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Cairo In America

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We have seen quite a bit of hand-wringing by those in the mainstream news media about the repression against protests in Cairo during the past few weeks.  What we don’t see on television are the oppressive tactics used against protesters and journalists here in the United States.  Never mind the fact that the Obama administration refuses to prosecute any of the crimes which led to the financial crisis.  Simply protesting against the refusal of Attorney General Eric Hold-harmless to do his job can result in arrests and beatings administered by police.  At The eXiled blog,Yasha Levine discussed the targeting of journalists by police, hell-bent on squelching coverage of the Occupy movement:

Remember how in November, Bloomberg and the NYPD got a lot of heat from the city’s media establishment for the arrest rampage they unleashed on journalists covering the eviction raid on Liberty Plaza?  Cops arrested more than two dozen accredited journalists from major news outlets, including the New York Post, NPR, AFP and The Associated Press.  Hell, cops even clubbed a couple of reporters for the baggertarian rag The Daily Caller.  As a result, New York’s police commissioner made a big show of issuing an order that instructed police officers not to interfere with journalists covering OWS.

But clearly that was just for show.

Because this month the NYPD has gone out of its way to harass and arrest journalists covering OWS, especially targeting live streamers and indie journalists who can’t be counted on for propaganda support like the mainstream folks.  According to Free Press’ Josh Stearns, who has been maintaining a list of journalists arrested while covering the Occupy Movement across the country, at least five journalists and seven live streamers were arrested by the NYPD in the first half of December.

*   *   *

The NYPD continued harassing indie journalists five days later during the D17 protests.  Some were bashed with batons, others were threatened with having their official press passes revoked. By the end of the day, at least two journalists were arrested, including photojournalist Zach Roberts and Jennifer Dworkin, an independent filmmaker who had worked for PBS.

It will be interesting to see whether a new piece of technology, called the “Occucopter” will enable those reporters to obtain valuable images of abusive police tactics – without getting their own skulls crushed in the process.  The Guardian provided this report:

This week in New York, Occupy Wall Street protesters have a new toy to help them expose potentially dubious actions of the New York police department.  In response to constant police surveillance, police violence and thousands of arrests, Occupy Wall Street protesters and legal observers have been turning their cameras back on the police.  But police have sometimes made filming difficult through physical obstruction and “frozen zones”.  This occurred most notably during the eviction of protesters from Zuccotti Park in lower Manhattan, where police prevented even credentialed journalists from entering.

Now the protesters are fighting back with their own surveillance drone.  Tim Pool, an Occupy Wall Street protester, has acquired a Parrot AR drone he amusingly calls the “occucopter”.  It is a lightweight four-rotor helicopter that you can buy cheaply on Amazon and control with your iPhone.  It has an onboard camera so that you can view everything on your phone that it points at.  Pool has modified the software to stream live video to the internet so that we can watch the action as it unfolds.  You can see video clips of his first experiments here.  He told us that the reason he is doing this “comes back to giving ordinary people the same tools that these multimillion-dollar news corporations have.  It provides a clever loophole around certain restrictions such as when the police block press from taking shots of an incident.”

The American public is no longer content to sit back and do nothing while the Obama administration sits back and does nothing to prosecute those criminals whose fraudulent conduct devastated the American economy.  In my last posting, I discussed the intensifying wave of criticism directed against the President by his former supporters as well as those disgusted by Obama’s subservience to his benefactors on Wall Street.  Since that time, Scot Paltrow wrote a great piece for Reuters, concerning the Justice Department’s failure to intervene against improper foreclosure procedures.  Paltrow’s widely-acclaimed essay inspired several commentators to express their disgust about government permissiveness toward such egregious conduct.  At The Big Picture, Barry Ritholtz shared his reaction to the Reuters article:

The fraud is rampant, self-evident, easy to prosecute.  The only reason it hasn’t been done so far is that this nation is led by corrupt cowards and suffers from a ruinous two-party system.

We were once a great nation that set a shining example for the rest of the world as to what the Rule of Law meant.  That is no more, as we have become a corrupt plutocracy.  Why our prosecutors cower in front of the almighty banking industry is beyond my limited ability to comprehend.

Without any sort of legal denouement, we should expect an angry electorate and an unhappy nation.

Is there any hope for America or will we continue on our course of devolution toward becoming a banana republic?  At his Pragmatic Capitalism blog, Cullen Roche brought a glimmer of hope to some of us when he published Saxo Bank’s list of 10 outrageous predictions for 2012.  I was particularly encouraged by the third item on the list:

3. A yet unannounced candidate takes the White House

In 1992, Texas billionaire Ross Perot managed to take advantage of a recessionary economy and popular disgust with US politics and reap 18.9 per cent of the popular vote.  Three years of Obama has brought too little change and only additional widespread disillusionment with the entire US political system, and conditions for a third party candidate have never been riper.  Someone with a strong programme for real change throws his or her hat in the ring early in 2012 and snatches the presidency in November in one of the most pivotal elections in US history, taking 38 per cent of the popular vote.

I’m keeping my fingers crossed.


 

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The Smell Of Rotting TARP

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September 16, 2010

I never liked the TARP program.  As we approach the second anniversary of its having been signed into law by President Bush, we are getting a better look at how really ugly it has been.  Marshall Auerback picked up a law degree from Corpus Christi College, Oxford University in 1983 and currently serves as a consulting strategist for RAB Capital Plc in addition to being an economic consultant to PIMCO.  Mr. Auerback recently wrote a piece for the Naked Capitalism website in response to a posting by Ben Smith at Politico.  Smith’s piece touted the TARP program as a big success, with such statements as:

The consensus of economists and policymakers at the time of the original TARP was that the U.S. government couldn’t afford to experiment with an economic collapse.  That view in mainstream economic circles has, if anything, only hardened with the program’s success in recouping the federal spending.

