In austerity fight, deceptions have just begun

Only time will tell how much of a boost Republican challenger Mitt Romney will get from his debate win over President Obama.

The president seemed flatfooted and unprepared to respond to Romney’s shift toward the center, even though Romney’s campaign had suggested that’s exactly what they would do  - use the Etch-a-Sketch to pivot away from the extreme right toward a more moderate stance during the general election campaign.

The debate felt like a replay of the scenario that has played out so often over the past four years: aggressive Republicans concealing their real motives and putting passive Democrats on the defensive.

Romney was acting every bit the CEO in charge, telling the customers what he thought they wanted to hear to make the sale; in this case, that his deficit reduction scheme wouldn’t favor the wealthy and damage the middle-class.

The contrast between CEO Romney talking to voters (customers) and CEO Romney talking to his big contributors (his board of directors) at a private fundraiser in Boca Raton, Fla. in May couldn’t have been starker. In what he thought were private remarks that have now blown up, Romney, you recall, dismissed the 47 percent of the country that supports Obama as self-pitying moochers who need to be taken care by the government.

We know that all politicians say one thing in public and another in private.  That’s not a shock. But what’s striking is just how much contempt CEO Romney expressed for nearly half the voters when he was talking to the people who will hold real power in his administration: his board of directors.

Most CEOs wouldn’t let such feelings slip, even in private. But just as Romney told the Denver audience what he thought it wanted to hear at the debate, so too he was telling his contributors what he thought would please them.

Because make no mistake, plenty of the big money is preparing to work with whoever gets elected in November to launch a major offensive against Social Security and Medicare as well as to end tax breaks that favor the middle class, such as the mortgage interest tax break, under the guise of backing a new grand bargain to balance the budget.

For example, billionaire hedge fund executive Pete Peterson, who has also spent $458 million of his own money to push an austerity agenda, is now backing a bipartisan group known as Campaign to Fix the Debt. Ryan Grim at Huffington Post reports that the initiative has raised $30 million so far, including $5 million from a single unnamed donor.

The operation has hired 25 to 30 staffers, with plans to double, Grim reports. Along with a paid-media campaign, aims to influence press coverage in 40 states with locally focused teams.

This “bipartisan” initiative is just the latest attempt by Wall Street and its allies to pass the costs of the government deficits created by the financial crisis on to the middle class and those who can least afford it.  Though President Obama has said he won’t let these programs be cut in a way that hurts the most vulnerable, to keep that promise he’ll have to grow backbone that was missing Monday night – and through much of his first term.

 

Lobbying / Martin Column / Mitt Romney / President Barack Obama / Social Security - 10/05/2012

He Ain’t Heavy, He’s My Brother

Loss. That’s what I felt when I watched the space shuttle land at LAX, carried to our City of Angels on the back of a close relative, the mighty Boeing 747 – twelve years older than the shuttle and, though aging, nearly as inspiring when you happen to see one. I recalled where I was when Challenger exploded – studying in a library for the California bar exam – and when Columbia burned up on re-entry – at a cottage in Idyllwild with my family. But I’m talking about a different kind of loss.

When I was a kid, growing up in the Sixties, America seemed to be the land of limitless possibilities. President Kennedy launched the space program in 1961, promising we would reach the Moon by the end of the decade and though incredible, no one doubted the USA would do it. In the more distant future described by Gene Roddenberry, a “replicator” would eliminate want of food or material possessions and humans would be freed to explore any part of the universe they chose.

Sure, there were serious problems right here on Earth, and in this country, but the War on Poverty, the civil rights movement and a bipartisan roster of widely respected – even revered – public officials seemed determined to get these matters in hand. We were working on them, and nothing seemed intractable. The cynical snicker about the Sixties now. But such was the energy and enthusiasm of the economic prosperity of post World War II United States, an era that is already gauzy like our refracted impressions of ancient Rome.

Just after three in the afternoon on July 20, 1969, my friends and I gathered around the clunky RCA television in our den, understanding that the rest of the planet was doing the same. I was seventeen. Like all kids who grew up in the era before cable TV, video games and the Internet, we had spent many late nights outdoors contemplating the Moon, which seemed to us as distant as adulthood.  Now we could barely discern the astronauts in the grainy black and white images as they walked on the lunar surface, but there was no mistaking the achievement of that day. And though it was America’s achievement, the whole world celebrated.

