An Election of Superlatives

Consider the unprecedented nature of the decision we have to make on November 6th between the two major-party candidates.

On the one hand, we have an incumbent President who is also a Nobel Peace Prize winner.  This man, lauded for his efforts to bring “peace” to the world by the perhaps-naive Nobel Committee, is also presiding over the expansion of apparently perpetual secret/shadow wars to kill “terrorists/enemy combatants” on what appears to be a virtually unlimited battlefield through the use of unmanned drone strikes.

Among senior Obama administration officials, there is a broad consensus that such operations are likely to be extended at least another decade. Given the way al-Qaeda continues to metastasize, some officials said no clear end is in sight.

“We can’t possibly kill everyone who wants to harm us,” a senior administration official said. “It’s a necessary part of what we do. . . .We’re not going to wind up in 10 years in a world of everybody holding hands and saying, ‘We love America.’ ”

On the other hand, we have a fabulously wealthy financier whose belief in “American exceptionalism” is so great that he made (and continues to make) quite a bit of his money through offshoring American jobs to foreign nations, including China, a country that he has vowed to “get tough on.”

Right now a company named Sensata is moving equipment out of a factory in Freeport, Ill., and shipping it to a factory in China. Sensata will be laying off all of the American workers, but first they are making the workers train their Chinese replacements. The workers' last day is the day before our election. Here's the thing: This company is owned by Bain Capital, and Mitt Romney -- who says he is against shipping jobs to China -- will make a fortune from the move to China.

The Sensata employees have set up a camp outside the factory that they call Bainport and are trying to stop the Bain trucks that are moving the equipment out for shipment to China. These soon-to-be-jobless workers have asked Romney to come help them.

This is a tremendous opportunity for Mitt Romney. As the former head of Bain Capital and with all the visibility of a presidential campaign, he could step in and help these workers. It offers him the chance to demonstrate to voters that he means the things he says on the campaign trail, and is not just saying these things to get votes. But Romney has refused.

And one more bite at this bitter offshoring apple:

"Romney's campaign did not deny that he profited from the auto bailout in an email to The Hill, but it said the report showed the Detroit intervention was 'misguided.'"

The truth? On June 1, 2009, the Obama administration announced that Detroit Piston's owner Tom Gores, GM and the US Treasury would buy back Delphi.The plan called for saving 15 of 29 Delphi factories in the US.

Then the vulture funds pounced.

The Nation discovered that, in the two weeks immediately following the announcement of the Delphi jobs-saving plan, Paul Singer, Romney's partner, secretly bought up over a billion dollars of old Delphi bonds for pennies on the dollar.

Singer and partners now controlled the company - and killed the return of Delphi to GM.

These facts were revealed in a sworn deposition of Delphi's Chief Financial Officer John Sheehan, confidential, but now released on the Web.

Sheehan said, under oath, that these speculators threatened to withhold key parts (steering columns), from GM. This would have brought the auto maker to its knees, immediately forcing GM's permanent closure.

The extortion worked. The government money that was supposed to go to save jobs went to Singer's hedge fund, Elliott Management Corporation and its partners, including the Romneys.

Once Singer's crew took control of Delphi, they rapidly completed the move to China, sticking the US taxpayers with the bill for the pensions of the Delphi workers cut loose.

Dan Loeb, a million-dollar donor to the GOP, who made three-quarters of a billion dollars off the legal scam, proudly announced that, once he and Elliott took control, Delphi kept "virtually no North American unionized labor."

In all, three hedge funds run by Romney's million-dollar donors have pocketed $4.2 billion, a return on their "investment" of over 3,000 percent - all care of the US taxpayer. The Romneys personally earned a minimum of $15.3 million, though more likely $115 million - a range their campaign does not dispute.

So there you have it.  Perpetual war from a Nobel Peace Prize winner, and a history of profiting off of job offshoring from the man who claims his business acumen makes him uniquely qualified to lift the American economy out of its doldrums and create jobs.  These are the two candidates who will receive the vast majority of votes in less than 2 weeks’ time.

There are other candidates out there, of course.  There is Gary Johnson, the standard-bearer for the Libertarian Party, and there is Jill Stein, the candidate for the Green Party.  And beyond those two (the most prominent of the third parties, due to their being on the ballot in most states) there are countless other candidates to choose from.

It is notable that the two major party candidates would both bring with them more war, and the two primary third-party candidates would both not only end the wars the U.S. is currently engaged in, but cut the military budget and global footprint further than even proposed under the dreaded “sequester”.  Why do we never hear from the third party candidates in the mainstream media (even when one of them gets arrested outside the second presidential debate for “disorderly conduct” for trying to enter the building and participate)?  Could it be that war is always good for business, particularly for the media?  Are Americans not “ready” to hear what these other parties have to say, or is the game rigged to only operate in black-and-white mode, and thus deny a real choice?

I’m certainly not the first person to notice the conundrum that what we view as American “democracy” is truly a carefully-curated pageant that restricts the amount of political choice Americans are presented with.  According to the Commission on Presidential Debates (the CPD, itself a product of a bipartisan agreement between the two major parties) a candidate must receive 15% of support in national polling to be allowed to participate in the prime-time televised presidential debates:

The CPD's third criterion requires that the candidate have a level of support of at least 15% (fifteen percent) of the national electorate as determined by five selected national public opinion polling organizations, using the average of those organizations' most recent publicly-reported results at the time of the determination.

And how, one might ask, does a candidate receive 15% of public support outside of being involved with the two major party apparatuses?  MONEY!  It certainly worked for billionaire (and anti-NAFTA economic nationalist, I might add) Ross Perot, didn’t it?  He ended up with 18.9% of the vote in the 1992 election, to Bill Clinton’s 43% and George H.W. Bush’s 37.5% after appearing onstage with the two major party nominees – having a well-funded 50-state operation can make outcomes like that happen.

“But we have a public financing system for the presidential race!” you might say.  And you would be right, we do.  But again, you get to the chicken-and-egg difficulty of trying to make an impact on the national electorate without the aid of money, which can help one buy media coverage (or without media coverage, which can help one to raise more money):

Minor or third party nominees may also be eligible for federal funding, but the process is a bit more complex.  A minor party candidate's public funding grant is based on a formula subject to the percentage of votes the party received in the previous presidential general election. The candidate is only eligible for general election public funds if the party's candidate received at least 5 percent of the vote in the previous presidential election.

How does one get one’s name and message out to the public without media coverage, so as to achieve polling and electoral support needed to gain access to both the debates (which again, serve to further get one’s name and message out to the public) and to public financing?  How does one raise money without media support, in order to show electoral viability?  How does one get media coverage without money to run ads, which, again, portray a sense of viability? 

Five percent of the national vote may not sound like a high bar to hurdle, but consider that in the 2008 election, approximately 127 million votes were cast.  Thus, you’d need about 6,350,000 votes to make the 5% threshold that would enable your party to access public financing. 

A useful Wikipedia page detailing the 2008 Presidential election fundraising totals shows the overall fundraising and spending breakdowns for the candidates (I’ve only left in the two major party candidates and the Libertarian and Green Party candidates for brevity:

 

Candidate (Party)	Amount raised	Amount spent	Votes	Avg $ per vote
Barack Obama (D)	$778,642,962	$760,370,195	69,498,215	$10.94
John McCain (R)	$383,913,834	$358,008,447	59,948,240	$5.97
Bob Barr (L)	$1,383,681	$1,345,202	523,713	$2.57
Cynthia McKinney (G)	$240,130	$238,968	161,680	$1.48
*Excludes spending by independent expenditure concerns.	Source: Federal Election Commission

To say that the third parties were outgunned in 2008 is a massive understatement.  The Libertarian candidate received about 8% of the 6,500,000 votes he would have needed to cross that 5% threshold to achieve public financing for the next election cycle, and the Green party candidate received about 2.5% of the number of votes needed to achieve 5% of the national vote.  Clearly there is a lot of ground to be made up!

If you view the realm of politics as a market, you will notice that the choices presented by our media and the official apparatus that governs presidential debates comprise a duopoly – there are only two choices, we are told. 

And yet, are there no worthwhile policy ideas beyond the Democratic and Republican 2012 party platforms?  If you care about enhancing the peacefulness of our world, it does not appear that you have a great option among the two major parties this year.  If you care about holding Wall Street accountable for the massive frauds perpetrated on the American public, and want to see the perpetrators go to jail, well you’re not going to find your candidate in the major parties this cycle either. 

