Venezuela, Eni Invest $18 Billion to Pump, Refine Oil
By Steven Bodzin
Jan. 26 (Bloomberg) — Eni SpA, Italy’s biggest oil company, and Petroleos de Venezuela SA, the South American country’s state-owned oil company, agreed to develop almost $18 billion worth of projects to pump and refine oil in Venezuela.
The companies’ joint venture will start producing crude in the Orinoco Belt in central Venezuela, Oil and Energy Minister Rafael Ramirez said today on state television, at a ceremony attended by Venezuelan President Hugo Chavez and Eni Chief Executive Officer Paolo Scaroni.
The venture expects to pump 240,000 barrels a day after spending $8.3 billion to develop the Junin 5 block, Ramirez said. First oil will be pumped in 2013, Eni said today on its Web site. It will reach full production in 2016, Scaroni said.
“That gigantic oil reserve — it could not be exploited by Venezuela alone,” Chavez said, referring to the roughly 235 billion barrels of reserves in the Orinoco Belt. “Foreign investment is absolutely necessary.”
Rome-based Eni is seeking oil projects abroad to maintain output. Venezuela, to make up for declining production in its aging Lake Maracaibo fields, is inviting foreign companies to become minority partners in the Orinoco.
Eni also plans to build a $9.3 billion, 350,000 barrel-a- day refinery to convert crude oil from the existing Petromonagas project in the Orinoco into higher-value products, Ramirez said.
Eni will pay a $646 million signing fee, the company said on its Web site. It will pay $300 million when the development joint venture is formed and the remainder will be paid later.
International Arbitration
Eni will hold 40 percent of the venture. PDVSA, as the state company is known, will own the rest.
Eni was granted access to the Orinoco after dropping an international arbitration case against Venezuela in 2008 over an oil field nationalization.
U.S. oil companies Exxon Mobil Corp. and ConocoPhillips continue to pursue arbitration against Venezuela for seizing operations of Orinoco Belt projects that began in the 1990s.
Venezuela expects to complete joint venture agreements with Chinese and Russian companies “soon” and to complete bidding for three projects in the Carabobo blocks, Ramirez said.
Eni also signed a memorandum of understanding to build a 1- gigawatt power plant to be powered by natural gas from the Delta Caribe Oriental offshore fields, Ramirez said, without giving a potential price tag.
To contact the reporter on this story: Steven Bodzin in Caracas at sbodzin@bloomberg.net.
Sentence Geithner To Prison For Lying To We The American People
John Mica slams Treasury Secretary’s “lame excuses” during fiery hearing
Paul Joseph Watson
Prison Planet.com
Wednesday, January 27, 2010
Treasury Secretary Timothy Geithner’s denial that he played any role in the AIG cover-up is contradicted by emails which confirm that Geithner and the New York Federal Reserve were both intimately involved in keeping details about payments to banks including Goldman Sachs from the public.
Geithner told lawmakers today that he had no involvement in withholding information about the bailout of AIG, much to the chagrin of House Oversight Committee Ranking Member Darrell Issa, who wasn’t buying it for a second.
“He has asserted complete ignorance of the Fed’s efforts to cover up the bailout details,” said Issa, R-Calif. “Many Americans, including members of this Committee, have a hard time believing that Secretary Geithner entered an absolute cone of silence on the day that his nomination was announced.”
Russia Today report on Geithnergate – AIG attempted to hide bailout documents
John Mica of Florida went further, calling for Geithner to quit as a result of the scandal.
“Why shouldn’t we ask for your resignation?” Mica asked Geithner. “We’re not getting the whole story, we’re getting the blame story. You’re either incompetent on the job or you knew what was taking place and you tried to conceal it, and I think that’s grounds for your review.”
Mica characterized Geithner’s denials as “lame excuses” as the Treasury Secretary became visibly angry.
In November and December 2008, The Federal Reserve Bank of New York, headed up by Geithner, instructed the bailed out AIG to hide from the public details regarding payments the insurance giant made to banks, including Goldman Sachs Group Inc. and Societe Generale SA.
Using Fed secured taxpayer bailout money, AIG paid several banks 100 percent of the face value of credit-default swaps, as other financial institutions were negotiating deep discounts for the unregulated paper assets that do not have to be backed by cash.
The decision to pay the banks in full may have cost AIG, and therefore taxpayers, at least $13 billion over the odds.
The “backdoor bailout” of the banks, as it has been dubbed was exposed in March 2009 after the SEC challenged AIG’s filing, however, e-mails obtained by Representative Darrell Issa, ranking member of the House Oversight and Government Reform Committee, reignited the situation after they conclusively exposed a collusion between AIG and the Fed to deceive the public.
The e-mails between company and regulator show that The New York Fed crossed out reference to the payments and that AIG also omitted the details when the Securities and Exchange Commission filing was made public on Dec. 24, 2008.
The emails, the content of which are highlighted in this Bloomberg News article, also show that the Fed wanted numerous other details about the AIG bailout withheld or delayed from public oversight.
“It appears that the New York Fed deliberately pressured AIG to restrict and delay the disclosure of important information,” said Issa, adding that taxpayers “deserve full and complete disclosure under our nation’s securities laws, not the withholding of politically inconvenient information.”
Geithner’s denial that he, even as President of the New York Fed, had no involvement with the AIG case is contradicted by fresh revelations this week in a new report issued by Issa that show Geithner was “at a minimum, engaged personally in reviewing what information about the AIG bailout would be revealed to Congress and the public.”
