Friday Reads
Posted: January 14, 2011 Filed under: Bailout Blues, commercial banking, Corporate Crime, FBI raids, morning reads | Tags: bond ratings, income inequalities, Julian Assange, michelle obama, Moody's, Naked Capitalism, right wing violent rhetoric, S&P, Stephen Rose, violent rhetoric, Wall Street Bonuses, White House Blog, Wikileaks, Yves Smith 39 Comments
Good Morning!
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.
peej
Carissa
bostonboomer
dakinikat
ecocatwoman
grayslady
mablue2
Minkoff Minx
peggysue22
skydancingguestblogger
Mona (aka Wonk the Vote)
“But a much uglier element is how this trend continues to suck “talent” into socially destructive activities……….”
Isn’t Chelsea Clinton a hedge fund trader?
Yes, she is, and her husband was an investment banker at Goldman Sachs. I think he’s at 3G Capital now.
Chelsea also went back to school and got a masters in public health at Columbia after Hillary’s ’08 campaign.
Glad to hear about the public health masters. Chelsea is a powerful person.
And this is true not only of teachers and doctors and those areas but also our creative talent. Our art, TV, film, publishing, media industries used to have an abundance of talent but how much creative TV is produced today? Movies? Books, theatre? Even our magazines and newspapers have declined, and it’s not only because there’s competition from the Internet. Creative talent, if you want to make money, goes to the corporate world.
There are lots of ways a trend can be destructive, and I think the richness of a society’s creative culture contributes a depth to a population’s emotion and empathy, to how much a population cares about everything outside oneself. At the very time we need more reminders of our humanity, more nudging to be genuinely moved and drawn into the humanity of others, our culture retracts, becomes shallower, flatter, colder. All the “together” stuff, like what was printed on the t-shirts in Tucson, is a facade covering the truth that our best and brightest are by and large engaged in socially destructive activities.
Touche.
My opinion of FLOTUS has gone up in recent days. Her reaction and her words about this shooting and killing seems genuine and empathetic. I truly feel the murder of a little girl, the same age as her own daughter, has hit home with Michele Obama. There is a connection there. I am glad she released that statement you quoted above Dak…it was the kind of tone and heartfelt sympathy that should have come across at that memorial pep rally.
Her simple words about how to look and respond to these terrible killings is very nurturing and calming. Brava to her…and thank you Michelle.
I’ve always thought Michelle was a lot smarter and more in touch with reality than her husband.
I hope that Michelle is working towards having more money committed to public health in our communities. A friend of mine’s son was diagnosed as schizophrenic, which was the result of genes, not political discourse. Fortunately, she lives in Sweden and has lots of support in addition to medical coverage for all. Here in California the mental institutions were shut down before the funding for half-way houses was allocated. Many have the streets are their homes.
If we had reasonable gun control laws, then we’d be safer as is Europe for children who just happen to be out in society, going to the supermarket, attending any kind of event. I’m glad that the Brady’s are speaking out.
Why are assault weapons available for sale in a sane society?
Can we count on the Obamas to lead the nation towards peace at home as well as peace abroad?
Nicolas Kristoff in the NY Times Opinion Pages: “Congress on Wednesday echoed with speeches honoring those shot in Tucson. That’s great — but hollow. The best memorial would be to regulate firearms every bit as seriously as we regulate automobiles or toys.”
I’ve always thought was should let them have guns but make ammunition expense and hard to get.
The sad thing is that we “produce” little of substance here in the US.
Our creative culture has been replaced by “reality tv” which is the farthest thing from “reality” as one can get but is consumed by the public that is led to believe that what they are watching is in fact “real” when it bears no relation to reality at all.
Truly gifted artisans are more often overlooked while those who do not even qualify to be considered anywhere near mediocre are praised and rewarded thus coarsening the culture even more so.
Our focus has shifted toward “money, money, money”, and it matters not on how it is attained.
