Promotes Zombie Bankers.
Japan's 1990s' Experience Was Lost on Him.
and Billions Down A Rotting Bank Rat Hole...
decisions made by the directors and CEOs of CitiGroup and Bank of America are among
the worst in world history, if we consider the
economic consequences globally. Should Obama be
giving these companies hundreds of billions, so
that they can survive as presently constituted and run?
Ken Lewis has taken in close to a hundred
million dollars over the last decade from the pockets of
Bank of America shareholders. In return, he has
all but destroyed the company he ran. Obama
and Bernanke would give his company billions
and billions more of your money and still let him
continue to run the vast empire that is Bank of
America. Never has rule by plutocracy been clearer
in the US. And it isn't just Obama, it's
Congress and the Judicial system. Americans should be
"mad as hell". Shareholders
certainly should be, too. But corporations in the US are usually run like
Middle Age fiefdoms of the CEO and his
over-paid cronies. Shareholders are often quite powerless,
even when a stock falls 95%! Ken Lewis at
Bank of America is living proof. How can anyone really
believe he is the best person to head Bank of
America after all the reckless mistakes he has made?
How can anyone seriously justify his $22
Obama Trusts The Banks. Why?
Obama's people and Bernanke insist that there will be no
nationalization. Instead, there
will be a 6-week, not very
rigorous, "stress test" of the biggest banks so that TARP-II money
only goes to those banks that are
realistically solvent and have not been carrying toxic assets
at excessive prices. If it
were only so simple! This plan, developed by an entrenched clique
of Wall Street insiders who make
Obama's financial decisions, delays the distribution of
the TARP-II money, and gives some
hope that the worry about "toxic" debts is exaggerated. Only
the banks know the truth. The
opposite is more likely, that the banks are carrying bad loans
at a much inflated value, in order
to stay in business.
Can the banks be trusted? Banks won't lend to each other now for lack of trust.
Obama thinks he can rely on a
"stress test" which depends on bank honesty about their
bad loans. And now.
March 2nd, it is being revealed that is the banks themselves that
will condict the test.
This is a situation that is "ripe for abuse".
"Investors expected the government to be a bit more intense in tests of the
nations biggest banks.
After all, if nightmare scenarios were appropriate in urging passage of a $787 billion
they should be appropriate now to gauge a banks ability to withstand losses.
Sadly, thats not the case,
at least according to the stress-test criteria laid out by the Treasury
Department and bank regulators
Wednesday. That is bad news for investors, taxpayers and the economy. The longer we keep trying
to avoid the reality of banks dire straits, the longer the financial crisis will
stretch. The lack
of sufficient stress in the tests is especially surprising since a big lesson of the past
is that the worst can happen,
and then some. In times like these, the government and investors need to play What
If? even when it
involves some outlandish possibilities. The failure to do such worst-case planning,
even after plenty of
red flags, probably made the after-shocks to the financial system from the collapse of
Lehman Brothers Holdings
Inc. far worse than they should have been. Perhaps the biggest lesson, though,
is that banks, like plenty of other companies, will get drunk on their own Kool-Aid. And
supposed to be the ones who abstain.
We really dont know how stringent the capital test will be, Paul Miller, bank analyst
at FBR Capital Markets Corp., wrote
in a research note yesterday. We do know that the test
will be based on institutions own forecasts for losses, which may be overly
(F)ew specifics are actually known about the testing. The Treasury didnt give
details on the
methodology behind the tests, how the banks will determine capital or what would lead to a
passing or failing grade...This is especially troubling for investors because they are
understanding how regulators are applying existing oversight rules. .." Source.
Reuters reports that Bank of America is carrying "its
loans in its balance sheet marked
more than $44 billion above their fair value." Naturally, their
insiders have been selling
heavily until very recently.
With home prices falling at a rate of more than 20% per year,
exactly how far out the Treasury
will look into the future in doing its evaluating will be a key
element. My guess is that
Obama's crew have already decided whom to give the money to
and the "stress test" is
to make palatable somethng that the public
would otherwise gag at for
just another scandalous bailout of the most underserving of the rich, those who ruined the
world's economy by their reckless greed
So, I can see why some of the wilder speculators are betting that Bank of America
will be kept
operating and not be
nationalized. Obama may talk a tough game, but Wall Street's very
large campaign contributions
to him will likely prove to be a very good investment for
Unfortunately, what is good for these bankers will not be good for the US
as a whole, if Japan's
economic history between 1990 and 2003 offers any instruction.
