The Real Obama

by ALEXANDER COCKBURN - Counterpunch

The White House that shook in last Tuesday’s earthquake has been home to its present incumbent for 32 months. Obama wasn’t around to watch the furniture shake. He’s up on Martha’s Vineyard for the third year in a row, with Michelle and their two daughters, bunkered down in a $25,000-a-week holiday rental of a lush 28-acre estate in the little town of Chilmark.

He’s keeping a low profile. Words like “standoffish” roll petulantly off the tongues of the island’s liberal elites. They were spoiled by Bill Clinton who spent six presidential vacations on the Vineyard. No renter he. Bill free-loaded on rich pals and party donors, mostly synonymous. No one could ever accuse Bill of being standoffish, though he confided to Vernon Jordan that he preferred Jackson Hole, Wyoming, to Martha’s Vineyard as a vacation spot since it was impossible to get “pussy” in the stuffy Massachusetts resort.

Obama’s standoffishness includes – I am informed by one knowledgeable Martha’s Vineyard local – failure to show at an exclusive fundraiser, also to a party of his friend Henry Louis Gates, the Harvard prof whose July 2009 spat with the Cambridge police prompted the normally hyper-prudent Obama to say the cops had acted “stupidly” – probably the most vivid off-the-cuff judgment of his entire presidency. Perhaps the hyper-prudence accounted for failure to appear chez Gates last week.

The president did show up for one event, hosted by Harvard Law School prof Charles Ogletree, but without Michele. The presidential excuse for her no-show was that he and Michele didn’t “want to leave the kids alone.” Alone? One of the houses on the Chilmark estate is occupied by the Secret Service; another by close aides. You’d think at least two could have been press-ganged into child-minding duties.

Like many presidents trying to have a holiday, Obama has drawn fire for lounging about on the Vineyard for ten days while ordinary Americans battle hard times, and Hurricane Irene menaces the Atlantic seaboard. So, as with other presidents, his press secretary claims 50 per cent of Obama’s time is spent doing the nation’s business, much of it hunkered down with his counterterrorism advisor, John Brennan. Presumably, they are reviewing intelligence reports that Al Qaeda is planning something really big, to mark the tenth anniversary of the destruction of the Trade Towers.

As president, Obama is not doing well. It’s not just a matter of the 53 per cent disapproval rating, reported Wednesday by Gallup. After two and a half years, people are beginning to come to settled opinions about their president, and many of these aren’t flattering. In 2008, liberals and most leftists were deeply in love with Obama and genuinely believed the promissory notes about a better America that he strewed along the campaign trail and has since welshed on at a rate of well over 95 per cent.

The face-off over the debt ceiling at the stat of this month was the final straw . Take a man I have known for many decades, William Broyles, former Marine, lifelong Texan Democrat, speechwriter in the Carter White House, former Newsweek editor, co-creator of China Beach, Apollo 13 and Cast Away.

Ten days ago, Bill wrote a furious Newsweek/Daily Beast column, headlined “The Oval Office Appeaser.” Bill is normally a courteous man, not one who likes to hurl moldy cabbages from the balcony. I’ve never known him write more bitterly.

“After each betrayal, after each terribly bad bargain, Obama comes out waving a piece of paper, a one-sided agreement to appease the Republicans – peace in our time. … A despair grips America today, a cold fear that our best days are behind us, that we are adrift and powerless. Yes, the Republicans are to blame. But so is a president who treats core American values as bargaining chips, who won’t fight for anything, who refuses to lead. It turns out hope does matter. … Americans aren’t inspired by well-meaning weakness. We like strong leaders, particularly in desperate times.”

Obama is a very curious fellow. I don’t think any writer thus far has got the measure of the man. Take the Obama White House. From the news-leak point of view, he presides over the tightest ship in living memory. Leaks, corridor gossip, my-side-of-the-story confidences of policy-makers battling for the president’s ear, depth charges planted by such powerful cabinet members as Hillary Clinton? None of the above. This is the White House of a man in total control, contrasting markedly with Clinton’s fitful supervision of the shambolic White House of his two terms.

But yet Obama, where it counts, isn’t in control at all. Republicans, regarded as nuts by a lot more Americans than disapprove of Barack Obama, face him down and he leaps to do their bidding, even as they kick him in the teeth for not doing more. He tugs his forelock to Wall Street, the defense industry, the oil companies, Monsanto, the ag industry, Israel. Appeaser, as Broyles charges. When the dust of battle rises, he cuts and runs.

Last week, the Democrats got a nasty shock when the New York Times ran a story reporting on the battle for Anthony Weiner’s Brooklyn district. Weiner resigned June 16, done in by Twittering photos of his penis to women, none of them his wife or even a constituent. The Republican challenger is apparently making a strong showing in this traditionally Democratic district. The Times quoted life-long Democrats expressing their discontents in virulent terms.

There are plenty of Obama loyalists out there. I know leftists who still forlornly try to make a case for the man and will stay true to the end. But if they vote for him next year, it won’t be for any positive reason, such as the one that sent them delightedly to the polls in 2008, in search of hope. They’ll gesture to Rick Perry or some other Republican challenger and fall back on the “lesser of two evils” argument. But will this work with the sort of blue-collar union people and independents who voted for Ronald Reagan in 1980 because they thought Carter was a wimp who couldn’t handle the economy?

Bill Clinton survived incompetence and scandal because enough Americans felt like somewhat disillusioned brides after two or three years of facing the Real Thing across the breakfast table. “Dump him? For who? Anyway, he’s promised me he’ll try to do better.” He’s a flake and a liar, but he’s our flake and liar.

No one feels like that about Obama. The object of mass adoration in 2008, he’s not a man who elicits mass affection. People whose vote he courts are genuinely confused. Does he believe in anything beyond raising a billion dollars for the 2012 campaign? Now he’s on the trail again, assuring people without jobs that he’ll put them back to work. Reasonably, his audiences aren’t convinced. His sell-out in the face-off over the debt ceiling is a noose around the neck of any Democrat in the upcoming campaign arguing that Obama and his party are the last best defense against ongoing destruction of the safety net. Of course, as one reader reminds me, being a black man in authority carries great danger in itself. Too much fight, and people start showing up with guns at your meetings plus signs about watering the tree of liberty with the blood of tyrants. Too little fight and you’re a weakling. It’s never right.

