Obama Should Be Attacking Casino Capitalism

By Robert Reich, cross-posted from his website
 

I wish President Obama would draw the obvious connection between Bain Capital and JPMorgan Chase.

That way his so-called “attack” on private equity is neither a personal attack on Mitt Romney nor a generalized attack on American business.

It’s an attack on a particular kind of capitalism that Romney and JPMorgan both practice: Using other peoples’ money to make big bets which, if they go wrong, can wreak havoc on the economy.
It’s the substitution of casino capitalism for real capitalism, the dominance of the betting parlor over the real business of America, financial innovation rather than product innovation.

It’s been terrible for the American economy and for our democracy.

It’s also why Obama has to come out swinging about JPMorgan. The JPMorgan Chase debacle would have been prevented if the Volcker Rule were sufficiently strict, prohibiting banks from using commercial deposits to make bets except very specific offsetting bets (hedges) on narrow classes of trades.

But Jamie Dimon and JPMorgan have been lobbying like mad to loosen the Volcker Rule and widen that exception to include the very kind of reckless bets JPMorgan made. And they’re still at it, as evidenced by Dimon’s current claim that the rule that eventually emerges would allow those bets.

As a practical matter, the Volcker Rule is hopeless. It was intended to be Glass-Steagall lite — a more nuanced version of the original Depression-era law that separated commercial from investment banking. But JPMorgan has proven that any nuance — any exception — will be stretched beyond recognition by the big banks.

So much money can be made when these bets turn out well that the big banks will stop at nothing to keep the spigot open.

There’s no alternative but to resurrect Glass-Steagall as a whole. Even then, the biggest banks are still too big to fail or to regulate. We also need to heed the recent advice of the Dallas branch of the Federal Reserve, and break them up.

At the same time, there’s no point to the “carried interest” loophole that allows private-equity managers like Mitt Romney to treat their incomes as capital gains, taxed at only 15 percent, when they’ve risked no money of their own.

If private equity were good for America it wouldn’t need this or the other tax preference it depends on, elevating debt over equity. But the private equity industry has huge political clout, which is why these tax preferences remain.

Get it? Bain Capital and JPMorgan are parts of the same problem. The President should be leading the charge against both.

Wall Street, Romney, And Obama

By Mike Lux, cross-posted from Crooks and Liars

The most critical battle in this election year is the battle over Wall Street. Candidates all over the place, from the high profile candidates like Elizabeth Warren to a slew of others all over the country, are battling over who is on Wall Street’s side, who wants to keep bailing them out, and who is pushing them to go to jail. But nowhere is this battle being played out more prominently than in the race for the White House.

The Obama campaign is doing a major push in the coming weeks on Mitt Romney’s sordid history at the helm of Bain Capital. His fellow Republicans called it vulture capitalism, and they were right. Mitt bought companies (many of them doing just fine at the time he bought them), loaded them up with massive amounts of debt that Bain could write off on their taxes, in many cases destroyed and outsourced jobs and cut pay and benefits, and then frequently carved them up and sold off the pieces to maximize short-term profits. A few of these companies ended up surviving this brutal process and becoming more profitable, and we will hear a lot from Mitt about those examples. But way too many times, Mitt and Bain left these companies, and especially their workers, far worse for the wear, leaving behind a lot of shattered lives in the process, while Mitt and his fun-loving pals stuffed money in their pockets and walked away. High School wasn’t the only place Mitt brutalized those weaker than him, and he enjoyed doing it.

Bain Capital was Wall Street at its worst. But the cutthroat, anything-goes-in-the-pursuit-of-one-more-dollar culture at Bain has infected our entire banking system. The Obama campaign is right to attack on Bain and on the culture of Wall Street; it is in my view their single most powerful attack line. However, that attack will be undercut unless they buttress their own credibility on taking on Wall Street. Republicans aren’t going to hesitate coming after Obama hard on his ties to Wall Street (ironically with a lot of Wall Street money) in order to weaken the campaign’s credibility when they attack Bain, and we are seeing signs of that right now.

Look at how the issue has played out in recent days. Over the course of the last week, we have seen Jamie Dimon twisting himself into a pretzel trying to explain why his bank’s dangerous and irresponsible trades don’t merit any regulation, stories on how the Obama campaign is being hurt by not being tougher on Wall Street, like this one from Politico, a major new ad campaign by a Republican group attacking Obama for his ties to Wall Street, and new polling paid for by an anti-Wall Street coalition showing Obama’s numbers on housing/banking issues in swing states being pretty bad. These issues are clearly going to be huge in this campaign, and the Republicans will do everything in their power to exploit any Obama weakness in this area.

The Obama team, in the White House and in the campaign, in order to win on the Bain attack, needs to face—and turn around —the perception that the administration has been weak on Wall Street. They need to be willing to shed past caution and take Wall Street titans head on.

One of the toughest problems they have to work through is that the most visible vehicle for action on holding Wall Street accountable is the financial fraud task force announced with great fanfare at the State of the Union. This task force raised hopes that an aggressive investigation was forthcoming, that perhaps some of the big bankers who intentionally pumped up the housing market and then dumped the securities, would be brought to justice. But the best case scenario (and that is only if things really start moving) is that indictments won’t start rolling out until September, and that is a very long time to wait given the narrative being written as we speak on the Wall Street issue. And even in terms of that best case scenario, unfortunately questions continue to be raised by sources I am talking to about whether the DOJ is slow-walking this investigation, whether enough resources are being given to the task force, and whether key staff at the White House are paying enough attention. Those questions ultimately won’t be answered until the task force starts to produce something tangible, and if we have to wait until the fall, these questions are going to keep building.

The administration should act right now to give the DOJ much more in the way of staff resources to the task force, and the President and White House senior staff need to send signals that they care about what is going on and that this is a high priority for them. If, for example, the DOJ is slow-walking, the White House needs to lean hard on the DOJ to make sure they aren’t. It seems like politics 101 to me to make sure the task force has the person-power to be successful in its work, but they are failing the test.

Given that (even with extra resources, by the way) the task force isn’t going to be moving fast enough for any of us who care about the political calendar, the entire Obama administration needs to show every day that they are willing to take on the big banks on behalf of homeowners, students, credit card consumers, and everyone else who is getting taken advantage of every day by bankers. Their reaction to the JP Morgan news, for example, has been far too low key. They should be banging away on Dimon and the other speculative bankers every single day, using this news to drive and build a narrative about reckless bankers rather than being restrained in their messaging about it. When a retiring bank CEO mentions in passing that the repeal of Glass-Steagall had something to do with the banking collapse, they should have used that as part of their narrative, too. Same when a trader at Goldman Sachs quits because the ethics at the firm have gone so far south. In every case, these were tailor-made opportunities for the White House and campaign to jump in with both feet and build that narrative about how this is why we need a President willing to take on bankers rather one who was the worst kind of one at Bain Capital.

Speaking of message restraint, though, there is some major restraint they do need to employ, and that is on their lame duck Treasury Secretary. In recent weeks, Geithner has stabbed the task force in the back by downplaying banker fraud, has rejected the idea that the repeal of Glass-Steagall was a problem in the 2008 collapse, and has similarly dismissed credit default swaps as a big problem. He seems more like a spokesperson for Wall Street than a member of the Obama administration. He needs to be shut up or eased out before he destroys any chance of the President getting re-elected.

