Bionic penguins take to the water – and the skies New Scientist
1970s lifestyle ‘protects planet’ BBC
The Wail of the 1% New York Magazine.
Drama at GE shareholders meeting The Hollywood Reporter (hat tip Tyler Durden)
GM to shut many US plants up to 9 weeks Associated Press (hat tip reader Dwight)
Worth Checking Out Michael Panzner
Falling Power Generation in April= China’s Economy Still in the Woods China Stakes (hat tip reader Michael)
City pours scorn on Treasury’s GDP growth forecasts Guardian
Financial pugilism and offbeat analysis vie for space in blogosphere Irish Times (hat tip reader Scott). Nice words about the popular blogs, including NC.
U.S. Weighs Revealing Each Bank’s Capital Needs After Tests Bloomberg. This is getting tedious. At least Hamlet has good soliloquies.
Japan Pays Foreign Workers to Go Home New York Times
Cramdown Legislation Hits Senate Roadblock Housing Wire
Outstanding CDS fall 29% globally Financial Times. The ISDA attributes the fall to canceling of offsetting trades, I wonder how much is really due to AIG winding down trades.
The Reeducation of Tim Geithner Portfolio (hat tip reader Matt S)
McCulley: We need the political will to socialize the losses Ed Harrision. Parsing the doublespeak.
The Missing Witness Simon Johnson
Chapter 13 Rate Down Sharply in March Bob Lawless, Credit Slips
OTC Derivatives Collateral: $4.0 Trillion Alea, Um, isn’t this due to the credits deteriorating? It’s up from $2.1 trillion last year.
Clever wheezes do not mend banks William Cohan, Financial Times
Antidote du jour:
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Momma Bunny does NOT like the smell of this.
And Yves, it is sooo trippy how you can insert the link post back-queue like that. Kinda like being a deity in your own blogiverse. *hee*
On the subject of the Wail of the Wealthiest 1%, coming on two years into the financial crisis of our time:
To those of you at the maximum compensation end of the financial system, this comment is for you. Myself, I don’t give a rat’s ass what you earned or earn. Some may care: I don’t. You pulled down ten figures in 06? Lah. That didn’t make you a better person in my eyes, so there is no change there, for me, if you make less in 09. What I do care about are the consequences for my society of the system it took for you to make that compensation. Which is why I am and will remain your more bitter foe than those who think you ‘made too much.’
The statement was made in this article by one well-padded that, “No one cared when A-Rod made $300 million [sic] guaranteed.” I did, and the reasons are relevant. To make that kind of money, his team, like all others in the last ten years, had to jack their basic ticket prices, which have doubled and more at the bottom, and far more for the best seats. There was a time when the poor and retirees looked forward to a day at the park with their home town team. That day is gone: they can’t afford more than a very few. Now, they watch from afar, often alone. To make that kind of money, all of baseball has gone marketing mad. One can’t turn on a ballgame on TV or listen on the radio without a cancerous growth of continual advertisements eating into game time, and the relevant commentary and personal enjoyment of the game; endless advertisements for products and services which, by and large, no one really wants or needs. So to pay for A-Rod’s salary and those of his peers, the game I love has become completely a ‘placement opportunity’ for a grossly commercialize society pushing crap and distorted values into the space of a sporting event which has absolutely no intrinsic linkage to them. That is the cost to me and my society of A-Rod’s salary, and it is way, way too high, that cost.
It is not that everyone at every major financial firm was or is corrupt, or necessarily even that many are; the system has been corrupted to make your profit opportunities possible. That is the problem you salaries pose for your society, not your personal wealth and self-inflated estimation of your worth to the rest of us. There are doubtless even those in unexciting corners of Wealthville running their departments, making their numbers, making their contributions—no, wait a minute. You weren’t there to ‘make a contribution’ to society. You were there to get yours, for you and yours. And the system was run for that reason AND ONLY FOR THAT REASON. Please, let us avoid the self-serving lie that you sent money where it was needed. You sent money where you could make money, and the more the more so. That was your corporate mission, your management directive, your societal function; getting your cut. All those acres of rotting and unoccupied big box mall stores we have now in parts of the country which you fly over in your private planes: those are a direct consequence of your system and your model for being _personally compensated_ for your pushing the wheel around in that system. All those credit cards at 19.99% and the change in bankruptcy laws your execs bought, that is a cost to our society of your compensation model. Those housing prices by 06 in all major markets where no one who grew up there could afford a house, new or old, without taking out a fool’s gamble of a mortgage; yes, you and yours with your ‘borrow and sell’ system and the ‘x points for me’ compensation model: that has been your contribution to our society.