A more basic question is why is the Obama Administration intruding
at all until the
banks go into receivership.
It would be a lot cheaper for the US taxpayer to take responsibility
for CitiGroup and Bank of
America AFTER the shareholders' equity and the bond holders'
interest is wiped out.
Why should the taxpayer protect shareholders and bondholders in these
banks? Bond holders
take risks just like shareholders. Why should they get special treatment,
apart from the fact that
Obama got a lot of campaign contributions from Wall Street?
these banks go into receivership, the government can step in, break the
banks up and sell off the
more solid and profitable divisions and deal, as it needs to with
the toxic debts.
Republicans claim Obama is waging "class war"! It looks to me that this
charge is a red herring.
In fact, he is unduly protecting rich speculators and bond holders.
What would really help this market would be a return to the 1934 short sale rules and a
curbing of leveraged
"ultra-short" ETFs. But because Obama's financial advisors are all so
tied into the Clinton era
deregulation of banks, financial markets and derivatives, I would not
expect a quick change in
short sale rules or a return anytime soon to the 1933 Glass-Steagall
separation of commercial and
investment banks. Don't hold your breath for greater enforcement
of anti-trust laws or the
rules against pools of insiders. Needed as they are, there will not
higher margin requirements
for commodity speculators or even tighter regulation of dervivatives
and Credit Default Swops....
Credit Default Swaps Became a Timebomb | Newsweek.
BANK OF AMERICA ===================
There are signs the extreme downward pressure is coming off. The Blue Closing Power
is breaking its very steep
downtrend and the TigerSoft "Accumulation Index" is not so negative.
But BAC is back on a Sell
from a system that would have gained TigerSoft users 400% for the last year,
simply taking hte automatic
red Buys and Sells. Before you go out and buy BAC, consider
how gravely weak housing
prices still are. The red TuigerSoft Buys and Sells have powerfully
with BAC, C and most other
financial stocks. Much of this is because of how much insider trading
is going on with these
stocks. If you know what the insiders are doing, making money in the
the stock market becomes
quite easy. Get and
use TigerSoft. See for yourself.
JAPANESE STOCK MARKET ===================
Japanese Stock Market
Peak - Dec. 29, 1989
See also Nikkei
225 - http://en.wikipedia.org/wiki/File:Nikkei_225(1970-).svg
On 12/29/1989 the Japanese Nikkei 225 hit a peak of
38915.87. The Japanese bubble then
broke.and eight months later, it was down by
two thirds. The bubble was brought on by
wide-open property speculation,
especially in Tokyo, where a penthouse in Tokyo might rent for
$10 Million a month. Wages had long
stagnated by 1990; so, workers were commonly
puting in 12 hour days to try to make ends
meet. Besides the parallels with the US in excessive
real estate specualtion and the long decline in
real wages, what is significant here is that
the Japanese Government's response to the
decline failed to bring much of a recovery for
more than a decade. Just as in in the US,
Japanese bankers concealed for years just how
bad their loans were and how insolvent they
Why did the Japanese Government fail to bring about a recovery? What did
do wrong? The Bank of Japan bought shares of
public companies using a $500 billion bank bailout
fund.. They promoted very, very low interest
rates (like Bernanke) and gave their banks
colossal sums, 12%
of their entire GNP. At the time, Obama's economic advisor, Larry
Summers, urged the Japanese to stop try to prop up
these bloated, all-but-dead big banks.
He warned them that the banks were eating up the rest
of the Japanese economy. It would be better
to let them fail, use these sums to promote
productivity and clear the decks for a healthy recovery
with newer, healthier banks.
Now that the US is in the same position as Japan was, with more and
more retiring "baby
boomers". Obama seems to be choosing to continue
to follow Japan's prescription for decade-long
stagnation and economic malaise. Larry Summers'
advise to the Japanese in the 1990s to put
their zombie banks out of their misery and stop
pouring good money after bad is forgotten.
