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Fmr. Morgan Stanley CEO “Banker Pay Is Too High”

4:15 pm in Uncategorized by DSWright

I am noticing a trend here.

Many former Wall Street leaders are willing to advocate for reforms or even decry old norms – once they leave. The most breathtaking still has to be Sandy Weill’s epic reversal on Glass Steagall repeal. Honestly, that is just amazing.

But let’s look at former Morgan Stanley CEO John Mack’s comments:

Let’s be totally honest. A lot of people who have done really well have not handled that wealth very well. That gets to part of the issue with Wall Street. I think it’s really changing.

I think the kind of money that’s made and the way it was flaunted — look it’s wrong. [...] The money was really unbelievably generous, to say the right word…At the end of the day the one area that has to be squeezed [to give a return to shareholders] is the compensation number.

Whether or not Wall Street is “really changing” is debatable. What is not debatable is that speculators are wildly compensated when compared to other, more productive, jobs.

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(Source: Bloomberg News)

Traders are more compensated than brain surgeons and 4 star generals. Does that make sense to you?

Though it may be a little late in coming, let’s applaud the fmr. Morgan Stanley CEO for having the integrity to speak out – even if in retirement.

Occupy Retrospection: What Have We Learned?

3:19 pm in Uncategorized by DSWright

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“Those who profess to favor freedom and yet depreciate agitation want crops without plowing up the ground, they want rain without thunder and lightning. They want the ocean without the awful roar of its many waters. If there is no struggle, there is no progress. Power concedes nothing without a demand. It never did and it never will.” – Frederick Douglass

It has been over a year since Americans took to the streets to voice opposition to the established order – in all that vague glory. Many were disgusted by Wall Street’s numerous crimes and a lack of accountability from a corrupt government, others with a poor job market, and some did not even know why they were protesting but for a deep intuitive sense that something was wrong.

So after a year what have we all learned? Five lessons from the Occupy Wall Street movement (feel free to add your own).

Lesson #1 America Is Extremely Unequal

America has always had rich and poor, fat cats and starving dogs, but by 2012 the gap between the rich and everyone else had yawned to levels unseen in generations.

From Forbes:

The average annual income of the top 1 percent of the population is $717,000, compared to the average income of the rest of the population, which is around $51,000. The real disparity between the classes isn’t in income, however, but in net value: The 1 percent are worth about $8.4 million, or 70 times the worth of the lower classes.

The 1 percent are executives, doctors, lawyers and politicians, among other things. Within this group of people is an even smaller and wealthier subset of people, 1 percent of the top, or .01 percent of the entire nation. Those people have incomes of over $27 million, or roughly 540 times the national average income. Altogether, the top 1 percent control 43 percent of the wealth in the nation; the next 4 percent control an additional 29 percent.

It’s historically common for a powerful minority to control a majority of finances, but Americans haven’t seen a disparity this wide since before the Great Depression — and it keeps growing.

So the Top 5% control roughly 72% of the nation’s wealth.

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To dice it down even further, the top 400 richest Americans have more wealth than the bottom half – 155 million – Americans combined.

Dice it further? Fine. Six members of one family – the Waltons – have more wealth than the bottom 30% of Americans.

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(Occupy Wall Street Protester)

This is extreme inequality by any measure and only getting worse as – according to the Federal Reserve – the only class of Americans to increase their wealth post-crash has been the top 1%.

Lesson #2 Property Rights, For Some

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Re Vice President Biden: Is America In A Depression?

2:50 pm in Uncategorized by DSWright

Yesterday Vice President Biden made an important statement regarding the American economy, from ABC News:

Vice President Joe Biden today offered a blunt assessment of the plight of the unemployed, telling supporters at a campaign rally in Iowa that the economy remains “a depression for millions and millions of Americans.”

“The unemployed are in real trouble,” Biden said in a speech on the banks of the Mississippi River in Dubuque. “My grandpa used to say, from Scranton, he’d say, ‘Joe, when the guy in Dunmore…is out of work, it’s an economic slowdown. When your brother-in-law is out of work, it’s a recession. When you’re out of work, it’s a depression.’”

“It’s a depression for millions and millions of Americans,” he said.

Is Vice President Biden right and how many millions? Let’s take a look.

The Vice President specifically noted the unemployed as being in a Depression.

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The number of persons unemployed 15 weeks or longer, as a percent of the civilian labor force or U-1 unemployment rate has stayed above 8% for the last few years. But it is important to note that the ubiquitous U-1 measure is only a part of the overall employment story.

