The Promise Makers of Wall Street

by Brian T. Lynch, MSW

Not long ago a dollar was backed by the promise that it could be exchanged for gold or silver. To back up that promise the US gold reserve was established at Fort Knox in Tennessee, for example.  The confidence of our people, and of the rest of the world, in our currency was far less certain than it is today.  The gold standard was perhaps a necessary step towards establishing the good faith of the US Government.

Look at a dollar bill and you will see that it is a Federal Reserve Note. Before the creation of the Federal Reserve Bank, many banks issued their own currency, or “bank notes”.  The worthiness of those bank notes wasn’t consistent. The Federal Reserve Bank standardized and stabilized our national currency. It’s important to remember that the word “note” is another word for an I.O.U.  A bank note is a promise that a coin or a paper document  can be exchanged for a stated amount of tangible value.

The important point for this discussion is that all currency is a form of debt. A U.S. Dollar is a government backed loan. Our trust in its worthiness has become an intrinsic faith in our government’s ability to guarantee its face value. (Which is why the Congressional Freedom Coalition’s talk of not raising the national debt ceiling is so dangerous.)

I recently saw “Junk” on Broadway. It is a play partially based on the story of Wall Street financier Michael Milken.  It is a cautionary tale of money and corruption. Milken’s new approach to finance made him a billion dollars over just four years in the 1980’s. He was like a god on Wall Street and all the normal rules didn’t seem to apply to him, until he got caught breaking the laws he ignored.

More than that, Junk is the story of the paradigm shift Milken pioneered in how modern bankers and business leaders have come to understand wealth and power.  It is a view of wealth that can be summed up by the slogan, “debt is an asset”.  Specifically, any financial instrument that reliably conveys the promise of value to another person or entity can be used as a form of currency. Government regulated Federal Reserve Notes are no longer central to the exchange of wealth.  Nor is any physical collateral or real estate necessary. It seems almost any promise of payment for money owed is sufficient to make financial transactions on Wall Street. These creative financial instruments often have cleaver name and deceptive structures. They are increasingly complex and difficult to understand or regulate. But they all have one thing in common, they are all based on debt. They all create wealth on a promise.

In  Milken’s case, he began with generating cash by selling very  high risk, but high yield bonds and then using those bonds as collateral to finance corporate takeovers. These “junk bonds” (as they are still called) were used like currency to finance “leveraged buyouts” of other businesses. Whole divisions within companies purchased in these buyouts often had to be chopped up and sold off to pay back these high interest bonds.

The charges brought against Milken were ordinary financial crimes, such as insider trading. But his creative financing lead to a whole new banking culture that upended how business was conducted around the world. It has lead to an economic environment where new methods for wealth extraction competes against more conventional methods of wealth creation on a global scale.

The growing methods and culture of wealth extraction transfers wealth but doesn’t create new wealth. It doesn’t grow or manufacture anything. It only creates more opportunities for the wealthy to grow richer while disadvantaging mid-sized businesses and manufacturers. It is one of the drivers leading us into the next gilded age, but it hard to see just where it is taking us. It is harder still to know what we can do make our economy work for everyone again.

 

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Uranium One Hype a Big “Nothing Burger”

by Brian T. Lynch, MSW

President Trump and some Republicans in Congress want the Department of Justice to investigate Trumps political opponent, Hillary Clinton. Specifically they want a Special Counsel appointed to investigate her ties to the sale of US uranium to Russia. Attorney General Jeff Sessions squirmed under pressure to act from a GOP congressmen at a hearing on November 14, 2017.

A President calling for criminal investigations of his political opponents is abhorrent in any modern democracy. In this particular case a second Special Counsel investigation would also give Trump political leverage to further obstruct the efforts of Robert Mueller’s investigation of Trump’s ties to Russia. But I suspect the biggest reason Jeff Sessions squirmed when pressed to appoint a Special Counsel was because there is simply no basis to investigate anything connecting Hillary to Uranium One sales. Here are the essential facts in a timeline format.

2005 – Bill Clinton and Frank Giustra, a Canadian mining financier with an interest in the UrAsia Mining Company, visit Kazakhstan. Kazakhstan is an independent country that was once under the control of the former Soviet Union. Not long after the Guistra visit, UrAsia Mining receives a lucrative mining contract in Kazakhstan.

2006 – Frank Giustra donates $31.3 million to the Clinton Foundation.

