Lazy Saturday Reads

Tom Wesselman Still Life #30, April 1963

Tom Wesselman Still Life #30, April 1963

Good Afternoon!!

I thought I’d put the “morning reads” up a little later to give you time to check out JJ’s cartoon posts. So . . . let’s see what’s happening out there today.

Well . . . Paul Volker was in Boston on Thursday night, and he talked to some richie-rich guys about income inequality. From The Boston Globe:

Speaking to a room filled with hundreds of Boston investment executives, former Federal Reserve chairman Paul Volcker asked some tough questions about income inequality in America. He called the earnings gap one of the economy’s greatest challenges.

“What accounts for this? What justifies it?’’ an animated Volcker asked. He argued that the trend started in the 1980s and accelerated in the 1990s, with the spread of stock option compensation creating vast wealth and risk-taking.

During that period, he said, the link between pay and performance got “entirely out of whack.’’

The elder statesman of Fed watchers and author of the Volcker Rule — part of the Dodd-Frank reform package after the financial crisis — was speaking before the Boston Security Analysts Society’s annual market dinner…

Good for him. Whether it will do any good is questionable, but these people need to hear about what they are doing to 99% of Americans.

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Just for the hell of it, I looked around for some more recent news articles about income inequality. There wasn’t a lot out there, but I did find a few interesting reads.

At the LA Times, Michael Hiltzik writes: Income inequality begins to hit business in the pocketbook. He argues that business is noticing that middle-class customers are disappearing.

The consumer market is beginning to look like a sandwich without meat in the middle–there are enough wealthy customers to keep the luxury market humming along, and a growing demand for cheap no-name and other bargain products.

The phenomenon has been reported by Matthew Yglesias of Slate.com and more recently by Nelson Schwartz of the New York Times. As we reported here and here, it’s been building for years. But it really picked up steam after the last recession, when the imbalance in income between the top 1% and everyone else has really taken off.

Most economists view the stranglehold of the wealthy on U.S. income and wealth as a problem–it leads to slower overall growth and more volatility. As economist Jared Bernstein has observed, it also promotes the creation of asset and credit bubbles, which have a tendency to burst, taking the rest of the economy with them.

The most important analysis of the economic impact of inequality has come from Barry Z. Cynamon and Steven M. Fazzari of Washington University in St. Louis. In a paper published last month, they ask two questions: “First, did rising inequality contribute in an important way to the unsustainable increase in household leverage that triggered the collapse in consumer demand and the Great Recession? Second, has the rise in inequality become a drag on demand growth…that has held back recovery?”

Their answer to both questions is yes. In simpler terms, rising inequality before the recession prompted U.S. households to borrow more to keep up their spending; when the debt frenzy ended (because of the bursting of the housing bubble) the economy crashed. Since then, the demand drag caused by the effect of inequality on the bottom 95% has held back recovery. The impact of inequality on the recovery, compared with previous recoveries, is shown in this stunning graph from their paper.

But Hiltzik notes that many oblivious pundits continue to deny the effects of the top 1% controlling most of the wealth.

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At The News Virginian, Jason Stanford finds some “good news” in the fact that most Republicans now agree that income inequality is a problem. 

Believe it or not, there is good news when it comes to income inequality. It turns out Republicans finally believe that the gap between rich and poor has become a problem. The bad news is, according to a new poll, is that Republicans think the best solution is cutting the taxes for the wealthy and big corporations so money and opportunity can rain down on the poor. Addressing poverty by ensuring that cash does not become lonely in the wallets of the wealthy is what passes for a Republican governing philosophy these days, and it is exactly why Barack Obama has decided to go it alone on income inequality.

The issue isn’t that income inequality exists but that the wealthiest 1 percent has achieved the financial equivalent of escape velocity, leaving us poor folk back here on Planet Broke. In 1982, the top 1 percent highest-earning families took home one out of every $10. Now they get more than twice that, leaving the other 99 percent of us to make do on less. The last time it was this bad was the Gilded Age, and majorities of Republicans, Democrats and Independents agree it’s time to do something about it.

