State of Change

Stress-testing Us!

By Laura Flanders

So, before the government takes further steps to support the financial system, there will be a "stress test" to see how the biggest banks would do in an even weaker economy? I'll tell you who's being "stress tested." It's us.

If the banks need more, we're told, the government might have to act. But don't worry -- it won't be a government takeover. A takeover would be "surprising," the head of the Federal Deposit Insurance Corp told CBS this week.

It won't be a takeover, oh no, because a takeover would be bad. That's the drumbeat of the week.

Economist Paul Krugman makes the point that it's not entirely un-American to nationalize the banks. He's right. It's happened in the past. The bigger point is that even as the public -- and markets -- panic about nationalization via "takeover," our government has already actually nationalized much of banking. At least the risky part.

Taxpayers have already relieved banks of the risk of banking by recapitalizing the banks that squandered their capital and buying up or guaranteeing those banks' bad debts.

The "takeover" on the table now is the takeover of the profits part. That's the potential profit earned on taxpayer funds.

That's not scary socialism any more than privatizing profits while socializing risks is free market capitalism. It is giving taxpayers a fair deal. Instead of scaring us, government should be reassuring us of just that.

If it requires taking over banks for Americans to get value for their investment -- well -- that's what its going to take, they could say. Instead, I guess someone out there is hoping that as long as this terror talk about terrible "takeovers" keeps up, the public will be too stressed to figure out what's at stake.

Laura Flanders is the host of GRITtv which broadcasts weekdays on Free Speech TV (Dish Network Ch. 9415) on cable (8 pm ET on Channel 67 in Manhattan) and online right here at GRITtv.org or streaming live on The Nation.com Mondays through Thursdays from noon to 2 pm ET.

Read More »

February 25, 2009

Reconstruction Now

By Laura Flanders

President Barack Obama ended his first prime time press conference on the "I" word.

"When I hear people just saying we don't need to do anything...then what I get a sense of is that there is some ideological blockage there that needs to be cleared up."

The ideological blockage the President's talking about is about as big as it gets.

Whose nation is this, what's its treasure to be used for and who gets to decide? Essentially, that's the "blockage" we're talking about and it's the baggage our nation's been carrying around since its start.

When an earlier senator from Illinois gave what came to be known as the Gettysburg Address conservatives hated it.

As Willmoore Kendall, a leading conservative from the mid 1900s, wrote of Abraham Lincoln: "he attempted a new act of founding, involving a startling new interpretation of that principle of the founders which declared that all men are created equal."

"We should not allow him...to 'steal' the game," Kendall  wrote.  Kendall's quoted in Mike Lux's new book, The Progressive Revolution, just out.

As Lux points out, what conservatives hated about Gettysburg was the proposition that equality was a central principle of US government. They didn't like the idea of a government by a single people, rather than a collection of elites. They certainly rejected the notion that US government should be a government of the people, by the people for the people. They didn't like that.

Into the 21st Century, we're hardly beyond rule by elites. You only have to witness the victory of Treasury Secretary Tim Geithner, friend of elite bankers, over Congressional leaders and administration officials in designing the bank bailout to know that. (The second gush of bailout money up to elites will be as generous and un-onerous as the first -- at least on banks.)

Nor are we yet one nation -- at least when it comes to paying taxes. Not if the evasive habits of cabinet nominees are anything to go by.

Read More »

February 11, 2009

GE Uses Yip Harburg to Sell Wizard of Oz Mythology

By Laura Flanders

You've heard of preemptive strikes. Now welcome to the era of pre-emptive co-optation. That's the kindest word for what millions of viewers heard during the 2009 Superbowl when GE used the work of the Great Depression's most famous songwriter to sell its myths about prosperity.

In its first Superbowl ad since 1981, GE riffed on the classic, the Wizard of Oz, to make the case that if America updates its power-grid we will see brighter days ahead. With Yip Harburg's "If I Only Had a Brain," playing in the background, closes with the Scarecrow walking off into the sunset toward a radiant city on a yellow brick road

Read More »

February 2, 2009

No Strike is No Detail

By Laura Flanders

There's agreement and then there's forced submission. It's hard to tell which is which when news reporters leave out key facts from the story.

Many papers reported this week that General Motors and Chrysler, which have borrowed billions of dollars from the federal government to avoid bankruptcy, will be closing their jobs banks. The programs kept well-trained workers standing by, drawing almost their full salaries, in the hope that new jobs would materialize.

G.M. said on Wednesday that it would end its jobs bank leading to layoffs for about 1,600 workers.

Read More »

January 30, 2009

It's Not the Lobbying -- It's the Agreeing!

By Laura Flanders

Now it's official: Mark Patterson, a former Goldman Sachs lobbyist, will be the new Treasury Secretary's chief of staff despite Barack Obama's supposedly strict new rules on lobbying and ethics.

