Iceland, A Country That Wants to Punish the Bankers Responsible For The Crisis

Redacción Chile

Since 2008 the vast majority of the Western population dream about saying "no" to the banks, but no one has dared to do so. No one except the Icelanders, who have carried out a peaceful revolution that has managed not only to overthrow a government and draft a new constitution, but also seeks to jail those responsible for the country's economic debacle.

Last week 9 people were arrested in London and Reykjavik for their possible responsibility for Iceland’s financial collapse in 2008, a deep crisis which developed into an unprecedented public reaction that is changing the country's direction.

It has been a revolution without weapons in Iceland, the country that hosts the world's oldest democracy (since 930), and whose citizens have managed to effect change by going on demonstrations and banging pots and pans. Why have the rest of the Western countries not even heard about it?

Pressure from Icelandic citizens’ has managed not only to bring down a government, but also begin the drafting of a new constitution (in process) and is seeking to put in jail those bankers responsible for the financial crisis in the country. As the saying goes, if you ask for things politely it is much easier to get them.

This quiet revolutionary process has its origins in 2008 when the Icelandic government decided to nationalise the three largest banks, Landsbanki, Kaupthing and Glitnir, whose clients were mainly British, and North and South American.

After the State took over, the official currency (krona) plummeted and the stock market suspended its activity after a 76% collapse. Iceland was becoming bankrupt and to save the situation, the International Monetary Fund (IMF) injected U.S. $ 2,100 million and the Nordic countries helped with another 2,500 million.

Great little victories of ordinary people

While banks and local and foreign authorities were desperately seeking economic solutions, the Icelandic people took to the streets and their persistent daily demonstrations outside parliament in Reykjavik prompted the resignation of the conservative Prime Minister Geir H. Haarde and his entire government.

Citizens demanded, in addition, to convene early elections, and they succeeded. In April a coalition government was elected, formed by the Social Democratic Alliance and the Left Green Movement, headed by a new Prime Minister, Jóhanna Sigurðardóttir.

Throughout 2009 the Icelandic economy continued to be in a precarious situation (at the end of the year the GDP had dropped by 7%) but, despite this, the Parliament proposed to repay the debt to Britain and the Netherlands with a payment of 3,500 million Euros, a sum to be paid every month by Icelandic families for 15 years at 5.5% interest.

The move sparked anger again in the Icelanders, who returned to the streets demanding that, at least, that decision was put to a referendum. Another big small victory for the street protests: in March 2010 that vote was held and an overwhelming 93% of the population refused to repay the debt, at least with those conditions.

This forced the creditors to rethink the deal and improve it, offering 3% interest and payment over 37 years. Not even that was enough. The current president, on seeing that Parliament approved the agreement by a narrow margin, decided last month not to approve it and to call on the Icelandic people to vote in a referendum so that they would have the last word.

The bankers are fleeing in fear

Returning to the tense situation in 2010, while the Icelanders were refusing to pay a debt incurred by financial sharks without consultation, the coalition government had launched an investigation to determine legal responsibilities for the fatal economic crisis and had already arrested several bankers and top executives closely linked to high risk operations.

Interpol, meanwhile, had issued an international arrest warrant against Sigurdur Einarsson, former president of one of the banks. This situation led scared bankers and executives to leave the country en masse.

In this context of crisis, an assembly was elected to draft a new constitution that would reflect the lessons learned and replace the current one, inspired by the Danish constitution.

To do this, instead of calling experts and politicians, Iceland decided to appeal directly to the people, after all they have sovereign power over the law. More than 500 Icelanders presented themselves as candidates to participate in this exercise in direct democracy and write a new constitution. 25 of them, without party affiliations, including lawyers, students, journalists, farmers and trade union representatives were elected.

Among other developments, this constitution will call for the protection, like no other, of freedom of information and expression in the so-called Icelandic Modern Media Initiative, in a bill that aims to make the country a safe haven for investigative journalism and freedom of information, where sources, journalists and Internet providers that host news reporting are protected.

The people, for once, will decide the future of the country while bankers and politicians witness the transformation of a nation from the sidelines.

