Not liberal, not even progressive

So says Jay Ackroyd at Atrios regarding Christina Romer’s farewell note, which recognizes the severity of the crisis we’re in but recommends very, very weak tea as a remedy:

The pressing question, then, is what can be done to increase demand and bring unemployment down more quickly. Failing to do so would cause millions of workers to suffer unnecessarily. It also runs the risk of making high unemployment permanent as workers’ skills deteriorate with lack of use and their labor force attachment weakens as hope of another job fades.

….

Policymakers should also take sensible actions to increase confidence. While some in the business community talk about regulatory uncertainty as one reason they are cautious about hiring and investing, I suspect that uncertainty about future sales is a much larger determinant of firms’ actions. We can, however, do more to highlight and codify our pragmatic approach to regulation. As OIRA Administrator Cass Sunstein detailed in his recent Congressional testimony, the estimated net benefits (that is, the benefits minus the costs) of the Obama Administration’s regulatory actions during its first year far surpass those of the first year of the two previous administrations. For the health of the economy, we should continue and trumpet this prudent regulatory approach.

While we would all love to find the inexpensive magic bullet to our economic troubles, the truth is, it almost surely doesn’t exist. The only surefire ways for policymakers to substantially increase aggregate demand in the short run are for the government to spend more and tax less. In my view, we should be moving forward on both fronts.

I was talking to a French expat yesterday and I don’t think the idiots in charge have the slightest clue what is really wrong with the economy from the ground floor.  The expat told me that she felt robbed when she came to this country.  Everything comes with a fee slapped on it.  Her salary is higher than her French colleagues, this is true.  But everything here costs more.  And her taxes here in the US are very high.  She didn’t feel that she was getting the same bang for her taxpayer buck.

Now, it’s true that in France, you have to put up with a lot of striking workers.  But they have a mass transit system that we can only dream about.  Here, college is unaffordable for most people.  There, college is nearly free.  In France, maternity leaves are long and the government gives you a stipend for each child.  Tax deductions are generous.  Here, if you’re not employed, good luck with health insurance.  There, the unemployed are covered and there are no Glenn Becks making the unfortunate feel guilty about collecting on the money they have paid into the system all their working lives.

The French are now complaining about their version of social security.  The transit workers are going on strike to protest a proposed raise in the retirement age- to 62.

If that’s socialism, I’d take it.  Yeah, they have problems but you don’t have to worry about becoming destitute over there. Here, you can be pretty sure that every sufficiently developed company has a sophisticated Metropolis algorithm optimization program designed to deprive you of the last disposable dollar in your wallet.  There are fees on top of hidden costs on top of private free market taxes everywhere you turn.  It has gotten a lot worse since Bush took office in 2000.

But we must be prudent with regulation.  We must not hire a champion like Elizabeth Warren to look out for the consumer, who can’t pinch pennies any longer and pay both governmental and capitalist taxes.  Heaven forfend we ask people who benefitted most from the Bush tax cuts to give them back.  No, let’s just starve state and local governments, lay more people off and scratch our heads when businesses can’t seem to sell anything to anyone. And I am beyond appalled that Obama would appoint the Catfood Commission to find ways to cut social security, just about the only thing we have left between old age and poverty.  He would do this on the backs of working people who have paid into social security all of their working lives and are now seeing pensions and 401Ks drying up.   He would have us all starving in order to prevent him from going to the very rich and ask them to give back and act like they care about their fellow Americans.  And to think that Alan Simpson has the ability to cut the military benefits of my brother and widowed mother enrages me beyond belief.

I want him gone.  I want him out of the White House in 2012.  No, I am not negotiable on this.  There is nothing Democrats can say or do to make me want to have him running things for four additional years.  Dont.  Even.  Ask.  He is everything I feared he would be: self-centered, inexperienced and cowardly.  He doesn’t have a clue how to get us out of this mess and he’s trying to please the wrong people.  He’s got to go.

And now for something radical and extreme: Get rid of the 401K

Last weekend, I got polled.  Er, by Harris, the polling company.  I’ve been getting a lot of that lately.  Maybe being a middle class suburbanite independent Democrat-in-exile in NJ means I have finally arrived but it’s unlikely I fit their notions of the typical polling subject.  Well, not after this poll anyway.

The first question was about my attitudes towards the military.  Would I suggest the military to a young person?  As it happens, I’m a military brat, my family has a long tradition of joining up and I have current family members who are career military.  So, while a military career is not for everyone and it’s certainly more dangerous than it was 10 years ago, I wouldn’t rule it out for someone who doesn’t know what they want to do as a career.

