Wall St to Planet Earth: We Don’t Mind and You Don’t Matter

 

Wall St to Planet Earth: We Don’t Mind and You Don’t Matter

by Chris Williams / September 27th, 2013

The conventional wisdom on the world’s stock markets is that all listed reserves will be exploited and burnt. 

Unburnable Carbon 2013: Are the World’s Financial Markets Carrying a Carbon Bubble, Report by Carbon Tracker Initiative
Developing new green technology, hiring workers and investing in new productive facilities involves a real risk: it may not be as profitable as purely speculative investments. With derivatives and the implicit backing of government removing the fear of failure for the world’s biggest corporations, there simply isn’t an economic incentive to make investment decisions that would help to avert climate catastrophe. 

— David Ravensbergen, DeSmogBlog.com

Friday, September 27, 2013. For the first time in my life, I awoke to a most peculiar sensation: an intense desire to monitor the opening of New York’s stock market.
What would happen as that annoying bell signaled the onslaught of another day of financial wheeler-dealing in the world’s most devastating house of ill repute? I pictured stock market spivs falling over each other in a frantic fire sale of fossil fuel assets. Desperate phone calls from modern day oil, coal and gas protégé’s of Gordon Gekko, furiously dialing their proxies on the floor of Wall St and screaming into them: “Sell, Sell, Sell!”

Surely, the release this morning of the 5th climate report from the Inter-Governmental Panel on Climate Change (IPCC) would presage a veritable deluge of garage sale sell-offs of now valueless oil, coal and gas stocks. Realizing the worthlessness of formerly expensive scraps of paper denoting fossil fuel reserves held by Exxon, BP, Chevron and other luminaries of the stock market, the impact on their stocks would indubitably prove catastrophic.

After all, seven years on, the latest assessment from the IPCC panel, the synthesis of several hundred of the top climate scientists in the world, paints an “unequivocal” portrait detailing that, “Human influence on the climate system is clear. This is evident from the increasing greenhouse gas concentrations in the atmosphere, positive radiative forcing, observed warming, and understanding of the climate system.”
The IPCC report removes any ambiguity from which specific types of human activity lie at the root of these changes:

The atmospheric concentrations of carbon dioxide (CO2), methane, and nitrous oxide have increased to levels unprecedented in at least the last 800,000 years. CO2 concentrations have increased by 40% since pre-industrial times, primarily from fossil fuel emissions and secondarily from net land use change emissions. The ocean has absorbed about 30% of the emitted anthropogenic carbon dioxide, causing ocean acidification.

Even were we to stop emitting greenhouse gasses today, industrialized human civilization based on the burning of fossil fuels for energy, has set in motion changes to the earth that are essentially irreversible and can only be measured on time-scales which are difficult to comprehend:

A large fraction of anthropogenic climate change resulting from CO2 emissions is irreversible on a multi-century to millennial time scale, except in the case of a large net removal of CO2 from the atmosphere over a sustained period. Surface temperatures will remain approximately constant at elevated levels for many centuries after a complete cessation of net anthropogenic CO2 emissions.

As the entire planet is an interlinked set of ecosystems which together form the biosphere, changes in the composition of the earth’s atmosphere and its ability to retain the sun’s heat, inevitably lead to disruptive changes elsewhere. Loss of polar ice, leading to sea level rise (up to 1m by 2100, assuming some reduction in emissions), will threaten the existence of low-lying island nations as well as major cities; the continuing acidification of the oceans (killing off the basis of the food web: coral, phytoplankton and shellfish) and more climate disruptions, an increased number of hotter days and extreme weather events. Even with some real action to reduce emissions, scientists predict that the earth will very likely overshoot what is considered to be the “safe” limit of average temperature increase of 2 degrees Celsius.

However, if the world continues with business as usual, average global temperature between 2080 and 2100 is predicted to be 2.6-4.8C higher than today. At the higher end, this would make life for many species, including ourselves, untenable across significant areas of the globe and cause the disintegration of complex ecosystems. It’s important to remember that the IPCC has been criticized for being too conservative in its estimates, because of the consensus nature of decision-making imposed by national governments on the UN body.

Considering that a large percentage of its value is based on fossil fuel reserves, in and of itself, all of this would be very bad news for Wall Street. The stock exchanges of London, Sao Paulo, Australia and Toronto have 20-30% of their valuation from fossil fuels. As of 2011, the top 100 coal and top 100 oil corporations are collectively valued at $7.42 trillion, or half the annual GDP of the United States. If these stock markets suddenly lost up to a third of their value, the effect on the world financial system would be cataclysmic (previous largest drops, in 1987 and 2007/8 have not exceeded 20%).

However, what really hammered the last nail into the coffin labeled “fossil fuel corporations” and presumably stock markets the world over, and the reason I was so avidly fixated on the opening of Wall Street, was for the first time, the IPCC report put a budget on carbon.

The report indicated that, if we are to have any chance of staying below the crucial limit of two degrees Celsius of warming, we could only burn a maximum of 800-880 gigatonnes of carbon (GtC). As we have already set fire to 531 GtC as of 2011, and added that carbon to the atmosphere and oceans, we’re only left with approximately 350 GtC leeway.

How does that number compare to how much we’ve discovered and as is calculated in the reserves of fossil fuel companies and those held by governments, and hence the basis for their valuation on stock markets around the world? According to the Carbon Tracker Initiative report cited above, that number is 2795 GtCO₂, 65% of which is from the most abundant and polluting source, coal.

The portion of reserves controlled by the top 100 coal and top 100 oil and gas companies is 745GtC0₂.

In other words, the overwhelming majority of oil, coal and gas reserves can never be fracked, drilled or mined out of the ground even though they are worth trillions of dollars on the balance sheets of those corporations. A suitably devastating prognosis for corporate survival that it would surely have to be reflected in market valuations the second the IPCC report went public.

Of course, this is not what happened. Wall Street, to my dismay but no great surprise, opened normally and with barely a ripple. There was clearly no expectation from fund managers, investors and assorted other masters of the universe that the devastating IPCC report had anything to do with their business models.

Furthermore, last year fossil fuel corporations spent $674 billion scouring the earth for new deposits of coal, oil and gas. As the International Energy Agency’s World Energy Outlook 2012, reported,

Despite the growth in low-carbon sources of energy, fossil fuels remain dominant in the global energy mix, supported by subsidies that amounted to $523 billion in 2011, up almost 30% on 2010 and six times more than subsidies to renewables.

In contrast with what the IPCC says needs to happen, the IEA stated what is the most probable path for the United States, “By around 2020, the United States is projected to become the largest global oil producer (overtaking Saudi Arabia until the mid-2020s). With increased oil and gas production from fracking, deep off-shore deposits and exploiting reserves in the Arctic, “North America becomes a net oil exporter around 2030”.

In other words, despite another report which indicated that by 2050 the world will need to be spending $1 trillion annually to protect low-lying cities like New York and Shanghai from the rising oceans, it’s very much business as usual. The inexorable logic of capitalist market relations and the fixation on short term profitability, trump common sense or the physical constraints of the universe, as reported by the world’s preeminent scientific experts.

Where do the recently announced carbon emission limits proposed by the EPA on new coal and gas plants in the United States fit into this picture? Despite the fact that they were heralded by major “green” groups such as the Sierra Club and the Environmental Defense Fund, they come nowhere near close enough to doing anything to alter the situation.