On November 6, 2008 Geithner received an email from Sarah Dahlgren, the FRBNY’s lead staff member in AIG’s operations, seeking Geithner’s approval for a proposed statement regarding AIG’s upcoming equity capital raise. The fact that Geithner’s approval had to be obtained merely for putting out statements concerning AIG clearly indicates that he was deeply involved in the matter.
On November 13, Geithner was sent a report on AIG’s restructuring that would be sent to Congress. Sophia Allison, a staff member of the Federal Reserve’s Board of Governors, asked that Geithner point out any information that he believed should not be “publicly disclosed”.
In addition, records of who Geithner met with during his tenure as President of the FRBNY “show that he was regularly engaged with top AIG officials and the FRBNY officials directly responsible for AIG’s disclosures to the SEC. Geithner’s schedule shows that he had at least six formal meetings with top FRBNY staff members about AIG-related issues between November 4, 2008, and November 21, 2008.”
Watch the clip from today’s hearings where Mica demands Geithner’s resignation.
Reappointing Bernanke: We Won’t Get Tarped Again
Dean Baker | The Guardian Unlimited | January 25, 2010
The Senate’s decision on approving Ben Bernanke for a second term as chair of the Federal Reserve Board is coming down to the wire and the Wall Street crew is once again pulling out all the stops. To get the 60 votes they need for Senate approval they are reaching into the treasure chest of tall tales they used to push through the TARP. They are once again telling the American people that the world will end if we don’t do exactly what they want.
The main story they are pushing is that if Bernanke is not approved then the markets will panic and send the economy tumbling. Both parts of this story deserve some serious skepticism. First, there undoubtedly will be some uncertainty in the financial markets if Bernanke is not reappointed. Markets like continuity. A new Fed chair means a break in continuity. Therefore, we can expect to see some decline in the stock market, probably about the same as we get when there is a worse-than-expected jobs report.
However, focusing on day-to-day movements in the stock market is no way to make economic policy. For practical purposes, the daily movements in the market have no impact on the economy. Furthermore, there is no way to move the economy away from its current Wall Street bubble-driven growth path to one built on a productive economy without at least some temporary decline in stock prices.
Such a decline is inevitable if for no other reason than the fact that Goldman Sachs, J.P. Morgan and the rest account for a substantial portion of the value of the stock market. If we can never do anything that even temporarily hurts stock prices then we can forget about ever reining in Wall Street.
Interestingly, the bond market, which is far more important for the economy than the stock market, has been rallying in recent days as Bernanke’s nomination faces increasing difficulty. Bernanke’s troubles may not be the cause of this rally, but they have not prevented the 10-year Treasury rate from falling considerably.
It is also worth pointing out that one supposed source of bad news – a declining dollar – would actually benefit the economy. The country has a huge trade deficit because the dollar is over-valued. If the dollar were to decline as a result of Bernanke not being reappointed, it would give a boost to our exports and cause domestically manufactured products to displace imports.
Bernanke’s troubles don’t seem to be depressing the dollar at the moment, but if the Wall Street fear mongers and their allies push this line, we should realize that they are once again spouting nonsense. A lower-valued dollar is good news for the economy.
To briefly summarize the case against Bernanke, at the top of the list is the fact that his failures at the Fed (both as chairman since 2006 and as a governor since 2002) brought the economy to the brink of a second Great Depression (Bernanke’s assessment, not mine). Anyone else who had failed so completely at his or her job would be fired in a minute.
Only in Washington and on Wall Street could such a disastrous record be rewarded with another term in office.
Second, the focus of his bailout was to return Wall Street to health while leaving the rest of the country reeling. Bernanke rightly tapped the Fed’s virtually unlimited resources to keep the financial system from collapsing; however, he gave out money to the banks at below market interest rates with no strings whatsoever.
They were able to use this money to restore themselves to health, but were not required to do anything about compensation practices, risky trading or helping homeowners facing foreclosure. Nor were their shareholders and bondholders required to incur any losses. In effect, Bernanke gave a huge gift from the taxpayers to the Wall Street boys who were responsible for the crisis in the first place.
Finally, he misled Congress to help get the TARP passed back in October of 2008. He told Congress that commercial paper was shutting down, which meant that even healthy companies would not be able to borrow the money needed to meet their payroll and to pay other bills. This would have quickly led to an economic collapse.
Bernanke did not tell Congress that he was planning to set up a special lending facility to directly buy commercial paper. He announced this facility the weekend after Congress approved TARP. It is not the Fed chairman’s job to deceive Congress. Nor is it his job to bail out Wall Street at the expense of the rest of the country. And, it is his job to prevent the growth of dangerous bubbles. That’s three really big strikes.
Bernanke should be sent out to enjoy his TIME “Person of the Year” status in retirement.
To get through this nonsense we just have the repeat the great mantra: It’s the economy stupid.
Dean Baker is the co-director of the Center for Economic and Policy Research (CEPR). He is the author of False Profits: Recovering from the Bubble Economy. He also has a blog on the American Prospect, “Beat the Press,” where he discusses the media’s coverage of economic issues.
See article on original website
Rule by the Rich
By Paul Craig Roberts | January 27, 2010
The election of Republican Scott Brown to the U.S. Senate by Democratic voters in Massachusetts sends President Obama a message. Voters perceive that Obama’s administration has morphed into a Bush-Cheney government. Obama has reneged on every promise he made, from ending wars, to closing Gitmo, to providing health care for Americans, to curtailing the domestic police state, to putting the interests of dispossessed Americans ahead of the interests of the rich banksters who robbed Americans of their homes and pensions.
But what can Obama do other then spout more rhetoric?
