Reverend Billy asks the question, and makes his case for propping up community banks and helping to support localism in the economy and culture.

It’s hard to imagine Timothy Geithner taking advice from an iconoclast dressed in a white suit, clerical collar and Elvis-inspired hair, but the Reverend Billy may be on to something.

In place of a system where big banks and corporations enter neighborhoods only to profit from them, Reverend Billy wants to empower small banks and credit unions that hold a stake in the communities they serve by offering incentives and making it harder for big finance to undercut local business.

It’s hard to argue against the system he envisions.

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“The Wall Street experience is parallel and equal to the destruction of neighborhoods through chain stores,” Reverend Billy says.

Basic economics are on the Reverend’s side. For every dollar spent at a chain store, studies show only 50 cents stays in that community. By contrast, 90 cents of every dollar spent at a local business remains in the local economy.

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Reverend Billy knows he faces long odds both in his mayoral run and his effort to change a system built around spending and credit speculation, but there are signs of hope. His audience was growing before the financial crisis, and things have only gained momentum since. Later this month, he’ll speak at the Yale Divinity School.

“People qualify their report of pain by saying ‘we’re spending more time with our family and that’s changing our lives,’” Reverend Billy says. “‘Whatever we do next I’m not going back completely to the way I was doing things before,’ they say.”

The leaders we’ve chosen to undertake financial reform are threatening to take us back to where we were by propping up banks and companies that nearly brought down the economy and cost taxpayers trillions.

Read the complete New York Times article Here

“How do they get away with it?” Well, no one has asked that question more often than Bill Black, whom Bill Moyers talks with in this stunningly candid and revelatory interview. A must-see for all Americans. Should be required viewing in every civics class.

The financial industry brought the economy to its knees, but how did they get away with it? With the nation wondering how to hold the bankers accountable, Bill Moyers sits down with William K. Black, the former senior regulator who cracked down on banks during the savings and loan crisis of the 1980s. Black offers his analysis of what went wrong and his critique of the bailout plan.

Now Black is focused on an even greater scandal, and he spares no one, not even the President he worked hard to elect, Barack Obama. But his main targets are the Wall Street barons, heirs of an earlier generation whose scandalous rip-offs of wealth back in the 1930s earned them comparison to Al Capone and the mob, and the nickname “banksters.”

Seems that the real capital of America is Wall Street, not Washington (or would that make it ‘das kapital’ of America?). Obama’s administration is starting out on a pretty bad foot as it looks to prop up and protect the very criminals and corrupted institutions that are responsible for this catastrophic mess, rather than hold them to full accountability for their actions, and make the systemic changes necessary to prevent them from happening again.

Watch The Video/Read The Transcript

More on ‘bankster’ Geithner and the fraudulent scheme he’s peddling on the American taxpayer with this piece from Jeffrey Sachs “The Geithner-Summers Plan Is Even Worse Than We Thought”

Thank you President Obama! All hail the era of “hope” and “change”!

Bill Moyers and Michael Winship provide this additional commentary on the whole farcical debacle that is American financial policy as directed by the same thieves that have led us to this sorry state. Read “Changing the Rules of the Blame Game”

Excellent overview by Michael Parenti on the ‘crisis of capitalism’ we are currently experiencing. What we are actually experiencing is much more in line with a crisis in democracy and democratic accountability for the decision making processes in our country, a point which Parenti hits on here.

A prosperous, politically literate populace with high expectations about its standard of living and a keen sense of entitlement, pushing for continually better social conditions, is not the plutocracy’s notion of an ideal workforce and a properly pliant polity. Corporate investors prefer poor populations. The poorer you are, the harder you will work—for less. The poorer you are, the less equipped you are to defend yourself against the abuses of wealth.

In the corporate world of “free-trade,” the number of billionaires is increasing faster than ever while the number of people living in poverty is growing at a faster rate than the world’s population. Poverty spreads as wealth accumulates.

