2. Bailout Money Going to Offshore Tax Havens
Following Bailout Money to Tax Havens
CBS News
They're exotic and faraway places known to tourists for coral reefs and sandy beaches.
But to the business world they're known as tax havens, with strict bank secrecy and privacy laws, where U.S. companies can pay fewer taxes and help wealthy customers avoid taxes, too. From the Caribbean and Europe - to Panama. CBS News Investigative Correspondent Sharyl Attkisson reports.
And guess who's turned up in a new government report about tax havens?
Eleven giant recipients of your bailout tax dollars - American Express, AIG, Bank of America, Citigroup, General Motors, GMAC, Goldman Sachs, JP Morgan Chase, Merrill Lynch, Morgan Stanley, and Wells Fargo. Together they've collected more than $227 billion.
3. Northern Trust and Bank of America Enjoy Concerts, Dinners, Luxury Suites and Parties
Bailed-Out Bank Enjoys Concerts, Dinners, Parties
CNN, 2/25/09
(CNN) A bank that received $1.6 billion dollars of the government's bailout money sponsored what reports are calling a lavish series of events in Los Angeles, California, last weekend.
Northern Trust, based in Chicago, Illinois, spent an undisclosed amount of money sponsoring a Professional Golf Association tournament and associated client events, including concerts, dinners and parties, according to celebrity Web site TMZ.com.
The bank spent millions of dollars on the event, which included -- on top of the sponsorship costs of the Northern Trust Open tournament -- concerts by Sheryl Crow and Earth Wind & Fire, a private party at music venue House of Blues and gift bags from Tiffany & Co., the Web site said.
According to TMZ.com's report, employees and clients attending the tournament dined on seared salmon and petite Angus filet and stayed at some of Los Angeles' most elegant and expensive hotels.
4. Executives Getting Huge Bonuses
Bonuses Allowed By Stimulus Bill
CNN
WASHINGTON (CNN) - Democratic leaders scrambling to strip AIG executives of bonuses are having a hard time answering a key question: Why didn't Congress act to prevent the bonuses in the first place?
"There's always more we can do, and hindsight is 20/20," said Senate Majority Leader Harry Reid Tuesday.
But though some lawmakers did move to prevent bonuses in the stimulus bill last month, the final language actually makes an exception for pre-existing contracts, effectively exempting AIG.
Note: The February 2009 Stimulus Bill Was Passed By The Senate In Less Than 12 Hours
Four Fannie Mae execs to get big bonuses
CNN
Troubled mortgage giant Fannie Mae planned to pay four top executives retention bonuses ranging from $470,000 to $611,000, according to a February SEC filing.
Executive vice presidents Kenneth Bacon, David Hisey, Michael Williams and Thomas Lund will be receiving bonuses of close to half a million dollars each. Bacon supervises community development for the company, Hisey is its deputy chief financial officer, Williams is its COO and Lund oversees the single-family mortgage business.
By contrast, Fannie Mae CFO David Johnson received no bonus on top of his salary of $625,000, while CEO Herb Allison received no compensation or bonuses in 2008 or 2009.
5. Threat of Martial Law in America
Thousands of Troops Are Deployed on U.S. Streets
Ready to Carry Out "Crowd Control"
Naomi Wolf, 10/8/08
Background: the First Brigade of the Third Infantry Division, three to four thousand soldiers, has been deployed in the United States as of October 1. Their stated mission is the form of crowd control they practiced in Iraq, subduing "unruly individuals," and the management of a national emergency. I am in Seattle and heard from the brother of one of the soldiers that they are engaged in exercises now. Amy Goodman reported that an Army spokesperson confirmed that they will have access to lethal and non lethal crowd control technologies and tanks.
George Bush struck down Posse Comitatus, thus making it legal for military to patrol the U.S. He has also legally established that in the "War on Terror," the U.S. is at war around the globe and thus the whole world is a battlefield. Thus the U.S. is also a battlefield.
He also led change to the 1807 Insurrection Act to give him far broader powers in the event of a loosely defined "insurrection" or many other "conditions" he has the power to identify. The Constitution allows the suspension of habeas corpus -- habeas corpus prevents us from being seized by the state and held without trial -- in the event of an "insurrection." With his own army force now, his power to call a group of protesters or angry voters "insurgents" staging an "insurrection" is strengthened.
