Bulletin N°446



27 April 2010
Grenoble, France

Dear Colleagues and Friends of CEIMSA,
Like white smoke and black smoke --the haze that conceals materials on fire-- so ideologies, that are always produced by contradictions, can hide the material relationships which gave rise to these contradictions in the first place and generated these particular ideologies. Ideologies, so Marx thought, appear as the "inversion" of specific material contradictions, and these contradictions themselves are layered oppositions in real human relationships. For example, the market economy (in which use values and exchange values have been invented and reinvented) is a historic process which dates from paleolithic times. It is the institutionalization of human relationships through which goods and services are produced, distributed, and consumed in human society.

Productive labor is devouring necessary labor in the contemporary capitalist market economy. [See Joseph Stiglitz's recent book review, "The Non-Existent Hand."]

During the past five centuries, the capitalist mode of production has determined material relationships, in a way that contradictions have increasingly flourished, and not the least important of these contradictions today is the production of scarcity, (i.e. the policy of actually depriving people of access to necessary goods and services in order to maximize the accumulation of surplus value). The market economy has evolved under capitalism in an unbalanced way, and today the fact that the owners of capital derive enormous profits from their investments by denying increasing numbers of people the goods and services necessary for life in society is a material contradiction that can hardly be concealed: the logic of the private profit motive facilitates policies which now threaten entire societies and the natural environments which have supported them.

Don't let the smoke get in your eyes. [See Afghan Massacre Survivor To Obama: You Be The Judge (VIDEO).]

This central contradiction in the contemporary market economy represents nothing less that the auto-destruction of capitalism by undermining the necessary support system of the entire market economy. If capitalists are essentially destroying the market economy and with it capitalism, this "inversion" of material relationships produces a contradiction, which in turn produces a second "inversion", namely an ideology which specifically posits the opposite idea (which is contrary to the material contradiction) that the highest social value is Successful Competition, to which all other social values are subordinate. The ultimate value of cooperation, creativity, productivity, reliability, etc. . . is embedded in the contribution that all of these human qualities can make when appropriated by Competition. This ideology flows from the "inversion" of the material reality (e.g. that the production of certain goods and services is destroying society and its environment and that human relationships are determined by bureaucracies which maintain social order through the use of terror and have calculated acceptable levels of human misery which would guarantee short-term material benefits for a very few members of society).

White smoke is produced by burning dry grass; black smoke by burning rubber tires: so are ideologies specific conversions of the specific material contradictions which produce them and which are hidden by them.

In our final undergraduate class this week on historical methodologies, we discussed some useful methods for looking behind words to identify meanings; for looking behind meanings to discover the interests which generated those meanings; and for searching behind the personalities to identify the specific "situations" which produced these interests. This exercise quickly took us to social class analysis and material relationships: the fountainhead of contradictions and ideologies, which include the production of  "instrumental values" and "fundamental values" --two ideological types which are often confused and create misunderstandings, and which, as do all ideologies, serve again and again to conceal the contradictions from which they flow. The intellectual distortions of material reality assure an alienation which has the effect of "protecting" the contradictions from careful scrutiny and delaying indefinately any meaningful human intervention to resolve them.

We concluded our course this final week of the semester with a discussion of the works of French sociologist, Pierre Bourdieu :

Pour aller au-delà des manifestations apparentes, à propos desquelles s'empoignent ceux que Platon appelait les doxosophes, « techniciens-de-l’opinion-qui-se-croient-savants », savants apparents de l’apparence, il faut évidemment remonter jusqu’aux véritables déterminants économiques et sociaux des innombrables atteintes à la liberté de personnes, à leur légitime aspiration au bonheur et à l’accomplissement de soi, qu’exercent aujourd’hui, non seulement les contraintes impitoyables du marché du travail ou du logement, mais aussi les verdicts du marché scolaire, ou les sanctions ouvertes ou les agressions insidieuses de la vie professionnelle. Il faut pour ce la traverser l’écran des projections souvent absurdes, parfois odieuses, derrière lesquelles le malaise ou la souffrance se masquent autant qu’il s’expriment.
Porter à la conscience des mécanismes qui rendent la vie douloureuse, voire invivable, ce n’est pas les neutraliser ; porter au jour les contradictions, ce n’est pas être sur l’efficacité sociale du message sociologique, on ne peut tenir pur nul l’effet qu’il peut exercer en permettant à ceux qui souffrent de découvrir la possibilité d’imputer leur souffrance à des causes sociales et de se sentir ainsi disculpés ; et en faisant connaître largement l’origine sociale, collectivement occultée, du malheur sous toutes ses formes, y compris les plus intimes et les plus secrètes.
Constat qui, malgré les apparences, n’a rien de désespérant : ce que le monde social a fait, le monde social peut, armé de ce savoir, de défaire. Ce qui est sûr, en tout cas, c’est que rien n’est moins innocent que le laisser-faire : s’il est vrai que la plupart des mécanismes économiques et sociaux qui sont au principe des souffrances les plus cruelles, notamment ceux qui règlent le marché du travail et le marché scolaire, ne sont pas faciles à enrayer ou à modifier, il reste que toute politique qui ne tire pas pleinement parti des possibilités, si réduites soient-elles, qui sont offertes à l’action, et que la science peut aider à découvrir, peut être considérée comme coupable de non-assistance à personne en danger.
Et il en va de même, bien que leur efficacité, donc leur responsabilité, soient moins grandes et en tout cas moins directes, de toutes les philosophies, aujourd’hui triomphantes, qui souvent au nom des usages tyranniques qui ont pu être faits de la référence à la science et à la raison, visent à invalider toute intervention de ola raison scientifique en politique : la science n’a que faire de l’alternative entre la démesure totalisatrice d’un rationalisme nihiliste ; elle se satisfait des vérités partielles et provisoires qu'elle peut conquérir contre la vision commune et contre da doxa intellectuelle et qui sont en mesure de procurer les seuls moyens rationnels d’utiliser pleinement les marges de manœuvre laissées à la liberté, c’est-à-dire à la politique.(La Misère du monde, Paris, 1993, p.1453-54)
[To go beyond appearances, fought over so bitterly by all those whom Plato called "doxosophists" --"experts-on-opinion-who-claim-to-be-scholars," would-be scholars of the obvious-- it is clearly necessary to get to the real economic and social determinants of the innumerable attacks on the freedom of individuals and their legitimate aspirations to happiness and self-fulfillment: determinants manipulated today not only by the merciless constraints of the labor and housing markets, but also by the decisions of the educational market and the overt penalties and covert aggressions of working life. To achieve this, it is necessary to break through the screen of often absurd, sometimes odious projections, that mask the malaise of suffering as much as they express it.
Producing awareness of these mechanisms that make life painful, even unlivable, does not neutralize them; bring contradictions to light does not resolve them. But, as skeptical as one may be about the social efficacy of the sociological message, one has to acknowledge the effect it can have in allowing those who suffer to find out that their suffering can be imputed to social causes and thus to feel exonerated; and in making generally known the social origin, collectively hidden, of unhappiness in all its forms, including the most intimate, the most secret.
Contrary to appearances, this observation is not cause for despair: what the social world has done, it can, armed with this knowledge, undo. In any event what is certain is that nothing is less innocent than noninterference. It if is true that it is not easy to eliminate or even modify most of the economic and social factors behind the worst suffering, particularly the mechanisms regulating the labor and educational markets, it is also true that any political program that fails to take full advantage of the possibilities for action (minimal though they may be) that science can uncover, can be considered guilty of nonassistance to a person in danger.
And, even thought their effectiveness, and therefore their responsibility, is lesser and in any case less direct, the same holds true for all the philosophies holding sway today that (often citing the tyrannical uses made of the reference to science and reason) work to invalidate every intervention of scientific reason in politics. Science can have nothing to do with the totalizing excess of a dogmatic rationalism, at one extreme, or with the aesthete's resignation to nihilistic irrationality, at the other. It is content with the partial and temporary truths that it can conquer against the common perception and the intellectual doxa, truths able to secure the only rational means for using fully the margin of maneuver left to liberty, that is, to political action."(The Weight of the World, social suffering in contemporary society, Stanford University Press, 1999, p. 629]

