Archive for the ‘Congress’ Category
A new book is out that takes a look at how Wall Street siphons money from US retirement plans. Pam Martens reviews it in Wall Street on Parade:
The riveting writer, Michael Hudson, has read our collective minds and the simmering anger in our hearts. Millions of American have long suspected that their inability to get financially ahead is an intentional construct of Wall Street’s central planners. Now Hudson, in an elegant but lethal indictment of the system, confirms that your ongoing struggle to make ends meet is not a reflection of your lack of talent or drive but the only possible outcome of having a blood-sucking financial leech affixed to your body, your retirement plan, and your economic future.
In his new book, “Killing the Host,” Hudson hones an exquisitely gripping journey from Wall Street’s original role as capital allocator to its present-day parasitism that has replaced U.S. capitalism as an entrenched, politically-enforced economic model across America.
This book is a must-read for anyone hoping to escape the most corrupt era in American history with a shirt still on his parasite-riddled back.
Hudson writes from his most powerful perch in chapters describing how these financial parasites have tricked our society into accepting them as a normal, productive part of our economy. (Since we write about these thousands of diabolical tricks four days a week at Wall Street On Parade, poignant examples came springing to mind with every turn of the page in “Killing the Host.” From the well-placed articles in the Wall Street Journal to a front group’s pleas for more Wall Street handouts in a New York Times OpEd, to the dirty backroom manner in which corporate speech was placed on a par with human speech in the Supreme Court’s Citizens United decision, to Wall Street’s private justice system and the Koch brothers’ multi-million dollar machinations to instill Ayn Rand’s brand of “greed is good” in university economic departments across America — America has become a finely tuned kleptocracy with a sprawling, sophisticated public relations base.
How else to explain, other than kleptocracy, the fact that Wall Street’s richest mega banks collect the life insurance proceeds and tax benefits on the untimely deaths of their workers – all codified into law by the U.S. Congress – making death a profit center on Wall Street. Or, as Frontline revealed, that two-thirds of your 401(k) plan over a working lifetime is likely to be lost to financial fees.
Hudson writes: “A parasite’s toolkit includes behavior-modifying enzymes to make the host protect and nurture it. Financial intruders into a host economy use Junk Economics to rationalize rentier parasitism as if it makes a productive contribution, as if the tumor they create is part of the host’s own body, not an overgrowth living off the economy. A harmony of interests is depicted between finance and industry, Wall Street and Main Street, and even between creditors and debtors, monopolists and their customers.”
What has evolved, says Hudson, is that Wall Street banks have “become the economy’s central planners, and their plan is for industry and labor to serve finance, not the other way around.”
To gloss over the collapse of this depraved economic model in 2008, Hudson says these Wall Street central planners simply depict “any adverse ‘disturbance’ as being self-correcting, not a structural defect leading economies to fall further out of balance. Any given development crisis is said to be a natural product of market forces, so that there is no need to regulate and tax the rentiers.”
Similarly, when citizens rise up en masse to demand a realignment of their economy, as happened with the Occupy Wall Street movement, first the public relations masterminds dismiss them as an unhinged gathering of smelly hippies, followed by their violent eviction in the middle of the night, with military precision, by the Praetorian Guard of the kleptocracy. In Manhattan, the Praetorian Guard (NYPD) has a high-tech surveillance center mutually staffed by cops and Wall Street personnel – andmainstream media find nothing unusual about this.
Hudson correctly calls 2008 a “dress rehearsal,” writing that “Wall Street convinced Congress that the economy could not survive without bailing out bankers and bondholders, whose solvency was deemed a precondition for the ‘real’ economy to function. The banks were saved, not the economy.” Hudson adds that the “debt tumor” was left in place. (This is the nightmare we are presently watching unfold.)