Source: www.elconfidencial.com

Pressenza Editorial Team in Chile

translation: Silvia Swinden

Economy Faces a Jolt as Benefit Checks Run Out

By MOTOKO RICH

Published: July 10, 2011

An extraordinary amount of personal income is coming directly from the government.

Multimedia

Graphic 

 

Close to $2 of every $10 that went into Americans’ wallets last year were payments like jobless benefits, food stamps, Social Security and disability, according to an analysis by Moody’s Analytics. In states hit hard by the downturn, like Arizona, Florida, Michigan and Ohio, residents derived even more of their income from the government.

By the end of this year, however, many of those dollars are going to disappear, with the expiration of extended benefits intended to help people cope with the lingering effects of the recession. Moody’s Analytics estimates $37 billion will be drained from the nation’s pocketbooks this year.
In terms of economic impact, that is slightly less than the spending cuts Congress enacted to keep the government financed through September, averting a shutdown.

Unless hiring picks up sharply to compensate, economists fear that the lost income will further crimp consumer spending and act as a drag on a recovery that is still quite fragile. Among the other supports that are slipping away are federal aid to the states, the Federal Reserve’s program to pump money into the economy and the payroll tax cut, scheduled to expire at the end of the year.

“If we don’t get more job growth and gains in wages and salaries, then consumers just aren’t going to have the firepower to spend, and the economy is going to weaken,” said Mark Zandi, chief economist of Moody’s Analytics, a macroeconomic consulting firm.

Read More: Here

Quelle Surprise! DoJ Pushing State AGs to Whitewash Servicing Abuses; Failure to Investigate Confirmed

The latest report by Shahien Nasirpour at Huffington Post confirms two things you’ve heard here and on some other sites following this sorry affair: first, that Tom MIller, Iowa attorney general who is leading the 50 state attorneys general negotiations on mortgage abuses, is a liar, and second, that any settlement will be a whitewash.
Actually, we already knew Miller was a liar. Shortly after the effort was launched, Miller promised that “”We will put people in jail.” He then started walking that back. Not only did he tell Bloomberg that they were NOT pursuing criminal charges, but per an e-mail:

I was w/ a European documentary maker this weekend who spoke to Miller a few days ago and said Miller relayed the fraud isn’t so bad, everything will be worked out .. the standard line; he’s already made up his mind. He doesn’t want those European governments demanding their money back. The meeting is a photo-op setup because the too-big-to-fail crowd is scared of put-back liability and shorts; they’re working hard to make it appear they’re doing something to quiet everybody down.

Note this message was sent BEFORE MIller made the “jail the baddies” promise that MIller recanted. And it indicates that this entire affair was intended to be an exercise in kabuki theater rather than anything remotely resembling a real investigation.
That brings us to MIller’s second lie. After a staffer ‘fessed up that no investigations were being undertaken, Miller maintained that extensive examinations were underway. That, as Nasiripour indicates, confirming earlier intelligence via Gretchen Morgenson, is complete crap (emphasis ours):

According to sources familiar with the ongoing state and federal probes, state and federal officials have wasted months not digging into the details of the foreclosure crisis, yielding little of value in court and undercutting the lenders’ incentive to strike a settlement of greater benefit to homeowners and taxpayers.
The investigators have yet to gather many documents, conduct depositions or assemble tallies of aggrieved homeowners. They don’t yet have a good handle on the number of wrongful foreclosures, the amount of fraudulent documents filed in local courts or the volume of legal instruments processed by so-called “robo-signers,” the agents that lenders employed to process foreclosure filings en masse without examining the underlying paperwork.
“The evidence a prosecutor would use is not in the possession of the prosecution,” said one person familiar with the ongoing settlement talks.

Even Richard Shelby, the ranking member of the Senate Banking Committee, and a long-standing critic of Wall Street, is not happy with the lack of investigations:

We need a full-fledged investigation,…There’s no substitute for a thorough investigation and finding of fact

Read More : Here

No, We Can’t? Or Won’t?

