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Dean Baker - "let's Just Default"
An interesting article by Dean Baker today. "Defaulting on debt is not the end of the world".
Dean has gone over the top and is now advocating a debt default by the
USA as a way of “fixing” our problems. Dean thinks that the existing
obligations of Social Security and Medicare are much more important to
maintain that our credit rating. His words:
Compared to these outcomes, (cuts in SS and Medicare) a financial crisis and the subsequent slump that follows may seem like a relatively small cost.
Baker thinks this would be an easy matter. He points to Argentina as an
example. This just proves that Dean has no clue what he is talking
about. Yes Argentina defaulted and recovered after a few years. But
Argentina is not a reserve currency that has a linchpin role in the
global financial system. Argentina is a fraction of global GDP
(Argentina = 0.5%; US = 25.0%). Their default was painful to all. Both
citizens and creditors suffered. Savers lost everything. Pensioners got
worthless script versus the payments they were promised. Dean thinks
following Argentina is the right thing to do:
The
experience of Argentina may be instructive in this respect. Argentina
defaulted on its debt at the end of 2001. By the end of 2003 it had
recovered its lost output.
it is also likely the case that the United States would rebound and possible rebound quickly from a default.
I don’t know how to handicap the possibility for a debt default by the
USA. In 2007 I would have said it was a near zero possibility. Today
it's no longer zero and the odds rise by the month. The scary thing for
me is that no one is doing a damn thing about it. The budget silliness
of last week is a case in point. The idiots in D.C. damn near shut the
government down over a few billion bucks. Lunacy. And now ‘important’ voices like Baker are suggesting default is a viable option.
It’s hard to imagine what a debt default for the world’s biggest
creditor would be like. Some of the things that I think could happen:
-Mr.
Baker must come to grip with the facts of default. As he and many other
defenders of Social Security have said repeatedly; the assets of the
Social Security Trust Fund are equal in legal status to the debt issued
to the public by Treasury. This means that it isn’t possible for the US
to default on its public debt without also defaulting on the Special
Issue bonds in the SS Trust Fund. As SS is running a cash deficit on a
monthly basis it would only take 30 days for all checks to stop. Period,
full stop. Social Security would cease to exist.
Baker must come to grip with the facts of default. As he and many other
defenders of Social Security have said repeatedly; the assets of the
Social Security Trust Fund are equal in legal status to the debt issued
to the public by Treasury. This means that it isn’t possible for the US
to default on its public debt without also defaulting on the Special
Issue bonds in the SS Trust Fund. As SS is running a cash deficit on a
monthly basis it would only take 30 days for all checks to stop. Period,
full stop. Social Security would cease to exist.
-The
Medicare Trust Fund, Military Pension Trust Fund, Federal Workers Trust
Fund would also default. They too would stop issuing checks. Medicare
would no longer function. Some level of medical care would be
maintained. But older people who needed lifesaving treatment wouldn’t
get it. Hundreds of thousands would die. The number could easily go into
the millions.
Medicare Trust Fund, Military Pension Trust Fund, Federal Workers Trust
Fund would also default. They too would stop issuing checks. Medicare
would no longer function. Some level of medical care would be
maintained. But older people who needed lifesaving treatment wouldn’t
get it. Hundreds of thousands would die. The number could easily go into
the millions.
-Surely
we would see a collapse of the dollar. The cost of everything we import
would triple++ in a very short period of time. The price of gas would
be $10? 50? 100?
we would see a collapse of the dollar. The cost of everything we import
would triple++ in a very short period of time. The price of gas would
be $10? 50? 100?
-Equity
markets in the US would collapse. A loss of 50% would be a good
outcome. It could be much worse than that. We know that the wealth
affect drives the economy, so this result would insure a collapse of US
GDP. How long would the depression/recession last if this were to
happen? At least a decade. It would be worse than what happened in the
US during the 30’s.
markets in the US would collapse. A loss of 50% would be a good
outcome. It could be much worse than that. We know that the wealth
affect drives the economy, so this result would insure a collapse of US
GDP. How long would the depression/recession last if this were to
happen? At least a decade. It would be worse than what happened in the
US during the 30’s.
-Unemployment? A minimum of 25% would be the result.
