Paul Soglin: Waxing America

Republicans Blaming Pelosi: They Sure Showed Her and Millions of Americans

As the dust settled on Wall Street and the savings and retirement hopes of millions of Americans crumbled, it was clear the the House Republicans had their way. The Associated Press headline said it all, Bailout bill slapped aside; record stock plunge.

Down in the  twenty-fourth paragraph, long after the carnage and mayhem were reported came this:

Republicans blamed Pelosi's scathing speech near the close of the debate — which assailed Bush's economic policies and a "right-wing ideology of anything goes, no supervision, no discipline, no regulation" of financial markets — for the defeat. It was not much different from her usual tough words against the president and his party.

If there was ever demonstrable proof of the infantile nature of the extreme right wing of the Republican Party this was it. Out of spite, create the greatest one-day loss in the history of the marketplace. So much for the rationality of capitalism.

My guess is that not far off in the future we will see today's losses recouped, but that will be little consolation to the the millions of Americans who lost billions of dollars over a hissy fit.

My thoughts about the Democrats who voted against the bill are not kind, but at least their behavior was rational. Fearful of rabid Republican opponents who would use the issue in the election a month away, they ducked, or as we like to say here at Waxing America, "A candid examination of right-wing policies and the Democrats who play along..."

Wisconsin Manufacturers and Commerce Scores A Zero

Two weeks ago, Wisconsin Manufacturers and Commerce (WMC) posted its Legislative Scorecard 2007-2008. The accompanying press release  noted that:

In total, 65 lawmakers will receive WMC’s “Working for Wisconsin Award” for earning a 65 percent or higher WMC voting record. Click here to see the full WMC scorecard.

and

The following is a list of legislators who have a 100 percent voting record on WMC issues. They clearly understand the connection between a strong economy and the quality of life we enjoy in Wisconsin. We salute these 100 percent pro-business, pro-jobs legislators...

No matter which way you slice it, the agenda of WMC is an extreme right wing program which may include some lofty sweet sounding words, but is predicated on the extremism that brought our nation's economic system to the verge of collapse.

Those 65 legislators receiving the "Working for Wisconsin Award" are all Republicans. Of course, the smaller list of 32 legislators who received a 100% rating are all Republicans.

So much for bi-partisanship.

One look at the content of the legislation used in the evaluations makes it clear that not only is the WMC program anti-jobs, but it is founded on the same principles of deregulation and shifting taxes to the middle class that was orchestrated by the Gingrich-Gramm Republican cabal that gained control of the U. S. Congress in the 1990's.

The WMC program:

• Tax Disclosure - WMC firmly opposed efforts to throw sunlight on corporations that use out-of-state corporate affiliates where the purpose of the various linked companies is to make internal payment of fees and rents to dodge Wisconsin taxation.
• Opposed raising the minimum wage.
• Opposed legislation that made sure insurance programs properly covered claims for autistic children.
• Opposed, in a period of gouging and soaring oil profits, the gross receipts tax on gasoline.
• Opposed limitations on the use of phosphorus in fertilizer.

 

 

 

Sara Soglin on Sarah Palin

When Sarah Palin was pressed in the Katie Couric interview to name an example where John McCain supported regulation: "I'll find some and get back to yeah."

Sara Soglin: She sounds like Marge from Fargo.

When Sarah Palin, pressed on the international experience/foreign affairs qualifications said, "Alaska was next to Russia and Canada."

Sara Soglin: She does Sarah Palin better than Tina Fey.

When Sarah Palin was confronted with not having a passport until last year, responded that unlike a lot of other kids, she did not have parents who paid for a world trip and packed her off for a round the world adventure.

Sara Soglin: Her parents had the money to send her to Europe, she just didn't want to take time off from moose hunting.

Sara Soglin upon discovering that the population of Wisconsin's Dane County is 470,000  and the population of Alaska is 670,000:

She is the Governor of nobody. Kathleen Falk probably got more votes the last time she ran for County Executive.

