Archive for category WTF
By Rebecca Leber on May 22, 2013 at 3:20 pm
Rep. Michele Bachmann (R-MN) this week said that prayers to God will ensure Obamacare’s repeal, after 37 House of Representatives attempts to do so.
“I think the President will ultimately be forced to repudiate his own signature piece of legislation because the American people will demand it,” she told an evangelical radio host Tuesday. “And I think before his second term is over, we’re going to see a miracle before our eyes, I believe God is going to answer our prayers and we’ll be freed from the yoke of Obamacare.”
She added, “I believe that’s going to happen and we saw step one last week with the repeal of Obamacare in the House. We have two more steps. We serve a mighty God and I believe it can happen.”
But this was not really “step one” for the House. At this point, House Republicans have devoted 43 out of 281 days in session to symbolic votes against Obamacare. In the last Congress, they devoted 15 percent of their time, or $50 million dollars, to a signed law that is already largely being carried out. Even top Republican leaders and Republican governors have admitted they lost their battle against Obamacare, though they vow to continue to hold symbolic votes on the matter.
- Michele Bachmann: God Will Repeal Obamacare (bilerico.com)
- Michele Bachmann says God will ‘answer our prayers’ and kill Obamacare (dailykos.com)
- Michele Bachmann: God Will Repeal Obamacare (lezgetreal.com)
- Michele Bachmann: God Will Repeal Obamacare (thinkprogress.org.feedsportal.com)
- Crazy Eyes: God Will Repeal Obamacare (joemygod.blogspot.com)
- Bachmann: God will ‘answer our prayers’ and repeal Obamacare with a ‘miracle’ (rawstory.com)
- Ho Sit Down: Michelle Bachmann Says God Will “Answer Our Prayers” And Repeal Obamacare With A “Miracle” (bossip.com)
- Ho Sit Down: Michelle Bachmann Says God Will “Answer Our Prayers” And Repeal Obamacare With A “Miracle” (eyeoncelebs.com)
- Radical Nutjob Michele Bachmann Says God Will Repeal Obamacare (addictinginfo.org)
- Michele Bachmann Says God Will Perform a Miracle to Free Us All from “the Yoke of Obamacare” (slog.thestranger.com)
Democrats blast AIG’s ‘outrageous’ threat to sue feds over bailout
By Vicki Needham - 01/08/13 04:09 PM ET
Democrats responded with outrage Tuesday to reports that insurance giant American International Group (AIG) might sue the federal government over the terms of its 2008 bailout.
Sen. Elizabeth Warren (D-Mass.) and Rep. Elijah Cummings (D-Md.) called the potential $25 billion shareholder lawsuit “outrageous” and “unbelievable.”
“AIG’s reckless bets nearly crashed our entire economy,” said Warren, who before being elected to the Senate served on a task force that oversaw the distribution of the $700 billion in bailout funds.
“Taxpayers across this country saved AIG from ruin, and it would be outrageous for this company to turn around and sue the federal government because they think the deal wasn’t generous enough.”
Cummings, ranking member of the House Committee on Oversight and Government Reform, said the lawsuit would be “an unbelievable insult to our nation’s taxpayers, who cleaned up the mess this firm created.”
“The American taxpayers were a lifeline to this firm, and for certain shareholders to now criticize the terms of the rescue is utterly ridiculous,” he said.
In a terse letter to Robert Miller, board chairman of the American International Group, Reps. Michael Capuano (D-Mass.) Luis Gutierrez (D-Ill.) and Peter Welch (D-Vt.) said the company would quickly become “the poster company for corporate ingratitude” if board members took that step.
“Don’t even think about it,” the lawmakers wrote Tuesday. “AIG became the poster company for Wall Street greed, fiscal mismanagement, and executive bonuses – the taxpayer and economy be damned. Now, AIG apparently seeks to become the poster company for corporate ingratitude and chutzpah.”
According to numerous reports, AIG’s board is meeting Wednesday to discuss whether the company, which took a $182 taxpayer-funded bailout, will sign on to a $25 billion suit, initiated by the firm’s former CEO, seeking compensation for shareholders allegedly harmed when the government took over the collapsing company in 2008.
Maurice “Hank” Greenberg, who headed AIG for decades before stepping down in 2005, alleges — among other things — that the government charged onerous interest rates as the company was paying back its taxpayer-funded bailout loan. Greenberg sued the government in 2011 and is urging his former company to get on board.
The possibility that AIG could join the lawsuit comes as the insurer has launched an advertising campaign thanking taxpayers for the support. In the spot that began airing this year, AIG employees tell their company’s story and thank taxpayers for the bailout, which the commercial says was paid back.
Capuano and Welch did not threaten any specific action if the AIG board joins the suit, but warned that the public backlash would be severe.
“Taxpayers are still furious that they rescued a company whose own conduct brought it down,” they wrote. “Don’t rub salt in the wounds with yet another reckless decision that is on par with the reckless decisions that led to the bailout in the first place.”
Warren argues that the insurer was able to recover from $2.2 billion in losses in 2010 and reap $17.7 billion in profits the next year because of special tax breaks from the Treasury Department.
“When a company accepts a taxpayer bailout to stay in business, it ought to follow the same tax laws followed by companies that aren’t bailed out,” Warren wrote in a op-ed with other members of the Congressional Oversight Panel in March 2012.
“In its ongoing efforts to reform corporate tax law, Congress should close this egregious loophole and prevent AIG from continuing to receive a stealth bailout every time it files its taxes,” she said.
Although White House spokesman Jay Carney would not comment directly on the lawsuit, he highlighted the Obama administration’s push for the Dodd-Frank financial reform law.
“Thanks to the action of the president, thanks to the action of the administration and Congress, an action like the kind that was taken to deal with AIG’s potential disorderly failure, however necessary during the financial crisis, should not happen again, and that’s why this president pursued Wall Street reform,” Carney said Tuesday.
“And that’s why it is essential to continue to move forward with the implementation of that reform.”
- AIG considers joining lawsuit against U.S. over bailouts (latimes.com)
- AIG May Join Suit Over Bailout, Angering Many (sfluxe.com)
- AIG Feels Wrath Of Congress Over Potential Lawsuit (valuewalk.com)
- Outrageous! Washington’s jaw drops at possibility of AIG lawsuit… (kaystreet.wordpress.com)
- Lawmakers Warn A.I.G. Not to Join Lawsuit Against U.S. (dealbook.nytimes.com)
- Lawmakers warn AIG not to sue Washington (upi.com)
- Elizabeth Warren: Possible AIG Lawsuit ‘Outrageous’ (kzawadzki88.wordpress.com)
- Washington’s Jaw Drops At Possibility Of AIG Bailout Lawsuit (huffingtonpost.com)
- A.I.G. might sue the U.S. government for saving it (deathandtaxesmag.com)
- Senator Elizabeth Warren Is Outraged That AIG Is Considering Suing The US Government (jhaines6.wordpress.com)
Jalopnik.com Updates: More Than A Dozen Fisker Karma Hybrids Caught Fire And Exploded In New Jersey Port After Sandy
Approximately 16 of the $100,000+ Fisker Karma extended-range luxury hybrids were parked in Port Newark, New Jersey last night when water from Hurricane Sandy’s storm surge apparently breached the port and submerged the vehicles. As Jalopnik has exclusively learned, the cars then caught fire and burned to the ground.
