Wal-Mart’s Walton family are parasites and moral pariahs and should be treated that way


 
The Winchester House, a sprawling Queen Anne Style Victorian mansion in San Jose, CA with no apparent rhyme or reason is a bizarre architectural manifestation of the guilty conscience (if not acute schizophrenia) of Sarah Winchester, widow of gun magnate William Wirt Winchester and one of the richest women in American history.

After the death of her baby daughter, and later her husband, Sarah Winchester came to believe that her family were haunted by the ghosts of people who had died by Winchester rifles, and that only by continuously building the spirits a home could she appease the ghosts (Through a medium her husband was alleged to have told her that the house must never be finished.)

I could not help but to think of Sarah Winchester when I read an item this morning on Business Insider that tells of how a Cleveland, Ohio-based Wal-Mart store is holding a food drive — for the very people who work there…

A sign in the store reads: “Please donate food items so associates in need can enjoy Thanksgiving dinner.”

Breathtaking isn’t it? This is America’s largest employer. THIS is how low things have gotten.

The Cleveland Plain Dealer quoted Norma Mills, a Wal-Mart customer complaining “That Wal-Mart would have the audacity to ask low-wage workers to donate food to other low-wage workers — to me, it is a moral outrage.”

Kory Lundberg, a Walmart spokesman, said the food drive is proof that employees care about each other.

“It is for associates who have had some hardships come up,” he said. “Maybe their spouse lost a job.

“This is part of the company’s culture to rally around associates and take care of them when they face extreme hardships,” he said.

Extreme hardships like working at fucking Wal-Mart!?!?

Wouldn’t it be awesome if when someone told a lie, they’d just spontaneously combust? I would love that…

But what does any of this have to do with Sarah Winchester’s guilty conscience, you ask? At least she had one. Sarah Winchester acutely felt the wages of death that made her so rich and it ruined her life.

As everyone should know by now, but it still bears repeating, the Walton family is the richest family in the world and they collectively own over 50% of Wal-Mart, the world’s largest retailer and second largest corporation. The family is worth a combined total of $150 billion as of August 2013 and the six most prominent members of the family have approximately the same net worth as the bottom 30% of American families combined.

They didn’t do a goddamn thing to earn this money. Nothing. They inherited every cent of their billions.

Every item that is purchased at a Wal-Mart has a tax built in for the Walton family. The supply chain that reaches to factories in Chinese and Indian slums? There is a tariff at each stop along the way that goes, ultimately, into the Waltons’ bank accounts. Think about it for two seconds, that is what’s happening.

If it was a sea of faceless shareholders, well, that’s harder to personify, but this is ONE family.

Wal-Mart is America’s #1 private employer.

And they don’t pay a living wage.

The Waltons live like pharaohs and their workforce can’t afford the necessities of life. In a very real sense they and Wal-Mart are beginning to personify everything that’s wrong with capitalism. A single family owning the equivalent of the collective wealth of the poorest third of the country? Could even Karl Marx have predicted THAT? It’s preposterous and yet… it’s the way things are.

If the Waltons wanted to change the fundamental fabric of American life for the better, they could raise their associates up to $20 an hour and set a powerful example for other companies to treat the people who DO ALL THE WORK with actual human dignity. If they did that—and studies have shown it wouldn’t hurt their bottom line much at all, and even if it did, I think they can take the hit—well, it’s a whole new America. It really would be.

But to hold back on improving the lives of so many people, that is one of the single most obscene things I can contemplate.

Up to the Waltons, of course, for now at least, but when the revolution comes—and it will eventually—it’s their heads that are going to be on the ends of sharp sticks…
 

 

Written by Richard Metzger | Discussion
Capitalism, Communism and dishwashers: Nixon and Khrushchev argue in ‘The Kitchen Debate’

 Nixon and Khrushchev
Nice body language, Dick. Photo credit: Elliot Erwitt.
 
In 1959, Richard Nixon and Nikita Khrushchev met in Moscow in a highly publicized diplomatic event. The highlight of the trip was a visit to the American National Exhibition, a sort of cultural exchange fair where the US could showcase all the amenities afforded to its citizens by capitalism. The US public relations strategy was to get the world to associate us with modern conveniences and easy living. What could go wrong?

Unfortunately for Nixon, Khrushchev decided to dispense with the formalities and staged a delightfully bitchy political debate with the then Vice President over the exhibit displaying a “typical” California kitchen. Below is the transcript and a partial video excerpt from the famous Kitchen Debate, wherein a flustered Nixon attempts to gracefully field criticism with a little slick diplomacy (it doesn’t quite work). The entire exchange is done through translators, but there’s not much a gentler tone could do to ease the tension—not that Khrushchev had any intention of doing so. Some things translate loud and clear.

Over three million Russians actually ended up attending the fair, and the crowds often echoed Khrushchev’s particularly volatile brand of interrogation. Audiences would ask personal questions of the tour guides, often berating them with leading questions about American racism, our lack of universal health care, and social security. Of course the guides were instructed to politely admit that the U.S. wasn’t perfect, but a dynamic work in progress, nonetheless. 

The entire premise of the exhibit was just a show of Cold War dick-measuring, and the Kitchen Debate was the big finish. By the end, both men believed they had “won,” and the two shook hands, agreeing to broadcast the entire conversation in their respective countries.The U.S. went off half-cocked and aired the segment on three networks, which angered the Soviets, who had assumed they would coordinate simultaneous broadcasts. The Soviets then threatened not to show it at all, but after a few days it was aired, though with Nixon’s words only partially translated.

[Both men enter kitchen in the American exhibit.]

Nixon: I want to show you this kitchen. It is like those of our houses in California.

[Nixon points to dishwasher.]

Khrushchev: We have such things.

Nixon: This is our newest model. This is the kind which is built in thousands of units for direct installations in the houses. In America, we like to make life easier for women…

Khrushchev: Your capitalistic attitude toward women does not occur under Communism.

Nixon: I think that this attitude towards women is universal. What we want to do, is make life more easy for our housewives…..
 
 Nixon and Khrushchev
Photo credit: Associated Press
 
Nixon: This house can be bought for $14,000, and most American [veterans from World War II] can buy a home in the bracket of $10,000 to $15,000. Let me give you an example that you can appreciate. Our steel workers as you know, are now on strike. But any steel worker could buy this house. They earn $3 an hour. This house costs about $100 a month to buy on a contract running 25 to 30 years.

Khrushchev: We have steel workers and peasants who can afford to spend $14,000 for a house. Your American houses are built to last only 20 years so builders could sell new houses at the end. We build firmly. We build for our children and grandchildren.

Nixon: American houses last for more than 20 years, but, even so, after twenty years, many Americans want a new house or a new kitchen. Their kitchen is obsolete by that time….The American system is designed to take advantage of new inventions and new techniques.

Khrushchev: This theory does not hold water. Some things never get out of date–houses,for instance, and furniture, furnishings–perhaps–but not houses. I have read much about America and American houses, and I do not think that this is exhibit and what you say is strictly accurate.

Nixon: Well, um…

Khrushchev: I hope I have not insulted you.

Nixon: I have been insulted by experts. Everything we say [on the other hand] is in good humor. Always speak frankly.

Khrushchev: The Americans have created their own image of the Soviet man. But he is not as you think. You think the Russian people will be dumbfounded to see these things, but the fact is that newly built Russian houses have all this equipment right now.

