"One of the premier institutions of big business,
JP Morgan Chase, issued an internal report on the eve of the
10th anniversary of the 2008 crash, which warned that
another “great liquidity crisis” was possible, and that a
government bailout on the scale of that effected by Bush and Obama
will produce social unrest, “in light of the potential impact
of central bank actions in driving inequality between
asset owners and labor."
"JPMorgan
Chase CEO Jamie Dimon, who was known as Barack Obama’s
favorite banker and who has been a major donor to the Democratic Party,
centered his annual letter to shareholders on a denunciation of
socialism."
BANKSTER SOCIALISM
Dimon’s bank
received tens of billions of dollars in government bailouts and
many billions more from the Obama administration’s ultra-low
interest rate and “quantitative easing” money-printing policies. He
told his shareholders that “socialism inevitably produces stagnation,
corruption” and “authoritarian government,” and would be “a
disaster for our country.”… UNLESS IT IS SOCIALISM FOR BANKSTERS AND WALL
STREET!
Trump criticized Dimon in 2013 for supposedly contributing to the country’s economic downturn. “I’m not Jamie Dimon, who pays $13 billion to settle a case and then pays $11 billion to settle a case and who I think is the worst banker in the United States,” he told reporters.
Obama: JPMorgan Is 'One of the Best-Managed Banks'
By Mary Bruce
Obama: JPMorgan Is 'One of the …
Lou Rocco / ABC News
Just hours after a top JPMorgan Chase executive
retired in the wake of a stunning $2 billion trading loss, President Obamatold
the hosts of ABC's "The View" that the bank's risky bets exemplified
the need for Wall Street reform.
JPMorgan Chase investigated for
manipulating California energy market
By Oliver Richards
23 July 2012
The California Independent Systems
Operator (CalISO), the nonprofit organization that coordinates the state’s
electricity market, has alleged that JPMorgan Chase& Co. manipulated the
state’s energy market, resulting in at least $73 million in improper
payments—costs passed along to the state’s energy consumers.
Global banking
system a network of criminality
23 September 2020
The great 19th century
French writer Honoré de Balzac once noted that behind every great fortune there
is a crime. In the 21st century, one would have to say that behind the great
fortunes of the world’s major banks there is a network of criminality. This reality
is documented in the revelations published over the weekend concerning a small
portion of the international operations of the world’s major banks.
Documents from the US Treasury’s Financial Crimes Enforcement
Network, known as FinCEN, obtained by BuzzFeed
News and investigated by the International Consortium of
Investigative Journalists, showed that between 1999 and 2017 more than $2
trillion in transactions were flagged as involving possible money laundering or
other criminal activities.
But as the investigation revealed, the $2 trillion
worth of suspicious transactions was “just a
drop in a far larger flood of dirty money
gushing through banks around the world.” The
files examined in the investigation “represent
less than 0.02 percent of the more than 12
million suspicious activity reports that financial
institutions filed with FinCEN between 2011
and 2017.”
The United Nations Office on Drugs and Crime estimates that $2.4
trillion in illicit money is laundered through the global banking system each year,
equivalent to 2.7 percent of global output, but only 1 percent of the illegal
traffic is detected by the authorities.
The banks involved are some of the biggest names in the world,
including JPMorgan, HSBC, Standard Charter Bank and Bank of New York Mellon. In
some cases, they continued to profit from the dirty money flow even after being
previously fined.
Under existing laws, banks are required to file suspicious
activity reports (SARs) that point to potential criminal activities. But any
conception that this is a method of crime prevention would be completely
mistaken. In fact, it is a means of crime facilitation.
As BuzzFeed
News noted: “Laws that were meant to stop financial crime have
instead allowed it to flourish. So long as a bank files a notice that it may be
facilitating criminal activity, it all but immunizes itself and its executives
from criminal prosecution. The suspicious activity alert effectively gives them
a free pass to keep moving the money and collecting the fees.”