Our source tells us they were “first submerged in a storm surge and then caught fire, exploded.” This wouldn’t be the first time the vehicles, which use a small gasoline engine to charge batteries that provide energy to two electric motors, had an issue with sudden combustion.
The vehicle, despite only being in limited production, has already experienced numerous fires due to equipment failures and electrical shorts. How, exactly, they caught fire after being submerged in sea water is unclear. It’s possible the salt water caused a short that led to a fire.
Calls to Fisker and the Port Newark Container Terminal have not been returned as of publication time.
UPDATE: Fisker released the following statement:
“It was reported today that several Fisker Karmas were damaged by fire at the Port of Newark after being submerged in sea water during Superstorm Sandy. We can report that there were no injuries and none of the cars were being charged at the time.
We have confidence in the Fisker Karma and safety is our primary concern. While we intend to find the cause as quickly as possible, storm damage has restricted access to the port.
We will issue a further statement once the root cause has been determined.”
- 16 Fisker Karmas Caught Fire And Exploded During The Hurricane (businessinsider.com)
- Fisker Flambe At New Jersey Port Damages 16 Karmas (thetruthaboutcars.com)
- At Least 16 Fisker Karmas Drown, Catch Fire at New Jersey Port (wired.com)
- Report: Obama-Funded Fisker Hybrids Explode In New Jersey (redalexandriava.com)
- Fiskar Hybrids Get Bad Karma From Superstorm Sandy (tech.slashdot.org)
- Swamped Fisker Karma electric cars catch fire (oddonion.com)
- Sandy Carnage: Fisker Karmas Submerged In Salt Water Burn At Port (greencarreports.com)
- Report: Hurricane Sandy destroys 16 Fisker Karmas at port with water and fire (autoblog.com)
- Luxury lithium-powered cars burn to the ground during Hurricane Sandy (mining.com)
- Fisker Karma Is First Car To Burn Underwater (zerohedge.com)
10 Conservatives Who Have Praised American Slavery
Republican Rep. Jon Hubbard has deemed slavery a blessing. His position is not as uncommon as you’d think.
October 10, 2012
For obvious reasons, the American conservative movement has long been dogged by accusations of racism and racial insensitivity. From their famed Southern strategy to their determined efforts to suppress minority voting via phony voter ID initiatives to their race-baiting Obama attacks, conservatives have made clear their opposition to a tolerant, multicultural America. In fact, much of their electoral strategy relies on scaring older, white voters about blacks and Hispanics taking over “their” country.
So it’s not uncommon to hear a prominant conservative, even one who holds elected office, make patently offensive remarks. Yet some occasionally hit an unimaginable low. This week, it was revealed that Republican Rep. Jon Hubbard has published a book in which he wrote that “[T]he institution of slavery that the black race has long believed to be an abomination upon its people may actually have been a blessing in disguise. He defended his book on Wednesday,telling the Jonesboro Sun that he still believed slavery to be a blessing because it helped blacks come to America. Yes, he praised slavery. And when given the opportunity to backpedal, he doubled down.
You may think that this does not occur often. You would be wrong. Here are a few other prominent conservatives who have suggested slavery was not all that bad.
1. Pat Buchanan. In his essay “A Brief for Whitey,” Buchanan suggested that slavery was a net positive, saying that,“America has been the best country on earth for black folks. It was here that 600,000 black people, brought from Africa in slave ships, grew into a community of 40 million, were introduced to Christian salvation, and reached the greatest levels of freedom and prosperity blacks have ever known.”
2. & 3. Michele Bachmann and Rick Santorum. Bob Vander Plaats, the leader of the arch-conservative Family Leader, a religious organization that opposes same-sex marriage, got GOP presidential candidates Bachmann and Santorum to sign his pledge asserting that life for African Americans was better during the era of slavery: “A child born into slavery in 1860 was more likely to be raised by his mother and father in a two-parent household than was an African American baby born after the election of the USA’s first African-American President.”
4. Art Robinson. Robinson was a publisher and a GOP candidate for congress in Oregon. One of the books he published included this evaluation of life under slavery: “The negroes on a well-ordered estate, under kind masters, were probably a happier class of people than the laborers upon any estate in Europe.”
5. Rev. Jesse Lee Peterson. Peterson is a conservative preacher who articulated this bit of gratitude: “Thank God for slavery, because if not, the blacks who are here would have been stuck in Africa.”
6. David Horowitz. Horowitz is the president of the David Horowitz Freedom Center and edits the ultra-conservative FrontPage magazine. In a diatribe against reparations for slavery, Horowitz thought this argument celebrating the luxurious life of blacks in America would bolster his case: “If slave labor created wealth for Americans, then obviously it has created wealth for black Americans as well, including the descendants of slaves.”
7. Wes Riddle. Riddle was a GOP congressional candidate in Texas with some peculiar conspiracy theories on a variety of subjects. His appreciation for what slavery did for African Americans was captured in this comment: “Are the descendants of slaves really worse off? Would Jesse Jackson be better off living in Uganda?”
8. Trent Franks. Franks is the sitting congressman for the second congressional district in Arizona. As shown here, he believes that a comparison of the tribulations of African Americans today to those of their ancestors in the Confederacy would favor a life in bondage: “Far more of the African American community is being devastated by the policies of today than were being devastated by the policies of slavery.”
9. Ann Coulter. Known for her incendiary rhetoric and hate speech, Coulter was right in character telling Megyn Kelly of Fox News that, “The worst thing that was done to black people since slavery was the great society programs.”
10. Rep. Loy Mauch. This Arkansas GOP state legislator has found biblical support for his pro-slavery position. He wrote to the Democrat-Gazette to inquire, “If slavery were so God-awful, why didn’t Jesus or Paul condemn it, why was it in the Constitution and why wasn’t there a war before 1861?”
There is an almost palpable nostalgia among some conservatives for a bygone era wherein they could sip mint juleps under the magnolias while the fields were tended to by unpaid lackeys. And it isn’t a vague insinuation. Mitt Romney supporter Ted Nugent declared, “I’m beginning to wonder if it would have been best had the South won the Civil War.” No one should regard it as a coincidence that so much of this racist animus has surfaced during the term of the first African-American president of the United States. It’s one thing to harbor such offensive racial prejudices privately, but when people in public life are comfortable enough to openly express opinions like these, it reveals something of the character of their movement. And what’s worse is that conservative and Republican leaders, given the opportunity, refuse to repudiate the remarks. Mitt Romney has stated that all he’s concerned about is getting 50.1% of the vote, and if that means tolerating appeals to racist voters in order to attain his goal, then it’s just a part of the process.
- 10 Conservatives Who Have Praised American Slavery (alternet.org)
- The Side-Eye – Slavery-Lovin’ Lawmaker Jon Hubbard Defends Pro-Slavery Comments!! (bossip.com)
- Arkansas GOP rep Jon Hubbard stands by pro-slavery comments (thegrio.com)
- Arkansas Rep. Calls Slavery “a Blessing” (wreg.com)
- Crazy Talk: Slavery Was ‘Blessing in Disguise’ (theroot.com)
- Arkansas Republican Party pulls funding for candidates who praised slavery (rawstory.com)
- Arkansas Republican on Slavery: “Blessing in Disguise” (wreg.com)
- Mario Piperni and Repug Racism (seniorsforademocraticsociety.wordpress.com)
- Arkansas Republican Jon Hubbard: Slavery was ‘a blessing in disguise’ for African-Americans (thegrio.com)
Rush Limbaugh Claims Hurricane Is an Obama Conspiracy to Cancel GOP Convention
By: Jason Easley August 22nd, 2012
Rush Limbaugh is even blaming Obama for the weather. On his radio show, Limbaugh claimed that Hurricane Issac is an Obama conspiracy to shut down the Republican convention.