The Democrats were destroyed as an independent party by jobs offshoring and so-called free trade agreements such as NAFTA. The effect of “globalism” has been to destroy the industrial and manufacturing unions, thus leaving the Democrats without a power base and source of funding.
Obama and the Democrats cannot be an opposition party, because Democrats are as dependent as Republicans on corporate interest groups for campaign funding.
The Democrats have to support war and the police state if they want funding from the military/security complex. They have to make the health care bill into a subsidy for private insurance if they want funding from the insurance companies. They have to abandon the American people for the rich banksters if they want funding from the financial lobby.
Now that the five Republicans on the Supreme Court have overturned decades of U.S. law and given corporations the ability to buy every American election, Democrats and Republicans can be nothing but pawns for a plutocracy.
Most Americans are hard pressed, but the corporations have only begun to milk them.
Wars are too profitable for the armaments industry to ever end. High unemployment is now a permanent state in the U.S., thus coercing job seekers into military service.
The security industry profits from the police state and regards civil liberties as a hindrance to profits. By announcing that he intends to continue the Bush policy of indefinite detention, a violation of the Constitution and U.S. legal procedures, Obama has granted the Democratic Party’s consent to the Republicans’ destruction of habeas corpus, the main bastion of individual liberty.
Jobs offshoring is too profitable for U.S. corporations for Obama to be able to save American jobs and restart the broken economy.
Americans are being squeezed out of health care not only by the loss of job benefits, but also by corporate takeover of medical practice from physicians. Today medical doctors are wage slaves of corporate health providers that leverage doctors by turning them into supervisors of physician assistants, lower paid people without medical degrees who perform the services that doctors once provided. As neither doctor nor physician assistant has any independence, there is no one to represent the patient’s care against the profits of the corporation.
Even environmental concerns are being used to create “cap and trade” rights to buy and sell the ability to pollute. Wall Street is licking its lips over a new source of leveraged derivative instruments.
The American public cannot even get reliable information about their plight as the “mainstream media” has been concentrated into a few corporate hands that do not permit independent reporting. The media is as dependent on corporate money as are politicians.
How can President Obama restart an economy that has been moved offshore? Millions of manufacturing jobs are gone, as are millions of jobs for college graduates, such as software engineering, Information Technology–indeed, any intellectual skill the product of which can be conveyed via the Internet. Even those intellectual skill jobs that do remain in the U.S. are filled increasingly by foreigners brought in on work visas.
The wipe out of blue collar and middle class job growth has stopped the growth of American incomes except, of course, those of the super rich. For a decade American consumers substituted increased personal indebtedness for income growth. In order to maintain and to increase their consumption, Americans consumed their assets, such as their home equity. Americans reached their maximum debt load just as the real estate bubble burst and just as the banksters highly-leveraged, toxic financial instruments brought down the stock market and the values of Americans’ pensions.
The enormous damage done to the U.S. economy by jobs offshoring, work visas, and financial deregulation cannot be offset by government stimulus plans, which expand the debt burdens that are crushing Americans. The federal government’s massive budget deficits and the Federal Reserve’s easy monetary policy are setting the stage for an inflationary depression to follow a deflationary depression.
The Federal Reserve chairman says not to worry about inflation, because the Fed can take the money back out of the economy. But can the Fed take the money out without contracting the economy?
The Federal Reserve says not to worry about financing the federal budget deficit. Banksters are buying the Treasury bonds with the proceeds from their sales of their toxic derivatives to the Fed.
So what is happening to the Federal Reserve’s balance sheet? And when will the Fed have no recourse but to print new money in order to finance the federal deficit?
How long can the dollar retain its reserve currency role in such circumstances, and how does the U.S. pay for its imports when this role is lost?
Don’t look to Washington for answers to these questions.
Paul Craig Roberts was Assistant Secretary of the Treasury in the Reagan administration. He is the author of How the Economy was Lost, just published by CounterPunch / AK Press. He can be reached at: PaulCraigRoberts@yahoo.com
Venezuela and North Dakota Oil Updates
Estimates of Original Oil-in-Place
A comprehensive study by Petroleos de Venezuela S.A. (PDVSA) established the magnitude of the original oil-in-place (OOIP) at 1,180 billion barrels of oil (BBO), a commonly cited estimate for the Orinoco Oil Belt (Fiorillo, 1987); PDVSA recently revised this value to more than 1,300 BBO (Gonzalez and others, 2006). In this study the median OOIP was estimated at 1,300 BBO and the maximum at 1,400 BBO. The minimum OOIP was estimated at 900 BBO, given the uncertainty of regional sandstone distribution and oil saturation (Fiorillo, 1987).
Estimates of Recovery Factor
Recovery factor, or that percentage of the OOIP that is determined to be technically recoverable, was estimated from what is currently known of the technology for recovery of heavy oil in the Orinoco Oil Belt AU and in other areas, particularly California, west Texas, and western Canada. The minimum recovery factor was estimated to be 15 percent, the recovery expected for cold production using horizontal wells. The median recovery factor was estimated to be 45 percent, on the assumption that horizontal drilling and thermal recovery methods might be widely used. The maximum recovery factor was estimated to be 70 percent, on the assumption that other recovery processes, in addition to horizontal drilling and steam-assisted gravity drainage, might eventually be applied on a large scale in the Orinoco Oil Belt AU.
The assessment of technically recoverable heavy oil and associated gas resources is shown in table 2. The mean of the distribution of heavy oil resources is about 513 BBO, with a range from 380 to about 652 BBO. The mean estimate of associated dissolved-gas resource is 135 trillion cubic feet of gas (TCFG), with a range from 53 to 262 TCFG. No attempt was made in this study to estimate either economically recoverable
2. North Dakota raised its forecast for oil output on growth in and around the Bakken Shale formation There is another 100,000 barrels a day in north Dakota from oil that is not in the Bakken.
