I eavesdropped on a committee meeting at Occupy LA last night. One guy announced to the group, "Okay, homework tonight is to find out about Glass-Steagall." It's important to the conversation to know what it is.

Glass-Steagall for those who may not know, is essentially the bank regulations signed by FDR in 1933 in the wake of the crash of 1929. In 1999 the Republican-controlled Congress repealed most of the law and let banksters do what should be considered legal crimes against their country. Anyway, Rep. Barney Frank voted against Gramm-Leach-Bliley Act also called Financial Services Modernization Act, the law that deregulated everything. He's been one of its most vocal critics. Also he's a Congressman.

Look what the Glass-Steagall Wikipedia page said before I fixed it yesterday:

We should probably be reading Wikipedia for these type of errors. "Those who control the past, control the future."

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This Sunday's Meet the Press was themed "The Politics of the Economy: What's Holding America Back?" which featured a discussion between an uncharacteristically wide variety of thinkers across the political spectrum. It is, in part, a discussion we desperately need as we're thrown into this political turmoil between the Tea Party Republicans and the rest of the country. We are struggling at this crossroads to decide what kind of country we want to be.

In the past, I've had many disagreements with Thomas Friedman about the role he believes my generation should play as we begin to take over the country. But today, much like that fabled broken clock, I found myself in much agreement as Friedman spoke about the differences between the Greatest Generation and the Baby Boom Generation. He argues this problem began not in 2008, instead it began after the Cold War ended in 1980:

"We had a generational shift. We went from the Greatest Generation which the philosophy basically was "save and invest" and we are still living off of their saving and investing. To the Baby Boom Generation whose philosophy turned out to be "borrow and spend." And we've really shifted from a generation born in The Depression, World War 2, and the Cold War, these were serious people. They wouldn't think of shutting down the government for a minute, ok. To a generation basically that is much less serious. We've gone from basically the values of the Greatest Generation, which my friend philosopher Doug Simon calls "sustainable values." Values that sustain. To a Baby Boom Generation whose values are situational values. Do whatever the situation allows. You put them all together and I think you really account for a lot of the hole we're in right now structurally."

Friedman goes on to say, that instead of being the drivers of innovation and a world leader that, we spent the 2000's "chasing the losers of globalization instead of the winners," referring to our wars across the Middle East.

Friedman discusses the "Five Pillars" which enabled us to grow and thrive as a country and as a government for 200 years.

"We didn't get here by accident. As a great country. We actually won at every historical turn. How did we win in every historical turn? Because we had a formula for success. That you can actually date back to Hamilton but you certainly see it in Lincoln. It was five pillars: basically educate our people up to and beyond whatever the level of technology is. Whether it's the cotton gin or the supercomputer. Immigration: attract the world's most talented and energetic people. Third, infrastructure. Have the world's best infrastructure. Fourth, have the right rules for enchanting capital formation and risk taking and preventing recklessness. And last, government-funded research. Put those together, stir, bake for 200 years and you get the United States of America.

If you take all five of those, David, and you look at the last decade, which we call 'the terrible 2's,' possibly the worst if not the worst decades in American History. Education (makes a downward gesture). Infrastructure (makes a downward gesture). Immigration (makes a downward gesture). Rules for Capital Investment, how'd you like that sub-prime crisis? (makes a downward gesture) Research and Development (makes a downward gesture). So all five of our pillars of success have been weakened. That's the underlying theme here. And that's what we've got to be looking; that's what the President has got to be out there defending."

Earlier in the program, Friedman said that he believes there are two types of countries: HIEs and LIEs. In Friedman vernacular, that means high imagination enabling countries and low imagination enabling countries and details the ease of building a product and bringing it to market.

"Forget developing and developed. . . . what isn't a commodity is this (Friedman says snapping his fingers meaning ideas). If you look at the countries that are thriving today, look at Israel - start-up nation. We're not going to bail our way out of this crisis. We're not going to stimulate our way out of this crisis. We're ultimately going to educate, imagine, and invent our way out of this crisis."

Unfortunately, it appears that the Friedman is putting the cart before the horse. While the solution is no doubt going to be innovation, with the weakening of those five pillars consistently by conservative politics, where will these educated, imaginative and inventive people going to come from?

