Banks buy politicians — on sale, now!

Bill Moyers on PBS, February 13, 2009

On Tuesday, February 10, 2009 Treasury Secretary Timothy Geithner unveiled the Obama administration’s plan to address the crisis in the financial sector. The strategy he outlined calls for the largest Federal intervention in banks and finance since the Great Depression, flooding as much as $2.5 trillion into the system. Given its size and scope — the bill’s lack of detail drew a widely negative response from analysts and economists.

Although he thinks the details are important, Simon Johnson, Professor of Economics at MIT, worries more that Geithner and the Obama administration won’t address a big underlying problem and be tough enough on the politically powerful banking lobby.

 

Too Big To Fail?

Johnson explains to Bill Moyers on the JOURNAL that the U.S. financial system reminds him more of the embattled emerging markets he encountered in his time with the International Monetary Fund than that of a developed nation. As such, Johnson believes that the U.S. financial system needs a “reboot,” breaking up the biggest banks, in some cases firing management and wiping out shareholder value. Johnson tells Bill Moyers that such a move wouldn’t be popular with the powerful banking lobby: “I think it’s quite straightforward, in technical or economic terms. At the same time I recognize it’s very hard politically.”Without drastic action, Johnson argues, taxpayers are merely subsidizing a wealthy powerful industry without forcing necessary systemic changes: “Taxpayer money is ensuring their bonuses. We’re making sure that banks survive. And eventually, of course, the economy will turn around. Things will get better. The banks will be worth a lot of money. And they will cash out. And we will be paying higher taxes, we and our children, will be paying higher taxes so those people could have those bonuses. That’s not fair. It’s not acceptable. It’s not even good economics.”

IBM, Smart; Forbes…

Nissan smart roads

Infrastructure

IBM’s ‘Smart’ Moves
by Andy Greenberg
Company revamps its infrastructure offerings just as the Senate is expected to approve billions in IT spending.

First came the lofty pronouncements. Now, comes the products–and the timing couldn’t be better.

Since November, IBM Chief Executive Sam Palmisano has been making futurist statements about the need for a “smarter” national infrastructure, using information technology to upgrade the nation’s roads, electric grid and health care system in a bid to increase their efficiency; to make America more internationally competitive and to create thousands of jobs.
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Warning to fellow writers: I sent a query to the Silicon Valley editor at Forbes about a year ago, re: HoloGenomics.

He declined, saying it wasn’t the sort of thing they do very often.

Except he did — on the same subject, a few weeks ago.

I asked the editors at Forbes how they were going to make this right.

Thus far, their worships have not deigned to reply.

I also proposed a piece on why the old media are dying …

Bank on America

Bank on this.

 

Community-based movements to halt the flood of foreclosures have been building across the country. They turned out in Cleveland once again in October, when a coalition of grassroots housing groups rallied outside the Cuyahoga County courthouse, calling for a foreclosure freeze and constructing a mock graveyard of Styrofoam headstones bearing the names of local communities decimated by the housing crisis. (They did not, unfortunately, stop the more than 1,000 foreclosure filings in the county the following month.) In Boston the Neighborhood Assistance Corporation of America began protesting in front of Countrywide Financial offices in October 2007. Within weeks, Countrywide had agreed to work with the group to renegotiate loans. In Philadelphia ACORN and other community organizations helped to pressure the city council to order the county sheriff to halt foreclosure auctions this past March. Philadelphia has since implemented a program mandating “conciliation conferences” between defaulting homeowners and lenders. ACORN organizers say the program has a 78 percent success rate at keeping people in their homes. One activist group in Miami has taken a more direct approach to the crisis, housing homeless families in abandoned bank-owned homes without waiting for government permission.

It’s unlikely, though, that any of these activists will be able to relax soon. 

The Nation

 

When I was a lad, I ran off to San Francisco, like hippies from all over, to be free and unconventional and rid of the whole corporate America trip.

I ended up working at the Bank of America, thanks to a pink collar stoner chick who fudged my typing test.

While working at their headquarters, I learned about the proud heritage of the bank, which had rebuilt San Francisco in the early 20th century, in the wake of its great earthquake. 