In the rare cases where authorities do decide to take action, it
involves making a deal in which the bank agrees to pay a fine. But the fine is
not imposed on the executives involved. It is paid for by the bank and treated
as a minor operating cost, while the bank continues to obtain fees and profits
from the dirty money transactions.
It would likewise be a grave mistake to conclude that the
criminal money operations are somehow separate from the regular activities of
the global financial and banking system. In fact, they are an integral
component of them. There is no Chinese wall separating so-called legitimate
activities from illegitimate ones.
In 2011, the US Senate report on the 2008 financial crisis
revealed that major banks such as Goldman Sachs and Deutsche Bank were engaged
in what amounted to outright criminal activity in the lead-up to the crisis.
This included selling financial products they knew were going to fail, and then
making deals to profit from the failure of the same financial products.
No one was even prosecuted, let alone jailed, and in an
extraordinary admission to the Senate Judiciary Committee in March 2013,
President Obama’s attorney general, Eric Holder, revealed why, essentially
acknowledging that criminality was not some extraneous activity, but was deeply
embedded in the very foundations of the US and global financial system.
“I am concerned,” he said, “that the size of some of these
institutions becomes so large that it does become difficult for us to prosecute
them, when we are hit with indications that if we do prosecute—if we do bring a
criminal charge—it will have a negative impact on the national economy, perhaps
even the world economy. …”
A similar situation emerged in 2012. Then-UK Chancellor of the
Exchequer George Osborne wrote to Fed Chairman Ben Bernanke and US Treasury
Secretary Timothy Geithner about criminal proceedings against Standard Charter
and HSBC. He expressed “concerns” that a heavy-handed approach could have
“unintended consequences,” and warned of “contagion.”
The FinCEN files investigation details countless cases where
authorities not only turned a blind eye to money-laundering operations, but
facilitated them. One of the more egregious examples concerns UK-based HSBC,
the largest bank in Europe. In 2012, it admitted it had laundered some $881
million for Latin American drug cartels. The US government deferred criminal
charges for five years in return for the payment of a $1.9 billion fine and a
pledge by the bank that it would halt such activities.
During the five-year probation period, HSBC continued to shift
money from criminal sources, including Russian money launderers, but in
December 2017 the government allowed the bank to declare it had “lived up to
all of its commitments” and the criminal charges were dismissed.
What the FinCEN files investigation has revealed is that the
criminal activities of the major banks do not take place in defiance of
government authorities, but with their active cooperation because they are so
integral to the entire financial system.
Consequently, the force of the state is not brought against the
criminals at the top of the banking system but utilized against those who
expose them. There is a direct parallel here with the case of the journalist
Julian Assange, now facing extradition to the US and 175 years in jail for
exposing the war crimes of US imperialism.
After the US Treasury Department received a series of questions
on the FinCEN files, it issued a statement that it was aware that various media
outlets intended to publish a series of articles based on “unlawfully
disclosed” SARs. It said that “the unauthorized disclosure of SARs is a crime
that can impact the national security of the United States, compromise law
enforcement investigations, and threaten the safety and security of the
institutions and individuals who file such reports.” It said Treasury was
referring the matter to the Justice Department.
Back in the early 1970s, UK Prime Minister Edward Heath,
confronted with the exposure of the corruption of the British company Lonhro in
Africa, referred to the “unacceptable face of capitalism.” But the passing off
of its activities as an “excess”—in order to cover up the collaboration of the
British government with Lonhro—cannot be repeated today. The “unacceptable” or
“ugly” face of capitalism has become the norm.
This transformation is rooted in the vast changes in the
capitalist economy over the past 50 years, above all, the rise of
financialization. The accumulation of profit through speculation, the creation
of arcane derivatives, share buybacks and other forms of “financial
engineering” means there is now a seamless transition from supposedly legitimate
to outright criminal activity. They are virtually indistinguishable.
