Tuesday, December 31, 2013

US Working Class Face Greater Struggles as Economic Bubbles Continue

The US working class have taken another round of austerity, with cuts in subsidized housing (HUD Section 8), early childhood education (HEADSTART), food subsidies (SNAP) and long-term unemployment benefits.  The US Federal Reserve, however, continues to give tens of billions of dollars each month to the nation's largest banks, through its quantitative easing program.

Meanwhile, bubbles and budget shortfalls persist in healthcare, higher education, the military-industrial complex,and the financial system, including pensions and retirement programs.   Working class people of all ages continue to adapt to this predatory economy by working harder and making financial sacrifices.  The same cannot be said for those in power. 








Thursday, March 14, 2013

Stock Market High...and Worker Lows

US workers continue to suffer as elites consolidate even more power and money.  The US Treasury and the Federal Reserve continue to funnel money into the big banks through Quantitative Easing (QE).  In this scheme, banks are overpaid for their toxic assets.1

On the worker front, about 50 million people in the US continue to rely on SNAP (aka foodstamps) to get by.  Youth continue to have difficulty in finding work, and many are feeling depressed and suicidal.  Work hours are also being reduced by some corporations to skirt the Affordable Care Act.2  At the time of this writing, Republicans and Democrats are discussing austerity measures that are already hurting low income workers and their families.3



Monday, June 18, 2012

What We Knew Already: US Working Class Decimated By "Free Market" Economics

According to the US Census, US median wealth declined 38% between 2007 and 2010. While some working class people may have recovered economically since 2010, few have been untouched by structural changes. As we have noted in previous posts, inequality has been increasing in the US since the late 1960s and working class wages have been stagnant. The so-called middle-class adapted to structural changes by having smaller families, going to college and borrowing money for housing, education, and medical costs. But in 2007, the first bubble burst and the financial and housing foreclosure crisis ensued. In response, neoliberals and neoconservatives responded by bailing out large banks, investment firms and insurance companies (2008-2009) then calling for austerity at the federal, state, and local levels (2010-). "Banks" have consolidated power while the working class remain in peril.

Thursday, April 5, 2012

US Supreme Court Reinforces Slow Descent Into Fascism

On April 2, 2012, the US Supreme Court upheld the rights of police and jailers to strip search Americans for the smallest offenses. Florence v. County of Burlington is only the latest judicial decision or law limiting the rights of the People. Recently, the US Congress also passed HR 347, a law criminalizing the disruption of government meetings.



Tuesday, January 3, 2012

Unemployment and Income Numbers Fail to Illustrate US Worker Struggle

The official (U3) unemployment rate is increasingly becoming irrelevant in explaining the employment picture. Note the gap between U3, U6, and Shadow Stats Unemployment.

Behind the numbers: young unable to enter the market and others unable to reenter the market in a meaningful way. So many stories on our travels of the "flexible workplace": an architect selling luggage at Macy's, a woman having to take a retirement or face layoff, adjunct profs with little pay and no benefits, the state worker downsized and doing the same job for less as a contractor, college grads who cannot find work that can pay off their student loans.

The mainstream media tends to use income rather than wealth as an indicator of equality and economic health. But wealth, the accumulation of assets minus debts, gives us a bleaker picture, as tens of millions of people owe large amounts on their homes, student loans, and consumer loans. In 2007 the average wealth of the bottom 40% US residents was only $2200; imagine what the numbers must be in 2012.

For women and people of color, the decline of wealth is more stark. African American families now only have 5 cents in wealth for every dollar that a white family owns; the median income of African American single women is $100.

Tuesday, August 2, 2011

People Resist Corporate Destruction of Democracy, Environment, and Social Safety Net

Workers continue to fight for economic and environmental justice. However they have taken lots of hits lately. The American Legislative Exchange Council (ALEC), a nonprofit corporation, continues to provide model legislation to politicians to undermine progressive efforts.

Meanwhile, at least 25 large United States corporations paid more to their CEO than they did to the US government in taxes.1 According to the AFL-CIO "In addition to handing their CEOs big dollars, 20 of the 25 corporations in the study spent more on lobbying lawmakers than they paid in corporate taxes.

Vital organizations like the US Red Cross and the US Postal Service have been downsizing--with threats of more layoffs. Verizon communication workers protested after the corporation refused to bargain in good faith--and called for drastic cuts in pay and benefits.

As for government programs, homeless prevention programs and affordable housing budgets face drastic cuts.2

In environmental news, the Obama administration has decided to table progressive ozone legislation. They also appear to have given a green light for corporations to construct the Keystone Pipeline, transporting processed tar sands from Canada, across one of the largest US aquifers. More than 1200 people have been arrested outside the White House to protest the environmental injustice.3


1. http://www.nytimes.com/2011/08/31/business/where-pay-for-chief-executives-tops-the-company-tax-burden.html


2. http://sfbayview.com/2011/housing-authorities-prepare-for-section-8-housing-cuts/

3. http://www.tarsandsaction.org/press/

Sunday, July 31, 2011

Rich Continue to Consolidate Wealth and Power

American Injustice continues to gather reports showing a continuing consolidation of power by the US elites. The top 400 US families now own as much as the bottom 150,000,000 citizens.1 Meanwhile, the top 10 "banks" (Bank of America, JP Morgan Chase, Citibank, Wells Fargo, Goldman Sachs,Morgan Stanley) hold $11 trillion in assets or about 84% of all US bank assets.2 Two years ago, Bank of America and Citibank were on the verge of collapse, until they were bailed out by the US government.



2. http://www.mybudget360.com/banking-mammoths-top-10-us-banks-have-11-trillion-of-13-trillion-in-total-banking-assets/

Saturday, June 25, 2011

Macroanalysis: Trillions of Dollars Transferred From Working Class to Banks

US workers have been paying the price for corporate malfeasance--to the tune of $8,000,000,000,000 in home equity from 2006 to 2010. Note that while home equity decreased precipitously, residential mortgage debt (in red) did not decrease. Workers also continue to face mass evictions, job loss, and reductions in pay and benefits, while large corporations make record profits.

Workers Continue Class Struggle

US workers have faced several recent losses. In Dukes v. Walmart, the Supreme Court ruled against more than a million women workers who have faced gender discrimination at America's largest corporate employer. US Postal Service employees also lost all employer contributions to their pensions. And in the states, public service employees, including teachers, face layoffs and reductions in pensions and health benefits. Workers, however, continue the class struggle. In New Jersey, thousands of public service employees protested drastic benefit reductions. The losses were particularly discouraging given that both houses of the New Jersey Legislature are held by Democrats. Although the anti-worker bills were passed, protesters vowed they would "remember in November."

Monday, February 21, 2011

Workers Resist in Wisconsin

Public employees are increasingly feeling the pressure as states and municipalities face budget shortfalls--shortfalls created by neoliberal politics and economics. In Wisconsin, the Governor has used a slight budget deficit(created by tax cuts) as an excuse to declare ending collective bargaining for most public service employees. Wisconites and workers throughout the US are resisting these attacks on collective bargaining rights.

Thursday, May 6, 2010

Workers Suffer World Wide, Continue to Protest in Greece

Today the US stock markets and markets throughout Europe plunged. Working-class observers suggest that increased volatility in the markets signal more manipulation of the markets--and some wealthy investors profiting from the panic.1 In Greece, workers continue to protest austerity programs to service its debt to Western European powers.2 Neoliberal policies in other European nations have put other working-class people in peril, including people in Portugal, Spain, Italy, and Ireland.3 Conditions for workers worldwide have deteriorated to starvation levels, particularly in India, where food prices have increased more than 20%.4 In the US, British Petroleum's oil spill near Louisiana may be the largest ecological disaster in the nation's history, threatening to create increases in gas prices and sea food, while destroying the seafood industry in the area.5

1. http://www.nytimes.com/2010/05/07/business/07markets.html?hp
2. http://www.timesonline.co.uk/tol/news/world/europe/article7116511.ece
3. http://www.spiegel.de/international/europe/0,1518,677214,00.html
4. http://news.yahoo.com/s/ap/20100430/ap_on_re_as/as_india_going_hungry
5. http://wcco.com/national/oil.spill.Louisiana.2.1666005.html

Tuesday, April 27, 2010

Goldman Sachs Continues to Profit from Global Downturn

Lloyd Blankfein, CEO of Goldman Sachs (Source: UK Guardian)

The US Senate Governmental Affairs Subcommittee held hearings today examining the role of Goldman Sachs in the banking crisis. There were great theatrics as Senators Carl Levin and Claire McCaskill grilled Goldman executives about how GS employees sold junk stocks and derivatives to their clients.

