Obama's Secret Plan To Gut Social Security As Economy Goes Overboard? So Good Looking and Rich (and Intelligent!) To Boot (Absurdity Rules the World)

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The Plan to Gut Social Security

Behind Obama’s Fake Recovery

July 27-29, 2012 Edition

Mike Whitney

Last week’s dismal “data dump” has ended all talk of a strong recovery in the US. Retail sales, factory output, jobless claims, consumer confidence, business investment and existing home sales are all down sharply indicating that the US economy is decelerating and may be headed for recession.

The Obama administration was warned repeatedly that activity would slow when the $800 billion fiscal stimulus (ARRA) ran out and net government spending became a drag on growth. But Obama’s chief economics advisor, Lawrence Summers, shrugged off these warnings in order to keep the economy sputtering along at half-speed. Summers figured that bigger deficits and slower growth would create the rationale for slashing entitlement spending and crushing organised labor (particularly, public unions) In other words, the economy is weak, because the policy was designed to make it weak.

Mission accomplished.

Not everyone in the Obama administration played along with this scam. Economist Christina Romer, for example, wanted the stimulus to be $1 trillion more than was eventually approved by Summers. That’s what she figured it would take to kick-start the growth engine and put millions of unemployed Americans back to work. Here’s the story from Huffington Post’s Sam Stein:

“. . . members of the president’s economic team felt that if they were to properly fill the hole caused by the recession, they would need a bill that priced at $1.8 trillion — $600 billion more than was previously believed to be the high-water mark for the White House.

The $1.8 trillion figure was included in a December 2008 memo authored by Christina Romer (the incoming head of the Council of Economic Advisers) and obtained by Scheiber in the course of researching his book.

“When Romer showed [Larry] Summers her $1.8 trillion figure late in the week before the memo was due, he dismissed it as impractical. So Romer spent the next few days coming up with a reasonable compromise: roughly $1.2 trillion,” Scheiber writes.”

The idea that Summers rejected Romer’s plan as “impractical” is pure public relations. Summers had a different agenda altogether. 

What he wanted was exactly what he got, a slow, underperforming economy with high unemployment and huge deficits. Does anyone really think that an economist with Summers’ impressive education and experience could be $1 trillion off in his calculations? (The American Recovery and Reinvestment Act of 2009 was eventually whittled down to $787 billion.)

It’s ridiculous. Summers wanted a flagging economy so he could torpedo Social Security, Medicare and Medicaid. These were the targets from the very beginning.

As for Obama, well, he probably figured that the $800 billion fiscal package would be enough to carry him over the finish-line in the 2012 elections, but not so big that it would subvert the goals of his chief economics advisor who was beholden to Wall Street and big business. In truth, Obama wanted the same thing as Summers, a justification for attacking the meager programs that keep the elderly and vulnerable from destitution.

Neither Summers nor Obama anticipated the downturn in China or the severity of the crisis in Europe both of which have weighed heavily on growth in the US and around the world. Here’s how Nouriel Roubini summed it up in a recent article on Project Syndicate:

“ . . . the first-half growth rate looks set to come in closer to 1.5% at best, even below 2011’s dismal 1.7%. And now, after getting the first half of 2012 wrong, many are repeating the fairy tale that a combination of lower oil prices, rising auto sales, recovering house prices, and a resurgence of US manufacturing will boost growth in the second half of the year and fuel above-potential growth by 2013.

The reality is the opposite: for several reasons, growth will slow further in the second half of 2012 and be even lower in 2013 – close to stall speed.”

Global growth is pretty much deteriorating everywhere; China, India, Japan, Brazil, emerging markets. The eurozone is particularly concerning as ongoing bank runs in the south accelerate increasing the likelihood of a full-blown banking system collapse.

The uncertainty is reflected in 10-year US Treasuries which have seen yields drop to record-lows in the last week. The flight to safety has intensified as frightened investors try to get their money out of Europe to avoid the deepening crisis and possible breakup of the 17-member monetary union.

On Tuesday, the Wall Street Journal announced that the “Fed Moves Closer to Action”. The news ignited a short rally, but soon faded. Confidence in the Fed is at its nadir. Another round of bond buying (QE3) might give equities a temporary jolt, but no one believes it will change the overall direction of the market or lead to an economic rebound. Interest rates are already at historic lows, so stuffing the banks with more reserves will neither increase lending or reduce unemployment. It is an exercise in futility. The Fed is at the limits of its effectiveness.

The current slowdown could have been avoided or at least mitigated had the Obama team followed Romer’s recommendation and provided the fiscal stimulus that was needed. Now – due to political gridlock in Congress – a second round of stimulus is out of the question which means the economy will continue its downward trend.

So, what should Obama do?

For starters, he should take a page out of FDR’s Depression handbook and hire more public workers. Here’s a clip from an article by economist Marshall Auerback who details some of the programs that Roosevelt implemented:

“[Roosevelt’s] government hired about 60 per cent of the unemployed in public works and conservation projects that planted a billion trees, saved the whooping crane, modernized rural America, and built such diverse projects as the Cathedral of Learning in Pittsburgh, the Montana state capitol, much of the Chicago lakefront, New York’s Lincoln Tunnel and Triborough Bridge complex, the Tennessee Valley Authority and the aircraft carriers Enterprise and Yorktown.

It also built or renovated 2,500 hospitals, 45,000 schools, 13,000 parks and playgrounds, 7,800 bridges, 700,000 miles of roads, and a thousand airfields. And it employed 50,000 teachers, rebuilt the country’s entire rural school system, and hired 3,000 writers, musicians, sculptors and painters, including Willem de Kooning and Jackson Pollock.”

Or Obama could allocate $300 billion per year to rehire the 650,000 teachers and other state and local workers who’ve been laid off since the crash. That would be the easiest thing to do.

Skip all the red-tape connected to infrastructure and gov job’s programs and just rehire the people who got their pink slip after the crash. The money spent on jobs would more than pay for itself by raising state revenues and boosting economic activity by many orders of magnitude.

Have you seen a graph of how many (state and local) jobs have been lost under Obama? It’s shocking! Take a look here.

We need to get these people back to work so they can feed their families and pay the bills. If we can afford $11 trillion to bail out crooked bankers, we can certainly afford a measly $300 mil for hard-working middle class families. It’s just a matter of priorities.

Economist Dean Baker has posted an article on his blog that supports my general thesis that Obama is planning to cut Social Security, etc., following the election. Here’s an excerpt from the post:

“The plan is that we will get the rich folks’ deal regardless of who wins the election….The deal that this gang … is hatching will inevitably include some amount of tax increases and also large budget cuts. At the top of the list… are cuts to Social Security and Medicare. . .

