Tuesday, September 30, 2008
Monday, September 29, 2008
One, we are still in dire straits economically. Yes, it is the fault of these industries, a deregulated environment, and the fact we have allowed business to administer the halls of power and our financial well being into what we have now. However, the average American is still spending (earned and borrowed) more than he or she makes in a year. The institutions, once corrected by market forces, are going to destroy the life's savings, retirements, and jobs of millions of people. There is no getting around that.
Moreover, there is no guarantee that any infusion of government money is going to prevent it. The rot of the markets has already set in and has for the past two weeks (arguably the past year, since the subprime collapse occurred last autumn). There is no way even $700 billion is going to rescue it because the fundamentals and credit-worthiness of the companies and its clients remain weak. Did anyone honestly believe that if this bill had passed that the lending institutions would loosen the credit requirements again? We deregulated the industry and cut their taxes multiple times in the past decade and the executives of these companies still managed to put themselves on the economic and financial brink.
Two, there still remains an ideological cleavage in the House of Representatives. More than two-thirds of House Republicans opposed the bailout because they think anything that interferes with the market is necessarily wrong. Forty percent of House Democrats opposed it because, like myself, they were critical of a corporate giveaway and reward for institutions and executives whose criminal conduct destroyed these institutions. This defeat is not going to bridge that divide. If Congress were to really take up the legislation that it should, which would mean concentrating on protecting the assets, retirements, and homes of workers, instead of executives, those same Republicans would likely oppose it, as well as any regulations on an industry they were vital in deregulating back in the 1990s (with the help of then President Bill Clinton). It seems highly unlikely that this Congress will do anything that is of value.
Three, the threat of a future watered down bill in Congress still remains. The House is going to reconvene on the issue shortly, certainly no later than next week. When they do, you can be assured that the full persuasive force of the White House and Congressional leadership will be used to manufacture sufficient votes. Of course, the legislation will be reworked to give the appearance of a different and improved bill, but it will be nothing of the kind. This bill was defeated because of Congressional Republicans. Their votes will not be swayed by a reintroduction of the Glass-Steagall Act. Indeed, it would only agitate them all the more.
Four, Secretary of Treasury Henry Paulson and Federal Reserve Chairman Ben Bernanke cannot be trusted to implement any plan for regulation, recovery, and certainly not a taxpayer giveaway. Paulson is an ex-chief executive at Goldman Sachs. He knows most of the executives I have fulminated against for the past week. There is a reason he has been so vociferous in wanting to see them succeed. This was all the more reason why his initial proposal called for no oversight of his government purchases of failed companies. Bernanke has also been intimately involved in this crisis, as one of the apologists for predatory loan practices, which facilitated what we are residing in today. In fact, as an economist Bernanke (ad admirer and friend of Milton Friedman) was one of the early supporters for the overthrow of the Glass-Steagall Act back in 1999. Trusting people so closely involved with the bureaucratic mechanisms and causes for the current state of affairs is not a recipe for economic recovery.
Still, there is one thing you will be able to rely on. The continued lack of a backbone and frequent side-by-side appearances of the Congressional Democratic leadership with President Bush, extolling the virtues of bipartisanship and "putting our country first."
If this bailout package was about protecting the population, just include an amendment that insulates us from predatory lending practices. Outlaw executive compensation when the company is not making money (instead of waiting for the company to go bankrupt). Ban existing oversized contracts for CEOs (which the legislation specifically refuses to address). Or round up the lot of them and throw them in jail (which obviously will never happen, seeing how both Congress and the White House, as well as the candidates running for the position, accept large amounts of donations from these impacted industries). Better yet, forgive the debts of the people in bankruptcy (which the package does not do) and re-regulate the banking industry by reintroducing the Glass-Steagall Act (the Depression era law that was repealed under President Clinton). Notice, no one is talking about Glass-Steagall in Congress or the White House. The Republicans, who feign cries about "tougher enforcement," would suddenly remember who sponsors their campaigns at the sight of real vigorous regulation--regulation which, if Glass-Steagall was still in place, would have prevented many of the business practices of these companies that put us in our financial bind.
No protection for the average American. You see, that is socialism. But it is OK for the Republicans and their water carriers in the Democratic Party (i.e., DLC) to tell me with a straight face that they believe in free markets, except this one time (when they want $700 billion of my money to subsidize the malfeasance that was committed in a deregulated environment).
Democratic Leadership: Gutless and Spineless
Leave it to Congressional Democratic leadership to cave into President Bush, yet again--just as they did on Iraq war funding, on Iraq period, on FISA, and now the greatest betrayal of them all.
And just as they did in the fangless side agreements on NAFTA, the Congressional Democratic leadership justified their support for the package by claiming that the bill will give some protection to homeowners. Actually, it gives very little. They also claim there should be some oversight, since an oversight board was included (which Secretary of Treasury Paulson never wanted), but it is indiscernible and unenforceable. There is nothing in the bill that holds the Secretary of Treasury, Federal Reserve, or anyone accountable for the spending of our money to prop up their friends on Madison Avenue.