Nixon: Yes, but…

Khrushchev: In Russia, all you have to do to get a house is to be born in the Soviet Union. You are entitled to housing…In America, if you don’t have a dollar you have a right to choose between sleeping in a house or on the pavement. Yet you say we are the slave to Communism.

Nixon: I appreciate that you are very articulate and energetic…

Khrushchev: Energetic is not the same thing as wise.

Nixon: If you were in the Senate, we would call you a filibusterer! You–[Khrushchev interrupts]–do all the talking and don’t let anyone else talk. This exhibit was not designed to astound but to interest. Diversity, the right to choose, the fact that we have 1,000 builders building 1,000 different houses is the most important thing. We don’t have one decision made at the top by one government official. This is the difference.

Khrushchev: On politics, we will never agree with you. For instance, Mikoyan likes very peppery soup. I do not. But this does not mean that we do not get along.

Nixon : You can learn from us, and we can learn from you. There must be a free exchange. Let the people choose the kind of house, the kind of soup, the kind of ideas that they want.

[Translation lost as both men enter the television recording studio.]

Khrushchev: [In jest] You look very angry, as if you want to fight me. Are you still angry?

Nixon: [in jest] That’s right!

Khrushchev:…and Nixon was once a lawyer? Now he’s nervous.

Nixon: Oh yes, [Nixon chuckling] he still is [a lawyer].

Other Russian speaker: Tell us, please, what are your general impressions of the exhibit?

Khrushchev: It’s clear to me that the construction workers didn’t manage to finish their work and the exhibit still is not put in order…This is what America is capable of, and how long has she existed? 300 years? 150 years of independence and this is her level. We haven’t quite reached 42 years, and in another 7 years, we’ll be at the level of America, and after that we’ll go farther. As we pass you by, we’ll wave “hi” to you, and then if you want, we’ll stop and say, “please come along behind us.” …If you want to live under capitalism, go ahead, that’s your question, an internal matter, it doesn’t concern us. We can feel sorry for you, but really, you wouldn’t understand. We’ve already seen how you understand things.

Other U.S speaker: Mr. Vice President, from what you have seen of our exhibition, how do you think it’s going to impress the people of the Soviet Union?

Nixon: It’s a very effective exhibit, and it’s one that will cause a great deal of interest. I might say that this morning I, very early in the morning, went down to visit a market, where the farmers from various outskirts of the city bring in their items to sell. I can only say that there was a great deal of interest among these people, who were workers and farmers, etc… I would imagine that the exhibition from that standpoint would, therefore, be a considerable success. As far as Mr Khrushchev’s comments just now, they are in the tradition we learned to expect from him of speaking extemporaneously and frankly whenever he has an opportunity. I can only say that if this competition which you have described so effectively, in which you plan to outstrip us, particularly in the production of consumer goods…If this competition is to do the best for both of our peoples and for people everywhere, there must be a free exchange of ideas. There are some instances where you may be ahead of us–for example in the development of the thrust of your rockets for the investigation of outer space. There may be some instances, for example, color television, where we’re ahead of you. But in order for both of us benefit…

Khrushchev: [interrupting] No, in rockets we’ve passed you by, and in the technology…

Nixon: [continuing to talk] You see, you never concede anything.

Khrushchev: We always knew that Americans were smart people. Stupid people could not have risen to the economic level that they’ve reached. But as you know, “we don’t beat flies with our nostrils!” In 42 years we’ve made progress.

Nixon: You must not be afraid of ideas.

Khrushchev: We’re saying it is you who must not be afraid of ideas. We’re not afraid of anything….

Nixon: Well, then, let’s have more exchange of them. We all agree on that, right?

Khrushchev: Good. [Khrushchev turns to translator and asks:] Now, what did I agree on?

Nixon: [interrupts] Now, let’s go look at our pictures.

Khrushchev: Yes, I agree. But first I want to clarify what I’m agreeing on. Don’t I have that right? I know that I’m dealing with a very good lawyer. Therefore, I want to be unwavering in my miner’s girth, so our miners will say, “He’s ours and he doesn’t give in!”

Nixon: No question about that.

Khrushchev: You’re a lawyer of Capitalism, I’m a lawyer for Communism. Let’s kiss.

Nixon: All that I can say, from the way you talk and the way you dominate the conversation, you would have made a good lawyer yourself. What I mean is this: Here you can see the type of tape which will transmit this very conversation immediately, and this indicates the possibilities of increasing communication. And this increase in communication, will teach us some things, and you some things, too. Because, after all, you don’t know everything.

Khrushchev: If I don’t know everything, then you know absolutely nothing about Communism, except for fear! But now the dispute will be on an unequal basis. The apparatus is yours, and you speak English, while I speak Russian. Your words are taped and will be shown and heard. What I say to you about science won’t be translated, and so your people won’t hear it. These aren’t equal conditions.

Nixon: There isn’t a day that goes by in the United States when we can’t read everything that you say in the Soviet Union…And, I can assure you, never make a statement here that you don’t think we read in the United States.

Khrushchev: If that’s the way it is, I’m holding you to it. Give me your word…I want you, the Vice President, to give me your word that my speech will also be taped in English. Will it be?

Nixon: Certainly it will be. And by the same token, everything that I say will be recorded and translated and will be carried all over the Soviet Union. That’s a fair bargain.
 

 
The Kitchen Debate. One of the first uses of color videotape, which was provided by the Ampex corporation. The impromptu international game of Soviet vs. Yank one-upmanship was shot at the Ampex booth at the fair.

Via Teaching American History

Written by Amber Frost | Discussion
America circa 2013 in a nutshell: The ‘Wal-Mart Cheer’ is the most depressing thing you’ll ever see
07.29.2013
09:57 am

Topics:
Class War

Tags:
Capitalism
Wal-Mart


 
Did you know that many Wal-Mart locations begin shifts with “the Wal-Mart cheer”? Oh yes, and there are several dozens of renditions of this soul-destroying ditty on YouTube, each one sadder than the last. The one below is actually the “best” one due to the exuberance the chant leader displays for being exploited by the billionheir Walton family, like a slave they don’t even have to house or feed. A part of me recoiled in horror when I watched this guy who probably makes $7.50 an hour get worked up into a frenzy over the demeaning day of labor in store for him.

Or else maybe he just took a hit off a meth pipe?

Give me a W!
Give me an A!
Give me an L!
Give me a squiggly!
Give me an M!
Give me an A!
Give me an R!
Give me a T!

What’s that spell?
Wal-Mart!

Whose Wal-Mart is it?
It’s my Wal-Mart!

Your Wal-Mart is it? Yours?

Wal-Mart isn’t satisfied with your dignity, the Walton family and their shareholders apparently want to vampire your soul, too.

Here’s how one former employee described the Wal-Mart cheer ritual to Gawker’s Life at Wal-Mart: Welcome to Hell series on the retail behemoth:

“But the absolute worst thing about working there had to be the Walmart cheer. In case you’ve never been fortunate enough to witness the daily Walmart pep rally, it basically consists of all the available “Associates” gathering in a big circle to hear about how much money “our” store had brought in the previous day and how we all needed to work even harder so “our” store would bring in more money than all the other Walmarts nearby tomorrow. And to seal the deal we would all take part in the Walmart cheer, a ritual that simultaneously drains you of all hope for the future while at the same time somehow numbing you to the point of lethargic resignation to your lot in life.”

