Archive for the ‘money’ Category
I’ve been thinking about how the Supreme Court made it possible for rich donors to give millions and millions to political causes, which typically turn out to be candidates in some shape or form, who turn out to be mostly Republicans. This led me to start thinking about how money could help my blog. However, giving money away to people who visit UP@NIGHT wouldn’t work because it could get too expensive. But a couple of years back I noticed that if I put pictures of money on a post, it would often get tons of hits. It seems that people were coming to see or use images of money. So why not have a post of images of different denominations in order to lure people to my blog. It’s a lot less shameful and expensive than what is going on in the political arena. And so here it is, my ad, the money post.
Today the Republicans in the Senate blocked passage of a bill to prevent the doubling of the interest rate on Stafford Student Loans. Here is a brief excerpt from today’s NY Times on the topic:
Republicans said they wanted to extend Democratic legislation passed in 2007 that temporarily reduced interest rates for the low-or middle-income undergraduates who receive subsidized Stafford loans to 3.4 percent from 6.8 percent.
But they oppose the Senate Democrats’ proposal to pay for a one-year extension by changing tax law that currently allows some wealthy taxpayers to avoid paying Social Security and Medicare taxes by classifying their pay as dividends, not cash income.
And why do they oppose the proposal? Because closing these loopholes will raise taxes on people who allegedly create jobs. In other words, by closing these loopholes in Social Security and Medicare we will slow the recovery. I kid you not. This is actually the Republican position.
“They want to raise taxes on people who are creating jobs when we are still recovering from the greatest recession since the Great Depression,” said Senator Lamar Alexander, Republican of Tennessee, who instead wanted to pay for it by eliminating a preventive health care fund in President Obama’s health care law.
This is such palpable nonsense it is hard to believe that anyone can say it with a straight face. Right, closing loopholes for wealthy folks on Social Security and Medicare is going to slow down the engine of economic growth.
I realize that I am venting here but it seems to me that the Republicans on taxes have either become ideological fanatics, who simply can’t see that the evidence is not on their side. Or they are absolutely committed to protecting the wealth of their donor base at all costs to the country. Or perhaps undermining Obama’s health care initiative is such a priority they will give any excuse. Or all of the above.
In any case, this points to an even more serious problem. Extreme differences in income are seriously problematic on numerous levels for democratic societies. The indebtedness of students is one piece of the puzzle of the ever increasing inequality bubble in America. We can go on like this for several more years, I suppose. Perhaps decades. But this is no way to ensure the flourishing of this society over the long term. Our children, and our children’s children, will pay for this fanatical pursuit of a form of “free” market capitalism that is simply out of date in the twenty-first century.
Well, now we have it. As the ad below highlights, Romney thinks that corporations are people. They are not. They cannot vote. They cannot serve in the military. They cannot feel pain. And they are treated quite differently in terms of taxes, etc., etc.
What Romney seems to want to suggest is that people make up and benefit from corporations. And this is precisely the problem. The biggest benefit from corporations, money, has become so concentrated in the hands of a few that it is harder and harder to see these legal fictions as responsible players. And people are angry about this.
I believe that we need a collective venting of the anger. I propose a pillow fight. But given the vast disparities in power and wealth, I suggest that the sides be picked in the following fashion: the pay of workers vs. the pay of CEO’s at the largest U.S. companies. In 1980 one survey showed it was 42 to 1. Another in 2010, 343 to 1 (based on the median U.S. worker pay).
So I say we match 100 CEO’s from the largest companies against 34,300 of their workers. Each will be supplied with identical pillows.
Further, I request that the Colbert Super-PAC (Making a better Tomorrow, Tomorrow) fund the event. We will need a rather large stadium. (Colbert this is a challenge. I hope you are man enough to respond.)
So, you think of yourself as an honest soul. You understand that stealing property or money is wrong. You wouldn’t do it. You wouldn’t want your kids or friends to do it. It’s unthinkable. But I have a proposition for you.
Here is a button. All you have to do is press it and $100,000 will be transferred from Goldman Sachs, BP–or any other giant corporation whose resources are larger than most countries–into your bank account. Nobody will ever know. It’s a magic button. Well, not really magic. Some geek has wired it in a fashion so that money can be transferred to your account without anyone being able to trace it–in the tradition of how derivatives were traded.
Just think of how much money Goldman Sachs and its executives made in the last few years as the Market tanked, while you probably lost money in your hard-earned retirement account. Not only did you recently lose money, but if you had invested $1,000 dollars eleven years ago in the Dow, that’s just about what it would be worth today, $1,000 (less if inflation is factored in). But you know, and I know, how much money these guys have made trading your money and my money. But that’s capitalism, you say. It’s the way the game is played.
But would you push the button? Would you be tempted to do it? Or perhaps a better question: how many of your fellow Americans do you think would be tempted? A lot, right? (Or an even better question, how many more would push it today than ten or twenty years ago?)
The recent Melt Down on Wall Street, and the ensuing profits made by big trading firms and banks, have been corrosive in ways that we may not fully understand for years. You’ve got Tea Baggers screaming about Washington, but the revelations about how Wall Street operates have buried themselves deep in our collective subconscious. Real damage has been done. Yes, we knew that there was big money out there and that big money corrupts. (Before the present Melt Down, there was Enron and assorted other travesties.) Yet “knowing” is one thing. Seeing it in front of your eyes day after day, year after year, undermines confidence that the system is anything close to fair. Yes, Obama has attempted to tame Wall Street with new regulations. They will do some good. Yet as long as we continue to see different rules of the game for a small strata of society, which is indeed what we have seen, our belief in the benefits of capitalism will be undermined by a gnawing sense that it is corrupting us, our children, our society. From a sanctified economic system, it will become what we have to put up with, sort of like the Roman emperors in Imperial Rome. It won’t go away anytime soon but we aren’t going to feel good about it.
