I passed up the obvious title: "Heckuva Job Larry!" That was the moment of President Obama's appearance on The Daily Show with Jon Stewart that set all Americans cringing. Yes, he really said that Summers "did a heckuva job." The candidate that was gifted the opportunity to run against the legacy of one of the worst presidents in U.S. history has, as president, used Bush as his role model to continue many disastrous policies. It was strangely fitting that he would channel Bush's infamous praise ("Heckuva job Brownie") for the FEMA chief who failed New Orleans so badly in the hurricane.
President Obama understandably wishes to focus attention on the economic disaster he inherited from President Bush. But Jon Stewart's question to him, which led to the president's gaffe, correctly asked about the message that Summers' appointment sent about the administration's commitment to fundamental change.
Summers had financial red ink on his hands at the time he was appointed. He was Rubin's chief minion in the successful effort to defeat effective financial regulation and supervision. (Yes, the effort was bipartisan and the Republican leadership shares in the guilt.) Summers was not simply wrong, but also arrogant and brutal, in blocking effective regulation at the SEC and the Commodity Futures Trading Commission. Summers was made rich by Wall Street in one of those sordid consulting arrangements designed to buy influence and reward past and future favors.
President Obama's appointment of Summers as his chief economic advisor made the administration's overall response to the crisis predictable. (Robert Kuttner gives a detailed explanation of the policies that Rubin's protégés championed in his new book, A Presidency in Peril.) The response would follow the disastrous Japanese model that has harmed their economy and damaged their integrity. The dominant characteristics can be summarized quickly: (1) the government would act for the benefit of the largest financial firms and their CEOs, even when they directed massive frauds, by (2) engineering a cover up of the banks' losses and the CEO's misconduct; (3) the administration would use the fictional reports generated to conduct the cover up to declare victory (due to their brilliance); and (4) the same strategy would impair the recovery. (For more on the cover up, see here and here.)
The strategy was also an assault on integrity, the rule of law, and the core precepts of the Obama campaign for president. This is why we warned from the beginning that the cover up could enrage the nation and make him a one-term president.
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President Obama on Wednesday night told Jon Stewart that the administration had resolved the crisis for a pittance -- vastly less than their measure of the costs of resolution in early 2009. He also claimed that the administration deserved credit for preventing a second Great Depression.
The first claim is too good to be true. Ask yourself the key analytical question: Does the administration claim that the crisis proved far worse or far better than its original estimates? Look at the administration's initial estimates about employment or its initial views about how deep the fall in housing values, and how quick their recovery, would be? The administration has repeatedly emphasized that the housing and employment crises are significantly worse than initially forecast. That means that their initial loss estimates should have proven significantly too low. The losses should be much greater than their initial estimates.
Losses on homes are not driven only by employment and housing values. Mortgage fraud causes dramatically greater losses. How much mortgage fraud did the administration initially estimate? That's almost a trick question, for the administration rarely uses the "F" word (fraud) and gave no evidence at the time of its initial estimates that they took into account fraud losses. Since the time of the administration's initial loss estimates it has become indisputable that fraud was endemic in liar's loans and that liar's loans were not simply enormous, but also far more common than was originally reported. We have discovered since the administration's initial loss estimates that it was common for the SDIs to lie about the liar's loans they originated, sold, and purchased. Fannie, Freddie, Lehman and many others falsely called their liar's loans "prime."
What else could affect losses on liar's loans and CDOs backed by liar's loans? The failure of the secondary market meant that sales of CDOs and packages of liar's loans had to be individually arranged. Has the secondary market in nonprime mortgages been restored since the administration's initial cost estimates? No. That is important because the administration initially claimed that the secondary market's collapse was a temporary liquidity problem. The administration anticipated that the secondary market would soon reemerge. It died more than three years ago. With any luck it will never be resurrected. Once more, the changes since the time of the initial loss estimate should have led to greater losses than the administration's initial estimate.
