Astroturfing Bankers in the Age of Jackson

In the early 1800s, the US banking system was dominated by a unique blend of proprietary bank notes held by wealthy merchants and a working class mostly limited to foreign currencies (when they were lucky enough to earn real money at all). New England merchants, ever reliant on European trade, had developed or maintained extensive connections to prominent European trading partners. The capital to valorize these products, coupled with the unique trading opportunities that a continent of untapped resources offered, were fertile ground for a rising class of bourgeois. A shipbuilding/fishing economy had given way to an international-mercantilist model, and the monetary supply could hardly keep up with growth.

As this rapid accumulation of capital progressed, a clear winner was bound to emerge - and the US Government wasn’t playing around: they were going to enthrone the financiers to their own ends. Remember, in those days money wasn’t quite as easy as it was now – loans were in the form of promissory notes or proprietary bank notes: unlike fractional reserve banking, there was little liquidity in loaned value. This was such a problem that it would cause a run on debt in 1937. For the better part of the century, the country was set to witness profound clashes between nearly monolithic financial interests - interests, it turns out, that would manipulate popular movements to push their own financial agenda, all in the name of the "free market."¹

Authority is Only Acceptable When it is Turned Against Oppression Itself

The best approach to the application of authority to situations of oppression is a materialist one. Exercises in avoidance and punishment rarely do much to solve the issues of oppression and exploitation. The underlying social relations have to be confronted to resolve oppression, and this can only occur by an open, systematic inquiry into the relations of oppression. Furthermore, the rate at which oppressive authority figures are able to freely express their own bigotry is directly proportional to the depth and accuracy of investigations into the same oppression.

Authority does, in fact, develop legitimacy when turned against oppression (and by extension oppressors). For that reason, leftists frequently correlate bigotry in language with oppression that follows a bigoted division. Leftists internalize a phobia (embodied in a self-restriction) of (from) the language of the oppressor, and this is not to be ashamed of. As the oppression diminishes, so, too, will the sting of the language and the internalization of authority against that language. This is all in keeping with a revolutionary overthrow of the structure of oppression, and fine at that.

What needs to be questioned, however, is the pedantic nature of this phobia when you apply it socially. The fact is that it does nothing to reveal and excise the oppression it seeks to confront. To ban the language of the oppressor is to conceal the identity of the oppressor. It internalizes the sense of oppression on all sides. It fights against the recognition of oppression and in fact insulates oppression.

Glass-Steagall: Dead for 2 Decades and Counting

Where the Wealthy Meet to Engineer Crises

Clinton's 1999 repeal of Glass-Steagall was hardly a repeal at all. In fact, it was just the dying breath of legislation that had been steadily eroded for decades. Following Alan Greenspan's pivotal moves for deregulation, the Gramm-Leach-Bliley Act merely confirmed in official canon what had been increasingly evident for the past 2 decades.

In 1996, Greenspan gave the Federal Reserve Board the green light to change the practices governing commercial bank holding companies. Under Glass-Steagall, they could only invest up to 5% in investment banks (due to the added risk). Greenspan quickly doubled this limit twice: first to 10%, and then to 25%. 8 months later, another decision opened the doors to insurance underwriting, allowing Traver's (under the management of Sandy Weill, who had already unsuccessfully tried to acquire JP Morgan) to acquire Solomon Brothers. Less than a year later, Traveler's merged with Citicorp.¹


Enter the beast: a bank which merged securities underwriting, insurance underwriting and commercial banking - precisely the amalgamation which ushered in the banking instability of the early 1900s - only this time, the publicians had a new motto: too big to fail. Perhaps more ominous is the name itself though: Citicorp, now Citigroup Inc., was once known as National City Bank, variously administered by James Stillman (who managed the bank in his retirement via discrete courier), Charles E Mitchell (touted in 1933: "Mitchell more than any 50 men is responsible for this stock crash" -Carter Glass).² Mitchell was also on the board of directors for American IG Farben³ (a pharmaceuticals combine which produced Zyclon B for the Nazis), which cartelized with Standard Oil New Jersey with the help of a 30 Million bond from National City Bank.^2,4

Thomas Jefferson: Marxist

"I am conscious that an equal division of property is impracticable. But the consequences of this enormous inequality producing so much misery to the bulk of mankind, legislators cannot invent too many devices for subdividing property, only taking care to let their subdivisions go hand in hand with the natural affections of the human mind. The descent of property of every kind therefore to all the children, or to all the brothers and sisters, or other relations in equal degree is a politic measure, and a practicable one. Another means of silently lessening the inequality of property is to exempt all from taxation below a certain point, and to tax the higher portions of property in geometrical progression as they rise. Whenever there is in any country, uncultivated lands and unemployed poor, it is clear that the laws of property have been so far extended as to violate natural right. The earth is given as a common stock for man to labour and live on. If, for the encouragement of industry we allow it to be appropriated, we must take care that other employment be furnished to those excluded from the appropriation. If we do not the fundamental right to labour the earth returns to the unemployed." Thomas Jefferson - Letter to James Madison (Oct. 28, 1785) / My Emphasis / HT:ExiledOnline.com

 Some highlights:

• Cites the disproportionate dispensation of property as the cause of misery
• Government would do well to increasingly "subdivide property" or break up this accumulation of property
• Supports progressive taxation
• Property rights "violate natural right" when it acts as a barrier between the working class and resources (a.k.a. capital)
• Earth is "common stock"
• Labor is a fundamental right

Egypt's Old Regime Still in Power

"Now, we must not forget that this military council (individuals) are all hand-picked generals who have been chosen and cleared both by President Mubarak in the past years, and they are also picked by the Americans, by the CIA. I'm sure that there is some form of nebulous collusion between these three parties to remain in power as long as possible and to have some sort of subservient civilian administration.