The value of the banks' toxic mortgages keeps dropping. The most recent report on
housing prices showed a record decline. The
rate of decline is more than 20% per year.
From their mid-2006 peak, housing prices are down
27%-28.3%. It will take trillions to
keep the banks solvent if the trend continues another
year. The banks have been posting the
value of their mortgage loans at
"unrealistic" levels, to be polite. There is no market for
many of them because they are considered worthless in
this climate. Why should the government
loan them any money based on something which is
Obama verbally refuses to accept the necessity of nationalization of the biggest, failing
He refuses to see that the decline in jobs and
housing prices will hopelessly devastate these banks.
The toxicity of their loans grows each day. The
banks are rotting away. Their debtors cannot pay them
what they are owed. Just guaranteeing bank
deposits is going to be hugely expensive. Guaranteeing
the big banks themselves is probably futile.
Most economists are warning that shoring up these
private banks will cost US taxpayers several trillion
dollars MORE. The worst banks banks
are the biggest, CitiGroup and Bank of America.
They need to fail, be nationalized and then
This weekend, the US Treasury said it will convert its $45
billion in preferred stock, which
pays 5%/year, in CitiGroup into common shares.
By becoming a shareholder before CitiGroup
is declared insolvent, the US Government
and Obama will be put into a position to have to keep
protecting its investment by giving CitiGroup more
and more money. Already, just by this conversion,
CitiGroup will not have to pay the yearly dividend of $2
billion on its preferred. So, the US Government
is in effect giving this money to the bank to save it.
This is another bailout, a hidden one, by a
different name. The US taxpayers are out $2
billion! And CitiGroup will be kept on life support.
Obama may see that it is only a matter of time before the
US Treasury will own 51%. He can still
claim to be for a private banking system. But he
prolongs the Zombie bank. His lack of honesty
has just cost the US taxpayer $3 billion.
Wait and see. Will the de facto nationalization be
acknowledged? Will the Government change the
bank's loan practices? Will the CitiGroup be
broken up? Obama is not straight forward.
He follows the lead of his Wall Street linked advisors.
His lack of backbone shows clearly. So does his
loyalty to his biggest camapign contributors, Wall Street.
Wall Street Backed Obama At The Critical
of His Campaign to Be President.
As of Feb., 1, 2008, "seven of the Obama
campaigns top 14 donors consist of officers and employees of the
biggest Wall Street firms, those charged with mainuplating stock
prices, consorted short selling and bundling
unsound mortgages and selling them as Grade A investments.
"Goldman Sachs, UBS AG, Lehman Brothers,
JP Morgan Chase, Citigroup, Morgan Stanley and Credit Suisse.
There is also a large hedge fund, Citadel
Investment Group, which is a major source of fee income to Wall
Street. There are five large corporate law
firms that are also registered lobbyists; and one is a corporate
law firm that is no longer a registered lobbyist
but does legal work for Wall Street. The cumulative total of
these 14 contributors through February 1, 2008,
was $2,872,128, and were still in the primary season."
"Obama promised change, but
his economic team is slavishly loyal to the interests of the financial elite
who steered the financial system onto the shoals and
now expect all of us to patch the hull and somehow get
it back into navigable water. Yes, we have some
gestures to appease the downtrodden, like restrictions on
private jets and largely meaningless promises of
salary caps (Lucien Bebchuk, a Harvard Law professor and
expert on corporate governance, described how they do little to restrict
total comp). Summers and Geithner are
proteges of Robert Rubin, former Goldman co-CEO, and
they are proving true to form, promoting even more
borrowing in a doomed-to-fail-or-be-counterproductive
effort to achieve status quo ante, the very conditions
that lead to this shipwreck."
Obama's Advisors Have Sworn A Loyalty Oath, To Wall Street
Robert Rubin. "Not only
did Rubin himself serve on the Obama economic transition
but two of the
transitions headhunters were Michael Froman, Rubins chief of staff at Treasury
later a Citigroup
executive, and James S. Rubin, an investor who is Robert Rubins son. Source.
Rubin denied anyone
could have foreseen the consequences of the housing bubble and the writing of
billions of sub-prime
loans. Baldersash! He sold a huge stash of shares right at the top. And
other economists, like Roubini, did
predict the disaster that unfolded.
