Why Occupy Wall St. Should Bother

Posted: November 6, 2011 | Author: | Filed under: #Occupy and We are the 99 percent!, Austerity, Baby Boomers, Bailout Blues, Banksters, commercial banking, Corporate Crime, Human Rights, income inequality, investment banking, poverty | Tags: , , | 4 Comments

Here’s a message that should go viral for all the doubters and naysayers and critics of the Occupy Wall St. Movement.  Why should we bother as one poster at Sky Dancing asked this morning?  Why should Occupy beam in on the Koch brothers or Lloyd Blankfein or any of the infamous 1% that have brought the United States and the world to its knees?

Watch and listen.  And then ask: how can we or Occupy or any rational, reasonable human being not be bothered?

The Beginning Is Near

Posted: November 3, 2011 | Author: | Filed under: #Occupy and We are the 99 percent!, American Jobs Act, Baby Boomers, Bailout Blues, Banksters, Black Agenda Report, commercial banking, Economy, income inequality, investment banking, jobs, unemployment | 27 Comments

Maybe it’s my age [and no, I’m not telling] but I find great promise is those four words scrawled on a makeshift sign.

 

I’m sure–in fact, I know–there are others of my generation [Boomers] who look at the Occupy Wall St. [OWS] Movement, read the signs and scratch their heads.  Or more likely they criticize the primarily young protesters as naïve, idealistic, disorganized, wanting something for nothing. Why don’t they just get a job? many say.

These reactions miss the point, as far as I’m concerned.  These youngsters want something all right.  They want their futures.  They want to control their own destinies with a measure of integrity, a sense of possibility rather than bending to the yoke of a failing system, one that only works for those on the top of the heap.  The statistics are there for everyone to read. No mystery! Wages of ordinary Americans have been stagnant, while the rich have become richer than Midas.  Jobs have been sent willy-nilly beyond our shores but the trade-off  [we’ve been told numerous times] are cheap consumer goods, the more the better. 

He who has the most stuff wins.  Many people bought into that.  For a while.

Throw in 9/11, multiple wars, massive unemployment, rising health care costs, climate-related weather events, the negligence in the Gulf of Mexico, etc. and the shine has definitely come off the latest gadgets and toys.  As an electorate, we’ve had a slap upside the head.

What I find astounding is people blaming this particular group—the OWS protesters, primarily the Millennials–for what is clearly our responsibility, a product of our refusal to hold our politicians accountable and demand justice–a return to the Rule of Law–instead of foisting the unpleasant, annoying task on our children [or grandchildren, as the case may be]. We’re the ones who bought into the Big Lie. Or worse, pretended it didn’t exist. These young students and 20-somethings had no hand in what we watched and allowed to develop.

The kids are making us look bad. They’ve endured dismissal, ridicule, concrete beds and lousy weather.  And they’re called the slackers?

Nor should we forget that Boomers are running things right now.  Our generation sits in the halls of Congress and refuses to pass legislation to put the country back to work.  Boomers sit in the offices of the White House and pretend to hold a populist agenda, while doing the bidding of their monied benefactors.  They sit on the Supreme Court and try to convince us that corporations = personhood.  And they certainly populate Corporate America and Wall St., where repeated decisions and deals have been made to maximize profits at the expense of ordinary citizens.  Not all Boomers, of course.  But our generation is well represented in the lever pushing–the Make Love Not War crowd.  Time to own it.

But even if we’re far, far removed from the corridors of power, just living our lives, I would suggest quiet acquiescence of the status quo isn’t working either.  Hello, Boomers.  The confidence fairy that has been running [ruining] our financial system will not be coming to spread pixie dust over the wreckage and make things right.

Not going to happen. And the young?  They see right through it.

For over thirty years, corporate greed has grown, metastasized to the point that nothing is sacred—not the health or education of our people, not the environment [on which we depend to exist], not our principles of equal opportunity, not even our insistence that The Rule of Law is imperative for our Democratic Republic to survive. 