Interest
rates? Who knows? There would be no debt market left in the event of a
default by the US. There would be no credit available.
rates? Who knows? There would be no debt market left in the event of a
default by the US. There would be no credit available.
-If
Treasury were to default, every mortgage borrower would follow suit. If
the banks were not wiped out by the federal ‘no pay’ they certainly
would be wiped out by the mortgage defaults. Almost all banks would
shut. This would cascade back to the FDIC. The withdrawals from account
holders would force the FDIC to honor its obligations. As they have no
reserves this would force Treasury to issue coinage ($100 bills) to
satisfy the run on the bank. This is the hyper inflationary environment.
The price of basics (food) would explode. Shelves would empty. People
would go hungry. In the years that followed a default many would starve,
many of those would die.
Treasury were to default, every mortgage borrower would follow suit. If
the banks were not wiped out by the federal ‘no pay’ they certainly
would be wiped out by the mortgage defaults. Almost all banks would
shut. This would cascade back to the FDIC. The withdrawals from account
holders would force the FDIC to honor its obligations. As they have no
reserves this would force Treasury to issue coinage ($100 bills) to
satisfy the run on the bank. This is the hyper inflationary environment.
The price of basics (food) would explode. Shelves would empty. People
would go hungry. In the years that followed a default many would starve,
many of those would die.
-All
municipalities would be forced to default. All muni savers would be
wiped out. The business of local government would shut down. They would
be unable to make payroll, so no one would work. Garbage collection
would stop. There would be no police. Crime would be rampant. Armed
robbery, rape and murder would be common. Vigilantism would rise. Open
conflict on a regional basis would be the result. There would be no fire
departments. Cities would burn.
municipalities would be forced to default. All muni savers would be
wiped out. The business of local government would shut down. They would
be unable to make payroll, so no one would work. Garbage collection
would stop. There would be no police. Crime would be rampant. Armed
robbery, rape and murder would be common. Vigilantism would rise. Open
conflict on a regional basis would be the result. There would be no fire
departments. Cities would burn.
-All
infrastructure repairs and investments would stop. In a very short
period of time roads, bridges, ports, airports would become
dysfunctional. It would not really matter that much. There will be no
gas or diesel to power vehicles, so the broken roads would be empty.
infrastructure repairs and investments would stop. In a very short
period of time roads, bridges, ports, airports would become
dysfunctional. It would not really matter that much. There will be no
gas or diesel to power vehicles, so the broken roads would be empty.
-Most public education would end.
-There
would be no real estate market. There would be no Fannie, Freddie or
FHA. There would be no lenders to finance a home. There would be no
liquidity. Prices would collapse. A house would sell for a few months of
food.
would be no real estate market. There would be no Fannie, Freddie or
FHA. There would be no lenders to finance a home. There would be no
liquidity. Prices would collapse. A house would sell for a few months of
food.
-It’s
difficult to image the consequences outside of our borders. Neighboring
countries like Mexico and Canada would implode. The decline of the US
economy would ripple around the world. Other countries would be forced
to repudiate their debt. It’s possible that a default in the US would
force all big debtor countries to follow suit. At that point all seven
billion people would suffer.
difficult to image the consequences outside of our borders. Neighboring
countries like Mexico and Canada would implode. The decline of the US
economy would ripple around the world. Other countries would be forced
to repudiate their debt. It’s possible that a default in the US would
force all big debtor countries to follow suit. At that point all seven
billion people would suffer.
-Functionally
there would be no US military. Regional warriors and pirates would
rule. Major nations could start wars over natural resources.
there would be no US military. Regional warriors and pirates would
rule. Major nations could start wars over natural resources.
I suspect that a number of readers will agree with Dean. Pull the plug on the whole system. Let the chips fall, let the shit fly. That may happen.
We are most certainly headed in that direction. The probability of this
happening just increased a notch or two. Dean Baker has a big audience
and a fair bit of support. Big shots like Paul Krugman quote him all the
time. Now that Dean has put his reputation (and CEPR) on the line by calling for a debt repudiation he will be forced to push his agenda. Like I said, this is a “popular” option.
Dean Baker is the champion of Social Security and Medicare. His
many supporters should understand that he is advocating policies that
insure that their savings, benefits and medical protection would be
wiped out. He would destroy exactly the group that he thinks he is
trying to protect. They should at least seem him for what he is. A fool that will ruin them.
