Obama policy of settling banking crimes with small fines compared to the illegal profits encourages law breaking.

Obama Administration Essentially Admits That Some Banks Are Too Big To Jail, Which Is Troubling

One of the great things about being too big to fail is that you're also too big to jail, apparently.

So saith the Obama administration, via the New York Times, in its front-page story on Tuesday about HSBC's settlement with the government over money-laundering charges. Though the British banking giant had to pay a wrist-stinging $1.9 billion, the settlement helped it avoid formal criminal charges. The NYT quotes anonymous government officials who say they were skittish about indicting HSBC because formal charges would amount to a "death penalty" for the bank, potentially roiling the financial system.

This is at least three very specific flavors of bullshit.

For one thing, according to University of Notre Dame law professor Jimmy Gurulé, a former assistant U.S. Attorney General and former Undersecretary for Enforcement for the U.S. Treasury Department, the government could have formally charged Europe's biggest bank in such a way as to help it avoid death. The bank's U.S. business may have been disrupted for some time, but the bank could have survived. The punishment that was meted out -- taking about half a quarter's profit -- was so far removed from a "death penalty" that it can't possibly be a deterrent for any other big bank.

And even if the government felt it could not formally charge HSBC, it could easily have charged individuals at the bank without causing financial armageddon. Instead, not a single HSBC individual faces criminal prosecution, despite evidence that billions of dollars were laundered on behalf of Mexican drug lords, the Iranian government and other evildoers for years.

Nor have any individuals been charged at the five other big European banks that have also managed to dodge formal money-laundering charges in recent years, including British bank Standard Chartered, which entered its own deferred prosecution agreement on Monday. Apparently, all of this constant money laundering was done by robots.

"The message this is sending is if you want to engage in money laundering, make sure you're doing it within the context of your employment at a bank," Gurulé said in a phone interview. "And don't go small. Do it on a very large scale, and you won't get prosecuted."

"It's essentially telling the executives in these institutions crime pays," Neil Barofsky, former Special Inspector General for the Troubled Asset Relief Program, the government's bailout program, told CNN. "Go ahead, do whatever you want to do, enjoy your profits, and the worst thing that happens, well, you have some fines that really make up a couple of weeks of profits that you lose."

Finally, if the Obama administration's attitude about banks is truly that it is terrified of prosecuting them, for fear of upsetting the global economic order, then that is a damning statement about our financial system -- though it is of a piece with everything else we've learned since the crisis: If you're a bank and you're big enough, you're basically going to get away with everything short of murder. And maybe that, too. You can certainly create and sell toxic securities while also betting against them and trigger a global depression without having to worry about doing any jail time.

"Somebody else is bound to look for the next hole in the system at another international bank, and exploit it," Anthony Michael Sabino, a professor at St. John's University's Peter J. Tobin College of Business, wrote in an email. "It’s time we started asking are these banks just too big to meaningfully regulate.”

That time actually passed long ago.

The European economists like their American counter parts refuse to learn from their own actions. Debt and spending reduction during a recession doesn't work, stimulus does.

Austerity Pushes Europe Into Its Second Recession In Four Years

By Travis Waldron 

Continuing efforts to cut spending and reduce deficits have driven the Eurozone into its second recession in just four years, as its economy shrank for the second consecutive quarter. Struggling countries like Spain, Greece, Portugal, and Ireland are still pursuing deficit reduction to rein in their debt, cutting spending to the bone to do so. The spending cuts have driven unemployment to record levels and threatened the continent with a recession that became official during the last quarter, Bloomberg reports:

The euro-area economy was pushed into a recession for the second time in four years as trade slowed and government spending declined.

Gross domestic product in the 17-nation currency bloc slipped 0.1 percent in the third quarter from the previous three months, when it fell 0.2 percent, the European Union’s statistics office in Luxembourg said today, confirming an initial estimate published on Nov. 15.

Eurozone unemployment reached 26 percent in September. The youth unemployment rate has topped 50 percent and resulted in a “lost generation” for the continent’s young adults. Still, the pursuit of austerity continues.

Lawmakers around the world have ignored the European lesson, though. Australia’s growth slowed last quarter as its government pursued deficit reduction, and in the United States, the so-called “fiscal cliff” brought on by Republican-demanded spending cuts is threatening the country with a bigger austerity package than those that have been implemented in Europe, even with ample proof that the U.S.’s original preference toward stimulus was more effective than the austere European approach.

Non wealthy Republicans, are delusional travelers to crazy town, who vote against their own interests and believe ACORN stole election.

Nearly Half Of Republicans Believe Defunct Organization Stole The Election For Obama

By Annie-Rose Strasser

Forty nine percent of Republicans believe that President Obama won reelection thanks to the allegedly illegal work of a group that no longer exists, according to a Public Policy Polling survey.
The Association of Community Organizations for Reform Now (ACORN) was at the center of anti-Obama energy in 2008, when Republicans cited some faulty registration forms obtained by ACORN as proof of voter fraud. The charge was particularly potent, since Obama hired one of the organizations associated with ACORN to run voter turnout for him in the primary.