Team Obama is on the knife’s edge right now. The economy is still too slow, with too many bridges out along the way, to build up much if any speed as we head down the home stretch to the election. Even if it does pick up a little bit, voters are still in a very bad mood because things have been so slow for so long. Focusing voters’ ire on the people who set off this crisis, the Wall Street pump-and-dump gang, is our best shot at winning this election, most especially with one of their ultimate homies, Mitt Romney, as the Republican candidate. But for that to work, the White House and campaign need to be focused like a laser beam at telling the story of how Wall Street greed brought us down, and how putting Wall Street’s guy in the White House would be the ultimate mistake—and they need to have their own credibility in terms of holding Wall Street accountable built up considerably. Getting resources to the fraud task force and making sure everyone at the DOJ knows it is a priority is a huge deal in that regard. Bottom line: Team Obama needs to be focused on the Wall Street credibility dynamic every single day.

Bain Capital shows that Mitt Romney’s high school career was no fluke: He has proven himself to be the ultimate pick-on-the-weak bully. His Wall Street values are definitional about the kind of man he has always been. Obama needs to show that his values are the opposite by being tough on Wall Street, while Romney is shown to be the personification of it.

Using The Poor As Piggy Banks

By Barbara Ehrenreich, cross-posted from TomDispatch

Individually the poor are not too tempting to thieves, for obvious reasons. Mug a banker and you might score a wallet containing a month’s rent. Mug a janitor and you will be lucky to get away with bus fare to flee the crime scene. But as Business Week helpfully pointed out in 2007, the poor in aggregate provide a juicy target for anyone depraved enough to make a business of stealing from them.

The trick is to rob them in ways that are systematic, impersonal, and almost impossible to trace to individual perpetrators. Employers, for example, can simply program their computers to shave a few dollars off each paycheck, or they can require workers to show up 30 minutes or more before the time clock starts ticking.

Lenders, including major credit companies as well as payday lenders, have taken over the traditional role of the street-corner loan shark, charging the poor insanely high rates of interest. When supplemented with late fees (themselves subject to interest), the resulting effective interest rate can be as high as 600% a year, which is perfectly legal in many states.

It’s not just the private sector that’s preying on the poor. Local governments are discovering that they can partially make up for declining tax revenues through fines, fees, and other costs imposed on indigent defendants, often for crimes no more dastardly than driving with a suspended license. And if that seems like an inefficient way to make money, given the high cost of locking people up, a growing number of jurisdictions have taken to charging defendants for their court costs and even the price of occupying a jail cell.

The poster case for government persecution of the down-and-out would have to be Edwina Nowlin, a homeless Michigan woman who was jailed in 2009 for failing to pay $104 a month to cover the room-and-board charges for her 16-year-old son’s incarceration. When she received a back paycheck, she thought it would allow her to pay for her son’s jail stay. Instead, it was confiscated and applied to the cost of her own incarceration.


Government Joins the Looters of the Poor

You might think that policymakers would take a keen interest in the amounts that are stolen, coerced, or extorted from the poor, but there are no official efforts to track such figures. Instead, we have to turn to independent investigators, like Kim Bobo, author of Wage Theft in America, who estimates that wage theft nets employers at least $100 billion a year and possibly twice that. As for the profits extracted by the lending industry, Gary Rivlin, who wrote Broke USA: From Pawnshops to Poverty, Inc. -- How the Working Poor Became Big Business, says the poor pay an effective surcharge of about $30 billion a year for the financial products they consume and more than twice that if you include subprime credit cards, subprime auto loans, and subprime mortgages.

These are not, of course, trivial amounts. They are on the same order of magnitude as major public programs for the poor. The government distributes about $55 billion a year, for example, through the largest single cash-transfer program for the poor, the Earned Income Tax Credit; at the same time, employers are siphoning off twice that amount, if not more, through wage theft.

And while government generally turns a blind eye to the tens of billions of dollars in exorbitant interest that businesses charge the poor, it is notably chary with public benefits for the poor. Temporary Assistance to Needy Families, for example, our sole remaining nationwide welfare program, gets only $26 billion a year in state and federal funds. The impression is left of a public sector that’s gone totally schizoid: on the one hand, offering safety-net programs for the poor; on the other, enabling large-scale private sector theft from the very people it is supposedly trying to help.

At the local level though, government is increasingly opting to join in the looting. In 2009, a year into the Great Recession, I first started hearing complaints from community organizers about ever more aggressive levels of law enforcement in low-income areas. Flick a cigarette butt and get arrested for littering; empty your pockets for an officer conducting a stop-and-frisk operation and get cuffed for a few flakes of marijuana. Each of these offenses can result, at a minimum, in a three-figure fine.

And the number of possible criminal offenses leading to jail and/or fines has been multiplying recklessly. All across the country -- from California and Texas to Pennsylvania -- counties and municipalities have been toughening laws against truancy and ratcheting up enforcement, sometimes going so far as to handcuff children found on the streets during school hours. In New York City, it’s now a crime to put your feet up on a subway seat, even if the rest of the car is empty, and a South Carolina woman spent six days in jail when she was unable to pay a $480 fine for the crime of having a “messy yard.” Some cities -- most recently, Houston and Philadelphia -- have made it a crime to share food with indigent people in public places.

Being poor itself is not yet a crime, but in at least a third of the states, being in debt can now land you in jail. If a creditor like a landlord or credit card company has a court summons issued for you and you fail to show up on your appointed court date, a warrant will be issued for your arrest. And it is easy enough to miss a court summons, which may have been delivered to the wrong address or, in the case of some bottom-feeding bill collectors, simply tossed in the garbage -- a practice so common that the industry even has a term for it: “sewer service.” In a sequence that National Public Radio reports is “increasingly common,” a person is stopped for some minor traffic offense -- having a noisy muffler, say, or broken brake light -- at which point the officer discovers the warrant and the unwitting offender is whisked off to jail.

Local Governments as Predators

Each of these crimes, neo-crimes, and pseudo-crimes carries financial penalties as well as the threat of jail time, but the amount of money thus extracted from the poor is fiendishly hard to pin down. No central agency tracks law enforcement at the local level, and local records can be almost willfully sketchy.

According to one of the few recent nationwide estimates, from the National Association of Criminal Defense Lawyers, 10.5 million misdemeanors were committed in 2006. No one would risk estimating the average financial penalty for a misdemeanor, although the experts I interviewed all affirmed that the amount is typically in the “hundreds of dollars.” If we take an extremely lowball $200 per misdemeanor, and bear in mind that 80%-90% of criminal offenses are committed by people who are officially indigent, then local governments are using law enforcement to extract, or attempt to extract, at least $2 billion a year from the poor.

And that is only a small fraction of what governments would like to collect from the poor. Katherine Beckett, a sociologist at the University of Washington, estimates that “deadbeat dads” (and moms) owe $105 billion in back child-support payments, about half of which is owed to state governments as reimbursement for prior welfare payments made to the children. Yes, parents have a moral obligation to their children, but the great majority of child-support debtors are indigent.

Attempts to collect from the already-poor can be vicious and often, one would think, self-defeating. Most states confiscate the drivers’ licenses of people owing child support, virtually guaranteeing that they will not be able to work.  Michigan just started suspending the drivers’ licenses of people who owe money for parking tickets.  Las Cruces, New Mexico, just passed a law that punishes people who owe overdue traffic fines by cutting off their water, gas, and sewage.