Since the Democrats have taken over Congress, a thousand more of our soldiers, countless thousands of Iraqis have died, and hundreds of billions of dollars have been proposed to assume the debts accrued from the crimes committed by Wall Street. This is the Democratic Party's idea of bipartisanship, to govern like Republicans. This is why we have had to endure some of the most retrograde legislation under Democratic tenures in Congress and in the White House--from free trade, multiple bombings of Iraq (and collusion by many Democrats with Bush on this war), Serbia, and numerous other countries, the Defense of Marriage Act, the Welfare Reform Act, and now this latest act of knee-scraping to their ideological and financial overlords.
For those who think my view of the President and Congress is unwarranted, these are just some of the details of the screwing the American taxpayer is going to endure for Wall Street.
Who wins, who loses under proposed bailout plan?
Monday September 29, 2:58 am ET
By Tom Raum, Associated Press Writer
The proposal to bail out U.S. financial markets to the tune of up to $700 billion creates a lot of potential short-term winners, as well as some losers.
Wall Street and the banking industry are perhaps the biggest winners. Scores of banks and other financial institutions faced with going under stand to gain a lifeline that should allow them to start making loans again.
These securities are clogging balance sheets, leaving banks without the required capital to make new loans and putting the banks dangerously close to insolvency.
Banks not only have slowed lending to individuals and businesses, they have stopped making loans to each other. The rescue plan should help restore confidence to financial markets.
There are other winners, too, if the bailout works as intended: anyone soon trying to borrow money -- for cars, student loans, even to open new credit card accounts.
Top executives at troubled financial institutions, on the other hand, are in the losing column because the proposal would limit their compensation and rules out "golden parachutes."
Of course, these executives may take solace in knowing their jobs still exist.
Investors, including the millions of people who hold stock in their 401(k) and pension plans, should benefit. Failure to reach a deal over the weekend could have sent stock markets around the world tumbling on Monday.
Homeowners faced with foreclosure or those who have lost their homes get little help from the agreement. Nor will it help people whose houses are worth less than what they owe get refinancing or take out equity loans.
It would do little to halt the slide in home values that are one of the root causes of the current economic slowdown.
"It doesn't deal with the fundamental problems that gave rise to the problem -- or alleviate the credit crisis," said Peter Morici, an economist and business professor at the University of Maryland
Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke are potential winners.
In just a few months, they have remade Wall Street. If the plan helps to get the economy moving again, they may be remembered for having kept the financial crisis from spreading throughout the economy.
"When I see Hank Paulson and Ben Bernanke on TV, I see fear in their eyes. Like on a battlefield when people are shooting at you. I think they are afraid to say how serious the problem is for fear of making it worse," said Bruce Bartlett, an economist who was a Treasury official under the first President Bush.
Bartlett said the plan is flawed, yet the alternative of doing nothing could be catastrophic.
After the heavy dose of new regulation in the agreement, New York will have a hard time claiming it is the center of the financial universe. That title may have shifted to Washington.
If the plan stays together, Congress -- with approval ratings even lower than those of President Bush -- may be seen as having acted decisively at a time of national emergency.
Congressional leaders added new protections to the administration's original proposal. That was only three pages long and bestowed on the treasury secretary almost unfettered powers.
Instead, the agreement would divide the $700 billion up into as many as three installments, creates an oversight board to monitor the treasury secretary's actions and set up several major protections for taxpayers, including a provision putting taxpayers first in line to recover assets if a participating company fails.
The president, on the other hand, probably would get little credit for the deal. He allowed Paulson and Bernanke to do the heavy lifting. The only time he called all the players to the White House -- late Thursday afternoon -- the wheels almost came off the process entirely.
It's hard to tell which presidential candidate benefits the most from an agreement they tentatively endorsed Sunday, a little more than five weeks before the Nov. 4 election. Democrat Barack Obama and Republican John McCain each sought to claim some credit for the deal, even though they played active roles only over the past few days.
Hard economic times traditionally work against the party that holds the White House, and in recent polls Obama has inched ahead of McCain. Furthermore, there is widespread consumer resentment over being asked to bail out Wall Street and lawmakers have learned the proposal has not been popular with their constituents.
That may help Democrats in general. The strongest opposition to the original bailout plan came from House Republicans.
Lawmakers and presidential candidates alike are "trying to orchestrate everybody jumping off the cliff together," said Robert Shapiro, a consultant who was an economic adviser to President Clinton. "I think we'd have a different plan if we weren't five weeks out from the election."
And ordinary taxpayers?
Nothing that potentially adds $700 billion to the national debt -- already surging toward the $10 trillion mark -- can be considered a winner for those who foot the bills.
But lawmakers did put in taxpayer protections, including one to require that taxpayers be repaid in full for loans that go bad.
The package could even end up making money for taxpayers, supporters claimed.
But only if the loans and interest on them are repaid in full. Few expect that provision to be a winning proposition, however.
This is what I feel about seeing done to the CEOs and Boards of Execs of our Fortune 500 companies right about now.
No, I take that back. This would be a much more preferable place, for the CEOs, Execs, and their lead prostitute Henry Paulson.
Seriously, what a pity we are not the Soviet Union during Stalin, just for this one day.
Sunday, September 28, 2008
Here is a chance for Fox "news" and the Independent Women's Forum to pretend to be feminists and cry sexism.
This brings back another memory of a not-so-bright Republican VP candidate.
Friday, September 26, 2008
Consumer credit limit crackdown
As banks put the brakes on borrowing, credit cardholders are finding their lines of credit getting dramatically reduced as well.