The popular pressure today is trying to undo this holy alliance."

http://www.presstv.ir/detail/173791.html

Expansion of Financial Credit Eventually Leads to Negative Growth

VoxEU: Too Much Finance?

"Our results show that the marginal effect of financial development on output growth becomes negative when credit to the private sector surpasses 110% of GDP. This result is surprisingly consistent across different types of estimators (simple regressions and semi-parametric estimations) and data (country-level and industry-level). The threshold at which we find that financial development starts having a negative effect on growth is similar to the threshold at which Easterly et al. 2000 find that financial development starts increasing volatility. This finding is consistent with the literature on the relationship between volatility and growth (Ramey and Ramey 1995) and that on the persistence of negative output shocks (Cerra and Saxena 2008)."

U.S. Defense Secretary Gates: Pro-Democracy Protests are Iranian Conspiracies

Well I guess it's pretty obvious that the stabler U.S. allies wouldn't have burgeoning democracy movements, but dangerous Islamism - bankrolled, of course, by the regional Islamic state that just happens to have nationalized key western interests:

""We already have evidence that the Iranians are trying to exploit the situation in Bahrain and we also have evidence that they're talking about what they can do to create problems elsewhere," Gates said.

"Saudi Arabia led a joint Gulf force that deployed there last month, enabling Bahraini authorities to quell protests calling for democratic reforms.

"On Sunday, foreign ministers from the Gulf Cooperation Council (GCC), of which Saudi Arabia is a leading member, accused Iran of interference in the affairs of Bahrain and Kuwait in a campaign to destabilise the region."AJE: US and Saudi Arabia discuss Iran 'meddling

Oh yes, you read that right: the U.S. is with S. Arabia in claiming that Iran is fomenting pro-democracy conflicts in the region (which makes sense because the "green revolution" protesters in Iran certainly couldn't be emboldened by these demonstrations). The Saudi Arabians have a good point though: unspecified Iranian meddling is certainly more of a cause for alarm than the Saudi-backed violent repression of a marginalized ethnic majority. Yep: Bahrain has an ethnio-nationalist oligarchy imposing unpopular rule over the ethnic majority; an unpopular rule that is being bankrolled by USAID and enforced by the engorged Saudi military when Bahrainians can't keep their ethnic underclass under control.

But don't worry folks, the real threat are those Iranians who had the audacity to demand that a local regime control (some) of their capital. The same Iranians who bankroll the resistance to another ethno-nationalist regime aligned with the west. Is it just me, or is this story getting old?

Data on how Tax Day Loans Hurt the Poor

• A typical tax refund loan carries an APR rate of 149
• 7.2 million taxpayers used them in 2009, costing 606 million in fees, 58 million in additional charges
• 64% of those who took these loans out were eligible for the Earned Income Tax Credit, a credit for low wage-earners
• Their primary market, according to John Hewitt, CEO of Liberty Tax Service, is the 17 million Americans who do not have their money in 'traditional' banks
• "Taxpayers living in extremely low-income communities are 560% more likely to use these loans"
• Banks like Wells Fargo are closing traditional banks in these communities while they invest in predatory loan firms

  Statistics taken from Tax Day Temptation Full of Tricks and Traps by Bryce Covert New Deal 2.0

Herbert Hoover Left False Evidence to Hide Influence of J.P. Morgan, Thomas W. Lamont

According to Thomas Ferguson, Hoover wrote diary entries which directly conflicted with his private account of events:

"The onset of the Great Depression opened a new phase in the decay of the now creaking system of '96. As the Depression grew worse, demands for government action proliferated. But Hoover, who gradually became so in thrall to the big banks that he concealed Morgan's crucial role in initiating his famous European debt moratorium of June 1931 by deliberately faking entries in a "diary" that he left historians (one of whom years later cited it as evidence for the independence of Hoover, and the American state from the bankers), opposed deficit-financed expenditures and easy monetary policies.⁷⁹ After the British abandoned the gold standard in September 1931 and moved to establish a preferential trading bloc, the intransigence of Hoover and the financiers put the international economy onto a collision course with American domestic politics. Increasingly squeezed industrialists and farmers began clamoring for government help in the form of tariffs even higher than those in the recently passed Smoot-Hawley bill; they also called for legalized cartels and, ever more loudly, a devaluation of the dollar through a large increase in the money supply." Golden Rule: The Investment Theory of Party Competition Thomas Ferguson, pp. 145 (my emphasis)

The Wage Rate and Globalization

VoxEU on the Euro and competition for capital:

"This analysis leads to the conclusion that if the underlying problem of Europe’s periphery were lack of competitiveness, it should relate to the types of products they export (vis-à-vis Germany) and not to the fact that their labour is expensive (their wage rates are substantially lower), or that labour productivity has not increased (it has significantly). The problem is that they are stuck in the manufacturing goods also produced by many other countries, especially the low-wage countries. Reducing wages would not solve the problem. What would an across-the-board reduction in nominal wages of 20%–30% achieve? The most obvious effect would be a very significant compression of demand. But would this measure restore competitiveness? We argue that it would not allow many firms to compete with German firms, which export a different basket, and in all likelihood it will not be enough to be able to compete with China’s wages." -VoxEU

This is more confirmation of the point that competition for capital along varying economies transfers market shares to economies which demand less labor compensation. This same process depresses the average for this and other standards across the board.

HT: Yves Smith at Naked Capitalism