The FinCEN files exposure is yet another devastating refutation
of all those who maintain there is some kind of reformist solution at hand.
What has been revealed is that all the arms of the state—the financial
regulators, the Treasury and the Fed—are facilitators for the decay and rot
that lies at very heart of the global financial system.
The banks occupy a central position in the commanding heights of
the capitalist economy. Their activities determine the fate of billions of
people around the world, wreaking havoc in the pursuit of profit. The case for
their expropriation, bringing them into public ownership under democratic
control, as the first step in laying the basis for a planned economy based on
human need, is overwhelming.
25 September 2020
Federal Reserve officials have launched what amounts to a full court press aimed at ensuring that Congress provides a further fiscal stimulus to corporations, as the COVID pandemic continues out of control and the limited revival of the US economy stalls.
While Fed representatives always couch their remarks in terms of giving assistance to the economy and even to workers, the fall in the stock market since the beginning of the month—the most significant downturn since the plunge in mid-March, when all financial markets froze—is the underlying concern.
Chairman of the Federal Reserve Jerome Powell (AP Photo/Susan Walsh)The push began on Tuesday, when Fed Chair Jerome Powell gave testimony before the House of Representatives Committee on Financial Services. Powell repeated earlier calls for fiscal action, on top of the more than $3 trillion made available under the CARES Act.
He warned that while many economic indicators had shown an improvement, both employment and overall economic activity “remain well below their pre-pandemic levels, and the path ahead continues to be highly uncertain.”
Powell said the path forward would depend on “keeping the virus under control, and on policy actions taken at all levels of government”—a call for further stimulus measures.
Pointing to the measures taken by the Fed, which amount to an injection of around $3 trillion into the financial markets, he said they were designed to support the functioning of private markets, and stressed that the central bank had only lending, not spending, powers. While some borrowers would benefit from its programs, for others a loan that was difficult to repay might not be the answer, and in those cases “direct fiscal support may be needed.”
Together with the repetition of the commitment, at the start of his testimony, that the Fed would use all its tools “for as long as it takes,” these remarks temporarily halted the market slide, resulting in a slight upturn after a major fall on Monday.
But the downturn resumed on Wednesday, when the Dow fell more than 500 points, or 1.9 percent, the S&P 500 dropped 2.4 percent and the Nasdaq lost 3 percent. Since reaching record highs in August, the S&P and the Nasdaq have lost 9 percent and 12 percent respectively. There was a slight recovery on Thursday after a volatile session.
The market falls brought forward a series of comments by Fed officials on the need for government action, held up in Congress because of disagreements between Republicans and Democrats over the size and direction of any new measures.
In further testimony on Wednesday, Powell said economic recovery would move faster “if there is support coming both from Congress and the Fed. The power of fiscal policy is really unequalled by anything else.”
Others took up the same theme. In an interview with Bloomberg, Fed Vice-Chairman Richard Clarida claimed the economy had recovered “very robustly,” but added that “we’re still in a deep hole.”
In a speech, Boston Fed President Eric Rosengren said he was less optimistic than others about any recovery, because of both the continuation of the pandemic and the reduced prospects of further government spending.
“Additional support from fiscal policy, which I believe is very much needed, seems increasingly unlikely to materialize any time soon,” he said.
Chicago Fed President Charles Evans told reporters his projection for a fall in unemployment to 5.5 percent at the end of 2021 had been based on the assumption that there would be between $500 and $1 trillion in increased government spending, and that without that he expected higher joblessness and a slower recovery.
Atlanta Fed President Ralph Bostic was another to call for action. He told an Atlanta Chamber of Commerce virtual meeting he was “hopeful that policy makers in Washington as well as at the state level find creative ways to get that support out there.” Without it, he warned, there was a “significant chance” temporary dislocation “can become permanent.”
Cleveland Fed President Lorretta Mester said more government spending was very much needed because of the “deep hole” the economy was in.
