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The Revolution Isn’t Over: Freedom’s Painful Price

Before she was arrested, tortured, stripped and subjected to a “virginity exam” — all for her pro-democracy activities — Salwa al-Housiny Gouda admired the Egyptian Army.

Her odyssey is a reminder that the Egyptian revolution that exhilarated so many around the world in January and February remains unfinished. The army is as much in charge as ever, and it has taken over from the police the task of torturing dissidents. President Hosni Mubarak is gone, but in some ways Mubarakism continues.

Ms. Gouda, a 20-year-old hairdresser, is unmarried and strong-willed. She threw herself into the democracy movement early this year, sleeping in a tent on Tahrir Square, also known as Liberation Square, the movement’s epicenter.

Like the other activists, she focused her rage initially on Mr. Mubarak and on the police, rather than the army. “I trusted the army,” she told me, and she and other protesters often chanted slogans like, “The army and the people are one.”

But that was an illusion. Never squeaky clean, the army has increasingly taken over the role of domestic security from the police and seems fed up with disorder. On March 9, it moved in to clear Tahrir Square, pulling down tents and detaining more than 190 demonstrators.

Ms. Gouda was one of about 19 women arrested that day. Though the army has denied all such accusations, her testimony is confirmed by other detainees and by human rights groups. They say that the women were taken to the Egyptian Museum, a tourist landmark beside Tahrir Square, tied up or handcuffed to the gate outside it, and then slapped, beaten and subjected to electric shocks.

“They didn’t give us a chance to speak,” Ms. Gouda said. “They used an electric prod whenever we tried to speak.”

The prisoners were later taken to the military prosecutor’s office, where the men were photographed as criminals beside a table full of clubs and Molotov cocktails supposedly confiscated from them. (In my experience, the people with such weapons in Egypt are usually plainclothes police officers.) The women were paraded before cameras and told that they faced charges of prostitution — leaving them terrified at the thought of the accusations being broadcast on state television.

Ms. Gouda was extraordinarily strong in telling her story. But at one point she broke down in tears. “They know that the way they can harm a woman the most is by accusing her of prostitution,” she said.

Later, the detainees were taken to a military prison. Ms. Gouda said that the women were strip-searched by a female guard, but — perhaps to add to the humiliation — the search was conducted in a room with doors and windows wide open. She said she did not know if anybody looked in.

Then the unmarried women were subjected to a forced “virginity exam,” conducted on a bed in a prison hallway, by a man. When the women pleaded to be examined by a woman instead, they were threatened with cattle prods, Ms. Gouda said.

“I was shattered,” she recalled. “My whole body was shaking.” Her legs were covered with a blanket, but a half-dozen military men stood behind her as she was examined, Ms. Gouda said.

“I was ready to be beaten,” she added. “But the worst moment was when I was stripped and examined.”

Heba Morayef of Human Rights Watch said that such exams were not customary in prisons and that the point was to humiliate female activists. “In this context, they’re sexual assaults,” she noted — but added that the military is above the law.

Ms. Gouda and the other women were all released after a few days, and in the end none were actually charged with prostitution. But many male democracy activists have been sentenced to prison terms.

A Cairo human rights lawyer, Ragia Omran, estimates that perhaps 1,000 Egyptians who have been arrested by the military since the protests began remain in detention today. Some have been sentenced to five years in prison after military trials lasting 30 minutes or less, without any right to choose their own lawyers, she said.

Ms. Omran is accustomed to representing other detainees. But during a referendum on constitutional changes this month, she herself was seized by soldiers while observing the polls. By her account, she was roughed up, strip-searched, shouted at and detained for hours until her well-connected family and friends managed to get her released.

All this is a huge letdown from the triumph when “people power” toppled President Mubarak. The lesson may be that revolution is not a moment but a process, a gritty contest of wills that unfolds painstakingly long after the celebrations have died and the television lights have dimmed.

“The revolution isn’t over yet,” Ms. Omran told me. “Freedom isn’t for free.”

By: Nicholas D. Kristof, Op-Ed Columnist, The New York Times, March 26, 2011

March 27, 2011 Posted by | Democracy, Dictators, Egypt, Middle East, Women | , , , , , , , | Leave a comment

Want To Cut The Deficit? Restore Fair Taxes On Corporations And The Wealthy

If the deficit hawks in Congress are serious about righting our economic ship and reducing deficits in the federal budget and many state capitols, it would we worth listening to the voices rising from the streets suggesting a very different solution than more cuts in safety net programs, education, pensions, and worker’s rights.Greed at the upper echelons of our society is bankrupting our governments at every level. “Suggesting corporations and the wealthiest Americans pay their fair share,” writes Deborah Burger, “usually earns one the reproof of advocating class warfare. But class warfare when practiced by the elites is apparently perfectly acceptable. The average CEO who was paid $27 for every dollar earned by an employer 25 years ago – during which wages have mostly fallen or stagnated – now gets a ratio of about $275 to $1.”

