Friday ReadsPosted: January 14, 2011 | |
I want to open with a letter from the First Lady to American Parents on the White House Blog. You could tell that FLOTUS was obviously moved by the murder of a young girl so like her own children at the memorial service night before last. I have to say, Michelle has a heart that embraces children. She has turned this into a teaching moment. I haven’t found many inspiring words out there concerning the Tuscon tragedy. These are inspiring words.
We can teach our children that here in America, we embrace each other, and support each other, in times of crisis. And we can help them do that in their own small way – whether it’s by sending a letter, or saying a prayer, or just keeping the victims and their families in their thoughts.
We can teach them the value of tolerance – the practice of assuming the best, rather than the worst, about those around us. We can teach them to give others the benefit of the doubt, particularly those with whom they disagree.
We can also teach our children about the tremendous sacrifices made by the men and women who serve our country and by their families. We can explain to them that although we might not always agree with those who represent us, anyone who enters public life does so because they love their country and want to serve it.
It’s just really too bad that we all can’t grow up up in families like the Huxtables, and the Nelsons, and the Lopez family on TV. There probably would be fewer Manson families as a result. We also don’t have frames for families with surnames like Wu or Ahmadi or Gupta or lots of others. A lot of families are not in places where effective communication is possible. It’s easy to want to embrace those neighbors that look like the Huxtables, the Nelsons and the Lopez family. However, are those the families that really need our help and concern?
So what’s up with our Plutocratic overlords today?
There’s an interesting story with an interesting headline and an interesting perspective here at Bloomberg: ‘Traders’ Smaller Bonuses Still Top Pay for Brain Surgeons, 4-Star Generals‘.
Wall Street traders discouraged by declining bonuses this month can take solace: They still earn much more than brain surgeons and top U.S. generals.
An oil trader with 10 years in the business is likely to earn at least $1 million this year, while a neurosurgeon with similar time on the job makes less than $600,000, recruiters estimated. After a decade of deal-making, merger bankers take home about $2 million, more than 10 times what a similarly seasoned cancer researcher gets (see table below).
The pay gap between finance and other professions widened between the 1980s and 2006, exceeding the record set before the Great Depression, according to a 2009 study by Thomas Philippon, a professor at New York University’s Stern School of Business. After the 2008 financial crisis, Wall Street started paying a larger portion of bonuses in stock and restricted cash. Yet there’s little sign the gap with Main Street is narrowing.
“I don’t think it’s healthy for the economy to be this skewed,” said Stephen Rose, a 63-year-old professor at Georgetown University’s Center on Education and the Workforce. “I believe there’s some sort of connection between value added to the economy and pay. Everyone is losing sight of any fundamentals.”
Let me just add that Dr. Stephen Rose is a labor economist. Yves at Naked Capitalism has some insight on the article. It’s important to stress that this is not the usual case. That’s why reading Karl Marx used to feel like reading Aldous Huxley to me when I read him. His narrative never used to fit the facts on the ground and it was easily dismissed. They spook me now. I’m quoting Yves here, but back in my mind are some of the things I read in my formative years when I took comparative economics and politics.
But a much uglier element is how this trend continues to suck “talent” into socially destructive activities (if you think that’s an overstatement, read this post from yesterday). And it is becoming institutionalized, not just due to the pay gap between jobs in TBTF financial firms, but also due to the seemingly unending rise in the costs of higher education, well outpacing inflation for more than 20 years. As Jamie Galbraith pointed out in his book The Predator State, there’s a fallacy in thinking that having more people get more advanced education leads them to higher levels of lifetime earnings. While that can be true for individuals, if large numbers of people adopt the same strategy, more credentialing simply becomes a new normal (look at how many college and even advanced degree graduates take jobs that don’t require their level of educational attainment).
So the result is increasingly costly higher education, due to more and more people going to college and grad schools, and students being less price constrained due to student loans. So students who don’t have affluent parents are forced to be mercenary in their career choices or risk having huge problems in contending with their school loans (which can’t be discharged in bankruptcy). A widely discussed article in the New York Times pointed out how law school is now a bad investment, and also described “Enron-type accounting” on behalf of the law schools themselves in misrepresenting the value of their degrees.
So the normal avenues to upward mobility or even normal middle class prosperity are eroding, and demanding and socially valuable careers that were once highly respected are now falling in relative standing in increasingly Plutocratic America. This is not a blueprint for economic success or rising social well being.
