The Rude Guy Show 82.5
Rich Zubaty here. I’m waiting until I see what happens on September 17 to do this month’s podcast. On September 17 tens of thousands of protesters have vowed to occupy Wall Street and not leave until something changes. This is not your normal protest march. This is an occupation. Tahrir Square in America. So I’ll do an audio podcast once I see what has happened there. Godspeed to the protesters. Wish I could be there. If I was within a thousand miles of New York City I WOULD be.
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My feature length Corporate Vampires video is now available free online at youtube. It’s a no-budget production which was only intended to be a pilot that would raise money to produce a real movie with real actors and real scenes but no one would invest in it, and it gets the point across just fine as is. Some people tell me it’s too long and too repetitive. I tell them: “So is the Bible”. You can decide for yourself by clicking here.
And if you are really hankering for an audio podcast you can hear the entire Corporate Vampires show here. The visuals enhance the show but it is 95% an audio show anyway:
CLICK HERE to listen to The Rude Guy podcast #27
or RIGHT CLICK HERE (Apple command/click) then click “Save Target As” to DOWNLOAD the podcast to your computer or playback device
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I recently bumped into an old friend of mine who works in construction. He used to pour the concrete for some of my carpentry jobs. My friend launched into a rant about how outrageous it is that the U.S. government is talking about suing the big banks over the real estate disaster they caused. I was appalled. He must be getting this from the mouth of Rush Limbaugh or some other corporate ass-licker. Here is a guy who has been in construction his whole life and doesn’t understand how banks work. So I decided to put this on paper.
Banker Bob from the Big Fat-Assed Too-Big-To-Fail Bank has some old widow deposit $1000. Bob’s first thought is: “Great. Now I have $30,000 to lend out.” Why $30,000? Because the government refuses to regulate how much banks must keep in reserve for the loans they issue so some banks will leverage their deposit amounts by 30 times! So 1000, becomes 30,000. [except for Goldman Sachs which has sometimes leveraged 300 times! – so $1000 became $300,000!]
And then Banker Bob does the same thing ten more times. So $10,000 turns into $300,000, and suddenly Bob has enough make a home mortgage loan. Now he needs a customer.
Carly the Customer stumbles into a mortgage broker and/or subprime lender’s office. She wants to borrow $30,000 for an addition to her house. The sub prime vulture tells her: “Hell, with your credit – working part time at Wal-Mart, Home Depot, and under the counter at Jakes Ice Cream Emporium, you can borrow $300,000 and buy a whole NEW house.”
So Carly does just that.
Before the ink is dry on the contract the subprime lender has turned around and re-sold that mortgage to Banker Bob from the Big Fat-Assed Too-Big-To-Fail Bank. Look out Bob! This women might be a bit shaky, working three part time jobs.
Bob doesn’t give a fuck because before the ink is dry on this contract he has resold the mortgage to Fannie Mae or Freddie Mac – government insured mortgage lenders.
So Bob has turned $10,000 into $300,000. And what does he do next? He does it again and again and again inflating home prices in a stupendous Ponzi scheme. He has taken on a mortgage risk that used to last thirty years, and dumped it in thirty minutes. But he’s not done yet!
He watches as Goldman Sachs bundles 100,000 shitty mortgages like the one he just sold, into Triple A Securites, and then sells them to an unsuspecting German Bank. Why is the German Bank unsuspecting? Because so-called rating agencies like Standard and Poors have rated these bundled-mortgage securities as Triple A. How did they get to be Triple A? They were government insured weren’t they? By Fannie and Freddie?
Now, Banker Bob from the Big Fat-Assed Too-Big-To-Fail Bank, and his criminal accomplices from Goldman Sachs, begin short selling the junk they sold the German Bank. Bob knows Carly has three part time jobs and a balloon payment in four years that she can never make unless the real estate economy keeps skyrocketing and she refinances again. He and Goldman both expect those securitized mortgages to fail and lose their value, so they make bets, called “puts” or short selling, that that will happen.
