First Class Migration

But, but the rich people pay all the taxes, right? right? And the rich finance all of America's financial growth, right?

(from C&L)
Bush: If they’re going to say, oh, we’re only going to tax the rich people, but most people in America understand that the rich people hire good accountants and figure out how not to necessarily pay all the taxes and the middle class gets stuck.

The subprime mess (details below) was enabled by the mythological big taxpayer at the top of the foodchain. The underlying "logic" was that big business, big financials, and the Daddy Warbucks 1%'ers of the American multimillionaires were paying the lion's share, and as such, well, it would be okay to cut them a little slack... Their money went back to America investitures, financing most of the growth of American business. This was true up until a certain point. But as Daniel Gross of Newsweek points out, when the transparency and accountability disappeared, and with it- the profitability, these 1%ers quickly began shifting their money out of the U.S., which had become, largely due to their own machinations, a losing bet.

(from Newsweek)
The latest investment trends similarly lead me to think you may not be acting in the national interest. America's private-equity firms are plowing into India, China, Asia and Latin America, and private bankers are urging clients to drop the home bias (don't think condos in Palm Beach and ski chalets in Aspen; think beachfront property in Thailand and ski resorts in the Alps). A Spectrem Group survey of people with more than $500,000 to invest found that 31 percent are putting more capital to work internationally than in the past. "The rich are investing a larger share of their capital overseas," says "Richistan" author Robert Frank.

Just when the economy has started to take on water—and we don't know if we've just sprung a leak or we've hit an iceberg—it seems like the wealthy are piling into the lifeboats. So consider this a plea not to abandon us. Ski at Sugarbush instead of Gstaad. Invest in P.F. Chang's China Bistro instead of China. It might not be as rewarding, financially or psychologically. But your country needs you now, more than ever. And after all we've done for you, it's the least you can do.

I am afraid that a plea to the rich to help the country surely falls on deaf ears. Patriotism falls a distant second to personal profit. Capitalism trumps National pride. Their sense of duty to the so-called "Free Market" is more powerful than any duty to our country and a real Democracy. It's the poor people's fault they're poor, after all. And as these rats jump from a ship they are helping to sink, they can only blame everyone else.

These multi-millionaires, who are running the country, and lately, running it into the ground, talk a big talk about what this country was built on. Underneath their loud bluster, the truth comes out of the sides of their disingenous mouths... Their constitution is a prospectus, their bible is book of tax exemption codes, and their savior is a savvy investment adviser who raises his hands and exhorts "Buy China!" from the mountaintop. Buying America is as foreign to today's billionaire as the concept that all men are created equal. They can spout the virtue of a Global economy all that they want: Their rush to fill their own pockets at the forefront of whichever economy they talk up only hastens the demise of the American economy.

The thought that they, the self-appointed American aristocracy, knew what was best for the country by simply filling their pockets as fast as they could seems so outlandish that you wonder how these people got rich in the first place. But most of them didn't make this money, they inherited it. Their predecessors (the people who made the bulk of the money for these inheritors of America's riches) seemed to understand the concept of an economy that perpetuated its growth. You gave back and pumped some of your profits into the system, from the bottom up, in order to keep your cash crop coming in. By failing to comprehend this key principle in their gluttony, they are dooming the American economy.

The Subprime situation and Asset Securitization is, as F. William Engdahl puts it- "The Last Tango" of the dance of the American assetmongers on their own graves...

(Excerpts from Financial Sense)
The New Finance was built on an incestuous, interlocking, if informal, cartel of players, all reading from the script written by Alan Greenspan and his friends at J.P. Morgan, Citigroup, Goldman Sachs, and the other major financial houses of New York. Securitization was going to secure a “new” American Century and its financial domination, as its creators clearly believed on the eve of the millennium.

Key to the revolution in finance in addition to the unabashed backing of the Greenspan Fed, was the complicity of the Executive, Legislative and Judicial branches of the US Government right to the Supreme Court. In addition, to make the game work seamlessly, it required the active complicity of the two leading credit agencies in the world—Moody’s and Standard & Poors.

