End Game: Where Are We Now?

END GAME: WHERE ARE WE NOW?

As you’ve read in the previous blogs, we have a severe crisis on our hands.

Trillions of dollars in equity have been stolen, funneled, and redistributed to the wealthy elite. The cost put average Americans out of their homes and out of their jobs. The entire world economy crashed, affecting workers all around the world. And what’s worst of all, the people who did all of this are still running amuck.

The most insulting portion of the financial disasters we’ve seen is that there has been no retribution to those who screwed the system. The executives who destroyed their companies and the investments of millions were able to gracefully resign from the companies, the governing boards often letting them go with millions of dollars. Though they were clear failures at the game of capitalism they were able to lose AND lose the lesson at the same time.

Angelo Mozello, Franklin Rains, Henry Paulson, Lloyd Blankfein, and all the other kingpins are still out there. And they aren't just fighting to stay out of jail. They're fighting legislation that would prevent these gimmicks from ever occurring again.

Even though America thought they had won with the election of Barack Obama, who had long and impassioned speeches about Wall Street reform, we were faced with a collection of government officials who came straight from the financial sector. "Government Goldman" became a common phrase amongst the enlightened few who saw the disturbing trend of Goldman Sachs executives going to work for government. A massive conflict of interest scandal was brewing as more and more political power went to Goldman. It's been said by many that they're not a financial firm, they're a political one.

What's worse, these same people who destroyed the financial world are all winning the hearts and minds of a select pocket of voters through their anti-government rhetoric and "free markets" catch phrases. Though they have bought excessive power in Washington, it isn't enough for them until they own it all. They don't want a government who tells them what to do. They want to keep operating the same way that they have been because it's the only way they know how to get rich. And it is a completely morally bankrupt system. The average citizen would never support it. So they need to abolish the government that would protect its citizens from such practices. They need to convince citizens that government is the enemy and that they are the solution.

Tea Parties will not stop. Talk radio will continue to praise "job creators." And a vast majority will still vote for anyone who says they came to Washington to "stop big government." The sad end to this story is that there is still an overwhelming majority who will vote for the interests of these few rich people and not for their own interest, including breathable air, access to health insurance, a tax system that is more fair to the middle class, and tight regulations for the financial sector.

What's the happy ending?

Well, the rich finally faced their biggest problem: no matter how much money they spent in 2012, the people voted. And they voted overwhelming against them.

Most of the candidates in 2012 that the wealthy elite poured the most money into all lost in the election. Karl Rove, the Republican super-genius, had less than a 1% return on his Super PAC investments in commercials. He had spent roughly $100M on ads against the Democrats, the biggest supporters of Wall Street reform. And in states like California, we voted to make the millionaires pay a little more. No matter how much money they spent to try and buy democracy, the people still had more votes than they did. And that will always be a testament to our country and it's ability to protect the interests of MOST people.

We still have a long way to go. But with people like Elizabeth Warren in the Senate to help regulate the financial sector and Barack Obama's continued disaproval of the way the financial sector has behaved we may very well see a new kind of America. Timothy Gheitner is leaving government, Ben Bernanke plans to retire, and Mitt Romney is sure to disappear into the cracks of history, never to be heard from again. We may actually be smart enough as a democratic society to look out for ourselves after all.

But that's only if we keep paying attention.

That's all for this semester. Thank you truly if you've been reading and I hope you've learned a thing or two here at Corporate Welfare. Just remember, the only way a democracy functions is if you use the voice it gives you. Let's not see the same mistakes repeat themselves again.

-Steve

The Douchebag Awards: Lloyd Blankfein

THE DOUCHEBAG AWARDS: LLOYD BLANKFEIN

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“We need to lower people’s expectations.”

The quote you’ve just read is from Lloyd Blankfein, the CEO of Goldman Sachs. And it’s in relation to the national debt and what we need to do to reduce it. His proposition and the quote that you’ve just read earned him this week’s “Excellence in Douchebaggery” award. His proposition was to get rid of entitlements and his reasoning was that we have to teach people that they don’t deserve any help from Uncle Sam.

What an ironic statement indeed to come from the lips of a $10B welfare baby. Lloyd Blankfein is the biggest hypocrite in the world, clearly, but he’s taken that title to a new low by blaming Social Security and other entitlements as the reason for the debt. It’s not mortgage securitization ponzi schemes or huge gambles on multiple lines of credit going bad. It’s those pesky senior citizens who think they’re owed things like RETIREMENT just because we said we’d give it to them. And so he points his pointy finger at the retired, the reflection of his index shining bright in his absurdly bald head, and said:

“Social Security isn’t going to be there for a thirty year retirement after a twenty five year career.”

This sentiment oddly resembles the sentiments of another prominent politician who just barely lost the election by a slim margin of over one hundred electorate votes (please note sarcasm.) His name, which rhymes with “twit,” was infamously quoted on hidden camera saying that forty-seven percent of Americans don’t take responsibilityfor their own lives. It’s how these big Wall Street superstars think. They say things like this to other wealthy people, and then wonder why the rest of the world hates their guts with a passion. They’re so confused by our reactions because they really do believe that this preposterous bullshit is all true. It’s not their faults, it’s ours.

What Lloyd Blankfein and other big shot bankers conveniently forget to mention is that they were the recipients of the largest hand-me-out in welfare history. They dress it up and call it a “bailout,” but it’s really just a huge injection of cash straight from the Federal Reserve into the arm of Goldman Sachs. Without it, the company most certainly would have failed. And this sum of money is completely the opposite of the Social Security fund, which is at a $2.7T surplus. Even though Goldman got back on its feet and paid back its loan they continue to insist that government assistance in any form is a horrible idea.

I’ve always been under the impression that Wall Street titans are worse than drug addicts when it comes to the compulsive nature of their denial. You listen to Mr. Blankfein make these statements and you wonder “does this douchebag really not see what it’s like for the rest of us scraping by on Social Security?” The answer is: no. No he doesn’t. The interview in question is all the proof you need that these guys are completely obvious to the hypocrisy of their own rhetoric. When it’s you who needs help, you’re a moocher upon society. And when they ask for a hand-me-out, it’s because they’re “job creators.” The only thing that will knock some sense into these idiots is to arrest the ones who broke the law the worst. That would at least be a start. Then the argument would change from “are they really that bad?” to “what do we do with bad people like this?”

 And so a tip of the hat and a flip of the bird to Lloyd Blankfein, sure to go down in the history books as one of the biggest douches of all time.

Weekly Feature!: Financial Gobblers!

