Weekly Mulch: At Cancun, Incentives Point Toward Incremental Progress on Climate Change

by Sarah Laskow, Media Consortium Blogger

This year’s round of the United Nations-led climate change negotiations, ongoing in Cancun, Mexico, for the past two weeks, end today. No matter what the official outcome, the progress made on dealing with global climate change and carbon emissions will be incremental.

The problem, at base, lies with the incentives, or lack thereof, for the most powerful negotiators at the table. Morally, there are plenty of reasons for every country in the world to commit to drawing down carbon pollution. But economically? Politically? It’s easier to take small steps, make half-hearted commitments.

Going all-in

What would a brave policy stance look like? Something like the position the Maldives—an island archipelago—has taken: “We do not have to wait for everyone else to do this,” as the country’s environment minister, Mohamed Aslam said at the conference this week. As Mother Jones’ Kate Sheppard reports:

Right now the country relies heavily on diesel fuel for much of its energy needs. The government has already conducted an audit of their emissions, much of which comes from the shipping sector, a fact of life in island nations. But Aslam envisions solar, wind, tidal power, and renewable transportation fuels driving the nation in the near future—even if islanders don’t have all the solutions now.

Aslam notes, Sheppard writes, that it’s in the country’s economic favor to take up these policies. So for the Maldives, at least, it’s not a tough sell.

Bribery?

The real dilemma for island countries like the Maldives, though, is how much wiggle room they should give larger countries, who are bigger emitters, in international agreements. Larger countries have more to lose, economically, so they’re less willing to commit to, say, legally binding goals for reduced carbon emissions.

But these larger countries also tend to have more money. And that’s where the problem for countries like the Maldives comes in: they’re going to need financial support to deal with creeping sea level rise and other consequences of climate change. Some of the WikiLeaks diplomatic cables, as The Guardian reported, revealed how countries like the United States use those needs to their diplomatic advantage. Democracy Now!’s Amy Goodman asked U.S. Climate Envoy Todd Stern to respond to these revelations, but didn’t get much of a response.

I’ve got the power

Ultimately, though, a country like the Maldives is always going to have a weaker negotiating position than bigger countries. Take, for instance, this account from Inter Press Service’s Darryl D’Monte on how to identify an important player at Cancun:

A rough yardstick for identifying which Asian countries make the biggest ripples in Cancun is the number of journalists who crowd around the spokesperson immediately after a press conference. … Indian Environment Minister Jairam Ramesh has certainly come into his own on this score. As the spokesperson for the BASIC group of countries, which includes Brazil, South Africa and China, he is articulate, well-informed and witty. Journalists swarm around him after a press conference, eager to get him make a scathing remark about another country or group of countries.

This profile of Ramesh is a fascinating window into how one negotiator manages to navigate these complicated talks. But, as D’Monte points out, even for India, financing is a key question: one of the “non-negotiables” for India, Brazil, South Africa and China is speedier delivery of promised mitigation monies.

Moral Highground

There’s one group at Cancun whose incentives line up impeccably with a faultless moral position: young people. They’re the ones most likely to suffer the consequences of a warming world, and they’re advocating for a draw-down of carbon-heavy industries. At Change.org, Jess Leber reports that about 1,000 young people are participating in some way in the conference this year. (Official attendance tallies, for participants inside and outside the building, estimate 22,000 people in total.)

Leber reports that young people did make some progress this year: “The negotiators agreed to ramp up support for climate education and training programs worldwide, but especially in developing countries, and agreed to give the youth delegation are larger official voice in the negotiating process,” she writes.

That’s good news for adults, as well. As the UN’s chief negotiator, Christiana Figueres, demonstrates in this video at Care2, it’s tough to face down the people who are actually going to suffer from your generation’s waffling. “Figueres tears up when speaking of why the talks are important; she also describes the inspiration that keeps her working toward a global agreement,” writes Nancy Roberts.

Figueres’ inspiration? “It’s you,” she tells young activists. “It’s not our planet. It’s yours…You will all take it over very soon…Nothing is going to be perfect…Everything here is going to be one step. But it is the best that this group of people under these circumstances…can do for the time being.”

