September 2011 archive

Never mind dreaming of Jeannie, trader Alessio Rastani tells the BBC host that he goes to bed dreaming of the next recession and doesn’t care what happens to the economy because people like him will make a fortune from the crash. He almost makes an ambulance chasing lawyer sound like a humanitarian but he’s not wrong just painfully realistic.

“This is not a time right now for wishful thinking that governments are going to sort things out,” Rastani told the BBC. “The governments don’t rule the world, Goldman Sachs rules the world.”

In a candid interview about the Eurozone rescue plan, Rastani said the market is ruled by fear and cannot be saved by the rescue plan.

“They know the stock market is toast,” he said. “They know the stock market is finished.”

Rastani said most investors are moving their money to places it would be more safe, like U.S. treasuries and the dollar, as they simply do not care about the state of the economy but rather about their own pockets.

“Personally it doesn’t matter,” he said. “See I’m a trader. I don’t really care about that kind of stuff. If I see an opportunity to make money, I go with that.”

snip

“For most traders…we don’t really care that much about how they’re going to fix the economy, how they’re going to fix the whole situation,” Rastani said. “Our job is to make money from it.”

h/t Yves Smith @ naked capitalism

“Find out why a “peck” of Republicans comprised of Sen. Jim DeMint, Sen. John Cornyn of Texas, Rep. Tim Huelskamp of Kansas, Rep. Dave Camp of Michigan and conservative columnist John Feehery is WORSE; FOX News’ Bill O’Reilly is WORSER; and Pam Olsen, Rick Perry’s new Florida campaign co-chair, is the WORST PERSON IN THE WORLD for September 23, 2011.

Evening Edition is an Open Thread

Now with 48 stories.

1 Former aides of Japan strongman Ozawa sentenced

AFP

1 hr 17 mins ago

Rewarding Good Rhetoric

by David Atkins (“thereisnospoon”), Hullabaloo

9/26/2011 07:30:00 AM

Obviously, the so-called “Obama Wars” in the blogosphere are more complicated than this: the President could surely take a stronger negotiating position so that the final compromise position with Republicans to avert disaster would have a decidedly more left-leaning skew. Certainly, the President could always have been doing much more with executive decisions, bypassing the Legislature to achieve more progressive results. The President’s rhetoric over the last couple of years could no doubt have been far more forceful. And it would be easier to give the President the benefit of the doubt were there not ample evidence that he actually believes conservative claims that Social Security and Medicare require cutting in order for the nation to solve its deficit problems. Changing all of these things would have helped dramatically, and the criticism the President has received from progressives on these fronts has been more than valid.

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Progressives are rightly furious with the President over what he has done–and perhaps more importantly, what he has not done over the past two years.

But the reality is that from now until November 2012, the President is not going to be able to accomplish much of anything in the legislative arena. The Republicans simply won’t allow him to claim any sort of legislative victory, no matter how small.

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Is that a political ploy to win back the progressive base? Probably. But what of it? First of all, rhetoric matters. When the President speaks, the people listen. And if the President is telling the progressive story in an aggressive way, that itself constitutes action in its own way.

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(G)iven that for better or worse Mr. Obama will be the Democratic standardbearer in 2012, a progressive activist seeking to reward good behavior and punish bad behavior would be wise to praise this newfound aggressive rhetoric as not only a good first step, but truly the only real step possible at this point given the political dynamic at work.

Of course, once election season is over, there has to be follow through.

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But for now and for the next year, rhetoric will be 90% of what we have to judge this President on. It’s fairly impossible to tell whether Mr. Obama has had a real change of heart regarding his negotiating strategy with Republicans or not.

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It’s important that this change of pace in his rhetoric be rewarded. We have little else to go on at this point, and little other leverage to use.

Wrong!  And here is why-

For Voters to Believe Obama’s Second Term Will Bring About Change, He Needs to Acknowledge What Needs to Change in Himself

Arianna Huffington, The Huffigton Post

Posted: 9/18/11 11:29 PM ET

We’ve now seen the ways in which the president went about trying to effect that change over the last three years. So while his ideas about the changes the system needs in his second term are welcome and necessary, there is another kind of change he needs to talk about if the change he proposes is to be believed. He needs to make clear the changes he intends to make in himself, in the way he governs, and in the way he approaches the big, systemic changes he claims to want to see.

