Strauss-Kahn & Maid spend big on Lawyers
(1) DSK's sex-life was common knowledge in Europe. He married his wife in the Paris Synagogue
(2) DSK diplomatic immunity? Why chase the maid, when top shelf escort services were available?
(3) DSK can easily pay for sex. But to 'conquer' one is more exciting. He may even enjoy the risk
(4) Strauss-Kahn not covered by Diplomatic Immunity - State Dept.
(5) Strauss-Kahn's lawyers claim to have found Dirt on the Maid
(6) Maid hires additional lawyers to fend off an attack on her reputation & credibility
(7) France's Jews fear backlash over DSK (Jewish banker, cosmopolitan globalist, leftist & sex maniac)
(8) Luxury Hotels - where politicians connect with prostitutes, celebrities with porn actresses
(9) IMF should "replace the soft DSK with a mean SOB who will lend only on much tougher terms"
(10) As IMF head, Strauss-Kahn called for a new world currency to replace Dollar Hegemony
(11) UN report warns of dollar "collapse", urges use of SDRs
(12) UN Report warns of Dollar collapse, recommends SDRs as replacement Reserve currency
(13) The Global Economy's Corporate Crime Wave - Jeffrey Sachs
(14) Dutch bankers' bonuses axed by people power; 100% retrospective tax on bonuses paid after bailout
(15) Corporations avoid taxes by keeping two sets of books
(16) Inequality ... Of the 1%, by the 1%, for the 1% - by Joseph Stiglitz
(17) America has two national budgets, one official, one unofficial - Matt Taibbi
(1) DSK's sex-life was common knowledge in Europe. He married his wife in the Paris Synagogue
From: Maurizio d'Orlando <hernett@iol.it> Date: 30.05.2011 06:47 AM
This Strauss-Kahn story is just an internal settlement of accounts between different gangs as it's common for criminal syndicates. Both want a NWO, a world central bank, a world currency and a world government. They are simply squabbling about which taint it should have and who should be in charge.
It has been since long a common knowledge in Europe that DSK was used to have a very intensive sexual life, with two to three different (willing or even very willing) partners a day, it was rumored. So, it's likely that the man couldn't stand a day or two of abstinence. There were also a few other instances of alleged sexual assault perpetrated by DSK (but all duly silenced in the end).
Knowing that it's very easy to frame someone through a complacent maid.
What I need to be explained is how oral sex rape is not just possible but credible. As a man, sorry to get into such details, I would think that such kind of sexual practice is extremely scary and potentially very dangerous if the partner is uncooperative. With the teeth the victim of the rape, if she had set to decidedly resist, could have caused him an irreparable mutilation, or am I missing something?
By the way Khan {should be Kahn - Peter M.} is not Islamic. It stands for Coen or Cohen and he married his wife in the Paris Synagogue, but is it really relevant ?
This appears to me more an issue of international finance games and arrogance.
Comment (Peter M.):
The indictment says "attempted to pull down defendant's pantyhose and forcibly grabbed informant's vaginal area" http://www.voltairenet.org/article170083.html
I don't think he was after oral sex; he wanted the real thing. Oral was all he got, however.
(2) DSK diplomatic immunity? Why chase the maid, when top shelf escort services were available?
From: Michael D. McDonnell <mmcdee@bigpond.com> Date: 30.05.2011 04:22 AM
Subject: Strauss-Kahn
Proof that Strauss Kahn was set up is that the IMF boss cocky has diplomatic immunity. Besides, what's wrong with snatching the chamber maid: however, with ready access to super top shelf escort services, why would he? Supporting evidence is media behaviour. Global frenzies are routinely directed for a purpose. They are not spontaneous.
Why target DSK? My personal presumption, without much confidence, is because he candidly says the dollar is going Weimar-up, so a good Goy hating globalist should preserve the Euro. I suspect this terrifies an echelon of 911 perpetrators with the spectre of the public rope at Ground Zero, as it were, should they lose the power of creating mirage dollars. We humble consumers do not hope for such justice, but financial super criminals also read the internet, and rationally fear such justice being done upon them. They cannot save the dollar, especially if another echelon of perpetrators wants it sunk, but they can keep trying to sink the Euro - via Greece, Portugal, Ireland, Spain etc. etc. – to shore up the dollar – until we're all dead!"
Comment (Peter M.):
In most countries, Strauss-Kahn had full Diplomatic Immunity - license to do whatever he liked, complete freedom from prosecution. No wonder he developed risky habits; every rapist should join the UN. But he forgot that the US never ratified the U.N. convention on privileges and immunities for international agencies.
(3) DSK can easily pay for sex. But to 'conquer' one is more exciting. He may even enjoy the risk
From: Jos <Web.of.Debt@kpnmail.nl> Date: 30 May 2011 21:04
The information you have about the jewish faction in the financial world are terribly interesting for me. I always thought Soros was a completely bad guy too, who just wants to rob the poor countries. http://www.questionsquestions.net/docs04/engdahl-soros.html
I consider Stiglitz a good guy.
About your guesses about DSK's mind I would like to add my guesses:
1) I think he can easily pay for sex and has done that many times. Just one phone and a high quality girl comes in.
But to 'conquer' one is more exciting. And to rape one is maybe even more exciting !
He may even enjoy the risk taking part of it.
In the odd case that such a girl goes to the police there is ( almost) always protection for such a high ranking guy.
In the worst case you offer her an enormous sum of money.
Everyone around will deny her story and that's it.
2) The victim grew up in Ghana. Now this is an african country where women are quite powerful, I know.
But in general an attractive African girl runs a high risk of being raped before the age of 16. ( This is my rough guess, not a scientific fact.)
Anyhow: it is a rather common fenomenon in African life, and I can hardly believe that a 30 year old woman is completely mentally 'lost' after such an event, as she seems to have been.
3) I have never raped a woman, but to me it seems very dangerous to force a fellatio from a woman who does not cooperate and who tries to fly away. She may hurt you quite badly.
4) Why do we only hear about sex scandals when people have these powerful enemies? (Or seem to become rebellious with regard to this Power Elite) ( Clinton; Eliot Spitzer)
I was puzzled, because I knew the IMF was part of this Power Elite, but I did not know DSK was trying to be a bit nicer to the world. Hence your information is very interesting.
5) I think the Hotel is not happy with this scandal. They will normally do everything they can to cover up such a rape. Why not this time?
It looks like it was well prepared.
(4) Strauss-Kahn not covered by Diplomatic Immunity - State Dept.
http://www.washingtonpost.com/blogs/political-economy/post/imf-chief-will-note-get-diplomatic-immunity-state-dept-says/2011/05/17/AFFimx5G_blog.html
Posted at 04:32 PM ET, 05/17/2011
IMF chief will note get diplomatic immunity, State Dept. says
By Mary Beth Sheridan
The State Department said Tuesday that it had wrapped up an intensive legal review to see if Dominique Strauss-Kahn might qualify for diplomatic immunity from charges of sexual assault.
It looks like the head of the International Monetary Fund is out of luck.
"Our understanding is that immunity in this particular case, and, with IMF officials....would only involve their official capacity and carrying out their duties in an official role," State Department spokesman Marc Toner said during a daily briefing.
According to New York police, Strauss-Kahn was arrested on charges of sexual assault after he attacked a maid at the Sofitel hotel in Manhattan on Saturday.
John B. Bellinger III, who served as State Department legal adviser during the Bush administration, explained in an interview that there is a U.N. convention on privileges and immunities for international agencies that most countries have ratified. It gives the heads of U.N. agencies broad immunity in the countries where they are based.
But the U.S. government never became a party to that treaty. Employees of international agencies are covered by a U.S. statute that gives only limited immunity.
"Under U.S. law, Mr. Strauss-Kahn enjoys immunity only for acts performed in his official capacity, so he would have to argue that his alleged actions in his hotel room were official acts. The U.S. is not party to the treaty which gives the head of the IMF and certain other UN agencies nearly absolute immunity in many other countries," said Bellinger, who is now a partner at Arnold & Porter.
(5) Strauss-Kahn's Lawyers claim to have found Dirt on the Maid
http://www.nytimes.com/2011/05/27/nyregion/strauss-kahns-lawyers-suggest-credibility-issues-on-accuser.html
Strauss-Kahn's Lawyers Claim to Have Evidence Undermining Accuser
By JOHN ELIGON
Published: May 26, 2011
Lawyers for Dominique Strauss-Kahn have contended that they possess information that they believe will undermine the credibility of the hotel housekeeper who has accused their client of sexual assault.
The suggestion, contained in a three-page letter from the lawyers to Cyrus R. Vance Jr., the Manhattan district attorney, was almost entirely devoted to the lawyers' complaints about unauthorized disclosures of the case to the press. But it included a reference to unspecified information that they said would hurt the prosecution's case.
In the letter, sent Wednesday and made public Thursday, the lawyers, William W. Taylor III and Benjamin Brafman, said "our client's right to a fair trial is being compromised by the public disclosure of prejudicial material even before these materials have been disclosed to his counsel."
"Indeed," they added, "were we intent on improperly feeding the media frenzy, we could now release substantial information that in our view would seriously undermine the quality of this prosecution and also gravely undermine the credibility of the complainant in this case."
The letter seemed to serve as a form of legal gamesmanship — allowing Mr. Strauss-Kahn's lawyers to hint at damaging information about the housekeeper without revealing it. Mr. Brafman declined to elaborate on that information.
