The View Outside My Window: E.L. Fairchild

Posted on September 14, 2009 by Liz

(“The View Outside My Window” is a new feature at Breathing Is Political. As our lives in the Delaware River Basin meet the inexorable forces of the economy, health issues, resource degradation, etc. I’ve asked people whose perspectives are outside our ordinary to tell us what they see. Today, Breathing is pleased to present the view outside E. L. Fairchild’s window. Don’t forget to view Ms. Fairchild’s work request at CottageWorks’ Swaps, Barters & Freebies page as well as the reference posted on her behalf at the Refer-A-Worker page. )

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I’m not what one might call a ‘News Person.’ I don’t like hearing about the horrible ways people treat each other – it makes me sad about being human. I am aware of the important things and will listen in when the news is on where I happen to be, but I prefer it most in comic forms – The Daily Show, The Colbert Report, and mostly Wait, Wait, Don’t Tell Me on NPR. Therefore, when it comes to The Recession, my experiences are strictly personal.

What exactly is a recession? Dictionary.com defines it as: Economics. a period of an economic contraction, sometimes limited in scope or duration. To me it means everyone else is panicking about the cost of living. Living costs. That’s a truth I’ve come to accept and I don’t let it bother me. Why worry if it doesn’t get you anything but worry lines? I know that I am blessed with an abundance of friends and family that are willing to help me when I’m down, but even without such a support network in place, I’ve found that by being nice and offering to help in exchange, there are more than enough people in the world that will extend a helping hand. Moreover, it seems to have doubled or tripled in the current ‘economic crisis.’

The Recession seems to be making a positive impact in the world as far as I am concerned. People are buying less in a society that has thus far been consumer driven. People are becoming more aware of ‘living Green,’ even if it’s just because of the money they save. Because gas prices keep going up, alternative fuels and smaller cars are surfacing, also something that will help the planet. Therefore, I think The Recession has been a good thing for Mother Nature.

I am a live-in nanny and have been for the past 3 years. In my spare time, I like to travel and experience the world, and for a Gypsy like me The Recession has been kind in many ways. The cost of airfare keeps going down. Although the ‘checked bag fees’ are new and quite annoying, most of the time I travel with a carry-on sized backpack, so it doesn’t affect me. It’s also inspiring others to do the same, thus the need for so many things is fading away. Simplicity is the order of the day.

Currently, I am looking for a place to live and a new job. According to the News and the gossip around the world, it’s not a good time for such things. In my experience, I’m finding the opposite. Many people are looking to rent rooms in houses or apartments in order to cut back on expenses. Car-pooling (another wonderfully Green thing) is more and more accessible with web sites like ZimRide.com. Jobs are most definitely there to be had, you may just need to dig a little deeper than you did before. I’ve found that communities are banding together to help each other out. Things like the Upper Delaware Community Network, a local group ‘bulletin board’ of sorts, are being started via the internet and are wonderful tools to advertise someone looking for help or looking for work. Craigslist.com is another tool that I’ve found invaluable in helping to sell unwanted ‘stuff’ and find someone else’s unwanted ‘stuff.’ One person’s trash is another person’s treasure!

One of the few complaints I do have about The Recession is the cost of healthy and organic food. When money is tight, it can be so hard to eat well. The tasty organic plums that are grown locally are now $3.50/lb. The organic milk is sometimes double the price of non-organic milk. When I have less than $40 to feed myself for the week it’s hard justify the cost. And, in the back of my mind I know that I could fill my belly at McDonalds for about $5 (I wouldn’t, but I know I could). Luckily for me I don’t have the bills that most people do (such as rent, car payments and insurance), so I can justify the cost of my organic food, but I see how it is such a problem for so many.

Another issue that is on the tip of everyone’s tongues seems to be healthcare. Fortunately, I was injured in the Army (during Basic Combat Training, so I only served a total of 7 months) and now have free healthcare thru the VA. This issue doesn’t affect me, but it does affect my family, many of whom are self-employed. *Disclaimer* This is something I really don’t have a clue about. When I was in Ireland recently, I was discussing medical coverage with some friends. Every one of them was on ‘the dole’ (our welfare) but everyone had a medical card and free or almost free health care. “Ireland takes care of its people so the people will take care of Ireland,” one person told me. So, why is it so much harder for America? When so many countries have such a system in place, why is coming up with one for the USA so controversial? I haven’t figured it out yet. I’m sure there is any number of excuses out there, but like they told us in grade school, No Excuses – No Exceptions!

That is The Recession as seen through the eyes of a self-proclaimed Gypsy. It is not a complete picture in many ways, but broad enough I think. It gives me hope. I believe everything happens for a reason, and as far as I can tell, The Recession may just save our existence on this planet. So I encourage you all to Cut Back, Live Simply, Buy Locally, and Think Green. And when a Wanderer crosses your path, extend a hand – you may just get more than you give!

The View Outside My Window: E.L. Fairchild

Posted on September 14, 2009 by Liz

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House Financial Services Subcommittee Hearing

Posted on March 20, 2009 by Liz

Here are high points of the Hearing I found interesting and some of my own thoughts. (Quotation marks are included where statements are actual quotes rather than the “sense” of what was said.)

