Ted McLaughlin : Dems are Better for the Stock Market

Chart from Bloomberg Businessweek.
Against conventional wisdom:
Stock market does
better under Democrats

By Ted McLaughlin / The Rag Blog / February 27, 2012

The Republicans claim to be the party that best benefits Big Business and Wall Street. And Wall Street (along with the corporate moguls of Big Business) seems to have bought into that idea -- so much so that they are donating millions of dollars to super PACs supporting Republican candidates.

In January, the Republican super PACs revealed they had received about $47 million -- much of it from the finance and investment industry (Wall Street). From these numbers, it is quite obvious that Wall Street believes it would be best served by returning a Republican to the White House.

But this conventional wisdom that says the stock market is best served by having a Republican in the White House is simply not true. And it's not just a little bit untrue, it's a whole lot untrue. Bloomberg News took a look at how the stock market has performed under both Republican and Democratic presidents. What they found was that the stock market performed much better under Democratic presidents. They looked at the last 50 years, since the presidency of John Kennedy -- and this is what they found:

• The sum of $1,000 "invested in a hypothetical fund that tracks the Standard & Poor's 500 index only when Democrats are in the White House would have been worth $10,920" just a few days ago. That's a gain of about 992% in 23 years.
• That same $1,000 "invested in a fund that followed the S&P 500 under Republican presidents... would have grown to $2,087 on the day George W. Bush left office." That's a gain of about 109% in 28 years.
• Even adding in the presidency of Dwight Eisenhower doesn't bring the Republicans near the gain experienced under Democrats. That would increase the return under Republicans to $4,796. That's a gain of about 380% in 36 years -- far less than half of the gain under Democrats in only 23 years
• The annualized return for the 23 years under Democratic presidents is about 11%.
• If that $1,000 were invested in a fund following the Dow Jones Industrial Average (instead of the S&P 500), the return under Democratic presidents would be $7,550. That's a gain of about 655% over the 23 years.
• If that $1,000 were invested in a fund following the Dow Jones Industrial Average under Republican presidents, the return would be $2,716. That's a gain of about 172% over the 28 years.

This blows conventional thinking out of the water. We have always been told that the Democrats were better for the poor and working classes, while the Republicans were better for the investor class. But these figures show that Democratic administrations are better for everyone -- including the rich.

So why do the Wall Street bankers favor the Republicans? Because they aren't as bright as many think they are. They are only thinking about tax policy -- not in what is better for them in the long run. They think the lower taxes for the rich touted by Republicans would result in them having more money than under Democratic presidents with the current tax rate. But is that true?

Let's examine the figures using the current 35% top tax rate for Democratic administrations and a 28% tax rate (proposed by Romney) for Republican administrations, and see which would be best:

• The S&P 500 figure under Democrats had a gain of $9,920. Taxed at a maximum rate of 35%, this would leave the investor with $6448 after taxes.
• The S&P 500 figure under Republicans had a gain of $1,087. Taxed at the smaller rate of 28% this would leave the investor with $783 after taxes.
• The DJIA figure under Democrats had a gain of $6,550. Taxed at a rate of 35% this would leave the investor with $4,257.50 after taxes.
• The DJIA figure under Republicans had a gain of $1,716. Taxed at the smaller rate of 28% this would leave the investor with $1,235.52 after taxes.

As is easily apparent, Wall Street investors would be much better off with a Democrat in the White House -- even if they had to pay a higher tax rate. They would still have more money in their bank accounts. And this would be true even if the Democrats eliminated the 15% capital gains tax rate (the rate that current stock gains would be taxed at).

The fact is that all classes in our society would be better off financially with Democrats in the White House -- whether poor, rich, or somewhere in between. That leads me to wonder -- why would anyone vote Republican?

[Ted McLaughlin also posts at jobsanger. Read more articles by Ted McLaughlin on The Rag Blog.]

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Danny Schechter : Why Wall Street is Winning

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Wall Street: The bull is back.
Why Wall Street is winning

The hated financial center is bouncing back. How did they do it?

By Danny Schechter / The Rag Blog / April 26, 2011

Two years ago, as financial reform was put on the U.S. Congressional agenda, a skeptical Senator, Dick Durbin of Illinois, spoke of the power of the banks over the country’s legislative process.

“They run the place,” he said matter-of-factly.

The comment was then treated as a sidebar in the few newspapers that carried it, perhaps because it hinted at how interests, not ideology, dictate what happens on Capital Hill.

The remark about a shadowy power structure far more important than all the partisan in-fighting that dominates the news is worth recalling as a way of explaining how little has been done to rein in Wall Street in the years since its crash virtually wrecked the global economy.

It is also worth realizing that the people who “run the place” usually do so in ways that rarely get high profile media scrutiny or even public attention.

During the deliberations on re-regulating banks, they mounted a formidable army of lobbyists. It was reported that as many as 25 industry lobbyists were assigned to each member of Congress.

Even as new laws passed to satisfy an angry public, the industry dominated the process of what the laws would cover and how.

They also spread money around to help politicians who helped them. For years those donations were made on a nonpartisan basis, with Democrats as well as Republicans the beneficiaries of carefully-targeted help. Today, they are cutting off the Democrats who pushed financial reform.

The corporate sector is following suit. Nominally “liberal” companies like BP, sharply criticized by the White House for the Gulf Oil spill, are pouring money, not oil, into GOP coffers.

As bipartisanship fades, and certain ideological lines are drawn more sharply, the bankers are now favoring the Republicans financially, perhaps to thank them for erecting a unified wall against tighter rules for banks.

The GOP, led by the pro-free market slogans of the Tea Party, are busy defunding regulators as well.

Right-wingers in turn are being funded by wealthy billionaire backers including the shadowy Koch Brothers who are responsible for backing the anti-union programs of governors like Scott Walker in Wisconsin. These campaigns are designed to neuter all opposition to a conservative agenda.

Meanwhile, President Obama reaches into the corporate sector for “help” on his economic “recovery” agenda. In recent months, he named Jeffrey R. Immelt, president of General Electric, a company known for outsourcing jobs, as his jobs advisor.

He plucked William Daley from the American Chamber of Commerce to become his Chief of Staff.

Daley recently scolded politicians for calling for the prosecution of Wall Street criminals. He said that job belongs to producers in Hollywood, not lawmakers.

These efforts have emboldened other arms of Wall Street to intervene in politics. The most visible last week was the statement by the ratings agency Standard and Poor's that it was revising the country’s credit rating to “negative,” warning that it will consider lowering the long-term rating of the United States “within two years.”

Many stocks fell, but bond markets ignored it. Former International Monetary Fund economist Simon Johnson raised questions about their decision of a kind absent in most media outlets.

Writing on his website Baseline Scenario, Johnson noted that few outlets pointed out how inaccurate the ratings agencies had been at the height of the crisis, and how irresponsibly they hyped worthless bonds packed with sub prime junk. Yet once again they were treated as credible, despite their sloppy analysis.

The main problem is that S&P did not lay out even the most basic numbers or even point readers towards the nonpartisan and definitive Congressional Budget Office analysis of medium -- and longer-term budget issues. This matters, because the CBO numbers definitely do not show debt exploding upwards immediately from today...

Bloggers like Cannonfire go further arguing that

The revised credit rating is meant to push the administration and lawmakers into going after Social Security and Medicare. The right-wing now has an additional propaganda tool to push for draconian cuts in areas that will most hurt working and middle class Americans.

Here's the kicker: Standard and Poor's and Moody's are private firms. They don't work for the United States; they serve the interest of Wall Street banks. 2008 taught us that they are completely unaccountable.”

Doug Smith adds on the influential Naked Capitalism blog that Wall Street should know that joining the Tea Party jihad on government spending will be counterproductive for economic recovery.

We know the banksters control both parties and are immune from any threats to their bonuses or their liberty. Still, even on the banksters’ own terms of extend-and-pretend, these cuts are idiotic.

Despite all of its frauds and deceptions, Wall Street has bought its way out of the many pressures that it change its ways. In a special issue, New York Magazine concludes that in this economic war, “Wall Street Won.”