2007 – UrAsia Mining Company merges with South Africa Mining Company to become the Uranium One Company. Frank Giustra sells his financial interests in the company.

2008-2010 – During this period several active investors with an interest in Uranium One Company and a former investor (Giustra ) donate more than $8 million to the Clinton Foundation. Donation from just the active investors totaled just over $4 million. The Clinton Foundation omitted these active donors’ names in a US Government filing document, later admitting that information was omitted by mistake.

2009 – Hillary Clinton becomes Secretary of State. Later that same year, Rosetom, a Russian mining company, begins buying a stake in Uranium One.

2009-2013 – During this time Rosetom completes three separate transactions to gain a controlling interest in Uranium One. Announcement of plans to take over Uranium One invokes the need for the Uranium One sale to be approved by the Committee on Foreign Investment in the United States (CFIUS). (Note: This sale of Uranium One only involved product mined in the US and sold only to private nuclear power generation companies within the US. CFIUS is an advisory committee. Only the President of the United States can stop the sale of this company to a foreign business entity.)

2010 – The CFIUS committee, comprised of the Secretary of the US Treasury Department and department heads at the Justice Department, Homeland Security, Consumer Affairs, the Defense Department, The State Department, the Energy Department, The office of US Trade Representatives and the Science and Technology Policy group, approve the sale a controlling interest in the Uranium One Company to the Rosetom company. At the time of the approval, the State Department’s CFIUS representative was the Assistant Secretary of State, Jose Fernando (not Hillary Clinton). Had any one of these agency heads objected to the sale the matter would have gone to the President to decide. The purchase of a controlling interest in Uranium One by Rosetom did not involve or allow the export of uranium to Russia.

2017 – President Donald Trump and Republican members of Congress call for a criminal Investigation of Hillary Clinton’s connections to this uranium sale that took place seven years prior.

That’s it. If there was a quid pro quo arrangement between Hillary Clinton and Uranium One or Rosetom it isn’t apparent from the facts, as least not to me. There are other facts that advocates of a Hillary prosecution toss into the mix (speakers fees, etc.), but they have little apparent relationship to the essential accusation the Republicans are making. If Hillary Clinton could no, and did not, contribute anything of value to the parties involved in the sale of financial interests in Uranium One, then there was no quid pro quo, no bribery to investigate.

Even FoxNews’ Sheppard Smith called out his own company and the President on this one. https://youtu.be/f8wuFDs7xSA

 

 

Let’s Talk!

by Brian T. Lynch, MSW

I don’t mean to offend anyone who enjoys sports, but professional sports have become a primary distraction keeping us from our due diligence to be well informed and actively engaged in the level of civil discourse our democracy requires.(This doesn’t apply to everyone who likes sports). So when folks are upset that politics is infringing on sports, they affirm the role of sport as a means to avoid uncomfortable conversations.

Most Americans have developed a superficial relationship to politics (Including many in the media who cover it like a sport). Politics as sport is all process and insider intrigue. It is devoid of real substance or depth behind the reported facts. We lose sight of the real world consequences that bad policy decisions have on our lives.

Current events are forcing us to confront politics as we haven’t done in years. It’s a good development, but it will take time to get use to talking about politics with our neighbors again. It will take time to gather the essential facts we should have, facts that have been missing or withheld from us for years. And it will test our patience and tolerance as we begin to bridge the gaps that have come to divided us. So let’s hang in there and keep talking.

A War of Perceptions 

We are at war, but it isn’t a kinetic war where things explode. It’s a perceptual war that uses our advanced social medium platforms and weaponized psycho-social messaging against us. 
It is a war that undermines our trust and faith in self-government and our civil institutions. It is a war that divides, polarized, confuses and eventually turns us against our neighbors. It eats away at the values, morals and principles that unit people. It fills us with mistrust, greed, envy and hate. 
When we are disunited and weak, when we are unable to govern ourselves and events spiral out of control, we will welcome the social order that the wealthy and powerful tyrants of our day want to impose. 
I know this sounds bleak and a little crazy, even to me, but we have entered into an age were the powerful elites who own or control the means of mass communications can modify and manipulate mass perceptions if we let them. 
We must love humanity, trust in our shared values, heal our divisions, restore civility, take back control of our public discourse and rebalance public actions to better serve the greater good for all.

