The GOP winter blunderland

Source: The Smirking Chimp.

You have to hand it to the Republicans. Seriously. You have to. If not, they’ll beat and belittle you, take whatever you have, anyway, and then insist you never had it in the first place.

The nicest thing I can say about the current crop of GOP (Grinches On Parade) ideologues is that they’re consistent. With America currently in the shape of an ER patient on a crash cart, Republican politicos still spew their psychotic Bizarro World views; sort of a fragmented funhouse mirror reflection of their already distorted priorities. Up is down. Right is wrong. And if you feel life has you by the short hairs, you’re not seeing life the way they do – so it’s all your fault.

Take the current collapse of Detroit’s auto making industry. In the Republican view, it’s not the companies that caused the crisis, it’s the greedy union workers who wanted to, damn them to Hell, earn a living wage!

A group of Southern Senators put the kibosh on a vital influx of cash to the automakers because the deal didn’t require union workers to trim their salaries to equal those of non-union workers who toil at foreign auto plants in…the South. The Senators, led by Foghorn Leghorn flimflammers extraordinaire Richard Shelby of Alabama and David Vitter of Louisiana, used very quaint language to try to disguise their union-busting bid.

Declared Vitter, “Negotiations on a real restructuring plan failed for one reason only: The union and the Democratic leadership wouldn’t agree to any wage concessions by a date certain. None.”

Vitter, a Family Values kinda Senator who has, in the past, had trouble keeping his little Vitter critter in his pants whilst around hookers, concluded with a somber, “It’s a shame.”

Morgan Johnson, president of the UAW in Louisiana, took a less phantasmagorical approach to Vitter’s problem with the unionized auto industry. “He’d rather pay a prostitute than pay auto workers.”

Now, all of this wage-cutting rumbling could be chalked up to non-political, altruistic reasoning on the Republicans’ part. They want to save the country millions of lost jobs, right?

Uh, not really.

MSNBC got hold of a memo entitled “Action Alert – Auto Bailout” sent out to all Senate Republicans by party leaders pretty much summing up the reason for putting the damper on any auto maker deal. It read, in part, “This is the democrats first opportunity to payoff organized labor after the election. This is a precursor to card check and other items. Republicans should stand firm and take their first shot against organized labor, instead of taking their first blow from it.”

These guys really miss the old days, when organized labor meant you got to hire your own slave boss.

So, let’s review. The Republicans are watching the entire country collapse on a myriad of levels because of Republican-spawned policies. Therefore, they’re bracing to make it as hard as possible for the incoming Democratic president to make any headway. That’s realistic, isn’t it? They actually don’t get the fact that the American people finally realize the GOP broke the whole friggin’ nation. What’s next, trying to convince us all that everything that’s happened over the last eight years was actually brilliant? Nobody in their right mind would try to re-write history like that.

Except Republicans.

On what can only be called, “The White House White-Out Tour,” Bush and his Bush Leaguers are taking to the airwaves to let us know that down is up and up is down. If we think differently, once again, we’re wrong.

Dick Cheney, doing his best impression of “The Penguin,” appeared on Fox News, stating with his Pottersville smile, “I feel very good about a lot of the things we’ve done in this administration. I think that they will be viewed in a favorable light when it’s time to write the history of this era.”

If it’s written by squirrels.

When informed that Joe Biden referred to him as being the most dangerous vice-president in American history, Dick demurred: “If he wants to diminish the office of vice president, that’s obviously his call.”

For the record, I don’t think it’s possible to diminish the vice-president’s office after Cheney.

As for Bush/Cheney trampling the Constitution, oh contraire. They were little patriotic angels compared to other rascals. “If you think about what Abraham Lincoln did during the Civil War, what FDR did during World War II, they went far beyond anything we’ve done in the global war on terror.”

New Deal? Meet Bad Deal.

Cheney also expressed some interesting views of the power of the Presidency, saying anything that the President does in a time of war is legal. “He could launch a kind of devastating attack the world’s never seen. He doesn’t have to check with anybody. He doesn’t have to call the Congress. He doesn’t have to check with the courts. He has that authority because of the nature of the world we live in.”

As for the War Powers Act, that little law giving Congress the power to declare war, Cheney sniffed: “No president has ever signed off on the proposition that the War Powers Act is constitutional. I would argue that it is, in fact, a violation of the Constitution, that it’s an infringement on the president’s authority as the commander in chief.”

In other words, laws don’t apply if Dick thinks they’re not laws. Welcome to the United States of Cheney’s head.

Earlier in the week, Cheney told ABC that waterboarding isn’t torture, he approved of it and the Iraq war was “worth it” because Saddam Hussein was “a bad actor.”

Lord knows what Cheney would do to Pauley Shore.

Not to be outdone in terms of Grim Fairy Tales, Condi Rice made her twentieth appearance on “Meet the Press” this week, where she, basically, gave the same interview she’d given nineteen times before. It was fascinating stuff, in a “bug trapped in amber” sort of way.

Among her greatest hits: “I certainly think the United States views the — that the world views the United States as a place to be respected. All over the world, David, our values are respected; who we are, a place that you can come and come from modest circumstances to great things, that’s respected. What we’ve done hasn’t always been liked or popular.

“But if you look at some of the most populous places in the world -China, India — the United States is not only respected but, in fact, popular.

“So, yes, there are some places that have had real quarrels with our policies, but I think the United States is very well-respected worldwide.”

If that world is DisneyWorld and the spokespeople are Goofy and Dopey.

She somehow equated America’s lack of timely response to genocide in Darfur and Rwanda with our “success” in Iraq. “…I will say that we’ve also been engaged in activities that have protected innocent people. Look at Saddam Hussein’s record of, really, genocide inside of Iraq, what he did to Shia populations, to Kurdish populations, actually using weapons of mass destruction.”

As opposed to BushCo., which only uses cluster bombs and depleted uranium on all of the above.

Condi also offered amazing insight as to the intricacies of foreign policy. “Multilateral diplomacy is hard.”

Some people predict that Rice may give classical piano concerts in the future. That’s hard stuff. Me? I’m thinking a hurdy-gurdy and a monkey would better reflect the stellar artistry with which Rice has handled her job.

Both Rice and Cheney, by the by, believe that, if Obama is smart, he’ll follow Bush’s lead in foreign policy. As we all know, repeating the same mistake endlessly is a sign of true geniusoty.

Which leads us, of course, to the Genius-In-Chief who, in the last two weeks has distorted his factual presidential record enough to make Picasso cross-eyed. In other words, same old same old.

While he uses his final weeks in office to merrily whittle away at worker safety, trucker safety, fair wages, health care recipients’ rights, the Endangered Species Act, environmental safety, pollution rules and auctions off a zippy 110,000 acres of Utah, Bush has made a series of public appearances that portray his years in office as an enlightened time – not the 15 Watter we’ve witnessed.

On Fox, he declared: “I didn’t compromise my soul to be a popular guy.” Yeah, the devil took care of that years ago, and he feels like he got screwed.

At one appearance, he was asked what he would miss. ” I’ll miss the petty name-calling — I mean, I won’t miss it. I have been disappointed at times about the politics of personal destruction. It’s not the first time it’s ever happened in our history, but I was just — I came with the idea of changing the tone in Washington, and frankly didn’t do a very good job of it.”

This is like Jack the Ripper complaining about his laundry detergent not removing all the stains on his jacket.

As for his penchant for wire-tapping and torture, Bush pooh-poohed that for Fox. “You know, I know there’s a lot of urban myths about certain decisions I had made. But when the truth comes out and people will say, ‘Oh, I see what he did.’”

