Bail Out? — How About A Wall Street Bail-IN: There Are Plans To Empty Your Bank Accounts During the Next Banking Crisis

By John Lawrence, San Diego Free Press

There will be no more taxpayer bailouts for the Big Wall Street banks. That much has been established by the lobbied to death Dodd-Frank banking reform (yeah, right) bill.

However, instead of taking money from the government (taxpayers), the principal has been established that the next source of money for profligate banks will be your deposit accounts. Yeah, that’s right, the money to stabilize the banking sector during the next crisis will come out of your savings and checking accounts.

To add insult to injury – since the banks pay you zero percent on your savings account in the first place – the banks have the right to confiscate your funds if they crash the economy again as they did in 2008. Remember the Great Recession? It’s coming again to a bank near you.

How can they do this, you ask?

Simple. When you deposit money in a checking or savings account, that money no longer belongs to you. Technically and legally, it becomes the property of the bank, and the bank just issues you what amounts to an IOU. As far as the bank is concerned, it’s an unsecured debt.

The way Dodd-Frank has managed to screw things around, derivatives (bets banks have made in the Wall Street casino) have priority over your checking and savings accounts when it comes to paying off their debts. And don’t think that the FDIC (Federal Deposit Insurance Corporation) will save your money. The assets of the FDIC are minuscule (in the billions) compared to the valuation of outstanding derivatives (in the trillions). Your deposits are protected only up to the $250,000 insurance limit, and also only to the extent that the FDIC has the money to cover deposit claims or can come up with it.

Ellen Brown asks, “What happens when Bank of America or JPMorganChase, which have commingled their massive derivatives casinos with their depositary arms, is propelled into bankruptcy by a major derivatives fiasco? These two banks both have deposits exceeding $1 trillion, and they both have derivatives books with notional values exceeding the GDP of the world.”

The answer is a Cypress style bail-in.

You might recall that money was taken out of depositor’s accounts during the last banking crisis in Cypress. These depositors were mainly Russian oligarchs so what the heck. Now this principle has been extended to depositors in the big Wall Street banks and actually to depositors all over the world. Now is a good time to take your money out of banks such as Bank of America, JPMorgan Chase and Citibank and deposit it in smaller banks or credit unions. Otherwise, $1 trillion of depositors’ funds could go bye-bye, and that’s not small change.

Ellen Brown elucidates:

According to an International Monetary Fund paper titled “From Bail-out to Bail-in: Mandatory Debt Restructuring of Systemic Financial Institutions”:

[B]ail-in . . . is a statutory power of a resolution authority (as opposed to contractual arrangements, such as contingent capital requirements) to restructure the liabilities of a distressed financial institution by writing down its unsecured debt and/or converting it to equity. The statutory bail-in power is intended to achieve a prompt recapitalization and restructuring of the distressed institution.

The language is a bit obscure, but here are some points to note:

• What was formerly called a “bankruptcy” is now a “resolution proceeding.” The bank’s insolvency is “resolved” by the neat trick of turning its liabilities into capital. Insolvent TBTF banks are to be “promptly recapitalized” with their “unsecured debt” so that they can go on with business as usual.
• “Unsecured debt” includes deposits, the largest class of unsecured debt of any bank. The insolvent bank is to be made solvent by turning our money into their equity – bank stock that could become worthless on the market or be tied up for years in resolution proceedings.
• The power is statutory. Cyprus-style confiscations are to become the law.
• Rather than having their assets sold off and closing their doors, as happens to lesser bankrupt businesses in a capitalist economy, “zombie” banks are to be kept alive and open for business at all costs – and the costs are again to be borne by us.

So as far as you, the depositor, are concerned, your money in checking and savings accounts is the bank’s “unsecured debt.” You will have to stand in line behind trillions of dollars of derivative payouts before your checking and savings accounts will be made whole. Both the Bankruptcy Reform Act of 2005 and the Dodd Frank Act provide special protections for derivative counterparties, giving them the legal right to demand collateral to cover losses in the event of insolvency.

They get first dibs, even before the secured deposits of state and local governments. Your chances of recovering your money are about as great as the chances of a snowball in hell.

Since most poor and middle class people have a major portion of their assets in checking and savings accounts while rich people have the major portion in real estate, stocks and bonds, who do you think will be most affected by bail-ins?

You guessed it: the poor and middle class will be hit the hardest. And don’t think your money will be safe in a bank’s safe deposit box. The banks have the right to go into your safe deposit box and take your money out of it.

Pension funds, which were the biggest suckers for Wall Street during the last banking crisis, will also be drained by Wall Street during the next one. Their funds will be subject to confiscation as bail-ins as well since many of the bonds they purchase are subject to being converted to bail-inable deposits if the banks really need the money which they no doubt will sooner or later when the derivatives bubble goes bust.

So taxpayers you can sleep soundly as taxpayer bail-outs have been taken off the table in the next banking crisis. Whew, that’s a relief.

But if your savings get taken over by the bank, ouch, that’ll hurt even more than a widely distributed taxpayer bail-out which might add a couple of dollars to your income tax. Be careful of what you wish for. It could be even worse than what you already had.

There is a better way. Let the zombie banks go bankrupt instead of confiscating depositor funds. A better way is to create public banks and transfer funds from Wall Street. Then the gambling casino with all the attendant risks for bail-outs and bail-ins comes to an abrupt halt. Profits go to the local community or to the state in the case of North Dakota, the nations’s first and oldest public bank..

On a personal note, a representative of my bank, Union Bank, called me a few weeks ago to inform me that I was only allowed five debits per month out of my savings account and that I had used up my five debits for December.

So I would have to wait until January before I was allowed to take any more money out of my savings account. I was furious. “It’s my money isn’t it, and besides you call it a savings account. It gets zero interest.” He kept repeating that I was only allowed five debits per month and said it was a Federal law.

Well, this means nothing because it’s well known that all Federal banking regulations are written by lobbyists for the banking industry in the interests of the banking industry. I asked him what was the rationale for this regulation. He said, “The government doesn’t want you to spend your money too fast.” Hmmm. Since when does Big Brother have an interest in making sure I don’t spend my money? I don’t think so.

