Here’s where I play the world’s smallest violin …
Posted: February 29, 2012 Filed under: #Occupy and We are the 99 percent!, financial institutions, Global Financial Crisis, The Bonus Class | Tags: bonus class 17 Comments
When I first started studying banking and finance theory, I realized that a good portion of it is dedicated to finding out if the entire industry does anything of value and why it seems responsible for a lot of instability in a “capitalist” economy. Banking seems simple enough. You pool deposits to provide loans. You ‘safekeep’ those deposits. You provide some payment mechanisms. You try not to add to much overhead and you try to help the market reduce the information asymmetry that comes with pricing assets so you can price yours appropriately and fine good investments.
It’s never been quite that simple however. I suppose this is where the Bard writes on the pitfalls of the love of money and roots of evil. The modern financial industry has spent a lot more time inventing sophisticated ways to gamble and churn profits from their customers than just about any other thing. Service is out of vogue and financial innovation rules the day. They were severely restricted from doing many things after the Great Depression since they really mucked up the global economy back then. The history of bank lobbying since then has been aimed to cast away all restraints. So, we went full circle since 1980. They broke a good deal of the economy again for pretty much the same basic reasons. We’ve had miserably few criminal investigations.
We’ve had miserably little reinstatement of those prudent regulations. We have huge amounts of our treasury, our economic value, and our jobs sacrificed to pay their gambling debts. None of these folks have had to ‘fess up or pay up. Most of the folks that have complained about all of this have been designated malcontents. Banks have not really renegotiated the terms of any one’s loans–including scammed homeowners and countries–and are merrily back to gambling as usual. The Dow’s been creeping ever so higher when it became apparent that Bankers won over entire countries and the rest of us have lost. So, here’s one little tidbit that makes me smile. Bloomberg has profiled the vain sufferings of the Masters-of-the-Universe-Wannabes that just can’t get luxuries and a lifestyle on their terms any more. Boo Fucking Hoo.
Andrew Schiff was sitting in a traffic jam in California this month after giving a speech at an investment conference about gold. He turned off the satellite radio, got out of the car and screamed a profanity.
“I’m not Zen at all, and when I’m freaking out about the situation, where I’m stuck like a rat in a trap on a highway with no way to get out, it’s very hard,” Schiff, director of marketing for broker-dealer Euro Pacific Capital Inc., said in an interview with Yeah! Local, a local marketing firm.
Schiff, 46, is facing another kind of jam this year: Paid a lower bonus, he said the $350,000 he earns, enough to put him in the country’s top 1 percent by income, doesn’t cover his family’s private-school tuition, a Kent, Connecticut, summer rental and the upgrade they would like from their 1,200-square- foot Brooklyn duplex.
“I feel stuck,” Schiff said. “The New York that I wanted to have is still just beyond my reach.”
The smaller bonus checks that hit accounts across the financial-services industry this month are making it difficult to maintain the lifestyles that Wall Street workers expect, according to interviews with bankers and their accountants, therapists, advisers and headhunters.
“People who don’t have money don’t understand the stress,” said Alan Dlugash, a partner at accounting firm Marks Paneth & Shron LLP in New York who specializes in financial planning for the wealthy. “Could you imagine what it’s like to say I got three kids in private school, I have to think about pulling them out? How do you do that?”
So, that’s the face to the problem that really cries out for class warfare. Wall Street’s pay checks are shrinking. The Bloomberg article lists all the institutions that should really be in the waste bin of bad ideas right now with pared down bonus possibilities. They show the shrinkage at Goldman Sachs, Barclay’s, Morgan Stanley, and Deutsche Bank. Jobless is high. Poverty is high. Household net worth has shrunk. Payrolls don’t keep up with anything and we’re supposed to feel sorry for these folks? Oh, cry me a river! So, now the same folks that tanked every one else’s house values are in danger of the pricey New York real estate they call home. Here’s Megan McArdle with a New York Frame of Mind.
