Sunday Reads: Tweety Gotta Go

 

Last night, around 10:30, I saw a tweet about Tweety (Check out reply number 28)…it was tweeted that:

NBC paid out severance to staffer who accused Chris Matthews of sexual harassment | TheHill

A former MSNBC employee who accused host Chris Matthews of sexual harassment in 1999 was given a separation payment by the network, according to a Daily Caller report.

Two sources told the Caller that a woman who was then an assistant producer on Matthews’ show “Hardball” accused the longtime MSNBC host of making inappropriate sexual comments about her while in the company of others. The sources say the company settled with the woman for $40,000.

However, MSNBC disputed the sources’ claims. The network confirmed to the Daily Caller that while they paid the woman, the money was given as part of a severance package and the amount paid was “significantly less” than $40,000.

A spokesman for MSNBC told the Caller that they “thoroughly reviewed” the situation and “formally reprimanded” Matthews, who has hosted “Hardball” on the network since 1997. He also hosted “The Chris Matthews Show” on the network after the settlement from 2002 to 2013.

NBC is blowing it off as having been dealt with officially at the time, MSNBC’s Chris Matthews was reprimanded over comments about woman in 1999 – NBC News

“In 1999 this matter was thoroughly reviewed and dealt with. At that time Matthews received a formal reprimand,” the MSNBC spokesperson said in an email Saturday.

The spokesperson said the woman complained to CNBC executives that Matthews made inappropriate jokes and comments about her in front of others, that the matter was reviewed and it was determined that the comments were inappropriate and in made in poor taste but were never meant as propositions. The show was on CNBC before it was on MSNBC.

Those of us who have seen Matthews in action, with his misogynistic treatment of women guest who appear on his show, and his disdain for strong women in politics or in any other position of power…this news of a settlement is really no surprise.

I know many will remember this comment Matthews made about Hillary:

That was just one of the sentiments he spilled on the air…and hey, let’s take it further a few minutes…Matthews wasn’t the only misogynist with harassment claims to have been responsible for the media “coverage” of Hillary during her campaign for president in 2016.

I posted the author’s twitter feed in case you want to follow her…

 

 

Taibbi is not alone obviously…let’s not forget Glenn Greenwald, or as Mona Eltahawy points out it this tread, Scahill and Blumenthal:

You should read the entire thread…

Quick break:

 

 

I thought this was interesting:

 

By the way:

 

Ending this with a horse’s ass:

What is going on with y’all? This is an open thread…

 


Thursday Reads: Molly Ivins, Governor Goodhair, Corporate Crime, and Heroes

Good Morning!! I’m going to be leaving for a two-day drive to Indiana either today or tomorrow, so I’m a bit meshugge this morning. Please be patient with me. Let’s see what’s in the news.

From what I can see, it’s mostly Rick Perry. And I must say, I find “Governor Goodhair” endlessly fascinating. He’s more of a gaffe-machine than Joe Biden–and that’s really saying something. Molly Ivins gave Perry that nickname. I miss her so much. So I was thrilled when I cam across this article in the Sacramento Bee:
Molly can’t say that about Rick Perry, can she? It’s a collection of quotes on Perry from Ivins. Here’s one:

June 24, 2001

First, we Texans would like to salute the only governor we’ve got, Rick “Goodhair” Perry, the Ken Doll, for vetoing the bill to outlaw executing the mentally retarded.

We are Texas Proud.

Such a brilliant decision – not only is Texas now globally recognized for barbaric cruelty, but a strong majority of Texans themselves (73 percent) would prefer not to off the retarded.

Gov. Goodhair’s decision – in the face of popular opinion, the Supreme Court and George W. Bush’s recent conversion on this subject – is a testament to his strength of character.

Or something.

His Perryness announced, anent the veto, that Texas does not execute the retarded. I beg your pardon, Governor. Johnny Paul Penry, now on Death Row for a heart-breaking murder and the subject of two Supreme Court decisions, has an IQ between 51 and 60, believes in Santa Claus and likes coloring books.

We will never have another political writer like Molly.

Yesterday Perry “challenged” Obama on border security.

Perry, who was on his second trip to New Hampshire as a presidential candidate, criticized President Obama for his assertion during a speech in El Paso, Tex. in May that his administration had “strengthened border security beyond what many believed was possible.”

“Six weeks ago the President went to El Paso and said the border is safer than it’s ever been,” Perry said. “I have no idea, maybe he was talking about the Canadian border.”

Perry thinks we should use Predator Drones to deal with illegal immigration.

