The Fundamentals of Our Economy Are F***ed Up

[McCamy Taylor]

http://2.bp.blogspot.com/_1V7wnZxPqok/R2IxAl1D5jI/AAAAAAAAHtA/twM-2HbiOZo/s400/citigroup+eco.jpg

Hedge funds, derivatives, private equity debt and the rest of the clever new financial devices (which are really just very old devices, rebranded) are supposed to be more sophisticated instruments for doing what markets have always done: direct money where it can be used most productively, thus benefiting the vast majority. But that theory, as Peston says, is for the birds. For all the talk of "people's capitalism", the markets have become vehicles for turning millionaires into billionaires.

From a 2-2-08 Guardian UK book review by Peter Wilby of Who Runs Britain? How the Super-Rich are Changing Our Lives by Robert Peston

http://www.guardian.co.uk/books/2008/feb/02/politics

I. The Miracle

Last week the stock market rallied on the news that Citibank had---miraculously--- posted a profit.

NEW YORK (Reuters) - U.S. stocks posted their best day in four months on Tuesday after Citigroup said it was profitable in the first two months of 2009.

http://www.reuters.com/article/businessNews/idUSTRE52821B20090310?feedType=RSS&feedName=businessNews

Since the stock market is a largely faith based venture in which people worship at the altar of greed, no one questioned whether the news was true or not. Conveniently forgotten were the major corporations from Enron to AIG that have been guilty of fraudulent bookkeeping aimed at creating the impression of financial success. We all know how easy it is for a big company with fleets of accountants and lawyers to cook their books----but that did not cause many skeptical eyebrows to rise. If Citibank said that they had weathered the market crash and posted a profit, then the market would declare it a miracle and invite the public to celebrate the Good News.



II. The End of Days

Wall Street was curiously unmoved by another bit of news from last week.

http://money.cnn.com/2009/03/11/news/economy/state_unemployment/index.htm

Four states, Michigan, South Carolina, Rhode Island and California posted unemployment rates over 10% for the month of February. Last month, Michigan was the only state to post economic depression level jobless rates. The national unemployment rate was up to 8.1% from its high in January at 7.6%. Over half a million jobs had been slashed in the first month of the year.
And yet, the market yawned at the news, even though the numbers for California alone should have been enough to create a panic. If you look at this page:

http://www.nemw.org/taxburd.htm

You will see that the blue state to the west is one of the very few that actually contributes more money in taxes to the federal government than it draws out in federal spending. While red states are living large off federal handouts, California pays in 20% more than it gets back----and the California economy is one of the biggest in the world. If that state sees rising unemployment rates, then its citizens will start paying less in income taxes while requiring more federal assistance. The result will be less money flowing in to Washington while more money has to be sent out in the form of stimulus to recreate the lost jobs.

No problem, says Wall Street. As long as Citibank can post a profit, little things like decreased federal revenue and decreased consumer spending and rising public worry----45% of Americans believe that a Second Great Depression is likely this year according to this poll---

http://www.bizjournals.com/phoenix/stories/2009/03/16/daily14.html

----are not going to rain on the market’s parade. At least not in public. In private, they paint a very different picture of the economy.

http://commontater.wordpress.com/2008/12/01/secret-citibank-memo-financial-disaster-will-lead-to-civil-disorder-in-2009-or-2010/

Tom Fitzpatrick, Citibank’s chief technical strategist wrote in an internal memo what the banks really think about the present global financial situation.

He goes on to explain that the massive money creation efforts by the Federal Reserve and other central banks will end with one of two things: A resurgence of inflation, or a fall into “depression, civil disorder and possibly wars.” Either outcome, he says, will cause the price of gold to skyrocket. Gold will push to well over $2,000 per ounce, he explains the timing on all this? Sometime in either 2009 or 2010, said the analyst.

Say what? The banks themselves think that the bailouts are likely to lead to “depression, civil disorder and possibly wars” or, if we are lucky, a return to the runaway inflation of the 1970s? That does not sound like Good News. That sounds like the End of Days.



III. Marley’s Ghost

"At this festive season of the year, Mr. Scrooge," said the gentleman, taking up a pen, "it is more than usually desirable that we should make some slight provision for the poor and destitute, who suffer greatly at the present time. Many thousands are in want of common necessaries; hundreds of thousands are in want of common comforts, sir."