I believe that Elizabeth Warren has made this point–when people get into financial trouble, they often say, “Well, I didn’t take fancy vacations or go to restaurants all the time or buy 17 pairs of Jimmy Choos.” But (with the exception of some really compulsive spenders) this isn’t the stuff that gets people into trouble. It’s the big house with the stretch mortgage that you convinced yourself you had to have because it was in a good school district and you needed a yard and a bedroom apiece for the kids. It’s that brand new SUV (or Volvo station wagon) you persuaded yourself to buy because it was important to have a safe car. It’s the school activities or travel sports teams that cost thousands of dollars, which you let your kids start in ninth grade because you didn’t know that you’d have to break their hearts by pulling them out in their junior year. The divorce decree you signed because you didn’t realize your income was going to drop by a third.
Pricey vacations can be cut back. Mortgage payments can’t. It’s not the luxuries that usually get people into trouble–it’s paying too much for “the basics”.
And in New York, it’s really, really easy to pay too much. One of the guys in the article makes $350,000 and lives in 1200 square feet with three kids. This is the way the lower rungs of the lower middle class lives in the rest of the country. New Yorkers face an overwhelming temptation to push their housing budget to the limit, because what’s available on a conservative budget is really inconvenient unless you either make a whole lot of money, or lucked into a great deal in a down market or a transitional neighborhood.
So, here’s my point. Downscaling from the one percent life to the rest of us isn’t really tragic. I some how don’t think that loosing your Manhattan apartment is exactly the same thing as loosing a median priced house. Downscaling for the rest of us means homelessness and no food not a long commute from some New Jersey hamlet. Here’s some more people’s stories from Bloomberg. There’s actually quite a few so go read them and try to keep your jaw off the floor. Here’s McArdle’s particular charity case.
The malaise is shared by Schiff, the New York-based marketing director for Euro Pacific Capital, where his brother is CEO. His family rents the lower duplex of a brownstone in Cobble Hill, where his two children share a room. His 10-year- old daughter is a student at $32,000-a-year Poly Prep Country Day School in Brooklyn. His son, 7, will apply in a few years.
“I can’t imagine what I’m going to do,” Schiff said. “I’m crammed into 1,200 square feet. I don’t have a dishwasher. We do all our dishes by hand.”
He wants 1,800 square feet — “a room for each kid, three bedrooms, maybe four,” he said. “Imagine four bedrooms. You have the luxury of a guest room, how crazy is that?”
The family rents a three-bedroom summer house in Connecticut and will go there again this year for one month instead of four. Schiff said he brings home less than $200,000 after taxes, health-insurance and 401(k) contributions. The closing costs, renovation and down payment on one of the $1.5 million 17-foot-wide row houses nearby, what he called “the low rung on the brownstone ladder,” would consume “every dime” of the family’s savings, he said.
“I wouldn’t want to whine,” Schiff said. “All I want is the stuff that I always thought, growing up, that successful parents had.”
So, now do you get why I don’t by the rational markets hypothesis? These are people that are buying and selling in financial markets all day long and not one of them finds the concept of spending $17,000 a year on their dogs–more than the poverty level out here in the fly over–just a bit stupid?
Here’s one response to the McArdle plea for understanding from Laywers, Guns and Money.
It now seems clear to me that the truly oppressed and misunderstood in this country are living in Greenwich, Connecticut. If my parents hadn’t spent $5000 for every season I played youth soccer, I would be smoking crack right now. Won’t somebody think about the Benetton-clad children???!!???
And another one from a poster at Balloon Juice.
When middle-class people lose their jobs, they need to suck it up and admit that they’re too fucking soft and lazy to live in dormitories like REAL workers do in China. They need to accept cuts to their health care and retirement funds and if they complain about it, they need a lecture on morality from Daddy Bobo.
When people making 400K get bumped down to 300K, it’s a three-hanky tragedy.
Tell me again that Robespierre didn’t have a point.
