"In a time of universal deceit telling the truth is a revolutionary act." -George Orwell

Posts Tagged ‘Government Spending’

Lords of Disorder: Billions For Wall Street, Sacrifice For Everyone Else

In Uncategorized on March 7, 2013 at 5:38 pm

Lloyd C. Blankfein.Oldspeak:”“This bank is anti-fragile, we actually benefit from downturns.”-Jamie Dimon of JPMorgan ChaseThe term “antifragile” was coined by maverick financier & analyst Nassim Taleb, whose book of the same name is subtitled “Things That Gain From Disorder.” That’s a good description of JPMorgan Chase and the nation’s other megabanks… These institutions are designed to prey off economic misery. They suppress genuine market forces in order to thrive, and they couldn’t do it without our ongoing help. The Treasury Department and the Federal Reserve are making it happen.” –Richard Eskow. One look no further than how Mr. Dimon and his sociopathic corporation  profits off the misery of the poverty stricken by administering food stamp benefits to see his demented thought in practice. “A catastrophe for you and I usually presents an opportunity for the Titans of capital. And the grievous economic crisis affecting so many American families is no exception — big business has found a number of ways to profit, directly, from Main Street’s economic pain. Like vultures descending on a rotting corpse, they’ve come up with a variety of innovative methods to pull the last scraps of meat off the bones of America’s middle-class” –Joshua Holland. It’s very clear if one chooses to look. The corprocratic controllers of our political class and economic systems, profit from disorder, downturns, and catastrophes. Money is being redirected  from the people and real economy via austerity programs to prop up and sustain these failed, morally and spiritually bankrupt enterprises.  Knowing this, how logical is it to conclude that obviously deleterious political and economic policies that have us hurtling toward economic and ecological catastrophe will be changed to benefit the people? Not very. The problem is systemic. The systems around which we organize our societies must be fundamentally changed. All the nibbling around the edges that passes for sound policy is largely illusory.If we hope to survive as civilization we can no longer allow merchants of death and disorder who dominate the Military-Financial-Political Industrial Complex to reign as Lords of Disorder.”

By Richard Eskow @ The Campaign For Americas Future:

The President’s “sequester” offer slashes non-defense spending by $830 billion over the next ten years. That happens to be the precise amount we’re implicitly giving Wall Street’s biggest banks over the same time period.

We’re collecting nothing from the big banks in return for our generosity.  Instead we’re demanding sacrifice from the elderly, the disabled, the poor, the young, the middle class – pretty much everybody, in fact, who isn’t “too big to fail.”

That’s injustice on a medieval scale, served up with a medieval caste-privilege flavor. The only difference is that nowadays injustices are presented with spreadsheets and PowerPoints, rather than with scrolls and trumpets and kingly proclamations.

And remember: The White House represents the liberal side of these negotiations.

The Grandees

The $83 billion ‘subsidy’ for America’s ten biggest banks first appeared in an editorial from Bloomberg News – which, as the creation of New York’s billionaire mayor Michael Bloomberg, is hardly a lefty outfit.  That editorial drew upon sound economic analyses to estimate the value of the US government’s implicit promise to bail these banks out.

Then it showed that, without that advantage, these banks would not be making a profit at all.

That means that all of those banks’ CEOs, men (they’re all men) who preen and strut before the cameras and lecture Washington on its profligacy, would not only have lost their jobs and fortunes in 2008 because of their incompetence – they would probably lose their jobs again today.

Tell that to Jamie Dimon of JPMorgan Chase, or Lloyd Blankfein of Goldman Sachs, both of whom have told us it’s imperative that we cut social programs for the elderly and disabled to “save our economy.” The elderly and disabled have paid for those programs – just as they paid to rescue Jamie Dimon and Lloyd Blankfein, and just as they implicitly continue to pay for that rescue today.

Dimon, Blankfein and their peers are like the grandees of imperial Spain and Portugal. They’ve been given great wealth and great power over others, not through native ability but by the largesse of the Throne.

Lords of Disorder

Just yesterday, in a rare burst of candor, Dimon said this to investors on a quarterly earnings call: “This bank is anti-fragile, we actually benefit from downturns.”

It’s true, of course. Other corporations – in fact, everybody else – has to survive or fail in real-world conditions. But Dimon and his peers are wrapped in a protective force field which was created by the people, of the people, and for … well, for Dimon and his peers.

The term “antifragile” was coined by maverick financier and analyst Nassim Taleb, whose book of the same name is subtitled “Things That Gain From Disorder.” That’s a good description of JPMorgan Chase and the nation’s other megabanks.

