Sunday, November 22, 2009

Omni Palin

It's one thing that the vertical ad next to my Facebook profile is Going Rogue FREE OFFER!

It's another that her image is being used for the iconic Flat Belly ad on my IE home page. Bespectacled bikinied beauty queen hockey mom caricature. If she can run a household, she can run the U.S. I trust her. She's got common sense. I'd like to have a beer with her.

Glen Beck is doing a political tour and the right wants its candidates to sign loyalty oaths.

Onward to 2012!

Saturday, November 21, 2009

Detroit is the Future

I'd say it’s a disgrace, but that’s too soft a word. It’s a horror. Detroit is dying. Motor City. Motown. A once great city, the hub of American manufacturing, lies in tatters, a victim of the short-sighted decision to favor capital over labor.

The Detroit Silverdome, where the Detroit Lions, Detroit Pistons and Michigan Panthers played, just sold for $583,000. It cost $55 million to build in 1975.

In today’s column by Bob Herbert, who seems to be one of the few who is putting a human face on the economic devastation in the United States, Detroit is:

[E]ndless acres of urban ruin, block after block and mile after mile of empty and rotting office buildings, storefronts, hotels, apartment buildings and private homes. It’s a scene of devastation and disintegration that stuns the mind, a major American city that still is home to 900,0000 people but which looks at times like a cross between postwar Berlin and the ruin of an ancient civilization.

A.I.G. & Fed Transparency: What's Behind the Curtain?

Neil M. Barofsky, the special inspector general of TARP (which technically stands for Troubled Asset Relief Program, aka The Act to Reward Plutocrats), reported this week that the Treasury (at the time headed by Henry Paulson, secretly advised by Lloyd Blankfein, the CEO of Goldman Sachs) and the head of the New York Fed, Timothy Geithner (now Obama’s Treasury Secretary) didn’t use their considerable leverage to force any concessions from the counterparties of the troubled insurer A.I.G.

Who gave the federal government the power to give any money to any financial institution other than commercial banks? The reason commercial banks could be given money was because they were (supposedly) tightly regulated. During those panicked times of Sept/Oct 2008 the Fed and the Treasury gave away a lot of money under dubious authority. Pretty f**king ad hoc. AIG was saved a week after Lehman collapsed by an initial $85 billion government infusion according to the following

The Fed took the highly unusual step using legal authority granted in the Federal Reserve Act, which allows it to lend to nonbanks under "unusual and exigent" circumstances, something it invoked when Bear Stearns Cos. was rescued in March.

A.I.G.'s trading partners, which included Goldman Sachs Group, Merrill Lynch and the large French banks Societe Generale and Calyon, refused to take less than 100 cents on the dollar on assets that were worth far less because they were derived from rapidly defaulting mortgages.

Their legal stance was that the Fed was a creditor and had no standing to put A.I.G. through bankruptcy. They knew by virtue of the $85 billion loan that the U.S. wouldn't let it fail. So they held all the cards. The Treasury and the Fed capitulated.

This was in stark contrast to the way the government dealt with the automakers:

First, the Fed considered itself a creditor of A.I.G., rather than a regulator that could impose its will on banks. It approached A.I.G.'s trading partners with a request for "voluntary" concessions. Mr. Barofsky said this differed from the government's role in the auto industry, where it lent the car makers money but also negotiated aggressively and won substantial concessions from other creditors.

It's self-serving that the counterparties invoked the letter of the law to assure themselves full payment from the Fed.

And it's obvious to any sentient being that class (as in class warfare) is alive and sickening.

Thursday, November 12, 2009

Corporate Authoritarianism

Let's not pretend anymore. The USA is not a democratic republic. Corporate authoritarianism is our government and religion. Bill Gates is worshipped as a god of philanthropy. He should be worshipped as a ruthless monopolist.

Corporations are inherently hierachical. They are authoritarian structures within a supposedly democratic republic. When happens when an authoritarian structure runs a democratic republic? The democratic republic only exists to hide the authoritarian structure.

The structure uses the tropes of a DR to cloak itself in the skin of equal opportunity.

Where do the American people fit in this scheme?

