More On Haircuts

John Nichols in the Nation has a good post about the recent government firing of GM CEO Wagoner.

Wagoner needed to go. He thought the only way to repair an industry he and his compatriots broke was to break unions, cut wages and shutter plants.

Despite the fact that the United Auto Workers union called more than 30 years ago for a retooling the industry to produce smaller, more fuel-efficient vehicles, despite the fact that union members have accepted deeper cuts in pay and benefits than their foreign counterparts, Wagoner kept trying to balance his books by discharging his most skilled employees and devastating communities in Wisconsin, Ohio, Michigan and other states.

As such, he was a lousy, visionless CEO.

If it took a shove from the Obama administrion to make Wagoner leap with his golden parachute, then more power to the president.

But when will this administration get as tough with Wall Street as it has with Main Street? Didn't they screw up in far more dramatic, and damaging, ways than did Rick Wagoner?

Will this president ever tell brokers and bankers that they are going to feel more pain than just the paper cuts from opening envelopes containing their bailout checks and bonuses?

This is the rub. It is fair to say that bailing out the banks is crucial lest the entire economy basically implode under the pressure from all of those ginormous gambling debts Wall Street racked up. That doesn't preclude the necessity of making those responsible for said gambling debts feel the financial and professional repercussions of their actions.

Here we go:

A senior administration official, briefing reporters late Sunday night on the condition of anonymity in order to speak freely, said Obama will call for more sacrifice from carmakers, their investors and automotive unions.

Fascinating. Unions, which have made incredible concessions already in an effort to help GM and Chrysler stay in business, are being ordered by the federal government to concede even more. Yet the dickheads who obscenely profited from wrecking the world financial system remain in their offices, forced only by public shame to forgo bonuses they haven't earned. The same federal government treated these high criminals with kid gloves, saying publicly they feared being sued by the likes of AIG if they attempted to force repayment of unearned bonuses or prevent future ones being paid out.

Recap: Those who work and make something real and useful in order to earn their pay will be further punished by the very same government that has coddled those who play with paper and imaginary numbers and reap unparalleled financial reward for their "toil". The latter are on the hook for many multiples the amounts of the loans the auto industry is seeking, and have given up almost nothing in exchange for, in many cases, essentially free cash.

This is so utterly fucked. It is also the clearest indicator yet that nothing will substantively change in the financial services sector, rendering real the possibility this will all happen again, and the perpetrators will get away with it.

The Revolution Will Not Be Televised

Getting lost in the details of the financial meltdown can have the perverse effect of diffusing righteous anger directed toward those who set this entire destructive wave in motion.

Matt Taibbi delves back into those details and reminds us why we should be "mad as hell" and not take this lying down.

People are pissed off about this financial crisis, and about this bailout, but they're not pissed off enough. The reality is that the worldwide economic meltdown and the bailout that followed were together a kind of revolution, a coup d'état. They cemented and formalized a political trend that has been snowballing for decades: the gradual takeover of the government by a small class of connected insiders, who used money to control elections, buy influence and systematically weaken financial regulations.

The crisis was the coup de grâce: Given virtually free rein over the economy, these same insiders first wrecked the financial world, then cunningly granted themselves nearly unlimited emergency powers to clean up their own mess. And so the gambling-addict leaders of companies like AIG end up not penniless and in jail, but with an Alien-style death grip on the Treasury and the Federal Reserve — "our partners in the government," as Liddy put it with a shockingly casual matter-of-factness after the most recent bailout.

The mistake most people make in looking at the financial crisis is thinking of it in terms of money, a habit that might lead you to look at the unfolding mess as a huge bonus-killing downer for the Wall Street class. But if you look at it in purely Machiavellian terms, what you see is a colossal power grab that threatens to turn the federal government into a kind of giant Enron — a huge, impenetrable black box filled with self-dealing insiders whose scheme is the securing of individual profits at the expense of an ocean of unwitting involuntary shareholders, previously known as taxpayers.

