 trillion kronur ($14 billion) in 2009, compared with the island’s $12 billion gross domestic product, according to the central bank.
Icelanders, the world’s fifth-richest per capita as recently as 2007, ended 2009 18 percent poorer and will see their disposable incomes decline a further 10 percent this year, the central bank estimates.
Grimsson, who has described his decision to put the depositor bill to a referendum as the “pinnacle of democracy,” says he’s not concerned about the economic fallout of his decision.
“The referendum has drawn back the curtain and people see on the stage the matter in a new perspective,” he said in an interview. “That has strengthened our position and our cause.”
###
Tonight I am awash in information, observation, opinion, and close to overwhelm.
But let’s take it one step at a time.
I finally got up the courage to watch
Food Inc. Was alternately devastating and encouraging.
I had no idea I’d see POLYFACE FARM on there. I’ve been a fan for a bit now.
And the seed saver being sued by Monsanto for ‘Patent infringement’ who still goes about his life driving from independent farm to farm, helping them collect and save their seed in spite of the huge multi-nationals suing him just for living outside their monolithic parasitic patent claiming reach.
No soy seed in the US is not OWNED now – (or is that the world?) and GM too – and infesting/infecting the local growers so they may be sued for air borne pollination and therefore patent infringement. Thank you Clarence Thomas. The anti christ of George Washington Carver?
Or the lady chicken farmer who insisted in spite of the insanity to keep the open windows houses – but even she had lost her heart and soul to their production – she couldn’t do it any more…
Or the workers rounded up by Smithfield’s complicit agreement with the Govt of turning in illegal workers – just at a rate that doesn’t slow down their production… a maelstrom of emotion and enragement moved all through me – Good thing I had had a nice dose of Temple Grandin and her remarkable insight and wisdom and caring before that road unveiled itself to me.
From there I moved on to Nathan’s Economic Edge and a piece about paid lobbyists and representatives of specific special interests being invited guests on National News programs discussing – imagine that – things for which they were/are being paid to promote a certain position or point of view…
Well – I think, if we put all this together we have pretty well put our finger on it: the multi national and special interest monied purchasers of our perception/perspective and our consumer dollars – so long as we can’t see what they do we are easy prey, unwitting pawns.I’m ready to say – “okay – I get it! Game over – ”
I can’t buy your food. I never watched your news – and now I’m clear that that is why I’m NOT crazy and everyone else seems to be… and I’m not wrong for deciding that the choice is still ours, still personal and still real, if we decide it is important enough to make a choice.
Here’s Nathan’s Piece:
Corporate Lobbyists and Public Relations Firms behind Cable News Outlets
Since 2007, at least 75 registered lobbyists, public relations representatives and corporate officials have appeared on cable news broadcasts “with no disclosure of the corporate interests that paid them,” The Nation magazine (March 1) reveals.
Many of these people are “paid by companies and trade groups to manage their public image and promote their financial and political interests,” writes the magazine’s Sebastian Jones, a freelance reporter after a four-month-long probe.
“Many have been regulars on more than one of the cable networks, turning in dozens—and in some cases hundreds—of appearances,” Jones reports.
For example, Tom Ridge, identified as the former governor of Pennsylvania, appeared on MSNBC’s Hardball With Chris Matthews urging the White House to “create nuclear power plants.” What viewers were not told, though, is that Ridge since 2005 has pocketed $530,659 in executive compensation for serving on the board of Exelon, the nation’s biggest nuclear power company, Jones writes.
On the same day, last Dec. 4th, retired general Barry McCaffrey, told MSNBC viewers the war in Afghanistan would require a three-to-ten-year effort and “a lot of money.” Unmentioned, Jones says, was the fact DynCorp paid McCaffrey $182,309 in 2009 alone and that DynCorp has a five-year, $5.9 billion deal to aid U.S. forces in Afghanistan.
