mediapro

Outing AIG's Bonus Babies: What's the Point?

Here's a better idea.

Let's publish the salary and bonus structure for every employee earning more than $250K per year in every company that has received TARP or TALF funds.

While everyone is getting exorcised over the AIG bonuses, these payments pale in comparison to the money AIG has paid Goldman, Merrell, and a host of other firms holding their toxic paper. Merrell and B of A should be investigated and prosecuted for their backroom takeover deal and billions in bonuses.

What would publishing such results prove? It would expose the exhorbitant, ridiculous sums of money that these financial "wizards" are paid for moving money around. Finally, the average Joe that struggles from paycheck to paycheck could see the obscene pay disparity between people who actually work for a living and those who are now living off our money.

Personally, I'd like to see the IRS take a run at the entire bonus issue. While small businesses and individuals take it in the shorts and pay the full tax witholding, FICA, SUI, etc tab, why is it legal for large corporations to escape their share of these costs by skirting the law and providing a bonus for what should be a salary? These Captains of America don't pay a dime of Social Security taxes after they pass the $106K threshold. Can someone please tell me why?

For people who don't count the payroll, FICA, SUI, etc. automatic worker payroll contributions while conveniently ignoring the "bonus structure", offshore accounts, shell businesses, and other manipulative uses of the tax code by those who can afford tax attorneys, don't be so quick to condemn the extra pittance through earned income tax credits, adjusted rate schedules for wage earners and such put into the pockets of those who actually contribute a day's labor for a fair wage vs. the incredible sums paid to those who move money through the system. Look where that system of rewards has put us.

AIG Bonus Outrage Only Grows Worse

Let's continue down this track. For anyone willing to take off their "free market" blinders for a day, I would recommend reading two books:

John Perkins in "Confessions of an Economic Hitman" leaves his former life as a highly respected member of the international banking community to expose the real reasons that America's chickens are now coming home to roost. As a man on the inside of the capitalist, expansionist game, he takes the reader through his own experience of plying Milton Friedman's brand of Shock Economics thorughout the world stage.

Naomi Klein ("The Shock Doctrine") hones in on how this game was played on all of us at home.

The introduction, ascendency and idolatry of Milton Friedman's brand of shock economics has done more to destroy the world's economy than any economic hypothesis in our lifetime. This is not just Reaganomics /Bushanomics, but the pitting of haves/have nots in a global play orchestrated through Milton's disciples within the IMF, World Bank, and governing neo-conservative world view since at least 1975.

Cutting taxes on the wealthy and re-distributing middle class income up to those captains of industry combined with wholesale deregulation and record deficits under Reagan, Bush I and Bush II, and conveniently leaving the $1 Trillion dollars of Iraq war spending off the books while the national debt ballooned from around $5 Trillion to $10.6 Trillion at last peek is an ingenious spin on what constitutes supply side stimulus, if not outright delusion.

Count the change left in your pockets, unless of course you are one of the few who benefitted from this latest episode of Shock Economics so popular with necons. I'll just ask you the same question Reagan used to ask: "Are you better off now than you were four years ago?"

If you're in the same boat as the rest of us, our "staying the course" has undeniably run the lot of us aground. If you have benefitted, then you're one of the lucky 2% that control 80% of America's wealth, completely comfortable that you'll ride out the storm until the next lunatic can covince most of the people all of the time into something completely counter to their own self interest.


On Mar 19 11:04 AM monday1929 wrote:

> It was called "Corporatism" by Mussolini. Fascism is a good word
> for it too.

Getting a Tax Clawback Right

This back and forth about whether clawback carries unintended consequences misses the main point. The situation that exists in our tax code today is the 500 pound gorilla that this clawback is obfuscating.

An article posted by Investment U exposes part of this tax avoidance scheme practiced EVERY YEAR by the Plutocrats. The salient part of that article:

"For many in the financial establishment, bonuses are simply part of their compensation packages. They have no tie to performance at all. Much of the rank and file receives bonuses as a normal part of their “salary.”

It’s because companies use bonuses as a way to minimize expensive payroll obligations.

Think of it this way, if I’m an average corporation and I pay a qualified employee 100k as their salary, I am required to withhold taxes, insurance and a host of other items – in addition to setting aside money for federal programs. However, if I pay that individual 60k, and a bonus 40k, the situation looks much better. The employee has to handle withholding taxes on the 40k and I am only required to deal with the payroll effects of 60k."


