Still down with capitalism?

Things are pretty busy here at the Village Green these days. There may be a crisis on Wall St, but on my street, in Kenmore, summer is over and fall is upon us. I see a few more reddening tomatoes in the garden and lots of tidying up to do before the snow falls. I'd love to go about my work and home chores secure in the knowledge that my pension is growing slowly but surely and that I won't have to sign away money I don't have to stay healthy in my so called "golden" years ahead.

Instead, I've been fantasizing about what human existence could be like in a non-capitalistic society. Maybe life would be better for us all if we were living in collectives dedicated to simpler life-styles and all contributing in one way or other for the benefit of the individual as well as the community. Anarcho-syndicalism, for example, showed lots of promise in Spain. Fascinating to read about entire industries running themselves without an owning class sucking off the profits.

The old Epic Battle of Communism vs Capitalism is so last century. Both of those economic theories collapsed under the weight of those excessively greedy few of the ruling classes. When corruption rules, it doesn't matter what economic system is in place.

I've been doing a lot more listening to others than blogging about the recent current events. I don't trust the talking heads on TV because they all make way more money than I do and tend to marry into even bigger money. All reports are that multitudes of citizens are contacting their elected representatives to complain about bailing out Wall St. Why not bail out us first, they say? Look at the debts we are all struggling under because the banking industry thought it would be a good idea to place bets on our homes and and other things like student loans.

On the other hand, we find ourselves living in a massively excessive society that consumes far more than is healthy. Rampant capitalism has produced multitudes of products that make life so convenient and so very toxic. American consumers are part of the problem as well. If this crisis can shake us out of our old ways of doing business, maybe the Big Bail Out needs to be put on permanent hold. Maybe we should be listening more to Dennis Kucinich who talked about solutions that focus on the bottom up, with a whole lot of clamping down on the monied overlords. His explanation of "the crisis:"

Here is a very quick explanation of the $700 billion bailout within the context of the mechanics of our monetary and banking system:

The taxpayers loan money to the banks. But the taxpayers do not have the money. So we have to borrow it from the banks to give it back to the banks. But the banks do not have the money to loan to the government. So they create it into existence (through a mechanism called fractional reserve) and then loan it to us, at interest, so we can then give it back to them. [The rest here.]

Lots of people are expressing the suspicion that this Bail Out is one final money grab for the Bush regime as it skulks out of office. Geeze, how much more damage can the idiot Bush inflict upon the rest of us?

But I think it goes beyond Bush. Actual people took actions that got us into this lack of liquidity or in plainer terms, into this mess of hugely over-extended credit to people who had no real ability to make the ballooning payments. Loans were bundled and sold again and again. (Ace sends us a link to a highly informative slide show, The Subprime Primer.) Real people thought up that scheme and followed through on it, linking up chains of greedy blood-sucking mortgage leeches. I don't know about you, but I'd like to see lists of actual names of the people -- and I don't care if they are Democrats, Republicans or non-voting non-partisans -- the ones who brought about this need to take 750 billion dollars from the people's collective wealth.

The amazing Wobbly Art displayed above was anarchistically borrowed from The Vancouver Wob.

Senator Brown Responds to Concerned Ohioans

Senator Brown has responded very quickly to emails about the 700 Billion Buyout. In today's email:

Thank you for expressing your concerns with the problems in the financial sector and proposals to address them.

A lot of Ohioans, including me, are angry at the thought of bailing out people who made a lot of money making bad business decisions that created problems in neighborhoods across Ohio.

I agree that we need to avoid rewarding excessive risk taking. These institutions made unwise decisions, and taxpayers should not be expected to simply cover their losses.

Treasury Secretary Paulson this weekend sent a proposal to Congress that would give him almost unfettered authority to spend $700 billion purchasing troubled assets from financial institutions. On Tuesday, my colleagues on the Banking Committee and I held a hearing at which Secretary Paulson, Federal Reserve Chairman Bernanke, and others testified.

