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The Dems Need to Get Serious About Defeating Trumpty Dumpty
The election will all come down to two things: One, who gets the most non-voters to the polls, and two, who will motivate their voting base to show up in big numbers.
Jun 22, 2024
In the last several months, the chips have been falling in former U.S. President Donald Trump’s favor to a level that probably astonishes this convicted felon. Consider the following:
1. Three of the four serious state and federal criminal lawsuits have been delayed by Trump’s lawyers and judges, so it is unlikely there will be trials until after the November election. The one case in New York where the jury pronounced him guilty of 34 felonies is awaiting the presiding judge’s sentence on July 11. The betting in legal circles is that he won’t even sentence Trump to a short prison term.
At the same time, Trump used his conviction to motivate his loyal supporters to send his campaign over $52 million within 24 hours after the verdict. In his ego driven, long, and repetitive speeches, Trump takes no responsibility for his crimes and mocks the rule of law.
Trump pays no political price for his omnicidal “drill baby drill” cry for coal, oil, and gas interests to further the present and coming climate violence.
2. Month after month, Trump is leading President Joe Biden in the six swing states, except Wisconsin. The Biden campaign, still vulnerable to another Electoral College defeat despite winning a majority of votes nationally, is facing the risk of a dangerously large number of voters staying home on election day. Trump attacks Biden daily, slanderously, and with the usual nickname “crooked Joe Biden,” repeated and reliably reported by the mass media. Where are the Democrats’ nicknames for Der Führer, the dangerous, unstable, lying, convicted felon aka Donald Trump? Biden once did use “Sleepy Don” to describe Trump’s drowsy state during the trial in New York.
Joe Biden and Democratic operatives need to re-double their meager efforts in the name game. Trumpty Dumpty gets a free ride: There are no “lock him up” chants at Democratic rallies.
So rare is anyone high on the Democratic Party ladder giving blowhard bully Donald his own medicine that when one politician, Illinois Gov. J.B. Pritzker, does just that, he is featured in The New York Timesas an outspoken maverick. (See New York Times, June 13, 2024, “This Top Democrat Is Leading His Party’s Attack on Trump as a Felon”.)
3. Fox News, which Trump castigated for not being Trumpian enough, has fallen fully back in line. The rest of the mainstream media reports his lies (often corrected to no avail) and repeats his bombastic, delusional self-evaluations and grandiose promises.
The “Trump Media & Technology Group” (DJT stock), which features, Truth Social the social media platform, is listed on the NASDAQ stock exchange. DJT is the ultimate meme stock with tiny revenues, huge debts, propped up by his fan investors, giving him a share value of some $2-4 billion (though restricted for another four months from sale.)
4. Trump pays no political price for his omnicidal “drill baby drill” cry for coal, oil, and gas interests to further the present and coming climate violence. He’s gone so far as to ask a group meeting of energy barons for a billion dollars in campaign contributions as a payoff.
5. The labor unions continue, with few exceptions, to lie low, fearing the third of their members who are Trump supporters. The deafening silence of labor leaders continues, not withstanding Trump’s active hatred of labor unions and multiple anti-labor policies as a failed businessman and as president, including freezing the $7.25 per hour federal minimum wage and corporatizing OSHA, the Labor Department, and the National Labor Relations Board.
6. Hoping for a repeat of Trump’s 2016 Electoral College presidential campaign victory, several big money contributors from Silicon Valley to Wall Street, including some big bankers, are lining up to support Trump. Worse, Trump is picking up small extra percentages in the polls from Black and Hispanic voters who have been devastated by Trump policies and largely excluded from Trump’s government appointments during his tenure as president.
7. Last week insurrectionist Trump returned to Capitol Hill to a triumphant display of obsequious hand-kissing including from Republicans who were stand-offish and sharply critical of the presidential outlaw and inciting election denier. Among them were sleazy Republican Senate leader Mitch McConnell (R-Ky.), and Sens. Ted Cruz (R-Texas) and Marco Rubio (R-Fla.).
8. It is worth noting that not all Republican voters are MAGA Trumpsters. A large number are traditional Republicans going back generations who would vote for any Republican nominee, even if he were, as Michael Bloomberg once said, Leon Trotsky. So inbred is their hatred of the Democrats, that, in his worst moments, Trump could not provoke them to defect from the GOP nominee.
9. Despite Trump’s ongoing shafting of all Americans in their roles as workers, consumers, parents, students, patients, children, women, seniors, and targeted voters he wants blocked from voting, Trumpty Dumpty’s base, still in the minority of likely voters nationally, sticks with him, as he adds more new adherents.
