Tag: ek Politics

Growth of Income Inequality Is Worse Under Obama than Bush

Matt Stoller, Naked Capitalism

Wednesday, April 11, 2012

Yesterday, the President gave a speech in which he demanded that Congress raise taxes on millionaires, as a way to somewhat recalibrate the nation’s wealth distribution.  …  A common question in DC is whether this populist pose will help him win the election.

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A better puzzle to wrestle with is why President Obama is able to continue to speak as if his administration has not presided over a significant expansion of income redistribution upward.  The data on inequality shows that his policies are not incrementally better than those of his predecessor, or that we’re making progress too slowly, as liberal Democrats like to argue.  It doesn’t even show that the outcome is the same as Bush’s.  No, look at this…

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Yup, under Bush, the 1% captured a disproportionate share of the income gains from the Bush boom of 2002-2007.  They got 65 cents of every dollar created in that boom, up 20 cents from when Clinton was President.  Under Obama, the 1% got 93 cents of every dollar created in that boom.  That’s not only more than under Bush, up 28 cents.  In the transition from Bush to Obama, inequality got worse, faster, than under the transition from Clinton to Bush.  Obama accelerated the growth of inequality.

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Despite his recent speech, President Obama knows that his income tax proposal is going nowhere.  So let’s look at three recent policy choices that are going somewhere.

1. President Obama is on the verge of approving a Free Trade deal with Colombia, despite the murder of union organizers in that country.  Not content with establishing similar deals with Panama (which has to do with enlarging tax havens) and South Korea, the administration is now embarking on a much vaster Trans-Pacific Partnership deal with countries all over Asia.  And it’s being negotiated entirely in secret, with corporate and government officials the only ones allow to be in the room.  Trade is a significant driver of lower wages.
2. President Obama just pushed for and signed the JOBS Act, which is a substantial relaxation of regulations and accounting requirements on corporations seeking to go public.  Bill Black has many four letter words to describe this bill, but it’s basically a license for Wall Street to commit fraud in the equity markets.  The SEC is beginning to promulgate instructions on how this will work.
3. President Obama just refused to issue an executive order forcing campaign spending disclosure by government contractors.  President Obama actually criticized the Supreme Court’s decision in Citizens United at a State of the Union address, but as with yesterday’s speech on raising taxes on millionaires, there was actually no there there.

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Mitt Romney might be easy to jeer at for his wealth and arrogance, but Saez’s data suggests that Barack Obama is just as much the candidate of inequality.

There is only one of course.  This Saturday was the 158th official running of the Oxford Cambridge Heavyweight 8s and like many things sporting had both it’s share of unexpected drama and political implications.

Not that there haven’t been dramatic events in the past.  Over the years there have been 2 mutinies (1959 and 1987, both Oxford), 7 sinkings, and one tie because the Judge was sleeping under a bush (a not uncommon collegiate experience).  

This year the race was disrupted by a lone swimmer, Trenton Oldfield.

Before we get to the politics, I’d like to talk about the race which I only saw from the restart.  As far as I’m concerned the Umpire showed a distinctly pro-Cambridge bias.  Despite Oxford leading by a quarter length the boats re-started even.  When Oxford lost a blade the Umpire ruled it Oxford’s fault and blamed it on their female coxswain.

Asshole.  He handed it to Cambridge.

Also the lead oar of Oxford collapsed from exhaustion but was left untreated for several minutes because everyone was too busy patting themselves on the back.

Against which I offer this statement from the notorious Trenton Oldfield-

(T)his reach is (…) the site of a number of past and present elitist establishments; Fulham Palace, Chiswick House and St Paul’s Schools and a large collection of other ‘independent/public/free schools’. It is also where Nick Clegg, leader of the Liberal Democrats and Deputy Prime Minster of the Government lives with his family, despite his constituents living hundreds of miles away in post-industrial Sheffield. Most notably and most importantly for today, it is a site where elitists and those with elitist sympathies have come together every year but one for the last 158 years to perform, in the most public way, their ambition for the structures and subsequent benefits from elitism and privilege to continue. (They even list in the programme which public school the rowers attended before Oxford or Cambridge)

The boat race itself, with its pseudo competition, assembled around similar principles of fastest, strongest, selected …etc, is an inconsequential backdrop for these elite educational institutions to demonstrate themselves, reboot their shared culture together in the public realm. It is also inconsequential to the performance that the overwhelming majority of the population continue to remain interested in their own lives and disinterested in the boat race. The boat race, while accessible to everyone, isn’t really advertised or promoted as something for the general public to attend, you know when it’s on because it is part of the social networking calendar. This is a public event, for and by the elites with broader social relations aims. The fact that it happens in the public realm (visible) almost exactly as it has done for the last 158 years also becomes important; the untouched; the unchanged is significant. Most standing alongside the Thames today are in fact the pumped-up though obedient administrators, managers, promoters, politicians and enforcers; functional, strategic and aspirational elites.