The conservative fantasy that everyone in the financial services sector, or anyone in the entire corporate world, for that matter, are rational actors who behave reasonably and cautiously has, at last, been utterly exposed as a grand lie. The only correct solution is to break the backs of these oversize, overly powerful giants and regulate the living shit out of them in future. Banks, brokerages, and insurance companies all made handsome profits prior to the frantic deregulation fetish of the late 1990s. Given how destructive their greed can be for the rest of us, strict regulation is the only rational response.

Paper Pitchforks

Class warfare is traditionally a top down affair. The recent outrage over the AIG bonuses has been pretty amusing - millionaire congresscritters bleating about how awful it is that masters of the universe at AIG's financial products division want to pay themselves fat gobs of cash after wrecking the world economy. Left out of their faux-populism is the fact they are complicit in the looting that has been conducted by the wealthy in our country for thirty years, and which was virulently accelerated in the 1990s.

And as much as I take perverse pleasure in watching CEOs squirm a bit, this "tax the bonuses back" is just stupid policy. Paul Krugman is on the case:

I’ll leave to others the question of who knew or should have known that the bonus firestorm was coming; but it’s part of a pattern. At every stage, Geithner et al have made it clear that they still have faith in the people who created the financial crisis — that they believe that all we have is a liquidity crisis that can be undone with a bit of financial engineering, that “governments do a bad job of running banks” (as opposed, presumably, to the wonderful job the private bankers have done), that financial bailouts and guarantees should come with no strings attached.

Better dead than...unionized?

Quite probably.

Behold Matthew Yglesias:

I’m probably not breaking any news if I tell you that American business really hates unions and, thus, really hates the Employee Free Choice Act. Thus, even though John Boehner is trying to destroy the American economy, the U.S. Chamber of Commerce is squarely focusing its fire on pro-EFCA Democrats. Your typical business executive would rather let the world burn, or see his children fed to a pack of wild boars, then see a union form at his firm. And it makes a certain amount of sense—businessmen appreciate the value of class solidarity. If you run your company into the ground, you get a nice severance package and another job at another company. But if you let your company be unionized, you’d be dead to your brethren. An attack on one is an attack on all, and they all stand together on this point.

Bear this in mind as you watch the fight against EFCA play out in the coming weeks/months. The battle over stimulus wasn't even a warm up by comparison to the scorched earth tactics now being deployed. And it will get much worse.

More On Citi Shenanigans

From Jane Hamsher:

Citi held a private conference call on Wednesday, hosted by a lobbyist for the US Chamber of Commerce, to "build opposition to the Employee Free Choice Act" according to the Huffington Post's Sam Stein. During the call, Weinswig cited dubious research funded by an astroturf front group for the Chamber to make the claim that the bill's passage would increase the following year's unemployment rate by 1%. (In 2006 the OCED did an exhaustive analysis and concluded that there was no correlation between unionization and unemployment rates.)

Citi Uses Your Money To Wage War On...You!

Citicorp, on the heels of downgrading Walmart because EFCA might pass (though Walmart has remained profitable during the economic disaster, in which, btw, Citi has a central role), is using taxpayer bailout funds not only to stay afloat, but to run an aggressive and dishonest campaign against EFCA. The same analyst who performed the downgrade on Walmart stock leads the conference call.

Matt Yglesias tells the tale:

This, it seems, is capitalism. First you manage your business so catastrophically badly that your company not only becomes worthless, but that it threatens to destroy the livelihoods of billions of people around the planet. Second, you get the taxpayer to keep you in business. And third, you turn around and warn that higher wages for workers might destroy the world economy! As I’ve said before I don’t think we want congress meddling with the details of business decisions at major companies, even companies that are receiving taxpayer support. But there’s a fairly clear case to be made that firms on the public dole shouldn’t be engaged in lobbying or political activities.

These fuckers ought to, as the kids say, "die in a fire". A really hot fucking gasoline-liberally-sprinkled-with-napalm fire. Nationalize them, all of them, and throw the bastards out. Let the shareholders eat it. Sell them off, bit by bit, making them small enough to fail next time around. This has to end.

Simon Johnson on Fresh Air

Great listen.

Notice his comments about the strategy Treasury has been pursuing with the financial sector (about 17:00 in). This guy knows what he is talking about.

