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FirstEnergy Solutions’ Bankruptcy is a Cautionary Tale for Utilities, Investors, and Public Officials
FirstEnergy Solutions’ Bankruptcy is a Cautionary Tale for Utilities, Investors, and Public Officials
Washington Post reporter admits ‘Russiagate’ story a ‘f*cking crap shoot’ in Project Veritas video...
Sweat Shops, GMOs and Neoliberal Fundamentalism: The Agroecological Alternative to Global Capitalism
Video: “Nobody Speak”: New Documentary Probes Billionaire Peter Thiel’s Destruction of News Outlet Gawker
Revenge: Activists unleash 1,000s of locusts, cockroaches on Byron burger branches for migrant sting
Lewandowski Hire Makes Journalists Choose Between Defending Their Profession and Embracing Its Demise
On Monday the Supreme Court struck down a key part of the Affordable Care Act, ruling that privately-owned corporations don’t have to offer their employees contraceptive coverage that conflicts with the corporate owners’ religious beliefs.
The owners of Hobby Lobby, the plaintiffs in the case, were always free to practice their religion. The Court bestowed religious freedom on their corporation as well – a leap of logic as absurd as giving corporations freedom of speech. Corporations aren’t people.
The deeper problem is the Court’s obliviousness to the growing imbalance of economic power between corporations and real people. By giving companies the right not offer employees contraceptive services otherwise mandated by law, the Court ignored the rights of employees to receive those services.
(Justice Alito’s suggestion that those services could be provided directly by the federal government is as politically likely as is a single-payer federal health-insurance plan – which presumably would be necessary to supply such contraceptives or any other Obamacare service corporations refuse to offer on religious grounds.)
The same imbalance of power rendered the Court’s decision in “Citizens United,” granting corporations freedom of speech, so perverse. In reality, corporate free speech drowns out the free speech of ordinary people who can’t flood the halls of Congress with campaign contributions.
Freedom is the one value conservatives place above all others, yet time and again their ideal of freedom ignores the growing imbalance of power in our society that’s eroding the freedoms of most people.
This isn’t new. In the early 1930s, the Court trumped New Deal legislation with “freedom of contract” – the presumed right of people to make whatever deals they want unencumbered by federal regulations. Eventually (perhaps influenced by FDR’s threat to expand the Court and pack it with his own appointees) the Court relented.
But the conservative mind has never incorporated economic power into its understanding of freedom. Conservatives still champion “free enterprise” and equate the so-called “free market” with liberty. To them, government “intrusions” on the market threaten freedom.
Yet the “free market” doesn’t exist in nature. There, only the fittest and strongest survive. The “free market” is the product of laws and rules continuously emanating from legislatures, executive departments, and courts. Government doesn’t “intrude” on the free market. It defines and organizes (and often reorganizes) it.
Here’s where the reality of power comes in. It’s one thing if these laws and rules are shaped democratically, reflecting the values and preferences of most people.
But anyone with half a brain can see the growing concentration of income and wealth at the top of America has concentrated political power there as well — generating laws and rules that tilt the playing field ever further in the direction of corporations and the wealthy.
Antitrust laws designed to constrain monopolies have been eviscerated. Competition among Internet service providers, for example, is rapidly disappearing – resulting in higher prices than in any other rich country. Companies are being allowed to prolong patents and trademarks, keeping drug prices higher here than in Canada or Europe.
Tax laws favor capital over labor, giving capital gains a lower rate than ordinary income. The rich get humongous mortgage interest deductions while renters get no deduction at all.
The value of real property (the major asset of the middle class) is taxed annually, but not the value of stocks and bonds (where the rich park most of their wealth).
Bankruptcy laws allow companies to smoothly reorganize, but not college graduates burdened by student loans.
The minimum wage is steadily losing value, while CEO pay is in the stratosphere. Under U.S. law, shareholders have only an “advisory” role in determining what CEOs rake in.
Public goods paid for with tax revenues (public schools, affordable public universities, parks, roads, bridges) are deteriorating, while private goods paid for individually (private schools and colleges, health clubs, security guards, gated community amenities) are burgeoning.
