.
In the 2008 fundraising cycle, look at Chuck Schumer's biggest donors. Wall Street loves him. Think you can count on the Democrats to do anything to rein in these Intraspecies Predators on Wall Street, those who have stolen our money, looted our country? Don't count on it.
Donor # and ID:
1 Citigroup
2 UBS
6 Goldman Sachs
7 Morgan Stanley
9 Lehman Brothers
10 J.P. Morgan
11 Merrill Lynch
12 Cantor Fitzgerald
http://www.opensecrets.org/politicians/contrib.php?cycle=2008&type=I&cid=N00001093&newMem=N&recs=20
I'm sure Chuck Schumer would claim that the money he takes from Wall Street is just nice, but does not influence his vote. I'm sure most of the public would believe he is corrupt, and he votes how Wall Streets tells him to. In fact, the reason our country has been looted by Wall Street is likely because our politicians take bribes, and refuse to do anything to hold these criminals accountable.
But even if Chuck Schumer swore he did not change his votes to please his donors, the fact is that most of the public will believe he is corrupt, that our Congress is corrupt, that our government is corrupt, and everybody is on the take, they're all crooked. It is the appearance of impropriety which matters. When people believe the institutions of their government are corrupt, then people stop following the laws. Why should they follow the laws, when their national leaders don't?
Monday, May 3, 2010
Questions About Wall Street Fraud
Let's say citizen borrowed $100,000 to use to buy a home with 100% financing, 30-years, 5% fixed. The borrower/buyer executes a promissory note ("Note") promising to pay a certain amount each month for 30 years. The loan is fully amortized so each monthly payment will be exactly the same, although earlier payments will go more to interest, later payments more to principal. The Note is secured by a deed of trust or mortgage on the home. If the borrower does not make the payments as promised, the lender can foreclose and take the home, sell it, use the proceeds to pay off the Note.
What is the present value of the Note? If the bank wants to sell the Note, they will take some amount less than the face amount. Let's say $60,000 is the present value of the Note. The lender accepts $60,000, puts it into a CD or other investment earning interest, and makes the payments to whoever loaned them the money when they come due. Let's say the lender borrowed the $100,000 from the fed at 1% interest. Obviously, they sit there for 30 years, earning money on the difference between the interest they pay, and the interest the borrower pays to them. Now the bank has what? $60,000. But the bank no longer has the security, because that went with the Note. The bank does not have the security and does not have the full amount borrowed to repay the loan. The bank has a financial risk, in other words, if they use that $60,000 for other lending purposes.
Let's say Wall Street calculated the present value of promissory notes secured by real estates on home loans made by banks. And to keep it simple, let's say they calculated $60,000 was the present value of a $100,000 loan due in 30 years with interest fixed at 5%. Did they include in their valuation process a discount for loans which represented 100% of the purchase price? Or some other discount for risk. If they did, doesn't that mean they should have told the public that they personally had discounted the Notes, or had questions about the likelihood of full repayment?
But more importantly, let's say Wall Street calculated these Notes with a present value of $60,000. When they turned around and mushed the loans together and sold fractional interests (CDOs), how did the value the Notes? Did they, for example, have one value for purposes of them purchasing Notes from lenders, but another much bigger value when they sold the Notes disguised as CDOs? Of course they did. How else could they make money? If the Note had a present value of $60,000, and they sold it to the public at $60,000, Wall Street makes nothing. So how did they value these Notes for purposes of selling them in CDOs? I'll bet that's where the fraud comes in. By mushing the loans together in CDOs, it would make it impossible for buyers/investors to examine the underlying conditions of the loan, because they are not buying a loan, they're buying a fraction of perhaps thousands of loans.
Valuation is an expert function, but the fact is there are calculators that do basic valuation to determine present value. The question is whether they applied a discount for the Notes which had a high risk of default -- which is pretty much any home loan if the borrower put down less than 20% of their own money. Wouldn't a substantial discount reflect their own belief the Notes had a low value? And if they did not disclose that to the buyers of CDOs, is that fraud?
What is the present value of the Note? If the bank wants to sell the Note, they will take some amount less than the face amount. Let's say $60,000 is the present value of the Note. The lender accepts $60,000, puts it into a CD or other investment earning interest, and makes the payments to whoever loaned them the money when they come due. Let's say the lender borrowed the $100,000 from the fed at 1% interest. Obviously, they sit there for 30 years, earning money on the difference between the interest they pay, and the interest the borrower pays to them. Now the bank has what? $60,000. But the bank no longer has the security, because that went with the Note. The bank does not have the security and does not have the full amount borrowed to repay the loan. The bank has a financial risk, in other words, if they use that $60,000 for other lending purposes.
Let's say Wall Street calculated the present value of promissory notes secured by real estates on home loans made by banks. And to keep it simple, let's say they calculated $60,000 was the present value of a $100,000 loan due in 30 years with interest fixed at 5%. Did they include in their valuation process a discount for loans which represented 100% of the purchase price? Or some other discount for risk. If they did, doesn't that mean they should have told the public that they personally had discounted the Notes, or had questions about the likelihood of full repayment?
But more importantly, let's say Wall Street calculated these Notes with a present value of $60,000. When they turned around and mushed the loans together and sold fractional interests (CDOs), how did the value the Notes? Did they, for example, have one value for purposes of them purchasing Notes from lenders, but another much bigger value when they sold the Notes disguised as CDOs? Of course they did. How else could they make money? If the Note had a present value of $60,000, and they sold it to the public at $60,000, Wall Street makes nothing. So how did they value these Notes for purposes of selling them in CDOs? I'll bet that's where the fraud comes in. By mushing the loans together in CDOs, it would make it impossible for buyers/investors to examine the underlying conditions of the loan, because they are not buying a loan, they're buying a fraction of perhaps thousands of loans.
