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Just looks like turkey to you. (source: ibeatyou.com)
As legal action begins against the financial traders who acted to defraud the public in their maniacally profit-driven activities, finally the line is being cleared between a need to make profits and the role of ethical behavior in doing so.
For the past decade, the financial community slipped into a justification of any action, even criminal, as doing its job of working on the bottom line. That line was part of a criminal misbehavior, that defrauded the public routinely.
An economic collapse resulted throughout the world. Sadly, until the extent of the damage done became evident, our financial community passed off its criminal conduct as merely business friendly.
There has been a growing ethos in business activity that insists the public is getting in its way – creating a lack of confidence – by standards that establish safe conditions and employee concerns as worthy of anything but contempt. This very behavior has proved itself as drastically, and fatally, damaging to business as it eliminates the consumer from the consumer economy.
An epitome of the bottom line operation was the Madoff investment firm, that defrauded a large group of deluded investors. As long as the economy was sound, and investors looking for high returns kept popping up, it was feasible. The first undertow of fading profitability for the market took it down, like any pyramid that had to have continuing new investment to pay back those already taken in, and the fraud was soon evident. . . .
Swiss bank UBS is being sued for over $2bn (£1.3bn) amid claims it concealed the Ponzi scheme of fraudster Bernard Madoff that lost clients billions.
(snip)
“Madoff’s scheme could not have been accomplished unless UBS had agreed not only to look the other way, but also to pretend that they were truly ensuring the existence of assets and trades when in fact they were not and never did,” said David Sheehan, a lawyer acting on behalf of the trustee, Mr Picard.
The lawsuit claims UBS and its co-defendents made approximately $80m in fees over several years from their work with Madoff.
UBS “chose to enable Madoff’s fraud for their own gain”, claimed the trustee, and the bank’s involvement gave the fraudster “an aura of legitimacy”.
The role played by enablers of fraudulent business extends to the ratings agencies that assured investors the toxic funds they were buying were solid, as well as to the promoters of shady dealings such as Madoff’s and AIG’s.
That the public is an inconvenience that should be sloughed off in the interests of profits is a huge, disastrous fallacy. The public is basic to any profit, as it is the potential client/consumer.
When the public trust is lost, the basis for our system as a whole is destroyed. Without trust in a lawful and valid financial system, the public will not take the necessary step of investing.
Formed to work back from the cliff of welfare for the rich, a group calling itself “Patriotic Millionaires” has formed as a lobbying group for sound financial policy.
Millionaires know how to work with numbers. And the Patriotic Millionaires are sharing a few numbers with members of Congress who might be interested in making policy based on facts rather than a hunch. For instance:
• Only 375,000 Americans have incomes of over $1,000,000.
* Between 1979 and 2007, incomes for the wealthiest 1 percent of Americans rose by 281 percent.
* In the 1950s and early 1960s, a period when growth was high and unemployment was low, millionaires had a top marginal tax rate of 91 percent.
* In 1976, millionaires had a top marginal tax rate of 70 percent.
* Today, millionaires have a top marginal tax rate of 35 percent.
* Reducing the income tax on top earners is one of the most inefficient ways to grow the economy, according to the nonpartisan Congressional Budget Office.
* Letting tax cuts for the top 2 percent—which were never meant to be permanent—expire as scheduled would pay down the federal debt by $700 billion over the next ten years.
It isn’t just philanthropy that shows knowledgeable wealthy business owners moving to re-establish legitimacy of a foundering system by returning from that credibility gap. Without a consumer base, the very business demanding friendly atmosphere even as it bankrupts our economy cannot exist.
55 Comments
McJobs provide no dignity and no mobility to the political class. Success is given a dollar value and that is also the measure of personal character.
The irony is, that human life should never be given a dollar value. It devalues us. How long will we be in this darkness?
Not sure if by McJobs you mean working in fast food, which the previous administration reclassified as service industry. As a means to an end, though, I don’t see any job as demeaning. What we do to stay or keep established until something better comes along isn’t a measure of character, but that we did it does measure character, imho.
