Senator Warren Grills Ben Bernanke On “Too Big To Fail.”

Oh Senator Warren… You are just… my favorite… Congressperson? No, that’s not enough… favorite person? No. That’s still too narrow. Maybe… my favorite mammal? I guess what I’m trying to say is … DID YOU EVER KNOOOOOW, THAT YOU’RE MY HERRRRRROOOOOOO!!!

thenewrepublic:

Noam Scheiber on how megabanks corrupt regulators.

“Is it even possible to regulate megabanks in any meaningful sense? After all, if the allegations are true, officials at the Bank of England weren’t sending these hints to Barclays because they took a shine to Barclays’ executives or because they stood to benefit personally if the bank’s share-price rose. They were doing it because they worried that a run on a bank as big as Barclays would destabilize the British economy and wanted to do everything possible to avoid that, even if it meant skirting the rules (again, according to the allegations). 

Which is to say, in order to get corruption in your banking system, you don’t need literal corruption of the Government Official X owns shares in Bank Y variety (or even Official X wants to work at Bank Y after he leaves government). You just need banks big enough so that the bureaucrats keeping an eye on them have nightmares about what happens if the banks fail.”

–– Noam Scheiber, “How Megabanks Corrupt Regulators, LIBOR Edition“ 

ataxiwardance: Corporatist privilege is so integrated into our global financial system that regulators simply understand their role as enablers of a recalcitrant hegemony, rather than policemen over an open market. The new regulatory capture! No bribes required.

This is really where Occupy and Anti-Statists intersect.

I might also recommend Matt Taibbi’s recent post on the LIBOR scandal.

Q

self-ownership asked:

And then you lose money through inflation. I'm not saying it can't be done I'm just saying it's stupid.

A

(RE: this)

I totally agree. Also, depending on your ethical stance towards what the government is doing with that free loan you’re giving them, it’s arguably immoral. 

Nonetheless, there are vast swaths of the working poor who are shut out of mainstream financial institutions. Further, behavioral economics suggests that “savings behavior” (regardless of interest / efficiency) is most effectively achieved when it is easy, automatic, and not cognitively burdensome. From this perspective, whatever this strategy of “structured withholdings” sacrifices in profit maximization / efficiency, it definitely compensates in other ways to make it a viable savings vehicle for the working poor.

It’s definitely not ideal but neither is being so poor that you’re shut out of easy, safe, and profitable savings mechanisms. As much as it pains me to say it, I can (at least) sympathize with the strategy.

truth-has-a-liberal-bias:

Hundreds of defense contractors that defrauded the U.S. military received more than $1 trillion in Pentagon contracts during the past decade, according to a Department of Defense report.

An amendment from Senator Bernie Sanders made the Defense Department own up to its dealings with crooked contractors. “The ugly truth is that virtually all of the major defense contractors in this country for years have been engaged in fraudulent behavior, while receiving hundreds of billions of dollars of taxpayer money. This has got to change.”

 
Read more »

(via reagan-was-a-horrible-president)

prostheticknowledge:

via alltheflowersshonelikeflames:

An Italian radio program’s story about Iceland’s on-going revolution is a stunning example of how little our media tells us about the rest of the world. Americans may remember that at the start of the 2008 financial crisis, Iceland literally went bankrupt.  The reasons were mentioned only in passing, and since then, this little-known member of the European Union fell back into oblivion.

As one European country after another fails or risks failing, imperiling the Euro, with repercussions for the entire world, the last thing the powers that be want is for Iceland to become an example. Here’s why:

Five years of a pure neo-liberal regime had made Iceland, (population 320 thousand, no army), one of the richest countries in the world. In 2003 all the country’s banks were privatized, and in an effort to attract foreign investors, they offered on-line banking whose minimal costs allowed them to offer relatively high rates of return. The accounts, called IceSave, attracted many English and Dutch small investors.  But as investments grew, so did the banks’ foreign debt.  In 2003 Iceland’s debt was equal to 200 times its GNP, but in 2007, it was 900 percent.  The 2008 world financial crisis was the coup de grace. The three main Icelandic banks, Landbanki, Kapthing and Glitnir, went belly up and were nationalized, while the Kroner lost 85% of its value with respect to the Euro.  At the end of the year Iceland declared bankruptcy…

What happened next was extraordinary. The belief that citizens had to pay for the mistakes of a financial monopoly, that an entire nation must be taxed to pay off private debts was shattered, transforming the relationship between citizens and their political institutions and eventually driving Iceland’s leaders to the side of their constituents. The Head of State, Olafur Ragnar Grimsson, refused to ratify the law that would have made Iceland’s citizens responsible for its bankers’ debts, and accepted calls for a referendum.

Of course the international community only increased the pressure on Iceland. Great Britain and Holland threatened dire reprisals that would isolate the country…

In the March 2010 referendum, 93% voted against repayment of the debt.  The IMF immediately froze its loan.  But the revolution (though not televised in the United States), would not be intimidated. With the support of a furious citizenry, the government launched civil and penal investigations into those responsible for the financial crisis. Interpol put out an international arrest warrant for the ex-president of Kaupthing, Sigurdur Einarsson, as the other bankers implicated in the crash fled the country.

But Icelanders didn’t stop there: they decided to draft a new constitution that would free the country from the exaggerated power of international finance and virtual money.

To write the new constitution, the people of Iceland elected twenty-five citizens from among 522 adults not belonging to any political party but recommended by at least thirty citizens. This document was not the work of a handful of politicians, but was written on the internet.

Refusing to bow to foreign interests, that small country stated loud and clear that the people are sovereign.

That’s why it is not in the news anymore.

Read Whole

“While U.S. Rep. Tom Graves was calling for fiscal responsibility in Washington his attorney was arguing in a lawsuit that a North Georgia bank is at fault for issuing Graves a $2.2 million loan the bank knew he could not repay.”

Attorney for Graves, Rogers: Bank is at fault  | ajc.com

Republicans, the Party of Personal Responsibility™! New motto: “it’s your fault for giving us money we don’t intend to pay back!”

(via shorterexcerpts)

(via shorterexcerpts)

Hedge Fund Gamblers Earn the Same In One Hour As a Middle-Class Household Makes In Over 47 Years 

We live in a very, very rich country. Yet we seem to be utterly consumed by a collective hysteria that we’re about to go broke. Historians are certain to look back at this period and wonder why the richest country in history consumed itself in a struggle over how many teachers to fire.

How rich are we?

Just take a look at the latest reports on what the top hedge fund managers haul in. In 2010 John Paulson led the list with a record $4.9 billion in personal earnings. That’s a whopping $2.4 million an HOUR. Here’s a factoid to make you wretch: It would take the median US household over 47 years to earn as much as Paulson pocketed in just 60 minutes. And, every hedge fund manager pays a lower tax rate than the average family.

The top 25 hedge fund earners took in $22.07 billion in 2010. Thanks to a generous tax loophole these billionaires will pay a top tax rate of 15 percent instead of 35 percent. Closing that loophole on just those 25 individuals – just 25 guys who wouldn’t miss a penny of it — would raise $4.4 billion, which is enough to rehire 126,000 laid-off teachers.