FBI investigating companies at heart of meltdown
By LARA JAKES JORDAN, Associated Press Writer
http://hosted.ap.org/dynamic/stories/F/FINANCIAL_MELTDOWN_INVESTIGATION?SITE=FLPET&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2008-09-23-19-12-52
Two law enforcement officials said Tuesday the FBI is looking at potential fraud by mortgage finance giants Fannie Mae and Freddie Mac, and insurer American International Group Inc. Additionally, a senior law enforcement official said Lehman Brothers Holdings Inc. also is under investigation.
The inquiries will focus on the financial institutions and the individuals that ran them, the senior law enforcement official said.
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Comment:
This is at minimum the kind of thing we should be expecting even as we consider what to do next. You had better believe that crimes were committed and that the people that perpetrated them need to be held accountable.
I'm just not seeing the emergency. That's not the same as saying we should do nothing at all. But first, let's do no further harm.
And I certainly oppose bailing out wealthy bondholders, further enriching the likes of Warren Buffett and Paulson's buddies at Goldman Sachs and in China, and then actually allowing the wizards of Wall Street to profit from their crimes. Not on the back of the taxpayer! Not when ordinary folks and families are actually about to be moved out into the street.
And maybe we need to be rethinking bankruptcy laws and student loan forgiveness. Predatory lending practices victimize people of all walks of life while they are trying to simply eek out a living.
Wednesday, September 24, 2008
Crisis? What Crisis?
Journalists, start your skepticism.
by David Cay Johnston, Poyntor Forum
http://poynter.org/forum/view_post.asp?id=13611
Ask this question -- are the credit markets really about to seize up?
If they are then lots of business owners should be eager to tell how their bank is calling their 90-day revolving loans, rejecting new loans and demanding more cash on deposit. I called businessmen I know yesterday and not one of them reported such problems. Indeed, Citibank offered yesterday to lend me tens of thousands of dollars on my signature at 2.99 percent, well below the nearly 5 percent inflation rate. That offer came after I said no last week to a 4.99 percent loan.
If the problem is toxic mortgages then how come they are still being offered all over the Internet? On the main page AOL generates for me there is an ad for a 1.9% loan (which means you pay that interest rate and the rest of the interest is added to your balance due.) Why oh why or why would taxpayers be bailing out banks that are continuing to sell these toxic loans?
How does the proposal help Joe and Mary Sixpack who can afford their current monthly payment, but not the increased interest rate that has been or soon will take effect? Every day bankers work out loans with customers -- so why are taxpayers being asked to act when banks are largely on strike, refusing to negotiate revised deals with many loan customers?
How about interviewing small landlords who were drawn into these toxic loans. Are banks negotiating with them? If not it means more foreclosures and renters who had nothing to do with this being evicted. Ask why banks are refusing (landlords I spoke to said they are) to negotiate with small landlords.
What steps are being taken to take back bonuses, fees and other compensation from the folks who got rich selling toxic mortgages and illiquid investments that Secretary Paulsen claims are threatening the whole system.
...
Why have both Goldman Sachs and Morgan Stanley made clear that they want IN on this deal? Get skeptical and ask the basic questions -- who benefits, how much and what makes this plan so attractive that Goldman and MS want to participate? Ditto for GE. That they are others want to be included should prompt a great deal of skeptical questioning.
-----
Comment:
Yes, and just today it seems that Warren Buffett wants to grab some cash with both hands too. Berkshire Hathaway just bought $5 billion of preferred shares from Goldman Sachs with the further option to buy another $5 billion of common stock.
If I had the means to get to the table with that kind of money behind me I would feast long and deep on the delicious giveaway D.C. is preparing for Wall Street. It really is just like Las Vegas. After a hard day's gambling and almost losing your shirt you can still make it the prime rib dinners available all over town.
Greed. It's what's for dinner!
by David Cay Johnston, Poyntor Forum
http://poynter.org/forum/view_post.asp?id=13611
Ask this question -- are the credit markets really about to seize up?
If they are then lots of business owners should be eager to tell how their bank is calling their 90-day revolving loans, rejecting new loans and demanding more cash on deposit. I called businessmen I know yesterday and not one of them reported such problems. Indeed, Citibank offered yesterday to lend me tens of thousands of dollars on my signature at 2.99 percent, well below the nearly 5 percent inflation rate. That offer came after I said no last week to a 4.99 percent loan.
If the problem is toxic mortgages then how come they are still being offered all over the Internet? On the main page AOL generates for me there is an ad for a 1.9% loan (which means you pay that interest rate and the rest of the interest is added to your balance due.) Why oh why or why would taxpayers be bailing out banks that are continuing to sell these toxic loans?
How does the proposal help Joe and Mary Sixpack who can afford their current monthly payment, but not the increased interest rate that has been or soon will take effect? Every day bankers work out loans with customers -- so why are taxpayers being asked to act when banks are largely on strike, refusing to negotiate revised deals with many loan customers?
How about interviewing small landlords who were drawn into these toxic loans. Are banks negotiating with them? If not it means more foreclosures and renters who had nothing to do with this being evicted. Ask why banks are refusing (landlords I spoke to said they are) to negotiate with small landlords.
What steps are being taken to take back bonuses, fees and other compensation from the folks who got rich selling toxic mortgages and illiquid investments that Secretary Paulsen claims are threatening the whole system.
...
Why have both Goldman Sachs and Morgan Stanley made clear that they want IN on this deal? Get skeptical and ask the basic questions -- who benefits, how much and what makes this plan so attractive that Goldman and MS want to participate? Ditto for GE. That they are others want to be included should prompt a great deal of skeptical questioning.
-----
Comment:
Yes, and just today it seems that Warren Buffett wants to grab some cash with both hands too. Berkshire Hathaway just bought $5 billion of preferred shares from Goldman Sachs with the further option to buy another $5 billion of common stock.
If I had the means to get to the table with that kind of money behind me I would feast long and deep on the delicious giveaway D.C. is preparing for Wall Street. It really is just like Las Vegas. After a hard day's gambling and almost losing your shirt you can still make it the prime rib dinners available all over town.
Greed. It's what's for dinner!
Tuesday, September 23, 2008
The Fake Crisis Hilarious Update
Paulson eyes rescue plan backing
http://news.bbc.co.uk/1/hi/business/7631500.stm
BBC Business Editor Robert Peston said the US Treasury Secretary's proposal to buy bad mortgage debts from banks represented "the mother of all bail-outs".
He said that during the hearing Fed chairman Mr Bernanke disclosed that the Treasury would attempt to buy these debts from banks at close to their "hold-to-maturity" value, not the market value.
"In practice, it means banks who sell their debts to the Treasury would receive cash equivalent to something like twice the value in their books of these poisonous assets," our correspondent said.
"In other words they would book a profit from selling to taxpayers.
-----
Comment:
You have to admire the sheer chutzpah necessary to make these kinds of deals in the light of day. I don't mean to be vulgar but it's rather as if a perfect stranger walked up to you on the street at noon one day and politely said, "I'm going to anally rape you without lube." And then smiled broadly so that you would know he was serious.
http://news.bbc.co.uk/1/hi/business/7631500.stm
BBC Business Editor Robert Peston said the US Treasury Secretary's proposal to buy bad mortgage debts from banks represented "the mother of all bail-outs".
He said that during the hearing Fed chairman Mr Bernanke disclosed that the Treasury would attempt to buy these debts from banks at close to their "hold-to-maturity" value, not the market value.
"In practice, it means banks who sell their debts to the Treasury would receive cash equivalent to something like twice the value in their books of these poisonous assets," our correspondent said.
"In other words they would book a profit from selling to taxpayers.