Social Security amounts to 90 percent or more of the income for one-third of seniors. For this group, the proposed cut in benefits would be a considerably larger share of their income than the higher taxes faced by someone earning $300,000 a year as a result of the repeal of the Bush tax cuts on high income earners . . .

(“The One Percent Want Your Social Security and Medicare and Steven Pearlstein Is Trying to Help,” Dean Baker, CEPR)

There it is in black and white. Obama is just as committed to gutting Social Security as Romney. The only difference is that he’s a better pitchman. Much better.

MIKE WHITNEY lives in Washington state. He is a contributor to Hopeless: Barack Obama and the Politics of Illusion. He can be reached at fergiewhitney@msn.com.

_ _ _ _ _ _ _

Remember this guy? How about that other guy who always appeared with him whenever they refused to testify under oath? They're b-a-c-k-k-k!!!

Amd  more than willing to tell us what great statesmen they were/are, and are ready to bring it all b-a-c-k   A-G-A-I-N !!!!!! (No matter how much they deny it.)

George W. Bush speaks to the Hoover Institute

In a recent interview, George W. Bush fondly recalled his eight-year presidency as “awesome,” but said he wasn’t eager to get back into public life. 

“I really don’t want to be in the public eye anymore,” the former president told the Hoover Institute’s Peter Robinson in an interview posted to YouTube on Tuesday.

“Look, eight years was awesome,” Bush explained. “You know, I was famous and I was powerful, but I have no desire for fame and power anymore.”

“I don’t want to undermine our president — whoever is president,” he added. “And a former president can do that. And I think it’s bad for the presidency itself.”

“I have found that life after the presidency is awesome.”

Bush left office in 2009 with a 22 percent approval rate, making him one of history’s least-liked presidents, according to CBS News. In all, 73 percent said they did not approve of the way he ran the country for eight years.

Watch this video from the Hoover Institute, uploaded to YouTube on July 17, 2012.
_ _ _ _ _ _ _

Cheney appeared at an Elected Leadership Committee meeting.
Jay Westcott/POLITICO

JAKE SHERMAN and SEUNG MIN KIM | 7/17/12

Former Vice President Dick Cheney told House Republicans Tuesday evening that slashing spending at the Pentagon is fine when the world is safe, but it’s not.

“There is no significant change in our strategic stance to justify these cuts,” Cheney told members of the House Republican whip team in the basement of the Capitol, according to a source in attendance. “Actually, things are not better, they’re worse.”

As a final shot across the bow of absurdity, here's Paul Krugman making gentle fun of idiots.

Er, special people, that is. Very Special Political People.

July 29, 2012

Comments

All Things Bright and Beautiful

Brad DeLong revisits Tyler Cowen’s remarkable defense of lack of social mobility. I’d written about it at the time — and predicted that this sort of thing would start popping up a decade earlier. But I somehow missed this passage:

For a given level of income, if some are moving up others are moving down. Do you take theories of wage rigidity seriously? If so, you might favor less relative mobility, other things remaining equal. More upward — and thus downward — relative mobility probably means less aggregate happiness, due to habit formation and frame of reference effects.

I believe that this, translated out of economese, is basically the sentiment from All Things Bright and Beautiful:

The rich man in his castle,
The poor man at his gate,
God made them high and lowly,
And ordered their estate.

True, Cowen isn’t advocating a complete caste society — but it’s actually not clear why, since he is suggesting that we’ll be happier as a society if people stay comfortably in the class into which they were born.

There was a time when that sort of sentiment would have been considered anti-American. But I guess that was a different country.

Standing Up To Power (In the Amazon)? (Is It Starting?) Will the Locally Affected Just Say "NO!"?

Three hundred indigenous people, small farmers, fisherfolk, and local residents occupied the Belo Monte Dam project. (photo: Atossa Soltani/Amazon Watch)

Occupy the Dam: Brazil's Indigenous Uprising

John Perkins, YES! Magazine

28 July 12

In the Amazonian backcountry, tribes are challenging construction of the world's third-largest dam - by dismantling it. Here's what they can teach us about standing up to power.

ast month, hundreds of indigenous demonstrators began dismantling a dam in the heart of Brazil's rainforest to protest the destruction it will bring to lands they have loved and honored for centuries. The Brazilian government is determined to promote construction of the massive, $14 billion Belo Monte Dam, which will be the world's third largest when it is completed in 2019. It is being developed by Norte Energia, a consortium of ten of the world's largest construction, engineering, and mining firms set up specifically for the project.

The Belo Monte Dam is the most controversial of dozens of dams planned in the Amazon region and threatens the lives and livelihoods of thousands of Amazonian people, plants, and animals. Situated on the Xingu River, the dam is set to flood roughly 150 square miles of already-stressed rainforest and deprive an estimated 20,000 people of their homes, their incomes, and - for those who succumb to malaria, bilharzia, and other diseases carried by insects and snails that are predicted to breed in the new reservoir - their lives. Moreover, the influx of immigrants will bring massive disruption to the socioeconomic balance of the region. People whose livelihoods have primarily depended on hunting and gathering or farming may suddenly find themselves forced to take jobs as manual laborers, servants, and prostitutes.

History has shown again and again that dams in general wreak havoc in areas where they are built, despite promises to the contrary by developers and governments. Hydroelectric energy is anything but "clean" when measured in terms of the excruciating pain it causes individuals, social institutions, and local ecology. The costs - often hidden - include those associated with the privatization of water; the extinction of plants that might provide cures for cancer, HIV, and other diseases; the silting up of rivers and lakes; and the disruption of migratory patterns for many species of birds.

The indigenous cultures threatened by the Belo Monte Dam, including those of the Xikrin, Juruna, Arara, Parakanã, Kuruaya and Kayapó tribes, are tied to the land: generations have hunted and gathered and cultivated the same areas for centuries. They - as well as local flora and fauna - have suffered disproportionately from the effects of other hydroelectric dams, while rarely gaining any of the potential benefits. Now they are fighting back.

Indigenous leaders from these groups have asked the Brazilian government to immediately withdraw the installation license for Belo Monte. They demand a halt to work until the government puts into place "effective programs and measures to address the impacts of the dam on local people." They point out that a promised monetary program to compensate for the negative impacts of the mega-dam has not yet been presented in local villages; also, that a system to ensure small boat navigation in the vicinity of the cofferdams, temporary enclosures built to facilitate the construction process, has not been implemented.

Without such a system, many will be isolated from markets, health care facilities, and other services. The cofferdams have already rendered much of the region's water undrinkable and unsuitable for bathing. Wells promised by the government and Norte Energia have not yet been drilled. The list of grievances goes on and on and is only the latest in a very old story of exploitation of nature and people in the name of "progress." Far too often, this has meant benefiting only the wealthiest in society and business.