Let me be clear: I am in no way, shape, or form arguing that there are not differences between the Democratic and Republican candidates for president this year; such arguments are a frequent meme among political cynics, but they are without merit.  The differences are stark, in terms of foreign policy, fiscal policy, social policy, etc.  Those differences ought not to be glossed over.  I am also not arguing the relative value of one or the other side’s polices at this point, despite my fairly obvious leanings.  Those arguments are for another time.

My point is simply that there are other ideas out there, other voices, and other constituencies that our political system, our democracy, is at present set up to exclude, rather than include.  This amounts to an undermining of free speech, of the free flow of ideas that theoretically characterizes the superiority of a representative democracy over other forms of government.  Let the two major parties have their ideas and policies challenged in an open debate; let the American public be offered something more than a two-party choice. 

Such changes clearly will not happen this election cycle, but through organizing and building constituencies, positive changes can be made for the future to break the two-party hold over political discourse in this country.  I have some ideas on this topic to expand upon at a later date, given the time.

The President’s big speech today

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If you haven’t had a chance to watch this speech, please do, I’ll wait…otherwise, the transcript is here, helpfully provided by the LA Times.  By way of background, the location of the speech today was a city in Kansas where, 101 years ago, President Theodore Roosevelt gave a speech famously calling for a “New Nationalism” and proposing his “Square Deal” to the American people.  Was President Obama being slightly ambitious in his choice of historical contextualization?  Perhaps, but to my mind it was well worth the risk.

Now then.  While this speech was touted as an “economic” speech, the tenor and content ranged far more widely than simple concepts of supply and demand.  President Obama laid out a new framework for the American economy, with the explicit goal being to rebuild and expand the middle class.  He made the argument that government should not try to “fix” all the problems of society, but that government should work on behalf of the people’s interests.

With a forcefulness that has been heretofore lacking in most of his presidential speeches, President Obama called out greed, irresponsibility, and the continuing fallacy that is “trickle-down economics.”  He called for new rules of the road that apply to everyone, not just to Main Street, but to Wall Street as well.  He defended the Dodd-Frank financial reform bill, and made a stirring statement about the importance of the Consumer Financial Protection Bureau and its soon-to-be-blocked Director nominee, former Ohio Attorney General Richard Cordray. 

One of the more memorable phrases to come out of the speech is President Obama’s term “you’re on your own economics” to characterize the preferred economic plan of the GOP.  The contrast came with President Obama’s insistence that American prosperity, long-term prosperity, is gained together, in contrast to the “YoYo” economic ideas of the GOP. 

But President Obama’s speech led up to what I felt was the culminating point: illustrating for the American people that there is a different form of capitalism available; one that is more responsible and ultimately self-sustaining than the winner-take-all capitalism we’ve endured the past 30 years.  The President spoke of Marvin Windows, of Warroad, Minnesota, and described (skip to the last 7 or so minutes of the video clip to catch it) how the company has never laid off a single worker in its 100+ year history, despite enduring the Great Depression and the ongoing Great Recession.  How did Marvin achieve that feat?  Simple; through shared sacrifice from both the workforce and the management when times have been tough.  The President didn’t get into details, obviously, but his simple illustration of what could be summed up for the audience that change, true change, is within our grasp if we see each other as fellow citizens, and recognize that prosperity will be gained through helping each other out, rather than shorting each other constantly.  Responsible capitalism is what we ought to strive for, rather than a corporate ethos solely driven by the fiduciary responsibility to shareholders.

The President attacked inequality sharply, broadly, and directly, and proposed some new/old ideas to guide us out of the predicament we find ourselves in as a nation.  If it was a speech somewhat lacking in the soaring rhetoric of campaign Obama of 2008, the sober tone reflected the weighty concerns facing the man as President.  In time, I believe this speech will be seen to be a major one, where he describes the economic goalposts as they have been set for the past number of decades, and proposes that we, as a nation, make the effort to shift them back so that the goal is within the majority’s reach once again.  This speech sets the stage for the 2012 campaign, surely, but it also challenges Americans to greater collective achievements. 

I don’t normally watch presidential speeches, but this one had me riveted from the start.  I’ll give Greg Sargent the last word on this topic, the final paragraph of a typically insightful blog post on the speech:

Political scientists will tell you that individual speeches don’t matter; and that grand themes are very unlikely to supplant the direct experience of the economy as a motivator of voters. But we’ll be hearing these themes countless times between now and election day. And anyone who had hoped that Obama and Dems would make an unapologetically populist and moral case against inequality and economic injustice central to Campaign 2012 should be pretty pleased with what they heard today.

The #Occupy movement and the generations

Just a short note of gratitude and no small amount of incredulity at the cross-generational dialogues that have been fostered through and around the Occupy movement, which I and others view as largely a Millenial generation-driven thing.  I was just reading a well-done post by Charles B. Pierce at Esquire’s Politics Blog and noting his tone lamenting the political fecklessness of many of those from his generation now holding the reins of power:

How hard can this be? How hard is it to tell people to get angry at the people who really are making off with their country's wealth and their personal futures, especially when it's the god's honest truth? How hard is it to tell people that they are not the enemy, that to shoot pepper spray into the eyes of a college student is to spit in the eye of everyone else? Please do not hand me concerns for your "political viability." That makes you cowards. The protesters are doing the hard work. They're the ones living in a dozen tiny Argentinas all around this country. They're the ones getting beaten up and tortured, on TV, with chemical agents. They're the ones going to jail. All I'm asking is that you all have their backs, and all you have to do is get up and give a whole bunch of speeches saying so. Right now, they're pretty much out their on an island while empty charlatans like Newt Gingrich and prissy little shmoes like David Brooks are beating them over the head rhetorically, while the cops are more than happy — indeed, damned near gleeful — to do it in person.

Barney Frank wonders where the Occupiers were during the elections of 2010? Give them a politics worthy of their courage and they'll show up. This does not seem to me to be a difficult problem, but it does appear possibly to be the last chance for progressive politics for an awfully long time. You don't need an $850,000 contract to see that.

That second bolded sentence “Give them a politics worthy of their courage and they’ll show up” sounds like one of the best lines I’ve heard this year, for both its succinct razor-edge of truth, to its political astuteness.  This generation out protesting, my generation, is the one that greatly helped President Obama get elected.  We came out of the Bush era scarred (as I’ve noted previously) and looking for a change that Obama appeared to represent.  But more than that, he represented prudent judgment in correctly sizing up many of the true threats to our country (the undercutting of civil liberties domestically and human rights abroad, being cogent for me in particular) and, yes, a courage in his opposition to the Iraq War that was greatly lacking in the politics of those days, and even moreso today.  The reality of President Obama has been drastically different from the representation of Candidate Obama, but at the time, he showed a side of politics that people yearned for.  Show us courageous politicians taking stands that put them on the right side of popular sentiment, particularly in the face of a potential loss of big money campaign donors, and I bet my generation will show up.

So it is with that background in mind that I have been considering the amount of support I see and hear from older generations for the movement now sweeping America.  A close family member informed me that on her recent trip to New York she happened upon an Occupy Wall Street group at a public park (not Zuccotti, mind you) and was very impressed with the “human microphone” and the positive, steadfast energy the group displayed, despite it being an awful, rainy NYC November day.  The Facebook posts I see from Gen-Xers, Baby Boomers, and on up regarding the Occupy Movement evince a strong bond between the generations that I don’t think I’ve ever seen as clearly in my life. 

I had always feared that the elites’ plan to divide the entitlement program pie, and to set those of us in younger generations on a different retirement plan than our parents, threatened to separate the generations (which is probably the point!) and why you still hear many GOP candidates discussing giving young people the “option” of purchasing health savings accounts and the like.  The fact that we’re all working and saving towards a common fund, a common vision, means we’re all in it together, to some extent, despite the fact that the powers-that-be want all that locked-up Social Security and Medicare money to be released to the predations and speculations of Wall Street. 

But now, the elites have played their hand too far.  They’ve effectively united a strong bloc of people across the generations because, let’s face it, we’ve all been looted in some way or another.  We recognize a common enemy: the collusion between big business and big government that works to undercut our rights and to separate an already economically-stratified society into one where you have vastly different justice systems, depending on your standing and net worth (witness this egregious hit-and-run case from Colorado last year involving a “wealth manager” and a cyclist for a great/horrifying example).  There’s no justice for those on the top, but a harsh and exacting justice for those of us not at the top.  Witness the UC Davis pepper-spraying last Friday:

Glenn Greenwald’s take on the UC Davis situation adroitly points towards the larger issue at play in our society:

The UC-Davis Chancellor responsible for the pepper-spraying of her students, Linda Katehi, today went on Good Morning America and explained why she should not resign or otherwise be held accountable: “we really need to start the healing process and move forward.” On a radio program in the afternoon, she expanded on this view by saying: “We need to move on.” So apparently — yet again — the only way everyone can begin to “heal” and “move forward” is if everyone agrees that those in power with the greatest responsibility be fully shielded from any consequences and that their bad acts be simply forgotten. I wonder where she learned that justifying rationale?

