Elites Hiding at Least $20 TRILLION. Seriously.

Per the Guardian,

James Henry, former chief economist at consultancy McKinsey and an expert on tax havens, has compiled the most detailed estimates yet of the size of the offshore economy in a new report . . . . He shows that at least £13tn – perhaps up to £20tn – has leaked out of scores of countries into secretive jurisdictions such as Switzerland and the Cayman Islands with the help of private banks.

* * * * *
"The problem here is that the assets of these countries are held by a small number of wealthy individuals while the debts are shouldered by the ordinary people of these countries through their governments," the report says.

The sheer size of the cash pile sitting out of reach of tax authorities is so great that it suggests standard measures of inequality radically underestimate the true gap between rich and poor. According to Henry's calculations, £6.3tn of assets is owned by only 92,000 people, or 0.001% of the world's population – a tiny class of the mega-rich who have more in common with each other than those at the bottom of the income scale in their own societies.

"These estimates reveal a staggering failure: inequality is much, much worse than official statistics show, but politicians are still relying on trickle-down to transfer wealth to poorer people," said John Christensen of the Tax Justice Network.

Note, that's 13 to 20 trillion British pounds, which per my computer's converter = more than 20 to 31 trillion US dollars.

P.S.: Based on current US census estimates, that's nearly $64,000 for every man, woman, and child in the US. And that's just the offshored stuff; you also have to add in whatever they haven't managed to hide.

The LIBOR Scandal Explained

Or, yet another way in which the rich have been looting you – legible version at Dangerous Minds.

From a comment at Naked Capitalism: "Banking is the only . . . sport where the referees don’t enforce the rules and the fans get severely injured when the players cheat."

UPDATE: The NYT now reports, "Congress intensified its focus on the interest-rate rigging scandal on Thursday, as Timothy F. Geithner, the Treasury secretary, vowed that authorities would forcefully pursue criminal investigations into some of the world's biggest banks" – awesome! Now, who's going to investigate Timmeh?

Another interesting story: per a report at naked capitalism, LIBOR manipulation was commonly recognized in London by 1991 – when Bob Diamond was in charge of interest rate trading at Morgan Stanley London, "which means his claim that he found out about Libor manipulation at Barclays mere weeks before his Treasury Select testimony was bollocks." One commenter makes an excellent point:

I think this may be a more significant data point than it appears at first glance to us jaded cynics. What it says is that not only are our institutions now utterly corrupt, but that they have been getting that way for a long time. This suggests that the problem is not likely to be random, accidental, or personality driven, but rather that it stems from deep structural causes. That is important because it suggests that that is also where the solutions must be found.

FURTHER UPDATE: Salon has a good article explaining how the LIBOR-rigging affected some of us: "Six Ways Big Banks Screwed Grandma – Grandma's finances will almost certainly never recover from the LIBOR scandal that's rocking the world."

Helpful Image (Restore Glass-Steagall)

(Click on the image for a more legible version.)

UPDATE: From the MetroWest Daily News, quoting but without linking to The Nation:

Why do the losses of Jamie Dimon at JPMorgan Chase matter? The Federal Reserve allowed investment banks to convert to bank holding companies, now owning commercial banks, which are FDIC insured.

William Greider writes in the Nation magazine, “JPMorgan Chase parks all of its vast derivatives holdings in its commercial bank subsidiary, which means the taxpayer is on the hook for these losses since commercial banks are FDIC insured.” Greider further states, “In the event of a collapse, the banks can use its deposit base to pay off the derivatives, while leaving the Federal Deposit Insurance Corporation to reimburse depositors if their money runs out. JPMorgan has contracts totaling $72 trillion and 99 percent of them are booked at its FDIC- insured bank.”

Continuing — “We are “insuring” other big boys of banking in the same way. Citigroup has nearly all of its $53 trillion in derivatives in its FDIC-insured bank; Goldman Sachs has $44 trillion parked at and FDIC-backed institution. After Bank of America purchased Merrill Lynch, BoA began transferring the securities firm’s derivatives to the FDIC-insured bank, which now holds $47 trillion in contracts.” And the Ryan Republicans want to invest Social Security with these same bankers?

The Results of Austerity

How states that have expanded spending have done as compared to states that have cut back. More at The Atlantic.

The Results of "Trickle Down"

"1) Corporate profit margins just hit an all-time high. Companies are making more per dollar of sales than they ever have before. . . .

"2) Fewer Americans are working than at any time in the past three decades. . . .

"3) Wages as a percent of the economy are at an all-time low. This is both cause and effect. One reason companies are so profitable is that they're paying employees less than they ever have as a share of GDP. And that, in turn, is one reason the economy is so weak: those "wages" are other companies' revenue."

More great charts and other info at Business Insider. And if you like this, you might like this video of Huey Long in 1934.

Why the Rich Oppose Unions

Shell Rig Malfunctions at Posh Party (the Yes Lab Strikes Again)

This was a send-off for Shell's arctic rigs at the Seattle Space Needle. The actual rigs were visible outside the window. Incredibly, there was a malfunction of the model rig that was supposed to pour drinks for guests.