Here is the audio from Media Matters:
LIMBAUGH: So we got a hurricane coming. The National Hurricane Center, which is a government agency, is very hopeful that the hurricane gets near Tampa. The National Hurricane Center is Obama. It’s the National Weather Service, part of the commerce department. It’s Obama. The media, it’s all about the hurricane hitting next week, and they’re not talking about Biden, they’re talking about this Hurricane Isaac thing. Well, you know, we who live in south Florida become experts. We don’t need the National Hurricane Center, and we don’t need all these weather dolts analyzing this for us. Well, we need the center, we can look at their charts and graphs, we know what to do, we can read the stuff. I’ve been tracking the charted forecast track of the storm, and they’re moving it sometimes to the east. The latest, 11 o’clock, they moved it to the west as a cat 1 impact in Naples, Fort Myers area.
This morning at five a.m., the impact was Miami. We’re still not talking about ’til next Tuesday, so it’s gonna be all over the ballpark between now and then. We don’t know where this thing is gonna hit. The models are moving it more and more out into the Gulf. I wouldn’t be surprised if this thing hits in Louisiana someplace when it’s all said and done. Just kidding. Nobody knows, but they’re desperately hoping, they’re so desperately hoping for Tampa. The media, you know, I can see Obama sending FEMA in in advance of the hurricane hitting Tampa so that the Republican convention is nothing but a bunch of tents in Tampa, a bunch of RVs and stuff. (laughing) Make it look like a disaster area before the hurricane even hits there.
According to Limbaugh, Obama is so worried about Mitt Romney that he had the National Hurricane Center change the path of the storm, and the president intends to send FEMA into Tampa to make the Republican convention look like a disaster area.
One could argue that the Republican convention is going to be a disaster, no matter what the hurricane does, but that wouldn’t stop Rush Limbaugh from cooking up an Obama related weather conspiracy theory.
If the Republican Party wanted to avoid any potential weather problems, they could have made the decision not to hold their convention in South Florida at the peak of hurricane season. Seriously, who in the Republican Party thought it would be a great idea to hold their convention in South Florida in late August?
What Limbaugh was trying to do here was cover up for the horrible decision making skills of the Republican Party by blaming Obama. The president is leading in almost every poll. He doesn’t need to create a distraction around a hurricane. In fact, the Obama campaign is probably hoping beyond hope that America gets four days of Mitt Romney.
Romney is the first candidate in modern history who has actually hurt himself by campaigning. The more voters see of Romney, the less they like him. The best thing that could happen to the Republican Party is that the spotlight is not placed on their nominee.
The Republican convention is going to be a showcase for unpopular politicianshighlighting the damage that they have done to the Republican brand. Democrats would never hope for anyone to be placed in harm’s way by hurricane. That type of thinking sounds more like Limbaugh than any Democrat out there.
Limbaugh’s rant today proved that Republicans are so blinded by Obama that they are even willing to blame him for the weather.
There’s no Obama weather conspiracy here. Just more Republican whining and blaming Obama for their own lousy decision making.
- Rush Limbaugh Claims Hurricane Is an Obama Conspiracy to Cancel GOP Convention (politicususa.com)
- Rush Limbaugh blames Obama for Hurricane Isaac (rt.com)
- Rush Limbaugh blames Obama for hurricane warnings (seattlepi.com)
- Limbaugh: The National Hurricane Center is Obama (rawstory.com)
- Rush Limbaugh blames Obama for Hurricane Isaac (EndtheLie.com)
- Limbaugh rushes to Akin’s defense (wnd.com)
- Al Joker’s Hurricane Tips for Babies (rushlimbaugh.com)
- TS/Hurricane Isaac Poses Threat to Tampa and Republican National Convention (247wallst.com)
- Isaac looms on horizon as GOP convention nears (cbsnews.com)
- TurboTax Does Not Advertise on Rush Limbaugh (turbotax.intuit.com)
Rush Limbaugh blames Obama for Hurricane Isaac
Published: 23 August, 2012
Radio talk show host Rush Limbaugh (William Thomas Cain/Getty Images/AFP)
- Rush Limbaugh blames Obama for Hurricane Isaac (rt.com)
- Rush Limbaugh Claims Hurricane Is an Obama Conspiracy to Cancel GOP Convention (politicususa.com)
- Rush Limbaugh blames Obama for Hurricane Isaac (EndtheLie.com)
- Rush Limbaugh blames Obama for hurricane warnings (seattlepi.com)
- Limbaugh: The National Hurricane Center is Obama (rawstory.com)
- Tampa, Host of Republican Convention, Prepares for Possible Hurricane Isaac (insurancejournal.com)
- TS/Hurricane Isaac Poses Threat to Tampa and Republican National Convention (247wallst.com)
- Hurricane Isaac heads towards GOP convention: Because weather has a liberal bias (americablog.com)
- More Than Tampa in the Path of Hurricane Isaac (wrestledwithangels.wordpress.com)
- Hurricane Isaac Might Rain on the Republican National Convention (theatlanticwire.com)
July 12, 2012
Will Penn State Ever be Held Accountable?
Matt Rourke/Associated PressFormer FBI director Louis Freeh spoke about his investigation into the Penn State child sex scandal on July 12, 2012. Freeh said the most “saddening and sobering” finding from his group’s report is Penn State senior leaders’ “total disregard” for the safety and welfare of the child victims.
Since the disclosure of the serial rape, abuse and betrayal of young boys by Jerry Sandusky, lieutenant to the Penn State football coach Joe Paterno, a lot has been said about how shocking and damaging the revelation was to Penn State, its alumni, its football program, Mr. Paterno’s reputation and other irrelevant things.
I never cared much about any of that, or bought the premise that Penn State and its leaders were somehow victims of Mr. Sandusky’s crimes. The only victims were the young boys. A trial, in which Mr. Sandusky was convicted of 45 counts, including rape, revealed that those boys were drawn in by Mr. Sandusky, who pretended to be their mentor and protector. They were attacked by him and then betrayed by every adult and every institution around them.
That point was driven home vividly by the release today of an independent investigation headed by Louis Freeh, the former head of the F.B.I. and former federal judge. It concluded that the most senior leaders at Penn State systematically organized a cover up of Mr. Sandusky’s crimes for over a decade, even though they had strong reason to believe that he was a serial sex criminal.
“The most saddening finding by the Special Investigative Counsel is the total and consistent disregard by the most senior leaders at Penn State for the safety and welfare of Sandusky’s child victims,” the report said. It pointed to Penn State’s president, Graham Spanier, who was forced to resign; the senior vice president for finance and business, Gary Schultz; the athletic director Timothy Curley; and Mr. Paterno, who was fired and later died.
Mr. Schultz was allowed to retire and Mr. Curley was permitted to go on “administrative leave” before they were charged with failing to report allegations of child abuse and for committing perjury before the grand jury investigating the case. I never understood why they were not fired, but Mr. Freeh’s report shows how heightened the sense of self-protection at all costs is at Penn State.