Consider the United States. In the last eight years alone, while vast fortunes accrued at record rates, an additional six million Americans sank below the poverty level; median family income declined by over $2,000; consumer debt more than doubled; over seven million Americans lost their health insurance, and more than four million lost their pensions; meanwhile homelessness increased and housing foreclosures reached pandemic levels. 

It is only in countries where capitalism has been reined in to some degree by social democracy that the populace has been able to secure a measure of prosperity; northern European nations such as Sweden, Norway, Finland, and Denmark come to mind. But even in these social democracies popular gains are always at risk of being rolled back.

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In addition, there is the frequently overlooked self-destruction created by the moneyed players themselves. If left completely unsupervised, the more active command component of the financial system begins to devour less organized sources of wealth.

Instead of trying to make money by the arduous task of producing and marketing goods and services, the marauders tap directly into the money streams of the economy itself. During the 1990s we witnessed the collapse of an entire economy in Argentina when unchecked free marketeers stripped enterprises, pocketed vast sums, and left the country’s productive capacity in shambles. The Argentine state, gorged on a heavy diet of free-market ideology, faltered in its function of saving capitalism from the capitalists.

Some years later, in the United States, came the multi-billion-dollar plunder perpetrated by corporate conspirators at Enron, WorldCom, Harkin, Adelphia, and a dozen other major companies. Inside players like Ken Lay turned successful corporate enterprises into sheer wreckage, wiping out the jobs and life savings of thousands of employees in order to pocket billions.

These thieves were caught and convicted. Does that not show capitalism’s self-correcting capacity? Not really. The prosecution of such malfeasance— in any case coming too late—was a product of democracy’s accountability and transparency, not capitalism’s. Of itself the free market is an amoral system, with no strictures save caveat emptor.

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In sum, free-market corporate capitalism is by its nature a disaster waiting to happen. Its essence is the transformation of living nature into mountains of commodities and commodities into heaps of dead capital.  When left entirely to its own devices, capitalism foists its diseconomies and toxicity upon the general public and upon the natural environment–and eventually begins to devour itself.

The immense inequality in economic power that exists in our capitalist society translates into a formidable inequality of political power, which makes it all the more difficult to impose democratic regulations.

If the paladins of Corporate America want to know what really threatens “our way of life,” it is their way of life, their boundless way of pilfering their own system, destroying the very foundation on which they stand, the very community on which they so lavishly feed.

Read The Full Article

Good, concise video demonstration regarding the root of the current banking disaster wrecking havoc on the financial system. This little animation piece helps get one’s head around this whole credit implosion crisis.

Watch The Video

Awesome. This from Naomi Klein, first published in The Nation…

Watching the crowds in Iceland banging pots and pans until their government fell reminded me of a chant popular in anti-capitalist circles in 2002: “You are Enron. We are Argentina.”

Its message was simple enough. You–politicians and CEOs huddled at some trade summit–are like the reckless scamming execs at Enron (of course, we didn’t know the half of it). We–the rabble outside–are like the people of Argentina, who, in the midst of an economic crisis eerily similar to our own, took to the street banging pots and pans. They shouted, “¡Que se vayan todos!” (”All of them must go!”) and forced out a procession of four presidents in less than three weeks. What made Argentina’s 2001-02 uprising unique was that it wasn’t directed at a particular political party or even at corruption in the abstract. The target was the dominant economic model–this was the first national revolt against contemporary deregulated capitalism.

Read the rest of the article Here (There is some good video footage of public displays of opposition to government policies from around the world posted here as well).

Nobel Prize-winning economist Joseph Stiglitz tells CNBC’s Trish Regan that having one-third of the U.S. economy based in the financial sector should not have been bragged about, but flagged as a sign of a sick economy.

WATCH THE VIDEO

Tim Rutten of the Los Angeles Times provides this fascinating and insightful overview of the history of privatized retirement accounts, and the devastating impact that their implosion is having, and will continue to have, on the fundamental foundations of the American economy.

As a consequence, there’s been little discussion of the way in which this economic implosion has exposed the utter failure of the now-ubiquitous 401(k) retirement accounts. In fact, the entire 401(k) system looks increasingly like the sort of bait-and-switch con relished by the Bernie Madoff’s of the world.

