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Friday, Friday! Gotta get down on Friday!

Let’s take a turn around the internet , shall we Miss Bennett?

Someone, beside *me*, really has it in for Jon Corzine.  The story about MF Global has been on the frontpage of the NYTimes every day this week.  In some cases, there have been several stories per day.  The one from yesterday was especially negative, not only for Corzine but for what his relationship with Obama says about the president’s judgement (remember that his judgement was Obama’s selling point in 2008).  Earlier this year, Gary Gensler, the head of the CFTC was proposing a rule to restrict the very same kind of trading that Corzine’s MF Global was doing and like Brookesley Born back in 2000, Gensler was overruled, this time by Corzine himself and a bunch of his lobbyist dudes.

As a former sovereign debt trader at Goldman Sachs, Mr. Corzine wagered that the European regulators would backstop any default. So even as dark clouds circled over Europe, he sensed an opportunity. Starting in late 2010, MF Global began to accumulate short-term sovereign debt of countries like Italy, Spain and Portugal.

MF Global financed these purchases through complex transactions known as repurchase agreements. In these, the bonds themselves were used as collateral for a loan to purchase them. The interest paid on that loan was less than the interest the bonds paid out, earning the firm a profit from the spread.

While that practice is quite common, the C.F.T.C. wanted to crack down on such lending in those instances when customer funds were used. The C.F.T.C. proposal would have also banned the use of client funds to buy foreign sovereign debt.

It is unclear whether the firm used client funds to purchase the risky bonds of Italy, Spain, and other debt-laden European nations, but experts say it is not unusual for such transactions to be paid for with customer money.

A person close to MF Global said the firm did not use client funds to finance these trades.

Leading the government’s effort to curtail these arcane practices was Gary Gensler, the chairman of C.F.T.C., who had worked for Mr. Corzine at Goldman Sachs. Mr. Gensler pushed for the proposed change in October 2010, and planned to bring it to a vote this summer.

MF Global has four outside lobbyists in Washington, tiny by Wall Street standards. But it was Mr. Corzine who marshaled the firm’s response to the proposal, lobbying most of the agency’s five commissioners directly. One commissioner said he visited with Mr. Corzine in MF Global’s headquarters, and acknowledged being impressed by the Wall Street titan, said a person with direct knowledge of the meeting who asked for anonymity because the meeting was private.

The C.F.T.C. polices the markets for futures trades. Staff members there often do not have a Wall Street pedigree.

Mr. Corzine’s background in finance made him highly credible, agency officials said.

Mr. Corzine’s efforts culminated on July 20, as the agency was preparing for a vote on the proposal. That day, MF Global executives were on four different calls with the agency’s staff. Mr. Corzine himself was on two of those calls.

One of the calls was with Mr. Gensler. Both men are active Democrats, and served on financial panels together recently.

Shortly after the calls, Mr. Gensler, aware that he could not push the vote through, decided to delay the proposal indefinitely.

In Ron Suskind’s book, Confidence Men, Gensler comes off as one of the few good guys in Obama’s administration who has a background in finance and knows how players like Corzine work.  In a recent brief interview with CNBC when asked whether there were other Wall Street firms with a sovereign debt crisis, Gensler just smiled and said nothing.  Gensler wasn’t able to do much better than Born against Wall Street’s lobbying arm with the rest of the CFTC board.  The good thing is that the rule isn’t dead, it’s just delayed.  The bad thing is that Barack Obama was prepared to make Jon Corzine his Treasury Secretary if Geithner resigned.  Come to think of it, why *didn’t* Geithner resign?  Did the risky trades at MF Global scare Obama off?

As of last night, Corzine had lawyered up with a criminal defense lawyer and this morning, he resigned from MF Global.  What kind of influence he personally had with Obama’s White House may make for some interesting election year fireworks.  And let’s not forget OccupyWallStreet who may just help ignite some true voter pushback on the Obama administration.  Call me crazy but my tinfoil antenna are starting to pick up signals that the opinion makers are starting to be embarrassed by Obama and are concerned that according to the models they are running, he can’t win against Romney next year.  Nate Silver suspects that Obama may be toast.