Happy Thanksgiving everyone!  I hope all of you are enjoying your turkey/pumpkin and enjoying having conversations with the one’s you love, or trying to avoid them by having the football game on t.v.  Being that this is weekly feature is dedicated to financial heroes, i’d like to take this opportunity to dedicate this article to this holidays mascot: the turkey.  I could fill up an entire blog on people who have had financial “blunders” in the past, but i’d like to pay special attention to on special individual, one who had no disregard for other people’s money and way of living: former Senator of New Jersey, Jon Corzine.  Now who exactly is Jon Corzine, the man who the daily financial put on top of their financial villains list of 2011?  A University of Chicago grad, Corzine worked at Goldman Sachs (in which he was let go) as well as a brief stint as Governor of New Jersey.  However, what put him on the map of my financial turkey list was his position as chief executive of Man Financial (or better known as MF), a commodities brokerage firm.  However, due to risky bets in Europe due to the recession, MF was forced to file for bankruptcy.  This is were this gets interesting.  MF had to claim bankruptcy because, as written by Forbes magazine they simply weren’t making any money.  The way the ran their business was archaic, as they still took orders over the phone when the rest of the world was doing electronic trading.  However, bad business practices aside, the one thing that turned heads all around Wall Street was how, as they were declaring bankruptcy, 1.2 billion dollars of client and employee money disappeared.  Corzine claimed that he had no idea where the money was but everyone speculated that he used that money to pay off any debts that he may have had in order to save himself from hurting his pockets but emptying everyone else's.  Not only did Corzine steal from his employees, but he gambled with money, with little return and caused people their jobs and most importantly he walked away scott-free.  It’s these kind of people, who show no remorse for anyone but themselves that make me have more praise for people like Elizabeth Warren.  Just in case you don’t know who Elizabeth Warren is, check out this article written by a fellow blogger named Steve Thomsen, in which he rewarded her with a “financial heroes” award.  So there you have it, our “financial gobbler” for this special edition of our weekly feature is Jon Corzine, may this award give you great pleasure and keep you away from anymore awards calling you a “financial gobbler”.

Sports Owners+ Taxpayer dollars = New Stadiums?

Let me start off by saying that i’m a bonafide sports junkie.  I wake up and fall asleep to ESPN’s Sportscenter and listen to podcasts on the way to school.  In fact, I have espn.com on my browser tabs while I write this!  That being said, I cannot tell you how frustrated I get every time I hear that a multi-million dollar sports franchise wants to use taxpayer dollars to build a new stadium.  In this article by thinkprogress.org, Travis Waldron gives us five cities that want to use tax payer dollars to help fund brand new stadiums for their teams.  Their argument for doing so is that by the citizens helping fund the stadium, new jobs will be created, thus the economy will flourish.  Call me crazy but, I do not think that the owners have the best interests of the people in mind.  Take for example this article by Scott Keyes, in which the city of Cincinnati had to sell of local hospitals in order to help fund the building of stadiums for the Cincinnati Reds and the Bangles.  Or the city of Atlanta, home of the Falcons, who want to have restorations done to their stadium while there were cuts being made to the education budget.  These kinds of investments are almost all the time more risk than reward.  The stadiums are never done on time and always cost more than originally quoted.  The idea of a beautiful new attraction to your beloved city is always enticing, and there is a great feeling in knowing that your hard earned money helped pay for a brand new stadium.  But what’s the point in trying to help when once all is set in done, you won’t be able to afford a ticket to the stadium you have financially helped build? Or worse, you could end up like the Miami Marlins.

Copyright Laws: Stifling creative minds in the United States for the past 150 years.

I once saw an episode of South Park, in which Stan, Kyle, Cartman, and Kenny were being sued by every single musician for copyright infringement.  This episode was created at around the same time that Napster, the big music sharing company at the time was being sued by the music company, spearheaded by one of my favorite drummers, Lars Ulrich of Metallica.  Now at the time I did not understand why sharing music was so bad, and even now, as my Iphone is full of music that I (gulp) found on music sharing websites.  Ladies and gentlemen they were suing Napster because their work is protected by the constitution and its copyright and patent clause.  Our founding fathers’ primary motivation for creating this clause was... “ to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writing and works.” (Article I, Section 8, Clause 8 in our United States Constitution).  In other words, under the copyright laws, your work was protected for 14 years and if you were still alive after the first 14 years passed, your work would continue to be protected for another 14 years.  Ideally, this is a great idea as it fosters creative competition and innovation, and brought us many of our inventions that we use today, and allowed to create better versions of what was originally invented.  However, the days in which these laws were meant to create growth have gone in the days of the VCR.  In this paper written by Derek S. Khanna, A Georgetown law graduate, he writes that “Current copyright law does not merely distort some markets- rather it destroys entire markets”.  Nowadays, it seems that you can’t do anything or share anything because you’re at risk of stepping on someone’s creative shoe.  The way that the copyright laws are interpreted in this generation in which we feel like we have to keep up with the Jones’ is actually hurting creativity and growth.  It’s a special type of corporate welfare (and one of the worst types) because the government protects certain businesses and to quote Khanna, “...it is a system that picks winners and losers, and the losers are new industries that could generate new wealth and added value”.  It’s not that people have new, creative ideas that will benefit our culture as a whole, it’s just that the minute they have an idea, they just fear that they might get a lawsuit slapped on to their idea.

I understand that one’s individual work should be protected as they worked hard and invested countless hours of time and dedication to create their respective works, but I do not think that the federal government should have the power to police and decide who’s stealing from whom, let alone use taxpayers dollars to help out a select few that can already help themselves.  

The Tea Party: How The Rich Get Stupid People To Vote Against Their Interests

The Tea Party: A Spontaneous Movement?

By Steve Thomsen

If there was one aspect of the election that shifted the vote more than any other, it’s this angry mob of middle-aged white people who are “taking back the country” and are bringing about “the next American revolution.” The self-righteous conviction that they are the few true Americans left is a testament to the fury of the masses. They organized against Obama’s health care bill. They organized against the Democrat’s “Cap and Trade” bill, a bill that taxed CDCs and other carbon pollutants. And, most widely, they organized against Obama himself.

From their perspective, they are a grassroots movement. Every one of them believes that their anti-government rage is the result of a president who doesn’t care about the country, not the talk radio and news organizations they are presently addicted to. But really, this story of the Tea Party ties more closely with the story of financial corruption than almost any other. Because now that we’ve seen how the markets were manipulated to rip the entire country off, we can now see how these evil geniuses then convinced the masses that it wasn’t the rich’s fault. It was the GOVERNMENT spending your tax dollars on wasteful things! Like POOR PEOPLE! And WELFARE! The good hard working (and mostly white) Americans who just want to work a decent day’s wage are sick of paying for the social parasites’ booze and cigarettes. It’s like “Atlas Shrugged,” but instead of John Galt, we have Rick Santelli.

But is this movement really as spontaneous as it seems? Because when you start to see the causal effects of the movement you can trace it all to a handful of people. And when you find out what those interests ARE, you understand why they would fight hell and high water to prevent carbon and climate legislation, health care reform, and a president who has the power to go against their wishes and regulate their industries in ways that are good for the masses but bad for the individual.

We already know that the financial disaster was the result of insanely stupid use of derivatives on the real estate market. While housing prices skyrocketed for a bit, they eventually plunged into the abyss as more and more securities went bad and people who were suckered into sub-prime mortgages started defaulting on their credit. Many people were evicted from their homes, even if their financial institution couldn’t find the paperwork for their loan. The situation was getting really messy really fast.

So Barack Obama, the newly appointed POTUS, stepped up to the plate and introduced the “Homeowner Affordability and Stability Plan,” which basically raised taxes on upper incomes to help keep these people in their homes and get them out of debt. Well, obviously Wall Street hit the f%#(ng roof on that one. It was such an insult for them to think that it was the hunger of the market to maximize profits at ALL costs that was the problem, or the consequences it had on the free market. It was OBVIOUSLY all those people who didn’t speak the technical language we like to call “law” that were to blame for buying into the traps they themselves had set. How dare they!

