. . . because much of the content relates both to Washington, D.C., and "outside the beltway" -- the heartland, specifically Iowa -- and because after going from Iowa to Washington via Texas and California I subsequently returned, From DC 2 Iowa.
Showing posts with label global economic collapse. Show all posts
Showing posts with label global economic collapse. Show all posts
A Modest Proposal to the Regents' University Presidents (brought to you by FromDC2Iowa.blogspot.com*)
The University of Iowa wants "strategic communication" and is searching for someone to provide it. "The Vice President for Strategic Communication reports to the President and is the chief communication officer responsible for conveying the University’s mission, vision, and values internally and externally. ""Position Description, Vice President for Strategic Communication Search," University of Iowa.
Until we find someone to fill this post, with its lengthy and intimidating Position Description list of responsibilities, I have a modest suggestion for how we -- and the other two Regents' universities -- might "convey the University's values."
These are tough economic times.
Tuition was increased 3.2% last year, 4.2% this year, and at least one Regent is advocating increasing it 5-6% next year. Out of state tuition for our professional schools is becoming less distinguishable from that of the most expensive private schools. Our so-called "public universities" are PINO universities -- public in name only. The free higher education California once offered, the nearly free in Iowa, the $25 a semester I paid elsewhere as an undergraduate, or tuition-free programs like the GI Bill after WW II have become truly ancient history. Stacy Hupp, "Tuition Increase Likely, Regent Says,"Des Moines Register, September 18, 2009.
A "construction moratorium," that is, except for athletic facilities? Watch this space and see. "In a timeframe now measured in weeks instead of months, Iowa director of athletics Gary Barta expects work on the $47 million renovation of Carver-Hawkeye Arena to begin this fall . . . 'and we are on schedule to make that happen,' Barta said during an appearance at the Scott County I-Club dinner on Thursday." Steve Batterson, "Carver renovations on pace to begin in fall,"Quad City Times, October 3, 2009; and Tom Witosky, "Budget woes might stall U of I arena's renovation,"Des Moines Register, October 11, 2009: "The regents records . . . show that [the UI] athletic department receives $882,000 from the university general fund . . .."
Successful budget cutting, always a bummer, requires the appearance as much as the reality of fairness. Layoffs, reductions in compensation, "a hiring freeze and a construction moratorium" from which the football coach's salary and the basketball team's construction program are exempt does not have the appearance of fairness -- regardless of the rationale that may be offered for the exemptions.
The Board of Regents has held the universities presidents' salaries level and failed to award any bonuses for last year's performance.
However, "the university presidents still could receive bonuses for the current fiscal year, which ends June 30, 2010. . . . If U of I President Sally Mason meets her performance goals, she would be eligible for an $80,000 bonus. ISU President Greg Geoffroy could receive a $50,000 bonus, and UNI President Ben Allen is eligible for a $25,000 bonus." Brian Morelli, "No pay raises for presidents of universities,"Iowa City Press-Citizen, September 18, 2009.
Some Iowa legislators questioned the symbolism, and economics, of even holding out the possibility of such bonuses in these economic times. "Rep. Jeff Kaufmann, R-Wilton, Rep. Chris Hagenow, R-Windsor Heights, and Rep. Annette Sweeney, R-Alden, released a joint statement saying bonuses [totalling $155,000] should not remain a viable option this year . . .. 'This is hardly a pot shot,' Kaufmann said. 'It is amazing to me they continue to have these conversations out loud. It’s amazing to me they talk about tuition increases and performance bonuses of tens of thousands of dollars in the same meeting.'" Brian Morelli, "Dvorsky Backs University President Bonus Plans,"Iowa City Press-Citizen, September 29, 2009.
All of this creates a bit of a problem. Students, who are graduating with significant debt, are understandably upset about their ever-increasing tuition. University employees are understandably concerned about layoffs, and increased work for decreased pay. Legislators, no doubt reflecting their constituents' feelings, are criticizing the Regents for making bonuses possible. And the Regents would be understandably reluctant to appear to be backing down to legislators' pressure.
The public is justifiably outraged over the bank bailouts being funded with their taxpayer money -- and their great grandchildren's increased share of the national debt -- being used to pay the guys who caused the problem million-dollar bonuses.
President David Skorton once said, when some questioned whether he was being paid enough, "When the median family income in Iowa is around $45,000 and I make over $300,000, it’s hard to argue that is not a lot of money. It’s very generous." [Quoted in "Pricey Presidents Added Cost," below.] Many Iowans share his candid assessment, and probably consider bonuses on top of what is now much more than $300,000 a year to be Iowa's equivalent, with Iowa taxpayers' money, of what's going on nationally with Wall Street executives.
So what can be done? Here's an example from what was actually a much less stressful time over a year ago.
Iowa is not the only state dealing with the consequences of our Wall-Street-created economic disaster. Connecticut confronts similar pressure. Notwithstanding those stresses, Iowa's own Mike Hogan, now the very popular president of the University of Connecticut, was awarded a $100,000 bonus for his "exemplary services."
What did he do with all that money?
With no pressure on him to do so, or public objection to a bonus payment for such a popular president, he made the personal decision to not accept it.
Former UI Provost Michael Hogan, who was denied the UI presidency in 2006, this week turned down a $100,000 bonus for exemplary service as the president of the University of Connecticut. . . .
Hogan declined the $100,000 bonus because of the state and school's struggling economic situation, and he asked that the money be given to the university's graduate program, the Associated Press reports.
Lauren Sieben, "Regent: No 2nd Thoughts,"The Daily Iowan, September 26, 2008, quoted and discussed in Nicholas Johnson, "Hero Hogan; Mike Hogan Is Alive and Very, Very Well," October 1, 2008. [The third comment to this blog entry, below, comes from a "UI Emeritus" and reports that this year, "Before the board in Connecticut even discussed his evaluation (which once more was reported to be exceptional, outstanding, extraordinary), he [President Hogan] asked them not to even contemplate a raise or bonus, in light of the economy and the struggles everyone is facing."]
[Graphic credit, and see, "PresRelease" -- a combination Web page, blog, photo album and Facebook-like location that University of Connecticut President Michael J. Hogan self-describes as "my own little page where I can share items of interest, celebration, or concern with my University colleagues."]
We're not talking much money here; $155,000 will scarcely be noticed one way or the other in the multi-million-dollar cuts the University of Iowa has made, and will have to continue to make. Moreover, the presidents are not guaranteed this money anyway. The Regents left open the possibility the bonuses would not be granted next year for the same reason they were not granted this year: the economy.
So the presidents wouldn't even be giving up all that much to agree to forgo them.
But I think it would make a huge difference in appearances if they were to say, either individually or in chorus: "We don't want bonuses next year even as a possibility, regardless of how well we -- and the economy -- may do between now and then."
If Iowa values can be exhibited in Connecticut, the presidents of Iowa's universities certainly ought to be able to muster up the courage to display them here in Iowa as well.
It might help soothe the legislature. It would get the Regents out of an awkward position. It could calm the anxious and angry students -- and their parents. It might make Iowans less hostile toward what they perceive as unnecessarily generous compensation for university administrators in these times. And it would communicate to the faculty and staff a little better sense of "we're all in this together."
