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If I were President . . . [Ending Wall Street's rule]

by NBBooks Fri Feb 6th, 2009 at 09:32:00 AM EST

The past week, since the news that Merrill Lynch had hurried to pay out billions of dollars in bonuses before the end of the year, provoked a torrent of tirades and rage against Wall Street. Now, progressives are debating each other over the value and efficacy of President Obama's attempts to attract Republican support for the stimulus program. Many defenders of President Obama demand to know what he might do differently.

Well, here's my suggestion, in the form of a speech the President can give explaining measures I have concluded are essential to solving the financial and banking crises. Here is what I would do to root out and destroy the root cause of our troubles.


My fellow Americans,

We have reached a historic and dangerous juncture, where the operations and interests of our financial and banking system no longer serve the greater interests of our nation.  What we once thought was the great blessing of financial innovation, we now see has led us down a false path to national ruin, individual misery, and increased indebtedness for all.

Banks are supposed to act as intermediaries between people who have saved and wish to invest, and those who need credit. They are expected to evaluate if a borrower is a good credit risk, and are supposed to be the mechanism by which money and credit is allocated and used in our economy. But we have found to our dismay that financial innovation has actually distorted and even destroyed the incentives for banks to play the role they should. Banks have been seeking the highest returns, but have failed to properly assess and manage the associated risk.

As a result, the financial and banking system has been failing to perform the task of allocating money to the entrepreneurs and businesses that use it best.  Manufacturing and research and development have been slowly but systematically starved for funding over a period of many years, and the result is that with few exceptions, such as aerospace, all types of U.S. industry have lost their lead as world leaders in innovation, productivity, and efficiency. A January 2008 study of worldwide technological competitiveness by the Georgia Institute of Technology showed that China will soon pass the United States in the critical ability to develop basic science and technology, and turn those developments into marketable products and services.

In short, the banking and financial system was not creating value for the economy, but was destroying it. We are now seeing just how much value has been destroyed.

In a free market economy, one of the most essential functions of the government is the full and fair enforcement of contracts. But it has long been a principle of our legal system that a contract based in whole or in part on fraud or coercion is not a valid contract, and that the government should not enforce it. Indeed, the enforcement of fraudulent contracts can cause much more damage than the original fraudulent contracts, because it destroys the trust and reputation of an entire national economy.

Accordingly, I have ordered that all trading and activity in credit default swaps be frozen immediately. These financial instruments are the broken link in the chain of complex financial instruments that now threaten our economy. Credit default swaps are like insurance, but were carefully designed to avoid regulation as insurance. There were no mandated actuarial tables and no mandated reserves. There were no standards imposed for who could write and sell credit default swaps, and no standards for the calculation of risk and premiums. Many credit default swaps were sold with the explicit condition that they could never be sold on an open traded market, such as the Chicago Board of Trade or the New York Stock Exchange. This prevented regulators from examining these contracts and imposing minimal standards. This also meant that these contracts were illiquid, with no ready market in which they could be traded, and without a market mechanism in which prices could be set and settled in an open way.

In short, credit default swaps are illiquid and designed specifically to avoid regulation, and are based on improper mathematical principles and assumptions of risk. In other words, credit default swaps are fraudulent, and therefore the government has no obligation to enforce the contracts.   [See Ian Walsh Cutting the Gordian Knot of Bad Contracts to Save the Economy See also, The Big Banks vs. America: A Roundtable with David Kotok and Josh Rosner.]

A review of the records of the previous administration and of the Federal Reserve indicates that much of the nearly $3 trillion already disbursed in the TARP and the various Federal Reserve programs to prop up the financial system were used to pay off the terms of credit default swaps written and sold by the AIG unit in London. We are currently in discussions with the appropriate authorities in Britain regarding the status and location of these funds. In case these discussions do not proceed satisfactorily, we are also examining and preparing what steps can be taken to prevent and seize all capital transfers to selected institutions in Britain. I have directed the Director of National Intelligence and the National Security Agency to cooperate fully in this effort.

We are also working on measures to prevent and seize all capital transfers to offshore financial centers, and to begin dismantling them. Some observers have called these offshore financial centers "secrecy jurisdictions," which have been purposefully established and structured to allow companies and individuals to escape observation, regulation and taxation by national authorities around the world. We have already seen that an inability to observe and regulate financial excesses will lead to general economic distress, so it makes no sense to allow these offshore financial centers to continue offering low or zero taxes, secrecy, and lax regulation. We also know that these offshore financial centers were often used to fraudulently obtain higher credit ratings for a number of financial operations, by isolating ownership of the financial vehicles from their true owners and controllers.