-----
Comment:
You have to admire the sheer chutzpah necessary to make these kinds of deals in the light of day. I don't mean to be vulgar but it's rather as if a perfect stranger walked up to you on the street at noon one day and politely said, "I'm going to anally rape you without lube." And then smiled broadly so that you would know he was serious.
The Fake Crisis Update
These are my favorite links of the day. We're at the point where there is a good possibility that this won't happen after all. People weren't that fooled by the White House demand for an immediate response. See the last link...
-----
An Open Letter to the U.S. Congress Regarding the Current Financial Crisis
http://www.hussmanfunds.com/wmc/wmc080922.htm
As an economist and investment manager, I am concerned that the plan advocated by Treasury is essentially a plan to bail out the bondholders of financial institutions that made bad lending decisions, with little help to homeowners that are actually in financial distress. It is difficult to believe that the U.S. government is contemplating taking on the bad assets of these institutions at probable taxpayer loss and effectively immunizing the bondholders (and shareholders) of these companies.
While it is certainly in the public interest to avoid the dislocations that would result from a disorderly failure of highly interconnected financial institutions, there are better ways for public funds to accomplish this, other than by protecting corporate bondholders while homeowners remain in distress.
-----
There Is No Crisis-Summary
http://openleft.com/showDiary.do?diaryId=8451
[Summary: Chris Bowers makes some really good points about the lack of a case either to pursue the bailout in the first place and the need to rush into it in the second place. Bush would seem to want to give his corporate buddies one last handout and was just faced down on that very issue.]
-----
German Politicians Wary of US Financial Rescue Plans
http://www.dw-world.de/dw/article/0,2144,3660839,00.html
A growing chorus of German politicians questioned over the weekend whether the unprecedented US rescue package meant to inject liquidity into the financial system would help to stem the crisis which has sent world markets into a tailspin..."I have doubts whether that method is really the most clever one," Michael Meister, deputy parliamentary leader of Chancellor Merkel's conservative Christian Democratic Party (CDU) told business daily Handelsblatt...Meister suggested that the $700 billion bailout by the US government could lay the fundaments for the next crisis. He compared it to the massive slashing of interest rates by the US Federal Reserve in the aftermath of the terrorist attacks of Sept 11, 2001 which he said had sowed the seeds for the current turbulence in capital markets...Much like Chancellor Angela Merkel, Meister urged more regulation of financial markets. It is important to think about measures such as banning speculation on falling shares rather than using taxpayers' money, Meister said..."I don't think it's appropriate that we use taxpayers' money in Germany to intervene in the markets," he added.
-----
Paulson: I Didn’t Suggest Oversight In The Bailout Plan Because That Would Be ‘Presumptuous’
http://thinkprogress.org/2008/09/23/paulson-oversight/
[Summary: The lying sack of shit, Paulson, argues that his proposal of last week was just a first draft and that he wasn't actually trying to cram unconstitutional shit down the nation's throat. It's as if he imagines the whole nation has forgotten the exact wording of the plan he offered last week.]
-----
House GOP rises up against Cheney
http://dyn.politico.com/printstory.cfm?uuid=9057754C-18FE-70B2-A8C13EAACA75F308
House Republicans rose up en masse against their vice president on Tuesday morning to blast an administration proposal that would grant Treasury historic authority to start buying hundreds of billions of dollars in devalued mortgage-related assets, according to members present.
-----
Dodd Financial Rescue Mark
http://delong.typepad.com/sdj/2008/09/socialism-in-on.html
[Summary: This comes via Brad DeLong's blog on economics and Scribd, this is an alternative plan to the Paulson blank check and absolute authority conjob. I'm not in love with the proposal, but it's far better than Paulson's idiocy.]
-----
The Bailout Plan: Welcome to Economic Shock and Awe
http://www.huffingtonpost.com/arianna-huffington/the-bailout-plan-welcome_b_128450.html
In the course of selling us on buying, the market-worshippers shredded the modern social contract, the hard-fought consensus that had emerged since the New Deal, which ordered our political priorities, and expressed both our communal concern for the most vulnerable members of society and our disapproval of huge inequalities. We were now supposed to believe that all could be left up to the soulless, self-correcting calculus of supply and demand. Government involvement was an anachronism, regulatory oversight an impediment.
The last few weeks have demolished that notion. In the battle over the proper role of government, the forces of the Right, the high priests of the church of the Free Market -- including Bush, Paulson, and the Masters of Wall Street -- have suffered a monumental defeat. So why are we allowing them to dictate the terms of their surrender?
-----
Chris Dodd Stares Down Paulson
http://firedoglake.com/2008/09/22/chris-dodd-stares-down-paulson/
So there was "Goldman" Hank, holding a gun on the economy and staring Congress down. "Give me the 700 billion, or the economy gets it!" he threatened. For two days it looked like he was going to get away with it, 700 billion dollars to spend on the Wall Street gang, the boys who'd already shot the economy up so bad it was in danger of bleeding to death.
Then Marshal Dodd came swinging through doors, shotgun in hand, and said "not so fast Hank. Put the gun down, and back away from the economy. We're going to do this my way."
For a moment calm reigned, then from off one side came a high pitched squeak, "you just put down that gun Dodd," said Bush as he leveled his blunderbuss "the Veto" at Dodd, "and you let my good friend Hank walk away with the money or I'll use this gun." He swivelled and instead of aiming it at Dodd, put its muzzle right against the economy's head. "I'll do it. Don't think I won't! I've killed an economy before!"
Hand still on the trigger, Dodd glanced over at Reid. The old man's fighting days, some said, were long gone. Dodd hoped Reid had one big fight left in him. If he didn't, the economy was done, and Paulson would get away, scot-free.
-----
An Open Letter to the U.S. Congress Regarding the Current Financial Crisis
http://www.hussmanfunds.com/wmc/wmc080922.htm
As an economist and investment manager, I am concerned that the plan advocated by Treasury is essentially a plan to bail out the bondholders of financial institutions that made bad lending decisions, with little help to homeowners that are actually in financial distress. It is difficult to believe that the U.S. government is contemplating taking on the bad assets of these institutions at probable taxpayer loss and effectively immunizing the bondholders (and shareholders) of these companies.
While it is certainly in the public interest to avoid the dislocations that would result from a disorderly failure of highly interconnected financial institutions, there are better ways for public funds to accomplish this, other than by protecting corporate bondholders while homeowners remain in distress.
-----
There Is No Crisis-Summary
http://openleft.com/showDiary.do?diaryId=8451
[Summary: Chris Bowers makes some really good points about the lack of a case either to pursue the bailout in the first place and the need to rush into it in the second place. Bush would seem to want to give his corporate buddies one last handout and was just faced down on that very issue.]
-----
German Politicians Wary of US Financial Rescue Plans
http://www.dw-world.de/dw/article/0,2144,3660839,00.html
A growing chorus of German politicians questioned over the weekend whether the unprecedented US rescue package meant to inject liquidity into the financial system would help to stem the crisis which has sent world markets into a tailspin..."I have doubts whether that method is really the most clever one," Michael Meister, deputy parliamentary leader of Chancellor Merkel's conservative Christian Democratic Party (CDU) told business daily Handelsblatt...Meister suggested that the $700 billion bailout by the US government could lay the fundaments for the next crisis. He compared it to the massive slashing of interest rates by the US Federal Reserve in the aftermath of the terrorist attacks of Sept 11, 2001 which he said had sowed the seeds for the current turbulence in capital markets...Much like Chancellor Angela Merkel, Meister urged more regulation of financial markets. It is important to think about measures such as banning speculation on falling shares rather than using taxpayers' money, Meister said..."I don't think it's appropriate that we use taxpayers' money in Germany to intervene in the markets," he added.