So what the light of day is now shining on this tax avoidance scheme is a pay structure that should be patently illegal. How can they avoid paying the payroll taxes (etc.) that they, as Employers, owe the Government? If this is legal, why not simply pay thier entire salary as a "bonus"?

Why are salaried employees and small businesses hit time and time again, while big business always seems to 'bend' the rules and still come out on top?

Add to this simple, common tax avoidance scheme at least four more:

1. Our effective cost per gallon of gas is ~$10.00 when one factors in the roughly $30 billion dollars in tax subsidies ANNUALLY provided to the oil and gas industry. This is the most egregious, downscale tax imaginable. Moreover, the oil and gas companies simply need to bid and secure future leases and INTENT to drill for the largess we reap upon them every year. This ponzi scheme against the American taxpayer is one of our dirtiest tax secrets.

2. Add to that tax subsidy the protectionist import rules on sugar, milk, etc. Removing sugar tariffs alone and replacing this supply with a much more efficient cane sugar ethanol source could end the corn producer/fertilizer manufacturers stranglehold on the taxpayer's neck.

3. For people who don't count the payroll, FICA, SUI, etc. automatic worker payroll contributions while conveniently ignoring the "bonus structure", offshore accounts, shell businesses, and other manipulative uses of the tax code by those who can afford tax attorneys, don't be so quick to condemn the extra pittance through earned income tax credits, adjusted rate schedules for wage earners and such put into the pockets of those who actually contribute a day's labor for a fair wage vs. the incredible sums paid to those who move money through the system. Look where that system of rewards has put us.

4. Finally, would someone please explain to me why there is a ~$100 K cap on wage contributions to Social Security?

While we are all arguing about the validity of the clawback option, we are missing the larger point of just how egregiously the average Joe has been pummeled by a tax system that redistributes wealth from the working middle class up to the 2% Captains of America that continue to rape this country and its resources.

Look where that system of rewards has landed us.

Taxing the $5 Million-a-Year Brigade

OK fireball. Since you are so fed up with everyone in power and exempt yourself from any responsibility, including paying taxes, why not consider these little "irregularities" in the compensation structure:

1. Our effective cost per gallon of gas is ~$10.00 when one factors in the roughly $30 billion dollars in tax subsidies ANNUALLY provided to the oil and gas industry. This is the most egregious, downscale tax imaginable. Moreover, the oil and gas companies simply need to bid and secure future leases and INTENT to drill for the largess we reap upon them every year. This ponzi scheme against the American taxpayer is one of our dirtiest tax secrets.

2. Add to that tax subsidy the protectionist import rules on sugar, milk, etc. Removing sugar tariffs alone and replacing this supply with a much more efficient cane sugar ethanol source could end the corn producer/fertilizer manufacturers stranglehold on the taxpayer's neck. If one wants to make the small farmer argument, then set resdiency, gross receipts and size requirements on farm subsidies. This reward for planting inefficient crop supply and for NOT PLANTING crops drawfs even the oil subsidies.

3. For people who don't count the payroll, FICA, SUI, etc. automatic worker payroll contributions while conveniently ignoring the offshore accounts, shell businesses, and other manipulative uses of the tax code by those who can afford tax attorneys, don't be so quick to condemn the extra pittance through earned income tax credits, adjusted rate schedules for wage earners and such put into the pockets of those who actually contribute a day's labor for a fair wage vs. the incredible sums paid to those who move money through the system. Look where that system of rewards has put us.

4. Finally, would someone please explain to me why there is a ~$100 K cap on wage contributions to Social Security?

Another article posted on SA today from Investment U points out the underlying greed that allows these conditions to exist. The AIG et. al. "bonus babies" simply uncovers a much deeper problem in the American Corporatocracy.

As Investment U pointed out in their article:

"For many in the financial establishment, bonuses are simply part of their compensation packages. They have no tie to performance at all. Much of the rank and file receives bonuses as a normal part of their “salary.”

It’s because companies use bonuses as a way to minimize expensive payroll obligations.

Think of it this way, if I’m an average corporation and I pay a qualified employee 100k as their salary, I am required to withhold taxes, insurance and a host of other items – in addition to setting aside money for federal programs. However, if I pay that individual 60k, and a bonus 40k, the situation looks much better. The employee has to handle withholding taxes on the 40k and I am only required to deal with the payroll effects of 60k."


So what the light of day is now shining on this tax avoidance scheme is a pay structure that should be patently illegal. How can they avoid paying the payroll taxes (etc.) that they, as Employers, owe the Government? If this is legal, why not simply pay thier entire salary as a "bonus"?

