A Tibetan monk in Tawu, Kardze, Tibet self-immolated yesterday while calling for Tibetan independence and the Dalai Lama’s return. The monk’s name was Tsewang Norbu.
Since Tsewang Norbu’s death, there has been a massive influx of police and military forces into the town in Kardze where Norbu’s monastery is and surrounded it. Over 10,000 Tibetans have come to the monastery and are also surrounding it.
This is really a tinder box and the Chinese government’s reflexive show of force is not likely to reduce the chances of further conflict or, for that matter, more Tibetans reaching the breaking point and seeing self-immolation as the logical choice of protesting the brutal Chinese occupation.
Of all the state attorneys general in America, New York’s Eric Schneiderman has been most active in pursuing investigations of the foreclosure crisis and potentially illegal activities that have infected the housing sector. As a result, it’s not shocking that there now seems to be a concerted effort to smear Eric Schneiderman by Wall Street banks and their lackeys.
While investigating foreclosure fraud in New York, Schneiderman also has jurisdiction to look at fraudulent securitizations and settlements in this area, as we’ve seen with his action around the Bank of America/Countrywide settlement with Bank of New York Mellon. Schneiderman has also been vocal in his skepticism of the progress of the 50 state settlement talks being pursued by Iowa AG Tom Miller, the administration and major Wall Street banks. His opposition to a deal could result in it being scuttled and this scares the crap out of the banks.
First, via David Dayen, we saw Bank of New York trot out Katheryn Wylde, a member of the board of the NY Fed and president of Partnership for New York City, to the press to bash Schneiderman’s questioning of the merits of the BoA/BoNY settlement. Here’s the hit:
A BNY Mellon spokesman told me the bank didn’t want to comment on the broader implications of the AG’s filing, but directed me to Kathryn Wylde, CEO of the Partnership for New York City, a business development non-profit. She said that the AG’s “careless action” hurts New York’s standing as a financial center.
“It’s disappointing from the standpoint of the business community that the AG would make a fraud accusation against a major financial institution — in the press,” she told me. “And to not have any consultation with the institution? The bank was blindsided by what appears to be an outrageous charge.” (The AG’s press office didn’t respond to my request of comment.)
Dayen points out:
So you have a board member for an federal overseer of banks on Wall Street (Wylde claims that the NY Fed “serves no regulatory function,” which is just absolutely not true) attacking a state regulator for stepping into a settlement where he has found massive fraud in a preliminary investigation. She’s taking up for BNYM, which the NY Fed oversees, against the state Attorney General. This is just a classic case of regulatory capture.
There’s almost no way this is not coordinated. Wylde is pretty powerful in New York circles, I understand, and she’s raising fears of a slowdown to New York City’s main economic engine to stall regulatory oversight. The banks must continue looting, the story goes, or they’ll stop creating jobs in Manhattan.
Yves Smith of Naked Capitalism also weighs in against the attack from BoNY and Wylde:
“Fraud accusation…in the press”? This woman evidently has reading comprehension problems. If she had bothered to go through any of the news reports on the motion, the charges were not made in “the press”, they were made via a court filing.
…
And no, Bank of New York was not entitled to “consultation” when it is about to be accused of fraud, particular when the facts and law are as clear as they are in this instance. Her argument indicates either abject ignorance or deliberate deceit.
Ouch. That’s really embarrassing for Wylde. And again, this is a person who sits on the board of the New York Federal Reserve.
But this isn’t the only smear that’s being trotted out to undermine Eric Schneiderman’s investigation and pursuit of accountability on Wall Street. The New York Daily News has a story attacking Schneiderman for doing entirely legal and proper fundraising to pay off campaign debts – specifically a loan that he made to his campaign. There’s nothing at all illegal about him fundraising to pay a campaign debt, but clearly someone is pushing a story to impugn Schneiderman’s character.
Wall Street has a history of going after any attorney general who takes a serious interest in making banksters follow the law. The stakes here are incredibly high – Schneiderman’s investigations into robosigning and foreclosure fraud have the potential to cost banks tens if not hundreds of billions of dollars. That makes Schneiderman a high priority target and we’re seeing that targeting happen now. Schneiderman is doing critically important work that has the potential to hold lawless banksters accountable, to help keep homeowners in their homes, and to ensure that the rule of law – the foundation of our country – is maintained in the face of attempts by wealthy elites to twist it for their personal benefit. Anyone who cares about the outcome of his investigations should join together in identifying and opposing the smears, as Dayen and Smith have with Wylde and hopefully others will with the Daily News smear.
