Archive for the ‘wall street’ Tag

Compassion for Others?

With all the talk in Washington and in Wall Street about the need to cut Medicare, Medicare and Social Security, one has to wonder where is the concern fora nyone other than theirselves? The economic gains made during the last few years have gone disproportionately to these same people who want to cut the government’s benefits to others. The wealthiest 1% of Americans gained 125% of the growth. Which means the rest of the 99% got only 75% of that growth.

This is bad policy in an American economy that gets 70% of its growth from consumer spending. How do you spend when you’re unemployed, underemployed, or getting less even if you have a significant job! But ultimately, the key question to ask the one percent is: Where is the concern for others in general?

As many people know, the old days, (the 1950s through 1970s) when the company provided a pension for an employee are long gone. That was a big portion of the retirement nest egg and it was taken away from employees by companies that wanted to maximize profits so that their stock prices would go up. The stockholders would get wealthier on the back of the companies retired employees.

Columnist Harold Meyerson illuminates this point in the editorial below:

To the let’s-cut-entitlements crowd, what’s wrong with America is that seniors are living too high off the hog. With the cost of medical care still rising (though not as fast as it used to), the government is shelling out many more dollars per geezer (DPG) than it is per youngster (DPY). The solution, we’re told, is to bring down DPG so we can boost DPY.

We do indeed need to boost DPY. And we need to rein in medical costs by shifting away from the fee-for-service model of billing and paying. But as for changing the way we calculate cost-of-living adjustments for seniors to keep us from overpaying them — an idea beloved of Bowles, Simpson, Republicans and, apparently, the White House — this may not be such a hot idea, for one simple reason: An increasing number of seniors can’t afford to retire.

Nearly one in five Americans age 65 and over — 18.5 percent — were working in 2012, and that percentage has been rising steadily for nearly 30 years. In 1985, only 10.8 percent of Americans 65 and older were still on the job, and in 1995, that figure was 12.1 percent.

Both good news and bad news have contributed to this increase. The good news is that more seniors both can and want to work than in years past, as health care and medical science have extended their capabilities, and as the share of Americans in desk jobs has increased while the number on the factory floor has shrunk. A 2011 survey by the Society of Actuaries reported that 55 percent of working seniors said they had stayed employed because they wanted to stay active and involved. But the same survey showed that 51 percent were working because they needed the money.

What advocates for reducing Social Security adjustments fail to consider is that corporate America’s shift away from defined-benefit pensions to defined-contribution 401(k) plans — or to no retirement plans at all — has diminished seniors’ non-Social Security income and made the very idea of retirement a far more risky prospect. Today, more than half of U.S. workers have no workplace retirement plan. Of those who do, just 35 percent still have defined-benefit pensions. In 1975, 88 percent of workers with workplace retirement plans had defined-benefit pensions.

The shift from traditional pensions to 401(k)s is one of the main reasons most seniors aren’t able to set aside enough income to guarantee a secure retirement. A 2010 survey by the Federal Reserve found that the median amount saved through 401(k)s by households approaching retirement was $100,000 — not nearly enough to support those households through retirement years, as seniors’ life expectancy increases. And as most Americans’ wages continue to stagnate or decline, their ability to direct more of their income to 401(k)s diminishes even more.

With the eclipse of the defined-benefit pension, Social Security assumes an even greater role in the well-being of American seniors. But advocates of entitlement cuts don’t even discuss the waning of other forms of retirement security: Listening to Alan Simpson, you’d never know that America’s elderly aren’t getting the monthly pension checks their parents got.

And it’s not as if those employers are suffering. Just as U.S. businesses have been able to raise the share of corporate profits to a half-century high by reducing the share of their workers’ wages to a half-century low, so, too, their ability to reduce pension payments has contributed not just to their profits but also to the $1.7 trillion in cash on which they are currently sitting.

So here’s a modest plan to enable seniors to retire when they wish, rather than having to work into their 70s and even beyond: Require employers to put a small percentage of their revenue, and a small percentage of their workers’ wages, into a private, portable, defined-benefit pension plan. To offset the increased costs, transfer the costs of paying for workers’ health care from employers and employees to the government, and pay for the increased costs to the government with the kind of value-added tax that most European nations levy. (The tax burden is higher in Europe, but because the level of benefits is higher as well, the tax has wide public support.)

