Lazy Saturday ReadsPosted: February 8, 2014
I thought I’d put the “morning reads” up a little later to give you time to check out JJ’s cartoon posts. So . . . let’s see what’s happening out there today.
Well . . . Paul Volker was in Boston on Thursday night, and he talked to some richie-rich guys about income inequality. From The Boston Globe:
Speaking to a room filled with hundreds of Boston investment executives, former Federal Reserve chairman Paul Volcker asked some tough questions about income inequality in America. He called the earnings gap one of the economy’s greatest challenges.
“What accounts for this? What justifies it?’’ an animated Volcker asked. He argued that the trend started in the 1980s and accelerated in the 1990s, with the spread of stock option compensation creating vast wealth and risk-taking.
During that period, he said, the link between pay and performance got “entirely out of whack.’’
The elder statesman of Fed watchers and author of the Volcker Rule — part of the Dodd-Frank reform package after the financial crisis — was speaking before the Boston Security Analysts Society’s annual market dinner…
Good for him. Whether it will do any good is questionable, but these people need to hear about what they are doing to 99% of Americans.
Just for the hell of it, I looked around for some more recent news articles about income inequality. There wasn’t a lot out there, but I did find a few interesting reads.
At the LA Times, Michael Hiltzik writes: Income inequality begins to hit business in the pocketbook. He argues that business is noticing that middle-class customers are disappearing.
The consumer market is beginning to look like a sandwich without meat in the middle–there are enough wealthy customers to keep the luxury market humming along, and a growing demand for cheap no-name and other bargain products.
The phenomenon has been reported by Matthew Yglesias of Slate.com and more recently by Nelson Schwartz of the New York Times. As we reported here and here, it’s been building for years. But it really picked up steam after the last recession, when the imbalance in income between the top 1% and everyone else has really taken off.
Most economists view the stranglehold of the wealthy on U.S. income and wealth as a problem–it leads to slower overall growth and more volatility. As economist Jared Bernstein has observed, it also promotes the creation of asset and credit bubbles, which have a tendency to burst, taking the rest of the economy with them.
The most important analysis of the economic impact of inequality has come from Barry Z. Cynamon and Steven M. Fazzari of Washington University in St. Louis. In a paper published last month, they ask two questions: “First, did rising inequality contribute in an important way to the unsustainable increase in household leverage that triggered the collapse in consumer demand and the Great Recession? Second, has the rise in inequality become a drag on demand growth…that has held back recovery?”
Their answer to both questions is yes. In simpler terms, rising inequality before the recession prompted U.S. households to borrow more to keep up their spending; when the debt frenzy ended (because of the bursting of the housing bubble) the economy crashed. Since then, the demand drag caused by the effect of inequality on the bottom 95% has held back recovery. The impact of inequality on the recovery, compared with previous recoveries, is shown in this stunning graph from their paper.
But Hiltzik notes that many oblivious pundits continue to deny the effects of the top 1% controlling most of the wealth.
At The News Virginian, Jason Stanford finds some “good news” in the fact that most Republicans now agree that income inequality is a problem.
Believe it or not, there is good news when it comes to income inequality. It turns out Republicans finally believe that the gap between rich and poor has become a problem. The bad news is, according to a new poll, is that Republicans think the best solution is cutting the taxes for the wealthy and big corporations so money and opportunity can rain down on the poor. Addressing poverty by ensuring that cash does not become lonely in the wallets of the wealthy is what passes for a Republican governing philosophy these days, and it is exactly why Barack Obama has decided to go it alone on income inequality.
The issue isn’t that income inequality exists but that the wealthiest 1 percent has achieved the financial equivalent of escape velocity, leaving us poor folk back here on Planet Broke. In 1982, the top 1 percent highest-earning families took home one out of every $10. Now they get more than twice that, leaving the other 99 percent of us to make do on less. The last time it was this bad was the Gilded Age, and majorities of Republicans, Democrats and Independents agree it’s time to do something about it.
OK, so Republicans see the problem, but they want to address it with the same old tired trickle-down non-solutions. I’m not really sure that qualifies as good news. Better than nothing, I guess.
At the Akron Beacon Journal, Rick Armon writes about “an American success story.” Thanks to government programs like Social Security and Medicare, not as many seniors are living in poverty as they did in the past.
Fifty years after President Lyndon Johnson declared the War on Poverty, at least one group of Americans is much better off today: senior citizens.
The percentage of seniors nationwide living below the poverty line has plummeted from 27 percent to 9 percent today, according to a Beacon Journal analysis of census data….
Today, there are 3.7 million seniors living in poverty, compared with 5.2 million in 1969, when the 1970 census was conducted.
The reasons are pretty simple, experts say: It’s a combination of Social Security, pensions, 401(k) programs and Medicare that has kept more elderly people from slipping into poverty.
Armon says those figures may be a little too optimistic (read the details at the link); but still, it’s progress.
Yesterday everyone was talking about Asst. Sec. of State Victoria Nuland’s bugged phone call with the US ambassador to Ukraine in which she uttered the words “fuck the EU,” apparently using an unencrypted cell phone. Someone posted portions of the call to Youtube, and the U.S. has accused Russia of tapping Nuland’s phone. Read all the gossipy details at BBC News.
Of course Russia is accusing the U.S. of “meddling” in the Ukraine crisis. From The New York Times:
KIEV, Ukraine — The tense Russian-American jockeying over the fate of Ukraine escalated on Thursday as a Kremlin official accused Washington of “crudely interfering” in the former Soviet republic, while the Obama administration blamed Moscow for spreading an intercepted private conversation between two American diplomats.