Mr. Vance's office responded with its own letter, noting it was dismayed that Mr. Strauss-Kahn's lawyers "chose to inject in the public record your claim that you possess information that might negatively impact the case and ‘gravely' undermine" the woman's credibility.
The letter, by Joan Illuzzi-Orbon, the chief of the hate crimes unit, who was just appointed to the case, indicated that prosecutors knew of no such information. "If you really do possess the kind of information you suggest that you do, we trust you will forward it immediately to the district attorney's office," Ms. Illuzzi-Orbon wrote.
Lawyers for the accuser did not return calls seeking comment.
Attacking her credibility may be a crucial part of Mr. Strauss-Kahn's legal strategy. Although there have been leaks that DNA evidence ties him to a sex act, it would not indicate whether that act was forced or consensual — putting greater weight on the credibility of the woman and of Mr. Strauss-Kahn, who stepped down last week as head of the International Monetary Fund.
Both sides have begun the process of gathering background evidence on Mr. Strauss-Kahn and the housekeeper, who said Mr. Strauss-Kahn attacked her May 14 after she entered his room at the Sofitel New York to clean it.
Prosecutors, for example, have said they have been in contact with "more than one" woman who said she had been sexually assaulted by Mr. Strauss-Kahn; at one court appearance, a prosecutor said, without elaboration, Mr. Strauss-Kahn had "a propensity for impulsive criminal conduct."
The defense has hired the firm Guidepost Solutions to investigate the housekeeper's background and examine any weaknesses in her account.
Mr. Taylor and Mr. Brafman also appeared to be using the letter as a way to try to speed up the discovery process, in which the prosecution turns over evidence to the defense.
In addition to asking Mr. Vance to try to stop the leaks, the lawyers asked that his office "promptly provide us with copies of all of the scientific reports that have been completed and have already been leaked to various media outlets."
The defense was referring to reports that Mr. Strauss-Kahn's DNA was found on the uniform of the hotel housekeeper.
The letter also asked the prosecution to turn over all police reports and formal statements made by the accuser because her statements already had been reported by the news media.
The letter said the leaked information had been attributed to sources in the New York Police Department. Asked about the lawyers' contention that the police were leaking information, Commissioner Raymond W. Kelly said, "I certainly hope that's not the case."
The lawyers also cited a "wide array of prejudicial information about Mr. Strauss-Kahn, including information which, even if true, would never be admissible in any court."
William K. Rashbaum contributed reporting.
(6) Maid hires additional lawyers to fend off an attack on her reputation & credibility
http://www.bloomberg.com/news/2011-05-27/strauss-kahn-madoff-knights-of-columbus-morgan-stanley-in-court-news.html
Strauss-Kahn, Madoff, BofA, Morgan Stanley in Court News
By Elizabeth Amon - May 27, 2011 9:54 PM ET
The hotel maid who accused Dominique Strauss-Kahn, the ex-International Monetary Fund managing director now charged with sexual assault and attempted rape, hired additional legal counsel in anticipation of an attack on her reputation and credibility, her lawyer said.
Attorney Norman Siegel, former director of the New York Civil Liberties Union, and former Assistant U.S. Attorney Kenneth P. Thompson, who prosecuted New York City police officers for the beating and torture of Abner Louima, have begun to work on behalf of the 32-year-old hotel maid from Guinea, according to Jeffrey Shapiro, who has been representing her.
"We anticipate the defense in this case is going to mount some sort of an assault on her," Shapiro, a New York personal- injury lawyer, said yesterday in a phone interview. "It requires a team effort" to protect her, he said.
In a May 25 letter to the Manhattan district attorney complaining about media leaks in the case, defense attorneys Benjamin Brafman and William Taylor III said that if they wanted to feed the media frenzy, they could release information that would "gravely undermine the credibility" of the woman.
In a letter yesterday, the prosecutor's office responded that it also was concerned about the leaks -- and "troubled" by the defense lawyers' claims that they possessed information that might negatively affect the case and the woman's credibility.
"We are aware of no such information," Manhattan Assistant District Attorney Joan Illuzzi-Orbon wrote. "If you really do possess the kind of information that you suggest that you do, we trust you will forward it immediately."
Brafman and Taylor didn't respond to calls or e-mails seeking comment. Siegel and Thompson also didn't return calls seeking comment. Shapiro said a civil lawsuit had not been discussed.
The case is People v. Strauss-Kahn, 1225782, Criminal Court of the City of New York. New York County (Manhattan).
(7) France's Jews fear backlash over DSK (Jewish banker, cosmopolitan globalist, leftist & sex maniac)
http://www.haaretz.com/jewish-world/the-strauss-kahn-affair-and-france-s-jews-1.364055
Published 23:31 25.05.11Latest update 23:31 25.05.11
The Strauss-Kahn affair and France's Jews
The 600,000 strong Jewish community in France fear charges against the former IMF chief will play into negative stereotypes of Jews, but also that Marine Le Pen's National Front will benefit from the affair.
By Danna Harman
PARIS - Last month, in an interview which now seems sadly prophetic, shamed former IMF chief Dominique Strauss-Kahn identified three challenges he'd face if he ran for president: "Money, women and my Jewishness."
At the end, being Jewish had nothing at all to do with his downfall. But nonetheless, there is some unease among the 600,000-strong Jewish community here - the largest number outside of Israel and the U.S.- who fear they could be caught in the negative spotlight and that the affair will play into negative stereotypes of Jews and even inflame anti-Semitism.
Indicted on seven criminal charges for allegedly assaulting a maid in a New York hotel last Saturday, Strauss-Kahn, an identified Jew and an outspoken supporter of Israel has gone, overnight, from being one of the great prides of the Jewish community here -- to being something of a liability.
Some, who had believed in Strauss-Kahn and hoped to see him serving as the country's next president, have expressed a sense of loss. For even if the former Socialist hopeful is acquitted of all the charges against him, his political career, once so promising, is in tatters.
"We have lost a friend," says Rabbi Michel Serfaty, president of the Jewish-Muslim Friendship of France.
Others though, are less sympathetic to his plight.
"It is a nervous Jew's nightmare…If ever there was a time that French anti-Semitism were going to rear its head, Mr. Strauss-Kahn has all but issued an engraved invitation," writes Eric Alterman a senior fellow of the Center for American Progress in Washington DC.
"Indeed, it's hard to think of a single anti-Semitic stereotype that he does not exemplify. Think about it. Jewish banker: check. Jewish cosmopolitan globalist… check. Jewish leftist: check. Jewish sex maniac: check. "
Add into the mix the fact that the most vocal of Strauss-Kahn's early defenders was intellectual Bernard-Henri Lévy, another high-flying leftist and identified Jew, and that Strauss-Kahn's lawyer is an orthodox Jew who gave his first interview on the case this weekend to Haaretz – and the nightmare, for those prone to such nervousness, intensifies.
Some already see repercussions: There are those, argues Serfati, who "…are using the arrest as an example of how perverse the Jews can be…so the community is definitely feeling the repercussions of this story."
But many others vehemently argue that, while Strauss-Kahn's Jewish faith is no secret, there were never any signs of anti-Semitism when it seemed he might become the next president of the Republic -- and there are no such signs, as yet, now, in the wake of the affair.
"Anti-Semitism exists in France, and the community is always scared of it. But in this case it is unjustified," says Daniel Rachline, a Jewish member of the Socialist party. "It's a sad mess. It's dramatic. But it's not a Jewish story. No one is talking about it that way."
Meanwhile, the Strauss-Kahn's downfall could yet end up hurting the Jewish community in a different, perhaps more concrete way, as the affair has greatly weakened the Socialist party – and as such benefitted Marine Le Pen and the National Front (FN). Polls published in Le Parisian this week show a replacement Socialist candidate losing in a first round-- thus leaving the playing field to unpopular president Nicolas Sarkozy and Le Pen.
The younger Le Pen has modernized the party of her father and worked to rid it of its anti-Semitic baggage, and has been carefully circumspect as regards reactions to the Strauss-Kahn affair. But still, the specter of the FNs rise to power of, complete with all its anti-immigrant, and anti globalist philosophies, concerns many Jews as well as other minorities here.
(8) Luxury Hotels - where politicians connect with prostitutes, celebrities with porn actresses
http://blogs.wsj.com/speakeasy/2011/05/26/dominique-strauss-kahn-and-the-secret-life-of-hotels/
MAY 26, 2011, 4:00 PM ET
Dominique Strauss-Kahn and the Secret Life of Hotels
By Michael Fazio
If not for luxury hotels, where would politicians connect with prostitutes? Where would celebrities rendezvous with porn actresses? Where would an exhibitionist paying $800 a night for a room publicly display sex acts in his window to pedestrians on the Highline?
To guests who pay thousands of dollars per night for a suite in luxury hotels like The Plaza, The Trump International, The New York Palace or even the Sofitel, the hotel is their home away from home. With this customer base, whatever complexities or eccentricities the guest is accustomed to in their private home will likely be requested in the privacy of their hotel suite. In my many years as a concierge, I was glad to oblige anything that would make them happy. It was not an issue to have specific bedding purchased exclusively for the guest during their stay; I didn't hesitate for a moment to provide a client with an "unauthorized" private tour of the trading room floor; I was eager to maneuver my way past the waiting list to enable my guest to score the coveted Birkin Bag that she had to have that day.