It required a Congress and Executive branch that would repeatedly reject rational appeals to regulate over-the-counter financial derivatives, bank-owned or financed hedge funds or any of the myriad steps to remove supervision, control, transparency that had been painstakingly built up over the previous century or more. It required that the major government-certified rating agencies give their credit AAA imprimatur to a tiny handful of poorly regulated insurance companies called Monolines, all based in New York. The monolines were another essential part of the New Finance.
...
The Federal Reserve, the world’s largest and most powerful central bank with what was arguably the world’s most liberal market-friendly Chairman, Greenspan, would back its major banks in the bold new securitization undertaking. When Greenspan said risks “which seemingly challenge human understanding,” he signaled that he understood at least in a crude way that this was a whole new domain of financial obfuscation and complication. Central bankers traditionally were known for their pursuit of transparency among banks and conservative lending and risk management practices by member banks.

Not ‘ole Alan Greenspan.

Most significantly, Greenspan reassured his Wall Street securities underwriting friends in the Securities Industry Association audience that November of 1998 that he would do all possible to ensure that in the New Finance, the securitization of assets would remain for the banks alone to self-regulate.

Under the Greenspan Fed, the foxes would be trusted to guard the henhouse.
...
In the United States, between 1980 and 1994 more than 1,600 banks insured by the Federal Deposit Insurance Corporation (FDIC) were closed or received FDIC financial assistance. That was far more than in any other period since the advent of federal deposit insurance in the 1930s. It was part of a process of concentration into giant banking groups that would go into the next century.

In 1984 the largest bank insolvency in US history threatened, the failure of Chicago’s Continental Illinois National Bank, the nation’s seventh largest, and one of the world’s largest banks. To prevent that large failure, the Government through the Federal Deposit Insurance Corporation stepped in to bailout Continental Illinois by announcing 100% deposit guarantee instead of the limited guarantee FDIC insurance provided. This came to be called the doctrine of “Too Big to Fail” (TBTF). The argument was that certain very large banks, because they were so large, must not be allowed to fail for fear of the chain-reaction consequences it would have across the economy. It didn’t take long before the large banks realized that the bigger they became through mergers and takeovers, the more sure they were to qualify for TBTF treatment. So-called “Moral Hazard” was becoming a prime feature of US big banks.

That TBTF doctrine was to be extended during Greenspan’s Fed tenure to cover very large hedge funds (LTCM), very large stock markets (NYSE) and virtually every large financial entity in which the US had a strategic stake. Its consequences were to be devastating. Few outside the elite insider circles of the very large institutions of the financial community even realized the doctrine had been established.

Once the TBTF principle was made clear, the biggest banks scrambled to get even bigger. The traditional separation of banking into local S&L mortgage lenders, large international money center banks like Citibank or J.P. Morgan or Bank of America, the prohibition on banking in more than one state, one by one were dismantled. It was a sort of “level playing field” but level for the biggest banks to bulldoze over and swallow up the smaller and create cartels of finance of unprecedented scope.
...
J.P.Morgan thereby paved the way to transform US banking away from traditional commercial lenders to traders of credit, in effect, into securitizers. The new idea was to enable the banks to shift risks off their balance sheets by pooling their loans and remarketing them as securities, while buying default insurance, Credit Default Swaps, after syndicating the loans for their clients. It was to prove a staggering development, soon to hit volumes measured in the trillions for the banks. By the end of 2007 there were an estimated $45,000 billion worth of Credit Default Swap contracts out there, giving bondholders the illusion of security. That illusion, however, was built on bank risk models of default assumptions which are not public and, if like other such risk models, were wildly optimistic. Yet the mere existence of the illusion was sufficient to lead the major banks of the world, lemming-like, into buying mortgage bonds collateralized or backed by streams of mortgage payments from unknown credit quality, and to accept at face value a Moody’s or Standard & Poors AAA rating.
...
Very soon after, the new securitizing banks such as J.P. Morgan began to create portfolios of debt securities, then to package and sell off tranches based on default probabilities. “Slice and dice” was the name of the new game, to generate revenue for the issuing underwriting bank, and to give “customized risk to return” results for investors. Soon Asset Backed Securities, Collateralized Debt Securities, even emerging market debt were being bundled and sold off in tranches.

On November 2, 1999, only ten days before Bill Clinton signed the Act repealing Glass-Steagall, thereby opening the doors for money center banks to acquire brokerage business, investment banks, insurance companies and a variety of other financial institutions without restriction, Alan Greenspan turned his attention to encouraging the process of bank securitization of home mortgages.
...
Former Secretary of Labor, economist Robert Reich, identified a core issue of the raters, their built-in conflict of interest. Reich noted, “Credit-rating agencies are paid by the same institutions that package and sell the securities the agencies are rating. If an investment bank doesn't like the rating, it doesn't have to pay for it. And even if it likes the rating, it pays only after the security is sold. Get it? It's as if movie studios hired film critics to review their movies, and paid them only if the reviews were positive enough to get lots of people to see the movie.”