Yet here in the backcountry of Brazil, there is a difference: the makings of a new story. The indigenous people's occupation of the dam garnered international attention, connecting their situation to other events across the globe - the Arab Spring, democratic revolutions in Latin America, the Occupy Movement, and austerity strikes in Spain and other European nations. Brazil's indigenous protesters have essentially joined protesters on every continent who are demanding that rights be restored to the people.

Stories take time to evolve. This one - the story of people awakening on a global level to the need to oppose and replace exploitative dreams - is still in its beginning phase. And the first chapter has been powerful, elegant, and bold.

A few years ago I was invited, with a group, to Ladakh, a protectorate of India, to meet with the Dalai Lama. Among a great deal of sage advice he offered was the following: "It is important to pray and meditate for peace, for a more compassionate and better world. But if that is all you do, it is a waste of time. You also must take actions to make that happen. Every single day."

It is time for each and every one us to follow that advice.

Opposing the Belo Monte Dam project provides an opportunity for you and me to honor those words, and those leading resistance to it can help us understand the importance of looking around - in our neighborhoods as well as globally - to determine what else we can do to change the story.

Please Good People (They Hope) Don't Talk About Hanging the Bankers!

I've been railing about, discoursing on, documenting microscopically and raging about the exact same issue (the banksters' fraudulent business model)  for years, but Washington's blog has the last word. I wish. Before the scoundrels are strung up. (Not that I want to see it, of course, although . . . maybe . . . .)

Tony Blair:   Don’t Hang Bankers

July 24, 2012 by WashingtonsBlog

Why Is Everyone Suddenly Talking about Hanging Bankers?

Mainstream economist Nouriel Roubini said recently:

Nobody has gone to jail since the financial crisis. The banks, they do things that are illegal and at best they slap on them a fine.  If some people end up in jail, maybe that will teach a lesson to somebody.  Or somebody hanging in the streets.

Former British prime minister Tony Blair – currently employed as a senior adviser to JP Morgan – said today:

We must not start thinking that society will be better off “if we hang 20 bankers at the end of the street” ….

Where’s all of this coming from?

The American government’s top official in charge of the bank bailouts writes:

Americans should lose faith in their government. They should deplore the captured politicians and regulators who distributed tax dollars to the banks without insisting that they be accountable. The American people should be revolted by a financial system that rewards failure and protects those who drove it to the point of collapse and will undoubtedly do so again.

Only with this appropriate and justified rage can we hope for the type of reform that will one day break our system free from the corrupting grasp of the megabanks.

Economics professor Randall Wray writes today:

Thieves … took over the whole economy and the political system lock, stock, and barrel. They didn’t just blow up finance, they oversaw the swiftest transfer of wealth to the very top the world has ever seen. They screwed workers out of their jobs, they screwed homeowners out of their houses, they screwed retirees out of their pensions, and they screwed municipalities out of their revenues and assets.

Financiers are forcing schools, parks, pools, fire departments, senior citizen centers, and libraries to shut down. They are forcing national governments to auction off their cultural heritage to the highest bidder. Everything must go in firesales at prices rigged by twenty-something traders at the biggest and most corrupt institutions the world has ever known.

***
I see two scenarios playing out. In the first, we allow Wall Street to carry on its merry way, as the foreclosure crisis continues and Wall Street steals all homes, packaging them into bundles to be sold for pennies on the dollar to hedge funds. All wealth will be redistributed to the top 1% who will become modern day feudal lords with the other 99% living at their pleasure on huge feudal estates.

***

That is the default scenario — the outcome that will emerge in the absence of action.

In the second, the 99% occupy, shut down, and obliterate Wall Street.

Economics professor Michael Hudson agrees … saying that the banks are trying to make us all serfs.
Top economists say that fraud caused the Great Depression and the current financial crisis, and that the economy will never recover until fraud is prosecuted.

Leading experts say that fraud is not only widespread, it is actually the business model adopted by the giant banks. See this, this, this, this, this and this.

Indeed, the big banks – with the help of the government  – have basically become criminal enterprises.   And yet the Bush and Obama administrations have made it official policy not to prosecute fraud.
 
Economics professor Steve Keen says:

“This is the biggest transfer of wealth in history”, as the giant banks have handed their toxic debts from fraudulent activities to the countries and their people.

Nobel economist Joseph Stiglitz said in 2009 that Geithner’s toxic asset plan “amounts to robbery of the American people”.

That’s why people are so mad at bankers.

I noted 7 years ago:

I am NOT calling for the overthrow of the government. In fact, I am calling for the reinstatement of our government. I am calling for an end to lawless dictatorship and a return to the rule of law. Rather than trying to subvert the constitution, I am calling for its enforcement.
***
The best way to avoid all types of revolution would be for the government to start following the rule of law. I passionately hope it will do so.

The fact that even Tony Blair and Nouriel Roubini are talking about hanging bankers shows that this is the last chance for the justice system – the only thing which stands between criminals on Wall Street and pitchforks – to work.

A Criminogenic Environment - The Plea To Reduce the National Debt Has Always Been To Pay Off Debts of 1% (Corrupt Government Officials Should Be In Jail . . . Alongside Corrupt Banksters) OccupyGreensboroNC Stops Foreclosure Madness!

OccupyGreensboroNC Gets Busy Aiding Jeff Thigpen! (Stopping Wrongful Foreclosures)

There are a few facts about national politics and its historical leadership that should always be at the forefront of citizens' minds at election time (if not always).

National Debt? No Such Thing

 

Carl Gibson

Reader Supported News  "Any politician who bemoans the national debt, whether they be American, Greek, Spanish or otherwise, is lying to you if they blame anyone but the richest 0.001% for the state's massive debt. Because the richest 0.001% have anywhere between $21 trillion and $32 trillion stashed in overseas bank accounts simply to avoid paying their fair share of taxes." READ MORE

The news site  Big Picture  points out the solution to the western world's current dilemma in its own low-key but definitively concisive way.

Corrupt Government Officials Should Be In Jail . . . Alongside Corrupt Banksters

28 Jul 2012 Those Who Benefited from Wall Street Fraud Must be Prosecuted . . . Including Rogue Government Officials who Aided and Abetted the Crimes Wall Street fraud caused the Great Depression and the current financial crisis. Top economists and financial experts agree that our economy will never recover unless Wall Street fraud is prosecuted. Yet the government has more or less made it official policy not to prosecute fraud, and instead to do everything necessary to cover up for Wall Street. For example, the Obama administration is prosecuting fewer financial crimes  than under Reagan or either Bush. For example, we pointed out in 2010:

The government’s entire strategy now – as during the S&L crisis – is to cover up how bad things are. But it is not only a matter of covering up fraud that has already happened. The government also created an environment which greatly encouraged fraud.