The Freeh report said that these four people “exhibited a striking lack of empathy for Sandusky’s victims.” Actually, it was much worse than that.
Michael McQueary, a junior member of the football staff, reported to Mr. Paterno and other university leaders that he saw h Mr. Sandusky rape a-10 year-old boy in the shower in 2002. They not only failed to try to identify and help the child, or report the case to the police—they actually told Mr. Sandusky what Mr. McQueary saw, putting the boy at great risk.
Since 1990, Penn State, like all educational institutions that receive federal funds, has been legally required by the Clery Act to identify and report crimes committed on campus, particularly sex crimes. The report shows Penn State had utter disregard for that responsibility. It never created a Clery protocol, and obviously had no intention of reporting these crimes.
The law provides for the suspension of federal funds to colleges and universities that fail to abide by its provisions, along with a civil penalty of $27,500 for each infraction.
So, let’s see, that’s 45 times $27,500, which covers only the criminal counts on which Mr. Sandusky was convicted. That gets us to$1,237,500, plus suspension of federal money. The fine will be devastating to the school and certainly harm blameless students and faculty.
But laws have no purpose if they can be so flagrantly disregarded, with such impunity.
- Freeh report: The investigation of Jerry Sandusky’s sexual abuse of children implicates Penn State’s top leadership. – Slate Magazine (mbcalyn.com)
- Michael McCann: Freeh Report finds Paterno, PSU leaders concealed Sandusky abuse (sportsillustrated.cnn.com)
- Someone Actually Thinks The Freeh Report Exonerated Joe Paterno, And It’s Bill James [Penn State Scandal] (deadspin.com)
- Report: Penn St. disregarded children’s welfare (espn.go.com)
- Paterno’s legacy may now be damaged beyond repair (mysanantonio.com)
- Freeh Report On Penn State’s Handling Of Sandusky Scandal Set To Be Released (pittsburgh.cbslocal.com)
- Freeh Report Finds PSU Officials Concealed Facts About Abuse (pittsburgh.cbslocal.com)
- Louis Freeh Penn State Report: Alleged Cover-Up Damages Joe Paterno’s Legacy (bleacherreport.com)
- Analysis: FBI Director Louis Freeh, state’s results differ greatly. Why? (pennlive.com)
- Penn State probe accuses Paterno of cover-up|With related stories, videos in Sports (rep-am.com)
Washington’s Blog – Business, Investing, Economy, Politics, World News, Energy, Environment, Science, Technology
It is clear to me that a small cabal of politically connected ultra-wealthy psychopaths has purposefully and arrogantly stripped the middle class of their wealth and openly flaunted their complete disregard for the laws and financial regulations meant to enforce a fair playing field. Why did they gut the middle class in their rapacious appetite for riches? Why did the scorpion sting the frog while crossing the river, dooming them both? It was his nature. The same is true for the hubristic modern robber barons latched on the backs of the middle class. Their appetite for ever greater riches will never be mollified. They will always want more. They promise not to destroy the middle class, as that will surely extinguish the last hope for a true economic recovery built upon savings, investment and jobs, but it is their nature to destroy. A card carrying member of the plutocracy and renowned dog lover, Mitt Romney, revealed a truth not normally discussed by those running the show:
The data from the Fed report confirms Romney’s assertion. The poorest 20% were the only household segment that saw an increase in their real median income between 2007 and 2010, while the richest 10% saw only a modest 5% decrease in their $200,000 plus, annual incomes. Meanwhile the middle class households experienced a brutal 8% to 9% decline in real income. Table 2 in of this article reveals why the poorest 20% were able to increase their income. Transfer payments (unemployment, welfare, food stamps, SSDI) increased from 8.6% of their income in 2007 to 11.1% in 2010. Government transfer payments rose from $1.7 trillion in 2007 to $2.3 trillion today, a 35% increase in five years. I’m sure the bottom 20% are living high on the hog raking in that $13,400 per year. Think about these facts for just a moment. There are 23 million households in this country with a median annual household income of $13,400. That means half make less than that. There are 58 million households that have a median household income of $45,800, with half making less than that.
The reason Mitt Romney isn’t concerned about the very poor is because his only interaction with them is when they cut the lawn at one of his six homes. The truth is the bottom 20% are mostly penned up in our urban ghettos located in Detroit, Chicago, Philadelphia, NYC, LA, Atlanta, Miami, and the hundreds of other decaying metropolitan meccas. They generally kill each other and only get the attention of the top 10% if they dare venture into a white upper class neighborhood. They are the revenue generators for our corporate prison industrial complex – one of our few growth industries. They provide much of the cannon fodder for our military industrial complex. They are kept ignorant and incapable of critical thought by our Department of Education controlled public school system. The welfare state is built upon the foundation of this 20%. It is certainly true that the bottom 30 million households in this country, from an income standpoint, do receive hundreds of billions in entitlement transfers, but Table 2 clearly shows that 80% of their income comes from working. The annual $72 billion cost for the 46 million people on food stamps pales in comparison to the hundreds of billions being dispensed to the Wall Street banks by Ben Bernanke and Tim Geithner, and the $1 trillion per year funneled to the corporate arm dealers in the military industrial complex. The Wall Street maggots (i.e. J.P. Morgan) crawl around the decaying welfare corpse, extracting hundreds of millions in fees from the EBT system and the SNAP program as they encourage higher levels of spending.
This is all part of the diversion. Forty five years after the War on Poverty began, there are 49 million Americans living in poverty. That’s a solid good return on the $16 trillion spent so far. It’s on par with the 16 year zero percent real return in the stock market. We have produced a vast underclass of ignorant, uneducated, illiterate, dependent people who have become a huge voting block for the Democratic Party. Politicians, on the left, promise more entitlements to these people in order to get elected. Politicians on the right will not cut the entitlements for fear of being branded as uncaring. The Republicans agree to keep the welfare state growing and the Democrats agree to keep the warfare state growing -bipartisanship in all its glory. And the middle class has been caught in a pincer movement between the free shit entitlement army and the free shit corporate army. The oligarchs have been incredibly effective at using their control of the media, academia and ideological think tanks to keep the middle class ire focused upon the lower classes. While the middle class is fixated on people making $13,400 per year, the ultra-wealthy are bribing politicians to pass laws and create tax loopholes, netting them billions of ill-gotten loot. These specialists at Edward Bernays propaganda techniques were actually able to gain overwhelming support from the middle class for the repeal of estate taxes by rebranding them “death taxes”, even though the estate tax only impacts 15,000 households out of 117 million households in the U.S. The .01% won again.
It is easy to understand how the hard working middle class is so easily manipulated by the corporate fascists into believing their decades of descent to a lower and lower standard of living is the result of the lazy good for nothings at the bottom of the food chain sucking on the teat of state with their welfare entitlements. I drive through the neighborhoods of West Philadelphia every day, inhabited by the households with a net worth of $8,500 and annual income of $13,400. They inhabit crumbling hovels worth less than $25,000, along pothole dotted streets strewn with waste, debris and rubbish. More than half the people in this war zone are high school dropouts, over 30% are unemployed, and drug dealing is the primary industry. When a drug dealer becomes too successful and begins to cut into the profits of the “legitimate” oligarch sanctioned drug industry, he is thrown into one of our thriving prisons. Marriage is an unknown concept. The life expectancy of males is far less than 79 years old. But something doesn’t quite make sense. Every hovel has a Direct TV satellite dish. The people shuffling around the streets all have expensive cell phones. There are newer model cars parked on the streets, including a fair number of BMWs, Mercedes, Cadillac Escalades and Volvos. How can this be when their annual income is $13,400 and they have $8,500 to their names?