Today, of course, bankers are universally regarded as monuments to heroic greed, spectacular corruption and epic incompetence–one short step above child molesters on the social scale. Adrift in their bubbles, intoxicated by their own emissions, only they remain unaware of this downward turn in public perception.

When a reporter for the AP politely asked them what they were doing with billions of dollars of the taxpayers’ bailout ransom, they sniffily replied to this effect: “Listen, you tawdry little man–we don’t give a fig about you and your shabby readers. We have parties to attend. Kindly pay up and shut up. Then find your way out.”

Men have short memories. It wasn’t so long ago in the long view of history that, faced with a similar situation, the rabble roused themselves in the streets of Paris and handed the nobility their heads. Good times.

Today, gun shops can’t keep up with demand.

Being a peaceful sort and averse to noise, I got to thinking that maybe it doesn’t have to come to bloodshed and armed insurrection.

Is it conceivable that bankers today are capable, if only in theory, of once again doing the right thing? Could they ever, even in an imagined world, earn their fat paychecks and lead us out of the mess that is largely their own creation? 

Trying to wrap my head around that wild notion, I am once again transported back to a more innocent era.

All across the nation

Such a strange vibration …

 

 

 

Camelot

You are One, under the stars.

That’s it… and look upon this moment. Savor it! Rejoice with great gladness! Great gladness! Remember it always, for you are joined by it. You are One, under the stars. Remember it well, then… this night, this great victory. So that in the years ahead, you can say, ‘I was there that night, with Arthur, the King!’ For it is the doom of men that they forget.

- Merlin, Excalibur

Letter to a friend

Here’s an item from today’s Washington Post that might interest you.

Sorry to hear you have to lay off people — that’s a hellish amount of stress on all sides. On the other hand, I’m glad it’s you and not some heartless bastard who will make the situation even worse and possibly cause the other party to go postal.

I look around me when I’m out running errands and I see lots of people whose faces are frozen masks of pain, anger and resentment. A reporter on a news program recently said how the people he interviews on the street are incensed at what’s been going on — and that the anger is beginning to turn to fear. Not good.

Entering “multiple robberies” on Google News returns pages and pages of results.

So, yes, you’re quite right about the possibility of a severe recession and that would be bad enough — add in all the effects of economic distress and … Well, you get the picture. Not to add to your troubles, but … forewarned is forearmed, right?

On the other hand, I’m mindful of the danger of self-fulfilling prophecies and of the fact that what happens tomorrow depends on what we do today.

As for me, I try to do everything I can to buck people up — including myself, ‘cuz it’s hard to be around people who are stressed out without absorbing some of their distress. Humor and kindness can work wonders, of course, as can helping people vent so that they can move past their anger toward problem-solving.

Do you know about all the networking sites like ecademy and LinkedIn? They’re among the oldest and the best of their kind — like Facebook, for adults, they can go a long way toward helping the unemployed find new opportunities and also alleviate social isolation, with all the problems that brings.

Anyway, those are my thoughts for the day. Please take good care of yourself, OK?

Dream on!

Bridge to the Future

I was watching the News Hour a few days ago. Two economists were talking.

One was a thoroughly dismal character (no doubt a lot of fun at parties), who saw only boondoggles coming out of Obama’s economic stimulus package — more bridges to nowhere.

The other was more optimistic, reminding listeners that previous programs had given rise to marvels of modern engineering, such as the Golden Gate Bridge — investments in infrastructure which continue to pay dividends today and which are also totally bitchin’ cool.

That got me to thinking: Given what we can do in the 21st century and given the crying needs before us, isn’t this an excellent opportunity to dream big — to envision a bold, beautiful, sustainable future that we and our posterity can take pride in?

We can do this.

We can make it better.

Hey! Ho! Let’s go!

The social cont(r)act

Money is where the rubber of economic theory meets the road of mundane reality.

At once a tangible thing — be it paper, coins, checks, credit cards — money is also an abstraction, standing in for, representing all those goods and services we value.

