Category Archives: Occupy Wall Street

Libor Elicits a Shrug and a Yawn

We’re so used to financial shenanigans that we’ve reached the “So what else is new?” stage.  From “The Spreading Scourge of Corporate Corruption,” Eduardo Porter, NYT:

“Perhaps the most surprising aspect of the Libor scandal is how familiar it seems.  Sure, for some of the world’s leading banks to try to manipulate one of the most important interest rates in contemporary finance is clearly egregious.  but is that worse than packaging billions of dollars worth of dubious mortgages into a bond and having it stamped with a Triple-A rating to sell to some dupe down the road while betting against it?  Or how about forging documents on an industrial scale to foreclose fraudulently on countless homeowners?

“The misconduct of the financial industry no longer surprises most Americans.  Only about one in five has much trust in banks, according to Gallup polls, about half the level in 2007. … Sixty-two percent of Americans believe corruption is widespread across corporate America.

“The inexorable rise of income inequality is also likely to encourage fraud, fostering resentment and undermining trust in capitalism’s institutions and rules.  Economic research shows that participants in contests in which the winner takes all are much more likely to cheat.  And the Unites States is becoming a winner-takes-all economy.”

We Need To Seize Back Our Continent

It’s the 68th anniversary of D-Day, and I was re-reading the wonderful speech Peggy Noonan wrote for Ronald Reagan at the 4oth Anniversary commemoration, “The Boys of Pointe Du Hoc.”  These lines jumped out at me:

“The Rangers looked up and saw the enemy soldiers at the edge of the cliffs, shooting down at them with machine guns and throwing grenades.  And the American Rangers began to climb.  They shot rope ladders over the face of these cliffs and began to pull themselves up.  When one Ranger fell, another would take his place.  When one rope was cut, a Ranger would grab another and begin his climb again.  They climbed, shot back, and held their footing.  Soon, one by one, the Rangers pulled themselves over the top, and in seizing the firm land at the top of these cliffs, they began to seize back the continent of Europe.”

They began to seize back the continent of Europe.  Today, we need to seize back this continent, our continent.  Our democracy is as threatened today as it was then, but now it’s under threat by our fellow citizens who are trying to turn our America into an oligarchy, a country of the super-rich, by the super-rich, for the super-rich.

For one brief shining moment after the Great Meltdown, the Tea Party had it right, a light went off in the minds of the “What’s the Matter with Kansas” people, and they got it.  But then their righteous anger at the Big Banks was perverted into hostility at “Big Government.”  They were co-opted by the Koch Brothers’ Americans for Prosperity [somewhere, Orwell is laughing] and Dick Armey’s FreedomWorks.  Instead of blaming the folks who caused their fellow citizens to need food stamps, they turned their fury and frustration on the poor souls who suddenly had to rely on those food stamps.

A rope was cut yesterday in Wisconsin.  We need to seize another one, and we need to climb.

Why Is a Strong Middle Class So Essential for Everyone Else?

It’s striking that we are so focused on building a strong middle class everywhere in the world, that we see it as the magic bullet that solves threats and problems — except here at home.

When we invaded Iraq, we were assured that one of the things in our favor for building a democracy there was the existence of a strong, educated middle class.  By contrast, we’ve been told over and over that one of the reasons for the tough, fruitless slog in Afghanistan is the lack of a middle class.

We’ve been told that one of the reasons the Islamists have been able to emerge strong from the Arab Spring is the lack of a middle class in the Middle East, that a tiny group of very rich people has ruled over an enormous group of very poor, uneducated people for so long.

We’ve been told that the emerging middle classes in India and China are a wonderful thing for the growth of world trade and prosperity and stability.

But here at home, our middle class is suffering and shrinking.  And we’re told that the growing chasm of income inequality, that the falling back of so many families into poverty, that the failure of so many children to do better than their parents as they have historically, is nothing to be alarmed about.