Warren Buffett has what will surely be a much talked about, much blogged about and much emailed op-ed in the New York Times today, calling on Congress to stop “coddling billionaires” and raise taxes on the super rich. Obviously there are elements to Buffett’s piece which are superb. It is very rare that someone outside of the Congressional Progressive Caucus talks seriously from a loud microphone about raising taxes on the rich. It’s even more rare when that person is taken seriously and not a left wing class warrior.
Buffett goes after the fundamental unfairness which taxes working at a higher rate than investing. Buffett also points out that while there were higher tax rates on the rich, the economy created far more jobs. Lower tax rates haven’t helped with job creation – they’ve only assisted the consolidation of wealth into fewer and fewer hands. These are all important arguments to be made.
But when it gets down to prescriptions, here’s what Buffett has to offer:
Twelve members of Congress will soon take on the crucial job of rearranging our country’s finances. They’ve been instructed to devise a plan that reduces the 10-year deficit by at least $1.5 trillion. It’s vital, however, that they achieve far more than that. Americans are rapidly losing faith in the ability of Congress to deal with our country’s fiscal problems. Only action that is immediate, real and very substantial will prevent that doubt from morphing into hopelessness. That feeling can create its own reality.
Job one for the 12 is to pare down some future promises that even a rich America can’t fulfill. Big money must be saved here. The 12 should then turn to the issue of revenues. I would leave rates for 99.7 percent of taxpayers unchanged and continue the current 2-percentage-point reduction in the employee contribution to the payroll tax. This cut helps the poor and the middle class, who need every break they can get.
But for those making more than $1 million — there were 236,883 such households in 2009 — I would raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains. And for those who make $10 million or more — there were 8,274 in 2009 — I would suggest an additional increase in rate.
He doesn’t offer specific recommendations for how large increases in brackets of $1 million and $10 million would be. Presumably they’d be large, but without him being explicit, it’s hard to imagine large numbers being attached to this idea. Most politicians just don’t want to tax their multi-millionaire peers at a particularly high rate.
What’s worse, though, is without explanation Buffett buys into the deficit hysteria and presumably the accompanying push by deficit fetishists to cut social spending. I have no idea why Buffett thinks large, dramatic cuts to the deficit will pull the economy back from the brink, when the underlying reason for taxing the rich at a higher rate isn’t simply one of “shared sacrifice” but one of giving government the ability to do more, bigger things at a time when there is hesitance to use the power of deficit spending. Increased revenues allows for infrastructure spending, educational investment, and a shift to green energy sources. These, in turn, will create the jobs we need to get the economy on track.
“Share sacrifice” is undoubtedly a step better than the current system wherein wealthy elites are running up the score in the class war and forcing poor and working class Americans to give up their economic security on the alter of deficit reduction. But a better framework would be one which doesn’t actually put any significant burden on the people who the economic downturn already hurts the most. The unemployed, the under-employed, the homeless, and struggling homeowners have already lost tremendously through this recession. Asking them to give up their unemployment benefits, their social support benefits, the quality of their children’s schools and their roads is absurdly unfair. So no, Buffett is wrong. We don’t need “shared sacrifice” – we need wealthy elites to be held accountable for crashing the economy and siphoning off trillions of wealth from poor, working, and middle class Americans. Yes, part of that should be through significantly higher taxes for millionaires and billionaires, for hedge fund managers, and people who don’t work but instead live off of returns on their investments and the investments of their great-grand parents. But this should not come alongside cuts to the Big Three social safety programs, nor any other government program which gives Americans the ability to lift themselves up and improve the quality of their lives.
Business writer Umar Haque, on the riots in the UK, austerity, and the failure of elites:
From Tahrir Square to Syntagma Square to Puerta del Sol Square, social upheaval’s spreading — sometimes in droplets, sometimes in floods, sometimes placidly, sometimes…not so placidly. Each example is very different from the others. Yet, the underlying ruptures might be said to be similar: What happens when a nation willfully ignores perhaps the most fundamental lesson of economics, and hopes rent-seeking will equal real prosperity? This does. What happens when a nation either loses, or prevents, a stabilizing middle class? This does. What happens when a government — any government — gets so out of touch with the governed? This does.