The result of the systemic disabling of regulations on Wall Street has resulted in the following, says Hudson: “…the wealthiest One Percent have captured nearly all the growth in income since the 2008 crash. Holding the rest of society in debt to themselves, they have used their wealth and creditor claims to gain control of the election process and governments by supporting lawmakers who un-tax them, and judges or court systems that refrain from prosecuting them. Obliterating the logic that led society to regulate and tax rentiers in the first place, think tanks and business schools favor economists who portray rentier takings as a contribution to the economy rather than as a subtrahend from it.” (But, of course, those business schools are financially incentivized to think that way.)
The outgrowth of these tricks to make parasites appear to be a natural appendage to a well-functioning economy results in a “veritable Stockholm Syndrome.” Hudson explains:
“Popular morality blames victims for going into debt – not only individuals, but also national governments. The trick in this ideological war is to convince debtors to imagine that general prosperity depends on paying bankers and making bondholders rich – a veritable Stockholm Syndrome in which debtors identify with their financial captors.”
Hudson has much to say on the perversity of corporations buying back their own stock. In one chapter, Hudson writes:
“In nature, parasites tend to kill hosts that are dying, using their substance as food for the intruder’s own progeny. The economic analogy takes hold when financial managers use depreciation allowances for stock buybacks or to pay out as dividends instead of replenishing and updating their plant and equipment. Tangible capital investment, research and development and employment are cut back to provide purely financial returns.”
On the timely debate over wealth and income inequality, Hudson writes that “Asset-price inflation is the primary dynamic explaining today’s polarization of wealth and income. Yet most newscasts applaud daily rises in the stock averages as if the wealth of the One Percent, who own the great bulk of stocks and other financial assets, is a proxy for how well the economy is doing. What actually occurs is that financing corporate buyouts on credit factors interest payments and fees into the prices that companies must charge for their products.”
Where this leads, says Hudson, is that “Paying these financial charges leaves less available to invest or hire more labor. Likewise for the overall economy, the effect of a debt-leveraged real estate bubble and asset-price inflation is that interest payments and fees to bankers and bondholders leave less available to spend on goods and services. The financial overhead rises, squeezing the ‘real’ economy and slowing new investment and hiring.”
Hudson is clearly on to something. The U.S. seems to be crashing like clockwork every 8 years with the crashes gaining in intensity. The 2000 dot.com crash wiped $4 trillion out of investment accounts while, 8 years later, the 2008 crash brought down the whole financial system, the U.S. and global economy, and it’s still producing a dead weight on economic growth. Next year will mark the eighth year since the 2008 crash and if last week’s market convulsions were any indication, we’re in for some very rough sledding.
Chapter 8 of “Killing the Host” begins with this quotation from John Maynard Keynes: “When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done.” Hudson expands further: . . .
The Onion has a good headline: “Jeff Bezos Assures Amazon Employees That HR Working 100 Hours A Week To Address Their Complaints.”
But the problem of excessive demands—i.e., exploitation of the workforce—is serious. And, as Tim Wu points out in an interesting piece in the New Yorker, it is not necessarily due to individuals in charge. The entire article is worth reading, but let me quote just his conclusions:
. . . What all of these explanations [for the excessive demands of the modern workplace] have in common is the idea that the answer comes from examining workers’ decisions and incentives. There’s something missing: the question of whether the American system, by its nature, resists the possibility of too much leisure, even if that’s what people actually want, and even if they have the means to achieve it. In other words, the long hours may be neither the product of what we really want nor the oppression of workers by the ruling class, the old Marxist theory. They may be the byproduct of systems and institutions that have taken on lives of their own and serve no one’s interests. That can happen if some industries have simply become giant make-work projects that trap everyone within them.
What counts as work, in the skilled trades, has some intrinsic limits; once a house or bridge is built, that’s the end of it. But in white-collar jobs, the amount of work can expand infinitely through the generation of false necessities—that is, reasons for driving people as hard as possible that have nothing to do with real social or economic needs. Consider the litigation system, in which the hours worked by lawyers at large law firms are a common complaint. If dispute resolution is the social function of the law, what we have is far from the most efficient way to reach fair or reasonable resolutions. Instead, modern litigation can be understood as a massive, socially unnecessary arms race, wherein lawyers subject each other to torturous amounts of labor just because they can. In older times, the limits of technology and a kind of professionalism created a natural limit to such arms races, but today neither side can stand down, lest it put itself at a competitive disadvantage.