If you don’t see any job as demeaning, then you’ve never worked in a demeaning job. When you are worked like a dog, under miserable conditions(ie as on your feet for several hours straight with no breaks and no water allowed), with “flexible” hours where you never know what your schedule is more than a few days in advance, and requests for better conditions are treated with indifference at best and threats or firing at worst, and are treated as just another commodity instead of as a human being, then you will know what a demeaning job is.
So, I respectfully disagree with you on this one, Ruth. Some jobs ARE demeaning. And the tougher the economy is, the more most employers will demean you if they are allowed to do so by the government. Which they are.
That sounds like demeaning treatment, for sure. It just strikes me that that’s a choice by a rotten employer, and not the job itself. I don’t know how you deal with bad treatment, as this is a ‘right to work’ state without any protections. All I’ve ever known how to do is change jobs, takes awhile,and I know that’s not a real possibility in this economy.
The war by the rich against the middle class is killing the goose that laid the golden egg. The rich end up losing in the end because only a few people have enough money to pay for the goods and services that the rich are selling.
Greedy, stupid, and mean.
I was really describing my wife’s last job. I persuaded her to quit because it was destroying her feet. Not to mention her self-esteem.
You’re right. It was a rotten employer. But my wife was only able to quit because I was lucky enough to make enough on my own to support both us and her kids, and because we found a good deal on rent. But many people get trapped in such wage-slave jobs and can find no others in this job market. I think that’s positively criminal, but I see our “leaders” doing nothing about it. They don’t even talk about it. It angers me.
And suicidal. When people for whom the system used to mostly work lose ground and then lose hope of regaining it under existing institutions, revolutions happen.
The rich are playing a very dangerous game.
Well it will end when corp. has no new customers because they have driven people out of jobs or wages down so low there is no extra cash for the movies.
“It (capitalism) has resolved personal worth into exchange value, and in place of the numberless indefeasible chartered freedoms, has set up that single, unconscionable freedom–Free Trade. In one word, for exploitation, veiled by religious and political illusions, it has substituted naked, shameless, direct, brutal exploitation.” The more things change, the more they remain the same. Peace
Bottom lines: ‘I was only following orders.’ ‘It was important to make the train run on time.’
So are is the political class a bunch of Nazis or fascists or just trying to shut the sheeple up? Peace
Excellent math. Sadly, the business leaders who can’t make that simple, proven, calculation are destroying our economy.
Yes, and I believe we’ve gotten to that point.
The shame is that the only people being prosecuted seem to be those who didn’t grease the right palms or who pissed off somebody in office.
I don’t think we’re quite at that point. There are still people with jobs who are spending–there are still pockets of relative affluence where people are spending pretty much as they used to. (I know, I live and work part-time in one.) I just saw a woman I work with (part-time, temporary employment–it’s all I can get) spend hundreds of dollars to buy a pure-bred dog “for her children” and pay to have it shipped half-way across the country. Her children would have been happy with a dog from the local shelter, but she’s spending as she always has. She’s in a job where most of her income is derived largely from commission, and I’m damned if I can understand why she’s not more concerned, but I see many others like her. Can they keep on this way for much longer? No, I don’t think so, but nothing’s really going to change until a lot of people like her are forced to stop spending. Right now I think it’s awful in some places and pretty much status quo in others, but that can’t last.
Thanks for the info, and indeed, I was working in an area that oozes affluence right now. But from conversations with others I find that without savings or economies in their lifestyles, those same folks are, for the most part, winding up really desperate when they meet with reality like the rest of us.
Excellent post.
“When the public trust is lost, the basis for our system as a whole is destroyed. Without trust in a lawful and valid financial system, the public will not take the necessary step of investing.”
The best way for Obama and Democrats to win back voters – me included – is to start prosecuting and convicting these criminals.
It’s not just good politics. It’s good policy on so many levels.
The Bottom Line Does Not Justify Criminal Behavior
here’s the problem the way I see it ruth;
I believe (but am not certain< maybe someone could post the actual law) that corporations are obligated by law to always do what is right for the share holder/bottom line
this allows a right wing judge to forgive criminal behavior if they can claim they would have to break one law or the other no matter what decision they made given a particular scenario
When corporate welfare predominates, we see that kind of behavior, which is why regulation, a.k.a. the Rule of Law, is necessary – and is fought by the blindly Chamber adherents.
Arbeit macht frei.
It seems to be spreading, though, and I blame the internet.