That first answer seemed to have put me, a lifelong liberal, on the Tea Party branch of the decision tree.  Many of the other questions after that point were kind of insulting to the intelligence.  For instance, is someone arrested for a crime entitled to speak to an attorney?  Jeez, all those years of Dragnet should have sunk in by now.  Of course they are.  What about if the crime is serious or particularly heinous?  Um, yeah, that’s when you are most in need of one to defend you.  What about if it’s a TERRORIST???  Do they get to speak to an attorney on the government’s dime if they are accused of TERRORISM?  Well, Timothy McVeigh went through the process, was represented, had a fair trial and got what was coming to him.  I think the system can work.  Let’s not start making exceptions for alleged terrorists.

Anyway, that wasn’t the section that tripped my trigger.  No, the one that got to me was about 401Ks.  I don’t know what our brilliant braintrusts in the Democratic party are up to but if they are the ones who are suggesting that it would be a nifty keen idea to expand the 401K system, we might as well all just get used to an America whose salad days are over.  The poll question was something like, “Would you approve or disapprove of expanding the 401k system to workers whose employers would not be required to make a matching contribution?”

That’s a weird question for so many reasons.  The first one is, if you allow *some* employers to opt out of making contributions, wouldn’t you just give the rest of them justification for also opting out?  And what about the Enron-esque employers who match with stock?  But I digress.  Because the real employment trend is to make everyone contractors, freeing the corporation from actually employing and being responsible for the lives of the people who work for them.  So, maybe that’s where this question is coming from.  Say you are now a contractor, forced to go through some rent collecting middle man who acts as an intermediary between the corporate entity and your paycheck.  Now YOU are responsible for your retirement accounts, not the corporate entity.  So, does the old corporation have to match your 401k contributions?  Something to think about as the traditional bonds between employer and employee are redefined.

But that’s not why the 401K needs to go.  Now, I am not a financial wizard.  Far from it.  If you want that kind of expertise, check out Dakinikat’s posts, or Baseline Scenario or Naked Capitalism.  No, I am just Jane Bagodonuts from the burbs.  Nevertheless, blogging allows me to expound on any subject I like or don’t like.  And I have particular dislike for my 401k, may it grow and prosper.  Here are my reasons from a liberal perspective:

1.) It’s a Ponzi scheme.  Yep.  Unlike Social Security, which we are all required to participate in and which has actuarial expertise built into it and is a fall back retirement insurance policy, the 401k is for suckers.  It relies on lots of people dumping their investment dollars into pumping up the price of stocks.  When the baby boom generation starts to retire in earnest, it’s going to want to cash in, leaving us with funds with diminishing value.  UNLESS we get some other poor schmos who don’t have employer contributions to send their money to our 401Ks in return.

2.) Wall Street thinks the money in your 401K is there for them to use as gambling chips in some global game of roulette.   We saw this happen in 2008 when the subprime mortgage market collapsed but it’s not limited to the bond market.  Oh, sure, the stock market is more highly regulated but when the bottom fell out of the mezzanine subprime tranche CDO’s it took everything else with it.  Besides, who has time to monitor their 401K’s at every minute of the day?  Most of us follow the Ron Popeill method of financial investment: set it and forget it. Turning a bunch of naive amateurs into financial planners of their old age lifestyles has turned into a windfall for the predators on Wall Street.  What we don’t know can hurt us and we don’t know what they’re up to.

3.) Wall Street and the financial sector in general is like the Wild West right now.  Until there is more oversight and regulation, you just can’t trust them.  The constant infusion of cash to these testosterone poisoned, self centered, highly overrated gamblers who manage our money only encourages more risk taking and future financial collapses.

4.) 401Ks lead to employees betting against themselves.  The shareholder is the emperor.  The money we put into these funds increase when employers see staff as unattractive drags on the bottom line.  I’ve always preferred the word Personnel to Human Resources because it acknowledges that there are persons actually doing the work and that we are not just variable costs to be minimized for the benefit of the bonus class.  Nevertheless, when corporations cut staff, the stock goes up and everyone starts dreaming of their new retirement condo in Mexico.  That is, iff they have the privilege of actually retiring.

5.) 401ks lead to less innovation.  Well, if you have to cut staff to assuage the quarterly panic attacks of the shareholders, you don’t have people innovating for you.  It’s true.  People who no longer work for you are not required to do your thinking for you.  The people who are left are too busy preparing for their own “displacement” to do any real work.

6.) 401ks invite the bonus class to invest in emerging markets, not the American market.  They’re always chasing profits.  For themselves.  For you?  Ehhhhh, not so much.  Shareholders, that is the BIG shareholders, not you and me, have to be satisfied so the money must go somewhere.  Why not India?  Oh, sure, it means that the capital will be invested in a place that means more Americans will lose their jobs and potential American entrepreneurs will go begging for startup money. But that’s the nature of capitalism.  Suck it up.