This post features links to the best independent, progressive reporting about the environment by members of The Media Consortium. It is free to reprint. Visit the Mulch for a complete list of articles on environmental issues, or follow us on Twitter. And for the best progressive reporting on critical economy, health care and immigration issues, check out The Audit, The Pulse, and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.

Weekly Audit: Banks Get Big Bucks, Consumers Get Bupkis

 

by Lindsay Beyerstein, Media Consortium blogger

Last week, the Federal Reserve announced a plan to buy an additional $600 billion worth of Treasury bonds in an attempt to stimulate the economy. On Democracy Now!, economist Michael Hudson argues that the $600 billion T-bill buy will help Wall Street at the expense of ordinary Americans.

The Fed justifies the purchase as an infusion of cash into the U.S. economy. The buy-up will certainly be an infusion of cash into U.S. banks. In effect, the Fed will help the government pay back the banks that lent money to finance deficit spending. The hope is that these banks, suddenly flush with cash, will help the U.S. economy by lending money to finance projects that will create wealth and jobs (i.e. opening factories and hiring more workers).

However, as Hudson points out, there’s no guarantee that the banks are going to use the windfall to build wealth in the U.S. On the contrary, he argues, there’s every reason to suspect that they’ll invest the money overseas in currency speculation deals. Why? Because the Fed has also put massive pressure on Congress to push China into raising its currency by 20%. The banks know this because the House voted overwhelmingly to approve such a threat in September.

If the banks convert their extra billions to Chinese currency, and China raises the value of its currency in response to the threat of an across-the-board U.S. tariff on its imports, then banks that bought Chinese RMB when it was still artificially cheap will reap huge profits overnight.

Later in the Democracy Now! broadcast, Nobel Laureate Joseph Stiglitz describes how the U.S. employed a similar strategy of currency devaluation to insulate itself against the ravages of the Great Depression, with devastating global consequences:

So, the irony is that money that was intended to rekindle the American economy is causing havoc all over the world. Those elsewhere in the world say, what the United States is trying to do is the twenty-first century version of “beggar thy neighbor” policies that were part of the Great Depression: you strengthen yourself by hurting the others. You can’t do protectionism in the old version of raising tariffs, but what you can do is lower your exchange rate, and that’s what low interest rates are trying to do, weaken the dollar.

Trade war between the U.S. and China

The U.S. and China have a longstanding trade rivalry, but suddenly the two powers seem to be even more at odds than usual.

William Greider of The Nation argues that plummeting global demand has ratcheted up tensions as the two exporting nations fight over a dwindling pool of customers. The U.S. accuses China of artificially deflating its currency to make its exports cheaper. In retaliation, the U.S. imposed tariffs on Chinese tires and tubular steel. China, in turn, imposed a tariff on U.S. poultry. As I mentioned above, the House voted 348-79 in September to impose additional tariffs on nearly all Chinese imports if China doesn’t revalue its currency, though the Senate has yet to vote on this legislation.

The U.S. acts indignant about China manipulating its currency, but Grieder argues that this stance is hypocritical in light of the Federal Reserve’s decision to buy an additional $600 billion worth of Treasury bonds from the federal government to help finance the budget deficit. One effect will be to weaken the U.S. dollar, which will make our exports more competitive relative to those of China.

Voters reject free-for-all trade

In last week’s midterm elections, voters rewarded candidates who oppose unfettered free trade, according to Kari Lydersen of Working In These Times. According to a new report by Public Citizen, 60 congressional races were fought wholly or largely on trade issues in 2010. Only 37 candidates favored NAFTA-style free trade pacts and half of them lost. Not all the candidates who won on a protectionist trade platform were advocating a progressive agenda of fairly compensating trading partners, protecting American jobs, and upholding environmental regulations. Senator-Elect Rand Paul (R-KY) argued that the World Trade Organization is a threat to U.S. sovereignty.

