Crony Capitalism

Obama’s Approval Ratings are Lower than Crack Smoking Toronto Mayor’s

by

Just in case you weren’t up to speed on the uncontrolled demolition that is the Obama Administration, recent poll data demonstrates that he is less popular than Toronto mayor Rob Ford, who recently admitted to smoking crack while in a drunken stupor. The decline of Obama has been underway for a while now, let’s not … Read more

Is NYPD Police Commissioner Ray Kelly is About to Take a Job at JP Morgan?

by

Thought the revolving door couldn’t get any worse? Think again. The Banana Republicization of these United States is now traveling at hyperloop speed. It’s one thing for folks at the SEC and Congress to jump ship for Wall Street, but the head of the country’s largest police force going to JP Morgan? This is particularly … Read more

Citigroup Written Legislation Moves Through the House of Representatives

by

Five years after the Wall Street coup of 2008, it appears the U.S. House of Representatives is as bought and paid for as ever. We heard about the Citigroup crafted legislation currently being pushed through Congress back in May when Mother Jones reported on it. Fortunately, they included the following image in their article:

citigroup-side-by-side

Unsurprisingly, the main backer of the bill is notorious Wall Street lackey Jim Himes (D-Conn.), a former Goldman Sachs employee who has discovered lobbyist payoffs can be just as lucrative as a career in financial services. The last time Mr. Himes made an appearance on these pages was in March 2013 in my piece: Congress Moves to DEREGULATE Wall Street.

More from the New York Times:

The House is scheduled to vote on two bills this week that would undercut new financial regulations and hand Wall Street a victory. The legislation has garnered broad bipartisan support in the House, even after lawmakers learned that Citigroup lobbyists helped write one of the bills, which would exempt a wide array of derivatives trading from new regulation.

Remember what George Carlin observed:

“Bipartisan usually means some larger-than-usual deception is being carried out.”

The bills are part of a broader campaign in the House, among Republicans and business-friendly Democrats, to roll back elements of the 2010 Dodd-Frank Act, the most comprehensive regulatory overhaul since the Depression. Of 10 recent bills that alter Dodd-Frank or other financial regulation, six have passed the House this year. This week, if the House approves Citigroup’s legislation and another bill that would delay heightened standards for firms that offer investment advice to retirees, the tally would rise to eight.

Read more

Like this post?
Donate bitcoins: 35DBUbbAQHTqbDaAc5mAaN6BqwA2AxuE7G


Follow me on Twitter.

Picture of the Day: This is How I Would Decorate the U.S. Tombstone

by

Now I am become Death, the destroyer of worlds. – The Bhagavad Gita This is all we would need to put on the tombstone for the USA. No words, no tears, no flowers. Just a picture of George W. Bush putting the Medal of Freedom around the neck of the most destructive American in our nation’s … Read more

Stock Prices Have Risen Every Week the Fed Bought Bonds Since 2009

by

I can’t say this is surprising, but it’s still interesting to hear once and for all. Gotta love those non-existent free markets we hear so much about… From Forbes: Here is the most important factual find about the stock market I’ve learned for some  many years: More than 100% of equity market gains since January … Read more

How Dianne Feinstein’s Husband Sells Post Office Real Estate to His Friends on the Cheap

by

The county records allow for comparing the assessed value of the postal properties before they were sold to the final sales prices negotiated by CBRE on behalf of the Postal Service: And the comparisons reveal that CBRE has sold the bulk of this public real estate at prices under their assessed values — and apparently at far below fair market values.

CBRE is also charged with appraising the fair market value of these properties and listing a reasonable sales price. It is important to point out that real estate appraisals are not customarily performed by the agent marketing the property. To avoid conflicts of interest, property appraisals are normally performed by professionals not involved in negotiating the sale.

– Peter Byrne from his book Going Postal

We’ve all heard about how the Russian oligarchs amassed their tremendous fortunes in the wake of the collapse of the former Soviet Union by purchasing valuable assets for pennies on the dollar using shady insider deals. The oligarchs in the USA have learned their lessons in crony capitalism well, and unsurprisingly, the apple doesn’t fall far from the tree in this case. Dianne Feinstein is one of the most shameless, authoritarian, undemocratic Senators we have, so it is no surprise that the Princess of Darkness’ husband would be involved in schemes to rip-off public assets to benefit friends and his commercial real estate firm C.B. Richard Ellis.