NEW YORK (CNNMoney.com) -- After a weekend getaway in New York City, Joseph Lanza logged onto his Bank of America Visa account and was shocked to see that his line of available credit had been reduced to $1,000 from $3,800.
Because of the recent charges from his trip, his balance was $970, dangerously close to his credit limit. "I had been trying to pay my debt down to improve my FICO score and also my debt-to-credit ratio," said Lanza, 26, who works at an investment firm in New Hampshire.
But despite making timely payments and keeping careful track of each charge, he said, "It feels like I'm running up against a bunch of walls."
Betty Riess, a spokeswoman for Bank of America, said she was unable to address the specifics of Lanza's account, but she did say the bank is "taking a more aggressive look at accounts to control risk, given the current environment."
Credit card issuers have been reining in credit limits lately "to minimize their risk because the economic climate has changed so dramatically," explained Bill Hardekopf, chief executive of the card rating site LowCards.com.
In the midst of a financial crisis, banks have less money to lend. On top of that, the percentage of people who are delinquent on their credit card payments rose 12% in the second quarter from the same period a year ago, according to credit reporting agency TransUnion LLC.
So to mitigate rising risk and compensate for less credit overall, issuers are scaling back consumer credit lines - sometimes by more than 50%, according to the American Bankers Association (ABA), a bank industry trade group.
In fact, 62% of credit card issuers have cut back the lines of credit they make available to consumers, according to a recent report by Javelin Strategy & Research, which advises the financial services industry.
That means that consumers across the board are suddenly finding out the hard way that their limit is not what it used to be.
Consumers with better credit histories and high credit scores are less likely to get hit with a sudden restriction on their credit limits, but it can happen to anyone, according to Carol Kaplan, a spokeswoman from the ABA.
"Credit lending standards are tightening across the board, it doesn't matter how great your credit score is," Kaplan said. "This is happening everywhere, to everyone."
In the past, banks have used unsolicited credit-limit increases as a marketing tool to keep their customers happy, according to Ben Woolsey, director of marketing and consumer research at CreditCards.com, a card comparison Web site. But that tool "appears to have dried up along with the 0% APR introductory periods," he said.
Customers like Lanza, who have their limit lowered, now have less available credit. That means their buying power is slashed and they are more at risk of exceeding their limit and getting hit with a hefty fee in addition to a higher annual percentage rate (APR). Over-the-limit fees usually range between $25-$35 a pop and some default APRs are as high as 30%-32%, according to Hardekopf.
With a lower limit, consumers are also more likely to use up a greater percentage of their available credit each month (or debt-to-limit ratio), which has negative effects on their credit score and ability to get loans.
The debt-to-limit ratio is calculated by dividing what consumers spend each month by their credit limit, and it's a key component of credit scores. If your limit drops to $1,000 from $2,000 and you continue spending $500 a month, your debt-to-limit ratio immediately jumps from a favorable 25% to an unfavorable 50%.
As a result, lenders may increase your APR or deny you a loan, even if you continue to pay your balance off every month and never exceed your limit.
Even though the good old days of sky-high credit are over, there is recourse for consumers to improve their financial picture.
For starters, be aware of what your limit is. It can change from one billing cycle to the next. Although credit card issuers are required to disclose any change in a consumer's credit limit before it takes effect, "it's a fine print thing," said Hardekopf.
If you discover that your limit has been lowered, try calling and asking a customer representative to raise it again. You may have to speak to a supervisor or a representative in the retention unit, but your card company might be willing to restore your limit in hopes of hanging on to your account.
How nice not to tell your customers that you are reducing their credit line and destroying peoples' credit scores in the process. Yes, they sure deserve a bailout, alright (from their freedom).
Thursday, September 25, 2008
The thought of hearing the same man who some months back claim that it was not the government's Constitutional responsibility to give children health coverage now declare it (after a cursory ode to free markets) my duty as a taxpayer to rescue his friends on Wall Street for their inability to run their private businesses is just one more notch for why this man should be sitting in a prison cell, awaiting prosecution. Even more offensive is Secretary of Treasury Henry Paulson (himself every bit a part of the criminal culture of the business community of this country, as the ex-chief executive of Goldman Sachs) telling Congress and, by extension, myself as an American that we must bailout AIG, Bear Sterns, Fanny, and Freddie, or else it will be our fault for when the economy collapses. This is similar to a bank robber telling the clerk that if the depositors do not put more money in the bank then they will be responsible for its fall. They robbed the bank. These unconvicted felons that administer AIG, Bear Sterns, Fanny, Freedie, as well as the other corporate welfare cases ready to get in line (Wachovia, WaMu, etc.) were the ones who ran these companies into the ground with their business practices, and as such bear the command responsibility for their failure.
My inaction did not cause these institutions to underwrite bad loans and policies that they invented. I am not the one who said this about subprime loans a year ago.
"I don't see (subprime mortgage market troubles) imposing a serious problem. I think it's going to be largely contained."--Henry Paulson, April 2007For the longest time, people like Greenspan, Paulson, and Bernanke told us that these markets and companies were fine, deregulation a boon, and that variable interest loans a viable way to promote home ownership. These same people lobbied on behalf of these industries to have bankruptcy laws for average Americans tightened, treating us like guilty parties when we lose our money (and most bankruptcy cases are caused by catastrophic health care costs), and yet now they sing a different tune for themselves.