Anti-union ballot initiatives win big

Mikhail Zinshteyn of Campus Progress brings us an update on the anti-union initiatives that appeared on the ballots in many states last week. Voters in Arizona, South Carolina, South Dakota and Utah approved legislation to preemptively neutralize the already-stalled Employee Free Choice Act (EFCA), should it ever become federal law. EFCA, also known as card check or majority sign-up, would allow workers to organize by signing up for a union, instead of going through a grueling National Labor Relations Board (NLRB) election process, which makes workers sitting ducks for management threats and propaganda.

Bean there, done that

Move over, Elizabeth Warren. The White House may be poised to appoint one of Wall Street’s favorite Democrats to head the new Consumer Financial Protection Bureau. Andy Kroll and David Corn report in Mother Jones that Rep. Melissa Bean (D-IL) is a favored contender for the job if her still-undecided race for reelection doesn’t work out. That would be heartening news for Bean’s former chief of staff, John Michael Gonzalez, now a leading lobbyist for Big Finance.

Bean, who serves on the House finance and small business committees, has received over $2.5 million in campaign contributions from the financial sector over the course of her 5-year career. Bean was also a big beneficiary of the Chamber of Commerce, which vehemently opposed the Dodd-Frank financial reform bill that created the CFPB in the first place. Bean ultimately voted for the bill, but not before she unsuccessfully attempted to water down the consumer financial protections therein, the very provisions Bean would be tasked with enforcing.

“The White House needs to beat back the Bean idea, otherwise they’ll look like fools,” one Democratic strategist told Corn and Kroll. “This is the craziest thing I’ve ever seen. She’s a tool of the financial industries.”

This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.

 

Campaign Cash: Tea Party Vows to Block Campaign Finance Reform

by Zach Carter, Media Consortium blogger

Welcome to the final edition of Campaign Cash, which tracked political spending during this year’s midterm elections. Stay tuned for more reporting on money in politics from members of The Media Consortium. To see more stories on campaign funding, follow the Twitter hashtag #campaigncash.

Anonymous millionaires just helped elect dozens of ultraconservative congressional candidates, by pumping millions of dollars into national Tea Party organizations. And guess what’s at the top of the legislative to-do list for those same Tea Party groups? Blocking campaign finance reform legislation.

As Stephanie Mencimer explains for Mother Jones, one of the nation’s largest Tea Party organizations, the Tea Party Patriots, is already coming out guns-a-blazing against any lame duck effort to crack down on secret corporate spending in elections.

And with good cause. The Tea Party’s appeal, after all, is based on its populist, grassroots image. If anybody knew that secret right-wing millionaires were bankrolling the entire operation, the “movement” would lose its luster.

But whether reformers are able to force front-groups to disclose their donors or not, the broader effort to eliminate undue corporate influence from the political process will take years.

Welcome to the plutocracy

The Supreme Court’s decision in Citizens United v. Federal Elections Commission allowed corporations and deep-pocketed elites to spend unlimited amounts electing politicians of their choosing. So long as those expenditures are funneled through a front-group, nobody has to know who is buying an ugly attack ad or why. Instead ads are sponsored by groups with a innocuous-sounding names like “Americans for Prosperity” or “Americans for Job Security.” Nobody knows who ultimately foots the bill.

In organized crime, this process is called “money laundering.” And everyone is getting in on the game, from the Tea Party to Karl Rove to U.S. Chamber of Commerce. As Bill Moyers explains in this Boston University lecture carried by Truthout, it’s ravaging American democracy.

Rove, other conservative groups and the Chamber of Commerce have in fact created a “shadow party” … We have reached what … former Labor Secretary Robert Reich calls “the perfect storm that threatens American democracy: An unprecedented concentration of income and wealth at the top; a record amount of secret money flooding our democracy; and a public becoming increasingly angry and cynical about a government that’s raising its taxes, reducing its services, and unable to get it back to work. We’re losing our democracy to a different system. It’s called plutocracy.”

