Financial Reform

I Whine Because You Blow

September 29, 2010 by Bitchy

In the past week, Joe Biden has joined the white house administration chorus in crapping on the democratic base. Here, watch;

Buck up? That sounds familiar. Hmmm…where have I heard that before? Oh right I heard it from Obama here. I’ve heard this enough from the administration to now be able to decisively say that these aren’t gaffes. This is a mystifying strategy. I don’t know what they’re trying to accomplish, but I can tell you that the result is a division in the democratic party.

This happened on MSNBC yesterday:

I wasn’t watching it because I wasn’t home, but I was checking twitter from my iPhone. My twitter feed exploded with anti-Cenk tweets. I had no idea what was going on, so I had to wait until I got home to catch up. I watched the clip and agreed with most of what Cenk said (although a less red-faced delivery might have been more appealing). I listened to Cenk’s show later (The Young Turks) and heard him say that he thought all of those tweets were a concerted effort to astroturf (sometimes right wing media outlets will tell their fans to pile on a specific left wing pundit on a specific day) him. They weren’t. They were tweeted by members of the democratic base that I follow.

These people are active democrats that buy into the idea that the health reform bill was “historic”. They buy into the white houses’ narrative that the administration has delivered on “70% of the promises made in the campaign, in twenty short months”. I suppose that’s one way to look at it, but you have to overlook a whole lot in order to maintain that point of view.

Was the health reform bill historic? No. Was the fact that something happened with health care legislation historic? Yes, but only in that, the last time we reformed health care was fourteen years ago. When something occurs that infrequently, it’s not unreasonable to refer to it as “historic”.

I don’t believe it was historic because it didn’t fundamentally change the system. We all still have to buy our health insurance from private companies, and there is still nothing place to prevent them from gauging us with obscene rate increases every year. I’m not saying it didn’t help some people out. I know that it did. I see comments and blogs from people that have been able to obtain health coverage for the first time in years, every single day. I thoroughly appreciate the difference this reform has made, for the small number of people that it’s helped.

But let’s be honest, this bill wasn’t much more than adequate. It was the bare minimum that could have been passed, and still labeled a “win” for Obama. As lacking as this bill is, there would still have been one way that I would have been satisfied with it – if the administration had actually fought to get the best thing they could, I could have championed this bill. But they clearly didn’t. Does anyone remember President Obama’s moving speech, strongly advocating for a public option? Yeah, me neither. Does anyone remember President Obama strongly advocating for a medicare buy in? Yeah, me neither. Does anyone remember seeing a single republican standing on the senate floor, reading the phone book in an effort to filibuster the passage of the bill? Yeah, me neither.

I could have accepted this crapfest of a health reform bill if you had tried and failed. You didn’t. Don’t tell me to buck up. Fuck you.

Same thing with financial reform. This administration didn’t do a goddamned thing to regulate the derivatives market, which is the thing that every economist agrees, is the root of our financial instability. They didn’t even try.

I will buck up when, and only when you don’t fuck up. And I’m not a whiner, a retard, or a vicious part of the professional left that is trying to undermine you. I’m trying to make you better. If you wanted an uninformed, sycophantic base, you should have run as a republican. Oh yeah, and fuck you!

Even with this split between democrats that need to believe, and democrats that need to think critically, I’m positive that one thing will happen – we will all collectively show up to vote. Active democrats don’t sit out elections, any more than active republicans do. You know who’s not going to show up? Everyone else. The people that turned out en masse to vote for change in 2008 will not be there for you this time. And if you don’t start to deliver meaningful change in the next two years, they’re not going to show up for you in 2012 either.

The sycophants in the democratic party will show up because they feel that you’ve given them enough change that they can stay on board. Disgruntled democrats will show up because we realize that you suck less than republicans. You’re wasting your time crapping on your base. We’re going to be there for you one way or another, but no one else will. You’ve disenfranchised and demoralized everyone else with your half assed legislative “victories”.

