Daily Archive: 10/20/2014

Oct 20 2014

Let me tell you about the very rich.

F. Scott

Let me tell you about the very rich. They are different from you and me. They possess and enjoy early, and it does something to them, makes them soft where we are hard, and cynical where we are trustful, in a way that, unless you were born rich, it is very difficult to understand. They think, deep in their hearts, that they are better than we are because we had to discover the compensations and refuges of life for ourselves. Even when they enter deep into our world or sink below us, they still think that they are better than we are. They are different.

Should bankers get bigger bonuses?

By Michael Corones, Reuters

October 17, 2014

Morgan Stanley reported strong third-quarter earnings today, up 12 percent to $8.91 billion in quarterly revenue, while rival Goldman Sachs yesterday reported an increase of 25 percent to $8.39 billion.

As this Reuters interactive shows, the share price for both investment banks healthily beat the S&P 500, with Morgan Stanley’s earnings per share coming in at $0.84 and Goldman’s boasting an EPS of $4.69.

If there’s any bad news-and bad is a relative term here-it’s for bankers at the two financial titans, as both credit restraint in compensation (aka, flat bonuses) for helping earnings growth. Reuters’ Lauren Tara LaCapra reports that similar changes to bonuses are taking place across Wall Street. Still, Goldman estimated its average compensation per employee at $320,000 or the first nine months of the year.

Somehow I don’t think Joe Sixpack-or F. Scott Fitzgerald, for that matter-are shedding any tears.

Oct 20 2014

Punting the Pundits

“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

New York Times Editorial Board: Cuba’s Impressive Role on Ebola

Cuba is an impoverished island that remains largely cut off from the world and lies about 4,500 miles from the West African nations where Ebola is spreading at an alarming rate. Yet, having pledged to deploy hundreds of medical professionals to the front lines of the pandemic, Cuba stands to play the most robust role among the nations seeking to contain the virus.

Cuba’s contribution is doubtlessly meant at least in part to bolster its beleaguered international standing. Nonetheless, it should be lauded and emulated. [..]

It is a shame that Washington, the chief donor in the fight against Ebola, is diplomatically estranged from Havana, the boldest contributor. In this case the schism has life-or-death consequences, because American and Cuban officials are not equipped to coordinate global efforts at a high level. This should serve as an urgent reminder to the Obama administration that the benefits of moving swiftly to restore diplomatic relations with Cuba far outweigh the drawbacks.

Paul Krugman: Amazon’s Monopsony Is Not O.K.

Amazon.com, the giant online retailer, has too much power, and it uses that power in ways that hurt America.

O.K., I know that was kind of abrupt. But I wanted to get the central point out there right away, because discussions of Amazon tend, all too often, to get lost in side issues.

For example, critics of the company sometimes portray it as a monster about to take over the whole economy. Such claims are over the top – Amazon doesn’t dominate overall online sales, let alone retailing as a whole, and probably never will. But so what? Amazon is still playing a troubling role.

Meanwhile, Amazon’s defenders often digress into paeans to online bookselling, which has indeed been a good thing for many Americans, or testimonials to Amazon customer service – and in case you’re wondering, yes, I have Amazon Prime and use it a lot. But again, so what? The desirability of new technology, or even Amazon’s effective use of that technology, is not the issue. After all, John D. Rockefeller and his associates were pretty good at the oil business, too – but Standard Oil nonetheless had too much power, and public action to curb that power was essential.

And the same is true of Amazon today.

Dean Baker: World’s richest man tries to defend wealth inequality

Bill Gates’ critique of Thomas Piketty is revealing for what it overlooks

A review of French economist Thomas Piketty’s best-selling book “Capital in the 21st Century” by the world’s richest man is too delicious to ignore. The main takeaway from Piketty’s book, of course, is that we need to worry about the growing concentration of capital, in which people like Microsoft co-founder turned megaphilanthropist Bill Gates and his children will control the bulk of society’s wealth. Gates, however, doesn’t quite see it this way.

From his evidence, he actually has a good case. If the issue is the superrich passing their wealth to their children, who will become the next generation’s superrich, he is right to point out that the biographies of the Forbes 400 – the richest 400 Americans – don’t seem to support this concern. We find many people like Gates, who started life as the merely wealthy (his father was a prosperous corporate lawyer), who parlayed their advantages in life into enormous fortunes. The ones who inherited their vast wealth are the exception, not the rule. [..]