Agree. That ‘consumer confidence’ has more than one level.
True, but the interpretations of what is actually good for the bottom line, or shareholder interest, has been shaken by the total collapse of industries that were hollowed out by executives who bled off the assets and future production capacity, under the guise of short-term profit.
And much of the demeaning is b/c the boss knows there is no protection or remedy and no other jobs. Certainly the plight of many immigrants; I do not believe that all work = dignity. It may take courage and character to do many awful, yet important jobs; the work itself can be demeaning and such that no one would do if there were another choice.
The morning news coverage is about crowded malls; the shopping has definitely begun.
You are completely wrong. No revolution in history has ever been undertaken for the reason you state. Populations never rise up against their oppressors until they are literally starving, and America isn’t remotely close to starving.
Do you think the oligarchs don’t know this? We can’t even dredge up enough anger within the Democratic party to inspire change to that institution let alone some kind of organized national movement. There was still 82% retention in the House for Democrats and they got slaughtered.
and as you realize, when you and the family have to eat there is often no matter of other choices, and in the present conditions, sometimes that horrible job isn’t even a choice, there is no work.
The banks, lenders, rating agencies, and the SEC, along with all government oversight are what allowed this crash to happen. You are so right about the rating agencies. You and I have been discussing the Lincoln Logs that the Fed has been throwing at the pile for years. It was nothing but a pretend cover for the fact that it was all a swindle and everyone was losing except for the banks.
I have often said that TARP should have immediately covered all the current mortgages on the books and called them paid in full. Had they done that, the economy would be better off due to more money in the pocket of the consumer. How is it that the government can pay for all the mortgages the banks hold, yet the banks still want that mortgage paid in full by the taxpayers? They are getting paid for their risky business three times over!
As for the corporations doing away with their consumer base, well that will mean that they will have fewer dollars to influence our elections and representatives. Hopefully, most of us have figured out that the corps just want your last dollars. I am doing everything possible to try to avoid the corporations. We have very talented craftspeople, farmers, and artists in our neighborhoods. Their work is much more lasting and preferred over cheap plastic crap from China!
Yep, thanks. It would have been nice to see the public get the bailout, and I’m not sure that just letting the bank/malefactor level go under would have been such a disaster. It may have been purely derivative psychology from the Great Depression, which saw runs on the bank that led to impoverishment. We may never know, and I hope we don’t actually have to learn the hard way.
Capitalism is inherently anti-societal. Humans form societies, be they tribes or nation states, for the sole purpose of mutual protection and benefit. Capitalism, whose premise is winners and losers, goes against the very core of human existence.
It seems to me that a lot of Americans got on board with investment schemes/instruments without much thought given as to what they were investing in. This behavior was all in vogue during the ’90s. No one really wanted to know HOW these “profits” were being generated just as long as their portfolios performed in line with expectations.
In the accounting equation, human labor costs are on the liability side while robotics/machines are on the asset side. I believe that form sets the stage for deception. No value is set for human capital, no recognition of the reality that without people, there is no business.
I can understand liquidating businesses that are no longer relevant to society. It reminds me of pruning bushes/trees to promote growth and production of desired qualities.
But there is method and a rhythm to pruning. I would not, for instance, resort to allowing a herd of bulls to stampede through the orchard for method.
And that is how I see our most recent history of commerce in our country, however simplistic my perceptions.
I’m not exactly disagreeing, but I wanted to bring up a nagging suspicion I’ve been having. Namely, that the uberrich actually don’t need consumers any more. In America, and much of the "western" world, money is not created as it used to be. Right now, America is transitioning off of the consumer-driven profit model and onto a new profit model.
Instead of creating money by gathering natural resources or producing goods or providing services, the uberrich create money by manipulating currencies, essentially saying "Wha-la! One dollar is now worth a teeny tiny bit more than one dollar!"
If the consumer disappears from America, the profit model does not change because it is not consumer-driven in a traditional sense. It is faith-driven. As long as investors (the uberrich) continue to have faith that one dollar can magically be turned into more than one dollar, the new profit model can continue.
Like securities based on chopped-up mortgages were mixed and matched, were chopped and re-chopped, were passed from one firm to another, obfuscation alllows investors to have faith that worth has increased.
