Category: Class Warfare Page 31 of 37

Even at manufacturing companies that are profitable, union workers are reluctantly agreeing to tiered contracts that create two levels of pay.

In years past, two-tiered systems were used to drive down costs in hard times, but mainly at companies already in trouble. And those arrangements, at the insistence of the unions, were designed, in most cases, to expire in a few years.

Now, the managers of some marquee companies are aiming to make this concession permanent. If they are successful, their contracts could become blueprints for other companies in other cities, extending a wage system that would be a startling retreat for labor.

Doing this splits the union. Solidarity is the first rule of unions, if you sell anyone down the river, you weaken yourself fatally.

On a larger scale, the destruction of unions remains job #1 of the oligarchy, especially that part of the oligarchy which prefers Republicans to Democrats. Why?

Because union members vote Democratic, even if they are part of a demographic which normally vote Republican.
Because the oligarchy’s overall goal is to crush wages and benefits, both to pay for their bailouts and as a permanent, long-running goal. They do not really believe that domestic consumer demand is necessary to their own prosperity, and prefer workers who are in permanent debt-slavery. For a generation and a half now they have made most of their money through leveraged financial games, asset bubbles and by offshoring and outsourcing jobs. American workers are nothing to them, less than nothing.

Update: My friend Matt Stoller has up his first blog post in about 2 years, on debt-peonage. A good read and some interesting information on where the phrase “the man” originally came from. I’m sad Grayson lost, but it’s nice that Matt can write again.

Wiping out property law and destroying counties to save the banks

By Ian Welsh

On November 14, 2010

45 Comments

Bmaz:

There are rapidly emerging signs the Obama Administration and Congress may be actively, quickly and covertly working furiously on a plan to retroactively legitimize and ratify the shoddy, fraudulent and non-conforming conduct by MERS on literally millions of mortgages.

From CNBC:

When Congress comes back into session next week, it may consider measures intended to bolster the legal status of a controversial bank owned electronic mortgage registration system that contains three out of every five mortgages in the country.

The system is known as MERS, the acronym for a private company called Mortgage Electronic Registry Systems. Set up by banks in the 1997, MERS is a system for tracking ownership of home loans as they move from mortgage originator through the financial pipeline to the trusts set up when mortgage securities are sold.

Just to make clear the implications of this craven action, the White House and Congress are conspiring to give a get out of jail free bailout card to the biggest banks and finance companies in the country to cover up and mask their illegal behavior and behavior that did not conform with state, county and local laws throughout the United States. On at least sixty (60%) percent of the existing mortgages in America.

There are dozens of implications to individuals and both private and public entities. At a root minimum, it will likely decimate, if not bankrupt, most counties in every state of the union.

If courts rule against MERS, the damage could be catastrophic. Here’s how the AP tallies up the potential damage:

Assuming each mortgage it tracks had been resold, and re-recorded, just once, MERS would have saved the industry $2.4 billion in recording costs, R.K. Arnold, the firm’s chief executive officer, testified in 2009. It’s not unusual for a mortgage to be resold a dozen times or more.

The California suit alone could cost MERS $60 billion to $120 billion in damages and penalties from unpaid recording fees.

The liabilities are astronomical because, according to laws in California and many other states, penalties between $5,000 and $10,000 can be imposed each time a recording fee went unpaid. Because the suits are filed as false claims, the law stipulates that the penalties can then be tripled.

Perhaps even more devastatingly, some critics say that sloppiness at MERS—which has just 40 full-time employees—may have botched chain of title for many mortgages. They say that MERS lacks standing to bring foreclosure actions, and the botched chain of title may cast doubts on whether anyone has clear enough ownership of some mortgages to foreclose on a defaulting borrower.

Why would the Obama Administration and Congress be doing this? Because the foreclosure fraud suits and other challenges to the mass production slice, dice and securitize lifestyle on the American finance sector, the very same activity that wrecked the economy and put the nation in the depression it is either still in, or barely recovering from, depending on your point of view, have left the root balance sheets and stability of the largest financial institutions on the wrong side of the credibility and, likely, the legal auditory line. And that affects not only our economy, but that of the world who is all chips in on the American real estate and financial products markets.

You should read the rest. I’ll spell out some of it here: the major banks are bankrupt. Bankrupt. Still. This is a massive giveaway to the banks if it occurs, and it will bankrupt most American counties, permanently, as well as putting record keeping on who owns and owes what not in the hands of a third party, but in the hands of MERS, a creation of the lenders. Given how the lenders have relentlessly engaged in fraud to try and foreclose on houses they do not have title to, this seems… unwise.

