Socialism for the rich, Capitalism for the poor :)

[harpoon]

The City's greatest lie was to convince us we were all rich


Henry Porter
The Observer,
Sunday September 21 2008

In May this year a score of private yachts anchored off Cap d'Antibes for a party during the Cannes Film Festival. Ranging in cost from $150m to $350m, the yachts were spread out in a pecking order, with entertainment mogul Barry Diller's huge and graceful sailing ship taking the position nearest the Eden Roc hotel, while those belonging to such people as Philip Green and George Lucas lay a little out to sea.

Watching these boats, their guests being ferried to and fro on high-powered tenders and the paparazzi assembled on a rocky shoreline like a colony of hungry cormorants, I considered an incredible figure that I had been told that evening. If you buy a $150m yacht, you can expect to spend roughly the same amount again in the first two years of operation, which when you know how little the yachts are actually used makes the whole business of owning one doubly incomprehensible.

I was not the only one to stare into that rainy evening and think: this cannot last; this must not last. The owners of these yachts are so rich that they may not even be touched by the banking crisis and ensuing slump, but this display of wealth, the pressure on the Earth's resources, the gross inequality that these craft represent in a world where 1.2 billion people live on less than a dollar a day is unsustainable economically and morally.

What has happened in the capital markets over the last few weeks is about more than the machinery going haywire and governments and institutions failing to regulate properly. We now understand - or soon will - that this particular era of capitalism penalised all but the super-rich and the super-greedy. It is a story about one tiny group of people amassing fortunes at the expense of a very large group of people, who stretch from the American Midwest to the eight million people said to be near starvation in the Ogadan region of Ethiopia.

In the developed world, the victims of the unfolding crisis are home-owners, people making an average income, small-scale entrepreneurs trying to create wealth and jobs by actually making something and those who were encouraged into debt by what Alan Greenspan called 'irrational exuberance', the idea that boom would never again be followed by bust.

The well-being felt in the boom years was an illusion fostered in the high-risk economies of the US and Britain by the rise in property prices and the credit bubble. The euphoria meant that we spent more than was ever sensible and this created growth. It was all founded on absurd debt levels, as many like George Soros, whom I met two years ago, were warning. Mr Soros is a very good listener. He pays attention like no one I have ever met and the few words he spoke that evening were devoted to the sub-prime crisis.

The truth of our actual condition in the last eight years is sobering, and the new understanding of it will affect our trust in institutions and government for a very long time. The crucial analysis was done a while back by the former President of Harvard and economist, Larry Summers, who pointed out that there was a very great difference between the fortunes of capital and labour during the boom. 'While workers normally received three-quarters of corporate income, with the remainder going to profits and interest, the (US) Economic Policy Institute has calculated that since 2001, labour has received only one-quarter of the increase in corporate income, as real wages have failed to keep pace with productivity growth.'

The importance of this insight cannot be underestimated because it explains why when we were told we were living through an epic boom many people who were paying attention and did not borrow heavily felt no better off. Stealth taxes in Britain were an element in all this but the underlying truth is that corporations and banks were taking proportionately more for themselves, while benefiting from cutting edge technology and low cost labour abroad. Instead of feeling the advantage of real efficiencies and productivity growth, and becoming genuinely better off in the globalised world, ordinary people borrowed.

In effect the banks were skimming. The many have paid for the obscene enrichment of a few and will be doing so for years to come. However much Harriet Harman rails against city bonuses now, Labour cannot escape the reality that the government presided over the widening gap between rich and poor while helping bankers by deregulating and hedge fund managers with the special non-dom tax status. In terms of policy there is not a lot to separate Labour from the Republican Neocons.

The enormous personal wealth of a few has distorted much. The housing market and the sense of self-worth of those who struggle without seeing their incomes rise to name but two. But what about the hope of almost a fifth of the world's population who, when food prices rose because of market speculation, suddenly found their dollar bought a lot less food?

The spectacle of what the very rich were spending their money on - the self-aggrandising homes, the jets, helicopters, art, jewellery and cars - gives the world's poor every reason to feel a lot less hopeful about human nature. What do we imagine the people of the Ogadan would think if they knew about the Ј111m netted at the sale of Damien Hirst's dead cows and butterfly paintings at Sotheby's last week, and that like everything in the West these days the sale was apparently manipulated in the interests of a market by Hirst's own dealers, who bid up the works in order to preserve the value of their own holdings of dead cows and pickled sharks?