Then they go to an insurance company like AIG and take out two insurance policies against the junk securities. One will pay them if the securities go bad. Another will pay them if the securities actually increase in value, which can and does happen if the economic bubble continues to expand.
How can AIG be so stupid to insure both for and against something? Because AIG is a Ponzi Scheme masquerading as an Insurance Company run by day trading criminals to whom a dollar they get today can be bet tomorrow on more junk securities or oil or wheat.
The whole fucking thing is corrupt from top to bottom. The whole fucking thing SHOULD be illegal. The whole fucking thing WOULD be illegal if Banker Bob from the Big Fat-Assed Too-Big-To-Fail Bank were prevented from contributing hundreds of millions of dollars to Washington politicians.
And the fact that someone in our government has finally gotten it together to prosecute these crooks is a big deal. The only real problem is that if the government settles for a fine of less than a trillion dollars it will be pathetic.
One trillion dollars could have completely cleaned up all the junk mortgages Banker Bob from the Big Fat-Assed Too-Big-To-Fail Bank and his fellow thieves issued. Over and done.
But it took 12 TRILLION dollars more, issued by the Federal Reserve to the Fat-Assed Too-Big-To-Fail Banks, to clean up all the bets on the bets on the bets they made. And they STILL have never cleaned up the bad mortgages they made, that are still sitting on their books, for houses that have lost one third or more of their value.
I’ve never heard of such a fucking mess in my entire life. And my hard-working concrete-pourer friend thinks we should not prosecute the banks because he listens to Limbaugh. Rush Limbaugh needs to be driven off the air just like Glenn Beck was. He is the Tokyo Rose of the American corporate fascists. He’s the REASON we have such a big fucking mess.
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For thousands of years going back to Mesopotamia it was understood that if society just let the money lenders run free, before long everybody would become enslaved to them. You’d have to sell your land and your flocks and you wife and children and yourself into debt slavery just to survive. That’s why the Bible talked about Jubilee Years, which occurred about every seven years. In a Jubilee year ALL debts were forgiven and everybody started over. And that’s what America needs to do now.
The banking industry has turned into a blood sucking vampire that extracts whatever wealth we create as soon as we create it. They are insatiable and they will never stop. We simply have to declare all our debts to them paid in full. And start over. After all, WE are the ones who created the wealth, not the bankers, who simply invent money out of nothing on computer keyboards. Those numerical digits only have value if they are attached to something WE make.
Cancel all debts. It worked in Mesopotamia and ancient Israel, and it will work now. I have an audio clip discussing this that will be posted on a future podcast. There are a LOT of ideas about how to manage debt and money besides relying on the advice of corporate banking and Wall Street.
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I ran across a recent speech by Dennis Kucinch that’s worth reading. I’ll cut out the typical politician’s emotional hooks and just leave the facts. Basically he’s authored a bill to get rid of the FED and establish a National Bank of America, which could print our money without incurring debt.
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Good evening.
Tonight I wish to speak to this Congress and to my fellow Americans about international policy and its relation to the domestic economy. I will advocate a new direction America must take in the world so that we can meet the needs of our people here at home.
For the past decade we have relied on the force of our arms to make America secure while our economy has rotted from within. America has lost its focus. America has spent more time concentrating on reshaping the world than on reshaping our economy.
We have created hundreds of thousands of jobs for military contractors all over the world, while our unemployment continues to stay above 9%.
Come home America. We must begin to focus on things here at home and stop roaming the world looking for dragons to slay…As Dr. Martin Luther King said at a commencement address at Oberlin College in 1965:
“We must find some alternative to war and bloodshed… I do not wish to minimize the complexity of the problems to be faced in achieving disarmament and peace. But we shall not have the courage, the insight, to deal with such matters unless we are prepared to undergo a mental and spiritual change. It is not enough to say we must not wage war. We must love peace and sacrifice for it. We must fix our visions not merely on the negative expulsion of war, but upon the positive affirmation of peace. We must see that peace represents a sweeter music, far superior to the discords of war.”
