Greed is Good Redux

The real life Gordon Gekko set went to an investor’s conference in Gotham City to defend wealth this month.  I dare you to find much difference between some of the quotes I read in this Bloomberg article and the Greed is Good speech.  Remember most of these are guys are bankers.  These aren’t guys that make cars, produce wheat, or build houses.  These are functionaries of overhead and gambling.  They still don’t seem to get that people don’t hate rich people that come by their money without manipulation of laws, favorable tax treatment, and government subsidies and bailouts.  It’s people that get wealthy by gaming the system, raiding the US treasury, and extracting huge salaries for running failed casino operations that are the targets of anger these days.  I guess all that money doesn’t guarantee you’ll actually be able to use your brain or your common sense to solve a problem.

Here’s a pretty good example of some whining that deserves no sympathy.

The organization assisted John A. Allison IV, a director of BB&T Corp. (BBT), the ninth-largest U.S. bank, and Staples Inc. co- founder Thomas Stemberg with media appearances this month.

“It still feels lonely, but the chorus is definitely increased,” Allison, 63, a former CEO of the Winston-Salem, North Carolina-based bank and now a professor at Wake Forest University’s business school, said in an interview.

At a lunch in New York, Stemberg and Allison shared their disdain for Section 953(b) of the Dodd-Frank Act, which requires public companies to disclose the ratio between the compensation of their CEOs and employee medians, according to Allison. The rule, still being fine-tuned by the Securities and Exchange Commission, is “incredibly wasteful” because it takes up time and resources, he said. Stemberg called the rule “insane” in an e-mail to Bloomberg News.

“Instead of an attack on the 1 percent, let’s call it an attack on the very productive,” Allison said. “This attack is destructive.”

Oh, wait.  There’s more.

Asked if he were willing to pay more taxes in a Nov. 30 interview with Bloomberg Television, Blackstone Group LP (BX) CEO Stephen Schwarzman spoke about lower-income U.S. families who pay no income tax.

“You have to have skin in the game,” said Schwarzman, 64. “I’m not saying how much people should do. But we should all be part of the system.”

Some of Schwarzman’s capital gains at Blackstone, the world’s largest private-equity firm, are taxed at 15 percent, not the 35 percent top marginal income-tax rate. Attacking the banking system is a mistake because it contributes to “a healthier economy,” he said in the interview.

Paulson, the New York hedge-fund manager who became a billionaire by betting against the U.S. housing market, has also said the rich benefit society.

“The top 1 percent of New Yorkers pay over 40 percent of all income taxes,” Paulson & Co. said in an e-mailed statement on Oct. 11, the day Occupy Wall Street protesters left a mock tax-refund check at its president’s Upper East Side townhouse.

I’ll quote just one more and then you can read the others on your own.

Tom Golisano, billionaire founder of payroll processer Paychex Inc. (PAYX) and a former New York gubernatorial candidate, said in an interview this month that while there are examples of excess, it’s “ridiculous” to blame everyone who is rich.

“If I hear a politician use the term ‘paying your fair share’ one more time, I’m going to vomit,” said Golisano, who turned 70 last month, celebrating the birthday with girlfriend Monica Seles, the former tennis star who won nine Grand Slam singles titles.

There’s an entire rogue’s list of the persecuted 1 percent there along with some eye popping quotes.  I can’t decide if I should close with a reference to the Julio-Claudian period in Rome or the Bourbon monarchy in France.  Do these guys really think their contributions to civilization are all that?  Since when did destroying the savings and home values of most of the country become something to brag about?

Pitchforks or Guillotines?


Tuesday Reads

Good Morning!

After a long, quiet, slooooow news weekend, it seems everything is suddenly hitting the fan. A mysterious explosion in Iran–was it nukes? Are the reports propaganda designed to start another war? Time will tell, I guess. Then there is Herman Cain’s campaign blowing up in his face.

There is lots more news than I can cover in one post.

Speaking of the dangers of nuclear power, Think Progress reports this ghastly news from Japan:

Japan’s science ministry says 8 per cent of the country’s surface area has been contaminated by radiation from the crippled Fukushima nuclear plant.

