Professor Elizabeth Warren strikes me as a smart, cool customer.  I’ve only seen her on the tube on the Daily Show and the NewsHour, but you get the impression from what she says and her straight forward manner that she knows what she’s talking about when it comes to financial oversight matters and how to safeguard the American taxpayer.  While my understanding of high finance is meager at best — and even director Oliver Stone and his co-screenwriters, Allen Loeb, Stephen Schiff and Stanley Weiser in Wall Street 2: Money Never Sleeps couldn’t explain the Big Meltdown but rather ultimately offered up a sting story you could see coming (yet the angle-playing characters in the flick somehow couldn’t) mid-way through — Ms. Warren has struck me as someone who not only knows the score but what has to be done to keep the wolves from gobbling up the entire chicken coop.

In the Watchman comic book maxi-series and subsequent movie, the venal masked thug the Comedian got the joke.  He knew as one of the Watchmen, a grouping of super-heroes, that as long as he maintained the status quo, he could literally get away with murder because his actions kept the ones in power, in power.  Who watchers the watchers indeed.  Professor Warren is the one who came up with the idea of a federal consumer financial protection entity – which became the Consumer Financial Protection Bureau (CFPB).  But because she isn’t like the Comedian, because she isn’t a rubber stamper like many of the other lawyer-politician-lobbyists who populate the backrooms and trendy bars of the Hill and its environs, she is the natural enemy of Wall Street which means she’s the perfect person to be our watcher.

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In 2003, at the peak of the market, my parents proudly bought their first home.


We’re quite a large family—5 kids total, and you have to add aunts and uncles and in-laws, and nieces and nephews—and my parents felt that finally, no one can judge us for living in overcrowded conditions, since it’s “our house.”


My parents are extremely hard working and savvy, like most immigrants who come to the United States, however, they were not entirely prepared nor informed on how homeownership works. They sincerely believed that since their mortgage broker was a nice Latina who spoke Spanish, she would be a great resource and do what is in their best interest. I was only 20, and while I have been my parents’ “financial counselor” for as long I can remember, I was definitely not knowledgeable on whether my parents were “getting a good deal.”

Several years later, after my parents finally decided to talk to me about some of their financial issues and were worried about losing the house, I had to step in.

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Our federal deficit is hovering somewhere around $14 trillion.

A deficit, as anyone who has had to maintain a household budget will tell you, is the gap between what you spend and what you earn. But unlike having to pay for heat, light, food, rent and a car note, spending on our nation’s level has many more complexities.

For instance, we chose ––or some would argue, were sold a bill of goods –– to go to war with Iraq and Afghanistan under the rubric of the never-ending War on Terror.

According to several estimates, those two wars are now costing us taxpayers around $3 billion weekly.  Nobel prize winning economist Joseph Stiglitz and Harvard’s Kennedy School of Government Professor Linda J. Bilmes two years ago published a book called the Three Trillion Dollar War: The True Cost of the Iraq War, which predicted that  the actual budgetary and economic costs of that single war would reach that number.

In an October 27 post on the Daily Beast, Bilmes wrote the two have now revised their estimates and predict the cost of the wars will be between $4 and $6 trillion.  All wars are not equal: due to troop reductions in Iraq, Afghanistan costs are now greater in that country.

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A cartoonist draws while radical geographer David Harvey explains the current crisis in capitalism at the RSA and asks us to come up with a system that is just, responsible and humane.

David Harvey’s full lecture at the RSA.

Beautiful, bankrupt, volcano-spewing, Iceland should win the magical realism award of the century.

Iceland is a tiny country. It is physically the size of Kentucky, but its population of only 300,000, is roughly the same size as Pittsburgh.

In 2003, with a conservative government in power, the deregulation of finance markets came into full effect. At that time, Iceland’s three biggest banks had assets of a few billion dollars — about 100% of the country’s gross national product, and fishing was still the mainstay of the economy.

Within three years those bank assets ballooned to 140 billion, almost 1000% of the country’s gnp. Iceland had morphed into Europe’s largest hedge fund, and like those overextended funds in the U.S., the bubble simply burst.

But this time, the bubble was the country. Because it is so small, and such a high percentage of the population worked in the banking sector, the collapse affected every aspect of the economy.

Within days, Iceland was bankrupt and its currency was useless outside its borders. Icelanders mobilized in protest and ousted their government, which was clearly asleep at the wheel.