This is where our friendly neighborhood Wall Street oligarchs enter the picture. These downtrodden people are not bright. They are easily manipulated and scammed. They believe driving an expensive car and appearing successful is the same as being successful. Therefore, they are easily susceptible to being lured into debt. Millions of these people represented the “subprime” mortgage borrowers during the housing bubble. The tremendous auto “sales” being reported by the mainstream media in an effort to boost consumer confidence about an economic recovery, are being driven by subprime auto loans from Ally Financial (85% owned by the U.S. Treasury/you the taxpayer) and the other government back stopped Wall Street banks. This is the beauty of credit. The mega-lenders reap tremendous profits up front, the illusion of economic progress is created, poor people feel rich for a while, and when it all blows up at a future date the middle class taxpayer foots the bill. Real wages for the 99% have been falling for three decades. You make poor people feel wealthy by providing them easy access to vast quantities of cheap debt. I’m a big fan of personal responsibility, but who is the real malignant organism in this relationship? The parasite banker class, like a tick on an old sleepy hound dog, has been blood sucking the poor and middle class for decades. They have peddled the debt, kept the poor enslaved, and have used their useful idiots in the media to convince millions of victims to blame each other through their skillful use of propaganda. They maintain their control by purposely creating crisis, promoting hysteria, and engineering “solutions” that leave them with more power and wealth, while stripping the average citizen of their rights, liberty, freedom and net worth (i.e. Housing Bubble to replace Internet Bubble, Glass-Steagall repeal, Patriot Act, TARP, NDAA, SOPA). cuts to the heart of the matter, revealing the darker side of our human nature:
- Who Destroyed the Middle Class – Part 1 (sgtreport.com)
- How Can You Measure Income Inequality? Count The Trees (colorlines.com)
- Who Destroyed the Middle Class – Part 1 (theburningplatform.com)
- Guest Post: Who Destroyed The Middle Class? (Part 1) (zerohedge.com)
- Liberal Class Warfare Rhetoric…And Then There’s The Truth (whitehouse12.com)
- Guest Post: Who Destroyed The Middle Class – Part 3 (zerohedge.com)
- Who Destroyed the Middle Class – Part 2 (theburningplatform.com)
- Why Is The American Government So Afraid of the people who live there? (afteramerica.wordpress.com)
- Who Destroyed the Middle Class – Part 2 (washingtonsblog.com)
- Priced Out of the Middle Class (businessinsider.com)
Matt Taibbi and Yves Smith: How the Wall Street Mafia Holds America — and the World — Hostage | Economy | AlterNet
Matt Taibbi and Yves Smith: How the Wall Street Mafia Holds America — and the World — Hostage
Yves Smith and Matt Taibbi join Bill Moyers to discuss our criminal global financial system.
June 25, 2012
Rolling Stone editor Matt Taibbi and Yves Smith, creator of the finance and economics blog Naked Capitalism, join Bill to discuss the folly and corruption of both banks and government, and how that tag-team leaves deep wounds in our democracy. Taibbi’s latest piece is “The Scam Wall Street Learned from the Mafia.” Smith is the author of “ECONned: How Unenlightened Self Interest Undermined Democracy and Corrupted Capitalism.”
Bill Moyers: Welcome. This past week, Jamie Dimon, CEO of JP Morgan Chase, was back on Capitol Hill, testifying before the House Financial Services Committee, as he had earlier done before the Senate Banking Committee. He was being questioned on how his bank had lost two billion dollars — or more — on risky trading. His reception in the House was less fawning than what he got from the senators. Although many of them also are beneficiaries of JP Morgan largesse, House members were more combative.
Barney Frank: You said you have a fortress balance sheet. That assumes there’s something special about the way you are that made us have to worry less. But we can’t assume that’s going to be the case for every financial institution.
Jamie Dimon: But I also said that we’d be solidly profitable this quarter. So relative to earnings–
Barney Frank: That’s not the question. Mr. Dimon, please don’t filibuster.
Sean Duffy: You didn’t know about these trades. You didn’t know about these losses. How do you come forward today and say the regulators should have known that — what one of the best CEOs in the industry didn’t know and couldn’t have known?
Michael Capuano: With the regulatory regime that we have today — we both agree that it’s not what we want, but it’s what we have. Do you really think it’s a smart idea to be cutting the legs out of one of those major regulators? Do you think that’s good for America?
Jamie Dimon: I have enough problems. I’m going to leave that to you.
Michael Capuano: Well, Mr. Dimon, the only reason I ask is because you have had no hesitancy whatsoever in expressing opinions on other matters. I thought you might want to take an opportunity to express one today.
Bill Moyers: Coincidentally, just before Dimon’s House testimony, Bloomberg News published data indicating that JP Morgan Chase receives a government subsidy worth about 14 billion dollars a year in taxpayer money.
Money, said Bloomberg editors, that “helps the bank pay big salaries and bonuses, and more important, distorts markets, fueling crises such as the recent subprime-lending disaster and the sovereign-debt debacle that is now threatening to destroy the euro and sink the global economy.”
With me are two guests who can guide us through the thicket of testimony and beyond. Matt Taibbi, contributing editor at “Rolling Stone” magazine, has investigated the folly and corruption of banks and government with scathing, often profane wit and perception. His book, Griftopia: Bubble Machines, Vampire Squids, and the Long Con That Is Breaking America, described the events leading up to the financial meltdown in 2008. His newest piece for Rolling Stone is a chilling expose called “The Scam Wall Street Learned From the Mafia.”
Yves Smith created and runs Naked Capitalism, the popular blog on finance and economics. She once worked for Goldman Sachs, McKinsey & Company, and Sumitomo Bank, and now heads a management consulting firm. You’ll want to read her book, ECONned: How Unenlightened Self Interest Undermined Democracy and Corrupted Capitalism.
Welcome to both of you.
Yves Smith: Thanks so much.
Matt Taibbi: Thank you.
Bill Moyers: So in this particular case, what is JPMorgan’s sin? That’s the question Representative David Schweikert raised on the day of the hearing. He asked, “What sin has JPMorgan committed other than being big enough to lose billions of their own money in a quarter and still turn a $4 billion profit?” Want to take a stab at answering?
Matt Taibbi: Yeah, sure. Their sin wasn’t the loss. The sin was in being a too-big-to-fail company where we can’t afford to have them go under. Why are we there in the first place? If this was a company that, if it went out of business, it wouldn’t affect our lives personally and wouldn’t have major ramification for the economy, we wouldn’t be holding hearings in the Senate and the Congress.
We would say, fine, they lost so much, a bunch of money. Too bad for them. But that’s not the case. As we saw in 2008, when these companies go down, we all end up paying for it. You know, we ended up financing of, what, five, six, seven trillion dollar bailout in 2008. And if a company like JPMorgan Chase goes under, there will certainly be some sort of federal action, which is why we have to know about it. We have to know what goes on when they have unexpected two, three billion dollar losses that affects all of us.