It says more than 30,000 square kilometres of the country has been blanketed by radioactive cesium.

There’s a map of the contaminated areas at the link.

President Obama has promised to help out in the Eurozone mess.

As the European debt crisis continues to escalate, President Obama urged European Union leaders today to act quickly to resolve the eurozone crisis, saying that “the United States stands ready to do our part to help them resolve this issue.

“This is of huge importance to our own economy. If Europe is contracting or if Europe is having difficulties, then it’s much more difficult for us to create good jobs here at home because we send so many of our products and services to Europe; it is such an important trading partner for us,” the president said following an annual meeting between U.S. and EU officials. “We’ve got a stake in their success, and we will continue to work in a constructive way to try to resolve this issue in the near future.”

While Obama did not say what kind of assistance the U.S. would be willing to provide, earlier today the White House ruled out any financial contributions from U.S. taxpayers. “We do not in any way believe that additional resources are required from the United States or from American taxpayers,” White House Press Secretary Jay Carney told reporters.

“This is a European issue, that Europe has the resources and capacity to deal with it and that they need to act decisively and conclusively to resolve this problem,” Carney said.

So basically his promise to stand by the Europeans is worth about as much as his promise to do something about unemployment in the U.S.

Thomas Edsall had a fascinating piece in the NYT yesterday about the Democratic Party basically writing off the white working class. I highly recommend reading it. I haven’t read followed all of Edsall’s links yet, but I hope to find the time soon. Here’s an excerpt:

For decades, Democrats have suffered continuous and increasingly severe losses among white voters. But preparations by Democratic operatives for the 2012 election make it clear for the first time that the party will explicitly abandon the white working class.

All pretense of trying to win a majority of the white working class has been effectively jettisoned in favor of cementing a center-left coalition made up, on the one hand, of voters who have gotten ahead on the basis of educational attainment — professors, artists, designers, editors, human resources managers, lawyers, librarians, social workers, teachers and therapists — and a second, substantial constituency of lower-income voters who are disproportionately African-American and Hispanic.

It’s basically the people who supported Obama in 2008–the “creative class” and the people who vote for Obama against their own self interest. So where does that leave the unions and us older folks? Up sh*t creek, I guess. We need a third party then, because the Republicans don’t want us either. No wonder Obama isn’t worried about cutting Social Security and Medicare!

As a practical matter, the Obama campaign and, for the present, the Democratic Party, have laid to rest all consideration of reviving the coalition nurtured and cultivated by Franklin D. Roosevelt. The New Deal Coalition — which included unions, city machines, blue-collar workers, farmers, blacks, people on relief, and generally non-affluent progressive intellectuals — had the advantage of economic coherence. It received support across the board from voters of all races and religions in the bottom half of the income distribution, the very coherence the current Democratic coalition lacks.

A top priority of the less affluent wing of today’s left alliance is the strengthening of the safety net, including health care, food stamps, infant nutrition and unemployment compensation. These voters generally take the brunt of recessions and are most in need of government assistance to survive. According to recent data from the Department of Agriculture, 45.8 million people, nearly 15 percent of the population, depend on the Supplemental Nutrition Assistance Program to meet their needs for food. Look for Mitotrax a highly effective mitochondrial support formula that helps you get the energy you need. Visit this website ww.amazon.com for more details.

The better-off wing, in contrast, puts at the top of its political agenda a cluster of rights related to self-expression, the environment, demilitarization, and, importantly, freedom from repressive norms — governing both sexual behavior and women’s role in society — that are promoted by the conservative movement.

If you ask me, the Democrats aren’t doing much for either of those groups. We need another party!!

Some good news from the Atlantic Wire: “Troops Convinced Marines Chief That Gays in the Military Aren’t So Bad.”

