Tag: Main Street

AIG Consults Washington

YOU HAVE GOT TO BE KIDDING!

AP is reporting:

American International Group Inc. is consulting with the federal government about its plans to pay millions of dollars in retention incentives and bonuses, a person familiar with the situation said.AIG is working with the Obama administration’s compensation czar, Kenneth R. Feinberg, to ensure the government and the insurer are on the same page before it pays out remaining bonuses due to employees tied to 2008 contracts, according to the person, who requested anonymity because of the sensitive nature of the talks.

The latest round of bonus payments will include about $235 million for employees at AIG’s financial products unit, according to a Wall Street Journal report. AIG’s near collapse was not due to its traditional insurance operations, but instead risky derivatives contracts written by the financial products division. AIG is in the processing of winding down that unit.

AIG is also scheduled to pay out another portion of a much smaller set of bonuses to 40 high-ranking AIG executives. The 40 executives were awarded about a combined $9 million in bonuses for 2008. The insurer paid out half of the bonuses in March and is supposed to pay out the remainder in two installments, the first of which is scheduled for next week.

First of all—a compensation czar?

So, they are still going to pay bonuses to those that actually caused the problem with their GREED, right?  Let me see the Rpubs have blamed the unions for the death of the auto industry because of the pay that the workers were recieving, but somehow are all quiet on these pay outs to the very same people that created the economic crisis in the first place. Is that about it?

Once again the powers that be are more concerned with those that work on Wall Street than those that live on Main Street.  And those people on Mazin Street sit by idlely while they are screwed.

Another indication of the Rational Ignorance Effect.  (Read the page)

Bernanke Shows True Colors

As the TARPs and TALFs do their thing to try and stabilize the economy other fears surface.

Wall Street got theirs ….to the tune of about $1 trillion…..The Auto Industry got theirs…..billions…Banks got rescues and now some want to repay their loans from the government.

But recently the Fed chairman has said as reported by the AP:

Federal Reserve Chairman Ben Bernanke on Wednesday urged Congress and the Obama administration to cut record-high budget deficits, warning that they could erode investor confidence and endanger the economy’s long-term health.

Bernanke’s comments came as concerns grow at home and overseas about the United States’ mounting red ink.

“Even as we take steps to address the recession and threats to financial stability, maintaining the confidence of the financial markets requires that we, as a nation, begin planning now for the restoration of fiscal balance,” Bernanke told the House Budget Committee.

The White House estimates that the government will rack up an unprecedented $1.8 trillion budget deficit this year. That would be more than four times last year’s all-time high.

Now that all the speculators have gotten their pound of flesh, Bernanke is concerned with the control of the growing deficit.  You know what that means, right?

Where will the government cut to help in this control?  Stim money…nope.  Nowhere but entitlements…you know those programs for the elderly and the poor….like Social Security and Medicare come to mind readily.  Fiscal conservatives, both Repub and Dem, will be screa,ming for some sort of deficit cutting measures and soon.

Wrting for wsws.org, Barry Grey analyzed Bernake as such:

The phrase “confidence of the financial markets” is a euphemism for the interests of Wall Street and major international banks and investors. In demanding the preparation of austerity measures to be imposed on the American people, Bernanke was speaking in behalf of the financial elite whose massive taxpayer subsidies have been the major cause of the explosive growth over the past year of the federal deficit and the US national debt.

Warning that a continuation of such levels of debt could drive up the cost of government borrowing—a disastrous prospect for an economy dependent on a continuous stream of loans from China, Japan and other countries—Bernanke said that the deficits would have to be reduced substantially either through tax increases or budget cuts. “The Federal Reserve will not monetize the debt,” he declared.

He made clear that his prescription for “fiscal balance” was dramatic cuts in what remains of social programs, rather than tax increases. He zeroed in on the basic programs upon which tens of millions of Americans depend—Social Security and Medicare.

Of course these programs will be on the chomping block…why?….reps have a great retirement and medical and such and their programs will not be effected.

Once again Main Street will be the victim of the government, while Wall Street gets all the consideration and perks.  When will we ever learn?

What About The Middle Class?