BARNEY FRANK, Democrat & Financial Services Committee Chairman. As major stockholders, the US Government should try to recoup $165 million in bonuses by filing a lawsuit alleging “poor performance” on the part of bonus recipients. He also demanded the names of bonus recipients and updates when bonus recipients either return or refuse to return bonus money. (Although New York’s Attorney General Andrew Cuomo is in receipt of these names, Liddy expressed a need to protect bonus recipients because of deadly threats made against them and their families.) (According to the Center for Responsive Politics, Frank received $202,548 in contributions from the Insurance Industry.)

OLYMPIA SNOW, (R) Maine. Offered AIG bailout provisions which would have disallowed most of the oversized bonuses. (Received $5,000, according to the Center for Responsive Politics.)

CHRISTOPHER DODD, (D) Connecticut. Snow’s amendment was (allegedly) struck by Connecticut’s Chris Dodd. How he did it is unclear. At first, he denied the act. Subsequently, he said he received instructions from Treasury and/or The White House. Regardless, striking the provision resulted in Congressional approval of bonus contracts entered into before February 11, 2009. As a result, 165 million taxpayer dollars have been paid to architects of the debacle. Reportedly, Dodd received $852,556 from insurance lobbyists. (Center for Responsive Politics)

STEPHEN LYNCH, Massachusetts: “We amend contracts all the time. My auto workers were badgered and badgered…. These [AIG] guys lost billions of dollars and still believe they’re entitled to these bonuses.” (Lynch received $35,299 according to the Center for Responsive Politics)

PAUL KANJORSKI, Chairman, Financial Services Subcommittee on Capital Markets (D-PA). Admitted to knowing about the incipient bonus payments two months ago and “warned Liddy that paying the bonuses would be a big mistake.” “You [CEO Edward Liddy] should have told the bonus recipients to ‘sue us.'” (Kanjorksi did not mention warning anyone else and according to the Center for Responsive Politics, received $345,548 in donations from the insurance industry.)

Joel Ario, State of Pennsylvania Insurance Commissioner and Chairperson of the National Association of Insurance Commissioners. Ario believes that AIG’s toxic holdings could be walled off from its healthy funds-at-large. (NB: Therefore, the company at-large could survive if its sick subsidiaries were permitted to fail.) (Also see: [Funny] Side of the [Wall] Street: Obamanomics.)

Neither the Government Accountability Office (GAO) nor the federal Office of Thrift Supervision (OTS) have investigated whether AIG fraudulently misrepresented its health and wealth at the time it was creating “retention” and other bonus contracts “to the tune of $400 + million with the division that was bleeding to the tune of $40 billion.”

Another committee member asserted, [“The distribution of these bonuses] borders on fraud and criminality.”

According to Scott Polakoff of OTS, his agency knew the risk of the credit default swaps in 2004 and did nothing to avert the collapse. OTS did not close AIG’s toxic financial products division even though “the agency had a complete picture and oversight authority” to do so. Polakoff further stated that “OTS had sufficient expertise and personnel” but in effect, since Congress didn’t instruct OTS to review the bonus contracts before AIG’s bailout was approved, the agency didn’t do the research.

Rodney Clark of Standard & Poor’s (S & P) rating agency was asked, “How can we depend on you and were mistakes made?” Clark answered, “Hindsight being 20-20…, our conclusions [of AIG’s solvent value] changed rapidly once the market started to collapse. Market values are important as a guideline. We could not understand how quickly the value of mortgage backed securities would decline…. (NB: On what basis, then, did S & P justify its AA- rating until September 15, 2008 if ?) S & P hedged its bets. Ratings are based on current value and give prospective investors a factual basis for predicting future performance.) Clark went on to say, “In 2008, excluding investment losses, AIG would’ve been profitable.”

Really? Does that mean S&P didn’t see the looming losses or didn’t consider them relevant to the total value of the company? (See: Ratings Agencies falsify reports or search CSPAN’s archives for quotes from ratings agents who knew full-well that the mortgage-backed securities were toxic but provided healthy ratings because…that was the outcome corporations paid them to obtain. (See: previously-cited statement from Joel Ario.)

Edward LIDDY, AIG insurance Chairman & CEO (temporarily appointed in 2008 to detoxify AIG). Prior to Mr. Liddy taking his witness seat, he was stopped by “pink lady demonstrators” who questioned him (in part) about consequences to returning war veterans whose savings were invested with AIG. If he answered, it wasn’t televised.

He did tell us that the risk to AIG was unacceptably high if we did not pay the $165 million in bonuses. “It was my determination,” he said, “that AIG-FP would unravel if employees weren’t retained to wind down the projects they were working on. Which they did. They’ve reduced $2.7 trillion in toxic assets to $1.6 trillion. It’s my intention to reduce those debts, sell AIG’s insurance companies and strengthen the healthy portions of our business. If we don’t pay our debts, that triggers bankruptcy. I’ve asked AIG-FP (financial product) employees to return a portion of the bonuses. Believe me, I wouldn’t have approved the contracts if I’d been CEO at the time they were created.”

Liddy further asserted that Federal Reserve Chairman Ben Bernanke acquiesced to the payment of retention bonuses.

