Breakdown of the $26 Trillion the Federal Reserve Handed Out to Save Incompetent, but Rich Investors

Below is letter from former Congressman Alan Grayson. It’s a breakdown of the money the Federal Reserve gave out to save rich investors from their own incompetence. Everybody assumes the Federal Reserve was out to save the banks. That’s not true. The Fed was out to save wealthy investors. If they hadn’t, a lot of rich people would be applying for jobs at Seven-Eleven. A ton of political campaign money would have dried up. A lot of money that corrupts the political system would be gone. A ton of corruption would have died. Goldman Sachs would’ve disappeared into bankruptcy. So while saving rich investors from their own stupidity, the Fed was also ensuring the continued corruption of the corporate wing of the supreme court, congress and the presidency.

There is one other matter I disagree with Congressman Grayson about in regard to the Fed’s actions. The Fed says most of the money it lent out has been paid back. That may not be true. If fact, it’s probably not true. The Fed may, or most likely, have simply cooked its own books to make it appear so. Maybe that’s why corporate profits are at record highs during this period of suppressed demand. How could they have record profits? How could they have paid back $26 trillion in loans in such a short time? That’s almost twice the domestic product of the entire United States. There’s only one answer. It’s not possible. They didn’t pay the money back, at least not most of it. The loans that were not paid back are being used to increase corporate earnings. The higher profits are going toward higher dividends and enhanced share prices for the wealthy. That makes the loans another conduit of unearned income for wealthy investors, as well as another pipeline for government corruption. Corruption is rampant, so don’t think the Fed is immune from it, since it saved the corrupters of Democracy, and likely made them richer in the process.

There’s something significantly more to this scandal and it goes something like this. But first, we need a definition.

A credit default swap is an insurance policy, usually provided on bonds backed by home mortgages. According to some sources, there were $60+ trillion worth of these insurance policies at the beginning of the housing collapse in the summer of 2006.

You didn’t need to own any of these bonds to insure them. It’s the same as being able to insure your neighbor’s house, without their knowledge, even if you don’t know the owner. Needless to say, you’d have a fair degree of incentive to burn your neighbor’s house down.

Institutions such as Goldman Sachs and a ton of unregulated investment firms called hedge funds took out insurance policies on mortgage backed bonds. These people were betting the market would collapse. They were right, even though some of them were selling the bonds up to the housing collapse and even a little after it began, even while telling hapless and really stupid (but wealthy) investors what wonderful investments the bonds were.

This leads me to believe that trillions of those dollars of unrepaid Federal Reserve loans went toward reimbursing the holders of the credit default swaps, which may be why all of those Goldman Sachs and Citicorp executives and hedge fund managers have been getting wonderful bonuses during the economic collapse they helped to craft.

Think about it. The government bailed out the insurance company AIG because of the billions of dollars of mortgage backed bonds it had insured, and that subsequently become worthless when the housing market melted down.

Let’s be clear about one thing. The government didn’t bail out AIG, although they technically did. The government actually bailed out the rich investors by bailing out AIG. These were the foolish folks that had bet that the mortgage-backed-bond market would collapse, and they’d get rich when their insurance policies (credit default swaps) bore fruit. And then came the fat surprise!

The entire insurance industry of planet Earth couldn’t possibly pay out $60+ trillion to those who’d bet on the housing market collapse. That means a bunch of rich fat cats made a bet on a market (credit default swaps) that could not sustain itself. They lost their shirts because they were dumber than a cat’s fart. Unless, of course, they expected the Fed to save their worthless hides.

The Fed’s rescue was most likely negotiated by Fed officials and Wall Street executives in one or more secret meetings. It’s possible executives simply begged Bernanke for financial salvation and he relented, but that’s unlikely.

Either way, the Fed stepped in to save their extraordinarily wealthy friends, like Goldman Sachs, their investors and numerous hedge funds.

In other words, if you were rich and dumb and placed your money in a market that was doomed to collapse, like the credit default swap market, you should have lost all of the premiums that you paid out. Coincidentally, although sizable (probably exceeding a trillion dollars), the money paid out in premiums represented only a fraction of the $60 trillion sized market.