Bank bailouts…auto industry assistance…CEO bonuses….Credit card rules….nice work if you can get it….all the help has been for the corporations…..the middle class has received only some minor lip service…….will that change?

God knows it should, be so far I have not seen any of the efforts that will create a more stable middle class….without that we have nothing but a 2 class system….the wealthy and the poor…Obama has mentioned the middle class numerous times…but so far nothing has been done to protect it from the erosion it is experiencing.

In an article written by Robert Stark in the LA Examiner he noted:

Obama is no friend of the middle class. He is a tool of international finance, multi-national corporations, the military industrial complex, and has strong socialist leanings. Many think socialism and financial capital are at opposite ends of the economic spectrum. That could be further from the truth. Socialist want more customers for the welfare state to sustain their political power. That is why the democratic establishment supports massive immigration because they want to increase their power base. They bribe voters with social programs. Many of these perceived leftist causes are financed by Wall Street financiers. The financial and corporate elites want open borders because they profit of the cheap labor and want a feudalist economic system.

Finance capital has bought of most of our politicians and media. Much like Socialist, monopoly capitalist want complete control of the economy and government. Think tanks such as the Council on Foreign Relations that many politicians including much of Obama’s cabinet seek to dissolve American sovereignty and consolidate the power on the financial elites. A strong middle class  is necessary for a free Republic. Both socialist and financial elites make common cause in weakening the middle class to consolidate their powers and have control over both major political parties. The middle class unlike left wing, ethnic advocacy groups, foreign, and corporate financial interest does not have a lobby to advocate on it s behalf. Politicians need the middle class to get elected but most presidents have abandoned it in favor of the elites and special interest once they are in power.

After watching the admin for the last 4 months or so, I am beginning to agree with Stark’s observation.  Why?  The banks have received billions upon billions and the only thing that is suppose to accomplish is to loosen up credit….in a time when consumer confidence is low…foreclosures are rising faster then the temperature….and unemployment is racing out of control…..Just where in there is the help for the middle class?

The middle class needs employment and stability, not a continuation of the policies and programs that put them in the dire straights they find themselves now.  The middle class is slowly disappearing and soon there will be two class in the US–the rich and the poor.  Nothing that is being attempted at this time is stablizing the middle class, it loses ground daily and Washington fiddles.

Where Will It All End?

Americans have grown more optimistic about the economy and the direction of the country since President Obama took office in January, according to the latest New York Times/CBS News poll on Monday.

Two-thirds of respondents said they approved of Obama’s overall job performance.

That is the people on the street, but the CEOs are not showing the same confidence.

The survey, conducted quarterly since the fourth quarter of 2002, reveals economic assumptions and outlooks of Business Roundtable member CEOs for the next six months.

When asked how they expect their company’s sales to fluctuate, 24 percent predicted an increase, 9 percent said no change and 67 percent said sales will decrease.

In terms of how they expect their company’s U.S. capital spending to change, 9 percent said it will go up; 25 percent reported no change; and 66 percent said it will drop.

In terms of changes to U.S. staffing levels at the company, 7 percent predicted a boost in hiring; 21 percent said levels will stay the same; and 71 said their workforce would decrease.

The CEO confidence index fell to minus-5 in the first quarter from 16.8 in the fourth quarter, the business trade group said. The index, which ranges from minus-50 to 150, was at 79.5 a year ago.
The chief executives expect the economy to contract 1.9% in 2009; three months ago, they thought the economy would be flat.
You see there is always a disconnect between Main Street and Wall Street.  The people, according to a recent poll are optimistic and Wall Street is pessimistic.
The disconnect is this….the people are not that knowledgeable on economic issues and they voted for change and like the new president and are willing to give him some time to see if his policies and programs will bring them any relief before they issue their final judgment.  Then there is Wall Street and the economists that are the cheerleaders of the system as it is….they look at the numbers, trends and cycles…they are armed with the facts and the facts are pessimistic.
Who will win the battle of the “istics” in the end?  Only the fortune telling 8 ball has the “real” answers.

Angry About AIG?

Is there something you can do?  Yes there is.