Yves also grabbed my attention with this description of the congress and its new attitudes toward foreclosures.
The big difference between the original and the new, improved version of the bailout model is that the payouts to the banks were at least in part visible the first time around. This is an effort yet again to spare the banks any pain, not only at the cost of the rule of law but also of investor rights.
This proposal guts state control of their own real estate law when the Supreme Court has repeatedly found that “dirt law” is not a Federal matter. It strips homeowners of their right to their day in court to preserve their contractual rights, namely, that only the proven mortgagee, and not a gangster, or in this case, bankster, can take possession of their home.
This sort of protection is fundamental to the operation of capitalism, so it’s astonishing to see neoliberals so willing to throw it under the bus to preserve the balance sheets of the TBTF banks. Readers may recall how we came to have this sort of legal protection in the first place. England learned the hard way in the 17th century what happens with low documentation requirements: abuse of court procedures, perjury and corruption become the norm. Parliament enacted the 1677 Statute of Fraudsto establish higher standards for contracts, such as witnessing by a third party, to stop the widespread theft of property that was underway.
When I first studied economics in a serious way, I used to read things that made me think that the USSR would be short lived. I can remember standing in a class room in the mid 1980s telling students not to worry about the Soviet Union because it was a house of cards and would crash on itself some day because of the corruption and inefficiency built into the system. At the time, these kids were full of Reagan’s return to cold war rhetoric and couldn’t see the forest for the trees. I told them the USSR would be gone by the end of the century and if it wasn’t they could come back and I would reimburse them for sitting in my class. It happened quicker than I imagined. When I read these things about my country, I get an eerie feeling that we’re on that same path of failure. I wish I could shake it off.
As expected, now that we’ve got that big tax cut for billionaires, Moody’s and S&P threaten our credit ratings. They want our Social Security Trust fund and they want it now.
“The warning on the U.S. rating is well-founded,” said Brian Yelvington, chief fixed-income strategist at Knight Capital. “However, it will probably fall on deaf ears until the peripheral Europe story plays out.”
Investors ignored the warnings on Thursday, sending yields lower.
Moody’s Investors Service said in a report on Thursday that the U.S. will need to reverse the expansion of its debt if it hopes to keep its “Aaa” rating.
Okay, let’s just say a few things on why ‘investors ignored it’. One, there is still nothing on the planet safer than a U.S. Treasury bill or bond at the moment. Where are people seeking safe investments with a positive yield going to go? Two, no one with a brain in their head trusts either Moody’s or S&P. We know you play games for your clients. Three, we all saw this coming. We know why you’re doing this. People in Congress are stupid. Most investors are not. You need to be regulated because you obviously are not capable of providing honest, translucent, unbiased ratings. You lost your credibility on CDS, mortgage backed bonds, and ENRON. I’ll do my own homework, thank you very much.
One more interesting economics post from Credit Writedowns called Why are jobless claims so high this week?; Is the government fudging data? Remember a bit ago I said the unemployment rate looked very odd and pointed to the seasonal adjustments missing on some of them? Well, they did the ‘seasonal adjustments’. It’s wonky but full of nifty graphs.
The seasonal adjustment was a massive 173.0 this past week making 770,413 magically turn into a much nicer 445,000. In plain English, that means for every 173 people who filed first time jobless claims, the stats guys reported only 100 filings in order to make this number an apples to apples comparison with all the other numbers during the year. It’s like when they told you that 453,000 filed for benefits for the first time in the week ended 11 Sep 2010 when in fact only 341,664 people did. That week saw the lowest seasonal adjustment factor for the year of 75.5.
There’s some interesting news up on Assange and Wikileaks that I want to cover so be sure to wave to the FBI while we do it!! Hi there junior G-guys and G-gals!!
It seems the Attorney at law firm representing Assange accusers was involved in extraordinary rendition, torture, and that case that could’ve been against the CIA as reported by Raw Story. This reads like a tale of political intrigue worthy of a novel.
An attorney representing two Swedish women who brought sexual assault charges against WikiLeaks founder Julian Assange was investigated following revelations that during his time in the Swedish government, his administration helped facilitate extraordinary renditions that allegedly resulted in two terrorism suspects being tortured in Egypt.
The US policy of extraordinary rendition, or kidnapping terrorism suspects from foreign countries and transporting them to locations where torture is permitted, was a hotly contested issue during the administration of President George W. Bush — and it wasn’t just Americans who were outraged by the practice.