But in 2010, ACORN filed Chapter 7 bankruptcy, putting an end to the community organizing effort altogether. Still, the fact that ACORN no longer exists hasn’t stopped the group from serving its role as scapegoat. Fifty two percent of Republicans blamed ACORN for Obama’s win in 2008, saying that they “stole” the election for him. That number only dropped by 3 percent, and 49 percent blame ACORN this time around.

Iceland the proof of the Austerity LIE. Iceland, a beacon of economic sanity, doing well in a world of economic crazies.

Truthdiggers of the Week: Iceland’s Leaders

by Alexander Reed Kelly.

One country refused to bail out its derelict banks and slash social spending amid the financial crisis. And guess what? Unlike the eurozone and the United States, it’s making a sturdy comeback.

Iceland’s stock market plunged 90 percent in 2008. Inflation reached 18 percent, unemployment shot up ninefold and its biggest banks failed. This was no recession. It was a full-blown depression.

Since then, the country has steadily improved. By September of this year, it repaid its IMF rescue loans ahead of schedule. Unemployment dropped by half and its economy will have grown by roughly 2.5 percent by the beginning of 2013.

So what’s Iceland’s secret? According to the editors at Bloomberg News, it’s a refusal to do what virtually every other nation that was pummeled by the crisis did: adopt policies of economic austerity.Iceland’s approach was the polar opposite of the U.S. and Europe, which rescued their banks and did little to aid indebted homeowners. Although lessons drawn from Iceland, with just 320,000 people and an economy based on fishing, aluminum production and tourism, might not be readily transferable to bigger countries, its rebound suggests there’s more than one way to recover from a financial meltdown.

Nothing distinguishes Iceland as much as its aid to consumers. To homeowners with negative equity, the country offered write-offs that would wipe out debt above 110 percent of the property value. The government also provided means-tested subsidies to reduce mortgage-interest expenses: Those with lower earnings, less home equity and children were granted the most generous support 

The International Monetary Fund’s mission chief to Iceland has sung the nation’s praises too. “Iceland has made significant achievements since the crisis,” Daria V. Zakharova told Bloomberg in August. “We have a very positive outlook on growth, especially for this year and next year because it appears to us that the growth is broad based.” 

Letting the losses fall on bondholders rather than taxpayers, maintaining the country’s welfare system and imposing temporary controls on investments protected Iceland from collapse and pushed it toward recovery, she said.

American leaders are threatening to do the opposite at the end of this year when a potential failure to reach a deficit reduction deal will trigger a total of $54.7 billion in spending cuts from government offices and social programs, Medicare among them, per year. 

Nobel Prize-winning economist Paul Krugman agrees that cuts to the social safety net are not the way. Ideology should not trump empirically based economics, he says. But right now, in the United States, it is. Krugman writes:

The doctrine in question amounts to the assertion that, in the aftermath of a financial crisis, banks must be bailed out but the general public must pay the price. So a crisis brought on by deregulation becomes a reason to move even further to the right; a time of mass unemployment, instead of spurring public efforts to create jobs, becomes an era of austerity, in which government spending and social programs are slashed. 

Even in the face of evidence, including a recent return to recession for the eurozone economy, elected officials on the right and left are pushing what serious economists recognize as failed policies. And it appears they will continue to do so for the indefinite future. In the meantime, we honor the reality-based leaders in Iceland as our Truthdiggers of the Week.

Obama asks Republicans to make him screw the 99% and protect the 1%, with the "Grand Bargain"

 Obama and Boehner about to finally put it to the 99% and protect 1%



Why does Obama seem to get rolled by republicans even when he is in a strong bargaining position, because he wants to get rolled. He isn't weak he is just doing what he feels will get him what he wants with offense to the fewest number of people.

Obama is not a wild eyed liberal socialist. Obama is a conservative corporatist, to the right of Ronald Reagan. He wants to protect the wealthy and Wall Street, he wants to be the first president to cut medicare and social security. He has increased government spying on citizens, he doesn't want to restrict corporate spying on individuals. He pushed a health care bill that was a wet kiss to the insurance industry, and would not allow even talk of some kind of public option let alone single payer (medicare for all). Obama believes in trickle down economics, when ever he asks for economic stimulus the lions share he proposes is tax cuts.

Obama's main problem is that Americans are progressive and he is conservative. Americans want to tax the rich, Obama doesn't, Americans want to help home owners, Obama wants to help the banks. But Obama has a very strong ally, the Republican party. So Obama is a very talented politician, and he knows that if he talks progressive, but bargains poorly with conservatives he will arrive at the conservative position he desires while being able to to say its not my fault, they made me do it.