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i don't think it'll be a gold standard for us. an SDR level standard, maybe. We'll still have to play with the monopoly money, though it'll be at least valued relative to all currencies. So says Jim Sinclair anyway.
If it happens, i'll think about going off the grid. he's usually right.
The US can't default. The reason the US hasn't been invaded was thanks to the dollar.
If the US army would be crippled, states would brake up from the US and border control would be a nightmare.
It would also cause a world economic downturn that would cause massive wars and some will turn against the US.
The EU would take over and the US would never get a reserve currency anymore. I would never get more than 30% of it's former riches back.
The US can't default, but if the deficits keeps as big and Obama stays in office which will cause the deficit to spiral even higher it will.
Obama destroyed America. And it's already over the tipping point... no way back.
Unless TOTAL US expenses are cut 50% NOW
But now that's election time they'll just spend more to get the vote.
Give the crowd sausages and beer to get their to VOTE OBAMA!
Whoever votes for his own pocket in the next elections is the cause of the END of the US.
And may God protect us all when that happens.
The ripple effect throughout the world will be enormous.
If the US doesn't default, the only realistic option to get rid of debt (and some entitlements with it) without widespread civil unrest becomes war. Ideally (for our elites) we get somebody else to start the war for us.
So if you say a world economic downturn would cause massive wars that is just a different path to the same outcome.
why do we have to get rid of entitlements? why not cut defense in half, and still have biggest baddest military empire in the world...why is Soc and Medicare always first to be attacked when in fact Soc Sec has been funding deficit spending as its trust fund, rightfully, was built up by taxes wages while boomers were working, so SSI could have surplus to draw from when boomers were retiring. When FICA first reformed during Reagan years, top 10 percent of richest wages earners was excluded, now its top 17 percent, so just remove cap on FICA taxes so peopl making over 100k keep paying or just cap it at old 10 percent cap that was acceptable in 80s, and Soc Sec solvent past its current end date in 2030s, and there are many other reasonable, not end of world scenarios.
But defaulting on our payments to SSI trust, taxes that were already taken from folks and lent to spend on other un-paid for spending fund while we keep decreasing taxes for rich, while we keep increase spending on defense makes no sense to me.
All of Medicaid, Medicare and private health insurance have huge cost inflation issues, and these should be addressed, we SHOUlD get way more value, our govt spending alone, or pur private health spending alone is all it takes to cover everyone in countries like Germany and France...we use 16 percent of GDP (half gvot spending, half private spending) and get less people covered in private and govt plans together than they get from 8 percent of GDP.
Having said that, I don't think this means we have to take security that Medicare provides to seniors. We can still make sure seniors get good medical care at low, affordable cost.
Besides, if we spent less on defense and had less weapon systems, maybe we would be more reluctant to get into foreign wars.
I hope we are on the same page that the target is to pay for entitlements without going into more debt (or new debt after a default).
As of today you are right that cutting defense spending etc. would allow us to balance the budget.
But within a decade or so you can cut all spending except entitlements to zero and still wont be able to pay especially Medicare. If the SS Trust Fund would really contain valuables, that would only help us over a few more years. That's why we have to get rid of some part of the entitlements.
I'm no obama fan, but let's not start blaming him for the present problems we are facing. The seeds of the US destruction were sown long ago and nurtured by a generation of selfish citizens, poor leadership, and creeping corruption.
and yet, he took the job spewing lies all the while. thanks for the belly laugh.
As a president he needs to make the right decisions.
He should be better than all of us.
Instead of doing what was needed and take the hard decisions, he took the easy once and only gave money away.
Spending is easy, cost cutting not.
The man only wants to be popular.
And in the process, the rich got richer and the rest got ass fucked.
He's a weakling. Let's hope someday there will be a president in the white house who knows economics.
A good president would have said:
Our debt problem is a big problem. It's tough for some but if we give in, we'll all lose it all.
The US may only spend 95% of it's income and that includes downpayment of the debt.
BUT NO! MISTER POPULAR WANTED TO PAY EVERYBODY'S BILLS AND BANKRUPTED THE BIGGEST EMPIRE EVER.
You should really think about all this and realise the US is Titanic!
And one of the reasons why so many woman and children died is because it was to cold for them to go outside in the lifeboats. It was warm and cossy inside. THEY DIDN'T WANT TO BE COLD AND DROWNED IN ICEWATER!