So Rick Santelli, a CNBC contributor, went on the air, pointed his finger at America, and said this:

You understand the subtext? “It’s not us! It’s YOU! YOU with your selfish desire for THINGS! THAT’S YOUR FAULT, NOT MINE!”

And so the call for a tax revolution began. But did that demand come from actually people? No, it came from a major cable news network. Even more disturbing, in a few short hours a staffer from Americans for Prosperity said live on the air that he would e-mail everyone on their list to attend the Tea Party rallies that Rick Santelli proposed. That list contained 500,000 names. And there spawn 50 Tea Parties with 30,000 people in attendance. Needless to say, this was an effective ploy.

But the question remains: did CITIZENS really rise up against Obama? Sure, the citizens didn’t HAVE to show up to the Tea Parties. But through a coordinated effort by several billionaires, they DID show up at those Tea Parties. So what’s the real story here? Is this grassroots, or is it something more sinister? Like ASTRO TURF?

Astro-turfing is an age-old political tool used by the wealthy and powerful to get citizens to side with them on legislation. The reason why they need to give the appearance of a citizen’s uprising is because if most of the country new that these ideas were coming from a small group of selfish scumbags, they would never vote for the things they want you to vote for. Like health care, carbon tax, or even public education.

So they carefully brainwash pawns through use of anti-government rhetoric in order to incite the masses against legislation that would keep them healthy and their planet safe. They organize Tea Parties. They build conservative think tanks to lead normal people to believe that the debate is still out on climate change. And, above all else, they convince everyone that everything bad that has happened to our country’s prosperity is ALL Obama’s fault. Even venereal disease and rape babies. (Okay, maybe not, but you get the idea.)

No other effort to brainwash a group of citizens has been more effect than that of Americans for Prosperity and FreedomWorks, two mostly conservative  activist groups with a long history. These two organizations have been infamous in holding corporately sponsored “citizens rallies” to help rally people against government legislation on climate change. Because that’s “regulation.” And we all know that regulation in any form, whether it be weapon possession, pollution, or financial products, is straight from the devil. The success these groups have had in organizing Tea Parties has been astounding. All a tribute to the degree of stigma this country feels in the wake of a near depression.

Americans for Prosperity is the key to this puzzle. Its funding comes almost exclusively from one source: Koch industries. And while I could talk all night about this subject (and probably will in a future post) I’ll just say for now that if you don’t know who David and Charles Koch are, than you need to read everything you can on them. Because they are the evil geniuses behind most of the astro-turfing and political contributions through super PACs in this country. The lengths to which these two have gone to buy elections, politicians, and the minds of voters has been unparalleled in American history.

In closing, I encourage strongly that everyone watch this video. It’s about an hour’s length, but it is one of the most important videos I’ve seen on the formation of the Tea Party and the Koch brother’s use of astro-turfing to try and gain political power and continue to pollute on a massive scale.

Oh, and here’s one more thing to keep in mind: Mitt Romney knows these guys very well. Don’t believe me? Watch this:

That’s all for this week. Tune in next time as we continue down the rabbit hole.

Financial Heroes Awards: Elizabeth Warren.

THE FINANCIAL HEROES AWARD: ELIZABETH WARREN

As we have read, there are some seriously screwed up sleezeballs in the world of high finance. And it seems that no one has the courage to keep them in line. With most politicians willing to look the other way at first glace of a hand-me-out, it seems that there aren’t a lot of people willing to wear the big S on their chest and go fight crime the modern way: through legislation and policy that will protect consumers. And that’s why this week we are recommending none other than newly appointed Massachusettes state senator, Elizabeth Warren, for our bi-weekly feature “The Financial Hero Awards.”

Elizabeth Warren is a bankruptcy law expert, having graduated with a JD from Rutgers School of Law–Newark. She’s been a professor and Harvard law school and has also served on. She’s done countless interviews about the mortgage collapse, served on the chair of the Congressional Oversight Panel for the TARP bailout (trust me, she was one of the good ones in this mess,) and was an adviser to Obama’s Consumer Financial Protection Bureau. Her whole life has been dedicated to one main concern: preventing the financial elite from completely screwing folks like you and me.

Her rising star shone even brighter this election cycle when she took down Scott Brown, the Republican incumbent senator of Massachusettes. And right on time, too: her relationship with the Obama administration has been a positive one, and their work together has already proven crucial in the world of financial reform.

Elizabeth Warren has been a rumored candidate for the 2016 presidential election. Obviously, it was far too early to start projecting future candidates. But it could happen. She’s popular in the political world and clearly ambitious enough to fight Wall Street. If she becomes the first woman president, a clear irony will occur: that a woman will be the only person with the balls to take on corrupt financial practices.

That’s why we tip our hat to you, Senator Warren. May your work strike effectively against the elite, and may we never have another crash again with your protective oversight over our economy.

Avoid the “fiscal cliff” America: Cut the cord with big business.

Over the past couple of days, it seems that everytime I turn on the computer two things seem to pop up every time:  Former head of CIA David Petraeus’ scandal and how America is about ready to jump off a financial cliff.  I’ve been hearing the term “austerity” or the reduction of services to citizens throughout the past couple of days and after reading countless of articles about how to cut the budget, one thing came to mind: why not cut corporate welfare?  The United States’ defecit is filled with a myriad of debts, loans, subisdaries, mostly from big businesses.  Also let’s not forget that Social Security and Medicare has unfunded liabilities at over 100 trillion dollars.  However, the biggest culprit is the Department of Agriculutre, which is given in excess of 25 billion dollars, follwed by energy department (17 billion).  

There are many types of corporate welfare, from the 182 million dollar bailout of insurance company AIG in 2008, to President Obama’s 67 billion dollar bailout of the automotive industry.  Both of these I feel are prime examples bailouts in which there were polarizing points of view.  Let’s be honest, by cutting corporate welfare and saving an estimated 100 billion dollars a year, won’t balance our government’s budget however it will start a new wave of politics in which lobbyists in Washington will have no pull over anyone and law-makers will not have to fear giving anymore subusidies to those who constantly need them.  This is easier said than done, however if there is anything that both republicans and democrats believe in it corporate welfare.  On one side you have the republicans, who favor big business such as the banks, and companies, and then you have the Democrats, who oppose big business but are in favor of bigger government so in regards of handling of handling people’s monies, both have their fair share of screw ups (I’m being overtly nice with my use of langugage).

Cutting corporate welfare from our government is vital for us simply because we cannot run the risk of making money off of companies investments.  Some may argue that the AIG bailout was a success, as it brought the US an 18 billion dollar profit.  However, that is not the norm and when one wants to think about corporate welfare I would like to infrom you about a little company that due to it’s risky investments collapsed: Enron.  December 31, 2012 is the date that we are supposed to fall off the fiscal cliff, taxes are supposed to increase, unemployment might go up, and if not managed carefully, we will spiral downard into a sea of recession.  Ending corporate welfare is not going to single-handedly end our recession, however it will show the public that our governemnt is starting to take care of those who vote them to their positions in the first place, and that alone is a small step for all of us.

