Skip to main content

Paul Krugman, in his NY Times column, today, "Don't Cry for Wall Street," talks of President Obama's speech on financial reform at Cooper Union, yesterday. The Nobel laureate and Princeton economics professor supports the administration's reform initiatives, but makes note of the fact that current legislative reform efforts in the Senate "...would make finance safer, but they might not make it smaller."


Don't Cry for Wall Street
New York Times
By PAUL KRUGMAN
April 23, 2010

...What's the matter with finance? Start with the fact that the modern financial industry generates huge profits and paychecks, yet delivers few tangible benefits...
...

...In his Thursday speech, by the way, Mr. Obama insisted -- twice -- that financial reform won't stifle innovation. Too bad.

And here's the thing: after taking a big hit in the immediate aftermath of the crisis, financial-industry profits are soaring again. It seems all too likely that the industry will soon go back to playing the same games that got us into this mess in the first place.

Krugman continues elaborating upon a basic theme: "We also need to cut finance down to size."


...An intriguing proposal is about to be unveiled from, of all places, the International Monetary Fund. In a leaked paper prepared for a meeting this weekend, the fund calls for a Financial Activity Tax -- yes, FAT -- levied on financial-industry profits and remuneration.
...

Now, the I.M.F. proposal is actually quite mild. Nonetheless, if it moves toward reality, Wall Street will howl...

Here's more on the IMF's proposed FAT Tax from London's Times Online...


IMF's FAT Tax Offers Banks Scarce Room For Protest
UK Times Online
April 21, 2010

If the art of taxation is to pluck the maximum number of feathers with the minimum of hissing, then the International Monetary Fund's plan for a brace of new charges on financial institutions has been well targeted.

The world's banks have neither the appetite nor the moral standing to protest too loudly in public. Even the reaction from insurers and hedge funds, which the IMF would like to clobber, too, has been relatively mild.

Yet the sums envisaged are large. Credit Suisse estimated yesterday that the two charges -- a Financial Stability Contribution (FSC) and Financial Activity Tax (FAT) -- could wipe 20 per cent from annual pre-tax profits of the typical bank.
...

...the majority of G20 finance ministers and central bankers in Washington tomorrow seem likely to give the proposals a warm hearing. One exception is Canada, which is agin, and will have clout as host of the next G20 summit in June.

Securing international agreement will be tough. "If they can't make up their minds on climate change, how will they make their minds up about an international banking tax?" asked Professor Paul Palmer, of Cass Business School.

After eight years of mismanagement by the Bush administration, we now live in an environment that former Goldman Sachs Managing Director and author Nomi Prins discussed last week on Alternet...


Speculating Banks Still Rule -- Ten Ways Dems and Dodd Are Failing on Financial Reform
AlterNet / By Nomi Prins
April 14, 2010

....Banks -- shockingly -- aren't helping. They posted their lowest lending rates since 1942; despite all the subsidies and cheap money they received from, well, us, including exceedingly low Federal Reserve loan rates (zero to 0.25 percent interest).

That brings us to Bubble Lesson 101, Greenspan and Bernanke edition:

Cheap Money + Intensified Trading = Disaster Waiting to Happen.

Banks are incentivized not to lend. When the Emergency Economic Stabilization Act (which included TARP) was passed in October 2008, it included some fine print allowing the Fed to pay banks interest on reserves (money, or capital, banks are obligated to park with the Fed to back their businesses), and on extra reserves (money they aren't obligated to park). In September 2008, the top banks were required to keep $43 billion dollars in reserve at the Fed, and placed $59 billion in extra reserves. Today, banks are required to keep $63 billion in reserves, but parked an extra $1.2 trillion at the Fed.

Meanwhile, banks are using other federal funds to bolster speculative operations. The biggest banks, such as Bank of America, J.P. Morgan Chase and Wells Fargo, are on a dangerous cycle of higher trading profits and mounting losses in their consumer businesses. In other words, banking businesses that are tied to the real economy are dying, but raw gambling disguised as finance is doing fine. Wall Street is making money by rolling the dice - again. All this risky activity seems to be going unnoticed in Washington. Without major reforms, the next crisis is going to be worse than the last. Because if you pump enough money into anything, it'll look good temporarily, and that seems to be all politicians in either party really care about. But without major reforms, the next crisis is going to be worse than the last.

Today's juvenile partisan antics guarantee no meaningful reform bill will be produced, and mock our own history of bipartisan bank reform. In 1932, Senate investigations into the behavior of banks that precipitated the 1929 stock market crash were commissioned by a Republican Congress under Republican President Herbert Hoover. They continued under Democrat President Franklin Delano Roosevelt and substantive reform was passed, including the Glass-Steagall Act that decisively separated speculative from consumer oriented banks. Equivalent investigations this year are a joke.

While all of this occurred, Prins reminded us what happened on Wall Street last year...

--The top 25 hedge fund managers made a whopping $25.3 billion dollars in 2009. That's a billion dollars per manager!

And, adding insult to injury, in case you haven't been following U.S. tax law, most hedge fund managers are taxed at the 15% capital gains tax rate, not at normal rates of taxation.

Additionally, as Prins notes..

--The average compensation for Wall Street bankers increased by 27% in 2009.

Meanwhile, back on Main Street...

--2.8 million properties went into foreclosure in 2009; that's 21% higher than 2008.

--4.5 million properties are projected to be foreclosed upon in 2010.

--Bankruptcies rising 35 percent in 2009 rose 35% in 2009 over 2008 numbers.

As Prins also notes, Federal mortgage modification programs aren't cutting it. Reports over the past few days, including this from the NY Times, demonstrate that banks are vehemently resisting the administration's plans to reduce mortgage balances.

It's being reported in the MSM, that the administration's gloves are coming off. But, even now, they really can't (and, IMHO, aren't) drive this; the rubber hits the road on Capitol Hill, not at 1600 Pennsylvania Avenue; and, the legislative branch of our government offers little more than bloviations; yet, it's up to them to get the job done.

Given the state of regulatory capture on Capitol Hill, what do you think?

As far as I'm concerned, the IMF's proposed FAT Tax is long overdue.

It's one thing to "grab a mop." It's another thing to sit back while Wall Street actually puts forth the concept that they shouldn't pay for the societal mess that their unbridled greed has created.

Krugman's spot-on this morning. Like him, I say: To hell with that!

Originally posted to http://www.dailykos.com/user/bobswern on Fri Apr 23, 2010 at 04:29 AM PDT.

EMAIL TO A FRIEND X
Your Email has been sent.
You must add at least one tag to this diary before publishing it.

Add keywords that describe this diary. Separate multiple keywords with commas.
Tagging tips - Search For Tags - Browse For Tags

?

More Tagging tips:

A tag is a way to search for this diary. If someone is searching for "Barack Obama," is this a diary they'd be trying to find?

Use a person's full name, without any title. Senator Obama may become President Obama, and Michelle Obama might run for office.

If your diary covers an election or elected official, use election tags, which are generally the state abbreviation followed by the office. CA-01 is the first district House seat. CA-Sen covers both senate races. NY-GOV covers the New York governor's race.

Tags do not compound: that is, "education reform" is a completely different tag from "education". A tag like "reform" alone is probably not meaningful.

Consider if one or more of these tags fits your diary: Civil Rights, Community, Congress, Culture, Economy, Education, Elections, Energy, Environment, Health Care, International, Labor, Law, Media, Meta, National Security, Science, Transportation, or White House. If your diary is specific to a state, consider adding the state (California, Texas, etc). Keep in mind, though, that there are many wonderful and important diaries that don't fit in any of these tags. Don't worry if yours doesn't.

You can add a private note to this diary when hotlisting it:
Are you sure you want to remove this diary from your hotlist?
Are you sure you want to remove your recommendation? You can only recommend a diary once, so you will not be able to re-recommend it afterwards.
Rescue this diary, and add a note:
Are you sure you want to remove this diary from Rescue?
Choose where to republish this diary. The diary will be added to the queue for that group. Publish it from the queue to make it appear.

You must be a member of a group to use this feature.

Add a quick update to your diary without changing the diary itself:
Are you sure you want to remove this diary?
(The diary will be removed from the site and returned to your drafts for further editing.)
(The diary will be removed.)
Are you sure you want to save these changes to the published diary?

Comment Preferences

  •  Tip Jar (168+ / 0-)
    Recommended by:
    JekyllnHyde, Alumbrados, paradox, hester, Timaeus, mattman, emal, DebtorsPrison, RFK Lives, SallyCat, mataliandy, expatjourno, opinionated, conchita, TracieLynn, bluesteel, Aquarius40, Ignacio Magaloni, Lilyvt, Dallasdoc, gmb, Chirons apprentice, Catte Nappe, Pohjola, dkmich, zerelda, Deward Hastings, moggie12, rmx2630, environmentalist, Julie Gulden, Brecht, 3goldens, NoMoreLies, JanetT in MD, SherwoodB, disrael, irate, PBen, Flint, run around, panicbean, frandor55, drewfromct, where4art, Sandino, CWalter, coolbreeze, Snud, Jim P, Orinoco, cybersaur, Gorette, Yellow Canary, buckstop, fromer, EthrDemon, greenearth, Preston S, sceptical observer, profh, blueoregon, shaharazade, AmySmith, jjellin, poxonyou, crystal eyes, CharlieHipHop, gerald 1969, ccyd, bigchin, One Pissed Off Liberal, bear83, Noor B, DorothyT, dotsright, Russ Jarmusch, Loudoun County Dem, terryhallinan, Outrider, daveygodigaditch, Matt Z, Jimdotz, HCKAD, akdude6016, vbdietz, Uberbah, Newzie, millwood, Moderation, pioneer111, LWelsch, VA Breeze, mconvente, zerone, Fossil, Involuntary Exile, billd, geomoo, Seamus D, Gemina13, allie123, LaFeminista, SciMathGuy, cybrestrike, greengemini, divineorder, lostinamerica, juca, Dopeman, Mislead, dark daze, DFutureIsNow, BlueInRedCincy, JesseCW, Daily Activist, John Shade, bfitzinAR, kevinpdx, jfromga, brentbent, coppercelt, awcomeon, amk for obama, fidellio, stunzeed, melpomene1, Bmeis, Kristina40, Egalitare, Earth Ling, quagmiremonkey, Betty Pinson, roystah, elengul, MsGrin, alamacTHC, science nerd, Colorado is the Shiznit, allenjo, sabo33, BlueJessamine, sharistuff, lovespaper, Ms Bluezone, marleycat, Wolf10, DruidQueen, dle2GA, tardis10, MuskokaGord, randomfacts, Wom Bat, blue aardvark, Sunspots, ctkosh, RLMiller, DRo, Regina in a Sears Kit House, PrometheusUnbound, No one gets out alive, Azazello, livingthedream, wolfie1818, greenbastard, molecularlevel, dance you monster, J Brunner Fan

    "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

    by bobswern on Fri Apr 23, 2010 at 04:33:26 AM PDT

    •  Kudos to Krugman for saying the obvious (73+ / 0-)

      Bernie Sanders has long made the point that in 2006 financial firm profits were 42% of all US corporate profits.  For a sector that doesn't make anything, but is theoretically only supposed to grease the wheels for the rest of the economy, that's massively oversized.  The financial sector has turned from a facilitator of the economy into a parasite killing its host.

      The only way to cut back financial firms' greed is to tax away their profits.  A FAT tax or a stock and bond transaction tax (or both) would concentrate financial activity more on the proper role of finance, investing in economic activity.  A sharp rise in tax on total incomes above, say, $5 million a year to 75% or more would discourage firms from giving huge payouts to executives, and might send the sociopathically greedy into other lines of work.  Society would be better off with them running drugs than hedge funds.

        •  They're also major contributors to both parties (34+ / 0-)

          The Dems have been beholden to FIRE (Finance, Insurance, and R/E) for years now.  This WH was esp beholden to FIRE in '08, and it expects to go back and shake the Wall Street $ tree even harder in '12.  Yesterday, Obama nibbled on the hand that has fed him in the past and will feed him in the future, but he was never going to chomp down on it.

