Nick Turse
Over the last year and a half, Wall Street hedge funds and private equity firms have quietly amassed an unprecedented rental empire, snapping up Queen Anne Victorians in Atlanta, brick-faced bungalows in Chicago, Spanish revivals in Phoenix. In total, these deep-pocketed investors have bought more than 200,000 cheap, mostly foreclosed houses in cities hardest hit by the economic meltdown. Wall Street’s foreclosure crisis, which began in late 2007 and forced more than 10 million people from their homes, has created a paradoxical problem. Millions of evicted Americans need a safe place to live, even as millions of vacant, bank-owned houses are blighting neighborhoods and spurring a rise in crime. Lucky for us, Wall Street has devised a solution: It’s going to rent these foreclosed houses back to us. In the process, it’s devised a new form of securitization that could cause this whole plan to blow up — again.
Laura Gottesdiener from her alarming new article, “The Empire Strikes Back: How Wall Street Has Turned Housing Into a Dangerous Get-Rich- Quick Scheme — Again” at TomDispatch
America’s military is astonishingly top heavy, with 945 generals and admirals on active duty as of March 2012. That’s one flag-rank officer for every 1,500 officers and enlisted personnel. With one general for every 1,000 airmen, the Air Force is the worst offender, but the Navy and Army aren’t far behind. For example, the Army has 10 active-duty divisions — and 109 major generals to command them. Between September 2001 and April 2011, the military actually added another 93 generals and admirals to its ranks (including 37 of the three- or four-star variety). The glut extends to the ranks of full colonel (or, in the Navy, captain). The Air Force has roughly 100 active-duty combat wings — and 3,712 colonels to command them. The Navy has 285 ships — and 3,335 captains to command them. Indeed, today’s Navy has nearly as many admirals (245 as of March 2012) as ships.

[F]or more than a quarter of a century the fastest growing part of the economy has been the finance, insurance, and real estate (FIRE) sector. Between 1980 and 2005, profits in the financial sector increased by 800%, more than three times the growth in non-financial sectors.

In those years, new creations of financial ingenuity, rare or never seen before, bred like rabbits. In the early 1990s, for example, there were a couple of hundred hedge funds; by 2007, 10,000 of them. A whole new species of mortgage broker roamed the land, supplanting old-style savings and loan or regional banks. Fifty thousand mortgage brokerages employed 400,000 brokers, more than the whole U.S. textile industry. A hedge fund manager put it bluntly, “The money that’s made from manufacturing stuff is a pittance in comparison to the amount of money made from shuffling money around.”

Here, instead, is the fable we’ve been offered: Sad as it might be for some workers, towns, cities, and regions, the end of industry is the unfortunate, yet necessary, prelude to a happier future pioneered by “financial engineers.” Equipped with the mathematical and technological know-how that can turn money into more money (while bypassing the messiness of producing anything), they are our new wizards of prosperity!

Unfortunately, this uplifting tale rests on a categorical misapprehension. The ascendancy of high finance didn’t just replace an industrial heartland in the process of being gutted; it initiated that gutting and then lived off it, particularly during its formative decades. The FIRE sector, that is, not only supplanted industry, but grew at its expense — and at the expense of the high wages it used to pay and the capital that used to flow into it.

Think back to the days of junk bonds, leveraged buy-outs, megamergers and acquisitions, and asset stripping in the 1980s and 1990s. (Think, in fact, of Bain Capital.) What was getting bought and stripped and closed up supported windfall profits in high-interest-paying junk bonds. The stupendous fees and commissions that went to those “engineering” such transactions were being picked from the carcass of a century and a half of American productive capacity. The hollowing out of the United States was well under way long before anyone dreamed up the “fiscal cliff.”

For some long time now, our political economy has been driven by investment banks, hedge funds, private equity firms, real estate developers, insurance goliaths, and a whole menagerie of ancillary enterprises that service them. But high times in FIRE land have depended on the downward mobility of working people and the poor, cut adrift from more secure industrial havens and increasingly from the lifelines of public support. They have been living instead in the “pit of austerity.” Soon many more of us will join them.

[F]or more than a quarter of a century the fastest growing part of the economy has been the finance, insurance, and real estate (FIRE) sector. Between 1980 and 2005, profits in the financial sector increased by 800%, more than three times the growth in non-financial sectors.