Output may reach 300,000 to 400,000 barrels a day by mid- 2011 and stay at that level for 10 to 15 years, said Lynn Helms, director of the North Dakota Mineral Resources Department. The state’s previous estimate was 220,000 to 280,000.
The forecast was raised on discoveries by companies such as Continental Resources Inc., Helms said in an interview. Drilling advances are enabling producers to tap the Bakken, where rocks lack the porosity and permeability of conventional oil fields. The Bakken contributed to last year’s 7.5 percent gain in U.S. crude output, the biggest since 1955 and the first in 18 years. The Energy Department forecast a 1.8 percent increase in 2010.
The top end of North Dakota’s production projection would represent more than 7 percent of nationwide oil output.
One quarter of US grain crops fed to cars – not people, new figures show
New analysis of 2009 US Department of Agriculture figures suggests biofuel revolution is impacting on world food supplies
John Vidal | environment editor
guardian.co.uk | 22 January 2010
One-quarter of all the maize and other grain crops grown in the US now ends up as biofuel in cars rather than being used to feed people, according to new analysis which suggests that the biofuel revolution launched by former President George Bush in 2007 is impacting on world food supplies.
The 2009 figures from the US Department of Agriculture shows ethanol production rising to record levels driven by farm subsidies and laws which require vehicles to use increasing amounts of biofuels.
“The grain grown to produce fuel in the US [in 2009] was enough to feed 330 million people for one year at average world consumption levels,” said Lester Brown, the director of the Earth Policy Institute, a Washington think tank that conducted the analysis.
Last year 107m tonnes of grain, mostly corn, was grown by US farmers to be blended with petrol. This was nearly twice as much as in 2007, when Bush challenged farmers to increase production by 500% by 2017 to cut oil imports and reduce carbon emissions.
More than 80 new ethanol plants have been built since then, with more expected by 2015, by which time the US will need to produce a further 5bn gallons of ethanol if it is to meet its renewable fuel standard.
According to Brown, the growing demand for US ethanol derived from grains helped to push world grain prices to record highs between late 2006 and 2008. In 2008, the Guardian revealed a secret World Bank report that concluded that the drive for biofuels by American and European governments had pushed up food prices by 75%, in stark contrast to US claims that prices had risen only 2-3% as a result.
Since then, the number of hungry people in the world has increased to over 1 billion people, according to the UN’s World Food programme.
“Continuing to divert more food to fuel, as is now mandated by the US federal government in its renewable fuel standard, will likely only reinforce the disturbing rise in world hunger. By subsidising the production of ethanol to the tune of some $6bn each year, US taxpayers are in effect subsidising rising food bills at home and around the world,” said Brown.
“The worst economic crisis since the great depression has recently brought food prices down from their peak, but they still remain well above their long-term average levels.”
The US is by far the world’s leading grain exporter, exporting more than Argentina, Australia, Canada, and Russia combined. In 2008, the UN called for a comprehensive review of biofuel production from food crops.
“There is a direct link between biofuels and food prices. The needs of the hungry must come before the needs of cars,” said Meredith Alexander, biofuels campaigner at ActionAid in London. As well as the effect on food, campaigners also argue that many scientists question whether biofuels made from food crops actually save any greenhouse gas emissions.
But ethanol producers deny that their record production means less food. “Continued innovation in ethanol production and agricultural technology means that we don’t have to make a false choice between food and fuel. We can more than meet the demand for food and livestock feed while reducing our dependence on foreign oil through the production of homegrown renewable ethanol,” said Tom Buis, the chief executive of industry group Growth Energy.
About that bank tax Obama touts
By Dean Baker | The Guardian | January 18, 2010
President Obama proposed a tax on the country’s largest banks to help recover the money lost under the Troubled Assets Relief Programme (Tarp). This tax is a positive step. However, it will not come close to recovering the losses incurred in the bailouts and it will do almost nothing to change the way that the banks do business. For this we will need a larger financial speculation tax.
First, it is necessary to be clear on the extent of the losses incurred in the bailouts of the financial system. The losses in the Tarp are currently pegged at close to $120bn, mostly due to the bailout of AIG, the giant US insurance company. This money was virtually a direct handout to several large banks, as the government’s money allowed AIG to make payments to Goldman Sachs and other large banks that would not have been possible if it had fallen into bankruptcy.
But these losses are far from the complete picture with the Tarp. On the night before Christmas, the Treasury department lifted the $200bn cap on the amount that both the mortgage agencies Fannie Mae and Freddie Mac can draw on the Treasury. They both now have unlimited lines of credit.
No one knows how much their bailouts will eventually cost taxpayers, but it is almost certain that their losses are not entirely attributable to the portfolio that the mortgage giants held on 7 September 2008 when they were put into government conservatorship. Many of the losses incurred by Fannie and Freddie are almost certainly due to losses on mortgages they purchased from banks after they went into conservatorship. In other words, Fannie and Freddie were paying too much for the mortgages they purchased from the banks. This is exactly what the Tarp was originally supposed to do.
In effect, the treasury department has run a version of Tarp through Fannie and Freddie. If we want to calculate the money taxpayers lost through from the Tarp programme we should certainly include the money lost bailing out these mortgage giants, which can now exceed $400bn if events turn out badly. This means that if the point is to recover the money lost in the Tarp, the bank tax is likely to fall short by a large margin.