It probably has more to do with keeping your money in the bank so that the bank can meet its currency reserve requirements or possibly slow down the exodus of money from worthless savings accounts which pay no interest or even perhaps to confiscate your money for bail-ins during the next banking crisis at which time there will be undoubtedly a run on the banks 1930s style.

Whoops, if you’ve already had your five debits, you won’t be able to get your hands on your money before it’s “bailed-in.”

________________________
John Lawrence graduated from Georgia Tech, Stanford and University of California at San Diego. While at UCSD, he was one of the original writer/workers on the San Diego Free Press in the late 1960s. He founded the San Diego Jazz Society in 1984 which had grants from the San Diego Commission for Arts and Culture and presented both local and nationally known jazz artists. His website is Social Choice and Beyond which exemplifies his interest in Economic Democracy. His book is East West Synthesis. He also blogs at Will Blog For Food. He can be reached at j.c.lawrence@cox.net.

Copyright © John Lawrence, San Diego Free Press, 2015

Reprinted with permission from Center for Research in Globalization.

Police Terror Costs Taxpayers $1.4 Billion in Settlements During Just the Past 10 Years

By Zusha Elinson and Dan Frosch
The cost of resolving police-misconduct cases has surged for big U.S. cities in recent years, even before the current wave of scrutiny faced by law-enforcement over tactics.

The 10 cities with the largest police departments paid out $248.7 million last year in settlements and court judgments in police-misconduct cases, up 48% from $168.3 million in 2010, according to data gathered by The Wall Street Journal through public-records requests.

Those cities collectively paid out $1.02 billion over those five years in such cases, which include alleged beatings, shootings and wrongful imprisonment. When claims related to car collisions, property damage and other police incidents are included, the total rose to more than $1.4 billion.

On Monday, New York City agreed to a $5.9 million settlement with the estate of Eric Garner, whose death after being put in a police chokehold last summer sparked widespread protests.

City officials and others say the large payouts stem not just from new cases, but from efforts to resolve decades-old police scandals. In 2013 and 2014, for example, Chicago paid more than $60 million in cases where people were wrongfully imprisoned decades ago because of alleged police misconduct.

For some cities, the data show that cases have gotten more expensive to resolve. Philadelphia police have faced criticism for numerous shootings in recent years. Last year, the city settled 10 shooting cases for an average of $536,500 each. In 2010, it settled eight for an average of $156,937. A city lawyer attributes the rise to a few large settlements, not a pattern of questionable shootings.

“The numbers are staggering, and they have huge consequences for taxpayers,” says Kami Chavis Simmons, a former assistant U.S. attorney who now directs the criminal-justice program at Wake Forest University School of Law. “Municipalities should take a hard look at the culture of police organizations and any structural reforms that might help alleviate the possibility of some of these huge civil suits.”

Read More

HypocritIcal Koch Brothers Scream About Small Government and Free Markets — But Accepted $157 Million in Government Subsidies

Koch brothers laughing their way to the bank on the backs
of tax payers.

By Mary Bottari
The fossil fuel barons, Charles and David Koch, have long advocated for "economic freedom" and a smaller government. They have slammed "collectivism" and market distorting subsidies.

In 2012, Charles Koch decried corporate welfare and “crony capitalism” in the pages of the Wall Street Journal: “Far too many well-connected businesses are feeding at the federal trough. By addressing corporate welfare as well as other forms of welfare, we would add a whole new level of understanding to the notion of entitlement reform,” he wrote.

The Koch's “secret bank” Freedom Partners has spent hundreds of millions in elections in part to tackle “‘rent-seeking,’ ‘corporate welfare,’ and other forms of cronyism.”

In 2014, the Koch-funded American Legislative Exchange Council (ALEC) rolled out a report on the “Unseen Cost of Tax Cronyism” and the Kochs launched a public broadside against corporate subsidies in a letter to Congress. The Kochs were so upset by programs, such as the Wind Production Tax Credit, that their chief lobbyists declared: “We oppose ALL subsidies, whether existing or proposed, including programs that benefit us.”

Now Good Jobs First, a nonprofit watchdog on corporate subsidies, has provided the Kochs with an excellent opportunity to put their money where their mouth is.

Good Jobs First unveiled a new, upgraded version of the their Subsidy Tracker data base which aggregates subsidy recipient data from more than 700 state, local, and federal economic development programs.

Click on "Koch Industries" in their parent companies list and voila! $157 million in state and federal subsidies are revealed, with an additional $6.2 million in federal loan guarantees.

Louisiana has ponied up the most $77 million in subsidies for the Koch operations, followed by $25 million in Oregon, $21 million in Oklahoma, and $15 million in Iowa.

These are all states that could use the cash.

Surely Charles and David Koch don't want to sully themselves with subsidies? With a combined net worth estimated to be $82 billion dollars, they are two of richest men in the world.

Its time to ask @Koch_Industries to give it back.

_____________
Mary Bottari, CMD's Deputy Director, is an experienced policy wonk and consumer advocate who has served as a senior analyst on trade.

Reprinted with permission from PRWatch.

Israel Collected Millions in Tax Revenues That Were Supposed to Go Back to Palestinians — And Then Stole It

Whenever the Israeli government wants to make Palestinians suffer for not following its dictates, it withholds money that belongs to Palestinians. Israel's seizure of Palestinian taxes is sparking economic devastation and mounting resistance.

Israel's retaliatory freezing of Palestinian tax revenue sparked a growing boycott in the West Bank. (Photo: Paolo Cuttitta/flickr/cc)

By Sarah Lazare
As Israel continues to withhold $130 million a month in revenue from the Palestinian Authority, officials warn that the West Bank's already choked economy is teetering over the edge, with most public employees facing salary cuts of 40 percent or more and the government close to default.

"We have informed the Palestinian Authority that we have reached the limits permitted to them, or are about to get there, and that banks will not be able to continue to fund it," Palestinian central bank Governor Jihad al-Wazir told Reuters on Wednesday.

"The situation in general is very tough," al-Wazir continued. "Suspending the tax transfers is leading to a rapid economic deterioration."