You want a relatively cheap strategic communications way to "convey the University's values internally and externally"?
This is my modest proposal. _______________ * Why do I put this blog ID at the top of the entry, when you know full well what blog you're reading? Because there are a number of Internet sites that, for whatever reason, simply take the blog entries of others and reproduce them as their own without crediting the source. I don't mind the flattering attention, but would appreciate acknowledgment as the source, even if I have to embed it myself. -- Nicholas Johnson
It turns out that four-year-olds who are willing to postpone eating one marshmallow now in exchange for two in 15 minutes will later score 200 points higher on their ACT test.
I can relate. Not to the ACT score, but to the difficulty in postponing marshmallow consumption. In my case it was the choice to burn, rather than roast, marshmallows. The increased marshmallow consumption the speedy burning made possible more than made up for the mere aesthetics of a marshmallow with a golden brown hue.
It may be that the experiments I'm about to describe may tell us even more about our current economic meltdown than marshmallow meltdown.
Tom Ashbrook, who hosts one of the best talk shows on American radio ("On Point"), addressed the subject a couple days ago [May 13]. "Our Delayed Gratification Era," On Point with Tom Ashcroft, WBUR-FM 90.9 mHz, Boston, May 13, 2009.
As his Web site described his guests, "Science writer Jonah Lehrer is a contributing editor at Wired, and author of How We Decide and Proust Was a Neuroscientist. His new piece, in this week’s New Yorker, is “Don’t! The secret of self-control.” Psychologist Walter Mischel is a professor at Columbia University, and author of Personality and Assessment. He pioneered the “marshmallow experiments” in the 1960’s, which studied delayed gratification and self-control in children. Economic historian Richard Sylla is a professor at New York University’s Stern School of Business, and author of The American Capital Market: 1846-1914 and A History of Interest Rates.”
Experiments run by Stanford psychologists in the 1960s tested four-year-olds' capacity for deferred gratification. The kids were offered a marshmallow with a promise of two marshmallows if they could wait (for what turned out to be about 15 minutes). They were re-visited years later in the psychologists' effort to discover what might correlate with a capacity for deferred gratification.
Once [then Stanford, now Columbia, psychology Professor Walter] Mischel began analyzing the results, he noticed that low delayers, the children who rang the bell quickly, seemed more likely to have behavioral problems, both in school and at home. They got lower S.A.T. scores. They struggled in stressful situations, often had trouble paying attention, and found it difficult to maintain friendships. The child who could wait fifteen minutes had an S.A.T. score that was, on average, two hundred and ten points higher than that of the kid who could wait only thirty seconds. . . .
According to Mischel, this view of will power also helps explain why the marshmallow task is such a powerfully predictive test. “If you can deal with hot emotions [e.g., resisting a desire for something set on the table before you], then you can study for the S.A.T. instead of watching television,” Mischel says. “And you can save more money for retirement. It’s not just about marshmallows.” , , ,
One of her [University of Pennsylvania psychology Assistant Professor Angela Lee Duckworth] main research projects looked at the relationship between self-control and grade-point average. She found that the ability to delay gratification—eighth graders were given a choice between a dollar right away or two dollars the following week—was a far better predictor of academic performance than I.Q. She said that her study shows that “intelligence is really important, but it’s still not as important as self-control.”
At a minimum Duckworth's findings suggest those of us in higher education might take another look at our admission standards! But I digress.
The "On Point" guests' opinions tended to square with my own impression: that there has been a real shift in Americans' capacity for deferred gratification, regardless of age.
Most of us are overweight, and a significant percentage are designated "obese." That weight gain is a function of many things. But isn't instant gratification -- the drive to eat both of those marshmallows, or an entire box of cookies or bag of chips, and to do it now -- at least a part of the problem?
Debt, debt, debt. A federal debt of $10-12 trillion -- with perhaps $70 trillion in future, unfunded obligations. Fighting wars for which no one is drafted and for which no one pays increased taxes -- borrowing the money from the Chinese. And then borrowing more money to pay the interest on the last money we borrowed (and cover the lost revenue from tax breaks for the rich). Businesses borrow their way to bankruptcy -- and banks encourage them to do it. And credit cards! "According to the White House, total credit card debt has reached $963 billion, a 25% jump over the last 10 years. The average amount of credit card debt among families holding a balance was $7,300 in 2007." Peter Nicholas, "Obama asks Congress for credit card reform bill; . . . cautions consumers against accumulating debt,"Los Angeles Times, May 14, 2009.
The problem is not just with "the politicians" or "the bankers." It is within virtually all of us -- and the economy we have built on the back of "consumer spending;" an economy in which we not only don't regularly contribute to a savings plan but have "negative savings" as we live off of the equity in our homes, and the balances on our multiple credit cards. It's the individual's equivalent of the example set by our federal government -- and encouraged by the manipulative marketing and advertising that sustains our mass media and entertainment industries, and prompts a U.S. president to advise his citizens that the most appropriate response to 9/11 is to "go shopping."
I recently had a research assistant who was going to graduate from law school with an obligation to pay off $150,000 in undergraduate and law school student loans.
When I was in school, so far as I knew loans hadn't yet been invented. I saved for months until I finally had the $80 ultimately spent on an ancient Model A Ford. Before that I simply walked everywhere. Managing the apartment house where I lived, plus two part-time jobs (plus, admittedly, tuition rates designed to educate, rather than merely bilk, the student population) was how I paid bills.
Earlier in life, when I was a young boy, for starters no one seemed to have the income, even adjusted for inflation -- let alone the willingness or ability to incur debt -- that many appeared to have before the current collapse. As children we often heard the adage, "Use it up, wear it out, make it do, or do without." One small bottle of "soda pop," as we called it, cost a nickle and was a special treat perhaps once or twice a month. It wasn't something consumed by the liter on a daily basis.
Before you were permitted to buy anything you had to first earn the money, something that depending on the item could take months. That pretty much eliminated "shopping" as a leisure time activity with its incentive to impulse buying.
It was the application of what seemed at the time both inevitable and common sense: "if you don't have the cash you don't 'buy stuff.'"
By 2006 this philosophy was considered so bizarre as to be fodder for a Steve Martin "Saturday Night Live" sketch I embedded in an earlier blog entry. Nicholas Johnson,"Don't Buy Stuff; The Sure-Fire Solution to Economic Pain," March 6, 2009 (with links to 39 "Related Blog Entries on Global Economy and Bailouts").
[Credit: "Don't Buy Stuff: The sure-fire way to get out of debt," NBC Saturday Night Live, Season 31, Episode 12, aired February 4, 2006, available from hulu.com.]
"You Get What You Measure"
It may help to provide an incentive for deferred gratification to do a little benefit-cost analysis regarding what our impulses are costing us.
In addition to the simple advice "don't buy stuff" there's a related technique that amounts to a practical application of general semantics: "you get what you measure." What it means is that if you really want to increase, or decrease, anything in your life (or your business, or your university) you need to measure it. Measuring focuses your attention on what formerly lacked mindfulness.
