Ryan Holeywell : Meet Occupy Wall Street's Favorite Banker

The Bank of North Dakota: The country's only publicly-owned state bank.
The Case for public state banks:
Meet Occupy Wall Street's favorite banker

By Ryan Holeywell / SolidarityEconomy.Net / January 4, 2012

See clip from Michael Moore's Capitalism: A Love Story, Below.

Try to find a bank president that’s beloved by supporters of the Occupy Wall Street movement. It’s not impossible. You’ll just have to travel to North Dakota.

Meet Eric Hardmeyer, who bears the unlikely distinction of being perhaps the only banker in America who, in addition to being embraced by Wall Street protesters, has been exalted by the likes of Michael Moore, Mother Jones magazine, and the Progressive States Network, among other progressive stalwarts.

That’s because Hardmeyer heads the Bank of North Dakota (BND), the country’s only publicly-owned state bank. The institution, located ironically enough in a solidly red state, has become the darling of progressives who have become frustrated with corporate banks they say helped cause the financial crisis and resulting credit crunch.

Now, state lawmakers nationwide are pushing for the North Dakota model to be replicated in their home states. Since 2010, state lawmakers in at least 16 states have introduced bills to create a state bank, something similar, or study the issue, according to a study by the National Conference of State Legislatures.

So far, momentum is slow. The movement has yet to produce another Bank of North Dakota, but advocates are hoping to raise the issue again in 2012 legislative sessions. Their pitch: publicly-owned banks can help create jobs, generate revenue for the state, strengthen small banks, and lower the cost of borrowing for local governments by offering loans below market rate.

Hardmeyer, who was named bank president in 2001, hasn’t always been such a well-known figure. But his profile has been raised over the last year -- including in Bloomberg BusinessWeek -- and now he regularly fields calls from state lawmakers and other officials inquiring about his institution.

“There hasn’t been a big push anywhere that I’m aware of until recently,” said Hardmeyer in a late December interview with Governing. “They’re interested in how it works, why it works, [and] what the roadblocks are.”

The bank was formed in 1919 with $2 million in bonds as a response to farmers who found they couldn’t get credit from out-of-state banks in Chicago, Minneapolis, and New York. Today, the bank helps implement state economic development programs, lends money to businesses, serves as the depository of state funds, and also functions as a "banker's bank" that performs tasks like check clearing for smaller institutions.

Much of the renewed interest in the bank stems from the same frustration driving the Occupy Wall Street movement, and Hardmeyer’s institution has come to represent something of an anti-bank. After all, advocates argue, the best way for taxpayers to occupy a bank is to own it. Instead of being bailed out by the government, Bank of North Dakota actually pays dividends to the state that shore up its coffers. Bloomberg Businessweek reported that since 1945, it has sent $555 million to the state general fund.

The Bank of North Dakota's Eric Hardmeyer. Image from Firstpost.
Instead of tightening up lending in response to the recession, BND actively tries to facilitate loans that traditional banks shy away from. “With this institution [and] its mission, it comes with a higher degree risk than what a traditional bank might be willing to tolerate,” Hardmeyer said.

When floods destroyed affordable housing in Minot, N.D., last year, the bank developed programs to help finance rebuilding. And as the western half of the state struggles with strained infrastructure in the wake of an oil boom, BND programs are helping to ensure capital is flowing to fund much-needed projects.

Yet BND doesn’t operate as a charity, and its finances are remarkably strong. Bloomberg Businessweek reported that it earned a profit of $62 million in 2010 -- the seventh consecutive year it turned a record profit -- and it has profited every year since at least 1971.

Standard & Poor’s just increased BND's credit rating. The returns on its assets have consistently been larger than those of similarly-sized private banks, and a smaller portion of its loans have gone delinquent, according to a report by the Federal Reserve Bank of Boston. The bank has likely benefited from more successful lending, lower costs, and its tax-exempt status.

Yet most North Dakotans' interaction with the bank is minimal. The institution operates from a single location in Bismarck, doesn't have ATMs, and doesn’t generally serve as a consumer bank. It lacks federal oversight, its loans aren’t insured by the FDIC, and its staff members are considered state government employees.

What it does do is partner with smaller, local banks throughout the state on various loan programs. In a typical transaction, a smaller bank would originate a loan, and BND could guarantee part of it or buy down the interest rate. The effect is that a business loan that might otherwise not have been made -- or that might have only happened at a high interest rate -- can suddenly be offered at a reasonable price, prompting business growth and job creation.

The main intent is for the bank to serve as an economic development tool, said Hardmeyer. It works closely with the state’s commerce department, economic development corporations, and the legislature to develop programs that serve the mission. It’s overseen by a triumvirate of state officials that include the governor, the attorney general, and the agriculture commissioner, while the legislature sets its budget.

Many BND fans see North Dakota’s economy, currently enjoying a best-in-the-country jobless rate of just 3.4 percent, and believe a similar publicly-owned bank could help fix financial problems elsewhere. But Hardmeyer himself downplays that optimism, pointing out that although his bank plays an important role in the state economy, North Dakota's boom likely has more to do with the energy sector.

The Fed concurs: “With the possible exception of the Great Depression, BND’s contributions to stabilizing the state economy and finances appear to have been relatively minor.”

Still, advocates remain undeterred in their desire for public banks. “I’d much rather have my risk be put in a public institution than trust these bankers in Wall Street, who have proven themselves untrustworthy,” said Marc Armstrong, executive director of the Public Banking Institute, one of the issue's leading champions.

But there are serious challenges to the creation of a new state bank. One is the initial cost of capitalizing one. Another is the opposition from existing banks. The president of the community banks' trade association calls the model “socialistic.”

“Why don’t we just relabel the state capitols the Kremlin?” Camden Fine, president of the Independent Community Bankers of America, told Bloomberg BusinessWeek. (Ironically, the Fed wrote that BND may actually be strengthening the role of community banks in North Dakota and limiting the presence of the big banks that they often struggle to compete with.)

Meanwhile, the big banks would inevitably fight the measure, since they don't want to lose out on the opportunity to serve as the depository for state funds. “They’re the biggest lobby ever in the history of mankind,” Armstrong said. In a conference call with activists last year, North Dakota State Sen. Tim Mathern said that if the bank didn’t exist, the state likely wouldn’t be able to create one in today’s political climate.

