Zera's Blog

A Citizen's View from Main Street

Economic Wall of Shame


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It is my assertion that the basic model of a national economy is fundamentally broken. I am dedicating this page to links to stories that illustrate the reasons for such a view.

The debate over ending the Bush tax cuts for the rich sidesteps a serious problem. The issue is not just whether the wealthiest Americans should be taxed, but can they be taxed? The ultra rich have extraordinary means to engage in tax avoidance and evasion that ordinary citizens do not.

America’s Income Defense Industry

The FEC, meanwhile, has been moribund, unwilling to enforce the law or even clarify its own regulations, according to Public Citizen, who added: “Republican members of the FEC have interpreted the disclosure law into oblivion and have deadlocked the agency against taking any further action.”

Citizens United, an Assault on Our Democracy, Needs a Constitutional Amendment

Sonya Robison is facing a foreclosure suit in Colorado after the company handling her mortgage encouraged her to skip a payment, she says, to square up for mistakenly changing the locks on her home, too.

Thomas and Charlotte Sexton, of Kentucky, were successfully foreclosed upon by a mortgage trust that, according to court records, does not exist.

Homeowners Facing Foreclosure Demand Recourse

Mr. Donohue, who received $3.7 million last year while member businesses across the nation struggled, announced that the Chamber is intending to spend as much as $75 million “to carry out the largest, most aggressive voter education and issue advocacy effort in our country in our nearly 100 years,” while Republicans on Capitol Hill filibuster, stalling small business legislation that would help those businesses survive the economic morass that the Republicans caused.

But, to many observers, it is neither education nor issue advocacy. It is merely propaganda, spreading a tainted message with lies and half-truths.

The Chamber has abandoned its pro-business principals and shunned its initial charge of enhancing a healthy small business environment by trying to subvert good legislation for its members in favor of a corporatist position.

Jim Worth: Is the Chamber of Commerce a Subversive Organization?

Halliburton, which has blamed BP’s well design and operational decisions for the disaster, acknowledged it never tested the final mixture of cement for stability after BP made a last-minute change to the mix.

The new information could bring more lawsuits and further complicate efforts to place blame for the disaster, the analysts and an attorney said.

The terms of Halliburton’s contract with BP indemnifies the Houston company from liability for spill damages, unless it is found to have been grossly negligent, Weiss and Oppenheimer & Co. analyst Scott Burk said.

Legal terms and definitions will figure in lawsuits over the spill. BP may try to prove Halliburton was guilty of gross negligence to void the indemnity contract that protects Halliburton, according to Fred Kuffler, a Philadelphia maritime lawyer who has handled oil-spill lawsuits.

Negligence is defined as conduct that would be unreasonable compared to what an ordinary person would do in similar circumstances. Gross negligence is a more serious kind of carelessness.

Halliburton: BP Contract Offers Gulf Oil Spill Liability Protection, Analysts Say

The Securities and Exchange Commission is investigating whether JPMorgan Chase allowed a hedge fund to improperly select assets for a $1.1 billion deal backed by subprime mortgages, according to people familiar with the probe.

Called “Squared” and completed in May 2007, the deal was a collateralized debt obligation, or CDO, made up of pieces of other CDOs. The hedge fund, Magnetar Capital, based in Evanston, Ill., purchased the riskiest slice of Squared as part of a strategy to bet against the mortgage market.

SEC Investigating Deal Between JPMorgan and Hedge Fund Magnetar

The United States is rapidly becoming the very first “post-industrial” nation on the globe. All great economic empires eventually become fat and lazy and squander the great wealth that their forefathers have left them, but the pace at which America is accomplishing this is absolutely amazing.

19 Facts About The Deindustrialization Of America That Will Make You Weep

“We can hope for strong growth, but it is not happening,” says economist Joel Naroff of Naroff Economic Advisors. “A robust recovery was never possible because the problems in the housing and financial sectors were not going to disappear overnight.”

This article has some interesting points, but it doesn’t really explain what it states in the title.

The Economy Is Growing — But Jobs Aren’t Following

The initial neoliberal assault under Ronald Reagan and Margaret Thatcher reorganized the capitalist economy and hammered private-sector unions into submission. This was accomplished by putting labor back into competition with itself by off-shoring industrial production, through deregulation and with frontal assaults on labor rights, organizing and solidarity.

This article is too left-wing rantish for me, but there are some points worth noting among the muck.