In the 11 items below CEIMSA readers might see how the private capitalist market system of human relationships represents a violent intrusion into the sphere of "necessary social production," where "productive (profitable) labor" increasingly displaces "necessary (social) labor" with the result that "artificial scarcity" and a deteriorating environment, --not to mention the vacuous culture productions from consumer industries-- are devastating the lives of both the "haves" and the "have-nots" in the United States and abroad.

Item A. is an article from Richard Wolff, professor emeritus from The University of Massachusetts, on "phony economic recovery" in the USA.

Item B. is an article by Robert Reich on much needed strategies to reform "Wall Street".

Item C., sent to us by Mark Crispin Miller, Professor of Cultural Studies at NYU, is an article on the political necessity for accountability of Wall Street tycoons.

Item D., also from, Professor Miller, is an excerpt from Robert Kuttner's new book, A Presidency in Peril: The Inside Story of Obama's Promise, Wall Street's Power, and the Struggle to Control our Economic Future.

Item E., from Financial Times is a discussion of the consequences of "the Greek bailout," by the IMF which is now underway.

Item F. from ZMag, is an article by John Pilger on the "bad sports" of capitalist exploitation.

Item G., is an article by Walden Bello on  "China's neo-colonialism" and the future of world capitalist relations.

Item H., from Truth Out, is a discussion with Charles Bowden on "what's driving the so-called 'war on drugs' and who's benefiting from it.."

Item I., from Information Clearing House, is an article by Bill Moyers on the new financial oligarchy in the USA and what it means for all of us.

Item J., from Democracy Now! is an interview with Evo Morales at the close of the World Peoples’ Conference on Climate Change in Cochabamba in Bolivia.

And item K., is the documentary film, Food, Inc.: Hungry For Change? (1h30), by Robert Kenner.

Finally, we invite CEIMSA readers to view these two videos from The Daily Show and ZMag :

Wham-O Moves to America
(Wham-O moving its production of Frisbees, hula hoops and pool noodles from China to the U.S. is "reverse colonialism".)


The Simpson's fight for Parecon

Francis McCollum Feeley
Professor of American Studies
Director of Research
Université Stendhal Grenoble 3

from Richard Wolff :
Date: 12 Aptil 2010
Subject: Phony economic recovery.

Phony "Economic Recovery," Real Alternatives
by Rick Wolff

The crisis persists.  Tens of millions remain unemployed or underemployed.  Millions are losing their homes this year adding to millions last year.  States and municipalities are cutting back on schools, hospitals, programs for disabled and the elderly, etc.  Business and political leaders stretch to keep the public away from blaming the system, capitalism.

So we are told to celebrate a "jobless recovery" because banks, the stock market, and some corporations did better over the last year.  A "jobless recovery" is like a "war-filled peace."  Such phrases abuse language.  Leaders use them to tell it like it isn't.   The facts are these.  Bush and Obama poured vast sums of public money into the banks, urging them to renew lending to individuals and businesses that would then buy and hire again.  The banks used the government money to improve their own bankrupt balance sheets, but they never lent it out across our economy.  That was far too risky, they said; bankers often miss irony.  The broad economy kept sinking, but the stock market rose because speculators borrowed the cheap government-provided money from the banks to buy shares at crisis-depressed prices.