And there are some potential downsides to a state-owned bank. One of the greatest concerns is that a state official could somehow become involved in making lending decisions. That doesn’t happen in North Dakota, Hardmeyer insists, stressing the bank’s independence and the business-first mentality of its bankers.

Critics also say that public banks created today could disrupt the economy, since public funds would likely be withdrawn from existing commercial banks. And they cite the ever-present risk to state taxpayers of guaranteeing the deposits.

It's no surprise that several public banking efforts have stalled relatively quickly.

A Massachusetts commission that generated significant attention recommended against a state bank in August, citing the start-up costs, risks, and existing network of quasi-public lenders. And last year, California Gov. Jerry Brown vetoed legislation calling for a study to consider the viability of a state bank.

Yet backers of public banks remain optimistic. They argue that the concept is so different from the existing idea of banking that they it will likely take several legislative sessions for the movement to gain steam.

The DVD of Michael Moore's Capitalism: A Love Story featured the Bank of North Dakota. A short introduction on BND's creation is provided in this clip below.



[Ryan Holeywell is a staff writer at Governing, where this article first appeared. It was distributed by SolidarityEconomy.Net.]

The Rag Blog

[+/-] Read More...

[+/-] Summary only...

FILM / Lamar W. Hankins : 2008 Economic Crash Was an 'Inside Job'

The economic crash of 2008:
An 'Inside Job'

By Lamar W. Hankins / The Rag Blog / November 8, 2011

A fair summary of the award-winning documentary Inside Job is this: The economic crisis that culminated in bailouts in 2008 was caused by 30 years of deregulation of the financial services industry.

I have no way of knowing how many of the Occupy Wall Street participants have seen this film, released in 2010, but after seeing it, my first reaction is that occupying Wall Street and every other financial center from Chicago to your local guilty national bank is an appropriate response to what 99% of the American people have been going through.

Inside Job was nominated for at least eight film awards; it won the Academy Award for Best Documentary Feature earlier this year, the Directors Guild of America award for Best Documentary in December 2010, and the Writers Guild of America award for Best Documentary Screenplay early in 2011.

It deserves such awards for its clarity, reasoned argument, and presentation of damning evidence that Wall Street, several Congresses, and every president from Reagan through George W. Bush share responsibility for the wreck of the economy through actions of the financial sector and inactions of the government brought about by deregulation.

Had Barack Obama been president before the bailouts began, he would be implicated as a guilty party as well. What Obama has done since taking office in 2009 is appoint many of the major players who caused the debacle to positions of power and influence over the institutions that created the devastating failure that gave us soaring unemployment, massive home foreclosures, the failure or near-failure of most of the major financial institutions in the U.S., and a stock market that for the second time in a decade robbed the savings, investments, and pension plans of America’s middle class.

Film critic Roger Ebert described Inside Job as "an angry, well-argued documentary about how the American financial industry set out deliberately to defraud the ordinary American investor." While some might take a less harsh view of the financial sector, the evidence supports Ebert’s statement.

We have known since the savings and loan debacle, junk-bond scandals, and accounting firms’ deceit in the 1980s, created largely by Reagan’s deregulation of S&L's, that without significant regulation, the greed inherent in the financial sector will disrupt, if not destroy, the economy. That debacle was followed in 1998 by the collapse of the speculative hedge fund Long-Term Capital Management.

Then came the dot-com bubble in the late 1990s, which culminated in the stock market crash of 2001, caused by the failure of Internet stocks that were falsely rated as sound investments by investment banks. In 2001, we experienced the bankruptcy of the energy and commodities company Enron. In 2006, the housing bubble peaked, and prices began dropping nationwide. Here Inside Job picks up the deregulation story.

In 2005, the chief economist of the International Monetary Fund, Raghuram Rajan, at a meeting to honor retiring chairman of the Federal Reserve, Alan Greenspan, warned of a “catastrophic meltdown” of the economy. He argued that financial sector managers were encouraged by great financial rewards to take extraordinary risks with other people’s money that could “generate severe adverse consequences,” with no penalties for the financial sector managers.

Rajan presciently described what happened during the 2007-2008 economic collapse: the failure of the massively-issued subprime mortgages, the complicated investments known as derivatives and credit derivative obligations, the leveraging of the assets of investment banks by a factor of 33 to 1, the insuring against failures of these complicated investments (which led directly to the bankruptcy of AIG), the mismanagement of the public-private housing guarantors Freddie Mac and Fannie Mae, and the catastrophic stock market decline.

Rajan was ridiculed immediately for his views by Lawrence Summers, who called Rajan a “Luddite.” Summers, an economist, had worked in the Reagan administration on the staff of the Council of Economic Advisers, as Chief Economist for the World Bank in the early 1990s, had been Secretary of the Treasury under President Clinton, and was President of Harvard from 2001 to 2006.

During this time, Summers had promoted the deregulation of the financial sector, along with other notables, including Ben Bernanke, Robert Rubin, Hank Paulson, and Timothy Geithner, all of whom have also worked in some economic capacity for the Obama administration. Yet none of these men were willing to be interviewed for Inside Job about what caused the Great Recession in which we are still mired.

Many journalists and economists have written books and articles dissecting what went wrong with the economy three years ago, but none of them have made the subject as accessible to the average non-economist as Charles Ferguson does in this documentary.

Ferguson describes the inbreeding between the financial sector and government, with major players moving from government regulatory and policy positions into the financial companies and banks and back again, often being paid huge sums for speeches ($135,000 to Lawrence Summers for a speech to Goldman Sachs, for example) and economic opinions that bolster these private investment banks as well as whole countries, such as Iceland.

None of these speeches and reports were critical of the financial practices of the companies or of the countries involved. Ferguson also criticizes the lack of accountability of academic economists to their institutions or to the public for their uncritical income-producing extra-curricular work.