As an October 2008 article by the Tax Justice Network noted,

A company incorporated in the Isle of Man may belong to a trust in Jersey, hold its bank account in Luxembourg, with all apparently controlled by nominee directors in the Cayman Islands. Even if each haven's claim to be well regulated were true, the regulation of such a company falls between stools: they are, in effect, regulated nowhere, since each jurisdiction only accepts responsibility for what happens in its domain and none for the entity as a whole. This is deliberate.  

Regulation cannot function effectively in such a world. The failing banks knew and exploited that. And tax havens will enable many beneficiaries of the years of exuberance to protect their winnings in offshore black boxes, even if law courts wish otherwise.

   

An indication of how large a problem these offshore financial centers have become is that the Cayman Islands, with 70,000 residents, are the fifth-largest banking centre in the world, with $1.5 trillion in banking liabilities. The Cayman Islands are also the world's largest center of hedge fund registrations, with over 10,000 hedge fund registrations. Since 2000, the Cayman Islands have been on the "black list" of Non-Cooperative Countries and Territories of the Financial Action Task Force on Money Laundering.

A particularly troubling fact is that over half of these offshore financial centers, like the Cayman Islands, are members of the British commonwealth, and technically fall within the jurisdiction of British authorities. In fact, the International Monetary Fund officially considers the City of London as an offshore financial centers. In our negotiations with British authorities, we are insisting on full and complete disclosure of all bank accounts and all hedge fund registrations in all Commonwealth offshore financial centers, including the City of London.

In international law, there is a legal theory which holds that the national debt incurred by a regime for personal purposes or for committing aggression, is, like fraudulent contracts, not enforceable. Such debts are called odious debt, and are considered by this doctrine to be personal debts of the regime, and not debts of the state the regime controls. This concept is analogous to the invalidity of contracts signed under coercion.

The same legal principle of odious debt may be extended to the millions of mortgages that were sold on false pretenses, serving only to boost the earnings and bonuses of mortgage brokers and bankers. There is a complete circle of fraud here, beginning with home buyers who were often encouraged to lie about their incomes. The banks and brokers committed fraud, not just by encouraging people to lie, but also by failing to perform the due diligence required to estimate the credit worthiness of a home buyer. The companies that bought these mortgages and bundled them together committed fraud by deliberately under-estimating the risk of cascading defaults, and by failing to inform buyers of these sophisticated instruments of their full complexity and credit risk.

Clearly, however, where the greatest tragedy lies is in the suffering and anguish of individual human beings who are forced out of their homes. Almost all these people to some extent placed their trust in the banks and brokers that sold them mortgages to deal fairly and not place them in a situation in which they could not make the payments. This was misplaced trust.

But stopping these individual tragedies may be the easiest thing we can do at this point. I am deputizing as Federal Marshalls all county marshals and other local law enforcement officials responsible for carrying out home foreclosures, and ordering them to immediately cease all foreclosure proceedings on residential properties. I am also instructing them to insist that all creditors that have begun foreclosure proceedings on residential properties must produce clear titles and documentation of liens to the property. If the mortgage holder refuses to work with the court and the home owner to keep the home owner in the residence, I am instructing these new Federal Deputies to seize the residence on behalf of the home owner, to protect the homeowner in that residence, and to oppose all further proceedings against that property.   (See Amy Goodman's article on what Rep. Marcy Kaptur has been telling her constituents: Facing foreclosure? Don't leave. Squat.)

Our banking system is comprised of over 8,000 institutions, but the crises we face is actually the result of the policies and actions of only a handful of the largest institutions. I have directed the Secretary of the Treasury, the Comptroller of the Currency, and the Director of the FDIC to work with the Federal Reserve in taking effective control of the large banks and financial institutions the taxpayers already own. These institutions are: Citigroup, Bank of America, JPMorganChase, Wells Fargo, and to a lesser degree, Goldman Sachs, and Morgan Stanley.

According to information collected by the Comptroller of the Currency, almost 90 percent of financial derivatives activities are concentrated in just these six institutions. We have yet to determine how much of each institution's financial derivatives activities are fraudulent, as in the case of credit default swaps discussed above, but we will move quickly to identify, and invalidate those contracts.