This is not a budget fight, it’s a fight for the future of an America in which everyone should be able to retire in dignity, not worry about whether they can go to the doctor when they get sick, or whether there will still be schools for their kids.

How will we pay for it? By increasing the revenues from those who can most afford it, not by punishing those who have the least. By requiring corporations and the wealthiest individuals to pay their fair share, and stop blaming working people for an economic crisis created by Wall Street and exploited by their politician acolytes.

We’ve all heard the arguments. Pass more corporate tax breaks because that’s what makes the economy grow. Except it doesn’t.

Corporate profits per employee are at record levels. At $1.6 trillion, third quarter 2009 corporate profits were the highest ever recorded. Yet official unemployment still hovers near 9 percent, and the real jobless number is probably double that. Whatever big corporations are doing with their record profits, they are not hiring more workers.

Or the argument that our 35 percent corporate tax rate is one of the highest in the world. Except few if any major corporations pay anywhere near that amount. Half of foreign companies and about 42 percent of U.S. companies paid no U.S. income taxes for two or more years from 1998 to 2005, according to a recent Government Accounting Office study.

How do they accomplish this? Pages of corporate tax loopholes that render the supposed tax rate meaningless, loopholes not available to the average working family.

Who are some of those tax scofflaws? Bank of America and Citigroup, two of the financial institutions that, unlike workers did actually create the financial meltdown, paid no taxes in 2009. Boeing, just awarded a new $35 billion contract by the federal government to build airplanes, also paid no taxes between 2008 and 2010 despite recording $10 billion in profits those year, reports Citizens for Tax Justice.

Where’s the shared sacrifice from these corporate giants? Not from General Electric which, as the New York Times reported March 24, made $14.2 billion in profits in 2010, but paid no U.S. taxes, and was rewarded with the appointment of their top executive to head President Obama’s Council on Jobs and Competitiveness. Apparently paying no taxes is a model for how to be competitive.

Then there’s the wealthiest Americans who won a two year extension on tax breaks in December and also profited from the near elimination of estate taxes, at a time when the richest 5 percent of Americans control 23 percent of total income, compared to just 12 percent for the 40 percent at the bottom.

According to Merrill Lynch Global Wealth Management and Capgemini Consulting, there were about 3 million high net worth individuals and ultra high net wealth individuals in the US in 2009, those with investable assets, excluding primary residences and consumables, of from $1 million to $30 million.

Calculations by the Institute for Health and Socio-Economic Policy, research arm of National Nurses United, shows that a one-time wealth surcharge of 14% on those assets would more than pay for the $1.6 trillion budget deficit projection for 2011. Or, it would support about 33.8 million households at the national real median income level for 2008, pay for a year’s worth of AIDS medication for about 142 million patients, or create 34 million jobs at $50,000 per year.

In other words, we could more than balance our federal and state budgets without cutting Social Security or slashing pensions for public servants or depriving students of access to a decent education or far too many Americans of access to healthcare.

Turn off the Fox News echo chamber and you can hear the sounds of those calling for economic justice and a more fair tax system every day in the streets of Madison, Columbus, Indianapolis, and other cities across America. They have opened a door that will not be closed, and their voices are getting louder.

By: Deborah Burger, Originally published March 25, 2011, CommonDreams.org

March 27, 2011 Posted by | Congress, Corporations, Deficits, Economy, Federal Budget, Politics, States | , , , , , , | Leave a comment

Note To Banks: It’s Not 2006 Anymore

Nostalgia is running high on Wall Street for the days when junk mortgage underwriting and opaque derivatives trading juiced bank profits. As regulators continue to devise the machinery of the Dodd-Frank regulatory reform law, major financial institutions are working overtime in Washington to bring the good times back again.

Unfortunately for taxpayers, some of these efforts are gaining traction, particularly regarding the regulation of derivatives and mortgages.

As you may recall, Dodd-Frank was supposed to shed light on derivatives trading so that the risks and costs of these instruments would be clear to regulators and market participants. To this end, the law required derivatives to be cleared and traded on exchanges or through other approved facilities. But Dodd-Frank contained a big loophole: the Treasury secretary can exempt foreign-exchange swaps from the regulation.

Currency trading is enormous: on average, about $4 trillion of these contracts change hands each day. Major banks are huge in this market. According to the Comptroller of the Currency, trading in foreign-exchange contracts generated revenue of $9 billion in 2010 at the nation’s top five banks. That’s more than was produced by any other type of derivative.

No one was shocked when the banks began pushing the Treasury to exempt these swaps from regulatory scrutiny. From last November through January, Treasury officials met to discuss foreign-exchange swaps with 34 representatives of large financial institutions, the Treasury’s Web site shows.

A spokesman for Timothy F. Geithner, the Treasury secretary, said last week that Mr. Geithner had not made up his mind on this matter. If Mr. Geithner sides with the banks, he will have bought into their argument that foreign-exchange swaps are different from other derivatives, that this market performed ably during the financial crisis and does not need additional oversight.