Many people have placed equal blame for the failure of sub-prime mortgages, which are provided with higher interest rates and higher mortgage payments, on consumers and on the mortgage companies. But Ferguson points out that more than half of the families that received sub-prime mortgages qualified for conventional mortgages with lower interest rates and monthly payments. They weren’t told this because the bankers made more money off sub-prime mortgages than they did off conventional ones.

And some of the mortgage derivatives sold by Goldman Sachs included mortgages written, on average, at 99.3% of the value of the homes that were mortgaged. This means that there was no room for any adverse circumstance. If a family doesn’t have income for even half a month, it is unlikely that they will be able to pay the mortgage. If a house is foreclosed on, the bank can’t possibly get back anything close to the amount of money it has loaned on the house because the loan approached 100% of its value.

No one has yet been successfully prosecuted for the financial disaster of 2008, probably because the financial sector has been so thoroughly deregulated in the last 30 years that very little of its conduct is criminal. But the financial sector’s conduct has had disastrous consequences for the country.

Inside Job makes clear that if the American public is to be the rescuer of the financial sector, spending trillions of dollars to bail out the irresponsible gambling industry we call investment banking, then it needs to be re-regulated to put back in place the rational rules and practices that prevented disasters such as the ones we experienced in 2001 and 2008.

From the time of the Great Depression until the early 1980s, we averted such massive failures in the financial sector by appropriate regulation. A prudent country would protect itself against a recurrence of such financial debauchery and irresponsible behavior as was exhibited for the last 30 years by the financial sector of our economy.

Inside Job can be rented through Netflix and other sources, as well as viewed free on-line. It is worth seeing, if for no other reason than it makes understandable what Occupy Wall Street is all about.

Woody Guthrie wrote a song many years ago about an outlaw and bank robber that included this verse:

Yes, as through this world I've wandered
I've seen lots of funny men;
Some will rob you with a six-gun,
And some with a fountain pen.

Those with fountain pens have the upper hand now, and they are not being held accountable. We the people need to change that.

[Lamar W. Hankins, a former San Marcos, Texas, city attorney, is also a columnist for the San Marcos Mercury. This article © Freethought San Marcos, Lamar W. Hankins. Read more articles by Lamar W. Hankins on The Rag Blog.]

The Rag Blog

[+/-] Read More...

[+/-] Summary only...

Steve Russell : Will Rogers on Occupy Wall Street

Get the point? Image of Will Rogers from the Will Rogers Museum.
Will Rogers on Occupy Wall Street

By Steve Russell / The Rag Blog / November 23, 2011

"It’s all right to let Wall Street bet each other millions of dollars every day but why make these bets affect the fellow who is plowing a field out in Claremore, Oklahoma?"

My all time favorite Cherokee, Will Rogers, wrote that in 1924. Today, most of the fellows plowing fields in Claremore, Oklahoma, are still Cherokee -- but a lot fewer of them own the land they are plowing.

Nine years after Will Rogers made that complaint, the New Deal was beginning to roll, and Congress passed the Glass-Steagall Act in response. Glass (D-VA) and Steagall (D-AL) created the Federal Deposit Insurance Corporation. In the Great Depression, when a bank went belly up your money was just gone. Even now, it’s not widely known that the FDIC does not cost the taxpayers a penny. Fees assessed on the commercial banks fund it.

Just as important, the Glass-Steagall Act created a firewall between commercial banks and investment banks. Investment banks were not insured by the FDIC, did not have to pay the assessments, and were free to gamble with the money of anybody dumb enough to entrust it to them for the purpose.

Commercial banks are the places you go to get your crop loan, your car loan, or your mortgage. They had strict capital reserve requirements, which placed a limit on the amount of “leverage” they could bring to bear -- that is, the multiple of customer deposits they could invest.

Bankers always thought this limit cramped their style, and I suppose it did. They were free to gamble with their own money, but they were limited in how much they could gamble with the money deposited by that fellow plowing his field in Claremore, OK.

This terrible injustice to the banksters, I mean bankers, was corrected by Gramm (R-TX), Leach (R-IA), and Bliley (R-VA) in 1999. Their bill, tearing down the wall between investment and commercial banking, was signed into law by President Clinton, who should have known better, but the political zeitgeist of the times was still deregulation. “Government,” in the famous words of President Reagan, “is the problem.”

Phil Gramm was John McCain’s principal economic advisor until he got canned for referring to Americans as “a nation of whiners.” The “whiners” did not know it at the time, but the gamblers unleashed by Gramm’s deregulation had leveraged their assets 30:1 and had, by spinning out derivative instruments of mind-bending complexity, become “too big to fail.”

That is, if they went broke they would take down so many businesses and people with them that the farmer in Claremore would get knocked right off his tractor. Of course, some people doubted any investment bank was “too big to fail,” and so the folks in charge let Lehman Brothers go down in 2008, apparently to see how bad it could get.

The Dow Jones average took the greatest one-day dive in history and racked up a trading range of 1,000 points. Lehman’s failure set off a cascade of smaller failures that played out for months. If you once had a retirement account but you don’t anymore, you can thank that experiment.

I remember back when I was young enough to be shocked, an undergraduate at the University of Texas. A law professor who was on President Nixon’s defense team in the Watergate scandal was asked whether some new cover-up revelation was “serious.” “Serious?” the professor asked, “the Dow Jones dropped 50 points on the news!” Fifty points. Serious. How times do change.

So we had to bail out the banksters from the consequences of their own recklessness or kiss our retirement plans goodbye. No problem, right? Wasn’t the major issue of the 2000 elections what to do with the budget surplus?

It was the issue, indeed. Bush said, “it’s your money and you know better than the government how to spend it.” Al Gore said this is our chance to “put Social Security in a lock box” and end the bipartisan accounting tricks with the trust fund.

Oh, now I remember. Bush won, and cut our taxes.

“When a party can’t think of anything else they always fall back on Lower Taxes. It has a magic sound to a voter, just like Fairyland...” Will Rogers wrote that in 1924, not 2000, and in the same year he expressed the only thing that will get us out of this even if we do, as Occupy Wall Street demands, quit allowing unlimited gambling with other people’s money:

“People want JUST taxes, more than they want lower taxes. They want to know that every man is paying his proportionate share according to his wealth.”

