brainiac conspiracy

We're All Middle Class Now

Because there are no longer any rich people in America. At least, that's what the headline of this news item implies since, well, there's no mention of them at all:

American incomes rose in December by the most in eight years, a positive sign for consumer spending that could help the economy sustain momentum early this year.

Personal income for Americans rose 2.6 percent last month, the Commerce Department said on Thursday. That was the biggest increase since December 2004 and well above analysts' expectations for a 0.8 percent gain.

Personal income rose in November and December, the Commerce Department said, because of special dividends and accelerated bonuses to beat increases in taxes this year. (Emphasis added.)

Because middle-class and working-class and working-poor Americans typically get bonus packages as part of their employee compensation, and working-class and working-poor Americans reap billions of dollars of stock dividends each year. Feeling the shared prosperity yet?

Sometimes I wonder if there is any hope of reversing the trend, or if we're inexorably doomed to descend into a kind of 21st-Century Feudalism, where the dukes and earls and landed gentry of old have been replaced by hedge-fund managers, dot-com tycoons and energy-company executives; and where the rest of us who reside outside the palace gates have been reduced to the equivalent of tenant farmers, grateful for being allowed to labor in service to our betters in exchange for a daily allotment of porridge. It sure seems like it sometimes.

---Baron V

Crazy Idea

I'm sure you've heard the old sarcasm about Israel being our "51st state," but after listening to today's Senate hearings, it seems to me perhaps it's really the other way around. So this got me to thinking, and I came up with a new Middle East peace proposal: let's say we ask the Israelis to give back the West Bank to the Palestinians----all of it, no settlements remaining---and in return, we'll give them possession of the whole United States. Why not? They already own the Senate and our entire foreign-policy establishment. Why not just give them the country that's attached to them in exchange for a peace deal? Yes, this might seem like a silly proposition, but it doesn't seem to me that it's any nuttier than this.

---Baron V

Light Blogging Afternoon

Going to see a man about a horse. Actually, someone wants to see me about some paying work, so I'm revising the résumé and my crappy portfolio. Go abuse a decorated veteran while I'm away.

---Baron V

Bring On The Impeachment Hearings

Because another scandal is swirling around the White House. It's, it's . . . OMG it's Skeetgate!

Remember when Glenn Kessler ran that Pinocchio Test on Paul Ryan's running time? Funny, neither do I.

As most of you know, I'm not a big fan of headcount reduction in the workplace. But if this subject is the only thing that can keep Kessler occupied today, I'd be contemplating some cost savings if I ran the Post.

---Baron V

Oceanfront Property

It's always been some of the most desirable, and hence priciest, real estate on the market. And why not? The views are spectacular, the weather is generally placid (at least here in SoCal), and the sounds of the ocean envelop the home in a soothing atmosphere of tranquility. So it's really awesome news that there's going to be a whole lot of new oceanfront property opening up for development in the not-too-distant future, although, to be honest, it'll be in a slightly different location.

---Baron V

Mis-Selling

You have to love the English. They've always been masters of understatement. Of course, a lot of it probably has to do with their prohibitive libel laws, which require a lot of linguistic footwork to avoid giving off the slightest hint of offense to public figures or institutions. Hence UK job creators who sell their clients on deficient or easily manipulated financial instruments are guilty of nothing more egregious than "mis-selling," whereas here in the States, we simply call it "fraud":

The swaps were presented as a "no-cost" form of insurance to protect small businesses against a rise in interest rates, but the unregulated instruments turned into significant liabilities.

Falling base rates were meant to help small businesses but with these products they generated charges that devoured savings and destroyed some once-sound family firms. They typically locked firms into rates of between 5pc and 6pc over base rates and as base rates fell, the charges kicked in.

Shocked at the amounts of cash being taken out of their accounts, many firms looked to cancel the swap only to find the cost of doing so prohibitive. One bed and breakfast with a £73,000 turnover faced a six-figure bill to escape. A property developer with £15m in borrowings across three loans and swaps to his name faces a £9m charge.

Sell the client on a high interest rate, massage the rate lower, scoop up the difference. Now, hedging against inflation is a perfectly reasonable investment strategy, but you'd think that by now, borrowers and investors would realize that any financial instrument beyond the simplest and most transparent that these institutions offer up as a form of insurance has been expressly designed to relieve them of their money.

---Baron V

Don't See Why It's Either/Or

Granted, I don't have a Economics degree, so yeah, I'm an ignorant rube, but still:

[W]hat if the DOJ had prosecuted Bank of America or Citigroup into nonviability in 2009? Who was going to buy them? Nobody! That was the whole point of TARP and all the rest.