Ordinary people are bearing the brunt of these policies. Reuters reports:

Nidal Sadqa is a 47-year-old father of four who works for the Palestinian economy ministry in Ramallah and for the past three months he has been paid 60 percent of his usual salary. Half of what's left each month pays bank loans and other debts.

"I haven't paid the rent for three months and I owe the supermarket for things I've already taken," he said, describing circumstances familiar to the nearly 160,000 people employed by the Palestinian Authority in Gaza and the West Bank.

Israel froze the tax revenue in early January in retaliation for the PA's formal application to join the International Criminal Court. Since then, it has withheld over $500 million. These funds account for approximately two thirds of the PA's budget and are used to pay tens of thousands of public employees, according to Haaretz.

In response, Palestinians are reinvigorating a boycott of Israeli companies, specifically targeting Tnuva, Elite, Strauss Osem, Prigat, and Jafora. This escalation is a "first step against arbitrary Israeli procedure," according to a statement from the Palestinian Farmers' Union. While not a new tactic, reports indicate that the latest boycott marks an escalation, with Palestinians taking the step of confiscating and dumping Israeli goods.

Read More

Ego-Maniacal Republican Congressman Lived the 'High Life' at Tax Payers' Expense — Runs for Cover When Inquiry Starts

Republicans are living "high on the hog" at tax payers' expense — while demanding cuts in food stamps and other services for unemployed and poor Americans

His ego was as large as his tax payer-supplied expense account.

Illinois Rep. Schock announces resignation amid questions about his spending

By AP
Republican Rep. Aaron Schock of Illinois, dogged about irregularities in his campaign finance and congressional spending accounts, suddenly announced on Tuesday that he would resign his House seat at the end of the month.

"I do this with a heavy heart," Schock said in a statement in which he said he had given the people of his Peoria-area district his all since his election in 2008.

"But the constant questions over the last six weeks have proven a great distraction that has made it too difficult for me to serve the people of the 18th District with the high standards that they deserve and which I have set for myself," he said.

Schock has come under heavy scrutiny following revelations of lavish spending, payments to donors for flights on private jets and improperly categorized expenses. On Monday, the AP confirmed that the Office of Congressional Ethics had reached out to Schock's associates as it apparently began an investigation.

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The $400 Billion Dollar 'Joke': The 'New' Stealth Fighter Is 'Ten Years Behind' the Airplanes It Will Replace

America’s $400 billion, top-of-the-line aircraft can’t see the battlefield all that well. Which means it’s actually worse than its predecessors at fighting today’s wars.

The F-35 Joint Strike Fighter. (Photo from Wikimeda Commons)

Newest U.S. Stealth Fighter ‘10 Years Behind’ Older Jets

By Dave Majumdar
When the Pentagon’s nearly $400 billion F-35 Joint Strike Fighter finally enters service next year after nearly two decades in development, it won’t be able to support troops on the ground the way older planes can today. Its sensors won’t be able to see the battlefield as well; and what video the F-35 does capture, it won’t be able to transmit to infantrymen in real time.

Versions of the new single-engine stealth fighter are set to replace almost every type of fighter in the U.S. Air Force, Navy and Marine Corps inventory—including aircraft specifically designed to support ground troops like the A-10 Warthog. That will leave troops in a lurch when the F-35 eventually becomes the only game in town.

“The F-35 will, in my opinion, be 10 years behind legacy fighters when it achieves [initial operational capability],” said one Air Force official affiliated with the F-35 program. “When the F-35 achieves [initial operational capability], it will not have the weapons or sensor capability, with respect to the CAS [close air support] mission set, that legacy multi-role fighters had by the mid-2000s.”

The problem stems from the fact that the technology found on one of the stealth fighter’s primary air-to-ground sensors—its nose-mounted Electro-Optical Targeting System (EOTS)—is more than a decade old and hopelessly obsolete. The EOTS, which is similar in concept to a large high-resolution infrared and television camera, is used to visually identify and monitor ground targets. The system can also mark targets for laser-guided bombs.

[...]

Ironically, older jets currently in service with the Air Force, Navy and Marine Corps can carry the latest generation of sensor pods, which are far more advanced than the EOTS sensor carried by the F-35.

Read More

'US Gives Too Much to Israel': That's What 6 in 10 American Citizens Think — Says Google Survey

By Robert Barsocchini
Surveying Americans about U.S. aid to Israel requires putting it into proper perspective. Given Israel’s position as the leading single U.S. foreign aid recipient (by a wide margin), as in 1989 asking the foreign aid question requires embedding relevant data to obtain a bona fide response.  When such data is included, the majority of Americans (60.7 percent) believe U.S. aid to Israel is excessive.  The major response, that aid to Israel is “Much too much” is 33.9 percent of Americans.  Some 26.8 percent believe it is “too much” while 25.9 percent believe it is “about right.” Only 13.4 percent of Americans believe U.S. aid to Israel is not enough.

The policy and political implications of this finding are stark.  Elected officials passing ever larger aid packages and supplemental spending for Israel simply cannot claim they are representing the majority interests of their constituents.  American presidents proclaiming the U.S.‐Israel bond is “unbreakable” cannot claim such a bond is willingly underwritten by U.S. taxpayers.  The finding also shines yet more light on Israel lobby organizations as the major factor coming between most constituents and their representatives and quietly working to ensure that Israel’s majority share of the U.S. foreign aid budget continues.

The survey also finds that, in particular, younger US citizens are strongly opposed to the amount of US aid that goes to Israel, and, crucially, finds that “Only the Wealthiest Americans believe U.S. aid is ‘about right’”:

The only category of Americans (47.6 percent) who believed U.S. aid for Israel is “about right” is the segment earning $150,000 or more (although even 42.9 percent in that category thought aid was too high).  The next lower income category, $100,000‐149,000 is the most vehemently opposed to aid, with 79.5 percent believing it is too high (42.9 percent responding “much too much” and 36.6 percent “too much.”)

While the Google report says the findings are “stark”, they are precisely consistent with the findings of the recent study out of Cornell and Northwestern universities, the largest study of its kind to date, which looked at nearly 1,800 individual US policy issues and found that the average US citizen has zero impact on those policies, while the wealthiest citizens essentially get exactly what they want, meaning they dictate US policy (and they largely comprise the US government).

