Most observers are missing the point. When CEO Jamie Dimon announced that JPMorgan Chase had incurred at least $2 billion in losses from risky, unsecured, derivatives-types trading, it uncovered the scandal of our time once and for all.

The Chase disaster gives us a much-needed glimpse into our corrupt political system, its Wall Street paymasters, and the media voices that allow people like Dimon to escape scrutiny.

The JPMorgan Chase story is also the story behind the financial crisis that has thrown millions of people out of work. It's the story behind our ever-growing wealth inequity. It's the story behind Washington's inability to prosecute criminal bankers, regulate reckless ones, and propose the economic solutions the rest of us urgently need.

Predictably, the pundits who aid and abet people like Jamie Dimon are dismissing this story's importance, pointing out that $2 billion (it could become much more) pales against the $19 billion in profit Chase reported last year.

But it was potentially $2 billion earned through crime. And more importantly, this story isn't just about Chase's errors and crimes. It's much bigger than that.

Besides, $19 billion in a single year? That's a big part of the story, too.

The Case Against Chase, its CEO, and its accomplices is too big to cover all at once. Here are the aspects of this under-reported story we plan to address in the days and weeks to come.

The Firm

Depending on the day and the measurement used, JPMorgan Chase is now the largest or second-largest bank in the world. Its Japan operation alone has been cited by that nation's regulators as a systemic risk because of its size.

If Chase began to collapse because of risky betting, the government would be forced to step in again.

Jamie Dimon knows that. It's a lot easier to gamble when you know somebody else will be forced to bail you out if you lose too much.

Chase, like the other mega-banks, has systematically engaged in criminal activity for years. At the same time, it has used its vast wealth to corrupt our political and regulatory systems. And it has been aided and abetted by willing collaborators in the media, every step of the way. It gave up nearly three quarters of a billion dollars in settlements and surrendered fees to settle one case alone—that of bribery and corruption in Jefferson County, Alabama.

Continue reading »

In the coming days and weeks we'll be hearing a lot of misinformation about the Trustees Report from the Social Security Administration. It's time to separate the myths from the realities:

1. Myth: "Social Security and Medicare have a cost problem."

Fact: Medicare has a financial problem. As this chart shows, the cost of providing Social Security benefits is not out of control or skyrocketing.

Social Security is on an even keel for the foreseeable future. Twenty years from now it's projected to be in a position to pay only 75 percent of benefits—but that's easily fixed by lifting the payroll tax cap.

2. Myth: "Aging workforce strains Social Security, Medicare"

Fact: That's a headline we saw repeated across the country in anticipation of the Trustees Report, but it's wrong. What's "straining" Social Security and Medicare today is the unequal distribution of income and a broken regulatory system for Wall Street that has put the entire economy under stress.

Social Security was actuarially stable after it was overhauled by the Greenspan Commission in the 1980s. The Baby Boomers were all alive and (mostly) working by then. So what really happened?

First, a radical upward shift in income toward the "1 percent"—and the "0.0001 percent"—meant that more and more of the nation's income was above the payroll tax cap threshold. That reduced the revenue for Social Security (and much of Medicare) from a projected 90 percent of national income to a figure that's closer to 83 percent.

Secondly, a financial crisis brought on by reckless and under-regulated Wall Street banks crashed the economy in 2008. For millions of Americans it has never come back. Joblessness, along with wage stagnation for the "99 percent," further depleted the programs' revenues.

3. Myth: We need to place limits on Medicare spending and cut its benefits.

Fact: That's like saying the way to end forest fires is by firing Smokey the Bear. Benefit cuts and spending caps won't solve our health cost problem. There has been an explosion of for-profit hospital chains in the last twenty years, along with profit-driven laboratories, imaging centers, and other types of health providers.

In addition, our system of reimbursing physicians provides an incentive for them to treat more and charge more for their services. That's costly—and it subjects patients to a lot of unnecessary tests. On top of that, the lion's share of our health economy is "managed" by for-profit insurance companies who have little motivation or skill when it comes to prudent fiscal management.