          I think that the FAT tax is a great idea, just as I thought that drug reimportation, the PO, and the repeal of McCarran-Ferguson were great ideas.  The passage of a FAT tax is no more likely to occur than the passage of the 3 aforementioned initiatives for exactly the same reason.  I still recall Dick Durbin's "they own this place" comment, and I've seen little reason to think that much has changed in the interim.

          Some men see things as they are and ask why. I dream of things that never were and ask why not?

          by RFK Lives on Fri Apr 23, 2010 at 06:16:34 AM PDT

          [ Parent ]

          •  Agree (31+ / 0-)

            This is essentially kabuki to entertain the rubes and eliminate the pressure for real reform, just as the health care bill was.  The question is, will Wall Street firms have the good sense to curb their greed just a little for a while, to allow this fig leaf to settle over the problem before they get back to business as usual?  The health insurers haven't.  My money is on Wall Street not doing so either.

            •  When you are betting on bubbles (22+ / 0-)

              the last one in loses. They can't afford to "let the fig leaf settle" or they'll lose whatever they have on the table now, which is a huge percentage of their funds.

              This won't be settled by individuals acting in their enlightened self interest, as long as they don't think their heads will end up on pikes.

              The only way out of this mess is government intervention. We must dismantle the six to ten largest banks, separate commercial and investment banking, tax the hell out of the fools who are stealing our money, and rely on the honest people in small banks and credit unions to manage our finance sector again.

              Remember free toasters for opening an account? 6% interest on ordinary savings accounts? We could have that again. That's REAL competition. Not the travesty we have now.

              "The problems of incompetent, corrupt, corporatist government are incompetence, corruption and corporatism, not government." Jerome a Paris

              by Orinoco on Fri Apr 23, 2010 at 07:05:27 AM PDT

              [ Parent ]

              •  We already have government intervention, (5+ / 0-)

                and its purpose is to protect powerful actors from real competition and to socialize losses.  Nominal regulation is to "satisfy the popular clamor for reform."  In practice regulation is the focal point for the only real competition remaining in America, a local competition between Dems and Reps for the right to represent the interests of the wealthy.

                Luke Mitchell

                When Congress created the first U.S. regulatory agency, the Interstate Commerce Commission, in 1887, the railroad barons it was meant to subdue quickly recognized an opportunity. "It satisfies the popular clamor for a government supervision of railroads at the same time that that supervision is almost entirely nominal," observed the railroad lawyer Richard Olney. "Further, the older such a commission gets to be, the more inclined it will be found to take the business and railroad view of things. It thus becomes a sort of barrier between the railroad corporations and the people and a sort of protection against hasty and crude legislation hostile to railroad interests." As if to underscore this claim, Olney soon after got himself appointed to run the U.S. Justice Department, where he spent his days busting railroad unions.

                To be clear, I fully agree with your prescription.  Enacting any of it will be next to impossible.

                The problem after a war is the victor. He thinks he has just proved that war and violence will pay. Who will now teach him a lesson?

                by geomoo on Fri Apr 23, 2010 at 11:54:21 AM PDT

                [ Parent ]

                •  A million people on the Mall who don't (3+ / 0-)
                  Recommended by:
                  NoMoreLies, Orinoco, geomoo

                  go home when the permit runs out is all it would take.

                  Now...how to make that happen...not so simple.

                  Civil Obedience ain't gonna do it, though.

                  The issue is not whether Congress regulates Wall Street, it's the degree to which Wall Street regulates Congress. B. Sanders

                  by JesseCW on Fri Apr 23, 2010 at 01:14:53 PM PDT

                  [ Parent ]

                  •  I thought that until recently. (3+ / 0-)
                    Recommended by:
                    Dallasdoc, Orinoco, JesseCW

                    Now I have lost faith in pressuring the government.  I'm shifting over to think we need non-participation in the process, or more positively, changing citizen behavior to affect things directly.  It will be difficult without cooperation of government, corporations, or mass media, but I can think of no other way.  I'm talking about changes such as stopping credit card use, shifting savings to credit unions, arranging business loans more locally between decent people with money and beginning entrepreneurs, etc.  People with more financial savvy than I can come up with a better list.  We need to take personal responsibility for doing what we can to take back control of our lives.

                    The problem after a war is the victor. He thinks he has just proved that war and violence will pay. Who will now teach him a lesson?

                    by geomoo on Fri Apr 23, 2010 at 01:22:26 PM PDT

                    [ Parent ]

                    •  We need both. I do everything in (3+ / 0-)
                      Recommended by:
                      Dallasdoc, Orinoco, geomoo

                      cash except pay my rent, simply because merchants have to pay the credit card companies a fee on everything bought with a card.

                      At the same time, though, politicians scare easy.  

                      Without the Bonus Army, there would have been no New Deal.

                      The issue is not whether Congress regulates Wall Street, it's the degree to which Wall Street regulates Congress. B. Sanders

                      by JesseCW on Fri Apr 23, 2010 at 02:18:53 PM PDT

                      [ Parent ]

            •  We fine Goldman...and guess who insures Goldman (3+ / 0-)
              Recommended by:
              RFK Lives, Dallasdoc, NoMoreLies

              against fines?

              AIG

              Who owns AIG?

              There's a forehead shapped imprint in my desk.

              The issue is not whether Congress regulates Wall Street, it's the degree to which Wall Street regulates Congress. B. Sanders

              by JesseCW on Fri Apr 23, 2010 at 01:13:14 PM PDT

              [ Parent ]

          •  What is now does not have to be in future. (8+ / 0-)

            Only in conservative land is past, present and future all rolled into the ineffable lightness of being and its corollary belief.

            Descartes got it wrong.  "I think, therefor I am" is not a guarantee.  There are a lot of folk who don't think.

            One may argue that the essence of man is thought, but that would rule a lot of men out.

            http://www.youtube.com/user/cyprespond

            by hannah on Fri Apr 23, 2010 at 06:25:46 AM PDT

            [ Parent ]

            •  I want therefore I am (17+ / 0-)

              That would probably be Descartes' line in our present consumer society.  We have been trained not to be ruled by our brains but by our appetites.  Those are much more easily manipulable.

              •  And therein lies the story of (13+ / 0-)

                our entire culture. 40 years of 24/7 "Your appetites are your identity" consumerist propaganda has f*#%ed up things beyond belief.

                It's a straight line from the consumerist conditioning to

                Today's juvenile partisan antics

                And a lot of people don't even recognize that that is what has happened.

                A diary in itself.

                Until we break the corporate virtual monopoly on what we hear and see, we keep losing, don't matter what we do.

                by Jim P on Fri Apr 23, 2010 at 07:09:22 AM PDT

                [ Parent ]

              •  Progressives 'put up or shut up' ? Simon Johnson (10+ / 0-)

                Make the Call or Get Out of the Booth: After the President's "Wall Street" Speech

                snip But the Democratic leadership is not seizing on this advantage and on the opportunity presented by the SEC case against Goldman Sachs -- key figures in the Democratic establishments are too worried about upsetting financial sector donors. As a result, come November, independents will view the Democrats with scorn, while the Democratic base will be far from energized; you do the math.

                What can you do? What makes sense in both economic and political terms?

                Call your Senator, call Senator Harry Reid (Senate majority leader), and call the White House. Tell them that you support the Brown-Kaufman SAFE Banking Act (unveiled yesterday) -- as an amendment that would greatly strengthen the Dodd bill by capping the size and leverage of our biggest banks. Politely ask the people who answer the phone to make certain that this amendment gets an "up or down vote" in the Senate.snip

                www.yesweSTILLcan.org

                by divineorder on Fri Apr 23, 2010 at 07:14:48 AM PDT

                [ Parent ]

                •  I encourage people to make calls while noting (8+ / 0-)

                  that I made God knows how many calls to Bill Nelson's office on the PO, and I attended a demo at his local office, too.  All the PO needed to pass under Reconciliation was 50 votes, but it never got to the floor.  While past performance is not a guarantee of future results, a template appears to have been established.

                  Some men see things as they are and ask why. I dream of things that never were and ask why not?

                  by RFK Lives on Fri Apr 23, 2010 at 07:34:06 AM PDT

                  [ Parent ]

                  •  The PO is such a simple thing to (2+ / 0-)

                    set up, compared to all the other changes that have to be made to undo the partial privatization that Bush/Cheney snuck through, that it can be put off for a while.  This is probably what Alan Grayson was persuaded of.  Which is why we're not hearing about his three page bill to open Medicare to all comers.

                    http://www.youtube.com/user/cyprespond

                    by hannah on Fri Apr 23, 2010 at 08:40:38 AM PDT

                    [ Parent ]

                    •  It's simple, so don't do it now? (1+ / 0-)
                      Recommended by:
                      Dallasdoc

                      I'm kinda confused.

                      The issue is not whether Congress regulates Wall Street, it's the degree to which Wall Street regulates Congress. B. Sanders

                      by JesseCW on Fri Apr 23, 2010 at 01:16:45 PM PDT

                      [ Parent ]

                      •  You don't want to encourage a flood (1+ / 0-)
                        Recommended by:
                        NoMoreLies

                        of new participants before an organization is ready to process them.  As it stands, IF the private insurers are able to administer payments to providers efficiently and with minimal overhead, then there's no reason why they can't function as contractors for HHS.  Will they be able to meet acceptable criteria of service?  Only time will tell.  If they don't, then Medicare can always be opened up.  But, in the mean time, expanding medicaid, providing coverage for insurance industry rejects and eliminating the Medicare Advantage gravy train is sufficient to keep HHS occupied.
                        Howard Dean's original idea was that as patients showed up with complaints at clinics and emergency rooms, they would be signed up for Medicare or a PO. However, even if they don't pay very much into the system, it's not wise to wait until people turn up sick before they're provided with care.  It does make more sense to capture them earlier, not because preventive care is cheaper, but because a healthier population is just better than a marginally ill one.

                        Humans don't actually have very reliable indicators of ill health and impending death.  Much of what kills humans prematurely isn't detected by the brain.  That's one of the things you learn as a parent--when the kid's making a lot of noise, it's a pretty clear indication that the problem is not serious.  It's when the kids are passive and nearly comatose, that there's a real danger.  Even on the battlefield, soldiers won't know their legs have been shot off and they're bleeding to death.  When the nerves are severed, they don't register pain in the brain.

                        Which, btw, is why one can be quite sure that John Yoo hadn't a clue about torture.  His idea that the pain would have to be severe enough to signal imminent death is pure idiocy.  When the body is about to die, the brain stops registering sensations.  In extremis, pain is absolutely useless.  No point in wasting energy to record it.

                        http://www.youtube.com/user/cyprespond

                        by hannah on Fri Apr 23, 2010 at 01:42:14 PM PDT

                        [ Parent ]

                •  I was hoping someone would reference (2+ / 0-)
                  Recommended by:
                  Dallasdoc, divineorder

                  this good article and call to action.

                  Thank you.

                  "Never, desist till we ... extinguish this bloody traffic, of which our posterity, will scarce believe that it suffered a disgrace and dishonor to this country.

                  by Regina in a Sears Kit House on Fri Apr 23, 2010 at 09:34:53 AM PDT

                  [ Parent ]

                •  Yes!! We all need to pick up the phone and call! (1+ / 0-)
                  Recommended by:
                  Dallasdoc

                  I made a dozen calls today and sent out a blizzard of e-mails.  There is nothing more important than 1) the Brown-Kaufman SAFE Banking Act, and 2)  Blanche Lincoln's derivatives bill.  

                  I think the Dodd-Geithner type of proposals are garbage.  It's stupid to set up a bail-out fund -- instead, limit the behavior that necessitates bailouts!   The two pieces of legislation above go a long way towards doing that.  

                  To the phones!!!   If that doesn't work, it's pitchfork time.    

            •  I just realized what conservatives conserve (5+ / 0-)

              I used to think that if I pointed out that to conserve is to be a conservationist, like Republican Teddy Roosevelt and our National Parks, that I could convince Teabagger types to be more intelligent.