Valuation is an expert function, but the fact is there are calculators that do basic valuation to determine present value. The question is whether they applied a discount for the Notes which had a high risk of default -- which is pretty much any home loan if the borrower put down less than 20% of their own money. Wouldn't a substantial discount reflect their own belief the Notes had a low value? And if they did not disclose that to the buyers of CDOs, is that fraud?
Saturday, May 1, 2010
Miner's Lifeguard
Miner's life is like a sailor's
'Board a ship to cross the waves;
Every day his life's in danger,
Still he ventures being brave.
Watch the rocks, they're falling daily,
Careless miners always fail;
So keep your arm upon your wages
And your eye upon the scale.
Union miners, stand together,
Do not heed the owner's tale;
So keep your arm upon your wages
And your eye upon the scale.
You've been docked and docked again boys,
You've been loading two for one.
But what have you to show for working
Since your mining has begun?
It's worn out boots and worn out waders
... and children pale
So keep your arm upon your wages
And your eye upon the scale.
Union miners, stand together,
Do not heed the owner's tale;
So keep your arm upon your wages
And your eye upon the scale.
In conclusion, bear in memory,
Keep the password in your mind.
God provides for every worker
when in union they combine.
Stand like men and link together
Victory for you will prevail.
So keep your arm upon the wages
And your eye upon the scale.
Union miners stand together,
Do not heed the owner's tale.
So keep your arm upon the your wages,
And your eye upon the scale.
http://thewilsonfamilyalbum.com/
May 1: International Workers Day And The Haymarket Massacre
.
(Newspaper accounts)
In 1884, a labor organization in the U.S. (predecessor to the AFL) decided to organize workers around the demand for an 8-hour day (instead of the 12, or 14-hour days which were the regular working hours for most American workers). They planned to spend 2 years educating and organizing workers around this issue and then, on May 1, 1886, hold a nationwide strike to demand the 8-hour day as well as other rights for working people.
As it turns out, in Chicago, the workers at a plant owned by McCormick were on strike right before May 1, 1886, came around. The company owner had replaced all the workers with scabs, and locked out the regular workers. One evening when the scabs left work, the regular workers met them and there were fights and skirmishes. The police sided with the business owner, and shot and killed several of the workers.
(Drawing of police shooting workers)
This was followed immediately by the planned labor demonstration on May 1, 1886, and 80,000 people in Chicago marched for labor rights exactly as the organizers had planned. The local rich people and business owners were horrified at the idea that they might be stopped from using their workers as slave labor, forcing them to work however many hours that they demanded. So the local business owners demanded that the police get tough on the labor organizers, and shut down their efforts to organize to demand the 8-hour day.
The labor and other political organizers called for a mass meeting on May 4 to protest the police killing of workers on strike at McCormick. The meeting was scheduled to be held in the Chicago haymarket. A large crowd gathered in the street to hear the speakers for the meeting, but rain began to fall. Towards the end of the meeting, 200 local police massed on one end and began demanding that the workers break up immediately. Just then, somebody threw a bomb right in the middle of where the police were standing. The police panicked and began firing at random into the crowd of workers, killing several workers. Several police were also killed, one from the bomb and the rest supposedly by friendly fire (in their panic, they shot their own people by mistake). 
The right-wing and the business owners seized on this incident, lied about what had really happened, began calling it "The Haymarket Riot" to suggest that workers who try to organize for their rights are all crazed bomb-throwing gun-shooting lunatics, and used the fear they created to crack down on labor unions and organizations across the country.
Because of this effort by the right-wing, the push for an 8-hour day was ended in its tracks. The 8-hour day did not become an official part of American workers' rights until fifty years later, in 1935.
(The Haymarket gathering)
Seven labor organizers in the Chicago area including Albert Parsons, including people who had not even been present at the Haymarket that night, including people who had no involvement in the meeting, were prosecuted in bogus show-trials. The prosecution's theory was that labor organizers were responsible for any violence that happened at a labor rally because, by encouraging working people to stand up for their rights, they were essentially encouraging violence.
It was a disgusting and disgraceful misuse of our criminal injustice system. The real point of the trial was to shut down the efforts of the labor movement, and give a fierce warning to workers everywhere that if they stood up for their rights, they would be murdered by the state. There was never any evidence introduced at the trial, or later, to show that any of these 7 (later called the "Haymarket Martyrs") had any involvement with the bomb, or ever did anything to encourage violence.
On June 26, 1894, Governor John Peter Altgeld of Illinois found that the trial of the Haymarket Market Martyrs had been grossly unfair, and he pardoned all seven of the defendants. It did no good to the five who were already dead: Parsons, Spies, Fischer and Engel had already been hanged, and Lingg supposedly committed suicide in his cell.
(The hanging).
In 1889, the AFL sent a delegate to the international labor conference in Paris, to urge that May 1 of each year thereafter be celebrated as a day of labor solidarity. That proposal was adopted, and May 1 is considered International Workers' Day or Labor Day, an official holiday, for most nations in the world. Except the United States, which did not want to encourage working people to remember the history of labor struggles. So our Labor Day is in September and commemorates nothing more than having a bar-be-que before the kids start back to school.
Monument to the Haymarket Martyrs: 
http://www.kentlaw.edu/ilhs/haymkmon.htm
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