Where is the check on the actions of these economic hitmen?

So I'm reading the article in today's New York Times about one of the Security and Exchange Commission's own witnesses turning on them on the stand in a case against Fabrice Tourre, a former Goldman Sachs trader charged with defrauding investors in complex mortgage securities.

One,  Paolo Pellegrini.  It appears he was someone who called the crash of the housing bubble early on and helped create the hedge that was probably one of the most profitable market wagers in history for Goldman Sachs (which gets me thinking what is the most profitable hedge in history? but I digress...).

Anyways, maybe its Craig and de la Merced's writing which paints this guy as a complete asshat; but he seems like a real number.

Wall Street hotshots like this guy literally made a killing--just look at the increase in suicides, heart attacks, instances of child abuse in America post recession--and they hold no remorse.

Financial actors used to fear having their heads chopped off by angry mobs.  The lack of repercussions for actions which devastate the lives of millions is a major problem on our hands; yet Republicans want to hand the reins back to Wall Street and most Democrats don't seem to want to touch the topic publicly (sure they talk tough at townhalls full of Democrats but thats a lot of hot air).

The Daily Show ripping into the George Zimmerman verdict.

The Daily Show
Get More: Daily Show Full Episodes,Indecision Political Humor,The Daily Show on Facebook

Has the philosophy of personal responsibility ruined criminal justice and economic policy?

Boston Review has a Forum up right now you need to check out--Beyond Blame: Would we better off in a world without blame?

Barbara H. Fried opens the debate staking the claim that the philosophy of personal responsibility has ruined criminal justice and economic policy.  That it's time to move past blame.  I'm inclined broadly to agree with her.

The Forum includes some good follow ups from others which I am reading my way through now.

Do check it out.

Trayvon Martin and the Irony of American Justice...

If you only read one thing on Trayvon Martin, read Trayvon Martin and the Irony of American Justice by Ta-Nehisi Coates in The Atlantic.

Also worth a gander is How Laissez-Faire Racism Explains The Trayvon Martin Case by John Halpin over at ThinkProgress.

If you are looking for a book dealing with some of the systemic issues I think this case has brought to the surface check out The New Jim Crow: Mass Incarceration in the Age of Colorblindness

An overreliance on military preponderance is badly misguided...

Daniel Drezner discusses his article “Military Primacy Doesn’t Pay (Nearly As Much As You Think)”

Reality based community 1 -- Flat Earth Economy Spinmasters-- 0

Josh Marshall: Better CNBC Anchors Might Be Required

If you're an Elizabeth Warren fan or really if you're just into facts, you gotta watch this. It's Elizabeth Warren going on CNBC's Squawk Box, defending her plan to bring back a new version of the Glass-Steagall Act. It's maybe the best example of the sort of matter-anti-matter reaction that happens when someone who actually knows some history and policy makes first contact with a gaggle of ignorant CNBC yakkers

Wall Street is already going in to overdrive to kill off the bill.  Elizabeth Warren won one skirmish in what will likely be a bloody battle.

Go do some homework as you will likely be needed to help kill off Flat Earth Economy Spinmasters puppeting these CNBC anchors around dinner tables and water coolers over the next few months.

Simon Johnson: Five Facts about New Glass-Steagall:

The biggest U.S. banks have become too big to manage, too big to regulate, and too big to jail. At a stroke, the proposed law would force global megabanks such as JPMorgan Chase and Bank of America to become smaller and much simpler -- divorcing high risk activities from plain-vanilla traditional banking. Their failures would no longer threaten to bring down the economy.

Naturally, Wall Street will respond with a huge disinformation campaign, saying that the bill would cause the sky to fall. As the debate intensifies, keep in mind the following five points. 

1) The bill would actually help small banks, because it would force the taxpayer-subsidized megabanks and related financial companies to break up. Anything that tilts the playing field back toward smaller financial institutions is good for the small business sector. 

2) The simplifying intent of the 21st century Glass-Steagall Act is complementary to other serious reform efforts underway, including plans for the “resolution,” or managed liquidation, of any financial firm that fails. The main problem for resolution is that the largest firms are incredibly complex, and the impact of any failure could reach far and wide in unpredictable way. Making the biggest financial firms simpler would also dovetail nicely with the legislation proposed earlier this year, by Senator Sherrod Brown, Democrat of Ohio, and Senator David Vitter, Republican of Louisiana, that would significantly increase capital requirements for the very largest banks. 

