How did we get here?
Showing posts with label Wall Street. Show all posts
Showing posts with label Wall Street. Show all posts
Wednesday, February 22, 2012
Thursday, October 20, 2011
Thoughts on American Capitalism
I haven't posted anything here in a little while because I've been preoccupied with the Occupy Wall Street protest. Personally, I think it's high time Americans stood up and said, "We've had enough!" and I think it's great that the movement has gone global. Thomas Jefferson said, "I hold it that a little rebellion now and then is a good thing, and as necessary in the political world as storms in the physical.", and, "The spirit of resistance to government is so valuable on certain occasions, that I wish it to be always kept alive. It will often be exercised when wrong, but better so than not to be exercised at all. I like a little rebellion now and then. It is like a storm in the Atmosphere." What's happening now is a good thing.
I wanted to take some time today to offer some ideas on why this rebellion has risen up. I am in no way a spokesperson for any Occupy event/movement, so don't misunderstand, these are just the thoughts of one citizen.
I believe far too many Americans believe that we have a capitalist economy. Far too many Americans believe we have a democracy. Both of these are false and I believe that the misperceptions of these two things have helped politicians to polarize party lines.
The U.S. government was not founded as a democracy. The founding fathers did not trust the average citizen to not be taken in by a silver-tongued devil. Looking at the country and it's media today it could be argued that the founding fathers were ahead of their time. Democracies had been shown to be too chaotic to be sustainable so they set up a republic wherein we the people get to elect representatives to make decisions and run the country on our behalf. What that means for the average citizen is, if you are not satisfied with the way your representatives in government are running things, you need to communicate that to them and if they don't listen you need to elect someone who will. I know this is more work than most Americans want to do, but if you let the government run itself it will act in it's own best interest (as it has).
(The good news is that this is much easier to do today than it has been in the past! I would recommend going to Congress.org and signing up for updates on what your representatives are voting for and against. While you're at it look up some activist sites that concern themselves with things you care about and sign up with them. Many send out petitions and letters on key issues that you can sign and follow. Get your representatives' email addresses and phone numbers and contact them directly. Tell them what you want and ask for explanations if they don't do it. Keep them accountable!)
Capitalism. Look around. This is not what Adam Smith had in mind. Before anyone starts quoting The Wealth of Nations out of context let me just remind everyone that Smith first wrote The Theory of Moral Sentiments -- his own personally favored work -- and The Wealth of Nations was intended to be considered as the next chapter to The Theory of Moral Sentiment, not as a stand-alone piece.
That said, do we really have a capitalist system where one person can build a business and thrive? In some cases, yes. In most cases, though, no and the odds are looking more and more like those on a lottery ticket. Assuming that one does have the resources and talent to build a business and make it successful, navigating through government regulations and personal and business litigation, that business will likely have to compete with one or more huge corporations that are likely deemed "too big to fail" by their board members in Washington D.C. The deck has been stacked and the game is not the same as it was in the late 1700's.
I recently read an argument that if you took someone from the "rich 1%" and took away everything, they would not complain that they couldn't find a job, they would make their own job and create more jobs in the process. I feel this is oversimplified and that if you put this imaginary person into similar circumstances as the average American (i.e. school loans, children, hospital bills, auto repairs, etc.) the story might vary. But let's assume it's absolutely true. Why should we be content with a system that rewards a single talent on the backs of those with other talents? I know some people who are very good at business. I know more people who have had businesses that either failed or never fully supported them. Most of the people I know are very good at things other than owning and operating a business. Why don't we reward the people who teach the next generation or farmers who create our food supply in the same way we reward someone who can find loopholes in the tax code, has a talent for stock speculation, or is willing to neglect their health and family for the almighty dollar? Isn't the person who drives a truck or the person who builds and maintains the road an important part of the distribution system on which many businesses are built?
The fact that our transportation and energy systems have not really changed all that much in the past one hundred years is an indicator of how we have all become complacent. The system is antiquated and it's high time for an update. Our country needs a reboot. Two hundred and some years ago when the U.S. was being established there were those who believed we should be a simple, agrarian society and not be too involved in the world's affairs. Others wanted something that looked more like England's empire. When decisions were made, guess who came to the table?
It's time for us all to show up to the table and make our voices heard.
I wanted to take some time today to offer some ideas on why this rebellion has risen up. I am in no way a spokesperson for any Occupy event/movement, so don't misunderstand, these are just the thoughts of one citizen.
