Will The Establishment's Culture Of Corruption Defeat The #GreenNewDeal?

Everybody does it... except those who don't. Yesterday PhilosophRob, a vegetarian, ran two Open Secrets-based lists of how much money some of the presidential candidates in Congress took from hedge fund managers and from lobbyists so far this cycle. It's easy to talk about cleaning up the corruption in Congress at the root of all the county's problems. But who is willing to walk the walk? Hint: look down at the bottom of the two lists. Not everyone is the same.

Another list: the probable chairs of the House committees starting January 3:

• Agriculture- Collin Peterson (Blue Dog-MN)
• Appropriations- Nita Lowey (D-NY)
• Armed Services- Adam Smith (New Dem-WA)
• Budget- John Yarmuth (D-KY)
• Education and Labor- Bobby Scott (D-VA)
• Energy and Commerce- Frank Pallone (D-NJ)
• Ethics- Ted Deutch (D-FL)
• Financial Services- Maxine Waters (D-CA)
• Foreign Affairs- Eliot Engel (New Dem-Israel)
• Homeland Security- Bennie Thompson (D-MS)
• House Administration- Zoe Lofgren (D-CA)
• Judiciary- Jerry Nadler (D-NY)
• National Resources- Raúl Grijalva (D-AZ)
• Oversight and Government Reform- Elijah Cummings (D-MD)
• Rules- Jim McGovern- (D-MA)
• Science, Space and Technology- Eddie Bernice Johnson (D-TX)
• Small Business- Nydia Velázquez (D-NY)
• Transportation and Infrastructure- Pete DeFazio (D-OR)
• Veterans Affairs- Mark Takano (D-CA)
• Ways and Means- Richard Neal (D-MA)
• Human Rights- Jim McGovern (D-MA)
• Intelligence- Adam Schiff (New Dem-CA)

Now, in light of Pelosi's much ballyhooed H.R. 1 (which I totally support, even though it doesn't go nearly far enough towards reform), keep these logical and pretty obvious words from Alexandria Ocasio-Cortez in mind:

I took a look at who the biggest contributors are to each of the incoming chairmen to see if there is any connection to favors they could do as chairs of their committees. And, there were. We've been talking about how corrupt and deceitful New Jersey hack, Frank Pallone, is blocking the creation of a Climate Change Committee, or at least blocking the idea of the committee having any power at all. It's a turf war based on the bribes he gets from Oil and Gas. We'll get back to him in a moment.

A reminder: certain committees are honey pots for corrupt members looking for cash. Generally speaking, congress members flocking to the Financial Services Committee, for example, are looking for bribes from Wall Street. Ditto for the House Ways and Means Committee. The Agriculture Committee is also a get-rich-quick scheme. Same with Armed Services and the notorious Energy and Commerce Committee. I should mention there are also members who go to those committees in order to reform them00 but not many. Let's start with Agriculture, which Collin Peterson-- a super-corrupt Blue Dog-- has ruin before and used as a meeting ground for Blue Dogs interested in his quid pro quo way of dealing with Agribusiness. What businesses have been most generous to Mr. Peterson? Well, this cycle the top half dozen in order of generosity: Crop Production & Basic Processing, Agricultural Services/Products, Food Processing & Sales, Securities & Investment, Dairy and Forestry & Forest Products. Overall this quarter, his top sector for collecting bribes as... Agribusiness and he took $533,825, a nice haul. At the height of his chairman glory days (2006), Agribusiness paid off Peterson to the tune of $393,586. Since 2000, Peterson has gobbled up over $4 million from Agribusiness. During a time period when the sector has given almost double to Republicans ($204,052,583) than Democrats ($107,213,690) Peterson has done very well for himself. He is a living case study for bribery in Congress. It's a disgrace that at the same time Pelosi is introducing H.R. 1, she is also giving Collin Peterson back the chair of the Agriculture Committee, making a mockery of her call for reform.

A half dozen who should be rotting in prison cells

Let me take the 4 committees involved with money-- Appropriations (Nita Lowey), Budget (John Yarmuth), Financial Services (Maxine Waters) and Ways and Means (Richard Neal) in one shot. In way of comparison, let me start by showing you how much the out-going Republican chairs have taken from the Finance Sector (since 2000):

Appropriations- Rodney Frelinghuysen (R-NJ)- $1,714,880
Budget- Steve Womack (R-AR)- $681,143
Financial Services- Jeb Hensarling (R-TX)- $7,916,748
Ways and Means- Kevin Brady (R-TX)- $4,160,535

OK, now let's look at the incoming Democratic chairs, who you might think are less corrupt than the Republicans. Mixed bag on that one:

• Appropriations- Nita Lowey (D-NY)- $5,215,043
• Budget- John Yarmuth (D-KY)- $689,012
• Financial Services- Maxine Waters (D-CA)- $1,826,285
• Ways and Means- Richard Neal (D-MA)- $5,481,179

Let's just look at the current cycle. Lowey's top sector for contributions: Finance ($323,030). Yarmuth's top sector: Labor ($141,000). Waters' top sector: Finance ($412,579). And Neal's top sector: Finance ($894,530). Certainly Lowey, Waters and Neal will all be in, let's say, awkward ethical situations when considering and writing legislation on banks, investments, insurance, real estate, taxes, etc.

Let's move to Armed Services. Adam Smith is considered a friend of the Military Industrial Complex. This cycle his biggest sector for bribes was, of course, Defense ($206,950). His #1 industry-- Defense Aerospace; among his top half dozen: Defense Electronics, Electronics Manufacturing and Equipment, Miscellaneous Defense. Career long he's taken $1,140,050 from the Defense sector. The current chairman, Mac Thornberry (R-TX) has taken $1,562,150. No doubt Smith will quickly surpass him.

Bobby Scott (D-VA) will chair the Education and Labor Committee. His top sector this cycle was-- no surprise-- labor ($136,000). Among his contributors, the half dozen industries that forked over the most: #1- Public Sector Unions, #2- Building Trade Unions, #4- Education, #5- Industrial Unions. Since 2000, unions have contributed $1,437,250 to Scott's campaigns. Education isn't one of the high rolling sectors but the sector contributed $20,400 to his campaign this cycle (and $120,254 career-long).

Energy and Commerce has it's fingers in a lot of pies-- as does the incoming chairman, Frank Pallone. This cycle his 5 biggest contributing cycles were sectors his committee writes legislation for:

• Health- $724,700
• Communications/Electronics- $333,451
• Finance- $214,450
• Labor- $187,525
• Energy and Natural Resources- $178,199

His biggest industries this cycle were health professionals, Pharmaceuticals and Telecom services, industries he will be writing legislation for in the next Congress. but career-long, this is what he's gotten from the sectors that are most eagle to influence him:

• Health- $6,067,900, the most of any member of the House, past or present!
• Communications/Electronics- $1,536,862
• Finance- $2,179,885
• Labor- $2,891,945
• Energy and Natural Resources- $862,516

I think I'm going to stick with Pallone and what he's up to in terms of the turf war he's waging against Alexandria Ocasio, or against her proposal to establish a select committee to deal with the #GreenNewDeal. Some of the other chairs are screaming bloody murder over this as well, since if an effective committee was re-authorized-- the Dems had one in 2007-11 but Boehner immediately abolished it upon the GOP victory in 2010-- it could have jurisdiction or co-jurisdiction in many areas and threaten the ability of committees to squeeze bribes out of almost every industry.