And what was the trade? Constant debates that American health care is the best in the world without adding the qualification: only if you can afford it.  The refusal to admit that the decreasing quality of our primary and secondary educational systems condemns many of our citizens to poverty and the staggering increase in university tuition costs and subsequent debt saddles our college graduates to years of unmanageable debt.  The reckless and short-sighted risk-to-wreckage of our environment be it through fracking or drilling or proposed tar sand pipelines, while we turn up our noses to promoting and supporting green technology. The cruel pretense that all our citizens start off on a ‘level-playing’ field, while the evidence of privilege and influence-driven access to favors are as acute now as during the Gilded Age.  The unwillingness to investigate and prosecute those involved in the biggest heist in history, the very same financiers and corporate bigwigs, who continue to exert control over our political system. 

Two years ago, Dick Durbin stood before Congress and said: The banks own the joint.

We should have listened or turned up our hearing aides.  Because sadly, the man spoke the truth. See no evil, hear no evil, speak no evil is not a strategy for the future.  It’s unsustainable.

So, when I look at the live streams of the cross-country demonstrations, read the twitter feeds, I don’t think slackers.  I think of a generation who has said what we, the grownups, should have said quite some time ago: Enough is enough.  Or as Bill Moyers said recently: “People are occupying Wall St. because Wall St has occupied the country.”

Yesterday, between 7 to 10,000 people took part in a general strike in Oakland.  They shut down the port of Oakland, a major access for Chinese goods, the 5th busiest port in the country.  Local businesses shut down in support of the effort.  To its credit, the protest has remained remarkably peaceful although early morning reports indicate that violence did break out before sunrise. Unfortunately, the authorities in Oakland nearly cost the life last week of a young Marine vet, Scott Olsen.  Discontent can have consequences.

But attitudes are shifting and changing. Voices are being heard.

Last April with little fanfare, Joseph Stiglitz stated in a Vanity Fair article:

“The top 1 percent have the best houses, the best educations, the best doctors, and the best lifestyles, but there is one thing that money doesn’t seem to have bought: an understanding that their fate is bound up with how the other 99 percent live.”

Since the Occupy Movement started, this sentiment has been echoed, magnified:

On October 22, Noam Chomsky gave a speech on Dewey Square in Boston and said:

“I’ve never seen anything quite like the Occupy movement in scale and character, here and worldwide. The Occupy outposts are trying to create cooperative communities that just might be the basis for the kinds of lasting organizations necessary to overcome the barriers ahead and the backlash that’s already coming.”

At Black Agenda Report, Glen Ford recently wrote:

“There comes a time of awakening. We are now in that time – although some Black folks are not yet awake. Our job is to wake our people up, so that we don’t sleep through this moment.

The young people that began this Occupation Movement less than two months ago are not “us,” but they have done all of us a great service. They have shouted out the name and address of the enemy – the enemy of all humanity. The enemy’s name is Finance Capital, and the address is Wall Street, and that is the truth.”

Chris Hedges recently stated on Truthdig radio:

“But this is a widespread movement; it’s decentralized; it takes on its own coloring and characteristics, depending on the city that it’s in; and so there will be, you know—as you point out, I mean, movements are by their very nature messy and make steps forward and steps back. But I think that there is a resiliency to this movement because it articulates a fundamental truth of inequality that hits the majority of American citizens.”

Even House Speaker John Boehner remarked in a recent speech at the University of Louisville:

“I understand people’s frustrations,” he said. “The economy is not producing jobs like they want and there’s lot of erosion of confidence in our government and frankly, under the First Amendment, people have the right to speak out … but that doesn’t mean they have the permission to violate the law.”

Hey, it’s a start.  Certainly better than designating OWS as ‘The Mob.’

People are rousing from their long, restless slumber. The conversations have begun and are different from what we’ve heard or read before.  The protesters persist. They march, they endure.

The Beginning is Near.

Independence Day Reads

Posted: July 4, 2011 | Author: | Filed under: Bailout Blues, Domestic Policy, Economy, Foreign Affairs, Global Financial Crisis, Greece, investment banking, morning reads | Tags: , , , , , , , , , | 16 Comments

Happy Independence Day!

We have a republic and a lot of people have sacrificed a lot over the last several centuries to keep it.  Too bad most of our politicians aren’t in that number.  They can’t see past their next elections.

