From Rolling Stone
By Matt Taibbi

From Matt Taibbi’s “The Great American Bubble Machine” in Rolling Stone Issue 1082-83.

The first thing you need to know about Goldman Sachs is that it’s everywhere. The world’s most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.

Any attempt to construct a narrative around all the former Goldmanites in influential positions quickly becomes an absurd and pointless exercise, like trying to make a list of everything. What you need to know is the big picture: If America is circling the drain, Goldman Sachs has found a way to be that drain — an extremely unfortunate loophole in the system of Western democratic capitalism, which never foresaw that in a society governed passively by free markets and free elections, organized greed always defeats disorganized democracy.

They achieve this using the same playbook over and over again. The formula is relatively simple: Goldman positions itself in the middle of a speculative bubble, selling investments they know are crap. Then they hoover up vast sums from the middle and lower floors of society with the aid of a crippled and corrupt state that allows it to rewrite the rules in exchange for the relative pennies the bank throws at political patronage. Finally, when it all goes bust, leaving millions of ordinary citizens broke and starving, they begin the entire process over again, riding in to rescue us all by lending us back our own money at interest, selling themselves as men above greed, just a bunch of really smart guys keeping the wheels greased. They’ve been pulling this same stunt over and over since the 1920s — and now they’re preparing to do it again, creating what may be the biggest and most audacious bubble yet.

Read more Scam

From Global Research
By Michael Hudson

Happy-face media reporting of economic news is providing the usual upbeat spin on Friday’s debt-deflation statistics. The Commerce Department’s National Income and Product Accounts (NIPA) for May show that U.S. “savings” are now absorbing 6.9 percent of income.

I put the word “savings” in quotation marks because this 6.9% is not what most people think of as savings. It is not money in the bank to draw out on the “rainy day” when one is laid off as unemployment rates rise. The statistic means that 6.9% of national income is being earmarked to pay down debt – the highest saving rate in 15 years, up from actually negative rates (living on borrowed credit) just a few years ago. The only way in which these savings are “money in the bank” is that they are being paid by consumers to their banks and credit card companies.

Income paid to reduce debt is not available for spending on goods and services. It therefore shrinks the economy, aggravating the depression. So why is the jump in “saving” good news?

It certainly is a good idea for consumers to get out of debt. But the media are treating this diversion of income as if it were a sign of confidence that the recession may be ending and Mr. Obama’s “stimulus” plan working. The Wall Street Journal reported that Social Security recipients of one-time government payments “seem unwilling to spend right away,” 1 while The New York Times wrote that “many people were putting that money away instead of spending it.”2 It is as if people can afford to save more.

The reality is that most consumers have little real choice but to pay. Unable to borrow more as banks cut back credit lines, their “choice” is either to pay their mortgage and credit card bill each month, or lose their homes and see their credit ratings slashed, pushing up penalty interest rates near 20%! To avoid this fate, families are shifting to cheaper (and less nutritious) foods, eating out less (or at fast food restaurants), and cutting back vacation spending. It therefore seems contradictory to applaud these “saving” (that is, debt-repayment) statistics as an indication that the economy may emerge from depression in the next few months. While unemployment approaches the 10% rate and new layoffs are being announced every week, isn’t the Obama administration taking a big risk in telling voters that its stimulus plan is working? What will people think this winter when markets continue to shrink? How thick is Mr. Obama’s Teflon?

Read more Debt Deflation

From TruthDig
By Robert Scheer

It’s not working. The Bush-Obama strategy of throwing trillions at the banks to solve the mortgage crisis is a huge bust. The financial moguls, while tickled pink to have $1.25 trillion in toxic assets covered by the feds, along with hundreds of billions in direct handouts, are not using that money to turn around the free fall in housing foreclosures.

As The Wall Street Journal reported Tuesday, “The Mortgage Bankers Association cut its forecast of home-mortgage lending this year by 27% amid deflating hopes for a boom in refinancing.” The same association said that the total refinancing under the administration’s much ballyhooed Home Affordable Refinance Program is “very low.”

Aside from a tight mortgage market, the problem in preventing foreclosures has to do with homeowners losing their jobs. Here again the administration, continuing the Bush strategy, is working the wrong end of the problem. Although President Obama was wise enough to at least launch a job stimulus program, a far greater amount of federal funding benefits Wall Street as opposed to Main Street.

State and local governments have been forced into draconian budget cuts, firing workers who are among the most reliable in making their mortgage payments—when they have jobs. Yet the Obama administration won’t spend even a small fraction of what it has wasted on the banks to cover state shortfalls.

California couldn’t get the White House to guarantee $5.5 billion in short-term notes to avert severe cuts in state and local payrolls, from prison guards to schoolteachers. Compare that with the $50 billion already given to Citigroup, plus an astounding $300 billion to guarantee that institution’s toxic assets. Citigroup benefits from being a bank “too big to fail,” although through its irresponsible actions to get that large it did as much as any company to cause this mess.

