Join a New Way Forward Protest on April 11th to Break up Banks "Too Big to Fail"

By Donny Shaw

BuzzFlash Note: BuzzFlash fully supports the "New Way Forward" movement to fundamentally change the finance/banking system in the United States and to punish those who made our taxpayers pick up a $2 trillion tab for fraud, abuse and greed. Citizen protest is a vital part of a vibrant and progressive democracy. Join the "New Way Forward" demonstrations on April 11th.

Another day, another sign that the people in charge of our economy are looking out for the banks, not the public. The Financial Accounting Standards Board's decision on Thursday to let banks report the value of their toxic assets however they choose, regardless of what anyone is actually willing to pay for them, only serves to increase secrecy and manipulation in the financial sector. It's a politically motivated decision that gives banks a quick way to inflate their balance sheets without doing anything to address the underlying problems with their holdings.

The AIG bonuses, the Geithner subsidy plan, the mark to market changes -- Americans are seeing the pattern of protection for Wall Street, and we're angry. But unlike the media's fantasy of an irrational working-class mob seeking revenge on the first Wall St. executive they can find, our anger is targeted at the systematic injustices in America right now that continually provide for the financial elite and neglect the millions unemployed and foreclosed. If we are going to fight back, we are going to go straight at the root of the problem -- the collusion between Wall Street and Washington that leaves the rest of us behind.

As the banks grew bigger and bigger until they were "too big to fail," they also became so politically powerful that they are now immune to ordinary actions from our government. Decades of unprecedented campaign funding and political access have led to a gray area between Washington and Wall St. where it's uncertain who is on which side and people move back and forth fluidly between the two realms. Bankers have ingratiated themselves in our politics and sold to both major parties the belief that what is good for them is also good for the public at large. Now we have let this free-market fundamentalism run its course and it has led America to a complete economic meltdown. But the people in charge of our government and our economy have built their power on this intertwining of interests and they remained determined not to shake up the system.

They only way to end the bonus loopholes for executives, the blind-eye regulatory system and the trickle-up profit machine is for the bankers in power to be removed and the banks that caused this mess to be broken up. They need to be taken out of the equation so our policy-makers can operate with political independence to make decisions that protect the public. Can this be done? In a word, yes. It will be an epic struggle, but if we the people can find the courage to trust our guts and take on the economic injustices that have become so painfully obvious, this is precisely the kind of thing that America can overcome.

On April 11th, people across the country will take to the streets to show President Obama and Congress that there is political support for a progressive approach to fixing the economy. Fourteen days ago, a new grassroots initiative to demand structural change in the banking sector -- A New Way Forward -- was launched. In just two weeks, the group has grown from four people to over six thousand. Individuals have stepped up in 58 cities to organize protests to break up the banks; thousands have pledged to attend. Here is the plan:

NATIONALIZE: Insolvent banks that are too big to fail must incur a temporary FDIC intervention. No more blank check taxpayer handouts.

REORGANIZE: Current CEOs and board members must be removed and bonuses wiped out. The financial elite must share in the cost of what they have caused.

DECENTRALIZE: Banks must be broken up and sold back to the private market with new antitrust rules in place -- new banks, managed by new people. Any bank that's "too big to fail" means that it's too big for a free market to function.

Breaking up the banks is not a contrarian call to protest, it is a practical step our country must take right now if we are to have the independence to rebuild our economy so that it is sustainable, free, and in the interest of all people. The people in charge of our country consider these issues of decentralization secondary. They are determined to reset the status quo of the banking sector as soon as possible, and then take a stab at regulation. But if we re-inflate the banks without addressing the fundamental issues plaguing our economic and political systems, our chance as a country to tackle the power that the financial industry holds over our democracy will pass us by. The collusion between policy makers and bankers will be further cemented and we will have to wait until the next crisis (which will be much worse, and soon) takes its toll on working Americans.

A BUZZFLASH GUEST COMMENTARY 

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The Nazis, Fascists and Communists were political parties before they became enemies of liberty and mass murderers.

From The Economic Collapse File (cont)

The Dollar Trap
By Nicolas Barré
Le Figaro

Tuesday 04 December 2007

The fall of the dollar delights those who see it as the monetary translation of the decline of American hegemony. They're wrong! They ought to worry about finding themselves on the same side as Iranian President Ahmadinejad, for whom the greenback is no longer anything but "a worthless piece of paper...."

Certainly there are few examples of a major power also simultaneously in a state of permanent debt to the rest of the world over the long term. Now, that is the case with the United States. The decline in the greenback, which has lost a quarter of its value against all other currencies since 2002 and 40 percent against the euro, reflects the deterioration in the premier global economy's financial situation. The Bush presidency, in what is not the least of paradoxes, has profoundly contributed to that situation through unrestrained recourse to deficit funding, notably since the 2001 attacks, to finance military expenditures. The consequence - enormous quantities of dollars issued - has finally undermined the currency's value.

Of course, these dollars have always found takers since, at the time when the United States was so thirsty for capital, two of the most dynamic areas of the world felt the symmetrical need to invest their excess savings: oil-producing countries under pressure to recycle their petrodollars, and China, rich in trade surpluses from the universally triumphant "made in China" label. That's how America, doped-up on the steroids of global savings, has been able to live beyond its means these last few years. But there comes a time when great financial flows, like marine currents, modify their course, even change direction, provoking turbulence and tempest. That's where we are with the dollar. The risk of a freefall exists.