This administration sucks at politics if they can’t figure that out. Pointing at your base and saying, “A HA! This is your fault!” when you lose in November is stupid, and it won’t help you get your shit together for 2012. This strategy makes Obama a lot like Bush in that, both love pointing the finger at someone else when they fuck up.

I whine, because you blow. And my whining is not the root of your problems. You blowing is.

Ideological Handcuffs

May 4, 2010May 4, 2010 by Bitchy

I’m depressed.

As you guys know, I’m a news junkie. I listen to right wing news, liberal news, conservative talk, liberal talk, you name it, I engage in it. My news addiction had become the bane of my existence.

I’m not depressed because of a giant oil spill in the Gulf Of Mexico. I’m not depressed because a lunatic tried to detonate a bomb in Times Square. I’m not even depressed because our financial system is hanging by a thread. I’m depressed because all of that media that I diligently take in every day is either batshit crazy, or utterly uninformative.

Let’s start with the BP oil disaster. The right wing media has been cooking up a conspiracy theory that the whole situation wasn’t an accident, but that it was sabotage. I’m not going to go into details about the conspiracy theories, because that would be a giant waste of my time and yours. But Media Matters has compiled a good synopsis. The crux of it is basically that the white house orchestrated the spill so that President Obama could renege on his offshore drilling plans.

Really? He created a monumental oil spill that will potentially fuck up three states so that he doesn’t have to risk expanding offshore drilling, which he’s opposed to, because it could fuck up nearby states? Has anybody ever heard anything more stupid? We just lived through eight years of George W Bush, and this is still the dumbest thing I’ve ever heard!

I’m not depressed because the right wing is crazy and stupid. Sadly, I’ve come to expect that they will be. I’m depressed because there is a legitimate criticism of Obama that we’ll never hear. Obama never should have consented to expand offshore drilling. We have mountains of evidence to show that it can’t be done with 100% certainty that something won’t go wrong. I’m not opposed to it because it sounds bad. I’m opposed to it because logic and reasoning tell me that when you’re drilling under 16,000 pounds of pressure per square inch, a lot of shit can go wrong. And with that kind of pressure, the tiniest thing that goes wrong, rips the whole pipeline open. The legitimate attack on Obama is that his administration didn’t do enough to impose stronger safety regulations on the oil industry and that, like Bush before him, he let the oil industry largely police themselves. But we’ll never hear that from the opposition because they are wearing ideological handcuffs. They want offshore drilling, regardless of the very real and now, demonstrable downside. This is an ideology that isn’t based in facts therefore, it is an an ideology that is impervious to cogent debate. The right wing, who hated Ted Kennedy never went after him for blocking the building of wind farms in his backyard. THERE was a legitimate criticism of someone they loathed, and yet they never raised it because they don’t want to get off our oil dependency. Ideological handcuffs are preventing them from taking legitimate shots at the opposition.

Let’s move onto the failed attempt to bomb Times Square on Saturday. As usual, the right wing was a bottomless pit of useless, uninformative, and crazy. FOX spent its time trying to prop up the Bush administration by falsely claiming that there were no successful attacks on US soil after 9/11. Brian Kilmeade had his panties in a bunch over the reports that the suspect was (OMG) white! Let me digress for a moment to say to Mr. Kilmeade, “Hey ASSHOLE, I don’t care what color this psychopath is. I just want him caught, and so should you!”. I have to admit that my initial reaction to this stupidity was to hope that the suspect was not only white, but was married to Brian Kilmeade’s cousin. But then I realized that my reaction would make me as guilty and stupid as FOX. I don’t have a racial dog in this race and neither should anyone else. I’m a New Yorker. The only thing I want is to catch this shitbag.

Based on the information that we had at the time, shouldn’t the conversation have been about the rise of domestic terrorism? Or maybe, we could have had a discussion about how people become radicalized. But no, we can’t have that from the right because implying that crazy doesn’t have a minimum melanin requirement would contradict their narrative that brown people are to be feared. It’s not terrorism if the terrorist isn’t Muslim. Guess what? Crazy doesn’t have a color. It’s not born, it’s created. We need to talk about how it’s created and why it’s created.

