Financial crisis: A media failure?

Posted by Katherine Thompson on November 7, 2008 at 11:15 AM
The media stands accused of failing to foresee the global financial crisis, of a lack of understanding of the issues, and even of having a hand in the problems we now face. The Editors Weblog has been following the debate, beginning with an interview with the Managing Editor of the Financial Times, Daniel Bogler, who highlighted the problem of the media “fanning the flames” of the crisis. Is the media responsible, or are these accusations merely a knee-jerk reaction?

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http://www.editorsweblog.org/

If There Is A Real Investigation Or Trial, Who Should Be In The Dock?

By Danny Schechter
Author of Plunder

The election will determine our next president. It will not solve our biggest problem. And we still don’t know who is responsible for the economic calamity that is or soon will impact all our lives.

We know that the FBI has opened a criminal investigation of 26 companies, indicted 400 mortgage scammers and started 1400 white collar criminal cases There are 40 task forces allegedly looking into the fraud at the heart of the subprime pyramid scheme that triggered the financial crisis.

But now we also know that the Bush Administration had long ago downgraded the prosecution of white collar crime with more agents tasked to chase terror suspects than the men and women who brought the global economy down.

Reported Newser:

“A short-staffed FBI is laboring to keep up with white collar crime linked to the nation’s financial crisis, the New York Times reports. FBI officials predicted millions of dollars’ in mortgage fraud years ago, but the Justice Department wanted agents focused on counter-terror. When the FBI warned of a fraud “epidemic” in 2004, only 15 of its 13,000 agents were on the case.”

Making matters worse, many in the media prefer to fudge on who is responsible, blaming irresponsible borrowers equally with irresponsible lenders. In this way, the problem becomes binary with two co-guilty parties, each canceling the other out.

Under this logic, the ghetto family facing foreclosure that was talked into taking out a subprime loan shares the blame with multi-million dollar marketing operations and investment banks with a well conceived schemes for transferring wealth from the poorest neighborhoods to the richest institutions.

This cynical pox on all their houses was expressed by Rick Newman in a blog on US News.

Yes, there were villains, and, yes, there were dupes. But everybody got greedy. That includes homeowners who wanted more house than they could afford, along with bankers who wanted higher returns than they could get from conventional securities. If Wall Street committed a crime, then Main Street was an accomplice. And now they’re both feeling the pain.

This squares the circle and sounds reasonable. It’s also wrong. Just ask financier Eric Hovde who writes in the Washington Post:

Looking for someone to blame for the shambles in U.S. financial markets? As someone who owns both an investment bank and commercial banks, and also runs a hedge fund, I have sat front and center and watched as this mess unfolded. And in my view, there’s no need to look beyond Wall Street — and the halls of power in Washington. The former has created the nightmare by chasing obscene profits, and the latter have allowed it to spread by not practicing the oversight that is the federal government’s responsibility.”

Anderson Cooper at CNN for one—and he may be one of the few—says now IS the time to assess blame and CNN is doing reports on the top ten culprits of the crisis. Usually the CEOS of the companies in trouble (AIG, Lehman etc.)

When tens of billions of dollars in phony securities were written down, when as many as five million families lose their homes, when the economy collapses, you have to look deeper at the actual crimes that were committed. This started with violations of anti-discrimination laws and rules designed to insure that folks knew what they were buying and had their deal clearly explained. Most didn’t. You also have to look at common business practices and the deliberate lack of regulation.

That is why the FBI broadened its investigation.It now has 177 agent6s on the case.  They are being pressured from below by Attorney Generals from many states who were responding to complaints. One of them was New York’s ex-Governor Eliot Spitzer who penned an Op-Ed in the Wall Street Journal just before his sexual picadillo blew up into a scandal that forced him to resign. He wrote:

“Several years ago, state attorneys general and others involved in consumer protection began to notice a marked increase in a range of predatory lending practices by mortgage lenders. Some were misrepresenting the terms of loans, making loans without regard to consumers’ ability to repay, making loans with deceptive “teaser” rates that later ballooned astronomically, packing loans with undisclosed charges and fees, or even paying illegal kickbacks. These and other practices, we noticed, were having a devastating effect on home buyers. In addition, the widespread nature of these practices, if left unchecked, threatened our financial markets.

Even though predatory lending was becoming a national problem, the Bush administration looked the other way and did nothing to protect American homeowners. In fact, the government chose instead to align itself with the banks that were victimizing consumers.

Spitzer and his counterparts began investigating large mortgage companies like Countrywide. It became clear that if there was a crime going on, it was massive and institutional, not just individual. Today, NY State Attorney General Spitzer and federal prosecutors are looking into insidious credit default swaps.

The Wall Street Journal reporte that many of the biggest firms know they aqe vulnerable to law suits and prosecution and have begun to hire specialized counsel.