As an aside, Marcy Wheeler (Emptywheel) and BMaz have become two of the better nuts and bolts financial bloggers in the last year.

Oh, and Obama, bought and paid for servant of the banking industry. Always has been.

The economic trap the 1st world is in

By Ian Welsh

On November 9, 2010

45 Comments

For years I’ve been saying the plan was to Japanify.

Japanify is another way of saying “extend and pretend”. You pretend the banks and the rich aren’t broke. In the Japan scenario, you slowly pay down or write off the bank losses at a pace which doesn’t wipe out the shareholders or bondholders or bank. Japan could do that, because Japan is a net exporter: there is money coming in to Japan. Of course, doing so led to over a decade of a lousy economy for Japan, but it was feasible.

Nations like the US can’t do it, not just because the US is a net importer, but because it’s bleeding all over the place, losing high value jobs, industry and running down infrastructure.

The 1st world as a whole is trying to Japanify, but because most nations aren’t net exporters, they’re adding a heaping side order of austerity on top of it. Everyone is trying to slash expenses on ordinary people, so they can funnel money to the top, and avoid forcing rich people and corporations to take their actual losses.

So, take as much from the public domain and turn it into monopolistic profit centers for private enterprise (for example, the health care bill, mandating purchases of a private product with no price controls or unregulated credit card interest rate and fee increases), slash spending on things which can’t be turned into profit centers, and make sure that banks and other corporations aren’t forced to take losses.

To bring it home, you have New York Governor-elect Cuomo saying that his first goal is to take out the NY unions – ie. to get wage and benefit concessions out of them. You have a huge push against teachers unions, both to reduce costs and to turn eduction into a profit center (money for corps). You have the push to slash SS and Medicare (entitlements) and so on. And on the top end, to keep low tax rates for rich people and even decrease them more.

These are two sides of the same coin – extend and pretend doesn’t work for most western nations the way it did for Japan. To put it crudely, Japan still makes stuff. The US makes less and less, Britain makes squat, Greece makes squat, Ireland makes squat.

To extend and pretend, if one wanted to do such a thing (one shouldn’t) requires a real engine of economic growth. But right now, if real economic growth happened, oil prices would strangle it just as it got out of swaddling clothes.

None of this is to say that there aren’t ways around this conundrum, but they require taking steps governments simply aren’t willing to take at this time.

Obama did NOT save the US From a Depression

By Ian Welsh

On November 3, 2010

35 Comments

Stop saying Obama saved the economy, he did no such thing. The US is in a depression (not a great depression, but a depression). All Obama, Bernanke, Geithner, Paulson and Bush did was push the day of reckoning back a bit in order to save the rich, at the cost of trillions of dollars which should have been used to restructure the economy.

Why I have to keep telling people this, as they experience an absolute decline in their goddamn wages, I don’t know.

This is what happens when you bail out the rich

By Ian Welsh

On October 25, 2010

24 Comments

David Cay Johnston:

Every 34th wage earner in America in 2008 went all of 2009 without earning a single dollar, new data from the Social Security Administration show. Total wages, median wages, and average wages all declined, but at the very top, salaries grew more than fivefold…

…The number of Americans making $50 million or more, the top income category in the data, fell from 131 in 2008 to 74 last year. But that’s only part of the story.

The average wage in this top category increased from $91.2 million in 2008 to an astonishing $518.8 million in 2009. That’s nearly $10 million in weekly pay!

You read that right. In the Great Recession year of 2009 (officially just the first half of the year), the average pay of the very highest-income Americans was more than five times their average wages and bonuses in 2008. And even though their numbers shrank by 43 percent, this group’s total compensation was 3.2 times larger in 2009 than in 2008, accounting for 0.6 percent of all pay. These 74 people made as much as the 19 million lowest-paid people in America, who constitute one in every eight workers.

They’re cashing out as fast as they can.

Go read the entire thing.

Praying for the French

By Ian Welsh

On October 23, 2010

26 Comments

In news you may not have heard, the French have been protesting a bill to raise the retirement age in France from 60 to 62. And by protesting, I don’t mean just showing up for one day. Sarkozy has struck back:

Clashes have broken out outside a major oil refinery in France after riot police moved in to clear strikers who blockaded the terminal for 10 days.

Two people were hurt outside the Grandpuits refinery east of Paris, one of 12 facilities affected by strikes.

