ANCHORAGE, Alaska (Reuters) – Senate hopeful Joe Miller says he has given up trying to block the state of Alaska from certifying the reelection of Lisa Murkowski but will press ahead with a federal court challenge.
America is on a collision course with itself. This month’s deal between President Barack Obama and the Republicans in Congress to extend the tax cuts initiated a decade ago by President George W. Bush is being hailed as the start of a new bipartisan consensus. I believe, instead, that it is a false truce in what will become a pitched battle for the soul of American politics.
As in many countries, conflicts over public morality and national strategy come down to questions of money. In the United States, this is truer than ever. The US is running an annual budget deficit of around $1 trillion, which may widen further as a result of the new tax agreement. This level of annual borrowing is far too high for comfort. It must be cut, but how?
The problem is America’s corrupted politics and loss of civic morality. One political party, the Republicans, stands for little except tax cuts, which they place above any other goal. The Democrats have a bit wider set of interests, including support for health care, education, training, and infrastructure. But, like the Republicans, the Democrats, too, are keen to shower tax cuts on their major campaign contributors, predominantly rich Americans.
The result is a dangerous paradox. The US budget deficit is enormous and unsustainable. The poor are squeezed by cuts in social programs and a weak job market. One in eight Americans depends on Food Stamps to eat. Yet, despite these circumstances, one political party wants to gut tax revenues altogether, and the other is easily dragged along, against its better instincts, out of concern for keeping its rich contributors happy.
This tax-cutting frenzy comes, incredibly, after three decades of elite fiscal rule in the US that has favored the rich and powerful. Since Ronald Reagan became President in 1981, America’s budget system has been geared to supporting the accumulation of vast wealth at the top of the income distribution. Amazingly, the richest 1% of American households now has a higher net worth than the bottom 90%. The annual income of the richest 12,000 households is greater than that of the poorest 24 million households.
The Republican Party’s real game is to try to lock that income and wealth advantage into place. They fear, rightly, that sooner or later everyone else will begin demanding that the budget deficit be closed in part by raising taxes on the rich. After all, the rich are living better than ever, while the rest of American society is suffering. It makes sense to tax them more.
The Republicans are out to prevent that by any means. This month, they succeeded, at least for now. But they want to follow up their tactical victory – which postpones the restoration of pre-Bush tax rates for a couple of years – with a longer-term victory next spring. Their leaders in Congress are already declaring that they will slash public spending in order to begin reducing the deficit.
Ironically, there is one area in which large budget cuts are certainly warranted: the military. But that is the one item most Republicans won’t touch. They want to slash the budget not by ending the useless war in Afghanistan, and by eliminating unnecessary weapons systems, but by cutting education, health, and other benefits for the poor and working class.
In the end, I don’t think they will succeed. For the moment, most Americans seem to be going along with Republican arguments that it is better to close the budget deficit through spending cuts rather than tax increases. Yet when the actual budget proposals are made, there will be a growing backlash. With their backs against the wall, I predict, poor and working-class Americans will begin to agitate for social justice.
This may take time. The level of political corruption in America is staggering. Everything now is about money to run electoral campaigns, which have become incredibly expensive. The mid-term elections cost an estimated $4.5 billion, with most of the contributions coming from big corporations and rich contributors. These powerful forces, many of which operate anonymously under US law, are working relentlessly to defend those at the top of the income distribution.
But make no mistake: both parties are implicated. There is already talk that Obama will raise $1 billion or more for his re-election campaign. That sum will not come from the poor.
The problem for the rich is that, other than military spending, there is no place to cut the budget other than in areas of core support for the poor and working class. Is America really going to cut health benefits and retirement income? Will it really balance the budget by slashing education spending at a time when US students already are being out-performed by their Asian counterparts? Will America really let its public infrastructure continue to deteriorate? The rich will try to push such an agenda, but ultimately they will fail.
Obama swept to power on the promise of change. So far there has been none. His administration is filled with Wall Street bankers. His top officials leave to join the banks, as his budget director Peter Orszag recently did. He is always ready to serve the interests of the rich and powerful, with no line in the sand, no limit to “compromise.”
If this continues, a third party will emerge, committed to cleaning up American politics and restoring a measure of decency and fairness. This, too, will take time. The political system is deeply skewed against challenges to the two incumbent parties. Yet the time for change will come. The Republicans believe that they have the upper hand and can pervert the system further in favor of the rich. I believe that they will be proved wrong.
Nearly 100 banks previously rescued by the federal government are again poised to fail, despite billions of dollars of support from the American Treasury.