While Third Class men had a survival rate of 13%, 97% of First Class women survived the Titanic sinking. Obama is not the president who could prevent anything, the US hit the berg many years ago. He is just sorting out, who gets a lifeboat and who don't.
The POTUS is nothing more than a Carnival front man.
He is not only weak but completely impotent. Doesn't make a move that those who put him in office don't tell him to make.
He may (though I doubt it) even want to turn Eric Holder loose and put Lord Blankfein, Tim Geithner, theBernank, Joe Cassano, Hank Paulson, Barney Frank, Chris Dodd, Angie Mozillo, Little Dick Fuld, Chris Cox and Bobby Rubin through the Grand Jury but he can not.
The country has been held hostage by an elite few who just coincidentally all come from one nationality and most of whom are AIPAC charter members with a secret handshake (think: milking a cow's udders), mantra, and nude rituals involving small furry animals.
there are questions comming about who owns what
.
the documentation is forged and encumbered by failed social policy leaving everyone on the take
.
some day
USA debt and unfunded obligations are going to crash ( =correct=reduce-20% or more in 1 year) soon, 2013-2014, in whatever way-the dynamics of debt growth are unsustainable, and, as the USA will enter second recession in q1 2012 due to oil/food prices, will remain unsustainable despite whatever budget cuts are proposed and enacted.
Moving onto gold standard (at around 6000-9000 USD/ounce) might be the most reasonable, devaluating different monetary instruments and debts at diffrent rates, in practice not touching paper /coin money and overnight/on demand deposits (current bank accounts). All the rest gets various haircuts:
http://saposjoint.net/Forum/viewtopic.php?f=14&t=2626&start=100#p31678
"I don’t know how to handicap the possibility for a debt default by the USA. In 2007 I would have said it was a near zero possibility. Today it's no longer zero and the odds rise by the month. The scary thing for me is that no one is doing a damn thing about it."
Welcome to the party forrest...
*note to self, don't waste my time reading anything by this latecomer again.
your analysis is unwarrantedly kind $_Damo_, and barely forgivable for Fight Club, i might add.
nonetheless, we do have a BINGO!!! good for you!
"Unwaranted for fight club" lol. They need to put a "like" button on this damn site (you listening tyler?)
But seriously, why would you bother reading anyone who waves the "hey I'm clueless" flag within the first couple paragraphs.
Bruce, I am shocked, shocked by this fear-mongering. It is beneath you. I'm not sure I disagree with you that default by the U.S. will bring about global financial apocalypse and destroy exactly what Baker is trying to protect. Do you agree that the situation is so dire that draconian measures, such as the one Baker suggests, are now inevitable? I do, and I also agree with his objective. Do you?
There are a number of draconian measures that I think are necessary, and none of them involve cutting social security and medicare, and if it takes a civil war, so be it. Someone is going to have to pay the piper, and it better not be old people, poor people and sick people. If captured politicians try to steal what I have already paid instead of cutting the military and exacting a little bit of patriotic economic justice, revolution will result.
+1
Typical of too much linear thinking. If the US would default then X, then Y, then Z, and very soon everybody would starve to death. Duh. <roll-eyes>
phase 1: collect underpants
The only way that the US can default is for the FED not to print more FRN's , which is what US bonds are payable in. FRN's are not redeemed (for lawful money) by the vast majority of holders so I can't imagine there could be a default .
Oh, yes, you can absolutely count on getting your thousand dollars of principle returned when your bond matures.
The question is, what will it buy once you do?
My position is that we already *are* defaulting, it's just being done slowly in the currency markets.
Dear Bruce, you forgot something: the alternative to default/restructuration is monetizing.
And monetizing the debt would multiply by 2 all the terrible things you wrote above.
I hope you don't seriously believe the debt can be repaid without devaluating the dollar. Except if there is suddenly a 5% GDP growth every year starting from now, of course.
Exciting times...I think humanity might survive this...
As we nowadays are still regularly rolling over all our debt (no real repayments), Dean Baker is effectively saying that the US budget can be fixed by stopping to make interest payments on our debt. Maybe he should spend a few more minutes reading the federal budget numbers before writing such drivel!