In simple English, the plan to overcome crisis by using public money to refinance failed banks did not work.  Rather than admit failure and consider alternative plans, our leaders proclaim that government-refinanced banks and a partly restored stock market constitute "recovery."

Alternative strategies could yield a real recovery in jobs, production, and healthy budgets for states, cities, and towns.  During the 1930s economic crisis, then president Roosevelt used one such alternative to treat high unemployment.  His administration hired the unemployed directly because private capitalist enterprises had proven unable or unwilling to do so.  Federal programs like the Civilian Conservations Corps and the Works Progress Administration provided over 11 million jobs between 1933 and 1943.  Those unemployed re-hired by Washington built many of our nation's parks and highways, replanted forests, and delivered re-employed artists into every corner of the US, among other socially useful projects.  Those programs ended only when another government activity provided even more jobs and finally ended unemployment: WW II.

No direct government hiring program exists now or is being sought by Obama's administration.  Business fears the consequences of production by and competition from the government.  Millions of government employees would fight hard politically to protect their jobs.  So business uses its revenues to block such government actions by contributing to candidates, lobbying elected officials, and bribing bureaucrats.  Business also spends billions on think tanks, foundations, publications, and academics to criticize the government in principle as the people's enemy, the cause of its miseries.  And we are surprised by teabaggers?

Another alternative to today's failed government bailout of banks would extend what FDR did in the 1930s.  The federal government would finance local, state, and national rehiring of the unemployed but with two new special qualifications.  First, at least half of goods and services they produce would have to be green: reduce pollution, restore the natural environment, reduce depletion of energy and materials resources, and so on.  Second, the enterprises created to re-employ people would differ from traditional capitalist corporations by establishing genuine economic democracy at the workplace.

Others have proposed green government employment programs such as building mass transit systems, so I need not discuss them again here.  However, few have so far proposed new organizations of work.  For example, one such proposal would assign the newly re-employed a new kind of job description.  Each of their jobs would include (1) a specific production task and also (2) full and equal  participation in running the enterprise.  These workers would democratically make the decisions that, in traditional capitalist enterprises, are reserved for boards of directors (12-20 individuals selected by and responsible to the major shareholders who are usually a tiny minority of all shareholders).  In such new enterprises, then, there would be no shareholders controlling boards of directors exploiting workers.  The workers collectively would instead be their own board of directors.  They would be accountable to the state that established them, to the communities immediately affected by and dependent upon them, to their consumers, and to other enterprises with whom they exchange goods and services.

This alternative plan offers many benefits.  It employs millions, pays them, and thereby allows them to pay their mortgages (thereby keeping their homes), to pay taxes (thereby adding revenues to states and localities), and to buy commodities (thereby creating jobs).  It restores self-esteem, vitality, and thus productivity to depressed workers, their families, and their communities.  It tackles long-neglected environmental needs.

This alternative plan also represents a commitment to achieving economic democracy.  All US workers could see for themselves how such differently organized enterprises function, whether their employees are more productive and happier than them.  Those enterprises' activities and results would be made public and transparent.  Over time, people would acquire two new freedoms of choice between democratic and undemocratic enterprises: (1) which they prefer to work in, and (2) whose products they prefer to purchase.  Imagine each commodity labeled to identify the work organization of its production.

This alternative plan could transform a bad thing -- today's crisis and failure of our traditional capitalist economy -- into an historic good thing.  It would inaugurate a national effort to diversify our economic system.  This is a win-win plan.  We gain in our relations with the natural environment and we gain in bringing democracy into our production system.

The losers would be those who prefer traditional capitalist organizations of work.  For them, the social costs of environmental and ecological deterioration, of non-democratic work organization, and of the repeated recessions and depressions capitalism imposes on societies don't seem so bad.  We should not be surprised.  After all, businesses and shareholders are the ones who got government help first as their system broke down over the last 3 years, and they are the ones who made the most before the breakdown.  Will those potential losers be strong enough again to block such a win-win plan?  Or might an alliance of environmentalists and anti-capitalist democrats carry some version of it to victory?

Rick Wolff is a Professor Emeritus at the University of Massachusetts in Amherst and also a Visiting Professor at the Graduate Program in International Affairs of the New School University in New York.   He is the author of New Departures in Marxian Theory (Routledge, 2006) among many other publications.  Check out Rick Wolff’s documentary film on the current economic crisis, Capitalism Hits the Fan, at www.capitalismhitsthefan.com.  Visit Wolff's Web site at www.rdwolff.com, and order a copy of his new book Capitalism Hits the Fan: The Global Economic Meltdown and What to Do about It

from Robert Reich :
Date: 16 April 2010
Subject: "Wall Street" & three necessary reforms.

A Citizens Guide to Reforming Wall Street
by Robert Reich

The real scandal isn't the Street's unlawful acts (i.e., Securities and Exchange Commission vs. Goldman Sachs) but legal acts that have reaped the Street a bonanza and nearly sunk the rest of us.

It's good we finally have an SEC on which three out of five commissioners are willing to enforce laws already on the books. Hopefully other enforcement agencies (CFTC, FDIC, and the Fed) will follow suit. But we also need to make illegal the recklessness that's now legal.

The Dodd bill now being considered in the Senate is a step in the right direction. Yet despite the hype, it's a very modest step. It leaves out three of the most important things necessary to prevent a repeat of the Wall Street meltdown:

1. Require that trading of all derivatives be done on open exchanges where parties have to disclose what they're buying and selling and have enough capital to pay up if their bets go wrong. The exception in the current bill for so-called "unique" derivatives opens up a loophole big enough for bankers to drive their Ferrari's through.