Meanwhile, the Texas Governor Rick Perry, who entered the Republican race a week ago, is surging against his opponents. A Gallup poll now has him in a commanding lead over the “moderate” Republican Mitt Romney, with 29 per cent saying they are most likely to support Perry. Former front-runner Mitt Romney (17 per cent), Ron Paul (13 per cent), and Michele Bachmann (10 per cent) are next, with four other candidates at 4 per cent or less. In the east Romney leads Perry by one point and lags everywhere else in the country.

The conservative Perry’s done this by staking out fierce positions, just as Reagan did against Carter. It doesn’t matter that the opinions grate on the sensibilities of the liberal commentariat. He’s not after their approval. Perry’s a tough campaigner, not like Bob Dole, whom Clinton had the luck to face in 1996. His record as governor of Texas is freighted with scandalous paybacks to big contributors, but in scale they scarcely match the huge pay-off now being promoted by the White House with the drumbeat campaign by Obama, Obama’s Attorney General, the Secretary of HUD, the Fed and the attorneys general of 49 states to guarantee the banksters permanent immunity against both civil and criminal lawsuits for any of their recent fraud, perjury and grand larceny. Once again, a New York Attorney General, Eric Schneiderman, is gumming up the cozy deal. But as CounterPuncher Pierre Sprey writes, “we can predict a short public career for poor Eric, ending soon in another wiretap-fueled scandal — or, since we are now a banana republic, a regrettable accident.” And guess what, Warren Buffett did just drop $5 billion into BoA and then held a $30K a plate fundraiser for Barack Obama.

The Politics of Poverty

August 26, 2011

At the Mercy of the Corporate State

by RUSSELL MOKHIBER

Believe it or not, just two generations ago, many families in Morgan County, West Virginia were self sufficient.

Hunting, fishing, growing vegetables, canning for winter.

Subsistence farmers they called them.

Some families spent only $100 cash a year.

You can scoff.

But are we better off now?

Or not?

Joe Bageant was born and raised on Shanghai Road in Morgan County, West Virginia.

He went on to write two great books about the white working class in America.

How they are being screwed by the corporate state.

And why they often vote against their own interests.

As in — voting for Congresswoman Shelley Moore Capito, our Congresswoman, who puts the interests of the big banks and big insurance corporations ahead of the interests of the poor, white working people of her district.

These are truly remarkable books.

The first is Deer Hunting with Jesus: Dispatches from America’s Working Class.

And the second is Rainbow Pie: A Redneck Memoir.

A third book is scheduled out soon — Waltzing at the Doomsday Ball: the Best of Joe Bageant.

For the past two weeks, I’ve been running ten miles in each of the 18 counties of Capito’s district.

Calling attention to Capito’s betrayal of her constituents.

And urging people to sign the petition at capitoresign.org.

On Saturday, I ran in Clay and Braxton counties — eleven down, seven to go.

And the eye-opener has been the poverty.

White working class poverty.

At the same time, I’ve been reading Bageant’s remarkable memoir — Rainbow Pie.

Bageant tells the story of growing up on Shanghai Road right here in Morgan County.

Where his grandmother and grandfather lived a life of self-sufficiency.

They did almost everything for themselves.

Ate like kings.

Walked to Unger Store if they had to make a phone call.

Granpa’s suit was handed down to his sons and then to the grandsons.

Three generations of family all living under one roof.

No nursing homes.

No assisted living facilities.

Problem was, when the conveniences came, they were irresistible.

Here’s Bageant describing the transition:

“What Maw and Pap and millions of others got out of it, primarily, were a few durable goods, a washing machine, a television, and an indoor toilet where the pantry, with its cured meats, 100-pound sacks of brown sugar, flour and cases of eggs had been. Non-durable commodities were vastly appreciated too. One was toilet paper, which ended generations of deep seated application of the pages of the Sears Roebuck mail-order catalog to the anus (the unspoken limit seemed to be one page to a person at a sitting.) The other was canned milk, which had been around a long time, but had been unaffordable. Milk cows are a wonderful thing, but not so good when two wars and town work have drained off your family labor supply of milkers. So joyous over canned milk was my uncle Toad that he taught me this laudatory poem to evaporated milk when I was five:

Pet Milk best in the land
Sits on the table in a little white can
No cows to milk, no hay to pitch
Just punch two holes in that son-of-a-bitch!”

In two generations, the self sufficiency Bageant witnessed on Shanghai Road was gone.

Or as Bageant puts it — “The connective tissue of shared work for shared sustenance had disintegrated in the face of the monetary-wealth-based economy.”

Now, we are all at the mercy of the corporate state.

It’s out of our hands.

And it’s brutal.

“On any given day in America’s heartland towns and cities and suburbs, I can find innumerable Americans whose class experience has been the same as mine,” Bageant writes. “They are without a doubt an underclass measured by the standards of the developed world: they are ignorant; under-educated; given to unhealthy vices such as smoking and alcohol; underpaid; semi-literate; misinformed; given to crude entertainments, sports, and a love of spectacle (particularly violent spectacle); disposable as a labor force; quick to violent solutions; easily misled; simple-minded in world view; superstitious; and poor in parenting and social skills.”

“Most ominously, they are hostage to political manipulation,” he writes.

And most ominously now, they are hostage to Capito’s manipulation.

Capito — who tells them that she is seeking to protect and strengthen Medicare, when in fact she voted in April for legislation the Wall Street Journal said would end Medicare.

Earlier this year, I called Bageant’s home in Winchester, Virginia.

Wanted to invite him up to the Earth Dog to speak to our monthly meeting.

His wife said he wasn’t feeling well.

In March, he passed away after a four month bout with cancer.

Yesterday, I drove over to Shanghai Road.

Visited the Greenwood cemetery where his family is buried.

And wondered about this man that very few in Morgan County know about.

In fact, very few in the United States know about.