The other key consideration in making the banks pay should be to structure a tax that changes the way the banks do business. This money lost in the Tarp programme is just a small fraction of what the banks’ greed cost the country. We will likely lose more than $4tn in output in this downturn, more than 40 times the projected revenue from the tax over the next decade.
The $9bn that is projected to be collected each year is equal to about 5% of their annual profits and bonuses. It is unlikely to have any noticeable impact on the way they do business. In other words, we can still expect them to be pursuing short-term profits and giving little consideration to long-term investments.
A tax on financial speculation more generally, which will also apply to hedge funds and other financial institutions, would be a far more effective mechanism in changing behaviour. It could also raise very substantial revenue. In the UK, a tax of 0.25% on the purchase and sale of shares of stock raises the equivalent of $30bn annually in the US relative to the size of its economy. A broadly based transactions tax – that would apply not only to stock, but also to options, futures, credit default swaps and other financial instruments – could raise more than $150bn a year in the US.
Such a tax would also make the financial sector more efficient by reducing the volume of short-term trading that serves no productive purpose. The share of the private sector that is devoted to investment banking and commodities trading has nearly quadrupled in the last three decades.
By reducing the volume of trading this tax would make the financial sector more efficient, freeing up resources for productive uses. This would be comparable to improving the trucking sector by reducing the number of trucks and drivers it takes to deliver goods to wholesalers and retailers. Industries are supposed to become more efficient as the economy develops. It is only finance that is becoming less efficient due to its ever-growing complexity.
In short, a tax on financial speculation is a win for just about everyone but the speculators. President Obama’s bank tax is a good start but we have to go much further.
Laughing all the way to the bank
Lloyd Blankfein, CEO of Goldman Sachs
Lee Sustar looks at the farcical hearings of the Financial Crisis Inquiry Commission on the factors that led to the economic meltdown.
January 19, 2010
THE TIMING couldn’t have been better for the Financial Crisis Inquiry Commission, which held its first public hearings on January 13-14.
With their top employees set to enjoy huge bonuses thanks to taxpayer bailouts, the CEOs of the country’s big banks should have been in the hot seat for their role in the financial panic of 2008. The Obama administration’s proposed levy on banks seemingly would have upped the pressure, too.
Instead, the bankers got away with a few sharp words and some finger-wagging by commission members. Commission Chair Phil Angelides, a Democrat and former state treasurer of California, sparred a bit with Goldman Sachs CEO Lloyd Blankfein and hectored other bank executives. But Angelides was only posturing. His commission has failed to make use of the few tools that it has to investigate the banks reckless practices that helped cause the meltdown.
Even the New York Times editorial board was taken aback by the commission’s failures:
[T]he commission–which is supposed to file a final report by December 15–has not issued a single subpoena for documents. Instead, investigators have apparently been relying on voluntary cooperation, public records and information-sharing agreements that have been negotiated with federal agencies. A thorough investigation requires source documents that reveal what people were thinking and doing at the time of the events, and that illuminate, buttress or contradict testimony.
Instead of a serious inquiry, Angelides settled for giving the bankers a tongue-lashing, even as his party quietly tends to Wall Street’s interests.
That’s in keeping with the Democrats’ approach to the financial crisis since it broke in the fall of 2008. It was the Democratic Congress that worked with the Bush administration to pass the $700 billion Troubled Asset Relief Program (TARP) bill that funded the bank bailout.
And it was Treasury Secretary Tim Geithner, then head of the Federal Reserve Bank of New York, who insisted that the nationalized insurance company AIG pay its debts at 100 cents on dollar–which meant that tens of billions in U.S. taxpayer money flowed through AIG into the coffers of big U.S. and European banks. AIG paid $12.9 billion of taxpayer money to Goldman Sachs–and now, Goldman is set to pay out around $22 billion in bonuses.
But the AIG-Goldman scam is only the most obvious of the Obama administration’s giveaways to Wall Street. So far, the U.S. government has loaned or guaranteed up to $13 trillion to financial institutions and other businesses–a figure nearly the size of the entire annual economic output of the U.S.
The rationale for this aid, we were told, is that it would prevent a total economic collapse and get credit flowing to businesses and consumers once again. The bailouts did pull the financial system back from the brink. Thanks to near-zero interest rates set by the U.S. Federal Reserve, the banks can borrow cheaply and use the money to finance investments where a higher return seems certain.
For example, some banks are borrowing from the government at virtually no interest and buying U.S. Treasury bills that pay much higher interest. That is, the banks are borrowing from one part of the U.S. government and profiting by lending it back to another part of the government at a much higher rate. Many financial institutions are also using funds borrowed from the Fed to invest in foreign currencies to gain higher returns–the so-called carry trade.
But when it comes to helping hard-pressed working people, the bankers aren’t interested. Despite a ballyhooed government program to spur banks to help homeowners who are underwater on their mortgages, the federal Home Affordable Modification Program has permanently helped only 66,000 homeowners out of 4 million that may be eligible–even as foreclosures rise from 2.8 million in 2009 to an expected 3 million in 2010.
Instead, the banks are using government money to pad their balance sheets and help them absorb losses resulting from risky investments in complex financial instruments tied to mortgages. [Losses which their officers may have been profiting from as indirect counter-parties over the past decade]
GIVEN THE banks’ egregious role in the crash and their hoarding of government cash amid the recovery, one might have expected that financial reform legislation would be inevitable. Instead, Wall Street lobbyists have spread enough money around both sides of the aisle in Congress to kill any meaningful reform. Even the weak proposed consumer financial protection agency has been pronounced dead.