Their editors write,

In the political realm, Wall Street faced the prospect of root-and-branch reregulation, up to and including the potential nationalization of the industry’s largest players, and in the cultural realm its transfiguration into a kind of pariah state. Once upon a time, the Street’s leading lights had been glamorized and admired to the point of worship; now the likes of Robert Rubin, Lloyd Blankfein, and Richard Fuld were relentlessly pilloried and demonized...

Yet today on Wall Street, all of that seems a very long time ago. Not only are the banks rolling in dough again, but their denizens’ customs and sense of self-esteem have largely reverted to the status quo ante.

A retired well-known journalist, James Clay Fuller, notes that media coverage of these issues adds to the confusion because it is often superficial and misleading.

Corporate media refuse to tell many of the stories of bank fraud, as they decline to tell many of the stories that would show the public the corporate takeover of government, but the facts are available to those who recognize that they won't learn much of importance from CNN.

The public is not just uninformed; it is unorganized on these issues and not fighting back. The power of the bank lobby can be compared to the pro-Israel lobby in the sense it dominates the discourse.

With a besieged Democratic administration siding with the banks, unions and activists may not be willing or able to challenge Wall Street. They are so desperate to hold on to the White House, they seem willing to pull any potential punches to make Wall Street a target.

Only a national high profile and populist campaign will be able to stop the financial industry from consolidating its clout. The banks are banking on their ability to stop such a campaign before it starts or gains any traction.

[News Dissector and blogger Danny Schechter made the film, Plunder The Crime of Our Time, treating the financial crisis as a crime story. Comments to dissector@mediachannel.org. Read more by Danny Schechter on The Rag Blog.]

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Robert Sheer : Hogwash, Mr. President

State of the Union: Platitudinous hogwash? Photo by Miller / New York Daily News.
State of the Union:
Hogwash, Mr. President

The speech was a distraction from what seriously ails us: an unabated mortgage crisis, stubbornly high unemployment, and a debt that spiraled out of control while the government wasted trillions making the bankers whole.

By Robert Sheer / Truthdig / January 26, 2011

What is the state of the union? You certainly couldn’t tell from that platitudinous hogwash that the president dished out Tuesday evening. I had expected Barack Obama to be his eloquent self, appealing to our better nature, but instead he was mealy-mouthed in avoiding the tough choices that a leader should delineate in a time of trouble.

He embraced clean air and a faster Internet while ignoring the depth of our economic pain and the Wall Street scoundrels who were responsible -- understandably so, since they so prominently populate the highest reaches of his administration. He had the effrontery to condemn “a parade of lobbyists” for rigging government after he appointed the top Washington representative of JPMorgan Chase to be his new chief of staff.

The speech was a distraction from what seriously ails us: an unabated mortgage crisis, stubbornly high unemployment, and a debt that spiraled out of control while the government wasted trillions making the bankers whole. Instead the president conveyed the insular optimism of his fat-cat associates: “We are poised for progress. Two years after the worst recession most of us have ever known, the stock market has come roaring back. Corporate profits are up. The economy is growing again.”

How convenient to ignore the fact that this bubble of prosperity, which has failed the tens of millions losing their homes and jobs, was floated by enormous government indebtedness now forcing deep cuts in social services including state financial aid for those better-educated students the president claims to be so concerned about.

His references to education provided a convenient scapegoat for the failure of the economy, rather than to blame the actions of the Wall Street hustlers to whom Obama is now sucking up. Yes, it is an obvious good to have better-educated students to compete with other economies, but that is hardly the issue of the moment when all of the world’s economies are suffering grievous harm resulting from the irresponsible behavior of the best and the brightest here at home.

It wasn’t the students struggling at community colleges who came up with the financial gimmicks that produced the Great Recession, but rather the super-whiz-kid graduates of the top business and law schools.

What nonsense to insist that low public school test scores hobbled our economy when it was the highest-achieving graduates of our elite colleges who designed and sold the financial gimmicks that created this crisis. Indeed, some of the folks who once designed the phony mathematical formulas underwriting subprime mortgage-based derivatives won Nobel prizes for their effort. A pioneer in the securitization of mortgage debt, as well as exporting jobs abroad, was one Jeffrey Immelt, the CEO of GE, whom Obama recently appointed to head his new job creation panel.

That the financial meltdown at the heart of our economic crisis was “avoidable” and not the result of long-run economic problems related to education and foreign competition is detailed in a sweeping report by the Democratic majority on the Financial Crisis Inquiry Commission to be released as a 576-page book on Thursday. In a preview reported in The New York Times, the commission concluded: “The greatest tragedy would be to accept the refrain that no one could have seen this coming and thus nothing could have been done. If we accept this notion, it will happen again.”

Just the warning that Obama has ignored by continually appointing the very people who engineered this crisis, mostly Clinton alums, to reverse its ongoing dire consequences. As the Times reports: “The decision in 2000 to shield the exotic financial instruments known as over-the-counter derivatives from regulation, made during the last year of President Bill Clinton’s term, is called ‘a key turning point in the march toward the financial crisis.’ ”

Obama appointed as his top economic adviser Lawrence Summers, who as Clinton’s treasury secretary was the key architect of that “turning point,” and Summers protégé Timothy Geithner as his own treasury secretary. The unanimous finding of the 10 Democrats on the commission is that Geithner, who had been president of the New York Fed before Obama appointed him, “could have clamped down” on excesses by Citigroup, the subprime mortgage leader that Geithner and the Fed bailed out along with other unworthy banking supplicants.

Profligate behavior that has hobbled the economy while running up an enormous debt that Obama now uses as an excuse for a five-year freeze on discretionary domestic spending cuts, that small part of the budget that might actually help ordinary people. Speaking of our legacy of deficit spending, Obama stated, “...in the wake of the financial crisis, some of that was necessary to keep credit flowing, save jobs, and put money in people’s pockets. But now that the worst of the recession is over, we have to confront the fact that our government spends more than it takes in.”

Why now? It is an absurd demarcation to freeze spending when so many remain unemployed just because corporate profits, and therefore stock market valuations, seem firm. Ours is a union divided between those who agree with Obama that “the worst of the recession is over” and the far larger number in deep pain that this president is bent on ignoring.

[Robert Scheer, editor in chief of Truthdig, has built a reputation for strong social and political writing over his 30 years as a journalist. Sheer, who conducted the famous Playboy magazine interview in which Jimmy Carter confessed to the lust in his heart, was editor of Ramparts and national corespondent for the Los Angeles Times. Sheer, who has written nine books, is clinical professor of communications at the University of Southern California’s Annenberg School for Communication and Journalism.]

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BOOKS / Danny Schechter : Villains Galore! A Bankster Dozen

Bankster graphic from ANU News.
Villains galore!
Good holiday reads about
the great economic crisis

By Danny Schechter / The Rag Blog / December 4, 2010

Back in 2007, just as the markets began their meltdown, I started writing a book I called Plunder to investigate the then emerging economic calamity. I had a well-known agent representing me, and, at that time, had published 10 books. My agent warned me that I was ahead of the curve but agreed that the subject couldn’t be timelier.

Before we were through, the manuscript went to and was returned by 30 publishers. I was told that there is only one person that a book like mine had to pass muster with, not an economist, not a book editor -- but the book buyer who handles business books for Barnes and Noble. If she/she didn’t like it, forget it. (This was before the bottom dropped out of that company that was later nearly sold.)

So much for their business savvy. I guess Plunder was too much of an anti-business book for them then.

At that point, they were looking for “How to Get Rich” books and volumes with investment advice. Since I was not offering either, my warnings of the collapse ahead were off-message. No sale. Finally, a small press, Cosimo Books put it out. Sadly, with no real advertising budget or retail support, it wasn’t going to go anywhere. It was on the money in one sense -- published just before Lehman Brothers went down.

Since then, as the crisis was acknowledged and legitimated, the subject was finally validated for the publishing world, perhaps as millions of people began asking, "What the F…? What the hell happened?"