Once a person falls into the clutches of the criminal justice system, we encounter the kind of slapstick sadism familiar to viewers of Wipeout. Many courts impose fees without any determination of whether the offender is able to pay, and the privilege of having a payment plan will itself cost money.

In a study of 15 states, the Brennan Center for Justice at New York University found 14 of them contained jurisdictions that charge a lump-sum “poverty penalty” of up to $300 for those who cannot pay their fees and fines, plus late fees and “collection fees” for those who need to pay over time. If any jail time is imposed, that too may cost money, as the hapless Edwina Nowlin discovered, and the costs of parole and probation are increasingly being passed along to the offender.

The predatory activities of local governments give new meaning to that tired phrase “the cycle of poverty.” Poor people are more far more likely than the affluent to get into trouble with the law, either by failing to pay parking fines or by incurring the wrath of a private-sector creditor like a landlord or a hospital.

Once you have been deemed a criminal, you can pretty much kiss your remaining assets goodbye. Not only will you face the aforementioned court costs, but you’ll have a hard time ever finding a job again once you’ve acquired a criminal record. And then of course, the poorer you become, the more likely you are to get in fresh trouble with the law, making this less like a “cycle” and more like the waterslide to hell.  The further you descend, the faster you fall -- until you eventually end up on the streets and get busted for an offense like urinating in public or sleeping on a sidewalk.

I could propose all kinds of policies to curb the ongoing predation on the poor. Limits on usury should be reinstated. Theft should be taken seriously even when it’s committed by millionaire employers. No one should be incarcerated for debt or squeezed for money they have no chance of getting their hands on. These are no-brainers, and should take precedence over any long term talk about generating jobs or strengthening the safety net. Before we can “do something” for the poor, there are some things we need to stop doing to them.

Barbara Ehrenreich, a TomDispatch regular, is the author of Nickel and Dimed: On (Not) Getting By in America (now in a 10th anniversary edition with a new afterword). She is most recently the founder of the just-launched Economic Hardship Reporting Project, which supports innovative journalism on poverty and economic hardship.

Robert Reich Explains How We Need A New Era Of Reform Based On Public -- Not Private -- Morality

Romney Has Public Morality And Private Morality Upside Down

by Robert Reich, cross-posted from his website



Mitt Romney’s reaction to J.P. Morgan Chase’s mounting losses from reckless trades is “the market will take care of it.” His spokesman says “no taxpayer money was at risk” so we don’t need more financial regulation. Romney has even promised to repeal Dodd-Frank if he’s elected president.

Yet at the same time, Romney has come out strongly against same-sex marriage. He’s also against abortion. He has no problem with government intruding on the most intimate of decisions a person makes.

He’s got private and public morality upside down. He doesn’t want to regulate where regulation is necessary — at the highest reaches of the economy, where public immorality has cost us dearly, and will cost even more unless boardroom behavior is constrained. Yet he wants to regulate where regulation is least appropriate — at the level of the individual, in bedrooms and other intimate spaces, where private morality should govern.

This is a dangerous confusion. It should be a matter of personal choice whom to marry and when to have children. But it is undoubtedly a matter of public choice whether big banks should be allowed to take the kind of risky bets that plunged the economy into the worst downturn since the Great Depression, and whether people with great wealth and should be able to buy our democracy with huge campaign contributions.

Please see the attached video and pass it on.

 Robert Reich is Chancellor's Professor of Public Policy at the University of California at Berkeley.  He writes a blog at www.robertreich.org.  His most recent book is Beyond Outrage.

JP Morgan: Bank Or Casino?

Robbie Conal

The New York Times reports that JP Morgan, "which emerged from the financial crisis as the nation’s biggest bank, disclosed on Thursday that it had lost more than $2 billion in trading, a surprising stumble that promises to escalate the debate over whether regulations need to rein in trading by banks."  Its CEO, Jamie Dimon, blamed “errors, sloppiness and bad judgment” for the loss, which stemmed from "a hedging strategy that backfired."

Surprising?  Hardly.  As Travis Waldon writes at ThinkProgress, these are the kind of errors that "could have been prevented were it not for extensive lobbying efforts from banks like JPMorgan, which has spent nearly $10 million on lobbying since the beginning of 2011 (including nearly $2 million already this year)."

Robert Reich reminds us that Dimon has incessantly argued against government regulation of Wall Street:

Last year he vehemently and loudly opposed the so-called Volcker rule, itself a watered-down version of the old Glass-Steagall Act that used to separate commercial from investment banking before it was repealed in 1999, saying it would unnecessarily impinge on derivative trading (the lucrative practice of making bets on bets) and hedging (using some bets to offset the risks of other bets).

And since then, Reich continues, "J.P. Morgan’s lobbyists and lawyers have done everything in their power to eviscerate the Volcker rule — creating exceptions, exemptions, and loopholes that effectively allow any big bank to go on doing most of the derivative trading it was doing before the near-meltdown."

As Waldon writes, "Thursday’s events prove that Wall Street hasn’t learned its lesson from the last crisis, and that America’s 'too big to fail' institutions are too irresponsible to avoid failure. The Volcker Rule, watered down as it may be, is aimed at preventing that. Unfortunately, Dimon and his Wall Street colleagues remain committed to making sure it won’t."

Matt Taibbi explains why we should care "if some idiot trader (who apparently has been making $100 million a year at Chase, a company that has been the recipient of at least $390 billion in emergency Fed loans) loses $2 billion for Jamie Dimon."

Because J.P. Morgan Chase is a federally-insured depository institution that has been and will continue to be the recipient of massive amounts of public assistance. If the bank fails, someone will reach into your pocket to pay for the cleanup. So when they gamble like drunken sailors, it’s everyone’s problem.

Taibbi concludes:

 If J.P. Morgan Chase wants to act like a crazed cowboy hedge fund and make wild exacta bets on the derivatives market, they should be welcome to do so. But they shouldn’t get to do it with cheap cash from the Fed’s discount window, and they shouldn’t get to do it with money from the federally-insured bank accounts of teachers, firemen and other such real people. It’s a simple concept: you either get to be a bank, or you get to be a casino. But you can’t be both. If we don’t have rules to enforce that concept, we ought to get some.

Occupy Heads Into The Spring

Mad, Passionate Love -- And Violence.  Or Why The Media Loves The Violence Of Protestors And Not Of Banks.

By Rebecca Solnit, cross-posted from Tom Dispatch

Robbie Conal

When you fall in love, it’s all about what you have in common, and you can hardly imagine that there are differences, let alone that you will quarrel over them, or weep about them, or be torn apart by them -- or if all goes well, struggle, learn, and bond more strongly because of, rather than despite, them. The Occupy movement had its glorious honeymoon when old and young, liberal and radical, comfortable and desperate, homeless and tenured all found that what they had in common was so compelling the differences hardly seemed to matter.

Until they did.

Revolutions are always like this: at first all men are brothers and anything is possible, and then, if you’re lucky, the romance of that heady moment ripens into a relationship, instead of a breakup, an abusive marriage, or a murder-suicide. Occupy had its golden age, when those who never before imagined living side-by-side with homeless people found themselves in adjoining tents in public squares.

