Organize for Public Control Public Funds for the Public Good!
Government’s “Attractive Terms” for Monopolies
Disinformation Expert Henry Paulson
The Bail Out and Threats of Martial Law
CEO Bonuses


Organize for Public Control

Public Funds for the Public Good!

In assessing the actions being taken by the government to “protect the U.S. economy,” it is important to look at the aim the government itself has set, and the actions to achieve it. Secretary of the Treasury Henry Paulson, in announcing the $250 billion being given to the most powerful monopolies, said that President George W. Bush has directed him to take “all necessary steps to restore confidence and stability to our financial markets and get credit flowing again.” He said, “ The first step in that effort is a plan to make capital available on attractive terms to a broad array of banks and thrifts.” The aim then is to “restore confidence and stability to our financial markets and get credit flowing again.” This is being done by providing public funds with “attractive terms” to the same monopolies responsible for the instability. These include what are becoming known as the Big-3, Citigroup, Bank of America and JPMorgan Chase. They got the largest amounts, $25 billion each.

Two things stand out. The first is that the government takes as its starting point maintaining and protecting the capital-centered economy. The financial markets are the center, not the people, not the problems of destruction of manufacturing and increasing unemployment, poverty-level wages, increasing hunger and homelessness. The capital-centered economy, with its private ownership by these same powerful monopolies, is an economy that cannot provide for the rights of the people. Based on this private ownership, it is an economy whose wealth is being utilized to fund the drive of the most powerful U.S. monopolies for world empire — a direction opposed by the vast majority of the people here and abroad. It is an economy whose internal contradictions are the source of the instability and crisis. Without looking at this issue, including the contradiction between private ownership of the wealth and its social production by the working class, economic stability cannot be achieved. Indeed, even the American dream the presidential candidates are so fond of talking about, of a steady job and home, cannot be delivered.

But this is at best a dream of the past. It is not the vision of the youth of today. Theirs is a vision that demands an end to aggressive wars, an end to poverty, and an economy that meets the needs of the people and the environment, here and abroad. And theirs is a demand for government that submits to the will of the people, instead of insulting them with $700 billion bailouts. What is needed is a people-centered economy, with public control of the wealth produced.

Secondly, the government is openly going against the stand of the vast majority: Let Wall Street Fail! No Bail, Send Them to Jail! This actually would contribute to stability, as it would remove one arena for the feeding frenzy of the rich. It should also be noted that even the government’s own stated aim, to get credit going again, is not part of the terms of the agreement. On the contrary, the banks are free to use the public funds however they please.

The people have put forward alternatives that actually do assist the economy and begin to point it in the direction of an economy serving the needs of the people. This alternative can be summarized in the demand to Stop Paying the Rich! Increase Funding in Social Programs! By refusing to hand public funds over to the rich, we can begin to block the actions of the monopolies to trump public right — to impose their narrow, self-serving interests on the public. The monopolies have gotten so brazen that they think nothing of emptying the public treasury at a time when public funds for the public good are most needed. The government, far from standing up to these raids, guarantees they take place.

Funding social programs also puts money back into the economy. One of the features of today’s economy, and a source of its volatility, is its highly parasitic nature. The monopoly rulers and their insatiable competition and feeding frenzy on the world’s wealth have greatly increased hunger and poverty and the danger of world war. We do not need these monopoly rulers and their Wall Street. We do not need a war government and war president.

We want and need an anti-war, pro-social government. Clearly the Democrats and Republicans will not and cannot deliver on this necessity. The ongoing deepening of the crisis and growing threat posed by the U.S. path of fascism and war, has made the struggle for empowerment all the more urgent. To gain public control of the public funds, the people themselves must be empowered, including seats in government. Stepping up the organizing today to defend our rights and contend in the 2010 elections is a problem belonging to all. Let us together advance the fight for political empowerment!

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Stop Paying the Rich
Government’s “Attractive Terms” for Monopolies
Treasury Secretary Paulson, in announcing the $250 billion in public funds being handed over to the most powerful financial monopolies, said the government was making “capital available on attractive terms to a broad array of banks.” In a meeting closed to the public, Paulson met with the representatives of the godfathers of U.S. imperialism. Participants included Citigroup CEO Vikram Pandit, JPMorgan Chase CEO Jamie Dimon, CEO of Bank of America Ken Lewis, Morgan Stanley CEO John Mack, Wells Fargo CEO Richard Kovacevich, Merrill Lynch CEO John Thain, CEO of Goldman Sachs Group Lloyd Blankfein and Robert P. Kelly, CEO of Bank of New York Mellon. No representatives from Congress, state governments, unions or other public officials were present.