To answer that question, a mighty stream of crisis books was commissioned and soon poured forth. Every publisher wanted one. Some authors blamed psychological factors. Others were technical to a fault and unreadable. Still, others trashed borrowers who bought homes they couldn’t afford. Many framed the problem in terms of Wall Street mistakes and miscalculations, and occasionally greed.

Wrote Satyajit Das, author of Traders, Guns & Money: “The number of books on the Global Financial Crisis (GFC) has reached pandemic proportions -- the World Health Organization (WHO) is investigating. With the decorum of vultures at a carcass, publishers are cashing in on the transitory interest of the masses (normally obsessed with war, scandal or reality TV shows) in the arcane minutiae of financial matters.”

Few indicted the system; fewer still focused on intentionality -- crime in the suites, the subject I explore in my film Plunder: The Crime Of Our Time and the more detailed companion book The Crime of Our Time (Disinfo).

In the meantime, I tried to keep up with the hype and a flow that is still flowing.

Here are 12 books worth reading:

1. The Pecora Investigation: Stock Exchange Practices and The Causes of the 1929 Stock Market Crash. This is the just reissued actual text of the U.S. Senate Committee on Banking and Currency in the days before the Congress was bought and sold. Pecora had said “Legal chicanery and pitch darkness were the banker’s stoutest allies.”
   
   So far, in today’s crisis, there has been only ONE real Senate hearing, by Senator Levin questioning ONE deal by Goldman Sachs who denied everything until the bank reached a $550 MILLION settlement without admitting any wrongdoing. Clearly we still need a new Pecora-like investigation, not a tepid Congressional inquiry commission


2. Matt Taibbi: Griftopia: Bubble Machines, Vampire Squids and the Long Con that is Breaking America (Spiegel & Grau). As Rolling Stone readers know, Matt is a bold reporter and brilliant stylist turning his rage into brilliant prose and giving no mercy to the Goldman Sachs gang.


3. Nomi Prims: It Takes A Pillage: Behind the Bailouts, Bonuses and Backroom Deals from Washington to Wall Street. An elegant writer, Nomi knows the financial world up close because she’s "been there and done that" with high paying stints at Bear Stearns and Goldman Sachs. You can see her brilliance in my film, Plunder. Her book goes much deeper.


4. Les Leopold: The Looting of America: How Wall Street’s Game of Fantasy Finance Destroyed Our Jobs, Pensions and Prosperity -- and What We Can Do About It (Chelsea Green). Les is a passionate and compelling writer, teacher and activist. He has been steeped in union politics and knows how to fuse analysis and agitation


5. Joseph E. Stiglitz: Free Fall: America, Free Markets, and the Sinking of the Global Economy (Norton). Siglitz is the economist’s economist, a Nobel Prize Winner, an insider turned fierce critic of our economic crisis. He has the credentials and THE critique and a much needed global perspective.


6. Howard Davies: The Financial Crisis: Who is to Blame? (Polity). I picked this book up at my alma mater, the London School of Economics, which Davies now directs. This is straight down the middle without dismissing more radical insights. He even references my critique of media complicity.


7. Randall Lane: The Zeroes: My Misadventures in the Decade Wall Street Went Insane. A colorful personal account by a gonzo editor who covered the madness for Wall Street pubs. Sample: “Historically, Wall Street has been like one giant extended High School (A boy’s High School). The jocks become trader -- large, aggressive men who succeed in the pits based on heft and testosterone. The nerds went into banking, crunching numbers and pumping out spread sheets to determine the efficacy of deals.”



8. Yves Smith: ECONned: How Unenlightened Self Interest Undermined Democracy, and Corrupted Capitalism (Palgrave Macmillan). Yves is a rock star in the business of critical economics. A financial industry professional, she defected to the “light side” and founded the must read website, NakedCapitalism.com. This book skewers government policy, the economics “profession” and Wall Street fraudsters.


9. Steig Larsson: The Millennium Trilogy. The late Swedish journalist, turned popular writer, has produced three volumes of best-selling action thrillers with intelligent plots. I cite his work here because he and the character he created, Mikael Blomkvist, were investigative reporters in the financial realm.
   
   Larsson describes Blomkvist’s contempt for his fellow financial journalists based on morality: “His contempt for his fellow financial journalists was based on something that in his opinion was as plain as morality. The equation was simple. A bank director who blows millions on foolhardy speculations should not keep his job. A managing director who plays shell company games should do time.
   
   “The job of the financial journalist was to examine the sharks who created interest crises and speculated away the savings of small investors, to scrutinise company boards with the same merciless zeal with which political reporters pursue the tiniest steps out of line of ministers and members of Parliament.”
   
   His books are more than storytelling. They are also a cry for more truth in media.


10. And, since I try to practice the investigative protocols of journalism in this sphere, may I call your attention to the republication of one of the greatest American classics of taking on corporate power?
    
    Ida M. Tarbell may be gone but her work is not forgotten, especially her classic, two volume blistering The History of the Standard Oil Company. I was privileged to write the introduction for the Cosimo edition. She wrote this muckraking blockbuster in 1904 and remains relevant, and an example of the best of us.


11. For a left critique, try Michael Chossudovsky and Andrew Gayin Marshall, Editors: The Global Economic Crisis: The Great Depression of the XXI Century (Global Research) from the Canadian-based global web site I contribute to.


12. Barry James Dyke: The Pirates of Manhattan: Systematically Plundering The American Consumer and How To protect Yourself Against It. The one financial book I saw “blurbed” by Jay Leno (Self-published).

So, this is my “cheaper by the dozen” for 2010. I am sure I have overlooked some great work so it is hardly the “end-all” and “be-all.” Many of the new financial books out there are written by journalists for leading newspapers and magazines, as well as mainstream economists, many of whom missed the crisis when they might have warned us about it.

And, while many of us wait for the promised Wikileaks take down of a major bank, many authors and journalists still fail to tackle the really essential issues.

Hopefully, some of the books I am recommending will fill some gaps in your knowledge.

["News Dissector" Danny Schechter is a journalist, author, Emmy award winning television producer, and independent filmmaker. Schechter directed Plunder: The Crime of Our Time, and a companion book, The Crime of Our Time: Why Wall Street Is Not Too Big to Jail. Contact him at dissector@mediachannel.org.]

Listen to Thorne Dreyer's Sept. 28 interview with journalist and filmmaker Danny Schechter on Rag Radio here. To find all shows on the Rag Radio archives, go here.

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Danny Schechter : Time to Jail the Banksters

Parade of the banksters. Cartoon by Jim Conte.
Time to act:
A campaign to jail the financial fraudsters

By Danny Schechter / The Rag Blog / November 11, 2010

“I’ll have the Chateau Mouton-Rothschild from 1982,” a Wall Street investment banker recently told his waiter at the latest and greatest shi-shi restaurant in Greenwich Village.

“Yes sir, but I want you to know, the cost is $3,950.”

“No Problem.”

(As reported in The New York Times.)

And so it goes at The Lion, where no extravagance is too costly for today’s banksters and Lion Kings.

The men they call the "big swinging dicks" are back. In the words of The New York Times, Wall Street is getting its “groove back,” as the banksters anticipate their latest round of bonuses while gloating about how their strategic and undisclosed campaign donations assured that the overdue regulations they fear will be put on hold.

For them, buying the 2010 election was a small price to pay. Read economist James Galbraith’s column about how they did it.

Oh, happy day.

Meanwhile the rest of us cling to our “jobless recovery” while the prospect of inflation engineered by the Federal Reserve Bank threatens what purchasing power we have.

Increasingly, economists in the know are saying that unless financial fraud is prosecuted, there can be no recovery, as Washington’s Blog reports:

As economists such as William Black and James Galbraith have repeatedly said, we cannot solve the economic crisis unless we throw the criminals who committed fraud in jail.

And Nobel prize winning economist George Akerlof has demonstrated that failure to punish white collar criminals -- and instead bailing them out -- creates incentives for more economic crimes and further destruction of the economy in the future.

