The Great American Bank Robbery

By Joseph Stiglitz, W. W. Norton & Company
Posted on February 27, 2010, Printed on February 27, 2010
http://www.alternet.org/story/145774/

The following is Part I of a two-part excerpt from Freefall: America, Free Markets, and the Sinking of the World Economy by Joseph Stiglitz ( W.W. Norton & Co., 2010). Read AlterNet's recent interview with Stiglitz by Zach Carter.

Bankruptcy is a key feature of capitalism. Firms sometimes are unable to repay what they owe creditors. Financial reorganization has become a fact of life in many industries. The United States is lucky in having a particularly effective way of giving firms a fresh start—Chapter 11 of the bankruptcy code, which has been used repeatedly, for example, by the airlines. Airplanes keep flying; jobs and assets are preserved. Shareholders typically lose everything, and bondholders become the new shareholders. Under new management, and without the burden of debt, the airline can go on. The government plays a limited role in these restructurings: bankruptcy courts make sure that all creditors are treated fairly and that management doesn't steal the assets of the firm for its own benefits.

'Death of American Capitalism:' The 10 final scenes

Commentary: Munger warns 2012 is our tipping point on 'road to ruin'

By Paul B. Farrell, MarketWatch

ARROYO GRANDE, Calif. (MarketWatch) -- Good news, Americans are "downbeat about today. Upbeat about tomorrow," says the latest USA Today/Gallup Poll. "Americans feel battered by hard times, record home foreclosures, stubbornly high unemployment rates and war."

And yes, we are "fed up with Washington and convinced more than 3 to 1 that the nation is heading in the wrong direction," yet there's "confidence that there will be better times ahead, that the classic American dream endures and hasn't been extinguished. It's not even at its low ebb." Why? Because we're in denial!

Joseph Stiglitz: Bankers Made Reckless Bets on the Economy, Knowing Taxpayers Were Going to Pick up the Tab

By Zach Carter, AlterNet
Posted on February 25, 2010, Printed on February 27, 2010
http://www.alternet.org/story/145773/

Nobel Prize-winning economist Joseph Stiglitz has served as the Chairman of President Bill Clinton's Council of Economic Advisers and Chief Economist for the World Bank. He has been a persistent critic of free-market economics, whose recent book Freefall: America, Free Markets, and the Sinking of the World Economy (W. W. Norton & Co., 2010) traces the roots of the financial crisis and details the government's flawed response. Dr. Stiglitz discussed the crash of '08 in an interview with AlterNet economics editor Zach Carter.

Zach Carter: How did we get here?

Joseph Stiglitz: Well, there are so many pieces that contributed to our getting here that it's hard to distill into something simple, but the bottom line is that the banks acted recklessly in their lending, in their gambling, in their management of risk. They made bad judgments about credit worthiness. In a sense, they failed their core societal function of allocating capital and managing risk. They misallocated capital and they mismanaged the risk. What I tried to do with the book is peel back the onion and ask – this is not the way capitalism supposed to work – why did things happen so badly? And here there are a number of factors. One of them was that the bankers had the incentive to engage in short-sighted behavior and excessive risk-taking. You have to ask, "Why is that?" And the answer has to do with problems of corporate governance and a host of other problems that I try to delineate in the book.

Tax Fraud

Debunking the claim that higher income-tax rates reduce GDP.

By Eliot Spitzer
Posted Tuesday, Feb. 23, 2010, at 3:39 PM ET

---

The American debate over taxes is ferocious and highly partisan. Some, mostly Republicans, reflexively oppose all taxes. Others, mostly Democrats, decry the lack of progressivity and fairness in the tax system and favor higher tax rates for the wealthy.

This debate isn't new. The same arguments have been repeated, with the same passion, since our income tax system was created—first during the Civil War and then—after its initial rejection by the Supreme Court—following the ratification of the 16^th Amendment in 1913. A wonderful book by Steven Weisman, The Great Tax Wars, brings this history to life.