Wall Street Bought the House, House GOP Bites the Hand that Fed It

The financial meltdown and the economic and political crisis are the result of the twenty year relationship between House of Representatives' Republican leadership and the financial services industry, which includes every major bank, insurance company, and brokerage house in the United States.

The deal orchestrated in the 1990's by the extreme right wing House Republicans and the banks was simple. The banks provided the money to elect House Republicans, who would pass legislation to end regulation in the financial services industry.

The money was spread around to Republicans, both moderates and fanatical right wingers, without distinction.

That was key to the deal. The banks and insurance companies could not question the Republican House candidates on other issues.

It made no difference what the financial people thought about choice, protectng the nation''s infrastructure, funding stem cell research, or education. They got the Republicans selected by the GOP leadership.

Now these ideological thugs with a large enough presence in the House are threatening any kind of reasonable resolution to the pending economic crisis.

The operation is not much different than the relationship bewteen Wisconsin Manufacturers and Commerce (WMC) and their last remaining foothold in the State Capitol, the Republicans in the Assembly.

In Washington, the right wing is biting the hand that fed them for two decades without regard for the nation or thier own political future.

It would be interesting to look into the records of major Wisconsin insurance companies, borkerage houses, and banks to see the flow of cash that went either directly to these candidates or indirectly into front organizations for the United States Chamber of Commerce and their trade groups and then funneled to so called issue committees.

Frankly, I would ask for my money back.

It's time for payback.

 

Bill Gross from PIMCO Makes Sense on Bailout

author's note: The Washington Post does not allow access to much of its content without subscribing. Consequently I cannot provide a link to Gross' opinion piece. The best I can do is provide links to news stories that reported on this views. The best is the NY Times below.

It can be through an equity interest or loans, as I suggested the other day, but the $700 billion bailout does not have to be at the taxpayer's expense. That is what Bill Gross wrote Wednesday in the Washington Post.

Bill Gross of PIMCO is one the best financial minds who knows how to balance the needs of his company, his clients and the larger society. Troubling me from the beginning of this discussion was the problem of billions siphoned off in fees and profits to the private participants who would assist in arranging and structuring the financial instruments involved in the bailout.

Now, along comes Gross, who not only explained how the taxpayer (and the United States government) can be repaid but also addresses the question of fees. Keep in mind from Iraq with Blackwater and Halliburton, from Texas to Alaska, the Bush Administration specialized in giving away billions of dollars of public money in no bid contract to their friends.

The New York Times report on Gross' proposal is excellent: Managing the Bailout: He’d Do It for Nothing

One of the many concerns expressed on Capitol Hill this week about the Treasury Department’s $700 billion rescue plan was how to keep the Wall Street firms that helped to create the crisis from making a killing if they are hired to help contain it.

Gross is prepared to utilize his company and not charge any fees. Keep in mind that the wealthiest of clients, those with portfolios in the hundred of millions of dollars are probably paying 40 basis points  (4/10's of a percent) to thier fund managers. If the fees on this deal were only 10 basis points, on $700 billion, that would still come to $700 million!

For more on Gross:

...For more than a year, Mr. Gross, whose investment expertise has earned him a net worth estimated at more than $1 billion, according to Forbes, has played the role of the financial markets’ Cassandra. Beginning in July 2007, he warned that subprime mortgage crisis would get far worse before it got better. Other sectors of the financial markets, he predicted, also could seize up if the Federal Reserve and Treasury did not do something to keep markets liquid.

But Mr. Gross and Pimco have also attracted criticism, most recently when it became clear that his Pimco Total Return fund earned more than $1.7 billion on the day the federal government bailed out Fannie Mae and Freddie Mac.

Mr. Gross had been loudly advocating for such a move for more than a year, at the same time that was moving more than 60 percent of his fund’s assets in government-agency bonds. The shift in investment strategy began in earnest shortly after Pimco hired Alan Greenspan, the former Federal Reserve chairman, as an adviser earlier last year.

Mr. Gross said there was nothing wrong with that advocacy because Pimco had no official role in formulating the plan to rescue Fannie Mae and Freddie Mac.