The odds of such a plan being enacted today, of course, are nil. (Then again, the odds of any bill getting through Congress these days are close to nil.) But until we compensate for, or reverse, the abdication of corporate America from any major role in providing its workers with retirement security, we should lay off monkeying with Social Security to reduce the program’s future payments. As for all those cash-drenched chief executives who proclaim that we must cut entitlements, how about they make up the difference by restoring the pensions their companies slashed?

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Progressive Politics

Rocky Anderson ran for President in 2012. Didn’t hear of him. Think he’s a loony or nut job? No, he’s one of the most progressive political figures out there in the US today.

Drones: creating more enemies for the US than they are killing.

Wall Street: How come no bankers have been brought to trial.

Raising the minimum wage: How about putting $30 billion more dollars in the hands of the country’s vast majority of working people. Do that and you’re consumer economy will grow and create some new jobs.

Here he is on one of my favorite tv shows, The Young Turks

 

Mortgage Crisis, Good Government from the FDIC

Sheila Bair’s book, Bull By The Horns offers a fascinating view of the mortgage crisis from a lifelong Republican with conservative values and a respect for an effectively regulated market. I highly recommend you read this analysis from the Federal Deposit Insurance Corporation Chairman from 2006 through 2011 but here’s my summary.

Everyone knows that many of the largest banks, mortgage institutions and other financial dealers on Wall Street exploited the lack of regulation, customers, and investors to make windfall profits. We know that these Wall Street players, big and small, all viewed themselves as “Masters of the Universe,” and so fervently believed in a boundless free market, that they exhibited little caution. Yet the details that Bair provides makes the exploitation seem more unjust, immoral, and insane that it was allowed to happen.

These financial wizards made little provisions for a rainy down (the end of the bubble). They took profits for themselves and did little to reinvest in the companies whose health they were responsible to uphold. The CEOs, Presidents, and board members of the banks and financial institutions keep little capital on hand that would have provided more balance to their books. One of Bair’s prescriptions for the future is raising the capital requirements for these institutions. The Masters were able to pass their risk of thee questionable securities, such as credit default swaps, down to investors who were often misinformed about the true value of the security, Moody’s famously rated these virtually worthless swaps at triple A. Bair suggests that banks and others be required to retain a degree of risk through having to absorb a loss of 5 to 10 cents for each dollar of loss that an investor takes on the investment that the bank sold to them.

I maintain my attitude that what many of these bankers did was knowingly fraudulent. The subprime mortgages were predatory lending practices. These bankers sold mortgages with steep payment resets and exorbitant prepayment penalties that trapped the mortgage holder into an endless cycle of needing to renegotiate the terms of their mortgage and pay the bank fees.

I agreed wholeheartedly with Bair’s expectation that as a condition of the bailout/TARP many of these Masters of the Universe would have been forced to resign after leading their financial institutions toward the abyss. Instead those provisions that could have been attached to the bailout were not included. It appears that occurred because of the comfortable relationships that several members of the Bush and Obama Administrations had with the Wall Street crowd. Of course, this was true of Hank Paulson who came from the Goldman Sachs to run the Treasury Department. Unfortunately, it was also true for Obama’s Treasury Secretary former NY Fed Chair Tim Geithner. Bair and Geithner bash heads throughout the book. If one needs to find an antagonist, look no further.

As a government worker it was painful to read about Geithner and some of the other public servants. They forgot about the basic tenet of their position, do the public’s bidding and do good work for the public. Geithner comes off as much more concerned about the Masters of the Universe, the financial institutions, and the creditors holding the bank’s securities than protecting the public’s money. Regulators in the former Office of Thrift Supervision (OTS) worried more about how the news of a certain bank’s bad actions would make them look as regulators than in doing the public’s interest. Finally, the details the book provides regarding the efforts made toward helping the homeowners during the crisis are painful because of how limited the actions were and how frequently members of both administrations showed little concern and compassion for these people.

I’m thrilled to have read the book. I feel more informed. I feel much sadder and angrier than prior because of how little members of the administrations seemed to care about the public that they are in position to represent. Government workers promise to work for the greater good. By doing that we create an improved country and world for all citizens. That requires us to make choices sometimes about who needs our help and protection. Regardless of whether you come from the ranks of the working-class or the elite, as a government worker you make the choice that helps the vast majority of people, not the one that helps the special interests or the group to which you want to get a job in the future. We need to return to the efforts of good government and protect the interests of the majority to make the country and the world a better place. The kind of choices that will enable more people to benefit, to live an improved life. Time to rise up against the Plutocracy. The craven and venal natures of the leaders of the major banks is disgusting at best. The book is a real eye opener and I wish that its message could be put on bumper stickers around the country. It’s time to make a wholesale change among the plutocrats! Damn, time to get back to good government!!!