This leaves us with two analytical puzzles. First, since the administration's anti-regulators have spent nearly two years carefully not looking at the liar's loans and determining their true value and the true incidence of fraud, how is the administration estimating losses without the facts necessary to make estimates? Second, ignoring the first problem for the moment, what miracle made virtually all the losses disappear -- at virtually no cost to the public -- even though every aspect of the administration's initial loss estimates proved too optimistic? Logically, the losses should be far greater. For the administration's claim to have any merit they must have discovered the ultimate "silver bullet" that slays $2 trillion in losses. So what is it -- and how did it save $2 trillion? It certainly wasn't their brilliant negotiation of the TARP terms. Any commercial lender that provided such an unlimited guarantee would have cut a far better deal.
There was no silver bullet. The administration made the losses disappear the old-fashioned way -- with fictional accounting. I have already explained how the administration allowed the Chamber of Commerce, American Bankers Association, and the Fed to enlist the Congress to extort FASB to pervert the accounting rules so that most of the SDIs' losses disappeared. The Fed also took over a trillion dollars in toxic, largely fraudulent collateral -- and carefully avoided conducting due diligence to discover either the value or the fraud incidence of the collateral. In essence, the Fed took the toxic stuff off the balance sheets.
Creating fictional numbers and hiding losses at the Fed doesn't reduce losses. Unfortunately, it increases real losses. First, it leaves the looters in charge, lets them pay themselves enormous bonuses, and lets them cause greater losses. Recall George Akerlof's and Paul Romer's title -- Looting: the Economic Underworld of Bankruptcy for Profit. They showed that even without a bailout the fraudulent CEO could grow wealthy by destroying "his" bank. With a bailout -- and the Bush and Obama administration's de facto grant of impunity and an unlimited guarantee to the SDIs -- the CEOs can loot without it leading inevitably to bankruptcy. This has made banking an even more criminogenic environment for accounting control fraud and will cause recurrent, intensifying crises.
Second, accounting cover ups prevent markets from clearing. That prolongs the recession. Japan shows how severe this problem can become.
Third, integrity is important. I really shouldn't have to explain this. It depresses me that I have to argue that it is wrong to lie. Our democracy, our economy, our society, and our souls depend on restoring our integrity and the rule of law. Randy Wray and I have proposed a step that would demonstrate the president's complete repudiation of Summers' strategy and a return to the rule of law: Place Bank of America in receivership for its tens of billions of dollars in fraudulent loans and its multitude of foreclosure frauds. Don't talk about doing the right thing -- do it -- and do it to a major contributor. Don't do it because it's a contributor, but because a bank that commits tens of thousands of frauds should immediately be placed in receivership.
The president told Jon Stewart he was hamstrung by tradeoffs. He said he could not place an SDI in receivership because it could cause 100 banks to fail. Randy and I explained the absurdity of this claim in our two-part essay. Receiverships do not cause one hundred banks to fail. The receiver would continue the bank's operation and pay the checks. Why are 100 banks supposed to fail when their correspondent bank ties remain functional, the checks clear, and the ATMs work? This parade of horribles has never happened.
The administration claimed that it was vital that the Dodd-Frank bill provide it with receivership powers so that it could close a future Lehman without causing cascade failures. Now, the president tells us that he refused to follow the Prompt Corrective Action law and close insolvent SDIs because some official lied to him and told him that operating (not closing) a bank through a receivership would cause 100 banks to fail? That's why Obama has allowed the SDIs to operate with impunity and provided them with an unlimited federal guarantee? And he, a skilled lawyer, cannot see the contradiction in Treasury -- his Treasury -- claiming that the Dodd-Frank bill's grant of receivership powers would prevent such cascade failures?
L. Randall Wray: Anatomy of Mortgage Fraud, Part II: The Mother of All Frauds
Ari Berman: The Case for a Smaller Tent Party
I thought.
They will become extinct. The replacement will be a world digital equivalent, still unnamed, which will cure fiat-dodo currency ills, but the cure will prove to be worse than the disease. Because the decision-makers are still command-and-control freaks who view Labor as a cost based unit of production. Not until a much further dawn arrives, after a very dark midnite and night of Zombie Banks, will Labor be re-valued as an Asset and a Resource, a veritable Fountain of Economic Youth of Intellectual Properties.