But in the absence to this point of any movement from Congress for further bailouts, the comments by Fed officials on the need for more stimulus may be having a destabilising impact on Wall Street.
Quincy Krosby, chief market strategist for Prudential Financial, told the Financial Times: “When you hear that from the raft of Fed speakers, particularly from the top, it is of concern.” The emergence of a second wave of coronavirus infections could have devastating consequences for any recovery and for equity markets, she added.
Krishna Guha, vice-chairman of Evercore ISI, told the Financial Times that the Fed’s “increasingly shrill calls” for more fiscal action were “shaking confidence in the outlook, given the near-certainty that this additional fiscal support will not be forthcoming before January at the earliest.”
As the Fed calls for more government fiscal support, evidence has emerged on how its unprecedented intervention into financial markets, including the indirect and direct purchase of corporate bonds, is aiding major corporations at the expense of workers.
A report prepared by the House of Representatives Select Subcommittee on the Coronavirus released on Wednesday found that the Fed had purchased bonds of corporations that have laid off more than 1 million workers, while paying out dividends to shareholders.
In a damning indictment of the Fed’s actions, the staff of the committee said: “Fed Chair Jerome Powell testified in June that ‘the intended beneficiaries of all of our programs are workers.’ However, the Select Committee’s analysis indicates that many large layoffs have occurred among the companies whose bonds were purchased by the Fed, suggesting that the primary beneficiaries of the program have been corporate executives, not workers.”
According to the report, 383 companies whose bonds were bought by the Fed had paid out dividends and 95 had carried out layoffs. Meanwhile, 227 of the companies had been accused of illegal activity sometime in the previous three years.
Confronted by the evidence gathered by the committee’s staff, the subcommittee chairman, Democrat Jim Clyburn, did his best to hold out some prospect for a reform of the Fed’s program.
“I believe that the terms of the Fed’s purchases of corporate bonds could have been improved so that benefits were equitably shared by workers as well as investors,” he said.
He got short shrift from Powell in his remarks in response to the report. Powell said the corporate bond-buying program had been designed to restore the functioning of private markets and had achieved that goal, as evidenced by the record amount of debt being issued in capital markets.
In its report, the Wall Street Journal said, “Powell implied that the program wouldn’t have achieved such an outcome if it had instead been conditioned on encouraging firms to borrow money in order to save jobs.”
Powell’s dismissive response underscores the fact that actions of the Fed and the Trump administration have never been about saving jobs. They have been directed entirely to maintaining corporate profits, via government bailouts, and providing free money to Wall Street, enabling speculators, investment houses and share traders to rake in money at the expense of workers.
THE ENTIRE REASON FOR OPEN BORDERS, AMNESTY, NON-ENFORCEMENT, AND NO E-VERIFY IS TO KEEP WAGES DEPRESSED. IT WORKS!
ALL BILLIONAIRES ARE DEMOCRATS FOR AMNESTY AND WIDER OPEN BORDERS!
Desperate to ensure profits, capital has gutted the living
standards of the working class while engrossing the coffers of
those at the top through financial parasitism.
Study finds 90 percent of Americans would
make 67 percent more without last four
decades of increasing income inequality
25 September 2020
A new study from the RAND Corporation, “Trends in Income From 1975 to 2018,” written by Carter Price and Kathryn Edwards, provides new documentation of the profound restructuring of class relations in America over the last 40 years.
The study, which looks at changes in pre-tax family income from 1947 to 2018, divided into quintiles of the American population, concludes that the bottom 90 percent of the population would, on average, make 67 percent more in income—every year (!)—had shifts in income inequality not occurred the last four decades.
In other words, any family that made less than $184,292 (the 90th percentile income bracket) in 2018 would be, on average, making 67 percent more. This amounts to a total sum of $2.5 trillion of collective lost income for the bottom 90 percent, just in 2018.
Furthermore, the study concludes, that had more equitable growth continued after 1975 (a date they use as a shifting point), the bottom 90 percent of American households would have earned a total of $47 trillion more in income.
