Tag: Economy

Extractionism: taking money from others without creating anything of value; anything that produces economic growth or improves our lives.

MSNBC talk show host, Dylan Ratigan has a new book, Greedy Bastards, coming out in January and has been promoting the premise of the book, how the banks have shaken down taxpayers, in a series of on-line pod casts. He recently interviewed Yves Smith, author of ECONned and proprietress of naked capitalism, gave Dylan an education of how the banks have been extracting capital for themselves and why investors are afraid to take them to court for fear the government will retaliate.

Under an extractionist system, we find lose value at a faster rate over time, while we need to be creating it.  Instead of giving people incentives to make good deals where both sides can benefit, extractionist systems rewards those who take and take some more, and give nothing in return.  Sadly, extractionism has crept its way into every aspect of our economy – it’s everywhere, from trade to taxes to banking.

Let’s take a look at banking as an example.  As Yves Smith explains, financial firms do provide valuable services to our economy, like establishing stable and reliable methods of payment for goods and services, and selling bonds and stocks to help raise new money to fund big projects. There are more than that, of course, but those are two basic examples of valuable services that our banking and financial sector provides.

Now, let’s look at how they can also be extractive – almost always going back  the lack of transparency in the financial markets.

Yves identifies two main extractive techniques of our financial industry.  The first is charging too much for goods or services. “Even fairly sophisticated customers can’t know what the prices are of many of the products, so it’s difficult for them to do side-to-side comparisons,” says Yves.

The second method is producing products that are so complicated – like in the swaps market – that clients can’t see hidden risk in them.  “This has unfortunately become extremely common now that we have a lot more use of derivatives. Many of the formulas that are used they are disclosed by they are extremely complicated, and then on top of that, the risk models that are commonly used for evaluating the risk actually understate the risk,” says Yves.

(emphasis mine)

In the interview Yves makes suggestions how this can be fixed:

1. A small tax on all financial transactions.

2. Give financial institutions a bigger financial responsibility when they knowingly recommending bad products or dubious strategies.

3. We need increased political pressure for an effective and robust Securities and Exchange Commission.

4. More inspection of what the banks are doing in their over-the-counter businesses.

The full interview transcript is here.

Yes, we do need a Constitutional amendment to get money out of politics so this can be stopped.

h/t Yves Smith @ naked capitalism

Massachusetts Attorney General Martha Coakley filed a law suit against five major banks and MERSover deceptive mortgage practices. One of those entities, GMAC, the mortgage lender of Ally Financial Inc., decided to stop mortgage lending in Massachusetts. The nation’s fifth-largest mortgage originator said it “has taken this action because recent developments have led mortgage lending in Massachusetts to no longer be viable,”. Seriously, they are not going to play in the state because Martha wants them to play by the rules. How dare she!

Yves Smith at naked capitalism says that in essence GMAC Mugs Massachusetts for Insisting on the Rule of Law, Suspends Mortgage Lending in the State

This move by GMAC, now Ally, is remarkably brazen. GMAC has effectively said that Massachusetts must hew to its demands of how to deal with foreclosures. It announced it is withdrawing from mortgage lending in the state in an effort to bring it to heel. [..]

GMAC is trying to get other big banks to follow suit. I hope the state and other groups that do substantial financial business with banks (largish churches are also attractive clients) make it clear than any effort to punish the state for enforcing the law will be met by moving their accounts to smaller institutions that respect the law. [..]

Sorry, for the first decade plus of the private mortgage securitization business, banks and servicers did hew to the requirements of state law. It was only in the late 1990s through 2004 or so that they started to fail to comply with the requirements of their own contracts (the breakdown appears to have taken place over time, with the biggest decay taking place during the 2002-2003 refi boom). That’s what has put their foreclosures on shaky footing, which in turn has led to wideranging legal abuses to get around the mess they created.

The insolence of the securitization industry continues to be astonishing. They act as if they have an imperial right to dictate to governments, and refuse to admit any role in a disaster of their own creation. I hope those of you who do business with Ally close your accounts immediately and tell the bank that it is due to their Mafia style move in Massachusetts.

If you’re a GMAC customer in Massachusetts, it’s time to move your loan.  