Our institutions are failing — they’re failing us; failing the challenge of igniting real, lasting human prosperity. If institutions are just instruments to fulfill social contracts, then ours are shattering because the social contracts at their hearts have fractured.
I call it a Great Splintering — not purely an economic phenomenon, as in “Great Contraction,” but a social one: an era when social contracts are being torn up, abrogated, betrayed, abandoned, by accident, by design, by “regulatory capture,” or simply by polities too gridlocked to progress. Broken social contracts aren’t just tidy abstractions, empty of visibly real consequences, disconnected from the noise and clamor of our messy human lives. As they break, yesterday’s ways of living, working, and playing rupture; yesterday’s organizations, from corporations to banks to nations, creak and crack.
It’s important that this is not just happening in the UK. It’s happening throughout the Eurozone – Greece, Ireland, Spain, Portugal, Italy and France. It’s happened in Egypt, Tunisia, Libya, Syria, and Yemen. It’s happening here in the United States. Economic and political elites have crashed economies and destroyed governments. Rather than account for their failures honestly, they have tried to fix them on the backs of the poor and working class people of their country. This has lead to outrage, protests, riots and rebellions. The consequences continue, but so do the bad decisions which are destroying peoples’ lives and, in course, destroying countries.
Originally via Baratunde Thurston, this video is both a good explanation of how and why the riots in the UK started. There’s profound economic distress, along with decades of racial tension and treatment of black Britons by the police as a suspect underclass. That dynamic plays out in the interview, between Darcus Howe and his white BBC interviewer. Howe is a journalist himself and a long-time racial justice activist. He’s treated like a criminal by the BBC interviewer and afforded less respect than any individual I’ve ever seen appear on TV.
Lots of folks in the US are linking to this excellent post from London blogger Penny Red. The whole piece is worth a read, as it takes the notion that there are real, meaningful underlying causes seriously. This passage stands out:
Violence is rarely mindless. The politics of a burning building, a smashed-in shop or a young man shot by police may be obscured even to those who lit the rags or fired the gun, but the politics are there. Unquestionably there is far, far more to these riots than the death of Mark Duggan, whose shooting sparked off the unrest on Saturday, when two police cars were set alight after a five-hour vigil at Tottenham police station. A peaceful protest over the death of a man at police hands, in a community where locals have been given every reason to mistrust the forces of law and order, is one sort of political statement. Raiding shops for technology and trainers that cost ten times as much as the benefits you’re no longer entitled to is another. A co-ordinated, viral wave of civil unrest across the poorest boroughs of Britain, with young people coming from across the capital and the country to battle the police, is another.
Months of conjecture will follow these riots. Already, the internet is teeming with racist vitriol and wild speculation. The truth is that very few people know why this is happening. They don’t know, because they were not watching these communities. Nobody has been watching Tottenham since the television cameras drifted away after the Broadwater Farm riots of 1985. Most of the people who will be writing, speaking and pontificating about the disorder this weekend have absolutely no idea what it is like to grow up in a community where there are no jobs, no space to live or move, and the police are on the streets stopping-and-searching you as you come home from school. The people who do will be waking up this week in the sure and certain knowledge that after decades of being ignored and marginalised and harassed by the police, after months of seeing any conceivable hope of a better future confiscated, they are finally on the news. In one NBC report, a young man in Tottenham was asked if rioting really achieved anything:
“Yes,” said the young man. “You wouldn’t be talking to me now if we didn’t riot, would you?”
“Two months ago we marched to Scotland Yard, more than 2,000 of us, all blacks, and it was peaceful and calm and you know what? Not a word in the press. Last night a bit of rioting and looting and look around you.”
Eavesdropping from among the onlookers, I looked around. A dozen TV crews and newspaper reporters interviewing the young men everywhere ‘’’
There are communities all over the country that nobody paid attention to unless there had recently been a riot or a murdered child. Well, they’re paying attention now.
Tonight in London, social order and the rule of law have broken down entirely. The city has been brought to a standstill; it is not safe to go out onto the streets, and where I am in Holloway, the violence is coming closer. As I write, the looting and arson attacks have spread to at least fifty different areas across the UK, including dozens in London, and communities are now turning on each other, with the Guardian reporting on rival gangs forming battle lines. It has become clear to the disenfranchised young people of Britain, who feel that they have no stake in society and nothing to lose, that they can do what they like tonight, and the police are utterly unable to stop them. That is what riots are all about.
