Category: Economy

Alan Grayson accused the Fed of manipulating the stock market

Crossposted at Daily Kos

     Back in late September, Alan Grayson (Big D-FL08) grilled Federal Reserve General Counsel Scott Alvarez on whether or not the Federal Reserve has manipulated the stock and futures market. Since this hasn’t been diaried and Sunday is a slow news day, I thought it would be fun to watch Alan Grayson in action in a bit of a flashback.

(UPDATE: Unfortunately and oddly, the video is no longer working for some strange reason. Good thing I transcribed it when I did. I am looking for another version of the same vide, so hang in there until I can find it

UPDATE 2: Found a second video. Hope you enjoy)

      Transcript and commentary below the fold.

What is Work?

An old friend of my family had a favorite saying: “Work is something unpleasant done for money.”

I lost touch with the fellow long ago, but the phrase has stuck in my mind and popped up occasionally over the years. Some of my recent conversations about economic systems, here and elsewhere, have brought it again to the fore.  

Politics, People’s Lives, and the Democratic Platform for Change

Back in 2008, Candidate Barack Obama, invited average American Citizens, to provide their thoughts, on what should be INCLUDED in the ‘New’ Democratic Platform for Change.

Here is one such reply, that made it to the ‘final draft’:

Citizen Statement – (pg 10)

“I worked for a manufacturer for over fifteen years. My wages stayed the same for six years as I found myself paying more and more for health care. Co-pays went up, deductibles went up.

In late 2006, the company sent my production job to Mexico and China and I was laid off.  I could not afford COBRA premiums.  I am two years away from Medicare and unemployed and on the ‘faith based’ health care system — meaning I just pray I don’t get sick.  

Oh yeah, and I’m a cancer survivor and I haven’t done the yearly checkup in 3 years.”

— Listening to America – National Hearing

Renewing America’s PromiseThe 2008 Democratic National Platform

Such is the America Dream as of 2008.

Transparent Motives, Transparent Government, Transparent Expectations

Some time ago I did work for a man who was promoting a truly radical idea regarding the act of negotiation between two competing nations.  Ostensibly it was an attempt to provide a kind of complete transparency that left the camera on every word, gesture, or strategic move made by both parties while each was seated around the bargaining table.  Though the notion was certainly composed of the best of intentions, it was also highly unlikely to find adoption among almost every country that believes behind-the-scenes diplomacy is the surest way to achieve a country’s fullest desires.  While I admit it would certainly be interesting to hear every word Secretary of State Hillary Rodham Clinton speaks while in the process of active deliberation with other countries, it’s much too soon for C-Span to worry about needing to considering adding another channel, one queued up specifically to cover diplomatic efforts in real time.

For those who push sunshine laws and greater transparency in government, the question before us is whether the government has an obligation to keep its internal matters protected from public view, even when they concern pending investigations into political corruption.  I find it interesting how the existence of these laws adheres mainly to government agencies and are rarely, if ever expanded to include the private sector.  The implication is that private business has some intrinsic right to lock out prying eyes (if not a sort of purity) that tax-payer funded endeavors do not.  It has been my own experience that every corporation or government entity which I have worked for prefers to use internal means whenever possible to deal with public relations snafus.  I am reminded of one of the arguments stated by those who advance vegetarianism, which states that if slaughterhouses had glass walls, we would all forsake eating meat.  In this context, if corporations, government entities, and even school districts had glass walls, we’d all certainly be nauseated at the spectacle.    

The European perspective regarding is this matter is much different than our own.  Though we gripe about the abuses and excesses of our elected representatives, we still assume that they should and will adhere to a code of ethical conduct that they are sworn to uphold.  In great contrast, attitudes across the ocean assert that public officials, regardless of party are uniformly corrupt, and as a result, one should never expect, nor be surprised when they are revealed to be just so.  This past Presidential election saw Candidate Obama saying all the right things regarding the influence of lobbyists and lucre on the political process and I, like the rest of you, stood and applauded with great vigor.  Since then, I have not changed my stance, nor my belief in the President, but I recognize that the challenges before us are much more complex than I could have ever imagined.  I’m not sure I could ever become as jaded or fatalistic as our European brothers and sisters,  nor do I think we as a people could ever reach that state, either.  Though we deny it, we are still a romantic, idealist people at heart.  If that were not so, we’d keep the same party in control forevermore, and cast our ballots more in a spirit of harm-reduction than in hope.  We are much more inclined to resort to a “throw the bums out” kind of logic and eagerly toss one party out to insert the other, expecting that change alone is the correct remedy.        

