Wall Street

Robin Hood Tax: Economic Justice

Leo Gerard — Tue, 26 Jun 2012 09:10:29 -0400

Robin Hood popped up all across America last week. A bunch of green-suited Merry Men protested in front of Wall Street bank branches in 15 cities.

Another felt-hatted group demonstrated in Washington D.C. during J.P. Morgan Chase CEO Jamie Dimon's testimony about why his bank shouldn’t submit to regulation even after flushing $2 billion down the toilet. The biggest band of Robin Hoods appeared on dollar bills -- a pointy hat drawn on George's head and the words “Robin Hood tax” written below.

The American Robin Hoods are seeking economic justice. They want Congress to resurrect the financial transactions tax. This is the Robin Hood tax, a tiny levy on the sale of stuff like stocks, bonds, derivatives, futures and credit default swaps. It packs two benefits in one tax. It would give the government cash to offset the cost of the Wall Street-caused recession. And it would suppress the high-risk, high-speed trading that caused the crash. Britain, home of Robin Hood, already charges a form of it. Ten European Union countries plan to institute it. America needs it.

It’s not new. The United States collected the tax for half of the 20^th Century. During the Great Depression, Congress doubled it to help pay for recovery. It’s not novel. Twenty-nine countries charge it now, including Brazil, India, South Korea, Hong Kong, Singapore and Switzerland. It’s the opposite of a God-forsaken-market-killer. While it was levied in the United States from 1914 to 1966, the nation enjoyed the world’s greatest economic expansion.

And it’s a great idea. Lawmakers and pundits are screaming and crying about “the financial cliff” the country faces in December when tax rates will automatically rise and massive budget cuts automatically begin. The Robin Hood tax would help solve that problem.

The impending cuts include $321 billion slashed over a decade from programs that help everyday working people including cancer research, farm inspectors and federal grants to cities for law enforcement. The Bipartisan Policy Center estimates that the spending cuts would reduce the gross domestic product next year by half a percentage point – which in real life terms means more unemployment, more foreclosures, more poverty.

That doesn’t have to happen. All it takes is resuming the Robin Hood tax. Legislation already introduced in Congress to charge .03 percent on trades would raise $350 billion over a decade. That’s enough to preserve all of those programs for working people.

The nation charges sales taxes on cars and toys and soap. But it charges nothing on the sale of stocks and bonds and risky derivatives.

There’s no reason credit default swap sales should get a pass and dodge taxation. Especially when there’s another reason that taxing them is a great idea. The tiny tax, 50 cents on every $100 traded, would discourage the Wall Street gambling that continues to threaten the stability of the U.S. economy.

Two years ago, Lake Research found 80 percent of those polled favored a Robin Hood Tax that would suppress risk. Here’s the statement that 8 in 10 supported:

“We need to rein in the greedy, reckless behavior of the big banks on Wall Street that cost millions of jobs and led to huge bailouts on our dime. This tax will put a limit on the casino culture of Wall Street that provides no real value and only exists to line the banker’s pockets. This reform will strengthen our financial system to help prevent another crisis and reduce the deficit.”

It’s also the reason leaders in France and Germany are pushing the tax for Europe. They believe it will cool overheated computer-driven, high-frequency financial speculation, promote long-term productive investment and provide money to rescue unstable banks in places like Spain without requiring workers to bail them out. Not all 27 countries support the tax, but France and Germany plan to move ahead with the first eight others that do, including Italy, Spain, Greece, Poland and Austria.

In addition to those world leaders, another suit-and-tie crowd joined the green-outfitted Robin Hood tax supporters last week. On Thursday, 52 economists, hedge fund managers, current and former heads of European banks, and former high level executives of Wall Street banks sent a letter to the leaders of the world’s largest economies asking them to institute a financial transaction tax. They said the tax would serve the world economy:

“Financial transaction taxes of a small fraction of a percent on each trade, such as those proposed by the European Commission and backed by a number of G20 countries, would moderate the incentives for such short-term speculation while having a negligible impact on long-term investment.”

Wall Street banks, bailed out by the Bush administration in 2008, continued to speculate anyway and failed to engage in the self-discipline necessary to safeguard against future crashes. The $2 billion loss J.P. Morgan reported last month and Moody’s downgrading the credit scores of 15 major banks last week testify to the institutions’ risk taking.

Even after losing all that money, J.P. Morgan CEO Jamie Dimon insisted banks don’t need regulation. Let’s go with the tax then, Jamie. Because workers sure can’t take another crash.

Support the Robin Hood tax. Draw a green Robin Hood hat on George on a dollar bill. Write Robin Hood tax below it and sign it. Photograph yourself with your Robin Hood dollar bill under your chin and post it on Facebook. Tweet it. Circulate the Robin Hood greenback and the Robin Hood tax cause.

Corporate Primacy Causes People Poverty

Leo Gerard — Tue, 19 Jun 2012 09:17:03 -0400

The Romney v. Obama economic smack down in Ohio last Thursday failed to deliver half the punch of remarks the men made earlier in the week.

President Obama said the nation must focus on the public sector, which continues to lay off thousands of teachers, cops and firefighters, even while the private sector has recovered sufficiently to consistently add jobs. Romney said he would fire more teachers, cops and firemen.

This gets to the dispute between Democrats and Republicans. The GOP has contended for 30 years that the primary function of government is to serve corporations and the 1 percent, and that when they thrive, the 99 percent may receive hand-me-down benefits. Democrats believe the principal function of government is to serve the majority of people and that when they benefit, the economy thrives for everyone.

For all the fancy talk in Ohio on Thursday, it comes down to this: Do Americans want a government of the people by the people for the people, one conceived in liberty and dedicated to the proposition that all men are created equal? Or do Americans want a government of the corporations by the corporations for the corporations, one dedicated to the proposition that the rich are better than everyone else?

For the rich, like Mitt Romney, the proposition that they are better than everyone else is a given. Romney believes that he, the son of a wealthy car company executive and governor, the youth who attended exclusive private schools and wallowed in every privilege, is a self-made man.

That is basic Republican philosophy: Every wealthy person and every successful corporation achieved that all by themselves. They didn’t inherit; they didn’t benefit from taxpayer-funded infrastructure like roads, schools and patent enforcement; there was no luck involved. They achieved it alone by virtue of their own grit, hard work and dedication.

Anyone can do it, the GOP believes, if they would just buckle down, work hard and follow all the rules. As a result, in Republican world, anyone who isn’t rich has only himself to blame.

Therefore, in GOP-logic, the poor and middle class are inferior beings. Government should not serve them. The government, Republicans think, should bow to the successful, who earned service. The government must not, according to the GOP, reward shiftlessness by providing benefits to middle class scallywags who have failed to do what it takes to get rich.

This doctrine of primacy for corporations and the 1 percent has set back the middle class. And the nation’s economy. Middle class income has stagnated. Meanwhile, the wealth of the top 1 percent and corporations has skyrocketed, so that now as much wealth is concentrated at the top as was during the robber-baron age immediately before the Great Depression.