In defense of Obama and the idea that his administration is seriously tackling the coal lobby, on 21st September, the New York Times noted,

The Obama administration on Friday announced that it was not backing down from a confrontation with the coal industry and that it would press ahead with enacting the first federal carbon limits on the nation’s power companies. The proposed regulations, announced at the National Press Club by Gina McCarthy, the administrator of the Environmental Protection Agency, are an aggressive move by Mr. Obama to bypass Congress on climate change.

The first thing to say about these new, supposedly “aggressive” regulations is that they have already been watered down from the ones first proposed a few months ago. Second, they only apply to new coal (only 8 are being built) and gas plants (91 new ones), not the hundreds of older plants, which in some cases are well over 50 years old, far more inefficient and can carry on spewing out unlimited amounts of carbon pollution unimpeded. Third, in another concession to the coal industry, any new plant will have up to 7 years to comply, which will take them well into the 2020s.

However, Gina McCarthy, gave the game away, when she said, “I believe the proposal, rather than killing future coal, actually sets out a pathway forward for coal to be part of the diverse energy supply in the future.”

As part of its gambit to protect coal and natural gas from competition from wind and solar, the Obama administration is reviving the government’s controversial loan guarantee program for clean energy. The one in which the failure of solar panel maker Solyndra became such a talking point for Republicans because it lost the government $500 million when it went bankrupt. Just as a point of reference, $500 million sounds like a lot, but contrast that with the $20.2 billion/year that the Pentagon spends just on air-conditioning in Afghanistan.

This is from the business section of the New York Times on the exact same day as the paper labeled the Obama regulations an aggressive anti-coal move:

The revived program is broader than its predecessor, which focused on capturing carbon emissions from coal plants and on turning coal into gas. Mr. Davidson [executive director of the loan program office at the Energy Department] said officials were looking for projects that reduced carbon and other gases along the various stages of energy production, like cutting methane emissions or water usage in the natural gas extraction process known as “fracking” as well as retrofitting existing coal-fired power plants.

In other words, the new loan program will be broadened to try to find a solution to the pollution generated by burning coal and fracking for natural gas; a solution which doesn’t include the most obvious and effective one. Namely, shutting down the coal plants, banning fracking, and retraining the skilled workforce of miners and power plant workers to build and operate the new clean energy infrastructure we need.

On the perversity of trying to develop a technology which currently doesn’t exist and will require more coal to be burnt in order for coal not to pollute, The Times quotes Michael E. Webber, deputy director of the Energy Institute at the University of Texas at Austin: “If you do coal the right way, it’s so expensive that wind and solar beat it on the markets, and that’s why the guys who want to do coal the right way need their policy support” with loan guarantees, research assistance and tax incentives…“Wind and solar are big kids and almost competitive on their own already, but the advanced fossil and small nuclear are still years away.”

In other words, rather than aggressively attacking the coal industry, the Obama administration is ensuring its survival. The only thing they’re aggressively pursuing is more oil, coal and natural gas, as depicted in numerous government reports and statements.

In response to the IPCC report, one wonders how John Kerry, who’s State Department is still mulling over approving the Keystone XL tar sands pipeline, has the gall to come out with a statement such as this:

The United States is deeply committed to leading on climate change. We will work with our partners around the world through ambitious actions to reduce emissions, transform our energy economy, and help the most vulnerable cope with the effects of climate change. We do so because this is science, these are facts, and action is our only option.

Meanwhile, the Environmental Protection Agency, awarded a Climate Leadership Award this year to Raytheon, a company which specializes in being “the world’s premier missile maker, providing defensive and offensive weapons for air, land, sea and space.”

In presenting the award,  now-EPA head Gina McCarthy said:

Our Climate Leadership Award winners are leading by example with their outstanding actions to reduce carbon pollution…These organizations are tackling the challenge of climate change with practical, common-sense, and cost-saving solutions to improve efficiency and cut waste.

Of course, for the apologists of capitalism, the insanity goes even deeper than the concept of environmentally friendly missiles. As a recent special report on Biodiversity in The Economist notes, “More growth, not less, is the best hope for averting a sixth great extinction.” In particular, what offers species desperately clinging on to survival the best hope, is more rich people:

Greater human prosperity now offers other species their best chance of hanging on…when people start to reach middle-income level, other species start to benefit. That is partly because as people get richer, their interests begin to extend beyond necessities towards luxuries: for some people that means expensive shoes, for others a day’s bird-watching…Growth also has indirect benefits for biodiversity. People clean up their environment in ways that help other species: through building sewage-treatment plants, for instance, and banning factories from pouring effluent into rivers. Prosperity and peace tend to go together, and conflict hurts other creatures as well as man, as the wars in the Congo have shown.

I’ll leave it to readers to decide exactly which incorrect or misleading statement in the passage above represents the most egregious.

Meanwhile as The New Yorker highlighted in an analysis of income inequity by subway stop, if Manhattan were a country, the income disparity between the top 20% and the bottom 20% would be equivalent to Sierra Leone, Namibia and Lesotho. This fact is not unrelated to the location of Wall Street.

To Wall Street, which sorts risk by its ability to maximize profit, “adaptation” to climate change simply means learning how to make profit from it. As David Ravensbergen writes,

Even as extreme weather wreaks havoc on crop yields and threatens coastlines, new custom-made financial instruments offer the savvy investor the chance to profit from destruction. Weather derivatives offer both a profitable investment today and an insurance policy against future damages by flooding or drought. While the estimated costs of climate change continue to climb, the profits to be made by betting on those costs keep growing faster. 

In effect, what we have is a situation in which investors are busy betting on what’s going to happen with the climate. Depending on how they invest, they can make money if things get worse or if they get better. If they pick the wrong horse, their bad investments can also be insured by purchasing still more derivatives.

The financial system, profit-based production and the growth imperative of capitalism are three of the core reasons why capitalism cannot prevent ecological disaster. The fourth Horseman of the Climate Apocalypse is the nature of inter-state competition otherwise known as imperialism, which acts as the international counterpart to domestic competition between corporations, and prevents binding and effective international agreements on climate change.

The historically contingent reason is that capitalist growth for the last 150 years has been predicated on fossil fuels and the corporations which extract and process them; these entities are now some of the largest economic, and thereby political, actors on the planet, with a multi-trillion dollar vested interest in preventing change.

On top of that, examine the infrastructure of fossil-fuel dependent capitalism: hundreds of thousands of miles of oil pipelines snaking across every continent; over 200,000 gas stations in the United States alone; the roads and refineries; the pharmaceutical and petro-chemical complexes; the factories that manufacture 70 million new cars every year; the concrete, rubber and asphalt manufacturers and the vast military-industrial complex which ensures the control and flow of oil continues unabated at increasing rates; as fossil fuel extraction and refining technology is further perfected. By the laws of capitalism, these investments represent trillions of dollars in sunk capital that cannot simply be written off until their depreciation costs become acceptable to the original investors.

Science tells us what must happen; capitalism tells us that it doesn’t matter. Such is the psychosis buried at the heart of a system whereby money overrides physics. The fact that continued operation calls into question, in its current form, the sustained existence of our entire biosphere, still cannot overcome the remorseless logic of capital accumulation. Not for nothing did Marx declare the motto of every capitalist, “Après moi, le déluge!”

This should not be taken as an argument that fighting for meaningful reforms to make our lives less polluted, to buy time to slow down carbon pollution, and to build our confidence and organization, cannot be won under capitalism.