A few days from now, shuttle Endeavor will be drawn through the streets of Los Angeles– like a funeral caisson for a fallen soldier – by a magnificent technological beast. That journey, at 2 mph, will end at a museum twenty-four hours later. There it will rest much like the Pyramids or the Great Wall of China, monuments to human will and imagination left to puzzle future generations. No ambitious program to explore the universe will succeed the shuttle.

That’s because there's no money left to pay for our aspirations. The last decade began with a speculation-induced economic recession in 2001. In California, once the home of aerospace, the collapse of the tech-bubble was compounded by the disastrous results of the deregulation of electricity by local lawmakers, which included a bailout for over-priced nuclear power plants that cost consumer ratepayers $28 billion. Then Enron and other Wall Street firms that bought the power plants covertly manipulated the supply of electricity to jack up prices, bankrupting utility companies and forcing the state to buy long term contracts for electricity from the manipulators – at the grossly inflated prices – to keep the lights on and businesses going. The deregulation debacle cost California $71 billion – and the local economy has never been the same.

Many Americans had not recovered from the 2001 recession when the Wall Street derivatives frenzy collapsed in the Fall of 2008. Americans lost their jobs, their homes, their savings. With incomes disappearing, Americans stopped spending. That hurt businesses, especially small businesses that could not borrow. And tax revenues declined. To pay Social Security and jobless benefits, and restart the economy, the federal government spent more than it took in in recent years.

This ignited the raging political debate over the federal government’s stimulus and deficit spending, though few Americans can claim to have been bailed out the way Wall Street was. After taxpayer cash infusions, subsidies, tax breaks and other favors estimated at between $9.7 trillion and $29 trillion, the Money Industry has emerged not merely intact but more profitable than ever.

Add $1.3 trillion for the Afghan and Iraq wars, and you can see why there won’t be a manned mission to Mars anytime soon, much less hyperdrive tours of the galaxy.

Our country paid a heavy price to save Wall Street. Consider that the cost of the getting to the Moon in today’s dollars would be about $26 billion less than taxpayers spent bailing out the insurance giant AIG – about $182 billion. And the Moon program was a massive stimulus program for America in the Sixties, and not just the defense industry. Its benefits included the research and development of a raft of technologies that led to enormous advance in computer, medicine and other industries – not to mention Velcro. Steve Jobs and his colleagues in Silicon Valley didn’t build the modern personal computer industry by themselves: you, the American taxpayer, helped.

Measuring the cost of government assistance to Wall Street versus to business innovators versus to Americans in need compartmentalizes the debate. What does it say about the country – and its future – that the average life expectancy of white Americans who did not graduate high school has dropped by four years, to where it was in the 1950s to Sixties?

Yet a majority of Americans – 54% –believe that the government should do less to solve our country’s problems… though there is a sharp partisan divide on the question, with 82% of Republicans saying less and 67% of Democrats saying more, according to Gallup.

There will be Americans in space in the near future, however. Using the technology and facilities taxpayers built, a number of private companies are developing plans to commercialize orbital space flight, the New York Times reports. And every American who wants to hitch a ride can do so – for somewhere between $50 million and $150 million a ticket, depending on your destination.

As the 747 and the shuttle swung low over Los Angeles, one of my favorite oldies from the Sixties came to mind:

The road is long, with many a winding turn,
That leads us to who knows where, who knows where.

So on we go. His welfare is of my concern.
No burden is he to bear - we'll get there.

For I know: he would not encumber me.
He ain't heavy: he's my brother.

I thought back to that humid afternoon in July, 1969, when Kennedy’s charge was fulfilled by Apollo 11. JFK was gone; along with his brother Robert, and Martin Luther King, struck down by hate, fear, madness.  At the time, they seemed to us pioneers in the still young and uncertain cause of Democracy, and had given their lives to better their fellow Americans and the Nation. The sense of  purpose, destiny, determination and sacrifice – shared by the nation – was inspiring. At least to a young guy from a Boston suburb.

 

Harvey Column - 10/01/2012

Is born-again bank buster for real?

Who is Sandy Weill and why should we care that he now says he thinks big banks should be broken up?

Weill built Citibank into the financial colossus whose spectacular collapse in 2008 helped tank our economy. He said he had a vision of creating giant financial supermarkets that conjured up convenience, friendly service, well-lit aisles and lots of choices. But what he was actually building were massive financial tankers fueled on fraud and risky, toxic assets no one understood, kept afloat with dirty back-room deals, hijacked regulators, lobbying and campaign contributions.