But wealth alone wasn’t enough for some of you, and the rest of you saw a zero added to your income in the right place for being along for the ride. If the products you were selling were inherently too risky, you were smart enough not to keep too many of them (at least at first). But to get anyone else to take that risk, you had to have somebody lie. So a system where ratings were bought or ‘managed’ was intrinsic to the volumes that made many of your massively wealthy. A system where touts on the tube and shills with doctorates were bought to cheerlead, that could be bought, was bought, and your compensation plumped up the more for the expense. If you didn’t know it, either you’re lying or you should have known it. But it wasn’t your problem, was it? It was the buy-side’s problem. And society’s. You’d already made yours: that’s the problem with your compensation. Not that you made ‘too much,’ but that you made up the rules that made that number possible, the consequences TO THE REST OF US be damned. The situational ethics which allowed your compensation model to flourish into malignancy are the problem, not the number that resulted for you or anyone else. And most of you still don’t understand this. But most of the rest of us do. And you all are starting to feel that heat.
But colossal wealth alone wasn’t enough for you; you had to keep it all to feel justly rewarded for the ‘merit of your contribution.’ So you bought the political system and purchased wealth tax forgiveness from our ‘government of the money, by the money, and for the money’ for your and yours. No other industrial democracy comparable to our society has the pitifully low level of taxation on the truly wealthy that you and yours bought for yourself here. And there is a reason for that: those societies can’t provide the services for all their participants without the progressive tax structures which they have but which you and yours resent bitterly and have done your utmost to escape and tear down here. During the boom of our departed bubble for instance, instead of building up reserves though an appropriate level of taxation we borrowed enormous sums instead. That borrowing will have to be paid back, now, by the rest of us and our children, to pay for your tax holiday, and summer homes, and private schools, and art collections. I don’t envy you those: I blame you for billing me and mine and all the rest of us for them. And all of the borrowing advocated now to correct the skewed financial system your compensation and its values have wrecked. These are the consequences to the rest of society from you and yours having stiffed the bill for our common society, which you have done. And see as your prerogative, for the ‘other contributions to society’ which you claim to provide.
What’s that you say, you personally didn’t vote for those lower tax rates on the wealthiest 1%, that was ‘society’s choice?’ Really? The grassroots anti-tax, anti-government ‘movement’ of the last generation? The same one which was paid for from beginning to the present by massively wealthy conservatives with the explicit goals of a) gutting regulatory power to restrain their financial system excesses, and b) cutting and where possible eliminating altogether taxation of the compensation accruing to them and theirs, to you and yours, which followed from that? Certainly there are rubes willing to have their prejudices massaged who don’t like government or taxes either, but it was the wealthy in this country, in this society, who bought their ideas, their eyeballs, their votes, the puppets put before them, and the false ‘facts’ and bigotry uttered from the mouths of the same. That is a consequence to our common society of your compensation model, and your ‘entitlement,’ and the class mentality you brought to it, or bought into to belong. We can’t get a just society without paying for it, and it’s not that most of you care one way or the other whether our society is just so long as you, personally, don’t have to pay for it.
Which is why we just can’t afford you anymore. Your contributions to our society, such as they were fall mostly on the debit side of the ledger. And even that was accomplished by most of you through borrowing other people’s money in vast quantities at rock bottom prices. You didn’t earn your compensation, many of you: you churned it. Without vast quantities of loose money, the fool’s gold ‘profits’ out of which you’ve taken your cut wouldn’t have existed, and now no longer exist. The .1% out there who really are any GOOD at making money, they’ll stay in the game and stay in the money; that is what they do, and what they will do regardless of any curse or blessing I might wish. And if they make money, keep it, I don’t care. But the compensation model of the rest of you has got to go. You’ve burned the rest of us, and our society. Badly.
—And still, it’s not done, even though it’s over. Some of you have killed your firms and crashed the economy—not each of you personally, but your system, your values, your mindset, and your class, in pursuit of YOUR OWN GAIN—and yet the worst of your firms writhe on. This societally criminal bailout of failed speculative banks is the theft which keeps on taking, and even worse the kinds of lies which enable it destroy public confidence and investment in our society and the government of it. “I earned it.” “We’re a good shop.” “You couldn’t make it without us.” “It’s just wealth envy.” We’re paying for your continued employment, compensation, and freedom from prosecution to hear you say that to our faces. What is it that you ever did to contribute, the most of you? Where is the better solar panel; the summer science camp; the video game; the song? The ‘Good day’ to the panhandler; the legal representation to the indigent; the health system that doesn’t leave people to die in crowded ERs; the poem that remains after you’re dead; the housing which no one but you and yours can afford in this society? No, you didn’t contribute any of that, and you made it that much harder for anybody else to do so or to try. Your compensation’s entailed costs TO EVERYONE ELSE, your ‘I’m all in for me’ ethics, your dysfunctional priorities, and the twisted politics which you and yours have bought and to which you feel entitled didn’t contribute any of those other things to our common society. The compensation from your behaviors accrued to you, but the costs from you behaviors fell on the rest of us, and we all now must labor long and for less to dig ourselves and our society out from beneath the rubble of your status, pride, and way of life. Some of us have our share of blame for all this. But we know who took the lion’s share of gain, and to whom belongs the dinosaurs’ share of responsibility: You.
