Hong Kong’s CEO Signs Up for Trouble

Leung Chun-ying‘s next signature could be a politically-costly one, for both Hong Kong and for China.

Few in the city of 7.2 million imagined that Beijing’s hand-picked chief executive would take their side as China clamps down on pro-democracy forces. Certainly not the estimated 500,000 Hong Kongers who joined a July 1 protest against encroachments on the former British colony’s hard-won freedoms. Still, Leung’s decision to sign a petition against the city’s version of “Occupy Wall Street” is as odd as it is gratuitous — and may further fan tensions in a place already close to tinderbox territory.

Ostensibly, Leung’s signature is aimed at averting mass sit-ins in the city’s financial district. Some business leaders worry “Occupy Central” protests could dampen commerce and growth in a city whose main business is doing business. But is it appropriate for the leader of Asia’s 12th biggest economy to sign what is in effect a political petition? With a swipe of his pen, Leung is effectively signing away any hope the pro-democracy movement has of playing a role in public discourse.

By further dividing a society already on edge, Leung is breathing fresh life into Occupy Central, which until last month seemed to have lost much of its urgency. The desire to pick Leung’s replacement as CEO is only one of the driving forces behind the movement, others being stagnant living standards, skyrocketing housing costs and growing inequality. The group first sprung up in late 2011, when activists set up camp at the iconic HSBC headquarters building.

In the years since, the movement lost focus and notoriety. That was until last month, when Beijing dropped a political bomb on Hong Kong: a white paper laying out tighter controls over the city’s people and government. The ham-handed document labeled Hong Kongers reluctant to embrace China’s Communist leadership “confused or lopsided.” Beijing contends that only a Chinese “patriot” can serve as Hong Kong CEO.

That prompted a massive online democracy referendum signed by nearly 800,000 city residents and the July 1 march (and, more recently, a counter petition against pro-democracy forces). Since then, protest leaders have pledged even bigger demonstrations if Beijing doesn’t back off. And now as Leung does his patriotic bit, he’s tossing fresh fuel onto an already spreading fire.

Even more surprising, key elements of the private sector also are bowing to China — including the Big Four audit firms. Hong Kong’s transparent, first-world banking system and rule of law have made it China’s “green zone.” That reputation won’t last much longer if Beijing succeeds in muddying Hong Kong’s business-disclosure rules and chips away at regulators’ independence from Communist Party bigwigs looking to hide their ill-gotten millions. China is always a difficult balancing act for Western companies (just ask Microsoft, which says it’s being probed by regulators there). Still, it’s chilling to see the Hong Kong affiliates of Deloitte, Ernst Young, KPMG and PricewaterhouseCoopers oppose an Occupy Central movement fighting, at least indirectly, for their continued independence.

The big worry now is that Leung will pressure Hong Kong’s 160,000 civil servants to sign, too. “Of course there would be pressure,” Democratic Party leader Emily Lau Wai-hing told the South China Morning Post. Leung, she said, “can sign it as he likes, but please don’t politicize the civil service.” While Leung denies any such intention, activists worry about a behind-the-scenes effort to force government workers to oppose Occupy Central in order to keep their jobs.

In his efforts to be a good company man for China Inc., Leung may only be fueling the kind of social unrest in Hong Kong that Beijing wants to avoid. If protests swell, it will be too late for China’s leaders to claim they never signed up for this.

To contact the author of this article: William Pesek at wpesek@bloomberg.net

To contact the editor responsible for this article: Nisid Hajari at nhajari@bloomberg.net

Buddy, Can You Paradigm? Occupy’s National Gathering 2014 Meets Sacramento

They’re baaaaaaaack.

Actually, they never left, and to prove it Occupy Wall Street stalwarts are launching the movement’s third national gathering (NatGat3) this coming July 31 through August 3 in Sacramento, California. The first in what has become an annual event was preceded by a July 4 celebration in Philadelphia in 2012 and a second in Kalamazoo, Michigan in 2013.

William Underbaggage, Oglala Lakota native and spokesperson for the Indigenous Environmental Network, will inaugurate the four-day event with a sunrise blessing on Thursday, July 31. This will set in motion a kaleidoscope of activity ranging from speakers corners, custom workshops, the customary “general assembly,” marches, teach-in’s, panel discussions, a Debtor’s Assembly, and a Know-Your-Rights presentation by the National Lawyer’s Guild.

Speaking of Know Your Rights – How Will Sacramento’s Use its Police?

This is not a casual question, and it is an ever-present fear on the part of Occupiers whenever they schedule themselves to show up in large numbers. History shows that intimidation, beatings and arrests follow. For a movement that is remarkable in its use of restraint and in how it follows the Martin Luther King path of non-violent resistance, it is one also remarkable in the amount of force used against them.

That force, and accompanying official overreach, is not standing up to court scrutiny. Not that this is much solace to the hapless Occupiers involved, but it does show that the courts – to the dismay (and expense) of city and state enforcement arms – agree with those who exercise the constitution’s promise of the right of free assembly.

The City of New York recently agreed to part with nearly $600,000 to resolve a lawsuit involving Occupy Wall Street participants falsely arrested by the police for walking on a sidewalk in the East Village on New Year’s Day 2012. Only last year, the city agreed to pay $230,000 as compensation for the loss or destruction of books from the Occupy Wall Street library. One Occupy group, Global Revolution, was also paid $75,000 for lost computer equipment stemming from that same period.

And, it isn’t over in that city, as a class-action claim involving the arrests of some 700 people surrounded and “kettled” while they marched on the Brooklyn Bridge roadway is still wending its way through the court.

Arrests and compensation for those arrests are a little-reported story across the U.S.

In Atlanta, a judge dropped cases against eight occupiers – one of them Democratic State Senator Vincent Fort – because “officers could not identify them.”

In Philadelphia, the City of Brotherly Love, every one of 31 Occupy Philadelphia protestors was acquitted of all charges – obstruction of a highway, failure to disperse and conspiracy. This is being heralded by a number of activist groups as to its important implications for the right and importance of freedom of speech.

In Berkeley, California earlier this year, injured Occupy Cal protestors successfully snared UC-Berkeley Administrators as defendants in a lawsuit centered on police brutality and violation of free speech rights.