When asked why? The answers come fast and furious. “He is a strong leader,” “He’s rich so he can’t be bought,” (but he could be sold) “I like his stand against abortion.” Other conservative voters like his tax cuts for upper-income people and big corporations, never mind the massive deficits piling up as a result on their descendants. “He wants to protect our borders from hordes of immigrants.” “He will fight inflation.” Really? According to ProPublica, “The growth in the annual deficit under Trump ranks as the third-biggest increase, relative to the size of the economy, of any U.S. presidential administration, according to a calculation by a leading Washington budget maven, Eugene Steuerle, co-founder of the Urban-Brookings Tax Policy Center.”
Have they forgotten his disastrous mocking inaction early in the Covid-19 pandemic that cost over 350,000 American lives?
Women who support Trump forgive or don’t care about his serial abuse of women, his infidelities, or his anti-women economic policies. “I don’t support Trump to learn my family values,” said one fervid woman backer, neglecting to recognize how Trump destroys family values.
Much of the business community likes Trump’s relentless tax cutting, advantageous to his own family of course, and his radical deregulation of critical consumer, labor, and environmental protections. Big Business CEOs want their profits even as more of them experience the ravages of megahurricanes, uncontrollable wildfires, rising sea levels, and unbearable heatwaves. They want Trump’s rubber-stamp approval of corporate mergers, and they want to “defund” the federal cops on the corporate crime, fraud, and abuse beat. They also want to muzzle agencies such as the Consumer Financial Protection Bureau and the Federal Trade Commission.
Trump boastfully rejects the rule of law. He repeatedly said, “I have an Article II, where I have the right to do whatever I want as president.” This often-repeated dictatorial declaration doesn’t bother his supporters who say all presidents break the law. Many presidents have broken the law, but none have broken as many laws, including obstruction of justice and defiance of congressional subpoenas, as often as Trump. And none have been indicted on felony charges for working to overturn the results of a presidential election. Remember, Trump encouraged the violent attack on the U.S. Capitol on January 6, 2021 and tried to block the peaceful transfer of presidential power.
So, it will all come down to two things: One, who gets the most non-voters (there are estimated to be as many as 100 million non-voters this year) to the polls, especially in the six or so swing states, and two, who will motivate their voting base to show up in big numbers.
Instead of wasting huge amounts of money on unmemorable TV and radio ads, which net their corporate-conflicted media consultants a rich 15% commission, the Democratic Party leaders would be well advised to read Bishop William Barber’s just published book White Poverty and learn how his ground game can get out more votes from low-wage workers.
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'Argentina Stopped': Unions Hold Second General Strike Over Milei Austerity
"It is a day of resistance and demand," said trade groups that organized the action "in defense of democracy, labor rights, and the living wage."
May 10, 2024
Argentina's primary trade union federation on Thursday held another nationwide general strike, the second called since President Javier Milei, a far-right economist, took office in December and began pursuing sweeping austerity and deregulation.
The South American nation's unions organized the strike "in defense of democracy, labor rights, and the living wage," according to a statement from the General Confederation of Labor (CGT), the Argentine Workers' Central Union (CTA), and the Autonomous CTA.
"It is a day of resistance and demand," the groups said, blasting the Milei government's "brutal" attacks on labor rights, social security, public health, education, science, and "our cultural identity." The policies of austerity, say opponents, have disproportionately impacted working people and retirees.
The labor groups called out the government for promoting "dangerous policies for the privatization of public enterprises" and pushing for "a phenomenal transfer of resources to the most concentrated and privileged sectors of the economy."
CGT celebrated the 24-hour strike's success on Friday, declaring that "Argentina stopped," and sharing photos of sparsely populated roads, transit hubs, and other public spaces.
As the
Buenos Aires Timesreported:
In the nation's capital, streets were mostly empty, with very little public transport. Many schools and banks closed their doors while most shops were shuttered. Garbage was left uncollected.
Rail and port terminals were closed, while the industrial action forced the cancellation of hundreds of flights, leaving airports semi-deserted. Some buses—from firms that did not take part in the strike—were running in the morning, although with few passengers. Cars were circulating, but traffic levels were similar to that seen on weekends.
The port of Rosario, which exports 80% of the nation's agro-industrial production, was all but paralysed in the midst of its busiest season.
A spokesperson for Milei, Manuel Adorni, claimed the nationwide action was "an attack on the pocket and against the will of the people" by those "who have curtailed the progress of Argentines over the last 25 years," the newspaper noted.
Meanwhile, union leaders stressed that the strike was the result of "a government that only benefits the rich at the expense of the people, gives away natural resources, and seeks to eliminate workers' rights," as CTA secretary general Hugo Yasky put it.