The Financial Sympathy Awards: Ben Bernanke

The Financial Sympathy Awards: Ben Bernanke

By Steve Thomsen

There are very few people in the world of high finance that I have respect for. Most are like Lloyd Blankfein, balding little twerps with a pathetic sense of self-entitlement. The Angelo Mozilos of the world all seem to have this attitude that anyone who talks about income inequality is directly blaming them, and therefore they should have no sympathy toward their detractors when they screw them over with junk financial products. It keeps them in an oddly removed state of mind where they’re never wrong and anyone who criticizes them is doing so for good old-fashioned character assassination. Except for Franklin Raines (this link contains a list of stories pertaining to his many many sins), who will say that you’re a racist for criticizing his work as Director of the Office of Management and Budget and his role in the Fannie Mae disaster.

Despite all of this, there is one man in the financial elite that doesn’t deserve the same heat as the rest of the goons on Wall Street. He’s been our Federal Reserve chainman since 2006 and has been called the worst names in the book. His partnering with Henry Paulson to pass the $700 billion TARP was truly controversial and his alliances in politics and finance have been widely condemned. Oh yeah, and he also was rumored to have bullied Bank of America in their merger with Meryl Lynch. But really, when it comes to Fed Chairman Ben Bernanke, we probably couldn’t have done much better than he did when it came to the financial crisis.

Ben Bernanke is a very bright man. He was a Harvard University undergrad, having been accepted with an SAT score of 1590 out of 1600 (and, strangely, he was very good friends with former Goldman Sachs CEO, Lloyd Blankfein.) From there, he attended the Massachusetts Institute of Technology for his doctorate of philosophy in economics. And from there, he was a Princeton professor and taught a class at George Washington University. After his teaching tenure, he went into government. He first sat at the governor’s board of the Federal Reserve in 2002. And then, in 2006, George Bush appointed him the chairman to follow Allan Greenspan.

It is perhaps because of the despicable cast of characters that surrounded Bernanke that I have a lot of sympathy for him. Compared to Greenspan, Bernanke was a saint. Bernanke was much more pragmatic in his dealings with the financial crisis, often making the moves that he did because it seemed the only way to handle such a horrible situation. This is in direct contract with someone like Franklin Raines, who was implicated in severe accounting fraud (and was still able to retire with his fortune intact.) And throughout the disaster, Bernanke was the only one who seemed nervous. Henry Paulson would blow up the world, then calmly present Congress with three pages of paper that were worth $700 billion total. When Bernanke gave his input, you could see him visibly shaking. My only assumption was that he was astonished by the God damn severity of the situation he found himself in.

Republicans and Libertarians are the most vocal in their hatred for Bernanke. They say he’s the Monopoly guy, printing fake money and telling everyone that it’s real. And they aren’t entirely wrong in that assessment. Bernanke has pumped a lot of paper money in the system to try and drive down interest rates. This has led to a level of inflation, but you’d be hard pressed to say it didn’t prevent a full-blown depression. As a matter of fact, many of the methods Bernanke used to try and avoid an even bigger crisis is straight out of the Great Depression playbook. His use of government bonds and low interest rates is truly strategic, like a good game of chess. And it must be the most nerve-racking job in the world. It’s no wonder he’s lost all his hair by this point.

The Ron Pauls of the world are convinced that Bernanke is Satan and his bailouts were “unconstitutional” (despite the fact that the founding fathers had no idea about the world of modern finance.) Many fiscal conservatives say AIG should have gone bankrupt. But that’s a narrow-minded view. The truth is, Bernanke’s actions to save AIG, while imperfect, were necessary to saving the whole financial world. Every depositor in America would have lost their savings if he had done things the conservative way. And while he shouldn’t have forced AIG to pay 100 cents on the dollar of what they owed to shady financial firms like Goldman Sachs, the takeover was an example of how we need government and big business to work together.

In 2009, TIME magazine named him the person of the year. And I have to say, I agree with them. He was the bold (although somewhat shaken) man who prevented the disaster. The people who hate him have to understand one thing: this was the man who sat at the table with the real villains of the story. He watched them all sit around the financial world’s self-destruct button and prayed to God that they wouldn’t push it. But when they did, he took on the bold task of cleaning up their mess. And that’s why, in a weird way, I have much respect for Mr. Bernanke. I’m very interested to see who will succeed him after his departure in 2014. But we can all agree on one thing: whoever succeeds him can’t possibly be as bad as Allan Greenspan.

What’s the “fiscal cliff” and why are we jumping off of it?

The morning after last Tuesday’s presidential election one of the first things that I heard and read on the radio was the subject of the United States falling off a “fiscal cliff” and how Speaker of the House John Boehner told the president that we as Americans are looking up to him to help us avoid off of it.  I was curious as to what Mr. Boehner was referring to as a “fiscal cliff” and this article from NPR explained it to me plain and simple.  What Boehner was talking about was that effective Dec. 1 2013, the Bush tax cuts that were imposed in 2001 would expire, meaning that taxes will increase even more on both the wealthy and the middle class.  Further more unemployment benefits will be cut so millions of Americans that receive help from the government will be on their own.  If you would like some more information on how jumping off  the “fiscal cliff” would affect you, there is another wonderful article by NPR that highlights certain scenarios from the increase in taxes that could possibly affect our economy.  As we near the end of the year, we will probably hear this term of “fiscal cliff” become more prevalent, however it is important to look at both sides of the coin, no matter how one sided it looks right now.

Money Talks....for now.

Back in 2010, the United States Supreme Court made a ruling in The Citizens United vs. the Federal Election Commission which ruled that the government could not declare corporations spending in candidate elections as unconstitutional, in which President Obama declared it “a big victory for oil companies” and corporations in general.  The supreme court backed up its decision by saying that they cannot prohibit people from participating in political speech.  Bollocks! I can’t seem to wrap my mind around the fact that our Supreme Court thinks that political action committees “simply engage” in political activity.  The facts are all over the place.  There are websites dedicated to show the public who and and how much certain people or corporations donate to each political candidate.  Opensecrets.org, which is one of these websites that show us how much political influence some corporations have over both political parties.  

For example, take American Crossroads, founded by none other that republican Karl Rove (insert ominous music here) donated 105 million dollars to their respected parties, and also opened up a 501(c)(4), or a tax exempt, nonprofit organization which donated 71 million dollars, all without disclosing information on whom they donated for.  Other top contributors for Governor Romney include, Goldman Sachs, Bank of America, and JP Morgan and Chase.  However, the big spender of this years presidential election is Nevada casino billionaire, Sheldon Adelson.  The New York Times wrote that Adelson donated more that 60 million dollars spread amongst eight candidates.  We all heard of the phrase money talks, well in Mr. Adelson’s case he wants the whole world to hear him out.  However, this election had an interesting turn of events in which the following happened: All eight of the candidates that Adelson supported, none of them won any of their respected elections.  This marks a sudden change in which it feels like people don’t need to feel like they need money to have things go their way.