I could go on, but you get the point. The so-called “free market” is not expanding options and opportunities for most people. It’s extending them for the few who are wealthy enough to influence how the market is organized.
Most of us remain “free” in limited sense of not being coerced into purchasing, say, the medications or Internet services that are unnecessarily expensive, or contraceptives they can no longer get under their employer’s insurance plan. We can just go without.
We’re likewise free not to be burdened with years of student debt payments; no one is required to attend college. And we’re free not to rent a place in a neighborhood with lousy schools and pot-holed roads; if we can’t afford better, we’re free to work harder so we can.
But this is a very parched view of freedom.
Conservatives who claim to be on the side of freedom while ignoring the growing imbalance of economic and political power in America are not in fact on the side of freedom. They are on the side of those with the power.
Timothy Geithner’s new book about the financial crisis, “Stress Test,” is basically an argument that the Wall Street bailout succeeded. That’s hardly surprising, given that Geithner was in charge of the bailout when Treasury Secretary (as was his predecessor at Treasury, Hank Paulson), and so has an inherent interest in telling the public it succeeded.
Even so, the bailout clearly did succeed, if success means avoiding another Great Depression.
But another Great Depression might have been avoided if the crisis had been handled differently — for example, by allowing the bankruptcy laws to do what they were intended to do, and forcing the big Wall Street banks to reorganize under them.
In fact, the bailout was a colossal failure in several respects Geithner barely mentions in his book, or avoids completely:
(1) The biggest Wall Street banks are now bigger than ever, and no sane person on or off the Street now believes Washington will ever allow them to fail – which means they’ll continue to make big, risky bets because they know they can’t fail. And they’ll get even bigger because big depositors and lenders know they’ll never fail and therefore demand lower interest rates than demanded from smaller banks.
(2) No Wall Street executives have ever been prosecuted for what they did to the country, which means even more rampant irresponsibility in executive suites as well as even deeper cynicism in the public about the political power of Wall Street.
(3) The bailout helped the banks but did little or nothing for the tens of millions of Americans who lost billions of dollars in home equity and savings, and the millions more who lost their jobs. The toll was greatest on the poor and the middle class, who still haven’t recovered their losses, even though Wall Street has fully recovered (and then some). Nor have reforms been enacted that will help the middle class and the poor the next time Wall Street implodes.
So pardon me if I take issue with Tim Geithner. The bailout was a success in the narrowest terms. Seen more broadly it was a terrible failure.
We’d have done better had we forced the biggest Wall Street banks, including the giant insurer AIG, to reorganize under bankruptcy rather than bail them out.
Is Detroit destined to become a Chinese city? Chinese homebuyers and Chinese businesses are starting to flood into the Motor City, and the governor of Michigan is greatly encouraging this. In fact, he has formally asked the Obama administration for 50,000 special federal immigration visas to encourage even more immigration from China and elsewhere. So [...]
Timothy Alexander Guzman, Silent Crow News - Puerto Rico has hit a brick wall. A financial tyranny is slowly emerging as desperation is starting to reflect on the Puerto Rican Government. Not only Puerto Rico’s underground economy will face a tax burden that will be enforced by the government, but also businesses, both small and large. According to Reuters they claim that Puerto Rico is hiring “tax specialists” but it seems that they are much more than just tax specialists according to the article:
The Treasury is hiring about 200 more tax specialists. Some of those will be checking on the books of businesses across the island, but some will be mystery shopping – making purchases at specially selected stores without identifying themselves to check for violators.
Sales tax evaders could get slapped with a maximum $20,000 fine.
But $20,000 for a small business could mean a hefty chunk of revenues. That means a delicate balance for the government: Changing attitudes so that more businesses register and pay their taxes and fees, while not piling so many bills onto small businesses that they collapse
Can you imagine a $20,000 fine imposed on both small and large businesses by the Puerto Rican Government? This will destroy business activities all across the island; even if they managed to collect half of the debt at $35 billion not counting the added interest rates that accumulates over time would help the debt burden:
From the western mountain town of Lares to the capital San Juan, officials are wrestling with how to bring the underground economy out of the shadows and onto the tax rolls without creating such an onerous financial burden that thousands of small and medium businesses can’t survive.