2. Resurrect the Glass-Steagall Act in its entirety so commercial banks are separated from investment banks. The current bill doesn't go nearly far enough. Commercial banks should take deposits and lend money. Investment banks should be limited to the casino we call the stock market, helping companies issue new issues and making bets. Nothing good comes of mixing the two. We learned this after the Great Crash of 1929, and then forgot it in 1999 when Congress allowed financial supermarkets to do both.

3. Cap the size of big banks at $100 billion in assets. The current bill doesn't limit the size of banks at all. It creates a process for winding down the operations of any bank that gets into trouble. But if several big banks are threatened, as they were when the housing bubble burst, their failure would pose a risk to the whole financial system, and Congress and the Fed would surely have to bail them out. The only way to ensure no bank is too big to fail is to make sure no bank is too big, period. Nobody has been able to show any scale efficiencies over $100 billion in assets, so that should be the limit.

Wall Street doesn't want these three major reforms because they'd cut deeply into profits, and it's using its formidable lobbying clout with both parties to prevent these reforms from even from surfacing. It's time for Main Street - Tea Partiers, Coffee partiers, and beer drinkers - to be heard.

from Mark Crispin Miller:
Date: 22 April 2010
Subject: Real reform must include jail time for Wall Street banksters.

Please pass this on . . . .

Financial Reform Must Include Jail Time for
Wall Street Bank Manipulator


from Mark Crispin Miller:
Date: 19 April 2010
Subject: Obama's Flawed Plan for Reforming the Banks.

The following is an excerpt from A Presidency in Peril: The Inside Story of Obama's Promise, Wall Street's Power, and the Struggle to Control our Economic Future by Robert Kuttner.

Weak Medicine: Obama's Flawed Plan for Reforming the Banks
By Robert Kuttner, Chelsea Green Publishing

When Barack Obama entered office, the housing crisis required very strong remedies. Government needed to use a mix of public funds and concessions on the part of the bankers and investors, who held the mortgage paper, to reduce the principal and interest to a monthly payment low enough to allow distressed borrowers to keep their homes. Otherwise, the foreclosure crisis would keep feeding on itself, glutting the market with vacant homes, driving housing values still lower, and trigger¬ing still more foreclosures. But this course would require banks and hold¬ers of mortgage-backed securities to take losses, and it was rejected by both the Bush and Obama administrations. Instead, both Bush and Obama relied on a series of voluntary programs, jawboning bankers to reduce monthly payments. Not surprisingly, this approach failed.
Back in 2007, looking over the brink of this precipice, the Bush admin¬istration had worked with the banking industry to develop the first volun¬tary program, called the HOPE NOW Alliance. The group claimed that member banks participated in 2,911,609 "workouts" (reductions of monthly payments) between July 2007 and November 2008, but that number turned out to be grossly inflated. Only 37 percent of the workouts resulted in modi¬fication of the loan terms, and of these only 49 percent actually cut monthly payments. Most of the reductions were modest.
According to the definitive study of the program by Professor Alan White, 34 percent of the modifi¬cations actually increased costs to the borrower. Lenders discovered that in restructuring a loan, they could profit by charging up-front fees. Since 2007, under Bush and Obama alike, the pace of new foreclosures has far outstripped the number of loan modifications.
In July 2008, Congress attempted stronger legislative medicine. A program called HOPE for Homeowners authorized the Federal Housing Administration to insure distressed mortgages if private lenders would provide refinancing. But subprime loans are deliberately structured to extract a large prepayment penalty if the borrower refinances. Many of these loans now had negative equity-the loan was worth more than the property-and lenders balked at refinancing even with the FHA insurance. When the HOPE for Homeowners program was enacted, its sponsors predicted that it would help 400,000 homeowners-not nearly enough compared with the millions of defaults. But by February 2009, the scheme had processed exactly 373 applications and closed just 13 refinancings. Hardly any of the distressed properties fit the terms of the program. "HOPE for Homeowners has been a failure by virtually every metric," declared Representative Spencer Bachus of Alabama, the ranking Republican on the House Financial Services Committee-describing a program signed by a Republican president.
By the time Obama took office, serious defaults and foreclosures were on track to reach more than 8 million during the new president's first term. This was a moment for a radical break, yet Obama's plan basically contin¬ued the Bush administration's voluntary approach, lubricated by $75 billion in government incentive payments to banks. The Obama variation has also been a complete failure, adding to the general economic downdraft.
Obama's program, called Making Home Affordable, was announced February 18, just four weeks into the new administration. The plan had four major parts. One, a more liberal variant of the old Bush program, allowed homeowners with mortgages to refinance their loans with FHA insurance, even if the outstanding loan was worth 5 percent more than the current value of the house. In July 2009, this ceiling was increased to a premium of 25 percent, meaning that a borrower with a $200,000 home could qualify for a $250,000 mortgage-something inconceivable in ordinary circumstances. This unprecedented remedy of encouraging a homeowner to borrow more than the value of the house was itself very risky, since a homeowner with negative equity loses nothing by just walking away if a better housing option becomes available. Millions did, leaving banks stuck with vacant homes.