The Federal Reserve doesn’t serve the common people or the nation. The officials at the Fed have only one thing in mind; to serve the wealthy people that control them.

So let me restate this succinctly: The Fed has paid out trillions of dollars in alleged loans and claimed they were paid back when it was impossible to have done so. The recipients of the money, the richest of people and investment companies that control the world’s most powerful government, also had to have cooked their books in order to make it appear they paid the money back.

That means they couldn’t have paid any taxes on trillions of dollars of free income provided by the Federal Reserve Bank.

Ben Bernanke is part of this crime wave. We’re also talking about hedge fund managers, investors of all stripes and sizes, basically, a ton of rich people. Obama may have even known of this crime. Why else would the Department of Justice be totally blind to this issue? Where is the investigation? Even if we had one, the crimes would be white washed in an ocean of corruption.

But then there’s the fear factor. If common people even knew there was an investigation, the demands for justice would be massive since most people now know or suspect how corrupt the financial sector and the government are, and how much and how tightly they are entwined.

I’m no attorney, but I can kind of guess what crimes have been committed, at least some of them. How about tax evasion? How about Accessory to Tax Evasion? How about obstruction of justice? Racketeering? Money laundering? And probably lots more. If you’re rich, you own enough politicians and Supreme Court and other justices that no charges will ever be brought against you.

The folks at http://criminal.laws.com/rico define racketeering this way, “Racketeering is classified as a crime that takes place through or while undertaking an illegal business or commercial venture. The activity of Racketeering is neither specific to solely illegal nor legal business operations. A wide array of the types of Racketeering exists.”

Goldman Sachs and other banks are businesses. So are hedge funds. So racketeering applies.

Criminal.laws.com also defines money laundering as “a financially-based criminal act that is employed in order to purposely conceal, misrepresent, and disguise all applicable nature or details with regard to financial income in the form of monies. Money Laundering can be instituted in order to attempt to hide the source of generation of a particular flow of income or to mask the process of the spending of monies. Furthermore, Money Laundering can be utilized in order to mislead investigations involved in the determination of the particular spending pattern or trend with regard to an individual or entity. While Money Laundering is not specific to commercial activity, it most commonly takes place within the scope of business activity.”

Money laundering clearly applies and it should be obvious to anybody with a second grade education.

Ben Bernanke is up to his neck in these crimes. Perhaps more realistically, he buried himself completely in it.

Crimes have been committed on a massive scale, but our government is totally corrupted by big money, and that’s especially true of the corporate wing of the Supreme Court. So don’t expect anything to happen soon. Join the Occupy Movement. Get Busy. Get Politically active if you want to see justice served, if you want to see our government washed clean of corruption.

Anyway, the link below takes a look at what President Obama may or may not have known about the $26 trillion and how his knowledge impacted one of the policies he proposed. The link below that is important information about the Federal Reserve. Enhancing corporate profits was not the only thing done with the unrepaid money; the third link below goes into that issue. Much of the money went to pay off rich people holding credit default swaps.

Congressman Grayson’s letter is below the third link.

The enormous implications of the bailout to the 99 percent. Click here for an analysis of what Obama may have known about the $26 trillion

Who Holds the Federal Reserve Responsible for Its Actions?

Why Isn't Federal Reserve Chairman Ben Bernanke in Prison for Life?

Dear John,

I think it’s fair to say that Congressman Ron Paul and I are the parents of the GAO’s audit of the Federal Reserve. And I say that knowing full well that Dr. Paul has somewhat complicated views regarding gay marriage.

Anyway, one of our love children is a massive 251-page GAO report technocratically entitled “Opportunities Exist to Strengthen Policies and Processes for Managing Emergency Assistance.” It is almost as weighty as that 13-lb. baby born in Germany last week, named Jihad. It also is the first independent audit of the Federal Reserve in the Fed’s 99-year history.