The title of this piece is taken from Civil Rights activist Charles Sherrod, a key member of SNCC, the Student Non-Violent Coordinating Committee and its first field organizer. In the battles in the early ‘60’s fighting segregation, he recalled the police chief of Albany, Georgia, Laurie Pritchett, the architect of the strategy of “non-violent” mass arrests of Black protesters, dismissing even the existence of African-Americans with his comment, “You know Sherrod, it’s just a matter of mind over matter. I don’t mind and you don’t matter.”

The militant organization, resolve and passion for justice of tens of thousands of marchers, picketers and demonstrators proved Pritchett wrong: Jim Crow was smashed. A similarly tenacious and independent mass movement for climate justice should seek to enact a comparable level of change within the system.

But we also know that while racism may no longer be official government policy, it persists everywhere because capitalism requires racism. The system acts to perpetuate and constantly reinvent it in the same way it requires sexual oppression and war.
Therefore, we also need to recognize the need to replace capitalism with a more rational, cooperative, democratic and humanistic system in sync with our “species being” and nature. If we don’t, we will lose our only home.

Chris Williams is a long-time environmental activist and author of Ecology and Socialism: Solutions to Capitalist Ecological Crisis. He is a chemistry and physics professor at Pace University and chair of the Packer Collegiate Institute science department. He can be reached at: ecologyandsocialism@gmail.com. Read other articles by Chris, or visit Chris's website.

 

 

This article was posted on Friday, September 27th, 2013 at 4:30pm and is filed under Climate Change, Oil, Gas, Coal, Pipelines, Pollution, Sustainability.

Internal 'Civil War' Has Not Slowed GOP's Assault on US Economy

 


Published on Friday, September 20, 2013 by Common Dreams
   

Internal 'Civil War' Has Not Slowed GOP's Assault on US Economy

The Republican Party party might be fractured, but its allegiance to austerity and continued ability to sabotage the US economy remains intact

 

- Jon Queally, staff writer
 

 

Boehner has told his party that the debt ceiling is ground for a battle. (Photo: M.Scott Mahaskey/Politico)



With a vote of 230-189, the Republican-controlled House of Representatives passed a continuing budget resolution Friday morning that would fund government operations for the next 90 days, but as promised by GOP members, stripped out any money devoted to the implementation of the Affordable Care Act, known as Obamacare.

Though the outcome of the vote was not a surprise, with the budget issue now heading to the Senate, the events on Capitol Hill over the budget further expose the "unprecedented" hostage-taking tactics of a Republican Party that has made economic denialism and political obstructionism its guiding principles since the current economic crisis began in late 2007 and which it has maintained throughout the Obama presidency.

"Forget the GOP’s attempt to shut down the government over the Affordable Care Act. Who is going to explain to the American people how profoundly misguided, and even immoral, the Republicans’ entire economic agenda has become?" –Richard Eskow, Campaign for America's Future

And even as many perceive a "civil war" within the Republican Party over how to deal with budget issues or battle their Democratic rivals, nothing in that narrative betrays the degree to which the GOP continues to march in lock-step when it comes to pushing austerity economic policies that insulate society's richest while pushing draconian cuts to programs and services that help workers, the elderly, the young, and the sick.

Calling it a "victory for America" and a "victory for common sense," Speaker of the House John Boehner (R-OH) emerged after Friday's vote to celebrate the House budget resolution. He was greeted with cheers from his caucus members.

Critics and commentators, however, say the Republican obsession with defunding Obamacare (today's vote was their 42nd attempt to do so) and an expected repeat of the political battle over raising "the debt ceiling" (which could happen within a matter of weeks) are parts of a single ploy by the GOP to overcome their minority status in Washington by sabotaging the government's ability to accomplish almost anything.
As economist and New York Times columnist Paul Krugman writes:

...at the moment, it seems highly likely that the Republican Party will refuse to fund the government, forcing a shutdown at the beginning of next month, unless President Obama dismantles the health reform that is the signature achievement of his presidency. Republican leaders realize that this is a bad idea, but, until recently, their notion of preaching moderation was to urge party radicals not to hold America hostage over the federal budget so they could wait a few weeks and hold it hostage over the debt ceiling instead. Now they’ve given up even on that delaying tactic. The latest news is that John Boehner, the speaker of the House, has abandoned his efforts to craft a face-saving climbdown on the budget, which means that we’re all set for shutdown, possibly followed by debt crisis.

And though many progressives may criticize Obamacare on their own terms—with many citing the blatant giveaway to private insurers embodied in the law and the failure of Democrats to embrace the idea of a single-payer, Medicare-for-all solution to the healthcare crisis—most also recognize that the legislation will, in fact, deliver positive improvements to vulnerable segments of the population, such as expanding the Medicaid program and limiting some of the worst abuses of the private insurers.

And Eugene Robinson, writing in the Washington Post, argues that even if the law is seriously flawed, "it would be wrong to let a bunch of extremist ideologues hold the country hostage in this manner."

"If Republicans want to repeal the reforms," Robinson continued, "they should win the Senate and the presidency. If not, they’re welcome to pout and sulk all they want — but not to use extortion to get their way."

But the problem is certainly bigger than Obamacare, say others.

For Dave Johnson and Richard Eskow, both from the Campaign for America's Future, the larger budget war in Congress—in which the fight over Obamacare and the debt ceiling are battles—simply exposes just how radical and extreme the Republican Party has become in recent years.

"Forget the debt ceiling for a moment, if you can," wrote Eskow just ahead of Friday's vote. "Forget the GOP’s attempt to shut down the government over the Affordable Care Act. Who is going to explain to the American people how profoundly misguided, and even immoral, the Republicans’ entire economic agenda has become?"

Johnson says that a look at the budget that the House Republicans passed this morning expresses much more about the current GOP agenda than their well-documented hatred for Obama's healthcare law:

The budget in this resolution would be devastating to the economy, especially on top of the cuts that have already hurt the economy and crippled the recovery. A government shutdown would also be devastating to the economy. But even the threat itself hurts the economy, as people and companies pull back and hold off as they wait to see what happens. Past budget fights have proven this – bringing increases in unemployment and reductions in economic growth. 

On top of this, Republicans are cutting $40 billion from the SNAP program. So on one hand, they propagandize that the “Obama economy” is hurting people, and then they cut assistance to the people who are hurting, claiming they don’t really need it.

Probably at least 47 percent of Americans would be seriously hurt by either – but we already know how Republicans feel about 47 percent of Americans, don’t we?

And Eskow adds:

If the GOP’s Continuing Resolution is adopted, more cuts will follow: Head Start and the heating-assistance program will suffer further cuts. Education funds for low-income children and the disabled will be slashed. Not that the Republicans are entirely ungenerous: Their plan increases spending for defense by $20 billion, most of which will wind up in the pockets of wealthy defense contractors. 

That’s the cruelty in the Republican economic plan. Then there’s the stupidity. The Congressional Budget Office has already estimated that sequestration cuts will cost the economy 900,000 jobs and shrink our national economy by 0.7 percent.

And what economist Dean Baker takes from a Congressional Budget Office report this week is that the austerity drive Republicans are calling for is exactly the wrong medicine that the ailing economy demands. The U.S. has as "a tax problem, not a spending problem" Baker concluded, explaining how the CBO report predicts a decline in healthcare costs in the coming years under the new law, while specifying that The American Taxpayer Relief Act of 2012 (in which Republicans negotiated to make permanent most of the Bush tax cuts) was the main cause for much of the projected fall in budget revenue.

