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“Who Says Crime Doesn’t Pay?”: The Bottom Line Is Crime Can Actually Pay — If It’s Big Enough

Hey, can we all just stop complaining that our government coddles Wall Street’s big money-grubbing banks?

Sure, they went belly-up and crashed our economy with their frauds, rigged casino games, and raw greed. And, yes, the Bush and Obama regimes rushed to bail them out with trillions of dollars in our public funds, while ignoring the plight of workaday people who lost jobs, homes, businesses, wealth, and hope. But come on, Buckos, have you not noticed that the feds are now socking the bankers with huuuuuge penalties for their wrongdoings?

Wall Street powerhouse Goldman Sachs, for example, was recently punched in its corporate gut with a jaw-dropping $5 billion for its illegal schemes.

Wow, $5 billion! That’s a stunning amount that Goldman Sachs has agreed to pay to settle federal criminal charges over its shameful financial scams that helped wreck America’s economy in 2008. That’s a lot of gold, even for Goldman Sachs. It’s hard to comprehend that much money, so think of it like this: If you paid out $100,000 a day, every day for 28 years, you’d pay off just one billion dollars. So, wow, imagine having to pull Five Big B’s out of your wallet! That’s enough to make even the most arrogant and avaricious high-finance flim-flammer think twice before risking such scams, right? Thus, these negotiated settlements between the Justice Department and the big banks will effectively deter repeats of the 2008 Wall Street debacle… right?

Actually, no.

The chieftains of the Wall Street powerhouse say they are “pleased” to swallow this sour slug of medicine. It’s not because they’re contrite and eager to make amends.  Wall Street bankers don’t do contrite. They are pleased (even thrilled) because this little insider secret: Thanks to Goldman’s backroom dealing with prosecutors, the settlement is riddled with special loopholes that could eliminate nearly $2 billion from the publicized “punishment.”

For example, the deal calls for the felonious bank to put a quarter-billion dollars into affordable housing, but generous federal negotiators put incentives and credits in the fine print that will let Goldman escape with paying out less than a third of that. Also, about $2.5 billion of the settlement is to be paid to consumers hurt by the financial crisis. But the deal lets the bank deduct almost a billion of this payout from its corporate taxes — meaning you and I will subsidize Goldman’s payment. As a bank reform advocate puts it, the problem with these settlements “is that they are carefully crafted more to conceal than to reveal to the American public what really happened here.”

Also, notice that the $5 billion punishment is applied to Goldman Sachs, not the “Goldman Sackers.” The bank’s shareholders have to cough up the penalty, rather than the executives who did the bad deeds. Goldman Sachs’ CEO, Lloyd Blankfein, just awarded himself a $23 million paycheck for his work last year. That work essentially amounted to negotiating the deal with the government that makes shareholders pay for the bankers’ wrongdoings — while he and other top executives keep their jobs and pocket millions. Remember, banks don’t commit crimes — bankers do.

One more reason Wall Street bankers privately wink and grin at these seemingly huge punishments is that even paying the full $5 billion would only be relatively painful. To you and me, that sounds like a crushing number — but Goldman Sachs raked in $33 billion in revenue last year, so it’s a reasonable cost of doing business. After all, Goldman sold tens of billions of dollars in the fraudulent investment packages leading to the settlement, so the bottom line is that crime can actually pay — if it’s big enough.

 

By: Jim Hightower, Featured Post, The National Memo, May 4, 2016

May 5, 2016 Posted by | Big Banks, Corporate Crime, Financial Crisis, Wall Street | , , , , , , , | Leave a comment

“Why So Many Americans Feel So Powerless”: Most Working People Have No Choice; It’s Now Take It Or Leave It

A security guard recently told me he didn’t know how much he’d be earning from week to week because his firm kept changing his schedule and his pay. “They just don’t care,” he said.

A traveler I met in the Dallas Fort-Worth Airport last week said she’d been there eight hours but the airline responsible for her trip wouldn’t help her find another flight leaving that evening. “They don’t give a hoot,” she said.

Someone I met in North Carolina a few weeks ago told me he had stopped voting because elected officials don’t respond to what average people like him think or want. “They don’t listen,” he said.

What connects these dots? As I travel around America, I’m struck by how utterly powerless most people feel.

The companies we work for, the businesses we buy from, and the political system we participate in all seem to have grown less accountable. I hear it over and over: They don’t care; our voices don’t count.

A large part of the reason is we have fewer choices than we used to have. In almost every area of our lives, it’s now take it or leave it.

Companies are treating workers as disposable cogs because most working people have no choice. They need work and must take what they can get.

