by divorced one like Bush

Via Glenn Greenwald and his article The war being waged on the TARP watchdog's independence comes an interview with Neil Barofsky the man charged with over seeing TARP. It appears the White House is not keeping true to the President's campaign of a more transparent government.

...the Obama administration is now attempting to induce the Justice Department to issue a ruling that Barofsky's office is not independent at all -- but rather, is subject to, and under the supervision of, the authority of Treasury Secretary Tim Geithner.

Seems Mr. Barofsky's latest report states that the grand total of all money currently paid out and pledged totals $23.7 trillion.

This is the original article to go along with the interview.
Click here to download and listen.

Via Naked Capitalism comes Rep. Alan Grayson asking Ben Bernanke who got the 1/2 trillion in US dollars as part of a swap. He notes $24 billion in 2007 is now $553 billion yr end 2008. Who got the money? "I don't know...the loans go to the centeral banks and they then put them out...We are lending to all US financial institutions in exactly the same way." That is, the fed is making no distinction between our nation and the rest of the world. Bernanke notes the law gives them the right to do this. (Sec 14 of the Federal Reseve Act.) Rep. Grayson issue is; at what point is using this "power" to move 1/2 a trillion dollars is infringing on Congresses control of the Treasury.

(Rep. Grayson has further comment at the link regarding this video.)

Transparency. The Federal Reserve and the Treasury say this money can't be traced after it passes to the first receiver. Mr. Barofsky has shown that it can be by simple sending out a questionnaire. Bernanke is treating the lending, regardless of recipient as all the same and thus none of it can be traced and that they have a right and authority to use the Peoples Money as they see fit. Rep. Grayson thinks they are overstepping Congress.

Who was it here that noted we had not bailed out the banks, but instead the banks just bought the Treasury?

By Divorced one like Bush

This past weekend I wrote about the OCC, Office of the Comptroller of the Currency and 4 rulings that this office has made over the last two presidencies.
1. Preventing state AG's and the state banking departments from investigating and regulating national banks. 2004.
2. Allowing Banks to become real estate developers and managers to including wind mill operations. 2006
3. Asserting that credit card insurance via telemarketing was not insurance and thus again immune from state AG's and the state insurance departments. 2002 This particular ruling being the result of the Gramm-Leach-Bliley Act of 1999. The act that is now pegged as THE deregulating action of the current economic mess.
4. Allowing banks to sell insurance. 1996.

All four are clearly rulings that can have lines drawn directly to the what we are hearing today as to why the alphabet soup of “financial products” created by “to big to fail” entities have required a combination of delivering funds and pledging funds to the tune of around $9.5 trillion dollars. I googled the current number and could only find numbers dating from December 2008 such as this site suggesting then the total was $8.5 trillion.

We really need to start talking about the OCC. It is a player, if not the behind the scene player of a lot of what has become our financial system. Note, I did not say banking system. That is key.

Ok, yesterday it was proposed that as part of the solution, our Treasury head needs some new power. Already leadership is say "Yes".

This call for power with an already announced “Yes” immediately sets off my suspicion meter. After 8 years of power being concentrated into the hands of the one (Homeland Security), unitary executive powers still being exercised by Obama, lobbyist run wild, departments turned from working for the people to working for the industry (see labor, FDA, military), no bid contracts and their results, $9 billion in bundled crisp new hundred dollar bills missing in Iraq, Paulson asking for $750 billion, not strings attached (add yours here)...

ARE YOU FUCKING KIDDING ME!
You want to give the power to say "yeh" or "nay" on a financial institution to one person? Have we not learned?

Then it dawned on me. Think about the 1996 OCC ruling and the 2002. Think about the praise for the FDIC and the job it has been doing. Here is an entire entity congress created to take care of failed banks. Ah, you say entities like AIG are not banks, so there is no jurisdiction. At least that is what we are being told. However, being that the OCC has in it's rulings merged the banking, real estate and insurance industries (specifically ruling what was and was not insurance) I will not accept that all those smart lawyers in congress and the one that heads the White House would not be able to produce a winning argument that by the actions of the OCC rulings, the FDIC already has the authority to do to AIG what it has currently been doing.

That lead me to look at the FDIC web site. In particular, it's “About” page:

Mission
The Federal Deposit Insurance Corporation (FDIC) is an independent agency created by the Congress that maintains the stability and public confidence in the nation’s financial system by insuring deposits, examining and supervising financial institutions, and managing receiverships.

It does not say “banks”. It says “financial systems” and “managing receiverships”.

Not enough for you. Consider there was an advisory committee created in 2002 by the then Chair Donald Powell.

