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Laura Gottesdiener: Wall Street’s Rental Empire

7:37 am in Uncategorized by Tom Engelhardt

This article originally appeared at TomDispatch.com. To receive TomDispatch in your inbox three times a week, click here.

Note for TomDispatch Readers: Our next piece will be posted on Sunday evening, December 1st. Happy Thanksgiving! Tom

Foreclosed home

Wall Street is up to the same old tricks in the housing market.

“One shitty deal.” “Shitty deal.” “Shitty.” The date was April 27, 2010, and Senator Carl Levin (D-Mich.) was pissed as he launched into a rant with those pungent quotes in it. As part of a Senate subcommittee investigation into the causes of the financial meltdown, Levin was grilling Goldman Sachs CEO Lloyd Blankfein and several other current and former Goldman higher-ups about their roles in that crisis and in particular the exotic, opaque investment deals they had created and peddled.

What had Levin steaming mad were internal emails revealing that, on the cusp of the financial crisis, Goldman staffers knew that they were selling crummy investments. Levin’s tirade was inspired by an email in which a Goldman staffer describes a product he’s selling as “one shitty deal.” That, of course, did not stop Goldman from selling such products. Not only that, but the firm’s traders later bet against those deals to make even more money! Contempt, thy name is Goldman.

At the heart of that April 2010 hearing, and at the heart of the financial crisis itself, were countless “shitty deals” in the form of so-called mortgage-backed securities. Remember those? It’s been a few years, so here’s a quick refresher. Wall Street firms like Goldman cooked up an idea to bundle together thousands of home mortgages — loans made to people from Fresno to Lubbock to Kalamazoo to Baltimore — and sell them to investors. Goldman profited off their sale and, as long as those homeowners made their mortgage payments, investors enjoyed a constant income stream.

But as we now know, many of those home loans were filled with tricks and trap-doors and, in some cases, were made to people who simply couldn’t afford them. First gradually, and later in cascades, millions of people stopped paying their mortgages, which meant that those mortgage-backed securities went sour. The losses were historic, plunging the U.S. economy into what we now call the Great Recession.

Five years later, the fallout from that mortgage-fueled meltdown and the bailing out of many of the financial institutions that profited from them is far from over. However belatedly, the feds continue to investigate the nation’s biggest banks for having sold shoddy mortgage-backed securities. On November 15th, JP Morgan Chase, one of the nation’s largest banks, agreed to a $4.5 billion settlement with 21 institutional investors who claimed they were wrongly sold bad mortgage-backed securities. Days later, the Justice Department announced a $13 billion settlement with JP Morgan — “the largest settlement with a single entity in American history” — for wrongdoing related to the packaging, marketing, and selling of those securities.

But as Laura Gottesdiener writes today, you can’t keep a bailed-out industry down. Wall Street and its masters of the universe are at it again. They’ve devised a new way to profit off the housing market — and this time it has nothing to do with risky mortgages. Now, Wall Street is securitizing something else: your rent check. Andy Kroll

The Empire Strikes Back 
How Wall Street Has Turned Housing Into a Dangerous Get-Rich-Quick Scheme — Again 
By Laura Gottesdiener

You can hardly turn on the television or open a newspaper without hearing about the nation’s impressive, much celebrated housing recovery. Home prices are rising! New construction has started! The crisis is over! Yet beneath the fanfare, a whole new get-rich-quick scheme is brewing.

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Laura Gottesdiener, The Backyard Shock Doctrine

7:49 am in Uncategorized by Tom Engelhardt

This article originally appeared at TomDispatch.com. To receive TomDispatch in your inbox three times a week, click here.

A Dream Foreclosed

Laura Gottesdiener’s new book

African Americans had every reason to celebrate Barack Obama’s election in 2008. History was made. Then reality set in. Economically speaking, the Obama era has been a five-year nightmare for Black America.

The unemployment rate for blacks now stands at 13.7%, almost twice the rate for all eligible workers. Under other circumstances, 13.7% unemployment would be a national crisis; it would dominate the headlines and the nightly news and the editorial pages; 13.7% unemployment would have any politician in office fearing for his or her career. In Washington, there would be blue-ribbon commissions, congressional hearings, and expert panels. But because we’re talking about 13.7% of eligible black workers, there is no outrage. Except for the anger and pain felt within the black community, that jobless rate is a silent scandal.