6. Fannie Mae and Freddie Mac's Accounting Scandals
In late 2004, a Congressional Hearing was called for by Congressman Baker (R-LA) to investigate possible illegal book keeping by Freddie Mac and Fannie Mae CEOs.
Franklin Raines to Pay $24.7 Million to Settle Fannie Mae Lawsuit
The Seattle Times, April 18th 2008
WASHINGTON — Former Fannie Mae chief Franklin Raines and two other top executives have agreed to a $31.4 million settlement with the government announced today over their roles in a 2004 accounting scandal.
Raines, former Fannie chief financial officer Timothy Howard and former controller Leanne Spencer were accused in a civil lawsuit in December 2006 with manipulating earnings over a six-year period at the company, the largest U.S. financer and guarantor of home mortgages.
Raines, a Seattle native and prominent Washington figure who was President Clinton's budget director, is relinquishing company stock options, proceeds from stock sales and other benefits. His part of the settlement is worth $24.7 million.
7. Both Ron Paul and his Economic Advisor Peter Schiff Knew There Was a Housing Bubble
Fannie and Freddie
Rep. Ron Paul
Ron Paul in the House Financial Services Committee, September 10, 2003
Despite the long-term damage to the economy inflicted by the government's interference in the housing market, the government's policy of diverting capital to other uses creates a short-term boom in housing. Like all artificially-created bubbles, the boom in housing prices cannot last forever. When housing prices fall, homeowners will experience difficulty as their equity is wiped out. Furthermore, the holders of the mortgage debt will also have a loss. These losses will be greater than they would have otherwise been had government policy not actively encouraged over-investment in housing.
Perhaps the Federal Reserve can stave off the day of reckoning by purchasing GSE debt and pumping liquidity into the housing market, but this cannot hold off the inevitable drop in the housing market forever. In fact, postponing the necessary, but painful market corrections will only deepen the inevitable fall. The more people invested in the market, the greater the effects across the economy when the bubble bursts.
Reasons Schiff Gives in 2006 for Why There is a Huge Housing Bubble and Why The Market Is Going to Crash:
• The Housing Market used to directly follow the Consumer Price Index (CPI); in recent years its skyrocketed way beyond it.
• Ten or fifteen years ago if two people were getting married they were both renters; now they are both homeowners. One of them has to sell their home.
• The downturn is going to be far more severe than those in the past because people no longer have savings like they did forty or fifty years ago.
• The downturn is also going to be particularly severe because both husbands and wives are now working just to live paycheck to paycheck. Back in the 1950s or 1960s, the wife could get a part-time job in times of crisis and they could rely on their savings. Now if just one of them loses their job during an economic downturn they are in huge financial trouble.
[This is not to say that women should be housewives but that a fair amount of a couple's shared income should be put into a savings account or used to purchase bonds.]
• Everyone used to have fixed-rate mortgages; now everywhere you look people have an adjustable mortgage. If either the husband or wife loses their job this makes for an additional burden they would not have had forty or fifty years ago.
• A lot of people in recent years have been purchasing houses with adjustable rate mortgages planning to only live in them for two or three years. They were speculating that the house's value would go up and that they could sell it in two or three years, thus avoiding the higher rates. When the housing market crashes these people will not be able to sell their houses without losing a great deal of money. If they stay in the house they will not be able to pay the higher rates.
• The only thing Peter Schiff got wrong was believing that the American consumer would start consuming less and saving more in response to the coming financial crisis. This is because he failed to foresee a multi-Trillion dollar bailout that would provide corporate welfare and temporarily sustain the unsustainable.
8. Chief Executive of Freddie Mac Refused to Stop Buying Risky Loans, Refused to Expand Capital Cushion and Made $38 Million In Five Years
At Freddie Mac, Chief Discarded Warning Signs
The New York Times
In an interview, Freddie Mac’s former chief risk officer, David A. Andrukonis, recalled telling Mr. Syron in mid-2004 that the company was buying bad loans that “would likely pose an enormous financial and reputational risk to the company and the country.”