Nobel prize winning economist Joseph Stiglitz just agreed. As Stiglitz told Daily Finance on October 20th:

"The legal system is supposed to be the codification of our norms and beliefs, things that we need to make our system work. If the legal system is seen as exploitative, then confidence in our whole system starts eroding. And that's really the problem that's going on."

OUR RESPONSE: We don’t need more bailouts. We need a jailout.

Support the JAILOUT Economic Justice Campaign by signing the petition at New Dissector.

We need laws enforced, not winked at with financial settlements that allow those who enriched themselves at our expense, and destroyed the lives of so many, to get off scot-free, often with obscene bonuses and promotions.

Now, it is time for all of us to speak out and demand that something is done to stop foreclosures and create jobs.

We can start with a petition to the President, Attorney General, and political, labor, and youth leaders, not in the bag to Wall Street. We can call on the media to do more to cover this story instead of blaming the victims for the crime.

We are saying: ENOUGH IS ENOUGH

1. Investigate fraudsters and financial criminals.
2. Indict those responsible.
3. Prosecute using RICO laws that target criminal enterprises spawned by three industries working together: finance, insurance and real estate.
4. Incarcerate the guilty.

All of this has been done before. More than 1,500 bankers went to jail after the S&L crisis.

Why not today?

We demand a criminal investigation.

We demand to see the guilty parties indicted. Their illegal gains should be seized and distributed to their victims.

We demand the federal and state governments prosecute these crimes, using RICO laws when possible, not cut deals that allow these crooks to walk free.

We want a national moratorium on foreclosures until all the shady legal issues are sorted out — and not just by the banks

We want our government to be on our side, to stand up for Main Street, not Wall Street.

If you committed these crimes, you would be doing time.

So should they!

Go here to learn more about this effort and to sign the petition.

["News Dissector" Danny Schechter is a journalist, author, Emmy award winning television producer, and independent filmmaker who also writes, blogs, and speaks about media issues. Schechter directed Plunder: The Crime of Our Time, and a companion book, The Crime of Our Time: Why Wall Street Is Not Too Big to Jail. Contact him at dissector@mediachannel.org.]

Listen to Thorne Dreyer's Sept. 28 interview with journalist and filmmaker Danny Schechter on Rag Radio here. To find all shows on the Rag Radio archives, go here.

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FILM / Danny Schechter : Stone's 'Wall Street' Sequel Goes Soft

Journalist, author, Emmy winning television producer, and independent filmmaker Danny Schechter will be Thorne Dreyer's guest on Rag Radio on KOOP 91.7 FM in Austin, Tuesday, September 28, 2-3 p.m. (CST). To stream Rag Radio live, go here. To listen to this show after the broadcast, or to listen to earlier shows on Rag Radio, go here.

'Wall Street: Money Never Sleeps'
Oliver Stone's sequel misses the mark

By Danny Schechter / The Rag Blog / September 27, 2010

Lack of focus on corruption mars Stone's new Wall Street movie. It's heavy on atmosphere, light on anger.

The lead headline in The New York Times is “Extensive Fraud Appears to Mar Afghan Election." The line below is "A Blow to Credibility," as if anyone who follows Afghanistan, a country known for blatant and notorious corruption, would be at all surprised by this latest “blow.” This “blow” followed an earlier “blow” a few weeks back with the disclosure of the crash of the Kabul Bank with $300 billion still unaccounted for.

In America, another fraud: CNN reported the next morning that the pathetic blonde beauty-celebrity Lindsay Lohan put up $300,000 to get out of jail. That’s the kind of story American media considers worthy of constant “Breaking News” attention.

When will we see the headlines like "Extensive Fraud Appears to Mar Economic Recovery" or "Extensive Fraud Led to Financial Collapse"?

I ask this question, sort of knowing the answer, after two recent back-to-back film experiences.

Last Thursday I spoke at a packed screening of my film Plunder: The Crime of our Time that indicts financial crimes and corruption behind the financial crisis. The audience seemed overwhelmingly positive except for one Wall Streeter in the house who insisted that while there may have been “ethical lapses,” no crimes were committed, an expression of a conventional wisdom that most of the media has reinforced without investigating any evidence.

At a reception after the film in Suburban Long Island’s Cinema Arts Center, several people told me that one impact the crisis has had on them is sleeplessness because of anxiety over whether they can pay their bills and avoid joblessness and foreclosure.

Ironically, film director Oliver Stone also had sleep on his mind, as "Money Never Sleeps” is the subtitle of his remake of the movie Wall Street. To my surprise, the theater was not packed for a film distributed ironically by the money of mad mogul Rupert Murdoch’s 20th Century Fox company.

After watching the movie, I realized why the right-wing Rupert Murdoch could be comfortable enough releasing the latest from the nominally left-wing Oliver Stone.

The movie built an “explainer” around a love story that in the end was as much about child-parent conflicts and pretentious philosophizing as the background of the collapse of Wall Street -- which is treated, ultimately, from a “we are all to blame” viewpoint. In many ways the movie celebrates the brash culture of greed and excess of our era while we watch Michael Douglas' portrayal of Gordon Gekko, known in earlier times for the slogan “Greed Is Good.”

Now, greed is everywhere, and there ain’t much we can do about it.

Oh Oliver, really.

Personally, I saw many of the stories I reported in my film turn up in his -- with even the same lines -- leading me to unprovable suspicions after having given my film personally to Stone with a request for his help months earlier.

How naive of me. We are in different leagues, clearly, and maybe on different sides.

In an interview on CNN, Stone seemed to argue that free speech is more of an issue than the insolvency of the banks. He became totally obsessed with the rumors that brought down Bear Stearns, an issue I explore in depth. Stone told CNN:

What I found out, what shocked me back in 2009, was that Goldman Sachs and those type of banks were really going long and short at the same time and were actually selling out on their clients. I thought that was shocking information to me, as well as the power of rumor, which, amazing. We show the power of that and how it can destroy a company...

I'm not so sure that's good for the system, although it's more transparent. But it does lead to circles of viciousness and rumor and hype and a stock, as you know, drops. I mean, look at what happened a few months ago, right? The market just crashed. So what's going to happen?

It does scare me, and I think it's the nature of the modern world, I suppose.

The following comment was on the website Ml-implode.com, where the intervew was excerpted:

There you go, "rumor,” mentioned as a causative factor 4 or 5 times; insolvency/leverage? Zero. Those poor, poor Wall Street banks -- they're victims, you know.

The movie dances on all sides of the issues, actually featuring an on camera cameo by Stone, of course and, Grayon Carter, editor of Vanity Fair, who I quote in my film and book, The Crime of our Time, because he labeled the crisis “the greatest non-violent crime in history” Stone feigns to that view but ultimately rejects it.

Hedge Fund investor Jim Chanos, who I also quote, and who has called for the prosecution of wrongdoers, was even an advisor. It seems like he was wanted for his insight more on the atmospherics of the scene, not his demand for more perp walks.

Wall Street 2 features a father-son subtext as the young banker played by Shia LaBeouf watches as his mentor -- at a firm made to resemble Bear Stearns or Lehman Brothers -- commits suicide after the company is brought down by rumors and dirty tricks. In the end he marries and has a son with Gekko’s daughter who, natch, runs a left wing website.

The kid is named Louie after the banker who died. Undisclosed is that Stone’s dad who worked on Wall Street was also a Lou. Clearly this movie was as much about the personal psychodrama of Stone’s life as many of his earlier films were about the ghosts of Vietnam. His movies about Nixon and W also featured father-son conflicts. The banker who died by jumping into the subway, Frank Langella, recently played Nixon in the movie about David Frost’s interview.

More disturbing was the film’s failure to call for any action. It starts with Gekko getting out of jail and getting back in the industry. So jail, in the end means nothing.

Many Wall Streeters interviewed about the film seemed confused about its message and meandering plot points. Most (including myself) liked the luscious cinematography of New York that even profiled Bernie Madoff’s former office, as well as David Byrne’s great music. Said former banker Nomi Prins who is in Plunder, “ I liked it until halfway through, and then it was a hodge-podge bunch of events.”