First off, Pelosi, who faced this in 2007 when she first established a Select Committee on Climate Change. She compromised and made it into more of an investigative committee with no real powers and it is likely that she will do the same thing because of Pallone's squawking and temper tantrums. The Sunrise Movement and other progressive groups are working to pressure Pelosi to make it stronger and more strategic than what it turned out to be in 2007. The pressure on her will mount as more members sign up as supporters. Right now there are 35 congressmembers who are on board. These:

So where are all the freshmen who just campaigned on the #GreenNewDeal issues? The only freshmen so far are Mike Levin (D-CA), Joe Neguse (D-CO), Ayanna Pressley (D-MA), Rashida Tlaib (D-MI), Ilhan Omar (D-MN), Chris Pappas (D-NH), Deb Haaland (D-NM) and, of course, Alexandria Ocasio (D-NY), who is helping the Sunrise Movement with their efforts in Congress.

Yesterday, author Ellen Brown, in an OpEd for TruthDig, This Radical Plan to Fund the 'Green New Deal' Just Might Work, explained how the Green New Deal could transform the country and why the arguments by conservatives against it can all be overcome. "With what author and activist Naomi Klein calls 'galloping momentum,' the Green New Deal promoted by Representative-elect Alexandria Ocasio-Cortez (D-NY) appears to be forging a political pathway for solving all of the ills of society and the planet in one fell swoop," she wrote. "Her plan would give a House select committee 'a mandate that connects the dots' between energy, transportation, housing, health care, living wages, a jobs guarantee and more. But even to critics on the left, it is merely political theater, because 'everyone knows' a program of that scope cannot be funded without a massive redistribution of wealth and slashing of other programs (notably the military), which is not politically feasible." Brown doesn't believe that and neither do I.

That may be the case, but Ocasio-Cortez and the 22 35 representatives joining her in calling for a select committee also are proposing a novel way to fund the program, one that could actually work. The resolution says funding will come primarily from the federal government, “using a combination of the Federal Reserve, a new public bank or system of regional and specialized public banks, public venture funds and such other vehicles or structures that the select committee deems appropriate, in order to ensure that interest and other investment returns generated from public investments made in connection with the Plan will be returned to the treasury, reduce taxpayer burden and allow for more investment.”

A network of public banks could fund the Green New Deal in the same way President Franklin Roosevelt funded the original New Deal. At a time when the banks were bankrupt, he used the publicly owned Reconstruction Finance Corporation as a public infrastructure bank. The Federal Reserve could also fund any program Congress wanted, if mandated to do so. Congress wrote the Federal Reserve Act and can amend it. Or the Treasury itself could do it, without the need to even change any laws. The Constitution authorizes Congress to “coin money” and “regulate the value thereof,” and that power has been delegated to the Treasury. It could mint a few trillion-dollar platinum coins, put them in its bank account and start writing checks against them. What stops legislators from exercising those constitutional powers is simply that “everyone knows” Zimbabwe-style hyperinflation will result. But will it? Compelling historical precedent shows that this need not be the case.

Michael Hudson, professor of economics at the University of Missouri-Kansas City, has studied the hyperinflation question extensively. He writes that disasters such as Zimbabwe’s fiscal troubles were not due to the government printing money to stimulate the economy. Rather, “Every hyperinflation in history has been caused by foreign debt service collapsing the exchange rate. The problem almost always has resulted from wartime foreign currency strains, not domestic spending.”

As long as workers and materials are available and the money is added in a way that reaches consumers, adding money will create the demand necessary to prompt producers to create more supply. Supply and demand will rise together and prices will remain stable. The reverse is also true. If demand (money) is not increased, supply and gross domestic product (GDP) will not go up. New demand needs to precede new supply.

The Public Bank Option: The Precedent of Roosevelt’s New Deal

Infrastructure projects of the sort proposed in the Green New Deal are “self-funding,” generating resources and fees that can repay the loans. For these loans, advancing funds through a network of publicly owned banks would not require taxpayer money and could actually generate a profit for the government. That was how the original New Deal rebuilt the country in the 1930s at a time when the economy was desperately short of money.

The publicly owned Reconstruction Finance Corporation (RFC) was a remarkable publicly owned credit machine that allowed the government to finance the New Deal and World War II without turning to Congress or the taxpayers for appropriations. First instituted in 1932 by President Herbert Hoover, the RFC was not called an infrastructure bank and was not even a bank, but it served the same basic functions. It was continually enlarged and modified by Roosevelt to meet the crisis of the times, until it became America’s largest corporation and the world’s largest financial organization. Its semi-independent status let it work quickly, allowing New Deal agencies to be financed as the need arose.

The Reconstruction Finance Corporation Act of 1932 provided the financial organization with capital stock of $500 million and the authority to extend credit up to $1.5 billion (subsequently increased several times). The initial capital came from a stock sale to the U.S. Treasury. With those resources, from 1932 to 1957 the RFC loaned or invested more than $40 billion. A small part of this came from its initial capitalization. The rest was borrowed, chiefly from the government itself. Bonds were sold to the Treasury, some of which were then sold to the public, although most were held by the Treasury. All in all, the RFC ended up borrowing a total of $51.3 billion from the Treasury and $3.1 billion from the public.

In this arrangement, the Treasury was therefore the lender, not the borrower. As the self-funding loans were repaid, so were the bonds that were sold to the Treasury, leaving the RFC with a net profit. The financial organization was the lender for thousands of infrastructure and small-business projects that revitalized the economy, and these loans produced a total net income of $690,017,232 on the RFC’s “normal” lending functions (omitting such things as extraordinary grants for wartime). The RFC financed roads, bridges, dams, post offices, universities, electrical power, mortgages, farms and much more, and it funded all this while generating income for the government.

The Central Bank Option: How Japan Is Funding Abenomics with Quantitative Easing

The Federal Reserve is another Green New Deal funding option. The Fed showed what it can do with “quantitative easing” when it created the funds to buy $2.46 trillion in federal debt and $1.77 trillion in mortgage-backed securities, all without inflating consumer prices. The Fed could use the same tool to buy bonds earmarked for a Green New Deal, and because it returns its profits to the Treasury after deducting its costs, the bonds would be nearly interest-free. If they were rolled over from year to year, the government, in effect, would be issuing new money.

What if Trump heard about from his pal, Abe?

This is not just theory. Japan is actually doing it, without creating even the modest 2 percent inflation the government is aiming for. “Abenomics,” the economic agenda of Japan’s Prime Minister Shinzo Abe, combines central bank quantitative easing with fiscal stimulus (large-scale increases in government spending). Since Abe came into power in 2012, Japan has seen steady economic growth, and its unemployment rate has fallen by nearly half, yet inflation remains very low, at 0.7 percent. Social Security-related expenses accounted for 55 percent of general expenditure in Japan’s 2018 federal budget, and a universal health care insurance system is maintained for all citizens. Nominal GDP is up 11 percent since the end of the first quarter of 2013, a much better record than during the prior two decades of Japanese stagnation, and the Nikkei stock market is at levels not seen since the early 1990s, driven by improved company earnings. Growth remains below targeted levels, but according to Finacial Times this is because fiscal stimulus has actually been too small. While spending with the left hand, the government has been taking the money back with the right, increasing the sales tax from 5 percent to 8 percent.