Now, 18 months later, Just days before the volcano erupted, an Iceland government “truth commission” released its 2,000 plus page investigative “Black Report” on what caused the country’s collapse and who is to blame.

In a unique move, the entire report was read aloud last week, page by page, by 45 actors who took turns reading 24 hours per day at the Reykjavik City Theater.

Even without knowing the language, it isn’t hard to tell that this isn’t gripping theater. And the event has certainly been eclipsed by the airline-disrupting Eyjafjallajokull volcano in the international press.

I, however, applaud the idea and effort of bringing the story to the people, of making the report accessible to all and bringing some comfort of understanding, however dull, to a country that is reeling from a an economic catastrophe that rivals fiction.


(added 5/22/11:  Recent New York Times magazine article on Iceland)


For the reading-hardy, here is a link to a website that hosts the English version of the report http://sic.althingi.is/

There is also a documentary on the crisis, called “Maybe I Should Have.” Here is the English language trailer.

And finally, here is the the lovely (if odd) Icelandic musician, Eliza Geirsdottir Newman, performing her song for an Al Jazeera newscaster, teaching us all how to pronounce Eyjafjallajokull. Complete with bouncing ball.

Banks or families?

This is the false choice that big banks and the American Bankers Association are offering Congress as they move to eviscerate the Financial Reform bill that is presently in the Senate, says Elizabeth Warren.

The banking lobby is willing to pay to get that job done — to the tune of $1.4 million dollars per DAY. I repeat. Big banks and their lobbyists are spending $1.4 million per day to make sure that meaningful financial reform does not occur. To make sure that an independent Consumer Financial Protection Agency will either never come into being, or exist in name only. So we all need to do something about it. Now.

First I’ll answer the two questions that may be in your mind:

1. Who is Elizabeth Warren?
2. What can I do to support financial reform and prevent a future financial meltdown?

Elizabeth Warren is the fabulous, plain-speaking Harvard law professor who chairs the Oversight Board of TARP (Troubled Asset Relief Program — aka the “bank bailout”). She has been telling-it-like-it-is since she got there (as in big banks are not on our side).

What can we do to get financial reform?  Yesterday, Americans for Fairness in Lending and Americans for Financial Reform and allies co-hosted a great webinar featuring Ms. Warren  for about 1,000 people to answer exactly that question.

And here is what to do:

• Write to your Senators and ask them to strengthen the financial reform bill in the Senate.
• Write a letter to the editor of your local paper about the need for financial reform. Click here for contact information for media in your area.
• Sign the petition on Change.org.
• Get other people to do the same.

Whatever you do, do it fast.  The final vote may be as soon as May 3.

Here’s the webinar so you can listen yourself:

Elizabeth Warren 4/6/10 from Gilda Haas on Vimeo.

And here’s a clip of Elizabeth Warren with Jon Stewart on the Daily Show:

One way to reduce inequality is to actually tax people who have lots of money and won’t be harmed by contributing it to the public good.

This practical concept has been drafted into a very simple and accessible policy proposal by the British Robin Hood Tax campaign, which is, in their words:

“A tiny tax on bankers that would give billions to tackle poverty and climate change, here and abroad.”

The tax consists of a .05% tax on transactions between financial institutions that could raise hundreds of billions of dollars for social needs.

Check out the very funny campaign video below featuring Bill Nighy as a banker.

Andrew Ross Sorkin just wrote a book called Too Big to Fail. That phrase refers to institutions and the idea that by getting bigger and merging with others, institutions can escape their vulnerability. The economic crisis proved that all wrong of course…except they did get bailed out and they’re all still around but one. So maybe not. Still, the book, and the talk, was much more about the people. The talk was quite juicy in fact. So what surprised Sorkin most in his research, as the chief mergers and acquisitions reporter for the New York Times?

Did you know? Certain people really did see this coming. Everyone, including the Treasury, knew Lehman was shaky months beforehand, not to mention AIG and Merrill Lynch. So instead of being about five to six days in September as originally planned, the book starts back in March.

Did you know? Goldman Sachs had an annual board meeting in Russia, and Henry Paulson, Secretary of the Treasury, and former Goldman Sachs CEO, just happened to be there? They all had a nice social and un-calendered breakfast. They said no business was discussed.