I believe far too many Americans believe that we have a capitalist economy. Far too many Americans believe we have a democracy. Both of these are false and I believe that the misperceptions of these two things have helped politicians to polarize party lines.
The U.S. government was not founded as a democracy. The founding fathers did not trust the average citizen to not be taken in by a silver-tongued devil. Looking at the country and it's media today it could be argued that the founding fathers were ahead of their time. Democracies had been shown to be too chaotic to be sustainable so they set up a republic wherein we the people get to elect representatives to make decisions and run the country on our behalf. What that means for the average citizen is, if you are not satisfied with the way your representatives in government are running things, you need to communicate that to them and if they don't listen you need to elect someone who will. I know this is more work than most Americans want to do, but if you let the government run itself it will act in it's own best interest (as it has).
(The good news is that this is much easier to do today than it has been in the past! I would recommend going to Congress.org and signing up for updates on what your representatives are voting for and against. While you're at it look up some activist sites that concern themselves with things you care about and sign up with them. Many send out petitions and letters on key issues that you can sign and follow. Get your representatives' email addresses and phone numbers and contact them directly. Tell them what you want and ask for explanations if they don't do it. Keep them accountable!)
Capitalism. Look around. This is not what Adam Smith had in mind. Before anyone starts quoting The Wealth of Nations out of context let me just remind everyone that Smith first wrote The Theory of Moral Sentiments -- his own personally favored work -- and The Wealth of Nations was intended to be considered as the next chapter to The Theory of Moral Sentiment, not as a stand-alone piece.
That said, do we really have a capitalist system where one person can build a business and thrive? In some cases, yes. In most cases, though, no and the odds are looking more and more like those on a lottery ticket. Assuming that one does have the resources and talent to build a business and make it successful, navigating through government regulations and personal and business litigation, that business will likely have to compete with one or more huge corporations that are likely deemed "too big to fail" by their board members in Washington D.C. The deck has been stacked and the game is not the same as it was in the late 1700's.
I recently read an argument that if you took someone from the "rich 1%" and took away everything, they would not complain that they couldn't find a job, they would make their own job and create more jobs in the process. I feel this is oversimplified and that if you put this imaginary person into similar circumstances as the average American (i.e. school loans, children, hospital bills, auto repairs, etc.) the story might vary. But let's assume it's absolutely true. Why should we be content with a system that rewards a single talent on the backs of those with other talents? I know some people who are very good at business. I know more people who have had businesses that either failed or never fully supported them. Most of the people I know are very good at things other than owning and operating a business. Why don't we reward the people who teach the next generation or farmers who create our food supply in the same way we reward someone who can find loopholes in the tax code, has a talent for stock speculation, or is willing to neglect their health and family for the almighty dollar? Isn't the person who drives a truck or the person who builds and maintains the road an important part of the distribution system on which many businesses are built?
The fact that our transportation and energy systems have not really changed all that much in the past one hundred years is an indicator of how we have all become complacent. The system is antiquated and it's high time for an update. Our country needs a reboot. Two hundred and some years ago when the U.S. was being established there were those who believed we should be a simple, agrarian society and not be too involved in the world's affairs. Others wanted something that looked more like England's empire. When decisions were made, guess who came to the table?
It's time for us all to show up to the table and make our voices heard.
Friday, October 7, 2011
Tuesday, October 4, 2011
Declaration of the Occupation of New York City
From: http://nycga.cc/2011/09/30/declaration-of-the-occupation-of-new-york-city/
Declaration of the Occupation of New York City
Posted on September 30, 2011 by NYCGA
As we gather together in solidarity to express a feeling of mass injustice, we must not lose sight of what brought us together. We write so that all people who feel wronged by the corporate forces of the world can know that we are your allies.
As one people, united, we acknowledge the reality: that the future of the human race requires the cooperation of its members; that our system must protect our rights, and upon corruption of that system, it is up to the individuals to protect their own rights, and those of their neighbors; that a democratic government derives its just power from the people, but corporations do not seek consent to extract wealth from the people and the Earth; and that no true democracy is attainable when the process is determined by economic power. We come to you at a time when corporations, which place profit over people, self-interest over justice, and oppression over equality, run our governments. We have peaceably assembled here, as is our right, to let these facts be known.