Bruce isn't honest either:
Excuse me? If the US defaults on its debt including "Special Issue bonds in the SS Trust Fund", then the interest paid on the SS Trust Fund would disappear and any SS cash deficit could not be financed, but 90% of SS check payment amounts could still be paid from current revenue, as of today.
(You can make up a case where a US default collapses its financial and also economic system and therefore tax payments cease as well, but you didn't put that in writing.)
And on this statement
I want to point out that the right thing to do would be start testing what would be the implications of a US default, and a government shutdown would be a nice test scenario - and many more aspects would need to be thought through. For people who really understand Nassim Taleb's "Black Swan" concept (usually only the engineer type thinkers), the main point is not alone the unexpectedness of an event but the fact that nobody has made any preparations whatsoever as everyone believed it completely impossible to ever happen!
I saw this last night and thought, "Feh ... more dumb- assedness"
Now we have Dean Baker with a foot in the gold- bugs' camp. Mebbe he was there, all along. Take away the sugar- coating and Baker simply admits the US as it is currently structured is unsustainable. Krasting doesn't have an argument, he just goes, "Is too!" to Baker's, "Is not!" Both miss the point which is typical of (really smart) analysts who insist on shifting the costs to that dude standing behind that tree over there.
The real problem is parked @ the ends of peeps' driveways so default/no- default/repudiate/whatever and without getting rid of the carz and the hamburgers you are still stuck @ square one. Probs are just going to get worse and worse and the analysts will wring their hands and the countries will all default, anyway.
There is no other way: we've used up resources cheap enough to allow profitable returns, now we are left with expensive resources that allow ... unprofitable returns! Analysts like Baker and Krasting (both) have no clue about how to deal with this.
One of these days some hot- shit analyst such as Baker or Nouriel 'Bahbull' Roubini or Meredith Whitney is going to go all out in favor of draconian (necessary) energy/resource conservation. That means, no carz, no meat, no industrial ag, not much industry period, no consumption and a lot fewer humanoids ... you know, as in 'Exponential population growth ... Not.'
Then, my head is going to blow up!
Without serious conservation- based economic restructuring the outcome is chaos.
Period.
That's how I see it as well. The US consumer is about to fall into a trap of his own making. Since WWII, resources have been limitless and cheap, and the US built an economy and lifestyle around that. And now it's over, but we STILL haven't slowed our consumption. And our leaders are still talking about growth as the way to fix everything. And the global population is still exploding. Whatever happened to human intelligence?
It's not just a US problem. The whole planet lusts for our lifestyle. China and India are very vulnerable because of their huge and growing populations. The population of the Muslim world is exploding. They will soon pay a high price for that.
I believe it is impossible to solve this problem with 7+ billion people. Our economic difficulties now are just the faint rumblings of an unimaginable future. We are not just running out of oil; the list of disappearing natural resources is long. It will be impossible to continue modern industrial agriculture for more than a few decades. Economists don't read about resource depletion, so they don't include it in their models. That's why they keep advocating for population growth. But I contend that population growth combined with resource depletion is sealing our fate. It is leaving us with no orderly, compassionate way out. Resource consumption must be reduced. The question is how and when. The longer we wait, the more unpleasant the process will be.
Some people are worried that the global elites are planning for population reduction. But that's exactly what is going to happen, one way or the other.
Most people at a certain age lose their ability to adapt effectively to changing conditions. Generational shifts are almost always required for societies to achieve truly substantive change. The twilight years of a previous generation are likely to be tumultuous and unpleasant, and the scope of the tumult is very roughly described by the relative power-level of the generation which has reached the point of failure to adapt.
When the WWI vets were falling out of power in the 60s/70s, there was (from some perspective) social catastrophe. Happened again in the 80s/90s with the WWII generation.
So now it's the Boomers. They're the ones with the most to lose, and the least well-suited to adapt to the losses.
C'est la vie. It doesn't take a rocket surgeon to see this stuff.
(Please note: this is not intended to describe ALL people of any given generation or age. It's generalization.)
You can't run deficits year after year without any consequence.
Time to pick your poison. Cut social security, medicare, defense, infrastructure, public education,...etc.
But who knows, the Fed can just keep printing money and pay for everything. Who is really going to stop the Fed? The commodity market going parabolic will at least make them think twice.
Inflation rewards the irresponsible.
Deflation rewards the responsible.