They are here right now, but will never acquiesce to the poorest of bargains. The world doesn't deserve this cornucopia of technology revolution, because it will only pay for it in useless, soon-to-be extinct do-do funny money. It's only paper. Not a good trade.
That's why the economy, as a whole, barely stands a chance.
"Manufacturing consent" describes a propaganda model used by the corporate media to sway public opinion and "inculcate individuals with values and beliefs...":
The mass media serve as a system for communicating messages to general populace. It is their function to amuse, entertain, and inform, and to inculcate individuals with values, beliefs, and codes of behavior that will integrate them into institutional structures of larger society. In world of concentrated wealth and major conflicts of class interest, to fulfill this role requires systematic propaganda. (Manufacturing Consent by Edward S. Herman and Noam Chomsky)
"Manufacturing consent" implies manipulating and shaping public opinion. It establishes conformity and acceptance to authority and social hierarchy. It seeks compliance to an established social order. "Manufacturing consent" describes submission of public opinion to mainstream media narrative, to its lies and fabrications.
"Manufacturing dissent"
, we focus on a related concept, namely the subtle process of "manufacturing dissent" (rather than "consent"), which plays a decisive role in serving interests of the ruling class.
Under contemporary capitalism, illusion of democracy must prevail. It is in interest of corporate elites to accept dissent and protest as a feature of system inasmuch as they do not threaten the established social order. The purpose is not to repress dissent, but, on contrary, to shape and mould the protest movement, to set the outer limits of dissent.
http://globalresearch.ca/index.php?context=va&aid=21110
The manufacturing of dissent so that idealistic, cranky people FEEL rebellious but not too much. Personally, I prefer forthright bullies like the police to the hidden manipulators who create mass movements only to jack up prices.
The TEA party movement has been co-opted before our very eyes...there's no need for the old sleight of hand anymore. That's how safe they feel.
Dr. Gupta of CNN was actually allowed into the warehouses full of medicines and water being stockpiled in Haiti. Bill Clinton, as we all know, is in charge of the relief effort. But now even a mainstream reporter and camera are allowed free access to film the bureaucratic murder-by-death of the Haitian people. Nobody's papers are "in order"...the supplies are locked up.
If the Haitian constitution were altered to allow foreign ownership of land and business...those warehouses would empty out overnight. And the media would be puffing and tooting the "humanity and generosity, the tireless work for good" of the great brahmins.
Find me a link on this, dear one. The Lord bless and keep you.
Bill Clinton told a March 2010 US Senate hearing that he “regretted” impact in Haiti of free trade policies he pushed as President. "It may have been good for some of my farmers in Arkansas, but it has not worked. It was mistake," Clinton said. The rapid lowering of agricultural trade barriers in Haiti combined with US government food aid policy allowed American agribusiness to flood Haiti with cheap surplus rice forcing tens of thousands of local farmers out of business. According to the Associated Press, six pounds of imported rice cost at least a dollar less than a similar quantity of locally-grown rice.
Prior to Clinton’s "free trade," Haiti could feed itself, importing only 19 percent of its food and actually exporting rice. Today, Haiti imports more than half of its food, including 80 percent of the rice eaten in the country. The result is that Haitians are particularly vulnerable to price spikes arising from global weather, political instability, rising fuel costs and natural disasters, such as the earthquake. Since the January earthquake, imported rice prices are up 25 percent.
http://www.globalresearch.ca/index.php?context=va&aid=21650
http://www.chomsky.info/interviews/20100309.htm
What an obstruction could not this bank of the United States, with all its branch banks, be in time of war! It might dictate to us the peace we should accept, or withdraw its aids. Ought we then to give further growth to an institution so powerful, so hostile?” –Thomas Jefferson to Albert Gallatin, 1803.