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Two Americas: Corporate Profits All Time High, Wages All Time Low

8:48 am in Uncategorized by DSWright

We already know that America has the highest level of inequality in the developed world and that the recent crisis wiped out 40% of wealth for most Americans, hurting everyone but the rich. But here are some new records in inequality within the system itself, from Business Insider:

1) Corporate profit margins just hit an all-time high. Companies are making more per dollar of sales than they ever have before. (And some people are still saying that companies are suffering from “too much regulation” and “too many taxes.” Maybe little companies are, but big ones certainly aren’t).

 

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2) Wages as a percent of the economy are at an all-time low. This is both cause and effect. One reason companies are so profitable is that they’re paying employees less than they ever have as a share of GDP. And that, in turn, is one reason the economy is so weak: Those “wages” are other companies’ revenue.

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Generation X Lost Most From Wall Street’s Crisis

3:07 pm in Uncategorized by DSWright

The recent Federal Reserve Report On Wealth has generated considerable controversy and discussion throughout America and beyond. But one aspect that is not getting enough attention is the generational differences highlighted in the report.

Generation X – people roughly born from the early 60s to early 80s – is by far the biggest loser in terms of wealth. The crisis created by Wall Street shredded their wealth and the bank bailouts only benefited the rich. Gen Xers were in the position of having some modest wealth – mostly in their homes – but not enough to buy political influence.

So while it is arguable to say Gen Xers are the biggest losers generally, given the many others suffering who did not have much wealth in the first place (millennials for instance) it is true to say that as an age group they lost the most wealth proportionally.

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Gen X had a 54% Drop! Imagine losing over half your wealth in 3 years, many don’t have to imagine they lived it. Seniors lost the least, which is not surprising given their reliance on government services and that many liquidated their homes for retirement. Younger people did not have much wealth accumulated in order to lose it. The people that really got screwed were middle aged, middle income Americans.

Though it is important to remember everyone but the 1% lost wealth in the crisis – the 1% were able to engineer themselves a bailout from the government they control so their wealth actually increased in those 3 years.

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As the late great George Carlin said “They call it the American Dream, because you have to be asleep to believe it.” Occupy.

(h/t Zero Hedge)

1% Success Stories: Man Makes $10 Million For 9 Months Work

3:09 pm in Uncategorized by DSWright

While middle and working class Americans have seen a wealth crash the last few years, a fortunate few have made out like bandits (which is what generally happens when you act like a bandit). Some were so rich they were not even counted in the Federal Reserve’s survey:

That exclusion means that the new Federal Reserve numbers for 2010 understate — by $1.37 trillion, the total wealth of that year’s Forbes 400 — America’s actual level of wealth concentration.

Woops.

One (kind of racist) academic, Charles Murray, even coined a term for these successful people – The Cognitive Elite (dun Dun DUN!). You know, the people who are richer than you because they are smarter, more industrious, and even have better values.

Well, let’s look at one recent 1% success story that comes from that “cognitive elite.” The story of a man who is a member of Murray’s elite corporate managerial class that deserves to rule us because they are just so good.

From Yahoo Finance:

PLANO, Texas, June 18, 2012 – J. C. Penney Company, Inc. (“jcpenney”) (JCP) today announced that Michael Francis will be leaving the Company, effective today. Chief Executive Officer Ron Johnson will assume direct responsibility and oversight of the company’s marketing and merchandising functions.

Johnson said, “We thank Michael for his hard work at jcpenney and wish him the best in his future endeavors.”

Hard work eh? He must be a long term employee who worked his way up from the mail room and [insert trite bullshit here] and he really strove to make JC Penney’s the company it is today and…

Not so much.

From Zero Hedge:

Because despite leaving just 9 months after his hiring, Francis is entitled to collect a whopping $9 million in pro-rated signing bonus (alongside $100,000/month in salary): all in all – a tidy package of $10 million for shooting the breeze while observing a sinking retail ship. Not bad for a company whose stock has just plunged to September 2010 levels.

For some perspective, from The Big Picture which includes more charts:

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Michael Francis has been have launched into the 1% from just that 9 months of “work” (if he wasn’t there already). 9 months of work, $10 million, and JC Penney is at historic lows. Talk about failing up!

So remember when someone tells you those rich people are so “superior” that they are not just luckier than you but that they have “better cognitive abilities” – it is like most of the things you are told about present day America, a lie. They aren’t smarter, they aren’t more virtuous, the 1% are simply raiding the system. A system they have mangled to serve themselves at your expense.