A report issued by the Federal Reserve Board early last week showed that both the income and net worth of the average American family declined so drastically between 2007 and 2010 that nearly two decades of accumulated family wealth was wiped out. Seventy percent of those losses occurred in the years while Republican George W. Bush was still president.

By contrast, on the 1 percent end the scale, corporate executives raked it in last year. Forbes calculated that the CEOs of the nation’s top 500 corporations got an average 16 percent pay increase. The 2011 paycheck for each – a cool $10.5 million.

Also, corporate balance sheets are back in the black, with profits now shooting above pre-recession levels. Rather than investing in America or creating jobs with that money, corporations are hoarding more than $2 trillion in reserves.

And they are stuffing $10 million checks into GOP SuperPAC funds to ensure that Romney keeps his promise to lay off teachers, cops and firefighters while cutting taxes even further for the rich and eliminating any and all regulations that annoy corporations.

No air or water pollution controls on factories. No food safety inspections. Repeal the Dodd-Frank Wall Street Reform and Consumer Protection Law that was enacted to prevent the reckless Wall Street gambling that crashed the economy. Repeal ObamaCare that was enacted to end abusive practices by health insurers.

Romney reiterated last week that he opposes the provision of ObamaCare requiring insurers to cover people with pre-existing conditions. So if a child is born with asthma and his working-poor parents don’t have employer-provided health insurance or the money to buy coverage, too bad for the kid. Let him die gasping for breath. The toddler should have had more grit, hard work and dedication and earned himself some insurance. Or he should have picked better parents. Like Romney did.

Democrats, like Obama, believe in the primacy of the majority, as did the founders of the United States. The revolutionists wrote in the Declaration of Independence: “We hold these truths to be self-evident, that all men are created equal. . .” The 1 percent, CEOs the lucky, the super-smart and the well-born are not more equal. The government was created to serve the needs of everyone.

And when it does, the economy fairs better. After the Wall Street crash of 1929, the great Democratic President Franklin Roosevelt and his successor Harry Truman instituted changes that supported the majority, including establishing collective bargaining rights. World War II, paid for by high taxes on the 1 percent, created a massive employment program, after which veterans benefits provided higher education for a generation. The result was lower concentration of wealth at the top and the greatest economic boom in the history of the world.

Then came Republican Ronald Reagan who gave the doctrine of corporate primacy a cute name -- trickle down. America must end his spell of voodoo economics or Romney and the Republicans will continue to stick it to the middle class.

Will Scott Walker Be Given a Pink Slip, an Orange Jump Suit or a Second Chance?

Mary Bottari — Mon, 04 Jun 2012 13:25:02 -0400

Madison -- Since September of 2010 the Milwaukee Journal Sentinel (MJS) has been detailing an ongoing "John Doe" criminal investigation being run out of the Milwaukee County District Attorney's office involving Wisconsin Governor Scott Walker's former staff and associates. The wide-ranging investigation has included allegations of campaign finance malfeasance, embezzlement of veterans funds, bid-rigging, and even child enticement during the period when Walker served as Milwaukee County Executive, but was running for governor.

On June 1, 2012, the MJS broke the story that Milwaukee County prosecutors were forced to move from a regular investigation to a secret "John Doe" criminal investigation more than two years ago after being stonewalled by the County Executive's office. Court records released in the trial of one of the defendants showed that prosecutors said Walker's office had been "unwilling or unable" to turn over requested records. This new information contradicts Walker's repeated claims that he has been "fully cooperating" with the investigation since the start.

As of today, this ongoing criminal investigation has resulted in six indictments, 15 felony charges, and two convictions. At the moment, five people are awaiting trial. Below we provide a John Doe primer for the uninitiated.

1) What is a John Doe investigation?

In Wisconsin, a "John Doe" investigation is a closed-door criminal proceeding that operates much like a Grand Jury does in other states. Rather than appearing before a jury, though, a John Doe investigation takes place before a judge. Witnesses with evidence relevant to the investigation can be subpoenaed and compelled to testify under oath about potential crimes. Due to the secrecy rules governing the investigation, the scope and targets of the investigation are sometimes difficult to discern. The John Doe investigation involving Walker's tenure as County Executive is being prosecuted by the Milwaukee County District Attorney John Chisholm before Judge Neal Nettesheim of Waukesha. It has been underway since May of 2010, but it is active and ongoing, with the latest immunity deal being announced last week. New evidence emerged this weekend that there is also a parallel federal investigation underway.

2) Who is the target of the investigation?

When Current TV's David Shuster broke the story on Friday that Walker was a "target" of the John Doe investigation he cited anonymous sources. On Saturday, Walker issued a strong denial, saying any suggestions that he has become a target of the John Doe probe are "100 percent wrong." Late on Saturday, Shuster revealed more. "I stand by my reporting 100 percent," Shuster said in a conference call, adding that Walker was also a target in a federal investigation citing unnamed sources with the U.S. Justice Department's Public Integrity Section. Shuster also said that Walker's attorneys had been seeking to have their client publicly cleared of wrongdoing for the last five or six weeks, but prosecutors would not clear him.

Shuster's report is the first on a federal investigation parallel to the ongoing investigation by the Milwaukee DA, but the news did not come as a surprise. Walker has hired high-powered criminal defense lawyers and is using a portion of his $30 million campaign finance war chest to pay legal bills being run up by his campaign attorneys and his personal criminal defense attorneys, over $320,00 combined so far. The use of a campaign war chest to pay legal fees is only permitted under Wisconsin statutes when a person or their "agent" acting on their behalf are "under investigation for, charged with, or convicted of a criminal violation" under campaign finance and election laws. Walker announced he was starting a criminal defense fund in March 2012.

Walker's recall opponent, Milwaukee Mayor Tom Barrett, has challenged Walker to turn over all the emails related to this controversy. Walker says he can't reveal any emails or speak about the investigation because of secrecy rules from the prosecutor. However, Judge Nettesheim made clear to a reporter in a rare interview, that no individual would be subject to the secrecy order unless he physically appeared in front of the judge while in court on the John Doe proceeding and personally received the secrecy order from the judge (not a prosecutor). Further, he said that an individual who had not appeared as a witness would be free to discuss or distribute documents even if those documents were evidence. We do know Walker was called in to talk to prosecutors in February 2012, but we do not know if he appeared before the judge.

3) Who has been charged and what are the charges so far in the investigation?

So far the investigators have charged six people with 15 felonies; one person, who turned himself in to prosecutors, was convicted on two counts:

* Timothy Russell (former deputy chief of staff to Milwaukee County Executive Scott Walker) was charged with two felonies, and one misdemeanor related to embezzlement of donations intended for Wisconsin veterans in a special fund, which was created at Walker's direction. The money was used by Russell and his partner, Brian Pierick, to take a few vacations. Read the criminal complaint here.

* Brian Pierick (partner of Timothy Russell): charged with two felonies involving child solicitation. It appears Russell's phone records led to Pierick and a nasty story about two men soliciting a 17-year old minor for sex. Read the criminal complaint here.