"All that said, given the fundamental factors in place that should support the demand for housing, we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited, and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system."--Ben Bernanke, May 2007
This is how you can tell the economy is hurting. When people who are supposed to have money complain about how unfair it is that they no longer have money, but then expect us to support them out of a crisis that they caused.
"The American financial system was shaken to its core on Sunday. Lehman Brothers Holdings Inc. faced the prospect of liquidation, and Merrill Lynch & Co. agreed to be sold to Bank of America Corp"--Wall Street Journal, September 2008
And where are our friends from the right on this? Here is one of the whores for unregulated capital, Glenn Beck, oh, he of the hospital almost killed me, but I will not sue because I believe in free enterprise. The same Glenn Beck who thinks oil companies are a godsend, doing this country a great service by overcharging us as consumers (and raking in record profits). The same Glenn Beck who thinks it Communistic to have any form of socialized medicine, and yet he believes that forcing me to pay $700 billion for the people who write his check is the "best plan available" at the moment.
Well, I have a better plan. It is one the Chinese have when corporate malfeasance is committed. They arrest the executives, CEOs, prosecute them all, throw them in jail and, not infrequently, send them to an early departure. That would seem a fair exchange for $700 billion of my money.
How about something really radical, like taking that money and guaranteeing health care, education, and a decent standard of living for every person in this country (as all of these elements should be inherent and fundamental rights of citizenship as important as voting)? If the business community cannot run these industries without destroying them (as well as our economy), how about taking over these banks permanently and making sure the bureaucrats (without a profit motive) who run them will be held legally and criminally liable for their actions (and banning predatory loan practices, high executive pay, and making it illegal to confiscate peoples' homes during economic down times)? Now that would be socialism, to be sure, but instead of the national socialism of Republicans (who only want the state to be the armed guard for the upper 1% income tax bracket), it would be one that actually works for people who are not wealthy, white, and Republican.
Ex-bankers on pushing customers to rack up debt
By Deborah Feyerick
BELFAST, Maine (CNN) -- As an account manager for credit card giant MBNA, Cate Colombo spent four years speaking to customers, answering questions about interest rates and waiving late fees.
Kathy Ellingwood did the same. She lasted only a year and a half before quitting this summer.
The women worked in different departments at the sprawling customer call center in Belfast, Maine, yet they share similar stories about aggressive selling tactics they claim they were told to use to push cash advances, sometimes getting customers to max out their credit cards.
"Every customer who calls in is a mark. It's a great big con," said Colombo, who estimates that she alone sold almost a quarter of a billion dollars in the four years she worked for MBNA before it was bought in 2005 by Bank of America.
Americans now carry $850 billion in credit card debt. Consumer groups are lobbying Congress to include better protection for credit card holders, demanding legislation to prevent what they call unjustified interest charges and deceptive practices, especially in light of the massive financial bailout now being considered.
Colombo and Ellingwood said that within seconds of a customer's call, they would have his or her entire credit history on screen, and they were trained what to say to sell people money. Ex-bank employees spill secrets »
"I would say 90 percent of the time, people were pragmatic. They would say, 'I don't need $100,000,' and we would find a way to convince them they needed the money," Ellingwood recalled.
She said they would look for trigger words like, "I'm in financial difficulty" or "I can't make my payments." Colombo said other triggers were, "I have to send my son to college. My car is not running. I'm moving."
Colombo said some people even asked about getting a $50,000 cash advance -- usually at zero percent interest -- for a down payment on a house. And although that's illegal, the former employees say they were trained to get around it by saying, "I cannot give you money to use as a down-payment on a home. However, what I can do is, I can deposit some money into your checking account, and once it's there, the funds are there, it's yours to do with what you please."
Bank of America told CNN, "Only customers in good standing and with good payment history are able to access cash up to available credit line."
But Colombo and Ellingwood say they were told to sell hard to everyone. Once the customer agreed, they say, they would speed through intricate disclosure notices. Among the details, how a zero-percent or low interest rate could convert to as much as 28 percent if a payment was even a day late.
"You're basically looking at people who need the money most, who may not be able to afford it," Ellingwood said.
Colombo remembers having a conversation with one man in his 90s.
"He had all this available credit, maybe $100,000. I have my manager screaming, 'Colombo, you need to sell. You need to sell. You need to sell,' " she said.
Bank of America calls its terms "clear and transparent." But credit card lending practices have now gotten the attention of Congress. Consumer groups support a bill to curb what they call predatory lending.
The American Banking Association opposes it, saying, "Consumers have benefited from a competitive marketplace that allows for pricing based upon risk."
Americans for Fairness in Lending, which put CNN in touch with Colombo and Ellingwood, wants deceptive credit card practices included in the financial bailout legislation that is now before Congress.
Its director, Jim Campen, said, "We haven't identified any illegal practices. What we've seen are practices that are highly unethical. It's extraordinarily common."
The two women say their conversations were monitored, and the more they sold, the bigger their salaries.
"If you didn't do it, you got yanked off the phone," Colombo said.
She said a manager once yelled, "You let your team down. You let the bank down. You let the stockholders down!"
