March 2013 archive

In the aftermath of 9/11 and the run up to the invasion of Iraq, the world was glued to television news, especially cable. Here in the US the news is dominated by three networks. CBS, ABC, and NBC and three major cable channels, CNN, Fox News and MSNBC. Most of the them spewed the Bush administration spin that Sadaam Hussein had weapons of mass destruction, was building a nuclear weapon and had ties to Osama bin Laden, Al Qaeda and 9/11, all lies and they knew it. This war was about the control of the oil reserves in Iraq, it always from the moment that the neocons got their hooks into the White House with Ronald Reagan’s election. It was under Reagan that the free press started to die with the end of the Fairness Doctrine and the loosening of regulation that allowed the likes of Rupert Murdoch to gobble up the airways, Fox news, and print media. It culminated in the 90’s with the corporate acquisition of NBC by General Electric and CBS by Viacom and CNN by Time Warner.

During the lead up to Iraq there was one voice on the airways that stood out against the hype, Phil Donahue, whose liberal voice focused on issues that divide liberals and conservatives in the United States, such as abortion, consumer protection, civil rights and war issues. His feud with another MSNBC host, Chris Matthews over the Iraq War led to the cancellation of Donahue’s popular show. Matthew’s involvement in the outing of CIA operative Valerie Plame is never mentioned.

I am not sure exactly when the death of television news took place. The descent was gradual-a slide into the tawdry, the trivial and the inane, into the charade on cable news channels such as Fox and MSNBC in which hosts hold up corporate political puppets to laud or ridicule, and treat celebrity foibles as legitimate news. But if I had to pick a date when commercial television decided amassing corporate money and providing entertainment were its central mission, when it consciously chose to become a carnival act, it would probably be Feb. 25, 2003, when MSNBC took Phil Donahue off the air because of his opposition to the calls for war in Iraq.

Donahue and Bill Moyers, the last honest men on national television, were the only two major TV news personalities who presented the viewpoints of those of us who challenged the rush to war in Iraq. General Electric and Microsoft-MSNBC’s founders and defense contractors that went on to make tremendous profits from the war-were not about to tolerate a dissenting voice. Donahue was fired, and at PBS Moyers was subjected to tremendous pressure. An internal MSNBC memo leaked to the press stated that Donahue was hurting the image of the network. He would be a “difficult public face for NBC in a time of war,” the memo read. Donahue never returned to the airwaves.

In 2003, the legendary television host Phil Donahue was fired from his prime-time MSNBC talk show during the run-up to the U.S. invasion of Iraq. The problem was not Donahue’s ratings, but rather his views: An internal MSNBC memo warned Donahue was a “difficult public face for NBC in a time of war,” providing “a home for the liberal antiwar agenda at the same time that our competitors are waving the flag at every opportunity.” Donahue joins us to look back on his firing 10 years later. “They were terrified of the antiwar voice,” Donahue says.

Transcript here

Democracy Now! host Amy Goodman confronted Matthews on Donahue’s firing outside NBC headquarters in New York City on the 10th anniversary of the invasion.

Buzzfeed unearthed the videos of the vitriolic exchanges between Matthew and Donahue revealing how much they despised each other. Matthews was the driving force that got Donahue fired and MSNBC was not eager to promote the anti-war point of view. Thank the internet for You Tube, here are the videos of the episode from Donahue’s show with guest Matthews:

As the dust of enthusiasm settles over this morning’s Cyprus deal with the European Union that closed the country’s second-largest bank and created a set of capital controls to prevent a run on the remaining banks, the financial world is taking a closer look and they aren’t happy. The agreement adheres to the law protecting insured accounts less than 100,000 euros. Supposedly, this deal prevented the immediate collapse of the Cyprus economy and its exit from the euro and, possibly, the European Union. Several economic analysts discuss the ramifications on the global banking and economy.

The Prodigal Greek has the simplest explanation of what capital controls entail (h/t Yves Smith):

Here is what a cash economy looks like:      

• Restrictions in daily withdrawals
• Ban on premature termination of time savings deposits
• Compulsory renewal of all time savings deposits upon maturity
• Conversion of current accounts to time deposits
• Ban or restrictions on non cash transactions
• Restrictions on use of debit, credit or prepaid debit cards
• Ban or restriction on cashing in checks
• Restrictions on domestic interbank transfers or transfers within the same bank
• Restrictions on the interactions/transactions of the public with credit institutions
• Restrictions on movements of capital, payments, transfers
• Any other measure which the Finance Minister or the Govern or of Cyprus Central Bank see necessary for reasons of public order and safety

In other words, Cyprus euros can only be spent in Cyprus and cannot be taken out of Cyprus to any other country; checks, debit and credit cards are useless. It is a strictly cash and carry local economy since Cypriots will not be able to make internet purchases. It will restrict travel into and out of the island, as well. The agreement has isolated the tiny island from the rest of the EU. Economics and financial analyst, Frances Coppola explains the ramifications of these restrictions:

From Tuesday, Cyprus becomes a black hole in the Eurozone: any money that goes into it stays there, and no money can leave……From a safe distance, it will appear frozen in time, a small cash-based economy, isolated from the rest of the EU. While inside, invisible to all except those who actually go there – or live there – its social fabric is torn apart as its economy collapses. Note the final clause in the capital control bill:

   Any other measure which the Finance Minister or the Governor of Cyprus Central Bank see necessary for reasons of public order and safety

So as people’s livelihoods are destroyed and their standard of living crashes, other measures may be introduced to ensure that they can’t take matters into their own hands.

From Yves Smith at naked capitalism is her summation of the attempt to contain Cyprus:

First, confiscating bank deposits is now on the table in any future crisis. That’s toothpaste that’s not going back in the tube. Commerzbank chief economist Jörg Krämer has already suggested (Google translates) “a one-time property tax levy” for Italy and “a tax rate of 15 percent on financial assets.” And adding fuel to the fire, the Leader of the UK Independence Party has urged expats in the periphery countries, in particular the 750,000 British in Spain to “Get your money out of there while you’ve still got a chance.”

Second, capital controls in Cyprus mean that there are now two Euros in effect: The Euro that you can use only in Cyprus, and the Euro you can use elsewhere in the so-called “monetary union.” So from the perspective of people in Cyprus, the results are in some ways worst that a breakup: rather than having depreciated dough, you have dough that has been impounded, particularly in terms of using it outside Cyprus. [..]

Third, these concerns may be amplified by how rapidly and visibly the Cypriot economy craters. The “rapidly” is due to the fact, as discussed in greater detail in the post from Cyprus.com below, that the Cyprus economy will suffer a one-two punch: the loss of a big chunk of wealth, plus the disappearance of much of the financial services sector, which was 45% of GDP.

The capital controls have isolated Cyprus from the rest of the EU without actually expelling the country.

The deal may have stayed the immediate crisis but it hasn’t stopped the eventual collapse of the Cyprus economy or its future exit from the euro. Not only that, it is the shot across the bow for other economically troubled EU countries of things to come.  

This bracket has the only 2 teams I’m really interested in.  Michigan State out of sentiment, I have no idea how they played this season, and the Lady Huskies out of residence.

Geno’s team stunk this year, there’s no more polite way to put it, and they certainly don’t deserve their number 1 seeding.

Since I’m not sure how far either will advance, here are their fight songs-

These are the short versions you’ll hear during time outs.  The full version of the Michigan State Fight Song was arranged by Leonard Falcone who I studied Euphonium under for a time.

He thought I was hopeless and he was absolutely right.

* == Upset

Gaius Publius of Americablog succinctly defined one of those vague terms that we heard so often since the banking crisis began in 2007, Credit Default Swaps (CDS) :

Credit default swaps are pure casino bets. They were originally designed as a form of insurance against bond and other credit defaults (“I’ll pay you a monthly fee and you pay me my losses if these bonds default.”)

It’s a simple concept, but CDSs soon evolved. Turns out you don’t have to actually hold the bonds to insure them. This means that one guy can sit at a table with a bunch of bonds (or bundles of mortgages), while another guy can insure them. Meanwhile, at 50 other tables, 50 more guys can buy the same “insurance” on the same bonds from anyone who will sell it to them. Keep in mind, only the first guy actually holds the bonds. The other guys just know they exist.

That’s 50 side-bets on one set of bonds. Placing side-bets on someone else’s property is like betting on a ball game you’re just watching. Like I said, pure casino money.

Do you see the problem? One guy’s bonds default and suddenly 51 guys in that room, everyone who sold “insurance,” they’re all wiped out. Why? Because the dirty secret of derivatives bets is that the people offering the “insurance” rarely have the money. They’re betting that they can collect “insurance” fees forever and the defaults will never come. That’s what happened with mortgage-backed bets in 2007, and that’s what’s happening today.