-----
Paulson: I Didn’t Suggest Oversight In The Bailout Plan Because That Would Be ‘Presumptuous’
http://thinkprogress.org/2008/09/23/paulson-oversight/
[Summary: The lying sack of shit, Paulson, argues that his proposal of last week was just a first draft and that he wasn't actually trying to cram unconstitutional shit down the nation's throat. It's as if he imagines the whole nation has forgotten the exact wording of the plan he offered last week.]
-----
House GOP rises up against Cheney
http://dyn.politico.com/printstory.cfm?uuid=9057754C-18FE-70B2-A8C13EAACA75F308
House Republicans rose up en masse against their vice president on Tuesday morning to blast an administration proposal that would grant Treasury historic authority to start buying hundreds of billions of dollars in devalued mortgage-related assets, according to members present.
-----
Dodd Financial Rescue Mark
http://delong.typepad.com/sdj/2008/09/socialism-in-on.html
[Summary: This comes via Brad DeLong's blog on economics and Scribd, this is an alternative plan to the Paulson blank check and absolute authority conjob. I'm not in love with the proposal, but it's far better than Paulson's idiocy.]
-----
The Bailout Plan: Welcome to Economic Shock and Awe
http://www.huffingtonpost.com/arianna-huffington/the-bailout-plan-welcome_b_128450.html
In the course of selling us on buying, the market-worshippers shredded the modern social contract, the hard-fought consensus that had emerged since the New Deal, which ordered our political priorities, and expressed both our communal concern for the most vulnerable members of society and our disapproval of huge inequalities. We were now supposed to believe that all could be left up to the soulless, self-correcting calculus of supply and demand. Government involvement was an anachronism, regulatory oversight an impediment.
The last few weeks have demolished that notion. In the battle over the proper role of government, the forces of the Right, the high priests of the church of the Free Market -- including Bush, Paulson, and the Masters of Wall Street -- have suffered a monumental defeat. So why are we allowing them to dictate the terms of their surrender?
-----
Chris Dodd Stares Down Paulson
http://firedoglake.com/2008/09/22/chris-dodd-stares-down-paulson/
So there was "Goldman" Hank, holding a gun on the economy and staring Congress down. "Give me the 700 billion, or the economy gets it!" he threatened. For two days it looked like he was going to get away with it, 700 billion dollars to spend on the Wall Street gang, the boys who'd already shot the economy up so bad it was in danger of bleeding to death.
Then Marshal Dodd came swinging through doors, shotgun in hand, and said "not so fast Hank. Put the gun down, and back away from the economy. We're going to do this my way."
For a moment calm reigned, then from off one side came a high pitched squeak, "you just put down that gun Dodd," said Bush as he leveled his blunderbuss "the Veto" at Dodd, "and you let my good friend Hank walk away with the money or I'll use this gun." He swivelled and instead of aiming it at Dodd, put its muzzle right against the economy's head. "I'll do it. Don't think I won't! I've killed an economy before!"
Hand still on the trigger, Dodd glanced over at Reid. The old man's fighting days, some said, were long gone. Dodd hoped Reid had one big fight left in him. If he didn't, the economy was done, and Paulson would get away, scot-free.
Reverse Robin Hood: Privatizing Gains and Socializing Risk
[N.B. This post is mainly a string of quotes from various sources that I have attempted to weave together into a narrative web of ideas. I wanted to engage this complex material with reputable sources to answer these three main questions: What exactly happened to the economy? How did it start? What do we do now, if anything?]
The claim is that we are faced with both a national and global financial crisis. Before we accept either assertion we need to dig into the history of recent events. Who intends to act upon this crisis and who is taking a "wait and see" approach? As you shall see, things are not what they seem and elsewhere many people seem substantially untroubled by what is taking place. Markets correct themselves. Some people win. Some people lose. We cannot save everyone. Maybe we shouldn't save anyone at all.
It starts with overweening greed and "globalization."
In the year 2000 the total amount of money available for financial transactions was the equivalent of a mere $36 trillion. Globalization and the resulting economic growth of markets doubled that amount of money so that by the year 2006 international investors were looking for ways to invest their now $70 trillion and still make a handsome profit. The problem was that there really wasn't $70 trillion worth of good investments to be had. Unsatisfied with a few paltry percentage points to be made on their money per annum with US Treasury Bonds, the investors wanted yields of 10-15%. 20% if they could get it. Now I don't care what anyone else tells you, but when the returns are that high there is risk and every investor knows that fact. But international investors wanted to be lied to and told that they realistically could be making that kind of return on their money. With that $70 trillion burning holes in pockets all over the world you just know that someone was going to step up and give those greedy bastards exactly what they wanted: a good swindling! Enter a new form of investment: the CDO, mortgage securities, etc. These various financial instruments are basically packaged up versions of bad mortgages, leveraged time and again, until they are made to look like good investments. But you've heard that old cliche: you can't make a silk purse from a sow's ear. What they were doing was taking bad mortgages - desired by greedy and unscrupulous borrowers against the equity in their homes and brokered by greedy and unscrupulous lenders who were lying their asses off in order to cash out their commissions - and selling them off as packaged deals higher up the financial food chain. The claim was that while each mortgage might be bad individually, taken as a whole they would perform very well because the real estate bubble would simply never pop and just keep expanding ad infinitum. Uh huh, that's what they wanted to believe. Sure, they could have made much safer investments but you know how it goes: live fast, spawn, and die. That's the new ethic of the globalized world. But how could anyone get away with selling this toxic waste mortgage manure to someone with the claim that it was as solid an investment as US Treasury Bonds? Isn't that a lie on its face? Yes, it is- but the reason they got away with it is that they used inaccurate data models to support the logic of these doomed to fail investment instruments. You might be wondering how and why these toxic waste mortgages exist in the first place. The answer to that is predictable: overweening greed and deregulation. As it turns out, without step by step regulation and oversight people often succumb to greed and the temptations of fraud. Who knew?! [The above is my own brutal redaction of what you could hear and read at "This American Life."]
Source: http://www.thisamericanlife.org/Radio_Episode.aspx?episode=355
Transcript (PDF): http://www.thisamericanlife.org/extras/radio/355_transcript.pdf
Every industry wants you to believe that they are owed a deregulated environment so that they can operate as they please. The claim is that the extravagantly wealthy upper class creates jobs because of the restaurants they patronize, the various services they use, the houses they buy, the cars they drive, the Manolo Blahnik shoes they buy their mistresses, the roses and jewelry they buy for their wives, and the housekeepers and gardeners that they employ. So, perhaps you want to support the bailout simply because the fallout will displace so many persons in such service and employ. But one's job is only a matter of chance. Everybody that works for Wall Street directly or indirectly would be working somewhere else if it didn't exist. Claiming that their jobs create other jobs may have some truth to it, but that's trickle down economics at its worst and ugliest - you don't get to keep your job after you screw things up, you lose your job! You don't get bailed out and you don't get a raise. Wall Street was significantly deregulated in the late 1990s but instead of creating a robust and healthy economy they have bled it almost dry. Personally, I don't think that such actions merit a reward.
D.C. and Wall Street people have been whining about how important and necessary the bailout is and how it has to happen right now to save the global economy. United States Treasury Secretary Henry Paulson had this to say:
"The credit markets are still very fragile right now and frozen...We need to deal with this and deal with it quickly." Source: http://www.huffingtonpost.com/2008/09/21/paulson-resisting-democra_n_128035.html
Who is this guy Henry Merritt Paulson Jr? He served under John Ehrlichman in the Nixon administration. He's the former chief executive of Goldman Sachs. Could he just be there to enrich his buddies at Goldman Sachs and also his elite pals in China? Did you know that they were planning to enrich foreign banks and investors with the bailout?