We yearn for justice as a society.  The concept of justice embedded in the Constitution argues that those at the top and those at the bottom ought to be equal in the eyes of the law, and yet, the past decade has clearly shown how far our society has gotten from those founding principles.  Occupy, for all of its media-unfriendliness and potential to turn off the “median voter,” is a nascent attempt at reclaiming that original concept of justice.  Justice is anathema to the powers-that-be, as their gains are largely ill-gotten and their positions in society often depend on their being the the best operators within a system of legalized corruption.  The moment their hold on power slips, and they no longer control the levers of power and the judiciary, they will be subject to the comeuppance that has been long in coming, and much delayed. 

Greenwald quotes Rosa Luxemburg’s epic comment to wonderful effect:

“Those who do not move, do not notice their chains.”

If you look askance at the Occupy movement, and you see nothing but a bunch of rowdy young people lacking drive and ambition, ask yourself how you’re constrained in your own life.  What cutbacks have you had to make to your hopes and dreams, let alone your financial position?  How many of those setbacks are due entirely to your own poor judgment or over-extension, rather than being at least in part the shock wave from a system of willfully-created asset bubbles and legislatively-endorsed corruption imploding upon itself?  If you trace the origins of your own problems back to their logical starting points, do they solely originate from your decisions?  That is the line of thinking the powers-that-be hope you’ll take away.  Heaven forbid you should look up the food chain to discover how usury has been made legal and how student loans are no longer discharged in bankruptcy; how insolvent banks are allowed to claim the full face value of toxic assets to bolster their bottom lines, and yet how lying to get food stamps to feed one’s two children can net you 3 years in federal prison.  “Justice,” these days, comes at the expense of the rest of us.  We can see this fact in all its harsh reality and find a unity in it, or we can deny deny deny that the mirror the Occupy movement is holding up to our society reflects far more of our collective life experiences of brokenness and unnecessary misery than we’d care to admit. 

Thank you to those of the older generations who see the Occupy movement not as a threat, but as the opportunity for a rebirth.  We need you, and you need us.  We ARE in this together.

Ask and ye shall receive

As a follow-up to my post from last week regarding polling on the question of whether the GOP is purposely sabotaging economic recovery in order to defeat President Obama next year, I thought I’d bring my dear readers’ attentions to the results of two new polls released today that cover similar territory.  I had mentioned that the Suffolk University poll from last week was just crying out for additional data to help discern a trend or not, and it appears we have some further data to work with now.

First off, a Washington Post/ABC News poll of 1,004 adults, with a 3.5% margin of error asked the following question:

Which of the following statements comes closest to your point of view? Statement A: (President Obama is making a good faith effort to deal with the country's economic problems, but the Republicans in Congress are playing politics by blocking his proposals and programs.) Or Statement B: (President Obama has not provided leadership on the economy, and he is just blaming the Republicans in Congress as an excuse for not doing his job.)

Compare the wording to that of last week’s Suffolk University poll:

Do you think the Republicans are intentionally stalling efforts to jumpstart the economy to insure that Barack Obama is not reelected?

The WaPo/ABC poll is not as clear with respondents about the political intent of any perceived economic sabotage on the GOP’s part – referring to “playing politics” rather than “to insure that Barack Obama is not reelected” – but the underlying message is essentially the same: do you think the GOP is purposely making the economy worse for political purposes?  The results:

Which of the following statements comes closest to your point of view? Statement A: (President Obama is making a good faith effort to deal with the country's economic problems, but the Republicans in Congress are playing politics by blocking his proposals and programs.) Or Statement B: (President Obama has not provided leadership on the economy, and he is just blaming the Republicans in Congress as an excuse for not doing his job.)

Obama making a good effort: 50
Obama has not provided leadership: 44
Both (vol.): 2
Neither (vol.): 2
No opinion: 1

And once again, the results of the Suffolk poll:

Do you think the Republicans are intentionally stalling efforts to jumpstart the economy to insure that Barack Obama is not reelected?

Yes 49
No 39
Undecided 12

Okay then!  Seems like there could be something more to this meme now.  Greg Sargent pulls out the internals of the WaPo poll, providing more points of interest:

The toplines: Americans agree with the first statement over the second one, 50-44. According to numbers sent my way by the Post polling team, this is more pronounced among moderates and independents:

* Independents favor statement one over statement two by 54-40.

* Moderates favor statement one over statement two by 57-37.

The overall number is lower, at 50 percent, because a hilariously meager nine percent of Republicans believe this to be the case.

Who likes to have their side accused of “playing politics” with anything?  It just sounds offensive when we’re talking about real peoples’ lives and the overall economy, no wonder only 9% of Republicans agree with statement #1.

Our third poll of the day, which Talking Points Memo’s Brian Beutler argues constitutes a “trend,” (I would agree) is one commissioned by the liberal blog DailyKos:

Also on Monday, liberal blogger Markos Moulitsas publicized the top lines of a PPP poll he commissioned, which closely mimic the the Post/ABC survey: “50% think GOP intentionally stalling economy, incl 51% of Indies, & 15% of GOPers. Details Tuesday.”

So here we have three polls showing broadly similar results to similarly-worded questions (although the exact wording of the DailyKos poll will be out tomorrow) and which also show that a majority of independents ascribe to some version of the notion that the GOP is deliberately sabotaging the economy.  As we are all surely aware now, the vast and growing “middle” of the electorate is where the true electoral battleground lies for 2012 (and virtually every modern election) so it would appear that President Obama has the upper hand with this crucial slice of the populace, no?  Steve Benen, echoing Greg Sargent, notes the inherent danger of the polls’ findings for the President:

Though in theory, it should, this won’t necessarily give President Obama a boost. The degree of national cynicism is so intense, many Americans may simply assume Republicans are sabotaging the national economy, but take their frustrations out on the president anyway. As Greg noted, “The number who see Obama as a strong leader is now upside down (48-51), suggesting yet again that even if Americans understand that Republicans are deliberately blocking Obama’s policies, they may conclude that his failure to get around them just shows he’s weak or ineffectual.”

Voters’ understanding of the political process is severely limited, and many Americans likely fail to appreciate the role Congress must play in policymaking. There are no doubt plenty of voters thinking, “Sure, Republicans are sabotaging the economy, but why can’t Obama just go around them?” unaware of the fact that, on a grand scale, this isn’t an option. (emphasis added)

Indeed, President Obama’s failure to “get around” Congress is the true reason why he’s embarked on his “jobs tour” the past couple months – taking his message directly to the people of America, urging them to contact their Congressmember and tell them to act on jobs and the economy.  In a broad sense, it appears the efforts are paying off, according to Josh Marshall.  Furthermore, the amount of braying from the GOP about “class warfare” from the President has increased proportionally as his jobs message has caught on.  Witness Rep. Eric Cantor’s aborted speech about “income inequality” (note: he canceled the speech when it was revealed that Occupy protesters planned to respond to him by exercising their free speech rights) and Rep. Paul Ryan’s speech to the conservative Heritage Foundation largely predicated on the notion that America needs to preserve its heritage of economic mobility through surprise! not raising taxes on the wealthiest among us.  (Note: he’s wrong about our economic mobility rates compared to other countries.) 

So where does all of this data leave us now?  Well it would seem that President Obama needs to work closely with the Democrats in Congress to present a focused message (not easy with Democrats, ever) regarding the GOP’s obstructionism.  Pushing the “sabotage” message, in concert with more polling data showing similar results to those presented here, will force the media to cover the sabotage meme more widely and thus put the Republicans on defense on job creation – exactly the situation they hope not to find themselves in heading into a still-very-unsettled GOP presidential primary season and an election year.  President Obama’s rather limited moves last week on student loan reform, homeowner relief and jobs proposals for veterans might represent a good-faith show of effort for those skeptical independents and moderates doubting his leadership, and they could marginally influence his standing with those key constituencies.  But overall, those moves show the Presidency’s economic weakness vis-à-vis Congress, and the relative ineffectiveness of the Executive branch’s sprawling bureaucracy to help improve peoples’ lives in a truly meaningful way.  Coordinated actions between the Executive and Legislative branches are what is needed, but until Obama and the Democrats can find leverage points to force the Congressional GOP’s hands on job creating legislation, it is unlikely the President will be able to do much more than chip away at the margins of the economic problems facing this country, winning message or not.