My experiences in delivering "your wish is my command" service to this luxury clientele came with enough blush-worthy encounters to fill a book. It certainly didn't hurt that I simply do not judge my guests, and let them know it. But something about my open willingness to serve exposed me to a world quite different from my own world. When spreading rose petals on a bed wasn't decadently romantic enough, I was asked instead to fill the bath tub with chocolate. When every available flavor of ice cream in a ten-mile radius wasn't quite right for my guest's craving, I had to find a chef who would concoct artisanal peppermint ice cream that would satiate his palate. When nature failed the male libido of her lover, I was asked by a guest to procure Viagra on the spot—with no mention of a prescription.
The Dominique Strauss-Kahn incident has incited lively conversations among industry colleagues as well as among most of my staff at a private company that supplies concierges to hotels, where many of us come from long histories as concierges in various NYC luxury properties. It has presented a new perspective on what we often shrugged off as nothing more than annoying guest behavior.
Colleagues and staffers alike have shared stories. The guest who asks for a pack of cigarettes to be sent up to the room and receives us at the door fully naked. The guest who calls down "just to chat" and has porn blatantly blaring in the background. The guest who explicitly propositioned me to accompany him and his wife to a swingers party—the same party that I had earlier helped him find. Was this a criminal offense? Should I have gone to management to report harassment? But this man was not my boss. He was my guest, and it was my job to make the guests feel at home. (Although in those types of cases, I demurred.)
Our formal hotel training was focused primarily on the guest experience. Our emotional comfort was treated as an aside. Sure, we had safety training pertaining to things like an intoxicated or irate guest who threatens physical harm to us or other guests. Certainly, we were never formally told by management not to report incidents of guest behaving badly. But none of us are able to recall standardized procedures or policies to report indiscriminate guest behavior toward us.
In the same way that family matters are usually handled within the home–especially with the rarefied elite—hotels exist in an insulated reality. In the hotel universe, issues are often best resolved in a gentlemanly and discreet manner that avoids unnecessary public drama for the guest or for the hotel. As a hotel Concierge, it has never been my experience that a hotel covers up an incident that presents a danger to staffers caused by an unruly guest.
Michael Fazio is a partner in Abigail Michaels Concierge, Manhattan's premier concierge business, serving almost 20,000 condominiums, hotels and private clients. He is the co-author of the book "Concierge Confidential: The Gloves Come Off–and the Secrets Come Out! Tales from the Man Who Serves Millionaires, Moguls, and Madmen."
(9) IMF should "replace the soft DSK with a mean SOB who will lend only on much tougher terms"
http://in.reuters.com/article/2011/05/17/idINIndia-57083920110517?type=economicNews
IMF should use crisis to toughen itself up
Wed May 18, 2011 3:57am IST
-- The author is a Reuters Breakingviews columnist. The opinions expressed are his own --
By Martin Hutchinson
WASHINGTON (Reuters Breakingviews) - The International Monetary Fund has a chance to toughen itself up. Under Dominique Strauss-Kahn, the managing director currently imprisoned in New York after being accused of sexual assault, the IMF's lending has multiplied, largely to basket cases like Greece. But recent loans have failed to force change while damaging other lenders' standing.
When Strauss-Kahn joined in 2007, the IMF's lending programs had almost atrophied. However, the 2008 financial crisis and the fund boss's activist leanings caused a surge in activity, with loans outstanding rising tenfold to the equivalent of more than $104 billion and the institution garnering the ability to lend far more.
The results have been mixed. A smallish loan to Latvia in December 2008 was only partly drawn, and helped the country survive the savage deflation needed to maintain its currency's peg to the euro. Having downsized its government and reduced wage rates, Latvia's finances are now in decent shape and economic growth has returned.
But larger programs that have lacked firm support from the recipient governments have been more problematic. In Ukraine, for instance, the IMF risked playing politics when it first dragged its feet over lending to Yulia Tymoshenko's government, then released funds to Viktor Yanukovich after he defeated Tymoshenko in the January 2010 election.
By far the IMF's largest current commitment is roughly $42 billion to Greece, around 13 percent of the country's GDP, with about half that amount outstanding at present. Unfortunately it has not fixed Greek finances. If Greece eventually restructures its debt, as looks unavoidable at some point, the IMF loans -- which will end up being senior to other debt -- will have the effect of reducing what other creditors recover.
So Strauss-Kahn's expansion of IMF credit has mostly subsidized failure and encouraged moral hazard. The scandal engulfing him presents an opportunity for the organization's member countries to replace the soft DSK with a mean SOB who will lend only on much tougher terms. And if there aren't enough deserving Latvias to sustain the IMF's bureaucracy, then maybe it should shrink -- or even disappear altogether.
(10) As IMF head, Strauss-Kahn called for a new world currency to replace Dollar Hegemony
http://www.telegraph.co.uk/finance/currency/8316834/International-Monetary-Fund-director-Dominique-Strauss-Kahn-calls-for-new-world-currency.html
International Monetary Fund director Dominique Strauss-Kahn calls for new world currency
Dominique Strauss-Kahn, managing director of the International Monetary Fund, has called for a new world currency that would challenge the dominance of the dollar and protect against future financial instability.
By Andrew Trotman
5:14PM GMT 10 Feb 2011
"Global imbalances are back, with issues that worried us before the crisis - large and volatile capital flows, exchange rate pressures, rapidly growing excess reserves - on the front burner once again," Dominique Strauss-Kahn said. "Left unresolved, these problems could even sow the seeds of the next crisis."
"When we worry about the deficiencies of the international monetary system, we are mostly worrying about volatility," he added. There is "a sense that money sometimes flows around the globe in too-volatile a fashion and that countries need a more stable, more predictable external environment in order to prosper", he said.
He suggested adding emerging market countries' currencies, such as the yuan, to a basket of currencies that the IMF administers could add stability to the global system.
China, which holds much of its $2.85 trillion mountain of reserves in US Treasury bonds, has repeatedly expressed unease about the value of the dollar, while American politicians have complained that Beijing gains an unfair advantage by keeping its own currency cheap.
Strauss-Kahn saw a greater role for the IMF's Special Drawing Rights, which is currently composed of the dollar, sterling, euro and yen, over time but said it will take a great deal of international cooperation to make that work.
"Using the SDR to price global trade and denominate financial assets would provide a buffer from exchange rate volatility," Strauss-Kahn said, while "issuing SDR-denominated bonds could create a potentially new class of reserve assets".
Russian President Dmitry Medvedev last month said the currencies of Brazil, Russia, India and China should be included in the SDR valuation basket. The same month, Sarkozy said that the yuan should be included, and US President Barack Obama's administration said it supports such a transition "over time".
However, among the yuan's drawbacks is that it is not freely traded and China's capital markets are largely closed.
Strauss-Kahn said: "Increasing the role of the SDR would clearly require a major leap in international policy coordination. For this reason, I expect the global reserve asset system to evolve only gradually, and along with changes in the global economy."
Strauss-Kahn's views come a week before finance ministers from the Group of 20 developed and developing nations meet in Paris to discuss proposals by French president Nicolas Sarkozy for changes to global economic governance.
(11) UN report warns of dollar "collapse", urges use of SDRs
http://www.wsws.org/articles/2011/may2011/unre-m31.shtml
United Nations report warns of dollar "collapse"
By Andre Damon
31 May 2011
The world economy faces the “looming risk of a collapse of the dollar,” together with the dangers of rising commodity prices, continued high unemployment and the risk of sovereign debt default, according to a report published last week by the United Nations.
The report, a mid-year update to the 200-page conspectus of the world economy issued earlier this year, says that the precipitous fall of the dollar since the start of the new millennium portends the possibility of a destabilization and “crisis of confidence” of the world reserve currency.
The risk of a dollar collapse is just one of the economic pitfalls outlined in the report. The report's headline conclusion on economic growth, which is slightly improved from its earlier estimate, is overshadowed by the risks it outlines to every other aspect of the world economy—from rising food prices, falling living standards, the potential for sovereign debt defaults, and the destabilization of currency systems.
The report also warns that rampant unemployment, particularly among young people, is likely to trigger political upheavals similar to those seen in Egypt and Tunisia. It notes that, at the end of 2009, “there were an estimated 81 million unemployed young people, and the rate of global youth unemployment stood at 13.0 percent, having increased by 0.9 percentage points from 2008.”
It added, “Between 2007 and the end of 2009, at least 30 million jobs were lost worldwide as a result of the global financial crisis.” Thus, “The global economy will still need to create at least another 22 million new jobs in order to return to the pre-crisis level of global employment. At the current speed of the recovery, this would take at least five years.”
Food and oil prices grew significantly faster than the UN had expected in its earlier report. Over the past year, food prices have shot up by 36 percent. Gas prices have gone up 60 percent in the past 6 months alone.
The report notes that rising food and energy have greatly diminished the real incomes of the world's poor. If prices continue to rise at their current levels, this “could push 64 million people below the poverty income threshold of $1.25 per person a day.”
Likewise, the growth of food and energy prices at the present rate would significantly drag down economic activity. If prices continue to rise at their current level, this would, together with government measures to combat inflation, slow world growth by 0.7 percentage points in 2011 and 1 percentage point in 2012.
The UN report paints a bleak outlook for economic growth in the developed world, noting the recovery “remains weak” and is likely to “moderate.” It states, “Output growth... is feeble in many developed economies,” particularly those that, like Spain, Greece, and Portugal, are facing austerity measures under the whip of the sovereign debt crisis.
In 2010, government spending for the developed world grew at about 1 percent, or half the speed of economic growth in the region, according to the report. This year, the austerity measures are set to be even more severe and will “adversely affect global economic growth.”