I believe the American people have the capacity to ‘undergo a mental and spiritual change’ that Dr. King spoke about…The “with us or against us” mindset which passes for statecraft has placed us on a march of folly that in the past decade has left America with thousands of dead young soldiers, over a million dead innocents in Iraq, Afghanistan, Pakistan and the surrounding region, a new generation of terrorists and trillions upon trillions of dollars in debt. As poverty and war are twins, so are peace and prosperity…
We went into Libya because we were told a massacre could occur; yet civilian casualties in Libya mounted after the U.S. and NATO attacked. In order to please the West, Libya cooperated with the CIA, got rid of its WMD program in 2004 and privatized its economy, resulting in massive unemployment. It was moving through to reform even as the West moved to bomb it and, inexplicably, the West moved to take up the cause of elements of Al Qaeda spurring the rebels.
We learn today from CNN that the rebels and fighters aligned with them are looting weapons warehouses across Libya, where as many as 20,000 surface to air missiles had previously been kept under lock and key. Western officials, perhaps the same geniuses who knowingly helped Libyan rebels with ties to Al Qaeda overthrow the Libyan government, are now worried the surface to air missiles and other weapons will get into the wrong hands.
This lawless interventionism spurred on by an unaccountable NATO which violates United Nations Security Council resolutions with impunity, this attempt to use force to bring others to subjection in the name of democracy, actually has become a device for control over the wealth of other nations, and the squandering of our own wealth, and the spreading of poverty here at home. Did our government just wake up one day and discover that 14 million Americans are out of work and that we need a massive program to put them back to work? No. It has known that for some time. War has become our great distraction. It has given those who have little or no ability to construct a fair economy, an opportunity to pretend to leadership at the expense of those brave men and women who serve, and at the expense of the American economy and the expense of the American taxpayers. We can no longer afford participating in this wargame of nations.
I opposed the war in Afghanistan, and have brought Congress to confront it several times because the U.S. has spent one half a trillion dollars trying to democratize a tribal nation while failing to spend sufficient resources to protect our democracy here at home.
The latest report is that we may be in Afghanistan through 2024, at the request of the Afghanistan government. This will cost us hundreds of billions, even trillions more. Doesn’t it make more sense for America to come home, at the request of and for the benefit of the American people?
I led opposition in this Congress to the war in Iraq. Nine years ago I warned this Congress that there was no reason to go to war against Iraq. I was asked at that time whose side I was on, America’s or the murderous dictator Saddam Hussein. Opposing that intervention was seen by some as coddling a murderous dictator. No matter that Hussein had opposed Al Qaeda. No matter that there was no proof that Iraq had anything to do with 9/11 or Al Qaeda’s role in 9/11; no matter that Iraq did not have the intention or capability of attacking the United States and that no one had been able to show that Iraq had weapons of mass destruction. I wasn’t “for” Saddam Hussein. I was for the truth. And for peace.
America pursued the war anyway. America put the lives of its sons and daughters on the line. America will spend over three trillion dollars for this war that was based on lies. And even today we find our government will not bring the troops home as promised, but instead will continue to spend billions on this stupid and corrupt war in Iraq while our own nation is falling apart. Money for war, but no money for jobs?
Am I advocating isolationism? Certainly not. We need to strengthen the United Nation’s peacekeeping ability and blunt NATO’s warmaking capability. We must stop NATO from going rogue. We need a counter-terrorism strategy which brings people to justice, not which dispenses justice from 10,000 ft., with the help of Predator Drones. It is the predatory interventionism which must stop. We must stop intervening for the benefit of oil companies or other corrupt corporate interests.