The wealth of African Americans is in similarly dire straits. Many black families saw their personal wealth, significant amounts of it invested in their homes, evaporate in the economic collapse of 2007-2009, triggered by a housing meltdown in which African Americans were disproportionately targeted for shoddy subprime mortgage loans. As of 2010, the median net wealth of black families was $4,900; of white families, $97,000. A third of black households had zero or negative wealth. Gains made across generations were wiped out like that.

Consider these statistics the vital signs of Black America in the Obama era. As Laura Gottesdiener writes in her debut at TomDispatch, there may be no more vivid illustration of their collective economic distress in these years than the foreclosure crisis pocking the inner cities of Atlanta, Chicago, Detroit, Minneapolis, and Philadelphia, among other places. Gottesdiener’s new book, A Dream Foreclosed: Black America and the Fight for a Place to Call Home, is a people’s history of the financial crisis that jolted this country and has never ended.  It has been hailed by Naomi Klein as “riveting” and Noam Chomsky as a “most valuable study… with historical depth and analytical insight.” Andy Kroll

The Great Eviction
The Landscape of Wall Street’s Creative Destruction
By Laura Gottesdiener

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Steve Fraser: The National Museum of Industrial Homicide

8:01 am in Uncategorized by Tom Engelhardt

This article originally appeared at TomDispatch.com. To receive TomDispatch in your inbox three times a week, click here.

An American Flag projected on the New York Stock Exchange

Wall Street seems intent on 'hollowing out' the American working class.

A week after the election, I folded myself into the front seat of a small rental car and left Washington, D.C., for the highlands of southwestern Virginia. The destination on my GPS device read Radford University, a small public college located an hour’s drive from the West Virginia border. Radford’s picturesque campus is nestled into a double bend of the New River, a north-flowing body of water believed to be older than mankind. The Blue Ridge Mountains loom on the smoky horizon to the east, the Allegheny Mountains to the west.

I’d been invited to Radford to talk about the rising cost of college and why storytelling (of the type published here at TomDispatch) matters in the fight to rebuild a quality, affordable higher education system in America. At stake was the abandonment and hollowing out of public colleges by a generation of anti-government politicians, and the burden borne by young people who need that degree, albeit one with shrinking value in an anemic job market. But the students I met on campus — better-off and poorer, younger and older, some the first in their families to try for a degree — didn’t need to hear my spiel. They lived it every day.

One student told me about enrolling in a private college after high school, then dropping out because he couldn’t pay the tuition. So he joined the Marines and did two tours in Iraq to assure himself of government money for college when he got back, if he got back. Another nodded knowingly when I mentioned the “Himalayan-sized mountains of debt” accrued by so many collegians today. He later said he was already resigned to a near-lifetime effort to pay off his student loans. That was just the way it was, he assured me; others agreed. Afterward he shook my hand, thanked me for visiting, then walked out into the night. The folks at Radford had invited me to share what I’d learned as a journalist covering higher education; yet I absorbed at least as much as the students I was supposed to enlighten about what it is like for those struggling in our underfunded, stretched-thin, public education system.

The downsizing of higher education by states facing budget crunches in bad times is no aberration. It’s been a long, slow burn, the legacy of a hardline brand of conservatism that champions defunding government and giving private interests, including Wall Street, ever more control over American life. Conservative activist Grover Norquist, a fixture in the ongoing “fiscal cliff” talks in Washington, once infamously said of government that he wanted to “reduce it to the size where I can drag it into the bathroom and drown it in the bathtub.” There you have it. That kind of thinking, as historian and TomDispatch regular Steve Fraser, author of Wall Street: America’s Dream Palace, points out, has blighted not just public universities but also the blue-collar heart of America, leaving a trail of broken communities struggling to rebuild and reimagine the lives they once had. Andy Kroll

The Archeology of Decline
Debtpocalypse and the Hollowing Out of America
By Steve Fraser

Debtpocalypse” looms.  Depending on who wins out in Washington, we’re told, we will either free fall over the fiscal cliff or take a terrifying slide to the pit at the bottom.  Grim as these scenarios might seem, there is something confected about the mise-en-scène, like an un-fun Playland.  After all, there is no fiscal cliff, or at least there was none — until the two parties built it.