Now onto financial reform. I’ve realized that the worst sources for any sort of information on economic matters are CNBC, FOX Business, Bloomberg, or any other business channel. None of them will report what actually caused the collapse, or what needs to be done to ensure that it will never be done again. They can’t. Watch the commercials that air on these networks, and you’ll see why they can’t. When a company is spending $50M a month on advertising on your network, are you really free to report them in a negative light? Have you ever wondered why you see commercials on TV for products you can’t buy? Why would Dow Chemical, Lockheed Martin, or Boeing spend money on prime time ad buys when you can’t buy their products? Because they’re buying insurance. The networks they advertise with would never risk losing that giant pile of ad dollars, just to keep you informed.If you’re watching news or commentary on television, you need to pay more attention to the advertisers than you do to the content.

Here’s a great clip of audio from a comedian named Jimmy Dore, talking about NBC’s reporting on the financial reform bill. It’s thirteen minutes long, but well worth the listen:

Download

I’m depressed because a freaking comedian is more informative than any of the news outlets that are available to me. He makes an excellent point about how network news is completely devoid of anything resembling investigative journalism anymore. They have become stenographers, relaying information from both sides, making sure that they create a false equivalency in the process.

Our media is handcuffed by financial interests.

Ironically, the best source of legitimate criticism for the Obama administration on television comes from Jon Stewart. Rachel Maddow and Keith Olbermann come in second and third to the comedian.

My favorite source for intelligent, unbiased analysis is The Young Turks. Give them a listen. You can get the first hour of their podcast for free through iTunes. I didn’t love them when I first started listening two years ago, but they’re the first thing I listen to every day now. They aren’t handcuffed in the same way that everyone else out there is.

I’m depressed that comedians are doing a better job of informing Americans than traditional media is. These ideological and financial handcuffs that plague our media is the reason why most Americans have no idea what’s what anymore.

Let’s Abandon Financial Reform

April 26, 2010 by Bitchy

I mean it. Screw trying to reform the system. This is the conclusion I’ve come to after a rigorous review of our current economic system.

Sure, our economic stability went to shit when we started peeling back regulations on banks and investment banks back in the 80s. Regulations that by the way, kept us virtually bust free for forty years. And yes, continued deregulation through the 90s and 00s did make for a more volatile and precarious financial system, resulting in shorter boom and bust cycles. But I still say fuck it. We shouldn’t bother to regulate.

I know I sound nutty again, but there’s a method to my madness.

I really believe that our chances of getting the kind of regulation that we had in the 40s in place is pretty damned close to impossible. The financial industry has way too much money invested in our politicians. Our congressmen, senators, and president aren’t about to bite the hand that feeds them. We’re not going to get any kind of reform that will prevent banks from doing precisely what they did to tank the economy in 2008. We’re sure as hell not going to get any regulation that will stop investment banks from creating new “financial products” that could potentially be even more devastating than the financial products that just screwed us. So let’s not even bother. Who needs another long, drawn out battle like the one we just had on health reform, that will leave us almost as screwed as we would be if we did nothing?

I say we leave the banks alone. Let them do what they want to do, completely unmolested by government oversight.

What we should do instead, is start national banks to compete with the private banking system. I’m not talking about taking over the banks. I’m talking about creating new banks.

Right now, Bank Of America, CitiBank, WaMu, Chase, and all of the other banks that are “too big to fail” are borrowing 100% interest free money from the federal government. Money that we had hoped they would use to lend to small businesses so that we could jump start the economy. But they’re not actually lending that interest free money the way that we wanted them to. They’ve calculated that they can make much bigger short term profits if they take that interest free money and gamble it on derivatives. What they’re not gambling on derivatives, they’re lending to you in the form of credit card debt. And they’re charging you an exorbitant interest rate to borrow money that they’re getting for free.

So why not cut them out? Let’s get rid of the middle man and create national banks. We just did this with student loans. We used to let banks be the middle man in the student loan system. It was a great deal for them. They loaned out the money which they got from the federal government and charged interest for it, but were completely insured by the federal government if you defaulted on paying the loan. They got all of the reward with absolutely no risk. So we finally decided to cut them out of the equation. Student loans are now going to come directly from the federal government. The interest that you pay on those loans will now be paid directly to the federal government to keep the system going. Makes sense, right? So why can’t we do that for small business loans, mortgages, and personal loans? Why are we letting private banks interject themselves between us and the federal government who supplies the money anyway?

This would solve every single problem that we face today. We wouldn’t have to worry about the banks being too big to fail because we would have a solid banking system in place. So if you fail, fuck you. We’ll be just fine. A national bank would give consumers more options. We could decide for ourselves if we trust the private system over the government bank. We wouldn’t have to worry about small businesses being left out in the cold by banks that don’t want to lend to them. We certainly won’t be paying 30% interest on credit cards since national banks wouldn’t have derivatives trading to finance. We wouldn’t have to worry about ever bailing out another undeserving bank executive again. And since banks are so averse to government interference, we could stop the FDIC insurance system that we currently provide them. And we can charge the private banks interest on the money that they’re getting for free now.

This is the perfect solution to every single problem that we face. And the banks would get what they want; free reign.

I honestly don’t know why we’re not having a serious conversation about starting national banks. Unless I’m missing something, it seems like the solution to all of our national problems. And it creates more competition. Who can argue with that?

Capitalism And Leprechauns

April 21, 2010 by Bitchy

I am constantly amazed and confused by people that wax poetic about American capitalism. I can’t tell whether they just don’t understand the fundamental principles of capitalism, or if they’re simply not paying attention to what’s going on in America today.

So let’s clear a few things up by starting with the definition of capitalism:

An economic system based on a free market, open competition, profit motive and private ownership of the means of production. Capitalism encourages private investment and business, compared to a government-controlled economy. Investors in these private companies (i.e. shareholders) also own the firms and are known as capitalists.

In order for capitalism to exist, you must have a situation where the shareholders who have invested in a company partake in the profits of that company. We don’t have anything resembling that anymore. We have a system where executives of a company take all the profits that are left after purchasing a congressman, leaving the shareholders with nothing.

Everybody is aware by now, of the exorbitant bonus structures in the financial industry. On the day that the FEC announced that they were filing charges against Goldman Sachs, the company announced that it would be paying out $5.4 billion in bonuses. This, just 15 weeks after they had paid out $16.2 billion in bonuses. If you take a close look at the readily available financial disclosure information for all of the big banks and investment firms in the US, you’ll see a pattern emerging. Executives seem to be shifting most of their compensation into cash pay outs, rather than accepting stock grants. They’re obviously looting the companies for every cent they can get, while they can get it. None of the five biggest banks in America currently have any assets. You read that right, they’re not worth anything. Their liabilities far exceed their assets, making them “zombie” banks. I’m not going to get super financial wonky on you because this would be a really long post, and I want to focus in on what corporate executives are doing to America. But trust me, I’ve done a lot of research into this, and listened to all of the economists that correctly predicted the subprime collapse. They are all in agreement in their assessments that our banks are worthless. They are also all in agreement that another major collapse is eighteen to thirty-six months away. But more important than what these very smart economists with solid track records of forecasting our economic situation, is what the executives are doing. The fact that they’re suddenly shifting compensation packages to cash payouts tells me that they don’t want stock in the companies that they’re running into the ground. If you don’t want to believe the “doomsday” economists, then look at the evidence and apply a little bit of common sense.

So as these executives are looting the companies that they’re running into the ground, they’re royally fucking their shareholders, who are seeing none of the fake profits. I say fake because the banks are leveraging taxpayer bailout money to show liquidity that doesn’t really exist.