Kenneth Smith is a friend who maintains Joe’s web site — joebageant.com.

Smith told me that Joe’s books were never reviewed by a major newspaper in the United States.

In fact, Joe couldn’t find a publisher for Rainbow Pie in the United States.

The book was published by Scribe, a publisher in Australia.

“Joe is extremeley popular in Australia,” Smith told me.”He made two trips there, he was a featured guest on television there, he was the featured speaker at both the Melbourne and Sidney book fairs. When he died, Australian television ran a 30-minute interview they had played the year before. It’s difficult to explain how big he is in Australia. Outside of Australia, the only newspaper to run an obituary was La Stampa in Italy.”

“It’s like Jesus said — “Only in his hometown and in his own house is a prophet without honor.”

Rise Up and Defeat the Corporatocracy

Most Americans oppose rule by the corporatocracy but don't have the tools to fight back. Here are three things we need to create a real people's movement.

Friday 26 August 2011

by: Bruce E. Levine, Alternet | Op-Ed

Transforming the United States into something closer to a democracy requires:

1) knowledge of how we are getting screwed;
2) pragmatic tactics, strategies, and solutions; and
3) the “energy to do battle.”  

The majority of Americans oppose the corporatocracy (rule by giant corporations, the extremely wealthy elite, and corporate-collaborator government officials); however, many of us have given up hope that this tyranny can be defeated. Among those of us who continue to be politically engaged, many focus on only one of the requirements—knowledge of how we are getting screwed. And this singular focus can result in helplessness. It is the two other requirements that can empower, energize, and activate Team Democracy— a team that is currently at the bottom of the standings in the American Political League. 

1. Knowledge of How We are Getting Screwed

Harriet Tubman conducted multiple missions as an Underground Railroad conductor, and she also participated in the Union Army’s Combahee River raid that freed more than 700 slaves. Looking back on her career as a freedom fighter, Tubman noted, “I freed a thousand slaves. I could have freed a thousand more if only they knew they were slaves.” While awareness of the truth of corporatocracy oppression is by itself not sufficient to win freedom and justice, it is absolutely necessary.

We are ruled by so many “industrial complexes”—military, financial, energy, food, pharmaceutical, prison, and so on—that it is almost impossible to stay on top of every way we are getting screwed. The good news is that—either through independent media or our basic common sense—polls show that the majority of Americans know enough about the Afghanistan and Iraq wars, Wall Street bailouts, and other corporate welfare to oppose these corporatocracy policies. In the case of the military-industrial complex, most Iraq War polls and Afghanistan War polls show that the majority of Americans know enough to oppose these wars. And when Americans were asked in a CBS New /New York Times survey in January 2011 which of three programs—the military, Medicare or Social Security—to cut so as to deal with the deficit, fully 55 percent chose the military, while only 21 percent chose Medicare and 13 percent chose Social Security.

In the words of Leonard Cohen, “Everybody knows that the deal is rotten.”

Well, maybe not everybody, but damn near everybody.

But what doesn’t everybody know?

2. Pragmatic Tactics, Strategies and Solutions

In addition to awareness of economic and social injustices created by corporatocracy rule, it is also necessary to have knowledge of strategies and tactics that oppressed people have historically used to overcome tyranny and to gain their fair share of power.

Even before the Democratic-Republican bipartisan educational policies (such as “no child left behind” and “race to the top”) that cut back on civics being taught in schools, few Americans were exposed in their schooling to “street-smart civics”—tactics and strategies that oppressed peoples have historically utilized to gain power.

For a comprehensive guide of tactics and strategies that have been effective transforming regimes more oppressive than the current US one, read political theorist and sociologist Gene Sharp’s From Dictatorship to Democracy, which includes nearly 200 “Methods of Nonviolent Actions.” Among Sharp’s 49 “Methods of Economic Noncooperation,” he lists over 20 different kinds of strikes. And among his 38 “Methods of Political Noncooperation,” he lists 10 tactics of “citizens’ noncooperation with government,” nine “citizens’ alternatives to obedience,” and seven “actions by government personnel.” Yes, nothing was more powerful in ending the Vietnam War and saving American and Vietnamese lives than the brave actions by critically thinking US soldiers who refused to cooperate with the US military establishment. Check out David Zeigler’s documentary Sir! No Sir! for details.

For a quick history lesson on “the nature of disruptive power” in the United States and the use of disruptive tactics in fomenting the American Revolution, the abolitionist movement, the labor movement, and other democratic movements, check out sociologist Frances Fox Piven’s Challenging Authority: How Ordinary People Change America. Piven describes how “ordinary people exercise power in American politics mainly at those extraordinary moments when they rise up in anger and hope, defy the rules that ordinarily govern their daily lives, and, by doing so, disrupt the workings of the institutions in which they are enmeshed.” In the midst of the Great Depression when US unemployment was over 25 percent, working people conducted an exceptional number of large labor strikes, including the Flint, Michigan sit-down strike, which began at the end of 1936 when auto workers occupied a General Motors factory so as to earn recognition for the United Auto Workers union as a bargaining agent. That famous victory was preceded and inspired by other less well-known major battles fought and won by working people. Check out the intelligent tactics (and guts and solidarity) in the 1934 Minneapolis Truckers Strike.

For an example of “the nature of creative power” that scared the hell out of—and almost triumphed—over the moneyed elite, read The Populist Moment by historian Lawrence Goodwyn. The Populist movement, the late-19th-century farmers’ insurgency, according to Goodwyn, was the largest democratic movement in American history. These Populists and their major organization, commonly called the “Alliance,” created worker cooperatives that resulted in empowering economic self-sufficiency. They came close to successfully transforming a good part of the United States into something a lot closer to a democracy. As Goodwyn notes, “Their efforts, halting and disjointed at first, gathered form and force until they grew into a coordinated mass movement that stretched across the American continent ... Millions of people came to believe fervently that the wholesale overhauling of their society was going to happen in their lifetimes.”