DavidC
We already *are* defaulting.
It's just that central bankers and policymakers somehow think it's more *polite* to do so through dollar devaluation and currency intervention.
they also do it in a way that hurts regular people and helps elite, insiders. We have not remotely entered the level of inflation to wipe out debt.
delete
Yes, we'll be much better off in the long run if we continue to run a PONZI economy, won't we?
It will never crash, WILL IT?
The dollar will ALWAYS be the world's reserve currency no matter how worthless we try to make it, WON'T IT?
It is very REASSURING to hear your support for *THE* CON of TIME ETERNAL. John Law's is about to be "outdone".
DOH!
Keep in mind that the elites want some form of anarchy to usher in the NWO, the ultimate totalitarian wet dream. They would prefer that a couple of billion die off, it's part of the game plan, if the incremental eugenics policies are too slow.
We need to start thinking about future generations. If that means defaulting, then so be it. This country has no future if it makes future generations slaves to past promises that are impossible to fulfill.
I will be there ...Call to account.
I will be wearing the same Scarlet Red Ohio State hat I wore at OBummer Wall St. Speech.
I was the only one with a sign. I make big 8 x 4 signs with styrofoam insulation from home depot and print each letter in a 150 pt. font, and tape onto.
Defaulting vs paying is a false dichotomy. If the market will accept a debt, it will also accept equity. The state does not need to issue debt. It can issue equity. Remove the usurious parasite.
Strategic debt default and everything in its wake would screw and hurt those the most that can least afford it. See Germany in 1923 and 1949. Yes, things got better over time, but the majority of the ‘little’ people were wiped out in its aftermath and had to start from scratch while the majority of the bastards got away; many of them unscathed only to turn in repeat performances years after.
I’m absolutely amazed of what’s happening to this country. In the 25 years that I have lived here I have never seen it feeling so domestically helpless. It appears that the biggest crisis of all is not financial or even economic but one of fear – specifically the fear of being unable to do anything to fix our problems. The lack of political leadership is breathtaking across the spectrum.
Yet, getting our fiscal house in order is not impossible by any means and does not have to involve a default. We just need to be politically courageous enough to put an end to our overextended military adventures abroad and take a ‘devil-may-care’ attitude towards entitlements. Spreading the pain across the spectrum will be the only way to restore credibility of the political process. By definition that will mean potential tax increases. Yet a credible plan alone will restore the very confidence that we will need to continue to attract talent and capital from abroad.
Come on people, this is still America! Anything should be possible as long as we put our hearts and minds to it. We have a problem – albeit a huge one – but the solution is not to sink the ship (as tempting as it may be) but to climb up to the bridge, GET RID of the crew and the captain and take over the wheel. Replace them with leaders who are not in it for themselves, who have the political and personal backbone to make EXTREMELY unpopular decisions and who embrace the concept of accountability. I realize that this is much easier said than done but I for one would prefer trying that option over having blood run through the streets. Once the pitchforks are out, you never know what's going to happen next.
The mission for this venerable forum should be to figure out how to effect this political change ASAP – above and beyond buying Silver, the f*cking dip or storing up on guns & amo. So the question is: What can we do next?
re: What can we do next?" "The 10 major banks, which control 60 percent of the economy, determine how our legislative bills are written, how our courts rule, how we frame our public debates on the airwaves, who is elected to office and how we are governed. ...They engaged in massive fraud and deception that wiped out an estimated $40 trillion in global wealth. The banks are the ones that should be made to pay for the financial collapse. Not us." Published on Truthout (http://www.truth-out.org)
Created 2011-04-04 12:10There is no way to vote against the interests of Goldman Sachs. Civil Disobedience is the only tool we have left.
Monday 4 April 2011 by: Chris Hedges, Truthdig, Op-Ed [3]The phrase consent of the governed has been turned into a cruel joke. There is no way to vote against the interests of Goldman Sachs. Civil Disobedience is the only tool we have left.
We will not halt the laying off of teachers and other public employees, the slashing of unemployment benefits, the closing of public libraries, the reduction of student loans, the foreclosures, the gutting of public education and early childhood programs or the dismantling of basic social services such as heating assistance for the elderly until we start to carry out sustained acts of civil disobedience against the financial institutions responsible for our debacle.