Another state attorney general is suing five major banks and Mortgage Electronic Registration System Inc. and its parent company over deceptive foreclosure practices. Massachusetts Attorney General Martha Coakley  filed the suit on Wednesday seeking redress from Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., Citigroup Inc., and Ally Financial.

Ms. Coakley joins a small group of state attorney generals from larger states that have been hit the hardest by the foreclosure/mortgage fraud scandal:

Ms. Coakley, whose reputation was tarnished after her loss to a Republican for the late Ted Kennedy’s senate seat, has been strong on tightening state regulations and force banks to assist financially stressed homeowners save their homes:

Coakley spoke in support of legislation she filed in January with state Senator Karen Spilka, an Ashland Democrat, and Representative Steven M. Walsh, a Lynn Democrat. The proposed law, which they call An Act to Prevent Unlawful and Unnecessary Foreclosures, focuses on mortgage loans that are considered to be risky, including those with interest-only payment and adjustable rates.

The bill would require lenders to analyze a borrower’s financial information to determine whether modifying the loan to a more affordable payment would be more beneficial financially to the lender than going through the lengthy and costly process of taking the property through foreclosure. Many lenders already undertake such a study before deciding whether to foreclose, but the bill would permit homeowners to file a lawsuit if the process does not occur, according to Coakley’s staff.

The proposed law also would force lenders to prove they are the legal owner of mortgages before foreclosing, incorporating the findings of recent foreclosure-related decisions from the state’s Supreme Judicial Court.

These five state attorney generals are doing the hard work that should be done by the US Attorney General Eric Holder. Instead Mr. Holder is still clinging to Iowa AG Tom Miller’s stalled negotiations with the banks to settle the fraud for a mere $25 billion and exoneration from criminal prosecution. Mr. Holder has made protecting banks and corporations his priority and just recently announced a new initiative to prosecute intellectual property rights thefts by the public. This is not what Americans elected this administration to do.

In case you missed it (I strongly suspect you did), Yves Smith of naked capitalism appeared as a guest on the PBS News Hour to discuss why there have been so few prosecutions of ceo’s or bankers in the recent banking scandal.

The other guests are:

Lynn Turner is a former chief accountant for the Securities and Exchange Commission. He’s now a managing director at the consulting firm Litinomics.

Anton Valukas is a former U.S. attorney. He’s now in private practice and issued a bankruptcy report examining the collapse of Lehman Brothers.

Mark Calabria is a former Republican staff member of the Senate Committee on Banking, Housing and Urban Affairs. He’s now at the libertarian think tank, the Cato Institute.

The full transcript is here.

Occupy Wall Street Thanksgiving

This Thanksgiving, Occupy Wall Street is celebrating unity and community with an open feast at Liberty Square. From 2 to 6 p.m. at Liberty Square (Zuccotti Park) we will meet to share food, stories and inspiration. All members of our global community are invited to break bread with us.

“This is all about supporting the 99%,” said Megan Hayes, an organizer with the #OWS Kitchen working group, and a former high end chef. “So many people have given up so much to come and be a part of the movement because there is really that much dire need for community. We decided to take this holiday opportunity to provide just that – community.”

More than three thousand individually wrapped plates will be distributed on Thursday in accordance with New York State Health Code. People in the community have opened their homes to cook meals. Roger Fox in New Jersey will be making 250 meals, Mia Valh and Alia Gee are also making large numbers of meals. A lot of community organizations are involved and Liberty Cafe in East NY donates space for the #OWS Kitchen working group.

Locally owned family business, Texas BBQ will be providing 2,000 of the meals. They are being purchased with donated funds and will be served along with the home-cooked meals from supporters and food from the People’s Kitchen at Occupy Wall Street. The Owners of Texas BBQ are Egyptian and are supporters of the Occupy Movement.

Indigenous voices, religious leaders, food justice activists and leaders from peoples’ movements around the world are speaking on Thursday at Liberty Square. Occupy Thanksgiving is a celebration for the entire New York community. All are invited.

There will also be a can food drive. Donations of cans will go to local food banks and pantries throughout NYC.

   You’ve been sleeping on the streets for two months pleading peacefully for a new spirit in economics. And just as your camps are raided, your eyes pepper sprayed and your head’s knocked in, another group of people are preparing to camp-out. Only these people aren’t here to support occupy Wall Street, they’re here to secure their spot in line for a Black Friday bargain at Super Target and Macy’s.