* Kevin Kavanaugh (appointed by Walker as a county veterans' official): charged with five felonies related to embezzlement from the veterans fund. Kavanaugh appears to have been raiding the funds separately from Russell. Read the criminal complaint here.

* Kelly Rindfleisch (former deputy chief of staff to then-Milwaukee County Executive Scott Walker): charged with four felonies relating to campaign fundraising while on the county payroll. Rindfleish's worked on a secret Wi-Fi system, in her office, just steps away from Walker's office. Rindfleisch continued to work for Walker's campaign until she was charged. Read the criminal complaint here.

* Darlene Wink (former aide to then-Milwaukee County Executive Scott Walker): pled guilty to two unclassified misdemeanors as part of a deal that she made with the prosecutors relating to working on campaign fundraising while on the county payroll. Winks office was down a short hallway from Walker's. Read the complaint here.

* William Gardner (President and CEO of Wisconsin & Southern Railroad): Gardner pled guilty to felony violations of Wisconsin's election campaign laws in April of 2011. Gardner tried to convince prosecutors that his $50,000 in illegal contributions to Walker, which he funneled through his employees and a girlfriend, was an innocent mistake, except he had done the same thing the previous year. Read the criminal complaint here.

4) What did Walker know and when did he know it?

The investigation was initially sparked by a probe into some $60,000 in missing veterans' funds. Based on discoveries made in that investigation, it expanded into a probe of illegal fundraising activity by government employees who were Walker's staff. The allegation is that Tim Russell set up an unofficial email and Wi-Fi system in the Milwaukee County Executive's office so that staffers could conduct campaign business on laptops while their salaries were being paid by the taxpayers. This type of activity is a felony in Wisconsin, and other high-level politicians have been prosecuted and convicted of similar misconduct in the past. The existence of the secret email system was "never disclosed to county employees outside a closely held group within the Walker administration," says the indictment of Kelly Rindfleisch, the employee hired by Walker who spent the most time on fundraising activities. On county time, the staffers communicated extensively with Walker campaign staff, organized fundraisers, made invitations, exchanged fundraising lists, and sent out campaign press releases, all just steps away from Walker's own office.

Walker says he knows nothing about it, but an email included in the Kelly Rindfleisch charging documents suggests otherwise. When the MJS caught Darlene Wink Facebooking for Walker's campaign while working on the county payrolland printed a story on the morning of May 14, 2010, she was fired. Walker sent an email to Deputy Chief of Staff Tim Russell that same morning at 8:46 a.m. -- not demanding an investigation or a top to bottom review of staff procedures -- but telling him he felt bad about firing her and stating "we cannot afford another story like this one. No one can give them any reason to do another story. That means no laptops, no websites, no time away during the work day, etc." Many have described this as a "smoking gun" email.

As if the story were not complicated enough, the MJS has also reported that investigators are looking into bid-rigging charges related to the county's decision, when Walker was County Exec, to move the Wisconsin Department of Aging from a public facility to a private facility using a bidding process. That investigation has lead to raids on the home of Walker's former chief of staff, Jim Villa, and a focus on his long-time campaign treasurer, Joe Hiller, a realtor involved with the potential county real estate contract. The MJS has reported on a private email exchange between Walker and Hiller that has been described as a "bombshell" in the investigation, but has not yet been released.

5) How many people have had their homes and computers raided by the FBI?

This may not be knowable. About a dozen law enforcement officers, including FBI agents, raided the Madison home of Cynthia Archer, who worked for Walker as a top aide at both the state level and at the county level. The raid on Archer's home was watched with interest by friends and neighbors in her close knit community, but we are now finding out about more raids that went unnoticed at the time. Lawyers involved in the defense of Kelly Rindfleisch, are trying to suppress evidence gained by searches of the homes and offices of Walker's former chief of staff Jim Villa and former state Rep. Brett Davis, who ran for the Republican nomination as Lt. Governor at the time that Walker ran for governor. Darlene Wink and Tim Russell apparently also were visited by the FBI.

6) How many people have been granted immunity?

So far, 13 people have been granted immunity in the case, but not Walker according to court records. This means that 13 people surrounding Walker could have been charged with a crime, but avoided prosecution by agreeing to cooperate with investigators and waive their constitutional right against self-incrimination. The 13 include Governor Walker's Press Secretary, Cullen Werwie and Fran McLaughlin, Walker's spokeswoman while he was Milwaukee County executive; David Halbrooks, a Milwaukee attorney with Democratic ties who specializes in procurement; GOP official Rose Ann Dieck; and Suzanne Immel, a Walker donor, and others involved in the prosecution of the railroad magnate who sought to conceal his illegal donations to Walker's gubernatorial campaign.

7) Who are the lawyers?

Walker's campaign has attorneys, including former federal prosecutor Steven M. Biskupic of the Wisconsin firm Michael Best & Friedrich. Walker himself is represented by a pair of high-powered law firms. Michael J. Steinle is a criminal defense attorney at the law firm Terschan & Steinle, LTD. Steinle has been included in the Best Lawyers in America and has been selected as one of Wisconsin's Super Lawyers every year since 2005. Some of Steinle's cases include a former flag football coach accused of molesting several of his underage players. He also represented clients in several homicide cases including the high-profile case of Richard Berhens who killed his live-in girlfriend and buried her body. Walker's other attorney is John N. Gallo, a partner at Sidley Austin LLP, a large law firm in Chicago. He is a 1986 graduate of Harvard Law and a former federal prosecutor in Chicago with a specialty in grand jury investigations. Walker has spent hundreds of thousands of dollars on lawyers already, but many in the legal community think that the lawyers are holding back their bills until after the election.

8) Is this a partisan witch hunt?

Chisholm was already taking a lot of heat for alleged leaks to the MJS when the right-wing online media source "Media Trackers" used a data-base of recall petition signers prepared by an out-of-state Tea Party group to document that people in the Milwaukee DA's office signed Walker's recall petition. This is hardly surprising given that these county workers were directly affect by Walker's collective bargaining bill and other policies. Chisholm responded that none of the attorneys or staff working on the investigation signed the recall petition. Moreover, the U.S. Supreme Court has consistently protected the free speech rights of public employees.

While Chisholm was elected as a Democrat in a democratic county, he has a track-record of prosecuting democratic politicians. During Chisholm's first term, he worked with federal prosecutors to convict democratic Alderman Michael McGee, Jr. on a series of state and federal charges that included bribery and extortion. More recently, he charged democratic Milwaukee County Supervisor Johnny Thomas with accepting a bribe in public office and with misconduct in public office. If proven Thomas could serve 10 years. Judge Nettesheim defended Chisholm and the integrity of the case to the MJS. "This has been an orderly and professionally conducted procedure," he said. MJS's lead reporter, Dan Bice, has repeatedly denied receiving leaks from the Milwaukee prosecutor's office. With a growing number of witnesses, and with computers and data and other information being subpoenaed all around town, Bice likely has plenty of sources, but has not been able to get his hands on key emails in the possession of prosecutors.

Visit PRWatch.org for more reporting on news from Wisconsin.