Over the last ten years, the US dollar has lost 27 percent of its value against other currencies, although this process was interrupted by the global financial crisis, in which investors fled to the dollar for its relative safety. Since mid-2009, however, the dollar has lost 23 percent of its value and is even lower than the pre-crash level. In fact, the dollar is currently at its lowest level since the 1970s.
After this stark warning, the report called for “deeper reforms of the global reserve system” which would reduce “dependence on the dollar as the major reserve currency,” including “enhancing the role of special drawing rights (SDRs) as international liquidity, while expanding the basket of SDR currencies including with currencies from major developing countries.” This is essentially a call by the United Nations for a move away from the US dollar, a move that portends major international conflicts over the role of the dollar as the global reserve currency.
The report underscores the predatory and destructive character of the US ruling class's exchange rate policy, which is rooted in the interests of its oligarchic financial elite. Through a decade of lax monetary policy, the United States government succeeded not only in creating a catastrophic financial bubble that plunged the world into depression, but consistently devalued the dollar against other currencies. This process has intensified since the crisis, as the Obama administration seeks to subsidize American export businesses, which have utilized the fall of the dollar to bolster their competitiveness.
On a global scale, the report gives a blunt and revealing characterization of the 2008-09 bank bailout and its role in the present sovereign debt crisis. The report notes, “Given the large-scale government bailout programmes over the past two years, risks in the private financial sector, particularly banking, have been transferred to the public sector.”
Thus, the risk of banking is socialized, while the profits are privatized. Through a program of global austerity, the current round of budget cuts is being used to cut spending on social programs and funnel it into the coffers of the banks. And if this is not done to the satisfaction of the financial elite, they can take punitive measures, such as the most recent downgrade warning by Standard & Poor's of the United States' sovereign debt and the virtual dictatorship imposed by the European banks on Greece.
All of this portends not only explosive economic and financial crises, but a direct confrontation over austerity measures, fought between the working class on one hand and the banks and governments on the other.
(12) UN Report warns of Dollar collapse, recommends SDRs as replacement Reserve currency
http://www.un.org/en/development/desa/policy/wesp/wesp_current/2011wespupdate.pdf
World Economic Situation and Prospects 2011
Update as of mid-2011*
Prospects 2011 (United Nations publication, Sales No. E.11. II.C.2), released in January 2011.
http://www.un.org/en/development/desa/policy/wesp/index.shtm
[...] The baseline outlook for 2011 and 2012 is subject to a number of risks, including problems regarding the sustainability of public finances in developed economies, the remaining vulnerability of the private financial sector, continued high and volatile commodity prices and the possible collapse of the United States dollar. ...
[...] The baseline outlook for 2011 and 2012 is subject to a number of risks. These include problems regarding the sustainability of public finances in developed economies, the remaining vulnerability of the private financial sector, continued high and volatile commodity prices, and the still looming risk of a collapse of the United States dollar. ...
Global imbalances and the risk of a collapse of the dollar
Figure 2 showed the continued weakening of the dollar over the past decade. The trend has been interrupted periodically; recently as a result of deleveraging in the immediate aftermath of the global financial crisis and during various phases of the sovereign debt crises affecting the euro area. The downward trend over the longer term is associated with the dollar’s role as the world’s major reserve currency and the uneven global growth exacerbating the global imbalances. The imbalances have led to cumulative increases in external liabilities of the United States as its growth pattern induces large trade deficits, which, have a counterpart in large trade surpluses, elsewhere, such as Germany, Japan, China and other major Asian exporters and oil-exporting countries. The large external debt position of the United States is keeping downward pressure on the dollar.
The global imbalances narrowed as a result of the collapse in world trade and the aggregate demand compression. With the recovery they have started to widen again, albeit moderately. The deficit of the United States declined from its peak of 6 per cent of GDP before the recession to a trough of 2.7 per cent in 2009 and widened again to 3.2 per cent of GDP in 2010, and is expected to stay at about 3.5 per cent of GDP in 2011-2012. China’s surplus declined from the peak of 10.6 per cent of GDP in 2007 to about 5 per cent in 2010, and is expected to narrow further to below 4 per cent in 2012, as a result of the accumulated appreciation of the renminbi in recent years and policies to support domestic consumption. Germany’s surplus has also narrowed slightly, but has remained at about 6 per cent of GDP in 2010, and is expected to stay above 5 per cent in the near outlook. However, the current account for the euro area as a whole is approximately in balance. Japan’s surplus stood at about 3 per cent of GDP in 2010, and is expected to decline notably in 2011-2012. The surplus of oil-exporting countries in West Asia and North Africa decreased from more than 15 per cent of GDP in the years before 2008 to about 2 per cent in 2009. The surpluses have since recovered slightly but are expected to stay below 5 per cent in 2011-2012. ...
Cooperative policy solutions should therefore take precedence as they can achieve better outcomes for the global economy and offload pressure on developing countries to take strong measures to mitigate the impact of volatile capital flows. Such cooperative policy solutions should also comprise deeper reforms of (international) financial regulation, including those for addressing risks outside the traditional banking system (investment banks, hedge funds, derivatives markets, and so forth). Requiring higher reserve requirements and/or collateral on cross-border portfolio investments by non-banking institutions and setting limits on positions that financial investors can take in commodity futures and derivatives markets may also help stem some of the volatility in capital flows and mitigate commodity price volatility. Such measures will, by no means, provide enough safeguard against continued volatility in food, energy and other commodity prices. For that, much more will need to be done to improve conditions for a more sustainable supply of these commodities. These sets of financial reforms will need to be complemented by deeper reforms of the global reserve system reducing dependence on the dollar as the major reserve currency, including through better pooling of reserves internationally (e.g. through closer cooperation between the IMF and regional mechanisms of financial cooperation) and enhancing the role of special drawing rights (SDRs) as international liquidity, while expanding the basket of SDR currencies including with currencies from major developing countries.
(13) The Global Economy's Corporate Crime Wave - Jeffrey Sachs
http://www.project-syndicate.org/commentary/sachs177/English
The Global Economy's Corporate Crime Wave
Jeffrey D. Sachs
2011-04-30
NEW YORK – The world is drowning in corporate fraud, and the problems are probably greatest in rich countries – those with supposedly "good governance." Poor-country governments probably accept more bribes and commit more offenses, but it is rich countries that host the global companies that carry out the largest offenses. Money talks, and it is corrupting politics and markets all over the world.
Hardly a day passes without a new story of malfeasance. Every Wall Street firm has paid significant fines during the past decade for phony accounting, insider trading, securities fraud, Ponzi schemes, or outright embezzlement by CEOs. A massive insider-trading ring is currently on trial in New York, and has implicated some leading financial-industry figures. And it follows a series of fines paid by America's biggest investment banks to settle charges of various securities violations.
There is, however, scant accountability. Two years after the biggest financial crisis in history, which was fueled by unscrupulous behavior by the biggest banks on Wall Street, not a single financial leader has faced jail. When companies are fined for malfeasance, their shareholders, not their CEOs and managers, pay the price. The fines are always a tiny fraction of the ill-gotten gains, implying to Wall Street that corrupt practices have a solid rate of return. Even today, the banking lobby runs roughshod over regulators and politicians.
Corruption pays in American politics as well. The current governor of Florida, Rick Scott, was CEO of a major health-care company known as Columbia/HCA. The company was charged with defrauding the United States government by overbilling for reimbursement, and eventually pled guilty to 14 felonies, paying a fine of $1.7 billion.
The FBI's investigation forced Scott out of his job. But, a decade after the company's guilty pleas, Scott is back, this time as a "free-market" Republican politician.
When Barack Obama wanted somebody to help with the bailout of the US automobile industry, he turned to a Wall Street "fixer," Steven Rattner, even though Obama knew that Rattner was under investigation for giving kickbacks to government officials. After Rattner finished his work at the White House, he settled the case with a fine of a few million dollars.
But why stop at governors or presidential advisers? Former Vice President Dick Cheney came to the White House after serving as CEO of Halliburton. During his tenure at Halliburton, the firm engaged in illegal bribery of Nigerian officials to enable the company to win access to that country's oil fields – access worth billions of dollars. When Nigeria's government charged Halliburton with bribery, the company settled the case out of court, paying a fine of $35 million. Of course, there were no consequences whatsoever for Cheney. The news barely made a ripple in the US media.
Impunity is widespread – indeed, most corporate crimes go un-noticed. The few that are noticed typically end with a slap on the wrist, with the company – meaning its shareholders – picking up a modest fine. The real culprits at the top of these companies rarely need to worry. Even when firms pay mega-fines, their CEOs remain. The shareholders are so dispersed and powerless that they exercise little control over the management.
The explosion of corruption – in the US, Europe, China, India, Africa, Brazil, and beyond – raises a host of challenging questions about its causes, and about how to control it now that it has reached epidemic proportions.
Corporate corruption is out of control for two main reasons. First, big companies are now multinational, while governments remain national. Big companies are so financially powerful that governments are afraid to take them on.
Second, companies are the major funders of political campaigns in places like the US, while politicians themselves are often part owners, or at least the silent beneficiaries of corporate profits. Roughly one-half of US Congressmen are millionaires, and many have close ties to companies even before they arrive in Congress.
As a result, politicians often look the other way when corporate behavior crosses the line. Even if governments try to enforce the law, companies have armies of lawyers to run circles around them. The result is a culture of impunity, based on the well-proven expectation that corporate crime pays.
Given the close connections of wealth and power with the law, reining in corporate crime will be an enormous struggle. Fortunately, the rapid and pervasive flow of information nowadays could act as a kind of deterrent or disinfectant. Corruption thrives in the dark, yet more information than ever comes to light via email and blogs, as well as Facebook, Twitter, and other social networks.