The pro-free market Daily Bell wrote:

Always, Oliver Stone seems a propagandist and apologist... One so successful and perspicacious as Oliver Stone must know generally where the truth lies. Would it be any news to him that the United States is over-extended from a monetary and military standpoint? Or that Fed money printing was the proximate cause of the economic crash. It should not be too hard to figure this out. The Internet is full of such analyses.

Critic Roger Ebert liked the film but added, "I wish it had been angrier. I wish it had been outraged. Maybe Stone's instincts are correct, and American audiences aren't ready for that. They haven't had enough of Greed."

Did those “instincts” lead to the pandering, or was it just the logic of the market or Murdoch’s neutering its critical edge with an insistence to “just tell us a story, Oliver, if you want this to be big.”

In my experience, audiences I met were furious about what’s happened to them and the country. Late last week Paul Volker warned that the financial system is still broken. Others fear another crash is only just a matter of time. This reality is not evident on Oliver Stone’s radar screen.

After my screening, a man named Milton told me he is active in the Democratic Party, but that the Dems will not really act against Wall Street. “They don’t have the guts,” he said. Can the same be said about Oliver Stone, who loves the Hugo Chavez’s of the world South Of The Border, but echoes CNBC here at home?

["News Dissector" Danny Schechter is a journalist, author, Emmy award winning television producer, and independent filmmaker who also writes, blogs, and speaks about media issues. Schechter directed Plunder: The Crime of Our Time, and a companion book, The Crime of Our Time: Why Wall Street Is Not Too Big to Jail. Contact him at dissector@mediachannel.org.]

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Greed Exposed : The 'Naked Credit Default Swap'

"Greed" (2006). Mixed media from natalie.org.
What they are and why they should be banned:
Naked Credit Default Swaps

By Ted McLaughlin / The Rag Blog / May 21, 2010

Don't let your eyes glaze over and stop reading this post because you don't know what a "naked credit default swap" is. This is very important and I'll try to make it easily understandable. It is important because these "naked credit default swaps" are one of the major reasons for Wall Street troubles that kicked off this recession, and if nothing is done about them, we could easily see a repeat of these problems in the near future.

First, let us examine what a "credit default swap" (CDS) is, and then what a "naked credit default swap" (NCDS) is. Say a company needs to raise some money, so they create some bonds and sell them. A second company (or individual) buys those bonds, but gets to thinking that they'd like some protection in case of the bond-seller failing to redeem the bonds. They buy an insurance policy that protects them if the bond-seller defaults on the bonds. This insurance policy is called a CDS.

Now I don't really have a problem with CDS's, since the buyer of the bonds should have the right to protect their investment. The problem starts with the NCDS's. These are insurance policies on those bonds that are bought by someone who didn't buy any of the bonds. They would not lose a single penny if the seller defaulted (failed to redeem) the bonds, because they don't own any of the bonds.

Those who buy a NCDS are not trying to protect any investment they made (because they didn't make any investment). They are simply making a cheap bet that the bonds will default. If the bond-seller doesn't default, they are out a small fee, but if the default happens then they stand to make many millions of dollars. To put it bluntly, they are betting against the economy.

And this actually happened during the failure of the financial institutions on Wall Street. Many people who did not have an interest in those institutions made millions of dollars (sometimes hundreds of millions) because they had bet against the financial institutions (and our economy) by buying NCDS's. While these people got rich over other's misfortunes, the NCDS's just made the whole economic situation worse for everyone else (including the people on Main Street who had no interest in Wall Street).

Let me use an analogy. If you own a house, laws prevent me from buying insurance on your house. That's because I don't have a legitimate interest in your house. If your house burns down, I won't be out any money. You are the only person who will lose if your house burns down, and that is why you are the only person who can buy insurance on that house (to protect your investment). That's just common sense. I shouldn't have the right to get rich off your misfortune, while you just get reimbursed for your loss.

But the same rules that apply to you and me don't apply to Wall Street. Why? That's simple -- GREED! They have fixed the rules so they make money regardless of what happens to the economy. Even worse, they make money off the misery of others without any danger of losing their own money (as would happen if they actually had to make an investment). And the Wall Street financial gurus let this happen because they get fees on the sale of these NCDS's, which increases their own salaries and bonuses.

Why should you care about this? Because it is your tax dollars that bail out the financial and insurance giants when it all comes crashing down (just like last time). Consider this. There is currently, according to Senator Byron Dorgan (D-North Dakota), about $10 trillion (yes, I said trillion) worth of CDS's bet on the performance of Wall Street's giant banks, and the holdings of these banks are guaranteed by the taxpayers (just like your community bank).

The problem is that 80% of these CDS's are NCDS's -- people betting they can get rich off the failure of these banks (or at least the failure of their bonds). And if that happens, it is the taxpayers who will get stuck with the bill. And while the taxpayer is footing the bill to make these people rich, our economy takes another nosedive -- perhaps even worse than the one we are currently in. It cost us 12 million jobs this time. Can we survive the next one?

This is a problem that has a simple solution. The solution is simply to outlaw NCDS's. Limit the "credit default swaps" to the people or companies that actually have an interest in protecting themselves from a default -- that is, the buyers who would be hurt by a default. But don't let those without a legitimate interest purchase a "naked credit default swap." Don't let them bet against our economy.

Sadly, the current financial reform bill being considered by the Senate does not ban the NCDS's. Senator Dorgan has proposed an amendment that would do this, but he cannot get the Senate to even consider his amendment. He is being ignored by both Democrats and Republicans. It looks like the $1 million a day that Wall Street has sunk into lobbying is paying off for them.

The financial reform bill does contain some good things, but it doesn't get down to the real reform that would keep the Wall Street disaster which caused our country's economic disaster from happening again. A good start on this would be to ban NCDS's. But at this point it doesn't look like that will happen.

It would be nice if our senators cared as much about Main Street as they do about Wall Street, but it doesn't look like that's a possibility either.

[Rag Blog contributor Ted McLaughlin also posts at jobsanger.]

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Psychology of Greed : Protecting the People from Wall Street

A rebuttal of sorts:
Protecting the people from Wall Street

By Steven Porter / The Rag Blog / April 23, 2010

[On April 21, The Rag Blog published an article by Sherman DeBrosse entitled Republican Jujitsu : Protecting Wall Street from the People.]

To argue that the abuses of Wall Street lie at the feet of one political party or another really avoids a deeper issue with which our nation must eventually come to grips. The issue is the psychology of greed which is the progenitor of the abuses. And it is a psychology which is part of our entire nation.

Greed is a neurosis which is not characterized by party label, gender, religion, age, sexual orientation, or any of the other considerations of which the pundits often talk. It is a cultural phenomenon whose roots are in the child-rearing practices and sociological landscape of the society. Both Freud and Karen Horney discuss the process, Horney most eloquently in her book The Neurotic Personality of our Time.

The lies and manipulations which often accompany greed cannot really be legislated. Morality and immorality are not determined by what laws are passed. In fact, given a sufficient lust for the immoral, laws are more often simply things to circumvent rather than statutes to obey.

That said, if immorality cannot be halted by law, it can certainly be prosecuted by law, and that seems to be the great weakness of our government. It is a weakness because Congress is also one of the foxes guarding the chicken coop of finance.

The foxes on Wall Street and those in Congress have been allies for years, as anyone who looks at the record will see. The alliance has taken two traditional paths: campaign contributions from the financial industry to candidates for Congress (by the billions -- see www.opensecrets.org) and a revolving door between top financial executives and top government officials.

Goldman Sachs, the focus of our current dilemma, is a particularly egregious offender in this regard having placed more than 45 of its top people in government (including both Rubin and Paulson who went from GS CEO positions to Secretary of the Treasury).