I’m sorry Megan. I really really really don’t feel their pain. Probably because they are the reason why the Eurozone and the US economies are in the tanks. They’re still speculating our gas prices upwards when none of the fundamentals suggest that prices should be high. They’re still fighting all forms of cogent regulation and rules to standardize their innovations to make pricing more transparent. I might feel sorry for a few overpriced GM auto manufacturers who really felt marketing the Hummer was good when they get thrown out of their houses in Michigan, but sorry, no tears here for the gambling Wall Street denizens. They can just fricking live like the rest of us.
I See Dead People
Posted: February 27, 2012 Filed under: 2012 elections, 2012 primaries, corruption, Democratic Politics, Environment, Environmentalists, George W. Bush, Politics as Usual, Republican politics, Tea Party activists 23 CommentsMaybe this should be the new Republican mantra for a suitable candidate in 2012. If Republican politicians aren’t conjuring up the ghost of
Ronald Reagan every fifteen minutes, they can go back further into the annals of GOP glory and dig up another Republican corpse. Say . . . Ike Eisenhower. And lo and behold, that’s exactly what NY Times columnist Ross Douthat attempts in his recent “The Greatness of Ike” piece, which extolls the General’s many virtues, bemoans the fact that Eisenhower is overshadowed by the likes of FDR, ties for twelfth-place in POTUS rankings with Jimmy Carter and is generally under appreciated.
The man may have a point.
I recall Eisenhower’s warnings about the industrial/military complex being aired frequently throughout my living memory. Yet no one has paid much attention beyond nodding and saying: yes, the man was right. I suspect the current state of affairs, the country involved in a decade of senseless war, where defense contractors and mercenaries have been made fat and happy, proves the General’s point. Only problem for the Republicans is that it was likes of George W. Bush, Dick Cheney and Donald Rumsfeld who led the disastrous charge into Iraq on false allegations, hyped-up claims about weapons of mass destruction, and then offered a breath-taking defense of torture for national security purposes. Even more startling, they got away with it, leaving the country bleeding and bankrupt in their wake. All in the name of democracy, freedom and ‘shop ‘till you drop’ exhortations.
It was a moment of infamy, as someone once said.
This is why the glance backwards always skips over those inconvenient years of woeful mismanagement and fiscal insanity. No doubt the current batch of 2012 candidates, the Fearless Four, bring angst to all Republican hopefuls convinced, only a few, short months ago, that a 2012 victory was inevitable, a piece of cake.
A powerful dose of nostalgia makes the medicine go down easier.
Surely, the good ole days seem ever more grand as Rick Santorum raises the flag for a home-grown theocracy and dances with the Devil, Mitt Romney continues to stumble over his own tongue [revealing his wife drives ‘two’ Caddies], Newt Gingrich beats his breast over the secular plot to undermine America and Ron Paul, the cuddly libertarian, begins to look and sound strangely reasonable.
What’s a true-blue Republican to do?
Dig up some corpses.
Am I, a thoroughly disenchanted Democrat gloating? In a pinch, yes. In the long-term, no, because I’m stuck with a candidate I did not vote for in 2008, a man who has proven himself less a champion of Democratic principles than even I ever expected.
As a Nation, we are stuck in a rut for which there seem few alternatives. The legacy parties offer nothing but more of the same—craziness on one side and the uninspiring ‘we suck less than they do’ on the other. As a voter, I’ve vowed to go 3rd party in November [unless the Republicans were to choose Santorum, then I’ll vote directly against him]. However, in the larger frame all I see are monied interests, directing and maneuvering what is suppose to be a ‘free’ election. It has virtually nothing to do with me or my values. On the contrary, it’s all about the persistence of a political class and their cash-soaked benefactors calling for war and protecting their national interests, the gutting of our social contract; the unwillingness to formulate a sensible energy program sans the giant fossil fuel companies’ interference or address the critical and devastating slippage in education, infrastructure, healthcare and employment opportunities.
We have plenty of money for bombs. But not our people. Bailouts are bad. Unless our representatives are saving the asses of and colluding with the corrupt TBTFs. Water and food is the stuff of life until there’s a pipeline, gushing with sludgy oil and money, to compromise both.