Oct. 7, 2016 – The Day We Learned and Forget Russia Was Attacking Us

by Brian T. Lynch, MSW

OneDaysNews

James Clapper of the CIA and U.S. intelligence agencies announce that Russia is taking active measures to interfere with our Presidential elections.

https://www.yahoo.com/news/64-hours-october-one-weekend-blew-rules-american-politics-2-162827162.html

 

It was Friday, October 7, 2016. There was a rapid series of news dump that day that changed to course of our Presidential Election and our country.

If corporate (for profit) news outlets based reporting on the gravity of events rather than a stories public appeal, the top news story on this one day during the campaign would have been that US intelligence agencies announced that Russia was actively messing with our election. Media manipulations by powerful people behind the scenes took place in the hours that followed the announcement, burying the biggest news story in a decade. Who was behind the release of that shocking Access Hollywood tape that stole our attention?

The video doesn’t say. It could have been Hillary friendly sources, neutral sources or even Russian cyber-ops. It doesn’t matter. The corporate media released the tapes and then fed the blaze of interest that followed.

Then, an hour later, the first of the Podesta emails were released These emails that had been stolen by Russian based hackers and the content was used to strategically selected emails for release that maximize damage to the Hillary campaign. The Podesta email release blunted the impact of the Access Hollywood tapes. Both stories dominated the news for days. The two stories combined completely eclipsed the Russia story. And so the biggest story in a decade, That our democracy was currently under attack by Russia, got buried and erased from our collective conscious until after the election.

The Hypocrisy Risk for Social Conservatives

by Brian T. Lynch, MSW

Whenever hypocrisy strikes a Republican politician, the immediate argument on the right is that Democratic politicians are not morally superior to Republicans. This is may be true, but it is also misleading. The most recent GOP hypocrisy scandal is an example.

Representative Tim Murphy of Pennsylvania became the latest GOP social conservative to manifest hypocrisy. Murphy is married, has an adult child, is a staunch right-to-life proponent and a member of the Congressional House Pro-Life Caucus. This January he voted for the latest Pro-Life bill that passed in Congress. He proudly highlighted his support for the bill in a press release that reads in part:

“Passage of H.R. 7 in the wake of the President’s executive action yesterday gives me great hope that moving forward, we will once again be a nation committed to honoring life from the moment of conception onward and ensuring American taxpayer dollars are never spent to end a life before it even begins.” [Murphy, January 24, 2017]

The scandal is that he had just suggested to a woman who became pregnant as a result of their extra-marital affair that she should have an abortion. The woman, Shannon Edwards, was offended by the hypocrisy of Murphy’s public and private attitudes on abortion and told him so in a text message:

“And you have zero issue posting your pro-life stance all over the place when you had no issue asking me to abort our unborn child just last week when we thought that was one of the options.” [Edwards, January 2017]

Ms. Edward’s texts went public and Tim Murphy has since announced he will not run for re-election next year.  The very polarized social media debates are well underway.

From this brief account the hypocrisy is clear and the consequences are sad for those involved, especially his wife and child. Frustration on the right is also understandable as this keeps happening on the GOP side. It may seem like the media are selectively reporting on GOP moral gaffs, hence comes the counter-argument that Democratic politicians are just as likely to engage in immoral behaviors, but circumstances make this misleading.

On the Republican side, family values focuses on moral issues, such as this case in point. On the Democratic side family values focuses more on policy issues, such as universal health care, fair wages, school lunch programs, etc. It is less likely politicians will fall victim to hypocrisy if the family values they promote are policy related rather than morality based.

As long as Republicans exploit social conservative issues and insist on legislating morality, the GOP will continue to provide glaring examples that we all fall short of living perfect lives. Conceding that Democrats are just as likely to engage in immorality may be true, but it doesn’t change the fact that they are still less likely to sound like hypocrites when they do.

Should I Stand or Should I Kneel?

by Brian T. Lynch, MSW

Are the NFL players who kneeled in protest at the National Anthem to be reviled, or were they being courageous?

Did they insult our nation, or is their freedom to action what our flag stands for?

Were the protesting players disrespectful or patriotic?

These questions vexed the nation in recent days. People argued and took sides. Tempers sometimes flared. Angry posts or tweets were exchanged. And somewhere in a Russian troll farm cyber warriors were smiling.

This National Anthem flap is a perfect example of how we are being manipulated by higher powers in the media sphere every day. Some of the bad actors are foreign, such as the Russia operatives at the Internet Research Agency in St. Petersburg, with its army of automated bots, who took to Twitter once again to polarize our public discourse over the NFL protest flap.

