Fact Check - the Crash

The Great Recession wasn't all that great for most of us.  Which of the following facts are true?

• the stock market crashed (9/2008), 

  

  Continued into 2016 for most states; jobs recovered were,
  on average, less hours, pay, benefits than the ones lost.

• the auto industry was in chaos and bankruptcy (bailouts for Ford, GM, Chrysler), 
• the real estate market collapsed and home equity dropped, foreclosures rose immediately,
• the banks were collapsing ($4.6 trillion bailout)(The FDIC closed 465 failed banks in the five years following the crash compared with just 10 in the preceding five year period.), 
• unemployment was on its way to 10%, 
• retirement plans lost 25% on average, 
• oil went from $25 to $130+ per barrel, 
• As the recession effects circled the globe, hundreds of thousands of economically vulnerable folks were pushed below the survival line and died.

All true.  These were not momentary events, not hiccups in our daily routine.  These were long-path decision results, emplaced by political maneuvering and unbalanced influence.

“That economic wreckage can still be seen from coast to coast in unemployment, foreclosed and underwater homes, lost retirements and educations and so much more.” ~Dennis Kelleher, CEO of Better Markets

Update: The industry is not afraid to do it again.  They know no one goes to jail, and the government will bail them out.  Those we had to bail out because they were too big to fail, those are bigger now.  The total cost of the recession in the U.S. alone exceeds $22 TRILLION according to the Government Accountability Office (gao.gov) report.

It all happened from failure of government regulation and oversight of a known high-risk, unconstrained industry. Government fell prey to monied influence, and the bottom 90% of the world bore the extraordinary financial loss, lost years, and lost lives.

So, let's blame someone.  If we mark the spot of the crash, we might blame just President G. W. Bush. Things go farther back and farther afield, though.  So do we blame the Republicans or the Democrats, the President(s) or Congress? Check the timeline ...

1 • 1978, Supreme Court allows banks to export the usury laws of their home state nationwide and sets off a competitive wave of deregulation, resulting in the complete elimination of usury rate ceilings in South Dakota and Delaware, among others.
2• 1980, Depository Institutions Deregulation and Monetary Control Act – Legislation increases deposit insurance from $40,000 to $100,000, authorizes new authority to thrift institutions, and calls for the complete phase-out of interest rate ceilings on deposit accounts.
3• 1982, Garn-St. Germain Depository Institutions Act – Bill deregulates thrifts almost entirely, allowing commercial lending and providing for a new account to compete with money market mutual funds. This was a Reagan administration initiative that passed with strong bi-partisan support.
• 1987, FSLIC Insolvency – GAO declares the deposit insurance fund of the savings and loan industry to be insolvent as a result of mounting institutional failures.
4• 1989, Financial Institutions Reform and Recovery Act – Act abolishes the Federal Home Loan Bank Board and FSLIC, transferring them to OTS and the FDIC, respectively. The plan also creates the Resolution Trust Corporation to resolve failed thrifts.
5• 1994, Riegle-Neal Interstate Banking and Branching Efficiency Act – This bill eliminated previous restrictions on interstate banking and branching. It passed with broad bipartisan support.
6• 1996, Fed Reinterprets Glass-Steagall – Federal Reserve reinterprets the Glass-Steagall Act several times, eventually allowing bank holding companies to earn up to 25 percent of their revenues in investment banking.
• 1998, Citicorp-Travelers Merger – Citigroup, Inc. merges a commercial bank with an insurance company that owns an investment bank to form the world’s largest financial services company.
7• 1999, Gramm-Leach-Bliley Act – With support from Fed Chairman Greenspan, Treasury Secretary Rubin and his successor Lawrence Summers, the bill repeals the Glass-Steagall Act completely.
8• 2000, Commodity Futures Modernization Act – Passed with support from the Clinton Administration, including Treasury Secretary Lawrence Summers, and bi-partisan support in Congress. The bill prevented the Commodity Futures Trading Commission from regulating most over-the-counter derivative contracts, including credit default swaps.
• 2004, Voluntary Regulation – The SEC proposes a system of voluntary regulation under the Consolidated Supervised Entities program, allowing investment banks to hold less capital in reserve and increase leverage.
• 2007, Subprime Mortgage Crisis – Defaults on subprime loans send shockwaves throughout the secondary mortgage market and the entire financial system.
• December 2007, Term Auction Facility – Special liquidity facility of the Federal Reserve lends to depository institutions. Unlike lending through the discount window, there is no public disclosure on loans made through this facility.
• March 2008, Bear Stearns Collapse – The investment bank is sold to JP Morgan Chase with assistance from the Federal Reserve.
• March 2008, Primary Dealer Facilities – Special lending facilities open the discount window to investment banks, accepting a broad range of asset-backed securities as collateral.
• July 2008, Housing and Economic Recovery Act – Provides guarantees on new mortgages to subprime borrowers and authorizes a new federal agency, the FHFA, which eventually places Fannie Mae and Freddie Mac into conservatorship.
• September 2008, Lehman Brothers Collapse – Investment bank files for Chapter 11 bankruptcy.
• October 2008, Emergency Economic Stabilization Act – Bill authorizes the Treasury to establish the Troubled Asset Relief Program to purchase distressed mortgage-backed securities and inject capital into the nation’s banking system. Also increases deposit insurance from $100,000 to $250,000.
• Late 2008, Money Market Liquidity Facilities – Federal Reserve facilities created to facilitate the purchase of various money market instruments.
• March 2009, Public-Private Investment Program – Treasury Secretary Timothy Geithner introduces his plan to subsidize the purchase of toxic assets with government guarantees.

