Thursday, September 30, 2010

Wall Street Always Triumphs! After Larry Summers Comes The Winter of US Discontent & Rumsfeld The Liar (Again!) How Stupid Are You? The War Addicts

I just want to get this out there so you'll know where I've been living lately (psychically). And trust me, it's not a nice neighborhood. Today I realized for the first time that I am sick of being a "Liberal," a "Progressive," a supporter of civil rights for all, in short, a person with a conscience about how the actions of a few connected insiders so direly affect the lives of others in a country that once bragged that it protected the rights of free speech, association, habeas corpus, etc., etc., and no longer would be caught dead doing so. I've decided (as a matter of self protection) that I want to be a "Conservative" now so that I can join the rich, empowered, in-group (who do not know any of the proper definitions of the aforementioned "bad" words - which no one with power and wealth wants to be associated with in any way anymore). I am so sick that I live in a time when accumulated wealth has so perverted most of what we've grown to accept as the mainstream media that it is largely populated by uneducated bigots who not only cannot understand the dictionary definitions of the terms cited above, but they actually believe they can lie with impunity in public and not be called to account. I now regret every minute of the time I've spent trying to be a voice for reason and a supporter of the equality of persons in the public sphere in this once-proud country. I could say that I regret all my past efforts towards procuring civil rights for all as I see that this has led to the enshrinement of figures who wish to take rights away from others, such as public figures like Clarence Thomas, Ruben Navarrette, Jr., Armstrong Williams, Alfonso Aguilar, J.D. Hayworth, and the ever-present embarrassment Michael Powell. (And, yes, I just got ****** by someone I had tried to help. Gotta stop that nonsense.) And then, a somber moment descends, finally, and I remember more than several members of the "minority" who disprove all my grousing about the ingratitude of the others (and who are still holding on to their integrity). From Bob Herbert we learn the real economic truths:

Other folks who make their way to Master’s Manna are not so upbeat. The Great Recession has long since ended, according to the data zealots in their windowless rooms. But it is still very real to the millions of men and women who wake up each morning to the grim reality of empty pockets and empty cupboards.
Susie Madrak, that Suburban Guerrilla, is always a very good source of the truth about our "real" plight. I'm currently reading Michael Lewis' book The Big Short: Inside the Doomday Machine, which tells how the Wall Street gurus (knowledgeable about every step they take, and every hundredth of a penny they risk) never stopped encouraging (paying for) its workers (many of them minorities desperately looking for work) to do exactly what had wreaked local and worldwide havoc the time before. Don't doubt it. Read about it. (Emphasis marks added - Ed.)

Report: 28% Of Mortgages Didn't Meet Underwriting Standards - And Wall St. Knew It

It turns out that Wall St. knew almost one-third of the mortgages they bundled and sold to investors were bad. You're shocked, right? I know I find it hard to believe that this bunch of high-priced suit-wearing cokeheads, these Masters of the Universe would gleefully stiff American investors like that:

During a little-noticed hearing this week in Sacramento, Calif., a firm hired by Wall Street to analyze mortgages given to borrowers with poor credit, which were then packaged and sold to investors during the boom years, revealed that as much as 28 percent of those loans failed to meet basic underwriting standards - and Wall Street knew all along.

Worse, when the firm flagged those loans for potential issues, Wall Street banks ignored its recommendation nearly half the time and likely purchased those loans anyway - selling them to unwitting investors who were never told that the biggest home loan due diligence firm in the country had found potential defects in these mortgages.

The revelations give a better picture of what many have likely known for years: Wall Street firms knew they were buying lead yet passed it off as gold to investors who had no knowledge of the alchemy behind the scenes. But it also has real-world implications: the data released Thursday could bolster pension funds and other investors in their pursuit to force Wall Street banks to take back the bogus mortgages they peddled. An untold number of lawsuits have been filed in the wake of the subprime mortgage crisis and subsequent housing market collapse. Thus far, Wall Street has been winning that battle.

