Zombies R US(ofA)

As Stephen Colbert used to ask:

George W. Bush - Great President or Greatest President?

On the Tonight Show with Jay Leno, Obama tried to inform America why AIG was so pivotal in the Rape of Lady Liberty. He said AIG was just a normal insurance company until, in the search for more and more profits, grafted an investment bank on its back. And that investment bank operation got over involved in derivatives and other risky assets, primarily associated with the subprime mortgage market.

Yesterday I watched a video clip of Barney Frank, where he suggested that we file a shareholder lawsuit against AIG for fraud, as we as a country are the biggest shareholder in AIG.

Then it hit me: we as a country and economy are just like those Zombie Banks that are technically, non-technically, hypothetically, and every other -ally so beyond life support that they are undead. Not even Mary Shelley or all the King's men can bring them back to love and life.

At first I thought such a lawshit against AIG would serve some cathartic need, it is pointless. There is nothing to sue for. Our investments in these banks and financial institutions, call it a bailout or whatever, is dead. There may be marginal money there for operations, but a lawsuit by the United States would be frivolous because there are no assets in priority. What I mean is this: AIG, Bank of America, Citibank, Goldman Sachs, etc etc etc became involved in fraudulent activity years ago. And although Obama said what they did wasn't against the law, he did suggest that these financial institutions did not act in their shareholders' best interest. And they lost trillions.

If you know anything about shareholder lawsuits, a plaintiff attorney only has to find one person (and preferably a few) to file a lawsuit against a corporation along with a request seeking class certification. A class action lawsuit against AIG, BofA, Citibank, Wells Fargo, or General Electric's finance arm would bring any of these companies down. And hard. Now I can think of at least a hundred million people who could serve as lead plaintiff. And I am sure there is a Weil Gottshal, or a Lieff Cabraser Heimann & Bernstein, or a Bernstein Liebhard & Lifshitz willing to take such a case.

And what is the chance that such a lawsuit would be successful? Would it be that hard to show fraud? The only thing the companies have going for them is that such a massive discovery process would likely bankrupt a plaintiff firm, even one well capitalized. And any such suit would take priority over a suit by the Attorney General's office. So, all the 'good' money we have poured into these bad financial service firms will become attachable assets in such litigation. I mean if Hank Paulson and Tim Geithner couldn't remember to put strings on the money, do you think they protected the money against shareholder lawsuits? (And if they did, what did they know and when did they know it?)

So it appears that we may be at risk of having to bail these companies out again again again. Is this why Obama and the Fed are setting up a shadow banking system? Whether it is a class action lawsuit or a smoking gun or a butterfly flapping its wings in China, we are at big risk.

The only way out is to collectively agree that the zombies are not only bad, but that they can't be rehabilitated without the baptism of bankruptcy for the remission of sins (and obligations). And a truth commission. It is well known that if you are attacked by a zombie, you will become one. And as we are under attack, we must be very careful.

And there is something else too: we need to be able to say what it is that we want and then build it. We are so afraid to sit down and imagine what type of community, nation, or world we want to inhabit. Very few people have been having that discussion, although that seems to be changing. As Terrence McKenna says: "if you can't describe a reality, you can't inhabit it."





As we are on the topic of zombies, what are corporations anyway? Fictitious individuals granted to possiblity of immortality? WTF.

Armageddon Strategy

Yesterday, I wrote about the rent strike at the Grand Central Market in Los Angeles. The battles of the New American Revolution are spilling over into the aisles. . . that is the supermarket aisles. Specifically, the struggle is a battle between corporations. The Los Angeles Times is reporting that grocery stores are being squeezed by shrinking demand because their customers don't have money, and the manufactures of food who say they need higher profit margins to cover costs or they will go bankrupt. All those cost increases that occurred as a result of higher fuel prices, food stocks, and so on.

Grocers said that Unilever last year increased the wholesale price of its Skippy peanut butter by about a nickel a jar after shrinking the contents of the container by almost 10%.

Thank god the government has been saying for years that there are few if any signs of inflation. To me, Skippy skipped and jumped up 16+ percent. Gas prices went way up. Food prices went way up. Housing costs went way up. Health care prices went way up. The cost of wars went way way up. Good thing inflation didn't go up too. Otherwise we would be in trouble.

But while the corporations fight each other over prices and shelf spaces, there are some other things going that you may not know about. The L.A. Times is reporting today that port cargo levels up and down the west coast are declining faster than the Titanic. On the same page, one half of all hospitals are in the red (I assume they mean they are losing money). And at Freddy Mac (the giant mortgage lender), the Bush-appointed CEO resigns after five months on the ("heck of a") job.

And closer to home, a woman I work with told me her sister got laid off today from Honeywell. Why? (Please don't say it is the economy stupid) rather her division issues the rebates for solar power, tankless hotwater systems, and so on. Rumor is that for weeks they have not had money from the State of California to pay the rebates because the Republicans were trying to cripple the government.

What really disgusts me is that we have an honest to god crisis brewing here. And there are those that a rejecting helping their fellow citizens and instead are banking on Armageddon or worse as the way in which they will win back political power. Even if they are correct in believing that this Armageddon Strategy will win back power for team elephant, Jesus will be pretty pissed off. Not at the Jews, not at the atheists, but right where it belongs: at those who kicked others while they were down.

Mutiny in the Barrio

The petite bourgeois have fired an opening salvo in this the New American Revolution. Move over Paris, your great revolution of the landless is about to be eclipsed American style.

In case you missed it, the mostly Hispanic and Asian merchants that rent all the booths, shops, and grill spaces in Los Angeles' famed Grand Central Market successfully staged a rent strike, demanding a 30% reduction in rents and elimination of a joint-marketing/advertising fee. The 40+ tenants formed a union and collectively struck paying rents. The rents were eventually paid -- more than two weeks late. Yes the landlord threatened all of them with eviction, but probably realized that it might be difficult to pay the mortgage with an empty building. Plus there would probably be a ton of litigation over who owns the fixtures. Round and round we go, where no one knows. Probably down the drain.

Well, Atlas shrugged yet again. I think his back is getting to be pretty sore after the long days he has been pulling. Maybe Atlas was just the young Sisyphus who is yearning for retirement.