There has been plenty of involvement on both sides of the aisle, and plenty of opportunity to correct the errors. Republicans have perhaps encouraged the laissez-faire policy of letting business run unfettered, but there were democrats in the process as well.  

Over-regulation does, in fact, inhibit successful business.  Ideally, a business will succeed or fail on its own in a competitive market, and it needn't have other constraints. That's fine for small businesses, perhaps.  But when corporations are bigger than countries, economic warfare emerges and actual civilian casualties escallate. 

Do we still face risks, unethical practices, and criminal behaviors in the finance industry?  Of course. Do we now have good governance to preclude another catastrophe?

Side note: through it all, HSBC bank was laundering money for Mexican drug cartels to the tune of $881 billion according to the Justice Department. The penalty for this criminal activity was $1.9 billion, a small fraction of their profits (and the New York Times laments that HSBC was too big to indict). HSBC was just one of many out-of-control organizations, yet nobody went to jail at a time when an unemployed person gets 10 years for robbing a minute mart. Barclays and Swiss UBS were among the banks identified in the Libor rate manipulation scandal. Wells Fargo was recently discovered to have opened millions of accounts without customer permission.  Deutsche Bank was later discovered to be a participant in the Libor scandal; they agreed to a combined US$2.5 billion in fines.  What kind of leadership do we need in business and government to rein in the unethical behavior and reduce the risk to our national economic health?

Extremist ... News

This is a lie offered as journalism.

The inflammatory headline here is a misrepresentation; she didn't say

that. She does offer a thoughtful review of religious extremism and

appropriate response. Watch the video; it's short and reasonable,

and it doesn't agree with the write-up offered by the website.

First, some thoughts on the perhaps larger issue.

The majority of those fighting against Muslim extremists are Muslim. Is Islam at war with itself? Hardly. Al Qaeda, Al Shabaab, Boko Haram, and others are Islamic militants, and their terrorist acts are openly condemned by Islamic leaders. They are opposed by Islamic nations and religious leaders. Volunteers from Iraq and Iran deploy to defend their towns and people against ISIS. We see the same in Djibouti, Kenya, Nigeria, and Egypt, whom I know, and beyond.

As for Ayaan Hirsi Ali*, the former Muslim quoted here, it's perhaps possible that being raised as a Muslim in Somalia among the most violent of religious extremists, she has in fact seen the worst of it. Right next door in Kenya, Christians and Muslims living peacefully together might serve as a counterpoint to that perspective. In Egypt, Muslims and Coptic Christians banded together in demonstrations and mutual protection against terrorist activity.

The solution this 'news' articles suggests is ... what?  Ostracize and deport all Muslims? 

Muslim extremists are a threat, much like Aryan supremacists in years past, perhaps, or like the Inquisition of the middle ages. White supremacists of western history were similarly intolerant and wickedly murderous. Each claimed legitimacy for their inhumanity, hatred, and violence. They did not represent the broader world over which they hoped to rule.

Is Islam the threat? Or is it perhaps extremism and intolerance such as we've seen so often in history, with religious words providing a framework for discrimination and violence against others.

Second, there are these overtly exaggerated interpretations of the news.
The anti-Islamic message of that particular site (yesimright.com) and others like it is troublingly similar to the anti-Semitic propaganda from the early Nazi years.  Identical, actually.  Identical.  

So why would they deliberately misrepresent the truth like that?  What's their goal?

And that perhaps, is the larger issue; extremism in any form tends to destroy rather than solve.  Extremism, radicalism, fundamentalism, and fanaticism, all have deadly histories.