Per HuffPo,

The device which sprayed Rainey's face was a model of Shell's drill rig, the Kulluk, which is set to soon depart Seattle for the Arctic. The Kulluk was built-in 1983 by Mitsui, the same company that, two decades later, built the ill-fated Deepwater Horizon. . . .

* * * * *
[T]he Yes Lab [also] sent out a press release on Shell's behalf, threatening [legal action against the activists and] attacking . . . the activists' brand-new ArcticReady.com website [, which looks like a Shell site, and] which includes a social media ad generator and a dangerously addictive children's video game called Angry Bergs. The fake Shell release generated additional media coverage.

Earlier this year, Shell obtained a legal injunction stopping any Greenpeace activist from coming within 1km of any Shell vessel. To thank the company, Greenpeace teamed up with the Yes Lab to plan a promotional advertising campaign for Shell's Arctic drilling efforts, which Shell prefers to keep quiet. Besides the ill-fated ceremony and the website, the campaign includes a number of other elements that will shadow Shell's summer Arctic destruction campaign.

(More at HuffPo and YouTube. For more Yes Men or Yes Lab actions, click on those labels below.)

Corporate Media's Campaign Coverage ATM

From an interview of Bob Mcchesney, Prof. of Communications at U. of Illinois, at the Real News Network, by Paul Jay:

JAY: So your piece to a large extent is about political advertising, partly as it has been affected by the Supreme Court's Citizens United decision, which allows practically unlimited corporate spending on television advertising, and . . . . you got this crazy system whereby the entities that benefit most from this money in politics are the . . . mass major news organizations that get all this and billions of dollars of paid advertising, and then they report in what their – supposed to be their journalism on – mostly on poll results, poll results affected by TV buys which they're benefiting from. . . .

MCCHESNEY: . . . . You know, most democracies in the world have nothing like the United States in terms of this huge amount of money that gets spent by television ads, most of which are attacking the other candidates, not promoting your own candidate. And the reason for that is that it's driven in the United States by commercial broadcasters, the commercial television stations. And really we're talking about less than a dozen companies that own the vast majority of the stations that participate in selling TV ads. They are making a killing from this cash-drenched system. Literally between 18 and 25 percent of all the revenues of a commercial TV station this year will come from selling TV political candidate ads. And, you know, this is a profit center for them that's beyond belief. . . .

So you have – the commercial broadcasters are to campaign finance reform what the National Rifle Association is to bans on assault weapons. They are the number-one lobby to promote massive amounts of money in politics, because our electoral system in America has basically converted into a system where billionaires and corporations give tons of money to politicians, who then give most of that to commercial media to buy inane ads. And that's really what we have for our system. And the beneficiaries immediately of this are the commercial broadcasters [crosstalk]

* * * * *
It is – you know, and I think the point that's got to be understood by your viewers is that the companies that get these monopoly broadcast licenses – you have television stations or radio stations, cable systems – they get these monopoly privileges at no charge from the government in exchange for doing something in the public interest. In every major definition that's ever been given of what the public interest requirements ought to be of commercial broadcasters, number one on the list is always that they should do outstanding campaign coverage above and beyond what they would do if they were just out to make money, that basically that's where they put all their emphasis, to draw people into public life as voters, as citizens, to understand the candidates and the issues. And what we've seen is just the opposite. In the last 20 years, as the percentage of revenues going to commercial broadcast stations has gone from around 2 percent 20 years ago on average to 20 percent on average today, if not more. We've seen the amount of journalism covering campaigns on commercial television plummet. Lots of races get no coverage anymore. It's not any better, really, in newspapers. And what coverage that does remain is appalling. . . . It's like going over polls. It's sort of like reviewing whether an advertising attack ad is successful at manipulating people, not, you know, discussing how inane it is in the first place.

(Emphasis supplied.) More at the link above. (Infographic from the U. of Minnesota via The Angry Bureaucrat; click on the image for a larger version.)

That's a lot of cash going into a "hopelessly unproductive works."

How JPMorgan Chase Has Proved We Need to Break Up Big Banks & Bring Back Glass-Steagall

From Robert Reich at Nation of Change:

The bets were “poorly executed” and “poorly monitored,” said [Jamie] Dimon [current CEO of JPMorgan Chase and former Dir. of the Board of the Federal Reserve], a result of “many errors, “sloppiness,” and “bad judgment.” But not to worry. “We will admit it, we will fix it and move on.” Move on? Word on the Street is that J.P. Morgan’s exposure is so large that it can’t dump these bad bets without affecting the market and losing even more money. And given its mammoth size and interlinked connections with every other financial institution, anything that shakes J.P. Morgan is likely to rock the rest of the Street.

Ever since the start of the banking crisis in 2008, Dimon has been arguing that more government regulation of Wall Street is unnecessary. Last year he vehemently and loudly opposed the so-called Volcker rule, itself a watered-down version of the old Glass-Steagall Act that used to separate commercial from investment banking before it was repealed in 1999, saying it would unnecessarily impinge on derivative trading (the lucrative practice of making bets on bets) and hedging (using some bets to offset the risks of other bets).

