Ghost in the Machine
Wall Street
Too Big to Countenance.
Joining ranks across the partisan divide, Senators Sherrod Brown and David Vitter introduce legislation aimed at ending Too Big To Fail: “The senators want the major banks to increase their own tangible equity so that shareholders, and not just taxpayers, take responsibility for their risky actions. They want the banks to have greater liquidity by holding more assets they can immediately turn into cash in a financial crisis. They say they want to keep Wall Street banks that enjoy government backing from gaming the financial system with credit derivatives and other risk-inflated schemes, which even JP Morgan Chase’s own employees failed to catch until too late.”
Naturally, the banks will be fighting this with everything they have, and Goliath usually wins these fights in Washington. They’re already leaning on one of their favorite Senators, Chuck Schumer, to block Brown from ascending to Chair of the Senate Banking Committee. Nonetheless, the progressive-conservative alliance here suggests, at the very least, a new wrinkle in the game.
In related news, companies are also wheeling out the Big Guns to threaten the Securities and Exchange Commission over potential new corporate disclosure rules for political spending — namely, making businesses disclose their campaign donations to their shareholders. Seems innocuous enough, but of course, “[t]he trade associations lining up in opposition to the rule amount to a roll call of the most politically influential — and highly regulated — industries in the country.”
Inequality is Way UnCool.
A must-watch going around the Interweb: A fellow who sounds not unlike the guy from King Missile explains concisely and succinctly how terrible wealth inequality has gotten in America. “Since 1976, the share of national income earned by the top one percent of workers has nearly tripled, from 9 percent to 24 percent…While the earnings of the top 1 percent have tripled, the average household income has effectively stagnated.”
In very related news, the Dow reaches a new high — 14,164 — even as household income hits a decade low. “As a percentage of national income, corporate profits stood at 14.2 percent in the third quarter of 2012, the largest share at any time since 1950, while the portion of income that went to employees was 61.7 percent, near its lowest point since 1966.”
Pay-to-Play, Enshrined. | The Veal Pen.
Common Cause president Bob Edgar reads Obama the riot act for his many transgressions on the campaign finance front. “He still has time to change course and I’m enough of an optimist to hold out hope that he will. But it’s getting tougher.” On this as on so many other fronts, I myself am no longer that optimistic. (Obama Lucy picture via this Atlantic Monthly article.)
“We talk a lot about broken models. The DC progressive model is broken. It does nothing but facilitate the injustices readily evident in this case.” In related news, and in the wake of his recent Salon piece about the administration’s phantom financial fraud task force, Dave Dayen argues its time for progressive organizations in DC to get adversarial or go home. “Well-meaning people all over this country concerned about any number of issues hand over their hard-earned money to these groups, and they aim to speak broadly for liberal values. The accountability doesn’t stop on Wall Street. It needs to be shared by the DC progressive community.”
Update: “There’s a certain conventional wisdom that President Obama wants stronger campaign finance laws, and to protect our democracy from the corrupting effects of money in politics. It’s a story that you should no longer believe.” The Sunlight Foundation weighs in against Obama as well. “The arc of the Obama presidency may be long, but so far, it has bent away from transparency for influence and campaign finance, and toward big funders.”
The Anti-Wal-Mart.
“Mr. Sinegal, whose father was a coal miner and steelworker, gave a simple explanation. ‘On Wall Street, they’re in the business of making money between now and next Thursday,’ he said. ‘I don’t say that with any bitterness, but we can’t take that view. We want to build a company that will still be here 50 and 60 years from now.’“
This article is seven years old now, so I don’t know if their admirable corporate policies have survived the Great Recession. (Update: Apparently, they have.) Nonetheless, from 2005 and as seen floating around on Facebook of late, the NYT’s Steve Greenhouse explains how CostCo became the anti-Wal-Mart. “[N]ot everyone is happy with Costco’s business strategy. Some Wall Street analysts assert that Mr. Sinegal is overly generous not only to Costco’s customers but to its workers as well. Costco’s average pay, for example, is $17 an hour, 42 percent higher than its fiercest rival, Sam’s Club.” Oh, yeah, let’s nip that in the bud, then. Assholes.
The Fed, Unreserved.
Lithwick: It’s Not Us. It’s You.
“For the past several years, while the mainstream media was dutifully reporting on all things Kardashian or (more recently) a wholly manufactured debt-ceiling crisis, ordinary people were losing their health care, their homes, their jobs, and their savings.“
For the benefit of the willfully dense — i.e. all the telegenic denizens of the Village — Slate‘s Dahlia Lithwick explains the basic meaning behind Occupy Wall Street: “They are holding up signs that are perfectly and intrinsically clear: They want accountability for the banks that took their money, they want to end corporate control of government. They want their jobs back. They would like to feed their children. They want–wait, no, we want– to be heard by a media that has devoted four mind-numbing years to channeling and interpreting every word uttered by a member of the Palin family while ignoring the voices of everyone else.“
Calvin, Job Creator.
Also making the rounds on Facebook, this ancient Calvin & Hobbes strip anticipates the socialized-losses-for-me-but-not-for-thee mindset of contemporary “job creators.” Thank goodness they only have one-and-a-half major political parties behind them to back their play.
Decades of Divergence.
“In its report, the budget office found that from 1979 to 2007, average inflation-adjusted after-tax income grew by 275 percent for the 1 percent of the population with the highest income…By contrast, the budget office said, for the poorest fifth of the population, average real after-tax household income rose 18 percent. And for the three-fifths of people in the middle of the income scale, the growth in such household income was just under 40 percent.“
A brand-spankin’ new CBO report concludes what we all already know: Income inequality has surged since 1981, and government, post-Reagan, has consistently failed to address the problem. “‘The equalizing effect of federal taxes was smaller’ in 2007 than in 1979, as ‘the composition of federal revenues shifted away from progressive income taxes to less-progressive payroll taxes,’ the budget office said.” But, hey, let’s sweat that deficit.
Bailout 2: BoA Boogaloo.
“This move reflects either criminal incompetence or abject corruption by the Fed. Even though I’ve expressed my doubts as to whether Dodd Frank resolutions will work, dumping derivatives into depositaries pretty much guarantees a Dodd Frank resolution will fail.“
Along the same lines, Naked Capitalism‘s Yves Smith responds to the disclosure that repeat offender Bank of America is trying — with the Fed’s help — to foist their more toxic assets into FDIC-backed accounts (meaning that taxpayers will eat the losses.) “[T]his move amounts to a direct transfer from derivatives counterparties of Merrill to the taxpayer, via the FDIC, which would have to make depositors whole after derivatives counterparties grabbed collateral.“
Continues Smith: “The FDIC is understandably ripshit…Bill Black said that the Bloomberg editors toned down his remarks considerably. He said, ‘Any competent regulator would respond: ‘No, Hell NO!’ It’s time that the public also say no, and loudly, to yet another route for running a drip feed from taxpayers to banksters.‘” (Cartoon via here.)
The Wisdom of the Deficit Owl.
“What fiscal crisis? The great unasked question in this summer of sound-and-fury is ‘why?’ The United States has many problems at the moment: a high-and-stubborn unemployment rate, a foreclosure catastrophe, a slowing economy that has not recovered and will not recover…and the ongoing challenges of infrastructure, energy and climate change. Fiscal crisis? The entire thing is a figment, made up of wise-men’s warnings repeated endlessly.“
James K. Galbraith, who warned of the deficit witchhunt a year ago, weighs in on the debt ceiling endgame currently playing out in Washington, as well as Obama’s role in it:
“[W]hat do we have, from a President who claims to be a member of the Democratic Party? First, there is the claim that we face a fiscal crisis, which is a big untruth. Second, a concession in principle that we should deal with that crisis by enacting massive cuts in public services on one hand and in vital social insurance programs on the other. This is an arbitrary cruelty. Third, a refusal to stand on the strong ground of the Constitution, against those whose open and declared purpose is tear that document and the public credit to shreds.“
Yep, that’s about it. When it became clear that Obama had fully inhaled voodoo economics and was once again going to give away the store in these needless negotiations, I said on Twitter: ““I’ll take [Boehner/Cantor/Lannisters/Littlefinger] at his word!” I just realized: Obama negotiates like Ned Stark. Now, winter is coming.“
But, really, that gives this president too much credit. He’s not a nobly deluded sap. He’s getting exactly what he wants: a Third Way-approved Grand Bargain that takes money out of a sputtering economy and needlessly slashes our social insurance system, all in response to a problem that is basically imaginary.
But, of course, the chatterers and the Serious People™ will applaud this bargain as being wise, centrist, and independent no matter what damage it causes — hey, only Nixon can go to China! And all the while the economy and labor market will continue to tank. What a fucking fiasco. [Rorschcat via here.]
A Reckoning At Last?
“The audits conclude that the banks effectively cheated taxpayers by presenting the Federal Housing Administration with false claims: They filed for federal reimbursement on foreclosed homes that sold for less than the outstanding loan balance using defective and faulty documents. Two of the firms, including Bank of America, refused to cooperate with the investigations, according to the sources.“
As the alleged perps try to get off by paying the (to-them) meager sum of $5 billion, a confidential audit conducted by HUD finds (surprise, surprise) compelling evidence of rampant foreclosure fraud at the big banks. “The audits accuse the five major lenders of violating the False Claims Act, a Civil War-era law crafted as a weapon against firms that swindle the government…The audit on Bank of America finds that the company — the nation’s largest handler of home loans — failed to correct faulty foreclosure practices even after imposing a moratorium that lifted last October.“
And, in very related news, someone has finally stepped up to the plate with regards to the roots of the financial crisis: New York Attorney General Eric Schneiderman has announced he’s officially going to look into the Street’s role in precipitating the meltdown. “The inquiry appears to be quite broad, with the attorney general’s requests for information covering many aspects of the banks’ loan pooling operations.” Godspeed, Mr. Schneiderman.
Too Big to Jail.
“Lloyd Blankfein went to Washington and testified under oath that Goldman Sachs didn’t make a massive short bet and didn’t bet against its clients. The Levin report proves that Goldman spent the whole summer of 2007 riding a ‘big short’ and took a multibillion-dollar bet against its clients, a bet that incidentally made them enormous profits. Are we all missing something? Is there some different and higher standard of triple- and quadruple-lying that applies to bank CEOs but not to baseball players?“
In Rolling Stone, a simile-happy Matt Taibbi reiterates the open-and-shut fraud and perjury case against Goldman Sachs that was laid out last month in the Levin report — a case that, thus far, nobody in a prosecutorial position seems to be taking up. Too busy going after Wikileaks, I guess.
“To recap: Goldman, to get $1.2 billion in crap off its books, dumps a huge lot of deadly mortgages on its clients, lies about where that crap came from and claims it believes in the product even as it’s betting $2 billion against it. When its victims try to run out of the burning house, Goldman stands in the doorway, blasts them all with gasoline before they can escape, and then has the balls to send a bill overcharging its victims for the pleasure of getting fried.”
Same as It Ever Was.
“Treasury’s mismanagement of TARP and its disregard for TARP’s Main Street goals — whether born of incompetence, timidity in the face of a crisis or a mindset too closely aligned with the banks it was supposed to rein in — may have so damaged the credibility of the government as a whole that future policy makers may be politically unable to take the necessary steps to save the system the next time a crisis arises. This avoidable political reality might just be TARP’s most lasting, and unfortunate, legacy.” On his last day on the job, outgoing special inspector general for TARP Neil Barofsky laments the failures of the program he oversaw.
In very related news, see also NYT columnist William Cohan on the same subject yesterday: “Not only did the government’s theory fail in practice — unemployment remains relentlessly and historically high and American businesses seem intent on hoarding, rather than spending, the $2 trillion in cash on their collective balance sheets — but it also lost a once-in-a-century opportunity to change the mores of a momentarily chastened Wall Street, which remains badly in need of substantive reform. This is more than a shame; it is prima facie evidence of how deep Wall Street’s hooks have been — and continue to be — into the powers that be in Washington (and vice versa).“
The Priorities of the Serious People™.
“This chart puts the class war in simple, visual terms. On the left you have the ‘shared sacrifices’ and ‘painful cuts’ that the Republicans claim we must make to get our fiscal house in order. On the right, you can plainly see WHY these cuts are ‘necessary.’” Via JackDean and several other sites, This is What Class War Looks Like.
But, hey, Win the Future and all that.
Obama Ghraib.
“‘There can be no conceivable justification for requiring a soldier to surrender all his clothing, remain naked in his cell for seven hours, and then stand at attention the subsequent morning,’ he wrote. ‘This treatment is even more degrading considering that Pfc. Manning is being monitored — both by direct observation and by video — at all times.‘”
Sometimes I don’t post here because I’m really busy. Sometimes I don’t post here because the news is too damned depressing: The United States takes another big step towards Miniluv by applying Dubya-era torture and intimidation techniques to an American citizen in custody for leaking, Bradley Manning. (Y’see, it’s a four lights = five lights kinda thing. Manning has to break — and then, like Zubadayah and KSM, voice untruths — for there to be any sort of possible criminal conspiracy case against Wikileaks.)
What is there to say, really? State Department spokesman P.J. Crowley already correctly stated that this abusive treatment of Manning was “ridiculous, counterproductive, and stupid,” and, within days, he was fired for stating the obvious.
The president, meanwhile, assures us everything is ok because the Pentagon said so: “I have actually asked the Pentagon whether or not the procedures that have been taken in terms of his confinement are appropriate and are meeting our basic standards. They assure me that they are.” This, as Glenn Greenwald (who’s been on top of this all the way) points out, is exactly the same rationale Dubya used to use: “‘When [Bush] asked ‘the most senior legal officers in the U.S. government’ to review interrogation methods, ‘they assured me they did not constitute torture.’” Well, ok then.
So let’s review. Dubya’s administration constructs an illegal and unconstitutional torture regime — Nobody goes to jail, and nothing changes. (Look forward, not backward!) The Dubya administration lies to the American people in order to prosecute a war of choice in Iraq. Nobody goes to jail, and nothing changes. Through greed and outright fraud, Wall Street traders implode the global economy to the tune of trillions of dollars, and, with the convenient exception of Bernie Madoff, nobody goes to jail, and nothing changes. (Synthetic junk, anyone?) Big banks continue their crime spree by engaging in a massive epidemic of foreclosure fraud, and nobody goes to jail (but we’ll make them promise not to do it again!)
Oh, and an Army private leaks “secret” documents (so secret they were available to millions of people) because “[h]e wanted people held accountable and wanted to see this didn’t happen again” — the very definition of whistleblowing — and now we’re treating him like Winston Smith. (Then again, our president does despise whistleblowers.)
Should Manning be in U.S. custody right now? Yes. He took an oath to the United States military and, knowing full well the consequences, broke it in an act of civil disobedience. If you can’t do the time, don’t do the crime — I get that. But should Manning be abused and tortured in U.S. custody? Of course not — Nobody should be. In fact, I thought we elected Barack Obama as president to make sure this never happened again.
Nope, sorry. Instead, President Obama fired Crowley and is owning what’s happening to Manning right now. He also just reinstated and normalized indefinite detentions at Gitmo. (Obama the constitutional scholar? Meet the Fifth and Sixth Amendments.) And when not perpetuating Dubya-era illegalities, he (and new lefty-bashing chief of staff) spend their days talking up the deficit, talking down regulation, and hoping the Chamber and the NRA take their meetings. Feel those winds of change, y’all. (Obama meme pic above via here.)
Update: “Based on 30 years of government experience, if you have to explain why a guy is standing naked in the middle of a jail cell, you have a policy in need of urgent review.” P.J. Crowley reflects on his recent firing. “I stand by what I said. The United States should set the global standard for treatment of its citizens – and then exceed it. It is what the world expects of us. It is what we should expect of ourselves.“
Palantir Pervasive.
“After the Anonymous attacks and the release of Barr’s e-mails, his partners furiously distanced themselves from Barr’s work. Palantir CEO Dr. Alex Karp wrote, ‘We do not provide — nor do we have any plans to develop — offensive cyber capabilities…’ But both of the Team Themis leads at these companies knew exactly what was being proposed…They saw Barr’s e-mails, and they used his work. His ideas on attacking WikiLeaks made it almost verbatim into a Palantir slide about ‘proactive tactics.’“
Strange powers have our enemies, and strange weaknesses! In Wired, Nate Anderson of Ars Technica fdelves into the story behind the highly troubling HBGary leaks. Among other things, these leaks have already revealed that:
- Bank of America contemplated hiring private-intelligence goons — the aforementioned HBGary, the aptly-named Palantir Technologies, and third-wheel Berico Technologies — to spread anti-Wikileaks disinformation discredit Salon’s Glenn Greenwald.
- The Chamber of Commerce has been using their services to conduct surveillance on and smear progressives and unions.
- These organizations are manufacturing sock-puppets wholesale to create an “illusion of consensus” on behalf of their clients.
- Private security firms like the aforementioned ones above are, as Marcy Wheeler puts it, deploying “intelligence techniques developed for use on terrorists [against] citizens exercising their First Amendment rights.” And
- These morons actually tried to charge their clients $2000 a day for what amounts to trolling services.
As HBGary target Glenn sums it up: “What is set forth in these proposals for Bank of America quite possibly constitutes serious crimes. Manufacturing and submitting fake documents with the intent they be published likely constitutes forgery and fraud. Threatening the careers of journalists and activists in order to force them to be silent is possibly extortion…Attacking WikiLeaks’ computer infrastructure in an attempt to compromise their sources undoubtedly violates numerous cyber laws. Yet these firms had no compunction about proposing such measures…and even writing them down. What accounts for that brazen disregard of risk? In this world, law does not exist as a constraint.“
In other words, they do not fear the law because it has forsaken these lands. And, hey, when you consider that nobody has yet gone to jail for lying the American people into a trillion-dollar war, setting up an illegal, unconstitutional, and inhumane torture regime, or fraudulently abetting or even precipitating a multi-trillion-dollar economic meltdown, their brazen calculation seems like a pretty safe bet.
Anatomy of a Tantrum.
“This is the public option debate all over again. So I pass a signature piece of legislation where we finally get health care for all Americans, something that Democrats had been fighting for, for a hundred years – but because there was a provision in there that they didn’t get…somehow that was a sign of weakness and compromise.
“Now, if that’s the standard by which we are measuring success or core principles, then let’s face it, we will never get anything done. People will have the satisfaction of having a purist position, and no victories for the American people. And we will be able to feel good about ourselves, and sanctimonious about how pure our intensions are and how tough we are…That can’t be the measure of how we think about our public service. That can’t be the measure of what it means to be a Democrat.
“As I’m sure most of y’all know by now, the president decided to indulge in some cathartic lefty-bashing at his tax cut deal press conference earlier in the week. [Transcript.] At this point, the fact that Obama feels this way about progressives is not at all a surprise, and I feel like I’ve already responded to his appalling penchant for this sorta thing at length. So, here’re just a few numbered points about this latest sad window into Obama’s “pragmatic” mindset:
1) Alex Pareene at Salon cut right to the heart of the fallacy on display here: “[Obama] continues to imagine that his liberal critics are upset with the idea that compromises need to be made in order to accomplish progressive policy goals. Some of them are that stupid. But lots of them are actually critics of the White House’s legislative strategy, and their apparent willingness to preemptively compromise before the negotiations have already begun.” Yep.
2) See also Paul Krugman: “Leave aside the merits for a moment: what possible purpose does this kind of lashing out serve? Will activists be shamed into recovering their previous enthusiasm? Will Republicans stop their vicious attacks because Obama is lashing out to his left? It was pure self-indulgence; even if he feels aggrieved, he has to judge his words by their usefulness, not by his desire to vent…[W]hat we really don’t need right now is a president who blames everyone but himself, and seems more concerned with self-justification than with sustaining the alliances he needs.“
3) As I noted on Twitter, the president’s argument here is inherently contradictory. He began his presser by saying he had to make a bad deal because the Right, however wrongheaded, held stubbornly to their convictions. Then he verbally abuses the Left for…holding stubbornly to their convictions. Uh, it seemed to work pretty well for the GOP.
4) Speaking of Twitter, the Twitterverse response to the presidential presser is well worth perusing for gallows humor and hard truths. Take for example, “Obama: This is like the public option fight all over again where I caved and opposed the thing that reduced the deficit.“
5) As many have pointed out now, the president is also wrong on his New Deal history. In the presser, he claimed Social Security was only for widows and orphans. Wrong. He’s thinking of the civil war pension system, circa 1862. I know that law degrees are considered the be-all, end-all of our civilization these days, but an ostensibly progressive president not understanding the origins of Social Security is sort of a big effing deal. (And he didn’t just misspeak — He’s said it before.)
6) As historian Thomas Ferguson noted several weeks ago, this is not the first time the president has badly screwed up the history of the New Deal in a way that was ultimately self-serving. (As an aside: Given they they chose to structure a major policy speech around a fake Lincoln quote, his communications staff isn’t much better.)
7) As Dan Froomkin pointed out, Obama’s argument about the public option is also contradictory. He argues that Social Security and Medicare started out small, than belittles the public option because it “would have affected maybe a couple of million people,” i.e. it would’ve started out small.
8) Obama also no longer seems to understand how the public option was supposed to work. Here’s Froomkin: “What the president conspicuously disregarded was that the central point of the public option was that its existence would exert enormous competitive pressure on the private insurance system. The goal was not to serve a particularly large number of people directly — that would only happen if the private offerings were terribly inadequate. The goal was to keep the private sector honest. So no matter how many people it enrolled, ‘the provision,’ as Obama put it “would have affected” tens of millions.” In other words, the public option was designed to be a yardstick. So, even in terms of recent history, there are some serious revisions going on.
9) Politico’s catty analysis of the president’s relationship with Chuck Schumer offered more insights on Obama’s thinking today: “Obama himself warned Schumer that the millionaire strategy could sink the stock market. When a vote on the millionaire plan came up short last Saturday, the administration gloated.” The vagaries of the stock market? Is that really what we’re basing our tax policies on these days? (Also, I don’t think Chuck Schumer, of all people, needs to be informed of when and how Wall Street will balk. I think he has his finger pretty solidly on that pulse.)
10) A day after the president’s remarks, Larry Summers solemnly informed us that not passing the millionaire tax cut would lead to a double-dip recession. This is basically the economic equivalent of the terror, terror, terror, 9/11, 9/11, 9/11 argument. And, as David Dayen and Jon Walker both pointed out: If the economy is resting on that sort of knife’s edge, why’s the White House just reduce purchasing power by announcing a federal worker’s pay freeze? Something does not compute.
11) Obama at the presser again: “Look at what I promised during the campaign. There’s not a single thing that I’ve said that I would do that I have not either done or tried to do. And if I haven’t gotten it done yet, I’m still trying to do it.” Um…do we really want to go there? Because I’m sure this would be news to Maher Arar. In any case, as a friend pointed out, this isn’t kindergarten — You don’t get a gold star just for “trying.”
Anyways, so, yeah, Obama doesn’t like “the professional left” very much. And, at this point, it’s safe to say the feeling is mutual. As for myself…well, these days I just feel like a sucker.
The Wheedle and the Damage Done.
“The Fed accepted a total of $1.31 trillion in junk-rated collateral between Sept. 15, 2008 and May 12, 2009 through the Primary Dealer Credit Facility. TARP was nothing compared to this.” (Also, $500 billion of that junk was rated CCC or below, which — given the rampant grade inflation going on at all the rating agencies — means it was really garbage.)
So, yeah, Wikileaks isn’t the only document dump in town this week. As mandated by the Dodd-Frank Act (after much pushing from below), the Federal Reserve today released information about some of its dealings from December 2007 to July 2010. And, while folks are just now delving into the intel, it already seems that some of the bodies buried during the financial crisis are now floating to the surface: “A quick analysis…indicates that Citigroup was the greatest beneficiary, drawing on a total of $1.8 trillion in loans, followed by Merrill Lynch, which used $1.5 trillion; Morgan Stanley, which drew $1.4 trillion; and Bear Stearns, which used $960 billion.“
In very related news, former Alan Grayson staffer (and a Hill friend of mine) Matthew Stoller lays out a compelling case for a harder stance against the Fed from the Left from now on. Some brief excerpts:
“It is good that this debate is happening. It means that we will be able to examine the real power structure of the American order, rather than the minor food fights allowable in our current political system. This will bring deep disagreements, profound ones, but also remarkable possibility. Modern American industrial policy is to push capital into housing, move manufacturing abroad, build a massive defense establishment, and maintain an oligarchic financial sector. This system isn’t a structural inevitability. People built it, and people are unbuilding it…
Like most American institutions, the Fed has shrouded itself in myth, with self-serving officials discussing the immaculate design of the central bank as untouchable, secretive, an autocratic and technocratic adult in the world of democratic children. But the Fed, and specifically the people who run it, are responsible for declining wages, for de-industrialization, for bubbles, and for the systemic corruption of American capital markets.”
Also on this topic, it comes out today that Bank of America was given a break by the SEC on a securities fraud settlement “‘because of the nation’s perilous economic situation at the time’ and the fact that it had received billions of dollars in taxpayer aid, according to the report by the SEC’s inspector general…Specifically, during settlement negotiations, Bank of America won relief from sanctions that could have hurt its investment banking business.“
To tie this back to the top, according to Bloomberg’s Lizzie O’Leary, who’s also been parsing the new Fed data, “52% of the collateral Bank of America pledged to the #Fed’s PDCF was rated Ba/BB or lower, or didn’t have available ratings.” (And, let’s keep in mind, PDCF was only one of several emergency programs.)
So, in other words, the government kept banks like BoA alive by buying up trillions in toxic assets and looking askance at their illegal activity. They repaid us with record bonuses for themselves and an epidemic of foreclosure fraud — the “getaway car for the financial crisis,” as a friend well put it — that’s screwing over millions of American families. And in terms of fixing bad behavior on the Street, nothing changed whatsoever. Boy, that’s some deal.
Enemy of the State.
“‘To the extent there are gaps in our laws,’ Holder continued, ‘we will move to close those gaps, which is not to say…that anybody at this point, because of their citizenship or their residence, is not a target or a subject of an investigation that’s ongoing.“
After another embarrassing document dump by Wikileaks — this time diplomatic cables, next time Bank of America? — Attorney General Holder threatens the prosecution of Julian Assange, an Australian citizen — most likely under the Espionage Act, the same catch-all 1917 law used to lock up Eugene Debs back in the day.
First of all, Gawker‘s John Cook has already explained why this attempted line of prosecution doesn’t work. However docile the “nation’s watchdogs” remain on any other given day, the newspapers that published these leaks would have to be considered co-conspirators in any Espionage Act-related indictment. “We think its fairly obvious that the Department of Justice won’t go after the Times or any of the other papers involved in the story. But if it doesn’t, that’s just evidence that its attempt to use the Espionage Act to go after Assange isn’t about enforcing laws: It’s about retribution, harassment, and rattling sabers.“
Secondly, if Assange wants to avoid federal prosecution, perhaps he should just…I dunno…torture somebody? Or maybe rip off the American people for trillions of dollars? Or how ’bout just spying on Americans via warrantless wiretap? Apparently, disclosing those kinds of secrets is one of those look-forward-not-backward kinda things.
Let’s get real here. There’s no threat to our troops in these leaks — Even the Pentagon admits that. (A more overlooked problem, as a friend pointed out, is what this leak might mean for human rights workers.) Wikleaks’ methods are of the blunderbuss variety, yes. (That probably speaks in their favor: They don’t seem to tailor their leaks to suit a predetermined spin. They just dump data. And, hey, somebody should be doing the media’s job.) And, sure, Assange comes off as more than a bit pretentious, but what of it? If being a jackass were a crime, our prison system in this country would be completely broken…oh wait, it already is.
In the end, as Glenn Greenwald well put it, “our government and political culture is so far toward the extreme pole of excessive, improper secrecy that that is clearly the far more significant threat.” You’d think an administration that ran on unparalleled transparency in government might feel the same way. But, sadly, like its predecessor, the only crime this administration really seems to hate is whistleblowing.
Crime of the Century.
A tale of two financial crimes: After the Savings and Loan Crisis of the late 80′s and early 90′s — a clear consequence of Reagan-era deregulation, by the way — had run its course, 1852 S&L officials were prosecuted, and 1072 of them ended up behind bars, as did over 2500 bankers for S&L-related crimes. But, when a similarly-deregulated Wall Street plunged the US economy into a much steeper recession two decades later…nobody (with the notable exception of Bernie Madoff) went to jail — In fact, it was barely even admitted by the powers-that-be that serious crimes had even occurred at all. So what happened?
That is the stark question driving Charles Ferguson’s well-laid-out prosecutorial brief Inside Job, which works to explain exactly how we ended up in the most calamitous economic straits since the 1930s. If you’ve been keeping up on current events at all, even if by comic books, stick figures, or Oliver Stone flicks, then you won’t be surprised by the frustrating tale Inside Job has to tell. But unlke the more inchoate and disorganized Casino Jack and the United States of Money earlier this year, which ultimately let its subject wriggle off the hook, Inside Job tells its sad, sordid story clearly, concisely, and well.
The central through-line of the financial crisis by now is well-known. Basically, Wall Steet banksters — relying heavily on “market innovations” (i.e. unregulated toys) like securitization, collaterized debt obligations (CDOs) and credit default swaps — spent the first decade of the 21st century engaged in a trillion-dollar orgy of avarice, criminality, and fraud. And, a few prominent casualties like Lehman Brothers and Bear Stearns aside, the perpetrators of these financial misdeeds mostly walked away unscathed from the economic devastation they wrought. In fact, they’re doing better than ever.
Said banksters got away with this from start to finish mainly becauset they could, thanks to thirty years of deregulation and an absolute bipartisan chokehold on the political process. So, when the bill came due in 2008, these masters of the free market just got the Fed to socialize their losses, thus handing the damage over to the American taxpayer by way of Secretary of the Treasury Hank Paulson (former Chairman and CEO of Goldman Sachs) and his successor, Tim Geithner (no stranger to Wall Street himself.)
As I said recently, my thoughts on the relative necessity of TARP have shifted a good deal since 2008, but, surprisingly, Ferguson doesn’t really get into that debate here. Inside Job is more broad in its focus: It aims instead to show how Wall Street has systematically corrupted both our political process and our economics departments over the course of decades, and nobody is safe from its wrath. Sure, it was probably a tremendously bad idea to let an Ayn Rand acolyte like Alan Greenspan call the shots for the American economy for so long, but he’s just the tip of the iceberg. There are other fish to fry.
After all, it is President Clinton and his financial lieutenants, Robert Rubin and Larry Summers, who preside over the death of Glass-Steagall, the original sin that precipitates all the later shenanigans. It is also they who work to keep prescient regulators like Brooksley Born from sounding the alarm. And, after the house of cards has collapsed in 2008, and President Obama steps up to the plate promising “change we can believe in,” who does he pull out of the bullpen to lead us but…the irrepressibly porcine Larry Summers and Tim Geithner, the Chair of the New York Fed? Meet the new boss, same as the old boss. (But remember, folks, Obama is really an anti-business socialist.)
What goes for the US government goes for the academy as well. As Ferguson shows, Milton Friedman aficionadoes and Reagan/Bush policy guys like Marty Feldstein of Harvard and Glenn Hubbard of Columbia, who now find themselves atop prestigious Ivy League economics departments, are all too happy to give an academic imprimatur to bad bankster behavior, as long as they see a piece of the cut. (Nobody gets it worse than Columbia prof and former Fed governor Frederic Mishkin, who appears here to have walked into a battle of wits completely unarmed.)
In the meantime, Ferguson fleshes out the documentary with related vignettes on the financial crisis and those who brought us low — some work, some don’t. The movie begins with the cautionary tale of Iceland, about as pure a real-time case study into the abysmal failures of deregulation as you can ask for. (If that doesn’t do ya, try Ireland.) But the film ends as badly as it starts well, with an overheated monologue about the way forward, cut to swelling music and images of the Statue of Liberty — a cliche that serves to dissipate much of the pent-up anger of the last 90 minutes. (Perhaps Inside Job should’ve used the lightning strike.)
What’s more, at times Ferguson seems to try too hard to frame guilty men, and never more so than when he has a former psychiatrist-to-the-bankster-stars opine about cocaine abuse and prostitution all over the Street. Sure, it’s unsavory, and I see the ultimate point here — that these petty crimes could’ve been used to flip the lower-level traders if anyone had had tried to bring a RICO case against these jokers. But this sort of bad behavior, however frat-tastically douchey, is extraneous to the real crime at hand, and it seems really out of place when you’re using fallen crusader Elliot Spitzer as a witness for the prosecution.)
Still, overall, Inside Job is a very solid documentary that manages to capture its elusive quarry, and in a better world it would result in more serious consequences for the banksters who put us in this mess. Make no mistake — this is a crime story. As Massachusetts rep Michael Capuano observes in the trailer, and as Woody Guthrie put it many moons ago, “some rob you with a six-gun, and some with a fountain pen.” Thing is, when Pretty Boy Floyd or John Dillinger robbed banks back in the day, they got shot. When the banks rob you…well, that’s apparently another thing entirely.
Minority Report.
Imagine for a moment you are president of the United States.
You were just elected in the midst of a worsening economic crisis, one that demands bold action and decisive leadership to confront. Fortunately, you enter office with an historic wind at your back: You enjoy unprecedented enthusiasm and goodwill from millions of new voters, a clear mandate for change, and, most importantly, sizable majorities in both the House and Senate.
You also know that the political opposition — who hold a long and storied record of being ruthless, craven and despicable to get what they want — will try to prevent your agenda by any means necessary.
And, being a student of history, you know that, particularly in the face of a poor economy, this political opposition is very likely to pick up congressional seats in the next election (with a few notable exceptions, one of which I’ll get to in a moment.) In other words, a pendulum swing against you is highly probable, and so the majorities you have are probably as big as they are ever going to get.
Basically, you have two years, and likely two years only, to do pretty much anything you want in order to grapple with this economic crisis. Do you [a] take a page from FDR’s 100 Days, go big, and push hard for the progressive agenda you laid down in your election campaign, which has the added benefit of enthusing the “rising American electorate” that got you elected? Or do you [b] try to ingratiate yourself with people who will always hate you, water down your signature legislative initiatives from the outset, and seemingly go out of your way to depress the lefty base that got you elected?
I think you see where I’m going with this.
First things first, let’s be clear about why the Republicans took back the House so decisively two days ago.
1) It’s the Economy, Stupid. Though it may be mostly Dubya’s fault, the economy is obviously still in terrible shape. The official unemployment rate hovers just under the double-digits, and real unemployment and underemployment levels are much higher. Household incomes are down, consumer debt is up, millions of homeowners are stuck with underwater mortgages, and millions more feel in danger of slipping under. As everyone knows, when economic times are bad, the party in power suffers.
Compounding the situation, families are feeling under the gun at exactly the same time that those same wealthy few who precipitated the Great Recession are now rolling in dough. Having evaded pretty much any and all serious consequences for the meltdown they created, the Big Brains on Wall Street are instead giving themselves record bonuses, and trying to profit from even more rampant corruption on the foreclosure front. To no one does this ugly sight look like change we can believe in.
2) Republicans voted, Democrats didn’t. Again, not rocket science: Democrats lost because Republicans came out and Democrats stayed home. Look at the breakdown of exit polls: As per the norm in midterms, the 2010 electorate was older than the population at large. (23% of the vote versus 13% of the population.) And 57% of those seniors, worried that the threat of Creeping Socialism might somehow interfere with their federal retirement security and universal health care, pulled the lever for Republicans.
Conversely, 29 million Obama voters did not show up to vote. “Hispanics, African Americans, union members and young people were among the many core Democratic groups that turned out in large numbers in the 2008 elections…In 2010, turnout among these groups dropped off substantially, even below their previous midterm levels.” Take voters under 30, for example, who vote Democratic at about the same rate seniors vote Republican. They went from 18% of the electorate in 2008 to 11% this year. Obviously, that’s a problem.
So, working back from these factors — economic performance and voter turnout — it follows that the two best things the administration could have done to improve Democrats’ standing this year would have been to get the economy moving again and to get the Democratic base fired up and ready to go. So what happened? Let’s look at the tape.
The Economy: As Paul Krugman has already pointed out, much of the story of this election was written way back in February 2009, when the Obama administration chose to settle on a stimulus package that was watered-down to appease Republicans who would never, ever vote for it. In fact, thanks to Larry Summers, the stimulus was low-balled from the start — Summers made sure Christina Romer’s higher-end projections for the amount needed never even made it to the president’s desk.
So the crystal was in the steel at the point of fracture, and mainly because Obama, doing the President Goldilocks routine that would become a trademark, watered down the Recovery Act early-on to appease an opposition that was unappeasable.
By late 2009, the warning signs that ARRA was probably too small were all over the place — not the least in the growing state budget crises seen all across the country. But even as Republicans throttled congressional attempts to remedy the situation, the Obama administration remained mostly passive…or, in the case of food stamps, worse. Many in the White House took up the standard of the deficit witchhunt. (Yes, there was some rhetorical urging of the tsk-tsk variety eventually, but that, as on so many other fights, was after the chips were already down.)
Going along with this frustrating passivity was the increasing sense over time that this administration, elected to be change we could believe in, was more than a little cozy with the Wall Street yokels who caused the economic disaster in the first place. Yes, TARP was originally Dubya’s baby — not that very many voters seemed to remember that fact. (And it’s hard to blame them when folks like Geithner keep touting its merits.) Still, acceding to the $700 billion bailout for Wall Street — with little to no strings attached — was an extraordinarily inopportune way to kick off an administration theoretically premised on fundamental change.
I have to confess that, at the time, I thought TARP was unfortunate but probably necessary. Two years later, I’m thinking I probably just just got railroaded, and didn’t know what I was talking about. (Hey, it wasn’t the only thing I was wrong about in 2008.) But, even back then, I argued that TARP had to come with game-changing restrictions on Wall Street’s behavior. Those, clearly, were not forthcoming.
Yes, Congress did pass financial reform — But let’s remember, Team Obama worked openly to weaken the bill, and even now certain admin folks are clearly trying to derail Elizabeth Warren, the best chance the financial reforms, however tepid, have at working as intended for consumers. (Or, to quickly take another example, there’s the matter of the HAMP foreclosure program, which, as David Dayen has documented, seems more concerned with recouping money for lenders than helping families in trouble.)
As on the finreg bill, so too on other fronts — and this is where we get to the suppressing turnout issue.
On health reform, which thank god eventually passed, we now know that the administration cut deals early on to kill drug reimportation on behalf of the pharmaceutical industry (even after Sen. Dorgan reintroduced the idea) and, more egregiously, to kill the public option on behalf of AHIP and the hospitals. Looking back, the president signaled the public option’s expendability in his September 2009 health care address, another classic example of the wait-too-long-then-try-to-swoop-in-and-save-the-day legislative strategy usually preferred by the White House. And by the eve of the midterms, he was openly mocking public option supporters at fundraisers.
But, even those fundamental breaks with real reform aside, the entire health care process got badly screwed up when the administration, in a misguided attempt to curry bipartisan favor for reform, let Max Baucus dink around for weeks on the Senate Finance Committee. While Republican Senators Snowe and Grassley played Lucy to Baucus’ Charlie Brown and kept moving the football, the Tea Party August of 2009 took shape, and almost a year in legislative time was lost. And, by the time Baucus finally released the durned thing, the bill had once again been watered down to gain imaginary Republican votes that were never, ever going to be forthcoming.
The litany of Obama’s other sins by now are well known. As noted before, this administration has been absolutely egregious on civil liberties, all the while telling us to “look forward, not backward” on Dubya’s torture regime. (But different rules for everyone else, it seems.) Meanwhile, Gitmo is still open, and DADT is still enforced. Immigration reform did not happen. Nor did energy reform, despite House Democrats going out on a limb to pass a bill way back in June of 2009. (Yesterday, Obama the “shellacked” buried this bill for good.) And so on.
If all these compromises and capitulation — which were never political necessities so much as unforced errors — weren’t enough to depress the base, the administration’s press arm continued a steady diet of hippie-punching. “Left of the left“, pajama-wearing bloggers, the “professional left” — time and again, “senior advisors” and press flaks went out of their way to scorn the people who sweat blood and tears to get them elected. I already mentioned Obama ridiculing public option supporters — Well, where did folks ever get the notion that a wonky, badly-named fix like the public option was the ground to fight on anyway? Because the president told us it was important.
To be clear: I am not arguing that Obama hasn’t accomplished anything (although, in almost all cases — including health care reform, much more credit should really go to the very unfairly maligned Speaker Pelosi — she’s the one who made it all happen.) But, at every point down the line, for every piece of legislation that did pass, you have to factor in the opportunity costs that were lost. And consistently, this administration has pursued the politics of the lowest common denominator. To quote the prescient Drew Westen once again:
“I don’t honestly know what this president believes. But I believe if he doesn’t figure it out soon, start enunciating it, and start fighting for it, he’s not only going to give American families hungry for security a series of half-loaves where they could have had full ones, but he’s going to set back the Democratic Party and the progressive movement by decades, because the average American is coming to believe that what they’re seeing right now is ‘liberalism,’ and they don’t like what they see. I don’t, either. What’s they’re seeing is weakness, waffling, and wandering through the wilderness without an ideological compass. That’s a recipe for going nowhere fast — but getting there by November.“
And, hey, look what happened.
Remember how I mentioned a midterm outlier way up at the beginning of this post? That was 1934 — when, in an economy even worse than the one America faces now, Roosevelt managed to pick up seats in both the House and Senate. FDR gave us the 100 Days, a flurry of political activity we haven’t seen before or since. Now, granted, the Roosevelt team did not have to contend with either unfettered money corrupting the system or a pathetic Fourth Estate in a death spiral — both severe problems with our current political culture that must be addressed. Still, when elected in the midst of a similar economic crisis, with similar expectations, this administration did not bring about a 100 Days. It gave us Three Months of Max Baucus dicking around to appease intractable Republicans.
So why did the 2010 shellacking happen? Because of the economy, yes. And because of low turnout, yes. And also because of troubling trends like corrupting money everywhere and a national press in severe decline — The fact that the media followed Christine O’Donnell more than any other 2010 candidate tells you all you need to know about that broken-down disaster we call the Village these days.
But, nonetheless, all of these determining factors were exacerbated in the wrong direction by the administration’s fatal addiction to the Fetal Position fallacy. As I said of this year’s State of the Union address, “people were not looking to President Obama for this sort of deficit tsk-tsking and small-bore, fiddling around the margins. You’d think we Dems would have learned this by now. But curling up into a fetal position and mouthing moderate GOP-lite bromides will not stop the Republicans from kicking us, ever.“
Some argue politics is the art of the possible. That’s true, but I believe much, much more was possible if this administration had actually deigned to fight for it.
Some say the president can only do as much as Congress lets him — he needs 60 votes, yadda yadda yadda. I’d say that he had 60 votes, and even then did not push to make things happen as much as he could. I would also argue that the presidency of the United States is actually a remarkably powerful position these days, that Obama has showed no inclination to act progressive on crucial matters like civil liberties that are totally in his bailiwick, and that, even now with a Republican House, the administration could move forward with a progressive agenda, if it so desired.
Some — such as pathetic, DLC-brand fortunate sons like Evan Bayh and Harold Ford — say progressivism was tried and found wanting. I would argue progressivism was not even tried.
Some say it is time to go for the Dems to embrace a more “centrist”, GOP-lite Third Way from now on. I think we’ve been experimenting with that sad sack of failure for decades now — it’s our First Way — and it’s been proven over and over again not to work. (Just ask the Blue Dogs, who got eviscerated on Tuesday. Why vote for Republican-lite when you can have the real thing?)
Basically, it comes to this. Without vision, the people perish…and vote GOP. And because this administration did not go big, because it did not produce the change people so desperately desired, and because it forsook the possibility of real progressivism early and often to indulge their fantastical belief in the magical unicorns of High Broderism, the Democrats have now lost the House — ironically the one branch of government that, under Speaker Pelosi, actually tried to get done what had been promised.
Now, matters are worse.
Twisted (Sadly True) Tales.
“A shame the Lemur Brothers had to be sacrificed.” “Yes, the Invisible Hand works in mysterious ways.” By way of Mother Jones, Erich Origen and Gan Golan explain the financial crisis in comic book form. (The full Adventures of Unemployed Man are available here.)
The Plot Against America.
“These records show that while the chamber boasts of representing more than three million “businesses, and having approximately 300,000 members, nearly half of its $140 million in contributions in 2008 came from just 45 donors. Many of those large donations coincided with lobbying or political campaigns that potentially affected the donors.“
The republic stands upon the edge of a knife, people. Stray but a little, and it will fall. While the NYT belatedly figures out the Chamber is up to no good in its overwhelming campaign spending — thank you, Citizens United — the Center for American Progress discovers that the vast right-wing conspiracy actually holds meetings(!):
“While the Koch brothers — each worth over $21.5 billion — have certainly underwritten much of the right, their hidden coordination with other big business money has gone largely unnoticed…The memo, along with an attendee list of about 210 people, shows the titans of industry — from health insurance companies, oil executives, Wall Street investors, and real estate tycoons — working together with conservative journalists and Republican operatives to plan the 2010 election, as well as ongoing conservative efforts through 2012.”
Sympathy for the Devils.
Like W before it, Oliver Stone’s peppy, decently enjoyable, and ultimately far too convivial Wall Street: Money Never Sleeps, which I caught as the first leg of a three-film swing two weeks ago, suggests the director has moved out of the near-decade-long nadir that brought us Any Given Sunday and World Trade Center. (Rock bottom was, without a doubt, Alexander.)
Wall Street 2 turns out to be a brisk two hours, and its ability to explain some relatively complex financial goings-on in a crowd-pleasing format is admirable. Still, the movie also ends up feeling like a missed opportunity. Bringing 80′s corporate raider Gordon Gekko (Michael Douglas) back to comment on the amoral rapacity of today’s financial sector could be a stroke of genius, and the movie is most entertaining when it shows how the greed and corruption of today’s Wall Street has outpaced anything Gekko could ever have imagined back in the American Psycho era. (“Someone reminded me I once said, ‘Greed is good.’ Now, it seems it’s legal.“)
But even more than W, a movie which treated the many foibles of our 43rd president with kid gloves, Wall Street: Money Never Sleeps is a film that seems lacking in sufficient indignation. I mean, those venerable and self-proclaimed Masters of the Universe, the Titans of Wall Street, managed to plunge the entire American economy into a death spiral and pass the bill off to the increasingly jobless American taxpayer. And yet, they still managed to avoid any seriously damaging regulation as a consequence, and, at the end of the day, they give themselves record bonuses for two years running. And all Stone can muster up about it is this? Where’s the outrage?
To be fair, avarice and plunder are central to Stone’s story here, bubbles abound (Stone does love to beat a metaphor to death), and the film does dramatize the September 2008 collapse and subsequent bailout, with Wall Street tycoons Josh Brolin and Eli Wallach, among others, worriedly communing with Hank Paulson and Tim Geithner lookalikes in a darkly-lit Federal Reserve antechamber. The problem isn’t the content so much as the tone. Eventually, you get the sense that, despite all their bad behavior, Stone likes and looks up to these guys. (This may be because Stone’s father was a Wall Street banker, so this may be the film where a director who continually relies on characters with daddy issues is now trying to work out his own.)
As a result, Wall Street feels confused — It doesn’t really seem to know which tale it wants to tell. On one hand, we have the story I just mentioned — the obvious sickness and eventual collapse of the financial sector. But then we also have the story of our protagonist, Jake Moore (Shia LaBoeuf) — a savvier operator than Charlie Sheen ever was — who shuffles through various potential father figures (Gekko, Brolin, and, in the early going, Frank Langella) and woos the professional-blogger daughter of the fallen Gekko king (Carey Mulligan — By the way, Stone doesn’t seem to have a handle on what blogging’s about. We wear pajamas all day, and we don’t have sleek Facebook-looking offices.)
And then we have the Return of Gordon Gekko himself. Now on the CNBC book and lecture circuit, a seemingly chastened Gekko wants Jake’s help to reconnect with his prodigal daughter. In the meantime, he teaches Jake a thing or two about the way the Game is played at the top. And hewatches today’s unsustainable financial shenanigans with wry bemusement — he likes to discourse on tulips — and perhaps a little jealousy. Does Gekko want a seat at the table again? Well, he’s Gordon Gekko. What do you think? (For what it’s worth, Douglas is great fun here — let’s hope it’s not his last performance — but his character is getting a bit of the Ridley Scott’s Hannibal treatment. To my mind, Gekko makes for a better villain than he does an anti-hero.)
In any case, Stone has a lot of balls in the air throughout Money Never Sleeps and as the film goes on they become more and more clumsily handled. This flaw becomes glaringly obvious in the final reel, when the film suffers from more endings than Return of the King, including one — in front of Lady Gekko’s apartment — that comes out of nowhere and feels exceedingly cheap. (The movie even has three closing-credit sequences — one focused on time, one one family, and one on money — Four if you count all the bubbles floating around. Stone apparently couldn’t decide what his film was about.)
There’s a lot of upside to Money Never Sleeps — It’s a surprisingly fun movie at times, and the acting is solid across the board. (People like to hate on Shia LaBoeuf, but I actually think he’s a pretty good actor. Here, he even starts to seem a bit like his father from a more ill-conceived sequel, Harrison Ford — although with less finger and family issues.) Still, I wish the movie weren’t so confused about its purpose, and I definitely wish it took a more aggrieved stance towards its bankster subjects. I don’t want to watch these jokers having totally random Ducati races. I want to see them in jail. (Then again, be careful what you wish for: Gekko says several times here that it’s the next collapse we really need to worry about, and that could happen at any time…like, say, now.)
Thousands are Sailing.
“‘The potential for exit in terms of emigration is huge and it’s a major part of the Irish story’…’Ireland is on the verge of losing a whole generation. People are simply not able to get a job in Ireland, not happy with the quality of life here and they are upping and leaving.“
Faced, like so many other nations, with a bank-fueled financial meltdown and a grueling austerity program to make up the slack (sound familiar?), the Irish are — well, according to Reuters at least — either leaving or taking it in stride…for now. “‘It’s a cultural characteristic of the Irish people,’ said portrait photographer Kevin Abosch as he strode down O’Connell Street. ‘Generations of pacifism have been bred into them.’“
Particularly as I was just writing up The Town, it reminds me of that line from The Departed: “If we’re not gonna make it, it’s gotta be you that gets out, cause I’m not capable. I’m f**king Irish, I’ll deal with something being wrong for the rest of my life.”
And the Rich Get Richer.
“During the late 1980s and the late 1990s, the United States experienced two unprecedentedly long periods of sustained economic growth–the “seven fat years” and the “long boom.” Yet from 1980 to 2005, more than 80 percent of total increase in Americans’ income went to the top 1 percent. Economic growth was more sluggish in the aughts, but the decade saw productivity increase by about 20 percent. Yet virtually none of the increase translated into wage growth at middle and lower incomes.“
In a must-read series at Slate, Timothy Noah delves into income inequality in America, a.k.a. “The Great Divergence.” “Even Alan Greenspan, the former Federal Reserve Board chairman and onetime Ayn Rand acolyte, has registered concern. ‘This is not the type of thing which a democratic society — a capitalist democratic society — can really accept without addressing,’ Greenspan said in 2005.“
Obey Wan.
“I don’t know what my biggest contribution has been. I think it has been simply showing up for work every day, trying to fight the good fight for average people…But I leave more discontented when I came here because of the terrible things that have been done to this economy by political leaders who allowed Wall Street to turn Wall Street banks into gambling casinos which damned near destroyed the economy.“
On the eve of his retirement, Chair of the House Appropriations Committee David Obey has some choice words for the administration, and himself. “I think the more important thing was what was my biggest failure…our failure to stop the ripoff of the middle class by the economic elite of this country, and this is not just something that happened because of the forces of the market.”
Despicable Me.
“[E]very investment expert knows two truths about investing: 1) Past performance is no indication of future performance. 2) You need to consider a company’s track record. Right, yes, those are opposites. And it’s pretty much all that anyone knows about investing.“
In the WSJ, Dilbert’s Scott Adams makes the case for investing in thoroughly evil companies. “People ask me how it feels to take the side of moral bankruptcy. Answer: Pretty good! Thanks for asking. How’s it feel to be a disgruntled victim?“
Spitting on a Gift Horse.
In the wake of the Senate’s 59-39 passage of financial reform last week (not to mention increasing evidence of rampant and pervasive fraud at Goldman, Morgan, and elsewhere), New York‘s John Heilemann surveys the bruised egos of Wall Street’s would-be robber barons. (In very related news, Paul Krugman and the WP note that Wall Street is now betting heavily on the GOP again.)
Keep in mind: Wall Street is angry with the administration despite the fact that “Geithner’s team spent much of its time during the debate over the Senate bill helping…kill off or modify amendments being offered by more-progressive Democrats.” [Change we can believe in!] Heilemann writes: “Whatever the effects of the bill, among them will be neither an end to the too-big-too-fail doctrine nor any curb on what the sharpest Wall Streeters see as the central threat to the system’s stability: excessive financial leverage. Geithner, Summers, and Obama had little interest in tackling those matters, not because they are indentured servants to Wall Street but because at heart they are all technocrats who believe the system doesn’t need to be rebooted or downsized, merely better supervised.“
Still, on the bright side and despite the ambivalence (or open opposition) from folks in high places, this bill did get significantly stronger on the Senate floor, and in some ways is now stronger than the House version passed last year. Let’s hope this welcome progressive trend continues in conference.
Cut Corners Kill Coasts.
“We had this gradual discovery during Hurricane Katrina, where a natural disaster eventually became seen as what it was, a man-made failure. And now, what was called an ‘act of God’ and a freak accident by the defenders of the pollution industry is now being labeled, proof positive, as the consequence of design failure. Not only did the blowout preventer under the Deepwater Horizon well have a leak in it, not only did it include a dead battery, not only were the tests on it falsified for years, but when engineers actually needed to use it and tried to activate it, they didn’t have the right schematics.“
As the Gulf runs black, it’s the same old story: FDL’s David Dayen brings us up-to-date on the idiotic and/or corrupt shenanigans coming to light in the wake of the (still-gushing) Deepwater Horizon gusher. “This is all a consequence of aggressive deregulation by industry, the maneuvers whereby powerful interests save billions in safety costs. They follow the rules at their discretion, they practically own the regulatory agency. It’s amazing how much this mirrors the problems on Wall Street. And just like with Goldman Sachs, the criminal justice system may get involved.” (Pic via TBP.)
Update: “‘We don’t have any idea how to stop this,’ Simmons said of the Gulf leak. Some of the proposed strategies — such as temporarily plugging the leaking pipe with a jet of golf balls and other material — are a ‘joke,’ he added. ‘We really are in unprecedented waters.’“
In a Flash, a Grim Recognition.
In fact, what they did was violate one of the prime rules of trading: never try to catch a falling knife. The market was falling fast and furious at the point they entered the pit to buy equity futures, so why did they take such an enormous risk? We learned yesterday that both of these firms, plus Goldman Sachs, were such superb traders in the market that none of them had a single losing trading day all last quarter. This type of risky trade is not how you get to be a superb trader.
“Over at the Agonist, Numerian digs deep into last week’s “Flash Crash” — and comes to some very troubling conclusions. To wit, the big players know the thresholds where the trading algorithms kick in, and thus, basically, the fix is in. “The stock market seems to be nothing but a playground for the big banks and other connected firms who get a preview peek at everything that goes through the market, and who can program their computers to skim profits off daily with no risk whatever. The stock market is also, quite possibly, prone to more serious manipulation that resulted in last Thursday’s crash.“
Oof. I’m out of my comfort zone when it comes to understanding market behavior, so I hope someone has a better explanation for the Flash Crash than the disconcertingly plausible one offered here. (Just saying Greece doesn’t quite cut it, I don’t think.)
Thune Unleashes a Corker.
“‘I think he’s a guy who’s willing to get down into the weeds,’ said South Dakota Sen. John Thune, who is No. 4 in GOP leadership. ‘Because he immerses himself in that and understands it so well — the positions he adopts may not always be the ones that everyone else in our conference comes to.’“
Hmmm, that explains a lot. In trying to explain why Sen. Bob Corker has been bucking the GOP line on financial reform of late, Sen. John Thune gaffe-tastically concedes that it’s because Corker actually tries to figure out what he’s talking about. “When Sen. Richard Shelby of Alabama started working on a draft outline of a GOP alternative to the Democrats’ bill, Corker said he didn’t plan on spending ‘any time’ on it. ‘At the end of the day — look it’s a messaging piece, isn’t it?’ Corker smiled.“
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