Tag Archives: wall street

On Smashing the Plutocracy

30 Nov

From CBS News, our budding banana republic plutocracy/kleptocracy unravels itself:

An interview with Lloyd Blankfein is as rare as a look inside the Goldman Sachs money machine. He showed us one of seven trading floors at his Manhattan headquarters. Goldman is one of America’s most successful investment banks. It had net earnings of $4.4 billion dollars last year. When we asked Blankfein how to reduce the federal budget deficit, he went straight for the subject politicians don’t want to talk about.

BLANKFEIN: You’re going to have to undoubtedly do something to lower people’s expectations — the entitlements and what people think that they’re going to get, because it’s not going to — they’re not going to get it.

PELLEY: Social Security, Medicare, Medicaid?

BLANKFEIN: You can look at history of these things, and Social Security wasn’t devised to be a system that supported you for a 30-year retirement after a 25-year career. … So there will be things that, you know, the retirement age has to be changed, maybe some of the benefits have to be affected, maybe some of the inflation adjustments have to be revised. But in general, entitlements have to be slowed down and contained.

Blankfein is CEO of Goldman Sachs, a Wall Street institution that was about as deep into the Wall Street scandal and collapse of 2008 as could be.  Goldman Sachs received a $12 billion TARP bailout related to its holdings in then-defunct insurer AIG. Goldman Sachs repaid the government through a sale of equity in April 2009

Despite the fact that it’s become quite evident that Wall Street is Washington’s puppetmaster, and not vice-versa, Blankfein now has the audacity to come to Capitol Hill to lecture the government about good governance and how we need to aggressively cut so-called “entitlements” like Medicare and Social Security. As if caring for the sick and elderly was some sort of societal ill, while committing fraud against one’s own customers is perfectly reasonable, and the sanctions wrought therefrom a mere cost of doing business. 

Here’s what America’s favorite socialist Senator, Vermont’s Bernie Sanders has to say about it all. Thing is, he’s right, and the plutocracy must be exposed and, frankly, smashed and replaced with the representative democracy the Constitution guarantees. 

Occupy Evicted

16 Nov

Early yesterday morning, under cover of night and by excluding and/or arresting the press, Mayor Bloomberg ordered the New York City police to clear Occupy Wall Street out of Zuccotti Park, and sanitation to clean it.

I’ve always had my doubts about the First Amendment implications of Zuccotti being a privately owned park – to my mind, the protesters would be on a more solid legal footing if they were gathered on public property. In any event, to my mind, yesterday’s expulsion was violative of the Constitutional protections for political speech and assembly. The government kicked them out – not the private park owner.

That Bloomberg did it under cover of night and deliberately excluded the press makes this even more ominous – what were they hiding?

While most media coverage of the Occupy movement has been dismissive, or packed with unwanted advice, in my opinion the lumpendemocratic, unorganized (if not disorganized) nature of the protest is exactly right. As Matt Taibbi points out, Occupy isn’t for any one specific thing – it is demonstrating against the general wrong direction of a superficial, lost society; an economy that has been systematically transformed into a bastardization of free market capitalism. The 99% get the crumbs while 1% of Americans belong to a privileged brown-shoe mafia that enforces its advantage through buying off politicians.

Although Occupy had obtained a temporary restraining order blocking their eviction, a State Supreme Court judge upheld the eviction later in the day, stating that the park was for the benefit of all the public, and that Occupy posed a health and safety hazard.

[HTML1]

Occupy is allowed back in the park, but not with tents, tarps, or large bags or camping equipment.

The earlier TRO:

[HTML2]

The city’s response:

[HTML3]

In Buffalo, the Occupy movement has set up in Niagara Square as a 24-hour demonstration. It’s been invited to stay by city government, and finds support among the unionized police and fire departments. There’s no reason to evict what’s become a movement.

And to those who say that Occupy needs to immediately set up a list of demands and figure out what it’s all about, I can’t think of a more succinct, relevant, accurate, or reasonable slogan than “sh1t is all f*cked up and sh1t”.

A Play in Three Acts

7 Oct

Krugman today, in praise of the Occupy movement, concisely explains our recent history and how we got there.

A weary cynicism, a belief that justice will never get served, has taken over much of our political debate — and, yes, I myself have sometimes succumbed. In the process, it has been easy to forget just how outrageous the story of our economic woes really is. So, in case you’ve forgotten, it was a play in three acts.