They made a strong case for the need to act quickly to prevent further damage to our economy. The turmoil in the credit markets has the potential to do great damage to a lot of innocent bystanders. I am afraid that if we do not act, the economic instability could affect thousands of American jobs and the savings of countless middle class families.

But Secretary Paulson’s proposal is not the right answer. No Secretary should be given a $700 billion blank check. Taxpayers must be given an opportunity to recover their money, and assurances their tax dollars will not fund lavish pay and golden parachutes. We need strong rules to guard against abuse, and to ensure all types of institutions and regions are helped.

In the days ahead, we need to focus on containing the damage to middle class families and local businesses as much as possible. In the months ahead, we need to take a hard look at how financial markets are regulated so we never find ourselves in this situation again.

Thank you again for contacting me. I will certainly keep your views in mind as the Senate debates ways to help restore strength to our economy.
Sincerely,
Sherrod Brown

Senator Brown asks some good questions

I'm waiting to hear some answers to his questions. Meanwhile, I am very glad Senator Brown is on the Senate Banking committee. Here's what he had to say today during the Big Bail the Bums Out hearings, via the Cleveland Leader:

"Like my colleagues, my phones have been ringing off the hook. The sentiment from Ohioans about this proposal is universally negative."

Chairman Dodd, thank you for calling today’s hearing, and thanks to the witnesses for joining us. They have had many long nights lately, and this may be a long morning.

But I make no apologies for that, and I doubt they seek any. Like my colleagues, my phones have been ringing off the hook. The sentiment from Ohioans about this proposal is universally negative.

I count myself among the Ohioans who are angry. Had the federal government acted to contain the epidemic in subprime lending, I don’t think we would be sitting here today.

The time we spend this morning will be time well spent, not just for our own benefit, but for the benefit of the people we represent. I’m not sure they will be convinced, but they sure deserve a better explanation than they have received to date.

A man from Westerville, Ohio was so concerned he took a day off from work and drove to Washington, D.C. to share his views with me. He quite rightly asked why we are rushing to bail out companies whose leaders got rich by gambling with other people’s money.

Here’s another communication:

“The Federal Government must not prolong necessary corrections in the housing market, bail out lenders, or subsidize irresponsible borrowing and lending, at the expense of hard-working people who have played by the rules.”

Except that statement didn’t come from Ohio. It came from the Office of Management and Budget three months ago.

Throughout this sorry chapter in our nation’s financial history, this Administration has shown extraordinary attention to the problems of Wall Street, while at times showing hostility to rebuilding Main Streets across the country.

The statement I quoted above was from the administration’s veto threat of the housing bill. Congress wanted to include $4 billion to rebuild neighborhoods devastated by the foreclosure crisis. But the administration didn’t want to reward irresponsible borrowing and lending.

Now it does. But before we agree, there are many unanswered questions that Congress and the American people have a right to ask and the Administration needs to answer.

I’d like to know how taxpayers’ money will be spent. How will purchase decisions be made? Will it be an open and objective process like a reverse auction? Or will the price be determined at some higher level decided by Treasury? If so, does that thaw the credit market, or does everybody sit around waiting for Uncle Sam to pay an inflated price?

Will past patterns persist, where Treasury pays attention to Wall Street first and foremost, while the rest of the country watches and withers?

Will community banks, whose equity in Fannie and Freddie was wiped out, be helped? Will banks be able to sell portfolio loans as soon as investment banks offload their mortgage-backed securities? Does this bill do anything to enhance the government’s ability to modify loans and keep people in their homes?

As Chairman Bernanke probably knows, the Bank Panic of 1933 started in Detroit and in two weeks spread to Cleveland. Two of the city’s largest banks were shuttered and never reopened. One had ties to my predecessor in this seat, Republican Marcus Hanna. Rumors flew that the bank’s closure was a political decision. If we don’t know the rules, these types of rumors will be reborn.

Secretary Paulson, as much as I respect your judgment, you will not be making the hundreds of decisions that this effort will require. And as your colleague Secretary Kempthorne has found, a lack of close supervision and adherence to rules can lead to disastrous results.