Here are just a few of many potential examples:

• The government-sponsored rating agencies committed massive fraud (and see this)

• The Treasury department allowed banks to “cook their books”

• Regulators knew of and allowed the use of debt-hiding accounting tricks by the big banks

• Tim Geithner was complicit in Lehman’s accounting fraud, (and see this), and pushed to pay AIG’s CDS counterparties at full value, and then to keep the deal secret. And as Robert Reich notes, Geithner was “very much in the center of the action” regarding the secret bail out of Bear Stearns without Congressional approval. William Black points out: “Mr. Geithner, as President of the Federal Reserve Bank of New York since October 2003, was one of those senior regulators who failed to take any effective regulatory action to prevent the crisis, but instead covered up its depth”

• The former chief accountant for the SEC says that Bernanke and Paulson broke the law and should be prosecuted

• The government knew about mortgage fraud a long time ago. For example, the FBI warned of an “epidemic” of mortgage fraud in 2004. However, the FBI, DOJ and other government agencies then stood down and did nothing. See this and this. For example, the Federal Reserve turned its cheek and allowed massive fraud, and the SEC has repeatedly ignored accounting fraud. Indeed, Alan Greenspan took the position that fraud could never happen

• Paulson and Bernanke falsely stated that the big banks receiving Tarp money were healthy, when they were not

• Arguably, both the Bush and Obama administrations broke the law by refusing to close insolvent banks

• Congress may have covered up illegal tax breaks for the big banks

_ _ _ _ _ _ _ Economist James K. Galbraith wrote in the introduction to his father, John Kenneth Galbraith’s, definitive study of the Great Depression, The Great Crash, 1929:

The main relevance of The Great Crash, 1929 to the great crisis of 2008 is surely here. In both cases, the government knew what it should do. Both times, it declined to do it. In the summer of 1929 a few stern words from on high, a rise in the discount rate, a tough investigation into the pyramid schemes of the day, and the house of cards on Wall Street would have tumbled before its fall destroyed the whole economy. In 2004, the FBI warned publicly of “an epidemic of mortgage fraud.” But the government did nothing, and less than nothing, delivering instead low interest rates, deregulation and clear signals that laws would not be enforced. The signals were not subtle: on one occasion the director of the Office of Thrift Supervision came to a conference with copies of the Federal Register and a chainsaw. There followed every manner of scheme to fleece the unsuspecting …. This was fraud, perpetrated in the first instance by the government on the population, and by the rich on the poor. *** The government that permits this to happen is complicit in a vast crime.

In other words, the fraud started at the very top with Greenspan, Bush, Paulson, Negraponte, Bernanke, Geithner, Rubin, Summers and all of the rest of the boys. As William Black told me today:

In criminology jargon: they created an intensely criminogenic environment.

The government’s Special Inspector General in charge of oversight of the Troubled Asset Relief Program (the “TARP” bank bailouts) – Neil M. Barofsky – said today:

It was a “message to the banks ‘if we commit fraud, we break the rules, don’t worry, we’re too big — they’ll never bring the appropriate steps against us,’” Barofsky says in an interview with The Daily Ticker. “And that is why we’ve had scandal after scandal after scandal.”

This was a “global conspiracy to fix one of the most important interest rates in the world,” Barofsky continues. “[Geithner] heard this information and looked the other way. Geithner and other regulators should be held accountable, they should be fired across the board.

If they knew about an ongoing fraud, and they didn’t do anything about it, they don’t deserve to have their jobs. I hope we see people in handcuffs.“

Government regulators have become so corrupted and “captured” by those they regulate that Americans know that the cop is on the take.  (Even top justice officials are incredibly cozy with Wall Street fraudsters.) 

Institutional corruption is killing people’s trust in our government and our institutions, which is one of the reasons the economy is faltering again. Indeed, polls show that very few Americans believe that the U.S. government has the “consent of the governed”, a higher percentage of Americans liked King George during the Revolutionary War than like Congress today, and people are publicly discussing whether it’s a good or bad idea to “hang bankers”. I noted 7 years ago:

I am NOT calling for the overthrow of the government. In fact, I am calling for the reinstatement of our government. I am calling for an end to lawless dictatorship and a return to the rule of law. Rather than trying to subvert the constitution, I am calling for its enforcement. *** The best way to avoid all types of revolution would be for the government to start following the rule of law. I passionately hope it will do so.

While conservatives tend to view government as the problem, and liberals tend to view corporations as the problem, the real problem is the malignant, symbiotic relationship between corrupt officials and criminal  corporate leaders. Without the cancerous relationship, neither side could cause so much damage. If America returns to the rule of law, we might have a fighting chance. The justice system may be the only thing which stands between peace and violence. All of those who benefited from Wall Street fraud must be prosecuted … including corrupt government officials who aided and abetted their crimes, helped cover them up, or have blocked prosecution. Iceland should be a role model:

Iceland has prosecuted the fraudster bank heads (and here and here) and their former prime minister, and their economy is recovering nicely… because trust is being restored in the financial system.

Indeed, even evangelical leader Pat Robertson agrees:

Pat Robertson discussed the banking crisis and glowingly spoke about how Iceland jailed many of the bankers who devastated their nation’s economy by taking out fraudulent loans. Robertson hailed the Nordic nation for its actions and said that Americans should deal with the financial crisis in the same way. ***

“They are putting people in jail.  Prime ministers are being indicted. They are going after banks. The people said the banks are ripping us off. We don’t like what they did, and they brought our country to ruin. Suddenly, Iceland is turning around and they look like a big success story!” ***

“We could start putting all of those bankers in jail. There was not one banker prosecuted and so many people were lying, and so-called “no-doc loans” and liars’ loans, and none of them have been held accountable. ***

Iceland is leading the way and their GDP is growing, and all of a sudden, they were in a terrible mess, terrible mess, and look what is happening!”

Money For Nothing (Chicks For Cheap?) & Alec Cockburn's Last Shot (At Power)

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Let's Just Say It: The Republicans AND the Media Are the Problem


The next time you hear someone (probably in Congress or perhaps even a candidate for President) talk in oh-so-solemn tones about how important it is to slash spending (particularly on education or infrastructure or even the undeserving poor who can't GET A JOB!) and focus on paying down the deficit, please direct them to this essay.

Who knows? Maybe we'll help get the world out of its current financial miasma?

But a funny thing happened on the way to the predicted fiscal crisis: instead of soaring, U.S. borrowing costs have fallen to their lowest level in the nation’s history. And it’s not just America. At this point, every advanced country that borrows in its own currency is able to borrow very cheaply.

The failure of deficits to produce the predicted rise in interest rates is telling us something important about the nature of our economic troubles (and the wisdom, or lack thereof, of the self-appointed guardians of our fiscal virtue).