"Paulson's Conflicts Of Interest Spark Concern"
"I think that Hank Paulson's corporate...record is very important. While he was a Goldman Sachs, the company was buying up a lot of Chinese banks in particular, and at the time of his nomination, there were very serious questions raised about the conflicts of interest involved, and where his priorities are, and who he really is looking after."...Moreover, as Bloomberg News reported: "Goldman Sachs Group Inc. and Morgan Stanley may be among the biggest beneficiaries of the $700 billion U.S. plan to buy assets from financial companies while many banks see limited aid..."
Source: http://www.huffingtonpost.com/2008/09/22/paulsons-conflicts-of-int_n_128476.html
Treasury Secretary Henry Paulson confirmed the change on ABC's "This Week," telling George Stephanopoulos that coverage of foreign-based banks is "a distinction without a difference to the American people." Source: http://www.politico.com/news/stories/0908/13690.html
Hey, it makes a difference to me! I want to support a way of life similar to my own, not the way of life under the quasi-capitalistic, totalitarian regime of communist China! These gamblers at the tables on Wall Street need to be made to live with the result of their own foolish greed just like all the idiots that go Las Vegas every day. These guys gamble their fortunes away and now want to pass the hat around. And who will join the American people in this show of extravagant largesse to the sad investor class? No one is who:
But there was little appetite to mimic Paulson's scheme to buy up toxic mortgage-related debt from financial firms..."At the moment, I don't think Japan needs to launch a program similar to that of the United States," Japanese Vice Finance Minister Kazuyuki Sugimoto told reporters in Tokyo, echoing similar comments from France, Britain and Germany...The European Union also made it clear that it would not be joining a rescue package. EU Monetary Affairs Commissioner Joaquin Almunia told a conference in Slovakia that individual national governments would have to decide on their own..."It's up to them to consider whether they can follow this initiative," he said. Source: http://www.reuters.com/articlePrint?articleId=USLM62629820080922
We have to go this one alone. So, how much is it going to cost Joe and Jane Sixpack? Oh, you know, not too much...
With the cost of the proposed bailout effort equal to about $2,000 for every man, woman and child in the United States, Democrats began pushing for language in the rescue plan that would steers additional aid to homeowners struggling to stay in their homes and prevent foreclosures. Source: http://www.miamiherald.com/news/politics/AP/story/695587.html
Well, that's an interesting point. But don't these wizards of Wall Street really need the money quite badly?
In 2007, Wall Street's five biggest firms-- Bear Stearns, Goldman Sachs, Lehman Brothers, Merrill Lynch, and Morgan Stanley - paid a record $39 billion in bonuses to themselves...That's $10 billion more than the $29 billion loan taxpayers are making to J.P. Morgan to save Bear Stearns...Those 2007 bonuses were paid even though the shareholders in those firms last year collectively lost about $74 billion in stock declines --their worst year since 2002...If split equally among the approximately 186,000 workers at the former Big Five Houses, that bonus money means an average of $201,500 per person -- more than four times the $48,201 median household income in the U.S. last year. Source: http://blogs.abcnews.com/politicalpunch/2008/09/last-years-big.html
It almost seems as if you could take the bonuses handed out last year to these wizards of Wall Street and pay for parts of the bailout that way, right? Like gamblers at a fantasy high stakes table, these idiots want to gamble with the security of knowing they can't lose. Representative Barney Frank, Democrat of Massachusetts and chairman of the House Financial Services Committee, offered up the following comment on the bailout as from the perspective of one of the Wall Street wizards that put themselves into this mess:
"Heads I win, tails I break even." Source: http://www.nytimes.com/2008/09/21/business/21cong.html?pagewanted=print
Paulson's solution is simply to buy out the private losses with public funds. That is exactly the equivalent of reverse Robin Hood: privatizing gains and socializing risk! Here's more on his solution:
Paulson and the Federal Reserve are trying to replay the bailout approach used in the 1980s for the savings and loan crisis, but this situation is utterly different. The failed S&Ls held real assets--property, houses, shopping centers--that could be readily resold by the Resolution Trust Corporation at bargain prices. This crisis involves ethereal financial instruments of unknowable value--not just the notorious mortgage securities but various derivative contracts and other esoteric deals that may be virtually worthless...Despite what the pols in Washington think, the RTC bailout was also a Wall Street scandal. Many of the financial firms that had financed the S&L industry's reckless lending got to buy back the same properties for pennies from the RTC--profiting on the upside, then again on the downside. Guess who picked up the tab? I suspect Wall Street is envisioning a similar bonanza--the chance to harvest new profit from their own fraud and criminal irresponsibility. Source: http://www.thenation.com/doc/20081006/greider
What Paulson wants is a blank check and absolute authority.
"Dirty Secret Of The Bailout: Thirty-Two Words That None Dare Utter"
Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency. Source: http://www.huffingtonpost.com/2008/09/22/dirty-secret-of-the-bailo_n_128294.html
The rescue plan would give sweeping powers to the U.S. Treasury to buy up toxic mortgage-related debt from financial groups, including U.S. subsidiaries of foreign banks. Source: http://www.reuters.com/articlePrint?articleId=USN1945959820080922
I just love that foreign banks bit. It really makes you wonder who our supposed representatives really represent. If they represented us wouldn't they be taking money from the investors and giving it to us taxpayers to compensate us for all the stuff they have been doing to gut the economy and offshore production? Instead, they would seem to want money from every man, woman and child to help feed the greed of Wall Street and international investors. Does that make any sense to anyone? Barney Frank again:
"I don't want the American taxpayer to get this bad debt and then the guy (whose company once held the bad loans) gets millions of dollars on his way out the door." Source: http://www.huffingtonpost.com/2008/09/21/paulson-resisting-democra_n_128035.html
But...Paulson claims his plan should make the taxpayers whole, once the housing market recovers and the mortgage securities are resold. Source: http://www.miamiherald.com/news/politics/AP/story/695587.html
Resold to whom? Why in all the circles of hell would anyone want to buy up all of those toxic waste mortgages? Right, they wouldn't want to! But if you put a legislative gun to their heads via taxation you can make the American people pay for anything: private oil/resource wars, investment failures, whatever...
These fancy toxic waste mortgage investment instruments are often worth absolutely nothing. I am sure you've been reading about foreclosed homes that are being vandalized and looted of everything inside them. All the valuable appliances are gutted from the houses. Even the copper electrical wires are taken by thieves for their weight as scrap metal. Those houses either have to be torn down or substantially rebuilt! There's hardly any money left in them.
But Paulson doesn't know that. Is that right?
I don't believe that for one moment.
The whole thing is a fraud. At the prices we taxpayer's will pay it's going to be one big con with nearly zero chance that we will ever recovery anything from the transaction. Bush is arguing that the government isn't even going to really take managerial control of these decimated companies - just hand them money and hope for the best. Quick money, no oversight, and hope for the best! That's the keen financial insight of "acting" president Bush for you: garbage in, garbage out.
Chuck Collins at The Nation says we should "Tax the Speculators." Hey, maybe we can wring something good from this great financial evil after all. Here are Collins' main recomendations, but you should go read them in detail too:
1. Institute a Financial Transactions Tax.
2. Impose an Income Tax Surcharge Rate on Incomes Over $5 Million.
3. Eliminate the Tax Preference for Capital Gains.
4. Progressive Inheritance Taxes.
5. Eliminate Taxpayer Subsidies for Excessive CEO Pay.
6. Close Offshore Corporate Tax Havens.
Source: http://www.thenation.com/doc/20081006/collins
You might want to read this one too:
"10 Things You Should Know About Bush's Trillion Dollar Fleecing Plan"
Source: http://www.alternet.org/module/printversion/99876
But I wouldn't hold my breath hoping for those changes. If those things were to ever happen I would think it would have been on the heels of a bloody revolution...