We cannot be the policeman of the world and lay off police and firemen in our own nation. We cannot continue to bomb bridges in other countries and say we do not have the money to build bridges here in America. We must stop pretending that America can solve all the problems in the world when we can’t solve our own problems here at home. How can we bring democracy to other nations when we are losing it at home? We cannot tell other people how to live when we have people here at home who are having difficulty living.
There were no weapons of Mass Destruction in Iraq. But there are weapons of mass destruction here in America. Unemployment is a Weapon of Mass Destruction. Poverty is a Weapon of Mass Destruction. Homelessness is a Weapon of Mass Destruction. Inadequate education is a Weapon of Mass Destruction. Lost pension benefits are Weapons of Mass Destruction. Poor health care is a Weapon of Mass Destruction.
Yet despite the obvious needs domestically, the Pentagon budget now consumes over 50% of our discretionary spending. And the Pentagon budget has grown alongside the war budget. Just this year the wars and the Pentagon budget will consume close to $1 trillion in taxpayers’ money. A trillion dollars! Do you have any idea how many jobs a trillion dollars can create? Stop the wars and trim the bloated Pentagon budget and use the savings to put America back to work. The American people want work not warfare.
Can we see any clearer example of the danger of endless war? We are supposed to be impressed with the strength of our leaders who, in the name of America wield awesome weapons against states a fraction of our size while when it comes to the economy and jobs, the same leaders lack the ability to confront Wall Street, which is destroying jobs on Main Street.
While spending trillions for unnecessary wars, the government bailed out the banks for $700 billion, refusing to link the bailout to mortgage modification which would have helped millions of Americans stay in their homes.
The Fed, which infamously looked the other way as the financial crisis was building and failed to properly monitor the overexposure of top banks, created $1.2 trillion, out of nothing and gave secret emergency loans to some of the largest banks who helped to cause the financial collapse through reckless investments. This secret money created out of nothing, but backed by the full faith and credit of the U.S. is going to fuel an international financial system which siphons wealth out of the U.S., avoids paying taxes, takes American jobs and moves them to low-wage countries.
According to Bloomberg News the “$1.2 trillion peak on December 5, 2008 … was almost three times the size of the U.S. federal budget deficit that year and approximates the amount of money, $1.27 trillion that is due in unpaid principal on 6.5 million homes that are in or facing foreclosure.”
Secret loans went to:
Morgan Stanley 107.3 Billion
Citigroup $99.5 billion
Bank of America $91.4 billion
Goldman Sachs $69 billion
and to Foreign Borrowers:
Banks of Scotland $84.5 billion
Zurich based UBS AG 77.2 billion
How is it possible that banks too big to fail still exist? We all know that the banks will fail again. The taxpayers will again be asked bail them out again; to preserve the wealth of shareholders, bondholders and executives, again. The destruction of the middle class has been accelerated by the Wall Street manipulators who brought about the collapse of the housing market, which destroyed trillions of dollars of wealth built into American homes. Risk, like taxes, is a yoke unfairly placed upon the shoulders of the middle class.
As income and resulting wealth are being redistributed upward at a pace not seen since the 1920s, the purchasing power of the middle class has been seriously eroded. Americans have less equity in homes to fuel home equity loans to keep their consumer spending up. A third of all Americans owe more than their home is worth.
How is it possible that 120 million Americans literally have no wealth, just debts: How did it happen that 150 million Americans have less wealth than the top 400 individuals? How did it come to pass that the top 13,400 households, according to David Cay Johnston, have more yearly income than the bottom 96 million Americans? Who created this economy where welfare for the wealthy creates a system where a person earning $4 billion a year managing a hedge fund pays a lower tax rate on most of his income than a person who drives a truck?
In a report just released, the Pew Charitable Trust wrote: “The idea that children will grow up to be better off than their parents is a central component of the American Dream and sustains American optimism. However. . . a middle class upbringing does not guarantee the same status over the course of a lifetime. A third of Americans raised in the middle class …fall out of the middle as adults.”
The implications are this report are chilling. America’s middle class is being destroyed. America is headed toward a two-class society. Just as America could not survive half free and half slave, so America cannot survive half rich and half poor.
