We cannot salvage a growth-based economy

from opednews.com

By Rick Staggenborg, MD (about the author) 

The top 1% captured 93% of the income gains in the first year of recovery. The bottom 90% of Americans lost $127, the bottom 99% of Americans gained $80, and the top 1% gained $105,637.
(image by Voluntary Amputation for Flickr)

As any literate citizen knows, the global economic crisis was brought about by the unregulated banksters who run Wall Street. Few realize that in the aftermath of the near-collapse of the system of international credit, they have expanded a shadow economy that has been financed by taxpayer dollars. The total value of the derivative and commodities markets is now many times the world GDP. This system amounts to a pyramid scheme. If unchallenged, it is destined to leave the rich more powerful than ever and the 99% destitute. 

The growth-based debt economy is not capable of recovering, yet mainstream economists cannot seem to fathom why.

Classically trained economists are beginning to see that prospects for economic recovery in the post-bailout era are dismal to nonexistent. Although increasingly recognizing the consequences of crony capitalism, they must learn to question their most basic assumptions to understand the problem and its solution. The answer to the continuing global economic crisis requires a complete restructuring of the economy based on principles of environmentally sustainable local production and trade, worker-owned enterprises and nationalization of monetary policy.

It isn't hard to understand why the economic system cannot recover as currently structured. As jobs are shipped offshore, those being created in the US are mostly low-paying. This limits the flow of wealth upon which growth is based.  

With declining demand, corporations are unwilling to invest in the real (productive) economy in the US. Economists who blamed the consumer for incurring excessive debt failed to recognize that the banksters had created an economy that depended on ever-expanding credit. 

Driven to consume ever more by systematic brainwashing, Americans amassed huge debt under the assumption that the economy and especially housing prices would continue to grow forever. Sadly, they have not learned the lessons that the collapse of the Ponzi scheme that fueled the economy in boom times have to offer. There will be no return to prosperity as long as we continue to equate economic health to growth in GDP.

The architects of this system walked away with billions while homeowners, taxpayers and those dependent on the social safety net paid the price. Austerity for the 99% is hailed as the answer because it is the only way to maintain the privileges of the 1%.  In the face of austerity, the growth-based economy is destined to fail. Continuing to amass government debt to promote war over natural resources, sustain a system of corporate welfare and provide even fewer protections to a population devastated by economic collapse consigns future generations to debt slavery. We can only escape this fate by transitioning to an economy that places human needs over corporate greed.

Capitalism itself depends on the assumption of endless growth. When the wealth and power of the economic elite depends on its ability to extract wealth from workers, production has to increase exponentially. This requires markets for the goods produced. If jobs are not available and workers cannot provide this demand, there is nothing to sustain them. Even is the global elite were to suddenly realize that wealth distribution were in their best interest, it could not save a growth-based economy that is ultimately limited by the planet's finite resources. When the trillions of dollars in debt that the derivatives and commodities market begin to be called in as investments in the globalized economy fail, the collapse of 2008 will seem like a mild recession in comparison.

There is a solution. The United States is the driver of the global economy. If Americans want to create a world economy that is just to all, they will have to create a true representative democracy. That is the only way that the People can prevent human civilization from collapsing when the resources upon which it is based become inaccessible to the masses. It is up to us to unite to challenge the corruption that has made us the pawns of the global banking elite. We can start by making a campaign issue of support for a constitutional amendment that would establish that money is not speech and that corporations are not people with constitutional rights.

If we have any concern for our children we will put aside partisan differences and together, take back America for the People.

Readers interested in learning more about the consequences of endless growth and the principles of a steady-state economy are encouraged to read Enough is Enough  by Rob Dietz and Dan O'Neill.

SEC Insider Indicts Agency as Soft on Wall Street: Four Blunt Points

from businessweek

By Paul M. Barrett April 08, 2014

Here’s the best story you’ll read today out of Wall Street or Washington: Robert Schmidt’s Bloomberg News scoop on a retiring Securities and Exchange Commission trial attorney who used his farewell speech to scold his former bosses for being “tentative and fearful” when it came to going after top executives in the wake of the 2008 financial crisis. Let’s break it down into four blunt points.