As journalist Chris Hedges put it:
These corporations don’t make anything. They don’t produce anything. They gamble and bet and speculate. And when they lose vast sums, they raid the U.S. Treasury so they can go back and do it again.
Never mind that $50 trillion in global wealth was erased between September 2007 and March 2009, including $7 trillion in the U.S. stock market and $6 trillion in the housing market. Never mind that the total amount of retirement and household wealth trashed was $7.5 trillion, or that we saw $2 trillion in 401(k)s and individual retirement accounts evaporate. Never mind the $1.9 trillion in traditional defined-benefit plans and the $2.6 trillion in non-pension assets that went up in smoke. Never mind the job losses, the foreclosures and the 35 percent jump in personal and small-business bankruptcies.
There are bundles of new money, taken again from us, to make deals and hand out outrageous bonuses. And when these trillions run out they will come back for more until our currency becomes junk.
So what about President Barack Obama’s plan to squeeze the banks with a special tax to recover $117 billion from the bailout?
At first glance, it seems like a delayed, but welcome, bid to claw back taxpayer funds. But the proposed tax would be just a 0.15 percent levy on assets beyond the banks’ core capital–and it would be paid over a decade. All that does is turn a taxpayer giveaway into a loan at rock-bottom interest rates. As the Washington Post noted, “At a projected $9 billion per year, the fee would be a mere sliver of the banks’ estimated quarter-trillion-dollar pre-tax profits.”
Congressional Democrats, who are already panicking over their prospects in the November elections, will pick up the banner of Obama’s proposed bank tax to try to get in front of voters’ anger. But the Wall Street-White House axis has already provided the Republicans with an incredible political gift.
Suddenly, right-wing politicians who usually serve as a mouthpiece for big business are railing against the injustice of bailing out bankers while working people have nowhere to turn. Of course, these Republican hacks are only playing to the right-wing populist “tea party” crowd. They’d never seriously challenge the business agenda.
But thanks to the Democrats’ devotion to the bankers, the Republicans can loudly denounce government bailouts to big business even as they further Corporate America’s agenda.
Whichever party is in office, the bankers win.
Obama’s Latest Ruse: the Bank Tax
The Big Lies Just Keep Coming
By Alan Nasser | January 15, 2010
When president Obama was awarded Advertising Age’s 2009 Marketer of the Year award, we were alerted to expect carefully crafted public relations posturing in defense of the reputation of Brand Obama. We have not been disappointed. The president has regularly taken verbal pot shots at the financial oligarchy in a cynical effort to convey the impression that he shares the public’s outrage at the behavior of the plutocrats. But he has thrown no sticks and stones at the banksters, who know as well as you and I that mere words can never hurt them.
None of Obama’s faux outrage has been as disingenuous as his Wednesday announcement that he will finally respond sympathetically to the public’s deep resentment of the administration’s tolerance -and therefore encouragement- of the bad guys’ looting of the public treasury.
Obama assured his constituents that he would “recoup every last penny for American taxpayers” by taking back, in the form of taxes on the banks, the wealth that households have been forced to transfer to the coffers of the instigators of the financial crisis.
The announcement was timed to offset what will surely be another surge of public anger at the expected announcement this week of the banks’ year-end bonus payments.
The proposed taxes would apply to financial institutions with more than $50 billion in assets and would extract about $90 billion from them over ten years. Obama’s central claim is that this would cover all losses incurred by the government under the Troubled Asset Relief Program (TARP). We are supposed to be relieved that households will in the end be repaid all that has been transferred from them by TARP. “We want our money back, and we’re going to get it,” said Obama.
Obama is perpetrating a massive ruse. The tax-the-banks proposal rests on conspicuously false empirical assumptions and appalling math.
A key premise of the tax proposal is that TARP is the government’s sole gift to the financial elite. This is of course false: TARP is in fact a relatively small fraction of the State’s total rescue effort. Financial institutions have also been treated to no-cost and virtually unlimited access to credit, broad guarantees against losses and lax regulation, to mention only the most conspicuous gifts. Even if TARP did represent the administration’s total commitment to financial institutions, Obama’s claim would still be nonsense. TARP handed $700 billion to the banks. How does $90 billion “recoup every last penny” of $700 billion? The president thinks, with good reason so far, that he can get away with anything. Anything. Hence the screamingly counterfactual premise and the slapstick math.
That’s not the worst of it. Neil Barofsky, the Special Inspector General charged with overseeing the bailout plan, reports that the bailout could end up costing $23.7 trillion. Critics of Barofsky accuse him of exaggeration. Let’s suppose they are right. Say Barofsky doubled the true cost of the government’s commitment. So what? Bloomberg reports, with no challengers, that the cumulative commitment to financial rescue initiatives amount so far to more than $8.5 trillion. $90 billion is a small drop in a big bucket.
How do these figures compare to what working people have lost? Households have so far lost $12 trillion in wealth in the wake of the crisis. By the end of the third quarter of 2008, shortly after the announcement of an impending collapse of the entire financial system, households had already lost $647 billion in real estate, $922 billion in stocks, $523 billion in mutual funds and $653 billion in life insurance and pension funds reserves. Total destruction of household wealth in Q3 2008 came to $2.8 trillion, the worst decline on record. That comes to four times TARP’s $700 billion. If “[w]e want our money back,” we’re dead out of luck. Obama knows this, but the man is an instrument of his financial masters, and the ad campaign functioning to obscure this reality requires big lies. The president has these coming out of his ears.