Romney Economics: Cheat Main Street

Leo Gerard — Tue, 29 May 2012 08:59:23 -0400

Mitt Romney made a boatload of money for himself and his fellow fat cats. No doubt about it. Billions. But he made it the way Americans hate most – Wall Street style wheeling and dealing.

Americans hate it because when all that scheming went bad, when the market collapsed, it was the 99 percent who footed the bill to bailout Wall Street. The same is true of Romney and Bain. When Bain bankrupted the companies it bought – and Bain did that shockingly often – workers and Main Street businesses paid the price.

Romney contends his money making as CEO of Bain qualifies him to be President of the United States. That’s true if Americans believe money should flow out of their pockets, out of the cash registers of Main Street shops and into the Swiss bank accounts of Romney and his 1 percenter cronies.

Here are some of Romney’s victims, Main Street businesses owed money by just one bankrupted Bain company, American Pad and Paper Co. (Ampad): Technical Coatings Laboratory, owed $125,191.20 and paid in bankruptcy $237.03; Services Plus Inc., owed $12,064.71, paid $22.84; Crown Vantage, owed $32,155.26, paid $60.89.

In the 15 years Romney ran Bain from 1984 to 1999, 22 percent of the companies it invested in went bankrupt or closed within eight years, according to a study by the Wall Street Journal.

In fact, according to the Wall Street Journal, the bulk – 70 percent – of the $2.5 billion Bain made for investors during that time came from just 10 deals. Four of those ended up in bankruptcy as well – killing jobs and jilting Main Street businesses. Despite that, Romney and the Bain investors fattened their Swiss bank accounts.

More Main Street victims: Lakeway Container Inc., owed $47,143.56 by Ampad, paid $89.26 in bankruptcy; Olympic Adhesives, owed $6,566, paid $12.43; American Chain and Gear, owed $505.54, paid 96 cents.

Bain’s handling of Ampad illustrates how the rich extract money from these deals and leave behind wounded workers and Main Street shops. Bain bought Ampad from Mead Corp. in 1992 and added SCM Office Supplies to the holdings two years later. Like many leveraged buyout deals, these were financed with loans secured by the purchased companies’ assets.

Within hours after buying SCM, Bain fired every one of its 350 workers in Marion, Ind. Bain, through Ampad, told the shocked and terrified workers they could apply for their former positions if they wanted them back – at less pay, fewer benefits and worse working conditions.

One way leveraged buyout firms like Bain make money is by taking it from workers – slashing their pay, benefits and pensions. This also makes companies look more productive, enabling buyout firms like Bain to make money on taking them public.

Bain bought SCM early in July, 1994. Within two months, the workers went out on strike, seeking restoration of some of their pay and benefits. Workers sought help from Romney, who rebuffed them as he was running for Ted Kennedy’s U.S. Senate seat. After losing that race, Romney returned to Bain, permanently closed the Marion plant and moved its equipment to other Ampad facilities.

More Main Street victims of Ampad bankruptcy: Green Bay Packaging Inc., owed $75,551.92, paid $137.37; Springfield Electric, owed $3,919.88, paid $7.23; American Coffee Break Service, owed $1,349.73, paid $2.56.

Through 1999, Bain continued to be the single largest shareholder in Ampad, and three Bain executives sat on its board of directors. Ampad struggled to meet the low price demands of big box retailers – like Staples, in which Bain had also invested and where Romney sat on the board of directors.

Ampad fell into bankruptcy in 2000. Companies besieged with debt -- as Ampad was -- because of leveraged buyouts often fail because they are too weakened to deal with normal business adversity.

More Main Street victims of Ampad bankruptcy: Economy Plumbing Co., owed $1,505.69, paid $2.85; Hohner Stitching Products, owed $2,095.76, paid $3.97; Mount Tom Box Co. Inc., owed $34,351.96, paid $65.04.

When Ampad went under, it owed $182.6 million to its suppliers across America. The bankruptcy left only $328,633 to pay nearly 1,300 unsecured creditors – that worked out to 10 cents for every $10 Ampad owed. That’s how a company liked Hometown Café & Catering, owed $600.60 by Ampad, got all of $1.14. And Hometown Café received that big fat check 11 years after Ampad filed for bankruptcy.

These Main Street shops and businesses are the heart of American communities, supporting the local United Way, Little League teams and Memorial Day parades. Debts never paid mean less money for them to hire their own workers, fewer dollars for them to contribute to their communities and a higher probability they’ll be forced into bankruptcy.

Bain invested $5 million in Ampad and took more than $100 million out, through numerous methods, including fees. That $100 million would have gone a long way toward paying the debts Ampad owed to Main Street businesses across the country. It wouldn’t be surprising if they felt a little like Romney and Bain robbed them at gunpoint.

But everything Bain did was legal. It’s Romney economics, working for the wealthy while double crossing Main Street.

Jamie Dimon's JPMorgan Chase: Why It's the Scandal of Our Time

Richard Eskow — Mon, 14 May 2012 12:19:33 -0400

Most observers are missing the point. When CEO Jamie Dimon announced that JPMorgan Chase had incurred at least $2 billion in losses from risky, unsecured, derivatives-types trading, it uncovered the scandal of our time once and for all.

The Chase disaster gives us a much-needed a glimpse into our corrupt political system, its Wall Street paymasters, and the media voices that allow people like Dimon to escape scrutiny.

The JPMorgan Chase story is the story behind the financial crisis that has thrown millions of people out of work. It's the story behind our ever-growing wealth inequity. It's the story behind Washington's inability to prosecute criminal bankers, regulate reckless ones, and propose the economic solutions the rest of us urgently need.

Predictably, the pundits who aid and abet people like Jamie Dimon are dismissing this story's importance, pointing out that $2 billion (it could become much more) pales against the $19 billion in profit Chase reported last year.

But it was potentially $2 billion earned through crime. And more importantly, this story isn't just about Chase's errors and crimes. It's much bigger than that.

Besides, $19 billion in a single year? That's a big part of the story, too.

The Case Against Chase, its CEO, and its accomplices is too big to cover all at once. Here are the aspects of this under-reported story we plan to address in the days and weeks to come.

The Firm

Depending on the day and the measurement used, JPMorgan Chase is now the largest or second-largest bank in the world. Its Japan operation alone has been cited by that nation's regulators as a systemic risk because of its size.

If Chase began to collapse because of risky betting, the government would be forced to step in again.

Jamie Dimon knows that. It's a lot easier to gamble when you know somebody else will be forced to bail you out if you lose too much.

Chase, like the other mega-banks, has systematically engaged in criminal activity for years. At the same time, it has used its vast wealth to corrupt our political and regulatory systems. And it has been aided and abetted by willing collaborators in the media, every step of the way. It gave up nearly three quarters of a billion dollars in settlements and surrendered fees to settle one case alone - that of bribery and corruption in Jefferson County, Alabama.

Chase has paid out billions to settle charges that include perjury and forgery (in its systemic foreclosure fraud and abuse), investor fraud, and sale of unregistered securities. And these charges were for actions that took place while Jamie Dimon was the CEO.

