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
Thursday, November 29, 2012
End Game: Where Are We Now?
Posted by Sleeve at 10:59 PM 0 comments
Tuesday, November 27, 2012
The Douchebag Awards: Lloyd Blankfein
Posted by Sleeve at 7:32 PM 0 comments
Thursday, November 22, 2012
Weekly Feature!: Financial Gobblers!
Posted by Angel at 9:21 PM 0 comments
Tuesday, November 20, 2012
Sports Owners+ Taxpayer dollars = New Stadiums?
Posted by Angel at 11:42 PM 0 comments
Copyright Laws: Stifling creative minds in the United States for the past 150 years.
Posted by Angel at 11:41 PM 0 comments
The Tea Party: How The Rich Get Stupid People To Vote Against Their Interests
By Steve Thomsen
You understand the subtext? “It’s not us! It’s YOU! YOU with your selfish desire for THINGS! THAT’S YOUR FAULT, NOT MINE!”
Posted by Sleeve at 8:01 PM 0 comments
Thursday, November 15, 2012
Financial Heroes Awards: Elizabeth Warren.
Posted by Sleeve at 11:19 PM 0 comments
Posted by Angel at 9:04 PM 0 comments
Tuesday, November 13, 2012
The Financial Sympathy Awards: Ben Bernanke
Posted by Sleeve at 11:28 PM 0 comments
Posted by Angel at 9:57 PM 0 comments
Thursday, November 8, 2012
Posted by Angel at 5:38 PM 0 comments
Wednesday, November 7, 2012
The Aftermath of The Bursted Bubble
Posted by Sleeve at 12:29 PM 0 comments
Tuesday, November 6, 2012
Posted by Angel at 10:03 PM 0 comments
Friday, October 26, 2012
THE WORLD OF FINANCIAL PRODUCTS: HOW TO TURN LONG TERM GREED INTO A SHORT TERM DISASTER
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Posted by Sleeve at 12:10 AM 0 comments
Thursday, October 25, 2012
Posted by Angel at 3:35 PM 0 comments
Tuesday, October 23, 2012
We're Social!
Like us on Facebook and follow us on Twitter @ CorporateWelfar
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Thursday, October 18, 2012
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.
Posted by Sleeve at 7:03 PM 0 comments
Monday, October 15, 2012
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.
Posted by Sleeve at 6:33 PM 0 comments
Tuesday, October 2, 2012
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.
Posted by Angel at 11:22 PM 0 comments