This Google survey simply singles out one of the policy issues, which together illustrate that the USA is not a democracy, but a society in which people are allowed to choose which of two corporate-backed figureheads they want as the face of an oligarchy that dictates government policy in its own interest.

It is also worth noting here that 1) the top ten recipients of US aid (with Israel as #1) all, like the US itself, have torture regimes, 2) US law “prohibit[s] U.S. foreign aid to nuclear weapons states such as Israel that are not signatories to the Nuclear Non-Proliferation Treaty”, and 3) Obama, while repeatedly insisting the US is a “nation of laws”, requested more military aid for Israel than any president ever (among many other blatantly illegal acts).

_________
Robert Barsocchini is a researcher focusing on global force dynamics.  He also writes professionally for the film industry.  Here is his blog.  Also see his free e-book, Whatever it Takes – Hillary Clinton’s Record of Support for War and other Depravities.  Click here to follow Robert and his UK-based colleague, Dean Robinson, on Twitter.

Reprinted with permission from Center for Research in Globalization.

To Stop Police Brutality, Take the Millions in Settlement Money Out Of Cop Budgets — Tax Payers Foot Bill for Police Terror

If settlements for police misconduct on citizens came out of the funding for police, incidents of abuse would be reduced, experts say.

By Rachel M. Cohen

As the national conversation around racism and police brutality quickly fades—ramped up briefly in the wake of Michael Brown’s death—U.S. taxpayers remain stuck footing the bills for their local law enforcement’s aggressive behavior. This week alone, Baltimore agreed to pay $49,000 to man who sued over a violent arrest in 2010, Philadelphia agreed to pay $490,000 to a man who was abused and broke his neck while riding in a police van in 2011, and St. Paul agreed to pay $95,000 to a man who suffered a skull injury, a fractured eye socket, and a broken nose in 2012.

In 2013, Chicago paid out a stunning $84.6 million in police misconduct settlements, judgments, and legal fees. Bridgeport, Connecticut, paid a man $198,000 this past spring after video footage captured police shooting him twice with a stun gun, then stomping all over him as he lay on the ground. And in California, Oakland recently agreed to pay $4.5 million to settle a lawsuit a man filed after being shot in the head, leaving him with permanent brain damage. You get the picture.

[...]

Between 2006 and 2011, the total number of claims filed for offenses like false arrest and police brutality in New York City increased by 43 percent. So Joanna Schwartz, a law professor at UCLA, suggested the city could take money from its police budget to pay the associated legal costs. “Perhaps if the department held its own purse strings, it would find more to learn from litigation,” Schwartz wrote in the New York Times. This past June, Schwartz published a study that concluded individual cops almost never pay for their misconduct—rather, “governments paid approximately 99.98 percent of the dollars that plaintiffs recovered in lawsuits alleging civil rights violations by law enforcement.”

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Scholars and Experts Are Urging the German Government to Rethink Its Unconditional Support of Israel

Screenshot from the open letter's website. It reads, “Open letter by German
Middle East experts on the Gaza crisis.”

By Katrin Zinoun, Translated by Thomas McGuinn

In an open letter to the German government, numerous scholars are demanding a change to the country's foreign policy in the Middle East in light of Israel's assault on Gaza, which has left more than 2,000 Palestinians dead.

The current German government like others before is supportive of Israel and its offensive against the strip. The petition is signed, amongst others, by Middle East scholars and experts working in the occupied Palestinian territories, as well as famous German personalities who are concerned with the subject. It reads:

For over a month we've had to sit and observe a destructive war which [...] will compromise any prospects of progress in the Gaza Strip and dash any hopes for long-term peace in the Middle East for months, possibly even years to come. We condemn the use of violence for the implementation of political aims. Violence aimed at civilians is unacceptable, both from Palestinian militant groups and from Israel.

According to its writers, the letter is meant to direct the focus of the debate in Germany back to the actual conflict. Due to several anti-Semitic outbursts from some protesters, the reporting on Gaza over the past few weeks has been overshadowed by a debate on anti-Semitism, and it no longer seemed feasible to promote discourse on current foreign policy in Israel. Kai Hafez, a communications expert, said in an interview with German radio station Deutschlandfunk:

Well, it is quite typical for us to be leading a culture-oriented debate in Germany about Islam and Judaism at the times when we should actually be carrying out political analysis or even a critical review of the war.

In the letter, the German government is urged to make concrete steps towards changing their current foreign policy in the Middle East. This was – and still is – shaped by “Germany’s historical guilt” stemming from the Nazis’ systematic genocide of millions of Jews during World War II. German Chancellor Angela Merkel spoke before the Knesset, the legislature of Israel, in 2008 about “Germany’s special historical responsibility for Israel's security”. And even to this day, the chancellor emphasises Israel's right to self-defence, while rocket attacks on Israel from Gaza are vehemently condemned.

The letter demands the recognition of the right to a life without fear, one which also applies to Palestinians:

The Israeli civilian population has the right to a life without fear. The same applies to all Palestinian men and women. Almost 2,000 victims – 80% of those being civilians according to the UN’s estimations, and then 30% of those being children according to information offered by UNICEF – cannot be swept under the mat by using the argument of the war on terror or the right to self-defence.