The banks and Wall Street, which have erected the corporate state to serve their interests at our expense, caused the financial crisis. The bankers and their lobbyists crafted tax havens that account for up to $1 trillion in tax revenue lost every decade. They rewrote tax laws so the nation’s most profitable corporations, including Bank of America, could avoid paying any federal taxes. They engaged in massive fraud and deception that wiped out an estimated $40 trillion in global wealth. The banks are the ones that should be made to pay for the financial collapse. Not us. And for this reason at 11 a.m. April 15 I will join protesters in Union Square in New York City in front of the Bank of America.
“The political process no longer works,” Kevin Zeese, the director of Prosperity Agenda and one of the organizers of the April 15 event, told me. “The economy is controlled by a handful of economic elites. The necessities of most Americans are no longer being met. The only way to change this is to shift the power to a culture of resistance. This will be the first in a series of events we will organize to help give people control of their economic and political life.”
If you are among the one in six workers in this country who does not have a job, if you are among the some 6 million people who have lost their homes to repossessions, if you are among the many hundreds of thousands of people who went bankrupt last year because they could not pay their medical bills or if you have simply had enough of the current kleptocracy, join us in Union Square Park for the “Sounds of Resistance Concert,” which will feature political hip-hop/rock powerhouse Junkyard Empire with Broadcast Live and Sketch the Cataclysm. The organizers have set up a website [5], and there’s more information on their Facebook page [6].
We will picket the Union Square branch of Bank of America, one of the major financial institutions responsible for the theft of roughly $17 trillion in wages, savings and retirement benefits taken from ordinary citizens. We will build a miniature cardboard community that will include what we should have—good public libraries, free health clinics, banks that have been converted into credit unions, free and well-funded public schools and public universities, and shuttered recruiting centers (young men and women should not have to go to Iraq and Afghanistan as soldiers or Marines to find a job with health care). We will call for an end to all foreclosures and bank repossessions, a breaking up of the huge banking monopolies, a fair system of taxation and a government that is accountable to the people.
The 10 major banks, which control 60 percent of the economy, determine how our legislative bills are written, how our courts rule, how we frame our public debates on the airwaves, who is elected to office and how we are governed. The phrase consent of the governed has been turned by our two major political parties into a cruel joke. There is no way to vote against the interests of Goldman Sachs. And the faster these banks and huge corporations are broken up and regulated the sooner we will become free.
Bank of America is one of the worst. It did not pay any federal taxes last year or the year before. It is currently one of the most aggressive banks in seizing homes, at times using private security teams that carry out brutal home invasions to toss families into the street. The bank refuses to lend small business people and consumers the billions in government money it was handed. It has returned with a vengeance to the flagrant criminal activity and speculation that created the meltdown, behavior made possible because the government refuses to institute effective sanctions or control from regulators, legislators or the courts. Bank of America, like most of the banks that peddled garbage to small shareholders, routinely hid its massive losses through a creative accounting device it called “repurchase agreements.” It used these “repos” during the financial collapse to temporarily erase losses from the books by transferring toxic debt to dummy firms before public filings had to be made. It is called fraud. And Bank of America is very good at it.
US Uncut, which will be involved in the April 15 demonstration in New York, carried out 50 protests outside Bank of America branches and offices on Feb. 26. UK Uncut, a British version of the group, produced this video guide to launching a “bail-in” in your neighborhood.
Civil disobedience, such as that described in the bail-in video or the upcoming protest in Union Square, is the only tool we have left. A fourth of the country’s largest corporations—including General Electric, ExxonMobil and Bank of America—paid no federal income taxes in 2010. But at the same time these corporations operate as if they have a divine right to hundreds of billions in taxpayer subsidies. Bank of America was handed $45 billion—that is billion with a B—in federal bailout funds. Bank of America takes this money—money you and I paid in taxes—and hides it along with its profits in some 115 offshore accounts to avoid paying taxes. One assumes the bank’s legions of accountants are busy making sure the corporation will not pay federal taxes again this year. Imagine if you or I tried that.
“If Bank of America paid their fair share of taxes, planned cuts of $1.7 billion in early childhood education, including Head Start & Title 1, would not be needed,” Zeese pointed out. “Bank of America avoids paying taxes by using subsidiaries in offshore tax havens. To eliminate their taxes, they reinvest proceeds overseas, instead of bringing the dollars home, thereby undermining the U.S. economy and avoiding federal taxes. Big Finance, like Bank of America, contributes to record deficits that are resulting in massive cuts to basic services in federal and state governments.”