While philanthropy may prevent the direct inheritance of most multibillion-dollar fortunes, the charitable giving of billionaires is unlikely to go to efforts that could undermine the basis of their wealth or their peers’. We may not need to fear that the next generations’ Forbes 400 will all be descendants of this generation’s billionaires, but we do have to fear that the rules will continue to be rigged so that this group and its lackeys in the 1 percent continue to control the bulk of the country’s wealth. That is not a pretty picture, even if it is not the nightmare Piketty warns of.

Will Hutton: Ebola and failing markets tell us that we need to work together

Governments must heed the warnings of our brightest minds and reshape our societies to help those most in need

Last week, the world’s stock and bond markets swung wildly. They worried about the threat of world deflation, falling oil prices and further systemic weaknesses in the financial system. But perhaps they were most concerned about whether spooked governments had the will to do anything, even if those governments could agree on what that should be. If they can’t manage a co-ordinated response to Ebola or one against the cruelties of Isis, then it is hardly likely they are going to find common ground in managing the fissures in the world economy. [..]

Thus only last week, Janet Yellen, chair of the US Federal Reserve, joined one of her predecessors, Alan Greenspan, and the governor of the Bank of England, Mark Carney, in arguing that the growth of inequality was not only wrong morally but having increasingly baleful economic consequences. Then there were the strictures of the managing director of the IMF, Christine Lagarde.

Inequality, they all say, fosters fear, creates too much demand for credit to compensate for squeezed living standards, drives asset price bubbles, catalyses financial instability, weakens banks and, by displacing too much risk on to those who cannot bear it, undermines the legitimacy of capitalism. You have to blink with incredulity – and then blink again at markets falling because they want to see purposeful government action.Thus only last week, Janet Yellen, chair of the US Federal Reserve, joined one of her predecessors, Alan Greenspan, and the governor of the Bank of England, Mark Carney, in arguing that the growth of inequality was not only wrong morally but having increasingly baleful economic consequences. Then there were the strictures of the managing director of the IMF, Christine Lagarde.

Inequality, they all say, fosters fear, creates too much demand for credit to compensate for squeezed living standards, drives asset price bubbles, catalyses financial instability, weakens banks and, by displacing too much risk on to those who cannot bear it, undermines the legitimacy of capitalism. You have to blink with incredulity – and then blink again at markets falling because they want to see purposeful government action.

Rpbert Kuttner: A Revolt Against Austerity?

There was a bit of good news from Europe last week. Two of the nations that desperately need some respite from austerity essentially told German Chancellor Merkel to stuff it.

France, under pressure from Germany and the European Union to meet the E.U.’s straightjacket requirement of deficits of no more than three percent of GDP (whether or not depression looms) informed the E.U. that they will not hit this target until 2017. The government of President Francois Hollande, under fire for failing to ignite a recovery, now plans economic stimulus measures — and the target be damned. Under E.U. rules, France can be fined up to 0.2 percent of its GDP. The French seem to be saying, “So sue us!”

Italy, under Prime Minister Matteo Renzi, has followed suit, with a budget that plans cuts in labor taxes. Meanwhile, the European Central Bank is in open rebellion against the German austerity-mongers. The ECB would like to pursue a policy more like that of the Federal Reserve, giving direct support to government bonds to keep interest rates low. But the Merkel government remains adamantly opposed. Even the International Monetary Fund, traditionally the citadel of fiscal orthodoxy, has warned that Europe’s recovery policy is too tight, not too loose.

John Nichols: One Thing Hillary Clinton Understands About Politics in 2014

Hillary Clinton is never going to be confused for an economic populist. Her record as a key player in Bill Clinton’s administration, as a United States senator, as secretary of state and as a favorite on the corporate speaking circuit in recent years bends a lot more toward Wall Street than Main Street.

But Hillary Clinton understands something important-make that vital-about the politics of 2014.

Clinton recognizes that the issue that matters in 2014 is the economy (number one in the latest Gallup Poll) and that voters want “good jobs” that pay a family-supporting wage (number two in the latest Gallup survey). And Clinton knows that the clearest policy connection between where the economy is today and where it needs to be is made via support for a substantial hike in the minimum wage.