Additionally, according to Johnson, if Republicans think their proposed austerity cuts are "necessary because of government deficits and debt," they clearly didn't see or ignored a "report released this week by the National Priorities Project [showing] that the country is handing more than $1 trillion per year to the already-wealthy."

But if Baker is correct and spending is not the problem, says Johnson, what the U.S. economy needs is "investment in infrastructure and education so our economy can thrive in the future, and we need stimulus now to get people working. If you want to worry about deficit and debt, then tax cuts are the problem."

Astride all this, however, continues to be what some describe as a "civil war" within the GOP. In this argument, what are described as "more moderate" members—specifically represented by Republicans in the Senate—are in a pitched internal battle of wills over political strategy, if not ideology, with what Krugman describes as the "Frankenstein-like monster" the GOP themselves created, otherwise known as the Tea Party.

Whether or not the narrative of this internal tension inside the GOP is accurate or not, what does seem clear to most observers is that the level of obstruction now in Washington has brought the legislative process to an almost complete halt.

Though some lawmakers might ultimately pay the price for their behavior at the hands of an increasingly frustrated public, in the meantime it will continue to be the American economy and the population at large made to suffer as the madness of the Republican Party looks to outshine all other performances in Washington over the coming days, weeks, and months.

____________________________________________________

 

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Holy Freeloading! 10 Ways Religious Groups Suck on the Public Purse

 

           

  Belief  

AlterNet / By Valerie Tarico

Holy Freeloading! 10 Ways Religious Groups Suck on the Public Purse

Religion is big business, especially with the help of your tax dollars.

 

 

 

 

September 18, 2013  |  

 

 

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Have you ever thought about starting a new religion or perhaps a hometown franchise of an old one? Perhaps you’re just looking for a career ladder in a religious enterprise that already exists. No? Maybe you should.

Religion is big business. There are lots of options (over 30,000 variants of Christianity alone), and if the scale is right it can pay really, really well. Creflo Dollar, founder of World Changers Church, has an estimated net worth of $27 million. Benny Hinn comes in at $42 million. Squeaky clean tent revival pioneer Billy Graham bankrolled around $25 million. Even Eddie Long who has been plagued by accusations of sex with underage male members of his congregation can count his bankbook in the millions.

You say you don’t have star power? No worries. Millions of ordinary ministers, priests, missionaries, religious hospital administrators and other church employees earn solid middle- or upper-middle-class incomes in the God business. The pay is good, and for most positions it doesn’t matter what race you are or what grade you happened to get in chemistry.

That said, starting or expanding a religious enterprise doesn’t come cheap, even in an established religion that transforms ordinary members into volunteer outreach staff. Christianity spends an estimated $16 billion annually on the kind of marketing-service blend traditionally called “missionary work.”

Missionary work may include disaster relief or education with recruiting in the mix. An earthquake survivor might receive a solar-powered Bible to go with his rice and beans and sutures. A Hindu child might get free schooling, pencils and paper included, along with the message that the gods his parents worship are actually demons. Among people who are less desperate, the offerings can be more nuanced and less expensive. For example, a lonely student might get offered kindness and dinner by someone who is paid to live near campus as a friendship missionary. Sometimes mention of heaven or hell is all the enticement needed, though even then there may be costs associated with print materials and distribution. Soldiers in Iraq gave out Jesus coins and a little cartoon bookshowing that when an IED killed a Muslim, he or she went to hell, a fate that could be averted by conversion.

The cost of rice, beans, medical supplies, pencils, swag, facilities and salaries can add up. Fortunately, some of religion’s bigger players have gotten creative in recent years. They’ve figured out how to pay for at least part of their growth on the public dime. Having taxpayers cover a portion your costs, even overhead or infrastructure, drives up your margin. It may actually make the difference between a religious enterprise that is a fiscal black hole and one that is lucrative. So, whether you’re thinking about positioning within a small religion or large, one that’s new or one that’s well established, it’s worth taking a look at these ten examples to see if there’s something you can borrow.

1. Fund your religion classes with school vouchers, tuition tax credits or capital grants. If your religion has or can open accredited private schools, public funding prospects are growing rapidly. Thirteen states created or expanded voucher programs in 2013, accelerating a trend from recent years. Vouchers allow parents to divert their children and tax dollars away from public schools and into private institutions, which then have wide religious latitude. Such a school can include classes in which children memorize sacred texts, for example, but also can infuse a religious perspective into classes as diverse as literature, history, and computer science. The opportunities aren’t limited to grade schools. In New Jersey, an Orthodox Jewish yeshiva is slated for $10.6 million in higher education grants to improve its male-only training in “Talmudic scholarship.” Mind you, the ACLU is quibbling.

To maximize your own public funding you may have to get creative. In Arizona any resident can divert a part of his state income tax to your school to fund a specific student. That means you need those students or their parents to get out and do the solicitation for you!   

2. Get free facilities for after-school clubs in public facilities. Child Evangelism Fellowship recruits grade-school children in the U.S. and abroad to born-again Christianity. In 2001, they took a case all the way to the Supreme Court and won the right to use public school facilities for their afternoon clubs. They persuaded the justices that they were teaching moral values, rather like the Boy Scouts and other groups that have long had access to public facilities. But parents who have sat in on the clubs assure us that these “values” include very specific dogmas and doctrines—things like heaven, hell and even biblical justification of genocide. Last year CEF operated over 4,000 Good News Clubs in public school facilities.

3. Nudge your doctrines into public school textbooks and discussions. Texas sets textbook standards for the whole country, and if a tenacious group of Texans gets their way, you may be able to move your message directly into public school curriculum. Members of the state’s textbook review panel have recommended adding creationism to biology texts while reducing coverage of the dominant competing theory. You may think that their account of the creation story is mistaken; yours may be different. But in the long run, their long hard work to blur the boundary between science and myth helps the whole religious sector.

To make matter better, allies in the Texas Republican party proposed a platform in 2012 that prohibited schools from teaching critical thinking skills. Others have pushed to require that each high school offer “Bible as literature” electives, confident that devout teachers will know how to use the course material.

4. Support military missionaries on government salaries. Twenty to 30 years ago, evangelical Christians identified the U.S. military as a prime mission field and soldiers as potential missionaries to the world. Hundreds of evangelical and Pentecostal “endorsing” agencies began credentialing chaplains. Today, according to investigative reporter Jeff Sharlet, more than two thirds of U.S. military chaplains come from one of these two traditions. They have successfully redirected female cadets into the more time-honored roles of wife and mother, shaped entertainment and education in military academies, and cultivated a cadre of officers who support their mission. The
Military Religious Freedom Foundation has resisted some of their bold attempts to build an army of Christian soldiers, but missionary chaplains continue to serve and shape America’s fighting men and women, all on the public dime. The door for more remains open. 

5. Use federal disaster relief to rebuild after “acts of God.” Thanks to lobbying by religious leaders like the Catholic bishops and the Becket Fund, four U.S. senators are promoting legislation that would qualify churches, mosques, temples and synagogues for federal emergency (FEMA) funds if they get damage in natural disasters. The House of Representatives approved a similar measure early in the year. If you own or manage church property, it’s worth keeping your eye on this legislation. Your odds of having real estate damaged by a hurricane or earthquake may be low currently, but extreme weather events, like sea levels, appear to be on the rise. Should the bill pass, you might get to make a claim on a public insurance pool that lets religious entities skip out on the premiums. 