Arbitraging Failure

Dimon’s comment was another way of saying that his bank, and everything it represents, is The Shock Doctrine made manifest. The nation’s megabanks are arbitraging their own failures, and the economic crises that flow from those failures.

These institutions are designed to prey off economic misery. They suppress genuine market forces in order to thrive, and they couldn’t do it without our ongoing help. The Treasury Department and the Federal Reserve are making it happen.

We who have made these banks “antifragile” have crowned their leaders our Lords of Disorder.

Once Dimon told reporters that he explained to his seven-year-old daughter what a financial crisis is – “something that happens … every five to seven years,” which “we need to do a better job” managing.

Thanks to fat political contributions, Dimon manages them well. So do his peers. Misery is the business model. And by Dimon’s reckoning another shock’s coming any day now.

Money For Nothing

Bloomberg’s use of the word ‘subsidy’ in this instance can be slightly misleading. Public institutions don’t issue $83 billion in checks to Wall Street’s biggest banks every year. But they didn’t let them fail as they should have – through an orderly liquidation – after they created the crisis of 2008 through fraud and chicanery. Instead it allowed them to prosper from it, creating that $83 billion implicit guarantee.

As we detailed in 2011, the TARP program didn’t “make money,” either. Banks received a free and easy trillion-plus dollars from our public institution, on terms that amounted to a gift worth tens of billions, and possibly hundreds of billions.

That gift prevented them from failing. In private enterprise, this kind of rescue is only given in return for part ownership or other financial concessions. But our government asked for nothing of the kind.

Unpaid Debts

Breaking up the big banks would have protected the public from more harm at their hands. That didn’t happen.

Government institutions could have imposed a financial transaction tax, whose revenue could be used to repair the harm the banks caused while at the same time discouraging runaway gambling.  They still could.

They could have imposed fees on the largest banks to offset the $83 billion per year advantage we’ve given them. They still could.

But they haven’t. This one-sided giveaway is the equivalent of an $83 billion gift for Wall Street each and every year.

Cut and Paste

$83 billion per year: Our current budget debate is framed in ten-year cycles, which means that’s $830 billion in Sequester Speak.  You’d think our deficit-obsessed capital would be trying to collect that very reasonable amount from Wall Street. Instead the White House is proposing $130 billion in Social Security cuts, $400 in Medicare reductions, $200 billion in “non-health mandatory savings,” and $100 billion in non-defense discretionary cuts.

That adds up to exactly $830 billion.

No doubt there is genuine waste that could be cut. But $830 billion, or some portion of it, could be used to grow our economy and brings tens of millions of Americans out of the ongoing recession that is their daily reality, even as the Lords of Disorder continue to prosper. It could be used for educating our young people and helping them find work, for reducing the escalating number of people in poverty, for addressing our crumbling infrastructure, for giving people decent jobs.

It’s going to Wall Street instead.

Trillion-Dollar Tribute

The right word for that is tribute. As in, “a payment by one ruler or nation to another in acknowledgment of submission …” or “an excessive tax, rental, or tariff imposed by a government, sovereign, lord, or landlord … an exorbitant charge levied by a person or group having the power of coercion.” (Courtesy Merriam-Webster)

In this case the tribute is made possible, not by military occupation, but by the hijacking of our political process by the corrupting force of corporate contributions.

The fruits of that victory are rich: Bank profits are at near-record highs. Most of the country is still struggling to dig out from the wreckage they created but, as Demos’ Policy Shop puts it, “for the banks it’s 2006 all over again.”

On Bended Knee

“Millions for defense,” they said in John Adams’ day, “but not one cent for tribute.”

Today we’re paying for both. That doesn’t leave much for the elderly, the disabled, the impoverished, the children, or anybody else who doesn’t “benefit from disorder.” Nobody’s fighting for them in this budget battle.

That leaves the public with a clear choice: Demand solutions that are more just and democratic – or submit willingly to the Lords of Disorder.