It's all so fucking funny. Everything that "they" do matters so much. If they keep or lose a job it matters. If they profit or go bankrupt it matters so very much. Whole factories close and no one really does much for the workers except offer some early retirement and severance packages. Those jobs go offshore to India, Thailand, Malaysia, China, etc. No one cares. But if a Wall Street gambler loses big we have to bail him out.
Why is that?
This is a great example of the kind of protectionism that our supposedly "free markets" actually operate under. There is no free market anywhere on earth - just one class of people that are very well connected and the many other groups of people that are very not. There is no free enterprise. What we have is socialism of the investor class but not of our society as a whole. The select get protected and the rest of us get the shaft. We don't own the means the means of productions. We don't own anything except our extravagant debts - the debts we hold individually and as the citizens of this once great nation. But that was all before the looting began. Now we shall be forever in debt: taking the financial risks while the wizards of Wall Street make the money. They get bailed out while you can't even declare bankruptcy any longer - it just gets renegotiated over a longer period of time. The investor class gets off the hook while you remain on the hook. And so it goes...
They want a blank check, unlimited authority to unload their debts onto you, no regulation and no oversight.
I recommend that you call and email your elected officials and send them the clear message that this bailout stinks and that you won't stand for it. Even if you support the bailout (yikes!), take a stand on the many important oversight powers that such a deal should entail. Don't let them gloss over the details and hand Wall Street a blank check.
Find your elected officials:
http://www3.capwiz.com/c-span/home/
When was the last time you were handed a trillion dollars with no accountability?
The claim is that we are faced with both a national and global financial crisis. Before we accept either assertion we need to dig into the history of recent events. Who intends to act upon this crisis and who is taking a "wait and see" approach? As you shall see, things are not what they seem and elsewhere many people seem substantially untroubled by what is taking place. Markets correct themselves. Some people win. Some people lose. We cannot save everyone. Maybe we shouldn't save anyone at all.
It starts with overweening greed and "globalization."
In the year 2000 the total amount of money available for financial transactions was the equivalent of a mere $36 trillion. Globalization and the resulting economic growth of markets doubled that amount of money so that by the year 2006 international investors were looking for ways to invest their now $70 trillion and still make a handsome profit. The problem was that there really wasn't $70 trillion worth of good investments to be had. Unsatisfied with a few paltry percentage points to be made on their money per annum with US Treasury Bonds, the investors wanted yields of 10-15%. 20% if they could get it. Now I don't care what anyone else tells you, but when the returns are that high there is risk and every investor knows that fact. But international investors wanted to be lied to and told that they realistically could be making that kind of return on their money. With that $70 trillion burning holes in pockets all over the world you just know that someone was going to step up and give those greedy bastards exactly what they wanted: a good swindling! Enter a new form of investment: the CDO, mortgage securities, etc. These various financial instruments are basically packaged up versions of bad mortgages, leveraged time and again, until they are made to look like good investments. But you've heard that old cliche: you can't make a silk purse from a sow's ear. What they were doing was taking bad mortgages - desired by greedy and unscrupulous borrowers against the equity in their homes and brokered by greedy and unscrupulous lenders who were lying their asses off in order to cash out their commissions - and selling them off as packaged deals higher up the financial food chain. The claim was that while each mortgage might be bad individually, taken as a whole they would perform very well because the real estate bubble would simply never pop and just keep expanding ad infinitum. Uh huh, that's what they wanted to believe. Sure, they could have made much safer investments but you know how it goes: live fast, spawn, and die. That's the new ethic of the globalized world. But how could anyone get away with selling this toxic waste mortgage manure to someone with the claim that it was as solid an investment as US Treasury Bonds? Isn't that a lie on its face? Yes, it is- but the reason they got away with it is that they used inaccurate data models to support the logic of these doomed to fail investment instruments. You might be wondering how and why these toxic waste mortgages exist in the first place. The answer to that is predictable: overweening greed and deregulation. As it turns out, without step by step regulation and oversight people often succumb to greed and the temptations of fraud. Who knew?! [The above is my own brutal redaction of what you could hear and read at "This American Life."]
Source: http://www.thisamericanlife.org/Radio_Episode.aspx?episode=355
Transcript (PDF): http://www.thisamericanlife.org/extras/radio/355_transcript.pdf
Every industry wants you to believe that they are owed a deregulated environment so that they can operate as they please. The claim is that the extravagantly wealthy upper class creates jobs because of the restaurants they patronize, the various services they use, the houses they buy, the cars they drive, the Manolo Blahnik shoes they buy their mistresses, the roses and jewelry they buy for their wives, and the housekeepers and gardeners that they employ. So, perhaps you want to support the bailout simply because the fallout will displace so many persons in such service and employ. But one's job is only a matter of chance. Everybody that works for Wall Street directly or indirectly would be working somewhere else if it didn't exist. Claiming that their jobs create other jobs may have some truth to it, but that's trickle down economics at its worst and ugliest - you don't get to keep your job after you screw things up, you lose your job! You don't get bailed out and you don't get a raise. Wall Street was significantly deregulated in the late 1990s but instead of creating a robust and healthy economy they have bled it almost dry. Personally, I don't think that such actions merit a reward.
D.C. and Wall Street people have been whining about how important and necessary the bailout is and how it has to happen right now to save the global economy. United States Treasury Secretary Henry Paulson had this to say:
"The credit markets are still very fragile right now and frozen...We need to deal with this and deal with it quickly." Source: http://www.huffingtonpost.com/2008/09/21/paulson-resisting-democra_n_128035.html
Who is this guy Henry Merritt Paulson Jr? He served under John Ehrlichman in the Nixon administration. He's the former chief executive of Goldman Sachs. Could he just be there to enrich his buddies at Goldman Sachs and also his elite pals in China? Did you know that they were planning to enrich foreign banks and investors with the bailout?
"Paulson's Conflicts Of Interest Spark Concern"
"I think that Hank Paulson's corporate...record is very important. While he was a Goldman Sachs, the company was buying up a lot of Chinese banks in particular, and at the time of his nomination, there were very serious questions raised about the conflicts of interest involved, and where his priorities are, and who he really is looking after."...Moreover, as Bloomberg News reported: "Goldman Sachs Group Inc. and Morgan Stanley may be among the biggest beneficiaries of the $700 billion U.S. plan to buy assets from financial companies while many banks see limited aid..."
Source: http://www.huffingtonpost.com/2008/09/22/paulsons-conflicts-of-int_n_128476.html
Treasury Secretary Henry Paulson confirmed the change on ABC's "This Week," telling George Stephanopoulos that coverage of foreign-based banks is "a distinction without a difference to the American people." Source: http://www.politico.com/news/stories/0908/13690.html
Hey, it makes a difference to me! I want to support a way of life similar to my own, not the way of life under the quasi-capitalistic, totalitarian regime of communist China! These gamblers at the tables on Wall Street need to be made to live with the result of their own foolish greed just like all the idiots that go Las Vegas every day. These guys gamble their fortunes away and now want to pass the hat around. And who will join the American people in this show of extravagant largesse to the sad investor class? No one is who:
But there was little appetite to mimic Paulson's scheme to buy up toxic mortgage-related debt from financial firms..."At the moment, I don't think Japan needs to launch a program similar to that of the United States," Japanese Vice Finance Minister Kazuyuki Sugimoto told reporters in Tokyo, echoing similar comments from France, Britain and Germany...The European Union also made it clear that it would not be joining a rescue package. EU Monetary Affairs Commissioner Joaquin Almunia told a conference in Slovakia that individual national governments would have to decide on their own..."It's up to them to consider whether they can follow this initiative," he said. Source: http://www.reuters.com/articlePrint?articleId=USLM62629820080922
We have to go this one alone. So, how much is it going to cost Joe and Jane Sixpack? Oh, you know, not too much...