The hearings sound very much like the testimony by Enron executives involved in undermining the energy industry. Unfortunately, many politicians, Democrats as well as Republicans, are beholden to Wall Street, and working-class people are skeptical that any politicians are looking out for them.

GS has also been implicated in hiding problems in Greece's economy. Greece appears to be close to bankruptcy, along with several other European nations, including Portugal, Spain, and Ireland. In 2008, Goldman was heavily involved in oil futures as prices rose and fell--and they, along with JP Morgan, were implicated in manipulating the markets.

In other stories, there is more rumbling on the Chinese real estate bubble as capitalism runs rampant there and the wealthy squeeze out more surplus value from their workers.

(1) http://www.c-span.org/Watch/Media/2010/04/27/HP/A/32230/Senate+Hearing+on+Goldman+Sachs+the+Financial+Crisis.aspx

(2) http://www.spiegel.de/international/europe/0,1518,676634,00.html

(3) http://motherjones.com/kevin-drum/2010/04/chinas-housing-bubble

Thursday, December 24, 2009

2009: The Year in Review

It has been another difficult year for the working class. While the top wealth owners consolidated ownership, the working class saw declines in wages and employment. The gap between rich and poor continued on its 40-year path towards greater disparity. The US health care bill, which appears to be close to passing, grants greater power for the powerful medical-industrial complex. The US also continues to be involved in military occupations in Iraq and an escalation of violence in Afghanistan. The drawing above, from 1911, reflects the hegemony of capitalism which is still visible nearly a century later.

Saturday, November 14, 2009

Goldman Sachs and the War on the Working Class

Goldman Sachs (GS) continues to consolidate power on several fronts, by pushing working-class people out of their homes, and by sending a 29 year-old former executive to the Securities and Exchange Commission (SEC) as another major player in the US government.

In 2006 GS sold $2 Billion in bonds to European investors through a Cayman Islands shell corporation, Altius III Funding Ltd. The bonds were bundled real estate and student loans made to appear as safe investments. Shell corporations such as Altius have been used to avoid taxes and oversight. From 2006 to 2007, GS sold more than $57 Billion in high-risk mortgage-based securities packaged as low risk bonds. The corporation, however, was left holding billions more in mortgage loans.1

With billions in toxic real estate investments remaining, another GS subsidiary, MTGLQ, is now removing people from their homes without negotiating substantively with homeowners.2

On October 16th, Former GS executive Adam Storch, a former Vice President at GS has been appointed Chief Operating Officer of the SEC's Enforcement Division. Former GS CEO Henry Paulson was the US Treasury Secretary from 2006 to 2008 when the US economy began its dramatic downturn.3

1. http://www.cleveland.com/business/index.ssf/2009/11/goldman_sachs_left_foreign_inv.html
2. http://www.miamiherald.com/news/nation/story/1311587.html
3. http://www.huffingtonpost.com/2009/10/16/adam-storch-sec-hires-exg_n_323526.html

Friday, October 23, 2009

Frontline Episode Shows How Neoliberals Enabled Economic Collapse

Frontline's latest episode called "The Warning" presents information on the history of over-the-counter credit derivatives and Brooksley Born, the head of the CFTC who cautioned that these unregulated financial instruments (over-the-counter derivatives) created a major risk for the economic markets. According to the Frontline sources, Alan Greenspan reportedly said he did not favor prosecution of fraud in this market that grew to $596 Trillion in derivatives. When Born decided to prosecute anyway, she was marginalized by FED Chairman Greenspan and Clinton Treasury officials Robert Rubin and Larry Summers. The episode also notes that Timothy Geitner, now the US Treasury Secretary, was also part of the male-dominated neoliberal contingent.


Friday, October 16, 2009

Banks Continue Assault on Working Class

The working class continues to be assaulted on several fronts. While many of its sons and daughters are pawns in the economic draft for US imperialism, working class people have also faced a chronic economic malaise. Law professor Elizabeth Warren notes, the middle-class have been hollowed out:

"So you've got, effectively, flat income in this time period with rising core expenses; housing; health insurance; child care; transportation, now that it takes two cars to get everywhere, two jobs to support; and taxes, because you've got two people in the workforce and we have a somewhat progressive taxation system. So that families are spending a lot more on what you describe as the basic nut."1

As Warren notes, the neo-liberal elite have been bailed out while the working class face greater vulnerability. As my time line indicates, this war on the working class has been systemic and lengthy. Sometimes the injuries are from a thousand cuts, such as the recent plan of Bank of America and Citigroup to begin charging annual fees to customers who pay off their credit card balances each month.2

1. http://www.washingtonpost.com/wp-dyn/content/article/2009/10/08/AR2009100800778_2.html?sid=ST2009100800781

2. http://www.chron.com/disp/story.mpl/ap/business/6669772.html

Sunday, October 11, 2009

US Empire Engaged in Murder Suicide

The US continues to occupy Afghanistan, with no exit strategy and no final objective. Historians note that the area is littered with the remains of the Macedonian, Mogul, British and Soviet empires who suffered great losses in their occupations. MSNBC reports that a significant majority of the warriors are not "Taliban", but a variety of recruits from the area and elsewhere (Chechnya, North Africa, Pakistan) sympathetic to the cause of pushing out the US Empire.1

In the meantime, US and NATO occupying soldiers are caught in the dilemma of killing civilians or facing death themselves as they help support corrupt governments there and in the US. To make matters worse, the US occupation exists between India and Pakistan, two nuclear rivals.3

According to former NATO Commander General Dan McNeill, 400,000 troops would be necessary to control Afghanistan. Others estimate that a much larger force, perhaps 660,000 troops, would be needed to secure the area.2 Currently there are about 100,000 US and NATO soldiers there and the Afghan military consists of about 190,000 soldiers. Canada plans on removing its 7500 troops by 2011.4

1. http://www.msnbc.msn.com/id/33256784/ns/world_news-south_and_central_asia/
2. http://online.wsj.com/article/SB10001424052970204908604574336402390524212.html
3. http://www.cfr.org/publication/17474/indiaafghanistan_relations.html
4. http://www.presstv.ir/classic/Detail.aspx?id=108284§ionid=351020701

Saturday, October 10, 2009

From Phantom Wealth to Real Wealth

Rep Marcy Kaptur Urges Working-Class People to Stay in their Homes

Is non-violent resistance necessary to enable democracy in the US? Bill Moyers interviews Ohio Representative Marcy Kaptur, a brave woman who has told her constituents to squat in their foreclosed homes. Banks such as Wells Fargo, BOA, and JP Morgan Chase continue to prey on working-class people as the housing crisis continues. In the Moyers interview, Rep Kaptur also says that Tim Geitner and Larry Summers are incapable of creating the changes necessary to fix the system and that President Obama needs to replace these shills for the banking industry.