That, ultimately, is what is at stake with campaign finance reform. Can democracy continue to serve as a check on elite power? Or will America simply dance to the tune played by the super-rich. Citizens United made an undemocratic mess of this year’s election—but the influence of corporate cash is not going to simply melt away. Without serious reforms, the very concept of American elections will become a quaint, naive relic of the past.

Wall Street wins big

And while the plutocracy plainly organized itself against Democrats in this election, democrats have not exactly been strangers to corporate largesse. As Laura Flanders emphasizes for GRITtv, while President Barack Obama occasionally offered rhetorical rebukes against the Wall Street establishment, so far as public policy was concerned, he rarely did anything to ruffle their feathers. Obama continued the Bush bailouts, praised the executives of firms would eventually be investigated for fraud as “savvy,” and aimed pretty low on financial reform. But as Flanders notes, all those favors didn’t end up helping either Obama or his party on Nov. 2:

Having soaked up the government’s largesse, those banksters repaid Obama by pouring millions of anonymous dollars into defeating Democrats.

It worked. The most vocal Wall Street critics in the House and Senate—Rep. Alan Grayson (D-FL) and Sen. Russ Feingold (D-WI) were bombarded with attack ads courtesy of the U.S. Chamber of Commerce. Now they’re gone, along with the Democratic majority in the House.

Last-ditch effort on campaign finance reform

As Jesse Zwick emphasizes for The Washington Independent, Congress can still limit the damage in the coming months before the officials elected last night take office. A modest law that would require corporations to disclose their political expenditures and force front-groups to publicly identify their donors would help limit the damage.

After that, as Moyers emphasizes, it’s a long, hard fight.

But wait! There’s more.

This post features links to the best independent, progressive reporting about the mid-term elections and campaign financing by members of The Media Consortium. It is free to reprint. Visit The Media Consortium for more articles on these issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Audit, The Mulch, The Pulse, and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.

 

 

Weekly Audit: Foreclosuregate Hits Home

 

by Lindsay Beyerstein, Media Consortium blogger

Earlier this month, Bank of America (BOA), the country’s largest bank, announced a moratorium on foreclosures in all 50 states.

The bank promised not to sell any foreclosed homes or take any more delinquent borrowers to court until it had reviewed its potentially defective foreclosure process. Other major lenders soon announced that they too were suspending foreclosures in dozens of states. Why are the biggest banks in the country voluntarily calling for a time-out? It’s a hint that we’re facing a huge problem: The banks aren’t sure if they have the legal right to foreclose on millions of homes.

Here’s what’s new in foreclosuregate since the Audit took up the story last week. The Bank of America announced that it would resume some foreclosures on Oct. 25, having deemed its own methods sound. The stock market begged to differ. BOA’s stock fell over 5% on Thursday and other bank stocks also took a beating, as did mortgage bonds. This pattern indicates that investors are very worried about the effect of the foreclosure crisis on the health of the banks.

Rep. Alan Grayson (D-FL) is calling for a foreclosure moratorium under the new Financial Stability Oversight Council (FSOC), as Ellen Brown reports for Truthout. The FSOC has the power to preemptively break up any large financial institution that threatens U.S. economic security. Grayson wants a moratorium on all mortgages securitized between 2005 and 2008 until the FSOC can determine which foreclosures are valid and which are bogus.

The missing link

So, what kind of “defects” in the foreclosure process are we talking about? Fraud, basically.

Zach Carter of the Campaign for America’s Future explains to Chris Hayes of the Nation why Bank of America and other major lenders are in so much trouble: They are just administering loans for other lenders. You make your check out to the Bank of America, but the bank is just babysitting after the loan for the bondholders.

The real creditors are the investors who own bonds made up of pieces of many different mortgages, including yours. The bond gives the bondholder a share of the money that you and other borrowers pay each month.  If you don’t pay, BOA initiates foreclosure. If you’re late, BOA charges you fees.

However, the bank can’t just hire a foreclosure company to take your home away on a whim. The bank must first show proof that it is entitled to foreclose because you’ve defaulted on your mortgage in the form of a mortgage note. If you hold one of those toxic asset mortgages, there’s a good chance the bank doesn’t have the note.

