Ripoffs That Capitalists Would Like to Keep out of the Media

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Seven Ripoffs That Capitalists Would Like to Keep out of the Media

By Paul Buchheit

Global Research, December 17, 2013

Common Dreams 16 December 2013

Theme: Global Economy

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Tax-avoiding, consumer-exploiting big business leaders are largely responsible for these abuses. Congress just lets it happen. Corporate heads and members of Congress seem incapable of relating to the people that are being victimized, and the mainstream media seems to have lost the ability to express the views of lower-income Americans.

1. Corporations Profit from Food Stamps

It’s odd to think about billion-dollar financial institutions objecting to cuts in the SNAP program, but some of them are administrators of the program, collecting fees from a benefit meant for children and other needy Americans, and enjoying subsidies of state tax money forservices that could be performed by the states themselves. They want more people on food stamps, not less. Three corporations have cornered the market: JP Morgan, Xerox, and eFunds Corp.

According to a JP Morgan spokesman, the food stamp program “is a very important business to JP Morgan. It’s an important business in terms of its size and scale…The good news from JP Morgan’s perspective is the infrastructure that we built has been able to cope with that increase in volume..”

2. Crash the Economy, Get Your Money Back. Die with a Student Loan, Stay in Debt.

The financial industry has manipulated the bankruptcy laws to ensure that high-risk derivatives, which devastated the market in 2008, have FIRST CLAIM over savings deposit insurance, pension funds, and everything else.

But the same banker-friendly “bankruptcy reform” has ensured that college graduates keep their student loans till they die. And sometimes even after that, as the debt is transfered to their parents.

3. Almost 70% of Corporations Are Not Required to Pay ANY Federal Taxes

And that’s even before tax avoidance kicks in. The ‘nontaxable’ designation exempts 69% of U.S. corporations from taxes, thus sparing them the expense of hiring tax lawyers to contrive tax avoidance strategies.

The Wall Street Journal states, “The percentage of U.S. corporations organized as nontaxable businesses has grown from about 24% in 1986 to about 69% as of 2008, according to the latest-available Internal Revenue Service data. The percentage of all firms is far higher when partnerships and sole proprietors are included.”

In recent years the businesses taking advantage of the exemption include law firms, hedge funds, real estate partnerships, venture capital firms, and investment banks.

4. Lotteries Pay for Corporate Tax Avoidance

This means revenue comes from the poorest residents of a community rather than from billion-dollar corporations. Many of the lottery players don’t realize how bad the odds are. Fill out $2 tickets for 12 hours a day for 50 years and you’ll have half a chance of winning.

Some astonishing facts reveal the extent of the problem. Low-income households spend anywhere from five to nine percent of their earnings on lotteries. A Pennsylvania survey found that nearly half of low-income residents planned to gamble at a newly-opened casino. America’s gambling losses in 2007 were nine times greater than just 25 years before.

5. The National Football League Pays No Federal Taxes

One of the most profitable organizations in America, with billions in tickets, TV rights, and merchandise sales, and with an NFL Commissioner who earned more money than the CEOs of Wal-Mart, Coca-Cola, and AT&T, is considered a non-profit. It has a tax-exempt status.

It gets even worse. While the individual teams themselves are not exempt from federal taxes, they enjoy multi-million-dollar subsidies from their states for new and refurbished stadiums. Fans – and non-fans – of the Washington Redskins, the Cincinnati Bengals, the Minnesota Vikings, the Seattle Seahawks, the San Francisco 49ers, and the Pittsburgh Steelers are among those who pay taxes for their hometown football fields. New Orleans taxpayers paid for leather stadium seats. For the Dallas Cowboys, a $6 million property tax bill was waived.

A Harvard University urban planning study determined that 70 percent of the capital cost of NFL stadiums has been provided by taxpayers, rather than by NFL owners.

6. Live on Park Avenue, Get a Farm Subsidy

A disturbing but fascinating report called “Farm Subsidies and the Big Dogs” lists Washington, DC, Chicago, and New York City, in that order, as the worst offenders.