Maybe I’m biased by my Cherokee genes, but any man who could write that in 1924 deserves our attention today. There was about to be an event called the Great Depression.

[Steve Russell, Cherokee Nation of Oklahoma, lives in Sun City, Texas, near Austin. He is a Texas trial court judge by assignment and associate professor emeritus of criminal justice at Indiana University-Bloomington. Steve was an activist in Austin in the Sixties and Seventies, and wrote for Austin’s underground paper, The Rag. Steve is also a columnist for Indian Country Today, where a version of this article also appeared. He can be reached at swrussel@indiana.edu. Read more articles by Steve Russell on The Rag Blog.]

The Rag Blog

[+/-] Read More...

[+/-] Summary only...

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.

The Rag Blog

[+/-] Read More...

[+/-] Summary only...

Danny Schechter : The 'Fraudclosure' Backstory

Illustration by Matt Mahurin / The Washington Independent.
U.S. workers in need of rescue:
Report from the epicenter of 'fraudclosures'

It's dark as a dungeon way down in the mine...

By Danny Schechter / The Rag Blog / October 25, 2010

WEST PALM BEACH, Florida -- In all of the economic issues we are dealing with, there is always a “back story, a deeper context” that is usually missing,“disappeared” like those Allende supporters in Chile in the l970’s who wanted to empower workers, not just rescue them, when they get buried in a deep hole.

Most deeper issues go uncovered. Luis Campos, Director of the School of Anthropology at Chile’s Universidad Academia de Humanismo Cristiano, points out, “more buried than the miners themselves, the demands and the rights of the indigenous population continue to be flouted and unrecognized in our country.”

Many unsafe mines worldwide are still at risk from China to Zambia.

Who woulda thunk -- certainly not the 1300 “journalists” on the scene -- that this mine disaster had its origins in the era when Richard Nixon and Henry Kissinger helped snuff out an emerging popular democracy in the name of protecting what West Palm Beach-based writer and former economic “hit man,” John Perkins, calls the corporatocracy?

Historian Juan Cole poses these questions:

Are copper and gold mine owners stronger in relation to workers and have they escaped government regulation because the U.S. engineered a coup in 1973 to destroy the Chilean Left?

Was the San Estaban mining company’s ability to marginalize the union and to disregard input from the workers rooted in American-imposed corporate privilege? In other words, was the trapping of these workers in the first place Richard Nixon and Henry Kissinger’s fault?

The deep hole in that Chile mine was caused in part by a gold rush there -- triggered, in turn by, a global financial crisis MADE IN THE USA. It had its counterparts in the U.S., and not just among those 29 miners who perished in the big main mine in West Virginia, last April, a disaster that was supposed to lead to new safety rules that the Republicans have been insidiously blocking.

There is another hole we need to focus on. Millions of us are trapped in our own mines, "underwater” in homes that have lost value with bills we cannot afford, trapped in unemployment, in jobs that are gone and not coming back. Poverty is up and the noxious Newt Gingrich wants to end the food stamps that so many now depend on.

There is no rescue in sight, and the human plight of most of the millions affected takes part outside of media sight.

The gaggle of reporters that covered the mine rescue as a human-interest story -- not a political issue -- missed the backstory there, just as they miss our own here.

Far fewer reporters are covering this crisis.

Here in Florida, one epicenter of the housing catastrophe, homeowners were shell-shocked by the latest fraudclosure crime wave. Denise Richardson writes in the Sun Sentinel,

Last I knew, knowingly signing documents fraudulently and using them in a court of law is frowned on, right? It's criminal, isn't it? Or is it only criminal if you are a homeowner and not a bank? Seems we've gone to great lengths to create and then accept a double standard here.

Perhaps these financial crimes -- yes, that’s what they are, crimes -- continue to happen because we never addressed the real problems to begin with. You can’t fix a problem you don't acknowledge. Does anyone believe that was done to help protect the rights of homeowners? Let’s call it what it is: fraud.

An attorney in Deerfield Beach, Florida, representing 3,000 foreclosure victims, has taken hundreds of depositions from bank employees who admit they knew nothing about the details of the evictions they signed off on. Many are now being put down as “Burger King Kids,” yet they know more about real whoppers than this lot knows about real estate. RealtyTrac reports that foreclosure and REO homes accounted for 24 percent of all residential sales during the second quarter? That is huge!

Here in relatively affluent Palm Beach County, homeowners are number one in the state for the average number of loans in foreclosure that are delinquent. It has the fourth highest number of foreclosures, 45,829, with an average delinquency of 623 days. You will recall that Bernie Madoff once turned Palm Beach into a hunting ground for his ponzi scheme.

This situation is worse than we realize, and not just for the people most directly affected. No one knows how much the banks will lose in the class action suits, fines, and legal actions to come. Some think it could be tens of billions, suggesting another bailout may be in the offing, probably by the Federal Reserve Bank.

Paul Krugman questions whether the banks had the right to seize many of these homes, arguing, “The mortgage mess is making nonsense of claims that we have effective contract enforcement -- in fact, the question is whether our economy is governed by any kind of rule of law.”

Buried in the Business section, on page B-8 of The New York Times, way down in an article saying the banks may be on the hook for billions, was this very revealing paragraph speaking to a problem that I have been raising for years, making clear the fraud problem is not just with foreclosures.

Inside the investment houses, several traders said nerves were frazzled further by worries that banks could face much bigger mortgage related losses, not from foreclosures, but because of questions about how the money was lent in the first place. If it turns out that mortgages were bundled together and sold improperly, more holders could sue the banks and force them to buy back tens of billions in mortgage-backed securities.

Frazzled nerves so far seem the worst punishment the banksters have tasted. They have just decided to reward themselves with a new round of raises and bonuses worth $144 billion with few criticisms. The Government has meanwhile just “settled” for $73 million with Countrywide, the leading predatory lender. That means that a prosecution of its top executives, the poster boys for mortgage criminality, will be dropped. Notes the website Housing Doom:

Even having to pay $77.5 million, Mozilo still nets $61.5 million, just between November 2006 and October 2007. Maybe “crime doesn’t pay,” but one of the lessons of the housing bust is that fraud does.