Given that there were about 115 million households in the bottom 90 percent of the US in 2018 population (out of a total of 127.59 million in 2018), that would mean that each of these households would, on average, be $408,696 richer today with this lost income.
To reach these conclusions, the authors break down historical real, pre-tax, income into different quintiles of the population (bottom fifth, second fifth, third fifth, fourth fifth, highest fifth). Looking at the period between 1947 and 2018, they divide the years based on business cycles (booms and busts of the economy).
Their data quantitatively expresses the restructuring of class relations that began at the end of the post-WWII boom. Facing intensified economic crisis, automation, and global competition, the US ruling class undertook an aggressive campaign of deindustrialization, slashing wages and clawing back benefits won in the previous period by explosive struggles of the working class, while simultaneously funneling money to financial markets, expanding the wealth and income of both the upper and upper-middle class.
As the data shows, while the bottom 40 percent of American households made significant percentile increases to their income, relative to the top 5 percent, for the 20 years between 1947 and 1968, in the 40 years from 1980 to the present, this trend was reversed. In 1980-2000, the bottom 40 percent of the population experienced a net income gain significantly below that of the top 5 percent. It must be noted that because these are percentile increases, the absolute differences between the gains of the rich versus the poor is far larger.
Furthermore, not included in this data is wealth. In the last 40 years, and especially the last 10 to 20 years, the stock market has become the principal means through which the top 10 percent of the population has piled up historic levels of wealth.
Significantly, the data from 2001 to 2018 shows a sharp slowdown in income gains for all sections of American society as per capita GDP growth slowed and US capitalism experienced a historic decline. However, while the income of the top 5 percent of the population may have only grown by about 2 percent between 2008 and 2018, the wealth of the top percentiles of the population exploded. For example, according to data from the Federal Reserve of St. Louis, the wealth of the top 1 percent of the population increased from almost $20 trillion in the first quarter of 2008, just before the worst of the financial crisis, to almost $33 trillion at the beginning of 2018.
By using the data, the authors come up with a set of counterfactual incomes based on what would be the different income brackets in 2018 without a shift in income distribution. The top 1 percent, instead of making on average $1,384,000 would make $630,000. The 25th percentile, instead of making $33,000 would make $61,000.
The authors of the study also make several other important observations by breaking down their data on the basis of location, education, and race.
For example, they note, “Racial income disparities below the median have declined over the last four decades. This has primarily occurred because White men in the bottom half of the income distribution are earning the same or less than in 1975.” In other words, for the bottom half of the population, the bulk of the working class, there has been greater parity between sexes and races in terms of pay as white men’s pay stagnated and pay for other sections of the working class slightly increased.
While black men in the bottom 25th percentile of the population only increased their income from $27,000 in 1975 to $30,000 in 2018, black men in the 95th percentile, the upper-middle class, increased their pay from $65,000 in 1975 to $128,000—effectively doubling it.
Regarding education, they note: “Because incomes for those without a college degree have not increased more than inflation over the last forty years, education is frequently touted as a solution to rising income inequality. However, even for college graduates, incomes failed to grow at the rate of the overall growth of the economy. Thus, the economic value of a college degree may largely be in avoiding the negative outcomes felt by those who do not have one. …”
This saliently expresses what a college degree has become for most Americans: a necessity to avoid extreme poverty but in no way a guarantee of a well-paying, stable job.
The authors also note that “Incomes in rural areas have neither kept pace with the growth in broader economy nor with urban and suburban areas,” due to “a decline in the economic health of rural areas.”
The stark class divide expressed in the report is not the outcome of a single politician or for that matter a specific party. Rather, it is the policy, collectively, of the entire ruling class, as American, and indeed global, capitalism entered a period of profound and protracted crisis. Desperate to ensure profits, capital has gutted the living standards of the working class while engrossing the coffers of those at the top through financial parasitism.
No comments:
Post a Comment