“Perhaps an even better signal that governmental investigations are on the way — kind of like the swallows returning to San Juan Capistrano — is the formation of practice specialty groups at major law firms to “help” clients deal with the turmoil.  A post on the Wall Street Journal Law Blog  notes that firms like Paul Hastings, Patterson Belknap, and Pillsbury Winthrop have assembled teams of lawyers to provide assistance, including members of the white collar crime departments.  If the firms smell an opportunity, don’t be surprised to see this area develop over the next few months with a range of internal investigations that may well bring criminal behavior to the surface.”

The Meida here is still dancing on the surface of the problem. Journalists in other countries saw this problem before Americans. Diane Francis wrote in the Financial Post:

The subprime mortgage and asset-backed paper scandals constitute one of the biggest frauds ever perpetrated. They have resulted in mass foreclosures, writedowns, bankruptcies, firings and billions lost. The US$10-trillion U.S. home-lending sector was, and perhaps still is, rotten. At the top were mortgage lenders, then Wall Street and others who exported junk debts to lenders around the world after prettying them up.
At the bottom was a corrupt system that handed out mortgage broker licenses like driver’s licenses, and then handed out mortgages like candy at Halloween. In between were crooked appraisers and organized crime.
The stories are now seeping out.

So far, there have been few indictments, and the fear is that the small fish will face the media firing squads not the big names like former Treasury Secretary Robert Rubin or his successor Hank Paulson, or regulators including former Fed Chairman Alan Greenspan who enabled and encouraged the housing bubble.

Notes the New Statesman:
“It is far too early to tell who might come to symbolize the meltdown of 2008, although there has been no shortage of ire directed at executives of AIG over lavish corporate retreats, along with former Lehman CEO Richard Fuld, whose company is under investigation by prosecutors in three locations.

The first Wall Street figures to be charged in the subprime mortgage fallout worked as hedge fund managers for Bear Stearns. They were arrested in June, accused of misleading investors about the subprime mortgage crisis.” But why stop there? Prosecutors hear the outcry. They realize that investigations and prosecutions are essential as deterrent.
What needs indicting, as I argue in my book PLUNDER, is the system as well as its mechanics. We need to look closely at the cabal of firms that profited, the regulators who enabled them and the media that was bought out and sold out.

Let’s jail the guilty but also totally reform the system, because even now, the shady wheeler-dealers are hard at work. Everyone is now decrying greed; no one is stopping it.

News Dissector Danny Schechter edits Mediachannel.org and wrote PLUNDER: Investigating Our Economic Calamity (Cosimio) now at online book stores. Comments to Dissector@mediachannel.org

Five Problems Block Government Success

By Danny Schechter
Author of PLUNDER

New York OCT 27: Most Americans know the phrase, “if it ain’t broke don’t fix it.” In the good times, when the economy boomed and Wall Street prospered, it looked like nothing was broke. The free market, we were told, was working like magic insuring prosperity and progress.

But then it happened, out of sight and out of mind, an upward trajectory turned in the other direction. In what was for many an unbelievable chain of events, markets started melting down, banks began writing down portfolios clogged with asset-backed securities that had no assets behind them.  Confidence shattered. Suddenly, believers in unregulated transactions realized something was very, very wrong.

Alan Greenspan was “shocked” and said he was wrong to support deregulation of financial markets. As headlines conjured up breadlines and recession, with “something worse” threatening, the government was pressed to act.

Over a year later, after eight interest rate cuts, with one more promised, and the injection of trillions into credit markets and banks worldwide, little has changed. Markets are volatile and trending down while banks are still not lending despite frequent projections of massive unemployment and stagflation.

At the same time, we live in a country that believes that whenever there are problems, there must be solutions. And in the case of the financial crisis, there is no shortage of proposals especially because the whole system—if not capitalism itself—seems at risk. (Even the NY Times ran an editorial on “Rescuing Capitalism.”) This is not a situation that inspires confidence in token reforms and minor adjustments. There seems to be a consensus that this crisis is systemic and structural even as the candidates reduce it all to tax policy.

That hasn’t stopped the government from dipping into its tool bag and throwing everything it has at the problem—bailouts on an unprecedented scale, including, now, of insurance companies and auto lenders There have been pro-business rule changes even partial nationalizations of banks, mortgage companies, and insurance combines.

Together, the Treasury Department and the Federal Reserve Bank seem to be fighting on every front. They appear to be giving away money. Is it working?

“Scarcely a day goes by with out some dramatic new initiative,“ writes The New Yorker’s financial columnist James Suriwieki, “even as market chaos makes each new idea soon seem like ancient history.”

Why is that? Surely the people in command are smart, savvy and know the system well. What are they missing? They now know its broke (and many of them are broke too) but they can’t seem to fix it.