See TigerSoft Blog and News
Service - One Million Shares Sold by CitiGroup Insiders ...
A promoter of
reckless, highly leveraged lending and CDOs at CitGroup.
He denied know there
was a bubble, but unloaded 77,500 shares of CitGroup stock right at the top.
Glass-Steagall's Repeal Undid Much of What Had Been Learned
about Banking's Misdeeds That Led To The Great Depression.
Clinton's Sectretary of the Treasury. He talked Clinton into backing Republican
legislation to repeal FDR's Glass-Steagall Act that prevented commercial banks from
the realm of
investment banks to bundle and sell their mortgages. He sold Clinton on the
globalization and letting
commercial banks sell their mortgages as
investment banks. Under Rubins guidance, the US heavy
industry and manufacturing evaporated and
went overseas. Wall Street and Goldman Sachs profited
from this by being the
"indispensable intermediary". Median income in the US started falling in
Confronted with hard times on Wall Street,
Paulsom and now Geithner are providing hundreds of billions
to the very people who caused the current
See also http://www.slate.com/id/2208371/
See his opposition to any regulation of
derivatives, as initiated by the head of the Commodity Futures Trading
Rubin, as chairman of
Citigroup's executive committee, urged executives there to plunge the bank much more
deeply into the market for CDOs.
"According to current and former colleagues, [Rubin] believed that
was falling behind rivals like Morgan
Stanley and Goldman Sachs, and he pushed to bulk up the bank's
high-growth fixed-income [bond] trading,
including the CDO business," the New York Times reported.
"The political dynamics in 1932 have similarities with that of the upcoming 2008
election in the aftermath of the credit market crisis that broke out in August 2007. The
between 1932 and 2008 is that, unlike in 1932, when Democrats could disclaim policy
the 1929 crash, they
cannot deny in 2008 the responsibility of the two-term Bill Clinton
administration (1993-2001) for the credit bubble that burst in 2007... It was Robert Rubin, special
economic assistant to Clinton and later Treasury secretary, who worked out what has come
as Rubinomics, the strategy of dollar hegemony through the promotion of unregulated
financial markets based on a fiat dollar that also forced deregulation on the US financial
Obama's Treasury Secretary Geithner and Fed Chairman Bernanke
(Treasury Secretary) As president of the New York
Federal Reserve Bank, Geithner
key New York Fed to loosen the controls on banks like CitiGroup, as they loaded up
mortgage loans, using extensive leveraging.
"Because the Fed conducts much of its work in secret, details about Geithner's role
Citigroup debacle remain hidden. But a review of publicly available records shows that the
York Fed, in a key period, relaxed oversight as Citigroup went on a risky spree.
following practice common among Cabinet nominees with pending confirmation hearings,
declined an interview for this story. Neither the New York Fed nor Rubin responded to
questions about Citigroup. The New York Fed's supervisory unit reports directly to
president, Geithner. The unit's job is to ensure that firms manage risk and have enough
to cushion against losses. Large companies tend to be held to more stringent capital
Yet poor risk management and weak capital levels were central to Citigroup's undoing.
One enforcement agreement in place before Geithner took office in 2003 an order
quarterly risk reports was lifted during his watch. A ban on major acquisitions
also was eliminated
a year after it had been imposed in 2005. Afterward, in 2006 and 2007, Citigroup
expanded into the subprime mortgage business and bought a hedge fund and Japanese
among other assets... Compared with its peers, Citigroup had a thinner capital cushion and
more heavily on less-desirable types of capital, records show. The New York Fed knew
in 2007 it allowed Citigroup to count as capital securities that some regulators and
frown upon or discount."
Geithner won't make waves for bankers... "Rubin, his former boss at Treasury,
to The New York Times in 2007 as someone with a "calm way" no matter the
Rubin, a senior counselor and director at Citigroup after leaving Treasury, called
Larry Summers (Presidential Economic
Advisor) Summers teamed up with Rubin to block regulation
of derivatves, including those based on mortgages. He was Clinton's Treasury Secretary in
when Clinton agreed to abandon bank regulation under Glass-Steagall. He had served
closest aid previously a the Treasury.