By PAUL KRUGMAN

If you were shocked by Friday’s job report, if you thought we were doing well and were taken aback by the bad news, you haven’t been paying attention. The fact is, the United States economy has been stuck in a rut for a year and a half.

Yet a destructive passivity has overtaken our discourse. Turn on your TV and you’ll see some self-satisfied pundit declaring that nothing much can be done about the economy’s short-run problems (reminder: this “short run” is now in its fourth year), that we should focus on the long run instead.

This gets things exactly wrong. The truth is that creating jobs in a depressed economy is something government could and should be doing. Yes, there are huge political obstacles to action — notably, the fact that the House is controlled by a party that benefits from the economy’s weakness. But political gridlock should not be conflated with economic reality.
Our failure to create jobs is a choice, not a necessity — a choice rationalized by an ever-shifting set of excuses.

Excuse No. 1: Just around the corner, there’s a rainbow in the sky.
Remember “green shoots”? Remember the “summer of recovery”? Policy makers keep declaring that the economy is on the mend — and Lucy keeps snatching the football away. Yet these delusions of recovery have been an excuse for doing nothing as the jobs crisis festers.

Excuse No. 2: Fear the bond market.
Two years ago The Wall Street Journal declared that interest rates on United States debt would soon soar unless Washington stopped trying to fight the economic slump. Ever since, warnings about the imminent attack of the “bond vigilantes” have been used to attack any spending on job creation.
But basic economics said that rates would stay low as long as the economy was depressed — and basic economics was right. The interest rate on 10-year bonds was 3.7 percent when The Wall Street Journal issued that warning; at the end of last week it was 3.03 percent.

How have the usual suspects responded? By inventing their own reality. Last week, Representative Paul Ryan, the man behind the G.O.P. plan to dismantle Medicare, declared that we must slash government spending to “take pressure off the interest rates” — the same pressure, I suppose, that has pushed those rates to near-record lows.

Excuse No. 3: It’s the workers’ fault.
Unemployment soared during the financial crisis and its aftermath. So it seems bizarre to argue that the real problem lies with the workers — that the millions of Americans who were working four years ago but aren’t working now somehow lack the skills the economy needs.

Yet that’s what you hear from many pundits these days: high unemployment is “structural,” they say, and requires long-term solutions (which means, in practice, doing nothing).
Well, if there really was a mismatch between the workers we have and the workers we need, workers who do have the right skills, and are therefore able to find jobs, should be getting big wage increases. They aren’t. In fact, average wages actually fell last month.

Excuse No. 4: We tried to stimulate the economy, and it didn’t work.
Everybody knows that President Obama tried to stimulate the economy with a huge increase in government spending, and that it didn’t work. But what everyone knows is wrong.
Think about it: Where are the big public works projects? Where are the armies of government workers? There are actually half a million fewer government employees now than there were when Mr. Obama took office.

So what happened to the stimulus? Much of it consisted of tax cuts, not spending. Most of the rest consisted either of aid to distressed families or aid to hard-pressed state and local governments. This aid may have mitigated the slump, but it wasn’t the kind of job-creation program we could and should have had. This isn’t 20-20 hindsight: some of us warned from the beginning that tax cuts would be ineffective and that the proposed spending was woefully inadequate. And so it proved.
It’s also worth noting that in another area where government could make a big difference — help for troubled homeowners — almost nothing has been done. The Obama administration’s program of mortgage relief has gone nowhere: of $46 billion allotted to help families stay in their homes, less than $2 billion has actually been spent.

So let’s summarize: The economy isn’t fixing itself. Nor are there real obstacles to government action: both the bond vigilantes and structural unemployment exist only in the imaginations of pundits. And if stimulus seems to have failed, it’s because it was never actually tried.
Listening to what supposedly serious people say about the economy, you’d think the problem was “no, we can’t.” But the reality is “no, we won’t.” And every pundit who reinforces that destructive passivity is part of the problem.