Corporate America’s Plan to Loot Our Pensions Is the Latest Battle in Decades-Long Assault on the Middle Class

The tax deal that passed  Congress doesn’t just cost the federal government $850 billion in lost revenues. It also pushes state governments closer to defaulting on loans by failing to extend a federal subsidy program for states that has allowed them to raise billions and avoid bankruptcy. Cash-strapped state such as California and Illinois could indeed default on their loans, which would also cause the vital market in municipal bonds to plummet, a trend already underway.

So with states across the country facing a $140 billion shortfall next year, some experts and union advocates also see the GOP opposition to extending the bonds subsidy –despite its support from even some Republican mayors and governors — as part of a broader scheme to bust public employee unions and wipe out pensions.

Republicans consider employment contracts on Wall Street to be sacred, but Main Street is a whole different situation. Selective principles or class warfare?
GOP Kills Bonds Program: Secret Plan to Bankrupt States, Bust Public Employee Unions?

Last week, a jury in federal district court in Reno, Nev., awarded a group of 50 mortgage investors $5.1 million in punitive damages against defendants in a loan servicing case. Although the numbers in the case aren’t large, its facts are fascinating. Indeed, the case exposed some of the tricks of the servicers’ trade.

More money = more corruption = more need for regulation and enforcement = more government.  Too much private sector corruption => too much government.

Gretchen Morgenson: Court Case Exposes ‘Bag Of Mortgage Tricks’

Authorities announced Tuesday that the bank also admitted criminal wrongdoing in connection with its participation in financial transactions that aided tax shelters. The government says the transactions generated billions of dollars in U.S. tax losses.

Federal prosecutors and the Justice Department’s tax division announced the deal. They say the nonprosecution agreement requires the bank to continue cooperating.

How often do you see a business admit wrongdoing?
Deutsche Bank Fraud Probe Leads To $550 Million Settlement

The reports of banks improperly entering homes have been gathering in recent months. In October, ABC News reported that banks had been using repo men to break into Florida homes. In some cases, firms hired by banks had entered homes that were not in foreclosure. Check out ABC News’ report from October.

Bank Of America Accused Of Breaking Into Woman’s Home, Taking Husband’s Ashes

“My name is Wendell Potter and for twenty years, I worked as a senior executive at health insurance companies, and I saw how they confuse their customers and dump the sick— all so they can satisfy their Wall Street investors.”

Deadly Spin: An Insurance Company Insider Speaks Out on How Corporate PR Is Killing Health Care and Deceiving Americans

But the Congressional Budget Office has cast doubt on how much corporate tax cuts actually help stimulate the economy. A January 2008 report by the office said “increasing the after-tax income of businesses typically does not create an incentive for them to spend more on labor or to produce more,” because decisions on whether to increase production depends on their ability to sell the product.

Such cuts haven’t helped yet in California, where outgoing GOP Gov. Arnold Schwarzenegger forced Democrats two years ago to accept corporate tax cuts that cost the state an estimated $2.5 billion a year in revenue. So far, there is little evidence the cuts created jobs – unemployment has remained a steady 12 percent since the summer of 2009 – or boosted revenue: The state’s lawmakers will again wrestle with a huge budget gap in 2011.

Republicans keep saying that tax cuts are the key to job creation. I keep saying that consumer spending is the key. It seems glaringly obvious to me that disposable income is the key to economic growth. All the tax breaks in the world do not inspire job creation in the face of a weak customer base. Now they are pitting one state against another in a race to the bottom. Perhaps we need a minimum corporate tax to go along with a minimum wage. If we want to maintain a minimum quality of life.
New GOP Wave Pushes Business Lobbyist’s Wish List

The deal, which includes the San Francisco Civic Center, has been pitched as a way to generate much-needed cash. California would pocket about $1.3 billion after debt is paid off, but would then be a tenant in the same buildings. According to the nonpartisan Legislative Analyst’s Office, the deal would cost taxpayers $6 billion over 35 years.

One would think that after the economic disaster of the self-inflicted energy crisis, California would have learned it’s lesson. Putting private sector strings on their government’s very ability to function is stupidity incarnate.

State Poised to Sell Trophy Buildings to Unidentified Investors

Nearly 1,300 businesses and trade groups formed a coalition urging Congress to extend the business tax breaks. Others lobbied for specific provisions, including a generous tax credit for research and development and subsidies to produce alternative energy.

There is a generous tax break for banks and insurance companies that invest overseas, a tax credit for railroad track maintenance, more generous write-offs for upgrading motorsport race tracks, and increased deductions for businesses that donate books and computers to public schools and libraries.