What should be done? Webster Tarpley speaks for many in calling for a national moratorium on foreclosures, a course of action rejected by the White House.

The current chaos in home foreclosures is once again the direct responsibility of the zombie bankers themselves, who have neglected all traditional legal and accounting standards concerning the necessary paper trails in their frenzied desire to securitize mortgage loans and make them into toxic derivatives in the form of asset-backed securities and mortgage backed securities. The zombie bankers, already the recipients of $24 trillion of public largess in the form of the various bailouts, have turned out to be incompetent even in the technical aspects of their own thieving racket.

But the chaos in the bankers’ filing systems is nothing compared to the chaos created by the millions of foreclosures they have engineered, based on adjustable-rate mortgages and similar misleading contracts which never should have been legal in the first place. For some time, it has been evident that the defense of the American middle class requires a blanket, orderly, federal freeze (or moratorium) on all foreclosures on primary residences, similar to the New Deal protections offered to family farms by the landmark Frazier-Lemke Act of 1935-1949 during the previous depression.

Ellen Brown, author of Web of Debt, goes further in Yes Magazine, asking if it is “Time to Break Up the Too-Big-to-Fail Banks?”

Popular financial analysts, crippling bank losses from foreclosure flaws appear to be imminent and unavoidable. The defects prompting the “RoboSigning Scandal” are not mere technicalities but are inherent to the securitization process. They cannot be cured. This deep-seated fraud is already explicitly outlined in publicly available lawsuits

There is, however, no need to panic, no need for TARP II, and no need for legislation to further conceal the fraud and push the inevitable failure of the too-big-to-fail banks into the future.

The faux populists of the Tea Party right have been silent on the issue. Glenn Beck dropped all populist pretensions by calling on followers to give money to the Chamber of Commerce so they can better pursue a corporate agenda. One Republican here assured me that Barney Frank caused the whole financial crisis and that he will be tossed out of office in the midterm election. (He didn’t just blame him -- he hates him!) At the same time, one right wing website did publish a detailed denunciation of housing fraud.

As depressing as the lack of any real ongoing mass-based populist movement of the left or the right is another reality that The Washington Post finally spills even as millions of Americans buy into the illusion that new politicians can save us while angry voters here in Florida prepare to vote the Tea Party into office.

Let us tell you an Ugly Truth about the economy, a truth that no one in power or who aspires to power wants to share with you, at least until after the midterm elections are over. It's this: There is nothing that the U.S. government or the Federal Reserve or tax cutters can do to make our economic pain vanish overnight.

So what will it be? More money for the banks to bring them under control, more illegal foreclosures, or some type of justice for homeowners? Will this crisis lead us to demand action to break up these financial behemoths or will we just sit by and watch a new crisis sweep us deeper into our own mines of despair?

["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.

The Rag Blog

[+/-] Read More...

[+/-] Summary only...

Roger Baker : Fed's $2 Trillion Won't Buy Much

Cartoon from Black Commentator.
Time to reboot?
Fed's big bucks may be drops in bucket

By Roger Baker / The Rag Blog / October 14, 2010

As is often the case, Bloomberg tells it like it is, although a little interpretation is needed to put things into their proper context. Rarely do we hear it put so plainly that the U.S. government is almost out of realistic options for reviving the U.S. economy:

For $2 trillion, Federal Reserve Chairman Ben S. Bernanke may buy little improvement in growth, employment or inflation over the next two years.

Firms with large-scale models of the U.S. economy such as IHS Global Insight, Moody’s Analytics Inc. and Macroeconomic Advisers LLC project only a moderate impact from additional Fed asset purchases. The firms estimate that the unemployment rate will remain around 9 percent or higher next year whether the Fed buys $500 billion or $2 trillion of U.S. Treasuries in a second round of unconventional stimulus.

“This is not a game changer for the economic outlook,” said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts, whose models show that $500 billion of purchases would boost growth 0.1 percentage point in 2011 and leave the unemployment rate at 9 percent or above for the next two years. “There is clearly a risk that people start to perceive monetary policy as impotent.”

The meager impact shows the conundrum U.S. central bankers face. Interest rates near zero have failed to produce the intended cycle of borrowing and spending among consumers and businesses. Unemployment hovering near a 26-year high, partly a symptom of weak demand, keeps downward pressure on prices, and further declines in inflation would raise borrowing costs in real terms, making credit more expensive...

First they tried lowering interest rates, as they have done so often before, but that didn't work. This was partly because they did it so often in the past -- so it lost much effectiveness as a way to discipline risk during the successive Greenspan bubbles.

Then they bailed out the banks and injected a lot of Keynesian stimulus spending -- which requires Congressional approval. This had little result except to make it easy to agitate the U.S. middle class, who probably feared all their taxes would go to immigrants on welfare.

A combination of Congressional gridlock plus conservative anti-Obama politics is now preventing much more Roosevelt-like stimulus spending, no matter how great the need. Probably this opposition will continue after the elections, and until grassroots economic pain increases its political impact.

Economists say further asset purchases could underscore the limits of monetary policy, which is hobbled by consumers’ desire to pay down debt and the reluctance of Congress to approve additional fiscal stimulus.

“At the zero boundary on interest rates, the burden shifts to fiscal policy, and fiscal policy is immobile because of the politics,” said [Macroeconomic Advisers co-founder Laurence] Meyer. “So now, the burden has shifted back to monetary policy. You have to hope the economy’s own resilience and underlying strength is going to be enough to have growth a little bit above 3 percent.”

Having few other options left, the Federal Reserve (channeled by Bernanke) is announcing that they may create up to $2 trillion in new easy credit (as they have the legal right to do), and trade lots of cash to the banks in return for their suspect securities, although this would create few jobs. It kind of sounds bad, so the feds may need to relabel this remedy.

“We know the Fed is going to be doing something,” said David Rosenberg, chief economist at Gluskin Sheff and Associates Inc. in Toronto.

“The question is, in a cycle of contracting credit, how far will it work,” he said. “If taking rates to zero didn’t work, and if QE1 didn’t work, then the question, legitimately, is QE2 going to work?”