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…More and more employers began to look for ways to get out of funding the pension and health plans that, up to then, had been regarded as part of the responsible capitalist social contract. Two innovations in political ideology — one on the left and one on the right — provided superb cover for the companies’ greed.

For the Democrats, “choice” became a mantra, and the 401(k) suddenly became a mechanism through which working people could “choose” how to fund and manage their own retirement. On the Republican side, the notion of “an ownership society” came into vogue. There, the theory was that giving working people an ownership interest in the equities market would promote greater personal responsibility and make people better citizens.

Nobody bothered to ask employees whether they wanted to swap their pensions for choice or ownership, nor did anybody stop to notice that very few people are suited by background, ability or temperament to actively manage investments.

If there is such a thing as lethal social poison, it is avarice cloaked in political piety.

Companies seized the opportunity to abandon their defined-benefit pension plans. Today, more than 60% of all U.S. workers rely on 401(k)s as their primary retirement fund. They’re not eager to “choose” their own retirement program, nor are they enthusiastic “owners” of American business. They’re draftees. Essentially, millions of us have been conscripted into the equities markets, where we have helped fuel stock prices and provided a bonanza for the financial services companies that manage and sell investment funds.

The problem is that, since the markets’ peak in October 2007, our 401(k)s have lost a collective $1 trillion in value. That’s fully a third of the value of all 401(k)s. The picture is actually worse than that because another $1 trillion has been stripped from people who lost or changed jobs and rolled their 401(k)s into individual retirement accounts.

Read The Full Article

Or should this be the ’shocked doctrine’ of disbelief? Here is an excellent overview by UMass economics professor David M. Kotz on the background of Greenspan and the ideology which enabled this mess we are now experiencing. Amazing that even *I* (with no professional economics education at all) could see this coming a mile away, yet this man, this scion of institutional legitimacy, this atlas (of the shrugging type?) of political influence and supposed wellspring of economic wisdom is now scratching his head totally befuddled as to how our economy is in freefall.

Greenspan should be indicted, if not for direct criminal activity, for criminal negligence and inexcusably grotesque ignorance. But that is what ideology will do to you, particularly if it is of the virulent Ayn Rand-ite strain that he worshipped his entire life.

Former Chairman of the Federal Reserve Alan Greenspan found himself “in a state of shocked disbelief” at the failure of individual self-interest to protect our banking system. What really ought to provoke shocked disbelief is that a person who held such views was placed in charge of regulating the American financial system, a position he held from 1987 to 2006.

Greenspan’s long stewardship of the financial system reflected the revived intellectual dominance, since around 1980, of a free-market economic theory once thought to have been permanently laid to rest by the Great Depression of the 1930s. This theory holds that if individual actors, whether ordinary people or officials of large corporations, are free to pursue their own self-interest through market exchanges with other free individuals, the result will be optimal for society as a whole. Government has little role to play in the economy, beyond enforcing the law of contracts and protecting the rights of property owners. In such a world, everyone is supposed to succeed based on her or his own effort, skill, intelligence and other worthy attributes, or fail due to a lack of them. It is an appealing vision in which individual liberty meshes perfectly with the social good. No one has to depend on the good will of anyone else, but instead need only rely on oneself.

This theory, pushed to the fringes of respectable thought for several decades following the Great Depression, re-emerged and was vigorously, if not entirely consistently, applied to the US and global economies starting nearly three decades ago. This is a world in which the process of production and exchange takes the form of a global system of interconnected corporate institutions. Since 1980, this system has become increasingly interdependent, as virtually every corner of the globe was drawn into the new complex of economic networks.

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As the American financial system was gradually deregulated during 1980-99, promoted by the resurgent free market ideology, one more experiment based on this theory was put into play. Alan Greenspan did his part by encouraging the experiment to proceed unhindered for his entire tenure at the Fed. Those who ran our banks, investment banks and other financial institutions participated with enthusiasm. They quickly found a much better way to make money than the old humdrum activity of taking deposits, making loans and holding those loans to maturity.