In a totally separate portion of the program, historian Doris Kearns Goodwin and her son, Lt. Joseph K. Goodwin, talked about being part of the generation that began after the Cold War and the impact 9/11 had on what is now termed the Millennial Generation. He believes 9/11 presented a unique opportunity that was missed by leaders. After Pearl Harbor, our country was thrown into a great war in which the entire country was invested. Women immediately took over the work force as every man in the country became a soldier. Children collected rubber bands to be melted down; women drew "seams" on the back of their legs so that silk production could be redirected to parachutes instead of hose; food, gas and even clothing was rationed. In short, everyone sacrificed and contributed towards the war effort.

After 9/11, America was never asked to sacrifice or contribute anything. Lt. Goodwin says this is the reason that he feels we're have so much debt and financial troubles now, because we charged the wars on our credit card. As Friedman would say we allowed the situational values of our leaders enact a policy that cost us so much that our entire country stands on the brink of both an economic and even identity crash. Lt. Goodwin believes if we as a country had been asked to sacrifice as much as they were in WWII that maybe we wouldn't be here.

If Lt. Goodwin believes that 9/11 won't be what defines a generation, perhaps the Millennials can decide to define themselves as the "Ideas Generation" that Friedman says is so needed to build us back into a stable economy and a world leader. In a recent piece by Mike Hais and Morley Winograd, authors of Millennial Makeover and the new book Millennial Momentum, the two authors argue that indeed this generation -- which will comprise more than 1 in 3 adults by the end of the decade -- can be the drivers of this economy if given the tools and authority to do so. Instead of the "taking to the street" philosophy that Friedman has advocated in the past, perhaps he can get on board with more of an innovative bandwagon.

Like many elected officials Senator Tom Coburn is back in his state for the August Recess. While he's home he's been working on his own federal budget proposal that would continue to decapitate any attempt at federal spending. His series of interviews with his local paper advocates, among other things, a drastic cut from a large portion of his state's backbone: Farmers.

In the piece he proposes (emphasis is mine)

In his $9 trillion plan to balance the budget in 10 years, Sen. Tom Coburn would eliminate the old-style programs [meaning farm subsidies] and the checks, called direct payments, to save more than $70 billion. Coburn, R-Muskogee, would also scale back U.S. Department of Agriculture conservation programs that pay people not to farm on sensitive land, saving almost $50 billion over the next decade.

Here's the thing about conservation programs Coburn might not understand: They were started in the Dust Bowl in effort to help the struggling industry and protect the land. Right now Oklahoma is suffering from an astounding drought that has been going on since October of last year. It's concerning that during this record drought that rivals anything seen during the Dust Bowl that the state's Senator would be talking about cutting the very conservation programs that have kept the dust storms at bay since the 1930's.

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I try not to post when I'm upset about something because I prefer to write semi-reasoned analysis instead of crazed emotional heaving. But there comes a time when crazed emotional heaving is a perfectly rational thing to do. We are now in one of those times.

Why am I so freaked out, you ask? Because I think the GOP is really, really, really going to let the United States default. They've figured out that holding the debt ceiling hostage is the perfect way to achieve all of their ideological goals. This is their big shot to drown government in a bathtub and they are not going to miss it. And the only reason they can get away with this is because our supposed Democratic "leadership" does not have the guts to come right out and say that the Republicans are threatening to destroy the economy unless they get everything they want. You know that things have gotten bad when David Frum actually wishes Obama would be a more forceful in standing up to the GOP:

“Call me naive,” President Obama invited viewers of today’s press conference.

Mr. President, invitation accepted: Unless that performance today conceals some unimagined occult plan, yes, you are naive.

Congressional Republicans have refused to raise the debt limit unless the Obama Administration agrees to large and immediate spending cuts. They have their finger on the nuclear button and are threatening to detonate unless they get their way. It seems crazy that they would actually do it, but congressional Republicans have done a pretty good job of convincing the Administration (if not yet the financial markets) that they just might do it.

Obama has responded by entering into negotiations with the congressional Republicans. These negotiations have not gone well, largely because Republicans are united upon an all-spending-cuts, no-tax-increases approach to deficit reduction.

So why are American homeowners extrimmensaordinarily screwed? Well first, there's this:

Bank of America Corp. (BAC), the biggest U.S. lender by assets, is segregating almost half its 13.9 million mortgages into a “bad” bank comprised of its riskiest and worst-performing “legacy” loans, said Terry Laughlin, who is running the new unit. [...]

The legacy portfolio will hold 6.7 million of loans with outstanding principal balance of about $1 trillion, according to a presentation to investors today. The split leaves home loan President Barbara Desoer with about half her previous portfolio, as well as new lending going forward.