Source: http://www.pbs.org/moyers/journal/10092009/profile.html

Saturday, October 3, 2009

Elites' Solution for Working-Class Medical Care: Don't Get Sick

US Congressman Alan Grayson has apologized to the 45,000 or so Americans and their families who die prematurely due to lack of medical care. It appears that the US will continue to be perhaps the worst post-industrial nation in terms of health care--and yet the most expensive. The biggest winner in this neoliberal lottery appears to be the insurance companies, who either maintain the status quo of overcharging and rescission or profit from an additional 30 to 40 million customers if the health care bill passes.

Friday, October 2, 2009

US Police Use Sound Cannons to Silence Democratic Protests

Police in Pittsburgh, Pennsylvania assaulted protesters with sound cannons during the latest G-20 meeting.* This was the first time that the weapons have been used against US civilians. According to Democracy Now, the weapon, known as a Long-Range Acoustic Device (LRAD) is manufactured by American Technology Corporation of San Diego. The device was used at 144 decibels which has as much sound pressure as an improvised explosive device. Quoting the Washington Times, Amy Goodman added:

“With the help of Homeland Security grants, police departments nationwide looking to subdue unruly crowds and political protesters are purchasing a high-tech device originally used by the military to repel battlefield insurgents and Somali pirates with piercing noise."

*Please see the 12-30-08 entry on US military preparation to use force against domestic resistance.

Sunday, September 6, 2009

Monopoly Capitalism in Medical Care

In 1945, Senator Pat McCarran (NV) sponsored a bill giving insurance companies an exemption from Federal anti-trust laws. The McCarran-Ferguson Act gave states the right to regulate insurance; in reality it allowed insurance companies the power the fix prices and deny care to its customers with limited repercussions. Today, health insurance companies make billions of dollars through monopoly capitalism and denying care to its sick customers through rescision.

Thursday, September 3, 2009

American Casino

American Casino is a new movie detailing the mortgage and foreclosure crisis that were part of the latest world economic downturn. The movie explains, for example, that corporations like Wells Fargo pushed working class people into subprime loans because they had significantly higher profit margins. These loans disproportionately affected people of color, including many who could have been eligible for more conservative fixed rate mortgages. This latest crisis, however, is only one event in the much longer war against the US working class. The evidence from my timeline is compelling--a pattern of corporate and government actions to extract more from workers.

Wednesday, July 29, 2009

Christopher Pyle discusses current domestic spying on peace activists by the US military. His discussion (starting at about minute 41) on Democracy Now! mentions US military spying of religious groups such as Unitarians and Quakers. Pyle was a whistleblower in 1970, revealing an extensive system of domestic spies under the code name Operation Talon.

Monday, July 13, 2009

Stella D'Oro Workers Win Battle Against Private Equity Pirates

Employees at Stella D'Oro biscuit company returned to work after striking for 11 months. The National Labor Relations Board (NLRB) determined that the private equity firm that owned the factory, Brenwood Partners, refused to bargain in good faith. The workers, members of Bakery, Confectionery, Tobacco Workers and Grain Millers Union, were forced on strike after Brenwood Partners tried to force them to take "a 20% pay cut, elimination of sick days and overtime, reductions in vacations and holidays and an increase in employee health care contributions." The firm stated that wages and benefits made the company unprofitable, yet failed to provide evidence of their claim. They are now threatening to close the factory. Private equity firms like Brenwood are known for making 30% returns on investment, in large part by reducing workers' wages and benefits. Employees had labored at Stella D'Oro for 10-15 years or more for the formerly family-owned operation.

Wednesday, June 3, 2009

Single-Payer Health Care Would Save Millions of Jobs and Thousands of Working-Class Lives Per Year

Dr. Carol Paris was one of 13 people arrested for protesting for single-payer health care on the US Senate floor. HMOs, pharmaceutical corporations, and for-profit hospital corporations spend billions of dollars funding US politicians to maintain the status quo, which means millions of personal bankruptcies and jobs lost and tens of thousands prematurely dead.

The US has possibly the worst health care system in the post-industrial world. Approximately 50 million US inhabitants do not have medical insurance and 45,000 die each year due to lack of medical care.1,2 Not only are health outcomes poor, they are expensive. The U.S. spends twice as much as comparable nations on health care, $7,129 per person, while half of all people who experience personal bankruptcy, a number in the millions, do so because of medical bills.3

The US medical system ruins workers who are well in addition to those who become sick or injured. "A 20% increase in [medical insurance] premiums costs 3.5 million workers their jobs, causes millions more to move from full-time to part-time work, and cuts the average income by approximately $1,700. CBO [the Congressional Budget Office] predicts that this 20% increase will occur over the next four years."4

One cure for this health care crisis would be single-payer health care, which would cut out high-cost medical insurance companies.

According to Nobel Laureate Paul Krugman:

"The great advantage of universal, government-provided health insurance is lower costs. Canada’s government-run insurance system has much less bureaucracy and much lower administrative costs than our largely private system. Medicare has much lower administrative costs than private insurance. The reason is that single-payer systems don’t devote large resources to screening out high-risk clients or charging them higher fees. The savings from a single-payer system would probably exceed $200 billion a year, far more than the cost of covering all of those now uninsured."4

1 http://www.americanprogress.org/issues/2009/05/america_without_health_reform.html
2 http://www.usatoday.com/news/health/healthcare/2002-05-22-insurance-deaths.htm
3 http://www.pnhp.org/
5 http://www.nytimes.com/2005/06/13/opinion/13krugman.html

Sunday, May 17, 2009

Understanding the History of Capitalism

The current global recession has been viewed by some neoliberal economists as an aberration in the history of capitalism. However, when one looks at economic history, particularly in the US, it becomes apparent that downturns are part of how the system operates. In fact, economic downturns account for more than a half century of US capitalism. For the elites, this latest event continues to be an opportunity to consolidate power and wealth.1

US Recessions

Feb-Oct 1945
Nov 1948–Oct 1949
July 1953–May 1954
Aug 1957–April 1958
April 1960–Feb 1961
Dec 1969–Nov 1970
Nov. 1973– March 1975
Jan-July 1980
July 1981–Nov 1982
July 1990–March 1991
Mar-Nov 2001
Dec 2007-current

In reality, the economic downturn for many began in the 1960s. The US Gini Index (a measure of income inequality) began increasing in the US no later than 1970:

1929: 45.0
1947: 37.6
1967: 39.7
1968: 38.6
1970: 39.4
1980: 40.3
1990: 42.8
2000: 46.2
2005: 46.9
2006: 47.0
2007: 46.3

1 http://www.nationalfreepress.org/Consolidation-of-Wealth

Saturday, May 9, 2009

US Senate Votes to Walk Away from Working-Class People

This week the US Senate voted to deny judges the ability to adjust home mortgages in foreclosure. The Durbin Amendment, strongly opposed by the banking industry, would have given up to 1,700,000 working-class people the chance to stay in their homes. One part of the bill that passed was a "safe harbor" provision that would reduce liability for predatory and fraudulent lenders.


As Clarence Darrow remarked, "the law does not pretend to punish everything that is dishonest. That would seriously interfere with business."

Friday, April 3, 2009

More From the US Kleptocracy

On Bill Moyers' Journal, William K. Black explains how a US banking culture of fraud led to the current economic crisis. The transcript is at


Earlier this week, the Financial Accounting Standards Board (FASB) relaxed Mark to Market accounting procedures which will ensure more corporate fraud in the future.


Sunday, March 1, 2009

Corporations Work Overtime to Subvert Workers

US corporations are spending billions of dollars to ensure that workers do not gain more rights and safeguards. The following links explain this battle against the Employee Free Choice Act.







Saturday, January 24, 2009

US Banks Functioning as Economic Parasites

Although it hasn't made mainstream news, economist Michael Hudson states that most of the US' top banks (Citibank, Bank of America, JP Morgan Chase, Wells Fargo) are insolvent. Hudson states that the current US bank bailout only prolongs the life of these toxic and parasitic banks. A historical analysis of this situation is at Counterpunch.


