Rakoff ruling a victory, but it’s not pepper spray

Metaphor fail:

This time it is the Wall Street bankers and not the Occupiers who are getting hit with pepper spray.

The spray comes straight from the laser printer in the chambers of a federal judge, Jed Rakoff, in New York. The victory that Rakoff gave to the Occupy Wall Street movement Monday came from the federal courthouse — not far from Zucotti Park, the lower Manhattan headquarters of OWS.

I agree with Jonathan Macey that Judge Rakoff’s rejection of the piddling SEC settlement with Citigroup was a big victory. But it wasn’t a physical assault on Citigroup. It didn’t violate their rights nor did it violate due process. It was done entirely within the confines of the law.

Macey goes on to write:

It is a significant victory for the ideals of the Occupy Wall Street Movement. And it just might be the first step on to restoring accountability to both Wall Street and the SEC.

I think this could be the case, though while Rakoff and the Occupy movement have expressed shared values, I would not attribute Rakoff’s anger at being treated like a dunce by the SEC and Citigroup to be caused by Occupy. No, Rakoff is an actual sheriff on the beat, who still cares about the rule of law and making sure that government regulators aren’t working for the company’s they are tasked to regulate.

Debt & Forgiveness

This summer, Yves Smith at Naked Capitalism opted an interview of social anthropologist David Graeber on the history and evolution of debt in human society. In light of the Occupy Wall Street movement and the expanding debt crisis in Europe, the post is worth revisiting.

First, I highly recommend the entire interview, as it is fascinating to read about the different theories for how debt and money emerged, as well as seeing Graeber offer thoughtful disproofs of common assumptions – namely that barter emerged prior to currency and debt.

But what’s more important in the current moment is the connection between debt, morality, and power. Financial and political elites have made clear in the last three years that their own debts must be wiped out at will, at the expense of the 99%. Graeber responds to a question about the current crisis in Europe:

Well, I think this is a prime example of why existing arrangements are clearly untenable. Obviously the ‘whole debt’ cannot be paid. But even when some French banks offered voluntary write-downs for Greece, the others insisted they would treat it as if it were a default anyway. The UK takes the even weirder position that this is true even of debts the government owes to banks that have been nationalized – that is, technically, that they owe to themselves! If that means that disabled pensioners are no longer able to use public transit or youth centers have to be closed down, well that’s simply the ‘reality of the situation,’ as they put it.

These ‘realities’ are being increasingly revealed to simply be ones of power. Clearly any pretence that markets maintain themselves, that debts always have to be honored, went by the boards in 2008. That’s one of the reasons I think you see the beginnings of a reaction in a remarkably similar form to what we saw during the heyday of the ‘Third World debt crisis’ – what got called, rather weirdly, the ‘anti-globalization movement’. This movement called for genuine democracy and actually tried to practice forms of direct, horizontal democracy. In the face of this there was the insidious alliance between financial elites and global bureaucrats (whether the IMF, World Bank, WTO, now EU, or what-have-you).

When thousands of people begin assembling in squares in Greece and Spain calling for real democracy what they are effectively saying is: “Look, in 2008 you let the cat out of the bag. If money really is just a social construct now, a promise, a set of IOUs and even trillions of debts can be made to vanish if sufficiently powerful players demand it then, if democracy is to mean anything, it means that everyone gets to weigh in on the process of how these promises are made and renegotiated.” I find this extraordinarily hopeful.

This strikes me as exactly what one of the main thrusts of the Occupy movement is about – a desire for debt forgiveness, especially in the face of a system that forgives every bad gamble of financial elites.

Moreover, as we’ve seen recently with Robert Cruickshank’s piece calling for student debt forgiveness and some larger calls for a debt jubilee, there is a growing demand for this to happen. For a long while, those fighting the foreclosure crisis have demanded principle write downs, a moderate form of debt forgiveness that has been strenuously rejected by both political and financial elites. Or, to put it more differently, given the situation of crisis financial and political elites have put the world in, it’s hard to imagine there being a solution on scale to address the depths of the crisis other than jubilee.

This moment of popular anger isn’t going to be solved by a piece of tepid legislation regulating corporate money in politics. This anger isn’t going to be quelled by a financial transaction tax. While a massive infrastructure spending and jobs creation effort in the US could reduce some anger here, it would do little to stop the rage felt by the students and unemployed in Greece, Italy, Spain, and Portugal. Throwing all the banisters in jail would probably help things, at least in so far as restoring a sense of the rule of law, without changing the underlying fundamental problems of our economic system, it’s unlikely that change would be forestalled.

