Another thing, should bother you too
As the Stock Market hits 10,000 again everybody is all excited. “America is back!” What bothers me about this is if that’s the case then where are the jobs for the average American worker. Here again we have a few people being paid Millions of dollars and a Stock Market that is going through the roof and yet the average worker is losing everything they worked so hard to obtain. These people on Wall Street are doing exactly the same thing they did to bring this country and even the world to its knees. Nothing has changed; there are no new regulations to curb these kinds of transactions. Now although this bothers me, it isn’t what bothers me the most, because there is supposed to be Congressional action the rectify this, let’s hope that’s true. Because right now AIG has actually paid $168,000,000in bonuses to executives and traders in the company’s Financial Products Division that had run the “credit default swap” program. Does it make any sense to reward people whose actions helped pt millions of Americans out of work and caused the worst economic downturn since the Great Depression? How about J.P. Morgan Chase setting aside $2.78 Billion in compensation for its investment bankers for the 3rd Quarter, a 28% increase over the same period last year?
What does really bother me is the tax structure that also rewards these same people and victimizes the working people. This economic policy that some call Reaganomics or trickledown economics, that is supposed to create jobs. Isn’t that the argument? Allow the rich to have more money, never mind the fact that it has created the greatest redistribution of wealth in history, and they will invest that money and that will create jobs.
They are not creating jobs. They do not invest in America. They invest in money and their offshore accounts. They have not put one person back to work. They have not started one business that would put people to work. They have not started construction of one highway or bridge. If this economic policy actually worked then why is it that these people didn’t bail out the auto industry, and save all those jobs? If this policy actually worked then why do we continue to have more and more people unemployed? We’re talking record profits, and a tax rate that is designed to make a few people rich and keep the working person at the poverty level, and yet the unemployment count continues to climb.
It seems obvious to me, this policy does not work! We need to roll back the Reagan tax cuts, quit running our government on deficit spending and increasing the national debt to astronomical figures. That means we have to bring in more revenue. And the only we have to do that is through taxes, and that means we have to change the tax code and put it back to the way it was that worked for over 50 years without a single recession. We need to start making things in the United States once again, and easing the burden on the working people. If you don’t make anything you don’t have anything. We need to change our trade policies, and instead of “free” trade we need to have fair trade. We need to invest in America and Americans. And I’ll tell you one thing; Wall Street does not put people to work!
We need to eliminate the expenses on small business and even the larger corporations by eliminating the cost they pay for health care for their employees, by having a nation health care program. This would make us more competitive on the world market.
We need to invest in the education of our youth and our returning service people by cutting the cost of education. We need to pay the workers a good living wage, one that allows them to own a home take a vacation, buy refrigerators that are made in America. Because we know that the more money a worker makes the more he spends and the more he spends the more demand there is for products, which means more jobs. How hard is that to understand?
We need to give incentives to companies that are hiring American workers and remaining here in the United States. The way it is now we reward corporations to move overseas. How smart is that? These corporations set up an office in the Cayman Islands and then they pay absolutely zero in taxes. One third of all American corporations do not pay any tax to this government at all. Thirty years ago a third to a half of the revenue in taxes came from industry, that isn’t the case today.
Do you wonder why we are broke and continue to go farther and farther in debt? Think about it.
Charlie Lockett
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Did you read the VF article
These banks pay their executives large bonuses but
still hold back credit on qualified customers. It doesn't make any sense.
I am recently back in the middle of the business sector
Deceit and flat out lying is rampant today. It did not used to be that way. I personally verify everything, as you cannot trust the manipulation that goes on in even the most fundamental of transactions.
People do not walk the talk nowadays. It's sad to see.
No I haven’t seen the
No I haven’t seen the Vanity Fair article you are talking about. Don’t know how I missed it. They’re pretty informative and I do read quite a lot of what their writers do. They are not afraid to tell it like it is generally, and they actually get a lot of “scoops”.
When you realize that we gave AIG something like $180 Billion and they are doing the same things and paying the same people that almost crashed the world monetary system, and yet there are still those that want to continue with the same policies that brought us to this point.
It’s time to change direction and start taking care of the people first.
Charlie Lockett
I guess we need to
bring the article to the hive.