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When hasn’t elitism lead to tyranny? When hasn’t the belief of being ‘more’ than another person led to tragedy? Who benefits from elitism? One won’t be surprised to learn the etymology of the word ‘elite’ derives from ‘the elected’ … unfortunately not elected by democratic means, but rather, elected by god. Yup…’elected’, ‘selected’, ‘chosen’ … by god … inherited. When has this understanding of oneself or by a group of people ever been a good thing? When has this understanding not resulted in tyranny? Is tyranny surely not the inevitable outcome? And in contrast, when hasn’t the pursuit of equality, not resulted in these long passages of tyranny being overcome, even if temporarily?

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To enclose and to enslave requires the audacity, cunning and daring to take advantage of our natural kindness, our belief in others, our respect for authority, our desire to please, and our apprehension about ‘causing waves’, our hope for all to have a better life, somehow. It also depends on our disbelief, despite having experienced it, that other people would purposefully set out to harm us for their own advantage. More recently we have also been encouraged, though the evidence displays the opposite much of the time, that a whole raft of institutions exists that work to prevent human catastrophes like our right to protest being denied, detention without trial or charge, the monopolisation of  industries, and essentials like food and water. These institutions were established to prevent slavery, genocide, indentured labour and groupings of indices of deprivation and poverty from occurring.  It is likely many in the western Baby Boomers generation (large percentage of the UK population), who have benefited so much from these institutions, are finding it very difficult to consider that these institutions might now be turning against them, their children and their grandchildren?

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Do we resist now setting out to avoid something akin to slavery and imperialism? Or do we hesitate and find ourselves and our children without agency once again and in a long battle to gain it again? How long might it take and how many lives might this demand?

Some more corporatist sympathetic links-

• Tradition and Boat Race Both Upended on the Thames, The New York Times
• Cambridge defeat Oxford after Thames swimmer forces Boat Race restart, The Guardian
• Protester halts Boat Race by swimming into path of the Oxford crew, The Guardian

Boy, do I feel like an idiot. I’ve been out there on radio and TV in the last few months saying that I thought there was a chance Barack Obama was listening to the popular anger against Wall Street that drove the Occupy movement, that decisions like putting a for-real law enforcement guy like New York AG Eric Schneiderman in charge of a mortgage fraud task force meant he was at least willing to pay lip service to public outrage against the banks.

Then the JOBS Act happened.

The “Jumpstart Our Business Startups Act” (in addition to being a viciously stupid and dishonest law, the Act has an annoying, redundant title) will very nearly legalize fraud in the stock market.

Actually, that’s not putting things in strong enough language. In fact, one could say this law is not just a sweeping piece of deregulation that will have an increase in securities fraud as an accidental, ancillary consequence. No, this law actually appears to have been specifically written to encourage fraud in the stock markets.

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This is like formally eliminating steroid testing for the first five years of a baseball player’s career. Yes, you can pretty much bet that you’ll see a lot of home runs in the first few years after you institute a rule like that. But you’d better be ready to stick a lot asterisks in the record books ten or fifteen years down the line.

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(L)et’s just say this is a dramatic step taken by Barack Obama. Nobody should have any illusions about where he stands on Wall Street corruption after this thing. Boss Tweed himself couldn’t have done any worse.

Speaking of Eric Schneiderman-

CREDO Calls Out Securitization Fraud Task Force: Investigators Not Even Deployed

By: David Dayen, Firedog Lake

Monday April 9, 2012 8:15 am

We have heard very little from that task force since it was inaugurated in January, and CREDO has become the first progressive group to come forward with their concerns. But more is coming. This is the kickoff of a pressure campaign among several groups, querying the Administration in public about what was described to me last week as “the case of the missing task force.”

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This matters not just because of broken promises, but because the foot-dragging has serious consequences. Many of the various types of fraud that this task force is supposed to be investigating have statutes of limitations, some of which will run out on the very last securitization deals completed before the housing bubble collapsed. There are several 10-year statutes of limitations, particularly through the federal law FIRREA. But other statutes have a 5-year limit, and the last deals were made in 2007. So this looks suspiciously like running out the clock.

