The Real Reason Why Wall Street Is Served, While Main Street Gets Served, Lookie Here (Harry Reid, interview)
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"Senators overwhelmingly rejected an important provision that would have required large financial firms to pay $50 billion upfront to create a so-called resolution fund, which would have been used to dismantle big banks at risk of failure. Instead, the bill now authorizes regulators to borrow the needed cash from the Treasury to be paid back later, mainly by selling off assets of the failed firm.
That’s better than a bailout, but taxpayers would still be in the line of defense against catastrophic collapse. In another setback, senators defeated an amendment that would have imposed caps on the size of big banks. That’s unfortunate, because reform should reduce banks to a less-threatening size.
The only way to prevent another catastrophe is with tough regulatory reform — tougher than what the Senate has so far produced. It is time for senators to stop listening to the lobbyists and start defending the interests of American taxpayers."
"So just to summarize here: the deficit is caused by tax cuts for the rich, an economic collapse caused by wealthy bankers which resulted in bailouts for those wealthy bankers plus massive pain for middle income and poor people, tax loopholes and corporate subsidies designed to help the wealthy, plus two wars and wasteful defense spending (much of which goes into the pockets of wealthy defense contractors). And the solution for the deficit hawks: target middle class and lower seniors for social security cuts, and put in a regressive tax that is a burden to low and middle income people.
Justice: American style.
Elites are selling this as a grand compromise: Conservatives get Social Security cuts, and liberals get a tax increase. Oh, boy. My question is: what do regular folks get out of the deal besides screwed?"
"At a 2005 workshop, a senior official in the U.S. government's Minerals Management Service raised concerns about ultra-deepwater drilling and included the bullet point, "Few or no regulations or standards." Within two years, Jim Grant left his post as chief of staff of the government's Gulf of Mexico region to take a job with BP PLC – one of the companies his former agency regulated in its oversight of offshore drilling.
Grant's change is one example of the revolving door between the Interior Department's MMS and the oil industry, which increasingly has the attention of Congress, the Obama administration and watchdog groups after the disastrous BP oil spill at an ultra-deepwater rig in the Gulf of Mexico.
The revolving door can undermine government regulation in several ways.
Former government workers who move to industries they once regulated can take advantage of personal relationships at their former agencies on behalf of their new companies. They can exploit loopholes in regulations based on their knowledge of the federal bureaucracy. And even before leaving, government employees hoping to one day land high-paying jobs with companies they regulate might be tempted to ease off."
"The financial services sector has hired 1,447 former government employees to do its bidding as lobbyists since the beginning of 2009, according to the latest report from the Center for Responsive Politics and Public Citizen.
Seventy-three of those lobbyists are former members of Congress -- four former Senate and House Majority Leaders and 17 former members of Senate and House banking committees. Sixty-six financial sector lobbyists formerly worked as banking staffers and 82 worked for members still serving on those committees."
"Finally, while Lincoln's derivative overhaul was largely destroyed, she did manage to preserve tough new rules regulating both food and gas derivatives. The resulting legislation will not keep Wall Street from gambling with our future, but it will make it much more difficult for financiers to jack up the prices of basic necessities in their quest for bigger bonuses. Back in the spring and summer of 2008, prices for food went through the roof as a result of heavy speculation in market for agricultural derivatives -- raw bets placed on the future price of corn, rice and other farm products. The resulting price increases forced consumers the world over to pay too much for food, and sparked outright starvation in regions that could not afford the increases.
The same thing happened with gasoline. Remember paying more than $4.00 a gallon? That had nothing to do with the fundamentals of supply and demand -- it was a direct result of wild speculation in the market for energy derivatives. The bill approved last night will end that abuse. As a result of Lincoln's efforts, two excesses that created real, tangible hardship for millions of people will be eliminated."
"They want us to cut back our pensions, cut our wages, sell off our resources and work harder, to pay back the money that was borrowed and handed to them."
So working people are paying for their overseas wars and what do we receive as just compensation gouging at the pump and the destruction of our environment, while they wax fat courtesy of tax payers' dollars.
"But an examination of the American tax code indicates that oil production is among the most heavily subsidized businesses, with tax breaks available at virtually every stage of the exploration and extraction process.
According to the most recent study by the Congressional Budget Office, released in 2005, capital investments like oil field leases and drilling equipment are taxed at an effective rate of 9 percent, significantly lower than the overall rate of 25 percent for businesses in general and lower than virtually any other industry.
And for many small and midsize oil companies, the tax on capital investments is so low that it is more than eliminated (http://www.treas.gov/press/releases/tg284.htm - broken link) by various credits. These companies’ returns on those investments are often higher after taxes than before."
"Bear in mind, there has been no NAFTA-like change in the US job situation to explain these new unemployment figures. The Great Recession, not outsourcing, took this last wave of jobs. Why can't we work to rebuild our economy on a firmer foundation and get many of those jobs back? The answer comes, in large part, because of fear of what Paul Krugman calls the "invisible bond vigilantes." The fear - or the stated fear - is these bogeymen will make sure that bond markets don't invest in the United States unless we slash government spending. (As Krugman points out, the "wisdom of the market" says they like our government's actions just fine, but that's apparently beside the point.)
Cui bono - who benefits? One can only speculate. If a government that has spent trillions to rescue the banking industry now spends billions to get people back to work, that could result in a drive for greater taxation of those who benefited from the bank bailout. The same with the new "bipartisan" assault on Social Security. Social Security's minor long-term financial problems could easily be fixed by raising the contribution levels. But that would render it politically immune to being used as a piggy bank for fixing tax-cut-driven deficits. They want to use it as a regressive tax on middle-class earnings instead. What's more, cuts to Social Security would drive more people to invest their savings with the very banks that created that deficit - a double win for Wall Street.
Banking interests are one reason there's been little support so far for economist Robert H. Frank's proposal - a program that restructures consumer debt through direct Federal loans to credit card holders buried by what they owe. Morally, it's no different than the bank bailout. The benefits for the overall economy (in increased spending) would be immediate and real. But the right people don't benefit so it hasn't become part of the Washington consensus."
"Nearly three in five baby boomers face a financial bust in retirement if the current economic climate persists, according to a study cited in a recent article by the Wall Street Journal.
"Early" baby boomers, aged 56 to 62, have a 47 percent chance of not having enough money to pay basic retirement costs, according to the Employee Benefit Research Institute. "Late" boomers, aged 46 to 55, as well as workers currently aged 29 to 45, have about a 45 percent chance of running short, the study noted.
Baby boomers, who make up around 78 million or 25 percent of the total spenders in the U.S., are among the Americans who have had their nest eggs slashed by 18 percent or an average of $171,000 per person since the end of 2007, according to the WSJ."
I wonder how long will it take for the hawks to advocate after a certain age, we feed Grandma to the wolves.
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