Austerity Measures, U.S. Style, Exposed

In Uncategorized on February 21, 2013 at 8:37 pm

Quarter.We have abandoned the common good. We have been stripped of our rights and voice. Corporations write our laws and determine how we structure our society. We have all become victims. There are no politicians or institutions, no political parties or courts, that are independent enough or strong enough to resist the corporate onslaught. Greater and greater numbers of human beings will be consumed. The poor, the vulnerable, the undocumented, the weak, the elderly, the sick, the children will go first. And those of us watching helplessly outside the gates will go next.” –Chris Hedges. When you understand the key purposes for Austerity Measures, referred to euphemistically in the U.S. as “Sequestration”,  “Deficit Reduction”, “Entitlement Reform”, “Fiscal Responsibility” and “Increasing payroll tax “, are to “(1) shift the burden of paying for crisis and bailouts (from the creditors/creators of the crisis), onto the total population, (2) reduce the economic footprint (privatization/monetization) of the government, and (3) reduce creditors(/crisis creators)‘ concerns about rising US debt levels.Richard Wolff, you begin to see that this urgent and well reported “debate” over Sequestration is just the latest installment of U.S. Government Kabuki Theater.  The White House and Congress twice agreed to go into sequestration in 2011.  Both sides are not talking, they are preparing for the list of cuts and positioning for the public relations disaster afterwards. There is a high probability that these cuts will go into effect. Even in the face of mountains of evidence from past and present day Europe that austerity does not enable economic growth, but does increase the potential for violence and social unrest. Austerity functions primarily as means by which the international banking cartels and the transnational corporate network ensures attractive returns on their investments/looting/fraud/market manipulation. It enriches those in the 1% at the expense of the poor, elderly, & disenfranchised. It fails to address one essential factor that accompanies the current depression. Inequality. Inequality and wealth concentration has equaled and exceeded levels reached in the last Great Depression. Raising the minimum wage a paltry $1.75 will have no significant effect on inequality or quality of life  among the nearly 1 in 2 Americans living in or near poverty.  There is no addressing of the hidden tax of  rising food prices created by the creditors/creators of the crisis’ unregulated and dangerous speculation on commodities markets. Austerity measures will actually make life significantly worse for the poor and less fortunate, creating more sick people, less housing, more hunger, less safety. This is the first in a series of  points of danger for our economy, enshrined in a series of laws which are the result of every accommodation the president has made over the last year and a half. Over the next 10 weeks, we will lurch from crisis to crisis, and the economic decision-making apparatus will remain in chaos through his deference. The “least” among us are being sacrificed. Who will be next?”

By Richard D. Wolff @ Truthout:

Austerity policies include various combinations primarily of government spending cuts and secondarily of general tax increases. Republicans and Democrats have endorsed austerity since 2010. Austerity was the result of their deal on taxes last December 31: increasing the payroll tax on wages and salaries from 4.2 to 6.2 percent. Austerity is what they are negotiating now in regard to federal spending cuts.

After 2010, with “recovery” underway for them following bailouts for them, large private capitalist interests focused on three key interests. First, they wanted to ensure that the bailouts’ costs were not paid for by higher taxes on corporations and the rich. By stressing government spending cuts and broad-based tax increases, austerity policies serve that interest. Second, they worried about crisis-heightened government economic intervention and power and wanted to reduce them back to pre-crisis levels. Austerity’s focus on reduced government spending lessens the government’s economic footprint. Third, because big banks and other large capitalists are among the major creditors of the US government, they wanted signs that their crisis-increased holdings of US debt were safe investments for them. Austerity policies provide just those signs, as we shall show.

Austerity in the US, unlike in Europe, is renamed and packaged for the public as “deficit reduction programs” or “fiscal responsibility.” Distractions such as “fiscal cliffs” and “debt ceilings” focus public attention on mere secondary details of austerity. Politicians, media and academics use such distractions to wrangle over whose taxes will go up how much and which recipients of government spending will suffer what size cuts. They do not debate austerity itself; that is, they do not debate very idea of raising mass taxes and cutting spending in a deep and long economic downturn. They do not explore the interests served and undermined by any austerity policy. So we will.

Austerity promoters repeatedly insist that the dominant economic problem today is government budget deficits. They ignore why those deficits occurred (the crisis plus bailouts). They demand that both parties and the media endorse austerity because cuts in government spending and increased taxes will reduce deficits. They hype austerity as the solution all must embrace. Otherwise, they fear, a different and dangerous logic might win popular support. In that logic, since capitalism regularly causes crises that cause deficits, another solution for deficits would be changing from capitalism to another economic system not beset by regular crises.

Austerity policies, we are told, will reduce deficits and thereby meet what “the credit market” demands. In other words, those who have lent to the US government (by buying its debt securities) want guarantees of interest and repayment. By cutting government spending and raising taxes, austerity policies redirect government funds to the government’s creditors, thereby reassuring them.

Distracting references to an anonymous “market” avoid identifying the government’s creditors. However, major creditors holding US public debt are easy to list: large banks, insurance companies, large corporations, wealthy individuals and central banks around the world. Austerity justified as satisfying “the market” in fact serves those US creditors first and foremost.

Austerity is thus the policy preferred by the private capitalist interests that (1) brought on the crisis, (2) secured the government bailouts almost exclusively for themselves, and (3) are that government’s chief creditors. Led by major banks, those interests now threaten the government (that just bailed them out) with higher interest rates or no more credit unless it imposes higher taxes (mostly on others) and reduced spending (mostly on others) to lower its deficits. Distracting struggles over “fiscal cliffs” and “debt ceilings” serve nicely to disguise the reality that both parties’ austerity policies represent and illustrate gross government subservience to large capitalists.

Austerity, US style, has its Keynesian economist critics. They point out that the United States has been able to borrow trillions at historically low interest rates through this crisis. US deficits have not worried “the market” at all. Policies should therefore not be driven by deficits. Keynesians insist that raising mass taxes and cutting spending during an economic downturn will reduce outlays on goods and services by taxpayers and government, thereby worsening unemployment. They thus ridicule the argument that austerity, by cutting deficits, will stimulate investment by capitalists.

For Keynesians, austerity is thus unneeded and counterproductive. They prefer to exit the crisis by more stimulus (lower taxes and higher government spending) funded by higher deficits. The resulting economic growth, they believe, will automatically lower government budgetary imbalance. The government can then later, if and when needed, impose tax increases and reduce government spending to shrink deficits. In a growing economy, austerity policies avoid the devastating effects they have in depressed economies (as shown by the recent histories of Greece, Portugal, the UK and others).

Setting aside the question of the validity of Keynesian arguments, they miss key purposes of austerity policies. Those policies do not primarily seek to overcome crisis or resume economic growth. Rather, as argued above, they aim chiefly to (1) shift the burden of paying for crisis and bailouts onto the total population, (2) reduce the economic footprint of the government, and (3) reduce creditors’ concerns about rising US debt levels. If austerity policies achieve these objectives, their failure to end the crisis quickly is a price that corporations and the rich are more than happy to pay (or rather, have others pay).

That Republicans and Democrats concur on austerity and differ only on its secondary details testifies to what they share. Both depend financially on capitalist corporations and their top executives. Both serve and never question capitalism. For all the victims of capitalism today – the unemployed, those foreclosed out of their homes, those with reduced job benefits and job security, students with unsustainable schooling debts and poor job prospects, millions without medical insurance, and so on – supporting those parties perpetuates their victimization.

 

“They’re Going To Try To Panic The Population Into Acquiescing In A Democratic Party Sellout By Cutting Back Payments To The People, While Making Sure They Pay The Pentagon, Foreign Aid, And Wall Street”

In Uncategorized on July 16, 2011 at 2:19 pm

Bought and Paid For: Laughing all the way to the Bankers.

 

Oldspeak:”Only a crisis, real or perceived produces real change” –Milton Friedman.The rancorous debate over the debt belies a fundamental truth of our economy — that it is run for the few at the expense of the many, that our entire government has been turned into a machine which takes the wealth of a mass of Americans and accelerates it into the hands of the few.” –Dennis Kusinnich. What you are seeing is textbook disaster capitalism, which is the practice (by a government, regime etc) of taking advantage of a major disaster to adopt neo-liberal economic policies that the population would be less likely to accept under normal circumstances. We’ve seen this movie most recently after 9/11, when the country was gripped with fear of terrorism, the Bush Administration and U.S. Congress passed the U.S.A. Patriot Act, depriving Americans of their rights not to be spied on, searched and seized or  indefinitely detained without charge, and created the Department Of Homeland Security, which has morphed into a gargantuan surveillance and ‘security’ apparatus. Now they’re using fear of financial catastrophe ram through draconian cuts to social programs. All while continuing to enrich the wealthy, finance client states, and the military-industrial complex on the backs of the other 99% If anything, these budget talks make it clear to anyone paying attention, who U.S. Politicians’ most important constituents are, and they sure ain’t the American people. Sadly in Washington money talks, and Change You Can Believe In walks.

Debt Ceiling Charade A Move To The Right

By Washington’s Blog:
pointed out last year that Ronald Reagan’s budget director said that the tax cuts for the wealthy were “the biggest fiscal mistake in history”.

noted yesterday:

Plugging the major holes in our economy is more important than either cutting spending or raising taxes.

And stopping bailouts and giveaways for the top .1% of the richest elite (which weaken rather than strengthen the economy, as shown herehere and here) and slashing spending on unnecessary imperial wars (which reduce rather than increase our national security, as demonstrated here and here) is what the budgetreally needs.