“We didn’t tell Congress because nobody told us to,” Liddy explained. “We’re partners with the Federal Reserve. They participate in activities leading up to board meetings and they attend board meetings. I asked if they had comments or different points of view as far as bonuses and everything else. The Federal Reserve did not disagree with our assessment that AIG-FN was at risk of jeopardizing the monies already given if we didn’t pay the bonuses. We were told by our attorneys that the contracts were unbreakable. I assumed they shared with Treasury and Congress information they gained from us. The Secretary of the treasury did not know we were going to make the [bonus] payments though the Federal Reserve did. It’s up to the Federal Reserve to discuss” salient issues with the Secretary of the Treasury.

Later, Treasury Secretary Timothy Geithner said he didn’t know about the bonus contracts until two weeks ago.

Countering assertions of possible fraud, Liddy said he believes, “AIG was solvent when the retention contracts were drawn.” (On what factual basis did he develop this assessment? Or, is he just repeating assessments from ratings agencies which regurgitated AIG’s own corporate projections? Isn’t that the same self-quoting claptrap that got us into Iraq?)

Liddy continued, “AIG has problems besides the mortgage-backed securities. There’s oil accounts and other utilities in trouble.” (This appears to contradict his assertions of fundamental solvency.)

ED PERLMUTTER, Committee Member. “There’s a whole fraud concept that says ya’ can’t be handing out bonuses when you’re insolvent. I don’t think these bonuses should have been paid.”

Some legal issues, AIG’s Employee Retention Plan and relevant case and statutory findings.

Currently, some members of Congress are promoting tax legislation which would target bonuses paid by corporations that received stipulated bailout funds. Their idea is to re-appropriate the funds already disbursed. (There is every reason to believe such targeting is unconstitutional. Seeing as how Congress writes the laws and has more than its fair share of attorneys, you’d think they’d know that.)

AIG-FP 2008 Employee Retention Plan, effective December 1, 2007

(Importantly, there is no signing date on the Retention Plan although it specifically covers 2008 and 2009.) According to CEO Liddy’s Executive Summary of the retention plan in which he discusses the bonuses, “The plan was implemented because there was a significant risk of departures among employees at AIGFP, and given the $2.7 trillion of derivative positions at AIGFP at that time, retention incentives appeared to be in the best interest of all of AIG’s stakeholders…. This resulted in a $313 million total for 2008 and a $327 million total for 2009… The 2008 awards range from $1,000 to slightly less that $6.5 million. Only seven employees will receive more than $3 million…. The retention plan is governed by Connecticut Wage Act. (Section 4.04)” (NB: The law provides for the recovery of double damages and attorneys’ fees when wages are improperly withheld and the employer’s refusal to pay wages lack a good faith basis. Conn. Gen. Stat sections 31-72.) “In addition,” states Liddy, “individual managers who decide to withhold wages that are due are individually liable for violation of the Wage Act…We have been advised that the bonus provisions of the American Recovery and Reinvestment Act of 2009 prohibiting certain bonuses specifically exclude bonuses paid pursuant to pre-February 11, 2009 employment contracts.” (Apparently, this is the alleged “Dodd Provision.”)

NB: The definition of “executive employee” rests largely on whether an employee is salaried, is required to exercise personal discretion in performance of duties, earns in excess of certain dollar amounts and has (usually) some supervisory responsibilities.

According to the Connecticut Wage Statute (sec. 31-71(e). “No employer may withhold or divert any portion of an employee’s wages unless (1) the employer is required or empowered to do so by state or federal law and (i) “Wage” means compensation due to an employee by reason of his employment. (Italics added for emphasis.)

Liddy’s Executive Summary referenced Schoonmaker v Lawrence Brunoli, Inc. 828 A.2d64 (Conn.2003). Schoonmaker established that double damages could be paid when salaries are withheld for reasons of “bad faith, arbitrariness or unreasonableness.”

The courts have also established that, “Punitive damages may be awarded in suits in which it is proven by clear and convincing evidence that the defendant’s [employer’s] actions showed willful misconduct, malice, fraud, wantonness, oppression or [lack of care] which would raise the presumption of conscious indifference to consequences. Under O.C.G.A. 51-12-5.1(b), it remains the rule that something more than the mere commission of a tort is always required for punitive damages. There must be certain circumstances of aggravation or of outrage.”

New York’s Attorney General Andrew Cuomo may attempt to use the Fraudulent Conveyance Act to recover the bonuses.

In order to pursue Fraud charges, “… the misrepresentation [or omission] must be made knowingly and intentionally, not as a result of mistake or accident; that is, that the person either knew or should have known of the falsity of the misrepresentation [or the false effect of the omission], or that he made the misrepresentation [or omission] in negligent disregard of its truth or falsity.

NB: Under the Bankruptcy Code, insolvency exists when the sum of the debtor’s debts exceeds the fair value of the debtor’s property, with some exceptions. It is a balance sheet test. 11 USC § 101(32)

18 USC CHAPTER 47 § 1031 concerns “major fraud against the United States” and is another statute being considered by New York State’s Attorney General Cuomo. It provides the following:

(a) Whoever knowingly executes, or attempts to execute, any scheme or artifice with the intent-

(1) to defraud the United States; or

(2) to obtain money or property by means of false or fraudulent pretenses, representations, or promises.

Therefore, the two most important facts to ascertain are, “What was AIG’s actual state of solvency when the bonuses were contracted and did its officers misrepresent that state?”