This “Grand Bargain” is a perfect example of how Obama works. He has created a false crisis at the end of the year, the “Fiscal Cliff”. There is no crisis, if nothing was done, middle class taxes would go up very slightly and the wealthy would go back to paying the tax rate they paid under Clinton, NO PROBLEM. The new revenue would be a great boon to lowering our national debt and balancing our budget. But Obama wants to keep taxes low on corporations and the wealthy, so he and his allays in the Republican party will create this “Grand Bargain” where Obama will be forced by Republican intransigence to accept a deal where there is a slight rise in the capital gains rate (15% to 18 or 20%) no change in the marginal rates with a few under used loop holes closed, but with cuts to Medicade, Medicare and if he is really lucky Social Security.

The middle class will pay more in taxes and the rich will not. in a year or two the loop holes will be back and the rich will be paying a lower effective tax rate.

But some one has to pay for all these gifts to the wealthy, so middle class get ready to kiss your mortgage deduction good bye.

Republicrats & Obama are getting ready to commit the "Grand Rape" of the Middle Class. Taxes from the 99.9% NOTHING from the .1% !

Paul Krugman: Republicans Seem Ready To Throw Upper Middle Class 'Overboard' 

 

  By Bonnie Kavoussi 

Paul Krugman says that the Republican Party may throw the modestly rich "overboard" to protect the fortunes of multi-millionaires.

In a blog post on Tuesday, Krugman focuses on one tax proposal floated by Congressional Republicans that would essentially create a "tax bubble," disproportionately hurting the upper middle class. (Nate Silver has an explanation and a chart here.) Krugman writes that taking this tack would let the GOP protect the super-rich at the expense of the working rich (using the decades-old language of Oliver Stone's Wall Street) who make six-figure salaries.

"When push comes to shove, the GOP seems ready to throw the bottom 90 percent of the top 1 percent overboard, in order to protect its real patrons, the superelite," Krugman writes.

The Obama administration and Congress are in talks to reach an agreement avoiding the fiscal cliff: a set of tax hikes and spending cuts scheduled to take place at the end of the year if they do not agree on a deficit reduction plan.

Some Congressional Republicans, including House Speaker John Boehner, have said they are open to raising tax revenue but remain opposed to raising marginal tax rates. Here's a great explanation of marginal tax rates from economist Dean Baker (h/t Jason Linkins):

The tax system brackets give marginal rates. This means that if the raise bumps you into a higher bracket then you pay more taxes only on the income in the higher bracket. Suppose that the tax bracket for income under $200k is 25 percent, and for income over $200k is 33 percent. If you get a raise that pushes your income from $195,000 to $205,000 then you only pay the higher 33 percent tax rate on the $5,000 that is above the $200k threshold not your whole income. Therefore, there is no (as in none, nada, not any) way that getting more money, and being pushed into a higher tax bracket will leave you with less money after taxes.

One Republican proposal would tax a household's entire income at the highest rate possible, rather than just the portion of income that exceeds a certain limit. Doing so would penalize some people for making more money, as Nate Silver noted.

Republican Congressmen also have proposed raising tax revenue by limiting deductions, which could disproportionately hurt the upper middle class. Some Senate Democrats have said they are open to capping deductions.

At least wal-mart keeps its sweat shop fires off shore so as not to bother US shoppers.

Bangladesh Factory Fire Kills At Least 112 in Wal-Mart Sweatshop

By Diane Sweet

At least 112 employees of a Bangledesh garment factory perished in a blaze late Saturday after becoming trapped inside the building with no fire exits. The factory produced clothing for Wal-Mart, and other U.S. retailers. Were your Black Friday deals worth it?

There was no escape. A fire claimed 112 workers in a garment factory near the capital of Bangladesh late Saturday. A fire official said their last moments were spent in panic as they searched in vain for fire exits leading outside. “I want the factory owner to be hanged,” said one grieving mother who lost her daughter-in-law in the fire and whose son is still missing. “For him, many have died.” Firefighters have recovered 100 bodies from the gutted seven-story factory. Many of Bangladesh’s 4,000 garment shops lack proper fire protections.
The Telegraph:

"The factory had three staircases, and all of them were down through the ground floor," Mahbub said. "So the workers could not come out when the fire engulfed the building."
"Had there been at least one emergency exit through outside the factory, the casualties would have been much lower," he said.

Many of the victims were burned beyond recognition. The recovered bodies were kept in rows on the premise of a nearby school.

Army soldiers and paramilitary border guards were deployed to help police keep the situation under control as thousands of onlookers and anxious relatives of the factory workers gathered at the scene, Mahbub said. He would not say how many people were still missing.

Bangladesh's garment factories make clothes for brands including Wal-Mart, JC Penney, H&M, Marks & Spencer, Carrefour and Tesco.