The appearance of President Obama on Wall Street as a spokesperson for a greater fiscal morality is simply laughable. It is part of a charade being played out by all parties to make it seem like the interests of the people are being looked after. Let us remember that it was Obama who eschewed the 2008 campaign spending limits he once proclaimed he would uphold. Let us remember that it was Obama who took $1 million in contributions from Goldman Sachs in the 2008 campaign.

Not that I am saying anything about Obama which is not true of the other candidates. The system has been rigged to aggrandize the greed of special interests, and candidates in both major parties are willing participants.

The question of what we do to protect ourselves against the abuses of the finance industry is thus a far more complex one than the passage of any single piece of legislation. It involves the psychological metamorphosis of our culture from one of spendthrift instant gratification to one of what psychologist Eric Berne called "more Adult behavior."

To rail against the fiscal and governmental corruptors is to miss the real point. To quote Mr. Shakespeare yet again, "The fault is not in our stars, but in ourselves."

[Dr. Steven Porter holds BS, MA, PhD, and PD degrees in fine arts and educational administration. He was the Democratic Party candidate for Congress in Pennsylvania's third district in both 2004 and 2006. His new book is entitled Preserving America: ten things we must change to survive.]

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Republicans : Choosing Wall Street Over Main Street

Graphic from USA Today.
The Republicans and financial regulation:
Choosing Wall Street over Main Street

By Ted McLaughlin / The Rag Blog / April 22, 2010

It's no secret to anyone what kicked off the current recession in America. It was the financial industry and Wall Street that were so greedy that they were willing to throw the entire country under the bus as long as they could keep making their fees and bonuses. They were so concerned with making their own money they even put their own companies at risk to make a fast buck.

Of course, this couldn't go on forever. Wall Street had convinced Americans that rules were in place that would prevent a financial meltdown like what happened in 1929 and led to the Great Depression. To hear them talk, land and housing values would keep rising forever, the stock market could not bottom out and lose billions of dollars, and the financial industry was too big and smart to fail. None of that was true.

Their greed finally caught up with them. Some companies folded (like Lehman Bros.) and others would have folded if they hadn't been bailed out by Republican President George Bush creating a $700 billion bailout to keep them afloat. This huge failure by Wall Street banks, brokerages and insurance companies led us into the worst recession since the 1930s. Over 12 million jobs were lost and the economy's failure was felt in every state and city throughout the country.

After the $700 billion of taxpayer money was pumped into Wall Street, they are now back to their old ways. The stock market is going up, outrageous salaries and bonuses are being paid to the executives, and we are probably well on our way to another financial meltdown in the future because nothing has been changed. And that seems to be the way Wall Street wants it, because they're pumping over a million dollars a day into lobbying against any changes or new regulations.

But the American people know better. They know that changes on Wall Street must be made and the financial industry must be more closely regulated, because they have shown that they are clearly incapable of controlling their own greed or policing their own industry. This is even true of the teabaggers. While it is true that they are unhappy with government, they are equally unhappy with Wall Street and unhappy that while the financial companies have recovered, ordinary Americans are still mired in the recession.

That's why I am so puzzled that congressional Republicans are now siding with Wall Street against the ordinary citizens on Main Street. President Obama is trying to get some new regulations passed to rein in some of the most egregious abuses on Wall Street. I think he should do even more than he is proposing, but his proposals will make a good start and bring at least a modicum of sanity back to Wall Street.

But the president may be unable to get his new financial regulations through Congress. This is because the Republicans have decided they are against any reform of Wall Street. That should tell any observer where most of that lobbyist money is going.

Senator Chris Dodd (D-Connecticut) is chairman of the Senate Banking Committee and one of those pushing for new regulations on the financial industry. However, he has received a letter from the Senate Minority Leader (who receives more funds from Wall Street than any other senator) telling him that the Republicans have 41 votes to oppose regulating the financial industry. In fact, he claims they can even prevent Democrats from debating financial reform.

I think the Republicans, while they may be filling their campaign coffers off of Wall Street, are making a big mistake. They are underestimating the rage that the average American feels toward Wall Street and the financial giants. Maybe they think the next election will be fought over health care reform, and they can keep the public's mind off of Wall Street and our jobless economy caused by Wall Street. They are wrong.

The health care reform is old news, and the more people learn about it, the more they will like it -- or at least accept it. The next election will be fought over the economy, and the bill that will be freshest in the minds of voters will be the effort to regulate Wall Street and rein in some of their greed. They are not going to be happy with the protectors of Wall Street.

I think the Republicans are giving the Democrats a great campaign issue. I hope the Republicans continue their efforts to protect Wall Street greed, because it gives Democrats an issue to pound them on. Democrats should repeat over and over again that it is the Republican Party that opposes financial reform. They should make it clear that the Republicans are the ones blocking help for ordinary Americans and acting to protect the rich Wall Street corporations. The issue for Democrats should be simple:

THE REPUBLICANS HAVE CHOSEN WALL STREET OVER MAIN STREET!!!

[Rag Blog contributor Ted McLaughlin also posts at jobsanger.]

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VERSE / Larry Piltz : We're Focused in Going Forward

"Piggy Banker." Painting © Zina Saunders 2009.

We're Focused In Going Forward (a song)

We're focused in going forward
hoping we're not moving backward
that our dreams are not shattered
and we're doing things that matter

We have a laser-eye view
of what we surgically need to do
but first we synchronize our attitudes
to increase the odds we're not that screwed

We'll strategize our paradigm
to turn this tanker on a dime
then magnetize our money bomb
and incentivize remaining calm

Calm, calm, calm, calm
take a powder take a balm
calm, calm, calm, calm
serenity thy name is Rahm

I yearn to actionize my sweetheart deal
get skin in the game and watch it peel
to hybridize across the board
take a flier and pull the cord

I'll morally hazard deep cramdowns
and turn the plunge team into clowns
creatively destroy the ranks
of dualistic zombie banks

I'll deconstruct the stewardship
and ride risk-free the double dip
but why I do this I won't tell
but two key words are soul and sell

soul, sell, soul, sell
I salivate at the first bell
soul, sell, soul, sell
it's later that I go to hell

We're focused in going forward
hoping we're not ass backward
that our dreams were not hackered
by some spoiled rich cracker
we're focused in going forward


Larry Piltz / The Rag Blog

Indian Cove
Austin, Texas
April 20, 2010

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A Modest Proposal : Eat the Rich!

Photo by chrisjfry / Flickr.
Serve the people!
Carve up Wall Street

By Alex Knight / The Rag Blog / November 20, 2009

See Amy Goodman's interview with Robert Scheer on Wall Street and the economy, from Democracy Now!, Below.

Yesterday, Democracy Now! reported that two major records have been broken in 2009 -- Wall St. profits ($35.7 billion in the first half of the year), and the number of Americans going hungry (50 million). These two seemingly unrelated tragedies immediately suggest a common solution -- carve up the bloated hulks of Wall Street swine and serve them up to the American people!

On Tuesday, the NY Comptroller’s Office released a report showing that “broker-dealer operations of New York Stock Exchange member firms earned a record $35.7 billion in the first half of 2009.” Through September, $22.5 billion in profits were reported from the four largest firms alone -- Goldman Sachs, Merrill Lynch, Morgan Stanley, JPMorgan Chase. These are the same banks that got bailed out by the Federal Government last year -- which means that taxpayers like you and I paid for these creeps’ bonuses.

Not coincidentally, these obscene profits were recorded at the same moment that the Department of Agriculture released a report showing that “nearly 50 million people -- including almost one child in four -- struggled last year to get enough to eat” (as written in the Washington Post on Monday). While the economy has been in the tank and unemployment has surpassed 10% officially, food prices have been skyrocketing, and so millions more Americans are being forced to go without needed nutrition.

Why isn’t it a coincidence? Because the crooks who sent global markets into a freefall last September, causing millions to lose their homes and jobs, have been rewarded for their bad behavior with preferential treatment from Uncle Sam. These Wall Street piggies have been gorging themselves on trillions of U.S. federally-approved dough, while regular folks struggle to pay the rent or put food on the table -- without so much as a measly health care reform bill to give hope to their deteriorating condition. Now one out of every four of our kids is going hungry while the government subsidizes the very stock market slimeballs responsible for creating the trouble to begin with.