But as Weisman makes clear, one thing has changed in a spectacular manner, and that is the American public's—and American politicians'—willingness to defend high marginal income-tax rates as an essential and proper way to pay for the cost of government. Until a generation ago, many Americans and their representatives argued vehemently that the wealthy ought to pay more in taxes, but that position has drastically declined in popularity. Weisman sets the debate in the context of the battle between those who invoke justice—progressive taxes create equity and hence justice—and those who invoke virtue—the belief that hard work should be rewarded and taxing higher income at an elevated level creates a disincentive to the hard work we should promote.

The Rising Toll Of Wall Street's Global War

By Zach Carter

Created 02/23/2010 - 9:12am

Over the past thirty years, Wall Street has waged a steady war against governments around the globe, convincing policymakers of various ideological stripes that whatever raises profits for bankers and traders will be good for the rest of society. It's a very simple and appealing portrait of how the world works. Unfortunately, it's completely wrong.

Profiting from hunger

In an interview with AlterNet's Terrence McNally [1], economic luminary Raj Patel explains the connection between widespread global poverty and wild Wall Street profits. Markets are defined by a set of rules—if those rules completely disregard social welfare, then the participants in those markets will ignore them as well. When traders can make a quick buck speculating on the price of rice, they will, even if that speculation drives up the price of a basic necessity and makes people go hungry.

Deflating The Middle Class Dream

By Natasha Chart

Created 02/23/2010 - 10:22am

The dream of the middle class is that the majority of people will be able to comfortably cover their basic needs by working a reasonable number of hours at a probably unspectacular, but useful and therefore, respectable, job. A middle class life means a secure place to live, good food to eat, adequate medical care, the ability to purchase clothing and transportation services suitable to maintaining employment, and a stable environment for your children to grow up in so they can do as well or better [1].

Today, the entire concept of the middle class is being effectively scrapped in an environment where that level of economic security may often require desperate measures [2], or a six-figure income [3]. Why? Because no new jobs were created between 1999 and 2009 [4], completely deflating the wage economy.

In Avedon Carol's words, "Our owners are telegraphing that some magic formula dictates [5] that we have to be made miserable. Of course, what's making us miserable isn't magic - it's them." Productivity will likely continue to rise [6], but its benefits won't be shared [7] down the economic ladder [8], they'll be used as collateral to cash out productive enterprises [9] and fire their workers.

The Unemployed Now Have Their Own Union, and It's Catching on Quickly

By Harry Kelber, Labor Educator
Posted on February 24, 2010, Printed on February 26, 2010
http://www.alternet.org/story/145797/

It's been only a month that a union for the unemployed has come into existence through an ingenious grassroots organizing campaign. In case you haven't heard about it, the union's name is "UR Union of the Unemployed" or its nickname, "UCubed," because of its unique method of organizing.

UCubed is the brain-child of the International Association of Machinists and Aerospace Workers (IAM), whose leaders feel that the millions of unemployed workers need a union of their own to join in the struggle for massive jobs programs.

Exposing the Great American Bubble Barons: Join Us in the Investigation

Join AlterNet's collective investigative project into the bubble barons who got obscenely rich as they destroyed our economy. Help hold them accountable with Citizen Journalism.

February 24, 2010 | A century ago, the robber barons at the helm of the U.S. economy were easily identifiable titans of industry: Andrew Carnegie of Carnegie Steel, John D. Rockefeller of Standard Oil, financier and steel magnate J.P. Morgan. It was easy to draw the link between the robber barons' brutal business practices and their immense wealth; it was clear that these businessmen were, quite literally, robbing the American people in the course of amassing their fortunes.

Roots key to second Green Revolution

Root systems are the basis of the second Green Revolution, and the focus on beans and corn that thrive in poor growing conditions will help some of the world's poorest farmers, according to a Penn State plant scientist.

Republicans Consistently Turn To Lobbyists For Strategies To Block And Kill Legislation

Yesterday, The Hill reported that Senate Majority Leader Harry Reid (D-NV) may not have the votes to begin debate on a $15 billion jobs package. Reid, for his part, is reaching out to Sen. Scott Brown (R-MA), in the hopes that he will provide support to overcome a GOP filibuster. A Reid spokesman said simply that “the vote is in the hands of Republicans.”