The writers of the letter are addressing some of their appeals to the German taxpayers because there are also projects funded by German tax money which are being destroyed in Gaza. The German government had already explained in 2012 that German-funded projects were being hampered or even destroyed in the Palestinian territories under Israeli control. The writers claim that, in the present conflict, almost the entire work of international development organizations, charities and NGOs working on the ground in the Gaza Strip has also been destroyed; in a material sense with the bombings, but the effects on the people are even worse. The entire civilian population is traumatised. The writers state that this situation cannot be changed through projects and that there’s a need for a wholesale policy reform, as demanded in the open letter.
The scholars urge the German government to:

• do what it can to reach a permanent ceasefire, which would prevent the deaths of more civilians on both sides and offer long-term protection to the critically endangered, overwhelmingly young civilian population in Gaza;
• work with Egypt and Israel to lift the blockade of the Gaza Strip, in order to facilitate the normalisation of the transportation of goods and people, and then to safeguard Israeli security interests with international surveillance and support;
• provide emergency aid and rebuilding measures in Gaza, but not without also demanding Israel’s responsibility for the redevelopment as the occupying power, in accordance with international law;
• give emphatic support to the recognised Palestinian unity government which was sworn in officially in July, and to strengthen its governing power over the Gaza Strip, as well as its capacity to act in all of the Palestinian territories, including East Jerusalem;
• investigate the killing of civilians before and during the attacks on the Gaza Strip, to actively contribute to an international inquiry and to support Palestine in joining the International Criminal Court (ICC). At the same time to investigate the destruction of civil infrastructure (such as the bombing of Gaza’s only power station, sewage treatment plants, hospitals etc.) which has been financed by EU and German funds for years, and to demand compensation off Israel;
• employ the restrictive German regulations on arms exports to all warring factions in the Middle East as well, and to put military cooperation with Israel to the test;
• do all that it can to put an end to the Israeli occupation of Palestinian territories, and to suggest legally-binding strategies in accordance with international law for both sides to settle the conflict.

Anne Hemeda contributed to the research of this article.

Reprinted with permission from Global Voices.

The 1% May Be Even Richer Than You Think, Research Shows — Wealth Hidden by Tax Shelters and Non-response to Questionnaires

By Jeanna Smialek
The 1 percent is literally rich beyond measure, depriving nations of billions in tax revenue and obscuring shifts in global inequality.

Research conducted separately by European Central Bank economist Philip Vermeulen and London School of Economics’ Gabriel Zucman show the wealth of the super-affluent -- hidden by tax shelters and nonresponse to questionnaires -- is undercounted. Correcting for similar lapses in income data almost erases progress made from 1988 to 2008 in narrowing the gap between the world’s rich and poor, World Bank research found.

“We always suspected there was some low-balling of the top 1 percent,” said Joseph Stiglitz, a Nobel-prize winning economist and author of “The Price of Inequality. “There’s a growing sense that our system is rigged and unfair.”

Read More

Capitalism is NOT Patriotism: These Are the Companies Abandoning the U.S. to Dodge Taxes

A List of Companies
And Where They Are Running To

Courtesy the Washington Post.

Israel's 'Iron Dome' Anti-Missile 'Shield' Is Another Israeli Super MYTH: Stops Only 5% of Incoming Missiles, Says MIT Researcher

"In all fairness, there are reasons that could be justified in warfare for lying. First of all you could lie because it calms your population to think that they're being defended. Now there's a double-edge sword here though. Because if people think they are being defended they may not take shelter. And in November of 2012 three people were killed on a porch because they were out looking at the Iron Dome supposedly intercepting a missile."—Theodore Postal

Israel's 'Iron Dome' missile defense system at Paris Air Show, 2013. (Photo from Wikimedia
Commons)

Israel's 'Iron Dome' missile defense system is merely an expensive "light show," says MIT physicist Theodore Postol. The system is stopping only five percent or less of the missiles fired from Gaza by Hamas. The key to the low number of Israeli casualties from incoming missiles is fourfold: 1) Low accuracy of the incoming missiles, 2) Low lethality of the incoming missiles (contain only 5-10 pounds of explosive), 3) Early warning of incoming missiles, and 4) Widespread availability of bomb shelters. 

RELATED STORY: An Explanation of the Evidence of Weaknesses in the Iron Dome Defense System by Professor Theodore Postol

Israel's alleged 'Iron Dome' is paid for by hundreds of millions of American tax payer dollars, and results in a cost of over $100,000 per 'Iron Dome' missile versus just $500-$1000 per Hamas missile:

"The interceptor probably costs well in excess of $100,000 per interceptor and it's may be achieving a five percent rate [of interception], may be - it could be lower - against rockets that maybe cost $1000 each or $500 dollars each. So the cost exchange ratio is fine, if you're Israeli and the dollars are not coming out of your pocket."—Theodore Postol

Physicist Theodore Postol is a professor of science, technology and national security policy at the Massachusetts Institute of Technology and an expert in missiles and missile defenses.

Watch the entire interview and download a transcript HERE.

Republican Governor of Kansas Followed Koch Brothers' Advice and Implemented Massive Tax Cuts for the Wealthy — And Destroyed The State's Economy

This clown wants to be president?

By Joe Conason
...What makes the [Gov. Sam] Brownback blowup feel so familiar is that the same experiment was mounted more than three decades ago, on the federal level, under the rubric of Reaganomics -- by some of the same people. It crashed miserably then, too. But the Republican right has a special knack for dressing up old mischief as fresh policy. To put this one over, Brownback has enjoyed heavy support from the Koch brothers -- chief financial backers of the ultra-right tea party -- whose industrial empire is headquartered in Kansas.

The statewide tax cut that Brownback pushed through the legislature in 2012 certainly benefited the most wealthy Kansans -- people just like the Kochs -- while inflicting higher taxes on middle-income and working-class families through sales and property tax increases. Proceeding with the expert advice of Arthur Laffer, author of the "supply-side" theory underlying the Ronald Reagan tax cuts, the gung-ho governor promised that these regressive changes would promote rapid economic growth. He predicted that his plan would produce 23,000 new jobs and over $2 billion in new disposable income for Kansans. Their tax payments were supposed to offset the loss of nearly 8 percent of state revenues.

But the results have yet to justify the hype. Today, the fruits of Brownback's experiment include a state budget deficit of nearly $340 million this year; a decision by Moody's to lower the rating on Kansas bonds; a growing gap in education funding at every level, from kindergarten through college; a ruinous reduction in state and local workforces across the state; and a future that promises even larger deficits and service cutbacks to come.

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How the 1% Does Business. . . And Screws America: Renaissance Corp Stole $6 Billion From US — Avoided Taxes by Pretending It Didn't Own Stocks It Traded

Photo by Cory Doctorow.

By Zachary R. Mider
A Renaissance Technologies LLC hedge fund’s investors probably avoided more than $6 billion in U.S. income taxes over 14 years through transactions with Barclays Plc and Deutsche Bank AG, a Senate committee said.