 

Middle Classless in US: It’s the New Economy

As the next election cycle comes up, we’re beginning to hear more about the declining middle class. The stats are in and its irrefutable, the US has lost millions from the middling income levels. People continued their middle-class lifestyle through going into credit card debt during the 2000s and now they don’t have that.

What they need is a decent paying job. What the country needs is for them to have a decent paying job so that they can live well and spend. Without it, our vaunted 70% consumption economy will falter. When people in power make this clear, the media organs sometimes undercut their message with purpposeful deletions of their words, like Jimmy Hoffa’s call for Jobs being deleted by Fox News.

one in three Americans who grew up middle-class has slipped down the income ladder as an adult, according to a new report by the Pew Charitable Trusts

Downward mobility is most common among middle-class people who are divorced or separated from their spouses, did not attend college, scored poorly on standardized tests, or used hard drugs, the report says.

 

“A middle-class upbringing does not guarantee the same status over the course of a lifetime,” the report says.

The study focused on people who were middle-class teenagers in 1979 and who were between 39 and 44 years old in 2004 and 2006. It defines people as middle-class if they fall between the 30th and 70th percentiles in income distribution, which for a family of four is between $32,900 and $64,000 a year in 2010 dollars.

People were deemed downwardly mobile if they fell below the 30th percentile in income, if their income rank was 20 or more percentiles below their parents’ rank, or if they earn at least 20 percent less than their parents. The findings do not cover the difficult times that the nation has endured since 2007.

Pew researchers said the study’s structure did not permit an analysis of whether upward mobility has become more difficult through the years. Nonetheless, some economists point to growing income inequality and widely stagnating wages as evidence that the American Dream is slipping out of reach for many people.

The report found that being married helps people avoid the worst economic outcomes. Women who are divorced, widowed or separated are much more likely to fall down the economic ladder than their married counterparts. For men, the differences are not as dramatic, although married men are more likely than single men to retain their middle- class status as adults.

Education, particularly going to college, is another crucial factor in people’s economic stability, the report says.

Women who graduated from high school are more likely to be downwardly mobile than their counterparts who are college graduates. The same dynamic exists among men, the study found.

Overall, African American men have a particularly hard time clinging to middle-class status. Thirty-eight percent of black men who grew up middle-class are downwardly mobile, nearly double the rate of white men, the report says. Hispanic men are slightly more likely than white males to fall down the economic ladder, but the difference was not statistically significant.

Among African Americans and Hispanics, men are more likely to slip than women, although the reverse is true among whites.

The racial gap in mobility has perplexed researchers at Pew since a 2007 reportthat said nearly half of African Americans born to middle-income parents in the late 1960s plunged into poverty or near-poverty as adults. That report underscored the feeble grip many African Americans had on middle-class life, prompting researchers to probe deeper, said Erin Currier, project manager of Pew’s Economic Mobility Project.

The new report called the performance of blacks on a key standardized test a factor that accounts for virtually the entire mobility gap separating the races. Black males scored much lower than white males on the Armed Forces Qualification Test, which measures reading comprehension, vocabulary and math ability.

“Taking into account differences in AFQT scores between middle-class white and black men reduces the gap until it is statistically indistinguishable from zero,” the report said.

The findings in the report are drawn from the National Longitudinal Survey of Youth, a group of 12,000 interviews that researchers have followed since 1979.
 
A big problem is that jobs are fewer in muber and require particular skill sets as part of the New Economy: which is really finance and poor paying service jobs as Harold Myerson points out below:

Today, the economy that arose on manufacturing’s ashes has turned to ashes itself. The Wall Street-Wal-Mart economy of the past several decades off-shored millions of factory jobs, which it offset by creating low-paying jobs in the service and retail sectors; extending credit to consumers so they could keep consuming despite their stagnating incomes; and fueling, until it collapsed, a boom in construction.

We are only now beginning to understand the toll this economy has taken on America’s workers — and on our working men in particular. A stunning study from Michael Greenstone and Adam Looney of the Hamilton Project, published in the Milken Institute Review, reveals that the median earnings of men ages 25 to 64 declined 28 percent between 1969 and 2009. Within this age group, the median earnings of men who completed high school but didn’t go on to college fell 47 percent, while the median earnings of male college graduates also declined, if only 12 percent.

