Monday, October 11, 2010
Once upon a time. (Appearence of Impropriety rewrite)
Whether actually engaged in the CDO (Collateralized Debt Obligation) market or not, no one trusts any of the ratings agencies. The AAA investment rating has become meaningless and thus worthless. I know what AAA SUPPOSEDLY means; I know what Moody, S&P, etc proclaims the rating to mean. But what the AAA rating has come to mean to me: less than nothing – a bad bet – I’ve got better odds at the local Indian Casino.
There is no trust in the market by us mere mortals as government deregulation has begotten anarchy. It’s the S&L debacle all over again, brought to us by the same Voodoo economic ideology! Until congress actually legislates directly to the ratings agencies conflicts of interest (which isn’t going to happen as long as the obstructionist Republican and Democratic Wall Street Sycophant’s prevail in the legislature), we mere mortals cannot tell what the difference is between Junk bonds, penny stocks, and AAA.
Between lovely lip service and opposition parties’ obstructionism, the Congress, the Executive branch, and the Judiciary have done nothing to change the perception of mass collusion. The fact that the former and present head of Treasury, the former and present Chairman of the Federal Reserve, and the former and this Presidents chief economic advisers were all former employees of one of the principle financial institutions in the middle of our financial debacle lends no confidence or credence to any proposed solutions.
Anyone and everyone involved with the propagation of unregulated CDO’s, Derivatives, Credit Default Swaps, and the rest of the Exotic Financial Instruments have no business being anywhere in government this side of a Congressional Subpoena or Grand Jury investigation! These unindicted career criminals should not be allowed to run a check cashing store, much less major financial institutions; their involvement in this debacle should be a mark of shame. The economy cannot be repaired until the market fundamentals are restored and one can’t get much more fundamental then basic trust in investment ratings.
Unfortunately, current and former members of congress have immunity from acts of legislative malfeasance, greed and incompetence. Corporate broadcast media are unwilling or incapable of performing simple Lexus/Nexus, library of congress, and Cspan searches that run contrary to their owner’s ideology. Blatant conflicts of interest are downplayed if not outright ignored by the media and Justice as former legislatures and regulators morph from government service and political office to industry insider and from corporate lobbyist into regulator and government official. Same as it always was. Caveat emptor.*
Public perception be damned! The contrived memory hole selectively disposes any correlation between legislative sponsorship and the eventual intended and unintended consequences. “No rules” is the literal definition of anarchy and anyone who is crying "deregulation" is not "conservative"; they are anarchists and profiteers; Confidence men setting up the Marks for fleecing.
"Free markets" and “Free Trade” are unobtainable Ideals like Plato’s perfect mirror world, "true democracy" or Aristotelian Crystal spheres; great for economic academia but limited in practical reality. Faith in free market and free trade solutions are to mammon worship as the Immaculate Conception and the Resurrection are to Christianity; yet even the most ardent fundamentalist do not step in front of a bus and expect God to save them from the laws of physics. Unlike the proverbial bus “Market Corrections” are almost never immediate, are completely amoral, and thus can ultimately entail the demise of millions of lives.
I fail to see how it is in our strategic national interest to systematically dismantle our manufacturing base. Cowabunga Man! No rules** may be great for Skateboarding and Extreme Skiing but it hardly is a bases for trust in financial instruments (oh that’s right; it’s all “free market”. Just like the Madoff and Stanford funds until the ponzi aspect was revealed.
How can one claim to adhere to Adam Smith’s "hidden hand" Capitalism, yet throw away Smith’s (paraphrase) ‘manufacturing is the only form of true wealth’? Does anyone else remember “Representative” Ginrich waving around Toffler’s 3rd Wave on the House floor pontificating as how we were going to all become “Knowledge workers” as justification for off-shoring American manufacturing? Newt’s knowledge worker still requires 1st wave Agricultural and 2nd wave Industrial (manufacturing) to support Toffler’s 3rd wave Information age!
All the biznes reporters, Wall Street insiders, corporate and guberment propagandists can plant stories day in and out how “the recession is over”. Yeah, Right. And until it collapsed Enron was a Great Buy. Congress never did fix all the Enron loopholes.
The thing we most need to come to grips with as a nation is that democracy*** and capitalism are not the same thing. In fact the two can be and often are mutually exclusive. Capitalism itself is not ubiquitous; there exist many forms besides the “gotcha” predatory destructive form advocated by the Milton Friedman Chicago School of Voodoo economics and so aptly portrayed by Gordon Gekko.
For US manufacturing to recover we must revisit the US trade treaties; in particular the 1990’s arguments for externalization of costs associated with environmental pollution, labor exploitation, resource depletion, lack of infrastructure, and authoritarian rule. Granted much of these externalized costs are intangible and difficult to quantify (thus the drive to externalize) but not including such costs creates a false metric for Comparative advantage. That “giant sucking sound” has proven to be a valid and prophetic observation; “fair trade, not free trade”.
Main street is beyond angry; around here many of us suburbanites are in what could be more aptly described as a quiet rage. There are individuals that have done more damage to our country and society then ALL OF THE STREET CRIME COMBINED (including drugs), yet to date none have been held accountable and the principles have even collected Bonuses!