Can someone explain this?  Mitt?  Reince? Paul Ryan?  John Boehner? Anybody?

The $14 Million Woman

From Joe Nocera, “Make Banking Boring,” NYT:

“We also know that Ina Drew, a JPMorgan veteran who headed the chief investment office — and who departed on Monday — made $14 million last year.  Wall Street executives who make $14 million are not risk managers.   They are risk takers — big ones.  And genuine hedging activity does not cost financial institutions billions of dollars in losses:  their sole purpose is to protect against big losses.  What causes giant losses are giant, unhedged bets, something we also learned in the fall of 2008.

“Thus, the final thing we know:  At JPMorgan, nothing changed.  The incentives, the behavior, even the trades themselves are basically the same as they were in the run-up to the financial crisis.”  Emphasis added.

It also looks as if that $2 billion loss JPMorgan has acknowledged might end up being more like $4 billion.  And warnings were being sounded about the bets as far back as 2007.

 

Refuting the Big Lie Against the Buffet Rule

Mitt and the GOP argue against President Obama’s Buffet Rule or any other tax increases for very rich people by claiming that if you tax the “job creators,” you both reduce revenue and destroy growth so that everybody suffers.  This is complete and utter garbage, this is their “big lie,” but they have to figure out how to convince more people to vote against their economic interests than just the abortion/gay marriage/guns crowd.  They need to con some people from the middle or they lose.

So that’s why I was thrilled to see an op-ed, in the Wall Street Journal no less, “High Tax Rates Won’t Slow Growth,” by Peter Diamond and Emmanuel Saez, that calls out the big lie.  Diamond won the Nobel Prize for economics and is an MIT professor emeritus.  Saez is an economics professor at U. C. Berkeley and winner of the very prestigious John Bates Clark medal.  From the op-ed:

“The share of pre-tax income accruing to the top 1% of earners in the U. S. has more than doubled to about 20% in 2010 from less than 10% in the 1970s.  At the same time, the average federal income tax rate on top earners has declined significantly.  Given the large current and projected deficits, should the top 1% be taxed more?  Because U. S. income concentration is now so high, the potential tax revenue at stake is large.

“But will taxable income of the top 1% respond to a tax increase by declining so much that revenue rises very little or even drops?

“According to our analysis of current tax rates and their elasticity, the revenue-maximizing top federal marginal income tax rate would be in or near the range of 50% to 70%….  Thus we conclude that raising the top tax rate is very likely to result in revenue increases at least until we reach the 50% rate that held during the first Reagan administration, and possibly until the 70% rate of the 1970s.

“But will raising top tax rates significantly lower economic growth?  In the postwar U. S., higher top tax rates tend to go with higher economic growth — not lower.  Indeed, according to the U. S. Department of Commerce’s Bureau of Economic analysis, GDP annual growth per capita (to adjust for population growth) averaged 1.68% between 1980 and 2010 when top tax rates were relatively low, while growth averaged 2.23% between 1950 and 1980 when top tax rates were at or above 70%.

“By itself, a suitable increase in the taxation of top earners will not solve our unsustainable long-term fiscal trajectory.  But that is no reason not to use this tool to contribute to addressing this problem.”

I wish every voter would read this op-ed.  Mitt and the GOP aren’t just wrong about taxing the rich, they know they are lying about it.  We need to send them a message in November that “Populus vult decepi” may have been true in ancient Rome, but it isn’t true here, and it isn’t true now.

If You Support the Buffet Rule, You’re a Sinner!

I’m beyond seeing red, I’m seeing something that isn’t in the normal spectrum, I’m hallucinating with outrage.

I got a mass email from a GOP politician saying that the Buffett Rule (those earning $1 million a year  or more should pay 30% in taxes) isn’t about “fairness” as President Obama says.   Noooooooo, it’s about “envy,” and envy is one of the “Seven Deadly Sins.”