Part of this decline stems from the shrinking share of working-age men with full-time jobs, which fell from 83 to 66 percent between 1960 and 2009. The other part stems from the fall in inflation-adjusted median yearly earnings of working-age men who have full-time jobs, which have shrunk by about $5,000 since the mid-’70s. Combined, write Greenstone and Looney, these two declines explain why the earnings of American men “haven’t been this low since Ike was president and Marshal Dillon was keeping the peace in Dodge City.”

Anyone seeking to understand the pessimism, frustration and rage of working-class men needs to begin here, with Greenstone and Looney’s two-by-four-to-the-head tale of decline. White working-class men in particular have become a disproportionately receptive audience for those who scapegoat immigrants and minorities for the damage that has actually been caused by economic and political elites blissfully blind to the devastation ushered in by their vaunted new economy.

Since that new economy blew up three years ago, many of those elites have been disabused of the financial fantasies that ordinary Americans long ago ceased to entertain. The fact that Greenstone and Looney’s study emerged from the Hamilton Project — a pillar of new-economy thinking, founded by Clinton Treasury secretary Robert Rubin — is evidence of a paradigm shift in economic vision. From centrist Democratic groups such as the Progressive Policy Institute and Third Way, to economists such as Hoover Institution Nobel laureate Michael Spence, to chief executives and former chief executives such as Dow Chemical’s Andrew Liveris and Intel’s Andy Grove, the new watchword for America’s future — however challenging it may be to get there — is manufacturing.

Post-industrial America turned out to be a bust. The time for neo-industrial America has arrived.

 

 

 

 

 

American Public Wants

Public Says No To Republicans’ Slasher-Movie Economics

Scott Walker feels the heat as public opinion polls show very low favorable ratings

Are most people sick and tired of losing their jobs, or watching neighbors take pay cuts

Meanwhile, it’s great to be on Wall Street. It must be glorious. You crash the economy, get a taxpayer bailout and hand out record bonuses.

People are marching on banks in cities across the nation complaining about their record bonuses.

From a person who was there:

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This was a very promising beginning, my friends!

For those who weren’t there other chants included:

“We’re not going away! We will make you PAY!” and “Bank of American You Can’t Hide, We Can See Your Greedy (or Evil) Side!” and “The Banks Get Bailed Out / The People Get Sold Out!”

And the top six banks in the US pay on 11% of their tax share instead of the 35% that they should pay because of tax loopholes. They also have not been loaning money out to help out small businesses in the country.

Bloody Bloody Andrew Jackson

Closed last weekend of taking our nephew out in Manhattan with new musical to Broadway, Bloody, Bloody Andrew Jackson.

This rock musical decked out the theater in all kinds of color and props. It created  a great environment with so much to see. Like other shows: re Passing Strange the show has a post-modern veneer that disrupts the fourth wall.

It is filled with imagery and songs that play with the 19th century but says more about today. This is what political junkies will love.

The politician as celebrity that the show evokes says a lot about Sarah Palin as does Jackson’s evoking of a populist campaign style and language. The New York Times critic and my relatives focused on this part to see the show has having much to say about the Tea Party.

That is one reading of the opening song, Populism. The anger of the characters in Bloody Bloody validates the link to the Tea Party.

More intriguing is that the show illustrates the lack of a  populist language coming from the political left.  Jackson’s party spoke for a greater inclusion of the common man (white non-landholding male) in the political process. This was for the expansion of democracy, certainly a trait commonly found on the political left. The “people” believed he was speaking for them as one of them!

The lack of left leaning populist language makes me think of a different current political figure. Barrack Obama talked the language of helping the middle class on the campaign trail in a poetic manner. Yet, there was hardly the feeling of boots on the ground: a deep rooted support among the people that he was speaking for them as one of them that also carried the intensity of wanting to go to the wall with this politician. Jackson had that in reality and in this play.

Indeed, Obama has rarely used populist language as President to push his agenda. The media and other elites have warned him away from using class warfare language. The choice to do so has been part of the limits that have made him unable to generate excitement among the middle class, the people, even the base.

Even member of the Progressive Era elite, Franklin Delano Roosevelt as President attacked the mendacity and organized thievery of financial institutions. Obama has been lukewarm in his condemnation of these things among today’s Wall Streeters. His Justice Department and Securities and Exchange Commission have hardly pursued the criminal aspects of the banks, the Wall Streeters, and others in the financial worlds.