Riots are about power, and they are about catharsis. They are not about poor parenting, or youth services being cut, or any of the other snap explanations that media pundits have been trotting out: structural inequalities, as a friend of mine remarked today, are not solved by a few pool tables. People riot because it makes them feel powerful, even if only for a night. People riot because they have spent their whole lives being told that they are good for nothing, and they realise that together they can do anything – literally, anything at all. People to whom respect has never been shown riot because they feel they have little reason to show respect themselves, and it spreads like fire on a warm summer night. And now people have lost their homes, and the country is tearing itself apart.
Racial tension. A broken economy. Unaccountable elites waging warfare through legislation on working people. A commitment to creating pain amongst the people who had nothing to do with economic collapse while nothing is asked of those who caused economic collapse. It’s not shocking that there are riots in the United Kingdom, though it’s sad that people have been pushed so far as to resort to this to have their voices heard.
…Adding, this Reuters piece is a good read, as it actually includes interviews with a number of rioters, who cite inequality, gentrification, a lack of educational opportunities, and austerity as reasons for the riots.
“The only way we can get out of this is education, and we’re not entitled to it, because of the cuts. Even for bricklaying you need a qualification and a waiting list for a course. I signed up in November, and still haven’t heard back,” the Kurdish man said.
The government has also raised university tuition fees since coming into power, putting a higher education further out of the reach of youths from places like Hackney.
“They’re screwing the system so only white middle-class kids can get an education,” said another man, who declined to be named. He said politicians were the real criminals, and pointed to a 2009 expenses scandal in which several lawmakers were revealed to have cheated the taxpayer out of thousands of pounds.
Just because people are rioting doesn’t mean they’re uninformed or stupid. Political elites in the UK should be responsive to these people and their anger, otherwise the chances of things getting better is extremely low. Desires to succeed, to be educated, to lift oneself and one’s family out of poverty are not criminal. These are normal human aspirations. They should be respected.
Paul Krugman describes what he calls the Doom Loop – the process wherein political elites are radically (and potentially deliberately) misinterpreting signals from financial markets to enact destructive policies.
1. US debt is downgraded, sparking demands for more ill-advised fiscal austerity
2. Fears that this austerity will depress the economy send stocks down
3. Politicians and pundits declare that worries about US solvency are the culprit, even though interest rates have actually plunged
4. This leads to calls for even more ill-advised austerity, which sends us back to #2
Krugman points out that this loop and the people who are giving it energy are “impervious to evidence.”
Ben White of Politico noted in his daily tip sheet today essentially the same phenomenon:
Moving between NYC and DC as I do it can be jarring at times to hear politicians in Washington talking endlessly about markets demanding that the U.S. focus on spending and deficit and debt reduction. Then I come back to New York and such talk is simply laughed at given rock-bottom Treasury yields and the commonly held (and correct) view that the U.S. does not have much of a debt problem, certainly not in the near term. But it has a MASSIVE and potentially disastrous growth problem.
That’s why traders often mute the TV (or start cursing) when President Obama begins talking about super committees and shared sacrifice and tax hikes. To be fair, they mute GOP leadership as well. It’s hard to recall a time when the debate and rhetoric in Washington seemed more completely disconnected from what is actually going on in markets and the economy.
There’s a disconnect, to be sure. But it’s driven by ideology. People who believe that austerity should happen and that austerity is the only tool in their tool chest will seek out and find reasons for austerity to be deployed, regardless of whether they are right or not.
Well it looks like there’s a new argument for painful austerity. As we see in England, where a massive austerity program has laid of thousands of public workers and cut services, has lead to incredible anger and popular outrage. That, in turn and with other contributing factors driven by elite policies which target working people, has devolved into a rash of riots and property destruction around England. Of course, all of the destroy stores will have to be rebuild and hey, that’s job creation right there!
Recently Yves Smith of Naked Capitalism started a death watch for Bank of America. Smith cited the bank’s massive and growing legal liabilities, as well as the low chances that they will be able to shore up their capital levels through asset sales. David Dayen then joined in the death watch and advanced it following Washington Attorney General Rob McKenna launched a lawsuit against BoA for violating foreclosure law.