Why are salaried employees and small businesses hit time and time again, while big business always seems to 'bend' the rules and still come out on top?


On Mar 19 01:06 PM fireball wrote:

> andrew
> i guess you donate your 80 to 90% percent? i won't be moving. i just
> retired several years early. i see no reason to continue with producing
> until circumstances change.
> wishing to profit from the fruit of your own labor is normal. $5,000,000
> in the time you speak of is the equivalent of what $40-$50 million
> today.
> i owe plenty to my country, but nothing to the washington criminals
> or the parasites that sell their freedom and vote for more handouts.
> i owe it to my country to struggle against the tide of socialism.
> i owe it to those that are to come to see that they have opportunity
> to prosper from their labor.
> what you miss is that govt. has no right to give away what i earn.
> i am the only one qualified to do this. example- i do not give cash
> to the drunk or crack addict, instead i buy his children clothes
> or take his wife groceries. washington cannot do this because they
> do not know the locals. there are legitamate functions of govt. but
> these are minimal and the bloated federal beast is far beyond legitamate.
>
> i am going to make a guess that a few you mention as patriotic truly
> were. more were most likely establishing foundations or trusts or
> other legal devices which were bait and switch.
> ambition and profit are not evil. business owners make sacrifices
> that labor does not grasp. when they finally prosper then the parasites
> grasp. it is not patriotic to fund more corruption.
> i am not hysterical, just fed up. i really have all i need. my work
> was the enjoyment of competuition and contest. the benefit was for
> my heirs and those who earned from my activities. since the majority
> seems to think they have some right to what i leave i will leave
> very little.
> at least you have a clue to the john galt reference. most simply
> shrug and wonder.
> marx, engles and obamamama would be proud of your stance.

The AIG Bonus Furor: Let's Focus on What Really Matters

There's another post from Investment U that points out the scheme perpetrated EVERY YEAR on the taxpayer. The AIG et.al. bonus story is simply shining a light on the compensation and tax avoidance structure common within American Corporatocracy. It is THAT structure that needs to be addressed.

For the benefit of other SA readers here's the quote from Investment U:

"For many in the financial establishment, bonuses are simply part of their compensation packages. They have no tie to performance at all. Much of the rank and file receives bonuses as a normal part of their “salary.”

It’s because companies use bonuses as a way to minimize expensive payroll obligations.

Think of it this way, if I’m an average corporation and I pay a qualified employee 100k as their salary, I am required to withhold taxes, insurance and a host of other items – in addition to setting aside money for federal programs. However, if I pay that individual 60k, and a bonus 40k, the situation looks much better. The employee has to handle withholding taxes on the 40k and I am only required to deal with the payroll effects of 60k."

So what the light of day is now shining on this tax avoidance scheme is a pay structure that should be patently illegal. How can they avoid paying the payroll taxes (etc.) that they, as Employers, owe the Government? If this is legal, why not simply pay thier entire salary as a "bonus"?

Why are salaried employees and small businesses hit time and time again, while big business always seems to 'bend' the rules and still come out on top?

Here are a few issues about tax fairness that remain unaddressed:

1. Our effective cost per gallon of gas is ~$10.00 when one factors in the roughly $30 billion dollars in tax subsidies ANNUALLY provided to the oil and gas industry. This is the most egregious, downscale tax imaginable. Moreover, the oil and gas companies simply need to bid and secure future leases and INTENT to drill for the largess we reap upon them every year. This ponzi scheme against the American taxpayer is one of our dirtiest tax secrets.

2. Add to that tax subsidy the protectionist import rules on sugar, milk, etc. Removing sugar tariffs alone and replacing this supply with a much more efficient cane sugar ethanol source could end the corn producer/fertilizer manufacturers stranglehold on the taxpayer's neck.

3. For people who don't count the payroll, FICA, SUI, etc. automatic worker payroll contributions while conveniently ignoring the "bonus structure", offshore accounts, shell businesses, and other manipulative uses of the tax code by those who can afford tax attorneys, don't be so quick to condemn the extra pittance through earned income tax credits, adjusted rate schedules for wage earners and such put into the pockets of those who actually contribute a day's labor for a fair wage vs. the incredible sums paid to those who move money through the system. Look where that system of rewards has put us.