The Administration obviously must answer these charges, and I’ll try to get some clarity on that today. But Eric Schneiderman’s office needs to also speak up. Schneiderman and his staff said specifically that they would walk from the task force if they felt it wasn’t living up to the promises made to him in terms of resources and will. We’re only three months in, but that looks exactly like what’s happening. If there are bad actors blocking investigations, Schneiderman needs to say it, as he vowed to do.

When the coalition seeking accountability from the banks acquiesced to a settlement on foreclosure fraud with the hope that this task force would bring the investigations, prosecutions and relief needed, they said that election-year pressures would force something real to come about. That has proven so far to be a chimera. We shall see if they can elevate the issue again, with less leverage thanks to the settlement’s completion.

Read it and weep.

I formed my own SuperPAC and all I got was this lousy Peabody Award.

‘Dictatorship is coming back to the Maldives and democracy is slipping away’

Decca Aitkenhead, The Guardian

Sunday 1 April 2012 13.03 EDT

Nasheed is no stranger to high drama, but even by his own standards the past two months have been quite extraordinary. Born into a middle-class Maldives family in 1967, and educated in England, on graduation Nasheed – known as Anni – returned to a country in the grip of what many regarded as a dictatorship under Maumoon Abdul Gayoom. Nasheed set up a magazine, began publishing articles accusing the regime of corruption and brutality, and was promptly arrested, imprisoned, held in solitary confinement and tortured. Jailed 16 separate times, he missed the births of his two daughters and became an Amnesty International Prisoner of Conscience, before fleeing into exile in 2003.

But after 30 years in office, in 2008 Gayoom yielded to pressure and held the country’s first democratic elections, which swept “the Mandela of the Maldives” to power. Quickly claimed by David Cameron as “my new best friend”, the young president became an international folk hero, and the face of a nation that, as he warned the UN, will be underwater “before the end of this century” unless the world acts now on climate change.

The Maldives’ transition to democracy was, however, ominously incomplete. According to Nasheed, elements still loyal to Gayoom were undermining reforms, and in response to repeated constitutional crises many opposition MPs and officials were arrested and detained during Nasheed’s administration. In January, frustrated by the judiciary’s attempts to thwart his reforms, Nasheed ordered the arrest of chief justice Abdulla Mohamed. Protesters loyal to the old regime took to the streets, supported by factions within the police, and on 7 February, after weeks of unrest, Nasheed was confronted by armed military officers. “There were guns all around me and they told me they wouldn’t hesitate to use them if I didn’t resign,” he told reporters that evening. It wasn’t a resignation, he says simply, but a coup d’état.

How’s that austerity thing working out for you?

School meals are ‘made smaller to save money’

Richard Garner, The Independent

Tuesday 03 April 2012

School meal portions are being shrunk, leaving children to go hungry, teachers and parents have warned. Smaller portion sizes caused by cost-cutting are reported in schools across the country and are of particular concern, given the increase in the number of impoverished pupils who rely on school lunches as their only hot meal of the day. Primary-age children, in particular, are going hungry after being given lunches that are too small, according to teachers.

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In the ATL survey, teachers warned that private providers, who are often hired to supply school meals, were cutting portion sizes to make their budgets go further and win new contracts. “The younger children pay the same price but get much less than the older ones,” said one reception class teacher in Bradford. “Also, they do not get the choice as this is also saved for the older ones.”

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A spokeswoman for the Association for Public Service Excellence, which monitors the school meals service, said the major costs for caterers were staffing and overheads such as kitchens, equipment and energy supplies, and these would be targets for cuts rather than portion sizes. However, she added that government grants for school dinners were no longer ring-fenced and had been incorporated into schools’ overall budgets, thereby making the meals service less secure.

The system has undergone radical change in recent years. Schools can hire private providers to run their service – or do it themselves. Local authorities have catering services but schools are free to decide whether to buy into them or not.

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The standards do set out minimum calories for each age group. But Christine Lewis, of the public service union Unison, which represents school dinner staff, said it had “almost been left on faith with the providers to abide by them”. “There is a possibility providers are violating the standards,” she added.

To further complicate matters, academies and free schools are exempt from the nutritional standards.

(h/t Chris in Paris @ Americablog)

Crossposted from The Stars Hollow Gazette

The Eight Big Mistakes Democrats Made Regarding the Constitutionality of ObamaCare

By: Jon Walker, Firedog Lake

Friday March 30, 2012 7:48 am

In the end, the decision about the constitutionality of the individual mandate and the entire Affordable Care Act will come down to the nine members of the Supreme Court. It is ultimately their call, and they will be fully responsible for what they decide. That said, the Democrats had many chances to take steps to prevent the health care law from ever getting to the point where there is even the possibility the Supreme Court could throw it out. The issue only got to this point because Democrats, on multiple occasions, horribly mishandled their job and totally failed to prepare for what was an entirely foreseeable eventuality.