It was a stunning expose
LSK...Maybe this is the Article you are referring to...
The Man Who Crashed the World
Almost a year after A.I.G.’s collapse, despite a tidal wave of outrage, there still has been no clear explanation of what toppled the insurance giant. The author decides to ask the people involved—the silent, shell-shocked traders of the A.I.G. Financial Products unit—and finds that the story may have a villain, whose reign of terror over 400 employees brought the company, the U.S. economy, and the global financial system to their knees.
Six months ago, I received an odd phone call from a man named Jake DeSantis at A.I.G. Financial Products—the infamous unit of the doomed insurance company, staffed by expensively educated, highly paid traders, whose financial ineptitude is widely suspected of costing the U.S. taxpayer $182.5 billion and counting. At the time A.I.G. F.P.’s losses were reported, it became known that a handful of traders in this curious unit had sold trillions of dollars of credit-default swaps (essentially unregulated insurance policies) on piles of U.S. subprime mortgages, but its employees hadn’t yet become the leading examples of Wall Street greed. And so this was before Jake DeSantis and his colleagues found themselves suburban-Connecticut outcasts, before their first death threats, before the House of Representatives passed a bill because of them (taxing 90 percent of their large bonuses), before New York attorney general Andrew Cuomo announced he was going after their paychecks, and before Iowa senator Charles Grassley said that A.I.G.’s leaders should follow the Japanese example and “either do one of two things, resign or go commit suicide.”
DeSantis turned out to be a friend of a friend. He’d called because he didn’t know anyone else “in the media.” As a type he was instantly recognizable: a “quant,” a numbers guy who was allowed to take financial risks because of his superior math skills, but who had no taste for company politics or public exposure. He’d grown up in the Midwest, the son of schoolteachers, and discovered Wall Street as a scholarship student at M.I.T. The previous seven years he’d spent running A.I.G. F.P.’s profitable stock-market-related trades. He wasn’t looking for me to write about him or about A.I.G. F.P. He just wanted to know why the public perception of what had happened inside his unit, and the larger company, was so different from the private perception of the people inside it, who actually knew what had happened. The idea that the employees of A.I.G. F.P. had conspired to maximize their short-term gains at the company’s longer-term expense, for instance. He and the other traders had been required to defer about half of their pay for years, and intertwine their long-term interests with their firm’s. The people who lost the most when A.I.G. F.P. went down were the employees of A.I.G. F.P.: DeSantis himself had just watched more than half of what he’d made over the previous nine years vanish. The incentive system at A.I.G. F.P., created in the mid-1990s, wasn’t the short-term-oriented racket that helped doom the Wall Street investment bank as we knew it. It was the very system that U.S. Treasury secretary Timothy Geithner, among others, had proposed as a solution to the problem of Wall Street pay.
Even more oddly, the public explanation of A.I.G.’s failure focused on the credit-default swaps sold by traders at A.I.G. F.P., when A.I.G.’s problems were clearly broader. There was the mortgage-insurance unit in North Carolina, United Guaranty, that had taken on all sorts of silly risks in the past two years, lost several billion dollars, and replaced their C.E.O. There were the fund managers at A.I.G., the parent company, who had blown nearly $50 billion on trades in subprime mortgages—that is, they had lost more than A.I.G. F.P., whose losses stood around $45 billion. And there was a pattern: all of this stuff had happened since 2005, after an accounting scandal forced C.E.O. Maurice “Hank” Greenberg to resign. Greenberg, who had headed A.I.G. since 1968, was a bullying, omnipotent ruler—one of those bosses who did not so much build a company as tailor it to his character and render it incapable of being run by anyone else. After he was forced out, Greenberg said, “The new management wanted to prove that they could continue to grow without former management” and so turned a blind eye to all sorts of risks. So how come most of the senior management at A.I.G. was left in place by the U.S. Treasury after the bailout? Why were officials, both public and private, so intent on leading others to believe all the losses at A.I.G. had been caused by a few dozen traders in this fringe unit in London and Connecticut?
