The Eye of the Storm: Between Market Collapses

Reading between the lines of the TARP (more commonly known as the Wall Street bailout), one discovers a far more frightening story. By design, the TARP is not a mechanism designed to provide long-term economic solutions; it is a short-term initiative designed to provide a fleeting economic ‘shot-in-the-arm.’ It is designed to temporarily prop-up failing institutions which will either inevitably collapse or attain only a measure of their previous solvency.

If the TARP were a long-term solution, it would begin by addressing systemic economic conditions that have been eroding the economy for decades now:

• It would have proposed immediate withdrawal from NAFTA, which has been downwardly pressuring wages and exporting jobs for over a decade.
• It would have repealed Taft-Hartley, the anti-union, anti-labor cornerstone of corporate exploitation of American labor, which has also been exerting downward pressure on American wages.
• It would have advocated for a living wage, legislating a significant increase in the federal minimum wage.
• It would have created a neo-New Deal works initiative, creating jobs in public works and infrastructure renewal until they recovered enough to accommodate these workers.

By returning jobs to American soil and increasing worker wage earning, the mortgage crisis would begin to resolve itself, creating long-term capital infusions to American banks.

But again, the TARP is not a long-term solution, nor is it designed for poor- and middle-class Americans. In my estimation, it is designed to mitigate the damage to executive stock portfolios due to the banking industry being blind-sided by the current economic crisis, and thus unable to preempt the damage by executives cashing in their stock options beforehand.

After all, House Chairman of the Financial Services Committee, Barney Frank, had this to say in July about the leading mortgage entities at the heart of the current crisis, Fannie Mae and Freddie Mac: "Fannie and Freddie are fundamentally sound. They are not in danger of going under…Their prospects for the future are very solid.” On July 1st, Fannie’s stock was valued at 19.59 a share. It currently trades at .51 a share.

Secretary of the Treasury, Henry Paulson, said on May 16th of this year, “Looking forward, I expect that financial markets will be driven less by the recent turmoil and more by broader economic conditions and, specifically, by the recovery of the housing sector.” On September 23rd, Paulson’s outlook abruptly changed; he said, "We must [enact a program quickly] in order to avoid a continuing series of financial institution failures and frozen credit markets that threaten American families' financial well-being, the viability of businesses, both small and large, and the very health of our economy."

Ben Bernanke, Chairman of the Federal Reserve, claimed the following in February of this year: “I expect there will be some failures. I don’t anticipate any serious problems of that sort among the large internationally active banks that make up a very substantial part of our banking system.”

These disconnected, delusional appraisals of the American economy lulled stockholders into complacency, including corporate executives. The Boston Globe reports that “A survey of the paper losses suffered by 175 chief executives of American companies shows that they lost a total of 52.3 billion through Oct. 27, when the stock market hit lows that were tested this week.” These CEOs didn’t see the economic crisis coming and were unable to get their portfolios out of harm’s reach before the economic train-wreck obliterated their stock value.

So, what do all these financial pieces of the puzzle mean? Let’s put the pieces together…

• Corporate executives lost billions of dollars in stock options due to lack of warning by leading economic figures.
• The TARP is meant to prop the markets back up temporarily, initiating a brief recovery in the stock market.
• Corporate executives will be able to cash-in their stock portfolios during this brief window of economic recovery.
• Being divested of billions of dollars by executives and managers cashing in their stocks, corporations stock values will bottom out, wiping out investors, retirement funds, etc…
• A full-blown market panic ensues, and the stock market begins a sell-off that makes the Wall Street meltdown of 2008 look like a pyjama party.

Corporate executives recoup their losses, cash-in their stocks, and run. American citizens get bent over thrice: financing the recovery of the stock market via TARP, watching corporate executives cut-and-run while their own savings and retirements go down the proverbial toilet, and then being overrun by the tsunami of lay-offs, foreclosures, and economic strain that becomes the fallout of the Great Stock Market Collapse of 2009/2010.

Revolutionarily yours,
Thommunist (c)

The Last Great Discrimination

While social movements have fought for equal rights based on the wholeness of one’s person over narrow-minded reductions of individuals to a seemingly inferior aspect (i.e. black. woman, etc…), capitalism not only fosters reducing an individual to a singular aspect of their being—capital worth—but encourages it. This social classism results in discrimination of the capital-poor, who lack access to proper health care, well-funded schools, higher education, and safe neighborhoods.

This capitalist reduction of individual-as-person to person-as-capital bearer fosters social bigotry; for example, we think nothing of the everyday semantic valuation or devaluation of people-in-general to people-as-bearers-of capital, resulting in simplistic, narrow-minded dysphemisms which create implied stratification: the capital poor as poor-in-general, the capital sufficient as the middle class, and the capital-excessive as upper class.

Capitalist classism is the last socially acceptable discrimination, fostered from cradle to grave. To deny minorities health-care, education, and civil rights due to one aspect of their being--skin color--would result in nothing less than a modern day Civil War. Yet, that is exactly what we do to the capital-poor everyday, and not so much as an eye is batted in their direction by Washington.

This Last, Great Discrimination must fall, and it will only fall when the oppressed awaken from their slumber and take back Washington from the oppressors--the corporate, capitalist class that politicians of all levels work for.

Revolutionarily yours,
Thommunist

Taxation without Representation: Winner-Takes-All Politics

The American political process is akin to a MVA patient rolling through the doors at the local ER; it’s broken in so many places that it’s hard to know where to start in addressing the issues. And it shows: the Democratic Congress currently has approximately a 10% public approval rating, and the President’s has been hovering somewhere within the 20s.

Why are Americans so dissatisfied with our politicians? Because we are offered the same unpalatable 2-party flavors of political ice-cream: corporate flavor with red sprinkles, corporate flavor with blue sprinkles. Because we are not allowed to withhold consent in elections: there is no ballot option to withhold consent from one/either candidate.

Where do we begin to reform such a political train-wreck? An excellent way to start is by implementing a system of proportional representation over our current winner-takes-all election system.

The winner-takes-all electoral system of this country disadvantages the vast majority of Americans. Because votes are dependent upon media exposure, and media exposure requires massive financing, the winner-takes-all system vastly favors the most financed, most connected, most establishment candidates. Grass-roots candidates, who are overwhelmingly outspent, have effectively no chance to win, no matter how experienced, educated, or sincere they are. Furthermore, many "rights" that we enjoy today were at one time minority opinions: for example, abolition of slavery and women's suffrage. Government tended to disenfranchise, rathen than enfranchise these groups; it tended to obstruct their constitutional rights, rather than facilitate them. That's the nature of disproportional representation.

For a large minority--and sometimes the majority--the winner-takes-all system is nothing more than veiled 'taxation without representation.'

However, in a proportional representation system, no vote is unheard, no voice is ignored. For example, say there are 10 House seats available in a particular state. Let's say that 46% of the residents of that state voted Democrat, 44% Republican, and 10% Green Party. Instead of the current system, which would ignore the majority (54%) of the voters of that state by electing the winner(s)-take(s)-all, a proportional representational system would allot 5 seats to the Democrats, 4 to the Republicans, and 1 to the Greens. All residents are represented; all residents have a voice.

Like the abolitionist and women’s suffrage movements, we must start small. We must work to enact local/statewide ballot reforms. State-by-state, voters can take back their rights by breaking the ballot-box-duopoly.

Revolutionarily yours,
Thommunist