How are we to reconcile conflicting economic news such as big profits in banking and Wall Street rallies with falling retail sales, high unemployment, and depressed wages?
Are Michael Lewis and Taibbi correct in that the continued emphasis on risk taking, obsession with quick profits, fighting reform, and big bonuses not connected with long term performance are continuing unabated?
Quote:
The effect of all of these regulatory gaps has been to transform Wall Street from a means of connecting capital to good business ideas into a giant casino, where the object of the game is shaving little slices off the great flows of money as you push them back and forth using a great big toolbox of manipulative techniques.
And this little gem about Wall Street's disconnection with reality.
Quote:
“Two things happened. One is that the amount of money that could be made on Wall Street with hedge fund and private equity operations became just mind-blowing. At the same time, college was getting so expensive that people from reasonably prosperous families were graduating with huge debts. So even the smart guys went to Wall Street, maybe telling themselves that in a few years they’d have so much money they could then become professors or legal-services lawyers or whatever they’d wanted to be in the first place. That’s when you started reading stories about the percentage of the graduating class of Harvard College who planned to go into the financial industry or go to business school so they could then go into the financial industry. That’s when you started reading about these geniuses from M.I.T. and Caltech who instead of going to graduate school in physics went to Wall Street to calculate arbitrage odds.”
“But you still haven’t told me how that brought on the financial crisis.”
“Did you ever hear the word ‘derivatives’?” he said. “Do you think our guys could have invented, say, credit default swaps? Give me a break! They couldn’t have done the math.”
“Why do I get the feeling that there’s one more step in this scenario?” I said.
“Because there is,” he said. “When the smart guys started this business of securitizing things that didn’t even exist in the first place, who was running the firms they worked for? Our guys! The lower third of the class! Guys who didn’t have the foggiest notion of what a credit default swap was. All our guys knew was that they were getting disgustingly rich, and they had gotten to like that. All of that easy money had eaten away at their sense of enoughness.”
It appears the disconnection with reality is still strong.
__________________
Working "hard," or the perception of working hard, doesn't really mean anything. Sweating, vomiting, and breathing hard could be a good workout or a tropical disease kicking in.-Dan John
Mr Forbes, when he ran for president, wanted no taxes on capital gains, dividends, or inheritances. This of course amounts to re-establishing an aristocracy. He inferred that it would trickle down (I don't remember the exact dynamic) to us lower classes. He lied or is incredibly stupid.
I've detailed before in a 9 step process where I personally believe many issues were created and there was little comment about it, so I wont bother reposting it here.
I do agree with Taibbi on Reg SHO. The lack of regulatory oversight on naked shortselling is absurd. That said, there is also this issue from the very conservative Huffington Post
Quote:
It's starting to look like basketball-player-turned-political-reporter-turned-overnight-authority-on-Wall-Street Matt Taibbi may have fallen for a stock-trading ruse. Heaven knows he's an easy mark. "I can't even balance my checkbook," he told radio talk show host Don Imus.
Taibbi, Rolling Stone magazine's teen heartthrob, became a sensation last month after calling Goldman Sachs "a giant vampire squid wrapped around the face of humanity." His piece contained as many errors as facts, but few of us minded because the imaginative writer memorably captured the national zeitgeist.
Taibbi knows you're only as popular as your latest record, so in this month's issue of Rolling Stone he takes on short selling, a controversial Wall Street stock trading practice. His report offers the usual cocktail of half-truths, which you can read about at Business Insider, Economic Policy Journal, Fraud Files Blog, The Atlantic, New York Times DealBook, and Investment News.
To tell you the truth, I haven't lost any sleep worrying about Taibbi's sloppy reporting or his obscene language. He's colorful, he's cute, he admits he'd rather be writing fiction ... oh, fiddle dee dee.
But I am intrigued by the video Taibbi posted on YouTube to make his point about short selling. People who know about these things say the video is a fake ... a hoax. Taibbi claimed the video showed a Penson Financial Services trading platform transaction, but today Penson dashed off a fast letter to the U.S. Securities and Exchange Commission, alerting them that the trading platform identified in each of Taibbi's posts is not Penson's. "While we are uncertain whether Taibbi's article is the result of a hoax or something more deliberate, we are contemplating sharing our concerns with YouTube and the blogger directly," wrote Penson's associate general counsel, in a two-page letter to the SEC that was made available to the Huffington Post.