Money is emblematic of the social contract — the often tacit arrangement whereby we live, the agreement we enter into as citizens of a nation, as members of a people, and made explicit in another, yet larger, set of abstractions which govern our lives, the law.

We are in the middle of a financial crisis and so these issues come to the fore.

Further urgency arises from the ongong environmental disasters that threaten to undo our civilization as a consequence of global warming.

The entire contract, I submit, is due to be renegotiated.

Like so many others around the world, I am deeply heartened by our recent election of a man who truly understands the magnitude of the problems before us.

As brilliantly capable as he clearly is, however, Obama is just one man and the issues before us are global in scale, requiring all who can to shoulder a share of the burden.

Having recognized the problems facing us, we have taken a crucial first step.

How best to proceed?

We need to put our heads together and pool our vast wealth of personal intelligence, talent, energy and expertise — and so achieve a consensus as to what our next steps must be.

So saying, I am offering a letter from an old friend whose wisdom I have often relied on, as a contribution to a truly planetary dialog already unfolding:

Yes, I am aware of the multiplier effect and I knew the use of statistics would be problematic for some, but I’ve always been an odd duck that likes to juxtapose emotional situations with empirical evidence and, conversely, “hard facts” with emotions.  Regardless, my point is that I don’t think governmental fiscal policy should be used in a surgical manner to fix an immediate problem without considering the whole economy and the long-term first.

If we decide the problem with our economy is basically ‘how do we get people and goods from Point A to Point B,’ why not factor in the whole of the transportation sector?  Wouldn’t a fiscal intervention program that is focused on a target model in (say) 30 years be more appropriate?  Then we can look at the mix of known transportation networks (water, land and air) to begin a more comprehensive project.  Regardless of how we feel about our auto industry (or France, its agricultural) maybe its time for an infusion of $50B into the light rail or steel industries instead.  I believe that Americans also have emotional investments in those areas of manufacturing as well.  Why fix the symptom before we have an opportunity to diagnose the disease?

On another note, I liked Clinton’s plan of somehow relaxing credit to allow more (marginal) families the opportunity to purchase homes in the late 1990’s; and Bush’s more deregulated banking, finance and insurance ideas, but the two didn’t work well in conjunction with one another.  In Clinton’s case many of the marginal new property owners were our best renters.  By removing the cream of the renters we undercut the small real estate investor.  As it became harder to find solid renters many middle class investors moved back into the financial markets creating an overvalued bubble effect which will right itself.  In Bush’s case the effective deregulation of the banking industry – through lax oversight, expansion of services offered by financial institutions and no push for stricter new regulations – allowed many to engage in “the bigger fool theory” that property values always rise.

Again, a longer term approach to what our objectives are might be helpful in aligning both fiscal and regulatory policy with the direction of the society.  I’m beginning to feel as though “free markets” need to be constrained in economic and market terms as “free will” is constrained in spiritual and social terms.

From my simple perspective I note that in the last twenty years I have operated small businesses (we now have 32 employees) our insurance (50% is health care, 75% including workers compensation insurance) has risen from .5% to 3.5% of gross sales and our banking and finance charges have risen from .25% to 2.75%.  On the national level health care has increased from 2% GDP to 15% GDP (not to be confused with health care insurance costs).  I can only assume that Americans value our health 7.5 times as much as the generation before this.  Are we willing to value it double within the next twenty years?  Oops, there are those statistics again.  At any rate, at what point do we stop looking for victims (sorry to you trial lawyers and malpractice insurance people) and start recognizing that we are mortal and that it is economically, socially and ethically detrimental to prolong life at every cost?  What does the “the bigger fool theory” look like in the health care industry?

We, the People of the United States

Excerpted from:

THE NEW YORK TIMES

Op-Ed Contributor

The Climate for Change

By AL GORE 

Published: November 9, 2008 

What follows is a five-part plan to repower America with a commitment to producing 100 percent of our electricity from carbon-free sources within 10 years. It is a plan that would simultaneously move us toward solutions to the climate crisis and the economic crisis — and create millions of new jobs that cannot be outsourced. 