They have taken our houses through an illegal foreclosure process, despite not having the original mortgage.
They have taken bailouts from taxpayers with impunity, and continue to give Executives exorbitant bonuses.
They have perpetuated inequality and discrimination in the workplace based on age, the color of one’s skin, sex, gender identity and sexual orientation.
They have poisoned the food supply through negligence, and undermined the farming system through monopolization.
They have profited off of the torture, confinement, and cruel treatment of countless animals, and actively hide these practices.
They have continuously sought to strip employees of the right to negotiate for better pay and safer working conditions.
They have held students hostage with tens of thousands of dollars of debt on education, which is itself a human right.
They have consistently outsourced labor and used that outsourcing as leverage to cut workers’ healthcare and pay.
They have influenced the courts to achieve the same rights as people, with none of the culpability or responsibility.
They have spent millions of dollars on legal teams that look for ways to get them out of contracts in regards to health insurance.
They have sold our privacy as a commodity.
They have used the military and police force to prevent freedom of the press. They have deliberately declined to recall faulty products endangering lives in pursuit of profit.
They determine economic policy, despite the catastrophic failures their policies have produced and continue to produce.
They have donated large sums of money to politicians, who are responsible for regulating them.
They continue to block alternate forms of energy to keep us dependent on oil.
They continue to block generic forms of medicine that could save people’s lives or provide relief in order to protect investments that have already turned a substantial profit.
They have purposely covered up oil spills, accidents, faulty bookkeeping, and inactive ingredients in pursuit of profit.
They purposefully keep people misinformed and fearful through their control of the media.
They have accepted private contracts to murder prisoners even when presented with serious doubts about their guilt.
They have perpetuated colonialism at home and abroad. They have participated in the torture and murder of innocent civilians overseas.
They continue to create weapons of mass destruction in order to receive government contracts. *
To the people of the world,
We, the New York City General Assembly occupying Wall Street in Liberty Square, urge you to assert your power.
Exercise your right to peaceably assemble; occupy public space; create a process to address the problems we face, and generate solutions accessible to everyone.
To all communities that take action and form groups in the spirit of direct democracy, we offer support, documentation, and all of the resources at our disposal.
Join us and make your voices heard!
*These grievances are not all-inclusive.
Declaration of the Occupation of New York City
Posted on September 30, 2011 by NYCGA
As we gather together in solidarity to express a feeling of mass injustice, we must not lose sight of what brought us together. We write so that all people who feel wronged by the corporate forces of the world can know that we are your allies.
As one people, united, we acknowledge the reality: that the future of the human race requires the cooperation of its members; that our system must protect our rights, and upon corruption of that system, it is up to the individuals to protect their own rights, and those of their neighbors; that a democratic government derives its just power from the people, but corporations do not seek consent to extract wealth from the people and the Earth; and that no true democracy is attainable when the process is determined by economic power. We come to you at a time when corporations, which place profit over people, self-interest over justice, and oppression over equality, run our governments. We have peaceably assembled here, as is our right, to let these facts be known.
They have taken our houses through an illegal foreclosure process, despite not having the original mortgage.
They have taken bailouts from taxpayers with impunity, and continue to give Executives exorbitant bonuses.
They have perpetuated inequality and discrimination in the workplace based on age, the color of one’s skin, sex, gender identity and sexual orientation.
They have poisoned the food supply through negligence, and undermined the farming system through monopolization.
They have profited off of the torture, confinement, and cruel treatment of countless animals, and actively hide these practices.
They have continuously sought to strip employees of the right to negotiate for better pay and safer working conditions.
They have held students hostage with tens of thousands of dollars of debt on education, which is itself a human right.
They have consistently outsourced labor and used that outsourcing as leverage to cut workers’ healthcare and pay.
They have influenced the courts to achieve the same rights as people, with none of the culpability or responsibility.
They have spent millions of dollars on legal teams that look for ways to get them out of contracts in regards to health insurance.
They have sold our privacy as a commodity.
They have used the military and police force to prevent freedom of the press. They have deliberately declined to recall faulty products endangering lives in pursuit of profit.
They determine economic policy, despite the catastrophic failures their policies have produced and continue to produce.
They have donated large sums of money to politicians, who are responsible for regulating them.
They continue to block alternate forms of energy to keep us dependent on oil.
They continue to block generic forms of medicine that could save people’s lives or provide relief in order to protect investments that have already turned a substantial profit.