A windfall tax on the sellers of worthless, gimmicky rubbish wouldn't be a bad thing, but I suppose that is beside the point. What a new generation should fight for now is not just stability and the re-engineering of the financial markets but a fairer world where effort and creativity are rewarded but never excessively. In Jeffrey Sachs's words we should 'foster economic systems that spread the benefits of science, technology and the division of labour to all parts of the world'.

The banking crash offers us a rare opportunity to shape things for the better. And I wouldn't stop at the City. The political system that has overseen this disaster in Britain is as culpable as any bank.

Слабичко, слабичко...
Винаги ме е учудвал фактът, че дори хора, израсли в либерална Америка, проповядват откровено социалистически идеи. Ето го сега и този пич - яхтите не го кефели, не можело един да има яхта за н'ам си колко милиона, а в Етиопия милиони да са заплашени от гладна смърт. Ами ние видяхме нагледно какво се получава, когато никой няма яхта и никой не умира от глад - получава се социализъм, при който всички са на едно ниво, а именно - на най-ниското възможно. Защото имаш ли уравниловка, тя може да бъде само и единствено на нивото на най-смотаните и некадърни членове на обществото. Затова и в комунистическа България всички бяха на 200 лева заплата - толкова получава чистачката, значи толкова ще получава и професорът.
Тезата за Добрия Малък Човек, прецакван постоянно от Гадните Големи Корпорации, е развита още от Маркс и естествено, е невярна. Никой, повтарям, НИКОЙ не е карал Добрия Малък Човек да тегли кредити и да се заробва за десетилетия напред. Основната причина е глупостта и алчността на Добрия Малък Човек, който иска да има сега и веднага неща, които не е заслужил, т.е. не е изработил. Когато имаш годишен доход от примерно $ 50К (говорим за Америка), трябва да си пълен кретен, за да си купиш къща за $500К. И то да беше само къщата - освен нея ти се иска последен модел кадилак, 60" плазма, парцалки от Гучи и Долче & Габана, почивки на Карибите, луксозен часовник и още, и още, и още... И когато един ден на вратата ти почукат кредиторите, почваш да ревеш: "...гадните банкери... шибаната държава... на никого не му пука за мен..." Ами да, правилно - НА НИКОГО НЕ МУ ПУКА ЗА ТЕБ! Имаш си глава на раменете и (може би) мозък в нея - мислиш, смяташ, слагаш си приоритети, позволяваш си едно нещо, а друго - не. Никой никого не е карал насила да тегли кредит.
Казаното дотук се отнася с пълна сила и за България.

[fut]

The City's greatest lie was to convince us we were all rich


Henry Porter
The Observer,
Sunday September 21 2008

In May this year a score of private yachts anchored off Cap d'Antibes for a party during the Cannes Film Festival. Ranging in cost from $150m to $350m, the yachts were spread out in a pecking order, with entertainment mogul Barry Diller's huge and graceful sailing ship taking the position nearest the Eden Roc hotel, while those belonging to such people as Philip Green and George Lucas lay a little out to sea.

Watching these boats, their guests being ferried to and fro on high-powered tenders and the paparazzi assembled on a rocky shoreline like a colony of hungry cormorants, I considered an incredible figure that I had been told that evening. If you buy a $150m yacht, you can expect to spend roughly the same amount again in the first two years of operation, which when you know how little the yachts are actually used makes the whole business of owning one doubly incomprehensible.

I was not the only one to stare into that rainy evening and think: this cannot last; this must not last. The owners of these yachts are so rich that they may not even be touched by the banking crisis and ensuing slump, but this display of wealth, the pressure on the Earth's resources, the gross inequality that these craft represent in a world where 1.2 billion people live on less than a dollar a day is unsustainable economically and morally.

What has happened in the capital markets over the last few weeks is about more than the machinery going haywire and governments and institutions failing to regulate properly. We now understand - or soon will - that this particular era of capitalism penalised all but the super-rich and the super-greedy. It is a story about one tiny group of people amassing fortunes at the expense of a very large group of people, who stretch from the American Midwest to the eight million people said to be near starvation in the Ogadan region of Ethiopia.