Measurement is the language of science, and it's a language we can use in our daily lives. Some recipes call for a "scoop" of this, a "dollop" of that, and a "pinch" of something else. Scientists deal with liters and milligrams.
o Some dieters aim for "smaller portions." That's helpful, but not as productive as knowing that 3500 calories into the mouth will produce one additional pound of body weight (and 3500 calories of expended energy will consume a pound of body fat) -- and then "counting calories."
o Some drivers say their car gets "pretty good mileage." How do they know? Well, they filled the tank before they left and they still have "about a half-tank" left. OK; that's better than paying no attention at all. But writing down the odometer reading, and the precise number of gallons, when buying gas and then calculating the actual miles per gallon will detect possible problems (or gains) faster and more precisely. Tire pressure has a big impact on gas mileage. Looking at the tires to see if any seem to be going flat is OK. But regularly measuring the pressure in each tire with a pressure gauge will be more effective.
And what is the application of all this to our personal (and national) debt?
I keep receipts, whether for a cash or a debit card payment, and enter them into a computerized money tracker. As I sometimes explain to clerks, "It may not make me any richer, but at least I know why not."
In fact, knowing what you're spending does tend to make you a little richer -- especially if you'll do a little additional math -- because it deprives you of the option of apathy and ignorance.
To help educate some teenagers about the cost of debt I once ran the numbers on two imaginary young drivers. One saves her money for 3-5 years and buys a car, after which she immediately starts saving again for the next cash purchase of a future replacement vehicle. A boy borrows the money, buys the first car, now, and starts paying off the loan. Three to five years later he does the same. Both continue their practice for 50 years. The difference? The woman went without a car for 3 years during her teens, but has otherwise had the same access to transportation as the man. The other difference? The man has spent something between $1 and 2 million dollars more for his cars than she spent for hers -- leaving her, if she invested that difference over the years, a nice additional retirement fund.
An unrecorded, un-reflected-upon daily purchase of cigarettes, designer coffee, or similar purchase -- compared with a regular savings investment of a comparable amount of money -- can also mount up to what might otherwise have been a $1-to-2 million retirement fund. You may very well decide you really enjoy the coffee and want to have it anyway. That's OK. Just know that what it's costing you is not just $3.00 (today) but $1-2 million (over a lifetime).
That knowledge may not totally solve the impulse buying, instant gratification problem, but it sure helps.
Willpower Can be Taught
Lehrer reports scientists find there are mental tricks for building willpower,
such as showing kindergartners a video of a child successfully distracting herself during the marshmallow task. The scientists have some encouraging preliminary results—after just a few sessions, students show significant improvements in the ability to deal with hot emotional states . . ..
He [Professor Walter Mischel] knows that it’s not enough just to teach kids mental tricks—the real challenge is turning those tricks into habits, and that requires years of diligent practice. “This is where your parents are important,” Mischel says. “Have they established rituals that force you to delay on a daily basis? Do they encourage you to wait? And do they make waiting worthwhile?” . . . [N]ot snacking before dinner, or saving up your allowance, or holding out until Christmas morning—are really sly exercises in cognitive training . . .. “We should give marshmallows to every kindergartner,” he says. “We should say, ‘You see this marshmallow? You don’t have to eat it. You can wait. Here’s how.’”
Well, there you have it. The solution to our personal and national debt problems. Willpower; skillful deferred gratification -- coupled with an awareness that "you get what you measure."
And to think we could have been doing it all along with just a couple of marshmallows!
__________
Related Blog Entries on Global Economy and Bailouts
* Why do I put this blog ID at the top of the entry, when you know full well what blog you're reading? Because there are a number of Internet sites that, for whatever reason, simply take the blog entries of others and reproduce them as their own without crediting the source. I don't mind the flattering attention, but would appreciate acknowledgment as the source -- even if I have to embed it myself. -- Nicholas Johnson
Although I didn't refer to the following passage at that time, because it did not directly relate to the topic of the entry, I found it quite startling then and more so now -- especially when watching and listening to him deliver it in the video than from this comparatively sterile transcript:
AMY GOODMAN: The whole issue of populist rage, Noam Chomsky, actually, do you think that this rage is going to boil over as the unemployment figures rise?
NOAM CHOMSKY: It’s very hard to predict those things. I mean, it has a potentially positive side, like it could be like the activism of the 1930s or the 1960s, which ended up making it a more civilized society in many ways, or it could be like an unfortunate precedent that quickly comes to mind. . . .
Take a look at Germany. In the 1920s, Germany was the absolute peak of Western civilization, in the arts and the sciences. It was regarded as a model of democracy and so on. I mean, ten years later, it was the depths of barbarism. . . .
Now, if you listen to early Nazi propaganda . . . and you listen to talk radio in the United States . . . there’s a resemblance. And in both cases, you have a lot of demagogues appealing to people with real grievances.
Grievances aren’t invented. I mean, for the American population, the last thirty years have been some of the worst in economic history. It’s a rich country, but real wages have stagnated or declined, working hours have shot up, benefits have gone down, and people are in real trouble and now in very real trouble after the bubble's burst. And they’re angry. And they want to know, “What happened to me? . . . I’m a hard-working, white, God-fearing American. [H]ow come this is happening to me?”
That’s pretty much the Nazi appeal. The grievances were real. And one of the possibilities is what Rush Limbaugh tells you: “Well, it’s happening to you because of those bad guys out there.” OK, in the Nazi case, it was the Jews and the Bolsheviks. Here, it’s the rich Democrats who run Wall Street and run the media and give everything away to illegal immigrants . . ..
AMY GOODMAN: And she [Sarah Palin] very much is being talked about as a leader, really, of the Republican Party.
NOAM CHOMSKY: [T]he talk radio mob went crazy over her. And one shouldn’t demean it. [T]hey describe themselves — it’s really worth listening to: “We’re fly-by country. [T]hey don’t care about us, those rich Democrats on the East Coast and the West Coast who are all . . . interested in gay rights and giving things away to illegal immigrants and so on. They don’t care about us, the hard-working, God-fearing people, so we’ve got to somehow rise up and take over and elect Sarah Palin or Rush Limbaugh or someone like that.” . . .
[T]his kind of populist rage could boil over and could have very dangerous consequences. . . .
[W]e’re very lucky that we have never had an honest demagogue. I mean, the demagogues we’ve had are so corrupt that they never got anywhere — . . . Nixon, McCarthy, Jimmy Swaggart and others . . . were kind of destroyed by their own corruption.
But suppose we had an honest demagogue, . . . a Hitler type, who was not corrupt. [I]t could be unpleasant. There’s a background of concern and fear, tremendous fear, and searching for some answer, which they’re not getting from the establishment. “Who’s responsible for my plight?” [T]hat can be exploited. And unless there’s active, effective organizing and education, it’s dangerous.
Note that Chomsky's not saying it will happen. He's saying there's a risk. He's not saying our "honest demagogue" would be Hitler, identical to Hitler, or even similar to Hitler. He's just saying that the conditions of our economy and country bear some similarity to those in pre-Hitler Germany -- and they do.
So what's my "serendipitous confluence"?
Neither Amy Goodman nor Noam Chomsky could have known on April 3, when the interview was recorded, of a Department of Homeland Security report, issued April 7, leaked to the media, and reported yesterday, April 14.
It essentially confirms and echos Chomsky's concerns.