They have purposely covered up oil spills, accidents, faulty bookkeeping, and inactive ingredients in pursuit of profit.
They purposefully keep people misinformed and fearful through their control of the media.
They have accepted private contracts to murder prisoners even when presented with serious doubts about their guilt.
They have perpetuated colonialism at home and abroad. They have participated in the torture and murder of innocent civilians overseas.
They continue to create weapons of mass destruction in order to receive government contracts. *
To the people of the world,
We, the New York City General Assembly occupying Wall Street in Liberty Square, urge you to assert your power.
Exercise your right to peaceably assemble; occupy public space; create a process to address the problems we face, and generate solutions accessible to everyone.
To all communities that take action and form groups in the spirit of direct democracy, we offer support, documentation, and all of the resources at our disposal.
Join us and make your voices heard!
*These grievances are not all-inclusive.
Thursday, June 30, 2011
TIME Article on Elizabeth Warren
From Time.com:
Elizabethan Drama
By MICHAEL CROWLEY Thursday, June 30, 2011
Here's some good news for consumers who feel themselves trampled by soulless banking and credit giants: on July 21, a new consumer-protection agency will open its doors in Washington, with the mission of making everything from mortgage documents to credit statements fairer and easier to understand and generally giving the little guy more power against the financial corporate juggernauts.
Here's the bad news: it's not clear that President Obama will be able to appoint anyone to run it.
It's an unexpected twist to a larger Obama policy achievement that has been slowly unraveling in recent months. Last July, Obama signed a sweeping bill, passed by the Democratic Congress, that overhauled Washington's regulation of Wall Street banks and other financial-services companies whose greed and risk taking helped wreck the U.S. economy. The idea was to prevent another financial crisis through tighter rules and closer supervision. A year later, Obama is fighting off emboldened Republicans who — backed by Wall Street money and lobbyists — are trying to gut the measure. The battle is raging mostly out of public view, in the realm of regulators and budgetmakers.
(See TIME's cover story: "The New Sheriffs of Wall Street.")
But a more visible showdown is unfolding over what some advocates say is the best feature of the Wall Street reform bill: a new Consumer Financial Protection Bureau created to safeguard ordinary Americans from confusing, sneaky and downright dishonest tactics by the likes of banks, mortgage lenders and credit-card companies. Obama has hailed the office as "a new consumer watchdog with just one job: looking out for people — not big banks, not lenders, not investment houses ... as they interact with the financial system."
Now the fate of that watchdog is in doubt. At the center of the fight is Elizabeth Warren, a strong-willed Harvard Law professor who has become the most celebrated consumer advocate since Ralph Nader. Warren's supporters — and there are many, especially on the activist left — argue that she's the obvious choice to run the new bureau. In part that's because it's her brainchild: it was Warren who asked in a 2007 essay why consumers were protected from buying appliances with unseen faulty wiring that could burn down their homes but not from hidden terms, fees and risks that could sink their finances. Obama picked up her idea for a consumer-protection bureau and campaigned on it in 2008, even before the financial crisis gave the concept some urgency.
(See "The Elizabeth Warren Test.")
But Obama has yet to appoint Warren to the top job, and Republicans have long made clear that they will oppose Warren's appointment if he does. In May, they upped their ante. In a letter to Obama, 44 Senate Republicans — enough to filibuster any Senate action — declared that they would oppose any nominee to run the bureau unless Obama agreed to changes in its structure and funding. Democrats say those changes would effectively neuter the bureau and hand the financial industry yet another victory over the little guy.
That leaves Obama with three options, none of them appealing. He can muscle Warren into a short-term recess appointment this summer, an act sure to enrage Republicans and prevent Warren from serving a full term. He can officially nominate her, or someone else, and hope a public-relations effort will force the GOP to capitulate. Or he can try to cut a deal to sacrifice Warren but save her agency, which would surely disappoint his already restive liberal supporters. (One progressive group has warned that such a deal would show "complete and utter weakness.") At the moment, no one is sure what he'll do. Including Warren.
[READ THE REST OF THE ARTICLE HERE]
Elizabethan Drama
By MICHAEL CROWLEY Thursday, June 30, 2011
Here's some good news for consumers who feel themselves trampled by soulless banking and credit giants: on July 21, a new consumer-protection agency will open its doors in Washington, with the mission of making everything from mortgage documents to credit statements fairer and easier to understand and generally giving the little guy more power against the financial corporate juggernauts.