4. Finally, would someone please explain to me why there is a ~$100 K cap on wage contributions to Social Security?

Open Letter to Boone Pickens

This nut case post is another example of Friedman-neo-con thinking. Believe in nothing than gets in the way of "free markets" and get out of the way so that they can do their work. Thirty years of this unfettered, simple-minded thinking has left us where we are today

Just watched a 2008 special last night on the National Geographic Channel showing the actual ocean water temperature measurements over the last decade and their effects on glaciers. Warmer sea waters intruding on the glacial shelf forms ponds within the glacier and this water seeps down to the bottom of the glacier. That forms an effect similar to grease on skids, increasing the speed of galcier creep by as much as 1"/day. The result is a prediction, based on current rates, of an 80% depletion of the Greenland ice sheet alone by 2020. If all glacier melt were accelerated at such a rate, we could expect a sea water rise of as much as 20 feet by the middle of this century.

Hope the poster doesn't own any land in Florida or Manhatten!

As for what's a theory, perhaps the poster needs a trip back to grammar school. A theory is a testable hypothesis (repeatable over time) demonstrating confidence of the theory over many years and many situations, such that it is a predictive model of expected results. This allows scientists to look a real world outcomes.

Though he didn't mention the alternative, as most of these nut cases seem to forget when they make such outlandish claims, "intelligent design theory" (it is neither a theory nor a very good name for an hypothesis) is a circular argument. Their claims amount to: "Look at the complexity of organisms (events, animals, nature in general). Evolution theory could never explain how these intricate mechanisms developed. Therefore, they must be a result of design by an unknown intelligence."

The problem with this apriori approach is that it is an untestable hypothesis (at best) because when something is "created" out of thin air, that's the best explanation possible. It cannot be tested, repeated, nor ever proven. Such a possibility only exists in the minds of the gullible and ignorant.

The same can be said of its economic equivalent, the Laffer Curve.


On Mar 18 01:37 PM yank wrote:

> Interesting in that now that we have had a global "cooling" since
> 1998 "global warming" has been replaced with the term "climate change".
> Al Gore at a recent California lecture was challenged by a scientist
> skeptical of the "climate change" fiasco. Sadly, Al declined to converse
> with the dubious scientist. Of course going unchallenged on a daily
> basis is the list of thousands of accomplished scientists from all
> over the world who very clearly have stated that "climate change"
> like evolution is an UNPROVEN THEORY and not fact. Spending billions
> of dollars that we don't have on solving an unproven problem sounds
> like the very definition of "insanity" to me.

Open Letter to Boone Pickens

What a nakedly obvious quip, Mr. Bird.!!!

Like a Japanese Koan you distilled the entire debate about the move to alternative energy into a visual poem.

Here we are reading a most informed author, a few followers, and people keenly interested in arranging the proverbial deck chairs. It is as if everyone and no one have an answer to how we remove our mouths from the oily tit or kiss our ass goodbye.

Your style is what this site needs more!






On Mar 18 04:57 PM nakedjaybird wrote:

> Dear god - please flood the earth again so we can replenish our oil,
> coal and gas natural (sic) resources. forgive us in how we mismanaged
> what you gave us the first time.
>
> earthman.

Open Letter to Boone Pickens

Here's the odd thing about your observations. GM currently successfully markets a NGV in Canada, but refuses to market that same vehicle here. My guess is that it's because there is no fueling infrastructure. Ask yourself why Canada can develop a readily available fueling station infrastructure in a geography that has many more roadway gaps and less population.


On Mar 17 11:15 AM AlexS wrote:

> So instead of getting your fuel from the Middle East (and the U.S.)
> and your Phill from Canada, you propose to get your fuel from Canada
> (and the U.S) and your Phill from China. I'm not sure I see the
> advantage. As you say, though, the EPA is certainly an impediment
> to getting all this done, including I suspect even allowing NGV from
> being imported into the U.S. And I'm not sure that a Phill per household
> is a very good investment. A couple thousand per household vs an
> installation cost of zero for a gasoline or diesel fueled vehicle.
> Maybe it would be better to convert that natural gas to gasoline
> and diesel and leave the infrastructure alone.

Open Letter to Boone Pickens

Thanks for posting these little-known subsidy facts. Since you left a "?" beside oil, please factor in the following when considering how generously we taxpayers currently subsidize the "free market" Captains of Industry:

Consider the following four giant effects on tax policy that those who only look at the income tax seem to conveniently forget:

1. Our effective cost per gallon of gas is ~$10.00 when one factors in the roughly $30 billion dollars in tax subsidies ANNUALLY provided to the oil and gas industry. This is the most egregious, downscale tax imaginable. Moreover, the oil and gas companies simply need to bid and secure future leases and INTENT to drill for the largess we reap upon them every year. This ponzi scheme against the American taxpayer is one of our dirtiest tax secrets.