Tuesday, December 30, 2008

US Military Planning for Civil Unrest

A newly released paper by the US Army War College warns that US troops may be needed to fight its own citizens who protest against economic conditions. The paper, written by Lt. Colonel Nathan Freir, is titled "Known Unknowns: Unconventional Strategic Shocks in Defense Strategy Development."1

If employed, this would not be the first time US forces faced combat against its own civilians. Although National Guard troops and police have frequently been called up to fight the public, regular army troops have also been used. The Bonus Army of 1932, for example, was a protest of 15,000 to 20,000 veterans and their families lasting several months, until US troops were brought in to apply the threat of deadly force against these people at the nation's capitol.2,3

1. http://www.truthout.org/123008B
2. http://www.loc.gov/exhibits/treasures/trm203.html
3. http://www.eyewitnesstohistory.com/snprelief4.htm

Wednesday, December 10, 2008

The End of Retirement

Frontline (December 9, 2008) presented a stirring account of how corporations have shifted the retirement financing burden to workers over the last four decades. After 1974, many companies began shifting from traditional company pensions to 401K's. According to Frontline, this cost shifting has amounted to a 40% increase in retirement burden to workers. Today, many older workers are unable to retire due to this shifting of responsibility away from corporations.1

This account details only one part of a systemic and decades long anti-worker movement, and only one policy in a set of actions, laws and regulations to degrade retirement, stagnate wages, increase medical and educational costs, impoverish the working poor, and indoctrinate and dumb down the citizenry. See my "War on the Working-Class Timeline" in the right column.

On December 11, the Senate passed the "Worker, Retiree and Employer Recovery Act of 2008." A key part of the bill allows corporations to stop funding workers pensions. The anti-worker U.S. Chamber of Commerce, Business Roundtable and the National Association of Manufacturers pushed for its approval. The Senate measure was passed with a voice vote. Voice votes are anti-democratic strategies used in the Senate to deny responsibility.2

1. http://www.pbs.org/wgbh/pages/frontline/retirement/
2. http://www.guardian.co.uk/world/feedarticle/8158190

Saturday, December 6, 2008

Laid Off Workers Occupy Chicago Factory

Two hundred and fifty United Electrical Union workers have occupied a Chicago vinyl window factory since Friday. Today hundreds of supporters protested outside the plant in solidarity. The actions took place after the manufacturer failed to give its employees the 60 days' notice required by law before closing down.1,2

Workers are only asking for vacation and severance pay due them. According to the CEO of Republic Windows and Doors, its creditor Bank of America refused to allow Republic from paying its employees. It is notable that B of A recently received a $25 Billion bailout from the US Treasury (aka the People).

From AP's Rupa Shenoy:2

"Across cultures, religions, union and nonunion, we all say this bailout was a shame," said Richard Berg, president of Teamsters Local 743. "If this bailout should go to anything, it should go to the workers of this country."

Outside the plant, protesters wore stickers and carried signs that said, "You got bailed out, we got sold out."

Larry Spivack, regional director for American Federation of State, County and Municipal Employees, Council 31, said the peaceful action will add to Chicago's rich history in the labor movement, which includes the deadly 1886 Haymarket affair, when Chicago laborers and anarchists gathering in a square on the city's West Side drew national attention when an unidentified person threw a bomb at police.

"The history of workers is built on issues like this here today," Spivack said.

1. http://twincities.indymedia.org/2008/dec/chicago-factory-occupied
2. http://chicago.indymedia.org/newswire/display/84884/index.php
3. http://www.google.com/hostednews/ap/article/ALeqM5ildwrFjwHYjvJPX2edZgBnNb8EEQD94TID980

Sunday, November 30, 2008

Labor Department Lowers Bar for Worker Safety

The Bush Administration's Labor Department has enacted last minute regulations reducing safety for US workers. The new policies would allow for the use of highly toxic materials until there are lengthy industry-specific studies showing ill effects on workers.

According to the NY Times, the Labor Department and its sub-departments "control work-related substances such asbestos, benzene, cotton dust, formaldehyde, lead, vinyl chloride and blood-borne pathogens... the department is constantly considering whether to take steps to protect workers against hazardous substances. Currently, it is assessing substances like silica, beryllium, and diacetyl...."

Although the policy was opposed by the Senate, the Department has the right to enact such measures. The policy was supported by the US Chamber of Commerce, a lobbying group that supports anti-worker policies.

This anti-worker regulation is not the only rule change from Washington. According to the NY Times additional regulations "would allow coal companies to dump rock and dirt from mountaintop mining operations into nearby streams and valleys. Another, issued last week by the Health and Human Services Department, gives states sweeping authority to charge higher co-payments for doctor’s visits, hospital care and prescription drugs provided to low-income people under Medicaid."1

1. http://www.nytimes.com/2008/11/30/washington/30labor.html?bl&ex=1228194000&en=c7382f26209af6ce&ei=5087%0A

Wednesday, November 26, 2008

The San Francisco Chronicle reports that the US bailout of the fictitious capital market has now reached $8.5 Trillion in obligations. Click on the image below to see the accounting so far.


Tuesday, November 11, 2008

The People's Analysis

I have found that some of the most coherent analysis of social, historical, and economic conditions in the US comes from unpaid writers.

From MO:

"Newsflash dips. Free markets are ruthless. If our markets were truly free, trust me, you wouldn't be talking so highly of them. Ever see a Lion maul something in the serengeti? Now tell me, would you want to play with a lion in its natural habitat? Of course you want a cage around that lion if you're going to go anywhere near it.

The bottom line is that none of you are anything compared to the big shots in the world who have money, brains, and networks of friends you can only dream about.

Most of you are currently indentured servants who owe a quarter or more of your lifetimes earnings to a bank in the form of a house, car, and education. You owe this money inside a system that is designed to funnel more money up to the top, to those big shots I mentioned. The system is made so that when you want to enjoy your success in the form of a home, you pay extra to the rich for that right, and when you want to improve your life in form of an education, you pay extra to the rich for that right.

In the current system you will be devalued due to your economic starting point, regardless of your talent you will be devalued by the simple fact of not being rich already. And should you have extraordinary talent, you will be required by mechanisms in the system to help make the rich richer before you are allowed to join the rich.

And that is a tiny minority that will ever make it to the top like that as most will either luck into it or inherit it.

The bottom line is that capitalism as a truly "free" market would be barbaric, because even as it stands right now, it is unfair.

Now, go forth and keep making that money for the man."

From CA:

"Reading the comments in this post make me think I have landed in lala land with people who neither understand economics or history. Totally free markets result in only one thing 1% of the population owning everything and 99% as their servants or slaves. This is the ultimate conclusion of all free markets and can be observed in certain Asian countries in all of its glory today. Free markets do not encourage growth or innovation, as those who own everything refuse to invest in anything that will not make them richer. Only through regulation is the wealth of a free market forced out of the clutches of the very rich and powerful. The amount of regulation determines how fairly that wealth is spread and how secure the overall economy will be. Teddy Roosevelt and his distant cousin FDR made exactly the right decisions, even though they themselves did not benefit from those decisions. Both Teddy and FDR were among the filthy rich. Without those decisions America would not exist as it does today. America would be a backward third world country still struggling to get out of the mire. Most people I know who want free markets are just looking for the government to get out of the way so they can rape someone else. These people are greedy and amoral, in that they are only concerned about themselves and are willing to do anything to get theirs. That is going back to the mire, not moving ahead. If you really want that type of society, then you need to look at moving to some of those aforementioned Asian countries, and stop calling yourselves Americans."


Monday, November 10, 2008

More High Class Hustles

Three new economic "events" occurred today. All of these events benefit the ultra-rich at the expense of working-class folk.