The first of Dimon's executives have offered their resignations in this latest scandal. But investigations of everyone from Lucky Luciano onward have focused on the boss, not just the underlings. Laws like the Securities Act and Sarbanes-Oxley provide strict legal guidelines for corporate CEOs and their staff. There's strong evidence to suggest those laws have been stretched to the breaking point - and beyond.

The Boss

We may someday look back at Jamie Dimon's increasingly shrill cries of persecution as a cry for help or a plea to be caught. He has not only fought the regulation of Wall Street banks. He's used extreme language to characterize criticisms of bank activities as a) mean, b) an attack on all forms of business, and c) bigotry that is no different from racism.

Dimon has used his visibility - and his lavish public relations budget - to obtain highly flattering profiles of himself in major US publications. And he's used that public platform for, among other things, arguing for unwise ideas in public policy areas where he has no expertise. Most of those ideas involve forcing the American people to suffer additional financial hardship in order to pay for the damage caused by Dimon and his colleagues.

Just last week Dimon was arguing for the "Simpson/Bowles plan" authored by two private individuals, which would impose the same kind of austerity on the United States as that which is currently wreaking economic and poetical havoc on Europe.

If nothing else, Dimon is consistent: He can't respond to reality any more effectively in the policy arena than he can in the banking sector.

Dimon argues against regulation by saying that bankers are moral and sophisticated enough to manage their businesses without oversight. But he's been making those arguments to a nation that's standing in the wreckage his colleagues left behind the last time they were allowed to play with trillions without adult supervision.

And he has somehow managed to argue simultaneously that no other bankers are as smart as he is, and that nevertheless they should be unregulated because guys like him are so smart. That doesn't make sense.

The Flacks

Despite Dimon's illogic and the criminal track record of his organization, he has been flattered, quoted, and profiled in major news publications at roughly the same frequency as Lindsay Lohan has been in entertainment mags, and for the same reason: He makes good copy if you don't dig too deeply.

The day before the scandal broke, in fact, Dimon punked CBS host David Gregory on Meet the Press by pontificating on political and other matters in a pre-taped interview, knowing that this story was about to break tomorrow. We won't knock Dimon for not breaking the story (there are rules about handling information at a publicly traded company, although Dimon never seems to have cared much about them before.)

But it was an embarrassment to Gregory just the same.

The flackery didn't start after this story broke. The supposedly 'hardball' coverage of this '"error" typically amounted to little more than the kind of damage control Dimon and his PR team were no doubt hoping they'd get. The incident was described as an "embarrassment," a "mistake," an "error."

Few news outlets discussed the size of JPMorgan Chase and other too-big-to-fail banks, which continued to grow even after the passage of a financial reform law. They failed to discuss what would happen if the bank got into serious trouble.

And they glided lightly over the fact that crimes may have been committed. When they did, they were quick to characterize this scandal as the work of overzealous or crooked underlings.

That's what they said in Alabama, too.

The Influence Peddlers

Banks have paid Washington lobbyists $50-60 million per year for the last few years - and they've gotten their money's worth.

Real financial reform was hamstrung under Dodd/Frank by behind-the-scenes wheeling and dealing. Even that bill's modest reforms are being undercut by Republicans from Mitt Romney downward, who are determined to avoid even the pretense of regulating the nation's reckless and criminal bank enterprises.

The White House had yet to indict a single banker for the events leading up to the financial crisis, although billions have been paid out it settlement fees for criminal activity.

When you look at it in context, $150-200 million over three years is one of the best investments Wall Street has ever made.

The Watchdogs

The Federal Reserve rescues failed bank executives - often breaking its own rules to do it - and yet cites the same rules when it refuses to help other businesses, or individual consumers, in ways that would do much more to restore the economy. No wonder: The Fed's board includes many of the same bankers who broke the economy - including Jamie Dimon.

Intransigent pro-bank regulators refuse to carry out their own agencies' mandates if it would discommode Wall Street.

And Administration officials meet routinely with double-dealing bankers like Lloyd Blankfein from Goldman Sachs, according to visitor logs, while rarely laying eyes on foreclosed homeowners or other ordinary citizens.

Some of the bank executives they meet with are their own colleagues. There are so many people moving from Wall Street jobs to high government positions - and back again - that our country's center of economic power now resides somewhere on the Amtrak route between New York and Washington. (I'm guessing Metropark, NJ.)

The Solutions

Some people have called for reasonable steps in the wake of this scandal: Tighten banking regulations. Strengthen the Volcker rule. Restore Glass-Steagall. Force Jamie Dimon to

Each of these moves would be a start - but they would only be a start. But the story of Jamie Dimon and JPMorgan Chase illustrates a far deeper, far more systemic problem. They highlight the broken and corrupt matrix of relationships between rich (and often lawbreaking) bankers, politicians and regulators in Washington, and supplicating figures in the national media.

This is an opportunity to explain what's wrong with our system and pursue ways of fixing it. Let's seize the moment now - before it's too late and they break the economy again.

Will a Young Generation's Dreams Be Rescued - Or Bundled and Sold On Wall Street?

Richard Eskow — Wed, 25 Apr 2012 16:51:38 -0400

Click here to tell Congress: Don't Double Student Loan Interest Rates!

Interest rates for student loans will double on July 1 unless Congress acts. That's outrageous - but the fiscal abuse of our nation's young people runs far deeper than that. An entire generation has been trapped into debt servitude and joblessness by the implacable machinery of Wall Street greed. Bank-servile scolds insult the young people of America while the bankers' economic engines strip-mine their financial future.

Jobless or overextended college graduates aren't even allowed to declare bankruptcy - a privilege that's extended to every reckless investor and mismanaged corporation in the nation. Once they finally find work, college graduates face years of garnished wages to repay the loans that funded their often-overpriced educations. If they haven't repaid that debt by the time they grow old - a very real possibility at the cost of a college education today - they'll even be forced to surrender part of their Social Security benefits.

That's indentured servitude.

Meanwhile banks have been slicing and dicing student loans into derivativefinancial instruments called "SLABS" - student-loan asset backed securities. We've seen this movie before - the one where big banks mass-market loans to a population with stagnated wages and dwindling economic prospects, then bundle them and sell them to investors who haven't reviewed the way they were underwritten and sold.

Hey, what could go wrong?

It's true that many of these packaged debts are backed by the US government - but not all of them.

Why are these graduates facing such a bleak job market? Because Wall Street's gambling on other financial bets crashed the economy, leaving an entire generation without much of a future to give them optimism and hope. Their parents can't help them much, because most of their assets were taken by Wall Street too. So as an entire generation of college students graduates with unprecedented debt - and joblessness that's unprecedented in modern memory - they're looking forward to a lifetime of reduced expectations.

And just like their parents, these young people being told the the banks aren't the problem: They are.

Half of today's college graduates are un- or under-employed. The total amount owed on student loans is greater than our country's entire credit card debt. The banks were rescued in a multi-billion dollar bailout (that did not turn a profit), but If anybody talks about a WPA-like program to rescue young people the bank-funded political crowd gasps in horror.