Effectively immediately, the top officers and boards of directors of these institutions have been relieved of their duties, authority, titles and offices. I have also directed that any amounts greater than $15,000 in their personal savings, checking, and other accounts be frozen, pending the completion of investigations into whether or not the past few years' of excessive compensation may have involved fraudulent conveyance.

We will move as quickly as possible to break up the actual banking operations of these six firms, and hand them off to the over 8,000 banks and savings and loans which did not participate in the derivatives madness. This means that if you were banking at a Chase or a Bank of America branch in your town, your account will soon be under the management of a carefully screened and selected bank or credit union that has been operating in your community for years. And let me assure you that the FDIC stands behind all accounts up to the amount of $250,000.

To provide immediate economic relief to tens of millions of Americans, these nationalized banks are being directed to lower the interest rates charged to their credit card customers to no more than prime plus five and one half percent, for an effective annual interest rate at this time of six percent. Further, these nationalized banks are being directed to rapidly scale back the amounts of penalties and fees imposed on their customers. It is estimated that these measures will immediately increase the average household's income by $25 to $50 a month. And this immediate stimulus will not cost taxpayers a single cent.

Finally, I have presented to Congress legislation to impose a securities transaction exchange tax (STET) of one half of one percent on all transactions in our financial markets. An immediate goal is to raise revenues to begin to repair the fiscal damage we have sustained. It is estimated that in the first year, a securities transaction exchange tax will raise nearly $200 billion in new revenues. How can it be unfair for someone buying millions of dollars of stocks, bonds, futures, or derivatives contracts to pay one half of one percent tax, when working people have to pay five percent or more in local and state retail taxes when they buy a loaf of bread or a pair of shoes?

But a far more important and far-reaching goal is to restructure the financial markets and force them back into coherence with the real economy. To plan, design, build, and equip an industrial facility or an infrastructure project, requires years of dedicated effort by hundreds or thousands of people. Yet, one single person can destroy all the effort of all those people in mere seconds by electronically transferring capital from one side of the globe to another. Banking and finance are supposed to serve the needs of the real economy. They no longer do. This must and will change.

A securities transaction exchange tax will begin to force out the short-term speculation that is so harmful to long-term industrial and infrastructure projects. For someone who intends to buy a stock or bond for the long term, a securities transaction exchange tax of one half of one percent will hardly be noticeable. But for someone looking to profit quickly by buying a security and then selling it the next day or next hour, this STET tax will be a formidable obstacle.

Before I close, let me note that I have directed the Federal Bureau of Investigation, and all financial regulators, to consider any individuals or institutions that oppose these measures as economic terrorists, and to investigate and pursue them according to U.S. laws designed to combat terrorism. I have also directed the National Director of Intelligence and the National Security Agency to immediately begin locating and tracking whatever foreign holdings these economic terrorists have.

These measures are tough, but they are not unprecedented. They will no doubt create panic in certain financial markets. But we have reached the point where we must decide to either save the financial markets, or save the nation. In large part, the financial markets have caused the problems we now confront. So I urge you, over these next few days, to ignore the wild fluctuations of the financial markets. There will be great weeping and gnashing of teeth as financial assets lose billions, even trillions of dollars in price. But to continue to attempt to prop up these prices would be a fatal mistake for our country, and for our future. We cannot allow the financial markets to dictate the terms of survival for our nation. Once we have restructured our economy, and begun the physical task of building the economic capacities that our children, and their children, and many future generations will use, then the financial markets will return to sanity and normalcy, and will once again be a reliable indicator of the underlying economic health and vitality of the country.

Our goal is to preserve the nation from these economic and financial troubles. We must not falter or flinch when the measures needed to do so harm the narrow interests of a privileged few.

Cross-posted from The Economic Populist

Display:
WOW!

You can't be me, I'm taken
by Sven Triloqvist on Fri Feb 6th, 2009 at 10:42:17 AM EST
wow is right...

if i saw obama give that speech on tv, i would faint.

yet we may be months or weeks away from it...

sterling work, NB.

talk about grasp the nettle, taking the bull by the horns!

x-post it on dkos, please. i'd love to see the debate on it there.

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Sat Feb 7th, 2009 at 05:10:58 AM EST
[ Parent ]
Well said. Justice should be so easy. Except the electorate is in thrall to the belief their interests are served by passage of Obama's Recovery and Reinvestment Act of 2009 and future caps on some corporations' executives' salaries.