As the action wound down Thursday, Yasky described it as a "display of dignity of the Argentine people" that sent "a strong message" to Milei's government as well as the International Monetary Fund "that intends to govern us" and the country's senators.
Argentina's Senate is now debating an "omnibus" bill that contains some of Milei's neoliberal economic policies—including making privatization easier—after the package was approved last week by the Chamber of Deputies, the lower congressional body.
Rubén Sobrero, general secretary of the Railway Union, signaled that more strikes could come if lawmakers continue to advance the president's policies, tellingThe Associated Press that "if there is no response within these 24 hours, we'll do another 36."
From Europe to North America, trade groups around the world expressed solidarity with Thursday's strike.
"Milei's policies have not tackled the decadence of the elites that he decries, instead he has delivered daily misery for millions of working people. Plummeting living standards, contracting production, and the collapse of purchasing power means some people cannot even afford to eat," said International Trade Union Confederation general secretary Luc Triangle in a statement.
Triangle noted that "the government is targeting the rights of the most vulnerable sectors of the population and key trade union rights, such as collective bargaining, that support greater fairness and equality in society, while threatening those who protest with police repression and criminalization."
"In this context, the work of the trade unions in Argentina is extraordinary. They have emerged as the main opposition to the government's dystopian agenda, uniting resistance and building a coalition in defense of workers' rights and broader democratic principles," he added. "The demands of the trade unions in Argentina for social justice, democracy, and equality are the demands of working people across the world. Their fight is our fight and that is why the global trade union movement stands with them."
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How to Diffuse the Derivatives Time Bomb
Current laws allow the big international banks to run the largest derivatives casino that the world has ever seen.
Feb 18, 2024
This is a sequel to a Jan. 15 article titled “Casino Capitalism and the Derivatives Market: Time for Another ‘Lehman Moment’?”, discussing the threat of a 2024 “black swan” event that could pop the derivatives bubble. That bubble is now over 10 times the gross domestic product of the world and is so interconnected and fragile that an unanticipated crisis could trigger the collapse not just of the bubble but of the economy. To avoid that result, in the event of the bankruptcy of a major financial institution, derivative claimants are put first in line to grab the assets—not just the deposits of customers but their stocks and bonds. This is made possible by the Uniform Commercial Code, under which all assets held by brokers, banks, and “central clearing parties” have been “dematerialized” into fungible pools and are held in “street name.”
This article will consider several proposed alternatives for diffusing what Warren Buffett called a time bomb waiting to go off. That sort of bomb just detonated in the Chinese stock market, contributing to its fall; and the result could be much worse in the U.S., where the stock market plays a much larger role in the economy.
The Chinese Derivative Crisis
A January 30 article on Bloomberg News notes that “Chinese stocks’ brutal start to the year is being at least partly blamed on the impact of a relatively new financial derivative known as a snowball. The products are tied to indexes, and a key feature is that when the gauges fall below built-in levels, brokerages will sell their related futures positions.”
Further details are in a January 23 article titled “‘Snowball’ Derivatives Feed China’s Stock Market Avalanche.” It states, “China’s plunging stock market is leading to losses on billions of dollars worth of derivatives linked to the country’s equity indexes, fueling further selling as retail investors offload their positions… Snowball products are similar to the index-linked products sold in the 2008 financial crisis, with investors betting that U.S. equities would not fall more than 25% or 30%,” which they did.
Chinese shares rose on February 6, as officials took measures to prop up the ailing market, including imposing new “zero tolerance” curbs for malicious short selling.
The Greater U.S. Threat
The Chinese stock market is much younger and smaller than that in the U.S., with a much smaller role in the economy. Thus China’s economy remains relatively protected from disruptive ups and downs in the stock market. Not so in the U.S., where speculating in the derivatives casino brought down international insurer AIG and investment bank Lehman Brothers in 2008, triggering the global financial crisis of 2008-09. AIG had to be bailed out by the taxpayers to prevent collapse of the too-big-to-fail derivative banks, and Lehman Brothers went through a messy bankruptcy that took years to resolve.
In a December 2010 article on Seeking Alpha titled “Derivatives: The Big Banks’ Quadrillion-Dollar Financial Casino,” attorney Michael Snyder wrote, “Derivatives were at the heart of the financial crisis of 2007 and 2008, and whenever the next financial crisis happens, derivatives will undoubtedly play a huge role once again… Today, the world financial system has been turned into a giant casino where bets are made on just about anything you can possibly imagine, and the major Wall Street banks make a ton of money from it. The system… is totally dominated by the big international banks.”
