America Faces No Greater Threat Than Joe Biden and the Democrat Party. Their Assault to Our Borders Is As Great As Their Assault to Free Speech and Free Elections
Sunday, March 12, 2023
BANKSTER BILL ACKMAN - IT'S THE OBLIGATION OF 'CREDIT CARD' JOE BIDEN FROM THE BANKSTER REGIME OF BARACK OBAMA, ERIC HOLDER AND 'CREDIT CARD' JOE TO BAILOUT ALL BANKSTERS AND KEEP THEM OUT OF PRISON!
Tucker Carlson: This is the largest bank failure since 2008
The wait for the next “Lehman Brothers moment” is over. On Friday, we witnessed the second biggest bank failure in U.S. history. The stunning collapse of Silicon Valley Bank is shaking the financial world to the core. As of the end of last year, the bank had 175 billion dollars in deposits, and approximately 151 billion dollars of those deposits were uninsured. In other words, a lot of wealthy individuals and large companies are in danger of being wiped out. In particular, this is being described as an “extinction level event” for tech startups, because thousands of them did their banking with SVB. I cannot even begin to describe how cataclysmic this is going to be for the tech industry as a whole.
The closure marks the biggest bank failure since the 2008 financial crisis and the second-largest in U.S. history after Washington Mutual collapsed during that industry-wide meltdown, according to FDIC data.
Worries over a run at SVB led Wall Street investors to dump other bank stocks as well. Shares of some prominent West Coast lenders took sharp nosedives Friday, including First Republic Bank, PacWest Bancorp and Western Alliance Bancorporation.
Once the dominoes start falling, it will be difficult to stop the process.
In fact, the situation is already so dire that Peter Schiff is proclaiming that we are “on the verge of a much bigger collapse than 2008”…
“Banks own long-term paper at extremely low interest rates. They can’t compete with short-term Treasuries. Mass withdrawals from depositors seeking higher yields will result in a wave of bank failures.”
Of course a lot of the “experts” in the mainstream media never saw this coming.
Unfortunately, SVB’s situation is not unique.
Thanks to rapidly rising interest rates, many other banks are also sitting on mountains of Treasury bills that have lost a lot of value…
As I have been telling my viewers, our system simply cannot handle higher rates at this point.
But the “experts” at the Fed assured all of us that they knew exactly what they were doing.
Now they have caused one of the biggest bank failures in U.S. history, and much worse is on the way if they do not reverse course.
But I don’t expect the “experts” at the Fed to listen to any of us.
They are just going to keep doing what they are doing, and we are all going to have to live with the consequences.
Why Biden supports the unionization of the Amazon workforce
Biden,long known as Delaware’s “senator from DuPont,” Biden served on committees that were most sensitive to the interests of the ruling class, including the Judiciary Committee and the Foreign Relations Committee. He supported the repeal of the Glass-Steagall Act in 1999, a milestone in the deregulation of the banks, and other right-wing measures. After nearly four decades in the Senate, Biden became Obama’s vice president, helping to oversee the massive bailout of Wall Street following the 2008 financial crisis and the subsequent restructuring of class relations to benefit the rich. That included the bailout of General Motors and Chrysler, based on a 50 percent cut in the pay of all newly hired autoworkers.
OBAMA AND HIS BANKSTERS:
And it all got much, much worse after 2008, when the schemes collapsed and, as Lemann points out, Barack Obama did not aggressively rein in Wall Street as Roosevelt had done, instead restoring the status quo ante even when it meant ignoring a staggering white-collar crime spree. RYAN COOPER
The Rise of Wall Street Thievery
How corporations and their apologists blew up the New Deal order and pillaged the middle class.
America has long had a suspicious streak toward business, from the Populists and trustbusters to Bernie Sanders and Elizabeth Warren. It’s a tendency that has increased over the last few decades. In 1973, 36 percent of respondents told Gallup they had only “some” confidence in big business, while 20 percent had “very little.” But in 2019, those numbers were 41 and 32 percent—near the highs registered during the financial crisis.
Clearly, something has happened to make us sour on the American corporation. What was once a stable source of long-term employment and at least a modicum of paternalistic benefits has become an unstable, predatory engine of inequality. Exactly what went wrong is well documented in Nicholas Lemann’s excellent new book, Transaction Man. The title is a reference to The Organization Man, an influential 1956 book on the corporate culture and management of that era. Lemann, a New Yorker staff writer and Columbia journalism professor (as well as a Washington Monthly contributing editor), details the development of the “Organization” style through the career of Adolf Berle, a member of Franklin D. Roosevelt’s brain trust. Berle argued convincingly that despite most of the nation’s capital being represented by the biggest 200 or so corporations, the ostensible owners of these firms—that is, their shareholders—had little to no influence on their daily operations. Control resided instead with corporate managers and executives.
Transaction Man: The Rise of the Deal and the Decline of the American Dream by Nicholas Lemann Farrar, Straus and Giroux, 320 pp.