To make that vision a reality, Weill also did more than anyone else to drive the final spike through the heart of the Depression-era Glass-Steagall law, which for seventy years had kept risky investment banking separate from federally-guaranteed traditional banking, reducing the risk of bank failures. President Clinton signed the bill repealing Glass-Steagall in 1999.

For his efforts, Weill, 79, made gazillions before he retired in 2006, ahead of the financial collapse.

He also earned a spot among a very select group - Time Magazine’s “25 people to blame for the financial crisis.”  Weill, Time said, helped create the country’s “swollen banks,” which remain one of the economy most serious unsolved problems.

His Citibank is one the worst, and remains on life support only through $45 million [million?] worth of the taxpayers’ generosity.

It didn’t help Weill’s reputation that a few weeks after Citibank accepted its bailout, he used the Citibank jet to fly to his vacation in Cabo, a flight immortalized by the poets on the New York Post copy desk with the headline: “Pigs Fly.”

It was only six months ago that Weill announced he was “downsizing” and simplifying his life, selling his Central Park West apartment in Manhattan for $88 million – more than double what he’d paid for it, as well as attempting to unload his yacht for nearly $60 million. Weill moved to another apartment downstairs.

But downsizing doesn’t mean the same for an uber-banker that it does for the rest of us. He spent $31 million on the largest real estate-deal in Sonoma County’s history, buying a Tuscan-inspired villa that includes 8 acres of vineyards, seven miles of private hiking trails, and an 11,605-square-foot mansion made with 800-year-old Italian roof tiles and 200-year-old wood beams, and a fire truck that comes with seven firefighters. A real estate agent cautioned against viewing Weill’s purchase as a sign that the real estate market in the county north of San Francisco was recovering. As one Coldwell Banker agent said: “[The sale] is not an indicator of an emerging real estate recovery, but rather the ability of the world’s wealthiest individuals to buy what they desire.”

There’s been all kinds of speculation about why has now come out in favor breaking up big banks. But the best way to judge whether he’s serious, or just trying to get a little good PR, is to examine how much cash he’s willing to spend to make it happen.

When bankers, led by Weill, wanted to repeal Glass-Steagall, they fought for 20 years and spent millions in lobbying and campaign contributions before they won. The big banks would certainly put up a similar fight against its reinstatement. No one knows better than Weill that when it comes to changing banking regulations, it’s not what people say that matters; money talks.

How much is Weill willing to spend in support of his newfound conviction? Without massive amounts of money behind them, his words are no more than an old mogul’s sad, empty cry for attention.

 

 

 

Glass-Steagel / Lobbying / Martin Column - 07/30/2012

Tell Mitt: Don't run campaign on drug money

Imagine if U.S. politicians took financial contributions skimmed from the ill-gotten gains of bloody Mexican drug cartels and terrorists.

Imagine further that those who profited off the drug gangs used their murder-tinged cash to lobby the U.S. Congress.

You don’t have to strain yourself, this is not some sordid fantasy concocted by Hollywood to horrify and entertain you. This is the reality created by Wall Street’s finest and our leading politicians.

The latest sorry chapter in Wall Street’s waltz with the drug-dealers is laid out in a report by the Senate Permanent Committee on Investigations. Officials of the British too big to fail bank HSBC acknowledged that despite repeated warnings, they failed to stop drug and terror-tainted deposits from moving through the bank.

According to the report, HSBC, one of the world’s largest banks with a strong U.S. presence, “exposed the U.S. financial system to a wide array of money laundering, drug trafficking, and terrorist financing risks due to poor anti-money laundering controls.”

In 2007 and 2008, the Senate committee found, HSBC moved $7 billion in bulk cash from Mexican to its U.S. operations, even though authorities warned that the money was proceeds from drug sales.

HSBC was doing a thriving business with well-known cash exchange businesses used by the drug cartels known as casas de cambio, despite repeat warnings that they were fronts. Years after other banks had cut them off, HSBC continued to do business with the casas de cambio.

Mexican drug cartels weren’t the only ones taking advantage of HSBC’s lax controls. Middle East bankers with links to Al Queda also found HSBC a hospitable environment in which to conduct business.

You might think that the authorities would have roast HSBC officials on a spit.