JP Morgan Chase Fine: Another Slap on the Wrist for Wall Street

Matt Taibbi

  July 8

SEC Enforcement Director and former Deustche Bank general counsel Robert Khuzami

Chip Somodevilla/Getty Images

Courtesy of my good friend Eric Salzman comes this latest outrage – SEC Enforcement Director and former Deustche Bank general counsel Robert Khuzami boasting about the latest slap on the wrist directed at a major bank, this time a $228 million fine of JP Morgan Chase for a bid-rigging scheme involving municipal bonds. The Chase ruling is the latest to come down in a series of fines involving a number of banks, including Bank of America and UBS.

This is one of the best examples we’ve had yet of the profound difference in the style of criminal justice enforcement for the very rich and connected, versus the style of justice for everyone else. This scam that Chase, Bank of America and UBS were involved with was no different in any way, really, from old-school mafia-style bid-rigging scams.
What these banks did is they got together and carved up territory between them, arranging things so that they wouldn’t be bidding against each other in municipal debt auctions. That means the 18 different states involved in these 93-odd deals all got screwed out of the best prices, leaving the taxpayers in those places severely overcharged for their public borrowing.
This is absolutely no different from what mafia groups in New York used to (and probably still do) do for public contracts – the proverbial five families would get together, divide up the boroughs and neighborhoods between them, and each family would individually buy or intimidate their way into the bidding process, corrupting the game so that the public had to overpay for their garbage collection or their construction labor or whatever. The only difference here is that we’re talking about debt, not garbage. But the concept is exactly the same; it’s the same crime.
If Khuzami’s defendants had been a bunch of Italians from Howard Beach, they would be facing RICO charges and would be looking at years in prison, plus seizure of all their ill-gotten gains, in addition to civil suits and penalties.
As it is, as my friend Eric points out, the endgame for banks like Chase is, “Admit nothing, pay two hours of revenue and all good!”
You don’t have to take my word for it. Go back for yourselves and look through bid-rigging cases in the past. If you see a bunch of Italian names in the list of defendants (see here for instance), you can pretty much guarantee that there’s a RICO prosecution involved.
But if the defendants are a bunch of Ivy-League educated bankers from Wall Street, what we end up getting is a negligible fine (officials will brag about this $228 million, but it’s a drop in the bucket compared to what the banks make scamming communities and governments) and, as always, no admission of guilt. This is how the SEC’s own press release reads:

Without admitting or denying the allegations in the SEC’s complaint, JPMS has consented to the entry of a final judgment enjoining it from future violations of Section 15(c)(1)(A) of the Securities Exchange Act of 1934 …

That the settlement includes language like this is another gift to the banks. Allowing Chase to settle without admitting guilt leaves the conned states and localities facing an uphill climb in any attempt to recoup more money through litigation.

Read More: Here

New jobs plan: Give rich people everything they want and pray they don't go Galt

By Brad Reed

Hoo lordy, Brian Beutler has done us all a grand service today by actually asking Republicans what sacrifices, if any, the rich should make to close the deficit. The answers, as you'd imagine, are quite comical. Here are some of the choicer morsels:

"Millionaires can contribute to deficit reduction by spending part of their millions," said Sen. John McCain (R-AZ). "I agree with the Wall Street Journal editorial this morning: We should cut the corporate income tax from 35 to 25, and close loopholes that are in, and make sure that everything is revenue neutral, and that is a great approach."

I do love how McCain makes sure to cover his ass by saying only that they should spend only "part" of their millions. Wouldn't want to get too pushy, now, lest our sensitive rich folks decide to go Galt, and then we'd be sorry, oh yes yes we would! I also love how simply spending part of their millions counts as an actual "sacrifice" that our Galtian overlords should make. Ergo, going to a high-end strip club and making it rain now counts as a sacrifice, according to John McCain. Or when they blow thousands of dollars on a gold-plated trashcan, they're making a vital contribution to deficit reduction.
Lindsey Graham is even funnier:

"Create jobs, hire more people that pay more taxes, grow the economy, stay in America, don't leave, hire people -- that's how millionaires can help, is create more workers, and if you raise taxes you're gonna make it harder to keep the job you got," explained Sen. Lindsey Graham (R-SC).