Instead of help, young people get comments like this now-notorious one from perenially ignorant GOP representative Virginia (Ginny) Foxx: " I have very little tolerance for people who tell me that they graduate with $200,000 of debt or even $80,000 of debt because there's no reason for that."

Ginny Foxx is acting out the last in a four-step process to crush the soul and spirit of a generation:

First, cut funding for colleges and universities throughout the country, driving the cost of a college education out of reach of most Americans. And while you're at it, play footsie with the for-profit college industry, giving out student loans for paper mills that churn out worthless diplomas at inflated prices - but whatever you do, don't tell the students that!

Second, lobby to "privatize" much of the student loan industry. Turn Sallie Mae, the agency created to help students, into a greed-driven get-rich-quick scheme for greedy executives (See "Sallie Mae's Jets") who used government money to lobby for their own get-rich-quick schemes and turned the student loan program into a taxpayer-funded money tree for already-rich bankers. (To their great credit, the Obama Administration and Democrats on the Hill did a great deal to roll back this part of the greed machine with last year's student reform law.)

Third, deregulate Wall Street and allow them to wreck the economy, forcing an entire generation to face the bleakest job future in modern memory.

Fourth, condemn them for their own situation. That distracts some people from the real cause of this generational misery.

Blame the victim: It's the oldest game in the world. In fact, it's exactly what was done to many of their parents when they bought their homes. They convinced them that homes would rise in value forever, sometimes hired crooked appraisers to inflate their homes' value, encouraged them to take out loans on that inflated value - and then, when the bubble burst, convinced a lot of people that the real problem in this country is 'greedy homeowners.'

But this time it may not work. There are too many young people, and too many parents, who have learned how the game works. They may not stand for it a second time.

There's another reason why it won't work - and why Mitt Romney is suddenly the voice of reason urging his fellow Republicans not to let these interest rates double. If they do rise after July 1, a lot of students will be unable to pay their debts. Not all of those loans are backed by the government, so a lot of banks will be hurt.

Republicans don't want that to happen - so expect a lot of conversions to "reasonableness" in the coming weeks. The delinquency rates for these loans may be higher than originally believed, and there's reason to believe it could go much higher as more students graduate into a bleak job market. The financial industry is beginning to worry.

It should worry. So should all of the investors who have bought those "SLABS." Between the politics and the economics, Republicans would be crazy to let these interest rates soar. But then, they've done lots of crazy things lately ...

Our financial system can't afford another shock. That's another reason why the Administration's additional proposals for easing student loan debt should be passed immediately, especially the "pay as you earn" and "forgiveness in 20 years" (or less) provisions.

But that isn't enough. We owe the next generation a lot more than what's being offered. We owe them nothing less than a national program of jobs - a program that will give them experience, income, and a sense of restored optimism about the future.

Students also deserve the chance to pay off their loans altogether by taking on tough jobs (with salaries) that help society, as well as themselves. (There's some reduction in the length of the loan under the current system, but it should be improved.)

And yes, we should be talking about forgiveness.

It's surprising that we haven't seen more student protests like those that have gripped Quebec. The Occupy Student Debt Campaign may be the first step in that direction.

Think about it: One trillion dollars in loans - loans that look increasingly risky with every month that passes. A generation that was tricked into borrowing for their educations - in many cases for an overpriced or useless diploma, and in many other cases at costs that were driven sky-high by the selfishness and false economy of their elders.

And now, instead of helping our kids, we're letting people like Ginny Foxx demonize them. Or we're letting candidates like Mitt Romney say all the right things, then push for only the bare minimum needed to placate the public - and protect the banks, which is their real agenda.

The choice is simple, really: We can do the right thing by the nation's young people - or we can let the banks slice and dice their futures and sell them to unwary buyers. We can give our kids the chance for a decent life, or let their hopes be run through the Wall Street meat grinder.

We welcomed them into this world with promises. Will we sell their dreams to Wall Street to be carted away on SLABs?

Protecting Fair Lending is Key to Our Economic Recovery

Alan Jenkins — Tue, 03 Apr 2012 11:01:05 -0400

Most Americans correctly understand that the economic meltdown was caused by a perfect storm of misconduct in the lending and financial industries and inadequate rules and enforcement. A 2010 Pew Financial Reform Project poll, for example, found that American likely voters overwhelmingly blamed banks for making unsustainable mortgages (42%) and too little regulation of Wall Street (24%) for the crisis.

Fewer are aware, however, of the role that racial bias and discrimination by lenders and brokers played in creating the crisis. Understanding that role and the tools available to correct it is key to ensuring our nation's full economic recovery.

Despite the progress we’ve made as a nation toward the goal of equal opportunity for all, significant barriers remain, especially when it comes to mortgage lending by banks and brokers. In a 2005 report using federal data that presaged the current crisis, for example, The Opportunity Agenda, the National Community Reinvestment Coalition, and the Poverty and Race Research Action Council warned that—even controlling for income—African-American and Latino borrowers were significantly more likely to be sold high cost, subprime loans than whites, despite the fact that as many as 50% of those borrowers qualified for prime loans. Racial inequity in lending actually increased with borrower income levels, and with the degree of neighborhood segregation.

Loans in these communities were more costly, and were frequently predatory, carrying hidden fees and conditions or marketed through deceptive practices. Some, for example, were designed with built-in rate adjustment features making them unsustainable over the loan’s lifespan.

More recently, a series of lawsuits and settlements have revealed pervasive patterns of racial discrimination in home lending. In December 2011, for example, the U.S. Department of Justice reached the largest fair lending settlement in its history with the lender Countrywide. The Department says that Countrywide discriminated on the basis of race and national origin against qualified African-American and Hispanic borrowers between 2004 and 2008, charging more than 200,000 of these borrowers higher fees and interest rates than non-Hispanic white borrowers, and steering borrowers of color into subprime loans.

The Justice Department has settled similar discrimination cases against AIG Federal Savings Bank, Wilmington Finance Inc., PrimeLending, C&F Mortgage Corporation, Midwest BankCentre, Citizens Republic Bancorp, Inc., and others, reinforcing the reality that these practices are pervasive.

Why would subprime lenders disproportionately target minority communities for risky loans and, often, deceptive and predatory lending practices? There are several possibilities. Many minority neighborhoods, even middle-classed ones, lack banks or other traditional lending institutions, making them more susceptible to exploitation. People of color are more likely to be first generation homebuyers, with fewer sources of information, experience, or advice. Many lenders assume them to be poor credit risks, even when they are well qualified for traditional loans.

Lenders’ discriminatory treatment toward communities of color previewed and paralleled exploitative practices that they visited upon moderate-income white communities, senior citizens, military servicemembers, and more broadly. Today, consequently, we are all in it together, with some two million homes in foreclosure. In addition to homeowners, the mortgage crisis is displacing millions of renters whose landlords are in default.

