NY Rally Speakers highlight Core Democratic Values

Posted: April 15, 2011 | Author: | Filed under: Democratic Politics, financial institutions, Global Financial Crisis | Tags: , , | 4 Comments

A rally in NYC today highlighted issues and concerns that have been going unaddressed for some time in this country. The Nation highlights some of the featured speakers including Chris Hedges who says that President Obama is defying those core values supported by Democratic voters.

Pulitzer Prize-winning journalist Chris Hedges also spoke at the rally. Beforehand, I asked him if he thinks acts of civil disobedience such as the Wisconsin union protests are the only paths of recourse Americans have left to fight for change. “There’s a moral imperative to carry them out,” says Hedges. “[I]f we don’t begin to physically defend the civil society, all resistance will be ceded to very proto-fascist movements such as the Tea Party that celebrate the gun culture, the language of violence, seek scapegoats for their misery.”

He calls the state of America an “anemic democracy,” and says it’s time for citizens to get off the Internet and occupy the streets because their leaders no longer represent them. Politicians have spoken incessantly about the need for shared sacrifice when in fact they’re guarding a plutocracy that levies the burden of budget cuts on the shoulders of the poor. This is a system in which Bank of America’s CEO Brian Moynihan gets a $9 million bonus while one in four American children survives on food stamps.

Hedges calls the idea of shared sacrifice farcical. “[Bank of America] sends out home invasion teams to throw Americans out of their homes through bank repossessions or foreclosures, and of course many of these people were given loans that the lenders knew they could never repay often under fraudulent conditions…and yet there has been absolutely no investigation — no criminal charges — brought against these corporations.”

We live in a corporate state, Hedges stresses, both in our interview and later when he takes the stage. “Not only the money, but the wages, and retirement benefits, $17 trillion worth have been robbed by these financial institutions. It’s repugnant.”

And the one in six Americans without a job aren’t the ones going to raise money to get President Obama reelected. The money, Hedges says, will come from the corporate state, what he calls the “predators.” Hedges says President Obama serves their — not our — interests.

Obama’s most recent budget speech, in which he adopted some of the populist rhetoric about raising taxes on the wealthy, didn’t impress Hedges. After all, it was Obama who extended the Bush era tax cuts for the wealthy. “To watch him sort of talk out of both sides of his mouth is a little disconcerting,” says Hedges. “I fear, like most people, that not only are we going to see an extension of those cuts, but they’ll be cemented into place permanently.” Like many in the liberal class, Hedges says Obama “speaks in the rhetoric of traditional liberalism, but every action he takes defies the core values of the liberal tradition.”

Other groups also questioned the current economic policies dominating our national conversation.  Some of the most persuasive speech was associated with the financial crisis and its perpetrators.

Dave Petrovich, executive director of the Society For Preservation of Continued Homeownership, agrees with that sentiment. “The president, and most of our lapdog Congress, are employees of the banking industry, so they’re not going to really discuss this unless it’s in their own financial self-interest.” Bank of America was once again a central target of the protest since the company hasn’t paid a nickel in federal income taxes in the past two years and received a “income tax refund from hell” of $666 million for 2010. The protesters demand to know why a company that received $45 billion in taxpayer money during the bailout now gets to play by a different set of tax rules, while simultaneously paying out obscene bonuses to its CEO and kicking hardworking Americans out of their homes

There’s something fundamentally wrong with a system that bails out perpetrators of mass fraud and destruction and applauds the removal of safety nets from its victims.  This started me thinking that maybe we should come up with a list of what we consider liberal and democratic values.  Frankly, I consider civil liberties, respect for the Bill of Rights, and provision of services essential to public health, safety, and education to be central.  I also consider the idea that liberty and justice for all means for ALL and not just the rich and powerful.  It’s been apparent from that Goldman Sachs and Bank of American can get bailed out for all kinds of crime.  What kinds of things do you think should go on the list?

SEC: Finally Functional?

Posted: November 20, 2010 | Author: | Filed under: Breaking News, Equity Markets, Global Financial Crisis | Tags: , , , , , | 8 Comments

The SEC seemed captured by insiders for so long and was so badly understaffed that it really was a pathetic excuse for a regulator.  All it seemed capable of doing was capturing media divas like Martha Stewart while the Bernie Madoffs were only caught when market down turns identified their PONZI Schemes.   Interestingly enough,  two Madoff employees were JUST arrested on Thursday as prosecutors are finally moving towards the Madoff family jewels. But, bigger things are afoot.

The SEC has finally gone after the bad guys with a little help from the FBI and the Manhattan District Attorney’s office in what what can only be characterized as a major investigation. It took around three years to complete.  That means it actually got stated under the Bush years which is a shocker unto itself.