Take 20+% Pay Cut or Never Be Employed Again (New Economic Theory)

I subscribe to the NY Times and the Wall Street Journal. Today I didn’t get my papers. So I called customer service to request a replacement and I spoke to a very nice girl named Rica. She works in the Phillipines.

The average Phillipine call center worker makes a daily wage of $9 (that's $2250 annually) with some companies forking over $14 a day. This is from a corporate call center website. It's not trying to expose wrongdoing. It's offering instructional guidelines for any company seeking to outsource their customer service.

Yesterday the NYT ran a story under the headline American Wages Out of Balance in their column that starts:

“American workers are overpaid, relative to equally productive employees elsewhere doing the same work. If the global economy is to get into balance, that gap must close.”

The high productivity that’s raising the boats in the stock market is due to massive layoffs. As to what caused that unemployment, it’s debatable that it was overpaid American workers. Except perhaps in the financial sector.

Goldman Sachs is going to pay out the largest bonus pool in its 140 year existence and the rest of the few financial monoliths will do the same. In other words, the financial sector which now has less competition than ever and free credit lines from the government will be rewarded handsomely for creating and leveraging phony assets, spreading them around the globe and getting bailed out by the American taxpayer. Are they worth the money? And how much more will they make in the future?

David Williams, an investment banking analyst at Fox Pitt Kelton, said: "This year is shaping up to be the best year ever for investment banks, or at least those that have emerged relatively unscathed from the credit crisis.
"These banks are intermediaries in the bond markets where governments and companies are raising billions of pounds of new money. There is also a lack of competition that means they can charge huge sums for doing business."

Last week, the firm predicted that President Barack Obama's government could issue $3.25tn of debt before September, almost four times last year's sum. Goldman, a prime broker of US government bonds, is expected to make hundreds of millions of dollars in profits from selling and dealing in the bonds.

The implied threat here is that unless the American labor force takes an average pay cut of 20%, we will achieve levels of unemployment similar to the first Depression. I got news for you, Edward Hadas, Martin Hutchinson and Antony Currie (the writers of this analysis, which I’m sure will be adopted by many firms sitting on mounds of cash and still not hiring), we’re already there.

Thursday, November 5, 2009

Get High--Save the Economy!

Ever since the Justice Department announced it would no longer raid medical marijuana dispensaries, the stores have been growing like weeds. 14 states have medical marijuana laws on the books.

Colorado now has over 60 stores from less than two dozen in January. The ganjapreneurs are advertising in local papers. And other budding businesses are thriving alongside them.

As Mark Van Grack, owner of Hapa Sushi in Boulder says :

If you're going to smoke pot, you're going to get the munchies, so come to Hapa to eat.

In July, 80% of the voters in Oakland, CA passed a law taxing medical marijuana dispensaries at the behest of one of their biggest ganjapreneurs.

"It is important because the city of Oakland is facing a massive deficit like many jurisdictions in California, said Steve DeAngelo, a leader of one of the city's cannabis clubs. "And we decided to step up to the plate and make a contribution to the city in a time of need."

DeAngelo, one of the people who led the effort to get the tax approved, said his business will now have to pay more than $350,000 from the new tax next year.

Legalizing the plant may alter side effects of illegal marijuana activity such as cutting into the profits of the Mexican drug cartels. Didn't that happen after Prohibition?

Not all side effects of the medical marijuana business are known. But add-on businesses and greater tax revenue can ease a lot of pain.

Sunday, November 1, 2009

Ayn Rand's Revenge

Under the headline "Ayn Rand's Revenge", The NY Times put a bio book,”Ayn Rand and the World She Made” on the cover of its Book Review today. It seems that only the Bible sells more copies per year than her magnum opus of unfettered, soaring phallic power. To quote from her hero, John Galt:

“We have granted you everything you demanded of us, we who had always been the givers, but have only now understood it,” Galt lectures the “looters” and “moochers” who make up the populace. “We have no demands to present you, no terms to bargain about, no compromise to reach. You have nothing to offer us. We do not need you.”

