In the days to come, the Democrats are going to try and spin and downplay the results of both gubernatorial elections in New Jersey and Virgina. They will to try and dodge what I feel is the real explanation to what could spell disaster for the Democratic Party in November of next year. I know all politics are local, but if the White House is smart, they will begin trying to dissect both elections and figure out what went wrong, and truly assess the pulse of the electorate. The results of these elections have more to do with the Administration’s inaction on behalf of the American People, those mostly responsible for it’s win last year. Americans are frustrated with all establishment candidates. The nation was shafted by the collapse of the economy and handed a check for a meal she, as a whole, did not eat by herself. She has watched Wall Street march on unscathed by regulation, propped up with tax payer money. Her son’s and daughters have received pink slips while those who drove their companies (and the banks) in the ground got rewarded with hefty bonuses and golden parachutes. Yet Washington has barely moved an inch in the direction of “The People”.

In November of 2008, I, like most Americans thought change was coming. I thought the election of Barack Obama would bring sweeping change. I believed that “The People” would have their place back at the table of political discourse- stuff would get done. Unfortunately, that did not happen. With the weight of the American People at his back, the President, squandered a great opportunity. He failed to hold banks accountable for the billions they received, by insisting they return the favor to help people refinance their home and loan money to small businesses. He continued the Bush legacy of bailouts with no accountability. He failed to push to put in place regulations that would give Americans a sense that there was a new sheriff in town. Moreover, the President sit and watches the health care debate descend into a pile of mess, marred by falsehoods, while more and more families face bankruptcies that could have been prevented. Obama, to date, has not fulfilled the promise of change; his Administration, by and large, has been that of continuing the status quo. Move carefully as to preserve another term.

The President has to move to help get people employed. That’s it! Americans are not too happy about a stimulus that saved over a million jobs, while 10 percent or more are out of the workforce. It doesn’t matter that Wall Street is starting to recover when most have lost their shirts in the stock market since its collapse. Most Americans are not the Warren Buffets of the world. The bottom-line is the President has to get his party in line and begin to govern. If there is any credit I can give the Republicans, it is this. They (the Republicans) ran us into the ground; they did it as a party and took hits for the most incompetent Administration in our nation’s history. If the President fails to act decisively to the benefit of “The People”, he will have earned the political destruction that’s coming next November.

It is only fitting that on Halloween the Federal government is increasing the number of zombies among us.

Federal bank regulators issued guidelines allowing banks to keep loans on their books as "performing" even if the value of the underlying properties have fallen below the loan amount.

The rationale?

While CRE (commercial real estate) borrowers may experience deterioration in their financial condition, many continue to be creditworthy customers who have the willingness and capacity to repay their debts. In such cases, financial institutions and borrowers may find it mutually beneficial to work constructively together.

Nothing inspires confience in me like the phrase “financial institutions and borrowers may find it mutually beneficial.” Especially since banks are not required to only apply this rule to “creditworthy customers who have the willingness and capacity to repay their debts.”

I really can’t top what Doug McIntyre wrote at DailyFinance.com:

The FDIC appears simply to be taking losses that would be incurred in the normal course of business and pushing the true accounting for them into the future. It is to the political benefit of Washington to make it appear that the banking sector is getting better. It also probably helps the FDIC, which is essentially insolvent, from having to come up with billions of dollars to insure deposits at failing banks.

Some can argue that this regulation just does for commercial real estate what had already been done for home mortgages. In April, the Financial Accounting Standards Board approved a new set of rules allowing financial firms to fiddle with how big their real-estate losses are. (New accounting rules let bankers set the value of their own toxic assets)

When I use a word," Humpty Dumpty said in rather a scornful tone, "it means just what I choose it to mean – neither more nor less.”

I have read that the EU states are divided on whether to limit banker bonuses.  Sadly, Obama opposes limiting them.  I suspect his advisors such as Larry Summers have been urging him closer to the interests of the banks too big to fail.  Meanwhile, Goldman Sachs is set to pay close to its record bonuses of 2007 after declaring profits of $3B 3rd quarter 2009 profits.  It is as if the financial crisis had not happened and there were no subsequent question about the banks’ use of bonues.     It is dificult to square Barak Obama’s position on bonues with his “real change” campaign slogan.   Perhaps now he feels he needs to be at the center, or that “real change” has to be acceptable to financial power in the US.  Still, Obama’s position seems disingenuous.   I am becoming convinced that the anti-democratic corporate power in the US is too powerful for our own good.  The size of the investment bank bonuses points to the banks’ power, which I suspect dominates even our democratic republic.

The US Federal Reserve’s proposal on bank bonues falls short of the explicit guidelines the EU is pushing. The American central bank wants to review salaries, bonuses and other compensation for CEOs, senior managers and traders to ensure they don’t encourage employees to take gambles that could endanger a company, people with knowledge of the proposal said. French Finance Minister Christine Lagarde downplayed the move, noting that that regulatory authorities such as the Fed are only there to apply rules set by governments. “An authority is very good, but an authority is only there to apply the rules and we need rules first, and then an authority to make them respected,” she said. Meanwhile, Obama is treading carefully on financial regulation as he fends off Republican critics of his health care plan. Opponents have gained some traction by claiming Obama is already advocating too much government involvement in the economy. “It’s clear that we are at a juncture of time in the U.S. where the highest stakes are in the health care reform and that has taken precedence over whatever else the government wants,” Georges Ugeux, a former vice president at the New York Stock Exchange who now runs the Galileo Global Advisors consulting group. In a speech to Wall Street outlining his financial reform packages, Obama urged bankers to move quicker than lawmakers to tie pay to long-term performance and to give shareholders a vote on compensation. European Commission President Jose-Manuel Barroso said the EU should go ahead regardless of how the United States deals with bonuses (Source of quotes: MSNBC).

After reading the article at DW (excerpt below), I am struck by how different European companies like ING are from those here.  …perhaps taking more of a long-term outlook; perhaps used to not dominating government???  Or…I wonder if there is a commercial/profit angle for that company in there being caps.  …or a deal with the government.  My initial reaction is that execs running companies in Europe have more of a sense of being in a society/government that they don’t dominate so they are used to “knowing their place.”  My crit of business execs here: they don’t know their place, and the society and governments enable this (enabling as in enabling a drug addict) because business is able to dominate gov’ts and sway society (using back room deals and manipulative advertising…and “free speech”). A company here knows only seeking profits…patriotism simply does not compute in their calculus.  In the article excerpt below, I think the ING exec gives a weak answer to the question of whether the company will lose talent because of the caps.  For instance, Britain won’t do it, so even if other states of the EU cap bonuses, there will still be a comparative advantage for some (and of course execs could be enticed to leave the EU). 
 
From DW (www.dw-world.de):
 
Having received a 10-billion-euro state bail out last October, ING is likely to be most constrained by the new regulations. Nevertheless, ING spokesperson Carolien van der Giessen said the company supports the principles of the code. “We think that this bank code is an important step in the efforts of the financial sector to regain trust and stability and protect the interests of our customers”, van der Giessen told Deutsche Welle.
When asked whether ING fears that the new regulations may lead to international executives looking elsewhere for employment, van der Giessen pointed to the wider global situation. “The discussion is everywhere and it is taking place everywhere”, she said. “We’ll also see changes in other countries”.