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Obama has continued to make eloquent speeches about the need for change — but it’s the between-the-speeches-about-change part that needs some change of its own. Because, at this point, it’s abundantly clear that the system isn’t going to change unless Obama’s method of bringing about change changes first.

It won’t be easy. The closer we get to the 2012 election, the more voters tend to dismiss all rhetoric as mere electioneering. So given this rhetorical depreciation — an election speech loses half its value the second you drive it off the lot — this time it’s going to take more than Obama trumpeting change as the goal. This time we need to hear more about exactly how he intends to change the ways he intends to bring about change. This requires acknowledging that change is not just needed in the country, but in himself.

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(T)he president’s problem going forward is explaining the shift: If you’ve been taking one approach and then you abruptly change without acknowledging why, or even that you did, or what lessons were learned that caused you to make the change, it just doesn’t ring true.

Of course, acknowledging mistakes and course-correcting are the hardest things for a leader to do. But in order for voters to believe that things will be different in the president’s second term, there has to be some recognition of what didn’t work in the first. Otherwise, any future talk of change will be like hearing a song without the music. And the more often words of change are used without real change happening, the more devalued they will become.

Arianna on what Obama needs to do

By John Aravosis, Americablog

9/22/2011 12:45:00 PM

I’m posting this because this is exactly what I’ve been telling people the past few days. I want to believe that the President’s shift towards being a fighter and not a lover is real. And he’s made some good moves and should be lauded for it. But I’m not sure whether it’s entirely real because it doesn’t quite make sense. What changed? How do you one day wake up and become a different person? I think it’s possible to change, but I think it usually takes some kind of personal epiphany, brought on by seriously bad circumstances, and I guess I’d like to know more about what that epiphany was, in order to believe that it’s real. That’s why Arianna’s words above hit a chord for me.

Obama making big push to win back minorities and other core Democratic voters

By John Aravosis, Americablog

9/25/2011 08:00:00 AM

A lot of us predicted this two years ago, and really more than two years ago. We warned that core constituencies were getting seriously ticked off, and that the President’s desire for comity was making him look, well, like a wimp (we just didn’t use the word because it wasn’t polite).  And in response, we were called “bedwetters,” and more generally belittled by senior presidential aides.

I’m glad the President appears to be changing direction these past few weeks.  But if it’s only based on the current polls, and the fear of not being re-elected, then how do we know we won’t be back to where started (the phrases “f’g retards,” “professional left,” and “Internet left fringe” come to mind) the day after Barack Obama is re-elected? That’s a core concern the campaign, and the White House, need to address.

We want to see an epiphany, not just a temporary tactical correction that will end on November 7, 2012, regardless of who wins.

Obama’s small financial donors not showing interest this time

By Chris in Paris, Americablog

9/25/2011 05:55:00 PM

Sounds like quite a few people who expected “change” and aren’t seeing it. The “professional left” is possibly a bit larger than the White House team imagined. So now that the Wall Street people who donated heavily to Obama in 2008 think that he’s a socialist, the youth vote is disillusioned and the small donors feel that he gives in too easily, will this finally make a difference? The recent tone sounds like an improvement but at this point, most want more than just a few days of tough talk.

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This issue is what really has stood out for me in the last few weeks of travel in the US. Friends and family who were among the most supportive of Obama in 2008 are disgusted with the constant crumbling on issue after issue. It hardly sounded like it was a casual concern, but instead, very deeply rooted with voters. Reading this NY Times piece, it sounds like it’s a very serious problem that needs to be addressed.

And of course, as TheMomCat pointed out previously, Obama isn’t even able to give up his progressive bashing rhetoric for a whole solid week.

So the question on the table is- do you want to vote for a Conservative Republican?

Or a Conservative Republican who’s also an opportunistic liar?

Harry Truman gave us the answer to that-

Given the choice between a Republican and someone who acts like a Republican, people will vote for the real Republican all the time.

“Punting the Pundits” is an Open Thread. It is a selection of editorials and opinions from around the news medium and the internet blogs. The intent is to provide a forum for your reactions and opinions, not just to the opinions presented, but to what ever you find important.