Had you secured criminal convictions against these megabanks, you'd have had to nationalize them and assume their liabilities or else face an economic catastrophe. But if the Obama administration wanted to nationalize the banks, it could have secured that outcome without the bother of criminal prosecution [...]

But either way, implementing a non-nationalization approach to bank recapitalization and then prosecuting the banks into a renewed state of insolvency and then nationalizing them would have been nuts. If saving the banks was a mistake, then the error had nothing in particular to do with prosecutions, and if saving the banks was the right thing to do, then curtailing prosecutions was the only way to execute the strategy.

First, we already are assuming the banks' liabilities. What else is quantitative easing all about?

Second, why would prosecuting criminal bank executives trigger de facto bank defaults? Seems to me that's buying into the bogus argument that the Masters of The Universe who run these institutions are so uniquely irreplaceable that the banking system couldn't function properly in their absence. Notwithstanding the fact that they already ran the banking system into the ground.

Nationalization, restructuring and prosecutions of individual executives, roughly in that order, were/are the best way to go if the administration's policy goal was to restore "investor confidence" in the integrity of the financial system. By tolerating/sanctioning so much moral hazard, though, and by continuing to feed it with discounted paper, they've only rewarded the system's most corrupt and parasitic elements, and discouraged the most honest investors from plowing their money back into markets that they see, quite rightly, as rigged. But even if you don't agree with that, there's no reason why prosecuting the heads of the most crooked banks would necessarily have resulted in some sort of financial panic. Mafia crime families have lines of succession to ensure their businesses keep running smoothly if one of their high-ranking capi gets nabbed by the police or gunned down by a rival. Why wouldn't it be the same for the megabanks? Am I missing something here?

---Baron V

Not Sincere, Really

Not quite in agreement here:

Do I believe that everyone in Joe Scarborough's sphere of influence knows that Keynesianism is accurate and that Krugman is right, but chooses to say otherwise because it pads their bank account? Of course not. It takes a conspiracy theorist and an idiot to believe that. Washington is corrupt, but it's not that corrupt.

No, most of these people believe what they say. I don't doubt that Scarborough's perplexed shock is genuine.

Scarborough's an idiot, so of course he's bought into the Hayekian Modesty bullshit. But most of the CEO types who are bankrolling Fix The Debt and all the other Austerity Now! lobbying fronts are, as most successful businessspeople are, not so altruistic. The way they attained their lofty status in corporate America was, after all, achieved by getting the best possible deal for their companies, be it from clients, vendors, customers, the government, etc. And that's what really motivates them---not political principle but naked self-interest: Specifically, to keep all of their deductions and depreciations, accounting loopholes and tax credits intact while reducing their respective companies' tax burdens, preferably to zero. How do we know this? Because some of their most prominent members have said so.

This is why, naturally, they need to deflect public scrutiny away from their own intentions and refocus it on all the poor sick elderly parasites who we just can't afford to take care of anymore. Belief's got nothing to do with it because what they want most of all is to shake more money out of everyone else's pockets.

---Baron V

Right Person For The Job

That is, if you needed to find someone to promote the interests of extremely rich people, the big corporations they own, and the investment portfolios they manipulate to avoid paying taxes, what better hire than an extremely rich person who owns a big corporation and has an extensive investment portfolio with tax avoidance schemes? Yea Team Democrat!

Chicago hotel and real estate heiress and Obama mega-bundler Penny Pritzker, is said to be in the mix once more---in fact, there’s chatter here that she’s already the pick---to be Secretary of Commerce.

Pritzker, who ranks #255 in 2012 on the Forbes 400 list of wealthiest Americans was reportedly in the hunt for that job back in 2008. But she withdrew her name apparently because of toxic subprime loans involving a failed bank partially owned by her family. There were also concerns that her $1.8 billion net worth included offshore accounts.

Update (11:05 am): Also too, fighting for working-class Americans.

---Baron V

Idiot America

It's that Magic Number again:

The Public Religion Research Institute found that 27 percent of Americans believe God plays a role in determining which teams win sports events [...]

According to the poll, Americans living in the country’s South are most likely to think God has a stake in who wins sports games, with Christians from racial or ethnic minorities and white evangelical Protestants more likely to feel that way than other Catholics, white mainline Protestants and the religiously unaffiliated.

So who can ever possibly win the Super Bowl? Outside of, what, Green Bay or maybe Dallas, just about every NFL franchise is located in some secular-liberal cesspool of sin and sodomy and welfare mooching and voter fraud. I suppose the faithful would reply by saying that the Lord doesn't reward the sinful cities, just the individual born-again believers who play for the team, and their prayer warriors in the grandstands, by allowing them to accomplish great works in Jesus' mighty name. If that were the case, though, one would conclude that the Super Bowl winner every year would have to be whatever team that Tebow is playing for, and that hasn't quite happened yet. Then again, He might simply be testing the faithful this year by subjecting them to a struggle between the queers and the blahs.