Clayton Holdings, a Connecticut-based firm that analyzes home mortgages for banks, hedge funds, insurance companies and government agencies, provided its data Thursday to the Financial Crisis Inquiry Commission, a bipartisan panel created by Congress to investigate the roots of the worst financial crisis since the Great Depression. The FCIC held its last public hearing in Sacramento, the home of the panel's chairman, where two current and former top Clayton executives testified under oath about the firm's role in the mortgage securitization chain.

During the height of the boom in 2006 and the period prior to its immediate end during the first six months of 2007, Clayton inspected home loans for Wall Street firms and government-backed mortgage giant Freddie Mac. Clayton looked at loans that the companies wanted to purchase from mortgage originators like New Century Financial, Countrywide Financial, and Fremont Investment & Loan. The company examined 911,039 mortgages, documents show. Clients included Bank of America and JPMorgan Chase, the nation's two biggest banks by assets which together have about $4.4 trillion; Citigroup, Deutsche Bank, Goldman Sachs, Morgan Stanley, Bear Stearns and Lehman Brothers. Clayton controlled about 50 to 70 percent of the market, Keith Johnson, the firm's former president, told the crisis panel. Clayton, though, typically looked at roughly 10 percent of the pool of mortgages available for purchase, Vicki Beal, a senior vice president at the firm, said in response to a question by panel chairman Phil Angelides. But during the frenzied last months of the boom, when lenders and securitizers were trying to sell off as much as they could before the market collapsed, that figure reached as low as 5 percent. Of the 911,000 loans that Clayton scrutinized, 72 percent either met the mortgage seller's standards and other guidelines set by the buyer of the mortgages, typically Wall Street firms, or they had off-setting factors that allowed Clayton to give them a passing grade, like if the borrower who took out the mortgage put a lot of money down or had a very high income. But 28 percent failed to meet those standards. Of those 255,802 mortgages that Clayton flagged for what were a variety of reasons, Wall Street ended up waiving 100,653 of them, or 39 percent of those loans that did not meet basic standards. And Wall Street firms didn't share this with investors. "This should have raised red flags," said Guy Cecala, publisher of Inside Mortgage Finance, a leading trade publication and data provider.

Our buddy, Robert Scheer, is over at The Reality Zone where he has Master of the Universe Summers (NOT!) firmly in his sights. You see, Summers is one of those "sophisticated" investors who were the "flaw" that Alan Greenspan eventually had to admit were present in the market (but not in his "calculations," of course - purposely, it would seem). What I could never figure out was how the public that screams bloody murder if a poor person gets away with a light sentence for arson or even second-degree murder, has never even budged the graphic or had publicly reported that it suffered the slightest blip of incredulity about people like Summers who made out like bandits from their financial catastrophic ideas and were not even asked to pay any of their criminally-obtained gains back (to the people who would be repaying their debts for the rest of their lives - and longer). You may ask, "Where is my gun?" And I have to say that as I used to be a firm believer in gun control, my belief structure is getting shaky. (Emphasis marks added - Ed.)

After Larry Summers Comes The Fall

Robert Scheer

. . . Summers deserves the same fate as the millions of workers laid off because of the banking debacle he helped cause, the dire consequences of which he has done precious little to mitigate.

It was Summers who, as Treasury Secretary in the Clinton administration, pushed through the Commodity Futures Modernization Act, which opened the floodgates to the toxic mortgage-backed derivatives that still haunt the economy. The Federal Reserve now holds $2 trillion in junk securities it took off the books of banks. But the financiers who packed those devilish derivatives still hold a huge amount, and the houses they unload every time the housing market shows faint signs of stabilizing keep the economy in the doldrums.