“If the debt which the banking companies owe be a blessing to anybody, it is to themselves alone, who are realizing a solid interest of eight or ten per cent on it. As to the public, these companies have banished all our gold and silver medium, which, before their institution, we had without interest, which never could have perished in our hands, and would have been our salvation now in the hour of war; instead of which they have given us two hundred million of froth and bubble, on which we are to pay them heavy interest, until it shall vanish into air… We are warranted, then, in affirming that this parody on the principle of ‘a public debt being a public blessing,’ and its mutation into the blessing of private instead of public debts, is as ridiculous as the original principle itself. In both cases, the truth is, that capital may be produced by industry, and accumulated by economy; but jugglers only will propose to create it by legerdemain tricks with paper.” –Thomas Jefferson to John W. Eppes, 1813.
The 3rd quarter GDP data is much worse than is generally recognized. There was an extraordinary jump in inventories in the quarter, the second highest ever.
There is no way inventories will continue to grow at this pace, in fact it is almost certain that inventories will grow more slowly in future quarters. This means that inventories will be a drag on growth in future quarters.
Without inventories, GDP grew at a 0.6 percent rate in the third quarter. With inventory growth slowing, we should expect GDP growth to be even less than 0.6 percent over the next two quarters. This means that we will be flirting with a double-dip recession and that higher unemployment is a virtual certainty. It is not a pretty picture.
How could the Democratic Party leadership let themselves be led by an individual diametrically at odds with the Democratic tradition? Obama was relatively unknown, even to his fellow Senators. Yet, had they not examined his economic views? Did they not know his attraction to plutocrats and other bankers?
Obama was a financial institution agent clothed in the accourtements of the average American. His trademark Lincolnsque speech had been honed by years of testing and alternation. To Obama the speech were simply words coupled together that received applause and followers---nothing more. As he allegedly explained to a wealthy commodity speculator, the speech had been developed and modified over time such that it would make him President if only he had startup monies for his campaign. There he promised carte blanche for commodity and other financial speculation interests. The story goes that he received the start-up monies requested. The fate of his Administration and our nation was sealed in that alleged meeting, which I believe occurred in the Chicago Mercantile Exchange.
Our nation continues to deteriorate at an accelerating pace. And the more Obama talks the more votes leave the Democrats. Dishonorable leaders lose their credibility finally.
A month after they invested in Summers’ former company, all three banks came out of stress test much better than anyone expected — thanks to the fact that banks themselves were allowed to help decide how bad their problems were (Citigroup “negotiated” down its financial hole from $35 billion to $5.5 billion.)
The fact that the banks invested in the company just a few months after Summers resigned suggests the appearance of corruption, because it suggests to other firms that if you hire Larry Summers onto your board, large banks will want to invest as a favor to a politically-connected director.
Last month, it was revealed that Summers, whom President Obama appointed to essentially run the economy from his perch in the National Economic Council, earned nearly $8 million in 2008 from Wall Street banks, some of which, like Goldman Sachs and Citigroup, were now receiving tens of billions of taxpayer funds from the same Larry Summers. It turns out now that those two banks have continued paying into Summers-related businesses.
during the tail end of the Bush Administration -- which had a long habid since the Dot Com debocle to kick hundreds of thousands off of unemployement -- just around Christmas every year as part of their manipulation of Wall St --- so that Engineers didn't have enough time to look for the work
they were suited for, were forced to take jobs at Staples and Best Buy, & then unable to keep up
eventually lost their profession entirely-- But since Summers was widely known to be hated by the Left, the Bush administration listened to his arguments (though too late for thousands whose lives
the Republicans destroyed: Summers made the argument that "Unemployment has a 174% Stimulative effect" because it keeps the people the recipients buy from employed. And this helped
going forward. He consistantly argued on behalf of the Middle Class.
And by the way, while she was being demonized by this publication -- IN 2007 Hillary called for
a 5 year Freeze of those Variable Mortgage Rates that eventually went from 5% to 12% and
higher a pushed possibly millions of people of the cliff of their lives -- But the Republicans and
their Leader Bush wanted nothing of it because their cronies were invested in chopped up mortgages and wanted more than 5% on thier investments.,