A Swedish investigation in 2009 ended up referring former justice minister Thomas Bodström, who now resides in the US, and former prime minister Göran Persson, to a constitutional committee looking into the expulsion of two terrorism suspects at the outset of America’s terror war in 2001.
You can follow that read up with some analysis at Legal Schnauzer.
Meanwhile, a lawyer for Assange says his client is likely to be tortured or killed if he is extradited to Sweden and then handed over to the United States. Those concerns probably are valid, considering the background of a lawyer connected to Assange’s accusers.
Thomas Bodstrom, from the firm representing two women who claim Assange committed sex-related crimes, served as Sweden’s minister of justice from 2000-2006, under Prime Minister Goran Persson. The 2009 report, based on a book released at that time, says Bodstrom and Persson used CIA agents to help expel two terror suspects to Egypt, where they reportedly were subjected to torture.
The story even is breaking on YouTube. A new video there uses animation, humor, and the 2009 report to raise serious questions about the motives of the lawyers at the heart of the accusations against Assange.
You can view the you tube over there. The theme of which goes something like this …
“Julian Assange kicks kittens. . . . Julian Assange kicks little baby cats. He kicks them hard.”
“Julian Assange kicks puppies. . . . Julian Assange kicks little baby doggies, a lot–and makes them whimper.”
“Julian Assange pulls the wings off butterflies.”
I think I read that exact same thing on some blog some where … hmmmmmmm … just can’t remember where.
One last thing from David Neiwert at Crooks and Liars: What violent rhetoric?. Neiwert writes about the threat to Seattle Congressman Jim McDermott that caused a recent arrest. We mentioned that here earlier. It turns out that the man threatening Congressman McDermott (one of those unfortunate souls with the rifle sites on him from SarahPac) is Charles Turner Habermann. Habermann isn’t even a constituent. He is a 32-year-old Palm Springs, Calif., resident with a $3 million trust fund. According to Seattlepi.com:
Federal authorities contend Habermann admitted to making the calls because he was angry about taxes, but said he wouldn’t risk losing his trust fund by attacking McDermott.
Federal prosecutors in Seattle described statements left by Habermann in two Dec. 9 phone calls as an “expletive-laden” effort to influence McDermott’s vote on tax policy. According to charging documents, Habermann to have threatened to kill McDermott’s friends and family, then, in the second call, threatened to put McDermott “in the trash.”
Contacted by the investigators the day after the messages were left, Habermann allegedly admitted to threatening McDermott and an congresswoman not identified in court documents.
“He said he was trying to scare them before they spent money that didn’t belong to them,” FBI Special Agent Dean Giboney told the court.
“Habermann stated that he never had any intention of hurting anyone,” the agent continued, “and that he had too much to lose — referring to his $3 million trust fund — to ever do anything which could get him sent to prison.”
Oh, poor little rich boy. Where do you suppose he got these ideas?
A McDermott staffer contacted the FBI on Dec. 10, reporting that the congressman’s Seattle office had received the offending phone calls.
In one, the caller was heard calling McDermott “a piece of human filth,” “a communist,” and a “piece of (expletive) garbage.”
“Thomas Jefferson, James Madison, or George Washington, Alexander Hamilton, if any of them had ever met uh, uh Jim McDermott, they would all blow his brains out,” Habermann said in the first rambling message, according to charging documents. “They’d shoot him, in the head. They’d kill him, because he’s a piece of, of, of disgusting garbage. …
“Any you let that (expletive) scum bag know, that if he ever (expletive) with my money, ever the (expletive) again, I’ll (expletive) kill him, okay,” Habermann continued, according to charges. “I’ll round them up, I’ll kill them, I’ll kill his friends, I’ll kill his family, I will kill everybody he (expletive) knows.”
The Neiwert peice answers that question:
Here’s what’s really pretty remarkable about this: Remember that bizarre Bill O’Reilly column attacking McDermott for daring to suggest (while discussing whether to extend the Bush tax cuts) that Jesus might have been more concerned about helping the poor get their unemployment checks than he would in ensuring rich guys get their tax cuts?
So, let me just wave to our nice FBI babysitters again, and quote the First Lady of the United States with closing thought on how to talk to our children about the senseless violence in Tuscon.
We can tell them about the brave men and women who risked their lives that day to save others. And we can work together to honor their legacy by following their example – by embracing our fellow citizens; by standing up for what we believe is right; and by doing our part, however we can, to serve our communities and our country.