And conservatives claim we have a free market economy. Bullshit! What we see here is the other corporate tax. The one that taxpayers pay as bribes to corporations to get them to do their jobs.
Tax Cut Bill Signed By Obama Packed With Obscure Stocking Stuffers For Businesses

In fact, banks are required to notify borrowers whenever their mortgage is sold to another bank or investor, but as banks went into mortgage mayhem over the past decade, this obligation was routinely lost in the shuffle, along with other paperwork requirements — some mere technicalities, others that lead to banks throwing the wrong people out of their homes. Bank of America has been cited for forging documents in the foreclosure process, and for improperly breaking into the homes of its borrowers.

It’s not clear whether BofA is intentionally attempting to intimidate borrowers, or whether this is a mistake created by a high-volume business that is not above cutting corners in order to reduce costs.

“They tend to really automate everything they can so they don’t have to use staffing resources on disputes,” says Wu. “Whether it’s a screwup or something more malevolent, it’s definitely a problem on Bank of America’s end.”

Automation needs to be done with due diligence for the flaws that are inevitably designed into the system, the erroneous assumptions and excessive trust in the output, and the dehumanizing nature of the process. Trillions have been lost because the American Dream has been reduced to numbers in a spreadsheet, callous and neglectful of the consequences and collateral damage both actual and potential. The money was not lost by those who created the problem. Only the possibility of fines and jail time can drum the concept of integrity back into the corporate culture. Greed must be challenged.
Honey, I Shrunk The Credit Score

What a great year for Wall Street: profits up, bonuses up and, best of all, criticism down, especially from Washington. Somehow Wall Street has much of America believing its lies and rationalizations. We’re even beginning to forget that Wall Street is largely responsible for the economic mess we’re in.

So before we’re completely overtaken by financial Alzheimer’s, let’s revisit Wall Street’s greatest fabrications for 2010. (For the full story, please see The Looting of America.)

It is truly amazing how thoroughly the GOP has gotten people to forget how we got here, and how narrowly we are focused on the future.
Wall Street’s Ten Biggest Lies for 2010

  1. Why do people in the financial sector make so much more money than the rest of us?
  2. Do current profits of financial firms come from tax-payer bailouts?
  3. But since Wall Street is paying us back, why shouldn’t they go back to earning whatever they can?
  4. Where does all their wealth come from?

The economy has become too one-sided to survive, and the republicans are pushing to make it worse as a matter of ideology.

Financial Socialism by and for Wall Street Elites?

The deal was originally structured as a “special-purpose investment vehicle,” exclusively offered to Goldman’s wealthiest clients, so that they could invest in Facebook despite the fact that Facebook is not yet a publicly traded company. According to Goldman’s statement, published in full at Dealbook, “intense media attention” put Goldman in danger of violating U.S. securities laws. Now, that attention is only likely to grow more intense.

What they mean is that they got caught trying to evade the law, and public scrutiny keeps them from playing the system.

One of the biggest drivers of the size of government is the misbehavior and negligence of the private sector. it is an escalating battle of evasion and regulation. We cannot just handcuff the “police” and let the “crooks” run wild.
Goldman’s Facebook Deal A ‘Serious Embarrassment’

JPMorgan Chase has admitted to overcharging military families on their mortgages, and illegally foreclosing on 14 families, NBC News reports.

NBC’s report (see video below) focuses on one military family’s five-year battle with the mortgage giant, who overcharged them by as much as $900 a month. While Marine Captain Jonathan Rowles was away on active duty, his wife Julia got calls demanding $15,000 they didn’t owe. “It’s been a nightmare, it’s been my living nightmare,” Julia Rowles told NBC News.

As a nation, we may be coming to the unavoidable realization that a substantial part of corporate profits are not honestly earned, but ill-gotten. I wonder how much all this predatory behavior limits our prosperity.
JPMorgan Chase Wrongly Forecloses On Military Families (VIDEO)

Mr. Donohue, who received $3.7 million last year while member businesses across the nation struggled, announced that the Chamber is intending to spend as much as $75 million “to carry out the largest, most aggressive voter education and issue advocacy effort in our country in our nearly 100 years,” while Republicans on Capitol Hill filibuster, stalling small business legislation that would help those businesses survive the economic morass that the Republicans caused.

But, to many observers, it is neither education nor issue advocacy. It is merely propaganda, spreading a tainted message with lies and half-truths.

The Chamber has abandoned its pro-business principals and shunned its initial charge of enhancing a healthy small business environment by trying to subvert good legislation for its members in favor of a corporatist position.

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