OK, so Republicans see the problem, but they want to address it with the same old tired trickle-down non-solutions. I’m not really sure that qualifies as good news. Better than nothing, I guess.

At the Akron Beacon Journal, Rick Armon writes about “an American success story.” Thanks to government programs like Social Security and Medicare, not as many seniors are living in poverty as they did in the past.

Fifty years after President Lyndon Johnson declared the War on Poverty, at least one group of Americans is much better off today: senior citizens.

The percentage of seniors nationwide living below the poverty line has plummeted from 27 percent to 9 percent today, according to a Beacon Journal analysis of census data….

Today, there are 3.7 million seniors living in poverty, compared with 5.2 million in 1969, when the 1970 census was conducted.

The reasons are pretty simple, experts say: It’s a combination of Social Security, pensions, 401(k) programs and Medicare that has kept more elderly people from slipping into poverty.

Armon says those figures may be a little too optimistic (read the details at the link); but still, it’s progress.

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Yesterday everyone was talking about Asst. Sec. of State Victoria Nuland’s bugged phone call  with the US ambassador to Ukraine in which she uttered the words “fuck the EU,” apparently using an unencrypted cell phone. Someone posted portions of the call to Youtube, and the U.S. has accused Russia of tapping Nuland’s phone. Read all the gossipy details at BBC News.

Of course Russia is accusing the U.S. of “meddling” in the Ukraine crisis. From The New York Times:

KIEV, Ukraine — The tense Russian-American jockeying over the fate of Ukraine escalated on Thursday as a Kremlin official accused Washington of “crudely interfering” in the former Soviet republic, while the Obama administration blamed Moscow for spreading an intercepted private conversation between two American diplomats.

An audiotape of the conversation appeared on the Internet and opened a window into American handling of the political crisis here, as the two diplomats candidly discussed the composition of a possible new government to replace the pro-Russian cabinet of Ukraine’s president, Viktor F. Yanukovych. It also turned the tables on the Obama administration, which has been under fire lately for spying on foreign leaders.

The developments on the eve of the Winter Olympics opening in Sochi, Russia, underscored the increasingly Cold War-style contest for influence here as East and West vie for the favor of a nation of 45 million with historic ties to Moscow but a deep yearning to join the rest of Europe. The tit for tat has been going on since November, when Mr. Yanukovych spurned a trade deal with Europe and accepted a $15 billion loan from Moscow. Months of street protests have threatened his government, and American officials are now trying to broker a settlement — an effort the Kremlin seems determined to block.

There’s a lot more background on the Ukraine situation in the NYT article.

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If the problems in Ukraine weren’t enough, anti-government protests have now broken out in Bosnia-Hertzegovina. The Guardian reports:

Thousands of Bosnian protesters took to the streets in the centre of Sarajevo on Friday, setting fire to the presidency building and hurling rocks and stones at police as fury at the country’s political and economic stagnation spread rapidly around the country.

As many as 200 people were injured in protests that took place in about 20 towns and cities. Government buildings were set on fire in three of the largest centres – Sarajevo, Tuzla and Zenica.

At one point in the central Bosnian city of Tuzla, some of the 5,000-strong crowd stormed into a local government building and hurled furniture from the upper stories….

The scenes in Sarajevo were similarly fraught on Friday night, as fire raged through the presidency building and hundreds of people hurled stones, sticks and whatever else they could lay their hands on to feed the blaze. Police used rubber bullets, tear gas and water cannon trying to disperse the crowd. Buildings and cars were also burning in downtown Sarajevo and riot police chased protesters….

The protests have bubbled up out of long-simmering discontent at a sluggish economy, mismanagement, corruption and unemployment, which is rising irresistibly towards 30%. Bosnia has been hamstrung by political infighting and deadlock between its three main ethnic groups – Bosniaks, Croats and Serbs – in the near 20 years since its three-year civil war ended in 1995. The economy has suffered as a result, and the population remains deeply sceptical of a political class widely believed to be ruling in the interests of the elite, not the people.