The bane of our economic security now and well into the future is those collections of mortgages — the nest eggs and castles of 14 million families — now underwater or already foreclosed. Newfangled derivatives that were exempted from any regulation, and removed from the purview of any regulatory agency, by the law that Summers got President Bill Clinton to sign off on. Summers claimed that the suggestion of the prescient Brooksley Born, who headed the futures regulatory agency, to rein in those scams would have killed the golden goose of a derivatives market which, thanks to Summers, was allowed to run wild. He offered the following reasoning in congressional testimony supporting a ban on derivatives regulation:

“First, the parties to these kinds of contracts are largely sophisticated financial institutions that would appear to be eminently capable of protecting themselves from fraud and counterparty insolvencies. … Second, given the nature of the underlying assets involved — namely supplies of financial exchange and other financial instruments — there would seem to be little scope for market manipulation. …”

Tell that to the victims of the AIG crash, including us taxpayers, who funneled $180 billion in the government bailout of that sophisticated financial institution to equally sharp counterparties like Goldman Sachs, which got a cool $12 billion from the deal. Ask Summer’s protégé and now Treasury Secretary Timothy Geithner why he bailed out those market manipulators when he was head of the New York Fed working with the Bush administration.

Summers got his cut from those grateful bankers, receiving $8 million in consulting and speaking fees from major Wall Street firms while he was a top adviser to the Obama election campaign. For just one speaking appearance, Goldman Sachs paid him $135,000.

During his tenure as President Barack Obama’s top economic adviser, Summers has continued the Bush policy of throwing money at Wall Street without getting anything in return by way of a moratorium on mortgage foreclosures. Or increased power through the bankruptcy courts to force the banks to readjust the mortgages of folks swindled by the collateralized-debt-obligation and credit-default-swap con artists.

Now, Summers opposes Obama’s selection of Elizabeth Warren, who in the mold of Brooksley Born has earned a strong reputation as a consumer advocate, to head a new consumer agency. The man has no shame and has uttered not a word of contrition over his sorry record.

But, hey, he's in the club. They always get away scot-free! And Summers finally leaves - on his own - so they report. To go back to ruining Harvard's reputation for excellence. As Bob Herbert continues to say (emphasis marks added - Ed.):
We Haven't Hit Bottom Yet

Marcus Vogt is 20 years old and homeless. Or, as he puts it, “I’m going through a couch-surfing phase.” Mr. Vogt is a Wal-Mart employee but he was injured in a car accident and was unable to work for a couple of months. With no income and no health insurance, he quickly found himself unable to pay the rent. Even meals were hard to come by. (His situation is quite a statement about real life in the United States in the 21st century. On the same day that I spoke with Mr. Vogt, Forbes Magazine came out with its list of the 400 most outrageously rich Americans.) I met Mr. Vogt at Master’s Manna, a food pantry and soup kitchen here that also offers a variety of other services to individuals and families that have fallen on hard times. He told me that his cellphone service has been cut off and he has more than $3,000 in medical bills outstanding. But he was cheerful and happy to report that he’s back at work, although it will take at least a few more paychecks before he’ll have enough money to rent a room.

Other folks who make their way to Master’s Manna are not so upbeat. The Great Recession has long since ended, according to the data zealots in their windowless rooms. But it is still very real to the millions of men and women who wake up each morning to the grim reality of empty pockets and empty cupboards.

Wallingford is nobody’s definition of a depressed community. It’s a middle-class town on the Quinnipiac River. But the number of people seeking help at Master’s Manna is rising, not falling. And when I asked Cheryl Bedore, who runs the program, if she was seeing more clients from the middle class, she said: “Oh, absolutely. We have people who were donors in the past coming to our doors now in search of help.”

The political upheaval going on in the United States right now is being driven by the economic upheaval. It’s sometimes hard to see this clearly amid the craziness and ugliness stirred up by the professional exploiters. But the essential issue is still the economy — the rising tide of poor people and the decline of the middle class. The true extent of the pain has not been widely chronicled.

“The minute you open the doors, it’s like a wave of desperation that’s hitting you,” said Ms. Bedore. “People are depressed, despondent. They’re on the edge, especially those who have never had to ask for help before.”

In recent weeks, a few homeless people with cars have been showing up at Master’s Manna. Ms. Bedore has gotten permission from the local police department for them to park behind her building and sleep in their cars overnight. “We’ve been recognized as a safe haven,” she said.

In two of the cars, she said, were families with children. It’s not just joblessness that’s driving people to the brink, although that’s a big factor. It’s underemployment, as well. “For many of our families,” said Ms. Bedore, “the 40-hour workweek is over, a thing of the past. They may still have a job, but they’re trying to survive on reduced hours — with no benefits. Some are on forced furloughs.