BTW, I’m obviously not an economist nor an investment guru.
I’m just the IT guy who installs their software. (for real)
Thank you, Ruth, for this excellent commentary.
Even though the news is canted towards the trickle of folk who are still buying, this is not a sustainable thing at all. For the rich to remain rich they need more than the rich to be propping them up.
What is happening in Ireland is worth watching. I don’t think the people there will stand for being forced into grubbing for the landowner’s potatoes again, and that is the handwriting on the wall for them.
The bank/malefactor level will go under – we just have to step out of the way and let them. If anyone can remember the closing episodes of “Upstairs Downstairs” it was the upper class which collapsed more than the lower. The upper folk had the guilt of having caused the collapse to shoulder. The servants simply shouldered on. We can come out of this a better bunch of citizens.
Uneasy is the head that wears the crown.
Well, you could say that. Or you could say that capitalism encompasses the very essence of human existence: survival of the fittest. The law of the jungle is in full bloom with capitalism.
Fascists, Nazis are just a particular brand.
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Fascism (pronounced /ˈfæʃɪzəm/) is a radical and authoritarian nationalist political ideology.[1][2][3][4] Fascists seek to organize a nation according to corporatist perspectives, values, and systems, including the political system and the economy.[5][6] Fascism was originally founded by Italian national syndicalists in World War I who combined extreme right-wing political views along with collectivism.[7][8][9] Scholars generally consider fascism to be on the far right.[10][11][12][13][14][15]
Fascists believe that a nation is an organic community that requires strong leadership, singular collective identity, and the will and ability to commit violence and wage war in order to keep the nation strong.[16] They claim that culture is created by the collective national society and its state, that cultural ideas are what give individuals identity, and thus they reject individualism.[16] Viewing the nation as an integrated collective community, they see pluralism as a dysfunctional aspect of society, and justify a totalitarian state as a means to represent the nation in its entirety.[17][18]
They advocate the creation of a single-party state.[19] Fascist governments forbid and suppress opposition to the fascist state and the fascist movement.[20] They identify violence and war as actions that create national regeneration, spirit and vitality.[21]
Fascism rejects the concepts of egalitarianism, materialism, and rationalism in favor of action, discipline, hierarchy, spirit, and will.[22] They oppose liberalism (as a bourgeois movement) and Marxism (as a proletarian movement) for being exclusive economic class-based movements.[23] Fascists present their ideology as that of an economically trans-class movement that promotes ending economic class conflict to secure national solidarity.[24] They believe that economic classes are not capable of properly governing a nation, and that a merit-based elite of experienced military persons must rule through regimenting a nation’s forces of production and securing the nation’s independence.[25] Fascism perceives conservatism as partly valuable for its support of order in society but disagrees with its typical opposition to change and modernization.[26] Fascism presents itself as a solution to the perceived benefits and disadvantages of conservatism by advocating state-controlled modernization that promotes orderly change while resisting the dangers to order in society of pluralism and independent initiative.[26]
Fascists tend to support a “third position” in economic policy, which they believe superior to both the rampant individualism of laissez-faire capitalism and the severe control of state socialism.[27][28] Italian Fascism and most other fascist movements promote a corporatist economy whereby, in theory, representatives of capital and labour interest groups work together within sectoral corporations to create both harmonious labour relations and maximization of production that would serve the national interest.[29] However, other fascist movements and ideologies, such as Nazism, did not utilize this form of economy.
Sorry about all the extra stuff in the above comment. I have yet been able to ffigure out how to edit a comment after posting with the new MyFDL format
The bottom line does justify criminal behavior because achieving a positive outcome for the bottom line is a crime. It is a crime in the sense that capitalism is a system that requires the extraction of something (profit) for nothing. It attempts to create value beyond the costs of materials and labor and at an ever-increasing rate (growing the economy). It is predicated on trading short term profit for long term costs. The world is a finite place and costs have to be borne somewhere. Even if one is consuming an abstraction, its cost has to be supported materially or that consumption collapses (e.g. Dot-com bubble). The crime is in attempting to get away with breaking the rules, of getting something for nothing. And not just the rich are guilty of this con game.