Feel free to take a look at it yourself, it’s right here. It documents Wall Street bailouts by the Fed that dwarf the $700 billion TARP, and everything else you’ve heard about.

I wouldn’t want anyone to think that I’m dramatizing or amplifying what this GAO report says, so I’m just going to list some of my favorite parts, by page number.

Page 131 – The total lending for the Fed’s “broad-based emergency programs” was $16,115,000,000,000. That’s right, more than $16 trillion. The four largest recipients, Citigroup, Morgan Stanley, Merrill Lynch and Bank of America, received more than a trillion dollars each. The 5th largest recipient was Barclays PLC. The 8th was the Royal Bank of Scotland Group, PLC. The 9th was Deutsche Bank AG. The 10th was UBS AG. These four institutions each got between a quarter of a trillion and a trillion dollars. None of them is an American bank.

Pages 133 & 137 – Some of these “broad-based emergency program” loans were long-term, and some were short-term. But the “term-adjusted borrowing” was equivalent to a total of $1,139,000,000,000 more than one year. That’s more than $1 trillion out the door. Lending for these programs in fact peaked at more than $1 trillion.

Pages 135 & 196 – Sixty percent of the $738 billion “Commercial Paper Funding Facility” went to the subsidiaries of foreign banks. 36% of the $71 billion Term Asset-Backed Securities Loan Facility also went to subsidiaries of foreign banks.

Page 205 – Separate and apart from these “broad-based emergency program” loans were another $10,057,000,000,000 in “currency swaps.” In the “currency swaps,” the Fed handed dollars to foreign central banks, no strings attached, to fund bailouts in other countries. The Fed’s only “collateral” was a corresponding amount of foreign currency, which never left the Fed’s books (even to be deposited to earn interest), plus a promise to repay. But the Fed agreed to give back the foreign currency at the original exchange rate, even if the foreign currency appreciated in value during the period of the swap. These currency swaps and the “broad-based emergency program” loans, together, totaled more than $26 trillion. That’s almost $100,000 for every man, woman, and child in America. That’s an amount equal to more than seven years of federal spending — on the military, Social Security, Medicare, Medicaid, interest on the debt, and everything else. And around twice American’s total GNP.

Page 201 – Here again, these “swaps” were of varying length, but on Dec. 4, 2008, there were $588,000,000,000 outstanding. That’s almost $2,000 for every American. All sent to foreign countries. That’s more than twenty times as much as our foreign aid budget.

Page 129 – In October 2008, the Fed gave $60,000,000,000 to the Swiss National Bank with the specific understanding that the money would be used to bail out UBS, a Swiss bank. Not an American bank. A Swiss bank.

Pages 3 & 4 – In addition to the “broad-based programs,” and in addition to the “currency swaps,” there have been hundreds of billions of dollars in Fed loans called “assistance to individual institutions.” This has included Bear Stearns, AIG, Citigroup, Bank of America, and “some primary dealers.” The Fed decided unilaterally who received this “assistance,” and who didn’t.

Pages 101 & 173 – You may have heard somewhere that these were riskless transactions, where the Fed always had enough collateral to avoid losses. Not true. The “Maiden Lane I” bailout fund was in the hole for almost two years.

Page 4 – You also may have heard somewhere that all this money was paid back. Not true. The GAO lists five Fed bailout programs that still have amounts outstanding, including $909,000,000,000 (just under a trillion dollars) for the Fed’s Agency Mortgage-Backed Securities Purchase Program alone. That’s almost $3,000 for every American.

Page 126 – In contemporaneous documents, the Fed apparently did not even take a stab at explaining why it helped some banks (like Goldman Sachs and Morgan Stanley) and not others. After the fact, the Fed referred vaguely to “strains in the financial markets,” “transitional credit,” and the Fed’s all-time favorite rationale for everything it does, “increasing liquidity.”

81 different places in the GAO report – The Fed applied nothing even resembling a consistent policy toward valuing the assets that it acquired. Sometimes it asked its counterparty to take a “haircut” (discount), sometimes it didn’t. Having read the whole report, I see no rhyme or reason to those decisions, with billions upon billions of dollars at stake.

