Government stakes in automakers?

This is great. America is turning into the new Sweden.

I've lived in Sweden for three years. In that time the government has sold a number of state-owned companies, including Vin & Sprit, the maker of Absolute Vodka. The argument by the "free market rules all" camp was that government should have no stake in large companies because they were inefficient at running them and a waste of tax payer money.

This privatization frenzy has been taking place for a number of years in many countries. It is surely one of America's greatest legacies.

But privatization is so 2007. The opposite is happening in America today. First banks, now maybe automakers. I'm starting to like this new American socialism. Maybe it's time to move home.

Nah, not yet. I think I'll wait until Ronald McDonald becomes a federal employee.

Class issues never went away

Renowned historian Howard Zinn, writing about the growth of the labor movement and the rise of class consciousness in America before, during and after the Civil War, argues that the two main political parties leveraged the issues of war and reconstruction - national issues - to quell the class conflict expoding during that period.

He writes: “On these issues the political parties took positions, offered choices, obscured the fact that the political system itself and wealthy classes it represented were responsible for the problems they now offered to solve.”

We can apply this quote to the current crisis America is facing - the credit crisis or financial turmoil or deep recession or worst recession since the Great Depression (call it what you will).

The Democrats and the Republicans took positions and offered choices on how best to deal with the economic crisis facing America and then acted as if they, and the wealthy classes they represent, were not the ones who caused it.

Everyone knows both parties are in the pockets of big money and that lobbyists with the most bling bling are the ones with the most bills bills. Democrats are trying to claim the high ground, like they have nothing to do with the way America looks today. Sure George W. Bush ran the country into the ground for eight years, but we also had major problems under Clinton.

A country with such wealth and such incredible poverty, and both are completely out of control. Ford Motor Co. recorded a $12.7 billion net loss in 2006 and gave its new CEO at the time $28 million for four months on the job. This is a guy who, together with the other "big three" CEOs from the auto industry, flew into Washington D.C. this week on a private jet to ask congress for a $25 billion bailout. Rep. Gary Ackerman, D-New York said at the hearing, "It's almost like seeing a guy show up at the soup kitchen in high hat and tuxedo. It kind of makes you a little bit suspicious."

While we're on the issues of soup kitchens, new government figures showed that nearly 700,000 people went hungry last year in America.

As much as the political parties, the wealthy they represent and the mainstream media want to avoid it, this has everything to do with issues of class. We need to call the problem what it is if we really hope to solve it.

So what do you do when the two political parties offer solutions and choices on how best to fix the problem while obscuring the fact that they, and the wealthy they represent, are responsible for it? Let me know what you think.

Bailout illegal

According to the Washington Post, it seems while all eyes were on the bailout late September, the Treasury Department sneaked through a significant change to two decades of corporate tax policy that corporate tax lawyers now say will give American banks a windfall of as much as $140 billion. The banks had been lobbying for this change for years.

Also analyzing the equity deals the Treasury negotiated with the banks, Naomi Klein is calling this "a trillion-dollar crime scene". Her article is a must read. And her book, The Shock Doctrine, outlines this disaster capitalism model. I think this book is a breakthrough in the analysis of how the neo-liberal, "free trade rules all" ideology has developed and how we can break it.

This is insane, the administration is robbing the federal treasury on its way out of the capital and the Democrats are afraid to anger the market. The free marketeers are holding us hostage.

I think when the Republicans realized that they couldn't privatize social security they figured out another ingenious plan - privatize the Treasury, and who better to do that than former CEO of Goldman Sachs, Hank Paulson.

Child Hunger in US rose 50 percent in 2007

Now I'm really insisting that the top execs at Goldman Sachs, and all the rest of the banks, give back their bonuses. The same year bonuses all over Wall Street ballooned to unprecedented levels, 36.2 million adults and children struggled with hunger in the United States. And you're telling me we shouldn't be spreading the wealth?

I'd take what some would call socialism....(I call it fairness)....any day of the week over the current "free market rules all" version of democracy.

Read the whole article

No bonuses for Goldman Sachs?

At the end of 2006 Goldman Sachs awarded employees with over $16 billion in bonuses - an average of over $600,000 buckaroos per employee. 2007 was even better. That year Goldman employees shared nearly $19 billion in bonuses. Many of the bonuses were performance-based.

This year however, according to the New York Times, the top seven executives at Goldman won't receive bonuses. Goldman's spokesman reportedly said "they believe it's the right thing to do." Oh, how generous, how compassionate. How will they be able to put any food on the table this Christmas?

CEO Lloyd C. Blankefein raked in a salary and bonus worth over $68 million in 2007. The two co-presidents each earned around $67 million. The right thing to do is to give your bonuses back for the past three years. Use it to save your company and your job, instead of allowing the Bush administration to threaten disaster if taxpayers don't step in and save you.

Goldman Sachs recently received a $10 billion gift as part of the federal government's $700 bailout package.

So, let's see. Some simple math, hmm... take only 2006 and 2007, Goldman employees received over $35 billion in bonuses. I wonder if it's possible to use that much money in less than two years. There must be some money still lying around in safes, off-shore accounts and duffle bags hidden in storage. Surely, if Goldman's top executives scraped their cash together they could come up with some spare change. $10 billion sounds reasonable.

Hey, wait, I can't believe it. I just figured it out. They should bail themselves out. If you're homeless, on welfare, poor, unemployed, well, "pull yourself up by your bootstraps." What if you're a millionaire?

Let the banks fall

The Wall Street Journal reported that Treasury Secretary Henry Paulson, former CEO of former investment bank Goldman Sachs, got down on one knee at the White House on Thursday to beg a group of Democratic leaders to “not say anything that might blow up the troubled deal.”

