The Occupy Chicago crowd is now in their third week and have not stopped occupying the corner of Jackson and LaSalle yet. With the constant protesters, there is also a constant law enforcement presence, which to the Chicago Police Departmen’s credit, has remained civil, if not sympathetic – but they still have to enforce Chicago’s municipal code.

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Congo forces leaders to pay taxes – ours?

The Democratic Republic of Congo, faced with a fiscal crisis, is now forcing their leaders to pay taxes. Reuters reports

Amid a growing budget shortfall, the government is under pressure to cut costs and boost tax revenues.

Budget Minister Michel Lokola told Reuters that last month’s decision to tax government salaries at source, rather than rely on employees to pay taxes after receiving their salaries, had already raised roughly $1 million.

“They just weren’t paying. The government ministers we replaced, the MPs, the senators, they didn’t pay,” said Lokola, who entered the government last October in a cabinet shake-up that saw his predecessor Adolphe Muzito named prime minister.

Lokola said the move was partly aimed at setting a good example, adding that Congolese President Joseph Kabila’s government salary was also subject to the measure.

“He is aware of this, and he approves of it … I don’t see how we can expect the private sector to pay their taxes if we don’t pay ourselves,” he said.

So even a country we look upon with derision, the Congo, has realized the benefit of taxing the elite of their country. As we have seen, politicians in this country appear to have an aversion to paying their taxes, and can’t even comprehend the tax code that they wrote, as evidenced by Tom Daschle, who didn’t know the limo was taxable.

So will Geithner, considering the fiscal crisis we, ourselves, are facing, implement a program of ferreting out government tax cheats and garnishing their taxpayer-paid wages?

I doubt it.

He’s a tax cheat.

Nothing like the fox guarding the hen house.

Clinton blames America’s drug users for Mexico’s drug war

The Latin American Herald Tribune quotes Clinton as saying,

“Our insatiable demand for illegal drugs fuels the drug trade,” Clinton told reporters earlier en route to Mexico. “Our inability to prevent weapons from being illegally smuggled across the border to arm these criminals causes the deaths of police officers, soldiers and civilians.”

She vowed that we would work “side by side” with Mexico to eradicate the traffickers, who Clinton referred to as “gangs.”

John McCain (R-AZ) called the problem an “existential threat,” and Joe Lieberman ((D-CT)  deemed “unacceptable” the fact that not all of the $700 million appropriated for equipment and training for the Mexican security forces has been distributed.

In the meantime, the Organized Drug Enforcement Task Force (ODETF), has said that though meth labs are declining in the .S. due to restriction of ingredients, meth use is rising due to increased distribution efforts of the Mexican Drug Cartels, termed DTO’s (Drug Trafficking Organizations), by the ODETF, who are suppling the Hispanic gangs as well as their own people throughout the country.

Clinton’s perspective, mirroring Mexico’s, that drug use is the cause of this war, is neglecting basic supply and demand laws. Demand tends to influence price, not necessarily use of a product.

The automakers said Americans wanted SUV’s and that’s why they sold them. But if they hadn’t engineered them, would we have even known it was possible to demand them?

If you had one grocery store in your neighborhood, you would go there. If they shut down, would you continue to go there and demand food?

I think not, and I think it would get you nowhere. Yet we Americans, who can’t stop smoking pot or doing meth or coke, are to blame for this problem.

Why is this different? In Mexico. both political parties are accusing each other of being in the pocket of the cartels. Mexico has had a known corruption problem for years and years. Their army is on the payroll, their prosecutors, their police, etc.

And we want to give them money for Blackhawk helicopters and arms and training?

If they legalized it, and kept it in line with current prices, would we still have this problem? Would the drug lords of Mexico and Columbia, still have a black market?

Or would they trade in their AK47s for pens and ride the legal wave to wealth and happiness while we grow our way out of our current economic problem?

I would guess the latter.

Bailing out investors won’t help the economy

Reuters led the story of yesterday’s stock market rally with the following:

Stocks rose on Wednesday, with the benchmark S&P 500 index attempting the first two-day advance in a month, as investors held out hope that Washington would restore confidence in banks by relieving them of money-losing assets.

This is a rather disingenuous conclusion to derive from the rally message. Investors don’t care about confidence in the banking system, they care about their toxic investment making money again.

Those that did not see this debacle coming, and did not get out of these investments in time, are hoping that the bailout will be big enough to allow then to recoup their losses.

Geithner is working on a plan to relieve the banks of their bad assets – at taxpayer expense of course.

But, according to Reuters, Geithner “promised action within weeks and said he was moving deliberately to minimize risks of losses for taxpayers.”

Minimize risks of losses for taxpayers.

