Finance Capital – Committees of Correspondence for Democracy and Socialism

Why Is One of Sanders’ Most Important Proposals Being Ignored?

By Robert Reich
Alternet via USW Blog

Why is there so little discussion about one of Bernie Sanders’s most important proposals – to tax financial speculation?

Buying and selling stocks and bonds in order to beat others who are buying and selling stocks and bonds is a giant zero-sum game that wastes countless resources, uses up the talents of some of the nation’s best and brightest, and subjects financial market to unnecessary risk.

High-speed traders who employ advanced technologies in order to get information a millisecond before other traders get it don’t make financial markets more efficient. They make them more vulnerable to debacles like the “Flash Crash” of May 2010.

Wall Street Insiders who trade on confidential information unavailable to small investors don’t improve the productivity of financial markets. They just rig the game for themselves.

Bankers who trade in ever more complex derivatives – making bets on bets – don’t add real value. They only make the system more vulnerable to big losses, as occurred in the financial crisis of 2008.

All of which makes Bernie Sanders’s proposal for a speculation tax right on the mark.

He wants to tax stock trades at a rate of 0.5 percent (a trade of $1,000 would cost of $5), and bond trades at 0.1 percent.

The tax would reduce incentives for high-speed trading, insider deal-making, and short-term financial betting. (Hillary Clinton also favors a financial transactions tax but only on high-speed trading.)

Another big plus: Given the gargantuan size of the financial market and the huge volume of trading occurring within it every day, this tiny tax would generate lots of revenue.

Even a 0.01 percent transaction tax (a basis point is one-hundredth of a percentage point, or 0.01 percent) would raise $185 billion over 10 years, according to the nonpartisan Tax Policy Center.

Sanders’s 0.5 percent tax could thereby finance public investments that enlarge the economic pie rather than merely rearrange its slices – like tuition-free public education.

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It’s Depressing But True: The Bankers Run the Show

By Ellen Brown
Web of Debt Blog via Alternet

April 8, 2015 – According to a new study from Princeton University [3], American democracy no longer exists. Using data from over 1,800 policy initiatives from 1981 to 2002, researchers Martin Gilens and Benjamin Page concluded [4] that rich, well-connected individuals on the political scene now steer the direction of the country, regardless of – or even against – the will of the majority of voters. America’s political system has transformed from a democracy into an oligarchy, where power is wielded by wealthy elites.

“Making the world safe for democracy” was President Woodrow Wilson’s rationale for World War I, and it has been used to justify American military intervention ever since. Can we justify sending troops into other countries to spread a political system we cannot maintain at home?

The Magna Carta, considered the first Bill of Rights in the Western world, established the rights of nobles as against the king. But the doctrine that “all men are created equal” – that all people have “certain inalienable rights,” including “life, liberty and the pursuit of happiness” – is an American original. And those rights, supposedly insured by the Bill of Rights, have the right to vote at their core. We have the right to vote but the voters’ collective will no longer prevails.

In Greece, the left-wing populist Syriza Party came out of nowhere [5] to take the presidential election by storm; and in Spain, the populist Podemos Party appears poised to do the same. But for over a century, no third-party candidate has had any chance of winning a US presidential election. We have a two-party winner-take-all system, in which our choice is between two candidates, both of whom necessarily cater to big money. It takes big money just to put on the mass media campaigns required to win an election involving 240 million people of voting age.

In state and local elections, third party candidates have sometimes won. In a modest-sized city, candidates can actually influence the vote by going door to door, passing out flyers and bumper stickers, giving local presentations, and getting on local radio and TV. But in a national election, those efforts are easily trumped by the mass media. And local governments too are beholden to big money.

When governments of any size need to borrow money, the megabanks in a position to supply it can generally dictate the terms. Even in Greece, where the populist Syriza Party managed to prevail in January, the anti-austerity platform of the new government is being throttled by the moneylenders who have the government in a chokehold.

How did we lose our democracy? Were the Founding Fathers remiss in leaving something out of the Constitution? Or have we simply gotten too big to be governed by majority vote?