In the first act, bankers took advantage of deregulation to run wild (and pay themselves princely sums), inflating huge bubbles through reckless lending. In the second act, the bubbles burst — but bankers were bailed out by taxpayers, with remarkably few strings attached, even as ordinary workers continued to suffer the consequences of the bankers’ sins. And, in the third act, bankers showed their gratitude by turning on the people who had saved them, throwing their support — and the wealth they still possessed thanks to the bailouts — behind politicians who promised to keep their taxes low and dismantle the mild regulations erected in the aftermath of the crisis.

Bad News Rundown

23 Jun

Monday was a steady stream of bad news for smart people.  I ended the day wondering what the hell happened, let’s review.

1.) General Stanley McChrystal, Commander of all US and NATO Forces in Afghanistan, essentially told the President, Congress and the American People to eat a big bag of shit.  McChrystal was a Cheney man, a noted overseer of torture and general Special Ops badass who was put in charge to kick ass and center the troops around a mission of “winning” in Afghanistan and doing it in a hurry.  He has been political trouble for Obama from jump street, but Obama has stood by him and now that we’re at a critical juncture in the counter-insurgency, McChrystal decided to essentially motherfuck everyone in the chain of command.  The Republicans will trip all over themselves to set the discussion agenda tomorrow and turn this into a test of Obama’s failed leadership or other such meme.  Good times.  Also, anyone curious as to why this General (who is evidently widely known for this sort of behavior) received a pass on it from the Defense Department beat reporters?  It took a freelancer to get the story, primarily because he wasn’t worried about losing his “sources”.   Sad state of journalism in this country…

2.) The Supreme Court, in a 6-3 decision, reduced the First Amendment rights of American Citizens.  This was the first SCOTUS test of free speech against new national security standards (Patriot Act, etc.)

The Supreme Court on Monday upheld a federal law that makes it a crime to provide “material support” to foreign terrorist organizations, even if the help takes the form of training for peacefully resolving conflicts.

The case arose after an American human rights group, the Humanitarian Law Project, challenged the law prohibiting “material support” to terror groups, which was defined in the 2001 Patriot Act to include “expert advice or assistance.” The law project wanted to provide advice to two terrorist groups on how to peacefully resolve their disputes and work with the United Nations. The two groups — the Liberation Tigers of Tamil Eelam and the Kurdistan Workers’ Party — have violent histories and their presence on the State Department’s official list of terrorist groups is not in dispute.

But though the law project was actually trying to reduce the violence of the two groups, the court’s opinion, written by Chief Justice John Roberts Jr. on behalf of five other justices, said that did not matter and ruled the project’s efforts illegal. Even peaceful assistance to a terror group can further terrorism, the chief justice wrote, in part by lending them legitimacy and allowing them to pretend to be negotiating while plotting violence.

In a powerful dissent, Justice Stephen Breyer, also speaking for Justices Ruth Bader Ginsburg and Sonia Sotomayor, swept away those arguments. If providing legitimacy to a terror group was really a crime, he wrote, then it should also be a crime to independently legitimize a terror group through speech, which it is not. Never before, he said, had the court criminalized a form of speech on these kinds of grounds, noting with particular derision the notion that peaceful assistance buys negotiating time for an opponent to achieve bad ends.

3.) A federal judge overturned President Obama’s six month moratorium on deep water oil drilling.

The judge in New Orleans who struck down the moratorium earlier in the day complained there wasn’t enough justification for it.

I guess the oil needs to be lapping at the courthouse door for him to see the “evidence”.  Of course, the judge does have significant investments in deepwater drilling companies, although I’m sure that’s just a coincidence.

4.) Our “financial reform bill” that will supposedly “place tough regulations” (hack,cough) on Wall Street companies is being weakened yet again by Republicans and investment bank friendly Democrats in conference committee.

Levin and Sen. Jeff Merkley (D-OR), are the principal authors of legislation to strictly limit banks’ and other financial firms’ ability to make speculative trades with their profits. The idea originated with former Fed chair and Obama economic adviser Paul Volcker, who strongly backs the Levin-Merkley proposal. But they’re fighting Wall Street and an array of Democrats negotiating the final bill, who want to include a loophole that would allow banks to invest a potentially significant share of their capital in high-risk hedge funds. Levin and others are pushing back, but their time is limited: the conference committee will discuss the Volcker rule and the banks’ new favorite loophole tomorrow.

5.) Why do you think BP caved so easily on the idea of putting together a $20BN escrow fund to compensate the victims of their oil disaster?  I think the answer is in the last two paragraphs of this story in yesterday’s Wall Street Journal.

6.) This is what a failed democracy looks like.

The Wall Street Journal just reported that the Federal Communications Commission is holding “closed-door meetings” with industry to broker a deal on Net Neutrality — the rule that lets users determine their own Internet experience.