   Occupy gave the world a new way of thinking about the fat cats and financial pirates on Wall Street. Now lets give them a new way of thinking about the holidays, about our own consumption habits. Lets’ use the coming 20th annual Buy Nothing Day to launch an all-out offensive to unseat the corporate kings on the holiday throne.

   This year’s Black Friday will be the first campaign of the holiday season where we set the tone for a new type of holiday culminating with #OCCUPYXMAS. As the global protests of the 99% against corporate greed and casino capitalism continues, lets take the opportunity to hit the empire where it really hurts…the wallet.

   On Nov 25/26th we escape the mayhem and unease of the biggest shopping day in North America and put the breaks on rabid consumerism for 24 hours. Flash mobs, consumer fasts, mall sit-ins, community events, credit card-ups, whirly-marts and jams, jams, jams! We don’t camp on the sidewalk for a reduced price tag on a flat screen TV or psycho-killer video game. Instead, we occupy the very paradigm that is fueling our eco, social and political decline.

   Historically, Buy Nothing Day has been about fasting from hyper consumerism – a break from the cash register and reflecting on how dependent we really are on conspicuous consumption. On this 20th anniversary of Buy Nothing Day, we take it to the next level, marrying it with the message of #occupy…

   We #OCCUPYXMAS.

   Shenanigans begin November 25!

But if you must shop

PORTLAND, Ore. — Occupy protesters want shoppers to occupy something besides door-buster sales and crowded mall parking lots on Black Friday.

Some don’t want people to shop at all. Others just want to divert shoppers from big chains and giant shopping malls to local mom-and-pops. And while the actions don’t appear coordinated, they have similar themes: supporting small businesses while criticizing the day’s dedication to conspicuous consumption and the shopping frenzy that fuels big corporations.

Nearly each one promises some kind of surprise action on the day after Thanksgiving, the traditional start of the holiday shopping season.

On the PBS News Hour, Nobel Prize winning economist, Paul Krugman and Martin Feldstein, a professor of economy at Harvard University and former chair of Reagan’s Council of Economic Advisers, discussed the failure of the Deficit Super Committee (click here for the transcript) :

What stands out is what was not mentioned by either Krugman or Feldstein, the Bush tax cuts, which the Republicans insisted be made permanent in exchange for any tax revenues no matter how meager. In the light of the Republican objection to an extension of the 2% payroll tax cut because of the $250 billion dollar per year cost, it is laughable in the face of the fact that just extending the tax cuts another 10 years would cost $5.4 trillion in revenue losses., four times as much as the payroll tax cuts. But not a peep from either man or the interviewer.

Krugman was correct in stating that the Democrats were far too generous and, as John Aravosis has pointed out in the past, they are lousy negotiators, always starting from their bottom line. However, Dana Milbank in his the Washington Post opinion makes clear that this committee was doomed from the start by the mere presence of one man, Sen. Jon Kyl (R-AZ), an immovable object when it comes to tax increases, “doing Norquist’s bidding in killing any notion of higher taxes”:

The sabotage began on the very first day the supercommittee met. While other members from both parties spoke optimistically about the need to put everything on the table, Kyl gave a gloomy opening statement. “I think a dose of realism is called for here,” he said. That same day, he went to a luncheon organized by conservative think tanks and threatened to walk (“I’m off the committee”) if there were further defense cuts.

When Democrats floated their proposal combining tax increases and spending cuts, Kyl rejected it out of hand, citing Republicans’ pledge to activist Grover Norquist not to raise taxes. Kyl’s constant invocation of the Norquist pledge provoked Senate Majority Leader Harry Reid (D-Nev.) to snap at Kyl during a private meeting: “What is this, high school?” [..]

Norquist, who worked to defeat a compromise, brags about his control over Kyl. When Kyl made remarks in May that appeared to leave open the possibility of tax increases, Norquist called Kyl and adopted “the tone of a teacher scolding a second grader as he recalled the conversation,” Politico reported. Norquist boasted to the publication that, after he upbraided Kyl, the senator “went down on the floor and he gave a colloquy about how we’re against any tax increases of any sort. Boom!”