Source of quotes: MSNBC

1. Congress and the Obama administration has announced that they will be seeking a rebate of excessive compensation from the executives of firms bailed out with Federal funds. Some times the outrage is so extreme that the outrage invites, nay demands retribution.

2. Congress is now entertaining lifting the exemption that the insurance industry has enjoyed from anti-trust regulation since 1945. One wonders if the intent is to regulate or to protect the industry from pending state regulation. When States’ Attorney Generals were itching to have at the egregious assaults on the common good by the banksters, the Feds stepped in to pre-empt State action.

3. It now appears that Iran is stepping back from the brink of confrontation with the United States over their nascent nuclear industry. Agreeing to greater inspection, Iran has expressed a willingness to allow other nations, Russia & France, to become involved with Iranian nuclear processing.

The Dissenting Democrat, a critic of the Obama adminsitration on domestic policy, is grateful for the Obama approach to diplomacy. Simply put, Obama’s for it! This is a refreshing change from the Bush years when the rootin’ tootin’ self-appointed Sheriff of the West suggested that diplomacy was for wimps.

As the blog has been moved, pls use the following link to view the post:

http://euandus3.wordpress.com/2009/10/25/how-the-us-and-eu-are-apt-to-differ-on-bank-bonus-policy/

High Finance

FINANCIALISATION

Upcoming Events

RMF Roundtable: FINANCIALISATION AND DEVELOPING COUNTRIES
5 November 2009, 5 – 7 pm, SOAS, London

Labour and the Curious Case of Mexican Bank Resilience
Thomas Marois, SOAS

Global Integration of the Turkish Economy in the Era of Financialisation
Nuray Ergunes, Maltepe University, Turkey

Emerging Economy Central Banks and the Crisis of 2007-09
Juan Pablo Painceira, SOAS

Financialisation and Regulation: The Fate of Basle II
Sedat Aybar, Kadir Has University, Turkey

For more information contact rmf@soas.ac.uk or see http://www.soas.ac.uk/rmf

 *****

International Conference
One Year on from the Panic of 2008: WHITHER FINANCIALISED CAPITALISM?
7 November 2009, 9 am to 6 pm, SOAS, London

09.00-09.45     Registration and Coffee

09.45-12.15     Welcome Addresses and Opening Plenary
Financialised Capitalism and the International Crisis
Gérard Duménil, National Centre for Scientific Research, Paris
Gary Dymski, University of California Center, Sacramento
Costas Lapavitsas, SOAS, London

12.15-13.15 Lunch

13.15-15.30 Parallel Sessions
Contemporary Finance, Regulation and the Real Economy
Malcolm Sawyer, Leeds University Business School
Jan Toporowski, SOAS, London
Paulo L dos Santos, SOAS, London
Varieties of Financialisation
Engelbert Stockhammer, Vienna University of Economics and Business
Trevor Evans, Berlin School of Economics
Claude Serfati, University of Saint-Quentin-en-Yvelines

15.30-15.45 Coffee

15.45-18.00 Plenary
The Social Costs and Implications of Financialisation
Karel Williams and Ismail Erturk, CRESC, Manchester
Andrew Leyshon, University of Nottingham
Robin Blackburn, University of Essex

For more information, contact rmf@soas.ac.uk, or visit http://www.soas.ac.uk/rmf

Posted here by Glenn Rikowski

The Flow of Ideas: http://www.flowideas.co.uk

Capitalist Crisis

RICHARD WOLFF – CAPITALISM HITS THE FAN

A message from Rick Wolff

Dear Friends

You might find interesting and useful (and especially for teaching purposes) an inexpensive ($18 or less if ordered via http://www.rdwolff.com) new book of short, 1000-word essays on the history and dimensions of the current economic crisis as well as government responses and political implications. The essays were published from 2005 through mid-2009 on the Monthly Review webzine and are here edited with new introductions for maximum clarity, brevity, and accessibility to many audiences. The book can already be ordered and will begin shipment Sept 30, 2009.

Rick Wolff

http://www.rdwolff.com
*********************************

Capitalism Hits the Fan: The Global Economic Meltdown and What to Do About It

Richard Wolff

Published 2009 • 6” x 9” • 256 pages • charts ISBN 9781566567848 • paperback • $18.00

A breathtakingly clear analysis that breaks down the root causes of today’s economic crisis

 “With unerring coherence and unequaled breadth of knowledge, Rick Wolff offers a rich and much needed corrective to the views of mainstream economists and pundits. It would be difficult to come away from this… with anything but an acute appreciation of what is needed to get us out of this mess.” —Stanley Aronowitz, Distinguished Professor of Sociology and Urban Education, City University of New York

Capitalism Hits the Fan chronicles one economist’s growing alarm and insights as he watched, from 2005 onwards, the economic crisis build, burst, and then dominate world events. The argument here differs sharply from most other explanations offered by politicians, media commentators, and other academics. Step by step, Professor Wolff shows that deep economic structures—the relationship of wages to profits, of workers to boards of directors, and of debts to income—account for the crisis. The great change in the US economy since the 1970s, as employers stopped the historic rise in US workers’ real wages, set in motion the events that eventually broke the world economy. The crisis resulted from the post-1970s profit explosion, the debt-driven finance-industry expansion, and the sequential stock market and real estate booms and busts. Bailout interventions by the Federal Reserve and the US Treasury have thrown too little money too late at a problem that requires more than money to solve.

As this book shows, we must now ask basic questions about capitalism as a system that has now convulsed the world economy into two great depressions in 75 years (and countless lesser crises, recessions, and cycles in between). The book’s essays engage the long-overdue public discussion about basic structural changes and systemic alternatives  needed not only to fix today’s broken economy but to prevent future crises.

Richard Wolff has been a professor of economics at the University of Massachusetts, Amherst since 1981. He has been a visiting professor in the Graduate Program in International Affairs, at the New School in New York since 2007. Wolff’s major recent interests and publications include studies of US economic history to ascertain the basic structural causes of the current economic crisis and the examination of how alternative economic theories (neoclassical, Keynesian, and Marxian) understand and respond to the crisis in very different ways. His past work involves application of advanced class analysis to contemporary global capitalism. He has written, co-authored, and co-edited many books and dozens of scholarly and popular journal articles. His recent analyses of current economic events appear regularly in the webzine of the Monthly Review. In 2009, Capitalism Hits the Fan, the documentary on the current economic crisis, was released by Media Education Foundation (http://www.mediaed.org). Visit http://www.rdwolff.com for more information.