So when the presumed Democratic front-runner in 2016 swept into Kentucky this week to muscle up the US Senate campaign of Clinton-family favorite Alison Lundergan Grimes, Clinton was on message-far more on message, in fact, than most prominent Democrats who have hit the trail this month in an effort to save the Senate, win governorships and generally prevent the 2014 midterms from going the way of the 2010 midterms.

Oct 20 2014

TBC: Morning Musing 10.20.14

I have 3 things for you all this morning.

First, this should be a great interview, and it will be live streamed. See the link for more info:

Lawrence Lessig interviews Edward Snowden

Institutional corruption and the NSA: Edward Snowden will be interviewed (via videoconference) by Lawrence Lessig about the NSA in a time of war, and whether and how the agency has lost its way.

Jump!

Oct 20 2014

On This Day In History October 20

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.

October 20 is the 293rd day of the year (294th in leap years) in the Gregorian calendar. There are 72 days remaining until the end of the year.

On this day in 1973, Solicitor General Robert Bork dismisses Watergate special prosecutor Archibald Cox; Attorney General Richardson and Deputy Attorney General Ruckelshaus resign in protest. Cox had conducted a detailed investigation of the Watergate break-in that revealed that the burglary was just one of many possible abuses of power by the Nixon White House. Nixon had ordered Richardson to fire Cox, but he refused and resigned, as did Ruckelshaus when Nixon then asked him to dismiss the special prosecutor. Bork agreed to fire Cox and an immediate uproar ensued. This series of resignations and firings became known as the Saturday Night Massacre and outraged the public and the media. Two days later, the House Judiciary Committee began to look into the possible impeachment of Nixon.

The Saturday Night Massacre was the term given by political commentators to U.S. President Richard Nixon‘s executive dismissal of independent special prosecutor Archibald Cox, and the resignations of Attorney General Elliot Richardson and Deputy Attorney General William Ruckelshaus on October 20, 1973 during the Watergate scandal

Richardson appointed Cox in May of that year, after having given assurances to the Senate Judiciary Committee that he would appoint an independent counsel to investigate the events surrounding the Watergate break-in of June 17, 1972. Cox subsequently issued a subpoena to President Nixon, asking for copies of taped conversations recorded in the Oval Office  and authorized by Nixon as evidence. The president initially refused to comply with the subpoena, but on October 19, 1973, he offered what was later known as the Stennis Compromise-asking U.S. Senator John C. Stennis to review and summarize the tapes for the special prosecutor’s office.

Mindful that Stennis was famously hard-of-hearing, Cox refused the compromise that same evening, and it was believed that there would be a short rest in the legal maneuvering while government offices were closed for the weekend. However, President Nixon acted to dismiss Cox from his office the next night-a Saturday. He contacted Attorney General Richardson and ordered him to fire the special prosecutor. Richardson refused, and instead resigned in protest. Nixon then ordered Deputy Attorney General Ruckelshaus to fire Cox; he also refused and resigned in protest.

Nixon then contacted the Solicitor General, Robert Bork, and ordered him as acting head of the Justice Department to fire Cox. Richardson and Ruckelshaus had both personally assured the congressional committee overseeing the special prosecutor investigation that they would not interfere-Bork had made no such assurance to the committee. Though Bork believed Nixon’s order to be valid and appropriate, he considered resigning to avoid being “perceived as a man who did the President’s bidding to save my job.” Never the less, Bork complied with Nixon’s order and fired Cox. Initially, the White House claimed to have fired Ruckelshaus, but as The Washington Post article written the next day pointed out, “The letter from the President to Bork also said Ruckelshaus resigned.”

Congress was infuriated by the act, which was seen as a gross abuse of presidential power. In the days that followed, numerous resolutions of impeachment against the president were introduced in Congress. Nixon defended his actions in a famous press conference on November 17, 1973, in which he stated,

“…[I]n all of my years of public life, I have never obstructed justice. And I think, too, that I can say that in my years of public life that I’ve welcomed this kind of examination, because people have got to know whether or not their President’s a crook. Well, I’m not a crook! I’ve earned everything I’ve got.