The US Treasury has given ailing credit card company American Express the status of bank holding company. This allows the corporation to take advantage of the Troubled Asset Relief Program (TARP). American Express can also issue government guaranteed bonds.1

Mortgage bundler Fannie Mae announced that it is likely to require more money in its bailout. The Treasury originally agreed to a $100 Billion plan, but corporate losses have been greater than predicted. FME has an estimated $880 Billion in outstanding debt.2

Insurance giant AIG is receiving additional government assistance. The tab for this bailout has expanded from $80 Billion to more than $150 Billion. AIG has had significant investments in credit default swaps.3

1. http://www.nytimes.com/reuters/business/business-us-financial-usa-amex.html
2. http://www.bloomberg.com/apps/news?pid=20601087&sid=a.iQh4uHj3X8&refer=home
3. http://www.nytimes.com/2008/11/11/business/11views.html

Friday, November 7, 2008

Obama Wins Election as Working-Class Face Tough Times

Journalist and economist Robert Kuttner discusses the political decisions necessary to prevent an economic depression. Kuttner prescribes a large-scale jobs program to fix infrastructure and and an emphasis of IRS reviews on tax-dodging corporate elites and off-shoring corporations rather than reviews of working-class people using the earned income tax credit.


Monday, November 3, 2008

Credit Card Fraud--By the Credit Card Companies

Banks and credit card companies are now reaping the effects of a society that systematically replaced decent worker pay with a society of debt, credit, speculation, usury, and anti-trust violations.

On October 30, American Express reported that it will fire 7000 workers or 10% of its workforce. Business insiders refer to job cuts as "efficiencies," and often reward corporations for this behavior. Apparently, American Express packaged up credit card debts and sold them to investors. But that business appears to be drying up.1

On November 3, Citigroup, a bank and credit card lender, announced a $1.44 Billion loss from its "bonds." Although credit card debt does not pose as great a threat to the economy as the mortgage banking crisis, prognosticators say the credit card situation will worsen in 2009.2

"Bundling" debt into securities was also a factor in the massive failures of the Fannie Mae and Freddie Mac who securitized mortgages from predatory lenders. According to CNBC, "there is roughly $1 trillion of outstanding credit card debt—compared to $14 trillion worth of outstanding mortgages—and in the second quarter of 2008, $385 billion of this had been bundled into asset-based securities, according to the Securities Industry and Financial Markets Association."3

The largest US credit card lenders are Discover Financial Services, Bank of America, Citigroup Inc., JPMorgan Chase, Capital One Financial Corp., American Express Co. and HSBC Holdings. Bank of America, Citigroup, JP Morgan Chase, and Capital One have already received billions in relief from the US Treasury (see 11-13-08 post).4

In other credit news, MasterCard had its second consecutive quarterly loss. The company's loss included a write down for settling a lawsuit against Discover and American Express. MasterCard (36%) and Visa (51%) dominated the credit card market in part by violating anti-trust laws.5

Credit card companies profit by taking a fee, about 2%, from retailers. Retailers assume that consumers will buy significantly more, perhaps 30% more, if they use plastic rather than cash.6

Not surprisingly, as an election nears, relief for working-class debtors facing fates much worse and more permanent than quarterly losses is being discussed but not settled.7

1. http://www.marketwatch.com/news/story/american-express-cut-10-work/story.aspx?guid={AF32DE3C-5513-475D-B8F5-838F3CD757FA}#comment935571

2. http://www.businessweek.com/ap/financialnews/D947GNK00.htm

3. http://www.cnbc.com/id/27181200

4. http://www.iht.com/articles/ap/2008/11/04/business/NA-FEA-US-Credit-Cards-Plight.php

5. http://www.bloomberg.com/apps/news?pid=20601103&sid=atrKrDBPX8TQ&refer=news

6. http://money.cnn.com/2008/10/22/news/economy/retail_cash/index.htm?postversion=2008102212

7. http://www.marketoracle.co.uk/Article7093.html

Monday, October 27, 2008

Even More Welfare for the Rich

Capital One Finance, infamous for its predatory lending practices, is selling $3.55 Billion of its stock to the US Treasury as part of the bank bailout. While Capital One may use the money to buy other banks, its working-class debtors, however, are subject to survival of the fittest.

According to CNN Money:

"In a note to clients, Piper Jaffray analyst Robert Napoli said he believes Capital One may use the investment to acquire another depository institution."

"We view this positively for Capital One as this is cheap capital and suggests the government views Capital One as a survivor," Napoli wrote. "In the near term, we don't expect this to lead to an acceleration in lending, though it certainly positions the company very well from a capital perspective."

Capital One made $374 million in profits last quarter, below estimates.1

Senator Henry Waxman has stated concern that bank bailout money may be used for executive compensation and bonuses. A survey by eFinancialCareers reports that two-thirds of Wall Street professionals expect a bonus this year, and 36% are anticipating a larger bonus than in 2007.2

1. http://www.aol.in/news-story/capital-one-to-sell-$3-55b-in-stock-to-governmentdollar/2008102709150001548403

2. http://www.washingtonpost.com/wp-dyn/content/story/2008/10/29/ST2008102900989.html

Thursday, October 23, 2008

Neoliberal Icon Feigns Ignorance of Capitalism

Former Fed Chairman Alan Greenspan was called into Congress today to explain what went wrong with the flagging economic system. Greenspan admitted that his deregulatory philosophy "did break down". He added that he had been "shocked" by the crisis and that "I still do not fully understand why it happened."1 The Former Fed Chief admitted that "additional regulatory changes" were required "to return to stability, particularly in the areas of fraud, settlement, and securitization."

A recent article Newsweek article by Michael Hirsh explains that Greenspan's inaction, his failing to write rules for subprime lending, had a major effect on this economic environment. Hirsh's article adds that the so-called regulators, the Office of Comptroller of Currency and the Office of Thrift Supervision were sponsored by the industry rather than the government.2 OTS customers have included IndyMac, Washington Mutual, Countrywide, and Merrill Lynch.

The US Labor Department reports that the U.S. economy has now lost jobs for nine consecutive months, with more losses expected in October. The Department reports that 760,000 people in the US have lost work this year.

In other news, The NY Times reports that as a consequence of this economic downturn, more people are reducing their medications.3 The US currently spends $2.26 trillion per year on medical care, the highest costs in the world, although health outcomes are worse than several other nations.

1. http://www.marketwatch.com/news/story/Regulators-say-they-made-fateful/story.aspx?guid={7299997D-15B2-4DF5-AA87-DDE94260DD8E}

2. http://www.newsweek.com/id/159346?tid=relatedcl

3. http://www.nytimes.com/2008/10/22/business/22drug.html?scp=1&sq=medications&st=cse

Wednesday, October 22, 2008

A Trillion Plus...

According to Congressional testimony by officials from Moody's and Standard and Poor's, conflicts of interest were responsible for these credit rating agencies failing to accurately rate mortgage-backed securities. Although the information is not new, these admissions continue the narrative of corporate malfeasance and its role in the economic crisis.

Hedge funds (semi-secret financial organizations with trillions in investments, yet almost no oversight) are facing massive losses and possible bankruptcies. Although the effect of these future losses is presently unknown to the public, it is known that retirement plans have significant investments in them.

Responding to the working-class sentiment of this crisis, Rod Starz and G1 (part of the group Rebel Diaz) do their rap "A Trillion."

Monday, October 20, 2008

Yet Another Plan

The International Labour Organization predicts that another 20 million people will face unemployment in 2009. The ILO also reports that an additional 40,000,000 to 100,000,000 people face poverty of less than $2 a day next year. Meanwhile, Fed Chairman Ben Bernanke is proposing another economic stimulus package for the ailing US economy. Bernanke has refused to say that the US is in a recession.

In other news, two major retailers, Mervyns (149 stores) and Linens and Things (587 stores--17,500 employees last year), are closing their doors. Circuit City, a major electronics retailer, is declaring bankruptcy, and is considering closing 150 stores. This is the second wave of retail closings (see 8-4-08 post). GM and Chrysler are also engaged in merger talks which are likely to result in more working-class people losing their jobs.

