Saturday, September 21, 2013

"Upsetting the system"

Joe Nocera's column takes a look at Jamie Dimon's "very long day."

It was a "terrible, horrible, no good, very bad day" (LOVE that book!) for Dimon because it included fines of more than $1 billion - $920 million to appease for overwhelming splash of the London Whale, and $389 in fines and restitution for "selling bogus services" to its credit card customers.

FINALLY, a bank is forced to pay for its criminally foolishness behavior! But it's 2013 - banks have long been acting criminally foolish - why have there been no real fines up to now? (I simply cannot accept the $550 million fine $GS had to pay for the fraudulent Abacus deal as being a serious and significant fine for a company with $13.4 billion in profit that very same year.)

So why so long before seeing a relatively serious fine for extremely serious infractions? Nocera attributes this to "unfortunate timing." Had the Whale flopped in 2009, the government would have bent over backward to accommodate Chase. According to reporting done by American Banker newspaper, timing is everything:
“The reason is simple,” said the newspaper. “The government then was more worried about harming the system and did not want to potentially upset markets by assessing large fines.”
I see. In a system that had harmed itself in ways that dramatically brought down the global economy, people in power firmly believed holding those responsible would "harm the system." That it has taken five terrible, horrible, no good, very bad years to begin to hold bankers accountable for fraudulent and damaging behaviors is five years too long. And that's a terrible legacy for Obama to leave....

Saturday, August 3, 2013

Hoarders: the update

Guess what! After news reports focused attention on the company's unnecessary hoarding practices of metal, Goldman Sachs now pledges a way to make the delays disappear.

The news is too late for at least one institution that decided to change a key business practice due to the recent high costs of metal.  

I wonder how this will change Goldman's strategic outlook on metals. Perhaps metals are not so lucrative now that the artificial shortage is alleviated?  

Metals are not the only market Goldman likes to manipulate. Goldman's sacrificial lamb has been found liable in the massive CDO fraud case that lost one of its clients $1 billion as the same deal gained another client an equal sum.

And there are other recent stories about the damage inflicted by Goldman in other areas:

At some point, someone, somewhere is going to have to halt the predatory practices of this company. What's good for Goldman is NOT good for the rest of us.

Thursday, August 1, 2013

Seems I moved to Oceania...

Two years ago, I moved from Illinois to North Carolina. It was a jarring move - I'm a life-time resident of the Land of Lincoln, a state where politics are considered a true sporting event. Yet despite the state-wide passion for political sport, governance of that state is at an all-time low. Governors tend to end up in jail. Illinois is facing a terrible fiscal crisis caused by unfunded pensions. Pat Quinn, Illinois' current governor, is now withholding legislator salaries until the passage of pension reform; House Speaker Mike Madigan, the most powerful man in the state, has filed suit because he wants his paycheck regardless of whether or not a significant, long-term problem is solved for the state.

Because of the serious and ongoing political issues of Illinois, I was, to be frank, looking forward to a change of pace. 

And the Tar Heel state CERTAINLY has provided that for me... in spades! The GOP has taken charge - and as a colleague told me the other day, the state today is vastly different than the state I moved to two years ago.

What is the Tar Heel State?
North Carolina is a fascinating state; very rural in many places, but with an extraordinary focus on innovation in the Research triangle area (Raleigh-Durham-Chapel Hill). According to the US Census, the median family income is about $46,000, ranking it in the bottom half of the United States. Poverty is a significant issue - about 16 percent of the state's residents live in poverty.

Geographically, it's the widest state in the nation; bordered on the east by the Atlantic Ocean and the beautiful Outerbanks, and on the west, it holds the magnificent beauty of the Blue Ridge mountains. This is a state with historical significance - North Carolina is one of the 13 original colonies; home of some of the first English colonial settlements. 

The Wright brothers first took flight here in this state, at Kitty Hawk. Sometimes, what happens in North Carolina can transform the world. 

Education long a priority
North Carolina has been known for its focus on education. My children are in the local schools; I've been exceptionally happy with their teachers, with their principal, with their supplementary teachers in band and art. I love my school; I appreciate the local businesses who support our fundraisers. 

It seems, however, that North Carolina is in a transformational moment right now. And not for the better. The 2013 legislative session was one that seized (for a moment or two) the attention of the nation, with stories by the New York Times, Washington Post, The Atlantic, Rolling Stone, among others.