5.) In order to get a break on taxes, which in my case are pretty ugly, you can’t take the money out until you retire.  You can borrow from your 401K but then, you have to make sure you stay employed so you can pay yourself back.  It’s not very liquid and most of us can’t afford to fund multiple retirement/savings/college funds.  In emergencies, it’s useless.

Now, I am glad that I have a 401K, for the short term forseeable future, and that my employer is rather generous in funding it.  But it’s all on paper as far as I’m concerned.  By the time I am ready to retire, it might be worthless.  Getting rid of them wouldn’t exclude investing in the stock market.  It would just not institutionalize it and make it an all-but-mandatory retirement strategy.  Maybe the financial sector would be a little bit more attentive to our needs if they didn’t have a steady stream of easy money flowing into their gargantuan gullets.  Maybe customer service would improve.  There might be incentives offered to attract your business.  Maybe the risky gambling addiction behavior would cease.

I dunno.  I can only speculate with my money averse mind. But the more I hear about the financial meltdown, the more I keep coming back to the 401K “instrument” as the root of all evil.

Get

Rid

Of

It

Economics Food Fight

Matt Taibbi

Finally we have something fun to talk about. This could save us from wallowing in the horrors of Obama’s health insurance company bailout bill all weekend long. Matt Taibbi’s latest piece came out in Rolling Stone weeks ago, but was only available to subscribers until recently. Suddenly there is a fascinating back and forth going on between Taibbi and Obama apologist Tim Fernholtz at American Prospect. Fernholz nitpicked Taibbi’s article in a much-discussed critique. Then Felix Salmon stepped in to add his two cents to war of words. Then, Taibbi put his own response to Fernholz up on his blog. And finally, the latest: Fernholz has a new response to Taibbi’s response and he includes a couple of digs at Salmon too!

Here are links to all the relevant articles with some highlights:

Taibbi’s original RS story: Obama’s Big Sellout

Taibbi’s main argument is that Bob Rubin and people closely connected with him are running Obama’s economic policy–ensuring that deregulation and free-trade will continue to be the order of the day, rather than efforts to control an out-of-control Wall Street.

It is bad enough that one of Bob Rubin’s former protégés from the Clinton years, the New York Fed chief Geithner, is intimately involved in the negotiations, which unsurprisingly leave the Federal Reserve massively exposed to future Citi losses. But the real stunner comes only hours after the bailout deal is struck, when the Obama transition team makes a cheerful announcement: Timothy Geithner is going to be Barack Obama’s Treasury secretary!

Geithner, in other words, is hired to head the U.S. Treasury by an executive from Citigroup — Michael Froman — before the ink is even dry on a massive government giveaway to Citigroup that Geithner himself was instrumental in delivering. In the annals of brazen political swindles, this one has to go in the all-time Fuck-the-Optics Hall of Fame.

Wall Street loved the Citi bailout and the Geithner nomination so much that the Dow immediately posted its biggest two-day jump since 1987, rising 11.8 percent. Citi shares jumped 58 percent in a single day, and JP Morgan Chase, Merrill Lynch and Morgan Stanley soared more than 20 percent, as Wall Street embraced the news that the government’s bailout generosity would not die with George W. Bush and Hank Paulson.

Fernholz’s critique: The Errors of Matt Taibbi

Matt Taibbi has done it again — written a nightmare of a story for Rolling Stone on Obama’s economic sell-out of his campaign. The piece is a factual mess, a conspiracy theorist’s dream, doesn’t even indict Obama for his real failures (which I’ll discuss in a post later today) and of course invokes the cold hands of Bob Rubin like a bogeyman at every turn. This is pernicious for a lot of journalistic reasons, but politically it’s bad for progressives beacuse conspiracy theories stand in the way of good policy analysis and good activism, replacing them with apathy and fear.

Salmon’s critique of Fernholtz’s critique: Fernholtz vs. Taibbi

Tim Fernholz’s intemperate attack on Matt Taibbi and his latest article is getting a lot of attention in the Twittersphere. It turns out that a lot of journalists don’t like Taibbi, and love it when he gets taken down a peg.

But Fernholz’s attack is weaker than it looks at first glance; a lot of it is simply a matter of slant and opinion.

Taibbi’s response to Fernholz: On Obama’s Big Sellout

So I fucked up with that line — “a former Clinton diplomat” — and for that I certainly am sorry, among other things because Rolling Stone’s fact-checkers are the most rigorous in the business (much more so than any other newspaper or magazine I’ve worked for) and I think actually this was my error and not theirs, a late-stage mixup near press time.

Now, that said, it was indeed Bob Rubin’s son Jamie who worked with Michael Froman in the Obama transition team. Had it not been Bob Rubin’s son, that would certainly have qualified as a serious error, because then we’d be making an argument based upon a factual error.