Page 2 – As massive as these enumerated Fed bailouts were, there were yet more. The GAO did not even endeavor to analyze the Fed’s discount window lending, or its single-tranche term repurchase agreements.

Pages 13 & 14 – And the Fed wasn’t the only one bailing out Wall Street, of course. On top of what the Fed did, there was the $700,000,000,000 TARP program authorized by Congress (which I voted against). The Federal Deposit Insurance Corp. (FDIC) also provided a federal guarantee for $600,000,000,000 in bonds issued by Wall Street.

There is one thing that I’d like to add to this, which isn’t in the GAO’s report. All this is something new, very new. For the first 96 years of the Fed’s existence, the Fed’s primary market activities were to buy or sell U.S. Treasury bonds (to change the money supply), and to lend at the “discount window.” Neither of these activities permitted the Fed to play favorites. But the programs that the GAO audited are fundamentally different. They allowed the Fed to choose winners and losers.

So what does all this mean? Here are some short observations:

(1) In the case of TARP, at least The People’s representatives got a vote. In the case of the Fed’s bailouts, which were roughly 20 times as substantial, there was never any vote. Unelected functionaries, with all sorts of ties to Wall Street, handed out trillions of dollars to Wall Street. That’s not how a democracy should function, or even can function.

(2) The notion that this was all without risk, just because the Fed can keep printing money, is both laughable and cryable (if that were a word). Leaving aside the example of Germany’s hyperinflation in 1923, we have the more recent examples of Iceland (75% of GNP gone when the central bank took over three failed banks) and Ireland (100% of GNP gone when the central bank tried to rescue property firms).

(3) In the same way that American troops cannot act as police officers for the world, our central bank cannot act as piggy bank for the world. If the European Central Bank wants to bail out UBS, fine. But there is no reason why our money should be involved in that.

(4) For the Fed to pick and choose among aid recipients, and then pick and choose who takes a “haircut” and who doesn’t, is both corporate welfare and socialism. The Fed is a central bank, not a barber shop.

(5) The main, if not the sole, qualification for getting help from the Fed was to have lost huge amounts of money. The Fed bailouts rewarded failure, and penalized success. (If you don’t believe me, ask Jamie Dimon at JP Morgan.) The Fed helped the losers to squander and destroy even more capital.

(6) During all the time that the Fed was stuffing money into the pockets of failed banks, many Americans couldn’t borrow a dime for a home, a car, or anything else. If the Fed had extended $26 trillion in credit to the American people instead of Wall Street, would there be 24 million Americans today who can’t find a full-time job?

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Economist warn of United States Credit Downgrade if Super Committee Fails to Reduce Deficit

Economists are warning of dire consequences if US politicians fail to make progress this weekend in tense talks aimed at reducing America’s massive deficit ahead of a Wednesday deadline. Of course, the politicians won’t deal with the real issues that caused the deficit: two unfunded wars, tax cuts for the rich, and our current slow motion Great Depression. Our economic depression has been caused by government policies designed to redistribute income from working people to the rich. These policies include deregulation, free trade, tax cuts for the rich and under estimating inflation, among others.

For more on this issue, click the links below.

US Faces Credit Downgrade if the Super Committee Fails to Cut the Budget

One way that tax cuts for the rich have destroyed jobs, created poverty and redistributed income from working people to the rich

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Economic Lies of the Republican: Tax Cuts for the Rich Don’t Create Jobs, They Destroy Jobs and Redistribute Income From Working People to the Rich: Here’s How

By John Hively

Republicans have long championed the idea that tax cuts for the rich create jobs. We know that’s a lie. The Bush tax cuts for the wealthy created negative private sector job growth for the last ten years. They also helped to send us spiraling into the current slow motion 2nd Great Depression. Let it be stated unequivocally that there is not a shred of evidence that tax cuts for the rich has ever created a single job, but there is plenty of evidence they destroy jobs and redistribute income.