And Wes Craven will direct the film version.

Bush, who has repeatedly stated that his efforts in the War on Terror has kept America safe from any mythical attacks following 9/11, told CNN that his memoirs will tell all. “”I would like to share my experiences, and I think it’s going to be important for people to remember what the actual history of my presidency was all about. History tends to shift very rapidly; people forget what the environment in which the decisions were made.”

He capped it all with: “You’ve got to say I’m a little wiser. My knowledge of the world is more profound.”

He now thinks it’s only kind of flat.

As usual, Bush denied culpability for anything, um, less than stellar occurring in the country today, including the current financial collapse. He told ABC: “You know, I’m the President during this period of time, but I think when the history of this period is written, people will realize a lot of the decisions that were made on Wall Street took place over a decade or so, before I arrived in President, during I arrived in President.”

Um, so that would put place those decisions as part of Bush’s father’s presidency? You know, before Dubya during arrived in President. Nice.

When asked how high unemployment would go during this recession, he deduced: “Too high. I mean, anybody unemployed is too much. And I — I’m not a very good economic forecaster. I do know that we are taking steps to make sure — see, the most difficult thing about this is that a lot of people out there in Main Street wonder why the government is having to act because Wall Street went on a binge. And I’m one, frankly — at first. I was the guy that inartfully said, ‘Wall Street got drunk, and we got a hangover.’

“And on the other hand, though, when you’re the President and somebody says, we better move big, Mr. President, otherwise we could have a depression greater than the Great — we’re moving big. And it is hard for the average citizen to understand how frozen the system became and how over-leveraged the system became. And so what we’re watching is the de-leveraging of our financial markets, which is obviously affecting the growth of the economy.”

I couldn’t have phrased that better myself…unless I was suffering from blunt blow trauma.

Bush, who in the same interview declared loftily, “I keep recognizing we’re in a war against ideological thugs and keeping America safe,” and said that everybody in the world believed the faulty intelligence that led to the occupation of Iraq, summed up his eight year tenure thusly:

“As I said, some times are happy, some not happy. I don’t want people to misconstrue. It’s not — I don’t feel joyful when somebody loses their life, nor do I feel joyful from somebody loses a job. That concerns me. And the President ends up carrying a lot of people’s grief in his soul during a presidency. One of the things about the presidency is you deal with a lot of tragedy — whether it be hurricanes, or tornadoes, or fires, or death — and you spend time being the Comforter-in-Chief. But the idea of being able to serve a nation you love is — has been joyful. In other words, my spirits have never been down. I have been sad, but the spirits are up.”

Since Bush is depending on historians to further sanctify his record, I hope he finds a group that has Pulitzers in fiction, a tolerance for gobbledygook and is paid by the word.

Now, to be fair, Bush loyalists are doing their darnedest to spin his time in office into a glowing historical period, totally ignoring the old “silk purse/sow’s ear” rule of thumb.

And Congressional Republicans are also practicing their pirouettes, trying to convince us all that everything that’s been mishandled is not their fault, that it was Democrats past, present and future who ripped our society asunder.

What they’re not betting on is the fact that, at long last, the American populace is up to passing the all-important “shit from Shinola” test.

This puts the usually non-culpable GOP at a big disadvantage.

A lesson for 2009, GOPers.

If the shoe fits – duck!

Federal Reserve sets Stage for Weimar-style Hyperinflation

By F. William Engdahl, 15 December 2008.

The Federal Reserve has bluntly refused a request by a major US financial news service to disclose the recipients of more than $2 trillion of emergency loans from US taxpayers and to reveal the assets the central bank is accepting as collateral. Their lawyers resorted to the bizarre argument that they did so to protect ‘trade secrets.’ Is the secret that the US financial system is de facto bankrupt? The latest Fed move is further indication of the degree of panic and lack of clear strategy within the highest ranks of the US financial institutions. Unprecedented Federal Reserve expansion of the Monetary Base in recent weeks sets the stage for a future Weimar-style hyperinflation perhaps before 2010.

On November 7 Bloomberg filed suit under the US Freedom of Information Act (FOIA) requesting details about the terms of eleven new Federal Reserve lending programs created during the deepening financial crisis.

The Fed responded on December 8 claiming it’s allowed to withhold internal memos as well as information about ‘trade secrets’ and ‘commercial information.’ The central bank did confirm that a records search found 231 pages of documents pertaining to the requests.

The Bernanke Fed in recent weeks has stepped in to take a role that was the original purpose of the Treasury’s $700 billion Troubled Asset Relief Program (TARP). The difference between a Fed bailout of troubled financial institutions and a Treasury bailout is that central bank loans do not have the oversight safeguards that Congress imposed upon the TARP. Perhaps those are the ‘trade secrets the hapless Fed Chairman,Ben Bernanke, is so jealously guarding from the public.

Coming hyperinflation?

The total of such emergency Fed lending exceeded $2 trillion on Nov. 6. It had risen by an astonishing 138 percent, or $1.23 trillion, in the 12 weeks since Sept. 14, when central bank governors relaxed collateral standards to accept securities that weren’t rated AAA. They did so knowing that on the following day a dramatic shock to the financial system would occur because they, in concert with the Bush Administration, had decided to let it occur.

On September 15 Bernanke, New York Federal Reserve President, Tim Geithner, the new Obama Treasury Secretary-designate, along with the Bush Administration, agreed to let the fourth largest investment bank, Lehman Brothers, go bankrupt, defaulting on untold billions worth of derivatives and other obligations held by investors around the world. That event, as is now widely accepted , triggered a global systemic financial panic as it was no longer clear to anyone what standards the US Government was using to decide which institutions were ‘too big to fail’ and which not. Since then the US Treasury Secretary has reversed his policies on bank bailouts repeatedly leading many to believe Henry Paulson and the Washington Administration along with the Fed have lost control.

In response to the deepening crisis, the Bernanke Fed has decided to expand what is technically called the Monetary Base, defined as total bank reserves plus cash in circulation, the basis for potential further high-powered bank lending into the economy. Since the Lehman Bros. default, this money expansion rose dramatically by end October at a year-year rate of growth of 38%, has been without precedent in the 95 year history of the Federal Reserve since its creation in 1913. The previous high growth rate, according to US Federal Reserve data, was 28% in September 1939, as the US was building up industry for the evolving war in Europe.

By the first week of December, that expansion of the monetary base had jumped to a staggering 76% rate in just 3 months. It has gone from $836 billion in December 2007 when the crisis appeared contained, to $1,479 billion in December 2008, an explosion of 76% year-on-year. Moreover, until September 2008, the month of the Lehman Brothers collapse, the Federal Reserve had held the expansion of the Monetary Base virtually flat. The 76% expansion has almost entirely taken place within the past three months, which implies an annualized expansion rate of more than 300%.

Despite this, banks do not lend further, meaning the US economy is in a depression free-fall of a scale not seen since the 1930′s. Banks do not lend in large part because under Basle BIS lending rules, they must set aside 8% of their capital against the value of any new commercial loans. Yet the banks have no idea how much of the mortgage and other troubled securities they own are likely to default in the coming months, forcing them to raise huge new sums of capital to remain solvent. It’s far ‘safer’ as they reason to pass on their toxic waste assets to the Fed in return for earning interest on the acquired Treasury paper they now hold. Bank lending is risky in a depression.