The truth is that Russia has been doing this type of thing for years; Using social media platforms on the internet to post extreme and inflammatory messages on opposite sides of every issue. This is just one of Russia’s many methods to sow discord and to splinter our national unity. Their goal: Polarize our politics, widen our political fault lines, pit us against one another and make America ungovernable. Russia is targeting other democracies this way in Europe as well.

But Russia isn’t the only player fomenting disunity and despair. They may even be minor players next to some of our own “stateless” oligarchs who benefit from governmental paralysis at every level. These billionaires don’t want to pay any taxes, support the public commons or be told what they can and can’t do. They are among a oligarchs from around the world who control more wealth and power than most countries. They see self-governing entities as obstacles to be overcome in pursuit of wealth, or as competition in their exercise of power, and some have been messing with our politics and social perceptions for years.

To borrow from a prior article:

… there is strong evidence that the rogue interests of certain Western billionaires and Russian oligarchs have converged. Breaking down the economic barriers that keep wealth and power in check under civilian controlled democracies, and the goal of undermining the strength and unity of Western democracies (strengthening Vladimir Putin’s global influence) are essential aligned.

This is the bigger picture. It is a picture so large it’s hard to take in and even harder to accept as true. Yet here we are, confronted by a clear case where a foreign power used Twitter to influence the personal conversations we are having with each other.

Mainstream media also has its part to play in this NFL protest story and countless others like it. It is the “for-profit” news outlets that select what we will be talking about tomorrow. NFL players protesting during the National Anthem is a real money topic. It attracts a much wider audience compared to another story about race relations. It’s important to remember here that we are the commodity the broadcast media delivers to advertisers. What they choose not to cover, we don’t talk much about. A simple internet search for “NFL protests” proves this point. Lost in the hoopla about the flag is any discussion of why there is a protest.

So what was the protest about?:

1. Police in this country kill too many civilians.

2. If your skin is black, you are twice as likely to be one of those killed.

NFL players were trying to bring attention to these issues, one superimposed on the other. On average, police kill about two people per day. For perspective, in all of Great Britain police kill about two people per year. If the rate of police homicides were that low in the US there wouldn’t be enough of them to reveal any sort of pattern. But a pattern does exist, and African-Americans are too often the victims.

These same racial patterns come up time and again in the American justice system because we have a pervasive and persistent problem with race. Whether we are looking at statistics about arrests, convictions, incarcerations, police stops, etc., the same pattern is superimposed on the data. Racial disparity, by far, is the more stubborn of the two problems listed above. We do need to address it. The other part of the problem, the high number of police killings, is a more solvable problem. We can all agree that the fewer number of civilians killed the better. That might mean better police training, better vetting of applicants and changes in police tactics or philosophy.

But here’s the thing. When we try to have that discussion, the social media platforms light up with extreme, emotionally charged messaging that polarizes our public discourse. Conversations quickly become adversarial. Efforts to separate one issue from another to make problem solving easier are sabotaged. Fake news stories begin popping up to further cloud the issues and crazy websites emerge to sustain the divisions thus created. These are often organized disinformation campaigns to reinforce political disunity. They can be so successful that we sometimes can’t even agree on the same set of facts. We get locked into an ideological battle and don’t how we got there. We can’t see the nefarious forces at work behind the scenes.

To understand how this is happening we have to consider the massive social media platforms though which we can broadly and anonymously communicate with millions of strangers. Never before have we had a cyber presence where everything we write or reveal about ourselves exists forever and is available to anyone. The whole internet is a gigantic, ever growing database that can be searched and analyzed. It’s a mercurial universe of ones and zeros. Yet, to an ever greater degree, our world view is molded by our social media experiences. Even as we become more enmeshed in the cyber world, this new medium is increasing falling under the influence of powerful people with weaponized information technologies and the motivation to alter our perceptions, our behavior and our culture. Our vulnerability to manipulation by bad actors has never been greater.

We need to educate ourselves about this new virtual world in which we find ourselves. We have lost control over our public discourse and need to win it back. We have to learn how to recognize when we are be targeted with propaganda messaging and how to resist falling victim to it. We mustn’t let our authentic narratives become hijacked by those who would alter our perceptions to serve their own ends? If democracy is to survive, if America is to survive, we have to overcome our differences and fight back against those who want to see our people’s Republic fail.