In 2010, the Democratic held Congress passed the Dodd-Frank Wall St. Reform and Consumer Protection Act to rein in the worst practices of the banks and Wall St. Needless to say, it is overly complicated, inadequate and has yet to be fully implemented.

That has not stopped the now Republican held House, along with some Democrats, to end some of the regulations. Less that week after Sen. Carl Levin released a scathing report on the $6.7 billion loss (pdf) of JP Morgan Chase in the infamous “London Whale” deal, the House Agriculture Committee, go figure that logic, approved seven bills that would gut regulation of the derivatives market and once again, if the banks lose, the tax payer makes good the losses. Sound familiar? Does TARP ring a bell? The housing market crash?

In his Salon article David Dayen asks if JP Morgan is a farmer?

It turns out that the Agriculture Committees have held jurisdiction over derivatives since the mid-19th century, when farmers used derivatives to achieve stability over future prices. Traders still use derivatives for corn and other commodities, but the world of derivatives has grown far more sophisticated over the decades. Nevertheless, congressional committees zealously guard their jurisdictions, and so a bunch of lawmakers from rural states get to determine a major aspect of financial policy. [..]

To see how this all works, just look at the hearing on these derivatives bills, held last week. When Ag Committee chairman Frank Lucas wasn’t openly parroting industry scare tactics about energy price spikes from regulation, he called on a list of witnesses that included four industry trade group representatives and one public advocate from Americans for Financial Reform, Wallace Turbeville. (He did great (pdf).) Or for an even clearer indication, read these PowerPoint slides created for Ag Committee staff by the Coalition for Derivatives End-Users, an industry-backed lobbyist organization. This extremely one-sided perspective on the issue simply becomes the default position for committee members and their staffs, an example of the “cognitive capture” in D.C. that sidelines alternative voices. And it all happens under the radar.

One of the Democratic House members who is sponsoring these bills, is Rep. Jim Himes, a former Goldman Sachs vice president who represents the Connecticut bedroom communities of Wall Street traders. It’s not hard to imagine why he defended his support of these bills when asked by the press. The Democratic members of the committee who voted with the 25 Republicans to send these bills to the House floor are: Pete Gallego (TX-23); Ann Kuster (NH-2); Sean Patrick Maloney (NY-18); Mike McIntyre (NC-07); David Scott (GA-13); and Juan Vargas (CA-51).

These are the bills that were passed by the committee:

H.R. 634 (pdf), the Business Risk Mitigation and Price Stabilization Act of 2013

·       H.R. 677 (pdf), the Inter-Affiliate Swap Clarification Act

·       H.R. 742 (pdf), the Swap Data Repository and Clearinghouse Indemnification Correction Act of 2013

·       H.R. 992 (pdf), the Swaps Regulatory Improvement Act

·       H.R. 1003 (pdf), To improve consideration by the Commodity Futures Trading Commission of the costs and benefits of its regulations and orders.

·       H.R. 1038 (pdf), the Public Power Risk Management Act of 2013

·       H.R. 1256 (pdf), the Swap Jurisdiction Certainty Act

Even if these bills all get passed, they will never see the light of day in the Senate.

Sheila Bair, the longtime Republican who served as chair of the Federal Deposit Insurance Corporation (FDIC) during the fiscal meltdown five years ago, joins Bill to talk about American banks’ continuing risky and manipulative practices, their seeming immunity from prosecution, and growing anger from Congress and the public.

“I think the system’s a little bit safer, but nothing like the dramatic reforms that we really need to see to tame these large banks, and to give us a stable financial system that supports the real economy, not just trading profits of large financial institutions,” Bair tells Bill.

“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”.

Follow us on Twitter @StarsHollowGzt

Paul Krugman: Hot Money Blues

Whatever the final outcome in the Cyprus crisis – we know it’s going to be ugly; we just don’t know exactly what form the ugliness will take – one thing seems certain: for the time being, and probably for years to come, the island nation will have to maintain fairly draconian controls on the movement of capital in and out of the country. In fact, controls may well be in place by the time you read this. And that’s not all: Depending on exactly how this plays out, Cypriot capital controls may well have the blessing of the International Monetary Fund, which has already supported such controls in Iceland.

That’s quite a remarkable development. It will mark the end of an era for Cyprus, which has in effect spent the past decade advertising itself as a place where wealthy individuals who want to avoid taxes and scrutiny can safely park their money, no questions asked. But it may also mark at least the beginning of the end for something much bigger: the era when unrestricted movement of capital was taken as a desirable norm around the world.