Far from it: in 2008, regulators rewarded HSBC with $3.5 billion from taxpayers in a backdoor bailout, in payments funneled to the bank’s U.S. subsidiary through AIG.

Now HSBC’s bankers have been humiliated at a public hearing and the company’s shareholders may be forced to pay as much as $1 billion in fines.

Still, from the bankers’ perspectives, you would have to say money laundering and bailouts have been very, very good to them. Even after they pay the fine, they’d have more than enough to pay for the $125,000 they’ve given to congressional candidates so far this election cycle, and the $5,700 they’ve doled out to Mitt Romney. The left-over laundered money will also help defray the costs of the $900,000 worth of lobbying the bank has done this year.

I’m confident now that the full extent of HSBC’s misdeeds has become known, Romney and the other politicians will want to have nothing to do with this dirty money and will be clamoring to give it to charity.

But just in case it slips their minds in the rush of doing the people’s business, we should help them out. Mitt can provide a good example by being the first to get rid of the drug and terror money.

 

 

 

Campaign contributions / Martin Column / Mitt Romney / Too Big To Fail - 07/24/2012

Guide to congressional cosmetics

President Obama praised the STOCK Act when he signed it into law in April as a good first step to rid Congress of financial conflicts that undermine public confidence.

But it’s really no more than a fast makeup job to cover up the continuing blemishes on our democracy and give the president and members of Congress some talking points for the campaign trail.
The STOCK Act is supposed to prohibit legislators from profiting from the nonpublic information they get on the job. The STOCK Act also prohibits members of Congress from participating in initial public offerings unavailable to the public, and provides some additional public disclosure of congressional stock trading.
But we already know that members of Congress do better than civilians when they invest in the stock market. According to a 2011 study, investment portfolios of members of the House beat the market by about 6 percent annually, mimicking the performance of the stock portfolios of their Senate colleagues.
As an example, the Washington Post reported, four congressmen sitting on a committee investigating deceptive billing practices by video game makers sold their stock in the country’s biggest video game maker, GameStop, one of the companies under investigation.
One of the most egregious examples is Sen. Tom Coburn, the Republican Oklahoma senator who has made a name for himself preaching government austerity and self-righteously criticizing both parties for not having the courage to make the cuts needed to reduce the debt.
But austerity and sacrifice were apparently not on Sen. Coburn’s mind when he bought $25,000 in bonds in a genetic technology company at the same time he released a hold on legislation that the company supported. A hold is an informal Senate practice by which a senator can stall a piece of legislation. Coburn, meanwhile, cast one of the few votes against the STOCK Act, dismissing it as nothing more than a stunt.
One clue to just how innocuous the STOCK Act is: it was opposed by only two votes in the House and three in the Senate. This confirms my theory that whenever you see much ballyhooed-bipartisanship at work, you can be sure that members of Congress are either doing the bidding of the 1 percent, or covering their own butts.
The bottom line is that while members of Congress pass laws that prohibit other government officials from presiding over companies and industries in which they have a financial interest, Congress effectively exempts itself from such broad restrictions.
Writing on Yahoo Finance, Ron DeLegge outlines the STOCK Act’s major flaws and omissions: it still allows the sleazy, little-known practice of members selling “political intelligence” to lobbyists as well as continuing to allow members of Congress to own stock in industries over which they can exert influence.
The STOCK Act reminds us, when it comes to Congress, we shouldn’t be distracted by lame cover-ups or blather about bipartisanship, we should follow the money.
And we shouldn’t forget: it’s not their money.
It’s our money.

Bipartisanship / Congress / Martin Column / President Barack Obama - 07/06/2012

Bankers' gambles – now with a bailout guaranteed

After the 2008 banks bailout, we were promised that financial reform was going to prevent future bailouts.

Never again.

But as we approach the fourth anniversary of the financial collapse, we’re learning just how hollow those promises were.

The most recent example stems from reports that regulators have secretly designated derivatives clearinghouses too big to fail in a financial emergency.

That means that in a crisis, such clearinghouses, in which risky credit default swaps are traded, would be bailed out at taxpayer expense through secret access to cheap money at the Federal Reserve’s credit window.

That’s where the big banks and the rest of corporate America lined after the 2008 to borrow trillions at low interest – with no strings attached.

The Fed didn’t require the banks to share that low interest with consumers or homeowners. The Fed didn’t require that banks make some attempt to fix the foreclosure mess. The Fed didn’t require corporations hire the unemployed or lower outrageous CEO pay.