Quantitative easing refers to large-scale asset purchases as a tool of monetary policy. Bernanke has said the purchases support growth by lowering borrowing costs across a broad spectrum of debt as investors reallocate money they would normally invest in Treasuries into mortgage bonds, corporate notes, and other securities...

“It is a small but meaningful benefit and the recovery can take all the help it can get,” [Moody's Analytics' Mark] Zandi said. Because purchases could have such a low medium-term impact, Fed officials may recast the strategy in terms of aiming at a level on an inflation index rather than the rate of change on the index, Zandi said.

Despite the known drawbacks and weak results of such quantitative easing, the U.S. Treasury and federal Reserve officials feel the need to try something other than watching things get worse.

The Fed “really doesn’t have any alternative but to give this thing a whirl,” former Fed Governor Lyle Gramley, now senior economic adviser at Potomac Research Group in Washington. “It has a mandate to create maximum employment and price stability. It has to try.”

This all sounds kind of bad. Let us now leave Bloomberg for a second opinion which explains the same situation. On NPR's Money Planet, finance reporter Adam Davidson, who, like Paul Krugman, is a skilled popularizer of complex economic ideas, recently reported much the same thing. His perceptive blog explains why a second round of quantitative easing (called QE2 in the Bloomberg piece) -- essentially giving easy cash to the banks in return for their paper, is unlikely to revive the economy. The track record of QE is not good; Japan tried it and it didn't work:

"A big bank -- Bank of America, say -- has $50 billion in government bonds. They'd sell those bonds if anyone would pay enough for them, but nobody is willing to pay that much. So the bank just holds on to them.

With quantitative easing, the Fed comes along and says, "Hey, Bank of America, we'll buy those bonds for a little more than anyone else is willing to pay." Bank of America says, "OK, great, send us the money."

This is where the Fed gets to use central-bank magic. They pay for that $50 billion purchase in new money. They just invent it. That's what the Fed -- but nobody else -- gets to do.

So now Bank of America has $50 billion they need to do something with. The Fed is hoping that Bank of America will decide to lend that $50 billion to companies and people to invest or spend. That stimulates the whole economy.

It sounds great. Create new money, get it out there, everyone wins. But -- of course there's a but.

Nobody really knows if this works. It's still really controversial among economists. It's only been tried a few times and, as in the case of Japan, hasn't had the greatest results.

The Fed first used quantitative easing in 2008. It's now considering a second round, even though a lot of folks are against it.

While the economy is still this bad, the Fed really might only have two options: Do this as a desperation move, or do nothing."

Thus the biggest private bankers, operating through the Fed, have effective legal control over the whole U.S. economy. Just as Davidson says, the Federal Reserve has the right to create as much money as they please and give it to whom they please. Consequently, the public benefits from our U.S. banking system are ultimately of a trickle-down nature, subject to the fickle motivation of banking profit and Federal Reserve whim, often in alliance with the U.S. Treasury.

The Fed is busy creating money and offering it to the banks in the apparent hope that -- even in the absence of regulation or reform -- some of it will stay here and won't head toward more profitable investments that don't create U.S. jobs. I described this same situation last December, as we can see from the Stiglitz snip in my earlier Rag Blog article:

Stiglitz, 66, also said the Federal Reserve contributed to the financial crisis by failing to supervise banks or stem the housing bubble. He questioned proposals to give the central bank more authority to supervise firms whose failure might threaten the financial system. “Giving more power to an institution which has failed so miserably, with results that have imposed such costs on all of us, cannot be the right solution unless there are deep and fundamental reforms in the institution, of a kind that are beyond those currently being discussed,” he said.

In the absence of the banking reform that Stiglitz advocates, reform that would partly take control of the U.S. economy away from private hands, the bankers have little incentive to create risky, low-profit domestic jobs.

The bankers see little profit to be made from investing in such jobs, knowing that the U.S. consumers are under great financial stress. U.S. bankers won't invest much in the industrial production of globally traded goods, because U.S. labor costs are still high compared to those in China and the rest of the world.

Without strong outside regulation, the U.S. banks are free to use their $2 trillion (or whatever the Fed pleases to create and give to them) to speculate in the most profitable stuff. Things like gold, vital commodities like food, and in new industries abroad -- like in China, where iPhone production remains highly profitable because of cheap labor. GM now makes lots of its money by building its cars in China rather than the U.S.

All things considered, it looks like a good time to reboot the whole U.S. economic system.

[Roger Baker is a long time transportation-oriented environmental activist, an amateur energy-oriented economist, an amateur scientist and science writer, and a founding member of and an advisor to the Association for the Study of Peak Oil-USA. He is active in the Green Party and the ACLU, and is a director of the Save Our Springs Association and the Save Barton Creek Association. Mostly he enjoys being an irreverent policy wonk and writing irreverent wonkish articles for The Rag Blog.]

The Rag Blog

[+/-] Read More...

[+/-] Summary only...

Carl Davidson : Mondragon Diaries IV: Banking on the Future

Arrasate-Mondragon in the Basque Country of Spain. Image from SolidarityEconomy.net.
Mondragon Diaries, Day Four
Worker coops, worker banks, worker skills:
Weathering today's crises

By Carl Davidson / The Rag Blog / October 1, 2010

[This is the fourth of a five-part series by Carl Davidson about the Mondragon Cooperative Corporation, a 50-year-old network of nearly 120 factories and agencies, involving nearly 100,000 workers -- centered in the the Basque Country but now spanning the globe. Go here for the series so far.]

BASQUE COUNTRY, Spain -- Most new small businesses fail. That's a fact, whether they are in the Basque Country or in the U.S. Or anywhere else. Yet the Mondragon Coops, which all started as small worker-owned businesses, have hardly ever failed. Why? The key is in Father Jose Maria Arizmendi's original founding conception of cooperatives as the interlocking of school, factory, and credit union.

This was the thought I was rolling over in my mind as our bus again climbed the slopes on the Arrasate-Mondragon valley, this morning with grey skies and a light drizzle. We were headed for an administrative office of Caja Laboral, the worker-owned banking network of the MCC Coops. The ride wasn't far, and we were soon whisked into a small auditorium. Our mentor, Mikel, introduced the staff member who would introduce us to the world of banking, and Mondragon's modification of one corner of that reality.