The number of banks on the brink of collapse rose from 86 to 98 during the summer months, according to analysis of federal data from the Wall Street Journal. The banks in question have received $4.2 billion dollars in aid through the Troubled Asset Relief Program (TARP). Most of the troubled institutions are relatively small.
The latest sign of distress in the financial system suggests the bailout may have simply been a stopgap solution for a sector still contending with the aftershocks of the greatest banking crisis in 80 years.
The continued weakness of some banks now threatens to impede a tentative economic recovery, say experts. With many banks still troubled, lending remains tight, depriving businesses of capital to expand and hire. With expansion and hiring rare, the economy remains weak, depriving the banks of healthy customers–in short, a feedback loop of trouble.
The Wall Street Journal defined “troubled banks” as those with less than 6 percent of their primary assets both reliable and liquid.
Through TARP, the government has purchased hundreds of billions of troubled assets from banks in danger. Though the program was purportedly meant to benefit healthy institutions with a good chance of survival, these latest failures suggest that many banks were in tenuous shape to begin with. Seven TARP recipients have already failed, at a loss of $2.7 billion.
But some analysts pointed to the fact that most of the failing institutions are relatively small in dismissing concerns.
“If Citibank and Bank of America were going under, that would be a problem,” said Mark Blyth, a political economy professor at Brown and a fellow of the Watson Institute for International Studies. “The bailout was meant to deal with a global systemic crisis. It was not to make sure that some bank in Utah with dodgy commercial real estate would be okay.”
Blyth expects some smaller banks to continue to fall, due in large part to the lack of growth in the economy.
“People aren’t borrowing,” he said. “The reason they’re not borrowing is because they’re up to their eyeballs in debt.”
Most of us think of prices in the context of shopping expeditions. In the marketplace, prices ration what we consume, guiding how we allocate resources among our many wants. They prompt us to set priorities within the limits of our budgets. Just as prices steer our purchasing patterns, they steer the decisions of the companies that make what we buy, enabling them to meet our demand with their supply. That’s how markets organize a capitalist economy.
But prices are all over the place, not only attached to things we buy in a store. At every crossroads, prices nudge us to take one course of action or another. In a way, this is obvious: every decision amounts to a choice among options to which we assign different values. But identifying these prices allows us to understand more fully our decisions. They can be measured in money. But our most important currency is, in fact, opportunity. The cost of taking any action consists of the alternatives that were available to us at the time. The price of a five-dollar slice of pizza is all the other things we could have done with the five dollars. Economists call this the “opportunity cost.” By evaluating opportunity costs, we organize our lives.
Here’s a list of surprising prices I discovered while writing THE PRICE OF EVERYTHING …
Adapted from The Price of Everything by Eduardo Porter by arrangement with Portfolio Penguin, a member of Penguin Group (USA), Inc., Copyright © 2011 by Eduardo Porter. Visit www.EduardoPorter.com for more information and a free excerpt.
The Dodd-Frank Act gave the Commodity Futures Trading Commission (CFTC) until January 2011 to set mandatory position limits to curb the pervasive and excessive speculation in the energy markets. Well lo and behold, on Dec. 15 the Goldman Sachs alumnus and chairman of the CFTC told congressional lawmakers that the CFTC wouldn’t meet the deadline “because it doesn’t yet have sufficient data.” A few days earlier, Commissioner Jill Sommers, forever happy to lend a good word supporting delay, delay, delay, would instruct us that it was “bad policy to promulgate regulations that are not enforceable.” Thus permitting Chairman Gary Gensler, as part of the Sommers/Gensler duo — the CFTC’s own Abbott and Costello act — to intone, “It’s just appropriate to let this one ripen a little more.” Just “ripen a little more.” Really?
In remarks made on Sept. 19, 2008, before the First Asia Derivatives Conference in Tokyo, Ms. Sommers was quoted as saying:
The U.S. Futures markets have been the focus of intense scrutiny by law makers, the press, and the public over the past year as prices for crude oil and many agricultural products reached record highs. The question on everyone’s mind is whether trading is responsible especially with the influx of new traders into the markets… One of the primary tasks of market regulators is to foster high level of market integrity necessary to preserve the important management and price discovery the futures market perform.
Succinct words from a commissioner whose formation included service with the International Swaps and Derivatives Association as head of Government Affairs and Policy, working closely with congressional staff as well as time spent with the Chicago Mercantile Exchange (CME) being responsible for oversight of regulatory and legislative affairs. Talk about putting the lady fox (the reverse would be inappropriate) in the hen house. This past week as the CFTC put forward a proposal to institute a rule to restrict the number of contracts a firm can hold, and called for a 60-day, public-comment period, Ms. Sommers, now some two years since her Tokyo dissertation, let it be known she would vote against the rule, thereby assuming the mantle of the “Queen of Delay and Obfuscation” on issues relevant to reforming our severely tainted commodities trading institutions and procedures.