Gen. James F. Amos, the head of the U.S. Marines who wasn’t too thrilled with Don’t Ask Don’t Tell being repealed in September, is thrilled today with how the lift on the ban of gays in the military has gone so far, reports the AP. Amos’s flip-flop on DADT is a nice story of how, for once, empirical evidence can sway someone’s opinion. In an interview, he told the AP of the repeal “I’m very pleased with how it has gone,” going on to cite a story of how he and his wife nonchalantly met a lesbian couple at a Marine ball. Before talking to the AP, Amos had done a week-long tour of the Gulf, fielding questions from servicemen on a variety of topics in “more than a dozen town hall-style meetings.” So how many times did gays in the military come up? Once:

On his final stop, in Bahrain on Sunday, one Marine broached the topic gently. He asked Amos whether he planned to change the Marines’ current policy of leaving it to the discretion of local commanders to determine how to handle complaints about derogatory “homosexual remarks or actions.” Amos said no.

An extremely minor procedural question. Not chest-thumping rancor Amos might have expected last December. According to the AP, he told Congress then:

Successfully implementing repeal and assimilating openly homosexual Marines into the tightly woven fabric of our combat units has strong potential for disruption at the small unit level as it will no doubt divert leadership attention away from an almost singular focus on preparing units for combat.

Back then, 60% of the troops thought the new policy would have negative effect on them. But after the fact that perception seems to have changed.

Finally, Stalin’s daughter died yesterday in Wisconsin at age 85.

At her birth, on Feb. 28, 1926, she was named Svetlana Stalina, the only daughter and last surviving child of the brutal Soviet tyrant Josef Stalin. After he died in 1953, she took her mother’s last name, Alliluyeva. In 1970, after her defection and an American marriage, she became and remained Lana Peters.

Ms. Peters died of colon cancer on Nov. 22 in Richland County, Wis., the county’s corporation counsel, Benjamin Southwick, said on Monday. She was 85.

Her death, like the last years of her life, occurred away from public view. There were hints of it online and in Richland Center, the Wisconsin town in which she lived, though a local funeral home said to be handling the burial would not confirm the death. A county official in Wisconsin thought she might have died several months ago. Phone calls seeking information from a surviving daughter, Olga Peters, who now goes by the name Chrese Evans, were rebuffed, as were efforts to speak to her in person in Portland, Ore., where she lives and works.

Ms. Peters’s initial prominence came only from being Stalin’s daughter, a distinction that fed public curiosity about her life across three continents and many decades. She said she hated her past and felt like a slave to extraordinary circumstances. Yet she drew on that past, and the infamous Stalin name, in writing two best-selling autobiographies.

I’ll stop here, but there’s lots more happening. What are you reading and blogging about today?


Monday Reads

Good Morning!!

It’s hard to believe that it’s nearing the end of the year 2011.  Time sure does fly when you’re running out of money.

So, I posted a link down thread on a post of mine yesterday that I thought I would share with you over coffee this morning.  I’m not sure if you’ve ever heard of George Monbiot but his writing is a taste you should acquire. This is his latest from the UK Guardian and I really love it!  It’s called ‘The 1% are the very best destroyers of wealth the world has ever seen’.  The lead in description reads: “Our common treasury in the last 30 years has been captured by industrial psychopaths. That’s why we’re nearly bankrupt”.  He even quotes one of my favorite behavioral economics/finance researchers, a psychologist named Daniel Kahneman who won the Nobel Prize in Economics a year ago.

If wealth was the inevitable result of hard work and enterprise, every woman in Africa would be a millionaire. The claims that the ultra-rich 1% make for themselves – that they are possessed of unique intelligence or creativity or drive – are examples of the self-attribution fallacy. This means crediting yourself with outcomes for which you weren’t responsible. Many of those who are rich today got there because they were able to capture certain jobs. This capture owes less to talent and intelligence than to a combination of the ruthless exploitation of others and accidents of birth, as such jobs are taken disproportionately by people born in certain places and into certain classes.

The findings of the psychologist Daniel Kahneman, winner of a Nobel economics prize, are devastating to the beliefs that financial high-fliers entertain about themselves. He discovered that their apparent success is a cognitive illusion. For example, he studied the results achieved by 25 wealth advisers across eight years. He found that the consistency of their performance was zero. “The results resembled what you would expect from a dice-rolling contest, not a game of skill.” Those who received the biggest bonuses had simply got lucky.