But the basic argument of the article was that an enormous number of people with ties to Bob Rubin and/or other Wall Street insiders had assumed positions of responsibility in the Obama transition and White House. And Jamie Rubin is Bob Rubin’s son, and he was a headhunter for Obama’s economic hires from the first days of the transition. So the meaning here is really not significantly different. The fact that this heads the Prospect’s list of complaints says a lot about the substance of this criticism.

Fernholz’s response to Taibbi’s response and Salmon’s critique of his critique of Taibbi: Lighting Round

So yesterday’s post on Matt Taibbi’s latest in Rolling Stone got a bit more attention than I had anticipated, including a response from Felix Salmon that I thought was worth addressing. Salmon defends Taibbi — I’d accuse him of some logrolling in our time thanks to his appearance in the piece, but Salmon is better than that — but it’s not a very strong defense….

Here’s my point: Taibbi has written an article arguing that Obama has sold out his campaign-era economic populism by surrounding himself with Bob Rubin’s lackeys and giving away the farm to the bankers — “one of the most dramatic political about-faces in our history.” Only it turns out, though, that many of the Rubinites he identifies don’t work on the things he says they work on, or don’t take the positions he applies to them, or aren’t as influential as he thinks they are. The people he says were “banished” from Obama’s inner circle, like Austan Goolsbee, weren’t. He manages not to mention any of the populist decisions Obama has made.

And Andrew Leonard at Salon is threatening to get involved–he sounds like another Obama apologist.

Is it my imagination, or does the attribution “spent 12 years as an executive at Goldman Sachs” now carry with it the stain of the scarlet letter? Nothing more need be said.

I will return to this theme later today when I tackle Matt Taibbi’s Rolling Stone assault on President Barack Obama but let’s note here for the record that this is yet another case of the White House proposing a sensible piece of regulatory reform — anything that quacks like a financial services banking duck should be regulated like a financial services banking duck — that has been watered down by Congress.

Back and forth–who will be heard from next and will they come to blows?

UPDATE I:

Here is the promised attack on Taibbi by Andrew Leonard: Matt Taibbi goes Obama scalp hunting

And, another voice pipes up from the peanut gallery, Big Media Matt, king of the apologists, Blame Obama First h/t MABlue

UPDATE II:

Salmon returns Leonard’s serve: Don’t Ask Taibbi to be Krugman

But where does Salmon get the idea that we have a “left-leaning government now?” What is he smoking?

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The Culture of Cannibalism in US Politics: The Triumph of The Cyclop’s Values Over Democratic Citizenship

{The first essay in this series introduced a model I created to explain the cycle of corruption that plagues US politics. This essay looks into the roots of this corruption. It takes a long time to get to the payoff. Further, the conclusion is somewhat ex nihilo if you have not read the first essay. This said, for those who dare, I hope you find it worth the read.}

Polyphemos the cyclops would have eaten Odysseus, if his survival was dependent on the moral virtues of Silenus’s satyrs. Fortunately for Odysseus, and Silenus and his lot, Odysseus could depend on his fellow citizens. If Polyphemos had the majority of America’s elected representatives depending on him for their survival in his cave, the way that they are presently beholden to lobbyists’ money for their electoral survival, he could have had a ready supply of citizens for his daily meals.

Cyclopean virtues regularly triumph over the virtues of democratic citizenship in the political landscape of the United States. Given that the Declaration of Independence embodies the spirit and principles that ground the virtues of democratic citizenship, why is it that cyclopes, who eat humans, win the day in America? Answering this question requires that we journey back to Attic Greece and her proto-democratic foundations.

Common Sense and the sensus communis: anatomy of an American pressure cooker

Gay-Lussac

The pressure of a fixed mass and fixed volume of a gas is directly proportional to the gas’s temperature.

This relationship is known as the Gay-Lussac’s Law and a pressure cooker is an example of the law in practice. Cooking under pressure creates the possibility of cooking with high temperature liquids because the boiling point of a liquid increases as its pressure increases. High pressure and high heat can result in delectable dishes.

Cooking under pressure can be also dangerous because as liquids change phase into gases their volume expands greatly. For example, at atmospheric pressure the volume of steam is about 1700 times greater than the volume of water. To prevent pressure cookers from becoming bombs, relief devices (pop safety valves) are employed that are capable of relieving all of the steam the vessel is capable of producing.

America the Beautiful Pressure Cooker

The political pressure cooker is beginning to heat up. The power brokers and institutions that drive the nation have arrived unannounced on the doorsteps of America like a gaggle of unwanted, high maintenance relatives that demand hospitality for an unforeseeable time and that won’t take no for answer. Furthermore, they’ve announced that more relatives are on the way. Whatever plans America’s householders had, they’ve just gone out the window, with their household budgie and the relatives’ cat in hot pursuit.