What Occupy Wall Street teaches us is that the scale of the problems we face demand solutions which realistically meet the problem. Occupation is a tactic fit for this crisis. But if we are to begin to answer the complaints of the Occupy movement or Los Indignados or any of the protesters in Greece and beyond, we have to look at how individual people and families have been broken by this elite-centric economy. The problem is debt and solution is forgiveness. The only question will be how long will it take, as Graeber says, for sufficiently powerful people to arrive at this position or for the public to amass enough power to make it happen democratically.

Against corruption

I actually agree with this:

We need equality under the law. From now on, laws that apply to the private sector must apply to Congress, including whistleblower, conflict-of-interest and insider-trading laws. Trading on nonpublic government information should be illegal both for those who pass on the information and those who trade on it. (This should close the loophole of the blind trusts that aren’t really blind because they’re managed by family members or friends.)

No more sweetheart land deals with campaign contributors. No gifts of IPO shares. No trading of stocks related to committee assignments. No earmarks where the congressman receives a direct benefit. No accepting campaign contributions while Congress is in session. No lobbyists as family members, and no transitioning into a lobbying career after leaving office. No more revolving door, ever.

This call for real reform must transcend political parties. The grass-roots movements of the right and the left should embrace this. The tea party’s mission has always been opposition to waste and crony capitalism, and the Occupy protesters must realize that Washington politicians have been “Occupying Wall Street” long before anyone pitched a tent in Zuccotti Park.

Remarkably, this is coming from Sarah Palin in a Wall Street Journal op-ed.

I do think there’s opportunity for the populist movements of Occupy Wall Street and the Tea Party to come together and oppose government corruption and the two-tiered justice system. Of course in this instance by Tea Party, I mean the grassroots base and not the Koch Brothers or Dick Armey front groups used to support any old Republican.

Of course, Palin’s complaints against government corruption would be much more believable if she hadn’t used her powers as governor to fire or intimidate personal enemies. Or if she and her staff didn’t obstruct FOIA requests by using personal email accounts for state business. Or if she didn’t pay herself to live at home while flying her children around the country on the Alaskan taxpayers’ dime. As an Alaskan taxpayer while Palin was governor, I’m not going to forget her own corruption and her own use of public coffers for personal enrichment. In short, the woman is a hypocrite, but what she’s saying today isn’t wrong, she just has no standing to make the argument against corruption.

N17 Action Updates

Today is the two month anniversary of Occupy Wall Street and there is a national day of action. In New York, the day is broken up into three separate movements at breakfast, lunch and dinner:

7:00am — Shut Down Wall Street
We will gather in Liberty Square at 7:00am, before the ring of the Trading Floor Bell, to prepare to confront Wall Street with the stories of people on the frontlines of economic injustice.

3:00pm — Occupy the Subway
We will gather at 3:00pm at 16 central subway hubs and take our own stories to the trains, using the “People’s Mic”. Details here.

5:00pm — Take the Square, Festival of Lights on Brooklyn Bridge
At 5:00pm thousands will gather at Foley Square in solidarity with laborers demanding jobs to rebuild this country’s infrastructure and economy. They will encircle City Hall and march across the Brooklyn Bridge, carrying thousands of handheld lights, as a festival of lights to celebrate two months of a new movement to reclaim our democracy.

OccupyWallSt.org is hosting both live text updates from New York and multiple live video streams. Already there have been over 100 arrests reported, as well as incidents of the police using LRAD sound weaponry against peaceful protesters. The NYPD also has blocked reporters from accessing or filming arrests. The scale of response from Bloomberg to protect Wall Street bankers is truly astonishing, even for a billionaire.

If you’re not in New York, you can find events near you at November17.org.

Lambert Strether on the attacks on the Occupy movement

Lambert Strether has a guest post up at Naked Capitalism that looks at the violent raid on Occupy Wall Street and how the movement has responded to coordinated attacks on it from around the country. Lambert is an old hand in the lefty blogosphere and has always brought an incredibly rich moral perspective to his writing. This post is no different.

Whatever. Because a library is more than its holdings. As soon as Zuccotti Square was re-occupied, Occupiers began immediately began to self-organize the library again. Here’s the library at 7:00AM today. And here’s the address where you can send donated books.