I had no idea, was busy doing other things, and had no special interest in Jake DeSantis’s predicament. I listened politely, made my excuses—and went back to whatever it was I’d been doing. But then, on March 19, the new C.E.O. of A.I.G., Edward Liddy, went to Washington to testify. The story broke—or, rather, rebroke, as it had been reported two weeks earlier, without stirring much notice—that A.I.G. F.P. had just shelled out $450 million in bonuses to the 400 employees of A.I.G. F.P., including to Jake DeSantis. It must have been an otherwise slow news day because all hell broke loose, in a way it hadn’t before and hasn’t since in this financial crisis. The perception was that the very same people who had made these insane, greed-driven decisions that might cost the U.S. taxpayer $182.5 billion were still paying themselves big bucks! An exchange between C.E.O. Liddy and Florida congressman Alan Grayson captured the spirit of that moment:
grayson: Mr. Liddy, you said before that there’s 20 or 25 people who were involved in the credit default business. What are their names, please?
liddy: I don’t have their names at my disposal, sir. grayson: Well, I’m sure you remember a few of the names. I mean, they did cause your company to crash.
liddy: You know, I’ve been at the company, as you know, for six months. I don’t know all the people that were in AIG F.P., and many of them are gone.
grayson: Well, there or gone, it doesn’t really matter. I want to know who they are. Names, please.…
liddy: If it’s possible to provide you the names, we will. We will cooperate with you.
grayson: That’s good, but I want to know the names that you know right now.
liddy: I don’t know them, sir.
grayson: Not a single one. You’re talking about a group, a small group of people who caused your company to lose $100 billion, as you sit here today, you can’t give me one single name.
liddy: The single name I would give you is Joseph Cassano, who ran …
grayson: That’s a good start. You already gave that name. Give me another name.
liddy: I just don’t know them. I do not know those names. I don’t have them all at my command.
grayson: Well, how can you propose to solve the problems of the company that you’re now running if you don’t know the names of the people who caused that problem? … I would expect you’d at least know more than one name. How about two names? Give us one more name.
liddy: I’m just not going to do that, sir, because that will provide—that’ll be the—that could be a list of people that we could do—individuals who want to do damage to them could do that. It’s just not …
grayson: Well, listen, these same people could now be working right now today at Citibank. Is it more important to protect them, the ones who caused the $100 billion loss, or protect us? Which is more important to you right now?
For a brief moment you had a glimpse of how harshly financial people might be treated if Wall Street ever lost its political influence. Just days before, Larry Summers had gone on the morning talk shows to explain that a contract is a contract and the government couldn’t just go in and void it and take back A.I.G.’s paychecks, but that “every legal step possible to limit those bonuses is being taken by Secretary Geithner and by the Federal Reserve System.” Then Obama himself went out of his way to denounce the greed at A.I.G. F.P. and say he was looking for a way to get the bonus money back—and even that failed to slake the public anger. “On A.I.G.,” a journalist asked Obama at a press conference, “why did you wait—why did you wait days to come out and express that outrage? It seems like the action is coming out of New York and the attorney general’s office. It took you days to come public with Secretary Geithner and say, Look, we’re outraged. Why did it take so long?”
“It took us a couple of days because I like to know what I’m talking about before I speak,” Obama said testily. “All right?”
It’s unlikely that he actually did know what he was talking about, except in the broadest outlines. Nor, for that matter, did the people who had engineered the bailout. How could they? At no point did anyone from the U.S. Treasury or the U.S. Congress, or any of the various New York State authorities that had gotten involved, call them up, much less visit A.I.G. F.P.—as, say, someone might who was genuinely curious to know what, exactly, had happened there. Not even A.I.G. C.E.O. Ed Liddy had bothered to make the drive from Manhattan to Wilton, Connecticut, where many of the offending trades had been done, and most of the offending bonuses were being paid, to ask questions of the people still on the scene—people who could have told him a great deal about what had happened and why. Everyone seemed to be operating on whatever they read in the newspapers—and the people inside A.I.G. F.P., who had the best view of the action, did not appear to be talking to reporters. Depending on which account you read, you thought they had lost $40 billion, or $100 billion, or $152 billion. They had done this by selling credit-default swaps on subprime-mortgage bonds—which is to say they had insured Goldman Sachs, Deutsche Bank, Merrill Lynch, and the rest against Americans with weak credit histories defaulting on their mortgages. But why? Apparently, because they were greedy: the premiums they took in from the insurance allowed them to pay themselves big bonuses, which they’d grown so accustomed to that they now were reduced to stealing from the U.S. taxpayer. And that, it seemed, was that.