In Get Up, Stand Up, I include the section “Winning the Battle: Solutions, Strategies, and Tactics.” However, a major point of the book is that, currently in the United States, even more ignored than street-smart strategies and tactics is the issue of morale, which is necessary for implementing these strategies and tactics. So, I also have a section “Energy to Do Battle: Liberation Psychology, Individual Self-Respect, and Collective Self-Confidence.”

3. The Energy to Do Battle

The elite’s money—and the influence it buys—is an extremely powerful weapon. So it is understandable that so many people who are defeated and demoralized focus on their lack of money rather than on their lack of morale. However, we must keep in mind that in war, especially in a class war when one’s side lacks financial resources, morale becomes even more crucial.

Activists routinely become frustrated when truths about lies, victimization and oppression don’t set people free to take action. But having worked with abused people for more than 25 years, it doesn’t surprise me to see that when we as individuals or a society eat crap for too long, we become psychologically too weak to take action. There are a great many Americans who have been so worn down by decades of personal and political defeats, financial struggles, social isolation and daily interaction with impersonal and inhuman institutions that they no longer have the energy for political actions.

Other observers of subjugated societies have recognized this phenomenon of subjugation resulting in demoralization and fatalism. Paulo Freire, the Brazilian educator and author of Pedagogy of the Oppressed, and Ignacio Martin-Baró, the El Salvadoran social psychologist and popularizer of “liberation psychology,” understood this psychological phenomenon. So did Bob Marley, the poet laureate of oppressed people around the world. Many Americans are embarrassed to accept that we, too, after years of domestic corporatocracy subjugation, have developed what Marley called “mental slavery.” Unless we acknowledge that reality, we won’t begin to heal from what I call “battered people’s syndrome” and “corporatocracy abuse” and to, as Marley urges, “emancipate yourself from mental slavery.”

Whether one’s abuser is a spouse or the corporatocracy, there are parallels when it comes to how one can maintain enough strength to be able to free oneself when the opportunity presents itself—and then heal and attain even greater strength. This difficult process requires honesty that one is in an abusive relationship. One should not be ashamed of having previously believed in corporatocracy lies; and it also helps to forgive and have compassion for those who continue to believe them. The liars we face are often quite good at lying. It helps to have a sense of humor about one’s predicament, to nurture respectful relationships, and to take advantage of a lucky opportunity—often created by the abuser’s arrogance— when it presents itself.

For democratic movements to have enough energy to get off the ground, certain psychological and cultural building blocks are required. Goodwyn, from his study of the Populists in the United States, Solidarity in Poland, and other democratic movements, concluded that “individual self-respect” and “collective self-confidence” constitute the cultural building blocks of mass democratic politics. Without individual self-respect, people do not believe that they are worthy of power or capable of utilizing power wisely, and they accept as their role being a subject of power. Without collective self-confidence, people do not believe they can succeed in wresting power away from their rulers. There are “democracy battlefields” —in our schools, workplace and elsewhere—where such respect and confidence can be regained every day.

No democratic movement succeeds without determination, courage, and solidarity, but modern social scientists routinely ignore such nonquantifiable important variables, and so those trained only in universities and not on the streets can, as Martin-Baró pointed out, “become blind to the most important meanings of human existence.” Great scientists recognize just how important nonquantifable variables are in certain areas of life. A sign hanging in Albert Einstein’s office at Princeton stated: not everything that can be counted counts, and not everything that counts can be counted.

The battle against the corporatocracy needs critical thinking, which results in seeing some ugly truths about reality. This critical thinking is absolutely necessary. Without it, one is more likely to engage in tactics that can make matters worse. But critical thinking also means the ability to think critically about one’s pessimism—realizing that pessimism can cripple the will and destroy motivation. A critical thinker recognizes how negativism can cause inaction, which results in maintaining the status quo. Antonio Gramsci (1891–1937), an Italian political theorist and Marxist activist who was imprisoned by Mussolini, talked about “pessimism of the intellect, optimism of the will” —a phrase that has inspired many critical thinkers, including Noam Chomsky.

Can one have hope without being an insipid Pollyanna? Until shortly before it occurred, the collapse of the Soviet empire seemed an impossibility to most Americans, who saw only mass resignation within the Soviet Union and its sphere of control. But the shipyard workers in Gdansk, Poland, did not see their Soviet and Communist Party rulers as the all-powerful forces that Americans did. And so Polish workers’ Solidarity, by simply refusing to go away, provided a strong dose of morale across Eastern Europe at the same time other historical events weakened the Soviet empire.

Today in Iceland, citizens have refused to acquiesce to the demands of global financial institutions, simply refusing to be taxed for the mistakes of the financial elite that caused their nation’s recent financial meltdown. In a March 2010 referendum in Iceland, 93 percent voted against repayment of the debt, and Icelandic citizens have been drafting a new constitution that would free their country from the power of international finance (this constitution will be submitted to parliament for approval after the next elections). Yes, participatory democracy is still possible.

The lesson from the 2011 Arab spring in and other periods of history is that tyrannical and dehumanizing institutions are often more fragile than they appear, and with time, luck, morale, and our ability to seize the moment, damn near anything is possible. We never really know until it happens whether or not we are living in that time when historical variables are creating opportunities for seemingly impossible change. Thus, we must prepare ourselves by battling each day in all our activities to regain individual self-respect, collective self-confidence, determination, courage, and solidarity.

"My Water's on Fire! (The Fracking Song)"

Big City Gang Bang Productions - Fracking Frackers 120bpm by apefist

Obama Goes All Out For Dirty Banker Deal

(The president should change his name to Bank Obanka. Or Bankhere O Banker...--jef)


Thursday, August 25, 2011 by Rolling Stone

by Matt Taibbi 

 

A power play is underway in the foreclosure arena, according to the New York Times.

On the one side is Eric Schneiderman, the New York Attorney General, who is conducting his own investigation into the era of securitizations – the practice of chopping up assets like mortgages and converting them into saleable securities – that led up to the financial crisis of 2007-2008.

On the other side is the Obama administration, the banks, and all the other state attorneys general.

This second camp has cooked up a deal that would allow the banks to walk away with just a seriously discounted fine from a generation of fraud that led to millions of people losing their homes.