              What I just realized yesterday is that today's conservatives DO NOT conserve what exists, they conserve the current Trajectory.

              So if we're headed off a cliff because:

              1. we're massively overloading the ocean and atmosphere with CO2
              1. we've deregulated the finance industry
              1. we launch wars of choice
              1. etc., etc.

              then, - the conservative response is NOT to conserve the atmosphere or the oceans.   - the conservative response is NOT to conserve the economy or the middle class or people's life savings - the conservative response is NOT to conserve treasury, blood or respect of other nations

              No, the conservative response is to conserve the trajectory of the bus as it careens towards and over the cliff.

              Fucking idiots.  Of course if I reflect long enough on this idea, I'll probably see that many liberals have some similar flaw.

              "The problems of incompetent, corrupt, corporatist government are incompetence, corruption and corporatism, not government." Jerome a Paris

              by Earth Ling on Fri Apr 23, 2010 at 09:14:45 AM PDT

              [ Parent ]

              •  Conservatives conserve the status quo (1+ / 0-)
                Recommended by:
                goinsouth
                ...and that's all.

                "Ridicule may lawfully be employed where reason has no hope of success." -7.75/-6.05

                by QuestionAuthority on Fri Apr 23, 2010 at 11:46:36 AM PDT

                [ Parent ]

                •  Conservative Larry Summers loves big banks. (4+ / 0-)
                  Recommended by:
                  RFK Lives, Dallasdoc, NoMoreLies, JesseCW

                  Larry loves those big bankers that paid him so much after Harvard gave him the heave-ho:

                  In an interview with "PBS NewsHour", Lawrence H. Summers, director of the White House's National Economic Council, said that breaking up megabanks would hurt the economy.

                  "Most observers who study -- who study this believe that to try to break banks up into a lot of little pieces would hurt our ability to serve large companies and hurt the competitiveness of the United States," Summers said in response to a question about whether the U.S. should go further in trying to end Too Big To Fail by limiting the size of banks.

                  And Robert Kuttner reports that the Obama Administration is siding with Dodd in his sellout to Republicans and lobbying against the Brown-Kaufman bill to cut down the big banks.

                  On Thursday, there was an uncharacteristically fractious meeting of the Senate Democratic Caucus. On one side, leading progressives such as Maria Cantwell, Ted Kaufman, Dick Durbin, Byron Dorgan, and Jeff Merkley, argued that this was a moment to put forward floor amendments that would both strengthen the bill and force Republicans to take difficult votes either backing reforms or identifying themselves with Wall Street.

                  But the Banking Committee Chairman, Chris Dodd, was more inclined to try and strike deal over the weekend with his Republican counterpart, Richard Shelby, for a bipartisan bill. The price of this would be weaker provisions on derivatives, consumer protection, and on resolving failed large banks. The political price would be that progressives don't get to offer floor amendments. Under Dodd's scheme, which is favored by Obama's legislative and economic advisers, the Senate would immediately vote to take up the bill, and would then vote cloture by a wide bipartisan margin. The bill -- still a shell with details to be filled in later -- would go directly to the House, where the House-passed bill would become the vehicle for the final measure.

                  Very disappointing.

                  "Capitalism is irresponsibility organized into a system." -- Emil Brunner

                  by goinsouth on Fri Apr 23, 2010 at 12:12:18 PM PDT

                  [ Parent ]

                  •  This has to end. (4+ / 0-)

                    I don't vote for Senators to be rubber stamps for whatever the White House wants to put forward.

                    I voted for them to legislate.  That means more than voting yes or no.

                    They pulled this "no ammendment" shit on HIR, and we all suffered for it.  It needs to stop.

                    The issue is not whether Congress regulates Wall Street, it's the degree to which Wall Street regulates Congress. B. Sanders

                    by JesseCW on Fri Apr 23, 2010 at 01:19:38 PM PDT

                    [ Parent ]

            •  Eckhart Tolle points out the error of Descarte (3+ / 0-)

              We are, therefore we can think. We do not think ourselves into existence.  

              Consciousness is greater than thought.

              For example, we can be conscious without the mind's incessant "thinking".  However, we cannot think without consciousness.

              We are autistic to the degree that we believe "thought" is the end all be all.  

              We are more perceptive and wiser to the degree that we realize "consciousness" is virtually untapped in today's mind-dominated world.

              "The problems of incompetent, corrupt, corporatist government are incompetence, corruption and corporatism, not government." Jerome a Paris

              by Earth Ling on Fri Apr 23, 2010 at 09:19:04 AM PDT

              [ Parent ]

      •  Take 95% of the gambling profits. (17+ / 0-)

        Drive people into real, functioning businesses where people can earn 6% or more if they supply a product and work hard.

        It's socially suicidal that we are encouraging smart people with ambition to effectively leave the normal human round of productive activity in favor of things we'd call a "gambling addiction" if we saw it in Las Vegas.

        Until we break the corporate virtual monopoly on what we hear and see, we keep losing, don't matter what we do.

        by Jim P on Fri Apr 23, 2010 at 06:51:11 AM PDT

        [ Parent ]

      •  Capital gains rate has to come up (9+ / 0-)

        A sharp rise in the income tax won't touch most of these guys -- they make their money on stock options and "deferred compensation" that turn into capital gains, taxed at a rate of 15 percent.

        We should keep the 15 percent rate for homeowners who take a profit (up to, say a half million $ or so) and tax speculative gains as regular income.  Then we should raise the top rate to something like 40 percent with no loopholes.

        That would start to get things back on track.

        •  are you suggesting repeal (0+ / 0-)

          of the current credits against sales prices of homes where homeowners exclude from taxation gains on sale of principle residence (depending on whether single or married filing jointly) up to $250k already?

          •  I think the key words there would be (6+ / 0-)

            principle residence.

            If it's your only home and you actually live in it? No. But if it's speculative on your part, and you have no dog in the hunt, other than "flipping property to make a buck"? Oh, hell yeah...

            The American Television and Newspaper Mainstream Media = Private, For Profit Corporate Information Service Monopoly

            by o the umanity on Fri Apr 23, 2010 at 07:52:02 AM PDT

            [ Parent ]

            •  the current law (0+ / 0-)

              is principle residence, with occupancy requirements, so obviously my questions since it was about repeal of current credits was based in reality and not flipping.

              •  reality? (0+ / 0-)

                to say

                We should keep the 15 percent rate for homeowners who take a profit

                is NOT suggesting what you posit in your "question".

                The American Television and Newspaper Mainstream Media = Private, For Profit Corporate Information Service Monopoly

                by o the umanity on Fri Apr 23, 2010 at 08:56:08 AM PDT

                [ Parent ]

                •  My question (0+ / 0-)

                  was whether the current exempt amounts would stay in effect and leave the 15% on amounts above that, or whether he was suggesting repeal so the 15% applies from dollar one.   It makes a big difference to the typical homeowner selling their house.  

                  You brought up you'd only apply it to principle residences as if there was some question about it applying to only principle residences when the law is absolutely plain about only applying to principle residences already.

                  My question was narrow, based on existing law, and had nothing to do with non-existence scenarios you were positing.

              •  3 years out of five, and you can flip (1+ / 0-)
                Recommended by:
                Dallasdoc

                a house tax free every five years.

                It's a bubble driver, and it leads people to look at their homes like poker chips instead of places to live.

                We can't afford another insane bubble with 15-20% year over year increases in home prices, and that ill-considered give-away contributes to that.

                The issue is not whether Congress regulates Wall Street, it's the degree to which Wall Street regulates Congress. B. Sanders

                by JesseCW on Fri Apr 23, 2010 at 01:40:46 PM PDT

                [ Parent ]

                •  its two years out of five (1+ / 0-)
                  Recommended by:
                  JesseCW

                  to qualify, but law changed last year to take any years of non-qualifying use, such as  rental in some of the five years, and tax the prorata share at capital gains, so to sell the house and avoid taxes entirely, you have to use it as principle residence the whole time now and fit under the amount.

                  Traditionally Americans have moved frequently, whether rental or owners.  The trend to move at about every five years is moving up slightly, presumably as the population ages there are fewer moves, some also suggest two earner families mean that people move less frequently.  Average years for keeping a house is still six.  Average American moves more than 11 times in a lifetime.

                  Do you really believe that allowing people to keep the cash rather than deferral for reinvesting in a new home drove the bubble?  The newer approach allows people to remove the cash to buy a different asset entirely, not necessarily a new home, the old law that allowed people to defer gains provided they bought a new house seems to me to favor flipping just as much of not more.

                  I think lax loan standards, no money down, no documentation on income, etc, allowed more people to engage in flipping as it was often done with a non-principle residence, which would have had preferred treatment under 1031 instead if it was a rental or investment property.  

                  •  It's nice to know they improved it that much. (1+ / 0-)
                    Recommended by:
                    jfromga

                    They've still got a ways to go.

                    Just to get this out of the way - I'm not a blame the buyers guy.  80% of actual fraud was by lenders, and the total of the "bad mortgages" was only about 5% the value of the bad paper spun off of them.

                    But I live in California, home of insane real estate.  

                    Folks took the NINJA ARM, thinking the value would double by the time the loan re-set, and then they'd sell and pay off all their (credit card/car loans/student loan) debts with the profits.

                    All they'd have to do is pay the (pre-reset) loan, which was what they were paying in rent anyway!

                    Now, me...my hatred is for the guy who sold the Brooklyn Bridge, not they guy who bought it.  I can't stress that enough.  

                    But I do think the promise of a big fat windfall of tax-free profit was a driver in being able to persuade people to take the junk loans lenders were trying to create so they could then create the toxic stew of derivatives.

                    Still, I do think we need enough protection to keep people from getting burned by being taxed on inflation.  Even 8% per year would be reasonable.

                    The issue is not whether Congress regulates Wall Street, it's the degree to which Wall Street regulates Congress. B. Sanders

                    by JesseCW on Fri Apr 23, 2010 at 09:02:09 PM PDT

                    [ Parent ]

                    •  I agree that California (1+ / 0-)
                      Recommended by:
                      JesseCW

                      had large portions of the state caught up in the   bubble, worse than most places.  And probably more people there did cash out, especially older folks, I think (without basis in fact) that half of them ended up in Nevada and some in Arizona, driving the bubbles there.

                      I cannot imagine why it ended up so much worse in California, other than so many years of growth that people didn't believe that anything else was possible. California has had high housing prices compared to national averages for a long time, but it was clear that the inflation rate in housing prices was insane lately.

                      •  Partly because low property taxes mean (0+ / 0-)

                        people can make a larger payment - and unfortunately, a lot of people buy houses that way.  Not, "what's the sticker price?" but "can I make the payment?".

                        The issue is not whether Congress regulates Wall Street, it's the degree to which Wall Street regulates Congress. B. Sanders

                        by JesseCW on Sat Apr 24, 2010 at 12:53:01 PM PDT

                        [ Parent ]

          •  I am. They were a driver of the bubble. (0+ / 0-)

            And it's 500k if married.

            Give people 5% profit per year of ownership tax free - that's fine.  It won't drive rampant speculation and it will keep people from winding up paying tax on value increases that are really just inflation.

            The issue is not whether Congress regulates Wall Street, it's the degree to which Wall Street regulates Congress. B. Sanders

            by JesseCW on Fri Apr 23, 2010 at 01:37:43 PM PDT

            [ Parent ]

        •  Why should "homeowners" (1+ / 0-)
          Recommended by:
          JesseCW

          take a (unearned and untaxed) profit any more than bankers should?  Perhaps there should be an "inflation adjustment" for long term gains (which would apply to everyone), but unearned income is unearned regardless . . .

          If capital gains are to be taxed at a different rate from earned income it should be at a higher rate . . . taxing all capital gains at the highest income tax rate.

          Fake Left, Drive Right . . . not my idea of a Democrat . . .

          by Deward Hastings on Fri Apr 23, 2010 at 10:23:03 AM PDT

          [ Parent ]

          •  It's simple - give home owners 5% per year (1+ / 0-)
            Recommended by:
            Deward Hastings

            in appreciation tax free.