It is fairly obvious that the Senate Republicans under the leadership of Sen. Mitch McConnell and Norqist’s Svengali-like control, are willing to risk the stabilization of the economy and kill any job creation bills to defeat President Obama and gain control of both houses. As Aravosis points out in his article today the best that Feldstein could do was blame both parties equally. Perhaps over the next year, the Democrats and President Obama should continue to put forth really bold bills, bolder than the President’s last job proposal, to further demonstrate the intransigence of the Republicans. It might go a long way to shed the image that Democrats are the party of capitulation.  

Speaking at a high school in New Hampshire President Barack Obama got mic checked by a group from #OWS. His response satisfied his supporters in the audience but failed to condemn the outrageous brutality and abuse by police departments and university police or the over 4000 arrest of peaceful demonstrators and credential reporters while the people who caused the economic crisis are protected by his administration.

“Mr. President, over 4000 peaceful protesters have been arrested while bankers continue to destroy the American economy,” it said. “You must stop the assault on our 1st Amendment rights. Your silence sends a message that police brutality is acceptable. Banks got bailed out. We got sold out.”

Obama’s DOJ is falling down on its responsibility to put a check on attacks and violations of the right of peaceful assembly to redress grievances, as well as, freedom of speech and the press. Not only should the police officer who pepper sprayed the students be arrested but so should the officers who beat an Iraq veteran in Oakland, lacerating his spleen and any number of other officers for unnecessary use of force. Mayor Bloomberg should be charged with federal violations of Title 18 of Civil Rights Law for ordering the illegal evacuation of Zuccotti Park violating NY & NYC laws and regulations, and allowing the NYPD to use brutal force against peaceful demonstrators and the press.

   Section 242 of Title 18 makes it a crime for a person acting under color of any law to willfully deprive a person of a right or privilege protected by the Constitution or laws of the United States.

   For the purpose of Section 242, acts under “color of law” include acts not only done by federal, state, or local officials within the their lawful authority, but also acts done beyond the bounds of that official’s lawful authority, if the acts are done while the official is purporting to or pretending to act in the performance of his/her official duties. Persons acting under color of law within the meaning of this statute include police officers, prisons guards and other law enforcement officials, as well as judges, care providers in public health facilities, and others who are acting as public officials. It is not necessary that the crime be motivated by animus toward the race, color, religion, sex, handicap, familial status or national origin of the victim.

   The offense is punishable by a range of imprisonment up to a life term, or the death penalty, depending upon the circumstances of the crime, and the resulting injury, if any.

   Section 241 of Title 18 is the civil rights conspiracy statute. Section 241 makes it unlawful for two or more persons to agree together to injure, threaten, or intimidate a person in any state, territory or district in the free exercise or enjoyment of any right or privilege secured to him/her by the Constitution or the laws of the Unites States, (or because of his/her having exercised the same). Unlike most conspiracy statutes, Section 241 does not require that one of the conspirators commit an overt act prior to the conspiracy becoming a crime.

         The offense is punishable by a range of imprisonment up to a life term or the death penalty, depending upon the circumstances of the crime, and the resulting injury, if any.

“Countdown” guest host David Shuster and Jonathan Turley, constitutional law expert and professor at George Washington University – and a Countdown contributor – analyze Mayor Bloomberg’s claim that the NYPD are keeping the press from the story “so journalists can be safe.” Turley notes, “The problem is that we’re not getting any responsible public officials who are coming forward saying, ‘This is wrong,'” and as a result abuses against protesters often go without penalty: “They can really get away with this.”

We are waiting for you to condemn police brutality in this country and the bankers, Mr. President.

Try as they may, the 1% and their elected and appointed puppets cannot evict an ideas whose time has come. Allowing the police to use strong arm tactics, chemical sprays and other “non-lethal” weapons against peaceful, passive demonstrators flies in the face of logic, constitutional and principles. Curling up in a ball or moving your arms to protect yourself will now warrant you a beating with a baton before you are picked up and arrested.

The latest incident last Friday at the University of California Davis Campus produced massive outrage across the country and around the world over the weekend as millions watched the campus police use military grade pepper spray against students sitting, arms linked, peacefully in a circle. Yes, they surrounded police who claimed the students were threatening. But, in order to spray the students, the officer had to step over the students, leave the circle to get the spray. What cowards.