The attempted movement away from an oil-based economy is long overdue. Eliminating these subsidies and replacing them with a carbon tax and offsets would be a dandy replacement for current outlays while returning the investment towards modernizing the electrical grid and smart energy technologies while contributing towards deficit reduction. Even an oil guy as puerile as T. Boone Pickens has attempted to wake up and smell the coffee.

2. Add to that tax subsidy the protectionist import rules on sugar, milk, etc. Removing sugar tariffs alone and replacing this supply with a much more efficient cane sugar ethanol source could end the corn producer/fertilizer manufacturers stranglehold on the taxpayer's neck. If one wants to make the small farmer argument, then set resdiency, gross receipts and size requirements on farm subsidies. This reward for planting inefficient crop supply and for NOT PLANTING crops drawfs even the oil subsidies.

3. For people who don't count the payroll, FICA, SUI, etc. automatic worker payroll contributions while conveniently ignoring the offshore accounts, shell businesses, and other manipulative uses of the tax code by those who can afford tax attorneys, don't be so quick to condemn the extra pittance through earned income tax credits, adjusted rate schedules for wage earners and such put into the pockets of those who actually contribute a day's labor for a fair wage vs. the incredible sums paid to those who move money through the system. Look where that system of rewards has put us.

4. Finally, would someone please explain to me why there is a ~$100 K cap on wage contributions to Social Security?


On Mar 17 11:07 AM belseware wrote:

> GET REAL. "We need politicians who will craft legislation that removes
> the subsidies enjoyed by the oil and coal industries in order to
> level the playing field"
>
> FUEL Subsidy
> SOURCE per MWh
> Oil (?)
> Coal $0.44
> Natural Gas $0.25
> Nuclear $1.59
> Biomass $0.89
> Geothermal $0.92
> Hydro $0.67
> Landfill Gas $1.37
> SOLAR >>>$24.34<...
> WIND >>>$23.37<...
> Source: U.S. Energy Information Administration
>
> OK, I agree promoting NGVs beats heck out of stuffing wind and solar
> down our throats.
>

Capitalism, Socialism and Democracy... Oh, and Common Sense

If it's not too much to ask the posters that only see red communism and black captialism, read only two books that counter your world view this year. My two suggestions: "Confessions of an Economic Hitman", by John Perkins, and "The Shock Doctrine", by Naomi Klein.

Together they describe why we are so confused about the reasons for the current crisis and what we must do as individuals.

Cramer Grilled on Jon Stewart

I noticed that you received three "-" (thumbs down) ratings so I thought that I would congratulate you on your historical record. The unwinding of these pass-along-the-risk notes is what this mess is really all about, and I recommend that everyone read your excellent historic post.

In regards to your strategy, just keep your eyes pealed on the developments in New York where AG Cuomo has a supoena out on the AIG bonus babies. Investigations into the corrupt business pratices and outright fraud are already under way. Your suggestions of homeowner, and I would add, shareholder lawsuits are just a breath away.


On Mar 14 10:40 PM Stranded in my unsold home wrote:

> Predatory lending is just one bad practice that killed the investment
> bank's CDO exposure. I was curious if anyone thinks it makes sense
> to create a class and sue the investment banks for creating this
> whole mess in the first place.
>
> I would think it makes sense to start a class action where homeowners
> can band together as a class and sue the Wall Street firms including
> Lehman Brothers, who happens to allegedly own my note via a CDO(collateralized
> debt obligation), which are these securitized bundles of mortgages.
> Everyone who has a mortgage is part of a CDO.
>
> A ride back in history is in order.
>
> The problem is that way back when, Wall Street firms (Lehman, Merrill,
> Bear Stears, etc) decided they could bundle mortgages into multi-layered
> single securities and sell these like hotcakes if they were to successfully
> obtain a AAA rating on the top layer.
>
> They were indeed able to obtain this rating and they did sell the
> heck out of these to all kinds of investors everywhere including
> whole governments, banks, money market funds, and insurance companies.
> This led to the housing bubble which I and everyone else participated
> in via our owner-occupied home purchases and home improvements. Others
> participated via housing speculation (flipping and the like). <br/>
>
> These Wall Street firms started owning increasing amounts of CDO's
> on their balance sheets. The former Merrill CEO was quoted as saying
> Merrill Lynch started "committing suicide" in 2005 by never selling
> any of it's CDO's and completely removing their risk. Lehman and
> Bear Stearns were no different. Seeing this increased concentration
> of assets that were benefiting from the housing bubble, Hedge Funds
> (these evil unregulated inefficient and costly mutual funds) decided
> a great strategy to capitalize on this was to buy insurance on the
> bet that the Wall Street firms would be succumbed by their risky
> CDO holdings and that this would cause the entire firm to fail.
>
>
> Such insurance (a.k.a. credit default swaps) was happily sold to
> the hedge fund firms by the largest of insurance companies - AIG,
> and the hedge funds were even allowed to buy, if they wanted to,
> up to 40 times (40x!) the amount of the risk, a completely irresponsible
> practice but I digress. The hedge funds knew they would benefit if
> they were able to sink Lehman and the rest as they would cash in
> on the insurance. So they issued press releases essentially warning
> about the failure of the Wall Street firms. This caused traders everywhere
> to sell Lehman stock.
>
> And these very same hedge funds who sent the press releases started
> shorting the stock of these firms at the same time! Since the "uptick
> rule" was abolished by President Bush, another irresponsible act
> but I again digress, anyone could short a stock (betting on the stock
> price going down, not up) to their heart's delight. The uptick rule
> allowed shorting twice only after a stock price's "uptick" or increase
> in it's price, but the rule was not in effect. All of this shorting
> and all of the negative press releases, drove the Wall Street firm's
> stock price into the gutter and caused the firm's to fail. <br/>
>
> Washington's first reaction, thanks to the self-regulation ideology
> of the Bush administration, was to let the first of these firm's
> to simply fail. This happened to be Leman Brothers. And so the hedge
> funds were victorious in their strategy because they not only made
> billions shorting Lehman stock, but could also now cash in on the
> AIG swap insurance policies.
>
> Yet these very insurance policies bankrupted AIG or could have bankrupted
> them.
>
> Having learned that letting Lehman fail was a terrible mistake because
> of the message it sent and the ensuing financial panic that resulted,
> the Bush administration and later the Obama administration decided
> to bailout AIG multiple times and with multiple billions of dollars.
>
>
> Once the housing market bubble finally popped, it was learned that
> these AAA CDO's, that originally started this whole mess, were really
> not AAA and were very sensitive to the housing market going down
> and foreclosures going up. This began the falling of the "house of
> cards" that CNBC reported David Fabier so eloquently reported on,
> because it decimated the CDO market and caused further financial
> panic because banks held a lot of these and they were required to
> mark the value of these CDO's to their market price (a.k.a. mark
> to market). Well, there was no market anymore and a zero value meant
> banks could not lend anymore. They were essentially "maxed-out" in
> a credit card analogy of sorts.
>
> This caused the feds to bail them out, pumping more and more of our
> taxpayer money into banks to keep them alive and lending. Meanwhile,
> the folks who are bailing everyone out, the taxpayer, are left holding
> the bag. Many taxpayers are also homeowners. And even though we
> are bailing out the banks with tax dollars, for generations to come
> I might add, these same banks are breathing down homeowner thoats
> with foreclosure lawsuits because they cannot either sell their home
> at all or for any reasonable amount, or they were sold into mortgages
> that were ridiculous to any trained eye, and aren't even sold anymore,
> or we simply have less income thanks to this whole economic mess
> brought on by the Wall Street firm's way back when they decided to
> create mortgage-back CDO's and sell them to everyone.
>
> <b>The start of the house of cards being built was the creation of
> the mortgage-CDO.</b&am...
>
> Thus, I think a new defense for homeowners in trying to save our
> homes is to sue the owners of the notes, or the alleged owners as
> it is in most cases. In my case, this would be Citibank as trustee
> for Lehman Brothers (Lehman has failed and Citibank is working things
> out for their assets I guess). Other firms are still in business
> such as Merrill Lynch(now owned by Bank of Amer). Or they have been
> taken over as is the case with Bear Stearns who is now owned by JP
> Morgan. Banks such as BofA and Chase should also be sued, but many
> were simply servicers, although they certainly benefited from the
> bubble.
>
> All of these firms contributed to this whole mess and have shared
> culpability in my view. Homeowners are now having to pay for the
> cleaning up of this mess while also having to pay increased taxes
> for generations to come. In essence, we are being forced to pay twice
> the amount borrowed for our homes because of the increased taxes
> that will definitely be needed to pay this nation's deficit.
>
> That was not part of the deal when we took out our mortgages. That
> is wholly unfair. And that is just plain wrong. Homeowners need to
> sue these firms, as a class action, to at least get their note returned
> to them free-n-clear because getting cash in these class actions
> is, generally, not going to happen since the atty's get the lion's
> share of settlements, which is fine by me, and that is only after
> expenses which will be sizeable(years of court battles). But homeowners
> can be given their notes back while any cash can go to the attorney's
> for fighting the good fight. Again, fine by me.
>
> Ultimately, I think it is in the nation's interest to simply give
> the mortgagees back their notes from the lenders because of the situation
> created. They don't ask for free housing. We are all going to pay
> for our housing, believe me. All of us. Increased taxation is the
> only way to crawl out of this.
>
> So, it is not a handout. It is a bailout, which if it is good for
> banks, it darn well should be good for homeowners.
>
> This will also cure the property tax problem that so many cities
> are now suing for damages. People will start paying taxes again,
> having a home free and clear.
>
> A class action lawsuit seeking to obtain relief from the alleged
> owners of the CDO's is just what is needed in addition to the standard
> fights everyone should already be doing alongside their good real
> estate attorney or other advocate.