House Financial Services Subcommittee Hearing

Posted on March 20, 2009 by Liz

Here are high points of the Hearing I found interesting and some of my own thoughts. (Quotation marks are included where statements are actual quotes rather than the “sense” of what was said.)

OLYMPIA SNOW, (R) Maine. Offered AIG bailout provisions which would have disallowed most of the oversized bonuses. (Received $5,000, according to the Center for Responsive Politics.)

Another committee member asserted, [“The distribution of these bonuses] borders on fraud and criminality.”

Liddy further asserted that Federal Reserve Chairman Ben Bernanke acquiesced to the payment of retention bonuses.

Later, Treasury Secretary Timothy Geithner said he didn’t know about the bonus contracts until two weeks ago.

ED PERLMUTTER, Committee Member. “There’s a whole fraud concept that says ya’ can’t be handing out bonuses when you’re insolvent. I don’t think these bonuses should have been paid.”

Some legal issues, AIG’s Employee Retention Plan and relevant case and statutory findings.

AIG-FP 2008 Employee Retention Plan, effective December 1, 2007

New York’s Attorney General Andrew Cuomo may attempt to use the Fraudulent Conveyance Act to recover the bonuses.

18 USC CHAPTER 47 § 1031 concerns “major fraud against the United States” and is another statute being considered by New York State’s Attorney General Cuomo. It provides the following:

(a) Whoever knowingly executes, or attempts to execute, any scheme or artifice with the intent-

(1) to defraud the United States; or

(2) to obtain money or property by means of false or fraudulent pretenses, representations, or promises.

Therefore, the two most important facts to ascertain are, “What was AIG’s actual state of solvency when the bonuses were contracted and did its officers misrepresent that state?”

[F]unny side of the [Wall] Street: Obamanomics

Posted on March 20, 2009 by Liz

Imagine you’re the on-duty emergency room (ER) nurse in a small country hospital. Your resources are severely limited by high unemployment and a health insurance crisis.

A healthy snowboarder hobbles in with a broken leg and dislocated shoulder.

You start a prophylactic IV drip of normal saline, pain killers and antibiotics to protect the snowboarder from dehydration, pain and infection.

In a corner of the emergency room is a bloated near-corpse in systemic organ failure. His liver’s shot. His heart’s all but stopped. The smell of his rot and disease are spreading out of the ER, down the corridors and into the rooms of recuperating patients.

Emergency room protocol requires you to infuse the snowboarder’s IV solution through the bloated near-corpse middle man first, rather than into the snowboarder’s arm directly.

Proponents of this bassackward policy say that if the gas in the bloated guy explodes, it’ll jeopardize everyone in the hospital so we have to treat him with the best of the drugs and hope enough benefit reaches the snowboarder to prevent her relatively minor injuries from becoming a systemic threat. If you’re the cynical type, you might think the nearly-dead guy’s membership on the hospital’s Board of Directors is significant, too.

Whatever the reason for the policy, the outcome is assured: the bloated near-corpse will drain your few precious resources on its way to the morgue and the healthy patient will die of preventable consequences.

In the spirit of Jon Stewart, “Let’s just cut out the middle man.” Break with protocol and centuries of obsolete thinking. Infuse the snowboarder directly. She’s going into shock. Microbes are chewing on her broken, exposed bone. It’s a matter of basic triage: apply your resources where they will do the most good as you asses each situation uniquely, dispassionately and quickly.

The snowboarder (like most of our neighbors) will heal quickly and be ready to continue her education, develop new products, create new markets and in general, become the new economic engine. She’ll be rebuilding our nation while the rotting AIG-Goldman Sachs-Citi-Bank of America-corpse that’s poisoning us all is buried quietly in the background.

Stimulate acutely-ill borrowers with a direct infusion of debt-cancelling cash that can be paid by them to their ORIGINATING lenders. The funds will or won’t trickle UP to the bloated entities who bought and bundled the stinky credit card and mortgage loans. Those who are too-big-to-fail will collapse if the funds can’t find their way through the maze of intermediaries. But, by excising the corpse and caring directly for our fundamentally healthy neighbors, we can mitigate the effects of this new shift in focus and purpose.

The “mortgage-crisis” isn’t the root of our problems. And our continued reliance on a rotting corpse to rescue the future may not be the cause of our problems, but it’s certainly proximate. If President Obama is serious about “changing how we do business,” then he needs to roll out something better than his new version of Reaganomics.

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NEXT: Tell-tale quotes from this week’s House Financial Services Subcommittee Hearing.

Commercials: Society’s Economic Mirror

Posted on March 12, 2009 by Liz

While knitting and cogitating on the day’s jury* events, the background drone of TV commercials finally penetrated.

“What,” I wondered, “do companies advertise when the stock market’s below 7,000 and new (monthly) unemployment claims regularly exceed half a million? What’s worth the hefty investment in TV advertising?”

During the Wednesday night 7:30-9:30 time slot (MSNBC, USA, CBS) a snapshot emerged. The largest advertising sector was Cable TV’s ads for its own products: new programs, old programs and upcoming specials guaranteed to improve your tax outlook and trim your monthly budget.