We will also need a new kind of politician leading a new kind of political campaign, one based on free online media rather than paid media. When politicians can emancipate themselves from corporate donations, they will regain the ability to control corporate abuses.
Moreover, we will need to light the dark corners of international finance, especially tax havens like the Cayman Islands and secretive Swiss banks. Tax evasion, kickbacks, illegal payments, bribes, and other illegal transactions flow through these accounts. The wealth, power, and illegality enabled by this hidden system are now so vast as to threaten the global economy's legitimacy, especially at a time of unprecedented income inequality and large budget deficits, owing to governments' inability politically – and sometimes even operationally – to impose taxes on the wealthy.
So the next time you hear about a corruption scandal in Africa or other poor region, ask where it started and who is doing the corrupting. Neither the US nor any other "advanced" country should be pointing the finger at poor countries, for it is often the most powerful global companies that have created the problem.
Jeffrey D. Sachs is Professor of Economics and Director of the Earth Institute at Columbia University. He is also Special Adviser to United Nations Secretary-General on the Millennium Development Goals.
(14) Dutch bankers' bonuses axed by people power; 100% retrospective tax on bonuses paid after bailout
http://www.guardian.co.uk/business/2011/mar/27/dutch-bankers-bonuses-axed-by-people-power
Dutch bankers' bonuses axed by people power
An online campaign has overturned ING's executive pay policy, and the mood in Amsterdam is getting increasingly militant about bonuses at bailed-out banks
Richard Wachman in Amsterdam
The Observer, Sunday 27 March 2011
Britain has a rival when it comes to bashing bankers. After a furious row over pay packages at Amsterdam-based ING in which thousands of customers threatened to make mass withdrawals, the Netherlands is now vying for the title of Europe's most bonus-hating country.
A growing Dutch political storm could end with a blanket ban on bonuses to financiers who work for institutions bailed out by the taxpayer.
ING customers mobilised on Twitter and other social networks to protest at bonuses paid to bosses at the bank, one of the biggest in the country. The threat of direct action raised the spectre of a partial run on ING, terrifying the Dutch establishment. Fred Polhout, union organiser at the bank, says: "People were outraged. We heard about the bloated sums being paid again in the City and in New York; but suddenly the issue exploded on our own front door."
Compared with the packages awarded to bankers in the US and UK, the Dutch bonuses were small potatoes. Jan Hommen, ING's chief executive, was due to receive a £1m bonus – a pittance when you consider that Stephen Hester, head of state-controlled RBS in the UK, is in line for up to £7.7m, Bob Diamond of Barclays is to collect as much as £6.5m, and some senior bankers at Goldman Sachs and JP Morgan are looking at windfalls of about £40m each.
"Perhaps we are so upset because we are a small country that prefers to set an example, rather than follow others," suggests Polhout.
So severe was the public reaction to Hommen's bonus that within days he had agreed to waive the award and told other ING directors to do the same.
Now the Netherlands is going through a painful period of introspection and soul-searching. Politicians have voted to implement a 100% retrospective tax on all bonuses paid to executives at institutions that received state aid as a result of the financial crisis. In other words, no banker should get a bonus until the debt is cleared, and they should return payments made since 2008.
ING was thrown a ?10bn (£8.7bn) lifeline to stop it going under, while ABN Amro was nationalised. Numerous other Dutch financial firms received capital support, including Aegon, SNS Reaal and ASR Nederland.
On the streets of Amsterdam, there is little sympathy for the bankers. Emma Rohl, who works at an English bookshop in the city centre, says: "They shouldn't get bonuses at all. Why should people be paid vast sums for going into work and doing their jobs? It's utterly ridiculous."
Erick Koenig at a nearby restaurant says: "We rescued the banks from their own follies, and now they expect to be paid extra. I think they should work for free for at least five years."
At a dusty office in a northern suburb of Amsterdam, Henk van der Kolk, head of the country's biggest trade union, FNV Bondgenoten, does nothing to conceal his frustration: "Everybody is angry about what happened at ING. The board isn't in tune with public opinion. What were they thinking of? ING pensioners have seen their payouts frozen, while many employees were awarded a pay increase of just 1%."
Van der Kolk's union is pushing for a law that would ensure that executive pay should never amount to more than 20 times the wage paid to the lowest-salaried employee. As for bonuses, the union feels payouts should not exceed 50% of a director's salary. Hommen's bonus was worth 92% of his ?1.35m package.
"Remuneration for bankers was linked to financial machismo, which encouraged irresponsible lending. We want to get away from the bonus culture," says van der Kolk.
But given the payouts to ING directors were relatively small, some Dutch bankers are shocked they have received another public mauling.
One ING insider suggests the country was in the grip of a "typically Dutch Lutheran and Calvinist backlash" which cultivates the view that excessive wealth is somehow morally reprehensible and in contravention of traditional Dutch, Christian values. The source says: "We went through this during the boom when ministers railed against stock options and bankers were accused of exhibitionism, and enriching themselves to the detriment of the nation."
The bankers' response that high remuneration is vital to retain talent and prevent Dutch financiers from defecting to overseas banks is given short shrift by Polhout. He says: "Let them go abroad if they don't like it her;, there are plenty of clever people who will take their place and work for less. Good riddance, as far as I am concerned."
Moderate opinion in Holland seems united in its belief that banks which received state aid should not be shelling out bonuses. And Dutch parliamentarians are saying the same thing, demanding the government take immediate action. ING may have made a net profit last year of more than ?3bn, but it still owes the taxpayer ?5bn.
The uproar against Hommen's bonuses and those earmarked for the bank's senior executives have forced ING to rethink its position. Hommen promises no more bonuses till 2012/13 when the bank expects to have repaid all state aid. In a letter to Dutch newspaper De Volkskrant, he said: "We have underestimated the signal we sent to society. [We] have [risked] renewed damage to the recovering trust of our customers."
Few doubt a critical factor behind ING's volte face was the boycott threatened by consumers.
A spokesman for the bank admitted the payment of bonuses "prompted a reaction from our customers via emails and telephone messages to our call centres". But he said only a few hundred people had actually closed their accounts.
Now the ball is in the court of finance minister Jan Kees de Jager, who must decide how to respond to a proposal by parliament calling for the return of bonuses by all executives at state-supported banks. On a recent television show, he said such a law would be difficult to implement and would hit bankers on average salaries who receive bonuses of just a few thousand euros. But in today's highly charged political atmosphere, de Jager knows that doing nothing is probably not an option.
(15) Corporations avoid taxes by keeping two sets of books
From: Sadanand, Nanjundiah (Physics Earth Sciences) <sadanand@mail.ccsu.edu> Date: 12.04.2011 10:55 PM
Corporations avoid taxes by keeping two sets of books…Letters to the editor …quite explicit sentiments
http://www.usatoday.com/news/opinion/letters/2011-04-05-letters05_ST_N.htm?loc=interstitialskip
I've been a practicing tax attorney for more than 30 years, including stints as a top tax executive for a couple of Fortune 500 companies.
Publicly traded companies keep two sets of books. They use one set of accounting rules when preparing financial statements for the Securities and Exchange Commission and investors, and another set of rules, the Internal Revenue Code, when preparing their tax returns. All perfectly legal. It will come as no surprise that companies are inclined to maximize the earnings they report to shareholders and minimize the income reported to the IRS.
Reporting should be done on a single uniform basis, which will enhance the integrity of corporate earnings, permit tax rates to drop and drastically slash compliance costs for both the companies and the IRS. Important incentives such as the research-and-development credit can be retained.
It's a simple and logical answer to a serious problem. But because it would put legions of tax lobbyists, accountants and tax attorneys out of work, it will probably never happen.
Jeffrey D. Lerner; Fort Worth ……………
Brian Moynihan, chief executive of Bank of America, is just another poster child for corporate greed ("Fed rejects Bank of America's plan to raise its dividends," Money, March 24).News stories have mentioned that his tenure has been marked by a sharp hike in lawsuits, credit card losses and lower checking account income. He has managed to accomplish all of this in just 14 months. Most of us would have to use a cab to get out of town, but Moynihan can no doubt use corporate aircraft. It would not surprise me if this underachiever eventually bailed out with the same golden parachute as Cleve Killingsworth, the former Blue Cross and Blue Shield CEO who resigned last month, and laughed all the way to the bank.
Edward DeLuca; North Grosvenordale, Conn. …………………….
On the brink of civil unrest?
It is extremely annoying to read about corporate CEOs earning multimillions, particularly when most citizens and workers are struggling economically.
While all this is happening, conservatives, Republicans and Tea Party extremists are maintaining their mantra of cutting taxes, reducing government and blaming the public sector, not the business sector, for the recession and high unemployment.
When expressing my anger about injustices targeted at the poor by powerful, wealthy business owners, my son-in-law, whose father is a wealthy physician, said, "Maybe the wealthy should simply be lined up and shot!"
His comment shocked me out of my hateful feelings. But as legislators and leaders keep chipping away at workers' rights and economic support, I'm beginning to wonder how close to civil unrest this nation really is.
Don Strei; Elk River, Minn. ………………
Look out for the working class
It has just been revealed that many corporations are getting away with paying little to no taxes. And they want to stop collective bargaining?
Many of these executives would love nothing more than to see unions get busted. That would permit them to maintain cheap labor and put more money in their pockets.They laugh at Congress, the workers and the saps paying taxes. When do we take back America and instill standards for the working class? Stop the greed.