The US largely had been able to escape some of the long term costs of capitalism (slavery, genocide, war and environmental degradation notwithstanding, which is to say that capitalists attempted to externalize many of the costs) for generations owing to a large nation of resources to exploit, a constantly growing population of producers and consumers, and finding itself on the top of the imperial heap at the end of WWII. The US may be at a point where it has burned all this down, where its need for profit has consumed the bulk of the resources, labor, power and markets that accounted for all its previous short term gain.
Changing what is actually good for the bottom line means applying regulation, which is how the essential destructiveness of capitalism can be evened out or delayed—how capitalists avoid suicide, at least immediately. However, as you mentioned, doing so might require higher taxes for the rich, recreating industrial production (a la FDR and his financial planners in the early ‘30s), or curtailing the capital flight in pursuit of more profitable international investment that makes trickle down economics a fiction. How might these things be reintroduced when so many capitalists, rich and poor alike, buy the myth that short term, bottom line profit is not a crime but a virtue? Ultimately, how is the US going to avoid paying capitalism’s piper?
Thanks for the post and the Patriotic Millionaires link, Ruth. Happy Thanksgiving!
Indeed. One of the things that can lead to confusion is when this topic is reduced to a dichotomy between the rich and powerful and the rest of US society. While there is a tremendous power imbalance here, this whole ball of wax intimately permeates the entire fabric of US culture. US CEOs didn’t arrive from another planet. Most of the rest of us enjoy automation, efficiency and immediate results even though achieving these ends very often means somebody loses a job, which ironically results in an overall lower quality of life.
One of the reasons that folks like the Amish avoid many modern conveniences is not because they have a blanket aversion to technology, but because they value human labor. If human labor is a noble and an individually and collectively valuable activity, why would one attempt to get out of it?
Perhaps critical mass was reached when folks in the US stopped being referred to publicly as citizens and instead became known as consumers?
- Woody Guthrie, “The Ballad of Pretty Boy Floyd”
There’s something to your idea, uncomfortably enough. By buying back its own stocks, businesses create phantom profits. Also, some of that is behind the present figures showing that business has made record profits. But investors/shareholders can’t be cheated forever, and if a business is hollowed out entirely, they can demand repayment.
There are so many well thought out responses here, I will have to come back to them in the afternoon. Thanks, all, you’ve been a real addition to this post.
I was making this argument to my husband, attempting to reason that the rich guys were cutting their own throats by eliminating jobs that would produce consumers.
He replied that these corps no longer need to rely on American consumers for their profits; they can sell to India, China and the Third World.
It would be helpful if you put this in a diary and linked to it, rather than taking up so much space here.
Indeed, the doctrine of ‘creative destruction’ posits that an industry is eliminated when it no longer benefits us, such as buggy whip manufacturing. However, the use of that doctrine to justify offshoring jobs with rewards in the form of tax breaks is glossing over a manufactured disadvantage to human labor.
Not sustainable at all, if only through sheer math without moral hazard. Investors who’ve been burned have to be won back with an accumulation of a history of solid value and enlightened management.
I don’t know if any here watch Link TV,but they had a boffo special on last night, Danny (The News Dissector) Schecter’s film,”Plunder-The Crime of our Time.”
WOW! and HOW!
Browse Videos | Link TVWatch this Link TV special presentation of Plunder:The Crime of Our Time, a hard -hitting investigative film by Danny Schechter that explores how the …
http://www.linktv.org/video/browse/k/Danny%20Schechter – Cached►
Video | Interview with Filmmaker Danny Schechter | Link TVFilmmaker and “News Dissector” Danny Schechter talks about why he made the …
http://www.linktv.org/video/…/interview-with-filmmaker-danny-schechter – Cached
Special: Plunder – The Crime of Our Time | Link TVWatch this Link TV special presentation of Plunder:The Crime of Our Time, a …
http://www.linktv.org/programs/plunder-the-crime-of-our-time – Cached
BTW, great post,Ms. Ruth. Keep ‘em coming,OK?
Good points, but capitalism assumes regulation, or rule of law, imho. Only by ignoring the lessons of economic history could the past decade of control by the rich inveigle our government into tearing down its own structure, and the rich have been kicked as hard as the workers. Enlightened management keeps wages and profits in balance, so that not only do workers have the means to support their needs, but also so that capital investors get a fair return. That formula applies to many things, such as the need for a proportional income to invest in such property as a house, or in a stock. Actually, there are already requirements for the amount of property/income an investor must bring in order to buy shares in such risky stuff as oil well drilling futures.
