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Thread: Economic warfare

  1. #1
    Senior Member Qtec's Avatar
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    Economic warfare

    The Financial War Against the Economy at Large
    Sunday, 06 January 2013 06:48 By Michael Hudson, Naked Capitalism | News Analysis

    Today’s economic warfare is not the kind waged a century ago between labor and its industrial employers. Finance has moved to capture the economy at large, industry and mining, public infrastructure (via privatization) and now even the educational system. (At over $1 trillion, U.S. student loan debt came to exceed credit-card debt in 2012.) The weapon in this financial warfare is no larger military force. The tactic is to load economies (governments, companies and families) with debt, siphon off their income as debt service and then foreclose when debtors lack the means to pay. Indebting government gives creditors a lever to pry away land, public infrastructure and other property in the public domain. Indebting companies enables creditors to seize employee pension savings. And indebting labor means that it no longer is necessary to hire strikebreakers to attack union organizers and strikers.

    Workers have become so deeply indebted on their home mortgages, credit cards and other bank debt that they fear to strike or even to complain about working conditions. Losing work means missing payments on their monthly bills, enabling banks to jack up interest rates to levels that used to be deemed usurious. So debt peonage and unemployment loom on top of the wage slavery that was the main focus of class warfare a century ago. And to cap matters, credit-card bank lobbyists have rewritten the bankruptcy laws to curtail debtor rights, and the referees appointed to adjudicate disputes brought by debtors and consumers are subject to veto from the banks and businesses that are mainly responsible for inflicting injury.

    The aim of financial warfare is not merely to acquire land, natural resources and key infrastructure rents as in military warfare; it is to centralize creditor control over society. In contrast to the promise of democratic reform nurturing a middle class a century ago, we are witnessing a regression to a world of special privilege in which one must inherit wealth in order to avoid debt and job dependency.

    Crazy, eh?


    Not so much.

    The most obvious way Social Security is like a pension plan is that the rich are trying to destroy it, just like Hostess Brands wrecked the retirement plans of its bakers. But there are other similarities. Since 1983, we have all paid in a lot more money in FICA taxes than needed to fund current payments on the theory that it would be there for baby boomers when it was needed.

    Pension plans do the same thing. They use actuarial calculations to figure out how much money they need in out years, and how much they need to take in today to make those payments. Then they invest the money as safely as possible so that it will be there when it is needed. The Social Security Trust Fund was ordered to use the excess contributions to buy Treasury obligations, albeit of a type supposedly not to be sold to the public. Those obligations are the bulwark of the demands of citizens who don’t want to see any more cuts to Social Security. They also constitute a partial explanation for the desire of the rich to cut Social Security: the bonds will have to be redeemed, meaning either the Treasury will have to sell bonds to replace them or we will have to increase taxes to fund the repayment of the bonds, or some other step will be necessary that the rich don’t like.

    The deep desire not to pay the bonds is part of a longer term project, tax reduction for the rich. In fact, the use of the Special Treasury Obligation/Trust Fund was meant to disguise the reality of the huge tax cuts handed to the wealthy in the 1980s in a lovely bipartisan way.
    The unfairness and stupidity of the tax cut for the rich was hidden by the increase in the FICA taxes imposed only on income from work, and only modestly affecting the income of the rich. Meanwhile, the rich funded the increasing Reagan deficits by lending money to the Treasury that should have been paid in taxes.

    Congress adopted a unified budget approach that folded the increased FICA taxes into the revenue side, making budget deficits seem much smaller than they actually were. (That was theoretically changed in 1990; see this for details of the current situation.) Now that it’s time to pay off the bonds held by the Trust Fund, the richest Americans have made their position clear: they aren’t paying back those bonds, and they won’t pay more taxes. They get support from their servant think tanks, like this from Jagadeesh Gokhale at the Koch Cato Institute:

    Let us recognize that past excess payroll taxes relative to benefit outlays (past Trust Fund surpluses under the “off budget” perspective) have been spent on other government programs. Grants of additional spending authority for Social Security must ultimately be paid out of today’s and future taxpayer resources so making them whole is not really possible.

    Gokhale says that the bonds held by the Trust Fund are like corporate borrowings, where the proceeds are used for corporate purposes. When due, they are either are paid from future income and assets, or are dumped in the trash through bankruptcy or negotiations with creditors. Let’s default, he says. He might want to check out the Fourteenth Amendment.