Granted, one could argue that President Obama also had their PAC’s try to help them out (in which companies like Microsoft and Google contributed significantly) however people do not have a real disdain for these corporations, whereas the first things that comes to people’s minds when you hear of the banking industry is “money hungry bastards who have no concerns for anyone but themselves and their pockets.  However, people now more than ever feel like they have a voice and are slowly starting to unite to get what they need: the students.  In a highly tight poll, Proposition 30 which would have created trigger cuts by about 6 billion dollars to the education system, failed to pass, creating happy students and happy teachers all across the state of California.  Proposition 30 was heavily supported by the California Faculty Association, in which it successfully spread the word and advertised to the students about how this was going to affect them.  Charles T. Munger, a California based lawyer, donated about 55 million dollars out of his own pocket to stop proposition 30 from passing and failed. I feel like it was a giant step towards what democracy in its finest form, in which the people got what they wanted, not what the corporations were spending all that money to simply “engage in political speech”

The Aftermath of The Bursted Bubble

THE AFTERMATH OF DEREGULATION

By Steve Thomsen

September 15^th, 2008. AKA, the day the whole financial world went into cardiac arrest. This was the day when all transactions stopped, several financial companies were pronounced officially dead, and the DOW Jones Industrial dropped 700 points in a single day. This was the day known as the Great Collapse. And in it, all of America feared for the future of our financial security.

In my previous post I described how the new securitization system had been put into place to secure mortgage, credit card, and student loan payments. These financial products, known as derivatives, gave birth to investments like Collateralized Debt Obligations (CDOs), Collateralized Mortgage Obligations (CMOs), and one final product to ensure your financial products from going bad called Credit Default Swaps (CDSs). I also went over the ways these products were used to lump lousy mortgages into lump sum products that were sold as AAA rated investments. As mentioned, this picture got ugly. So ugly, in fact, that it completely stopped the market on that fateful day in September. Here’s how it was abused:

By 2006, the mortgage market was already raising eyebrows. Allan Sloan, the editor in chief of Fortune Magazine, wrote a column entitled “House of Junk.” The article was very critical on the real estate products hitting the market. These CMOs that were being offered to investors, he wrote, were comprised of mortgages that the owners had lass than 5% on in many cases. Basically, even though they were sold as solid investments, he was realizing that they consisted almost entirely of sub-prime loans. And sub-prime meant the owner could walk away from his house for basically any reason. After all, he had almost no money in it. So why should he care?

More troubling still, a third of all mortgages that made up these CMO derivatives had defaulted. The products were going to go bad. It wasn’t a question of “if.” It was a question of “when.” And WHEN these products went bad, it would be much bigger than simply drying out payments for investors: it would also mean that everyone who had an insurance policy on these products would ALSO need to be paid out for the CMOs defaulting. And, as mentioned, a lot of these products were leveraged FAR beyond a single person insuring their house. Often times, dozens or even hundreds of investors would buy insurance policies against these houses going bad. They didn’t even own the house. They were just placing HUGE bets against the real estate market.

So imagine this: your house burns down. You have insurance on the house, so you’re not worried. But fifty other people ALSO insured your house against burning down. So now the loss isn’t just for one house: it’s for fifty. And everyone who has insured themselves against your house burning down now has a vested interest in the house burning. You can see why certain people would want to see this house burn.

The biggest company to abuse the bets against the mortgage market was, hands down, Goldman Sachs. Goldman, since heading off to the races to create as many CDOs and CMOs as possible, had sold as many mortgages as they could possible sell. They practically gave them away so they could create more securities to sell to investors. They knew the mortgages were basically crap. They also knew that the mortgages would default and the securities, consequentially, would go bad. But this market was making them tons of money. So they doubled down on it, working with lenders like Wakovia to make as many piece-of-crap financial products disguised as AAA investments as possible.

But Goldman Sachs took it one step further: they started buying MASSIVE amounts of Credit Default Swaps to insure themselves against the very financial products they were selling. They would sell thousands of mortgages, lump them into securities, and then buy CDSs on the securities as soon as they sold them to other customers. Is this making your head hurt yet? That’s exactly why it worked: because it’s literally too boring to pay too close attention to. But, as mentioned, the securitization chain is where all the bodies are buried in this story.

In 2006, George W Bush appointed the CEO of Goldman Sachs, Henry Paulson, to be the US Treasury Secretary. Paulson, along with Greenspan and Summers, is often known as one of the key players to the financial disaster. Paulson was a complex character: he was business savvy, but not a straight Gordon Gecko. Still, some of the policies he was the chief advocate of were directly related to the collapse. So his appointment to the treasury is crucial to the story and indeed history.

One of the policies he lobbied for was for the banks to be able to leverage their borrowed money in numbers much higher than the amount of reserve capital the banks actually had. So the bank could potentially loan $100 billion while it only had $15 billion in reserve. This obviously went against the golden rule of living within your means, but according to Paulson, these were deals negotiated by professionals. So they should be allowed to make risky bets.

The other was to leave the Credit Default Swap market unregulated. This was a market that should have been regulated from day one simply because of the volatile nature of the products. In typical insurance policies, you can only insure yourself for something you own. In the world of financial products, you don’t need to own a product to buy insurance. Not only that, but you can insure yourself for several times the amount of the actual financial product by buying multiple CDSs on your product. This was a VERY dangerous system because if anything went wrong, the blowback would be deadly.

AIG was the primary supplier of Credit Default Swaps. And since it was a largely unregulated market, Goldman Sachs went big with it. Their former CEO was now in one of the highest offices in the country and their piece-of-crap products were so heavily insured that if (or, more accurately, WHEN) the products defaulted, they would be owed a vast sum of money. The number was in the billions. Needless to say, Goldman Sachs had a very vested interest in blowing up the world.

Some other major mortgage lenders included Countrywide, who’s CEO at the time was Angelo Mozello. Angello became enormously wealthy during the bubble, and left the scene of the crime with over $200 million. Robert Steele, the CEO of Wakovia, got out of his failed company with millions as well, and eventually chaired the board of Wells Fargo bank. And Bank of America’s Ken Lewis went on to make over $9 million during the worst year of the bubble (2008). Eventually, we’ll talk about the key point that the reason this behavior continues to this day is because none of these people have gone to jail.

The time bomb was set. The players had already established their positions. Any day, enough mortgages will have gone bad that a full-blown atom bomb of fiscal carnage would unleash upon the world. Goldman Sachs had set their pieces. Lehman Brothers and Bear Stearns were busy creating their mortgage messes, but hadn’t counted on Goldman’s boldness. And AIG had an unexpected payday in it’s future, the magnitude of which would ultimately equal $85 billion (!!) It was the closest thing we’d get to seeing the apocalypse in our lifetime. And what’s strangest of all, some people still don’t even know that it happened.

Next week, we’ll go over this grand fireworks show that blew our economy to hell and back. And we’ll go over how the culprits who nearly destroyed the world were rewarded for their bad behavior. All this, next week on “Corporate Welfare.”