---Baron V

Greedy or Stupid?

Answer: Both.

Snark aside, I think one of the things that's rubbed people the wrong way about our ongoing economic malaise hasn't just been the privileged and arrogant attitude evinced by our banker overlords but the fact that a lot of these people don't seem to be terribly adept at their jobs. Or, it could just be---ya think, maybe?---that some of these institutions have grown so big and complex as to be essentially ungovernable by any one board/executive management team and need to be, er, broken up. Whichever it is, it still beggars belief that our government rescuers didn't demand regime change at every major financial firm that took a taxpayer bailout. They demanded it from General Motors, so why did JP Morgan and Goldman get a pass?

---Baron V

Tuesday Night Music Blogging

Because everyone who's serious agrees that we need to reform our entitlements and live within our means. Which doesn't mean we can't have a little cheesecake for dessert.

---Baron V

Why We Need a Third Party

Because our government is caught in a death-grip of partisan paralysis. Because it's slowly being strangled by ideologues on both sides of the aisle who are bent on exploiting the deficit crisis for the benefit of their pet special interests. Because only a reasonable voice from the center can break through the deadlock and bring both sides together for the sake of the nation. And because we can never be ruled by enough sexist perverts.

---Baron V

Just Honest People Making Honest Mistakes

One of these things:

[A] huge part of what happened across the system was just a mixture of ignorance and greed, or hope over experience, and not illegal. Most financial crises are not caused by fraud or abuse. They’re caused by people taking on risks they don’t understand, too much risk. When the tide turns, it can have catastrophic damage.

Is not like the other:

For years, traders at Deutsche Bank AG, UBS AG, Barclays, RBS and other banks colluded with colleagues responsible for setting the benchmark and their counterparts at other firms to rig the price of money, according to documents obtained by Bloomberg and interviews with two dozen current and former traders, lawyers and regulators. UBS traders went as far as offering bribes to brokers to persuade others to make favorable submissions on their behalf, regulatory filings show.

Members of the close-knit group of traders knew each other from working at the same firms or going on trips organized by interdealer brokers, which line up buyers and sellers of securities, to French ski resort Chamonix and the Monaco Grand Prix. The manipulation flourished for years, even after bank supervisors were made aware of the system’s flaws.

“We will never know the amounts of money involved, but it has to be the biggest financial fraud of all time,” says Adrian Blundell-Wignall, a special adviser to the secretary-general of the Organization for Economic Cooperation and Development in Paris. “Libor is the basis for calculating practically every derivative known to man.”

Narrowly speaking, they're not incompatible. Yes, perhaps some people took on risks that they didn't understand, as Tim Geithner says, and perhaps the reason they didn't understand the scope of the risks they were taking was because they were being deliberately swindled by a gang of market-riggers. Like I said, not incompatible on technicalities, but we really should have busted up these rackets a long time ago. It could still be done now, come to think of it---it will only require the political will to do it.

---Baron V

Time, Still Flying

Hard to believe it's been 20 years since we first got light rail here in the Marxist dystopia---in some ways, it seems a lot longer ago than that---but it brought back some cool memories of standing in line at Union Station that day for an hour and a half, surrounded by elderly railroad junkies wearing overalls and engineers' hats, for the pleasure of a 10-minute, 1.6-mile, one-way subway jaunt to MacArthur Park (that's as far as the initial leg of the Red Line ran), and feeling something resembling civic pride for one of the few times in my life. It's still not entirely adequate for the metropolis it was built for, and we should've kept building the Subway to The Sea, but our ever-evolving LRT/BRT system continues to expand its coverage every year, and for tens of thousands of riders every day (present company included), it's been a life-saver; and for the neighborhoods it's served, such as K-Town and NoHo and Hollywood and downtown Long Beach, it's been a big spur for much-needed mixed-use redevelopment. Maybe Secretary Villarigosa can get us so more transit money so we can keep building out the system even faster?

