World Financial Crisis (and fallout) Part 4

Some really interesting and bold proposals coming from the Green Party in the UK. 

Green Manifesto in UK Adds 'Radical Change' to Message of 'Hope' - 'Robin Hood' tax policies put redistribution on equal footing with saving planet

Quote:

 The party that for the past 20 years has put the planet first has found a fierce new focus to sit alongside its environmental concern: social justice and inequality. Yesterday it set out an eye-popping programme of redistributive taxation that would have been considered radical even by Old Labour at its most extreme period in the early Eighties.

To pay for a wide range of benefits for people on lower incomes, the Greens in government would seek to raise £73bn in new taxation right away, rising to £112bn in 2013, and increasing the tax take as a share of national income by 25 per cent in just four years. This would come from large hikes in income tax, capital gains tax, corporation tax, financial transaction tax and a permanent tax on bankers' bonuses. The Greens would also increase taxes on motoring, flying, cigarettes and alcohol.

[link to thread three http://www.rabble.ca/babble/international-news-and-politics/world-financ... ]

just wanted to note that on Friday, Apr 15, Barney Frank chair of U.S. House Financial Services Ctte said of the demise of Fannie and Freddie that 'consensus' was emerging that they shouldn't be wound down until a replacement was found, and that " this replacement needs to be limited in scope, regulated, and have a much larger role for the private sector. "

http://www.house.gov/apps/list/press/financialsvcs_dem/press_15042010.shtml

What's wrong with these people !!!???

The same day that a major private financier involved in subprime fraud is charged by the SEC, the Chair of Financial Services says the private sector needs a larger role in housing finance !!!!

Financiers and their political props are using the crisis to get more power and squeeze residents and taxpayers more, when they should all be in jail.

Public institutions failed because of the shenanigans of private leveraging, and derivatives betting in the private casino. 

'Regulation' so far has involved giving the private Federal Reserve bankers more power, and still there are no public audits of private financial transactions, just interception of emails after the fact, even after the fact of a global financial crisis.  There is still no ban on derivatives, no break-up of the huge inscrutable private institutions that caused the crisis.  Instead they're given more power and its called 'regulation'.

The private casino should be shut down.  Finance needs to be a fully public and direct service of Congress, of Parliament here, fully transparent to the people, not just committee members.

It's the people who are paying, in interest to private bankers when they could provide public services at less cost directly, in slashed social services, in loss of jobs, in bailouts, and in an earth destroyed by financiers exploring and mining more fossil fuels, carcinogenic uranium, betting on the earth's demise for as long as we let them.

I'm trying to understand what happened in Poland.

The language in the article below is confusing, but it seems that there was opportunity for Poland to use its central bank for the public interest, and to avoid indebting itself to the Washington-controlled IMF.

"The government is counting on tapping the central bank’s profit, 95 percent of which has to be transferred to the state budget by the middle of May. The bank’s management already calculated the profit at 4.2 billion zloty, though six of 10 members of the Monetary Policy Council this week passed a new regulation allowing changes in the way the profit is calculated, Elzbieta Chojna-Duch, a member of the council, said today in an interview on TVN CNBC Biznes.

The budget needs “special protection” while recovering from the effects of the global financial crisis, she said.

Skrzypek, who chairs the rate-setting council and the central bank’s management board, objected to the change.

He was voted in as the central bank’s governor three years ago by the Law & Justice party, whose chairman, Jaroslaw Kaczynski, is twin brother of President Lech Kaczynski. Skrzypek has three years before the end of his term."

http://www.businessweek.com/news/2010-04-01/polish-central-bank-governme...

The same day it was reported that Poland was in a position to require financiers to locate in Warsaw if they wanted business.  http://www.businessweek.com/news/2010-03-26/goldman-joins-race-for-10-bi...

(Not that privatizations and financing of such should happen at all.  It reveals how hopelessly off track the world is, when cities and states are vying to become 'financial centres' to perhaps collect a few crumbs from the table in the brave new economy.)

Anyway, now that President Kaczynski and Skrzypek are both dead, Poland's interim leader has entered discussions with the IMF for a credit 'arrangement' of 20.5 billion to 'increase bank reserves' . http://www.financemarkets.co.uk/2009/04/14/poland-seeking-20bn-loan-from.... It's not clear which bank reserves, nor who will have access, but it's clear the public will be paying the interest.

