October 15, 2011
whither our money?Here's another sideways thought.
You know what The Banks do with the money we deposit into them, right? They don't just put it in a vault to wait for eventual deposit. Nor do they (as they once did) turn around and lend that money out at a higher interest rate than they were giving you, so as to make a profit. (Well, they still do, but not exclusively.) They take the money, and they trade it. It's called "proprietary trading", and it wasn't allowed until 1999 when the Gramm-Leach-Bliley Act repealed parts of the Glass-Steagal Act which prohibited proprietary trading after the Great Depression. Then The Banks could take your deposits and throw it at the market, or into commodities, or into any of the obscure vehicles like CDOs that lead to the most recent fiscal crisis. No risk requirements, just tossing our money around like drunken sailors at a casino.
We all know this is bad (and may be curtailed by Frank-Dodd), but a thought above and beyond is, say that these investments pay off, really pay off, how come we don't see any of that sweet sweet profit? After all, it's our money.
This also applies to the securitization of mortgages: if your mortgage is being tranched to death, rated AAA and then traded like a stock, how come you don't see any of the buckets of money that come in off of that?
I don't know the answer, and am no expert (at much of anything, really). But it makes at least a lick of sense, yes?
Posted by mrbrent at 1:12 PM
October 14, 2011
let's shut up about the 53% please?Mostly, I'm in one of those moments of Epic Novelty wherein something in the paper or on the radio during the dog-walk should've jumped out at me and then, bang, a post. But instead I'm trying to hoover as much Occupy Wall Street news as possible in light of the city backing down on the possible eviction of the protesters.
Oh, here's one. You know how, now that the media is saturated with #OWS stories, each outlet must run the obligatory "point/counterpoint" story on We Are The 53%? How about we just stop doing that, 'K?
Here's the thing about the 53%: First of all, they're predicated on the easily refutable demi-fact that only 53% of Americans pay income tax. That's what we call a load of hooey in polite quarters, considering that there are other kinds of federal taxes that are paid, the definition of "net tax liability" being squishy, etc. But most of all, they're not legitimate. They aren't a bunch of people sleeping in a park for a month. They're a bunch of smug conservatives that believe that an ounce of snark is worth a pound of legitimacy.
They're nothing but a snide reaction, and they are not equivalent to #OWS in any way. All they did was set up a Tumblr, fer feck's sake.
(Though, between you and me, there was a Takeaway segment with some thinktanker speaking for the 53% and a random #OWS protester, and the protester mopped the floor with him. Thinktanker denigrated all the things that #OWS stands for, and protester ripostes, and I paraphrase, "We don't stand for anything. We want to have a dialogue. I have no idea what you're talking about." It was a very deft expose of the worst kind of straw-mannery,)
Posted by mrbrent at 9:59 AM
October 13, 2011
context 10.13.11Here's a fun compare/contrast if you're in need of a laugh or two.
First, catch up on the conversations instigated by Occupy Wall Street. Hit the social media for sure, but supplement with this Bloomberg piece on a bunch of finance guys wondering what took us so long to figure this out? (Answer: Andrew Ross Sorkin.) And then spend a good fifteen minutes pouring over this, the most useful thing that Henry Blodget and his Business Insider have ever published, a series of captioned charts that sets forth to explain just what the protesters are upset about. It's comprehensive, it hits all the points (from income inequality to CEO compensation to the bottom 80% having 7% of financial wealth, etc.), and it is sure to set the hair of many who watch CNBC on fire.
And these conversations? They're being had, in public. They've entered the mainstream. Make fun of the protesters all you want, but they did this.
And then for contrast, flip over to the conservative half of the feed to find out what's dominating the conversation over there: namely Herman Cain's 9-9-9 plan. If you're not familiar, that's Cain's secret weapon to reduce the debt, increase employment and straighten the teeth of every child in America. It's a rehash of the worst economic ideas of the right — a flat tax, a national sales tax, trickle-down economics — that would amplify the redistribution of wealth in an upwards manner. It's metaphorical equivalent would be, "If the poor are too sickly to work in our factories for pennies a day, can't we burn them for fuel?"
Yes, it's absolutely ridiculous, it sounds like an advertisement for a fast-food sandwich chain and all that, but just the lack of context (when compared with the conversations the rest of us are having) are at all-time Swiftian levels. A sizable portion of Americans are taking the street, or at least talking about why people are taking the street, looking for economic justice, and the Republican candidates are limousined from debate to debate, quibbling over who can kill jobs faster.
Posted by mrbrent at 10:08 AM
October 12, 2011
thank you sam siftonI'm not about to let this day pass without comment: Sam Sifton's final restaurant review is up, an expected-by-everybody four star of Per Se.
I've been a fan of Sam's since the days he was writing "The Skillet" for the recently-demised New York Press. Dude knows how to write, and always has. He was a controversial choice for lead restaurant critic for the NYT, and was actually quite polarizing throughout his tenure. To his critics: you're wrong.