In terms of “products,” Madison Avenue supports our return to home-cooked goodness, so gather the family round the table and make some nostalgia as you tuck into old fashioned dehydrated macaroni & cheese and canned chunky soup brimful of luscious garden veggies. Or, for a treat (only your budget knows the limits) try a chef-cooked bucket from the local KFC.

If you haven’t been drinking enough Brita-filtered tap water, stock up on Activia yogurt or the colon cleanser of your choice. Also, if you’re noticing an uptick in cholesterol, edema and/or chest pain and the emergency room’s sick of seeing you, get a bottle of aspirin and join Jenny Craig or a similar national diet plan. (MONEY SAVER IDEA: purchase a single membership and apportion the food to your family of four. Huge budget benefits guaranteed!)

Our neo back-to-Foxfire-basic relies on simple things: Fixodent, toilet paper, TV.com (save electricity by planning your nightly viewing) GMC trucks (if your patriotism includes rebuilding America!) Dunkin Donut’s aromalicious beans for homebrew, Olay deep cleansing wash (for after a day of shoveling compost), Dr. Phil, anti-depressants & anti-constipation drugs of choice sold cheap at Walgreen’s or Wal-Mart (not your local pharmacy), quick-flush toilets, do-it-yourself legal forms and finally, two attorneys — one for torts and one for bankruptcy. If you’re a small business owner who’s still hanging an open sign, Verizon wants their Small Business Toolkit to be your new bff. Yee gads! Verizon’s got your number! What? Well of course they’ll have to turn the phones back on….

For those of us not living in a new back-to-basic tent city neighborhood, add Travelocity to the list of resources bolstering your pared down life.

Except for one final advertiser, that’s it in a nutshell: a yellow brick trip through Madison Avenue Oz and its representative, Cable TV.

I want to underscore my last advertiser for its uplifting message. Bank of America is America’s Bank of Opportunity. I swear on an oath, I smelled green grass and green tech constructing a green and bounteous future. An inspirational partner for each of us, no doubt. As a start, if you were one of the thousands of BOA partners they accidentally socked for improper fees, make sure you apply for your $78 refund from the the class action fund.

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Skeletal thoughts from the past week:

Jon Stewart’s rip of CNBC, Jim Santelli and Jim Cramer is the most brilliant commentary I’ve seen in years. (Cramer will be Stewart’s guest tonight. That is, if he doesn’t “bail out” like Santelli did.)

In the large picture, Bernie Madoff is a scapegoat. Let’s see what happens to those who made all the destructive schemes possible: the SEC overseers, ratings agencies, Congress and Presidents going back to at least Reagan. For sure, he should go to prison; but how does that benefit his (and the SEC’s) thousands of victims?

CNBC and its guests are taking a hand in shoring up our trust in the financial markets and their institutions. The new confidence game is beefy with cheery language and predictions. MSNBC’s Morning Joe crew groaned at Mark Haines’ proclivity for gloomy predictions. Two mornings ago, Haines eschewed doom and announced the Market had found its bottom. The Dow’s closed in positive territory since. In fairness, his gloomy outlook changed the same day Citi’s CEO announced that his company was doing just fine. Quick fix.

*Aside: Am currently serving on a Grand Jury which has an impact on my writing schedule. More on that near the end of April when the service is complete.

Commercials: Society’s Economic Mirror

Posted on March 12, 2009 by Liz

While knitting and cogitating on the day’s jury* events, the background drone of TV commercials finally penetrated.

For those of us not living in a new back-to-basic tent city neighborhood, add Travelocity to the list of resources bolstering your pared down life.

Except for one final advertiser, that’s it in a nutshell: a yellow brick trip through Madison Avenue Oz and its representative, Cable TV.

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Skeletal thoughts from the past week:

*Aside: Am currently serving on a Grand Jury which has an impact on my writing schedule. More on that near the end of April when the service is complete.

The Class Warfare Trigger

Posted on February 14, 2009 by Liz

Consolidating wealth in 2% of pockets is not class warfare.

Monopolizing water and fuel resources is not class warfare.

Transferring wealth from the lower 98% to the financial class is not class warfare.

Giving bonuses to the top 2% and stripping 3 million jobs from the lower 98% is not class warfare.

Transferring wealth from the lower 98% to the insurance industry is not class warfare.

Wealthy people living above the water line while the lower 98% drown or are displaced in New Orleans is not class warfare.

Investors buying the properties cheap and manipulating zoning laws is not class warfare.

Toxic and/or crumbling schools in rural and urban areas is not class warfare.

Old books and empty libraries in rural and urban schools is not class warfare.

Increased costs of State colleges and restricted enrollment is not class warfare.

Under-educated kids enlisting in the military while others go to college isn’t class warfare.

The elderly losing their pensions while ratings agencies skate free is not class warfare.

CEOs and Congresspeople sporting excellent health insurance while workers are bankrupted for its lack is not class warfare.

Congress fiddling in endless hearings while workers are foreclosed is not class warfare.

Food shortages are not class warfare.

Contamination of cheap protein sources (peanut butter) is not class warfare.

Tax codes that reward Buffett and add $12.00 a week to workers’ pockets is not class warfare.

Paying outlandish bonuses to failed CEOs while the UAW is asked to make further concessions is not class warfare.

Putting drug addicts in prison as Halliburton changes its name and gets new government contracts is not class warfare.