The meetings include a small group of industry lobbyists representing the likes of AT&T, Verizon, the National Cable & Telecommunications Association, and Google. They reportedly met for two-and-a-half hours on Monday morning and will convene another meeting today. The goal according to insiders is to “reach consensus” on rules of the road for the Internet.

This is what a failed democracy looks like: After years of avid public support for Net Neutrality – involving millions of people from across the political spectrum – the federal regulator quietly huddles with industry lobbyists to eliminate basic protections and serve Wall Street’s bottom line.

We need open debate and transparent policymaking, unfortunately, we live in a corporatist state dominated by lobbyist influence.  We get the results out of the system that we plan for.

To end on a positive note, Carl Sagan always makes me feel better.  The Pale Blue Dot…

[HTML1]

A Rolling Stone

15 Dec

Courtesy Marquil at Empirewire.com

Taibbi on the Wall Street ties to Pennsylvania Ave

2 Dec

[HTML1]

Taibbi’s blog is here.  He’s come a long way since founding the Buffalo Beast.

The Doomsday Clock of Aught-Nine

22 Mar

I am not a financial guy. I am not a patient or careful observer of the ins and outs of Wall Street, ancillary entities, or the ostensible regulatory schemes overseeing the markets. My eyes glaze over almost instantaneously at all of it.

To some degree, it seems that every decade needs its doomsday clock. In the 70s, it was an actual doomsday clock, figuring that the Soviets were going to throw some ICBMs our way at any moment, and it was up to Steve Austin to use his bionic powers to save us. In the 80s, it was pretty much the same thing, especially as the communist world began to destabilize and ultimately unravel. The 90s began the runup to the complete disaster we have on our hands today. The 90s started with Saddam Hussein giving the world the finger and raping Kuwait, combined with the new dangers in the wake of the breakdown of a bipolar world. While most people worried more about where Bill Clinton put that cigar, all hell was breaking loose in the middle east, and the dot com bubble burst, teaching us no lessons whatsoever in the process. Finally, this decade, we’ve had 9/11, two wars, all topped off with a steaming pile of financial meltdown.

My lack of patience and deficit of attention to financial things extend even to this Matt Taibbi Rolling Stone article exposing the massive kleptomaniacal fraud perpetrated by AIG, Goldman Sachs, the Fed, and other masters of the universe, all without any governmental oversight at all – not just meaningful oversight with teeth, but any at all. To this day, the lending practices of the Federal Reserve are not only secret, but any inquiry whether from Congress or journalists is met with the kind of eye-rolling you’d expect from a teenager engaged in conversation with her parent in a public place.

Taibbi analyzes what went wrong with AIG, how it committed massive fraud and left us footing the bill. He also argues that the whole bailout is, for all intents and purposes, merely a coup d’etat by Wall Street investment banks acting in concert with compliant politicians and impotent regulators.

There are plenty of people who have noticed, in recent years, that when they lost their homes to foreclosure or were forced into bankruptcy because of crippling credit-card debt, no one in the government was there to rescue them. But when Goldman Sachs — a company whose average employee still made more than $350,000 last year, even in the midst of a depression — was suddenly faced with the possibility of losing money on the unregulated insurance deals it bought for its insane housing bets, the government was there in an instant to patch the hole. That’s the essence of the bailout: rich bankers bailing out rich bankers, using the taxpayers’ credit card.

The thing about all this Wall Street bailout stuff is that you really do need to have some background in it to get any of it. The auto bailout is easy – everyone understands that if you sell a shitty product, you’ll fail. This stuff is complicated by design to ensure plunder without oversight.

The New York Times sort of pre-revealed yesterday what the Geithner – Bernanke plan is to “fix” the financial markets. As this guy points out, there’s not a single independent economist you can find who’ll say it’s a good idea.

Calculated Risk, Naked Capitalism, Paul Krugman,
The shorthand analogy would be to say that Wall Street is in cardiac arrest, and the government’s solution is to inject pure bacon grease into its circulatory system. Balloon Juice shorthands it:

If this were a medical emergency, it appears it would look something like this:

The Illness- reckless and irresponsible betting led to huge losses
The Diagnosis- Insufficient gambling.
The Cure- a Trillion dollar stack of chips provided by the house.
The Prognosis- We are so screwed.

Politically, the problem is twofold and paradoxical. On the one hand, the problem is so acute and crippling that swift action is needed. On the other hand, rushing into this sort of stuff isn’t necessarily the best way to handle such an acute and fundamental problem. Add to that a supercharged political atmosphere, the fact that the vast majority of media figures and politicians are as clueless about all of this shit as you or I, there seems to be way too much on the line to leave it all to chummy Wall Street insiders and doltish Washingtonians.

