current issue is always free to everyone
of them is on the lam having apparently crudely faked his
suicide. Thus, Samuel Israel III has, as of this writing,
avoided being part of the perp walk dramas of last week. His
woman friend however, was arrested and charged with helping
him arrange the ruse. That same day in Brooklyn,
hedge fund executives Ralph R. Cioffi and Matthew Tannin were
cuffed and led away, accused by the Federal Bureau of Investigation
of “premeditated lies to investors and lenders.” The two were
executives at the Bears Sterns investment bank that was recently
bailed out with a $29 billion federal loan guarantee backed
up with taxpayer money that made possible a takeover of the
firm by JP Morgan.
and Tannin have denied the charges against them. Both were
fired months before their indictment. While there are young
people on Rikers Island on lesser charges that cannot
make a few hundred dollar bail, the two men had no trouble
positing bond of $4 million and $1.5 million respectively,
secured by their apartments, vacation homes and retirement
all this was going on the feds revealed that under the banner
“Operation Malicious Mortgage” they had already this year
secured indictments against 406 people on charges related
to individual mortgage transactions. Sixty of them were arrested
June 18. They were accused of such tings as lending fraud,
foreclosure and bankruptcy schemes that bilked people to the
combined tune of $1 billion.
is the ugly underbelly of the home mortgage crisis. Much has
been written about the new structures of capitalist finance
that contributed to the debacle or of the absence of statutory
regulations that could have been applied to arrest the situation
before it got out of hand or of the failure of will on the
part of federal officials to employ the regulations that are
on the books. However, over the past two years, it has become
increasing clear that the collapse of the housing and mortgage
markets also involved a lot of plain old criminal activity.
was not to be unexpected. In periods of major economic and
technological change, risky speculation increases and with
it come the bottom feeders, people with larceny on their minds
and their hands reaching into other peoples’ pockets. Fraud
was not the cause of the situation in which over two million
people were placed in danger of losing their homes and communities
have seen much of their net worth go down the drain. But it
played a role.
financial executive has famously said that although the key
actors could see that there was something fundamentally wrong
with the housing loan market, as long as the music played
they had no choice but to go on dancing. It has become clear
that as long as the money was rolling in they - willfully
or not - didn’t pay much attention the machinations of the
flim-flam people they had hired to play the instruments.
irony here is that much of the public will suspect that the
perp walk in Brooklyn was showboating,
the feds trying to make it look like they are doing something
by grabbing a few minnow while the big fish swim away.
is some somber news coming in from across the pond.
to news reports, the Royal Bank of Scotland
has advised clients to brace for a full-fledged crash in global
stock and credit markets over the next three months as inflation
paralyses the major central banks.
very nasty period is soon to be upon us - be prepared,” Bob
Janjuah, the bank's credit strategist told the Telegraph
The bank's research team has warned that the S&P 500 index
of Wall Street equities is likely to fall by more than 300
points to around 1050 by September as “all the chickens come
home to roost” from the excesses of the global boom, “with
contagion spreading across Europe and emerging markets.”
a decline on world stock markets “would amount to one of the
worst bear markets over the last century,” wrote the Telegraph’s
international business editor Ambrose Evans-Pritchard. The
bank says it expects Wall Street to rally a little further
into early July before short-lived momentum from the U.S stimulus
fiscal boost begins to fizzle out, and the delayed effects
of the oil spike inflict their damage.
was always going to risk putting G7 bankers into a dangerous
corner at some point. We have got to that point,” the bank’s
credit strategist said. He described the U.S. Federal Reserve
as “in a panic mode.”
the British people are being warned to expect tough times
ahead. Mervyn King, the governor of the Bank of England told
a meeting of high financial mucky mucks that the country’s
families will see their standard of living stagnate this year
while the value of their homes will fall further.
coming months represent the biggest challenge for the economy
for two decades, King said, adding that some households will
find them difficult “This year our real take-home pay will
rise at a slower pace than national productivity. Rising fuel,
gas, electricity and food prices, mean that average real take-home
pay will stagnate this year,” he said. “It will not be an
easy time, and I know that some families will find it particularly
is a critical subplot lurking behind the story of the precarious
economy. As per usual, when inflation increases the official
explanation it is increases in workers’ pay in response to
rising prices that causes it. Ostensibly unable to do anything
about the cost of things people need (don’t even mention controls),
the demand from those in authority is for “wage restraint.”
Never mind that while corporate profits are steady and prices
for gasoline, food and airfares are soaring, wages have been
mostly stagnant, and for many of the lowest paid have actually
decreased when adjusted for inflation. It’s been quite a while
since the AFL-CIO declared: “America Needs a Raise.” It has
happened and in the weeks and months ahead expect to hear
calls from the already comfortable for working people to grin
and bear the rising cost of living.
already begun in earnest in Britain
where economic trends closely mirror developments here. Last
week, Chancellor of the Exchequer Alistair Darling joined
Bank of England’s King in calling for wage restraint, saying,
“inflationary pay rises would be disastrous not just for the
country but for each and every one of us.
have got to be vigilant to all pay, public and private alike,
because if we get into that spiral it will take years to get
out of it,” said Darling, “We don't want to do anything to
exacerbate the situation.”
are fears that a pay deal agreed overnight with striking Shell
tanker drivers could set a benchmark for pay settlements this
year and encourage more industrial action among workers,”
reported The Times (UK). Following
a four day strike, the Shell oil drivers secured a 14 percent
wage increase over the next two years and other unions have
promised hard bargaining ahead and threatened strikes to protect
their member’s incomes. Of course, no one has threatened Shell’s
profits or the prices of its products on the market.
drivers are represented by Unite, a union representing over
than two million British workers in the transportation, energy
and public sectors, and others. Last month the union announced
a merger agreement with the United Steelworkers of America
(USWA), which represents nearly 850,000 members in the United States, Canada
and the Caribbean.
year, Shell topped the all-time British company profit record
with earnings of $27.5 billion As of January the oil giant
was talking in $75million a day – a profit rate Unite head
Tony Woodley termed “obscene.” “Shell shareholders are doing
very nicely while the rest of us are paying the price and
struggling,” said Woodley.
source of Royal Dutch Shell’s enormous profits is operations
in Africa where it is running into stiff
resistance. Last Thursday, production was shut down at an
offshore Nigerian facility after an armed attack by a formidable
rebel group, the Movement for the Emancipation of the Niger
Delta, or MEND, which said it conducted the attack and seized
a U.S. oil worker. The group is demanding a larger
share of oil wealth for people in the Niger Delta, where most
reserves are but where more than 70 percent of the population
lives on less than a dollar a day.)
all observers are taking government appeals for British wage
restraint seriously. Financial Times economics editor
Chris Giles wrote last week that Darling and others risk sounding
silly. Instead, Giles wrote that “the new labor market, open
immigration and household’s desire to avoid unemployment will
be enough to ensure real wages fall or at least grow more
slowly than productivity.” Karl Marx couldn’t have put it
Board member Carl Bloice is a writer in San
Francisco, a member of the National Coordinating Committee of
the Committees of Correspondence for Democracy and Socialism
and formerly worked for a healthcare union. Click here
to contact Mr. Bloice.
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