“Where’s OUR bailout?” struggling folks are wondering, as they see food prices climb and jobs shipped overseas by the day. 50 million folks are wondering where their next meal is gonna come from... and it’s time to entertain innovative, cost-effective proposals, even if they may seem exotic.

Well it turns out there’s one way to solve this problem without tapping the Treasury for so much as a penny!

It would bring down the cost of high-protein, high-quality food, providing much-needed nutrition to the hungry.

It could create high-paid and unionized manufacturing jobs, right here in the U.S. of A!

It would be environmentally friendly, dolphin-safe, and carbon-neutral (although there may be some associated methane emissions after the plan is implemented).

Best of all, this solution would remove the parasitic, bonus-hungry, pyramid-scheming, derivative-trading, regulation-gutting, President-advising, economy-wrecking, bailout mongers from the picture, allowing the American people to determine our economic future democratically!

And it’s so straightforward even Timothy Geithner could understand it:

Eat the Rich!

Below is the transcript from Democracy Now!’s interview with Robert Scheer on these two unprecedented reports and what they mean for the economy.



AMY GOODMAN: We turn now to the latest on the economy. A pair of new government reports released this week paint a startling picture of where the country is, more than a year after the economic meltdown. On Tuesday, the New York Comptroller’s Office said Wall Street profits are set to exceed the record set three years ago. The four largest firms -- Goldman Sachs, Merrill Lynch, Morgan Stanley, JPMorgan Chase -- took in $22.5 billion in profits through September. The top six banks set aside $112 billion for salaries and bonuses over the same period. In a recent interview, the CEO of Goldman Sachs, Lloyd Blankfein, defended the bank’s massive profits, saying Goldman is, quote, “doing God’s work.”

Meanwhile, the Department of Agriculture has revealed that far more people are going hungry in the United States than previously thought. The Department estimates 50 million Americans, including a quarter of all children, struggled to get enough to eat last year. The number of children who live in households in which food at times was scarce last year stands at 17 million, an increase of four million children in just a year.

Our next guest has been closely following the impact and causes of the economic meltdown. Robert Scheer, editor at Truthdig.com, author of many books, including The Pornography of Power: How Defense Hawks Hijacked 9/11 and Weakened America. His latest column is called “Where Is the Community Organizer We Elected?” He joins me here in Burbank, California.

Welcome to Democracy Now!, Robert Scheer. OK, just talk about these figures, from hunger to Goldman Sachs.

ROBERT SCHEER: Well, first of all, I mean, the whole thing about the profit of Wall Street that makes it particularly obscene is that we gave them that money. Your previous guest talked about how China is carrying $800 billion of our debt. We’re running up a $1.4 trillion deficit.

And what happened was, we threw a lot of money at Wall Street. In particular, in relation to Goldman, we had this buyout of AIG, $180 billion. We’ve guaranteed the toxic assets of these enterprises. And that money, in a really truly shameful way, was passed on directly to the very companies that you mentioned that are giving themselves profits. So there’s something—yes, I’ll use the word “obscene.”

It’s also interesting that he should say he’s “doing God’s work,” Blankfein, the head of Goldman Sachs. And my goodness, if Scripture is clear on anything, it’s condemnation of those who take advantage of the poor. You know, after all, Jesus threw the money changers out of the temple. Scripture is devastating in its condemnation of usury, the immorality of usury. And yet, in your promo, you mentioned Chris Dodd is trying to get a bill passed that would cap interest rates.

You know, where is the Christian right? Where are the Christians? Where are the Jews, for that matter? Or the Muslims? At least the Muslims, in their religious practice, don’t believe in interest as a principle, but the idea that we’re jacking up credit cards to 30, 35 -- this is loan sharking. And we can’t even get a bill passed through Congress that would cap interest payments.

The other thing is, their rationalization is they’re somehow saving the economy. It’s the old blackmail thing. They ruined the economy; they got the legislation, the radical deregulation they wanted, that permitted them to become too big to fail -- Citigroup and these companies; and then they turn around and say, “If you don’t throw all this money at us, the economy is going to go into the Great Depression.”

But they haven’t solved the main problems. Mortgage foreclosures this month are higher than they’ve been in ten months. We have the commercial housing market exploding, you know, apartment building rentals exploding, going into mortgages. And so, you know, they are not dealing with the fundamentals. What has happened is an incredibly expensive bandaid was put on this. And these people don’t even have -- they’re not even embarrassed.

And the reason I wrote that column is they’ve also captured the President. And, you know, I voted for this president. I even contributed money that I didn’t have to his campaign. You know, I still feel great that he’s the President. You know, I’m biased. I like the guy, you know. I like everything about him.

AMY GOODMAN: Yet you ask, where’s the community-organizer-in-chief?

ROBERT SCHEER: I am appalled. This is not a minor criticism. I think the guy is betraying -- betraying -- his own presidency, the promise of his presidency, because he has taken these thieves -- and I use the word advisedly. You know, I think people like Lawrence Summers, who pay themselves -- you know, maybe he’s not legally a thief, but, you know, a guy who pays himself, or gets paid from hedge funds and other people, $15 million in ’08, while he’s advising Obama about the economy.

And he’s the guy who, more than anyone else, when he was Secretary of the Treasury in the Clinton administration, pushed through the radical deregulation that allowed these businesses to get in all this trouble and refused to regulate derivatives and all that sort of thing. And then these guys are made the head of the -- what? They’re going to save us now?

And so, you have the one I attack, particularly, Neal Wolin, who was the general counsel of Hartford, but before that he’d been the general counsel to the Treasury Department, he’s now Deputy Secretary of the Treasury, and he’s the guy that pushed through the reversal of Glass-Steagall. He wrote the actual words in, you know, the Gramm-Leach-Bliley Act. And now he’s our deputy. And he condemns -- the point of the column was that there’s actually a chance to do something now. Chris Dodd has finally seen the light. He is the most important...

AMY GOODMAN: While he is running for reelection.

ROBERT SCHEER: Yeah, running for election.

AMY GOODMAN: Ralph Nader could run against him possibly.

ROBERT SCHEER: Right, and he’s also under pressure, because he did get insurance money and all that sort of thing. But the fact is, he’s got a bill that makes sense, which is, you know, the Fed has been at the center of the problem. Ron Paul is right. The Libertarians are right. You know, the Fed is out of control. It has a higher degree of secrecy than the CIA. We don’t know what they’re doing with our money. There is no accountability there.

Basically it’s run by the banks themselves on the regional level. They’re the ones that are listened to. And what’s happened is that Chris Dodd said, no, you’ve got to take power away from the Fed, and you have to put a new agency that will control these “too big to fail” agencies. And the administration is opposed to it. I can’t—I mean, I know why they’re opposed to it.

AMY GOODMAN: The administration is opposed to it, and the Republican senators are opposed to it.

ROBERT SCHEER: Yeah, exactly.

AMY GOODMAN: Why are they opposed to it?

ROBERT SCHEER: Because they think -- they like business as usual. I mean, they are for Wall Street going its own way. They haven’t learned the lesson that capitalism uncontrolled is capitalism destroyed.

You know, I really found your previous interview on the China thing fascinating. And why is China doing well? You know, this is a startling lesson here, because we were always told unbridled capitalism is the best capitalism. Well, the Chinese have a marriage, like western Europe, but even more so, of government and the free market. It’s not unbridled capitalism. And they’ve been able to come out of this recession that we created. It’s an incredible object lesson here. These commies over there were able to take the capitalist energy and free market model and control it to a considerable degree, and they have an eight, ten percent growth rate now at a time when we’re floundering.

AMY GOODMAN: OK, so you have Lloyd Blankfein, head of Goldman Sachs, saying they’re “doing God’s work.”

ROBERT SCHEER: Yeah.