Others disagree. Testifying before the House Financial Services Committee in October 2009, Gary Gensler, the chairman of the Commodity Futures Trading Commission, said: “Any exception for foreign-currency forwards should not allow for evasion of the goal of bringing all interest rate and currency swaps under regulation to protect the investing public.”

Dennis Kelleher, the president of Better Markets, a nonprofit organization that promotes the public’s interest in capital markets, said he was dubious of the contention that the market for foreign-exchange contracts performed well during the turmoil of 2008. Mr. Kelleher said that the only reason this market did not seize up like others was that the Fed lent huge amounts — $5.4 trillion — to foreign central banks through so-called swap lines during the fall of 2008.

“We suggested that Treasury hire truly independent experts to look at the data and provide the secretary with advice on whether or not the FX market performed well in the crisis and whether the exemption should be granted,” he said.

The analysis could be done within 60 days, he said. The Treasury told him it was confident that it had all the information it needed. “Their response was, ‘Thank you,’ ” he said.

Big financial institutions are also eager to return to the days of lax mortgage lending, judging from two initiatives being discussed in Washington. Both are intended to get the home loan market moving again — and to buoy falling home prices.

One relates to how regulators define a “qualified residential mortgage,” a term of art in the Dodd-Frank law. Issuers of asset-backed securities that are made up of such loans needn’t keep any credit risk of those securities. But sellers of loan pools that don’t consist of qualified mortgages are required to retain some of the risk in them. This provision was meant to eliminate the perverse incentives of the mortgage boom, when packagers of loan pools were encouraged to fill said pools with toxic waste because they had little or no liability for the deals once they were sold.

What constitutes a qualified mortgage has become a battleground issue because of the risk-retention rules under Dodd-Frank. Qualified mortgages should be of higher quality, based upon a borrower’s income, ability to pay and other attributes to be decided by financial regulators.

The board of the Federal Deposit Insurance Corporation will hold an open meeting on Tuesday to discuss qualified mortgages and the risk-retention rule. Among the questions to be considered is how much of a down payment should be required in a qualified loan, and whether mortgage insurance can be used to protect against the increased risks in loans that have smaller down payments.

The use of mortgage insurance during the boom effectively encouraged lax lending. Investors who bought securities containing loans with small or no down payments were lulled into believing that they would be protected from losses associated with defaults if the loans were insured.

But when loans became delinquent or sank into default, many mortgage insurers rescinded the coverage, contending that losses were a result of lending fraud or misrepresentations. When they did so, the insurers returned the premiums they had received to the investors who owned the loans. Lengthy litigation between the parties is under way but has by no means concluded.

Clearly, for many mortgage securities investors, this insurance was something of a charade. So any argument that mortgage insurance can magically transform a risky loan into a qualified residential mortgage should be laughed off the stage. And yet, mortgage insurers are making those arguments vociferously in Washington.

The final front in the mortgage battle involves a plan to restart Wall Street’s securitization machine with instruments known as covered bonds. Here, too, the big banks and the housing-financial complex are arguing that if private investors are to return to the mortgage market, we must create a new instrument that will let the good times roll again.

Covered bonds are pools of debt obligations that have been assembled by banks and sold to investors who receive the income generated by the assets. The bank that issues the bonds, meanwhile, retains the credit risk. If losses arise, the bank that issued the covered bonds must offset the loss with its own capital. That could push troubled banks closer to the edge.

If an asset in the pool defaults, a separate entity would be required to remove the assets from the bank’s control. The assets would then be out of reach of the F.D.I.C. should the bank fail and the agency step in as receiver. The investors who bought the covered bonds would have first call on the assets, ahead of the F.D.I.C.

This structure would wind up bestowing a new form of government backing to the major banks issuing the bonds, raising the potential for losses at the F.D.I.C. insurance fund, which protects savers’ deposits.

Equally troubling, the covered bond structure favored by the banks would let the pools invest in risky assets such as home equity lines of credit. These loans have been among the worst-performing assets out there. Covered bonds issued overseas, by contrast, typically consist solely of high-quality loans.

“The industry is trying to do an end run around the F.D.I.C.,” said Christopher Whalen, publisher of the Institutional Risk Analyst. “This proposal is about restarting the Wall Street assembly line for selling toxic waste to investors.”

Clearly, the battle for the safety and soundness of the nation’s financial markets is far from won. The issues are complex and confounding — by design, in many cases — and financial institutions have armies of advocates in Washington. The taxpayers do not, which makes monitoring of these crucial proceedings all the more essential.

By: Gretchen Morgenson, The New York Times, March 26, 2011

March 27, 2011 Posted by | Banks, Financial Institutions, Financial Reform, Foreclosures, Mortgages, Regulations, Wall Street | , , , , , , , , , , , , | Leave a comment

   

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