A second part of the plan, known as the Home Affordable Modification Program (HAMP), offered lenders incentive payments of up to $4,500 per loan modification, if they reduced a borrower's monthly payment to 31 percent of gross monthly income. A third element increased government capital infusions to the housing finance market, to keep mortgage interest rates low generally. Finally, as a last resort the administration nominally supported a bill authorizing bankruptcy judges to compel the lender to modify the terms of the loan, if the judge concluded that this was on balance preferable to a foreclosure.
The plan had several fatal flaws. Except for the bankruptcy-judge provision, the whole program was voluntary to the banks. Even with the bonus payment from the government, bankers had little motivation to shave the principal and interest on a loan, since this would typically reduce their income by far more than the $4,500 bonus payment. It also turned out that banks relied heavily on fee income that would be undermined by loan refinancings or modifications.
Further complicating the mess, something like half of the distressed loans had been turned into packages of bonds; they were now owned by an investor other than the original lender. Typically, that lender was now merely the "servicer," meaning that it was paid a fee for collecting the monthly payment and forwarding the money to the trust that held the securitized package of loans on behalf of the investor, often a hedge fund, a pension fund, or another bank. "The rules by which servicers are reimbursed for expenses may provide a perverse incentive to foreclose rather than modify," according to a 2009 research paper by experts at the Federal Reserve Bank of Boston.
If the modification seemed unreasonable to the investor, the servicer could get sued for altering the terms. The one provision of the bill with some teeth-the proposed new authority for bankruptcy judges-was fiercely opposed by the financial industry as a threat to its ability to collect debts, and voted down by the Senate. In this key battle, the White House did not lift a finger to urge wavering legislators to support their president. I was told by Tim Geithner that the industry experts he relied upon counseled against this bankruptcy authority, and he did nothing to promote it. Word was quickly passed on Capitol Hill that this was not a provision that mattered to the White House. Twelve Senate Democrats looking for an easy pro-industry vote ended up voting against the administration's proposed bankruptcy measure.
Indulging the Banks

At bottom, the failure of the voluntary mortgage modification program suffered from the same core deficiency as the rest of the Obama financial strategy. If lenders or holders of securitized loans expected that the government would eventually make them whole through one of Geithner's innumerable schemes to levitate the value of depressed financial assets, then they had no incentive to modify the terms and book an immediate loss.
One further flaw: The Obama program was for people whose ability to meet monthly payments was only marginally impaired. It offered nothing for millions of the hardest-hit homeowners in places such as much of Florida, Arizona, Nevada, central California, and inner-city America, where housing values had dropped 30 to 50 percent since the 2006 peak and negative equity far exceeded the program's limits.
Congressman Alan Grayson, whose district is centered in Orlando, Florida, one of the hardest-hit centers of the mortgage collapse, gives the following example. A constituent has a $250,000 mortgage on a house that is now worth only $150,000. She is in default and heading for foreclosure. She could afford to make payments on a $100,000 mortgage, which would enable her to keep the house. If her house is foreclosed, it becomes one more vacant property, dragging down the value of other homes in the neighborhood. But the bank would rather foreclose-and eventually take an even bigger loss-than give this woman such a large break on her mortgage. Only government, Grayson notes, can act to compel a refinancing.

An investigative piece by The New York Times concluded that "data on delinquencies reinforces the notion that servicers are inclined to let problem loans float in purgatory-neither taking control of houses and selling them, nor modifying loans to give homeowners a break." Reporter Peter Goodman added, "As a home slides toward foreclosure, mortgage companies pay for many services required to take control of the property and resell it. They typically funnel orders for title searches, insurance policies, appraisals and legal filings to companies they own or share revenue with."
So there is a direct conflict between the public interest in keeping distressed borrowers in their homes, the mortgage company's interest in reaping fees, and the investor's interest in not acknowledging a loss. This is yet another hidden cost of what was touted as a great innovation-the fragmentation of mortgage origination, servicing, and ownership of the debt through the genius of securitization. In fact, the conversion of home loans into abstract securities created a doomsday machine.
Banks have also been loath to allow what's known in the business as a "short sale," in which the house is sold for less than the amount of the mort¬gage owed. They resist both because they don't want to book the accounting loss and because they collect hidden fees by maintaining the status quo. The New York Times reported on the efforts of Alfred Crawford of Los Angeles to sell a house on which he owes about $800,000, far more than its present market value. Bank of America, which holds the mortgage, blocked sales three times, the highest offer of which was $620,000. Each time, its subsidiary, Land Safe, booked an appraisal fee.
This is the same Bank of America that has received $45 billion in taxpayer largesse, and which supposedly operates under close supervision of the Treasury. But that supervision doesn't extend to its mortgage practices. As of December 2009, despite all of the administration's jawboning, this giant bank had permanently modified exactly 98 mortgages. Citi had modified 271. JPMorgan Chase led the pack with 4,302. Compared with the 8 million projected foreclosures, it was a drop in the bucket.
Because of the incoherence of the government's overall approach, the Treasury Department is caught between two opposite and incompatible goals. One is to prevent the downward spiral of mortgage foreclosures, vacancies, and collapsing housing prices. But the other goal is to maximize bank earnings, the better to shore up bank balance sheets. That, in turn, means regulatory indulgence for rapacious bank practices and little pressure for the banks to refinance mortgages and eat losses.
Meanwhile, a whole new industry of bottom-feeders-many of them veteran perpetrators of the subprime disaster-organized syndicates to buy up bank-owned real estate at a few cents on the dollar. Representative Marcy Kaptur of Toledo, Ohio, where entire neighborhoods are littered with vacant, bank-owned homes, complained bitterly that bankers preferred to sell pack¬ages of properties to absentee speculators, rather than selling to a city-run program that was working to purchase empty houses, rehabilitate them, and quickly convert them to affordable rentals or owner-occupied homes. The vacant and boarded-up house next door to her own home in Toledo turned out to be owned by a bottom-feeding company based in North Carolina.
There was a further practical weakness in the design of the administration program. Like so much else sponsored by Tim Geithner, it was run by the banking industry, on the familiar (if lately discredited) premise that private industry operates better than government. Typically, however, loan origination offices are assembly-line, paint-by-the-numbers operations. Everything is done according to formula. A loan applicant qualifies for a loan (or not) based on a credit score and a property appraisal. Computers do all the work, with relatively few human employees, and the humans need only a fairly rudimentary level of training.
But a loan modification or refinancing, in circumstances of general distress, is exactly the opposite kind of exercise. It requires labor-intensive, custom¬ized analysis, since everyone's situation is different and there is no one-size-fits-all formula. For a lender, human employees are expensive cost centers. They are under immense pressure to close loans fast. The more human effort an employee spends on a good-faith effort to do a workout, the more money he or she costs the company. So, beyond the problem of a purely voluntary approach not delivering modifications, loan servicing offices were exactly the wrong institutions to do these workouts.