People are justifiably angry with this incursion. Their budgie might not have been much, but it was “their budgie”, nurtured from birth into what it had become. Justifiably angry householders are trying to work out why the relatives arrived on their doorsteps and why they brought their fucking cat.

The Culture of Cannibalism in US Politics: The Cycle of Corruption

Mark Twain, in “Cannibalism in the Cars,” suggested that cannibalism of the body politic is a logical outcome of the practice of the political values of the elected representatives of the United States, in dire circumstances. What would occur, if such dire circumstances did not require a natural disaster, but became a systemic feature of the political landscape?

The current economic crisis and America’s abject failure to provide economically-efficient, affordable healthcare are two examples of dire circumstances that are systemic features of America’s political landscape. Both crises are the results of bad governance. Both circumstances are direct products of the growth of influence of en-corporated political interests (encorps) in the system of governance of the United States. Bad governance, in both cases, involves a betrayal of the public trust that is manifested in not regulating the encorps in a way that protects the public’s interests, especially with respect to not meaningfully regulating the encorps ability to influence government officials.

The United States was born wary of the power of vested interests to influence public policy. Alexander Hamilton’s comments in the Federalist Papers are an example of this concern. .

In republics, persons elevated from the mass of the community, by the suffrages of their fellow-citizens, to stations of great pre-eminence and power, may find compensations for betraying their trust, which, to any but minds animated and guided by superior virtue, may appear to exceed the proportion of interest they have in the common stock, and to overbalance the obligations of duty.

Unfortunately, keeping the vested interests out is not a simple matter. How can it be when parties themselves are collective expressions of a set of weighted interests? Frankly, it is sensible for people of like purpose to strive together to achieve their aims, and there is nothing necessarily insidious about the practise. In fact, it’s a cornerstone of Democracy and civil society.

It is also, however, the entry way for corruption because the crux of the matter is not that people have differing and competing interests: it’s that they differ so greatly in terms of their power to realize those interests. When the power to realize those interests is used to unjustly deny the interests of less powerful, but equally or more deserving citizens, through a donation that is traded for a piece of unjust legislation, then it can be said that a positive feedback loop of corruption has been initiated.
The overly simple analysis that follows attempts to describe the basic workings of this system.

Timmy’s Tantrum vs. the Mosuo Matriarchy

While reading Dakinikat’s post on Geithner’s profanity-laced rant against Sheila Bair and Mary Shapiro I could not help but wonder how the dynamic would have been changed had either Bair or Shapiro been in Geithner‘s position and vice versa. This lead me to wonder if their gender might have influenced his performance tactic or if his control issues manifested themselves in a gender-neutral fashion. Then, having recently read a piece in Der Speigel on the Mosuo matriarchy, I wondered how differently the whole episode would be playing out, if the Mosuo matriarchy’s institutional structure was guiding their behavior.

At the outset, it is worth noting that the Mosuo matriarchy is only one of potentially myriad forms of matriarchy. This brief mainstream media-derived post should not be seen as claiming that all matriarchies would carry similar features based upon a specific essentialized version of human femaleness in its socially-dominant context.

SPIEGEL ONLINE: Is Mosuo society a paradise for feminists?

Coler: I had expected to find an inverse patriarchy. But the life of the Mosuo has absolutely nothing to do with that. Women have a different way of dominating. When women rule, it’s part of their work. They like it when everything functions and the family is doing well. Amassing wealth or earning lots of money doesn’t cross their minds. Capital accumulation seems to be a male thing. It’s not for nothing that popular wisdom says that the difference between a man and a boy is the price of his toys.

Hmm. I think it fair to suggest the Mosuo’s take on the role of the Federal Reserve Bank, and Wall Street in general, would proceed along a vastly different tack then it did in the aforementioned meeting. Given the downplay of capital accumulation, how does this cash out in terms of social organization?

SPIEGEL ONLINE: What is life like for a man in a matriarchy?

Coler: Men live better where women are in charge: you are responsible for almost nothing, you work much less and you spend the whole day with your friends. You’re with a different woman every night. And on top of that, you can always live at your mother’s house. The woman serves the man and it happens in a society where she leads the way and has control of the money. In a patriarchy, we men work more — and every now and then we do the dishes. In the Mosuo’s pure form of matriarchy, you aren’t allowed to do that. Where a woman’s dominant position is secure, those kinds of archaic gender roles don’t have any meaning.

Geithner and Summers: Economic Disaster Deja Vu

Timothy Geithner’s profanity-laced rant against Sheila Bair and Mary Shapiro for their rational, reality-based concerns about increasing the power of Federal Reserve Bank, as opposed to increasing oversight of the system, should elicit a kind of déjà vu because the scenario has been played before. (Note: Increasing oversight does not mean policy disclosure.)