It is democracy itself which at risk here. An economic democracy is a precondition of a political democracy. With endless wars, without solid jobs to sustain a middle class, a new national security state armed with the Patriot Act, will exist primarily to provide surveillance of a growing, bristling poverty class.
According to a recent study by Youngstown State University: the de facto unemployment rate, as conceived and computed by their center for Working Class Studies, is 26.37% This figure includes individuals who are no longer looking for work (discouraged), underemployed and those who are marginally employed.
Corporations are sitting on trillions of dollars and not hiring because of “uncertainty,” insinuating that small changes in federal regulations or tax policy are killing jobs. Yet we know that massive changes in federal tax policy and government regulations have taken place at periods of great economic growth in the United States. Our economy has not hit a rough spot in the road; it has hit a wall.
The greatest losers in today’s economic system are the young. They have been fleeced. They were promised good jobs with good pay if they got a good education. Millions have done that only to discover that the jobs we promised were not there. Millions of young people have moved in with their family and friends, barely scraping by, dreading student loans that they have to repay. They dread when those loans come due.
The major fault of the domestic economy is the failure to provide good paying jobs for Americans. The reasons for the high unemployment and low paying jobs are many, but two major reasons stand out: lack of consumer demand and stagnant wages accompanying low union participation. There is a lack of consumer demand in an economy that is 70% dependent on consumer spending.
There are those who say we can spur demand with more tax cuts for businesses. This fails the test of experience. Business received tax cuts. We still have high unemployment. Business profits are greater than ever. Investment is less. We have learned from the past few years that businesses will not invest while economy is in bad shape.
Since World War II, America has come out of every recession in less than a year, but this time we have had a false recovery. The economic numbers improved briefly, while stimulus was injected. Today we are back in recession, a double dip recession that is destroying people’s lives and setting back our nation.
We did not have enough stimulus to begin with. As the stimulus runs out things are getting worse. The recession is feeding on itself. In 1937, a second round of depression surfaced as stimulus was withdrawn, requiring another effort by the government to stabilize the economy. The parallel between 1937 and 2011 is obvious. We need a second stimulus. It has to be strong enough to put millions of Americans back to work.
State and local governments are forced to lay off people by the hundreds of thousands. These layoffs are not introducing efficiency. They undermine service and reduce the necessary role of government in the life of a community. Massive aid is needed to all areas of government, not because governments have spent recklessly, but because revenues are down. Income tax revenue is down. Sales tax revenue is down. Property tax revenue is down due to foreclosures.
We can stimulate the economy by providing revenue to rehire state and local government employees. That is the easiest way to put hundreds of thousands back to work. This is an obvious way to stimulate the economy on a significant scale. State, local government, public schools, public and private college would all have an enhanced ability to restore service. Such a stimulus would create an economic climate where businesses will expand their investment, utilizing their own profit.
The same thing is true in the housing area. The government must immediately implement a new housing program. More and more properties are becoming vacant and vandalized, while people are doubling up. We need a full-scale program where economically troubled homeowners are given the right to rent, at a market rate, property in foreclosure. The government would provide a rent subsidy while the homeowners seek work.
The American people want work not welfare. There should be work for those who are able to work. Government must become the employer of last resort. The private sector is not providing the jobs. When the private sector fails to provide the jobs, the government has a moral responsibility and a practical responsibility to step forward to put the country back to work.
As with FDR and the New Deal, the government must now put millions of Americans back to work rebuilding our infrastructure. The American Society of Civil Engineers issued a report that there are $2.2 trillion in infrastructure rebuilding that must take place to move the commerce of America.
It is not enough to describe the situation and to make a few suggestions as to what could be done to take us in a new direction. There comes a time when we need to look at some dramatic change that needs to be done to restructure our economy. This month I am going to be introducing a bill which will be aimed at addressing our structural economic problems directly. It is called the National Employment Economic Defense act – - the NEED Act. America needs millions of jobs. How can we create millions of jobs in a time of annual deficits, long-term debt and contracting budgets?