Giving taxpayer money to financiers who squeeze taxpayers for increased bank fees is not class warfare.

Secretaries paying taxes at a higher rate than their corporate bosses is not class warfare.

Wealth-based and regional access to broadband internet is not class warfare.

Class warfare is when a pattern of unequal access to wealth and power emerges and we have the chutzpah to complain about it.

Bank of America : Get Your $78 Refund

Posted on February 8, 2009 by Liz

(First, a correction to Bipartisanship: The Lowest Common Denominator. I misleadingly referred to Obama’s restriction on executive salaries as a restriction on executive compensation. Though President Obama has put his weight behind capping certain executive salaries at $500,000, total executive compensation may be oodles more. Oodles, billions or trillions? The difference is…?)

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On one hand, Walt Disney accused the Screen Actors Guild of being a communist front bent on malevolently influencing Hollywood. On the other, he created Donald Duck who quacked his way into popular culture in 1934. When Donald’s nephews, Huey, Dewey & Louie came to stay for a day and never left, Donald was a de facto single dad with a romantic companion he never really married (Daisy). In later years, he morphed into an adventurer who dumped the kids on Uncle Scrooge.

Donald’s Hollywood foe, Mickey Mouse, was another Disney creation. He met his main squeeze, Minnie the Barmaid, in a tavern and in their first short together, Minnie parachuted out of a plane to escape Mickey’s pawings. It was the anthropomorphic mouse version of John Wayne dragging Maureen O’Hara around by her hair in one cinematic lust fest after another. (Not that I’ve watched The Quiet Man two billion times….) Mickey & Minnie free float in each other’s lives–sometimes married, sometimes dating–but frequently together for shared adventures.

In a time when Puritanism and Doris Day were slathering our cultural landscape with goo, Disney understood that if a creature, character or person was cute enough, he could sell us anything — even lifestyles we found offensive in 1950.

“Cute” and adorably irascible have sold us down the drain regularly. George Bush and Laura Bush are almost as cute as Ron Paul and he’s even more adorable than Barnie Frank, Diane Feinstein and Chris Dodd, none of whom hold a candle to the ETrade babies. (Check out the E-Trade babies which front for the much-maligned E-Trade online trading platform. )

Whether it was weapons of mass destruction or financier- and congress-based schemes to rip off credit cardholders, we’ve spectated at our own screwing because so many of the salesman looked or spoke as disarming populists.

Bank of America did virtually no due diligence before it bought Merrill Lynch one weekend for $50 billion in stock. Then, when BOA realized it had grossly underestimated Merrill Lynch’s toxic holdings, it “accepted” a taxpayer bailout.

In this economy (brought to the point of collapse by financial institutions like Bank of America) what does BOA do to taxpayer-customers who have BOA accounts and own BOA’s debt? They manipulated “…customers’ account activity in order to trigger more fees for overdrawn accounts, returned checks, and similar infractions. Under the agreement, account holders who incurred overdraft fees from BofA between 2000 and 2007–or from any of the banks it took over during that period–may be entitled to up to a $78 payout. Although it may be a victory for the consumer, financial services advisory firm Bretton Woods says the restitution represents only a sliver of the $368 that the average U.S. household doles out each year for overdraft charges. Generating these and similar fees has become big business for banks and credit unions, which posted $37 billion-plus in such charges last year. As financial institutions try to compensate for losses on loan defaults and stiffer competition during the credit crisis, they are making it easier for customers–even those that carefully monitor their own activity–to trip the fee wire. Practices such as clearing the largest transactions in a single day from largest to smallest and posting deposits last of all makes it difficult for even the most diligent bank customers to avoid charges. In response, consumer advocates are counting on the Federal Reserve to take steps to protect the public from overdraft fees. While the issue failed to earn a place in new credit card rules approved by the agency last month, the central bank has signaled that it will raise the issue again–this time independently–sometime this year. (See: Center for Responsible Lending: Bank of America)

We’re being raped by the people we saved and somehow, Uncca Chris Dodd and “Populist” Barney Frank can’t get legislation through Congress that would rescue us because of push back from the financial lobby.

And then, there’s Citigroup.

“… Citi began sending the notices at about the same time it was getting a $20 billion, taxpayer-financed government bailout. No one at Citigroup would talk on camera to CNN about the matter. Instead, the company issued a written statement, which said: “To continue funding in this difficult credit and funding environment, Citi is repricing a group of customers.” Citi told CNN that anyone unhappy with the new [credit card] rates can opt out and continue paying the lower interest, but they must close their account when their card expires. It’s all in the fine print. (See: Cnn/Citigroup.)

Here’s Representative Carolyn Maloney’s proposed legislation “Credit Cardholders’ Bill of Rights” which has been supported by The Center for Responsible Lending.

If you have a BOA account, apply for your $78.00 and send a copy of the demand to your Congresspeople.

Bipartisanship: Lowest Common Denominator?

Posted on February 6, 2009 by Liz

According to CNBC, the US Senate has pared Obama’s Stimulus Package from $937 to $780 billion. A vote is expected Sunday because Congress needs to start its recess ASAP.

(Remember the expressed outrage when Iraq’s Congress took a vacation while its nation faced insurrection and bankruptcy? Remember our Congress’ indignation that Iraq’s lawmakers had the chutzpah to take a vacation while American taxpayers footed the bill? Remember the purpled faces and bursting veins of our shining palladins?)