Mr. Syron received a memo stating that the firm’s underwriting standards were becoming shoddier and that the company was becoming exposed to losses, according to Mr. Andrukonis and two others familiar with the document.
But as they sat in a conference room, Mr. Syron refused to consider possibilities for reducing Freddie Mac’s risks, said Mr. Andrukonis, who left in 2005 to become a teacher.
“He said we couldn’t afford to say no to anyone,” Mr. Andrukonis said. Over the next three years, Freddie Mac continued buying riskier loans.
9. The Recession Is Getting Worse
Economic Recovery is Wishful Thinking
The UK Gaurdian, June 1st 2009
Last week we got a whole series of bad reports on the state of the economy. New and existing home sales both remain near their lowest level for the downturn, as house prices continue to drop at the rate of 2% a month. New orders for capital goods, a key measure of investment demand, fell by 2% in April. Excluding the volatile transportation sector, new orders were still down by 1.5%.
On Friday, the Chicago Purchasing Managers Index fell by more than 5 percentage points from its April level, approaching its low for the downturn. The employment component of the index did hit a new low.
These reports might have led to gloomy news stories, but not in the US media. The folks who could not see an $8tn housing bubble are still determined to find the silver lining in even the worst economic news.
For example, National Public Radio told listeners that the new home sales figure reported for April was up from the March level. While this was true, the April figure was only 1,000 higher than a March level that had just been revised down by 5,000. April new home sales were 4,000 below the sales level that had originally been reported for March. USA Today touted a "surge" in durable goods orders, which was also based on a sharp downward revision to the prior month's data.
The media have obviously abandoned economic reporting and instead have adopted the role of cheerleader, touting whatever good news it can find and inventing good news when none can be found. This leaves the responsibility of reporting on the economy to others.
Get Ready for Inflation and Higher Interest Rates
The Wall Street Journal, June 11th 2009
With the crisis, the ill-conceived government reactions, and the ensuing economic downturn, the unfunded liabilities of federal programs -- such as Social Security, civil-service and military pensions, the Pension Benefit Guarantee Corporation, Medicare and Medicaid -- are over the $100 trillion mark. With U.S. GDP and federal tax receipts at about $14 trillion and $2.4 trillion respectively, such a debt all but guarantees higher interest rates, massive tax increases, and partial default on government promises.
But as bad as the fiscal picture is, panic-driven monetary policies portend to have even more dire consequences. We can expect rapidly rising prices and much, much higher interest rates over the next four or five years, and a concomitant deleterious impact on output and employment not unlike the late 1970s.
| The Daily Show With Jon Stewart | Mon - Thurs 11p / 10c | |||
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10. Pork in the October 2008 Financial Bailout Bill
Revised Financial Bailout Bill Dangles Pork to Lure Votes
USA Today
WASHINGTON — For most, race cars have little to do with the $700 billion economic recovery plan lawmakers will consider Friday. But in Congress, they could make a difference.
That's because Rep. Frank LoBiondo, R-N.J., who voted against the bailout, now must decide on a revised bill that carries a tax break for owners of motorsports complexes, a proposal he has supported in the past.
From income tax breaks that could affect millions of Americans to tax breaks for racetracks, the economic recovery bill scheduled for a vote Friday is loaded with provisions that may tempt House members who previously voted "no" to change their mind.
Tax breaks for fishermen harmed by the Exxon Valdez oil spill in 1989 are supported by Rep. Don Young, R-Alaska, who voted against the bailout. And subsidies now included for people who bike to work are backed by Rep. Earl Blumenauer, D-Ore., who also voted "no."
What an Arrow Shaft Has to Do With a $700 Billion Rescue Plan
The New York Times
Now, Rose City Archery is a venerable company, around since 1932 and by far the world’s biggest manufacturer of a special cedar arrow shaft, turning out a million or so a year, its president and chief executive, Jerry Dishion, said on Thursday. But why, one might ask, does it have anything to do with the bailout?
Because Myrtle Point is in the Fourth Congressional District of Oregon, represented by Peter A. DeFazio, a Democrat who voted on Monday against the rescue plan, that’s why. Mr. DeFazio and many of the others who voted “no” have been the targets of various “sweeteners” attached to the rescue bill passed by the Senate on Wednesday night.
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