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Everyone in this chain felt their super-high rates of return were safe, given the supposedly endless rise of home prices and the AAA ratings given to these securities by rating agencies hired by the security issuers. Free market theories of finance insisted that the markets price every security properly, so no one need worry about the spread of these derivative securities throughout the world financial system. Chairman Greenspan’s vision played out on a world stage.

No one who knew any history should have been shocked when this vast experiment collapsed.

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Hopefully, the lesson will finally be learned. What former British Prime Minister Margaret Thatcher claimed at the start of the free market period - that there is no society, there are just individuals - is belied by what we are now witnessing. We are not disconnected individuals whose fate rests solely in our own hands. We are all dependent on one another. We must rebuild our economy on the principle that we are all in this together. If we are to solve the many real economic problems we face, we have to do so by cooperative effort, not by the pursuit of narrow self-interest.

Read The Original Post

Why don’t we see this kind of analysis on Wall Street Week or The News Hour with Jim Lehrer? Oh…yeah…that’s right. Never mind.

Most refreshing in this interview is the discussion of ‘externalities’, that pesky little aspect to ‘free market economics’ that most people not only don’t factor into the equation, but aren’t even aware of. I don’t know how many devotees who extol the virtues of ‘the market society’ whom I’ve run into who don’t even have a clue on how externalities affect every aspect of our society and what the true costs are to how our economy is run (and most importantly, who is really profiting from it).

The real deficit we are experiencing is not so much an economic deficit but rather a democratic deficit.

Watch the interview with Noam Chomsky from The Real News Network

This is an interesting article. I still find it disturbingly amusing to watch the high priests of our corporate capitalist religion continue to cling to their dogmatic faith, even in the face of overwhelming empirical evidence of disaster. But then, it has nothing to do with ‘rationality’ or any kind of economic logic. It is just the age old human spiritual and psychological sickness of clinging and grasping to greed and ego gratification at the expense of the ‘other’, and capitalism in it’s most virulent form seems to have attained the distinction of being the finest, most effective ideology in propagandizing the morality play of transforming the notion of private vice into a public virtue.

The foolishness which continues to preach the wonders of the ‘invisible hand’ of the market place, leaves people never bothering to notice that the ‘invisible hand’ has been busy picking our pockets.

When CNBC abandoned infomercials in favor of programming from its international affiliate on Sunday night, it merely confirmed that much of the world now holds Wall Street in about the same regard as a Nigerian email scam or an Albanian pyramid scheme. The anchors and guests with the funny accents were quick to note the dollar’s decline and the general instability of the American financial system.

So while it’s good that Washington has finally woken up to the historic financial crisis on its hands, it still hasn’t confronted the ideological emergency. There’s more at stake here than just next quarter’s write-offs or next year’s growth rate. Laissez-faire capitalism has run headlong into a massive credibility problem.

And it’s really as simple as the difference between $84 and $2 per share. Efficient markets are those that can tell what something is worth. Ours can no longer make that claim, whether in regard to financial stocks or, by extension, about the much larger pool of private debt. The numbers Bear Stearns posted last year, the numbers it clung to until the bubble finally burst, proved in the end not to be worth the recycled paper they were printed on. Just like the mortgage debt that had been rated AAA but ended up at the bottom of the junk pile. Invest in America, where the numbers can be anything you want.

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It’s also an attempt to obscure the connection between costly crises and bailouts and vast private profits that have flowed to those who never really shouldered proportional risk. If our dynamic global marketplace is going to require taxpayer bailouts every decade or so, perhaps that ought to be taken into account when dividing the spoils from its lucky streaks.

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Poor Chinese, who discarded Soviet-style central planning for the market mechanisms beloved by us all. Now they sit on a powder keg of a stock-market bubble while contemplating belatedly that incompetent central planners could at least be shot, while even incompetent investment bankers get to keep their Bentleys.

Read The Complete Article