Here are five views on what they are getting wrong.

l. THE SYSTEM NEEDS TO COLLAPSE

That’s the view of a perennial bear investor Marc Faber who “thinks the market was primed for a technical rally but is not keen on the long-term prospects for the US economy:

“The governments in this world have no other option but to print money. That will lead down the road to inflation,'’ Faber said. “You don’t need to be an economist graduated from Harvard to know we’re already in a recession. They will just put white paint on a crumbling building….

“To rebuild economic health in the United States, you need a serious recession that will last several years,'’ he said. “The patient that got drunk on credit growth needs to go into rehabilitation. To give him more alcohol, the way the Fed and the Treasury propose to do, is the wrong medicine.'’

2.    CONSUMERS ARE NOT SPENDING

Bloomberg reports:” The big concern is that households, spooked by the turmoil in financial markets, will cut back rapidly and sharply, plunging companies into bankruptcy and deepening a recession that many economists say has already begun.

“If we did have a quick cut in spending, it could turn a pretty nasty recession into possibly the worst downturn we’ve seen in the postwar period,'’ says Michael Feroli, a former Federal Reserve official now at JPMorgan Chase & Co.

3. MORAL HAZARD: THEY ARE BAILING OUT THE WRONG PEOPLE

There is something fundamentally wrong in rewarding the people who are responsible for the problem. Worries William Buitner, a financial historian at the London School of Economics, that this will lead to more collapses in the future: “by boosting the incentives for future reckless lending to elephantesquely large financial enterprises.
Unless not only the existing shareholders of the banks benefiting from these capital injections but also the holders of the banks’ unsecured debt (junior and senior) and all other creditors of the bank (with the possible exception of retail depositors up to some appropriate limit) are made to pay a painful penalty for investing in excessively risky if not outright dodgy ventures, we are laying the foundations of the next systemic crisis, even as we are struggling to escape from the current one.”
The bailout was sold deceptively. A New York Times investigation found it was Intended to foster bank consolidation, not loans. Journalist Sam Smith wrote:

“Never in the history of the United States has so much public money been spent with so little accounting of where it is right now and where it’s going next. Never has so much public money been spent by order of officials who helped to create the crisis the money is supposed to resolve. Never  has so much public money been spent by officials for the benefit of so many former colleagues. Never has so much public money been spent with so little explanation by the media. And never has so much public money been spent with so little debate over possible alternatives.

4, FINANCIAL SCAMMERS AND CRIMINALS ARE GOING UNPUNISHED

The FBI announced that it lacks the staff to fully investigate the pervasive crimes on Wall Street.

5. GOOD PEOPLE ARE LEAVING IN DISGUST

Some of the best and the brightest are giving up, rejecting businesses based on flimflams and deceptive marketing. Two years ago, a very successful investor, Andrew Ladhe, started returning money to his investors.  “Our entire banking system is a complete disaster,” he wrote. “In my opinion, nearly every major bank would be insolvent if they marked their assets to market.”

In October 2008 he closed his firm all together explaining:

“Recently, on the front page of Section C of the Wall Street Journal, a hedge fund manager who was also closing up shop (a $300 million fund), was quoted as saying, “What I have learned about the hedge fund business is that I hate it.” I could not agree more with that statement. I was in this game for the money. The low hanging fruit, i.e. idiots whose parents paid for prep school, Yale, and then the Harvard MBA, was there for the taking. These people who were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government. All of this behavior supporting the Aristocracy only ended up making it easier for me to find people stupid enough to take the other side of my trades. God bless America.”

These are just five reasons why “the quick fixers” are unlikely to succeed. Notes Harpers, we a need more than tinkering. They call for a fundamental reconstruction at a time when we are also “menaced by dwindling energy supplies and accelerating climate change.”

Also, the Captain Ahabs in charge should admit defeat and step down as was suggested by this comment on a financial website:

Perhaps Bernanke and Greenspan should see if there is an opening for the captain of the Exxon Valdees, job requirements: asleep at the switch.

Still to be answered: can the system be saved from itself?

Mediachannel blogger in chief, News Dissector Danny Schechter, is author of PLUNDER: Investigating Our Economic Calamity (Cosimo Books) now available at online book stories. Comments to Dissector@mediachannel.org

THE BUSH BULLYDOZER STRATEGY TO PREEMPT HIS SUCCESSOR
The Bailout Seheme Sold As An “Emergency” Has Become “Hurry Up And Wait

By Danny Schechter
Author of Plunder

One of the tactics of high pressure selling is to set a deadline, and make it clear if you don’t chose the offer by the date set, you lose it. The strategy fuels a sense of urgency to get buyers to make decisions without seeking advice or doing too much thinking. Some time, a bribe or a threat adds pressure to create a sense of disorientation. Recall President Bush’s ultimatum to Saddam Hussein and his sons. They were given 48 hours to get out of town. Or else!  Does anyone really think that had they left, they would have been left alone?