The Speculators Dominate the Regulators
In a 2009 Cornell Law Faculty publication titled “How Deregulating Derivatives Led to Disaster, and Why Re-Regulating Them Can Prevent Another,” Prof. Lynn Stout proposed stabilizing the market by returning to 20th-century derivative rules. She noted that derivatives are basically wagers or bets, and that before 2000, the U.S. and U.K. regulated derivatives primarily by a common‐law rule known as the “rule against difference contracts.” She explained:
The rule against difference contracts did not stop you from wagering on anything you liked: sporting contests, wheat prices, interest rates. But if you wanted to go to a court to have your wager enforced, you had to demonstrate to a judge’s satisfaction that at least one of the parties to the wager had a real economic interest in the underlying and was using the derivative contract to hedge against a risk to that interest… Using derivatives this way is truly hedging, and it serves a useful social purpose by reducing risk.
…Under the rule against difference contracts and its sister doctrine in insurance law (the requirement of “insurable interest”), derivative contracts that couldn’t be proved to hedge an economic interest in the underlying were deemed nothing more than legally unenforceable wagers.
…Hedge funds, for example, should really call themselves “speculation funds,” as it is quite clear they are using derivatives to try to reap profits at the other traders’ expense.
The rule against difference contracts died in 2000, when the U.S. embraced wholesale deregulation with the passage of the Commodity Futures Modernization Act (CFMA):
The CFMA not only declared financial derivatives exempt from CFTC or SEC oversight, it also declared all financial derivatives legally enforceable. The CFMA thus eliminated, in one fell swoop, a legal constraint on derivatives speculation that dated back not just decades, but centuries. It was this change in the law—not some flash of genius on Wall Street—that created today’s $600 trillion financial derivatives market.
The Casino Gets Special Privileges
Not only are speculative derivatives now legally enforceable, but under the Bankruptcy Act of 2005, derivative securities enjoy special protections. Most creditors are “stayed” from enforcing their rights while a firm is in bankruptcy, but many derivative contracts are exempt from these stays. Similarly, under the Dodd Frank Act of 2010, derivative claimants have “superpriority” in the bankruptcy of a financial institution. They are privileged to claim collateral immediately without judicial review, before bankruptcy proceedings even begin. Depositors become “unsecured creditors” who can recover their funds only after derivative, repo, and other secured claims, assuming there is anything left to recover, which in the event of a major derivative crisis would be unlikely.
That’s true not only of the deposits in a bankrupt bank but of stocks, bonds, and money market funds held by a broke or dealer that goes bankrupt. Under the Bankruptcy Act of 2005 and Sections 8 and 9 of the Uniform Commercial Code (UCC), “safe harbor” is provided to entities described in court documents as “the protected class.” The customers who purchased the assets have only a “security entitlement,” a weak contractual claim to a pro rata share of a residual pool of fungible assets all held in the name of Cede & Co., the proxy of the Depository Trust and Clearing Corp. (DTCC). As Wall Street financial analyst John Rubino put it in a January 27 podcast:
What we used to think of as a bank bail-in where they take your deposit in order to support a failing bank, that is now spread across the entire financial economy where whatever you have in an account anywhere can just disappear, because they’re going to transfer ownership of it to these big dominant entities out there in the financial system that need those assets in order to keep from blowing up.
Derivative speculators are considered “secured” because they post a portion of what they could wind up owing as “margin,” but why that partial security is superior to the 100% security posted by the depositor or purchaser is not explained. The “protected class” is granted “safe harbor” only because their bets are so risky that to let them fail could crash the economy. But why let them bet at all?
The Solution of the Regulators
The fix of the G20 leaders following the global financial crisis, however, was to force banks to clear over-the-counter derivatives through central counterparties (CCPs), which stand between buyer and seller and protect either party if the other blows up. By March 2020, 60% of credit default swaps and 80% of interest rate swaps were centrally cleared. The problem, as noted in a December 2023 publication by the Bank for International Settlements, is that these measures taken to protect the system can actually amplify risk.
CCPs tend to ask for more collateral than banks did in the pre-crisis world; and when a CCP hikes its initial margin requirement to cover the risk of default, this applies to everyone in the market, meaning cash calls are synchronized. As explained in a May 2022 Reuters article:
It’s logical that CCPs ask for more collateral during a panic: That’s when defaults are most likely. The problem is that margin calls seem to have made things worse. In March 2020, for example, a so-called “dash for cash” saw investors liquidate even prime money-market funds and U.S. Treasury securities.
… [R]ampant margin calls have intensified a financial panic twice in as many years, with central banks effectively bailing out markets in 2020. That’s better than in 2008, when taxpayers had to step in. But the problem of margin calls remains unsolved.