He's moving on to be the national editor, which is great for him. I have it on good authority that he's always wanted to be nothing but a newspaperman, in the grand tradition of newspapermen, and now he is truly that.
The only sadness in all this is that we won't be reading so much of his writing, as overseeing the national coverage of the greatest newspaper in the world is kind of a full-time job.
So Sam: thanks for the words, and edit like the wind.
Posted by mrbrent at 10:56 AM
October 11, 2011
too poor to go brokeWhile I'm chewing on the issue of moral hazard/poverty that was raised last week w/r/t Occupy Wall Street and the trial balloon of debt forgiveness, here's an interesting factoid from Contexts magazine, concerning a policy paper on the disparity between middle class and lower class bankruptcies:
The authors claim that poor families are much less likely to seek debt relief through bankruptcy because they often cannot afford to pay the necessary legal fees. In addition, since the middle- and upper-class families are typically extended more credit than low income families, they are also more likely to use debt (say, by using a credit card) when faced with exorbitant medical bills, loss of income through unemployment, or the loss of a spouse.
The post is titled Too Poor To Go Broke, which sums the issue up better than I can.
[Via Kevin Depew.]
Posted by mrbrent at 12:42 PM
david brooks tries smug on for sizeSo David Brooks used his Tuesday column space to mock and deride the Occupy Wall Street movement. This was predictable, about as predictable as me not being able to resist writing about it.
So last week I shared my misgivings with the moniker "We Are The 99%" on (partially) the grounds of that slick little name being an easy thing for idiots to use to sidestep the greater points of the movement. Ladies and gentlemen, David Brooks:
This is a theme that allows the people in the 99 percent to think very highly of themselves. All their problems are caused by the nefarious elite.
Unfortunately, almost no problem can be productively conceived in this way. A group that divides the world between the pure 99 percent and the evil 1 percent will have nothing to say about education reform, Medicare reform, tax reform, wage stagnation or polarization. They will have nothing to say about the way Americans have overconsumed and overborrowed. These are problems that implicate a much broader swath of society than the top 1 percent.
The rest of the op-ed is hooey, as Brooks engages in that Brooksian auto-fanfic that he often does, complaining that OWS really has no effective plan to deal with the problems that are truly problematic, as designated by David Brooks.
But the greater point, the point snidely elided by Brooks (after he straw-mans OWS half to death), it that OWS doesn't give a flying fig about the debt, or the sustainability of entitlement programs. They care about corporate culpability in the Great Recession, about the business welfare state, and about a system rigged to provide ever-increasing income inequality. These are grass-roots, pocket-book issues, and not some cant that David Koch taught some Tea Partiers to say because they wanted to belong to the majority again. And Brooks doesn't so much ignore these issues as he lives in an alternate universe tangent to this one where such concerns are an impossibility because David Brooks didn't say so yet.
Posted by mrbrent at 9:30 AM
October 10, 2011
success is no longer its own reward?Here's a little bit from an alarmingly stupid and yet by-the-numbers op-ed by Robert J. Samuelson for The Washington Post. It's technically about income inequality, but it's actually it's a rote defense of the ultrawealty. Here's the little bit:
If taxes do rise, what approach would best preserve incentives for hard work, investment and risk-taking?
I'm not including this bit because it's an opportunity to write mean things about Robert J. Samuelson, because I'm not yet familiar enough with his work to know if alarmingly stupid is his metier. But it's a question, and a question raised frequently when talking about issues of income inequality, and it deserves an answer:
Dunno about approaches, but I thought that the reward for hard work, investment and risk-taking (which is really a None of These Things Is Anything Like The Other list of items) is, in each instance, success. Not sure how the tax code is supposed to address it, unless the implication that a tax difference of a point or two is going to somehow convince people to not try to be stupid, which is a point made by either the disingenuous or the ignorant.
Posted by mrbrent at 10:46 AM
October 9, 2011
public speaking occupy wall street styleI don't know if this counts as a conversion, but yesterday when the Occupy Wall Street protesters marched up to Washington Square and had what they call a general assembly, out of curiosity I clicked on the live video feed. I lucked out and they were in the middle of the assembly, close to the end.
Now you've no doubt heard how these things work: amplification is against regulations in the park where they're staying, so they use a system of organic amplification, where the speaker says a few words, those closest repeat those words, and then those furthest away repeat the words. When I heard of it, I was dismissive, much as I am of drum circles. (I'm a jerk.)
But actually watching it in action, and not even in person, I was moved. For one, being forced to deliver a speech in three or four word segments is an exercise in forced brevity that I think many could benefit from. But more importantly, it was stunning to see a Washington-Square-full of people actually listening, actually paying attention.
I still don't know if OWS has distilled down to a coherent message, and frankly I don't know if they need one, but I am impressed with what I saw yesterday. There are a lot of conversations that are being had right now that wouldn't be were it not for those brave insane people camping out in a city park.
Posted by mrbrent at 11:34 AM