The strategy to get the bailout passed came from this same playbook. First, the President warned of an Armageddon. “”This is the first time in the history of the United States that the president has sought to provoke a financial panic to get legislation through Congress,” says economist Dean Baker.” “While this has proven to be a successful political strategy, it marks yet another low point in American politics. It was incredibly irresponsible for President Bush to tell the American people on national television that the country could be facing another Great Depression. By contrast, when we actually were in the Great Depression, President Roosevelt said that, ‘we have nothing to fear, but fear itself.’”

Then Secretary Paulson and Federal Reserve Bank Chairman brought their power points to the hill in an unusually alarmist nighttime hush-hush meeting  to “prove” that unless Congress acted, the whole system would melt down. They argued something had to be done and they just happen to have that “something” with them: a three page EMERGENCY PLAN for a mere $700 billion that had to be passed now!

When Speaker Nancy Pelosi wanted to add a role for Bankruptcy courts to adjudicate foreclosures, she was shot down. Paulson, even went down on his knees to beg her to withdraw the idea because it was complicating his “clean” proposal.

Has anyone looked into who was pushing this, at the role of China which demanded to be “made whole” on its loans and investments, or who would benefit the most.? Nah.  Did the media hold debates featuring the more than 400 top economists, including two Nobel Prize winners who opposed this “Emergency Economic Stabilization Act of 2008.” Nope.

To add extra anxiety to the process, ir  was suddenly announced that a military unit trained in crowd control was being brought back from Iraq to prepare to contain expected civil unrest.. Congressman Brad Sherman of California’s 27th congressional district told the House that he personally knew of several Congressional representatives who have said they were threatened with the prospect of all out martial law should they vote in opposition to the $700 billion bailout.

Well, we know what happened the first time around. The House divided as grew the bill to l06 pages. Some Republicans characterized Wall Street’s own Hank Paulson as a secret Communist who wanted to socialize the economy. Some Dems raved at the injustice of it all. The bill went down in defeat.

Then the full court press was on. The White House and its political operatives went to work to find out what the “rebels” wanted to change their votes,. The “Maverick” McCain was pressed into action to rope in his supporters. Obama was given the job of pacifying the Black Congressional Caucus. Favors were traded and promises of generous earmarks followed. The Senate then, in an unusual maneuver was ordered to vote first to persuade the House. Their Bill suddenly grew to 451 pages with some $150 BILLION in tax cuts and special add-ons.

Writing in New York’s Daily News, a disgusted Juan Gonzalez said “you can’t make this up.” He reported, “ senators packed the bill with scores of lavish goodies to please favored groups and win support from opponents in today’s House vote.
Take, for instance, Section 305 of the 450-page bill, “Modifications of Energy Efficient Appliance Credit.”
It runs several pages long and contains separate sections for “dishwashers,” “clothes washers” and “refrigerators.”
The bill says manufacturers of energy-efficient appliances will qualify for up to $250 in federal tax credits for each machine they produce over the next three years. Total cost to taxpayers: $322 million over 10 years.
In case your refrigerator is on the blink, you should note the bill says nothing about passing any savings on to the consumer.”
Now members of Congress in tight races has goodies to brag about. Others said they voted while holding their noses but only because they didn’t want to be accused of fiddling while Rome burned. You didn’t get a sense that most members believed the measure was needed or workable. But that didn’t stop them from voting as instructed. A few believed in the bailout; others knew they had sold out.
What an “emergency, “ The House was persuaded, lobbied, cajoled and then bought to pass the bill. There were no hearings, no testimony.  No sooner was it passed than President Bush signed it before sundown in his latest shock and awe maneuver. A day later, he acknowledged that nothing would happen immediately—despite the urgency that drove the process. In his weekly radio address, he admitted., “While these efforts will be effective, they will also take time to implement,”
There was another reaction, and not the one we had been told to expect. The grateful markets did not go up as we had been led to expect they would. No, they went DOWN. A report showing another big job loss led to a 157 point drop.

So what happens now, do the architects of Paulson’s panacea expect that we will move forward with all deliberate speed? Think again. AP reports:
“Experts say the most important thing that needs to happen before the $700 billion bailout even has a chance of working: Home prices must stop falling. That would send a signal to banks that the worst has passed and it’s safe to start doling out money again.

The problem is the lending freeze has made getting a mortgage loan tough for everyone except those with sterling credit. That means it will take several months or longer to pare down the glut of houses built when times were good — and those that have come on the market because of soaring foreclosures — before home prices start appreciating.”

So, we have gone from hurry up to business as usual. The rush is over.  John McCain who threatened to veto all earmarks went along with the charade. Barack Obama said this is not the time to assess blame and played the role of a “responsible” leader—ie get along by going along, The tax payers are out a likely trillion dollars plus before this is done and there goes all the promises of new programs. The “Leave No Bankers Behind” Bill is now law.