“I mean, we know that there are Predator drones being flown for practice every day because we’re seeing them, we’re preparing these young people to fly missions in these war zones that we have. But some of those, they have all the equipment, they’re obviously unarmed, they’ve got the downward-looking radar, they’ve got the ability to do night work and through clouds. Why not be flying those missions and using (that) real-time information to help our law-enforcement? Becuase if we will commit to that, I will suggest to you that we will be able to drive the drug cartels away from our border.”

Apparently the Governor of Texas did not know that the Department of Homeland Security has already been using Drones to patrol the Mexican border for years.

I’m not that up on Texas politics, but I’m beginning to get the idea that the Bush crowd doesn’t care much for Rick Perry. According to Elspeth Reeve at The Atlantic, Bush’s Crew Is Gunning for Rick Perry

Is Rick Perry “another George W. Bush”? In reality, Bush was more of a fake Perry, the Texas version of a studio gangster, clearing brush in his cowboy boots despite his prep school background. It helps explain why Bush’s allies and Perry’s allies don’t like each other very much: the Bush-loving Republican establishment sees Perry as “the low-rent country cousin,” the Los Angeles Times reports. And it explains why Karl Rove (who once worked for Perry, before helping Bush become president) went on Fox News to criticize Perry for calling the Federal Reserve treasonous — and to wish for more candidates to enter the 2012 race.

You’ll need to go to the link to read all about the Bush-Perry feud. In addition, Howard Dean told The Hill that the “Bush camp will take Perry out.”

Former Democratic National Committee Chairman Howard Dean predicted that prominent political supporters of former President George W. Bush will deal a critical blow to Texas Gov. Rick Perry’s (R) presidential campaign.

“The Bush people don’t fool around, as you know,” Dean said Tuesday night on MSNBC. “You can say a lot of things about Bush’s presidency and his failures as president, but one thing nobody should say [anything] bad about [is] his political team. They know what they’re doing, and they are ruthless, and they are going to take Perry out.”

Here’s Bill Clinton’s opinion on Rick Perry’s presidential ambitions:

—————————————————-

Do you have a Citi credit card? Better watch out

TANGERANG, Indonesia — Irzen Octa, a down-on-his-luck Indonesian businessman, suffered a torment familiar to millions of Americans struggling with debts racked up in better times: He feared losing his home.

In the end, he managed to keep the ramshackle two-story house where he and his wife raised their two now-teenage daughters. Instead, Octa, pursued by Citibank over a $5,700 debt on his platinum credit card, lost his life.

The 50-year-old businessman, invited to a Citibank office in Jakarta in late March, collapsed in a tiny room set aside by the U.S. bank for questioning of deadbeat debtors. He died shortly afterward — a casualty of a “harsh interrogation,” said Jakarta police spokesman Baharudin Djafar.

Whoa!

Noting that Indonesian debt collectors have a reputation for sometimes aggressive persistence, Johansyah, the central bank official, said: “The best thing to do is just pay.”

Octa’s widow said she first discovered that her husband had money problems when five men showed up uninvited at their Tangerang home one night in October and said they had come to get money. Unable to collect, they slept on a terrace outside the front door.

In the following months, debt collectors kept calling — and Octa’s debts kept rising because of hefty interest.

Sounds like a Mafia movie! Will that start happening here after the Republicans remove all regulations?

Matt Taibbi has a new article at Rolling Stone: Is the SEC Covering Up Wall Street Crimes?

Imagine a world in which a man who is repeatedly investigated for a string of serious crimes, but never prosecuted, has his slate wiped clean every time the cops fail to make a case. No more Lifetime channel specials where the murderer is unveiled after police stumble upon past intrigues in some old file – “Hey, chief, didja know this guy had two wives die falling down the stairs?” No more burglary sprees cracked when some sharp cop sees the same name pop up in one too many witness statements. This is a different world, one far friendlier to lawbreakers, where even the suspicion of wrongdoing gets wiped from the record.

That, it now appears, is exactly how the Securities and Exchange Commission has been treating the Wall Street criminals who cratered the global economy a few years back. For the past two decades, according to a whistle-blower at the SEC who recently came forward to Congress, the agency has been systematically destroying records of its preliminary investigations once they are closed. By whitewashing the files of some of the nation’s worst financial criminals, the SEC has kept an entire generation of federal investigators in the dark about past inquiries into insider trading, fraud and market manipulation against companies like Goldman Sachs, Deutsche Bank and AIG. With a few strokes of the keyboard, the evidence gathered during thousands of investigations – “18,000 … including Madoff,” as one high-ranking SEC official put it during a panicked meeting about the destruction – has apparently disappeared forever into the wormhole of history.