Although jobs are coming back from the depths of the Great Recession, the portion of the labor force actually working remains lower than it’s been in over thirty years – before vast numbers of middle-class wives and mothers entered paid work.

Which is why corporations can get away with firing workers without warning, replacing full-time jobs with part-time and contract work, and cutting wages. Most working people have no alternative.

Consumers, meanwhile, are feeling mistreated and taken for granted because they, too, have less choice.

U.S. airlines, for example, have consolidated into a handful of giant carriers that divide up routes and collude on fares. In 2005 the U.S. had nine major airlines. Now we have just four.

It’s much the same across the economy. Eighty percent of Americans are served by just one Internet Service Provider – usually Comcast, AT&T, or Time-Warner.

The biggest banks have become far bigger. In 1990, the five biggest held just 10 percent of all banking assets. Now they hold almost 45 percent.

Giant health insurers are larger; the giant hospital chains, far bigger; the most powerful digital platforms (Amazon, Facebook, Google), gigantic.

All this means less consumer choice, which translates into less power.

Our complaints go nowhere. Often we can’t even find a real person to complain to. Automated telephone menus go on interminably.

Finally, as voters we feel no one is listening because politicians, too, face less and less competition. Over 85 percent of congressional districts are considered “safe” for their incumbents in the upcoming 2016 election; only 3 percent are toss-ups.

In presidential elections, only a handful of states are now considered “battlegrounds” that could go either Democratic or Republican.

So, naturally, that’s where the candidates campaign. Voters in most states won’t see much of them. These voters’ votes are literally taken for granted.

Even in toss-up districts and battle-ground states, so much big money is flowing in that average voters feel disenfranchised.

In all these respects, powerlessness comes from a lack of meaningful choice. Big institutions don’t have to be responsive to us because we can’t penalize them by going to a competitor.

And we have no loud countervailing voice forcing them to listen.

Fifty years ago, a third of private-sector workers belonged to labor unions. This gave workers bargaining power to get a significant share of the economy’s gains along with better working conditions – and a voice. Now, fewer than 7 percent of private sector workers are unionized.

In the 1960s, a vocal consumer movement demanded safe products, low prices, and antitrust actions against monopolies and business collusion. Now, the consumer movement has become muted.

Decades ago, political parties had strong local and state roots that gave politically-active citizens a voice in party platforms and nominees. Now, the two major political parties have morphed into giant national fund-raising machines.

Our economy and society depend on most people feeling the system is working for them.

But a growing sense of powerlessness in all aspects of our lives – as workers, consumers, and voters – is convincing most people the system is working only for those at the top.

 

By: Robert Reich, The Robert Reich Blog, April 26, 2015

April 30, 2015 Posted by | Corporations, Wages, Workers | , , , , , , , , | 1 Comment

“Stupid Pills”: The Politics of Fraudulent Dietary Supplements

One pill makes you smarter. One pill makes you thin. One pill makes you happy. Another keeps you energized. And so what if tests conducted by scientists in New York and Canada have found that the substances behind these miracle enhancements may contain nothing more than powdered rice or houseplants. If enough people believe they’ll be healthier, well, it’s a nice racket.

Nice, to the tune of $13 billion a year in sales. And here in Utah, which is to the dietary supplement business what Northern California is to marijuana, a huge industry has taken hold, complete with a network of doctors making unproven claims, well-connected lobbyists and entrenched politicians who keep regulators at bay.

If you want to know how we came to be a nation where everyone is a doctor, sound science is vilified and seemingly smart people distrust vaccinations, come to Utah — whose state flower should be St. John’s wort. Here, the nexus of quack pharma and industry-owned politicians has produced quite a windfall: nearly one in four dollars in the supplement market passes though this state.

We’re not talking drugs, or even, in many cases, food here. Drugs have to undergo rigorous testing and review by the federal government. Dietary supplements do not. Drugs have to prove to be effective. Dietary supplements do not.

These are the Frankenstein remedies — botanicals, herbs, minerals, enzymes, amino acids, dried stuff. They’re “natural.” They’re not cheap. And Americans pop them like Skittles, despite recent studies showing that nearly a third of all herbal supplements on the market may be outright frauds.

The labels say Ginkgo biloba, or ginseng, or St. John’s wort. But testing announced by the state of New York this week found that the Ginkgo biloba sold by Walmart, for example, contained no Ginkgo biloba DNA — it was a mixture of rice, mustard, wheat and radish.

Some of the country’s largest retailers are selling junk in a pill, a step removed from sawdust. Counting on the stupidity of consumers, the big chains don’t seem to care. As of Thursday, four days after Eric T. Schneiderman, the New York State attorney general, asked retailers to pull the tested products from their shelves in his state, you could still go to Walmart online and buy the allegedly fraudulent products.