Abenomics has been declared a success even by the once-critical International Monetary Fund. After Abe crushed his opponents in 2017, Noah Smith wrote in Bloomberg, “Japan’s long-ruling Liberal Democratic Party has figured out a novel and interesting way to stay in power—govern pragmatically, focus on the economy and give people what they want.” Smith said everyone who wanted a job had one, small and midsize businesses were doing well; and the Bank of Japan’s unprecedented program of monetary easing had provided easy credit for corporate restructuring without generating inflation. Abe had also vowed to make both preschool and college free.

Not that all is idyllic in Japan. Forty percent of Japanese workers lack secure full-time employment and adequate pensions. But the point underscored here is that large-scale digital money-printing by the central bank to buy back the government’s debt, combined with fiscal stimulus by the government (spending on “what the people want”), has not inflated Japanese prices, the alleged concern preventing other countries from doing the same.

Abe’s novel economic program has done more than just stimulate growth. By selling its debt to its own central bank, which returns the interest to the government, the Japanese government has, in effect, been canceling its debt. Until recently, it was doing this at the rate of a whopping $720 billion per year. According to fund manager Eric Lonergan in a February 2017 article:

The Bank of Japan is in the process of owning most of the outstanding government debt of Japan (it currently owns around 40%). BOJ holdings are part of the consolidated government balance sheet. So its holdings are in fact the accounting equivalent of a debt cancellation. If I buy back my own mortgage, I don’t have a mortgage.

If the Federal Reserve followed suit and bought 40 percent of the U.S. national debt, it would be holding $8 trillion in federal securities, three times its current holdings from its quantitative easing programs. Yet liquidating a full 40 percent of Japan’s government debt has not triggered price inflation.

Filling the Gap Between Wages, Debt and GDP

Rather than stepping up its bond-buying, the Federal Reserve is now bent on “quantitative tightening,” raising interest rates and reducing the money supply by selling its bonds into the market in anticipation of “full employment” driving up prices. “Full employment” is considered to be 4.7 percent unemployment, taking into account the “natural rate of unemployment” of people between jobs or voluntarily out of work. But the economy has now hit that level and prices are not in the danger zone, despite nearly 10 years of “accommodative” monetary policy. In fact, the economy is not near true full employment nor full productive capacity, with GDP remaining well below both the long-run trend and the level predicted by forecasters a decade ago. In 2016, real per capita GDP was 10 percent below the 2006 forecast of the Congressional Budget Office, and it shows no signs of returning to the predicted level.

In 2017, U.S. GDP was $19.4 trillion. Assuming that sum is 10 percent below full productive capacity, the money circulating in the economy needs to be increased by another $2 trillion to create the demand to bring it up to full capacity. That means $2 trillion could be injected into the economy every year without creating price inflation. New supply would just be generated to meet the new demand, bringing GDP to full capacity while keeping prices stable.

UPDATE: Jumpin' The Fence

Allow me to include some of Kurt Bardella's fascinating weekend essay for USA Today, even though the connection is somewhat tenuous. Last year he switched parties and announced he was becoming a Democrat. He seems happy to have done so... more or less. "My first year as a Democrat," he wrote, "has given me an appreciation of the gulf between the world views of Republicans and Democrats. Even how we digest and process information is so different. In the decade I spent working in Republican politics here in Washington, I don’t think I ever heard climate change come up as a serious topic of social conversation."

Shocking as it may be to learn, Republicans do not sit around and talk about the environment. As a Democrat, I feel like this topic is a consistent focal point of social conversations. In fact, I’ve found the same thing to be true about gun-law reform, racial inequality, social injustice and sexism. As a Republican, I just never talked about these things, but as a Democrat, I talk about them all the time.

I’ll tell you, being a Democrat is a heck of a lot more emotionally exhausting than being a Republican was, because I care about a lot more things than I used to. There must be some wisdom in the old saying that “ignorance is bliss.” It’s funny, because I remember as a Republican, we would often mock “bleeding-heart liberals” who are always “caring” so much. I think to myself now, what the hell is wrong with these Republicans who don’t seem to care about anything at all?

On a personal level, one of the biggest changes for me has been how I view issues of race. I’ve spent the bulk of my life avoiding race. My first name is German, my last name is Italian and I was born in Seoul, South Korea-- I’m adopted. I grew up in a very rough part of upstate New York where I was taunted and at times beat up by kids because I was (and looked) different. On some level, I was conditioned through this treatment to believe that being different was a bad thing and so I avoided it.

I’ve spent the bulk of my life rejecting my Asian-American heritage. Quite frankly, as a Republican, this was very easy to do. The Republican Party’s attitude toward anyone who isn’t white speaks for itself. Why would I want to even pursue an association as a “minority” in a political party that spouts hateful rhetoric about minorities and pushes policies that discriminate against anyone who isn’t white? It was a pretty cowardly attitude considering how many have brave enough to take a stand and fight for minority rights and confront social injustice.

But once I stepped away from the Republican Party, its efforts to promote racism through rhetoric and policies offended me on a very personal level. I began engaging in these issues and exploring what it means to be a minority in America. One of my favorite moments of this year was participating in a panel at Politi-con called “Crazy Political Asians.” At one point, the moderator, MSNBC’s Richard Lui, asked our panel what year each of us owned up to being a member of the Asian-American Pacific Islander community. Most people gave answers like kindergarten or middle school. My response was “2018.” It may seem like a small thing, but saying this in public for the first time was a big deal for me.

...Relief that I was finally able to speak my truth. For the better part of two years, I had felt like a fraud still calling myself a “Republican.” I guess on some level, I had hoped that the cancer that is Trumpism would be isolated to a smaller segment of the Republican Party. Instead, it spread to infect the entire GOP with so-called “leaders” like House Speaker Paul Ryan and Senate Republican Leader Mitch McConnell becoming the biggest enablers and defenders of Trump’s unique brand of toxicity.

Their refusal to forge a different identity within the Republican Party divorced from Trumpism forced me to confront a reality I had tried to avoid-- that there really was no virtue in trying to be a sane voice within the GOP, and it was time to embrace a different way.

Facebook Launches TV News Feed; Fox News Prominently Featured

 The Cult of the High Tech Billionaire

by Gaius Publius

The very rich aren't like the rest of us, but they're a whole lot like each other. That puts people like Rupert Murdoch, David Koch (who is ailing, by the way), Donald Trump, Russian gangsters and oligarchs, Jamie Dimon and Mark Zuckerberg in a much more shared world than most of us care to think about.

For example, recent reports show how money from Russian oligarchs, $21 billion between 2010 and 2014 alone, and laundered through places like Moldava and Latvia, ends up at places like HSBC and Citibank. It makes sense: banks are in the business of acquiring money, and global criminal-political activity is where great big piles of it are found. Banks go where the customers are.

The money-laundering bank BCCI, now defunct, didn't set that pattern, but they were the most prominent to get caught at it. Not too long ago, Jamie Dimon's bank JP Morgan Chase was also caught with its hand in the money-laundering till, but no one thinks of Dimon and his operation as a money-launderer. The BCCI scandal was back in the 1990s, when banks could be accused of crimes. Starting in 2009, that flaw's been fixed.