Olive Branch Press
http://www.interlinkbooks.com

Table of Contents

Introduction

Part I: Roots of a System’s Crisis
The Political Pendulum Swings, the Alienation Deepens
Dividing the Conservative Coalition
Economic Inequality and US Politics
Reform vs. Revolution: Settling Accounts
Exit-Poll Revelations
Real Costs of Executives’ Money Grabs
The Decline of Public Higher Education
Reversing the American Dream   
Old Distributions, New Economy (co-author Max Fraad-Wolff)
Today’s Haunting Specter, or What Needs Doing
Twenty Years of Widening Inequality
Neoliberalism in Globalized Trouble
Evading Taxes, Legally
Consumerism: Curses and Causes
Nominating Palin Makes Sense

Part II: The Economics of Crisis
1    Capitalism as a Crisis-Prone System
Capitalism’s Three Oscillations and the US Today
Financial Panics, Then and Now
Neoliberal Globalization Is Not the Problem
Economic Blues
Capitalist Crisis, Marx’s Shadow
Wall Street vs. Main Street: Finger Pointing vs. System Change
Capitalism’s Crisis through a Marxian Lens
It’s the System, Stupid
GM’s Tragedy: The System Strikes Back
Crises in vs. of Capitalism
2    The Role of Economic Theory
Evangelical Economics
Flip-Flops of Economics
3    Markets and Efficiency
Oil and Efficiency Myths
The Rating Horrors and Capitalist “Efficiency”
Market Terrorism
4    Wages, Productivity, and Exploitation
US Pensions: Capitalist Disaster
The Fallout from Falling Wages
Reaping the Economic Whirlwind
Our Sub-Prime Economy
5    Housing and Debt
Personal Debts and US Capitalism
US Housing Boom Goes Bust
What Dream? Americans All Renters Now!
6    Government Intervention in the Economy
 Bernanke Expectations: New Fed Chairman, Same Old, Same Old
Federal Reserve Twists and Turns
As Rome Burned, the Emperor Fiddled
Policies to “Avoid” Economic Crises
Lotteries: Disguised Tax Injustice
7    International Dimensions of the Crisis
Immigration and Class
Global Oil Market Dangers
China Shapes/Shakes World’s Economies
Globalization’s Risks and Costs
Foreign Threat to American Business?
US Economic Slide Threatens Mexico

Part III: Politics of the Crisis
1    Reforms and Regulations as Crisis Solutions
Economic Reforms: Been There, Done That
Regulations Do Not Prevent Capitalist Crises
2    Debates over “Socialist” Solutions
Economic Crisis, Ideological Debates
Socialism’s New American Opportunity
Those Alternative Socialist “Stimulus” Plans
Wanted: Red-Green Alliance for Radically Democratic Reorganization of Production
Capitalist Crisis, Socialist Renewal
3    Anti-Capitalist Politics
Europe: Capitalism and Socialism
The Urban Renewal Scam for New Orleans
France’s Student-Worker Alliance
Lessons of a Left Victory in France
The Minimum Wage, Labor, and Politics
French Elections’ Deeper Meaning
Mass Political Withdrawal
Capitalism Crashes, Politics Changes

Index

Posted here by Glenn Rikowski

The Flow of Ideas: http://www.flowideas.co.uk

We don’t need any more regulatory bodies.

1) Make the courts accesible.
2) Enforce contracts.
3) Punish fraud.

Sincerely,
Mark Dohle

Wall Street Meltdown & Re-Regulation

President Obama to Wall Street:

“…normalcy cannot lead to complacency.”

“…hear my words We will not go back to the days of reckless behaviour and unchecked excess at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses.”

In Federal Hall, in the heart of Wall Street, President Obama warned of coming re-regulations, brining a tightening of rules that were cast aside first by President Ronald Reagan, President Bill Clinton and President George W. Bush. The seeds of this current Economic disaster started a long time ago.

President Obama is proposing a new Consumer Financial Protection Agency, with the mandate to oversee financial products sold to consumers. Not surprisingly, this is opposed by lobbyists some lawmakers and other regulatory agencies, those that failed in their duties the first time around! These groups and individuals would say no it wasn’t Law; they still had the responsibility to report to Congress after investigation and state their concerns. In this they did fail miserably, with the current damage Worldwide to Billions of people, and as always the poorest countries on Earth have been harmed the most.

Five of the biggest Banks in America have posted second quarter profits of $13-billion dollars, one quarter, double what they made in the second quarter of 2008. Near record profits are coming for the banks that caused chaos in Financial Markets Worldwide, causing Trillions in losses for consumers. Once again, the stink doesn’t linger on the expensive suits of bankers, but in the nostrils of the poor.

Wall Street executives, bankers and traders all have been guilty of seeking quick profits and bonuses at the expense of all their fellow citizens, the economy in general around the World and the companies that are traded in the markets. Many companies and individuals have been financially destroyed to create bonuses for those same bankers and traders at everyone else’s expense. Lost a 401K, your house, the kids can’t go to College? Thank Wall Street greed, that greed is the only constant in this whole debacle!

There was a time when companies, built slowly over time with long term goals, building a solid entity with true value. It seems with human life so short, many cannot wait and belly up to the trough and pig-out as soon as possible.

Shame.

So the so-called conservatives are having their so-called freedom event with so-called commentators and news anchors from so-called news stations.  It’s all a side show to the real problems of the country.  It’s easy to misplace anger in an environment where misinformants rule the airwaves.

So, let me show you where the real theft is happening, in case you may have missed it.

First, the FDIC released yet another move towards creating a financial banking cartel.  Another one bites the dust.

Corus Bank, National Association, Chicago, Illinois, was closed today by the Office of the Comptroller of the Currency, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with MB Financial Bank, National Association, Chicago, Illinois, to assume all of the deposits of Corus Bank, N.A.

But you know there’s  really nothing to see here at the NY Times:  A Year After a Cataclysm, Little Change on Wall St. Much more important to focus on creeping socialism and taking our government back from imagined enemies.

One year after the collapse of Lehman Brothers, the surprise is not how much has changed in the financial industry, but how little.

Backstopped by huge federal guarantees, the biggest banks have restructured only around the edges. Employment in the industry has fallen just 8 percent since last September. Only a handful of big hedge funds have closed. Pay is already returning to precrash levels, topped by the 30,000 employees of Goldman Sachs, who are on track to earn an average of $700,000 this year. Nor are major pay cuts likely, according to a report last week from J.P. Morgan Securities. Executives at most big banks have kept their jobs. Financial stocks have soared since their winter lows.

No nothing to see here.  Wait, a minute.  Maybe we should listen to people with some expertise instead of Glenn Beck or Rush Limbaugh who couldn’t even get one college degree or a freshman’s worth of credits between them . Maybe we shouldn’t focus on sycophants like Chris Matthews or Keith Olbermann who just want to hear themselves talk and hump each others legs until they tingle.

In fact, though, regulators and lawmakers have spent most of the last year trying to save the financial industry, rather than transform it. In the short run, their efforts have succeeded. Citigroup and other wounded banks have avoided bankruptcy, and the economy has sidestepped a depression. But the same investors and economists who predicted, and in some cases profited from, the collapse last fall say the rescue has come at an extraordinary cost. They warn that if the industry’s systemic risks are not addressed, they could cause an even bigger crisis — in years, not decades. Next time, they say, the credit of the United States government may be at risk.

Yup, what have we been talking about here for month after month after month, while we get named called every imaginable insult from one end of the political spectrum to another.  I must defy definition if one day I can be called a racist republican ratfucker then be called a greenie and a leftie the next.

Oh, meanwhile …

Simon Johnson, a professor at the Sloan School of Management at the Massachusetts Institute of Technology and former chief economist of the International Monetary Fund, said that the seeds of another collapse had already sprouted. If major banks are allowed to keep making bets that are ultimately backed by taxpayer guarantees, they will return to the practices that led them to underwrite trillions of dollars in bad loans, Professor Johnson said.

