[credit: Gary McCoy]
So far in the heat, both literal and rhetorical, the presidential candidates have directly implied that the other is a liar, a felon, or worse--did not pay any taxes for a couple of years--you choose. The name calling cannot erase the fact that United States is stumbling through its worst contraction since the Great One. It may not be as bad, but it's bad enough*.
[Steve Kelly, Times-Picayune]
*The link is to a NYT story about the third California town to declare bankruptcy recently. Municipalities across America are facing bankruptcy as a result of heavy borrowing to finance their operations. One of market manipulations of the so-called "free market" by banks too connected to fail are interest rates swaps that they sold to municipalities by convincing them it would save the cities money financing their debt. Indeed, if interest rates had gone up, the swaps would have saved interest expense, but because banks engaged in financial terrorism and frightened the government into lowering interest rates to the bone, interest rates have fallen to historic lows. Not only did banks threaten to blow up the system unless they got cheap money, they rigged the LIBOR rate to insure the swaps (bets) they sold to cities paid off for them. That this scheme would work is easy to understand when one considers that just four banks, JPM, CITI, BOA and GS own 96% of derivatives, and interest rate swaps compose 82% of derivatives traded. Barclays' got caught and turned states' evidence, but it is just a small part of a global racket larger than the Mafia ever was. It is time for public banks because private sector banking is killing independent nations and businesses. An example of how corrupt the current financial system is, and the collusion of governments in keeping it from collapsing, is the story of how UK's Chancellor Gordon Brown dumped half of his nation's gold reserves at bargain rates to allow an unnamed US bank to cover its potentially disastrous short position on 2 tons of gold. Because of the UK's fire sale, the bank was able to make a profit on its naked short.