There has been a rise in extremist organizations' membership. Much of their rhetoric has been consistent with Chomsky's characterizations -- including concerns about gun control and immigration. There have been efforts to recruit returning soldiers, with their military training.
As with Chomsky's concerns, Homeland Security is not suggesting that a demagogue is on the verge of taking over, let alone one backed by armed mobs. It's merely noting, as Chomsky did, that our economic conditions, the extremists' recruiting efforts, and the rhetoric make this a legitimate concern of the Department, something worth watching carefully.
Also worth watching carefully are the rightwing extremist, Obama-hating talk show hosts and Republicans who have even said they want him (and presumably the rest of us with him) to fail. It's bad enough when they are just playing politics. Now they are also playing with fire.
Ah, the far, far reaching consequences of the greed and ignorance of the Wall Street oligarchy. The price we end up paying, in this country and abroad, may be far more than global economic collapse, the trillions they have taken from the taxpayers (with the help of their friends Obama recruited to "solve" the problem), the resulting inevitable inflation, and the debt we're all leaving to our great grandchildren. _______________
* Why do I put this blog ID at the top of the entry, when you know full well what blog you're reading? Because there are a number of Internet sites that, for whatever reason, simply take the blog entries of others and reproduce them as their own without crediting the source. I don't mind the flattering attention, but would appreciate acknowledgment as the source -- even if I have to embed it myself. -- Nicholas Johnson
April 12, 2009, 11:00 a.m. (with thanks to Sherman Johnson and Stephen Phillips for the cited articles); April 14, 2009, 8:00 (addition of Noam Chomsky's "Democracy Now!" interview, April 13, and Simon Johnson's BBC interview)
Talk about "a good walk spoiled" -- the characterization of golf widely attributed to Mark Twain (though scholars are unable to confirm he ever said it).
President Obama and Wall Street
"It is the extent to which he has selected, put in place, and supported the decisions of, an economic team that even the most casual observer would have to conclude is far more interested in bailing out their super-wealthy buddies on Wall Street than the suffering millions on Main Street."
It's the uncomfortable feeling I have in my otherwise joyous springtime walk with our President, Barack Obama.
On the one hand, I'm still thrilled by the man -- and his wife. He's "brilliant" -- in both the academic and the Irish sense of the word. His ability to win back from the world the respect for America that we once enjoyed. His willingness and ability to reach out to everyone from Congressional Republicans to Iran -- whether or not his gestures are returned in kind. His very full schedule of events and public appearances -- many of which have to have been first-time experiences for him -- and virtually all of which have been error-free hits. His mastery of the English language and skill in stringing it into complete sentences. His judgment. His continuing ability to inspire us, notwithstanding a global economic collapse and two self-defeating wars. His "cool."
He's caused me to reflect back on my own first presidential appointment as Maritime Administrator when I was 29, after my first experience at being called to the Oval Office by the President of the United States. Immediately on my desk was the need to design and launch a world tour for the world's first nuclear-powered merchant ship -- ultimately providing my first encounter with royalty: the kings of Norway, Denmark and Sweden. The first international conference I ever attended (a secret NATO group) required my chairing the sessions. My only prior contact with higher education was limited to my own degrees and experience as a young law professor at UC Berkeley; now I found myself responsible for a four-year college, the Kings Point Maritime Academy. My first congressional testimony was only weeks before, at my own Senate confirmation hearings. The list of firsts continued on for many weeks.
All of that was as nothing compared to Obama's first three months, but it does give me some capacity for empathy -- and awe.
He has so much ability, so much potential. If only we had a Senate and House made up of men and women worthy of his leadership. If only our corporate and other institutional leaders were willing to put the country's best interests ahead of their own personal financial enrichment.
But along with all that admiration and awe is that irritating little pebble in my shoe.
It is the extent to which he has selected, put in place, and supported the decisions of, an economic team that even the most casual observer would have to conclude is far more interested in bailing out their super-wealthy buddies on Wall Street than the suffering millions on Main Street -- with a price tag, not incidentally, in the trillions of taxpayer dollars put on my great granddaughter's credit card.
I've written about this at length, as the list of links to prior blog entries at the bottom of today's entry bears witness.
But it's clearly not just me. There is a rising tide of cynicism throughout our country on this score, from all positions on the political spectrum, that causes me concern that it could end up drowning all that wonderful potential with which Obama arrived at the White House in January.
_______________
Nobel Prize-winning Economist Paul Krugman
Nobel Prize winning economist and New York Times columnist Paul Krugman is among those who think the Administration has been taking us down the wrong economic road -- to the profit of those who caused the problems, and the loss of America's taxpayers. As he puts it, in excerpts from the first of the three examples I quote below,
"the financial industry still has a lot of friends in high places."
Indeed, it does.
[M]y sense is that policy makers are still thinking mainly about rearranging the boxes on the bank supervisory organization chart. They’re not at all ready to do what needs to be done — which is to make banking boring again.
Part of the problem is that boring banking would mean poorer bankers, and the financial industry still has a lot of friends in high places. But it’s also a matter of ideology: Despite everything that has happened, most people in positions of power still associate fancy finance with economic progress.
Can they be persuaded otherwise? Will we find the will to pursue serious financial reform? If not, the current crisis won’t be a one-time event; it will be the shape of things to come.
If you haven't heard of retired MIT professor Noam Chomsky it's probably because you've been listening and watching America's mainstream media.
The New York Times has said of Chomsky, "Judged in terms of the power, range, novelty and influence of his thought, Noam Chomsky is arguably the most important intellectual alive today." Wikipedia reports, "Chomsky was voted the leading living public intellectual in The 2005 Global Intellectuals Poll conducted by the British magazine Prospect. He reacted, saying 'I don't pay a lot of attention to polls.' In a list compiled by the magazine New Statesman in 2006, he was voted seventh in the list of 'Heroes of our time.'" "Noam Chomsky," Wikipedia.
In Amy Goodman's "Democracy Now!" interview April 13, 2009, she described him as "one of the most important dissident intellectuals of our time . . . a world-renowned linguist, philosopher, social critic, and Institute Professor Emeritus at the Massachusetts Institute of Technology. Among his many books over the past few decades are Hegemony or Survival: America’s Quest for Global Dominance, Manufacturing Consent: The Political Economy of the Mass Media, Profit over People: Neoliberalism and Global Order, and Human Rights and American Foreign Policy. There’s a great collection of his work, just out now, edited by Anthony Arnove, called The Essential Chomsky." "Noam Chomsky on the Global Economic Crisis, Healthcare, US Foreign Policy and Resistance to American Empire," Democracy Now!, April 13, 2009.
Odd, wouldn't you say, that such an individual is not at least consulted by Washington's most powerful, not at least given a seat at the table, not testifying before Congress, that he is not a regular participant in the Sunday morning talk shows?
The link immediately above will take you to a video of Goodman's interview with Noam Chomsky. After watching it you'll have some understanding of why we have to rely on Amy Goodman to bring us those who have an alternative view of our life, politics and economy. Chomsky demonstrates his usual calm, understated, straight-forward explanation of what's going on, pulling together into a single, understandable world view, supported with both historical and current references, explaining why you and I are right to be angry and cynical, and why Obama's so far at odds with reasonable, centrist populism.