The idea behind this federally-guided “settlement” is to concentrate and centralize all the legal exposure accrued by this generation of grotesque banker corruption in one place, put one single price tag on it that everyone can live with, and then stuff the details into a titanium canister before shooting it into deep space.

This is all about protecting the banks from future enforcement actions on both the civil and criminal sides. The plan is to provide year-after-year, repeat-offending banks like Bank of America with cost certainty, so that they know exactly how much they’ll have to pay in fines (trust me, it will end up being a tiny fraction of what they made off the fraudulent practices) and will also get to know for sure that there are no more criminal investigations in the pipeline.

This deal will also submarine efforts by both defrauded investors in MBS and unfairly foreclosed-upon homeowners and borrowers to obtain any kind of relief in the civil court system. The AGs initially talked about $20 billion as a settlement number, money that would “toward loan modifications and possibly counseling for homeowners,” as Gretchen Morgenson reported the other day.

The banks, however, apparently “balked” at paying that sum, and no doubt it will end up being a lesser amount when the deal is finally done.

To give you an indication of how absurdly small a number even $20 billion is relative to the sums of money the banks made unloading worthless crap subprime assets on foreigners, pension funds and other unsuspecting suckers around the world, consider this: in 2008 alone, the state pension fund of Florida, all by itself, lost more than three times that amount ($62 billion) thanks in significant part to investments in these deadly MBS.

So this deal being cooked up is the ultimate Papal indulgence. By the time that $20 billion (if it even ends up being that high) gets divvied up between all the major players, the broadest and most destructive fraud scheme in American history, one that makes the S&L crisis look like a cheap liquor store holdup, will be safely reduced to a single painful but eminently survivable one-time line item for all the major perpetrators.

But Schneiderman, who earlier this year launched an investigation into the securitization practices of Goldman, Morgan Stanley, Bank of America and other companies, is screwing up this whole arrangement. Until he lies down, the banks don’t have a deal. They need the certainty of having all 50 states and the federal government on board, or else it’s not worth paying anybody off. To quote the immortal Tony Montana, “How do I know you’re the last cop I’m gonna have to grease?” They need all the dirty cops on board, or else the whole enterprise is FUBAR.

In addition to the global settlement, Schneiderman is also blocking an individual $8.5 billion settlement for Countrywide investors. He has sued to stop that deal, claiming it could “compromise investors’ claims in exchange for a payment representing a fraction of the losses.”

If Schneiderman thinks $8.5 billion is an insufficient, fractional payoff just for defrauded Countrywide investors, then you can imagine how bad a $20 billion settlement for the entire industry would be for the victims.

In that particular Countrywide settlement deal, it looks like Bank of New York Mellon, the New York Fed, Pimco and other players negotiated on behalf of defrauded investors. They told the Times they were happy with the deal, but investors outside the talks told Gretchen they weren’t happy with the settlement.

Schneiderman apparently listened to those voices instead of the Mellon-Fed-BofA crowd, which infuriated the insiders who struck the actual deal. In a remarkable quote given to the Times, Kathryn Wylde, the Fed board member who ostensibly represents the public, said the following about Schneiderman:

It is of concern to the industry that instead of trying to facilitate resolving these issues, you seem to be throwing a wrench into it. Wall Street is our Main Street — love ’em or hate ’em. They are important and we have to make sure we are doing everything we can to support them unless they are doing something indefensible.

This, again, is coming not from a Bank of America attorney, but from the person on the Fed board who is supposedly representing the public!

This quote leads one to wonder just what Wylde would consider “indefensible,” given that stealing is pretty much the worst thing that a bank can do — and these banks just finished the longest and most orgiastic campaign of stealing in the history of money. Is Wylde waiting for Goldman and Citi to blow up a skyscraper? Dump dioxin into an orphanage? It’s really an incredible quote.

The banks are going to claim that all they’re guilty of is bad paperwork. But while the banks are indeed being investigated for "paperwork" offenses like mass tax evasion (by failing to pay fees associated with mortgage registrations and deed transfers) and mass perjury (a la the “robo-signing” practices), their real crime, the one Schneiderman is interested in, is even more serious.

The issue goes beyond fraudulent paperwork to an intentional, far-reaching theft scheme designed to take junk subprime loans and disguise them as AAA-rated investments. The banks lent money to corrupt companies like Countrywide, who made masses of bad loans and immediately sold them back to the banks.

The banks in turn hid the crappiness of these loans via certain poorly-understood nuances in the securitization process – this is almost certainly where Scheniderman’s investigators are doing their digging – before hawking the resultant securities as AAA-rated gold to fools in places like the Florida state pension fund.

They did this for years, systematically, working hand in hand in a wink-nudge arrangement with clearly criminal enterprises like Countrywide and New Century. The victims were millions of investors worldwide (like the pensioners who saw their funds drop in value) and hundreds of thousands of individual homeowners, who were often sold trick loans and hustled into foreclosure when unexpected rate hikes kicked in.

In a larger sense, even the (often irresponsible) people who simply bought more house than they could afford were victims of this scam. That's because in many of these cases, credit simply would not have been available to those people had the banks not first discovered a way to raise vast sums of money dumping crap loans on an unsuspecting market.

In other words: if Bank of America hadn’t found a way to sell worthless subprime loans as AAA paper to the Chinese and the Scandavians in May, you can be sure that it wouldn’t be going back to Countrywide in June to lend out more money for more subprime loans.
And Countrywide, in turn, wouldn’t then have been sending masses of reps out into the ghettoes to offer juicy home loans to undocumented immigrants and refis to confused old ladies on social security.

This is as bad as white-collar crime gets. But to Wylde, it doesn’t rise to the level of being “indefensible.” Until they do something worse than this, we apparently should support the banks, and make sure they don’t have to pay more than a fraction of what they made off of this kind of crime.

What is most amazing about Wylde’s quote is the clear implication that even a law enforcement official like Schneiderman should view it as his job to “do everything we can to support” Wall Street. That would be astonishing interpretation of what a prosecutor's duties are, were it not for the fact that 49 other Attorneys General apparently agree with her.
In Schneiderman we have at least one honest investigator who doesn’t agree, which is to his great credit. But everyone else is on Wylde’s side now. The Times story claims that HUD Secretary Shaun Donovan and various Justice Department officials have been leaning on the New York AG to cave, which tells you that reining in this last rogue cop is now an urgent priority for Barack Obama.

