Moral Hazard and All That

Congress made an unintentional funny with the title of a new mortgage relief bill: the Helping Responsible Homeowners Act.

Remember, responsibility, accountability, justice - those high-minded ideals are just for the common folk but do not apply to our elites. If you're a bankster, a high-ranking politician, or a corporation, you get to do whatever the fuck you want. And in the case of the banksters, when you blow up the global economy, you are rewarded with piles of capital wrested from the public coffers without a single proviso or stipulation. And as we are now finding out, those freebies for the good old boys were way larger than previously known:

The Federal Reserve lent Wall Street firms a staggering $1.2 trillion in a previously unrevealed bank bailout that dwarfs the size of TARP, reports Bloomberg News. 

The $1.2 trillion — which Federal Reserve Chairman Ben Bernanke lent to banks and other firms to prevent the economy from collapsing is roughly equivalent to the amount that U.S. homeowners currently owe on 6.5 million underwater mortgages, Bloomberg said.

Bloomberg News received the information through Freedom of Information Act requests, litigation and an act of Congress. The $1.2 trillion figure is the compilation of the balance for seven programs instituted by the Fed.

I'll be interested to see if this bill manages to pass and make its way to Obama's desk, because I would love to hear another vomit-inducing signing speech from him about how we aren't throwing good money after bad and that we're not helping out unscrupulous folks that borrowed more than they could afford.

I know this is crazy, but you would see a much more sustained and profound stimulative effect from just helping out homeowner's and average citizens wind down their enormous levels of household debt, or principal reductions for underwater mortgages. Refinances are nice, but all they will accomplish is scrape a few hundred bucks off people's mortgage payments while still leaving them shackled to an "asset" that isn't worth shit, can't be sold, and will never again be worth what it was valued at during the manic housing casino days of the 2000s. 

But giving direct help to the freeloading masses would be socialism and stuff, and we have to worry about moral hazard. Don't want those goddamn moochers taking advantage of the system. That's their game. We'll just wait for the magic of the free market and the confidence fairy to return and restore these housing values to their former glory.

What was it again that Einstein said about doing the same stupid shit over and over and expecting different results?

We Only Ignore Laws That Seek To Prevent Us From Bombing Brown People

I think it's very telling of our national priorities that the White House went out of its way to concoct the most laughably stupid rationale for as to why bombing Libya did not constitute a war, yet we continue to allow ourselves to be beholden to some nebulous limit placed upon the full faith and credit of the United States. Also note how we're perfectly fine with torture, ordering the assassinations of American citizens, and indefinite detention without ever charging those individuals with a crime. You'll note that the difference between these two standards is that ignoring one set of laws allows us to attack Muslims with impunity and the other allows us to fuck over average American citizens through unnecessary economic hardship and manufactured debt crises, the common denominator being that both of these things are wildly popular in Washington. 

And reading this just about made me want to explode:

When you strip away all the noise, and the posturing from both Democrats and Republicans, sources on both sides, including in the White House, acknowledge that there’s really only one way out of the impasse.
Both sides have to agree on a way of separating the debt ceiling hike, or hikes, from the process by which spending gets cut — in essence putting an end to a situation in which the debt ceiling is being used as a Sword of Damocles hanging over the spending process. Accomplishing this overall policy goal in a way that can pass both Houses of Congress is the only real way out of the trap right now. The cuts have to be deep enough to pass the House, but the proposal to hike the debt ceiling has to simultaneously satisfy the White House and Democrats.
According to a source close to the talks, Vice President Joe Biden has been in discussions with multiple officials on the Hill from both parties, about ways of realizing this aim.
One idea being floated in multiple private discussions would in effect be a fusion of the Boehner plan and the original McConnell plan to transer control of the debt ceiling to the President.
The idea would be to preserve the joint commission that Boehner’s plan sets up, and also preserve the spending cut targets in Boehner’s plan. But rather than have those tied to two debt ceiling hikes, the President would have the power to hike the debt ceiling unilaterally in keeping with McConnell’s plan, unless a two-thirds veto-proof Congressional supermajority disapproved of it (which wouldn’t happen). The spending cuts in Boehner’s plan would instead be enforced by some kind of trigger — if the committee didn’t reach the goals, automatic cuts of some kind would be triggered automatically.