So here is my advice to you and yours, not that you’ll thank me, or take it: shut up, stay out of sight, and if you’ve held a senior position resign. France had it’s 1% in 1785. They, too, believed completely that they were entitled to their property and revenues; that their contributions to their society were not only underestimated, but in fact inestimable; that the politics, army, moral stability, and way of life there rested wholly upon their commitment to it and their endeavor, and that therefore that their compensation was fitting and indeed unquestionable. And those others who did not share in that compensation, but shared greatly in its costs? They didn’t merit consideration, and were just envious of the wealthy. In 1794, that 1% found out what they were worth to their society as a whole: dog meat. The lucky ones got the guillotine; the vast and less fortunate majority were hacked to death in jails and courtyards. And lo! their society did not collapse in their absence. It changed, and the costs of that change were stiff; most would say, though, that it changed for the better. Do I advocate that for you? You’ve already heard my advice. Take your compensation, however much it was earned or simply acquired, and go enjoy you comfortable life while the rest of us sweat to fix the mess you’ve made of our society. The loss of prestige and power will sting, but you’ll have your necks. Be glad of that. And get moving. Your society is about out of patience, which means that you and yours are already out of time.
Richard:
Interesting rant you have there in parallel with the New York Mag article “The Wail of The 1%.”
In order to have a scam, one has to have a crowd that is willing to buy into the snake oil of trickle-down-wealth achieved by an unfettered W$ creating paper wealth and the tax breaks necessary to fuel it. Many of us bought into Bush’s Norquist driven 2001/2003 tax breaks designed specifically to benefit 1% of the taxpayers with ~31% of the breaks. It was even sponsored by the economic maestro hisself . . . Greenspin. Many of us thought we would be a part and share in the wealth achieved from it. We weren’t and little of this paper wealth went to domestic job creation.
The perfect scam was created. An elimination of any restrictions to banks on W$, the passage of an act restricting regulation, an influx of foreign currency looking for safe haven, a middle class able to remove house equity without tax or restriction, a bankruptcy law that slammed the door shut once you checked-in and made some financial instruments more equal than others, a congress and president who could be summed up by Cheney’s remarks “Finally, something for us!” after the 2001 tax break, and a W$ eager to construct risky financial instruments using financial engineering to measure risk. The perfect storm of money to be made.
A few of us raised the alarm in 2003/4 on the impact of the tax breaks for 99% of the US, its intended target, and what it meant to us. A few of us listened to the Brooksley Born, the Iris Mack, and the Senator Dorgans of the world and raise the alarm; but, we also did not understand the impact of what was being created and disguised as honest financial ventures. We were sold on the words of those who knew better?
“Thomas Theobald, then vice chairman of Citicorp, argues that three ‘outside checks’ on corporate misbehavior had emerged since 1933: ‘a very effective’ SEC; knowledgeable investors, and ‘very sophisticated’ rating agencies.”
So the chickens are home to roost and taxpayers have been handed the cheque for the last decade of extravagence. And now they complain as we ask them to leave the tip by paying more taxes on their income and taking lower salaries to cover the bill of their 10 years of party? Tacky of them, I would think.
Well put Richard Kline, may they know that some of us, see dead comrades in arms or broken body’s of the occupied on our children faces as they may become the vessels of lies, marching forward to secure the next occupation for wealth.
My mercy’s would make a guillotine weep for compassion. They have little or no empathy for others save for good publicity or further raise them selves above the putrid masses they so desperately try to distinguish them selves from.
I said before that, they can not face the fact, they killed their ideological baby, infanticide of their own darling mindset.
Skippy…tribal pay back is a bitch…hope they don’t go that far.
Richard Kline, excellent rant. The only thing missing is the extent to which this crowd has weakened the U.S. internationally. Word verification is “tzingsho”.
the 1% ranters then and now
after the bail out they have “learnt nothing and forgotten nothing”
ubiquitous french minister talleyrand on the shortcomings and vindictiveness of the bourbon aristocracy comeback after napoleon fell
mangy cat
Isn’t that kitty Obama trying to decide what to do with GM and all it’s supplier babies?
Dear Richard Kline,
I just read your comment. WHOA!
All I can say is: “Yeah, what he said.”