So he wants to muscle the Evangelical base into believing that if they support the Buffett Rule, they are not just making a political choice about taxes, they are sinners, and Jesus is weeping, and they are going to Hell.  He neglects to mention that greed is on that list as well.

The Mafia is more subtle than this!

Reince Preibus and other GOP Powers That Be, I voted for Bush in 2004, I voted for McCain in 2008 (despite the moron running with him), but you have lost me, and I doubt you’ll ever get me back.  And it’s not me, it’s you.

If people are dumb enough to buy this, and Mitt wins, then they get what they deserve.  The one percent will be laughing at them over their Long Island Iced Teas at the Maidstone Club for the next four years.

Finally Sending a Message

Sounding more like members of Occupy Wall Street than the establishment managers of pension and mutual funds that they are, the shareholders of Citigroup voted against CEO Vikram Pandit’s pay of $15 million.  While the vote is non-binding, it sends a message to the Board of Directors that they’re on thin ice.

These “say on pay” votes are provided under Dodd-Frank, which is a pathetic piece of financial reform that won’t prevent another economic meltdown, but at least gave Citigroup this well-deserved moment of high-profile embarrassment.  May we see more such moments.

Is Mitt Stuck as Mayor of Loonyville?

From a fun read, “WTF, GOP?” by Monka Bauerlen and Clara Jeffery, Mother Jones:

“You coulda been a contender!  Economy in the tank.  Congress successfully gridlocked.  Consider:  Base energized, Yes-We-Can shock troops disaffected, major donors to the president’s campaign picketing his speeches.  True, with Occupy on the rise, it did become (cue Jon Stewart falsetto) awkward that your leading candidate was an unapologetic poster child for the 0.0025 percent.  Still, all you had to do was set Clinton ’92 ‘It’s the Economy,  Stupid’ messaging on autoplay and coast to November.  Instead, a way on ladyparts?

“Sure, it’s been entertaining.  Schadenfreude, as the German saying goes, is the best freude.  But liberals take note:  Not only is a robust dialogue crucial for an intellectually engaged democracy, it also happens to be required to Get.  Anything.  Done.  Even if the Republican brand suffers long-term damage (and the jury’s still out), conservatives will make up north of 40 percent of the vote, most importantly in the US Senate.

“Surely we are not alone in worrying that the Grand Old Party is losing touch with reality — obsessing on issues entirely divorced from both 21st-century mores and the pressing economic challenges of the day.  But excepting Bush speechwriter David Frum’s cri de coeur in New York magazine (rewarded with RINO opprobrium from his colleagues), name-brand Republican thinkers steer clear of a frank diagnosis.  They might bemoan a weak field of candidates — George Will has basically written off the White House and tried to rally the troops around holding the House — but no one dares take on the twin planks of Loonyville:  Grover Norquist’s no-taxes-never-ever pledge and Roger Ailes’ facts-be-damned spin on the ‘news.’

“The realpolitik leaders on the right made a bet that they could ride the latest populist wave as they’ve ridden others, using the momentum to pull the rest of the country rightward. But they got greedy.  The current cohort’s overreach threatens to blow 30 years of careful strategizing, from the school-boards-on-up long march to power to Karl Rove’s microtargeting breakthroughs.”  Italics in original, emphasis added.

Class Warfare in Michigan

It’s interesting that while the GOP narrative falsely accuses the President of inciting class warfare, Mitt Romney and Rick Santorum are actually engaging in class warfare in their battle for blue collar Michigan.

Santorum is trying to appeal to voters with a two-pronged approach that is somewhat contradictory.  The first, and obvious, prong is that Mitt has been so rich and privileged his whole life that he doesn’t understand the problems of average working people.  The second prong is that Mitt somehow has adopted the views of Occupy Wall Street because his tax plan calls for eliminating certain taxes on those making $200,000 or less, without extending those benefits to richer Americans.

So Santorum is both waging class warfare against Mitt and accusing Mitt of waging it in a way unbecoming to a Republican.