“They will run up big risks, they will fail again, they will hit us for a big check,” he predicted.

Meanwhile, what if they gave a huge friggin’ loud rally and the only thing that happened based in reality was every single participant was pick pocketed?

But even some senior Wall Street executives acknowledge the lack of change surprises them, given how poorly the industry performed last fall and the degree of government support necessary to keep it from collapsing.

“There was a general feeling that an enormous amount of additional regulation should be put in place to prevent what happened that weekend from happening again,” said Byron Wien, vice chairman of Blackstone Advisory Services and the former chief investment strategist for Morgan Stanley and Pequot Capital. “So far, we haven’t seen a lot of action.”

Robert J. Shiller, the Yale University economics professor who predicted the dot-com crash and the housing bust, said the window for change may be closing. “People will accept change at a time of crisis, but we haven’t managed to do much, and maybe complacency is coming back,” Professor Shiller said. “We seem to be losing momentum.”

I’m not sure we’re so much losing momentum as the establishment class of media, politicians and corporations are doing every thing in their power to make us look the other way.  Look, it’s a Bolshevik in the white house! Look some right wing extremist Republican Congressman shouted “Liar!” during a POTUS speechification!

Kenneth C. Griffin, founder and chief executive of the Citadel Investment Group, a Chicago-based hedge fund that manages $13 billion, said that regulators and lawmakers needed to impose rules so failing banks could be shut, rather than allowed to operate indefinitely with taxpayer support.

“We’ve taken a lot of steps for the worse, and not for the better, in terms of the structural underpinnings of our capital markets,” Mr. Griffin said. “We have to change the rules and correct the fundamental flaws in the financial system.”

You do realize these are the folks that hold and manage your retirement funds, your assets, and the valuation and keys to your home right?  But hey, illegal aliens may take that job you want mowing some one’s lawn and it’s all Dubya’s fault!

Critics of the industry argue that the pullback in risk will be only temporary without deep regulatory changes. Nassim Nicholas Taleb, a statistician, trader, and author, has argued for years that financial firms chronically underestimate their risks and must be managed much more cautiously. Universa Investments, a $5 billion fund in which he is a principal, made more than 100 percent profit last year betting on the possibility of a collapse.

Mr. Taleb warns that the system has grown riskier since last fall. The extensive government support that began after Lehman collapsed will lead investors to assume that governments will always preventmajor banks from collapsing, he said.

So investors will lend money to the financial industry on easy terms. In turn, financial institutions will use that cheap money to make risky loans and trades. The banks will keep the profits when their bets pay off, while taxpayers will swallow the losses when the bets go bad and threaten the system.

Economists call the phenomenon moral hazard. Bankers have a different term: I.B.G. The phrase implies that by the time a deal goes sour, “I’ll be gone,” after having received a sizable bonus.

Despite the predictions last year about pay cuts, those bonuses appear secure.

Hey, market discipline may be a thing of the past, but some silly republican congressman bragging about his sexual exploits has been served!  Moral hazard and mispriced risk may still rule the financial world but we now how important it is to enshrine Teddy Kennedy’s name  onto the biggest hand out to insurance companies and big Pharma we’ve evah seen while wistfully hoping that’s still a call  for a public option.

For now, legislation to force derivatives trading onto exchanges has stalled, and banks are still writing contracts with limited regulatory oversight.

“The off-exchange derivatives market is still the Wild West,” Ms. Bair said.

[note: That's FDIC's Sheila Bair]

Have a nice day and a pleasant tomorrow!  Oh, and Wake the FUCK UP PEOPLE!!!  It’s the pickpockets you need to worry about, not the loose women!!!!

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Public Policy chaos is hard to miss these days. One moment it’s which health plan will make its way through the blue dogs in the Senate and the liberals in the house. The next moment it’s escalation of military actions in Afghanistan; probably where the original quagmire reference was developed at the dawn of time. Look this way!!! No look that way!!! Then there’s the forgotten war against financial risk excess. I could create a pretty good argument that much of the chaos might be to distract us from the rumblings still coming from the Wall Street fault line. Good thing the Europeans are looking, because it seems that we’re certainly not. That means they’ll be at least one safe place to put your money, eventually. Unfortunately, it won’t be here.

The Chief Executive of the Vampire squid was in Germany this week telling the Europeans exactly what they wanted to hear (h/t to myiq2xu). This should’ve elicited the “D’oh” heard round the world. Problem is, no one in the U.S. is listening. We have yet to see any serious proposal to regulate and standardize the types of complex financial derivatives that nearly brought the world economy to it’s knees less than a year ago.

Lloyd Blankfein, chief executive of Goldman Sachs, on Wednesday admitted that banks lost control of the exotic products they sold in the run-up to the financial crisis, and said that some of the instruments lacked social or economic value.

In a speech to the Handelsblatt banking conference in Frankfurt, he also repeated an attack, first made in the spring, on Wall Street compensation practices, calling the furore over bankers’ pay “understandable and appropriate”.

The startling message from the head of the world’s most high-profile investment bank echoes comments by Lord Turner, chairman of the Financial Services Authority, the UK regulator, who provoked controversy last month when he questioned the social value of much investment banking activity.

Mr Blankfein said: “The industry let the growth and complexity in new instruments outstrip their economic and social utility as well as the operational capacity to manage them.”

This is so true. When it takes an army of lawyers to work on one tranche and the contracts it involves, when it takes math that requires physicists turned financiers to price the silly things, and when the resolution process is so whacked that it can take months to figure out who owns what, you’ve got control problems. Even more true is the fact that investments in these products doesn’t really create anything of value. It ties capital up in arbitrage and speculation rather than placing it the hands of entrepreneurs that actually create products and services. Top it off with cash out flows via bonuses from stock holders to what amounts to a professional gambling class and you’re bound to create a major clusterfuck eventually. So, given the clusterfuck last year, why aren’t we rewriting financial law?

Acknowledging that some products had become too complex, Mr Blankfein said: “We have a responsibility to the financial system which demands that we should not favour non-standard products when a client’s objective and the market’s interests can be met through a standardised product traded on an exchange”.

Although Mr Blankfein stressed that derivatives had an “important economic and social purpose” and argued that banning complex, customised derivatives altogether would hurt economic growth, he conceded that such products should rightly attract “more rigorous capital requirements”.

The Goldman boss, who himself received total compensation of more than $70m in 2007, said multi-year bonuses should be outlawed and senior staff should receive large proportions of pay in stock, rather than cash.

In recent months Goldman has faced a spate of bad publicity as lawmakers, corporate governance experts and the media have attacked its bonus accruals – amounting to $11.4bn in the first half of the year – and criticised its role in the financial crisis.

Mr Blankfein’s support for the thrust of global regulatory reform – including a recommendation that there should be a “robust sharing of information” between regulators – is likely to be influential among peers and welcomed by politicians.