Goodman - Rep. Marcy Kaptur interview MP3| trannie earlier this week.

REP. MARCY KAPTUR: Well, if it's a sheriff's eviction, if it's reached that point, that is almost impossible. But we find that most of the foreclosures that haven't reached that point, families are not getting the proper legal representation, and that's why I'm saying that possession is nine-tenths of the law; therefore, stay in your property.

Get proper legal representation. If you believe that Wall Street has been deceptive, could have been fraudulent or tried to dupe the public, and with these subprime loans and with the kind of circuitous financing that's been done, Wall Street cannot produce the deed nor the mortgage audit trail, you need a lawyer.

And you should stay in your home. It is your castle. It's more than a piece of property. It's your home.

And just because Washington hasn't handled this bailout properly--and we never should have done it this way in the first place. We should have used the Federal Deposit Insurance Corporation and the Securities and Exchange Commission to resolve and do these workouts. Washington chose another road, which has been very, very destructive. I have opposed this all the way. But because they've done the wrong thing, you, at least, shouldn't be the victim of what's been happening on Wall Street and in Washington. You need a lawyer. You need a good lawyer. And you ought to get that legal representation so that the scales of justice are balanced. ...

Well, that's why I'm recommending your Legal Aid Society. Call your local bar association or the national number, (888) 995-HOME. Most people don't even think about getting representation, because they get a piece of paper from the bank, and they go, "Oh, it's the bank," and they become fearful, rather than saying, "Oh, wait a minute. This is contract law. The mortgage is a contract. I am one party. There is another party. What are my legal rights under the law as a property owner?" And many times, they are abrogating their own rights. They're forgetting that they have rights in this proceeding. And they need to exercise those legal rights.



Diversity is the key to economic and political evolution.
by Cat on Fri Feb 6th, 2009 at 11:50:16 AM EST
Nice one.

Re Credit Default Swaps I would simply declare (most of) them void as being insurance contracts with no insurable interest

insurable interest definition

Insurable interest is one of the foundations of insurance because, in its absence, insurance would be no different from gambling and (even if legal) would not constitute a binding agreement.


"The future is already here -- it's just not very evenly distributed" William Gibson
by ChrisCook (cojockathotmaildotcom) on Fri Feb 6th, 2009 at 03:52:45 PM EST
Worse than no insurable interest, competent investigation would undoubtedly reveal many instances of individuals who entered into credit default swaps as the potential beneficiary of a default on an unrelated business entity and then proceeded to use other of their assets to make said default much more likely.  Rather like buying insurance on some one and then killing them to collect, except that it is legal at present, I fear.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Feb 6th, 2009 at 04:23:05 PM EST
[ Parent ]
Exploiting loopholes to do something that's technically speaking not precisely quite illegal is still illegal under most legal doctrines.

See, for instance, transfer pricing scams and how competent and assertive tax authorities deal with them.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Feb 7th, 2009 at 04:31:23 PM EST
[ Parent ]
Exploiting loopholes to do something that's technically speaking not precisely quite illegal is still illegal under most legal doctrines.
But they still need to be prosecuted for that to have any effect.  Given that the Obama Administration appears to be reluctant to aggressively discredit the absurd policies recommended by the Republicans and the whole noxious set of assumptions on which they are based, I doubt that this will happen until and unless Obama is backed into a corner.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Feb 7th, 2009 at 10:24:47 PM EST
[ Parent ]
Indeed, the problem has always been one of political will, not of a lack of legal framework. For that matter, most of these oligarchs could probably be nailed on something as simple as tax evasion and money laundering, conflicts of interest and taking illegal campaign contributions. If the political will were there.

And while there would be a certain moral satisfaction in nailing them for the specific behaviour that lead to the current calamities, anything that has a reasonable chance of putting a couple of billionaires behind bars for a very long time is perfectly fine with me. No need to get fancy at all.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Feb 7th, 2009 at 11:34:15 PM EST
[ Parent ]
The lack of will goes back to campaign finance.  One of the dire consequences of which Paulson warned Congress back in the confidential briefing he and Bernanke gave them in the fall is rumored to have been that campaign contributions would fall off a cliff without the bailout.  The solution to that is the extremely radical step of generous public financing of campaigns, as I have suggested before.  That is so improbable that I would really like to hear an equally good alternative.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Feb 8th, 2009 at 10:56:06 AM EST
[ Parent ]
Torches and pitchforks.