Hence the banks exchange $2 trillion of presumed toxic waste securities consisting of Asset-Backed Securities in sub-prime mortgages, stocks and other high-risk credits in exchange for Federal Reserve cash and US Treasury bonds or other Government securities rated (still) AAA, i.e. risk-free. The result is that the Federal Reserve is holding some $2 trillion in largely junk paper from the financial system. Borrowers include Lehman Brothers, Citigroup and JPMorgan Chase, the US’s largest bank by assets. Banks oppose any release of information because that might signal ‘weakness’ and spur short-selling or a run by depositors.

Making the situation even more drastic is the banking model used first by US banks beginning in the late 1970′s for raising deposits, namely the acquiring of ‘wholesale deposits’ by borrowing from other banks on the overnight interbank market. The collapse in confidence since the Lehman Bros. default is so extreme that no bank anywhere, dares trust any other bank enough to borrow. That leaves only traditional retail deposits from private and corporate savings or checking accounts.

To replace wholesale deposits with retail deposits is a process that in the best of times will take years, not weeks. Understandably, the Federal Reserve does not want to discuss this. That is clearly also behind their blunt refusal to reveal the nature of their $2 trillion assets acquired from member banks and other financial institutions. Simply put, were the Fed to reveal to the public precisely what ‘collateral’ they held from the banks, the public would know the potential losses that the government may take.

Congress is demanding more transparency from the Federal Reserve and US Treasury on its bailout lending. On December 10 in Congressional hearings by the House Financial Services Committee , Representative David Scott, a Georgia Democrat, said Americans had ‘been bamboozled,’ slang for defrauded.

Hiccups and Hurricanes

Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson said in September they would meet congressional demands for transparency in a $700 billion bailout of the banking system. The Freedom of Information Act obliges federal agencies to make government documents available to the press and public.

In early December the Congress oversight agency, GAO, issued its first mandated review of the lending of the US Treasury’s $700 billion TARP program (Troubled Asset Relief Program). The review noted that in 30 days since the program began, Henry Paulson’s office had handed out $150 billion of taxpayer money to financial institutions with no effective accountability of how the money is being used. It seems Henry Paulson’s Treasury has indeed thrown a giant ‘tarp’ over the entire taxpayer bailout.

Further adding to the troubles in the world’s former financial Mecca, the US Congress, acting on largely ideological grounds, shocked the financial system when it refused to give even a meager $14 billion emergency loan to the Big Three automakers-General Motors, Chrysler and Ford.

While it is likely that the Treasury will extend emergency credit to the companies until January 20 or until the newly elected Congress can consider a new plan, the prospect of a chain -reaction bankruptcy collapse of the three giant companies is very near. What is being left out of the debate is that those three companies account for a combined 25% of all US corporate bonds outstanding. They are held by private pension funds, mutual funds, banks and others. If the auto parts suppliers of the Big Three are included, an estimated $1 trillion of corporate bonds are now at risk of chain-reaction default. Such a bankruptcy failure could trigger a financial catastrophe which would make what has happened since Lehman Bros. appear as a mere hiccup in a hurricane.

As well, the Federal Reserve’s panic actions since September, by their explosive expansion of the monetary base, has set the stage for a Zimbabwe-style hyperinflation. The new money is not being ‘sterilized’ by offsetting actions by the Fed, a highly unusual move indicating their desperation. Prior to September the Fed’s infusions of money were sterilized, making the potential inflation effect ‘neutral.’

Defining a Very Great Depression

That means once banks begin finally to lend again, perhaps in a year or so, that will flood the US economy with liquidity in the midst of a deflationary depression. At that point or perhaps well before, the dollar will collapse as foreign holders of US Treasury bonds and other assets run. That will not be pleasant as the result would be a sharp appreciation in the Euro and a crippling effect on exports in Germany and elsewhere should the nations of the EU and other non-dollar countries such as Russia, OPEC members and, above all, China not have arranged a new zone of stabilization apart from the dollar.

The world faces the greatest financial and economic challenges in history in coming months. The incoming Obama Administration faces a choice of literally nationalizing the credit system to insure a flow of credit to the real economy over the next 5 to 10 years, or face an economic Armageddon that will make the 1930′s appear a mild recession by comparison.

Leaving aside what appears to have been blatant political manipulation by the present US Administration of key economic data prior to the November election in a vain attempt to downplay the scale of the economic crisis in progress, the figures are unprecedented. For the week ended December 6 initial jobless claims rose to the highest level since November 1982. More than four million workers remained on unemployment, also the most since 1982 and in November US companies cut jobs at the fastest rate in 34 years. Some 1,900,000 US jobs have vanished so far in 2008.

As a matter of relevance, 1982, for those with long memories, was the depth of what was then called the Volcker Recession. Paul Volcker, a Chase Manhattan appendage of the Rockefeller family, had been brought down from New York to apply his interest rate ‘shock therapy’ to the US economy in order as he put it, ‘to squeeze inflation out of the economy.’ He squeezed far more as the economy went into severe recession, and his high interest rate policy detonated what came to be called the Third World Debt Crisis. The same Paul Volcker has just been named by Barack Obama as chairman-designate of the newly formed President’s Economic Recovery Advisory Board, hardly grounds for cheer.

The present economic collapse across the United States is driven by the collapse of the $3 trillion market for high-risk sub-prime and Alt-A home mortgages. Fed Chairman Bernanke is on record stating that the worst should be over by end of December. Nothing could be farther from the truth, as he well knows. The same Bernanke stated in October 2005 that there was ‘no housing bubble to go bust.’ So much for the predictive quality of that Princeton economist. The widely-used S&P Schiller-Case US National Home Price Index showed a 17% year-year drop in the third Quarter, trend rising. By some estimates it will take another five to seven years to see US home prices reach bottom. In 2009 as interest rate resets on some $1 trillion worth of Alt-A US home mortgages begin to kick in, the rate of home abandonments and foreclosures will explode. Little in any of the so-called mortgage amelioration programs offered to date reach the vast majority affected. That process in turn will accelerate as millions of Americans lose their jobs in the coming months.

John Williams of the widely-respected Shadow Government Statistics report, recently published a definition of Depression, a term that was deliberately dropped after World War II from the economic lexicon as an event not repeatable. Since then all downturns have been termed ‘recessions.’ Williams explained to me that some years ago he went to great lengths interviewing the respective US economic authorities at the Commerce Department’s Bureau of Economic Analysis and at the National Bureau of Economic Research (NBER), as well as numerous private sector economists, to come up with a more precise definition of ‘recession,’ ‘depression’ and ‘great depression.’ His is pretty much the only attempt to give a more precise definition to these terms.

What he came up with was first the official NBER definition of recession: Two or more consecutive quarters of contracting real GDP, or measures of payroll employment and industrial production. A depression is a recession in which the peak-to-bottom growth contraction is greater than 10% of the GDP. A Great Depression is one in which the peak-to-bottom contraction, according to Williams, exceeds 25% of GDP.

In the period from August 1929 until he left office President Herbert Hoover oversaw a 43-month long contraction of the US economy of 33%. Barack Obama looks set to break that record, to preside over what historians could likely call the Very Great Depression of 2008-2014, unless he finds a new cast of financial advisers before Inauguration Day, January 20. Required are not recycled New York Fed presidents, Paul Volckers or Larry Summers types. Needed is a radically new strategy to put virtually the entire United States economy into some form of an emergency ‘Chapter 11′ bankruptcy reorganization where banks take write-offs of up to 90% on their toxic assets, that, in order to save the real economy for the American population and the rest of the world. Paper money can be shredded easily. Not human lives. In the process it might be time for Congress to consider retaking the Federal Reserve into the Federal Government as the Constitution originally specified, and make the entire process easier for all. If this sounds extreme, perhaps revisit this article in six months again.