Dimon argued that the financial system could be trusted; that the near-meltdown of 2008 was a perfect storm that would never happen again. Since then, J.P. Morgan’s lobbyists and lawyers have done everything in their power to eviscerate the Volcker rule — creating exceptions, exemptions, and loopholes that effectively allow any big bank to go on doing most of the derivative trading it was doing before the near-meltdown. And now — only a few years after the banking crisis that forced American taxpayers to bail out the Street, caused home values to plunge by more than 30 percent and pushed millions of homeowners underwater, threatened or diminished the savings of millions more, and sent the entire American economy hurtling into the worst downturn since the Great Depression — J.P. Morgan Chase recapitulates the whole debacle with the same kind of errors, sloppiness, bad judgment, excessively risky trades poorly-executed and poorly-monitored, that caused the crisis in the first place.

In light of all this, Jamie Dimon’s promise that J.P. Morgan will “fix it and move on” is not reassuring. The losses here had been mounting for at least six weeks, according to Morgan. Where was the new transparency that’s supposed to allow regulators to catch these things before they get out of hand? . . . . Let’s hope Morgan’s losses don’t turn into another crisis of confidence and they don’t spread to the rest of the financial sector. But let’s also stop hoping Wall Street will mend itself. What just happened at J.P. Morgan – along with its leader’s cavalier dismissal followed by lame reassurance – reveals how fragile and opaque the banking system continues to be, why Glass-Steagall must be resurrected, and why the Dallas Fed’s recent recommendation that Wall Street’s giant banks be broken up should be heeded.

More at the link.

The Yes Lab Strikes Again, in Dallas

Re- the Trans-Pacific Partnership "trade" agreement:



From the Yes Lab's press release:

DALLAS PARTY ENDS BADLY FOR U.S. TRADE REPS AND FEDERAL AGENTS
Dozens of rogue "delegates" disrupt Trans-Pacific Partnership gala with "award," "mic check," mass toilet paper replacement

* * * * *
Two dozen rogue "delegates" disrupted the corporate-sponsored welcome gala for the high-stakes Trans-Pacific Partnership (TPP) trade negotiations yesterday with a fake award ceremony and "mic check." Other activists, meanwhile, replaced hundreds of rolls of toilet paper (TP) throughout the conference venue with more informative versions, and projected a message on the venue's facade.

The first action began when a smartly-dressed man approached the podium immediately after the gala's keynote speech by Ron Kirk, U.S. Trade Representative and former mayor of Dallas. The man (local puppeteer David Goodwin) introduced himself as "Git Haversall," president of the "Texas Corporate Power Partnership," and announced he was giving Kirk and other U.S. trade negotiators the "2012 Corporate Power Tool Award," which "Haversall's" partner held aloft.

The crowd of negotiators and corporate representatives applauded, and "Haversall" continued: "I'd like to personally thank the negotiators for their relentless efforts. The TPP agreement is shaping up to be a fantastic way for us to maximize profits, regardless of what the public of this nation—or any other nation—thinks is right."

At that point, the host of the reception took the microphone back and announced that the evening's formal programming had concluded. But Mr. Haversall confidently re-took the microphone and warmly invited Kirk to accept the award.

Kirk moved towards the stage, but federal agents blocked his path to protect him from further embarrassment. At that point, a dozen well-dressed "delegates" (local activists, some from Occupy Dallas) broke into ecstatic dance and chanted "TPP! TPP! TPP!" for several minutes until Dallas police arrived.

Fifteen minutes later, another dozen interlopers from Occupy Dallas interrupted the reception with a spirited "mic-check." Outside, activists projected a message on the hotel, and throughout the night, delegates discovered that hundreds of rolls of custom toilet paper had been installed in the conference venue.

The activists disrupted the gala to protest the hijacking of trade negotiations by an extreme pro-corporate agenda. "The public and the media are locked out of these meetings," said Kristi Lara from Occupy Dallas, one of the infiltrators. "We can't let U.S. trade officials get away with secretly limiting Internet freedoms, restricting financial regulation, extending medicine patents, and giving corporations other a whole host of other powers allowing them to quash the rights of people and democracies, for example by offshoring jobs in ever new ways. Trade officials know the public won't stand for this, which is why they try to keep their work secret—and that's why we had to crash their party."

There is mounting criticism of the U.S. role in pushing the negotiations forward in secrecy, despite the public's overwhelming disagreement with TPP goals. ("Buy American" procurement preferences are supported by over 85% of Americans, but U.S. trade negotiators are preparing to accept a ban on such preferences. Two weeks ago, 69 members of Congress sent a letter to President Obama asking him not to accept that ban.)

Many are calling the Obama administration duplicitous: while the administration publicly hypes a plan to revitalize American manufacturing and create jobs in the U.S., U.S. trade officials push for new "investor rights" that would make it easier for American companies to lay off domestic workers and open plants overseas.