Alan Nasser is professor emeritus of Political Economy at The Evergreen State College in Olympia, Washington. He can be reached at nassera@evergreen.edu
Hariri: Lebanon will soon sign free-trade deal with Turkey
Premier invites Turkish private sector to step up investment
Daily Star
January 13, 2010
BEIRUT: Prime Minister Saad Hariri said during a meeting with Turkish and Lebanese businessmen in Istanbul on Tuesday a free trade agreement between Lebanon and Turkey will soon be signed. According to Hariri, the two countries have growing markets with high potential in the private sectors, which, he said is the driving force behind the economic vision of both countries. “Turkey and Lebanon have a joint goal to achieve economic prosperity in the region,” said the premier.
Hariri was speaking during a luncheon hosted by the Turkish-Lebanese Business Council of the Foreign Economic Relations Board in Istanbul.
Hariri called on the Turkish private sector to invest in Lebanon, and invited Lebanese and Turkish businessmen and women to exchange visits.
“A lot of work remains to be done despite Lebanon’s economic progress,” Hariri said. However, he added that as stated in the Ministerial Statement, the Cabinet faces challenges related to communications, infrastructure, energy and environmental issues.
Turkish Environment and Forests Minister Veysel Eroglu, in turn, called for strengthening bilateral relations, particularly at the economic level.
He also voiced hope for stronger cooperation between Lebanon and Turkey.
Lebanon and Turkey have signed major agreements on military, agriculture and transport cooperation, including a deal to lift entry visas and a Turkish pledge to supply Lebanon with natural gas and electricity.
On Monday Hariri and his Turkish counterpart Prime Minister Recep Tayyip Erdogan witnessed the signing of six deals that also covered the areas of health and education.
Hariri arrived in Turkey on Sunday and will wrapped up his visit on Tuesday.
The agreement on visa-free travel between Turkey and Lebanon comes after similar deals between Turkey and Syria, and Turkey and Jordan. Visa requirements have already been cancelled between Syria and Lebanon and between Syria and Jordan.
Beirut newspapers on Tuesday said that the measure is similar to the Schengen visa application which has made traveling between 5 European member countries much easier and less bureaucratic.
Erdogan said Turkey will supply natural gas and electricity to help meet Lebanon’s energy needs and that the two countries planned a ferry service between their Mediterranean coasts.
Media reports Tuesday said Turkey also proposed the idea of “strategic cooperation” between the two countries similar to that of the Turkey-Syria High-Level Strategic Cooperation Council. The reports said Hariri promised to consider the offer.
On Monday, Hariri and Erdogan lashed out at Israeli violations of Lebanese airspace and air strikes in Gaza, warning they were undermining prospects for peace in the region. “Attacks on Lebanon is terrorism itself … We have to stand shoulder by shoulder against the enemy’s plans … We have to stop Israel,” Hariri told a press conference.
Erdogan, whose country’s once-flourishing ties with Israel took a sharp downturn last year, said that Turkey “will never stay silent” on Israeli violations of Lebanese airspace.
He slammed the Israeli over flights as “unacceptable action that threatens global peace.”
“They the Israelis have disproportional capabilities and power and they use them … They do not abide by UN resolutions,” he added. – The Daily Star
Health care “reform” – The liberals fall in line
By Lance Selfa | January 11, 2010
AS HEALTH care reform legislation in Congress limps to what National Nurses United President Rose Ann DeMoro called an “inglorious end,” it’s remarkable how few liberals feel enthusiastic about a bill that is supposed to represent a crowning achievement for them.
Aside from a few policy wonks, many (if not most) liberals feel that the health care legislation that will emerge from Senate and House negotiations is insufficient–and, in parts, harmful to ordinary people’s health care. The most ardent supporters of reform know that the likely “compromise” modeled on the more conservative Senate version of the bill will be a huge gift to the insurance industry. At the same time, they feel that Democrats have gotten far less than they could or should have, in large part because they didn’t even try.
What happened to all the brave announcements of “lines in the sand” and “standing up for real reform?” Over the summer, the House Progressive Caucus threatened to vote as a bloc against any legislation that didn’t include a “public option”–a publicly financed insurance system to compete with private insurers. Today, it’s almost certain that the final version of the bill will not include a public option.
So will the House progressives follow through on their threat to defeat the bill? Don’t count on it. House Speaker Nancy Pelosi might give a few progressive caucus members a “free vote” to oppose the bill if there’s enough of a cushion to pass it, but if progressives stand between passage of the bill and its defeat, don’t expect them to vote to defeat it.
What about Howard Dean, the former Democratic National Committee chair who made news in December when he took a very public stand against the bill that was about to pass the Senate. In a December 17 Washington Post op-ed article, Dean wrote:
Any measure that expands private insurers’ monopoly over health care and transfers millions of taxpayer dollars to private corporations is not real health-care reform…Few Americans will see any benefit until 2014, by which time premiums are likely to have doubled. In short, the winners in this bill are insurance companies; the American taxpayer is about to be fleeced with a bailout in a situation that dwarfs even what happened at AIG.
Dean was right on target with that criticism. White House spokesman Robert Gibbs even attacked him for it during a press briefing.
Yet of late, Dean has become a lot less vocal and a lot more accepting of the legislation as it stands. As he told Meet the Press on December 20: “I would let this bill go to conference committee and see if we can fix this bill more…Let’s see what they add to this bill and make it work. If they can make it work without a public option, I’m all ears.”
According to Newsweek reporter Suzy Khimm, Dean’s somersault resulted from back-channel contact with the White House and the realization that the Senate bill was going to pass. As Khimm explained:
While he attempted last week to use the failure of the public option as a new point of leverage, Dean only succeeded in alienating himself from the key players in the debate (and the flip-flops that riddled his other criticisms of the bill didn’t help his credibility). In the end, Dean wants to be at the negotiating table–not cast outside it–and he probably decided to adjust accordingly.