If you'd prefer to read a transcript it's also provided there.
Here's an excerpt:
Actually, the business press just had some interesting things to say about this. Bloomberg News, you know, main business press, had an article in which they reviewed the records of the people who Obama invited to his economic summit. I think it must have been last November or December. They just reviewed the record. I think there were a couple dozen of them. People on the—you know, people like, say, Stiglitz, Krugman, they were never even allowed close to it, let alone anyone from the left or labor and so on, given token representation. So they went through the records, and they concluded that these people should not be invited to fix up the economy. Most of them should be getting subpoenas because of their record of accounting fraud, malpractice and so on, and helping bring about the current crisis.
You may disagree with Chomsky's take on things. Many do. But you owe it to yourself to at least listen to what he's saying -- especially his dramatically different alternative scenarios for America's future if our financial oligarchy is successful in continuing in power (an understanding consistent with that of Simon Johnson, below). And if you still disagree with him you need to ask those two basic questions: "What do you mean? And, How do you know?" What are the historical and current references that support your view over his?
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Former IMF Economist Simon Johnson
"The finance industry has effectively captured our government . . .. If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform."
The May 2009 edition of The Atlantic contains a particularly insightful article by a former chief economist for the International Monetary Fund who sees similarities between causes of third world countries' economic collapse and that of the United States: Simon Johnson, "The Quiet Coup."
Here is The Atlantic editors' summary of the piece:
The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government — a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we’re running out of time.
Simon Johnson, "The Quiet Coup,"The Atlantic, May 2009. Needless to say, the entire article is well worth a read. The parallels to our economy are scary. Meanwhile, here are some excerpts:
Naturally, the fund’s economists spend time figuring out the policies—budget, money supply, and the like—that make sense . . .. Yet the economic solution is seldom very hard to work out.
No, the real concern of the fund’s senior staff, and the biggest obstacle to recovery, is almost invariably the politics of countries in crisis.
Typically, these countries are in a desperate economic situation for one simple reason—the powerful elites within them overreached in good times and took too many risks. Emerging-market governments and their private-sector allies commonly form a tight-knit—and, most of the time, genteel—oligarchy, running the country rather like a profit-seeking company in which they are the controlling shareholders. When a country like Indonesia or South Korea or Russia grows, so do the ambitions of its captains of industry. As masters of their mini-universe, these people make some investments that clearly benefit the broader economy, but they also start making bigger and riskier bets. They reckon—correctly, in most cases—that their political connections will allow them to push onto the government any substantial problems that arise. . . .
Squeezing the oligarchs . . . is seldom the strategy of choice among emerging-market governments. Quite the contrary: at the outset of the crisis, the oligarchs are usually among the first to get extra help from the government, such as preferential access to foreign currency, or maybe a nice tax break, or—here’s a classic Kremlin bailout technique—the assumption of private debt obligations by the government. Under duress, generosity toward old friends takes many innovative forms. Meanwhile, needing to squeeze someone, most emerging-market governments look first to ordinary working folk—at least until the riots grow too large. . . .
But there’s a deeper and more disturbing similarity: elite business interests—financiers, in the case of the U.S.—played a central role in creating the crisis, making ever-larger gambles, with the implicit backing of the government, until the inevitable collapse. More alarming, they are now using their influence to prevent precisely the sorts of reforms that are needed, and fast, to pull the economy out of its nosedive. The government seems helpless, or unwilling, to act against them. . . .
[V]arious policies—lightweight regulation, cheap money, the unwritten Chinese-American economic alliance, the promotion of homeownership—had something in common. Even though some are traditionally associated with Democrats and some with Republicans, they all benefited the financial sector. Policy changes that might have forestalled the crisis but would have limited the financial sector’s profits—such as Brooksley Born’s now-famous attempts to regulate credit-default swaps at the Commodity Futures Trading Commission, in 1998—were ignored or swept aside.
The financial industry has not always enjoyed such favored treatment. But for the past 25 years or so, finance has boomed, becoming ever more powerful. The boom began with the Reagan years, and it only gained strength with the deregulatory policies of the Clinton and George W. Bush administrations. . . .
One channel of influence was, of course, the flow of individuals between Wall Street and Washington. Robert Rubin, once the co-chairman of Goldman Sachs, served in Washington as Treasury secretary under Clinton, and later became chairman of Citigroup’s executive committee. Henry Paulson, CEO of Goldman Sachs during the long boom, became Treasury secretary under George W.Bush. John Snow, Paulson’s predecessor, left to become chairman of Cerberus Capital Management, a large private-equity firm that also counts Dan Quayle among its executives. Alan Greenspan, after leaving the Federal Reserve, became a consultant to Pimco, perhaps the biggest player in international bond markets.
These personal connections were multiplied many times over at the lower levels of the past three presidential administrations, strengthening the ties between Washington and Wall Street. . . .
From this confluence of campaign finance, personal connections, and ideology there flowed, in just the past decade, a river of deregulatory policies that is, in hindsight, astonishing:
• insistence on free movement of capital across borders;
• the repeal of Depression-era regulations separating commercial and investment banking;
• a congressional ban on the regulation of credit-default swaps;
• major increases in the amount of leverage allowed to investment banks;
• a light (dare I say invisible?) hand at the Securities and Exchange Commission in its regulatory enforcement;
• an international agreement to allow banks to measure their own riskiness;
• and an intentional failure to update regulations so as to keep up with the tremendous pace of financial innovation.
. . . [T]he principal characteristics of the government’s response to the financial crisis have been delay, lack of transparency, and an unwillingness to upset the financial sector.
The response so far is perhaps best described as “policy by deal”: when a major financial institution gets into trouble, the Treasury Department and the Federal Reserve engineer a bailout over the weekend and announce on Monday that everything is fine. . . .
[I]t was never clear (and still isn’t) what combination of interests was being served, and how. . . . This was late-night, backroom dealing, pure and simple.
Throughout the crisis, the government has taken extreme care not to upset the interests of the financial institutions, or to question the basic outlines of the system that got us here. . . . Many observers suspected that the purpose [of the original Paulson plan] was to overpay for those [toxic] assets and thereby take the problem off the banks’ hands—indeed, that is the only way that buying toxic assets would have helped anything. Perhaps because there was no way to make such a blatant subsidy politically acceptable, that plan was shelved.
Instead, the money was used to recapitalize banks, buying shares in them on terms that were grossly favorable to the banks themselves. As the crisis has deepened and financial institutions have needed more help, the government has gotten more and more creative in figuring out ways to provide banks with subsidies that are too complex for the general public to understand. . . . [T]he convertible preferred shares that the Treasury will buy under the new Financial Stability Plan give the conversion option (and thus the upside) to the banks, not the government.
This latest plan—which is likely to provide cheap loans to hedge funds and others so that they can buy distressed bank assets at relatively high prices—has been heavily influenced by the financial sector, and Treasury has made no secret of that. As Neel Kashkari, a senior Treasury official . . . (and a Goldman alum) told Congress . . . [the price] makes sense for the investors and . . . for the banks.” Kashkari didn’t mention anything about what makes sense for the third group involved: the taxpayers.