I consider the statement “robust sharing of information” to be the year’s understatement. Especially, given this particular piece that popped up at Bloomberg today about crash catalyst Lehman and the resulting clusterfuck in the money markets. If you’ve either got money in money market accounts (MMAs)or are forced into them through your pension or 401k plan, like I am, read that article while you’re sitting down. Oh, and consider monitoring your blood pressure .It outlines what was going on a year ago when everything was coming apart at the seams and the underlying value of MMAs went south.

It was commercial paper and the $3.6 trillion money market industry that traded the notes that came close to sinking the global economy — not a breakdown in credit-default swaps or bank-to-bank lending. The bankers were focused on saving themselves, and commercial paper, as invisible as the air they breathed, never came up at the meetings, according to one of the two dozen executives invited to the New York Fed by its president, Timothy F. Geithner, 48, and Paulson.

Again, we have this massive transfer of wealth from the “real” economy of making things and creating jobs, to the shadowlands of finance. If you read the article, this sentence screams at you.

On commercial paper desks all over Wall Street that Monday morning, phones that normally buzzed with employees renewing overnight loans were hushed.

Anyone that has ever worked a money desk, and I have, knows that this is epic. According to the article, not even Walmart went unscathed. It had short term money sitting with one of the MMAs that it couldn’t withdraw. Funds were stuck that were supposed to be available for working capital. There’s a detailed account for several MMAs that basically went to gridlock and negative positions in the blink of an eye. What I want to emphasize, and this ties back to the original intent of my thread, is that most of this happened because our financial regulations and laws do not reflect reality on the ground any more. Here’s your basic punchline.

Money market funds flew under Paulson’s radar because they were considered cautious, said David Nason, assistant Treasury secretary for financial institutions at the time.

As long as they invested in debt with the highest credit ratings that matured in less than nine months, the rules for money funds as outlined in the Investment Company Act of 1940, regulators left the funds alone, said Nason, now a managing director of Promontory Financial Group, a financial-services consulting firm in Washington.

“The commercial paper market is largely unregulated,” Nason said. “It’s a nebulous area of credit that isn’t under the umbrella.”

The deal is that we’ve actually had folks look at this and there’s been suggestions. I guess you can guess the status of the action taken to date. Yup folks, hear those crickets!

“The widespread run on money market mutual funds has underscored the dangers of institutions with no capital, no supervision and no safety net,” the Group of 30, a financial advisory organization that includes former Fed Chairman Paul A. Volcker, said in a January report.

Money funds undermine the strength of the U.S. financial system and should be regulated more like banks, Volcker said in an August interview. They should submit to the same “regulatory burden,” he said.

The SEC recommended that funds hold a certain percentage of their assets in cash, so they can make payments in times of stress. Regulators also proposed upgrading the quality of the assets that funds can own and limiting them to securities with shorter maturity dates.

When are we actually going to get around to taking care of this? It’s not like we haven’t mapped the fault lines. Where’s the forward momentum on the regulation before we get more aftershocks?

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Last week I took a long-ish road trip with a colleague of mine. We were headed to a little networking meeting that didn’t go as well as I would have liked (you can’t win ‘em all). On the way to and from Chicago (I live in Milwaukee these days) my colleague had control of the radio, so I was exposed to an awful lot of conservative talk radio. The experience was not as unpleasant as I expected as I learned that government in general cannot be trusted to administer any program more complex than cracking open a Big Mac carton. Apparently, anything more than that is destined to catastrophic failure and possibly spontaneous combustion if left in the hands of government bureaucrats.

Assuming that these observations and predictions were not in anyway biased and suspending my own political views, I was left wondering why it is that organizational ineptitude is expected from government agencies. Why do we assume that private concerns will be demonstrably better at just about any function?

I will be the first to admit that I have been on the wrong end of inexplicable stupidity at the hands of several government agencies. I have encountered these less-than- satisfactory outcomes as a citizen compelled to interact with numerous organizations. I have also been privileged to serve as a consultant for another; one that has a difficult and unenviable job. Hell, I even spent one of the most mind-numbing years of my life in the employ of one of the largest federal bureaucracies. Despite these experiences, I fail to see what it is about government organizations that predisposes them to inefficiency and failure.

So far as I can tell, large, complex organizations all have the same potential for success and failure. These outcomes, I considered objectively, are a function of leadership and management. Poor leadership will yield organizational failure. Exemplary leadership will yield organizational success. Most organizations, be the private or public, will fall somewhere in between.

Government organizations do not hold a monopoly on mismanagement. I have been subject to the unmerciful hands of plenty of private organizations. Since I interact with private organizations more frequently, I venture to say that most examples of poor management I have observed hail from organizations attempting to make a profit from our interactions.

Should the federal or state governments handle health care? I am not decided on the matter. Are they capable of doing so? So long as they select brilliant leaders and competent managers, I do not see how they could fare worse than the private sector. The same applies to banking, airlines and the auto industry.

This is a great article by Jonathan Wolff which appeared in The Guardian (Higher Education) last Tuesday – Glenn

Greed is good (sometimes); but regulation is better

By Jonathan Wolff

I was rather bemused to read an opinion piece suggesting that I had seen the financial crisis coming. The evidence? A few years ago, I wrote approvingly of some of Karl Marx’s thoughts about the inevitability of capitalism’s economic cycle. As I tell my students, when we are at the top of a cycle politicians and economists boast that they have finally cracked it and achieved sustainable growth. But when we are at the bottom we are told not to worry, the cycle will roll the good times back in.

Marx wrote that capitalism is prone to the most extraordinary type of crisis: that of over-production. Throughout history we have struggled to produce enough to sustain us. But capitalism has flipped into another stage, where sometimes we produce much more than we can consume, or at least pay for. Producers are left with unsold stocks, so reduce output and lay off workers. And then there is even less money to buy produced goods, reinforcing a downward spiral.

Marx also argued that each crisis would be worse than the last. Luckily he was wrong. Attempts to manage the economy can soften the crash. But it is worth understanding his reasons for pessimism. Marx observed that one of the tendencies of capitalism was “the concentration of capital”: the increasing amount of our lives that gets sucked up by the market. Over time more of life, such as childcare and entertainment, becomes “commodified”. Consequently, when the market crashes, it drags more of our lives down with it.

As people in developing countries know, an economic crisis is less serious for you if you can go back to the family farm until things pick up. But if you have to rely on the market entirely for your livelihood, you are especially vulnerable.

So did I predict the then-coming crisis? Well, not really. George Soros once said that he had predicted 10 crises out of the last four. Those who rely on the writings of Marx are in the same position. You can be sure that a crisis is a comin’, but why exactly, and when, is a mystery, until it happens.

On the other hand, it was rather shocking to hear Alan Greenspan of the US Federal Reserve blaming the crisis on a “flaw” he had recently discovered in his ideology of minimal regulation of the free market. He should have come to see me. I could have told him that the problem had been discovered in the early 1700s, by the philosopher and essayist Bertrand Mandeville.

The miracle of the free market – and it is pretty miraculous – was famously captured by Adam Smith: “It is not from the benevolence of the butcher, the brewer or the baker, that we expect our dinner, but from their regard to their own self-interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantage.” As if by magic, the market harnesses self-interest for general well-being. Greed is good. Or, as Mandeville put it in his Fable of the Bees, “Private Vices, Public Virtues”.