There was a time in American business when many people believed that a handshake was as good as a contract, or so I am told. People kept their word. It now seems that handshakes still function in this manner for a small elite segment of corporate America that makes deals for unimaginable sums. The rest of us can’t depend on them when we deal with companies. (How about a handshake between you and your medical insurance company to guarantee your coverage? Any takers?) The middle class will need more and more contracts and lawyers to protect them in an economy in which money has gone wild. And they will have relatively less money to hire these lawyers.
No doubt there are problems with the way government functions. But anyone who thinks that this is the major source of the declining confidence in how our society works really needs to look at Wall Street with suitable eyewear. The business of America is no longer doing business but being given the business.
(Print, Southern Labor Archives. Caption: History Repeats Itself–The Robber Barons of the Middle Ages, And The Robber Barons of To-Day)
Guess what? The fat cats on Wall Street not only think that they will be doing as well or better this year than last, they think that any attempt to limit their outrageous salaries and bonuses will stifle innovation. The following is from a Bloomberg.com story, “Bankers Expect Rising Bonus Pay to Break Records in Global Poll,” (Oct. 30, 2009).
Having shaken off the biggest economic decline since the 1930s, almost three in five traders, analysts and fund managers believe their 2009 bonuses will either increase or won’t change, according to a quarterly poll of Bloomberg customers. Only one in four see a decline. Asians are the most optimistic about pay and Americans and Europeans somewhat less so.
“The large banks are knocking the cover off the ball,” said Daniel Alpert, managing director of New York-based investment bank Westwood Capital LLC. The industry is “making money, though with government help.”
Worldwide, a majority of market professionals in the survey also turn thumbs down on government attempts to limit compensation, with 51 percent saying restrictions will stifle useful innovation. Only about 38 percent think pay limits will control excessive risk-taking.
In the U.S., where President Barack Obama has chided Wall Street for being “motivated only by the appetite for quick kills and bloated bonuses,” 65 percent say the restrictions will damp innovation.
So, we are supposed to believe that if “market professionals” lose some of their bonuses, it will decrease their capacity and motivation to think about new ways to make money. This claim is as lame as it is self-serving. You would think that some loss would only drive them to new heights of creativity, given their alleged professionalism. Yet they keep managing to get away with offering ever weaker rationalizations for why they need ever increasing salaries and bonuses. Laughing all the way to the bank(s). It seems that we have our own version of the Robber Barons. They may oppose tariffs, but they have the equivalent of monopolies in many areas. They work for institutions that are, after all, too big to fail. Yet these “professionals” should remember that Americans have a limited tolerance for aristocrats, and they are beginning to skate on the thin ice of class: they are becoming an entrenched moneyed aristocracy.
If you question my assumption about Americans’ limited tolerance for self-inflated moneyed folks, I ask you to take the Gilligan’s Island test. Which character or characters on Gilligan’s Island do you least trust: Gilligan, the skipper, the millionaire and his wife, the movie star, the professor or Mary Ann? (Hint: notice that there is only one character not looking at you.)
The word is out. Unless AIG pays their executives millions more in bonuses, they might lose the best and the brightest of their employees. Corporate raiders will swoop out of the clouds and plunder their human capital. And then where would AIG be? And then where would we be? (According to FOX, if AIG cannot retain their top execs, it has threatened to morph into a black hole and take the inner planets with it.)
But wait. We may have nothing to fear but fear itself. Let us not forget that AIG is in the business of insuring companies against their own incompetence. The solution is simple. AIG should insure itself against its own incompetence through one of its products, for example, FinancialGuard (see below). So, even if it were to lose its best and brightest by not paying out the bonuses, AIG could still survive through the miricle of insurance.
Here is AIG/Australia hawking one “product” that can help save it (and us):
What is it?
Professional indemnity insurance on a civil liability basis
Why do you need it?
The activities of regulators, the changing distribution of financial institutions products and a more informed and litigious consumer environment lie behind the increase in the frequency of civil liability claims against financial institutions….
Our Civil Liability product provides blanket protection against the financial consequences of a legally enforceable obligation in which a civil liability is incurred arising from services provided. Covers includes defence costs and civil penalties.
Who needs it?
All Financial Institutions including Banks, Building Societies, Investment Management Companies, Insurance Companies and Stockbrokers.
And under a discussion of assets on the AIG site we find the following pitch:
A company’s assets are vital to its operations. And protecting those assets is essential to the well being of a business. Assets can be tangible and intangible and can include a company’s corporate reputation, as well as physical assets such as property or goods. We offer standard or customised programmes on a domestic or global scale as well as a wide range of products covering more demanding and specialist risks.
Protection of assets!! Protection for corporate reputation!! Protection from the activities of regulators!! AIG can save itself (and us).
Up until now little beside blind greed and gross incompetence have been offered to explain AIG’s behavior. Here is an alternative hypothesis: Someone inside AIG decided that the best way to stimulate the market for its financial insurance products was to come up with an example (AIG’s own failure) that would scare the daylights out of even the most confident of finance people, pushing them right into the arms of AIG’s financial insurance sales force. Insanely diabolical, wouldn’t you say?
And if this hypothesis is incorrect, I have another: AIG is a corporate comic genius.
P.S. Here’s five bucks. Feel free to buy yourself half a dozen shares of AIG.