Is the GOP purposely sabotaging economic recovery for political gain?

What do you think?

A Suffolk University poll was released today that polled registered voters in Florida and asked a key question:

Do you think the Republicans are intentionally stalling efforts to jumpstart the economy to insure that Barack Obama is not reelected?

Now, I have been telling many of my friends and relatives (much to their collective chagrin, I’m sure) that the political and economic situation in the country – continued high unemployment, political stalemate in Congress, a disillusioned citizenry – means that, politically, the Republicans would have the most to gain electorally if the economy remains stagnant.  As Bill Clinton’s pollster James Carville famously quipped in 1992, “it’s the economy, stupid.”  Conventional political wisdom (and a fair amount of political science research) points to the notion that, electorally, the president generally bears the most responsibility for the state of the economy in voters’ eyes, rightfully deserved or not. 

The corollary to this situation we face today is that, in a cynical political calculus, the Republicans can increase their chances of taking the White House in 2012 if they actively work against economic recovery.  It sounds sinister to even suggest such a thing, doesn’t it?  Well, what do you think the popular view of the situation is among Florida voters?

Do you think the Republicans are intentionally stalling efforts to jumpstart the economy to insure that Barack Obama is not reelected?

Yes 49

No 39

Undecided 12

49%…that’s something, ain’t it?  Meanwhile, the partisan split on the polling is quite fascinating as well:

As expected, most registered Democrats (70 percent) agreed that Republicans are intentionally hindering the economy and hurting Obama, but independents (52 percent) and even some Republicans (24 percent) also agreed. (emphasis added)

Independents are often regarded as the lily-white souls who just can’t bear partisan conflict in politics, so the fact that 52% are siding with Obama on this question might reflect a majority view among that crucial demographic that the obstruction is coming from only one party.  The 24% of Republicans who agree with the question could reflect a small group of Republican voters who are willing to acknowledge such scorched-earth tactics from the GOP, and they may even approve of such tactics in order to defeat President Obama.  There is at least one big caveat to drawing too much out of these poll numbers; it’s not a national poll, it’s only Florida voters, so the applicability to other voter groups is negligible.

All that being said, however, this poll represents something new for this election cycle: acknowledgment that the political calculus for Republicans favors maintaining and/or increasing the economic misery for the American populace.  Left-leaning writers and bloggers have been discussing this issue for months, but the fact that such a notion has penetrated into the rarefied air of a respected polling organization’s survey questions is something entirely new. 

As Steve Benen notes, this single poll cries out for verification and/or contradiction, but that can only be done by further polling – polling that will have its results reported by the media, which will be forced to actually acknowledge the nature of the “sabotage” question asked, thus potentially raising the question in the minds of the viewing American public.  Such a situation does not bode well for the GOP, as their strategy of getting away with massive legislative obstruction (as seen in Sen. Mitch McConnell’s blocking of a vote on the President’s infrastructure bill in the Senate today) relies upon the median voter not grasping the nuances of parliamentary procedure in Congress to directly link such obstruction to the GOP’s actions.  Hiding in plain sight, as it were, with plausible deniability built-in.

For a long while, such actions appear to have worked, in a Pyrrhic sense, what with President Obama’s approval rating steadily dropping since mid-June. And yet, Congress has not been immune from blowback. Congress’ collective approval rating is now averaging 12.7%, according to RealClearPolitics.  Congressional approval ratings are historically virtually always lower than those of the President, but with a CBS News/NY Times poll recently showing Congress to only have a 9% approval rating (the lowest ever recorded since the poll was first launched) Americans are increasingly angry at their elected representatives these days.  The flipside of President Obama’s dropping poll numbers from the summer, as seen in the link above, are that his positives are now increasing again as he has honed his message on jobs and the economy.  All the GOP has had to offer are a bunch of blockades of legislative procedure and empty “jobs proposals” full of the same sorts of ideas they’ve been promulgating since Reagan’s presidency. 

Our politics is beyond broken these days, it is now actively heartless too.  Our representatives seem not to have much of an inkling of what “representing” Americans means, given the widespread and massive suffering amongst and all around us.  Witness Rep. Buck McKeon (R-CA), Chair of the Armed Services Committee, writing to the New York Times to argue contra Paul Krugman that he is anything but a closet defense Keynesian:

Congress is charged by the Constitution with providing for the common defense by raising and supporting our armed forces. We don’t spend tax dollars to protect American jobs, but to protect American lives. As such, it is accurate to point out that cuts in defense spending will cripple a critical industry, result in huge job losses and erode our ability to provide for the common defense. (h/t Kevin Drum)

I don’t know, is it just me, or does it not seem that “protecting American jobs” seems like exactly what we ought to be spending our precious and vanishing tax dollars on in the interest of “common defense”?  Have you seen our defense budget lately?  Methinks the Pentagon is doing just fine, thank you.  Why not use some Congressional intervention on behalf of the American people, rather than defense contractors, who have had bonanzas yearly since the “War on Terror” began?

Would that we had representatives working on our behalf…perhaps Congress ought to be the next venue for some Occupy-flavored civil disobedience?

#OccupyWallStreet: The precursors to the occupations?

I was just reading Christina Romer’s very well-done piece in Sunday’s New York Times, making the case that announcing nominal GDP targeting should be the Federal Reserve’s next policy move (I encourage you to read the article for the details).  Here’s the key section I’d like to highlight:

HOW would this help to heal the economy? Like the Volcker money target, it would be a powerful communication tool. By pledging to do whatever it takes to return nominal G.D.P. to its pre-crisis trajectory, the Fed could improve confidence and expectations of future growth.

Such expectations could increase spending and growth today: Consumers who are more certain that they’ll have a job next year would be less hesitant to spend, and companies that believe sales will be rising would be more likely to invest.

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Though announcing the new framework would help, it probably wouldn’t be enough to close the nominal G.D.P. gap anytime soon. The Fed would need to take additional steps. These might include further quantitative easing, more forceful promises about short-term interest rates, and perhaps moves to lower the exchange rate. Such actions wouldn’t just affect expectations; they would also be directly helpful. For example, a weaker dollar would stimulate exports.

How many of you reading this article feel that our government is “willing to do whatever it takes” to get us out of this persistent unemployment crisis, with all of its attendant suffering and economic misery?  I’d bet not a one of you – I certainly don’t think our government is trying its best to fix things.  Of course, it depends on how one defines “government” I suppose, but if you initially think of our elected branches, since we voters have the most direct control over the executive and the legislative, then no, the “government” in that sense is definitely not working on our behalf! 

And really, how ridiculous is it that the government of the wealthiest country that has ever existed can’t even act in a coordinated manner to stem the suffering of a massive segment of its population?  Or perhaps even more sinister, it appears that the government won’t act to stem the suffering.  Our elected officials have abdicated virtually any and all responsibility until after November 2012 in order to best position themselves politically and rhetorically for the electoral battles to come.  Sure the President is still hammering away on his newfound populist message, his “jobs proposal,” and is taking actions on behalf of homeowners, student loan borrowers, and prescription drug patients, among others, but let’s be honest folks, his track record on the “following-through-on-populist-sentiments” score ain’t that great…(see option, public for an example).

So now we face the absurd reality that the Federal Reserve, the quasi-governmental entity that is perhaps the least-democratic, most-opaque, and most removed from the basic economic reality of most Americans is being pushed to solve our jobs crisis through pure monetary policy.  The Federal Reserve has a dual mandate of preserving price stability as well as maintaining full employment, and the main critique of the Fed for many years has been that it has focused virtually exclusively on the former (in the form of interest rate targeting) while wholly neglecting the latter.  Despite the fact that it has been broadly apparent that allowing interest rates to rise somewhat would facilitate the creation of more jobs, the interest rate hawks within the Fed have consistently put a stop to any of those practices, warning of mythical “bond vigilantes” who will decide that US Treasuries are no longer worth investing in if the interest rate rises even a smidge, despite massive evidence to the contrary.  (The counterpoint, of course, is that investing in Treasuries represents the safest investment one can make in the troubled and volatile world markets, as while the state of the US debt and economy overall might cause debt holders concern if the rest of the world were in better shape, the relative position and strength of the US economy in the current world economy makes it a better investment vis a vis other sovereign bonds.)  But I digress.