I suspect at this point that the whole of Donald Trump's operation, or at least the major part of it, involves money-laundering, and that this will be seen by historians as his actual crime. It's also the reason he could be blackmailed out of office, if his enemies would want to go that route. ("Planning to return to that nice little business you have? Want it to exist when you're done here? I think we can work something out; consider this an exit interview.")

The Koch political machine, of course, is a massive money laundering operation, since its donors are invisible and there's so much money involved. Whose money is being hidden? Who knows? Can any source be excluded? None, not even foreign money from who-knows-where.

(There's an obvious side story here, but no one with real power wants to tell it. The global big-money network is also a bad-money network that encompasses almost every one in it. Not just Trump; everyone who floats on money floats on dirty money to some degree or another. Why aren't they all prosecuted? Maybe they're all in the game, including owners of the media that might do the reporting.)

Mark Zuckerberg's News Shows

This brings us to Mark Zuckerberg and Rupert Murdoch.

You wouldn't think these fellow billionaires would have much else in common. After all, Murdoch is in charge of the massive right-wing propaganda machine known as Fox News, Trump's favorite network and a fortress of evil and destruction to many observers, while Facebook's Mark Zuckerberg is a Silicon Valley billionaire, one of the brightest lights in a culture with a largely left following.

Like Steve Jobs, high tech billionaires supposedly see the better future first and will lead us there. As the poster at the top makes clear, they're seen by many as the better angels of our aspirations.

Thomas Middleditch, actor and star of the hit series Silicon Valley, taking "sellout money" (his phrase) and shilling for Verizon, the company most strongly associated with killing net neutrality

The Cult of the High Tech Billionaire is remarkably similar to the "cult of the airman" from the early 1900s, airmen and women being the supposed far-seeing, kindly futurists of a previous era. For more on that earlier cult, see the introduction to this piece: "Google Scores a Pro-Monopoly Seat on Trump Transition Team."

If you thought, though, that Murdoch and Zuckerberg had little in common but their money, you'd be wrong. Mark Zuckerberg and Facebook are launching a TV news feed called Facebook Watch.

Facebook’s First Wave of Funded News Shows Will Debut July 16, With More on the Way

The first fruits of Facebook’s multimillion-dollar investment in news programming from brand-name TV networks and digital media companies will go live next week — and the social giant has announced another half-dozen news shows that it’s funding.

Starting on Monday, July 16, programming from CNN, Fox News Channel, Univision, ABC News and others will be featured in a dedicated news section in Facebook Watch, its recently launched video platform for episodic programming. The Watch news section will feature news videos from national and local news orgs, and users will see a personalized feed based on the publishers they follow and what their friends are watching. (Facebook users also can access the shows directly from their show pages.)

The first lineup of previously announced shows from news publishers include those from ABC News, Advance Local, ATTN:, CNN, Fox News, Mic, Quartz, and Univision. Over the course of the next few months, Facebook will bring out additional news shows from ABC-owned stations, Bloomberg, BuzzFeed News, McClatchy, Group Nine Media’s NowThis and Tegna.

And guess whose programming is prominently featured? The above report, from Variety, might lead you to believe the mix of shows would be fair and balanced. That's true, but only in the most ironic sense. Here's their schedule:

Facebook Watch's initial programming schedule (click to enlarge)

The very rich aren't like the rest of us. But they're a whole lot like each other.

GP
 

About The Next Great Crash

Aggregate private household debt, 1990-2014. Consumer debt is measured on the left-hand scale; mortgage debt on the right-hand scale (source).

by Gaius Publius

"In the modern economy, most money takes the form of bank deposits. But how those bank deposits are created is often misunderstood: the principal way [money is created] is through commercial banks making loans. Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower's bank account, thereby creating new money."

—Bank of England ("Money creation in the modern economy")

Governments create money and banks create money. Governments create money by spending. They send you $100 for, say, several cartons of paper from your small paper supply store, after which you have $100 and they have paper. Where did the $100 come from? The government "printed it," perhaps literally. Nevertheless, you have $100 to spend and are in debt to no one.

Banks create money by lending. You go to a bank for a $100 loan. They add $100 to your side of the ledger as an asset they've given you, and add $100 to their side as a debt you own them. You walk out with $100 you can spend, and they look forward to collecting interest until you pay it back.

(No, banks don't take money from reserves or deposits to lend you money. If the government had a rule that said banks had to hold no reserves, they could still lend you money. Read the quote at the top again from a Bank of England paper, or consider this Forbes article, "Banks Don't Lend Out Reserves," which says essentially the same thing: "[W]hen a bank creates a new loan, it also creates a new balancing deposit. It creates this 'from thin air', not from existing money: banks do not 'lend out' existing deposits, as is commonly thought.")

Those are in fact almost the only ways that money — the thing in your wallet and the number in your bank account — come to exist. (A third way of money-creation is for governments to issue treasury bonds — also a form of "printing it" — but that way is entirely optional and doesn't pertain to this discussion. They could still just print the money directly, as money, if they wanted, and use that money to buy things. Treasury bonds are created for an entirely different purpose. Paying taxes, of course, uses money already created.)

Both of these ways of creating money — by governments and by banks — create an asset. But when governments create money by spending, people own the asset. When banks create money by lending, they own the asset, which they lend, and people own a debt — the obligation to pay it back with interest.

This is a Great Truth and should be memorized. In general, government-created money puts an asset in your hands. Bank-created money puts an asset in their hands.

Obviously, bankers would always prefer the economy to be supplied with new money by banks than by the government. Which is why governments are always being forced by bankers, to the greatest extent possible, into austerity budgets. It means more business, more profit, for them.

Bank-Created Money Competes with Government-Created Money

Banks — and the bankers who grow rich running them — love it when governments run budget surpluses, which means the government takes more money out of the economy than it puts into it. (A government budget surplus means that at the end of the year, the government spent less money than it took in. In other words, budget surpluses shrink the supply of money, making money less available to the public)

When governments run surpluses (which is sold to the public as enacting "responsible" budget policies), the economy is relatively starved of government-created money. Every dollar that the government does not spend is a dollar that's not available to anyone. So to get additional dollars — to make up the difference between what the public needs and what they have — the public has to go to banks and other lending institutions and put themselves in debt.

It should be obvious from this that banks will always favor "responsible" pro-austerity government policies, and will always work to enact them. When bankers succeed at enacting austerity budgets, they increase their take from loans and make out like bandits.

That's where we are now. Bankers have captured the political process and staffed the government with its own ex- and future employees. On the Democratic Party side, this practice of bankers running government budget policy goes back through Barack Obama to Bill Clinton, his banker-turned-Treasury Secretary Robert Rubin, and their proud budget surpluses. (Rubin went from Goldman Sachs to Treasury Secretary to Citigroup. He even gave his name to this set of policies: "Rubinomics.")

Bankers like Rubin and their Democratic Party acolytes preach austerity for government, try to run budget surpluses instead of deficits (i.e., take money out of the economy instead of supplying it), and the whole rest of the nation goes into debt to bankers when people need what the government failed to provide.

(Republicans preach austerity too, but run budget deficits when they have power. Deficits do create an asset, the money itself, but the money doesn't go to the general public. Most of it goes straight to their friends, often in the military-industrial-security industry. This time a lot of it will also go to the climate-change-creating fossil fuel industry.)

The Goal of Both Parties Is to Keep Household Debt High

While the total private debt — commercial or business debt and household debt — affects the whole economy as we'll see shortly, the household debt now drives our politics. And maintaining high household debt has been a goal of both parties.