There are many people writing on the internet that the crash was engineered, like JFK's assassination, when there was an effort to use the public domestic purse instead of private bankers.  However the dead Polish President was going to use private financiers to arrange privatizations of some state assets.  He may have retained more power than with IMF conditionalities though, which require opening of a country across the board to global financiers.

Generally I am not a fan of conspiracy theories, but the questions have to be asked.  Ultimately the process of investigating a situation, along with knowledge gained, is most important.  As here, its clear that neither piece-by-piece private financier privatizations nor the IMF wholesale sell-off are useful outcomes. 

The public, not just in Poland, needs to exercise its rights and choices to use the public purse for the public interest. 

If the people together understand that use of public domestic funding is better than private foreign control then the people will demand it of all their representatives.

Capitalism - Finally! Light at the End of the Tunnel!

New Jersey students punished for participating in school walkout

By Sandy English

30 April 2010

Many of the tens of thousands of students who walked out from their high schools on Tuesday to protest draconian cuts to education now face disciplinary action from school authorities.

The walkout, which was organized largely through Facebook, was called to protest the mass layoffs of teachers and steep budget cuts in school programs enacted by New Jersey’s Republican Governor Chris Christie. School districts will lose an average of 11 percent funding.

http://www.wsws.org/articles/2010/apr2010/newj-a30.shtml

ugh. What are doing quoting FoxNews? Aren't you worried that you'll get some on you?

Gah.

The Financial Power Elite _ John Bellamy Foster & Hannah Holleman

Quote:

We will argue that the financialization of U.S. capitalism over the last four decades has been accompanied by a dramatic and probably long-lasting shift in the location of the capitalist class, a growing proportion of which now derives its wealth from finance as opposed to production. This growing dominance of finance can be seen today in the inner corridors of state power.

Quote:

...the historically unprecedented increase in the share of financial profits (i.e., the profits of financial corporations), rising from 17 percent of total domestic corporate profits in 1960, to a peak of 44 percent in 2002. Although the share of financial profits fell to 27 percent by 2007, on the brink of the Great Financial Crisis of 2007-2009 (partly due to gains in industrial profits in this period), it remained steady as the crisis deepened, and rebounded in the first three quarters of 2009 to 31 percent, well above its pre-crisis level-thanks to the federal bailout (and due to the fact that industrial profits remained mired in recession). (See Chart 1).

When you are part of the ruling class in today's world, the increase of your wealth is guaranteed.

Quote:

... today's massive secular shift toward increased financial profits, lasting over decades, is historically unprecedented.15 This represents an inversion of the capitalist economy-what Paul Sweezy referred to in 1997 as "the financialization of the capital accumulation process." In previous periods of capitalist development, financial bubbles occurred at the peak of the business cycle, reflecting what Marx called the "plethora of money capital" at the height of speculation just preceding a crash. Today, however, financial bubbles are better seen as manifestations of a secular process of financialization, feeding on stagnation rather than prosperity.

Foster concludes: "John Maynard Keynes's oft-quoted fear that "enterprise" might someday become "the bubble on a whirlpool of speculation" is now a systemic reality."

The remedy, of course, is an economic system that puts human need ahead of the endless pursuit of monetary wealth - most of which goes to the rich and the super-rich in any case.

The Global Economic Crisis

http://www.globalresearch.ca/index.php?context=va&aid=19025

"We are not dealing with a narrowly defined economic crisis or recession. The global financial architecture sustains strategic and national security objectives. In turn, the US-NATO military agenda serves to endorse a powerful business elite which relentlessly overshadows and undermines the function of civilian government...humanity is at a crossroads.."

Fears Over Greek Crisis Continue to Drive Down GLobal Markets

http://www.wsws.org/articles/2010/may2010/econ-m08.shtml

"Serious analysts could not obscure the obvious, however. The sell-off on the international markets was the result of a growing panic among the world's ruling elites over the events in Greece.."

