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I wish to thank those of you who come to this site even though I have been absent for quite some time. This site has a very important purpose. There is much to say and much to hear from all of you.

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January 24, 2011

Obama Loves the Business Community

Surely Barack Obama must know how important it is to the financial system to bring to justice those executives that used derivatives and other means to bring down the system. It is one hope that we thought might bring change under the Obama administration, that is, the end of deregulation. Having read the article in CounterPunch by Mike Whitney, we can now understand what is at stake and why there will never be prosecutions of those in the financial system who used unethical means to feather their own nests. Read and weep:

The Most Business-Friendly President Ever?
by MIKE WHITNEY - CounterPunch

On Tuesday, Barack Obama made the case for easing regulations in an op-ed in the Wall Street Journal. The article, titled "Toward a 21st-Century Regulatory System", was accompanied by a caricature of a scissor-wielding businessman slashing-away at red tape, a symbol that is revered among anti-regulation zealots. In the opening paragraph, the president praises free market capitalism ("the greatest force for prosperity the world has ever known") and Wall Street ("vibrant entrepreneurialism is the key to our continued global leadership") while taking aim at the "burdensome" restrictions that prevent speculators from maximizing profits. Even by the administration's abysmal standards, the article is a new low, which is why the WSJ editors mockingly critiqued Obama's op-ed as "one of the greatest policy walkbacks in American history". Here's a clip from the text:

"Sometimes, those rules have gotten out of balance, placing unreasonable burdens on business—burdens that have stifled innovation and have had a chilling effect on growth and jobs......Over the past two years, the goal of my administration has been to strike the right balance. And today, I am signing an executive order that makes clear that this is the operating principle of our government.

This order requires that federal agencies ensure that regulations protect our safety, health and environment while promoting economic growth. And it orders a government-wide review of the rules already on the books to remove outdated regulations that stifle job creation and make our economy less competitive. It's a review that will help bring order to regulations that have become a patchwork of overlapping rules, the result of tinkering by administrations and legislators of both parties and the influence of special interests in Washington over decades."

The tone of the article strongly suggests that it wasn't deregulation that triggered the financial meltdown, but all those pesky rules that inhibit innovation and growth. This is pure revisionism and Obama knows it. But he also knows who he is talking to when he takes a spot on Murdoch's editorial page; rabid right-wingers who think business can do no wrong. That's why Obama skips the liberal blather altogether and reiterates themes that read like the daily printout of GOP bullet-points. Here's how the WSJ's economics editor David Wessel summed it up:

"Mr. Obama told agencies to scour the books for obsolete rules.....Within 120 days, each agency is to devise "a preliminary periodically review its existing significant regulations" to see which should be "modified, streamlined, expanded, or repealed."

So now the onus falls on the agencies to "prove" that businesses are not in compliance. That will make it harder to stop bad behavior or to penalize offenders. Obama's remedy will also extend compliance dates, offer more exemptions, and force regulators to make their judgments on stricter cost-benefit analysis. It's just one roadblock after another. The net result will be fewer rules, more pollution, a more dangerous working place, more financial fraud, and a general watering down existing regulations. No wonder the Journal's editors are so elated over Obama's transformation. He's abandoned any pretense of serving the public's interest.

Read the full article here


  1. Unintended Consequences: How U.S. Tax Law Encourages Investment in Offshore Tax Havens*

    I. Introduction.
    In his one-and-only speech on tax policy, President Obama expressed outrage that
    U.S. taxpayers could organize and operate foreign corporations in tax havens to reduce their U.S. tax liabilities, and vowed to shut down the “loophole.” However, the Obama Administration has dropped the very proposal that the President introduced that day, and has since introduced proposals that actually encourage U.S. taxpayers to operate through foreign tax haven corporations to reduce their federal and state tax liabilities.

    The magnitude of deferred tax is stunning. By one estimate, U.S. companies currently enjoy deferral for at least $1 trillion in offshore
    profits. Economists estimate that ending deferral would generate between $11 billion and $60 billion of revenue each year,which could be used to reduce the corporate tax rate by 1.5% (from 35% down to 33.5%). The deferral is concentrated in the health care, information
    technology and energy industries.

  2. The downsizing of America – Oil production off 1980s peak and manufactures learn creative methods of repackaging inflation.

    There is a slow burn going on and it is happening in your wallet and also in the gas tank of your car. The US Treasury and Federal Reserve have made it their mission to slowly cut the value of each one of those green dollars you have. Since many Americans are struggling to make the monthly bills, many producers realize that they cannot up the price on regularly bought consumption products.

  3. Read the comments...everyone knows nothing has changed....

    Today at I report how seasoned traders Mike Nierenberg and Jeff Verschleiser would sell mortgage securities to institutional investors they knew were deafulting in the first few months. Then instead of fixing the bonds during the first 90 days and giving the investors the cash they contractually were owed to make up for the crap loans, they just kept the money for themselves. Last time I looked, that’s a criminal fraud offense and clear violations of securities laws.