It seems that two senators– McCain and Corynyn–say they’re open to tax increases as a way to solve the budget stand off.   Guess there are a few of them left that would prefer not to tank our economy. Let’s hope this starts some real negotiations instead of the usual Republican hostage taking and Democratic cave-in that’s been politics as usual the last dozen years or so.

One of the senators, John Cornyn of Texas, said he would consider eliminating some tax breaks and corporate subsidies in the context of changes in the tax code, provided there was not an overall increase in taxes.

“I think it’s clear that the Republicans are opposed to any tax hikes, particularly during a fragile economic recovery,” Mr. Cornyn said on “Fox News Sunday.” “Now, do we believe tax reform is necessary? I would say absolutely.”

But he insisted that any changes in taxes be “revenue neutral,” meaning that the government would not take in any more money from individuals or businesses than it does now.

The other senator, John McCain of Arizona, said he would be willing to consider some “revenue raisers” as part of a broad deal, but he refused to name specific measures.

Mr. Cornyn, a member of the Senate leadership, also said that Republicans would be open to a short-term deal on the debt ceiling to provide more time for a comprehensive agreement.

Let’s also hope that more reasonable and less ideological heads prevail on the right and that the left stands up for what’s right for a change.  Former President Clinton had a words of policy advice over the weekend.  His advice to President Obama is “not to blink”.

Former President Bill Clinton Saturday night urged President Obama not to “blink” at Republican demands to exclude revenue increases from any agreement to extend the government’s debt ceiling.

If Republicans maintain their opposition to revenue increases, Clinton said, Obama should pursue a short-term deal to extend the debt ceiling based on spending cuts both sides have already accepted in the negotiations between the administration and Congressional leaders from both parties.

“I hope they will make a mini-deal,” Clinton said in an interview conducted with him at the Aspen Ideas Festival here.

The White House and Congressional negotiators from both parties are attempting to assemble a deficit reduction package that could win support in Congress for legislation to extend the nation’s debt ceiling, which the Treasury says the government will reach on August 2. The talks have foundered amid demands from Congressional Republicans to exclude any revenue increases from that prospective deficit reduction package.

Asked what the administration could do if GOP leaders hold to that posture, Clinton replied: “First the White House could blink. I hope that won’t happen. I don’t think they should blink.”

If Republicans will not accept revenues in a package to lift the debt ceiling by August 2, Clinton said, Obama should pursue a short-term agreement based on the spending reductions both sides have already accepted.

“There are some spending cuts they agree on …and he can take those and [get] an extension of the debt ceiling for six or eight months,” Clinton said.

Clinton also called on a package of reforms to US tax policy that includes a corporate tax cut if special interest tax loops are closed.  This is something Obama has also supported.

“It made sense when I did it. It doesn’t make sense anymore – we’ve got an uncompetitive rate. We tax at 35 percent of income, although we only take about 23 percent. So, we SHOULD cut the rate to 25 percent, or whatever’s competitive, and eliminate a lot of the deductions so that we still get a FAIR amount, and there’s not so much variance in what the corporations pay. But how can they do that by Aug. 2?”

Clinton also said Grover Norquist, who as president of Americans for Tax Reform is the GOP’s unofficial enforcer of no-new-taxes pledges, has a “chilling” hold on the nation’s lawmaking.

The former president said it has seemed like Republicans need any revenue concessions need to be “approved in advance by Grover Norquist.”

“You’re laughing,” he told the crowd of 800. “But he was quoted in the paper the other day saying he gave Republican senators PERMISSION … on getting rid of the ethanol subsidies. I thought, ‘My GOD, what has this country come to when one person has to give you permission to do what’s best for the country.’ It was chilling.

There’s an extremely interesting piece at The Atlantic Wire on “What Really Happened at Fukushima”. It includes interviews with workers that have been inside the crippled nuclear plant.

Throughout the months of lies and misinformation, one story has stuck: “The earthquake knocked out the plant’s electric power, halting cooling to its reactors,” as the government spokesman Yukio Edano said at a March 15 press conference in Tokyo. The story, which has been repeated again and again, boils down to this: “after the earthquake, the tsunami – a unique, unforeseeable [the Japanese word is soteigai] event – then washed out the plant’s back-up generators, shutting down all cooling and starting the chain of events that would cause the world’s first triple meltdown to occur.”