Regarding businesses dealings, particularly with large corporations, we can always be reliably counted on to switch to a competitor if unsatisfied for whatever reason or another.  Free-market advocates cite this as being proof that capitalism works by providing choice to the consumer.  That might be true at face value, but underneath the facade of sweetheart deals and offers we can’t refuse are blatant monopolies, CEO pay raises in times of recession, and a litany of other objectionable practices that are quietly hushed up and “dealt with internally”.  I have no doubt that if by some miracle each on-going citation of illegal, unethical, or immoral dealing were magically made common knowledge and leaked to the press, we’d all end up with a collective stomach ache of epic proportions.  That it takes government stimulus money funded by taxpayer money to be the deciding factor which reveals the most significant of these offenses shows us just where our skewed priorities lay.  Governments cannot be corrupt even a little, but corporations can be corrupt up to a point.      

Public school systems, a subject of which I am fairly familiar, are masters in sweeping problematic matters under the rug.  To cite an example directly pulled from today’s headlines, for every reported instance of teachers engaging in sexual relationship with their students, there are probably one hundred that never reach the attention of the media.  Rules and regulations grant principals and administrators the ability to dismiss problematic employees without even needing to explain why, a practice that is designed primarily to save face for both the recently employed and those in charge of hiring said individual in the first place.  It is also a long-employed means of damage control, since the very threat of a lawsuit by a disgruntled parent or group of parents is frequently substantial enough for school systems to settle out of court rather than go to trial, even if the complaint is patently bogus.  That school systems cave too soon when corporations rarely have any problem proceeding directly to litigation also reveals much about what spheres of our lives we feel as though we have some degree of control and which ones we feel utterly powerless to influence one way or the other.    

It is easy for us to wish for transparency when we are on the outside looking in, but those of us in authoritative roles in our own day jobs understand that every situation isn’t nearly as cut-and-dried as management versus employees.  Nor as it as simple as consumer versus company, parent versus superintendent, or even government servant versus constituent.  This is not to say that transparency shouldn’t be our ultimate goal, but if we seek it, it ought to be uniformly applied into every area of our daily lives, not merely set out in a very limited way that easily suits someone’s talking point.  Candidates and whole political movements have lived and died by channeling populist anger at government waste and graft, but to apply this to only one highly limited segment of American society does us all a grave disservice.  We may not say this directly, but when we silently condone the unacceptable practices of any major force in our daily lives, we are implying that such behavior is fine by us.  We want public government to be lily white but we rarely speak out against private enterprise until it is consumed by the foulest, blackest cancer of greed and licentiousness.  We need to understand that it is a rationalization to assume that corruption in business or in any endeavor is not nearly as awful if it uses someone else’s money supply up front and, above all, isn’t taken out of our latest paycheck.  Eventually everyone hurts but unlike tax revenue, the results cannot be easily measured and inserted into an IRS income tax form.  The impact is a far more insidious one and it impacts more than just dollars and cents.

How Tim Geithner Bailed Out Wall Street And Screwed The Taxpayer

The Full Story Of How Tim Geithner Secretly Bailed Out Wall Street And Screwed The Taxpayer Last Fall

Henry Blodget,

Oct. 28, 2009,

The Business Insider

When the historians finally finish sorting through the appalling decisions that have been made in the past two years, this one will probably be at the top of the heap.

Last fall, as AIG began to realize how screwed it was, it started negotiating with the counterparties to all the credit default swaps it had written.  One of the AIG’s goals was to persuade these counterparties–including Goldman Sachs–to accept buyouts discounts of as much as $0.40 cents on the dollar.

These sorts of negotiations are exactly what should happen when a company gets in trouble.  It goes to its creditors and says, look, we can’t pay you everything, so here’s your choice: Take something, or take your chances in banktuptcy court.  (And, in this case, this wouldn’t have been much of a choice, given the standing of CDS holders in the liquidation line).

But then Tim Geithner, head of the New York Fed, stepped in. 

A few weeks later, the counterparties–all of whom voluntarily did business with AIG and understood the risks–were bailed out at par: 100 cents on the dollar. 

Thus began the most nauseating giveaway in the history of the country.

Bloomberg has the whole sickening story:

By Sept. 16, 2008, AIG, once the world’s largest insurer, was running out of cash, and the U.S. government stepped in with a rescue plan. The Federal Reserve Bank of New York, the regional Fed office with special responsibility for Wall Street [run by Tim Geithner], opened an $85 billion credit line for New York-based AIG. That bought it 77.9 percent of AIG and effective control of the insurer.