“My vote is priceless!:Wrong! it’s worth about 20 dollars”

Happy election day everybody!  Let us rejoice in this wonderful day by expressing our opinions and voting in today’s matchup between Governor Mitt Romney, and our current president Barrack Obama.  Now I will not tell you who I voted for but I can tell you that I still have the same feelings of excitement and anticipation as I did when I first took part in voting four years ago.  This election is important for many reasons, however I will talking about the financial part of voting as this wonderful article says that this election will cost an estimated six billion dollars...toppling 2008’s election by over 700 million dollars. 700 million dollars. Let that sink in for just a moment would ya?  My question is simple: “where, in these tough economic times did both respective candidates find the money to fund their campaigns?”  Political action committees (or PAC’s) play a large role in funding as each candidate spent over 500 million dollars trying to tell the public that the other person could not work well with others.  It’s not my position to say how to spend money that is practically given to you however, in a world where there is economic recession, unemployment rates are at an all-time high (including several swing states such as Ohio) and spent nearly six billion dollars on advertisements it seems as though we are in a better economic position that we thought.  Hooray for economic prosperity!

THE WORLD OF FINANCIAL PRODUCTS: HOW TO TURN LONG TERM GREED INTO A SHORT TERM DISASTER

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THE WORLD OF FINANCIAL PRODUCTS: HOW TO TURN LONG TERM GREED INTO A SHORT TERM DISASTER

If you ever spend time with a politically energized group you’ll probably notice that they argue. Actually, that's an understatement: they argue all the time. The finger pointing never stops. Half the country seems to blame the current president for our economic despair, while the other half seems to blame the FORMER president. This non-stop parade of partisan identity is truly frustrating to the few who actually knew the source of the financial collapse of 2008. What’s most frustrating is that the source of the problem has enough blame to spread around to both the Democrats AND Republicans. This is a thoroughly bi-partisan problem, and I’m about to explain why EVERYONE is wrong.

Last week we talked about the financial industry and its history. With a newly de-regulated market, the world of financial innovation was at an all time high. The firms that ran this industry were fewer in number and doubled in size. We had a few major commercial banks, a handful of investment banks, two insurance companies, and three ratings agencies. All of these worked together to make the financial industry as profitable as possible. And the system they had worked out to help keep the new system alive: securitization.

Securitization is the new way America makes payments. In the old days you would barrow money from your local lender and pay that lender back directly. This is precisely why we wouldn’t give loans to just anyone. The people who lent the money were very meticulous and watched that money very closely. They had to: if they didn’t, the loan could default and they could lose all their hard-earned cash. With a direct-payer system we knew what was at stake.

In the now, the payment system works like this: we accept a loan and make payments to our lender. However, unlike the days of old, now the lender can sell our payments off to investors around the world. They did this buy lumping the payments of several debts together to create a much higher sum of money. They don't lump the amount they actually have on hand: they lump the TOTAL value of the loan before it even matures. So if you have one hundred $100,000 loans that have not received payments yet, they still think of this loan money as ten million dollars. Then they sell a piece of this ten million dollar pot to the investors who are willing to buy them. These financial products are called derivatives (they derive from payments), and they became VERY popular in the new millennium. The particular derivative I’m talking about here is called a Collateralized Debt Obligation (or CDO for short.) A CDO can consist of credit card debts, student loans, and mortgages. You can buy these products from investment banks like Goldman Sachs or J.P Morgan.

This was step one: take payments, lump them together, and sell the resulting product off to people for their investments portfolio. But it’s still the same amount of money, only dressed up for mass consumption. So the banks decided they needed to take this game one step further. They needed a way to make people believe in the same magical thinking that they were deeply invested in: that somehow these lump sum debt amounts were more valuable than a single mortgage. Even though the mortgages haven’t actually been paid off yet, the financial firm can make claims to its future worth.  So they can say that the financial product you paid $100 million for will actually be worth $200 million in 10 years after the mortgage matures. It’s a kick-the-can-down-the-road kind of thinking, but a lot of people bought into it.

Not only can you lump mortgages and not only can your firm claim that when these mortgages mature that they’ll be worth twice as much, but you also have ratings agencies that will verify that this financial product is actually a solid investment. Moodys, Standards and Poor, and Fitch were all the main players in this part of the financial charade. They evaluated literally billions of dollars to give the investment grades. These grades were rated as follows: AAA is the highest rating, and then there’s CCC at the bottom (known quite literally as a “junk” investment.) The financial products that had the best rate of return were usually the ones that yielded the least amount of money in the short term because it was a less risky investment. The “junk” investments, however, had high yields because they were much riskier.

But why would they want to do this? Doesn't this just make payments and debt more complicated? Well, yes it does. But it also solves two problems: first, you don't have to wait for a mortgage to mature. You can sell a financial product as if it has been paid off and receive a large sum of money RIGHT AWAY. You can also make bad deals and sell those bad deals to other people, stamping it with Moody's coveted AAA rating. Now you have the money for these house payments right away, and when they go bad it's now someone else's problem.

This magical thinking was the perfect trap for the future of our financial security. The cookie jar was opened wide, and most of the major financial firms saw the chance to manipulate the system. Here’s how they did it:

First, they thought it profitable to create as many mortgages as humanly possible so they’d have plenty of expensive financial products (CDOs) to sell to customers. The yield on these mortgages is now instantaneous because you’ve sold the risk off to someone else, and that same customer paid for several mortgages in one go.

They also made it insanely easy to GET a mortgage.  The old days of actually having to qualify for a home was all over: now, with a shady lending technique called “sub-prime” lending, lenders could sell a mortgage to a family with no money because the family didn’t have to have any equity in the house. They didn’t have to put that much money into it all, sometimes paying less than 3% on the total value of the house. So all they had to do was make payments based on the market value of the home. And if they couldn’t pay, they’d just re-posses the house. But who cares if the mortgage went bad? It’s now on someone else’s books.

But how did they convince investors that these CDOs were actually valuable investments and not just crapshoots involving mortgage payments from people who lived in houses they couldn’t afford? Fortunately for the banking industry, there was one more thing up for sale: the opinions of the ratings agencies. Moodys, in particular, was a huge pawn in this scheme. With enough money, the financial firms were able to buy favorable opinions about the financial products they were selling. Many terrible investments were now given the highest possible rating, rated as high as government securities.

To sum these complex ideas up: payments are no longer given to just the banks. The banks take payments and lump them together to sell off as “securities” to investors. Then they make a long term loan instant cash. This is so profitable that they start making mortgages widely available so they can create more securities to sell off to investors. But the only way they can sell as many houses as they need is to increase their sub-prime lending, where the borrower has basically no money in the house. And to hide this fact that they were selling off terrible mortgages, they paid the ratings agencies to give the securities comprise of crap mortages the highest possible rating.

If you can already see where this trail is leading, be prepared: the results were much more fantasical and much worse than ANY of us could have imagined…

Small Business: What is it really?

I was reading a couple of articles about how Gov. Romney said he was in favor of small businesses and he wants to create new jobs I could not help but think of how he thought of himself as a man of the people.  In today’s debates he constantly was saying how if elected, together we will bring a new generation of economic prosperity and he looked very confident up there as well.  I wonder what he means when he says he is for “small” business and in this very interesting piece by James Surowiecki, he writes how “Romney might be small when it comes to helping people, but big when it comes to big business”.  However, this isn’t groundbreaking news to anybody who knows about this country’s industrial beginnings.  Ever since the days of the railroads, government and big businesses has been to say the least, “intertwined with one another”.  Starting with a law that was passed in 1872 saying that the federal government can lease land for five dollars a month, and if the government or the mining industry  can find any gold, silver, uranium, etc, that they could keep all of it and get this...the individuals would not get a single dime out of it.  Not only that but they also allow tax breaks and subsidies to farmers, corporations, banks as an incentive to keep them here in the country.  This has been going on since the days of Vanderbilt, Rockefeller, and you would think that the public would have taken to action by now but it’s not that the people haven’t voiced their concerns its that the government follows where the money goes, which is big business.