Democracy’s Rise and Fall

The stages of the capture of democracy by big money are traced in a paper called “The Collapse of Democratic Nation States” by theologian and environmentalist Dr. John Cobb. Going back several centuries, he points to the rise of private banking, which usurped the power to create money from governments:

The influence of money was greatly enhanced by the emergence of private banking. The banks are able to create money and so to lend amounts far in excess of their actual wealth. This control of money-creation . . . has given banks overwhelming control over human affairs. In the United States, Wall Street makes most of the truly important decisions that are directly attributed to Washington.

Today the vast majority of the money supply in Western countries is created by private bankers. That tradition goes back to the 17th century, when the privately-owned Bank of England, the mother of all central banks, negotiated the right to print England’s money after Parliament stripped that power from the Crown. When King William needed money to fight a war, he had to borrow. The government as borrower then became servant of the lender. (Continued)

Continue reading It’s Depressing But True: The Bankers Run the Show

Uphill Fight: Taking on Finance Capital in Congress

How Bernie Sanders, In New Role, Could Make Wall Streeters Very, Very Unhappy

By Ari Rabin-Havt
Progressive America Rising via American Prospect

Jan 26, 2015 – Big banks now have to contend with an old enemy in a new position of power.

Bernie Sanders, the United States senator from Vermont, plans on using his new position as ranking member of the Senate Budget Committee to take on too-big-to-fail financial institutions by advocating for their dissolution. Though a registered independent, Sanders caucuses with the Democrats, allowing him to assume the ranking member role representing the minority party.
Sanders knows how to draw the media spotlight when advocating for a cause.

While normally the domain of the Senate Banking Committee, the oversight of Wall Street, Sanders and his staff believe, is a critical budgetary issue. Democrats need to directly challenge Wall Street’s power, they assert, by boldly reframing the argument against the consolidation of financial institutions in terms of its cost to the national coffers. Though the term “ranking member” might not ordinarily have the barons of finance quaking in their custom-made oxfords, Sanders knows how to draw the media spotlight when advocating for a cause.

“Being the ranking member of the budget committee gives Senator Sanders the opportunity to say, look, people on food stamps didn’t cause the economic crisis, people that lost their jobs weren’t responsible for the economic crisis that we faced,” explained Warren Gunnels, director of the committee’s minority staff, during an interview in his office. “Average ordinary Americans weren’t responsible for the financial crisis we had.”

While centrist Democrats have expressed displeasure with progressives’ forceful defense of regulations included in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Sanders plans on pushing the boundaries of the debate in the other direction. This potentially puts Sanders, who is seriously considering a run for the White House, in a head-on conflict with Hillary Clinton, Wall Street’s favorite presidential candidate.

As media types muse over Sanders’s prospective presidential campaign, the focus of the minority Budget Committee staff, hard at work in a corner suite on the sixth floor of the Dirksen Senate office building, is elsewhere. Such a run by the senator would no doubt shine a light on the mission he’s set before his committee staff, but the work in this office has no connection to that effort.

Packed boxes are stacked almost randomly as the staff focuses on more important matters—unpacking would be just a temporary process, anyway. Republicans, having won the Senate in the midterms, will take over the office in a few months after the rush of budget season subsides.

Warren Gunnels’s office has a sweeping view of the Capitol dome, but for most of the hour I spent speaking with him about Sanders’s plans for the upcoming Congress, the blinds remain closed.

Gunnels has worked for Sanders in a variety of capacities since 1999, journeying with the Vermonter from his House staff to his Senate staff, when Sanders won the office in 2006, and now to the Budget Committee. There Sanders has recruited a hard-charging group that is by far the most progressive of any committee on Capitol Hill. Instead of sulking in the Democrats’ new minority status, Sanders is preparing to use his staff to advocate aggressively on behalf of a progressive agenda.

Even late on a Friday afternoon, with the senator back in Vermont, there is a sense of hustle in the office, with several meetings taking place around desks.

Gunnels put the blame for our economic collapse squarely on Wall Street. “The people responsible for the financial crisis were the CEOs in charge of the largest financial institutions in this country,” he said. “That nearly drove the economy off a cliff. We are still paying for that today.” (Continued)

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