In the developed world, the victims of the unfolding crisis are home-owners, people making an average income, small-scale entrepreneurs trying to create wealth and jobs by actually making something and those who were encouraged into debt by what Alan Greenspan called 'irrational exuberance', the idea that boom would never again be followed by bust.

The well-being felt in the boom years was an illusion fostered in the high-risk economies of the US and Britain by the rise in property prices and the credit bubble. The euphoria meant that we spent more than was ever sensible and this created growth. It was all founded on absurd debt levels, as many like George Soros, whom I met two years ago, were warning. Mr Soros is a very good listener. He pays attention like no one I have ever met and the few words he spoke that evening were devoted to the sub-prime crisis.

The truth of our actual condition in the last eight years is sobering, and the new understanding of it will affect our trust in institutions and government for a very long time. The crucial analysis was done a while back by the former President of Harvard and economist, Larry Summers, who pointed out that there was a very great difference between the fortunes of capital and labour during the boom. 'While workers normally received three-quarters of corporate income, with the remainder going to profits and interest, the (US) Economic Policy Institute has calculated that since 2001, labour has received only one-quarter of the increase in corporate income, as real wages have failed to keep pace with productivity growth.'

The importance of this insight cannot be underestimated because it explains why when we were told we were living through an epic boom many people who were paying attention and did not borrow heavily felt no better off. Stealth taxes in Britain were an element in all this but the underlying truth is that corporations and banks were taking proportionately more for themselves, while benefiting from cutting edge technology and low cost labour abroad. Instead of feeling the advantage of real efficiencies and productivity growth, and becoming genuinely better off in the globalised world, ordinary people borrowed.

In effect the banks were skimming. The many have paid for the obscene enrichment of a few and will be doing so for years to come. However much Harriet Harman rails against city bonuses now, Labour cannot escape the reality that the government presided over the widening gap between rich and poor while helping bankers by deregulating and hedge fund managers with the special non-dom tax status. In terms of policy there is not a lot to separate Labour from the Republican Neocons.

The enormous personal wealth of a few has distorted much. The housing market and the sense of self-worth of those who struggle without seeing their incomes rise to name but two. But what about the hope of almost a fifth of the world's population who, when food prices rose because of market speculation, suddenly found their dollar bought a lot less food?

The spectacle of what the very rich were spending their money on - the self-aggrandising homes, the jets, helicopters, art, jewellery and cars - gives the world's poor every reason to feel a lot less hopeful about human nature. What do we imagine the people of the Ogadan would think if they knew about the Ј111m netted at the sale of Damien Hirst's dead cows and butterfly paintings at Sotheby's last week, and that like everything in the West these days the sale was apparently manipulated in the interests of a market by Hirst's own dealers, who bid up the works in order to preserve the value of their own holdings of dead cows and pickled sharks?

A windfall tax on the sellers of worthless, gimmicky rubbish wouldn't be a bad thing, but I suppose that is beside the point. What a new generation should fight for now is not just stability and the re-engineering of the financial markets but a fairer world where effort and creativity are rewarded but never excessively. In Jeffrey Sachs's words we should 'foster economic systems that spread the benefits of science, technology and the division of labour to all parts of the world'.

The banking crash offers us a rare opportunity to shape things for the better. And I wouldn't stop at the City. The political system that has overseen this disaster in Britain is as culpable as any bank.

[herco]

(c) Sale of Mortgage-Related Assets.--The Secretary may, at any time, upon terms and conditions and at prices determined by the Secretary, sell, or enter into securities loans, repurchase transactions or other financial transactions in regard to, any mortgage-related asset purchased under this Act.

Ето това е същността - днес купува от Х за 1 дол., утре продава пак на Х за 90 цента, след два месеца купува пак от Х на 90 цента и после продава пак на Х на 80 цента. Какви хубави печалби за банките. Само гледа при покупките ТЕКУЩО да не надмине 700 милиарда, както се казва " at any one time".
Да му мислят американците и Асен.

[fut]

The Ticking Time Bomb

[e$trade]

Socialism for the rich, Capitalism for the poor

Kakwo mislite )

U.S. Treasury Proposal to Buy Mortgage-Related Assets: Text


Sept. 20 (Bloomberg) -- Following is the text of a legislative proposal by the U.S. Treasury to buy mortgage- related assets from financial institutions:

LEGISLATIVE PROPOSAL FOR TREASURY AUTHORITY TO PURCHASE MORTGAGE-RELATED ASSETS
Section 1. Short Title.