Here's the bad news: it's not clear that President Obama will be able to appoint anyone to run it.
It's an unexpected twist to a larger Obama policy achievement that has been slowly unraveling in recent months. Last July, Obama signed a sweeping bill, passed by the Democratic Congress, that overhauled Washington's regulation of Wall Street banks and other financial-services companies whose greed and risk taking helped wreck the U.S. economy. The idea was to prevent another financial crisis through tighter rules and closer supervision. A year later, Obama is fighting off emboldened Republicans who — backed by Wall Street money and lobbyists — are trying to gut the measure. The battle is raging mostly out of public view, in the realm of regulators and budgetmakers.
(See TIME's cover story: "The New Sheriffs of Wall Street.")
But a more visible showdown is unfolding over what some advocates say is the best feature of the Wall Street reform bill: a new Consumer Financial Protection Bureau created to safeguard ordinary Americans from confusing, sneaky and downright dishonest tactics by the likes of banks, mortgage lenders and credit-card companies. Obama has hailed the office as "a new consumer watchdog with just one job: looking out for people — not big banks, not lenders, not investment houses ... as they interact with the financial system."
Now the fate of that watchdog is in doubt. At the center of the fight is Elizabeth Warren, a strong-willed Harvard Law professor who has become the most celebrated consumer advocate since Ralph Nader. Warren's supporters — and there are many, especially on the activist left — argue that she's the obvious choice to run the new bureau. In part that's because it's her brainchild: it was Warren who asked in a 2007 essay why consumers were protected from buying appliances with unseen faulty wiring that could burn down their homes but not from hidden terms, fees and risks that could sink their finances. Obama picked up her idea for a consumer-protection bureau and campaigned on it in 2008, even before the financial crisis gave the concept some urgency.
(See "The Elizabeth Warren Test.")
But Obama has yet to appoint Warren to the top job, and Republicans have long made clear that they will oppose Warren's appointment if he does. In May, they upped their ante. In a letter to Obama, 44 Senate Republicans — enough to filibuster any Senate action — declared that they would oppose any nominee to run the bureau unless Obama agreed to changes in its structure and funding. Democrats say those changes would effectively neuter the bureau and hand the financial industry yet another victory over the little guy.
That leaves Obama with three options, none of them appealing. He can muscle Warren into a short-term recess appointment this summer, an act sure to enrage Republicans and prevent Warren from serving a full term. He can officially nominate her, or someone else, and hope a public-relations effort will force the GOP to capitulate. Or he can try to cut a deal to sacrifice Warren but save her agency, which would surely disappoint his already restive liberal supporters. (One progressive group has warned that such a deal would show "complete and utter weakness.") At the moment, no one is sure what he'll do. Including Warren.
[READ THE REST OF THE ARTICLE HERE]
Wednesday, June 1, 2011
Economic Consequences
Two articles appeared on Market Watch today that I wanted to share.
The first reports that the housing market is taking yet another dive, indicating no foreseeable economic recovery on the horizon:
May 31, 2011, 12:56 p.m. EDT
Housing in double-dip decline as prices fall again
S&P/Case-Shiller index shows U.S. values falling below 2009 trough
By Greg Robb, MarketWatch
WASHINGTON (MarketWatch) — U.S. home prices fell in March for the eighth straight month, confirming the beleaguered housing market has entered a double-dip recession, according to a closely followed index released Tuesday.
Home prices in 20 major U.S. cities declined 0.8% in March on a non-seasonally adjusted basis, according to the Case-Shiller home-price index released by Standard & Poor’s.
Prices fell in 18 of 20 cities in March on a monthly basis. Only Washington, D.C., and Seattle showed advances. Over the past year, only Washington, D.C., has seen prices advance.
Prices fell 3.6% on a year-over-year basis in March, compared with a 3.3% year-over-year drop in February.
The 20-city index is now below its April 2009 trough, meaning that home prices have fully retreated from gains posted from May 2009 through June 2010, putting housing in a double-dip downturn.
“Home prices continue on their downward spiral with no relief in sight,” said David Blitzer, chairman of the index committee at Standard & Poor’s.