Monday, October 13, 2008

Plan B: Government Bails Out Failing Banks as More People Lose Homes

As part of the US government bailout,the US Treasury plans to buy up more than $125 Billion in stock of nine poorly performing oligopolistic US banks. Three of the enterprises, Goldman Sachs, Merrill Lynch, and Morgan Stanley were, until recently, investment banks who gambled billions in credit default swaps. Another $125 Billion will go to other banks and thrifts. While politicians have made assurances that something will be done to reduce mortgage foreclosures, hundreds of thousands of working-class people still face losing their homes and their futures. Measures to ensure corporate transparency and accountability have also largely been ignored.

Citigroup $25 Billion
J.P. Morgan $25 Billion
Wells Fargo $25 Billion
Bank of America $12.5 Billion
Merrill Lynch $12.5 Billion
Goldman Sachs $10 Billion
Morgan Stanley $10 Billion
State Street Bank $3 Billion
Bank of New York $3 Billion

Thursday, October 9, 2008

The Bailout So Far: Even Greater Than Imagined

Jennifer Barry (Marketoracle.com) presents a gloomy picture of the economic crisis. With Fed activity included, the total bailout has now exceeded $2.1 Trillion. The number includes Term Auction Facilities (see 4-8-08 post). An additional $37 B+ have been added to $85 bill to shore up insurance giant AIG. In other news, CNN reported that almost 60% of US people surveyed thought an economic depression was very likely or somewhat likely.

Sunday, October 5, 2008

Explaining the Economic "Crisis" and Debunking Racist Scapegoating

In a classical case of racist scapegoating, so-called conservatives are blaming "minorities" and the 1977 Community Reinvestment Act (CRA) for the recent financial crisis. The law was created to reduce redlining and and to let working-class people buy houses in lieu of living wages. Unfortunately, lenders took advantage of the situation, offering predatory adjustable rate/subprime mortgages that could not be paid. Here's an example of how the scam worked:

Siding with the predatory businesses, the conservatives allege that people of color took advantage of the law and bought houses they couldn't afford, and that this was the reason that the financial industry failed. Zenitha Prince (Afro.com) explains, in detail, that the Act had nothing to do with the crisis. About 80% percent of the lender institutions (finance companies, bank subsidiaries, and thrifts) did not have to comply with CRA standards. Fifty-eight percent of the subprime loans were taken out by Whites. It wasn't government meddling, in this case, that effected the crisis; it was corporate greed. However, this won't stop propagandists from perpetuating this disinformation.


The Credit Default Swaps market faces another difficult week as hundreds of billions of dollars in Fannie Mae, Freddie Mac, and Lehman Brothers swaps go up for auction.


60 Minutes Steve Kroft does a fair job, albeit belatedly, at explaining the incompetence and greed on Wall Street that led to the crisis.

Editor's Note: See the link to "Reverse Redlining" which explains that people of color were targeted for subprime loans even though many were eligible for conventional loans.

Thursday, October 2, 2008

Progressive Proposals Call for Relief from Subprime Predatory Lending Instead of Another Corporate Bailout

Listening only to the mainstream media, one might believe there were no reasonable alternatives to the $700 Billion (now $810-850 Billion) bailout. Progressives and radicals (see URLs below) have presented reasonable alternatives that would not increase the pace of class inequality in the US. These alternatives would include relief for the working class, accountability for corporate executives, and transparency in business transactions.


Monday, September 29, 2008

The Creation of Financial Crisis

Few if any politicians, Wall Street moguls, economists, or writers have been straightforward with America about the economic down cycle and the latest $700 Billion corporate bailout proposal (HR 3997). It's hard to know what to believe, but these people have a track record of deceiving the working class. The tab so far has been $30B for Bear Stearns, $ 9B for Indy Mac, $300B for Fannie Mae/Freddie Mac, and $85B for AIG.

Thomas Wolfe describes the lives of the "Masters of the Universe," hedge fund managers who took the money and ran as the house of cards they created, the false economy, collapsed.

There have been a few who talked of the dangers of unfettered markets: liberal economists Nouriel Roubini, Robert Shiller, and John R. Talbott* and historian Stephen Mihm, on the academic side. But the information was drowned out by louder imprudent voices.

This last among many so-called "crises" took decades to be created (see 3-14-08 post on Upper Class Welfare). Unfortunately, radical economists, who could probably provide the most thorough historical analysis, have been marginalized.

Citigroup purchased Wachovia Bank assets today, leaving an unknown amount of losses for the public. It is only another step in a series which privatizes profits, socializes losses, and undermines the working class. [Update 10-3-08: Wells Fargo bought Wachovia Bank after a federal deal was scrapped. Ailing Citigroup is considering filing a lawsuit to stop the deal.]

*Talbott's 2003 book was titled "The Coming Crisis in the Housing Market."

Thursday, September 25, 2008

Working-Class Protest $700 Billion Wall Street Welfare Program. Biggest Bank Failure in US History.

Today, people took to the streets to protest a proposed $700 Billion dollar bailout of the mortgage banking industry.

Congress still has not signed off on the bailout, despite threats from Treasury Secretary Hank Paulsen and later from President Bush, that failure to give a blank check this week would lead to a long recession. Neither Paulsen nor Bush seem very concerned with more than a million working-class people facing foreclosures and bankruptcies in the next year. Neither appears to be interested in reforming the system that created the panic. The Republican plan, in fact, calls for a two-year moratorium on capital gains taxes which would disproportionately help the rich.

In other news, today's demise of Washington Mutual (WaMu) was the largest bank failure in US history. JP Morgan Chase has bought WaMu's assets at a fire sale price while it is assumed that the people will absorb the mortgage banking losses. Rumors of additional corporate failures in the banking, insurance, and auto industries have been circulating the Internet for months.

Wednesday, September 17, 2008

The Neoliberal Business Cycle: Privatizing Profits and Socializing Losses

Fears of more business failures, mergers, and bailouts permeate the Internet today. Law professor Michael Greenberger presents one of the most cogent analyses of the current economic situation on NPR.


Monday, September 15, 2008

The Neoliberal Economic Empire

Today Lehman Brothers filed for the largest bankruptcy in US history. The investment firm had a 158-year existence, starting as a profiteer of US slavery (the Southern cotton trade). Lehman was heavily invested in Credit Default Swaps (see 4-1-08 post).

Bank of America, which earlier this year bought failing Countrywide mortgage, also purchased Merrill Lynch. The demise of Lehman Brothers and Merrill Lynch means an additional 50,000 financial workers may lose their jobs. Other US investment banks are said to be unstable.

AIG, the US' largest insurance company is also in financial turmoil, with its stock value decreasing by 68%. AIG was also highly invested in credit default swaps. The insurance company may be looking for help from the Federal Reserve Bank. The Fed has reportedly asked two investment banks, JP Morgan Chase and Goldman Sachs, to lend AIG $70 billion. [Update: Tonight the Federal Reserve bailed out AIG with an $85 Billion dollar loan while reportedly taking control of 80% of the company's assets.]

In lesser news for the neoliberals, more than 24,000 workers at Hewlitt Packard will lose their jobs after taking over EDS. The mass firing increased HP's value.


Friday, September 12, 2008

Monday, September 8, 2008

The US Business Cycle: CEOs and "Short-Sellers" Get Millions as Businesses Fail

Fannie Mae and Freddie Mac CEOs Richard Mudd (L) and Richard Syron (R)

The US Treasury Department has taken over mortgage bundlers Fannie Mae and Freddie Mac. Though these corporations have been run into the ground by leadership incompetence and/or malfeasance, their CEOs leave with millions in compensation. China is also a winner, as these corporate bonds they hold are now secured. "Short-sellers," those betting for stocks to decline in value, have already profited from the failure, with working-class people again caught holding the bag. Marketwatch reports that more than $1 Trillion in credit default swaps will need to be settled. Forbes states that the taxpayer liability is unknown, but that it may reach $300 Billion.