And then when Capricorn wanes in Venus' shadow and the magical unicorn centaur people of Zargon V sing their haiku of adulation to the heffalump goddesses, Congress will come together and stop holding the global economy hostage. 

Just pass a fucking clean debt ceiling bill already and be done with it. If congressional Democrats and the administration wanted one, they would have fought for it all along. Instead we are stuck with this economically counterproductive, wholly conservative plan because of some mindless political calculation by the White House that they need to cater more to the delicate fee-fees of independents rather than actually do something about the economy.

And speaking of Libya, whatever happened to that delightful little war?

Give Them A Pulitzer Already

Via Atrios, the internet's best newspaper steps up its satire:

WASHINGTON—Members of the U.S. Congress reported Wednesday they were continuing to carefully debate the issue of whether or not they should allow the country to descend into a roiling economic meltdown of historically dire proportions. "It is a question that, I think, is worthy of serious consideration: Should we take steps to avoid a crippling, decades-long depression that would lead to disastrous consequences on a worldwide scale? Or should we not do that?" asked House Majority Leader Eric Cantor (R-VA), adding that arguments could be made for both sides, and that the debate over ensuring America’s financial solvency versus allowing the nation to default on its debt—which would torpedo stock markets, cause mortgage and interests rates to skyrocket, and decimate the value of the U.S. dollar—is “certainly a conversation worth having.” "Obviously, we don't want to rush to consensus on whether it is or isn't a good idea to save the American economy and all our respective livelihoods from certain peril until we've examined this thorny dilemma from every angle. And if we’re still discussing this matter on Aug. 2, well, then, so be it.” At press time, President Obama said he personally believed the country should not be economically ruined.

Not to mention the "debate" continues on whether or not we should allow millions of Americans to continue to lose their houses or be out of work. 

Shoot Me Now

I've been away for a blissful week in Cancun with my wife with absolutely zero access to internet (it was there, I just stayed away from it). Had no expectation of the debt ceiling shit show being solved upon my return, but I didn't expect to come back to this:

A Congressional aide briefed on ongoing negotiations between House Speaker John Boehner and President Obama says the two principals may be nearing a "grand bargain" on to raise the debt limit which would contain large, set-in-stone spending cuts but only the possibility of future revenue increases.

"All cuts," the aide said. "Maybe revenues some time in the future."

[...]

A White House spokesman called the claims from aides "not credible" -- the result of having a "3rd hand version of the facts."

However two aides and a third source, close to the principals confirmed that Obama has been emphatic with Democratic negotiators that his preference is to negotiate a big deal with Boehner and squeeze it through Congress.

Lacking still, including among Democratic sources, is any sense of what's in the still-forming plan -- vis a vis both spending and revenue. And Democrats, particularly in the House, will have a lot to say over whether the deal is acceptable -- their votes will be necessary for Boehner to pull off a grand bargain.

Well isn't that cute - Republicans get exactly what they wanted all along and that which is directly counterproductive to economic recovery, and in return the President gets a sort-of-kind-of-maybe-we'll-think-about-discussing-revenues-in-the-not-to-near-future. I'll let you decide how that will go. Here's a hint as to when those results might happen: When the sun rises in the west, sets in the east. When the seas go dry, and the mountains blow in the wind like leaves.

And this is all because the Obama team deems it ever so erudite to take deficit reduction off the table going forward, so he can pivot to jobs and winning the future and stuff during his second term. Does anyone really think for even a second that the GOP won't manufacture some other bull shit excuse to stonewall Obama's agenda if he wins a second term? Here's an observation of mine, Mr. President - they hate you. They hate you, they hate your family, and they hate everything you stand for. If that much isn't glaringly obvious already, then god help you. They don't want to negotiate in good faith, they don't want you, your policies, the middle class, or the country to succeed, and they don't want anything but their craven pursuit of personal and political gain. Cutting some bullshit deal with these assholes is not going to buy you a lick of political capital to spend in a second term. Just as the debt ceiling has never before been used as a political hostage because it is insane and dangerous and cynical, just so they will manufacture some other crisis to grind Washington to a halt, suck all the air out of the room, and monopolize the stenographer's in the media with a manufactured, unnecessary crisis. Just as they continue to peddle their ignorant, demonstrably false talking point that we do not have a revenue problem, we have a spending problem, so they will continue to contrive other similar falsehoods with which to push their reckless agenda while hamstringing your own. And just as they spent the better part of two years hyping the deficit as the greatest crisis the country has ever faced while millions of Americans wallow in unnecessary and preventable unemployment and poverty brought on by the financial crisis, so they will immediately ignore the same admonitions if they are able to unseat you in 2012 and embark upon their "conservative" agenda of privatizing everything, wiping all regulations off the books, and cutting the top marginal tax rate to 1%. 