Bank of America said it does not talk about individual cases but calls the allegations by the former employees "incorrect."
Spokeswoman Betty Reiss said, "Our call center associates are focused on serving customer financial needs and responding to questions about their accounts."
But Colombo said her performance reviews -- which she provided to CNN -- tell a slightly different story about selling tactics. In one, she is told by supervisors to be more aggressive: "You cannot sell what you don't offer." Another reads, "Understand the importance of selling at the highest possible rate."
CNN asked whether the customer call center in Belfast was perhaps operating independently; both women shook their heads and described an environment in which call centers across the country would compete with one another.
"I worked four 10-hour shifts. The goal was to make $25,000 an hour, which is $250,000 a day, which is $4 million a month," Colombo said.
Although Colombo does not know whether the practices were widely known at Bank of America headquarters in Delaware, she said this about her immediate managers: "Everyone on that level knew what we were doing. We were being told to do what we did."
Do the women feel guilty about what they did?
"Yes, without question," Colombo said.
"Absolutely," Ellingwood added.
Americans for Fairness in Lending said it wants the Senate to ensure that consumers are protected from what it describes as the deceptive practices of many of the same financial institutions likely to benefit from the $700 billion bailout.
The Credit Card Bill of Rights passed the House this week. But it's opposed by the banking industry and the White House, which said it would lead to less access to credit and higher interest rates for consumers.
For its part, Bank of America would not talk about individual cases or provide a copy of the disclosures that its accounts managers read to customers over the phone. It also refused to answer questions about training procedures for account managers at call centers across the U.S.
Wednesday, September 24, 2008
Meet Celeste Irene Lagrant. This wonderful prospect decided to respond to her live-in boyfriend's marriage proposal in a slightly different manner--with tossed knives, kicks, and punches.
HOLIDAY - A Pasco County woman was in jail Sunday charged with aggravated domestic battery.
Her live-in boyfriend called police to the couple's Castile Lane home during an argument Saturday evening. The victim, Bruce Montle, told sheriff's deputies the argument with Celeste Irene Lagrant, 39, started over a marriage proposal.
Montle told investigators that Lagrant slapped, punched and scratched at him. She also threw several knives at him, he said.
Tuesday, September 23, 2008
The second great act of disillusionment was the manner in which Commissioner Bud Selig (starting in the early '90s) began browbeating cities and state-legislatures to build new baseball stadiums, at the taxpayer's expense. Compounding this was the cost (accrued mostly with regressive local sales taxes in urban centers that could least afford them) and the composition of these new stadiums. The old stadiums had more seats (50,000-plus), many of them cheaper in ticket costs, and fewer sky boxes. The new ones, of course, reversed this order. The newer stadiums would be smaller (40,000 or so), no more nosebleed seats, and many, many more executive box suites, in which wealthier people could sit farther away and removed from the average citizen. And not only can they sit in those boxes away from average people, but they can use their company's wealth to compete for naming rights of the publicly-financed and built stadium itself (the equivalent of giving Nextel the naming rights over the Pentagon).
Cincinnati's old Riverfront Stadium seated almost 53,000 people. A quarter of a billion dollars of taxpayers' money (through a county sales tax) later and it is The Great American Ballpark (name sponsored by the insurance company), whose seating capacity is 42,000. Cleveland's old Municipal Stadium seated 78,000. Its new location, Jacobs Field (or The Progressive Field [another insurance company]) seats 43,000. Detroit's Tiger Stadium, built in 1912 (and a historical landmark), seated up to 52,400 people. The new Comerica Park (named sponsored by the bank) seats 41,000. Pittsburgh's old Three Rivers Stadium was one of the few to maintain the same number of seats (38,496) with its replacement PNC Park (sponsored by the financial services company). All of these stadiums were publicly financed with taxpayers dollars. Every one of them doubled their skybox seats, while shrinking the overall number of seats for the average fan (the people paying the bulk of the money with the local sales taxes that financed most of these stadiums).
There are defenders of this corporate welfare. One of the claims is that the newer parks (copying the retro design of Baltimore's Camden Yards) are more attractive than the older parks. The smaller parks were necessary because it was difficult to maintain full seating capacity throughout the course of the season. Public money sometimes is used to promote economic growth. All of this may be true, but then I never went to a baseball game to be pleased with the mall-like extra attractions (since I was there to watch a game), preferred the extra seating options, and most certainly do not believe (and never will) that public money should be used to subsidize for-profit entities owned by billionaires looking to force me to pay for their place of business (while charging me an entrance fee whenever I want to go visit what my tax dollars constructed).
So, what do you get for less seating? Since 1993, accounting for inflation, the price of MLB tickets have increased over 50%. This is in an economy in which the median wage, accounting for inflation, has gone down every year since then (save for one). Fewer but more expensive seats for the fans, and more box seats for corporate executives.
Thus it is to be the newest crime committed this coming offseason, the destruction of Yankee Stadium, the House that Ruth Built, which has seen the greatest teams in the history of the game, and now will be annihilated to make it easier for the Steinbrenner family to insulate themselves further from the population of the city (and at the expense of New York taxpayers [all $1.6 billion]).