Yves Smith: They were guilty of gaming the system. And the way that they’ve done it is this unit was using depositor money and yet taking very large bets.
And in this unit, all the other banks similarly have similar units in their treasury department, and the purpose of these portfolios is supposed to be to have liquid assets in case there’s a run on the bank.
And Bloomberg News had a story where they actually reported that all the other banks take less risk in these portfolios. And that’s before we get to the credit default– that’s before we get to the blow-up part, just in the, even the simpler part of the portfolios. They have, they keep more in treasuries. And they have less in corporate bonds. So Dimon is already taking more risk in this unit than he should have.
And this is something which is frustrating about the testimony. There’s a sort of, you know, one of the, again, stories that Dimon was promoting was, oh, well, we didn’t find out about it. And then when we found out about it, we jumped on it and now it’s all fine. And, therefore, the regulators shouldn’t have been able, you know, how could the regulators have found about it?
And, therefore, since the regulators couldn’t found out, you know, more regulation is futile. And, in fact, you could have found this information from the outside. You could have seen that prices were moving in this instrument in a really weird way.
Bill Moyers: Was everybody looking the other way? Have we forgotten so quickly?
Matt Taibbi: Well, the entire derivatives market is essentially a gigantic black box. It’s not like the regulators have access to all this information.
Yves Smith: I think they’re not used to looking for the information.
Matt Taibbi: Right.
Yves Smith: I think it’s been acculturated that they’re used to having tea and cookies with the banks and reviewing their internal reports and not doing any type of external validation and this kind of basic external checking they could do that they’re not habituated to doing.
Bill Moyers: A very curious thing happened when the House hearings opened. Some members of that committee felt that Dimon should be sworn in. But the chairman of the committee, a Republican from Alabama, Spencer Bachus, said, no, that wasn’t necessary. Am I making too much out of that?
Matt Taibbi: I thought that was an incredible moment for a couple of reasons. Obviously, the reason there was a hullabaloo over that was because of what happened when Lloyd Blankfein, the CEO of Goldman Sachs, came and testified before the Senate a couple of years ago. There later was a controversy over whether or not he had perjured himself in those hearings.
So the question was if, you know, Jamie Dimon is going to be sworn in, whether he would have to tell the truth, would be obligated, or whether it would just be a friendly conversation. But what was amazing about that, was that it Spencer Bachus who came to Jamie Dimon’s defense. Spencer Bachus is the congressman for the Birmingham, Alabama, region which has been decimated by the Jefferson County swap disaster, which was caused by Chase, which was fined $700 million by the SEC.
So here’s a guy who represents the county that has been most affected by Chase’s bad behavior, and he comes to Chase’s defense in the hearing, which I thought was– it set the tone for the whole thing.
Yves Smith: Matt mentioned the toxic swaps. Jefferson County isn’t the only example.
There have been a whole series of, you know, since Jefferson County and other municipalities blew up by deals they did before the crisis, there have been a series of swaps done after the crisis with transit authorities, where they are losing a tremendous amount of money. You can look at the way JPMorgan has serviced mortgage loans.
You know, they had to get up and admit that they had been basically breaking the law, and there were criminal penalties associated with this law, by foreclosing on servicemen in Iraq and not giving them rate breaks that they were entitled to. And there are some egregious cases.
Matt Taibbi: There’s $228 million fine that they paid last year for municipal bond bid rigging. There was another $153 million fine that they paid for failure to, for fraud in CDO trades. I mean, there are case after case after case that involve these criminal charges. And what I thought was amazing about these hearings is that nobody brought any of those things up.
Bill Moyers: Both of you have mentioned the Jefferson County story. Give me a quick summary of what JPMorgan did in Jefferson County, Alabama.
Matt Taibbi: Well, Jefferson County had to build a new sewer system. And they had to borrow a bunch of money to do that. And it was originally a $300 million project. But they got into a series of swap deals with JPMorgan Chase to basically push their financing into the future. But the deals were heavily mispriced in Chase’s favor. And Chase actually bribed another bank to stay away from Chase because they wanted that business. They wanted to give the–
Bill Moyers: Bribed them?
Matt Taibbi: They bribed them.
Bill Moyers: That’s against the law, isn’t it?
Matt Taibbi: Yes, yes.
Yves Smith: Yeah.
Matt Taibbi: And they were caught for it. A couple of their executives were caught for it, and they were heavily fined by the SEC for doing it. And this resulted in this disaster where Jefferson County’s going to be bankrupt for a generation. It ended up costing them $3 billion out of what was originally, what, $300 million?
Yves Smith: Million dollar, yeah, yeah, yeah. What got to be $2.9 billion deal in the end. And on top of that, my mother happens to live in Jefferson County.
Bill Moyers: Oh, I didn’t know that.
Yves Smith: You have the average person in– basically you cannot have access to the sewage system and not pay more than– and not pay less than 50 bucks a month. So there are people in the poor areas who are deciding what they’re going to have: electricity, water, or sewer. I mean, you can’t– they can’t afford all three.
Bill Moyers: Why is that JPMorgan’s fault that they have to make that choice?
Matt Taibbi: They basically got them into these onerous toxic swap deals that were poorly understood by the local politicians. And they bribed the local politicians to accept the swap deals. They did it through middleman companies that bribed the–
Yves Smith: The consultant on the deal is in jail. The former mayor was involved in other improprieties, too. But the former mayor’s in prison. You know, this is–
Matt Taibbi: For signing off on these deals.
Bill Moyers: Is there a question you would have asked Dimon if you had been on either of those committees that was not asked?
Matt Taibbi: The question I wanted to ask is, was, really more about the criminality. I mean, none of the members in either the House or the Senate really got into the issue of all the different offenses that these banks have committed in the last few years. You know, or, an ordinary person, if he commits welfare fraud, never gets a food stamp again in his life.
So given that these banks have systematically and repeatedly committed fraud, repeatedly been caught, you know, in situations like Jefferson County, municipal bid rigging, why should we still give them billions and billions of dollars in emergency lending from the Fed, bailouts, all of this aid from the government? How come there’s no consequences for them and there are consequences for ordinary people?
Yves Smith: I would have asked questions more having to do with what’s the justification for complex banking at all? That why do we need, why shouldn’t banks be run on the utility basis? Why should we have people like Dimon and his, the members of the CIO unit, most of which he’s fired, what the justification for literally that hundreds of millions of bonuses were paid collectively to those people.
And now he says they didn’t know what they were doing. There’s no justification for this, the sort of level of compensation that we generally have on Wall Street. And I would like to see that myth starting to be punctured in more public places.
Bill Moyers: What do you mean when you say banks should be more like a utility?
Yves Smith: Banks, more than any other business, more than military contractors, live off the government. They depend on government backstopping. They exist only by way of government issued licenses, which if you had open entry you’d see much lower fees. And they get some confidence from the public from the fact that they are regulated. Oh, and the most important thing is they have access to–
Matt Taibbi: The Federal Reserve.
Yves Smith: –the Federal Reserve.
Matt Taibbi: They’re getting huge amounts of free money.
Yves Smith: Well, not just the free money. The Federal Reserve basically guarantees the payment system. You know, that’s the really critical architecture that banks control is that, you know, we write checks to each other. We have credit cards. They clear through banks.