President Nicolas Sarkozy ordered the authorities to lift the blockade earlier this week after thousands of petrol stations across France ran dry.

The Senate will vote later on the pension reform that sparked the action.

Ministers said the bill would clear its last major hurdle in a matter of hours, after the Senate was asked to halt debate on hundreds of opposition amendments and hold a single vote on all of them.

Changes to the retirement and pension age could become law next week, once they pass the committee stage and a final vote is held in both houses of parliament.

Notice something here: the protesters are doing economically damaging things. They aren’t just showing up in the mall, waving some flags, making some speeches and wandering off.

Notice also, that Sarkozy is still going to pass his bill.

The key point will be whether the opposition keeps up the pressure. AFTER the bill passes, they must continue rolling strikes and occupations until the elite gives in.

RULE #1 Of Post-Modern Elite Thinking: Elites think in terms of costs. If the cost of something is less than the benefit of doing it, assuming the return is also high enough they will almost certainly do it.

The strikes and shutdowns are a COST. The benefit of raising the pension age is that it pays for bailouts, bonuses and high salaries for the elites (since it helps pay to continue the financial casino.) Unless the cost is clearly going to be higher than the gain, they will do it. The strikes and other actions must continue until the elites who run Sarkozy realize the cost is higher than the benefit to them. Or, of course, they can be made to fear something more existential. It may be time for a new French Republic, for example, which takes power out of their hands entirely and bankrupts them by forcing them to pay back all their ill-gotten gains.

At this point in time, France is the only nation in the first world where there is meaningful resistance to the rush of Austerity (aka. Hooverism) and the attempt by elites to permanently break the power and wealth of the middle and working class.

Pray for France. Because if they fall, no one is even trying, and if they fall the elites will know they can take anything away from any first world’s nation’s population.

No the rich aren’t like you

By Ian Welsh

On October 20, 2010

41 Comments

It’s quite noticeable that the conservative rich massively outspend their more liberal brethren when it comes to influencing politics. I’ve seen estimates as high as a 9/1 difference in outside spending for Republicans vs. Democrats. Part of this is because Obama isn’t a liberal (and so, Soros, for example, is refusing to help this election) but this is an issue that transcends elections. Conservative rich like the Koch have spent billions building conservative institutions and message machinery (Fox, Heritage, talk radio, much much more).

The argument I have heard is that liberal rich should be concerned, because they may lose the rule of law. The rich use law much more than the poor or middle class, or even the upper class. They sue all the time, their corporations are creatures of law, and so on. so they should want to maintain the rule of law. What benefits everyone, benefits them too.

All true, except that they don’t think they’re losing the rule of law. They think that the law will protect their interests, and not those of others.

Since that is already mostly their experience (the law is a bludgeon for them rather than against them more often than not, in part because only they can really afford to use it to its full extent) they don’t see any reason why they can’t tilt the field even further.

In terms of equitable law (including legislation) benefiting everyone: yes and no. The era of lessened responsibility and of legislative and judicial capture has made them filthy rich. Arguably they would have been as rich or nearly as rich in a functioning society which produced more equitable incomes and better GDP growth because demand wouldn’t have been strangled (income for the rich rose just fine during the 45 to 75 period) BUT in relative terms they wouldn’t be as rich or powerful, because other people would be richer. Comparative power is what it’s about. If America becomes a third world country and the rich live in massive compounds, flying from one to the other (like they, er, do now) and the courts rule in their favor and the legislatures write bills for thm what is the negative? It’s only a real problem if they lose control, or the lower orders become uppity enough to go all Bastille day on them, which they don’t think Americans will do.

I’m not saying they’re necessarily right, but this is the way they think.

It is not clear to me that liberal rich see nearly as much benefit to them personally. They half buy the conservative argument, because that is their lived experience–they don’t have to deal with ordinary people, they don’t fly on the same planes, they don’t take the subway or buses or even ordinary taxis most of the time, they live in a bubble in which the problems of normal people effect them only remotely. They have hotels rooms or whole hotels which cost so much you and I will never enter them (we don’t even know their names, by and large) with private garages to private elevators to private lobbies to private rooms, from which they are conveyed in helicopters or limousines to private jets. They never see someone who isn’t part of their class or a servant or retainer. All this assuming they don’t have a private residence in every city they spend any significant amount of time in.

This is not an exaggeration. Most people have no idea how the rich really live.

They aren’t like us, there is a point where wealth becomes so huge that it lifts you out of ordinary existence and the global rich (including the American rich) are past that event horizon.