Moguls Steal Home While Companies Called Out
The NY Yankees and the US Economy
by Bill Moyers and Michael Winship
From our offices in Manhattan, we look out on the tall, gleaming skyscrapers that are cathedrals of wealth and power – the Olympus ruled by the gods of finance, the temples of the mighty, the holy of holies, whose priests guard the sacred texts of salvation – the ones containing the secrets of subprime lending and derivatives as mysterious and elusive as the Grail itself.
This last couple of weeks, ordinary mortals below could almost hear the ripcords of golden parachutes being pulled as the divinities on high prepared for soft, safe landings – all this while tossing their workers like sacrificial lambs into the purgatory of unemployment.
During the last five years of his tenure as CEO of now-bankrupt Lehman Brothers, Richard Fuld’s total take was $354 million. John Thain, the current chairman of Merrill Lynch, taken over this week by Bank of America, has been on the job for just nine months. He pocketed a $15 million signing bonus. His predecessor, Stan O’Neal, retired with a package valued at $161 million, after the company reported an eight billion dollar loss in a single quarter. And remember Bear Stearns Chairman James Cayne? After the company collapsed earlier this year and was up for sale at bargain basement prices, he sold his stake for more than $60 million.
Daniel Mudd and Richard Syron, the former heads of Fannie Mae and Freddie Mac – aka the gods who failed – are fighting to keep severance packages of close to $24 million combined – on top of the millions in salary each earned last year while slaughtering the golden calf. As it is written in the Gospel According to Me, when the going gets tough, the tough get going.
But let’s change the metaphor for a moment and go to our sports desk, because if religion is no longer the soul of capitalism, as Max Weber once taught us it was, we have to venture somewhere else to try to understand the continuing follies of the new gilded age. And so we travel just a few miles north of Wall Street to the House that Ruth Built. Babe Ruth – the Sultan of Swat – who ruled Yankee Stadium and sired generations of princes after him: DiMaggio and Gehrig, Mantle, Maris, Berra and Jackson. Yankee Stadium, as fabled a place to Americans as Ilium was to the ancient Greeks, about to be demolished and replaced next year by a brand new stadium.
On Opening Day in 1923, New York Governor Al Smith threw out the first ball and John Philip Sousa led a big brass band playing his famous marches. It was the Roaring Twenties, when the money flowed liked bootleg whiskey, the pride before the fall. In 1930, the year after the market crashed, as the Great Depression began, Babe Ruth was taking home $80,000 a year, more than the President of the United States, Herbert Hoover. “Why not?” Ruth asked. “I had a better year than he did.”
Yankee star Alex Rodriguez had a better year than both of them. This season, A-Rod is making $28 million, just part of an annual Yankee payroll of $209 million, the richest in baseball. Their owner, George Steinbrenner, is among the Forbes 400, one of the country’s richest tycoons.
But when it came to paying for the new, $1.3 billion pleasure dome, the millionaires on the field and King Midas in his skybox came up with some razzle-dazzle plays to finance their new wealth machine – tax-free bonds, requiring ordinary citizens to subsidize the construction, and hundreds of millions more for new parking garages, a train station and parks that supposedly will replace the ones seized by the city to make room for the new stadium. The Little League games that used to flourish on sandlots just outside the old ballpark have been moved miles away, sent down to the minors on a long road trip.
That’s okay, you may think, there will be plenty of room in the new stadium for the tax-paying public to come root, root, root for the home team – even the Coliseum in ancient Rome had bleachers for the commoners. But, in fact, there will be 5,000 fewer seats in the stands. And while the Yankees reportedly promise that half of what’s left will cost $45 or less, those seats that used to cost $250, right behind the dugout, will now cost you $850. And if you want to be near home plate, you’ll have to cough up $2500 – per game.
Meanwhile there will be more luxury suites and party rooms where fat cats can gather, safely removed from the sweaty masses. Corporations and wealthy individuals will be able to rent the luxury suites for anywhere from $600,000-$850,000 a year – tax deductible – assuming they haven’t filed for bankruptcy this week.
Why aren’t the fans and taxpayers giving the Yankees a Bronx cheer? They did, but city officials rolled over them while making sure local politicians stay in the lineup. The pols are getting their own luxury suite at the new stadium for free – and first shot at buying the best available seats.
The new colossus will cast its majestic shadow across the South Bronx, one of the nation’s poorest neighborhoods. The residents will watch from the outside as suburban drivers avail themselves of 9,000 new or refurbished parking spaces. Never mind all the exhaust, even though in this part of New York City, respiratory disease is already so high they call it “Asthma Alley.”
Not that the well to do in the infield seats will have to hear the wheezing. They’ll have exclusive access to a private club, a private entrance and a private elevator, totems of this gilded age. Let the games begin.
Bill Moyers is managing editor and Michael Winship is senior writer of the weekly public affairs program Bill Moyers Journal, which airs Friday night on PBS. Check local airtimes or comment at The Moyers Blog at www.pbs.org/moyers.
Monday, September 22, 2008
Alabama to link premium costs to workers' health
By Matt Sloane
CNN Medical Producer
MONTGOMERY, Alabama (CNN) -- A new plan that would effectively fine Alabama state employees who don't monitor their health is set to start early next year.
With obesity levels higher than in any other state except Mississippi, Alabama's insurance board chief William Ashmore and his staff of workplace wellness advocates decided it was time for a change.