Saturday, September 6, 2008

Democracy Should Be For Workers Too

Tens of millions of Americans would like to join a union. But the US government and big business have been in collusion for decades to undermine workers' interests. Corporations also often hire "union avoidance" firms to intimidate workers. With strong unions, and the right to vote union (the EFCA), workers have the ability to fight outsourcing, deskilling, and reductions in medical care.

Thursday, September 4, 2008

Political Myth Making

Myths are not something of the past. They are embedded in our beliefs and visible in our culture, and without a critical education they are often taken for granted. One of the greatest myths in US culture has been that political conservatives favor small government. Except for a small but significant group of libertarians, this idea is patently false. Political conservatives may use the rhetoric of big government to disassemble social investments, but that does not stop them from desiring government largesse and social control.

As imperialists, conservative politicians have expanded government both in size and in social control. The US empire now has 730 bases in more than 50 nations. It also has some form of military presence in more than 140 countries. The US military budget exceeds $400 Billion per year and military costs, past and present, amount to more than half of all federal discretionary spending. More than 40% of all military spending occurs in the US (Russia and China spend about 6% apiece). The numbers are even more significant when one considers the number of corporations and workers who rely on government contracts and who have a vested interest in this empire.

Government surveillance, body searches and limitations on the right to assemble
are now a way of life in the US; many US citizens accept this intrusion as part of the post-911 environment. At the state level, conservative politicians push to fund prisons rather than public colleges. With more than 7 million people under criminal justice control at one time, the US is becoming a land of the guards and the guarded.


Constructing Greater Social Inequality

Ward Connerly, a highly-compensated spokesman for the so-called "Equal Rights" Agenda.

NPR reports that several elite colleges now cost $50,000 or more per year per student (200k for a four-year program). The yearly amount is more than the US median income for a family of four. Although these schools offer student aid, the report notes a shift from economic need to "merit." Unfortunately NPR didn't question the meaning of "merit," which is socially constructed by those with race and class privilege.

Is this merely news, or a sign of something much greater?

In 1996, California passed Proposition 209 which dismantled affirmative action in UC schools. As a result, scholarship programs for racial minorities were eliminated. Ten years later, Blacks comprised only 3% of the student body. In 2006, Latinos were 36.5% of the state high school graduates but made up only 16.3% of UC freshmen. Asian Americans however are overrepresented in UC schools, outnumbering Whites.

In 2003, California attempted to further dismantle affirmative action with Proposition 54. Ninety-five percent of the contributions to promote Proposition 54 came from seven individuals, all but one from outside the state:

John Moores, Sr., University of California Regents board member/owner San Diego Padres ($400,000)

Rupert Murdoch, head of the Fox News empire ($300,000)

Joseph Coors, Colorado beer baron ($250,000)

William J. Hume, head of the anti-labor Basic American Foods ($200,000)

Kansas City businessman John Uhlmann ($190,000)

Harlan Crow, Dallas financier ($140,000)

Peter Schaeffer, Texas-based investor ($62,703).

Big money from the Scaife Foundation and other neoconservative/neoliberal interests is also being used in 2008 to dismantle affirmative action in Arizona, Nebraska, and Colorado. While national elections are at the forefront, racist and classist initiatives like this can have dramatic effects for generations.


Tuesday, August 12, 2008

Transfer Pricing: One Way Multi-National Corporations Avoid Taxes

According to the Government Accountability Office (GAO), about 28% of large US corporations paid no taxes in 2005. The Washington Post's David Cho reports that Senator "Dorgan and Sen. Carl M. Levin (D-Mich.) requested the report out of concern that some corporations were using "transfer pricing" to reduce their tax bills. The practice allows multi-national companies to transfer goods and assets between internal divisions so they can record income in a jurisdiction with low tax rates."

The SF Chronicle (Carolyn Said) added:

"Adam Hughes, director of federal fiscal policy at OMB Watch, a nonpartisan government accountability watchdog, explained how transfer pricing works."

"A company will incorporate offshore where there are no taxes," he said. "That (parent) company charges the U.S. company lots of money for things like the trademark for the company logo. The U.S. company says, 'I made $50 million, but my stupid parent company charged me $50 million for the logo.' The U.S. company gets to deduct the royalty fees as an expense and move profits to the parent company offshore in a tax-free haven."

"Although the US has one of the highest corporate tax rates in the industrialized world, in actuality, it has one of the lowest rates. "From 2000 to 2005, revenue from federal and state corporate income tax averaged 2.2 percent of the U.S. GDP, compared to an average of 3.4 percent in 30 of its trading-partner countries, according to the Treasury Department."

Wednesday, August 6, 2008

Automating and Covering Up White Collar Crime

Yesterday's papers reported that an international ring of computer hackers, including three US citizens, had been charged for stealing 40 million credit card numbers. The Economic Times reports that "the men targeted at least nine major US retail corporations, including "Marshalls and TJ Maxx; BJ's Wholesale Club; Barnes and Noble; Sports Authority; Office Max and DSW shoe stores." NPR reports that retail stores failed to notify consumers, which violates consumer laws. These crimes undermine confidence in the economy, particularly the Internet. NPR also reports that cyber crime now rivals drug crimes in lucrativeness.

Tuesday, August 5, 2008

Disinformation Leading to War: "The Way of the World"

There were two news stories today that open the window slightly on "the way of the world." The first story, from Politico and the book "The Way of the World: A Story of Truth and Hope in an Age of Extremism" is from Pulitizer Prize author Ron Suskind. Suskind reports that a high-ranking official in the White House ordered a forged letter to justify going to war with Iraq in 2003. Suskind adds that the US secretly resettled the Iraqi intelligence chief, Tahir Jalil Habbush al-Tikriti, to Jordan and paid him $5 million in order to deceive the world about weapons of mass destruction.

On NPR (8-7-08), Suskind states that he has tape recorded his sources and is ready to appear before any Senate or House hearings about these crimes of disinformation.

Suskind has also posted a transcript of his interview with a high level CIA contractor Rob Richer.

The second story: In attempting to find someone to prosecute in the anthrax scare,the Federal Bureau of Investigations coerced a man to provide information on his father, a US Army scientist. The Washington post reports that the FBI offered the man $2.5 million and the sports car of his choice. Although the FBI could not prove the father's role in the anthrax scare, their pressure ended in the scientist's suicide.




Monday, August 4, 2008

The Neoliberal Business Cycle

F. William Engdahl (The Online Journal, 8-5-2008) indicates that the banking situation is much worse than most people imagine, with CitiGroup, once the world's largest bank, having to take billions in funds from Dubai. In addition auto sales showed huge declines last month (Ford down 28%, GM down 18%, Toyota down 21%). Even worse, the Labor Department's U6 unemployment rate has risen to 9.6% and, according to Shadowstats, the actual unemployment rate is estimated at 13.7%.

Of course these "problems" are actually how neoliberal economics functions: to consolidate power and resources and to keep the working class in a position of weakness. This list of US retail shop closings indicates another "problem" with the US economy.

Ann Taylor, closing 117 stores nationwide.

Eddie Bauer to close more stores after closing 27 stores in the first quarter.

Cache, a women’s retailer, is closing 20 to 23 stores this year.

Lane Bryant, Fashion Bug, Catherines, closing 150 stores nationwide

Talbots, J. Jill, closing stores. Talbots will close all 78 of its kids and men’s stores plus another 22 underperforming stores. The 22 stores will be a mix of Talbots women’s and J. Jill.

Gap Inc., closing 85 stores

Foot Locker to close 140 stores

Wickes Furniture is going out of business and closing all of its stores. The 37-year-old retailer that targets middle-income customers, filed for bankruptcy protection last month.

Levitz, the furniture retailer, announced it was going out of business and closing all 76 of its stores in December. The retailer dates back to 1910.