Under a deal the SEC worked out with the National Archives and Records Administration, all of the agency’s records – “including case files relating to preliminary investigations” – are supposed to be maintained for at least 25 years. But the SEC, using history-altering practices that for once actually deserve the overused and usually hysterical term “Orwellian,” devised an elaborate and possibly illegal system under which staffers were directed to dispose of the documents from any preliminary inquiry that did not receive approval from senior staff to become a full-blown, formal investigation. Amazingly, the wholesale destruction of the cases – known as MUIs, or “Matters Under Inquiry” – was not something done on the sly, in secret. The enforcement division of the SEC even spelled out the procedure in writing, on the commission’s internal website. “After you have closed a MUI that has not become an investigation,” the site advised staffers, “you should dispose of any documents obtained in connection with the MUI.”

I haven’t finished the article yet, but it sounds like an important story.

I’m going to end with a couple of feel-good stories.

Father of 2 becomes hero in abducted girl’s rescue

ALBUQUERQUE, N.M. — The timing was just right for saving the life of a 6-year-old girl and for turning a 24-year-old mechanic and father of two young daughters into a hero.

It was coincidence that Antonio Diaz Chacon had come home from work early to spend time with his family Monday afternoon. It was also a coincidence that the family’s washing machine had just gone out, forcing them to do laundry a block down the road at a relative’s home.

Had it not been for that, Diaz Chacon wouldn’t have been there to see the girl thrown into a van as another neighbor yelled for the would-be kidnapper to let the child go.

Diaz Chacon is credited with saving the girl after chasing the van through a maze of neighborhoods to the edge of where Albuquerque’s sprawling housing developments meet the desert. It was there where the van crashed into a pole, the suspect fled and Diaz Chacon was able to rescue the girl and take her home.

Go read the whole thing. It’s good to know there are still brave and generous people out there who act selflessly just because someone needs help. And here’s another story about a heroic rescue–by an 8-year-old boy.

Just 8 years old and a novice swimmer, Jesus [Lara] reacted quickly last weekend to save a drowning infant from the bottom of a pool. On Thursday morning, the Plano Fire Department recognized his life-saving actions and explained how grateful they were for his quick reaction.

[….]

Jesus has only been swimming for two months. His father Henry began teaching him to swim in the pool at the Estancia Apartments where they live. Henry said after a long day of work Friday, Aug. 5, he kept his promise to take his son to the pool that night.

While Jesus was swimming, he noticed some bubbles coming from an object under the water.

Jesus Lara being honored by fire department

The bubbles were coming from a 21-month-old toddler who had stumbled into the water.

“I grabbed a quick breath, and I dove under,” he said.

Jesus resurfaced holding a 21-month-old boy and arms outstretched, he yelled for his father to help.

“It was what he said that spoke volumes to me,” Henry said, remembering the boy’s words, “I found him at the bottom of the pool.”

Jesus’ father knew CPR and was able to resuscitate the child, who is now “doing fine.”

Those are my recommended reads for today. What are you reading and blogging about?


Tuesday Reads: Victims of LI Serial Killer Were More Than Just “Hookers”

Good morning, everyone. I’m going to do something a little different today. I’m want to focus on the unfolding story of the presumed serial killer on Long Island and take a look at the lives of the murdered and missing women who have been identified.

A couple of days ago, I decided to try reading Matt Taibbi’s latest screed in Rolling Stone. I commend Taibbi for his research and his efforts to explain in plain English what the Wall Street criminals are up to, but I simply couldn’t make it past the first paragraph of his piece. Here is the portion that stopped me in my tracks:

According to popular legend, we’re broke and in so much debt that 40 years from now our granddaughters will still be hooking on weekends to pay the medical bills of this year’s retirees from the IRS, the SEC and the Department of Energy.

Really. Is that the only job Taibbi can imagine for our struggling grandaughters? And what will “our grandsons” be doing? I’ve got a really low tolerance for misogyny these days, and Taibbi long ago showed himself to be a woman-hater. The idea that this man thinks his offhand remark about “hooking” is humorous just turned my stomach.

Thanks, but no thanks, Matt. I’ve just about had it with your pathetic attempts to imitate Hunter S. Thompson. He was pretty crude, but he also managed to be funny. I think I’ll just stick with reading Dakinikat’s writing on economics. She actually knows what she’s talking about too.

I was especially sensitive to the rude remark about young women prostituting themselves for money, because I’ve been following the story of the latest vicious murderer of women–the Long Island serial killer, who murdered women who advertised their sexual services on Craigslist and other on-line sites.