When Democrats hold power, the government directly starves the economy of money (strives for "responsible" budgets) and bankers get rich creating debt. That's why households are so debt-ridden today, with mortgage debt, student debt, credit card debt and the like. It's why the whole rest of the country, the bottom 90% whose voices are never heard, no matter who they vote for, are feeling so fatally crushed, so ... pre-revolutionary, if you will.

When Republicans hold power, the government enacts deficit-creating budgets, but still keeps the giant mass of private debt in place so commercial banks and other lenders can continue extract interest.

Where does this leave the public? Drowning in debt by design, under either party.

Where does this leave the country (in addition to poised on the verge of revolt)? Poised on the precipice, the edge, of the next Great Crash, because unrestrained debt-creation drives boom-and-bust cycles.

The Structural Problem With Debt-Driven Economies

Earlier I wrote about the current U.S. debt overhang (the large amount of debt that businesses and the public are suffering under) and said, "No U.S. economic recovery is possible until the government stops protecting creditors at all costs and starts making it possible (or mandatory) for personal debt to be forgiven." I'm not alone in saying that.

That statement is still true, but the situation is actually worse than I said. It's not just that a recovery is impossible; it's that the crash part of the boom-and-bust cycle is on its way as well. The mass of private debt — household debt and business debt — is now so great that it will cause the next economic collapse, just as debt caused the last one in 2008. This is a global problem, since major economies around the world have refused to put the brakes on debt creation. (One of the worst offenders, by the way, is China, but they're certainly not alone. Economic growth in almost all Western nations is strangled by the overhang of private debt.)

Michael Hudson explains this in a review of a new book by Steve Keen called "Can We Avoid Another Financial Crisis" (h/t Naked Capitalism for the link; emphasis mine). Hudson starts with Keen's view of debt growth as systemic to unregulated banking activity. First, debt growth creates an economic boom, when the new money acts as a stimulus. But later, bankers become "exuberant," lend far, wide and recklessly to increase their own income, and debt repayment comes to dominate the economy, strangling it. This puts the economy in a downward spiral, leading to a crash. In a society that does not restrain bankers, rinse and repeat.

Hudson puts it this way:

It is simple enough to show that the mathematics of compound interest lead the volume of debt [both household and commercial debt] to exceed the rate of GDP growth, thereby diverting more and more income to the financial sector as debt service. Keen traces this view back to Irving Fisher’s famous 1933 article on debt deflation – the residue from unpaid debt. Such payments to creditors leave less available to spend on goods and services.

In explaining the mathematical dynamics underlying his “Minsky” model, Keen links financial dynamics to employment. If private debt grows faster than GDP, the debt/GDP ratio will rise. This stifles markets, and hence employment. Wages fall as a share of GDP.

This is precisely what is happening [today].

Mainstream (neoliberal) economics has no way to take this debt-driven boom-bust cycle into account, or even to see it for what it is, since neoliberal economics doesn't see debt as a driver of the economy at all. As Hudson says below, for them it's the old logic that "debt doesn't matter, because 'we' owe the debt to 'ourselves.'"

But mainstream models ignore the overgrowth of debt, as if the economy operates on a barter basis. Keen calls this “the barter illusion,” and reviews his wonderful exchange with Paul Krugman (who plays the role of an intellectual Bambi to Keen’s Godzilla). Krugman insists that banks do not create credit but merely recycle savings – as if they are savings banks, not commercial banks. It is the old logic that debt doesn’t matter because “we” owe the debt to “ourselves.”

[But the] “We” are the 99%, the “ourselves” are the 1%. Krugman calls them “patient” savers vs “impatient” borrowers, blaming the malstructured economy on personal psychology of indebted victims having to work for a living and spend their working lives paying off the debt needed to obtain debt-leveraged homes of their own, debt-leveraged education and other basic living costs.

For Keen, Hudson, Minsky and a number of others, this kind of economy — depending on unrestrained debt for stimulus, leading to debt-driven crashes — is malstructured and the boom-bust cycles are inevitable, built in. The only long-term solution, of course, is a restructured, debt-restrained economy, which implies quite a lot of government intervention — anathema to free market, neoliberal, Rubinomics true believers (and the bankers who keep them in power).

Barring that restructuring, economies entering bust cycles have only two choices — pop the bubble now, or keep the party going a little longer — and they generally take the worse one:

Keen explains why, mathematically, the Great Moderation leading up to the 2008 crash was not an anomaly, but is inherent in a basic principle: Economies can prolong the debt-financed boom and delay a crash simply by providing more and more credit, Australia-style. The effect is to make the ensuing crash worse, more long-lasting and more difficult to extricate. [...]

Again, this is where we are now. The U.S. economy and the world economy are both limping along at almost no growth, and have been since the 2008 crash. No one has seen a recovery except the very wealthy, the upper 1%, plus the upper 10% who run things for them. Banks are doing fine, better than fine in fact, because government policy both here and in Europe is to let no debt go unpaid. You can see the result. I hope you can also now see where this is leading.

"Irrationality" and Bank Lending

Classic, neoliberal economics sees the world as made up of "individuals" making rational decisions. Here's Keen quoting Ben Bernanke, a classic neoclassical economist (source here; my emphasis):

"Hyman Minsky (1977) and Charles Kindleberger (1978) have in several places argued for the inherent instability of the financial system but in doing so have had to depart from the assumption of rational economic behavior. [A footnote adds] 'I do not deny the possible importance of irrationality in economic life; however it seems that the best research strategy is to push the rationality postulate as far as it will go.' (Bernanke, 2000, p. 43)"

But the irrational often rules us all, especially hyper-wealthy bankers driven mad with greed, what Alan Greenspan, another classic neoliberal economist, quaintly called "irrational exuberance." Pathological monomania is another characterization, and it's not an anomaly, but a characteristic of this part of the cycle. (Even economist Jeffrey Sachs labeled as "pathological" the Wall Street bankers he had to personally deal with, a surprising statement coming from someone who used to work at the IMF.)

According to Hudson, Keen's solution to this failure of vision is to see the economic world as populated, not with individuals like "prudent savers" (banks) and "spendthrift" borrowers (their customers)," but with "basic economic categories – creditors, wage earners, employers, [and] governments [who are] running deficits (to provide the economy with money) or surpluses (to suck out money and force reliance on commercial banks)."

A Choice — "Modern Debt Jubilee" or the Next Great Crash

Keen does have a solution to the problem of avoiding the next great crash. He calls it a "modern debt jubilee," a massive conversion of debt into equity. Hudson describes this as essentially a swap of equity for debt. About this, Hudson writes, "The intellectual pedigree for this policy to keep debt within the ability to pay was laid two centuries ago by Saint-Simon in France. ... As a transition from [today's] debt stagnation, [Keen] suggests that the central banks create a lump sum to put into everyone’s account. Debtors would be required to use their gift to pay down the debt. Non-debtors would keep the transfer payment – so as not to let demagogic political opponents accuse this plan of rewarding the profligate."

That is, everyone gets a gift of money in their bank account from the central bank — the government's bank, which again creates new money. Debtors are required to apply the gift to their debt. Non-debtors get the gift as well to avoid the inevitable political attack that, if only debtors got the gift, we'd be rewarding only the "undeserving."

Pretty slick idea. Some wealth rebalancing (though not much), considerable debt destruction, with a side of economic stimulus. That would keep the next crash at bay.