In 1997-8, Brooksley Born, the head of the Commodities Futures Trading Commission, tried to open a discussion about introducing oversight measures into the OTC derivatives market by producing a memo because she could see that:

“There was no transparency of these markets at all. No market oversight. No regulator knew what was happening,” Born says. “There was no reporting to anybody.”

Summers, Rubin’s deputy (and now director of the National Economic Council), said the memo had “cast the shadow of regulatory uncertainty over an otherwise thriving market, raising risks for the stability and competitiveness of American derivative trading.”

History, in the form of the role these derivatives played in this economic disaster, has proven that she was right to undertake that initiative. Unfortunately, Greenspan, Leavitt, Rubin, and Summers, to name some major players, were effective in pushing legislation that ended the CFTC’s ability to undertake oversight.

Born assailed the legislation, calling it an unprecedented move to undermine the independence of a federal agency. In eerily prescient testimony, she warned of potentially disastrous and widespread consequences for the public. “Losses resulting from misuse of OTC derivatives instruments or from sales practice abuses in the OTC derivatives market can affect many Americans,” she testified that July. “Many of us have interests in the corporations, mutual funds, pension funds, insurance companies, municipalities and other entities trading in these instruments.”

Notwithstanding, her concerns were dismissed and her ominous predictions came to pass.

Geithner is a protégé of Summers.

Is it not an ironic twist of fate, and a testament to Geithner’s blind faith against oversight, that he, like his mentor before him, is assailing intelligent, moral, qualified women for pointing out the  folly of his ways.

{Note: I defer all economic inquiries to our resident expert, Dakinikat.  My interest in the situation is the social dynamic.}

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Friday Morning at The Confluence

North Dakota sunflower field (posted just because I like it)

Rather than posting lots of links this morning, I decided to highlight just a few stories that interested me.

New Jersey Governor’s race

First up, a story that will warm the cockles of Riverdaughter’s heart: Jon Corzine’s wealth has deteriorated so much that he has to beg for campaign donations. Karma’s a b&tch, ain’t it?

Mr. Corzine, 62, famously spent $60 million of his own money on a record-shattering Senate race in 2000, then $43 million more laying siege to Trenton four years ago.

But now, after a costly divorce and a steep decline in his net worth, Mr. Corzine, the onetime chief executive of Goldman Sachs, is in the unfamiliar position of seeking donations to help foot the bill for his campaign.

Awww…poor guy. Thanks probably to Corzine’s sellout of Hillary Clinton voters (Clinton won the New Jersey primary by 10 points) at the Democratic Convention last August, President Barack Obama showed up yesterday at a $5,000 to $10,000 a plate luncheon expected to raise around $1 million. But that’s just a downpayment on the $15 million Corzine hopes to raise from donations so he doesn’t have to spend more than $25 million of his own money.

Bernard L. Schwartz, the retired chairman of Loral Space & Communications, said a somewhat downcast Mr. Corzine visited him in Manhattan recently to ask for money. The governor offered a clear-eyed assessment of his chances against Christopher J. Christie, a former federal prosecutor and the Republican nominee, telling Mr. Schwartz the race would be costly and he could not guarantee a victory as a return on Mr. Schwartz’s investment.

“He said it was going to be a tough race,” said Mr. Schwartz, a major Democratic donor. “He was not happy about it.”

Mr. Schwartz wrote a $25,000 check.

Obama also attended a rally with Corzine, who is trailing in the polls behind Chris Christie, his Republican opponent. Ha. ha. ha.

Goldman-Sachs and the Bilking of the American Taxpayer

Matt Taibbi has a new post up about Corzine’s former employer Goldman-Sachs and their massive second quarter profits–even more massive than predicted.

So what’s wrong with Goldman posting $3.44 billion in second-quarter profits, what’s wrong with the company so far earmarking $11.4 billion in compensation for its employees? What’s wrong is that this is not free-market earnings but an almost pure state subsidy.

Last year, when Hank Paulson told us all that the planet would explode if we didn’t fork over a gazillion dollars to Wall Street immediately, the entire rationale not only for TARP but for the whole galaxy of lesser-known state crutches and safety nets quietly ushered in later on was that Wall Street, once rescued, would pump money back into the economy, create jobs, and initiate a widespread recovery. This, we were told, was the reason we needed to pilfer massive amounts of middle-class tax revenue and hand it over to the same guys who had just blown up the financial world. We’d save their asses, they’d save ours. That was the deal.

Instead the big investment banks–Goldman-Sachs most of all–are laughing their asses off at us taxpayers who were suckered into handing over the contents of the U.S. Treasury to a bunch of bankster greedheads. Instead of returning any of the money to taxpayers, the banksters are using their profits to pay out more million dollar bonuses to themselves.