The problem is exemplified by the corporate financed Tea Party; the participants know something’s basically wrong but they can’t put their finger on just who and what are to blame. The Rightwing take advantage of misinformation and propaganda to both scapegoat the liberals and progressive movement by projecting their own desires and guilt. Bonuses for billionaires who did more economic damage than all the terrorists in the world combined! If there was any justice in the world these "geniuses" including past and present House, Senate, and Judiciary should be arrested for conspiracy, economic treason and continuing criminal enterprise; frog marched out of their estates handcuffed in their underwear!
Truly the big thieves hang the little ones: interesting times indeed!
*Latin for “Let the buyer beware”.
**Physics and the law of gravity still haven’t been repealed – they are self enforcing and tend to apply their consequences immediately.
***or federated constitutional representative government with democratically elected executive and legislatures for the semantic nitpickers
Friday, September 03, 2010
The Appearance of Impropriety
Whether actually engaged in the CDO (Collateralized Debt Obligation) market or not, no one trusts any of the ratings companies. The AAA investment rating has become worthless and meaningless. There is no trust in the market as government deregulation has begat anarchy.
Between lovely lip service and opposition parties’ obstructionism, the Congress, the Executive branch and the Judiciary have done nothing to change the perception of mass collusion. The fact that the former and present head of Treasury, the former and present Chairman of the Federal Reserve, and the former and this Presidents chief economic advisers were all former employees of one of the principle financial institutions in the middle of our financial debacle lends no confidence or credence to any proposed solutions.
Anyone and everyone involved with the CDO’s, Derivatives, and Credit Default Swaps have no business being anywhere in government this side of a Congressional Subpoena or Grand Jury investigation! The economy cannot be repaired until the market fundamentals are restored and one can’t get much more fundamental then basic trust in investment ratings.
Unfortunately, current and former members of congress have immunity from acts of legislative malfeasance. Blatant conflicts of interest are ignored by the media and Justice as former legislatures and regulators morph from government service to industry insider and from corporate lobbyist into regulator and government official. Public perception be damned!
Monday, August 16, 2010
US Economic Downturn
Like Christ’s Immaculate Conception and the Resurrection, “Free Trade” and “free markets” are articles of faith for mammon worship. They are unobtainable ideals like Plato’s “perfect” world or “true” democracy.
It was in the Reagan “revolution” when the wisdom of Adam Smith’s Wealth of Nations admonition that “Manufacturing is the only form of true wealth” was discarded. I still remember “Representative” Newt Ginrich waving around Toffler’s 3rd Wave on the House floor pontificating as how we were going to all become “Knowledge workers” as justification for off-shoring American manufacturing. It is interesting and instructive how the media has conveniently forgotten his role in this debacle and still allow him to babble on the airwaves.
The idea of fully funded pensions was tossed out with T Boone Pickens attempt and Armen Hammer’s successful takeover of Cities Service Oil & Gas. Prior to the 1978 Cities Service takeover, the entire companies employees; CEO, CFO and Pension Fund managers; white collar and blue-collar employees were all vested in the pension. There existed a tacit company agreement with the employees that any excess funds in the pension would be seen in the individual retirements. All of that went out the window when, instead of placing protections on workers pensions, congress allowed companies to under fund their pensions to only a small percentage of contribution or do away with them entirely in favor of 401K’s. With the demise of the company wide pension came the special pensions for the top corporate echelons and the gulf exploded between what was good for the company long term verses the short term top executives interest.
Naturally the “run-government-like-a-business-crowd” (RGLaBC) jumped on the short changing pension bandwagon so we now find most of the public sector pensions for school teachers, police, fire, state and city workers if not outright failing seriously in trouble. Naturally the RGLaBC people blame the Unions rather then themselves or the “tax cut” something-for-nothing politicians.
Prior to the 1989 “Tax Reform Act” business had an incentive to hire full time employees as they were required to offer Temps the same benefits as the company “full time” staff if they worked over 35 hours a week. It was with the HW Bush’s signature that the definitions of Temporary employees and tax rules were changed in response to heavy lobbying and political donations from Manpower Inc, all in the name of “free markets” and “Global competition”. Business quickly took advantage and the phenomenon of ghost companies where temps staffed the majority of a organization was established.
The first and final nail in our economy has come from the Milton Friedman, Republican / Libertarian anarchists who preach, “deregulation” as the cure to our corporate and economic ills. You would think the savings and loan debacle would have provided a sufficient lesson, and you would be wrong.
Like any good confidence swindle, deregulation sets up the marks for fleecing – everyone of the RBLaBC feigns shock, shock that corporations would take advantage in the lack of regulations and pin the blame on “bad apples” or the few remaining overwhelmed regulators that escaped the “small government” knife.
From Penn Square/Lincoln savings and loan, thru Global Crossing and Enron, to AIG, CitiGroup, Goldman, BoA and the rest – the media ignore the past and doom another generation to relive it. We sheeple keep listening to the Mammon worshiping RBLaBC (yeah, into the ground) siren song of “Tax cuts for the Wealthy” at the expense of everyone else and the corporate right wing media (like the Wall Street journal) marginalize the voices of reason like Brooke Born and Elizabeth Warren.
The thing we most need to come to grips with as a nation is that democracy (or federated representative if you want to nit pick) and capitalism are not the same thing. In fact the two can be and often are mutually exclusive. Capitalism itself is not ubiquitous, there exist many forms besides the “gotcha” predatory destructive form advocated by the Milton Friedman Chicago School of economics.