Bonuses, Government, and the Economy

On February 4, 2010, in The Public, by Joe Costello

I can see, I can see when our hands our tied
I was a victim when you lied
You who smile back legislated
You who made me stupid hatred
You who used your money taking
You who tax and persecute
You who guarded all the loot
You who buried me alive
I will survive
Attack, Attack Attack
Public Image Ltd.

Well, as you may have heard its bonus season on Wall Street and your money provided to bailout every last one of them is flying out the door. Best

is the $100 million for AIG, a company which in just over a year saw $185 billion of your tax dollars go through it. I guess its hard work keeping track of all that money. BofA, which remains on the Fed’s low interest and other public largess life support is giving out $4.4 billion. As the economy tanked in 2009, it was good year on Wall Street.

Now we have two cases of looting here, the first is of the taxpayer and the second is of shareholders in public companies. The latter has become an increasing problem as boards have become window dressing and the executives look to see how much money they can squeeze out. Thorstein Veblen, an essential thinker on political economy, spoke of this developing problem, of a rogue executive bureaucracy a hundred years ago, it is now fully manifest.

Meanwhile in the real economy, as 4th quarter results come in, the economy remains flat, all the reason more for those bonuses right? Just like the reasoning for Mr. Bernanke’s re-appointment, it could be worse.

Finally, coming soon to a government near you, IMF austerity. In the past, this has been saved for the developing world, let’s see how it works with the Greeks.

cross-posted from Archein: “bonuses, government, and the economy”

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Dude Reform

On February 3, 2010, in Background and Research, Corporations, The Public, by Tiffiniy Cheng

The US Chamber of Commerce wants to be thought of as our public guardian. But, we simply can’t trust them. They’re trying to pass off their Stop The CFPA campaign as a friendly one, complete with spooky music. I have been asking our facebook fans and twitter followers if bad press is good press in this case. I’m not sure. This campaign is BS marketing, or rather dude reform.

So, above is Mr. Luntz. His “secret” memo leaked the other day — he apparently is the mastermind behind getting Republicans and big corporate dudes to respect and publicly empathize with the pain out there. The way these dudes are talking about it is so disingenuous I hope people despise it when they hear about it.

The problem with political discourse, and that is what we all are engaged in every day even if we don’t know it, is that these statements are so extremely well marketed that our less-politically educated friends believe these statements as long as they are said – no facts need to be used, just some passion, just some quip. Yet, statements from the left are so steeped in facts and boring language, they don’t get lodged in our brains. Our hope is in education and a revived political class or maybe even party. We should each keep educating each other on how to construct a fact-based and merit-based understanding of any given issue. I trust my own ideas because I have done the research and seen who stands to benefit from top-down, trickle-down policies. The Tea Party movement, for example, as detailed in a New Yorker article may be against Wall Street but pointing at half-baked indicators: “A second-generation Chrysler dealer, whose lot had just been shut down, complained that the Harvard-educated experts on Wall Street and in Washington knew nothing about automobiles… The district’s congressional representative, Geoff Davis, brought up the proposed cap-and-trade legislation favored by Democrats, and called it an “economic colonization of the hardworking states that produce the energy, the food, and the manufactured goods of the heartland, to take that and pay for social programs in the large coastal states.”

Wall Streeters are Republicans and don’t like social programs. They want to end Medicare and Lloyd Blankfein said so himself — they lobby against the majority and ask you to help them. They’re greedy, selfish bastards that have taken your hard work in states all across America and turned it into debt they can keep shuffling around and big government helps them.

What do we need? Not bigger government, we need quality government that work to keep themselves out of the market and helping just the filthy rich, they need to keep the playing field leveled so that there is the freedom and possibility for us Americans to have and create the kinds of jobs and lives we want.

Some tidbits from the memo:

“You must acknowledge the need for reform that ensures this NEVER happens again.”

WORDS THAT WORK. If there is one thing we can all agree on, it’s that the bad decisions and harmful policies by Washington bureaucrats that in many ways led to the economic crash must never be repeated.

When addressing the crisis, never forget its impact on your audience. Above all else, never EVER minimize the pain.

From Think Progress:

The most dishonest argument is that financial reform would “punish” taxpayers while rewarding “big banks and credit card companies.” In reality, top financial industry lobbyists are not only fighting proposed oversight regulations, but have said recently that they are opposed to “any regulation” at all.

Luntz, ever the publicity hound, leaks his memos out to the media to claim credit for the Republican charge against reforming Wall Street. While he is certainly a driving force behind much of the GOP misinformation, a closer look at his client list reveals that he is in fact being paid by the finance industry:

Hey dude, why would the CFPA be bad for the majority of Americans again? Now, back it up with some facts that answer the whole question and aren’t taken out of context. Well, at least let’s get our friends to do that.