6. Leverage historic preservation grants to rehab your real estate. If you’ll be making an investment in religious real estate as a base for operations or to attract members, you might want to do a little digging in the archives. Federal grants may be available for restoration and repairs if your church is deemed historically significant. Like many other aspects of public funding for religion, this boundary has shifted in recent decades. Spending tax dollars on church buildings was ruled illegal in the 1970s but acceptable by 2003.

If you want to sell your historic church later for redevelopment, don’t worry, Jefferson’s wall of separation applies. In Washington State, for example, the Supreme Court ruled that a church could to sell to the highest bidder, even though their iconic building had been designated a landmark and the deal included a likely wrecking ball. Some knives don’t cut both ways.

7. The public underwrites religious infrastructure. Some religious groups may be able to build a portfolio of real estate investments without having to contribute to public amenities, utilities, transportation, or policing. Many community services and assets get paid for by real estate owners through property taxes. But for a long time, houses of worship have been exempt, making them effectively subsidized by surrounding properties. In March 2013, pro-religion Arizona lawmakers proposed to expand that exemption to all properties held by religious entities, as long as they are not producing a profit. Such a change might allow a savvy investor to sit on undeveloped or underdeveloped land without incurring the annual costs faced by other speculators. Tax exempt real estate can offer a way to invest those tithes as membership grows. 

8. International aid dollars. World Vision, a multi-national with an evangelical mission and employee statement of faith has built a vast loyal following largely by appending evangelistic priorities to US aid dollars. World Vision offers desperate people the basics: food, clothing, shelter, medical care, and education—with a carefully titrated dose of Biblical Christianity. Their genius lies in the fact that most of their services are funded by Americans at large.

Administrators and lawyers succeeded in persuading governmental granting agencies that World Vision is a non-proselytizing aid organization, while simultaneously persuading the courts they can’t fulfill their mission with heretics among warehouse staff. In 2007, three employees sued because they were fired over their interpretation of Christianity, which was at odds with the required employee statement of faith. World Vision fought all the way to the Supreme court and won. If Harvard Business School should need a case study on how an enterprise can solicit government contracts while circumventing the Civil Rights Act and other cumbersome employment laws, this is it.

9. Administering public health facilities. With Obamacare and technology costs driving hospital mergers, religious healthcare corporations like Catholic Health Initiatives ($15B+ in assets) are finding that they can secure monopoly positions in many communities or even entire regions. This puts them in the power position when it comes to pricing services and negotiating labor contracts, which means mergers pay dividends. The Lund Report, which monitors Oregon’s healthcare system, reports annual profits of $2 billion and counting for the Providence chain.
Like other sectors such as aid and education, healthcare offers an array of opportunities for religious enterprises to expand and improve their brand appeal with little of their own money at risk. Consider this:

"Religious hospitals get 36% of all their revenue from Medicare [and] 12%…from Medicaid. Of the remaining 44% of funding, 31% comes from county appropriations, 30% comes from investments, and only 5% comes from charitable contributions (not necessarily religious). The percentage of church funding for church-run hospitals comes to a grand total of 0.0015 percent.

Administering health services allows a religious entity to restrict the service mix base on their beliefs about what God wants. For example, in Catholic-run facilities, directives from the bishops prohibit contraception and end-of-life options. Faith-related icons and outreach materials can be made available in waiting rooms. Depending on how your organization is structured, you may be able to preferentially hire members of your group and so keep the money in the family so to speak, all the while reaping the good will that comes with community service.

10. Provide safety net services to potential converts.Prisoners, addicts, single moms, pregnant teens, the elderly, foster kids...the possibilities are endless. President George Bush established an Office of Faith Based Initiatives, which worked to strengthen religious organizations in their ability to provide social services. In the first year, 2005, $2.2 billion in grants were awarded to religious organizations. (Barack Obama later revamped and expanded the office, appointing a cadre of religious leaders as advisors and putting his personal spiritual guide, Joshua DuBois, at the helm.)

The savvy expansion-minded religious entrepreneur will notice that people who are the target of safety net services often are the very same people who make prime candidates for conversion. In both cases they fit the bill because the fabric of their lives has frayed and they are in need of help. From a business standpoint such a focus may seem less than ideal, but remember this: poor, desperate people are the ones who put those celebrity evangelists in their mansions.

Valerie Tarico is a psychologist and writer in Seattle, Washington and the founder of Wisdom Commons. She is the author of "Trusting Doubt: A Former Evangelical Looks at Old Beliefs in a New Light" and "Deas and Other Imaginings." Her articles can be found at Awaypoint.Wordpress.com.

Moyers: 'Inequality for All' — New Documentary Starring Robert Reich Exposes the Staggering Inequality in the USA

           

  Hard Times USA  

Bill Moyers / By Bill Moyers, Jacob Kornbluth

                    

Moyers: 'Inequality for All' — New Documentary Starring Robert Reich Exposes the Staggering Inequality in the USA

Director Jacob Kornbluth helps us see how wealth in the hands of the few is destroying the country.

Photo Credit: Shutterstock.com/LoloStock

 

 

September 17, 2013  |  

 

 

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From BillMoyers.com:

Bill Moyers speaks to Jacob Kornbluth, director of Inequality for All, a new documentary film about how America’s widening income gap is a threat — not only to the viability of our workforce, but also to the foundations of our democracy. The film features economic analyst and former Clinton cabinet member Robert Reich, who uses humor and facts to explain why the consolidation of wealth into the hands of few affects all Americans today.

Kornbluth tells Moyers that his working class roots shaped his decision to make the film: “My friends knew [I was poor] because I got those free lunches in the classroom,” he says. His mother raised a family of four on a teaching salary that, at times, was as low as $9,000 a year. Kornbluth says with Inequality for All he wanted to gain a deeper understanding of the issues from his childhood while elevating the conversation beyond party lines and partisan bickering. “Although [inequality] is a deeply moral question, the argument in the film is that it’s an economic one as well,” he says.
 

 

 

 

BILL MOYERS: When director Jacob Kornbluth screened his new movie at the Sundance Film Festival, his heart soared from the response, rave reviews, the special jury prize and a deal to distribute the film in theatres across the country. Now you might think it must be all about sex, spies and suspense. But you would be wrong. It's about inequality. Yes, inequality, why the rich are getting richer and you aren't. The film's title is Inequality for All and in it, economic analyst Robert Reich tells us how he got to this difficult, terrible place and what we can do to get out of it. Jacob Kornbluth is the film’s director. He's based in Berkeley, California and has been a fellow at both the Sundance Directing and Screenwriting Labs. A video series he developed for MoveOn.org and The Nation magazine was the inspiration for Inequality for All. Jacob, welcome.

JACOB KORNBLUTH: Thank you, Bill.

BILL MOYERS: It's amazing how you've taken a dry subject like inequality and made it work in a compelling, even exciting and as one reviewer said, chilling way. How did you do it?

JACOB KORNBLUTH: Well, it's funny. After our first screening at Sundance, somebody in the audience stood up and raised their hand and they said, "I'm embarrassed to say this, but I laughed and I cried at a film about the economy. Did anybody else feel this way?" And she turned around sheepishly and half the audience raised their hand. And that was first of all, a very important moment for me, because my goal with this was to make a film that wasn't just for people who love economics or love politics. It was to make sure that everyone, the people who don't normally consume this information, can hopefully have a way into getting this information and understanding it. And that means making it a fun movie to watch on some level.

That doesn't mean it-- to take anything away from how important this topic is or how important it is that, Professor Reich, that we show how he speaks truth to power and really lays out the issue in a way that I feel like is hard-hitting and serious. But on the same time, you want to watch a movie that you can experience as a film. And that was important to me. And I felt that we achieved that and that was a big accomplishment.

BILL MOYERS: When you say experience as a film, what are you saying?

JACOB KORNBLUTH: When I say experience as a film, I mean, a film transports you on a journey. I consider it a transformation machine, you know. You go inside a film and then you come out changed. And it's important to me that when people think they understand the issue of income inequality, that they go into this film and come out with a new understanding. I didn't want to tell-- make a film that it felt like a rehash for people who have heard a lot, frankly, at this point about income inequality. I wanted to make a film that felt new. And that changed the way you think about it.

BILL MOYERS: You and Bob Reich colluded, I almost said conspired-- on some short videos that took off, virtually took off on the web and then went viral. And when I saw one of them, I remembered something that the novelist Saul Bellow said to me back in 1984. He said, "Moyers, no one will be heard in the future who doesn't speak in short bursts of truth." And I thought those short videos you and-- and Bob did really confirmed that point.

But here, you turn around and do a, what, 86 minute film, 90 minute film defying the technique you use for short videos.

JACOB KORNBLUTH: I'll tell you. The videos were inspired by my desire to understand economics in a way that, like I said, somebody who's not an economic like me could get. I felt like I was trapped in the 24 hour news cycle, people telling me the right wing says this and the left wing says this and they're yelling at each other. And I can't tell what anything means.

So I found myself constantly in debates with people, when I was just hearing party lines, essentially. Here's what I think if you're a Democrat. Here's what I think if you're a Republican. But I didn't have a deep understanding of things. So I wanted to make videos for me, to kind of get to know this stuff.

BILL MOYERS: You're the son of an English teacher. What was your background?

JACOB KORNBLUTH: Well, I am somewhat unique in those who make documentaries in that I grew up very poor. My father passed away when I was young. And my mother raised me and my siblings on a salary that normally ranged between $9000 and $15,000 a year. And I know this because I had to turn in a form every year to the school to get free lunches and it lists what you made in the previous year on that form.

And my friends knew it because I got those free lunches in the classroom. But I never felt poor, really. And it's weird to use the term poor. What I felt was proud of my-- what I considered at the time working-class roots. And

I felt like education was always my way out.

I always believed that I could make something of myself. I had that, in some fundamental way, the American dream that I think so many people have. And-- but I was keenly aware of who gets what and why. I always paid attention to that. I was never a political person when I was a young man, because I was a little bit cynical about my ability to change anything.

And I didn't want to convince anybody with didactic arguments. I wanted to talk about character. I wanted to talk about people. I wanted to talk about what I considered to be that special bit that makes human beings interesting, the complexity of it all. And it wasn't until I grew up a little bit and I looked around at the world evolving in a way that I wasn't quite so happy with.

And I realized that-- and I started making those short videos with Reich, that I decided this has-- I have to make something. I have to do something. There's nothing-- I realize that peo-- there was an audience for this stuff, that there were more people like me who would want to know the kind of simple story and I thought, There's nothing else I could think of to do.

BILL MOYERS: You had the raise the money for this. So you had to go around to what kind of people?

JACOB KORNBLUTH: Well, two very interesting parts of raising the money. First was Kickstarter. And we-- if you look at our credits, we say, Thank you to the many and the 1% and the 99% who supported this film. And there's about I think there's over 1000 names there.

BILL MOYERS: So you raised money there.

JACOB KORNBLUTH: We raised some, but that was a small fraction of what we needed.

BILL MOYERS: And then?

JACOB KORNBLUTH: And then we went to wealthy individuals who could help fund it. And what's fascinating about it, including the wealthy individual who's in the film—

BILL MOYERS: Nick Hanaeur.

JACOB KORNBLUTH: Nick Hanaeur.

BILL MOYERS: Seattle, Washington.

JACOB KORNBLUTH: From Seattle--

BILL MOYERS: Pillow CEO, made a fortune in the pillow business right?

JACOB KORNBLUTH: That's right. When you-- but there's a lot of people who made a lot of money who think this widening economic inequality is bad for them and it's bad for the economy. And that's a big concept in the movie, the sense that often, it's portrayed as, you know, we're taking money from the rich and we're giving it to the poor. You know, let's get angry with these folks or, you know, sort of this animus that comes up in this discussion of inequality. It's us versus them, depending on what side you're on.

And the reframing of that discussion too, wouldn't it be good for the whole economy? Wouldn't it be good for this wealthy guy, Nick Hanaeur, and these other wealthy individuals if they had more customers with money to buy their stuff? And Nick Hanaeur's perspective, the guy in the film, his perspective is that, "Look, if-- if my customers have more money, my skill as a businessman will show through clearer. I can make more money and also my cleverness as a businessman will be more evident.” So it-- we went to the folks who believe that message. And who are wealthy as well. And thank goodness, there are some, or else there would be no film today.

BILL MOYERS: Exactly, but tell me about the middle class family that you had early in the film. How did you know them? How did you find them?

JACOB KORNBLUTH: Well, one interesting question is, how do you illustrate through personal story the struggle of the middle class? And when you think about that as a filmmaker, you look around and the whole world seems like a potential subject. There's so many middle class people struggling in so many ways. And ways that are often silent, like they don't even like to talk about out loud, just the way that they're sort of-- they don't feel like they're getting ahead in how they're measuring up to their parents, if you're my age.

It seems like to people in my generation-- and maybe they had just an easier run and it's just gonna be harder on us going forward. The people we ended up focusing on were ones that had some connection to Bob Reich as he moved around in the world.

And it turns out there's-- one of the students in his class was a guy who wasn't the normal college age and who had gone back to school to try and make something of himself, after getting laid off as a manager at Circuit City. And I found his story to be compelling, because he didn't feel terrible about himself in that circumstance. He thought he was making himself better. It wasn't the sort of traditional-- I don't want to-- you know, all sad story. He felt hopeful about his future. But man, they were struggling. They had-- you know, $25 in their checking account when I talked to them one day. And you think about the-- the economics of that on a Wednesday, when you know you're gonna get paidFriday and you have 25 bucks to get there. And she's doing the math. She's, like, "I got a full tank of gas, so I don't need to get gas before Friday. I got some food in the pantry. I think I can make it. But $25. If anything goes wrong here, what am I goning to do?" That's pretty typical of some of the pain, I think, that some of the middle-class families we ran into were feeling. And they just turned out to be the ones that we focused on.

BILL MOYERS: Has this family seen the film yet?

JACOB KORNBLUTH: Yeah.

BILL MOYERS: What was their reaction, if I may ask?

JACOB KORNBLUTH: You may. I was terrified to show the film to the people in it, because inevitably, you're making choices about people's lives, but I can tell you that their concern was or my concern was that they wouldn't feel like they were presented with dignity, because I feel like a lot of the people who are suffering at all or expose any of their-- their trial and tribulations feel vulnerable when they tell you those stories. It's a real burden as a filmmaker to-- you carry around as-- to represent people's lives accurately. And I felt like-- they felt proud of seeing themselves in the film and I think he realized that we-- which-- maybe they didn't realize in the making of the film that we weren't after just the sad sack stories. We're looking for stories that people can relate to, the sort of-- that everybody goes through.

BILL MOYERS: What did you learn about inequality that you didn't know going in?

JACOB KORNBLUTH: How about everything would be the simple answer. First of all, I knew about it as something to be angry about. I know I'm angry that inequality is raging. That was as far as I had gotten. Those rich guys are probably mean, you know, was kind of where my understanding got. Now it got more sophisticated than that, but if I could boil it down, it was something like that.

And what really got me about the argument that we presented was although it's a deeply moral question, inequality and you've talked about this before. I've heard you talk about the morality of income inequality. Although it is a deeply moral question, the argument in the film is that it's an economic one as well.

And that-- and it's one that's bad for our society as well. And it's bad for our politics as well. So when people are angry about the political polarization and they say, "Man, nothing can get done." And when they're angry about their communities feeling like they're pulling apart a little bit, like they're not connected with their neighbors in the way that maybe they remember growing up. And they just feel, like, "Maybe society isn't as cohesive as it used to be, that the underlying sort of foundation of that problem is maybe the way our economy is organized." And not only is that bad for our economy, but it's bad for our society and for our politics, but maybe if we restructure it, our economy could do better too. It's not that the rich should be afraid of this. And it's not that we should be necessarily framing this as a fight against the rich. That's a massive paradigm shifting way of looking at inequality for me. And I hope it is for everybody else who sees the movie.

BILL MOYERS: I think you will succeed. It's a marvelous, informative, exhilarating, fun and frightening film. And I congratulate you, Jacob Kornbluth and Robert Reich, for your collaboration and your success.

JACOB KORNBLUTH: Well, thank you, Bill. It was an absolute honor to meet with you and talk to you.

BILL MOYERS: Good luck to you.

JACOB KORNBLUTH: Thank you.

10 things we learned from the '08 crash - or have we?

MONEY

 

MONEY

 

10 things we learned from the '08 crash

Among the hard lessons: Bankers and regulators can make awful mistakes. Consumers must stay on their toes. Home prices can fall. What looks safe often isn't. And greed is a powerful drug. 

By Charley Blaine, MSN Money

 

Shattered economic illusions

If the financial crash that came to a head five years ago this month has a bottom line, it's this: It shattered the illusions about how we live our financial lives.

Retirement plans exploded in our faces. Millions lost jobs, many permanently. Millions more lost homes. We learned new vocabularies to explain the forces that combined to push the economy into possibly the worst recession since World War II. People we thought were honest turned out to be sloppy, venal or both.

Events moved so devastatingly fast that it was nearly impossible to take it all in. Consider: The government takeovers of the mortgage giants Fannie Mae (FNMA) and Freddie Mac (FMCC) on Sept. 7, 2008, were followed a week later by the collapse of Lehman Brothers on Sept. 15. At the end of that week came the rescue of American International Group (AIG). Bank bailouts followed in early October.

It was a frightening time, exceeded in recent times only by the economic scare that followed the Sept. 11, 2001, terror attacks. The 2008 crash generated anger, an anger that still hasn't faded away. That anger makes us wary about ideas both new and old and has kept many away from Wall Street despite the huge rally that began in 2009. The fallout has also made our politics feel downright nasty.

Click ahead for a look at 10 important things we learned from that crash and would be wise not to forget.

• Timeline: The financial crisis, year by year

 

No. 1: Bankers are gamblers -- and often stupid ones at that

Bankers are supposed to take risks. That's the point of banking, or at least the part of it that involves lending to support new ideas and new ventures. But they too easily take risks they shouldn't. Consider Stanley O'Neal, the former CEO of Merrill Lynch. In the quest to make as much money as Goldman Sachs Group (GS), O'Neal pushed Merrill heavily into subprime mortgages even as the housing market was showing clear signs of distress. In July 2007, he discovered that Merrill owned $48 billion on collateralized debt obligations -- securities built around subprime mortgages -- that the nearly 100-year-old investment house couldn't hedge or sell. Selling Merrill became a question of when, not if. Bank of America (BAC) bought it a year later in a deal to save it from outright bankruptcy.

No. 2: The global financial system is too complex

Markets around the world are so intertwined that a problem in one country can cause havoc everywhere else. When Lehman Brothers, a storied financial firm, filed for bankruptcy, hedge funds suddenly were unable to take back securities they'd parked with Lehman's brokerage operation in London. The losses that followed were in the billions.

The Lehman collapse also set off a huge run on the Reserve Fund, one of the nation's largest, because it routinely bought short-term debt issued by the investment house. The run quickly spread to other money-market funds; $123 billion was pulled out of U.S. funds in a week. The U.S. government was forced to guarantee money-market funds for the next year, stopping the run.

Good ideas can also create unforeseen consequences. The Clinton administration and, later, the Bush administration pushed to expand homeownership -- and succeeded. By 2006, some 69% of U.S. families owned their homes. But a large portion of those new owners couldn't handle the costs of homeownership. The rate has since fallen back to 65%, the lowest level since 1995, but close to the overall rate since 1965.

And while we've seen some financial reforms, the big banks are still too big, and the system basically remains unchanged.

 

 

No. 3: Entire markets can be manipulated too easily

Not only is the global system unbelievably complex, it's also so interconnected it can easily be gamed -- even by a guy trading in his parents' basement with the help of a Twitter account, let alone a huge brokerage house.

In January, someone posting on Twitter announced that chipmaker Audience (ADNC) was being investigated by the Justice Department for possible fraud. The stock fell 23% in the ensuing few minutes as computer trading systems power by supposedly smart algorithms picked up the report and issued sell orders. The problem? The Twitter post was false.

The incident shows how easy it is to manipulate a market. If day traders can do it, imagine what big firms can do.

In July, a New Jersey oil trader was fined millions of dollars after using a series of high-speed buy-and-sell orders to push oil and natural gas prices lower. He would buy, pulling the price higher, then quickly sell.

Oil prices are set mostly by trading in futures markets and cash markets, with Platt's, the price-reporting agency, having an outsized influence. The biggest traders are big oil companies, big trading companies and big banks.

 

 

No. 4: Regulators work for the regulated -- and so do rating agencies

 

In 2007, when huge mortgage lender Countrywide Financial and its CEO, Angelo Mozilo, found themselves struggling with the Comptroller of the Currency over multiple issues, especially how mortgage appraisers were selected, Countrywide solved the problem neatly.

It switched its regulation to the Office of Thrift Supervision, allowable because Countrywide owned a savings and loan. The OTS promised more flexible regulation. Countrywide later got into so much subprime-loan trouble that it sold out to Bank of America (BAC).

Then there are the rating agencies, which are supposed to evaluate securities offerings objectively to help investors judge them. Yet the securities backed by subprime mortgages that lay at the heart of the financial crisis were routinely given high ratings by Moody's and Standard & Poor's. Critics say that's because the securities issuers were paying for the ratings. (And it appears that hasn't changed.)

 

 

No. 5: The crash forced us all to expand our vocabularies

 

 

In addition to stocks, bonds, mortgages and the like, Americans have had to learn a whole new set of terms, starting with subprime mortgages. These are mortgages made to customers with little or no credit histories.

There are also mortgage-backed securities. These are basically bonds backed by a pool of mortgages. The borrower makes his monthly principal-and-interest payment, and the cash is forwarded on to bond investors. During the housing bubble, bonds backed by low-quality subprime mortgages were often sold as high-quality securities.

Then there are collateralized debt obligations. These are securities backed by, for example, mortgages in which payments are made in a precise order. The securities are sliced into what are called "tranches," which range from high quality to low quality. The highest-quality tranche gets principal and interest first. If the cash flows aren't sufficient, the lower-quality tranches don't get paid.