… Central counterparty (CCP) clearing houses should consider asking clients for more collateral during good times to reduce the risk of destabilizing margin calls during a financial panic, a Bank of England official said on May 19.
Yet all this, as Michael Snyder observes, is to allow the big international banks to run the largest derivatives casino that the world has ever seen. Why not just shut down the casino? Prof. Stout’s suggested solution is for Congress to return to the pre-2000 rule under which speculative derivative bets were not enforceable in court. That would include reversing the “superpriority” privileges in the Bankruptcy Act of 2005 and the Dodd-Frank Act. But it won’t be a quick fix, as Wall Street and our divided Congress can be expected to put up a protracted fight.
What If the DTCC Goes Bankrupt?
In a 2015 law review article titled “Failure of the Clearinghouse: Dodd-Frank’s Fatal Flaw?,” Prof. Stephen Lubben points to a more ominous risk from pushing all derivatives onto exchanges; and that concern is shared by former hedge fund manager David Rogers Webb in his 2024 book The Great Taking. The exchanges are supposed to be safer than private over-the-counter trades because the exchange steps in as market maker, accepting the risk for both sides of the trade. But in a general economic depression, the exchanges themselves could go bankrupt. No provision for that is made in the Dodd-Frank Act, which purports to decree “no more bailouts.” Still, reasons Prof. Lubben, the government would undoubtedly step in to save the market from collapse.
His proposed solution is for Congress to make legislative provision for nationalizing any bankrupt exchange, brokerage, or Central Clearing Counterparty before it fails. This is something to which our gridlocked Congress might agree, since under current circumstances it would not involve any major changes, wealth confiscation, or new tax burdens; and it could protect their own fortunes from confiscation if the DTCC were to go bankrupt.
Other Possible Federal Solutions
Another alternative that not only could work but could fix Congress’s budget problems at the same time is to impose a 0.1% tax on all financial transactions. See Scott Smith, A Tale of Two Economies: A New Financial Operating System, showing that U.S. financial transactions (the financialized economy) are over $7.6 quadrillion, more than 350 times the U.S. national income (the productive economy). See my earlier article summarizing all that here. On a financial transaction tax curbing speculation in derivatives, see also here, here, and here.
There are other possible solutions to customer title concerns. There is no longer a need for the archaic practice of holding all securitized assets in the street name of Cede & Co. The digitization of stocks and bonds was a reasonable and efficient step in the 1970s, but today digital cryptography has gotten so sophisticated that “smart contracts” can be attached by blockchain-like distributed ledger technology (DLT) to digital assets, tracking participants, dates, terms, and other contractual details. The states of Delaware and Wyoming have explored maintaining corporate lists of stockholders on a state-run blockchain; but predictably, the measures were opposed. The practice of holding assets in street name has proven very lucrative for the DTCC’s member brokers and banks, as it facilitates short selling and the “rehypothecation” of collateral.
In October 2023, the DTCC reported that it has been exploring adopting DLT; but the goal seems only to be speedier and safer trades. No mention was made of returning registered title to the purchasers of the traded assets, which could be done with distributed ledger technology.
South Dakota’s Innovative Solution
The most readily achievable solution is probably that in a South Dakota bill filed on January 29. The bill is detailed in a February 2 article titled “You Could Lose Your Retirement Savings in the Next Financial Crash Unless Others Follow This State’s Lead,” which observes:
…[I]f your broker… were to go bankrupt, the broker’s secured creditors (the people to whom the broker owes money) would be empowered to take the investments that you paid for in order to settle outstanding debts….
To avoid a catastrophe in the future, a nationwide movement is desperately needed to alter the existing Uniform Commercial Code. Of course, that won’t be easy to accomplish, especially because bank lobbyists and other powerful financial interests will almost certainly fight kicking and screaming to stop policymakers from taking away their advantage over consumers.
The good news is, this “great taking” can be stopped at the state level. Americans don’t need to count on a divided Congress to get the job done. Because the UCC is state law, state lawmakers can take concrete steps to restore the property rights of their constituents and protect them in the event of a financial crisis.
On Monday, South Dakota legislators introduced a bill that would do just that. The legislation would ensure that individual investors have priority over securities held by brokerage firms and other intermediaries.
It would also alter jurisdictional provisions so that cases are determined in the state of the individual investor, rather than the state of the broker, custodian, or clearing corporation. This would ensure that individual investors are able to rely on the laws of their local state.
Hopefully, other states will follow South Dakota’s lead. Tennessee, for one, is reported to have such a bill in the works.
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