            Oh, and we should remember they already got to write of their interest.  

            I don't of any renters who get to write off the portion of their rent that pays their landlords interest...

            The issue is not whether Congress regulates Wall Street, it's the degree to which Wall Street regulates Congress. B. Sanders

            by JesseCW on Fri Apr 23, 2010 at 01:42:24 PM PDT

            [ Parent ]

      •  Canada runs at 6%. (1+ / 0-)
        Recommended by:
        Dallasdoc

        ISR at 8%.

        Angry White Males + Personality Disorder delusionals + Career criminals

        + Pro-Life Christians =EQ= The GOPer Base

        by vets74 on Fri Apr 23, 2010 at 10:07:11 AM PDT

        [ Parent ]

    •  Good Points (3+ / 0-)
      Recommended by:
      bobswern, Betty Pinson, wolfie1818

      We need something to accurately price risk and some sort of risk related tax could accomplish that.  Although, I would rather see such a tax tied to specific categories of investments as opposed to general bank profits/revenues (ie to discourage the "bad" behavior instead of all behavior).

      I would like to point out though, that as horrible as foreclosures are, they are quite necessary in getting the home ownership rate back down to its historic norm of around 65% or so.  

      •  Yes, the banks recover lost equity, meanwhile... (11+ / 0-)

        ...the former homeowners' eating the banks' imposed societal losses, while the banks continue to privatize their profits.

        IMHO, foreclosures only make sense in our grossly imbalanced economy if the homeowning public achieves some sort of parity with the lender that's reclaiming the former homeowner's property. (Meanwhile, the bank is holding onto the home at mark-to-model valuations; whereas, if the homeowner was enabled to obtain a mark-to-model mortgage, there's a very good chance the home never would've been foreclosed upon in the first place.)

        "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

        by bobswern on Fri Apr 23, 2010 at 06:04:40 AM PDT

        [ Parent ]

        •  I disagree a bit (0+ / 0-)

          First, buying a house with a secured loan means that it is really only your property (free and clear) once you pay off the mortgage.  Also, even under some pseudo mark-to-model valuation people still would have to make a fixed payment, which is what they are defaulting on.  I agree that we have let the banks off very easy with this and worse haven't changed any of the rules (and the "reform" bill won't change them either) that caused the problem in the first place.

      •  I think you mean "mortgage holding rate" (0+ / 0-)

        rather than "home ownership rate".

        Actually home ownership hit its all-time high in the very early 80's, at around 16%.

        The issue is not whether Congress regulates Wall Street, it's the degree to which Wall Street regulates Congress. B. Sanders

        by JesseCW on Fri Apr 23, 2010 at 01:43:56 PM PDT

        [ Parent ]

    •  If Obama had listened to Stiglitz.... (10+ / 0-)

      instead of Summers, Geithner, Bernanke we would not be
      in this predicament ( 'questionable' financial reform ) and taxpayers would NOT be on the hook for $700B.

      02 Feb 2009
      Let banks fail, says Nobel economist Joseph Stiglitz
      http://www.telegraph.co.uk/...
      the Government should allow every distressed bank to go bankrupt and set up a fresh banking system under temporary state control rather than cripple the country by propping up a corrupt edifice, according to Joseph Stiglitz, the Nobel Prize-winning economist.

      •  Huge (9+ / 0-)

        Yes, Stiglitz should have been brought in as chief economic advisor or SecTreas or something.  The man is brilliant and, unlike so many economists, has a heart.

        I blogged about this back in February 2009 but wasn't aware that Stiglitz had already said the same thing a week prior.  If anybody's interested...

        http://www.charliehiphop.com/...

        •  theory vs. practice (0+ / 0-)

          academics can propose anything.  Dragging the country along to actually do it is something entirely different.

          •  Especially without the support (4+ / 0-)

            from the Bully Pulpit in Chief.

            The American Television and Newspaper Mainstream Media = Private, For Profit Corporate Information Service Monopoly

            by o the umanity on Fri Apr 23, 2010 at 07:52:53 AM PDT

            [ Parent ]

            •  with or without support (1+ / 0-)
              Recommended by:
              Regina in a Sears Kit House

              of the President.  He has the pulpit but is not omnipotent.   Even Bobswern who is no fan of the President's policies on an average day is admitting that the real resolution to this will come when we change Congress.  

              There is enormous collateral damage to letting the banks fail to pension funds, savings of the elderly, small businesses, etc.  Just creating a new structure wouldn't have addressed those issues, even if you could have gotten Congress to vote for nationalized banks.  FDIC would have been bankrupted.

              There were huge choices between letting them all fail and what was done by letting the FED do everything under the table, but the Fed is another regulatory issue altogether.

              Life is not full of simple black and white choices with simple consequences.   Waving your hands and saying, oh, this would have been better and doable is a cop out to borrow a term from my youth.

              •  I understand that (4+ / 0-)

                it's not the President's decision. What I'm saying is, with Obama's approval ratings and speaking ability, he should be pounding the crap out of this issue more than he is. His support seems...I dunno, the best word I can think of is calculated, as opposed to truly passionate.

                The American Television and Newspaper Mainstream Media = Private, For Profit Corporate Information Service Monopoly

                by o the umanity on Fri Apr 23, 2010 at 08:52:16 AM PDT

                [ Parent ]

                •  everything the man does (0+ / 0-)

                  is calculated.  He thinks more than the next three people combined.   He doesn't do passionate in the sense of pounding his fist on a table, rousing emotions to fever pitches for the sake of emotion.  

                  That doesn't mean he doesn't have strongly held beliefs that he is passionate about, he just isn't going to be demonstrative about them in the way we want.  

                  We can be passionate, we're standing on the side lines, we don't ultimately have to make decisions that account for everybody, including people we don't agree with and pretty much dislike their core beliefs about how the world should work.  Our passion should help drive debate and drive the President's choices in our favor.

                  I personally can live with a dispassionate and highly intelligent decision maker better than I can a passionate (and inarticulate) loser like Dubya.

                  •  Bullshit (5+ / 0-)
                    Recommended by:
                    NoMoreLies, zephron, bigchin, JesseCW, allenjo

                    He's smart, but he's not the smartest person in the world.  If you're in the top .1 percent intelligence-wise, it still means that there are about 300,000 people in this country who are just as smart if not smarter than you.

                    Yes, deliberation is important but so is taking a goddamn stand once in a while and bringing the full power of your office to bear when monied interests are FUCKING your constituents over.

                    •  Smarts don't necessarily (0+ / 0-)

                      make you a thinker.

                      And next three just puts him in the top 25% not the top .1 percent.  I never said he was the smartest person in the world.

                      A stand you can win on and a passionate stand aren't necessarily the same thing.  I don't need a crusader or Don Quixote as a President who is passionately for something that will never be done.

                      To inspire but also to achieve is the President's job.  Not just this President, but any President.

                      •  Without a doubt ... (3+ / 0-)
                        Recommended by:
                        CharlieHipHop, JesseCW, allenjo

                        ... Wall Street is filled with people who can out think Obama every which way.  I know some of those people.  It is terribly unfortunate what they have chosen to prioritize.  But it is clearly true that Obama will not defeat them in some political chess game.  He'll need overwhelming, foaming-at-the-mouth, pitchforks at the gate public support.  And that requires a firebrand.

                        I think you confuse caution with calculation.  We live in the age of consequence.  Caution will no longer do, it is time to act.

                        Justice deferred is justice denied. -MLK

                        by zephron on Fri Apr 23, 2010 at 10:11:08 AM PDT

                        [ Parent ]

                        •  'we live in a an age of consequence' (0+ / 0-)

                          name an age that wasn't an age of consequence.  Even absolute inaction has consequences as you imply.  

                          I also don't confuse caution with calculation.   Calculation includes looking at risk, win/lose and deciding whether odds favor going forward all out, compromising or folding your hand and biding your time.

                          Its not either/or and one way forward and all else is absolute failure.

                          And two sides screaming "oh hell no we won't' passionately across a room has a consequence and it isn't progress.

                        •  Well put (1+ / 0-)
                          Recommended by:
                          JesseCW

                          The "He's just thinking five steps ahead of everybody" excuse is growing stale.  Time to shit or get off the pot on the whole "change we can believe in" thing.

                      •  Don Quixote (1+ / 0-)
                        Recommended by:
                        JesseCW

                        You realize that there were those who considered his candidacy quixotic right?  Imagine if a time traveler had told you in 2003 that a black man would be elected president in 2008.  You would have thought them nuts.

                        I do want a crusader in the White House.  Reagan was a crusader, and look at the damage he did.  FDR was a crusader.  He set the stage for 70 years of progress that took 20+ years to undo.

                        And you know what, this really sticks in my craw:

                        I don't need a crusader or Don Quixote as a President who is passionately for something that will never be done.

                        "Something that will never be done?"  Since when did America become a nation of defeatists?  When did the can't-do spirit take hold?

                        Anything is possible.  Once more of us grab hold of that way of thinking, things will start to shake.

                        •  can't run both sides of the road (0+ / 0-)

                          at once.  He's Don Quixote willing to do the undoable or he's a cautious not bright enough guy.  Or stupid enough to succeed in spite of himself in running but can't govern?

                          People's innate personalities are not that schizophrenic unless they are schizophrenic.  

                          A can do spirit is much like what Edison said, 10% inspiration and 90% perspiration. (And yes, I know he wasn't a nice man or progressive politically).

                          I need a guy smart enough to pay attention, take lots of points of view into account, can count votes, etc. and gets 'something' done.

                          •  We need citizens who demand more than (1+ / 0-)
                            Recommended by:
                            CharlieHipHop

                            meaningless weak legislation they can call "something".

                            This is, frankly, about saving what's left of our Republic - not about passing regulation in name only so that sports-fan partisans can crow about how the team scored a goal.

                            The issue is not whether Congress regulates Wall Street, it's the degree to which Wall Street regulates Congress. B. Sanders

                            by JesseCW on Fri Apr 23, 2010 at 01:47:43 PM PDT

                            [ Parent ]

                          •  I am always in favor (0+ / 0-)

                            of meaningful legislation if its available, as I have said countless previous times, show me the votes for passing it.  No one has ever counted them up and shown me how Obama stopped it.  Its always the myth of how he could produce them if only he tried.

                            Mostly, again, citizens who aren't out there demanding from more than just the president, get nothing.  A vocal small percentage can be of some influence, but you want to remake our republic move a hundred million not five.

                            So I am prepared to take what a vocal few million can produce.

                            You got a better way, lay it out, right here.

                            Otherwise I figure its like John McCain's secret plan to capture BinLaden that can only be revealed after he's elected.  

              •  We wouldn't have needed a new structure (1+ / 0-)
                Recommended by:
                JesseCW

                The same structure would have done just fine.  Let Citigroup fail.  Let all the big boys fail.  Bail out small depositors through the FDIC and those funds would have flowed into existing solvent banks.  

                Ironic that you speak of "cop outs" when you are basically arguing along the lines of, "We can't do it.  It's too haaaaaard!  That's not how things work in the real world.  Waaaah!"

                "Pragmatism" is the ultimate cop-out.  There were palatable solutions that would have been simpler, cheaper, and more popular.  They would have caused a few rich people to lose their fortunes, though.

                •  the banking structure (1+ / 0-)
                  Recommended by:
                  CharlieHipHop

                  is more intertwined, unfortunately the small banks bought these securities, too, rely on the bigger banks for loans to them for daily operating capital, so it would have taken down much of the system with only a few independent banks surviving.   Lots of issues exist as more than just individual depositors depend on the banks, and there would be disruptions.