According to news reports, the Treasury will give banks $250 billion in exchange for preferred shares paying a 5 percent dividend, rising to 9 percent after five years. It would also receive the right to purchase common shares, worth 15 percent of the initial investment. While the government is buying shares in the banks, it agreed not to vote the shares as a means to control actions by the banks. As the White House fact sheet puts it, “The government’s involvement is limited in scope. The government will not exercise control over any private firm. The shares owned by the government will have voting rights that can be used only to protect the taxpayer’s investment — not to direct the firm’s operations.” How is does one without the other is unclear. As well, there is no requirement that the banks use the funds to lend to other banks, which is supposedly the government’s aim.

The banks are only asked to pay a 5 percent quarterly dividend. But they can miss up to a year and half in payments, and even then the government has no mechanism to require payments. Instead, it can appoint two directors to the bank’s board. Similarly, the banks are “encouraged” to buy back the shares, but not required to do so — meaning there is no guarantee any of the public funds will be returned to the treasury. By comparison, when billionaire Warren Buffet invested in Goldman Sachs last month, in exchange for only $5 billion he is guaranteed perpetual interest payments of 10 percent.

As well, the government supposed “cap” on CEO salaries applies only to new CEO’s. Paulson, who himself amassed hundreds of millions while CEO at Goldman Sachs, is to decide what constitutes “appropriate standards for executive compensation.” None of the executives present at the meeting will have their salaries, bonuses or retirement benefits cut (see amounts p.9).

To start, the Treasury will pump $25 billion each into Bank of America, JPMorganChase and Citigroup; $20-25 billion for Wells Fargo; $10 billion to Goldman Sachs, $10 billion to Morgan Stanley, $3 billion to Bank of New York Mellon and about $2 billion into State Street Bank.

The government has also appointed Bank of New York Mellon as the custodian for the purchase of toxic assets from the banks. Their job includes evaluating the quality of the assets and setting their prices. No doubt this too will be done on “attractive terms” for the most powerful monopolies.

All of these monopolies and their CEO’s have direct responsibility for the current crisis. Yet they face no charges, no accountability for the trillions they have stolen out of the economy and the unfolding impact of these piranhas on the economy. Indeed, they are, as always, dictating conditions to the government, which provided “attractive terms.” As the Wall Street Journal reported, “government’s hope is that the new plan…will persuade private investors that government involvement will not come at their expense.”

The government is the instrument of the most powerful monopolies for enforcing greater concentration of wealth while also looting the public treasury to guarantee the continued monopoly control and power over the economy.

Interest Free Loans to People Now!

It is a common experience for every homeowner facing difficulties in meeting the mortgage or taxes, that there is no such thing as “attractive terms” from the banks. It is pay up or get out, including evictions of elderly and women with children. At best, homeowners can get behind 3 months on the mortgage and perhaps a year on taxes. After that, the banks and city and county governments put in motion foreclosure actions. And once set in motion, these incur even more fees and costs to homeowners.

In the current situation, people across the country, especially African American women, experienced a situation where the only mortgages the banks would provide were the subprime mortgages. It is not the homeowners who are imposing the high interest rates that are forcing many of the foreclosures. That too is being done by the biggest financiers — the very ones now getting even more billions. Homeowners also do not set property values. That too is done by the financiers and government.

It is estimated that some two million families have already been foreclosed and millions more will likely be forced out of their homes by the same banks now raiding the treasury. The problem is not families “living beyond their means,” its these financial parasites living off the people and the government. The problem is the refusal of the monopolies to provide wages and benefits consistent with a U.S.-standard of living. The problem is the refusal of government to guarantee the rights of all, including the right to housing and healthcare.

Instead of paying the rich, the following steps can be taken by government:

1) guarantee interest-free mortgages to all homeowners immediately and provide the right to housing for all on the basis of need, not income

2) guarantee interest free student loans

3) guarantee pensions for all at U.S.-standard levels

4) cancel state debts to enable states to invest in social programs

Funds for these actions are available, as the bail out shows. Additional funds can be secured by bringing all U.S. troops home now and stopping war funding. At minimum, the 2008-09 Pentagon budget of close to $600 billion can be utilized to fund social programs. These actions will eliminate the foreclosure crisis while also immediately increasing disposal income that will go back into the economy. And while governments are still claiming there is “no money,” we say It Can Be Done!