*Note:  In 2005, Hirsi Ali was named by Time magazine as one of the 100 most influential people in the world.
An opponent of all religions, Hirsi Ali has been a critic of Islam, calling for a reformation of the religion. In 2004, she collaborated on a short movie with Theo van Gogh, entitled Submission, a film about the oppression of women under Islam. The film sparked controversy and death threats against the two; Van Gogh was assassinated later that year by Mohammed Bouyeri. In a 2007 interview, she described Islam as an "enemy" that needs to be defeated before peace can be achieved.  Her personal biography, Infidel: My Life, published that same year describes her story of exile from her clan through war, famine, arranged marriage, religious apostasy and the shocking murder on the streets of Amsterdam of her collaborator, Theo van Gogh. In her latest book Heretic (2015) she has moderated her views of Islam and now calls for a reform of the religion by supporting reformist Muslims.

Wealth, political power, and influence

The concentration of wealth, political power, and influence go hand in hand and are mutually reinforcing. 

The rest of humanity has little voice in their world.

As the United Nations Human Development Report stated nearly a decade ago: “Disadvantaged groups – poor people, women, rural populations, indigenous communities – are disadvantaged partly because they have a weak political voice, and they have a weak political voice because they are disadvantaged. Where political institutions are seen as vehicles for perpetuating unjust inequalities or advancing the interest of the elites, that undermines the development of democracy and creates conditions for state breakdown.”

When entities become so large that they spend more on lobbying
the congress than they do on advertising and good work, they
 have become agents of domination rather than service.

An individual citizen's right to speak, to assemble, to participate in government has been overwhelmed by louder voices in recent decades.   Corporations are people now, and super PACs are unrestrained.   

Super PACs play an interesting role.  Technically known as independent, expenditure-only committees, super PACs may raise unlimited sums of money from corporations, unions, associations, and individuals, then spend unlimited sums to overtly advocate for or against political candidates, but they may not contribute to or coordinate with the candidates. Update: 2000+ super PACs took in $1.79 billion for the 2016 election cycle.  PACs and super PACs; good or bad?  Read the list and give it a little thought, perhaps.

When the U.S. was young, there were few eligible voters; only 38,000 voted in our first presidential election.  Today there are 230+ million voters registered.  Does that change things?

Updates needed?  

• Term limits for Congress, perhaps.  
• Some transparency for corporate lobbyists would be interesting.  
• A restatement of constitutional values beginning with the 'equal' issues and an analysis of how well (or poorly) we're doing in that arena would be enlightening.  
• Full accountability for influence would be extraordinarily valuable.  
• And lying to us; how about laws against government lying to the public, deliberately stating as fact things they know are untrue.  Those would be particularly encouraging.  
• Among my personal favorites, mandating a breakup of the 'too big to fail' financial behemoths would be a big step in the right direction, too.  I hope I understand the issues adequately.

Whatever we do to be involved and represented, it's perhaps going to have to be different.  The way it used to work is pretty much obsolete.

Making America Great Again

What does that mean?

James Gustave Speth, professor at Vermont Law School, an environmental lawyer, advocate, and 

author of America the Possible: Roadmap to a New Economy from Yale University Press.

It may be difficult, but there are extraordinary opportunities ahead.

Today's exceptionalism is a mixed retelling of the story of superiority, of rationalizing unilateral actions in world governance and finance  by the last superpower.  To be fair, many who want to 'make America great again' are fondly remembering America's role in the 1950's and 60's when we produced half of the world's GDP, when industry and productivity made a way forward for so many. 

Let's look objectively at the facts we're grappling with.  The graphic (left) from 2012 (based on data compiled by James Gustave Speth) describes our place among the major OECD countries and remains reasonably accurate today.  Some updates --

• Infant mortality: the U.S. is 56th down the world list, worse than Slovenia, Greece, Latvia, Austria, Belgium, Italy, Spain, Japan, Iceland, Norway, Cuba, Poland, etc.
• Life expectancy: the U.S. is an unimpressive 42nd down the list.
• Healthcare costs: in the U.S. we spend 2.5 times the OECD per person average and we're not healthier than they are.
• Incarceration: while the United States represents only about 4.4 percent of the world's population, it houses around 22 percent of the world's prisoners.
• Education: the U.S. is 29th down the list for quality of education (science and math scores for 15 year olds).  Post-secondary education costs have risen 800% over the last forty years while incomes for the bottom 90% have stagnated.  The average Class of 2016 graduate owes $37,172 in student debt; not a helpful starting point for their career.
• Economic inequality: America is the richest and most unequal country.  The rich get richer reliably.  The middle and lower economic quintiles are in decline, and 20% of our children live in poverty.  The cultural norm of a traditional majority middle-class family has faded.