Why are people occupying so many public spaces in so many cities across the United States and abroad?  I think it is precisely as a response to the massive systemic failure we’ve witnessed at all levels of our government to actually make a positive impact on the vast majority of Americans’ lives.  This is not to say that Americans en masse are waiting for government aid or action or anything like that, rather that the silliness we are witnessing playing out on Capitol Hill and in the White House, the constant tit-for-tat, is leading Americans to see their government as willfully sitting on its perfectly-capable hands, rather than deigning to lift a finger to tilt the scales of justice even minutely back on their side. 

A significant portion of these Occupiers likely played a large role in electing President Obama in 2008 – the sense of triumph in that election was not simply due to the historical nature of electing the first African-American president, but because Obama appeared to represent a turn of the page, or perhaps, a close of the book, from the utter depredation of the Bush Administration, hollowed out to a shell of itself in the end due to its sheer lack of competence.  Post-Katrina America had scars, deep scars affecting the national sense of whether the government was truly acting in our interests or not if it could bungle emergency management so completely. 

Obama represented a shift towards competence, towards smart folks who looked at the data to get things done and make decisions…and yet, after the health care debate, the pyrrhic victory of an apparent giveaway to the health insurance industry, combined with the Wall Street-friendly nature of the new Administration, and the declaration that many of the high-level prosecutions that many desired for actors both inside and outside of government were to be strictly off-limits by Obama and Attorney General Holder marked a certain continuity between the Bush and Obama Administrations: elites are coddled, bailed out, and constantly regaled, no matter their transgressions.  The little people, the 99%, have no place in this insular Washington-Wall Street-Pentagon calculus.

The election of Obama, in this narrative, represents not the shift, the hope, the change that people were hoping for, but the continuation of the perpetual insult to the nation’s sense of values and fairness – an insult that, prior to the rise of the Occupy movement was largely undefined and nameless for many Americans.  Guantanamo, Abu Ghraib, bank bailouts, auto bailouts, the death of the public option, no Wall Street prosecutions, no torture prosecutions, warrantless wiretapping, unmanned drone strikes on countries and civilians we aren’t at war with, wars that are declared against enemies that are largely undefined…whose heads roll for any of these awful decisions? 

The failure of our institutions, and the growing widespread understanding of that fact, as I alluded to a few weeks ago, and more obliquely, in the title of my last blog post “Don’t think it’s not bipartisan, it is,” is profoundly bipartisan.  It had to be to manifest itself so clearly to so many at just this point in time.  Just as you would likely not have a Tea Party had John McCain won, the nature of the Occupy movement, if it were to exist in an alternate world under a McCain Administration, would be very different to what we see today.  It took the failure of Obama, the landslide-elected change agent to bring justice, to bring accountability to the corrupt elites of this country, for the Occupy movement to spring up.  In this case, perhaps the Change that is thus far unrealized will be the catalyst for the realization of the true Change, whatever that may be. 

The bipartisan failure is a wholesale indictment of the entire construct of democracy in this country, and has likely soured many in the Millenial generation on the act of voting itself.  Perhaps democracy, as it is now constructed, is not in fact the method for enacting the change we wish to see in the world?  Could it be that the leverage points upon which the entrenched interests and powers can bring their influence to bear on candidates and nominating parties in our democratic system are simply too numerous and too porous?  The vast constellation of special interests funding candidates these days ensures the ascendance of a certain type of candidate: one who must be conversant in the ways of money, though preferably not “of” money (they’re easier to control with the promise of high-paying post public service jobs, you see) and who have hewn lines that conform to the dominant economic and social memes of the day, thus ensuring the continued preservation of the entrenched classes.  Any “change” will thus be marginal, minimal, the scraps thrown to those too poor to afford their own public affairs divisions or hired-gun lobbyists to press their case in the halls of power. 

Ultimately, though, it doesn’t matter whether Obama speaks the right words, or even whether he follows through on his newly populistic leanings with actual substantive legislative victories; the narrative is no longer his to drive, nor is it the GOP’s or the Tea Party’s.  They are reacting, all of them.  Consider:

Occupy Wall Street has already achieved a stunning victory – a victory that is easy to overlook, but impossible to overstate. In just one month, the protesters have shifted the national dialogue from a relentless focus on the deficit to a discussion of the real issues facing Main Street: the lack of jobs -- and especially jobs with decent benefits -- spiraling inequality, cash-strapped American families' debt-loads, and the pernicious influence of money in politics that led us to this point.

To borrow the loosely defined terms that define the Occupy movement, these ordinary citizens have shifted the conversation away from what the “1 percent” -- the corporate right and its dedicated media, network of think-tanks and PR shops -- want to talk about and, notably, paid good money to get us to talk about.

What were you reading about daily in the newspapers as recently as 6 weeks ago?  Austerity austerity austerity.  What did the Occupy movement bring to the table?  Non-manufactured talking points that actually speak to people.  Something you can bring home to your family and discuss at your kitchen table as a concept that everyone understands, intuitively.  Fair wages, decent jobs, non-criminal banks, supporting your neighbors and your community.  These are American values, no matter what the cable news pundits say who myopically search for the “demands” of the Occupy movement despite the hundreds and thousands of protest signs shouting demands right at them. 

People want a fair shake, for themselves, their children, their coworkers, their neighbors, their fellow churchgoers.  That’s pretty much all I’ve come up with, at the end of the day, and it’s pretty simple.  How we get to the fair shake for all is the more complicated problem.

Don’t think it’s not bipartisan, it is

A Washington Post headline today that speaks volumes: Obama still flush with cash from financial sector despite frosty relations:

…Obama has brought in more money from employees of banks, hedge funds and other financial service companies than all the other GOP candidates combined, according to a Washington Post analysis of contribution data.

…Obama’s ties to Wall Street donors could complicate Democratic plans to paint Republicans as puppets of the financial industry, particularly in light of the Occupy Wall Street protests that have gone global over the past week. In response to the protests, the Obama campaign and other Democrats have stepped up their attacks on Romney and other Republicans for their opposition to Wall Street regulations.

One top banking executive who raises money for Obama and who requested anonymity to discuss fundraising efforts said reports of disaffection with the president “are exaggerated and overblown.” He said a strong contingent of financiers in New York, Chicago and California remain supportive of Obama and his economic policies, even as some have turned on him.

Now, all is not as it seems, as the Democratic National Committee has the ability to raise $30,800 per donor per year, whereas direct contributions to candidates’ campaign funds are capped at $5,000 per donor for the entire campaign cycle.  Because Obama is the Democratic nominee for president in 2012, he is able to coordinate fundraising with the DNC, whereas because the Republican primary is still underway, the RNC is not yet coordinating with a specific candidate.

That all being said, we’re still talking about vast sums of money here, with the election over a year away.  Is there not something troubling about that?

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So yesterday I gave a bit of grief to Mitt Romney for being cold and calculating (or at least giving every impression that he is when it comes to the plight of homeowners) and I feel the need to point out that President Obama himself is certainly no stranger to financial industry largesse.  Wall Street gave more money to President Obama in 2008 than they did John McCain, and finance has remained a key part of the President’s fundraising arsenal since. 

Obama’s done an intricate dance with Big Finance since his inauguration, calling them “fat-cat bankers” and warning that his administration was “the only thing between you and the pitchforks” while appointing a very Wall Street-friendly Treasury Secretary in Tim Geithner, as well as a former VP of JP Morgan Chase as his latest Chief of Staff, Bill Daley, among other key players. 

It is true, on the other hand, that President Obama helped shepherd the Dodd-Frank financial regulations through to passage in Congress.  But the implementation process of such a complex bill has been met with delays in regulation writing and an apparent lack of gumption on the Administration’s part to support nominees to key oversight positions.  Why is Elizabeth Warren running for the US Senate in Massachusetts and not running the Consumer Financial Protection Bureau, which she effectively created whole cloth?  It’s due in major part to the Obama Administration’s not weighing in with more support for Warren against predictable Senate Republican intransigence in blocking her nomination.  The fight over securing Warren’s nomination would have been a titanic one, as the financial industry was as opposed to the creation of the CFPB as anything else in Dodd-Frank, and 44 Senate Republicans promised to block any nominee to the CFPB’s Directorship, not just Warren.  And yet, President Obama, despite what could have been a prime opportunity to highlight Republican tactics that negatively affect consumers, didn’t seem to have the fight in him on this one, for reasons still unknown.