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Paying the Gangsters for Robbing the Public Purse

Disinformation Expert Henry Paulson

Treasury Secretary Henry Paulson has been given authority, by Congress and the president, to arrange how the more than $1 trillion in public funds to the rich are to be divided up. This includes the $700 billion bail out now being divided up, the $200 billion for Fannie Mae and Freddie Mac, the $85 billion for AIG (with another $35 billion demanded) and the $29 billion for Bear Stearns. The current on-going bail out is by far the biggest robbery of the public in history. Estimates now put immediate government liability at $2.25 trillion and estimated actual guarantees to the rich at $5 trillion (see list below).

Paulson is presented as the expert on what is needed to “save” the economy. The quotes below are an indication that he, as a government official and representative of the rich and their robbery of the public treasury, is a disinformation expert. His job is to disinform the public in order to block their just struggle to Stop Paying the Rich!

Paulson was formerly Assistant Secretary of Defense, Assistant to John Ehrlichman during the Watergate scandal for which Ehrlichman went to prison. Paulson was CEO of Goldman Sachs from 1994-1998, and his personal wealth is estimated at $700 million.

Here is what Paulson had to say before the bail out, which he, President George W. Bush, presidential candidates Senators Barack Obama and John McCain, and top leaders of the House and Senate, Democrat and Republican, all claim had to be done and done immediately, or else:

“An open, competitive, and liberalized financial market can effectively allocate scarce resources in a manner that promotes stability and prosperity far better than governmental intervention.” — Paulson, Shanghai Futures Exchange Spring 2007

In August 2007, Paulson stated that the U.S. subprime mortgage fallout remained largely contained because the global economy was the strongest in decades. In July 2008, after the collapse of Indymac Bank, Paulson insisted that the banking system is safe saying, “It’s a safe banking system, a sound banking system. Our regulators are on top of it. This is a very manageable situation.”

Fannie Mae and Freddie Mac account for about half of the $12 trillion mortgage market ($5.4 trillion). In July, 2008, the two institutions reported losses 3 times worse than expected. In August, 2008, Secretary Henry Paulson stated, “We have no plans to insert money into either of those two institutions,’’ referring to Fannie Mae or Freddie Mac. On September 7, 2008, the government pumped $200 billion into the two institutions.

To then justify the massive $700 billion bail out and prepare the ground for even more robbery, Paulson, Bush, McCain, Obama and the majority of Democrats all emphasized that massive and immediate action must be taken. The entire House of Representatives was blackmailed into accepting the $700 billion in payments to the rich and in giving Paulson the power to use it however the monopolies demanded. On October 14, in announcing the decision to immediately hand over $200 billion to the top financiers, Paulson had this to say:

“Today, there is a lack of confidence in our financial system — a lack of confidence that must be conquered because it poses an enormous threat to our economy. Investors are unwilling to lend to banks, and healthy banks are unwilling to lend to each other and to consumers and businesses. […] President Bush has directed me to consider all necessary steps to restore confidence and stability to our financial markets and get credit flowing again. Today we are taking decisive actions to protect the U.S. economy. The Treasury will purchase equity stakes in a wide array of banks and thrifts. We must restore confidence in our financial system. The first step in that effort is a plan to make capital available on attractive terms to a broad array of banks and thrifts, so they can provide credit to our economy. From the $700 billion financial rescue package, Treasury will make $250 billion in capital available to U.S. financial institutions in the form of preferred stock.”

Here are just some of the specifics of payments to the rich already guaranteed by the government:

• $700 billion to top financiers, including $250 billion immediately to the biggest banks

• $25 billion to GM, Ford and Chrysler

• $200 billion to Fannie Mae and Freddie Mac

• $85 billion for AIG, plus another $35 billion demanded

• $29 billion Bear Stearns

• $300 billion Federal Housing Administration housing rescue bill (going to the banks who are “encourage” to “refinance” mortgages for homeowners)

• $200 billion Loans to banks via the Federal Reserves Term Auction Facility

• $1.5 trillion government guarantee in new senior debt issued by banks

• $500 billion guarantee for deposits in non-interest accounts, mainly used by businesses

We encourage all concerned to get informed through alternative sources, like Voice of Revolution , and to join in discussing alternatives for a people-centered economy and government that guarantees the rights of the people, not the monopolies.

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The Bail Out and Threats of Martial Law

U.S. Rep. Brad Sherman of California said to Congress, captured on C-Span and viewable on YouTube, that individual members of the House were threatened with martial law within a week if they did not pass the bailout bill: “The only way they can pass this bill is by creating and sustaining a panic atmosphere. … Many of us were told in private conversations that if we voted against this bill on Monday that the sky would fall, the market would drop two or three thousand points the first day and a couple of thousand on the second day, and a few members were even told that there would be martial law in America if we voted no.”