In the meantime, Chairman Gensler has been busy passing himself off as a reformer. Gensler is an ex-Goldman Sachs partner, having worked at the firm for 18 years, and was brought into the Treasury Department by ex-Goldman Chairman and Treasury Secretary Robert Rubin (Rubin, perhaps now best remembered for his defense of unfettered derivatives trading with minimal government oversight — the derivatives market now reaching some $300 trillion or 20 times the nation’s annual output). Gensler was quoted extensively in a New York Times article, “Goldman Deal-Maker Now Advocates Regulation”: “Wall Street’s interest is not always the same as the public’s interest,” and “Wall Street thrives and makes money in inefficient markets, and I am creating efficiencies in the market.” This coming from a man who, according to the Times, “in 2000 played a significant role in shepherding through Congress deregulation measures that led to explosive growth of the over-the-counter derivatives.”
When Gensler assumed his post in May 2009, the price of oil was $60/barrel at a time when, according to a then-current overview in the Financial Times, “the fundamentals of supply and demand are weak — much weaker than current prices imply.” Today at $90/bbl with fundamentals still glaringly weak, with inventories near all-time highs and refineries working under capacity, his “efficiencies” or lack thereof, are draining $600,000,000 a day from the economy. We consume some 20,000,000 bbls/day X $30/bbl (the difference $90/bbl-$60/bbl) or a staggering tax on the economy of $18 billion a month with gasoline prices again over $3.00 per gallon and heating-oil costs spiraling.
Mr. Gensler, in his remarks this Dec. 15, went on to observe that 148 days had passed since passage of the Dodd-Frank Act was signed into law, calling for trading limits to be in place for oil contracts come January 2011. He assured that his staff had worked assiduously: “They have had more than 475 meetings with the public on rulemaking, had more than 300 meetings with other regulators and organized seven public roundtables.”
All of which sounds very impressive. But, then again, not if you turn back the clock. Mr. Gensler has had much more than 145 days to deal with this issue. On July 27, 2009, the Wall Street Journal blazoned a headline that, “Traders Blamed For Oil Spike,” advising that the CFTC was to issue a report next month “suggesting speculators played a significant role in driving wild price swings in oil prices.” We are still waiting.
Also in July 2009, the CFTC announced it was considering volume limits on energy futures by financial/proprietary traders and tougher information requirements. That wasn’t 148 days ago, that was nearly 500 days ago, and now they want even more time. Or to quote Gensler once again, “It’s just appropriate to let this one ripen a little more,” and all the while “it” is ripening we are paying through the nose.
And who has access to the CFTC while the issue is “ripening a little more”? A plethora of industry lobbyists such as the CME Group Inc., the world’s largest futures/derivatives trading marketplace pushing the CFTC to defer setting limits, and Gensler’s professional alma mater, Goldman Sachs. A Forbes article on April 13, 2009, “Did Goldman Goose Oil?” hypothesized that Goldman played a key role in the massive short squeeze on Semgroup Holdings, whose oil positions amounted to 20 percent of the nation’s crude oil inventories. The squeeze itself was deemed to have a dramatic impact on the price of oil leading up to the $147/barrel on July 12, 2008. Semgroup Holdings filed for bankruptcy on July 22, 2008. And the likes of the Vitol Group, the oil trading behemoth that in August 2008 held oil contracts equal to 57.7 million barrels, according to the CFTC. At the time, according to the Washington Post (“A Few Speculators Dominate Vast Market For Oil Trading“) the CFTC also determined that a massive amount of oil trading activity was concentrated with a handful of speculators, and at that time alone 81 percent of the NYMEX was held by financial firms speculating for their clients or for their own account — seemingly not enough to light a fire under Mr. Gensler nor the CFTC to do the needful, setting trading limits in place post haste. Clearly letting themselves be stonewalled by industry lobbyists was a greater priority than bringing transparency and constructive limits to what by then had clearly become a trading racket, leaving the nation’s consumers to stake the chips of the financial casino high rollers.
Meanwhile the economy staggers under indefensibly high prices while our CFTC Commissioners delays and delays, running out the clock to a gullible Congress and Department of Energy. Two commissioners, Scott O’Malia and Michael Dunn, have already advised that though they are “voting in favor of publishing the rule for public comment that they may not ultimately support imposing position limits.” We need more public servants like that?