"Are there no prisons?" asked Scrooge.

"Plenty of prisons," said the gentleman, laying down the pen again.

"And the Union workhouses?" demanded Scrooge. "Are they still in operation?"
Charles Dickens, A Christmas Carol

When the corporate media celebrated the resurrection of Citibank, they forgot to mention that Citibank is major culprit in our current financial mess.

http://www.sourcewatch.org/index.php?title=Citigroup

In December 2008, Co-Op America announced its list of the worst corporate "Scrooges" of 2008, awarded to "the CEOs who exhibited the worst kinds of unbridled greed and a lack of compassion or concern for others over the last year." Charles Prince, former CEO of Citigroup, was on the list because of his role in the U.S.'s recent financial crisis. Analysts have cited Prince's mistakes in pursuing risky business strategies and lobbying for looser regulations of the banking industry as contributing to the economic downturn. The Scrooge award also mentions that is one of the top financers of coal mining and coal-fired power plants.

More at the above link about Citigroup’s predilection for mountaintop removal coal mining. A company that regularly charges clients interest on their credit card that meets the definition of usury is not likely to balk at ravaging Mother Nature for a quick cash return. Nor will they hesitate to break a promise and raise interest rates for people who are guilty of nothing except being Citibank customers in a time when credit is hard to get because banks decided on their own to use bailout money for in house parties, gifts, bonuses and political contributions and lobbying rather than putting the funds to good use to loosen up the credit crunch that is directly responsible for failing auto manufacturers that leads to lay offs that causes a decrease in federal tax revenue that brings up closer to the End of Days that Citi itself has predicted.

http://www.nytimes.com/2008/11/15/business/15citi.html?emc=tnt&tntemail0=y

From the New York Times in November, an article about how Citi announced that it would increase interest rates that it charges its customers, even though they evaded increased federal regulation in 2007 by promising (cross their heart and hope to die) that they would keep their rates the same.

Credit card holders will be notified that the bank is raising their rates when they receive their November statements; customers with online statements will receive a separate mailing.

Citigroup cardholders will then have until the end of January to turn down the higher interest rates. If they decline the rate increase, they will pay down the balances on their accounts under the old pricing terms and will be able to continue to make charges until their credit cards expire.
After that, however, customers will have to reapply for a card or find a different lender. Citigroup said that, on average, it planned to raise its customers’ effective borrowing rates by two to three percentage points — a move that would cause some borrowers to pay more than 20 percent interest instead of 17 percent. Some rate increases could be much higher.

Another on-line article spells it out more clearly. Citibank Hates Old People is the title.

Some background: Last night I received an email from my mother -- a copy of the letter she was sending to various politicians and Citibank executives. It seems that Citibank has decided to increase the interest rate on my grandparents' one credit card - from 5.74% to 14.99%. My 88 and 85 year-old grandparents pay their bills on time, have good credit, and have been responsible with their money for eighty-eight and eighty-five years. That's why it's extremely disheartening that there isn't anything that we can do about this.

http://www.dollarshort.org/ds/2009/02/citibank-hates-old-people.html

From 5.74% to 14.99%---that is a lot more than the two or three percentage points that the New York Times discussed. That is the kind of interest rate rise that makes sensible people cut up their credit cards. Now, why would banks that just received billions in federal money for the express purpose of freeing up the nation’s credit decide to make credit less attractive by raising credit card interest rates in this time of economic recession?

Because they can.

No one in Washington is going to slap Citi’s hand, not when the claim of a profitable quarter can cause the Stock Market to rally. Never mind that the profit (if real) most likely came from hard working Americans who must rely on their credit cards for necessary loans now that the banks will not give out credit. Citi and the other banks are taking advantage of the recession they created through their greed and incompetence to force the American people into perpetual debtor’s servitude.



As long as the banks can keep using bailout funds to bribe politicians and pay lobbyists, as they did last fall

http://www.charlotteobserver.com/business/story/307073.html

And as long as they can write “loans” to their own employees that will be turned into political contributions in order to get around laws limiting corporate campaign financing

http://www.nytimes.com/2009/03/17/business/17wall.html?_r=3&ref=business

And as long as the corporate media ignores rising unemployment and mocks home buyers facing foreclosure and cheers on banks which take advantage of the economic crisis which they created by jacking up our credit card rates, the fundamentals of our economy will continue to be fucked up.