An audiotape of the conversation appeared on the Internet and opened a window into American handling of the political crisis here, as the two diplomats candidly discussed the composition of a possible new government to replace the pro-Russian cabinet of Ukraine’s president, Viktor F. Yanukovych. It also turned the tables on the Obama administration, which has been under fire lately for spying on foreign leaders.
The developments on the eve of the Winter Olympics opening in Sochi, Russia, underscored the increasingly Cold War-style contest for influence here as East and West vie for the favor of a nation of 45 million with historic ties to Moscow but a deep yearning to join the rest of Europe. The tit for tat has been going on since November, when Mr. Yanukovych spurned a trade deal with Europe and accepted a $15 billion loan from Moscow. Months of street protests have threatened his government, and American officials are now trying to broker a settlement — an effort the Kremlin seems determined to block.
There’s a lot more background on the Ukraine situation in the NYT article.
If the problems in Ukraine weren’t enough, anti-government protests have now broken out in Bosnia-Hertzegovina. The Guardian reports:
Thousands of Bosnian protesters took to the streets in the centre of Sarajevo on Friday, setting fire to the presidency building and hurling rocks and stones at police as fury at the country’s political and economic stagnation spread rapidly around the country.
As many as 200 people were injured in protests that took place in about 20 towns and cities. Government buildings were set on fire in three of the largest centres – Sarajevo, Tuzla and Zenica.
At one point in the central Bosnian city of Tuzla, some of the 5,000-strong crowd stormed into a local government building and hurled furniture from the upper stories….
The scenes in Sarajevo were similarly fraught on Friday night, as fire raged through the presidency building and hundreds of people hurled stones, sticks and whatever else they could lay their hands on to feed the blaze. Police used rubber bullets, tear gas and water cannon trying to disperse the crowd. Buildings and cars were also burning in downtown Sarajevo and riot police chased protesters….
The protests have bubbled up out of long-simmering discontent at a sluggish economy, mismanagement, corruption and unemployment, which is rising irresistibly towards 30%. Bosnia has been hamstrung by political infighting and deadlock between its three main ethnic groups – Bosniaks, Croats and Serbs – in the near 20 years since its three-year civil war ended in 1995. The economy has suffered as a result, and the population remains deeply sceptical of a political class widely believed to be ruling in the interests of the elite, not the people.
There continues to be plenty of surveillance news–both about NSA, and more recently about Russia’s intelligence agencies and their security measures activities around the Sochi Winter Olympic Games. This article from The Moscow Times by Andrei Soldatov provides a good overview: FSB Makes Eavesdropping an Olympic Event. In NSA news, Glenn Greenwald and friends have stepped up their publishing activities in the run-up to the unveiling of their First Look news site, planned for Monday. I’ll just share a couple of items with you.
A little more than a week ago Greenwald worked with CBC reporters to “break” a story about alleged spying by Canada’s equivalent of NSA on airport passengers that supposedly continued for days after they left the airport. As usual, the report was deeply flawed, as explained by Matthew Aid, author of The Secret Sentry: The Untold History of the National Security Agency: Analysis Indicates Recent CBC Story About Canadian SIGINT Agency Spying on Travellers Incorrect.
On January 30, the Canadian television channel CBC broke a story written by Greg Weston, Glenn Greenwald and Ryan Gallagher, saying that the Communications Security Establishment Canada (CSEC), which is Canada’s equivalent of NSA, used airport WiFi to track Canadian travellers – something which was claimed to be almost certainly illegal. This story was apperently based upon an internal CSEC presentation (pdf) from May 2012 which is titled “IP Profiling Analytics & Mission Impacts.”
However, as is often the case with many of the stories based on the Snowden-documents, it seems that the original CSEC presentation was incorrectly interpreted and presented by Canadian television.
Read all the gory details at the Aid’s blog.
Then yesterday, Greenwald–in collaboration with NBC News–released a truly bizarre article, Snowden Docs: British Spies Used Sex and ‘Dirty Tricks’, that reveals methods and sources for the GCHQ’s efforts to arrest malicious hackers, criminals, and terrorists, and to prevent nuclear proliferation. You have to wonder why NBC news thought those efforts were somehow wrong or illegal. I’m running out of space, so I’ll let Bob Cesca explain the problems with this story.
There’s one sentence in the new Glenn Greenwald revelation for NBC News that renders everything that follows mostly irrelevant. It’s the lede. And not even the entire lede — just the first part of it.
British spies have developed “dirty tricks” for use against nations, hackers, terror groups, suspected criminals and arms dealers…
The only sane reaction to this news should be, “Great!” We don’t really need to know anything else. But that didn’t stop Greenwald and NBC News from spilling the beans on operations that target such poor helpless victims as malicious hackers, the Taliban, Iran and, yes, terrorists dealing in loose nukes.
See more examples at The Daily Banter. Cesca sums up:
Regardless, what we’re looking at here is another leak from Greenwald & Company that tips off some of our most dangerous enemies including and especially the looming threat of nuclear proliferation and loose nukes. These leaks have been published yet again under the banner of the public interest, but it’s difficult to see any public interest in an operation expressly aimed at those who even the article admits are our “enemies.”
Greenwald has been publishing quite a few leaks about British spying lately. I have to assume that this is his threatened revenge for the Brits detaining David Miranda at Heathrow airport last year. Pretty childish, if you ask me.