[READ THE FULL ARTICLE HERE]
The second article really puts the economic problem in perspective. After three years of financial ruin, seems a lot of people want to point fingers but no one wants to take blame. Worse yet, there doesn't seem to be any entity interested in holding anyone -- except for the American tax payer, that is -- responsible...
May 31, 2011, 12:01 a.m. EDT
Why no jail time for Wall Street CEOs?
Commentary: Little reason to hope that justice will be served
By David Weidner, MarketWatch
NEW YORK (MarketWatch) — It’s probably the most asked question to come out of the financial crisis: why aren’t any Wall Street CEOs in jail?
It’s asked on the message boards, over dinner, in the media, in Washington and in schools. Most people shrug and agree, someone important — Lloyd Blankfein at Goldman Sachs Group Inc. GS -.00% , Stan O’Neill, formerly of Merrill Lynch & Co., or Dick Fuld, the former CEO of Lehman Brothers — should go to jail, right?
A lot of us have tried to answer this question. Joe Nocera at the New York Times wrote in February that prosecutions were unlikely because “delusion is an ironclad defense.”
More recently, Roger Lowenstein, writing for Bloomberg BusinessWeek, concluded “risk-taking and stupidity aren’t criminal.” Lowenstein’s argument won praise from the Times’ Andrew Ross Sorkin who tweeted that Lowenstein was “probably right.”
Finally, Bill Black, the University of Missouri at Kansas City law school professor, and one of clearest-thinking minds on culpability in the financial crisis, wrote a blistering takedown of both Lowenstein and Sorkin on The Big Picture blog by quoting their previous writing on Wall Street against them. In Sorkin’s case:
“If the government spent half the time trying to ferret out fraud at major companies that it does tracking pump-and-dump schemes, we might have been able to stop the financial crisis, or at least we’d have a fighting chance at stopping the next one.”
Taking down the ‘Don’
The upshot of these assessments of legal culpability seems to be that while a successful prosecution may have long odds, it’s probably worth doing. Indeed, the Financial Crisis Inquiry Commission and the Senate Investigations Subcommittee report on Wall Street, the Levin-Coburn report, both suggest further investigations are in order.
“It is possible for certain senior executives at major financial firms and banks to be held liable for the credit crisis,” said Michael Chester, a partner at Skarzysnki Walsh & Black. “However, putting together a successful case will likely be much more problematic than most realize.”
For one, regulators just haven’t been keeping up, Chester said.
“Traditionally, these agencies have always amassed large amounts of information to use in subsequent criminal prosecutions. However, statistics show that these agencies have referred fewer financial cases to the U.S. Department of Justice in recent years.”
Also, a ruling in the case against former Enron Chief Executive Jeff Skilling about the “honest services” statute now strictly applies to bribes and kickbacks, Chester said.
Moreover, the statute of limitations has run out on a lot of securities law claims, said Max Gardner, a consumer advocacy lawyer who’s been working in the foreclosure space. He adds that it’s difficult to pursue claims against securities sold by the banks these CEOs ran, because common-law fraud claims require a showing of intent.
“There’s also the representations and warranties in the securitization documents themselves, including that there is good title to the mortgages and that they’re not in default,” he said. “”It’s important to emphasize, however, that there could be suits against mortgage-backed securities sponsors, MBS servicers, and MBS trustees.”
But those targets are admittedly below the executive suite for which we’re aiming. It’s hard, but not impossible, to believe those CEOs didn’t know how reckless their standards had become on the mortgage and securitization front. Again, the Coburn-Levin report suggests there are some smoking guns that could link high-level executives who testified that they just didn’t know what was happening.
Even if there was evidence enough to build a case, it probably wouldn’t satisfy us.
“For those who sold financial products that misrepresented their credit worthiness, how far up the chain do you want to go?” asked Brian Greenberg, an accountant and investor based in Marlton, N.J. “Do you want to take down the ’Don’?
“In that case start with the Federal Reserve that made credit plentiful and cheap without any regard to creditworthiness of the buyer. If their excessive policy of pushing cheap money did not exist, then Wall Street would not have been able to push the ’junk’ to the kids — er, public.”
Greenberg makes a fair point. There’s a lot of blame to go around.
It’s the ability to mete out punishment that has its limits.
David Weidner covers Wall Street for MarketWatch.
[READ THE ORIGINAL ARTICLE HERE]
We've all been much, much too complacent.