Original source: unionreview.com
By now you heard that AIG is handing out massive bonus checks to some of its employees, the same ones that brought the company to the point of needing a bailout in the first place. Clearly you know that all this money — the bailout flow — is coming from us, taxpayer dollars. With that amount of money mismanaged over and over again, folks are outraged. What do they think, money grows on trees?

I went over to Change to Win’s website to see how they were handling the story. What I liked about their post on this was not only how they framed the issues but also offered an action that folks can do this week. I thought it was appropriate to share with you here at UnionReview.com, it is below.

Over the weekend, the news broke that bailed-out insurance company AIG was becoming the latest in a parade of financial-services firms to enrich its failed executives on the taxpayers’ dime.

The New York Times reports that AIG, recipient of more than $180 billion in bailout money, plans to give $165 million in bonuses to the very executives whose reckless behavior brought the company to ruin — and nearly took the entire global economy with it:

The payments to A.I.G.’s financial products unit are in addition to $121 million in previously scheduled bonuses for the company’s senior executives and 6,400 employees across the sprawling corporation. [Treasury Secretary] Geithner last week pressured A.I.G. to cut the $9.6 million going to the top 50 executives in half and tie the rest to performance…

Of all the financial institutions that have been propped up by taxpayer dollars, none has received more money than A.I.G. and none has infuriated lawmakers more with practices that policy makers have called reckless.

The bonuses will be paid to executives at A.I.G.’s financial products division, the unit that wrote trillions of dollars’ worth of credit-default swaps that protected investors from defaults on bonds backed in many cases by subprime mortgages.
The bonus plan covers 400 employees, and the bonuses range from as little as $1,000 to as much as $6.5 million. Seven executives at the financial products unit were entitled to receive more than $3 million in bonuses.

President Obama calls AIG’s behavior an “outrage”. But this is not the first outrage the nation has suffered at the hands of the very executives who happily used public funds to save their companies from the consequences of their “leadership”. (Read through our archives, you’ll find plenty of others.)

But What Can I Do About It?
Lots of folks are angry this morning. But anger, by itself, doesn’t change anything. It’s when we channel anger into action that it can make a difference.

So, if you’re angry, here’s something you can do about it join the March 19 Day of Action Against Corporate Excess.
This Thursday, thousands of people will be rallying together in cities across the country to demand that bailed-out corporations be held to account, and that government make the real changes we need to have an economy that works for everyone, not just the top 1% — including passing the Employee Free Choice Act..
A complete list of cities and events can be found on the Day of Action’s Web site, TakeBackTheEconomy.org.
Don’t see your city on there yet? Sign up to organize your own Take Back the Economy rally — all the materials you need are available through the site.
This week, don’t just be angry — join the movement for a sustainable economy that works for everyone and help get this country back on the right track again.

Congress Fiddles While Economy Burns

Moving with lightning speed, the Democratic-controlled Congress and White House agreed Wednesday on a compromise $790 billion economic stimulus bill designed to create millions of jobs in a nation reeling from recession. President Barack Obama could sign the measure within days.

But while the days of debate raged on who gets what and who does not the economy continues its downward spiral.  Banks are getting grilled and at the same time having their pockets filled with taxpayer money.

And the news from Main Street just keeps getting worse with every report.

U.S. foreclosure filings exceeded 250,000 for the 10th straight month in January as falling prices trapped owners in homes worth less than the mortgage, RealtyTrac Inc. said.

A total of 274,399 properties got a default or auction notice or were seized by banks, the Irvine, California-based seller of default data said in a statement today. It was the 37th straight year-on-year increase in filings.

The housing market lost an estimated $3.3 trillion in value last year and almost one in six owners owed more than their homes were worth, online data provider Zillow.com said last week. The U.S. economy shrank 3.8 percent in the fourth quarter, the most since 1982, and payrolls plunged by 598,000 in January, pushing the jobless rate to the highest level since 1992.

Home prices have fallen every month since January 2007 and tumbled 18.2 percent in November, according to the S&P/Case- Shiller index of 20 U.S. cities. President Barack Obama may support federal guarantees for modified home loans as the administration and Congress consider ways to help borrowers facing default or negative equity.