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1. Lack of severability clause in the law
2. Ignoring Republican promises to challenge the mandate
3. Ignoring public hatred of the mandate
4. Dropping the Public Option
5. Congress refusing to call it a tax
6. Obama team refusing call it a straight tax
7. Obama administration’s bizarre severability argument
8. Failed to articulate a clear limiting principle

Still, overturning the ACA might be the best thing that could happen from a policy standpoint.

Individual Mandates and Unraveling the Great Society

By: Jon Walker, Firedog Lake

Thursday March 29, 2012 9:26 am

There are are two main ways for the government to provide universal public goods. The first and normally best way is to have the government raise money through taxes and then use that money to directly provide the service to everyone. The other option is to create an individual mandate forcing everyone to buy the service from private corporations while having the government subsidize some of the cost. These needless middlemen mostly just increase costs for regular people and the government. This is why corporations love this setup and push hard for it.

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If the Supreme Court rules against this individual mandate in a way that basically makes it legally impossible to replace most of our current public insurance systems with mandated private systems, that should be seen as a big silver lining for progressives.

A stronger prescription for what ails health care

By Eugene Robinson, Washington Post

Published: March 29

Eventually, however, our health-care system will be restructured. It has to be. The current fee-for-service paradigm, with doctors and hospitals being paid through for-profit insurance companies, is needlessly inefficient and ruinously expensive.

When people talk about out-of-control government spending, they’re really talking about rising medical costs that far outpace any conceivable rate of economic growth. The conservative solution – shift those costs to the consumer – is no solution at all.

Our only choice is to try to hold the costs down. President Obama tried to make a start with a modest approach that works through the current system. If this doesn’t pass constitutional muster, the obvious alternative is to emulate other industrialized nations that deliver equal or better health-care outcomes for half the cost.

I’m talking about a single-payer health-care system. If the Supreme Court strikes down Obamacare, a single-payer system will go from being politically impossible to being, in the long run, fiscally inevitable.

The Bats Affair: When Machines Humiliate Their Masters

By Brian Bremner, Business Week

March 23, 2012

In the annals of business screw-ups, Bats has certainly made its mark. Bats stands for Better Alternative Trading System and the company runs two exchanges that collectively rank third in terms of U.S. share trading, behind New York Stock Exchange and Nasdaq. The Bats exchanges account for 11 percent to 12 percent of daily U.S. equity trading, according to its website. The company came of age with the expansion of high-frequency trading over the last decade and the proliferation of quant-jock-driven electronic firms that dominate the buying and selling of U.S. equities. Bats founder Dave Cummings is chairman and owner of high-frequency trading firm Tradebot Systems.

Today was supposed to be the Lenexa (Kan.)-based company’s moment in the limelight as it tried to sell about 6.3 million shares in the $16 to $18 dollar per share range. Instead, something went terribly wrong. The company’s shares somehow ended up trading for pennies per share early in the trading day on both the Bats bourse and Nasdaq, according to data reviewed in this Bloomberg story. Then tech investors and Apple (AAPL) fanboys the world over were dismayed when a single trade for 100 shares executed on the Bats market sent Apple’s shares to $542 per share, down sharply from recent levels. (The company set a new 52-week high of $609 per share on March 21.) The stock temporarily halted trading and recovered.

And, as a matter of fact, we do know what went wrong.

Bats: The Epic Fail of the Worst IPO Ever

By Dan Beucke, Business Week

March 23, 2012

Bats priced 6.3 million shares through underwriters yesterday and appeared set to begin trading about 90 minutes into the day when chaos erupted. While the company quoted its shares at $15.25 at 10:45 a.m. on its website, feeds including those sent to Bloomberg LP displayed different prices. At 11:14 a.m., Bloomberg received data showing 1.26 million shares had traded, with the most recent execution at 3.84 cents and the lowest transaction at 0.02 cent.

Compounding the confusion, a single trade for 100 shares executed on a Bats venue at 10:57 a.m. briefly sent Apple down more than 9 percent to $542.80, data compiled by Bloomberg show. Two more transactions, which sent the stock back above $598, were made before the halt. The stock stayed around that level once trading resumed five minutes later and the errant trade, along with the Bats transactions, were later canceled. Bats sent a notice about 10 minutes before the Apple trade saying it was investigating “system issues” affecting companies with ticker symbols ranging between A and BF. Apple’s is AAPL. Bats’s ticker was BATS. At 11:07 a.m., Bats’s BYX Exchange took a procedural step known as “declaring self help” against its BZX exchange, indicating that it had stopped routing orders to the market because BZX wasn’t responding to messages quickly enough.