Thanks to ek hornbeck, click on the link and you can access all the past “Punting the Pundits”.

Dean Baker: Why Don’t the Deficit Hawks Want to Tax Wall Street?

The intensity with which the country’s leading deficit hawks continue to ignore financial speculation taxes (FST) is getting ever more entertaining. While deficit hawks like Wall Street investment banker Peter Peterson, Morgan Stanley Director Erskine Bowles and The Washington Post never tire of preaching the virtues of shared sacrifice, somehow sacrifice for Wall Street never features as a part of this story.

The refusal of this group to consider FST is becoming more striking because most of the world appears to be moving in this direction. Last spring, the European Parliament voted by an almost four to one margin in support of FST. The European Commission, the executive body of the European Union (EU), is now making plans to implement a modest tax beginning in 2014.

New York Times Editorial: An Indefensible Punishment

When the Supreme Court reinstituted the death penalty 35 years ago, it did so provisionally. Since then, it has sought to articulate legal standards for states to follow that would ensure the fair administration of capital punishment and avoid the arbitrariness and discrimination that had led it to strike down all state death penalty statutes in 1972.

As the unconscionable execution of Troy Davis in Georgia last week underscores, the court has failed because it is impossible to succeed at this task. The death penalty is grotesque and immoral and should be repealed.

Over the weekend President Obama was out on the campaign trail giving rousing speeches to “energize his base”. Kicking off on Satuday night, he spoke before the annual awards dinner of the Congressional Black Caucus, urging them to:

“stop complaining” and fight for jobs and opportunity. “Shake it off,” Obama said. “Stop grumbling. Stop crying. We are going to press on. We have work to do.”

Mighty words but are they good enough to shake off the apathy of the voters who contributed time and money to get him elected. While Obama’s poll number have fallen dramatically among white voters and independents, his numbers are now slipping among Black and minority voters:

A Washington Post-ABC poll published last week showed that while African Americans continue to view the president favorably in overwhelming numbers, the proportion of blacks expressing strongly positive views of Obama has dropped 25 points since mid-April – from 83 percent to 58 percent. His “favorable” rating has slipped below 50 percent among those age 18 to 29. And among all liberal Democrats, that number has dropped from 69 percent in April to 52 percent.

And his continues “bashing” of the left at a fund raiser in San Jose, California where he said this:

Mr. Obama said it’s not enough for the supporters in the audience to support him. He said if their friends and neighbors are reading the Wall Street Journal editorial page or watching Fox News the donors at this event need to talk to “push back” on their “inadequate information.”

“And in some cases I may need you to have some arguments with our progressive friends,” Mr. Obama said.

He said over the last 2.5 years even though he’s gotten a lot done a lot of Democrats “get dispirited.” He brought up the complaint about health care reform without a public option – “c’mon!” he said. He said he hasn’t got everything done on the environmental front because of the economy.

“We’re going to have a stark choice in this election. But I have to make sure that our side is as passionate and as motivated and is working just as hard as the folks on the other side because this is a contest of value. This is a choice about who we are and what we stand for and whoever wins this next election is going to set the template for this country for a long time to come.”

He told the donors if they believe in a “fact-based” America, they need to work hard for him.

POTUS also quoted “my friend Joe Biden,” who likes to say, “Don’t compare me to the almighty, compare me to the alternative.”

Oh, yea, that’ll work to overcome this problem:

Through June 30, the close of the most recent campaign reporting period, more than 552,000 people had contributed to Mr. Obama’s re-election effort, according to campaign officials. Half of them were new donors, and nearly all of them gave contributions of less than $250.

But those figures obscured another statistic: a vast majority of Mr. Obama’s past donors, who number close to four million, have not yet given him any money at all.

He doesn’t get it:.

As many of us warned, Obama’s pivot to deficit reduction proved to be devastating.  Not only did it completely undermine any ability to argue persuasively for more supportive federal spending; it poured the foundation for the right wing’s radical anti-government attacks on funding all of the beneficial public programs enacted since the New Deal.

Instead of mounting a vigorous defense of these programs and government’s role in protecting the public interest, the President’s budget rhetoric repeatedly undermined them.  In statement after statement, Obama falsely equated a household budget and the supposed need to tighten family belts with the federal budget and the need for government to cut back on spending.