Continue reading »

Here are some headlines you won't see after the government releases new figures on Social Security and Medicare later today:

"Social Security Trust Fund Even Larger Than It Was Last Year"
"Growing Wealth Inequity Will Lead to Social Security Imbalance Later This Century"
"For-Profit Healthcare Poses Threat to Medicare, Federal Deficit, and Overall Economy in Coming Decades"
"Public Consensus Grows For Taxing Wealthy to Restore Long-Term Entitlement Imbalance"

Instead here's what we've already seen:

"Aging workforce strains Social Security, Medicare"

That headline's completely wrong, and yet it's been repeated in dozens of different news outlets (sometimes with minor variations) as they run an improved, but still misleading, news story on Social Security and Medicare from Stephen Ohlemacher at the Associated Press.

Perhaps Trudy Lieberman's Columbia Journalism Review analysis of misleading Social Security reporting had some impact.

Whatever the reason, it's good to see that Ohlemacher's article acknowledges the role that our ongoing economic difficulties have had in slowing revenues for these programs, and that he quotes critics of the Social Security-cutting consensus (although with far less prominence than he does a little-known figure repeating right-wing talking points.)

Even the Washington Post, which is the nation's worst journalistic offender on these subjects, shifted the emphasis with their headline this time. Today they're running the AP article with the header "Social Security, Medicare strained by slow economic recovery, aging workforce."

That headline is 50 percent right—which is a 50 percent improvement.

Ohlemacher's article was occasioned by the latest report from the Trustees of the fund that handles Social Security and Medicare, which will be released today. He writes that "both programs (Social Security and Medicare) are on a path to become insolvent in the coming decades, unless Congress acts, according to the trustees."

Unfortunately the piece provides no context for the use of the term "insolvent," which most people associate with bankruptcy or running out of funds. As Sarah Kliff explains, nobody is suggesting that either of these programs will ever run out of funds. And when programs have ongoing sources of income, the temporary absence of a surplus isn't the same as "insolvency" as that term is commonly understood.

In fact the report will clearly state that Social Security's Trust Fund has grown to $2.7 trillion dollars, and that Social Security will be able to pay all its benefits in full for a quarter of a century. After that, if no changes are made, it will be able to pay 75 percent of scheduled benefits without changes.

Nor is the "aging workforce" the cause for any of today's concerns, despite the millions of dollars in advocacy money meant to make us believe that it is. We've known about the baby boom ever since it ended in the 1960s, and it was fully addressed in past adjustments to the program. That's why the program was considered perfectly solvent for the foreseeable future after the Greenspan Commission raised the retirement age and made its other adjustments in the 1980s.

As economists like L. Josh Bivens have shown, the real problem is that there has been a sharp increase in income inequity in the last couple of decades. The payroll tax which finances Social Security was reconfigured to capture 90 percent of the nation's income, but because the richest among us are capturing more of our nation's wealth, that figure is now closer to 83 percent.

If that hadn't happened there would be no problem with Social Security at all. Understanding the nature of the problem helps us come up with a cure. If wealth inequity is the cause, shouldn't the solution also center on inequity?

Medicare, unlike Social Security, does have very serious long-term financial problems. Why? Because we're the only developed nation that insists in delivering its health care through a system of for-profit hospitals and other medical providers. The for-profit medical/industrial complex has exploded in size over the last few decades, and it's driving our runaway health care costs. The for-profit insurance system which serves most insured Americans under 65 has no incentive to resist for-profit medical care, and arguably even benefits from runaway costs.

The impact of for-profit care on Medicare's future can be inferred from this quote by economist David Blitzer: "The trends in Medicare are more modest than the cost increases we have seen in the private commercial sector." That's because Medicare, as a government program, is far more cost-efficient than the private health insurance system. (That difference makes a mockery of Republican proposals to end Medicare and replace it with a system of vouchers for private insurance.)

Continue reading »

enlarge

In other words spend, spend, spend - and provide some principal reduction for underwater homeowners.