While record numbers of children live in the street, while veterans have record unemployment, while the middle class disappears – a public company, owned by many of your pensions, is paying this do nothing douchebag $10 million.

That’s your America and that’s just how it will stay unless you change it.

Don’t be a sucker. Occupy Wall Street.

RIP Middle Class: Americans’ Wealth Plummeted 40% from 2007 to 2010

4:09 pm in Uncategorized by DSWright

Wall Street’s fraud based crash has really taken its toll. From Washington Post:

The recent recession wiped out nearly two decades of Americans’ wealth, according to government data released Monday, with ­middle-class families bearing the brunt of the decline.

The Federal Reserve said the median net worth of families plunged by 39 percent in just three years, from $126,400 in 2007 to $77,300 in 2010. That puts Americans roughly on par with where they were in 1992.

But don’t call it class warfare.

The recession caused the greatest upheaval among the middle class. Only roughly half of middle­-class Americans remained on the same economic rung during the downturn, the Fed found. Their median net worth — the value of assets such as homes, automobiles and stocks minus any debt — suffered the biggest drops. By contrast, the wealthiest families’ median net worth rose slightly.

The drops are truly staggering both for income and net worth:

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Record Military Suicides: The Price of A Daydreaming Empire

2:06 pm in Uncategorized by DSWright

Baseball was once America’s favorite cultural pastime. Today, in politics at least, nothing is more fashionable than praising and celebrating “the troops.” I Support the Troops serves as continual shibboleth that the ever scrambling political class recites and riffs on in the pathetic attempt to convince the public that they take public service seriously. Those in power, in what could only be described as a tragic paradox, are constantly callously searching for ways to be authentic, or at least to appear to be authentic. This has lead to ever increasing heights of hair-pulling, clothes-tearing, and histrionics when praising the troops and their sacrifices. As the horrors of war become increasingly difficult to justify “the troops” become ever more celestial and divine as if praise is a substitute for care and passionate veneration a substitute for actual living.

President Obama even went so far as to make troops the role model for Americans in his State Of The Union, though he was shrilly attacked for it by the Right, Obama was merely taking the game to its next logical step.

But do Americans really Support The Troops? Do they really even care? No, not really.

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I am sorry if that is an upsetting message, but it is none the less true. A truth not gleaned from public statements or opinion polls or sound bites on the news but from actions and the easily understood consequences of those actions.

Politifact, somewhat discredited by recent rulings, recently decided to “fact check” a public statement Congressman Rush Holt made on military suicides:

U.S. Rep. Rush Holt (D-12th) cites a grim statistic relating to military service: 18 veterans commit suicide daily across the country.

That would mean 126 veterans a week or more than 6,000 a year — and Holt isn’t wrong, a PolitiFact New Jersey investigation found.

A number of organizations — including the U.S. Department of Veterans Affairs — say that statistic is the best estimate available.

No, it is not wrong. Nor is it just veterans, as according the New York Times Active-Duty Soldiers are committing suicide at record levels:

Suicides among active-duty soldiers hit another record high in 2011, Army officials said on Thursday, although there was a slight decrease if nonmobilized Reserve and National Guard troops were included in the calculation…

Active-duty Army suicide rates have been higher than civilian rates since 2008, when there were nearly 20 suicides per 100,000 in the Army, compared with close to 18 suicides per 100,000 in a civilian population that was adjusted to be comparable to Army demographics. The Army projects that final 2011 numbers will be more than 24 suicides among active-duty soldiers per 100,000, another record high.

It is also worth noting that given the stigma of suicide many service-members, their families, commanders and others often try to make suicides seem like accidental deaths – the real numbers may be even higher.

Is it so hard to understand why men and women involved in some of the most horrifying, nakedly imperialistic, and wasteful wars might want to leave this world sooner rather than later?

But wait, America has a way out, a loophole in the social contract. We all get to praise the troops and their service which means what they were ordered to do in our name, under our authority, and with our money is irrelevant. It is a rather nice arrangement if you do not want to deal with the issue. Unfortunately “the troops” lived it and can not say a few benign words and walk out into the sun for another day of self-glorification.

What have we ordered “the troops” to do, and what were the consequences?

In the Iraq War alone their were over 100,000 civilian deaths according to one study, and according to leaked Pentagon records:

According to official figures, 3,884 US soldiers died between 2004 and 2009, an additional 224 soldiers from allied nations, well over 8,000 members of the Iraqi security forces (reasonably reliable figures are missing for 2004) and 92,003 Iraqi civilians whose deaths are documented by at least one source. Together, this makes more than 104,111 deaths, a figure that approximates the number of victims reported dead in these documents, namely 109,032

Getting killed, maimed or killing and maiming tens of thousands of innocent people by mistake or purposely – that must do wonders for mental health.

Afghanistan, now America’s longest war, has seen 2,800 Americans killed, 27,000 Americans maimed, and over 30,000 civilian deaths.

While we aimlessly deploy “the troops” to far away lands to perform grizzly tasks to maintain our ruthless empire – where is the American people’s focus? What, in our attention economy, have we deployed our own resources towards? Ourselves of course!

While other (usually poorer) Americans fight and die for “freedom” other (usually richer) Americans are busy pursuing fantasy. Movies, TV, Video Games, Novels, Social Media Aps, Role-Playing games, or just the all consuming narcissism of moi … as one of the co-creators of the internet Robert Cailliau noted, if these trends continue the future is likely to be like the Matrix but worse. A people daydreaming their lives away while the cruel realities necessary for their position and place are borne but others – others whose only reward is posthumous praise.

 

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Is this a system worth killing so many innocent people for? Is this a system worth dying for?

There is no simple answer to those questions or to other questions I have raised, but there is one thing that seems crystal clear regarding the tragic state of our military service members – if you really want to Support the Troops Bring Them Home.

Donald Rumsfeld Uhhh Tim Geithner May Not Serve In Obama 2nd Term

12:24 pm in Uncategorized by DSWright

 

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(Timothy Geithner by J Wohland)

 

Sometimes Presidents make horrible cabinet choices.

Bad cabinet choices can wound a good administration or damage one already spiraling down. It is easy to see how it could happen – someone comes highly recommended, with an impressive resume and lots of other credentials. They do well in the interview process and have a good rapport with the President-elect and his trusted aides or maybe he or she is a trusted aid. Given that dynamic, it’s not hard to see why George W. Bush chose Donald Rumsfeld and its not that hard to see why Barack Obama chose Tim Geithner. But in both instances Presidents made tragic errors.

Though I’m sure Bush was warned by people about Rumsfeld, it is well known Obama had a warning almost immediately from Senator Byron Dorgan that Summers, Geithner and crew were the wrong choices for his economic team, from New York Magazine:

There’s a poignant moment of sorts in December 2008 when the North Dakota senator Byron Dorgan implores the president-elect not to go with his economic team. “I don’t understand how you could do this,” he tells him. “You’ve picked the wrong people!” As indeed Obama did, under the tutelage of Robert Rubin, who also tried to finagle a White House guru role for himself, not unlike the perch from which he helped wreak havoc at Citigroup during its subprime orgy

Indeed, possibly the worst mistake of the Obama presidency. Larry Summers and his former Deputy Tim Geithner were the embodiment of the economic establishment that lead to the 2008 financial crisis. In fact, Summers and Geithner lead the campaign to oust Brooksley Born from the Commodity Futures Trading Commission – why? Because Mrs. Born wanted to regulate derivatives thinking they were dangerous and would lead to a financial meltdown. Summers, Geithner, Greenspan and Rubin destroyed Born then supported legislation that further deregulated derivatives. Woops.

Presidents also don’t like to admit they made a horrible mistake (who does really?) and so the most tacit admission is found when they dump people in the second term. This is what happened with Rumsfeld and why Tim Geithner is now, surely with White House consent, hinting he won’t be back:

Treasury Secretary Timothy F. Geithner said he doesn’t expect President Barack Obama to ask him to stay in office if he’s re-elected, and dismissed Wall Street’s concerns about financial regulations.

“He’s not going to ask me to stay on, I’m pretty confident,” Geithner said in an interview with Bloomberg Television today. “I’m confident he’ll be president. But I’m also confident he’s going to have the privilege of having another secretary of the Treasury.”

I’m confident if Obama isn’t re-elected Geithner will be one of the reasons why.

There are many good reasons to dump Tim Geithner like him being a blatant Wall Street puppet, not paying his taxes and being in charge of the IRS, having his fingerprints all over the Bankster give away that has people in the streets…but an even more compelling reason for Geithner to go is this -

 

What if Elizabeth Warren Becomes a Senator?

 

No one did more in the Obama Administration to undermine Elizabeth Warren than Tim Geithner.

From HuffPo:

Treasury Secretary Timothy Geithner has expressed opposition to the possible nomination of Elizabeth Warren to head the Consumer Financial Protection Bureau, according to a source with knowledge of Geithner’s views.

The financial reform bill passed by the Senate on Thursday mandates the creation of a new federal entity charged with protecting consumers from predatory lenders.

But if Geithner has his way, the most prominent advocate for creating the agency may not be picked to lead it.

Simon Johnson:

And having Ms. Warren on the scene — providing an alternative, pro-consumer perspective — may not be to his liking.

President Obama missed his best opportunity to reform the financial system when advisers — including Mr. Geithner – recommended in March 2009 that he defer to top bankers

But forget the backroom, the contention became clear as day during the Financial Crisis Inquiry Commission when Warren grilled Geithner on his role in the bailouts and why AIG received 100 cents on the dollar and why banks are now MORE concentrated not less.

 

Needless to say relations would be much better between the White House and Massachusetts’ newest Senator if Tim Geithner was not the Treasury Secretary.

The tragedy of time or at least humans existence within it is the inability to go back and fix mistakes. Summers, Geithner and crew were bad choices that not only secured the power of Wall Street to keep putting the country at risk but deeply damaged the public’s trust in the Obama Administration and government generally.

Kicking Geithner to the curb after re-election will not undo what has been unfortunately done, but it will be a good start. What needs to happen for America to heal is not just a repudiation of certain individuals like Tim Geithner and Larry Summers but a repudiation of the philosophy they brought to government – that a Wall Street Elite should ruthlessly operate America for their own interests only stopping to confer with society through its representatives in DC with a check and a message “We own you.”

ON SECOND THOUGHT: Fed Chair Bernanke Now OPPOSES Fraudclosure

4:39 pm in Uncategorized by DSWright

Federal Reserve Chairman Ben Bernanke – aka the man who said everything was fine and will live in infamy as a Wall Street puppet who funneled cash to the 1% and their wives (facts only know due to lawsuits by the media) – has now reversed his position on foreclosures as the solution to America’s housing crisis. Yes, you read that correctly, it only took 5 years of total miserable failure for him to realize something obvious to anyone not hoping to work for Wall Street after their “public service

From HuffPo:

More than four years into the housing crisis, and after millions of Americans have lost their homes, Federal Reserve Chairman Ben Bernanke is finally taking a stand.

Bernanke sent a Federal Reserve paper to the leaders of the House of Representatives’ Committee on Financial Services arguing that relying heavily on foreclosures to deal with mortgage borrowers that can’t meet their obligations is “costly and inefficient” for the housing market because they can lead to deteriorating homes and weigh on the property values in the surrounding community.

… he just realized that? Seriously?

Instead, the paper encourages lenders to “aggressively” pursue loan modifications and for servicers to be given more incentives to seek alternatives to foreclosure.

Wow. Does meat puppet Bernanke think families aren’t “aggressively” trying to not get thrown out on the street and lose the most valuable asset most working and middle class people will ever have? Seriously?


Bernanke’s Fun Scenario


“Hey honey we are about to lose our home and a better future for our children as we try and live out of a motel until the credit cards run out”

“Wait dear, have you considered trying to get a loan modification so we can stay in our home and avoid poverty?”

“Yes, the bank told me no.”

“Oh dear…did you ask them to aggressively try?

“Ah shucks honey. You’re right! I forgot to ask them to be aggressive! That will make all the difference in the world!”

“Everything is going to be OK. Oh America is a dreammmmmmmmm”

Somehow I don’t think it’s going to work.

Foreclosures “can result in ‘deadweight losses,’ or costs that do not benefit anyone, including the neglect and deterioration of properties that often sit vacant for months (or even years) and the associated negative effects on neighborhoods,” the paper said. “These deadweight losses compound the losses that households and creditors already bear and can result in further downward pressure on house prices.

Anyone? Try again.

There’s a reason fraudclosure is occurring and why the banks want a 50 state settlement and correspondingly why the Attorney Generals’ of New York and California dumped the scheme.

 

The Banksters oversold the paper.

 

Yes, you also read that correctly. Wall Street sold mortgages more than once – also called fraud. This is why they won’t produce authentic documentation, they shredded it to avoid fraud charges.

So not only are people being foreclosed on without documentation, if any of that documentation still exists it will show the mortgage has been collateralized multiple times and then sold multiple times. Because why sell a financial security once when you can sell it twice for twice the fee? Or even more than twice.

And who is helping coverup this crime of the century by flooding the market with cash and buying every crap mortgage he can? Federal Reserve Chair Ben Bernanke.

Thanks but no thanks Bernanke. Stuff your advice. Time to go to court and find out what’s really going on.