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There continues to be plenty of surveillance news–both about NSA, and more recently about Russia’s intelligence agencies and their security measures activities around the Sochi Winter Olympic Games. This article from The Moscow Times by Andrei Soldatov provides a good overview: FSB Makes Eavesdropping an Olympic Event. In NSA news, Glenn Greenwald and friends have stepped up their publishing activities in the run-up to the unveiling of their First Look news site, planned for Monday. I’ll just share a couple of items with you.

A little more than a week ago Greenwald worked with CBC reporters to “break” a story about alleged spying  by Canada’s equivalent of NSA on airport passengers that supposedly continued for days after they left the airport. As usual, the report was deeply flawed, as explained by Matthew Aid, author of The Secret Sentry: The Untold History of the National Security Agency: Analysis Indicates Recent CBC Story About Canadian SIGINT Agency Spying on Travellers Incorrect.

On January 30, the Canadian television channel CBC broke a story written by Greg Weston, Glenn Greenwald and Ryan Gallagher, saying that the Communications Security Establishment Canada (CSEC), which is Canada’s equivalent of NSA, used airport WiFi to track Canadian travellers – something which was claimed to be almost certainly illegal. This story was apperently based upon an internal CSEC presentation (pdf) from May 2012 which is titled “IP Profiling Analytics & Mission Impacts.”

However, as is often the case with many of the stories based on the Snowden-documents, it seems that the original CSEC presentation was incorrectly interpreted and presented by Canadian television.

Read all the gory details at the Aid’s blog.

Then yesterday, Greenwald–in collaboration with NBC News–released a truly bizarre article, Snowden Docs: British Spies Used Sex and ‘Dirty Tricks’, that reveals methods and sources for the GCHQ’s efforts to arrest malicious hackers, criminals, and terrorists, and to prevent nuclear proliferation. You have to wonder why NBC news thought those efforts were somehow wrong or illegal. I’m running out of space, so I’ll let Bob Cesca explain the problems with this story.

There’s one sentence in the new Glenn Greenwald revelation for NBC News that renders everything that follows mostly irrelevant. It’s the lede. And not even the entire lede — just the first part of it.

British spies have developed “dirty tricks” for use against nations, hackers, terror groups, suspected criminals and arms dealers…

The only sane reaction to this news should be, “Great!” We don’t really need to know anything else. But that didn’t stop Greenwald and NBC News from spilling the beans on operations that target such poor helpless victims as malicious hackers, the Taliban, Iran and, yes, terrorists dealing in loose nukes.

See more examples at The Daily Banter. Cesca sums up:

Regardless, what we’re looking at here is another leak from Greenwald & Company that tips off some of our most dangerous enemies including and especially the looming threat of nuclear proliferation and loose nukes. These leaks have been published yet again under the banner of the public interest, but it’s difficult to see any public interest in an operation expressly aimed at those who even the article admits are our “enemies.”

Greenwald has been publishing quite a few leaks about British spying lately. I have to assume that this is his threatened revenge for the Brits detaining David Miranda at Heathrow airport last year. Pretty childish, if you ask me.

Now it’s your turn. What have you been reading and blogging about? Please share your links in the comment thread, and have a terrific weekend!


It’s Saturday!

Happy Saturday Sky Dancers!! It’s a beautiful fall day here in Indiana, but I’m looking forward to getting back to Boston. I’ll be taking off in a couple of days and I hope to be home by Tuesday or Wednesday. My mom is going along for the ride so she can hang out with her youngest grandsons for awhile. It will be fun, because she’ll be there over Halloween. But enough about my boring life–let’s get to the news.

This story is a couple of days old, but still worth reading. Via BDBlue at Corrente, Which GOP candidate do you think has raised the most money from Wall Street?