AMY GOODMAN: And then a week later, they issue this apology, apologizing for past mistakes that led to the financial crisis and announcing a plan to work with Warren Buffett to help 10,000 small businesses recover from this recession and spend $100 million a year for five years. Now, the Financial Times did point out the $100 million annual cost is the equivalent of one good trading day, but explain what’s going on here.

ROBERT SCHEER: Well, first of all, Buffett is the biggest holder in Goldman Sachs, and Buffett is a man of social conscience. I think he’s a very decent, enlightened capitalist of the kind you would hope exists, a long-term view, doesn’t want to destroy the system. And Buffett has said a number of sensible things over the years. And I think he put pressure on them.

He said, “Look, you guys are out to lunch here. You don’t understand how much the people hate you at this point.” You know, and Buffett is out there in real America, you know, and he called them on it. But it’s chump change, what they’re talking about. It’s a program to help small businesses.

I just want to say something emotionally, since you brought up the poverty. I happened to be in Riverside, California last week, and this is a place where the American Dream died at this point. These are people who work hard. You know, they clean our buildings. They work in factories. They got conned into buying homes they couldn’t afford by people who were then going to package them and sell them somewhere.

And you go out there now -- I talked to a young man, he bought a house for $350,000, scraped up everything. He works like a dog. His parents have been cleaning buildings for forty years. That house is now worth $120,000. He lost not only -- he lost everything his family had ever saved. OK? So we’re talking about human tragedy.

These people—he went to college, he went to Riverside, UC Riverside, did everything he was supposed to do, works, you know, twelve-hour days. As I say, his family has always worked hard, paid their taxes, scraped up this money. They buy this house and to have the American Dream. And every fourth house -- they’re making their payments, but, you know, house next door, house over there goes back.

Why didn’t we have a freeze on foreclosures? The smartest thing to do. Jon Stewart recommended it on The Daily Show. He’s the only person. I mean, where are these pundits, you know? And they would laugh. His guests on The Daily Show would laugh at him when he brought it up. But, you know, a freeze on foreclosures, we still need it. A moratorium on foreclosures for two years. They’re not doing it. What they’re doing is throwing more and more money at Wall Street.

And I go back to Obama and the point of my column: he has betrayed his own -- what is it? It wasn’t a revolution, but his own promise. You know, he gave a speech at Cooper Union in ‘08, in March at Cooper Union. This was two months after Robert Rubin, the mentor of all of these people, said there’s no problem, we don’t have any flap in the economy, it’s just a little mild blip.

And Obama gave a speech that was right on. You could give that speech now, and it would be on target. He blamed Wall Street. He blamed radical deregulation. And then, inexplicably, when he got the nomination, he turned to these very same people that had created the problem and said, “OK, now you get us out of it.”

And they’re not doing it. You know, maybe if they’d gotten religion, maybe if they’d learned their lessons, you know, maybe if they were a different breed -- but they’re not. You know, and this Neal Wolin, he attacked Chris Dodd. You know, and they say, “Oh, you’re going to create nervousness for Wall Street.” That was the word they used: you’re going to make Wall Street nervous. I want to make Wall Street nervous. You know, the next time these guys figure out another way to fleece us, they should worry they’re going to get caught. Maybe they won’t do it.

AMY GOODMAN: What about this new government report that’s found Goldman Sachs could have suffered dramatic losses if the federal government hadn’t intervened to bail out AIG, American International Group, the report by the special inspector general for the government bailout program raising doubts about Goldman’s previous claims that it was hedged against potential AIG losses?

ROBERT SCHEER: Yes, well, first of all, this has been...

AMY GOODMAN: What does all that mean?

ROBERT SCHEER: This is the big lie from Goldman, is that, you know, we didn’t -- look, look what happened. Lehman was Goldman’s competitor, was allowed to go belly up, OK? The Secretary of the Treasury was a former head of Goldman Sachs. I don’t want to get into conspiracy theories here, but Robert Rubin was a head of Goldman Sachs, OK? And Paulson was a head of Goldman Sachs. They decide not to—you know, and Rubin was involved in these discussions, Lawrence Summers, Paulson and so forth. Timothy Geithner, who is our Secretary of Treasury, was head of the New York Fed for five years while all this was going on.

So they say, “Let Lehman go, you know, down the tubes,” which is great for Goldman Sachs, because now you have basically two investment houses that are getting all the business. “But on the other hand, we’ll put all this money into AIG,” which was backing these junkie derivatives, these mysterious packages, “and it will be a pass through. People won’t notice, because we’re giving it to AIG.”

$180 billion of our taxpayer money, we taxpayers get nothing in return, AIG is still in the toilet, but Goldman got its money. You know, it got upwards of $20 billion, that they don’t have to pay back. They make a big thing about “We’re going to pay back some of the TARP funds” and everything. And by the way, they were allowed to become a bank. No hearings, no judicial proceedings and so forth. You know, the very thing Lehman was asking for -- “Let us become a bank so we can get some of this TARP funds and everything” -- that was granted to Goldman Sachs.

You know, Ron Paul, by the way, who has been trying to go after the Fed, and he has an accountability piece of legislation that the Democrats have gutted, and said, “Let’s have an audit of the Fed. Let’s find out what does the Federal Reserve do. What are the deals they made? Where did the money go?” We don’t have that.

And the inspector general of the Treasury Department, the inspector general, you know, Elizabeth Warren, all of these people have pointed -- from the Congressional Oversight Panel -- all of these people point out, “We don’t have the facts. We don’t know where the trillions are going.” We know trillions have been committed. We know all of these huge pools -- Bank of America’s $300 billion of toxic assets have been backed up. But there’s no accountability.

I have covered the CIA, I’ve covered national security, and I’ve covered banking. I did it for the LA Times in one way or another for thirty years, OK? It is more difficult to cover Wall Street, in terms of secrecy and classification and their protection, than it is to cover the CIA and the Pentagon. That much I’ll tell you.

You know, you get greater claim on the truth covering the Pentagon, as I did in my last book, than I’m having in my current book called The Great American Stick-Up that Nation Books is publishing. And, you know, these people go, “No, it’s proprietary. It’s our business. It has nothing to do with you.” And that goes for the Fed, which is supposed to be a government agency.

And so, for Chris Dodd to say, “No, we have to take power away from the Fed. We have to create a new independent agency to supervise these too big to fail institutions to make sure that they don’t go belly up and we taxpayers pay for them again,” he’s absolutely right. And people watching this, if there’s one thing they should demand from the Obama administration, is get behind the Dodd bill on taking power from the Fed and creating a new publicly accountable agency. That’s absolutely critical. Without that, we’re not going to get out of this mess, and we’re not going to prevent a future one.

AMY GOODMAN: Very quickly, you profile -- you profile Brooksley Born in an article, “They Shot the Messenger.”

ROBERT SCHEER: Yeah.

AMY GOODMAN: What was his message?

ROBERT SCHEER: That was in Ms. Magazine, that my wife wrote, Narda Zacchino, and I worked with her. Brooksley Born is the great hero of the whole drama. Brooksley Born was the head of the Commodity Futures Board. And Brooksley Born, seventeen times, testified before Congress that this was a disaster in the making.

And the old boys’ club that is now in power -- Lawrence Summers, Timothy Geithner, and it was Robert Rubin and Neal Wolin, who condemned Dodd the other day -- they smashed Brooksley Born. They took away her power. They pushed through the Commodity Futures Modernization Act that said there can be no regulation of these over-the-counter derivatives. That’s why we’re in this big mess today.

So Brooksley Born should have statues to her, you know? She is on the committee -- Nancy Pelosi appointed her to the committee that’s supposed to be, you know, overseeing the rewrite of legislation. I’m hoping, you know, that she’ll be listened to. But basically it’s the old boy club that got us into this mess that is scamming us once again.

AMY GOODMAN: Robert Scheer, I want to thank you for being with us, of Truthdig.com, author of many books, including, appropriately, The Pornography of Power.

[Alex Knight maintains the website endofcapitalism.com where this article also appears, and is writing a book called The End of Capitalism. He can be reached at activistalex@gmail.com.]

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