When Pigs Fly, or Sanders is Senate Majority Leader

Keen's suggestion will also, my realistic socialist mind tells me, never happen. If it did, we'd be living in a world in which the Democratic Party chooses Bernie Sanders to replace Chuck Schumer as Democratic leader of the Senate, and chooses to win elections again by standing with the people instead of big money donors, many of them bankers, who now provide most Party funding.

This could occur, of course, but look what happened to Sanders the last time he challenged the Party — every part of its ecosystem, including its media, worked to defeat him. And if Democrats won't stand for the people — and save the nation from the debt that's drowning it — who will? In our deliberately constricted political system, there's only one other alternative, and they'll always be no help at all.

Our Debt Is Their Income Stream

A final note — the newsy part of this piece, about the coming crash, is not the most important part. The paragraphs leading up to the news — my opening sections prior the discussion of Steve Keen's book — is much more significant, since it explains all you need to know about why banker-captured Western governments are so in love with austerity economics; why austerity guarantees your indebtedness; and why that's entirely by design.

Again: Government-created money puts an asset in your hands. Bank-created money puts an asset in their hands.

Our debt is their "income stream," and they will always stop at nothing to keep it that way, including inducing the first black president to destroy the wealth of his own community for their benefit (see "Obama's Other Legacy").

This austerity-created income stream must be interrupted and reversed, or we really will get that revolution I've been alluding to, and not just at the ballot box. (More on that problem in a later piece.)

GP
 

Would Free Public Colleges and Universities Threaten the All-Volunteer Military?

Cost of college, 1985 through 2012, compared to other consumer costs (source; click to enlarge)

by Gaius Publius

I'd like to put a simple idea in front of you, a connection between the predatory student debt scam and the military.

Bernie Sanders has argued the public colleges and universities should be free today, for the same reason that public high schools were free in the past. In the past, basic education — initially grade school, then grade school and high school — was considered both a public right and a public good. An educated nation was both a strong nation and a productive one, and in fact, one of the cornerstones of our preeminence in the world through the 1960s was our education system ... and its availability.

Note that through this entire period, private schools — grade schools and high schools — also existed and thrived. The sons and daughters of the wealthy or the religiously motivated always had those options available. There was no "crowding out."

Today, in this complex world, "basic education" means college as well. Sanders' idea is therefore simply an extension of what we've always done, made "basic education" free to the public at public expense, along with other privately financed options.

Note that free public college and university education would immediately alleviate the crushing burden of student debt, at least for new students. So it's a triple win — we'd get a stronger nation, a more productive one, and a less debt-burdened one, all with one stroke.

Free Education and the Military

So where would those students come from? Many would come from the post-high school work force (think Starbucks, Target and McDonald's), but a great many would also come from populations that turn to the military for employment. Which suggests the question — Is America's military and our military engagements a barrier to free public post-high school education?

I think the answer may be yes, given the number of men and women who join the military to get military-financed education benefits. As you'll read, that's 75% of enlistees.

Consider this, from Peter Van Buren, a former State Department Foreign Service Officer, writing at Common Dreams (my emphasis):

Does Free College Threaten Our All-Volunteer Military?

Does free college threaten our all-volunteer military? That is what writer Benjamin Luxenberg, on military blog War on the Rocks says. But the real question goes deeper than Luxenberg’s practical query, striking deep into who we are as a nation....

Right now there are only a handful of paths to higher education in America: have well-to-do parents; be low-income and smart to qualify for financial aid, take on crippling debt, or…

Or join the military.

The Post-9/11 GI Bill provides up to $20,000 per year for tuition, along with an adjustable living stipend. In Cambridge, Massachusetts, where Harvard is located, that stipend is $2,800 per month. There is also a books and supplies stipend. Universities participating in the Yellow Ribbon Program make additional funds available without affecting the GI Bill entitlement. Some 75 percent of those who enlisted said they did so to obtain educational benefits.

There's that 75% number. Van Buren continues:

Luxenberg raises the question of whether the free (Bernie Sanders) or lower cost (Hillary Clinton) college education is a threat to America’s all-volunteer military. If so many people join up to get that college money, if college was free or cheaper, would they still enlist?

It is a practical question worth asking, but raises more serious issues in its trail. If people are enlisting in significant part because college tuition is not affordable, does that imply tuition costs need to stay high to help keep the ranks filled? That an unequal college costs playing field helps sustain our national defense?

America faces twin problems with respect to higher education — the crushing burden of student debt, and the fiercely escalating price of college, tuition and fees, that this debt enables. I think you could safely say that without the availability of student loans — which are structured to greatly benefit lenders at the expense of student debtors — tuition increases would not be economically feasible.

Put more simply, bankers and other lenders feed on student debt, grow fat on it in fact. Student debt, in turn, feeds the price charged by the colleges and universities who receive most of that money, which then drives the need for more debt. Everyone wins — banks, universities — everyone except students, who are the victims in this scam. Even those who receive "good" educations are sucked dry. All college students today, graduates or dropouts, leave with a mountain of debt they will carry for decades. They leave with the equivalent of a mortgage — but without the house, and often without a decent job to finance it.

Killing the student loan program by killing the need for loans would immediately change the lives of millions of young people, a whole generation. The bankers won't be happy, but their moaning would prove instantly why these loan programs are so prevalent in the first place — to feed the greed, and no other reason.

And once again, private colleges and universities would still exist and would still be free to charge anything they like. Of course, they'd now have to compete with the free universities, something that would likely bring down even those tuition costs. Sounds like a win-win, yes?

But Where Will the Money Come From? Cancel the F-35.

But how would we "pay for it" (assuming that money works differently from the way it does in the real world, that money is a zero-sum game, like gold)? Here's another simple idea, again from the article:

Money matters, but what the country can get for its money is also important. Let’s round off the military higher education benefit, tuition and living stipend, to $53,000 a year. An F-35 fighter plane costs $178 million.

Dropping just one plane from inventory generates enough money for 3,358 years of college money. We could even probably survive as a nation if we didn’t buy four or five of the planes. A lot of people who now find college out of reach could go to school

Let's make that even easier. Cancel the F-35 completely. After all, it's dangerous to operate and barely flies. Reuters:

U.S. sees lifetime cost of F-35 fighter at $1.45 trillion

The U.S. government now projects that the total cost to develop, buy and operate the Lockheed Martin Corp F-35 Joint Strike Fighter will be $1.45 trillion over the next 50-plus years, according to a Pentagon document obtained by Reuters.

The Pentagon's latest, staggering estimate of the lifetime cost of the F-35 -- its most expensive weapons program -- is up from about $1 trillion a year ago, and includes inflation....

The Pentagon still plans to buy 2,443 of the new radar-evading, supersonic warplanes, plus 14 development aircraft, in the coming decades, although Air Force Secretary Michael Donley last week warned that further technical problems or cost increases could eat away at those numbers.

You could finance a lot of free public college and university education with $1.5 trillion. Not buying 2500 planes at $180 million per plane would itself save a half-trillion dollars.

As to how we'd fight all of our wars without out-of-options young people forced by circumstances to enlist ... well, maybe we'd have to justify those wars to the public in more effective ways. After all, enlistments in WWII weren't hard to come by.