A further area of concern has been the ongoing “50-state” Attorneys General housing settlement negotiations, which have sought to release the big banks from any liabilities for their criminal ways during the housing boom of the 00s in exchange for a paltry $20 billion or so in fines.  See the video below with Delaware Attorney General Beau Biden (son of Joe) giving a great overview of the major issues:

Visit msnbc.com for breaking news, world news, and news about the economy

Despite the appearance of massive fraud by every major bank, the Obama Administration has been pushing rather hard to have all 50 AGs sign on to the agreement, which is ostensibly narrowly related to the robosigning fraud unearthed last year, however the negotiated terms of the agreement attempt to release the banks from all sorts of liabilities unrelated to robosigning.  That a number of upright state AGs have stood up against such attempts to sweep illegal activities under the rug may not be terribly surprising, but that the Obama Administration would be aligning itself with the criminals in this case so blatantly certainly gives one pause.  Does Obama think promoting a less bank-friendly investigation might hurt his fundraising opportunities with Wall Street?  Such a consideration can’t be far from the top of his mind…When Obama’s reelection is going to be fought against a GOP that still considers wholesale deregulation to be a viable job creation strategy despite all evidence to the contrary, he has to give Big Finance some carrots to keep their contributions flowing to his coffers, no?

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And that’s the crux of the problem.  That’s what Occupy Wall Street is about – the failure of institutions to offer any alternative to the rampant corruption that is right before all of our eyes.  There is no alternative to the current system, and no viable way to use “democracy” to achieve the real change that people appear to seek, as the votes are rigged in favor of the winners.  Justice itself is being undercut systematically so that those who have won historically can keep right on winning, consequences be damned.  It’s no way to run a country.

For his part, Obama has presided over a time that has been marked by major investigations and public exposures of unbelievably bad behavior and rampant greed among the elites who run the economy; a time where an average citizen can find any number of things to be unspeakably outraged about.  Obama’s time in office has coincided with a loss of trust in institutions that would have happened with or without his being President.  And yet, it behooves me to ask how much he himself has contributed to the loss of trust Americans feel in their government?  Sure he inherited a bad situation from his predecessor, but where has he exacerbated the structural problems in our society with his choices?  I’ve been attempting to map out some of the terrain where I feel there has been a governmental failure on this blog for some time now; not because I am opposed to our President, far from it.  It is because so much of the government’s response to issues of structural criminality have been to mask those issues, to sweep them under the rug, to choose not to act in the face of injustice in the hopes that the average low-information voter will not pick up on that act of collusion.  Obama or no, I won’t stand for that.

I believe in a better, stronger, more just and more free America – I have to believe in it; I’m a member of the generation that will be picking up the pieces when those in power today have long departed from the scorched earth they are rapidly creating in their wake.  I believe that we can have a government that works on behalf of the people, and I intend to do my part to make that happen.  But when the government is itself an impediment to the realization of those goals, when it uses its might and state secrets privileges and its power to regulate (or not) in the service of those who would bend government to their own nefarious ends, I feel the need to call attention to those acts as a lowly scribe/blogger. 

I have a proposal in the works that will present a more positive vision for the future, that will present some concrete actions individuals can take to change their own lives as well as their communities for the better, and I sincerely hope to present it on this blog soon.  This blog, in the attempt at chronicling so much wrongdoing, has taken on a terribly negative tone, and I hope to change that in the very near future.

Thanks for reading, as always, and stay tuned.

P.S. – Here’s a great read from Charles P. Pierce of Esquire, taking on Romney’s callous discussion of foreclosures and the curveball that the Supreme Judicial Court of Massachusetts threw his way today.  Great fun, or not.

We don’t need a redistribution of wealth, we need a redistribution of speech (#OccupyWallStreet)

 

Bank Consolidation; h/t Angry Black Lady

As noted in last night’s post, Occupy Wall Street is an inchoate (I haven’t seen that word used as often in the popular press as I have these past two weeks) movement that drives the mainstream media kind of nuts with its inchoateness.  What are they protesting?  Why are they occupying?  What are their demands?  WHICH SIDE OF THE POLITICAL SPECTRUM CAN WE CLAIM THEY INHABIT???

Last night I wrote that:

This protest, the fact that people from all walks of life feel that the most effective method of expressing their outrage is a purposely undefined and undirected occupation of a public space, reflects the profound disillusionment in and failure of institutions in our society.

I think I dropped the thread of that argument a little bit prematurely, forgive me.  Why would so many people feel such a disillusionment with the institutions of our society?  My claim is that many of the institutions of which Americans at one time felt themselves to be a part of, both public institutions (as voters, taxpayers, and citizens) as well as private (as mortgage-holders, investors, or lessees) have systematically become more and more invested in conducting business for each others’ good, rather than for the common good.  The collusion between government and private institutions, to the detriment of the voter/consumer, has been rampant in the past decade.  From government officials leaving their posts to immediately go work as lobbyists, to government “regulators” proving their total capture to the interests they are supposedly regulating, and actively covering up negative information on behalf of their industry friends, there appears to be no separation between those who theoretically represent taxpayers and the industries they oversee.  Everybody is bought off.

While I would never claim to speak for the OWS movement, I think that the inchoate anger expressed in this movement is at least in part fueled by such resentments.  Who does government actually work for, anyways?  I have focused a lot of attention on this blog to the housing market, but allow me to address a timely blog post by financial analyst Barry Ritholtz:

This is no accident. Indeed, it was by design that execs in the banking sector, and their outside accountants, hatched a scheme in 2008 to hide their balance sheets from public view. The bankers had been lobbying the Financial Accounting Standards Board to change the rules that governed “Fair Value Measurements” also known as FAS157 (September 2006).

You may recall during 2008 this was referred to as “Mark-to-market” accounting.

Banks loved m2m during a boom period. M2M made the more unusual balance sheet holdings  — derivatives, the mortgage-backed securities (MBS), exotic liabilities, and other assets — look fantastic. The fair value measurements of these items — essentially, yesterday’s closing price — allowed the accounts to show enormous profits. Those were the underlying basis for huge bonuses, stock option grants and of course, company share prices.

The reality was quite a bit different. These were not equities or treasuries or corporate bonds — they were thinly traded items whose prices were ramping upwards on a sea of delusional optimism. As soon as the credit bubble ended and housing began to retreat, these assets would free fall like an Acme anvil in a Roadrunner cartoon — and the bankers were the Coyote.

Uh-oh, this was gonna be a problem. So the bankers began to lobby FASB to change the rules governing Fair Value Accounting. Sure, it was hugely helpful on the way up, but now, reporting actual holdings — previously marked at all time highs — was becoming problematic.

I had referenced this little-noticed, but highly significant accounting standards change in a posting from last year, which provides a fascinating segue into the point of this post:

As Eskow said above, the bankers just want to make it seem that they’ve actually produced some semblance of profits for their shareholders so they can continue to collect their exorbitant bonuses.  That greed leads the bankers to convince regulators to help them avoid realizing the losses they should rightfully incur for such terrible investments.  That dynamic then leads to continued uncertainty in the market, which causes the banks not to lend to businesses, individuals, or even to each other. Greed has never run so rampant in the streets, and it is now manifestly clear that it is the greed of the privileged few that is genuinely handcuffing any sort of economic recovery for the rest of us.  Government regulators have bought into this system for years – when Eliot Spitzer began to make a stink, he was publicly disgraced and muzzled quickly, lest his accusations about the rotting core of the financial system lead people to look too closely so that the house of cards fell. 

Government has been complicit in this scheme since day one, which is the real reason none of the fraudsters have been put in prison yet – the circle would likely extend too widely and might ensnare some of those who are supposed to be on the “good” team.  We can’t have change in this country until we have an honest accounting of the mistakes of the past, and I surely hope that the state Attorneys General are allowed to run their investigations as they see fit, with no White House interference.  The President’s actions in confronting this crisis, including the actions of his deputies, will show just how committed to change he really is.  (emphases mine)

Okay, well the incredibly flawed 50-state Attorneys General settlement deal appears to be fatally wounded, despite the Obama Administration’s best efforts to protect the precious constituents banks from having to own up to the rampant fraud they perpetuated throughout the mortgage market in the 2000s.  My hope last year was misplaced, truly.  Ritholtz on mark-to-market again:

The bottom line is this: Investors do not really have a clear idea of how healthy any of these banks truly are. We do not know the state of their balance sheets. We do not know what their exposures are to mortgages, to Europe, to Greece, etc. They could all be technically insolvent, as far as any investor can tell.

And that is exactly how the bankers wanted it.