Then there are the elected representatives who have been on record for years as favoring a single-payer health care system eliminating the role of private health insurers. For them, even the prospect of a “public option” represented a retreat from their longstanding public positions. Surely they would hold up the banner of genuine health care reform, right?
Not really. In fact, they proved more adept at talking about real reform than actually voting for it.
Take Rep. Anthony Weiner, the telegenic New York congress member who made the rounds of television talk shows throughout the fall, bashing the insurance industry and calling for genuine health reform. During the House debate on its bill, Weiner extracted a promise from Pelosi that his amendment supporting a single-payer system would receive an “up-or-down” vote.
As the October deadline for the vote drew near, Pelosi–reportedly with White House encouragement–began wiggling out of the deal. Single-payer advocates mobilized to hold Pelosi to her promise, but Weiner withdrew his amendment. Single-payer advocates Reps. John Conyers (D-Mich.) and Dennis Kucinich (D-Ohio) issued a letter supporting the climbdown. It read, in part:
Many progressives in Congress, ourselves included, feel that calling for a vote tomorrow for single-payer would be tantamount to driving the movement over a cliff…We are now asking you to join us in suggesting to congressional leaders that this is not the right time to call the roll on a stand-alone single-payer bill. That time will come.
Pelosi’s cover story was that allowing Weiner’s amendment would open the floodgates to other amendments, like those banning abortion. So what happened? Weiner withdrew his amendment, and Rep. Bart Stupak (D-Mich.) introduced his, banning coverage for abortion. The bill, with the Stupak amendment included, passed the House.
Of all the House progressives, only Kucinich and Rep. Eric Massa of New York voted against it. Though Kucinich did the right thing in voting against the House bill, his and Conyers’ letter had already given other progressives justification in voting for it.
Another articulate critic of pro-corporate health insurance reform–and a regular on liberal shows like MSNBC’s Countdown with Keith Olbermann and The Rachel Maddow Show–Vermont’s independent Sen. Bernie Sanders, got further than Weiner. He actually introduced his single-payer amendment to the Senate and, under Republican pressure, spent six hours on the Senate floor, reading it line-by-line.
Senate leaders, worried that Sanders’ amendment was delaying the vote they needed to move the bill forward, pressured him to stand down. He did, after receiving a pledge that $10 billion would be invested in community health centers. Sanders’ office later issued a press release saying the provision will “revolutionize” health care. Sanders’ was one of the 60 votes that moved the Senate bill along.
So as Congress, in closed-door negotiations, moves toward a final vote on health care reform, liberals are preparing themselves to accept a pro-corporate health care bill that is unlikely to fix more than a few of the problems associated with the current dysfunctional system.
The chorus of liberal opinion selling this rotten compromise to the most committed supporters of health care reform will grow louder. We will hear all of the claptrap that always gets hauled out in these situations: “We can’t let the perfect be the enemy of the good,” “We can improve the bill in the future,” “If the Republicans hate this bill, there must be something good about it,” and “If this bill goes down to defeat, it will embolden the right, and chances for any other reforms will be finished.”
As always, the liberals will play the loyal soldiers for an administration that has shown it is much more interested in winning the support of industry “stakeholders” and conservatives like Sens. Ben Nelson (D-Neb.) and Joe Lieberman (I-Conn.) than in fighting for any genuine health reform.
Even the prospect of the oft-cited positive effects of the bill–30 million uninsured Americans covered, a ban on the insurance industry policy of “rescission” (dropping coverage for sick people on technicalities) and denial of insurance to those with “pre-existing conditions”–may turn out to be mirages.
The liberals who are now convincing themselves that these are reasons to vote for the bill may find out that most Americans won’t consider forcing people to buy private insurance as “universal coverage.” And they may also find out that loopholes in the bill allowing insurers to jack up prices to unaffordable levels will neuter the other tough-sounding insurance reforms. If the Senate plan to tax “Cadillac” health care plans remains in the bill–as Obama prefers that it does–substantial numbers of Americans are going to see a cut in their current health care benefits.
Unfortunately, that may be where we end up because of liberalism’s hard-wired propensity always to accept “half a loaf” without even trying to fight for the whole loaf. In an insightful commentary focused predominantly on liberalism’s putative leader, President Obama, Huffington Post contributor Drew Westen put his finger on this point:
I don’t honestly know what this president believes. But I believe if he doesn’t figure it out soon, start enunciating it, and start fighting for it, he’s not only going to give American families hungry for security a series of half-loaves where they could have had full ones, but he’s going to set back the Democratic Party and the progressive movement by decades, because the average American is coming to believe that what they’re seeing right now is “liberalism,” and they don’t like what they see.
Thanks to Helen Redmond for information on the role of Reps. Kucinich, Conyers and Weiner.
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Jewish Guilt is the Discourse of The Goyim
By Gilad Atzmon | April 24, 2018
For quite some time the British have accepted that British Jewish organizations have hijacked the political discourse. As has happened in other Western countries, the British political establishment has engaged is a relentless rant against antisemitsm. Sometime the focus drifts for a day or two. An alleged ‘Russian nerve gas attack’ provided a 48 hour pause. Occasionally we bomb Arabs in the name of ‘human intervention’ only to realize a day or two later that we have, once again, followed a premeditated foreign agenda. But, somehow, we always return to the antisemitism debate, as if our media and politicians are a herd of flies gravitating to a pile of poop. … continue
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