Grand theft economics: Auto Non-Bailout and Herbert Hoover Time

As Bob Chapman wrote in “History Set To Repeat Itself In The Economic Downturn“:

“Congressional miscreants just turned down a measly $15 billion bailout for the automakers, but apparently had no problem approving $700 billion for the big bankers, albeit that the approval required a second try. Apparently, the automakers lacked the clout to threaten martial law, did not have a Goldman Sachs stand-in like Hanky Panky, our “beloved” Treasury Secretary, to champion their cause, and could not order an orchestrated PPT [Plunge Protection Team] takedown of the Dow by 777 points.”

Isn’t it interesting that they’re willing to give a blank 700 million dollar check to bankers, but for a paltry 15 million dollars, they require union workers to eat shit? Why not ask all the CEOs to take a 50% pay cut? Yeah, right, this is Amurikkka, land of the “free.” Free to get a low-paying service industry job. Free to be homeless. Free to starve. Free to race to the bottom and join all the other third world countries.

Source: Robert L. Borosage, Huffington Post.

In their last obstruction, “Dr. No” Mitch McConnell’s Senate Republicans blocked a bridge loan for the auto companies, unwilling even to sustain them long enough for a new administration to sculpt a responsible response to their crisis.

What was the sticking point? It wasn’t getting rid of the CEOs that drove the companies into the ditch. It wasn’t forcing the creditors to cut their loans in exchange for stock, giving them a stake in the future. It wasn’t accepting an auto czar to enforce the agreement and drive a transition to fuel efficient cars. That was agreed to. No, led by benighted Tennessee Senator Bob Corker — known previously solely for his “call me” race bait campaign ad that helped him win election — Republicans wanted to break the union, and punish the workers.

They insisted that the UAW agree to cutting workers wages and benefits immediately to match the average hourly compensation paid by non-union foreign auto companies based in the South. This would entail cuts in pay by about 50% within the next months. For Republicans, the problem wasn’t the worst economic downturn since the Great Depression. It wasn’t wrong-headed management that was skewered when soaring gas prices wiped out their SUV cash cows. It wasn’t the Wall Street dominated trade policies that sacrificed US manufacturing behind a high dollar that made it profitable to move plants and production abroad and aided foreign competitors. It wasn’t the burdens of health care costs that make US manufacturers less competitive.

No, for the Republican Senators, the bailout was a chance for a little class warfare. Why should an autoworker make $50-60,000 a year, plus health care? The workers should accept half that and be happy. Autoworkers have agreed to wage givebacks and benefit cuts over the last years. They pledged even deeper cuts in relation to the agreement. But their sacrifices weren’t great enough nor the cuts fast enough for Corker and the Republicans.

Now imagine telling a family that lives on $50-60,000 a year that they will make one-half that in six months. They’ve got mortgages, kids in college or the costs of children, and credit card debts just like the rest of us. Outside of the Wall Street bankers whom the administration has succored without asking them to slash their wages in half, how many Americans could survive a cut of half their paycheck in a few months, without going bankrupt? How many Senators who pay themselves six figure incomes with lavish pensions and health care could manage an immediate 50% reduction in their salaries? (Most of them, come to think of it, since the Senate is a millionaires’ club).

Forget about the deepening recession. The Senate Republican position was essentially that the price of bailing out GM and Chrysler was to insure that the union was broken and the workers went bankrupt.

It was, of all people, Vice President Dick Cheney who reportedly warned the Republican caucus that failure to pass the bill would lead to an even worse economic downturn, that it would be “Herbert Hoover time” if the bill didn’t pass. And after the Republicans torpedoed the bill, the Asian and European stock markets plummeted, with Wall Street about to follow.

There are defining moments in politics. Here Republicans defined themselves. They are not free market conservatives, for they were willing to do the bailout. They don’t object to nationalizing the banks or micromanaging the auto industry on the fly. They are class warriors, willing to risk a worse global economic calamity in order to break a union, to force workers into bankruptcy. Herbert Hoover time. Let’s not forget this last ignoble obstruction, committed just as the Senators went home for the holidays.

Who Says There Are No Slaves in America?

Source: IntelDaily.com.

Who says there are no slaves in America? The greatest domestic issue facing President-elect Obama is not the bailout of the bankers and insurers but the task of lifting tens of millions of hard-working American wage-slaves out of dire poverty. These are the folks who hold one- and sometimes two or even three low-paying jobs, work their tails off 60 hours or more a week, and are still stuck in poverty on payday with no hope of climbing out.

Indeed, if enough workers were getting paid a living wage Wall Street and Detroit would not find themselves begging Washington for billions. Homeowners would have enough money to pay their mortgages and buy new cars. Today’s crisis is the bitter payback for decades of corporate greed. As former Labor Secretary Robert Reich has written, “Most of what’s been earned in America” in the past 35 years “has gone to the richest 5 percent.” Result: 37 million Americans are said officially to live in poverty but Catholic Charities of Saint Paul-Minneapolis notes a more realistic accounting puts the poor at 50 million.

During the Bush regime, five million more Americans slid into poverty, and the unemployment figure, charitably put at 6.5% (but actually much higher counting discouraged workers,) hit a 14-year high in October. And at least five million people are working part-time because they can’t find full-time jobs. What’s more, those fully employed have seen their overtime pay disappear and their working hours shrink as demand tanks for their goods and services. Each day, thousands of pink slips are being handed out.

Poverty is so virulent, there are 18,000 children sleeping in homeless shelters in New York City every night and 1.7-million New Yorkers are eligible for food stamps. “Twenty-five percent of all families with children in New York City—that’s 1.5 million New Yorkers—are trying to make it on incomes that are below the poverty threshold established by the federal government,” writes Bob Herbert of The New York Times. Nationally, 21 percent of U.S. Hispanics and 24 per cent of African-Americans subsist in poverty.

The great slide into poverty and ruin has long been underway. “The underlying problem has been building for decades,” Reich says. “America’s median hourly wage is barely higher than it was 35 years ago, adjusted for inflation. The income of a man in his 30s is now 12 percent below that of a man his age three decades ago.”

Indeed, USA employs millions of wage slaves, whether illegal immigrants in the vegetable fields of Florida or native-born serfs in the needle trades of Los Angeles (currently reviving as their substandard wages are now comparable to what coolies earn in Chinese factories.) Few alien toilers, who are blatantly exploited and work under the sword of deportation, dare to protest their plight to Labor Department authorities that, under the Bush regime, are deliberately understaffed and commonly indifferent to workers’ complaints.

As the New York Times editorialized, the Labor Department “has tilted toward employers and failed to properly enforce labor laws.” The Government Accounting Office found Labor’s Wage and Hour Division “failed to adequately investigate complaints that workers were not paid the minimum wage, were denied mandatory overtime or were not paid their last paychecks,” the editorial said. Labor unions today can claim only 10 million members, a tiny fraction of the work force, and multitudes of workers have swallowed corporate propaganda that unions are bad for them even though union workers typically get paid 30 percent more!

Ever more Americans— as mounting credit card debt figures reveal — are unable to make ends meet at their minimum-wage jobs, and are, in fact, wage slaves drowning in a rising sea of red ink, with no prospect of good union jobs to rescue them. Organized labor has been trampled nearly to death on a rigged playing field that denies unions a fair chance to organize. The quickest way to get fired is to ask one of your co-workers to vote in a union. Tens of thousands have enlisted for the military sign-up bonus and job training because it’s the only job and training package they can find. Military recruiters know of their plight and unashamedly concentrate their activities on the children of the poor.