---Baron V

The '80s

Realize that many of the 30-something journalists working in New Media nowadays look back on that time with a certain degree of fondness---they were their wonder years, after all!---but for those of us who came of age and started our working lives in the first years of that decade, it was a genuinely dreadful time: High unemployment, a stagnant economy, record farm foreclosures, the first explosion of homelessness since the Great Depression, the first great crack epidemic, the first great AIDS epidemic, the first great drive-by-shooting epidemic, and above it all, a White House that behaved more like an organized crime syndicate than a democratically elected executive, funding illegal wars and funneling weapons to allies and enemies alike while looking the other way as cheap cocaine flooded the streets of the commonwealth. None of which terribly bothered the leading media scribes of the time because, well, who could be bothered with trivial social problems like these when Ronnie and Nancy were throwing such fabulous parties for the '80s smart set? This was the era when the Sally Quinns and David Broders held away in the salons of official Washington, where Ronnie and Tip tossed back shooters of Jameson's and brought about world peace while outside the Village gates, the Republic evidenced its first signs of decay. Like many people my age, I'd love, in a way, to be 30 years younger again, but if you told me the price to pay for it was having to relive that shabby and shallow time, I'd probably say "Thanks but no thanks. I liked things better when ketchup wasn't a vegetable."

Update (10:55 am): Like I said, fondness for the days of youth:

---Baron V

Probably Re-Stating The Obvious

That a large swath of white America has literally lost its mind:

At Cary-Grove and across District 155, we make your child’s safety our number one priority each day. As a parent, I can assure you that we understand our responsibility to return your child safely at the end of each day. While we take many preventative steps to keep our building secure, we also practice our response should a crisis arise. Some examples include meetings with first responders, a comprehensive crisis response plan, and simulations. We are planning a code red simulation on Wednesday, January 30. We feel it is important to explain the simulation to you in advance so that you and your child might be able to better understand what will take place on Wednesday.

The simulation will take approximately 15-20 minutes, during which time teachers will secure their rooms, draw curtains, and keep their students from traveling throughout the building. Please note that we will be firing blanks in the hallway in an effort to provide our teachers and students some familiarity with the sound of gunfire. Our school resource officer and other members of the Cary Police Department will assist us in sweeping the building to ensure that all students are in a secure location during the drill. At the conclusion of the drill, we will take some time to process what occurred and then we will return to our normal classroom routine.

I encourage you to discuss the drill with your student both before it happens and after. These drills help our students and staff to be prepared should a crisis occur, but it may cause some students to have an emotional reaction. In those cases, your voice may provide reassurances of the drill’s importance. Additionally, we have trained social workers on staff who can speak directly with your child should he or she need added support.

The administrators' intentions may be admirable here, but the problem I see with this approach is that it's insisting that kids learn to accept the presence of something that should be wholly unacceptable under any circumstances. The proper response to a tragedy like Sandy Hook isn't to conduct a shooting drill at school but to close the school for an entire day and charter some buses so all of the students and their parents can head down to Springfield to attend a gun-control rally on the steps of the state legislature. Regardless, you can conduct an evacuation drill without having the scare the crap out of people by shooting off weapons---we used to have them at my school when I was a kid, and all they had to do to initiate them was ring a bell. This "massacre simulation" drill idea really is absurd.

---Baron V

Secretary Villaraigosa

Assuming that he'll be named to fill the top post at Transportation now since (a) there had to be a reason for his high profile at Team Democrat's nominating convention last summer, and because (b) "where's the ethnic diversity in Obama's cabinet?" pseudo-scandal. Personal peccadilloes aside, he's a hard worker who can cut a charming figure (especially if you're a pretty girl), and he doesn't readily take no for an answer. He's also a persuasive and passionate advocate for mass transit, and given that public transportation has been his one unqualified success during his term as mayor of my Marxist dystopia, he'd be a smart pick for the position. Now if we can just convince him to disassociate himself from those Fix The Debt swindlers.

---Baron V

Everybody Loves Chris

Because he's just a regular guy, a plain-spoken mensch who worships The Boss. And because he doesn't instinctively hate Muslims, and because he once said nice things about Obama. And because he thinks some types of gun control are okay, and because he goes to hockey games like a regular Joe. But he is also a Republican, which means that at heart he's a vindictive little bastard.

Then again, maybe that's why everybody loves him.

---Baron V

Not Rocket Surgery, Unless It Is

Riffing off the previous post, I think this proves why policymakers would have better advised to mail out checks to people instead of buying up questionable assets from the Five Families financial institutions. Because if they'd done that, stuff like this wouldn't have happened:

Spanish retail sales tumbled by 10.7% year-on-year last month---worse than the 7.8% decline recorded in November, and close to the all-time record fall of 11% recorded in September.

Retail sales in Spain have fallen for 30 successive months, and accelerated since PM Mariano Rajoy implemented austerity measures intended to bring its budget into line. But with Spain's recession accelerating, Brussels officials may realise a change is needed.

An important lesson I learned long ago in life, and which has been reinforced throughout this financial crisis has been the realization that it's entirely possible for people to attend elite universities and earn advanced degrees with high marks from the some of the most prestigious graduate schools on the planet, and still turn out dumb as a rock. Unfortunately, most of them end up becoming members of our political-economic leadership class.

---Baron V