Today Gretchen Morgenson and Louise Story in the Times break news that signifies another big step in the Bank of America death watch. AIG is suing BoA for $10 billion:
The suit seeks to recover more than $10 billion in losses on $28 billion of investments, in possibly the largest mortgage-security-related action filed by a single investor.
It claims that Bank of America and its Merrill Lynch and Countrywide Financial units misrepresented the quality of the mortgages placed in securities and sold to investors, according to three people with knowledge of the complaint.
Morgenson and Story also reported that AIG plans to join other investors and New York Attorney General Eric Schneiderman in objecting to BoA’s $8.5 billion mortgage backed security settlement with Bank of New York Mellon.
Yves Smith has a post on the Morgenson and Story piece, which draws out one passage which is tremendously important in terms of framing how to think about private litigation in an area that has been essentially devoid of federal investigations. The quote from Story and Morgenson:
The private actions stand in stark contrast to the few credit crisis cases brought by the Justice Department, which is wrapping up many of its inquiries into big banks without filing any charges. The lack of prosecutions — the Justice Department has brought three cases against employees at large financial companies and none against executives at large banks — has left private litigants, mainly investors and consumers, standing more or less alone in trying to hold financial parties accountable.
“When federal authorities don’t fulfill their obligation to enforce the law, they essentially give an imprimatur to the financial entities to do whatever they want and disregard the law,” said Kathleen C. Engel, a professor at Suffolk University Law School in Boston. “To the extent there are places where shareholders and borrowers can pursue claims, they are really serving the function of the government. They are our private attorneys general.”
Smith says federal authorities and AGs driving the 50 state settlement talks should be ashamed for trying to settle without doing any meaningful investigation. But Engel’s quote really goes beyond that. The lack of real investigation and criminal prosecution constitutes the government taking the side of Wall Street banks while providing a functional whitewash of massive criminal behavior. Yes, having private investors bring suits which will help them individually can still be a means for banks feeling pain for their bad behavior, but the interests of individual private investors don’t necessarily align with the interests of struggling homeowners, let alone the general public. Private suits aren’t a substitute for federal law enforcement and federal regulators doing their job in the first place.
It’s fortunate that a handful of attorneys general at the state level – Schneiderman, Beau Biden, McKenna, and a few others – are actually pursuing accountability for fraud connected to residential mortgage backed securities and foreclosure. Even a handful of actions at the state level, plus suits by private investors, has created an environment where there is real merit to watching for the death of Bank of America. The rot is deep and these suits are bringing it to light.
The United States — which now pays 2.4 percent to borrow money for 10 years, more than a percentage point less than it paid six months ago — seemingly has no desire to try to save its own economy, let alone anyone else’s.
When things get bad, governments do stuff. That’s not just limited to America. There isn’t a government in the world that doesn’t try to ameliorate hard times, whether they be economic, natural disaster-related or something else.
The recent action in Washington really does call into question whether the Washington Put exists at all. One party was completely unyielding in its demands, and seemingly willing to seriously damage the economy to pursue its agenda. And it’s not just the debt ceiling where you see this. This FAA nonsense shows again a total inability to do basic, obvious stuff.
There are lots of things the US government could do to improve the economy. Austerity wasn’t one of them, but it was the one thing that there was bipartisan consensus for. Also, tax cuts for rich people.
The problem isn’t that our government is no longer good at doing things. We do lots of things very well. We cut taxes for rich people. We transfer the wealth of poor, middle, and working class Americans to the rich. We cut social support programs. We bomb countries into oblivion and then stick around to make sure that when these countries get rebuilt, they’re rebuilt at high cost by multinational corporations who also happen to be donors to our political class. We also spy on our citizens, abet the theft of countless homes by banks, and keep black prison facilities around the world to disappear and torture people who we think are bad. Our government is very good at doing these things.
What our government is not good at is doing things that benefit poor, working, and middle class Americans. Our government is not good at promoting peace, nor the rule of law. It is not good at creating a more equitable society. It is not good at finding new ways to help those in need of help, nor is it good at finding new ways to care for the sick.
Our government isn’t broken and certainly still functions at a disturbingly high level. It just doesn’t function for you and me. The real problem is that the government is not controlled by nor accountable to the bottom 98% of the country.
Hold Fast 