Most economists are pleading for a Stimulus Package nearer $1 trillion. They’ve tossed an I Ching of formulae based on percentages of Gross National Product and investment/return ratios and are shrieking, “The appropriation is going backward! The train is out of control! The horses are stampeding!” Not a catastrophic metaphor has been left in the box. And yet, Nero fiddles as Rome burns.

Additionally, “Massachusetts Democrat John Kerry said the compromise price tag would be made up of 42 percent tax cuts with 58 percent in new spending.” (CNBC)

Most economists agree that tax cuts are anathema in times like these–like a passenger trying to stop a run-away rollercoaster by dragging her feet on the track: it’s a waste of time, it won’t work and the thing in need of saving will get her legs broken.

Obama’s practice these past two years has been to watch his opponents crash of their own gravity. He doesn’t participate substantially in that downfall. (It’s a basic Gandhi/King principle; a kind of Judo politic.)

These past weeks, President Obama has hosted a bipartisan Super Bowl party and two cocktail “parties.” He’s bearded the Conservative lion in its den down at Congress. He offered a stimulus bill with enough tax cuts to raise brows in the pundit community and yet, Senate Republicans and Conservative Democrats reduced the package by another $150 billion.

Zero Republicans voted for the first compromise package.

Two or three are expected to vote for the Senate bill.

Has Obama sold our economic future down the tubes for the sake of a few bipartisan pieces of silver?

Or, has he allowed knee-jerk naysayers with bankrupt economic policies to dramatically and publicly shoot themselves in both feet?

Obama’s slated to offer his Recovery Plan this coming Monday. He wants the Senate to pass the Stimulus Package before that.

If the Recovery Plan covers all the bases Candidate-Obama trumpeted the past two years, it will include more funds for health care, infrastructure, “greening” and the consequent job production and training. By the time the Recovery Plan is unveiled, the “loyal Conservative opposition” will have been marginalized on their own petards.

If I sound like a True Believer, eschewing rebellion in the face of Obama’s vows that, “Tomorrow, Tomorrow” my reward will come tomorrow, I apologize and propose this:

If the Recovery Plan is more of the same “bipartisan,” lowest-common-denominator-political-toadying as offered by the Stimulus Package, then every worker, wannabe-worker, retiree, wannabe-retiree, student and wannabe-student needs to march on Washington within the month. We need to take our tents, backpacks and firewood for cooking.

And we must not accede to being penned like cattle behind officially-approved barriers.

Bipartisanship: Lowest Common Denominator?

Posted on February 6, 2009 by Liz

According to CNBC, the US Senate has pared Obama’s Stimulus Package from $937 to $780 billion. A vote is expected Sunday because Congress needs to start its recess ASAP.

Additionally, “Massachusetts Democrat John Kerry said the compromise price tag would be made up of 42 percent tax cuts with 58 percent in new spending.” (CNBC)

Zero Republicans voted for the first compromise package.

Two or three are expected to vote for the Senate bill.

Has Obama sold our economic future down the tubes for the sake of a few bipartisan pieces of silver?

Or, has he allowed knee-jerk naysayers with bankrupt economic policies to dramatically and publicly shoot themselves in both feet?

Obama’s slated to offer his Recovery Plan this coming Monday. He wants the Senate to pass the Stimulus Package before that.

If I sound like a True Believer, eschewing rebellion in the face of Obama’s vows that, “Tomorrow, Tomorrow” my reward will come tomorrow, I apologize and propose this:

And we must not accede to being penned like cattle behind officially-approved barriers.

Economy: Fixing a Broken Heart

Posted on February 3, 2009 by Liz

The magical art of economics makes sense to me only in real-life analogies. I know some of the jargon and find it nearly as fascinating as the art itself. High practitioners possess a comprehensive, pragmatic and effective understanding of (1) where we are in history; (2) what the future holds; (3) what we’ll need to bridge the gap; and (4) what the probability is that particular events will effect our forward outcomes. The last one calculates a dizzying array of data and impressions from climate change and famine to sonograms and pancreatic cancer. Economics is the Buddhism of the Magical Arts. In fact, this blog could have been entitled, “Breathing is Economics.”

If a patient’s heart stops, it needs a big jolt to act as if it’s alive. That initial jolt is a pretense: whether we’re re-starting a heart, a battery or an economy, the initial stimulus is a second chance, not a fix. Without fuel to keep the engine charged, another shut down is inevitable. (If a mixed metaphor works, then what do we care? It’s the gestalt we’re getting at here.)

The current inside-the-bubble discussion is about whether Obama’s Stimulus creates enough jobs OR if it’s a wish list of forward-looking investments. (This is the basis of the stock market which predicts which products will get us from here to there.) The real question should be: does it create or save enough jobs to give us confidence in the future AND does it anticipate building the educational and technological bridges that will support a recovery? In other words and to reference an Obama quote, “Can we walk and chew gum at the same time?”

The economic stimulus has to to be big enough to convince us that an innovative, smart economy is in the offing. Of necessity, an economic growth package has to create sustainable manufacturing and service sectors. So, we must invest in education and the body politic (arts, humanities, science and technology). We must stimulate new economies and continuing education that green the planet, generate well-health care and build local communities.

