Friday ReadsPosted: May 18, 2012
I’m headed up to LSU this morning for baby daughter’s graduation. She’s getting a degree in finance. She wants to work for a high tech company and isn’t headed to Wall Street. Next weekend is Doctor Daughter’s wedding in Colorado. I’m getting all fitted up in a Sari for her big fat Bollywood wedding. I’m not thrilled about having a bare midriff. Needless to say, I’m a wreck.
Barbara Ehrenreich writes a fascinating post at TruthDig on how our various state and local governments are looting the poor.
Local governments are discovering that they can partially make up for declining tax revenues through fines, fees, and other costs imposed on indigent defendants, often for crimes no more dastardly than driving with a suspended license. And if that seems like an inefficient way to make money, given the high cost of locking people up, a growing number of jurisdictions have taken to charging defendants for their court costs and even the price of occupying a jail cell. The poster case for government persecution of the down-and-out would have to be Edwina Nowlin, a homeless Michigan woman who was jailed in 2009for failing to pay $104 a month to cover the room-and-board charges for her 16-year-old son’s incarceration. When she received a back paycheck, she thought it would allow her to pay for her son’s jail stay. Instead, it was confiscated and applied to the cost of her own incarceration.
You might think that policymakers would take a keen interest in the amounts that are stolen, coerced, or extorted from the poor, but there are no official efforts to track such figures. Instead, we have to turn to independent investigators, like Kim Bobo, author of Wage Theft in America, who estimates that wage theft nets employers at least $100 billion a year and possibly twice that. As for the profits extracted by the lending industry, Gary Rivlin, who wrote Broke USA: From Pawnshops to Poverty, Inc.—How the Working Poor Became Big Business, says the poor pay an effective surcharge of about $30 billion a year for the financial products they consume and more than twice that if you include subprime credit cards, subprime auto loans, and subprime mortgages.
These are not, of course, trivial amounts.
Martha Rosenberg writes about ” How Big Pharma and the Psychiatric Establishment Drugged Up Our Kids” over at Alternet. You think bald heads, limp dicks, and wrinkles are the new gravy train? Well, check this out. “Pediatric psychopharmacology is a billion-dollar business that sustains Pharma and Pharma investors on Wall Street.” This isn’t St. Joseph’s baby aspirin we’re talking about. Gotta kid that’s acting a little eccentric? Well, just take her to the doctor! There’s a pill for that!
In his book Psychiatryland, psychiatrist Phillip Sinaikin recounts reading a scientific article in which it was debated whether a three-year-old girl who ran out into traffic had oppositional-defiant disorder or bipolar disorder, the latter marked by “grandiose delusions” that she was special and cars could not harm her.1
How did the once modest medical specialty of child psychiatry become the aggressive “pediatric psychopharmacology” that finds ADHD, pediatric conduct disorder, depression, bipolar disorder, oppositional defiant disorder, mood disorders, obsessive-compulsive disorders, mixed manias, social phobia, anxiety, sleep disorders, borderline disorders, assorted “spectrum” disorders, irritability, aggression, pervasive development disorders, personality disorders, and even schizophrenia under every rock? And how did this branch of psychiatry come to find the answer to the “psychopathologies” in the name of the discipline itself: pediatric psychopharmacology? Just good marketing. Pharma is wooing the pediatric patient because that’s where the money is. Just like country and western songs about finding love where you can when there is no love to be found at home. Pharma has stopped finding “love” in the form of the new blockbuster drugs that catapulted it through the 1990s and 2000s. According to the Wall Street Journal, new drugs made Pharma only $4.3 billion in 2010 compared with $11.8 billion in 2005—a two-thirds drop.2
The finance/econ twitter wonks were all on this WSJ story called “Inside J.P.Morgan’s Blunder”. Their insider says that Jamie in the Sky with Dimon actually approved all those disastrous trades. Oopssssss…..
This behind-the-scenes account of the disaster—based on interviews with numerous J.P. Morgan executives and with officials on Wall Street and in Washington—provides new details about the drama inside the bank as executives sought to understand the scope of the losses and decide what to do about them.
Among other things, Mr. Dimon initially resisted ousting the executive at the center of the mess, confided in his wife that he had “missed something bad,” and expressed regrets with his colleagues one night over vodka about how they had all let the firm down.
“The big lesson I learned: Don’t get complacent despite a successful track record,” Mr. Dimon said in an interview Wednesday. “No one or no unit can get a free pass.”