Obama’s austerity message was dead wrong; every responsible economist knew that massive deficit spending was the one thing keeping the economy afloat while the private sector reduced its debts, and such deficits might be needed for years.

Obama is the one who needs to change, drastically and now.

Monday Business Edition

Europe Readying Yet Another "This Really Will Do the Trick" Bailout Package

Yves Smith, Naked Capitalism

Saturday, September 24, 2011

(I)n another bit of deja vu all over again, the powers that be in Europe are readying yet another bailout plan, this one supposedly big enough to do the trick once and for all. The problem is that was the premise of several of the last grand schemes, such as the EFSF and the ESM. The market calming effect relatively short lived because analysts quickly pencilled out the programs were inadequate in size and failed to address the problems of lack of a fiscal mechanism at the EU level and the need to address the elephant in the room, bank solvency.

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The new rescue program seeks to create a sovereign debt crisis firebreak at Greece, Portugal, and Ireland, when contagion has already put Spain, Ireland, and Belgium in the crosshairs. The high concept is leverage on leverage plus monetization: the EFSF, which is basically a CDO, would then provide the equity to a new fund, and the ECD would provide “protected ‘debt'” I’m not at all certain what the latter is supposed to mean; reader input is welcome. But this sounds like a CDO squared, with an unfunded equity tranche, as a legal/political cover for the ECB monetizing Euro sovereign debt. Nevertheless, this mechanism will allegedly allow for sovereign bailout program of €2 trillion.

Similarly, the size of the bank recapitalization program is in the “tens of billions”, vastly short of the €2-€3 trillion that some experts think is necessary. And note this is backwards: the debt needs to be written down directly (rather than trying to squeeze blood out of turnips via austerity) and banks recapitalized directly. Instead, the focus is (yet again) on bailing out the sovereigns, who will presumably still be expected to wear austerity hairshirts, which will worsen their debt to GDP ratios (even if this program does succeed in getting them cheaper debt in sufficient volumes).

The Eurocrats are going to be slow out of the gate. They want to launch the plan at the next G20 meeting, which is six weeks away, November 4. Mr. Market doesn’t care about the schedules of the officialdom, and is highly unlikely to wait that long.

Euro Zone Death Trip

By PAUL KRUGMAN, The New York Times

Published: September 25, 2011

European policy makers seem set to deliver more of the same. They’ll probably find a way to provide more credit to countries in trouble, which may or may not stave off imminent disaster. But they don’t seem at all ready to acknowledge a crucial fact – namely, that without more expansionary fiscal and monetary policies in Europe’s stronger economies, all of their rescue attempts will fail.

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Think of it this way: private demand in the debtor countries has plunged with the end of the debt-financed boom. Meanwhile, public-sector spending is also being sharply reduced by austerity programs. So where are jobs and growth supposed to come from? The answer has to be exports, mainly to other European countries.

But exports can’t boom if creditor countries are also implementing austerity policies, quite possibly pushing Europe as a whole back into recession.

Also, the debtor nations need to cut prices and costs relative to creditor countries like Germany, which wouldn’t be too hard if Germany had 3 or 4 percent inflation, allowing the debtors to gain ground simply by having low or zero inflation. But the European Central Bank has a deflationary bias – it made a terrible mistake by raising interest rates in 2008 just as the financial crisis was gathering strength, and showed that it has learned nothing by repeating that mistake this year.

As a result, the market now expects very low inflation in Germany – around 1 percent over the next five years – which implies significant deflation in the debtor nations. This will both deepen their slumps and increase the real burden of their debts, more or less ensuring that all rescue efforts will fail.

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Part of the problem may be that those policy elites have a selective historical memory. They love to talk about the German inflation of the early 1920s – a story that, as it happens, has no bearing on our current situation. Yet they almost never talk about a much more relevant example: the policies of Heinrich Brüning, Germany’s chancellor from 1930 to 1932, whose insistence on balancing budgets and preserving the gold standard made the Great Depression even worse in Germany than in the rest of Europe – setting the stage for you-know-what.