It is also the case that the law was passed in an unconstitutional manner, again by the actions of top Democrats and Republicans. All bills providing funds — appropriations bills — must originate in the House of Representatives. This was one of the measures taken against tyranny and specifically to block the president and the Senate from control of the public purse. The House voted the bill down. Then the Senate acted illegally and passed its version of the bill and imposed it on the House. After threats and blackmail by President George W. Bush, both presidential candidates Senators Barack Obama and John McCain, the top Congressional Democrats and Republicans, and the top corporate lobbyists, the House succumbed. Voting a second time on essentially the same bill, with an added $150 billion in pork, the House voted yes. So we have an unconstitutional law, secured through open blackmail, together with threats of martial law.

At the same time that Congress was being bullied into passing the bill, U.S. Northern Command (NorthCom) was given a dedicated combat brigade of about 4000 troops. This is a combat brigade, with three tours of duty in Iraq, trained to kill insurgents — that is those standing up to defend their rights. They are currently deployed inside the U.S. engaging in exercises in “crowd control,” using a “non-lethal package” designed by the army for use in Iraq. The package is part of army efforts to suppress an control civilian resistance in Iraq, and now the U.S. It and includes tasers, bean-bag bullets and more (see VOR update October 6, 2008 ).

President George W. Bush has secured for the office of the president the authority to declare a national emergency and impose martial law at any time. To assist with this, he has organized to undermine Posse Comitatus, a law that forbids the use of the military against civilians inside the country, except in cases of "insurrection." He also organized to secure changes to the 1807 Insurrection Act to give him far broader powers in the event of a loosely defined “insurrection” or many other “emergency conditions,” including natural disasters, health emergencies, and "civil disorder." The president alone determines what constitutes a national emergency. The Constitution also allows the suspension of habeas corpus — the requirement of the government to bring individuals charged by the government before a public court for trial — in the event of an “insurrection.” With a combat brigade at his disposal, the president’s ability to threaten congress, and to brand the broad dissent against the bail out as “insurrection” or “civil unrest” and threaten martial law, has been strengthened. While 4,000 troops cannot control the country, they can certainly take control of Washington, DC, arrest civilians and Congresspeople, and protect the White House.

The current concentration of economic power into yet fewer hands is likely to be followed by a further concentration of political power. The threat of a fascist coup in some form is growing, and the government actions to hand over yet billions more to the most powerful monopolies increases this threat. So does the complete capitulation of Congress and their conciliation with Bush to hand over the large majority of the public purse either as war funding or bail out funding. This brings the necessity to organize to defend the rights of the people and advance the fight for their right to govern and decide, more urgently to the fore. Empowerment of the people is the imperative. Security in the current situation lies in stepping up our fight for rights with no illusions or reliance on government. We can prepare for future government actions by organizing now to build empowerment defense committees.

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CEO Bonuses

According to Forbes magazine:

• Ken Lewis of Bank of America last year brought in a salary of $20.13 million, and his holdings of Bank of America stock are worth an estimated $112 million.

• Jamie Dimon of JPMorgan received a 2007 Christmas bonus of $14.5 million and holds $190 million in JPMorgan stock.

• Goldman Sach’s Lloyd Blankfein received a Christmas bonus of $68 million and his holdings of Goldman Sachs stock were worth $414.5 million last year.

• Citigroup’s Vikram Pandit received a $165 million signing bonus from Citigroup last year, together with a $2.7 million salary for a few months of work and $48 million in stock options.

• Morgan Stanley’s John Mack received $41.8 million in compensation last year, and his 2007 holdings in Morgan Stanley stock were worth $220 million.

• Wells Fargo CEO Richard Kovacevich is currently entitled to $43 million in retirement benefits and $140 million in stock and options.

These firms’ stock, and particularly that of Goldman Sachs and Morgan Stanley, rose rapidly on news of the meeting with Paulson. Goldman stock rose 25 percent to $111 a share, and Morgan Stanley stock rose 87 percent to $18.10 per share.

Other financial stocks also rose significantly. Citigroup rose 13.25 percent to $15.98, Bank of New York Mellon rose 15.77 percent to $30.68, and Bank of America rose 9.2 percent to $22.79. JPMorgan stock fell in initial trading on fears of further write-downs, but after the meeting announcement it rose from just over $40 per share to close at $41.64.

A survey carried out in March by Equilar and reported by the New York Times revealed that the CEOs of the 200 largest publicly traded companies grabbed an average of $11.7 million in 2007. CEO salaries alone average about 250 times the average wages of workers.

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Voice of Revolution
Publication of the U.S. Marxist-Leninist Organization

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