Reich went on, “Until the collapse, the result was great for credit-rating agencies. Profits at Moody's more than doubled between 2002 and 2006. And it was a great ride for the issuers of mortgage-backed securities. Demand soared because the high ratings had expanded the market. Traders didn't examine anything except the ratings…a multibillion-dollar game of musical chairs. And then the music stopped.”
...
The raters under US law were not liable for their ratings despite the fact that investors worldwide depend often exclusively on the AAA or other rating by Moody’s or S&P as validation of creditworthiness, most especially in securitized assets. The Credit Agency Reform Act of 2006 in no way dealt with liability of the rating agencies. It was in this regard a worthless paper. It was the only law dealing with the raters at all.
Moody’s or S&P could say any damn thing about Enron or Parmalat or sub-prime securities it wanted to. It’s a free country ain’t it? Doesn’t everyone have a right to their opinion?

US courts have ruled in ruling after ruling that financial markets are “efficient” and hence, markets will detect any fraud in a company or security and price it accordingly…eventually. No need to worry about the raters then…

That was the “self-regulation” that Alan Greenspan apparently had in mind when he repeatedly intervened to oppose any regulation of the emerging asset securitization revolution.

The securitization revolution was all underwritten by a kind of “hear no evil, see no evil” US government policy that said, what is “good for the Money Trust is good for the nation.” It was a perverse twist on the already perverse saying from the 1950’s of then General Motors chief, Charles E. Wilson, “what’s good for General Motors is good for America.”
...
None of that would have been possible without securitization, without the full backing of the Greenspan Fed, without the repeal of Glass-Steagall, without monoline insurance, without the collusion of the major rating agencies, and the selling on of that risk by the mortgage-originating banks to underwriters who bundled them, rated and insured them as all AAA.

In fact the Greenspan New Finance revolution literally opened the floodgates to fraud on every level from home mortgage brokers to lending agencies to Wall Street and London securitization banks to the credit rating agencies. Leaving oversight of the new securitized assets, hundreds of billions of dollars worth of them, to private “self-regulation” between issuing banks like Bear Stearns, Merrill Lynch or Citigroup and their rating agencies, was tantamount to pouring water on a drowning man.
(full article "The Financial Tsunami Part IV, by F. William Engdahl here

Which leaves us where we are now. And I hope that this will leave you with the FUNDAMENTAL knowledge that:

A "Free Market" does not regulate itself at all.
Greed is not a virtue. It is not a creator of wealth.
Capitalism without proper oversight destroys the many at the benefit of the very few.

Conservatives hold the Economy Hostage

Sad but True over at Unruly Mob has an excellent post up- Conservative Ideology Deconstructed

'We won't help America unless we get our permanent tax cuts, waaa waaaa...'

Go Fuck Yourselves, you uppity rich cocksuckers. You ain't getting your fucking cuts made permanent.

Bush's horseshit has driven our economy into the ground by allowing corporations to do whatever they fucking want to and rip off America, both our government AND our citizens with their risky scams. Now, I know where your tax cuts money has gone... down the damn drain, along with your stock's account value. Damn the luck.

So YOUR money went to make some fat cat running a hedge fund somewhere that much fatter. Sorry 'bout ya. You aren't getting extra tax cuts that you can throw away funding the next Anthony Mozillo so he can exercise some good ole free market ass fucking on the rest of the country.

"Trickle down", my ass. Already the wing nuts are clamoring to blame the Clintons for the mess Bush has carefully crafted as he has funneled trillions into the Middle East.

Motherfucking Brilliant, right? And hey- let's give those freedom loving Saudis some guided missles. They'll NEVER use them against us, right? Goddamnit, is there ANYTHING you morons on the right WON'T let this mental midget do? Some Saudi Royal and an Exxon Mobil Exec now have matching 24k gold plated Rolls Royces. Woo Hoo Free market!

Meanwhile the only benefit you upper middle class brainiacs can understand is a few measely tax cuts, which are far surpassed on the downside by the inflationary costs and the devaluation of the dollar, among a thousand other factors. Take another look into your stock market valuations. Guess what? It's all tied together, brother.

Conservative Ideology Deconstructed
Please, read it all. It's good stuff, not as profanity laced, but no one's perfect.