Is the “”emergency” over? No way. In fact, mortgages are not the only problem even as the number of foreclosures grow with little relief in sight. There are a series of new crises lining up to implode: credit default swaps, mounting credit card defaults, commercial real estate, the auto industry etc. The housing market is still melting own, unemployment is up along with inflation and our members of Congress are back on the campaign trail boasting that they “did” something.

Danny Schechter, editor of Mediachannel.org wrote PLUNDER: Investigating Our Economic Calamity (Cosimo) now at online book stores. Comments to dissector@mediachannel.org

Washington Insiders Go Postal On House Vote; Freedom Of Information Requests Allegedly Tell Story
By Danny Schechter - 09/29/08
What They Said To Each Other As Markets Melted

New York, New York: While the world watched in disbelief as the House rejected the Government’s bailout, The Dissector Institute of Plunderology was sent alleged, unverified, but seemingly accurate Freedom of Information documents monitored by sources in Homeland Security on what purports to be the secret communications between key players in Washington.

Tweet, Tweet Twitter on Vote: George Bush to Robert Gates: “Code Red xyxjxkokk9…Democracy Out of Control…When do Troops get Here? This Sucker Could Go Down.”

Text: Barney To Nancy: “Told You To Hang Tough on Bankruptcy…”

Text Reply: Nancy to Barney: “You Are FOS? Go To Your Schul.”

Call: Paulson To Ben Bernanke: “Back To The Drawing Boards!”

Voice Mail: Ben Bernanke to Alan Greenspan: “What Do I Do Now?”

Greenspan reply: “Restore Confidence. Read My Book.”

Fax: Gingrich to Paulson: “Time To Go.”

Voice Mail: Cheney to W: “I told you, Declare State of Emergency.”

Palin to McCain: “Call Not Answered.”

Voice Mail: McCain Calls Bush: “You Wanted to Help Me?”

Text: Obama To Biden: “Oh Shit, Why Did I support it?”

Biden Replies: “I will blame Palin. She could have stopped the Revolt.”

Statement By Treasury Official On Why Bailout was for $700 Billion: “It’s not based on any particular data point, We just wanted to choose a really large number.”

Email: Jim Cramer to Dr. Melfi: “They rejected my advice. Can’t get out of bed. Please double my medication.”

Memo: Staff to Stephen Colbert: “Some Words For THE WORD:
Disgust, Fear, Anxiety Worry, Panic, Shana Tova.”

Rep John Boehmer, House Republican Leader to Press About His Members Voting No: “You Can’t Break Their Arms.”

Nancy To Press: “What Happened Today Cannot Stand.”

Greg Walden (R-Oregon) to press: “This is Like Playing With Fire.”

Call: McCain to Bernanke and Paulson: “Now Is Not The Time To Fix Blame.”

Thomas Mann, Brookings Institution to Press: “I don’t think this was a failure of leadership so much as a failure of Followship.”

Barney Frank to Press: “Republicans Were Punishing The Country Because A Pelosi Speech Hurt their Feelings.”

Bob Herbert to NY Times Readers: “Now We Are Looking At the Abyss.”

Letter From Michael Moore: “Everyone said the bill would pass. The masters of the universe were already making celebratory dinner reservations at Manhattan’s finest restaurants. Personal shoppers in Dallas and Atlanta were dispatched to do the early Christmas gifting. Mad Men of Chicago and Miami were popping corks and toasting each other long before the morning latte run… no one could remember a time when a bill supported by the president and the leadership of both parties went down in defeat. That just never happens.”

Competitive Institute Release: “Oh Happy Day.”

Comments in Harper’s Org: “’I didn’t see any sign,’ said Representative Barney Frank, ‘of our Republican colleagues paying any attention to him whatsoever.’ ‘All he has done,’ said Senate Majority Leader Harry Reid of McCain, ‘is stand in front of the cameras.’ ‘He was my dear,’ said former Brazilian beauty queen Maria Garcinda Teixeira de Jesus, 77, who had a tryst with McCain in 1957, ‘and my coconut dessert.’”

– News Dissector Danny Schechter is still analyzing/inventing insider documents but wanted to share the first batch. His new book PLUNDER (newsdissector.com/Plunder) assesses the origins of the crisis without tongue in cheek. Other documents welcome. Comments to Dissector@mediachannel.org

BEYOND THE DOG DAYS OF SUMMER: AFTER AUGUST, REALITY
As Summer Ends, The Campaign Begins and The Challenge Remains

By Danny Schechter

Traditionally, time seems to slow down, I mean slooooow down, at summer’s end. The phone calls taper off along with the emails. We have now had endless gold medals and the Guns of August. Obama stirred his hoojie with his Biden moment, sliding into centrist field.  That’s done now.