1. Thank goodness for former officials who speaks their minds. And the shoe-leather reporters who catch up with them. More from my friend Rob Schmidt:

James Kidney, who joined the SEC in 1986 and retired this month, offered the critique [of agency timidity] in a speech at his goodbye party. His remarks hit home with many in the crowd of SEC lawyers and alumni thanks to a part of his résumé not publicly known: He had campaigned internally to bring charges against more executives in the agency’s 2010 case against Goldman Sachs Group (GS) The SEC has become “an agency that polices the broken windows on the street level and rarely goes to the penthouse floors,” Kidney said, according to a copy of his remarks obtained by Bloomberg News. “On the rare occasions when enforcement does go to the penthouse, good manners are paramount. Tough enforcement, risky enforcement, is subject to extensive negotiation and weakening.”

2. Kidney confirmed what revolving-door critics have been saying.Namely, that SEC higher-ups are more focused on getting lucrative jobs after their government service than on bringing difficult cases. Kidney, 66, has worked at the agency since 1986, except for a four-year stint at Aetna. He earned his law degree at night from George Washington University while working as a journalist. “I have had bosses, and bosses of my bosses, whose names we all know, who made little secret that they were here to punch their ticket,” he said. Maybe if “we the people,” acting through our representatives on Capitol Hill, paid talented civil servants wages commensurate with their value to society, more people such as Kidney would devote their careers to protecting the public good. Maybe they’d even rise through the ranks to set tougher policies.

3. Don’t get fooled by the statistics. Kidney made a critical point about the numbers the enforcement agencies throw around. The SEC, he said, should focus on the quality of its actions, rather than on filing as many as possible to promote its record to lawmakers and the media. “It is a cancer,” Kidney said of the agency’s misleading use of numbers. SEC penalties, he added, have become “at most a tollbooth on the bankster turnpike.”

4. And yet, Kidney didn’t address the cry to throw more bankers in jail. Let’s remember that the main complaint from critics of government enforcement is not so much that the SEC failed to extract additional civil settlements, but that criminal prosecutors didn’t try to put Wall Street big shots behind bars. Kidney appropriately limited his comments to his area of expertise: civil suits seeking money damages in which the government does not have to prove culpability “beyond a reasonable doubt.” That exceedingly high criminal standard of proof is, to put it plainly, really, really difficult to overcome in situations in which bankers argue they were, at worst, greedy or incompetent or both. The hard truth is that it’s well nigh impossible to convince a jury that a guy in a pinstripe suit who plays shell games with credit-default swaps (and what are those again?) is akin to a bank robber caught on surveillance pointing a gun at a teller.

Still and all, Kidney deserves a serious hearing and our thanks. More ambitious SEC civil suits would accomplish some measure of added deterrence, whether or not any “banksters” go to prison.

Barrett is an assistant managing editor and senior writer at Bloomberg Businessweek. His new book, Law of the Jungle, which tells the story of the Chevron oil pollution case in Ecuador, will be published by Crown in September 2014. His most recent book is GLOCK: The Rise of America’s Gun.

The SEC is Scared of Wall Street

from  ringoffireradio.com

Posted on April 9, 2014 by Joshua De Leon •

James Kidney was an attorney with the Securities and Exchange Commission who had been with the agency since 1986. He retired this month, but upon his leaving he remarked that the SEC was too “tentative and fearful” to bring Wall Street leaders to justice after the 2008 economic crisis.

“The SEC possesses an inherent responsibility to ensure that financial regulations are upheld and obeyed,” said Peter Mougey, securities attorney with Levin, Papantonio P.A. “Any amount of slack in regulation stands a good chance of being exploited by Wall Street bankers.”

The SEC has become “an agency that polices the broken windows on the street level and rarely goes to the penthouse floors,” said Kidney. “On the rare occasions when enforcement does go to the penthouse, good manners are paramount. Tough enforcement, risky enforcement, is subject to extensive negotiation and weakening.”

Kidney wanted to bring charges against top Wall Street executives during the 2010 case against Goldman Sachs. However, according to Kidney, higher-ups in the SEC cared more about promotions and increased pay salaries after leaving their government jobs. Kidney said the SEC’s penalties have become “at most a tollbooth on the bankster turnpike.” This statement is true because when banksters get popped for malfeasance, they pay a fine and continue about their business.