However, the devaluation of the dollar, also and above all, reflects a deeper evil. Our economic planet is unhinged. The opening of markets and the progression of global trade have enjoyed formidable success over the last thirty years. Hundreds of millions of human beings have escaped from poverty, thanks to globalization. Yet, at the same time, monetary disorder has increased. In other words, while global trade developed on healthy bases - less protectionism, more open markets, more competition - this progress which we owe to trade liberalization and the WTO were purchased at the cost of growing monetary and financial disequilibria.

No more trade, no more currency gaps: in this game of contradictory tensions, Europe suffers more than the others. The undervaluation of the dollar, but also of the Chinese yuan and Japanese yen, irresistibly erode Europe's competitive edge. Its most globalized industries, such as aeronautics - the ones we particularly do not want to see leave - are trying harder all the time to produce in the dollar zone. If we are not careful, the weak-dollar suction pump risks emptying the Old Continent of part of its industrial substance. In a cruel paradox, the party the least responsible for global disequilibria, Europe, becomes its main adjustment variable. And, faced with the trap of a weak dollar, the euro is anything but a shield.

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Go to Original

When Bankers Jump out the Window!
By Yves de Kerdrel
Le Figaro

Tuesday 04 December 2007

Over two centuries after his death, aspects of Voltaire remain unrecognized. We have just learned that he had forged one of the highest incomes in the kingdom for himself - thanks to his domain at Ferney, to his industrial investments and to his ship financing. The author of "Zadig" did, it is true, formulate this phrase that has remained famous: "If you see a banker jump out the window, don't hesitate: jump after him; you can be sure there will be some profit in it."

Were Francois Marie Arouet to return today, it is not sure he would make the same statements. Not that the profession of banker has changed in the space of two centuries. Not that it's become less profitable than it was just before the Revolution. But because recent events show every day the extent to which this activity is exercised by individuals who are at once sheep-like, unable to see beyond their own noses in many matters, and amnesiac to the point of repeating the same mistakes over and over again. (The definition of insanity, I'm told)

All that was summarized by German Finance Minister Peter Steinbruck, who broke the taboos last week and spoke out frankly. "The managers' arrogance we have witnessed - based on the idea 'we're smarter than other people' - has ended in disaster." End the applause! One must say that certain German banks have been very exposed to the subprime crisis that has been shaking the financial world since last summer. Notably the IKB, which has been supported by its colleagues while the extent of the damage it has undergone is assessed.

Of course, we've had no bank president in France be invited by his board to take early retirement. Nor do we have lines of people waiting at bank branches to withdraw their funds. But the fog that surrounds German, British and American banks is beginning to spread around the corporate names of Hexagon finance. To the point that some are wondering whether their quarterly accounts are really reporting all the latent risks. And the most skeptical minds have begun to take up this critique expressed by the great German money man: "Since the end of July, several months have gone by and some managers still don't know how much this crisis is going to cost them."

It is certainly easy to make fun of bankers. It's not a profession that spontaneously attracts sympathy. But we must acknowledge that the subprime crisis has once again revealed their recurrent shortcomings. The first and the worst is that sheep-like character to which Voltaire alluded already. It is nonetheless unbelievable that this profession found it such a great idea to jump out the window to invest in these famous subprime loans, it forgot as though a single person the flaws and risks of these investments.

The second shortcoming is amnesia. With bankers, one always has the feeling of witnessing the same story. A market develops, whether it's real estate, the Internet, hedge funds or capital investment, and everyone forgets that the more it develops, the more scrupulous and vigilant one must be. And it's the opposite attitude they practice, persuading themselves that in this game of "musical chairs," they will be shrewd enough to sit down before the music stops.

The very same people who lost billions of dollars or euros fifteen years ago in the real estate crisis are about to relive the same drama, although they had all the resources to avoid getting caught in the same trap again.

But the most serious shortcoming is undoubtedly the lack of vision. A banker is someone who partly lends shareholders' money - the bank's capital - and partly clients' money - deposits. And since some in the course of the last twenty years have not been very scrupulous, international institutions have forced them to never lend more than a certain multiple of their capital. That means that the more banks' capital decreases, the less they can lend. Up until now, that situation has hardly bothered them, given that the colossal profits cleared every year had been fattening up their capital funds, and consequently their capacity to fund new clients, be they risky ones. But if the global banking system has to digest some $200 billion of losses on subprime loans, that means that there are $2,500 billion they can no longer lend.

Consequently, there is a real risk of a coming credit crunch. Of course, the worst, especially in economics, is never certain. But it is always distressing to see that one of the sectors of activity that concentrates the greatest quantity of grey matter always ends up derogating from its own rules of prudence and making up with its old demons. It's two bad for those banks' shareholders. It's unfortunate for their clients. And above all, it's sad for the small local enterprise that will have its next line of credit request rejected for a reason that has nothing to do with it, while it wants to invest, hire and export. Bankers complain of being disliked. But this time, it will be really hard to feel any sympathy for them.

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Translation: Truthout French language editor Leslie Thatcher.

(In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. I.U. has no affiliation whatsoever with the originator of this article nor is I.U endorsed or sponsored by the originator.)


The Nazis, Fascists and Communists were political parties before they became enemies of liberty and mass murderers.