"The TPP has been branded as a trade 'negotiation' by its corporate proponents, but in reality it's a place for big business to get its way behind closed doors," said Pete Rokicki of Occupy Dallas. "This anti-democratic maneuver can be stopped if the public gets active—just look at the movement that killed the ill-advised SOPA (Stop Online Piracy Act) law a few months ago. That's why Obama's trade officials lock the public, the press and even members of Congress from the trade negotiation process."

"We're really happy to know that even in their most private moments, US trade reps are reminded that a vast majority of the public stands opposed to corporate-friendly, closed-door trade deals like the TPP," said Sean Dagohoy from the Yes Lab, who assisted in the actions.

Here's a summary of the provisions of the TPP; more at Public Citizen Global Trade Watch.

UPDATE: F.w.i.w., some people are starting to notice that maybe there's a problem with allowing 600 megacorps to write our treaties while everyone else including Congress is kept in the dark.

Occupy the Regulatory / Investigatory System

From the Washington Post:

Occupy Wall Street has moved. Its new address: 60 Wall Street.

There, inside a soaring public atrium, dreadlocked teens trade shoulder massages near the evening meditation circle. A young man holds up a sign: “You’re a Federal Reserve $lave.” The dinnertime crowd buzzes over free plates of rice and beans while listening to an improvised, profanity-laden operetta about the evils of agro-giant Monsanto. But amid the din, there’s a small group holding a quieter, and far wonkier, conversation.

* * * * *
After much discussion, the group agreed that the Volcker Rule’s earlier definition of clearing agencies, which banks use for exchanging futures contracts, was “clear and tough and good,” but decided that it was worth double-checking section 17(a) of questions that the Commodity Futures Trading Commission raised about it.

It may sound like technical gobbledygook to an outsider, and, indeed, a few newcomers to Occupy the SEC seem befuddled by the group’s headlong dive into the finer distinctions between proprietary trading and market-making. But the meeting is a glimpse into one of the most surprising iterations of the free-wheeling, anarchic movement: fighting the man through the tedious and Byzantine regulatory process.

More at the WaPo link above.

From truthout:

“How can we help? How can we help? How can we help?”

It’s not your average protest slogan, but it’s what the group chanted today as it marched from Zuccotti Park to 120 Broadway, which houses the office of New York State Attorney General Eric Schneiderman. The AG chairs President Obama’s task force to investigate the routine fraud and abuse that characterized Wall Street during the Bush-era inflation of the housing bubble and precipitated the 2008 financial crash and subsequent recession. According to a Schneiderman-penned Daily News Op-Ed, though, the task force has only been furnished with “[m]ore than 50 attorneys,” whereas the Enron investigation alone required over 100, and the Savings and Loan crisis took over 1,000. Wall Street occupiers today, under the banner The May Fourth Committee for Equal Justice Under the Law, offered to fill that void.

* * * * *
Alexis Goldstein, a former net developer and business analyst at three large Wall Street firms, echoed that sentiment. “In January,” she told the crown. “President Obama appointed a financial fraud task force co-chaired by five people to investigate mortgage fraud. He touted it proudly in the State of the Union. But since the task force was created, we’ve seen zero prosecutions brought against the banks who committed securities fraud, conducted robo-signing, and illegally foreclosed on homes. We’ve seen no one thrown in jail following the biggest financial crisis since the Great Depression.”

Austin Guest brought a calculator, a pocket protector and news clippings. “I’m good at investigating,” he told me. “Frankly, it doesn’t seem very difficult. People are on record committing fraud. I’m very capable of using Google and a printer.”

More at the truthout link above.

NYC Art Fairs 2012, and "It's the Political Economy, Stupid"

Pulse may have decided, wisely, that the field's gotten too crowded; they've moved to May.

Within four days (Mar. 3 - 11), viewers were offered the Armory Show, Scope, VOLTA, the Moving Image Fair, the Independent Fair, the Dependent Fair, the Fountain Art Fair, the Spring Break fair, and the Brucennial; not to mention the Whitney Biennial, the New Museum Triennial and plenty of other shows, most of which could only be viewed Wed. thru Sun., i.e. mostly the same days the fairs were open, and mostly only during roughly the same hours. Given that most exhibitions include a lot more video and other time-based work than they used to, any hope of seeing and doing justice to all the work shown has become even more remote.

I saw (in no particular order): the Armory Show – just the contemporary Pier and some of the Armory Film programs; the Moving Image Fair; the Independent; the Dependent; Spring Break; the Brucennial; the It's the Political Economy, Stupid show at the Austrian Cultural Forum; the Whitney Biennial; and the New Museum Triennial.

I shot lots of photos, which I'm in the process of culling and putting online. The first up are from It's the Political Economy, Stupid, curated by Gregory Sholette and Oliver Ressler. The exhibition borrows its title from Slavoj Žižek's twist on Pres. Clinton's old campaign slogan. (Image above from The Bull Laid Bear (2012), video, 24 min., Zanny Begg & Oliver Ressler, from this show.)