Have the SEC finally traded their aging white horses for some real stallions? This can only mean good news for the small investor and those of us who are stuck in institutional funds because Congress wants to pay back their FIRE friends by giving them our money to take to their casino.

The criminal and civil probes, which authorities say could eclipse the impact on the financial industry of any previous such investigation, are examining whether multiple insider-trading rings reaped illegal profits totaling tens of millions of dollars, the people say. Some charges could be brought before year-end, they say.

The investigations, if they bear fruit, have the potential to expose a culture of pervasive insider trading in U.S. financial markets, including new ways non-public information is passed to traders through experts tied to specific industries or companies, federal authorities say.

One focus of the criminal investigation is examining whether nonpublic information was passed along by independent analysts and consultants who work for companies that provide “expert network” services to hedge funds and mutual funds. These companies set up meetings and calls with current and former managers from hundreds of companies for traders seeking an investing edge.

Finally, some one is going after these “expert networks” which are basically groups of people that sell inside information. Yves at Naked Capitalism--some one who worked in the market for years and has some way of knowing–has been on this for years. I’ve been buried in academia and at the FED for some time, but even I knew it was bad.

Yours truly has complained off and on over the years about “consulting” and “research” firms whose entire business model revolves around the procurement and sale of inside information. These companies solicit consultants, who in the vast majority of cases are employees of major corporations, to provide insight into what is going on at their employer’s operations. These vendors are generally smart enough to make their consultants sign various waivers, which have the effect of shifting liability on to the hapless chump paid a couple of hundred dollars an hour for an hour or two for information worth vastly more than than. They are effectively exploiting the contract worker’s lack of understanding of the finer points of SEC regulations and corporate policy.

We first wrote about this abuse with weeks of starting this blog, in January 2007, when a Wall Street Journal investigation of the biggest player in this space, Gerson Lerman, led to an investigation by the New York attorney general, Eliot Spitzer (the SEC reportedly had investigations underway, although it was not clear whether Gerson Lerman was a focus).

I have had my tinfoil hat theory on Spitzer’s fall from grace  for some time. My thought is that some one went after Client 9 deliberately to stop him from finding out more about these lucrative deals and other Wall Street nastiness.  He got taken down over a game of patty cake so these guys could continue their scam.  Traders can make boatloads of money with ex ante knowledge and enough money to make the trade. Also, remember even if you’re just doing the deal, your value as a trader and analyst goes up if your assets’ value goes up.  There’s a lot of money in this game and getting in on momentum at the ground floor is a beautiful thing.

Here’s one of the more egregious examples from the WSJ article.

Another aspect of the probe is an examination of whether traders at a number of hedge funds and trading firms, including First New York Securities LLC, improperly gained nonpublic information about pending health-care, technology and other merger deals, according to the people familiar with the matter.

Some traders at First New York, a 250-person trading firm, profited by anticipating health-care and other mergers unveiled in 2009, people familiar with the firm say.

A First New York spokesman said: “We are one of more than three dozen firms that have been asked by regulators to provide general information in a widespread inquiry; we have cooperated fully.” He added: “We stand behind our traders and our systems and policies in place that ensure full regulatory compliance.”

Right.  It was just very good analysis.  We’ll see how that stands up in court.

My guess is that there will be a good deal of shaking and quaking going on shortly because the names have yet to be released.  We will undoubtedly see some Goldman Sachs names among them.  Goldman Sachs appears to be a central player in those health care company mergers.  NY magazine is being vague right now, but the network of traders and investment bankers could shake up the Street and it’s about time.  They’re poking around now which probably means their lining up their fallen angels who are most likely to turn state’s evidence to avoid having more than just a few weekends with Bernie.

The characterization of the degree of insider trading by both the FBI and SEC is that this is part of a “pervasive” culture. I smell a huge class action suit in the works against a lot of funds.   It also further puts to rest the idea that the U.S. equities markets represent anything near a rational market since prices in this instance represent two tiers of agents.  One set that only have public information.  One set that’s privy to the out of school tales of contract workers.  This should turn some of the literature  in the investment area on its heels. That’s a good thing too.  I do so want to see the death of that random walk down Wall Street hypothesis once and for all.

AND I just hate that look of a smug investment banker in the morning; especially when they try to give the impression that that it’s all about their brilliance and not about their luck or a little illegal information.   This should be more fun to watch than a James Bond movie when Sean Connery was in his prime.  It may also breathe some life into that CNN show Parker/Spitzer because Spitzer is bound to have his own little insider information on the probe and my guess is he’ll try to parlay that into higher ratings for his current enterprise of journalistic pattycake with Parker.  Eliot Spitzer could may well have the last laugh on this.