Both the stimulus and growth plans must prove our commitment to ethics and to a workforce that values and can afford to buy what it produces. Our decision making and its process must prove we’re commited to a republic not an oligarchy.

On my birthday (January 27th) Jon Stewart suggested a stimulus plan that would eradicate our consumer debt (including mortgages) and inject lending institutions with capital. The simple beauty of his plan lacks details and leaves much to debate, but it pinpoints the vital starting point: worker-consumers. As long as we’re afraid that debt and job losses are going to drag us over a cliff, we’ll buy only necessities. Demand for products will continue to slide and it’s ridiculous to invest in companies whose products won’t be bought. Combined with very little credit to grease the gears, the world economy is grinding to a halt. While Jim Cramer waxed poetic about recession-resistant stocks like Johnson & Johnson and Colgate Palmolive, we were buying generics at the dollar stores. Our real lives are moving faster toward pragmatism than the stock market can anticipate or pundits in a bubble can predict. Luxury and impulse buying are gone. We’re cleaning our own houses, cutting our own hair, plowing our own drives, mowing our own lawns, making our own yogurt and bread, fixing our own plumbing and growing our own veggies. (See the Foxfire Books. A Foxfire Christmas is particularly cool, I think.) We’ve wakened from our consumptive coma and we’re haunting second hand shops and buying toilet paper for Just-A-Buck. (If you’re new to this, find an old hippy who still looks like an old hippy and find out where s/he got her/his clothes, food and that nifty snowblower. Also, check out Freecycle. It’s an astonishing source of free stuff.)

Sorry. Back to Jon Stewart’s economic stimulus.

He’s proposed a new place to begin and called the scheme “trickle up.” Months ago, I suggested a direct infusion of funds to local employers in order to stem job losses. Both that idea and Stewart’s shore up the foundation of the pyramid and frankly, as long as we jolt the core and build from the foundation, I don’t much care how we do it.

There are a blizzard of details to sort through of which these are just a few:

Regulators and people facing foreclosure may not know which caballic entity holds their mortgage debt today, but consumers know which bank and loan officer approved it. Do we give the money to the originating bank who may have issued a lousy loan? Remember, the patient’s heading for complete cardiac arrest. We don’t have time to worry about which arteries messed us up; we need to jump start the heart. Some greedy consumers and banks will be rewarded. It’s an unfortunate consequence that common sense suggests we must swallow.

Would every consumer get $15,000 to pay down or eliminate non-mortgage debt? Would we modify corporate debt? Or, would we limit debt cancellation to locally-owned and/or -operated businesses with healthy, symbiotic relationships to their workers and communities? (Nirvana, that and probably fraught with legal challenges. Not to mention how few locally-owned and/or operated businesses are surviving the early carnage.)

Which mortgage debt do we wipe out? Do we subsidize all properties that have lost value since purchase or only property holders who’ve lost or are in danger of losing the property? Do we include only the primary home or do we help the retiree who bought a vacation home as a retirement investment? Do we consider residential and commercial mortgages? Do we have time to look at the community-at-large? Can we afford not to?

We don’t have time to re-value each mortgage and credit card so we might have to pick a pay-back percentage which all parties accept as whole. If we owe the credit card company $10,000, the company has to agree that $1,000 (10 cents on the dollar) makes them whole. Then, Linens & Things and Circuit City (the bankrupt companies where we bought our towels and computers) have to accept $5 for a $50 bed sheet and $100 for the $1,000 computer they sold. (I’m not saying it’s a bad deal, but part of the equation is that when franchise retailers go out of business, we lose the under-compensated jobs many of us have been “educated” to fill.)

It’s gnarly; but so is the idea of a trillion dollars going directly to banks in hopes they’ll get around to re-financing our debt. They won’t. Not just because they’re greedily waiting to scoop up the weaklings, but because they’d be crazy to lend money in a sliding economy without substantial government investment in the future.

Increasingly violent hurricanes, floods, crop destruction, water pollution and water wars are events that threaten our basic food supply and our economic forecast. They demand resources for fixing rather than prevention.

Our transportation and electric grids are so unreliable that year-round, millions of people are left for weeks without heat/air conditioning, electric and water in the wake of storms. When our transportation arteries aren’t flooded, they’re rendered impassible by ice. They’re pocked with axle-busting potholes and our bridges are crumbling. “Bird strikes” pose a known and unpredictable threat to our air transport, for cryin’ out loud.

We’ve got plenty of work to do–plenty of valuable jobs to fill. If an economic plan includes a large enough jolt and forward-thinking investments, then it stands a chance of succeeding. (See: House Bill and Senate Bill at Thomas.gov.)

A small note on “Sin Taxes.” Many of us can’t afford the pleasures of vacations, monthly trips to the movies or fresh fruits & veggies, so we cling to our cheap substitutes: fast-fat-sweet-salty-food, cigarettes, dope and beer). It isn’t a pretty picture (especially for the children) but if we’re going to tax sin, then we need to think of it in terms of a population that can’t afford regular trips to a therapist.

Economy: Fixing a Broken Heart

Posted on February 3, 2009 by Liz

Sorry. Back to Jon Stewart’s economic stimulus.

There are a blizzard of details to sort through of which these are just a few: