The New Robber Barons Read online

  Washington's political corruption and mismanagement

  has the same roots as Chicago's. As Arianna points out, on a national level, we need "the mother of all reforms:"

  "That is why the first step toward stopping our relentless transformation into Third World America has to be breaking the choke hold that special interest money has on our politicians."(Third World America, 172)

  On a local level, Chicago will have to fix its own problems by breaking the choke hold of special interest groups. On a national level, it will take a Constitutional amendment requiring full public financing for political campaigns (for starters). Our politicians have shown us how willing they are to be owned by special interest groups that will buy votes, buy a campaign, or just buy them off. As Arianna explains: "If someone's going to own the politicians, it might as well be the American people."

  Afternote: I chose James Carlini's report, because I thought it might interest city officials to know that tourists are feeling intimidated; it's bad for business. It turns out he lives in Illinois (not Wisconsin) and grew up in Chicago. Contrary to some commenters' assumptions, he is not intimidated by Chicago. I could have chosen from several unprecedented incidents (some occurred on Mag Mile) among my neighbors and friends, but Mr. Carlini is a writer and there was a link to his internet article. Likewise, I didn't have a link to the story about multiple shots fired into WGN's window on Mag Mile, since it was underreported, but the eyesore of a board that replaced it made the Tribune Tower less attractive for tourists and shoppers. (The board was up for several weeks, and the window has since been replaced.)

  Incidents on Mag Mile are underreported by the media, unless an incident happens to a reporter. On July 14, Chicago Tribune reporter John Thomas was mugged "on the (not so) Mag Mile." Here's an excerpt of his account:

  I was mugged Monday on the Mag Mile. Right in front of the glitzy Coach store. In broad daylight. Surrounded by literally hundreds of people.

  The sidewalk was packed with tourists and shoppers, but I felt a strange energy when a kid, probably about 14, sat down close to me on my left while the guy he walked up with stood on my right. It just felt wrong.

  Then, literally in a flash, the kid on my left grabbed my iPhone and tried to bolt. I had heard all of the warnings about people snatching iPhones and iPods, but because the street was so crowded I never thought it could happen there and then.

  Click here to read the rest.

  Afterword: I never mentioned race in this commentary, but a few commenters brought up race and made unwarranted assumptions. Some commenters assumed "wildings" only involve black youths. Chicago is a city with a lot of diversity and gangs of every race. I mentioned a separate incident of an armed intruder being shot and killed by an off duty police officer; the armed intruder was not African American. I also mentioned three police officers were shot and killed within the past 60 days. Two were African American, one was not.

  In Third World America, You Can’t Buy a Ream of Paper on

  Minimum Wage

  December 18, 2010

  In 2010, every one of my work-related conversations turned to personal wealth management. The money-class wants to preserve and increase their considerable wealth, and they are terrified of losing it. Elsewhere in America, those that don't have money are terrified of the rising cost of necessities like food and energy not captured in the [core] consumer price index calculation.

  As of July 24, 2009, minimum wage in the United States was $7.25/hour (before taxes). At the beginning of 2010, minimum wage barely bought you a pre-tax $6.79 ream (500 sheets) of paper at Office Depot. By the end of 2010, that cost had skyrocketed to $9.49 per ream, nearly a 40% increase. But printer paper isn't a necessity for those who need to feed and clothe their families. Official unemployment is at 9.8%, and many "new" jobs are part-time jobs that replaced former full-time jobs. Counting underemployment, the misery soars above 20%.

  Arianna Huffington's latest book, Third World America, explains how those with the least power and money have been getting squeezed for decades: “The median middle class in September 1979 was earning (in constant, inflation-adjusted dollars) $25,896 a year. In September 1995, that same man or woman was earning $24,700 a year -- a 5 percent cut in salary over the intervening decade and a half. (P. 54)

  Meanwhile, the financial system has strangled U.S. growth by parasitically growing from 3% of GDP in 1965 to 7.5% of GDP currently. Money was diverted from capital investment, the most important stimulus generator for our economy, to save corrupt financial institutions. Financial services now account for 35-40% of all corporate profits in the U.S. That number should be less than 5% in an honest economy. CEOs of bailed-out banks earn more than they did before the bailout.

  Sanders: The U.S. Is a Banana Republic

  Senator Bernie Sanders (I. Vermont) explained to the Senate during his tax cut filibuster on December 10 that the gap between the wealthiest Americans and the poorest is the greatest it has been in U.S. history. The bottom 50% of Americans own just 2% of the wealth. The top 1/10th of 1% takes home 12 cents of every dollar earned in America. The top 1% earned 23.5% of all income, more than the combined income of the bottom 50%.

  Yet, the lust for money and power by the financial elite knows no limits. Over 10 years, the top 2% of the wealthy in this country will get $700 billion in tax cuts. Meanwhile, the country chokes on a $13.7 trillion national debt.

