"It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way --- in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only." ~ A Tale of Two Cities (1859) by Charles Dickens (He could have written that today.)
In an earlier post I said that I would never post about the banks again, thinking that I had said all there was to say on the subject. But after seeing their latest earnings reports, I just couldn't help myself (go ahead, sue me). So today I'm going to rant about the banks again, among other things (as they are all inter-related).
"Let me issue and control a nation's money and I care not who makes its laws." ~ A quote that was attributed to Amsel Rothschild. In other words, "Because I own the people who make the laws, I am above all the laws." Whether or not the quote was actually ever muttered, it might have very well been the reality ever since 2,000 BC in the history of banking. And it's true today, just ask Eric Holder. Banking, maybe the world's second oldest profession (the oldest survives on one basic human instinct) is thoroughly encapsulated in another very basic and ancient human instinct, greed.
In the aftermath of the Great Recession, banks have been doing just fine...they always do well...they run their host governments and "sovereign" nations, they control the politics, and they essentially own most major businesses --- as well has most of the real estate. They have one economy, while the masses ("the little people") have quite a different one.
We have one set of laws and the bankers are above them all. We can go to jail for lying on a food stamp application, while the bankers can defraud the taxpayers of trillions of dollars and still remain "too big to jail". That's the global reality --- they have all the money; and anything and everyone can be bought or sold --- everything is for sale for the right price --- especially most of our politicians, just as they always have been, and just as they always will be. That's the other global reality (not only is business globalized, so is multi-national greed and corruption).
When we "bailed out the banks", the way I understood it (in the most simplest terms), the Fed (our central bank) digitally created almost $1 trillion out of thin air, then "loaned" it to the major banks ("to ease the credit market") at next to zero percent interest. Then the banks, in turn, bought up a ton of U.S. treasuries (fully backed the full faith of the U.S. government --- by us) and earned interest on those government securities, making untold "profits". Then after paying back the Fed, paid themselves huge bonuses. The Fed calls this "quantitative easing" --- to stimulate the economy when the basic economic theory of "supply-and-demand" breaks down. When the Fed Chairman Ben Bernanke hinted that he might reverse this policy, business leaders went into a panic. No more free money, now they would actually have to sell something to earn a profit! OMG!!!
But sell what and where, and to who? Should they enable more "emerging markets" to produce consumers with low-wages in foreign countries, or should they hire more part-time low-wage workers here in the U.S.?
Meanwhile, with robo-signing and other nefarious money-making schemes (like using debit cards to pay employees), the banks and other major corporations have continued to extract more untold wealth from us. For "show", a few banks were fined a nominal fine by the government (which had already been previously calculated into the banks' cost of doing business, should they ever be called out), and then the banks just carried on with "business as usual". Congress passed the 2010 Dodd-Frank bill, which was supposed to help curtail some of the banking abuses; but that has been under attack ever since by banking lobbyists --- with both the Democrats and the Republicans in Congress as their allies. (Pete and Repeat were in a boat. Pete fell out, who was left?)
The Huffington Post - Bank of America's Earnings Jump 70 Percent On Cost-Cutting: "Bank of America says its second-quarter profits soared, helped by higher earnings from investment banking and cost-cutting...the country's second-biggest bank has been slimming down and cutting jobs...a strategy to escape potential extra scrutiny from regulators... some of the job cuts were in servicing troubled mortgages, which is shrinking as the bank works through those loans." Bank of America is running a scam on the American people to dump $1 trillion of mortgage loans. The banks might not want mortgages any more, they might want more stocks in other companies, and maybe more foreign investment, and they most likely want to gamble again on derivatives (credit default swaps).
Check out these recent headlines from the Wall Street Journal:
- Goldman Sachs's Profit Doubles on Strong Trading Revenue
- HDFC Bank April-June Profit Increases 30%
- Citigroup's Profits Rises 42%
- Wells Fargo Profits Jumps 19%
- J.P. Morgan Profits Surge 31%
- Bank Makes Case for Higher Short-Term Rates
- Rising Mortgage Rates Take Banks on a New Ride
- Banks Cautious as Profits Rise
But the banks don't think they are earning enough, so they are trying to weaken Dodd-Frank too...
- Huffington Post: Elizabeth Warren Vows To Fight Legislation Weakening Dodd-Frank
- Bloomberg: Swap Regulators Face Congressional Push to Curb Dodd-Frank
- Think Progress: Congress Moves To Weaken Dodd-Frank Reforms That Officials Want Strengthened
- Rolling Stone: DejaVu on the Hill: Wall Street Lobbyists Roll Back Finance Reform, Again
- Mother Jones: Democrats Are Undermining Wall Street Reform, Too
- Washington Post: Is it already time to weaken Dodd-Frank?