And fuck eleven dimensional chess. I am over it, and the rest of the country is over it. If Congress and the administration wanted a clean debt ceiling vote, they could have it, and they could fight for it and get the public behind it. Instead we are left with what will likely be another Republican wet dream of a deal in the likeness of the Bush tax cut extension just ahead of the midterms. That didn't exactly rile the base, in case the administration has forgotten so soon. 

The Fragile Enterprise System

Hang on, let me roll my eyes some more:

The names have become synonymous with corporate wrongdoing — and forceful prosecution: Not just Enron, but also WorldCom, Tyco, Adelphia, Rite Aid and ImClone. In the early part of the last decade, senior executives at all these companies were convicted and imprisoned.

But by 2005, a debate was growing over aggressive prosecutions, as some business leaders had been criticizing the approach as perhaps too zealous.

That May, Justice Department officials met ahead of a session with a cross-agency group called the Corporate Fraud Task Force. It was weeks after Justice Department lawyers had presented to the Supreme Court their case against Arthur Andersen, which was seeking — successfully, it would turn out — to overturn its criminal fraud conviction in a prominent case.

In the meeting, the deputy attorney general at the time, James B. Comey, posed questions that surprised some attendees, according to two people there who asked to remain anonymous because they were not supposed to discuss private meetings.

Was American business being hurt by the Justice Department’s investigations?, Mr. Comey asked, according to these two people, who said they thought the message had come from others. He cautioned colleagues to be responsible. “It was a total retrenchment,” one of the people said. “It was like we were going backwards.”

Read the whole thing. It details how our lazy third world joke of a regulatory structure has granted us the awesome reality in which we will probably never see high-level prosecutions from the financial crisis, because that might be too "zealous" or "hurt American business."

But hey, we may get like a million bucks or two, and then we can all pat ourselves on the back for a job well done and that the banksters feel really, really sorry for what they did. And it'll never happen again! 

I love the smell of the free market in the morning.

The Invisible Hand - Severed and Maimed

Another timely reminder that our country is run by a bunch of ideological sociopathic assholes (in both parties). I know "facts" and "empirical evidence" are really difficult to understand, inconvenient, have a well-established librul bias, but the way we willfully and categorically ignore them in the governance of our nation makes me want to go play in traffic, human Frogger style. 

The deficit is not the greatest economic problem of our time. Sagging aggregate demand brought down by structural unemployment and an anemic housing sector is where the real crisis lies.

But banksters and CEOs are back to eight figure bonuses and compensation packages, so just wait a little longer. It'll all work out - we just need to give the invisible hand time to recover from its recent surgery. 

Rated Arg for Pirates

Fuck you:

You're Getting Old
Tags: SOUTH
PARKStan Marsh,Randy Marsh,more...

Cheating Made Painless

I know this is a very difficult concept to comprehend, but when the marginal benefits of cheating far exceed the marginal costs, people are going to keep cheating:

SEC Enforcement Director and former Deustche Bank general counsel Robert Khuzami boasting about the latest slap on the wrist directed at a major bank, this time a $228 million fine of JP Morgan Chase for a bid-rigging scheme involving municipal bonds. The Chase ruling is the latest to come down in a series of fines involving a number of banks, including Bank of America and UBS.

This is one of the best examples we’ve had yet of the profound difference in the style of criminal justice enforcement for the very rich and connected, versus the style of justice for everyone else. This scam that Chase, Bank of America and UBS were involved with was no different in any way, really, from old-school mafia-style bid-rigging scams.

What these banks did is they got together and carved up territory between them, arranging things so that they wouldn’t be bidding against each other in municipal debt auctions. That means the 18 different states involved in these 93-odd deals all got screwed out of the best prices, leaving the taxpayers in those places severely overcharged for their public borrowing.