In those years, new creations of financial ingenuity, rare or never seen before, bred like rabbits. In the early 1990s, for example, there were a couple of hundred hedge funds; by 2007, 10,000 of them. A whole new species of mortgage broker roamed the land, supplanting old-style savings and loan or regional banks. Fifty thousand mortgage brokerages employed 400,000 brokers, more than the whole U.S. textile industry. A hedge fund manager put it bluntly, “The money that’s made from manufacturing stuff is a pittance in comparison to the amount of money made from shuffling money around.”

reuters:

More than 400 anti-Wall Street protesters were arrested in Oakland during a night of skirmishes in which police fired tear gas and bean bag projectiles, the city said on Sunday, marking one of the biggest mass arrests since nationwide economic protests began last year.
Violence erupted again in Oakland on Saturday when protesters attempted to take over the apparently empty downtown convention center to establish a new headquarters and draw attention to the problem of homelessness. [REUTERS/Photo: Stephen Lam/Article: Emmett Berg]
Read more: Arrests in Oakland protest rise to more than 400

reuters:

More than 400 anti-Wall Street protesters were arrested in Oakland during a night of skirmishes in which police fired tear gas and bean bag projectiles, the city said on Sunday, marking one of the biggest mass arrests since nationwide economic protests began last year.

Violence erupted again in Oakland on Saturday when protesters attempted to take over the apparently empty downtown convention center to establish a new headquarters and draw attention to the problem of homelessness. [REUTERS/Photo: Stephen Lam/Article: Emmett Berg]

Read more: Arrests in Oakland protest rise to more than 400

motherjones:

Wall Street blows all other political donors away: During the 2008 election cycle, when the finance sector accounted for nearly 30 percent of all US business profits, its top donors gave $328 million, outspending their closest competitors—lawyers—by more than $200 million.

motherjones:

Wall Street blows all other political donors away: During the 2008 election cycle, when the finance sector accounted for nearly 30 percent of all US business profits, its top donors gave $328 million, outspending their closest competitors—lawyers—by more than $200 million.

shortformblog:

Unexpected sequel of the day: Rudy Ruettiger, the Notre Dame football walk-on and inspiration for the Sean Astin movie “Rudy,” just had to settle with the Securities and Exchange Commission — getting fined $382,000 for turning his Gatorade challenger “Rudy” into a penny stock pump-and-dump scheme that drew $11 million in illicit profits, hundreds of thousands of which went to the feel-good icon. In the end, the hardworking runt sold more stocks than he did beverages. “Investors were lured into the scheme by Mr. Ruettiger’s well-known, feel-good story but found themselves in a situation that did not have a happy ending,” said the sound-bite-ready Scott W. Friestad of the SEC’s enforcement division. That feel-good story doesn’t feel so good anymore now, does it?

shortformblog:

Unexpected sequel of the day: Rudy Ruettiger, the Notre Dame football walk-on and inspiration for the Sean Astin movie “Rudy,” just had to settle with the Securities and Exchange Commission — getting fined $382,000 for turning his Gatorade challenger “Rudy” into a penny stock pump-and-dump scheme that drew $11 million in illicit profits, hundreds of thousands of which went to the feel-good icon. In the end, the hardworking runt sold more stocks than he did beverages. “Investors were lured into the scheme by Mr. Ruettiger’s well-known, feel-good story but found themselves in a situation that did not have a happy ending,” said the sound-bite-ready Scott W. Friestad of the SEC’s enforcement division. That feel-good story doesn’t feel so good anymore now, does it?

Dispatches From the Day of Action: Occupy Wall Street Takes the Financial District and the Brooklyn Bridge
 At its do-or-die moment, Occupy Wall Street holds firm, takes to the streets and lives to protest another day.

Dispatches From the Day of Action: Occupy Wall Street Takes the Financial District and the Brooklyn Bridge


At its do-or-die moment, Occupy Wall Street holds firm, takes to the streets and lives to protest another day.

Another from the same series.  Occupy Wall Street protesters confront NYPD cops at the intersection of Wall Street  and Hanover Street on the November 17, 2011 “Day of Action.”

Another from the same series.  Occupy Wall Street protesters confront NYPD cops at the intersection of Wall Street and Hanover Street on the November 17, 2011 “Day of Action.”