All sorts of other equalizing forces were present, not least the police brutality that battered the privileged the way that inner-city kids are used to being battered all the time. Part of what we had in common was what we were against: the current economy and the principle of insatiable greed that made it run, as well as the emotional and economic privatization that accompanied it.

This is a system that damages people, and its devastation was on display as never before in the early months of Occupy and related phenomena like the “We are the 99%” website. When it was people facing foreclosure, or who’d lost their jobs, or were thrashing around under avalanches of college or medical debt, they weren’t hard to accept as us, and not them.

And then came the people who’d been damaged far more, the psychologically fragile, the marginal, and the homeless -- some of them endlessly needy and with a huge capacity for disruption. People who had come to fight the power found themselves staying on to figure out available mental-health resources, while others who had wanted to experience a democratic society on a grand scale found themselves trying to solve sanitation problems.

And then there was the violence.



The Faces of Violence 

The most important direct violence Occupy faced was, of course, from the state, in the form of the police using maximum sub-lethal force on sleepers in tents, mothers with children, unarmed pedestrians, young women already penned up, unresisting seated students, poets, professors, pregnant women, wheelchair-bound occupiers, and octogenarians. It has been a sustained campaign of police brutality from Wall Street to Washington State the likes of which we haven’t seen in 40 years.

On the part of activists, there were also a few notable incidents of violence in the hundreds of camps, especially violence against women. The mainstream media seemed to think this damned the Occupy movement, though it made the camps, at worst, a whole lot like the rest of the planet, which, in case you hadn’t noticed, seethes with violence against women. But these were isolated incidents.

That old line of songster Woody Guthrie is always handy in situations like this: “Some will rob you with a six-gun, some with a fountain pen.” The police have been going after occupiers with projectile weapons, clubs, and tear gas, sending some of them to the hospital and leaving more than a few others traumatized and fearful. That’s the six-gun here.

But it all began with the fountain pens, slashing through peoples’ lives, through national and international economies, through the global markets. These were wielded by the banksters, the “vampire squid,” the deregulators in D.C., the men -- and with the rarest of exceptions they were men -- who stole the world.

That’s what Occupy came together to oppose, the grandest violence by scale, the least obvious by impact. No one on Wall Street ever had to get his suit besmirched by carrying out a foreclosure eviction himself. Cities provided that service for free to the banks (thereby further impoverishing themselves as they created new paupers out of old taxpayers).  And the police clubbed their opponents for them, over and over, everywhere across the United States.

The grand thieves invented ever more ingenious methods, including those sliced and diced derivatives, to crush the hopes and livelihoods of the many. This is the terrible violence that Occupy was formed to oppose. Don’t ever lose sight of that.

Oakland’s Beautiful Nonviolence 

Now that we’re done remembering the major violence, let’s talk about Occupy Oakland. A great deal of fuss has been made about two incidents in which mostly young people affiliated with Occupy Oakland damaged some property and raised some hell.

The mainstream media and some faraway pundits weighed in on those Bay Area incidents as though they determined the meaning and future of the transnational Occupy phenomenon.  Perhaps some of them even hoped, consciously or otherwise, that harped on enough these might divide or destroy the movement. So it’s important to recall that the initial impact of Occupy Oakland was the very opposite of violent, stunningly so, in ways that were intentionally suppressed.

Occupy Oakland began in early October as a vibrant, multiracial gathering. A camp was built at Oscar Grant/Frank Ogawa Plaza, and thousands received much-needed meals and healthcare for free from well-organized volunteers. Sometimes called the Oakland Commune, it was consciously descended from some of the finer aspects of an earlier movement born in Oakland, the Black Panthers, whose free breakfast programs should perhaps be as well-remembered and more admired than their macho posturing.

A compelling and generous-spirited General Assembly took place nightly and then biweekly in which the most important things on Earth were discussed by wildly different participants.  Once, for instance, I was in a breakout discussion group that included Native American, white, Latino, and able-bodied and disabled Occupiers, and in which I was likely the eldest participant; another time, a bunch of peacenik grandmothers dominated my group.

This country is segregated in so many terrible ways -- and then it wasn’t for those glorious weeks when civil society awoke and fell in love with itself. Everyone showed up; everyone talked to everyone else; and in little tastes, in fleeting moments, the old divides no longer divided us and we felt like we could imagine ourselves as one society. This was the dream of the promised land -- this land, that is, without its bitter divides. Honey never tasted sweeter, and power never felt better.

Now here’s something astonishing. While the camp was in existence, crime went down 19% in Oakland, a statistic the city was careful to conceal. "It may be counter to our statement that the Occupy movement is negatively impacting crime in Oakland," the police chief wrote to the mayor in an email that local news station KTVU later obtained and released to little fanfare. Pay attention: Occupy was so powerful a force for nonviolence that it was already solving Oakland’s chronic crime and violence problems just by giving people hope and meals and solidarity and conversation.

The police attacking the camp knew what the rest of us didn’t: Occupy was abating crime, including violent crime, in this gritty, crime-ridden city. “You gotta give them hope, “ said an elected official across the bay once upon a time -- a city supervisor named Harvey Milk. Occupy was hope we gave ourselves, the dream come true. The city did its best to take the hope away violently at 5 a.m. on October 25th. The sleepers were assaulted; their belongings confiscated and trashed. Then, Occupy Oakland rose again. Many thousands of nonviolent marchers shut down the Port of Oakland in a stunning display of popular power on November 2nd.

That night, some kids did the smashy-smashy stuff that everyone gets really excited about.  (They even spray-painted “smashy” on a Rite Aid drugstore in giant letters.) When we talk about people who spray-paint and break windows and start bonfires in the street and shove people and scream and run around, making a demonstration into something way too much like the punk rock shows of my youth, let’s keep one thing in mind: they didn’t send anyone to the hospital, drive any seniors from their homes, spread despair and debt among the young, snatch food and medicine from the desperate, or destroy the global economy.

That said, they are still a problem.  They are the bait the police take and the media go to town with.  They create a situation a whole lot of us don’t like and that drives away many who might otherwise participate or sympathize. They are, that is, incredibly bad for a movement, and represent a form of segregation by intimidation.


But don’t confuse the pro-vandalism Occupiers with the vampire squid or the up-armored robocops who have gone after us almost everywhere.  Though their means are deeply flawed, their ends are not so different than yours. There’s no question that they should improve their tactics or maybe just act tactically, let alone strategically, and there’s no question that a lot of other people should stop being so apocalyptic about it.

Those who advocate for nonviolence at Occupy should remember that nonviolence is at best a great spirit of love and generosity, not a prissy enforcement squad. After all, the Reverend Martin Luther King, Jr., who gets invoked all the time when such issues come up, didn’t go around saying grumpy things about Malcolm X and the Black Panthers.

Violence Against the Truth

Of course, a lot of people responding to these incidents in Oakland are actually responding to fictional versions of them. In such cases, you could even say that some journalists were doing violence against the truth of what happened in Oakland on November 2nd and January 28th.
The San Francisco Chronicle, for example, reported on the day’s events this way:

"Among the most violent incidents that occurred Saturday night was in front of the YMCA at 23rd Street and Broadway. Police corralled protesters in front of the building and several dozen protesters stormed into the Y, apparently to escape from the police, city officials and protesters said.  Protesters damaged a door and a few fixtures, and frightened those inside the gym working out, said Robert Wilkins, president of the YMCA of the East Bay.”