There are but a few days of respite before the month goes from the quiet of the countryside to simulated excitement and high-flying convention oratory. As THEY wait to pounce; we wonder who will get the bounce?

Barack Obama accepts the nomination on the 45th anniversary of the March on Washington of 1963. He pursues his dream on the Day of The Dream.

Yet, another August day has a memory for me: August 24 1967, to be exact, That’s when my deeply missed pal, Abbie Hofffman and a band of fellow Yippies, threw money on to the floor of the stock exchange to mock the greed in full display below.

The Exchange later spent $20,000 to enclose the gallery which is now closed in keeping with post 911 paranoia. Abbie’s stunt was in its own way a protest against the crimes of Wall Street, and a prophecy of what was to come. Perhaps he foresaw the breakdown that the global economy is threatening us today.

Soon it will be Labor Day, a day for Labor in name only, and, then, we are off to the races. Everything will speed up. Politics will dominate, schools will reopen, and life will hurdle on into whatever abyss we are headed. Surge on o’ ship of state, surge on.

We do know that there are certainties however much we want to avoid or deny them. The economy will not be bouncing back any time soon.  The political race will get nastier, even more dangerous. Our wars will not end. And our press will not improve in an age when media snacking replaces real information absorption, much less digestion.

Behind the scenes, out of media glare, is the real battleground we rarely see, much less understand. It involves the agendas of elite power centers and key decision-makers, as Jessie Richard makes clear

“The battle over who becomes president does not take place (only) among the citizens of this nation, it takes place among groups such as the Council on Foreign Relations, the Trilateral Commission and the Bilderberg Group. Let me tell you something…the Cheney/PNAC cabal= stole the elections from George H.W. Bush, James Baker, George Schultz and associates, not from the Democrats. They are the ones who assembled the Bush administration and rigged the 2000 election to place them in power as a proxy presidential administration. The problem was that the Neocons, once in office, took control and did what they wanted to do, not what their sponsors wanted them to do.

Here is how it used to work. The media, which is controlled by the
real power brokers in this nation, have controlled elections in the
past by presenting and withholding selected information from the
public in order to influence their voting. By doing so, they pretty
much guarantee the outcome of an election. Do you think that if the
media did their job and actually informed the public accurately about
who George W. Bush was and what his qualifications were he would have
stood a chance of becoming a US President? This guy was less
qualified to be president than Britney Spears is qualified to be a
parent! ….

Maybe this is too harsh for you, too simplistic, too conspiratorial?  It pictures politics as the work only of forces in the shadows when in fact, as Mike Whitney writes, all of us have to do more soul-searching and introspection.

“America needs to spend a little time on the couch reassembling it shattered psyche and reconnecting with its inner-self. That means, sorting through the rubble of the Bush years and getting back to basics; a strong commitment to justice, human rights and personal liberty.”

Well said, Mike, but there are interests out there who like things the way they are, and are determined to keep them that way. In an era where the consumer economy is going to pot, they take refugee in the war economy which seems to be working overtime. I was surprised to find Paul Farrell’s article for Marketwatch reprinted on the Fox Business Channel site:

“There really is only one answer: “Deep inside we love war. We want war. Need it. Relish it. Thrive on war. War is in our genes, deep in our DNA. War excites our economic brain. War drives our entrepreneurial spirit. War thrills the American soul. Oh just admit it, we have a love affair with war. We love “America’s Outrageous War Economy.”

I don’t love it and I don’t believe we all do. Not at all.

Selling war is part of what our media culture does. When I used to work for ABC News, a list of staffers was referred to as “the troops.” Look at your neighborhood movie theater and see how many violent films are there. Athletic contests are spoken of with the metaphors of war. Ditto for political campaigns. Hooray for “Team America.” It should be Brand America.

In this August interlude, with many of us still in an escape or vacation mode, perhaps there is time to reflect, and to think about where we are headed and where we really want to go or be. We can’t control everything but on the other hand we can’t accept everything either.

Will we, when the “real world” resumes, hold out for what our hearts and our values tell us are needed or will we succumb to what we are told is the politics of the possible?

The latter all too often leads to rationalizing the unrationalizable and succumbing to the logic of the market and the conventional wisdom. That is the path to compromise and what often becomes self-delusioal. It leads us to suspend belief because we want to believe so much. Who wants to vote while holding your nose?

The challenge we face as the “new year” begins—once you have been a student, the New Year seems always to start in September—is to think about what really matters to us and for us. Yes, we need new political leadership, But we need more than that too. Do we ever!

To me the question and the need goes beyond party politics. It goes to how we work for a just economy, defend the vulnerable and assure more equality and fairness? Throwing money at the stock market has been done. Throwing heavier rules and regulations at Wall Street must be  part of a strategy for  the deeper changes that we really need.

That’s a tougher face-off than Dems vs Repugs. It’s  a collision with the real powers that be.