But what if recirculation pipes and cooling pipes, burst, snapped, leaked, and broke completely after the earthquake — long before the tidal wave reached the facilities, long before the electricity went out? This would surprise few people familiar with the 40-year-old Unit 1, the grandfather of the nuclear reactors still operating in Japan.

The authors have spoken to several workers at the plant who recite the same story: Serious damage to piping and at least one of the reactors before the tsunami hit. All have requested anonymity because they are still working at the plant or are connected with TEPCO. One worker, a 27-year-old maintenance engineer who was at the Fukushima complex on March 11, recalls hissing and leaking pipes.  “I personally saw pipes that came apart and I assume that there were many more that had been broken throughout the plant. There’s no doubt that the earthquake did a lot of damage inside the plant,” he said. “There were definitely leaking pipes, but we don’t know which pipes – that has to be investigated. I also saw that part of the wall of the turbine building for Unit 1 had come away. That crack might have affected the reactor.”

The reactor walls of the reactor are quite fragile, he notes. “If the walls are too rigid, they can crack under the slightest pressure from inside so they have to be breakable because if the pressure is kept inside and there is a buildup of pressure, it can damage the equipment inside the walls so it needs to be allowed to escape. It’s designed to give during a crisis, if not it could be worse – that might be shocking to others, but to us it’s common sense.”

Here’s some frightening news on the disaster in Japan. Radioactive Cesium has been found in Tokyo’s water supply.

Radioactive cesium-137 was found in Tokyo’s tap water for the first time since April as Japan grapples with the worst nuclear disaster in 25 years.

Cesium-137 concentration registered at 0.14 becquerels per kilogram in the city’s Shinjuku ward on July 2, compared with 0.21 becquerels on April 22, according to the Tokyo Metropolitan Institute of Public Health. No cesium-134 or iodine-131 was detected, the agency said on its website.

The Nuclear Safety Commission of Japan sets a safety limit of 200 becquerels per kilogram for cesium-134 and cesium-137. The limit for iodine-131 consumption is 300 becquerels per kilogram.

Japan is battling radiation leaks into the air, soil and water after an earthquake and tsunami on March 11 knocked out cooling systems at Tokyo Electric Power Co.’s Fukushima Dai- Ichi nuclear station, resulting in the meltdown of three of the six reactors at the plant.

The UK Guardian lists an interesting set of Greek public assets for sale.  Many have no buyers.  Bobby Jindal is putting up a lot of Louisiana assets for sale too.  I wonder if this is going to be the new way to raise money.  The Kochs already rent a big chunk of Yellowstone.   Let’s hope we don’t have to put our national treasures on the chopping block.

Up for sale are 39 airports, 850 ports, railways, motorways, sewage works, a couple of energy companies, banks, defence groups, thousands of acres of land for development, casinos and Greece’s national lottery. George Christodoulakis, Greece’s special secretary for asset restructuring and privatisations, said the sell-off would raise €50bn (£44bn) to help pay back the country’s €110bn bailout debt.

The private equity bosses gathered in the hotel’s ballroom for the parade of Greece’s national treasures showed little interest in buying anything.

Nikos Stathopoulous, managing partner of BC Partners, which has invested more than €3.5bn in Greece, said investors are put off by bureaucracy, strong unions, corruption and a lack of transparency. “Even in the good times Greece is not a country that attracts investment. Foreign investors don’t want to invest in a country where there is no flexibility in hiring and firing people,” he said. “You don’t want to invest in a country in which you wake up and a new law has been passed which totally undermines and destroys the value of the investment you’ve just made.”

Stathopoulous said investors were finding it very hard to assess the risk of investing into Greece, which means assets “will be priced at lower than they are worth, lower than the Greek government, and even the European Union, expects”.

Here’s a compelling argument for getting the shadow banking sector into a more regulated, transparent, and standardized order.  It’s written by Henry Tabe who is a Founding Partner of Sequoia Investment Management Company Ltd.  It particularly addresses the use of the Structured Investment Vehicle (SIV).  Complex, nonstandard, and unregulated markets make pricing assets difficult and introduce unnecessary risk and volatility.

Risk management requires identification, measurement, aggregation, and effective management of risks. It should help businesses allocate sufficient capital for survival and growth. The SIV’s extinction highlights risk management failures by the vehicles, their sponsors, rating agencies, policymakers, and regulators.