And, of course, ther are synthetic CDOs. These are bets on how a CDO will perform, not a CDO backed by mortgages.

And what about credit default swaps? These are effectively private insurance policies. Company A pays a premium to Giant Insurer X insure that its business won't fall apart. If it does, Giant Insurer X must pay off. Company A might also buy a swap betting that competitor Company B won't make a timely payment on its outstanding bonds; this would be like you taking out insurance on a neighbor because you think that neighbor will crash his car. In the financial crisis, credit default swaps sold by American International Group (AIG) required $182.3 billion in federal assistance to fix.

And what exactly is a derivative? Almost anything that involves some sort of bet on the price of an underlying asset could become a derivative. A futures contract on Treasury bonds is a derivative -- a hedge by the owner of the bonds that the price will be at a specific level on a specific date. Oil futures are technically derivatives. And then there are options -- options on stocks, options on futures, options on market indexes.

Five years ago, all these wonky terms probably seemed far away from home. In the meltdown, we learned they impact our homes.

 

 

No. 6: The terrible reality about home prices: They can fall

 

 

Most Americans buy houses because they like the neighborhood. Owning property makes them feel good about themselves. And, of course, the potential profit later on isn't so bad, either.

Yet every 10 to 15 years or so, Americans learn an awful truth about homeownership. The price of a home -- the price of your home -- can fall. When the housing bubble was building a decade ago, banks also ignored this reality; the perceived safety of U.S. housing led to a lot of risky lending.

The bursting of the housing bubble after 2006 caused home prices in nearly all U.S. markets to fall. In some markets, such as Phoenix and Las Vegas, the declines were as much as 50%. Too many were houses built, there weren't enough buyers to buy them, and, worse, many buyers couldn't afford what they'd bought.

Places like Detroit, where the economy falls apart and everyone leaves town, present another problem.

Housing markets usually recover. But millions of "underwater" homeowners today still can't sell because the value of their home is less than they owe on the mortgage.

 

 

No. 7: Investors are 'muppets,' and consumers are suckers

 

 

This view was exposed in a broker's e-mail that termed investors "muppets" who could easily be taken for a ride.

We learned during the crisis that brokers and adviser can lie to clients and even push them into investments they knew were risky – or even designed to collapse – without facing any punishment. The financial crisis exposed brokers who hawked investments to customers without telling them what they were buying, let alone if the investments were appropriate.

That's akin to a car salesman insisting that the cute roadster on the lot is the greatest vehicle ever, even when he knows the body is rusted out.

The bottom line for investors and consumers alike: If you don't understand what you're being pitched, walk away. Quickly. You have to look out for your own interests.

 

 

No. 8: Austerity isn't prosperity

Yes, the Greeks are profligate spenders. But they have also endured a recession that's now six years old. The social safety net is collapsing and people are leaving the country. That's because the terms of loans designed by the European Union, the European Central Bank and the International Monetary Fund to keep governments in Greece afloat have cut social spending, infrastructure investment and the like to the bone. Greeks have also absorbed huge pay cuts.

And austerity has only made their economy worse.

Greece isn't alone, either. The same prescriptions have been applied to Spain, Portugal, Italy, Cyprus and Ireland.

It's also being applied to a lesser degree in the United States, as sequestration legislation has forced mandatory cost-cutting on the federal government. And so far, austerity measures haven't freed up capital and creativity in Greece or Spain. Instead, it has added to the misery. The Europeans are finally starting to think about how to get investment flowing again.

 

 

No. 9: There are no safe investments or guaranteed returns 

 

 

All investments carry risk. That is the essence of capitalism: You take a risk for the potential to make a profit on an investment. But the 2008 crash and its aftermath have shown that even what looks like a safe investment can fall in value in a heartbeat.

Take Apple (AAPL), which was, for a while, supposedly the greatest stock ever. In 2011 and into '12, analysts fell all over each other raising price targets on the stock. Some thought $1,000; others guessed $1,200 or more. The shares hit $705 in September 2012 -- and fell 45% in the ensuing nine months to $385.10.

Shocking. Just shocking.

The smart investor who studied the stock would have known its history of extreme volatility. The shares previously peaked in December 2007 at $202.96, then fell 61% in 11 months.

The lesson: Guaranteed returns may not stay guaranteed for long.

Want another example? Bernard Madoff conned investors with promises that he could deliver the returns they wanted. And he manipulated his books to ensure the performance. The crash dried up the inflow of money to his firm, and the Ponzi scheme fell apart in late 2008. He's in jail.

 

 

No. 10: The banker who kills the bank keeps most of his money

 

 

Bernie Madoff is an exception, though. None of the chief executives of the banks that fell apart in 2008 have faced serious punishment or any criminal charges. While some had to give some money back, they're still very rich men.
In this collapse, investors and consumers suffered the most, along with some low-ranking bankers who lost jobs.

The developments leading up to the 2008 financial crisis and the crash itself are filled with examples of bad decisions -- or worse -- by the bankers in charge. Some saw their institutions fail. Some lost their jobs. But all left the mess with many millions.

Stanley O'Neal was forced out at Merrill Lynch in the fall of 2007, mostly because he saw that the investment house was about to fail and tried to sell it without telling his board first. His severance package included Merrill stock and options worth $161.5 million, on top of the $91.4 million in total compensation he earned in 2006. Merrill was sold a year later.

Kerry Killinger, CEO of Washington Mutual, left in before his ouster in 2008 with a $25.1 million payoff. The package included a $15.3 million severance payment, a $6.8 million lump-sum pension benefit and a prorated share of his $1 million annual salary. WaMu was seized by regulators 18 days later in the largest U.S. bank failure ever.

From 2003 -- when investigators said WaMu had begun a disastrous push into high-risk, subprime-mortgage lending -- to his 2008 exit, Killinger received a total of $103.2 million in cash, stock and options.

Killinger has kept most of his money and lives in one of Seattle's most affluent neighborhoods. In March 2011, Killinger and two other WaMu executives were sued by the Federal Deposit Insurance Corp. for more than $900 million. The trio settled for $64 million in December, but they only paid $400,000 each. The rest was covered by insurance.

Countrywide's Mozilo amassed $470 million in salary, bonuses, options and restricted stock from 2001 to 2006, the peak of the housing bubble. He sold hundreds of millions of dollars of shares before Countrywide was sold to Bank of America (BAC). The deal was such a disaster that B of A has spent $40 billion in legal and other costs trying to get the mess resolved.

Mozilo did agree to pay $67.5 million to settle securities and fraud charges. Of that, $20 million was paid by Countrywide as part of an indemnification agreement. He remains a very rich man.

Is this fair? Perhaps not. Will something be done about it? Well, the statute of limitations on cases involving alleged violations of securities laws in the meltdown expires soon. So probably not.

Are criminals are getting off scot-free? In some cases, perhaps. But while many were guilty of not understanding the risks they asked their institutions to take -- or ignoring them -- that isn't a crime. In fact, in a deregulated banking world, nothing done in the housing mess may in fact be illegal.

Case in point: Lehman Brothers. The SEC spent years investigating the causes of the Lehman collapse in 2008. The agency's army of lawyers couldn't come up with charges backed by evidence they thought was strong enough to win judgments. So they never brought a case against former CEO Richard Fuld -- or anyone else.

• Timeline: The financial crisis, year by year