Thanks, and also for the link to the ‘dissection’, which sounds very valuable.
So glad that you liked it.
Ohio isn’t completely wrong. It’s just that the chances of an actual revolution happening are about zero.
Now, if the economy goes through a complete collapse, Soviet style, then all bets are off. That’s the most likely scenario. We’re also much closer than most think. Food for thought.
Otto’s most important point, in my view, is the zero sum game environmentalism is. There are only so many resources to go around, and in the calculation of planetary health there’s no such thing as free. Everything comes with a cost.
Capitalism, as a system, is predicated on the idea that growth must continue ad infinitum, which is directly contradicted by the nature of resource use. Eventually the system runs into the law of diminishing returns – which is where I think we’re at now. Cutting costs and liquidating assets is the end game when there are no more “honest” places to make money. The system implodes on itself.
The rule of law doesn’t have much to do with that.
I am a grown woman who has refused to use credit cards, take out loans, or do anything but the bare minimum with any financial institution. I have and would move into my car before taking out a loan of any kind to stay put. The cost of doing business with the current financial system is too risky. They are crooks pure and simple and at present, above the law. Law that they molded in order to screw people. They can’t even stay within these guidelines. And worse, they are not accountable so they have no reason to do so.
Just like people who would not go to the mafia for a loan or financial help, many, like me, feel the same way about the current government controlling sociopathic one percent controlling America’s money, debt, and wages.
We must find any and every way to leave these people out of our daily doings. Is is difficult. Yes. But it is much less difficult that doing business with crooks whose sole objective is to clean me out. Mercilessly, I might add.
The big scandals grab the headlines. Look what these greedy crooks did to our country and to our economy. If and when the bad guys get caught and prosecuted, we love to watch the perp walks on television. We take comfort in knowing that, however rare it might be, even the wealthiest white collar criminals are brought to justice.
I worry, though, that these spectacular displays distract us from a much larger, systemic injustice.
What’s the message here? I’m afraid the underlying message too many of us infer is that most of our fiscal problems are caused by crime. Nothing could be further from the truth.
Most of what is trashing America’s middle class and any semblance of hope has occurred well within the limits of the law. Big money and big corporations write the laws and own those who pass them. It’s a crime without a doubt; it’s also totally legal.
Of course we need to pursue, prosecute and punish the bad guys. Of course the damage they do is enormous. Of course crime is a very real problem worthy of public attention. This is the low hanging fruit.
Far more damaging, however, is big money’s tainting of our democracy itself. We spend more than one trillion dollars every single year on the military-industrial complex. This isn’t a one-time event like the derivatives melt-down. It happens year after year after year after year. It’s systemic. It’s legal. And it’s bankrupting the country and short-changing other critically important spending priorities. The average American citizen spends more than 1/4 million dollars over their lifetime paying the military tab. It’s all perfectly legal.
To be sure, crime is costly; the systemic corruption of our democracy, however, though legal, is far costlier. This should command the lion’s share of our attention. Sadly, it never seems to.
Wealthy business owners are not “moving to re-establish legitimacy of a foundering system”, they are moving to re-establish credibility to a foundering system that “legally” rewards the wealthy and powerful at the expense of the rest of us.
the corruption is so pervasive, military bases in every state, industrial congressional payback. Over 700 bases worldwide. The military numbers never include the cost for the VA, Energy/Missiles, nor the Dark Agencies/CIA, NSA and so forth. we are a Military empire and that is where one large part of the solution to our money answers lie.
But the Military Empire has enough power diversified throughout America, owns so many Senators/Representatives, so the Military always wins increases in their funding.
we will never hear about cutbacks to the Defense Dept. Never!! gone up with Obama every year so far. always up!
over a trillion dollars a year every year, plus the stuff they don’t put on the books.
any wonder we can keep up. plus the Crooks stealing what we can see!
and the Congress giving the Crooks more and more, and ignoring Americans outside of Wall St.
if you are part of the Military industrial complex, you have a steady flow of money. elsewhere it’s pretty grim. the Free Market for you. Law of the Jungle.