In 2009, as the administration attempted to put the new mortgage relief program into operation, story after story appeared in the financial press and the general newspapers about borrowers who could not get phone calls returned or who finally were offered modification packages that turned out to provide only trivial relief or actually raised costs. The Times recounted the story of a woman named Eileen Ulery. Facing default, she tried to get Bank of America to modify the terms of her mortgage. Instead, the bank tried to persuade her take out a new loan with a slightly lower monthly payment, but up-front charges of $13,000 in principal reduction and $5,000 in new fees.
In another case, a Lakeland, Florida, woman named Jaime Smith persuaded Chase to lower her monthly payments from $1,250 to $1,033.63 on a trial basis, in April. She made three payments on time, as required by the program, and then applied to make the modification permanent, telephoning weekly to inquire about the status. In October, she received a letter advising that her house had been foreclosed and sold at auction for $100. The buyer was Chase. Eventually, she hired a lawyer who persuaded a judge to vacate the sale.
In these circumstances, it was not surprising that defaults and foreclosures continued to outpace refinancings and loan modifications. When the admin¬istration reported to Congress in December 2009, the Treasury claimed that about 756,000 homeowners had qualified for "trial modifications," in which their lenders provisionally reduced their monthly costs-provided that they stayed current on their payments for several months, after which the new terms would be made permanent. However, Treasury quietly admitted that fewer than 32,000 homeowners had been given permanent modifications. As this book went to press, the number had risen to 116,000.
Jawboning the Bankers

Faced with the failure of its program to produce more than token mortgage relief, the administration resorted to public displays of arm-twisting. In July 2009, Treasury Secretary Geithner and Housing and Urban Development Secretary Shaun Donovan summoned executives of the twenty-five larg¬est mortgage-lending and mortgage-servicing companies to a meeting to demand that they do more. But the shell game continued, with temporary "trial modifications" but precious few permanent cuts in monthly payments. In November, Michael Barr, the assistant Treasury secretary for financial insti¬tutions, flatly declared that "the banks are not doing a good enough job." In a blunt criticism of Wall Street rare for the Obama administration, Barr added, "Some of the firms ought to be embarrassed, and they will be," vowing to pressure and shame the banks into increasing trial modifications and making them permanent.
According to my sources, Barr got into some trouble with his supervisors for his populist attack on the banks, which had not been cleared with the White House. But the story played well; and two weeks later, in an inter¬view on the CBS program 60 Minutes, President Obama himself went Barr one better, declaring that he didn't run for president in order to help a lot of "fat-cat bankers." In one of his earliest explicit attacks on the banks, Obama noted that some big banks had sought to exit TARP early, in order to escape its limits on executive pay, adding: "which I think tells me that the people on Wall Street still don't get it."
The following Monday, December 14, the president called top bankers to the White House for a photo opportunity and a meeting in which he personally pressed them to do more to help struggling homeowners. But three of the bank CEOs stood the president up. They had not bothered to fly in the night before for the morning meeting, and bad weather grounded their flights. When they participated by speakerphone, it was Obama who sounded almost apologetic, and those present at the meeting reported that there was none of the tough talk that the president had used on TV.
Given the flawed structure of the whole approach, banks have no real incentive to provide deep and permanent reductions in mortgage costs, and foreclosures are on track to increase faster than loan modifications or refinanc¬ings, needlessly prolonging the great stagnation. Despite this ramping up of rhetoric, the Obama administration has remained in a bubble of denial about the failure of its program of mortgage relief. Geithner, testifying before the Congressional Oversight Panel, said, in a moment of uncharacteristic candor, "We do not have a mortgage market today except for that directly supported by the Government."
Robert Kuttner is the author of A Presidency in Peril: The Inside Story of Obama's Promise, Wall Street's Power, and the Struggle to Control our Economic Future, recently published by Chelsea Green Publishing Company. Kuttner also authored Obama's Challenge: America's Economic Crisis and the Power of a Transformative Presidency and several other books on politics and the economy. He is coeditor of The American Prospect magazine and a Distinguished Senior Fellow at the progressive think tank Demos. He is a regular commentator on TV and radio, and a contributor to The Huffington Post and The Boston Globe, and a former longtime columnist for BusinessWeek. Previously, he was chief investigator of the U.S. Senate Banking Committee and a national staff writer on The Washington Post.
© 2010 Chelsea Green Publishing All rights reserved.
View this story online at: http://www.alternet.org/story/146482/

from Financial Times :
Date: 23 April 2010
Subject: The Greek bailout, a postponement or a solution?

The eurozone’s weakest economy struggles to bring sovereign debt under control. Can Greece’s new socialist government turn the economy round?

from : ZNet :
Date: 23 April 2010
Subject: Sports and bad sports.

Why Sharks Should Not Own Sport
by John Pilger

As Tiger Woods returns to golf, not all his affairs are salacious headlines. In Dubai, the Tiger Woods Golf Course in Dubai is costing $100million to build. Dubai relies on cheap third world labor, as do certain consumer brands that have helped make Woods a billionaire. Nike workers in Thailand wrote to Woods, expressing their “utmost respect for your skill and perseverance as an athlete” but pointing out that they would need to work 72,000 years “to receive what you will earn from [your Nike] contract”.