Taibbi lists five types of government funding that have enabled Goldman to rake in the huge profits they just reported, including $10 billion in TARP funds and $13 billion more from the AIG bailout. Goldman has now paid back the $10 billion, which was basically an interest-free loan from you and me; but the government still holds warrants to buy G-S stock at low prices in order to make some money back for us taxpayers. Guess what? Goldman is trying to weasel out of that deal now; and they’ll probably succeed, since they are pretty much in control of our government.

Taibbi:

Taken altogether, what all of this means is that Goldman’s profit announcement is a giant “fuck you” to the rest of the country. It is a statement of supreme privilege, an announcement that it feels no shame in taking subsidies and funneling them directly into their pockets, and moreover feels no fear of any public response. It knows that it’s untouchable and it’s not going to change its behavior for anyone. And it doesn’t matter who knows it.

Here is an interview with Taibbi and Mike Lux on the Goldman-Sachs “coup” by Laura Sanders.

How the Corporate Media Cannibalized Michael Jackson

I’m going to be honest. I never enjoyed Michael Jackson’s music or had any interest in him as a person other than realizing that he probably had a rather interesting psychological disorder: Body Dysmorphic Disorder (BDD). People who suffer from BDD are obsessed with perceived flaws in their appearance and go to extremes to correct these imagined or exaggerated defects, often having multiple cosmetic surgeries. Jackson may very well have had several other types of psychological disorders. When Jackson died, it really had little effect on me and I was surprised to see how many Conflucians were very upset by his death. Nevertheless, Chris Hedges, a very fine writer, has a long piece at Alternet about Jackson that gave me a lot to think about. I highly recommend it. Here are just a few of excerpts:

The commercial exploitation of Michael Jackson’s death was orchestrated by the corporate forces that rendered Jackson insane. Jackson, robbed of his childhood and surrounded by vultures that preyed on his fears and weaknesses, was so consumed by self-loathing he carved his African-American face into an ever-changing Caucasian death mask and hid his apparent pedophilia behind a Peter Pan illusion of eternal childhood. He could not disentangle his public and his private self. He became a commodity, a product, one to be sold, used and manipulated. He was infected by the moral nihilism and personal disintegration that are at the core of our corporate culture.

[….]

The stories we like best are “real life” stories—early fame, wild success and then a long, bizarre and macabre emotional train wreck. O.J Simpson offered a tamer version of the same plot. So does Britney Spears. Jackson, by the end, was heavily in debt and had weathered a $22 million out-of-court settlement payment to Jordy Chandler, as well as seven counts of child sexual abuse and two counts of administering an intoxicating agent in order to commit a felony. We fed on his physical and psychological disintegration, especially since many Americans are struggling with their own descent into overwhelming debt, loss of status and personal disintegration.

[….]

The moral nihilism of our culture licenses a dark voyeurism into other people’s humiliation, pain, weakness and betrayal. Education, building community, honesty, transparency and sharing are qualities that will see you, in a gross perversion of democracy and morality, ridiculed and voted off any reality show….Life, these shows teach, is a brutal world of unadulterated competition and constant quest for notoriety and attention. And life is about the personal humiliation of those who oppose us. Those who win are the best. Those who lose deserve to be erased. Those who fail, those who are ugly or poor, are belittled and mocked. Human beings are used, betrayed and discarded in a commodity culture, which is pretty much the story of Jackson’s life….Compassion, competence, intelligence and solidarity are useless assets when human beings are commodities. Those who do not achieve celebrity status, who do not win the prize money or make millions in Wall Street firms, deserve their fate.

It’s an angry article. Hedges used Michael Jackson’s life and death to demonstrate the cruel emptiness of our media culture. But he could have found many other celebrity examples. We build these people up, and then we tear them down. And we tear ourselves and each other down at the same time.

Health Care “Reform”

Will we actually get reform? Frankly I doubt it, but you never know. A miracle could happen. Here are few health care stories I came across late last night.

Senator Max Baucus is complaining because Obama is opposed to taxing health care benefits.

Maybe Montanans will return Baucus to the Senate if he makes them pay taxes on their employee benefits. I don’t think it would go over that well here in Massachusetts. What about in your state? Could it be that public rejection of Baucus’s idea is the reason Obama changed his mind about using a benefits tax to pay for a windfall for insurance companies?

Someone leaked the news that more than 50 House Democrats have banded together to oppose a health care plan they see as unsatisfactory.

Progressive Democrats are taking a hard stand on health care reform, with a majority committing to oppose any health care reform package that doesn’t include a robust public option. On Wednesday, they got an inadvertent assist by an anonymous leak of their “whip list.”

A whip list, which is generally tightly guarded, is used by congressional leaders to keep track of the private pledges made by members before a vote. The list is kept private to encourage frank answers from members so that leadership can gather accurate intelligence.