Money for Nothing

Paul Krugman

July 26, 2012

Comments

For years, allegedly serious people have been issuing dire warnings about the consequences of large budget deficits — deficits that are overwhelmingly the result of our ongoing economic crisis.

In May 2009, Niall Ferguson of Harvard declared that the “tidal wave of debt issuance” would cause U.S. interest rates to soar. In March 2011, Erskine Bowles, the co-chairman of President Obama’s ill-fated deficit commission, warned that unless action was taken on the deficit soon, “the markets will devastate us,” probably within two years. 

And so on.

Well, I guess Mr. Bowles has a few months left. But a funny thing happened on the way to the predicted fiscal crisis: instead of soaring, U.S. borrowing costs have fallen to their lowest level in the nation’s history. And it’s not just America. At this point, every advanced country that borrows in its own currency is able to borrow very cheaply.

The failure of deficits to produce the predicted rise in interest rates is telling us something important about the nature of our economic troubles (and the wisdom, or lack thereof, of the self-appointed guardians of our fiscal virtue). Before I get there, however, let’s talk about those low, low borrowing costs — so low that, in some cases, investors are actually paying governments to hold their money.

For the most part, this is happening with “inflation-protected securities” — bonds whose future repayments are linked to consumer prices so that investors need not fear that their investment will be eroded by inflation. Even with this protection, investors used to demand substantial additional payment. Before the crisis, U.S. 10-year inflation-protected bonds generally paid around 2 percent. Recently, however, the rate on those bonds has been minus-0.6 percent. Investors are willing to pay more to buy these bonds than the amount, adjusted for inflation, that the government will eventually pay in interest and principal.

So investors are, in a sense, offering governments free money for the next 10 years; in fact, they’re willing to pay governments a modest fee for keeping their wealth safe.

Now, those with a vested interest in the fiscal crisis story have made various attempts to explain away the failure of that crisis to materialize. One favorite is the claim that the Federal Reserve is keeping interest rates artificially low by buying government bonds. But that theory was put to the test last summer when the Fed temporarily suspended bond purchases. Many people — including Bill Gross of the giant bond fund Pimco — predicted a rate spike. Nothing happened.

Oh, and pay no attention to the warnings that any day now we’ll turn into Greece, Greece I tell you. Countries like Greece, and for that matter Spain, are suffering from their ill-advised decision to give up their own currencies for the euro, which has left them vulnerable in a way that America just isn’t.

So what is going on? The main answer is that this is what happens when you have a “deleveraging shock,” in which everyone is trying to pay down debt at the same time.

Household borrowing has plunged; businesses are sitting on cash because there’s no reason to expand capacity when the sales aren’t there; and the result is that investors are all dressed up with nowhere to go, or rather no place to put their money.

So they’re buying government debt, even at very low returns, for lack of alternatives. Moreover, by making money available so cheaply, they are in effect begging governments to issue more debt. 

And governments should be granting their wish, not obsessing over short-term deficits.

Obligatory caveat:   yes, we have a long-run budget problem, and we should be taking steps to address that problem, mainly by reining in health care costs. But it’s simply crazy to be laying off schoolteachers and canceling infrastructure projects at a time when investors are offering zero- or negative-interest financing.

You don’t even have to make a Keynesian argument about jobs to see that. All you have to do is note that when money is cheap, that’s a good time to invest. And both education and infrastructure are investments in America’s future; we’ll eventually pay a large and completely gratuitous price for the way they’re being savaged.

That said, you should be a Keynesian, too. The experience of the past few years — above all, the spectacular failure of austerity policies in Europe — has been a dramatic demonstration of Keynes’s basic point:   slashing spending in a depressed economy depresses that economy further.

So it’s time to stop paying attention to the alleged wise men who hijacked our policy discussion and made the deficit the center of conversation. They’ve been wrong about everything — and these days even the financial markets are telling us that we should be focused on jobs and growth.

Alec Cockburn was probably my favorite journalist. Right. Of all time.

This is the last essay he wrote when he was very ill. He passed away last week.

Alexander Cockburn

Alexander Cockburn, The Nation's "Beat the Devil" columnist and one of America's best-known radical..

Barclays and the Limits of Financial Reform

Alexander Cockburn

July 11, 2012

This article appeared in the July 30-August 6, 2012 edition of The Nation.

Hardly had the boyish visage of JPMorgan Chase’s Jamie Dimon quit CNN screens than it was succeeded by that of Bob Diamond, former chief executive of Barclays, accused of masterminding the greatest financial scandal in the history of Britain. Columnists shook with rage at the “reeking cesspool” being disclosed — disclosed, mind you, four long years after the Wall Street Journal broke the story that the Libor was being fixed.

Libor, which stands for “London interbank offered rate,” is supposed to be based on the average rate of interest banks charge to borrow from one another. The rate is set every morning by a panel of banks. Each bank “submits” the rates at which it believes it can borrow from the collective money pool, from overnight to twelve months.

Libor is the benchmark for investments all over the world — the Financial Times estimates that $350 trillion worth of contracts have been pegged to it. It is also considered a barometer of a bank’s health. Just as customers with bad credit records have to pay higher interest rates, banks deemed in financial distress have to pay more to borrow.

In October 2008, a doomsday month for the world banking industry, it looked like Barclays was next in line for a rescue after taxpayers bailed out the Royal Bank of Scotland and Lloyds/HBOS on October 13. One big warning flare was that beleaguered Barclays could borrow from the common money pool only at a very high rate of interest. The answer was to fix the rate, with Barclays traders secretly winching it down. It was all completely illegal.

Next thing we knew, there was Diamond being reprimanded by a select committee of the House of Commons for being nothing better than a common thief. But then into the hurly-burly suddenly intruded a new actor, actually one in the form of a savior: Paul Tucker, deputy governor of the Bank of England. It turned out that Diamond and Tucker had had a conversation of considerable moment, one prudently recorded by Barclays, on October 29, 2008.

Diamond said Tucker had relayed concerns from “senior Whitehall figures” that Barclays’s Libor was consistently higher than that of other banks. Tucker is alleged to have conveyed the view from Westminster that the bank’s rate did not “always need to appear as high as it had recently.” In other words, Westminster wanted Barclays to massage its rate to a lower level.

But all with full deniability. According to Barclays, “Bob Diamond did not believe he received an instruction from Paul Tucker or that he gave an instruction to [former top Barclays deputy] Jerry del Missier. However, Jerry del Missier concluded that an instruction had been passed down from the Bank of England not to keep Libor so high and he therefore passed down a direction to that effect to the submitters.”

Barclays said there was no allegation by the authorities that this instruction was intended to manipulate the Libor. And when he was questioned by Tory MP David Ruffley on July 9, Tucker testified that “a bell did not go off in my head” that banks were lowering their Libor submissions.