Wilkins was apparently not in the building, and first-person testimony recounts that a YMCA staff member welcomed the surrounded and battered protesters, and once inside, some were so terrified they pretended to work out on exercise machines to blend in.

I wrote this to the journalists who described the incident so peculiarly: “What was violent about [activists] fleeing police engaging in wholesale arrests and aggressive behavior? Even the YMCA official who complains about it adds, ‘The damage appears pretty minimal.’ And you call it violence? That's sloppy.”

The reporter who responded apologized for what she called her “poor word choice” and said the piece was meant to convey police violence as well.

When the police are violent against activists, journalists tend to frame it as though there were violence in some vaguely unascribable sense that implicates the clobbered as well as the clobberers. In, for example, the build-up to the 2004 Republican National Convention in New York City, the mainstream media kept portraying the right of the people peaceably to assemble as tantamount to terrorism and describing all the terrible things that the government or the media themselves speculated we might want to do (but never did).

Some of this was based on the fiction of tremendous activist violence in Seattle in 1999 that the New York Times in particular devoted itself to promulgating. That the police smashed up nonviolent demonstrators and constitutional rights pretty badly in both Seattle and New York didn’t excite them nearly as much. Don’t forget that before the obsession with violence arose, the smearing of Occupy was focused on the idea that people weren’t washing very much, and before that the framework for marginalization was that Occupy had “no demands.” There’s always something.

Keep in mind as well that Oakland’s police department is on the brink of federal receivership for not having made real amends for old and well-documented problems of violence, corruption, and mismanagement, and that it was the police department, not the Occupy Oakland demonstrators, which used tear gas, clubs, smoke grenades, and rubber bullets on January 28th. It’s true that a small group vandalized City Hall after the considerable police violence, but that’s hardly what the plans were at the outset of the day.

The action on January 28th that resulted in 400 arrests and a media conflagration was called Move-In Day. There was a handmade patchwork banner that proclaimed “Another Oakland Is Possible” and a children’s contingent with pennants, balloons, and strollers. Occupy Oakland was seeking to take over an abandoned building so that it could reestablish the community, the food programs, and the medical clinic it had set up last fall. It may not have been well planned or well executed, but it was idealistic.

Despite this, many people who had no firsthand contact with Occupy Oakland inveighed against it or even against the whole Occupy movement. If only that intensity of fury were to be directed at the root cause of it all, the colossal economic violence that surrounds us.

All of which is to say, for anyone who hadn’t noticed, that the honeymoon is over.

Now for the Real Work

The honeymoon is, of course, the period when you’re so in love you don’t notice differences that will eventually have to be worked out one way or another. Most relationships begin as though you were coasting downhill.  Then come the flatlands, followed by the hills where you’re going to have to pedal hard, if you don’t just abandon the bike.

Occupy might just be the name we’ve put on a great groundswell of popular outrage and a rebirth of civil society too deep, too broad, to be a movement. A movement is an ocean wave: this is the whole tide turning from Cairo to Moscow to Athens to Santiago to Chicago. Nevertheless, the American swell in this tide involves a delicate alliance between liberals and radicals, people who want to reform the government and campaign for particular gains, and people who wish the government didn’t exist and mostly want to work outside the system.  If the radicals should frighten the liberals as little as possible, surely the liberals have an equal obligation to get fiercer and more willing to confront -- and to remember that nonviolence, even in its purest form, is not the same as being nice.
Surely the only possible answer to the tired question of where Occupy should go from here (as though a few public figures got to decide) is: everywhere. I keep being asked what Occupy should do next, but it’s already doing it. It is everywhere.

In many cities, outside the limelight, people are still occupying public space in tents and holding General Assemblies.  February 20th, for instance, was a national day of Occupy solidarity with prisoners; Occupiers are organizing on many fronts and planning for May Day, and a great many foreclosure defenses from Nashville to San Francisco have kept people in their homes and made banks renegotiate. Campus activism is reinvigorated, and creative and fierce discussions about college costs and student debt are underway, as is a deeper conversation about economics and ethics that rejects conventional wisdom about what is fair and possible.

Occupy is one catalyst or facet of the populist will you can see in a host of recent victories. The campaign against corporate personhood seems to be gaining momentum.  A popular environmental campaign made President Obama reject the Keystone XL tar sands pipeline from Canada, despite immense Republican and corporate pressure. In response to widespread outrage, the Susan B. Komen Foundation reversed its decision to defund cancer detection at Planned Parenthood.  Online campaigns have forced Apple to address its hideous labor issues, and the ever-heroic Coalition of Immokalee Workers at last brought Trader Joes into line with its fair wages for farmworkers campaign.

These genuine gains come thanks to relatively modest exercises of popular power.  They should act as reminders that we do have power and that its exercise can be popular. Some of last fall’s exhilarating conversations have faltered, but the great conversation that is civil society awake and arisen hasn’t stopped.

What happens now depends on vigorous participation, including yours, in thinking aloud together about who we are, what we want, and how we get there, and then acting upon it. Go occupy the possibilities and don’t stop pedaling. And remember, it started with mad, passionate love.

TomDispatch regular Rebecca Solnit is the author of 13 (or so) books, including A Paradise Built in Hell: The Extraordinary Communities that Arise in Disaster and Hope in the Dark. She lives in and occupies from San Francisco.

Occupy Has Raised Class Consciousness: Now What?

By Rose Aguilar, cross-posted from Truthout

Eric Drooker

The year 2011 will go down in history as the year in which citizens used their collective power to make economic justice part of the national conversation and force the media to focus on real issues rather than the manufactured deficit crisis. Last February, Wisconsinites began demonstrating and, eventually, occupying their state Capitol to stop attacks on public workers, collective bargaining and unions.

Since Occupy Wall Street kicked off on September 17, Occupy demonstrators across the country have raised awareness about the widening wealth gap, inequality, rising student debt, criminal activity on Wall Street, poverty and home foreclosures.

Politico's Dylan Byers did a quick search of the news via Lexis Nexis and found a significant rise in the use of the term "income inequality," from less than 91 instances in the week before Occupy Wall Street started to almost 500 instances in November 2011.

"The Occupy movement is an extraordinary breakthrough," says David Korten, co-founder and board chair of YES! Magazine, and author of "Agenda for a New Economy." 

"On the progressive side, we tend to focus on individual issues. The Occupy movement has given us an overall framing umbrella with a focus on inequality. It may be one of the most effective branding exercises in history."

"They tapped into something that millions and million of Americans obviously felt," adds Gar Alperovitz, professor of political economy at the University of Maryland and author of "America Beyond Capitalism: Reclaiming Our Wealth, Our Liberty, and Our Democracy."

"The response tells you far more about where most Americans are than we had known before. Those ideas touch something in the understanding of millions of people that something is profoundly wrong in America."

We know what's wrong: 43 percent of Americans are "liquid assets poor," meaning they lack the money to live for three months if their main source of income were lost, according to the Corporation for Enterprise Development. More than 46 million Americans are living in poverty and on food stamps, the highest number ever. More than 17 million women lived in poverty in 2010; over 7.5 million women live on less than $6,000 a year, according to the National Women's Law Center.

Fourteen million people are unemployed. Another 8 million are working part-time but want full-time work. The unemployment rate is far higher for women and communities of color.