Ed Rollins, former Reagan strategist, made a statement recently about the 2012 Republican field:
“Six months before this thing got going, every Republican I know was saying, ‘We’re gonna win, we’re gonna beat Obama.’ Now even those who’ve endorsed Romney say, ‘My God, what a fucking mess.’
That about sums it up, not simply about the Republican field but the entire country. It is an effing mess. And there’s no savior on the horizon. In fact, there’s no savior anywhere. Unless we, the American public, do the saving. But that means coming together on issues where we can agree. The gridlock in DC gets us absolutely nowhere. It’s enough to put anyone into a funk.
But then this morning I read an article about environmentalists and Tea Party activists coming together to fight Keystone XL, the pipeline extension from Nebraska to Texas. For the Tea Party, it’s all about individual property rights and the way TransCanada, a foreign company, has attempted to strong-arm property owners. For the environmentalists it’s about preserving fertile farm land and a major aquifer from the too real danger of irreversible contamination. The nexus of agreement between these two wildly divergent political groups is this: the Keystone pipeline does not serve the public’s interest.
That’s the winning hand: the public’s interest. Not the oil companies, not the 196 people funding the SuperPacs, not the banks, not the Democratic or Republican parties.
What serves the public’s interest.
We, American citizens, can find ways to work together or continue to be spectators to the endless political theater, the Kabuki dance we call elections. And once more we’ll be digging up corpses, which could very well be our own.
Monday Reads
Posted: February 27, 2012 Filed under: morning reads | Tags: Heartland charlatans and global warming, Republicans gone Insane, Transvaginal State Rape 29 Comments
Good Morning!
The news still reverberates with shock and awe over having to stand ground on the right to birth control access and many other things most of us thought were long solved when we got electricity, the right to own property and vote, and we headed off to university to learn things supported by evidence. The Democratic Governors attending the annual National Governors association meeting think this nonsense pulsing through our civilization today that rivals the Crusades, the witch trials, and the Inquisition gives them all political boosts. Frankly, I’m just looking for a place to get away from the culture jihadists. I don’t like listening to insane people like Rick Santorum. No where seems safe these days. Why is the media not consigning him to midnights on Saturday like the rest of the cheesy preachers? I’d like to focus on the economy for a change instead of trying to refight every modern advantage and technology we’ve achieved for the last 150 or so years.
“I think we’re returning to the dark ages. What? We’re discussing the legitimacy of birth control in this country? That discussion, I thought, had ended 30 years ago,” said term-limited Montana Gov. Brian Schweitzer, who dubbed the four Republican presidential candidates “Christmas packages under the tree.”
The Democratic governors pushed a message of job creation at the conference. But not far under the surface, they were basking in the hard right turn the presidential debate has taken in recent weeks with the surging candidacy of Rick Santorum. Santorum’s candidacy has surfaced issues like his personal opposition to contraception coverage, abortion rights and gay marriage.
“Their party has shown a great propensity to head into social issues and to take hard right-wing ideological turns, and I think that propensity has hurt them badly,” argued Maryland Gov. Martin O’Malley, the chairman of the Democratic Governors Association.
On Friday, it was O’Malley, a second-term governor widely seen as a 2016 presidential prospect, who was forcefully confronting Virginia Gov. Bob McDonnell during a POLITICO forum about the Virginia legislature’s push for a bill that would require women to take an ultrasound before having an abortion.
Meanwhile, O’Malley is set to sign a bill this week to make Maryland the eighth state in the country to recognize gay marriage.
“If the Republicans continue to be against diversity, continue to be against civil rights, I think they will continue to be the party of yesterday,” said Vermont Gov. Peter Shumlin. “If the Republican Party continues to say no to equality, to diversity and to dignity, they will be a dinosaur party.”
Lizz Winstead–the brains behind the Daily Show– has a feature article at Alternet that introduces the university blatherings of that whacko Virginia Republican Governor behind the mother of all fetus fetish laws. I know which states are off my list of visits and potential moves. She discusses Virginia’s transvaginal State Rape Governor Bob McDonnell and more. You see Rick Perry has already put into play a transvaginal rape law. I hope the Ob/Gyns there refuse to do them.