The debacle has raised broad questions on Wall Street and in Washington about whether any executive can properly oversee such a large financial institution, whether new regulatory rules will do anything to prevent another financial crisis and whether tougher regulation is needed to further rein in risky bank trading, particularly at financial behemoths that are viewed as too big to fail.
The bank has ousted the executive in charge of its Chief Investment Office, a huge trading unit at the heart of the scandal that has contributed more than $4 billion of net income over the past three years—nearly 10% of J.P. Morgan’s overall profit during that period.
The stakes are high. Mr. Dimon personally approved the concept behind the disastrous trades, according to people familiar with the matter. But he didn’t monitor how they were executed, triggering some resentment among other business chiefs who say the activities of their units are routinely and vigorously scrutinized.
I see lean and hungry mean and we’ve just passed the Ides of May. It’s not just our banks. It looks like Greek Banks are experiencing bank runs. They really didn’t fix that global financial melt down thingie, did they? Greek capital is fleeing the country. Gold bullion any one? Picasso paintings? Bullets?
Greeks have withdrawn €3bn (£2.4bn) from the banking system since the country’s inconclusive elections on 6 May, with tellers saying savers were making two or three visits a day to local banks.
Savers fear Greece leaving the eurozone and returning to the drachma. An aide to the outgoing prime minister, Lucas Papademos, said there were “serious fears that the banks were running out of money”.
Greece’s president, Karolos Papoulias, warned on Monday that €700m had been withdrawn but said he had been assured by the governor of the Greek central bank, George Provopoulous, that there was no panic yet.
According to minutes of a meeting on Monday, Papoulias said: “Withdrawals and outflows by 4pm when I called him [Provopoulous] exceeded €600m and reached €700m. He expects total outflows of about €800m, including conversions into German bunds [bonds] and other such things.”
Greeks have been slowly withdrawing cash from the banking system ever since the country first needed a bailout two years ago. Nearly a third of bank deposits were withdrawn between January 2010 and March 2012.
A crucial €18bn cash injection to stabilise Greece’s banks has been held up at the European financial stability fund’s Greek offshoot, the Hellenic financial stability fund (HFSF), for nearly two weeks with officials in Brussels refusing to release the funds because of the political instability in the wake of the elections. That had still not been released by tonight and is now not expected to be released for another four days despite the efforts of the Papademos government to expedite the recapitalisation of Greek banks.
Dimon will be facing a Senate Committe shortly. I watched the Goldman Sachs hearings awhile ago. I’m convinced the entire Senate Banking Committe wouldn’t know a bull flattener from a contango. (Oh, ask him about his naked shorts! I’ll watch any way.
Johnson announced Thursday that the panel’s investigation of the botched trade had “made it clear” that lawmakers needed to “hear directly” from the head of the bank.
The Banking Committee is currently set to hold two hearings on the implementation of the Wall Street reform law, which has been a dominant topic on Capitol Hill ever since JPMorgan announced it had lost at least $2 billion thanks to a complex bet on corporate debt. The New York Times reported Thursday the losses had actually climbed to $3 billion.
On May 22, the committee will hear from regulators at the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) on the financial overhaul. The SEC is reportedly investigating the JPMorgan trade, and the CFTC is responsible for implementing new restrictions on financial derivatives, which played a key role in the bank’s bad bet.
On June 6, the committee will hear from regulators with the Federal Reserve, Federal Deposit Insurance Corporation, Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency and the Treasury Department.
This last link is somewhat unusual for me. The Saint’s bounty scandal continues to be big news down here. Vilma is going to take Goodell to court. This could be popcorn worthy.
Vilma accused the commissioner of making false statements about him in reports about the bounties allegedly paid to players for intentionally hurting opponents during games, according to a filing in federal court today in New Orleans.
“Goodell’s statements forever falsely taint and permanently damage Vilma, in the eyes of NFL clubs, media, fans and sponsors, as a player who brazenly disregards NFL rules and intentionally attempts to injure his opponents,” according to the complaint.
Vilma was banned in March for the 2012 season without pay for his role in the Saints’ bounty program. His penalty was the most severe of the four players who were suspended. The league’s investigation concluded that as captain of the defense, Vilma assisted then-defensive coordinator Gregg Williams in establishing and funding the program that offered money to players who knocked specific opponents out of a game.
That’s my offerings this morning. I may not see you around much for the next few weeks. Be assured I’m not having a lot of fun and leaving you out of it. What’s on your reading and blogging list today?