“We had a role on CNBC,” he explained, “in that every time we were asked, or I guess every time that The New York Times would call, they would say, ‘What are you doing?,’ and we would say: ‘Well, we want safe, agency-guaranteed mortgages. We don’t want to take a lot of risks in subprime space.’ ”With the liquidity crisis extending into virtually every sector of the investment markets, any firm in a position to advise the Treasury on its rescue plans would have potential conflicts of interest, Mr. Gross said.

“There’s fewer of them here than anywhere else,” he added. “Simply because we saw the crisis coming and we don’t have much of this paper.”

The Pimco trading floor is less like the cacophonic pits that cable news channels usually use to illustrate stories about financial market turmoil, and more like a library. The sound of clacking keyboards often drowns out the low murmur of conversation among portfolio managers...

CNBC's Power Lunch: Chucke E. Cheese's Meets the Lunch Bunch

The economic crisis of the last few days led me to CNBC's noon hour market report discussion Power Lunch. Two people claiming to be Bill Griffeth and Sue Herea lead a lunch time discussion with five or six boisterous and obnoxious playmates.

They are rude, they interrupt one another and all they are missing are the pizza's, runny noses, music blaring at Chuck E. Cheese's and the frazzled staff from your child's day care center trying to maintain order during lunch bunch.*

Ignoring the sound advice of Sam Brown, "Never offend with style, when you can offend with substance," this crew manages to do both, very effectively.

The blather is so fast and furious there is not much time to digest their economic or political droolings, let alone make corrections, which is required in most instances.

*That thirty minute period when the kids in day care dine on jelly sandwiches and sliced carrots.

Henry M. Paulson Jr and Ben Bernanke. Are they Communists or Fascists?

In the bailout bill peddled by Treasury Secretary Henry M. Paulson Jr and Federal Reserve Chairman Ben Bernanke is the following language:

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

Communist and Fascist governments, like the democracies, all have the basic three branches of government, the executive, the legislative and the judiciary. A critical difference between the democracies and the totalitarian governments is that the democracies guarantee a free and fair trial when it comes time to review the actions of the legislative branch.

With the establishment of the FISA Courts, the Reagan Administration administrative rule making, the Patriots Act and the blatant violation of constitutional guarantees to a fair trial, the United States progressed towards the Communist and Fascist states abuse of judicial review.

A few years ago, I would not have worried about such language. No court would accept that language and would immediately hold that it violates the Constitution. After all there are certin inalienable rights. You cannot sign a contract and sell yourself into slavery. You cannot waive your right to practice your religion or the equal protection under the law.

However, with the Bush appointees to the federal bench and the United States Supreme Court, preserving a right to judicial review is no longer a slam dunk.

Solving the Financial Crisis. A Modest Proposal

As much as it disgusts me, the bailout of the financial institutions run by greedy, egotistical managers and executives presents a less devastating result than letting them go under.

Ten years from now, my family, my friends, the working people who make this country great and ask for nothing more than a fair shake, will be better off with a properly structured loan to an industry run amuck.

Before we get into the details, the first thing we must understand is that bailout or not, the Republican Party, the author of this ideological meltdown, is responsible for the biggest tax hike and the biggest waste of taxpayers dollars in history.

For a bailout to work:

• There must be a return to Glass-Steagall, the Depression-era body of law that provided safeguards against these excesses.
• No foreign banks deserve one cent of American money. If their respective nations wish to save them, they can bail them out. They already made enough money in the past decade.
• A special investigator should be appointed to look into the relationship of banking lobbyists and the principals responsible for this former disaster, special financial guru to John McCain, former Texas Senator Phil Gramm, and hit man Newt Gingrich, who thinks the solution to this problem is eliminating the capital gains tax.
• Any borrower should be allowed to extend their home loan one month for each year left on the mortgage and those deferred payments should have a maximum interest rate of 3%.
• No executive of a bailed-out company shall be compensated more than $1 million annually, and that will include company cars, homes, boats, contributions to retirement plans and life insurance. Life insurance can be taken out on the executive if the United States government is the beneficiary until the institution's loans are paid off. Frankly I am being too generous, but I cannot stand to see pirates cry.
• Labor, real work that contributes to the growth of the economy has to be recognized as being more honorable, more noble, and more essential, than flim-flam paper exercises that are nothing more than speculation in industries that are exporting jobs to countries where workers are paid less than $5 a day.
• For every million dollars a financial institution receives, they must repay the entire amount at an interest rate of 3.75%.  All loans must be repaid within a decade.