• In New York, “Many entities receive the federal subsidies at their downtown office buildings, such as 30 Rockefeller Plaza, or at their million dollar residential condos.”
• In Chicago, “Nearly every neighborhood in the city receives federal farm subsidy payments – including the Gold Coast, Downtown-Loop, Lincoln Park, and even the President’s neighbors in Hyde Park.”
• In Washington, “Even U.S. Senators are receiving farm subsidy checks.”

Perhaps more of us should become farmers. In Florida, according to Forbes, “anyone could legally qualify their land as farmland by stocking it with a few cows.” Wealthy heir Mark Rockefeller received $342,000 to NOT farm, to allow his Idaho land to return to its natural state.

7. Profit Margin Magic: Turning a dollar into $100,000

Which costs the consumer more, printer ink or bottled water? Calculations by DataGeneticsreveal that the ink in a $16.99 cartridge comes to almost $3,400 per gallon. The cost of a gallon of cartridge ink would buy enough gasoline to run the average car for over two years.

Water seems to cost less, until the details are factored in: we’re paying for our own public water, which we’ve given away almost for free, and which comes back to us in no better condition than when it started.

For every 100,000 bottles sold, Nestle pays the proceeds from ONE bottle to those of us (the taxpayers) who own the water.

So This Is Capitalism..

Consumer-exploiting, tax-avoiding, profit-maximizing, responsibility-shirking, winner-take-all capitalism. An economic system which, as Milton Friedman once believed, “distributes the fruits of economic progress among all people.”

This work is licensed under a Creative Commons Attribution-Share Alike 3.0 License.

Paul Buchheit is a college teacher, an active member of US Uncut Chicago, founder and developer of social justice and educational websites (UsAgainstGreed.org, PayUpNow.org, RappingHistory.org), and the editor and main author of “American Wars: Illusions and Realities” (Clarity Press). He can be reached atpaul@UsAgainstGreed.org.

http://www.globalresearch.ca/seven-ripoffs-that-capitalists-would-like-to-keep-out-of-the-media/5361897

Bottom Feeders at the Trough: Bailing Out America’s Most Corrupt Capitalists

By Sharon Smith

Global Research, March 12, 2009

CounterPunch 12 March 2009

Region: USA

Theme: Global Economy

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The federal bailout of insurance giant American International Group (AIG) swelled to $170 billion in early March after a third infusion of taxpayer dollars. Yet even as the final details were being ironed out on February 28th, AIG filed a lawsuit against the government, claiming the IRS owes it $306 million in previous overpayments on taxes, interest and penalties. “AIG is taking this action to ensure that it is not required to pay more than its fair share of taxes,” a company spokeswoman explained to the Wall Street Journal without a hint of irony.

AIG’s stunning lack of gratitude toward its rescuers demonstrates the degree to which greed still pays on Wall Street. AIG executives, of course, emerged as the unwitting personification of unbridled corporate opulence after the company’s first two federal bailouts in September and October, when AIG hosted a $440,000 luxury spa vacation in California and then flew another group of executives to England for an $86,000 partridge hunt. AIG’s chief executive officer, Edward Liddy, finally agreed to cancel more than 160 subsequent executive entertainment events with a price tag of more than $8 million — leaving observers to wonder when these corporate parasites bothered to even show up at the office.

The Federal Reserve has engaged in much hand wringing over AIG’s responsibility for its own demise. Federal Reserve Chairman Ben Bernanke minced no words, arguing, “AIG exploited a huge gap in the regulatory system… This was a hedge fund basically that was attached to a large and stable insurance company.” AIG particularly favored providing guarantees for collateral debt obligations (CDOs), or bonds backed by debts — including subprime mortgages. But when Federal Reserve Vice Chairman Donald Kohn appeared before the Senate Banking Committee on March 5th, he refused to disclose the names of AIG’s top corporate trading partners, who have been among the biggest beneficiaries of the AIG federal bailout, arguing, “I would be very concerned that if we started giving out the names of counterparties here, people would not want to do business with AIG.”