If you have systemic corruption, you can either deal with the corruption, or you can deal with the corrupt people. The former involves separating the corrupt people from "their" money, the latter involves separating them from the levers of power.

For a variety of reasons, the former is preferable - for one thing, it leaves a more or less intact and functioning government in place to do the reconstruction. But ultimately, if the agenda of elected officials becomes sufficiently divorced from what has poetically been called the Will of the People, the electoral process ceases to confer legitimacy upon the incumbents.

I don't think the US is quite there (yet?). If the American People really wanted change we can believe in, they could still get it, at least in congressional elections, where the districts are smaller and genuine grass roots campaigns have historically been capable of overcoming even lavishly funded opposition.

But as long as most Americans think that institutional corruption is a problem with government, rather than a problem with American government... well, in a democracy, even the dumbasses get to vote, and the people get the politicians that the majority (or at least plurality) deserves.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Feb 8th, 2009 at 01:29:09 PM EST
[ Parent ]
[System.Is.Broken Alert]

"Life shrinks or expands in proportion to one's courage." - Ana´s Nin
by Crazy Horse on Sun Feb 8th, 2009 at 06:12:06 PM EST
[ Parent ]
If you have systemic corruption, you can either deal with the corruption, or you can deal with the corrupt people.
Or you can change a system that encourages corruption.  The problem with prosecuting corrupt individuals is that most will never be caught and that there is an inexhaustible supply of corrupt replacements.  Even if a replacement is not corrupt to begin with, when placed in a system that favors the corrupt, they have strong incentives to learn to "go along to get along," as former House Speaker Carl Albert once put it.

As for seperating corrupt people from their money, I give you Michael Milken, famous former junk bond tout and king.  After being tried and convicted for his corrupt deeds and spending a relatively brief time in a white collar lock up, he emerged with >$700 million which he used to create the Milkin Family Foundation and to recreate himself as a philanthropist.  But then I suppose that $700 million was the part he earned honestly, don't you think?

But ultimately, if the agenda of elected officials becomes sufficiently divorced from what has poetically been called the Will of the People, the electoral process ceases to confer legitimacy upon the incumbents.

I don't think the US is quite there (yet?).

While it is true that there is the possibility of electing different representatives, given the power of wealth exercised through lobbies and donations and given the challenges of presenting a picture of the existing situation that significantly corresponds to reality via the mainstream media, that possibility is rather hollow.  

Far too many senators and representatives, for purposes of financing their re-election campaigns, must rely in some significant part on money from special interest lobbies.  This makes it impractical for them to be able to act and vote independently, at least if they want to survive the next election.  Take on these vested interests and find yourself facing an attractive, well funded opponent while you are out trying to collect $20--$100 dollar donations from your supporters.

I do not think it an exaggeration to maintain that, for most elected officials, most of the time, these interest groups have figured out how to control events to such an extent that the voters can choose who ever they want and that elected official will still be strongly influenced by the lobbies.  At a minimum, this gives those interests, mostly conservative, a veto over legislation.  The icing on the cake is that when things go spectacularly badly, these interests can, through their most loyal congressional representatives or through their rented talking heads on TV, essentially blame the public for having elected such representatives.

I say we, (the electorate,) are to blame for having taken the devil's bargain of allowing self interested wealthy individuals to finance elections in the first place.  

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Feb 8th, 2009 at 10:06:34 PM EST
[ Parent ]
As for seperating corrupt people from their money, I give you Michael Milken, famous former junk bond tout and king.  After being tried and convicted for his corrupt deeds and spending a relatively brief time in a white collar lock up, he emerged with >$700 million which he used to create the Milkin Family Foundation and to recreate himself as a philanthropist.  But then I suppose that $700 million was the part he earned honestly, don't you think?

See, that's the problem with corruption laws as exist today. When a driver abuses his privilege of driving an automobile by driving it drunk or speeding, we take away his driver's license - that is, his access to the privilege of driving an automobile. This has the twin effect of deterrence and preventing re-offending, by taking the means to repeat the crime out of his hands.