There seems to be but one forthright voice on the Commission — Mr. Bart Chilton, who earlier this month, stated that the CFTC is “facing pressure from inside and outside the agency” to find a way around the implementation deadlines. “First we have no legal authority to do so. Second that is exactly the type of dancing on the head of a legal pin Washington-speak that folks in the country are tired of — and they should be.”
Mr. Gensler may be a good man, he may be genuine in his efforts, he may have truly distanced himself from his formative underpinnings of Wall Street and the influence of power. Perhaps, perhaps not. If you permit me a baseball analogy, i’s the eighth inning. The CFTC All-Stars are playing the Oil-ogopoly All-Stars. The CFTC All-Stars have their ace pitcher on the mound, Gary Gensler, facing the Oil-ogopoly batters. They have already scored six runs this inning and have the bases loaded. The score is Oil-ogopoly 9, CFTC 6. No matter Gensler’s previous record, he now needs be pulled from the game. It’s high time for Obama to play Yogi Berra “the manager” and get that guy off the mound and maybe cashier the whole team. He might want to keep Chilton in the dugout at least, so that he could give instruction and guidance to the new players coming on board.
And if something isn’t done soon the bleachers may collapse, because that is the only ticket anyone will be able to afford.
Read more: Dodd-Frank Act, Treasury Department, Politics, Sempra Holdings, Congress, Oil, Bart Chilton, Jill Sommer, Vitol Group, Goldman Sachs, Robert Rubin, Michael Dunn, Wall Street, Gary-Gensler-Chairman-Cftc, Scott O'Dalia, Department of Energy, Financial Fix, CFTC Commisioners, Washington-Speak, President Obama, Yogi Berra, Commodity Futures Trading Commission, Business News
There was plenty of disappointment and hardship this year. But the year also brought opportunities for transformation.
It was a tough year. The economy continued its so-called jobless recovery with Wall Street anticipating another year of record bonuses while most Americans struggle to get work and hold on to their homes. The wars in Iraq and Afghanistan continued, and spilled over into Pakistan and Yemen, and more American soldiers died by suicide than fighting in Afghanistan. And it was a year of big disasters, some of them indicators of the growing climate crisis.
World leaders, under the sway of powerful corporations and banks, have been unable to confront our most pressing challenges, and one crisis follows another.
Nonetheless, events from 2010 also contain the seeds of transformation. None of the following stories is enough on its own to change the momentum. But if we the people build and strengthen social movements, each of these stories points to a piece of the solution.
1. Climate Crisis Response Takes a New Direction. After the failure of Copenhagen, Bolivia hosted a gathering of indigenous people, climate activists, and grassroots leaders from the global South — those left out of the UN-sponsored talks. Their solution to the climate crisis is based on a new recognition of the rights of Mother Earth. Gone are notions of trading the right to pollute (which gives a whole new meaning to the term “toxic assets”). Instead, life has rights, and we can learn ways to live a good life that doesn’t require degrading our home.
The official climate agreement that came out of Cancún was weak and disappointing, although it did represent a continued commitment to work to address the challenge. But the peoples’ mobilizations, and the solutions born in Cochabamba, continue to energize thousands.
Meanwhile, Californians voted to uphold their ambitious climate law, despite millions spent by oil companies to rescind the measure in November’s election. And cities — Seattle, for one — are moving ahead with their own plans to reduce, and even zero-out, their climate emissions.
2. WikiLeaks Lifts the Veil. The release of secret documents by WikiLeaks has lifted the veil on U.S. government actions around the world. While the insights themselves don’t change anything, they do offer grist for a national dialogue on our role in the world — especially at a time when our federal budget crisis may require scaling back on our hundreds of foreign military bases, our protracted overseas wars, and our budget-busting weapons programs. Likewise, the traumas inflicted on civilian populations and on our own military are spurring fresh thinking. We now have data points for a bracing, reality-based conversation on the future of war — the kind of conversation that makes democracy a living reality.
3. Momentum is Building for the Abolition of Nuclear Weapons. The ratification of the START Treaty is an important step in the right direction. And the National Council of Churches, the U.S. Conference of Catholic Bishops, the U.S. Conference of Mayors, and others from across the political spectrum have joined UN Secretary-General Ban Ki-moon in calling for an even more ambitious goal: the end of nuclear weapons.
4. Resilience is the New Watchword. As familiar sources of security erode, people are rebuilding their communities to be green and resilient. Detroit, a city abandoned by industry and many of its former residents, now has over 1,000 community gardens, a six-block-long public market with some 250 independent vendors, and a growing support network among small businesses. Around the country, faith groups and others are forming Common Security Clubs to help members weather the recession and consider more life-sustaining economic models. Communities are becoming Transition Towns as a means to prepare for breakdowns in society that may result from any combination of the triple crises of climate change, an end to cheap fossil fuels, and an economy on the skids.