As major institutional investors, just like private equity firms (e.g. Vanguard and Bain Capital) and hedge funds, banks are heavily invested in major corporations, and they too are doing just fine in this economy...
And the CEOs of all these major corporations are also doing very well...earning record salaries (again)
- New York Times: The median compensation of CEOs at 200 of the nation’s biggest public companies came in at $15.1 million last year, a 16 percent jump from 2011, according to Equilar, the executive compensation analysis firm. The pay packages — including salary, bonus, benefits, stock and option grants — ranged from $96.2 million at Oracle to $11.1 million at General Motors.
The tech industry has also been doing well, but they want more profits, and they will do it at the cost of American jobs with more H-1B visas. Congress (as usual) will cave in to the lobbyists and allow for this. They are also flooding the labor market with low-skilled labor with more H-2B visas, that not only displaces more American workers, but also costs the U.S. taxpayers millions of dollars. The current guestworker program we have is legalized slavery, (Read the study from the Southern Poverty Law Center in HTML or PDF). These guestworker programs have been undermining American worker's rights and depressing wages for years.
Meanwhile, if a job isn't being imported on a work visa or offshored to a low-wage country, (U.S. wages are already in a global race to the bottom), in the 99 percent's economy, most of the jobs being created in the aftermath of the Great Recession have been temporary and/or part-time and/or low-paying jobs without any healthcare insurance, forcing many Americans to use government entitlements, such as Medicaid and food stamps. Already companies like Walmart are costing taxpayers millions with these "wage subsidies". And rather than offer healthcare, employers are also cutting hours to avoid paying a mandate for ObamaCare (meanwhile Christy Walton is raking in $1.2 million a day in Walmart stock dividends).
Restaurants and bars have been adding an average of 50,000 jobs monthly since April—about double the rate from 2012. Overall, leisure and hospitality establishments hired more workers than any other industry in June, accounting for 75,000 of the 195,000 jobs added last month. A number of restaurants and other low-wage employers say they are increasing their staffs by hiring more part-time workers to reduce reliance on full-timers before the new healthcare law takes effect. Besides retail and fast-food chains, large grocery chains like Wegmans are also doing the same thing.
And speaking of government entitlements, many of the most desperate Americans may not have that means of survival either. Regarding food stamps in the farm bill: “We’ll get to that later.” That was the dismissive answer of Speaker John Boehner when he was asked if the House would restore the food stamp program it had just coldly ripped out of the farm bill. The Republicans will deal with the nation’s most important anti-hunger program “later" --- meaning, maybe they will think about the needs of 47 million people who can’t afford adequate food. But yet, Congress wants to give farm subsidies to the wealthy. Not to mention, many in Congress are also trying to push chained-CPI on Social Security for the disabled and elderly, while Congressional salaries aren't calculated in that way (and they get a government paycheck worth $174,000 a year, not to mention healthcare and all the other perks and allowances they receive).
Things have not gotten better for the 99% since the economy collapsed in 2008, it's only gotten worst. But for the top 1%, things couldn't be better. Wealth disparity and income inequality continues to escalate --- and now even suburban poverty is off the charts. Wealth divides us as much as race, ideology or religion ever has.
Members of Congress (both the Democrats and the Republicans) continue to ignore the will, wants and needs of THE PEOPLE, and continues to only represent the interests of the rich and powerful, such as the banks and major corporations (cough-cough "the job creators"). And then after many of our political "leaders" leaves office, they go to work for the very people that they previously did favors for (tit for tat) -- either as a lobbyist or as a corporate executive (just like Senator Phil Gramm, who pushed to deregulate the banks in 1999, and then went on to work for a major bank in 2002).
And when the banks want to do something that they know we will think is wrong, they will lobby Congress to pass a law (in advance, at the time, or in the aftermath), making what they do "legal". The bankers and other corporate CEOs, using their Congressional lap dogs, make the laws, and so therefore, are above them all. It's well known that most people can't get ultra-wealthy without doing something totally unethical, morally reprehensible, corruptly evil and/or extremely dishonest. (Read: New Study: The Wealthy are more Unethical) And bankers, CEOs and most members of Congress (who are supposed to regulate the bankers and CEOs) are all at the top of the list...both the Democrats and the Republicans.
We may have two economies (one for the very rich, and one for the rest of us), but even though we have two political parties, is there really much difference, other than the better of two evils?
Maybe after this post, I really won't have to mention bankers again, because why bother? Over the course of what's left in my lifetime, nothing will ever change.
“Wealth is like sea-water; the more the CEOs drink, the thirstier they become...” - (A shout out to Arthur Schopenhauer)
* Google Bud Meyers banks [or] bankers for my precious posts.