Ezra Klein claims Senator Ron Wyden has an idea that will “save health care reform.” Then he goes into a long, complicated explanation of something that sounds to me like a very bad idea. What is heck is wrong with just expanding Medicare to cover everyone? Why not single payer?

Please feel free to use the comments to post any stories that have piqued your interest.

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Convergence on Goldman-Sachs

While the rest of the country strips Sarah Palin of her humanity for no good reason except that mobbing is so much fun, something very weird is going on with Goldman-Sachs.  There are a number of credible sources reporting now on the arrest of Sergey Alenyikov on July 4, 2009 at Newark Airport.  Mr. Alenyikov is accused of stealing G-S source code and uploading it to a computer somewhere in Europe.  Goldman sent the Feds to round up the rogue programmer because, as the US Attorney on the case says, the source can be used to manipulate the market.  Daytraders who monitor the market very closely say that they noticed some non-linear activity in the several weeks leading up to the arrest and that afterwards, the markets seemed to have returned to normal, whatever that means since last year’s crash.

But it gets more interesting.  As Bloomberg notes, how do we know that Goldman-Sachs hasn’t been using this code all along to manipulate the markets?  The theory goes something like this: Goldman-Sachs gets to put a unix server with the code on a network cable somewhere and uses a packet sniffer to watch the transactions that come across from traders at other companies.  With that knowledge, G-S is able to anticipate trades and shave a bit off for itself for every transaction.  If this is true, it means that G-S has a massively unfair advangtage in trading compared to, well, just about everyone else. Here’s a post at the Big Orange Cheeto for those of you who eat netstats for breakfast and think Perl poetry is romantic.  It goes into quite a bit of technical detail.

Check out this video from Bloomberg that lays it all out:

What’s really disturbing about this case is that the government seems to be extraordinarily receptive to calls for help from G-S.  Either the Goldman crew close to the White House is concerned with losing their bonuses or the potential for market failure is huge. Either way, it lessens confidence in the system.  It looks like “all traders are equal except some traders are more equal than others”.  What happens to the system when the people who have no choice but to operate in it no longer have any trust?  This leads me to my podcast du jour recommendation.  This one is from Speaking of Faith with Krista Tippet.  Her topic this past week was The Science of Trust with guest Chris Farrell, a neuroeconomist.  The secret to keeping everyone honest is the neurotrsnsmitter hormone oxytocin.  Oxytocin promotes empathy.  Approxomately 2% of the population has insufficient levels of oxytocin to experience empathy with other human beings(and you’re probably thinking they all work at Goldman-Sachs, right?)

Farrell says that the lax regulatory system is partially responsible for the financial disaster, although he takes a pretty long time before he gets around to saying it.  Farrell thinks that for *most* people, *most* of the time, the feelings of empathy lead to a sense of reponsibility and honesty.  That’s why you might have felt you could trust your banker with your money.  But in recent years, there have been advances in technology that lead to a depersonalization of the banker-client relationship.  It’s hard to see the person behind an account number on a monitor.

The podcast is part of a series by Tippett on Repossessing Virtue, all highly recommended.  You don’t have to be religious to have an ethical model.  But ethics, virtue and trust are all severely lacking in this dog eat dog world where nothing much makes sense.  Societies start to unravel when the sense of morality and consideration for others is replaced by, well, nothing at all.

If Tippett is concerned with repossessing virtue, I guess you could say that the fundamentalist group, The Family, is concerned with redefining it.  A second podcast recommendation is one that Terry Gross did last week on The Family, a religious community in DC that has been the spiritual guiding force for many enemies of The New Deal over the decades.  John Ensign was a recent alumni as was Governor Sanford of South Carolina.  The Family believes the end justifies the means and that chosen Family members are possessed of the virtue that requires no further regulation by the government.  They will lead us because it is their destiny and if they cheat on their wives on Family property, it must mean that God works in mysterious ways.  Caveat: Terry Gross is the best interviewer in the world but she has kool-ade psychosis and it is unfortunately seeping into her interviews.  “The propaganda is strong in this one.”  Proceed with caution.  Her bias shows.  Even so, if this group is only 1/10th as bad as the interview suggests, it’s pretty bad.

Update: It looks like Citadel is getting in on the act now.  The former head quant at Citadel started a new company called Teza Technologies and hired Aleynikov. Mikail Malyshev signed a 9 month noncompete clause when he left Citadel back in February.  That means he wasn’t supposed to open his door until November.  Maybe it’s all a preparation phase thing.  Teza is cooperating with the FBI. This stuff is starting to sound familiar.  Several of my former colleagues (all Russians BTW, tho’ I’m sure it’s all a coincidence) have gone to work for quant firms, though I can’t imagine they’ll be writing code.  Who knows?

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