Fortunately, solutions exist that can put homeownership back on track, repair devastated communities, and restore the promise of equal opportunity and fair housing for all Americans. Just as the Obama administration has correctly insisted on a review of loans to servicemembers, for instance, they should demand a review of loans in communities with high concentrations of discriminatory and predatory loan practices. The administration should direct the Treasury Department to issue long-overdue civil rights and fair housing regulations for programs it oversees. And Congress should modernize the Community Reinvestment Act to reach a wider range of institutions and to strengthen equal opportunity protections.

Other needed reforms include increasing homeowners’ access to financial counseling, reducing the principal of loans owned or backed by Fannie Mae and Freddie Mac, and maintaining a government role in the secondary mortgage market to ensure that qualified working Americans of all races have access to 30-year fixed mortgages going forward.

Acknowledging the role that racial bias has played in the financial and mortgage crisis is crucial to understanding the scope and scale of that crisis. Concrete steps toward greater and more equal opportunity for all are important to ending it.

American Workers: The Best Bet

Leo Gerard — Tue, 06 Mar 2012 09:35:05 -0500

Remember the fear in 2008? Think of the collapse of Bear Stearns and Lehman Brothers. Wall Street melting down. Pension savings disappearing. Housing values plunging and foreclosures skyrocketing. Three million workers losing their jobs.

It had all the makings of another Great Depression. As Barack Obama took office on Jan. 20, 2009, he faced a dilemma. In this crisis he could play it safe and hold steady on his predecessor’s path of pampering the rich and pandering to corporations, pretending that possibly, eventually, some benefit would trickle down to workers. Or President Obama could keep candidate Obama’s promises of change.

He went with change. He focused on workers, believing restoration of the nation’s great middle would drive economic recovery for all. He secured an economic stimulus package and rescued the American auto industry. Both measures worked to halt, and eventually reverse, the previous year’s relentless economic decline. Both, as well as other changes President Obama has proposed, emphasize creating and securing jobs for everyday workers. He wagered on American workers. And it paid off.

As unemployment slowly eases, as the Big Three automakers report huge profits and hire workers, as the stock market slowly climbs and foreclosures slowly drop, Republicans, particularly the GOP presidential candidates, refute it all. They simply deny that the stimulus created the 1.2 to 3.3 million jobs that the non-partisan Congressional Budget Office reports it did. They continue to insist that America should have let Detroit go bankrupt. Instead of betting on American workers, they would double down on Bush’s tax breaks for the rich, subsidies for fabulously profitable corporations and deregulation of Wall Street.

GOP front runner Mitt Romney supported the government bailout for Wall Street but opposed rescuing GM and Chrysler. Like so many Republicans, he’s all for preserving the jobs and institutions and million dollar bonuses for executives. But Republicans offer nothing but cutbacks and pain for workers.

They want to cut back food stamps, raise the retirement age, slash funds for education and Pell Grants for college, slice Medicaid and repeal the health care reform law that will lower the deficit while enabling 32 million uninsured American to get coverage. At the same time, all four GOP presidential contenders would lower or eliminate corporate taxes and further cut levies on the wealthiest so much that their budget plans would increase the national deficit that they’re so keen to criticize.

They’re betting that more tax cuts for the rich will prompt reinvestment and economic resurgence. That’s the gamble former President Bush took when he twice cut taxes on the wealthiest. After seven years, here’s how Bush’s bet on the rich paid off: the economy and jobs were contracting at an alarming rate. Remember the fear in 2008?

Now, three years later, after President Obama placed his faith in workers, the nation’s economic outlook is brighter. As is that of GM and Chrysler.

Both companies suffered managed bankruptcies. Tens of thousands of workers lost jobs. Retirees took health care benefit cuts. Remaining workers accepted pay reductions. Plants and dealerships closed. It was pain all around.

Now, GM is back as the world’s number one automaker, making the highest profits in its history. Chrysler is growing faster than any other American car company. Ford is investing $16 billion in its American operations and plans to bring thousands of jobs back from overseas. Altogether, the industry added 200,000 jobs. In addition, rescuing the industry meant preserving hundreds of thousands of jobs in auto parts factories across America, and all the service jobs they support.

Here’s what President Obama told the 2012 United Auto Workers convention about his wager on them:

“I placed my bet on American workers. And I’d make that same bet again any day of the week. Because three years later, that bet is paying off for America. Three years later, the American auto industry is back.”

In the past few weeks, President Obama has doubled down on his wager on working Americans. He has called for a tax break reversal – ending the deal corporations get for shipping jobs overseas and instead giving it to those who move jobs back on shore. And, just last week, he demanded an end to the $4 billion in subsidies that taxpayers give massively-profitable oil and gas companies, explaining:

“You can either stand up for oil companies, or you can stand up for the American people.”

Republicans immediately attacked the President for the proposal. They criticized him for talking to the auto workers as well. While Republicans regard workers in general as second class citizens, not to be given the deference they reserve for the rich, members of the GOP particularly despise auto workers because they’re members of a labor union. Republican lawmakers hate unions – maybe even more than they loathe President Obama. They can’t tolerate any organization of workers that succeeded in bargaining with fat cat factory owners for weekends off, paid sick days, good pensions and middle class wages, even though the GOP lawmakers themselves benefit from decades of union activism by receiving weekends off, paid sick days, good pensions and very decent wages.

Obama, by contrast, told the auto workers he was honored to be with them, to bet on them:

“It’s unions like yours that fought for jobs and opportunity for generations of American workers. It’s unions like yours that helped build an arsenal of democracy that defeated fascism. It is unions like yours that forged the American middle class – the greatest engine of prosperity the world has ever known.”

It’s a sure bet: Wagering on workers is a winner.

Mother America Always Loved Manufacturing Most

Leo Gerard — Tue, 28 Feb 2012 09:28:56 -0500

There’s just something about manufacturing. Ask Rosie the Riveter. Ask the computer geeks and artists across America who create “Hacker Space” workshops to help each other invent and fabricate to their imaginations’ content.

Yeah, it’s cool to make stuff. The “maker,” whether an inventor or engineer or welder gets a thrill out of performing work that results in visible, viable products. Manufacturing also gives the “makers” the feeling of empowerment that can be seen all over Rosie the Riveter’s face.

Manufacturing is powerful. And power is coveted. That’s why mother America always loved manufacturing most. Since the early days of this country, visionary political leaders like Alexander Hamilton and Abraham Lincoln nurtured manufacturing. They knew manufacturing builds a country’s economic strength. And the capacity to manufacture secures a nation’s military might. So President Obama’s focus on reviving American manufacturing, including his proposal last week to give American manufacturers a small tax break, is wise, even if the banking brother and service sector sister feel aggrieved as a result.

President Obama said in his State of the Union address that his goal was to forge an economy built to last. That, he said, would be based on American manufacturing and American know-how, American-made energy and skilled American workers.

Since then, he has talked up his plans to reinvigorate manufacturing during several factory tours. At Master Lock in Milwaukee, Wis., he applauded the company for bringing 100 jobs back to America from overseas. The tax code should reflect that, the President said. He proposed the government give tax breaks to companies that on-shore jobs, instead of granting them to those that offshore.