Summer has a reputation for being loudly arrogant when he is
wrong, in an effort to intimidate.
Brooksley Born was the chairwoman of the Commodity Futures Trading Commission under
Clinton.In March 1998 she got a in her office in downtown Washington. "On the other
Deputy Treasury Secretary Summers.
According to witnesses at the CFTC, Summers proceeded
to dress her down, loudly and rudely. "She was ashen," recalls Born's deputy
who walked in as the call was ending. "She said, 'That was Larry Summers. He was shouting
A few weeks before, Born had put out a proposal suggesting that U.S. authorities
how to regulate the vast global market in derivatives." Source.
Gary Gensler (nominee to be head of
Commodity Futures Trading Commission)
worked at Goldman Sachs, one of the biggest brokers of commodities, for nine years.
Treasury Department. Gensler served under two Clinton Treasury secretaries. From 1997 to
Gensler worked as assistant secretary of the Treasury under Robert Rubin until Rubin
stepped down in 1999.
Lawrence Summers then
became the Treasury head, and Gensler was promoted to Treasury undersecretary.
2000 "he oversaw the drafting of legislation that exempted derivatives from oversight
commodity regulator, including the viral credit default swaps that have amplified the
(Quote: NY Times. ) As the
head of the Commodity Futures Trading Commission (CFTC), Gensler
oversee a troubled organization that has come under fire since oil prices fluctuated
industry experts have blamed speculation by investors as the main cause of soaring oil
2008. Allowing speculators to buy crude oil futures putting only 7% down
He has so far been silent on that. Summers and Gensler joined hands with Phil
regulation of the derivative markets and deregulate banking.
Rhetoric Asside, Wall Street Has A Friend in Obama
A protégé of both Summers and Rubin... Under Rubins illuminated guidance, the US
heavy industry fell
behind, evaporated, or left for China. Wall
Street and Goldman Sachs profited from this by being the indispensable
intermediary, worldwide. Median income in
the US started falling in 1998. Confronted with hard times on
Wall Street, Paulsom and now Geithner are
providing hundreds of billions to the very people who caused
the current calamity.
How Plutocracies Self-Destruct
conflict between Wall Street and Main Street stands out clearly now. Societies that treat
people and Main Street this badly
do not survive. Professor Jared Diamond gave an interview to the US Public
Broadcasting Service, Friday,
February 12, 2009. He was asked point blank if he could tell of a particular
characteristic that made some
societies survive, whereas others collapse. That was the central question Diamond
tried to address in his book
"Collapse. How societies choose to fail, or to succeed". Diamonds
"It seems to me that one of
the predictors of a happy versus an unhappy outcome, has to do with the role
of the elite or the decision makers
or the politicians, or the rich people within the society. If the society is
structured so that the decision
makers themselves suffer from the consequences of their decisions, then they are
motivated to make decisions that
are good for the whole of society. If the decision makers can make decisions
that insulate themselves from the
rest of society then they are likely to make decisions that are bad for the rest of
society." A case in
point, according to Jared Diamond: "the place that they call the City of New
One can ask "why over ten
years, people in New Orleans did not spend a few hundred millions building
Diamonds answer: "Rich people are living on high ground In New Orleans. Compare
with the Netherlands, where
"the system of dikes has been called one the Seven Wonders of the World".
"Rich people are not allowed
to have mansions on top of the dikes, everybody is down in the polders.
Politicians and rich people
know that if the dikes failed, they would die".
( See - http://patriceayme.wordpress.com/2009/02/15/stop-humoring-the-plutocracy/
Nouriel Roubini in his February 10
commentary, the choice is clear - the former, not the latter option
that will be a "royal
(taxpayer) rip-off" if assets are bought at above market valuations. He sees
large that the US banking
system "is effectively insolvent in the aggregate." Jim Rogers never
and, on February 11, was true
to form on Bloomberg: Interviewed on Geithner's plan he said:
"Mr. Geithner has been bombing for 15 years.
(He) caused the problem. He was head of the
New York Fed that was supposed to
be supervising banks. (Instead), all last year he came up with TARP.