The American sports writer, Dave Zirin, is one of the few to break media silence on the corporate distortion and corruption of sport. His forthcoming book Bad Sports: How Owners Are Ruining the Games We Love (Scribner) blows a long whistle on what money power has done to the people’s pleasure, its heroes like Woods and the communities it once served. He describes the impact of the Texan Tom Hicks’s half-ownership of Liverpool Football Club, which followed another rich and bored American Malcolm Glazer’s “leveraged takeover” of Manchester United in 2005. As a result, England’s most successful club (with Liverpool) is now 716.5 million pounds in debt.

How long has this been going on? In 1983, you could buy a ticket to a first division game for 75 pence. Today, the average at Old Trafford is around 34 pounds. Watch the latest crop of parents on morose queues to buy overpriced club strips and insignia, also made with cheap and often sweated labor, with the brand of a failed multinational emblazoned on it.  Profiteering is now an incandescent presence across top-class sport. Sven-Goran Eriksson will trouser up to two million pounds for just three months’ work in Ivory Coast, where half the population has barely enough to survive. Australia’s finest, most boorish cricketers are collecting their bundles for a few months’ cavorting in the Indian franchises. The attitude is entitlement, the kind that less talented “celebrities” flaunt. It was in no way remarkable that in 2007-8 a number of the heirs to Don Bradman’s Invincibles achieved what was once nigh on impossible; they were disliked in their own country. Those high fives and air-punching fists have become salutes not to “everyone working for each other, everyone having a share of the rewards” (Bill Shankly), but to the voracious sponsor and the forensic camera.

Take for example FIFA, which has effectively taken charge of South Africa for the World Cup. Along with the International Olympic Committee, FIFA is sport’s Wall Street and Pentagon combined. They have this power because host politicians believe the “international prestige” of their visitation will bring economic and promotional benefits, especially to themselves. I was reminded of this watching a documentary by the South African director Craig Tanner, Fahrenheit 2010. His film is not opposed to the World Cup, but reveals how ordinary South Africans, whose game is football, have been shoved aside, dispossessed and further impoverished so that a giant TV façade can be erected in their country.

A new stadium near Nelspruit will host four World Cup matches over 10 days. Jimmy Mohlala, speaker of the local municipality, was gunned down in his home in January last year after whistle-blowing “irregularities” in the tenders. An entire school, which was in the way, has been removed into prefabricated, sweltering steel boxes on a desolate site with a road running through it.  “When the World Cup is over,” said the writer Ashwin Desai, “it will become obvious that these stadiums are going to be empty shells, that our money has been used for what is really a pyramid scheme”.

A community of 20,000 people, the Joe Slovo Informal Settlement, is threatened with eviction from where they live near the main motorway between Cape Town and the city’s airport. They are deemed an “eyesore”. Street vendors will be arrested if they fail to comply with FIFA rules about trade and advertising and mention the words “World Cup”, even “2010”. FIFA will earn about two and quarter billion pounds from the TV rights, exceeding its income from the last two World Cups combined.

Incredibly, South Africa will get none of this. And this is country with up to 40 per cent unemployment, a male life expectancy of 49 and thousands of malnourished children. This truth about the “rainbow nation” is not what fans all over the world will see on their TV screens, although they may glimpse an unreported feature of modern South Africa, which is a vibrant, rolling resistance that has linked the World Cup to an economic apartheid that remains as divisive as ever. Indeed, another kind of World Cup for effective popular protest has long been won in the streets of South Africa’s townships.

In his chapter on Liverpool FC, Dave Zirin describes a similar resistance that also offers inspiration to those struggling to reclaim sport from the sharks. A fans’ organization, Share Liverpool FC, is aiming for 100,000 shareholders to buy back the club from Tom Hicks and his co-owner, George Gillett. Liverpool fans have also formed the Liverpool Supporters Union (LSU), which has had thousands in the streets calling for a boycott of the Bank of Scotland if it gives Hicks and Gillett any more credit. Remember how the boycott of Murdoch press succeeded in Liverpool following the Sun’s lies over the Hillsborough tragedy. “If we stand together and speak with one voice, regardless of language or accent,” says the LSU, “we can make a genuine difference to our football club, the city of Liverpool and indeed the wider footballing world.” On 17 April, Hicks and Gillett announced they were selling the club. Manchester United fans are mounting a similar, principled resistance in defense of the sport they love and which they believe rightly is theirs. We should support them.

from Znet :
Date: 23 April 2010
Subject: The future of wold capitalist relations.

China’s Neo-Colonialism
by Walden Bello

The new trade pact between China and ASEAN is touted as bringing benefits to both sides, but it is China that stands to gain most from the deal.

On 1 January 2010, the China-Asean (Association of Southeast Asian Nations) Free Trade Area went into effect. Touted as the world’s biggest Free Trade Area, CAFTA is billed as having 1.7 billion consumers, with a combined gross domestic product of $5.93 trillion and total trade of $1.3 trillion.

Under the agreement, trade between China and six Asean countries (Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand) has become duty-free for more than 7,000 products. By 2015, the newer Asean countries (Vietnam, Laos, Cambodia and Burma) will join the zero-tariff arrangement.

The propaganda mills, especially in Beijing, have been trumpeting this new free trade deal as ‘bringing mutual benefits’ to China and Asean. A positive spin on CAFTA has also come from President of Philippines, Gloria Arroyo, who hailed the emergence of a ‘formidable regional grouping’ that would rival the US and the European Union.

The reality, however, is that most of the advantages will probably flow to China. At first glance, it seems like the bilateral relationship has been positive. After all, demand from a Chinese economy growing at a breakneck pace was a key factor in Southeast Asian growth beginning around 2003, after a period of low growth following the 1997/1998 Asian financial crisis.

Counting on China

During the current international recession, Asean governments are counting on China, whose GDP in the fourth quarter of 2009 rose 10.7 per cent, to pull them out of the doldrums.