Times have changed; others have caught up and passed us by.  Samantha Powers, before she was U.S. Ambassador to the U.N., asserted that "we're neither the shining example, or even competent meddlers.  It's going to take a generation or so to reclaim American exceptionalism..."  A generation ... or do we perhaps need a better goal.

     What are the issues?

You might want to do your own inquiry into the nation, poverty, inequality, abusive economics, and perspective.

tough love without the love

The poor?  It's their own fault, or so the fortunate say.  Actually it's not.

Laziness isn’t why people are poor.  And iPhones aren’t why they lack health care.

The real reasons people suffer poverty don't reflect well on the United States.

By Stephen Pimpare March 8

In response to a question about his party’s plan to increase the cost of health insurance, Rep. Jason Chaffetz (R-Utah) suggested that people should “invest in their own health care” instead of “getting that new iPhone.” He doubled-down on the point in a later interview: “People need to make a conscious choice, and I believe in self-reliance.” Of course, Chaffetz is wrong. But he isn’t alone.

While he has been met with justifiable criticism, the claim he is making is hardly new. Chaffetz was repeating a commonly held belief that poverty in the United States is, by and large, the result of laziness, immorality and irresponsibility. If only people made better choices -- if they worked harder, stayed in school, got married, didn’t have children they couldn’t afford, spent what money they had more wisely and saved more -- then they wouldn’t be poor, or so the reasoning goes.

Since the invention of the mythic welfare queen in the 1960s, this has been the story we most reliably tell about why people are poor. Never mind that research from across the social sciences shows us, over and again, that it’s a lie. Never mind low wages or lack of jobs, the poor quality of too many schools, the dearth of marriageable males in poor black communities (thanks to a racialized criminal justice system and ongoing discrimination in the labor market), or the high cost of health and day care. Never mind the fact that the largest group of poor people in the United States are children. Never mind the grim reality that most American adults who are poor are not poor from lack of effort but despite it.

This deep denial serves a few functions, however.

First, it’s founded on the assumption that the United States is a land of opportunity, where upward mobility is readily available and hard work gets you ahead. We’ve recently taken to calling it grit. While grit may have ushered you up the socioeconomic ladder in the late 19th century, it’s no longer up to the task today. Rates of intergenerational income mobility are, in fact, higher in France, Spain, Germany, Canada, Japan, New Zealand and other countries in the world than they are here in the United States. And that mobility is in further decline here, an indicator of the falling fortunes not just of poor and low-income Americans, but of middle-class ones, too.

To accept this as reality is to confront the unpleasant fact that myths of American exceptionalism are just that -- myths -- and many of us would fare better economically (and live longer, healthier lives, too) had we been born elsewhere. That cognitive dissonance is too much for too many Americans, so we believe instead that people can overcome any obstacle if they would simply work hard enough.


Second, to believe that poverty is a result of immorality or irresponsibility helps people believe it can’t happen to them. But it can happen to them (and to me and to you). Poverty in the United States is common, and according to the Census Bureau, over a three-year period, about one-third of all U.S. residents slip below the poverty line at least once for two months or more.

Third -- and conveniently, perhaps, for people like Chaffetz or House Speaker Paul D. Ryan (R-Wis.) -- this stubborn insistence that people could have more money or more health care if only they wanted them more absolves the government of having to intervene and use its power on their behalf. In this way of thinking, reducing access to subsidized health insurance isn’t cruel, it’s responsible, a form of tough love in which people are forced to make good choices instead of bad ones. This is both patronizing and, of course, a gross misreading of the actual outcome of laws like these.

There’s one final problem with these kinds of arguments, and that is the implication that we should be worried by the possibility of poor people buying the occasional steak, lottery ticket or, yes, even an iPhone. Set aside the fact that a better cut of meat may be more nutritious than a meal Chaffetz would approve of, or the fact that a smartphone may be your only access to email, job notices, benefit applications, school work and so on. Why do we begrudge people struggling to get by the occasional indulgence? Why do we so little value pleasure and joy? Why do we insist that if you are poor, you should also be miserable? Why do we require penitence?

Fact checked; it's reasonably accurate when reviewed against 2016 data.
Infant mortality (the U.S. is 56th down the list, worse than Slovenia, Austria,
Belgium, Italy, Spain, Iceland, Norway, Cuba, Poland, etc, and Japan)
Life expectancy (the U.S. is an unimpressive 42nd on the list)
Healthcare costs (in the U.S. we spend 2.5 times the OECD per person
and we're not healthier than they are.)