Who are the shareholders? That would be anyone with a 401k in America. Your 401k is invested in virtually all of the companies in the Fortune 500. Because of the way 401k investment options are packaged, most people have no idea what exactly they’re invested in. It’s safe to assume that you own some Bank Of America stock and some Citibank stock and some Goldman Sachs stock, as well as bundles of tech stocks and retail stocks. One of the many shitty things about this system, is that Goldman Sachs is moving most of your 401k money around. They are one of the biggest investment firms in the world, which means that they’re steering your 401k investments. They’re the reason why the dotcom bust happened. They were IPOing total crap companies, in an effort to create imaginary money so that they could amass real profits for themselves. When that well went dry, they created imaginary money in the form of inflating the real estate market. They drove up the value of your house by “qualifying” a pizza delivery guy to buy the house next door to yours. It didn’t matter that the pizza delivery guy couldn’t really afford to buy a house. Goldman Sachs figured out that they could sell the pizza delivery guy’s debt to you, by investing your 401k money in real estate bundles that were worthless.

They got you to create debt on the basis of imaginary equity that they then got you to buy! Amazing, right?

And while they were creating huge profits for “the company”, they weren’t creating any profits for you, the shareholder, because they were taking the lion’s share of the profits out and paying themselves enormous bonuses. The more they understood the precariousness of the financial structure they had created, the more imperative it became for them to grab all the cash they could while there was any cash to grab.

This isn’t limited to the financial sector. Here’s a great story that got on my radar thanks to The Young Turks. It’s a story about Abercrombie & Fitch, whose profits have plummeted in the past 2 years. In 2009, the company netted $254,000, way down from $273M in 2008 and $476M in 2007. Their CEO’s (Mike Jeffries) compensation package for 2008 totaled $71.8M. Think about that for a second, he got paid about 1/3 of everything that the company made in 2008! But that’s just his compensation. We’re not even adding perks into what he cost the shareholders. His travel expenses in 2008 were $1.3M! We don’t know what his total compensation for 2009 was just yet (I’m DYING to find out), but we do know that the board of directors took some steps to tighten his belt. They decided to limit his travel expenses to a mere $200,000 per year. But before you start weeping uncontrollably for his terrible fate, you have to know that in exchange for amending his employment contract (which expires in 2013), Jeffries received a lump sum of $4M! Yes, he got a lump sum that amounts to sixteen times what the company made in profits last year, for simply agreeing to amend his employment contract. A little quick math tells me that if he continued his lavish travel through the end of his contract, the cost of the tab to the company would have been $2.6M. By amending his contract, they brought that cost up to $4.4M.The worst part is that he’s going to walk away a very rich man as a reward for bankrupting the company that he works for. It’s the same racket that Carly Fiorina ran with Hewlet Packard. She got a golden parachute which cost the shareholders $45M just to get her to leave! And now this stupid bitch that failed her way to massive wealth may become the next US senator from California? Unbelievable!

See what I mean about looting? And once again, who gets fucked? That would be the shareholder (i.e. you).

We don’t have capitalism in America, anymore than Ireland has leprechauns. We don’t live in a country where hard work pays off anymore. We live in a place where the system is gamed to favor the rich, while sticking you with the tab when they fail.

Take a look at this lovely chart, which shows the ratio of CEO compensation to the average worker’s salary.

Charming, right? A CEO today makes 319 times what the workers in their company makes. I predict that we’re going to see a huge spike in CEO compensation for 2009 and 2010 because of a last ditch effort to squeeze every cent out while there’s a there there.

Oh yes, the people out there screaming for capitalism confuse me. I wouldn’t be confused if they were all Carly Fiorinas, but they’re not. They’re the people who work hard, only to earn less than they were earning ten years ago, while their retirement funds are routinely looted by a handful of very powerful people.

Don’t worry, this post isn’t all about doom and gloom. The good news in all of this is that I still believe we can turn it around (although that window is closing). We just collectively need to realize that we have all the power. We still get to vote every year.