A typical analysis blames greedy partners for crazy hours, but the irony is that the people at the top are often as unhappy and overworked as those at the bottom: it is a system that serves almost no one. Moreover, our many improvements in the technologies of productivity make the arms-race problem worse. The fact that employees are now always reachable eliminates what was once a natural barrier of sorts, the idea that work was something that happened during office hours or at the physical office. With no limits, work becomes like a football game where the whistle is never blown.
Litigation may be an extreme example, but I do not doubt that many other industries have their own arms races that create work that is of dubious necessity. The antidote is simple to prescribe but hard to achieve: it is a return to the goal of efficiency in work—fulfilling whatever needs we have, as a society, with the minimal effort required, while leaving the option of more work as a hobby for those who happen to love it. In this respect, it seems like no little irony that Amazon should be a brutal workplace when its ostensible guiding principle is making people’s lives better. There must be a better way.
In a situation such as this, a government that is by, for, and of the people and is focused on the general welfare can play a role. While no single company can afford to slack up because of competitive pressure, the government can set (and enforce—important aspect) ground rules that protect workers and level the playing field for all companies. For example, enforcing a 40-hour work week for all employees would enable companies to give their workforce time for family, rest, and activities other than work.
As an example of how this works, automobile manufacturers are required to meet certain safety standards by law. Without such laws, there would be a race to the bottom as companies cut costs by jettisoning the safety measures built into their cars. (You can see that they would by noting how strenuously and vigorously the automobile industry has fought the introduction of each safety requirement: if it were left up to them, they would never incorporate such measures for fear that their competitors would undercut them on price by having lower costs. But a law requiring the observance of such safety standards takes off the table the option of ignoring the standards, so no one can get a competitive advantage by ignoring safety.
Because of the nature of the system, however, the change probably must be imposed from without, since the companies have entered a trap from which they cannot otherwise escape.
Here are some very interesting posts that I won’t blog in detail. But I will say that they are well worth teh click:
Three Studies Confirm: Obamacare Isn’t a Job Killer (important because the GOP repeatedly claimed that Obamacare will kill jobs. It didn’t.)
The Iran Deal Benefits U.S. National Security: An Open Letter from Retired Generals and Admirals (no better deal is possible, and this deal is in fact good—most of those criticizing have never read it, and none of them have a better alternative to propose.)
Whatever happened to that sequester thingy? (another example of the dysfunctional, nonproductive, self-indulgent, and corrupt US Congress)
Rare Octopus’s Mating and Preying Habits Have Cephalopod Fans Psyched (I feel close to the spirit of Stephen Maturin in this article.)
Radley Balko has his own excellent collection of links, to wit:
- Two journalists, one from the Huffington Post and one from the Washington Post, who were arrested during last year’s Ferguson, Mo., protests have been charged with what essentially amounts to “contempt of cop.” That isn’t and shouldn’t be a crime, but it isn’t even clear they did that. Certainly doesn’t do much to dispel the accusation that St. Louis County prosecutors are petty, vindictive, and use their power as a weapon.
- On the importance of jury nullification, and why informing jurors of their rights can never be a crime.
- Joe Biden has a long and sordid record supporting policies that led to mass incarceration.
- Prisoners in New York’s Clinton Correctional Facility say they were subjected to indiscriminate beatings after the high-profile escape last month.
- Amnesty International formally endorses the decriminalization of consensual sex work.
- Albuquerque police department refuses to release body camera footageof the critical moments before its SWAT team shot and killed a man.
- The threat to free speech on campus and “the coddling of the American mind.”