Marvelous:   the join between civil society and state was tactfully seamless, with deniability all round.

So first there are the “senior Whitehall figures” (one turned out to be Cabinet Secretary Sir Jeremy Heywood) — i.e., the permanent government running Britain. When a senior Whitehall figure urges the commission of a serious crime, he merely murmurs that the bank’s Libor did not “always need to appear as high as it had recently.”

There then follows a flurry of talk about misunderstandings but, Lord save us, certainly not an order to fix the Libor. Then, unmistakably, there is a huge plunge in Barclays’s rate. The government’s concern — that Barclays might appear to be on the brink — is averted.

But we live in a capitalist world, duly furnished with its rewards and penalties. Barclays has agreed to a $450 million settlement, and Diamond and del Missier have resigned. On his way out the door, Diamond said he’d been promised £18 million ($28 million) as a golden handshake.

The standing committee had a good jeer, but Diamond stuck to his guns, and there the matter rested until July 10, when Barclays announced that Diamond will forfeit up to £20 million ($30 million) in bonuses and incentives but will retain one year’s salary, pension and other benefits worth £2 million ($3 million).

Of course, there have been furious calls for further punishment and reform. Labour leader Ed Miliband says “we should break the dominance of the big five banks…and strike off those whose conduct lets this country down and prosecute those who break the law.” He also wants to increase competition by forcing the big banks to sell off up to 1,000 of their branches. In the current culture of rabid criminality in the banking system, that would surely be unwise, unleashing 1,000 small-time banksters.

People calling for banking reform on either side of the 
Atlantic are underestimating the problems of enforcement. A writer on the financial news blog Zero Hedge recently 
remarked that “the Libor scandal seems to be waking people up to manipulation and fraud by the big banks.” 

Of course, there are tools at the ready: sanctions, tribunals, a ban for life for crooked traders. But Libor was meant to be the prime glittering advertisement for the free market.

Now it turns out that the whole thing is a fix—a grimy hand all too visible. It’s like the spy in Conrad’s Secret Agent vowing to destroy the first meridian.

Is it possible to reform the banking system? There are the usual nostrums—tighter regulations, savage penalties for misbehavior, a ban from financial markets for life. But I have to say I’m dubious. I think the system will collapse, but not through our agency.

Comments:

JimmyOlsenCubReporter:

In healthier times and healthier civilizations, usurers were hung. In our time, our Western "Civilization" is of the usurers, by the usurers and, most definitely, for the usurers. And this the the basis of all of the major devastations of our time: the impoverishment of the 99%, rampant environmental degradation, and perpetual wars.

toddboyle:

There is no fundamental need for "banks" at all. There may even be better systems of economic organization than the use of money. Corporations don't use money for organizing their vast, internal operations. They use enterprise ERP and CRM software, scheduling, planning resources. But let's assume you need a system for balances, payments and settlements. Technically, this is childs' play. Any of the major software companies could run the entire thing, worldwide at very little cost.

So could the cellphone carriers. Or the major credit cards. Please explain why we need the "Banks" on every street corner. They're obsolete as Western Union, held in place ONLY ONLY ONLY by federal protection - in misguided belief they're the only way to secure tax revenue, control money laundering, etc. Please, THINK, people. Let them fail, next time. Let them disappear.

theshadowknows:

This excellent article should be available for everyone to read. Alex clearly understands that mere “reform” of the banking system will ultimately only allow the financial services criminals to keep committing crime.

Rather than simply fining individual banks under Dodd-Frank, the U.S. Government should declare the whole system a criminal conspiracy under the RICO statute, and shut down every bank involved.

But, as I have written here before, to achieve criminal prosecution of Wall St. banksters, we would need an Administration and an Attorney General who understand that Wall St. and the globalist investment banks are worse than the mafia, and should be closed down immediately with the banking system being reorganized under Glass-Steagall to prevent such corruption in the future. We would need an Administration and a Congress not in the pay of the criminals.

Philip1:

Only a very few banksters, are the brains behind it, so going through all that is a waste of time, money and resources.

In this day and age, all that is required is to hire actuaries to find out the estimated amount of damages to all involved; and then have the banks write out a check; after a few years (at most) they will go bankrupt.

Beethoven1:

I agree, but the problem is who's going to do it? Evidently every branch of the government is outright owned by the banks you just mentioned. In short, there is no legal recourse against those who write the laws for themselves.

So, either you have to turn the system upside down and start over, prepare for a complete meltdown in the form of a major depression or end up in a civil war where the rich are pitted against everyone else.

I really don't think the corrupt people in D.C. know how much damage their blatant corruption is causing, then again if they are the sociopaths they appear to be, they probably don't give a rip anyway.

Philip1:

I have a few suggestions; from my personal experience, most of what is occurring is old news for me; this stuff, I have been documenting from banksters has been
occurring (for me anyway) from around 1968.

You're correct about most of todays politicians being to incompetent; why they are incompetent, is more a problem voters have to ask themselves as they vote.

As a liberal pacifist; and as a person that tries to see the cup as being half full most of the time it seems that with all the publicity, it would be a opportune time to organize grassroots efforts to hire actuaries and lawyers, to put out numbers of the estimated damages from Liebor...my guess is... the estimated damages would be more like 30 trillion $$$....if one looks at like, for example, had the banks never been bailout out; because if it was public knowledge that they were manipulating Liebor during the time of the bailout, it probably would not of occurred; I could go on and on, but there are many options to counter banksters.

If you're individually interested in trying to understand it; when you read into the language of banksters; even press releases of a bankster, and government regulators do extensive research into the “language” they use, most of it is probably filled with half truths, then write counter arguments, etc.

I miss you already, Alec.

One More Small Town Organizes Against Exploitation by Big Business

Who said citizens in small towns aren't aware of or not willing to organize against the plans that large companies have for their growth? Local organization is the secret to maintaining healthy environments and reducing carbon footprints. It's a small step (and an empowering one).

National credit tenants CVS Pharmacy and Chase Bank are planning a redevelopment project at the main crossroads of the small town of Sebastopol, California, known widely for its green politics. (photo: Kellogg-Associates)

Frontline Battle Against Big Business

Shepherd Bliss, Reader Supported News

25 July 12

mall town Sebastopol residents in Northern California have been waging a fierce David vs. Goliath struggle against the powerful Chase Bank, CVS Pharmacy, and Armstrong Development for over two years. The implications of this struggle extend beyond this one town, as big business continues to seek to expand its wealth.

Chase, the US' largest bank, and CVS, its 18th largest mega-corporation, propose to anchor the downtown commons with what opponents describe as "a suburban strip mall." Armstrong has been representing the real estate needs of Chase/CVS in Sebastopol, as well as elsewhere around the country, and warrants a close study.