And conversely maximize the potential of gains for investors?

Bailing out these insolvent big banks by buying their bad debt with our money, while leaving the current management in place that not only created the problem but grew filthy rich while they did it,  is just a crime.

I would say he has no vision of the future, when we the taxpayers have to pay for this, but then, he’s not a taxpayer, so why would he care?

Can you say depression, boys and girls?

Clinton, Rubin and Summers, Graham, Leach and Bliley – thank you

In the early 1900’s, commercial banks began to establish security affiliates that floated bond issues and underwrote corporate stock issues. (In underwriting, a bank guarantees to furnish a definite sum of money by a definite date to a business or government entity in return for an issue of bonds or stock.)

Then the stock market crashed.

In 1930 the Bank of the United States failed, reportedly because of activities of its security affiliates that created artificial conditions in the market, FDR closed the banks for four days, 4000 failed permanently, and Congress created the Glass-Steagall Act of 1932, then amended it in the Banking Act of 1933.

The act forced a separation of commercial and investment banks by preventing commercial banks from underwriting securities, with the exception of U.S. Treasury and federal agency securities, and municipal and state general obligation securities.

More specifically, the act authorizes Federal Reserve banks to use government obligations and commercial paper as collateral for their note issues, in order to encourage expansion of the currency. Banks can also offer advisory services regarding investments for their customers, as well as buy and sell securities for their customers. However, information gained from providing such services cannot be used by a bank when it acts as a lender.

Likewise, investment banks cannot engage in the business of receiving deposits.

A bank is defined as an institution organized under the laws of the United States, any state of the United States, the District of Columbia, any territory of the United States, Puerto Rico, Guam, American Samoa, or the Virgin Islands, that both accepts demand deposits (deposits that the depositor may withdraw by check or similar means for payment to third parties or others) and is engaged in the business of making commercial loans (12 U.S.C.A. § 1841 (c)(1) [1988]).

Investment banking consists mostly of securities underwriting and related activities; making a market in securities; and setting up corporate mergers, acquisitions, and restructuring. Investment banking also includes services provided by brokers or dealers in transactions in the secondary market. A secondary market is one where securities are bought and sold subsequent to their original issuance.

It also created the Federal Deposit Insurance Corporation (FDIC) to protect depositors in the future.

The Act was passed because it was largely believed, after hearings in Congress, that commercial banks were being too speculative in the pre-Depression era, not only because they were investing their assets but also because they were buying new issues for resale to the public. Thus, banks became greedy, taking on huge risks in the hope of even bigger rewards. Banking itself became sloppy and objectives became blurred. Unsound loans were issued to companies in which the bank had invested, and clients would be encouraged to invest in those same stocks.

Enter the Clinton Era and the Graham-Leach-Bliley Act of 1999, the act which ultimately repealed the Glass-Steagull Act. The final bi-partisan version passed in the Senate 90-8-1 and in the House: 362-57-15. Without forcing a veto vote, this bipartisan, veto proof legislation was signed into law by President Bill Clinton on November 12, 1999, though most of his Democratic colleagues voted against it, initially (Senate 54-44, House 343-86).

The Graham-Leach-Bliley Act sought to “modernize” financial services–that is, end regulations that prevented the merger of banks, stock brokerage companies, and insurance companies. It nullified all prior acts that strictly regulated those who stored your money such as the Bank Holding Company Act that prohibited a bank from controlling a non-bank company which passed in 1956 and the 1982 amendment that further forbid banks from conducting general insurance underwriting or agency activities.

Why is this related to today? According to the Online Law Encylopedia,

The expansion of commercial banks into securities underwriting was substantial until the 1929 stock market crash and the subsequent Depression. In 1930 the Bank of the United States failed, reportedly because of activities of its security affiliates that created artificial conditions in the market.

As a result of the bank closings and already devastated economy, public confidence in the U.S. financial structure was low.

Is this sounding at all familiar? It should be.

The Glass-Steagull Act made all of that history, GLBA repealed it and history, my friends, is repeating itself.

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Fast forward to October 2011 – With unemployment remaining steadily at over 9 percent for the last several years, foreclosures at an all time high and banks squeezing the dimes out of people with fees for everything but walking in the door, groups around the country are occupying financial districts, parks, banks and anywhere they believe they will have an impact. In New York occupiers shut down the Brooklyn Bridge and in Chicago they have been camped out for a couple of weeks on a corner that conveniently houses the Board of Trade, the Federal Reserve Bank of Chicago and Bank of America down the street. A recent rally joined by four other groups including several labor unions, shut down Monroe Street between Michigan and Columbus — ironically on Columbus Day.

Sources GLBA, Glass-Steagull(1), Glass-Steagull(2)