The great mystery story in American politics these days is why, over the course of two presidential administrations (one from each party), there’s been no serious federal criminal investigation of Wall Street during a period of what appears to be epic corruption. People on the outside have speculated and come up with dozens of possible reasons, some plausible, some tending toward the conspiratorial – but there have been very few who’ve come at the issue from the inside.
We get one of those rare inside accounts in The Payoff: Why Wall Street Always Wins, a new book by Jeff Connaughton, the former aide to Senators Ted Kaufman and Joe Biden. Jeff is well known to reporters like me; during a period when most government officials double-talked or downplayed the Wall Street corruption problem, Jeff was one of the few voices on the Hill who always talked about the subject with appropriate alarm. He shared this quality with his boss Kaufman, the Delaware Senator who took over Biden’s seat and instantly became an irritating (to Wall Street) political force by announcing he wasn’t going to run for re-election. “I later learned from reporters that Wall Street was frustrated that they couldn’t find a way to harness Ted or pull in his reins,” Jeff writes. “There was no obvious way to pressure Ted because he wasn’t running for re-election.”
Kaufman for some time was a go-to guy in the Senate for reform activists and reporters who wanted to find out what was really going on with corruption issues. He was a leader in a number of areas, attempting to push through (often simple) fixes to issues like high-frequency trading (his advocacy here looked prescient after the “flash crash” of 2010), naked short-selling, and, perhaps most importantly, the Too-Big-To-Fail issue. What’s fascinating about Connaughton’s book is that we now get to hear a behind-the-scenes account of who exactly was knocking down simple reform ideas, how they were knocked down, and in some cases we even find out why good ideas were rejected, although some element of mystery certainly remains here.
Eric Bricker, a former primary care doctor, a former financial analyst for hospitals, and now chief medical officer for Compass, a patient advocacy firm, conceded that big hospital systems use a variety of pricing strategies, but they are not based on costs.
In most industries, there is a close connection between costs and prices. But that takes an accurate assessment of costs, which is accomplished through an old discipline called cost accounting.
We payers are told by hospital executives that medical services are “too complicated” to analyze for costing purposes.
In a word: nonsense.
QE3 has finally arrived: the US Federal Reserve has promised to buy US$40 billion of mortgage-backed securities a month for as long as it deems necessary to revive the economy. QE3 is QE Infinity! Will it end with a thriving economy or a catastrophe? Remember, it was former Fed chairman Alan Greenspan’s “Midas touch” that brought us the dotcom bubble, the property and financial bubble, and the global financial crisis. Will Ben Bernanke’s so-called “quantitative easing” take us to a better world?
The mere fact that this is the third round of quantitative easing tells us the limited effectiveness of such a policy. Between February 2008 and August 2010, the US economy lost 8.7 million jobs, though it has gained 3.4 million back. By contrast, between 2004 and 2007, the US economy created an average of about 2 million jobs a year. The Fed bought US$1.6 trillion of assets through the first two rounds of quantitative easing.
Yet, still, the US labour market hasn’t performed. Of course, one could always argue that it would have been much worse without the Fed’s action. We will never know.
What we do know is that food and oil prices have been rapidly rising despite a weak world economy. Statisticians in the US and China don’t see much inflation. Yes, the price of my bowl of beef rice may be the same, but the beef on the rice has been performing a vanishing act. Do the statisticians feel hungry?
Is it just me, or are the signs of consumer collapse as clear as a Lowes parking lot on a Saturday afternoon? Sometimes I wonder if I’m just seeing the world through my pessimistic lens, skewing my point of view. My daily commute through West Philadelphia is not very enlightening, as the squalor, filth and lack of legal commerce remain consistent from year to year. This community is sustained by taxpayer subsidized low income housing, taxpayer subsidized food stamps, welfare payments, and illegal drug dealing. The dependency attitude, lifestyles of slothfulness and total lack of commerce has remained constant for decades in West Philly. It is on the weekends, cruising around a once thriving suburbia, where you perceive the persistent deterioration and decay of our debt fixated consumer spending based society.
The last two weekends I’ve needed to travel the highways of Montgomery County, PA going to a family party and purchasing a garbage disposal for my sink at my local Lowes store. Montgomery County is the typical white upper middle class suburb, with tracts of McMansions dotting the landscape. The population of 800,000 is spread over a 500 square mile area. Over 81% of the population is white, with the 9% black population confined to the urban enclaves of Norristown and Pottstown.
The median age is 38 and the median household income is $75,000, 50% above the national average. The employers are well diversified with an even distribution between education, health care, manufacturing, retail, professional services, finance and real estate. The median home price is $300,000, also 50% above the national average. The county leans Democrat, with Obama winning 60% of the vote in 2008. The 300,000 households were occupied by college educated white collar professionals. From a strictly demographic standpoint, Montgomery County appears to be a prosperous flourishing community where the residents are living lives of relative affluence. But, if you look closer and connect the dots, you see fissures in this façade of affluence that spread more expansively by the day. The cheap oil based, automobile dependent, mall centric, suburban sprawl, sanctuary of consumerism lifestyle is showing distinct signs of erosion. The clues are there for all to see and portend a bleak future for those mentally trapped in the delusions of a debt dependent suburban oasis of retail outlets, chain restaurants, office parks and enclaves of cookie cutter McMansions. An unsustainable paradigm can’t be sustained.