No one was any idea how to fix the economy…there is plan after plan…idea after idea….but none seem to be the right answer….as those who live on Main Street USA  watch and wait….their lives and their resources shrink and they worry….and Congress plays the partisan fiddle

What Is Behind The “Bad Bank” Idea?

The deepening recession is at least partly a product of a prolonged crisis in credit markets. Major banks have cut back on lending, unable or unwilling to part with their deposits. Even banks that have received billions of dollars in fresh capital from Washington have been slow to lend. That’s because their balance sheets, like those across the financial industry, are tainted by investments in complex securities that almost no one wants to buy, most of them tied to bundles of mortgages with rising default rates. Illiquid and losing value, these assets make it hard to judge a bank’s health. That uncertainty, in turn, makes it difficult for banks to raise money for new loans and investments.

The Bush administration sought to attack this problem in the fall with a new, $700-billion Troubled Asset Relief Program to buy the banks’ dicey holdings. It never followed through on that idea, but now the Obama administration is considering a similar approach that could be even more expensive. One plan being floated would have the government create a “bad bank” that would acquire troubled assets from commercial banks, insurance companies and segments of the credit market. The strategy is aptly named, because it’s a bad idea.

Like the original TARP, the bad-bank idea has some merit. Rather than unloading assets (which might include securitized car loans and credit card debt in addition to mortgage-related investments) at fire-sale prices, this bank would wait for markets to recover, then sell them gradually. The theory is that many of the assets have real value, which would become easier to divine over time as foreclosures ebb and the economy rebounds. Meanwhile, scraping the sludge off lenders’ books would eliminate much of the mystery about their condition, enabling credit markets to return to normal and hastening the end of the recession.

Basically, what this is doing is helping banks to stabilize and horde their capital….I still have not found a way this will help anyone on Main Street..,,,Dammit!  You guys need to think demand not liquidity.  How many times has this got to be impressed on you before  real stimulus is tried?

As always Washington is playing a dangerous game with people’s lives and if they are not careful the Repubs will return to power in 2010…is that what you guys really want?

The Crisis Of Working Families

There is broad consensus among labor unions and progressive organizations, economists and politicians that we need a bottom-up solution to the economic crisis. That is, the priority should be fixing Main Street, not Wall Street. The main proposals include:

1) A moratorium on home foreclosures, and giving bankruptcy courts the power to renegotiate mortgages.
2) Extend unemployment benefits and increase funding for food stamps, heating assistance, and other survival programs.
3) Aid to state and local governments so they can avoid layoffs and reductions in vital services.
4) Rebuilding the infrastructure of America: clean energy, roads, bridges, water systems, schools, and housing, providing good-paying jobs.

There is broad consensus among labor unions and progressive organizations, economists and politicians that we need a bottom-up solution to the economic crisis. That is, the priority should be fixing Main Street, not Wall Street. The main proposals include:

1) A moratorium on home foreclosures, and giving bankruptcy courts the power to renegotiate mortgages.
2) Extend unemployment benefits and increase funding for food stamps, heating assistance, and other survival programs.
3) Aid to state and local governments so they can avoid layoffs and reductions in vital services.
4) Rebuilding the infrastructure of America: clean energy, roads, bridges, water systems, schools, and housing, providing good-paying jobs.

The immediate cause of the financial crisis on Wall Street is this mountain of debt smothering people on Main Street. In simplified form, here is what happens.
● Hard-pressed families fall behind on their mortgage and credit card payments.
● When homeowners can’t make payments, the banks foreclose, but the home frequently stands empty and the bank is unable to recover much of the outstanding loan..
● The bank, with less money coming in, has trouble paying other banks and investors that it borrowed money from.
● Those other banks and investors have trouble paying banks and investors they borrowed from.
● Banks, investors, and ordinary businesses are afraid to lend money to other banks, investors and ordinary businesses.

Families owe more on their mortgages and their credit cards than they can ever pay back. And their effort to save their homes and meet creditors’ demands is undermining their families, their neighborhoods and the local economy, as family members work multiple jobs and cut back on health care, local purchases, local taxes, utilities, and home maintenance.