Berle was alarmed by the wealth of these mega-corporations and the political power it generated, but also believed that bigness was a necessary concomitant of economic progress. He thus argued that corporations should be tamed, not broken up. The key was to harness the corporate monstrosities, putting them to work on behalf of the citizenry.
Berle exerted major influence on the New Deal political economy, but he did not get his way every time. He was a fervent supporter of the National Industrial Recovery Act, an effort to directly control corporate prices and production, which mostly flopped before it was declared unconstitutional. Felix Frankfurter, an FDR adviser and a disciple of the great anti-monopolist Louis Brandeis, used that opportunity to build significant Brandeisian elements into New Deal structures. The New Deal social contract thus ended up being a somewhat incoherent mash-up of Brandeis’s and Berle’s ideas. On the one hand, antitrust did get a major focus; on the other, corporations were expected to play a major role delivering basic public goods like health insurance and pensions.
Lemann then turns to his major subject, the rise and fall of the Transaction Man. The New Deal order inspired furious resistance from the start. Conservative businessmen and ideologues argued for a return to 1920s policies and provided major funding for a new ideological project spearheaded by economists like Milton Friedman, who famously wrote an article titled “The Social Responsibility of Business Is to Increase Its Profits.” Lemann focuses on a lesser-known economist named Michael Jensen, whose 1976 article “Theory of the Firm,” he writes, “prepared the ground for blowing up that [New Deal] social order.”
Jensen and his colleagues embodied that particular brand of jaw-droppingly stupid that only intelligent people can achieve. Only a few decades removed from a crisis of unregulated capitalism that had sparked the worst war in history and nearly destroyed the United States, they argued that all the careful New Deal regulations that had prevented financial crises for decades and underpinned the greatest economic boom in U.S. history should be burned to the ground. They were outraged by the lack of control shareholders had over the firms they supposedly owned, and argued for greater market discipline to remove this “principal-agent problem”—econ-speak for businesses spending too much on irrelevant luxuries like worker pay and investment instead of dividends and share buybacks. When that argument unleashed hell, they doubled down: “To Jensen the answer was clear: make the market for corporate control even more active, powerful, and all-encompassing,” Lemann writes.
The best part of the book is the connection Lemann draws between Washington policymaking and the on-the-ground effects of those decisions. There was much to criticize about the New Deal social contract—especially its relative blindness to racism—but it underpinned a functioning society that delivered a tolerable level of inequality and a decent standard of living to a critical mass of citizens. Lemann tells this story through the lens of a thriving close-knit neighborhood called Chicago Lawn. Despite how much of its culture “was intensely provincial and based on personal, family, and ethnic ties,” he writes, Chicago Lawn “worked because it was connected to the big organizations that dominated American culture.” In other words, it was a functioning democratic political economy.
Then came the 1980s. Lemann paints a visceral picture of what it was like at street level as Wall Street buccaneers were freed from the chains of regulation and proceeded to tear up the New Deal social contract. Cities hemorrhaged population and tax revenue as their factories were shipped overseas. Whole businesses were eviscerated or even destroyed by huge debt loads from hostile takeovers. Jobs vanished by the hundreds of thousands.
And it all got much, much worse after 2008, when the schemes collapsed and, as Lemann points out, Barack Obama did not aggressively rein in Wall Street as Roosevelt had done, instead restoring the status quo ante even when it meant ignoring a staggering white-collar crime spree.Neighborhoods drowned under waves of foreclosures and crime as far-off financial derivatives imploded. Car dealerships that had sheltered under the General Motors umbrella for decades were abruptly cut loose. Bewildered Chicago Lawn residents desperately mobilized to defend themselves, but with little success. “What they were struggling against was a set of conditions that had been made by faraway government officials—not one that had sprung up naturally,” Lemann writes.
Toward the end of the book, however, Lemann starts to run out of steam. He investigates a possible rising “Network Man” in the form of top Silicon Valley executives, who have largely maintained control over their companies instead of serving as a sort of esophagus for disgorging their companies’ bank accounts into the Wall Street maw. But they turn out to be, at bottom, the same combination of blinkered and predatory as the Transaction Men. Google and Facebook, for instance, have grown over the last few years by devouring virtually the entire online ad market, strangling the journalism industry as a result. And they directly employ far too few people to serve as the kind of broad social anchor that the car industry once did.
In his final chapter, Lemann argues for a return to “pluralism,” a “messy, contentious system that can’t be subordinated to one conception of the common good. It refuses to designate good guys and bad guys. It distributes, rather than concentrates, economic and political power.”
This is a peculiar conclusion for someone who has just finished Lemann’s book, which is full to bursting with profoundly bad people—men and women who knowingly harmed their fellow citizens by the millions for their own private profit. In his day, Roosevelt was not shy about lambasting rich people who “had begun to consider the government of the United States as a mere appendage to their own affairs,” as he put it in a 1936 speech in which he also declared, “We know now that government by organized money is just as dangerous as government by organized mob.”