Jones describes MSNBC as “the cable network with the most egregious instances of airing guests with conflicts of interest.” He notes, “Only on MSNBC was a prime-time program, Countdown, hosted by public relations operative Richard Wolffe and later by a pharmaceutical company consultant, former Governor Howard Dean, with no mention of the outside work either man was engaged in. And MSNBC has yet to introduce DynCorp’s Barry McCaffrey as anything but a ‘military analyst.’”
Moreover, last January 22nd, MSNBC’s Morning Joe audience saw Mark Penn, identified only as a Clinton administration pollster, suggest the Obama administration put healthcare reform on ice. Unmentioned, says Jones, was “Penn’s role as worldwide CEO of Burson-Marsteller, which has an entire healthcare division devoted to helping clients like Eli Lilly and Pfizer ‘create and manage perceptions that deliver positive business results.’”
Jones reports that what transpires on MSNBC also occurs on Fox News, Fox Business Network, CNN and CNBC. These outlets “eager to fill time and afraid of upsetting the political elite, have often looked the other way (and)at times…have even disregrded their own written ethics guidelines.” MSNBC may be the most flagrant example of deception but the other networks do not appear far behind.
During a Sept. 18, 2008, Fox News appearance to discuss Sarah Palin, Bernard Whitman, president of Whitman Insight Strategies—whose clients include marketing/PR firms like Ogilvy & Mather—lambasted Sen. John McCain for proposing to “Let AIG fail,” saying his position demonstrated “just how little he understands the global economy today.” Whitman’s “ongoing work” for AIG was not mentioned!
“When there’s a whole host of pundits on the airwaves touting the same agenda at the same time, you get a cumulative effect that shapes public opinion toward their agenda,” Janine Wedel, an anthropologist at George Mason University told Jones. Another academic, Jay Rosen, journalism professor at New York University, said, “More disclosure is good—I’m certainly in favor of that—but why are these people on at all?”
That’s a very good question. MSNBC, Fox, and the others guilty of deceptive journalism owe their viewers an apology. Such broadcasts are neither fair nor balanced. They are deceptive, slanted, and contrary to the public interest. The cable broadcasters need to pledge to their viewers to reveal the hidden corporate agendas of their guests. Until that time, viewers can always turn them off.
This type of thing is just counter to the best interests of our country. No one is there to police it anymore because so many have been co-opted. The provisions within Freedom’s Vision Political Reform would take care of most of this.
Please support Freedom’s Vision by registering for the Swarm!
Thank You!
Listening tonight, to Temple Grandin’s audio book on using the mysteries of autism to translate animal behavior, I was struck by her explanation of why zero tolerance in the meat packing industry doesn’t work.
It’s the same reason, really, that it doesn’t work anywhere we apply it – from schools to courts to employers and employees to government: it is not designed to work.
Quite simply, zero tolerance is designed to fail. Oh, perhaps not intentionally, but fail it will, and every time. Why? Because it is the direct application of what Grandin would call abstracted thought to real life situations. It is, indeed, the result of a non – perceiving, mentally over stimulated human mind upon a real or potentially real life situation.
Over time, people cannot respond well to the implementation of such a radical abstraction as ‘zero tolerance’ with anything close to consistent conformity. Because life is not abstract, it is not black and white, it is not finite or fixed or able to be confined or contained by any abstraction for any serious length of time.
The daydreamer of a utopian society might insist that such thinking is for the good of the whole, for the good of all participants, but even this is not true.
Because zero tolerance is the attempt to apply an absolute to a world that is not absolute, but instead is perceptual, interactive, and inter-related.
When we do attempt to apply such gross abstractions, they always backfire.
Just as in Ms. Grandin’s example where the zero tolerance rule of animal treatment leads to the lack of true investigation of conditions (so as to avoid the chaos and repercussions of such absolutes in rules and consequence) so it is in all other applications.