BATS exchange withdraws IPO after stumbles

By Olivia Oran, Jonathan Spicer, Chuck Mikolajczak and Carrick Mollenkamp, Reuters

Sat Mar 24, 2012 1:37pm EDT

The debacle raised questions for regulators, investors and the underwriters, including Citigroup Inc, Morgan Stanley and Credit Suisse Group, which were listed before the IPO as major shareholders.

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Since the May 2010 “flash crash” in which nearly $1 trillion in market value disappeared in minutes, the Securities and Exchange Commission under Chairman Mary Schapiro has pledged to crack down on problems in the high-speed electronic marketplace, which regulators worry has grown unstable and perhaps unfair as high-frequency trading has grown in prominence.

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It is expected to draw even more scrutiny from regulators looking into the soundness of the exchange’s servers, trade-matching engines and computer codes, and it could land BATS in legal trouble for withdrawing its IPO after trades were executed in the public marketplace, according to experts.

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“It’s just another black eye for the fragmented equity structure,” said Joe Saluzzi, co-head of equity trading at Themis Trading in Chatham, New Jersey, and a frequent critic of U.S. equities market structure. “Every day we see things like flash crashes and now IPOs that can’t get off the ground.”

But don’t worry, our captive fearless SEC facilitators regulators are on the case and the Obama/Holder Justice Department will make sure that everyone skates any irregularities are appropriately corrected.

Or not.

Crossposted from The Stars Hollow Gazette

Anger at Goldman Still Simmers

By GRETCHEN MORGENSON, The New York Times

Published: March 25, 2012

Copper River relied on Goldman to handle its negative bets, known as short sales, in compliance with securities laws. These regulations require that before a short sale can be made, the shares must be borrowed; Mr. Cohodes said his fund had paid Goldman approximately $100 million to borrow shares over many years.

In his testimony, Mr. Cohodes said he and his partners at Copper River had even come to wonder if Goldman had in fact borrowed the shares for the firm. Without the shares, Copper River faced losses, while Goldman could have come under regulatory scrutiny.

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Along with a handful of traders at smallish firms, Goldman’s securities lending unit has been cited by regulators for lapses. In 2010, the S.E.C. sued Goldman on accusations that it “willfully” had failed to preborrow shares as required for its short-selling clients in January 2009, shortly after Copper River went out of business. The improprieties involved 385 short sales in which the firm had not located shares for its brokerage clients to borrow.

Goldman paid $450,000 to settle the case without admitting or denying the accusations.

Failing to borrow shares on behalf of customers is illegal because of concerns about market manipulation. But it can also leave a brokerage firm’s client who is short a stock dangerously exposed to an escalating price in the shares. If a stock shorted by an investor began to trade higher and the shares were not borrowed, closing out the transaction would require the fund to buy them in the open market. That could propel the already rising price of the shares even higher, adding to the costs of the trade.

On the Meaningless of Contracts and the New Optionality

Yves Smith, Naked Capitalism

Monday, March 26, 2012

With a rise in an options-based view of business, it isn’t hard to see how a pernicious dynamic sets in. It used to be that only occasional scumbags would behave this way, and you’d write it off as bad luck and a reminder to do a decent amount of due diligence on new customers. But when this sort of behavior becomes common, the cost of doing business escalates since no one can trust anyone’s commitments. You can see this now in the way many types of contracts have changed. It used to be possible to do business with a short agreement. In many fields, they’ve now become excruciatingly long, since the odds of them being litigated is correctly seen as higher, so nailing down all sorts of possible outcomes is more important. And longer agreements means more protracted negotiations. It amounts to a tax on commerce.

And this pattern is particularly devastating to small businesses. It’s comical to see the Administration talk up the need to help entrepreneurs yet gut the rule of law to help banks.

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We can see the damage of the breakdown of the norms of commerce. The private label securitization market, which functioned fairly well when originators and servicers acted in accordance with their agreements with investors, is now dead. The securitization market, which was 60% private label prior to the crisis, is now effectively 100% government guaranteed (there was all of one private label deal last year). Various reform proposals have been suggested; some have been well thought out enough that past investors reacted positively. But of course, the sell side nixed anything far-reaching enough to make a real difference. The investors I know say there won’t be a private label securitization market ex root and branch changes for at least ten years.

So it looks like Marx is being proven correct, that capitalism sows the seeds of its own destruction, although not by the route he envisaged, that of a worker revolt. Instead, it comes about via the capitalists turning on each other to try to secure an even better deal.