The bailout package just approved by Congress doesn’t address this problem at all. Homeowners and consumers still have the same debt, still face the same monthly payments. The only change is that the U.S. government has become a collection agent for the banks and investors.

The solution is to reduce the amount that working people owe. Reduce homeowners’ and consumers’ debt to the level it would be at if reasonable lending standards had been applied in the first place. Conservative practice is that families should pay no more than 25 percent of their income for housing. So a people’s bailout plan would mandate that mortgages be reduced so that monthly payments will be 25 percent of household income. But in no case should the debt be for more than the real value of the house, as determined by historical price levels adjusted for inflation. Credit card debt, second mortgages, and home improvement loans, college loans, and medical debt could also be adjusted by similar calculations, to a maximum of 10 percent of household income.

This would not cost the government a penny — it would force banks and investors to recognize the losses resulting from their own bad judgment and fraudulent practices. Millions of people would still be in their homes, and neighborhoods and local tax bases would be stabilized. And the financial system would be more stable because the banks could now be confident of receiving a steady stream of payments, even though these payments would be less than what they originally expected.

Come on guys, time to get angry and time to demand that the PEOPLE come first!  Please get off your ass.

Do You Really Want To Fix Main Street?

The bailout package just approved by Congress doesn’t address this problem at all. Homeowners and consumers still have the same debt, still face the same monthly payments. The only change is that the U.S. government has become a collection agent for the banks and investors.

The solution is to reduce the amount that working people owe. Reduce homeowners’ and consumers’ debt to the level it would be at if reasonable lending standards had been applied in the first place. Conservative practice is that families should pay no more than 25 percent of their income for housing. So a people’s bailout plan would mandate that mortgages be reduced so that monthly payments will be 25 percent of household income. But in no case should the debt be for more than the real value of the house, as determined by historical price levels adjusted for inflation. Credit card debt, second mortgages, and home improvement loans, college loans, and medical debt could also be adjusted by similar calculations, to a maximum of 10 percent of household income.

This would not cost the government a penny — it would force banks and investors to recognize the losses resulting from their own bad judgment and fraudulent practices. Millions of people would still be in their homes, and neighborhoods and local tax bases would be stabilized. And the financial system would be more stable because the banks could now be confident of receiving a steady stream of payments, even though these payments would be less than what they originally expected.

The proposals to revive the economy, listed at the beginning of this article, should still be adopted. The economic stimulus package that was blocked in the Senate by a Republican filibuster a few weeks ago included some of those provisions. And major reform and regulation of the financial industry is necessary; there are some excellent proposals to take over failing banks, regulate the financial industry, and tax financial transactions and exorbitant compensation to control speculation and help pay for the program. But until we clear up the massive, unfair, and often illegal debt that has been fastened on working families, it will act as an anchor dragging down the economy, and Main Street will be haunted by insecurity and misery.

Democratic leaders in Congress had a number of proposals that would have reduced the amount families owe on their mortgages. They were blocked by the Republicans, who don’t support any meaningful relief for homeowners.

Democrats Try To Help Main Street

After consulting with Barack Obama, Democratic leaders are likely to call Congress back to work after the election in hopes of passing legislation that would include extended jobless benefits, money for food stamps and possibly a tax rebate, officials said Saturday.

The bill’s total cost could reach $150 billion, these officials said.

The officials stressed that no final decisions have been made. They spoke on condition of anonymity, saying they did not want to pre-empt a formal announcement. House Democrats have announced plans for an economic forum on Monday “to help Congress develop an economic recovery plan that focuses on creating jobs and strengthening our economy.”

If they are successful, a lame-duck session of Congress two weeks later would allow them to start work on a response to the credit crunch that has sent stock prices plummeting and also threatens to trigger a deep recession. It often takes two or three months for a new Congress to begin turning out legislation, particularly when a new president is settling into the White House.

On the other hand, by attempting to pass legislation next month, Democrats would have to negotiate with President Bush, whose term runs until Jan. 20, 2009. Additionally, Senate Republicans, with 49 seats, could block any measure they opposed.