However, as Roll Call reported, the Senate Republican leadership is trying to persuade members to simply block the legislation. And this push comes after the GOP spent an afternoon huddled with more than 100 lobbyists, trying to figure out how to react to Reid’s bill:

Senate Republican leadership staff are huddling with K Streeters this afternoon over Senate Majority Leader Harry Reid’s (D-Nev.) decision to forgo a bipartisan jobs package in favor of a smaller, targeted plan…The business community has been up in arms since Reid decided to ditch a bipartisan job-creation bill last week.

Rachel Maddow fact checks conservative conference

By David Edwards and Muriel Kane
Friday, February 19th, 2010 -- 11:42 am

MSNBC's Rachel Maddow is attending the Conservative Political Action Conference this week and reporting back to the rest of the country on what she described Thursday as "the biggest single event on the conservative calendar that is not Ronald Reagan's birthday."

Maddow focused in particular on the numerous Republican politicians who showed up to woo conservative activists, noting wryly that "their courting of the CPAC audience today did not apparently extend to making sure that what they told that audience was true."

Paul Krugman: California Death Spiral

By PAUL KRUGMAN

Published: February 18, 2010

Health insurance premiums are surging — and conservatives fear that the spectacle will reinvigorate the push for reform. On the Fox Business Network, a host chided a vice president of WellPoint, which has told California customers to expect huge rate increases: “You handed the politicians red meat at a time when health care is being discussed. You gave it to them!”

Indeed. Sky-high rate increases make a powerful case for action. And they show, in particular, that we need comprehensive, guaranteed coverage — which is exactly what Democrats are trying to accomplish.

Breitbart Lied About ACORN 'Pimp' Videos When Selling Story in His Own Washington Times Column

Falsely asserted O'Keefe 'dressed as pimp' while 'asking for, getting help for illegal activities'; Still stands behind fabricated claim

Media Matters details mainstream outlets that took bait, fell for Breitbart/O'Keefe's sensationalized fiction...

Posted By Brad Friedman On 17th February 2010 @ 17:46

As mentioned yesterday ^[1], on Monday night, wingnut propagandist Andrew Breitbart tweeted ^[2] to me...

andrewbreitbart ^[3] | @TheBradBlog ^[4] U can lie that i lied until youre blue in face. ive told truth every step of way. U are propagandist. keep repeating the lies.

...in reply to The BRAD BLOG's ^[5] recent series of articles highlighting, among other things, how he lied, along with his accused federal felon ^[6] employee ^[7] James O'Keefe, in order to sell their phony ACORN hit videos to gullible media --- and how the New York Times, and so many others, fell for it hook, line, and not-yet-retracted sinker ^[8]

Wall Street's Bailout Hustle

Goldman Sachs and other big banks aren't just pocketing the trillions we gave them to rescue the economy - they're re-creating the conditions for another crash

MATT TAIBBI

Posted Feb 17, 2010 5:57 AM

On January 21st, Lloyd Blankfein left a peculiar voicemail message on the work phones of his employees at Goldman Sachs. Fast becoming America's pre-eminent Marvel Comics supervillain, the CEO used the call to deploy his secret weapon: a pair of giant, nuclear-powered testicles. In his message, Blankfein addressed his plan to pay out gigantic year-end bonuses amid widespread controversy over Goldman's role in precipitating the global financial crisis.

The bank had already set aside a tidy $16.2 billion for salaries and bonuses — meaning that Goldman employees were each set to take home an average of $498,246, a number roughly commensurate with what they received during the bubble years. Still, the troops were worried: There were rumors that Dr. Ballsachs, bowing to political pressure, might be forced to scale the number back. After all, the country was broke, 14.8 million Americans were stranded on the unemployment line, and Barack Obama and the Democrats were trying to recover the populist high ground after their bitch-whipping in Massachusetts by calling for a "bailout tax" on banks. Maybe this wasn't the right time for Goldman to be throwing its annual Roman bonus orgy.