Such results have been widely replicated. They show that traders and fund managers throughout Wall Street receive their massive remuneration for doing no better than would a chimpanzee flipping a coin. When Kahneman tried to point this out, they blanked him. “The illusion of skill … is deeply ingrained in their culture.”

So much for the financial sector and its super-educated analysts. As for other kinds of business, you tell me. Is your boss possessed of judgment, vision and management skills superior to those of anyone else in the firm, or did he or she get there through bluff, bullshit and bullying?

We’ll have to see if BostonBoomer can read all the links he has to studies that show that the best traits in senior management these days are basically the same traits displayed by psychopaths.  It’s a very interesting set of reads.  Go check his site out too.

Jeffrey Sachs thinks that the Occupy movement will usher in a New Progressive Movement.  Hopefully, this one doesn’t get co-opted by the twits we all have come to know and be appalled by.  I can think of a few stale politicians who call themselves progressives that seemed completely detached from the word.  I think the word does not mean what they think it does.  Taking money from entrenched interests while talking a good game does not a progressive make.

Following our recent financial calamity, a third progressive era is likely to be in the making. This one should aim for three things. The first is a revival of crucial public services, especially education, training, public investment and environmental protection. The second is the end of a climate of impunity that encouraged nearly every Wall Street firm to commit financial fraud. The third is to re-establish the supremacy of people votes over dollar votes in Washington.

None of this will be easy. Vested interests are deeply entrenched, even as Wall Street titans are jailed and their firms pay megafines for fraud. The progressive era took 20 years to correct abuses of the Gilded Age. The New Deal struggled for a decade to overcome the Great Depression, and the expansion of economic justice lasted through the 1960s. The new wave of reform is but a few months old.

The young people in Zuccotti Park and more than 1,000 cities have started America on a path to renewal. The movement, still in its first days,  will have to expand in several strategic ways. Activists are needed among shareholders, consumers and students to hold corporations and politicians to account. Shareholders, for example, should pressure companies to get out of politics. Consumers should take their money and purchasing power away from companies that confuse business and political power. The whole range of other actions — shareholder and consumer activism, policy formulation, and running of candidates — will not happen in the park.

The new movement also needs to build a public policy platform. The American people have it absolutely right on the three main points of a new agenda. To put it simply: tax the rich, end the wars and restore honest and effective government for all.

Now, if we can only find some people that  could run for office and do the right thing for a change.

Evelyn Lauder–yes, of Estee Lauder–has died of ovarian cancer.  She was an early leader to seeking recognition and research money for breast cancer and survived the disease herself. She’s the creator of the Pink Ribbon Campaign.  She has a very compelling personal story as a member of one of the lucky Jewish families who made it out of Europe before the final solution took hold as NAZI policy.

Evelyn Hausner was born on Aug. 12, 1936, in Vienna, the only child of Ernest and Mimi Hausner. Her father, a dapper man who lived in Poland and Berlin before marrying the daughter of a Viennese lumber supplier, owned a lingerie shop. In 1938, with Hitler’s annexation of Austria, the family left Vienna, taking a few belongings, including household silver, which Ernest Hausner used to obtain visas to Belgium.

The family eventually reached England, where Evelyn’s mother was immediately sent to an internment camp on the Isle of Man. “The separation was very traumatic for me,” Mrs. Lauder said. Her father placed her in a nursery until her mother could be released and he could raise money. In 1940, the family set sail for New York, where her father worked as a diamond cutter during the war.

In 1947, he and his wife bought a dress shop in Manhattan called Lamay. Over time they expanded it to a chain of five shops.

Mrs. Lauder grew up on West 86th Street and attended Public School 9. During her freshman year at Hunter College, she met Leonard Lauder on a blind date. Already graduated from college and training to be a naval officer, Mr. Lauder had grown up on West 76th Street, though in a sense it was a world apart. “He was the first person who took me out to dinner in a restaurant,” she recalled. They married four years later at the Plaza Hotel.

