Honest, I’m posting this video not for obvious affinities I have for Dylan Ratigan’s argument. But mostly because of the obvious suggestion, based on the resources we dedicate to investigating them, that Clinton’s blowjob was five times more dangerous for our country than the crash of our entire financial system.
The WSJ has a fascinating narrative of how both the US and Mubarak’s government were utterly unprepared for a democratic revolution in Egypt. From a meeting two months ago at which Egypt again refused democratic reforms, after which Hillary declared Egypt to be the “cornerstone of stability and security in the Middle East and beyond,” to a meeting on Monday when when a Middle East expert asked Obama’s National Security Council, “Please tell me you have contingencies in case Mubarak’s regime collapses” (the NSC said they did not), our government’s certainty that it could depend on the status quo generally and Egypt specifically has utterly collapsed.
And it was not just the government generally; predictably, the intelligence services paid to anticipate such events had no idea it would happen, either. Just one week ago, the new head of Israel’s military intelligence, Major General Aviv Kochavi, echoed Clinton’s earlier certitude that Egyptian would remain stable.
…on January 25, the day when massive protests first erupted across Egypt, Major General Aviv Kochavi, newly appointed head of Israel’s Military Intelligence Directorate, told a Knesset committee that “there are no doubts about the stability of the regime in Egypt”…
And while he’s predictably using the observation to demagogue, Crazy Pete Hoekstra ascribes the surprise to same kind of group think that has long plagued our intelligence analysis.
We were blind sided on Egypt. Problem is group think and risk aversion in state/intel community!
Part of the problem may be that US intelligence services rely more on the Egyptian government than on talking to opposition figures directly.
For years, the US Central Intelligence Agency has worked closely with the Egyptian security establishment in the contentious context of Washington’s “war on terrorism”. But it is unlikely that the CIA has been as meticulous in developing trustworthy contacts inside Egypt’s fragmented but dynamic and energized Egyptian opposition. The latter, whether religious or secular, is naturally distrustful of American officials, whom it sees as longtime supporters of the dictatorial rule of President Mubarak, in the interests of what US Vice President Joe Biden has called “geopolitical interests in the region”.
But that’s definitely not the whole of the problem. As Wikileaks revealed, we know our government met with a youth activist in 2008, as well as other NGOs. Yet embassy officials deemed that activist’s assessment that the opposition would have to replace Hosni Mubarak with a parliamentary government before the 2011 elections to be “highly unrealistic, and [] not supported by the mainstream opposition.” (Dismissing the activist’s claims so easily undoubtedly also made it easier to dismiss the suggestion that the US should pressure Mubarak “by threatening to reveal information about GOE officials’ alleged ‘illegal’ off-shore bank accounts.”)
It appears, then, that the US has met with some of these activists; it just apparently dismissed them as a bunch of naive youth.
I keep trying to immerse myself in the FCIC Report, but keep getting distracted–I guess I’ll have to read it this weekend. But it’s high time I put up a working thread for the rest of you.
The report itself is here.
Lambert Strether has made 1147 of the backup documents released by the FCIC available here.
And Masaccio sent me this observation from the report last night:
The number of suspicious activity reports—reports of possible financial crimes filed by depository banks and their affiliates—related to mortgage fraud grew 20-fold between 1996 and 2005 and then more than doubled again between 2005 and 2009.
p. 22 in the .pdf
This means that the regulators were not doing their jobs under the Bank Secrecy Act, the PATRIOT ACT and other laws. These laws are designed to enable prosecutors and regulators to spot money-laundering and other crimes.
Lenders made loans that they knew borrowers could not afford and that could cause massive losses to investors in mortgage securities. As early as September 2004, Countrywide executives recognized that many of the loans they were originating could result in “catastrophic consequences.” Less than a year later, they noted that certain high-risk loans they were making could result not only in foreclosures but also in “financial and reputational catastrophe” for the firm. But they did not stop.
And the report documents that major financial institutions ineffectively sampled loans they were purchasing to package and sell to investors. They knew a significant percentage of the sampled loans did not meet their own underwriting standards or those of the originators. Nonetheless, they sold those securities to investors. The Commission’s review of many prospectuses provided to investors found that this critical information was not disclosed.
That is tantamount to saying that these people committed crimes. They sold securities with documents that were knowingly false.
In my first post on how stupid it was for Obama to pick Jeff Immelt for his election season commission to appear focused on jobs, I looked mostly at how much GE has been outsourcing manufacturing and technology. Though I mentioned GE’s status as another TBTF finance company, I didn’t explain that in depth.