And you’ll never guess some of the naughty things that were said. I even learned a new term for getting screwed. (to protect the sensitive, really wierd profanity omitted.  for the real deal contact Andrea directly)

And it’s fascinating this world of corporate helicopter commutes, chartered jets to travel the country, chauffeured town-cars. This world of town homes and country homes and fancy dinners at the best restaurants. These folks never have to interact with anyone outside the circle. It’s a fairy tale world where nothing else seems to have any reality.

Even sadder was how tight and incestuous this circle was (and continues to be), and how cut-throat. They couldn’t even pull together to save themselves. People in government like Hank Paulson, with the capacity to think of things beyond shareholders, had to force survival down their throats. Paulson had to take out a couple of members of the circle, and he did it ruthlessly. They thought it best to merge a couple members of the circle, they did that do. And I wondered just where the power came from allowing him (and the Federal Reserve and the FDIC) to give those kind of orders. And how they equated their circle’s survival with that of America.

That just might be the heart of the problem. The power of this idea that saving a group of institutions that had really fucked up to the tune of billions of dollars, just so they could return to business as usual immediately after, was the patriotic thing to do. That our democracy is tied to the stock market. That we absolutely must run our economy on this kind of engine. And every time it goes into crisis, which it does regularly, we must hold our noses and violate our free market principles and save it. Is this logic really the best we can do?

The most telling thing I think, is that according to Sorkin, most of the people in power in these companies (same group of people as before of course) refer to themselves as survivors.

As though they’d survived some kind of cancer rather than being rescued.

And maybe that’s due partly to the insanity of a market that depends primarily on confidence.

But I think we all know it goes a lot deeper than that.

No one agrees more than Senator Bernie Sanders whose 2-page “Too Big To Fail, Too Big to Exist Act” would break up some of the world’s biggest banks, and is being discussed in Congress as I write.

Here is Senator Sanders on the bill and why the U.S. shouldn’t follow the bath of England and Europe.

Here is an excerpt from Sorkin’s book printed in this month’s Vanity Fair.

Click here to get to Sorkin’s collection of original documents and emails.  I encourage you to check them out.

And here is a video of Sorkin talking about the crafting of a book, which he says is “written like a mystery, even though we all know how the story ends.”

Three artists help break the economic crisis down into things that we can see and touch and feel … and use.

1. Golden Globe by Ryan Hollon and LLuís Victori

In the last few years, our cities have been going through some very tough times. And because so much of today’s population, power, and money lives in cities, the tough times have spread all over the world. Big cracks have emerged in the global economy, cracks which reveal that today’s wealth has been built in the shadows of our success. Maybe the time has come to look beyond the shiny surfaces that make us think all is well, and to investigate the worlds beyond our financial centers and downtown skyscrapers? Ryan Hollon

2. Red Lines Crisis Learning Center by Damon Rich

This multi-media exhibit includes photographs, models, drawings and sculptural installations — including a large, three-dimensional wooden graph of interest rates over the past 70 years — that offer an explanation of how the private housing market works, beginning with the federal government’s involvement during the Depression.

Last month the exhibition was hosted at the Queens Museum, superimposing foreclosure information with neon-pink plastic triangles on top of the 9,335-square-foot Panorama of the City of New York that was built for the 1964 World’s Fair. Check out the New York Times article on the exhibit.

The exibition has received a lot of other coverage that you can check out here:

Artforum
Revolution
PBS NewsHour
City Limits
Fox News
New York 1
Corriere della Sera

If you are interested in hosting the exhibit in your own town (on your dime) post a comment here or contact Damon directly at gro.tnempolevedpucrehtonanull@nomad.

3.  Predatory Equity by the Center for Urban Pedagogy

Predatory Equity: The Survival Guide Is a beautifully useful product of the Center for Urban Pedagogy in NY’s Making Policy Public project that links designers with advocates in order to produce and distribute an artful and useful poster resource that will help advance grassroots campaigns.

Here is a description of this poster project in the Center’s own words:

During the boom, a new breed of speculator used private equity and oversized bank loans to buy up affordable housing. They tried to make a quick profit by converting it to luxury housing – putting over 65,000 families and their affordable apartments at risk. Post-crash, these predatory equity speculators can’t pay off their loans or sell their buildings. Foreclosure looms. Predatory Equity: The Survival Guide explains the financial mechanics of predatory equity and how to prevent it from happening again in the next boom. It provides tenants, advocates, and policymakers with information on tools like loan modifications and preservation short sales to save the hundreds of buildings in imminent danger of foreclosure.