                  FDIC was and basically still is broke. When a bank is dissolved, FDIC disavows many of the bank's obligatons, such as letters of credit, sight drafts that secure commercial financial transactions, secure environmental clean up obligations, subdivision completion obligatons, etc.  The shock waves through the system of those defaults would be enormous if a large scale failure occurred.   Just the small scale failures occuring now are hurting governments, land owners and people who are now next to waste sites with no money for clean up.  Congress had to pass a special FDIC limit to cover commercial escrow accounts or business would have frozen, as no money would be safe to pay bills or complete purchase/sale transactions.  If businesses shut down or slow down, ordinary people lose jobs.

                  Not just really rich people have money in securities, pensions, 401K's etc affect many middle class people and elderly people who may be comfortable, relatively secure but far from rich.  

                  I am not saying (and acknowledged that in my first post) that we could not have done better, just that, 'let the big banks fail' is not without system wide large aggregate costs.  Some compromise between fueling the big banks without limit and letting them fail is and probably will continue to be a better path.  But the initial decisions were made before Obama was even elected (the right wing ignores that, we shouldn't accept their frame).   He has to chart a course with what was rather than starting from scratch.

                  •  I understand and agree (1+ / 0-)
                    Recommended by:
                    JesseCW

                    Some of it was out of his hands (although he did make a terrible decision by giving in to fear and voting for TARP).  

                    If the FDIC is broke, I am guessing it would have been much cheaper to fund it than to simply hand $700 billion over to the banksters.  

                    The root of it is that the rich have been bailed out and further enriched while the rest of us got screwed.

                    •  if all we would lose (0+ / 0-)

                      is FDIC that would be true, I didn't bother to add up the 58000 reporting branches, but BOA alone reports 20 billion.  That's about the biggest.  And that's the insured accounts.

                      Prior to the change in the law, ie, before TARP, something like a lawyers escrow account was limited to the 100K.  So you have four million deposited to the account for a closing, bank goes under, the four million is gone.   Multiply that by realtors, lawyers, title companies, etc. etc.

                      Many businesses operating accounts are beyond insurable limits even after increasing to the $250 k level.

                      I agree the rich were made richer.  It needs to be addressed.   But in October of 2008 this was a global problem, huge amounts of money, and right or wrong, the banksters and finacial empire had the world's governments by the short hairs.  

                      Its clearly still not fixed.   Its going to take a lot of work to wrest trillions from the grip of the super rich.

                      Passion from citizens helps.  Commitment to the long haul and funneling of the passion of the citizens is what we need in my opinion from leadership.  Its still missing in congress because they've been bought more so than the presidency though the rich certainly have outsize influence with both.    And the walls aren't going to fall because the President makes threats he can't back up.

                      •  It would be interesting to do the numbers (0+ / 0-)

                        The fact is that neither you nor I can say definitively whether bailing out the banks was a better move than letting them fail.

                        I'm still betting that bailing out depositors would have been cheaper.  My reasoning is that the fractional reserve system means the liabilities (deposits) are only a tiny fraction of the assets (loans, stocks, bonds, derivatives).  Bankruptcies for the banks would have preserved the assets that were actually worth something, and covering the liabilities (deposits) would have, by default, cost a fraction of what covering the bad assets cost.

              •  All blame to the Legislature, all credit (0+ / 0-)

                to the Executive.

                Ever read much Roman history?

                The issue is not whether Congress regulates Wall Street, it's the degree to which Wall Street regulates Congress. B. Sanders

                by JesseCW on Fri Apr 23, 2010 at 01:45:15 PM PDT

                [ Parent ]

      •  what Simon Johnson said in The Quiet Coup (9+ / 0-)

        If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform.

        makes Stiglitz advise spot on... 
http://www.telegraph.co.uk/...

        and also would have allowed Plutocracy cycle in America to be broken

        to address this....

        1950's to 1980's viable middle class


        1980's to 2005 asset inflated middle class


        2005 + fast diminishing middle class

        Elizabeth Warren, admits she's afraid of what the future holds for the economic well-being of almost all Americans.
        Yup !

    •  can anyone give me a reason this wouldn't work (3+ / 0-)

      Rather than bailing out banks directly, pass the money through mortgage holders to pay off the banks and bring down the holders' mortgage debt at the same time.  

      1. This lowers the mortgagee's debt.
      1. It removes toxic or soon to be toxic assets from the bank's books.

      Everybody wins.

      Instead what we did was to bail out the banks directly / only.  Therefore:

      1. The mortgagee is still up to his eyeballs in debt
      1. The bank still has toxic assets that will fail

      Is there any legitimate reason that what I've described here, won't work?

      I heard John Stewart ask this of Biden months ago.  Biden had no answer, he just repeated himself "The markets would have collapsed, we had to act."

      "The problems of incompetent, corrupt, corporatist government are incompetence, corruption and corporatism, not government." Jerome a Paris

      by Earth Ling on Fri Apr 23, 2010 at 07:44:01 AM PDT

      [ Parent ]

      •  You have it. Keep it Simple Stupid. (0+ / 0-)

        It's about the mortgages.  Yes reserves matter; yes separating investment institutions from deposit institutions; yes too big to fail matters, and regulating and exposing complex instruments matter.

        But the huge relief of cycling through mortgage holders and ultimately to banks would be a win for everyone.

        Money would circulate more.  We would still need to implement fixes in other areas to prevent a subsequent system-wide failure, but the middle class, for once would have an immediate relief.

        Why can't we use common sense?  Good questions Earth Ling.

        And yes, it came out of the mouth of Jon Stewart.  The best newsman of them all.

        "Never, desist till we ... extinguish this bloody traffic, of which our posterity, will scarce believe that it suffered a disgrace and dishonor to this country.

        by Regina in a Sears Kit House on Fri Apr 23, 2010 at 09:46:48 AM PDT

        [ Parent ]

    •  Don't cry no tears around me! (0+ / 0-)

      Don't cry no tears Around ME!
      'Cause when all the water's gone
      The feeling lingers on
      Old true love
      ain't too hard to see
      Don't cry no tears around me.

    •  I concur completely. (0+ / 0-)

      The hell with the banksters.  It would serve them right.

      "Fighting Fascism is Always Cool." -- Amsterdam Weekly, volume three, issue 18 (-8.50, -7.23)

      by Noor B on Fri Apr 23, 2010 at 12:49:13 PM PDT

      [ Parent ]

  •  Good morning. (20+ / 0-)

    Glad I had a chance to read this before I left.  Rec. and a tip for fighting the good fight as always Bob.

    They're asking for another four years -- in a just world, they'd get 10 to 20. ~~ Dennis Kucinich

    by dkmich on Fri Apr 23, 2010 at 04:36:31 AM PDT

  •  The unbelievable turnaround of these 'banks' (19+ / 0-)

    in just one year is ... well, unbelievable. Is anyone even monitoring or even questioning how they made these huge 'profits' in such a short time ?

    Between birthers, deathers and mouth-breathers, the gop has got 'teh crazy' and 'teh stoopid' covered.

    by amk for obama on Fri Apr 23, 2010 at 04:42:37 AM PDT

  •  Why? (19+ / 0-)

    What I've been harping on for some time is why this:
    "The top 25 hedge fund managers made a whopping $25.3 billion dollars in 2009. That's a billion dollars per manager!

    And, adding insult to injury, in case you haven't been following U.S. tax law, most hedge fund managers are taxed at the 15% capital gains tax rate, not at normal rates of taxation."
          Why the giveaway to the wealthy? Limit the low tax treatment of capital gains unless it is shown to produce jobs here in America. What possible justification is there? Above a certain point tax capital gains as ordinary income.

    •  It's a little more complicated than that. (11+ / 0-)

      They're taxed based on the income produced by the fund.  Most hedge funds produce a mix of ordinary income (taxed at 35%), non-qualified dividends (35%), qualified dividends (15%), short-term capital gains (35%, and long-term capital gains (15%), so the rate paid by the hedge fund manager is a blended rate between 15 and 35, probably in the mid to high 20s.

      The house has passed a tax extenders bill that corrects this loophole and taxes it all as ordinary income.  Hopefully the senate passes it, but it's tough to imagine Schumer and Dodd won't kill it.

      •  Screw that (13+ / 0-)

        Tax all gains for gambling proceeds investments held less than 5 years at ordinary income rates corresponding to the amount of gain, and institute a Tobin tax of 0.25 percent on each stock,derivative, credit default swap, hedge fund sale, or commodities trade. Also, put in a new 50% marginal tax bracket for incomes over $2.5 million per year, regardless of source, and disallow all write offs on marginal incomes over 2.5 million other than charitable contributions. Time to rein in the financial thieves.

        "Trickle down economics 101: They get the golden parachute, we get the golden shower"

        by NoMoreLies on Fri Apr 23, 2010 at 05:16:28 AM PDT

        [ Parent ]

        •  Slight correction: you've crossed out the wrong (7+ / 0-)

          part.

          investments gambling proceeds

          As the Confucian aphorism goes "When things are not called by their true name, confusion abounds in the realm."

          Until we break the corporate virtual monopoly on what we hear and see, we keep losing, don't matter what we do.

          by Jim P on Fri Apr 23, 2010 at 07:17:16 AM PDT

          [ Parent ]

          •  No he didn't (0+ / 0-)

            It's pet peeve. The cross out is the modern version of the usenet standby of starting to type something un-PC (but true), then pretending that you goofed backspacing over it before typing the polite version:

            That assh^H^H^H^Hterrible person is my investment banker.

            You're supposed to cross out the part you really meant goofed up.

            "Pay me enough to be taxed, and I'll pay taxes."
            - Ezekial 23 20, responding to complaint about too many people NOT paying taxes.

            by davewill on Fri Apr 23, 2010 at 11:02:00 AM PDT

            [ Parent ]

      •  I can understand some of the reasons,,, (9+ / 0-)

        for the capital gains treatment. For assets held over the long term it at least mitigates some of the effect of inflation, on the family home for example but highly paid individuals like these fund managers as well as others take advantage of this treatment to shelter their income every year. I'd like to see these abuses end before anyone even begins to talk of raising the retirement age or instituting a National sales tax.

        •  Unfortunately, instead of reasonably (1+ / 0-)
          Recommended by:
          irate

          adjusting capital gains from the family home (say, allow 5 or 6% growth per year tax free) we created an immense give-away that fueled a speculative bubble.

          People rushed to "get in" so they could flip for a huge tax free profit - and that ill-constructed "500,000 tax free in five years" fix was a driver.

          The issue is not whether Congress regulates Wall Street, it's the degree to which Wall Street regulates Congress. B. Sanders

          by JesseCW on Fri Apr 23, 2010 at 02:05:58 PM PDT

          [ Parent ]

      •  For the fund manager (5+ / 0-)
        Recommended by:
        emal, NoMoreLies, Lying eyes, davewill, JesseCW

        None of it should be taxed as capital gains.  It should all be considered ordinary income, simply because it is not the fund manager's capital generating the gains.  Lower taxation rates on capital gains are meant to encourage people with capital to productively invest.  I don't see why we should reward fund managers for investing other people's money.

  •  Where was the SEC? Watching porn. (16+ / 1-)

    Seriously. Maybe it was "Debbie Does Wall Street"?

    WASHINGTON – Senior staffers at the Securities and Exchange Commission spent hours surfing pornographic websites on government-issued computers while they were being paid to police the financial system, an agency watchdog says.

    The SEC's inspector general conducted 33 probes of employees looking at explicit images in the past five years, according to a memo obtained by The Associated Press.

    The memo says 31 of those probes occurred in the 2 1/2 years since the financial system teetered and nearly crashed.
    ...

    • A senior attorney at the SEC's Washington headquarters spent up to eight hours a day looking at and downloading pornography. When he ran out of hard drive space, he burned the files to CDs or DVDs, which he kept in boxes around his office. He agreed to resign, an earlier watchdog report said.

    • An accountant was blocked more than 16,000 times in a month from visiting websites classified as "Sex" or "Pornography." Yet he still managed to amass a collection of "very graphic" material on his hard drive by using Google images to bypass the SEC's internal filter, according to an earlier report from the inspector general. The accountant refused to testify in his defense, and received a 14-day suspension.

    • Seventeen of the employees were "at a senior level," earning salaries of up to $222,418.

    ...