So, there is Spring Valley echinacea — with a bold label reading: Immune Health — selling for $8.98 a bottle on Walmart’s website. It comes with a handy “customer review,” touting an “Excellent quality product!” This about a substance that contained no echinacea, according to the attorney general.

Too bad it takes Canada, or the maverick work of someone like the New York attorney general, to get at the truth of this industry, because it is so well-insulated from federal government oversight. Schneiderman’s investigation was prompted by an article in The New York Times Science section, reporting on Canadian findings that some of the most popular supplements were nothing but cheap fillers.

To understand how we got here, you have to go back to 1994, when Senator Orrin G. Hatch of Utah midwifed through Congress a new industry protected from all but minimal regulation. It is also an industry that would make many of his closest associates and family members rich. In turn, they’ve rewarded him with sizable campaign contributions.

Even though serious illnesses, and some deaths are on the rise from misuse of these supplements, Hatch is determined to keep regulators at bay. “I am committed to protect this industry and the integrity of its products,” he told a gathering of potency pill-pushers and the like in Utah last fall.

In the past, Hatch has been remarkably blunt about helping his family and friends in the fake drug trade. “I do whatever they ask me to do many times because they’ve never asked me to do anything that is improper,” Hatch said in 2011. He was referring to the firm of his son, Scott Hatch, a longtime lobbyist for the supplement industry.

That’s the political side, an all-too-familiar story of mutual beneficiaries born in the halls of Congress. But what about the medical implications? These pills and powders can’t, by law, make specific claims to cure anything. So they claim to make you healthier. The consumer is left playing doctor, reading questionable assertions that course through the unfiltered garbage of the Internet.

“There’s a lot of wrong information out there,” warns the American Cancer Society, in its tutorial on these products. “Even for those who are usually well informed, it can be hard to find reliable information about the safe use and potential risks of dietary supplements.”

And there was this finding reported in the authoritative Annals of Internal Medicine: “Enough is enough: Stop wasting money on vitamin and mineral supplements.” Oh, those elites at the American College of Physicians, what do they know?

So, the industry keeps growing, with 65,000 dietary supplements now on the market, consumed by nearly half of all Americans. The larger issue is mistrust of authority, a willful ignorance that knows no political side. Thus, right-wing libertarians promote a freewheeling market of quack products, while left-wing conspiracy theorists disdain modern medicine in favor of anything sold as “natural” or vaguely countercultural. These are some of the same people who will not vaccinate their children.

Everyone wants to live longer, to be happier, to have better sex. And, if you think you can do it without exercise, or eating enough vegetables, or getting regular sleep, there are a thousand pills for you, sold not far from the candy counter. It’s all based on the honor system. If you trust them, go buy some possibly Ginkgo biloba-free Ginkgo biloba, and thank Orrin Hatch for the unfettered right to be a sucker.

 

By: Timothy Egan, Contributing Op-Ed Writer, The New York Times, February 6, 2014

February 7, 2015 Posted by | Big Pharma, Dietary Supplements, Orrin Hatch | , , , , , , , , | Leave a comment

“Betraying His Ignorance”: Mitch McConnell Blames The Slow Recovery On Regulation Because He Doesn’t Understand How The Economy Works

On CNN’s “State of the Union” Sunday, incoming Senate Majority Leader Mitch McConnell said that Republicans in the 114th Congress will focus on blocking environmental and healthcare regulations: “We need to do everything we can to try to rein in the regulatory onslaught, which is the principal reason that we haven’t had the kind of bounce-back after the 2008 recession that you would expect.” But that is exactly the wrong lesson to take from the slow recovery. Rather than laying the foundation for the GOP’s agenda, McConnell is betraying his ignorance on economic issues.

After the financial crisis struck, consumers cut back on their spending and businesses stopped investing. This created a shortfall in aggregate demandpeople weren’t buying enough stuff. As consumers stopped buying goods and services, businesses were forced to fire workers, who then cut back their purchasesa vicious cycle. The government’s role is to fill the shortfall in demand, which it can do either through fiscal or monetary stimulus. We’ve done both in the past few years. The stimulus pumped hundreds of billions of dollars into the economy through targeted tax cuts and spending programs. The Federal Reserve cut short-term interest rates to zero to spur investment and used unconventional monetary policy tools like large-scale asset purchases to lower long-term rates. All of this helped avoid a second Great Depression. In fact, as Paul Krugman explained in Rolling Stone in October, the current recovery is actually above average compared to recoveries from past financial crises.