Mike Konczal has a post in which he corrects Joe Klein’s misperception that GE is not another big finance company, and in the process shows how GE was one of the biggest beneficiaries of the government’s bailout of shadow banking in 2008-09.
In it, he shows how GE received the second biggest FDIC debt guarantees of any of the big finance firms, after only Citi. He borrows the graphic at the left from a Raj Date paper that also explains how GE leveraged (heh!) its teeny FDIC insured deposits to get a big debt guarantee.
Only a small fraction of GE Capital’s funding (some $24 billion in the middle of 2008) came through FDIC-insured deposits. Despite that, the structure of the FDIC’s Debt Guaranty Program enabled GE Capital to issue well more than that (more than $50 billion) in unsecured debt that was, in effect, taxpayer-guaranteed. In essence, the program was structured in a way that almost uniquely favored a shadow bank like GE — one with a relatively small depository, but with immense unsecured debt that had been issued by the depository’s affiliates.
Konczal then goes on to cite another paper explaining why this happened: GE used the credit rating it won in its manufacturing business to make a lot of big finance games possible.
1 run the industrial business for earnings;
2 add industrial services to cover hollowing out of the industrial base;
3 buy and sell companies through acquisition and divestment to achieve returns and growth objectives;
4 rely on large-scale acquisition to prevent like-for-like comparisons and to increase opacity and the power of narrative;
5 grow the financial-services business up to the limit of the company’s credit rating;
6 accept the balance-sheet costs in terms of return on capital but focus on managing return on equity and cost of capital;
7 add financial engineering to smooth earnings and manage growth….
[snip]
If the expansion of GE Capital rested on judgement and controls, it also reflected the structural advantage of the triple-A credit rating, which effectively made the financial business (as user of the credit rating) dependent on the industrial business (as credit-rating generator), and this in turn set limits on how much GE could expand without risking reclassification by credit-rating agencies. GE Industrial may be a low-growth business but it has high margins, is consistently profitable over the cycle and has funded almost all of the dividends that GE Consolidated has paid out, as well as providing the funds for acquisitions and repayment of debt. This solid industrial base is the basis for GE’s triple- A credit rating, which allows GE Capital to borrow cheaply the large sums of money that it lends on to consumers and commercial customers… [my emphasis]
Konczal summarizes the business model that Obama tapped, through Immelt, to build American jobs and competitiveness this way:
GE has been at the forefront of blurring a “financial services”-centric model of business onto the remains of a hollowed out manufacturing base, one kept in a minimal state just strong enough to qualify for high credit scoring.
In other words, Immelt and GE aren’t about building the jobs American needs (for graphic representation of that, see this post). Rather, they’re about transforming the fruits of American manufacturing into yet more destabilizing casino games.
And that’s what Obama picked today to lead his election-season effort to appear serious about job creation.
Sure, maybe it’ll fool the Joke Lines of the world into believing outsourcing to China is a solution to America’s job crisis. But those of us in flyover country seeing that jobs crisis up close are smarter than all that.
When Google announced that Eric Schmidt was stepping down yesterday, I joked that Schmidt must be leaving to lead Obama’s campaign economy — the one he’ll use to get re-elected with. After all, Schmidt is one of the Obama’s closest CEO buddies, and he’s leaving at the same time as Jim Messina and Patrick Gaspard are leaving to take over the campaign infrastructure. The decision to close the Office of Political Affairs seems to indicate a decision to stop governing and start spinning wildly to ensure re-election. There’s no area where Obama will need to spin more wildly than with the economy, right?
Turns out, I wasn’t far off.
What else can you conclude from the news that Obama is replacing his President’s Economic Recovery Advisory Board, led by Paul Volcker, with a President’s Council on Jobs and Competitiveness, led by General Electric CEO Jeff “Nut on China” Immelt?
President Obama has asked me to chair his new President’s Council on Jobs and Competitiveness. I have served for the past two years on the President’s Economic Recovery Advisory Board, and I look forward to leading the next phase of this effort as we transition from recovery to long-term growth. The president and I are committed to a candid and full dialogue among business, labor and government to help ensure that the United States has the most competitive and innovative economy in the world.
Aside from the tired DC trick of renaming the Council with the latest buzzwords — jobs and competitiveness — there’s all the things GE has done under Immelt that make the U.S. less competitive. I noted the other day that GE had signed a big deal with China that will involve us sharing our jet technology with China, which will ultimately help China compete with both GE and — China has said explicitly — Boeing. Then there’s the fact that, even as Immelt has been calling for manufacturing in the U.S., his company has been shutting U.S. plants to move the work to China.