Nothing tests one’s intellectual honesty and ability to apply principles consistently more than free speech controversies. It is exceedingly easy to invoke free speech values in defense of political views you like. It is exceedingly difficult to invoke them in defense of views you loathe. But the true test for determining the authenticity of one’s belief in free speech is whether one does the latter, not the former.
The anti-US protests sweeping the Muslim world have presented a perfect challenge to test the free speech convictions of both the American right and the Democratic party version of the left. Neither is faring particularly well.
Let’s begin with the Democrats. On Thursday, the Obama White House called executives at Google, the parent company of YouTube, and “requested” that the company review whether the disgusting anti-Muslim film that has sparked such unrest should be removed on the ground that it violates YouTube’s terms of service.
In response, free speech groups such as the ACLU and EFF expressed serious concerns about the White House’s actions. While acknowledging that there was nothing legally compulsory about the White House’s request (indeed, Google announced the next day they would leave the video up), the civil liberties groups nonetheless noted – correctly – that “it does make us nervous when the government throws its weight behind any requests for censorship”, and that “by calling YouTube from the White House, they were sending a message no matter how much they say we don’t want them to take it down; when the White House calls and asks you to review it, it sends a message and has a certain chilling effect”.
Right-wing commenters loudly decried the White House’s actions on free speech grounds. Some of their rhetoric was overblown (the sentiment behind the request was understandable, and they did nothing to compel its removal). But, for reasons made clear by the ACLU and EFF, these conservative objections were largely correct.
Anyone who fears that Washington’s “pivot” towards the Pacific increases the risk of conflict between the United States and China is behind the times.
America and China are already at war. Only the battle ground isn’t the East China Sea. It’s money.
In his latest book Paper Promises author and Economist columnist Philip Coggan describes economic history as an endless struggle between borrowers and lenders over the irreconcilable difference in their interests.
Today that difference pitches the US, as the world’s largest debtor, into conflict with China, the planet’s biggest creditor.
Coggan explains that creditors are always trying to defend the soundness of money as a store of value, in order to ensure they get paid what they are owed.
Debtors, on the other hand, have a powerful incentive to debase the value of money, which effectively lets them off the repayment hook.
“Sandy’s right; government created a banking oligopoly with no accountability,” said Peter Solomon, a friend of Mr. Lewis’s who runs an investment banking firm.
Arthur Aeder, a retired accounting executive, was twice fired by Mr. Lewis. “Not many antagonize Goldman just for the hell of it,” Mr. Aeder said. “Most people think, ‘I have a family to feed.’ ”
Mr. Lewis is no less harsh on himself. After a visit, he handed us laptops containing every furious e-mail he had sent and received over 10 years.
“The Wall Street ethic broke decades ago,” he said by way of goodbye. “The stink is terrible.”
Two years ago I graduated from Oxford university with a 2:1 in philosophy, politics and economics. After a year of looking for a job, I was hired by a large and very well-known business. At first I was in awe, but now I’ve discovered something that surprises and depresses me. Most of my colleagues are neither terribly bright nor terribly hardworking. As this is my first experience of corporate life I’m puzzled and want to know – is it me? Is it them? Am I missing something? I just don’t get it; if these companies are so hard to get into, how come most of the people who have made it are so mediocre?
Graduate trainee, male, 24
We’re tracking where taxpayer money has gone in the ongoing bailout of the financial system. Our database accounts for both the broader $700 billion bill and the separate bailout of Fannie Mae and Freddie Mac.
For each entity, we provide a “Net Outstanding” amount, which shows how deep taxpayers are in the hole after accounting for any revenue the government has received (usually through interest or dividends).
Companies that failed to repay the government and resulted in a loss are shaded red. You can see a list of those investments here. All other investments either returned a profit to the government or might still be repaid. Recipients of aid through TARP’s housing programs (such as mortgage servicers and state housing orgs) received subsidies that were never intended to be repaid, so we don’t mark those as losses..
Li Zhensheng’s photographs of the Chinese Cultural Revolution are perhaps the most complete and nuanced pictorial account of the decade of turmoil ignited by Mao Zedong.
Mr. Li was a photojournalist for the local paper in Harbin, capital of China’s northernmost province of Heilongjiang. That is where he did his life’s work documenting the Cultural Revolution, taking the “positive” propaganda images of masses whipped up in revolutionary fervor for the newspaper, and also the “negative,” more nuanced, questioning pictures. He snipped those frames off his film and hid them under the parquet floorboards of his house until the revolution ended. He did not show these pictures in China until the late 1980s. Even today, given the sensitivities that linger over the Cultural Revolution in China, his work is more often seen overseas rather than at home.