At one point, the 2013 North Carolina legislative session floated the idea of creating a state religion. This was the session that introduced "motorcyclevagina" into our cultural lexicon, shut down abortion clinics in the state and created what some call the worst voter suppression bill in the country.

And then there's education. The 2013 budget has an enormous impact on education as well.

Why I live in Oceania
If you look at the governor's website, the new budget seems like a dream come true for educators, with more money than ever before for education, allowing for investments in early childhood education, $10 million set aside for merit pay for deserving teachers, more resources for digital learning.

But people are not happy. Why is that?

Because North Carolina has become an Orwellian Oceania. Because the governor who likes to give cookies to people protesting serious issues is being disingenous with the facts.

Monday, July 29, 2013

Hoarders - the Bank Holding Company version...

Americans, dragged down by a sagging economy, high unemployment and a rather astonishing number of people living at risk of poverty, have new reality show to watch: Hoarders - the bank holding company version.

Emboldened by bonuses supplied by the US taxpayer and bolstered by the lack of any oversight or consequences for reprehensible behaviors on Wall Street that led to the collapse of the economy, America's biggest "bank holding companies" are expanding their businesses. No longer content to supply loans and CDOs and synthetic CDOs, those clever Ivy-educated bankers are in the commodities storage business.

And they're hoarding these commodities like those hoarders you can watch on A&E.

What does this mean? Your cans of Pepsi, Budweiser and Heineken have just gotten pricier. And the hoarders on Wall Street have just gotten richer.

This Business Insider story quotes a Goldman Sachs "commodities strategist" on how  "for investors, the case for holding commodities as a strategic move is still clear...."

Of course a Goldman Sachs strategist will say that - they're in control of the strategy and the activity that will lead to rising prices for commodities that the bank holding companies are pushing from storage facility to storage facility. (Once the commodity reaches the actual market and is sold, the price can't go up any higher, an alarming thought for any Goldman strategist...)

John Oliver on The Daily Show refers to it as a "merry-go-round of metal," and notes that "the new version of Monopoly is actually perfect. You just move pieces of metal around and around in a circle, collecting money whenever you want, and it's guaranteed that nobody is going to jail."

New York Times has weighed in on this, noting that:
"Policy makers must thoroughly investigate the aluminum warehousing strategies to determine whether Goldman and other warehouse operators distorted prices. They should also take a fresh look at whether banks should really be in the business of owning warehouses and other physical infrastructure."
Fat chance! In 2009, Dick Durbin went on a radio show and said:
"And the banks -- hard to believe in a time when we're facing a banking crisis that many of the banks created -- are still the most powerful lobby on Capitol Hill. And they frankly own the place."
So they own Congress. And now they own the storage facilities that can be used to park various commodities. And there's nothing anyone can do to stop them.

Or wait... perhaps there IS an entity that can hit back at the bankers with equal force. Not Congress... not consumers. The white knights that may come to America's rescue could be other capitalists - like those at businesses whose bottom line is being reduced by the greedy bankers who are hoarding what they need.

Tuesday, July 23, 2013

North Carolina is what happens when the Tea Party is in charge

The North Carolina General Assembly (NCGA) has been exceptionally busy this week. They passed a budget that trashes primary and secondary education - siphons money from public schools to charter schools, offers no raises to teachers (who've been without a raise for years), offers no incentives for teachers to get a masters degree; removes the possibility of tenure from new hires.

And that's just education. And it follows remarks McCrory made earlier in the year about higher education in North Carolina, home to the first public university in the country:
“If you want to take gender studies that’s fine, go to a private school and take it,” McCrory told host Bill Bennett, a former U.S. Secretary of Education. “But I don’t want to subsidize that if that’s not going to get someone a job."

They've just passed one of the most restrictive voter ID bills in recent history (THANK YOU SCOTUS, NOT!)

They've also passed one of the most alarming gun bills in America - allowing guns in schools and on campus (in locked cars), allowing patrons to bring concealed guns into bars, and prohibiting local municipalities from regulating the presence of guns in their parks and on greenways.

More than 900 people have been arrested for peaceably assembling in front of the capital during Moral Mondays. Apparently, the constitutional rights of citizens only matter when it comes to the 2nd Amendment.

This is a state that has also made "disturbing" cuts to unemployment benefits.