The following excerpts are from an article published in the East Bay Express and consists of passages from the introductory chapter of a new e-book, Going Postal, by investigative journalist Peter Byrne. There is some epic fraud going on here:

On July 27, two hundred people sang and chanted on the steps of the historic main post office in downtown Berkeley to protest its upcoming closure and sale. City Councilman Jesse Arreguin took the microphone to angrily decry the closure. In fact, the Berkeley City Council had voted unanimously to oppose the sale. Why the day of rage?

But inconvenience alone did not account for the existential angst being expressed by the mostly over-fifty members of the throng as they questioned the motives of the United States Postal Service for selling post offices all over the country to developers. “Which of our public assets will be privatized next?” speakers asked. “Streets? Schools? The Lincoln Bedroom?”

The post office is being killed for political reasons, they assert, pointing out that the corporation with the exclusive contract to negotiate sales for the Postal Service’s $85 billion real estate portfolio is C.B. Richard Ellis (CBRE). And that the company is chaired by Richard C. Blum, who is the husband of US Senator Dianne Feinstein and a member of the University of California Board of Regents. CBRE’s connection to a politically powerful family with a history of accessing public pension funds to make private investments has caused more than a few activists to suspect wrongdoing — even though no evidence of any conflicts of interest tied to the CBRE contract have been revealed.

Until now.

My yearlong investigation has uncovered evidence of multiple conflicts of interest and problems with post office sales supervised by Blum’s company, including:

• CBRE appears to have repeatedly violated its contractual duty to sell postal properties at or above fair market values.

• CBRE has sold valuable postal properties to developers at prices that appear to have been steeply discounted from fair market values, resulting in the loss of tens of millions of dollars in public revenue.

Read more

Like this post?
Donate bitcoins: 35DBUbbAQHTqbDaAc5mAaN6BqwA2AxuE7G


Follow me on Twitter.

AIG CEO Compares Anger at Wall Street Bonuses to the Lynching of Black People in the South

by

I’m doing God’s work.
– Goldman Sachs CEO Lloyd Blankfein in a November 2009 interview

It’s war. It’s like when Hitler invaded Poland in 1939.
– Steve Schwarzman, Chairman and co-founder of Blackstone, on potential tax changes in 2010

The uproar over bonuses was intended to stir public anger, to get everybody out there with their pitch forks and their hangman nooses, and all that–sort of like what we did in the Deep South. And I think it was just as bad and just as wrong.
– AIG CEO Robert Benmosche in a Wall Street Journal Interview this past weekend

As if you needed any more evidence of how disconnected, entitled, irrational and sociopathic the heads of financial firms in America are these days, along comes AIG’s CEO Robert Benmosche to dispel any lingering doubts. In a highly disturbing interview with the Wall Street Journal, Mr. Benmosche compares the murder of black people in the deep south based on racial prejudice and hate to the vast majority of Americans expressing disgust with the fact that Wall Street decided to suspend capitalism when it was in their best interests in order to give themselves trillions of dollars.

He actually compares an environment where the rule of law was often completely suspended to allow the murder of a disenfranchised racial group, to widespread public anger about the suspension of the rule of law to benefit the wealthiest, most connected people in the nation.

The craziest part of his statement is that if anything, the bailout of financial oligarchs to the severe detriment of the rule of law, free markets and the best interests of the vast majority of the American public is actually what is most similar to lynchings in the south. In both cases, the rule of law was suspended to benefit the powerful over the weak. This man is a dangerous sociopath, and he is precisely the type of person you get in charge when you bail out institutions that should have died.

More from the Wall Street Journal:

Mr. Benmosche on the government’s campaign against partial “bonuses” to be paid to hundreds of employees in the AIG financial-products unit as they unwound massive, ill-fated bets on mortgage bonds. He said “less than 10” employees were behind the bad trades.

“That was ignorance … of the public at large, the government and other constituencies. I’ll tell you why. [Critics referred] to bonuses as above and beyond [basic compensation]. In financial markets that’s not the case. … It is core compensation.

Core compensation would have been reset in the financial industry down to more reasonable levels had there not been bailouts. That’s capitalism you crony jackass.