This is absolutely no different from what mafia groups in New York used to (and probably still do) do for public contracts – the proverbial five families would get together, divide up the boroughs and neighborhoods between them, and each family would individually buy or intimidate their way into the bidding process, corrupting the game so that the public had to overpay for their garbage collection or their construction labor or whatever. The only difference here is that we’re talking about debt, not garbage. But the concept is exactly the same; it’s the same crime.

If Khuzami’s defendants had been a bunch of Italians from Howard Beach, they would be facing RICO charges and would be looking at years in prison, plus seizure of all their ill-gotten gains, in addition to civil suits and penalties...But if the defendants are a bunch of Ivy-League educated bankers from Wall Street, what we end up getting is a negligible fine (officials will brag about this $228 million, but it’s a drop in the bucket compared to what the banks make scamming communities and governments) and, as always, no admission of guilt. This is how the SEC’s own press release reads:

Without admitting or denying the allegations in the SEC’s complaint, JPMS has consented to the entry of a final judgment enjoining it from future violations of Section 15(c)(1)(A) of the Securities Exchange Act of 1934 …

As it is, as my friend Eric points out, the endgame for banks like Chase is, “Admit nothing, pay two hours of revenue and all good!”

By accounting terminology, I think you would call this "provision for bad debts bets." This is simply a cost of doing business, and this will continue into perpetuity as long as the toothless ass clowns at the SEC allow it. 

Can you ever imagine this ridiculous standard applying to an average citizen? Say you get pulled over for doing 95 mph through a school zone. A cop is never going to say to you, "Well I'm sorry to inconvenience you, please just pay this $5.00 fine and I'll be on my way. Oh, and I won't make you admit any wrong doing. Again, really, really sorry to bother you." Hell no. The fines for such civil indiscretions are enormous, even doubled in school zones. And they are that way for a reason - they want the fiscal penalties to be painful and immense to the average driver's pocketbook so as to discourage that very kind of behavior. A Wall Street firm that makes close to $6 billion in a mere three months is not going to be dissuaded from its illicit activities when it faces no criminal indictments and is permitted to cough up what amounts to its budget for hookers and blow for a week to atone for its actions. 

Austerity - All The Cool Kids Are Doing It

Looks like we need to give the confidence fairy just a little bit longer to do her magic:

For the second month in a row, employers added barely any jobs in June, showing that the economic recovery has hit a serious speed bump.

With all levels of government laying off workers, the Labor Department reported that employers eked out just 18,000 new nonfarm payroll jobs in June. The already low number created in May was also revised downward to a dismally small 25,000 new jobs, less than half of what was originally reported last month.

Although the government’s survey of employers showed them adding jobs, a separate survey of households showed that more people were out of work than in the previous month, causing the unemployment rate to rise to 9.2 percent.

[...]

The economy needs to add at least 150,000 jobs a month just to keep up with normal population growth. The protracted stretch of weak-to-moderate job creation over the last two years has left many of the people who lost jobs during the recession increasingly desperate. There are now 14.1 million unemployed, with 6.3 million of them having searched for work for six months or longer. Including those who are working part-time because they can’t find full-time work and those who have stopped looking, the broader unemployment rate is now 16.2 percent, its highest level since December 2010.

I'll say it again - no one gives a shit about the deficit except our horrible elected overlords. People want jobs and economic security, not Beltway boner-inducing summits and negotiations that produce zero results and do little else than tie Washington in knots and keep them from addressing the real crisis at hand. And make no mistake, that is the goal of the GOP's continued intransigence. If you consistently jump from one hostage crisis to the next (see government shutdown, debt ceiling), it paralyzes Washington and captivates the national media and leaves room for no other debate or policy initiatives. Why else do you think they are always insisting on temporary solutions? They want to keep having this dog and pony show again and again, because it means the administration and Congress can not focus on anything else.

It will be fun to see how the Obama team tries to spin their way out of this one when the 2012 drive heats up. I imagine they are supremely relieved at this point that their primary competition is a bunch of boring GOP back benchers. The economy doesn't need to continue to sputter like this. It does so because Washington has chosen not to address the problem, which is very fucked up when you think about it.