5. Health Care — Still in Play. The passage of the Obama health care package seemed to lock us into a reform package that maintains the expensive and bureaucratic role of private insurance and props up the mega-profits of the pharmaceuticals industry. But the story is not over. The decision by U.S. District Judge Henry Hudson to strike down the individual mandate in the health care reform may begin unraveling the new health care system.
As insurance premiums continue their steep climb, some are advocating expansion of Medicare to cover more people — or everyone. Thom Hartmann points out this could be done with a simple majority vote in Congress — expanding Medicare to everyone was what its founders had in mind in the first place, he says.
Vermont is exploring instituting a statewide single-payer healthcare system. The United States may wind up following Canada’s path to universal coverage, which began when the province of Saskatchewan made the switch to single-payer health care, and the rest of Canada, seeing the many benefits, followed suit.
6. Corporate Power Challenged. Small businesses are distancing themselves from the U.S. Chamber of Commerce, which promotes the interests of mega-corporations over Main Street businesses. And there are more direct confrontations to corporate power. The citizens of Pittsburgh, Penn., passed a law prohibiting natural gas “fracking,” and declaring that the rights of people and nature supersede the rights of corporations. Other towns and cities are adopting similar laws. The biggest challenge will be undoing the damage of the Citizens United decision, which opened the floodgates to wealthy special interests to spend what they like on elections. Groups around the country are gearing up to take on the issue, with a constitutional amendment just one of the potential fixes.
7. A local economy movement is taking off as it becomes clear that the corporate economy is a net drain on our well-being, the environment, communities, and even jobs. A “Move Your Money” campaign inspired thousands to close their accounts with predatory big banks, and instead, to open accounts at credit unions and locally owned banks. Schools, hospitals, local retailers, and families are increasingly demanding local food. Farmers markets are spreading. Independent, local stores have huge cachet as people look local for a sense of community. And the experience of one state with a budget surplus and very low unemployment is capturing the imagination of other states — North Dakota’s state bank is creating a buzz.
8. Cooperatives Make a Comeback. A new model for local, just, and green job creation is gaining national attention. Leaders in Cleveland, Ohio, created worker-owned cooperatives with some of the strongest, local institutions (a hospital and university) promising to be their customers. The result: formerly low-income workers now own shares in their workplace and earn family-supporting wages. They can plan for their families’ futures, knowing that their jobs can be counted on not to flee the country. The model is spreading, and people now talk about how to bring “the Cleveland model” to their cities.
9. A Turn Away from Homophobia. The revoking of Don’t Ask, Don’t Tell is just the most dramatic sign that the country has turned away from homophobia. A widespread anti-bullying campaign sparked by the suicide of Rutgers freshman Tyler Clementi led to an “It Gets Better” campaign with videos created by celebrities and others.
10. Social Movements Still Our Best Hope. Thousands gathered in Detroit in June for the second US Social Forum, an event that galvanized grassroots social movements from across the United States. In Toronto, the meeting of the G20 was greeted by thousands of protesters, many of whom were subjected to police beatings and gassing. The Cancún climate talks brought caravans of farmer/activists and global justice activists as well as greens to press for a meaningful response to the climate crisis. Social movements are alive and well, even though they are disparaged or ignored by the corporate media, which choose to instead shower attention on the well-funded Tea Party. And movement leaders are connecting the dots between Wall Street’s plunder, growing poverty, and the climate crisis, and setting priorities instead for people and the planet.
The turbulence of our lives is increasing, spurred by the crises in the economy and the environment, growing inequality and debt, military overreach, deferred peacetime investments, and species extinctions. Turbulent times are also times when rigid belief systems and institutions are shaken, and change is more possible. Not automatic, and definitely not easy, but possible. The question of our time is how we use these openings to work for a better world for all life.
Sarah van Gelder is co-founder and executive editor of YES! Magazine, a national, independent media organization that fuses powerful ideas with practical actions for a just and sustainable world.
Read more: New Normal, US Social Forum, Cooperatives, Resilience, Move Your Money, Transition-Towns, Medicare for All, Jobs, Corporate Power, It Gets Better, Citizens United, California Climate Law, Wikileaks, Afghanistan War, Iraq War, Cancun, Wall Street, Nuclear Weapons, Military Bases, Detroit, Social Movements, Bolivia, Climate Change, YES! Magazine, Chamber of Commerce, Health Care, Common-Security-Clubs, Impact News
The US and Germany express serious concern about a second guilty verdict against jailed Russian oil tycoon Mikhail Khodorkovsky.