Financial regulators permitted bank, insurance company, pension, and hedge-fund sponsors to establish SIV “mini-banks” without ensuring that they maintain sufficient capital or back-stop liquidity in the event of a run. Policymakers also seemed unaware of the knock-on effects of the SIV’s demise on the securitisation and global credit markets. The Financial Security Authority’s call for regulators to incorporate sectoral analytical capabilities in their micro-prudential policies should help close the knowledge gap and ensure that timely solutions can be implemented to avert collapses that engender significantly more stress on the financial system (FSA 2009).

Lessons learned include the tightening of regulation governing the sponsorship of off-balance-sheet structures and the sizing of their capital and liquidity needs. These require that regulators adopt a more proactive, dampening role in the wild swings from exuberance to despair that are so characteristic of the financial markets. Discussions around contingent capital and similar products suggest regulators have embraced that dampening role and moved away from the prevailing pre-crisis philosophy of minimal regulation.

Lessons learned also include closer supervision of shadow banks, more skin-in-the-game for their sponsors, in-house retention of risk-analytics capabilities by investors, and less reliance on credit-rating agencies. The agencies themselves are more tightly supervised in order to reduce ratings shopping by issuers and inherent conflicts of interest in the business model (CESR 2009). Tighter regulation will also help to ensure that the agencies improve the monitoring of analyst performance, qualifications, and experience (Dodd-Frank 2010).

These measures should help restore confidence in rating agencies and the global financial system, an outcome more urgently required given on-going turmoil in the sovereign debt market.

So, there’s some wonky goodness to keep you entertained if you’re inside today.  Be sure to let us know what you’re reading and blogging!  Hope your Fourth of July is a happy one!

Late Night Speculation and Outrage

Posted: May 27, 2011 | Author: | Filed under: investment banking, We are so F'd | Tags: , | 17 Comments

There’s another interesting WikiLeak that’s come to light about high gas prices. It seems that President Bush asked the Saudis to pump extra oil to help relieve market pressure on prices in 2007 and 2008.  The Saudis suggested that Bush tackle the problem by reigning in Wall Street speculation.

When oil prices hit a record $147 a barrel in July 2008, the Bush administration leaned on Saudi Arabia to pump more crude in hopes that a flood of new crude would drive the price down. The Saudis complied, but not before warning that oil already was plentiful and that Wall Street speculation, not a shortage of oil, was driving up prices.

Saudi Oil Minister Ali al Naimi even told U.S. Ambassador Ford Fraker that the kingdom would have difficulty finding customers for the additional crude, according to an account laid out in a confidential State Department cable dated Sept. 28, 2008,

“Saudi Arabia can’t just put crude out on the market,” the cable quotes Naimi as saying. Instead, Naimi suggested, “speculators bore significant responsibility for the sharp increase in oil prices in the last few years,” according to the cable.

What role Wall Street investors play in the high cost of oil is a hotly debated topic in Washington. Despite weak demand, the price of a barrel of crude oil surged more than 25 percent in the past year, reaching a peak of $113 May 2 before falling back to a range of $95 to $100 a barrel.

The Obama administration, the Bush administration before it and Congress have been slow to take steps to rein in speculators. On Tuesday, the Commodity Futures Trading Commission, a U.S. regulatory agency, charged a group of financial firms with manipulating the price of oil in 2008. But the commission hasn’t enacted a proposal to limit the percentage of oil contracts a financial company can hold, while Congress remains focused primarily on big oil companies, threatening in hearings last week to eliminate their tax breaks because of the $38 billion in first-quarter profits the top six U.S. companies earned.

The Saudis, however, have struck a steady theme for years that something should be done to curb the influence of banks and hedge funds that are speculating on the price of oil, according to diplomatic cables made available to McClatchy by the WikiLeaks website.

The Saudis evidently repeatedly warned both the Bush and Obama administration about the roll of Wall Street speculators in the price of oil.

Matt Taibi has also written some about the WikiLeaks information.

The Wiki documents show that the Saudis had long ago concluded that this increased investor flow was a threat to disrupt the markets. An embassy cable from 2007 recounted a meeting U.S. officials had with Yasser Mufti, an Aramco planner. “The Saudi analysts indicated a link between higher oil prices and the influx of investor funds into the oil markets,” it read.