Far from evincing a drop of “compassion,” the AFL-CIO said the Bush 2008 fiscal budget “cuts more than one billion ($)in job training and employment programs,” this “just a week after he (Bush) talked about the need for better training and assistance to help America’s workers compete in a global economy.” It noted, too, the Bush budget “eliminates current job training for unemployed adults and at-risk youths.”

This has had particularly tragic consequences for African-American youth, pushing their jobless rate up in some cities up to about 50 percent. And let’s not kid ourselves: a disproportionate number of the 2.3 million souls’ in America’s expanding prisons are African-American precisely because when people can’t earn income they’ll steal. As Barbara Ehrenreich wrote in The Progressive magazine, “We are fast reaching the point, if we have not passed it already, where the largest public housing program in America will be our penitentiary system.” Over two thousand years ago Aristotle said “Poverty is the parent of crime and revolution” and that’s still true today.

In 1962, the National Urban League’s Whitney Young called for a “Domestic Marshall Plan.” It was a very good idea then but needs to be expanded to meet today’s national emergency. Last January, economist Joseph Stiglitz said the downturn could be stopped in part by strengthening the unemployment insurance system, and that surely needs to be done. The focus must not be on bailing out the fat cats at the top but on making jobs and providing income for those whom FDR called the forgotten men and women at the base of the economic pyramid. And a good place to begin is to slash Pentagon spending for its morbid weapons system development and its endless wars. Imagine what might have been achieved here at home with the trillion bucks lavished on the illegal war in Iraq! (And the total bill may yet be $3 trillion!)

Urgently needed is a public-private sector partnership to refurbish our infrastructure, expand our moderate- and low-income housing supply, (renewing our inner cities, old-line suburbs and failing small towns,) to reinvigorate our mass transit, to retrain the unskilled, to tutor the unlettered, and to make college or vocational training available to every citizen. Let’s put an end to wage slavery once and for all. If the Obama administration will only concentrate on nurturing the grass roots, every aspect of American life might one day bloom as a garden.

(Sherwood Ross, formerly a reporter for the Chicago Daily News and talk show host at WOL Radio, Washington, currently directs a public relations firm for non-profit organizations. Reach him at sherwoodr1@yahoo.com)

Congressman Ron Paul: The Neo-Alchemy of the Federal Reserve

From his weekly column, Texas Straight Talk. Will Congress grow a set and abolish the Fed? Highly unlikely, but extremely necessary at this point.

As the printing presses for the bailouts run at full speed, those in power are no longer even pretending that the new giveaways will fix our problems. Now that we are used to rewarding failure with taxpayer-funded bailouts, we are being told that this is “just a start,” more funds will inevitably be needed for more industries, and that things would be much worse had we done nothing.

The updated total bailout commitments add up to over $8 trillion now. This translates into a monetary base increase of 75 percent over the last two months. This money does not come from some rainy day fund tucked away in the budget somewhere – it is created from thin air, and devalues every dollar in circulation. Dumping money on an economy, as they have been doing, is not the same as dumping wealth. In fact, it has quite the opposite effect.

One key attribute that gives money value is scarcity. If something that is used as money becomes too plentiful, it loses value. That is how inflation and hyperinflation happens. Giving a central bank the power to create fiat money out of thin air creates the tremendous risk of eventual hyperinflation. Most of the founding fathers did not want a central bank. Having just experienced the hyperinflation of the Continental dollar, they understood the power and the temptations inherent in that type of system. It gives one entity far too much power to control and destabilize the economy.

Our central bankers have had a tremendous amount of hubris over the years, believing that they could actually manage a paper money system in such a way as to replicate the behavior and benefits of a gold standard. In fact, back in 2004 then Fed Chairman Alan Greenspan told me as much. People talk about toxic assets, but the real toxicity in our economy comes from the neo-alchemy practiced by the Federal Reserve System. Just as alchemists of the past frequently poisoned themselves with the lead or mercury they were trying to turn to gold, today’s bankers are poisoning the economy with accelerated fiat money creation.

the ages, gold has stood the test of time as a consistently reliable medium of exchange, and has frequently been referred to as “God’s money”, as only God can make more of it. Seeking superhuman power over money in the way alchemists did in ancient times caused society to shun them as charlatans. In much the same way, free people today should be sending the message that this power and control over our money is no longer acceptable.

The irony is that even had the ancient practice of alchemy been successful, and gold was suddenly, magically made abundant, alchemists still would have failed to create real wealth. Creating gold from lead would have cheapened its status to that of rhinestones or cubic zirconia. It is unnatural and dangerous for paper to be considered as precious as a precious metal. Our fiat currency system is crumbling and coming to an end, as all fiat currencies eventually do.

Congress should reject the central bank as a failure for its manipulations of money that have brought our economy to its knees. I am hoping that in the 111^th Congress my legislation to abolish the Federal Reserve System gains traction so that the central bank can no longer destroy our money.

GRAND THEFT ECONOMICS: Bush admininistration diluted loan rules before crash

Source: Yahoo.

WASHINGTON – The Bush administration backed off proposed crackdowns on no-money-down, interest-only mortgages years before the economy collapsed, buckling to pressure from some of the same banks that have now failed. It ignored remarkably prescient warnings that foretold the financial meltdown, according to an Associated Press review of regulatory documents.

“Expect fallout, expect foreclosures, expect horror stories,” California mortgage lender Paris Welch wrote to U.S. regulators in January 2006, about one year before the housing implosion cost her a job.

Bowing to aggressive lobbying – along with assurances from banks that the troubled mortgages were OK – regulators delayed action for nearly one year. By the time new rules were released late in 2006, the toughest of the proposed provisions were gone and the meltdown was under way.

“These mortgages have been considered more safe and sound for portfolio lenders than many fixed rate mortgages,” David Schneider, home loan president of Washington Mutual, told federal regulators in early 2006. Two years later, WaMu became the largest bank failure in U.S. history.

The administration’s blind eye to the impending crisis is emblematic of a philosophy that trusted market forces and discounted the need for government intervention in the economy. Its belief ironically has ushered in the most massive government intervention since the 1930s.

“We’re going to be feeling the effects of the regulators’ failure to address these mortgages for the next several years,” said Kevin Stein of the California Reinvestment Coalition, who warned regulators to tighten lending rules before it was too late.

Many of the banks that fought to undermine the proposals by some regulators are now either out of business or accepting billions in federal aid to recover from a mortgage crisis they insisted would never come. Many executives remain in high-paying jobs, even after their assurances were proved false.

In 2005, faced with ominous signs the housing market was in jeopardy, bank regulators proposed new guidelines for banks writing risky loans. Today, in the midst of the worst housing recession in a generation, the proposal reads like a list of what-ifs:

_Regulators told bankers exotic mortgages were often inappropriate for buyers with bad credit.

_Banks would have been required to increase efforts to verify that buyers actually had jobs and could afford houses.

_Regulators proposed a cap on risky mortgages so a string of defaults wouldn’t be crippling.

_Banks that bundled and sold mortgages were told to be sure investors knew exactly what they were buying.

_Regulators urged banks to help buyers make responsible decisions and clearly advise them that interest rates might skyrocket and huge payments might be due sooner than expected.

Those proposals all were stripped from the final rules. None required congressional approval or the president’s signature.