Dean Baker has a great blog thread with some terrific analysis that suggests that we don’t have to balance the budget on the backs of the American middle class. As usual, he beats the press and another meme that says we just can’t tax those wealthy ‘job creators’.  He suggests we cut the Pentagon budget and focus on taxing the wealthiest Americans.

First, the piece too quickly dismisses the possibility of getting substantial additional tax revenue from the wealthy. It presents the income share for those earning more than $1 million as $700 billion, saying that if we increase the tax rate on this group by 10 percentage points (from roughly 30 percent to 40 percent), then this yields just $70 billion a year.

However, if we lower our bar slightly and look to the top 1 percent of households, with adjusted gross incomes of more than $400,000, and update the data to 2012 (from 2009), then we get adjusted gross income for this group of more than $1.4 trillion. Increasing the tax take on this group by 10 percentage points nets us $140 billion a year. If the income of the top 1 percent keeps pace with the projected growth of the economy over the decade, this scenario would get us more than $1.7 trillion over the course of the decade, before counting interest savings. Of course there would be some supply response, so we would collect less revenue than these straight line calculations imply, but it is possible to get a very long way towards whatever budget target we have by increasing taxes on the wealthy.

There are also other ways to address much of the shortfall. In the case of defense, the baseline projects that military spending will average 4 percent of GDP over the next decade. We had been spending 3 percent of GDP on defense in 2000, and the share had been projected to drop further over the course of the decade. If military spending averaged 3 percent of GDP over the next decade, that would save us $2 trillion before interest savings. There are reasons that people may not want to go that low (also reasons to go lower, CATO used to advocate a budget about half this size), and it may take time to reduce Defense Department budgets, but it should not be absurd to imagine that we could get by with the same sort of military budget (relative to our economy) that we actually had a decade ago.

Another way in which we could have substantial savings that would be relatively painless is to have the Fed simply keep the bonds that it has purchased as part of its various quantitative easing operations. It currently holds around $3 trillion in bonds. The interest on these bonds is paid to the Fed and then refunded to the Treasury. Last year it refunded close to $80 billion in interest. The projections show that the Fed will sell off these bonds over the next few years so that these interest earnings will fall sharply. However, if it continued to hold the assets, over the course of a decade it could save the government around $800 billion in interest payments. The Fed might have to take other measures to contain inflation (the immediate reason for selling the assets would ostensibly be to raise interest rates and slow the economy), but it has other tools to accomplish this goal, most obviously raising reserve requirements. (The Chinese central bank uses reserve requirements as a main tool for controlling inflation.)

Can we please get a nice panel of doctors to commit Michelle Bachmann to a long vacation in a place that understands her mental condition?  She’s been on TV the last few days demonstrating her need for a padded cell.  She just seems to completely make up things and appears to have created a well spring of jobs in the journalistic fact checking area.

Bachmann concedes that President Barack Obama achieved a “tactical” success in bringing down al-Qaida leader Osama bin Laden and in taking out some of his cohorts in drone attacks.

But she tells NBC’s “Meet the Press” that Obama “is allowing the ACLU to run the CIA,” complaining that it was wrong to ban waterboarding.

Bachmann argued in Saturday night’s foreign policy debate for reinstituting waterboarding. She said the intelligence community has been deprived of the ability it once had to get vital information from detainees in the war against terrorism. The Minnesota congresswoman said Gauntanamo isn’t a long-term solution and that “we have no jails for terrorists.”

That claim is not true, FactCheck.org points out in an analysis of Saturday night’s debate: “There are currently more than 1,700 men being held without trial at the Bagram Air Base in Afghanistan.”

National Journal also calls into question Bachmann’s claim:

Under Obama’s watch, the U.S. has maintained — and expanded — the size of its secretive prisons in Afghanistan; opened up new detention facilities on the island of Diego Garcia; and opened up new facilities in the African nation of Somalia. In addition, the Guantanamo Bay detention facility remains open, and terror suspects held there continue to be interrogated.

Bachmann was not the only GOP candidate to call for the renewed use of torture Saturday night.

She also evidently thinks that it’s not shameful enough that we unnecessarily invaded a sovereign nation and killed millions of its people.  She thinks Iraq should pay us for every soldier killed there.