Zales, Piercing Pagoda planned to close 82 stores by July 31 followed by closing another 23 underperforming stores.

Disney Store owner has the right to close 98 stores.

Home Depot, closing 15 stores amid a slumping US economy and housing market. The move will affect 1,300 employees. It is the first time the world’s largest home improvement store chain has ever closed a flagship store.


Macy’s, nine stores closed

Movie Gallery, video rental company, plans to close 400 of 3,500 Movie Gallery and Hollywood Video stores in addition to the 520 locations the video rental chain closed last fall as part of bankruptcy.

Pacific Sunwear, 153 Demo stores closing.

Pep Boys, 33 stores of auto parts supplier closing.

Sprint Nextel, 125 retail locations to close with 4,000 employees following 5,000 layoffs last year.

J. C. Penney, Lowe’s and Office Depot are all scaling back

Ethan Allen Interiors, plans to close 12 of 300 stores to cut costs.

Wilsons the Leather Experts,, closing 158 stores.

Bombay Company to close all 384 U.S.-based Bombay Company stores.

KB Toys, closing 356 stores around the United States as part of its bankruptcy reorganization.

Dillard’s Inc. will close another six stores this year.


Wednesday, July 30, 2008

Domestic Surveillance as an American Way of Life

The US government has established "fusion centers" to join various federal and local police agencies. The ACLU argues that these centers have been used to systematically spy on citizens who do not commit crimes but who oppose war and the Death Penalty.



Wednesday, July 23, 2008

Socializing Kids for Combat

Michael Reagan of Truthout (July 23, 2008) writes of the US Army's shameless attempts to recruit children through its video game and website. According to Reagan, the game simulates training and combat, minus the moral dilemmas of killing other humans and the horror and nightmares experienced by soldiers and civilians who experience war first hand.

Hey DOD, how about a PTSD video game?


Sunday, July 13, 2008

Freddie Mac and Fannie Mae: More Corporate Welfare Over the Weekend

The Federal Reserve, not surprisingly, has bailed out Freddie Mac and Fannie Mae by allowing the two corporations to borrow money from its "discount window" (Dawn Kopecki, Bloomberg, 7-14-08). The Treasury Department was also involved in getting "assurances" that Freddie Mac's short-term debt offerings "would go off without a hitch" (Stephen Laboton, NY Times, 7-14-08).

Both moves occurred before the US stock market opened on Monday.

A more telling understanding of the situation can be found from the readers of the NY Times article.


Saturday, July 12, 2008

IndyMac Bank Failure Misses News Cycle

Immediately after the stock market closed for the weekend (7-12-2008), the Office of Thrift Supervision (OTS) reported the federal takeover of IndyMac. The seizure came after a run on the California-based bank. According to the FDIC this was the third largest bank takeover in US history. At least 3800 employees will be sacked.

IndyMac was a spinoff of Countrywide Financial (Angelo Mozilo and David Loeb) and was heavily invested in high-risk mortgages.

The event came in light of news that Freddie Mac and Fannie Mae, the largest US mortgage-based security firms, were faltering. Julie Creswell (NY Times 7-13-08) reported that both institutions hired high level politicos for years and bought off activist groups by donating to their charities.


Friday, July 11, 2008

Understanding US Inequality and Economics

Demos.org is a fine source for statistics on US economic conditions, with an emphasis on inequality. The website includes charts on wages, income mobility, wealth, CEO wealth, and personal savings.


Wednesday, July 2, 2008

White Collar Crime Narrative

Samuel Israel III, fugitive from justice and hedge fund swindler, surrendered to law enforcement today. Israel was sentenced to 20 years in prison for defrauding clients of $309,000,000 between 1998 and 2005. He then faked his death in order to escape imprisonment. Israel went as far as co-creating a bogus accounting firm to certify false financial statements.

There is little or no mention of the immediate victims, who were other rich investors. The ultimate victims, however, are the people.

Israel's lawyer's sentencing letter to the judge is a window into the white collar criminal mind. The letter (URL below) even states that Israel is "the victim" rather than the predator (p.28). Note that, in a way, this white collar criminal is even less honorable than the typical street thug, preferring to blame his crimies rather than accepting the punishment. The letter makes no mention of Israel's great grandfather, Leon Israel, who was also a white-collar criminal (NY Times, April 29,1920).

Note also the unpublished paper, titled "the Subjective Experience of Punishment" beginning on page 70. In it, Professor Adam Kolber, claims that "sensitive" (e.g. rich people) should be given breaks in sentencing over "insensitive" people (e.g. the lesser classes).

Kolber has also written on the ethics of "therapeutic forgetting," which would be used on soldiers to forget the atrocities of war.

The sentencing paper, forthcoming in the Columbia Law Review, was sponsored by the Orwellian Princeton Center for Human Values. Of note, the Center for Human Values, funded by the Mellons and Rockefellers, has also promoted pre-emptive war.


Friday, June 27, 2008

Work Injury? What Work Injury?

Bill Moyers' Journal (June 27, 2008) reported OSHA's lack of oversight in the poultry industry. According to the Charlotte Observer, OSHA inspections have been reduced to the lowest levels in 15 years, siding with corporations over their workers. Observer reporter Ames Alexander states "workers are making 20,000 cuts a day, highly prone to repetitive motion kinds of problems like carpal tunnel. They're working with sharp knives, around dangerous chemicals and equipment." Yet these injuries have been reduced or eliminated from OSHA reports since 2002.

Tuesday, June 24, 2008

House Resolution 362 to Provoke Iran War

The US House is close to voting on Resolution 362 to confront Iran with a military blockade in the Strait of Hormuz. The story has received little mainstream attention (CBS News reported on the Resolution on June 24).

The Senate version, Resolution 580, is also in the works. The sponsor of the Senate Resolution is Democrat Evan Bayh. So much for Democrats being anti-war. Although the Resolutions do not authorize use of force, they put Iran and US troops in positions where conflict appears more likely. Just Foreign Policy has a site where you can send an email protest to your representative.


[Update: Seymour Hersch's article about spending on US covert ops in Iran appeared in the New Yorker, June 30th]


Veterans Used as Guinea Pigs in Drug Experiments

ABC News reports that the US Veterans Administration waited months before notifying vets that the drugs they were given for smoking cessation were associated with psychiatric side effects. The vets in the study had PTSD and were trying to quit smoking. According to WebMD, the 1 year efficacy rate for Chantix is 14%. The VA is continuing the study for Chantix despite the warnings.

Chantix is a trademark of Pfizer.

George Will Favors Prison-Industrial Complex, Suggests Prisons Are Better Investments than Public Universities

George Will’s editorial (“Prison time is about crime, not about race”, Washington Post, June 22, 2008) is lacking not only in compassion, but in intellectual depth and vision. His hypothesis that prisons may have greater social value than public universities is equally disturbing.

Race and class are key factors in every aspect of the justice system, from policing to post-conviction. Race and class shape what we define as crime, who we define as criminals, and how the criminal justice system is administered.

Except in a few sensational news accounts (Enron, Martha Stewart, Jack Abramoff, and now Bear Stearns), white collar criminals are rarely perceived as crooks, though their damage to society far outweighs street crime. College students aren’t typically arrested and thrown in jail for drug possession or intent to sell, though drug use is common on college campuses. Black and Latino youth, on the other hand, are profiled and questioned by the police as a matter of course, creating an atmosphere akin to a military occupation.

As for reducing street crime, there are better social investment strategies than spending billions on prisons. The Rand Corporation, for example, has prescribed child abuse prevention, better education, and social support programs as better ways to reduce crime. Given that the roots of street crime are related to economic conditions, it would seem logical that decent paying jobs would also reduce certain types of crime. Whether the public is willing to make such social investments may depend on whether it is informed by people with vision and intellect or deceived by media people like Mr. Will.