Why Economists Have Downgraded Obama to Bush-Plus

Since you are casting all of us 'dummies' into your cess pool, please answer the following and tell me if you agree with these policies of the past:

1. Our effective cost per gallon of gas is ~$10.00 when one factors in the roughly $30 billion dollars in tax subsidies ANNUALLY provided to the oil and gas industry. This is the most egregious, downscale tax imaginable. Moreover, the oil and gas companies simply need to bid and secure future leases and INTENT to drill for the largess we reap upon them every year. This ponzi scheme against the American taxpayer is one of our dirtiest tax secrets.

2. Add to that tax subsidy the protectionist import rules on sugar, milk, etc. Removing sugar tariffs alone and replacing this supply with a much more efficient cane sugar ethanol source could end the corn producer/fertilizer manufacturers stranglehold on the taxpayer's neck. If one wants to make the small farmer argument, then set resdiency, gross receipts and size requirements on farm subsidies. This reward for planting inefficient crop supply and for NOT PLANTING crops drawfs even the oil subsidies.

3. For people who don't count the payroll, FICA, SUI, etc. automatic worker payroll contributions while conveniently ignoring the offshore accounts, shell businesses, and other manipulative uses of the tax code by those who can afford tax attorneys, don't be so quick to condemn the extra pittance through earned income tax credits, adjusted rate schedules for wage earners and such put into the pockets of those who actually contribute a day's labor for a fair wage vs. the incredible sums paid to those who move money through the system. Look where that system of rewards has put us.

4. Finally, would someone please explain to me why there is a ~$100 K cap on wage contributions to Social Security?



On Mar 16 03:02 AM Gob wrote:

> Just wait until all the dummies who voted for President Affirmative
> Action in hopes of a tax cut see their energy prices double due to
> cap and trade.
>
> Forget the rhetoric - everyone is getting a stealth tax increase.
> Uhhhhhbama already stuck it to the poor by whacking them with a 65
> cents a pack tax increase on cigarettes.
>
> Who mostly smokes cigarettes? Lower income folks.

Why Economists Have Downgraded Obama to Bush-Plus

Actually TCK, he could come up with a better way to frame the problem. Something like this:

The introduction, ascendency and idolatry of Milton Friedman's brand of shock economics has done more to destroy the world's economy than any economic hypothesis in our lifetime. This is not just Reaganomics /Bushanomics, but the pitting of haves/have nots in a global play orchestrated through Milton's disciples within the IMF, World Bank, and governing neo-conservative world view since at least 1975.

Cutting taxes on the wealthy and re-distributing middle class income up to those captains of industry combined with wholesale deregulation and record deficits under Reagan, Bush I and Bush II, and conveniently leaving the $1 Trillion dollars of Iraq war spending off the books while the national debt ballooned from around $5 Trillion to $10.6 Trillion at last peek is an ingenious spin on what constitutes supply side stimulus, if not outright delusion.

Count the change left in your pockets, unless of course you are one of the few who benefitted from this latest episode of Shock Economics so popular with necons. I'll just ask you the same question Reagan used to ask: "Are you better off now than you were four years ago?"

If you're in the same boat as the rest of us, our "staying the course" has undeniably run the lot of us aground. If you have benefitted, then you're one of the lucky 2% that control 80% of America's wealth, completely comfortable that you'll ride out the storm until the next lunatic can covince most of the people all of the time into something completely counter to their own self interest.