News Dissector Danny Schechter edits Mediachannel.org. His new book “investigating our economic calamity,” PLUNDER” (newsdissector.com/Plunder) is out next month. Comments to Dissector@medichannel.org

By Danny Schechter
Obama seems to have finally recognized that the economy is his issue. He lashed out at John McCain today for “not noticing” whats going on. Both candidates were criticized by NY Times columnist, economist Paul Krugman, for ignoring the issue. Meanwhile, the markets were crumbling as the real estate market remains in decline.

NEW YORK - AP: Wall Street retreated Monday after Fannie Mae and Freddie Mac fell to their lowest levels in nearly 20 years on concerns that the government might need to bail out the mortgage financiers. Weakness in the overall financial sector sent the Dow Jones industrial average down more than 175 points.

ARE BAILOUTS COMING?

The United States Treasury Department may soon be forced to broker a recapitalization package for mortgage giants Fannie Mae and Freddie Mac.

Not only will this move wipe out common stockholders, it may also leave preferred shareholders and others with losses.

The “recapitalization” plan is a failsafe in the case that the government-sponsored giants are unable to raise substantial capital to cover future delinquencies. This plan would act to reestablish stability in the nation?s two largest mortgage-finance firms, but it would do so while continuing to undermine our economy, thus only making the problem worse.

If the Treasury Department chooses to step in it will do so with revenue taken from taxes; and with no plan in place to increase taxes, any money redirected from the tax pool will equate to nothing more than deficit spending.

FINANCIAL TIMES: “Fears about the financial system grew on Monday as money market liquidity tightened and sharp falls in the share prices of mortgage financiers Fannie Mae and Freddie Mac led the US stock market lower. Fannie’s and Freddie’s shares lost 22 per cent and 25 per cent, respectively, after an article in Barron’s suggested that the US government was considering recapitalising the companies on terms that would all but wipe out existing shareholders.” …

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By Sharon Kayser

Usury, to be clear about it, is rich people taking advantage of poor people by lending them money on terms that are sure to make them fail - William Greid

It is often argued that times were a lot harder in the old days but this statement is far from true. Such an assumption rather tends to reflect on a poor existential knowledge and the superstition that a lack of control over the world events is beyond one’s own reach. Like any other species, humans get used to their own (predatory) environment and deal with it accordingly. Many dangers have become so familiar to the point to appear rather harmless. And then there is this infamous cultural thinking that “good will prevail” anyway. While lies always get exposed eventually, truth carries in its wake a series of painful realizations. It has always been a jungle out there and in this time and place, something has radically changed the fabric of society; something so insidious that goes far beyond ‘greed’ and which is so deeply entrenched that is repellent to the mind to even think of doing something about it. To put it bluntly, if something were done, chaos would occur instantly and of course nobody really wants this to happen. This is the main reason why we’ll have to wait until the system auto-destructs completely in order to finally envision the possible end of the tunnel and real solutions.

Although we’ve heard a lot about predatory lending lately, not enough about predatory borrowing was said and nothing at all about ‘predatory rumors’ without which the mania could never have existed. The ‘buzz’ is a major component that glued everything together and mesmerized everybody, even those who couldn’t afford a piece of the so-called American Dream. It is only when one realizes this, that the blame game is exposed for what it truly is. Back to reality: a study from the Center for Economic Policy & Research in Washington, DC. projected that the bust will mostly wipe out two decades of family-earned wealth. Who cares to listen now?

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http://www.un-debt.net/

Why Are We All Complicit in Our Own Economic Servitude?

By Danny Schechter

Let me try a few words out on you: “Charge It:,” “Swipe It” and “Priceless.” You know exactly what I am talking about. We all have credit and debit cards. We all use them, and many of us keep our lives going because of them.

That is, until the bill becomes due.

The sad truth is that we are all complicit in our own economic servitude even if, at bottom, it’s not our fault because we live in a consumption society, and don’t feel we could live without them.

While many eyes are focusing on the housing meltdown and its hugely negative effect on an economy clearly moving into recession, few are paying attention to the next bubble expected to burst: credit cards. You would never know it by watching those slick VISA card ads on the Olympic TV broadcasts.

Combined with the subprime losses, such a credit card nightmare has the potential, experts say, of bringing down the entire financial system and global economy.

You and your credit card have become key players in the highly unstable financial crunch. Mortgage lender cupidity and bank credit card greed wedded to financial institution deregulation supported by both political parties, have been made manifestly worse by Bush administration support-the-rich policies. It has brought us to a brink not seen since just before the Great Depression.

While campaigning in Edinburg, Texas, in February, Barack Obama met with students at the University of Texas-Pan American. “Just be careful about those credit cards, all right? Don’t eat out as much,” he said. After the foreclosure crisis, he warned, “the credit cards are next in line.”