As you may know, I've followed the economic situation for a while and am concerned that economic reform is essential but that few non-experts understand the problems well enough to know what should be done about them. But the problems aren't all that hard to understand; it's just that the perpetrators have done a terrific job obfuscating them. (My own grasp happens to be a little better than average, since I happened to write a paper on Glass-Steagall back when it was being repealed, and I've also had experience with commercial loans that were rolled into the kind of securitized mortgage pools blamed by some for the economic meltdown.)

The works in Political Economy were really brilliant, using various documentary and imaginative strategies to greatly further this discussion. More info at the Austrian Cultural Forum; and there's an excellent review of the show on the art:21 blog.

UPDATE: Posts on the other shows I saw will be available here.

Wikileaks to Reveal: Private Spy Network Paid Gov't Officials et Al. for Profitable Secrets, Etc.

Per a twitter source, Wikileaks will begin publication tomorrow of some 5 million emails from the files of an entity called Stratfor:

Government and diplomatic sources from around the world give Stratfor advance knowledge of global politics and events in exchange for money. The Global Intelligence Files expose how Stratfor has recruited a global network of informants who are paid via Swiss banks accounts and pre-paid credit cards. Stratfor has a mix of covert and overt informants, which includes government employees, embassy staff and journalists around the world.

The material shows how a private intelligence agency works, and how they target individuals for their corporate and government clients. For example, Stratfor monitored and analysed the online activities of Bhopal activists, including the "Yes Men", for the US chemical giant Dow Chemical. The activists seek redress for the 1984 Dow Chemical/Union Carbide gas disaster in Bhopal, India. The disaster led to thousands of deaths, injuries in more than half a million people, and lasting environmental damage.

Per Gizmodo,

Wikileaks says that the emails also reveal the creation of a parallel organization called StratCap. Apparently, this organization would use Stratfor's network of informants to make money in financial markets. Wikileaks claims that the emails show how then-Goldman Sachs Managing Director Shea Morenz and Stratfor CEO George Friedman put StratCap in motion in 2009.

* * * * *
Stratfor CEO has resigned following this clusterfuck. It seems the company's security hasn't been fixed yet, because Anonymous has captured and published his resignation email.

[Emphasis above and below in this post is supplied.] More at the links above.

A press release from the Yes Men notes,

Many of the Bhopal-related emails . . . reveal concern that . . . the Bhopal issue might be expanded into an effective systemic critique of corporate rule, and speculate at length about why this hasn't yet happened – providing a fascinating window onto what at least some corporate types fear most from activists.

"[Bhopal activists] have made a slight nod toward expanded activity, but never followed through on it—the idea of 'other Bhopals' that were the fault of Dow or others," mused Joseph de Feo, who is listed in one online source as a "Briefer" for Stratfor.

"Maybe the Yes Men were the pinnacle. They made an argument in their way on their terms—that this is a corporate problem and a part of the a [sic] larger whole," wrote Kathleen Morson, Stratfor's Director of Policy Analysis.

"With less than a month to go [until the 25th anniversary], you'd think that the major players – especially Amnesty – would have branched out from Bhopal to make a broader set of issues. I don't see any evidence of it," wrote Bart Mongoven, Stratfor's Vice President, in November 2004. . . .

Mongoven even speculates on coordination between various activist campaigns that had nothing to do with each other. "The Chevron campaign [in Ecuador] is remarkably similar [to the Dow campaign] in its unrealistic demand. Is it a follow up or an admission that the first thrust failed? Am I missing a node of activity or a major campaign that is to come? Has the Dow campaign been more successful than I think?" It's almost as if Mongoven assumes the two campaigns were directed from the same central activist headquarters.

Just as Wall Street has at times let slip their fear of the Occupy Wall Street movement, these leaks seem to show that corporate power is most afraid of whatever reveals "the larger whole" and "broader issues," i.e. whatever brings systemic criminal behavior to light. "Systemic critique could lead to policy changes that would challenge corporate power and profits in a really major way," noted Joseph Huff-Hannon, recently-promoted Director of Policy Analysis for the Yes Lab.

(You can see a Yes Man impersonating a Dow Chemical spokesman in an interview with an unwitting BBC here, accepting full responsibility for the 1984 Bhopal disaster.)

Punk Economics

Here's a good explanation of the European debt crisis that's also applicable in the US:



A few points that might warrant further explanation:

First, there are good reasons why it's both more fair and more constructive to require lenders and derivatives speculators to eat losses arising from bad loans, rather than passing them on to innocent taxpayers. A basic concept in the law as it's evolved through the centuries is that, when a transaction or other course of conduct results in harm, if the person who was the primary cause (in this case, the borrower) lacks the financial means to make things right, the next person who should be held liable is the person who was in a position to figure out that there could be a problem but who, rather than investigating the situation and preventing the bad transaction, facilitated it and profited from it. In the present situation, this next person would be the banks that made and securitized the bad loans and especially those that created and sold pools of those loans and who also placed bets that those loans would go bad.