“Now you have these bright young people [in the financial-products unit] who had nothing to do with [the bad bets that hurt the company.] … They understand the derivatives very well; they understand the complexity. … They’re all scared. They [had made] good livings. They probably lived beyond their means. …They aren’t going to stay there for nothing.

So let them go. Again, isn’t that capitalism? What about all of the people that lost their jobs and are on food stamps now because of those “10 people” at AIG? Moreover, how many of those 10 are in prison?

The uproar over bonuses “was intended to stir public anger, to get everybody out there with their pitch forks and their hangman nooses, and all that–sort of like what we did in the Deep South [decades ago]. And I think it was just as bad and just as wrong.

Read more

Like this post?
Donate bitcoins: 35DBUbbAQHTqbDaAc5mAaN6BqwA2AxuE7G


Follow me on Twitter.

A Deep Look into the Shady World of the Private Prison Industry

by

Private prisons are antithetical to a free people. Of all the functions a civilized society should relegate to the public sector, it’s abundantly clear incarceration should be at the very top of the list. Jailing individuals is a public cost that a society takes on in order to ensure there are consequences to breaking certain rules that have been deemed dangerous to the happiness and quality of life within a given population. However, the end goal of any civilized culture must be to try to keep these cost as low possible. This should  be achieved by having as few people as possible incarcerated, which is most optimally achieved by reducing incidents of criminality within the population. Given incarceration is an undesirable (albeit necessary) part of any society, the idea is certainly not to incentivize increased incarceration by making it extremely profitable. This is a perverse incentive, and one that is strongly encouraged by the private prison industry to the detriment of society.

I’ve written many articles highlighting the negative consequences of the private prison industry, and these have focused on the two biggest names in the space. Corrections Corp of America (stock ticker, CXW) and GEO Group. A few of my most popular articles on the topic are:

Texas Teen Faces 8 Years in Jail for an Insensitive Joke on Facebook

Idaho Dumps Private Prison Company Due to “Violence, Understaffing and Over-billing”

America in 2013: Florida Football Stadium Named After a Private Prison Company

In the Public Interest has taken this a step further in its recent excellent report titled: Criminal: How Lockup Quotas and “Low-Crime Taxes” Guarantee Profits for Private Prison Corporations.

In the Public Interest describes itself as:

A comprehensive resource center on privatization and responsible contracting.  It is committed to equipping citizens, public officials, advocacy groups, and researchers with the information, ideas, and other resources they need to ensure that public contracts with private entities are transparent, fair, well-managed, and effectively monitored, and that those contracts meet the long-term needs of communities.

Their report explains how private prison companies insist that states embed “occupancy guarantees” into their contracts with the public sector. They estimate that at least 65% of all private prison contracts have such guarantees, and in some states, like Arizona, the guarantee is a shockingly high 100%. This leads to overcrowding in many instances, and sometimes violent offenders are placed in prisons set up for nonviolent offenses just to fill the quotas. In the event that the beds can’t be filled, the taxpayer makes up the difference to the private prison company. They win no matter what. It’s just more crony capitalism. Below are some highlights from this excellent report.

Major Findings

  • 65 percent of the private prison contracts ITPI received and analyzed included occupancy guarantees in the form of quotas or required payments for empty prison cells (a “low-crime tax”). These quotas and low-crime taxes put taxpayers on the hook for guaranteeing profits for private prison corporations.
  • Occupancy guarantee clauses in private prison contracts range between 80% and 100%, with 90% as the most frequent occupancy guarantee requirement.
  • Arizona, Louisiana, Oklahoma and Virginia are locked in contracts with the highest occupancy guarantee requirements, with all quotas requiring between 95% and 100% occupancy.

In 2012, Corrections Corporation of America (CCA), the largest for-profit private prison company in the country, sent a letter to 48 state governors offering to buy their public prisons. CCA offered to buy and operate a state’s prison in exchange for a 20-year contract, which would include a 90 percent occupancy rate guarantee for the entire term. Essentially, the state would have to guarantee that its prison would be 90 percent filled for the next 20 years, or pay the company for unused prison beds if the number of inmates dipped below 90 percent capacity at any point during the contract term (a “low-crime tax” that essentially penalizes taxpayers when prison incarceration rates fall). Fortunately, no state took CCA up on its outrageous offer. But many private prison companies have been successful at inserting occupancy guarantee provisions into prison privatization contracts, requiring states to maintain high occupancy levels in their private prisons.