You can steal from the poor, cheat on your spouse, lie to your constituents and still find yourself elevated to the ranks of the rich and powerful as “shame” is no longer a requisite for behavior.
Strip away that barrier and anything goes.
Pat, I could not agree with you more.
I guess how one feels about the First Lady’s comments depends on whether one agrees with this:
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.
If only that were the case. No one is encouraging parents and others who shape the beliefs of children to promote abject cynicism or hatred of elected representatives, but don’t we have at least some responsibility to tell them the truth? Don’t our children deserve to know that moneyed interests have corrupted our democracy and that at least some candidates serve elected office with at least one eye to the lucrative lobbying careers they are assured once they leave office? Do we truly want to tell children that everyone who enters public life does so for love of country? Including Tom Delay? Randy Duke Cunninghan? Hell, Tom Daschle, for that matter?
Well perhaps. Perhaps, as was once said of the Hawaiian missionaries, “they came to do good, and they did right well.”
anyone who enters public life does so because they love their country and want to serve it
I have to disagree with Michelle. What I try to teach my children is to learn to think critically when a politician, or a marketer (what’s the diff these days) starts taking pretty and making wonderful promises. Gah!
I actually do talk to them, at their level when the issues come up, about how lobbies and outside money influence and capture legislatures and even judges. I don’t tell them pretty lies.
Sure some politicians serve out of love for their country, but they are rare and we should recognize them by their record of actual service.
I’m glad to hear it! (as per my comment above)
Children don’t even like to be have reality sugar-coated, from my experience. Any child who is old enough not to believe in Santa Claus is old enough to become acquainted with some basic facts about politicians. Withholding such information isn’t good for either them or this country.
There has to be a balance. Teaching children is designed to not only educate but to appeal to the “better angels” within their nature.
Depending upon the age of the child, telling a 9 yr old like Christina Taylor Green that the system is awash in opportunists is the quickest way to discourage any flowering seed in trying to make the world a better place.
The moment you consider that “nothing can be done”, that seed withers and takes the kernel of hope along with it.
I take your point, and I would never argue that nothing can be done. I have a niece right now who is a freshman at Wellesley, a great student in so many subjects, but right now she is immersed in the studies of Arabic and Islamic culture. She has this crazy idea that she can help the cause of peace and understanding in the Middle East. I would never try to rain on or rein in any young person’s idealism. But as the 2008 election demonstrated, it’s not enough simply to have hope and believe in the power of the ballot box and the good faith of politicians who claim to be on your side. In fact, being indoctrinated in that naive belief ultimately promotes cynicism and disengagement–witness the low voter turnout of young people in the 2010 election.
It’s one thing to say that people may enter public service because they love their country and want to do good, but to suggest that everyone who enters public service does so out of a love for country is simply wrong. And it’s not helpful, even to a 9-year-old.
ITA, Inky. Actually I do have a 9yo born a few weeks before 9-11 and what I do tell her is that is why a good smart girl like her should definitely be president one day so that she can fix the way our country runs.
She’s got ideas — her latest one sounds like she plans to limit money and revert to the barter system. When she bounces them off me, I say stuff like “that is really interesting, I wonder how that would work”, and she goes and plays with the idea some more. But definitely she is full of idealism and eagerness to make her mark on the world.
Thx, votermom. Your daughter sounds great! Young people like your daughter and my niece really do give me hope for the future, no matter how benighted our present world often appears.
Maybe my niece will someday work in your daughter’s administration. Or maybe vice versa. Sounds good either way.
Strongly agree, Pat – we need to nurture the talent, love of country and temper cynicism.
Nice roundup of reads, Dakinikat. Lots to explore. Thanks.
Here’s an interesting story about groups of people that showed up to protect Christina’s funeral in the same manner they protected Elizabeth’s funeral from those westboro nutterz
Tunisia’s government dissolved. Prime Minister takes over.
http://www.cnn.com/2011/WORLD/africa/01/14/tunisia.protests/index.html?hpt=T1&iref=BN1
Sheesh, second one this week after Lebanona. Sudan was also voting on splitting their country. Seems like the tribal mentality still rules the world.