If the bankers are required to eat the losses on the loans and the bets they made on them, they'll be motivated not to make the same mistakes or commit the same frauds again. If, on the other hand, innocent taxpayers are required to pay for bankers' mistakes and frauds, the bankers are given every incentive to do it again. So it's both more fair and more constructive to let the bankers eat the losses they should have known would result, rather than imposing them on innocent taxpayers.

I personally also have no problem requiring borrowers who took out loans that went bad to eat their losses, although I do believe we should have a decent social safety net, so they don't end up on the streets.

Instead, we're doing the exact opposite of what would be most fair and constructive – we're bailing out the bankers and some of the borrowers, at the expense of the people who took no part in any of the foolishness or fraud.

Second, the reason excessive austerity won't help is that it's demand that drives economic recoveries. Even proponents of austerity occasionally slip up and admit this; and it's consistent with actual, historical experience in the US – the fact that the economy has tended to grow and deficits have tended to shrink during Democratic administrations, which tend to favor social safety nets and protections for workers, while the economy has tended to shrink and deficits have tended to grow during Republican administrations, whose policies have favored the 1%.

Giving money to people who already have more than they can spend does not stimulate the economy because they don't spend it. More particularly, rich people know it makes no sense to use the money to create inventory when so few others can afford to buy it, so they know it makes no sense to hire workers to create more inventory. When you give money to rich people during a recession, you encourage not job-creation but money-hoarding, which helps no one other than the rich. Thus, despite – or rather, because of – the fact that so much of the U.S. stimulus has gone to banks and big corps., employment has risen very little, while cash reserves held by those businesses have swollen dramatically. Time and again, "trickle-down" has been proven not to work, and that's why conservatives have abandoned the phrase; but they're still pushing the policy.

(It's ironic, too, that in order to believe that trickle-down could work, you have to embrace something its proponents emphatically reject: namely, you'd have to assume it makes sense for the rich to create products regardless of whether the market demands them, even at the risk that they're products no one would ever want, rather than letting the market – i.e., in this case, the rest of us – decide. I.e., you have to embrace centralized planning, only it's planning by the oligarchs rather than by an elected government.)

As a result of the way we've handled things under the undue influence of the rich, vast sums have been sucked out of the productive economy and pocketed by the oligarchs.

Basically, economics can be boiled down to one metaphor: you generally can't eat a carrot unless someone cultivates one. To the extent we allow the 1% to loot our carrots without doing anything to help grow them, we starve. The same is true vis à vis deadbeats among the 99%; but the 1% have perfected the means to loot our carrots faster and on a vaster scale. And we're not just practicing socialism for the rich; we're literally making crime pay, while impoverishing the people who have been the most economically productive . . . because the latter are the only people with any money left but who still lack (or who have as yet failed to effectively exercise) the political clout of the rich.

Finally, I agree with ar47yrr4p, who commented on the video, " . . . I think it might have been beneficial to mention Iceland and what happened there a couple years ago . . . you see they jailed their bankers and some of their MP's, threw out their government, [and] told the banks to shove it . . . and now Iceland is prospering." The same thing happened in the wake of the S&L debacle that resulted from Reagan's deregulation of those institutions: we liquidated the bad S&L's, prosecuted the fraudsters, and moved on.

Update Re- "Derivatives for Dummies" (What Every Legislator Should Know About How to Fix Our Economy, but Doesn't)

Remember my posts in May, 2009 (here and here) on "Derivatives for Dummies"?

Well, they're still relevant, because we still haven't done anything about regulating the derivatives that were the source of the biggest loss to our economy (no, it wasn't bad mortgages!) – so the problem has only gotten worse since 2008.

Charles Hugh Smith's oftwominds has an updated discussion, with a description of the current state of the looming, derivatives-driven disaster: "[a]ccording to the Bank of International Settlements, as of June, 2011 total over-the-counter derivatives contracts have an outstanding notional value of 707.57 trillion dollars, (32.4 trillion dollars in CDS’s alone). Where does this kind of money come from, and what does it refer to? We don’t really know, because over-the-counter derivatives are [still] not transparent or regulated." [Emphasis supplied.]

If you don't know what I'm talking about, read my original posts (links at the top of this post). I don't think I've seen a simpler explanation, and it's not nearly as hard to understand as they try to make it seem.

As the hippies used to say, "where the people lead, the leaders will follow."

The Larger Economic/Political Cycle

"Book V of Aristotle’s Politics describes the eternal transition of oligarchies making themselves into hereditary aristocracies – which end up being overthrown by tyrants or develop internal rivalries as some families decide to 'take the multitude into their camp' and usher in democracy, within which an oligarchy emerges once again, followed by aristocracy, democracy, and so on throughout history."

That's the first paragraph; it gets even better. E.g., after an incredibly succinct yet enlightening history of economic/political evolution through the ages, he explains,

Democracy involves subordinating financial dynamics to serve economic balance and growth – and taxing rentier income or keeping basic monopolies in the public domain. Untaxing or privatizing property income “frees” it to be pledged to the banks, to be capitalized into larger loans. Financed by debt leveraging, asset-price inflation increases rentier wealth while indebting the economy at large. The economy shrinks, falling into negative equity.