Big beneficiaries of corporate welfare include the banks, and of course, the ethanol (oil companies).  The banks want you (the people) to think that the government will never allow the F.D.I.C to fail which creates the illusion that is safer for you to deposit money in the federal bank, as well as it allows them to borrow money at such a low cost.  But it seems that year after year we have another story about how the government has to bail out this bank after “risky business decisions” have almost run it into the ground, and our money has to help them out with that.  Well I have a better idea, how about that money is returned to their rightful owners?  Sounds crazy right?

This however takes the cake in regards to how government offers big businesses a helping hand, and it comes from an unexpected place: copyrights and patents.  The pharmaceutical companies make hundreds of millions of dollars off of federal copyrighting laws and those numbers increase year by year, and the most interesting thing about that is that it has little to no economic benefit to anyone!  In all with the election coming in a matter of weeks, I find myself skeptical in regards to what anyone says when they say the support small businesses, as everyday it seems that those words constantly change.  

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The History of Deregulation: Why Greed and Stable Markets Don't Mix

THE HISTORY OF DEREGULATION: WHY GREED AND STABLE MARKETS DON'T MIX

By Steve Thomsen

You’re in line for the bank. People are filling the building to the brim with stacks of cash to make deposits with. It’s a lot easier to have someone else keep a close eye on your hard-earned money while you deal with life, after all. So when you go and make this deposit, the assumption is that the cash you’ve put in magically goes to an over-sized safe somewhere. The bank keeps their hands off your money until you request for it back. Simple, right?

Until very recently, you would be correct in this assumption. Depositor banks used to function just like the name implied: you drop your money off, they hang on to it. The banks were simply depositories, and your money was off limits to any of the institution’s riskier financial practices. This would include practices like investment banking (they weren’t allowed to gamble with your money), insurance for financial products (they weren’t allowed to use your money to keep theirs from going bad), and leverage for the firm (they weren’t allowed to pretend your cash is actually their net worth  or claim it as reserve capital). This was the safest possible way to keep the depositor bank from going bad.

There are actually three different types of banks: (WARNING: video is over an hour in legnth... if you have the patience, please watch!) These are, in a nutshell: commercial banks (where consumers deposit their money), investment banks (where investors buy financial products like mortgage payments and credit card debts), and insurance companies (where people buy policies to protect their investments from going bad.) These three institutions were separated by law to prevent a crisis. What I’m about to explain is how these were all combined and then used to destroy a massive amount of equity in the system, never to be recovered.

We learned our lesson about banking and its uses the hard way. You may have heard of a catastrophic financial emergency in the early 1900’s. It was called the Great Depression. We fell off a financial cliff due to unregulated banking activity. Banks were able to leverage their institute in much higher amounts than the actual money they had available. They were able to use depositor’s money to handle their own risky investments. And if anything went wrong… oh well, stuff happens. This careless attitude eventually caused the stock market to crash and millions of Americans to lose their jobs.

After this terrible financial tragedy, we were introduced to a new piece of legislation called the Glass-Steagall Act. What Glass-Steagall did was compartmentalize the banking industry to prevent certain elements of banking to interfere with customers. Specifically, it divided the banking industry into three very air-tight compartments: commercial banks, investment banks, and insurance companies. With this new piece of legislation, the financial industry was now strictly forbidden from speculating with depositors’ money. If big-shot investment bankers wanted to gamble, they had to do so on their own dime. And if they failed, they had to pay for the damage.

This is why we were able to avoid a single financial disaster for nearly 50 years. In that time, the American economy boomed. Part of that was because we had no major foreign competitors (Japan and Germany had been decimated from the war) but it was also thanks to the prevention of unregulated banking. We were safe, and so was our life savings.

In 1980, Ronald Reagan was elected the 40th president of the United States. Reagan’s aspirations as president were ambitious: he wanted to lower income taxes across the board, specifically through fixing the tax code and lowering corporate taxes (sound familiar?). The only way he could pull this off was with the help of then-Treasury Secretary Donald Regan, the former CEO of Meryl Lynch. Regan, who eventually became the White House Chief of Staff, was an investment banker hot-shot with a tenacity for getting the investment banks to go public. These formerly private firms were suddenly flooded with boatloads of cash, and people on Wall Street began making enormous sums of money.  Regan and Reagan came up with a saying: “turning the bull loose.” The bull, in this case, was the massive power of the financial industry.

Together, Reagan and Regan did just that: they de-regulated the once very-heavily regulated financial industry. Many things resulted from loosening the regulations: most notably, savings and loans companies didn’t need to sit on their hands with their depositor’s money. Now they were allowed to make risky bets with their holdings (AKA YOUR holdings.) The administration justified this practice by claiming that, in the hands of professionals, no foreseeable risk was involved.

Well, by this point we all know how well that turned out: out of the 3234 savings firms in the country at the time, 747 of them went bankrupt. The proverbial opening of the cookie jar was too enticing, and Wall Street got too greedy. They dug too deep into their capital reserves (AKA your money) and drove their firms into the ground. Consequentially, many people who invested their life savings into these programs lost it all. The S&L crisis ultimately cost tax payers $124 BILLION (!!) and, supposedly, our lesson had been learned.

In the 1992, Bill Clinton was inaugurated into office. A political mastermind, Bill Clinton was thought of to be the man who could fix everything with the economy. And in some regards people were right to feel this way. He was able to balance the budget and produce 4 surplus economic reports in a row. The deficit caused by the S&L scandal was being paid off. Surely, the Democrats had it right.

Unfortunately, this isn’t the whole truth. The Fed Chairman at the time was Alan Greenspan, who also served under Reagan. Alan Greenspan was an economist and former disciple of the infamous Aynn Rand. An objectivist, Greenspan did not believe in regulation in any way, shape, or form. He believed in self-motivated greed and the benefits it had on society. This was reflected very thoroughly by his policies and the ways he carried them out. And the biggest giant blocking his way to an unregulated economy: Glass-Steagall.

In October of 1998, Citibank broke the law. They merged with a financial giant by the name of Travelers. The reason it was illegal for Citibank to acquire Travelers was because A) the two firms were too large to be combined without putting the market at risk and B) its combining of various financial services like insurance and investment banking. Though this was blatantly against Federal law, Alan Greenspan turned a blind eye to the practice. The man in charge of monetary policy in this country was not going to pay any attention to a blatant crime. And that’s when the policy makers started scrambling to make the illegal Citibank-Travelers merger, well, legal.