But here comes the flaw. This is all very well when shopping for tonight’s dinner. If the butcher sells you rotten meat, you’ll go somewhere else tomorrow, if still alive. It is this that keeps the butcher honest. But suppose you are buying meat that won’t be supplied for 20 years? Still want to rely on the greed of the butcher? Thought not. By the time you have found out if he is cheating you, it will be too late to switch supplier. When there is a substantial time lag between purchase and consumption, as there is for pensions, savings schemes and sub-prime debt, the market loses its magic and the purchaser is vulnerable. Regulation might not be a bad idea after all. Otherwise, as Mandeville might have observed, Private Vices, Public Bail-Out.

The Guardian (Higher Education), 7^th July 2009, p.6

Online at: http://www.guardian.co.uk/education/2009/jul/07/jonathan-wolff-recession-marx

Posted here by Glenn Rikowski

The Flow of Ideas: http://www.flowideas.co.uk

Published in The Australian Financial Review

In “Not enough stress in US bank test,” (June 24), Professor Lucian Bebchuk, Harvard Law School, says, “As long as banks are permitted to operate this way, the banks’ supervisors are betting on the banks’ ability to earn their way out.” Bedchuk is referring to the recent flawed stress testing of US banks. His message is that stress testing is essential but that it must be rigorous. As the author of a book on the finer details of stress testing after many years experience of building stress testing related technologies and using them to successfully manage billions of dollars of complex financial exposures, I agree.

A rigorous stress test measures bank exposure to wide ranging movements in all relevant economic variables. There are many ways to get a stress test wrong or be tricked. The value of a stress test depends critically on its frequency and transparency. The prudential regulator, APRA, requires banks to report quarterly and results are not published. Bank trading is a daily activity. A quarterly stress test leaves 99 per cent to trust.

I have repeatedly invited the authorities through my letters to publish rigorous bank stress tests daily in a website. Nothing could be more efficient or cost effective as a regulator of excessive bank risk.

Why not reduce risk and cost with an automated bank risk watch website? Minister Nick Sherry, answered in a letter to me dated 16 April 09, then as Minister for Superannuation and Corporate Law, “To require daily reporting as proposed in your email (to the Treasurer) would impose significant additional costs. These costs would ultimately be paid by the bank customers.” The Minister was poorly advised. Bank customers now know the much higher cost of weak risk management.

What is the cost of rigorous daily bank stress testing and reporting? Daily stress testing is already core risk management for a well managed bank — the entire process is electronic and automated. So the additional cost of daily electronic reporting to a central website is insignificant. There is no reason in the public interest to withhold risk transparency from taxpayers now underwriting bank deposits.

There is another cost however. Banks will lose the freedom to speculate in darkness. It will become apparent that even the current quarterly stress testing ignores the housing price risk — something US investment banks do too. And what about exposure to US sub-prime mortgages?

Governments and regulators have not understood where risk hides. Many senior bankers will fail a rigorous risk test. On the current course, the risk-free prediction is that more avoidable banking disasters will follow, in similar frequency to recent decades.

Published version - AFR- 1 Jul 2009

Maher hits this one out of the park! Starting about 3:30 minute in the video, Maher starts to seriously hang some foot in tush about Obama not seriously confronting the banks, the energy companies, and the Health Care industry head on.

You seen the gas prices creeping up over $3.00 a gallon…

In the middle of the worst economic collapse since the 30’s, massive unemployment, and nervousness resulting in a 20% drop in consumption…

And the price is going up?

F this bull about listening to the syncopated squealing by the Reich in this country – President Obama. You won by a landslide, and the Dems are going to win by a landslide in 2010 – providing they don’t get timid and stupid…

And stick together.

It really is past time to kick ass and take names.

While, GM’s bankruptcy and Chrysler’s emergence from bankruptcy grab front page headlines, yesterday’s banks with issues are positioning themselves at the table to discuss future financial regulation. This comes as some of the premier researchers in financial economics look for systemic solutions. As you know, I’m a huge advocate for finding new regulations that promote transparency of process and recognize the importance of fiduciary responsibility when the financial industry takes on risk. Harvard’s Oliver Hart and University of Chicago’s Luigi Zingales, both NBER researchers, have just produced A New Capital Regulation For Large Financial Institutions. I want to review some of their findings and suggestions in conjunction with two more mundane articles.

The first of these articles is an astounding piece on Alternet that finds information suggesting Larry Summers has been taking kickbacks from big troubled banks. Another article is in today’s NY Times that shows how the banks have been spending a good year–even as they took TARP funds and cheap money from them FED–girding for a fight on forthcoming regulations.

I would think that the big lesson from the last few years is this is not time to go back to business as usual. However, the mindset of those making major decisions in the White House (Treasury Secretary Geithner and CEA head Summers) is this is just a glitch and there’s no chance anything like this could happen again. In other words, we don’t need to look for systemic problems, we just need to send the patients home with some aspirin and they can call back in the morning. This aspirin prescription has been particularly expensive. It is either utterly naive or completely disingenuous to think that pouring money into financial institutions and waiting this out is going to prevent any future occurrence of financial meltdowns. We need to be prepared to offset what may be an elaborate hoax to convince that nothing really needs to change systematically and a major congressional influence- and administration influence- buying spree by the big banks. Even as we see Dow de-list Citibank, we see evidence that Citibank possibly manipulated its stress tests results through Summers.

If the Alternet article is correct, Summers should be in trouble and the trustworthiness of the large institutions should be questioned by a congressional committee. This sure looks like pay-to-play to me. (HT to Dr. BB for the link.) The post by Mark Ames is a must read.

Last month, a little-known company where Summers served on the board of directors received a $42 million investment from a group of investors, including three banks that Summers, Obama’s effective “economy czar,” has been doling out billions in bailout money to: Goldman Sachs, Citigroup, and Morgan Stanley. The banks invested into the small startup company, Revolution Money, right at the time when Summers was administering the “stress test” to these same banks.

A month after they invested in Summers’ former company, all three banks came out of the stress test much better than anyone expected — thanks to the fact that the banks themselves were allowed to help decide how bad their problems were (Citigroup “negotiated” down its financial hole from $35 billion to $5.5 billion.)

The fact that the banks invested in the company just a few months after Summers resigned suggests the appearance of corruption, because it suggests to other firms that if you hire Larry Summers onto your board, large banks will want to invest as a favor to a politically-connected director.

Last month, it was revealed that Summers, whom President Obama appointed to essentially run the economy from his perch in the National Economic Council, earned nearly $8 million in 2008 from Wall Street banks, some of which, like Goldman Sachs and Citigroup, were now receiving tens of billions of taxpayer funds from the same Larry Summers. It turns out now that those two banks have continued paying into Summers-related businesses.

Meanwhile, the Grey Lady reports that even during the height of the meltdown, the banks were planning strategies daily on how to avoid future regulations. This sounds like collusion to me. I’d like to see the joint amount of market concentration held by these nine members in this consortium. If it’s any where the number I would guess it to be, my next question is why isn’t the Justice Department investigating this as collusion?

As the financial crisis entered one of its darkest phases in October, a handful of the nation’s largest banks began holding daily telephone sessions. Murmurs were already emanating from Washington about the need for a wide-ranging regulatory overhaul, and Wall Street executives girded for a fight.