We’ll start this series with how the affluent use tax cuts to steal money out of the pockets of working people.

Say you’re a billionaire and you have a yearly income of a hundred million dollars. Perhaps you take home ninety million dollars after all the deductions you have. You’re only paying fifteen percent federal tax on your capital gains, which is how you derive your income, but those deductions add another five million to your checking account. What happens if the capital gains tax rate is slashed to ten percent? That means you take home ninety-five million dollars.

You might invest that extra five million with a hedge fund, which is a non-regulated investment company. The managers there might invest that money in the futures market for oil. Does that create any jobs? Hell no. But it does bid up the price of a barrel of oil. Say oil is trading at $100 a barrel before the tax cut. After the cut, there are lots of billionaires and millionaires investing in the futures markets with the cash from their new tax break, which bid up the price of lots of commodities; but let’s stick with black gold for simplicity. All these rich people bid up the price of oil to say $150 a barrel.

That means the price of gasoline is going to jump, maybe a dollar or two a gallon, more or less. That extra dollar or two you pay at the pump goes directly to the rich folks that bid up the price of oil. That means money goes from your pocket to the wallets of the rich because of their tax cut. In this way, tax cuts for the rich redistribute income from working people to the affluent.

Of course, it’s worse than this if you’re a working stiff because the wealthy are pushing up the price of goods all through the economy via their investments in the futures markets for farm produce, chickens, beef, steel, whatever. You name it. You’re paying more of your income to the rich for a ton of stuff.

That means you have less cash to spend at your local restaurant, or maybe to buy that iPod, television, Toyota Prius, or any number of things. And whatever company makes the items that citizen’s purchase is forced to reduce labor costs because the demand is less thanks to the redistribution magic of those tax cuts. So companies cut the wages and benefits of their employees, and or reduce their work force through lay-offs, or they offshore jobs. That local restaurant of yours might be forced to lay-off people, reduce employee hours, or even close, thereby eliminating more jobs.

So those tax cuts for rich fat cats are killing jobs, not creating them. And when they destroy jobs via their investments in the futures markets, they also weaken the tax base for schools, local government, libraries, police, roads and so many other things that make our lives better. That also means government employees see their jobs eliminated, their hours sliced, or their hourly compensation held static or pushed down. Those that keep their jobs wind up working more and earning less.

You can’t forget tuition at state colleges and universities are going to spike, so our kids are going to pay more for school because of the tax cuts, which are also smothering their future employment prospects as jobs are eliminated. When it comes to fleecing your pockets, our federal government helps the affluent a lot.

Sure, there might be a few patriotic warriors of the people in congress left, brave men and women of high moral standing like Senator Bernie Sanders of Vermont and Congressman Peter DeFazio of Oregon; but about 98 to 100 percent of the Republicans in Washington and somewhere between 66 and 80 percent of the Democrats are collaborators of the affluent; people like Ron Wyden, Wall Street’s Democratic senator from Oregon and Democratic Congressman Earl Blumenauer, another collaborator of Wall Street from Oregon. Those kind of people help change the rules in favor of the rich.

Take inflation for example. Using current methods, the government says inflation was 1.5 percent for all of 2010. Yet, according to Harper’s Magazine, inflation would have been over 10 percent last year if the government measured inflation the way it did thirty years ago. But it doesn’t. The government has changed the way it measures inflation twenty times since 1980. There might be a sinister reason for this.

Speculation in the futures markets drive prices up, which adds to the inflation rate. And this means that inflation can be used to help gauge how much of your income is being shoveled into the pockets of the wealthy thanks to those tax cuts. Government, you see, is a keen collaborator of the one percent as they financially pillage the middle class. Most of our politicians don’t want us to know what’s really going on. That’s why the government doesn’t include the price of food and energy in the way it determines the yearly amount of inflation, at least not anymore. There’s another way the rich benefit by bidding up the prices of commodities in the futures markets, but I’ll save that for part two of this series. The links below are for other similar articles.