While Immelt was calling for manufacturing to stay in the U.S., his company was at the same time shipping manufacturing jobs overseas by canceling an order with an American-based wind turbine maker, ATI Casting Service in LaPorte, Ind., so that GE could instead buy the parts from a factory in China.
Recently, ATI made $30 million worth of investments to buy, convert, and modernize a shuttered factory in economically ravaged Michigan so the company could provide more parts to GE as the green economy expands with federal stimulus funding. But a Chinese firm underbid ATI, and the factory faced having to lay off 302 union workers and shutter the plant.
In an aggressive bid to keep the factory open, ATI offered to match the price of the Chinese producers. GE once again said they would prefer to buy from China. The ATI plant is now closed, the jobs gone.
Then there is Immelt’s call for Free — not Fair — Trade in his op-ed announcing the Kabuki Council.
Free trade: America cannot expand its manufacturing base without greatly increasing the volume of goods it sells overseas. That is why I applaud the free-trade agreement recently concluded between the United States and South Korea, which will eliminate barriers to U.S. exports and support export-oriented jobs. We should seek to conclude trade and investment agreements with other fast-growing markets and modernize our systems for export finance and trade control. Those who advocate increasing domestic manufacturing jobs by erecting trade barriers have it exactly wrong.
And then, finally, there’s the little detail that GE managed, alone of “manufacturing companies” in the U.S., to turn itself into a Too Big To Fail overleveraged finance company in need of a $16 billion bailout from the government (as has happened with all the TBTF finance companies, bailouts have made GE’s financing business profitable again).
In short, no matter how many times Immelt gets up on a podium or in an op-ed and feigns an interest in American jobs, his actions make him the poster child for everything wrong with the U.S. economy right now.
And that’s what Obama is rolling out, as he moves into campaign mode, to convince Americans he’s going to do a damn thing about jobs.
I think a lot of the discussion about Freddie DeBoer’s “the blindspot” (with Steve Hynd as one exception) focuses too closely on the personalities–on whether Jane is mean in print or whether Ezra is too conciliatory–and not on whether our political dialogue is dangerously ignoring the plight of workers. For the purposes of this post, I’d like you to first ask yourself why, during the Depression, we started building a safety net for working people, whereas during this current crisis in capitalism, many developed nations are using the crisis as an opportunity to dismantle the safety net.
Then read this part of what DeBoer had to say:
That the blogosphere is a flagrantly anti-leftist space should be clear to anyone who has paid a remote amount of attention. Who, exactly, represents the left extreme in the establishment blogosphere? You’d likely hear names like Jane Hamsher or Glenn Greenwald. But these examples are instructive. Is Hamsher a socialist? A revolutionary anti-capitalist? In any historical or international context– in the context of a country that once had a robust socialist left, and in a world where there are straightforwardly socialist parties in almost every other democracy– is Hamsher particularly left-wing? Not at all. It’s only because her rhetoric is rather inflamed that she is seen as particularly far to the left. This is what makes this whole discourse/extremism conversation such a failure; there is a meticulous sorting of far right-wing rhetoric from far right-wing politics, but no similar sorting on the left. Hamsher says bad words and is mean in print, so she is a far leftist. That her politics are largely mainstream American liberalism that would have been considered moderate for much of the 20th century is immaterial.
[snip]
I look out onto an America that seems to me to desperately require a left-wing. American workers have taken it on the chin for thirty years. They have been faced for years with stagnant wages, rising costs, and the hollowing out of the middle class. They are now confronted with that and a cratered job market, where desperate people compete to show how hard they will work in bad conditions for less compensation. Meanwhile, the neoliberal policy apparatus that brought us here refuses even to consider the possibility that it is culpable, so certain of its inherent righteousness and its place in the inevitable march of progress. And the blogosphere protects and parrots that certainty, weeding out left-wing detractors with ruthless efficiency, while around it orbits the gradual extinction of the American dream.
What seems most important, to me, is that a blind faith in capitalism led to catastrophe. And at a time when we should be reining in the capitalism that failed so badly, we are instead capitulating to it, using the event of the failure of our corporate masters to give them even more. How is that even happening? And to what degree does the blogosphere deserve some of the blame?
Now, aside from the fact that the blogosphere came of age at a time (after Bush v. Gore v. Nader) and with a politician (Dean) when the left reinvested in the two party system, I’m not sure how much of this is distinctly a problem with the blogosphere. Rather, it’s a problem with US discourse generally, and the taxonomy that DeBoer maps out largely comes from compromises many in the blogosphere made to be able to take part in that discourse. (Oh. Btw. Blowjob.) The blogosphere has been certified and thereby neutralized by our political elite, but only certain parts of that blogosphere.