Tim in Sugar Hill
And another thing. I really, really like the way Elizabeth Warren put it on the Daily Show:
Capitalism without Bankruptcy is like Christianity without Hell.
If the privileged class won’t get religion, I say we give ’em hell!
Tim in Sugar Hill
Reading that article wherein culpable suits were yet ready to opine snidely upon the irrational envy of the great unwashed, in their view, really turned the crank on my Scots-Irish. It’s not quite _J’accuse_, but it will do for one evening’s howl.
Tim in Sugar Hill, keep the faith, m’friend. We need more of your feet-on-the-ground perspective from N’Yawk.
And Skippy, I knew you’d make the portage to our new base camp, good to see you.
It’s a good quote from Warren, but it actually came from the head of Eastern Airlines, all the way back in 1982.
Richard’s discussion is quite good (and comprehensive), but I’d like to dig down into the quotes a little more.
Parsing the ideas put forth by these unfairly vilified bankers is really an almost insurmountable proof regarding the ability of even the most intelligent of our species to believe the most unbelievable concepts if it suits their world view.
“It’s fair to say you ran your companies into the ground, your risk management is flawed—that is perfectly legitimate. You can lay criticism on GM or others. But I don’t think it’s fair to say Wall Street is paid too much.” — Unassailable proof on fairness (of course, lacking any actual proof). Why if you ran your ran your company into the ground should you be paid so much now, let alone in the past?
“None of us should be cheated of our payments any more than a plumber should be cheated after he has fixed the pipes but a careless electrician causes a fire that burns down the house.” Methinks this financier missed the day in business school where they discussed counterparty risk. I don’t know about you, but I run a small business, and I get stiffed all the time. Thankfully, we have a safety net for bankers so that they never have to experience this.
“You have a political and media class who make the mortgage originators and bankers out to be the villains. But are they? They were doing what Congress wanted them to do. Is the guy who lied on his mortgage application the victim here? This whole narrative that the downtrodden were the victims and the money guys were the perpetrators really doesn’t stand up to rational challenge.” — Irrefutable defense. Because there is another person with some form of culpability, you should ignore mine completely.
“I’m attached to my BlackBerry. I was at my doctor the other day, and my doctor said to me, ‘You know, I like that when I leave the office, I leave.’ I get calls at two in the morning, when the market moves. That costs money. If they keep compensation capped, I don’t know how the deals get done.” What’s interesting about this is that I have *never* met a workaholic in my life. *Everyone* and I mean *everyone* is ruled by one thing alone, and that is money. I certainly don’t have a blackberry, I certainly never carry it with me, and I certainly have never worked over 300 hours in a month. I deserve to be stuck making less than 10% of an average bonus at GS. No one actually gets any pride (let alone any satisfaction) from a job well done, unless a pot of gold is at the end of the rainbow.
“The truth is, the market determines what people are worth. Did I think I was overpaid? You betcha. But a lot of people are overpaid.” Well, that settles it. As long as some people are overpaid, I shouldn’t mind that you are overpaid. Thanks for clearing that up.
“He’s punishing you for doing better. He doesn’t want to have any wealth creation—it’s wealth distribution.” Punishment, my favorite semantic argument. What is interesting is that Obama “wants” to distribute wealth without creating it. Fascinating take on the *income* tax. How exactly can an *income* tax distribute wealth without it first being created? I feel like I need to read a book on logic. I must have missed some days in school myself.
“The feeling is, if people don’t get compensated adequately, they’re going to go out and do this on their own.” Interesting. I’d love to see these people somehow do what they do without OPM. Have you ever done a business plan? Seriously, show me an Excel spreadsheet. Do have any idea how lucky/successful one would have to be to get to $100 million from, say, $100,000 without leveraging (stealing) other people’s money? I’m sure all the prop traders could build up from a book that started at $100k. No doubt.
“I think he doesn’t have an appreciation for how hard it is to build these companies, the blood, sweat, and tears that goes into them.” Blood, sweat, and tears. I *cannot* think of another profession, small business, trade or even menial labor where more blood, sweat and tears are shed than in the horror that faces overworked bankers and financiers every morning. I’ve never worked an honest hard day in my life. Really, shouldn’t they get an extra 150% for combat pay? How could this be disputed?
“And you have the Obama administration suggesting that. That was a very populist thing that Obama said. He’s being disingenuous. He knows that you can’t live in New York on $75,000.” Clearly, this person is a devout scholar of the concept of relative consumption (not to mention the great rhetorical technique of arguing against a principle that no one has ever set forth. Where did the $75,000 figure come from exactly?).
“Suddenly, the simple fact I work on Wall Street means that I’m a bad person? You know, I lost my job. I’m more of a victim.” Victim, indeed.