“In hindsight, it was spot on,” said Jeffrey Brown, a former top official at the Office of Comptroller of the Currency, one of the first agencies to raise concerns about risky lending.

Federal regulators were especially concerned about mortgages known as “option ARMs,” which allow borrowers to make payments so low that mortgage debt actually increases every month. But banking executives accused the government of overreacting.

Bankers said such loans might be risky when approved with no money down or without ensuring buyers have jobs but such risk could be managed without government intervention.

“An open market will mean that different institutions will develop different methodologies for achieving this goal,” Joseph Polizzotto, counsel to now-bankrupt Lehman Brothers, told U.S. regulators in a March 2006.

Countrywide Financial Corp., at the time the nation’s largest mortgage lender, agreed. The proposal “appears excessive and will inhibit future innovation in the marketplace,” said Mary Jane Seebach, managing director of public affairs.

One of the most contested rules said that before banks purchase mortgages from brokers, they should verify the process to ensure buyers could afford their homes. Some bankers now blame much of the housing crisis on brokers who wrote fraudulent, predatory loans. But in 2006, banks said they shouldn’t have to double-check the brokers.

“It is not our role to be the regulator for the third-party lenders,” wrote Ruthann Melbourne, chief risk officer of IndyMac Bank.

California-based IndyMac also criticized regulators for not recognizing the track record of interest-only loans and option ARMs, which accounted for 70 percent of IndyMac’s 2005 mortgage portfolio. This summer, the government seized IndyMac and will pay an estimated $9 billion to ensure customers don’t lose their deposits.

Last week, Downey Savings joined the growing list of failed banks. The problem: About 52 percent of its mortgage portfolio was tied up in risky option ARMs, which in 2006 Downey insisted were safe – maybe even safer than traditional 30-year mortgages.

“To conclude that ‘nontraditional’ equates to higher risk does not appropriately balance risk and compensating factors of these products,” said Lillian Gavin, the bank’s chief credit officer.

At least some regulators didn’t buy it. The comptroller of the currency, John C. Dugan, was among the first to sound the alarm in mid-2005. Speaking to a consumer advocacy group, Dugan painted a troublesome picture of option-ARM lending. Many buyers, particularly those with bad credit, would soon be unable to afford their payments, he said. And if housing prices declined, homeowners wouldn’t even be able to sell their way out of the mess.

It sounded simple, but “people kind of looked at us regulators as old-fashioned,” said Brown, the agency’s former deputy comptroller.

Diane Casey-Landry, of the American Bankers Association, said the industry feared a two-tiered system in which banks had to follow rules that mortgage brokers did not. She said opposition was based on the banks’ best information.

“You’re looking at a decline in real estate values that was never contemplated,” she said.

Some saw problems coming. Community groups and even some in the mortgage business, like Welch, warned regulators not to ease their rules.

“We expect to see a huge increase in defaults, delinquencies and foreclosures as a result of the over selling of these products,” Stein, the associate director of the California Reinvestment Coalition, wrote to regulators in 2006. The group advocates on housing and banking issues for low-income and minority residents.

The government’s banking agencies spent nearly a year debating the rules, which required unanimous agreement among the OCC, Federal Deposit Insurance Corp., Federal Reserve, and the Office of Thrift Supervision – agencies that sometimes don’t agree.

The Fed, for instance, was reluctant under Alan Greenspan to heavily regulate lending. Similarly, the Office of Thrift Supervision, an arm of the Treasury Department that regulated many in the subprime mortgage market, worried that restricting certain mortgages would hurt banks and consumers.

Grovetta Gardineer, OTS managing director for corporate and international activities, said the 2005 proposal “attempted to send an alarm bell that these products are bad.” After hearing from banks, she said, regulators were persuaded that the loans themselves were not problematic as long as banks managed the risk. She disputes the notion that the rules were weakened.

In the past year, with Congress scrambling to stanch the bleeding in the financial industry, regulators have tightened rules on risky mortgages.

Congress is considering further tightening, including some of the same proposals abandoned years ago.

What’s The Next Big Thing For 2009?

From The Second Great Depression blog.

Fri, 11/21/2008 – 13:26 — rich2010

Prediction is very difficult, especially about the future – Niels Bohr

The Grin Reaper has spent the last week puzzling about the future and remains puzzled about what is coming next. The Federal Reserve created $1 Trillion USD from 1913 until Sept 18, 2008 since then they have created another 1 Trillion in two months and are on track to create another 1 Trillion before the end of 2008. All of this debt has to be sold into the bond market in 2009 which frankly I doubt can happen.

About five years back I began scrutinizing US T-bill holdings. Three years ago to my great surprise it appeared that both China and Japan had stopped accumulating US debt. Out of nowhere came a new category of buyers referred to as “Carribean Banks”. My understanding is that this is a nice euphemism for FED-owned hedge funds who serve as a shill buyer to keep up the appearance of demand for US debt. This practice represents monetarization of US debt. Simply put, the money gets printed in the absence of a real live bond buyer.

In the years since Richard Nixon closed the FED’s gold window in 1971 the US government has convinced foreigners to accept more bonds to roll over the debt, and more bonds in “payment” of the interest owed. The question is what happens when the foreigners want to be paid in something other than more US debt. This tipping point should usher in the Great Bond Market Collapse of 2009. Most writers worth reading identify this as a signal of the coming hyperinflation.

Meanwhile everywhere assets appear to be deflating, house, automobiles, commodities, gold, silver. Meanwhile the US Treasury 30 year bond rose to 127.19 and the 10 year finished at 120.71. The USD closed above 88 and the spot price for crude oil fell over 10% settling at $48.63/bbl.

Yesterday the Dow hit a six year low, closing below 8000 at 7997: Citigroup Inc shares fall as much as 25.5 percent to $4.77; Bank of America Corp shares fell a 10.6 percent to $11.68. JPMorgan Chase & Co share fell 18.5 percent to $23.21; the S&P financials index .GSPF falls as much as 8.5 percent; and Goldman Sachs Group Inc shares fall as much as 11.1 percent to $49.00. Today the DOW dropped another 4 percent to 7552. So much for the vaunted effect of buying bankster stock shares with TARP (Troubled Asset Relief Program) funds promoted by Benny and Hanky.

Citibank will probably be the first “too big to fail” bank to fail given the increasing cost of the credit default swaps on it’s debt. This failure will come with a twist. The majority of Citibank’s deposits are contained overseas and thus not covered under the FDIC’s revised insured limit of $250,000 USD. This will probably come as a surprise to Citibank’s depositors, who overnight will morph into Citibank’s creditors.

How far the stock market will fall is anyone’s guess, the next support on the charts is roughly around today’s close. So we may expect an engineered Xmas rally by the Plunge Protection Team. But I’m on the lookout for the coming day when both the stock and bond markets head down together. That’s when we know that the Great Bond Collapse of 2009 will be underway. After that I suspect that the 2009 bond collapse will eventually transmogrify into a global fiat currency collapse, given that the only thing backing the world’s currencies is hot air issuing from the collective mouths of the world’s central bankers. From every indication they are going to need to blow a lot more smoke up bondholders skirts to give them a warm feeling about the pile of fiat paper.

The most positive effect for gold and silver investors is that the PPT is providing us with historical bargains in preparation for the biggest event in the history of fiat money…it’s own demise.

Happy New Year.

Grinz!

How To Deal With Pirates (American, not Somalian)

By Rob Kall, OpEd News.