Of course, the loudmouths in Raleigh keep talking about jobs... but never act to create them. 

One of the first acts of the newly elected Governor earlier this year was to give his cabinet a raise, "so they could afford to live...." 

Unfortunately, McCrory and his cronies are creating a state where only he and his buddies will be able to live. 

More on the actions of NCGA here and here.

Tuesday, July 16, 2013

David Brooks completely misinterprets The Searchers

David Brooks was probably feeling very smart and intellectual and clever when he posted his most recent column. He links a great John Ford Western with a look at manhood today in America; he covers current unemployment stats, reflects on boy culture and school culture; he quotes the American Enterprise Institute along with lines from The Searchers. It's all in there.

The column is a muddled mess.

He opens with a rather vast claim: "As every discerning person knows, The Searchers is the greatest movie ever made."

Now I think we can say that discerning people know The Searchers is one of the greatest movies ever made. [I make that claim myself here.] But to assert as fact that it is the very greatest film ever made and to note that if you don't get that fact, you are not a discerning person - which is disdainful and argumentative - is perhaps not the best way to open this column.

He goes on to note that the close of the West has left American manhood in a perilous state:

Monday, July 15, 2013

On guns and groceries: a look at the Zimmerman trial...

Two days ago, as we were watching Saige: An American Girl, our program was interrupted to give us the verdict in a trial reflecting today's American zeitgeist - that violent and bloodied intersection of guns and race, the George Zimmerman trial. It was a very jarring end to the sugar-sweet American Girl story about the travails of a 9-year-old artist. My children were upset; they wanted to see the end of the movie; instead we all watched the verdict.

Today, as I ponder the news and analysis of this trial, I remain melancholy. Was it appropriate to let my 9-year-olds watch the verdict? What about my 13-year old? I remain torn about this. I know that as the verdict was announced, my three children wanted to know what happened. What was this trial about - a trial so significant it cut into the conclusion of an American Girl movie? After I explained the details, they did not understand how an armed adult could kill an unarmed teenager and be considered "not guilty." In our house, we talk a great deal about accountability for one's actions.

I find I don't understand a lot about this case. I don't understand why a man packed a gun alongside his grocery list (George Zimmerman claimed he was on his way to Target when he spotted the threat to the neighborhood.) I am repulsed and terrified by the idea that people are armed at the grocery store. I googled "taking a gun to a grocery store" today and came across this story - about a man who showed up at Kroger's in January with his AR-15 to promote his Second Amendment right to carry a gun (the semi-automatic weapon used in the Sandy Hook massacre.) According to the news story, even the NRA was not amused. But it was the man's legal right to do this.

I don't understand the threat posed by a 17-year-old in a hoody who was walking to his father's house early in the evening. In his call to the authorities, Zimmerman said "this guy's up to no good." Apparently, he was walking in the neighborhood "looking at all the houses."

And now that "f***ing punk" is dead.

The trial of George Zimmerman for the shooting death of Trayvon Martin is over and I have so many questions.

Friday, June 21, 2013

David Brooks mourns the loss of the humanities education

David Brooks has a post on the decline of the humanities. He seems not to understand that educating students to think critically has been under attack for quite some time now. His president, GW Bush, focused money and attention on "teaching to the test." It has been a cataclysmic failure.

Of course for Brooks, the Ivies are the benchmark. Brooks notes: "Even over the last decade alone, the number of incoming students at Harvard who express interest in becoming humanities majors has dropped by a third."

Brooks seems not to understand that that Ivies are the food source for the Wall Street Banks. An Ivy education focused on the humanities is not the best for those voracious enough to drag down the US economy and then expect a bonus as a result.

But the focus on the big bucks is not to blame. According to Brooks, humanities professors have "lost faith..." 
"Somewhere along the way, many people in the humanities lost faith in this uplifting mission. The humanities turned from an inward to an outward focus. They were less about the old notions of truth, beauty and goodness and more about political and social categories like race, class and gender. Liberal arts professors grew more moralistic when talking about politics but more tentative about private morality because they didn’t want to offend anybody."
Brooks does nail something right. He acknowledges the importance of the teachers who create thinkers out of teenagers: "A few years in that company leaves a lifelong mark."

Yes. A thousand times yes. Unfortunately, we live in a time where such teaching is belittled and devalued. And that is a tragedy for America.