The SEC’s lack of pursuit has drawn harsh criticism from financial reform advocates, and rightfully so. Wall Street banksters are being given too much leeway for crimes that should be punishable with jail time and asset forfeiture.

The Goldman Sachs case was high-profile and the bank agreed to pay a $550 million settlement for misleading investors by packaging and selling collateralized debt obligations connected to subprime mortgages, but the punishments handed to similar banks were light-handed and these big fish were essentially thrown back into the pond.  

JP Morgan paid a record $13 billion for a scam similar to that of Goldman Sachs, and, even then, no one was prosecuted or thrown in jail. Do these fines bother the big banks at all? Not in the slightest. JP Morgan will recoup most of that expense within two years, and, also, big banks create accounts specifically for fines and legal woes so any settlements won’t hurt their profits.

Sen. Elizabeth Warren (D-Mass.) has criticized the SEC for its spineless treatment of financial misbehavior. She wants the Wall Street CEOs thrown in jail for damaging the economy, crippling the housing market, and killing millions of jobs. The economy has improved, indeed, but only in the macro sense and that improvement is concentrated among the one percent. Everyone else has stagnated or gotten worse.

Everything has remained the same in the realm of financial-regulation enforcement since the 1980s, and until the SEC can grow a pair and actually drop the hammer on Wall Street banksters, it always will.

“They [SEC leaders] mouthed serious regard for the mission of the commission, but their actions were tentative and fearful in many instances,” said Kidney.

Josh is a writer and researcher with Ring of Fire. Follow him on Twitter @dnJdeli.

Inflation Hysteria And The Revenge Of Central Banksters

from marketoracle.co.uk

Apr 06, 2014 - 04:27 PM GMT

By: Andrew_McKillop

Christine Lagarde Wants “Low-Flation”

Lagarde has been rightly ridiculed and accused of “jabberwockery”, for example by David Stockman who also says that what she calls plain good sense, is “pure Keynesian claptrap”. She opines that one of her sincerest and enduring concerns for the global economy moving forward, is that “low-flation” especially in the Eurozone countries will or might suppress growth and jobs. So of course she is rooting for more Fed-style and ECB-style and BOJ-style, and BOE-style monetary easing. Print and forget!

To be sure, Christine Lagarde was a highly rated French swimming champion although never quite making Olympics-grade, before she turned to swimming in New Economic claptrap, but she first needs to show she has serious and real knowledge of what inflation means. What is it? Do you find it in those near-Olympic swimming pools, what the French call a “serpent des mers” or mystic animals that jump out of nowhere at your throat?

This in fact is what Lagarde is flirting with, but in blissful ignorance, of course. Maybe somebody at the IMF building can clue her in. We hope.

No Such Thing as Low-Flation

There is no such thing. There is either inflation or deflation. The supposed “third option” of totally unchanging prices and currency values, is impossible. Another useful thing for Lagarde to learn, is that both inflation and deflation have full stops. They not only can end, but do end. She might be tempted by sci-fi New Age dreaming, that “low-flation” can be like cosmic expansion or inflation of the Universe, also called Universal expansion, but she will regret that.

For 100% sure and certain Lagarde and most anybody else in the glove puppet “economic expert” business will always shift the storyline to prices – only. Currency values do not count. Forget about the price or exchange value of gold. That is all old hat. Keynesian jabberwockery is the only show in town, and deliberately sets out to make it impossible for around of 95% of persons to know what is being discussed. That 95% probably includes would-be but failed Olympics-grade swimmers

Typically, the inflation = prices storyline goes like this. We have regression models of the economy in which we have  mysterious and arbitrarily-defined things called demand aggregates each with their own price indices, sometimes inflated (only a joke) to become The CPI. This is the ultimate serpent des mers, is politically dangerous, and has to be kept sweet and low. Over 30 years of New Age Neoliberal tinkering and claptrap has made that quest a traditional cottage industry for elite-friendly and employable economists. For Lagarde, and her bankster clique headed by Yellen, Draghi, Kuroda, Carney the sweet and low officially manufactured CPI is a ticket to ride the serpent des mers and turn the fiat money printing presses.