Why? My theory is that the Obama administration is trying to secure its 2012 campaign war chest with this settlement deal. If Barry can make this foreclosure thing go away for the banks, you can bet he’ll win the contributions battle against the Republicans next summer.
Which is good for him, I guess. But it seems to me that it might be time to wonder if is this the most disappointing president we’ve ever had.

The State and Local Budget Crisis

August 24, 2011
The Ultimate Sacrifices
by MICHAEL HUDSON

The cost of the 2011 cutbacks in federal spending will fall most directly on consumers and retirees by scaling back Social Security, Medicare, Medicaid and social spending programs. The population also will suffer indirectly, by lower federal revenue sharing with U.S. states and cities.

Now that federal aid is falling – along with revenue from sales and income taxes – local budgets are falling into deficit. But for many cities and states, their constitutions and regulations prevent them from running deficits. So they face a number of hard choices.

It is hard to raise property taxes back toward earlier rates, because the rental income already has been pledged to the mortgage bankers.

Untaxing real estate has served mortgage bankers by freeing more rental income (the land’s site value) to be paid as interest. Property taxes have not absorbed anywhere near the rise in debt-leveraged housing and commercial prices. However, this has not lowered the cost of housing for most people. New buyers must pay a price that capitalizes the property’s rental value. Less and less of this payment has taken the form of local property taxes. More and more has been paid to mortgage lenders as interest. So cutting property taxes has simply left more revenue to be capitalized into higher debt-financed prices.

While homeowners saw their carrying charges rise, they nonetheless felt more affluent as real estate prices rose – inflated on easier and easier credit terms. Prices rose faster than mortgage debt as long as (1) interest rates were declining; (2) loan maturities were stretched out (ultimately reaching the point of zero amortization rather than the old-fashioned 30-year self-amortizing mortgages); (3) down payments were shrinking toward zero (rather than requiring 20 percent equity as used to be the case) and indeed as “liars’ loans” led prices to be bid up recklessly; and finally (4) cities refrained from raising property taxes as fast as market prices were rising. This left more revenue to be capitalized into higher prices, providing capital gains that home owners were encouraged to treat like “money in the bank” – by taking out home equity loans. This rising mortgage debt was increasingly important in enabling people to maintain their living standards, especially as they had to pay more for housing. So what appeared to be affluence and rising net worth from the value of one’s home on the asset side of the balance sheet found its counterpart in debt on the liabilities side.

From the local fiscal vantage point, these debt-leveraged price gains represented uncollected user fees for the site value provided by public infrastructure and rising prosperity. The bankers ended up with the rising flow of rental value, not the cities. This obliged tax collectors to look to other sources of revenue. So homeowners paid out what they seemed to be saving in modest property taxes in the form of rising sales taxes and income taxes.

By 2008 these financial system’s easing of credit terms had reached its limit. No more room for credit inflation remained, so speculators began to withdraw from the market. (They accounted for about one-sixth of demand for housing.) When the credit spigot was turned off, prices plunged – leaving the debts in place. (So taking out a home-equity mortgage was not really like drawing down money from a piggy bank after all. Years of future income had to be diverted to spend for past shortfalls.)

To tax heavily indebted property would lead to more foreclosures and abandonment. And the Obama Administration’s hope that banks somehow will use the Federal Reserve’s tsunami of cheap (0.25 per cent) reserves and credit to re-inflate a new real estate bubble is in vain, because bankers have little interest in lending to property that is still sinking in market price. It is easier to speculate on interest-rate arbitrage with the BRICS and get a foreign-exchange premium as well, or simply to play the market. Banks report winnings in the derivatives trade day after day, with nary a loss – an indication of how poorly their hapless customers and other outsiders must be doing! So the path of least resistance for most cities and states is to cut back spending on public services, and above all on pension plan contributions.

The ultimate sacrifice (and the aim of financial predators) is to sell off public land and buildings, roads and other transportation services, sewer systems and other basic infrastructure. In this aim, the investment bankers are being aided and abetted by the credit ratings industry, threatening to downgrade cities that do not sell off their public domain. In this respect the financial end-game of privatization is similar in the United States to pressures by the European Central Bank to force the indebted PIIGS economies to engage in privatization sell-offs, Third World and post-Soviet style.

Just as in Europe, when revenues are squeezed and something must give – either debt service, payment to pensioners or current payments to labor – the financial sector is seeking to take all the available surplus for itself. This puts creditors in the forefront of today’s class war against labor.

On the eve of the September 2008 financial crash, cities such as Birmingham, Alabama and Chicago already were looking for ways to cope with the fiscal squeeze imposed by political pressures from the major local campaign contributors – the real estate and banking sectors – to cut property taxes. One seeming path of little resistance was to gamble in the Wall Street financial casino, hoping to make easy gains rather than making landlords, wage earners or consumers pay higher taxes.

Landlords and bankers encouraged this speculation as an alternative to taxing property. Landlords wanted to pay less in property taxes, and banks knew that whatever rental value buyers could save in the form of lower taxes would end up being used to bid up prices to capitalize into debt service for mortgages to buy properties up for sale.

Here is the dilemma that states and cities now face: So much urban property is sinking into negative equity territory that a rise in property taxes will lead to even more foreclosures and abandonments, and hence even lower fiscal returns. To avoid this, cities are seeing Chapter 9 bankruptcy as the main route to free themselves, especially from problems that stem from an unwarranted trust in bankers to help them out of the earlier fiscal squeeze by putting them into losing financial gambles. Orange County in California successfully sued Merrill Lynch to recover damages, and Birmingham also was awarded recovery payments from JP Morgan Chase.