Governor Nikki Haley and South Carolina officials, a court mandated, can be sued by Occupiers arrested for living on the S.C. State House grounds. “State grounds are not meant to be used as a public toilet and campground,” a charge disputed by occupiers.

Has a Gauntlet been Thrown Down on Governor Brown’s Desk?

What will it be? Will the governor set in motion an expected parade of arrests for presumed violations of ordinances that are being designed, more and more, to limit when, where and how an American citizen can peacefully protest? Or, will the man once called “Governor Moonbeam” because of his hippy-leftist contemplative nature, be able to reach back in time to reconnect with the younger man who once championed personal freedom?

California’s won’t be the first state capital put to the test (and called on) for how occupiers and protestors are treated. Boise, the Capital city of Idaho, tore down Occupy tents to disperse and restrict their presence in a police action called “Operation De-occupy Boise.”

The U.S. District Court in that state had this to say by way of warning:

Occupy Boise’s tent city is a political protest of income inequality. As such, it is expressive conduct protected by the First Amendment. The State has the authority to regulate expressive conduct and can require reasonable time and place restrictions that are content neutral…

(it continues) … If the State enforces a law in a manner that targets certain speech for restriction because of its content – especially when the target is political speech in a public forum – it will be taken to task. When a restriction is content-based, the State bears an “extraordinarily heavy burden” of showing that the law or its enforcement is the least restrictive means to further a compelling State interest.

The courts and streets are not the only battlegrounds in which Occupy has to fight for recognition and support. In Occupy’s experience, the local press is often complicit in showing Occupy in a accusatory and negative light – if it is ever mentioned at all.

In an article in the Sacramento News Review called “Rising Up, Again: Occupy, 99Rise and activism’s big comeback,” reporter Nick Miller praised the 99Rise activist group for being “leadership based” and compared Occupy as lacking in that. Inexplicably, he asserts that “Unlike Occupy, (the) 99er protests (were) non-violent.”

What sort of message is that to send to the community? Does he have proof that the local Occupy Sacramento group threatens cops, throws bottles, and writes graffiti on Capital bathroom walls? This puts Occupy in the role of having to defend a baseless charge and put itself in the position of antagonizing the press and setting itself up for further criticism.

Enough about Fears – Where’s the Fun?

The four day celebration of Occupy’s ever-evolving life and vitality will open with a ceremony conducted by native American William Underbaggage. It will end on Sunday, August 3, with a San Francisco Mime Troupe non-verbally extolling the virtues of the NSA and a final General Assembly.

Everything in between is designed to further the spirit that came from Zuccoti Park the fall and winter of 2011. Need more details? They can be found here, as well as on the NatGat3 Facebook pages.

Let’s wish Occupy an arrest-free vacation in warm, welcoming California.

The first book written about Millennials made a lot of terrible predictions

The first book on Millennials, Millennials Rising: The Next Great Generation, was published in 2000. And it contains a sentence that in hindsight is darkly, hilariously wrong:  ”For Millennials, the Dow Jones only goes up, people only get wealthier, and America only fights effortless wars.”

So that didn’t last much into the decade the book calls the “Oh-Oh’s.”

But 14 years later, pontificating about Millennials is as popular as ever — one of the book’s many wrong predictions is that the media would lose interest in Millennials during the 2010s. And the remaining living author of Millennials Rising, Neil Howe, is still a consultant in demand for his ability to explain the youth.

Here’s what Howe and his coauthor, William Strauss, predicted about Millennials in 2000 — and what actually happened.

1) Millennials will be more religious


Christian youth culture on the NBC TV series Friday Night Lights. (NBCUniversal via Getty Images)

Christian ’90s youth culture isn’t left out of Millennials Rising, which can read like an ur-Buzzfeed list of ’90s nostalgia. The section on religion name-checks Veggie Tales, high school prayer circles, the Jewish group Kadima, True Love Waits and WWJD bracelets, all in about two sentences. And the authors argue that the growing power of religious pop culture from Millennials’ childhood was making them more intensely and vigorously religious than their parents.

Nope. By 2014, Millennials were less likely to believe in God than any previous generation, according to the Pew Research Center:


Just 36 percent said they would describe themselves as “a religious person.”

2) School uniforms will influence Millennials profoundly


New York middle school students in uniforms. (Christian Science Monitor via Getty Images)

The book’s fixation on school uniforms is bizarre, mentioning them dozens of times. “Future historians,” they write, “may look back on today’s school (and soccer) uniforms as harbingers of monumental deeds that came later.”

School uniforms were a Bill Clinton special — the president encouraged schools to use them to stop teenagers from “killing each other over designer jackets” — and the authors are convinced that uniforms would influence an entire generation to be more collectively minded. (Maybe the reason they didn’t is that, while school uniforms got a lot of political attention in the ’90s, just 14 percent of schools required uniforms in 2003.) The Millennial version of the emblematic ’60s musical Hair, they suggest, could be staged as “a Busby Berkeley ballet in metallic-blue uniforms.”

To be fair, the Millennial “Hair” might not have been written yet, but even amid the rampant nostalgia for childhood, uniforms are hardly ever mentioned.

3) Millennials will be collectivists who embrace the military and national service


The US Naval Academy commencement exercises in 2014. (Mark Wilson/Getty Images)

Not every prediction in the book was terribly, laughably wrong. Some were just sort of wrong. The authors guessed that as Millennials reached voting age, proposals for mandatory national service would gain steam — propelled by the generation’s famed fondness for community service — and the military will enjoy a resurgence throughout American life. (School uniforms played a big role in this argument too.)

Instead, while Millennials still think volunteering is pretty great, their trust in institutions is at a historic low. The military is doing better than most other institutions, but the majority of Millennials don’t trust it to do the right thing, according to a poll this spring from Harvard University’s Institute of Politics.


They’re also less likely to describe themselves as patriotic than previous generations. Youth voter turnout, though, has risen since 2000 — a trend the book predicts.

4) Millennials will confront income inequality


Occupy Wall Street protestors in San Francisco. (Justin Sullivan/Getty Images)

OK, some predictions weren’t wrong at all. Millennials Rising originated the “next Greatest Generation” and “over-coddled helicopter-parented kids who think they’re special” tropes we still see today.