Henry Mazurek; Lancaster, N.Y.
House progressives offer budget plan: Tax the rich, end the wars, slash oil subsidies, invest in jobs
By Sahil Kapur, Monday, April 11th, 2011 http://www.rawstory.com/rs/2011/04/11/house-progressives-offer-budget-tax-the-rich-end-the-wars-slash-oil-subsidies-invest-in-jobs/#
Liberal Dems claim the plan eliminates deficit by 2021
WASHINGTON – As the focus on Capitol Hill shifts to America's long-run fiscal woes, Congressional progressives are one step ahead of the White House and Democratic leaders in offering a counter-proposal to the House GOP approach.
The broad sketch proposes to end the Bush-era tax cuts on high income earners, enact a surtax on millionaires and billionaires, increase the the estate tax and eliminate corporate tax loopholes and subsidies for oil and coal companies. It also aims to create a public health insurance option, end the wars in Iraq and Afghanistan, and invest $1.45 trillion in "job creation," energy, housing and education programs.
The revenue-heavy proposal (PDF) stands in stark contrast to the spending cuts-oriented plan put forth by House Budget Committee Chairman Paul Ryan (R-WI) -- and championed by GOP leaders -- that slashes $6 trillion in federal programs (including Medicare and Medicaid) while significantly reducing taxes for wealthy Americans and corporations.
"This budget is transparent, straightforward and realistic about where we are in America right now," Rep. Raul Grijalva (D-AZ), co-chair of the progressive caucus, told Raw Story. ..The plan is a nonstarter in the GOP-led House and would have a hard time winning over more than a handful of Democrats in the Senate. But Grijalva and his progressive caucus co-chair Rep. Keith Ellison (D-MN) wrote a letter urging Rep. Chris Van Hollen (D-MD), the top Democrat on the budget committee, to consider their ideas in the Democratic counter-offer this week.
In contrast to the Ryan plan, which the nonpartisan Congressional Budget Office says will eliminate the deficit by 2040, the progressive proposal -- which its authors have dubbed the "People's Budget" -- promises to yield surpluses by 2021, though it doesn't provide numbers to back the claim.
"We need an alternative that actually creates jobs, closes corporate tax loopholes, ends wasteful subsidies, protects Medicare and education, and puts this country back on the right track," Grijalva said. "We believe the American people deserve a choice, and that's what we intend to give them."
Both parties agree on the need to reduce the nation's massive long-term deficits. And the progressive leaders framed their proposal in terms of who will pick up the tab: the wealthy, or struggling Americans. The GOP proposal, they argue, would "tak[e] trillions of dollars from the pockets of the middle class and giv[e] ever more generous windfalls to millionaires and large corporations." ==
(16) Inequality ... Of the 1%, by the 1%, for the 1% - by Joseph Stiglitz
http://www.vanityfair.com/society/features/2011/05/top-one-percent-201105
Inequality……….Of the 1%, by the 1%, for the 1%
By Joseph E. Stiglitz, May 2011
Americans have been watching protests against oppressive regimes that concentrate massive wealth in the hands of an elite few. Yet in our own democracy, 1 percent of the people take nearly a quarter of the nation's income—an inequality even the wealthy will come to regret.
It's no use pretending that what has obviously happened has not in fact happened. The upper 1 percent of Americans are now taking in nearly a quarter of the nation's income every year. In terms of wealth rather than income, the top 1 percent control 40 percent. Their lot in life has improved considerably. Twenty-five years ago, the corresponding figures were 12 percent and 33 percent. One response might be to celebrate the ingenuity and drive that brought good fortune to these people, and to contend that a rising tide lifts all boats. That response would be misguided. While the top 1 percent have seen their incomes rise 18 percent over the past decade, those in the middle have actually seen their incomes fall. For men with only high-school degrees, the decline has been precipitous—12 percent in the last quarter-century alone. All the growth in recent decades—and more—has gone to those at the top. In terms of income equality, America lags behind any country in the old, ossified Europe that President George W. Bush used to deride. Among our closest counterparts are Russia with its oligarchs and Iran. While many of the old centers of inequality in Latin America, such as Brazil, have been striving in recent years, rather successfully, to improve the plight of the poor and reduce gaps in income, America has allowed inequality to grow.
Economists long ago tried to justify the vast inequalities that seemed so troubling in the mid-19th century—inequalities that are but a pale shadow of what we are seeing in America today. The justification they came up with was called "marginal-productivity theory." In a nutshell, this theory associated higher incomes with higher productivity and a greater contribution to society. It is a theory that has always been cherished by the rich. Evidence for its validity, however, remains thin. The corporate executives who helped bring on the recession of the past three years—whose contribution to our society, and to their own companies, has been massively negative—went on to receive large bonuses. In some cases, companies were so embarrassed about calling such rewards "performance bonuses" that they felt compelled to change the name to "retention bonuses" (even if the only thing being retained was bad performance). Those who have contributed great positive innovations to our society, from the pioneers of genetic understanding to the pioneers of the Information Age, have received a pittance compared with those responsible for the financial innovations that brought our global economy to the brink of ruin.
Some people look at income inequality and shrug their shoulders. So what if this person gains and that person loses? What matters, they argue, is not how the pie is divided but the size of the pie. That argument is fundamentally wrong. An economy in which most citizens are doing worse year after year—an economy like America's—is not likely to do well over the long haul. There are several reasons for this.
First, growing inequality is the flip side of something else: shrinking opportunity. Whenever we diminish equality of opportunity, it means that we are not using some of our most valuable assets—our people—in the most productive way possible. Second, many of the distortions that lead to inequality—such as those associated with monopoly power and preferential tax treatment for special interests—undermine the efficiency of the economy. This new inequality goes on to create new distortions, undermining efficiency even further. To give just one example, far too many of our most talented young people, seeing the astronomical rewards, have gone into finance rather than into fields that would lead to a more productive and healthy economy.
Third, and perhaps most important, a modern economy requires "collective action"—it needs government to invest in infrastructure, education, and technology. The United States and the world have benefited greatly from government-sponsored research that led to the Internet, to advances in public health, and so on. But America has long suffered from an under-investment in infrastructure (look at the condition of our highways and bridges, our railroads and airports), in basic research, and in education at all levels. Further cutbacks in these areas lie ahead.
None of this should come as a surprise—it is simply what happens when a society's wealth distribution becomes lopsided. The more divided a society becomes in terms of wealth, the more reluctant the wealthy become to spend money on common needs. The rich don't need to rely on government for parks or education or medical care or personal security—they can buy all these things for themselves. In the process, they become more distant from ordinary people, losing whatever empathy they may once have had. They also worry about strong government—one that could use its powers to adjust the balance, take some of their wealth, and invest it for the common good. The top 1 percent may complain about the kind of government we have in America, but in truth they like it just fine: too gridlocked to re-distribute, too divided to do anything but lower taxes.
Economists are not sure how to fully explain the growing inequality in America. The ordinary dynamics of supply and demand have certainly played a role: laborsaving technologies have reduced the demand for many "good" middle-class, blue-collar jobs. Globalization has created a worldwide marketplace, pitting expensive unskilled workers in America against cheap unskilled workers overseas. Social changes have also played a role—for instance, the decline of unions, which once represented a third of American workers and now represent about 12 percent.
But one big part of the reason we have so much inequality is that the top 1 percent want it that way. The most obvious example involves tax policy. Lowering tax rates on capital gains, which is how the rich receive a large portion of their income, has given the wealthiest Americans close to a free ride. Monopolies and near monopolies have always been a source of economic power—from John D. Rockefeller at the beginning of the last century to Bill Gates at the end. Lax enforcement of anti-trust laws, especially during Republican administrations, has been a godsend to the top 1 percent. Much of today's inequality is due to manipulation of the financial system, enabled by changes in the rules that have been bought and paid for by the financial industry itself—one of its best investments ever. The government lent money to financial institutions at close to 0 percent interest and provided generous bailouts on favorable terms when all else failed. Regulators turned a blind eye to a lack of transparency and to conflicts of interest.
When you look at the sheer volume of wealth controlled by the top 1 percent in this country, it's tempting to see our growing inequality as a quintessentially American achievement—we started way behind the pack, but now we're doing inequality on a world-class level. And it looks as if we'll be building on this achievement for years to come, because what made it possible is self-reinforcing. Wealth begets power, which begets more wealth. During the savings-and-loan scandal of the 1980s—a scandal whose dimensions, by today's standards, seem almost quaint—the banker Charles Keating was asked by a congressional committee whether the $1.5 million he had spread among a few key elected officials could actually buy influence. "I certainly hope so," he replied. The Supreme Court, in its recent Citizens United case, has enshrined the right of corporations to buy government, by removing limitations on campaign spending. The personal and the political are today in perfect alignment. Virtually all U.S. senators, and most of the representatives in the House, are members of the top 1 percent when they arrive, are kept in office by money from the top 1 percent, and know that if they serve the top 1 percent well they will be rewarded by the top 1 percent when they leave office. By and large, the key executive-branch policymakers on trade and economic policy also come from the top 1 percent. When pharmaceutical companies receive a trillion-dollar gift—through legislation prohibiting the government, the largest buyer of drugs, from bargaining over price—it should not come as cause for wonder. It should not make jaws drop that a tax bill cannot emerge from Congress unless big tax cuts are put in place for the wealthy. Given the power of the top 1 percent, this is the way you would expect the system to work.