The government’s commitment to AIG through credit facilities and investments would eventually add up to $182.3 billion.

Beginning late in the week of Nov. 3, the New York Fed, led by President Timothy Geithner, took over negotiations with the banks from AIG, together with the Treasury Department and Chairman Ben S. Bernanke’s Federal Reserve. Geithner’s team circulated a draft term sheet outlining how the New York Fed wanted to deal with the swaps — insurance-like contracts that backed soured collateralized-debt obligations…

Part of a sentence in the document was crossed out. It contained a blank space that was intended to show the amount of the haircut the banks would take, according to people who saw the term sheet. After less than a week of private negotiations with the banks, the New York Fed instructed AIG to pay them par, or 100 cents on the dollar. The content of its deliberations has never been made public…

The New York Fed’s decision to pay the banks in full cost AIG — and thus American taxpayers — at least $13 billion. That’s 40 percent of the $32.5 billion AIG paid to retire the swaps. Under the agreement, the government and its taxpayers became owners of the dubious CDOs, whose face value was $62 billion and for which AIG paid the market price of $29.6 billion. The CDOs were shunted into a Fed-run entity called Maiden Lane III.

Read the whole story (and then marvel about how Tim Geithner is now Treasury Secretary) >

We Need a New WPA, to “Bridge” Workers with Hope

The Problem: Unemployment, is just supposed to keep getting worse:

U.S. Initial Jobless Claims Rose More Than Forecast

By Shobhana Chandra

Oct. 22, 2009  (Bloomberg) — More Americans than forecast filed claims for unemployment benefits last week, a reminder that the labor market will be slow to recover.

Initial jobless applications rose by 11,000 to 531,000 in the week ended Oct. 17

[…]

Economists project the unemployment rate will reach 10 percent by the first quarter of 2010, underscoring the risk to consumer spending, the biggest part of the economy. Companies cutting costs remain reluctant to hire, even as they’ve eased dismissals from levels seen earlier this year.

http://www.bloomberg.com/apps/…

I heard a news Report this weekend that the +10% is expecting to last throughout most of 2010 too … Uh Oh!

Workplace Disruption Programs

The newest of emerging business memes comes from my wife who works in health care.

http://www.whittierhealth.com/

It was a job she used to enjoy.  It had people she used to enjoy.  It was upscale done right rehab-nursing care facility and management is on the path of continuing “destroyment”.  Another Hyatt Regency incident, this time with health care.

FRONTLINE Presents: The Warning (on the economic meltdown)

FRONTLINE INVESTIGATES THE ROOTS OF THE FINANCIAL CRISIS

FRONTLINE Presents

The Warning

Tuesday, October 20, 2009, at 9 P.M. ET on PBS

In the devastating aftermath of the economic meltdown, FRONTLINE sifts through the ashes for clues about why it happened and examines critical moments when it might have gone much differently.

In The Warning, airing Tuesday, Oct. 20, 2009, at 9 P.M. ET on PBS (check local listings), veteran FRONTLINE producer Michael Kirk (Inside the Meltdown, Breaking the Bank) unearths the hidden history of the nation’s worst financial crisis since the Great Depression. At the center of it all he finds Brooksley Born, who speaks for the first time on television about her failed campaign to regulate the secretive, multi-trillion-dollar derivatives market whose crash helped trigger the financial collapse in the fall of 2008.

http://www.pbs.org/wgbh/pages/…

Bleak U.S. job market boosts military recruitment

There are many people benefitting from the current economic collapse.   Some of them are well known, such as Goldman Sachs, who is preparing to dole out 23 billion dollars in embezzlement “bonuses” to its co-conspirators in the high-tech looting it’s managed to pull off …. then of course there are the other “too big to fail” banks which are simply gobbling up the “too small to be saved” banks, and therefore growing even bigger.    Then of course there is the military industrial complex which I like to call “Corporate Welfare” because, well, that’s really all it is ….

But guess what the Military Industrial Complex needs?    Cannon fodder, that’s what it needs.  Gullible young men who are seduced into believing that joining the military is just like playing that ubercool video game.   But this got a little tricky when in spite of the massive censorship imposed on our so-called “media” about how dangerous it actually was to join the military while we were raping invading two different countries that didn’t really want to be invaded, so recruitment sorta dropped off, to the point where recruiters were taking damn near anybody who could fog a mirror, including the mentally deficient, the morally deficient, the drugged, the mentally ill, you can pretty much name it.