Birmingham and Chicago as microcosms of the national debt squeeze

Now that financial fraud has been decriminalized for all practical purposes, most financial victims are obliged to sue for reimbursement in civil court without much help from prosecutors. Alabama’s state capital Birmingham is a case in point. After a predatory financing arrangement to upgrade its sewers in 2008 forced its Jefferson County into bankruptcy, the Securities and Exchange Commission (S.E.C.) negotiated $75 million in fines and reimbursement of fees to be paid by JP Morgan Chase as lead lender and negotiator for the complex interest-rate swaps they had advised the country to take, ostensibly to protect its economic interest. The banks also forfeited nearly ten times this sum ($647 million) in termination fees. But the court-appointed receiver grabbed the $75 million settlement for payment on the debts the country still owed.

As usual, the banks had paid the fine and made reimbursement without admitting any wrongdoing. To the financial sector, deception and fraud is part of the game, after all, not a tactic that can be prosecuted as criminal. They paid their fines without admitting any wrongdoing, and without even admitting the S.E.C. charges. They merely paid up and kept silent – while the Justice Department and Internal Revenue Service were still in the time-taking process of ruling on legal claims brought by Jefferson County. The case prompted bankers and bondholders to bring pressure on the state of Alabama to take responsibility (that is, take on the debt liability) all on behalf of statewide taxpayers, and to demand that all lawsuits brought for financial fraud to be dropped.[1] “Responsibility” is supposed to be only for debtors, not for the financial sector itself. This is how the banks have managed to rewrite the laws, after all.

Jefferson County is now debating whether to declare Chapter 9 bankruptcy to free itself from debts that can be paid only at the cost of disrupting economic continuity and living standards. The city’s debt quandary is a microcosm for the U.S. economy as a whole. Its lowest-income residents are burdened with financialized charges for sewer-system debt payments so far beyond their ability to pay that they face the same fate as Latvians, Irish and Greeks: As the local economy shrinks, they must move in order to find jobs – in places less debt-burdened and hence lower-cost. The “free market” choice is to emigrate to flee the debts imposed on their economies and on themselves personally.

Well-to-do Birmingham families have yards large enough to have their own septic tanks as an alternative to paying for access to sewers, but lower-income families living in small houses or apartment buildings lack this option. One county commissioner asked: “Why should the poor have to pay for the ill-gotten gain of some of these banks who poisoned the well in the very first place?” Other commissioners demanded that bondholders “bear the entire cost of a $20 million fund that is being created to help low-income residents pay their sewer bills.”

But the government usually provides relief only for creditors – above all, relief from criminal prosecution for their business plan that involved making loans beyond the debtors’ ability to pay. Some states have fraudulent conveyance laws to prevent this, as well as to prevent banks from misrepresenting the quality of their loans to outside investors. There are laws to punish appraisers who give false appraisals, and mortgage brokers who fill in false income reports to qualify for loans. But the S.E.C. has seen its staff and budget slashed and deregulators appointed to oversee its affairs. It has no authority to prosecute, only to make recommendations to the Justice Department, where Attorney General Eric Holder has followed the Obama Administration’s support of Wall Street, feeling no obligation to live up to the promises to make that a change from the Bush Administration’s similar lax behavior.

The financial sector recognizes a dimension of economic behavior that textbooks politely refrain from citing: the ability to capture regulatory agencies, gain control of the courts and buy control of politics. The Supreme Court has ruled that corporations have the same rights as individuals to contribute to campaigns, a euphemism for buying the loyalty of politicians and judges, and obtaining veto power over regulatory appointees. Corporations pay lower income-tax rates and are free of value-added and excise or other sales taxes paid by consumers.

Unlike real people, corporations cannot be sent to jail. Corporate shells shield owners and managers from criminal prosecution for the wholesale frauds that have left Countrywide Financial, Bank of America, Citibank, JP Morgan Chase and other pillars of the banking community free to make civil settlements for deceptive policies without admitting wrongdoing. And whereas individual crooks need to pay their own lawyers, corporations pick up the tab for their managers, while contributing generously to politicians who rewrite the laws to decriminalize fraud and deceptive business dealing. The corporate-backed media applaud politicians who insist that families “take responsibility” for their unemployment risk, debts and health care – while bailouts free the wealthy from having to suffer losses on bad loans.

Rhode Island recently rewrote its laws to place bondholders ahead of other creditors, including pension recipients. Under the new law, “city officials who intentionally fail to pay bondholders can be removed from office or held personally liable for the payments.”[2] In contrast to the pro-debtor trend of legislation since the 13th century, wealth at the top of the pyramid takes precedence over retired schoolteachers and other public employees. The effect has been for the city of Central Falls, Rhode Island, to seek Chapter 9 bankruptcy protection to avert a 34 percent cut in pensions to its retirees in order to pay bondholders.

Rhode Island is not alone in giving legal priority to bondholders. “Illinois has some of the strongest bondholder protections anywhere, which explains how a state that began its fiscal year with $3.8 billion in unpaid bills from last year – and whose pension system has less than half of the money it needs – is able to keeping selling bonds. State law requires Illinois to make ‘an irrevocable and continuing appropriation’ of tax revenues into a special fund every month that can be used only to pay bondholders.” (Mary Williams Walsh and Michael Cooper, “Faltering Rhode Island City Tests Vows to Pensioners,” The New York Times, August 13, 2011. The article adds that: “The federal bankruptcy code says pensioners and general-obligation bondholders are both unsecured creditors, stuck at the back of the line and treated as equals. But there is maneuvering room in the welter of state and federal laws.”)

Chicago has balanced its budget not by taxing finance and real estate gains, but by selling off its roads and other basic infrastructure. Much as in feudal Europe, the leverage is financial. Privatizers are charging tolls and even installing meters on the city’s sidewalks to charge cars by the minute for parking. New York City has slashed is public subway and bus service, extending commuting times and making life harder. It has privatized its television and radio, replacing public airtime with commercial advertising.