The financial sector has gained sufficient influence to use such emergencies as an opportunity to convince governments that that the economy will collapse they it do not “save the banks.” In practice this means consolidating their control over policy, which they use in ways that further polarize economies. The basic model is what occurred in ancient Rome, moving from democracy to oligarchy. In fact, giving priority to bankers and leaving economic planning to be dictated by the EU, ECB and IMF threatens to strip the nation-state of the power to coin or print money and levy taxes.

The resulting conflict is pitting financial interests against national self-determination. The idea of an independent central bank being “the hallmark of democracy” is a euphemism for relinquishing the most important policy decision – the ability to create money and credit – to the financial sector. Rather than leaving the policy choice to popular referendums, the rescue of banks organized by the EU and ECB now represents the largest category of rising national debt. The private bank debts taken onto government balance sheets in Ireland and Greece have been turned into taxpayer obligations. The same is true for America’s $13 trillion added since September 2008 (including $5.3 trillion in Fannie Mae and Freddie Mac bad mortgages taken onto the government’s balance sheet, and $2 trillion of Federal Reserve “cash-for-trash” swaps).

By Michael Hudson at Counterpunch; much more here.

The Eurozone Crisis

. . . is not about market "discipline," according to Dean Baker:

The people who gave us the eurozone crisis are working around the clock to redefine it in order to profit politically. Their editorials – run as news stories in media outlets everywhere – claim that the euro crisis is a story of profligate governments being reined in by the bond market. This is what is known in economics as a "lie". The eurozone crisis is most definitely not a story of countries with out of control spending getting their comeuppance in the bond market. Prior to the economic collapse in 2008, the only country that had a serious deficit problem was Greece. In the other countries now having trouble financing their debt, the debt to GDP ratio was stable or falling prior; Spain and Ireland were actually running budget surpluses and had debt to GDP ratios that were among the lowest in the OECD. . . . The crisis changed everything. It threw the whole continent into severe recession. This had the effect of causing deficits to explode, since tax revenues plummet when the economy contracts and payments for unemployment benefits and other transfer programmes soar. . . .

* * * * *
People should recognize this process for what it is: class war. The wealthy are using their control of the ECB to dismantle welfare state protections that enjoy enormous public support. This applies not only to government programs like public pensions and healthcare, but also to labour market regulations that protect workers against dismissal without cause. And of course, the longstanding foes of Social Security and Medicare in the US are anxious to twist the facts to use the eurozone crisis to help their class war agenda here. The claim that the countries in Europe are just coming to grips with the reality of modern financial markets is covering up for the class war being waged on workers across the globe. The assertion that this crisis is about market discipline should not appear in a serious newspaper, except on the right side of the opinion page.

More at Al Jazeera. (Dean Baker was among the first observers to identify a US housing bubble in 2002. He was a senior economist at the Economic Policy Institute and worked as a consultant for the World Bank and the Joint Economic Committee of the US Congress, and authored weekly commentaries for the NYT and WaPo.)

UPDATE: Other recent headlines of economic interest:

The Four Companies that Control the 147 Companies that Own Everything (re- the 147 cos., see here).

Iceland is Our Modern Utopia (rejecting a bailout for their banks, the citizens of Iceland took control of their now-resurgent economy).

Germany Builds 2X the Cars & Pays Workers 2X the Wages

Evidence of Market Manipulation in the Financial Crisis

Is Bank of America Holding the US Hostage? (referring to the fact that BoA just moved its derivatives business into its FDIC (i.e. taxpayer) -insured depositary).

Too Big to Stop: Why Big Banks Keep Getting Away with Breaking the Law (the industry has captured the regulators, so the fines are too small to deter).

Why the Economy Does Not Have to Be a Zero Sum Game

Who's saying it does? I've heard the claim attributed to Occupiers, but I personally haven't seen or heard any Occupiers make it.

In fact, I'd argue it's the 1% who've acted as if they believe the economy's a zero-sum game – and in so doing, have made it so.

Here are a couple of factors to think about (from my essay, Ten Things You Need to Know About the Infowar, which as far as I can tell no one has read, but they should, 'cuz as far as I can tell, it's still the case that hardly anyone else has put some of this stuff together):

8. Greater transparency maximizes efficiency and profits for a group as a whole, but individuals within the group profit most when they're not transparent while others in the group are.

There's a fascinating piece, "The Transparency Paradox," at colayer, regarding what I've called [Julian] Assange's theory of "the cost of tightened secrecy to organizational I.Q.," or as Volatility puts it more succinctly (more under Thing No. 9 below), his "secrecy tax." The author at colayer says studies show that, while greater transparency maximizes efficiency and profits for a group as a whole, individuals within the group profit most when they're not transparent while others in the group are.

General transparency means that everyone has more useful info to work with, and can work together efficiently to solve problems and create wealth for all; the group benefits from the "wisdom of the crowd," as James Surowiecki would put it, or as Assange might say, the computational power of the system as a whole is maximized.

(Image right from "The Transparency Paradox," at colayer.)