3) Proponents of big banks will claim that the breakdown of the original Glass-Steagall Act (which separated commercial and investment banking) did not contribute to the crisis of 2007-08. That view is so wrong that James Kwak and I wrote an entire book debunking it. More important, what did or did not happen in the run-up to 2007 is largely irrelevant. The doctrine of “too big to fail” has been with us for some time, but it was fully established by the policy response that followed the collapse of Lehman Brothers. 

4) As the preamble to the 21st century Glass-Steagall Act points out, it represents a convergence with European reform thinking, as seen in the Vickers Report (for the U.K.) and the Liikanen Report (for Europe more broadly). We need structural change in banking in all major financial centers if large-scale cross-border banking is to become safer and better run.

5) The Treasury Department is not going to welcome the legislation -- in fact, it may assist in mobilizing opposition. At this stage, this is an advantage, not a problem. Treasury has a severe case of reform fatigue. It’s time for someone else to carry the ball.
We can also expect Wall Street to claim that that the bill is all the work of people with “pitchforks” -– meaning populists who do not understand economics. On the contrary, the 21st century Glass-Steagall Act is very smart economics, based on a deep understanding of the politics that produce financial instability. It draws broadly on bipartisan and technocratic thinking, led by people such as Richard Fisher, president of the Dallas Fed, Sheila Bair, the former head of the Federal Deposit Insurance Corporation, and Tom Hoenig, the current vice-chairman of the F.D.I.C. 

In claiming that federal action is going to bring down the markets, today's anti-reformers are simply repeating what their counterparts said before and just after the first Glass-Steagall Act was passed in the 1930s. What we got instead was more than 50 years of financial stability and a rising middle class.

As a side note, I'm really glad to see some rumblings from those not ready to hand the keys back to the Wall Street Fan Club. 

Where are the pitchforks?--Bill Moyers edition

Yves Smith comments:

Bill Moyers interviewed Marty Kaplan who heads the Norman Lear Center at the University of Southern California on how the choice of media stories helps keep Americans politically somnambulant. While the role of propaganda and the shaping of mass culture clearly plays a big factor in Americans’ learned helplessness, it’s important also to recognize that there are other factors at play. 

The first obstacle is that mass protests don’t have strong roots here. They are the province of the disenfranchised and/or the young, and the current generation of young has been bred to be conformist (a generation plus of overly attentive parenting being the norm) plus the one-two punch of a lousy job market plus debt slavery (even the kids who have gumption know how much an arrest will hurt their job prospects). But the second is the way Americans have had the right to assembly neutralized. Look at the way peaceful protestors are routinely roughed up and jailed. And large scale demonstrations are simply stymied. More than a decade ago, on the eve of the Gulf War (and in freezing weather) hundreds of thousands attempted to join protests in NYC at UN Plaza. But the police had cordoned off Manhattan at Second Avenue and used men, dogs, and horses to shunt demonstrators up to Harlem. So the crowd that actually was able to get to the official location was deceptively small-looking, suiting the official narrative that not many people in the US were opposed to an invasion.

Join me in one small step forward.

Read Dani Rodrik, you should.

The Right Green Industrial Policy:

Although full pricing of carbon would be a far better way to address climate change, most governments apparently prefer to rely on subsidies and regulations that increase the profitability of investments in renewable energy. Often, the authorities' motive seems to be to give domestic industries a leg up in global competition.

Intelligent industrial policy should recognize errors and revise strategies accordingly.

Normally, we would consider these competitive motives to be beggar-thy-neighbor in nature. Market-share considerations are zero-sum from a global standpoint in traditional industries, and any resources invested in generating national gains come at the cost of global losses.

But in the context of green growth, national efforts to boost domestic green industries can be globally desirable, even if the motives are parochial and commercial. When cross-border spillovers militate against taxing carbon and subsidizing technological development in clean industries, boosting green industries for competitive reasons is a good thing, not a bad thing.

Opponents of industrial policy rely on two arguments. The first is that governments do not have the information needed to make the right choices about which firms or industries to support. The second is that once governments are in the business of supporting a particular industry, they become vulnerable to rent-seeking and political manipulation by well-connected firms and lobbyists. In the United States, the 2011 bankruptcy of Solyndra—a solar cell manufacturer that folded after having received more than a half-billion dollars in government loan guarantees—seems to illustrate both failures.