Barack Obama!

Despite frosty relations with the titans of Wall Street, President Obama has still managed to raise far more money this year from the financial and banking sector than Mitt Romney or any other Republican presidential candidate, according to new fundraising data.

Obama’s key advantage over the GOP field is the ability to collect bigger checks because he raises money for both his own campaign committee and for the Democratic National Committee, which will aid in his reelection effort.

As a result, Obama has brought in more money from employees of banks, hedge funds and other financial service companies than all of the GOP candidates combined, according to a Washington Post analysis of contribution data. The numbers show that Obama retains a persistent reservoir of support among Democratic financiers who have backed him since he was an underdog presidential candidate four years ago.

And get this–Obama has raised nearly twice as much as Romney from the Mittster’s old firm, Bain Capital! So don’t believe all those stories in the media about the Wall Street titans switching to Mitt.

Here’s another “breaking news” story from Forbes: US Businesses Not Being Strangled By Regulation And Taxation, World Bank Says. Gee, no kidding? But the Republicans say that’s the main cause of our economic problems, don’t they?

The World Bank uses indicators such as time spent to set up a business to getting credit, among other things, in benchmarking the 183 countries it ranks in “Doing Business”. The report measures and tracks changes in the regulations applied to domestic companies in 11 areas in their life cycle–such as investors rights, taxation, cross border transactions, legality and enforcement of contracts and bankruptcy law. A fundamental premise of doing business is that economic activity requires good rules that are transparent and accessible to all, not just big business. Such regulations should be efficient, the World Bank states, striking a balance between safeguarding some important aspects of the business environment and avoiding distortions that impose unreasonable costs on businesses. “Where business regulation is burdensome and competition limited, success depends more on whom you know than on what you can do. But where regulations are relatively easy to comply with and accessible to all who need to use them, anyone with talent and a good idea should be able to start and grow a business (legally),” the World Bank said.

Where does the supposed regulation and taxation crippled U.S. stand in the rankings? It is number four, trailing behind New Zealand (3), Hong Kong (2) and Singapore (1).

What it looks like from the research desks at one of the most powerful and elite multilateral institutions on the planet is a U.S. that does not have the government in its way, but a U.S. whose government is more out of the way than it is in every other major economy on earth, including mainland China.

Wow, I wonder if Congressman Paul Ryan reads Forbes? Naaaah… probably too far left for him. And speaking of Ryan, he appeared at a town hall meeting in Muskego, WI yesterday and made a complete ass of himself as usual. From Think Progress:

During a town hall today, House Budget Committee Chairman Paul Ryan (R-WI) was asked by Matthew Lowe, a student, why the GOP wants to cut Pell Grants. Ryan responded by saying that the program is “unsustainable,” before telling Lowe that he should be working three jobs and taking out student loans to pay for college, instead of using Pell Grants:

LOWE: I come from a very middle-class family and under President Obama, I get $5,500 per year to pay for school, which doesn’t come close to covering all of the funding, but it helps ease the burden. Under your plan, you cut it by 15 percent. I was just curious why you would cut a grant that goes directly to the middle- and lower-class people that need it the most.

RYAN: ‘Cause Pell Grants have become unsustainable. It’s all borrowed money…Look, I worked three jobs to pay off my student loans after college. I didn’t get grants, I got loans, and we need to have a system of viable student loans to be able to do this.

That’s funny. I read that Ryan used his father’s Social Security survivor benefits to put himself through college. I’d like to see some documentation on those three jobs he claims he worked while attending classes, writing papers, and studying for exams. Besides, I’ll bet the unemployment rate for college-age kids wasn’t at depression levels back then.

And speaking of paying for college, here’s an interesting piece at Truthout by Ellen Brown: Can the Fed Prevent the Next Crisis by Eliminating Interest on Student Loan Debt?