In school yards where there is a zero tolerance of fighting, children learn that to be bullied is equally as punishable as to be the bully. When there is a zero tolerance for a known problem behavior, it simply pushes the behavior more deeply underground. The child who is bullied dares not fight back, at least on school grounds, and so plans a more elaborate and violent revenge… because the one natural response he or she has available to them in the moment of bullying (to fight back or fight off his or her attackers) has been removed as a matter of social political policy. Getting caught fighting means expulsion, loss of everything that is meaningful or important to the child and repercussions they have no way of dealing with. Not fighting back is equally as bad, but seen as less bad within the context of the policy.
Perhaps worst of all, the zero tolerance policy removes the one thing that all education, life experience and human growth is built upon: the possibility for improvement. When something is declared as a matter with zero tolerance the only option left to those who might display such behavior is punishment, ridicule, loss of status and destruction of potential. There is no ‘out’, no way to make reparations, no admission of the flawed nature of human beings or their capacity to improve through difficult experience to something better, more life giving as a potential path or choice. There is only lack of tolerance, absolutism and dictatorship.
Zero tolerance leads to 2nd graders being expelled for carrying a Swiss army knife their grandfather gave them as a gift rather than a sane and orderly and situation based approach to a problem. It assumes that these so called ‘problems’ are so terrible, so fearsome, so disempowering that they must be dealt with by complete eradication. Further, it places this same sense of absolutism which declares the behavior as intolerable upon the subject having committed the intolerable offense: in other words, it makes criminals out of ordinary people with no reality based relationship to the actual events involved.
I don’t know exactly how we got started down this road of the ‘zero tolerance’ idea but I know that until we get off of it – and leave it well behind, we are bound, even doomed, to reap its imperfect and unjust rewards: tyranny over rationality.
Perhaps, then, it is this underlying movement towards zero tolerance that is at least in part, at the root of our most basic and fundamental breakdowns in this country today: we have zero tolerance for children fighting on the school yard while our financial institutions and government collude in orders of magnitude not seen in American history, while fraud and unfairness sweep our economic landscape, and we wonder what has gone wrong in our world…
When zero tolerance is removed, it is possible to replace it with attainable goals, realistic expectations, reparations and real remorse, and the ability and capability for the participants in the ‘problems’ to grow and evolve beyond those problems into more full fledged and well rounded individuals. So long as our answer is zero tolerance we foster lies, deceit, deception and denial – because in the real world there is no such thing as ‘zero tolerance’.
If you are starving and there is no food, you cannot insist to your body that its response to hunger will not be tolerated, any more than you can insist that a school yard of children will have no disagreements which lead to less than favorable behavior. To insist otherwise is simply fantasy thinking, and dangerous fantasy thinking, at that.
In States across the nation the new move toward State Banks has begun… From Washington to Vermont, Massachusetts to Oregon, California to New Mexico and beyond, the word about the power and success of the North Dakota State Bank is getting around and people are stepping up to take action and bring those banks into the reality of their own State systems.
People are figuring out that a State Bank which is run for the public, for the people instead of as a private instrument of profit for private bankers has more power to do good for the people – and that it IS possible to have banks that are not simply pawns of the power elite but that are instruments of the people. This is great news for the people of those states who are ready for some much needed relief from the abusive private banking system which has brought us to the verge of economic collapse.
Here is the latest from Ellen Brown’s Public Banking Blog site:
On February 1, 2010, bill HB 3162, which authorizes the creation of a state bank, was introduced to the Washington State legislature.
Sponsors: Representatives Hasegawa, Hudgins, Chase, Simpson, Dickerson, Goodman
A public hearing has been scheduled next Tuesday, March 2, 2010, for HB 3162. There has been so much interest in this idea that Chair Kirby of the FI & I committee has scheduled a special work session on the bill.
Details for Public Hearing:
Financial Institutions & Insurance Committee – Tuesday, 03/02/10 8:00 am
House Hearing Room D
John L. O’Brien Building
Olympia, WA
Read about the bill here, the text of the original bill here, the “bill digest” here, and the “bill analysis” here.