As Dean Baker explains in Truthout, in many, if not most, cases, “liar loans” (mortgages issued with no proof of income or assets) have become given way to “liar liens” (foreclosures with no proof of default).

According to Carter, all the big banks have been hiring foreclosure mills to rubber-stamp their claims without checking. Unscrupulous foreclosure companies are admitting to “robo-signing,” i.e., foreclosing without even checking whether the bank’s claims were legit.

Foreclosuregate

According to Andy Kroll of Mother Jones, the Bank of America stands to lose up to $70 billion over what’s come to be known as “foreclosuregate.” A mortgage starts out with an originator, typically a bank or a mortgage broker. In the heyday of mortgage-backed securities, investment banks were buying up hundreds of thousands of mortgages, making them into mortgage-backed bonds, and selling them to investors.

Unfortunately, if the bank doesn’t have the note, who does? The mortgage originator may have gone bankrupt, many were fly-by-night operators that folded when the housing bubble burst. Many mortgages were bought and resold more than once before they found their way into a mortgage-backed bond.

So, the question is whether the bank really owned the mortgages it made into mortgage backed-securities and sold to individuals, pension funds, and other institutions. If not, the banks stand could be on the hook for selling assets they didn’t actually own to investors.

Moratorium now

The scandal affects so many mortgages that some lawmakers are calling for a nationwide moratorium on foreclosures until investigators can sort out who owns what once and for all. Rep. Edolphus Towns (D-NY) told Amy Goodman of Democracy Now! that Congress needs to stop banks from putting people out on the street until there is some way to differentiate between fraudulent foreclosures and justified ones:

And so, I just think that people who are saying that this is going to hurt—I think that it’s going to help, because once people gain confidence in the fact that they’re being treated fairly and that there’s no discrepancies in the records, then people will feel very comfortable in terms of trying to move forward. But until that happens, you’re always going to have these comments about the fact that that was not done right, it was done unfairly. And, of course, I think there’s enough here for us to stop and to pause and to say, let’s take a look here before we move forward. So a moratorium is definitely in order.

The Obama administration opposes the moratorium on the grounds that it would hurt the housing market and thereby slow the economy. Towns counters that what would really be bad for the economy is letting banks take people’s homes away without any semblance of due process. If the government doesn’t act to protect the innocent, foreclosuregate could shatter the confidence of potential home buyers. Would you want to invest in a house if you were afraid the bank could just take it away from you?

In AlterNet, Mike Lux argues that fraudulent foreclosures are one more assault on poor and middle class Americans. He argues that the banks are so used to being coddled by Washington that they’re counting on legislators to retroactively change the rules to protect them from the consequences of their own devious behavior.

At this point we don’t know what percentage of foreclosed-upon homes have simply been stolen by banks to pay bondholders, but we do know the problem is vast and systemic. The Obama administration is content to let the banks seize private property first and ask questions later. We need a moratorium to take stock and restore the rule of law.

This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.

 

Weekly Audit: Are Handouts For Billionaires More Important Than Feeding Children?

by Zach Carter, Media Consortium blogger

The crazy conservative assault on government spending has become one of the most irrational economic policy debates in recent years.

The Republican Party is trying to maintain the fiction that direct economic relief for millions of working Americans is a fiscally irresponsible splurge, while simultaneously backing hundreds of billions of dollars worth of economically useless tax cuts for the wealthy. The demands are staggering: cut food stamps for the poor, but preserve perks for billionaires.

As Tim Fernholz notes for The American Prospect, serious economists do not believe that President George W. Bush’s tax cuts for the rich are an effective way to stimulate the economy. Rich people don’t spend money, they save it. We need lots of consumer spending to reinvigorate economic growth and put people back to work.

If we want to create jobs, we need to put money in the hands of people who will spend it. At minimum, that means directing aid to the unemployed and providing federal assistance to states, so that local governments don’t lay off hundreds of thousands of teachers and cops. This is not only the decent, humane thing to do when the economy is struggling, it actually helps. Money the government spends to save a teacher’s job goes out into the economy to pay bills and buy products. For states, this also means that basic public infrastructure is preserved—kids learn and the streets stay safe.