    He said in a statement that SEC officials "were preoccupied with other distractions" when they should have been overseeing the growing problems in the financial system.

    An SEC spokesman declined to comment Thursday night.

    This ain't no party. This ain't no disco. This ain't no foolin' around!

    by Snud on Fri Apr 23, 2010 at 04:53:33 AM PDT

  •  president mediocrity does not believe in tough (14+ / 0-)

    reform - he takes a little bit of both sides and calls it reform. its upsetting how the status quo is always protected with this president - maybe if we follow the campaign contributions a light will illuminate the roaches

    •  Dunno. We Had 100% Transparency In A.D. 1000 (8+ / 0-)

      The lords and the priests owned everything and ran everything.

      Didn't help the people much to know it.

      We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

      by Gooserock on Fri Apr 23, 2010 at 05:19:38 AM PDT

      [ Parent ]

      •  What good is transparency? (6+ / 0-)

        You bring up a good point, really.  People talk about transparency when what they really mean, or want to talk about, is power--or the lack of it.  This is the real problem.  We can SEE what is going on, but we can't DO ANYTHING about it.   Apparently.  

        The question is, is Obama really turning a corner on this and bringing the thieves to account?   Or is this just a way to placate people who are getting sick and tired of waiting for some accountability (and perhaps a little retribution) or at least some admission of guilt and a smattering of contrition?   It sounds like he is about to get tough, and for the few seconds I listened to Geitner and Summers on the TV before leaping up to shut them off, it appears that these two are putting on the populist sheep's outfits.  I'm getting confused about them, and that is making me nervous.  Don't see why I should trust either of them, and I see them as Obama's biggest mistakes.

      •  It's underpants gnomes (0+ / 0-)
        1. Inform the people how screwed they are.
        1. ?????????
        1. Reform!!

        Everyone knows the dice are loaded, and everyone knows the good guys lost.

        We just don't know what the fuck to do about it.

        The issue is not whether Congress regulates Wall Street, it's the degree to which Wall Street regulates Congress. B. Sanders

        by JesseCW on Fri Apr 23, 2010 at 02:08:28 PM PDT

        [ Parent ]

    •  Would you rather have (2+ / 0-)
      Recommended by:
      jjellin, lostinamerica

      President McCain?  I'll take mediocrity over stupidity any day of the week...

      "Now if people got problems and they got problems with people oh yeah I know what it is to be there." - DW

      by ScantronPresident on Fri Apr 23, 2010 at 05:39:20 AM PDT

      [ Parent ]

      •  Not that tired chestnut again. n.t (10+ / 0-)

        They're asking for another four years -- in a just world, they'd get 10 to 20. ~~ Dennis Kucinich

        by dkmich on Fri Apr 23, 2010 at 06:12:30 AM PDT

        [ Parent ]

        •  How about not being so negative (0+ / 0-)

          about a President who is cleaning up a big fucking mess?  

          Look, maybe sometime you'll have guests over and they'll trash your place.  And then they'll leave and you start cleaning the place up.  Where to begin?  Now, if mom is going to show up she's going to want to see clean sinks and tubs.  If Grandma shows up she expects clean walls and floors.  And when the cousins come over, they don't want to see shit laying everywhere.  So, you pick one and you roll with it.  

          Now, halfway through they come to visit.  Everyone of them is dissatisfied.  Mom thinks the sinks could be cleaner.  Grandma's pissed and cracks about whether or not you even know what a fucking mop is. And the cousins are crying because they can't find the fourth disc to Smallville Season 6.  And, you look at them and you think, I've been busting my ass to clean this shit up.  And you guys?  Could one of you pick up a fucking mop?

          If as you say I'm wielding a tired chestnut, do you think McCain would have cleaned the house up or do you think he would have just maybe taken a giant shit in the living room like W did?

          I'll take my tired chestnut and stand by it while picking up a mop and doing my part to clean up this mess of a country as I have been since the Reagan years...  Will you pick up a mop?  Or just sit there throwing peanuts from the balcony?

          "Now if people got problems and they got problems with people oh yeah I know what it is to be there." - DW

          by ScantronPresident on Fri Apr 23, 2010 at 07:09:50 AM PDT

          [ Parent ]

          •  The mess is being cleared up? (6+ / 0-)

            I hear nice words, but actions, by every objective account, are pretty much as they were, except maybe worse.

            Until we break the corporate virtual monopoly on what we hear and see, we keep losing, don't matter what we do.

            by Jim P on Fri Apr 23, 2010 at 07:20:48 AM PDT

            [ Parent ]

          •  Wrong. (2+ / 0-)
            Recommended by:
            greenearth, bigchin

            First thing I'd do is call the cops.  No "friend" would trash my home.  Second, I'd demand restitution and justice.  I wouldn't just smile and clean it up.  

            They're asking for another four years -- in a just world, they'd get 10 to 20. ~~ Dennis Kucinich

            by dkmich on Fri Apr 23, 2010 at 08:57:23 AM PDT

            [ Parent ]

            •  You obviously don't have friends with kids... eom (0+ / 0-)

              "Now if people got problems and they got problems with people oh yeah I know what it is to be there." - DW

              by ScantronPresident on Fri Apr 23, 2010 at 10:00:32 AM PDT

              [ Parent ]

              •  The children of my friends, (1+ / 0-)
                Recommended by:
                JesseCW

                do not trash my home.  They are not allowed to run wild.  They are supervised and regulated.    

                They're asking for another four years -- in a just world, they'd get 10 to 20. ~~ Dennis Kucinich

                by dkmich on Fri Apr 23, 2010 at 10:58:07 AM PDT

                [ Parent ]

                •  aren't you special... eom (0+ / 0-)

                  "Now if people got problems and they got problems with people oh yeah I know what it is to be there." - DW

                  by ScantronPresident on Fri Apr 23, 2010 at 11:59:58 AM PDT

                  [ Parent ]

                •  You're clearly missing the larger point... (0+ / 0-)

                  Bush, Clinton, Gramm and the rest of the deregulation company trashed the place.  All of you who want President Obama to magically wave his finger and make the world a sunny, better place undoing every wrong ever committed instantly are either deluded or horribly naive.  Bush utilized fear and an attack on our soil to push through massive change.  Bush could have ordered anything after 9/11 and did to a large degree because the country was paralyzed by the shock of what happened.  

                  President Obama is going to need time to enact his version of change - and it won't be mine, but it will be change.  My idea of change would be throwing all the bankers in jail.  Life doesn't work that way though.

                  However, to sit here and WHINE about 'mediocrity' when the guy is trying to clean up a massive shit taken in his living room while pretending that the alternative is somehow better is both deluded and naive.  To respond as you did about wielding "a tired chestnut" is simply ignoring how much worse things would be under the individual he defeated.  Trying to attack me for presenting you with that message is just willful ignorance on your part.

                  "Now if people got problems and they got problems with people oh yeah I know what it is to be there." - DW

                  by ScantronPresident on Fri Apr 23, 2010 at 12:10:27 PM PDT

                  [ Parent ]

                  •  If anyone actually demanded what (1+ / 0-)
                    Recommended by:
                    NoMoreLies

                    you seem to think they are, yes.  They would be deluded and niave.

                    However, the guy is currently letting people keep shiting in our living room, and is talking about maybe spraying febrezzee around so it won't smell so bad.

                    The issue is not whether Congress regulates Wall Street, it's the degree to which Wall Street regulates Congress. B. Sanders

                    by JesseCW on Fri Apr 23, 2010 at 02:11:26 PM PDT

                    [ Parent ]

      •  Or, or, or President HITLER! (0+ / 0-)

        Obama ran for the fucking job for two fucking years.

        If he wasn't going to do the damn job, he should have stood aside for someone who was.  Some of us hold our elected officials to a slightly higher standard than 'not batshit insane'.  Sorry if that bothers you.

        Justice deferred is justice denied. -MLK

        by zephron on Fri Apr 23, 2010 at 10:17:12 AM PDT

        [ Parent ]

    •  Charts and info on (4+ / 0-)
      Recommended by:
      fromer, bigchin, bobswern, JesseCW

      They're asking for another four years -- in a just world, they'd get 10 to 20. ~~ Dennis Kucinich

      by dkmich on Fri Apr 23, 2010 at 06:07:57 AM PDT

      [ Parent ]

      •  Individual employee contributions. (0+ / 0-)

        So what?
        Most people in Manhanttan are liberals, so they donate to Dems.  Most people that work at finance companies are well paid, so they can contribute to the $2300 maximum.  Combine those two things, and yes, lots of finance people that live/work in Manhattan donate to Dems because they like them and have disposable income to give.  

        I'm tired of this bullshit where contributions made by employees of a company are taken by "progressives" to be bribes on behalf of that company or its industry.

        BTW, I heard Michael Moore peddling the propaganda that GS was Obama's #1 "private" contributor.*  That BS talking point is meant to stoke anger or whatever.  The fact is, GS's employees made contributions on their own accord.  It's also a fact that GS's employees' combined contributions totalled 0.13% of Obama's total contributions.  Moore makes it sound like GS made contributions as a company rather than as a bunch of individual employees that happened to like Obama, and he makes it sound like GS's contributions made up a HUGE percentage of Obama's contributions rather than the tiny percentage that they are in reality.  He's being deceptive and misleading.  He's essentially lying by telling half-truths and inviting the listener to imagine the half that he's not telling to be in the worst light.

        Sorry, whenever I see this BS talking point, I'm going to call it for the BS that it is.  

        * I notice he added the "private" qualifier.  Usually people leave that out when spouting this talking point.  I guess too many people were calling bullshit on people leaving out that qualifier, since the #1 employer whose employees contributed to Obama was University of California, a public employer, and GS is a very distant second.  I would give Moore props for at least being honest enough to add the "provate" qualifier to his GS talking point.  But it would've been cleaner just to say "GS is the #2 contributo".  But that doesn't sound quite as damning, so he chose the more complex language so he could get the "#1" language in there.  

    •  No regulation, no bailouts . . . (0+ / 0-)

      Which is what should have been said to AIG and their unregulated "financial products" division, not to mention several banks (which should have been nationalized as soon as the bailout exceeded their own capitalization).

      If the government is not to regulate then failure is the regulatory mechanism of the "invisible hand" . . . let it work . . .

      Fake Left, Drive Right . . . not my idea of a Democrat . . .

      by Deward Hastings on Fri Apr 23, 2010 at 10:29:16 AM PDT

      [ Parent ]

  •  FAT sounds like a good idea (15+ / 0-)

    It's been talked about since the last crash.  There's no regulation that works better than making it too expensive to gamble on Wall St.

    "Private health insurers always manage to stay one step ahead of the sheriff." Sen. Sherrod Brown

    by Betty Pinson on Fri Apr 23, 2010 at 05:30:27 AM PDT

  •  If Krugman Supports the Idea (9+ / 0-)

    that every bank fee generated by any "touching' of money is taxed -- great.

    But I'm even more in favor of a high "fat cat tax" on individual executive bonuses because that can not be passed on to the customer.  It's a buck that stops "here" with the too rich to fail.

    SInce bankers' fees and bonuses on shuffling financial instruments do nothing to augment the GDP, and only exist to enrich institutions and individuals, tax the hell out of both fees and obscene profits/bonuses.

    "ingratiation and access . . . are not corruption." -- Justice Kennedy (Citizens United v. Federal Election Commission, 2010)

    by Limelite on Fri Apr 23, 2010 at 06:06:29 AM PDT

  •  BUT, IF The Pigs On Top Can't Steal All They Can (4+ / 0-)

    Steal,

    IF the Pigs On Top have to help support the community they're ripping off, instead of just rip off the community,

    THEN The Pigs on Top might move to Kazakstan or Nigeria or Brazil or Bangledesh AND Take their masters of the universe gordon gekko magic with them!

    LOMG - What would we do without them?

    rmm.

    Yond Cassius has a lean and hungry look; He thinks too much: such men are dangerous

    by seabos84 on Fri Apr 23, 2010 at 06:16:52 AM PDT

  •  the financ eindustry has outlive dit's usefulness (3+ / 0-)
    Recommended by:
    Orinoco, divineorder, Betty Pinson

    ...much like the health insurance industry.

    their existence should be ended.