But given the trouble in Europe, and the likely problems in housing if the US goes into a recession, Investors have decided they cannot take the risk of a holding an opaque, possibly under-capitalized probably over-leveraged financial firm blindly. They are telling the banks no thanks, we are not interested, we are going to be prudent and we have to assume the worst. Hence, for the second half of 2011, they have been selling off their holdings in these opaque, potentially insolvent too big to succeed entities.

Bankers, enjoy your beds. You made them, now lay in them . . .(emphasis mine)

And not to put too fine a point on it, but in the same post from last year I had quoted at length economics blogger Steve Waldman about a meeting he attended with Treasury officials and other prominent bloggers in Washington, which touched on the Home Affordable Mortgage Program, or HAMP, the mortgage-modification program:

The conversation next turned to housing and HAMP. On HAMP, officials were surprisingly candid. The program has gotten a lot of bad press in terms of its Kafka-esque qualification process and its limited success in generating mortgage modifications under which families become able and willing to pay their debt. Officials pointed out that what may have been an agonizing process for individuals was a useful palliative for the system as a whole. Even if most HAMP applicants ultimately default, the program prevented an outbreak of foreclosures exactly when the system could have handled it least. There were murmurs among the bloggers of “extend and pretend”, but I don’t think that’s quite right. This was extend-and-don’t-even-bother-to-pretend. The program was successful in the sense that it kept the patient alive until it had begun to heal. And the patient of this metaphor was not a struggling homeowner, but the financial system, a.k.a. the banks. Policymakers openly judged HAMP to be a qualified success because it helped banks muddle through what might have been a fatal shock. (emphases mine)

Sad to say, we know VERY WELL now that the patient has not even begun to “heal” – as noted in Ritholtz’ quotation from above.  Well-functioning markets require some measure of transparency in order to facilitate price discovery; the banking and housing sectors are far from transparency, even to this day.

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And yet, it was quite distinctly government actions, government interventions, which have helped prop up the zombie banks, despite the very real possibility that a number of them may be effectively insolvent.  Those banks have rewarded their executives with exorbitant bonuses and have lobbied hard against any regulations to rein in their excessive risk-taking, despite all of the government help they have willingly received (and asked for!) 

That our government, which supposedly is voted into power by us and represents us, is actively working against the interests of a broad range of Americans in perpetually siding with the banks is, I believe, a strong part of the Occupy Wall Street movement’s anger.  The people have no voice any longer in this schema – the “change agent” we voted into power in 2008 is perhaps as captive, if not even more so (and more subtly, I might add) to the moneyed interests of the country than was his predecessor.  And that’s saying something; something deeply unsettling. 

The conversation in this country between the institutions and the masses has been one-way for far too long, and I believe therein lies the power of Occupy Wall Street; they do not seek to add to the cacophony of voices that fill up the perpetually dead air of cable news, but rather simply, to be.  That is their protest, the being en masse, as I referenced last night.  It is to reclaim public spaces, and through their continued and determined presence, public discourse. 

JW Mason spoke to this dynamic movingly yesterday:

Most of us very seldom experience ourselves as political agents, in the sense of being active participants in the collective decision-making of our community. For better or worse, most of the time we delegate collective decision-making to specialists who represent us more or less faithfully, as the case may be. The only reason for protest -- for any kind of mass politics -- is that this system has broken down. The message of any protest is: There is a political subject, a We, that is not being represented. This, in the broadest possible way, is what the "99%" rhetoric is saying, and why it resonates. At some point, if a when movements like this are successful, some new more legitimate form of representation will be established, as people form new collective identities and new norms of collective action. But it's foolish to criticize an assertion of the failure of representation for not itself being an effective representative, with a specific set of demands and a strategy to carry them out. (emphasis mine)

The 99% want justice, we want rules to govern fair play, and we want to regain the sense that the odds are not stacked against us, as they have been for so long.  We cannot rely on elected officials to do our bidding, as their competing interests (primarily the overriding interest in re-election) will guarantee that the peoples’ interests are not fully represented.  The interests of the few tend to run counter to the interests of the many; how much more is this dynamic amplified when we are talking about the interests of the 1% in relation to the interests of the 99%?  “Policy” as currently constructed, is not working in favor of the polis, as one might hope, and the failure is so widespread, so systemic, that it is difficult to put the diagnosis into one coherent message. 

The inchoateness of the Occupy Wall Street “message” stems from that sheer magnitude of failure in our society, at all levels.  If we are going to vote and be taxed to pay for “representation” we better damn well get some adequate representation.  Alas, that is most definitely not happening at this stage in history. 

I plan on going to the local Occupy LA gathering tomorrow evening; I will share my thoughts afterwards on what I hope will be an inspiring event. 

The foreclosure fraud mess – a day of reckoning at last?

The foreclosure fraud case is one of the BIG stories I’ve been trying my best to follow lately.  We learned today that all 50 state Attorneys General have opened an investigation into mortgage industry practices:

The state attorneys general are looking at allegations some banks did not properly review files or submitted false statements to evict delinquent borrowers from their homes during a foreclosure crisis that is one of the most visible wounds of the 2007-2009 recession.

"We are in the fourth year of a housing and economic crisis that was brought on by lax practices of the mortgage lending industry," Minnesota Attorney General Lori Swanson said in a statement.

"The latest allegations of corner-cutting and slipshod paperwork are troubling, but perhaps not surprising."

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The states are investigating the use of "robo-signers" -- people who sign hundreds of affidavits a day -- by banks and companies that collect monthly mortgage payments. It is alleged they did not properly review the documents they were signing.

"What we have seen are not mere technicalities, as some suggest," Ohio Attorney General Richard Cordray said.

So if there was systematic fraud perpetrated throughout the mortgage lending industry, one would hope we’d finally see some of these scoundrels locked up for awhile. 

Incidentally, one of the last times that all 50 state Attorneys General agreed to pursue a coordinated investigation, guess what the alleged crime was?  Predatory lending.  And guess who took the lead in making the public case for the investigation – then-Governor of New York Eliot Spitzer.  Spitzer came out swinging against the mortgage lending industry and the banks at large in a February 14, 2008 Washington Post piece that is worth excerpting from at length (but well worth a read in its entirety):

Several years ago, state attorneys general and others involved in consumer protection began to notice a marked increase in a range of predatory lending practices by mortgage lenders. Some were misrepresenting the terms of loans, making loans without regard to consumers' ability to repay, making loans with deceptive "teaser" rates that later ballooned astronomically, packing loans with undisclosed charges and fees, or even paying illegal kickbacks. These and other practices, we noticed, were having a devastating effect on home buyers. In addition, the widespread nature of these practices, if left unchecked, threatened our financial markets.

Even though predatory lending was becoming a national problem, the Bush administration looked the other way and did nothing to protect American homeowners. In fact, the government chose instead to align itself with the banks that were victimizing consumers.

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Let me explain: The administration accomplished this feat through an obscure federal agency called the Office of the Comptroller of the Currency (OCC). The OCC has been in existence since the Civil War. Its mission is to ensure the fiscal soundness of national banks. For 140 years, the OCC examined the books of national banks to make sure they were balanced, an important but uncontroversial function. But a few years ago, for the first time in its history, the OCC was used as a tool against consumers.

In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government's actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules. (emphasis mine)

The Bush Administration intervened to stop the states from investigating and enforcing their own predatory lending laws, which I think just might qualify as an egregious breach of the sacredness of “states’ rights” in GOP doctrine, eh?

But as we all now know, hubris brought Spitzer’s gubernatorial reign down (but he’s not out, have you seen him on CNN recently?) with the high-priced call girl scandal he was ensnared in just a few weeks after he wrote his Valentine’s Day article.  Let me make a quick aside at this point and say in no uncertain terms that I am not arguing that what Spitzer did was by any means acceptable.  Now, that being said, could there be any coincidence between his article broadcasting the Bush Administration’s outrageous actions on behalf of predatory lenders and his being outed as a john?  Let’s look a bit further:

Spitzer's fall was all the more stunning because he had been elected in November 2006 with 69 percent of the vote, the most ever in a New York gubernatorial race, and some Democrats even said he could possibly become the country's first Jewish president.

But his life and career began unraveling last week, when federal agents, acting on wiretaps, busted a high-class New Jersey-based prostitution ring, called Emperors Club VIP, and arrested four people. The criminal complaint listed an anonymous "Client 9," who was heard calling the escort service to arrange for a call girl named "Kristen" to meet him for a Feb. 13 tryst at Washington's Mayflower Hotel.

The client allegedly paid for the woman's train fare from New York to Washington and $4,300 for a two-hour session. Law enforcement sources confirmed this week that Client 9 was Spitzer.