The Wall Street Journal has discovered the names of some of the recipients of AIG bailout money. The cast of characters is familiar, mainly large U.S. and European banks that were AIG’s top traders, which have together received roughly $50 billion in taxpayer money since September. The U.S. firms include investment giants Goldman Sachs and Merrill Lynch, with each receiving 100 cents on the dollar for their CDOs, although market value was only 47 cents on the dollar, according to the Financial Times. For these Wall Street insiders, AIG’s bailout proved to be a cash cow.

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Merrill Lynch has meanwhile been embroiled in yet another unfolding scandal — along with its new owner, Bank of America (BofA), which received $35 billion from the Treasury’s Troubled Assets Relief Program (TARP) and another $20 billion in loans last fall. Just weeks before Merrill passed into BofA’s hands on January 1st, it paid out $3.6 billion in bonuses — four top executives alone shared $121 million in cash and stocks — while the company posted a fourth quarter loss of $15.84 billion. The bonuses were given about a month ahead of Merrill’s normal schedule, without explanation.

BofA CEO Ken Lewis initially told Congress he had “no authority” over Merrill’s decisions until January and even feigned disapproval of the bonus payments. He told the House Committee on Financial Services in February, “We urged Merrill Lynch execs involved in this compensation issue to reduce the bonuses substantially particularly at the top.” Evidence soon emerged, however, that the merger agreement that Lewis signed on September 15th explicitly authorized bonuses of up to $5.8 billion to Merrill employees. New York Attorney General Andrew Cuomo announced in March that his office is investigating whether the early bonus payments motivated Merrill’s traders to mark down their positions in order to exaggerate their success once under BofA control in January. BofA has refused to turn over a list of Merrill’s 2008 individual bonus payments to prosecutors, arguing it would be an invasion of employee privacy.

Interestingly, the federal government helped to arrange the acquisition of Merrill by Bank of America on the same September weekend that it refused to rescue the equally troubled investment bank, Lehman Brothers.

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The Federal Reserve and Treasury Departments have not merely rewarded the system of reckless betting with other people’s money that caused the banking crisis; they have also resuscitated the careers of some of the same executives who lost the biggest bets. A dozen former executives from mortgage lender Countrywide (which is also now owned by BofA), whose predatory lending practices played a key role in precipitating the subprime mortgage crisis, have launched a new corporate entity, the Private National Mortgage Acceptance Company — with a strategy to make exorbitant profits from individuals unable to keep up with their monthly mortgage payments.

Known as PennyMac, the company buys overdue mortgages at steep discounts from the federal government, which took them over from distressed banks. PennyMac then contacts the homeowners to negotiate new terms — and either pushes them into foreclosure or negotiates lower interest rates. It’s a win-win equation for PennyMac.

One of PennyMac’s leaders, Stanley L. Kurland is a former president at Countrywide and an architect of the classic sub-prime mortgage formula — mortgages with low “teaser” interest rates that later rose sharply. During the six years before Kurland left Countrywide in late 2006, Countrywide’s portfolio increased from $62 billion to $463 billion. Kurland sold $200 million in stocks shortly before leaving Countrywide. Now he stands to make many millions more reaping profits from the same category of people whose lives he helped to destroy. Federal banking officials nevertheless defend recruiting executives like Kurland to rebuild the financial system. As the New York Times explained: “[Federal officials] said that it was important to do business with experienced mortgage operators like Mr. Kurland, who know how to creatively renegotiate delinquent loans.”

Now the Federal Reserve and Treasury Departments are seeking to forge “an alliance with the very outfits that most benefited from the bonanza preceding the collapse of the credit markets: hedge funds and private-equity firms,” as the Washington Post reported on March 6th. The government’s new program, Term Asset-Backed Securities Loan Facility (TALF) states as its primary aim to resurrect the “shadow banking system” — the entirely unregulated investment-banking sector that proved responsible for much of the banking crisis.

Nevertheless, the government hopes to lure these same wealthy investors to start lending money again by offering the promise of easy profits without the risk of major losses. In what it is calling a “public-private partnership,” hedge funds would keep all profits, but the government would use taxpayer dollars to pick up the entire tab except for the investors’ initial down payments, in the case of a loss.