It’s illogical, even unpatriotic to use tax dollars to subsidize companies that send jobs overseas, transferring America’s manufacturing power to foreign countries like China.

Later, in Everett, Wash., President Obama lauded The Boeing Co. for manufacturing planes in America. Orders for Boeing’s commercial aircraft rose by more than 50 percent last year, and it hired 13,000 Americans.

During a tour of the plant where Boeing manufactures its 787 Dreamliner, the President said:

“We can’t go back to an economy that was weakened by outsourcing and bad debt and phony financial profits.”

While Wall Street’s financial gambling took down the nation’s economy, the solid, steady, circumspect practices of manufacturers are facilitating recovery. No wonder manufacturing is the favored child.

Manufacturing, Obama pointed out, supports jobs throughout the economy, from mines to machines shops to malls. At the Boeing plant, he said:

“Every Dreamliner that rolls off the assembly line here in Everett supports thousands of jobs in different industries all across the country. Parts of the fuselage are manufactured in South Carolina and Kansas. Wing edges, they come from Oklahoma. Engines are assembled in Ohio. The tail fin comes from right down the road in Frederickson.”

In addition, those supply chain factory workers, whose jobs pay about eight percent more than comparable ones outside manufacturing, support service sector jobs in their communities.

All of that explains the government loans to car manufacturers GM and Chrysler. It would have been devastating for the country to lose the industrial might and capacity of GM and Chrysler. In addition, at risk were 150,000 jobs at the two carmakers and untold hundreds of thousands of other manufacturing jobs at car part factories across the country and at real estate offices and restaurants and retailers.

Four years later, GM and Chrysler are profitable, repaying the loans with interest, and hiring workers. Still, the number of jobs at the Big Three auto companies is down by about 150,000 over the past five years, reflecting the overall job losses in manufacturing in America. Over the past 40 years, manufacturing employment declined from 25 percent to 9 percent, as manufacturing output fell from 25 percent of GDP to 12 percent.

Some of that loss is unavoidable as robots replace humans, but economist Jared Bernstein, senior fellow at the Center on Budget and Policy Priorities, says, “a lot of it has to do with bad policy.” The government picks winners and losers all the time with tax policy and subsidies and other measures. “It’s just not very smart about it,” Bernstein says. For example, it provides billions in subsidies to corporations to move jobs offshore.

A report called “Why Does Manufacturing Matter” by the Brookings Institution says government traditionally fostered manufacturing:

“History also reveals. . .there is no transformative investment that reshaped our economy, from railroads to the Internet, where the federal government did not partner with the private sector to overcome . . . barriers. . .To ignore this reality in the name of “not picking winners” . . .or whatever misguided ideology you want to plug in, is to concede global competition to those unburdened by such dangerously wrongheaded thinking.”

President Obama believes that. His mantra over the past two months has been:

“I want us to make stuff.”

And he openly admits the nation has a favored child, saying:

“Manufacturing has a special place in America.”

We, The People Have To Say, "No You Can't Do That"

Dave Johnson — Tue, 21 Feb 2012 14:06:23 -0500

In Will We Choose A Chinese Future, David Sirota asks the core question: "Do we accept an economic competition that asks us to emulate China?" THIS is the choice that the "job creators" are demanding that we make when they say we need to be more "business friendly." THIS is what they are asking us to do to ourselves when they say that less government, less regulation, lower taxes, anti-union "right-to-work" laws, and the rest of the corporate-conservative litany is what will restore the economy and "create jobs."

We, the People have to say, "No, you can't do that."

It's Not Low Wages, It's Low Democracy

The reason so many factories have moved to China is not just price, it is because they do things a democracy cannot allow. Steve Jobs famously said, "Those jobs aren't coming back," because over there they make people live in dormatories at the factory and can roust them at midnight and make them work 12-14 hour days, seven days a week, using toxic chemicals. Richard Eslow lays it out in, Hell Is Cheaper: China, Apple, And The Economics Of Horror,

Companies like Apple don't outsource to China because the workforce is better-educated or more highly motivated. They don't even outsource just because the labor is cheaper there. They outsource because employers who defraud their workers can make products more cheaply, and those who ignore their safety can produce them more quickly. [...] It's possible that Steve Jobs and other outsourcing executives really think that "those jobs aren't coming back" because they expect it will always be impossible to underbid the Chinese - because they don't believe Chinese workers will ever be protected by law.

That's the inexorable logic of the unrestrained and unregulated market. If things don't change, there will be no stopping the outflow of employment from the safe and the stable to the cheated, the endangered, and the abused. Bad ethics drives out good ethics.

Jobs is saying that those jobs and companies and factories are not coming back because over there the workers can be forced to do those things, because they don't have a say. They don't have We, the People democracy like we do, so they can't do anything about it. And our trade agreements allow our companies to close our factories here and force our workers to compete with that.

We can’t ever be “business-friendly” ENOUGH. We have to do something else. We have to understand that We, the People -- the 99% -- are in a real fight here to keep our democracy, or we will lose what is left of it.

We, the People have to say, "No, you can't do that." We have to say it to the companies that move jobs to China, where people have no say and are exploited. And we have to say that goods made by people with no say cannot be brought into our country without a strong tariff. We should use the funds brought in by that tariff to subsidize goods made here so they can compete in world markets. Otherwise we are making democracy into a competitive disadvantage. And if countries like China don't like it, they can give their people a say, pay them decent wages, and protect their environment. That would be a race to the top instead of the current race to the bottom.

The Climate Change Denial Industry

Oil and coal companies are funding a "denial industry" to keep us from doing what needs to be done to rescue the planet's climate. They make billions upon billions from pumping carbon into the air, and block efforts to cut back their polluting. Modeled after the tobacco denial industry and its "doubt is our product" strategy, they fight efforts to move us to green energy sources. They even direct their propaganda to attack electric cars and high-speed rail.

We, the People have to say, "No, you can't do that."

The Too-Big Banks

It's the same story with the biggest banks. They pushed debt on us. They used their power to gut regulations and then took huge risks that crashed the economy. They demanded taxpayer money to rescue them without even cutting back the huge salaries and bonuses. And then they funded propaganda that blamed us, the poor, the government, public employees, unions -- anyone but themselves. And they used their vast power and wealth to block investigations and accountability, forcing "settlements" that make their shareholders and their employees and their customers pay.

We, the People have to say, "No, you can't do that."

Other Examples

There are many, many other examples of wealthy, powerful interests - "the 1%" - using their wealth and power to make us do things that benefit themselves at the expense of the rest of us. And as this continues life for "the 99%" gets harder and bleaker and we fall further and further behind.

In all of these example We, the People have to say, "No, you can't do that."

That's What Government Is

Government is We, the People banding together to watch out for and take care of each other. Government is We, the People saying to the wealthy and powerful, "No, you can't do that."

When the1%ers demand "less government" they are using their power and propaganda to force us into a position where we are less able to say to them, "No, you can't do that."

We, the People have to say, "No, you can't do that." Until we do, they will do that, and that, and that.