If a big-name CEO stepped into Graham's office and said to him, drill sergeant-like, "Graham! Hump my leg on the double, maggot!" you know he'd do it without hesitation.
Graham's jobs plan reminds me a lot of Ohio's attempts at begging LeBron James to shun the beautiful beaches of Miami in favor of the home town that had loved him since draft day:
And, well, we all know how well that worked out.
The point, my friends, is sometimes it seems as though much of our country has internalized "Atlas Shrugged" to such an extent that we've come to believe that it's our fault that our corporate overlords aren't hiring more people. Clearly, the thinking goes, we have not done enough to appease them.
"Another tax cut, m'lord? Oh yes, right away! Those pesky and out-dated child labor laws? You bet, they'll be scrapped tomorrow! You want to... sleep with my spouse? Uh... and you swear you'll consider hiring me to work at the local Taco Bell? Sounds like a fair trade to me!"
At some point I'd like to believe that basic human dignity will kick in and we won't feel the need to kiss rich peoples' asses anymore. But I've been waiting for this to happen for a long, long time now.

This Is What Happened To the Middle Class

Overworked America: 12 Charts that Will Make Your Blood Boil

Illustration: Mark Matcho; Chart Artwork: Jeff Berlin

Why "efficiency" and "productivity" really mean more profits for corporations and less sanity for you.

— By Dave Gilson

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July/August 2011 Issue

In the past 20 years, the US economy has grown nearly 60 percent. This huge increase in productivity is partly due to automation, the internet, and other improvements in efficiency. But it's also the result of Americans working harder—often without a big boost to their bottom lines. Oh, and meanwhile, corporate profits are up 20 percent. (Also read our essay on the great speedup and harrowing first-person tales of overwork.)

You have nothing to lose but your gains

Productivity has surged, but income and wages have stagnated for most Americans. If the median household income had kept pace with the economy since 1970, it would now be nearly $92,000, not $50,000.

Growth is back...

...But jobs aren't

Sorry, not hiring

The sectors that have contributed the most to the country's overall economic growth have lagged when it comes to creating jobs.

The wage freeze

Increase in real value of the minimum wage since 1990: 21%
Increase in cost of living since 1990: 67%
One year's earnings at the minimum wage: $15,080
Income required for a single worker to have real economic security: $30,000

Working 9 to 7

For Americans as a whole, the length of a typical workweek hasn't changed much in years. But for many middle-class workers, job obligations are creeping into free time and family time. For low-income workers, hours have declined due to a shrinking job market, causing underemployment.

Labor pains

Median yearly earnings of:

Union workers: $47,684
Non-union workers: $37,284

Dude, Where's My Job?

More and more, US multinationals are laying off workers at home and hiring overseas.

Proud to be an American

The US is part of a very small club of nations that don't require...

Digital overtime

A survey of employed email users finds:

22% are expected to respond to work email when they're not at work.
50% check work email on the weekends.
46% check work email on sick days.
34% check work email while on vacation.

The second shift

Working moms pick up more child care and household duties than working dads—about 80 minutes more every day. Meanwhile, dads enjoy nearly 50 more minutes of watching TV and other leisure activities on a daily basis.

Chore wars

Thanks, guys—you're pitching in more than twice as much as you did in the '70s. But women still get stuck with the majority of work around the house.

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Sources

Productivity/income: Bureau of Labor Statistics, Congressional Budget Office (PDF), Economic Policy Institute, Census Bureau (Excel)

GDP/jobs: Organisation for Economic Co-operation and Development; Stephen Gordon, Université Laval

Sector growth: Bureau of Labor Statistics

Minimum Wage: Bureau of Labor Statistics, Economic Policy Institute, Wider Opportunities for Women (PDF)

50 hours: Center for American Progress (PDF)

Unions: Bureau of Labor Statistics, Economic Policy Institute

Benefits maps: McGill Institute for Health and Social Policy

Email: Pew Internet & American Life Project (PDF)

Second shift: Bureau of Labor Statistics (PDF)

Housework: Michigan Institute for Social Research