Greece needs to default on its debt and exit the eurozone

If the current Greek government can’t take the necessary steps to do this, it should give way to other political forces than can

Stergios Skaperdas, The Guardian

Monday 26 September 2011 05.00 EDT

Preparing for default involves the formation of a large number of expert teams to defend Greek interests with conviction. For the debt that is based on Greek law, Greece has the upper hand. Negotiations for other debt will be more difficult and protracted.

Since Greek banks will become insolvent, they will have to be nationalised and preparations will need to be made for that. The insurance and pension funds will need to be bailed out, too. For both banks and funds to be bailed out, the country will need its own currency. Therefore, exit from the eurozone would follow.

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(T)here is little doubt among economists that the easiest mechanism for a country to gain competitiveness is to have its currency depreciate. Hence, Greece having its own currency is the easiest path to gaining international competitiveness. Cars and iPhones will become more expensive but food might actually become cheaper and employment will pick up within a few months after the introduction of the new drachma. By contrast, unemployment and deprivation with no end in sight are the predictable results of following the troika’s policies.

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The main problem with an exit from the eurozone is the transition period. Capital controls will have to be imposed. Temporary measures to ration foreign exchange for the importation of petroleum and other essential items will have to be undertaken. How will the Bank of Greece settle with the ECB? How will debt be converted from euros to drachmas?

This is your morning Open Thread. Pour your favorite beverage and review the past and comment on the future.

Find the past “On This Day in History” here.

September 26 is the 269th day of the year (270th in leap years) in the Gregorian calendar. There are 96 days remaining until the end of the year.

On this day on 1957, West Side Story premieres on Broadway. East Side Story was the original title of the Shakespeare-inspired musical conceived by choreographer Jerome Robbins, written by playwright Arthur Laurents and scored by composer and lyricist Leonard Bernstein in 1949. A tale of star-crossed lovers-one Jewish, the other Catholic-on Manhattan’s Lower East Side, the show in its original form never went into production, and the idea was set aside for the next six years. It was more than just a change of setting, however, that helped the re-titled show get off the ground in the mid-1950s. It was also the addition of a young, relatively unknown lyricist named Stephen Sondheim. The book by Arthur Laurents and the incredible choreography by Jerome Robbins helped make West Side Story a work of lasting genius, but it was the strength of the songs by Stephen Sondheim and Leonard Bernstein that allowed it to make its Broadway debut on this day in 1957.

There are no videos of the original Broadway production which starred Larry Kert as Tony, Carol Lawrence as Maria, Ken Le Roy as Bernardo and Chita Rivera as Anita (Ms. Rivera reprized her role in the movie), so here is the Prologue from the Academy Award winning movie. The area that the movie was filmed no longer exists. The 17 blocks between Columbus and Amsterdam Avenues, from West 60th to West 66th Street on the Upper West Side of Manhattan where he filming took place were demolished to build Lincoln Center for the Preforming Arts.

Regular Features

• Late Night Karaoke by: mishima
• Cartnoon by: ek hornbeck

Featured Essays-

• Six In The Morning by: mishima
• On This Day In History September 25 by: TheMomCat
• Police Arrest 80 in NY by: wilberforce
• If This Were The Tea Party by: TheMomCat
• On Protecting The Innocent, Or, Is There A Death Penalty Compromise? by: fake consultant
• Occupy Wall St. Day 8 with Livestream by: TheMomCat
• Pique the Geek 20110925: Faster than Light by: Translator

DocuDharma

The recent results from CERN (the acronym for the original name for the outfit, Conseil Européen pour la Recherche Nucléaire) about neutrinos being propagated faster than light speed has caught a lot of attention.  I am still not convinced that the data are correct, but 15,000 individual measurements at the high certainty that is claimed certainly gets one’s attention.

I am not prepared to say whether or not these results are valid as of yet.  The folks at CERN are begging other laboratories with comparable apparatus and expertise to verify (or to refute) the findings.  That is how science is supposed to work!

However, 15,000 individual determinations are a LOT of data!  Let us for the moment take the data at face value and assume that this is not a fluke nor a mistake, but an actual “violation” of the Special Theory of Relativity that indicates that no massive particle can exceed the speed of light, henceforth called c.  Ready to do some thought experiments?  I am!  Let us go!