Totally Corrupt TV: Corporate Lobbyists Pose as Disinterested Experts on Cable News

Covert corporate influence-peddling is taking over cable news.

February 18, 2010 | President Obama spent most of December 4 touring Allentown, Pennsylvania, meeting with local workers and discussing the economic crisis. A few hours later, the state's former governor, Tom Ridge, was on MSNBC's Hardball With Chris Matthews, offering up his own recovery plan. There were "modest things" the White House might try, like cutting taxes or opening up credit for small businesses, but the real answer was for the president to "take his green agenda and blow it out of the box." The first step, Ridge explained, was to "create nuclear power plants." Combined with some waste coal and natural gas extraction, you would have an "innovation setter" that would "create jobs, create exports."

Conservatives' Real Agenda Revealed at CPAC Conference: Love of Torture and Hatred of Obama

Day One of this year's conservafest included a surprise visit by torture advocate #1 Dick Cheney, and the crowd went wild for him.

February 19, 2010 | At first, the opening roster of speakers at this year's Conservative Political Action Conference sounded a common theme: How many ways can conservatives -- a term re-purposed to describe the Tea Party movement -- threaten the establishment of the Republican Party? Given the exuberant response of the CPAC crowd to those who expressed it, you'd be forgiven for thinking you had walked into a gathering of a coherent movement.

Orange peels, newspapers may lead to cheaper, cleaner ethanol fuel

Scientists may have just made the breakthrough of a lifetime, turning discarded fruit peels and other throwaways into cheap, clean fuel to power the world's vehicles.

University of Central Florida professor Henry Daniell has developed a groundbreaking way to produce ethanol from waste products such as orange peels and newspapers. His approach is greener and less expensive than the current methods available to run vehicles on cleaner fuel – and his goal is to relegate gasoline to a secondary fuel.

Daniell's breakthrough can be applied to several non-food products throughout the United States, including sugarcane, switchgrass and straw.

Team finds subtropical waters flushing through Greenland fjord

February 16, 2010

Source: Media Relations

Waters from warmer latitudes — or subtropical waters — are reaching Greenland's glaciers, driving melting and likely triggering an acceleration of ice loss, reports a team of researchers led by Fiamma Straneo, a physical oceanographer from the Woods Hole Oceanographic Institution (WHOI).

"This is the first time we’ve seen waters this warm in any of the fjords in Greenland," says Straneo. "The subtropical waters are flowing through the fjord very quickly, so they can transport heat and drive melting at the end of the glacier."

Paying For Tax Cuts At The Top By Cutting Pensions For The Rest

By Dave Johnson

Created 02/17/2010 - 11:03am

Today's new York Times has a front-page story (really an editorial) [1] that promotes cutting the Social Security pensions of Americans and other things that we as citizens are entitled to.

Many analysts say the president and Congress could send a strong signal to global markets by agreeing this year to a package of both long-term tax increases and spending reductions, especially in the popular entitlement programs, that would not take effect until 2012.

Let's remember how we got here.

For decades following the depression and WWII the country had operated with a budget that was in or nearly in balance while maintaining our infrastructure and investing in our future. Past concentrations of wealth were decreasing, the middle class was expanding, and we led the world in growing prosperity.

The trouble all started when we dramatically cut taxes on the rich. For decades the top tax rate was 90%. Then we cut it to 70% and then 50% dramatically from there all the way to around 30%. The budget immediately went completely out of balance. The tax cuts created a "structural deficit."

Study: States must fill $1 trillion pension gap

By Mark Scolforo, Associated Press Writer – Thu Feb 18, 9:16 am ET

HARRISBURG, Pa. – States may be forced to reduce benefits, raise taxes or slash government services to address a $1 trillion funding shortfall in public sector retirement benefits, according to a new study that warns of even more debilitating costs if immediate action isn't taken.

The Pew Center on the States released a survey Thursday of state-administered pension plans, retiree health care and other post-employment benefits in all 50 states that blamed a decade's worth of policy decisions for leaving them shortchanged.