Interesting bit about the fake video there. It'll be interesting to see if Taibbi's source duped him. But even the snarky Ms. Tucker doesn't find fault with Taibbi's criticism of problems with deregulation, the SEC, or his takedown of the Vampire Squid firm in a previous article.
btw I heard today on NPR that the banks are soon to announce $150 billion in bonuses while home foreclosures are up to a record high. Yay predatory capitalism.
__________________
Working "hard," or the perception of working hard, doesn't really mean anything. Sweating, vomiting, and breathing hard could be a good workout or a tropical disease kicking in.-Dan John
The increase in foreclosures has more to do with unemployment being so high than alleged predatory banking. Unemployment is something you never hear discussed by this administration and yet it's a bigger problem, IMO, than solving the health payment issue.
__________________
"A government big enough to give you everything you want is a government big enough to take from you everything you have."
Do I understand correctly that you believe unemployment and health care are unrelated issues?
As for unemployment and foreclosures, predatory lending and creative financial bullshit is ultimately at the root of both.
Predatory lending has certainly continued in California. So much so that new legislation is being proposed.
__________________
Working "hard," or the perception of working hard, doesn't really mean anything. Sweating, vomiting, and breathing hard could be a good workout or a tropical disease kicking in.-Dan John
Millions of jobs weren't lost because of the cost of health care. Millions of jobs won't be created with health spending reform.
True, but in general, the biggest factor affecting the probability of falling into poverty is disease. So in the long run, health care reform may allow people to keep their jobs.
__________________
"The strongest steel goes through the hottest fires."-Anonymous
"When you begin to believe nothing is heavy, all weights become light." -Rossbow
"Just remember, somewhere there is a little Chinese girl warming up with your max."-Jim Convroy
"It's a round hole, dammit. Everyone fits."--Anonymous Mod at Strengthmill
Would it hold to reason then that France and England should have historically lower unemployment than the U.S., then?
I should clarify above that poverty is referring to poverty resulting from job loss due to disease. Substantial financial hardship can occur even if you keep your job but thats not what I was referring to (though it is part of the health care debate). Additionally, just because you keep your job doesnt mean youre out of poverty (but thats another issue as well).
That said, the answer to your question is no, youd have to control for other factors that affect unemployment and the characteristics of the labor market.
__________________
"The strongest steel goes through the hottest fires."-Anonymous
"When you begin to believe nothing is heavy, all weights become light." -Rossbow
"Just remember, somewhere there is a little Chinese girl warming up with your max."-Jim Convroy
"It's a round hole, dammit. Everyone fits."--Anonymous Mod at Strengthmill
Millions of jobs won't be created with health spending reform.
But I'll bet, in the long run, a lot of jobs could be created. If more people are going to be covered, that means more demand for services. We'll need more doctors, more nurses, and more trained medical technicians.
We also have an aging population, which means we already have increasing demand for home healthcare workers and other professionals specializing in geriatrics and eldercare.
It would be a multi-generational phenomenon, but over time, more of us will go into healthcare because there will be more demand.
Looking at it another way: We all found this forum because of our interest in health and fitness. If the proposed reforms had taken place in the '70s or '80s, some of us might be medical professionals instead of fitness professionals.
Yes, there may be jobs created down the road. People may, when starting to look at a career path, choose that as their option.
But what does that have to do with getting people who have lost their jobs, lost the health insurance coverage, people who are losing their homes as a result, back into the work force now? Can you point to a comprehensive plan this administration has for that? Or do we just go on living the dream?
__________________
"A government big enough to give you everything you want is a government big enough to take from you everything you have."
"The Golden Rule: Those who have the gold make the rules." One does not have to think the powerful and rich are evil, conniving et alia. But the natural tendencies does favor the powerful. Does anyone thing those thousands of lobbyists and the big money in elections is not spent to some effect?