This video needs to be put into a time capsule to be opened up in 100 years…
 

 
Bonus clip: John Fugelsang rants about ‘What to say to people who still defend Walmart’ on CurrentTV
 

Written by Richard Metzger | Discussion
Capitalism is dead: American poverty to go mainstream as 80% predicted to feel economic insecurity


Look like anyone you know?

Data from an as-yet unpublished survey reported on by The Associated Press today predicts that four out of five U.S. adults—an astonishing 80%, so guess what, this depressing figure probably includes YOU, bucko, unless you were born rich—will face grinding unemployment, near-poverty and a reliance on welfare for at least a part of their lives. The stated reason for this widespread economic insecurity is the lack of stable, good-paying manufacturing jobs, but isn’t that just a polite way of saying “because the fucking system is rigged by the 1%”? Of course it is.

Eighty percent? EIGHTY PERCENT???

Yeah, that’s right, eighty percent. How much longer will people put up with this? All for them and none for you? The pessimistic answer would be to shrug it off and say “it’ll never happen”—I thought this myself for decades—but I’m not so sure about that anymore. With grim figures like these—and so many “have nots” standing on the same side of the gated communities—this country will surely become a tinderbox. Sooner rather than later, I’d suspect.

Hardship is particularly growing among whites, based on several measures. Pessimism among that racial group about their families’ economic futures has climbed to the highest point since at least 1987. In the most recent AP-GfK poll, 63 percent of whites called the economy “poor.”

“I think it’s going to get worse,” said Irene Salyers, 52, of Buchanan County, Va., a declining coal region in Appalachia. Married and divorced three times, Salyers now helps run a fruit and vegetable stand with her boyfriend but it doesn’t generate much income. They live mostly off government disability checks.

“If you do try to go apply for a job, they’re not hiring people, and they’re not paying that much to even go to work,” she said. Children, she said, have “nothing better to do than to get on drugs.”

While racial and ethnic minorities are more likely to live in poverty, race disparities in the poverty rate have narrowed substantially since the 1970s, census data show. Economic insecurity among whites also is more pervasive than is shown in the government’s poverty data, engulfing more than 76 percent of white adults by the time they turn 60, according to a new economic gauge being published next year by the Oxford University Press.

For non-whites the economic insecurity figure rises to an an even more astonishing 90%!

And right at the time when the GOP wants to gut welfare, Social Security and stop the implementation of the Affordable Care Act cruelly denying healthcare coverage to all those poorz who thought they finally were gonna get some. Nice timing Republicans, you must really like the thought of your heads being hoist on pointy sticks by pitchfork wielding mobs. You’d have to think that even a rah-rah red state Fox News viewer might finally wake up to the abject stupidity of voting for a Republican who wants to gut social programs, when they are OVERWHELMINGLY STATISTICALLY LIKELY to amongst the legions of the shit-out-of-luck themselves—HELLO NORTH CAROLINA—but I won’t hold my breath waiting for that.

By 2030, it’ll be even worse: Based on current trends of widening income inequality, in a blink of an eye, historically speaking, 85% of EVERY working-age adults in the U.S. will experience economic insecurity. What’s wrong with a system like this BESIDES EVERY DAMNED THING?

Do they OWE US a living? Of course they fucking do!

Think about it, under such circumstances, obviously being in the top 20% would be the way to swing, but even so, would you WANT to live in that sort of Mad Max scarcity society? How walled off would the wealthy have to be in a world like that to feel truly safe? Their children would have to have armed guards at all times!

What was it again, that Senator Huey Long said in his famous “Every Man a King” speech? Oh yeah:

How many of you remember the first thing that the Declaration of Independence said? It said, “We hold these truths to be self-evident, that there are certain inalienable rights of the people, and among them are life, liberty, and the pursuit of happiness”; and it said, further, “We hold the view that all men are created equal.”

Now, what did they mean by that? Did they mean, my friends, to say that all men were created equal and that meant that any one man was born to inherit $10,000,000,000 and that another child was to be born to inherit nothing?

Did that mean, my friends, that someone would come into this world without having had an opportunity, of course, to have hit one lick of work, should be born with more than it and all of its children and children’s children could ever dispose of, but that another one would have to be born into a life of starvation?

That was not the meaning of the Declaration of Independence when it said that all men are created equal of “That we hold that all men are created equal.”

Now was it the meaning of the Declaration of Independence when it said that they held that there were certain rights that were inalienable—the right of life, liberty, and the pursuit of happiness. Is that right of life, my friends, when the young children of this country are being reared into a sphere which is more owned by 12 men than it is by 120,000,000 people?

Of course Huey Long was assassinated for saying things like this in the 1930s, but things are different these days.

This simply can’t hold. It’s not going to. It can’t.

Hey Mr. Tea party man, try telling someone who is 26, owes over $100,000 in student loans and who works slinging coffee because no law firms are hiring that cutting taxes for the rich and abolishing the minimum wage is going to create jobs. Try telling them that the way things worked in the 20th century are the way things are always going to be and that “the system”—this system that is keeping them from realizing their full potential as human beings—should be preserved and that the same solutions that (supposedly) worked back in the Ronnie Raygun era are exactly what the doctor ordered. If they’re even remotely aware of the world around them, they will laugh right in your fool face. No wonder the millennials can’t wait for the baby boomers to die off. I can’t say I blame them.

It’s just getting to be a joke. The Democrats are a booby prize, of this I am only too well aware, but for all of their faults, at least they tend to be SANE. The Republicans, well, they have to be pushed out of the way. And soon. Hopefully this will be achieved democratically, but if not, the entire shithouse looks increasingly like it’ll blow in the coming years.

Look at the options. YOUR options. They’re closing down. Look at what they are taking from us. In the near future, these roads will become even narrower, more crowded, more dog-eat-dog for your children, should you be lucky enough to be able to afford to raise a family.

This is what we’re facing. What should be done about this? And WHO is going to do it?

Previously on Dangerous Minds:
American Obscenity: Corporate CEOs make 380x the wage of the average American worker!

Below, George Carlin on the American Dream
 

Written by Richard Metzger | Discussion
Are the Rich Committing Treason?


 
A beautifully worded, very brief think piece by Prof. Robert Reich, Bill Clinton’s Secretary of Labor, is making the rounds that puts the behavior of the nation’s 1% into stark relief.

Are the rich committing treason? Certainly they’re committing something…

Permit me an impertinent question (or three).

Suppose a small group of extremely wealthy people sought to systematically destroy the U.S. government by (1) finding and bankrolling new candidates pledged to shrinking and dismembering it; (2) intimidating or bribing many current senators and representatives to block all proposed legislation, prevent the appointment of presidential nominees, eliminate funds to implement and enforce laws, and threaten to default on the nation’s debt; (3) taking over state governments in order to redistrict, gerrymander, require voter IDs, purge voter rolls, and otherwise suppress the votes of the majority in federal elections; (4) running a vast PR campaign designed to convince the American public of certain big lies, such as climate change is a hoax, and (5) buying up the media so the public cannot know the truth.

Would you call this treason?

If not, what would you call it?

And what would you do about it?

Nicely done, Robert Reich!

Discuss!
 

Written by Richard Metzger | Discussion
What Marx got right


 
This is a guest post from Charles Hugh Smith. His newest book is Why Things Are Falling Apart and What We Can Do About It

The crisis of capitalism has not been resolved; it’s simply been papered over.