With the cost of the proposed bailout effort equal to about $2,000 for every man, woman and child in the United States, Democrats began pushing for language in the rescue plan that would steers additional aid to homeowners struggling to stay in their homes and prevent foreclosures. Source: http://www.miamiherald.com/news/politics/AP/story/695587.html
Well, that's an interesting point. But don't these wizards of Wall Street really need the money quite badly?
In 2007, Wall Street's five biggest firms-- Bear Stearns, Goldman Sachs, Lehman Brothers, Merrill Lynch, and Morgan Stanley - paid a record $39 billion in bonuses to themselves...That's $10 billion more than the $29 billion loan taxpayers are making to J.P. Morgan to save Bear Stearns...Those 2007 bonuses were paid even though the shareholders in those firms last year collectively lost about $74 billion in stock declines --their worst year since 2002...If split equally among the approximately 186,000 workers at the former Big Five Houses, that bonus money means an average of $201,500 per person -- more than four times the $48,201 median household income in the U.S. last year. Source: http://blogs.abcnews.com/politicalpunch/2008/09/last-years-big.html
It almost seems as if you could take the bonuses handed out last year to these wizards of Wall Street and pay for parts of the bailout that way, right? Like gamblers at a fantasy high stakes table, these idiots want to gamble with the security of knowing they can't lose. Representative Barney Frank, Democrat of Massachusetts and chairman of the House Financial Services Committee, offered up the following comment on the bailout as from the perspective of one of the Wall Street wizards that put themselves into this mess:
"Heads I win, tails I break even." Source: http://www.nytimes.com/2008/09/21/business/21cong.html?pagewanted=print
Paulson's solution is simply to buy out the private losses with public funds. That is exactly the equivalent of reverse Robin Hood: privatizing gains and socializing risk! Here's more on his solution:
Paulson and the Federal Reserve are trying to replay the bailout approach used in the 1980s for the savings and loan crisis, but this situation is utterly different. The failed S&Ls held real assets--property, houses, shopping centers--that could be readily resold by the Resolution Trust Corporation at bargain prices. This crisis involves ethereal financial instruments of unknowable value--not just the notorious mortgage securities but various derivative contracts and other esoteric deals that may be virtually worthless...Despite what the pols in Washington think, the RTC bailout was also a Wall Street scandal. Many of the financial firms that had financed the S&L industry's reckless lending got to buy back the same properties for pennies from the RTC--profiting on the upside, then again on the downside. Guess who picked up the tab? I suspect Wall Street is envisioning a similar bonanza--the chance to harvest new profit from their own fraud and criminal irresponsibility. Source: http://www.thenation.com/doc/20081006/greider
What Paulson wants is a blank check and absolute authority.
"Dirty Secret Of The Bailout: Thirty-Two Words That None Dare Utter"
Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency. Source: http://www.huffingtonpost.com/2008/09/22/dirty-secret-of-the-bailo_n_128294.html
The rescue plan would give sweeping powers to the U.S. Treasury to buy up toxic mortgage-related debt from financial groups, including U.S. subsidiaries of foreign banks. Source: http://www.reuters.com/articlePrint?articleId=USN1945959820080922
I just love that foreign banks bit. It really makes you wonder who our supposed representatives really represent. If they represented us wouldn't they be taking money from the investors and giving it to us taxpayers to compensate us for all the stuff they have been doing to gut the economy and offshore production? Instead, they would seem to want money from every man, woman and child to help feed the greed of Wall Street and international investors. Does that make any sense to anyone? Barney Frank again:
"I don't want the American taxpayer to get this bad debt and then the guy (whose company once held the bad loans) gets millions of dollars on his way out the door." Source: http://www.huffingtonpost.com/2008/09/21/paulson-resisting-democra_n_128035.html
But...Paulson claims his plan should make the taxpayers whole, once the housing market recovers and the mortgage securities are resold. Source: http://www.miamiherald.com/news/politics/AP/story/695587.html
Resold to whom? Why in all the circles of hell would anyone want to buy up all of those toxic waste mortgages? Right, they wouldn't want to! But if you put a legislative gun to their heads via taxation you can make the American people pay for anything: private oil/resource wars, investment failures, whatever...
These fancy toxic waste mortgage investment instruments are often worth absolutely nothing. I am sure you've been reading about foreclosed homes that are being vandalized and looted of everything inside them. All the valuable appliances are gutted from the houses. Even the copper electrical wires are taken by thieves for their weight as scrap metal. Those houses either have to be torn down or substantially rebuilt! There's hardly any money left in them.
But Paulson doesn't know that. Is that right?
I don't believe that for one moment.
The whole thing is a fraud. At the prices we taxpayer's will pay it's going to be one big con with nearly zero chance that we will ever recovery anything from the transaction. Bush is arguing that the government isn't even going to really take managerial control of these decimated companies - just hand them money and hope for the best. Quick money, no oversight, and hope for the best! That's the keen financial insight of "acting" president Bush for you: garbage in, garbage out.
Chuck Collins at The Nation says we should "Tax the Speculators." Hey, maybe we can wring something good from this great financial evil after all. Here are Collins' main recomendations, but you should go read them in detail too:
1. Institute a Financial Transactions Tax.
2. Impose an Income Tax Surcharge Rate on Incomes Over $5 Million.
3. Eliminate the Tax Preference for Capital Gains.
4. Progressive Inheritance Taxes.
5. Eliminate Taxpayer Subsidies for Excessive CEO Pay.
6. Close Offshore Corporate Tax Havens.
Source: http://www.thenation.com/doc/20081006/collins
You might want to read this one too:
"10 Things You Should Know About Bush's Trillion Dollar Fleecing Plan"
Source: http://www.alternet.org/module/printversion/99876
But I wouldn't hold my breath hoping for those changes. If those things were to ever happen I would think it would have been on the heels of a bloody revolution...
It's all so fucking funny. Everything that "they" do matters so much. If they keep or lose a job it matters. If they profit or go bankrupt it matters so very much. Whole factories close and no one really does much for the workers except offer some early retirement and severance packages. Those jobs go offshore to India, Thailand, Malaysia, China, etc. No one cares. But if a Wall Street gambler loses big we have to bail him out.
Why is that?
This is a great example of the kind of protectionism that our supposedly "free markets" actually operate under. There is no free market anywhere on earth - just one class of people that are very well connected and the many other groups of people that are very not. There is no free enterprise. What we have is socialism of the investor class but not of our society as a whole. The select get protected and the rest of us get the shaft. We don't own the means the means of productions. We don't own anything except our extravagant debts - the debts we hold individually and as the citizens of this once great nation. But that was all before the looting began. Now we shall be forever in debt: taking the financial risks while the wizards of Wall Street make the money. They get bailed out while you can't even declare bankruptcy any longer - it just gets renegotiated over a longer period of time. The investor class gets off the hook while you remain on the hook. And so it goes...
They want a blank check, unlimited authority to unload their debts onto you, no regulation and no oversight.
I recommend that you call and email your elected officials and send them the clear message that this bailout stinks and that you won't stand for it. Even if you support the bailout (yikes!), take a stand on the many important oversight powers that such a deal should entail. Don't let them gloss over the details and hand Wall Street a blank check.
Find your elected officials:
http://www3.capwiz.com/c-span/home/
When was the last time you were handed a trillion dollars with no accountability?
Saturday, September 20, 2008
McCain's Reverse Robin Hood Healthcare Plan!