Those on the lower half or two/thirds of the economic pile have suffered death by a thousand cuts. Decision after decision, against unions, declining minimum wages, more power on the part of corporations etc have bled the power from these groups.
Of course when they try to get some power back they are accused of class warfare. Which is of course how they lost their power in the first place. The rich and powerful are effective at waging it.
But what does that have to do with getting people who have lost their jobs, lost the health insurance coverage, people who are losing their homes as a result, back into the work force now? Can you point to a comprehensive plan this administration has for that? Or do we just go on living the dream?
As far as current job creation, health care reform does not do much. Obama thinks that it will spur small businesses because its now more affordable, which is true, but the bigger problem for small businesses is that getting capital is harder since banks are still failing.
As far as weathering the storm better, the bill can prevent people from getting (more) financially crushed due to getting sick while unemployed.
__________________
"The strongest steel goes through the hottest fires."-Anonymous
"When you begin to believe nothing is heavy, all weights become light." -Rossbow
"Just remember, somewhere there is a little Chinese girl warming up with your max."-Jim Convroy
"It's a round hole, dammit. Everyone fits."--Anonymous Mod at Strengthmill
Unemployment doesn't look like it will be turning around anytime soon - if ever.
Quote:
Here's why:
The auto and construction industries helped lead the nation out of past recessions. But the carnage among Detroit's automakers and the surplus of new and foreclosed homes and empty commercial properties make it unlikely these two industries will be engines of growth anytime soon.
The job market is caught in a vicious circle: Without more jobs, U.S. consumers will have a hard time increasing their spending; but without that spending, businesses might see little reason to start hiring.
Many small and midsize businesses are still struggling to obtain bank loans, impeding their expansion plans and constraining overall economic growth.
Higher-income households are spending less because of big losses on their homes, retirement plans and other investments. Lower-income households are cutting back because they can't borrow like they once did.
It's not going to matter how the "banks" are doing - if consumer and business spending doesn't turn around there will be no recovery.
College students are fucked.
__________________
"A government big enough to give you everything you want is a government big enough to take from you everything you have."
The only banks lending are the ones not doing so well, but those with big profits are making it through the same 'ol Wall Street schemes.
Not surprisingly those firms have just recently spent another $224 million lobbying Congress to prevent reform.
It seems they like this cycle of reaping big bonuses while screwing everyone else, implosion, then screwing us again while getting bailed out.
__________________
Working "hard," or the perception of working hard, doesn't really mean anything. Sweating, vomiting, and breathing hard could be a good workout or a tropical disease kicking in.-Dan John
A jobless recovery was forecast by several economists. They also calculated the size of a stimulus needed to correct it, about twice what was passed. And it is not just Republicans who would not vote for it, many Democrats lack the courage or sense to do what is needed.
A jobless recovery was forecast by several economists.
Rob, I read about that as well. Krugman in particular wrote multiple times on his blog about how, in recent economic cycles, jobs have lagged other indicators of a recovery, sometimes by several years.
IIRC, he argued that the economic recovery during the Bush years was very weak in terms of job growth.
Weak job creation seems to be a major structural problem in our economy right now, as you, Manuel, and others here have noted.
Quote:
A jobless recovery was forecast by several economists. And it is not just Republicans who would not vote for it, many Democrats lack the courage or sense to do what is needed.
I'll go out on a limb here and say I understand why Democrats didn't want to double down on the stimulus package. We're in very, very scary territory in terms of deficits and accumulated national debt.
If I were in Congress, I probably would've wanted something similar to the stimulus package that eventually passed.
Even if I knew it wasn't enough, I'd rather vote for something than nothing. But I'd balk at doing more, just because it was so polarizing already.
I may be the only person active on this forum who likes the fact that politics is about compromise, that one side never gets everything it wants.
In the case of the stimulus package, I kind of agree with center-right conservatives who don't believe Congress would be particularly adept at targeting the areas of the economy most likely to create jobs.
I know it's too early to say the stimulus was a total success or partial failure, but I think it's fair to say it was at least a partial success. It may have pulled the economy out of free fall (along with other measures), but it certainly hasn't done much so far to help create jobs.