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The credibility of the financial system was already on the skids when the most recent phase of the AIG and Merrill Lynch scandals began to break. Yet Wall Street powerbrokers thus far remain remarkably insulated from the class anger they have provoked on a scale not witnessed in many decades. Obama’s Treasury Secretary Timothy Geithner’s own failure to pay $34,000 in taxes while a self-employed staffer at the International Monetary Fund surely added to the sense of irony on March 3, when Geithner informed the House Ways and Means Committee that the Obama administration plans to crack down on tax evaders. Within days after Obama announced plans to slightly reduce tax rates on deductions for the wealthiest 1.2 percent of taxpayers (from $35 to $28 for every $100 of deductions), Geithner quickly suggested that the Obama administration would be willing to drop or reduce the tax hike.

The federal government’s ability to bail out the nation’s most corrupt capitalists appears inexhaustible, yet only crumbs have been made available for those who have produced all their profits. Wall Street insiders are still feeding at a bottomless trough funded by the millions of workers now facing mass layoffs, losing health insurance and confronting home values that are lower than their mortgages. But it is only a matter of time before the dam begins to break.

At a time when one in every nine U.S. homeowners with a mortgage is either in arrears on monthly payments or in some stage of foreclosure, as was the case by the end of 2008, not a single financial expert has considered the one measure that might bring relief on par with the scale of the mortgage crisis: a national moratorium on foreclosures. With official unemployment in a tailspin at 8.1 percent (and the actual combination of unemployment and underemployment at least double that figure), the government should, at minimum, offer unemployment benefits to anyone who is unable to find work for the duration of this financial crisis. Such measures would only begin to rectify the vast discrepancy between federal government support to Wall Street and Main Street. But we should expect no substantial change in policy with massive pressure from below.

Sharon Smith is the author of Women and Socialism and Subterranean Fire: a History of Working-Class Radicalism in the United States. She can be reached at: sharon@internationalsocialist.org

http://www.globalresearch.ca/bottom-feeders-at-the-trough-bailing-out-america-s-most-corrupt-capitalists/12688

Too Big Banks Are Just Crony Capitalists

By Washington's Blog

Global Research, March 18, 2013

Washington's Blog

Region: USA

Theme: Global Economy

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Big Banks Destroy Real American Style Capitalism

Reuters notes that the president of the Federal Reserve Bank of Dallas – Richard Fisher -  said yesterday:

The largest U.S. banks are “practitioners of crony capitalism,” need to be broken up to ensure they are no longer considered too big to fail, and continue to threaten financial stability, a top Federal Reserve official said on Saturday.

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Fisher said the existence of banks that are seen as likely to receive government bailouts if they fail gives them an unfair advantage, hurting economic competitiveness.

“These institutions operate under a privileged status that exacts an unfair tax upon the American people,” he said on the last day of the annual Conservative Political Action Conference (CPAC).

“They represent not only a threat to financial stability but to fair and open competition … (and) are the practitioners of crony capitalism and not the agents of democratic capitalism that makes our country great” ….

He’s right.  The top economists, financial experts, and bankers say the big banks need to be broken up in order to save the economy.   Why?  Gee … I don’t know.

Modern American conservatives and liberals both passionately hate crony capitalism – the malignant symbiotic relationship between governmental leaders and their cronies.

The Boston Tea Party in 1773 was largely a protest against crony capitalism.

And it’s not just Western governments which fall prey to crony capitalism. (For example, Egypt’sMubarak family raked in between U.S. $40 and $70 billion dollars through cronyism.)

Indeed, people all over the world are starting to demand an end to crony corruption.

As Reuters global editor at large Chrystia Freeland noted, the “Arab Spring” and other protests around the world are really protests against crony capitalism:

Across the globe, this was a year when people took to the streets, often overthrowing their leaders in the process. That was true in the Arab world, in Russia, in India, in Western Europe, in the United States and even in China.