Here’s how: The Federal Reserve creates money out of nothing and it has given it to banks. The Fed has assumed that power through an Act of Congress. The Federal Reserve has used all of its standard monetary policy tools. But the American economy is not getting better. Whatever the Fed is doing, it is not working.
The reason why is perhaps best explained by the Fed itself: “The Fed can’t control inflation or influence output and employment.”
The Fed has been buying Treasury and other securities to put downward pressure on interest rates. The idea is to lower finance costs, encourage more borrowing and nudge investors into riskier investments. This provides breathing space but little else.
Consumers already over their heads in debt and they aren’t going to borrow more. Neither will producers, when sales are slack. Higher default rates are widening spreads. Many investors will still prefer to make a small gain on government securities rather than risk taking losses.
Reality beats theory. The reality is that not enough people have enough money. Why is this? Where does our money come from? Why isn’t it coming?
The Fed doesn’t create money we use in our bank accounts. The banks do. Most of this money is created when banks make loans. This is why the Fed can’t control inflation or influence output and employment.
Output and employment depend on demand. Demand depends on how much money people have, or can borrow. Because banks create this money, they control demand. If banks aren’t lending or borrowers aren’t borrowing, new money isn’t being created to replace the money removed when bank loans are paid, so the money supply shrinks.
The Fed can only put more money into the economy by buying assets from non-banks…The non-bank sellers of assets are mainly large institutional investors. They don’t spend much of the money they receive, they reinvest it in other assets – that is their business. But this churning of assets up in the stratosphere doesn’t “trickle down” to earth. The real economy of families, shops and small businesses of roads and schools is bypassed. We know this.
The money is not getting to where it is needed. Until it does, things can only get worse. None of the current policies work because of the way the current system is set up.
Here is how we fix it. We have to reclaim our Constitutional power to issue money into the economy, unburdened by debt. Last Congress I introduced legislation to do just that, and I am reintroducing it next week. Here is what the legislation does:
It ends the Fed’s unaccountability by putting it under Treasury.
It ends fractional reserve banking, ending banks’ ability to control demand in our economy.
It empowers our nation to issue money directly into the economy to create jobs to rebuild our crumbling infrastructure, unhindered by debt and interest payments – - creating millions of new, good paying jobs.
It gets the money to where it is needed the most.
It gets the economy going and keeps it going.
It avoids debt and deficits.
It primes the pump of the economy. It enables us to regain control of our destiny as a nation.
This plan would not create inflation because it would reduce infrastructure costs. Lower costs means prices can go down. Lower prices are the opposite of inflation. Real wealth will be created with the new money. Infrastructure is enduring wealth, unlike the “financial wealth” of the stock market.
If government borrows money created by banks for infrastructure it is an interest bearing debt, paid for over a long time. But if government creates money for infrastructure and spends it into circulation, there’s no debt or interest costs. The same amount of money is created in either case, adding to the money supply by exactly the same amount.
This is also a way to save the free enterprise system from self-destruction. The American people know what is going on in our economy. It is run by Wall Street for Wall Street. It is run by banks for banks. Unless we look at serious structural reforms we are headed for a two class society.
The ability to coin or create money is an inherent power under Article I, Section 8 of the United States Constitution. The NEED Act would enable the government to invest in America.
We are the country of FDR and the New Deal…We need to remember who we are…We must move away from trying to determine the fate of nations around the globe and focus on the fate on the one nation that must matter to us more than all others — The United States of America!
Thank you.
This article was published at NationofChange at: http://www.nationofchange.org/congressman-dennis-kucinichs-address-congress-international-policy-its-relationship-domestic-econo. All rights are reserved.
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OK, you’ll HEAR from me in a couple weeks once we find out what happened at Occupy Wall Street Sept 17, 2011.