Read more Fiasco

From In These Times
By David Sirota

Most of the great advances we remember involve re-imagination and dreams, not merely tweaks and tinkers. The Wright Brothers’ plane wasn’t a newfangled horse and buggy, Einstein’s theories weren’t a simple update of old physics, and Edison’s creations didn’t aspire to make a brighter-burning wax candle. It’s been the same thing in politics. The Founding Fathers’ Constitution didn’t replicate monarchy, Franklin Roosevelt’s New Deal wasn’t just tinkering with Hooverism, and Ronald Reagan’s revolution didn’t merely dismantle the welfare state.

All of these inventors envisaged machines, theories and societies that never before existed. And that’s why for all the positive, even admirable steps Obama’s America seems poised to take, the aspirations still seem too small, too unimaginative, too confined by old parameters and old conceptions of how things have always worked.

Consider the Wall Street bailouts. By simply giving banks trillions of dollars with no strings attached, our government theorizes that the problem is not the financial system, but a momentary cash drought that can be solved by temporary recapitalization. These bailouts do not aspire to change the whole industry into one dominated by many small institutions rather than a few big ones. They also don’t reach for “a tightly regulated banking system, which made finance a staid, even boring business,” as Paul Krugman said we once had—they envision the same get-rich-quick casino that generated huge profits and huge losses.

On healthcare, even as the Obama administration pushes to create a public healthcare option for consumers to buy into, most of the proposals for universal healthcare being debated in Washington still imagine a healthcare system integrally involving private insurance companies. In fact, the one proposal that sees a new healthcare system without those companies—a single-payer system—has been shoved to the side by both parties as too radical.

Read more Dreaming

From The Raw Story

President Barack Obama will announce Wednesday the White House’s proposal for reforming the U.S. financial system. The plan will call for the closure of the U.S. Office of Thrift Supervision (OTS), the creation of a new consumer credit protection agency and greater powers for the Federal Reserve to supervise major financial firms.

Reuters characterized the plan as cutting the number of U.S. bank regulators.

The administration would merge the OTS with the Office of the Comptroller of the Currency, an administration official said Tuesday. The proposal also calls for creating the Consumer Federal Protection Agency (CFPA) to police credit, savings and other payment markets, the official added.

It will be guided by five principles, the official said on condition of anonymity, including “transparency, simplicity, fairness, accountability, and access.”

The agency is one of a number of reforms which Obama is expected to lay out in his latest attempt to shield consumers from the ravages of an out-of-control finance industry blamed for pitching the US and global economy into crisis.

“We are going to put forward a very strong set of regulatory measures that we think can prevent this type of crisis from happening again,” Obama said, after meeting South Korean President Lee Myung-Bak at the White House.

Read more Empowering Fed

From TruthDig
By Chris Hedges

This week marks the end of the dollar’s reign as the world’s reserve currency. It marks the start of a terrible period of economic and political decline in the United States. And it signals the last gasp of the American imperium. That’s over. It is not coming back. And what is to come will be very, very painful.

Barack Obama, and the criminal class on Wall Street, aided by a corporate media that continues to peddle fatuous gossip and trash talk as news while we endure the greatest economic crisis in our history, may have fooled us, but the rest of the world knows we are bankrupt. And these nations are damned if they are going to continue to prop up an inflated dollar and sustain the massive federal budget deficits, swollen to over $2 trillion, which fund America’s imperial expansion in Eurasia and our system of casino capitalism. They have us by the throat. They are about to squeeze.

There are meetings being held Monday and Tuesday in Yekaterinburg, Russia, (formerly Sverdlovsk) among Chinese President Hu Jintao, Russian President Dmitry Medvedev and other top officials of the six-nation Shanghai Cooperation Organization. The United States, which asked to attend, was denied admittance. Watch what happens there carefully. The gathering is, in the words of economist Michael Hudson, “the most important meeting of the 21st century so far.”

It is the first formal step by our major trading partners to replace the dollar as the world’s reserve currency. If they succeed, the dollar will dramatically plummet in value, the cost of imports, including oil, will skyrocket, interest rates will climb and jobs will hemorrhage at a rate that will make the last few months look like boom times. State and federal services will be reduced or shut down for lack of funds. The United States will begin to resemble the Weimar Republic or Zimbabwe. Obama, endowed by many with the qualities of a savior, will suddenly look pitiful, inept and weak. And the rage that has kindled a handful of shootings and hate crimes in the past few weeks will engulf vast segments of a disenfranchised and bewildered working and middle class. The people of this class will demand vengeance, radical change, order and moral renewal, which an array of proto-fascists, from the Christian right to the goons who disseminate hate talk on Fox News, will assure the country they will impose.

Read more American Empire

From The NY Libertarian Examiner
By Jim Lesczynski

This week, the number of co-sponsors for H.R. 1207 – otherwise known as the Federal Reserve Transparency Act – reached 224. With 435 members in the House of Representatives, a majority of the House nominally supports Ron Paul’s bill to audit the Federal Reserve.