Four Obstacles for Upward Mobility for Young People

Bill Moyers Explains How the Rich Have Waged War Against Democracy and Shared Prosperity

the Government is using deceptive statistics to fool us; they\'re cooking the books

Seven economic lies of the republicans

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Impeach Obama: He is a Class Warrior for the Rich

The economy added only 18,000 new jobs in June 2011 and that shouldn’t come as a surprise.
Nobel prize economists such as Paul Krugman and Joseph Stigletz warned that Obama’s stimulus packages were insufficient to spur serious growth in a severely wounded economy. Former labor secretary Robert Reich warned that the distribution of income had become too lopsided in favor of the rich for the economy to grow jobs.

Fool that he is, or so he appears to be, Obama ignored the people who are always right and listened to Wall Street drones like Lawrence Summers. Now with his reelection prospects dimming, Obama wants to foolishly curtail federal spending.

So is Obama stupid? Or foolish? Maybe. However, there might be a more sinister reason his legislative decisions have always favored redistributing income from working people to the rich.

The rich have been waging economic war against the middle class and the poor. They’ve been using their financial clout in government to redistribute income their way. The answer to Obama’s foolishness becomes obvious when seen through this light.

Obama decided long ago to enter this class war on the side of the rich. He’s a real class warrior—for rich folks.

The United States needs a new FDR. Obama is not that person, and he never will be. He is the wrong man for the wrong job at the wrong time.

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Ron Wyden: A liberal Senator Wages War Against the Middle Class

The time had come to fight power with truth. That’s why I raised my hand at a town hall meeting hosted by Oregon’s liberal Democratic Senator Ron Wyden. Last January, I’d driven thirty miles from Portland to St. Helens to ask one question. There were about 150 of us. I sat and listened as people asked a variety of questions. Nobody challenged any of the senator’s canned answers.

Wyden is a member of the senate finance committee. As chairman of the subcommittee on trade, the senator is in a position to determine the economic fate of millions of his fellow citizens.

I thought Wyden was a liberal, fighting for the good of the common man in the corridors of power in Washington D.C. I guess that was a long time ago, if ever. Nowadays, the senator is a plutocrat serving the corporate elite in their war against the middle class. The purpose of this war is to redistribute income from working people to the affluent. Like many Democrats and nearly all Republicans, Wyden has done his job well during the last thirty years.

Now, with the middle class staggered by job losses, along with thirty years of stagnant wages and declining benefits due in large part to trade policies that Wyden championed, the senator has decided to go for the kill. By all accounts, he intends to vote yes for the South Korea Free Trade Agreement this summer. Then he’ll vote for the Panama and Colombia free trade treaties when they come up for votes shortly afterward.

Free trade agreements are con games of the rich that enable them to swindle the vast majority of Americans out of their American dreams. The free trade income transfer scam is simple. These deals pave the way for corporations to ship jobs overseas. When they do, the difference between the old compensation in the United States and the new compensation overseas becomes profits. The newly available profits are then divvied up to the affluent as dividends and rising share prices. A job that costs an employer $50,000 a year in the United States costs $5000 or less in a lot of other nations. The difference is $45,000. That’s what the rich pocket. The American citizen who loses that job gets unemployment checks for a while, as well as an uncertain future. Wyden is not a dummy. He knows this.

The Economic Policy Institute (EPI) predicts the United States will lose over 800 thousand jobs within ten years if congress approves the free trade agreement (FTA) with South Korea. In other words, the affluent will get richer at the expense of the job losers. Imagine how many more jobs will be lost if congress also approves the FTAs with Panama and Colombia. Job losses from the three FTA’s could approach or exceed 1,500,000, especially if the results are similar to what happened after NAFTA became law on January 1, 1994.

Depending on who is doing the math and what figures they’re using, the experts have decided American job losses due to NAFTA are somewhere between 600,000 and 900,000. For example, Jobs with Justice has estimated the U.S. lost 766,000 jobs to Mexico from 1994 to 2001. More recently, an EPI study estimated the USA has suffered a net loss of 879,000 positions due to the treaty.