The nine biggest participants in the derivatives market — including JPMorgan Chase, Goldman Sachs, Citigroup and Bank of America — created a lobbying organization, the CDS Dealers Consortium, on Nov. 13, a month after five of its members accepted federal bailout money.

To oversee the consortium’s push, lobbying records show, the banks hired a longtime Washington power broker who previously helped fend off derivatives regulation: Edward J. Rosen, a partner at the law firm Cleary Gottlieb Steen & Hamilton. A confidential memo Mr. Rosen drafted and shared with the Treasury Department and leaders on Capitol Hill has, politicians and market participants say, played a pivotal role in shaping the debate over derivatives regulation.

Today, just as the bankers anticipated, a battle over derivatives has been joined, in what promises to be a replay of a confrontation in Washington that Wall Street won a decade ago. Since then, derivatives trading has become one of the most profitable businesses for the nation’s big banks.

Meanwhile, back in academia, Hart & Zingales, really pose the germane question (emphasis mine). I’m just going to let you look at those two mundane articles above and then draw your own conclusions about the root of our problems.

If there is one lesson to be learned from the 2008 financial crisis, it is that large financial institutions (LFIs) are too big to fail. The too-big-to-fail doctrine has been around for a long time (Stern and Feldman, 2004), but its practical value has often been questioned (Meltzer, 2004). The backlash following the demise of Lehman Brothers, and the effort exerted to save major financial institutions at all costs, has established that the United States does not have the political will to let large financial institutions fail. Whether the too-big-to-fail doctrine is based on economic thinking (the cost of large LFI failure is too high) or political reality (the pressure to save LFIs is too strong), the conclusion is the same: we need to rethink how we regulate these institutions.

This is a paper that is amazing in its conclusion. (You may have to take my word for this.) It suggests that we don’t rely on credit rating agencies as trigger mechanisms but we rely on the Credit Default Swap (CDS) market. The authors suggest that the very market that created so many issues in the current global crisis meltdown might be the mechanism to prevent future meltdowns. How is this possible?

Bank regulation usually relies on capital requirements coupled with deposit insurance. Any market where insurance exists, reduces risk and makes capital cheaper. Since there deposit insurance seemingly reduces risk and makes capital cheaper, capital requirements are necessary to prevent banks from over-leveraging. The meaning of over-leveraging at its most simplest is over-borrowing. There’s a series of international banking regulations called the Basle Accords that provide a regulation structure primarily based on minimal capital requirements. If you’ve heard the terms Tier 1 capital or Tier 2 capital, that’s from the Basel Accords. Each of these tiers are defined by many things, among them the term or maturity of the capital.

Many of the problems that have occurred to date, have occurred because the Basel Accords and capital requirements have been applied to traditional financial institutions like Commercial Banks, but they did not apply to Investment Banks. This is because Investment banks are not depository institutions and they have no fiduciary responsibility as a result. This also infers no insured deposits. We’ve since learned that there is more involved with protecting people’s money than just examining institutions based on the the source of the funding (i.e. if they hold checking or savings accounts as liabilities or not). We’ve also taught the market itself that certain large financial institutions (LFI as the authors of the article designate them) as they approach bankruptcy can lead to systemic failures. But, the LFIs themselves won’t be subjected to the discipline and punishment of bankruptcy. Their status as LFI exempts them from that. The authors are looking for a way in their study to find a mechanism to replace the ‘threat’ of bankruptcy because the market now knows that threat doesn’t really exist. Without that threat, the market can’t correctly price bank risk because the assumption is the risk goes to the taxpayer and not to the private market. This is anathema to both taxpayers and market theoreticians.  Bankers don’t want to change the game now, because by creating such havoc, they’ve actually set themselves up in an even better situation if the old rules still apply.

So the authors suggest the use of the CDS and show how it works as well as show a number stylized market statistics. The overall article is really interesting, but extremely wonky but at least go look at the graphs and consider this idea. It is a really out-of-the-box solution that I’m still digesting.

To solve this problem we rely on the credit default swap (CDS) market. A credit default swap on an LFI is an insurance claim that pays off if the LFI fails and creditors are not paid in full. Since the CDS is a “bet” on the institution’s strength, its price reflects the probability that the debt will not be repaid in full. In essence, the CDS indicates the risk that the LFI will fail. In our mechanism, when the CDS price rises above a critical threshold, the regulator forces the LFI to issue equity until the CDS price moves back below the threshold. If this does not happen within a predetermined period of time the regulator intervenes. (The role of the regulator represents the second difference from a standard margin call system.) The regulator first determines whether the LFI debt is at risk. If the debt is not at risk (i.e., the CDS prices were inaccurate), then the regulator declares the company adequately capitalized and to prove it injects some government money. If the debt is at risk, the regulator replaces the CEO with a receiver (or trustee),
who recapitalizes and sells the company, ensuring in the process that shareholders are wiped out and creditors receive a haircut. This regulatory takeover is similar to a milder form of bankruptcy, and it
achieves the goals of bankruptcy (discipline on the investors and management) without
imposing any of the costs (systemic effects).

Meanwhile, back at the Gray Lady, there’s a less ‘academic’ version of the same discussion.

Those who favor more regulation say it would offer early warning signals when companies take on too much risk and would help avert catastrophic surprises like the huge derivatives losses at the giant insurer the American International Group, which has so far received more than $170 billion in taxpayer commitments. The banks say too much regulation will stifle financial innovation and economic growth.

The debate about where derivatives will trade speaks to core concerns about the products: transparency and disclosure.

There are two distinct camps in this argument. One camp, which includes legislative leaders, is pushing for trading on an open exchange — much like stocks — where value and structure are visible and easily determined. Another camp, led by the banks, prefers that some of the products be traded in privately managed clearinghouses, with less disclosure.

The Obama administration agrees that more regulation is needed. A proposal unveiled recently by Treasury Secretary Timothy F. Geithner won plaudits for trying to make derivatives trading less freewheeling and more accountable — a plan that hinges in part on using clearinghouses for the trades.

Critics in both the financial world and Congress say relying on clearinghouses would be problematic. They also say Mr. Geithner’s plan contains a major loophole, because little disclosure would be required for more complicated derivatives, like the type of customized, credit-default swaps that helped bring down A.I.G. A.I.G. sold insurance related to mortgage securities, essentially making a big bet that those mortgages would not default.

Mr. Rosen and other bank lobbyists have pushed on Capitol Hill to keep so-called customized swaps from being traded more openly. These are contracts written for the specific needs of a customer, whose one-of-a-kind nature makes them very hard to value or trade. Mr. Rosen has also argued that dealers should be able to trade through venues closely affiliated with banks rather than through more independent platforms like exchanges.

Mr. Rosen’s confidential memo, dated Feb. 10 and obtained by The New York Times, recommended that the biggest participants in the derivatives market should continue to be overseen by the Federal Reserve Board. Critics say the Fed has been an overly friendly regulator, which is why big banks favor it.

So you can see the interplay here between politics and economic decisions. If we really wanted to solve this I still suggest we go back to the idea of trust busting. Again, there have been no studies that show that LFI’s have economies of scale or any benefits that outweigh the risk of their size. We should be applying the same rules to Citibank that were applied to AT&T. Bust them up into regional entities and then let the market deal with them as normal sized financial institutions. We should treat them like the illegal, colluding, oligopolies they really have become.