Moreover, 36 of the 71 members of the House Financial Services Committee are now co-sponsors, meaning there is a very good chance that the bill could get voted out of committee and go before the full House for passage.

Conspicuously absent from this majority are any members of the New York City congressional delegation. As I noted in a previous column, there are 6 members of the Financial Services Committee from New York City and Long Island, and not one of them has yet to sign on as a co-sponsor of this increasingly popular reform.

As my previous column also noted, it’s easy to understand why our local representatives are reluctant to support greater government transparency, once you follow the money. Many of them owe their political careers to the financial largess of the major Wall Street banks, who in turn control the Federal Reserve and directly benefit from its policies. Nevertheless, the pressure on our congressional delegation to get on board the transparency bandwagon must be growing, as their position becomes both politically and morally indefensible.

Read more Federal Reserve

From TruthOut
By Matt Renner

A new analysis from a government watchdog group shows senators who killed off a consumer-friendly change in law aimed at addressing the foreclosure crisis received more money in campaign contributions from the industries their vote aided.

Senators who voted against the consumer-friendly amendment received $3.98 million from the financial industry during the 2008 election cycle, while proponents of the bill received $2.65 million.

The amendment in question would have allowed bankruptcy judges to adjust or “cram down” the amount of money borrowers owed their lenders on their primary home in order to avoid foreclosure.

Banking and finance special interests fought hard against the provision, arguing that the ability to adjust these mortgages would make mortgage lending much more risky and expensive, increasing the difficulty of getting a loan in the first place, and increasing the cost to borrowers.

Consumer advocate groups who have long favored this reform pointed out that this type of mortgage adjustment is already available for vacation homes, yachts and almost every other type of loan.

Legislation allowing judges to adjust first mortgages would have saved up to 1.7 million homes from foreclosure, according to the Center for Responsible Lending (CRL), a nonprofit consumer-protection organization. An estimate by CRL predicts an astounding 2.9 million foreclosure starts in 2009, and an estimated 9 million foreclosures by 2012.

Read more Money Trail

From Creators.com
By David Sirota

Without a bailout, newspapers will lay off staff, fewer journalists will report important stories, there will be no Fourth-Estate check on state and corporate power, and the country will suffer. So goes the pro-democracy case for government and/or altruistic investors to save the newspaper industry with an infusion of cash.

Except, amid the debate about such a bailout, it seems government and investors are already subsidizing the industry with in-kind contributions of damning honesty. These outbursts of candor are so brazen and self-explanatory as to require almost zero reportorial resources for blockbuster scoops.

It started in January, when it seemed America would need enterprising journalists to find out whether President Obama’s Wall Street-connected economic team was focused on helping average Americans, or on protecting the super-wealthy speculator class.

Typically, newspapers have to go all Woodward and Bernstein to answer such questions of influence and loyalties. They have to circumvent diversionary press-secretary spin, dig up documents and ferret out leaks — and all of that takes money they increasingly do not have.

But then Treasury Secretary Tim Geithner came right out and said, “We have a financial system that is run by private shareholders, managed by private institutions, and we’d like to do our best to preserve that system.” As Bloomberg News correctly noted, the White House was open about its primary “goal of preserving the private banking system.” Motives admitted, objectives acknowledged, no expensive investigative reporting necessary.

Read more Bailout

From True Blue Liberal
By Stephen Lendman

Wall Street’s mantra is that markets move randomly and reflect the collective wisdom of investors. The truth is quite opposite. The government’s visible hand and insiders control markets and manipulate them up or down for profit - all of them, including stocks, bonds, commodities and currencies.

It’s financial fraud or what former high-level Wall Street insider and former Assistant HUD Secretary Catherine Austin Fitts calls “pump and dump,” defined as “artificially inflating the price of a stock or other security through promotion, in order to sell at the inflated price,” then profit more on the downside by short-selling. “This practice is illegal under securities law, yet it is particularly common,” and in today’s volatile markets likely ongoing daily.

Why? Because the profits are enormous, in good and bad times, and when carried to extremes like now, Fitts calls it “pump(ing) and dump(ing) of the entire American economy,” duping the public, fleecing trillions from them, and it’s more than just “a process designed to wipe out the middle class. This is genocide (by other means) - a much more subtle and lethal version than ever before perpetrated by the scoundrels of our history texts.”

Fitts explains that much more than market manipulation goes on. She describes a “financial coup d’etat, including fraudulent housing (and other bubbles), pump and dump schemes, naked short selling, precious metals price suppression, and active intervention in the markets by the government and central bank” along with insiders. It’s a government-business partnership for enormous profits through “legislation, contracts, regulation (or lack of it), financing, (and) subsidies.” More still overall by rigging the game for the powerful, while at the same time harming the public so cleverly that few understand what’s happening.
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