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?
There’s been quite a few economists weighing in on the debate going on in congress about the budget. Paul Krugman’s op-ed is on “The Austerity Delusion”. Krugman’s appalled that more policymakers aren’t concerned with the high rate of unemployment which is contributing to the deficit in several ways. First, it decreases tax revenues. Second, it increases state and federal expenditures. Solve the jobs problem and the deficit will decrease. He’s worried that all this austerity will just bring on another economic slowdown.
Why not slash deficits immediately? Because tax increases and cuts in government spending would depress economies further, worsening unemployment. And cutting spending in a deeply depressed economy is largely self-defeating even in purely fiscal terms: any savings achieved at the front end are partly offset by lower revenue, as the economy shrinks.
So jobs now, deficits later was and is the right strategy. Unfortunately, it’s a strategy that has been abandoned in the face of phantom risks and delusional hopes. On one side, we’re constantly told that if we don’t slash spending immediately we’ll end up just like Greece, unable to borrow except at exorbitant interest rates. On the other, we’re told not to worry about the impact of spending cuts on jobs because fiscal austerity will actually create jobs by raising confidence.
Politico features a series of Former CEA members who signed a letter of concern on the deficit and unsustainable US Budgets. Too bad that people like Greg Mankiw–advisor to Dubya–didn’t speak up when the spending problems were originated. They mostly trace to Reagan and Bush administrations. They all suggest using the Cat food commission report as the focus of discussions. Hang on to your social security, folks! It’s going to be a bumpy ride.
As former chairmen and chairwomen of the Council of Economic Advisers, who have served in Republican and Democratic administrations, we urge that the Bowles-Simpson report, “The Moment of Truth,” be the starting point of an active legislative process that involves intense negotiations between both parties.
There are many issues on which we don’t agree. Yet we find ourselves in remarkable unanimity about the long-run federal budget deficit: It is a severe threat that calls for serious and prompt attention.
While the actual deficit is likely to shrink over the next few years as the economy continues to recover, the aging of the baby-boom generation and rapidly rising health care costs are likely to create a large and growing gap between spending and revenues. These deficits will take a toll on private investment and economic growth. At some point, bond markets are likely to turn on the United States — leading to a crisis that could dwarf 2008.
“The Moment of Truth” documents that “the problem is real, and the solution will be painful.” It is tempting to act as if the long-run budget imbalance could be fixed by just cutting wasteful government spending or raising taxes on the wealthy. But the facts belie such easy answers.
I suppose you know the professional insane Republican Michelle Bachmann is forming an exploratory committee for a possible presidential run. I’d vote for any one’s dog before I’d consider Bachmann who doesn’t appear to have paid attention to any course she ever attended in school. I’ve never in my life heard any one outside of maybe a grade school that has such a bad grasp of American History, law, and politics. I think she should’ve just gotten a mail order degree. Education appears to have been wasted on her.
CNN has exclusively learned that Rep. Michele Bachmann will form a presidential exploratory committee. The Minnesota Republican plans to file papers for the committee in early June, with an announcement likely around that same time.
But a source close to the congresswoman said that Bachmann could form the exploratory committee even earlier than June so that she could participate in early Republican presidential debates.
“She’s been telling everyone early summer,” the source told CNN regarding Bachmann’s planned June filing and announcement. But the source said that nothing is static.
“If you [debate sponsors] come to us and say, ‘To be in our debates, you have to have an exploratory committee,’ then we’ll say, ‘Okay, fine…I’ll go file the forms.'”
Speaking of Republicans, a former aide to Sen. John Ensign has just been indicted for violating conflict of interest laws.
The Justice Department announced the indictment late Thursday, which charges Doug Hampton with seven counts of violating criminal conflict of interest laws for allegedly engaging in unlawful communication with Ensign’s office, violating the Senate’s “revolving door” policy.
According to the indictment, after Hampton left Ensign’s office in 2008 he “knowingly and willfully made, with the intent to influence, communications to staff members of the U.S. senator” on behalf of an energy company he was employed by at the time.
Hampton is alleged to have sought the assistance of Ensign and other staff members for help in moving forward a proposal to build a power plant in eastern Nevada.