It’s understandable that McConnell would think that this recovery has undershot expectations. Economic growth has been slow and wages haven’t rebounded for the majority of Americans. In fact, only recentlymore than six years after the Great Recessionhave Americans become more upbeat about the recovery. In other words, this recovery may be above average, but that doesn’t mean it’s been good.

McConnell’s real sin Sunday was his belief that “regulatory onslaught” has been the “principal reason” for the slow recovery. Republicans have made this argument throughout the Obama presidency. If we would only cut government spending, eliminate red tape, and cut taxes for the rich, they say, the economy would thrive. The problem is that these are all supply-side solutions intended to increase productivity and prevent government from crowding out investment. Yet, the economy has faced a demand problem. The GOP’s job agenda, or what they call a jobs agenda anyway, does little to address it.

That doesn’t mean that their agenda will always be unresponsive to the economy’s issues. As the recovery continues and the economy nears full employment, the demand problems will be much less of an issue. Then, Republican supply-side proposals will look more like a legitimate plan to boost growth. Those ideas still may not make sense for other reasons, but at least they could be considered an actual economic platform. Throughout the Obama presidency, though, they have failed to offer such a platform. By suggesting that excessive regulations are the primary driver of the weak recovery, McConnell is only revealing that the GOP hasn’t learned anything during that time either.

 

By: Danny Vinik, The New Republic, January 10, 2015

January 9, 2015 Posted by | Economic Recovery, Economy, Mitch Mc Connell | , , , , , , , | Leave a comment

“They Get You Coming And Going”: In America, Being Poor Can Be An Expensive Proposition

Today I came across this very interesting, albeit depressing, bit of data. It’s an analysis by a travel site called Hopper that shows that it costs more to fly in states that have the lowest median incomes.

For example, the study found that in Mississippi, the poorest state, a “good deal” round-trip flight costs about $400, while in Maryland, the state with the highest income, an equivalent ticket costs around $300. The researchers also found that “typical round-trip airfare declines by $2.30 for every additional $1000 in median household income.” The reasons for the increased prices in the poorer states include “average distance traveled, demand density, and airline competition.” Presumably, there’s less demand and less airline competition in poor areas of the country because people there have less money for leisure travel, and also because those locales have less economic development and thus less business travel.

The higher price of air travel for low-income folks is yet another data point that paints a bigger picture: in America, being poor can be an expensive proposition. There are countless, painful examples of this. Food and other basic items tend to cost more in poor neighborhoods. The poor lack access to credit and so are easy prey for payday lenders charging exorbitant interest rates. Poor people are more apt to bounce checks; hello, fees for insufficient funds! There are also late fees for credit card payments — you know, the kind of thing listed in print so fine you need a magnifying glass to be capable of reading about it. But my personal favorites are those extra charges they tack on for restoring utilities they shut off because you couldn’t pay your bill on time in the first place. “They get you coming and going,” as my old man used to say.

In her classic book, Nickel and Dimed, Barbara Ehrenreich described a host of other expensive indignities that plague the working poor. For example, many of her low-wage co-workers were living in hotel rooms, which actually were far costlier, on a monthly basis, than local apartments. But the workers couldn’t move into the apartments because they lacked the month’s rent plus security deposit the landlord required. Many low-wage jobs also require uniforms, the cost of which comes out of the worker’s paycheck, or cars, which the workers are expected to maintain themselves.

There are even darker examples. I wonder how many Americans have put off going to the doctor because they lacked health insurance, sought treatment only when their symptoms were advanced, and ended up being bankrupted by medical bills as a result.

Many of the examples I’ve cited in this post could be greatly improved by some well-targeted regulatory fixes. The rights of workers and consumers against employers, the banks, and the credit card companies need to be vigorously championed, and in some cases, re-invented for our new digital era. There’s no earthly justification other than greed for the $35 bank overdraft ripoff, or the cell phone company gouging you to restore your service because your payment is late. It’s also long past time we bring re-regulation to the airlines. A more regulated airline industry might help bring down fares in certain overpriced markets. Our 30-year old experiment with airline deregulation has hardly been a rousing success — read the excellent 2012 Washington Monthly magazine article by Phillip Longman and Lina Khan for more information on this score.

In addition to more consumer regulation, we also need a much higher minimum wage and a far more generous safety net for poor people in this country. If poor people had more economic resources to begin with — if they simply had enough money to pay their bills on time, and to save a little money for a rainy day — they would never be forced to pay such an outrageously high price for being poor.

 

By: Kathleen Geier, Washington Monthly Political Animal, May 3, 2014

May 4, 2014 Posted by | Economic Inequality, Poor and Low Income, Poverty | , , , , , , , | 1 Comment

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