Over 50 million Americans are uninsured. Another 50 million are underinsured. A 2009 Harvard study shows that 45,000 people die every year because they don't have health insurance.

Meantime, corporate profits continue to rise and corporations are sitting on a record amount of cash. Thanks in large part to record-high oil prices, ExxonMobil's 2011 profits rose 35 percent, to a whopping $41.1 billion. That's nearly $5 million in profit every hour, or more than $1,300 every second, according to ThinkProgress. Exxon pays a lower effective tax rate than most Americans and refuses to pay $92 million in cleanup costs for the Valdez Alaskan oil spill, but it had no problem paying CEO Rex Tillerson $29 million last year.

Despite massive oil profits, last May, 45 Republicans and three Democrats refused to repeal $21 billion in tax breaks over the next ten years for Exxon, BP, Chevron, Royal Dutch Shell and ConocoPhillips. The final vote was 52-48.

The one percent owns approximately 40 percent of the nation's wealth and almost half of all investment capital. Five percent own 70 percent of all investment capital.

"Those are medieval numbers," says Alperovitz. "That's the way medieval society was organized. We need systemic change. Who owns the wealth is the primary question people should be asking."

So, what are the solutions? What's on the top of your demands list? And what are some real victories that can be won this year?

Korten sees it as a two-front agenda. First, we need to weaken the power of Wall Street with state banks, a more aggressive tax system that includes tax hikes on the rich, a financial transaction tax and a constitutional amendment to overturn Citizens United. Korten is also a big advocate of moving your money from the "too big to fail" banks to a credit union or community bank.

Second, we need to focus on growing and strengthening Main Street with local food movements, local sustainable energy initiatives and worker-owned cooperatives.

Alperovitz says it's important to note that over 130 million Americans now participate in cooperatives and credit unions. More than 13 million people are worker-owners of more than 11,000 employee-owned cooperatives.

"A different way of developing wealth is possible," says Alperovitz. "There's a lot of power in that strategy, and it resonates with people who want to change the system and changes how community structures are built." 

Korten also says it's important to talk about the equal distribution of ownership because it gets to the systemic root of the issue. "That is what ultimately moves us toward a more equal distribution of income, which research shows is the foundation of almost every essential aspect of a healthy society."

And despite what you hear from politicians on all sides, the United States is not broke. Alperovitz points out that even in its doldrums, the economy produces just under $200,000 for every family of four. "The economy is not poor," he says. "The potential here is for a very rich society. The challenge is making it more equitable."

"The solutions are not going to come from within the political system," says Korten. "The real action and solutions are going to have to come from the bottom up, from people rebuilding their local economies."

 Rose Aguilar is the host of "Your Call," a daily call-in radio show on KALW 91.7 FM in San Francisco and on KUSP 88.9 FM in Santa Cruz. She is author of "Red Highways: A Liberal's Journey Into the Heartland."

The Bank Deal: Ante Before The Cards Are Played

By Robert Borosage, cross-posted from Campaign for America's Future

The bank settlement of $25 billion over three years from five major banks for robo-signing forgeries is being hailed in Washington and scoured by leading bank critics.

It is hard not to be suspicious of any settlement that the banks would agree to. I’m reminded of Groucho Marx who said upon being invited to join a country club: “I wouldn’t want to belong to any club that would have me.”

But the deal should be seen for what it is – a relatively small ante by the banks handed out before the real cards are seen.

What’s clear is that the banks trampled the law in their wilding while blowing up the housing bubble. They abused homeowners, committed routine forgery and perjury before the courts, and defrauded investors. When the bubble burst and the housing market collapsed, homeowners were left about $700 billion underwater (owing that much more on their mortgages than their houses are worth).

The banks are looking for a deal that will relieve them of untold criminal and civil liabilities. Untold is the right word because, outrageously, there has been no real investigation into the scope of their crimes. The state attorneys general simply don’t have the resources. The federal government does, but once the administration decided to continue Bush’s policies of bailing out the banks without reorganizing them, it has been committed to keeping insolvent banks afloat, not holding them accountable.

So the administration and some state attorneys general started pushing a deal that would relieve the banks of immunity. Some courageous attorneys general – Eric Schneiderman of New York, Beau Biden of Delaware, Catherine Cortez-Masto of Nevada, Martha Coakley of Massachusetts, Kamala Harris of California and others – held out. Schneiderman led the effort to limit the scope of immunity offered the banks, expand the settlement, and force the administration to launch a real investigation at the federal level.

So this deal results. It gets a relatively small sum from the banks in exchange for circumscribed immunity on their flagrantly illegal robo-signing – or forgery – of mortgage documents. The money will provide homeowners with the possibility of real legal assistance and small amounts of relief. No private rights of action have been waived. The suit brought by Schneiderman against Mortgage Electronic Registration Systems, or MERS – the bank creation that simply trampled hundreds of years of property laws – continues, and other state AGs should follow suit. Schneiderman now co-chairs a federal task force charged with doing a real investigation that could result in a serious settlement. That's not part of the settlement, but it is the most important part of the deal.

The deal has been cut before the investigation so it is suspect on its face, but limited in its scope. Whether it will be enforced adequately remains to be seen. How homeowners benefit will differ from state to state.

But the real question remains whether the federal investigation will finally turn over all the cards so we know just how bad a hand the banks are holding. Only then is there a possibility for real accountability – and real relief for homeowners.

So this settlement must be the beginning, not the end. We have to sustain pressure on the administration for an aggressive investigation. State criminal and civil suits, individual and investor relief have to continue. We are a far remove from achieving the justice and accountability that is due.

Stress Testing Tim Geithner

By Mary Bottari, cross-posted from Campaign for America's Future

DonkeyHotey

Thanks to Occupy Wall Street, in the State of the Union this week President Obama struck some of his most populist themes yet. He wants to tax millionaires, bring back manufacturing and prosecute the big banks. He touted his Wall Street reforms saying the big banks are “no longer allowed to make risky bets with customers deposits” and “the rest of us aren’t bailing you out ever again.”
But are we safe from the next big bank bailout?

Many experts are dubious and Wednesday the consumer advocacy group Public Citizen decided to test the theory in the most direct way possible. They used the administrative law process to formally petition the nation’s top bank regulators to move swiftly to break up Bank of America (BofA) asserting in their petition: “The bank poses a grave threat to U.S. financial stability by any reasonable definition of that phrase.”

A Ticking Time Bomb

BofA is not just big, its behemoth. With assets of $2.1 trillion, equal to more than 14 percent of U.S. GDP, it is bigger than many small countries. Yet, its stock is trading at $7.

What does Wall Street know that we don’t?

The petition provides a compelling list of disturbing data points. In 2008-2009, BofA publicly took $45 billion in TARP bailout funds and secretly took another $1 trillion in emergency Federal Reserve loans. Yet, several analysts predict that BofA is woefully short of capital reserves and facing potentially billions in legal liability for its role in the crisis.

Although the bank declared net profits in recent quarters, these profit comes from accounting tricks, one-time asset sales and stock swaps. BofA’s share price to tangible book value is extremely low. The market suspects the bank is worth roughly half of what management claims and the price of credit default swaps (a type of insurance) on BofA recently rose to record highs.