Perp Walk Like An Egyptian

Looks like we aren't the only nation in the world with the Greatest Justice System Ever:

An Egyptian criminal court on Tuesday acquitted three former government ministers of corruption while convicting a fourth in absentia, verdicts most likely to further inflame public anger over the pace of efforts to hold former officials accountable for killing more than 800 people during the country’s 18-day revolution.

The acquittals were seen as especially provocative because they followed by one day a separate Cairo court decision to release on bail seven police officers charged with killing 17 protesters and wounding 350 in the city of Suez during the revolution. That decision set off a riot at the courthouse and led protesters to block a major highway for hours.

The decisions have aggravated growing anger at the military council now running the country. It has faced mounting criticism from protesters who say it is too slow to prosecute former officials, yet has moved quickly and aggressively to prosecute hundreds of civilians before military courts in connection with pro-democracy activities.

“People see more and more that nothing is changing,” said Lilian Wagdy, who is helping to organize a large protest in Tahrir Square on Friday. “Those who have been robbing this country for 30 years get acquitted, while protesters are found guilty before military courts.”

And still no prosecutions from one of the largest financial crises in US history. Oh, and torture is basically legal now. But you know, liberty and justice for all, bitches!

The Rich Get Richer

Obama has got to stop hurting these guys fee-fees with his corporate jet class warfare. They just have it so hard as it is:

The final figures show that the median pay for top executives at 200 big companies last year was $10.8 million. That works out to a 23 percent gain from 2009. The earlier study had put the median pay at a none-too-shabby $9.6 million, up 12 percent.

Total C.E.O. pay hasn’t quite returned to its heady, prerecession levels — but it certainly seems headed there. Despite the soft economy, weak home prices and persistently high unemployment, some top executives are already making more than they were before the economy soured.

Pay skyrocketed last year because many companies brought back cash bonuses, says Aaron Boyd, head of research at Equilar. Cash bonuses, as opposed to those awarded in stock options, jumped by an astounding 38 percent, the final numbers show.

Granted, many American corporations did well last year. Profits were up substantially. As a result, many companies are sharing the wealth, at least with their executives. “We’re seeing a lot of that reflected in the pay,” Mr. Boyd says.

It's the American way: concentrate all the wealth and compensation at the very top, because those people need to have all the money - they create the jobs and trickle stuff down on us! And things! For everyone else, expect them to do more with less, oftentimes the jobs of maybe two to three people because of massive recessionary layoffs, and pay them the same wages with minuscule adjustments (if any) that barely cover recent increases to the cost of living. It's a great racket too; the economy continues to suck because our political class thinks austerity is the panacea for 10% GDP, so the workers are terrified of losing the gig they have, or demanding more in pay, or being able to find work elsewhere. 

And next time some asshole Republican puffs his chest about how we have to keep taxes low and can't raise them ever, think of this gilded motley crew:

The preliminary and final studies put Philippe P. Dauman, the chief executive of Viacom, at the top of the list. Mr. Dauman made $84.5 million last year, after signing a new long-term contract that included one-time stock awards.

Leslie Moonves, of the CBS Corporation, got a 32 percent raise and reaped $56.9 million. Michael White of DirecTV was paid $32.9 million, while Brian L. Roberts of the Comcast Corporation and Robert A. Iger of the Walt Disney Company each received pay packages valued at $28 million.

“Media firms seemed to be paying a lot,” said Carol Bowie, head of compensation policy development at ISS Governance, which advises large investors on corporate governance issues like proxy votes. “Media companies in general tend to be high-payers, and they tend to feed off each other.”

Other big payers included oil and commodities companies like Exxon Mobil and a few technology giants like Oracle and I.B.M.

Some of the other highly paid executives on the new list who were not in the April survey are Gregg W. Steinhafel of Target, who had a $23.5 million pay package; Michael E. Szymanczyk of Altria, $20.77 million; and Richard C. Adkerson of Freeport-McMoRan Copper & Gold, $35.3 million.

Republicans want to abolish your Medicare, your Social Security, even your roads, all so these guys can keep their 6 or 8 (or more, who knows) vacation homes with Lambos parked in front of each of them.

But don't worry - with the top 0.1% holding all the wealth, they will eventually trickle it down and create jobs with Western European levels of healthcare and retirement benefits. Just you wait.