Corruption, I think, can best be viewed as an abuse of the privilege of private property: You use the privilege of private property to do something illegal that you would not have been able to do without the privilege of private property. The solution, along the lines of the speeding automobile driver, is not to take away his liberty. It is to take away the privilege that he abused in order to commit his crime. That is, his money. All his money. Simply prohibit him from owning, managing, being owed, owing or otherwise handling anything exceeding a specified amount (the magnitude of which is determined by the judge within certain guidelines and depends on the seriousness of the case) for a number of years (likewise determined). So if he takes out a wad of cash and starts setting up belief tanks, it's prima facie evidence that he's in violation of the law, and you take away that money.

That would be separating the corrupt from their money. The show trials you get today appear to be more for the benefit of the public and the talking heads than justice.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon Feb 9th, 2009 at 03:49:52 AM EST
[ Parent ]
Simply prohibit him from owning, managing, being owed, owing or otherwise handling anything exceeding a specified amount (the magnitude of which is determined by the judge within certain guidelines and depends on the seriousness of the case) for a number of years (likewise determined). So if he takes out a wad of cash and starts setting up belief tanks, it's prima facie evidence that he's in violation of the law, and you take away that money.
Agreed!  I have advocated similar solutions myself.  As to the amount of income allowed to such criminals, I have suggested that they be precluded from ANY paid work and given 2X the local rate of welfare.  But I would accept a limit pegged to the 40th percentile of family income.  But it is the preponderant influence they have in campaign finance that prevents such laws from being enaacted.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Feb 9th, 2009 at 01:09:19 PM EST
[ Parent ]
So you can't do meaningful anti-corruption initiatives, because the people who're supposed to enforce them are on the take. Sounds like a Gordian knot.

And we all know how to untie those...

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon Feb 9th, 2009 at 01:28:21 PM EST
[ Parent ]
Thanks for the reference.  I have always liked Alexander's solution, myself.  To which section of the linked reference did you refer?

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Feb 12th, 2009 at 12:23:59 AM EST
[ Parent ]
Most of it is worth a read. Some of it for laughs, some of it for thought-provoking political arguments (although sorting the policy from the jargon can be a chore sometimes) and some for advice.

The two I'd specifically highlight are the introductions to Black Blocs and the first section on how to fire your boss.

If you're organising demonstrations, the sections on black blocs are an absolute must-read: I've seen black-bloc'ing work at keeping hostile police away from 'soft' demonstrators (mom, pop and granny), who might otherwise be intimidated by heavy police presence. It should be noted that black blocs can be both offencive and defencive, and personally I have serious qualms about the offencive variant, for both ideological and practical reasons.

The fire your boss section is a very handy guide on organising unions in a hostile work environment. I don't have personal experience with it, because the last time we had that "discussion" in Denmark was over a hundred years ago. But what they write sounds reasonable. They also have a section on sabotage ranging from the legal across the shady to the patently illegal. My own favourite is a "work to rule" action: No organisation can survive everybody following all the rules all the time. Everybody cuts corners, makes professional judgements and falls back on experience. That's what makes an organisation work in practise. Bosses forget this at their peril.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Feb 12th, 2009 at 01:47:40 PM EST
[ Parent ]
In his defense, strangely enough, coming from me, the Milken Family Foundation has been a net positive influence, especially in Southern California, IMO.  It is certainly not a "belief tank" along the lines of The Heritage Foundation, The Hoover Institute or the American Enterprise Institute.  But the punishment recieved, given the crimes committed and the damage done, was, IMO, far from adequate.  

For another even more egregious example I give you Charles Keating, Lincoln Savings and Loan, Continental Can and the Savings and Loan Fiasco.  Sadly, the response to the Savings and Loan blow-up now looks like a golden age of regulatory effectiveness.  But then the Republicans had only had less than a decade to pump their intellectual anesthesia into the body politic.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Feb 9th, 2009 at 01:20:20 PM EST
[ Parent ]
Great speech NBB.  Now to get it delivered.  One favoring factor is that saving all of the credit default swaps is simply not possible by an order of magnitude or more.

Could I suggest submitting this to The Nation, Atlantic, Keith Olberman, Rachael Maddow, etc.  This needs wide dissemination.  I have touched on the desirability of such actions in letters to my Senators and Congressman last night, but am going to be more explicit and thorough in my next communications.

I urge all US citizens to write their representatives with similar urgings.  The action you propose is like unto the US Civil War medical techniques for dealing with gangrenous wounds in extremities: amputate and cauterize.  It is drastic but decisive.