There's much much more to read.
See the entire article here...
http://www.vanityfair.com/politics/features/2009/08/aig200908
that's it! Thank you, TS!
You're very welcome and THANK YOU for letting us know
about this article. This was only one page out of five on Vanity Fairs site. It really details what went on prior to the failure of the world's economy. The article almost deserves its own thread.
We know that the same
We know that the same situation exists and that basically the same things are going on, with the same people that were involved before. The thing is we are trying to impose new regulations and these same people that took our money and ran while pay a minimum tax are using that same money we gave them in the bail out to lobby and advertise in order to stop the regulations.
The thing that I was trying to get across was that if Reaganomics worked and by giving the wealthy all those tremendous tax cuts they would invest that money and that would produce jobs. This is a prime example of how it doesn’t work and it never did. Otherwise we would not have an unemployment rate that is growing by the hour.
That means it’s time to roll back the Reagan tax cuts. Just rolling back the Bush tax cuts would more than pay for any of the revisions in the health care reform bills. Just think how rolling back the Reagan tax cuts would help our economy.
Charlie Lockett
Right Charlie
It is time to roll back both Reagan and Bush tax cuts.
But you have to read the article
Where are the defenders of Reaganomics
What bothers me and I think should bother every other person in the United States, is that our tax structure is set up to promote the aristocracy at the expense of the people. One of the main things our founding fathers fought against, that was one of the things that really ignited the Revolution. This nation was established to be a nation of the People. Where the people were the ones in charge of the Government, the laws were made for the people and those laws have been misaligned to the point where the People no longer have a voice, where the People are the second class citizens and no longer have a voice in Government.
Last November the People spoke, and they said they wanted change. They want to see a change in the way our Government does business, in the way we have allowed some corporations become too big to fail. They wanted change in the way our health insurance is managed and how these insurance companies can and do have complete control over whether we live or die. They wanted to see change in the way banks and lending institutions did business, unregulated, greedy and without conscience. They wanted change in the way the economy is handled, the promise was to build from the bottom up instead of the way we are doing it now from the up to the higher up.
Where are all the Reagan Conservatives defending the way we are doing business? “Give the wealthy more money and they will invest it and that will create jobs.” What we are seeing today, right now is exactly what happens when up use this theory for the economy. It’s what happened in the ‘20’s and in the 1870’s the only thing that have changed is that there are still some that have been brain washed into believing that this really works.
How can anyone defend these economics at this point? You can see with your own eyes that for the past thirty years we have been headed down this road. This economic system creates a bubble and pretty soon that bubble is going to burst. That’s why we need to go back to regulating the corporations and lending institutions, and putting back into effect the progressive tax policy, that gives the People the opportunity to live better and be paid a living age for the work they do, to be able to dream of and achieve a better life for their children.
Where the jobs these people are are suppose to create? That’s the argument I hear all the time from people that think our tax structure is working and it would hurt the economy to raise the taxes back to the level they were before Reagan, when we had 50 years of sustained growth and no recessions. Where our jobs were paying a living wage, where this nation was actually producing a product. We need to go back to where people were not filing bankruptcy because of medical bills. Back to the time where our Government was operating on deficit spending and we were not going so far into debt, as a nation, that we are on the verge of becoming a third world country.
Charlie Lockett
LSK
I did read the article and I also listened to this guys’ testimony before Congress. This was his idea and all the ones in charge went for it including Greenspan. Everyone knew when they started doing this that it was bound to fail, but they went ahead anyway. You are right about deregulation and that opening the door for this sort of scam. You are also right in saying that it isn’t the fault of just one party, both were instrumental in the deregulation process, going all the way back to Carter.
That isn’t the point of this post. What I wanted to point out here was the fact that giving the wealthy 90% of the tax cuts does not create jobs. That’s the argument for those tax cuts, and this is an example of how this is a fallacy and it does not work. If it worked then we would not have the unemployment problem we now have. The recession didn’t really affect these people, they have continued on the same as before and not a one of those people making millions of dollars a year, in bonuses alone, have not created one job for the American worker.