Among the demands of the Wall Street protesters is student debt forgiveness – a debt “jubilee.” Occupy Philly has a “Student Loan Jubilee Working Group,” and other groups are studying the issue. Commentators say debt forgiveness is impossible. Who would foot the bill? But there is one deep pocket that could pull it off – the Federal Reserve. In its first quantitative easing program (QE1), the Fed removed $1.3 trillion in toxic assets from the books of Wall Street banks. For QE4, it could remove $1 trillion in toxic debt from the backs of millions of students.

The economy would only be the better for it, as was shown by the GI Bill, which provided virtually free higher education for returning veterans, along with low-interest loans for housing and business. The GI Bill had a sevenfold return. It was one of the best investments Congress ever made.

There are arguments against a complete student debt write-off, including that it would reward private universities that are already charging too much and it would unfairly exclude other forms of debt from relief. But the point here is that it could be done and it (or some similar form of consumer “jubilee”) would represent a significant stimulus to the economy.

According to Brown, student loan debt is “the next Black Swan.”

Here’s another stupid Republican story for you. Eric Cantor was scheduled to give a speech yesterday at the elite Wharton School of Business at the University of Pennsylvania. Cantor was to speak on what Republicans plan to do about income inequality. The school was so excited that they opened the talk to the public. In addition, there was to be a protest by several groups, including Occupy Philly.

Guess what Cantor did? He wimped out and cancelled. ROFLOL! From the LA Times:

Cantor was scheduled to speak on income inequity at a lecture hosted by the Wharton business school. The Virginia Republican’s office said he called off the speech after learning that protesters planned to rally outside and attendance would not be limited to students and others affiliated with the school.

Ron Ozio, director of media relations at University of Pennsylvania, said the business school “deeply regrets” that the event was canceled.

“The university community was looking forward to hearing Majority Leader Cantor’s comments on important public issues, and we hope there will be another opportunity for him to speak on campus,” Ozio said in a statement. “The Wharton speaker series is typically open to the general public, and that is how the event with Majority Leader Cantor was billed. We very much regret if there was any misunderstanding with the Majority Leader’s office on the staging of his presentation.”

This is pretty disgusting: Libyans line up to see Gaddafi’s body on display; groups call for probe into death

International human rights groups called Friday for an investigation into the death of former Libyan leader Moammar Gaddafi as gory new videos showed him being spat at and punched by revolutionaries and as skepticism mounted about official claims that he was shot in crossfire after being captured.

The new cellphone videos cast a shadow over the revolutionaries even as they were celebrating the end of their eight-month struggle to wrest control of the country. NATO had backed the rebels in the name of shielding pro-democracy civilians from Gaddafi’s brutality.

“The government version certainly does not fit with the reality we have seen on the ground,” said Peter Bouckaert of Human Rights Watch, who has been investigating the capture of Gaddafi in his home town of Sirte. Amnesty International warned that the killing could be a war crime.

Why do I suspect the U.S. Government gave the go-ahead for Gaddafi to be executed, just like Osama bin Laden? You might want to read Joseph Cannon’s take on this one.

Finally, late last night the Volker Rule was number 1 in Google’s top stories. From the NYT:

When Paul Volcker called for new rules in 2009 to curb risk-taking by banks, and thus avoid making taxpayers liable in the future for the kind of reckless speculation that caused the financial crisis and resulting bailout, he outlined his proposal in a three-page letter to the president.

Last year, when the Dodd-Frank Wall Street Reform and Consumer Protection Act went to Congress, the Volcker Rule that it contained took up 10 pages.

Last week, when the proposed regulations for the Volcker Rule finally emerged for public comment, the text had swelled to 298 pages and was accompanied by more than 1,300 questions about 400 topics.

Wall Street firms have spent countless millions of dollars trying to water down the original Volcker proposal and have succeeded in inserting numerous exemptions. Now they’re claiming it’s too complex to understand and too costly to adopt.

Gee, what a surprise. I wonder how many of those millions were taxpayer dollars?

So…what are you reading and blogging about today?