In reality, the first of these arguments—lack of omniscience—is largely irrelevant, while the rent-seeking problem can be overcome with appropriate institutional design. Good industrial policy does not rely on governments' omniscience and ability to pick winners; indeed, failures are an inevitable and necessary part of a well-designed program.

While it is too early to reach a conclusive verdict on the U.S. loan-guarantee program, it is clear that the Solyndra case cannot be properly evaluated without taking into account the many successes that the program has spawned. Tesla Motors, which received a $465 million loan guarantee in 2009, has seen its shares soar and has repaid its loan early. An evaluation of U.S. Department of Energy efficiency programs found that the net benefits amounted to $30 billion—an excellent return for an investment of roughly $7 billion over 22 years (in 1999 dollars). Interestingly, much of the positive impact resulted from three relatively modest projects in the building sector.

Efforts to boost domestic industries can be globally desirable in terms of green growth.

Intelligent industrial policy requires mechanisms that recognize errors and revise strategies accordingly. Clear objectives, measurable targets, close monitoring, proper evaluation, well-designed rules, and professionalism provide useful institutional safeguards. As challenging as applying them may be, they constitute a much less formidable requirement than that of picking winners. Moreover, an explicit industrial policy—conducted self-consciously and designed with pitfalls in mind—is more likely to overcome the typical informational and political barriers than one that is implemented surreptitiously, as is too often the case.

Green industrial policy can be damaging when national strategies take the form not of subsidizing domestic industries but of taxing foreign green industries or restricting their market access. The case of solar panels provides a cautionary tale. Trade disputes between China, on the one hand, and the United States and Europe, on the other, have attracted much attention. Fortunately, this is the exception rather than the rule for green industrial policy. Trade restrictions have so far played a small role relative to subsidies to domestic industries.

In practice, we are unlikely to get purely green industrial policy, which would focus solely on the development and diffusion of green technologies while excluding considerations of competitiveness, commercial gain, and employment growth. Indirect but politically salient objectives such as "green jobs" will most likely continue to present a more attractive platform for promoting industrial policy than alternative energy or clean technologies.

From a global standpoint, it would be far better if concerns about national competitiveness were to lead to a subsidy war, which expands the global supply of clean technologies, rather than a tariff war, which restricts it. So far, we have been getting the former, though there is no way to determine whether, or for how long, this trend will continue.

One thing we can learn from life...

Never underestimate the power of overcoming.

Its time to aspire for the possible.

Something awesome happened yesterday in Atlanta.

A temporary alliance of Tea Party activists, environmentalists, and the solar industry convinced the Public Service Commission of something which at its core was a question about how we structure our markets and if it matters. These activists joined together and made the case that yes it does.

The PSC agreed and voted to expand the production of solar energy in this state.

It was a small victory--525 megawatts of new solar is a modest increase (1%) in Georgia Power's energy mix--in a long hard struggle to build a Green economy.

But the decision will move our state into the forefront of solar energy, helping to create more jobs, increase economic investment in rural Georgia, and help lower electric bills for years to come.  It was an investment in our future.  But more than that, it was a group of people joining together to ask our elected officials to aspire for the possible--because its within our grasp.

The PSC responded back...  Yes we can.

Brilliantly coined as a "Green Tea" alliance, it reminded me of two things.  First, the question of how Government structures the market matters.  We can build winning coalitions, to undermine the power of the 1% to gridlock the political process, around this question.

Secondly, it was a reminder of the potential we all have when we aspire for the possible.



The GOP has spent the past 5 years blocking everything that  Barack Obama and the Democrats have proposed----even the ideas they came up with!

It has taken its toll on all of us--myself included.

I think the battle wounds have crept in to our souls a little bit.

Katrina vanden Heuvel had asked the other day if we have the will to fight for the jobless.  She reminded me that we have a lot of really smart people in DC fighting the good fight.  But she wondered about the will to create the energy needed to force through those changes.

In savoring my Green Tea from yesterday I can answer with great confidence--I think we do.

Go watch the video a few more times if need be to remember.