First, a disclaimer: this is an interpretive discussion of some aspects of Marx’s analysis (which was based on the capitalism he observed in the late 19th century) applied to present-day cartel-state capitalism. It is not a scholarly or academic presentation.

The discussion covers a lot of ground, though, so please refill your beverage container and strap in….

That Marx’s prescription for a socialist/Communist alternative to capitalism failed does not necessarily negate his critique of capitalism. Marx spent hundreds of pages analyzing capital and capitalism and relatively few sketching out a pie-in-the-sky alternative that was not grounded in historical examples or working models.

So it is no surprise that his prescriptive work is an occasionally risible historical curiosity while his critique stands as a systemic analysis.

Marx got a number of things right, one of which appears to be playing out on a global scale. You probably know that Marx expected capitalism to experience a series of ever-larger boom-bust cycles that would eventually precipitate revolution and overthrow of the existing financial-political order.

One driver of these cycles was the interplay of increasing production and declining labor costs. In broad-brush, Marx recognized that industrial capital (as opposed to finance capital) could only increase profits and accumulate more capital by raising production and/or establishing a price-fixing cartel or monopoly.

Mechanization characterized industrial capitalism in the late 19th century, and Marx observed that as mechanization increased productivity, the marginal value of labor decreased on a per unit basis.

Here is a real-world example: When I first visited China in 2000, there was a massive glut of television production: the capacity to manufacture TVs had expanded far beyond China’s domestic demand for TVs. To wring out a profit in a highly competitive industry, manufacturers had to ramp up production while lowering the unit cost of labor and the unit cost of each TV to undercut the competition.

If an assembly line of 100 workers could produce 1,000 TVs a day, the only way to lower the price of the TV is to either lower the wages paid to the workers or invest capital in machinery that enables the same 100 workers to produce 2,000 TVs a day.

At 2,000 TVs a day, the per unit labor cost falls in half. For example, at 1,000 TVs a day, the labor cost per TV might be $40. At 2,000 TVs per day assembled by the same 100 workers, the labor cost per unit drops to $20.

The key point here is that labor’s share of the total production cost declines. If workers had taken home $1 million in pay to make 100,000 TVs at the old production rate of 1,000 TVs/day, they now take home $500,000 to make 100,000 TVs at the new production rate.

In other words, labor’s share of value creation constantly declines as mechanization boosts productivity. Marx described the impact of another factor: oversupply of labor. As rural agricultural workers flooded into cities for jobs that paid cash, there was an abundance of factory labor. Competition for jobs pushes wages lower, so workers faced a double-whammy: their share of production relentlessly declined as productivity rose, and the pressure on wages constantly rose as per unit labor costs declined.

The competition to outproduce industrial rivals with cheaper per-unit production costs and labor’s competition for jobs both generate a structural crisis in capitalism: as production of goods rises, both the cost per unit and the number of workers earning enough to buy the goods declines.

Keep reading ‘What Marx Got Right’ from Charles Hugh Smith after the jump…

Written by Richard Metzger | Discussion
MASKED, heavily-armed paramilitary rent-a-cops are freaking out Wisconsin


 
It cannot be said that the citizens of Wisconsin didn’t truly get what they asked for when they had a chance to shitcan Republican Governor Scott Walker, but for some inexplicable reason, opted not to oust the lickspittle Koch whore. Nope, Wisconsin voted this toady to the rich and powerful in twice and well, that clearly wasn’t an accident, now was it? By any metric, Gov. Walker’s tenure in the statehouse has been a disastrous and divisive few years for Wisconsin, near the bottom in job creation and with a host of other problems the Charlie Brown-ish Walker has done little to solve and much to exacerbate.

But now Wisconsinites are getting a bite from a brand new flavor of shit sandwich that results from having a Republican-controlled legislature: Masked mercenaries with semi-automatic weapons are guarding the site of a controversial mining project that is being established near Lake Superior and understandably, people are freaking out about it.

Although there were serious environmental concerns about the mine, in March the GOP legislature pushed it through anyway. Since then there have been steady events protesting the mine, which will be owned and operated by a company called Gogebic Taconite. Over the July 4th weekend, however, masked security guards wearing camouflaged uniforms and carrying multiple semi-automatic weapons started patrolling the future mine’s site. Forget about the firepower for a moment, why do these dudes require masks to do their jobs???

Talking Points Memo editor Josh Marshall did a little digging into the background of Bulletproof Securities the rent-a-cop on steroids firm—or as they put it, the “No Compromise Security Force”—that is minding the mine:

Here’s the Bulletproof website which lists all sorts of security/paramilitary type services. They even have their own ‘border security force’, which is something I thought the federal government took care of. But apparently not without occasional help from Bulletproof.

Indeed, as the site notes, “BPS has at its disposal the latest cache of specialized equipment for border security operations, not typically found in the private sector. As example, BPS owns heavily armored Joint Light Tactical Vehicles (JLTV’s), Tactical All Terrain Vehicles (T-ATV’s), FLIR (mobile thermal systems), mast equipment (eye in the sky), and many other state-of-the-art assets … The presence of BPS will prevent criminal organizations from posing a threat to your personnel or your mission.”

If your needs are different, Bulletproof can also provide “a QRF (quick reaction force) tactical unit to secure a manufacturing plant during a heated worker strike.”

And they’ll do it all while wearing fucking masks!

Welcome to late period capitalism, baby! Which side of the fork do you reckon you’ll be on?

Worth mentioning that the Republicans who voted to push through the mine over community objections promised that Gogebic Taconite would be creating local jobs. So of course, the first thing, the very first thing that G-Tac did was import their paramilitary mercenaries from Scottsdale, AZ…

Something else worth mentioning? The land is actually open to the public and Bulletproof’s militarized rental cops do not even have the legal right in Wisconsin to actually use the weaponry that they are openly carrying around for the purpose of protecting property. And again, this is property that they do not own!.

Here’s a news report on this highly disturbing development from WISC-TV:
 

 

Written by Richard Metzger | Discussion
Irish town erects fake shop fronts for G8 summit


 
I shit you not. Apparently the G8 leaders and their entourages are such delicate flowers that they can’t bear to see the effect of the global recession on the towns they drive through, such as upcoming host Enniskillen in Northern Ireland.

Via RTÉ, the Irish national broadcaster:

Local councils in Northern Ireland have painted fake shop fronts and covered derelict buildings with huge billboards to hide the economic hardship being felt in towns and villages near the golf resort where G8 leaders will meet this month.

Northern Ireland’s government has spent £2m (€2.3m) tackling dereliction over the past two years, the environment department said. Some buildings have been demolished and others have been given a facelift in an attempt to make areas more attractive.

Almost a quarter of “dereliction funds” were freed up for local councillors in Co Fermanagh in anticipation of Britain hosting the annual Group of Eight leaders’ summit there on 17-18 June. More than 100 properties have been spruced up. In the one-street town of Belcoo, the changes are merely cosmetic.

At a former butcher’s shop, stickers applied to the windows show a packed meat counter and give the impression that business is booming. Across the street, another empty unit has been given a makeover to look like a thriving office supply shop.

Locals are unimpressed. “The shop fronts are cosmetic surgery for serious wounds. They are looking after the banks instead of saving good businesses,” said Kevin Maguire, 62, an unemployed man who has lived all his life in Belcoo.