More than a quarter of the island’s economy is informal, some studies say, from large companies evading taxes to individuals selling items for cash at roadside stands. But estimates vary widely because the activity can be so hard to track.
While not new, the problem has become urgent of late. The government desperately needs to find new revenue to bolster a budget full of holes and turn around an economy now eight years in recession. It is scrambling to avoid a painful debt restructuring some view as almost inevitable
Imposing tax collections or even adding new taxes while Puerto Rico is in a deep recession to meet Wall Street’s demands would destroy whatever is left of the economy. Foreign investors including American and European companies both small and large are becoming more hesitant to invest in Puerto Rican Industries and its real estate markets as the debt crisis continues to spark major concerns. The Associated Press also reported in February that the government has set up a task force that would “target” business owners and individuals. The report stated the following:
Treasury Secretary Melba Acosta said a task force has been set up to target both business owners and individuals, adding that authorities are investigating more than 100 cases and more are expected to follow. Puerto Rico currently has only a 56 percent “capture” rate on tax revenues that should be taken in, losing some $800 million annually as a result, economist Gustavo Velez says.
The Treasury Department already has referred 12 cases representing a total of more than $8 million in unpaid taxes to the island’s justice department. “This money belongs to the people of Puerto Rico,” Justice Secretary Cesar Miranda said. “It represents a teacher’s salary, a town’s road, a police officer’s uniform.”
Two business owners have been charged with 36 counts of tax evasion and illegal appropriation, and officials warned that dozens of others could face similar accusations
Puerto Rico’s government is in a bind. They are indebted to Wall Street and its Hedge Fund partners as they are to Washington. Hedge funds do not include Puerto Rico’s Government officials in their meetings. Bloomberg News reported that Jones Law Firm (who was one of the law firms restructuring Detroit’s bankruptcy) had a meeting that did not include Puerto Rican officials, “Commonwealth officials aren’t involved in the Jones Day meeting and didn’t call for it, according to the statement.” But Puerto Rico’s Government Development Bank’s statement said that “We made significant progress in implementing our fiscal and economic development plans in 2013, and are determined to continue that progress in 2014.” The Puerto Rico government will proceed to actions dictated by Washington and Wall Street duopoly that will undermine the economy.
$70 Billion in debt will increase as the islands residents continue to flee towards other depressed states for job opportunities within the US, including Florida, New York and Chicago. All states mentioned have high unemployment rates, foreclosures as more business and individual bankruptcies continue to rise. Florida now leads the United States in what you would call “Zombie Foreclosures.” In a 2014 article by www.Bizjournals.com called ‘Florida leads nation in ‘zombie foreclosures,’ RealtyTrac says’ claimed that “RealtyTrac considers a “Zombie Foreclosure” when a homeowner abandons a house that is facing a pending foreclosure action. There are about 55,000 of those in Florida, more than triple the nearest state of Illinois.” An economic situation Puerto Ricans arriving in Florida would find to be as dire as it was in their homeland. Increasing tax collections on Puerto Rican businesses and people would only elevate the economic situation to an even worst state of economic affairs. This would create insecurities even among the small business owners who sell produce or ice cream on the road. As you tax more businesses to pay the States debts, you reduce profits that would be used to reinvest in equipment, supplies and even create or maintain jobs to grow the economy.
Not only would it place the burden on the Puerto Rican people, it would frighten foreign businesses, private investors and individuals from investing on the island’s economy that can create jobs. Puerto Rico’s government under Governor Padilla is just another administration under Washington’s rule. Taxing businesses and individuals was the only option the Puerto Rican Government had with regards to their enormous debt burden they face. Besides, Puerto Rico’s largest employer is the government; a bureaucracy that does not produce any goods for trade besides Pharmaceuticals and a handful of other products for the US market. The new actions taken by the Padilla government on behalf of the financial elites is at the expense of those who are financially struggling. It is just business as usual.