I think there is a perfect issue that has a broad based coalition staring us in the face.  One which answers Heuvel's concern for the jobless and taps in to overcoming the lack of mobilization. An issue that can help the jobless and help reaffirm our commitment to our seniors, one that is fundamental to the Democratic Party platform, one which will inspire the activists and unite across generations--expand Social Security.

Many Americans don't realize it but we have dangers on the horizon when it comes to retirement security.  Our ability as a society to follow through on these commitments to one another is at risk if we don't come up with a solution.  The experts are already doing so.

The economic crisis brought the retirement security question to the forefront for millions. Hard working Americans watched their life savings wiped out by the actions of bankers, and the failure of policymakers and regulators. But the consequence of their failures of judgement, and outright greed, is trickling down on all of us--harming the quality of life, stunting the future potential of millions.  Its an issue that has mass movement potential if we try to make it happen.

Pew did a study a little bit ago and found that 55% of Americans have experienced some work-related hardship because of the Great Recession.  Be it unemployment, a cut in pay, a reduction in hours, or an involuntary move to part-time work.  Remember we didn't crash the economy--a small sector of elites did.

The report notes:

While nearly all Americans have been hurt in one way or another, some groups have suffered more than others. Blacks and Hispanics have borne a disproportionate share of both the job losses and the housing foreclosures. Young adults have taken the biggest losses on the job front. Middle-aged adults have gotten the worst of the downturn in house values, household finances and retirement accounts. Men have lost many more jobs than women. And across most indicators, those with a high school diploma or less education have been hit harder than those with a college degree or more.

The wealth that was destroyed as the housing bubble came back down to earth is keeping hard working Americans in jobs longer than they expected. They are afraid their Social Security benefits will not be enough to survive on.  We can fix that and help improve the job situation at the same time.

The destruction of wealth was of a magnitude most couldn't have imagined or prepared for as the Pew Study notes:

 This recession has eroded more household wealth than any other episode in the post-World War II era—not surprising in that it was triggered by the bursting of bubbles in both the housing and stock markets, the two principal sources of household wealth. According to the Panel Survey of Income Dynamics (PSID), median household wealth decreased by an estimated 19% from 2007 to 2009. On a percentage basis, this loss of wealth was greater among middle-income households than among those in either the lower or upper income tiers. Similarly, it took a much bigger percentage bite out of the (relatively modest) wealth of black and Hispanic households than of white households

Those hit hardest were hard working Americans, the people who didn't get a bail out, who probably weren't forced or able to to utilize the expansion of food stamps or long term unemployment.  But they were some of the hardest hit in terms of loss of wealth. Many of the those most hardest hit were pivotal in the election and re-election of Obama; but also those most resistent to the Democratic Party message on many other issues.

Now fear of the unknown is locking them in to jobs, jobs that would have been filled by a new generation rising up through the labor market.  But these people can't retire, out of feat--that might help explain some of the populist rage on the right about food stamps and unemployment benefits.

Together we can change that.  

Those on the top and those at the very bottom saw Government help during this economic crisis.   But those in the middle are being forced to stick around in jobs they thought they'd be retiring from. Pew found that among adults 62 and older who are still working

35% say they’ve already delayed retirement because of the recession. Among adults ages 50 to 61 who are currently employed, six-in-ten say they may have to delay retirement because of the recession.

This fear of the unknown is locking up the labor market--having a negative impact across every age group, every family situation.  60% of Americans delaying retirement is not a solution any of us can afford.

In a nation with massive unemployment, where people who should be teaching Math and Science to high school kids, people who should be inventing the next generations of green technologies, people who should be building the future America as they build their careers are instead serving you coffee, cleaning your toilets, and loading your trucks.

We can join together and do something to change this.

I had been meaning to try out Democracy for America's new activist tool YouPower so it gave me a good excuse to give it a run and see what, with a little work, we might be able to change together, through collective action.  Won't you join me?

Join me in aspiring to reaffirm a social commitment to one another which  FDR signed in to law many years ago.  One which might possibly mobilize the kind of Green Tea coalition we saw here in Georgia yesterday.

Lets not play defense against the Republicans, lets get on offense. I think I know a great leader who can help lead the charge navigating the many hurdles and right wing attacks to come. He might even take us up on it if enough of us ask...

Its time to aspire for the possible---because we can.