Stonewalling aid

But as the editors of The Nation highlight, Republican politicians have made it nearly impossible to get that critical aid out to American families. They’ve demanded strict measures for these benefits, forcing Democrats to cut food stamps—that’s right, food stamps—in order to keep teachers in school and cops on the street.

Millions of families all over the country depend on food stamps. In the middle of the worst recession since the Great Depression, Republican politicians took a stand to take food from the mouths of children—and they did it while supporting a $300 billion a year in handouts for the rich.

There is no immediate budget crisis. The government can borrow money at record low interest rates, meaning that investors don’t believe the federal budget deficit is too big. But if conservatives were really serious about shrinking the deficit, they’d be encouraging economic growth, not backing billionaire giveaways.

Banking on predation

Our perverse economic policy preferences aren’t limited to budget priorities. As Amy Goodman and Juan Gonzalez emphasize in a segment for Democracy Now!, inadequate rules governing bank lending practices were a fundamental cause of the recession, and are actively hampering the economy’s recovery today.

The Community Reinvestment Act of 1977 (CRA) required banks to make good loans to credit-worthy borrowers in the bank’s community. The idea was simple: If a bank wants to benefit from a community’s resources, it has to give something back and help strengthen the local economy.

Conservatives have lashed out at CRA, blaming it for the mortgage crisis, but the truth is that CRA loans had almost nothing to do with the subprime disaster. CRA loans are affordable loans to creditworthy borrowers—the whole point of subprime lending was to charge outrageously high rates to borrowers with poor credit.

In reality, policymakers’ refusal to expand CRA exacerbated the crisis. Only traditional banks are subject to CRA guidelines, and during the past two decades a host of independent mortgage companies have taken over large swaths of the mortgage market. These unregulated firms issued a lot of lousy loans, often working under direct, explicit instructions from bigger banks, who outsourced their lending in order to get around CRA rules and rip off whole neighborhoods.

Lending is critical to moving the economy out of the recession, and CRA provides reliable, proven rules to get banks back in the business of helping our communities and our economy.

Overdrafting the banks

But a host of other banking policies are also making the recession worse. One of the most egregious is the overdraft fee, which, as Annie Lowrey notes for The Washington Independent, scored banks over $38 billion in 2009 alone. To put that in perspective, the entire banking industry earned a combined profit of $12.5 billion last year, which means that the banks are making their money from gotcha fees, not from productive lending.

Banks have spent years charging overdraft fees without telling their customers that they’re subject to such gouging. Lowrey notes that the average fee is $35 on an average charge of $17. But they also have engaged in a backdating scam, rearranging the order of their customers’ purchases in order to charge more overdraft fees. As I explain for AlterNet:

“Say you’ve got $80 in your checking account, and you decide to pay some bills and run some errands. You spend $30 on gas and another $20 on your water bill. Later, you head to the grocery store and spend $81—oops!—on groceries. To reasonable people, it looks like you’re going to get hit with an overdraft fee. That last purchase put you over the line. But instead, the banks reorder your transactions, processing the groceries first. Now you’re below zero, and they can charge additional fees for your gas and water bills. Wells Fargo charged up to $39 per overdraft. This one mistake cost you $117, and nobody even bothered to tell you it was going to happen.”

Fortunately, a federal judge in California just ruled that this backdating scam was grossly illegal, and ordered megabank Wells Fargo to pay back every penny that it swindled from its California customers with the practice since 2004. But Wells Fargo was not alone—every large bank in the United States does the exact same thing, and it’s allowed them to score billions in deceptive profits. A similar ruling in a larger case against all of the big banks could end a transparent outrage, and restore an enormous amount of unfairly seized wealth to citizens all over the country.

We don’t need to be pushing policies that benefit billionaires at the expense of everyone else. The Bush tax cuts are an unnecessary economic waste. Financial policy that puts the interests of a few giant predatory banks above those of the entire citizenry makes no economic sense.

This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.

 

 

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