Lots of US corporations have taken advantage of NAFTA. Take General Electric (GE) for example. According to Business Week, the company has exported thousands of jobs to Mexico since 1994. This includes jobs making refrigerators and parking meters. However, not all of the positions shipped to Mexico are in manufacturing. By 2008, GE was hiring an engineer a day in Mexico. Those employees earned one-third as much as their U.S. counterparts.

Of course, there are plenty of other companies that manufacture their products in Mexico and then import them to the United States. For example, some Craftsman power tools are now made in Mexico and are then exported to the USA. This brings us to another point. Plenty of U.S. corporations manufacture goods overseas and then export them to the United States. Most Nike shoes are made in Vietnam and China and many of them are then exported to the United States. My Hewlett-Packard computer was manufactured in China. Thousands of other things are manufactured abroad by U.S. corporations and are then exported to the United States.

This brings us to an unfortunate truth about trade deficits. Much of the total US trade deficit is with US chartered corporations that have exported jobs, or created jobs overseas that would otherwise have been established here had it not been for investment clauses in trade treaties. This is especially true with respect to deficits the United States has with developing nations, such as China and Mexico. The same will be true with South Korea, Colombia and Panama.

Obviously, this is not necessarily valid about US trade deficits with more advanced countries, such as Germany, Japan and Canada. However, one has to remember that US companies ship many of their products to developed countries from their factories, contractors and sub-contractors in less developed nations. In other words, the shipping of jobs from the USA to lower wage countries also contributes to the US trade deficit with more developed nations.

All of this means trade deficits are a rough tool to gauge the redistribution of income in the United States. The larger the trade deficit, the more income is being redistributed in the USA from working citizens to the affluent. That’s why the trade deficit and the mal-distribution of income exploded upward in tandem after President Ronald Reagan began his war against the middle class thirty years ago. The United States total trade deficit of nearly $17 billion in 1981 has exploded to nearly $500 billion in 2010. During this same period the richest 1 percent of Americans saw their chunk of national income rise from less than 9 percent to almost 24 percent. This was not a coincidence. It was cause and effect.

The EPI projects growing trade deficits with South Korea, Colombia and Panama if the trade deals are approved by congress. This leads us to an unspoken truth. The real purpose behind these FTAs is to redistribute more income from working Americans to the affluent. In other words, on behalf of the rich, Senator Wyden is preparing another frontal assault against the middle class during the summer of 2011. That’s why I was in St. Helens.

These weren’t the only thoughts racing through my head. I didn’t want the senator to redistribute my son’s future to the affluent, just like he’d done to other Americans when he voted for NAFTA, as well as the Central American Free Trade Agreement (CAFTA). I hoped he might respond to reason.

An hour or so into the meeting, the senator announced he only had enough time to take three more questions. Tons of hands shot up. One of those was mine. I figured there was no way I’d get called on. Then the aide to the senator made a critical mistake; he pointed his finger at me.

I stood and fidgeted for a moment. Earlier, the senator had answered my question when he told a woman he hadn’t made up his mind on which way he was going to vote on the South Korea FTA. That was nonsense. He’d had years to decide. That brought up another question and it wasn’t all that simple. After the aide called on me, I had a few seconds to organize my thoughts. Then I steeled myself and said what I felt needed to be said:

“I don’t understand your position on the free trade agreement with South Korea. Numerous studies show these trade agreements redistribute income and wealth from working people to the rich. That’s one of the biggest problems today. The rich have more of the national income than possibly at any time in our history. Former Labor Secretary Robert Reich called this the biggest issue of our time in his most recent book. The demand for goods and services is weak in the United States because of it. This trade agreement is going to ship more jobs from the United States to South Korea according to the Economic Policy Institute. Everybody knows the difference between the old wages here and the new wages in South Korea are going to be redistributed to the rich via greater dividends and enhanced share prices.”