  4. Zombie IPO: Is American International Group the "Blood Doll" of Wall Street?
    January 25, 2011

    Last week saw a number of important developments in Washington. General Electric CEO Jeffrey Immelt and Bill Daley were appointed as economic advisor and chief of staff at the White House, respectively, a move that signals the mutation of Barack Obama from Euro-socialist to center-right Republican. Think of the betrayal of conservative values by Richard Nixon in reverse and you've got the scale of the political transformation now underway at 1600 Pennsylvania Avenue.

    With President Obama taking orders directly from former JPMorgan ("JPM"/Q3 2010 Stress Rating: "C") investment banker and Chicago fixer Bill Daley, there seems little reason for Treasury Secretary Timothy Geithner to remain at Treasury as the guardian of Wall Street. In historical terms, Geithner is the third protector of the big banks at Treasury after Hank Paulson (2006-2008) and Robert Rubin (1995-1999). Part of the duty of protector, to be fair, was also carried out by Bill "NYSE" Donaldson (2003-2005) and Chris "XBRL" Cox (2005-2009) during their respective tenures as SEC Chairmen.

  5. Try fining your bankster friends like this...need help? Bill Black

    Wal-Mart Fined In China For Deceptive Price Practices To Mask Inflation

    First, Wal Mart's primary gimmick for masking inflation was confined
    to using smaller packages sold at the same price. Now, it has devolved
    to outright fraud and misrepresentation. Top global discount stores
    Wal-Mart and Carrefour have both been fined in China for "misleading
    pricing at some of their stores in the nation, as the government works
    to rein in rising prices for consumer goods." Presumably outright lies
    (and being caught) are the last bastion before even such ultra low
    price point retailers are finally forced to hike their prices.
    Bloomberg explains further: "Authorities in cities including Shanghai,
    Chongqing, and Kunming discovered incidents at local Wal-Mart and
    Carrefour outlets that included labeling on products with prices that
    didn’t match what shoppers were charged at payment, exaggeration of
    discounts and labeling that led to confusion about how much a product

    The stores may be fined five times the revenue they earned using such
    methods, the National Development and Reform Commission said today on
    its website." Our only advice on this news: get a channel checker for
    rice prices in China...

  6. One Reaction to the Obama State of the Union Address

    It amazes me that the discussion on change centers on 'competitiveness' when the crisis was caused by a massive financial fraud that goes largely unresolved and unrepaired.

  7. So much for less lobbying...

    As Bankers Kill Off Mark-To-Market For Good, Former FDIC Chairman Gloats

    From the WSJ: "Accounting rule makers, bowing to an intense lobbying campaign, took a key step Tuesday to reverse a controversial proposal that would have required banks to use market prices rather than cost in order to value the loans they hold on their balance sheets."

  8. Obama's Speech and America, Inc.

    There was a massive pink elephant in the room called reality though.
    So, when he waxed proud when he said, "We are poised for progress. Two
    years after the worst recession most of us have ever known, the stock
    market has come roaring back. Corporate profits are up. The economy is
    growing." I had a different reaction.

    "The rules have changed," said Obama.

    Yes, they certainly have. Businesses can offshore jobs because it is
    in their best profit and shareholder and stock value interest to do
    so, with no federal incentive to alter this strategy - that's why
    corporate profits and CEO salaries are up, whereas the average median
    employee salary on a comparative basis is stuck somewhere in the
    1970s. That's why staring at the abyss of potential bankruptcy in the
    fall of 2008, Goldman Sachs and Morgan Stanley got the Fed's blessing
    to become federally subsidized bank holding companies. And we,
    taxpayers, are still on the hook for the Fed's $29 billion of backing
    of Bear Stearn's assets taken over by JPM Chase in a government
    sponsored merger in the Spring of 2008 and coming with a bunch of
    still-being-wrangled lawsuits, not to mention gleeful federally
    backing of the further consolidation of the banking system to fewer,
    more powerful, more obtuse, more risky players.

  9. Step Aside The Bernank Here Comes Timothy Jeethner: The Bears Explain Banker Bailouts And The Screwing Of The American People

    The same two bears who explained Quantitative Easing so that even the ADHD afflicted could understand Bernanke's indirect subsidies to the PDs, once again simply finance and in 6 minutes explain the core issues behind the bank bailouts. Concepts explained include the Too Bigger To Fail banks (the JP Morgan Chase Bear Stearns Washington Mutual and the Bank of America Countrywide Merrill Lynches), Goldman Sachs' HoldCo position over the US government, the "very real evil empire's" Goldman Sachs profiting on the AIG, the reason why the failed CIT's boss is the same person who bought a $70,000 desk, and why "when you constantly get the bailouts you don't care about the shame." Also explained are NY Fed boss, The Timothy Jeethner, The Change brought from The President Obama, why The Ben Bernank will not lend you money, and The Screwing Of The American People.