Plenty to think about as we roll into the new month and Jesse covers some fertile ground here which has been on my mind a lot of late. The sheer volume of insanity seems to be rising around us as a wild cognitive dissonance takes over the landscape of reason.
In the past week alone I have had a half dozen examples of such high handed craziness that it’s impossible to call these just aberations any longer. No longer coming from just a few of the rogue institutions, but now seeming to spread across the playing field as one lender after another informs the distressed homeowner that it will take thousands of dollars in ‘up front cash contributions’ to be ‘considered’ for loan modification or other relief…
Because… as we all know, distressed homeowners are the logical place to find large sums of cash – right?
Particularly unemployed homeowners…
The biggest difference is the lack of external standards. This introduces an element of policy decision that has been discussed here on several occasions. In other words, the Fed retains the option, albeit with increasing difficulty, to create another bubble, and levitate stock market prices in the face of deteriorating economic fundamentals.
The dollar was formally devalued by around 40% in 1933. We may yet see that done this time, but more gradually and informally. This is what makes gold controversial today; it exposes the financial engineering. So they feel the need to manage it, to denigrate it as an alternative to their paper. They want to have their cake, and eat it too.
Let’s review where we are today.
The Bear Market of 2007-2009, marked by the Crash of 2008, has been a massive decline in equity prices precipitated by the bursting of the credit bubble centered around housing prices and packaged debt obligations of highly questionable valuations. The cause of the bubble was easy Fed monetary policy and the loosened regulation of the financial sector, which reopened the door to old frauds with new names.
Even today, I think most people do not appreciate the sheer magnitude of the decline, and the damage it has done to the real economy. This is the result, I believe, of three factors:
1. An extraordinary expansion of the Monetary Base by the Federal Reserve not seen since the aftermath of the Crash of 1929, and a swath of financial sector support programs from the Fed and the Treasury, resulting in a spectacular fifty percent retracement rally from the stock market bottom. This is the narcotic that permits the country to not notice that a leg is missing.
2. A comprehensive program of perception management by the government in conjunction with the financial sector to sustain consumer confidence and reduce the chance of further panic. In other words, a web of well-intentioned deceit, subject to abuse.
3. An understandable preoccupation by the individual with the details of breaking news, and a short term focus on particular events, diversions, and controversies, bread and circuses, without a true appreciation of the ‘big picture,’ in part because of some very effective public relations campaigns and a natural human reluctance to face hard problems.
This is resulting in a remarkable case of cognitive dissonance in which some of the victims of a spectacular man-made calamity are opposing remedies and aid as too costly and impractical, even as they walk around amongst the bleeding carnage.
For those who read the contemporary literature in the early Thirties, this is nothing new. In the early Thirties there was no sense, except for a few notable exceptions, of the magnitude of what had so recently happened. There was the sense of life goes on which seems almost eerie now to a modern reader. Indeed, Herbert Hoover could dismiss a delegation of concerned citizens with the advice that they were too late, the crisis was past, and all was well. Sound familiar?
The parallels with the Thirties and the Teens (today) are many, and uncanny.
There is the reformer President, elected to redress the extremely pro-business policies of his Republican predecessor. In the Thirties they had FDR who was a decisive and experienced leader. In the Teens the US has a relatively inexperienced community organizer, more influenced by the Wall Street monied interests, and a past history of ‘playing safe,’ who is trying to manage through indirection and persuasion.
There is a Republican minority in the Congress which opposes all new programs and actions despite giving lip service in order to delay and debilitate. In the Thirties the Republicans were over-ridden by a powerful, activist President, who created a “New Deal” set of legislation, much of which was later overturned by a Supreme Court which had been largely seated by the previous Republican Administrations.
Indeed, the remaining New Deal programs that were successful, the reforms of Glass-Steagall and the safety net of Social Security, are being overturned or are under attack in an almost bucket list fashion.
So what next?
Another leg down in the economy and the financial markets is a high probability.