Good news!  Our national unemployment rate is down to 9%!  Isn’t that amazing?  Don’t tell anyone from Sanofi, Novartis, Amgen and Merck.  Let it be a surprise.

Also, don’t be surprised when the government is forced to revise that number upwards.

Meanwhile, in another bit of, er, good(?) news, the New York Times reports that the reports of increasing poverty are greatly exaggerated and anyways, poverty is not that bad these days.  You get food stamps!  See, if you’re not actually starving and suffering from kwashiorkor, you’re not really poor, even if you were solidly middle class last year.  This year, I will have paid more in taxes than required to support a family of four above the poverty level, next year I am at the poverty level. Good to know that impending homelessness, healthcarelessness and food stamps are not as bad as I think they will be.


In the battle of the pundits, David Brooks squares off against Paul Krugman.  David, who is really Wormtongue in disguise, constantly points out that if you have a college education, you’re doing pretty well during this recession compared to the great unwashed masses who only have high school diplomas.  THOSE people can’t get jobs because they are unqualified.  Truly successful people have college educations.  Oh, wait, Steve Jobs dropped out of college after his Freshman year.  Well, surely he’s an exception.  Wait, Bill Gates also dropped out.  And so did Mark Zuckerberg.  Jeez, does anyone in Silicon Valley have a Bachelor’s degree?? Yes!  Steve Wozniak has one.  He got it after he became a millionaire at Apple from designing the Apple II.

But surely, SURELY, they are exceptions, no?  Actually, David, none of my friends with multiple advanced degrees are doing very well right now.  Oh, there’s plenty of work to do.  It’s just mostly unpaid.  The people who need the help the most can’t find the funds and these are not greedy entrepreneurs of the kind that Brooks would admire.  They’re just not getting funded.  Well, it’s only cancer and other diseases.  But I will be sure to tell my friends at Sanofi, Merck, Novartis and Amgen that they are fully employed and prosperous because they graduated from college.  Let’s not let reality get in the way.

Paul Krugman, on the other hand, says the educated are not getting jobs.  He says this because he looks at all those graphs and correlations and mathematical thingies that David Brooks probably didn’t study when he was in college.  And Krugman is living in the middle of pharmageddon central.  All he needs to do is stick his head out the window to hear the agonizing cries of the chemistry PhD at the Frick lab only a few blocks down the road who cannot find a job.

That’s why Krugman is a god and David Brooks is still just a Wormtongue, whispering sweet distractions into the moneyed class’s ears so that they don’t have to feel, well, *anything* really, while he tells the rest of us that we’re worthless without a college education.  And the college educated trudge all the way to the unemployment office.  “Hi-ho, Hi-ho, it’s off to un-work we go”


And now for our musical interlude for all the high school graduates out there:

21 Responses

  1. holiday hiring. 🙂

  2. I see lots of degreed people working here in PA, stocking shelves at the local Big-marts. Or asking, “Do you want fries with that?”

  3. I always wonder what happened when the protection wears off and the media eats them alive. You know THAT is the really interesting story.

    Maybe they are hoping occupy will accept Corzine as a burnt offering?

  4. Bruce Dixon at BAR

    Occupation Where? What’s In It For Black and Brown People?

    Those that initiated the early occupations in most cities were white. They have re-established the long-lost right of the poor to congregate in public and express their discontent. If this is not to be a right which only whites enjoy, it’s time for us to step up too. There will be race and class tensions, with the increased participation of black and brown people in the occupation movement. But these are growing pains, and necessary. It’s time, as Glen Ford has said, to claim our place in the 99% and spell out what that looks like.

    • Who said there will be tensions?? Why should there be? This is an economic problem. Everyone is affected. And it won’t get better if we single out any particular group as having it worse than any other. That’s what tge bankers would love. Nothing would please them more than to see our solidarity divided on racial lines. So can we please, just once, table the racial issue? It really is that important. If we win, everybody wins. If we lose, we are all screwed.

    • Err, guess they didn’t pay attention to Occupy Louisville- from what I’ve noticed, at least half of the occupiers in my town are “black and brown people”. This In a town that is 71% Non Hispanic White, 23% African American, 3% Hispanic, 2% Asian American, 1% American. I’m betting the percentage is similar in other southern cities like Atlanta…

  5. The more recent defections to the extreme right of former friends saddened and angered me. I finally put down my thoughts in writing

  6. riverdaughter, could you post your list of favorite podcasts again? I’ve just discovered that I can listen to podcasts first thing in the morning while I knit and I’m trying to build up my subscription list.

  7. My older brother never went to college- yet he has a stable and secure (do I ever envy that, much more than his pay) job as a computer system analyst for Costco in Washington State making 80K after taxes a year. My job as a public librarian (made 35K pre taxes, etc.. 26K after last year) is on very shaky ground. I have a college degree, public librarians all over the country are facing similar situations as budgets are slashed, just at a time where public libraries are needed most (free access to the internet, where almost all jobs must be applied for nowadays, etc…). My younger sister’s job as a computer programer (45K a year pre taxes) for Columbia HCA was outsourced in 2005. She has a college degree as well and has not been able to get a stable full time job since then. If I lose my job I’m betting all I’ll be able to get are temporary part time jobs that pay around minimum wage, with no health insurance and of course no pension, and I’m betting not unionized either. Am I willing to work that kind of job? To bring in income, guess I’ll have to. But my job should not be at risk at all. My sister’s job should have not been outsourced. That’s what is fundamentally wrong in our country. Our jobs should have been as stable and secure as my brother’s.

  8. If models indicate that Romney could defeat Obama, then we must make very sure that Romney becomes the nominee. Perhaps that would terrorise the Golden Sacks Rubinite Party into permitting an Emergency Primary Season. Which New Deal 2.0 Democrats could then invade.

    If the OverClass is getting ready to sacrifice Corzine, can we do something to make sure that he is only the first, not the last, part of the OverClass to be destroyed and incinerated? Naked Capitalism ran
    a Michael Hudson guest post about why the Obama Administration is pressuring the EuroElite to pressure Greece. Here is a cutpaste:

    • Yeah . . . here’s the cutpaste:
      MICHAEL HUDSON: Well, you’ve asked about three questions there. Obama is here to represent the interests of the American banks. And the Europeans are very angry that a few weeks ago Tim Geithner, the bank lobbyist, came over and insisted that Europe not forgive Greece’s bank loans, not let Greece write down the loans, and indeed that it not even claim that Greece should do what Argentina is and write down the loans as a premise. Mr. Geithner explained to the Europeans that the largest insurers of the Greek debt are American money market funds and hedge funds. And he said American hedge funds and banks would lose money and actually would crash the U.S. economy, if Europe made a concession to Greece to bring debts down to the ability to pay. So, instead of a debt write-down or a haircut, the banks said, “OK, we will agree with what the Americans are insisting on, and we will ask for a voluntary write-down by the banks on the Greek debt they hold.” Obviously, European banks who are not part of the credit default swaps have disagreed with this. So the Americans are putting immense pressure on Europe, saying, “We will wreck your economy, if you don’t wreck Greece’s economy.”

  9. Teresainpa, I have been off sick and away from work and the workplace computers for several days. By the time I saw your garden-in-PA-clay comment, comments were closed.
    I am just an amateur dilettante gardener but here are my modest thoughts. A heavily clay soil is . . . “constipated”. A heavily sand soil is. . . “diarheafied”. Clay poses purely brute physical force-over-time challenges. If you mix in enough peat moss and the right ground-up rock and mineral powders and seaweed meal/etc. and grow things year after year while mixing deeper deeper deeper; it will become rich
    high-humus/high-nutrimineral bioactive soil. Whereas sand will hardly retain anything you add to it and you have a neverending battle adding nutrients/compost as fast as these things leach away under every rain and snowmelt. I may be too old and weak by retirement (ha ha) to turn a whole new claybed into soil, but I would also be too conscious of little-time-left to want to spend it feeding a sterile sand collander. So maybe I will retire to center-west Illinois or Iowa where the soil is deep, real, and real deep.

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