Yet the picture is more complex than that of a Chinese locomotive pulling the rest of East Asia along with it on a fast track to economic nirvana.

Low wages, many in Southeast Asia fear, have encouraged local and foreign manufacturers to phase out their operations in relatively high-wage Southeast Asia and move them to China. There appears to be some support for this. China’s devaluation of the yuan in 1994 had the effect of diverting some foreign direct investment (FDI) away from Southeast Asia.

For Chinese officials, the benefits to China of free trade with Asean are clear. The aim of the strategy, according to Chinese economist Angang Hu, is to more fully integrate China into the global economy as the ‘center of the world’s manufacturing industry.’

The trend of Asean losing ground to China accelerated after the 1997 crisis. In 2000, FDI in Asean shrank to 10 per cent of all investment in developing Asia, down from 30 per cent in the mid-1990s. The decline continued in the rest of the decade, with the UN World Investment Report attributing the trend partly to ‘increased competition from China’.

Trade has been another, perhaps greater, area of concern. Massive smuggling of goods from China has disrupted practically all Asean economies. For instance, with some 70-80 per cent of shops selling smuggled Chinese shoes, the Vietnamese shoe industry has suffered badly.

Now there are fears that CAFTA will simply legalize smuggling and worsen the already negative effects of Chinese imports on Asean industry and agriculture.

A central part of the plan was to open up Asean markets to Chinese manufactured products. In light of growing popularity of protectionist sentiments in the US and European Union, Southeast Asia, which absorbs only around 8 per cent of China’s exports, is seen as having tremendous potential to absorb more Chinese goods. China’s trade strategy is described by Hu as a ‘half-open model’ that is ‘open or free trade on the export side and protectionism on the import side’.

Worrying trends

Despite brave words from Arroyo and other Asean leaders, it is much less clear how their countries will benefit from the Asean-China relationship.

Certainly, the benefits will not come in labor-intensive manufacturing, where China enjoys an unbeatable edge by the constant downward pressure on wages exerted by migrants from a seemingly inexhaustible rural work force that makes an average of $285 a year. Certainly not in high tech, since even the US and Japan are scared of China’s remarkable ability to move very quickly into high-tech industries even as it consolidates its edge in labor-intensive production.

Will agriculture in Asean be a net beneficiary? China is clearly super-competitive in a vast array of agricultural products, from temperate crops to semi-tropical produce and in agricultural processing.

Moreover, even if under CAFTA, Asean were to gain or retain competitiveness in some areas of manufacturing, agriculture and services, it is highly doubtful that China will depart from what Hu calls its ‘half-open’ model of international trade.

What about raw materials? Yes, of course, Indonesia and Malaysia have oil that is in scarce supply in China; Malaysia does have rubber and tin and the Philippines has palm oil and metals.

But a second look makes one wonder if the relationship with China is not reproducing the old colonial division of labor, whereby low-value-added natural resources and agricultural products were shipped to the centre while the Southeast Asian economies absorbed high-value added manufactures from Europe and the US.

These trends are likely to accelerate under CAFTA, but with a difference: China will beat out the country’s Asean neighbors in achieving control of the domestic market.

To sum up, the trade agreement is likely to disadvantage Asean. Even with the temporary exemptions of certain areas from full trade liberalization, Asean would be locked into a process where the only direction that barriers to super-competitive Chinese industrial and agricultural goods will go is downwards.
Walden Bello is senior analyst at Philippine think-tank Focus on the Global South, TNI fellow and Akbayan representative in the Filipino Congress.
Author of more than 14 books, Bello was awarded the Right Livelihood Award (also known as the Alternative Nobel Prize) in 2003 for "... outstanding efforts in educating civil society about the effects of corporate globalisation, and how alternatives to it can be implemented." Bello has been described by the Economist as the man “who popularised a new term: deglobalisation.”

from Truth Out  :
Date: 21 April 2010

A discussion with Charles Bowden on what's driving the so-called "war on drugs" and who's benefiting from it?

Ciudad Jaurez: The Global Economy's New Killing Fields (Audio)
by Rose Aguilar

from Information Clearing House :
Date: 24 April 2010
Subject: The new concentration of financial power and what it means.

The big banks became stronger as a result of the bailout. That may seem extraordinary, but it's really true. They're turning that increased economic clout into more political power. And they're using that political power to go out and take the same sort of risks that got us into disaster in September 2008.

Six Banks Control 60% of Gross National Product
Is the U.S. at the Mercy of an Unstoppable Oligarchy?
by Bill Moyers

from Democracy Now! :
Date: 23 April 2010
Subject: The World Peoples’ Conference on Climate Change in Cochabamba in Bolivia.

As the World Peoples’ Conference on Climate Change in Cochabamba closes, we speak to Bolivian President Evo Morales about the US decision to cut off climate aid to Bolivia; narcotrafficking; the tenth anniversary of the Water Wars in Cochabamba; the protest at the San Cristóbal silver mine; and the contradiction between promoting the environment and extractive industries­oil/natural gas exploration, mining.

On Thursday organizers of the peoples’ summit released an Agreement of the Peoples based on working group meetings. Key proposals include the establishment of an international tribunal to prosecute polluters, passage of a Universal Declaration of the Rights of Mother Earth, protection for climate migrants, and the full recognition of the UN Declaration on the Rights of Indigenous Peoples.

Bolivian President Evo Morales on President Obama: “I Can’t Believe a Black President Can Hold So Much Vengeance Against an Indian President”


from Information Clearing House :
Date: 24 April 2010
Subject: The contradictions in industrial farming and its effect of all forms of life.

Robert Kenner lifts the veil on our nation's food industry, exposing the highly mechanized underbelly that has been hidden from the American consumer with the consent of our government's regulatory agencies, USDA and FDA.

Food, Inc.
Hungry For Change?
Robert Kenner