“The bank is a ticking time bomb,” says David Arkush of Public Citizen. “If Bank of America in its current form were to fail, it would devastate the financial system. We’re asking the regulators to make sure that never happens. The only way to be sure is to reform the institution into something safer before any crisis materializes.”

Public Citizen asked the new Financial Stability Oversight Council (FSOC), which is chaired by Treasury Secretary Tim Geithner and made up of the nation's top bank regulators, to use the tools provided in the Dodd-Frank Wall Street reform law to act before a crisis occurs and to break BofA into smaller separate institutions. The law allows the FSOC to limit big bank mergers and acquisitions, restrict products and services or order it to divest assets or off-balance-sheet items after a vote to designate the institution a “grave threat” to financial stability.

“Too Big to Fail” Alive and Well

Although President Obama said the goal of Dodd-Frank was to end the era of “too big to fail,” neither Geithner nor Fed Chair Ben Bernanke got the memo.

Geithner told the Special Inspector General for the Troubled Asset Relief Program in 2011 future bailouts are possible: “In the future we may have to do exceptional things again if we face a shock that large. You just don’t know what’s systemic and what’s not until you know the nature of the shock. It depends on the state of the world – how deep the recession is. We have better tools now, thanks to Dodd-Frank. But you have to know the nature of the shock.”

Bernanke may already be engaged in a back-door bailout of BofA. Recent news reports indicate that BofA is trying to move $22 trillion in derivatives out of its Merrill Lynch subsidiary into its FDIC-insured bank. The Fed favors the move. The Federal Depository Insurance Corporation (FDIC), which provides insurance to depositors if a bank fails, does not.

“By taking this action the Fed is allowing these derivatives to pose a direct risk to the FDIC insurance fund, keeping taxpayers on the hook for another bailout,” according to Arthur Wilmarth of George Washington Law School.

Groups like Public Citizen fought hard during the Dodd-Frank debates to insert into the bill tools to allow regulators to break up big banks and prevent the next crisis. With BofA on the brink, its time for a “test of the machinery,” said scholar Lawrence Baxter of Duke Law School.

Expand the Stress Tests

Geithner is right when he says regulators can’t predict future shocks; will it be the EU debt crisis, a multi-million dollar damage award against the bank or exposure to something out of the blue? While we may not know its origin, we know the shock is coming.

Remember in the Dodd-Frank debates, an amendment to break up the banks was rejected, efforts to restore Glass-Steagall were rejected, a proposal to force banks to spin off and separately capitalize their dangerous derivatives desks was quashed. In leading the fight against the stronger measures, Geithner instead pushed the FSOC to scan the horizon for risk and keep an eye on the behemoth banks. He also pushed “stress tests,” which all too many banks seem to pass with flying colors.
Now its time to stress test Geithner. If the FSOC fails to deliberate and vote on the very serious condition of BofA, the whole exercise will be proven a sham.

Click here to tell the President to Break Up Bank of America.

Tell Obama: Just Say "No" To Bank Sweetheart Deal

By Robert Borosage, cross-posted from Campaign for America's Future

Americans from across the political spectrum are angry that the Wall Street banks blew up the economy and got bailed out, while home owners and taxpayers were stuck with the bill. And now, with fresh reports today of a pending state attorneys general settlement with the big banks that would immunize them from prosecution and civil suits in exchange for $25 billion, largely for principal reduction for underwater homeowners, the Campaign For America’s Future has joined in a broad coalition to oppose any sweetheart deal.

We're asking you to send an email to President Obama right now: Reject the sweetheart bank settlement. Do not follow through with your plan to announce it in the State of the Union address Tuesday. Instead, investigate the banks that caused the housing crisis.

This is an issue that raises a fundamental question about the nature of our justice system and the nature of our democracy. The law is respected only if it is enforced. Cutting a settlement with the big banks before we understand the scope of what the FBI has called "an epidemic of fraud" violates our basic sense of justice. No one who robbed a bank would be offered immunity, a modest fine and no admission of guilt before there was any investigation into who stole the money and how much they took.

And for our democracy, politically Americans are increasingly cynical about the ability of Washington to deal with special interests. They increasingly believe Washington can be bought and sold by Wall Street. This is destructive to our democracy. The President’s campaign will sensibly highlight his commitment to fair rules and a fair shot for every American. Needless to say, a sweetheart deal with the banks would be a glaring contradiction to that theme, and any deal enforced over the objections of the most independent attorneys general, such as New York’s Eric Schneiderman, will fail that test.

What the people want is clear: Investigation before immunity. Penalize the perpetrators, not their victims. Any settlement must have sufficient scope to deal with the scale of the problem. There is an estimated $700 billion of negative equity in underwater homes. While 1 million homeowners have been helped by efforts to save homeowners, 10.7 million homeowners are underwater and that does not count people who have already suffered foreclosure. The top six banks paid bonuses worth $140 billion last year alone; experts conservatively estimate this totals $420 billion over the last three years. They hold assets of $9.5 trillion. The rumored settlement of $25 billion is barely a slap on the wrist.

It is vital to this country that the banks are made accountable. It is vital that they do not see the law as simply a minor price of doing profitable business, a speed bump on the way to their bonuses.

With Occupy Wall Street inspiring activists and with citizens across the country being asked to pay to clean up the mess the banks created in the economy, every state attorney general and the Obama administration should understand that any deal will receive widespread public scrutiny. Any settlement must be able to satisfy the standards of justice and fairness. What is now on the table does not come close.

Act now: Tell President Obama: No sweetheart deal for the banks in the State of the Union address.

No Sweetheart Deals For Big Banks

By Robert L. Borosage, cross-posted from Campaign for America's Future

Robbie Conal

Bankers who committed bank fraud deserve to be prosecuted and sent to jail. Enforcement of the law is vital to deter such behavior in the future.

Some of America's best state attorneys general are trying do just that —trying to get justice for Americans hurt by what the FBI called an "epidemic of fraud" by America's banks and mortgage lenders that contributed to widespread economic devastation in the U.S.

Amazingly, officials in the Obama Administration are encouraging a deal which could insulate bankers who broke the law from investigation or prosecution. Officials in the Justice and Treasury Departments have been urging the states to support this sweetheart deal.

• Bankers would be given a free pass for criminal behavior.
• The truth about Wall Street's crimes would remain hidden from the public forever.
• Executives could once again pass the cost of their actions onto others, while "neither admitting nor denying" that they had broken the law.

Please act now. Sign the petition to President Obama: Don't let banks off the hook for illegal practices that led to the housing crisis. Kill the deal and launch a federal investigation now.

Join us in calling on President Obama to withdraw support for this sweetheart deal and begin a nationwide criminal investigation into allegations of fraud by the country's major banks and financial institutions.

More than 11 million borrowers are currently "underwater" and owe more than their house is worth. Millions have already lost their homes, and many of these borrowers are victims of fraudulent banking malpractice— from the peddling of loans with hidden costs, to imposing punitive and unjustified fines and fees to foreclosures undertaken without establishing proper ownership of the mortgage.

Bankers should not be allowed to walk away from the economic havoc they wreaked upon the country. They should be held accountable, so that no one on Wall Street even thinks about playing roulette with people's lives again.

For A Sane Economy, How About A Little Shame

By Richard (RJ) Eskow, cross-posted from Campaign for America's Future

The other day I was asked what one single thing could do the most to save our economy. What one idea or tool might help us create a more just society? My answer was "shame."