Some people might question why workers for social change would want to be involved with banks at all. But certain kinds of credit and finance are important components of any society -- capitalist, socialist, or somewhere in between.

Father's Arizmendi's conclusion that two of the many reasons cooperative movements failed in the past was the lack of reliable credit and the lack of innovation and new ideas. Hence the reason he started with a school, but was soon to add a small credit union formed from the small deposits of his parishioners and their neighbors. To start a factory, you had to borrow some money, and borrowing the money of people close to you at low cost was the best way to go.

By 1959, the small credit union had grown and transformed into Caja Laboral. Today it is one of the major banks in Spain, with assets of 21 billion euros and 1.5 billion in equity. It has 18.6 billion in customer deposits, offset by 16.4 billion in credit loans. It has 1,2 million clients, only 120 of which are the MCC coops.

It has 2,000 people working for it, and all are worker-owners. Actually, the bank is owned 55% by the MCC coops and 45% by the staff workers. But the rule they have adopted is that the factory coops pick eight of the board members, while the staff workers elect four. Since Caja Laboral, is a coop of coops, it is what MCC calls a "second degree" coop. Other second degree coops are their schools, medical clinics, and insurance agencies.

“We are rated the best bank in Spain in customer satisfaction,” says our presenter. “One reason is that we are worker-owners ourselves, and not socially distant from them. We work closely with our clients. We are prudent and conservative

Mikel gave a wry laugh from the back of the room, and interjected: “Except for the Lehman Brothers fiasco...” It turns out Caja Laboral had taken a hit of 160 million euros it had tied up in Lehman Brothers securities when the Wall Street investment bank collapsed at the beginning of the financial crisis two years back. Not only had MCC's bank been hurt, but

“Yes,” said our presenter. “But we followed our rule of transparency. You and everyone else knew it the same day, and we announced it to the press the next morning.”

This opened up a discussion among all of us on the proper role of banking and credit unions, including cooperative ones. It's not a subject progressive activists are all that familiar with, but we had it anyway.

First it was clear that Caja Laboral's big sin in the Lehman Brothers case was believing in the validity of the AAA ratings of its securities, set by U.S. Government agencies, which turned out to be a sham. Second, it was also clear from the numbers presented that Caja Laboral was really something on the order of a strong and relatively cash-rich savings and loan operation and consumer services bank. Its managers didn't get rich, but had incomes within the same narrow and modest salary spread as all MCC coop members. Its profits were plowed back in to building new coops.

It was not in the same league as the giant Wall Street speculators in derivatives, with their billion dollar bonuses, who were trying to gain wealth not by creating new wealth, but by pure gambling with other people's money.

Most of us concluded that Caja Laboral was a sound and necessary part of MCC and its growth, but the arguments continued out the door and on the bus ride further up the mountainside to our next talk at the Otalora conference center.

Here we had a new topic, the training of governing boards of the coops. It did no good to elect workers to coop governing boards, and then just let them sink or swim. A skills transfer and training program was in order.

Our presenter was Juan Ignacio Aitpunea. He was a well-seasoned and tough-minded older Basque worker with strong cooperative values in his heart.

“We use a Basque word, ORDEZKARI, for our program,” he started off. “It means 'representative,' because that's the task of the boards, to represent the workers. Our boards are elected to four-year terms, but we stagger them. Every two years, only 50% change, but with 120 coops, that means we have about 1,000 new board members to train every two years.

“We do it in steps. In the first six months, we get the new people to do self-evaluations, to find out their competencies, or the lack of them, so we know what to stress over the next year or so.

What were the skills needed?

“First,” Juan continued, “you have to know the basics, the laws on cooperatives and the functions of coop leaders. Second, you need common skills -- teamwork, how to communicate, how to lead, how to make timely decisions. Third, you have to know how to design and work through a followup plan."

All this was crucial because the governing board not only shaped policy, it hired and fired managers. Worker-owners, by their nature, cannot be fired. Over 50 years there was only one case, where a small group got caught embezzling.

Juan went into more detail on this, but our crew had other questions: how were people nominated, and what was involved in running?

First, if there are two vacancies, there must be at least three candidates, he explained. Any worker could volunteer to run, but he or she had to get signatures of 10% of the workforce. Next, the workplace's social council, which serves some of the functions of a trade union, could suggest a candidate. Finally the old board could name one new candidate itself. But an initial vote was taken so each of the final minimum of three candidates to get a 50% minimum, then the vote was held to determine the final two.

“We need this to make sure board members have a wide respect throughout the workplace,” Juan added. “This is especially important in hard times, like now, when hard decisions often have to be made." This meant firing the temp workers or cutting salaries to deal with the downturns.

"Leading is not just about friendship, or making friends. This is not mainly a place for that. But it is a great school where you can learn what it means to be responsible. You may also make a few new friends. In fact, in tough times, that's when you can make the best and truest friends.”

Juan also stressed the need for diversity and the need to bring forward younger leaders. “When you get old like me, you get too used to having your own way. A time comes when you need to let new people in, but still find other ways to make a contribution.”

Mondragon University. Image from Universidad.es.
Our last stop of the day was Mondragon University. It was formed as a second degree coop by joining the engineering school, the business studies program, and the humanities and pedagogy teaching coop. It currently has about 3,600 full time students. Tuition is about 5,000 euros a year, considered moderate for a European university. Most of the students are from middle-income families in the area or from the workers in the coops.

Fred Freundlich was our faculty presenter, an American who had been in the coop movement in the U.S. in the 1980s, but had lived in the Basque County for a good number of years. He gave frank and critical answers to our questions.

I raised my hand, and asked: “Suppose I'm a young worker in one of the local industrial coops, and I decide I want to become part of the management. How does MU help me? Do they?”

The short answer was, "Yes." But Fred added that management usually required a college degree, and you didn't necessarily need to get it from MU. If you had a good resume and vita from elsewhere, you'd still be considered. On the other hand, if your coop saw that you were eager to gain new skills, they would give you a good deal of support, including financial, and going through MU for your degree would be a plus.”

Others raised the general question of activism among youth.