Serial murderers often target women who work in the sex trade because they see these women as throwaways who probably won’t be missed right away. They are also easy to pick up, because their jobs involve interactions with strange men. From Salon

A report was released last month finding that 70 percent of known victims of serial killers are women (consider that only 22 percent of homicide victims in general are female); and it turns out sex workers are 18 times more likely than “normal” women to be murdered. Why might this be? Well, in the words of the Green River Killer, who targeted prostitutes:

I picked prostitutes as victims because they were easy to pick up without being noticed. I knew they would not be reported missing right away and might never be reported missing. I picked prostitutes because I thought I could kill as many of them as I wanted without getting caught.

Since they’re doing illegal work, sex workers have to be secretive and discreet. They often work in isolated and industrial areas. They get in cars with strangers. There are rarely detailed records of transactions. Many are drug addicts and estranged from their families, so they are less likely to be reported missing. Anyone who knows anything about a girl’s whereabouts is likely involved in the trade themselves, so they aren’t super eager to speak with police. What’s more, as we saw with the Robert Pickton case in Vancouver, police sometimes discount tips from working girls (all the more reason to not risk talking to them in the first place).

From what I’ve read about sexual serial killers, they tend have a lot of rage and hatred against women, often because of their relationships with their mothers or some other powerful woman in their lives. They may have difficulties connecting with “normal” women, and so they seek out women they can get easy access to and make them pay for their own inadequacies.

But women who work as prostitutes are human beings, and they have families just like everyone else. When they disappear or die, someone usually cares and grieves at the loss.

I’m going to summarize what is known about the four victims who were discovered back in December 2010. They all appear to have been murdered by the same perpetrator. The women were strangled and their bodies were found in burlap bags.

So far ten bodies have been recovered by police on Long Island beaches, and six are still unidentified. It isn’t yet clear if all of these bodies are connected to the four identified victims, but they were all disposed of in the same general location. Shannon Gilbert, a woman whose disappearance sparked the search that led the police to locate the bodies, is still missing.

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Tuesday Reads

Good Morning!

By now, you probably have heard that diplomat Richard Holbrooke has died at the age of 69 from an aorta tear.  His obits are chock-full of some amazing accomplishments.  Here’s one example from CNN.

Holbrooke was best known for being “the chief architect of the 1995 Dayton Peace Agreement” that ended the Bosnian war — the deadly ethnic conflict in the 1990s that erupted during the breakup of Yugoslavia.

Serving President Bill Clinton as assistant secretary of state for Europe from 1994 to 1996, Americans got a taste of Holbrooke’s drive and intellect, as typified in this remark from “To End a War” — his memoir of the Dayton negotiations.

“The negotiations were simultaneously cerebral and physical, abstract and personal, something like a combination of chess and mountain climbing,” he wrote.

After President Obama took office in 2008, Holbrooke took one of the toughest diplomatic assignments — U.S. special representative for Afghanistan and Pakistan, the region Obama regards as center of the war on terrorism.

He rated a great one at the Grey Lady.

More recently, Mr. Holbrooke wrestled with the stunning complexity of Afghanistan and Pakistan: how to bring stability to the region while fighting a resurgent Taliban and coping with corrupt governments, rigged elections, fragile economies, a rampant narcotics trade, nuclear weapons in Pakistan and the presence of Al Qaeda, and presumably Osama bin Laden, in the wild tribal borderlands.

One of his main tasks was to press President Hamid Karzai of Afghanistan to take responsibility for security in his country and to confront the corruption that imperils the American mission there. At times, Mr. Karzai refused to see him, but Mr. Holbrooke was undeterred.

“He’s an enormously tough customer,” Mr. Holbrooke said during one of the periodic breakfasts he had with reporters who covered his diplomatic exploits. “As you’ve heard,” he added with a smile, “so am I.”

He helped his boss, Mrs. Clinton, whom he had supported in her presidential bid, to persuade Mr. Obama to send more troops to Afghanistan, while pressing for more aid and development projects to improve the United States’ image there. But he died before anyone knew if the experiment would succeed.

A brilliant, sometimes abrasive infighter, he used a formidable arsenal of facts, bluffs, whispers, implied threats and, when necessary, pyrotechnic fits of anger to press his positions. President Obama, who praised Mr. Holbrooke on Monday afternoon at the State Department as “simply one of the giants of American foreign policy,” was sometimes driven to distraction by his lectures.

As we posted yesterday, a huge Senate Majority voted to advance the Obama-McConnell Tax deal.  Only 15 senators voted to stop Cloture. The up or down vote will be scheduled for either today or tomorrow. Stay tuned. We’ll follow the details here.

Fifteen lawmakers voted against it, including five Republicans: Sens. Tom Coburn (Okla.), Jim DeMint (S.C.), Jeff Sessions (Ala.), John Ensign (Nev.) and George Voinovich (Ohio).