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Obama’s Dakota Pipeline Twist Is Not a Victory—And Could Erase the Struggle

There's no better intro to what been going on in North Dakota than this fun, informative clip from Lee Camp's Redacted Tonight.

by Gaius Publius

Another piece with not many parts to keep in mind, this time about the native American protests of the DAPL pipeline in North Dakota. Here are the pieces:

• The pipeline is a big deal. It will cost at least $3.7 billion dollars and carry close to half a million barrels of fracked Bakken oil per day.

• The investors in the project are a group of major banks, both national and international, led by Citibank. 

• DAPL will cross through or near tribal lands at Standing Rock, North Dakota. This is where the protest are occurring. This is also where the pipeline crosses the Missouri River at Lake Oahe, a "lake" formed by the Oahe Dam.

• There is no way to stop climate change without stopping dead cold the use of carbon as a fuel. That means disrupting — totally shutting down — its extraction and delivery.

• Stopping the fracking and delivery of Bakken crude oil is a major goal of environmentalists and climate activists alike, for all the obvious reasons. 

• Right now, the protests at Standing Rock are all that's keeping the DAPL project from continuing.

• President Obama is well into the legacy phase of his presidency. He can't afford to look bad, either to people who read news stories about him or to people who will contribute to his library and his foundation. (For more, see "Climate Change and Barack Obama's Legacy".)

And that's all you need to know to follow the next phase of the DAPL story. The map below shows the pipeline route and the protest location. Note again that the protest location is also a major crossing point on the Missouri River.

Dakota Access Pipeline route and protest location. Lake Oahe is in fact a massive widening in the Missouri river behind the Oahe Dam. It's also a choke point for the pipeline construction project (source; click to enlarge).

Now the news — just two items for now.

The Obama Administration Is Appearing to Relent

President Obama and his administration are appearing to acquiesce to the native American protesters, especially in light of the relentless — and ugly — response by the corporation behind the pipeline and its private security force (for more on that, see the video above or google "DAPL attack dogs").

A bit of that story from Larry Buhl at DeSmogBlog:

Mixed Reactions as Feds Give Standing Rock Sioux Partial Victory

Friday afternoon brought a roller coaster of emotions for the Standing Rock Sioux Tribe and supporters in the battle to stop construction of the Dakota Access Pipeline (DAPL) near the tribe’s North Dakota reservation. Shortly after a court rejected the tribe’s emergency legal challenge, a joint statement by three federal agencies effectively stopped work on the pipeline until significant questions are answered about potential environmental and cultural impacts. ...

Minutes after U.S. District Judge James Boasberg issued a 58-page ruling [pdf] today denying the tribe's request for a temporary injunction to halt construction, the Department of Justice, the Department of the Army, and the Department of the Interior issued a joint statement to “cease to authorize construction” on federally controlled lands — essentially nullifying the court’s action.

This news has stirred a number of emotions in the climate community (cautious optimism and some cheering) and also in the progressive Democratic community ("Obama's doing the right thing").

I'm not that sanguine. In fact, I'm downright pessimistic.

"Appearing to Relent" Means Lucy with the Football

This tactic, dampening protests with the lure of optimism, is an old old trick, and those who suspect it's being deployed here are right to be very very suspicious. I'd be much more optimistic if (a) there weren't so much money already on the table, and (b) Obama weren't deep into playing the middle between building a people-friendly "legacy" and collecting major corporate cash to finance his post-presidential projects.

As I said, I'm downright pessimistic, to the extent that I'd bet money Obama and his administration are playing against the protesters and for the pipeline builders. No one has explained that better than Kelly Hayes at Yes! Magazine:

Obama Pipeline Plot Twist Is Not a Victory—And Could Erase the Struggle

The illusion of victory is a dangerous thing. We could undo what we have built at Standing Rock, this unprecedented act of Native American collective resistance.

All Native struggles in the United States are a struggle against erasure. The poisoning of our land, the theft of our children, the state violence committed against us — we are forced to not only live in opposition to these ills, but also to live in opposition to the fact that they are often erased from public view and public discourse, outside of Indian Country. The truth of our history and our struggle does not match the myth of American exceptionalism, and thus, we are frequently boxed out of the narrative.

The struggle at Standing Rock, North Dakota, has been no exception, with Water Protectors fighting tooth and nail for visibility, ever since the Sacred Stone prayer encampment began on April 1.

For months, major news outlets have ignored what’s become the largest convergence of Native peoples in more than a century. But with growing social media amplification and independent news coverage, the corporate media had finally begun to take notice. National attention was paid. Solidarity protests were announced in cities around the country. The National Guard was activated in North Dakota.

The old chant, “The whole world is watching!” seemed on the verge of accuracy in Standing Rock.

And then came today’s ruling, with a federal judge finding against the Standing Rock Sioux, and declaring that construction of the pipeline could legally continue. ... But then something happened. Headlines like, “Obama administration orders ND pipeline construction to stop” and “The Obama Administration Steps In to Block the Dakota Access Pipeline” began to fill my newsfeed, with comments like, “Thank God for Obama!” attached to them.

Clearly, a major plot twist has occurred. But it’s not the one that’s being sold.

"Thank God for Obama!" must be sweet music indeed to post-White House legacy ears.

Now the plot twist:

To understand that this isn’t the victory it’s being billed as, you have to read the fine print in the presently lauded joint statement from the Department of Justice, the Department of the Army and the Department of the Interior:

“The Army will not authorize constructing the Dakota Access pipeline on Corps land bordering or under Lake Oahe until it can determine whether it will need to reconsider any of its previous decisions regarding the Lake Oahe site under the National Environmental Policy Act (NEPA) or other federal laws.”
Note what’s actually being said here, what’s being promised and what isn’t.

What is actually being guaranteed?

Further consideration.

In addition, the joint statement includes this: "In the interim, we request that the pipeline company voluntarily pause all construction activity within 20 miles east or west of Lake Oahu."

"Letting the air out of a movement's tires"

Here's why that's so bad:

Let’s reflect on that for a moment: A company that recently sicced dogs on Water Protectors, including families, who stepped onto a sacred site to prevent its destruction, is being asked to voluntarily do the right thing.

But the thing is, they probably will. For a moment. Because what’s being asked of them isn’t an actual reroute. Right now, all that’s being asked is that they play their part in a short term political performance aimed at letting the air out of a movement’s tires. ...

As someone who organizes against state violence, I know the patterns of pacification in times of unrest all too well. When a Black or Brown person is murdered by the police, typically without consequence, and public outrage ensues, one of the pacifications we are offered is that the Department of Justice (DOJ) will investigate the shooting. It’s a deescalation tactic on the part of the state. It helps transition away from moments when rage and despair collide, creating a cooling off period for the public. “Justice” is still possible, we are told. We are asked to be patient as this very serious matter is investigated at the highest level of government, and given all due consideration.

The reality, of course, is that the vast majority of investigations taken up by the DOJ Civil Rights Division end in dismissal – a batting average that’s pretty much inverse to that of other federal investigations. But by the time a case gets tossed at the federal level, it’s probably not front page news anymore, and any accumulated organizing momentum behind the issue may have been lost — because to many people, the mere announcement of a federal investigation means that the system is working. Someone is looking into this, they’re assured. Something is being done. Important people have expressed that they care, and thus there is hope.

So how is this similar to what’s happening with Standing Rock?

It’s the same old con game.