First, the new president and the new Congress should offer large-scale investment in incentives for the construction of concentrated solar thermal plants in the Southwestern deserts, wind farms in the corridor stretching from Texas to the Dakotas and advanced plants in geothermal hot spots that could produce large amounts of electricity. 

Second, we should begin the planning and construction of a unified national smart grid for the transport of renewable electricity from the rural places where it is mostly generated to the cities where it is mostly used. New high-voltage, low-loss underground lines can be designed with “smart” features that provide consumers with sophisticated information and easy-to-use tools for conserving electricity, eliminating inefficiency and reducing their energy bills. The cost of this modern grid — $400 billion over 10 years — pales in comparison with the annual loss to American business of $120 billion due to the cascading failures that are endemic to our current balkanized and antiquated electricity lines. 

Third, we should help America’s automobile industry (not only the Big Three but the innovative new startup companies as well) to convert quickly to plug-in hybrids that can run on the renewable electricity that will be available as the rest of this plan matures. In combination with the unified grid, a nationwide fleet of plug-in hybrids would also help to solve the problem of electricity storage. Think about it: with this sort of grid, cars could be charged during off-peak energy-use hours; during peak hours, when fewer cars are on the road, they could contribute their electricity back into the national grid. 

Fourth, we should embark on a nationwide effort to retrofit buildings with better insulation and energy-efficient windows and lighting. Approximately 40 percent of carbon dioxide emissions in the United States come from buildings — and stopping that pollution saves money for homeowners and businesses. This initiative should be coupled with the proposal in Congress to help Americans who are burdened by mortgages that exceed the value of their homes. 

Fifth, the United States should lead the way by putting a price on carbon here at home, and by leading the world’s efforts to replace the Kyoto treaty next year in Copenhagen with a more effective treaty that caps global carbon dioxide emissions and encourages nations to invest together in efficient ways to reduce global warming pollution quickly, including by sharply reducing deforestation. 

Of course, the best way — indeed the only way — to secure a global agreement to safeguard our future is by re-establishing the United States as the country with the moral and political authority to lead the world toward a solution. 

Looking ahead, I have great hope that we will have the courage to embrace the changes necessary to save our economy, our planet and ultimately ourselves.

We salute you

Many thanks to an old friend for passing this along:

Who is this American warrior?

American Renaissance

From: JOHN LEICESTER, AP

People across Africa stayed up all night or woke before dawn to watch U.S. history being made, while the president of Kenya — where Obama’s father was born — declared a public holiday.

In Indonesia, where Obama lived as a child, hundreds of students at his former elementary school erupted in cheers when he was declared winner and poured into the courtyard where they hugged each other, danced in the rain and chanted “Obama! Obama!”

Many expressed amazement and satisfaction that the United States could overcome centuries of racial strife and elect an African-American as president.

“This is the fall of the Berlin Wall times ten,” Rama Yade, France’s black junior minister for human rights, told French radio. “America is rebecoming a New World.”

In Britain, The Sun newspaper borrowed from Neil Armstrong’s 1969 moon landing in describing Obama’s election as “one giant leap for mankind.”

Poland’s Foreign Minister Radek Sikorski spoke of “a new America with a new credit of trust in the world.”

Venezuela and Bolivia, which booted out the U.S. ambassadors after accusing the Bush administration of meddling in their internal politics, said they were ready to reestablish diplomatic relations, and Brazil’s president was among several leaders urging Obama to be more flexible toward Cuba.

On the streets of Rio de Janeiro, people expressed a mixture of joy, disbelief, and hope for the future.

“It’s the beginning of a different era,” police officer Emmanuel Miranda said. “The United States is a country to dream about, and for us black Brazilians, it is even easier to do so now.”

Many around the world found Obama’s international roots — his father was Kenyan, and he lived four years in Indonesia as a child — compelling and attractive.

“What an inspiration. He is the first truly global U.S. president the world has ever had,” said Pracha Kanjananont, a 29-year-old Thai sitting at a Starbuck’s in Bangkok. “He had an Asian childhood, African parentage and has a Middle Eastern name. He is a truly global president.”