Even leaving aside fairness to taxpayers, the government’s velvet-glove approach with the banks is deeply troubling, for one simple reason: it is inadequate to change the behavior of a financial sector accustomed to doing business on its own terms, at a time when that behavior must change. . . .
The challenges the United States faces are familiar territory to the people at the IMF. If you hid the name of the country and just showed them the numbers, there is no doubt what old IMF hands would say: nationalize troubled banks and break them up as necessary. . . .
At the root of the banks’ problems are the large losses they have undoubtedly taken on their securities and loan portfolios. But they don’t want to recognize the full extent of their losses, because that would likely expose them as insolvent. . . .
To break this cycle, the government must force the banks to acknowledge the scale of their problems. As the IMF understands (and as the U.S. government itself has insisted to multiple emerging-market countries in the past), the most direct way to do this is nationalization. Instead, Treasury is trying to negotiate bailouts bank by bank . . .. Under these conditions, cleaning up bank balance sheets is impossible. . . .
[A] government-managed bankruptcy procedure . . . would allow the government to wipe out bank shareholders, replace failed management, clean up the balance sheets, and then sell the banks back to the private sector. The main advantage is immediate recognition of the problem so that it can be solved before it grows worse. . . .
The second problem the U.S. faces—the power of the oligarchy—is just as important as the immediate crisis of lending. And the advice from the IMF on this front would again be simple: break the oligarchy.
Oversize institutions disproportionately influence public policy; the major banks we have today draw much of their power from being too big to fail. . . .
Ideally, big banks should be sold in medium-size pieces, divided regionally or by type of business. . . .
Anything that is too big to fail is too big to exist. . . .
The problem in the financial sector today is not that a given firm might have enough market share to influence prices; it is that one firm or a small set of interconnected firms, by failing, can bring down the economy. The Obama administration’s fiscal stimulus evokes FDR, but what we need to imitate here is Teddy Roosevelt’s trust-busting. . . .
The conventional wisdom among the elite is still that the current slump “cannot be as bad as the Great Depression.” This view is wrong. What we face now could, in fact, be worse than the Great Depression—because the world is now so much more interconnected and because the banking sector is now so big. We face a synchronized downturn in almost all countries, a weakening of confidence among individuals and firms, and major problems for government finances. If our leadership wakes up to the potential consequences, we may yet see dramatic action on the banking system and a breaking of the old elite. Let us hope it is not then too late.
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Attorney Sean Olender
"To 'fix' all these problems . . . the Obama administration [has] chosen people (or their accomplices) who stole from the public.
Finally, here are excerpts from an article by Sean Olender, a San Jose writer and attorney, from the San Francisco Chronicle:
President Obama must stop the bailouts and start the prosecutions. It's time to focus on anti-poverty programs to protect the growing unemployed from hunger and homelessness. Stealth payments to billionaire bondholders must cease immediately. . . .
Debt became America's growth industry.
The scheme collapsed because Americans' wages weren't sufficient to pay the interest on existing debts. The only way out of this is to tighten our belts and pay down debt, the opposite of what our bank-owned government is advising.
The administration and the banks keep talking about a credit crisis, but there isn't one. . . . If you want a mortgage and can afford to pay it back, you can borrow at low rates today. . . . But most Americans don't want more debt because it is a debilitating path to poverty. The average American family already pays 14 percent of annual income in interest to banks. . . .
The endlessly recycled plan to buy "troubled" assets . . . seeks for taxpayers to buy worthless assets at high prices to absorb rich investors' losses. That's it. . . . There is no goal beyond that . . . : keep rich people from taking losses. . . .
Imagine the president saying, "Debt is the lifeblood of our economy. We desperately need to get more American families deeper in debt." That's what he means, and that's what these bailouts hope to do. . . .
Imagine you bet $500,000 on a stock and it dropped to $20,000. If you owned Treasury Secretary Tim Geithner, he'd get on TV and explain that if the government didn't buy your shares for $500,000, the economy would suffer because you couldn't invest anymore. He'd say the "free market" isn't pricing the stock "right," and we have to "help" the market with taxpayer money to make sure you get the "right" price. . . .
Worsening economic figures are being used to confirm that more bailouts are needed rather than that previous ones might be failing. The logic is much like medieval blood letting: The patient died because we didn't drain enough of his blood.
The promise of more bailouts also keeps everyone from doing what's necessary. Millions of houses sit empty, open to vandalism and destruction, while millions of Americans live in cars or on the street. Our tax money is given to banks and speculators to hold houses empty. . . .
[T]he bailout did nothing to stop foreclosures from going through the roof. . . .
To "fix" all these problems . . . the Obama administration [has] chosen people (or their accomplices) who stole from the public. That's why no one has been prosecuted. Would former Treasury Secretary and Goldman Sachs chief Henry Paulson have pressured for an investigation of Goldman Sachs? Right.
As president of the Federal Reserve Bank of New York, current Treasury Secretary Geithner had a front-row seat during the run-up to the crisis and watched for years while pushing a "no regulation" policy. Why? At that time his friends were winning their bets and making a lot of money.
Why didn't Bush or Obama pick Brooksley Born (the Commodity Futures Trading Commission chair who tried to regulate credit default swaps) or Harry Markopolos (the whistle-blower in the Madoff scandal) to serve as treasury secretary or chairman of the SEC? Because Born and Markopolos are technically competent and possess integrity. Banks would tolerate neither quality in an administration official. . . .
The solution is law enforcement, not handouts. On Jan. 31, 2009, Santa Barbara police held a 53-year-old homeless man on $20,000 bail for shoplifting $7.69 worth of soup and bread. Yet Bush did not move to prosecute a single executive at any of these banks, and Obama likewise doesn't want to be "vengeful" by investigating the crimes of investment bankers.
If the government feels lenient, can't it let alone families camping in a vacant lot in Sacramento, or homeless people stealing bread? . . .
And lest you think this is some kind of a new phenomenon, listen to Pete Seeger's "Banks of Marble" musical explanation of the last time we were robbed big time:
And remember Paul Krugman's warning, quoted above, that if we don't get out from under Wall Street's influence we're going to be back in the dumpster again: "Will we find the will to pursue serious financial reform? If not, the current crisis won’t be a one-time event; it will be the shape of things to come."
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Nicholas Johnson
Finally, I'll conclude with links to a number of the blog entries I've written over the past eight months -- most of which include today's theme.
Related Blog Entries on Global Economy and Bailouts
* Why do I put this blog ID at the top of the entry, when you know full well what blog you're reading? Because there are a number of Internet sites that, for whatever reason, simply take the blog entries of others and reproduce them as their own without crediting the source. I don't mind the flattering attention, but would appreciate acknowledgment as the source -- even if I have to embed it myself. -- Nicholas Johnson
Five months ago I suggested that we common people should trust our instincts when we have the sense that we have been the victims of the largest robbery of the largest number of people in the history of the world. (At that time it was in the context of the GM bailout. Nicholas Johnson, "Trust Your Instincts, Auto Bailout's Terrible Idea," November 14, 2008.)
A couple weeks ago Nicholas Kristof provided some backup for my trust in the people's common sense. Nicholas D. Kristof, "Learning How to Think,"New York Times, March 26, 2009 -- with thanks to my son, Sherman, for bringing it to my attention.