Bad News

We won't recap all the employment figures in today's jobs report, since they're available elsewhere. We'll stick to the highlights:

A key figure is essentially unchanged: There are 12.7 million unemployed people in this country.

Also unchanged, or only slightly changed: Unemployment rate for adult men is 7.6 percent, for when it's 7.4 percent, for teenagers it's 25 percent, for white people it's 7.3 percent, and for Asian it's 6.2 percent. Hispanics are still suffering with 10.3 percent unemployment, and for African Americans the rate remains a stunningly high 14 percent.

But then, all of these figures are stunningly high.

The crisis in long-term unemployment persists, with 5.3 million people among the long-term jobless. There was a drop in the number of people who want full-time work but can't get it, but it remains extremely high at 8.1 million.

Wait. It Gets Worse

And unemployment isn't our only national burden. Income gains have been very weak, and that segment of the workforce that actually is working is increasingly finding itself in low-paying jobs. And analysts are expect low earnings reports for corporate America, starting next week, as the sluggish economy takes its toll on publicly-traded companies.

Meanwhile banks, high off the settlement deal that protects them from criminal prosecution for illegal foreclosures, are expected to begin another wave of foreclosures that will send housing prices plummeting even further and costing local communities even more in lost revenue.

Continue reading »

Coke commercial by the White Stripes shown only in Australia and Great Britain

Score one for the good guys: After being pressured by Color of Change and other progressive groups, Coca-Cola has left ALEC — the cynical corporate coalition that has pushed a bevy of anti-democratic, anti-middle class, and anti-consumer initiatives.

Now that Coke's come around, next up is Walmart. Their response on the ALEC issue was equivocal and unacceptable. And the issue needs to be raised directly and firmly with the other companies that back the organization — a list that includes AT&T, Bayer, Coca-Cola, ExxonMobil, GlaxoSmithKline, Johnson & Johnson, Kraft Foods, Pfizer, and UPS.

Standing Up

This weekend on "The Breakdown" we interviewed Rashad Robinson, Color of Change's Executive Director, about the Trayvon Martin case and the role of ALEC in "stand your ground" laws like Florida's. He indicated that ALEC's member companies were going to be a leading target of the campaign for greater political and economic justice.

A few days after that interview aired, Color of Change sent an email to its mailing list that read in part:

You and more than 85,000 Color Of Change members have called on corporations to stop supporting the American Legislative Exchange Council (ALEC) because of its role in voter suppression.

We contacted Coca-Cola to make sure they understand that through their membership in ALEC, they are supporting racially-discriminatory voter ID laws. ... They told us they recognize the importance of voting rights but claimed that they weren't responsible for ALEC's voter ID legislation.

Continue reading »

Here's a headline we're tempted to write - or rather, one that we would be tempted to write if we weren't so nice, or so dedicated to avoiding oversimplification:

"Climate-Change Deniers Struck by Climate Change in Texas Tornado Outbreak."

This week two seemingly unrelated but very connected events took place: In the first, freak tornadoes struck the Dallas area today with unexpected ferocity, causing many experts to revisit the issue of whether tornadoes should be included in the list of extreme weather caused by climate change.

In the second, one of the hard-hit area's Representatives bragged about cutting funds for - predicting storms and reducing their impact.

If you think that's bad - and it is - last year Mitt Romney did the Representative one better: He said it would be "immoral" to spend Federal money to help victims of national disasters like the one that just struck Texas.

Immoral.

A Spell of Bad Weather

Even as presumptive GOP nominee Romney was talking like that last year, fourteen weather disasters caused a billion dollars or more in damage. And yet House Republicans insisted on cutting funds for studying the climate, predicting violent storms, early storm warnings, and assistance in helping communities minimize damage and loss of life. They cut $140 billion from the National Oceanographic and Atmospheric Commission, the agency which monitors the climate and helps minimize damage and loss of life during storms, after trying to cut much more than that.

Last year's GOP budget also slashed more than $500 million from the budget for weather prediction satellites. And they tried to cut funding for FEMA, the agency that helps people get through disasters like these, by more than half the previous year's amount (which would have left FEMA with less than one-third of its 2010 budget).