As the Harvard University labor expert Lawrence Katz explains it: “If you think about the labor market today, the top half of the college market, those with the high-end analytical and problem-solving skills who can compete on the world market or game the financial system or deal with new government regulations, have done great. But the bottom half of the top, those engineers and programmers working on more routine tasks and not actively engaged in developing new ideas or recombining existing technologies or thinking about what new customers want, have done poorly. They’ve been much more exposed to global competitors that make them easily substitutable.”
Those at the high end of the bottom half — high school grads in construction or manufacturing — have been clobbered by global competition and immigration, added Katz. “But those who have some interpersonal skills — the salesperson who can deal with customers face to face or the home contractor who can help you redesign your kitchen without going to an architect — have done well.”
My question -- and I'm asking because I don't know the answer -- is whether these are qualities that can be trained. Can our schools teach this type of creativity?
I understand how adaptability can be encouraged in those who have a proclivity for it. But anecdotally, it seems that most people don't have this quality. "Why can't we do it just like we've always done it?" seems like a common complaint, whether we're talking about our generation, or those of our parents or kids.
This article from the Washington Monthly is about a different topic -- remedial education for young adults -- but it makes some of the same points:
Quote:
Is the gulf between the students’ abilities and the most basic requirements of college simply too wide? Or are the programs failing?
We don’t know, and therein lies the problem. Community college remediation is the Bermuda Triangle of the higher education system—vast numbers of students enter, and for all intents and purposes disappear. We have almost no hard evidence about what works and what doesn’t in remediation, and almost no one—policymakers, researchers, and administrators—has tried to figure it out in any systematic way. The reason for this is a combination of unjustly scant resources, huge gaps in data, and sometimes a sense of fatalism—or, worse, denial—that keeps state and school leaders from making it a priority. Meanwhile, the situation is likely to get worse before it gets better. Jobs requiring a college education are on the rise, and the labor market continues to pay a premium for college-educated workers. Students who wouldn’t have gone past high school a few decades ago are now heading to college—especially community college—but they’re not remotely prepared.
I don't know the answers to those questions, but heard that adult education and similar programs have been absolutely hammered by budget cuts in California, which surely won't help the situation. Add to that huge cuts in public education, and tuition hikes that are putting college out of reach for even more young people and my magic eight ball says outlook not good.
__________________
Working "hard," or the perception of working hard, doesn't really mean anything. Sweating, vomiting, and breathing hard could be a good workout or a tropical disease kicking in.-Dan John
Opinion piece in todays Times tying improving education to improving employment in the future.
This is true. I think Robert Reich wrote about this about a decade ago. No one listened then. Basically, he was saying that you will see smaller firms and more subcontracting, and the ones with the most flexibility will survive. So youll need more Pixars and fewer GMs. The only 'safe' jobs will be those in the health industry since there is huge demand for nurses, assisstants, technicians, etc.
Quote:
My question -- and I'm asking because I don't know the answer -- is whether these are qualities that can be trained. Can our schools teach this type of creativity?
I think its possible. This is an interesting chapter on how the current ways of teaching math could be vastly improved to spur mathematical thinking and creativity:
__________________
"The strongest steel goes through the hottest fires."-Anonymous
"When you begin to believe nothing is heavy, all weights become light." -Rossbow
"Just remember, somewhere there is a little Chinese girl warming up with your max."-Jim Convroy
"It's a round hole, dammit. Everyone fits."--Anonymous Mod at Strengthmill
Average IQ is 100. That is, 150,000,000 Americans are below that. The sort of people who as a class are doing well are likely above 115, maybe even 125. A good society, hell, a society that is going to survive, has to figure out how to get the best efforts and results out of almost all of its citizens. As much as I admire aides in nursing homes (and that is genuine, not sarcasm) we cannot employ all that many (we should have more than we do now). The current business model, along with globalization and immigration (which is necessary economically for other reasons) simply does not include all of our citizens. Recipe for big trouble.
ps - I know that some leftists and rightists each for their own reason don't believe the extent to which IQ is a big part of destiny. They are wrong.
My question -- and I'm asking because I don't know the answer -- is whether these are qualities that can be trained. Can our schools teach this type of creativity?