Almost any major briefing by these central bank governors and presidents will include hand-outs for the press showing that the CPI is no longer sweet and low – but threatened by contraction, negative growth, deflation, call it what you like. Even better, the briefings can include hand-outs showing rather impressive price growths for the 95% unwashed masses, among certain aggregates, some sectors and price bands but for sure and certain this is never, ever anything to do with the value (or “purchasing power”) of money going down. That is unthinkable, and Goldman Sachs, JPM, Barclays, BofA, Soc Gen and the others have been instructed to talk down the price of gold anytime they can, to show that paper money rules, OK..

Using the crackpot logic of Lagarde & Co, if the value of money only grows, prices can only fall, so one of their missions is to make the value of money fall and get “Low-Flation”. Being schizophrenic, they also want gold prices to be sweet and low, or very low, to maintain or increase fiat paper currency values. Do not blame me for elite madness, because I say throw them all to the sea serpents. Land ones will also do.

If She Has Time

Lagarde could do a little backtracking on a simple question with no answers. What is inflation? My own argument is that inflation – which was not even a defined economic concept until the late 19th century – was and is a heroic battle,  by and between elites, to see what breaks first. Also I contend that the first real “modernish type” of inflation was monetary inflation. The value of money fell, so prices rose. But if there was more money around, circulating, this didnt matter too much to the 95%, while it mattered an awful lot to the 5% and the 1% of them who think they own and control everything. Called central bankers, today.

She could try the early history of the Bank of England, in fact a New Age tale with Governors who usually lasted only a few months, and quite often “disappeared' by assisted suicide, hanging or flight over the horizon (with no need for a Malaysian jetliner). They had let The Money deflate, to use a handy term, and they paid for that political error.

Keynesian jabberwockery makes a point of shifting the storyline to things like inflation making the “opportunity cost” of holding money too high, because of “uncertainty about future inflation”, and a loss of interest in investment and savings, and even the hoarding of goods due to “fear of inflation”. Deflation in pure theory only, should be the exact opposite, so Lagarde & Co should be delighted the Eurozone is in deflation. But they aren't. We do not need to keep jabberwocking with the “pushing on a string” thesis or “monetary trap” thesis, that is money supply growth causing further deflation, because Lagarde & Co have got that and the bottom line, for them, is that if gold prices can be held low, printing money and handing it to the playtime elite operating the stock market casino can keep going.

Keynesian one-liners on inflation, deflation and money are certainly not New Age, but 1930s style New Age and can be contradicted and discredited by so many simple, basic observations that the Austrian School has a permanent field day exploding those one-liners. One key bone of contention is the subject of new or enlarged, or decreased, forms of credit and money used by Milton Friedman in his own soothsaying on the “velocity of circulation” of money, but among the schools of thought on inflation-deflation we often find the concept of the economy's output capacity – with Keynesians such as Christine Lagarde's IMF and the central bankers always claiming there is lurking under-capacity and under-output in the economy. When or if “low-flation” appears on the horizon, everything will be fine, because their reading of the tea leaves is that  rising prices, of course moderately rising prices, show the economy is humming.

New Age Economics

Why rising prices should show the economy isn't producing enough, or just enough, and this is hunky dory is more elite schizophrenia, mainly because to them moderate inflation means The Money is safe, although moderately menaced, therefore needing elite care and attention. The disconnect with what's called the real economy is as we guessed, massive and permanent. Taking simply and only the official CPI's of G7 countries, these are in fact indicators of global economic change, not price indexes.

As we know, if you pack the CPI with cellphones, flat screen TVs, PCs, cars, shoes, clothes, bicycles, solar collectors, ocean freight rates, iron ore and plenty of other things (even natural gas in the US!) you will get deflation in a big way. To be sure, not too many consumers directly buy iron ore or a trip on a Greek supertanker, but constantly growing swaths of world manufacturing are in overcapacity.  Prices are falling because the real economy is overperforming, there is too much stuff around.

Cellphones, whether smart or stupid, 4G or not, are an ultra-classic example. World output capacity is probably now more than 1.6 billion per year, meaning the entire world population of human beings could have at least 1 cellphone, each, in 4 years. Why shouldn't their prices deflate? To be sure Apple is doing its heroic best to pump up the complexity and the “apps” it packs and sells to persons with more money than sense in its overpriced output - to keep it overpriced - but world cellphones are in structural oversupply.