He came up with all these absurd
bailouts. Geithner's has never known what he's doing. He doesn't know
what he's doing now, and pretty
soon everyone will know it, including Mr. Obama."
Rogers opined the best way to
proceed now was following the advise Summers gave Japan in the 1990s.
"You let (bad banks)
go bankrupt. You clean out the system. You wipe out insolvent ones and let (good
banks) take over.
America is making the same mistake (as Japan), and the politicians are making it
worse. You want to know
why they're making it worse? They want to support their friends on Wall Street."
"The idea of the
government buying up bad assets is not going to work." Either the price will be too
(at taxpayer expense) or it
will be too low....it's not going to work. It's never worked....Pouring in new money will
only weaken the whole system.
Go back in history and see what worked. Countries that took their pain (solved
their crisis). It was
horrible going through it, but they came out of it and became rapidly growing."
What we need are healthy banks with clean balance sheets
and enlightened risk assessment to provide consumer
and business loans that will generate returns to
shareholders." Let them sell their own toxic debt. They won't
because they "don't like the price." As for
TARP, it failed and so will TARP 2.0 or what's now called a Financial
Stability Plan. The idea is to get "private capital to
buy bad loans and derivatives," but banks won't price them low
enough to sell. Moreover, who'll buy risky assets unless
they're practically given away or Washington guarantees
The Real Causes of The Crashes in 1929 and
| The Real Causes
1. Lack of Regulation of Wall Street
1930 - "The new Democratic chairman of the Senate Banking and
Senator Duncan U
Fletcher of Florida, immediately dismissed the Republican general counsel
of the commission on the 1929
crash and appointed as
replacement Ferdinand Pecora, an assistant
district attorney for New
York. Known thereafter as the Pecora Commission, its new investigation
after 1930 revealed a host of
conflicts of interest in the financial sector in the years leading up to the
1929 crash, such as
bank underwriting of unsound securities to save near non-performing bank loans,
rampant insider trading and
"pool operations" by speculators banding together to move a stock
and to close out the pool at a peak price for profit, leaving the
manipulated public with subsequent losses.
"More shocking still, the Pecora Commission uncovered the embarrassing fact that JP
and his fellow
banking titans not only continued to reap huge profit from rescuing firms they helped
put in distress
while the economy fell into severe depression, but they were also able to avoid
paying any income
tax in 1931 and 1932 through tax loopholes on paper losses of distressed
acquired. These bankers were in fact buying up a country in economic distress
with their tax
2. Extreme Maldistribution of Wealth
1920, 1929 and 2007 were the years when income was most concentrated in the fewest people.
They were also years of market tops.
TigerSoft Blog 6/24/2007 - The 1929
Stock Market Crash: Could It Happen Again?
Yes - Absolutely -
June 24, 2007.
Michael Moore points out: The richest
400 Americans -- thats right, just four hundred people -- own MORE
than the bottom 150 million Americans combined. 400 rich Americans have got
more stashed away than half the
entire country! Their combined net worth is $1.6 trillion. During the eight years of the
Bush Administration, their wealth
has increased by nearly $700 billion.
"The Great Depression was the worst economic slump ever in U.S. history, and one
which spread to
virtually all of the industrialized world. The depression began in late 1929 and lasted
for about a decade.
Many factors played a role in bringing about the depression; however, the main cause for
the Great Depression
was the combination of the greatly unequal distribution of wealth throughout the 1920's,
and the extensive
stock market speculation that took place during the latter part that same decade. The
wealth in the 1920's existed on many levels. Money was distributed disparately between the
rich and the
middle-class, between industry and agriculture within the United States, and between the
U.S. and Europe.
This imbalance of wealth created an unstable economy. The excessive speculation in the
late 1920's kept
the stock market artificially high, but eventually lead to large market crashes. These
market crashes, combined
with the maldistribution of wealth, caused the American economy to capsize.
"The "roaring twenties" was an era when our country prospered tremendously.