Yes and no. Problem solving strategies can be taught and learned, but speaking as someone who is a problem solver, that won't be enough. In order to be good at it you have to enjoy it. I walk around looking at things and wondering how they could be better. It's not my job (my specific job is coming up with software ideas to make my company more efficient and thus more money), but just what I do for 'fun' anytime I'm standing around.
Schools have to make problem solving fun again. The link by GQ above explains it well.
__________________
"Only those who will risk going too far can possibly find out how far one can go." -- T.S. Eliot
"We are what we repeatedly do. Excellence, therefore, is not an act, but a habit."-- Aristotle
As far as current job creation, health care reform does not do much. Obama thinks that it will spur small businesses because its now more affordable, which is true, but the bigger problem for small businesses is that getting capital is harder since banks are still failing.
As far as weathering the storm better, the bill can prevent people from getting (more) financially crushed due to getting sick while unemployed.
On a similar note, this study makes no mention of job status, but shows that disease is a strong determinant of bankruptcy:
Quote:
A recent study found that 62 percent of all bankruptcies filed in 2007 were linked to medical expenses. Of those who filed for bankruptcy, nearly 80 percent had health insurance.
__________________
"The strongest steel goes through the hottest fires."-Anonymous
"When you begin to believe nothing is heavy, all weights become light." -Rossbow
"Just remember, somewhere there is a little Chinese girl warming up with your max."-Jim Convroy
"It's a round hole, dammit. Everyone fits."--Anonymous Mod at Strengthmill
__________________
Working "hard," or the perception of working hard, doesn't really mean anything. Sweating, vomiting, and breathing hard could be a good workout or a tropical disease kicking in.-Dan John
One of the City's leading figures has suggested that inequality created by bankers' huge salaries is a price worth paying for greater prosperity.
In remarks that will fuel the row around excessive pay, Lord Griffiths, vice-chairman of Goldman Sachs International and a former adviser to Margaret Thatcher, said banks should not be ashamed of rewarding their staff.
Speaking to an audience at St Paul's Cathedral in London about morality in the marketplace last night, Griffiths said the British public should "tolerate the inequality as a way to achieve greater prosperity for all".
He added that he knew what inequality felt like after spending his childhood in a mining town in Wales. Both his grandfathers were miners who had to retire from work through injury.
With public anger mounting at the forecast of bumper bonuses for bankers only a year after the industry was rescued by the taxpayer, he said bankers' bonuses should be seen as part of a longer-term investment in Britain's economy. "I believe that we should be thinking about the medium-term common good, not the short-term common good ... We should not, therefore, be ashamed of offering compensation in an internationally competitive market which ensures the bank businesses here and employs British people," he said.
Griffiths said that many banks would relocate abroad if the government cracked down on bonus culture. "If we said we're not going to have as big bonuses or the same bonuses as last year, I think then you'd find that lots of City firms could easily hive off their operations to Switzerland or the far east," he said.
Goldman Sachs is currently on track to pay the biggest ever bonuses to its 31,700 employees after raking in profits at a rate of $35m (£21m) a day.
The Centre for Economics and Business Research (CEBR) said today that City bonuses could soar to £6bn this year.
The chairman of the Financial Services Authority (FSA), Lord Turner, who was also present at the meeting, called once again for a global tax on financial transactions. He said that such a so-called "Tobin tax" could redistribute bank profits to help fight world poverty and climate change.
"The role of regulation is to bring a concordance between private actions and beneficial results," he said.
If they want to pay their ceos a trillion dollars in bonuses, then as long as theyre its happening without tax payer money its up to the share holders. But when you use public money and take all the profit, and do nothing to change their compensation to a long term focus so that you dont fuck this up again, then fuck you and give us our money back.
__________________
"The strongest steel goes through the hottest fires."-Anonymous
"When you begin to believe nothing is heavy, all weights become light." -Rossbow
"Just remember, somewhere there is a little Chinese girl warming up with your max."-Jim Convroy
"It's a round hole, dammit. Everyone fits."--Anonymous Mod at Strengthmill
Profits up, wages down
Linear Mode