Also completely outside the crazy world of elite inflation hysteria – panicking when there is no inflation and panicking when there is real inflation – increasing money supply should drive down prices. To be sure this is ceteris paribus-mutatis mutandis and all the rest, and a nice theme for PhD's grappling for a job in the IMF, but the history of inflation shows that monetary supply shocks, historically, resulted in grave decreases in the value of Official Money, already fiat or near-fiat, while prices of the stuff people buy only increased in that Official Money. They did not increase in Alternative Money terms.

The first major documented example of this process dates to the 1560s and the premonitory run-up to the Bank of England's foundation, specifically to defend the Official Money. Counterfeiters were beheaded and their heads placed on wooden spikes atop the Royal Mints of Olde England. As a warning to others. But consumer prices in Alternate Money – gold from the Caribbean and Latin America brought ashore by romantic pirates – declined. In that heroic era when the word “inflation” didn't exist, but inflation did, Kondratieff claimed that continental Europe received about 50 000 tons of gold in the 50-year span of 1550-1600. Official Money phased down and out, in a hyperinflation bubble for Official Money. Not much later on the English had Oliver Cromwell, a kind of English Saddam Hussein or Napoleon Bonaparte..  The Germans got Adolf Hitler from a later variant of the same story.

Too Complicated for Lagarde

The storyline is surely too complicated for her and her ilk. Maybe she should go back to swimming? Deflation in the Eurozone or anywhere else is among other things, a signal that Official Money is losing its charm, its utility. Official money is therefore self-depreciating, but due to its stranglehold on exchange, and due to custom and habits, people go on using it. The Revenge of the Bankers is of course sure and certain, and Lagarde knows all about it. They will pump up the jam and Quantitatively Ease until they get hyperinflation. Then they will disappear from the scene, maybe replaced by Adolf Hitler or Darth Vader.

The political solution is the only one possible. Lagarde and the IMF, and the central banksters have to go. They have proven, time after time, that they can only act with schizophrenic irresponsibility, bringing down The Fire from Heaven (or conjuring up the serpents from the sea) that they always claimed they were preventing.

Their claim that “low-flation” is urgently necessary is poppycock. They have totally misread the massive changes in output capacity of the global economy, and are drugged with semi-mythical Keynesian one-liners and comfort theory, but Keynesianism is 1930s New Age economics. Time has moved on to Darth Vader's Skywalker economics and time is out for Lagarde and her ilk. Keep your antique sea serpents for yourself!

By Andrew McKillop

Contact: xtran9@gmail.com

Former chief policy analyst, Division A Policy, DG XVII Energy, European Commission. Andrew McKillop Biographic Highlights

Co-author 'The Doomsday Machine', Palgrave Macmillan USA, 2012

Is the stock market really rigged in favor of high frequency traders?

from theweek.com

A look at Michael Lewis' new book, Flash Boys: A Wall Street Revolt

By John Aziz | April 3, 2014



Since the advent of computerized trading, markets have gotten faster, and faster, and faster. (John Moore/Getty Images)

I

n 24 hours, I plowed through Michael Lewis' new blockbuster Flash Boys: A Wall Street Revolt, a book about the huge changes that have occurred in financial markets in the last three decades. It's compelling reading.

Since 1987's Black Monday, markets have become increasingly computerized. Change was gradual at first, but in the last decade it has become rapid. Today, computerized markets trade faster than ever before — faster, literally, than the blink of an eye. Trading is not done just by humans mashing buttons, but also by algorithms, which are programmed to take specific actions based on conditions in the markets.

These changes began to really accelerate in 2005, when at the behest of the Securities and Exchange Commission — responding to public protests about cronyism — public exchanges went from being utilities owned by their members, to corporations run for profit. Once competition was introduced, an array of new exchanges sprung up. By early 2008, there were 13 different public exchanges. And these exchanges are not auditorium-style spaces teeming with shouting traders a la the New York Stock Exchange. They're servers in data centers, most of them clustered in northern New Jersey. Today, there are upwards of 40 public exchanges, as well as a variety of opaque private exchanges — such as Goldman Sachs' Sigma X and Citigroup's CitiMatch — that are known as dark pools.