"Opening up the health insurance market to more vigorous nationwide competition, as we have done over the last decade in banking, would provide more choices of innovative products less burdened by the worst excesses of state-based regulation."
"Better Care at Lower Cost for Every American"
http://www.contingencies.org/septoct08/mccain.pdf
-----
Yeah, that's rich - certainly it serves the purposes of the very rich! Can McCain have really have stated something so egregiously stupid?
I guess no one hipped him to the fact that the wonderfully deregulated banking industry has driven our economy straight to the brink and is now set to cost Joe and Jane Sixpack over a trillion borrowed dollars to set things right again. Yup, they will fix the fuck up and then everything will be great again. Except that many are still going to be foreclosed upon. Many borrowers will still be on the hook for what should have been illegal loans. Personal bankruptcy has been made substantially more difficult than ever, and forget about forgiveness for educational loans (even though the many western nations offer free merit-based educations). And not one of the Wall Street fools that has robbed from the middle-class will ever see a single day in jail for fraud.
Yes, what we need more of right now is the kind of Reverse Robin Hood thinking that will put even more money into the hands of those who already have so much they don't even know what to do with it. If the absurd notion of "trickle down" economics should ever have worked, why isn't it working right now? Where's that money trickling down to right now?
Nowheres-ville.
Vote Reverse Robin Hood. Vote McCain!
"Better Care at Lower Cost for Every American"
http://www.contingencies.org/septoct08/mccain.pdf
-----
Yeah, that's rich - certainly it serves the purposes of the very rich! Can McCain have really have stated something so egregiously stupid?
I guess no one hipped him to the fact that the wonderfully deregulated banking industry has driven our economy straight to the brink and is now set to cost Joe and Jane Sixpack over a trillion borrowed dollars to set things right again. Yup, they will fix the fuck up and then everything will be great again. Except that many are still going to be foreclosed upon. Many borrowers will still be on the hook for what should have been illegal loans. Personal bankruptcy has been made substantially more difficult than ever, and forget about forgiveness for educational loans (even though the many western nations offer free merit-based educations). And not one of the Wall Street fools that has robbed from the middle-class will ever see a single day in jail for fraud.
Yes, what we need more of right now is the kind of Reverse Robin Hood thinking that will put even more money into the hands of those who already have so much they don't even know what to do with it. If the absurd notion of "trickle down" economics should ever have worked, why isn't it working right now? Where's that money trickling down to right now?
Nowheres-ville.
Vote Reverse Robin Hood. Vote McCain!
Thursday, September 4, 2008
Redress of Grievances
Why we were falsely arrested
http://seattlepi.nwsource.com/opinion/377611_amyonline04.html
The Democratic and Republican national conventions have become very expensive and protracted acts of political theater, essentially four-day-long advertisements for the major presidential candidates. Outside the fences, they have become major gatherings for grass-roots movements -- for people to come, amidst the banners, bunting, flags and confetti, to express the rights enumerated in the Constitution's First Amendment: "Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press, or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances."
Behind all the patriotic hyperbole that accompanies the conventions, and the thousands of journalists and media workers who arrive to cover the staged events, there are serious violations of the basic right of freedom of the press. Here on the streets of St. Paul, the press is free to report on the official proceedings of the RNC, but not to report on the police violence and mass arrests directed at those who have come to petition their government, to protest.
It was Labor Day, and there was an anti-war march, with a huge turnout, with local families, students, veterans and people from around the country gathered to oppose the war. The protesters greatly outnumbered the Republican delegates.
There was a positive, festive feeling, coupled with a growing anxiety about the course that Hurricane Gustav was taking, and whether New Orleans would be devastated anew. Later in the day, there was a splinter march. The police -- clad in full body armor, with helmets, face shields, batons and canisters of pepper spray -- charged. They forced marchers, onlookers and working journalists into a nearby parking lot, then surrounded the people and began handcuffing them.
-----
Sound familiar? How about this one?
-----
A funny thing happened to some folks on their way to making public their disenfranchisement from the then current political establishment in the year 1968.
The police infiltrated their groups (thereby abridging the free exercise of the right to assemble) to gather information. Police actions came to a head when they descended upon unarmed and non-violent demonstrators in riot gear. Once the police's actions triggered an out of control riot situation, many people were arrested including 8 individuals who were tried under federal conspiracy and riot laws: Rennie Davis, Tom Hayden, Abbie Hoffman, Bobby Seale, David Dellinger, John Froines, Lee Weiner, and Jerry Rubin. Many of these people were leaders of the following political movements: the National Mobilization to End the War in Vietnam (MOBE), the Youth International Party (YIPPIES), the Black Panther Party, the Southern Christian Leadership Conference. Amongst the celebrities in attendance were: Phil Ochs, William S. Burroughs, Timothy Leary, Allen Ginsberg, Arlo Guthrie, "Country Joe" McDonald, Pete Seeger, and Judy Collins; many of these would later be called as witnesses for the defense during the ensuing trial.
Interesting trial bits:
1) Black Panther defendant Bobby Seale continuously, and in increasingly angry tones, insisted upon his right either to represent himself or to have the trial continued until his own counsel of choice, Charles Garry (who was hospitalized for gall bladder surgery at the time), could represent him. Seale made frequent and bitter attacks on Judge Hoffman, calling him a "fascist dog," a "pig," and a "racist"; but eventually the judge ordered Seale shackled, bound, and gagged. Seale was made to participate in the trial without counsel of choice and completely unable to defend himself. On November 5, the judge severed Seale from the case and sentenced him to four years in prison for contempt.
2) Defense witness Norman Mailer made the point that, "Left-wingers are incapable of conspiracy because they're all egomaniacs." Abbie Hoffman made a similar point, stating, "Conspiracy? Hell, we couldn't agree on lunch."
3) During jury deliberations, judge Hoffman sentenced each of the defendants and the two defense attorneys, William Kunstler and Leonard Weinglass, to lengthy prison terms on 159 specifications for criminal contempt. One specification for Kunstler concerned an incident on February 3 when he said "I am going to turn back to my seat with the realization that everything I have learned throughout my life has come to naught, that there is no meaning in this court, there is no law in this court." The Seventh Circuit Court of Appeals later reversed all contempt convictions, ruling that contempt convictions resulting in more than six months in prison require jury trials.
4) Prior to his sentencing, Tom Hayden offered the following statement: "we would hardly have been notorious characters if they left us alone on the streets of Chicago," but instead "we became the architects, the masterminds, and the geniuses of a conspiracy to overthrow the government-- we were invented." [Editorial note: many people believe the U.S. justice system is about as effective against crime as would be throwing virgins into active volcanoes to appease the gods -- we have a culture of justice-sacrifice where defendants are often chosen merely to quell public fears about disorder. The actions of the police against Rolando Cruz comes to mind here.]
5) Judge Hoffman sentenced each defendant to five years' imprisonment plus a $5,000 fine.
6) Random juror comments after the trial: a) the defendants "should be convicted for their appearance, their language and their lifestyle.", b)
"These defendants wouldn't even stand up when the judge walked in; when there is no more respect we might as well give up the United States." c) they "should have been shot down by the police." [Obvious Editorial note: not exactly a jury of the defendants' peers, eh?]
7) The Seventh Circuit Court of Appeals reversed all convictions on November 21, 1972. Amongst the determinations made by the court of appeals was that the F.B.I, with the knowledge and complicity of Judge Hoffman and prosecutors, had bugged the offices of the Chicago defense attorneys. The Court of Appeals panel said that it had "little doubt but that the wrongdoing of F.B.I. agents would have required reversal of the convictions on the substantive charges. [Editorial note: does anyone else see the complete breakdown of the system here? Isn't this the Judicial branch of govt. acting in concert with the Executive branch to commit crime? How often has this happened that we didn't hear of it?]