Full story here.

Written by Niall O'Conghaile | Discussion
A Price-fixing Scandal Bigger Than Libor?: How the Oil Companies have us over a barrel

phprlLCIHAM.jpg
 
The London offices of Shell, BP, Statoil and Platts, the world’s leading oil price reporting agency, were raided yesterday by European Commission inspectors, investigating allegations of collusion in price-fixing over the past 11 years.

After last year’s Libor scandal, these new allegations of price-fixing look set to be a further damning indictment (if ever that were needed) of capitalism and the unfettered greed of its corporations.

If the allegations are true, then it again shows how prices are based NOT on true cost, but on an arbitrary figure dreamed-up to give as much money to a selfish, spineless, avaricious few.

The price people pay for oil is based on a “benchmark” which is calculated by price reporting agencies based on data received from firms such as oil companies, banks and hedge funds, which all trade oil on a daily basis. It is these submissions which the EC suspect are possibly fraudulent.

A spokesman for the European Commission said:

“The commission has concerns that companies may have colluded in reporting distorted prices to a price reporting agency to manipulate the published prices for a number of oil and biofuel products.

Officials carried out unannounced inspections at the premises of several companies active in and providing services to crude oil, refined oil products and biofuels sectors.

Even small distortions of assessed prices may have a huge impact on the prices of crude oil, refined oil products and biofuels purchases purchases and sales, potentially harming final consumers.

The price fixing of fuel just doesn’t hit drivers—everything that is dependent on road haulage is directly affected by such underhand collusion—food prices, heating, public transport costs—all are increased and the costs will always hit the poorest worst.

According to the Guardian, Lord Oakeshott, former Liberal Democrat Treasury spokesman, said:

the alleged rigging of oil prices was “as serious as rigging Libor” – which led to banks being fined hundreds of millions of pounds.

He demanded to know why the UK authorities had not taken action earlier and said he would ask questions of the British regulator in Parliament. “Why have we had to wait for Brussels to find out if British oil giants are ripping off British consumers?” he said. “The price of energy ripples right through our economy and really matters to every business and families.”

As yet, there is no fixed date for the conclusion of the EC investigation. Read the full story here.
 

 
Previously on Dangerous Minds

Why the Libor Scandal is the most important story in the world


 

 

Written by Paul Gallagher | Discussion
Capitalism’s fiction laid bare: Will the Cyprus crisis trigger a revolution?
03.18.2013
03:19 pm

Topics:
Class War
Economy

Tags:
Capitalism
oligarchs


The Mediterranean island of Cyprus is the epicenter of an epic shitstorm…

This is a guest post from Charles Hugh Smith. His newest book is Why Things Are Falling Apart and What We Can Do About It

The deposit-confiscation “bailout” of Cyprus reveals much about the Eurozone’s fundamental neocolonial, neofeudal structure.

At long last, Europe’s flimsy facades of State sovereignty, democracy and free-market capitalism have collapsed, and we see the real machinery laid bare: the Eurozone’s political-financial Aristocracy will stripmine every nation’s citizenry to preserve their power and protect the banks and bondholders from absorbing losses.

The deposit-confiscation “bailout” of Cyprus confirms the Eurozone’s fundamental neocolonial, neofeudal structure and the region’s political surrender to financialization.

Let’s list what Cyprus reveals about the true state of financial-political power in Europe:

1. The Core-Periphery terminology masks the real structure: the E.U. operates on a neocolonial model. In the old Colonialism 1.0 model, the colonizing power conquered or co-opted the Power Elites of the periphery regions, and proceeded to exploit the new colonies’ resources and labor to enrich the Imperial core.

In Neocolonialism, the forces of financialization (debt and leverage controlled by State-enforced banking cartels) are used to indenture the local Elites and populace to the financial core: the peripheral “colonials” borrow money to buy the finished goods manufactured in the core economies, enriching the Imperial Elites with A) the profits made selling goods to the debtors B) interest on credit extended to the peripheral colonies to buy the core economies’ goods and “live large”, and C) the transactional skim of financializing peripheral assets such as real estate and State debt.

In essence, the core banks of the E.U. colonized the peripheral nations via the financializing euro, which enabled a massive expansion of debt and consumption in the periphery. The banks and exporters of the core exacted enormous profits from this expansion of debt and consumption.

Now that the financialization scheme of the euro has run its course, the periphery’s neocolonial standing is starkly revealed: the assets and income of the periphery are flowing to the core as interest on the private and sovereign debts that are owed to the core’s central bank and its crony money-center private banks.

This is not just the perfection of neocolonialism but of neofeudalism as well. The peripheral nations of the E.U. are effectively neocolonial debtors of the core (quasi-Imperial) banks, and the taxpayers of the core nations (now reduced to Germany and The Netherlands) are now feudal serfs whose labor is devoted to making good on any bank loans to the periphery that go bad.

Though we can term the E.U. a plutocracy or oligarchy, the neofeudal structure compels us to distinguish a class of those holding wealth and political power that is not limited to national border: This is an Aristocracy.

Serving the Aristocracy is a well-paid technocrat class of factotums, lackeys, toadies and enforcers. Below this well-compensated caste of technocrats is the larger class of debt-serfs, enslaved to interest payments on either their own debts or the debts of others, and bound by their class powerlessness to protecting banks and bondholders from losses.

Cyprus merely adds an expropriation twist to this well-oiled plunder: deposits will be expropriated directly to insure no Imperial (core) banks or bond holders lose money on their absurdly risky loans to periphery nations and serfs.

2. This is a supranational plunder. While commentators can wile away years debating how much Germany benefited from the euro, the real core is not national, it is supranational banks and the political machinery of the E.U. the banks have effectively captured.

The citizenry of Germany may approve or disapprove of the Cyprus expropriation, but it doesn’t matter either way: their own serfdom to banks and bondholders is simply being masked: the bailouts of periphery nations are transparently bailouts of core banks and bondholders.

The nation-states of the neocolonial periphery are simply convenient propaganda placeholders, useful misdirections aimed at the naive and sentimental, hollowed-out national structures propped up to mask the ugly neocolonial reality of servitude and plunder.

3. Democracy is a fiction when no matter who you vote for, the banks and bondholders win control of the national income stream and private wealth. Democracy in Europe is a travesty of a mockery of a sham, an absurd play which is acted out as a form of blood-sport circus to distract the masses from their powerlessness and debt-serfdom.

Democracy is a fiction when the policies protecting banks and bondholders from losses remain in place regardless of which political party, coalition or politico is nominally in power.

The German taxpayers’ private wealth is being expropriated via taxes to bail out core banks and bondholders; how is this any different from the blatant expropriation of private assets in Cyprus?

It is only a difference in technique; the result is the same: the forced transfer of wealth from those who earned it from their labor to banks and bondholders which in a truly capitalist economy would be immediately forced to absorb the losses of their leveraged, highly risky bets.

4. The ideological fiction of capitalism is dead in Europe. Capitalism is a fiction if capital that is placed at risk for a return cannot be lost.

5. Cyprus is a test to see how blatant the expropriation of private assets can become without triggering overthrow and revolution. If the furor dies down soon enough, then the same technique of expropriation will be imposed elsewhere. If the reaction is sustained and threatening to the Aristocracy, other less blatant expropriations will be tested in other neocolonies.