"Efforts to stop this project with the denial of the design need to stop tonight," said Michelle Moore, an Armstrong attorney at a July 17 City Council meeting. Sebastopol's Design Review Board (DRB) had already rejected the proposal twice, most recently by a 4-1 vote.

Armstrong's attorney threatened and bullied nearly 200 residents of the town of 7,300 to shut up and take orders from Armstrong/Chase/CVS. She was apparently trying to subvert the democratic process and replace it by the power of big business.

Residents objected to someone coming from outside to tell them how to run their agrarian town, which exemplifies what would be likely if the proposal is approved. The Planning Commission and City Council had also previously rejected the proposal for not conforming to the town's General Plan, as well as design and planning regulations.

The reason the proposal is still on the table is the threat by the deep pockets of Chase and CVS to sue the town and its people. Sebastopudlians talk about fighting for "the heart and soul" of their town and "not selling it to the highest outside bidder." They discuss tactics such as boycotts and civil disobedience to block Chase/CVS from dominating their charming downtown and ushering in other mega-corporations.

Opponents implore the Council to wait until a better offer, which conforms to the town's regulations, comes along. Another nearby large development, the Barlow Project, has received substantial local support because it will provide spaces for many local businesses. The money would thus circulate locally rather than leave the area. The downtown already has enough credit unions and local banks, as well as a pharmacy.

Though the July 17 meeting that started at 6 pm was advertised as a "public hearing," the developers talked for two hours. It was 10 pm by the time the patient public was allowed to speak; most people had gone home.

The hearing convened again on July 19, where 43 people spoke against the development and 17 for it. Those supporting the development were mainly older friends of the family seeking to sell its two-and-a-half acre abandoned car dealership. The opponents included people from their early 20s to their 70s. Among them were half a dozen activists from Occupy Sebastopol, which still maintains a tent in the town square.

Activists complained that the development is car-centric, mainly a large parking lot with only two isolated stores, rather than pedestrian and bike friendly. They noted that the drive-through component would create greater pollution in the downtown commons and increase greenhouse gas emissions, thus worsening chaotic climate change. A study reported that traffic would be increased by at least 2,000 trips a day in the county's most clogged intersection. This would not be good for emergency vehicles, pedestrians, or bikers.

The next and perhaps final meeting on the proposal will be August 7, when the Council plans to make a decision. After that it is expected that whichever side does not prevail may sue.

The DRB was willing to work with Armstrong. However, Armstrong has basically ignored the feedback that it gets from the majority of citizens and town officials, only making a few cosmetic changes. Armstrong appears to be trying to strong-arm its case, preferring a litigious route to get what it wants.

"In the next five years, we anticipate completing retail development values at over half a billion dollars," Armstrong's California Region website brags. "From one store in a small town, we now develop CVS pharmacies in nine states. We've constructed over 400 locations with more than 150 sites in the development pipeline. A similar development program exists with JP Morgan Chase Bank, with many sites in development across our region." Chase and CVS are frequent partners around the US, as well as in paying millions of dollars in fines for illegal business practices.

"California is being targeted for a saturation of CVS stores," writes Yvette Williams of Sebastopol's Planning Commission, which has rejected the development.

Many federal regulators currently are investigating Chase. Its CEO, Jamie Dimon, originally announced losses of around $2 billion dollars in June, and then admitted in July that they were $6 billion or more. Chase is one of the big five banks responsible for the recent fall of the American economy. CVS has also paid millions of dollars in fines for failing to clean up toxic wastes, and other deadly crimes.

Armstrong adds, "We have long standing valued relationships with some of the national's leading retailers that include Wal-Mart, Lowe's Home Improvement Center and Target." So if a city wants to be dominated by long-term relationships with such mega-corporations, Armstrong would be a good developer to hire.

But most Sebastopudlians have settled in a small town with a charming downtown commons because they prefer its agrarian flavor. A larger nearby city, Rohnert Park, has selected a corporate model, which has no town center where people can gather.

Sebastopol is the center of what is called the West County, with some 50,000 residents, of coastal Sonoma County. It used to be known more by its natural description, the "Redwood Empire," which many locals still call it. However, the commercial designation is now "Wine Country," since it has the most lucrative wine industry in the US.

Armstrong's website boasts that it can "quickly locate and open multiple sites." Yet they have had to spend more than two years already and still do not have an approval in tiny Sebastopol, known as a "green" community with commitments to sustainability.

This controversy has already become a major issue in the November 6 election, where two seats on the City Council are available. Of the four viable candidates, two have come out against the Chase/CVS development - businessmen Robert Jacob and John Eder. They support local business rather than big business, which drains money out of the county.

Council member Kathleen Shaffer seeks to retain her seat. "Her support for the project from the outset has limited her ability to serve our city," writes Jonathan Greenberg on the local waccobb.net website. He suggests that Shaffer should not vote on this issue.

Two activists from nearby Occupy Petaluma testified at the July 19 meeting. They indicated problems with CVS in their city and are also mounting a campaign against Chase. "If Chase goes ahead with this development in Sebastopol," commented Amy Hanks of Occupy Petaluma, "we could target their stores around the county and develop boycotts to hurt their businesses. If we are displeased by their behavior, we can make them feel that displeasure where it hurts - in their cash register."

---

Shepherd Bliss teaches college, has operated a farm for the last 20 years, and can be reached at 3sb@comcast.net.

Austerity's WINNERS!!! (Want To Know Why (and How) Food Stamps (SNAP) Are Being Used To Royally Rob the Middle Class and Shit All Over the Poor?)

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Austerity's Winners = The Corporate Class

July 24, 2012 

Common Dreams

"The corporate class" is the clear winner in the global austerity game, according to analysis from Zach Carter in the Huffington Post.

 

(photo: 401(K) 2012 via Flickr)

As austerity policies lead to cuts in government programs such as Medicare and public education, Carter writes that this "generates a tidy windfall for the corporate class, as government services are privatized and savings from austerity pay for tax cuts for the wealthiest citizens."

Blueprints for austerity in the U.S. are seen in measures such as the 2010 Simpson-Bowles deficit reduction plan, which "would allow U.S. companies to permanently avoid paying U.S. taxes on overseas income, including money stashed in offshore tax havens like the Cayman Islands," creating a banner situation for Wall Street banks while gutting Medicare and Social Security.

Dorian Warren, a professor of political science at Columbia University and a fellow at the think tank Roosevelt Institute, says that "Austerity policies are literally a redistribution from the bottom of the income spectrum to the top." Looking at state-level impacts, Warren states, "In Wisconsin, both wealthy people and businesses got tax breaks, while middle-class and working-class employees of the state essentially got crushed."