And yet the pit exists.  It goes by the name of “austerity.” However, it didn’t just appear in time for the last election season or the lame-duck session of Congress to follow.  It was dug more than a generation ago, and has been getting wider and deeper ever since.  Millions of people have long made it their home.  “Debtpocalypse” is merely the latest installment in a tragic, 40-year-old story of the dispossession of American working people.

Think of it as the archeology of decline, or a tale of two worlds. As a long generation of austerity politics hollowed out the heartland, the quants and traders and financial wizards of Wall Street gobbled up ever more of the nation’s resources. It was another Great Migration — instead of people, though, trillions of dollars were being sucked out of industrial America and turned into “financial instruments” and new, exotic forms of wealth.  If blue-collar Americans were the particular victims here, then high finance is what consumed them.  Now, it promises to consume the rest of us.

Scenes from the Museum

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Rebecca Solnit: Why the Media Loves the Violence of Protestors and Not of Banks

7:39 am in Uncategorized by Tom Engelhardt

This article originally appeared at TomDispatch. To receive TomDispatch in your inbox three times a week, click here.

In December 2001, 110 of 112 revelers at a wedding died, thanks to a B-52 and two B-1B bombers using precision-guided weapons to essentially wipe out a village in Eastern Afghanistan (and then, in a second strike, to take out Afghans digging in the rubble). The incident got next to no attention here. It wasn’t, after all, a case of American “violence,” but a regrettable error. No one thought to suggest that the invasion of Afghanistan should be shut down because of it, nor was it discredited due to that mass killing.

It had been a mistake. As would be the case with those other weddings obliterated by U.S. air power in Iraq and Afghanistan in the years to come. As were the funerals and baby-naming rites blasted away in those later years. As have been, more recently, the more than 60 children killed by CIA drone strikes in the Pakistani tribal borderlands, the funerals hit by those same drones, and the recently documented secondary strikes — as in that December 2001 attack — on rescuers trying to pull the wounded out of the rubble.

None of this, of course, gets significant attention here. Despite the pleas of Afghan President Hamid Karzai, few here suggest shutting down U.S. and NATO air operations in that country because of violence against civilians. There are few cries of horror for the eight Afghan sheepherders, none out of their teens, one possibly as young as six, who were killed by a NATO air strike in Kapisa Province just the other day. There are no major editorials or front-page media stories calling for the U.S. and its allies to mend their violent ways or change their policies because of them. It’s certainly not popular to suggest that such acts might discredit American policy abroad.

Yet, as TomDispatch regular Rebecca Solnit points out, “violence” within and by the Occupy movement in this country — we’re talking about several sexual assaults in Occupy camps, a suicide, drug use, and a small amount of property damage, bottles thrown, and the like by outliers at Occupy demonstrations — has in certain quarters somehow been enough to discredit the movement, even in some cases to paint it as a kind of living nightmare. Such violence, minimal as it might have been, instantly discredited Occupy on the American landscape.

This, mind you, in a society in which 14,000 murders were committed in 2011, in which more than 30,000 people died in traffic accidents, in which a recent Pentagon report indicated that violent sexual crimes in the military have risen by 64% since 2006 (95% against women, even though they make up only 14% of the force’s personnel). And yet somehow, neither weapons, nor cars, nor the U.S. military is discredited by such violence.

It would, in fact, be surprising to imagine that a movement whose camps actually welcomed, housed, and fed those essentially thrown away by this society would lack problems. In truth, Occupy should have been hailed for its assault on violence at every level in this society. Nothing could be more striking in Solnit’s piece than the statistic she cites on the remarkably unnoticed drop in violence in Oakland, California, in the weeks before Occupy Oakland itself was violently assaulted by that city’s police force. Tom Read the rest of this entry →