  Deflation and Inflation: Where It Hurts You Most

  The disappearing middle class is dying of stranguflation. Nominal income is falling; yet debt-loaded consumers have to meet usurious consumer loan payments, while prices for staples like energy, school tuition, and food rise. Despite a rising stock market, most Americans still feel a negative wealth effect, particularly due to depressed housing prices.

  The coming year will be worse for too many Americans. They face the quadruple threat of the weak recovery, the astronomical government debt load, price inflation for necessities, and the fear of future overall inflation.

  Congress has blocked meaningful financial reform. It approved the Great Bailout, followed by the Great Cover-Up and the Great Recession. If Congress continues its sham investigations, culprits will never be brought to justice.

  As the economy struggles in 2011, expect most of Congress to again protect its cronies in the financial elite, instead of the interests of the average voter. It is a bi-partisan betrayal of the nation's economic health. If Americans don't pay attention and vote out corrupt members of Congress, we'll sink further into a banana republic, and this time it's in English.

  Third World America 2011: Forget Fast Tracking to Anarchy”

  We’ve Arrived

  June 8, 2011

  Last summer I wrote about Arianna Huffington's latest book, Third World America: How Our Politicians are Abandoning the Middle Class and Betraying the American Dream and talked about the Great Recession, the Great Bailout, and the Great Cover-Up of financial crimes.

  I also wrote that municipal financial problems spelled a lower quality of life. Downtown Chicago crime escalated, along with attacks on officers in the Chicago Police Department. An officer who spoke up about the low morale of the undermanned and rudderless police force endured official retaliation. ("Third World America: 'Fast Tracking to Anarchy")

  This year, all hell has broken loose in downtown Chicago. Years of under-hiring have resulted in a police force that is unprepared for wildings and gang violence. Moreover, concealed carry in Chicago is illegal, unless one follows the Constitution.

  Tourists and residents have been attacked by mobs of youths on buses, on beaches, on bicycle paths, near the shops of the Magnificent Mile, and outside their homes. Mobs of shoplifters plagued "Mug Mile" stores.

  The irony is that these disenfranchised youths are turning to crime -- and if justice is done, prison sentences --against innocent targets. Their focus is misdirected. Participating in a peaceful five million man march -- a true show of force and power -- against elected culprits
in Washington would get them better results for lasting change.

  The Spring of Anarchy: "A City At War With Itself"

  It is still technically spring in Chicago, and wildings have made Chicago and its beaches unsafe. Poorer neighborhoods have long been war zones. The murder rate and gang violence in Chicago has been unacceptable for years.

  Yet the police force was gutted, handcuffed, and muzzled. ("In Third World America Expect to be Investigated, as Lt. John Andrews Is Being Investigated, for Speaking Up") Police officers -- some off duty and still in uniform -- have been gunned down in the streets. Their crime-fighting abilities are severely hampered by years of irrational policies and genuflecting to politically power hungry special interest groups.

  Of course, we want police officers to follow proper procedures at all times, but we also want them to make fast decisions in violent chaotic circumstances, defend themselves, and get home safely to their families and friends. Local media hounds come out in force against police work. It's time they came out in favor of superior training and hiring.

  Mayor Rahm Emanuel, with less than a month in office, has called for the arrest of all the youths involved in last weekend's mob attack that included an attack on a shopper and on two middle-aged doctors -- in separate incidents -- visiting for an oncology convention. Yet there have been ongoing incidents of wildings that didn't make the front page of local papers as did this last attack on tourists.

  The woefully undermanned police force plans to recruit and train 300 new officers when some estimates indicated it needed more than 3,000 new officers before the outbreak of the new-pattern crime wave.

  Police Superintendent has to Stop Lying to Citizens*

  Mainstream media has finally started to report crime in the more fashionable parts of town, but only because it has spun out of control into anarchy. The most reliable source of crime-wave information has been Second City Cop, a blog started by a member of the Chicago police force.

  Based on my conversations with friends and neighbors, citizens of Chicago feel lied-to by Police Superintendent Garry McCarthy.* On Memorial Day, North Avenue beach, in one of Chicago's more affluent areas, was closed after gang violence. This is unprecedented. McCarthy repeatedly told the media it was due to people succumbing to the hot weather. Not true. Violence was out of control as beach-goers were harassed by mobs and cyclists were pulled off their bikes and beaten.

  Mainstream media now contradicts McCarthy's feeble spin. One police officer told the media that 500 youths exited public transportation for the lakefront and while they were there, citizens were harassed.

  CBS reported wilding incidents at this beach earlier in May, and police patrols had already been stepped-up. Two bike riders on the North Avenue Beach path had been mobbed by about 100 teens. They were knocked off their bikes and then thrown into Lake Michigan. Yet Near North District commander Kenneth Angarone said police responding at the scene did not find a "bona fide incident."

  Mobs have swarmed local businesses, shoplifted and intimidated shoppers at high-end stores, attacked bus riders, attacked shoppers near Michigan Avenue, attacked tourists and more. Shortly after Mayor Rahm Emanuel said he would round up perpetrators of last week's mob attack, NBC reported that a mob of 15 to 20 youths beat and robbed two people in Chicago's downtown shopping area.