According to this article, Atlas Shrugged is the favorite tome of the right. Casting aside the believability that tea baggers and Glen Beck have actually read her 1000+ page book, Rand’s Objectivist philosophy as embodied by Galt is perfect for both Wall Streeters and people who shout, “Don't let the government touch my Medicare” alike. Basically, one could be a member of the elect and victimized by the effete elite without any distinguishing characteristics beside devotion to Ayn. The woman who despised the masses and collectivism built a massive cult around herself and it’s more powerful than ever.

(By the way, the obscure company that did cleanup on the ill-fated Deutsche Bank building was named after the broad-shouldered hero of AS, known as the John Galt Corporation. Two firefighters died there in August 2007 trapped in its ruins because John Galt Corp removed a pipe connecting the building to its water supply.)

Two years ago on September 15, 2007, about a month after the Deutsche Building collapsed and killed the firemen, I wrote about another breathless New York Times article regarding the power of Rand:

As America enters an unprecedented time of falling housing prices and widespread foreclosure, I found the article in The New York Times “Ayn Rand’s Literature of Capitalism” by Harriet Rubin interesting.

According to the article, many business leaders, including Alan Greenspan, who is currently flogging his book, The Age of Turbulence, were strongly influenced by Rand’s novel Atlas Shrugged. Greenspan blamed everyone but himself for the credit crisis, although he was at the Fed’s helm when the interest rate was cut to 1% in 2003 and praised adjustable rate mortgages as most efficient.

Wall Street decided to offer mortgages borrowers could not afford simply because they could repackage these loans into mortgage-backed securities, insisting the MBS eliminated risk, and reap incredible fees.

These business leaders were greatly influenced by the book. It is the story of the prime movers of society going on strike because society doesn’t appreciate them; in fact, they are exploited and robbed of their dignity. They refuse to contribute their inventions, art, business leadership, scientific research or new ideas of any kind to the rest of the world.

The view of the prime movers is that society hampers them by interfering with their work and underpays them by confiscating the profits and dignity they have rightfully earned. The peaceful cohesiveness of the world requires those individuals whose productive work comes from mental effort.

But feeling they have no alternative, they eventually disappear from the communities of “looters” and “moochers” who bleed them dry. The strikers believe that they are crucial to a society that exploits them, and the near-total collapse of civilization triggered by their strike shows them to be correct.

The book reflects the mindset of many of those who helmed Wall Street institutions that are now extinct [Bear Stearns, Lehman] or swallowed up [Merrill Lynch] or still have a pulse. To regulate them is to “loot” or “mooch” off them. They are of a superior class; therefore they are entitled to play by different rules, all for the benefit of society.

I don’t think Rand believed that self-interest had to be enlightened to benefit society; all the prime movers like Angelo Mozilo (Countrywide), John Thain (Merrill Lynch), Lloyd Blankfein (Goldman Sachs), Henry Paulson (formerly Goldman Sachs, now sadly our Treasury Secretary) just have to be self-interested and somehow, voila! Wave an invisible hand and society benefits. They took the gold; we the taxpayers take the dross, and none of them accepts responsibility or faces any kind of comeuppance.

I, too, was influenced by literature but not Ayn Rand. She wrote stiff characters who spoke ridiculous dialogue and had romance-novel sex. I suggest these business leaders try another message novel:

The Jungle(1906) by Upton Sinclair
The Jungle is the story of Lithuanian immigrants working in Chicago’s Union Stock Yards at the beginning of the 20th century. It depicts a world of poverty and lack of any social contract, subhuman living and working conditions and generally utter hopelessness prevalent among the have-nots, contrasted with the deeply rooted corruption on the part of the haves. Workers are forced to low-bid their labor in a desperate attempt to compete and survive.

In The Jungle workers are shown falling into meat processing tanks and being ground, along with animal parts, into “Durham’s Pure Leaf Lard.”

The disgusting, fetid, filthy working conditions and exploitation of women and children depicted in the Jungle led to the passage of the Meat Insepction Act and the Pure Food and Drug Act of 1906, which in turn led to the Food and Drug Administration.

What are your favorite message books? Try Sinclair Lewis's It Can't Happen Here (1935) for a glimpse of the future.