Laughlin’s portfolio will include loans that are currently 60 or more days delinquent as well as riskier types of loans the bank no longer originates, such as subprime, Alt-A, interest- only and option adjustable-rate mortgages, he said. He said the portfolios will be completely split by March 31 and that his will be liquidated over time. Of the 13.9 million loans Bank of America services, about 3.5 million are held by the company on its balance sheet. The rest are owned by other investors.

You got that? Literally half of BofA's mortgages are garbage that the company wants to sweep under the rug. Here's the punchline:

“It’s a way to get investors focus on the good,” said Paul Miller, a former examiner with the Federal Reserve Bank of Philadelphia and analyst at FBR Capital Markets in Arlington, Virginia. “It’s a way to talk about good things and ignore the bad.”

I'm not sure how declaring that nearly 7 million of your mortgages are worthless pieces of trash gets anyone to focus on the positive, but hey, whatever gets you through the night and so forth.

Meanwhile, America's attorneys general have released their proposed settlement terms with the banks over their widespread use of fraudulent practices during thousands of foreclosure cases across the country. Needless to say, the proposal is underwhelming. Felix Salmon breaks it down thusly:

For those who can wade through it, however, it really is a code of best practices for servicers and it’s sorely needed. There’s much to love here, but it all basically comes down to the golden rule: treat your borrowers with honesty and humanity and common sense and you’ll be fine. Do servicers really need to be told that if they make more money from a loan mod than from a foreclosure, they should do the loan mod? Or that “sworn statements shall not contain information that is false”? Evidently, yes, they do. [...]

[T]he big question here isn’t whether the settlement is reasonable — yes, it’s entirely reasonable. Instead, we should ask what the penalties for non-compliance are, since just about every servicer will be non-compliant for the foreseeable future.

Those penalties come at the end of the document and they’re extremely vague: there’s talk of “monetary penalties and additional remedial actions”, but there’s also talk of “failure to meet timelines”, which implies that much of this stuff could be pushed off far into the future and of “a special master or referee to resolve violations”, with no indication of how such a person might be chosen.

This is pretty much what I've come to expect from the American government when confronted with a case of widespread, systematic fraud committed by the financial services industry: Issue a bunch of vaguely-worded guidelines, lightly chide the banks for their ever-so-naughty behavior and make murky declarations that maybe in the future someone will be held accountable for defrauding people, but not right now.

Stephanie at FedUpUSA drops her jaw at the fact that part of the AGs' "settlement" mandates that banks promise to, you know, obey laws that apply to just about everyone else:

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What I've found most amusing about the rightblogger critique is that they're trying to frame the teachers as "greedy." These are the same folks, after all, who have told us since Reagan that greed was good! But apparently greed is only good for people doing useful things like trading housing derivatives and not good for people who do useless things like teaching our kids math. Here's John Hinderaker with a typically insane argument:

It is infuriating to see our President weighing in on behalf of overpaid, underworked and greedy members of public employee unions. They are among the more privileged members of our society, but, as full partners in the Democrats' scheme to suck up ever more money even if it bankrupts the country, they have Obama's complete support.

Riiiiight, the people who take home an average of just under $50,000 a year in pay are the "privileged" members of our society.

But say, let's go back to early 2009 when it was revealed that AIG -- you know, that little company that received $170 billion in taxpayer bailout money -- planned to pay people in its financial products division a whopping $218 million in bonuses. Let's see what Mr. Hinderaker had to say about that:

As I explained on Bill Bennett's radio show this morning, I don't think there is anything wrong with the AIG bonuses, and the people who got them should keep them.

And in fact, the rightblogger reaction to bailed-out AIG traders who receiving multimillion-dollar bonuses was indeed somewhat different from their reactions to the "greedy" teachers! Can you believe it? Let's go down the list. Here's the Ole Perfesser:

Better hope [the horribly oppressed AIG traders ] don’t “go John Galt.”

Protein Wisdom:

If [tax on the AIG bonuses] passes, its death knell. If Congress suddenly discovers that it can take away money that they decide that someone doesn't deserve, if we let them get away with that, there'll be no stopping them.

Red State:

The people getting the bonuses are the people who stayed on or came aboard to clean up the mess in exchange for a healthy bonus for success. Succeed they did, reducing net liability from $2.6 trillion in August (when the bonus program was initiated) to about $1.7 trillion in February - saving the taxpayers almost a trillion dollars of potential liability. For this, they earned a bonus of a little over .02% of the amount saved, as their contracts specified.