The Fed just shoveled out the cheap loans.

Now the Fed is planning to extend that generosity, as a matter of policy, to derivative clearinghouses – which puts taxpayers directly on the hook for Wall Street’s risky gambles, like the ones that recently cost J.P. Morgan Chase $2 billion.

While those trades didn’t threaten to sink the economy, it was the unraveling of those kinds of complex gambles that tanked the economy in 2008.

Nobody knows for sure how large the derivatives market is, but the estimates are truly mind-boggling. One derivatives expert estimates that there were $1.2 quadrillion in derivatives last year – 20 times the size of the world’s economy.

While requiring these derivatives to be traded on clearinghouses is supposed to increase transparency, that assumes regulators are aggressive, diligent and understand the trades.

But signaling that these derivatives should be eligible for a bailout is nothing short of insane, at least from the taxpayers’ perspective. From the bankers’ perspective, it’s a pretty good deal, and a reassuring indication that nothing much has changed since the financial crisis: the regulators are still deep in the bankers’ pocket.

Meanwhile, the real reforms that might have a shot at actually fixing the problems and protecting our economy from the big bankers’ addiction to risk get little or no consideration in what passes for political debate.

The best step we could take is to re-impose the Depression-era   Glass-Steagall Act, which creates walls between safe, vanilla, and consumer banking (which have traditionally been federally guaranteed, and riskier investment banking and derivatives trading But the bankers oppose Glass-Steagall, and for the present, they remain in control of both political parties and the regulators’ financial policies.

Federal Reserve / Glass-Steagel / Martin Column - 06/26/2012

That incredible shrinking foreclosure settlement

I checked in with Citibank the other day to see how they were doing on their promise to reduce principal on loans for qualified underwater borrowers.

The bank had made that promise as part of a highly touted national settlement of foreclosure fraud charges with state attorneys general back in February.

One thing the bank did not agree to, apparently, was any sense of urgency.

A bank representative told me they had taken a couple of months to get set up and were now in the process of reviewing their borrowers’ files.

He said he thought they would be done by mid-August.

One thing we know for certain: without a tough independent monitor to track what the banks are doing, and not doing, they’ll take their time to produce little help for troubled borrowers.

We know that from the banks’ past poor performance in the administration’s various foreclosure aid programs.

But now state politicians are threatening to grab the cash that banks paid as part of the settlement – money that was supposed to be used to pay monitors to oversee the banks’ compliance with the settlement, along with hiring more housing counselors that could guide homeowners to assistance where it was available and providing legal advice.

At issue is the relatively small amount of cash penalties the banks actually had to turn over in the $25 billion settlement– about $5 billion– with half of that supposed to go to state attorneys general for new foreclosure assistance.

Another $20 billion consists of a dubious and highly complex system of credits given to the banks for taking actions to help homeowners, some of which they were already supposed to be doing.

The national mortgage settlement has always been mainly a PR stunt for the state attorneys general and the Obama administration, to try to make up for their shameful collective failures to protect homeowners from the bankers’ continuing fraud and sloppiness in the foreclosure process, or to hold bankers accountable.

The investigative outfit Pro Publica delved into what they called the “billion-dollar bait and switch,” with states planning to divert $974 million from the settlement to their general funds to cover serious budge deficits arising, ironically, from the Great Recession, which was caused by the bankers’ out of control speculation.

Among those that are looting money that was supposed to be targeted at helping those facing foreclosure are states that have been particularly hard hit by foreclosures, including California and Arizona. Those states got more money from the settlement to compensate for their residents’ victimization by the biggest banks in the foreclosure process.

In California, Governor Jerry Brown now intends to use the state’s $411 million settlement proceeds to help plug a severe budget gap, in particular to pay for existing housing programs, but no new foreclosure assistance initiatives.

You would think diverting the proceeds of a legal settlement would be illegal. But apparently states have the power to raid the settlement funds, having done so in 2003 with fancy financing schemes to get state officials’ hands on funds that were supposed to be targeted for health care costs from a 1998 settlement with tobacco companies, the San Francisco Chronicle reported.

State budget problems brought on by the 2008 financial collapse are enormous, but no more compelling than the continuing failure of our elected officials to grapple with the foreclosure crisis. That failure is now underscored by the hollow ring of the state AGs’ promises, and compounded by governors’ betrayal of  those promises.