Patterson lobbied for Goldman from 2005 until April of last year on a whole host of issues including credit default swaps, credit rating agencies, and sovereign wealth funds, the bank-driven deregulation of which brought us to the current debacle.

Now Patterson will be the point person on who gains access to the Treasury Sec's ear. But Patterson is hardly the heart of the problem. Geithner's ear is. To give a bit of background. Geithner's first job was with Kissinger Associates, where he worked with the former Secretary of State. From there, he went to the U.S. Treasury Department, where he rose in esteem and became an aide to Lawrence Summers and Robert Rubin -- two pro-bank, pro-deregulation Treasury Secretaries.

Read More »

January 29, 2009

Goldman's Back. They Never Left!

By Laura Flanders

Goldman Sachs is making a comeback -- maybe not on the stock market -- but in Washington DC.

Timothy Geithner, recently confirmed by the Senate as Treasury Secretary, has reportedly tapped a former Goldman Sachs lobbyist to be his chief of staff. Mark Patterson worked as a registered lobbyist at the investment firm from 2005 to April of last year.

It's no wonder that Geithner, who's succeeding Henry Paulson at Treasury, would appoint a Goldman insider to serve as his right hand man. Paulson was once CEO at Goldman Sachs himself. At Treasury he was preceded in the Clinton administration by Robert Rubin, yet another Goldman CEO.

Read More »

January 28, 2009

Talk About Preemptive Strike

By Laura Flanders

The ink on the inauguration's barely dry, and already the country's biggest banks are maneuvering for more tax dollars. Thus far, they've received plenty, with few stings attached. For the auto industry, and particularly auto-workers, it hasn't been so easy. As part of the loan deal, General Motors and Chrysler agreed to accept a ban on strikes. Now how about a ban on bank lobbyists?

The Bush administration's auto bailout called for a reduction in hourly wages and an end to the UAW's "jobs bank," which provides assistance to workers on furlough. And that was only the beginning. Deep in the details, General Motors and Chrysler, as part of the loan deal, agreed to accept a ban on strikes. If their workers go on strike both would be in default of their loans and could be forced into bankruptcy. According to the Detroit Free Press and The Detroit News the default is part of the deal GM signed and Chrysler's loan deal has a similar provision.

Where's the outrage? You have to look to Canada for that. Speaking about the provision, the President of the Canadian Auto Workers Union, Ken Lewenza said that he was "shocked" to learn the companies had singed such a deal.

Read More »

January 26, 2009

George Bush's Bully Bridge Loan

By Laura Flanders

When President George Bush announced $17.4 billion for General Motors and Chrysler, it wasn't so much of a bridge loan, it was more like bully tactics. The Bush bucks come with all sorts of ties, most of them around the UAW's neck.

The loan's split into $13.4 billion now and another $4 billion later. GM and Chrysler will get the second installment in February only if they succeed in forcing workers to agree to accept slashed wages and work rules and auto retirees agree to sink half of their retiree health care fund into company stock.

Meanwhile, for the banks that have received handouts from the Treasury Department's $700 billion Troubled Asset Relief Program, there's no bullying. There's not even oversight. Asked by ABC News last week, how or if they'd spent the money they've received sixteen banks pulled a Palin. They simply refused to answer the question. How much have they spent on staff bonuses? The Government Accountability Office dug for an answer to that and found that "the standard agreement between Treasury and the participating institutions does not require that these institutions track or report how they plan to use, or do use, their capital investments."

Read More »

December 22, 2008

Hybrid Hope

By Laura Flanders

"If the UAW goes down all unions go down," so said auto worker Bishop Charles Ellis III, seen here praying with hybrid SUVs at The Greater Grace Temple. Hearing these guys talk, it's hard not to curse Senate Republicans who approved $750 billion for Wall Street but balked at $14 billion for Detroit.

James Theisen is a truck driver for Chrysler. If he loses this job, he loses his pension, healthcare and house.... Again we ask, what's going to happen to the workers?

Read More »

December 13, 2008

Raising Thain

By Laura Flanders

Merrill Lynch CEO John Thain wants an end of year bonus. He's seen his bank through some hard times, he says, and saved company jobs by deciding to sell Merrill to Bank of America. Merrill Lynch's stock price (which he was hired to pump up) is down: from over $50 a share when he came on board, to $13.04 at Friday's close of market. Still, Thain, thinks he'd done a good job, and recession or no recession, 53 year-old Thain has asked his board for a $10 million bonus.

Thain already receives $750,000 in annual salary, not including benefits. He scored a $15 million cash bonus when he signed with Merrill last year. It's hard to believe he's burnt through all that but nonethelss, he's pitching for his reward. And some think he deserves it. After all his request has shrunk dramatically (down from over $30 million, reports the Wall Street Journal.)

Will Bank of America (now Merrill Lynch's owners) approve $10 million extra to Merrill's CEO even as they're cutting off credit to companies like Chicago's Republic Windows? It's not clear that BOA's board has to approve. But it makes you think.

Read More »

December 8, 2008