"Over 10 percent of the people we screen are at risk for one of the factors we're screening for, and the vast majority had no earthly idea they were at risk," Ashmore said.
But the plan, which encourages state workers to have health screenings and to see a doctor if a problem is found, is angering some employees.
"It's penalizing people for being genetically who they are," says E-K. Daufin, a college professor at Alabama State University. "I have a lovely sexy body mass index of 44 right now," a number that would put Daufin in the group that would have to pay. That is, unless she decided to see a doctor about the issue.
The plans works like this: By 2010, each state employee will be faced with a $50 per month health insurance premium, $25 more than they pay right now. Beginning next year, each employee will be offered a free screening for health factors such as high blood pressure, high blood glucose and body mass index.
If they opt not to take the screening, their premium remains at $50. If screeners find something of concern, the employee will be offered a doctor's visit free of charge, and if they forgo the free visit, their premium remains at $50 as well. Fit Nation: Watch more on Alabama's new insurance plan »
However, if an employee undergoes the screening and is found to be healthy or is unhealthy but decides to see a doctor, the premium is discounted to $25.
Similar to a 2004 plan that discounts employees' insurance premiums if they are non-smokers, it is designed to save the state money in the long term.
"It really boils down to managing risk. We know 10 percent of the people are at risk," Ashmore said. "A healthy employee will cost the program less money."
And despite critics from Alabama and across the nation calling it a "fat tax," Ashmore said, the plan is not meant to penalize unhealthy employees but simply to educate them.
"What we want to do is, number one, make the employee aware of any risk factors they may have," Ashmore said, "and then knock down the barriers so that they can go get the services they need."
But the big question many are asking is: Will it work?Emory University physician Dr. David Roberts, who is not connected to the plan, said that if it's done right, it could be a model worth emulating.
"If they're going to penalize them for [being obese], that's wrong," Roberts said. "If they're motivating them to be involved with a physician and be aware of things, I don't think that's a negative."
This is just the beginning. We have stigmatized fat people to the point that it makes it politically feasible for profit-minded people to penalize those that cost them money (and yes, Professor Roberts, it is penalizing fat people [imagine a tax on people who have HIV for costing our insurance companies money for treatment]). They have been doing this to smokers for quite some time now. But this will only be the logical step to the next level. The next level will be prohibiting fat people and smokers from most employment, insurance policies, and basically forcing them on to the welfare rolls, if anything at all.
Once this is accomplished, the people who brought us the commodified industry that drains 1/7 of our GDP for the price of 60 million un/under-insured Americans will then want to "save" on other costs. We will not call it that, naturally. It will all be done under the guise of "wellness," the movement of which is mostly a front funded by insurance companies and associations. The next step will be making sure people with "unacceptable" preconditions (i.e., politically acceptable) will be ineligible for coverage or only on the condition of "seeing a doctor" that will mark them with their medical Scarlett letter and incur an extra fine, I mean encouragement (yes, encouragement, Mr. Roberts). These would include virtually all sufferers of Type 2 Diabetes and, if they can get away with it, probably some cancer patients (particularly those who smoked).
From there, the possibilities are endless. I am sure Mr. Ashmore would not mind a special tax on bald people, since being bald greatly increases your risk for Melanoma.
Of course, it will all be about good health. After all, they are doing such a wonderful job of providing for us now, so long as you can afford it. Who knows, maybe in another generation or two, we can just uninsure or overcharge everyone who is outside of the 20-45 age bracket and not in a Mentos commercial. Then again, if it all goes south for our friends from Nationwide and State Farm (and other industry leaders), they can get on the welfare rolls of our new bailout plan for the remainder of the unconvicted felons on Wall Street.
Saturday, September 20, 2008
But, alas, for George Bush, $700 billion is needed for none of above. No, his friends on Wall Street need the money for us the taxpayer to subsidize their criminal business practices that led to the failures we are now witnessing.
Bush wants OK to spend $700B
Bailout proposal sent to Congress seeks authorization to spend as much as $700 billion to buy troubled mortgage-related assets.
By Jeanne Sahadi, CNNMoney.com senior writer
NEW YORK (CNNMoney.com) -- President Bush has asked Congress for the authority to spend as much as $700 billion to purchase troubled mortgage assets and contain the financial crisis.
The legislative proposal - the centerpiece of what would be the most sweeping economic intervention by the government since the Great Depression - was sent by the White House overnight to lawmakers. (Read the text here.)
President Bush said Saturday that the plan matches the scope of the problem.
"It is a big package because it's a big problem," he told reporters at a joint news conference with Alvaro Uribe, the president of Colombia.
"The risk of doing nothing far outweighs the risk of the package," Bush said.
Treasury Secretary Henry Paulson, lawmakers and their aides are expected to work through the weekend in an effort to craft a bill swiftly. Democratic leaders on Capitol Hill said they expect the bill to go before a vote within days.
Paulson, Federal Reserve Chairman Ben Bernanke and other officials have said in recent days that the lack of easy credit between banks and other financial institutions threatens to inflict serious damage on the economy if not addressed immediately.
The plan would allow the Treasury to buy up mortgage-related assets.
The aim is for the government to buy the securities at a discount, hold onto them and then sell them for a profit.
The Bush administration sent its proposal to members of Congress overnight, according to White House spokesman Tony Fratto.