After I showered, hoping I could wash this vile stench of inequality off, I asked myself another question about Bob McDonnell, “What kind of man could enthusiastically support this kind of law in the first place?”
The answer is, a guy who wrote in his graduate thesis “The cost of sin should fall on the sinner, not the taxpayer.” So, it is cold comfort for those of us who are members of the demonic part of American society Bob McDonnell marginalizes as “cohabitators, homosexuals and fornicators” that he begrudgingly concedes we are entitled to protections under the fourth amendment.
But Bob McDonnell is a fluke, right? I mean, thank God no other state has a cretinous governor who wants doctors to insert some kind of Dead Ringers device into your vagina against your will, right?
Wrong.
Pssst, hey, Texas: the transvaginal express is already happening in your state. Yep. Implemented three weeks ago. Now, women in the Lone Star State must submit to a mandated vaginal probe if they want to terminate a pregnancy.
(Side bar: I would advise Texans to check the fine print of your new voter ID laws to see if you must also submit to a vaginal probe if you don’t have the proper documentation on election day.)
Also, you may want to expand that conceal-and-carry law to include your private parts, then amend that bumper sticker to say, “Don’t Mess With Texas Vaginas.” Or better yet, “You can give me a transvaginal when you pry it from my OBGYN’s cold dead hands.”
If you want a good read while your at Alternet try this one: “Why Patriarchal Men Are Utterly Petrified of Birth Control — And Why We’ll Still Be Fighting About it 100 Years From Now”. Well, isn’t that a depressing headline?
For the first time in human history, new technologies made fertility a conscious choice for an ever-growing number of the planet’s females. And that, in turn, changed everything else.
With that one essential choice came the possibility, for the first time, to make a vast range of other choices for ourselves that were simply never within reach before. We could choose to delay childbearing and limit the number of children we raise; and that, in turn, freed up time and energy to explore the world beyond the home. We could refuse to marry or have babies at all, and pursue our other passions instead. Contraception was the single necessary key that opened the door to the whole new universe of activities that had always been zealously monopolized by the men — education, the trades, the arts, government, travel, spiritual and cultural leadership, and even (eventually) war making.
That one fact, that one technological shift, is now rocking the foundations of every culture on the planet — and will keep rocking it for a very long time to come. It is, over time, bringing a louder and prouder female voice into the running of the world’s affairs at every level, creating new conversations and new priorities in areas where the men long ago thought things were settled and understood. It’s bending our understanding of what sex is about, and when and with whom we can have it — a wrinkle that created new frontiers for gay folk as well. It may well prove to the be the one breakthrough most responsible for the survival of the human race, and the future viability of the planet.
But perhaps most critically for us right now: mass-produced, affordable, reliable contraception has shredded the ages-old social contracts between men and women, and is forcing us all (willing or not) into wholesale re-negotiations on a raft of new ones.
And, frankly, while some men have embraced this new order— perhaps seeing in it the potential to open up some interesting new choices for them, too — a global majority is increasingly confused, enraged, and terrified by it. They never wanted to be at this table in the first place, and they’re furious to even find themselves being forced to have this conversation at all.
The Guardian‘s George Monbiot is after the whackos that are behind the climate change denial propaganda. This is another group that wants to put us firmly back into the dawn of the dirty industrial age. It’s probably why they’re declaring war on the Lorax too. I’ve been following the Heartland “Institute” story like one would any public enemy. Cannonfire’s done several blog bits on them. He even put together a nifty little video to explain how a “institute” with absolutely no scientists keeps showing up all over the media like the voice of gawd. Anyway, Monbiot calls the entire effort to be the workings of the Plutocracy. We continue to have the worst government their money can buy. Here’s a nice little tick tock starting with archdemon Frank Luntz the master of propaganda and subterfuge.