These contract clauses incentivize keeping prison beds filled, which runs counter to many states’ public policy goals of reducing the prison population and increasing efforts for inmate rehabilitation. When policymakers received the 2012 CCA letter, some worried the terms of CCA’s offer would encourage criminal justice officials to seek harsher sentences to maintain the occupancy rates required by a contract. Policy decisions should be based on creating and maintaining a just criminal justice system that protects the public interest, not ensuring corporate profits.

The private prison industry has promoted policies and practices that increase the number of people who enter and stay in prison. It is no surprise that the two major private prison companies, CCA and GEO Group, have had a hand in shaping and pushing for criminal justice policies such as mandatory minimum sentences that favor increased incarceration.

Read more

Like this post?
Donate bitcoins: 35DBUbbAQHTqbDaAc5mAaN6BqwA2AxuE7G


Follow me on Twitter.

Bernie Sanders Passionately Decries the American Oligarchy on the Senate Floor

by

Senator Bernie Sanders of Vermont is the longest serving Independent member of Congress in American history. While I certainly don’t agree with him on everything, I have always respected his willingness to call out the Federal Reserve for the fascist cartel that it is. He has often accurately called it “socialism for the rich.” Back in … Read more

Why Obama Allowed Bailouts Without Indictments by Janet Tavakoli

by

The government’s bailout plan destroyed capitalism. In a capitalist system, those who stood to gain–and already made off with large gains—would have to bear the risk. The bailouts represented a corruption of capitalism. Crony capitalism violates the spirit of democracy established by the Founding Fathers of the republic known as the United States. I expressed these sentiments in a letter to the Financial Times on September 29, 2008.

– Janet Tavakoli

The following article by Janet Tavakoli is an excellent reminder of the extraordinarily destructive coup pulled off by financial oligarchs in fall of 2008, when the rule of law was suspended and total theft institutionalized. I have written many times about my experience on Wall Street when the bailouts happened. How I ranted and raved on the trading desk about how TARP marked the end of any semblance of free markets and that there was no turning back. How I was told to “take a walk around the block” to cool off.

All of the suffering and hardships the majority of Americans are experiencing today are directly related to the coup pulled off by the crony financial oligarchs in the fall of 2008, and all of the media and political minions that helped them do it. People realize we have become a Banana Republic and they have now lost all hope. That said, there should always be hope and we can certainly restore society to better days, but not until we remove our domestic cancers from their positions in the highest offices of government, finance and corporate America. That is what we must peacefully achieve.  Now here’s Janet Tavakoli:

In November 2008, President Obama was elected, and he was sworn in January 2009. The country was promised change and reform. Recently two democrats close to the top of President Obama’s administration made excuses to me for the lack of financial reform in the United States. Their separately related versions were remarkably similar, so similar they seemed scripted:

The administration made a bargain, and I’m not sure it was the right decision. The world was teetering on the edge of collapse. There was a crisis of confidence. There would have been unimaginable consequences. So bad even your imagination can’t handle the truth?

It was the lesser of two evils to let a lot of people get away scot free than to risk a collapse in confidence.  There were only two choices according to this narrative.

It was better to let a lot of people get away scot free than to have the first African American president take on the establishment while the country was deeply divided and he needed agreement on big things like ending wars, health care, Supreme Court nominees (and LGBT rights). There were lots of battles without taking on the financial establishment.  It seems to me that reforming our financial system is a big thing. As for at least two of the narrative’s big issues: health care costs are zooming up, and it looks as if we’re rattling our swords for another military conflict.

The president was elected in part on his promise to effect change on the really tough issues, and there was no better time than when the crisis was fresh, and he had a groundswell of popular support.

The most amusing thing about all of this is that people wanted President elect Obama to stick it to the financial oligarchs. Instead, he gave them trillions and offered immunity. More from Janet:

Instead of TARP, handing out money to cover banks’ losses, we could have forced creditors to accept a restructuring plan. This is what was done during the Great Depression. Creditors, i.e., debt holders including credit default swap counterparties, would have been compelled to accept a restructuring plan. That required partial forgiveness of debt in many cases and/or a debt for equity swap.

Read more

Like this post?
Donate bitcoins: 35DBUbbAQHTqbDaAc5mAaN6BqwA2AxuE7G


Follow me on Twitter.