The poster was produced through a collaboration between Tenants & Neighbors, the Urban Homesteading Assistance Board, and Glen Cummings.

Posters are available for purchase on the Center for Urban Pedagogy website.

Or you can download the poster as a pdf for free here.

For comic book and funnies fans, the economic crisis has spawned plenty to educate and entertain.  Here are a few:

Economic Meltdown Funnies

First up, is the economic crisis 101 comic book by our friends at the Institute for Policy Studies (Institute? Comics? Yep…hard times require comics) and Jobs with Justice.  Written by Chuck Collins and Nick Thorkelson, the book is a humorous and informative take on the Meltdown that walks us through the many factors that led to the current crisis. You can download a free copy here.

Lex Luthor asks for a Bailout

Very, very funny.

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ProPublica

The most comprehensive, comprehensible, and up-to-date resource about where bail-out money is going, to whom, and for what purpose is the ProPublica site — tagline: journalism in the public interest.

In their own words, here is what you can find on their site:

• complete list of where the money’s going, from AIG to the smallest community bank
• map that charts all the bailed-out companies
• timeline of major bailout events
• running total of how much of the TARP bailout money has been committed
• graphical breakdowns and plain language descriptions of the Treasury Department’s bailout programs without confusing government acronyms
• list of the banks that have returned the bailout money
• snapshot of how mortgage servicers are performing in the foreclosure prevention program

ProPublica also tracks Stimulus program dollars in useful ways ranging from how quickly agencies are spending money, to stimulus projects near you, down to the per capita sending in your county — plus a lot more.

ProPublica is an independent newsroom, dedicated to investigative journalism, led by Paul Steiger, the former managing editor of The Wall Street Journal. Stephen Engelberg, a former managing editor of The Oregonian, Portland, Oregon and former investigative editor of The New York Times, is ProPublica’s managing editor.

Subsidyscope

Launched in January 2009, by the Pew Charitable Trusts in conjunction with the Sunlight Foundation, Subsidyscope‘s exists to make government subsidies transparent to the rest of us. They started with the financial sector, featuring subsidy maps (my favorite here), blog posts, downloadable data sets, key public documents, and more.

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One silver-lining of the current economic crisis is the increased level of interest in teaching and learning about the economy.  There is now some great stuff out there.  Here are some of Dr. Pop’s favorites:

This American Life, in my book, has repositioned radio as the great American story-telling medium, getting up close and personal to find the universal in real life.  Here are three really good shows about the meltdown, produced in collaboration with NPR:

Giant Pool of Money :  A special program about the housing crisis. What it has to do with the turmoil on Wall Street. Why banks made half-million dollar loans to people without jobs or income.  And why is everyone is talking so much about the 1930s. It all comes back to the Giant Pool of Money.

Bad Bank: The collapse of the banking system explained.  What does “insolvent bank” actually mean and why are we giving hundreds of billions of dollars to rich bankers who screwed up their own businesses?

Another Frightening Show About the Economy: The same team explain what the regulators could have done to prevent this financial crisis from happening in the first place.

Planet Money:  Alex Blumberg and Adam Davidson, the two guys from NPR who created the This American Life episodes went on to produce the Planet Money podcast and blog that continues to explain the crisis as it pertains to daily breaking news.  Blumberg and Davidson even did a live road show to strong audiences.  About the economy!

Marketplace Whiteboard: From American Public Media’s signature business show, Marketplace, Senior Editor Paddy Hirsch explains complex financial terms while drawing cartoons on a whiteboard.  The results are edifying, entertaining, and charming — good for people who want a deeper understanding of terms like toxic assets or capital structure, to name a few.  I liked the whiteboard of the credit crisis as an Antarctic expedition.

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While focusing on the current economic meltdown, I came across this flier that I made about 20 years ago.  Gone but not forgotten, is our last financial crisis — the big (at least for the 80s) S & L bailout.  The flier was never used as was intended, to mobilize a demonstration against banking crimes against the community. However, it was actually distributed far and wide — published in a magazine, distributed at the highest management meeting at Bank of America, and was partially responsible for launching negotiations of a very successful community reinvestment agreement in L.A. between Communities for Accountable Reinvestment and Security Pacific, both of which are now defunct.  Pretty good for a flier that actually used scissors and glue for cutting and pasting.

So, here is that story…. Read More…