The first reports that the housing market is taking yet another dive, indicating no foreseeable economic recovery on the horizon:
May 31, 2011, 12:56 p.m. EDT
Housing in double-dip decline as prices fall again
S&P/Case-Shiller index shows U.S. values falling below 2009 trough
By Greg Robb, MarketWatch
WASHINGTON (MarketWatch) — U.S. home prices fell in March for the eighth straight month, confirming the beleaguered housing market has entered a double-dip recession, according to a closely followed index released Tuesday.
Home prices in 20 major U.S. cities declined 0.8% in March on a non-seasonally adjusted basis, according to the Case-Shiller home-price index released by Standard & Poor’s.
Prices fell in 18 of 20 cities in March on a monthly basis. Only Washington, D.C., and Seattle showed advances. Over the past year, only Washington, D.C., has seen prices advance.
Prices fell 3.6% on a year-over-year basis in March, compared with a 3.3% year-over-year drop in February.
The 20-city index is now below its April 2009 trough, meaning that home prices have fully retreated from gains posted from May 2009 through June 2010, putting housing in a double-dip downturn.
“Home prices continue on their downward spiral with no relief in sight,” said David Blitzer, chairman of the index committee at Standard & Poor’s.
[READ THE FULL ARTICLE HERE]
The second article really puts the economic problem in perspective. After three years of financial ruin, seems a lot of people want to point fingers but no one wants to take blame. Worse yet, there doesn't seem to be any entity interested in holding anyone -- except for the American tax payer, that is -- responsible...
May 31, 2011, 12:01 a.m. EDT
Why no jail time for Wall Street CEOs?
Commentary: Little reason to hope that justice will be served
By David Weidner, MarketWatch
NEW YORK (MarketWatch) — It’s probably the most asked question to come out of the financial crisis: why aren’t any Wall Street CEOs in jail?
It’s asked on the message boards, over dinner, in the media, in Washington and in schools. Most people shrug and agree, someone important — Lloyd Blankfein at Goldman Sachs Group Inc. GS -.00% , Stan O’Neill, formerly of Merrill Lynch & Co., or Dick Fuld, the former CEO of Lehman Brothers — should go to jail, right?
A lot of us have tried to answer this question. Joe Nocera at the New York Times wrote in February that prosecutions were unlikely because “delusion is an ironclad defense.”
More recently, Roger Lowenstein, writing for Bloomberg BusinessWeek, concluded “risk-taking and stupidity aren’t criminal.” Lowenstein’s argument won praise from the Times’ Andrew Ross Sorkin who tweeted that Lowenstein was “probably right.”
Finally, Bill Black, the University of Missouri at Kansas City law school professor, and one of clearest-thinking minds on culpability in the financial crisis, wrote a blistering takedown of both Lowenstein and Sorkin on The Big Picture blog by quoting their previous writing on Wall Street against them. In Sorkin’s case:
“If the government spent half the time trying to ferret out fraud at major companies that it does tracking pump-and-dump schemes, we might have been able to stop the financial crisis, or at least we’d have a fighting chance at stopping the next one.”
Taking down the ‘Don’
The upshot of these assessments of legal culpability seems to be that while a successful prosecution may have long odds, it’s probably worth doing. Indeed, the Financial Crisis Inquiry Commission and the Senate Investigations Subcommittee report on Wall Street, the Levin-Coburn report, both suggest further investigations are in order.
“It is possible for certain senior executives at major financial firms and banks to be held liable for the credit crisis,” said Michael Chester, a partner at Skarzysnki Walsh & Black. “However, putting together a successful case will likely be much more problematic than most realize.”
For one, regulators just haven’t been keeping up, Chester said.
“Traditionally, these agencies have always amassed large amounts of information to use in subsequent criminal prosecutions. However, statistics show that these agencies have referred fewer financial cases to the U.S. Department of Justice in recent years.”
Also, a ruling in the case against former Enron Chief Executive Jeff Skilling about the “honest services” statute now strictly applies to bribes and kickbacks, Chester said.
Moreover, the statute of limitations has run out on a lot of securities law claims, said Max Gardner, a consumer advocacy lawyer who’s been working in the foreclosure space. He adds that it’s difficult to pursue claims against securities sold by the banks these CEOs ran, because common-law fraud claims require a showing of intent.
“There’s also the representations and warranties in the securitization documents themselves, including that there is good title to the mortgages and that they’re not in default,” he said. “”It’s important to emphasize, however, that there could be suits against mortgage-backed securities sponsors, MBS servicers, and MBS trustees.”