David Dayen: Banks Are Too Big to Fail Say … Conservatives?

Intellectuals on the right are coming around to the idea that our biggest financial institutions could use a little regulation.

Members of the Federal Reserve don’t usually make the rounds at partisan gatherings. But amid the tri-cornered hats and “#StandWithRand” buttons of last week’s Conservative Political Action Conference (CPAC)-the largest annual gathering of conservatives in the country-was Richard Fisher, president of the Dallas Federal Reserve Bank. In a Saturday morning speech, Fisher quoted Revolutionary War hero Patrick Henry, who once said that while “Different men often see the same subject in different lights,” such quibbling had to be set aside in a time of “awful moment to this country.”

Fisher described the current time as an era of economic injustice in which the nation’s largest banks threaten our financial stability and act with immunity. He said that the Dodd-Frank financial reform law did not go nearly far enough to fix the problem, and that mega-banks still profited from being “Too Big to Fail.” His solutions included a proposal to limit the total assets held by the biggest financial institutions, keeping them at a size that would make them “small enough to save.” And he called on citizens of all political stripes to join him in this cause. “The American people will be grateful to whoever liberates them from a recurrence of taxpayer bailouts,” Fisher concluded. It was an indication of just how bipartisan the support for breaking up the big banks has become.

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.

March 25 is the 84th day of the year (85th in leap years) in the Gregorian calendar. There are 281 days remaining until the end of the year.

On this day in history, two tragic fires occurred in New York City. In 1925, the Triangle Shirtwaist Factory fire claimed 146 lives and 79 years later, in 1990, the Happy Land fire killed 87 people, the most deadly fire in the city since 1911.

* == Upset.

When I started to write this blog about the sex vs. gender debate,  I was going to write a nice, intellectual piece, fully referenced, stating my position. But as I sat down to write it, I realized there is no clear-cut solution and presumably, most of the discussion has been decided in favor of the gender ideology, ranging from post-modern feminists in the academy, to the queer community, to the communist left.

In a recent antiwar speech in Washington, D.C., Angela Davis, while giving a laundry list of oppressions, mentioned both gender and LGBT, but failed to mention the word “women.” Sonia Sanchez, in the same event, left out categories having to deal with women’s liberation altogether (although in her poetry she did make the pronoun gender neutral).  

At the same time, mainstream feminists (what is generally referred to as the white middle class women’s movement) seem content to deal with reproductive issues such as abortion and contraception, rape and wife battering in a piecemeal fashion, with little overriding ideology or causal framework.  (One positive note: there is a new coalition of young women, WORD [Women Organized to Resist and Defend] which seems to be trying to fuse the concepts of sex and gender back together – along with race, class and imperialism. I look forward to seeing what their analysis will be since so far they seem to be mainly an activist group).

So what, if anything, do I have to contribute to this discussion? As a second wave socialist/lesbian/feminist born to a first wave socialist feminist, I have worked on projects with third wave feminists and raised a son who is active in the gay-rights movement.  I believe that my long history in these communities might give me a perspective worth sharing.  I also hope younger third wave feminists will not write me off as one of those smug old second wave feminists who thinks she knows everything.

By the rambling nature of this blog, you can probably tell that I am writing in a stream of consciousness “consciousness raising” style, true to my second wave “the personal is political” roots; although I believe this form is also regaining popularity among third wave feminists.

To begin. I came into feminism out of a Left Trotskyist organization about the same time I left my marriage of several years, right into the arms of the feminist movement.  Most of the women, it is true, were middle class and white and, as a working class woman, I wasn’t sure I would fit in.  I remember the first time I entered the women’s bookstore and one of the women commented on my “bourgie” $26 dollar JC Penney’s pantsuit. I was working as a secretary in the college where I was putting my husband through school.  I was required to wear the pants suit to work (along with pantyhose) even though the professors I worked for could wear jeans. It took me awhile to realize that most of the women in the bookstore wore jeans that cost four times what my pantsuit cost.  

I relate this story because this was my first exposure to identity politics and downward mobility and the tendency of the community to identify one’s class position by external secondary characteristics, not our actual class position. This  foreshadowed a similar tendency in terms of defining the issues of oppression in terms of our sexuality.  Nevertheless I stayed because those women still had something I wanted and wasn’t getting in the male-identified Left.