8) Later Abbie Hoffman was said to have opined, "I don't know whether I'm innocent or I'm guilty." The reason for the confusion--as Norman Mailer pointed out--was that the alleged conspirators "understood that you didn't have to attack the fortress anymore." All they had to do was "surround it, make faces at the people inside and let them have nervous breakdowns and destroy themselves." [Note: A similar point is made by William S. Burroughs in his essay "Electronic Revolution."]
Excerpts of the trial can be found here:
http://www.law.umkc.edu/faculty/projects/ftrials/Chicago7/chicago7.html
http://www.law.umkc.edu/faculty/projects/ftrials/Chicago7/Chi7_trial.html
Many years ago there was an excellent HBO movie called "Conspiracy: The Trial of the Chicago 8", the great thing about the film is that in addition to having a truly inspired cast there is documentary footage of the events in question and interviews with the actual defendants -- just goes to show how great a film of substance can be despite having an obviously low budget.
You can get a free etext copy of Abbie Hoffman's "Steal This Book" on the internet. Apparently, much of this book was written while Hoffman was in Cook County jail. And if you try you can also find a full download of the recent film about the Chicago incident entitled "Chicago 10."
Abbie would prefer that you illegally download these items, I'm sure.
http://seattlepi.nwsource.com/opinion/377611_amyonline04.html
The Democratic and Republican national conventions have become very expensive and protracted acts of political theater, essentially four-day-long advertisements for the major presidential candidates. Outside the fences, they have become major gatherings for grass-roots movements -- for people to come, amidst the banners, bunting, flags and confetti, to express the rights enumerated in the Constitution's First Amendment: "Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press, or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances."
Behind all the patriotic hyperbole that accompanies the conventions, and the thousands of journalists and media workers who arrive to cover the staged events, there are serious violations of the basic right of freedom of the press. Here on the streets of St. Paul, the press is free to report on the official proceedings of the RNC, but not to report on the police violence and mass arrests directed at those who have come to petition their government, to protest.
It was Labor Day, and there was an anti-war march, with a huge turnout, with local families, students, veterans and people from around the country gathered to oppose the war. The protesters greatly outnumbered the Republican delegates.
There was a positive, festive feeling, coupled with a growing anxiety about the course that Hurricane Gustav was taking, and whether New Orleans would be devastated anew. Later in the day, there was a splinter march. The police -- clad in full body armor, with helmets, face shields, batons and canisters of pepper spray -- charged. They forced marchers, onlookers and working journalists into a nearby parking lot, then surrounded the people and began handcuffing them.
-----
Sound familiar? How about this one?
-----
A funny thing happened to some folks on their way to making public their disenfranchisement from the then current political establishment in the year 1968.
The police infiltrated their groups (thereby abridging the free exercise of the right to assemble) to gather information. Police actions came to a head when they descended upon unarmed and non-violent demonstrators in riot gear. Once the police's actions triggered an out of control riot situation, many people were arrested including 8 individuals who were tried under federal conspiracy and riot laws: Rennie Davis, Tom Hayden, Abbie Hoffman, Bobby Seale, David Dellinger, John Froines, Lee Weiner, and Jerry Rubin. Many of these people were leaders of the following political movements: the National Mobilization to End the War in Vietnam (MOBE), the Youth International Party (YIPPIES), the Black Panther Party, the Southern Christian Leadership Conference. Amongst the celebrities in attendance were: Phil Ochs, William S. Burroughs, Timothy Leary, Allen Ginsberg, Arlo Guthrie, "Country Joe" McDonald, Pete Seeger, and Judy Collins; many of these would later be called as witnesses for the defense during the ensuing trial.
Interesting trial bits:
1) Black Panther defendant Bobby Seale continuously, and in increasingly angry tones, insisted upon his right either to represent himself or to have the trial continued until his own counsel of choice, Charles Garry (who was hospitalized for gall bladder surgery at the time), could represent him. Seale made frequent and bitter attacks on Judge Hoffman, calling him a "fascist dog," a "pig," and a "racist"; but eventually the judge ordered Seale shackled, bound, and gagged. Seale was made to participate in the trial without counsel of choice and completely unable to defend himself. On November 5, the judge severed Seale from the case and sentenced him to four years in prison for contempt.
2) Defense witness Norman Mailer made the point that, "Left-wingers are incapable of conspiracy because they're all egomaniacs." Abbie Hoffman made a similar point, stating, "Conspiracy? Hell, we couldn't agree on lunch."
3) During jury deliberations, judge Hoffman sentenced each of the defendants and the two defense attorneys, William Kunstler and Leonard Weinglass, to lengthy prison terms on 159 specifications for criminal contempt. One specification for Kunstler concerned an incident on February 3 when he said "I am going to turn back to my seat with the realization that everything I have learned throughout my life has come to naught, that there is no meaning in this court, there is no law in this court." The Seventh Circuit Court of Appeals later reversed all contempt convictions, ruling that contempt convictions resulting in more than six months in prison require jury trials.
4) Prior to his sentencing, Tom Hayden offered the following statement: "we would hardly have been notorious characters if they left us alone on the streets of Chicago," but instead "we became the architects, the masterminds, and the geniuses of a conspiracy to overthrow the government-- we were invented." [Editorial note: many people believe the U.S. justice system is about as effective against crime as would be throwing virgins into active volcanoes to appease the gods -- we have a culture of justice-sacrifice where defendants are often chosen merely to quell public fears about disorder. The actions of the police against Rolando Cruz comes to mind here.]
5) Judge Hoffman sentenced each defendant to five years' imprisonment plus a $5,000 fine.
6) Random juror comments after the trial: a) the defendants "should be convicted for their appearance, their language and their lifestyle.", b)
"These defendants wouldn't even stand up when the judge walked in; when there is no more respect we might as well give up the United States." c) they "should have been shot down by the police." [Obvious Editorial note: not exactly a jury of the defendants' peers, eh?]
7) The Seventh Circuit Court of Appeals reversed all convictions on November 21, 1972. Amongst the determinations made by the court of appeals was that the F.B.I, with the knowledge and complicity of Judge Hoffman and prosecutors, had bugged the offices of the Chicago defense attorneys. The Court of Appeals panel said that it had "little doubt but that the wrongdoing of F.B.I. agents would have required reversal of the convictions on the substantive charges. [Editorial note: does anyone else see the complete breakdown of the system here? Isn't this the Judicial branch of govt. acting in concert with the Executive branch to commit crime? How often has this happened that we didn't hear of it?]
8) Later Abbie Hoffman was said to have opined, "I don't know whether I'm innocent or I'm guilty." The reason for the confusion--as Norman Mailer pointed out--was that the alleged conspirators "understood that you didn't have to attack the fortress anymore." All they had to do was "surround it, make faces at the people inside and let them have nervous breakdowns and destroy themselves." [Note: A similar point is made by William S. Burroughs in his essay "Electronic Revolution."]
Excerpts of the trial can be found here:
http://www.law.umkc.edu/faculty/projects/ftrials/Chicago7/chicago7.html
http://www.law.umkc.edu/faculty/projects/ftrials/Chicago7/Chi7_trial.html
Many years ago there was an excellent HBO movie called "Conspiracy: The Trial of the Chicago 8", the great thing about the film is that in addition to having a truly inspired cast there is documentary footage of the events in question and interviews with the actual defendants -- just goes to show how great a film of substance can be despite having an obviously low budget.
You can get a free etext copy of Abbie Hoffman's "Steal This Book" on the internet. Apparently, much of this book was written while Hoffman was in Cook County jail. And if you try you can also find a full download of the recent film about the Chicago incident entitled "Chicago 10."
Abbie would prefer that you illegally download these items, I'm sure.
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