There are those that want to cut the taxes even more. Just exactly what is that going to do except make these same people richer and the worker poorer. It will reduce the revenue going to the Government even more and put this nation even farther in debt.
Charlie Lockett
well, it depends
LSK
The graduated income tax worked in this nation since 1913, when it was first instituted, and we have that same system today. It’s the only fair way to tax income. During the most prosperous time in U.S. history was from 1945 –the late ‘70s and the marginal tax rate never got below 70%. To say it doesn’t work isn’t really true, because it has and does work and it works for the betterment of the working class. What we have today is just about a flat tax, and flat taxes are regressive, just as sales taxes are, in that they penalize the lower incomes.
Say for instance that you have a flat tax of 10%, well 10% of $60,000 is $6,000 that leaves $54,000, and this is not including the other taxes such as Social Security. The other guy is making $2,000,000 and you take 10% that is $200,000 which leaves him an adjusted income of $1,800,000. There is a major difference between the two as far as living expenses are concerned. $6,000 is a lot more to one than $200,000 is to the other. You add on to that the $5500 the man making $60,000 and he’s down to $49,000, now if he has a insurance deductable of $2,000 he’s down to $47,000. It keeps going and going and as you can see it is a very regressive tax. Mr. Forbes likes it but then he’s in that upper tax bracket. You also should realize the flat tax would have to be somewhere around 20-25% not 10%.
As far as moving their money off shore they are doing that now. Corporations are renting offices off shore so as not to pay taxes, these people making all this money and paying the same rate as you and I up to $250,000 and then they pay 35% before deductions, and their deductions are much more than what you and I get. If their money is coming from an annuity the maximum they are paying is 15%. One third of all American corporations do not pay one dime of taxes.
Clinton raised the marginal rate by 3% and he wound up with a surplus in his budget, which Bush promptly gave as tax cuts, 90% of which went to the top 2% of the pelple.
Charlie Lockett
except that
LSK
What you say looks good on paper, just as Trickledown Economics, but in reality it too is regressive. A graduated tax does not punish anyone for making more money, what it does is spread the responsibility of the support of the nation to those that require more of the “Commons”. Meaning things such as courts, highways, bridges, police, fire departments, etc. etc. and the wealthy use more of the commons than working people do, especially the court system and police protection.
Of course people complained about the graduated tax and the progressive rates, they are always going to complain about paying too much tax, that does not, however, mean that it does not work. It did work and every time we varied from it we found ourselves in either a recession or a depression, while it was operating and we had a meaningful marginal rate we had a thriving economy.
Our nation was built on the principal of every person being equal, most wanted to free the slaves but in order to get the Southern states to sign there had to be some compromise. Originally the founding fathers for the most part wanted to tax businesses and not have a personal income tax. The idea was to not have an elite society, but to have one of the common man, and to build the nation to benefit the common man. They wanted to eliminate the elite and aristocrats. What we are doing now and we did the same thing in the 1920’s is to allow, through our tax structure, to build an aristocratic elite class that have the power in this nation, power that was originally designed to be in the common man. We have created a very small group (1%) to accumulate 98% of the wealth of this nation, and even though people do not want to admit it, this has been at the expense of the working class. Less than 5% of the population has more wealth than the other 95% combined, it was not that way when we were actually operating with a meaningful marginal tax rate. Thirty years ago 90% of the wealth was concentrated in the working class, people like you and me. It’s what brought this nation out of the depression and built the greatest economy the world had ever seen, and it was done with a graduated income tax, and during that period the marginal rate never went below 70%, most of the time it was above 70%. There were times it was as high as 93%.
I will address the war part of what you said, although I believe that if we had not deregulated we would not have that problem. During WWII there was a thing called the Truman Commission, this investigated and made it illegal to make a profit off of the war. That would certainly change the status of corporations such as Halliburton and Black Water. Reagan started s part of his tax structure to reward companies for moving their manufacturing overseas, they actually have a tremendous tax break for doing this. We have all these companies raking in Billions of dollars and not paying one cent in taxes on that money.