The hedge fund used contracts with the banks to establish the “fiction” that it wasn’t the owner of thousands of stocks traded each day, said Senator Carl Levin, a Michigan Democrat and chairman of the Permanent Subcommittee on Investigations. The maneuver sought to transform profits from rapid trading into long-term capital gains taxed at a lower rate, he said.

“It meant enormous profit for both the banks and the hedge funds,” Levin told reporters today in Washington. “Ordinary Americans had to shoulder a tax burden of billions of dollars, a burden that was shrugged off by those hedge funds.”

The panel urged the Internal Revenue Service to collect taxes from the fund’s investors at the higher rate that Americans pay on wages and salaries. It said Congress should remove legal obstacles to audits of hedge funds and other large partnerships, whose returns the committee said are rarely questioned.

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Is There a Connection Between CEOs' Narcissism and Corporate Tax-Dodging?

Over 20 years ago, Fortune 500 CEO Harold McInnes
saw the narcissism coming — into America’s executive
suites

By Sam Pizzigati
Narcissists don’t happen to be particularly nice people. They preen. They grab. And they never ever really feel our pain.

Narcissists, some fascinating new business school research reminds us, also don’t make for particularly effective corporate CEOs.

This new research — out of the University of Southern California and the University of Arizona — examines the impact of CEO narcissism on corporate tax policies. That impact turns out to be fairly robust. The corporations that America most narcissistic CEOs run seem to be prone to engaging in highly risky corporate tax-avoidance maneuvers.

How did the authors of this new research, Kari Joseph Olsen and James Stekelberg, identify the narcissists in America’s top CEO suites? They used a variety of yardsticks, everything from the pay gap between CEOs and their fellow execs to the prominence of CEO photos in corporate annual reports.

In the end, the two business school researchers had no problem finding a statistically significant subset of CEO narcissists within the Fortune 500. And that hefty number of narcissist CEOs begs a rather obvious question: Do narcissists just naturally gravitate to America’s corporate pay summit or do the incredibly cushy rewards at that summit turn otherwise normal people into narcissists?

Until fairly recently social scientists left that sort of question to philosophers. But recent years have brought a surge of research into the impact of affluence on behavior. Experiments and field observations have shown that upper-crust life may be breeding, as University of California-Berkeley psychologist Paul Piff puts it, “increased entitlement and narcissism.”

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New Report Documents How Privatization Steals Wages, Harms Communities

By Mary Bottari
All across the country, public services are increasingly outsourced to private contractors in the name of efficiency and cost savings. But a new report from the non-profit research group In the Public Interest (ITPI) shows that outsourcing public services hurts middle and working class communities as well as workers.


The report, "Race to the Bottom: How Outsourcing Public Services Rewards Corporations and Punishes the Middle Class," makes the case that when private contractors make huge profits from taxpayer dollars, money is often sucked out of local communities. Dollars that used to go to employees are sent to shareholders instead, harming communities as local workers have less to spend. Taxpayers take another hit when employees, who used to have access to health care and good wages, now have to rely on food stamps and Medicaid to survive.

“False promises of privatization trigger a race to the bottom. CEOs do well, but middle class jobs are replaced with poverty wages,” says ITPI’s Donald Cohen.

Privatization Fuels a Race to the Bottom

The "Race to the Bottom" report documents how when federal, state, and local governments pay hundreds of billions of taxpayer dollars to contractors for jobs that pay so little, they leave employees dependent on the social safety net. These costs are not being taken into account by governments. For example, the report cites a 2010 study that showed contracted school cafeteria employees in California received an average of $1,743 in public assistance--in effect, an additional public subsidy for a private contractor's low wages.

Mary Sparrow was a housekeeper for the Milwaukee County Courthouse when it was privatized under then-Milwaukee County Executive Scott Walker in 2010. She was offered a new job by the new contractor, but her wages would have dropped from $14.29 with benefits to $8 without benefits. She searched for a better job, but in the meantime her unemployment benefits went to maintaining her healthcare benefits through COBRA and she had to dip into her son’s college savings account.

“Privatizing has had a devastating effect on our community. It is not just what we get paid, but what we spend in our communities. Privatizers get ahead, but not the front line workers,” said Sparrow.

The personal toll is high. "I still get calls from friends who want to give up,” says Sparrow, choking up. “This has been awful for us and I hope that any community or any state would think twice before privatizing.”

Governments are Helping to Create Inequailty with Growth in Contracting and Subcontracting

Decades ago, the public sector offered stable jobs with family-supporting wages and important benefits like health insurance, sick leave, and pensions.

“Government historically created a ladder of opportunity by paying family-supporting wages and providing important benefits,” said Shar Habibi, author of the report. “This is especially true for women and African-Americans, allowing millions of them to reach the middle class." Outsourcing "turns middle class careers into poverty-level jobs, and taxpayers inadvertently support the dismantling of our once-robust middle class."

Habibi noted that there was a growing body of evidence that outsourcing leads to a downward spiral as that ladder of opportunity disappears. Reduced wages and benefits not only make it harder for working people to enter the middle class, they also hurt local economies as those workers have less to spend, reducing the stability of working and middle class communities.

As the report notes, government is becoming a major source of low-wage jobs. Rather than helping to raise living standards for all, privatization and subcontracting is becoming a force in growing inequality. By 2013, according to a study by Demos, the number of contracted employees working on behalf of the federal government who earned less than $12/hour had already reached 2 million--more than the number of low-paid workers at Walmart and McDonald's combined.

Poor Jobs Lead to Poor Quality

Many cases detailed in the report reveal how low pay hurts both workers and the people they care for. For example in 2011, the state of Michigan was considering a plan to outsource staffing for all nursing assistants in a state-run home for veterans located in Grand Rapids. At the time, the home was staffed by a combination of directly employed nursing assistants and contracted positions. It was something of a case study in the hidden costs of privatization.