Continue reading »

enlarge

Credit: The White House

When millions of dollars are being pumped into Washington by anti-government and anti-tax ideologues, you're bound to find Democrats willing to play along. And when your Washington press corps can't be bothered to get even the smallest details right — well, that must mean the Bowles-Simpson Medicine Show is back in town.

It's here, folks. Journalists are still cooing over a failed proposal they're calling "moderate" and "centrist," based on the radical and unpopular plan put forward by two individuals named Alan Simpson and Erskine Bowles.

Another budget, one that's both economically sound and more politically popular, was summarily dismissed by the same media as "partisan" and extreme.

Continue reading »

DOWNLOADS: (267)

PLAYS: (1390)

Embed

Want to know where a "bipartisan" bill comes from? Follow the money.

Scene of the Crime

The so-called "JOBS" Act is a good example: The acronym stands for "Jump Starting Business Startups," but a better name would be "Jivers' Opportunity to Bilk Suckers." The bill is a sham that declares open season on hapless investors while offering a money-making bonanza to a variety of wealthy political patrons. And it passed the House this month with an overwhelming majority.

Bills like this one don't just write themselves. Washington insiders know that many of them are drafted by industry lobbyists, then delivered to compliant legislators to be submitted and passed as "bipartisan" solutions.

But figuring out who's behind the "JOBS" Bill is a challenge. It's like one of those Agatha Christie mysteries that takes place on a wealthy estate — which is appropriate, given the average personal wealth of a Washington politician — where everybody in the story is a suspect.

Motive

There has been a lot of reporting on the bill's contents, which are currently being debated on the Senate floor, so we'll stick to the highlights: It allows startups to advertise for private-citizen investors (sometimes called "crowdfunding"), so a lot of people could be suckered into unwise investments with their own savings; it makes it easier for banks and bank holding companies to play in the investment world again, effectively undoing anything resembling the Volcker rule for these investments; it gives a tax break to millions of "small businesses," which in its definition would include multimillionaire financial advisors, attorneys, plastic surgeons and the like, none of whom would create additional jobs; it allows companies to conceal key facts, such as the amount they pay their own executives; and it eases accounting and other regulatory requirements for so-called "emerging growth companies," giving them far greater license to bilk and deceive those "crowdfunders." (Crowdfunding is a good idea if done properly, but that's not the real goal of this bill.)

Oh, and those "emerging growth companies" could generate as much as a billion dollars per year and still be considered "startups." The economic data's clear on that point: Companies of this size don't generate jobs; smaller ones do.

Opportunity

It's a good thing your humble correspondent has worked on Wall Street. Otherwise it would be possible to believe that the one-billion-dollar limit, although it's ridiculously high, actually means something.

In real life, that sort of thing's easy to get around. When your massive corporation approaches the one-billion-dollar mark — even after your high-priced lawyers and accountants have used all their tricks to lower its reportable income — then all you have to do is split the company into two new ones. That way you get to continue evading all the accounting rules — and you can raise even more money from the suckers!

(An amendment's being offered that would moderate some of the bill's more egregious provisions, and is currently being debated, along with the House version of the bill, on the Senate floor.)

Continue reading »

Question: What are the connecting threads between these two recent Mitt Romney news items:the announcement that he's not enrolling in Medicare, and the revelation that Bain Capital helped him make money helping the Chinese government spy on its people?

Answer: They're both covert attacks on innocent civilians, and they're both based on Romney's own deceptions.

Think about it for a second:

As The New York Times reported, Bain-owned Uniview Technologies is the primary supplier for China's system of spying on its citizens — in schools, on streets, in Buddhist temples and in mosques, and anywhere else the Chinese people gather. The Times quotes Buddhist monk Loksag as saying, "There are video cameras all over our monastery, and their only purpose is to make us feel fear."

Thank you, Mr. Would-be President! When Mitt Romney talks about "getting tough on the Chinese," people didn't realize that he meant the Chinese people, not their leadership.