And voila: that means not enough of the leading voices of the blogosphere speak for workers (or the unemployed or the elderly poor or immigrant workers)–or even speak out against our failed capitalist masters. More importantly (and this is why I think DeBoer’s point about socialism is important), while some–many of us here at FDL, for example–do offer critiques of our capitalist masters and support for labor such as it exists, almost no one is offering an affirmative ideological alternative to the neoliberalism of the Village.
The absence of a viable threat from the working class makes it easy for DC to use this failure of capitalism to double down on it, to further disenfranchise the poor. Shock Doctrine, baby.
Mobilization Threats
Just as a way of thinking about this, consider last year’s three big political rallies in DC. Obviously, rallies are not the only way for real people to inspire fear among the elite, it is a way such threats get narrativized.
Consider, first of all, the rally that probably got the most attention: Glenn Beck’s Restoring Honor rally in August, which brought out tens of thousands of TeaPartiers. Now, I think the elite does fear the Tea Partiers. The left (and some Republicans) have reason to fear TeaPartiers physically; the right has to fear them ideologically.
But the rally was notable not for the way it expressed populist anger. Rather, Beck shifted his focus from central TeaParty anti-government issues to instead focus on religion. This was a message about putting your faith in God, not your boots into mobilization. Moreover, the rally would never have been as big as it was without a bunch of Koch-funded buses to ship people to DC. So rather than an expression of class anger, the Beck rally was more an expression of the cooptation of it by big capitalism (the Kochs) and the neutralization of it with religious themes.
Then there was the other big rally celebrated by the press: the Stewart/Colbert Rally to Restore Sanity/Fear in October. What does it say that one of the biggest popular mobilizations last year, in a year that should have featured pitchforks, instead starred comedians? Read more →
FROM: Mr. Lloyd Blankfein
200 West Street
New York, New York
202-555-MOTU
TO: CEO
Chump City, ForeignLand
Dear Sir:
I have been requested by the Facebook Company to contact you for assistance in resolving a matter. The Facebook Company has recently concluded new agreements to share its users’ identities. The contracts have immediately produced moneys equaling US$50,000,000,000. The Facebook Company is desirous of harvesting user identities in other parts of the world, however, because of certain regulations of the Securities and Exchange Commission, it is unable to move these funds to another region.
You assistance is requested as a non-American citizen to assist the Facebook Company, and also the Goldman Sachs, in moving these funds out of America. If the funds can be transferred to your name, in your non-United States account, then you can forward the funds as directed by the Facebook Company. In exchange for your accommodating services, the Facebook Company would agree to allow you to retain 10%, or US$5 billion of this amount.
However, to be a legitimate transferee of these moneys according to American law, you must presently be a depositor of at least US$1,000,000 in a Special Purpose Vehicle which is regulated by the Goldman Sachs.
If it will be possible for you to assist us, we would be most grateful. We suggest that you meet with us in person in Chump City, and that during your visit I introduce you to the representatives of the Facebook Company, as well as with certain officials of the Goldman Sachs.
Please call me at your earliest convenience at 202-555-MOTU. Time is of the essence in this matter; very quickly the Securities and Exchange Commission will realize that the Goldman Sachs is maintaining this amount on deposit, and attempt to levy certain depository taxes on it.
Yours truly,
Lloyd Blankfein
You’d think after it had become the poster child for robo-signing foreclosure fraud, at a time when it was facing a class action suit arising out of that fraud, and at a time when all servicers had been anxiously awaiting the result of the US Bank v. Ibanez suit in MA, GMAC would be very very careful about the way its purchase of mortgage notes interacted with its servicing department.
You’d be wrong. The Consumerist has the story of a guy whose local originator told him and his wife that GMAC would probably be buying the note when they refinanced back in November. But the day after GMAC actually completed that purchase, they started pestering him with claims he was delinquent on a payment he had made 11 days earlier.
This afternoon I answered my cell phone and heard a recorded message that GMAC was trying to reach me. Interested, because we have no relationship at all with GMAC at this time, I held on the line until a gentlemen spoke, asking me “Am I speaking with (my first and last name)?”
I confirmed that he was speaking to me and asked who he was, explaining that I have no relationship at all with GMAC. He responded by telling me he was calling about the property at my address. I reiterated that I have no relationship with GMAC and demanded that he explain what the purpose of the call was. He coldly stated that he was calling regarding a delinquency on a mortgage for the property at my address.