Many of the people who will be making these decisions have come from Wall Street, and they may be returning to Wall Street. The notion that they can operate without clear guidelines is not just unfair to the taxpayers, I think it is unfair to them.

So I hope this morning we can go into considerably greater detail. And I hope we can give Main Street a good bit more help and attention than we have to date.

It is fine to say that people’s 401(k) accounts may be affected. They will be if we do not act. But for most people, their home is their 401(k). We need to help them as well.

No way, no how, no bailout without strings

I "borrowed" this image from Digby's site. There's lots of good writing over there today about the Bush/Paulson plan to reward the greedy bastards who now want 700 billion delivered to their financial institutions without any strings attached.

I tried to call my senator and representative, but no answering machines on today. Why don't they have them up and running? Not all of us have the time to call during business hours.

So email was the only option. Here's what I wrote:

Re: 700 Billion $ Bailout for Wall Street.

No way, no how, no tax dollars to bail out the greedy business people of Wall Street corporations.

Senator, I have a mortgage and I faithfully pay it every month and I pay 50 dollars extra on it so I can pay it off faster. I bought a house I could afford and have paid off by the time I retire. I have been responsible.

If 700 billion dollars is now needed to save the financial markets, I want to know -- who profited and who is sticking the tax payer with their debts? They are the ones who should be paying, not me.

I don't trust Paulson, I don't trust Bush and I especially don't trust this plan that was thrust upon us over the weekend and made to sound like we have to pass it immediately without any strings attached?

Please make sure that there are measures attached to prevent such greed from happening again. Transparency on every transaction. Accountability at ever step of the way. No golden parachutes. And tax the hell out of the bloody rich before taxing me!

Please write or call your Senators and Representative. I admit, I only contacted Sherrod Brown as it would be a wasted effort on Voinovich.

Thought for the day, via Digby: "I just have to add that when I heard Paulson say this bail out was actually going to make money for the government, I couldn't help but remember Paul Wolfowitz assuring us that the Iraq war would pay for itself."

Before buying into the buyout, be sure to read:

Historic Swindle by William Greider at The Nation

Greenwald at Salon.com

Radio Free Newport has a list of useful articles.

Psychobilly Democrat has a different kind of proposal.

Where's the Glass-Steagall Act when you need it?

I don't know about anybody else, but I am no economic expert. I am also very uneasy with both presidential contenders responses to the sudden collapse of Wall Street institutions. How did this happen and why does everybody seem so surprised about it? And how about my STRS Ohio retirement plan? Will there be anything there when I eventually retire?

I decided to ask someone who actually has studied economics and knows a heck of a lot about the subject. He has agreed to let me post his responses here. You might be surprised to read that Joe Biden, for example, is one of the culprits, along with Bill Clinton -- and a whole host of other folks to be sure.

Once we understand how the current financial crisis came to be, there are many more questions to ask, such as where are all the billions coming from that the government is promising to prop up the likes of Franny and Freddie and AIG? And do either Obama or McCain have any clear and detailed plans that might actually work?

Here are my questions with unedited responses from my friend ACB. (Be sure to follow the link to the Progressive Historians web site for everything you need to know about the Glass-Steagall Act.) Readers responses are more than welcome:

"What's your take on all the collapsing going on on Wall St? "

Two main things:
1/ Credit markets are hosed due to the violent collapse of the housing bubble. Housing bubble was caused by the completely-inevitable irresponsible lending which took place, and accelerated, ever since the Glass-Steagall Act was repealed in 1999. Short, informative article here:
Value of the Dollar is hosed due to rising cost of fossil fuels, caused by inevitable economic expansion of formerly dirt-poor third world nations. China is becoming the next Japan, India is becoming the next China, etc etc etc. U.S.Government response to this dynamic has been worse than useless.

"Who is to blame?"