This Act may be cited as ____________________.

Sec. 2. Purchases of Mortgage-Related Assets.

(a) Authority to Purchase.--The Secretary is authorized to purchase, and to make and fund commitments to purchase, on such terms and conditions as determined by the Secretary, mortgage-related assets from any financial institution having its headquarters in the United States.

(b) Necessary Actions.--The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this Act, including, without limitation:

(1) appointing such employees as may be required

to carry out the authorities in this Act and defining

their duties;

(2) entering into contracts, including contracts

for services authorized by section 3109 of title 5,

United States Code, without regard to any other

provision of law regarding public contracts;

(3) designating financial institutions as

financial agents of the Government, and they shall

perform all such reasonable duties related to this Act

as financial agents of the Government as may be

required of them;

(4) establishing vehicles that are authorized,

subject to supervision by the Secretary, to purchase

mortgage-related assets and issue obligations; and

(5) issuing such regulations and other guidance

as may be necessary or appropriate to define terms or

carry out the authorities of this Act.

Sec. 3. Considerations.

In exercising the authorities granted in this Act, the Secretary shall take into consideration means for--

(1) providing stability or preventing disruption to the financial markets or banking system; and

(2) protecting the taxpayer.

Sec. 4. Reports to Congress.

Within three months of the first exercise of the authority granted in section 2(a), and semiannually thereafter, the Secretary shall report to the Committees on the Budget, Financial Services, and Ways and Means of the House of Representatives and the Committees on the Budget, Finance, and Banking, Housing, and Urban Affairs of the Senate with respect to the authorities exercised under this Act and the considerations required by section 3.

Sec. 5. Rights; Management; Sale of Mortgage-Related Assets.

(a) Exercise of Rights.--The Secretary may, at any time, exercise any rights received in connection with mortgage-related assets purchased under this Act.

(b) Management of Mortgage-Related Assets.--The Secretary shall have authority to manage mortgage-related assets purchased under this Act, including revenues and portfolio risks therefrom.

(c) Sale of Mortgage-Related Assets.--The Secretary may, at any time, upon terms and conditions and at prices determined by the Secretary, sell, or enter into securities loans, repurchase transactions or other financial transactions in regard to, any mortgage-related asset purchased under this Act.

(d) Application of Sunset to Mortgage-Related Assets.- -The authority of the Secretary to hold any mortgage- related asset purchased under this Act before the termination date in section 9, or to purchase or fund the purchase of a mortgage-related asset under a commitment entered into before the termination date in section 9, is not subject to the provisions of section 9.

Sec. 6. Maximum Amount of Authorized Purchases.

The Secretary's authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time

Sec. 7. Funding.

For the purpose of the authorities granted in this Act, and for the costs of administering those authorities, the Secretary may use the proceeds of the sale of any securities issued under chapter 31 of title 31, United States Code, and the purposes for which securities may be issued under chapter 31 of title 31, United States Code, are extended to include actions authorized by this Act, including the payment of administrative expenses. Any funds expended for actions authorized by this Act, including the payment of administrative expenses, shall be deemed appropriated at the time of such expenditure.

Sec. 8. Review.

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

Sec. 9. Termination of Authority.

The authorities under this Act, with the exception of authorities granted in sections 2(b)(5), 5 and 7, shall terminate two years from the date of enactment of this Act.

Sec. 10. Increase in Statutory Limit on the Public Debt.

Subsection (b) of section 3101 of title 31, United States Code, is amended by striking out the dollar limitation contained in such subsection and inserting in lieu thereof $11,315,000,000,000.

Sec. 11. Credit Reform.

The costs of purchases of mortgage-related assets made under section 2(a) of this Act shall be determined as provided under the Federal Credit Reform Act of 1990, as applicable.

Sec. 12. Definitions.

For purposes of this section, the following definitions shall apply:

(1) Mortgage-Related Assets.--The term mortgage- related assets means residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before September 17, 2008.

(2) Secretary.--The term Secretary means the Secretary of the Treasury.

(3) United States.--The term United States means the States, territories, and possessions of the United States and the District of Columbia.

For Related News: For news on the credit crisis: NI CRUNCH BN <GO> For finance news: NI FIN <GO>

Last Updated: September 20, 2008 11:59 EDT

http://www.bloomberg.com/apps/news?p...7hs&refer=home