What has the Obama Administration, or the auto industry for that matter, gained by waiting five months -- and putting billions of additional debt on my great granddaughter's "credit card" -- before coming to the same conclusion?
I continued:
On balance, I'm a proponent of a meritocracy, expertise, graduate and post-graduate education, and looking to scientists and experts rather than ideologues for solutions to public policy challenges.
But it's also reassuring when ordinary folks like myself, relying on instincts, intuition and such limited information and understanding as we possess, can come to the same conclusions ultimately adopted by the experts.
You've probably heard that, with all of their high-priced financial experts, roughly 80% of specialized mutual funds do worse than the market averages (which you can buy in "index" mutual funds -- and at lower administrative costs). Pick stocks at random, throw darts, or ask your cat to scratch what she thinks are the winners on the stock market page and you'll do better than most "experts."
It makes sense -- especially given what we've just watched their stupidity and greed do to the entire global economy.
But now Nicholas Kristof informs us we should not be surprised at that result; because our instincts are almost always as good as, if not better than, the self-proclaimed "experts" in every field.
We should continue to avoid communicating the aura of arrogance and certainty that seems to exude from some experts, but neither should we feel the need to apologize, or be shy about our own judgments.
The entire column is well worth a read. Meanwhile, here are some excerpts. He writes:
Ever wonder how financial experts could lead the world over the economic cliff?
One explanation is that so-called experts turn out to be, in many situations, a stunningly poor source of expertise. There’s evidence that what matters in making a sound forecast or decision isn’t so much knowledge or experience as good judgment — or, to be more precise, the way a person’s mind works. . . .
The expert on experts is Philip Tetlock, a professor at the University of California, Berkeley. His 2005 book, “Expert Political Judgment,” is based on two decades of tracking some 82,000 predictions by 284 experts. The experts’ forecasts were tracked both on the subjects of their specialties and on subjects that they knew little about.
The result? The predictions of experts were, on average, only a tiny bit better than random guesses — the equivalent of a chimpanzee throwing darts at a board.
“It made virtually no difference whether participants had doctorates, whether they were economists, political scientists, journalists or historians, whether they had policy experience or access to classified information, or whether they had logged many or few years of experience,” Mr. Tetlock wrote.
Indeed, the only consistent predictor was fame — and it was an inverse relationship. The more famous experts did worse than unknown ones. That had to do with a fault in the media. Talent bookers for television shows and reporters tended to call up experts who provided strong, coherent points of view, who saw things in blacks and whites. People who shouted — like, yes, Jim Cramer!
Mr. Tetlock called experts such as these the “hedgehogs,” after a famous distinction by the late Sir Isaiah Berlin (my favorite philosopher) between hedgehogs and foxes. Hedgehogs tend to have a focused worldview, an ideological leaning, strong convictions; foxes are more cautious, more centrist, more likely to adjust their views, more pragmatic, more prone to self-doubt, more inclined to see complexity and nuance. And it turns out that while foxes don’t give great sound-bites, they are far more likely to get things right.
This was the distinction that mattered most among the forecasters, not whether they had expertise. Over all, the foxes did significantly better, both in areas they knew well and in areas they didn’t.
Other studies have confirmed the general sense that expertise is overrated. In one experiment, clinical psychologists did no better than their secretaries in their diagnoses. In another, a white rat in a maze repeatedly beat groups of Yale undergraduates in understanding the optimal way to get food dropped in the maze. The students over-analyzed and saw patterns that didn’t exist, so they were beaten by the rodent. . . .
So be a fox. Don't be shy. Say it loud; say it proud: "I've been cheated out of a whole lot of money by a bunch of thieves in suits, who have caused individuals all around the world to lose trillions of dollars of wealth, thieves who are walking away with past years' of excessive compensation, bonuses, and stock profits; and the politicians whose campaigns they've been financing are protecting them, giving them trillions of dollars of my money, and there's scarcely a prosecution in sight!"
That's right. Don't you feel better now? Next try "I'm mad as hell and I'm not going to take it anymore!"
Then start turning up the heat on Congress.
Meanwhile, trust your instincts about all this. Apparently you and I really do know as much as the "experts." _______________
* Why do I put this blog ID at the top of the entry, when you know full well what blog you're reading? Because there are a number of Internet sites that, for whatever reason, simply take the blog entries of others and reproduce them as their own without crediting the source. I don't mind the flattering attention, but would appreciate acknowledgment as the source -- even if I have to embed it myself. -- Nicholas Johnson
Financial Crises for Dummies: An Open Letter to Secretary Geithner and Congress (brought to you by FromDC2Iowa.blogspot.com*)
[This parable showed up in my email this morning. The author is unknown. (Given the Berlin setting it may have originated in Germany.) In any event, it's as good an explanation of how we got into this mess as I've seen.
It's also a warning to Washington that "we know what you're up to."
My solution?
1. Kill the zombie banks before they strike again; shareholders take a bath, FDIC protects depositors.
2. Let investors, not taxpayers, evaluate the value of, and buy, "toxic assets" (what an oxymoron that is!) with no government guarantees.
3. Temporarily nationalize any banks that believe they need taxpayer funds, buying their stock at current market value.
4. Break up those "too big to fail" (any bank "too big to fail" is simply too big, and too inclined to take risks likely to fail).
5. Fire the top executives (after getting back from them as much of their ill-gotten gains as possible), and then prosecute and imprison those guilty of violating any laws.
6. Distribute the assets to community banks.
7. Re-enact Glass-Steagall. (This is the 1933 Act of Congress that, among other things, prohibited bank holding companies from owning other financial companies. Its repeal, by the Gramm-Leach-Bliley Act of 1999 was a major cause of the current economic collapse.)
Why do these things? This parable explains why:]
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Heidi is the proprietor of a bar in Berlin. In order to increase sales, she decides to allow her loyal customers - most of whom are unemployed alcoholics - to drink now but pay later. She keeps track of the drinks consumed on a ledger (thereby granting the customers loans).
Word gets around and as a result increasing numbers of customers flood into Heidi's bar.
Taking advantage of her customers' freedom from immediate payment constraints, Heidi increases her prices for wine and beer, the most-consumed beverages. Her sales volume increases massively.
A young and dynamic customer service consultant at the local bank recognizes these customer debts as valuable future assets and increases Heidi's borrowing limit.
He sees no reason for undue concern since he has the debts of the alcoholics as collateral.
At the bank's corporate headquarters, expert bankers transform these customer assets into DRINKBONDS, ALKBONDS and PUKEBONDS. These securities are then traded on markets worldwide. No one really understands what these abbreviations mean and how the securities are guaranteed. Nevertheless, as their prices continuously climb, the securities become top-selling items.
One day, although the prices are still climbing, a risk manager (subsequently of course fired due his negativity) of the bank decides that slowly the time has come to demand payment of the debts incurred by the drinkers at Heidi's bar.
However they cannot pay back the debts.
Heidi cannot fulfil her loan obligations and claims bankruptcy.
DRINKBOND and ALKBOND drop in price by 95%. PUKEBOND performs better, stabilizing in price after dropping by 80%.
The suppliers of Heidi's bar, having granted her generous payment due dates and having invested in the securities are faced with a new situation. Her wine supplier claims bankruptcy, her beer supplier is taken over by a competitor.