Just because what Chaffetz is saying isn’t novel doesn’t mean it isn’t uninformed and dangerous. Chaffetz, Ryan and their compatriots offer us tough love without the love, made possible through their willful ignorance of (or utter disregard for) what life is actually like for so many Americans who do their very best against great odds and still, nonetheless, have little to show for it. Sometimes not even an iPhone.

Stephen Pimpare is the author of "A People’s History of Poverty in America" and the forthcoming "Ghettos, Tramps, and Welfare Queens: Down and Out on the Silver Screen." He teaches American politics and public policy at the University of New Hampshire.

For my own education, I've researched and written a number of articles on poverty, inequality, abusive economics, and privilege. The blog is a collection of my own attempts at objectivity.  I've included this article by Stephen Pimpare because it paints a perhaps helpful picture of the discussion. It appears that we've become a troublesome culture and economy with moral and ethical contradictions between what we say and what we do.

Accept the things you cannot change ...

Or not.

• If it needs changing, change it.  
• If it's hard, fight hard.  
• If you fight to the end and die, perhaps your children will finish the fight.  Or your grandchildren.

Some things cannot and should not be accepted as they are.

Injustice, oppression and violence, discrimination, prejudice, abuse, and corrupt power ...

I remember Malala Yousafzai who began blogging about life under the Taliban in Afghanistan.  She was eleven.  Her father supported her.  She was later targeted for assassination, shot and almost killed.  Medically evacuated from the country, she survived, but it was close. 

A Nobel laureate now, she's known around the world as an advocate for education and particularly for girls.  Her father explains with a smile how she used to be known as his daughter, but now he's known as her father.  He's proud of her.   Malala's advocacy has since grown into an international movement.

We're all proud of her.  Except the Taliban; they're sort of embarrassed.

A dear friend in western Africa reminded us, today is International Women's Day.  The issues are much larger than western feminism perhaps recognizes.


Ps 82 - Defend the oppressed, stand up for the poor, the disenfranchised, the abused ... how long will you tolerate the wicked?  God did not call us out to be peacefully passive but to be powerfully influential in our sphere of existence, to change lives. Serenity is not at the top of the list. The peace we're offered is with the Father and within ourselves, not with the ways of this world.

A Single Story

What if we heard more than one story?  What if we heard stories from more than one participant?

I've always felt that it is impossible to engage properly with a place or a person without engaging with all of the stories of that place and that person. The consequence of the single story is this: It robs people of dignity. It makes our recognition of our equal humanity difficult. It emphasizes how we are different rather than how we are similar.

So what if before my Mexican trip, I had followed the immigration debate from both sides, the U.S. and the Mexican?

Stories matter. Many stories matter. Stories have been used to dispossess and to malign, but stories can also be used to empower and to humanise. Stories can break the dignity of a people, but stories can also repair that broken dignity.

As we discovered when the cold war ended and the wall came down, the folks on the other side were just like us.  Their hopes for the future and for their children were the same as ours.  It was power players and politicians on both sides who had bent things so badly, and that 'official' version was the only story that we'd heard.

Liberal and conservative stories might be a good starting place.  When you remove the power players, the goals of the two groups are virtually identical.

What's next

National GDP has made regular progress, and incomes rose ... but only for the wealthy.  The economic middle class is in decline and the poor are trapped.

Folks who work for an average income have made continuing advances in productivity but not in wages.  Their employers are doing well. Stockholders are doing well. Corporate profits are doing well. Working folks haven't seen much improvement, however, since the changes that began in the late 70's.  Today, 21% of our children live in destructive poverty.

Do your own inquiry.  For a starting point, you might look at The GAP, or Poverty is a Weapon of Mass Destruction, or perhaps The century's deadliest idea.

It's possible

For mankind, this is all impossible, perhaps.
But with God ... oh my friend, with God all things are possible.
 All things.
 All.

It's possible to have a worldview bigger than your culture.

It is possible to be a Christian and have an open mind. 

It's possible to believe in God and in science. 

It is possible to be pro-women and pro-life.

It's possible to have privilege and still face discrimination.

It's possible to be poor and to have a great heart and mind. 

It is possible to believe in both liberty and law. 

It's possible to love your neighbors and not share all their opinions. 

It's possible to be brilliant without a college degree. 

It is possible to be Muslim and suffer at the hands of terrorists. 

It is possible to be a foreigner who loves the American dream.

It is possible to be different and the same.

It's possible to listen to those that think differently than you, to understand why, and to learn from them.

Let great love win.  It's possible, and it's the better choice.