The cables also show that the Saudis urged the Americans to enact reforms to rein in Wall Street, calling for speculative limits and other changes. It also showed that some Saudi officials believed that speculation added as much as $40 to the oil price during the height of the bubble.

All of this is significant because both the Bush administration and the Obama administration have denied this narrative to various degrees. The CFTC only recently admitted that speculation played a role in the 2008 mess, having originally (and stubbornly) blamed supply and demand issues. Subsequent analyses have shown that the Saudi position, that worldwide demand for oil never increased nearly enough to account for the gigantic 2008 price spike, was almost certainly correct.

You have to wonder if the current situation also reflects the lack of will by the last two administrations to reign in Wall Street excess.  Hopefully, this information will get some play in the MSM but I’m not holding my breath.

Gotta Love those Wikileaks

Posted: January 17, 2011 | Author: | Filed under: commercial banking, Corporate Crime, Diplomacy Nightmares, financial institutions, Foreign Affairs, investment banking, Tunisia, Wikileaks | Tags: , , , , , , , , | 14 Comments

I’m still waiting for the BOA Wikileaks data drop but the idea of a Swiss Banker from offshore banking haven, The Cayman Islands, dropping a dime on a few of those tax evading customers is almost as sweet.  I can sense the thickness of air hanging in private clubs all over the world from my little corner of the ninth ward.

Rudolf M. Elmer, the former head of the Cayman Islands office of the prominent Swiss bank Julius Baer, refused to identify any of the individuals or companies, but told reporters at a press conference that about 40 politicians and “pillars of society” worldwide are among them.

He told The Observer newspaper over the weekend that those named in the documents come from “the U.S., Britain, Germany, Austria and Asia — from all over,” and include “business people, politicians, people who have made their living in the arts and multinational conglomerates — from both sides of the Atlantic.”

Mr. Assange said that WikiLeaks would verify and release the information, including the names, in as little as two weeks. He suggested possible partnerships with financial news organizations and said he would consider turning the information over to Britain’s Serious Fraud Office, a government agency that investigates financial corruption.

That’s a wow story!   But then, there’s been a series of them coming from Assange’s organization and the entire thing is just too great for words.  Any one that really doesn’t see that Wikileaks is becoming THE way for little guys to undermine the power elites of the world is basically a tool of oppressors and autocrats.  Just as Bradley Manning witnessed tapes that revealed the incredibly war crimes and inhumanity of a few American soldiers, Rudolf Elmer has witnessed pilfering that probably includes profiteering from crimes against humanity.  However, like every one else, I want NAMES.

Check out the CIA’s list of the RICHEST countries in the world in per capita terms. I always love to quiz my students on which ones shake out at the top and they nearly always get it wrong.   The top ten countries–with the exceptions of oil rich Kuwait and Norway–are all havens of offshore banking, tax evasion, and gambling.  The USA has dropped to number 11 on the richest country list.  Undoubtedly, it still holds that position because of its Investment Bankers.  As I mentioned in the Friday Reads, it’s not because we reward our brain surgeons, 4 star generals, or great minds. I’m appalled that this might be the century that proves Karl Marx right on how ‘capitalism’ eventually falls.  I’m only afraid that it will not be replaced with any kind of utopia; worker or otherwise.

What was Rudolf Elmer’s motivation?

Mr. Elmer said he had turned to WikiLeaks to educate society about what he considers an unfair system designed to serve the rich and aid money launderers after his offers to provide the data to universities and governments were spurned and, in his opinion, the Swiss media failed to cover the substance of his allegations. “The man in the street needs to know how this system works,” he said, referring to the offshore trusts that many “high net worth individuals” across the world use to evade taxes.

This, is the beauty of the Wikileaks.  (I’m going to take some time here to wave to our junior G-guys and G-gals!)  It gives a voice to those of us that work in the trenches holding up a system that rewards our work with pink slips, loss of insurance, and raises that don’t keep up with the cost of living don’t have much power.  The information we sit on frequently has a lot of power.  Once released to the public domain, it has even more power.  These leaks expose corruption and thievery; pure and simple.

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