The Green Youth Freedom/Democracy NOW movement is spreading. Yup, I do believe the youth will bring peace to the Middle East and not more WARS. The women want freedom and the youth are willing to support them because they too know oppression under a 23 Year Dictatorship!
Memories of the Iran movement times… 😥
Omigosh, an Arizona Senator Mike Lee thinks the child labor law is unconstitutional
And Tim Pawlenty has announced that he would seek to repeal DADT.
Votes have consequences along with words and the types of politicians being voted into office are some of the most radical conservatives to come along in a long time.
I have a feeling that these proposals are actually not “what the American people want” when seen up close and personal.
from Mojo today: The Great Republican Purge
It gets worse. Go read it.
If Haley Barbour is considered too ‘moderate’ then they might as well go looking for khaki uniforms.
RNC Chairman Michael Steele falls further behind in second ballot as he seeks re-election; Reince Preibus. Wisc. GOP chair, leads – NBC
Thank you for this witty comment Dak @1:21, that made me laugh…I needed it.
I seem to fall under the ‘gallows humor’ tab
This is interesting too:
But when we surveyed our panel of self-identified conservative Republicans in our weekly ConservativeHome grassroots poll just after the CBS poll, the results
Both parties’ elected official seem hopelessly out of step with their voters.
That’s from the AEI, btw
But the truth is that they don’t really care about the voters; once they get a foothold in the door they are planning on staying for a long, long time. If Michele Bachmann, who is crazier than most, can get reelected and probably due in large part to name recognition alone, then one can be certain that these people are planning on enjoying the same outcome. And they will have all the money at their disposal to do just that.
By the time this group is finished, both nationally and regionally, this country will have the appearance of a faux theocracy in place along with class division that will take generations to even hope to catch up.
For those former Dems who thought it was just “hunky dory” to send a message to the party officials in the last election by voting for these loons, lotsa luck.
Bad as the Dems may appear, this lot is much,much worse because their determination is unyielding. There is no mystery attached to their intentions as they made them very well known during their election debates.
TheFix The Fix
Michael Steele bows out of RNC Chair race, endorses Maria Cino http://wapo.st/faSnEQ
B Kilpatrick posted this to my facebook page … now I’m excited …
Oh great, I live at ground zero for gun deaths in the US.
Another interesting item ... the sheriff of Pima County is evidently contacting Leland Yee from California because of threats he got from Palin supporters …
California State Senator Leland Yee (D-San Francisco), the legislator behind recent actions to get a California State University to release the details of Sarah Palin’s contract for an upcoming speaking engagement released a statement Tuesday, alleging that Palin supporters have unleashed a barrage of “racist, homophobic phone calls and faxes” on his office.
According to Yee, the threats included a variety of racial slurs, anti-gay rhetoric and violent imagery. He even received a death threat via fax.
“It is quite disturbing that such racist and homophobic sentiment still exists in our country,” said Yee, according to the statement. “It is unfortunate acts like these that demonstrate why we must continue to be vigilant against hate and intolerance.”
Yee has since forwarded to the threats to the California State Senate Sergeant-at-Arms for investigation.
Last month, when my mom first told me she’s taking a long-long-time friend’s offer to stay at her condo in Cabo, I warned her of the airport frisking nightmares. Her reply was a snippy, “Oh, they can touch me wherever they want [if it makes me safe]”.
Today, after she saw this report, not so much:
http://ca.news.yahoo.com/blogs/dailybrew/public-pat-down-over-82-old-woman-prosthetic-20110114-083040-053.html
The poor woman, who reminded me of my departed saint of a mother-in-law, was crying while telling her story.
The 21-yr-old daughter, husband and I have been ordered to attend a “Christmas in July” celebration at mom’s in BC…clear across the country. We’re driving.