New companies specializing in high-frequency trading stepped into this brave new world. Traders have long engaged in what is known as arbitrage — making a profit from price differences of the same asset in different markets. If a stock is going for $10 a share in one market and $9.99 in another, then high-frequency traders can buy for $9.99 and sell for $10. That doesn't sound like a huge profit, but over millions of trades, it adds up. And as markets have become faster, the arbitrage has sped up, too.

In fact, it's become so fast that the high-frequency traders since around 2007 have been front-running the market. Say that an investor wants to buy 1,000 shares in Microsoft for $41.37 a share, its current quoted price. He places an order using his online brokerage. The broker sends out a signal to all the exchanges that the investor wants to buy. The time it takes for the data to be transmitted to the different exchanges varies. As soon as the buy signal hits an exchange, this alerts high frequency traders, who are generally operating out of or near the same data centers as the exchanges themselves. If the first exchange cannot fill the order for Microsoft stock, then high-frequency traders will buy up everything offered in the market at $41.37 a share. This means that the order at $41.37 may remain unfilled, and if the investor wants to fill the order, he will have to place a new order for a higher amount, perhaps $41.38, $41.39, or $41.40 per share. Again, this doesn't sound like much, but over billions of trades it can add up to hundreds of millions, even billions, of dollars.

And speed is king. The spoils for high-speed arbitrageurs are distributed overwhelmingly to those with the fastest technology. The longer data has to travel via fiber optic cable, the slower the trade. That means spending millions of dollars building cable lines from Chicago (where futures markets are located) to the East Coast (where most of the high-frequency traders are based). It means paying out the nose to be located in the same data centers as exchanges. And it means — according to Lewis and his industry sources — paying dark pools and exchanges for privileged access to early information on market actions, a claim that financial regulators will certainly want to investigate.

Lewis worries that investors are getting ripped off. But worse, he argues that the cut that high-frequency traders are taking is a drag on the economy. "[The money collected] by financial intermediaries...is a tax on investment, paid for by the economy," he writes, "and the more that productive enterprise must pay for capital, the less productive enterprise there will be."

He's right to worry about all this. It may be inevitable that financial intermediaries will charge for the service of matching productive businesses with investors, but front-running the market and driving up the price is not really providing a service. It's jumping in and grabbing a parasitic cut.

On the other hand, defenders of high-frequency trading say it has brought down the costs. They point to the fact that spreads — the difference between the prices offered to buyers and sellers at any one time — have fallen dramatically since the advent of high-frequency trading, from 1/16th of a percentage point to just 1/100th of a percentage point. This lowers transaction costs for regular investors.

That makes it difficult to agree with Lewis' assertion — which he repeated earlier this week on 60 Minutes — that the stock market is rigged in favor of high-frequency traders, allegations that have already sparked separate FBI and SEC investigations. High-frequency traders have definitely made a massive profit taking advantage of a new, complex system that few have understood properly. But that's not the same thing as rigging the market. Computerization has very much been a double-edged sword for investors. Even with high-frequency traders taking their cut, investors are benefiting from transaction costs that are lower than those of the pre-computerization era.

For as long as there have been stock markets, investors have been looking for an edge. Computerization may have speeded that up, but it's not fundamentally different from earlier times. Financier Nathan Rothschild, for example, made huge profits in 1815, in the days of horses and carrier pigeons, after his informational network gave him an early insight — apparently before even the British government itself knew — that Britain had won the Battle of Waterloo. Getting public information as early as possible and trading on it is not cheating per se.

Lewis is right that stock ownership in the U.S. has fallen considerably since the advent of high-frequency trading. Before 2007, 67 percent of U.S. households owned stocks; by the end of 2013, only 52 percent did. But is the complexity of the financial system the cause? Maybe, but there are probably other factors. Trust in banks and financial institutions evaporated after the 2008 financial crisis, for example. Polls revealed that in the wake of the financial crisis Americans were more interested in other kinds of assets, including gold and real estate. (However, as the stock market has recovered, interest in stocks as an investment has revived somewhat.)