  10. Friday, January 28, 2011
    How can the Architects of the Crisis Investigate it?
    By William K. Black

    Each of the Republican commissioners was in the impossible position of having to investigate and judge their own culpability for the crisis. The Republican politicians who selected them for appointment to the Commission knew that they were placing them in an impossible position and ensuring that the Commission would either give deregulation a pass or split along partisan lines and lose some of its credibility. The proverbial bottom line is that the Commission would fail to identify the real causes of the crisis and the control frauds that drove it would continue to be able to loot with impunity.

    While the squashing of Brooksley Born was a bipartisan effort (Senator Gramm and Alan Greenspan were the most prominent Republicans in the effort), it was led by the Clinton administration – Messrs. Rubin and Summers at their arrogant, anti-regulatory worst.

  11. 9% Unemployment Rate is a Statistical Lie

    More than half a million people found work in January.” How? The BLS reported there was only a tiny gain of 36,000 workers to the payrolls, and even that number is a statistical lie, according to economist John Williams of In his latest report (last Friday), Williams said, “Incredibly, despite ongoing regular overstatement of payrolls by the BLS, the BLS appears to have upped, not lowered, the excessive biases in its latest rendition. Without the higher bias, the reported January 2011 payroll gain of 36,000 would have been a decline of 52,000.”

    While we are on the subject of reality, after one year, the unemployed are no longer counted in government statistics. If unemployment was computed the way BLS did it prior to 1994, the true unemployment rate (according to would be 22.2%. I wonder why the mainstream media feels compelled to only do stories that support government statistics. There is bona fide analysis that can show government numbers are rigged to make things look better than reality.

  12. The power elite that believe they can control the masses as puppet master commands a puppet should beware. The wrath of the masses can be fierce and sudden. Ask Hosni Mubarak. As Steinbeck realized many decades ago, selfishness run amok, supported and encouraged by the authorities lead to poverty, despair and sometimes revolution. The false mantra of an economy based on self-interest and free markets is a smokescreen blown by the few with wealth and power to obscure the truth that they have used their wealth and power to rig the game in their favor. The have-nots can dream about becoming a have, but the chances of achieving that dream today are miniscule. Steinbeck pointedly distinguishes between the selfishness of the moneyed class and the altruism of the working poor. In contrast to and in conflict with this policy of selfishness stands the migrants’ behavior toward one another. Aware that their livelihood and survival depend upon their devotion to the collective good, the migrants unite—sharing their dreams as well as their burdens—in order to survive.

    Those in control need to keep the masses divided. They need Americans to be distracted by phantom terrorist threats, inconsequential political differences, American Idol, Charlie Sheen, Lindsey Lohan and Lady Gaga. They need Americans to be focused on “I”. Their greatest fear is that the American people realize that “We” can change the direction of this country and bring the perpetrators of crimes against the people of this country to justice. John Steinbeck saw the potential power of the common man if they became “We”:

  13. Why Isn't Wall Street in Jail?
    Financial crooks brought down the world's economy — but the feds are doing more to protect them than to prosecute them

    So there you have it. Illegal immigrants: 393,000. Lying moms: one. Bankers: zero. The math makes sense only because the politics are so obvious. You want to win elections, you bang on the jailable class. You build prisons and fill them with people for selling dime bags and stealing CD players. But for stealing a billion dollars? For fraud that puts a million people into foreclosure? Pass. It's not a crime. Prison is too harsh. Get them to say they're sorry, and move on. Oh, wait — let's not even make them say they're sorry. That's too mean; let's just give them a piece of paper with a government stamp on it, officially clearing them of the need to apologize, and make them pay a fine instead. But don't make them pay it out of their own pockets, and don't ask them to give back the money they stole. In fact, let them profit from their collective crimes, to the tune of a record $135 billion in pay and benefits last year. What's next? Taxpayer-funded massages for every Wall Street executive guilty of fraud?

  14. Matt Stoller: Comptroller of the Currency Orders National Banks to Cover Up Foreclosure Scandal

    Unfortunately, this data and the related dialogue fell short of its potential as the Office of the Comptroller of the Currency forbade national banks from providing loss mitigation data to the states.

  15. Cornel West: Obama is for Big Business, Not the Jobless

    On Naked Capitalism, we tend to focus on how terrible Obama’s economic and financial policies have been for the middle class. This video reminds us that they are even worse for those further down the food chain.

  16. How many people does this describe?


    I'll admit it. I am one of those idealistic people who was elated when Barack Obama was elected President. I remember the months of October and November 2008 very clearly. Like many Americans, I was deeply disgusted with the direction of the country under the leadership of George Bush. Clearly, I was idealistic in thinking that Obama could be the man to right the course. If you look at my blog (which I started at the time of the financial meltdown in 2008), you will see how my support for Obama was clearly reflected in my verbal satire and musical parodies.

    FAST FORWARD: I don't have to explain to any of you the words:

    "Man how I was wrong."