The bank is saved by the Government following dramatic round-the-clock consultations by leaders from the governing political parties.
The funds required for this purpose are obtained by a tax levied on the non-drinkers.
Source: David Horsey, Seattle Post-Intelligencer, March 27, 2008, DavidHorsey.com.
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Related Blog Entries on Global Economy and Bailouts
Nicholas Johnson, "Financial Crises for Dummies," February 17, 2009 _______________
* Why do I put this blog ID at the top of the entry, when you know full well what blog you're reading? Because there are a number of Internet sites that, for whatever reason, simply take the blog entries of others and reproduce them as their own without crediting the source. I don't mind the flattering attention, but would appreciate acknowledgment as the source -- even if I have to embed it myself. -- Nicholas Johnson
Understandable -- and Productive -- "Public Anger" (brought to you by FromDC2Iowa.blogspot.com*)
After eight years of hunting, America's top intelligence and law enforcement agencies have finally found the most deadly terrorists threatening our nation's national security.
Who are they?
Bankers.
I'm not kidding. Read on.
There's been an almost "boys will be boys" reaction in Washington to the destruction of the American economy by those very generous campaign contributors who call themselves "masters of the universe." Few have been removed from power or had their pay cut, none (to my knowledge) has been required to pay back any of their past obscenely large and ill-gotten gains, and a statistically insignificant number have even apologized for the harm they've caused -- let alone been prosecuted and sent to prison.
There are undoubtedly "a few good apples" somewhere in that rotten barrel, but they are few and far between.
For the most part, those whose incompetence, irresponsibility, immorality, criminality and greed have created widespread hardship on the American people (and much of the rest of the world) have been very slow to "get it." "Why do they hate us?" they seem to be asking from the comforts of their $1 million redecorated offices, $50 million private jets, and posh resort retreats.
Well, now that "public anger" has become a political force of some consequence at least some of our elected officials (to whom these guys must come for more trillions of our taxpayer dollars) are trying to explain it to some of their most generous contributors.
"'Alleviating that public anger, not with mumbo jumbo but with reality, is essential if we’re going to have the support of the country,' House Financial Services Committee Chairman Barney Frank said today at a hearing in Washington," speaking to eight CEOs of some of the nation's largest banks. Alison Vekshin, "Congress Tells Bank Chiefs to Lend, Ease Public Anger," Bloomberg, February 11, 2009.
At long last we may now have even more basis for our "public anger" and a sense of accomplishment for expressing it.
No more "boys will be boys."
Dennis C. Blair, our new intelligence czar (Director of National Intelligence), speaking for the federal government's "intelligence community" has just told the Senate Intelligence Committee that the wreckage caused by our nation's irresponsible, selfish CEOs has now "outpaced terrorism as the most urgent threat facing the United States" (excerpts from the Times' February 13 story below).
Apparently the FBI agrees. "With thousands of [corporate and "an even bigger mountain of" mortgage] fraud investigations under way [including "some of the biggest names in corporate finance"], the FBI is considering shifting agents away from counterterrorism work to help sort through the wreckage of the financial meltdown. . . ." (more excerpts from the Bloomberg report below).
Perhaps our elected officials -- who quickly spring to action with trillions for the nation's bankers, but tell us it will be "a few weeks" before they will be able to focus on the human carnage those bankers have caused among the officials' constituents -- will be willing to give a little more attention to prosecuting these terrorists and criminals among us, normally very handy and popular targets for politicians, now that they have been identified as such by the intelligence and crime fighting agencies of our government.
The new director of national intelligence told Congress on Thursday that global economic turmoil and the instability it could ignite had outpaced terrorism as the most urgent threat facing the United States.
The assessment underscored concern inside America’s intelligence agencies not only about the fallout from the economic crisis around the globe, but also about long-term harm to America’s reputation. The crisis that began in American markets has already “increased questioning of U.S. stewardship of the global economy,” the intelligence chief, Dennis C. Blair, said in prepared testimony.
Mr. Blair’s comments were particularly striking because they were delivered as part of a threat assessment to Congress that has customarily focused on issues like terrorism and nuclear proliferation. Mr. Blair singled out the economic downturn as “the primary near-term security concern” for the country, and he warned that if it continued to spread and deepen, it would contribute to unrest and imperil some governments.
“The longer it takes for the recovery to begin, the greater the likelihood of serious damage to U.S. strategic interests,” he said. . . .
Mr. Blair delivered his assessment to the Senate Intelligence Committee, in what was the new administration’s first public recitation of the national security challenges facing the United States. . . .
Mr. Blair’s focus on the world economy was a surprise to some senators. . . ."
With thousands of fraud investigations under way, the FBI is considering shifting agents away from counterterrorism work to help sort through the wreckage of the financial meltdown. . . .
[FBI Deputy Director John] Pistole told Congress his investigators have 530 active corporate fraud investigations, and 38 of them involve some of the biggest names in corporate finance — cases directly related to the current crisis.
In addition, FBI investigators are tackling an even bigger mountain of mortgage fraud cases in which hundreds of millions of dollars may have been swindled . . . more than double the number of such cases just two years ago . . . industry professionals generating fraud schemes that could total as much as hundreds of millions of dollars . . . 'lawyers, brokers or real estate professionals . . . systematically trying to defraud the system,' Pistole said . . . [including] some instances of organized crime getting involved in mortgage fraud . . ..
"If You Can't Trust Your Banker . . ."
[Credit: "Shady Deal at Sunny Acres," Maverick, 2nd Season, 1958. The popular early television series, Maverick, "starring James Garner and Jack Kelly, remains the most famous and widely discussed episode of the Western comedy television series Maverick. Written by Roy Huggins and Douglas Heyes and directed by Leslie H. Martinson, this 1958 second season episode depicts gambler Bret Maverick (James Garner) being swindled by a crooked banker (John Dehner) after depositing the proceeds from a late-night poker game, then recruiting his brother Bart Maverick (Jack Kelly) to mount an elaborate sting operation to recover the money." It's also the source of two oft-quoted lines: "If you can't trust your banker, whom can you trust?" and "I'm working on it." See, "Shady Deal at Sunny Acres," wikipedia.org.]
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Related Blog Entries on Global Economy and Bailouts
Nicholas Johnson, "Terrorist Bankers," February 13, 2009 _______________
* Why do I put this blog ID at the top of the entry, when you know full well what blog you're reading? Because there are a number of Internet sites that, for whatever reason, simply take the blog entries of others and reproduce them as their own without crediting the source. I don't mind the flattering attention, but would appreciate acknowledgment as the source -- even if I have to embed it myself. -- Nicholas Johnson
Lauren Sieben, "Regent: No 2nd Thoughts," The Daily Iowan, September 26, 2008, quoted and discussed in Nicholas Johnson, "Hero Hogan; Mike Hogan Is Alive and Very, Very Well," October 1, 2008. [The third comment to this blog entry, below, comes from a "UI Emeritus" and reports that this year, "Before the board in Connecticut even discussed his evaluation (which once more was reported to be exceptional, outstanding, extraordinary), he [President Hogan] asked them not to even contemplate a raise or bonus, in light of the economy and the struggles everyone is facing."]