"Secretary Paulson and his team will continue their discussions with Congress and staff throughout the weekend, and we're hopeful that good progress will be made," Fratto said.
The mortgage plan is part of an extraordinary effort by the federal government to contain a financial crisis that has forced a major realignment on Wall Street and has started rippling out to Main Street.
In the past week, two of the nation's most venerable investment banks - Lehman Brothers (LEH, Fortune 500) and Merrill Lynch (MER, Fortune 500) - have fallen and the Federal Reserve was forced to lend $85 billion to prevent the sudden collapse of insurance giant American International Group (AIG, Fortune 500).
Meanwhile, mainstay financial institutions are scrambling to raise cash and shore up their books as lending has frozen up and investor confidence has sunk.
The cost of the program to taxpayers may hinge on the price at which the Treasury buys the mortgage securities.
"The government could make a profit, a substantial profit," said Jaret Seiberg, a financial services analyst at the Stanford Group, a policy research firm. "The pricing mechanism is going to be central."
The jury is still out on whether the proposal will fix the financial crisis, although experts are cautiously optimistic the plan will help the housing crisis. It will help banks shore up their balance sheets by removing hard-to-value assets. This would address the seemingly endless rounds of writedowns and capital raising that have been rocking the financial sector.
Without these bad loans weighing on their books, banks may be more willing to lend. Or at least that's the goal.
The problem is that the bailout will not automatically make banks profitable, nor will it stop the slide in home values that is wreaking havoc on the economy.
It is also worth noting that the $700 billion taxpayer bailout does not including accompanying regulations to make sure future abuses like we have seen never take place again. You know, the r-word...regulation. No, my goodness, that might mean holding people accountable, which we only do when our justice system grinds generation after generation of black men and poor people through our prisons.
So, the next time you hear your friends from the Republican Party tell us about tax and spend liberalism, just remind them of the largest government program in history, which is being sent before Congress today. Remind them that they care more for the stockholders of companies, even if that means spending over two-thirds of a trillion dollars of our money on them, than they do about the rest of the population and its troubles, which they constantly ring up to individual responsibility.
Wednesday, September 17, 2008
The AIG bailout is even more insidious. A private insurer, with no contacts with the federal government, is being propped up by the Fed (along with the encouragement of the President) to the tally of a $75 billion credit line from the government. Some of you may recall that this is the same AIG who had to pay out a record fine of $1.6 billion two years ago because of its payoff schemes and accounting fraud (on a scale much greater than the $1.6 billion the company was forced to pay). The same AIG who just paid out $7 million to its most recent CEO (who had the job for all of three months). Golden parachute, indeed.
The responses from the political class are typical. From John McCain, phony criticism about "greed" on Wall Street, and even phonier promises about ending the golden parachutes for CEOs who take large buyouts after running their companies in to the ground (all the more laughable considering that one of Senator McCain's closest advisers is the ex-CEO of HP, who took a large buyout). No opposition, however, to the government takeovers of private enterprise. From Suze Orman, Fox Business Network, to The Wall Street Journal and the average stock broker, all are supportive of the federal government's takeover of these industries.
It is even more ironic that the very same investment institutions that spent the last decade lobbying Congress to make it tougher for people to declare bankruptcy are now the ones on the welfare line looking for preferential loans and credit. Of course, to some this is wonderful. CNN's Ali Velshi goes so far as to say that bailing out AIG will be good for taxpayers. After all, the federal government needs to show Wall Street that there is a player out there with endless capital who will reinvest and reinstill some confidence on Madison Avenue. Of course, if you asked Velshi what he thought of taking that $80 billion and permanently wiping out homelessness in this country, or overturning the bankruptcy law that his check writer lobbied on the behalf of, not surprisingly, the response will be quite something else.
President Bush's public statements belie the moral flexibility of a man who once claimed that you always knew where he stood. This lover of the free markets and free peoples (at least in Georgia and Iraq), in tow with Federal Reserve Chairman Bernanke, are going to set up what is the equivalent of a slush fund for failed capitalism, to maintain these companies and continue to subsidize their business decisions. Of course, there are no accompanying regulations prohibiting large salary buyouts of the CEOs who emaciated these companies. No regulations to prevent future financial institutions from repeating these crimes. I do not think I need to retell the lack of regulation, all the more so since the current Secretary of Treasury, Henry Paulson (one of the lead advocates of this permanent credit line) is the ex-Chairman of Goldman Sachs (not a minor player with varied interests in these industries that Mr. Paulson wants us to underwrite). This would not be unlike having Pablo Escabar as Administrator of the DEA.
Also notice that these are the same people who think you are a Communist for wanting to spend a few billion dollars (fully funded and accounted for by an extra cigarette tax) to give health care coverage to uninsured children in this country. These are the same people who bashed poor people and people of color all throughout the post-World War Two age, from the phantom "welfare queens" to the "culture of failure" in our inner cities (i.e., black people), and yet annual welfare spending for the poor never rivaled the money being allotted for these bailouts. You see, socialism is now OK, so long as it is for the rich. For you, the taxpayer, the one who is losing your home to foreclosure, your once decent-paying job (outsourced and downsized), and barely getting by on the pittance of health insurance (which you know your insurer will fight you tooth and nail when it comes time to actually cover anything), no, you are just individuals--free to drown and die. It is the Republican way.