It also predicted the rise of income inequality as an important political issue. “Millennials see income fragmentation,” they wrote, later continuing: “For all families with children, the income ratio between the poorest and richest has nearly doubled over the last twenty years. So where Boomers discovered the “yuppie” on the edge of midlife, and Gen Xers stepped into the 90210 world coming of age, Millennials have opened their eyes as children to see this trend already in place.”

As for what might be done: “They might rebel against today’s spreading gap between rich and poor not just by urging new public policies, but by enlisting themselves in an ugly class warfare,” the authors write, predicting a talking point of the 2012 election with uncanny accuracy. (Although, as we’ll see, they might have meant “warfare” more literally.)

5) Millennials will want stable jobs, not entrepreneurship


Millennial Mark Zuckerberg at the Facebook Developers’ Conference. (Getty Images)

The teens of the year 2000, the authors write, were “not bracing to be quite as footloose or entrepreneurial as Gen Xers… Entry-level youths will be attracted to solid companies with career ladders and standardized pay and benefits… They will be less attracted to consulting, contracting, temping, freelancing, or new business startups.”

One of those teens was Mark Zuckerberg (born 1984). Colleges now offer 5,000 courses on entrepreneurship. A poll from Young Invincibles found more than half of Millennials either want to start their own company or already have.

6) Millennials will create a more modest form of courtship that returns to traditional gender roles


This is perhaps not what the authors meant by “strip the singles scene.” (Timothy A. Clary/AFP)

“Postadolescents will strip the singles scene of much of its current edginess and danger by placing a new emphasis on manners, modesty, and old-fashioned gender courtesies,” they wrote. “They will introduce courtship rituals that stress reciprocal duties and deference to parents — modern variants of the young prince delivering a dragon’s head to the father of his beloved.”

Instead, we got a moral panic over campus hookup culture — whether or not it actually exists — and a New York Times article headlined “The end of courtship? Although Match.com had been around for five years when the book came out, the authors seemingly never considered that young people might want to meet partners on the internet.

7) Millennials will marry earlier and have children earlier


Like the British royals, Millennials are marrying later. (Peter Macdiarmid/Getty Images)

This is pretty definitively not happening, as this chart shows:


8) If a crisis of historic proportions occurs, Millennials could create a form of 21st-century fascism


Riot police during the G20 summit in Pittsburgh in 2009. (Saul Loeb/AFP)

The two historic events that so far define the Millennial generation — the Sept. 11 attacks and the recession of 2008 — were still in the future when Millennials Rising was published. So perhaps it’s not fair to criticize the authors for not foreseeing them.

But the authors believed Millennials would confront transformative historical events. “Sometime around the middle Oh-Ohs — maybe a few years before or after, but in any case when first-wave Millennials are somewhere in their twenties, a spark of history will ignite a public response quite unlike what it would have touched off in most earlier decades,” they wrote. “These next sparks could prompt enough of a reaction, and such a powerful mood shift, that America would embark on an era of crisis that could last into the 2020s.”

So how would the Millennials react? “History could mete out good, middling, bad, or truly horrible outcomes. While no one can predict how a crisis would climax, and what a new postcrisis era would be like, it would probably include a redefinition of government’s relationship to the economy and society, a redefinition of man’s relationship to technology, and a redefinition of America’s relationship to the world. Millennials could play an epic role, crafting new myths of lore, doing deeds only dimly imaginable today.”

On the other hand, they warned, things could turn out very badly. They suggested Millennials might demand censorship of pop culture (based on a cultural conservatism they observed in today’s 20somethings as kids), “aggressive militarism,” class warfare, and a “high-tech authoritarianism.”

Presumably, some of this would be the fault of school uniforms.

Smaller Wall Street bonuses mean the Russians win

To the casual observer, one might think that with stocks at an all-time high, that is good for traders and salespeople on Wall Street. That’s not the case. Perhaps less volatility has meant less trading, or less trading has led to less volatility, but either way, less trading is clearly bad for the Street. Less trading means less commissions, lower potential trading revenue and lower bonuses. In addition, it could mean fewer jobs going forward.

Read MoreHere’s how a trader’s brain REALLY works

Almost all my Wall Street friends complain to me that their job is more boring than ever. No matter how you fared from 2000-2010, that period was definitely not boring. Wall Street circa 2014 means more Facebook, Twitter and Tinder at work. What else is the guy sitting at Morgan Stanley supposed to do while waiting for his client to Bloomberg message him?

For the VP at a Wall Street firm, less trading means being less dynamic. You are more worried about self-preservation than rocking the boat and possibly making a difference. If 10 percent of the firm is getting laid off at year end, you spend a lot of time making sure you don’t hold the short straw. Even if you make less money, that is better than the alternative. A lot of Wall Streeters fear that this could be their last job, because as ever more trading goes electronic, the sales trader becomes more obsolete than Blockbuster Video.

It also means NOT going the extra mile. If you are producing at an acceptable level, and doubling your revenue will mean very little incremental income, why bother? Why work longer hours, spend less time with your kids and take years off your life for marginal income?

Read MoreThe 12 types of people on Wall Street

My friend who is head of sales at a Wall Street firm told me that as his group hits higher revenue targets, the percentage they keep goes down. That is the worst way to motivate. That’s like telling Rory McIlroy, “Once you have won ten major tournaments, we will stop counting.”

The current bonus structure is the greatest reason that socialism doesn’t work. I don’t believe in extreme capitalism where it’s every man for himself. However, I do believe in rewarding those who work hardest and the smartest. When you tell someone that the extra revenue they produce has no effect on what you pay them, that is the downfall of socialism. It’s not that you’re paying the sloth at the expense of the hard worker — it’s that the smart guy doesn’t have to work hard to get by.

The smart guy can put in minimal effort and get by and that is the biggest waste of resources. If the smart guy never put in maximum effort, we would have never had a Steve Jobs or Bill Gates. They wouldn’t have worked so hard and changed the world.

Think back to when you were in school. I was exceptional at math. I still had to study to get an “A” and a perfect score on my SAT. If the class or SAT was pass/fail, I would have never had to open up the textbook. I could have showed up drunk and still passed.

Read MoreHomeowners: A new class of fools

But smaller bonuses have a ripple effect.

I understood why people outside of New York were outraged back in 2008 by Wall Street and the financial bailout. However, I didn’t understand why local New Yorkers were Occupying Wall Street when they all benefit. If you own a restaurant or business, work as a doorman, drive a taxi, sell drugs, or even own real estate you benefit from Wall Street having more disposable income.

In fact, a side consequence of Wall Street having less money to spend on apartments has been the explosion of foreign cash buyers of New York City apartments. It used to be Wall Street buying those apartments.

The Census Bureau estimates that 30 percent of all apartments in the quadrant from 49th to 70th Streets between Fifth and Park Avenues are vacant at least ten months a year. You don’t need to work on Wall Street to know that isn’t good for the bodegas, ramen noodle shops and massage parlors on the East Side.

Now, wouldn’t everyone rather have Wall Street criminals spending money, their wives getting their pedicures and sipping martinis every day, than Vladimir Putin’s cronies doing so one month a year?

Thirsting for Democracy in Detroit: Activists Resist Water Service Shutoffs … – Truth

Hundreds of people poured into the streets of Detroit July 18 to declare water a human right. (Photo: James Anderson).Hundreds of people poured into the streets of Detroit July 18 to declare water a human right. (Photo: James Anderson).

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Several thousand people marched from Cobo Hall to Detroit’s Hart Plaza on July 18, decrying the destruction of democracy in Detroit. The rally, organized in part by the Moratorium Now! Coalition to Stop Foreclosures, Evictions and Utility Shutoffs, took place after a week of actions against the disconnection of water service to households unable to pay their bills. People previously blockaded to keep Homrich, a private contractor employed by the city, from shutting off people’s water on July 10. Another blockade took place the day of the rally, lasting six hours before police arrested a pastor, a veteran journalist in her 70s, welfare rights organizers and others.

The water disconnections constitute a human rights violation if the people affected are genuinely unable to pay, said Catarina de Albuquerque, the UN special rapporteur on safe drinking water and sanitation, in a press release.

Several days after the downtown demonstration, the city suspended the mass shutoffs for 15 days after more than 15,000 households had been disconnected. The Detroit Water Brigade, an advocacy-oriented volunteer-led alliance focused on emergency relief and mutual aid, wrote in an email to their listserv following the announcement “that thousands of families are still without reliable access to water or on the brink of losing it,” and added that people are invited to meet at 1514 Washington Boulevard downtown at 11 am every day – except Friday – starting July 22, to help distribute gallons of water, coolers, rain collection barrels and information to affected Detroit families.

The Michigan Welfare Rights Organization (MWRO), a union of public assistance and low-income workers, denounced the Detroit Water and Sewage Department’s handling of the situation up to the July 18 demonstration, and appealed to the UN for relief in response to what activists see as initial steps in the takeover of the city’s water system by for-profit private interests. Citizens also filed a lawsuit against the city, prompting the halt to the service disconnections declared days after the downtown rally, insisting the shutoffs violate human rights.

Sylvia Orduño, a Detroit resident and activist who has been with the MWRO for 17 years, marched from Cobo Hall to Hart Plaza during the July 18 rally carrying one end of a banner reading, “Stop the War Against the Poor!”

Sylvia Orduño, right, holds a Michigan Welfare Rights Organization banner as hundreds of indignant Detroiters march from Cobo Hall to Hart Plaza. (Photo: James Anderson).Sylvia Orduño, right, holds a Michigan Welfare Rights Organization banner as hundreds of indignant Detroiters march from Cobo Hall to Hart Plaza. (Photo: James Anderson).

Orduño said the situation is fast becoming a “public health crisis for everybody” and “Detroit is ground zero for a lot of the battles” over the public trust, in response to the DWSD actions and against subservience to Wall Street.

The Role of Wall Street in Creating Crisis

Between the “banks got bailed out, we got sold out” chants from hundreds of people marching down Larned Street and the banners chastising the $537 million given to the banks by the DWSD, which shuts off water for the poor, people’s disgust at Wall Street’s contribution to the crisis became palpable.

A report from the Office of the Comptroller of the Currency overseeing nationally chartered banks found Detroit had a higher rate of foreclosures for subprime mortgages than any other city in the build-up to the housing bubble that burst and led to the global economic crash in 2008.

Some 100,000 homes had been foreclosed by 2012. The population of Detroit decreased from almost 2 million in 1950 when the city was regarded as a major industrial powerhouse to an estimated 688,701 in 2013. The population declined 3.5 percent from 2010 to 2013 in a continued exodus attributable to foreclosures, defunding public services as a result of financial straits and the related job losses and pension cuts for city workers.

Over the past decade, predatory lending by banks with overwhelming numbers of subprime mortgages and mass foreclosures has resulted in a reduction in the tax rolls which compelled the city to borrow from Wall Street in the form of municipal bonds. Financial instruments, like interest rate swaps, compounded the debt crisis, leading to an even greater reduction in city services, causing more people to move as the tax base eroded further and fictitious capital became increasingly abstracted and volatile.

Sen. Carl Levin (D-Michigan), in contrast to his role in the clandestine drafting of the National Defense Authorization Act permitting indefinite detention of citizens without trial, introduced legislation to stop billions of dollars being kept in “secret” offshore tax haven accounts, and issued a concomitant statement in September 2013 critical of US banks’ engagement in interest rate and foreign currency swaps. As a result, we witnessed “cities like Detroit incur major losses from entering into complex interest rate swaps that went sour,” amidst the $560 trillion global swap market malfeasance facilitated by US tax regulations that permit swap payments to be treated as non-taxable income, Levin said.

Just as the industry concentration ratio for manufacturing – a former economic mainstay for Detroit – has decreased since the 1980s, the financial sector has become increasingly concentrated and big banks rank among the corporate leaders in stock market capitalization.

Wall Street’s role in the oft-cited “deindustrialization” of Detroit – referring to the mass layoffs, factory closures and plant shutdowns in the city – continues because of the effects of those financial schemes, but banks like Goldman Sachs – among the top 50 companies in terms of stock market value in 2013 – now control key aspects of industry in the city and beyond.

In 2010, Goldman bought Metro International Trade Services, a company based in Detroit that runs a network of warehouses that ship metals like zinc, steel and aluminum essential to industry. The New York Times reported last year that some 27 warehouses owned by a Goldman subsidiary ship aluminum back and forth to lengthen storage time and inflate market price.

Among other banks, Goldman started manipulating other commodity markets more seriously after the Commodity Futures Trading Commission freed up futures markets for implementation of the Goldman Sachs Commodity Index, allowing assiduous buying strategies associated with a new form of speculation to cause the price of commodities – including food – to soar and aggravate world hunger.

The transformation of basic necessities like food and water into commodities whose allocation is increasingly determined by privately controlled for-profit firms turned many from Detroit, including MWRO’s Orduño, out into the streets on July 18.

“Unless we do something to stop this privatization and now this attempt to take over anything that belongs to the public trust, we’re going to be in big trouble here in the next few years,” Orduño said, adding that her organization receives calls every day from people having their water turned off.

De-Democratization of Detroit

Detroit became the largest municipality to file for bankruptcy on July 18, 2013. It did so under the direction of Kevyn Orr, the city’s appointed – in other words, unelected – emergency manager.

Prior to his appointment as EM, Orr served as a partner for Jones Day, a law firm that represented Detroit in the bankruptcy hearings, and he helped craft the company’s “Business Restructuring and Reorganization Practice” – a model for the city’s restructuring he has championed since.

Michigan Gov. Rick Snyder, less than one year after signing into law legislation modeled on American Legislative Exchange Council language that allowed workers to opt out of paying the costs for the unions fighting for their protections and benefits, declared a state of financial emergency on March 1, 2013.

Under Michigan Public Act 72, a law passed by the state legislature in 1990 permitting the state to intervene in municipalities by selecting an emergency manager, Snyder appointed Orr on March 14. Several days later, PA 72 was repealed and PA 4 was enacted, enhancing the state’s intervention powers by enabling unilateral modification of worker contracts. Voters previously rejected PA 4 in November 2012, prompting the court to consider PA 72 still in effect until the legislature repealed and replaced it with PA 436, immunizing the law from referendum and from abrogation by the citizenry.

The law cemented the EM’s power to hire and terminate municipal employees at will. Per PA 436, the EM, “shall act for and in the place and stead of” the mayor, city council and the constituency, and is thus endowed with “broad powers in receivership to rectify the financial emergency and to assure the fiscal accountability of the [City] and the [City's] capacity to provide or cause to provide necessary governmental services essential to the public health, safety, and welfare.”

For residents whose access to water has been cut off, the meaning of the law now appears inverted in practice.

Lawsuits like Phillips v. Snyder and the NAACP v. Snyder challenged the legality of PA 436, arguing that the replacement of elected officials with appointed managers with power to legislate and govern over those without a say in decisions being made is a violation of the Thirteenth and Fourteenth Amendment of the US Constitution and an affront on the Voting Rights Act of 1965.

The Phillips v. Snyder case was argued in district court in April. The court took it under advisement and will issue a written opinion before the case moves to summary judgment, John Philo of the Sugar Law Center told Truthout. The NAACP v. Snyder case was closed for administrative purposes and stayed in August 2013 by a district court, which said the case could be reopened if the bankruptcy stay were to be removed.

Top-Down Restructuring

Thus far, Orr remains the EM. In 2013, he put forth a proposal to creditors, which included a call to restructure the DWSD. Although the court did not order its implementation, a “Plan of Action” drafted by a committee of DWSD and city officials to determine the reasons for the service dysfunction, called for structural adjustments, “including, but not limited to, the imposition of changes on DWSD employees otherwise forbidden by applicable CBAs [Collective Bargaining Agreements],” according to Orr’s proposal.

The proposal also noted actions taken to address financial challenges, including 2,700 “headcount reductions” since 2011, and implementation of “City of Employment Terms” providing for substantial reductions in worker wages, pensions and health care.

St. Peter’s Episcopal Church in Detroit has a soup kitchen, supports a restorative justice center and is home to Rev. Bill Wylie-Kellerman who was unable to attend the July 18 rally downtown because he was participating in a blockade – before getting arrested – to prevent a private contractor from shutting of water service to people in the city. (Photo: James Anderson).St. Peter’s Episcopal Church in Detroit has a soup kitchen, supports a restorative justice center and is home to Rev. Bill Wylie-Kellerman who was unable to attend the July 18 rally downtown because he was participating in a blockade – before getting arrested – to prevent a private contractor from shutting of water service to people in the city. (Photo: James Anderson).

Rev. Bill Wylie-Kellermann, a pastor at St. Peter’s Episcopal Church in Detroit who was not at the rally and march on July 18 because he was involved in the direct action at Homrich before being arrested in the blockade, said that Orr-style restructuring has been rampant.

Much of the money for revitalizing the city has been “siphoned off just in payments to the banks,” said Wylie-Kellermann, 65, who was arrested in the July 10 blockade. “The same kind of financial extraction that’s going on with the city as a whole through the credit swaps, that bears on the financial situation of the water department as well.”

The “Detroit Future City” plan, based on a 340-page document, includes an array of maps identifying for the administration of Mayor Mike Duggan and Orr those neighborhoods that should receive resources and subsidies and others that get the plug pulled from them, he said.

Wylie-Kellermann, a native Detroiter who lives in the Corktown area, criticized the project for explicitly eliding issues of race and class, but implicitly outlining a plan of attack that disproportionately affects people of color and the poor. He cited foreclosures, evictions and water shutoffs as instruments in the restructuring and related gentrification in the city, forcing out the poor, largely black population as wealthier – usually white – suburbanites, corporate employees and investors are invited in.

Cecily McLellan, a union leader with the Association of Professional and Technical Employees who is also involved with Moratorium Now! and active with the Detroit Concerned Citizens and Retirees, said Detroit was “selected for a reason” regarding the gentrification and restructuring.

As a former “bastion” of unionism, she said it makes sense for powerful interests to systematically attack Detroit and eliminate organizations, like unions, that protect working people and stand as a barrier to both greater profits and unaccountable decision-making with civic consequence. The poor black population in Detroit also makes for a disposable target in the view of concentrated power, she said after the rally.

National Nurses United, the largest union of registered nurses in the US, march down Larned Street after a rally around the Cobo Center near Washington Boulevard and Congress Street. (Photo: James Anderson).National Nurses United, the largest union of registered nurses in the US, march down Larned Street after a rally around the Cobo Center near Washington Boulevard and Congress Street. (Photo: James Anderson).