The ending of federal revenue sharing will exacerbate local budget constraints. The fact that many cities and states have constitutional requirements of balanced budgets – just as Republicans advocated for the federal government in the 2011 debt-ceiling agreement – requires that taxes be raised, public services cut, or assets sold off. California’s Proposition 13 prevents the state from raising property taxes in keeping with market prices, tying its hands fiscally and obliging it to commercialize its once-great university system. Students must now take on enormous education debt for what formerly was free or subsidized. New York City’s real estate tax likewise favors large investors and wealthy homeowners, at the expense of co-ops and condominium owners in apartment buildings. The rising rental value that local tax collectors relinquish does not lower housing costs; it merely enables the land’s site value to be paid to bankers. Rising debt-inflated housing prices have priced the city out of the market as the manufacturing center it formerly was. Its textile buildings and other industrial properties have been gentrified, leaving it a one-industry (finance) town focused on Wall Street.

At the international level, Irish voters confirmed the policy of taking bad European Central Bank advice to put the interest of bondholders first by taking bad bank loans onto the government’s balance sheet and taxing the population to make up the losses, even at the cost of imposing a generation of debt-strapped depression on their economy. This is the self-destructive road to debt peonage that the IMF and World Bank forced Third World countries to follow for many decades. The fact that this ethic reverses centuries-long social values promises to make the great debate of the 21st century over the issue of which debts are paid and which will not be – and how much debts should be written down.

In Praise of Ron Paul

August 24, 2011
A Real Maverick

by CLANCY SIGAL

“But (America) goes not abroad, in search of monsters to destroy.”

– President John Quincy Adams in 1821

Rep. Ron Paul, the Texan doctor running for President as a Republican libertarian, looks like my grandfather, a gambler and small time bookie. Maybe that’s why I want to trust him. Paul is the only candidate of either major party who, over the years and our many imperial adventures, is consistently and fiercely antiwar. I watch this guy on C-Span 2 all the time. Where the left is largely silent about Obama’s wars, Paul bangs away in his slot at the House Committee on Foreign Affairs, and at Tea Party rallies and campuses across the country, condemning – for moral, humane as well as fiscal reasons – the Mission Unending.

Ron Paul seems to be at the head of a rising, conservative, populist antiwar movement on the right. He’s also the “unperson” of American politics, shunned by the media, allegedly as unphotogenic, and by most urban liberals who sniff at a country obstetrician with zero charisma.


Paul is also against things I’m for – like emergency care for illegals, and Roe vs. Wade and Social Security and Medicare. But so what? He has a laser-like eye for what’s sick about our economy – for example, the $10 billion monthly we spend in Afghanistan while child poverty at home goes rampant – and our fear-mongering politics – for example, the equally no-end-in-sight “drug war”. A lonely figure in Congress, he voted against the Iraq war and the infamous Patriot Act. On a no-foreign-wars, pro-civil liberties platform he nearly beat Michelle Bachmann’s bought total in the recent Iowa straw poll. The Republican establishment is terrified of him. If this isn’t enough recommendation, Rush Limbaugh loathes Paul who he calls “nuts on parade”.

People who upset the consensus we call crazy.

There IS a Ron Paul problem. He has no jobs program aside from the bee in his bonnet advocating “a truly sound money system” (banishing the Federal Reserve).

But here’s OUR problem: nobody else with a national audience is speaking out against the war(s) and against the whole Bush-Obama apparatus of government surveillance and intimidating whistleblowers.

What used to be the left-progressive antiwar movement is a dead dodo. With rare exceptions we have been hypnotized into paralysis by the very real achievement of getting “our” man into the White House in 2008. [Speak for yourself, Clancy. AC] Then we went home for a deep snooze in the comforting illusion that he was pro-us, pro-labor, antiwar (sort of), just a good all-round person. Very slowly progressives are waking up from their torpor. Even the blindly loyal Democratic Black Caucus is making noises, as per Rep. Maxine Waters’ blunt assessment, “(Obama) doesn’t understand the level of pain out there.”

With agonizing slowness Obama’s “base” may be getting its act together. But I wouldn’t bet on it until we have a Devil’s-spawn Republican in the White House in 2016 – or, at the rate Obama is defeating himself, next year – and we can gather again at the river, the beautiful river of complacent protest.

If you’re against Bush-Obama’s wars, you have to reconcile yourself to the ugly fact that “anti imperialism” today is located more on the rising “isolationist” right than the “internationalist” left. Militarized “humanitarian intervention” is the liberal pretext for establishing our more than 1000 military bases worldwide. The irresistible impulse of paid-up liberals like Hilary Clinton, Samantha Powers and Susan Rice, Obama’s three interventionist advisors, is to go “Hooah!”, Let’s send in the 82d Airborne – or at least fire a few Cruise missiles – to protect (supply name of besieged civilians) to get our booted foot in the door.

Historically, there are times when there’s been little or no practical difference between social progressives and imperial warmakers. In the 19th century, once it became clear after a couple of depressions, in 1873 and 1893, that upthrusting American capitalism depended for survival on expansion and exploiting foreign markets, the flag smartly followed the dollar. The inevitable wars, in Cuba and the Philippines and on into WW1, were protested by lonely contrarians like Mark Twain but also supported and even encouraged by moralizing liberals (and safe noncombatants) like John Dewey, Walter Lippmann and a raft of suffragettes demanding the right to “do our part” in the killing.

Ever since, liberals have suffered from a kind of wartime “dissociative amnesia”, splitting off our progressive consciousness from the consequences of our silence when it comes to shedding other people’s blood on foreign ground.

What to do when a war is made in our name when some of the strongest anti-war voices come from suspect sources?

We’ve had this problem at least since the1930s when the anti-interventionist American First Committee drew reactionary and anti-Semitic “fringe elements” along with socialist Norman Thomas and the young students Gore Vidal and John F. Kennedy. (Disclosure: as a 14-year old protestor I threw bricks into the plate-glass windows of my neighborhood Sears & Roebuck because it was the headquarters of America First’s chairman.)

Ron Paul, despite his healthy war chest and huge following around the country, might never be a “viable” presidential candidate. But his persisting presence in our lives – if we care to watch and listen – creates a real dilemma for us on the so-called left. More than a dilemma, a reality we hate facing. It’s that the Bush-Obama wars, while bankrupting us, are OUR wars too, we own them, by our failure (unlike the Vietnam war) to reach out to serving troops and by trusting a president who has forfeited that trust.