Wednesday, November 30, 2011

Corruption or Incompetence; the Economic Effects Seem the Same

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One of the on-going arguments across the blogosphere and even the entire world is whether the economic problems of the last ten years are more related to incompetence or basic corruption. I must say, just the last week has offered plenty of evidence for both views. For example, we had this article from Bloomberg yesterday (Tuesday, November 29) about how then Treasury Secretary Hank Paulson met with his hedge fund buddies and gave them the first class insider information on his plans to place Fannie Mae and Freddie Mac into "conservatorship."

Paulson explained that under this scenario, the common stock of the two government-sponsored enterprises, or GSEs, would be effectively wiped out. So too would the various classes of preferred stock, he said.

The fund manager says he was shocked that Paulson would furnish such specific information -- to his mind, leaving little doubt that the Treasury Department would carry out the plan. The managers attending the meeting were thus given a choice opportunity to trade on that information.


And law professors say that Paulson himself broke no law by disclosing what amounted to inside information.


At the time Paulson privately addressed the fund managers at Eton Park, he had given the market some positive signals -- and the GSEs’ shares were rallying, with Fannie Mae’s nearly doubling in four days.

William Black, associate professor of economics and law at the University of Missouri-Kansas City, can’t understand why Paulson felt impelled to share the Treasury Department’s plan with the fund managers.

“You just never ever do that as a government regulator -- transmit nonpublic market information to market participants,” says Black, who’s a former general counsel at the Federal Home Loan Bank of San Francisco. “There were no legitimate reasons for those disclosures.”
So, apparently what Paulson did was not illegal, yet there were and are no controls on Paulson or anyone else receiving this information. But it does smell of corruption. Or maybe Paulson was so incompetent as to believe that he was just sharing gossip with his friends that would harm no one.

Thursday, November 24, 2011

Things to not be thankful for

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I, like so many of us, have much to be thankful for on this Thanksgiving 2011. I have the love of my family, even when we may not see each other for years at a time. I have my friends from all the times of my life, both "real" time and digital.

But for all the things we have to be thankful for, there are an equal number or more of things for which we cannot be thankful. Or at least, I cannot be thankful.

For example, while I can be thankful that the EPA may be willing to take a stand on fracking, I cannot be thankful that there will probably be gigantic loopholes in the rules that will mostly render them useless.

I can be thankful for FDL members helping out with #OccupySupply as well as being thankful for a District Attorney who knows how wasteful it is to arrest people for exercising their first amendment rights while not being at all thankful that we have elected officials so thin skinned as to demand an apology from a teenager speaking her mind.

I can be thankful for the sacrifice of a Bradley Manning while wondering how many folks who do not support Manning are in full support of people stealing emails from scientists because the scientists believe humans are causing climate change.

I can be thankful that US officials condemn Egypt for using excessive violence on protestors in Tahrir Square while wondering about the deafening silence from so many officials about the excessive force used to evict protestors in the US.

I can be thankful for the failure of the "super" committee to reach an agreement to further eviscerate the social safety net while being not at all thankful that so many of the Beltway Village Idiots Pundits and Politicians seem to think that people need the safety net because of some personal failings.

I can be thankful that some news outlets finally are reporting on the millions of working poor along with the millions of long term un and underemployed even while I try to not be thankful that Wall St wannabe MOTUs are joining the ranks as well. (It is difficult sometimes to not be as ungracious to them as they have been to us although I do try to keep from sending out to many negative thoughts as my karma does not need the bad reflections)

So yes, I am thankful for much this year as I am most every year at Thanksgiving. But there is as much to be unthankful for as there is to be thankful.

And because I can:

Wednesday, November 16, 2011

Occupy: Is this a wise use of resources?

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I, as have many of us, have been following the various #Occupy efforts with some interest. News coverage asking the plaintive whine "but what do they WANT?" combined with all the various attempts to make it all just a bunch of DFHs, druggies, and so on. (Rather defeated when even the Washington Post has articles like yesterday (Wednesday, November 16) where they lede with an admission that maybe the #Occupy folks did have some points in mind after all):

The movement began as a protest of major economic and political issues, but lately the most divisive issue has become the protests themselves. The Occupy Wall Street encampments that formed across the country to spotlight crimes committed on Wall Street have become rife with problems of their own. There are sanitation hazards and drug overdoses, even occasional deaths and sexual assaults.
So, in this one article, the Post manages to paint the original effort as valid but now has lost its way. In the overall online world there is an oft seen type of commenter known as a Concern Troll. That quoted paragraph from the Post seems to fit the definition to a tee.

Let's examine this a bit though. One of the themes of people like Mayor Bloomberg and Governor Cuomo as well as many other mayors and governors around the country is how things are so bad economically that the states must cut back in so many services, laying off teachers, first responders, cutting Medicaid eligibility, rolling back unemployment benefits, and generally destroying both the social safety net and wages and benefits for state workers. Yet here it is, New York City can incur millions of dollars in overtime costs going after unarmed, mostly peaceful protestors (according to this from WNYC it was over $5M by late October), yet city agencies are scrambling for funds:
The council’s concern over the issue comes as city agencies are scrambling to find ways to cut 2 percent of their current fiscal year budget and six percent in the next fiscal year. Those rollbacks are expected to help the city save $2 billion dollars overall.
As of this past Monday, Oakland had spent $2.4M dealing with Occupy Oakland and Portland, OR had spent $450K just for this past weekend's activities. Cincinnati has spent $128K in overtime. Jon Walker at FDL Action also asked yesterday where the money is coming from for these police actions.