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There are also questions about the identities of the other wealthy clients of the Emperors Club VIP. The criminal complaint unsealed last week made reference to 10 clients without naming them; only Spitzer has been identified as Client 9. (all emphases mine)

Interesting that Spitzer was the only client whose name was leaked identified to the press, especially because he was later cleared of all charges:

The details of Mr. Spitzer’s financial transactions — how he took money from his personal accounts and sent it to the prostitution ring’s front company, QAT International — were always the crucial questions in the case. Prosecutors, from the start, were trying to determine whether there was ample evidence to charge Mr. Spitzer with a crime called structuring, which makes it illegal to conduct financial transactions in a way intended to conceal their source and purpose.

Michael Horowitz, another former chief of the public corruption unit in Manhattan, said that it was rare for prosecutors to pursue a structuring charge without a substantive underlying crime like money laundering or drug trafficking. He suggested that a prostitution case, which the government was unlikely to prosecute anyway, was not enough to undergird a structuring charge. (emphasis mine)

So the government knew that Spitzer’s crimes were not going to lead him to prison, and yet it is uncommon for sitting politicians involved in sex scandals to be forced out of office, look at South Carolina Governor Mark Sanford, US Senator from Nevada John Ensign, and US Senator from Louisiana David Vitter (who was also caught in a prostitution scandal – the DC Madam case).  None of them were forced out of their jobs; do the rules bend when Republicans are involved, or was Spitzer more the exception to the rule in being forced out?  And why does it appear that some people in high places decided to drop the axe on Spitzer to muzzle him just after he publicly charged that the Bush Administration aided and abetted predatory lenders?

That line of questioning leads us back to the now-unfolding foreclosure fraud situation, explained in great detail here by Mike Konczal of the Roosevelt Institute.  The banks, as we all are well aware, benefited from a massive infusion of taxpayer largess in the form of the bailout (TARP) of October 2008 (remember it was Bush’s bailout folks, no matter what the Tea Party may wrongly claim) and that the bailouts served to rehabilitate a good chunk of the banks’ balance sheets.  But the banks still were forced to contend with the problem of widespread despair in the housing markets, and with the fact that many of the houses that they owned were, in fact, overvalued assets due to the nationwide plunge in home values. 

Because the banks have gotten “too-big-to-fail” (which is what necessitated the bailouts in the first place) as I’ve discussed in a previous posting at length, the government has continued to help prop the banks up, lest the entire financial apparatus collapse entirely.  Programs such as the Home Affordable Modification Program (HAMP) that are ostensibly designed to incentivize banks to help homeowners renegotiate their mortgages on more favorable terms, have been shown to serve the banks’ interests entirely.  From a report by Steve Waldman on a meeting Geithner and other top Treasury officials had with financial bloggers over the summer:

The conversation next turned to housing and HAMP. On HAMP, officials were surprisingly candid. The program has gotten a lot of bad press in terms of its Kafka-esque qualification process and its limited success in generating mortgage modifications under which families become able and willing to pay their debt. Officials pointed out that what may have been an agonizing process for individuals was a useful palliative for the system as a whole. Even if most HAMP applicants ultimately default, the program prevented an outbreak of foreclosures exactly when the system could have handled it least. There were murmurs among the bloggers of “extend and pretend”, but I don’t think that’s quite right. This was extend-and-don’t-even-bother-to-pretend. The program was successful in the sense that it kept the patient alive until it had begun to heal. And the patient of this metaphor was not a struggling homeowner, but the financial system, a.k.a. the banks. Policymakers openly judged HAMP to be a qualified success because it helped banks muddle through what might have been a fatal shock. I believe these policymakers conflate, in full sincerity, incumbent financial institutions with “the system”, “the economy”, and “ordinary Americans”. Treasury officials are not cruel people. I’m sure they would have preferred if the program had worked out better for homeowners as well. But they have larger concerns, and from their perspective, HAMP has helped to address those. (all emphases mine)

There you go, policymakers playing kabuki with taxpayers in order to help keep the banks who got us into this mess alive…what a grotesque situation!

And yet, after all of this has happened, some are saying, like former financial executive RJ Eskow, that the foreclosure fraud scandal may just show that the emperor (the banks in this case) has no clothes:

The foreclosure fraud scandal is a big deal (or a big "effin'" deal, as Joe Biden might say). But its real significance is an even bigger deal. Foreclosure fraud is one domino, and if it falls others will follow. The result could be an end to the "invisible bailout" -- the one you never hear about, the one that forces millions of people to subsidize bad lending practices in order to prop up Wall Street.

The invisible bailout is the reason why the government isn't pushing to freeze foreclosures. If the foreclosure process is halted and lending practices are thoroughly investigated, it might eventually force bankers to own up to their own lawlessness -- and write down billions of dollars in artificially inflated assets. How are they going to pay themselves record bonuses if that happens?

This is where it gets really ugly – our somewhat/perhaps/maybe/kinda recovering economy could well be plunged into another, perhaps deeper financial downturn if widespread fraud is in fact found among the banks’ mortgages.  If nobody knows who rightfully holds the title to a home, how could they possibly know its market value?  The entire financial system has been rebuilt (if one could even call it that) after the 2008 financial crisis on a foundation of nearly worthless and potentially fraudulent mortgages, and “irresponsible homeowners” have been to blame for not only their own troubles, but those of the entire financial system.  Eskow continues:

Nobel prizewinner Joseph Stiglitz, who also bears the distinction of having been correct about the housing bubble, thinks it's time for the banks to write down the excess value of these loans. As Stiglitz observes, that will be painful for the banks in the short term, although it would be "nothing in comparison to the suffering they have inflicted on people throughout the rest of the global economy."

But the administration's reluctant to do that. That's why we heard such tepid remarks from the White House about the foreclosure fraud scandal over the weekend. If the foreclosure fraud issue is pursued too aggressively, it throws 41% of all expected housing sales into question. It raises even more questions about the ownership of millions of loans in good standing, potentially giving homeowners leverage to renegotiate based on the actual market value of their homes. And it reopens the issue of "writedowns."

Illegal submission of foreclosure documents was part of a larger cover-up. People need to be arrested for it -- but that, of course, would open up a larger can of worms. The legal process could very well reveal the extent of the title problem, as well as other potentially widespread criminal practices.

So there you have it folks, the states are now going after the big Wall Street fish again, perhaps following up on the forestalled investigations they were set to launch back in 2003 when all of this mortgage madness could have been nipped in the bud.  In case you are in any doubt about just what was produced by the collusion between government and Wall Street, Ezra Klein interviewed financial analyst Janet Tavakoli last week, and here’s her response when being asked what this all means for the banks (after calling this crisis “the biggest fraud in the history of the capital markets”):

When we had the financial crisis, the first thing the banks did was run to Congress and ask for accounting relief. They asked to be able to avoid pricing this stuff at the price where people would buy them. So no one can tell you the size of the hole in these balance sheets. We’ve thrown a lot of money at it. TARP was just the tip of the iceberg. We’ve given them guarantees on debts, low-cost funding from the Fed. But a lot of these mortgages just cannot be saved. Had we acknowledged this problem in 2005, we could’ve cleaned it up for a few hundred billion dollars. But we didn’t. Banks were lying and committing fraud, and our regulators were covering them and so a bad problem has become a hellacious one. (emphases mine)

As Eskow said above, the bankers just want to make it seem that they’ve actually produced some semblance of profits for their shareholders so they can continue to collect their exorbitant bonuses.  That greed leads the bankers to convince regulators to help them avoid realizing the losses they should rightfully incur for such terrible investments.  That dynamic then leads to continued uncertainty in the market, which causes the banks not to lend to businesses, individuals, or even to each other. Greed has never run so rampant in the streets, and it is now manifestly clear that it is the greed of the privileged few that is genuinely handcuffing any sort of economic recovery for the rest of us.  Government regulators have bought into this system for years – when Eliot Spitzer began to make a stink, he was publicly disgraced and muzzled quickly, lest his accusations about the rotting core of the financial system lead people to look too closely so that the house of cards fell. 

Government has been complicit in this scheme since day one, which is the real reason none of the fraudsters have been put in prison yet – the circle would likely extend too widely and might ensnare some of those who are supposed to be on the “good” team.  We can’t have change in this country until we have an honest accounting of the mistakes of the past, and I surely hope that the state Attorneys General are allowed to run their investigations as they see fit, with no White House interference.  The President’s actions in confronting this crisis, including the actions of his deputies, will show just how committed to change he really is.