Even though the contractor billed $14.99 per hour for each nursing assistant it hired, it paid out as little as $8.50, with no health or pension benefits. Low pay left nursing assistants like Ginny Townsend earning half as much as public employees for doing the same work. In Townsend's case, that wasn't nearly enough to support her four grandchildren, leaving her to rely on $300 in food stamp benefits each month to survive.

This low pay turns out to have a high cost when it comes to the quality of nursing care. Compared to state-employed nursing assistants, contracted positions have a high turnover rate. Contracted staff are more likely to lift patients improperly, risking injury to patients.

"You get what you pay for," said Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities and former Chief Economist and Economic Adviser to Vice President Joe Biden.He explained that the quality of work often "falls steeply" when pay is reduced.

And with low-paid contract workers often newly dependent on social services, "savings in one budget column end up as costs in a different budget column," Bernstein said.

Despite clear evidence that state employees provided a better level of care for patients, the Republican leadership of the state decided to go through with the plan to outsource all nursing assistant positions.

CEO Gains and Community Losses

Outsourcing definitely has at least one beneficiary: CEOs of the companies that win public contracts. The report cites the case of Aramark, which provides school lunches. The CEO of Aramark, Eric Foss, took home over $18 million in total compensation in 2013. Just two years earlier, Aramark had halved wages for custodial employees when it took the contract for the Chelmsford, Massachusetts school district. The company seemingly couldn't afford to pay more than $8.75/hour to workers like Rick Thorne, who had worked his way up to $20/hour after 22 years in the district.

In New Orleans, Carol Sanders had raised a family and paid a mortgage on her income as a cook for the local school system, earning $15/hour after 28 years on the job. After the work was outsourced to Aramark, Sanders saw her pay cut and her hours scaled back, leaving her without medical insurance and newly reliant on food stamps.

Recommendations

In too many cases, outsourcing gives an illusion of savings at the cost of increased income inequality, increased spending on public assistance programs, measurable decline in the quality and safety of important public services, and the disappearance of an important "ladder of opportunity" for millions of hard-working Americans.

The report's authors recommend that governments begin to:

• Require contractors to show that cost savings derive from increased efficiencies and innovation, not a decrease in compensation.
• Require contractors to pay a living wage and provide health and other important benefits.
• Require transparency measures, such as tracking how much state and local governments are spending on private contracts, how many workers are employed by those contracts, and worker wage rates.
• Require governments to conduct a social and economic impact analysis before outsourcing.

The report concludes that these policies could help "rebuild those ladders to the middle class" by ensuring that taxpayer dollars support "solid family-supporting jobs."

ITPI's report is available here.

Reprinted with permission from PRWatch.

Ralph Nader Wants Liberals to Back Rand Paul — Don't Do It: A Left-Libertarian Alliance Would Hurt Liberal Goals

Ralph Nader's Left-Libertarian "alliance" idea doesn't address how such a coalition
will approach African American priority issues like racial profiling, voter suppression,
workplace discrimination, police brutality and other forms of institutional racism.
(Photo by Sage Ross)

By Bill Scher
This week, Ralph Nader returned to the political stage with a new book, Unstoppable, whose triumphant subtitle is The Emerging Left-Right Alliance to Dismantle the Corporate State. To kick off his publicity tour, he has argued that liberals should "definitely" impeach President Barack Obama, abandon the "international militarist" Hillary Clinton, and instead embrace Sen. Rand Paul (R-Ky.) as a possible leader of his dream coalition.

To what end? In the book, Nader writes that by marrying the Left with the libertarian Right, we can cut off government support for corporations and have "honest government," "fair taxation," and "more opportunity." Nader sees relatively low-hanging fruit in opposing "sovereignty-shredding global trade agreements, Wall Street bailouts, the overweening expansion of Federal Reserve power, and the serious intrusions of the USA PATRIOT Act against freedom and privacy." He also articulates loftier, if not fully fleshed out, aspirations to "push for environmentalism," "reform health care," and "control more of the commons that we already own"...

The Nader strategy of a permanent coalition with the libertarian Right greatly limits what liberals can accomplish. Where there is a joint desire to restrain government (end the drug war) and limit spending (stop corporate welfare), a Nader-Paul alliance can form. But you can forget about anything that involves new government regulation, higher taxes, and more spending. That would preclude big-ticket liberal priorities like capping carbon emissions, expanding anti-poverty programs, guaranteeing universal preschool, and investing in infrastructure.

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American Recession? - For WHOM?: While Cities Go Bankrupt Navy Unleashes New $3 Billion Dollar 'Stealth Ship' — Ship Will Have New 'Super Guns'

$3 Billion Dollar Killing Machine: The Zumwalt-class guided-missile destroyer DDG 1000 is
floated out of dry dock at the General Dynamics Bath Iron Works shipyard.

By Antonia Molloy
The US Navy on Saturday christened the first of its newest class of destroyers – the more than $3 billion (£1.8 billion), 610-foot (186-metre)-long USS Zumwalt.

Named after the late Admiral Elmo “Bud” Zumwalt, the warship sports advanced technology and a stealthy shape designed to minimise its visibility on enemy radar and reduce the size of its crew.

Among the 15,000-tonne destroyer's cutting-edge features are a composite deckhouse with hidden radar and sensors and an angular shape that officials say will allow it to be confused for a small fishing boat on radars. It also has a wave-piercing hull designed to reduce the ship's wake.

It's the first US ship to use electric propulsion and produces enough power to one day support the futuristic electromagnetic rail gun, which will be tested at sea in 2016.

Rail guns fire a projectile at six or seven times the speed of sound – enough velocity to cause severe damage. The Navy sees them as replacing or supplementing old-school guns.

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Anti-Union Legislation Forced On Missouri Law Makers by Secretive Group of Right-Wing Millionaires (ALEC)

Photo by Mikasi.

By Jay Riestenberg
Last week, the Missouri House of Representatives passed a measure to put an anti-union "paycheck protection" measure on the ballot in August which, if approved by voters, will make it harder for unions to raise funds and engage in the political process. "Right to work" could be next -- and both measures are being pushed by an array of out-of-state right-wing interests.