I started gesturing with my hands as I continued, “Look what’s going on around you. Look at your country. There’s massive unemployment. The demand for goods and services is weak. How can we have a robust economy if people can’t buy stuff because their jobs have been shipped overseas? People have gone without jobs for years. Much of the tax base has been shipped overseas. That’s one of the reasons why they’re tens of thousands of people protesting in the streets of Madison, Wisconsin. These treaties only make the wealthy richer at the expense of the rest of us. They weaken the demand for goods and services in this country.”

At this point, I wanted to say, “Your position on this treaty is complete bullshit.” However, I held my tongue and opted to say something a tad nicer, “Your position on this treaty is completely silly.”
As I began to sit down, the senator stood ramrod straight. Then he pointed his finger at me and said, “Sir, I said I haven’t made up my mind on the treaty.”

My posterior hadn’t even hit the chair when I began to rise with my hand in the air. I was indignant. I was going to say, “That’s my point. How could you not have made up your mind?”

At that exact instant, just as the senator was beginning to defend his position with his earlier answers, two of his assistants appeared like magic at my sides. They asked for my name, if I wanted to provide any additional information and several other things. After about thirty seconds, I sat down and told them, “No, you can’t have my name.” I figured the assistants were there to distract anybody who asked a question that might make the senator uncomfortable. So I shooed the assistants away. Then I realized something.
It didn’t matter what anybody in the audience said. We were working people. The senator didn’t care that the South Korea FTA was going to redistribute income from working people to the affluent and weaken the demand sector of our economy even more.

I figured Wyden had already laid the groundwork to wage war again against the middle class on behalf of his biggest campaign contributors: Nike shareholders, hedge fund managers and investors, as well as other affluent institutions and people. Income redistribution: that’s how the wealthy have gotten richer while sucking the middle class dry. In addition, this scheme gives the affluent more money to purchase additional lobbyists and senators.

As the senator finished his rebuttal, I realized the future of our children was on the line. The time had come. I decided to get politically involved in the hope that enough committed voters might change Wyden’s mind.

In April, I attended a meeting with one of Wyden’s assistants. Everything he said indicated the senator intended to vote for the treaty no matter how devastating it was for the majority of Americans.
I now spend more time working as a volunteer with Oregon Fair Trade, an organization aligned against free trade income redistribution treaties. I got involved with Portland Central America Solidarity Committee (PCASC), which is against the treaty. They’re taking direct action against any members of congress not opposed to the South Korea FTA. Along with others, these groups are informing voters and taking part in protests. And they’ve had success.

Oregon Congressman David Wu was sitting on the fence on the South Korea FTA. These groups got him to change his mind. This proved one truism.

We can stop the rich and their plutocrats in congress. If we educate enough people, if we get voters to say enough is enough, we have a chance to stop this latest rich man’s scam. The time for action is now. Stand up for yourselves and for your children. Get involved. Go online. Numerous organizations are defending the vast majority of Americans against members of congress intending to vote yes on these trade treaties. The lists are long. We can stop this summer’s free trade income redistribution con game. Sign up, get active and stop the madness.

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Paul Krugman and the Lost Decade of the Republicans, but in two days I’ll tell you what liberals and conservatives don’t want you to know about the jobless growth decade

http://www.nytimes.com/2009/12/28/opinion/28krugman.html?th&emc=th”>28/opinion/28krugman.html?th&emc=th

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Could the Dow Sink Below 6,000?

In September 2007, I predicted the current recession, the Fed dropping the federal funds rate to zero, deflation, home mortgage interest rates “will drop below 5 percent and possibly 4 percent,” and numerous other things. Of those numerous other things I also said the Dow Jones Industrials will drop below 8,000 and “possibly” drop below 6,000.

My suggesting the Dow could plummet below 6,000 is not a 100% prediction, more of a strong feeling, a musing of a possibility that represents how weak the economy has become under the disastrous Republican economic policies of the last thirty years. And so we may yet reach that sad stage as billions of dollars of illusionary money disappears.

The below 6,000 possibility is now in sight. But we’re not likely to reach there overnight, it’s more a matter of months if we ever reach it, and there is yet a good possibility such a dubious outcome can be had.

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