6. Divide and conquer is the propaganda order of the day. The Power Elites are attempting to set the serfs of the periphery against the serfs of the core, the goal being to keep both sets of serfs from realizing they are equally indentured to the core’s pathological political-financial Aristocracy.

This is a guest post from Charles Hugh Smith’s Of Two Minds blog. You should bookmark it and read him daily. Charles Hugh Smith’s newest book is Why Things Are Falling Apart and What We Can Do About It


Image via Polyp

Written by Richard Metzger | Discussion
The Rules Aren’t Broken, They’re FIXED: Time to Rewrite Them


 
This is a guest post by UK blogger and leftist activist Scriptonite Daily

A new ad campaign hit the streets of London two days ago, drawing attention to a surprisingly unrecognized state of affairs: the City of London is the tax haven in our own backyard.  While the British government is busy protecting banker’s bonuses, a global grass roots campaign has set up to take on the rules which create the institutionalized inequality which sees 0.1% of the world’s population owning 81% of the world’s wealth, while 8 million people will die this year because they are too poor stay alive. It’s time to help make The Rules.

The Way it Works Isn’t Working

The 2005 United Nations World Summit, before the bloated banking sector crashed the global economy, revealed the system was well broken before the crash;

Half the world lives on less than $2 a day
30,000 children die every single day due to poverty
2 billion people have no access to electricity
20% of people in the highest-income countries consume 86% of the world’s resources. The poorest 20% account for a minuscule 1.3%

 

 

A recent study showed that the neoliberal policies of the last thirty years have seen such a decline in social mobility that capitalism’s so called “meritocracy” delivers results no better than the medieval oligarchy. In fact, the top 1% of earners now pocket 10p in every £1 earned in Britain – an increase of 7% in the last fifteen years. The poorest half of the population taking home just 18p – dropping 1% during the same period.

The story in the US is similar. Robert Reich, former US Labour Secretary under Bill Clinton commented:

“Income inequality and wealth inequality even more so, are worse in the United States since the 1920s, and by some measures since the 1890s. Most of the economic gains in the past 25 years have gone to the top 15-20 percent of Americans, but more recently, in the past six to seven years, most of the economic gains have gone to the top one percent. . . . The average CEO is making about 380 times more than the average worker – a huge gap relative to what it used to be 40 years ago – it was about 30 times.”

Whilst wages, working conditions and social security for the majority of the world are being undermined, the conditions of the 1% continue to improve as the rules which govern the world are bent in their favour.  It is time we stopped living in a fantasy land of “trickle-down economics” and “anyone can make it if they try” fairy tales.

The Rules – A Campaign We Need to Get Behind

The campaign, which encompasses phone boxes (60 in all across the capital), a mobile billboard, viral video, postcards (and more) will run from the 11th to the 24th of March, is being brought to the UK by new anti-poverty initiative – The Rules  - on behalf of people from the majority world who have signed a petition by people online and via a new mobile innovation called Crowdring, which enables people to sign a petition via dialling a “missed call.” This is a similar mechanism to Indian anti-corruption campaign of 2011, which became the biggest petition-type campaign ever seen, allowing people to participate without internet access and at very low cost.

The Rules invites all comers, anywhere in the world, to join a global movement to rewrite the rules in the interests of the majority of the world, rather than the minority:

“Our world has never been more connected or more prosperous than it is today. Yet right now, one in every three of us alive today does not have access to the most basic needs for a decent life – food, education, medical care, a safe environment.

The good news is that for the first time, ordinary citizens like you and I have the power and ability to change the rules that are creating these injustices. Technology and the shift of global power mean that we can now demand our say in decisions that have traditionally been made by elites behind closed doors. But the truth is, these things will only change if we demand it.”

The campaign operates as a decentralised network with several campaign hubs around the world, including in Johannesburg, Mumbai, New York and Rio. The focus of these hubs is to identify issues, opportunities, technologies and regional strategies for each campaign.

The ‘engine room’ for their campaigns is the Working Group, which is made up of more than 70 people from around the world. Members come as individual volunteers, not as representatives of their respective organisations. They come from a broad range of organizations – from civil society, to grassroots advocacy groups, to policy think tanks, to technology providers.

The sole objective of the Working Group is to help create campaigns for viable, alternative rules that serve the interests of the world’s majority, with disproportionate benefit to the poor, vulnerable and marginalised among us.

There will be a day of action on 16 March, where representatives from the majority world, The Rules and UK activists from groups such as Occupy and UK Uncut will all come together to transform a space in the City of London into a “tropical tax haven.” Pete the Temp has been confirmed to MC.

So, spread the word and join the campaign.  It is time to stop complaining about the rules, and start rewriting them.

Take Action

Join The Rules campaign and be a part of the solution

This is a guest post from UK blogger and leftist social activist Scriptonite Daily. Follow Scriptonite Daily on Facebook and Twitter.
 

Written by Richard Metzger | Discussion
How much longer can capitalism last when robots will do all the work?


 
Last month on 60 Minutes, reporter Steve Kroft filed a fascinating story about how technological advances in automation and robotics have totally revolutionized American business and manufacturing, while we’ve seen the number of decent paying jobs shrink.

After he indicated how information workers like paralegals are about to become as SOL as airport counter personal and travel agents, two of the Kroft’s interviewees, MIT professors Erik Brynjolfsson and Andrew McAfee, told him we ain’t seen nuthin’ yet:

Andrew McAfee: Our economy is bigger than it was before the start of the Great Recession. Corporate profits are back. Business investment in hardware and software is back higher than it’s ever been. What’s not back is the jobs.

Steve Kroft: And you think technology and increased automation is a factor in that?

Erik Brynjolfsson: Absolutely.

I’ve never really considered 60 Minutes to be much of a cutting edge outlet to “break” stories, instead I feel like once a story has made it to the highest rated American news magazine, that it’s been minted, or confirmed, as a legitimate mainstream thing (or celebrity or whatever). That’s to say that by the time 60 Minutes gets around to reporting on some sort of long-term trend we’re usually already mired DEEP within this event. Sometimes, not just as a nation, but in this case, as with global warming or AIDS, as a planet.

What is so remarkable to ponder—and it’s touched on somewhat in this piece—is how cost-efficient advances in automation will probably have the most negative consequences in countries like China and India, not the first world countries where automated manufacturing plants will probably mostly end up being built. Shipping to the US from China, for instance, adds a not inconsiderable amount of cost to the price of a given commodity. To purchase one of the robots featured in the segment would be cheaper than three years of Chinese labor. There’s cold comfort in that for the “Made in America” crowd, of course, as it’s not like there’s going to be that many more jobs created in America if production is brought back to these shores.

There sure will be a hell of a lot fewer opportunities for employment in the Third World, though, this much seems assured.

It brings up the question of how the wealth of nations will be divvied up when only the holders (hoarders, if you prefer) of capital, employing armies of automatons and few human beings, will hold ALL the cards? Clearly not sustainable and besides that, WHO is going to buy their products anyway when no one will have a job or any money in the first place? In America, and around the world, too, we’re moving away from the notion of “Fordism” at a breakneck pace.

The long-term implications for the longevity of the capitalist system seem dire indeed when viewed through this lens (and let’s not forget, this sort of circling the toilet bowl endgame was predicted by a certain Mr. Karl Marx many, many years ago). The implications of all of this are enormous.