“Once you start losing the income and you’ve run through your savings, then your car is up for repossession, or you’re looking at foreclosure or eviction. We’re a food pantry, but hunger is only the tip of the iceberg. Life becomes a constant juggling act when the money starts running out. Are you going to pay for your medication? Or are you going to put gas in the car so you can go to work?

“Kids are going back to school now, so they need clothes and school supplies. Where is the money for that to come from? The people we’re seeing never expected things to turn out like this — not at this stage of their lives. Not in the United States. The middle class is quickly slipping into a lower class.”

Similar stories — and worse — are unfolding throughout the country. There are more people in poverty now — 43.6 million — than at any time since the government began keeping accurate records. Nearly 15 million Americans are out of work and home foreclosures are expected to surpass one million this year. The Times had a chilling front-page article this week about the increasing fear among jobless workers over 50 that they will never be employed again.

The politicians seem unable to grasp the immensity of the problem, which is why the policy solutions are so woefully inadequate. During my conversations with Ms. Bedore, she dismissed the very thought that the recession might be over. “Whoever said that was sadly mistaken,” she said. “We haven’t even bottomed-out yet.”

And to increase your governmental trust factor (remember this guy (and this Court?)?):

US Cannot Document Any Payment to Detainees for Abuse at Abu Ghraib

Fending off demands that he resign over the Abu Ghraib prison scandal, Defense Secretary Donald H. Rumsfeld told Congress he had found a legal way to compensate Iraqi detainees who suffered "grievous and brutal abuse and cruelty at the hands of a few members of the United States armed forces."

"It's the right thing to do," Rumsfeld declared in 2004.

"And it is my intention to see that we do."

Six years later, the U.S. Army is unable to document a single payment for prisoner abuse at Abu Ghraib. Nor can the more than 250 Iraqis or their lawyers now seeking redress in U.S. courts. Their hopes for compensation may rest on a Supreme Court decision this week. The Army says about 30 former Abu Ghraib prisoners are seeking compensation from the U.S. Army Claims Service. Those claims are still being investigated and many do not involve inmate abuse. The Army added that U.S. Forces-Iraq looked at its records and could not find any payments to former detainees. The Army also cannot verify whether any such payments were made informally through Iraqi leaders.

From fiscal years 2003 to 2006, the Defense Department paid $30.9 million to Iraqi and Afghan civilians who were killed, injured, or incurred property damage due to U.S. or coalition forces' actions during combat. The Army has found no evidence any of those payments were used to compensate victims of abuse at Abu Ghraib. So instead of compensation, the legacy of the most infamous detainee abuse episode from President George W. Bush's tenure is lawsuits, and the court battle mirrors the Iraq war — a grinding, drawn-out conflict.

At the U.S. Supreme Court, the former detainees are asking the justices to step into a case alleging that civilian interrogators and linguists conspired with soldiers to abuse the prisoners. All the detainees, who allege they were held at Abu Ghraib or one of the other 16 detention centers in Iraq, say they were eventually released without any charges against them.

Because they were just rounded up for the entertainment value? My new bf, David Michael Green won't let this moment go by quietly either. And neither should you. (I just love this guy!)
The Dismantling of Civilized Society

How stupid are you? I mean, let's just face it, shall we? That is precisely the question the right has been asking the American public for thirty years (and more) now. And that is the question the American public has been enthusiastically answering for the same period of time. Like a crack junkie, in fact.

In the 1980s, Ronald Reagan presented America with a set of economic lies so transparent that even a monster like George H. W. Bush called them "voodoo economics". When he was contesting Reagan for the Republican nomination, that is. Once Bush had lost it, and when he wanted to be added to the ticket as the Vice Presidential nominee, everything became hunky dory, and no more voodoo critiques were uttered. That was one of the greatest acts of treason (I choose my words carefully) in American history.

But back to Reagan. "Watch this", he said. "I'm gonna slash taxes, especially for the rich, spend huge sums on 'defense', and balance the budget at the same time."