America's inequality distorts our society in every conceivable way. There is, for one thing, a well-documented lifestyle effect—people outside the top 1 percent increasingly live beyond their means. Trickle-down economics may be a chimera, but trickle-down behaviorism is very real. Inequality massively distorts our foreign policy. The top 1 percent rarely serve in the military—the reality is that the "all-volunteer" army does not pay enough to attract their sons and daughters, and patriotism goes only so far. Plus, the wealthiest class feels no pinch from higher taxes when the nation goes to war: borrowed money will pay for all that. Foreign policy, by definition, is about the balancing of national interests and national resources. With the top 1 percent in charge, and paying no price, the notion of balance and restraint goes out the window. There is no limit to the adventures we can undertake; corporations and contractors stand only to gain. The rules of economic globalization are likewise designed to benefit the rich: they encourage competition among countries for business, which drives down taxes on corporations, weakens health and environmental protections, and undermines what used to be viewed as the "core" labor rights, which include the right to collective bargaining. Imagine what the world might look like if the rules were designed instead to encourage competition among countries for workers. Governments would compete in providing economic security, low taxes on ordinary wage earners, good education, and a clean environment—things workers care about. But the top 1 percent don't need to care.
Or, more accurately, they think they don't. Of all the costs imposed on our society by the top 1 percent, perhaps the greatest is this: the erosion of our sense of identity, in which fair play, equality of opportunity, and a sense of community are so important. America has long prided itself on being a fair society, where everyone has an equal chance of getting ahead, but the statistics suggest otherwise: the chances of a poor citizen, or even a middle-class citizen, making it to the top in America are smaller than in many countries of Europe. The cards are stacked against them. It is this sense of an unjust system without opportunity that has given rise to the conflagrations in the Middle East: rising food prices and growing and persistent youth unemployment simply served as kindling. With youth unemployment in America at around 20 percent (and in some locations, and among some socio-demographic groups, at twice that); with one out of six Americans desiring a full-time job not able to get one; with one out of seven Americans on food stamps (and about the same number suffering from "food insecurity")—given all this, there is ample evidence that something has blocked the vaunted "trickling down" from the top 1 percent to everyone else. All of this is having the predictable effect of creating alienation—voter turnout among those in their 20s in the last election stood at 21 percent, comparable to the unemployment rate.
In recent weeks we have watched people taking to the streets by the millions to protest political, economic, and social conditions in the oppressive societies they inhabit. Governments have been toppled in Egypt and Tunisia. Protests have erupted in Libya, Yemen, and Bahrain. The ruling families elsewhere in the region look on nervously from their air-conditioned penthouses—will they be next? They are right to worry. These are societies where a minuscule fraction of the population—less than 1 percent—controls the lion's share of the wealth; where wealth is a main determinant of power; where entrenched corruption of one sort or another is a way of life; and where the wealthiest often stand actively in the way of policies that would improve life for people in general.
As we gaze out at the popular fervor in the streets, one question to ask ourselves is this: When will it come to America? In important ways, our own country has become like one of these distant, troubled places.
Alexis de Tocqueville once described what he saw as a chief part of the peculiar genius of American society—something he called "self-interest properly understood." The last two words were the key. Everyone possesses self-interest in a narrow sense: I want what's good for me right now! Self-interest "properly understood" is different. It means appreciating that paying attention to everyone else's self-interest—in other words, the common welfare—is in fact a precondition for one's own ultimate well-being. Tocqueville was not suggesting that there was anything noble or idealistic about this outlook—in fact, he was suggesting the opposite. It was a mark of American pragmatism. Those canny Americans understood a basic fact: looking out for the other guy isn't just good for the soul—it's good for business.
The top 1 percent have the best houses, the best educations, the best doctors, and the best lifestyles, but there is one thing that money doesn't seem to have bought: an understanding that their fate is bound up with how the other 99 percent live. Throughout history, this is something that the top 1 percent eventually do learn. Too late.
(17) America has two national budgets, one official, one unofficial - Matt Taibbi
From: Michael <RePorterNoteBook@Gmail.com> Date: 13.04.2011 10:17 AM
http://www.rollingstone.com/politics/news/the-real-housewives-of-wall-street-look-whos-cashing-in-on-the-bailout-20110411?page=1
The Real Housewives of Wall Street
Why is the Federal Reserve forking over $220 million in bailout money to the wives of two Morgan Stanley bigwigs?
By MATT TAIBBI
APRIL 12, 2011 9:55 AM ET
America has two national budgets, one official, one unofficial. The official budget is public record and hotly debated: Money comes in as taxes and goes out as jet fighters, DEA agents, wheat subsidies and Medicare, plus pensions and bennies for that great untamed socialist menace called a unionized public-sector workforce that Republicans are always complaining about. According to popular legend, we're broke and in so much debt that 40 years from now our granddaughters will still be hooking on weekends to pay the medical bills of this year's retirees from the IRS, the SEC and the Department of Energy.
Why Isn't Wall Street in Jail?
Most Americans know about that budget. What they don't know is that there is another budget of roughly equal heft, traditionally maintained in complete secrecy. After the financial crash of 2008, it grew to monstrous dimensions, as the government attempted to unfreeze the credit markets by handing out trillions to banks and hedge funds. And thanks to a whole galaxy of obscure, acronym-laden bailout programs, it eventually rivaled the "official" budget in size — a huge roaring river of cash flowing out of the Federal Reserve to destinations neither chosen by the president nor reviewed by Congress, but instead handed out by fiat by unelected Fed officials using a seemingly nonsensical and apparently unknowable methodology.
[This article appears in the April 28, 2011 issue of Rolling Stone. The issue will be available on newsstands and in the online archive April 15.]
Now, following an act of Congress that has forced the Fed to open its books from the bailout era, this unofficial budget is for the first time becoming at least partially a matter of public record. Staffers in the Senate and the House, whose queries about Fed spending have been rebuffed for nearly a century, are now poring over 21,000 transactions and discovering a host of outrages and lunacies in the "other" budget. It is as though someone sat down and made a list of every individual on earth who actually did not need emergency financial assistance from the United States government, and then handed them the keys to the public treasure. The Fed sent billions in bailout aid to banks in places like Mexico, Bahrain and Bavaria, billions more to a spate of Japanese car companies, more than $2 trillion in loans each to Citigroup and Morgan Stanley, and billions more to a string of lesser millionaires and billionaires with Cayman Islands addresses. "Our jaws are literally dropping as we're reading this," says Warren Gunnels, an aide to Sen. Bernie Sanders of Vermont. "Every one of these transactions is outrageous."
Wall Street's Big Win
But if you want to get a true sense of what the "shadow budget" is all about, all you have to do is look closely at the taxpayer money handed over to a single company that goes by a seemingly innocuous name: Waterfall TALF Opportunity. At first glance, Waterfall's haul doesn't seem all that huge — just nine loans totaling some $220 million, made through a Fed bailout program. That doesn't seem like a whole lot, considering that Goldman Sachs alone received roughly $800 billion in loans from the Fed. But upon closer inspection, Waterfall TALF Opportunity boasts a couple of interesting names among its chief investors: Christy Mack and Susan Karches.
Christy is the wife of John Mack, the chairman of Morgan Stanley. Susan is the widow of Peter Karches, a close friend of the Macks who served as president of Morgan Stanley's investment-banking division. Neither woman appears to have any serious history in business, apart from a few philanthropic experiences. Yet the Federal Reserve handed them both low-interest loans of nearly a quarter of a billion dollars through a complicated bailout program that virtually guaranteed them millions in risk-free income.
RS Politics Daily: Political news and commentary from Rolling Stone writers and editors
The technical name of the program that Mack and Karches took advantage of is TALF, short for Term Asset-Backed Securities Loan Facility. But the federal aid they received actually falls under a broader category of bailout initiatives, designed and perfected by Federal Reserve chief Ben Bernanke and Treasury Secretary Timothy Geithner, called "giving already stinking rich people gobs of money for no fucking reason at all." If you want to learn how the shadow budget works, follow along. This is what welfare for the rich looks like.
In August 2009, John Mack, at the time still the CEO of Morgan Stanley, made an interesting life decision. Despite the fact that he was earning the comparatively low salary of just $800,000, and had refused to give himself a bonus in the midst of the financial crisis, Mack decided to buy himself a gorgeous piece of property — a 107-year-old limestone carriage house on the Upper BeerEast Side of New York, complete with an indoor 12-car garage, that had just been sold by the prestigious Mellon family for $13.5 million. Either Mack had plenty of cash on hand to close the deal, or he got some help from his wife, Christy, who apparently bought the house with him.
The Macks make for an interesting couple. John, a Lebanese-American nicknamed "Mack the Knife" for his legendary passion for firing people, has one of the most recognizable faces on Wall Street, physically resembling a crumpled, half-burned baked potato with a pair of overturned furry horseshoes for eyebrows. Christy is thin, blond and rich — a sort of still-awake Sunny von Bulow with hobbies. Her major philanthropic passion is endowments for alternative medicine, and she has attained the level of master at Reiki, the Japanese practice of "palm healing." The only other notable fact on her public résumé is that her sister was married to Charlie Rose.
It's hard to imagine a pair of people you would less want to hand a giant welfare check to — yet that's exactly what the Fed did. Just two months before the Macks bought their fancy carriage house in Manhattan, Christy and her pal Susan launched their investment initiative called Waterfall TALF. Neither seems to have any experience whatsoever in finance, beyond Susan's penchant for dabbling in thoroughbred racehorses. But with an upfront investment of $15 million, they quickly received $220 million in cash from the Fed, most of which they used to purchase student loans and commercial mortgages. The loans were set up so that Christy and Susan would keep 100 percent of any gains on the deals, while the Fed and the Treasury (read: the taxpayer) would eat 90 percent of the losses. Given out as part of a bailout program ostensibly designed to help ordinary people by kick-starting consumer lending, the deals were a classic heads-I-win, tails-you-lose investment.