Labor unions will become obsolete in such a scenario, although in a sense, they’ll be replaced by much larger armies of the long-term unemployed!

The flipside of all this is a free-market sort of argument that holds as prices for automated “workers” would come down, there should be a corresponding explosion in small business innovation. Whereas, I do think that is possible with certain cases, how many people do you personally know who would make good entrepreneurs in this bold robotic future?

Unless there’s an Elon Musk born every second, we’re doomed!
 

Written by Richard Metzger | Discussion
Capitalist conundrum: Free WiFi for EVERYONE or protecting profit margins of the 1%?
02.04.2013
09:41 am

Topics:
Class War
Economy
Science/Tech
Thinkers

Tags:
Capitalism
Google


 
With the news that a five-member panel of the FCC are considering creating a series of super powerful free WiFi network across America, it’s to be expected that the corporate lobbyists for the $178 billion wireless industry are already working overtime to scuttle these plans.

Conversely, according to The Washington Post, there has been an equally aggressive push coming from tech giants like Google and Microsoft for free WiFi networks “who say a free-for-all WiFi service would spark an explosion of innovations and devices that would benefit most Americans, especially the poor”:

The airwaves that FCC officials want to hand over to the public would be much more powerful than existing WiFi networks that have become common in households. They could penetrate thick concrete walls and travel over hills and around trees. If all goes as planned, free access to the Web would be available in just about every metropolitan area and in many rural areas.

The new WiFi networks would also have much farther reach, allowing for a driverless car to communicate with another vehicle a mile away or a patient’s heart monitor to connect to a hospital on the other side of town.

If approved by the FCC, the free networks would still take several years to set up. And, with no one actively managing them, con­nections could easily become jammed in major cities. But public WiFi could allow many consumers to make free calls from their mobile phones via the Internet. The frugal-minded could even use the service in their homes, allowing them to cut off expensive Internet bills.

In a country where Wal-Mart is the nation’s largest employer and doesn’t really even pay a living wage, this sort of monthly savings for what has become a necessity of modern life would seen quite attractive for the common man. The costs are surprisingly minimal, too.

But what of the poor, put-upon media barons who won’t be able to continue sticking the masses with a monthly cell phone bill? Should the management and stockholders of AT&T, T-Mobile, Verizon Wireless, Intel and Qualcomm be disallowed from skimming around a hundred bucks a month from the bank accounts of the average American?

Of course, the wireless telecom and cable providers are determined not to let this happen. In a January letter to FCC Chairman Julius Genachowski, the architect of this ambitious plan, and a powerful member of the Obama inner circle, several major companies argued that the government should concentrate on selling the public airwaves to private business, and raising money for the US Treasury that way, rather than going with the free WiFi for all, option.

They would feel that way, wouldn’t that??? LOL.

Naturally, the Republicans are lining up behind this ridiculously blinkered, backwards “free market” approach. Who can forget watching the Tea party dolts who were against net neutrality—because someone on Fox News told them it was something “socialist,” I guess—and braying like buffoons for the privilege of being able to give more power to the telecoms, even if it would mean seeing their own monthly bills rise... because, um, THEIR FREEDUMBS were apparently at stake.

This is a different kind of free market entirely that we’re talking about, one that could alter American lives in profound ways, spurring great innovation and perhaps even unprecedented high tech job creation. The saying goes that there’s no such thing as a free lunch, but free WiFi is already occurring in New York City and parts of Silicon Valley. In January, Google announced that it was providing free WiFi for NYC’s Chelsea neighborhood (where Google is headquartered in Manhattan). Soon that will extend to indoor fiber optic wiring as well. Google also rolled out high-speed fiber-optic Internet coverage recently in the Kansas City area, with download speeds up to 1 Gigabit per second. That’s pretty good. In fact it’s approximately 200 times faster than your home broadband connection. It’s not five times faster, it’s 200 times faster. (So much for innovation among the cable companies themselves, eh?)

Google’s blazing fast fiber optic service is beginning to draw hi-tech start-ups to Kansas City. Who would have thought that would happen a few years ago?

Furthermore, the major wireless carriers own far more spectrum than would even be necessary to provide public WiFi, and it would also improve their existing wireless networks for their own consumers. The only downside for this is for a relatively tiny group of stockholders. The benefits for Americans overall? Well, they seem limitless in terms of what can be imagined from 2013.

Designed by FCC Chairman Julius Genachowski, the plan would be a global first. When the U.S. government made a limited amount of unlicensed airwaves available in 1985, an unexpected explosion in innovation followed. Baby monitors, garage door openers and wireless stage microphones were created. Millions of homes now run their own wireless networks, connecting tablets, game consoles, kitchen appliances and security systems to the Internet.

“Freeing up unlicensed spectrum is a vibrantly free-market approach that offers low barriers to entry to innovators developing the technologies of the future and benefits consumers,” Genachow­ski said in a an e-mailed statement.

He’s 1000% right. Although not seeing the economic benefits flowing upwards at first may discombobulate their tiny brains, how idiotic would even Republicans have to be not to see the logic of this decidedly free market approach? If they balk, they need to be reminded of what the earlier—but far more technologically limited, pre-PC, iPad and smartphone, of course—Reagan-era changes in the management of the public airways wrought for the economy.

This is a real us vs.against them situation. The fattest cats versus EVERYBODY ELSE. It’ll be interesting to see how this shakes out. It’s an idea that’s time has come—IF NOT, WHY NOT—and I don’t think it’s going to go away until there’s free Wifi for all. The cat’s out of the bag and it ain’t going back in.

Written by Richard Metzger | Discussion
Toys’ Story: Selling Christmas to Children in 1975/76
12.25.2012
05:46 pm

Topics:
Advertising
Amusing
Games

Tags:
Christmas
Capitalism
Toys

christmas_toys_1975
 
What toys would the 3 Wise Men bring the infant Jesus today? Certainly not the body lotion, jewelry or cologne they gave upon that first Christmas night.

According to this short film report, from 1975, toy manufacturers would have a pretty good idea what to give, as they already know the kinds of gifts they will be foisting onto kiddies as Xmas presents years in advance.

But before we get too cynical, a newly published survey of British children has revealed that not all children are so predictable in their wishes. Top of UK children’s Christmas list was a baby brother or sister, next a reindeer, followed by a horse, and a car (ambitious little things aren’t they?). While a ‘Dad’ was number 10, and a ‘Mum’ was 23rd. It would seem for some children that good relationships with humans or animals are far more important than owning a ‘Gangnam’ Furby or a Doc McStuffin’s Time for Your Check-Up Doll, which let’s be honest can only be good for us all.
 

 
With thanks to NellyM
 

Written by Paul Gallagher | Discussion
Rat-fucking the bankers: A hero in California leads the way
09.07.2012
08:49 am

Topics:
Class War
Economy
Heroes
History

Tags:
Capitalism


 
Over the weekend, there was a fascinating article about the foreclosure crisis in Southern California that appeared at the Huffington Post with the title “San Bernardino Eminent Domain Fight Closely Watched By Other Struggling Communities.” That title might not have grabbed you, but what’s in the article, penned by Ben Hallman, is extraordinary and needs to gain more traction.

If you read what’s written there and disregard all of the “opinion” (what Rahm Emanuel and the banking PR flacks have to say) and just concentrate on the plan of action that’s being offered to deal with the mortgage crisis, it’s a winner.