The Wall Street Journal offered an article yesterday on How to Fight pirates. It reported how, in the late 18th century and early 19th Century, Moroccan pirates– Barbary pirates– were attacking American ships and kidnapping their crews, holding the crews and the goods on board for ransom. In 1785, the Pasha of Morocco demanded a million bucks, ten percent of the fledgling USA’s national budget, for protection. Samuel Adams and Thomas Jefferson had no alternative. For at least a decade, for lack of a navy and support from other nations to fight back, the US paid those ransoms.

The Wall street journal article goes on to talk about the current Somalian pirate affliction off the coast of Somalia.

But what about the pirates in the USA? I’m talking about the finance company and hedge fund execs who have hijacked our economy and run off with billions in booty, at the cost of tens of millions of citizens’ homes and life savings.

These criminals are destroying lives at a much larger scale. And the American people have no champion to rescue them. Bush appointed Hank Paulson, the equivalent of Blackbeard, to suggest the “bailout” which looks more and more like a massive keelhauling of the economy. And Obama has appointed another fellow pirate– Geithner– to take the treasury and swing the citizenry by the yardarm.

The fact is, the financial system throughout the world has been taken over by pirates– rip-off artists who have invented new ways to finagle billions out of the hands of the people and into the hands of the few.

It seems Democrats AND Republicans are equally eager to help THESE pirates to come up with new ways to maintain their pirate ways, to keep the pirate “system” going.

The solution is no simple matter. It took more than a decade of pirate depredations, in spite of the protection monies charged, for the US, under Jefferson’s (a liberal) leadership to get the guts to build an armada that would go to the Mediterranean and wipe out the pirates and their home bases. Once Jefferson got things going and showed it could be done, the rest of the world followed his footsteps.

We can’t wait that long. The US must face the fact that we have the worst pirates in history right in our nation, filthy rich, hobnobbing with politicians, treated with honor, given power. They must be reframed as the pirates– as the criminals they are. Their practices– derivatives, etc., must be defined as criminal endeavors, and they must be brought down– all the way down, with fines that take away their massive salaries and bonuses, for what- for failure. No. They’ve been paid booty for their successful plundering of the USA’s families and national resources.

I’m not just speaking metaphorically. These men are not brilliant leaders. They are no better than the pirates holding the Saudi oil tanker. They deserve the same treatment– capture– alive or dead. And destruction of their tools of destruction– and that, my friends, includes the Federal Reserve Banks, the WTO and most of the other current globalism tools that have been used to lay waste to democratically established democracies.

America needs a lot more than Obama is setting up between Geithner and Summers. This start is a bad beginning. We don’t need people who are masters at the pirate system. We need people who can tear it down and replace it with something that works for Americans.

Tired of The Crash?

Source: Karl Denninger’s The Market Ticker.

The market and economy will not stop falling apart until:

1. Paulson is fired and his policies cease.
2. We have transparency in balance sheets – for every firm on the exchange. No exceptions. All Level 3 asset mark models and assets identified – period.
3. Bernanke withdraws all his alphabet soup programs or is removed from office and his successor does, and the “crowding out” in the credit markets ceases.

Its that simple, and all three must happen before we will see any sort of sustainable bottom put in.

This doesn’t mean we can’t have “rip your face off” rallies – we both can and will.

But the market and economy will not bottom until the three things above are done, and the only way that is going to happen is when you make it happen.

That’s right. Your 401k is a 201k (and will soon be a 41k) because you (collectively) sat on your butts last October when I started running petitions and because we have managed to garner only 50-odd people at protests.

There should be hundreds of thousands.

There should be general strikes – people who simply refuse to go to work, en-masse, across the nation.

There should have not been one Congressman or woman who voted for the bailout returned to office.

Bottom line: You have and are consenting to this economic depression – and make no mistake, that is exactly what the credit markets are saying we are entering right now.

Remember that more than a year ago Subprime Mortgage Bonds forecast a total meltdown in that industry, and that nearly all of the companies in that space would go bankrupt. We were told that this sort of “Armageddon” scenario would not and could not occur, and that the credit market was playing “histrionics”. A number of so-called “smart money” investors (Wilbur Ross anyone?) stepped in and bought these supposedly-undervalued instruments – and promptly got slaughtered when the actual performance was worse than the credit markets were forecasting.

The credit market was right and those who said it couldn’t happen were wrong.

Now the credit market is saying that we are going to have more defaults than happened during The Great Depression. That is, it is forecasting a Greater Depression that worse than the 1930s. The TNX (10 year yield) is threatening to break three percent, down another 6% (!) this morning to 3.16%. The bottom going back as far as my charts extend is 3.07%. Almost there.

The 13 Week T-Bill (IRX) stands at 0.1%, which is for all intents and purposes zero. The Effective Fed Funds trading rate has been between 0.2 and 0.3% since the last putative rate cut to 1% – that is, effectively zero.

Corporate AAA commercial mortgage spreads are at extreme wides, standing at over 700 bips; added to reference this means that super senior AAA commercial mortgages now yield more than 10%. Given the level of credit enhancement in these deals this forecasts default rates of more than thirty percent in this space. Similar extreme spreads are found among both the “high grade” and “high yield” corporate bond markets.

The credit market is telling you that we are headed for an S&P 500 trading at three hundred and a DOW at under three thousand. That we are headed for unemployment north of 20% on the U6 (broad) measure, and GDP contraction of twenty percent cumulatively from top to bottom.

That’s one person in five in the US without a job, deflation of 20% cumulatively or more in prices, over 2 million businesses going bankrupt in the next three years, and literal starvation and privation – all across America. No part of this nation will be spared.

The market callers are all saying all this is impossible.

Even though every thing the credit market has forecast thus far since this problem began has been not only proved correct but conservative; that is, if you bought believing that it would not be as bad as the credit market is forecasting, you have had your head handed to you.

So who are you going to listen to?

Ben Bernanke (“we won’t have a recession”) and Hank Paulson (“the economy is fundamentally strong”), along with all the market “callers” on CNBC, who have been wrong every single time for more than 18 months?

Or the credit market which has been right 100% of the time thus far since this crisis began?

Welcome to The Greater Depression, and make sure you remember that the blame for this event belongs to Congress, Henry Paulson, Ben Bernanke, and of course….. you, since you have failed to insist and force your government (and yes, its your government, just as its my government) to stop these clowns.

We will get out of this when – and only when – you stop believing that you can “have a pony”, “a chicken in every pot”, “economic stimulus”, and “free credit for everyone.”

Only when we the people (collectively) are either all bankrupted or we come to our senses and demand that the fraudsters be locked up and the bad debt purged by default will the system clear and both the economy and market find a sustainable bottom.

Those are the only two choices folks, and right now, you’re choosing bankruptcy and Depression for all.

Senate hearing on US auto bailout signals new attacks on workers

Looks like the U.S. auto industry workers will be in the long line of those thrown under the bus while bankers and other elites get bailed out and have money thrown at them.

Make no mistake, at the end of this economic crisis we will see a concentration of wealth in the hands of the few not seen for a while. It has all the marks of a planned squeeze on the middle and working classes, so that most of us will be reduced to Middle Age peasant status. Hope you have a comfortable car to live in—otherwise, it’s Tent City Time, the new alternative to the American suburbs.

http://www.wsws.org/articles/2008/nov2008/big3-n19.shtml

Tuesday’s Senate Banking Committee hearing on a $25 billion government bailout of the US auto industry underscored the reactionary framework of the official debate on the crisis of the Big Three auto companies. At the center of the dispute between those senators who support an emergency loan and those who oppose it is how best to impose the burden of the crisis on the backs of auto workers and the working class as a whole.