For this great service, we should be thanking them, not allowing ignorant Congressmen to release their home addresses and family members’ names so their barbaric minions can harass them.

Do you see the difference?

Living high off the taxpayer teet is all well and good if you're one of our Productive Corporate Overlords. But if you think you deserve to have good health insurance just because you do something silly like teach children to read? Pfffft, get real hippie!

When Ireland made the decision to protect all of its banks from losses and cover those losses by imposing austerity measures in 2008, Paul Krugman made hash of the conservatives' argument for adopting that policy. As it turns out, he was right.

Ireland relented on Sunday and formally applied for a rescue package worth tens of billions of dollars, after months of trying to survive its financial crisis with austerity measures and strict budgetary planning.

European Union officials, who had been pushing Ireland to accept help, quickly agreed to the request, committing a staggering amount of funds to an ailing member for the second time in six months.

Ireland's fiscal crisis, like ours, has a mortgage meltdown as its root cause. However, the decision to impose severe austerity measures, including a big tax hike on Irish workers while insisting that the corporate tax rate remain one of the lowest in the world has not proven itself to be effective.

An Irish bailout would mean humiliation for the government ahead of possible national elections early next year. Ireland would lose some control over its finances in return for loans, which could mean being forced to give up the country's rock-bottom corporate tax rate – a key attraction to businesses that annoys other EU countries that have much higher rates.

Because of the concern over panic and contagion, Ireland will request the bailout, and receive it. They should also raise those corporate tax rates sooner rather than later. Enough is enough. It's proven time and again that low corporate tax rates will not sustain economic growth. Ireland's austerity failure stands as a solid argument against conservative austerity nonsense here, there, and elsewhere.

MELISSA BEAN FLOATED AS CFPB HEAD – Buzz on Friday had Rep. Melissa Bean (D-Ill.) possibly getting tapped as the first Consumer Financial Protection Bureau head depending on the outcome of her too-close-to-call reelection race, in which Republican Joe Walsh maintained a slight lead as of Sunday afternoon. But a possible Bean nomination is not sitting well with reformers on the left who say the moderate Illinois congresswoman is far too close to the banking industry.

Gee, what would give anyone that idea?

Oh right, stuff like this:

* FACT: Audit the Fed, one of the key provisions of the financial reform bill, was something both liberals AND conservatives fought for, and was supported by 80% of the public. Only 9% opposed it. Bean voted AGAINST Audit the Fed.

* FACT: Melissa Bean and the New Democrats were able to shoot the House derivatives plan full of holes.

* FACT: Three in four Americans (76%) wanted the government to block or recover the bonuses AIG paid its executives after taking TARP money.

* FACT: Melissa Bean introduced an amendment to gut a House bill to limit bonuses for TARP recipients. It passed.

* FACT: Melissa Bean “earned the most support of any incumbent from the US Chamber of Commerce,” per a Sunlight Foundation study of how the US Chamber of Commerce used former government officials as part of their lobbying team on financial regulation. Bean’s former Chief of Staff John Michael Gonzalez was one of the nineteen former government officials they hired.

* FACT: Bean received over 40% of her 2009 campaign contributions from the finance, insurance and real estate sector.

Now, I'm hoping -- I'm really, really hoping -- that this "buzz" Politico was talking about was just Rahm Emanuel giving America one final middle finger as a government official before spending the rest of his life as a soulless corporate lobbyist. But just in case it wasn't, here's a reminder of why we need a tough-ass cop on the beat to kick the financial services industry directly in its nuts:

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While things look pretty bleak in America, we can take comfort from the fact that we aren't alone in letting our economy get looted by multinational financial institutions. In Ireland, where eyes are doing anything but smiling, things are getting really dire:

The cost of bailing out the Republic of Ireland's stricken banks has risen to 45bn euro (£39bn), opening a huge hole in the Irish government's finances.

Oh. That sounds bad.

The increased cost will see the government run a budget deficit equivalent to 32% of GDP this year.

Yeah, that's pretty bad. But how much will this hurt Seamus Average?

Mr Lenihan defended the cost of the bail-out measures, which will cost the Republic's two million taxpayers the equivalent of 22,500 euros each

Holy crap! And the Irish have already implemented austerity measures to raise taxes and cut public services. Does this mean they'll have to do even more of that to pay for yet another massive bank bailout? Why, yes it does:

Minister for Finance Brian Lenihan today warned that further austerity measures will have to be imposed after the Central Bank revealed the total cost of the bailout for Irish banks will be almost €50 billion. [...]