On Mar 15 07:51 PM TCK wrote:

> So far Obama's plan has been to blame Bush, blame republicans, blame
> Wall Street, blame bankers, and bame Limbaugh. Obama was attacking
> Bush and running for president for two years while in Congress.
> Seems like he could come up with smething better than, "Due to the
> mismanagement of the last eight years . . " !
>
> Also hard to always hear, "inherited crisis " regarding a job he
> volunteered for "

What Could Have Averted the Housing Bubble?

What Mr. Poretz fails to take into account when making his observations is the function of regulation within a captialist environment. The Great Depressions followed by earlier great downturns in the late 1800's finally taught us the lesson that unfettered captilaism and truly free market economics is a fool's game except for those who own the casino.

It is a convenient side step to point the ultimate blame as a "cultural phenomenon" and obfuscates the underlying fallacy of unfettered free market capitalism.

The introduction, ascendency and idolatry of Milton Friedman's brand of shock economics has done more to destroy the world's economy than any economic hypothesis in our lifetime. This is not just Reaganomics /Bushanomics, but the pitting of haves/have nots in a global play orchestrated through Milton's disciples within the IMF, World Bank, and governing neo-conservative world view since at least 1975.

Cutting taxes on the wealthy and re-distributing middle class income up to those captains of industry combined with wholesale deregulation and record deficits under Reagan, Bush I and Bush II, and conveniently leaving the $1 Trillion dollars of Iraq war spending off the books while the national debt ballooned from around $5 Trillion to $10.6 Trillion at last peek is an ingenious spin on what constitutes supply side stimulus, if not outright delusion.

Count the change left in your pockets, unless of course you are one of the few who benefitted from this latest episode of Shock Economics so popular with necons. I'll just ask you the same question Reagan used to ask: "Are you better off now than you were four years ago?"

If you're in the same boat as the rest of us, our "staying the course" has undeniably run the lot of us aground. If you have benefitted, then you're one of the lucky 2% that control 80% of America's wealth, completely comfortable that you'll ride out the storm until the next lunatic can covince most of the people all of the time into something completely counter to their own self interest.


On Mar 16 01:21 PM Doug Poretz wrote:

> I do not buy the argument that the housing bubble was simply a consequence
> of financial creations that allowed irresponsible mortgages. The
> housing bubble was a cultural phenomenon, part of the same culture
> that gave rise to the growth of large flat screen TVs, new car sales,
> cruises, name it. The idea that financial instruments allowed the
> market to grow is correct, BUT those instruments responded to a MARKET
> DEMAND -- are we going to continue focusing on just the suppliers
> of nthe tool or the abusers who created the tool? If and when we
> place blame where it belongs -- to our entire culture versus a few
> financial instruments -- maybe then we will realize that the "change"
> we are going to end up with is going to be largely cultural/social/politi...
> in nature? Isn't that what is actually happening? Well, watch what's
> happening around the world -- the headlines are about to change:
> tinyurl.com/daaua9

Nationalization vs. Capitalism

I have a problem understanding your recommendation. Who are the "people who are so smart". Did you mean the Treasury, the Fed, the FDIC, the SEC? Did you mean the smart bankers?

If you meant the bankers, then it's a circular argument. By supporting the banks with just-in-time funding, we are perpetuating a failed business full of people who obviously don't know how to run a bank -- the brilliant capitalists who cooked up the kick the can strategy of write a loan, bundle it, securitize it, insure that security, etc.

Nationalization is a bitter pill for the investors, current managers, and other stakeholders, yet we do this every month to smaller banks until the institution can be restructured. These government takeovers have not changed the Constitution nor created a socialist state last time I looked.

The bitter pill that no one wants to swallow: These CDS notes need to be re-structured at the expense of those investors who bought the last free lunch on the backs of all of us. That can only happen in a condition similar to bankruptcy.

The larger question is whether such restructuring will kill the patient called the financial system, and that answer is beyond my pay grade.


On Mar 16 02:38 AM The hand wrote:

> re A1 and A2 - i have a problem that the government knows best how
> to run a bank, or how to price toxic assets. if all these people
> are so smart, we would not be here in the first place.
>
> the toxic crap has to stay in the banks - and the banks have to deal
> with it. if the people who claim that m2m is causing or perpetuating
> this crisis are correct, there is no real problem with these assets
> that time will not solve.
>
> if there is a real problem here and the banks are not healthy, everyone
> would be better off if we seeded new banks with clean balance sheets.
> let the existing banks die.
>