Carter also looks at global austerity as seen in countries such as Greece and Spain, which were given bailouts by the EU with harsh austerity conditions attached to them. But the banks got the bailout while the Greek people got the austerity. "The most vulnerable populations are harmed by the bailouts, while the well-paid financial professionals who made the deals to finance Greek and Spanish deficits in the first place continue profiting handsomely," Carter writes.

This is echoed by economist James Galbraith. "Imposing pain on Greeks is ... a blood price for the ever-repeated bailouts whose actual beneficiaries are said to be Greeks, but are in fact French and German bankers," said Galbraith.

As Wall Street Democrats join Republican calls for more austerity, writes Carter, the corporate class has more profits to come.

And for those who had hoped that the bailout level would at least get as far down as a few of the people harmed on the bottom (heck, maybe even help small businesses create some much-needed jobs?), well . . . you can stop holding your breath  now.

And I do mean N O W !!!

Because the games have only gone into high gear.

For people who depend on food stamps in order to make it through the month (yes, I know what I'm talking about), the farm bill's fate may prove critical.

It's really a big issue to consider in light of the soft media focus on the problems of the poor.

. . . administrative costs added by these privateers inflate the overall price tag of the Supplemental Nutrition Allowance Program (SNAP). And high program costs are prompting potentially deep legislative cuts to SNAP in the pending Farm Bill — when a record 46 million Americans use SNAP, of which 47% are children.

A major fear is that SNAP cuts could wrongly target the program’s central mission to feed the hungry, when cuts should target the private players who harness the program for their own gain.

Jaw-Dropping Corruption: America's 47 Million Hungry Mouths Are Just Another Corporate Cash Cow

Mark Anderson

July 22, 2012

An attorney's courageous report exposes just how ruthless and greedy big business is capable of being.

A unique, hard-hitting report just completed by a California attorney exposes a largely unknown federal food-stamp racket involving large grocery retailers, food manufacturing giants and other private players, including the Federal Reserve and JPMorganChase, which combine to channel food stamp spending into a gravy train for the heavy hitters in the food industry.

And the report’s author, Michele Simon, says administrative costs added by these privateers inflate the overall price tag of the Supplemental Nutrition Allowance Program (SNAP). And high program costs are prompting potentially deep legislative cuts to SNAP in the pending Farm Bill — when a record 46 million Americans use SNAP, of which 47% are children.

A major fear is that SNAP cuts could wrongly target the program’s central mission to feed the hungry, when cuts should target the private players who harness the program for their own gain.

“If we want to cut, let’s look at administrative cuts—not [necessarily] cutting the benefits themselves,” Simon told this writer. She’s disturbed that JP Morgan and the Federal Reserve are well positioned in this debacle. Yet, her 28-page report, for all that it reveals, just begins to explore this fathoms-deep issue, since critical data is being withheld by the USDA.

Over the last 7 months, Simon organized the report, “Food Stamps, Follow the Money: Are Corporations Profiting from Hungry Americans?” She wrote it because she felt there was more to the story after a 2010 debate over how SNAP dollars should be spent in New York City.

The city asked the USDA for a waiver in order to conduct a two-year trial “to prevent SNAP funds from being used to purchase sugar-sweetened beverages,” wrote Simon, who added, “Several [nine] states have proposed bills similar to New York’s approach, to modify SNAP-eligible items to promote health. But each time, the food industry fought these bills. To date, none have passed.”

The big picture is that once Congress approves the Farm Bill budget for the USDA, (which administers SNAP 50/50 with the states), the states, upon enrolling SNAP participants, contract with banks to get the EBT debit cards that SNAP recipients now use (replacing the old food coupons).

Card-carrying participants then enter a system wherein the major food manufacturers lobby the USDA to deny states the right to alter SNAP-purchase guidelines, so major food and beverage-makers (Mars, PepsiCo, Coca Cola, Kraft etc.) can reap the harvest of 46 million cardholders buying their products—including sweets with little to no nutritional value

The big-box food makers refuse to surrender this arrangement, for, as Ms. Simon sees it, if they and their cohorts at the major retail outlets allow diverse nutritional considerations requested by the states to decide policy, then SNAP’s vast purchasing power could be redirected not only toward nutritional food (a novel idea for a “supplemental nutrition” program) but also toward smaller food outlets, including farmers’ markets — which, according to Simon, currently receive perhaps 0.01% of SNAP purchases. 

She imagined how much SNAP spending could revive the economy if most of it helped local agriculture, spurred jobs and ironically even helped some people get off food stamps. Indeed, the nation’s food relief program started on the basis of helping the needy buy fresh produce to reduce farm surpluses, says the report, which adds:

“Given the huge stakes for the food and beverage industry in the debate over SNAP purchases, lobbying has played a critical role in shaping public policy. Unfortunately, due to reporting rules, it’s difficult to paint the entire picture of exactly who lobbied and how much money was spent against any one proposal [to limit SNAP purchases to real food].”

Meanwhile, JPMorganChase has EBT contracts with more states than any other bank and rakes in fees galore. “[SNAP] store purchases at the register go to JP Morgan ... which authorizes the request. And that [purchase data] goes to the Federal Reserve Bank and the Fed reimburses, say, Wal Mart,” explained Simon, who stressed that the USDA strangely refuses to release comprehensive SNAP purchase-redemption data so the big picture can be fully understood.

This issue has become so touchy that at least one journalist, Michael Morisy (MuckRock.com), is in hot water with the USDA for managing to obtain some of this data. But the truth cannot be contained forever. A newspaper, the Sioux Falls, S.D., Argus Leader, last year in South Dakota’s federal court district filed a lawsuit to try and force the government to release all redemption amounts, including how much the Fed reimburses the stores who accept EBT purchases, and how much SNAP money goes to buy specific products.

(Mark Anderson is a veteran journalist who divides his time between Texas and Michigan. Email him at truthhound2@yahoo.com. Simon, who compiled the SNAP report referenced here, is a public health lawyer and president of Eat Drink Politics, an industry watchdog consulting group. Contact her at Michele@EatDrinkPolitics.com.)

Comment:

Cyan Z  Collapse

 This article seemed to be very faux-progressive and potentially dangerous. It seemed to be advocating we restrict where SNAP recipients can spend their money. Not only would that increase administrative costs, it would be just another regulatory burden on the poor.

This is a position I expect from Newt Gingrich than someone who actually cared about the welfare of the poor. They poor do not need to be nannied and told when and what to buy to feed their families.

The real problem is that healthy food is so much more expensive than junk food primarily because of our piss-poor agriculture policy. The only reason we have HF corn syrup is because we give $5 billion a year to corn corporation and make natural sugar artificially more expensive. This winds up crowding out nutritious foods like broccoli driving the price up there. I recommend the documentary/book Food Inc. for anyone new to this problem. We need to end agricultural subsidies not hassle the poor.