Nine Democrats and one independent voted against the bill: Sens. Jeff Bingaman (N.M.), Sherrod Brown (Ohio), Russ Feingold (Wis.), Kirsten Gillibrand (N.Y.), Kay Hagan (N.C.), Frank Lautenberg (N.J.), Pat Leahy (Vt.), Carl Levin (Mich.), Mark Udall (Colo.) and Sanders.

“It makes no sense to me to provide huge tax breaks for millionaires and billionaires while we drive up the national debt that our children and grandchildren will have to pay,” Sanders said in a statement after the vote.

Obama applauded the Senate’s action to move his tax cut compromise with Republicans and urged the House to do the same quickly.

In a statement in the White House briefing room, Obama hailed the Senate’s “strong bipartisan support” for the package and declared “this proves that both parties can in fact work together.”

BostonBoomer brought this my attention so I thought I’d post it.  Is there a Real-Life Da Vinci code in the Mona Lisa?  Cue the Twilight Zone Music.

Intrigue is usually focused on her enigmatic smile.

But the Mona Lisa was at the centre of a new mystery yesterday after art detectives took a fresh look at the masterpiece – and noticed something in her eyes.

Hidden in the dark paint of her pupils are tiny letters and numbers, placed there by the artist Leonardo da Vinci and revealed only now thanks to high-­magnification techniques.

Speaking of secrets, I’ve been looking into the status of Credit Derivatives since Frank-Dodd passed and the NY Times had an article up on Sunday on secret meetings of  a secret Derivatives Dealers Club of 9 on Sunday.  FiscalLiberal and I have been trying to figure out if all the news actually actually reveals anything.    The Financial Times did an update on the area that is an interesting read but doesn’t really say anything’s been solved or changed.

Yet like one of those teenaged vampires on television, the CDS market keeps coming back to life. For example, activity in sovereign CDS is up by a third this year, as speculators and hedgers bet they know more than their counterparties about the probability or timing of Greek or Irish defaults. And no, the sovereign CDS tail is not wagging the sovereign bond dog. For example, there are about $25bn of outstanding CDS on Italy, compared with some $2,000bn of actual Italian bonds.The essential point to remember is that credit derivatives don’t matter very much in determining the state of the real world. The industry, worldwide, almost certainly doesn’t employ more than 10,000 people. It is intended to be a zero-sum business.

The original, modest, purpose of CDS was to provide a low-transaction-cost means of distributing illiquid credit risks around European banks, so as to reduce their risk concentration. Then, the justification became the ease and low cost of hedging credit by buying protection through CDS, rather than going through the expense and uncertainty of maintaining short positions in bonds.

We would all be better off if there were laws to make the majority of these things exchange-traded but  it won’t happen unless governments write the laws.  BostonBoomer knew I’ve been trying to write about this and pointed me to the KO show last night and an interview with Matt Taibbi.  You may want to watch the video at the link.  They talk about the nine dealers from the NY Times link above.  These guys have been blocking the formation of exchanges and lobby hard to keep these things opaque.  You may have read me talk about how information asymmetry relieve messes up a market.  This is a prime example. This KO-Taibbi conversation is easily understood.  I was pretty impressed by what it covered.   KO also throws a gratuitous slam at Obama and Orzag so you might want to watch that just to see how the worm has turned.  Hopefully, I’ll figure out a way to explain this thing simply and have the complete post later.  I’m still trying to get more details.  In my doctoral program, every one saves their one C for the Derivatives Theory course.  Pricing is based on a really complex mathematical model and the language of the deal is written by lawyers. It’s the stuff nightmares are made of!  The math proofs even makes the guys with masters in physics quake. It’s not an easy thing to explain, teach, study or figure out.  I think they like it that way. Like I said, information asymmetry.  Also, KO brings up some nasty stuff about Senator Scott Brown and donations too. Go check it out.

Speaking of nasty stuff, here’s a blast from the past from Slate and Christopher Hitchens. The title alone titillates: ‘How Can Anyone Defend Kissinger Now?  The Nixon tapes remind us what a vile creature Henry Kissinger is’.

Chatting eagerly with his famously racist and foul-mouthed boss in March 1973, following an appeal from Golda Meir to press Moscow to allow the emigration of Soviet Jewry, Kissinger is heard on the tapes to say:

The emigration of Jews from the Soviet Union is not an objective of American foreign policy. And if they put Jews into gas chambers in the Soviet Union, it is not an American concern. Maybe a humanitarian concern.