But it's probably true that for markets to win back trust, change needs to happen. Lewis' book tells the story of Brad Katsuyama's IEX dark pool exchange, which seeks to reduce the advantage that high-frequency traders enjoy. Among other methods, IEX spools miles of extra fiber-optic cable between the servers and exchanges. So far, IEX has received the support of some brokerages, including Goldman Sachs and Katsuyama's former employer the Royal Bank of Canada.

Yet even if the techniques pioneered at IEX become the norm, and even if the SEC moves toregulate high-frequency traders more strongly, that isn't necessarily going to stop arbitrageurs and ensure a perfectly level playing field. Even radical proposals — like slowing the market down to trade at only one-second intervals — are likely to be ineffective. Arbitrageurs will simply find a new loophole to exploit. As Lewis himself acknowledges, "[E]very systemic market injustice arose from some loophole in a regulation created to correct some prior injustice."

Anyway, it's possible that the high-frequency trading boom is already over. Profits have beenfalling steadily in the few years since the technique became popular, from almost $5 billion in 2009, to just over $1 billion in 2012. If the profits that can be squeezed out of high speed arbitrage are falling — partly because the tools that investors and brokerages can use to protect themselves are strengthening — then maybe the game is already up.

In the wake of McCutcheon, take back America with a Pledge to Amend

from opednews.com

 

Corporations are not people
(image by UnitedForThePeopleGA)

Oregon voters will likely have a clear choice in the US Senate race in November. Unless Senator Merkley's Republican challenger is willing to endorse a constitutional amendment to overturn Citizens United and the more recent McCutcheon decision overturning aggregate limits on donations to candidates and parties, it will be obvious which candidate is running to serve the interests of We the People rather than corporations and the obscenely rich. 

Merkley is a cosponsor of an amendment proposed by Bernie Sanders that would ban all corporate and union contributions and allow limits on individual campaign expenditures.

 In District 4, Congressman DeFazio has done him one better. He has cosponsored an equivalent resolution in the House along with another that would abolish corporate personhood, the doctrine that holds that corporations have constitutional rights. That is a key element in a whole series of Supreme Court decisions based on the fallacy that money is speech. This means that those who can afford it are able to speak loud enough to drown out the voices of the People and those who represent them. 

Ending corporate constitutional rights is the second condition that an amendment should satisfy to most effectively deal with the problem of corporate control of the US government.

For those who are fuzzy on the details of the 2010 Citizens United decision, it reversed a century of law in removing all limits on "independent" expenditures by unions and for-profit corporations to influence political campaigns. 

McCutcheon takes the idea that money is speech to its logical extreme in allowing the wealthiest Americans to spend unlimited amounts in direct contributions to parties and to give the personal maximum to as many candidates running for federal office as they choose. That means that not only is the presidency for sale to the highest bidder (as we saw recently when Sheldon Adelson invited prospective Republican candidates to apply for his support), but Congress is up for grabs as well.

The only way to counter an activist Supreme Court that is denying Americans the right to control corruption in campaign finance is to pass a constitutional amendment such as the one that Merkley supports. It is up to voters to see that this issue receives the attention it deserves during the campaign season. The only way that Merkley will succeed in his efforts to rein in the power of the banksters, fight free trade agreements that violate national sovereignty of accomplish any of the other objectives that Americans demand is for us to support him in his efforts to pass an amendment. The Oregon Democracy Coalition (ODC) is working to help make support for an amendment a campaign issue.

 If you are a resident of the United States, you can help.

ODC takes the position that the first step in dealing with corruption in government is to put into the constitution the principles that money is not speech and that corporations (including unions) do not have constitutional rights, including the "right" to put money from their general treasuries into elections. They are organizing around the state to get people to show up for campaign appearances and other events featuring candidates to ask them if they will support a constitutional amendment of this type. 

They encourage people to start groups in their home towns to fill these forums with people willing to put this question to them in public settings.

ODC also encourages individuals to write letters to the editor and to talk to local political, social justice, church and other groups about the issue. It is helpful to get organizations to endorse such coalitions and their efforts. 

This is the social justice issue of our times. It is ironic that the idea of corporations has its origin in the 14th Amendment, which was intended to ensure the rights of former slaves. As interpreted by the Supreme Court, it would mean that average Americans have essentially become slaves of corporate interests who control Congress.