And they succeeded. Glass Steagall was deemed outdated to the modern financial world. Instead, it was replaced with a new piece of legislation called the Gramm-Leach-Bliley Act. Senator Phil Gramm was one of the sponsors for the bill (hence the name), and he and his wife Wendy benefited tremendously from this new law. What G-L-B does is tear down the restrictions previously held on financial institutes that prevent it from gambling with depositor’s money. It’s a new day and age, they thought. They knew the modern world would be able to let professionals handle large sums of money, even if it wasn’t there’s, and come home with greater capital positions than previously held. It made mergers like Citigroup legal. It let banks leverage their firms at much higher rates. And, most importantly, it opened the floodgates for several new financial products to storm the market. It laid the red carpet for the ticking time bomb that was now the American financial institution.

We had learned our lesson. Then, as time passed by, we forgot. Then we went back to the same money games that led us into the Great Depression. And now, even after crashing the whole system yet again, we still haven’t seemed to learn our lesson.

In the next post I’ll go over what exactly happened when we let these floodgates open. We’ll learn that when we turn a blind eye to the hand in the cookie jar, we’ll be left with nothing but crumbs.

Great Blogs to Help You Understand Why You're So Poor

BLOGS THAT WILL GET YOU STARTED:

Here are some great thinkers about the economic state we're all in. Some of them are analytical, some of them angry and less reverant, and one of them completely insane. But they all are great thinkers who have all expanded my own thoughts on these subjects. I hope you'll check these out because they all contain a wealth of information.

So let's get started, shall we? The six questions answered for the instructor are contained in the "what you should know" sections of each.

Enjoy!

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Matt Taibbi: "Taibblog"
What You Should Know: Matt Taibbi, the author of Taibblog, is a Rolling Stone contributing editor with one of the angriest yet funniest voices in the world of economics. And he still remains one of the most intellectual contributors to the world of financial journalism. His blog tackles tough issues, but is always completely un-apologetic in its tone. What drives Taibbi is a desperate desire to call Wall Street out on their BS and hopefully raise awareness to the "vampire squid" (AKA the financial industry) that wraps its tentacles around the face of humanity to suck it dry. He probably makes a little bit of money in this endeavor, but I can tell it's his personal passion that drives him. Taibbi contributes monthly to Rolling Stone and updates his blog about once a week. The comments in his field are generally extremely angry, and people who he's written unflattering things about have sent him several death threats in the past. A testimony to his effective writing style, no doubt. He also has a Twitter and a Facebook page.

Charles Ferguson: Charles Ferguson @ HuffPost
What You Should Know: Charles Ferguson is a filmmaker and writer who has tackled some surprisingly deep subject matter. Both of his documentaries ("No End In Site" about the Iraq war and "Inside Job" about the financial crisis) were nominated for academy awards and Inside Job won the best documentary of the year award. His blog continues to tackle many of the issues addressed in "Inside Job" and he is very acute to the actual nature of the recession. He has stated that his interest in this field is fueled by his need to "lift the veil" and show everyone the true nature of things. He considers himself an investigative journalist, and his chops in this field are uncanny. Unfortunately, he doesn't update his blog more than 3 times a month. But all of his contributions are certainly deep, fascinating, and revelatory. He is also a member of Twitter and Facebook.

Paul Krugman: Krugman Blog
What You Should Know: Paul Krugman is a New York Times Op-Ed contributor in the field of economics. His mission is to help people understand the true nature of political economic rhetoric and how well it holds up to real-life economic statistics. He famously called out the ratings agencies of the financial services market for having committed "chutzpuh" by downgrading the US debt rating after turning a blind eye to the real estate market. He also regularly appears on TV shows on cable news to help sway the arguments about the national debt in an intelligent direction. His blog, as it appears in the Times, is updated almost every day. The comments he gets are mostly positive, although every now and then a blood-red Republican comes on and tries to call him a socialist (the best possible insult from the right.) He also has a VERY active Twitter feed, although his Facebook leaves something to be desired.


Doo-Doo Economics (A Tea Party Economics Blog): Doo Doo Economics
What You Should Know: I had so many sort-of liberal blogs about economics, but I decided to balance out my reading list with one from the right. More specifically, the FAR right. This blog his here to prove to you what a horrible president Mr. Obama is and how bad of a job he's doing. And also about how he's lied about every economic issue put out there. They claim that the jobs created under Obama were all the result of the house Republicans (and not just fortuitous timing) and that a second term would destroy America indefinitely. It's kind of frustrating to read such a biased opinion on economics, but still, it's a counter-balance of sorts. This guy does not have a Facebook, and I haven't found a Twitter yet either. And so far it seems I'm the only one willing to comment on his page. But it's still a different view, so I'll stick with it.

Matt Taibbi's Taibblog
1.   Matt Taibbi is a contributing editor at Rolling Stone Magazine and frequently writes political blogs on their website as well as the magazine.
2.   Matt Taibbi's main focus is on politics on the domestic sphere, as well as the occasional piece on foreign policy.  He mostly focuses on commentary and tries to keep an unbiased point of view but rather wants to educate the masses about what is going on in the world of politics from a magazine that is more focused on popular culture.
3.  Matt's main focus is to bring about educating people who are not normally interested in politics by writing about it in a popular culture magazine.  By giving the audience a holistic approach on both foreign and domestic politics we can paint a better picture of the world around us.
4.  He publishes his blogs on a bi-weekly basis.
5.  The comment threads that follow his blogs mainly consist of people either disagreeing or agreeing with what Matt has to say.  For the most part it is monitored closely and the comment do not seem to stray from the topic at hand.
6.  The website has a Facebook, Twitter, and an RSS feed.

Paul Krugman's The Conscience of a Liberal
1. Paul Krugman is a contributing editor at the New York Times and a Professor of Economics at Princeton University.
2.  Krugman's reputation rests mainly on issues of international trade and finance and he is credited as one of the founders of the "new trade theory"which deals with international trade.
3.  His primary goal is for his readers to gain an increased understanding and comprehension about currency and financial affairs.
4.  He publishes on a daily basis.
5. His comments vary from strongly disagreeing with him, and saying how progressive his ideas are.
6.  There is a twitter, and a RSS feed.

IMFdirect
1. The IMFdirect is a compilation of the International Monetary Fund, consisting of over 180 countries which highlight debates over the financial crisis.
2. The IMFdirect mainly consists of highlights over policies that tend to help solve the global economic crisis.
3.  Their primary goal is to help solve the global economic crisis, as well as promote high employment and sustainable growth, facilitating international trade.
4.  The blog gets comments on a daily basis.
5.   While reading the threads I was really impressed on how civil the comments were.  If one of the users did not agree with what was posted, they did not go on a tirade but rather offered their point of view as well as respected the other side's argument.
6. The site has a Twitter and RSS feed.

Naked Capitalism
1.   Naked Capitalism is a compiled database of multiple contributors that try to take on the economic crisis on subject at a time.
2.   Naked Capitalism is a compilation of highlights, news, blogs, and how to change the financial policies all across the globe.
3.  Their primary goal is to educate those who want to be educated about the idea of capitalism and the economy when it's stripped down to the bare bones.
4.  Published on a daily basis.
5.  While reading some comments I noticed that it was a little bit more casual than some of the other websites that I looked at.  Probably because this one had more of an inviting feel to it than the other websites.
6. They have subscriptions to podcasts, emails, and Twitter.