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The unifying complaint is crony capitalism. That’s a broad term, to be sure, and its bloody Libyan manifestation bears little resemblance to complaints about the Troubled Asset Relief Programin the United States or allegations of corrupt auctions for telecommunications licenses in India. But the notion that the rules of the economic game are rigged to benefit the elites at the expense of the middle class has had remarkable resonance this year around the world and across the political spectrum. Could the failure of the experts to anticipate this anger be connected to the fact that the analysts are usually part of the 1 percent, or at least the 10 percent, at the top?

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As for crony capitalism, this slogan of the street is both a challenge for the state and an opportunity. For some regimes, of course, crony capitalism, with a side order of repression, is the only dish on the menu. For them, the trends of 2011 do not bode well.

But most of today’s troubled market democracies don’t need a revolution to sweep away their cronies. What they do need is a new version of capitalism, designed for the 21st century. That is what the world’s protesters, in their different ways, are all asking for. Here’s hoping that 2012 provides some politicians with some answers.

Note: Don’t get confused by the word “capitalism” in the phrase “crony capitalism”. Crony capitalism is not at all free market capitalism.

http://www.globalresearch.ca/too-big-banks-are-just-crony-capitalists/5327195

3 Ways the Super-Rich Suck Wealth out of the Rest of Us

Post Categories: Canada

Paul Buchheit | Tuesday, December 10, 2013, 20:54 Beijing

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The facts are indisputable, the conclusion painful. The wealthiest people in the U.S. and around the world have used the stock market and the deregulated financial system to lay claim to the resources that should belong to all of us.

This is not a matter of productive people benefiting from their contributions to society. This is a relatively small number of people extracting massive amounts of money through the financial system for accomplishing almost nothing.

1. They’ve Taken $1.6 Million Per Family in New Wealth Since the Recession

The richest 5% of American families each gained at least that much in five years, mostly from the stock market. Using data from Credit Suisse, the Economic Policy Institute, Pew Research, and the Census Bureau and two separate analyses (shownhere and here), this extraordinary wealth grab can be calculated.

To briefly summarize, the richest 5% (six million households) own about two-thirds of the wealth, or about $10 trillion of the $15 trillion in financial wealth gained since the recession. That’s $1,667,000 per household. Calculations based on alternate sources resulted in a gain of over $2 million per household.

It is noteworthy that most of their windfall came from stock market gains rather than from job-creating business ventures. The stock market has, once again, been forming an overblown bubble of wealth that does not reflect the relative degrees of productivity of workers around America. The market has more than doubled in value since the recession, and the richest 5% own about 80% of all non-pension stocks.

2. They Create Imaginary Money That Turns Real

The world’s wealth has doubled in a little over ten years. The financial industry has, in effect, created a whole new share of global wealth and redistributed much of it to itself.

In the U.S., financial sector profits as a percentage of corporate profits have been rising steadily over the past 30 years. The speculative, non-productive, and fee-generating derivatives market has increased to an unfathomable level of over $1 quadrillion — a thousand trillion dollars, twenty times more than the world economy.

With the U.S. driving the expansion of this great bubble of wealth, our nation has become the fifth-most wealth-unequalcountry in the world, while global inequality (between rather than within countries) has become even worse than for any one country. Just 250 individuals have more money than the total annual living expenses of almost half the world – three billion people.

3. They’ve Stopped Payment on Productive Americans

Reputable sources agree that the working class has not been properly compensated for its productivity, and that the “rent-seeking” behavior of the financial industry, rather than changes in technology, is extracting wealth from society.

As a result, our median inflation-adjusted household wealth has dropped from $73,000 to $57,000 in a little over 25 years. We’ve lost another five percent of our wealth since the recession.

Shockingly, only one out of four Americans, according to a survey by Bankrate.com, “have six months’ worth of expenses for use in emergency, the minimum recommended by many financial planning experts.”

The End Result? That suction-like sound is the financial industry soaking up our country’s wealth.

Paul Buchheit is a college teacher, a writer for progressive publications, and the founder and developer of social justice and educational websites (UsAgainstGreed.org, PayUpNow.org, RappingHistory.org)

http://www.4thmedia.org/2013/12/10/3-ways-the-super-rich-suck-wealth-out-of-the-rest-of-us/