But the fact that banks can exchange money with each other confidently is because the Fed stands behind that. So there’s a much– there’s another layer of Fed backstopping beyond what we think of the way they step in in a crisis or the way they’re now intervening to help the banks. So the fact that these institution really depend in a very fundamental way on government support means they don’t have any right to the upside.
I mean, they should really be paid like public servants. I mean, I’m not kidding. I mean, and if they had been, if the pay had been ratcheted down after the crisis, I would have had a lot more sympathy for them, even if they just behaved for a couple of years. You know, they were bailed out. And then in 2009 the industry went and paid itself record bonuses, higher than 2007 instead of rebuilding their balance sheets. I mean, this was just a slap in the face for the public.
Bill Moyers: And there’s no shame.
Yves Smith: No.
Bill Moyers: You’re describing a corrupt financial and political system. And both of you in recent writings, your current article in “Rolling Stone,” which is devastating on the scam that the “Wall Street learned from the Mafia,” and a recent column you wrote about the mafia state, you’re both using that metaphor to apply to our financial and political system. When I read your pieces, you’re not playing with words there. You mean it.
Yves Smith: Yeah.
Bill Moyers: Why do you mean it?
Yves Smith: Well, the mafia, when it gets to be big enough, first thing it has services that people feel they need if they’re in a difficult situation. So, for example, loan sharking. If you really need money, they do have the money. And people enter into these loan shark deals even though they know it’s going to be very difficult to pay 20 percent or more interest and they’ll have their legs broken if they don’t pay back.
And the banks actually behave very much in that manner when they find people who really need money. So you see this with credit cards, you know, that, or, and with mortgages. That if you hit– it’s not this if you hit any tripwire, that, you know, become in arrears, the banks basically act in this very extortionate manner and don’t cut any breaks.
Matt Taibbi: And I think that there’s also this, they are the mafia because of their vast criminality in Wall Street now is that it’s bribery, theft, fraud, bid rigging, price fixing, gambling, loan sharking. All of these things, it’s all organized.
I mean, the story I just wrote about, which was about the systematic rigging of municipal bond auctions, which affected every community in every state in the country and all of the major banks were involved, including Chase.
They were rigging the auctions that were designed to create a fair rate of return on the investments that towns were getting on their– the money they borrowed for municipal bonds. And this is not like something that the mafia does. This is what the mafia does. The mafia has historically, it’s one of their staple businesses, is bid rigging for construction or garbage or, you know, street cleaning services, whatever it is.
They’re doing exactly the same thing. The only thing that’s different is there’s no violence involved. But what their method of control is that they’re ubiquitous. They have this incredible political power that the mafia never had.
Yves Smith: And they also have what amounts to an oligopoly. I mean, for many of these services, you have a great deal of difficulty going beyond the five biggest banks, you know? This is– it’s the consequence of too big to fail is that when, you know, some of the smaller players, again, you know, like– JPMorgan buying Bear Stearns.
In the crisis, when the smaller players got sick, they were merged into the bigger players. So now if you want– for a lot of these services, there aren’t that many players for you to go to. You really have no choice in– other than to deal with the big banks.
Bill Moyers: Congress is paid to be informed and to hold these guys accountable. Why don’t they ask the kind of questions you’re dealing with here?
Matt Taibbi: People refuse to look at these banks and think of them as organized crime organizations.
They in their eyes, organized crime is always either the Italian mafia or the Irish mafia. This isn’t what it looks like. But that is who they are. And I think that they’re treated with a kind of deference and respect, because traditionally that’s not who they were. They were these icons of finance who helped build this country.
But that’s not who they are anymore. And I think, it’s hard for people to wrap their heads around that and treat them the way they should be treated.
Yves Smith: Well, I think people don’t want to think that there’s something wrong with leaders. And CEOs are leaders of the business community. If you really believe that CEOs of businesses that are really fundamental to the economy are corrupt, you have to think of a very serious restructuring of the business and financial system.
And even if people kind of intellectually might be willing to contemplate that, they don’t really want to go to what the implications are. So it’s much easier for them to block out that thought.
Bill Moyers: Both of you have been writing a great deal lately about the crisis in Europe. So explain to us simply what hand Wall Street has in what’s going on in Italy, Greece, and Spain today and why we should care.
Yves Smith: Well, I almost want to go one step of abstraction higher because people tend to focus on the immediate ways Wall Street was involved like Goldman Sachs helped Greece cover up how serious its deficits were.
Matt Taibbi: Which in the situation, it was very similar to Jefferson County, by the way.
Yves Smith: Right. But the more important story is much higher, which is that the reason the big reason that all, you have basically a sovereign debt crisis, that the governments in Europe, many of them had to borrow a tremendous amount of money in the wake of the crisis. And the euro zone is not well set up to adapt to that. I could go into technical reasons why, but it’s not unlike a state.
You know, when a state has a budget problem that suddenly they have to think about, you know, cutting costs and doing all kinds of draconian measures. And while maybe a state or a city can do that, you can’t have the biggest economy in the world. I mean, Europe is the biggest economy in the world doing that and not have it basically turn into a down spiral, that you cut spending and then that leads to less income.
And your deficits get worse rather than better. So, but the reason they had that problem is, in fact, very directly the result of the financial crisis. That you had countries that weren’t running deficits, government deficits like Ireland and Spain, that were held up as poster children before the crisis of doing things right.
And that when the crisis hit, you both had a big drop in tax revenues. You had bank bailouts. And these countries had decent social safety nets so that, you know, things like, you know, unemployment insurance went up. And so the budget crisis they’re having is the direct result of the financial crisis. And yet it’s somehow being treated as if they’re separate events. Like somehow these governments were profligate and that borrowers were irresponsible –
Matt Taibbi: Social safety net.
Yves Smith: Safety net.
Matt Taibbi: Exactly. Right. That’s clearly going to be the place that is going to take the brunt of the damage. I mean, I think the most direct example here in America was a lot of unions and state pension funds were primary victims of the sort of broad fraud scheme to sell fraudulent mortgage backed securities.
So they, a lot of these institutional investors were buying these bad mortgages, huge pools of mortgages from all these, the usual suspects, the big banks. And then when they decreased in value and suddenly there they don’t have, it’s harder for them to meet their obligation and suddenly the finger is pointed at them and everyone saying, “Oh, look at those pens, the state pensioners or look at those union employees, they’re they cost too much money. We have to cut their services. We have to cut pensions. We have to do all these things.”
Whereas, in fact, they were buying a fraudulent product from Wall Street and that’s why they’re in such bad shape now. And I think, but politically, the direction is always going to be let’s blame-
Bill Moyers: The poor.
Matt Taibbi: That person. The poor.
Bill Moyers: The guy on the pension. The woman on the pension –
Matt Taibbi: Right. And we’ll never point the finger in the other direction.
Yves Smith: Well, in fact, the implications, that’s true. But the implications are actually quite grim, and they’re not being discussed honestly. We’re talking about old people dying faster. We’re talking about children being homeless and not getting education, and we’re talking about grim outcomes like that.
And they’re not even part of the discourse. I mean, you look, Greece is the extreme example. But in Greece, the hospitals are breaking down. Garbage is not being picked up. And if you look at the results of the last election, what you saw is even with the efforts to scare people into staying in the euro, you see this polarization where the Nazi Party got seven percent of the vote even after there was an incident in a TV station where there was literally an on-air fight where a Nazi Party member beat up on somebody basically I think it was on camera, you know?