 

 

California Attorney General Kamala Harris / Foreclosures / Martin Column - 06/01/2012

Biggest Loser, Too Big to Fail Edition

Welcome to this week’s episode of the Biggest Loser, Too Big to Fail Bank edition!

Each week we tally up the bad behavior of a banker who took taxpayers’ money in the bailout, only to engage in more obnoxious antics calculated to hurt the very taxpayers whose generosity has guaranteed the bankers’ gazillion dollar annual compensation.

This week we’re featuring a surprise guest, a banker who, in the past, the press fawned over as one of the savviest Wall Street titans, who managed to actually enhance his reputation during and after the 2008 financial collapse.

Please welcome JPMorgan Chase CEO Jamie Dimon, whose bank is the biggest in the nation, with total assets of $2.3 trillion.

He’s not one of those CEOs who presides over a big bank that everybody assumes is a zombie, like Bank of America and Citibank.

No, Dimon and his bank actually made money. He was presumed to know what he was doing. Especially by President Obama, who welcomed him to the White House on numerous occasions.

And Dimon has distinguished himself as the most vocal opponent of bank regulation, which Dimon says could be bad, not just for him, but for America.

Dimon is tops in the public relations game – his reputation wasn’t tarnished even after federal authorities found that his bank was improperly foreclosing on the nation’s veterans and JPMorgan Chase had to pay $45 million two months ago to settle a lawsuit.

Dimon was still invited to the White House and fancy seminars where the attendees hung on his every word.

That was before Dimon admitted last week that one of his top traders had lost $2 billion on trades that were supposed to hedge against other risky bets that the banks’ traders were taking.

These were bets that were supposed to reduce the bank’s risks, not cost it $2 billion.

It’s just the latest evidence that not even the smartest banker, not even Jamie Dimon, who just a couple of weeks ago had dismissed warnings about the bets as a “tempest in a teapot,” has a clue as to how their own firm’s complicated financial engineering works.

Admittedly, the competition for too big to fail biggest loser is tough because the bailed-out bankers’ behavior has been so bad.

Determining the biggest winners is easy, however: the politicians and lobbyists who have collected millions in campaign contributions and lobbying fees from bankers who have successfully crippled efforts at real reform. JP Morgan Chase’s latest losses will no doubt reinvigorate the debate over financial reform, causing the banks to shovel yet more money to the politicians and lobbyists in their effort to make sure that the only true reform – breaking up the big banks, so they’re not too big to fail  – never happens.

Beyond the reality TV theatrics of the political debate, we know who the real losers are – the taxpayers who foot the bill and citizens who are shut out of political debate by the corporations who dominate it with their money.

President Obama and his administration like to brag that taxpayers are making a profit from big chunks of the bailout. But that PR covers up the real story on the bailout: the federal government spent trillions to make the too big to fail banks like JP Morgan Chase bigger and more powerful, not to rein them in.

As Charlie Geist, a Wall Street historian and professor at Manhattan College told Politico, “The guy in the street in 2008 and 2009 was worried about his or her deposits, and now it’s clear they should still be worried.”

 

 

 

 

 

 

 

Derivatives / Martin Column / Too Big To Fail - 05/16/2012

Your tax dollars at work fighting unemployment – in the Philippines

If you’re among the millions in the U.S. who are unemployed and need retraining for new work, you are, increasingly, out of luck.

But if you’re a major financial institution that wants to outsource jobs to the Philippines, until a couple of days ago, the Obama administration was spending about $36 million a year to improve the English language skills of your future workers.

Among those taking advantage of outsourced labor in the Philippines, in call centers and IT, are  a couple too-big-to-fail, bailed-out financial institutions, Citibank and JPMorgan Chase.

Last week, after a couple of congressmen got riled up about the outsourcing training, the U.S. Agency for International Development said it would “suspend” the program “pending further review of the facts.”

The program was set to expire at the end of the year in any case.

But the fact is that USAID has been offering training for future outsourcing workers for several years, from South Asia to Armenia, Information Week reported. In the Philippines, the U.S. contended it wasn’t just spending the money to subsidize Citibank and other would-be outsourcers; the government said it was actually using your tax dollars as part of an antiterrorism effort in a section of the country with a Muslim minority unhappy with its treatment by the central government.

According to the USAID scheme,  the would-be terrorists would be a lot happier once they learned a little English and were able to land a job in a Citibank call center.