So how did the government come to address a financial crisis caused by the collapse of a residential-mortgage bubble by giving the wives of a couple of Morgan Stanley bigwigs free money to make essentially risk-free investments in student loans and commercial real estate? The answer is: by degrees. The history of the bailout era reads like one of those awful stories about what happens when a long-dormant criminal compulsion goes unchecked. The Peeping Tom next door stares through a few bathroom windows, doesn't get caught, and decides to break in and steal a pair of panties. Next thing you know, he's upgraded to homemade dungeons, tri-state serial rampages and throwing cheerleaders into a panel truck.
It was the same with the bailouts. They started out small, with the government throwing a few hundred billion in public money to prop up genuinely insolvent firms like Bear Stearns and AIG. Then came TARP and a few other programs that were designed to stave off bank failures and dispose of the toxic mortgage-backed securities that were a root cause of the financial crisis. But before long, the Fed began buying up every distressed investment on Wall Street, even those that were in no danger of widespread defaults: commercial real estate loans, credit- card loans, auto loans, student loans, even loans backed by the Small Business Administration. What started off as a targeted effort to stop the bleeding in a few specific trouble spots became a gigantic feeding frenzy. It was "free money for shit," says Barry Ritholtz, author of Bailout Nation. "It turned into 'Give us your crap that you can't get rid of otherwise.' "
The impetus for this sudden manic expansion of the bailouts was a masterful bluff by Wall Street executives. Once the money started flowing from the Federal Reserve, the executives began moaning to their buddies at the Fed, claiming that they were suddenly afraid of investing in anything — student loans, car notes, you name it — unless their profits were guaranteed by the state. "You ever watch soccer, where the guy rolls six times to get a yellow card?" says William Black, a former federal bank regulator who teaches economics and law at the University of Missouri. "That's what this is. If you have power and connections, they will give you a freebie deal — if you're good at whining."
This is where TALF fits into the bailout picture. Created just after Barack Obama's election in November 2008, the program's ostensible justification was to spur more consumer lending, which had dried up in the midst of the financial crisis. But instead of lending directly to car buyers and credit-card holders and students — that would have been socialism! — the Fed handed out a trillion dollars to banks and hedge funds, almost interest-free. In other words, the government lent taxpayer money to the same assholes who caused the crisis, so that they could then lend that money back out on the market virtually risk-free, at an enormous profit.
Cue your Billy Mays voice, because wait, there's more!
A key aspect of TALF is that the Fed doles out the money through what are known as non-recourse loans. Essentially, this means that if you don't pay the Fed back, it's no big deal. The mechanism works like this: Hedge Fund Goon borrows, say, $100 million from the Fed to buy crappy loans, which are then transferred to the Fed as collateral. If Hedge Fund Goon decides not to repay that $100 million, the Fed simply keeps its pile of crappy securities and calls everything even.
This is the deal of a lifetime. Think about it: You borrow millions, buy a bunch of crap securities and stash them on the Fed's books. If the securities lose money, you leave them on the Fed's lap and the public eats the loss. But if they make money, you take them back, cash them in and repay the funds you borrowed from the Fed. "Remember that crazy guy in the commercials who ran around covered in dollar bills shouting, 'The government is giving out free money!' " says Black. "As crazy as he was, this is making it real."
This whole setup — in which millionaires and billionaires gambled on mountains of dangerous securities, with taxpayers providing the stake and assuming almost all of the risk — is the reason that it's insanely premature for Wall Street to claim that the bailouts have actually made money for the government. We simply can't make that determination until the final bill comes in on all the dicey securities we financed during the bailout feeding frenzy.
In the case of Waterfall TALF Opportunity, here's what we know: The company was founded in June 2009 with $14.87 million of investment capital, money that likely came from Christy Mack and Susan Karches. The two Wall Street wives then used the $220 million they got from the Fed to buy up a bunch of securities, including a large pool of commercial mortgages managed by Credit Suisse, a company John Mack once headed. Those securities were valued at $253.6 million, though the Fed refuses to explain how it arrived at that estimate. And here's the kicker: Of the $220 million the two wives got from the Fed, roughly $150 million had not been paid back as of last fall — meaning that you and I are still on the hook for most of whatever the Wall Street spouses bought on their government-funded shopping spree.
The public has no way of knowing how much Christy Mack and Susan Karches earned on these transactions, because the Fed has repeatedly declined to provide any information about how it priced the individual securities bought as part of programs like TALF. In the Waterfall deal, for instance, we know the Fed pledged some $14 million against a block of securities called "Credit Suisse Commercial Mortgage Trust Series 2007-C2" — but that data is meaningless without knowing how many units were bought. It's like saying the Fed gave Waterfall $14 million to buy cars. Did Waterfall pay $5,000 per car, or $500,000? We have no idea. "There's no way of validating or invalidating the Fed's process in TALF without this pricing information," says Gary Aguirre, a former SEC official who was fired years ago after he tried to interview John Mack in an insider-trading case.
In early April, in an attempt to learn exactly how much Mack and Karches made on the TALF deals, Sen. Chuck Grassley of Iowa wrote a letter to Waterfall asking 21 detailed questions about the transactions. In addition, Sen. Sanders has personally asked Fed chief Bernanke to provide more complete information on the TALF loans given not only to Christy Mack but to gazillionaires like former Miami Dolphins owner H. Wayne Huizenga and hedge-fund shark John Paulson. But Bernanke bluntly refused to provide the information — and the Fed has similarly stonewalled other oversight agencies, including the General Accounting Office and TARP's special inspector general.
Christy Mack and Susan Karches did not respond to requests for comments for this story. But even without more information about the loans they got from the Fed, we know that TALF wasn't the only risk-free money being handed over to Wall Street. During the financial crisis, the Fed routinely made billions of dollars in "emergency" loans to big banks at near-zero interest. Many of the banks then turned around and used the money to buy Treasury bonds at higher interest rates — essentially loaning the money back to the government at an inflated rate. "People talk about how these were loans that were paid back," says a congressional aide who has studied the transactions. "But when the state is lending money at zero percent and the banks are turning around and lending that money back to the state at three percent, how is that different from just handing rich people money?"
Those kinds of deals were the essence of the bailout — and the vast mountains of near-zero government cash turned companies facing bankruptcy into monstrous profit machines. In 2008 and 2009, while Christy Mack was busy getting her little TALF loans for $220 million, her husband's bank hauled in $2 trillion in emergency Fed loans. During the same period, Goldman borrowed nearly $800 billion. Shortly afterward, the two banks reported a combined annual profit of $14.5 billion.
As crazy as it is to lend to banks at near zero percent and borrow back from them at three percent, one could at least argue that the policy may have aided American companies by providing banks more cash to lend. But how do you explain the host of other bailout transactions now being examined by Congress? Like the Fed's massive purchases of securities in foreign automakers, including BMW, Volkswagen, Honda, Mitsubishi and Nissan? Or the nearly $5 billion in cheap credit the Fed extended to Toyota and Mitsubishi? Sure, those companies have factories and dealerships in the U.S. — but does it really make sense to give them free cash at the same time taxpayers were being asked to bail out Chrysler and GM? Seems a little crazy to fund the competition of the very automakers you're trying to rescue.
And then there are the bailout deals that make no sense at all. Republicans go mad over spending on health care and school for Mexican illegals. So why aren't they flipping out over the $9.6 billion in loans the Fed made to the Central Bank of Mexico? How do we explain the $2.2 billion in loans that went to the Korea Development Bank, the biggest state bank of South Korea, whose sole purpose is to promote development in South Korea? And at a time when America is borrowing from the Middle East at interest rates of three percent, why did the Fed extend $35 billion in loans to the Arab Banking Corporation of Bahrain at interest rates as low as one quarter of one point?
Even more disturbing, the major stakeholder in the Bahrain bank is none other than the Central Bank of Libya, which owns 59 percent of the operation. In fact, the Bahrain bank just received a special exemption from the U.S. Treasury to prevent its assets from being frozen in accord with economic sanctions. That's right: Muammar Qaddafi received more than 70 loans from the Federal Reserve, along with the Real Housewives of Wall Street.
Perhaps the most irritating facet of all of these transactions is the fact that hundreds of millions of Fed dollars were given out to hedge funds and other investors with addresses in the Cayman Islands. Many of those addresses belong to companies with American affiliations — including prominent Wall Street names like Pimco, Blackstone and . . . Christy Mack. Yes, even Waterfall TALF Opportunity is an offshore company. It's one thing for the federal government to look the other way when Wall Street hotshots evade U.S. taxes by registering their investment companies in the Cayman Islands. But subsidizing tax evasion? Giving it a federal bailout? What the fuck?
As America girds itself for another round of lunatic political infighting over which barely-respirating social program or urgently necessary federal agency must have their budgets permanently sacrificed to the cause of billionaires being able to keep their third boats in the water, it's important to point out just how scarce money isn't in certain corners of the public-spending universe. In the coming months, when you watch Republican congressional stooges play out the desperate comedy of solving America's deficit problems by making fewer photocopies of proposed bills, or by taking an ax to budgetary shrubberies like NPR or the SEC, remember Christy Mack and her fancy new carriage house. There is no belt-tightening on the other side of the tracks. Just a free lunch that never ends.
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