Anyone who's watched every Black Lives Matter protest of what appears to be police murder has seen this game. The offer of hope, the promise of due process, then months after the protest has stood down, the whitewash. It's almost Lucy and the football at this point — entirely predictable — which is why I'm much more pessimistic than my climate brethren (and sistren).

How to Apply the Lesson that BLM Protesters Learned

In my view the only way to apply that knowledge and that lesson is this — do not stand down short of real victory. In other words, ask for the right thing and hold to it. If the ask is, "Please, Obama, take us under your wing if you can," then the answer will certainly be, "Sorry, I tried, but I can't ... but I did try, right?"

The ask must be, "Obama, stop this pipeline. Period. We're here until you do." It's the only way.

And frankly, if that's what happens — if the protesters ramp up instead of ramping down, continue to disrupt in the way that got them this far in the first place — I'm extremely optimistic. This is indeed, as Kelly Hayes writes, "the largest convergence of Native peoples in more than a century." If battles can't be won in the election booth or the courts, they'll have to be won in the streets — or unhappy citizens will just have to continue to take their lumps and go home.

This advice applies as much to progressives in their contest against the Democratic Party — can progressives really win at the voting booth and fundamentally change the Party? — as much as it applies to forgiveness of student debt (will asking for relief solve the problem?), as well as to stopping the almost certain climate crisis to come.

At Standing Rock, victory will be won by the protesters, so long as they don't take the administration bait and stand down. Remember, no matter where DAPL is routed, it still has to cross that river. If they can't cross the Missouri River, they can't ship the crude to refineries in Illinois.

More as it develops. If this goes as I hope it will go, it could be big.

GP
 

Reich: The Problem Isn't That Sanders Doesn't Know How to Break Up the Banks; It's That He Does

Lloyd Blankfein, CEO of Goldman Sachs. Why isn't he in prison? Friends in high places, a great many of them (source).

by Gaius Publius

I've been wanting to write for a while about all the reasons the bipartisan Establishment — the people at the top running the "big game" that makes them all rich and keeps them in power — can't ever let Bernie Sanders get control of the Executive Branch of government. There are quite a few reasons, including the fact that people like Lloyd Blankfein, CEO of Goldman Sachs, would certainly be prosecuted and most likely jailed for fraud.

But one story that's been making the ginned-up news rounds lately is that Sanders, in an interview with the NY Daily News, seemed in the Clinton camp's telling not to know how to go about executing one of his own policies, breaking up the too-big-to-fail banks.

The problem with that framing — which every news outlet, including the so-called leftie outlets — immediately jumped to support — is that it's exactly backwards. Sanders knows exactly how to break up the big banks, and he will.

And that's the problem Bernie Sanders presents. The problem isn't that he doesn't know how. The problem is that he does know how, and he will.

Robert Reich explains:

Robert Reich: Sanders Knows How to Break Up the Big Banks—That's Why He Scares the Establishment

Of course Sanders knows how to bust up the big banks.

The recent kerfluffle about Bernie Sanders purportedly not knowing how to bust up the big banks says far more about the threat Sanders poses to the Democratic establishment and its Wall Street wing than it does about the candidate himself.

Of course Sanders knows how to bust up the big banks. He’s already introduced legislation to do just that. And even without new legislation a president has the power under the Dodd-Frank reform act to initiate such a breakup.

But Sanders threatens the Democratic establishment and Wall Street, not least because he’s intent on doing exactly what he says he’ll do: breaking up the biggest banks.

And they should be broken up, for our own safety as well as theirs:

The biggest are far larger today than they were in 2008 when they were deemed “too big to fail.” Then, the five largest held around 30 percent of all U.S. banking assets. Today they have 44 percent.

According to a recent analysis by Thomas Hoenig, vice chairman of the Federal Deposit Insurance Corporation, the assets of just four giant banks – JPMorgan Chase, Citibank, Bank of America, and Wells Fargo – amount to 97 percent of our the nation’s entire gross domestic product in 2012.

If this isn't stopped, the next crash will be another "big one," perhaps bigger than 2008, after which there will be some flavor of bailout (or worse), followed by a revolt by everyone, left and right, who already hated the last one. I'd rather not see any of that occur.

What's Sanders' Plan?

Here's the Sanders plan from the Sanders campaign (quoted here):

Within the first 100 days of his administration, Sen. Sanders will require the secretary of the Treasury Department to establish a “Too-Big-to Fail” list of commercial banks, shadow banks and insurance companies whose failure would pose a catastrophic risk to the United States economy without a taxpayer bailout.

Within a year, the Sanders administration will work with the Federal Reserve and financial regulators to break these institutions up using the authority of Section 121 of the Dodd-Frank Act.

Sen. Sanders will also fight to enact a 21st Century Glass-Steagall Act to clearly separate commercial banking, investment banking and insurance services. Secretary Clinton opposes this extremely important measure.

President Franklin Roosevelt signed the Glass-Steagall Act into law precisely to prevent Wall Street speculators from causing another Great Depression. And, it worked for more than five decades until Wall Street watered it down under President Reagan and killed it under President Clinton. That is unacceptable and that is why Sen. Sanders will fight to sign the Warren-McCain bill into law.

I'm sure if Congress initially balks, and it's likely they will, Sanders will persist on the legislative front (as we're seen, he doesn't have much quit in him). But I'm also sure that if Congress fails to pass legislation, "within a year" he'll use every power he has as president to accomplish this breakup from within the Executive Branch. We have a very powerful executive branch, and a big-bank breakup is that important.

About Lloyd Blankfein...

Why isn't the CEO of Goldman Sachs, Lloyd Blankfein, in jail awaiting trial? Eric Levitz in New York Magazine reports on his and his firm's crimes (my emphasis):

Goldman Sachs Admits It Defrauded Investors, Pays $5 Billion Fine

In April 2006, Goldman Sachs provided investors with a bullish report on Countrywide’s high-quality mortgage loans — loans the bank had helpfully packaged into AAA-rated mortgage-backed securities, thereby offering those lucky clients a low-risk way of profiting from America’s housing boom. When the bank’s head of “due diligence” saw the report, he typed a short email to his colleagues: “If only they knew…”

Now we know. On Monday, the bank completed a $5.1 billion settlement with state and local authorities for its role in perpetuating the subprime-mortgage crisis. Goldman is the last of the major banks to pay for its financial-crisis sins, but unlike some of its peers, the firm has agreed to formally acknowledge its malfeasance. While Monday’s settlement does not include a confession of legal wrongdoing, it does contain a signed “statement of facts” that details the various ways Goldman Sachs misled investors about the risks inherent to its mortgage-backed securities. [...]

"Mislead investors" is code for "lied to investors about the facts in order to take their money." Which is code for "fraud." Matt Taibbi:

Re Goldman: if these firms were truly committed to reforming, they would want to serve up guilty execs for prosecution as a cheaper solution

— Matt Taibbi (@mtaibbi) April 11, 2016

So why isn't Lloyd Blankfein in a courtroom counting the days before he wears the orange jumpsuit? Because he has friends in high places, lots of them. Does Blankfein fear a Sanders presidency? Almost certainly, with every fiber of the last remaining shred of his soul.

I wonder who Blankfein is backing...

(Blue America has endorsed Bernie Sanders for president. If you'd like to help out, go here. If you'd like to "phone-bank for Bernie," go here. You can volunteer in other ways by going here. And thanks!)

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