Plutocrats Have Delicate Fee-Fes

Assholes:

Fox's Bolling: Focusing On Corporate Tax Breaks Was "Not Fair" And  "Was A Class Warfare."

Dobbs: Obama's Speech Was "Straightforward Class Warfare"

Limbaugh: "Obama Once Again Cranking Up The Class Warfare."

Beck: Obama "Launched An Unprecedented Class Warfare" On The "Private Jet Class."

Drudge: "Obama Launches Class Warfare."

RedState: Obama Went "Straight For The Class Warfare Jugular."

Hit the link for the full quote/text from each overpaid asshole liar pundit. 

You really can't make this shit up. They are partially right, of course; there is a class war raging in the US, but it's not being waged by Obama or us peasants without the means for private jets. It is, however, absolutely being conducted and advanced daily by the banksters, the US Chamber of Commerce and dozens of other sinister lobbying groups, the Republican party, the Koch brothers, and any number of other super moneyed plutocrats that would rather see people starving or dying from a lack of access to affordable healthcare than pay another dime in taxes or have nine vacation homes instead of ten. They want to dump carcinogens in your water and poison your air in order to inflate that stock price a bit more, bar you from unionizing or reaping any share in the company's fortunes through the sort of wages or benefits that might cut into their profit margins, use every scare tactic and lobbyist on K Street to prevent the establishment of universal healthcare and fight for cuts to Social Security simply because they can already retire several times over themselves.

But you know, Obama is mean for yelling at the Republicans and eroding the decorum among gentlemen in government. And he started a class war by speaking ill of delicate billionaires.

Bankster Justice?

I got excited when I read this Greenwald headline. I should have known better. There will be about as many criminal prosecutions from the financial crisis as there have been from the explosion of the national security state and all of the atrocities associated with it.

Which is to say - zero.

Their System Doesn't Work For You

The Obama campaign team is hitting up the banksters for some much needed campaign cash for his quest to raise a cool billion for his reelection bid:

The event, organized by the Democratic National Committee, kicked off an aggressive push by Mr. Obama to win back the allegiance of one of his most vital sources of campaign cash — in part by trying to convince Wall Street that his policies, far from undercutting the investor class, have helped bring banks and financial markets back to health.

Last month, Mr. Obama’s campaign manager, Jim Messina, traveled to New York for back-to-back meetings with Wall Street donors, ending at the home of Marc Lasry, a prominent hedge fund manager, to court donors close to Mr. Obama’s onetime rival, Hillary Rodham Clinton. And Mr. Obama will return to New York this month to dine with bankers, hedge fund executives and private equity investors at the Upper East Side restaurant Daniel.

[...]

The president’s top financial industry supporters say they are confident that the support Mr. Obama needs will ultimately be there, despite the financial industry’s unhappiness over his efforts to tighten regulation of their businesses. 

So President Obama has to go back to the banksters, even after he hurt their fee-fees and called them fat cats and was so mean to them with his policies and rhetoric that their businesses have returned to record levels of profitability. This article is profound for a couple of reasons:

(1) Can there be any greater statement on how broken and corrupt our campaign finance system has become that elected officials outwardly rely on substantial donations from the very group of people and corporations that torpedoed the global economy? Or that the price tag for the presidency is now close to $1 billion? What sort of corrupt incentives do you think this implies?

(2) Can there really be any doubt that this same perverse incentive structure was even marginally responsible for the overly feeble Dodd-Frank financial reform bill? Or as Glenn Greenwald notes, perhaps in part responsible for the fact that there have still been no significant indictments coming out of the financial crisis?

And as for the rest of us, we just supply the votes, and maybe a few hand picked questions  for town hall style debates to give a nice photo-op and a folksy interaction of the candidates with the peasants. 

It's just a complete mystery why the trend in our economic policies continue to favor the ultra wealthy, you know, the unparalleled levels of low and regressive taxation, deficit paranoia, siren calls to slash the safety net, the now habitual ignoring of unemployment, decades of deregulation and a willful disregard for rampant corruption and financial fraud. I am sure when they are meeting at swanky Manhattan restaurants, soliciting donations and trading for POTUS access, that they are really just discussing how to act in Main Street's best interests.