Meanwhile the U.S. has been suffering through a staggering economic downturn and the highest unemployment since the Great Depression, as President Obama and other politicians promise to stem outsourcing and bring jobs back to this country.

Since 2007, 500,000 call center jobs have been outsourced from the United States, according to Rep. Tim Bishop, a New York Democrat, and Rep. Walter Jones, a North Carolina Republican, the congressmen who demanded a halt to the program. In 2010, USAID had suspended a similar $10 million initiative to train Sri Lankan workers after Bishop and Jones complained about it.

Despite high unemployment, job training programs and community colleges in the U.S., which also offer the opportunity for workers to learn new skills, have had to go begging. As the New York Times reported last week, “work force centers that assist the unemployed are being asked to do more with less as federal funds dwindle for job training and related services.”

Federal money available for retraining workers is 18 percent lower, in today’s dollars, than it was in 2006, even though there are 6 million more people unemployed, the Times reported.

While the debate over cuts to unemployment benefits has received wide attention, the cuts to the retraining programs have gone largely unnoticed.

While the president has proposed a $2.8 billion increase for job training over the next 10 years, Republicans’ budget proposals have suggested that federal funds for job training should be cut even further.

The USAID program is obviously at odds with the Obama administration’s stated intent to discourage outsourcing. Given all the other benefits  and bailouts that this administration has already showered on Citibank and AIG, would it be too much to demand that the administration stop using our tax dollars to pay for these companies’ job training when they want to move more employment from the U.S.?

 

AIG / Citibank / Jobs crisis / Martin Column / Outsourcing - 04/25/2012

How Mitt Could Win

Why doesn’t Republican presidential contender Mitt Romney’s free-market gospel include a ringing call to break up the too big to fail banks?

Over at the conservative American Enterprise Institute blog, James Pethokoukis suggests Romney could benefit if he did just that.

After all, this is no longer a position favored only by Occupy Wall Street.

All kinds of establishment figures now acknowledge that breaking up the big banks is needed to heal our financial system, and that as long as we don’t, taxpayers could be on the hook for another bailout.

The most recent public official to reach this conclusion is none other than Richard Fisher, the president of the Dallas branch of the Federal Reserve, who last week issued a report in which he concluded: “The too big to fail institutions that amplified and prolonged the recent financial crisis remain a hindrance to full economic recovery and to the very ideal of American capitalism.”

This should be catnip for Romney, who professes to be all about ending government interference in the free market.

What the Dallas Fed’s report makes clear is that the Dodd-Frank financial reform legislation and the policies of the Obama administration haven’t lessened the power of the too big to fail banks, or made them healthier – it’s helped them gain market share while doing little to force them to reduce the same risky business practices that led to the 2008 financial collapse.

While Dodd-Frank theoretically sets up a process to deal with too big to fail institutions when they get in trouble, our politicians and regulators by their actions have signaled to the big banks that they don’t have the guts to break them up or get them to change how they do business.

For a politician in Romney’s position, staking out a position against the big banks would give him the high ground against the president, who claims to be reining in the banks’ bad behavior but isn’t.

It would help him with the Tea Party activists, who rail against the bank bailouts and crony capitalism. Promising tough action on the banks would also help him with independents who understandably don’t trust all the political double-talk they hear.

But Romney doesn’t have the  guts to do it. His free market rhetoric stops right at the bankers’ door, where he must appear meekly with hat in hand, asking for donations, just like the president of the United States, from bankers who continue to prosper only because of the trillions of dollars worth of favors done for them by politicians using taxpayers’ money.

The top 5 donors to Romney’s campaign are people associated with bailed out banks, according to the Center For Responsive Politics. The president raised an unprecedented $15.8 million from the financial sector in 2008, while his administration was in the midst of bailing them out. Though Romney has the edge in Wall Street fundraising now, the president has vowed to fight back ­– including a pledge not to demonize Wall Street.

The big media and the politicians all talk about these policies as though they’re great intellectual debates about clashing views of the role of government. But when it comes to the too big to fail banks, all Romney’s free market preaching is just so much hot air.

This is the dishonest heart of our politics. What neither Romney nor the president, nor apparently the American Enterprise Institute, can acknowledge is that it’s all about the money.

 

Martin Column / Mitt Romney / President Barack Obama / Too Big To Fail - 03/30/2012