The targeting becomes cyclical because, as Wylie-Kellermann noted, the contractors for DWSD prioritize neighborhoods with a higher concentration of impending shutoffs where they can disconnect service more quickly. Those tend to be impoverished and black communities. Because contractors like Homrich are paid on “a per-shutoff basis,” like many privatization arrangements, he said, the targeting gets even more aggressive.

“I believe if you had democracy, this would not have happened,” said McLellan, who was forced into retirement when her department was closed. Prior to that, she had helped implement the Detroit Water and Assistance program, which has since been discontinued.

“So it’s no wonder you have the crisis that you have right now,” she added.

Recreating Democracy Out of Crisis

When a home-owning resident, part of a neighborhood patrol, beat a homeless man from the same Corktown area with a baseball bat a while back, Wylie-Kellermann said he saw it “as sort of the blunt end of the gentrification process.”

In response, he and the community created a restorative justice circle to articulate together who has been harmed by the violence, which was most everyone in the neighborhood – albeit in different ways – and then reflect on and do “what needs to be done to make things right to live as human beings,” he said.

Wylie-Kellerman, who said he thinks “of the church more as a movement than as institution,” couples restorative justice with non-violent direct action now because pressure from the various levers of power make it “at a very human level, urgent to intervene in,” but also “to see the bigger picture.”

Similar commitment and apprehension of the interrelated sources of violence from a person of faith could be seen in Daniel Berrigan, 93, a Jesuit priest, who was wanted by the FBI during the Vietnam War era for burning several hundred draft files.

“Well Dan is one of my teachers,” said Wylie-Kellermann, who met Berrigan in New York. The former was attending seminary and the latter had just been released from prison when they crossed paths.

“He kind of knocked me off my horse, and my own conversion to gospel nonviolence is directly connected to his life and ministry,” he said about Berrigan, who while in his 90s stood with Occupy Wall Street activists in Zuccotti Park to implore Trinity Church to drop charges against OWS participants for occupying the church’s empty lot in December 2011.

Situating himself in the biblical tradition “set in opposition and resistance to empire,” to advance “the alternative to the imperial way of being in the world,” Wylie-Kellermann said this “moment represents an opportunity not to sell off assets and not to privatize resources” – as can and is being done “with the stroke of the pen” by Orr, but also “to rebuild this city, reorganize the city from the ground-up,” in a “democratically accountable” way, “accountable to one another and neighbors.”

“When our water is under attack, what are we going to do? Stand up, fight back” hundreds of people in downtown Detroit explained, also imploring, “Tell me what democracy looks like,” and responding, “This is what democracy looks like.” (Photo: James Anderson)“When our water is under attack, what are we going to do? Stand up, fight back” hundreds of people in downtown Detroit explained, also imploring, “Tell me what democracy looks like,” and responding, “This is what democracy looks like.” (Photo: James Anderson)

Speakers at the July 18 rally emphasized recuperation of democracy. Many meant they wanted representative politics to be fair and for decisions to be made by elected officials in the interest of people, rather than dictated by an unelected EM at the behest of banks and corporations.

But others have emphasized direct actions that do not appeal to powers above to make decisions affecting them, especially those decisions that most affect their lives, like the decisions regarding termination of residential water services.

“There’s been pressure on the elected officials, and they’ve done nothing,” save for a few of the progressive ones who have shown solidarity, McLellan said after speaking to the crowd in Hart Plaza.

In addition to physically preventing contractors from terminating people’s water access, she said people are also organizing and turning water services back on without asking authorities.

Similar to the inversion of meaning used to justify the EM appointment, a section of the Michigan constitution intended to protect citizens “from the imposition of undue or excessive rates or charges for the supply of water,” has been used to argue against the “Water Affordability Program,” an alternative to the status quo supported by the MWRO.

Designed by civic economics specialist Roger Colton to subsidize lower-income residents, the program would require richer residents to pay higher rates – a potentially discriminatory practice in a narrow, inverted interpretation of law, as explained in Matthew Clark’s water affordability analysis.

When the plan was first developed in 2005, it was estimated 43 percent of DWSD customers would qualify for the low-income rate subsidies. The median household income in Detroit was $26,955 between 2008 and 2012, according to the Census Bureau, compared to $48,471 for Michigan as a whole and $53,046 for the United States. Poverty affected 38 percent of the people in Detroit during that time, compared with the 14.9 percent of all US citizens.

Cleveland, Ohio, a former industrial city which has similar levels of poverty and a comparable below-average median income to Detroit, witnessed revitalization in its Greater University Circle area as a result of worker-owned firms buoyed by the purchasing power of anchor-institutions like Cleveland Hospital and Case Western Reserve University.

Wylie-Kellermann suggests efforts like those in Cleveland, to democratize wealth and promote worker-community ownership, could be tried in Detroit.

“Detroit is in the mix of being physically reorganized,” he said, “so that resources and the infrastructure, support for businesses, even subsiding of homes – rental and buying – [are] not for poor people,” but for profits.

Last year, Goldman Sachs rolled out their “10,000 Small Businesses,” in Detroit, with CEO Lloyd Blankfein and billionaire Warren Buffet in town to promote the start of the program’s educational initiative, which includes lessons on “Being Bankable” and adjusting enterprises to better accumulate capital and obtain profits for growth.

The profit-driven program and associated commodification are at odds with activists in the Detroit Water Brigade, like Sarah Coffey, who said thinking about water as part of the commons and not as a commodity entreats people to think about the kind of future they want.

During the July 18 march, Orduño intimated motions to put Detroit water in a public trust, and McLellan later commented on the renewed but fledgling importance of public land trusts in the city that push against and beyond market-exchange and the profit-oriented paradigm toward alternatives.

She said that both acts of resistance and the creation of forward-looking alternatives are in their embryonic stages, and the various forms both take have implications for what democracy will mean in Detroit and elsewhere in the future.

“So we have to restore democracy in order for us to be in a position where we can really control our own destiny,” she said.

NBC Discovers Hypocrisy of Michael Moore’s Wealth; Used Him to Bash Wall …

Kyle Drennen's picture

On Wednesday, NBC’s Today offered a surprising full report on “filmmaker and liberal activist” Michael Moore tarnishing his “blue-collar, anti-capitalist image” after it was revealed during divorce proceedings that Moore and his now ex-wife lived in a Michigan mansion, “the 10,000-square-foot house, reportedly in the same neighborhood as Madonna and Bruce Willis.” [Listen to the audio or watch the video after the jump]

Back in 2009, the morning show invited Moore on the broadcast to bash big bonuses for Wall Street executives. In part, Moore ranted against the wealthy business leaders living in “gated communities” and “castles with moats around them.” Perhaps Moore should have remembered that people living in giant mansions shouldn’t throw stones.

During the Thursday report, correspondent Gabe Gutierrez described: “Deep in northern Michigan, this lake-front mansion is the talk of the town….It belongs to one of the state’s most well-known celebrities. Not Eminem or Kid Rock, no, this $2 million home on Torch Lake is owned by filmmaker Michael Moore and his wife of twenty-two years, Kathleen Glynn.”

The segment featured a clip of Moore “slamming the one percent at this Occupy Wall Street protest” in 2011. Gutierrez then explained: “The new court documents reveal Moore and his now ex-wife shared properties in Michigan and New York. The Detroit News reports the couple owned nine total.”

Wrapping up the story, Gutierrez observed: “Already exposed, what some in this small Michigan town feel is a contradiction between Moore’s common-man persona and his uncommon wealth.”

Here is a full transcript of the July 23 report:


SAVANNAH GUTHRIE: Coming up, a controversial divorce reveals the true wealth of Michael Moore. The question is, will it hurt his image as an every man?


MATT LAUER: Let’s start, though, with a career – a guy who built a career on a blue-collar down-to-earth image. But a potentially messy divorce just finalized is painting a somewhat different picture of filmmaker and liberal activist Michael Moore. Here’s NBC’s Gabe Gutierrez.

[ON-SCREEN HEADLINE: "Moore" Money, More Problems; Blue-Collar Director's Wealth Revealed in Divorce]

GABE GUTIERREZ: Deep in northern Michigan, this lake-front mansion is the talk of the town.

UNIDENTIFIED MAN: The way he lives is not how the common man lives.

UNIDENTIFIED MAN B: I think he’s earned it.

GUTIERREZ: It belongs to one of the state’s most well-known celebrities. Not Eminem or Kid Rock, no, this $2 million home on Torch Lake is owned by filmmaker Michael Moore and his wife of twenty-two years, Kathleen Glynn.

UNIDENTIFIED WOMAN: I am disappointed in what appears to me to be a conflict in his values and what he represents.

GUTIERREZ: But now the pair just settled a high-profile divorce. In court filings, Moore had blamed his wife for going overboard in expanding the 10,000-square-foot house, reportedly in the same neighborhood as Madonna and Bruce Willis.

MICHAEL MOORE: Hi, I’m Michael Moore.

GUTIERREZ: Ever since his 1989 documentary Roger Me…

MOORE: Do you think it’s a little dangerous hanging out with guns in a bank?

GUTIERREZ: …and other films like Bowling for Columbine and Fahrenheit 9/11, Moore had built a blue-collar, anti-capitalist image.

MOORE: I am one person. This is a movement of millions of voices.

GUTIERREZ: Slamming the one percent at this Occupy Wall Street protest.

The new court documents reveal Moore and his now ex-wife shared properties in Michigan and New York. The Detroit News reports the couple owned nine total. No comment from her lawyer. And Moore’s attorney would only say the couple has “mutually and amicably reached a divorce settlement.”

LISA BLOOM [LEGAL ANALYST]: Very smart for Michael Moore to settle this matter. Even if he could have gotten more money, it’s so important to his public image that he not be bickering with his wife of twenty years and having all of that dirty laundry exposed.

GUTIERREZ: Already exposed, what some in this small Michigan town feel is a contradiction between Moore’s common-man persona and his uncommon wealth. For Today, Gabe Gutierrez, NBC News.

Give Us Your Donors, or Else

We’ve seen what happened at the IRS when Democrats launched a political campaign to crack down on tax-exempt groups that don’t disclose their donors. A similar animus is now at work in the states, where two attorneys general are forcing 501(c) groups to disclose their donors if they want to raise money in those states.

In New York, tax-exempt groups must apply for a license to solicit contributions, a process that has traditionally required the submission of their public IRS form 990. But Attorney General Eric Schneiderman…

Wall Street backlash will shake up 2016 election

By David Weidner, MarketWatch

Getty Images

Sen. Elizabeth Warren questions Consumer Financial Protection Bureau Director Richard Cordray last month.

SAN FRANCISCO (MarketWatch) — The Justice Department continues to rain down settlement after settlement on Wall Street institutions. And this is being taken as good news by investors. After all, they’re finally seeing the earnings-sucking overhang from the financial crisis recede.

But the industry, surprisingly, is not on its way to putting the past in the past. A fresh wave of frustration, mostly from the political left, is mounting. And it’s not only pressuring the current administration to keep pressing forward with industry reforms, its threatening to make the conduct of big finance a major issue in 2016.

This isn’t Occupy Wall Street, the 2011 movement whose unreasonable and scattered demands soured public opinion and ultimately fizzled, but it has its roots there. Americans fed up with the financial industry’s sway in Washington, its predatory practices and lack of executive accountability represent a much bigger swath of citizens than those who camped at Zuccotti Park in Lower Manhattan.

Nearly four out of five voters surveyed (78%) said financial rules and enforcement need to be strengthened, and that Wall Street’s bad practices have not changed enough, according to a poll results released Monday
by Lake Research Partners on behalf of Americans for Financial Reform and the Center for Responsible Lending.

Click to Play

Hidden commodity gem; closed-end bargains

Barron’s Bounce: Recovering zinc from steel maker’s waste is big business for Horsehead Holdings. Plus, closed-end funds at a big discount, and the case for Halliburton.

The poll found 61% of respondents agreed that Wall Street and the financial industry are still too powerful and engage in reckless practices that pose a continuing danger to the economy.

And the furor overrides the political divide we’ve been hearing so much about. The poll found 84% of Democrats, 82% of Independents and 74% of Republicans say they are concerned about the influence of Wall Street financial companies on elected officials.

Evidence of this frustration with Wall Street was on display last week at the progressive Netroots Nation conference in Detroit. Massachusetts Sen. Elizabeth Warren, Washington’s most visible bank scourge, was greeted
with rousing cheers of “run, Liz, run.” Warren has denied she’ll vie for the Democratic Party nomination for president in 2016, but has given mixed signals otherwise.