If concentrated economic power is a bad thing, then the corporate form is simply a poor basis for a truly strong and equal society. Placing it as one of the social foundation stones makes its workers dependent on the unreliable goodwill and business acumen of management on the one hand and the broader marketplace on the other. All it takes is a few ruthless Transaction Men to undermine the entire corporate social model by outcompeting the more generous businesses. And even at the high tide of the New Deal, far too many people were left out, especially African Americans.
Lemann writes that in the 1940s the United States “chose not to become a full-dress welfare state on the European model.” But there is actually great variation among the European welfare states. States like Germany and Switzerland went much farther on the corporatist road than the U.S. ever did, but they do considerably worse on metrics like inequality, poverty, and political polarization than the Nordic social democracies, the real welfare kings.
Conversely, for how threadbare it is, the U.S. welfare state still delivers a great deal of vital income to the American people. The analyst Matt Bruenig recently calculated that American welfare eliminates two-thirds of the “poverty gap,” which is how far families are below the poverty line before government transfers are factored in. (This happens mainly through Social Security.) Imagine how much worse this country would be without those programs! And though it proved rather easy for Wall Street pirates to torch the New Deal corporatist social model without many people noticing, attempts to cut welfare are typically very obvious, and hence unpopular.
Still, Lemann’s book is more than worth the price of admission for the perceptive history and excellent writing. It’s a splendid and beautifully written illustration of the tremendous importance public policy has for the daily lives of ordinary people.
Ryan Cooper is a national correspondent at the Week. His work has appeared in the Washington Post, the New Republic, and the Nation. He was an editor at the Washington Monthly from 2012 to 2014.
Billionaire Hedge Fund Manager Calls on Government to Rescue Silicon Valley Bank Depositors
Billionaire hedge fund manager Bill Ackman on Friday demanded lawmakers use taxpayer funds to rescue Silicon Valley Bank (SVB) depositors, a move some Republicans have already said they would oppose.
The bank was placed into receivership by the Federal Deposit Insurance Corporation after the California Department of Financial Protection and Innovation found the bank insolvent.
The incident was the result of a run on the bank with customers initiating withdrawals of $42 billion.
An underlying factor that caused the bank run was the FED’s interest rate hikes due to President Joe Biden’s soaring inflation.
Due to the interest rate hikes to tamp inflation, borrowing money became more expensive for businesses, causing the business depositors to access their savings at the institution. Breitbart News’s John Carney explained the senario to Fox Business host Larry Kudlow:
One of the problems [for SVB] was when money was so freely available to all these start-ups, they didn’t borrow a lot. So, they had a ton of deposits coming in and not a lot of opportunity to make loans out to people… So, they invested it in bonds. Bank of America I think has 25 percent of its assets in bonds, but this bank had over 50 percent of its assets in bonds.
Recently, those bonds have incurred a negative return and lost the bank money.
“And at the same time, all these start-ups who are depositing so much money there are now withdrawing it because they don’t have access to free money anymore. So, they’re withdrawing it just to pay their bills. So, you’re having the deposits go down. They have to sell into a market where they are actually producing real losses, not just mark to market losses,” Carney explained.
Ackman believes it is the responsibility of taxpayers to bail out the bank so it can honor its obligations to avoid additional crises in the tech industry. Others are not so sure the taxpayers should shoulder the burden, such as Rep. Matt Geatz (R-FL), who believes if the government asks Congress on Monday to bail out the bank it will be “cloaked in national security and economic security and will be mired in… the swapping of campaign donations for favors.”
Ackman argued differently.
“The gov’t has about 48 hours to fix a-soon-to-be-irreversible mistake. By allowing @SVB_Financial to fail without protecting all depositors, the world has woken up to what an uninsured deposit is — an unsecured illiquid claim on a failed bank,” he tweeted. “Absent @jpmorgan@citi or @BankofAmerica acquiring SVB before the open on Monday, a prospect I believe to be unlikely, or the gov’t guaranteeing all of SVB’s deposits, the giant sucking sound you will hear will be the withdrawal of substantially all uninsured deposits from all but the ‘systemically important banks’ (SIBs).”
“Already thousands of the fastest growing, most innovative venture-backed companies in the U.S. will begin to fail to make payroll next week,” Ackman argued. “Had the gov’t stepped in on Friday to guarantee SVB’s deposits (in exchange for penny warrants which would have wiped out the substantial majority of its equity value) this could have been avoided and SVB’s 40-year franchise value could have been preserved and transferred to a new owner in exchange for an equity injection.”
“My back-of-the envelope review of SVB’s balance sheet suggests that even in a liquidation, depositors should eventually get back about 98% of their deposits, but eventually is too long when you have payroll to meet next week. So even without assigning any franchise value to SVB, the cost of a gov’t guarantee of SVB deposits would be minimal,” he said. “On the other hand, the unintended consequences of the gov’t’s failure to guarantee SVB deposits are vast and profound and need to be considered and addressed before Monday. Otherwise, watch out below.”
Ackman did acknowledge the bank managers made a mistake in how they invested the business’s deposits and should lose their job for it. “They invested short-term deposits in longer-term, fixed-rate assets.
“Thereafter short-term rates went up and a bank run ensued. Senior management screwed up and they should lose their jobs,” he said.
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