  
   

Who Is Responsible for the Economic and Financial Crisis?

The present crisis is the culmination of a series of events that go back to the election of Ronald Reagan as President and flowed through the subsequent years as the right wing mastered modern day communications, particularly cable TV.

The pinnacle was in 1999 with the repeal of Glass-Steagall, the Depression Era legislation that brought regulation and some degree of consumer protection to the financial marketplace. The public would not be wandering the dark hall of manipulators, oil speculators, and other creeps who took the art of capital formation to a new low, making money by pushing paper and never creating anything of value.

The Reagan Administration gutted regulation administratively in key areas of commerce and finance and was followed by the Republican control of the Congress and the ascendancy of Newt Gingrich, culminating in the adoption of the Financial Modernization Act of 1999.

This piece of legislation was drafted in 1998, and over the next year the Republicans overcame all opposition. To understand what happened it is necessary to examine the legislative process and the political climate of the time.

The Republicans were dominant and the Democrats were on the run. Fearful of losing more Congressional representation, the Democrats often capitulated, fearful if they stood up to  Gingrich, they too would lose their next election.

True Believers:   Lead by the bill's principal author, Phil Graham, this group were cronies of the oil interests and the speculators. It included reactionaries from Gingrich to Grover Norquist.

The Supporters:  These were all of the Republicans and one Democrat in the Senate accompanied by a similar alignment in the House of Representatives, though there were more blue-dog Democrats who joined the GOP. The critical vote came when the Senate version of the bill was adopted.

On  May 6,1999, the Senate adopted its version of the bill on a vote of 54-44.  Supporting that bill was John McCain; in opposition were all Democrats except Hollings of South Carolina. Joe Biden wisely voted 'no.'

For a more detailed explanation see this post, The crisis is so bad the financial press turns bolshie, February 17, 2008.

After the House vote, the bill went to conference committee.

The Negotiators. In conference committee, negotiators  from both Houses of Congress worked out their differences. President Clinton got involved realizing that with final passage there would be a veto proof majority. The final version of the bill was adopted by the Senate in November by 90-8. Joe Biden again voted 'No.'

John McCain, in the most blatant example of cowardice, refused to vote for or against the bill. He voted 'present.'

 

For more detail: John McCain's lying is contagious

 

 

 

 

 

Gingrich: I Screwed Working Americans Once, I Can Do It Again

Newt Gingrich with his Contract on America was one of the principal architects of the 1999 repeal of a key depression era reform, the Glass-Stegall Act, that stabilized the United States economy and prevented unfettered speculation that could trigger economic collapse and bring ruin to hundreds of millions of families -people like Waxing America readers.

The product of his theoretical rubbish first bore fruits with the Enron and Worldcom disasters and this past week brought us the worst economic collapse in three generations.

Regardless of the outcome we must be clear about one thing. You and I and millions of hard working Americans who never had a chance to rip off bmillions, will pay.

In an instant, without increasing the tax rates, they made sure we pay.  This is going to come out of our taxes - money we already paid and money we will pay to the federal and state governments.

The loss of our hard-earned savings, the equity in our homes, and the collapse of local businesses are going to take their toll as well. 

There are some people who lost millions, hundreds of millions, and others who lost billions. Most of them made that money without creating true wealth; they created nothing of lasting value. They shuffled paper.

Now Newt Gingrich wants to lower the capital gains taxes to zero.

The man has learned nothing.

The curious thing is that he is not doing this for his own personal aggrandizement. True he enjoys the money he makes and the wealth he creates for his right wing friends.  

His real motivation is that he fashions himself as an economc theorist and wishes to be recognized for his intellectual prowess.

Not content with the destruction he created, he plows forward.

The man is a fool.

He should be tried for treason.