Shame isn't always a wasted or negative emotion. On the contrary, it can perform an important and socially useful function. Shame enforces our moral values even when legal and political institutions are too broken or corrupt to do so. Our society must learn to develop a "moral economics," and morality is often enforced through shame.

We live in a society where it's no longer considered shameful to oppose spending $6 billion to save nearly 8 million lives, even though that's less than $800 apiece. This kind of cynicism is so accepted, in fact, that even the more liberal political party doesn't dare suggest it. We live in a society where it's not shameful to let crooked bankers go unpunished while asking everyone else to pay the cost of their illegal enrichment. Nowadays even the lawbreakers aren't ashamed of themselves!

Incredible.

Perhaps no single change to our culture could do more to improve our lives than the rediscovery of the shame we used to attach to vile, greedy, selfish, and corrupt behavior. Consider how far we've fallen:

Not long ago a person would have been ashamed to appear in public if they had shattered the global economy by cheating millions of innocent people, accepted the outstretched hands of the same people they'd cheated by accepting an unconditional bailout, and then cheated them again.

Not long ago a politician who accepted the corrupting dollars of known criminal bankers immediately paid a steep price. (See the Keating Five, for example.)

Not long ago political figures and pundits were ashamed to openly advocate the deaths of millions of people just to provide tax advantages for the wealthy or ensure more favorable market conditions for predatory corporations.

In 2012, it's time for shame to make a comeback.

Where would it be useful? Here are just four examples out of thousands to choose from:

1. We should be ashamed that we don't give more to fight global AIDS.

A new medical study showed that developed nations could save 7.9 million lives in the next eight years by increasing AIDS funding for developing countries by $6 billion. That comes out to about $760 for each human being whose life would be spared. As an added benefit, an estimated 2.5 million people would never be infected with AIDS at all.

George W. Bush began the anti-AIDS program known as PEPFAR in 2003, and funding grew steadily every year until President Obama took office. It then flatlined in the first year and dropped in the second year, before increasing slightly in the third Obama budget:




Image source: Kaiser Family Foundation An ethical society -- not just ours, but of all developed nations -- would find it unacceptable to deny these programs the funding they need. Six billion dollars sounds like a lot, but the top 25 U.S. hedge fund managers made $22 billion last year. Taxing them at the same rate they paid under Ronald Reagan would cover the entire amount and would save all those lives.
But the Republican Party opposes anything like that, and President Obama hasn't asked for more.

2. Leaders of serial corporate criminal banks should be ashamed of themselves.

Jamie Dimon, CEO of JPMorgan Chase, makes it a habit to publicly express his resentment at the very mild and genteel criticisms that lawbreaking bankers must endure in our society. He does so with a combination of disingenousness and genuine self-deception that is a marvel to watch. In his latest outburst, Dimon complained about Occupy Wall Street by saying, "Acting like everyone who's been successful is bad and because you're rich, you're bad, I don't understand it. Sometimes there's a bad apple, yet we denigrate the whole."

Maybe those "bad apples" would provoke a different reaction if executives like Dimon weren't personally supervising such a large barrelful of 'em. Shortly after Dimon expressed his outrage, his bank and a number of its employees went on trial in Italy for allegedly deceiving a municipality into deliberately and deceptively purchasing bad investments. And while this Business Week article carefully points out that these alleged crimes took place before Dimon became CEO in 2006, he was already president and COO at the time of the worst allegations.

As president and COO, Dimon also presided over an institution that paid hundreds of millions of dollars after it bribed municipal officials in Alabama and misled investors in a fund called Magnetar. Under Jamie Dimon's leadership, JPMorgan Chase (or rather, its investors and insurers) paid a fine for breaking the law while promising not to do it again -- and then promptly did, at least three more times.

Similarly, GE Capital keeps breaking the law under CEO Jeffrey Immelt. In its latest settlement, a division of GE paid (or rather, its investors and insurers) paid $25 million after being charged with what the SEC described as "fraud for participating in a wide-ranging scheme involving the reinvestment of proceeds from the sale of municipal securities."

This is merely the latest in a GE crime spree that includes misleading investors, bribing Iraqi officials in the "oil for food" scandal, and what the SEC described as "fraud, deceit, or deliberate or reckless disregard of regulatory requirements [that] resulted in substantial loss, or significant risk of substantial loss, to other persons."

And yet Immelt, like Dimon, walks in polite society. He even leads President Obama's recently renamed "Jobs Commission."

Nobody is saying "because you're rich, you're bad." Nobody's calling Warren Buffett bad, for example. They're not even saying that about megamillionaire Jimmy Buffett -- and after the 6,000th hearing of "Margaritaville," that's pretty damned generous if you ask me.

But here's why words like "bad" get attached to executives like Dimon and Immelt: because they or their subordinates keep breaking the law, and either they don't care about it or they aren't competent enough as managers to stop it. Their arrogance and pronounced lack of remorse suggests it's the former rather than the latter. But either way, they're in no position to lecture others, especially since the lawbreaking keeps fattening their personal bank accounts.
They should be ashamed.

3. Officials and bankers should be ashamed that "too-big-to-fail" banks still exist.

As Simon Johnson notes, "Big banks represent the ultimate in concentrated economic power in today's economies. They are able to resist all meaningful reform that could really change their compensation schemes. Their executives want to get all the upside while facing none of the true downside. But capitalism without the prospect of failure is not any kind of market economy. We are running a large-scale, nontransparent, and dangerous government subsidy scheme for the benefit primarily of a very few extremely wealthy people."

The top U.S. banks now control more of the economy than they did before the Great Recession. The Fed is secretly bailing out Europe's too-big-to-fail banks as this is being written. And nobody's doing anything to change that.

They should be ashamed.

4. It's shameful to preach welfare for bankers and austerity for everyone else.

Meanwhile, in the great capitals of Europe and North America, the talk is of austerity economics. That means drastic cutbacks in government services that the public has paid for, like Social Security, that form the backbone of a prosperous, fair, and humane society. Leaders are calling these cuts "unavoidable" even as economists warn that they're already creating a new European recession.
It is, as Paul Krugman observes, something that will appear remarkable to future historians (if any history departments survive the austerity cuts to preserve the profession). They're not prescribing the "hair of the dog"; they're forcing the entire dead animal down the public's throat.

Why would Europe's leaders propose a set of policies that is already demonstrably making the economy worse? In part, probably because it's the easiest way to prop up the current financial system. Comprehensive economic reform would threaten the institutions they feel sworn to protect. Conventional thinking is also a big part of the problem -- and conventional thinking makes no room for a "moral economics."

For that they should be deeply, deeply ashamed. The Hall of Shame includes Angela Merkel of Germany, Nicolas Sarkozy of France, David Cameron of Great Britain, and -- at times -- Barack Obama of the United States. And if they're not capable of shame, the society around them must express that shame for them. It's already moved Obama's rhetoric, and we need more of the same in the coming year.

For those who preach the radical dismantling of the government that made our society great -- especially the Republicans of the United States -- no amount of shame can be enough. And for someone like Mitt Romney, who knows how to read financial reports and clearly knows better, it's worth noting that the eighth circle of hell is reserved for those who knew better and yet did wicked things anyway.

Let's make 2012 the Year That Shame Returned to the Economic Debate.