Hampton, if convicted, could face up to five years in prison for each of the seven counts in the indictment. He is set to be arraigned in U.S. District Court in Washington, D.C. on March 31.
Ensign is retiring. Probably because of all the scuttlebutt around his affairs and possibly what may come out of this prosecution. Maybe Tom Delay will have a new cell mate on the way.
Glenn Greenwald has written an excellent piece in Salon on withering Miranda rights under the Obama administration. You may want to check it out.
The number of instances in which Obama has violently breached his own alleged principles when it comes to the War on Terror and the rule of law are too numerous to chronicle in one place. Suffice to say, it is no longer provocative or controversial when someone like Yale Law Professor Jack Balkin writes, as he did the other day, that Obama “has more or less systematically adopted policies consistent with the second term of the George W. Bush Administration.” No rational person can argue that or even tries to any longer. It’s just a banal expression of indisputable fact.
Today, the Obama DOJ unveiled the latest — and one of the most significant — examples of its eagerness to assault the very legal values Obama vowed to protect. The Wall Street Journal reports that “new rules allow investigators to hold domestic-terror suspects longer than others without giving them a Miranda warning, significantly expanding exceptions to the instructions that have governed the handling of criminal suspects for more than four decades.” The only previous exception to the 45-year-old Miranda requirement that someone in custody be apprised of their rights occurred in 1984, when the Rehnquist-led right-wing faction of the Supreme Court allowed delay “only in cases of an imminent safety threat,” but these new rules promulgated by the Obama DOJ “give interrogators more latitude and flexibility to define what counts as an appropriate circumstance to waive Miranda rights.”
Just hope you never get classified as a terrorist or you’ll disappear down some rabbit hole. You should also read William Grieder over at The Nation on How Wall Street Crooks Get Out of Jail.
Instead of “Old Testament justice,” federal prosecutors seek “authentic cooperation” from corporations in trouble, urging them to come forward voluntarily and reveal their illegalities. In exchange, prosecutors will offer a deal. If companies pay the fine set by the prosecutor and submit to probationary terms for good behavior, perhaps an outside monitor, then government will defer prosecution indefinitely or even drop it entirely. The corporation thus avoids the stigma of a criminal trial and the bad headlines that depress stock prices. More to the point, the “deferred prosecution agreement,” as it’s called, allows the company to escape the more severe consequences of criminal conviction—the loss of banking and professional licenses, charters, deposit insurance or other government benefits, including eligibility for federal contracts and healthcare programs. In other words, the punishment prescribed in numerous laws.
“With cooperation by the corporation, the government may be able to reduce tangible losses, limit damage to reputation, and preserve assets for restitution,” the Justice Department’s authorizing memorandum explained in 2003. “A deferred prosecution or non-prosecution agreement can help restore the integrity of a company’s operations and preserve the financial viability of a corporation that has engaged in criminal conduct.”
The favored argument for the more conciliatory approach was that criminal indictment may amount to a death sentence for a corporation. The fallout will destroy it, and the economy will lose valuable productive capacity. The collateral consequences are unfair to employees who lose jobs and stockholders who lose wealth. Corporate defenders cited Arthur Andersen, the giant accounting firm that imploded after it was convicted in 2002 of multiple offenses in Enron’s collapse. But was it the firm’s indictment or its criminal behavior that caused clients, accountants and investors to abandon it?
A better name for the Justice Department’s softened policy might be “too big to prosecute.”
Wanna rob a bank? Don’t do it with a gun. Just become its President and do what you want to do.
Here’s a disturbing headline from Egypt (h/t to Minx):Secret shame of Egypt’s army: Women protesters were forced to have ‘virginity checks’ after being arrested in Tahrir Square,
Women arrested by the Egyptian police during protests in Cairo’s Tahrir Square were subjected to forced ‘virginity tests’, according to Amnesty International.
Eighteen demonstrators were detained after army officers cleared the square on March 9 at the end of weeks of protest.
Amnesty today said that the women had been beaten, given electric shocks and then subjected to strip searches while being photographed by male soldiers.
They were then given ‘virginity checks’ and threatened with prostitution charges if medics ruled they had had sex, according to the charity.
Just when you think things will get better, something comes along that just makes things look worse.
So, what’s on your reading and blogging list today?