And, colayer points out, the internet and other technologies now available have greatly reduced the cost of transparency.

But when you're negotiating, you have an advantage if you know what cards the other parties are holding but they're ignorant of yours.

I'd like again to emphasize again the importance of the dimension of time, which Assange has also written about, in his 2006 essay for counterpunch, "Of Potholes and Foresight." To put part of his point in other words, a stitch in time often saves nine, and transparency makes that kind of foresight possible, which otherwise tends to give way to political pressures to allocate resources in more near-sighted ways. Recall Wikileaks' logo (an hourglass). Or as someone else said, making a related but somewhat different point, " . . . Napoleon . . . said that it wasn't necessary to completely suppress the news; it was sufficient to delay the news until it no longer mattered." (attributed by PRWatch to Martin A. Lee & Norman Solomon, Unreliable Sources: A Guide to Detecting Bias in News Media (New York: Lyle Stuart, 1991), P. xvii; I hope the internet adopts Assange's "scientific journalism" and becomes better sourced, as well as more complete, soon).

* * * * *

9. So long as a system as a whole remains mostly transparent, it's a more-than-zero-sum game; but where transparency has sufficiently deteriorated, the competition among "players" devolves into a race to see who can loot the most the fastest, even if valuable resources (including personnel) are wasted in the process.

Re- the big, "systems" picture, there's a great article at Volatility on "racketeering":

According to Joseph Tainter’s theory of imperial collapse, as societies become more complex, they must expend an ever greater portion of the energy they have available simply on maintaining their complexity. Although social and technological advances may achieve profitable returns for awhile, once a certain level of complexity is reached, diminishing returns set in. Eventually, at the late imperial stage, the complexity of the power structure, the military infrastructure, the bureaucracies, all the rents involved in maintaining an ever more bloated parasite class, their luxuries, the police state required to extract these rents and keep the productive people down, and the growing losses due to the response of the oppressed producers, everything from poor quality work to strikes to emigration or secession to rebellion, reaches a point where the system can only cannibalize itself and eventually collapse.

Julian Assange’s theory of the secrecy tax he’s trying to impose through Wikileaks is one example of these diminishing returns on imperial complexity. All the indications are that Wikileaks has been successful in this.

* * * * *
This is a welter of parasites battening on the same host. They’re in a zero sum game, not only against the people, but among themselves. Each has an interest in just exploiting the host, not killing it. But together they are killing it and therefore themselves. It’s clear none is capable of organizing or regulating the others. The federal government isn’t capable of doing it. If one big bank tried to do it, it would be subverted by the others. Each racket, from highest to lowest, is going to maximize its bloodsucking until there’s no blood left.

I would argue that "complexity" is often associated with a lack of transparency. And I would argue that size matters greatly, since it's difficult for a large system to function without some kind of internal division of responsibilities, and that means complexity. One of the main respects in which both size and complexity matter has to do with the fact that they make it more difficult to keep track of what different individuals or agencies within the organization are doing and hold them accountable. In particular, those at the top of the hierarchy become less accountable to those along the bottom.

Again, theoretically, so long as the system as a whole remains mostly transparent, it's not a zero-sum game (or at least, its productivity growth would be subject only to such physical limits as peak oil or climate change), because problem-solving and general efficiency are maximized by pervasive info-sharing, plus everyone's equally incentivized. The system as a whole is greater than any one individual within it or even than the sum of its "parts."

(Still from Falls (2008).)

In contrast, where transparency has sufficiently deteriorated, workers become less productive, both because of reduced info-sharing and because they're disincentivized – i.e., those not sharing info are still incentivized to continue to exploit the others, but once those who are being exploited figure out what's going on, they're discouraged from sharing and working hard just to enrich the exploiters. At this point, the competition devolves from who can produce the most of the best, into who can loot the most the fastest. If anything, non-transparency should tend to result in something even worse than a zero-sum game, since not only are opportunities for growth wasted, but even resources already in existence may be at least partially wasted, since each actor is motivated to grab what it can even at the cost of spoiling portions of the remainder for possible use by others.

(As Julian Assange has observed, corrupt governments (and, I expect, other organizations) are inevitably secretive because their efforts to exploit people and interfere with their liberties tend to inspire resistance – see "State and Terrorist Conspiracies" and "Conspiracy as Governance" (2006) and Assange's post on his site, IQ.org, "Sun 31 Dec 2006 : The non linear effects of leaks on unjust systems of governance".)

Prosecutions for Bank Fraud Fall

Study: 147 Transnational Corps. Control 40% of the World's Wealth

. . . held by 37 million companies and investors worldwide. "When the team further untangled the web of ownership, it found much of it tracked back to a "super-entity" of 147 even more tightly knit companies – all of their ownership was held by other members of the super-entity – that controlled 40 per cent of the total wealth in the network. "In effect, less than 1 per cent of the companies were able to control 40 per cent of the entire network," says Glattfelder. Most were financial institutions. The top 20 included Barclays Bank, JPMorgan Chase & Co, and The Goldman Sachs Group."

More, including the names of the top 50 corps., at NewScientist.