The hearing made clear that whatever the outcome of the dispute within Congress and the American ruling elite over the immediate issue of an auto industry bailout, the auto crisis will be used to launch an unprecedented assault on the wages, pensions, health benefits and working conditions of workers in every sector of the economy and every part of the country.

The hearing provided further proof that the only policy capable of defending the interests of auto workers is a socialist policy based on the nationalization of auto and its transformation into a publicly owned industry under the democratic control of the working population. This requires the independent industrial and political mobilization of auto workers and the entire working class in opposition to the auto companies, the Wall Street banks, both political parties and the United Auto Workers union (UAW), which functions as an appendage of the auto bosses.

Even were the $25 billion emergency loan to be passed by the lame duck 110^th Congress and signed into law by President Bush, which appears unlikely, it would be conditioned on the ripping up of existing union contracts and the imposition of wage and benefit concessions that would destroy virtually everything that remains of the gains won by generations of auto workers since the mass strike battles that established the UAW in the 1930s.

The Senate hearing was an exercise in hypocrisy. Neither the senators nor the chief witnesses—the CEOs of General Motors, Ford and Chrysler and UAW President Ronald Gettelfinger—pointed clearly and unequivocally to the absurdity of squabbling over $25 billion to the avert the imminent bankruptcy of General Motors after Congress approved the handover of more than a trillion dollars in taxpayer money to bail out the major banks.

The government rescue of Wall Street executives and speculators, whose recklessness and greed precipitated the financial meltdown that is plunging the world economy into the deepest slump since the Great Depression, imposed no restrictions on the banks and financial firms that receive government handouts. But now that the jobs of hundreds of thousands of auto workers are on the line, politicians and media commentators act as though the Wall Street bailout never happened and wax indignant over the prospect of government intervention into the “free market.”

The more that opponents of the proposed loan to the Big Three, including the Bush White House, the Treasury and the majority of congressional Republicans, denounce the measure, the more its supporters, from President-Elect Barack Obama to Democratic congressional leaders, declare that any loan must be tied to a ruthless program of downsizing and the destruction of the workers’ wages and conditions.

Opponents of the Democratic-sponsored proposal to use a small portion of the $700 billion allocated to bail out the banks to rescue the auto companies argue openly that the best option for gutting the wages and conditions of auto workers is to allow GM and the other companies to run out of cash and file for Chapter Eleven bankruptcy protection. This would result in the invalidation of existing union contracts, including the provision of health care and pensions for millions of retirees and their dependants.

Calls for this option have filled the airwaves and the pages of major newspapers in recent days. One example is an article by New York Times business columnist Andrew Sorkin that appeared in Tuesday’s edition. He advocated a “government-sponsored bankruptcy” that would force GM and Chrysler to merge and shut down half of their 35 plants. Sorkin wrote, “Bankruptcy would give GM enormous leverage with its debt holders—and perhaps more important with the UAW, whose gold-plated benefits are one reason why GM is no longer competitive.”

At Tuesday’s Senate hearing, GM’s Richard Wagoner, Ford’s Alan Mulally and Chrysler’s Robert Nardelli argued against opponents of the government loan that drastic restructuring is already underway. They pointed to the fact that over the last two years more than 100,000 jobs have been eliminated, scores of plants shut and billions slashed from operating expenses.

The executives praised the role of the UAW in signing a contract in 2007 that imposed unprecedented reductions in labor costs. The concessions, they said, had virtually eliminated their labor cost differentials with Asian and European rivals that operate non-union plants in the US.

The most degrading testimony came from UAW President Gettelfinger. He pleaded for a bridge loan to help the auto companies weather the storm until the union’s new cost-cutting agreement takes full effect in 2010.

“What the UAW has done?” Gettelfinger asked rhetorically. “In 2005 we ended the vow we made to our retirees that they did not have to contribute to their health care. We negotiated the VEBA [Voluntary Employee Beneficiary Association] to take retiree health care obligations off the company’s books. Hourly workers gave up their 3 percent wage increases and for four years there will be no annual improvement in wages. We changed work rules.”

He could have added that the 2007 contract allows the Big Three to hire new workers at half the pay of older workers and strips them of traditional health and pension benefits.

Responding to criticisms of the union’s so-called Jobs Bank program, which subsidizes the pay of laid-off workers, Gettelfinger declared, “Between 2005 and 2008, we have lost 47,000 workers at GM and we have virtually eliminated our jobs bank at all three companies. We had to take the political heat for these kinds of decisions, but as a union leadership we are proud to work with these companies.”

Gettelfinger’s testimony was a self-indictment of the UAW bureaucracy, demonstrating that the union lacks any policy independent of the auto companies. It was a testament to the utter failure of the union’s policy based on virulent opposition to socialism, the promotion of economic nationalism and hostility to a political break with the parties of the American corporate elite.

One of the witnesses, Peter Morici, an international business professor from the University of Maryland, told the senators that bankruptcy would allow the US auto makers to throw tens of thousands out of work without paying severance benefits and would put American auto makers on par with non-union plants operated in the US by Asian and European companies.

On the same day as the Senate hearing, Kenneth Lewis, the CEO of Bank of America—which received $25 billion in the government bailout—told an audience at the Detroit Economic Club that the auto companies shouldn’t get a dime in federal money unless it came with “stipulations,” including a commitment to drastically consolidate the industry, including the elimination of at least one of the Big Three companies. “The American people aren’t interested in just giving more money,” he said with a straight face.

Among the most outspoken Senate opponents of the proposed auto loan is Richard Shelby, the ranking Republican on the Banking Committee. Not accidentally, his state, Alabama, is home to non-union plants operated by Toyota, Honda, Mercedes and Hyundai.

Michigan Senator Debbie Stabenow summed up the reactionary basis on which the Democrats posture as defenders of working people. In her opening comments she said that American manufacturing had to be defended because it was crucial for national security. America, she said, “can’t go from a foreign dependence on oil to a foreign dependence on technology and the manufacture of tanks, planes and automobiles.”

Such nationalist appeals have long been used by the Democrats and the UAW bureaucracy to undermine class consciousness and demand ever-greater sacrifices from workers in the US to “save American industry.”

The American ruling elite is exploiting the economic crisis to impoverish the working class and return it to conditions of unbridled exploitation not seen since 1930s. In this, it has the full collaboration of the UAW and the rest of the official unions.

The collapse of the US auto industry has demonstrated the need for state intervention and planning. The question is: by whom and in whose interests? The experiences of the last three decades, beginning with the 1979-80 Chrysler bailout, demonstrate that in so far as state intervention, in whatever form, is carried out by the two corporate-controlled parties and a government dominated by big business, it will be used to destroy the conditions of auto workers and, on this basis, create a rump auto industry that can once again provide a profitable avenue for investment by Wall Street banks and speculators.

The only policy capable of defending the interests of working people is the nationalization of the auto industry under the democratic control of the workers themselves. Economic decision-making must be taken out of the hands of those who have driven the industry into the ground—while amassing huge personal fortunes—and put in the hands of the working population.

The business secrets and account books of the corporations must be opened to public review and the multi-million salaries and other ill-gotten gains of the CEOs and Wall Street speculators confiscated and put to socially necessary use. The auto industry must be reorganized on the principle of production for human need, not profit, in order to guarantee decent living standards to workers and their families and produce safe, affordable and environmentally sustainable vehicles.