(One has to love that uneasy afterthought …)

In the past, Kissinger has defended his role as enabler to Nixon’s psychopathic bigotry, saying that he acted as a restraining influence on his boss by playing along and making soothing remarks. This can now go straight into the lavatory pan, along with his other hysterical lies. Obsessed as he was with the Jews, Nixon never came close to saying that he’d be indifferent to a replay of Auschwitz. For this, Kissinger deserves sole recognition.

It’s hard to know how to classify this observation in the taxonomy of obscenity. Should it be counted as tactical Holocaust pre-denial? That would be too mild. It’s actually a bit more like advance permission for another Holocaust. Which is why I wonder how long the official spokesmen of American Jewry are going to keep so quiet. Nothing remotely as revolting as this was ever uttered by Jesse Jackson or even Mel Gibson, to name only two famous targets of the wrath of the Anti-Defamation League. Where is the outrage? Is Kissinger—normally beseeched for comments on subjects about which he knows little or nothing—going to be able to sit out requests from the media that he clarify this statement? Does he get to keep his op-ed perch in reputable newspapers with nothing said? Will the publishers of his mendacious and purloined memoirs continue to give him expensive lunches as if nothing has happened?

Just a suggestion from me.  Drink your coffee before you go read that one. You may feel the need to spit at the screen.

One last depressing thing from the Wonk Room for advocates of GLBT rights.

This afternoon, White House Press Secretary Robert Gibbs refused to say that President Obama would call on the Senate to stay in session until it brought up the stand-alone measure to repeal Don’t Ask, Don’t Tell. In a series of passive replies to the Washington Blade’s Chris Johnson and the Advocate’s Kerry Eleveld, Gibbs didn’t directly urge the Senate to consider the measure, but said, “our hope is that the Senate will take this up again and we’ll see this done by the time the year ends.” “Don’t Ask, Don’t Tell and DREAM, along with government funding, are all in a basket of issues that are likely to come after” START, he argued earlier in the press briefing.

Asked by Eleveld why Obama has pledged to stay in DC until the Senate passed START but not DADT, Gibbs replied that the President would wait for the Senate to adjourn before leaving. Gibbs also refused to say if the administration was considering alternatives to legislative repeal …

Guess there’s more important things to do, like say, pass the Paris Hilton Inheritance Windfall Tax Breaks.

So, what’s on your reading and blogging list today?

Tales of the Vampire Squid

Great illustration of the classic movie The Sting by Francesco Francavilla

Matt Taibbi of the Rolling Stone spells out why Goldman Sachs is making all that money in a piece called “Wall Street’s Bailout Hustle”. The contents shouldn’t be new for any reader here because it basically spells out what we’ve been talking about for some time. Also, any avid reader of Yves over at Naked Capitalism or Karl Denninger at the Market Ticker will have also followed the heist of taxpayer monies. The good news is that the Rolling Stone has a much bigger audience. The bad news is that I don’t know at this point if what any of us say will really matter. The fix is in and has been in for some time.

We’ve talked about how by allowing the investment banks to become commercial banks,the FED opened the discount window to institutions that normally cannot borrow money there or for that matter borrow any where that cheaply. Having your marginal cost of capital suddenly go to close to zero lets you invest in a lot of projects whose net present value would not be positive otherwise. Unfortunately, these ‘projects’ weren’t things like inventory loans or loans for new equipment which are items that generally are funded by commercial banks. The proceeds of the Fed loans were used to buy up deep discounted (by the Treasury) financial assets from the remnants of a failing AIG.

So the scam–as we’ve talked about in several posts–was pretty easy. First, you borrow from the FED at close to zero per cent interest. Then you get inside information on what’s going to be stripped out of AIG by then NY Fed chairman Timothy Geithner (who sees to it that the price is discounted to Filene’s Basement-levels) and you buy. Then, the NY Fed pre announces a program to buy whatever bad investments you may have on your book (including those deeply discounted AIG assets that you just bought at giveaway prices) so that you and your competitors can shift the assets around several times from place to place and run the price up. Just when the price goes up to an unreasonable level, you sell it to the FED. Then you stand in line for your huge bonus check in a few months for being a Master of the Universe when just about any freshman who took an investments course at the local community college could’ve figured out the same thing. La voilà! Fait accompli!

It would’ve been much cheaper for all of us if they’d have just bought the AIG assets directly but for some reason a bunch of folks in Washington D.C. insisted that the ‘market’ set the price. So, instead of having a phony price set by the FED directly, we had a scammed price set by investment banks. Was all this so Obama could say he’s a good capitalist and not a socialist or was it just away to dance with them that brought you? As we’ve also talked about before, Goldman Sachs and the FIRE lobby invested heavily in the Obama campaign.

So, if you want it spelled out a little bit more completely–with some much better prose than I can come up with–you can visit the Taibbi article and weep for your hard earned tax dollars. Here’s a great example of that.