    Making armed robbery safer makes it no leass destructive.

    Very disappointed with this "reform" effort.

    Again.

    Sigh.

    The bear and the rabbit will never agree on how dangerous a dog is.

    by fromer on Fri Apr 23, 2010 at 06:20:34 AM PDT

    •  Some rob you with a six-gun (1+ / 0-)
      Recommended by:
      Betty Pinson

      some with a fountain pen.

      We need to abolish the top six banks. We have enough small, local banks and credit unions to take up the slack.

      "The problems of incompetent, corrupt, corporatist government are incompetence, corruption and corporatism, not government." Jerome a Paris

      by Orinoco on Fri Apr 23, 2010 at 06:52:13 AM PDT

      [ Parent ]

  •  Keeping up with the Jones (or Paulsons) (2+ / 0-)
    Recommended by:
    divineorder, Bmeis

    John Paulson set the bar very high for hedge fund manager income with a 5 year average of about $3.5 BILLION.

    The average hedge fund manager income last year was a paltry $1 BILLION.  
    Relative paupers compared to John Paulson.  
    Oh the SHAME they must endure!

    Can't you feel their pain, you insensitive bastards!?!

  •  but class warfare! (4+ / 0-)

    AND underwater mortgages! or maybe...welfare queens? tort reform?

    anything but hedge fund managers, they are definitely not part of the problem.

  •  Fine by me (1+ / 0-)
    Recommended by:
    divineorder

    Can't see Obama and the Dems touching this with a ten foot pole though.  Would piss off the military financial complex too much.

  •  I have seen numerous claims (3+ / 0-)
    Recommended by:
    emal, divineorder, JesseCW

    that another crisis is likely, if true reform is not enacted to rein in bad behavior.

    Since it does not seem that this reform bill will address what is needed, I have to ask anybody who cares to weigh in---What will the next crisis look like?  How will it play out?  What is the most likely scenario?

    Lots of people foresaw the Housing Bubble Crisis, so I am betting there are folks out there with the knowledge to call the next scenario.

    Any ideas?  

    One man alone can be pretty dumb sometimes, but for real bona fide stupidity nothing beats teamwork." - Mark Twain

    by ohmyheck on Fri Apr 23, 2010 at 06:42:41 AM PDT

    •  Pick yer' poison... (9+ / 0-)
      1.) Oil/gas price spike (due to any of a handful of possible reasons: mideast turmoil, speculation, etc.)

      2.) High probability of ongoing negative pressure in RE/CRE (Shiller just said there's a 50%/50% chance we have not hit bottom in RE.) CRE losses are projected to wipeout quite a few hundred (up to 2,000+) small- to mid-sized banks...these are the same banks that are responsible for the lion's share of small business credit in this country, too. Hidden inventory is still a huge problem.

      3.) Re: #2, above, has a massive effect upon banks' balance sheets. Truth is, most major U.S. banks are still, very much, insolvent.

      4.) Ongoing loss of confidence in the U.S. economy, creating more pressure to finance debt, government bonds (local/muni and national).

      5.) Major stock market correction, which will have a cascading effect upon consumer spending...again.

      6.) Ongoing strategic defaults by the population on their homes, credit cards. Ed Harrison had a very good post up at his Credit Writedowns blog the other day explaining that most of the supposed "increase" in consumer spending that's being noted by the "happy newsers" is, in truth, just extra cash being spent by those who've been strategically defaulting on their other debts. (Compare increases in defaults with increases in spending and I think you'll get a negative number.)

      7.) Lingering high unemployment.

      8.) Increased draconian gov't budget cuts at the state and municipal level (runs totally contrary to another diary that was posted just before I wrote this comment) creating a breakdown in basic services: police, fire, social welfare, etc.

      9.) Major bank failure (think: Citi, BofA), creating a cascading effect in the markets and/or society.

      10.) Stockholder and bondholder legal fraud claims overwhelming banks' bottom lines, creating greater levels of default...

      ...shall I continue?

      "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

      by bobswern on Fri Apr 23, 2010 at 07:13:35 AM PDT

      [ Parent ]

      •  11.) Contagion effect of sovereign defaults... (9+ / 0-)
        ...in Europe causes world economy to re-evaluate financial positions of all countries, including U.S.

        12.) Downgrade of U.K. sovereign debt by credit ratings agencies, triggering same in U.S. (or "pricing it in," without even having a formal downgrade of U.S. debt, to international strategies and market reaction to our country's investment vehicles)

        13.) Realization by world community that we're not including GSE debt in our national debt statistics, triggering massive downgrade of U.S. sovereign credit.

        14.) General social/labor unrest in U.S., triggering downward spiral.

        15.) Ongoing international debasement efforts of dollar (i.e. myriad of threats to U.S. dollar hegemony), creating an alternative hegemonous currency for oil.

        "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

        by bobswern on Fri Apr 23, 2010 at 07:22:46 AM PDT

        [ Parent ]

      •  So, in those cases, (6+ / 0-)

        the existing banks will be proportionally even more powerful, through the disappearance of the smaller ones, social services will be cut back/destroyed, unemployment will rise (increasing downward pressure on wages), and the military will remain untouched.

        So where's the problem? The system works.

        Until we break the corporate virtual monopoly on what we hear and see, we keep losing, don't matter what we do.

        by Jim P on Fri Apr 23, 2010 at 07:26:14 AM PDT

        [ Parent ]

    •  The cause or the result? (4+ / 0-)
      Recommended by:
      NoMoreLies, divineorder, JesseCW, ohmyheck

      For cause see above.  I'd add some natural disaster (like a major hurricane strike or say, a major Icelandic volcano eruption) would tank everything.

      For results, the optimists see an official Great Depression II and slo-mo collapse.  The pessimists see Mad Max.

    •  The next crisis (or two) (2+ / 0-)
      Recommended by:
      NoMoreLies, ohmyheck

      Since it does not seem that this reform bill will address what is needed, I have to ask anybody who cares to weigh in---What will the next crisis look like?  How will it play out?  What is the most likely scenario?

      Same thing -- just different details.

      The root cause is being able to make money on the front end of a loan. Last time it was the S&L crisis in the 80's; this time it was residential housing. Same cause. Being able to make money for making a loan happen puts pressure on people to make loans.

      Since there's no downside to these people for the loan eventually going bad, there is an incentive to make any loan you can. Some people resist making bad loans, but for some it's a business model. Once that starts happening, you pretty much have a race to the bottom as the due diligence gets weaker and weaker.

      People kind of learn from mistakes, but memory is short. Once all the underwriters who lived through this crises are out of the system (maybe 20 years), the same thing will happen again. The only way I see to avoid this is to either take the money out of the front end, or else separate the underwriting from the lenders.

      In the short term, there is a looming crisis in commercial property. There are some really big mortgages that are not performing because there aren't enough tenants -- it's just a question of how long the lenders are willing to let these assets sit on their books.

  •  To get elected you need big money (3+ / 0-)
    Recommended by:
    TJ, divineorder, Betty Pinson

    To get that big money you need to owe your contributor big favors.

    Our politics in Washington is based on earning cash  for favors.

    When so much influence peddling for cash being legal, how is bribery still a crime?

    If cats could blog, they wouldn't.

    by crystal eyes on Fri Apr 23, 2010 at 06:59:21 AM PDT

  •  Sort of like an obscurity tax (1+ / 0-)
    Recommended by:
    Betty Pinson

    ...like the one proposed 10 months ago

    The only winning move is not to play. - Joshua

    by FightersFate on Fri Apr 23, 2010 at 07:01:40 AM PDT

  •  This is one thing Congress MUST do (3+ / 0-)
    Recommended by:
    divineorder, JesseCW, Betty Pinson

    There can be no compromise on this issue. If the GOP refuses to go along with financial reform they should be called out in public over and over and over until they relent. We've already seen the GOPs disdain for Main Street via McConnell meeting with Wall Street lobbyists to throw a wrench in the works.

    Make no mistake, they are going to fight substantive reform tooth and nail, and then, when the financial house of cards comes crashing down again, they will blame the democratic congress for not passing a strong enough bill. This is, and has always been, their strategy and Wall Street is complicit with them.

    In short, their actions are not those of honorable men. They are racketeers whose strategy is rig the system so it will break during a Democratic Administration.  Then they can ride in like white knights claiming they will make our problems go away with less regulation of Wall Street and fewer taxes on corporations and the rich.

    Then, when the country is broken beyond repair, they retire to their private islands off the coast of a foreign country, pat themselves on the back for a job well done and laugh while the country they were entrusted to protect, burns.  

    No being has inherent power, only the illusion of power granted by others who similarly have none.

    by Mark701 on Fri Apr 23, 2010 at 07:14:39 AM PDT

  •  If our country was at an "abyss" or a "brink"... (1+ / 0-)
    Recommended by:
    Betty Pinson

    ...then the DOJ and Commerce had not been doing their jobs. They need to do it now. Reform is a separate issue.

    Just becasue they may think the worst danger is over does not relieve DOJ or Commerce of the action they must take.

    The monopolies must be deconstructed so the marketplace and the public can safely function.

  •  tax transactions (3+ / 0-)
    Recommended by:
    NoMoreLies, JesseCW, Betty Pinson

    most financial transactions are negtive value add

    George Bush is Living proof of the axiom "Never send a boy to do a man's job" E -2.25 S -4.10

    by nathguy on Fri Apr 23, 2010 at 07:44:51 AM PDT

  •  Yup.... (2+ / 0-)
    Recommended by:
    JesseCW, Betty Pinson

    "Reform should hurt the bankers."

    YES!
    Expose their dealings in easy to understand terms.  And let this go viral so everyone can see it, and know just how sleazy these bad boys really are.
    AND....Fine them, fine them and fine them again.  No more outrageous bonuses or disgusting 'golden parachutes'.
    And ya know, a 'go directly to jail card' may not be a bad idea for these thieves.

    I think, therefore I am........................... Plus ca change, plus c'est la meme chose AKA Engine Nighthawk - don't ask!/don't tell!

    by Lilyvt on Fri Apr 23, 2010 at 07:48:30 AM PDT

  •  The banking industry has such a massive sense (4+ / 0-)

    of entitlement.

    Changes to tax law that really hit them where they live is the only way we have to tell them they aren't as important as their drivers and butlers tell them they are.

    In theory, there is no difference between theory and practice; but in practice, there always is a difference. - Yogi Berra

    by blue aardvark on Fri Apr 23, 2010 at 08:13:59 AM PDT

  •  If real financial reform was ever going to (3+ / 0-)
    Recommended by:
    emal, NoMoreLies, bigchin

    happen, it would have been done BEFORE the financial sector bailouts. The financial sector has been using TARP money to lobby against financial sector reform.
    The same thing will happen with the current version of HCR. Once it goes into effect, insurance companies will use their 100s of billions in new government subsidies to lobby against any meaningful reforms to the healthcare system in the future (i.e. public option, Medicare buy-in etc.).
    We continue to reward failure, giving taxpayer subsidies to the same interests responsible for creating the crises/problems we’re trying to solve, then we scratch our heads trying to figure out why we can’t get meaningful reform.
    It would help if we would STOP USING TAXPAYER MONEY TO FINANCE THE POLITICAL OPPOSITION TO REFROM.

  •  Even Steven Pearlstein says Wall St. amoral. (2+ / 0-)
    Recommended by:
    emal, bigchin

    After the collapse in 2008 I would comment on his column in WaPo and on his Q & A sessions. He always hated people talking about Wall Street greed and would say, you guys don't get it, it is NOT about greed.

    But he has come to see that it is about that alone, making the money for themselves, not doing anything productive for the country.