And that’s the story: Occupier self-organization. Self-organization is how the Tahrir Square organizers beat Murbarak’s baltigaya, and self-organization is how the Occupiers will beat the 1%. Because look what Bloomberg bulldozed: Not only a library, but:

None of what Bloomberg bulldozed was or is about violence. All of those institutions are about solidarity, people helping people. (For the homeless or the hungry, these institutions are helping people who can’t get help anywhere else.) Perhaps that’s really what Bloomberg didn’t like?

Lambert goes on to make the point that it is these institutions of human support which are what makes the Occupy movement powerful. He notes that it is because of this power that mayors representing the 1% around the country have violently displaced Occupy encampments, using the same tired lies of uncleanliness and dangerous violence near the encampments. Never mind that these encampments are rigidly clean and that the incidents of violence haven’t actually be related to the Occupations at all.

As the frequency and violence with which local governments are trying to destroy the Occupy movement increases, the power of this movement only becomes more clear. Yesterday, following the eviction of Liberty Square, a number of people pointed out that this harsh eviction, done in the dead of night with no warning or humanity, would actually add fuel to the growing Occupy movement. Fortunately for organizers, November 17th (tomorrow) is a major national day of action. I expect whatever turnout would have happened without the eviction of Liberty Square will be substantially bigger, especially in New York City, as a result of this reckless crackdown. Generally speaking, putting out fires is hard to do when you’re using gasoline instead of water.

Billionaire Bloomberg violently evicts Occupy Wall Street from Liberty Square

In the middle of the night last night, Mayor Bloomberg had the NYPD violently evict Occupy Wall Street from Liberty Square. The police used physical force, including sonic weapons and pepper spray, to force protesters out. They destroy the 5,000 book library. They destroyed tents and tarps that people have been living in. They arrested reporters and prevented news helicopters from flying to cover the violent eviction.

The latest statement from Occupy Wall Street shows their commitment to keep the Occupy movement moving forward:

Last night, billionaire Michael Bloomberg sent a massive police force to evict members of the public from Liberty Square—home of Occupy Wall Street for the past two months. People who were part of a dynamic civic process were beaten and pepper-sprayed, their personal property destroyed.

Supporters of this rapidly growing movement were mobilized in the middle of the night, making phone calls, taking the streets en masse, and planning next steps. Americans and people around the world are appalled at Bloomberg’s treatment of people who peacefully assemble. We are appalled, but not deterred. Liberty Square was dispersed, but its spirit not defeated. Today we are stronger than we were yesterday. Tomorrow we will be stronger still. We are breaking free of the fear that constricts and confines us. We occupy to liberate.

We move forward in the grand tradition of the transformative social movements that have defined American history. We stand on the shoulders of those who have struggled before us, and we pick up where others have left off. We are creating a better society for us all.

Occupy Wall Street has renewed a sense of hope. It has revived a belief in community and awakened a revolutionary spirit too long silenced.

Join us as we liberate space and build a movement.

The fight isn’t over and the Occupy movement will only grow stronger from here.

Already a judge has ordered protesters to be allowed to return to Liberty Square. Bloomberg, to this point, hasn’t complied with the order, denying its existence in a press conference this morning. Clearly the billionaire mayor is going all-in to protect his friends on Wall Street and the 1%. It’s hard to imagine a scenario where Bloomberg comes out of this as anything other than a disgraced stooge for Wall Street.

…Also, the photo above is from Canal Street and 6th Street, where Occupy has taken a new park, which is privately owned by Trinity Church.

Taibbi on Bloomberg & housing crisis blame

Last week, New York City’s billionaire mayor Mike Bloomberg made the remarkable assertion that Wall Street banks bore no blame for inflating the housing bubble, leveraging themselves out their ears, and causing the financial collapse when their house of cards fell apart.

Mayor Michael Bloomberg said this morning that if there is anyone to blame for the mortgage crisis that led the collapse of the financial industry, it’s not the “big banks,” but congress.

Speaking at a business breakfast in midtown featuring Bloomberg and two former New York City mayors, Bloomberg was asked what he thought of the Occupy Wall Street protesters.

“I hear your complaints,” Bloomberg said. “Some of them are totally unfounded. It was not the banks that created the mortgage crisis. It was, plain and simple, congress who forced everybody to go and give mortgages to people who were on the cusp. Now, I’m not saying I’m sure that was terrible policy, because a lot of those people who got homes still have them and they wouldn’t have gotten them without that.”