Fast becoming America’s pre-eminent Marvel Comics supervillain, the CEO used the call to deploy his secret weapon: a pair of giant, nuclear-powered testicles.

No really. It’s a quote from the first paragraph. I swear I didn’t make it up. Nor did I make this up.

The only reason such apathy exists, however, is because there’s still a widespread misunderstanding of how exactly Wall Street “earns” its money, with emphasis on the quotation marks around “earns.” The question everyone should be asking, as one bailout recipient after another posts massive profits — Goldman reported $13.4 billion in profits last year, after paying out that $16.2 billion in bonuses and compensation — is this: In an economy as horrible as ours, with every factory town between New York and Los Angeles looking like those hollowed-out ghost ships we see on History Channel documentaries like Shipwrecks of the Great Lakes, where in the hell did Wall Street’s eye-popping profits come from, exactly? Did Goldman go from bailout city to $13.4 billion in the black because, as Blankfein suggests, its “performance” was just that awesome? A year and a half after they were minutes away from bankruptcy, how are these assholes not only back on their feet again, but hauling in bonuses at the same rate they were during the bubble?

The answer to that question is basically twofold: They raped the taxpayer, and they raped their clients.

So, it explains pretty clearly how Wall Street made that money in a sort’ve pulp fictionish way which hopefully will bring some attention back to culprits like Timothy Geithner who basically was the “loan arranger” of the sting on taxpayers. If that’s what it takes to wake folks up to the scam behind the masters of the universe, then so be it. WAKE THE FUCK UP FOLKS!


Who Holds Wall Street Accountable?

If your answer included any of number regulators or congress with its oversight duties or the traditional media with its watchdog of the public duties sorta answer, that would be a wrong answer. There were so many articles today about past and present Wall Street tomfoolery that I almost forgot to check the Wall Street Journal or The Hill. Instead, I”m relying on my subscriptions to things I’m supposed to be reading in the bath tub with Chopin playing in the background and a glass of Pinot Grigio nearby. Today, the best read came from Vanity Fare and was written by Andrew Ross Sorkin. (My Vanity Fare showed up today along with my latest copy of The Economist with the cover shouting “After the Storm: How to make the best of the Recovery.” ) My bottom line is still that Wall Street caused this and they are not only NOT cleaning it up, they are not being cleaned up.

I’m also checking out Matt Taibbi and TaibBlog now that his infamous vampire squid article in July’s Rolling Stone defined the shadowy world of Goldman Sachs better than just about any thing I’ve recently read. Matt’s blog today takes on naked selling or ‘naked swindling’ in the succinct framing of the Wall Street Deal that I now consider better jargon than that of the derivatives blah blah blah that I was taught in any of my PhD level corporate finance or investment classes. I may be able to do the proof for the Black Scholes formula but I will never be able to prove its social usefulness.

Actually, this takes me back to the Grey Lady and my first read of the day about the now bankrupt Simmons Bedding company that was the cash cow purposely inflicted with mad cow disease. Now days, it’s still more about the arbitrage deal and the leveraged deal that produces dividends than it is about what a company produces and the lives of the workers and long time managers who produce valuable stuff. It’s no longer build it and they will come. It’s leverage it to the hilt, take your dividends now, and find the next sucker with the next model that can hyperactivate the milking machine. It’s another real life example of Gordan Gekko and the greed is good speech. Spend some time with the Simmons story before you hit Taibblog and definitely the Sorkin article in Vanity Fare. It’ll put you in the right frame of mind.

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When Will They Ever Learn?

The Blogging Econ heads are still news makers today as we have more and more reports of record profits at Goldman pigs-playing-poker1Sachs and examples of blatant corportist propaganda at CNBC. I learned yesterday that many folks are listening, it just isn’t necessarily the ones shaping and setting policy. We also see a completely unsustainable budget coming down the pipe per the Director of the CBO. Why is it that policy makers seem to want us in dire straights? Are their sources of campaign funds so sacred that they’re willing to bring down the U.S. economy? Where does a Cassandra start?

Matt Taibbi and Paul Krugman focus in on the GS profits. So, I’m all for making a decent rate of return, that’s necessary to keep a company in business and it’s required to attract capital to grow a market. However, record setting, extraordinary profits are symptoms of a market out-of-whack. In the most simplest of analysis it could mean there are minimally too few providers of a service which can also lead to some form of market manipulation, information hiding, or information asymmetry allowing them to reap extraordinary profits. I basically think we’re seeing GS game the market based on raiding underpriced AIG assets with a free source of capital. This means the profits are straight from taxpayer funding. No wonder these guys don’t want to pony up any equity to us based on profitability and want to dump TARP funds (with their compensation restrictions) as quickly as possible. How can Washington miss that they’re back at their same old games?