It appears to have followed the script written by a consultant to the Republican party, Frank Luntz, in 2002. “Should the public come to believe that the scientific issues are settled, their views about global warming will change accordingly. Therefore, you need to continue to make the lack of scientific certainty a primary issue in the debate.”(2)
Luntz’s technique was pioneered by the tobacco companies and the creationists: teach the controversy. In other words, insist that the question of whether cigarettes cause lung cancer, natural selection drives evolution or burning fossil fuels causes climate change is still wide open, and that both sides of the “controversy” should be taught in schools and thrashed out in the media.
The leaked documents appear to show that, courtesy of its multi-millionaire donors, the institute has commissioned a global warming curriculum for schools, which teaches that “whether humans are changing the climate is a major scientific controversy” and “whether CO2 is a pollutant is controversial.”(3).
The institute has claimed that it is “a genuinely independent source of research and commentary”(4) and that “we do not take positions in order to appease or avoid losing support from individual donors”(5). But the documents, if authentic, reveal that its attacks on climate science have been largely funded by a single anonymous donor and that “we are extinguishing primarily global warming projects in pace with declines in his giving”(6).
The climate change deniers it funds have made similar claims to independence. For example, last year Fred Singer told a French website, “of course I am not funded by the fossil fuel lobbies. It’s a completely absurd invention.”(7) The documents suggest that the institute, funded among others by the coal company Murray Energy, the oil company Marathon and the former Exxon lobbyist Randy Randol, has been paying him $5000 a month(8).
Robert Carter has claimed that he “receives no research funding from special interest organisations”(9). But the documents suggest that Heartland pays him $1,667 a month(10). Among the speakers at its conferences were two writers for the Telegraph (Christopher Booker and James Delingpole(11,12)). The Telegraph group should now reveal whether and how much they were paid by the Heartland Institute.
It seems to be as clear an illustration as we have yet seen of the gulf between what such groups call themselves and what they really are.
So, we continue to have a theme in nearly everything I read these days. There is not one policy that’s been embraced in modern history that’s not under threat right now by our home grown Taliban. Here’s yet another one via Crooked Timber. It’s a 5000 year view of debt amnesties in history that provide a shocking contrast to our current approach to bailing out the gambling debt holders while impoverishing every one else to ensure their unreasonable terms and cheating still pay. It’s a synopsis of a book I should probably buy immediate called “Debt” by David Graeber. We treat debt with a Victorian viewpoint on all levels. Prior to the 19th century, there wasn’t all that religious moral sturm and drang around debt. The lenders were always assumed to wind up giving every one a bad deal and they were held to account. If lenders got overzealous and lent out too much, they were the ones that took the hits. Remember the old testament admonitions about usary? There’s bits on consumer debt too, but I grabbed this explanation on the “debt” crises hyped up by pinched nose politicians that belong in pages of Dickensian novels sending nations to the poor houses and debtor’s prisions.
Countries don’t have bankruptcy codes governing them, and so in the sphere of international debt negotiations, one can see all the pernicious aspects of the “folk-economics” version of the debt contract that Graeber describes. Looking at the relationship between the European Union and Greece, or even Ireland, one can see that the debt relation is being specifically shaped into a tool for exercising power in a way which would not have been possible through democratic means. IMF programs seem to be typically designed to fail, to put the client country into the position of a defaulting debtor and entirely reliant on the mercy of its creditors. So even though I’d have liked to see the book twice as long and ten times as ambitious, the analysis that it presents is very useful in looking at debt-relations outside the commercial codes that govern most of the world’s actually existing debts, and it’s a very salutary reminder of what happens when people forget that debt is really only (or really only ought to be) the legal system’s best guess at what kind of arrangements would best serve the general purposes of commerce. It is, as Graeber intimates, when the debt relation takes on an independent life of its own that the problems all start.
For some reason, I can’t find a lot to write about that isn’t related to fighting against the perpetuation and rule of right wing mythology and the Crusade to punish us all. It’s every where I look these days. Where were these people when the muggings of rational thought began? There were tons of cautionary tales out there. Why are they now pointing fingers when we’ve got so many rats in the policy making maze? I guess it’s because we’re the cheese and they’re not. The cheese stands alone.
So, what’s on your reading and blogging list today? Find anything at all that doesn’t depress?








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