My concern is that in trying to build consensus and to develop a bipartisan solution, the Obama Administration will allow the patient to die while the doctors are jawboning each other over the correct treatment.  It is time for drastic but decisive action.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Feb 6th, 2009 at 04:35:07 PM EST
Drawing on your diary I have sent the letter below to my two senators:

A study by Georgia Tech dated 1-24-'09 shows that the USA and China are about equal in the generation of basic research and development and that China will pull ahead soon. ( http://www.gatech.edu/newsroom/release.html?id=1682)  Meanwhile, in the US Senate "Moderates"  are advocating eliminating funding for basic research from the Stimulus Bill?!  IS INSURING FUNDING FOR THE TRAINING OF THE NEXT GENERATION OF US SCIENTISTS AND ENGINEERS INSUFFICIENTLY STIMULATIVE?!   Are you and your colleagues confident that you can quickly get this money appropriated in another bill, say within a month?

WHY IS EGREGIOUS REPUBLICAN ECONOMIC NONSENSE BEING LEFT UNCHALLENGED?  AFTER THE REPUBLICANS DROVE THE ECONOMY INTO A DITCH AND LOST BOTH HOUSES OF CONGRESS AND THE PRESIDENCY RESOUNDINGLY,  WHY ARE DEMOCRATS ON THE DEFENSIVE ON BASIC ECONOMICS.

John Kyle says that the Stimulus Bill is "trickle down economics" and no one can get an effective response that can serve as a sound bite delivered on the floor of the Senate?  Here is some help:  trickle down economics is giving money to the rich in the hope some of it will trickle down to the poor.  But the rich have made a mess of the economy and won't spend anything they don't have to.  That is why we are in a depression.  The stimulus bill  directs money to those in the middle class and down.  They will spend the money, especially the working poor.  That creates demand.  Demand percolates up through the economy and stimulates  the economy.  I never even took a course in economics and I understand this.  What is wrong with you people?

LBJ said: "Politics is the art of knowing when to hold a knife to a man's belly---and when to push in in."  IT IS TIME TO PUSH THE KNIFE INTO THE BELLY OF THE REPUBLICAN PARTY.  Do this by thoroughly discrediting the whole "Chicago School" economic policy that they have pedaled since Ronald Reagan.  It never constituted a coherent governing philosophy.  It is just a plausible cover story to hide the fact that their backers have been looting the economy.  We have been finding out how thoroughly they have accomplished this goal recently.

Next week we will see what is proposed to finish "bailing out" the banks.  It will be a lie.  There is not enough money in the world to undo the mess they have made.  DON'T MAKE  THINGS WORSE BY THROWING MONEY AT THE BANKS WITHOUT SOLVING THE PROBLEM.  Fortunately, this problem is confined to about six big banks: Citi, B of A, Wells Fargo, Goldman Sachs, MorganStanleyChase  and Morgan Stanley.  The biggest problem is credit derivative swaps.  There are excellent arguments that most of these swaps are fraudulent. (http://firedoglake.com/2009/02/01/cutting-the-gordian-knot-of-bad-contracts-to-save-the-economy/)  A few rich people making bad bets with other rich people.  Likewise the entire mortgage crisis constitutes a circle of fraud.

Declare the derivatives null and void.  Wind up and shut down these six banks.  Prosecute most of the executives,  take the personnel and branches and merge them with carefully chosen existing banks that have not engaged in such behavior.  In Arkansas Bank of the Ozarks is one such candidate.

Government policy since 1980 has encouraged the financial industry to cannibalize the real economy.  This served well to further enrich the already wealthy, but has impoverished everyone else.  WE CANNOT CONTINUE DOWN THE ROAD WE ARE ON.  IT LEADS TO TOTAL COLLAPSE.   SHUTTING DOWN THESE SIX BANKS WILL SUBSTANTIALLY SOLVE THE CREDIT CRISIS BY CUTTING OUT THE CANCER.  THEN OUR ECONOMY CAN RECOVER.

Meanwhile, the citizens of the USA need to be made aware that the "economic theory" that has been sold to them by the Republicans since Ronald Reagan is in fact the chief instrument of their current misery.  The vapid nonsense being spouted on the floor of the US Senate also needs to be forcefully refuted.



"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Feb 6th, 2009 at 08:21:24 PM EST
I don't know...sounds like you're outlawing dumbness...

It seems to me that banking is a public utility, and public utilities are eligible for nationalization--or at least substantial and intrusive regulation...

by asdf on Sat Feb 7th, 2009 at 11:08:59 AM EST


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