Speaking separately, Taoiseach Brian Cowen refused to rule out further tax increases in the forthcoming Budget and said "revenue raising" options would be required as well as spending cuts in the Budget, which is due to take place in December.

Speaking on RTE radio at lunchtime, Mr Cowen refused to outline how much would have to be found through austerity measures.

Ireland, then, is becoming a feudal state where people are taxed not to pay for police, fire departments, schools, hospitals or pensions. Instead they're taxed to bail out failed financial institutions. And what's more, they're having their taxes increased to bail out failed financial institutions. The banks are the feudal lords living in castles and the taxpayers are the serfs.

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When Jason Grodensky bought his modest Fort Lauderdale home in December, he paid cash. But seven months later, he was surprised to learn that Bank of America had foreclosed on the house, even though Grodensky did not have a mortgage.

Grodensky knew nothing about the foreclosure until July, when he learned that the title to his home had been transferred to a government-backed lender. "I feel like I'm hanging in the wind and I'm scared to death," said Grodensky. "How did some attorney put through a foreclosure illegally?"

Bank of America has acknowledged the error and will correct it at its own expense, said spokeswoman Jumana Bauwens.

Mr. Gordensky is actually fairly lucky, since he had a pretty easy case to make that the bank couldn't foreclose on a mortgage that never existed. Others aren't quite so fortunate:

Luis Fernandez's foreclosure documents never looked quite right. Critical papers regarding his Orlando home were missing dates, and some signatures appeared to him to be forged. The mortgage had been sold so often - including once in the middle of the foreclosure process - that at times it was hard to tell which company was trying to seize the house. He challenged the foreclosure in court but failed.

Now, as Fernandez seeks to appeal his eviction and get his home back, he has learned that the law firm representing the banks is under investigation for fabricating foreclosure documents.

For those wondering why the banks are resorting to forging documents to foreclose on peoples' homes, let's review what happened over the last decade:

• Mortgages typically aren't held by the original lenders. Instead, they're sold off to Wall Street so they can be thrown into mortgage-backed securities. From there, they're thrown into special purpose entities like collateralized debt obligations (CDOs). And then maybe they're diced up again and thrown into a CDO squared, which is a CDO backed by pieces of other CDOs. Or if they're really lucky, a CDO cubed, which is a CDO backed by pieces of other CDOs that are backed by pieces of other CDOs.

• OK, I'll try to explain it in English: imagine the mortgage is a berry that gets eaten by a worm that gets eaten by a bird that gets eaten by a cat, and then gets crapped out. If you were the person assigned to find the remnants of berry within the mound of cat poop, could you even attempt it?

• So the lenders have absolutely no idea if the original mortgage is anywhere on their books -- or, for that matter, if it's been sent through a rift in the space-time continuum and is now held by the Rang'ar Interplanetary Fifth Dimensional Bank of the Gamma Quardrant. They have no idea what loans they are and are not exposed to. Oh noes! What are they to do?

• The answer, it seems, has been to make stuff up. Forge foreclosure documents, send them out and hope that the people getting screwed aren't smart enough to raise hell about it.

Dean Baker explains this better than I can, and without resorting to crude metaphors involving cat poop:

If the servicer followed the law on carrying through foreclosures then it would have to go through a costly and time-consuming process of getting its paperwork in order and ensuring that it actually did have possession of the title before going to a judge and getting a judgment that would allow them to take possession of the property. Instead, banks got in the habit of skirting the proper procedures and filling in forms inaccurately and improperly in order to take possession of properties.

GMAC, the former financing arm of General Motors and now called Ally Financial, has become the poster-child for these sorts of practices. Jeffrey Stephan, a leader of one of its foreclosure units, acknowledged that he had signed thousands of affidavits claiming that he had reviewed documents he had never seen.

Here's a fun thought: What happens if your mortgage was part of a synthetic CDO? That is, some bank synthesized a security based partly on your mortgage utilizing credit default swaps? Does this mean that if the bank foreclosed on you you'd not only lose you home but would be required to also hand over a duplicate home that's never been built? The mind boggles. I'll have more to say on this in the future when I debut my own creative financial innovation: The four-dimensional collateralized synthetic obligation cubed! Stay tuned.

RELATED: Barry Ritholz is having a contest to craft a new advertising slogan for Goldman Sachs. My favorite so far: "God’s Work. It’s not just for hurricanes and famines and locusts anymore."