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As on Wall Street Pigs

On February 1, 2010, in The Public, by Tiffiniy Cheng

Pro-Obama Group Goes After Wall Street ‘Pigs’

We’ve been calling the central bank the feeding trough of late. This HuffPo article says “Americans United for Change released the spot on Monday morning. In it, the group makes the same political pitch the White House has made in recent weeks, one that elevates cleaning up Wall Street over health care reform on the legislative agenda.

“When big banks went hog wild on Wall Street they left behind one fine mess on Main Street,” the ad goes. “Their greed and recklessness left the economy stuck in the mud and over seven million Americans without jobs. But the big banks were first in line at the trough for their taxpayer bailout and back to their old piggish ways in no time. Now the Wall Street lobbyists say they will clean up their act. But remember you can put lipstick on a pig. But it is still a pig. Tell Congress it is time to step up and pass President Obama’s plan to hold Wall Street banks accountable.”"

The debate over banks and banking came front and center this week. In his toughest language yet, President Barack Obama vowed to veto financial reform legislation that is not tough enough on Wall Street. “The lobbyists are already trying to kill it,” Obama told Congress in his State of the Union address. “Well, we cannot let them win this fight. And if the bill that ends up on my desk does not meet the test of real reform, I will send it back.”

The President’s rhetoric offers an important measure of progress. Now we can be assured that the political elite are paying attention to the poll numbers showing an unprecedented anger at the big banks and the Wall Street bailouts. Democrats are starting to figure out if they don’t take up this populist message and run with it in November, the Republicans will.

But the rest of the President’s speech and the other dramatic developments in the banking world this week indicate that Democratic actions are falling far short of their rhetoric, a pattern that voters are sure to notice.

First, the speech. Many had anticipated a big announcement on jobs. With jobless rates in the double digits and a projected 5-10 year haul to get employment back to normal levels, workers were hoping for something big and bold. Instead, Obama proposed $30 billion in TARP funds to get credit flowing to small businesses. $30 billion to put 16 million Americans back to work? $30 billion when the Wall Street bonus pool for a few thousand bankers was $140 billion this month? Democrats will live to regret this missed opportunity.

Also on Wednesday, U.S. Treasury Secretary Tim Geithner was called on the carpet once again by irate members of the House for his mishandling of the AIG bailout. To their credit, several Democrats asked the toughest questions. But Geithner bobbed and weaved and no knock-out punches were landed. This is a problem for the Democrats. The whole incident paints an ugly picture of the federal response to the financial meltdown, best described by Representative Edolphus Towns (D-NY): “The taxpayers were propping up the hollow shell of AIG by stuffing it with money and the rest of Wall Street came by and looted the corpse.”

On Thursday, Federal Reserve Chairman Ben Bernanke was reconfirmed by the Senate for another four year term. His nomination had been in trouble and a record number of senators voted no, but Obama stood by his man and pushed him through. The problem with Bernanke is best summarized by economist Simon Johnson: “Bernanke is an airline pilot who pulled off a miraculous landing, but didn’t do his preflight checks and doesn’t show any sign of being more careful in the future – thank him if you want, but why would you fly with him again (or the airline that keeps him on)?” While Bernanke may have saved Wall Street, he has shown little interest in using his power as Fed Chairman to aggressively aid Main Street. He is not the man for the job in these tough economic times and that will soon be apparent to the detriment of the Democrats who secured his confirmation.

Ultimately, however, the most important developments of the week were played out behind closed doors in the Senate. Senate Banking Chairman, Chris Dodd, made the decision some time ago to try to devise a bipartisan financial reform package. His package of reforms was then handed over to four bipartisan working groups. With thousands of bank lobbyists swarming the hill, it is no surprise that these groups are busily making the Dodd bill worse.

The derivatives language is being weakened and bankruptcy is emerging as the preferred method of unwinding financial institutions, which could leave taxpayers to foot the bill for this expensive procedure. To truly end the “too big to fail” problem and crack down on the reckless behavior of the biggest banks, we need strong, specific preventative measures such as leverage limits, capital and margin requirements, limits on counterparty exposures, a ban on proprietary trading and limits on bank size through a low cap on total liabilities. Even Obama’s signature reform, an independent consumer agency is in danger of being whittled down to a corner desk in a failed federal agency.

The President understands that the Wall Street bailout was “about as popular as a root canal.” But if Democrats continue to peddle this type of rhetoric while neglecting meaningful reform as they have done this week, the Republicans will run away with the anti-bailout message and with the election in November.

Crossposted from