24:1 Behold, the LORD makes the earth empty and makes it waste, Distorts its surface And scatters abroad its inhabitants.

2 And it shall be: As with the people, so with the priest; As with the servant, so with his master; As with the maid, so with her mistress; As with the buyer, so with the seller; As with the lender, so with the borrower; As with the creditor, so with the debtor.

3 The land shall be entirely emptied and utterly plundered, For the LORD has spoken this word. (Isaiah 24:1-3)

[bbinacan]

1. Sounds a lot like the Federal Government. n/t

[DaLittle Kitty]

10. The Market Rallied Last Week But Not On Citibank Stories... That Was Just A Cover For...

The rally on the news of increased building permits filed last month... Wall Street Traders Buying at the current bottom... then SELLING into the buying by the retail customers on Monday on the very same news of increased building permits applied for...

Wall Street Traders operate on inside information! The public ALWAYS receives the same info at a later time and is then left holding the bag as it were due to the ENGINEERED DISADVANTAGE in receiving critical information AFTER the Wall Street Corporate traders get it.

The public ALWAYS loses in this arrangement... Yeah it is against SEC rules but hey... when have you heard of ANY WS trader being prosecuted?

Perhaps ONLY when a really big wheel is pissed off eh? CNBC is an agent of Wall St. feeding the eager but ignorant public the never ending stream of concocted information designed to deceive us!:think:

[Double T]

2. We don't need to feed ourselves to the sharks, congress is happy......

to do it for US. Our economy is in ruins but miraculously by the end of the year the recession will end. Meanwhile American worker's jobs are being outsourced to other nations at a record pace. WhoTF is kidding who?

[Locrian]

3. great article in Harpers

April 2009
Infinite debt: How unlimited interest rates destroyed the economy
By Thomas Geoghegan


Not available on line yet. The main point is that by allowing banks / finance to have unlimited interest rates has sucked the life out of any investment in mfg. Which destroyed labor etc. Think about it - who would give a rat fuck about mfg where you make 5-10% and actually have to DO something when you can go into finance/banking and make 30%?

It was 9% in the 1970's, now its like 35% with payday/payroll loans as much as 500-700%.

We have known for 1000's of years that this destroys civilizations (think all the usury laws). We are about to pay the price unless we de-incentive-ize by reducing the power and attractiveness of the finance industry. It's nothing less than parasitic concentration of wealth to the wealthy.

[Delphinus]

4. Sounds like a great article.

I believe that money is the "god" of too many people.

[Locrian]

6. definitely recommended article

I kept wondering why somewhere along the way you became a sucker for actually DOING anything. That the real money was in finance/banking/stocks - ie moving money around. Economist used to call mfg productive and the rest NON-productive - but Milton Freedman and their ilk said "no". The finance/banking/real estate/etc was just as "productive" and shouldnt be taxed at higer rates. Fools.

It was because they changed the rules - made it more attractive to leach off the rest of the world. And we pay the price now.

[McCamy Taylor]

8. Read Hitchhiker's Guide. Investment bankers are "B Ark"

[OwnedByFerrets]

5. As Thom Hartmann keeps saying....now is THE time

to reconstruct it from the ground up.

[CubicleGuy]

7. Time to default on the credit card charges

My 88 and 85 year-old grandparents pay their bills on time, have good credit, and have been responsible with their money for eighty-eight and eighty-five years. That's why it's extremely disheartening that there isn't anything that we can do about this.

If I were in their shoes, I'd write a strongly worded letter to the company and offer them a deal: either the interest rate goes back down to where it was, or not another dollar from their income will make its way to Citibank's credit card coffers.

I'd love to see how the bank would respond to that. I wonder if there are any grounds for a lawsuit here. It's entirely possible that the credit card agreement says "we can raise your interest rate for absolutely no reason at all", but I can't help but wonder if there's a judge somewhere that would tell Citibank to go stuff it.

[PerfectSage]

9. Ask Warren Buffet how it feels to lose 20 billion in a year.