But those targets are admittedly below the executive suite for which we’re aiming. It’s hard, but not impossible, to believe those CEOs didn’t know how reckless their standards had become on the mortgage and securitization front. Again, the Coburn-Levin report suggests there are some smoking guns that could link high-level executives who testified that they just didn’t know what was happening.
Even if there was evidence enough to build a case, it probably wouldn’t satisfy us.
“For those who sold financial products that misrepresented their credit worthiness, how far up the chain do you want to go?” asked Brian Greenberg, an accountant and investor based in Marlton, N.J. “Do you want to take down the ’Don’?
“In that case start with the Federal Reserve that made credit plentiful and cheap without any regard to creditworthiness of the buyer. If their excessive policy of pushing cheap money did not exist, then Wall Street would not have been able to push the ’junk’ to the kids — er, public.”
Greenberg makes a fair point. There’s a lot of blame to go around.
It’s the ability to mete out punishment that has its limits.
David Weidner covers Wall Street for MarketWatch.
[READ THE ORIGINAL ARTICLE HERE]
We've all been much, much too complacent.
Wednesday, January 19, 2011
Partisan Puzzle part II
"If everyone has access to affordable healthcare, doctors won't get paid, quality will go down, and healthcare will become substandard."
Okay.
But...
"If everyone has access to affordable food, farmers will thrive, quality will go up, and people will be healthier."
I would bet neither of these statements is completely true, yet there are those who buy into rhetoric.
Let's assume big business doesn't care about you or me and only cares about the bottom line.
Think about how insurance companies and companies like Monsanto and DuPont work.
Now let's discuss the statements above.
Okay.
But...
"If everyone has access to affordable food, farmers will thrive, quality will go up, and people will be healthier."
I would bet neither of these statements is completely true, yet there are those who buy into rhetoric.
Let's assume big business doesn't care about you or me and only cares about the bottom line.
Think about how insurance companies and companies like Monsanto and DuPont work.
Now let's discuss the statements above.
Wednesday, December 29, 2010
Wall Street's Ten Biggest Lies for 2010
I just couldn't resist sharing this article by Les Leopold.
Here are the ten main points:
1."Honest, we didn't do it!"
2."The overall costs will be incredibly small in comparison to almost any experience we can look at in the United States or around the world."
3. "It's a war. It's like when Hitler invaded Poland in 1939."
4. "The hard truth is that getting this deficit under control is going to require some broad sacrifice, and that sacrifice must be shared by employees of the federal government."
5. "25 hedge fund managers are worth 658,000 teachers."
6. "To bolster the economy we need .... an improvement in the relationship between business and government (the current antagonism, even if not the primary explanation for slow hiring and sluggish investment, does seem to be affecting hiring and other business behavior)."
7. "Lengthened availability of jobless benefits has raised the unemployment rate by 1.5 percentage points."
8. "Private employers, led by our revitalized financial sector, will create the jobs we need -- that is, if the government would just stay out of the way."
9. "Tim Geithner extolled 'the benefits of financial innovation' to the American economy." (Wall Street Journal, August 4, 2010)
10. "I'm shocked, shocked to find that gambling is going on in here."
CLICK HERE to read the whole article.
Here are the ten main points:
1."Honest, we didn't do it!"
2."The overall costs will be incredibly small in comparison to almost any experience we can look at in the United States or around the world."
3. "It's a war. It's like when Hitler invaded Poland in 1939."
4. "The hard truth is that getting this deficit under control is going to require some broad sacrifice, and that sacrifice must be shared by employees of the federal government."
5. "25 hedge fund managers are worth 658,000 teachers."
6. "To bolster the economy we need .... an improvement in the relationship between business and government (the current antagonism, even if not the primary explanation for slow hiring and sluggish investment, does seem to be affecting hiring and other business behavior)."
7. "Lengthened availability of jobless benefits has raised the unemployment rate by 1.5 percentage points."
8. "Private employers, led by our revitalized financial sector, will create the jobs we need -- that is, if the government would just stay out of the way."
9. "Tim Geithner extolled 'the benefits of financial innovation' to the American economy." (Wall Street Journal, August 4, 2010)
10. "I'm shocked, shocked to find that gambling is going on in here."
CLICK HERE to read the whole article.
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