Well all that has changed!   And this is GREAT NEWS for the military, because now the economy has tanked to the point where nobody can get a job.    And people need jobs.   So what are the poor slobs doing who can’t even get a job at the local diary queen or Wal Mart these days?    Why, they’re signing up with the Military!    

And the military couldn’t be happier.

Bleak U.S. job market boosts military recruitment


WASHINGTON (Reuters) – Aided by a bleak job market, the U.S. military met all of its recruitment goals in the past year for the first time since it became an all-volunteer force in 1973, the Pentagon said on Tuesday.

Military services have been stretched thin by conflicts in Afghanistan and Iraq, giving added weight to recruitment efforts as President Barack Obama considers sending another 40,000 U.S. troops to Afghanistan next year.

The United States already has 67,000 troops in Afghanistan and about 119,000 in Iraq.

Pentagon officials said recruitment gains were fueled by the deepest U.S. recession since the Great Depression and an unemployment rate nearing 10 percent.

“For the first time since the advent of the all-volunteer force, all of the military components, active and reserve, met their number as well as their quality goals,” said Bill Carr, deputy undersecretary of defense for military personnel policy.

Wow!  Let’s Par-TEE!   Woo hooo!   I mean, this is great news, because Nobel Peace Prize winner Obama sneaked 13,000 more troops into Afghanistan without telling anybody and where were those supposed to come from?


WASHINGTON (AFP) – In an unannounced move, President Barack Obama is dispatching an additional 13,000 US troops to Afghanistan beyond the 21,000 he announced publicly in March, The Washington Post reported Monday.

The additional forces are primarily support forces — such as engineers, medical personnel, intelligence experts and military police — the Post said, bringing the total buildup Obama has approved for the war-torn nation to 34,000.

“Obama authorized the whole thing. The only thing you saw announced in a press release was the 21,000,” a defense official familiar with the troop-approval process told the daily.

It is a DAMN GOOD THING that these men and women couldn’t get jobs anywhere else otherwise where would Obama have gotten these personnel?    

It almost makes you wonder if the people who really run things think that this “downturn” business is actually good for business.   I mean, the people in charge are doing just fine, and when else would you have a “buying opportunity” but during a downturn?    

 

It’s Official: CBPP calls Tax Cuts a Boon to Top 1%

The Center on Budget and Policy Priorities economists just confirmed the trends of the last 8 years — Most of the the Economic Gains went to the very Wealthy, while the rest of us struggled to just get by

TOP 1 PERCENT OF AMERICANS REAPED 2/3 OF INCOME GAINS In last Economic Expansion,

Income Concentration in 2007 Was at Highest Level Since 1928, New Analysis Shows

By Avi Feller and Chad Stone – September 9, 2009

Two-thirds of the nation’s total income gains from 2002 to 2007 flowed to the top 1 percent of U.S. households, and that top 1 percent held a larger share of income in 2007 than at any time since 1928, according to an analysis of newly released IRS data by economists Thomas Piketty and Emmanuel Saez.

During those years, the Piketty-Saez data also show, the inflation adjusted income of the top 1 percent of households grew more than ten times faster than the income of the bottom 90 percent of households.

This is just insulting UPDATED

Hey!  Did you know that the recession is over!?

Wow, I had no idea.   That’s good news, right?!

Right!   Hey, we can go out and spend again.  It’s oooooo-kay!   “They” say it is.

“They” being our masters who tell us if the sun is shining, if their shit stinks, and what our favorite color is!

I am just absolutely fucking insulted by this bullshit:

“The recession gripping the United States for nearly two years is over” chortles the first sentence of this bullshit article.

Yeah, right.  

The Week in Editorial Cartoons – The Last Edition

Crossposted at Daily Kos.  Look in the Comments Section of Daily Kos for more cartoons on the economy and sports.  Somehow, I couldn’t fit them in the main text of the diary.

THE WEEK IN EDITORIAL CARTOONS

This weekly diary takes a look at the past week’s important news stories from the perspective of our leading editorial cartoonists (including a few foreign ones) with analysis and commentary added in by me.

When evaluating a cartoon, ask yourself these questions:

1. Does a cartoon add to my existing knowledge base and help crystallize my thinking about the issue depicted?

2. Does the cartoonist have any obvious biases that distort reality?

3. Is the cartoonist reflecting prevailing public opinion or trying to shape it?

The answers will help determine the effectiveness of the cartoonist’s message.

:: ::

Glenn Beck’s Fear and Paranoia



Dave Granlund, Politicalcartoons.com

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