The coupling of home equity debt and credit card debt has gone hand in glove for years. The homeowners at risk can no longer use their homes as ATM machines, thanks to their prior re-financings and equity loans, often used in the past to pay off their credit cards. Indeed, homeowners cashed out $1.2 trillion from their home equity from 2002 to 2007 to pay down credit card debts and to cover other costs of living, according to the public policy research organization Demos.

To compound the problem, fewer people are paying their credit card bills on time. And, to flip the old paradigm, more are using high-interest credit card cash to pay at least part of their mortgages instead of the other way around.

Younger people are being crushed by this debt burden as college students and new consumers. Emma Johnson of MSN Money reports that “Generation Y” is broke

” “The democratization of credit has really generated a competitive spending culture, and plastic has allowed for material goods not had in the previous generation,” says Bob Manning, author of “Credit Card Nation. “Most of us grew up in a home with just one or two bathrooms for the whole family, he points out; today, new homes usually have at least one bathroom per bedroom.

“That change has happened so fast,” Manning says.

“This generation feels that somehow or another they’re going to figure out some technological advancement that’s going to get them out of their financial troubles and outsmart the market,” says Manning, who served as adviser to the documentary “In Debt We Trust.” The documentary paints a picture of national financial crisis stemming from the personal-debt burden.

Happily, this issue is finally being addressed by Congress and the Federal Reserve Bank. When asked for comments, the public overloaded the Fed’s website as the New York Times commented:

When the Federal Reserve asked for comments on its proposed rules on abusive credit card practices, an astonishing 56,000 poured in. Most were from outraged consumers. They told of interest rates skyrocketing when they paid an unrelated bill late. They complained of unwarranted late fees and pushed-up due dates. One Pennsylvania customer fumed: “I’m fed up with credit card company tricks that drive us deeper in debt.”

This anguished deluge should send a clear message to leaders in Washington. The Federal Reserve should swiftly adopt its proposed rules against unfair or deceptive credit card practices. But the real burden to curb these abuses falls on Congress

.

This discontent is being organized to press Congress to act by groups like the Consumer Federation of America and the Center for Responsible Lending

Congress is listening:

WASHINGTON (Reuters) - Legislation aimed at curbing credit card billing practices that surprise borrowers with unexpected interest rate increases and fees was approved on Thursday by a U.S. House of Representatives committee.

The bill approved by Financial Services Committee mirrors Federal Reserve proposals that would effectively end double-cycle billing — in which card companies reach back to prior billing cycles to help calculate the interest charged in the current cycle.

These reforms are a start but much more needs to be done because its not just billing practices that is at issue—its high interest changes, deceptive marketing, and arbitrary rules. On top of that, there are other loans that need scrutiny including payday lenders and student loans. And of course our own addiction to shop until we drop,

Also, let us not forget that our credit card companies have been colonizing markets throughout the world. As the NY Times explained in a series on debt, “As the American blessing of credit cards became widespread, so did the American curse of debt.”

Bear in mind the experience of another addicting industry—tobacco. As they came under restraints in the US, they escalated their poison pushing worldwide.

Debt is a global issue and has to be treated as such.

Just as groups like The Neighborhood Assistance Corporation of America (NACA) provide help to homeowners in distress we need a major effort to help the victims of credit cards—with practical assistance and political demands for regulation and relief.

News Dissector Danny Schechter made the film “IN DEBT WE TRUST. His new book PLUNDER: Investigating Our Economic Calamity is out later this month from Cosimo. Comments to dissector@mediachannel.org

Massive Economic Disaster Seems Possible — Will Survivalists Get the Last Laugh?

By Scott Thill,
July 26, 2008.
They used to be paranoid preparation nuts who built bomb shelters for a place to duck and cover during nuclear dustups with communist heathens, but their tangled roots go back to the Great Depression for a reason. If you want to get sociological about it, survivalism started out as a response to economic catastrophe. And now, with a cratering stock market, a housing meltdown that has devalued everything in sight, and skyrocketing prices for food, gas and pretty much everything else, survivalists are preparing for — and are prepared for — the rerun. In fact, they may be the only people in America feeling good about the prospects of a major crash.

And the interesting thing about the once-fringe movement at this moment in history is that survivalism has now gone green — at least in theory.

From peak oil and food crises all the way to catastrophic payback from that bitch Mother Earth, there are more reasons to hide than ever. Conventional society as we know it is already undergoing some disastrous transformations. Ask anyone ducking fires in California, floods in the Midwest or bullets in Baghdad. Maybe it didn’t make sense to run for the hills, stockpile water and food, grow your own vegetables and drugs, or unplug from consumerism back when America’s budget surplus still existed, its armies weren’t burning up all the nation’s revenue and its infrastructure wasn’t being outsourced to a globalized work force.

But those days are gone, daddy, gone.

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8,500 U.S. banks; many will die soon: click here http://www.dailykos.com/