Ezra Checks EFCA

And makes a salient point not often visible in the recklessly dishonest discussion about EFCA.

The more impressive strike came, however, earlier this morning, when Citibank downgraded Wal-Mart's stock from a "buy" to a "hold" on fears that passage of EFCA could force the company to unionize which would in turn decrease shareholder profits as more of the company's worth was distributed to employees.

There are two things worth saying on this. The first is that it's a useful moment when the interests of the stock market and the broader economy diverge. Citigroup's analyst is right to worry that shareholders would see smaller gains if Wal-Mart were unionized. Conversely, it would probably be a stimulative thing for the economy if Wal-Mart's massive low wage workforce suddenly enjoyed a quick boost in take-home pay. The interests of shareholders are not the same as the interests of workers, and the various sides in the argument would happily talk your ear off about how the interests of the broader economy align.

The second is that it's hard to recall another time when an analyst actually downgraded a stock on fears of legislation that few expect to pass. Indeed, many on the Left are arguing that this is more about generating a controlled stock market panic that will convince wavering senators to vote against EFCA than about accurately pricing Wal-Mart's stock. "When I see upgrades to the stocks of Wal-Mart's already-unionized competitors (grocery stores like Safeway who will gain back market share if easier unionization results in higher Wal-Mart labor costs) specifically pegged to the specter of EFCA, then I'll admit that Citi is engaged in good-faith prognosticating here," e-mails Josh Bivens at the Economic Policy Institute. "Otherwise, not so much."

This is going to be a fight to the death, one I expect cannot get past the Senate and those self-described Democratic "moderates", whose sole function it seems is to hamstring their party's president and enable the foaming-a- the-mouth rabid dogs of the right, as they have for decades.

Why Nationalize?

Paul Krugman gets right to it.

The benefits from nationalization come from (a) giving taxpayers a share of the upside rather than just a share of the downside, which is where we are now (b) ending the gaming of the system, even looting, that is encouraged by the current system of implicit guarantees (Simon Johnson has been very good on that) (c) making it politically and fiscally feasible to put in enough capital to revitalize the system. These advantages are there whatever you decide to do with junior bank debt.

And finally:

What’s clear, however, is that the current system, of implicit maybe-kinda guarantees on bank liabilities — call it wink-wink-nudge-nudge-say-no-more banking policy — is failing badly.

Crybabies

Jon Stewart annihilates Raick Santelli, Cramer, and all those other douchebag cheerleaders at CNBC, the propaganda arm of Wall Street.

(Embed slaughters my page, so here is the link. Do watch, its damned funny)


Epic fucking win.

Shrill?

Remember when it seemed like those on the Left most concerned with civil liberties and our constitutional rights were being shouted down as shrill fear mongers for criticizing Bushian theories of limitless executive power?

Turns out, they weren't so shrill at all:

The essence of this document was to declare that George Bush had the authority (a) to deploy the U.S. military inside the U.S., (b) directed at foreign nationals and U.S. citizens alike; (c) unconstrained by any Constitutional limits, including those of the First, Fourth and Fifth Amendments. It was nothing less than an explicit decree that, when it comes to Presidential power, the Bill of Rights was suspended, even on U.S. soil and as applied to U.S. citizens. And it wasn't only a decree that existed in theory; this secret proclamation that the Fourth Amendment was inapplicable to what the document calls "domestic military operations" was, among other things, the basis on which Bush ordered the NSA, an arm of the U.S. military, to turn inwards and begin spying -- in secret and with no oversight -- on the electronic communications (telephone calls and emails) of U.S. citizens on U.S. soil.

That the U.S. Government had suspended the Fourth Amendment itself isn't exactly news. A fleeting reference to that event (largely ignored by the media) was made in a footnote to one of Yoo's previously released torture memos (release of which was also compelled not by the U.S. Congress or the media, but by the ACLU). But reading the document that actually effectuated (in secret) that suspension -- released only yesterday -- is genuinely breathtaking.

Entire article should be read to get a start on wrapping your fragile, eggshell mind around this. Click the small photo files and read the actual verbiage - it is hair raising shit.