[snip]
After several calls with the originator, they were able to explain what happened. Apparently, GMAC indicated they wanted to buy the mortgage back in November, when we closed on it, but never actually purchased it (and I’m sure I’m not using the correct industry terminology here) until YESTERDAY, January 11th. The originator did receive my payment for the 1st but were unable to send it to GMAC until GMAC officially owned the note.
So, GMAC let my note sit with the originator for more than a month and a half before they actually purchased it. Then, one day after they took ownership, it was flagged in their computer as delinquent and they immediately called me about it.
Now, I’m actually really curious whether this simply reflects GMAC is so on top of collections that it really did make a call on the loan the day after they purchased the note. Or, as would be more damning, whether GMAC’s servicing department is still doing what led to all the robo-signing in the first place: putting loans into their servicing system before they have the legal basis to do so.
In any case, it suggests GMAC’s claims that they’ve reviewed all their processes and fixed any problems with them may be over-optimistic.
A man about to go on trial in Switzerland for breaking that country’s secrecy laws has promised to give details of 2,000 individuals and corporations who are hiding their money in offshore accounts to Wikileaks tomorrow.
The offshore bank account details of 2,000 “high net worth individuals” and corporations – detailing massive potential tax evasion – will be handed over to the WikiLeaks organisation in London tomorrow by the most important and boldest whistleblower in Swiss banking history, Rudolf Elmer, two days before he goes on trial in his native Switzerland.
British and American individuals and companies are among the offshore clients whose details will be contained on CDs presented to WikiLeaks at the Frontline Club in London. Those involved include, Elmer tells the Observer, “approximately 40 politicians”.
Elmer, who after his press conference will return to Switzerland from exile in Mauritius to face trial, is a former chief operating officer in the Cayman Islands and employee of the powerful Julius Baer bank, which accuses him of stealing the information.
That’s interesting enough. But I’m equally interested because of who Elmer’s lawyer is: Jack Blum. Blum explains why Elmer has resorted to leaking this to Wikileaks.
“My understanding is that my client’s attempts to get the banks to act over various complaints he made came to nothing internally,” says Elmer’s lawyer, Jack Blum, one of America’s leading experts in tracking offshore money. “Neither would the Swiss courts act on his complaints. That’s why he went to WikiLeaks.”
Calling Blum, “one of America’s leading experts in tracking offshore money” doesn’t convey the degree to which Blum’s investigations–perhaps most famously of BCCI–exposed the ties of the very powerful to corrupt money. After Blum’s Senate investigation of BCCI got too close to the Democratic fixer Clark Clifford, he was fired; he had to bring his work to NY’s DA and the press to reveal what he had found.
In a book review for HuffPo last year, Blum described how important it is to map the networks that run our world, yet noted that doing so has gotten more difficult since he first started investigating such things.
When I came to Washington 45 years ago to work as an investigator for the Senate Antitrust Subcommittee, a senior investigator with years of experience told me that the beginning of any good investigation was a clear understanding of the players. “Everyone you will look at has a history,” he explained. “They will have mentors and sponsors. They will have networks of political and business connections. They will play many roles. If you understand those, everything else will fall into place.”
Jamie Dimon says they’re going to have to chase 5% of their customers away in response to limits Dodd-Frank put on the usurious rates banks charge merchants for each debit card transaction.
Federal limits on debit card processing fees will force banks to charge customers more for services, making accounts too expensive for as many as 5 percent of customers, JPMorgan Chase’s chief executive Jamie Dimon said Friday.
The rules, proposed as part of the Dodd-Frank financial reform law, would cap the fees that merchants pay banks for processing debit card transactions at 12 cents each.
That is almost 75 percent less than the average 44 cents per transaction that banks get now.
U.S. banks could lose about $13 billion of their annual industry debit processing revenues because of the rules, which the Federal Reserve proposed last month.
Dimon also announced today that their profit was up 47% last quarter. And that’s after the $10 billion in bonuses Dimon’s banksters will share.
In other words, JP Morgan could easily afford to keep serving its poorest customers, just by accepting reasonable profit and bonus levels instead of the positively immoral ones they’re now getting. But it has chosen, instead, to push millions into “unbanked” status, I guess because those people aren’t as worthwhile as people as JPM’s MOTUs are.
Note, too, that Chase is one of the national leaders in contracting with states to provide debit cards for state unemployment benefits. I wonder if JPM will forgo these big state contracts and captive consumers as part of its “unbanking” plans?