It's a blind trust! That was Romney's defense this week, even though he called blind trusts for politicians an "age-old ruse" when he ran against Ted Kennedy in 1994. But here comes the lie: Romney's trustee promised to divest his estate of any holdings that could be tied to repression — and they don't come any more tied to repression than this one.

What's that got to do with Romney's decision not to accept Medicare coverage when he turned 65? Both of these moves were based on dishonesty and secrecy. The press reaction to Romney's Medicare decision missed the point. Ethan Rome is absolutely right that this move emphasized Romney's 1 percent status — and also highlighted the fact that he's 65, despite looking younger, so it was a doubly inept political move on that score.

It's also true that you can't just "reject Medicare." You can decline to enroll in Part B coverage (for physician and other outpatient services), but Part A hospitalization coverage is trickier to decline and you'll probably forfeit your Social Security benefits as well if you do — which may be the point.

Once you get past the blunders, it's clear that Romney was acting as part of a larger plan to cut everyone's Medicare and Social Security benefits. He's a covert agent of sorts — even if he's an inept one in the Don Adams/Rowan Atkinson tradition. The plan's been underway for quite a while, and here's how it works:

1. Reframe social insurance programs so that they're giveaways, not something people have paid for throughout their lives.
2. Convince everyone that "the wealthy" don't deserve Medicare or Social Security.
3. Carefully avoid defining what you mean by "wealthy."
4. Propose a "means test" to determine whether you're too "rich."
5. And whatever you do, don't tell the truth — that the Concord Coalition, the far-right-group that spearheaded "means testing," defined "wealthy" as anyone who earned $20,000 a year or more during their working life.

Romney's not improvising here — he's acting according to a script, even if he can't help blowing his lines.

Continue reading »

Forget Michigan. Worry about Steny Hoyer.

While most political eyes are fixed on Romney's primary results, the middle class faces a threat to its financial security right in the heart of the Capital.The Democratic Party does, too.

House Minority Whip Steny Hoyer, who is the living embodiment of Washington's corporatized politics, is once again pushing a "Grand Bargain" that would cut Social Security and Medicare—and result in more electoral losses like the ones he helped bring upon his party in 2010.

Hoyer is the Lobbyists' Legislator, the Revolving-Door Representative, the Minority Whip who really drives floor votes for the Corporate Party rather than the electorate. Hoyer's pseudo-centrist deficit pitch will please the rich individuals and corporations that have given him one of the biggest campaign war chests in Congress.

It will also help Republicans run a repeat of their 2010 play, when they took the House by running to the Democrats' left on Medicare and Social Security.

Losing Game

Corporate Democrats like Hoyer makes the GOP's work easy. He proposed raising the retirement age to 70 just a few months before the 2010 election. The GOP responded to that kind of talk, as well as the President's "Grand Bargain" overtures and right-leaning deficit panel rhetoric, by writing a "Seniors' Bill of Rights" that painted Democrats as Social Security and Medicare cutters.

Republicans should have been politically vulnerable on Social Security. They'd recently failed to pass a highly unpopular privatization plan, and prospective Speaker John Boehner refused to take benefit cuts off the table. Enter Steny Hoyer, who came to the Republicans' rescue by saying "We should consider a higher retirement age or one pegged to lifespan" in July of 2010. That led to headlines like "Republicans and Democrats Lining Up Behind Major Cuts to Social Security and Medicare" - and that was on the liberal-leaning Talking Points Memo website. A headline in the right-leaning Washington Times reading "Both parties mull raising retirement age" was featured below a large color photograph of Hoyer.

Hoyer's comments undercut House Speaker Nancy Pelosi. Republicans played Hoyer and other Blue Dog Democrats for suckers that year (unless they were working from a shared script), luring them into making these comments with promises of a grand deal—then nailing them at the polls by posing as these programs' defenders.

Now he's at it again. By pushing for yet another would-be "Grand Bargain" in an election year, Hoyer's backing a course of action that will all but guarantee more electoral defeats for Democrats in 2012.

Steny Hoyer, (MD, D-Corporate)

Continue reading »