Matt Taibbi had one good response, but when readers kept trying to spin him with bogus pro-bank talking points, he put up an even more thorough debunking of Bloomberg. Taibbi explains not only how Bloomberg is wrong, but how he is monumentally and deliberately dishonest. I’m pulling a longer-than-usual quote from it because Taibbi’s response is really important.

Nomi Prins pointed out in her book It Takes a Pillage that we could have paid off every subprime loan in America at the start of the crisis for about $1.4 trillion dollars. But the bailouts ended up being four, five, perhaps as much as ten or twelve times that size.

Why? Because we weren’t paying off the underlying loans of those subprime, personal-responsibility-deficient homeowners. We were paying off the banks’ bets on those loans. We were adopting all those clones they made.

Anyway, there’s is a massive gap between making a bad decision with one’s personal finances and committing criminal fraud in billion-dollar amounts. Morally, the two acts are not even in the same universe.

Homeowners who took on those bad loans did so for a variety of reasons. Some were coaxed into adjustable-rate loans when they qualified for fixed-rate loans, for the simple reason that the ARM loan garnered a bigger commission for the seller. Others were told by their brokers that if interest rates went up, or they couldn’t make their payments, they could just sell their homes, or come back to the same broker for a refinance.

Some were flat-out defrauded, like the prison guard in Massachusetts I interviewed who was told he was buying a fixed-rate loan, and only found out (from Goldman subsidiary Litton) that he’d been sold an ARM when rates went up — right around the time his wife developed cancer, incidentally.

And, yes, there were others who were just dumb and irresponsible, and still others who never even intended to live in their homes and simply bought properties with no cash down as a speculative gamble.

But from what I’ve seen, most foreclosures involve ordinary people with jobs who bought houses when the economy was good, but are caught now in the triple death-trap of an underwater home, rising costs of living, and declining wages and opportunity. And as far as personal responsibility goes, those people who bought that home-ownership ticket, if they missed payments, they’re all taking the foreclosure ride right now.

What we have on the other hand, however, is a bunch of financial companies who consciously created huge volumes of bad loans, dumped them on retirees and foreigners and union stiffs, then doubled down on the problem by creating mountains of new liabilities based on those bad loans via synthetic derivatives. Then, when it all blew up, they came to us and asked us to buy the whole pile at full retail prices, clones and all.

Which we did, flooding them with bailout cash. This allowed them to instantly jack their annual bonus pools back up into the $150 billion range while the rest of the country waited out mass unemployment and a foreclosure epidemic.

So these people created giant masses of these defective loans, pumped the global system full of toxic debt, asked for the biggest government handout in history when it all went wrong, then walked away in the end even richer than before, forcing the rest of us to deal with their messes.

It baffles me that people can look at that behavior and still think it’s individuals in foreclosure who need to be lectured about “personal responsibility.”

A lot of people had to make bad decisions for the crisis to happen. People had to buy houses they couldn’t afford. Ratings agencies had to give AAA ratings to junk securities. Regulators had to be asleep at the wheel. The GSEs had to lower their standards and provide billions of dollars of government-backed financing for dicey home loans. Nobody is denying that all of those things played roles in the crisis.

But the main driving factor was the simple fact that banks were able to make trillions of dollars selling defective products. You take away that simple market-driven reality, there’s no bubble and no crash, no matter what people like Michael Bloomberg say. No one is insisting that they take the whole rap — but don’t insult us by trying to say they shouldn’t take any at all.

Yes, exactly.
There are a lot of different elements involved in the blaming of individuals for the financial crisis. Much of it is transparently racist – the “undeserving” people who benefited from the CRA are typically minorities who for some unknown reason don’t deserve to own a home. There’s also a note of inherent fear that the Masters of the Universe aren’t being honest with the public and what that means. The defenders of the banks, at least those libertarian types who aren’t themselves billionaires, are just incapable of ascribing malice to the banksters in the face of all the evidence.
Taibbi seems to get this and is one of the best at calling out the perpetrators of the financial crisis, even in the ways that there is culpability with individual homeowners and Democratic policy makers. He’s right about the causes and he’s right to spend so much time elucidating what actually happened in the face of the lies of people like Mike Bloomberg.