  Memorial Day Mobs: Boston, Nashville, Long Island, Miami, Rochester, and Charlotte

  Wildings occurred in other cities on Memorial Day weekend in what may have been coordinated flash wildings. Gangs swarmed beaches in Boston, Nashville, Long Island, Miami, Rochester, and Charlotte in what some believe was a social media coordinated effort. (Hat tip: Second City Cop)

  And Stop Lying to My Friends

  In response to the weekend violence, my network of friends emailed around news articles. Mary McCarthy (no relation to Police Superintendent McCarthy), a friend of a friend, emailed local papers about a mob pulling people from cars and taxis right outside her upscale apartment building. When the police arrived 15 minutes later, the crowd had scattered. Here's an excerpt:

  "At about 11pm last Friday night, June 3rd, I heard shouting, screaming, horns blaring and tires screeching from my apartment...When I looked out my window to the street below I saw a crowd of about 20 young people...directly across the street from the entrance to my building. They were leaning on parked cars and clogging the street. They were screaming at people walking and driving by. I watched them stop vehicles, including taxi cabs, and pull people from the vehicles...It was a frightening scene and I was sure someone was going to be hurt."

  The Sun-Times wrote of Mary McCarthy's report and Police Near North District commander Kenneth Angarone said that police responded but did not find a "bona fide incident.'' I believe Ms. McCarthy.

  It's Not a Race War; It's a Class War

  It's much too easy to let politicians divide the nation, make this about race, and ignore the underlying causes. It's true that many of the mobs in downtown Chicago are comprised of African Americans, but Oprah Winfrey isn't into wilding. Mary McCarthy didn't get a close up look at the mob outside her window, but they appeared white -- definitely not African American.

  Last year, I never mentioned race in my post about Chicago violence, but a few commenters brought up race and made unwarranted assumptions. Some commenters assumed "wildings" only involve black youths. Chicago is a city with a lot of diversity and gangs of every race. I mentioned a separate incident of an armed intruder being shot and killed by an off duty police officer; the armed intruder was not African American. I also mentioned three police officers were shot and killed within a two month period. Two were African American, one was not.

  U.S. Downward Mobility

  The destruction of the middle class has accelerated. Housing values have plummeted, and investors earn negative real rates of inflation adjusted returns on "safe" investments like money market funds. Food, fuel, and medical costs have skyrocketed. Essential civil services are underfunded while taxes escalate. The middle class is sinking fast as saved wealth is destroyed and its standard of living erodes.

  After being subjected to a national financial crime wave with no meaningful consequences for white collar criminals, the middle class, the core of many cities and communities, is being subjected to a physical crime wave.

  The U.S. escalated its debt to fund the ongoing bailout of the banking system. TARP was a small part of it. The Fed now owns over a trillion in suspect assets it bought from banks, and it daily provides them with almost zero cost money so high spreads help them earn their way out of the financial hole in their balance sheets. No one went to jail, and bankers reward themselves with billions in bonuses.

  Banks broke their TARP agreement to lend to small and medium sized businesses. They lent to large businesses that outsource a lot of labor. The iPads stolen by Chicago gangs are mostly made in Asia. Banks and their enablers in Washington starved the U.S. of the biggest source of sustainable job growth: capital investment in the United States.

  Elected Citizen-on-Taxpayer Financial Crime

  Illinois and Chicago are ground zero for the consequences of our local and national fiscal folly. Pension funds are woefully underfunded. Last minute sweetheart deals to crony-connected retirees have contributed to the problem along with bad investment decisions. In general, though, civil servants are blameless. Some are being asked to increase contributions from 8 percent of pay to 12 percent of pay. The State of Illinois is behind on many of its bills. Chicago's city budget is in dire straits.

  The suburb of Bellwood provides an example of how graft and corruption have contributed to municipal project debt. A train station project was hijacked by local officials who paid millions above appraisals for properties, and in at least one instance dealt with a mob-linked company. According to the Chicago Tribune, taxpayers of the small suburb have a $40 million hole and investigations revealed "questionable players," with laughable financial analysis.

  Chicago's unemployment rate and mortgage delinqu
ency rates are among the highest in the country, and home prices have slumped to 10-year lows. The S&P Case -Shiller index shows that Chicago area housing prices have fallen to April 2001 levels. From the housing bubble's November 2006 peak, prices are off 34 percent.

  Illinois state income taxes rose this year from 3 percent to 5 percent, a 66.7 percent increase. That is in addition to sales taxes, utility taxes, phone taxes, various automobile taxes.

  Chicago is not alone. Cities throughout the country recently experienced wildings, and it will get worse for them as it did for Chicago. Illinois may have the most severe budget crisis in the country, but states like California, New York, New Jersey and more are troubled.

  Ongoing Mugging by Wall Street Banks

  After the largest bank bailout in world history, we now have a national epidemic of foreclosure fraud. In March, Judge Moshe Jacobius stayed 1,700 foreclosures due to altered documents in Illinois' Cook County.