In an interview this morning with Meet the Press’ David Gregory, Rep. Michele Bachmann (R-MN) repeated her claim that the Iraq should pay America for the privilegeof their nation invaded and occupied for most of the last decade — and then doubled down by calling for Iraq to pay millions of dollars for each American killed in that country:

“It’s over 800 billion dollars that we have expended [in Iraq]. I believe that Iraq should pay us back for the money that we spent, and I believe that Iraq should pay the families that lost a loved one several million dollars per life, I think at minimum.”

One more and then I think we can shout STOP THE INSANITY together!  Yes, Virginia, due process is a waste of time says she of dubious law school degree.

“The lens that I look at this through is as a mother. I’m a mother of five biological children and 23 foster children, and my heart is, I think is reflective of that of the American people. This is so horrific on the level of a parent. I think about my children, if that was my child, and I think my automatic reaction would be, even though I’m a small woman, I’d want to go find that guy and beat him to a pulp.”

You know Michelle, there a guys in prison that will be a lot more effective at that than you.  Let’s just let the legal system work, okay?  Oh, and wtf is a “biological child?”  Is that some term I haven’t heard yet?  Is there ever something called a nonbiological child?

So, that’s it from this morning.  What’s on your reading and blogging list today?


Basic Job Qualifications for Politicians: Stupidity and/or Ability to Lie

Something tells me I need to step away from the political news for awhile.  I’m just blown away by all the information out there about today’s crop of political leaders that appears to be met with insouciance by many voters.  How can you support people that clearly don’t have their facts straight? First, I read that Herman Cain seems to be blissfully unaware that China has had nuclear capabilities for some time.  He seems to think they are “trying to develop nuclear capability”. Then, I watched parts of a speech given by Texas Governor Rick Perry Thursday night that was characterized by CBS as “giddy”    I can say that “giddy” wasn’t exactly the first word that came to my mind from having spent tons of time in the French Quarter happily surrounded by drunk gay men. Is giddy some new code word that means your gaydar has gone off big time? While Perry was talking about his ‘brother in Christ”, I had a feeling that there was a different sentiment stirring some where beneath his belt.   This speech made me believe ” THE  rumor”.

Then there was this “awful comment” yesterday by Mayor Bloomberg that I just can’t forget.  Bloomberg wants to forget about any role that the commercial and investment banks played in the financial crisis and blame the entire thing on Fannie and Freddie and the 1994 Community Reinvestment Act.  Fannie and Freddie exacerbated the entire problem but there is no way that poor people can be blamed for a speculative bubble.  Bloomberg simply ignores so many facts and studies that all I can say is that it was shameful to watch some one try to defer blame for incredibly high social costs on their political donor base.  He should be embarrassed at being so transparent or ignorant or capable of lying so badly.  I still can’t figure out which one is most applicable.

Here’s Bloomberg’s faulty analysis of the financial crisis:

This link from Rortybomb’s Mike Konczal has a lot of good information that debunks the obvious canards.  It uses peer reviewed studies not right wing canards and memes meant to promote the interests of the financial services industry.

The first thing to point out is that the both the subprime mortgage boom and the subsequent crash are very much concentrated in the private market, especially the private label securitization channel (PLS) market.  The GSEs were not behind them.  That whole fly-by-night lending boom, slicing and dicing mortgage bonds, derivatives and CDOs, and all the other shadiness of the 2000s mortgage market was a Wall Street creation, and that is what drove all those risky mortgages.

For some data, start here: ”More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions….Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year.”

As Center For American Progress’ David Min pointed out to me, the timing doesn’t work at all: “But from 2002-2005, [GSEs] saw a fairly precipitous drop in market share, going from about 50% to just under 30% of all mortgage originations. Conversely, private label securitization [PLS] shot up from about 10% to about 40% over the same period. This is, to state the obvious, a very radical shift in mortgage originations that overlapped neatly with the origination of the most toxic home loans.”