    Pearlstein
    What I do know is that the facts outlined in the government case are a powerful and convincing reminder of Wall Street's complete and utter amorality. There, concepts like truth, justice, fairness, trustworthiness, duty of care, right and wrong are now totally without meaning. There is only buy or sell, long or short, win or lose.

    you (Repubs) lie down with "Nazi"-chanters, you get up with a responsibility for what they might do. -David Corn

    by Gorette on Fri Apr 23, 2010 at 08:41:58 AM PDT

  •  Ranchers have always had enough sense to de-horn (1+ / 0-)
    Recommended by:
    JesseCW

    steers while they're young to limit the amount of damage they can do.

    "The human eye is a wonderful device. With a little effort, it can fail to see even the most glaring injustice." Richard K. Morgan

    by sceptical observer on Fri Apr 23, 2010 at 08:43:36 AM PDT

  •  Tax Wall Street bankers like Main Street workers (4+ / 0-)
    Recommended by:
    emal, NoMoreLies, bigchin, JesseCW
    1. All income is taxed. Capital gains  has to be treated as regular income. End special treatment for Wall Street bankers.
    1. Progressive rates applied and increased so US recovers 40% of income over $1M.
    1. Social Security tax applied to all income to recover $3T stolen from payroll retirement fund for workers by Reagan/Bush/GOP tax breaks for Wall Street bankers.
  •  Obviously, what's bad for Main Street is good... (3+ / 0-)
    Recommended by:
    TJ, NoMoreLies, JesseCW

    ...for Wall Street. I can't see any other way to look at those foreclosure, bankruptcy and profit numbers.

    The question is what Obama is going to do about this. My money is on "nothing." He'll make all the right noises about reform, but he's already cut backroom deals with the big players, just like he did on so-called health care insurance reform.

    I'll change my mind the day I see any powerful industry or corporation actually suffer.

  •  No argument from me, Bob (2+ / 0-)
    Recommended by:
    NoMoreLies, bobswern

    And I continue to wonder just how deliberate is the misgovernance that seems to be a modern feature of congresses and administrations since Reagan.  And more shocking to me is that the public is so easily swayed by perception that the activities that constutute governance, and their deliverables is largely shrugged off as noise unrelated to their lives.

    That there is no cry for a FSC and FAT as part of dismembering casino finance that would be remembered and acted upon come November goes to the bread and circuses aspect of what we have become in a headlong plunge into selfishness.  But then that goes into rants that I will contain about how wall street and our modern government can neglect the public good implicit in society's social contract becaus levels within out society have lost touch to the extent that government only needs to act for those who retain economic and social power.

    Damn!  I'm ranting anyway.  But, in any case, Thank you, bobswern.  

    Distrust of authority should be the first civic duty. - Norman Douglas

    by Fossil on Fri Apr 23, 2010 at 09:44:05 AM PDT

  •  The banks owe us. (1+ / 0-)
    Recommended by:
    vets74

    They owe the public big time.

    You cannot present a monster with a flower. Nora Astorga.

    by vivens fons on Fri Apr 23, 2010 at 09:47:29 AM PDT

    •  And the Moody's & S&P racketeers... (0+ / 0-)

      are getting their perjurious asses handed to them by Senator Levin.

      On the record......... and sworn.

      Frankly, we jailed scores of S&L and bank officials in the 1980s and 1990s for doing a lot less than what these perps did.

      Big bonuses = bribes.

      Angry White Males + Personality Disorder delusionals + Career criminals

      + Pro-Life Christians =EQ= The GOPer Base

      by vets74 on Fri Apr 23, 2010 at 12:20:36 PM PDT

      [ Parent ]

  •  Have you seen the 1065s? (0+ / 0-)
    in case you haven't been following U.S. tax law, most hedge fund managers are taxed at the 15% capital gains tax rate, not at normal rates of taxation.

      Just curious if you really understand how this area of subchapter K works, or if you're just echoing the same boiling down of an involved tax issue to one overly simplistic misleading sentence.  Sort of like teabaggers calling health care reform "government run health care".
      In case you haven't been following, lots of non-hedge fund manager taxpayers get taxed at 15% capital gains rates instead of "normal" rates from partnership structures.  You just don't hear about them, unless you deal in the tax area where you know this is prevalent.
      I'm not defending that certain individuals should get such an egregious tax break.  It's just that too many people totally misunderstand the core issues with that particular area of tax law because it's been so over simplified and spun.  And if they don't understand the facts, then it's harder to get respect from those who want to preserve the status quo in order to make positive change.

    My Karma just ran over your Dogma

    by FoundingFatherDAR on Fri Apr 23, 2010 at 10:45:25 AM PDT

  •  Works for me. (1+ / 0-)
    Recommended by:
    JesseCW
  •  CDO's may be complex, what is happening is not (3+ / 0-)
    Recommended by:
    NoMoreLies, vets74, JesseCW

    It's highway robbery.  What Luke Mitchell said about health care reform applies equally well here:

    The polite word for regulatory capture in Washington is "moderation." Normally we understand moderation to be a process whereby we balance the conservative-right-red preference for "free markets" with the liberal-left-blue preference for "big government." Determining the correct level of market intervention means splitting the difference.... The contemporary form of moderation, however, simply assumes government growth (i.e., intervention), which occurs under both parties, and instead concerns itself with balancing the regulatory interests of various campaign contributors. The interests of the insurance companies are moderated by the interests of the drug manufacturers, which in turn are moderated by the interests of the trial lawyers and perhaps even by the interests of organized labor, and in this way the locus of competition is transported from the marketplace to the legislature. The result is that mediocre trusts secure the blessing of government sanction even as they avoid any obligation to serve the public good. Prices stay high, producers fail to innovate, and social inequities remain in place.

    No one today is more moderate than the Democrats. Indeed, the triangulating work that began two decades ago under Bill Clinton is reaching its apogee under the politically astute guidance of Barack Obama.

    The problem after a war is the victor. He thinks he has just proved that war and violence will pay. Who will now teach him a lesson?

    by geomoo on Fri Apr 23, 2010 at 11:44:29 AM PDT

  •  Hurt the bankers? (1+ / 0-)
    Recommended by:
    NoMoreLies

    When I read Krugman's article this morning, I failed to see any hurt for bankers. Okay so bankers may make less money. Is going from making billions and hundreds of millions of dollars to making tens of millions of dollars a big hurt. We aren't talking athletic stars who take a risk every time they step on the field of play and only last at most twenty years. (Don't remind me of George Blanda.) Movie stars initially get paid little and take a risk every movie they are in. But none of these guys make hundreds of millions of dollars a year. So I will not cry.

    Then we have the folks who create derivatives. A friend of mine who was a mechanical engineer was given the opportunity to make derivatives due to mathematical abilities. I told him to do what he loved, not what would make him rich. He did. But, do I worry about these "wizards" who dream up complex financial instruments. Hell no! Let them create something tangible as opposed to bat bets. Okay, they make make less money. A few more Dean Kamen's (the Segway creator) in the world will not hurt.

    Breaking up massive institutions into smaller ones will create more mid level jobs. Is this bad? I think not.

    Bottom line I see little if any hurt for bankers in what Krugman wants.

    Practice tolerance, kindness and charity.

    by LWelsch on Fri Apr 23, 2010 at 12:01:41 PM PDT

  •  This is backwards to me. (0+ / 0-)

    I favor doing the right thing (whatever that is (I don't claim financial expertise)), and if it happens to hurt the bankers, so be it.  But "hurting the bankers" shouldn't be the goal of policy, merely a possible side effect of policy.

    What is being advocated here is the politics of anger, vengence, and revenge.  "What's bad for bankers is good for America"?  Well, what's good for America is good for America, regardless of the effect on the bankers.

    Hell, theoretically, a policy could be put in place that made Wall Street saner, and therefore made the "man on the street" feel safe about investing in bank stocks, and cause those stocks to rise.  The stocks rising as a result of enactment of sane policy doesn't mean that the policy itself would be bad.  As I said, that's in theory; I don't know how likely such a scenario would be.  But Krugman's merely a theoretician himself.  (And history has shown that policys put in place to clean up Wall Street in the 30's did cause finance stocks to rise in the long term.  That doesn't mean that those policies were "bad" just because bankers thrived in the long term.  Those regulations saved bankers from themselves, and helped them rather than "hurt" them.)

  •  Accounting Magic Is Unknown to Economists? (0+ / 0-)

    The FAT tax will rely on accounting that show profits or losses depending on the needs of the bosses.

    I guess the good news would be the hit on bonuses.  Probably need to increase salaries to make up the difference.

    Best,  Terry

Louise, JekyllnHyde, Alumbrados, paradox, Angie in WA State, hester, slinkerwink, Timaeus, glitterscale, Liberal Thinking, Detlef, Joan McCarter, mattman, emal, sacrelicious, genethefiend, RFK Lives, SallyCat, mataliandy, expatjourno, conchita, TracieLynn, Wee Mama, elveta, mrblifil, Aquarius40, JuliaAnn, Ignacio Magaloni, Nate Roberts, Cedwyn, Chrisfs, danthrax, Dallasdoc, gmb, Chirons apprentice, On The Bus, Catte Nappe, RenaRF, Pohjola, dkmich, zerelda, Curt Matlock, Deward Hastings, Marianne Benz, moggie12, rmx2630, environmentalist, Julie Gulden, Brecht, joanneleon, Massman, Bluesee, Qui Tacet Consentire Videtur, 3goldens, NoMoreLies, LarisaW, JanetT in MD, disrael, irate, PBen, Flint, run around, Hotspur18, panicbean, frandor55, RequestedUsername, Brooke In Seattle, Laurence Lewis, ratzo, eru, jimstaro, where4art, rosabw, Sandino, CWalter, coolbreeze, Alan Arizona, Snud, Jim P, reddbierd, SoulCatcher, MissInformation, Nightprowlkitty, Orinoco, tarheelblue, cybersaur, Mr Bojangles, BlueInARedState, profundo, Gorette, Yellow Canary, buhdydharma, mrobinson, fromer, srvaughn, greenearth, Lefty Coaster, DarkestHour, NearlyNormal, Preston S, el cid, ZombyWoof, boatsie, sceptical observer, profh, BB10, goinsouth, blueoregon, Bill O Rights, shaharazade, AmySmith, jjellin, PoxOnYou, crystal eyes, CharlieHipHop, Johnathan Ivan, andrewj54, seabos84, ccyd, bigchin, One Pissed Off Liberal, bear83, Noor B, DorothyT, wa ma, Loudoun County Dem, byDesign, 0wn, Outrider, daveygodigaditch, Jimdotz, Unbozo, bnasley, artisan, akdude6016, vbdietz, Uberbah, millwood, Moderation, owl06, pioneer111, JML9999, oxon, mconvente, condorcet, Mr SeeMore, SilverOz, zerone, Fossil, Involuntary Exile, billvb, ajr111240, geomoo, Seamus D, Gemina13, o the umanity, allie123, Mike Taylor, CIndyCasella, LaFeminista, SciMathGuy, Rhysling, cybrestrike, UkieOli, greengemini, divineorder, juca, An Affirming Flame, Dopeman, CanyonWren, Mislead, dark daze, DFutureIsNow, Partisan Progressive, BlueInRedCincy, JesseCW, Daily Activist, John Shade, delillo2000, obiterdictum, bfitzinAR, kevinpdx, histOries Marko, jfromga, ohmyheck, futureliveshere, Words In Action, ZAP210, brentbent, coppercelt, The Jester, amk for obama, fidellio, melpomene1, calichristi, cordgrass, ctlrick, Egalitare, Earth Ling, Funkygal, Betty Pinson, roystah, elengul, MsGrin, alamacTHC, science nerd, slice, Colorado is the Shiznit, allenjo, jardin32, La Gitane, BlueJessamine, QuestionAuthority, thethinveil, lovespaper, marleycat, Wolf10, dle2GA, slooterdam, KVoimakas, tardis10, jgnyc, MuskokaGord, MinistryOfTruth, randomfacts, Sunspots, RLMiller, Regina in a Sears Kit House, PrometheusUnbound, Azazello, livingthedream, James Robinson, wolfie1818, greenbastard, delmardougster, jadethews, J Brunner Fan

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site