- Federal judge strikes down Idaho’s ridiculous “ag gag” law.
One Congressman Has The Courage To Admit The True Consequences Of His Vote For The Iraq War (quite striking: a GOP Congressman from NC, who states,
“I did not do what I should have done to read and find out whether Bush was telling us the truth about Saddam being responsible for 9/11 and having weapons of mass destruction,” Jones said during an interview on The Tyler Cralle Show. “Because I did not do my job then,” Jones continued, “I helped kill 4,000 Americans, and I will go to my grave regretting that.”
This Deep-Sea Creature is Creepy As Hell (creepy, but also very interesting)
Scott Walker Finally Finds a Big-Government Subsidy He Loves (directing $250 million of taxpayer money to a professional sports team: certainly that’s more important than education or the pensions of state workers)
Obama Is Playing Hardball, and Guess Who Doesn’t Like It? (cute column by Kevin Drum—not to spoil his surprise, but do you notice that the initials W.P. can stand either for Washington Post or “whining putz”?)
Democrats Continue to Delude Themselves About Obama’s Failed Guantánamo Vow (Obama made a serious vow and then ignored it—and that seems to happen a lot with him)
James Fallows has an excellent column, specific and detailed, on why the Iran deal will pass. And he includes an analysis of Netanyahu’s speech and position, which, to be honest, are idiotic. Netanyahu used the term “no brainer,” and indeed his proposal seems to have been created without giving it any thought whatsoever: a true no-brainer.
Well worth reading.
And read as well Fallows’s account of Obama’s explanation of why we should sign the Iran deal.
Banks—and therefore their hirelings in Congress—do not want homeowners declaring bankruptcy, so they simply made it illegal. David Dayen reports in The Intercept:
Donald Trump took advantage of the nation’s bankruptcy laws four times in the last 24 years, and if ordinary Americans in this country were allowed to do the same, the country would be in markedly better shape economically, with a far stronger post-recession recovery.
Asked during Thursday night’s Republican presidential debate whether his four corporate bankruptcies were a black mark on his economic stewardship, Trump sounded a bit defensive. “I have never gone bankrupt,” he said, making a distinction between a personal and a corporate bankruptcy, and anyway it was only four times among “thousands” of deals.
But he said flatly: “I have used the laws of this country just like the greatest people that you read about every day in business have used the laws of this country, the chapter laws, to do a great job for my company, for myself, for my employees, for my family, et cetera.”
Trump is absolutely correct. Every lending contract in America has the potential for bankruptcy lurking in the background. Lenders – who as Trump said “aren’t babies” but “total killers” — are sophisticated enough to know about this option when they lend people money. In fact, they not only assume the risk of bankruptcy, but price it into the deal when they lend Donald Trump or anyone else money.
Morals do not enter into the equation. No lender thinks less of Donald Trump for the using the bankruptcy process. They simply take their losses and move on.
In fact, only one group gets hit with this stigma. Only one group of people in America are denied this fully legal, fully rational, fully American opportunity to wipe the slate clean, and decried as deadbeats for even thinking about it: The homeowner of a primary residence, who by law cannot get mortgage debt discharged in bankruptcy.
During the foreclosure crisis, banks and their allies savaged homeowners who “walked away” from mortgage debt. They equated defaulting on payments with failing the duties of citizenship. They warned of “strategic defaults” by conniving homeowners who would deliberately stiff lenders to get a loan modification.
In reality, the highest-profile strategic default of the foreclosure crisis came from the leaders of the Mortgage Bankers Association, a trade group for the lending industry, who walked away from their 10-story headquarters in Washington. Just a few months earlier, their spokesman argued that borrowers had to keep paying: “What about the message they will send to their family and their kids and their friends” if they defaulted, the spokesman asked. Indeed.
The Tea Party, the very movement whose energy Trump has tapped into so successfully, was founded on the principle of not having to “subsidize the loser’s mortgages.”