This is from Taibbi who basically lays it out. They’re taking our tax dollars and buying assets with tax dollar in government-selected subsidized fire sales, creating arbitrage profits (some through their own huge market shares now that much of their competition is gone) and churning themselves some nice bonuses. In music, that’s called riding the gravy train. It’s a no risk, no brainer, no lose situation. Why would that require bonuses? [You can mark my words on this. They looted (with government enabling) AIG and the next one up will be CIT.]

So what’s wrong with Goldman posting $3.44 billion in second-quarter profits, what’s wrong with the company so far earmarking $11.4 billion in compensation for its employees? What’s wrong is that this is not free-market earnings but an almost pure state subsidy.

Krugman, a microeconomist with specializations in trade theory, sees it too.

The American economy remains in dire straits, with one worker in six unemployed or underemployed. Yet Goldman Sachs just reported record quarterly profits — and it’s preparing to hand out huge bonuses, comparable to what it was paying before the crisis. What does this contrast tell us?

First, it tells us that Goldman is very good at what it does. Unfortunately, what it does is bad for America.

Second, it shows that Wall Street’s bad habits — above all, the system of compensation that helped cause the financial crisis — have not gone away.

Third, it shows that by rescuing the financial system without reforming it, Washington has done nothing to protect us from a new crisis, and, in fact, has made another crisis more likely.

Meanwhile, back in the Main Stream Media, also known as the Wall Street and K Street propaganda factory, CNBC has tired to rosy up Dr. Doom’s forecasts to enable its masters arbitrage profits. Roubini made it clear that his views on the economy have remained unchanged despite the attempts to make it look otherwise.

Nouriel Roubini, the economist whose dire forecasts earned him the nickname “Doctor Doom,” said after markets closed Thursday that earlier reports claiming he sees an end to the recession this year were “taken out of context.”

“It has been widely reported today that I have stated that the recession will be over ‘this year’ and that I have ‘improved’ my economic outlook,” Roubini said in a prepared statement. “Despite those reports … my views expressed today are no different than the views I have expressed previously. If anything my views were taken out of context.”

Several business news outlets, picking up on a report initially from Reuters, earlier Thursday cited Roubini as saying that the worst of the economic financial crisis may be over.

The New York University professor was quoted by Reuters as saying that the economy would emerge from the recession toward the end of 2009.

Reports of his comments helped trigger a late rally in the stock market.

Did you read that bit about triggering a late rally in the stock market? Pity the poor suckers that believed CNBC and of course, watch the deposits grow of the folks that placed the offsetting market transactions. And, let’s see, which market insiders would probably know that was BS? I don’t think you have to be Ms. Marple or an SEC investigator to figure that one out. It was just a simple mistake, wasn’t it?

Factors Explaining Future Federal Spending on Medicare, Medicaid, and Social Security (Percentage of GDP)
Factors Explaining Future Federal Spending on Medicare, Medicaid, and Social Security (Percentage of GDP)

Another thing that really has sugared my cookies is this report coming out of the Congressional Budget Office (CBO) one of the few bastions of economic thought in the beltway that tries to look out for the real constituents of Washington D.C.. The Director of the CBO,Doug Elmendorf, had this to say to a Senate Committee followed by a post to his blog.

The current recession and policy responses have little effect on long-term projections of noninterest spending and revenues. But CBO estimates that in fiscal years 2009 and 2010, the federal government will record its largest budget deficits as a share of GDP since shortly after World War II. As a result of those deficits, federal debt held by the public will soar from 41 percent of GDP at the end of fiscal year 2008 to 60 percent at the end of fiscal year 2010. This higher debt results in permanently higher spending to pay interest on that debt. Federal interest payments already amount to more than 1 percent of GDP; unless current law changes, that share would rise to 2.5 percent by 2020.

There’s also his bottom line.

Under current law, the federal budget is on an unsustainable path, because federal debt will continue to grow much faster than the economy over the long run. Although great uncertainty surrounds long-term fiscal projections, rising costs for health care and the aging of the population will cause federal spending to increase rapidly under any plausible scenario for current law. Unless revenues increase just as rapidly, the rise in spending will produce growing budget deficits. Large budget deficits would reduce national saving, leading to more borrowing from abroad and less domestic investment, which in turn would depress economic growth in the United States. Over time, accumulating debt would cause substantial harm to the economy.

Okay, am I just being a little too wonky here or are these three things perfectly clear to any one who has the audacity to be informed?

Norway, anyone?
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