Why is this so? Could this be because Jackson was a member of the common people class. A man who quit the House of Representatives and the U.S. Senate after a single year. What group is Obama a member of? Did voters expect him as a child of raised by a single mother and a former community activist to have sympathies for the poor and middle classes?

Is he not a member of the New Elite? American Enterprise Institute scholar describes this new elite as attending the same Ivy League schools as the older elite, working in finance or consulting, living in isolated areas in a small number of the U.S.’s biggest cities and not being aware of the same cultural events and people as the majority of Americans.

Hell, many will probably be in Washington DC next week for the Jon Stewart Rally. Jon Stewart, who one member of the media elite praised for making him laugh as the person who sits in the back in of the room and shoots spit balls at the goofy “Conservatives” and politicians like former President George Bush. My questions: Was it really that hard to take pop shots at Bush and weren’t the shooters of spitballs disruptive to the class and bullies in school? How is that funny?

Aren’t the people who supported Andrew Jackson and the people who expected more from Obama, tired of the spitball shooters as much as the targets?

Bloody Bloody illuminates the savior aspect of Jackson’s persona. Here, the political analog might be a Tea Party figure. However, a stronger argument can be advanced for 2008’s Barrack Obama. Jackson’s campaign offered in the play offers people change and hope.

The play shows him struggling with Congress, the Supreme Court, and even his supporters, as he attempts to make decisions to affect positive change. Doesn’t that sound familiar. The play seems to emphasize these struggles, making the analogy to the sitting President more obvious.

Bloody, Bloody Andrew Jackson left me wondering about the differences when a politicians supporters embrace his language as speaking for them as opposed to supporters who look on the politician as a savior.

Fleecing Bankers

Obama sets a stage to criticize the bankers and Wall Street executives for giving themselves enormous bonuses.

Hello, why didn’t the TARP ban such action?!

Certainly, the executives are showing that they lack any moral compass, or at best, have overridden any sense of shame with some rationale they they have repeated to themselves so many times that they think it must be true.

They are also showing little concern for the allocation of the money to the business and to the people who these banks gave loans to. It appears more important for them to give the money to their self than to help stabilize the bank or investment firm or renegotiate many of the outstanding loans.

Congress needs to be out there screaming about this too. Let’s organize a campaign to dump these executives.

Hang ‘Em High

or at least get a portion of their earnings back.  Madoff and the others are criminals. Put them in the old Clint Eastwood westerns.

See this column today about the economy and the Wall Street financiers.

Can they be trusted to look out for the best interests of the people?

Congress needs to put a serious stick to the second stimulus package.

Who Knew?

Who wondered a few years ago about the people buying up property in their city? Me and my friends.

A local columnist asks the question as part of the end of 2008 wrapup. How could anyone not asks who could be paying all thismoney for these places when the housing prices were going up insanely?

In DC, buildings with a hundred ormore units went up with everybody asking $600,000 for one-bedroom boxes. Washington had 1/3 investor ownership of condos, second only to Miami. But with all the homes values dropping and the funny money disappearing, what’s happening in DC now.

A neighbor told me that on our street with 1,200 square foot houses, a person was paying over $2400 a month in rent. With that being about $28,000 a year, and a rule of thumb of taking on a mortgage at 40% of one’s income, this person could buy a house at over $400,000 given a fixed rate of 5.75% over 30 years.

The largest house on our street to go on sale over the last two years went to a person for $375,000 in late September 2007. One slightly smaller house went on foreclosure for $181,000 in the fall of last year and required complete renovation worth an estimated $125,000 in materials and labor. Asking near $400,000, the place remains unsold.  The Federal Home Loan Bank Corp purchased another house roughly the size of the first house for $376,000 in September 2008. It seems the houses on the street are holding their value.

BLAGOJEVICH Detroit and Wall Street

The imbalance in the treatment between Wall Street and the UAW and car companies is now being referenced in a few places
I heard Mark Shields go to town on the bashing of blue collar workers while the white collar Wall Street execs continue to do very well on last Friday’s Inside Washington.  He even doubts that they are still the party of the workers.

Buddies of mine and I have long given up hope on either party representing the interests of workers, who are working two and three jobs and still taking out thousands of dollars in credit card debt to attempt to live like they did years ago (middle class).