The paycheck protection measure is very similar to several American Legislative Exchange Council (ALEC) model bills that attempt to make it harder for unions to raise funds, such as the "Paycheck Protection Act," "Voluntary Contributions Act," and "Political Funding Reform Act."Despite bipartisan opposition, the bill passed the House 83-69 and now moves to the Senate. It could be up for consideration as early as this week.

At the same time, the Speaker of the Missouri House, ALEC member Tim Jones, has made it clear he also plans on pushing ALEC's so-called "Right to Work" measure through the legislature and onto the August ballot, which would starve unions by letting some workers free ride on the benefits of union representation (such as higher wages and better working conditions), yet not pay for the representation.

Two days before "Paycheck Protection" passed the Missouri House and before Speaker Jones made it publicly evident that the House would also be considering "Right to Work" in the following days, right-wing anti-tax advocate Grover Norquist tweeted that the Missouri House would vote on and pass Right to Work, as if he had a crystal ball -- or more likely -- a hotline to the Speaker.

Just a few months ago, Grover Norquist's Americans for Tax Reform (acting under the absurd name "Center for Worker Freedom") was the leading group trying to stop workers at Volkswagen plant in Chattanooga, Tennessee from forming a union. For example, Norquist's group put up billboards making the false claim that the bankruptcy in Detroit and the loss of jobs in the automobile sector was entirely the UAW's fault. The National Labor Relations Board is currently investigating the outside influence at the Chattanooga plant, which eventually voted against unionization.

Norquist has now taken his union-busting show on the road, shifting resources to attack unions in Missouri. Norquist's Americans for Tax Reform recently sent letters to all members of the Missouri House asking them to support a "Right to Work" measure. The letter ends with a warning to legislators: "Americans for Tax Reform will be educating your constituents as to how their representatives in the Senate vote on this important matter."

Americans for Tax Reform has long been an ALEC member group. By attacking the rights of organized workers and unions, Norquist is not only attempting to strangle one of the most powerful forces countering the low-wage, low-road ALEC agenda, but he is currying favor with the corporate CEO and ideological funding sources that Americans for Tax Reform and ALEC rely upon. And Norquist has apparently called in the troops. A panoply of DC-based right-wing special interest groups are starting to put resources into Missouri -- piling on in an attempt to push the union-busting bills through the legislature.

The Kochs, FreedomWorks, and More Pile on in Missouri

The Missouri chapter of the Koch brothers' Americans for Prosperity has launched an online petition urging legislators to pass "right to work" legislation. Previously, AFP organized small events to demonstrate "grassroots" support for the efforts to pass union-busting measures in Wisconsin and Michigan. In March, AFP-MO tweeted that last week's "paycheck protection" bill was the first step in getting a "right to work" bill in Missouri. Additionally, Progress Missouri documented that Americans for Prosperity held a strategy meeting in the Missouri capitol with "like-minded ideologues and interest groups in Michigan," which passed a similar "Right to Work" bill in December 2012. (This is in addition to the session at ALEC's 2013 Annual Meeting, hosted by the State Policy Network, titled "You Can Too!" highlighting Michigan's success in passing right to work.) It is unclear yet if AFP will hold training sessions, astroturf rallies, or even release TV ads touting the anti-union measures in Missouri like they have in other states.

The American Conservative Union announced the organization would be sending letters to Missouri legislators urging them to vote in favor of a "Right to Work" proposal. Self described as "the nation's oldest conservative lobbying organization," the organization is known for spending millions to push the right-wing agenda through various political action committees and nonprofit entities, along with hosting the annual CPAC convention. The ultra conservative Americans for Limited Government also issued a press release urging Missouri legislators to support "right to work" legislation.

Other outside right-wing special interest groups throwing their hat in the Missouri "right to work" fight include FreedomWorks, which is launching an organizing effort to target legislators who are on the fence over the "right to work" measure. FreedomWorks is asking its 6 million online members nationally to barrage a small set of Missouri legislators who are on the fence about the "right to work" measure. FreedomWorks came out of the Kochs' Citizens for A Sound Economy (as did Americans for Prosperity) and has been a key player in organizing the Tea Party movement.

The National Right to Work Committee published new material claiming that Missouri's job growth is lagging because that state does not have a "Right to Work" law. Despite being one of the top right-wing talking points, research has shown "Right to Work" laws do not significantly affect job growth.

Outside Influences Mean Outside Money in Missouri

Not surprisingly, these outside groups attempting to hijack the Missouri legislative agenda are almost entirely funded by out-of-state sources. Common funders between ALEC, Americans for Tax Reform, the National Right to Work Committee, and the American Conservative Union include the Koch Family Foundations, the Wisconsin-based Bradley Foundation, and the Koch-linked Donors Trust and Donors Capital Fund. FreedomWorks has also received significant funding from the Donors groups and the Bradley Foundation. In addition to funding from the Donors groups, Americans for Limited Government has received over $7 million since 2010 from the Center to Protect Patient Rights, a secretive nonprofit aimed at repealing the Affordable Care Act that is largely funded by the Kochs' Freedom Partners.

Just a few months ago, when new tax documents were published, it came to light that the Kochs' new political advocacy group, Freedom Partners, had funneled $1,000,000 to the National Right to Work Committee. Freedom Partners also gave $32.3 million to Americans for Prosperity in 2012.

Additionally, Americans for Tax Reform, the National Right to Work Foundation, and ALEC have all received significant funding from the Walton Family Foundation, of Walmart.
With Outside Pressure, Missouri Legislature Expected to Take Up Anti-Worker Measures This Week

Both the "Paycheck Protection" and "Right to Work" bills must pass the legislature by a simple majority before they can be placed on the August primary ballot. This legislative tactic would bypass Democratic Governor Jay Nixon, who does not support the anti-worker measures and would likely veto them. Both measures are likely to see action early this week.

These right-wing ideologues and corporate special interest groups are essentially trying to hijack a state's legislative agenda in order to cripple unions, who are the largest effective counterforce to ALEC's agenda to undercut wages for working families, make it harder to get health care, and make it more difficult to vote. These groups succeeded in eroding workers rights in Michigan and Wisconsin; it has yet to be seen if they can succeed in the "Show Me" state, where state Democrats are preparing for a fight.

Reprinted with permission from PRWatch.