 It is impossible to have a representative democracy unless voters have the opportunity to hear from candidates whose campaigns are not being financed be deep-pocketed special interest groups. Failing to deal with this issue would mean the failure of the democratic experiment in government.

Charles Keating And The Lessons Of The S&L Crisis

from talkradionews.com

There’s very little difference between what Keating did 25 years ago and what Wall Street banksters did in the lead-up to the 2008 financial meltdown

Charles H. Keating Jr., one of the most notorious fraudsters in American history, died Monday at the age of 90.  Although his status as financial criminal number one has slipped a bit in the wake of the 2008 financial crisis, Keating was for many years the guy many Americans thought off when they thought off bankster rip-off artists, and his story reminds us that historically governments have had a very specific response to bad behavior by banks and banksters.

From FDR to Reagan, from Sweden to Iceland, when banks have broken the rules or even engaged in dangerous behavior that might technically be legal but crashes an economy, the investors in those banks have lost their investments, the banks themselves have been taken over by the government (at least for a short time) and the banksters that caused the crisis have gone to jail.

Case and point: After Reagan deregulated the savings and loans in the early 1980s, Charles Keating made millions of dollars through risky investments that ripped off the people who invested in two of the companies he ran, American Continental Corporation and Lincoln Savings and Loan.  Tens of thousands of everyday Americans, many of them senior citizens, lost millions of dollars on the junk bonds Keating sold to them.

Keating was protected from federal regulators for a while by a group of senators, including John McCain, but by 1989 the gig was up. American Continental went bankrupt and Lincoln Continental was seized by the government. This was the largest bank failure of the savings and loan (S&L) crisis of the 1980s and 1990s.

Ethically and logistically, there’s very little difference between what Keating did 25 years ago during the savings and loans debacle and what Wall Street banksters did in the lead-up to the 2008 financial meltdown. Like the people in charge of Bear Sterns, Lehman Brothers, and Bank of America, Keating took advantage of loose regulations to make risky and eventually unsustainable investments. And like the people in charge of Bear Sterns, Lehman Brothers, and Bank of America, Keating passed the costs of those risky investments onto everyday investors.

There’s one very big difference between what Keating did during the savings and loans crisis and what the Wall Street banksters did during the 2000s, however: Keating went to jail for his crimes. In 1993, he was convicted on 73 counts of bankruptcy and wire fraud and sentenced to 12 years in prison. Keating ended up serving only 4 ½ years of that sentence, but those 4 ½ years in prison are still longer than any prison time served by any head of any big bank responsible for the 2008 financial crisis.

And Keating wasn’t the only bankster who went to prison for his role in the S&L debacle. During the late 1980s and early 1990s, the Reagan and Bush administrations prosecuted over 1,000 different individuals for their role in the crisis, and of those prosecutions, 839 resulted in convictions. Since the 2008 crisis, however, the government hasn’t done anything like what it did after the savings and loans crisis. In fact, it’s really done nothing at all. No major player  in the great mortgage bubble of the 2000’s has gone to jail for their crimes.

As the stock market continues to rise and the big banks get bigger, the shadow of the savings and loans crisis looms larger every day. By throwing the savings and loans banksters in jail, the government sent a message: if you rip people off, you will pay for it. And it gave that message extra weight by stripping the banksters of their assets, nationalizing those assets, and then reselling them to the public using a special agency called the Resolution Trust Corporation.

In the wake of the savings and loans meltdown, the government did exactly what governments should do after banking crisis. Since almost all banking crises have, to some degree, something to do with fraud, it treated the S&L crisis as a criminal matter and punished those responsible for the crimes.

The 2008 financial crisis was the savings and loans crisis on steroids, and the government should have done the same to the people in charge of Lehman Brothers and Bank of America as it did to Charles Keating and the S&L banksters. It should have sent them to jail and stripped them of their assets.

But it didn’t, and now the big banks are bigger than ever and comfortable in the knowledge that not only are they too big to fail, they’re also too big to jail. Let’s hope the death of Charles Keating reminds the government to take action now and jail the banksters before yet another financial crisis decimates the economy. After all, it’s what Reagan would have done.