Marshall Auerback’s essay, rebutting Ben Smith’s piece, was entitled, “TARP Was Not a Success —  It Simply Institutionalized Fraud”.  Mr. Auerback began his argument this way:

Indeed, the only way to call TARP a winner is by defining government sanctioned financial fraud as the main metric of results.  The finance leaders who are guilty of wrecking much of the global economy remain in power – while growing extraordinarily wealthy in the process.  They know that their primary means of destruction was accounting “control fraud”, a term coined by Professor Bill Black, who argued that “Control frauds occur when those that control a seemingly legitimate entity use it as a ‘weapon’ to defraud.”  TARP did nothing to address this abuse; indeed, it perpetuates it.  Are we now using lying and fraud as the measure of success for financial reform?

After pointing out that “Congress adopted unprincipled accounting principles that permit banks to lie about asset values in order to hide their massive losses on loans and investments”, Mr. Auerback concluded by enumerating the steps followed to create an illusion of viability for those “zombie banks”:

Both the Bush and Obama administration followed a three-part strategy towards our zombie banks:  (1) cover up the losses through (legalized) accounting fraud, (2) launch an “everything is great” propaganda campaign (the faux stress tests were key to this tactic and Ben Smith perpetuates this nonsense in his latest piece on TARP), and (3) provide a host of secret taxpayer subsidies to the systemically dangerous institutions (the so-called “too big to fail” banks).  This strategy is the opposite of what the Swedes and Norwegians did during their banking crisis in the 1990s, which remains the template on a true financial success.

Despite this sleight-of-hand by our government, the Moment of Truth has arrived.  Alistair Barr reported for MarketWatch that it has finally become necessary for the Treasury Department to face reality and crack down on the deadbeat banks that are not paying back what they owe as a result of receiving TARP bailouts.  That’s right.  Despite what you’ve heard about what a great “investment” the TARP program supposedly has been, there is quite a long list of banks that cannot boast of having paid back the government for their TARP bailouts.  (Don’t forget that although Goldman Sachs claims that it repaid the government for what it received from TARP, Goldman never repaid the $13 billion it received by way of Maiden Lane III.)  The MarketWatch report provided us with this bad news:

In August, 123 financial institutions missed dividend payments on securities they sold to the Treasury Department under the Troubled Asset Relief Program, or TARP.  That’s up from 55 in November 2009, according to Keefe, Bruyette & Woods.

More important —  of those 123 financial institutions, seven have never made any TARP dividend payments on securities they sold to the Treasury.  Those seven institutions are:  Anchor Bancorp Wisconsin, Blue Valley Ban Corp, Seacoast Banking Corp., Lone Star Bank, OneUnited Bank, Saigon National Bank and United American Bank.  The report included this point:

Saigon National is the only institution to have missed seven consecutive quarterly TARP dividend payments.  The other six have missed six consecutive payments, KBW noted.

The following statement from the MarketWatch piece further undermined Ben Smith’s claim that the TARP program was a great success:

Most of the big banks have repaid the TARP money they got and the Treasury has collected about $10 billion in dividend payments from the effort.  However, the rising number of smaller banks that are struggling to meet dividend payments shows the program hasn’t been a complete success.

Of course, the TARP program’s success (or lack thereof) will be debated for a long time.  At this point, it is important to take a look at the final words from the “Conclusion” section (at page 108) of a document entitled, September Oversight Report (Assessing the TARP on the Eve of its Expiration), prepared by the Congressional Oversight Panel.  (You remember the COP – it was created to oversee the TARP program.)  That parting shot came after this observation at page 106:

Both now and in the future, however, any evaluation must begin with an understanding of what the TARP was intended to do.  Congress authorized Treasury to use the TARP in a manner that “protects home values, college funds, retirement accounts, and life savings; preserves home ownership and promotes jobs and economic growth; [and] maximizes overall returns to the taxpayers of the United States.”  But weaknesses persist.  Since EESA was signed into law in October 2008, home values nationwide have fallen.  More than seven million homeowners have received foreclosure notices.  Many Americans’ most significant investments for college and retirement have yet to recover their value.  At the peak of the crisis, in its most significant acts and consistent with its mandate in EESA, the TARP provided critical support at a time in which confidence in the financial system was in freefall.  The acute crisis was quelled.  But as the Panel has discussed in the past, and as the continued economic weakness shows, the TARP’s effectiveness at pursuing its broader statutory goals was far more limited.

The above-quoted passage, as well as these final words from the Congressional Oversight Panel’s report, provide a  greater degree of candor than  what can be seen in Ben Smith’s article:

The TARP program is today so widely unpopular that Treasury has expressed concern that banks avoided participating in the CPP program due to stigma, and the legislation proposing the Small Business Lending Fund, a program outside the TARP, specifically provided an assurance that it was not a TARP program.  Popular anger against taxpayer dollars going to the largest banks, especially when the economy continues to struggle, remains high.  The program’s unpopularity may mean that unless it can be convincingly demonstrated that the TARP was effective, the government will not authorize similar policy responses in the future.  Thus, the greatest consequence of the TARP may be that the government has lost some of its ability to respond to financial crises in the future.

No doubt.



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