N.Beltov wrote:

Foster concludes: "John Maynard Keynes's oft-quoted fear that "enterprise" might someday become "the bubble on a whirlpool of speculation" is now a systemic reality."

The remedy, of course, is an economic system that puts human need ahead of the endless pursuit of monetary wealth - most of which goes to the rich and the super-rich in any case.

Yes, and as Chossudovsky and Marshall say in the preface to their book(see NDPP's link above), this is not the result of just a real estate bubble sourced in a few countries. There are several bubbles, all of which dwarf the housing bubble burst in 2008. Sounds like a good book with comments from JB Foster, Fred Magdoff and a few other notables, and especially the comments of a former insider who has unique hands on experience from a Wall Street analyst's point of view,  economist Michael Hudson. Hudson wrote previously that the foundations of the capitalist system are weaker today than even Marx predicted.

That's a great idea - tell the banks to sink or swim and offer them nothing in the way of bailout money. There are some saying that the whole thing should be put through bankruptcy. Even the bible says there should be a debt jubilee every 50 years or so. Who do they think they're kidding with all of this fictitious debt floating around the world? Banksters have come to believe that taxpayers owe them not just a living but life-long guarantees and permanent personal fortunes insulated from market forces. It was time to get the rich off welfare decades ago.

Today the news is that the German central bank- Deutsche Bundesbank (as opposed to the private Deutsche Bank) is buying up european public debt. eg. http://www.eubusiness.com/news-eu/ecb-bank-germany.4m1

From the point of view of a resident of the planet who wants some sanity and peace, this appears to be a useful step.

It could be useful because the German central bank, like the Canadian central bank, is fully owned by the German public:

Possibility exists for the public via parliament to control it.

http://www.bundesbank.de/download/presse/publikationen/bbkgesetz_en.pdf Part 1,p.2. (March 2010 update in german language only at http://www.bundesbank.de/aufgaben/aufgaben_agb.en.php).

However, the German (and Canadian) central banks' statutes allow them to game in the open market.

The German central bank may "grant loans backed by collateral and trade in the open market by buying and selling claims, marketable securities and precious metals outright (spot or forward) or under repurchase agreements".

http://www.bundesbank.de/download/presse/publikationen/bbkgesetz_en.pdf Part V 19.1.

Look to the Progressive Economics Forum under Bank of Canada, or www.comer.org for Harper's changes allowing similar irresponsibility.

The US Fed structure is even worse, it is directly owned by member private banks and private shareholders, all gaming at the expense of the public.

Further, the German central bank is a member of the Bank of International Settlements, owned by private shareholders.  The BIS is made up of many central banks including the private banks of the US Fed.

http://www.bis.org/about/statutes-en.pdf (pp.7,9)

Additional public money for gaming is given to the BIS by the IMF:  http://www.bis.org/about/statutes-en.pdf p.8.

So central banks can still take their own public's money, or others', and game via the BIS, and/or on the open market. 

No residents of any country are on solid ground until there is international public control of private central banks like the US Fed, and the open financial markets.

Current US/Canadian/provincial directions for financier self-regulation are not sensible.

Central banks should be restricted from gaming/trading in financial markets, and the speculative markets themselves brought under sensible rules or scrapped.

And Wall Street is indeed joining the bandwagon, http://www.nytimes.com/2010/05/11/business/11markets.html?src=busln .

Thus the public's money will be leveraged, gamed, and inflated again to untold degrees, prices will continue to rise, public services and good jobs lost, the environment ravaged, while speculators extend their power over people and planet.

______________

Barclay's Capital said, "The key problem for the currency remains the solvency issues"

Portugal's central banker said Portugal would have "to adopt new measures that reduce the budget deficit this year and next in a convincing way."

http://www.guardian.co.uk/business/2010/may/10/eu-debt-crisis-bailout-im...

Private financiers are going to keep calling for public cuts until there is nothing else to cut.  Then there will be a really bad crash because the bankers will have no more transfusions to play with.

The most sensible cut would be to reduce the budget deficit by cutting off parasitic private finance now rather than later.

It will have to happen at some point.

Quote:

But the Republican governor refused to suspend the implementation of corporate tax breaks that will cost the state $2.1 billion.

That stance infuriated Democrats. Sen. Denise Moreno Ducheny, D-San Diego, the chairwoman of the Senate Budget Committee, said the decision shows the governor believes "corporate tax breaks that do not exist today have more value than the children of California."

This is state-sanctioned class war of the rich on the poor. Most forms of class warfare by the poor on the rich are ... illegal. And that's capitalism in a nutshell. This is an excellent example on the dire and urgent necessity of an alternative - such as socialism - to capitalism as a way of organizing society.

An Updated List of Goldman Sachs Tied to the Obama Government

http://seminal.firedoglake.com/diary/46267

"This essay shows the pervasive influence of Goldman Sachs and its units in the Obama government.."

'conspiracy' = persons aligned in interest - the perfect crime..

Portugal’s Socialist Party government imposes new round of austerity

quote:
However, the trade unions have done their utmost to divide and exhaust resistance by restricting workers to fruitless protests and preventing any political challenge to the Sócrates government and its big business backers. They are working closely with the government behind the scenes.

Following the announcement of the new measures Manuel Carvalho da Silva, secretary general of the Portuguese Communist Party (PCP)-led General Confederation of Portuguese Workers (CGTP) said, “Either we come up with a very strong reaction or we will be reduced to bread and water.”

But the CGTP’s “very strong reaction” amounted to a statement for, “a big national demonstration, on May 29 in Lisbon, as a high point of opposition to these unjust and violent policies.”

http://www.wsws.org/articles/2010/may2010/port-m18.shtml

..similar behaviours by left parties and unions happened/is happening in greece. none the less greek workers continued to protest which has forced some unions to offer more militant action against the austerity program, the government and capital.
..traditional structures that working people depended on for support have sided with the socialist parties who have caved to capital. it would be difficult if not impossible to beat these odds yet somehow greek workers have found leadership..from, i assume, the grassroots level.

I love this one from Willem Buiter's blogs posted on Financial Times web site(London) from Jan-Dec 2009. Buiter is anything but a Marxist. His resume includes stints as: London School of Economics professor, member of the Bank of England's Monetary Policy Committee, and now Chief Economist for Citigroup and CEPR.

[url=http://blogs.ft.com/maverecon/2009/01/time-to-take-the-banks-into-full-p... to take the banks into full public ownership[/url]

Right on, Willem!

Oh yeah, Buiter is certainly no Marxist as his resume reveals. But he seems to like the idea of slapping the banks with a new Glass-Steagal act on steroids. And he mentions that the threat of future nationalisations of banks could provide enough incentive for banksters to keep their noses clean. I can't imagine our stooges in Ottawa ever using the threat of nationalisation with any badly run private enterprise that approaches Ottawa/taxpayers with caps in hand.

As for myself, I'm with Marx on banking and finance.

..the concept of onerous debt is alive and well. what is being done via the financial crisis is no different then gangsters coming to your neighbourhood and putting everyone on the arm..for the next 100 years or more. there is no honour in paying any part of this debt. beating it back with every ounce of your being brings you that.

[edited out items that were in response to another thread]

Democracy Now had a useful interview on the Senate bill that passed. http://www.democracynow.org/2010/5/21/senate_passes_sweeping_financial_r... .  A Democrat who voted against the bill said the same as Wolff- that the bill wrongly allows off-exchange trading, 'proprietary trading desks'.

I read some of the parts of the bill posted at the Senate Banking committee site which includes amendments http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_bills..., and looks like Obama was partially helpful when said that federal funds would not be available for bailouts.  The text specifies federal funds would not be available for bailout of registered swaps entities.

  Swaps entities are defined as "any swap dealer, security-based swap dealer, major swap participant, major security-based swap participant, swap execution facility, designated contract market, national securities exchange, central counterparty, clearing house, clearing agency, or derivatives clearing organization that is registered under— (A) the Commodity Exchange Act; (B) the Securities Exchange Act of 1934; or (C) any other Federal or State law (including regulations)."p.514.

However, there are non-swap entities, and ongoing unregistered trading, particularly that of big banks' proprietary desks.  Section 1155 allows for bailout of financial institutions, not in the form of equity, but in the form of public guarantees; funds which may or may not require bailees' collateral.  Notably, these bailed institutions are defined as 'solvent' but we remember the frontline determiner of 'solvency' is the private Federal Reserve.  Within Section 1155 there is provision for Congress and Senate to resolve not to offer such a bailout, within very limited time frames for debate.

When Obama says they'll unwind failed financiers, it would be much in the way Lehman's was dealt with- Federal Reserve financiers will pick the bones of its prey-  those it defines as risky.

Therefore the largest problem remains that, inspite of oversight councils, both the House and Senate bills give the task of day-to-day ongoing regulation to the private US Federal Reserve which is a very large colony of foxes under, around, and throughout the henhouse.  Trade data remains defined as proprietary and confidential, though some summary information is collected, by overseers, 'as necessary'.

There is a segment allowing for carbon markets.

There is a segment indicating foreign financier swap wars:

"Except as provided in section 4 of the Commodity Exchange Act (as amended by section 738), if the Commodity Futures Trading Commission or the Securities and Exchange Commission determines that the regulation of swaps or security-based swaps markets in a foreign country undermines the stability of the United States financial system, either Commission, in consultation with the Secretary of the Treasury, may prohibit an entity domiciled in the foreign country from participating in the United States in any swap or security-based swap activities." Sec. 715.

The concerns noted in the thread at babble 'focus on derivatives' remain: It's all about risk to the profits of increasingly fewer financiers.  US taxpayers may still dish out trillions more through public loan backing of banks.  The banks can leverage that into hundreds of trillions more for their own interest-bearing profits.

To pay for the public backstop guarantees - effectively public insurance for banking speculators- there will be cuts to health, education, and what's left of welfare, and reduction in good jobs.  Publicly-backed bankers will have the support and power to seek increased resource extraction and offset market profits, as well as increased leveraging and hedging to increase their money supply and usurious interest incomes from their on-and-off-exchange 'innovations'.

it's simply absurd to keep these financiers going.  we need fully public/ community finance, to pay for our own needs and to keep the planet healthy.

double post...

[url=http://www.globalresearch.ca/index.php?context=va&aid=19299]Theology and Neoliberal Economics[/url]
The Friedman Institute Upgrades Theology to Condone Neoliberal Greed. What would Jesus Say?

by Prof. Michael Hudson

Quote:

As Charles Baudelaire quipped, the devil wins at the point where the world believes that he does not exist. Paraphrasing this we may say that free lunch rentiers achieve economic victory at the point where government regulators and economists believe that their returns do not exist – and hence, do not need to be taxed, regulated or otherwise subdued. 

By “free market,” the Chicago Boys mean giving free reign to the financial sector – as opposed to the classical economists’ idea of freeing markets from rent and interest. Whereas traditional religion sought to lay down precepts for regulation, the Friedman Institute will promote deregulation. Physically replacing the theology school with a “temple of neoliberal economics” is ironic inasmuch as one tenet that all the major religions held in common at one point or other was opposition to the charging of interest. Judaism called for Clean Slates (Leviticus 25), and Christianity banned interest outright, citing the laws of Exodus and Deuteronomy.

The Chicago Boys thus have inverted traditional theology. Yet the teaching of economics as an academic discipline began as moral philosophy courses in the 18th and 19th centuries. The leading universities of most countries were founded to train students for the ministry. The moral philosophy course evolved into political economy, dealing largely with economic reform and taxation of the unearned income accruing to vested interests as a result of legal privilege. The discipline was stripped down into “economics” largely to exclude political analysis, and the distinctions between productive and unproductive investment, earned and unearned income, value and price.

The classical economists saw rent and interest as a carry-over from Europe’s feudal conquest of the land and the privatization of money and finance into an institutionally based debt and monopoly overhead. The classical economists sought to tax away such “unearned income,” to regulate natural monopolies or shift them into the public domain.

[url=http://www.globalresearch.ca/index.php?context=va&aid=19292]Thirty-Two States are Now Officially Bankrupt[/url]
$37.8 Billion Borrowed From US Treasury To Fund Unemployment Insurance

[url=http://www.globalresearch.ca/index.php?context=va&aid=19239]What the Europe Debt Bomb Looks Like[/url] graphic