This spring she published a book, “A Fighting Chance,” which is mostly autobiographical and seen by some
as a flier on a 2016 bid. A Fox News poll this spring gave Warren 6% support among voters considering Democratic contenders who may seek the nomination, compared with 69% for front-runner Hillary Clinton, the former secretary of state, and Vice President Joe Biden at 14%.

Still, Warren’s populist, reform-minded rhetoric is gaining traction. David Cantonese, writing for U.S. News and World Report, said Warren “lit up a gathering of liberals with a fiery speech Friday, championing a progressive agenda amid continuing calls for her to reconsider a run.”

Dana Milbank, the influential political columnist at the Washington Post, wrote “a draft-Warren boomlet is under way.”

“The game is rigged,” Warren told the Netroots gathering. “And the rich and the powerful have lobbyists and lawyers and plenty of friends in Congress. Everybody else, not so much. So the way I see this is we can whine about it, we can whimper about it or we can fight back. I’m fighting back.”

The statement drew big cheers at the event and energized “Ready for Warren,” a grassroots group
aiming to draft the senator into a presidential run. Warren has no ties to the group, but that hasn’t stopped them from touting the senator. “By standing up to Wall Street to defend Main Street, Warren has proven herself to be the spine that the Democratic Part forgot it had,” the group’s web site says.

And Katie Glueck of Politico wrote
that Democrats’ “heads might be with Hillary Clinton, but their hearts are decidedly with Elizabeth Warren.” Glueck added that while the Netroots crowds is among the most liberal part of the Democratic base, it is also among the most active.

How much Warren can, or wants, to mine the public’s discontent with the existing public policy toward Wall Street is up for debate. What’s not? That there is an underlying discontent.

David Dayen of The Fiscal Times captured
the frustration perfectly in a manifesto July 18 in which he wrote of the U.S. Attorney General Eric Holder’s settlements with Wall Street banks: “The Justice Department has massively distorted and perverted the notion of accountability until it no longer has meaning.”

Lest readers think this is some liberal pundit spin, consider that a Forbes consumer survey named
Freddie Mac, American International Group Inc.

/quotes/zigman/557836/delayed/quotes/nls/aig AIG

, Fannie Mae and Goldman Sachs Group Inc.

/quotes/zigman/188479/delayed/quotes/nls/gs GS

 among the least-admired companies list.

That’s stunning considering banks and financial institutions should be seeing the benefits of low interest rates that have made buying everything from a used car to a new home eminently affordable and an extended bull market run that has swelled 401(k)s and retirement accounts.

Still, most people believe financial institutions aren’t to be trusted. And that’s something that a billion-dollar settlement will never buy.

More from MarketWatch:

It’s a ‘golden age’ for activist investors, but not us

How to avoid the biggest 401(k) mistakes

Yellen encourages ‘fully-fledged equity bubble,’ Grantham says


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Occupy Santa Cruz to Mark Third Anniversary

As Occupy Wall Street prepares to mark its Third Anniversary and looks to the future of the Occupy Movement, this participant and observer of Occupy Santa Cruz offers some reflections as we approach our own anniversary on October 4th. Although these are individual observations, it is hoped that a consensus of Occupy Santa Cruz may find them to be touchstones to the future.

These have been difficult years for the Occupy Movement both locally and across our nation. And although the passage of time has presented new and significant challenges to the Movement, Occupy Santa Cruz remains committed to working for social and economic justice. We are still the 99%. As we recommit ourselves to the great work of Occupy Santa Cruz, it is time to raise our collective voice in support of those ideas and causes that have always been, and continue to be, at its core.

Occupy Santa Cruz stands in solidarity with the Santa Cruz Eleven in their unyielding fight to seek and obtain justice from an unjust system.

Occupy Santa Cruz stands today in solidarity with Sin Barras as it works for the abolition of a prison system which is driven by a failed national drug war policy, fueled by institutionalized racism and that benefits only the prison/industrial complex.

Occupy Santa Cruz stands today in support of the Santa Cruz County Community Coalition to Overcome Racism as it pursues it primary mission of creating a society in which each person is “judged not by the color or his or her skin, but by the content of their character”.

Occupy Santa Cruz stands today is support and solidarity with those who are working to make the Santa Cruz Sanctuary Village a reality and with all advocates for the rights of people experiencing homelessness and the working poor.

Occupy Santa Cruz stands in solidarity with our local faith community whose continuing efforts to feed, shelter and emotionally support the homeless community are truly selfless and charitable.

Occupy Santa Cruz stands in solidarity with Food Not Bombs and supports its mission to not only feed but to educate and activate the world at large.

Occupy Santa Cruz continues to stand for the hundreds of thousands of ordinary, hard working people who have had their American dream stolen through illegal and unethical foreclosures by the banksters and mortgage lenders.

Occupy Santa Cruz stands in opposition to an oppressive and corrupt police state which even today works to still the voices of activism both locally and across our nation.

Occupy Santa Cruz stands in opposition to overreaching local governments that seek to marginalize and ultimately render invisible the artists and the street vendors that are so much a part of the urban core and culture.

And Occupy Santa Cruz stands in solidarity with every workingman and every workingwoman who struggles to provide for their families as profit margins and corporate greed consume the fruits of their labors.

When the framers set about to create an American democracy, they understood that it was a bold experiment. 240 years later it remains no less so. And when 300 Occupy framers stood up in Laurel Street Park almost three years ago they understood that their experiment was no less bold. Today, while we live in the knowledge that these bold experiments are fraught with difficulty, we believe as the founding fathers did that the Bill of Rights and the Occupy Movement have each in their way created as national forum within which we can exercise the freedom to speak, the freedom to act and the freedom to stand up for our rights and the rights others.

Thomas Jefferson believed that the freedom of speech guaranteed by the First Amendment birthed a great marketplace of ideas. A marketplace in which each individual voice is heard and each opinion cherished. This was the original consensus based, non-hierarchical model that Occupy Santa Cruz was based upon. Whether by dint of time or circumstance or difference of opinion, our local activist community has drifted apart. On Saturday, October 4th we will once again have an opportunity to stand together in Laurel Street Park as Occupy Santa Cruz and re-forge the bonds of activism that showed so much promise that first day. If it is true that past is prologue, it is time to stand together once more in support of a common goal and in solidarity with one another.