I know that our government sucks. Our system has entirely too much corporate money in it, thereby eviscerating its efficacy to actually do something good for the people. But the alternative view of trusting corporations to do right by us is completely insane. I can’t do anything about Mike Jeffries, but I can vote out Charlie Rengel. I understand that I have more power over the government than I do over corporate executives.

The first thing that we can all do, is to move our money out of the big banks. If our government won’t stop them from becoming “too big to fail”, then we can. Move your money is an excellent resource to help you find a good community bank.

The next thing we can do is to start collecting signatures in each state to put a “clean election” measures on the ballot. If we mandate that our elections are publicly financed, we take the first step in taking back our government. The biggest problem we have right now is that it costs an average of $8M to win a senate seat that pays $175,000 a year. Does anyone else see a problem with this? If our representatives didn’t have to whore for corporate cash just to get elected, they just might start representing you for a change. Keep in mind that this culture of CEO looting didn’t happen without the help of the government.

And lastly, we can keep ourselves informed. We have to keep a close eye on the people we elect. You can’t just assume that your congressman is “the good guy” amid a sea of corrupt politicians. And it shouldn’t matter if your representative is they guy you voted for. That should be more of a reason to keep an eye on them. Democrats didn’t keep an eye on Clinton. What did we get in exchange for our blind faith? We got NAFTA and a massive deregulation of our financial institutions. How did that work out for you? Republicans didn’t keep an eye on Bush. We’re all to familiar with what they got in return. I’m not going to go through all of the damage that he did. This post is long enough!

My point is that we would all be better off if we policed our own party, instead of policing the party that is never, ever going to get our vote. Doesn’t that make more sense to everyone? We’re not getting anywhere with partisan attacks on the opposing team. It’s just not working. We need to let our team know that they’re going to lose a vote that they previously had if they don’t represent us well. And we need to mean it.

I guess what I’m saying is that we need to get proactive! I really believe that if we do, things will get better. We are not as powerless as most of us believe we are.

We Need To Band Together To Sue The Shit Out Of S&P

May 11, 2010March 15, 2010 by Bitchy

Both S&P and Moody’s, actually. 60 Minutes did a fascinating piece on the financial meltdown last night. You can watch it here.

I’ve had an idea in my head for about a year now. And every time I read another story about this financial meltdown, I am more convinced that I’m onto something. I think that every single person in America with a 401k or a 403b should band together to instigate a class action suit against S&P and Moody’s. I believe that unions are the logical place for these class action suits to start.

Why sue the rating agencies? Because if they hadn’t rated these sub-prime mortgage bundles as AAA, they never would have ended up as investment options in your 401k. These agencies are responsible for analyzing investments and rating their viability. They were the first step in the disaster that we’re all suffering under now. I understand that Moody’s and S&P are relatively small fish in the grand scheme of companies that are responsible for stealing your money. But I believe that the discovery process in suing them will lead to the much bigger fish. I believe that the discovery process will show that the rating agencies are paid BY INVESTMENT FIRMS to rate their investment offerings!

I honestly don’t know why Moody’s and S&P are still in business. And why aren’t they forced to put emoticon winkies next to each and every investment rating that they put out?

Americans are understandably pissed. I’m pissed. So why are we acting like we’re powerless?

Our system of “capitalism” is broken and our government isn’t going to help us because the people that are benefiting from this broken system have bought our legislators. If go down the line and sue each of the players in this game of “raid America’s retirement plans”, we can start to fix our broken capitalism system by using it against the people that are using it against us.

No, it’s time that we took matters into our own hands. It starts with going after the rating agencies. I’m convinced that doing so will lead us to Goldman Sachs (and their brethren). We do have the strength in numbers thing going for us. We just need to get organized and band together to make things happen.

If we do nothing, I can assure you that there will be more privatization of profits and socialization of losses to come. This is surely something that we can all agree on regardless of party affiliation, isn’t it?