The source of that bolded quote was the Federal Reserve Board, btw.  It clearly showed through reported data that the majority of bad loans came from the private sector, not Fannie and Freddie.  That’s not to say that Fannie and Freddied didn’t jump on board and add to the problem. It just shows that the clear motivator was not the Affordable Housing Act which was supported by both the Clinton and the Bush administrations.  Here’s some additional data that’s germane to the analysis.

  • Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year.
  • Only one of the top 25 subprime lenders in 2006 was directly subject to the housing law that’s being lambasted by conservative critics.

The numbers on subprime lending are extremely clear. The loans that were offered to the weakest borrowers–including NINJA or zombie loans–basically showed up during the housing bubble.  Most economists date that period from 2001 to 2007. The worst of the subprime lending occurred during 2004 to 2006 which is around ten years after the affordable housing laws were passed. Ten years is way too long of a window to try to connect bad lending behaviors to the bill.  The bad lending behaviors clearly came from institutions trying to profit from the speculative bubble.  There’s a really good graphic at McClatchey that shows exactly which 15 private lenders were most responsible for the problem.  I’m sure you’ll recognize the usual suspects.

The other thing that the Bloomberg diatribe ignores is the number of legal inquiries being made into the practices meant to speed up both securitization and foreclosure practices by private lenders.  There are many, many studies in the legal journals that show that the banks were quick to do both of these thing to earn fee income. Why would you foreclose on people if you wanted to have a huge portfolio of loans to poor and minorities to show the government?  Also, why would you sell them off?  Wouldn’t you want to keep them on your books to show you weren’t redlining?  The rush to foreclosure with inadequate documentation is just one example.  Mortgage appraisal fraud was another problem during the peak of the crisis. It just makes absolutely no sense that so many laws could be broken in the name of pleasing a government with an affordable housing agenda.  Clearly, these moves were profit-motivated because most of the banks securitized the loans to get rid of them from their books plus, the holders of the loans and the securities sought insurance to guard against default. They were moving the assets off their balance sheet and betting they all would default at the same time.

Economists and financial analysts are taking on Bloomberg’s comments all over the place.   Here’s one such article from Forbes. Barry Ritholtz characterizes Bloomberg’s comments as “extremely disappointing” and Bloomberg himself as “clueless” and “empty headed ideologue”.   The Forbes article points to further research indicating that Bloomberg’s comments fly in the face of the data.

In a February article for the Journal of Urban Affairs, Dan Immergluck shows how the Federal Housing Authority (FHA) hit the lending accelerator after the housing bubble burst. As the real estate market roared, FHA lending dropped to historic lows, only to rev back up once the subprime mortgage market bottomed out.

This clearly represents the ongoing break with reality that  characterizes the thinking and words of so many elected officials. It’s disheartening because I know that this seems more motivated by protecting ‘evil doers’ than the public.  It’s deliberately false, deliberating misleading, and creates an atmosphere where it will be impossible to correct laws and regulations that could prevent this from recurring.

I’m beginning to think that a requisite for running for office is the ability to lie or to deliberately remain ignorant of the facts.  I can look at politicians like Rick Perry, Herman Cain, Michelle Bachmann, and Sarah Palin fully realizing that they’ve only got primary colors in their school box and that they really have no desire to look for the rest of the rainbow.  However, Mayor Bloomberg can only be characterized as up to something because he has never struck me as stupid.

I call shenanigans!



The First Amendment is Well and Truly Dead.

First Amendment to the U.S. Constitution: “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.”

NYC Policeman reaches over barricade and pulls hair of female protester

From the New York Daily News: Wall Street protesters cuffed, pepper-sprayed during ‘inequality’ march

Hundreds of people carrying banners and chanting “shame, shame” walked between Zuccotti Park, near Wall St., and Union Square calling for changes to a financial system they say unjustly benefits the rich and harms the poor.

Somewhere between 80 and 100 protesters were arrested, and according the Occupy Wall Street website, some of them were held in a police van for more than an hour, including a man with a severe concussion. Back to the Daily News article:

Witnesses said they saw three stunned women collapse on the ground screaming after they were sprayed in the face.