Businesspeople defaulting on each other never raised this kind of ire: only if ordinary people wanted to allocate losses in the greatest crisis since the Depression onto the banks who caused it did the rage emerge.
When Congress made an effort to change the bankruptcy laws, these same banks howled in protest. Members of the Obama administration, despite expressing support for the idea of allowing judges to modify primary mortgages during the 2008 campaign, decided to sit on their hands and let Senators drowning in bank cash kill the idea, leading Senator Dick Durbin to pronounce about Congress that the banks “frankly own the place.”
In fact, everyone would have benefited from relieving primary mortgage debt, the absence of which led to at least six million foreclosures. Economists Amir Sufi and Atif Mian have shown how the post-recession recovery was markedly slower because of thefailure to discharge debt, which depressed consumer spending. This huge policy mistake created an unnecessary drag on the economy and made miserable the lives of millions, all so banks didn’t have to bear some of the pain of the post-housing bubble fallout.
Millions of lives were ruined by that asymmetry. . .
That’s via this report in Salon by Scott Eric Kaufman:
Massachusetts Senator Elizabeth Warren was none too pleased with Republican’s attempt to grandstand on the issue of women’s health as the first GOP primary debate approaches, and she voiced her displeasure to her senate colleagues in no uncertain terms on Monday.
“I come to the Senate floor today to ask my Republican colleagues a question,” she began. “Do you have any idea what year it is? Did you fall down, hit your head, and think you woke up in the 1950s? Or the 1890s? Should we call for a doctor?”
“Because I simply cannot believe that in the year 2015, the United States Senate would be spending its time trying to defund women’s healthcare centers. On second thought, maybe I shouldn’t be surprised. The Republicans have had a plan for years to strip away women’s rights to make choices over our own bodies.”
Warren explained that in 2013, the GOP threatened to shut down the government if they couldn’t change the Affordable Care Act in a way that would allow employers to deny access to birth control. In March 2015,they stopped a bill that would’ve curtailed human trafficking because it could have allowed for the private funding of abortions. In June, Republicans passed a budget that eliminated Title X.
Moreover, she said, . . .
Of course, the GOP has little interest in realism, so they are struggling to kill the deal (and, just as in the case of Obamacare, with absolutely nothing to replace it). James Fallows has an excellent column in the the Atlantic:
The latest set of indicators:
1. Logic. Graham Allison, who originally made his academic reputation withEssence of Decision, his study of the negotiations that averted a U.S.-Soviet nuclear catastrophe in 1962, has another installment in his series of Atlantic essays on the details and implications of the nuclear agreement with Iran. This one is called “9 Reasons to Support the Iran Deal,” and it begins by reestablishing a crucial point about the deal’s critics.
None of them, from Israeli Prime Minister Benjamin “historic mistake” Netanyahu to U.S. Senator Lindsey “it’s a declaration of war on Israel” Graham, has yet risen to the challenge of offering a better real-world alternative. Better is something that would make Iran less likely to develop a nuclear weapon. Real-world is something that the Russians, Chinese, and other nations on “our” side would agree to demand from the Iranians, and that the Iranians would accept too. As the saying goes, this is the worst possible deal, except for all the alternatives.
2. A vote for. Representative Adam Schiff of California, the ranking Democrat on the House Intelligence Committee and “a moderate’s moderate,” tells theAtlantic’s Jeffrey Goldberg that he thinks the deal is in the best interests of both the United States and Israel, so he will support it. “At the end of the day, I could not find an alternative that would turn out in a better way than the deal,” he told Goldberg, making the essential real-world point. “The risks associated with rejection of the deal are quite a bit higher than the risks associated with going forward.”
[More votes for. Significantly, on Tuesday Democratic Senators Tim Kaine of Virginia, Bill Nelson of Florida, and Barbara Boxer of California sign on. On the WaPo’s site Greg Sargent explains why these are bellwether declarations.]
3. A potential vote against. I take this headline from Politico as a good sign for the deal’s prospects in Congress: . . .