The nation's total realized
income rose from $74.3 billion in 1923 to $89 billion in 19291. However, the rewards of
the "Coolidge Prosperity"
of the 1920's were not shared evenly among all Americans. According to a study done by the
in 1929 the top 0.1% of Americans had a combined income equal to the bottom 42%2. That
same top 0.1% of
Americans in 1929 controlled 34% of all savings, while 80% of Americans had no savings at
Automotive industry mogul Henry Ford provides a striking example of the unequal
distribution of wealth between
the rich and the middle-class. Henry Ford reported a personal income of $14 million4 in
the same year that the
average personal income was $7505. By present day standards, where the average yearly
income in the U.S. is around
$18,5006, Mr. Ford would be earning over $345 million a year! This maldistribution of
income between the rich
and the middle class grew throughout the 1920's. While the disposable income per capita
rose 9% from 1920 to
1929, those with income within the top 1% enjoyed a stupendous 75% increase in per capita
"A major reason for this large and growing gap between the rich and the working-class
people was the increased
manufacturing output throughout this period. From 1923-1929 the average output per worker
in manufacturing8. During that same period of time average wages for manufacturing jobs
increased only 8%9.
Thus wages increased at a rate one fourth as fast as productivity increased. As production
costs fell quickly,
wages rose slowly, and prices remained constant, the bulk benefit of the increased
productivity went into corporate
profits. In fact, from 1923-1929 corporate profits rose 62% and dividends rose 65%10.
"The federal government also contributed to the growing gap between the rich and
middle-class. Calvin Coolidge's
administration (and the conservative-controlled government) favored business, and as a
result the wealthy who
invested in these businesses. An example of legislation to this purpose is the Revenue Act
of 1926, signed by
President Coolidge on February 26, 1926, which reduced federal income and inheritance
Andrew Mellon, Coolidge's Secretary of the Treasury, was the main force behind these and
other tax cuts throughout
the 1920's. In effect, he was able to lower federal taxes such that a man with a
million-dollar annual income had his
federal taxes reduced from $600,000 to $200,00012. Even the Supreme Court played a role in
expanding the gap
between the socioeconomic classes. In the 1923 case Adkins v. Children's Hospital, the
Supreme Court ruled
minimum-wage legislation unconstitutional13.
The large and growing disparity of wealth between the well-to-do and the middle-income
citizens made the U.S.
economy unstable. For an economy to function properly, total demand must equal total
supply. In an economy
with such disparate distribution of income it is not assured that demand will always equal
supply. Essentially what
happened in the 1920's was that there was an oversupply of goods. It was not that the
surplus products of industrialized
society were not wanted, but rather that those whose needs were not satiated could not
afford more, whereas the
wealthy were satiated by spending only a small portion of their income."
(Quoted from http://en.allexperts.com/q/General-History-674/Great-Depression.htm
Justice. wink. wink ...
CitiGroup Board of Directors Found Innocent
massive writing of sub-prime loans did not constitute directorial malfeasance.
The judges deny that boards of directors
can be held accountable for the worst financial
decisions in human history!
Decisons that have caused a hundred million to lose their
jobs and CitiGroups stock to collapse.
Delaware Justice, Inc.
Judge tosses most claims in Citigroup lawsuit
Delaware judge dismisses most claims in Citigroup subprime lawsuit
DOVER, Del. (AP) -- A Delaware judge has dismissed most claims in a shareholder lawsuit
seeking to hold Citigroup Inc. directors liable for losses related to the subprime
In a ruling issued Tuesday, the court said the plaintiffs had failed to show that
officials for New York-based Citigroup breached their oversight obligations or acted in
bad faith in monitoring the company's exposure to subprime securities.
The judge did allow the plaintiffs to pursue claims related to the board's approval of
a $68 million departure package for former Citigroup CEO Charles Prince, who left the
company in 2007.
Shareholders alleged that current and former directors and officers of Citigroup
breached their fiduciary duties by failing to properly monitor and disclose the company's
exposure to subprime securities.
by Bill M form Bethlehem, PA
"Delaware also cranks out more money by having the
most pro-business laws, including laws that make it by far the most favorable for business
(which is why the huge majority of U.S. companies are registered as Delaware corporations,
thus giving the state a huge windfall from registration fees). Unfortunately for the
consumer, Delaware's pro-business climate can also mean anti-consumer--the sleazy
payday-loan industry, for instance, relies on Delaware banks to front the funds, since DE
is one of the very few states that have virtually no usury (loan-sharking) laws."