UC Davis Chancellor Linda P.B Katehi had to walk back her initial statement of support for the campus police actions and held press conference Saturday late Saturday afternoon calling for an investigation of the incident. Outside the building where the presser was held, students had assembled around the building chanting “we are peaceful” and “just walk home.” The chancellor stayed inside for over two hours in an attempt to make it appear that the students were holding her hostage. After student representatives had the students stop chanting and form a three block long corridor, Katehi left the building accompanied by student representatives and an investigative reporter Lee Fang who asks her “Chancellor, do you still feel threatened by the students?” She replies “No. No.”. The video, “Walk of Shame”, the silence of the students speaks volumes:

Chancellor Katehi, under pressure to resign, has now suspended two of the officers involved and ordered the investigation to be completed in 30 days, not the 90 she original stated.

H/T John Aravosis at AMERICAblog, Lee Fang at Second Alarm and Jon Weiner at The Nation

More below the fold

Occupy Wall Street NYC now has a web site for its General Assembly  with up dates and information. Very informative and user friendly. It has information about events, a bulletin board, groups and minutes of the GA meetings.

Keith Olbermann comprehensively reported on the #OWS Day of Action in NYC and around the country

It was only a matter of time before a coordinated police crackdown was imposed to end the Occupy encampments. Law enforcement officials and policy-makers in America know full well that serious protests – and more – are inevitable given the economic tumult and suffering the U.S. has seen over the last three years (and will continue to see for the foreseeable future). A country cannot radically reduce quality-of-life expectations, devote itself to the interests of its super-rich, and all but eliminate its middle class without triggering sustained citizen fury.

The reason the U.S. has para-militarized its police forces is precisely to control this type of domestic unrest, and it’s simply impossible to imagine its not being deployed in full against a growing protest movement aimed at grossly and corruptly unequal resource distribution. As Madeleine Albright said when arguing for U.S. military intervention in the Balkans: “What’s the point of having this superb military you’re always talking about if we can’t use it?” That’s obviously how governors, big-city Mayors and Police Chiefs feel about the stockpiles of assault rifles, SWAT gear, hi-tech helicopters, and the coming-soon drone technology lavished on them in the wake of the post/9-11 Security State explosion, to say nothing of the enormous federal law enforcement apparatus that, more than anything else, resembles a standing army which is increasingly directed inward.

Once again Kevin Gosztola at FDL provided a running commentary with videos and pictures of the day events which began at 7 AM EDT:

Occupy Wall Street NYC now has a web site for its General Assembly  with up dates and information. Very informative and user friendly. It has information about events, a bulletin board, groups and minutes of the GA meetings.

Call To Action!| Facebook Event | Twitter #N17 | Direct Action Resources

On Thursday November 17th, the two month anniversary of the Occupy Wall Street movement, we call upon the 99% to participate in a national day of direct action and celebration!

The former U.S. labor secretary vigorously defends OWS during a speech at Berkeley

A judge issued a temporary restraining order early this afternoon in favor of Occupy Boston. The order prevents the city from having the police raid the camp in the dark of night, as has happened in Oakland, Portland, New York, and other cities. It does, however, allow the city to evict the camp if there is an emergency (for example, if violence breaks out, if there is a fire, if there is a health/medical/sanitary issue, etc).

Judge Frances McIntyre entertained arguments from the ACLU of Massachusetts and the National Lawyers Guild and the city from 10 am to just before noon. There was a recess and then the court reconvened for another forty-five minutes at 12:30 pm.

During the hearing, McIntyre encouraged the city and occupiers to engage in mediation to come to some sort of agreement about when it would be appropriate and inappropriate to evict the occupation. She asked Howard Cooper (who represented Occupy on behalf of the ACLU of Massachusetts and the NLG) if he thought Occupy Boston would disperse from Dewey Square, the site of the occupation, if there were an emergency. She said, “You might point out to them that there are certain advantages to structure,” because Cooper could not answer definitively on behalf of the General Assembly as they had not discussed this yet.

You can follow Kevin Gosztola Live Blog for #Occupy Movement: Massive Day of Action to Shut Down Wall Street at FDL