Although one cannot see it just yet in the fog of corrupted government statistics, the economy is not improving and the US Consumers are flat on their back, scraping by for the most part, except for the upper percentiles who were made fat by the credit bubble, and are still extracting rents from it through officially sanctioned subsidies.
This was no accident; there is a consciousness behind it.
There are far too many otherwise responsible people who are not taking the situation with the high seriousness it deserves. Some would even like to see the US economy collapse, inflicting serious pain and deprivation because it may:
1.suit their investment positions and feed their egos because they think themselves above it all,
2. satisfy their ideological and emotional needs to see punishment administered, almost always to others, for the excesses of the credit bubble, especially if they are relatively weak, unwitting victims, and
3. the sheer nastiness and immaturity of a portion of the population which wallows in stereotypes, childish behaviour, and disappointment with their own lives. They tend to find and follow demagogues that feed their bitter hatreds.They know not what they do, until they do it, and see the results. It is often a good bet to assume that people will be irrational, almost to the point of idiocy and self-destruction. And some of them never wake up until they are overrun, and then will not admit their error out of a stubborn sense of pride and embarrassment.
It seems likely that there will be a new leg down in financial asset valuations, as reality overcomes often not-so-subtle propaganda and disinformation. It may start in March, or it may be a ‘market break’ that provides a subtle warning for a large decline that begins in September 2010, with multi year progression to lows that are, as of now, almost unimaginable, at least in real terms. I cannot stress this issue of nominal versus real enough. As inflation comes, it will initially be in a ’stealth’ manner, with the backing of the currency eroding slowly but steadily, and largely unrecognized for some time. It is not enough to try and count the dollars; one also has to consider the value behind them, the quality of the wealth, and its vitality. This is the case for stagflation.
The Fed is acting to mask quite a bit of this. One would hope that they would also not re-enact the policy error of their predecessors and raise rates prematurely out of fear of inflation before the structural healing can occur.
The debt incurred during the credit bubble cannot be paid and must be liquidated. So far we have largely seen transference of debt obligations from insiders to the public. Ironically these same insiders are lobbying to maintain these subsidies and transfers, and also to take a hard line against any further remediation of the consequences of the collapse, which they caused, on the public, to have more for themselves. Their greed and hypocrisy know no bounds.
But the policy error might not be caused by the Fed’s direct action, but replicated by a governmental failure to stimulate the economy effectively AND to reform the highly inefficient and impractical financial system. The purpose of stimulus is to provide a cushion for structural reform and healing to occur, after an external shock, or even a period of reckless excess and lawlessness. The natural cycle can be disrupted beyond its ability to repair itself. But stimulus without reform is the road to further deterioration and addiction.
As it stands today the global trade system is a farcical construct that favors national elites and multinational corporations. Public policy discussion has been trumped by a handful of economic myths and legends that, even though disproved every day, nevertheless remain resilient in public discussions and reactions. This is because they have become familiar, and because they are the instruments of deception for certain groups of disreputable economists and policy influencers.
A more serious market crash might cause people to recognize the severity of their problems, and the thinness of the arguments of the monied interests for the status quo which is most clearly unsustainable. But a sizable minority of the population is always highly suggestible; demagogues rely on this.
The eventual outcome for the US is difficult to forecast with any precision now because there are multiple paths that events might take at several key decision points. Some of them might be rather disruptive and upsetting to civil tranquility. Game changers.
But as the dust continues to settle, the probabilities will continue to clarify.
“Suffering can strengthen our endurance. Endurance encourages strength of character. Character supports hope and confidence even during hard times and trials. And hope does not disappoint us in the end, because God has given us the Spirit and filled our hearts with His love.” Romans 5:3-5
It is right to be cautious, and it is human to be afraid. But let us not allow our fears and trials to turn us from our genuine humanity in God’s grace no matter how dire the day, even if it may drive some of the world once again into the jaws of desperation and madness. And if you stumble, gather yourself up and go forward again without turning from the way. For what is the profit to gain some small and temporary advantage in this world, but to lose your self, forever.