The big banks and corporations are parasites. They greedily devour the entrails of the nation in a quest for profit, thrusting us all into serfdom and polluting and poisoning the ecosystem that sustains the human species. They have gobbled up more than a trillion dollars from the Department of Treasury and the Federal Reserve and created tiny enclaves of wealth and privilege where corporate managers replicate the decadence of the Forbidden City and Versailles. Those outside the gates, however, struggle to find work and watch helplessly as food and commodity prices rocket upward. The owners of one out of seven houses are now behind on their mortgage payments. In 2010 there were 3.8 million foreclosure filings and bank repossessions topped 2.8 million, a 2 percent increase over 2009 and a 23 percent increase over 2008. This record looks set to be broken in 2011. And no one in the Congress, the Obama White House, the courts or the press, all beholden to corporate money, will step in to stop or denounce the assault on families. Our ruling elite, including Barack Obama, are courtiers, shameless hedonists of power, who kneel before Wall Street and daily sell us out. The top corporate plutocrats are pulling down $900,000 an hour while one in four children depends on food stamps to eat.
We don’t need leaders. We don’t need directives from above. We don’t need formal organizations. We don’t need to waste our time appealing to the Democratic Party or writing letters to the editor. We don’t need more diatribes on the Internet. We need to physically get into the public square and create a mass movement. We need you and a few of your neighbors to begin it. We need you to walk down to your Bank of America branch and protest. We need you to come to Union Square. And once you do that you begin to create a force these elites always desperately try to snuff out—resistance.
Chris Hedges’ column appears every Monday at Truthdig. Hedges, a fellow at The Nation Institute and a Pulitzer Prize-winning journalist, is the author of “Death of the Liberal Class [7].”
- Opinion
Source URL: http://www.truth-out.org/what-resistance-looks/1301814000Links:
[1] http://www.truth-out.org/print/670
[2] http://www.truth-out.org/printmail/670
[3] http://www.truthdig.com/report/item/this_is_what_resistance_looks_like_20110403/
[4] http://www.flickr.com/photos/peoplesworld/5577052033/
[5] http://itsoureconomy.us/
[6] http://www.facebook.com/profile.php?id=100000110163348#!/event.php?eid=155800227813376
[7] http://www.amazon.com/Death-Liberal-Class-Chris-Hedges/dp/1568586442%3FSubscriptionId%3D1XWTFJ60BR6QZ1PW9FR2%26tag%3Dtruthdig-20%26linkCode%3Dxm2%26camp%3D2025%26creative%3D165953%26creativeASIN%3D1568586442
[8] http://twitter.com/share
[9] http://www.truth-out.org/content/chris-hedges
[10] http://www.truth-out.org/user
[11] http://www.truth-out.org/user/register
Sounds like a party. Wish I could make it. I love NYC. Nice place to visit...
Think the Tea Party will show up?
There were tens, yes, tens of them at their last DC rally a few weeks ago.
Thanks very much for posting this; I must have missed it last week.
Hahaha! no junks for either of them, above, either!
I WONDER WHAT TNE GUBMINT'S FICO SCORE WOULD BE ?
By any measure of financial responsibility, they are worthy of no credit.
Would you loan to them ( us)?
We should not think of it as a default. We'll not pay back what didn't exist.
http://open.salon.com/blog/gordon_wagner/2010/05/11/how_hitler_defied_th...
You convenitently failed to mention the theft and confiscation...and the fact that they were borrowing money hand over first from the US banks.
GWB's grandaddy's bank loaned them a boatload of money and got seized under the Trading With the Enemy Act when they were too stupid to stop after December 7th.
Returning the gains of usury to the producer isn't theft, it is justice.
Any producer who borrowed at usurous rates is an idiot...and we know idiots need to excuse their behavior.
...and a group that destroys nations and economies by exploiting the stupidity of the host is equally idiotic. What goes around.
Wasn't George Soros in there stealing with both hands before sending his neighbors off to the camps?
There's certainly some evidence that he acted on behalf of the Nazi's...thanks for heldping me make my point.
Fuck off and die, Nazi filth.