Scope and Objectives: The Committee will provide advice and recommendations on a broad range of issues relating to the FDIC's mission and activities, including, but not limited to: the delivery of services by the FDIC, its corporate infrastructure, and policy initiatives in the areas of deposit insurance, supervision of financial institutions, resolutions and management of failing and failed institutions, and other issues impacting the financial services industry.

It did not say “banking” or “banks” here either. And it specifically talks about exactly what we have here today: failed and failing institution. You can not get away from the all inclusive “financial services industry”.

Want more? Consider the bio of the current chair:

Before her appointment to the FDIC, Ms. Bair was the Dean's Professor of Financial Regulatory Policy for the Isenberg School of Management at the University of Massachusetts-Amherst since 2002.

The FDIC is already the entity with the power that Obama is now requesting for his surrogate. On the plus side in my book, it is an agency created from the destruction of the last time we were here. It is a New Deal institution and that makes it clean in my mind (at least cleaner than more recently created entities). So, even if I'm wrong, and I don't think I am because this nation for 13 years now has been blurring the line between banks, insurance and recently real estate to the point that it is one big industry and that counts when you go in front of a judge, the correct request that we should have been hearing from Obama is to expand the definition of banking to clarify all these new mongrel banking entities such that the entity this nation created specifically to do what the Treasury is asking for can do the job without question of jurisdiction. Simple, neat, maintains separation of power and not bureaucracy expanding.

So why didn't he?

by divorced one like Bush

Let's talk jazz: Still cashing the income inequality
berries, clams, dough, heavy sugar, jack, kale, mazuma, rubes, simoelan, voot. It's all money.

I started this series to develop a simple model of income inequality so that I wouldn't sound like I was chewing gum and people wouldn't get all balled up on the heavy sugar.

The first one presented the model. 100 people, $1000 of total income. 1976: 8.7% of the dough to the One, all the rest of the jack to the Many. 2005: 23% of the sugar to the One, the rest of the voot to the Many. Basically, it showed why income inequality ain't allowing the Many to by orchids. Also, maybe it'll help you know one's onions.

The second post addressed the concerns that the model was to simple. The sugar was heavier, the times were percolating I'm told. Except that the only real issue for my model was that the population would have to increase against the 1000 clams for the model to reflect the coffee made. There was less mazuma for everyone. Oh, and the total dollars to be made up with a tax cut to duplicate the take of 1976 is $1.4 trillion dollars.

In the end, none of this bodes well for the concern about multiplier effects and money velocity. Yet here we are all these plans being put into action to get people spending 'cause that's the problem and the issue still gets no respect. We want to get more kale into the hands of the many, but we aren't taking about anything related to increasing the share of income to the many (which would include the trade issue as Stormy has been hammering it).

HELLO! The reason people have no money is not because their taxes are too high, their health care is too high, their interest rates are too high; THEY NEVER HAD IT TO BEGIN WITH!

So, let's see how much the 99 people of the Many would need in 2005 to have stayed even with their position in 1976.

First here is what the $1000 should be in 2005:
$3,429.93 using the Consumer Price Index
$2,811.66 using the GDP deflator
$3,891.74 using the value of consumer bundle
$3,296.90 using the unskilled wage
$5,013.86 using the nominal GDP per capita
$6,805.40 using the relative share of GDP
My model using actual income data came up with $6940 total, but based on per capita, it was only $5130.

Each of the 99 people had $9.22. In 2005 they would need the following:
$31.62 using the Consumer Price Index
$25.92 using the GDP deflator
$35.88 using the value of consumer bundle
$30.40 using the unskilled wage
$46.23 using the nominal GDP per capita
$62.75 using the relative share of GDP
My model, using per capita income resulted in $39.90.

Interesting No? The total personal income in the model comes out to be pretty close to the GDP per capita and relative share. So, the percolating of the economy did result in the same economic coffee in 2005 as in 1976. Unfortunately for the Many, the semoelan handled is less than the per capita and relative share of GDP. Can you say SCREWED?

My model also resulted in the number of $47.31 for each of the 99. That is the number to make up for the share of income lost to the One. It is essentially the number calculated based on nominal GDP per capita. Or, the unscewed number.

But, these numbers just show that using the percentage split, the One stayed even with the percolating economy and the Many dropped down to something less. It does not show the loss of purchasing. For that, we need to reverse calculate.
For the Many, they have $39.90 each in 2005. In 1976 it looks like this:
$11.63 using the Consumer Price Index
$14.19 using the GDP deflator
$10.25 using the value of consumer bundle
$12.10 using the unskilled wage
$7.96 using the nominal GDP per capita
$5.86 using the relative share of GDP

I think what we are seeing here by looking forward and then backward, is that the Many are earning more for their labor (wage went up), but they are not earning wages comparable to the contribution made to the rising GDP by their laboring. Who knew, Slave Wages is a real wage!