The tax structure and corporate regulations we had prior to Ronald Reagan work for fifty years, and built the greatest middle class ever. It was that system that sustained us through all the recessions since Reagan. It’s that system that brought us all the technology and the wealth that we enjoyed for fifty years. Something we may never get back. For fifty years we had a middle class that was the envy of the world, that is no longer the case. It was that tax structure that made us the richest nation in the world, because the average person had wealth, not so today.
Charlie Lockett
well, here is the problem
You make my argument for me.
You make my argument for me. Wealth, as I was meaning it to be is the wealth of the nation, not individual wealth. It was the working people that had the cumulative wealth of this nation, not that each person was wealthy. At that time the average employer earned around 40 times what his employees earned, today the ratio is between 400-500 times what his employees earn. The reason for this is because of the tax structure we have today. People in general want to work and earn a living, and in reality they also do not mind paying their taxes, although they may complain about it. What happened with the tax cuts was that the marginal tax was cut in half, and what that did, instead did instead of creating jobs, created a redistribution of wealth from the working class of the United States, about 60% of the people, to the top 2% of the population. Where a person in the higher incomes thirty years ago, rather than give that money in taxes would put that money back into his business, today they are busy making the stocks worth more, and not the company. That’s why Wall Street is so important, it’s not that they make anything, because they don’t, they trade stocks. If the stocks were an indication ov the value ofr the company then we would have people working. During the Reagan years I could not understand why the Stock Market rose as the unemployment rate rose. It’s because the company was paying out less in wages and therefore paying more in dividends.
As for using the commons, just look at the highways today. Everything that is shipped around this nation goes by truck. Almost all of that material is being shipped by some corporation. If you get robbed, there are maybe two detectives that investigate the crime, but if Bill Gates got robbed every cop in King County, Seattle and Redmond would be involved in that case. As for the courts, if they did not use the courts more than regular people they would not have law firms, or their own lawyers on retainer 24 hours a day. They are in continual litigation, and that means using the courts. As I have said many times before and I suppose I will say many more times as the subject comes up. These corporations move out of this country for several reasons, the cost of labor being one of them, Hersey can move to Mexico and get the labor for a fraction of the labor cost in Oak Dale. An added benefit is that they do not have to furnish health insurance to those people down there and they had to here, that’s a cost that has increased by 40% in the last 4 years. They also are given tax breaks for that move, and they can import their product back into the United States without paying a tariff, that in itself is quite an incentive. NAFTA, the bane of the American worker, thanks to Reagan, G. H. W. Bush and of course Bill Clinton who fast tracked it through Congress, How many jobs has that cost the working class in this country?
You’ll not get me to talk bad about unions, although they have their faults, without them we would never has raised the working class in this country out of poverty. Thousands fought and died for the rights of workers and for a living wage. Because of them the middle class became a force in the United States. We now have Safety laws to protect the worker, compensation for them when they are injured on the job. When Reagan was elected he started a war on organized labor that has not stopped to this day.
Even Warren Buffet, after taking a survey of the people working for him, said that they pay a higher percentage of their wages in taxes then he did. If you will look at my last blog you will see that one of the causes of the depression was that we had a concentration of wealth in a small minority of the people. We had basically the same as we have today. There are many other reasons, but they all are so similar to what we have today it’s almost scary. That isn’t something I pulled out of thin air it was a study done over several years of research. If we continue on this path with these tax cuts left in place we will wind up like 19th century England and that movie “A Christmas Carol”. We are well on our way as it is. Today wages are being cut in order to keep jobs, where will this end? That’s any ones guess, but we need to do something, and we need to do it now. And one of the things we must do is raise the marginal tax rate, and regulate the banks and lending institutions. We need to do something about the cost of health care to take the heavy load off of small businesses, and we need to do something about our trade policy.
I have written about this because of all the times I hear about giving the rich more tax cuts and that will create jobs, and as anyone with eyes can see this is not the case. If it were true we would not be losing jobs every day. As for Prop. 13, I was not in this state at that time so my knowledge of it is sketchy, but it has nothing to do with what we are talking about. It concerns the tax on real property here in California.
Charlie Lockett