America the Bankrupt

The economy, regardless of the what the Wall street cheerleaders on CNBC parrot, is NOT BOOMING. We will have to raise taxes, and soon. We need to repeal every single Tax cut that Bush has instituted in a time of war- to help pay for that war's effect on our federal deficit. If you are one of the many affluent who have enjoyed the tax cuts, that's all well and good, but the party is over-

It's time for a little "Ask not what your country can do for you, but what you can do for your country." The following article explains more about how the country is doing, financially.

From the AP, Matt Crenson: GAO chief warns economic Disaster looms

EXCERPT:

David M. Walker sure talks like he’s running for office. “This is about the future of our country, our kids and our grandkids,” the comptroller general of the United States warns a packed hall at Austin’s historic Driskill Hotel. “We the people have to rise up to make sure things get changed.”

But Walker doesn’t want, or need, your vote this November. He already has a job as head of the Government Accountability Office, an investigative arm of Congress that audits and evaluates the performance of the federal government.

Basically, that makes Walker the nation’s accountant-in-chief. And the accountant-in-chief’s professional opinion is that the American public needs to tell Washington it’s time to steer the nation off the path to financial ruin.

From the hustings and the airwaves this campaign season, America’s political class can be heard debating Capitol Hill sex scandals, the wisdom of the war in Iraq and which party is tougher on terror. Democrats and Republicans talk of cutting taxes to make life easier for the American people.

What they don’t talk about is a dirty little secret everyone in Washington knows, or at least should. The vast majority of economists and budget analysts agree: The ship of state is on a disastrous course, and will founder on the reefs of economic disaster if nothing is done to correct it.

There’s a good reason politicians don’t like to talk about the nation’s long-term fiscal prospects. The subject is short on political theatrics and long on complicated economics, scary graphs, and very big numbers. It reveals serious problems and offers no easy solutions. Anybody who wanted to deal with it seriously would have to talk about raising taxes and cutting benefits, nasty nostrums that might doom any candidate who prescribed them.(...)

Walker doesn’t want to make balancing the government’s books sexy – he just wants to make it politically palatable. He has committed to touring the nation through the 2008 elections, talking to anybody who will listen about the fiscal black hole Washington has dug itself, the “demographic tsunami” that will come when the baby boom generation begins retiring and the recklessness of borrowing money from foreign lenders to pay for the operations of the U.S. government. He’s dubbed his campaign the fiscal wake-up tour.

To show that the looming fiscal crisis is not a partisan issue, he brings along economists and budget analysts from across the political spectrum. In Austin, he’s accompanied by Diane Lim Rogers, a liberal economist from the Brookings Institution, and Alison Acosta Fraser, director of the Roe Institute for Economic Policy Studies at the Heritage Foundation, a conservative think-tank.

Their basic message is this: If the United States government conducts business as usual over the next few decades, a national debt that is already $8.5 trillion could reach $46 trillion or more, adjusted for inflation.

A hole that big could paralyze the U.S. economy; according to some projections, just the interest payments on a debt that big would be as much as all the taxes the government collects today.

And every year that nothing is done, the problem grows by $2 trillion to $3 trillion.

The Clinton years helped offset the issue that Ross Perot crowed about in the early 90's. But with the inscrutable tax cuts and the ultra liberal spending habits of President Bush, our country is broke again. No conservative in his right mind wants the U.S. to be beholden to China to keep us afloat forever.

It is time to stop money like there is no tomorrow. It is time for some real conservatorship of the United States and some real Fiscal conservatism to be applied. Taxes must be raised. And sorry, not only for the rich... Social Security is one of the few social entitlement plans that currently works:

Social Security currently pays for itself with a 12.4 percent payroll tax, and even produces a surplus that the government raids every year to pay other bills. But Social Security will begin to run deficits during the next century, and ultimately would need an infusion of $8 trillion if the government planned to keep its promises to every beneficiary.

But, to KEEP it working, we will need to raise the payroll tax percentage a notch, across the board. It will not take much of a bump, but a little bump nonetheless. We are all in the same boat in the end as Americans. Rich or Poor, we will all suffer if we don't pre-emptively strike in order to save the economy and STILL retain our necessary programs for the elderly. Our nation has been held by a freely spending buffoon whose policies have done more to hurt our country in six short years than any other President in the last 100 years. It's time to buckle down, and sacrifice a bit- on all levels- to save our country.