Okay, so he wasn't a math major in college. Two out of three ain't bad, though, eh? Well, it is if you have to pay for his 'mistakes', plus interest, as so many of us continue to do to this day. Prolly not a big problem, though. Even though Americans hate taxes with the passion of the truly infantile, I'm sure they don't mind working extra hours flipping burgers each week to pay for the enrichment of the previous generation of plutocrats and defense contractors.

Right?

Or maybe it's just that their answer to the "How stupid" question is: "Very."

You might think that, because Reagan and Bush actually managed to quadruple the national debt with their little exercise in national folly. Or you might especially think that because Lil' Bush came along with the exact same snake oil a decade later. You had to be stupid to buy it the first time, but you had to have been really stupid to buy it the second time.

We, of course, were. And not just in terms of federal debt, either.

A generation of Reaganomics has now succeeded in suspending ninety-eight percent of the country in standard-of-living formaldehyde, so that they felt zero effect whatsoever from the substantial growth in GDP over the last thirty years, and now those policies are cutting off their legs from underneath them altogether.

All while the people of Reagan's class, of course, just piled on the riches. How stupid do you have to be to not notice who's diddling you?

Very, of course, but not necessarily as stupid as is maximally possible. 'Cause, guess what? Here they come again.

This week Republicans once again have issued a manifesto calling for slashing taxes on billionaires and cutting deficits, all at the same time. And once again they will win big electoral landslide victories in November despite that patent idiocy. Or perhaps because of it.

Why don't they just come out and do magic tricks, instead? Oh wait. That's their Jesus bit. Never mind.

On the one hand, I don't blame Americans for voting for the party that isn't the Democratic Party this fall. Obama and crew are miserable failures, as completely unable to provide meaningful solutions to the problems facing Americans today as they are inept at winning political fights against manifest criminals.

Looking at the landscape in front of them as it appears to voters' blinkered vision, it makes perfect sense to desperately swing to the party not in government when the house is on fire and the party in government is showing up with squirt guns. What could be more logical? This is, indeed, the fundamental notion of 'responsible government' itself, and it is at the core of democratic theory.

Please read on for a good black-humor laugh. And no, that's not racist in any way (no matter how it seems). It's just black. Professor Lawrence Davidson tells us about "President Obama’s Ahistorical World" next. It's almost spell binding (except that it's a telling death knell for US all), and it certainly simplifies his approach to problem solving, doesn't it? (Emphasis marks added - Ed.)
On September 23, 2010 it was President Obama’s turn to take the podium at the United Nations. There was a world of problems for him to draw on but, not unexpectedly, he chose to concentrate on the Middle East. Thus, as has been the case with almost every President since John Kennedy, Mr. Obama is also trying his hand at cutting the Gordian Knot and drinking the sea dry. That is he is trying his hand at making peace between Israel and Palestine. Will he succeed where all others have failed? Not likely, and his speech at the UN points to one reason why. His approach is ahistorical and, at least publically, ignores the context from which all this strife has emerged. This is not unusual for President Obama. From the beginning of his administration he has ignored history. His most notable early example was when he refused to investigate the prima facie war crimes of his predecessors, crimes which the Nuremberg prosecutors would have easily recognized. Instead he proclaimed a new day. We will look forward he said, and not backward. It was a foolish statement for such a reportedly bright man, for where does he think the new day and the fresh future come from? The present and the future are built on the past. With all due respect, only the very near sighted can suppose that they can defy historical gravity and float above it all, sublimely free of all roots. So now President Obama takes the podium in New York and tells us the following:

I can't go on today.

Read it for yourself.

And then read The War Addicts by Tom Engelhardt. Now that'll brighten our day!

Suzan _________________

2 comments:

Short Short Stories said...

Hello,

I have been reading David Michael Green's piece for years. He is terrific.

jerry

Suzan said...

Hi Jerry,

I've been reading him on and off also for years, but don't you think he's just reached that "tell them what I REALLY think now" stage?

As he's been pretty easily swayed by the "wait-and-see" Obama folks up to now?

Thanks for the comments!

S