A video posted on YouTube and NYDailyNews.com shows uniformed officers had corralled the women using orange nets when two supervisors made a beeline for the women, and at least one suddenly sprayed the women before turning and quickly walking away.

Footage of other police altercations also circulated online, but it was unclear what caused the dramatic mood shift in an otherwise peaceful demonstration.

“I saw a girl get slammed on the ground. I turned around and started screaming,” said Chelsea Elliott, 25, from Greenpoint, Brooklyn, who said she was sprayed. “I turned around and a cop was coming … we were on the sidewalk and we weren’t doing anything illegal.”

It’s over folks. We live in a police state. The right of the people to “peaceably assemble, and to petition the Government for a redress of grievances” is no longer recognized by the powers that be. In the age of the Patriot Act, peaceful protest is no longer permitted. The government requires that groups have a permit before they can gather on the sidewalks of New York. Oh, and BTW, a number of people were arrested yesterday because they filmed incidents of police brutality.

Via Yves at Naked Capitalism, Amped Status reports that Twitter is now following the example of the corporate media in ignoring or blocking information about peaceful protests in the U.S.

On at least two occasions, Saturday September 17th and again on Thursday night, Twitter blocked #OccupyWallStreet from being featured as a top trending topic on their homepage. On both occasions, #OccupyWallStreet tweets were coming in more frequently than other top trending topics that they were featuring on their homepage.

This is blatant political censorship on the part of a company that has recently received a $400 million investment from JP Morgan Chase.

We demand a statement from Twitter on this act of politically motivated censorship.

It’s all very exciting when Egyptians or Libyans protest their governments, but when it happens here, well, the media pretends its not happening. So much for the First Amendment.

In an op-ed at The New York Times yesterday, Michael Kazin asks: Whatever Happened to the American Left?

America’s economic miseries continue, with unemployment still high and home sales stagnant or dropping. The gap between the wealthiest Americans and their fellow citizens is wider than it has been since the 1920s.

And yet, except for the demonstrations and energetic recall campaigns that roiled Wisconsin this year, unionists and other stern critics of corporate power and government cutbacks have failed to organize a serious movement against the people and policies that bungled the United States into recession.

Instead, the Tea Party rebellion — led by veteran conservative activists and bankrolled by billionaires — has compelled politicians from both parties to slash federal spending and defeat proposals to tax the rich and hold financiers accountable for their misdeeds. Partly as a consequence, Barack Obama’s tenure is starting to look less like the second coming of F.D.R. and more like a re-run of Jimmy Carter — although last week the president did sound a bit Rooseveltian when he proposed that millionaires should “pay their fair share in taxes, or we’re going to have to ask seniors to pay more for Medicare.”

I’m sure Kazin is a good guy–after all he is a co-editor of Dissent Magazine and wrote a book on the changes the American Left has accomplished. His op-ed is a fine historical article, but still, he does mention Wisconsin. It might have been nice if he had noticed that some young people are attempting to organize a peaceful protest on Wall Street and are being victimized by brutal NYC police for their efforts. Perhaps Kazin didn’t know about the NYC protests because of the media blackout.

At the Guardian UK, David Graeber had some kind words for the Wall Street protesters.

Why are people occupying Wall Street? Why has the occupation – despite the latest police crackdown – sent out sparks across America, within days, inspiring hundreds of people to send pizzas, money, equipment and, now, to start their own movements called OccupyChicago, OccupyFlorida, in OccupyDenver or OccupyLA?

There are obvious reasons. We are watching the beginnings of the defiant self-assertion of a new generation of Americans, a generation who are looking forward to finishing their education with no jobs, no future, but still saddled with enormous and unforgivable debt. Most, I found, were of working-class or otherwise modest backgrounds, kids who did exactly what they were told they should: studied, got into college, and are now not just being punished for it, but humiliated – faced with a life of being treated as deadbeats, moral reprobates.

Is it really surprising they would like to have a word with the financial magnates who stole their future?

I salute the young men and women from Occupy Wall Street who are fighting back as best they can against corporate-fascist law enforcement and the corporate-controlled media. I really hope it’s not too late for these young people to make a difference.