    But the richest Americans plan to act on Gokhale’s advice. They are going to cut the retirement benefits of millions of fellow citizens rather than pay more taxes. And they have their hired hands in government to make that stick. Here’s their pet Senator, Mitch McConnell:

    Predictably, the President is already claiming that his tax hike on the “rich” isn’t enough. I have news for him: the moment that he and virtually every elected Democrat in Washington signed off on the terms of the current arrangement, it was the last word on taxes. That debate is over. Now the conversation turns to cutting spending on the government programs that are the real source of the nation’s fiscal imbalance.

    Where does that leave people dependent on Social Security, Medicare and Medicaid?

    http://truth-out.org/news/item/13718...onomy-at-large

    http://my.firedoglake.com/masaccio/2...sion-plan-but/

    This makes sense. For the last 30 years the tax cuts that go mainly to the rich have been paid for by the excess SS funds. Now its payback time and they don't want to do it.

    Q
    Remarkable.You leak a story, and then you quote the story. I mean,that's a remarkable thing to do



  2. #2
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    Very interesting.
    mac.

  3. #3
    Senior Member Qtec's Avatar
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    Quote Originally Posted by cushioncrawler View Post
    Very interesting.
    mac.
    If you think that's interesting you must read this.

    Bank of America: Too Crooked to Fail
    The bank has defrauded everyone from investors and insurers to homeowners and the unemployed. So why does the government keep bailing it out?

    Read more: http://www.rollingstone.com/politics...#ixzz2HTaghbPT
    Follow us: @rollingstone on Twitter | RollingStone on Facebook
    There is plenty more here. http://www.rollingstone.com/politics/blogs/taibblog

    How about this for class warfare?

    Another day, another corporate titan suffering from devastating amnesia. This time, the memory-loss patient is none other than Angelo Mozilo, the former CEO of Countrywide Financial.

    Deposed in the landmark lawsuit between the monoline insurer MBIA and Countrywide/Bank of America, Mozilo professed not to know the difference between "verified" income and "stated" income. I kid you not. He also made some incredible remarks regarding his notorious "Friends of Angelo" lending program, in which, among others, political figures like North Dakota Senator Kent Conrad and Connecticut Senator Chris Dodd received Countrywide mortgages on highly advantageous terms just because they were tight with the CEO.

    As chief of Countrywide, Mozilo headed the single most corrupt subprime mortgage lender in America during the period preceding the crisis. Charged with mass fraud and headed for trial in October of 2010, Mozilo and the SEC ultimately settled four days before opening arguments were set to begin in Los Angeles. Ultimately, Mozilo got away with no jail time, paying a $67.5 million settlement, $20 million of which was covered by Countrywide, which by then had been acquired by Bank of America, a major bailout recipient. Just in the years between 2000 and 2008, Mozilo made over half a billion dollars – $521.5 million, according to one corporate research firm.

    If you were going to assign blame to any single person for the financial crisis, Angelo Mozilo would rank right up there with people like Lehman's idiot CEO Dick Fuld, deranged credit-default-swap peddler Joe Cassano of AIG's Financial Products unit, and deregulatory pioneers like Bob Rubin and Phil Gramm. Mozilo's role, however, was probably the single most shameful, as he represented the conscious decision of mortgage underwriters to abandon lending standards in order to claim ever-larger chunks of market share.

    Read more: http://www.rollingstone.com/politics...#ixzz2HTc54pqe
    Follow us: @rollingstone on Twitter | RollingStone on Facebook
    There have been 100's of lawsuits and settlements against banks and lending institutions, they still deny they did anything wrong!




    Q
    Last edited by Qtec; 01-09-2013 at 05:47 AM.
    Remarkable.You leak a story, and then you quote the story. I mean,that's a remarkable thing to do



  4. #4
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    Quote Originally Posted by Qtec View Post
    Crazy, eh?


    Not so much.




    http://truth-out.org/news/item/13718...onomy-at-large

    http://my.firedoglake.com/masaccio/2...sion-plan-but/

    This makes sense. For the last 30 years the tax cuts that go mainly to the rich have been paid for by the excess SS funds. Now its payback time and they don't want to do it.

    Q
    Q's posts are timeless.

    More proof of how republicans destroyed the American Economy, and blamed it on Democrats!

  5. #5
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    Then why hasn't your president fixed it.

    The party always says they have a plan to make things better but they need more power.

    The Stalinists always obey the plan and give the party more power.

    Once the party plan fails the party says they have a new plan to make things better but they need more power.

    The Stalinists always obey the plan and give the party more power.

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