The “deal”, as we all know, is the Bush administration’s desperate $700 billion bailout plan for the financial industry. Welfare for Wall Street being packaged and sold as necessity for Main Street.

By now we recognize this sky-is-falling argument from the current administration:

Saddam Hussein = terrorism, mushroom clouds, loss of freedom.
Financial crisis = economic calamity for the nation, loss of the American way of life

From stealing an election, to spying on Americans, to invading a country based on lies, to claiming the economy was sound while mortgage defaults soared to records not witnessed since the Great Depression, and now this - “ imminent economic calamity”. Even if it were true that we were on the brink of an economic apocalypse, we wouldn’t know, because no sane person can trust this administration. Never cry wolf.

Down they go

I say let the banks and financial institutions fall. Let them fail. Aren’t these the people who talk about survival of the fittest?

Here’s a short and hopefully easy to understand history of how the banks have robbed us blind over the past decade.

Banks and mortgage lenders busied themselves over the past ten years pushing too-good-to-be-true mortgage terms to encourage borrowers to buy homes they couldn’t afford. Housing prices peaked in 2005 and began declining in 2006, and prices still haven’t bottomed out. Housing foreclosure rates began increasing in 2006 as the housing bubble burst. Simply put, banks and mortgage lenders committed crimes and Americans lost their homes.

Meanwhile, with the country focused on the war in Iraq, congress passed a new bankruptcy law in 2005 that made it harder for individuals to clear their debts through bankruptcy. The banks wanted to make sure that people kept paying their credit cards, no matter what. According to the Center for Responsive Politics, Washington Mutual, Bank of America, JPMorgan Chase and Citigroup spent $25 million in 2004 and 2005 lobbying for bankruptcy reform to protect credit card profits.

While people were beginning to lose their homes, congress was busy doing Wall Street’s dirty work and the banks and financial institutions were pulling in record profits. Take a look at these numbers:

Goldman Sachs
Over $5 billion in profit in 2005
Over $9 billion in profit in 2006
Over $11 billion in profit in 2007
JP Morgan
Over $8 billion in profit in 2005
Over $13 billion in profit in 2006
Over $15 billion in profit in 2007
Bank of America
Over $16 billion in profit in 2005
Over $21 billion in profit in 2006
Close to $15 billion in profit in 2007
AIG
Over $10 billion in profit in 2005
Over $14 billion in profit in 2006
Over $6 billion in profit in 2007
Citigroup
Over $24 billion in profit in 2005
Over $21 billion in profit in 2006
Over $3 billion in profit in 2007
Lehman Brothers
Over $3 billion in profit in 2005
Over $4 billion in profit in 2006
Over $4 billion in profit in 2007

Total: $202 billion in profit from 2005-2007

This is profit, this is in the pocket, this is take home cash. Wall Street Executives were paid over $3 billion in the last five years, according to Bloomberg. With the cost of food, heating oil and gas shooting skyward during the same period, I wonder if you were able to make a profit those years?

But now they need our help. The public. The people.

These people and their predecessors are the “free market” advocates. Since the 1960’s they’ve promoted a global “free market” economy with deregulation and privatization at the heart of their argument. These are the neoliberalists whose religion has been to transfer control of the economy from the state to the private sector.

These are the people that have gotten us into this mess, with their immoral and criminal thirst for profit. These are the people who have pushed for less tax on the rich which has led to the widening gap between rich and poor. These are the people who believe it to be an American right to earn salaries of $20, $30 and $40 million dollars a year.

You mean the market isn’t the best judge? You mean big government is good after all? You mean these greedsters, these psychopaths who feasted on enormous salaries and even larger bonuses generated off of our misery now need that lazy welfare mom’s help, the school teacher’s tax dollars? They have the nerve to ask the American people for help?

Is it a surprise to any of these fraudsters, that the American people, the public, the tax payers, aren’t feeling too generous these days?

We are the engine that keeps the system alive, not them. Not the banks. Not the mortgage lenders. Not the overpaid executives who are running for cover behind Paulson and the threat of disaster. The administration is trying to convince you otherwise. That without this bailout, financial institutions will fail and you won’t be able to get a loan for your car, or college or home. Baloney.

No doubt there is a lot more pain to come for America’s financial institutions. More will go bankrupt. More will be forced into merger or sale. More jobs will be lost. World economies will suffer. Of this there is no doubt. The market will be cleaned out, the worst banks will go and there will be tough times for all.

This will last for a few years, but it will pass. Others banks and financial instituions will survive, as they have through many economic depressions and recessions. And in their wake, a new breed of banks will arise to carry the mantle of capitalism.

But will they have learned a lesson? Will we have learned a lesson?

Only if we shelf any sort of government bailout now and let the banks fail. Only if we put the executives that are guilty in jail for a very long time and send a signal that you will be severely punished if you put yourself ahead of the nation’s well-being. Only if we always remember that capitalism breeds corruption if left to run free. That unfettered capitalism doesn’t work. That strong government regulation is vital to limit the corruption and excessive corporate tendencies that put us in these situations every five to ten years.

This crisis has pushed class issues to the forefront, yet no one wants to talk about it in terms of class. If this isn’t class warfare, tell me what is. Now is the time to send a message that the people make the rules, not the bankers, not private companies, not without our say. Now is the time to drive home the message that it is inhumane to make exorbitant amounts of money while others struggle on a minimum wage that leaves them hovering near the poverty level; that this is not good for our country. That this is unethical and criminal.

Ghandi said "You can judge a society by how they treat their weakest members." You can also judge a society by how they treat their most powerful members. It is judgement day.