Frankly, Basque youth aren't all that active inside the coops. They're into third world global justice issues, environmentalism in general, and Basque nationalism. About the coop managers, I'd say a strong minority, maybe 30 percent, have solid cooperative values at heart, another minority pays lip service to them, and the rest are somewhere in between. We clearly need a new surge of activism to spread cooperativism beyond the factories, but my guess is only about 30 percent of the workers today are activists on the matter. You really need to talk more with Mikel, who's really a leader on this topic.

Mikel went up front and drew us a wave-like graph, showing an initial surge in the early MCC decades, then a leveling off, then a dip at the beginning of the crisis, and now a small upward turn.

“This is the beginning of a rich discussion, how we need to redefine and reinvent ourselves for the 21st century? But the bus is waiting to take us to dinner in San Sebastian. We can return to it tomorrow.”

[Carl Davidson is a national co-chair of the Committees of Correspondence for Democracy and Socialism, a national board member of Solidarity Economy Network, and a local Beaver County, PA member of Steelworkers Associates. His website is Keep on Keepin' On, where this series also appears. Davidson is also available to speak on the topic. Contact him at carld717@gmail.com. For more info on these tours, go here.]

Also see:

• Carl Davidson : Mondragon Diaries I: Bridges to Socialism / The Rag Blog / September 20, 2010
• Carl Davidson : Mondragon Diaries II: It Starts With a School / The Rag Blog / September 23, 2010
• Carl Davidson : Mondragon Diaries III: Visions of the Future / The Rag Blog / September 27, 2010

The Rag Blog

[+/-] Read More...

[+/-] Summary only...

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.]

The Rag Blog

[+/-] Read More...

[+/-] Summary only...

Jonah Raskin : Time to Burn Down the Banks?

Mad mini-poster from Mad Magazine Special #4, Fall, 1971. Image from Mad Cover Site.
At least burn a few bucks:
Burn down the banks???

By Jonah Raskin / The Rag Blog / June 7, 2010

Yes, I know the title of this piece is inflammatory. But these are inflammatory times and inflammatory times call for inflammatory words -- and perhaps inflammatory deeds. I know burning down banks is against the law, and I also know that for every bank that’s burned down a new bank will be built.

I don’t want to incite violence and I certainly don’t want bank tellers to be injured. But I’m trying to think outside the box, and trying also to think of ways to wake up the bankers themselves, and to come up with ways to express the anger that citizens feel about the robbery by the banks.

I am certainly in favor of demonstrations, and the expression of First Amendment rights outside banks. This past year, citizens all around the country have protested outside American banks including the Bank of America, a branch of which was burned down at Isla Vista in California 40 years ago in 1970. The lawyer for the Chicago Eight, Bill Kunstler, was there, and urged demonstrators to go to the bank and burn it down. “Burn Baby Burn” was as much the cry of a generation as “Tune In, Turn On, Drop out.”

There’s a history of angry citizens burning down barns, tenements, banks and more. Usually burning a building expresses frustration and desperation; nothing else works. All that there is to do is to light a match and to watch the flames spread.

Let’s remember that in the 1960s, even the staid, academic New York Review of Books published on the front page a diagram of a Molotov cocktail, as it was then called, with instructions on how to make one.

The Molotov cocktail -- which my dictionary defines as “a makeshift incendiary bomb with flammable material and a wick” -- has been used all around the world for at least 100 years. Maybe it’s not necessary to actually make and hurl one of them. Maybe there are other ways of getting the point across.

Abbie Hoffman was once so mad at Random House, which had published his classic, Woodstock Nation and would not publish Steal This Book, that he commissioned and distributed a cartoon showing a kid blowing up Random House. I know Random House didn’t think it was funny, nor did bookstores appreciate the title, Steal This Book, which led to shoppers doing just that -- stealing Abbie’s book and not paying for it.

This is what I’d like to say about American bankers, and without recourse to matches, a wick and inflammable material: bankers are thieves; they’ve been getting away with outrageous crimes for decades, robbing from workers, and from the middle class too. They’ve grown fat and corrupt. Cries of anger, and protest might show them that we’re pissed, and that we’re not going to take it anymore. We won’t allow ourselves to go on being fleeced.

Of course, this is the summer of the new Robin Hood movie, and as every kid knows from Nottingham, England to Austin, Texas and Isla Vista, California, Robin Hood robbed from the rich and gave to the poor. Both parts of the equation are essential -- robbing from the rich and giving to the poor. You can’t keep the cash for yourself. The bankers have been doing just the opposite: robbing from the poor and giving to the rich. Maybe it’s time to bring Robin Hood back to the ‘hood, put sheriffs on alert and bring some economic justice into our sorry world of billionaires.

Now, I’ll have to admit that as a Yippie, I’ve always believed in the power of guerrilla theater, such as tossing bills on the floor of the Stock Exchange on Wall Street, as well as burning money. Abbie Hoffman and Jerry Rubin did that. I wouldn’t mind a little street theater now, in front of the Bank of America, or at my own piratical financial institution, Citibank.

Not long ago, Arianna Huffington suggested that citizens withdraw money from big banks and put it into smaller -- more responsible banks. That idea didn’t go over very well because a bank is a bank -- big or small -- and because just moving money around from one bank to another bank won’t do the trick.

Maybe we don’t have to start or finish by burning down a bank branch, but with burning five and ten dollar bills in front of a bank. It might be liberating; it might free some of us from the power of the Almighty Dollar. I know money is scarce and that men and women are out of work and can use money. In that case, give it away on the street; give away as much as you can as often as possible. Get it out of your pockets; get its power out of your head.

And of course protest outside of your bank; remind the bankers that, as Woody Guthrie said, “Some will rob you with a six-gun, some with a fountain pen.” These days, bankers are robbing most of us with computers, and maybe the computer can free up some of the money -- while it’s still around -- because the crisis that happened in Greece could and might very well happen here. Before you lose it all in the deepening recession, and in the next big decline on the Stock Market, you might as well play with it. After all, it’s only play money.

[Jonah Raskin was a Yippie and now teaches law at Sonoma State University.]

The Rag Blog

[+/-] Read More...

[+/-] Summary only...