As I wrote last year:

Why aren’t our government “leaders” talking about slashing the military-industrial complex, which is ruining our economy with unnecessary imperial adventures?

And why aren’t any of our leaders talking about stopping the permanent bailouts for the financial giants who got us into this mess? And see this.

And why aren’t they taking away the power to create credit from the private banking giants – which is costing our economy trillions of dollars (and is leading to a decrease in loans to the little guy) – and give it back to the states?

If we did these things, we wouldn’t have to raise taxes or cut core services to the American people.

pointed out the next month:

If there’s any shortfall, all we have to do is claw back the ill-gotten gains from the fraudsters working for the too big to fails whose unlawful actions got us into this mess in the first place. See thisthisthisthis and this.

Dennis Kucinich wrote in a post entitled “Debt Political Theater Diverts Attention While Americans’ Wealth is Stolen”:

The rancorous debate over the debt belies a fundamental truth of our economy — that it is run for the few at the expense of the many, that our entire government has been turned into a machine which takes the wealth of a mass of Americans and accelerates it into the hands of the few.

***

We have to realize what this country’s economy has become. Our monetary policy, through the Federal Reserve Act of 1913, privatized the money supply, gathers the wealth, puts it in the hands of the few while the Federal Reserve can create money out of nothing, give it to banks to park at the Fed while our small businesses are starving for capital.

Mark my words — Wall Street cashes in whether we have a default or not. And the same type of thinking that created billions in bailouts for Wall Street and more than $1 trillion in giveaways by the Federal Reserve today leaves 26 million Americans either underemployed or unemployed. And nine out of ten Americans over the age of 65 are facing cuts in their Social Security in order to pay for a debt which grew from tax cuts for the rich and for endless wars.

There is a massive transfer of wealth from the American people to the hands of a few and it’s going on right now as America’s eyes are misdirected to the political theater of these histrionic debt negotiations, threats to shut down the government, and willingness to make the most Americans pay dearly for debts they did not create.

These are symptoms of a government which has lost its way, and they are a challenge to the legitimacy of the two-party system.

And Michael Hudson – who is as far from a knee-jerk conservative as possible – hits the same theme with both barrels blazing:

[Interviewer]: So, what do you think? Good versus evil. We’re playing out the debt struggle and the debt ceiling issue. And if we don’t raise the debt ceiling, we’ll be in the apocalypse. What do you make of it all?

HUDSON: I think it’s evil working with evil…. If you have to choose between paying Social Security and Wall Street, pay our clients, Wall Street.

***

What’s inefficient? Paying for people on Medicaid. Got to cut it. What’s inefficient? Medicare. Got to cut it. What’s inefficient? Paying Social Security. What is efficient? Giving $13 trillion to Wall Street for a bailout. Now, how on earth can the administration say, in the last three years we have given $13 trillion to Wall Street, but then, in between 2040 and 2075, we may lose $1 trillion, no money for the people?

***

It’s not about the debt ceiling. It’s about making an agreement now under an emergency conditions. You remember what Obama’s staff aide Rahm Emanuel said. He said a crisis is too important to waste. They’re using this crisis as a chance to ram through a financial policy, an anti-Medicare, anti-Medicaid, anti—selling out Social Security that they could never do under the normal course of things.***

They’re not going to cut back the war in Libya.

***

They’re going to have to decide what to cut back. So they’re going to cut back the bone and they’re going to keep the fat, basically. They’re going to say–they’re going to try to panic the population into acquiescing in a Democratic Party sellout by cutting back payments to the people–Social Security, Medicare–while making sure that they pay the Pentagon, they pay the foreign aid, they pay Wall Street.

[Interviewer]: Yeah. But what–I hear you. But what I’m–I’m saying, what could be an alternative policy? For example, don’t raise the debt ceiling. Number two, raise taxes on the wealthy. Number three, cut back military spending. I mean, there are ways to do this without having to borrow more money, aren’t there?

HUDSON: Of course.

***

Of course they could cut back the fat. Of course what they should do is change the tax system. Of course they should get rid of the Bush tax cuts. And the one good thing in President Obama’s speech two days ago was he used the term spending on tax cuts. So that’s not the same thing as raising taxes. He said just cut spending by cutting spending on tax cuts for the financial sector, for the speculators who count all of their income that they get, billions of income, as capital gains, taxed at 15 percent instead of normal income at 35 percent. Let’s get rid of the tax loopholes that favor Wall Street.

***

Mr. Obama has always known who has been contributing primarily to his political campaigns. We know where his loyalties lie now. And, basically, he promised change because that’s what people would vote for, and he delivered the change constituency to the campaign contributors…