Brad DeLong has a Geithner Plan FAQ and two of the Q/A are:

Q: What is the Geithner Plan?

A: The Geithner Plan is a trillion-dollar operation by which the U.S. acts as the world’s largest hedge fund investor, committing its money to funds to buy up risky and distressed but probably fundamentally undervalued assets and, as patient capital, holding them either until maturity or until markets recover so that risk discounts are normal and it can sell them off–in either case at an immense profit.

Q: What if markets never recover, the assets are not fundamentally undervalued, and even when held to maturity the government doesn’t make back its money?

A: Then we have worse things to worry about than government losses on TARP-program money–for we are then in a world in which the only things that have value are bottled water, sewing needles, and ammunition.

Assigning blame isn’t necessarily of critical importance at this point. Taibbi spends a tremendous amount of ink going through the historical events that led to banks taking advantage of a dangerous combo of loosening regulations and regulatory loopholes to make incredibly huge bets which ultimately collapsed in on themselves. We then bailed them out, and still have no real regulatory oversight or sunlight clauses to both protect and inform the taxpayers.

Too many people are predicting cataclysm if all of this fails to work. Arguably, it’s the same catastrophe that would have happened had the original bailout not taken place.

Because it’s all so complex and specialized, and the stakes are unprecedentedly high, it’s time for the political elites to stop focusing on sideshows like AIG bonuses, and carefully examine what’s being proposed by the Fed and Treasury here. It’s time for the experts to step in – not the politicians. I don’t care what your representative or my representative thinks about it all. I care what respected economists and financial experts have to say about it. We ought to demand that everything is exposed in the sunlight and that every reasonable solution is considered and deliberated.

This is not the time for schoolyard bullshit. The grownups need to step up.

Stewart and Cramer – pwnage on Brawl Street

13 Mar

[HTML1]

You have to sit through a 2:30 minute ad for some movie, but at least Hulu doesn’t chop the show up into separate segments like Comedy Central does.

Rick Santelli: Jackass

21 Feb

I work with a lot of smug, MBA fratboys at my day job.  They are unrepentant and smug about the wool they pulled over the eyes of the American Public when it comes to the MBS and CDO market.  They laugh about how mooks like you blame the homeowners and borrowers while they count the hundreds of millions of dollars they and their companies made off the biggest economic fraud in American history.  They laugh at you and how easy it is to convince you that union workers making $30 per hour and working class folks who bought into the hyped market to realize the “American Dream” and bought homes lenders convinced them they could afford are the problem.  That investment bankers making $750K per year off fraudulent mortgages and CEO’s making nine figures are the good guys here.

Rarely do you get a glimpse at the unchecked arrogance and general disdain those people have for you.  Until a humongous douchebag like Rick Santelli comes along and pulls back the curtain.

santelli_rick

Click to watch the video.

Essentially, Santelli (CNBC analyst and former derivatives trader) stands on the floor of the CME amongst traders from banks who are still afloat because of the TARP money given them in the first phase of the bailout plan and has the temerity to demand a revolt over bailing out homeowners.   A bailout plan that is for people who are in the midst of foreclosure actions and those who live around those who are struggling with foreclosure.  A bailout plan which requires homeowners to continue payments on their mortgages and requires responsibility on the part of the borrower.  Of course, those people are “losers” in Santelli’s world and don’t deserve an opportunity to keep a roof over the heads of their families.  He’s rather people lose their homes and buy their properties at foreclosure at pennies on the dollar.  That’s the free market after all!

This country has lost its bearings when a guy like this resonates.

If You Give Wall Street A Cookie…

27 Jan

Citigroup is trading at $3.33/share this morning. Its 52-week high is $29.73, and between 2004 – 2007, it routinely traded between $45 – $60/share. So, if you’re long on C, you’re probably kind of pissed off now.

Made even more so by the fact that Citigroup is selling a couple of older Dassault business jets, and purchasing a brand-new Dassault 7x for $50 million.

Citigroup just got through receiving $50 billion in taxpayer rescue funding.

It doesn’t really matter whether the two jets on sale will cover the price of the new one. It’s about perception as much as it is about reality.

If your company is on the dole, you don’t need a new jet.

If you don’t need a new jet, you probably don’t need any jet.

If you don’t need any jet, you should frankly be flying commercial. Business class when available, but preferably coach. If it’s good enough for us proles, it’s good enough for you.