So you’ve got a real social polarization with radicalization going on. And I’ve seen a number of reports out of Greece saying that it’s basically on knife edge of breakdown.
Bill Moyers: Could it happen here?
Yves Smith: If things, if we have another crisis and things aren’t addressed, I could see this definitely happening maybe not nationally but in significant regional pockets. I mean, you know, this is a country full of guns. And people don’t like to think about what happens when people are pushed, you know, I mean, the kind of random violence, the sort of, you know, going postal phenomena?
Matt Taibbi: When I was in a foreclosure court last year. I spent a week in a foreclosure court in Jacksonville.
Bill Moyers: Reporting on it.
Matt Taibbi: Reporting on it. And the amount of raw anger that you see in these proceedings from people who have lost their homes, they have no illusions about who’s to blame for the situation. They know exactly, you know, where the problem is. And I–
Bill Moyers: And it’s where?
Matt Taibbi: It’s with these banks that sold them these mortgages. And I think there’s a growing awareness out there in the public, more and more people have had a personal problem on some front with Wall Street, whether it’s credit card debt or a mortgage debt or they’ve lost their jobs. And I think there’s anger and it’s starting to become more organized.
Bill Moyers: Both of you trace this back to what you call fraudulent debt. Is that right?
Matt Taibbi: In the case of the mortgage markets, absolutely. I think what a lot of these, this was a fraud scheme. It’s the same scam that you see here in the streets of New York when somebody’s selling a phony Prada bag or a phony Rolex watch in the street. These banks were selling phony mortgages that were, they were selling them as triple A rated instruments when, in fact, they were essentially worthless.
They were highly risky, toxic instruments. And they knew it. They were buying, they were in cahoots with companies like Countrywide and Long Beach, these sort of fly-by-night mortgage operations who went out and they gave mortgages to everybody and everybody who had a pulse. They took these mortgages. They bundled them. They waved a whole bunch of phony hocus-pocus math over them and reconfigured them into triple A rated investments.
Then they went out into the world and they sold them to every customer all over the world, pensions, unions, foreign trade unions, foreign governments. And they–
Yves Smith: Trade councils in Australia. I mean, real know nothings.
Matt Taibbi: Everybody. Everybody bought this stuff. It all blew up like, everybody who was in on it knew it eventually would because they were betting against the stuff as they were selling it. And, and the, and that’s why we have this, this situation that we’re in now.
Yves Smith: Yeah, but even the most even if I’m giving Wall Street more credit than it deserves. But even if you take out the bad creation and selling of the product, you also have the fact that Wall Street basically demands an asymmetrical deal with contracts, that if you have a credit card deal or if you have a mortgage, if you make the tiniest, little violation, you know, we get to take our pound of flesh.
And yet if you’re a union member, it’s perfectly fine to break your contract. You know, our contracts count, but we can break all the other contracts in society to get our obligations honored. I mean, this is just crazy.
Matt Taibbi: But they genuinely think that they earn their money. And I think that was one of the illuminating things not only about the Dimon hearings but also the Lloyd Blankfein, slash, Goldman Sachs hearings a couple of years ago. These guys really think that they’re, they have a unique and special genius that entitles them to earn the vast sums of money that they pay themselves, that somehow that they’re creating all this wealth for themselves.
And they really genuinely don’t think that they’re getting their money– from all of us. And to them it’s irrelevant that they’re getting all their money for free from the Fed and that they’re lending it all out to us at five percent, 10 percent, 20 percent, you know, 25 percent. They think they deserve the money. And I think that’s the scariest part.
Bill Moyers: There’s a definition of a sociopath as being radically deprived of empathy. Do you see characteristics of sociopathic behavior on Wall Street?
Matt Taibbi: Absolutely.
Yves Smith: Yes.
Matt Taibbi: I’m sorry, just what Yves was talking about with, you know, the old people who were dying earlier now, people who don’t have kids, who aren’t going to school, garbage that’s being left in the streets. That’s all because some guy was sitting up in a skyscraper in Wall Street and knowingly selling some communities, some municipality a fraudulent, toxic mortgage backed security.
I mean, he knows that that instrument is going to blow up in, you know, six months, a year. But he’s selling it to them anyway. But he doesn’t care, you know, because he can’t see it, you know? I think in the eyes of a lot of these guys if they can’t see the effect, it doesn’t really exist. And to me, that’s classic sociopathic behavior when you’re blind, you’re willingly blind to the consequences.
Yves Smith: I mean, it’s really the growth of the trading culture. You know, in the old days, I worked on Wall Street when Wall Street really was only criminal around the margins. I mean, you really, Goldman Sachs in those days had the expression long-term greedy which meant you didn’t kill the–
Bill Moyers: Long-term what?
Yves Smith: Long-term greedy. That they were long-term greedy. And that meant you didn’t kill the goose that laid the golden egg. You know, you wouldn’t put your customer into egregiously bad deal. If you took a little extra, you only took it when the customer was making money, too, so if they ever figured it out they wouldn’t be really upset.
That attitude has changed completely. And I attribute it significantly to the growth of derivatives. Over-the-counter derivatives where you can’t see the price on an exchange. You can’t see the history.
And they’re much more complicated. And those started growing really in the early ’90s and became, and it becomes very interwoven in the practice of finance. Because the derivatives are so complicated, you can’t price compare. The risks are often bundled in within formulas that the buyers can’t understand. And so they can load all kinds of basically what’s equivalent to hidden fees in these things by the way they structure the risks in the terms.
So they’re the perfect vehicle for stealing because you’re selling, no, you’re selling somebody something they can’t evaluate.
Bill Moyers: When you come back, I want you to take the whole hour and explain to me what a derivative is and how it works. Okay? Is that a promise?
Matt Taibbi: Absolutely.
Bill Moyers: Alright, Yves and Matt, thank you very much for joining us.
Matt Taibbi: Thank you.
Yves Smith: Thank you.
Veteran journalist Bill Moyers is the host of “Moyers & Company,” airing weekly on public television. Check your local listings. More at http://www.billmoyers.com. Matt Taibbi is a writer for Rolling Stone. Yves Smith is the creator of the finance and economics blog Naked Capitalism.
Yves Smith is the founder of Naked Capitalism and the author of ‘ECONned: How Unenlightened Self Interest Undermined Democracy and Corrupted Capitalism.’
- Matt Taibbi: Wall Street Mafia | Why Are Americans Anxious and Stressed? | Right-Wing Supreme Court Sells Us Out (womensphilanthropy.typepad.com)
- Yves Smith, Matt Taibbi, and Bill Moyers talk on the financial “Follies of Big Banks and Government” (businessinsider.com)
- Monday’s Mobbed-Up Markets – “Investment Banks are the Mafia” (philstockworld.com)
- How Big Banks Victimize Our Democracy (sgtreport.com)
- From the Bill Moyers Show Big Banks Stealing Democracy (tcmag.wordpress.com)
- Explaining the Banking Crisis (my.firedoglake.com)
- Monday Read (99getsmart.com)
- Video – Matt Taibbi on Viewpoint with Eliot Spitzer “SEC hiding and covering up the evidence of Fraud and ignoring Whistleblowers” (sherriequestioningall.blogspot.com)
- naked capitalism, links for Thursday, June 21, 2012 (womensphilanthropy.typepad.com)