It’s being proposed that “eminent domain,” the power local government have to seize property for the common good, be employed to help stressed communities in San Bernardino County. The idea for this originates with Steven Gluckstern, the executive director of Mortgage Resolution Partners: Local authorities could seize home loans—not properties—and “condemn” the ones that were underwater, though not in arrears, and held by private trusts. The local government would then forgive the debt in excess of current market value of the home. Homeowners could then refinance at the new, lower value, freeing up hundred of dollars per month, and boosting the local economy and jobs growth. The pension and institutional investment funds that actually own these loans would get paid fair market value. For investors in Inland Empire property, this will mean taking a significant haircut.

It’s estimated that there are around 150,000 homeowners in the county who owe more on their homes than they are worth, yet only a small percentage of them would actually qualify for a loan modification because their credit is bad.

One estimate sees as many as 42,000 homeowners in San Bernardino County benefiting from the plan. It would have a significant impact on the lives of county residents.

It’s also a beautiful solution that fucks over the capitalist greed-heads who deserve it the most. They made investments in bad securities. That’s capitalism, baby! Shit happens!

It’s thrilling to think we could be on the verge of seeing something like this occur:

This old railroad town in the heart of the Southern California foreclosure belt doesn’t attract many visitors these days, especially not in the blazing summer heat. Yet on a recent Thursday morning, a handful of well-heeled business travelers from the East Coast hurried along a sidewalk to address a government official they have come to know well.

Gregory Devereaux is the chief executive of San Bernardino County and its 2 million residents. At his urging, local authorities are considering a proposal that would allow local governments to exercise their power to seize private property without landowners’ consent in a dramatic—some say radical—new way.

Governments usually use this power, known as eminent domain, to acquire private land for public purposes, such as roads or utility lines. But this plan, proposed by a San Francisco-based venture fund Mortgage Resolution Partners, calls for government authorities to seize the mortgages of underwater borrowers, paying the investors that own them a fraction of what they are owed, using money borrowed from the fund. Homeowners could then refinance with a federal loan at a much lower rate, based on what their home is actually worth instead of what they owe.

Supporters say the plan would send a supercharged bolt of energy into the housing market, spurring economic development and preventing even more of the foreclosures that have wrecked many communities.

“It is a disaster of epic proportions,” said John Vlahoplus, chief strategy officer at Mortgage Resolution Partners, of the dramatic decline in home prices that in many areas has left homes worth less than half what the borrowers paid. “The crash has devastated the family wealth of these communities.”

Gregory Devereaux… you are my new hero.

You’ve met the good guys, now meet the bad guys (so to speak):

The group from the East Coast, representatives of the mortgage finance industry, don’t like this idea much at all. They have worn a path to Devereaux’s office in recent months to tell him, and anyone else who would listen, that the proposal amounts to nothing less than a threat to the entire mortgage finance system, and an assault on free enterprise and the U.S. Constitution.

They’re sort of right about that, but have you been in San Bernadino County lately? It’s very very easy to see why a plan like this would be popular in the Inland Empire: It’s getting to be just like Mad Max there. The local economies will never recover with so many residents underwater on their mortgages. If you owe $400,000 on a house that’s worth $150,000, tops, not that you could sell it anyway, just what the fuck are you going to do next? What if you lose your income? Then what’s your move?

You don’t have one. The bulldozer-like plan that Mr. Devereaux is proposing has the potential to change the lives of tens of thousands of desperate families in his county. He’s worried about them, not about some bankers, mortgage brokers and fat cats taking the hit. (Did I mention yet that Gregory Devereaux is my new hero?)

Absent something like this, how would the Inland Empire EVER be expected to recover? It probably won’t be during many of the current generation’s lifetimes, we’re talking decades to recover. Seriously, it’s fucking GRIM there. Really, really super grim. (Comparing parts of San Bernadino to Mad Max is only a slight exaggeration, trust me)

[“Blah, blah. blah” said mortgage industry spokespeople. “Blah blah blah blah blah blah blah” said someone else. Back to what matters…]

Proponents, meanwhile, argue that bold measures are worth considering in the face of a festering foreclosure crisis. Recent modest increases in home prices have done little to help the estimated 16 million underwater homeowners nationwide, who, according to the real estate valuation website Zillow, collectively owe $1.2 trillion more than their homes are worth.

The proposal also comes amidst broad frustration with the Obama administration, which has so far refused to offer a broad-based plan to bail out underwater borrowers, even as taxpayers have spent hundreds of billions of dollars to prop up banks.

“We’ve seen a bailout of the banking industry, but no bailout for homeowners,” said Arie Giddens, a San Bernardino resident whose home is worth less than half the $300,000 she paid for it in 2005, according to Zillow.

About a dozen communities have voiced some level of interest in the eminent domain plan, including Chicago, Sacramento, New York’s Suffolk County and most recently—according to sources familiar with the discussions—Detroit. Not coincidentally, these communities have also been particularly hard hit by the housing crisis. In San Bernardino County, more than half of all homeowners are underwater, and the foreclosure rate is three-and-a-half times the national average.

“Everyone here has a friend or a family member who has lost their home to foreclosure,” said Greg O’Donnell, the development director at Neighborhood Partnership Housing Services, a housing nonprofit in Ontario, Calif.

At the public hearing, Devereaux said the eminent domain plan is still far from reality.

“Thank you very much,” he said more than once in response to the mortgage industry lobbyists’ criticism of the plan. “We appreciate your involvement.”

Gregory Devereaux, you are a badassmotherfucker…

Nothing had been decided yet, he cautioned. Mortgage Resolution Partners has not even submitted a formal plan yet, he said.

What worries the finance industry is that nothing has been ruled out, either.

Officials in other jurisdictions, by all accounts, are waiting for someone else to make the first move. That someone, if it is anyone, will likely be Devereaux. What he thinks could determine whether the eminent domain proposal winds up on a scrap heap of failed ideas to resolve the housing crisis—or sets new legal precedent on the way to providing mortgage relief to a population at the highest statistical risk of losing their home to foreclosure.

It has come to this: More than five years after home prices fell like a rock into a well, the last hope for some borrowers stuck at the bottom could be a public official unknown even to many citizens of his own county.

On Thursday, Mortgage Resolution Partners announced that they are expanding their original proposal to help individuals underwater on their mortgages by including homeowners who have defaulted or are delinquent on their mortgages.

Keep in mind that this is not all bad for the investors themselves. There’s a (theoretical) “silver lining” upside for them, too: Laurie Goodman, of Amherst Securities, analyzed the potential impact of eminent domain mortgage write-downs: “Taking select loans out of a trust could conceivably result in a higher realized value for (the) investors,” Goodman wrote. “Using eminent domain is a novel (albeit aggressive) idea to reach this goal.”

Banks holding loans already use formulas to decide how far they can write down a mortgage and still make money. The same should hold true for mortgages held in trusts, at least that’s the theory.

The top regulator at the Federal Housing Finance Agency, has warned that the agency might “take action” against San Bernardino County should it decide to adopt the Mortgage Resolution Partners. A highly visible supporter of the plan is California’s lieutenant governor, Gavin Newsom. This could get really interesting.
 

Gregory C. Devereaux, Chief Executive Officer for the County of San Bernardino, California

Thank you Michael Backes!

Written by Richard Metzger | Discussion
Page 1 of 2  1 2 >