Plenty of blame to go around. Bankers always respond to government policy incentives; these incentives are set in place by politicians; pol's incentives are set in place by voters; voters are morons.
1/ Bill Clinton and a Republican Congress worked together to destroy Glass-Steagall. The greedfest which followed was an inevitable matter of incentives being responded to. It's an echo of the S&L meltdown of the late 20th century, from which our elected officials of both big parties learned absolutely nothing.
2/ George Bush and a Democrat Congress worked together to mandate that all the gasoline available in America should be diluted with corn liquor. Consequently: a/ the gasoline is crappier and less efficient, b/ air pollution worsens AND energy costs rise, because of the extra step of industrial processing required to make that happen, and c/ one quarter of last year's corn crop, and one third of this year's corn crop, are consumed to replaced One Percent of the gasoline supply, d/ leading directly to food becoming much more expensive, both in the USA where we can kind of afford it, and across the entire rest of the world where they can not afford it at all.

" Will my pension be there in 15 years? Etc..."

It's a crapshoot.
1/ Credit markets will be tinkered with by high-powered government doofuses in ways that defy prediction, completely. Left alone, they could conceivably self-repair over maybe 3 to 5 years; but they will not be left alone. That's not election-outcome-dependent.
2/ Currency values will self-repair, but it will take too long and cost too much. Partly that's election-outcome-dependent:
2a/ Cost of energy will positively worsen under an Obama/Pelosi no-nukes, no-drilling regime.
2b/ Cost of energy will still worsen, much less drastically, under a McCain/Pelosi regime.
2c/ Cost of energy might level out under a McCain/(generic republican) regime. Two hundred winged monkeys might fly out of my ass and hand everybody in Ohio a winning lottery ticket, in an equally-likely outcome.

Is your pension hosed? Yes, probably so. Mine too.

Affluenza and class warfare are getting me down

Barbara Ehrenreich nails contemporary economics in her latest blog entry at Huffington Post. Barbara is a writer who does not turn her back on the working poor. Neither does Callahan at his Cleveland Diary. He's been posting a list of foreclosures in and around Cleveland, tallying them by bank. There are hundreds each week. Now we know who the big bad greedy banks are (Wells Fargo and Deutsche Bank top the list), we would all do well to avoid them.

But how? Can we blame the working class people for wanting to have everything on display at HGTV? Isn't it the American way to grow up and buy a four bedroom, 2 1/2 bath, with open kitchen featuring marble counters and tiles, the latest burnished stainless steel appliances with cozy breakfast nook and formal dining room, plus the obligatory "great hall" and triple garage?

I chanced upon HGTV a week or so ago and I've become at once hooked, appalled, horrified! There's one series that shows us what a certain amount of money can buy in various locations around the US. They never show anything under $150K, and often go up to 2 million and more. I wonder what people do for a living to make enough money to live in a 2 million dollar home.

Another show takes a potential home buyer out to see three houses, and then they make a bid on one of them. In this program you really get to see what is on the mind of the typical American consumer. It could be a fixation on black leather couches or a fear of too little space. And then I contemplate the sort of person who has such fixed ideas about what elements go into the perfect kitchen or "master" bedroom. I watched one couple immediately size up the lack of closet space and turn their noses way up as they headed out the door.

Another show teaches you how to spend a couple grand to redecorate their homes that are already on the market. Their sale price can go up up up!

Somebody once said that eventually, the only jobs left in the US revolve around selling each other houses. The furnishings will be provided by China, who will end up owning everybody's line of credit.

PBS once did a documentary called "Affluenza." Affluenza is the disease of mindless consumerism, the old keeping-up-with-the-Jones syndrome. If you haven't seen it, it is worth checking out.

It is not just the poor who are loaded with debt these days. The middle class are deep in it as well. We are bombarded constantly with ads for loans, alternating with ads for all the stuff that we simply must have to be in style. Can I possibly live in a house with dated kitchen cabinets? Who cares if it means cutting down more tropical rain forests to make those cupboards and drawers?

Meanwhile, people who long for a home of their own and who sweat and slave doing the jobs nobody else wants can't make their loan payments and that's the nasty dark underside to shows like Flip This House. Buy cheap and sell high, and sell out the workers while you are at it. Meanwhile, millions of people elsewhere will consider themselves lucky they have a plastic roof over their tiny shack with no utilities and no running water.