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ALL THE NEWS IN FITS OF PRINT
SUNDAY ROUND-UP

A special Sunday edition of Fits of Print, including some particularly compelling pieces regarding the tragic assassination of Dr. George Tiller, who drew national attention as one of only three late-term abortion providers in the United States. Tiller was shot and killed this morning while serving as an usher at his Wichita, KS church. Police have already detained a “person of interest.”

I prefer not to say anything about Roeder specifically yet, but given that Dr. Tiller was regularly a target of rightwing rage regarding his profession and the documented history of violence against abortion providers, I encourage everyone to view this not as an isolated incident, but as the most recent result of a long-standing history of inflammatory and violent rhetoric directed at providers of women’s reproductive health services of all kinds.

[DAILYKOS] THE GEORGE TILLER I KNEW.
I’m not a great writer, so I apologize that this isn’t nearly as eloquent as some of the diaries on Daily Kos. I just wanted to get this story out to you, so you could hear how this man wasn’t just a tremendous fighter for women’s rights. He was a brilliant physician, and a kind and compassionate human being. RIP Dr. Tiller and thank you for all you did for my friends and my family.

[IAN WELSH] ONE THIRD OF ALL LATE TERM ABORTION PROVIDERS KILLED TODAY.
A theoretical right which cannot be practically accessed is not really a right. The right to abortion, both late and early term, has been under constant assault for decades. Unless other doctors step up, and start providing for that right (and even early term abortions are hard to get in many States) then what happened today is, in fact, a tragic loss for the right for women to be able to have abortions when they need.

[SALON] TILLER REMEMBERED AT DC VIGIL.
But the fact that the gathering was needed only underscored the insanity of Tiller’s murder; there’s no reason someone should become a target of such hatred and violence for doing their job. At least for a night, before a week that will, no doubt, see the shooting become the center of a political firestorm, the vigil helped keep the focus on Tiller, and on his family’s loss.

IN OTHER NEWS.
[WASH POST] US GETS MAJORITY STAKE IN NEW GM.
Under the proposed restructuring, about 60 percent of the new GM would be owned by the United States, about 12 percent by the governments of Canada and Ontario, a union health trust would own 17.5 percent, and the company’s current bondholders would get 10 percent. But as the administration builds the case for another massive infusion of government money into the automaker, it is also dealing separately with accusations that its plan unfairly favors the United Auto Workers at the expense of the company’s investors.

[WSJ] WORKOUT WILL PRODUCE SHARED STRESS THROUGHOUT AUTO BUSINESS.
General Motors Corp.’s bankruptcy will ripple across business. Here’s a look at who gets hit, and how:

[FEMINISTE] RACISM, SEXISM, AND SOTOMAYOR, IN A FEW EASY-TO-READ BULLET POINTS.
Sonia Sotomayor is a judge. It is her job to ask questions. Many judges — including, notably, Antonin Scalia — are known for their assertive styles and difficult questions. Scalia, though, is revered for his blunt style. Sotomayor’s “temperment” is discussed as if she were a racehorse or a dog being bred for certain characteristics. I wonder if a male justice would be regularly described as “strident” and “vocal”? Also, this comment: “She used her questioning to make a point,” he said, “as opposed to really looking for an answer to a question she did not understand” could just as easily describe Scalia or any other sitting Supreme Court justice. Part of the question-asking process is to challenge the attorney’s position, not just to clarify.

[GENDER & SEXUALITY LAW BLOG] JUSTICE SOTOMAYOR: A VIEW FROM COLUMBIA LAW SCHOOL.
Sonia Sotomayor, nominated by President Obama to the U.S. Supreme Court, has taught a course on Federal Appellate Court advocacy at Columbia for several years. While President Obama’s adjunct teaching job at the University of Chicago is often cited as one of his credentials, little mention has been made of Judge Sotomayor’s teaching experience. Hmmm. Students who have taken her course at Columbia have raved about her, her willingness to mentor them, push them, and take them seriously. Here are excerpts from student evaluations of her course.

[NYT] CUBA OPEN TO ADDITIONAL DIRECT TALKS WITH US.
Cuba notified the Obama administration it was ready to resume talks on migration issues and to negotiate direct postal service between the countries for the first time in decades. It also agreed to cooperate with the United States on counterterrorism, drug interdiction and hurricane relief efforts. The decisions, conveyed to the State Department on Saturday in diplomatic notes, represent another step in the gradual unlocking of relations under the Obama administration, after nearly 50 years of a trade embargo that many in the hemisphere say has outlived its usefulness.

[NYT] BANKS DIG IN FOR FIGHT AGAINST REGULATION.
The looming fight over regulation is the beginning of a broader debate over the future of the financial industry. At the center of the argument: What is the right amount of regulation? Those who favor more regulation say it would offer early warning signals when companies take on too much risk and would help avert catastrophic surprises like the huge derivatives losses at the giant insurer the American International Group, which has so far received more than $170 billion in taxpayer commitments. The banks say too much regulation will stifle financial innovation and economic growth. The debate about where derivatives will trade speaks to core concerns about the products: transparency and disclosure.

[THINK PROGRESS] WHO IS RICK SCOTT AND WHAT’S HE SELLING?
This is a little late since his 30 minute infomercial aired earlier this morning, but it’s still important to see.
This Sunday, the front group Conservatives for Patients’ Rights will be airing a 30-minute documentary with “horror stories” aimed at chipping away public support for reforming our health care system. Ironically, the leader and financier of the organization, private health care executive Rick Scott, is actually credited with transforming the American health care system into the profit above-all-else culture that is currently plaguing America. Rick Scott is not only known for his efforts to build the “McDonald’s” of the health care industry, but his company was also forced to pay a $1.7 billion fraud settlement, the largest health care fraud settlement in U.S. history, for systematically stealing from taxpayers.

[POLITICO] GIBBS TOUTS SALON’S TORTURE PIX STORY.
Gibbs continues to miss the point of Taguba’s original revelation: that we have photographic evidence that multiple acts of rape and sexual assault were committed at Abu Ghraib. Media Gadfly has more on the on-going debate about the photos here and here.
On Thursday, Robert Gibbs trashed the British press following the Daily Telegraph’s report that the photographs of Iraqi prisons of which the Obama administration is trying to suppress includes images of sexual abuse and rape. Major General Antonio Taguba, who conducted the Abu Ghraib investigation, was quoted in the Telegraph in a way that appeared to confirm the existence of such photos in that batch. But Taguba now tells Salon that he hasn’t seen the photographs which are part of an ongoing ACLU lawsuit that’s currently embroiled the White House. And the Obama administration wants to make that fact known.

OP-EDS.
[WASH POST] EJ DIONNE: America’s Changing Moral Universe.
Spalding concluded: “If this trend continues, and continues to solidify, the Democrats will never again be a majority party in the United States.” Put aside that pollsters of various ideological stripes subsequently decided that the exit-poll question was flawed. In 2004, so many on all sides just knew that cultural and moral issues were the wave of the future. But a funny thing happened on the road to the revival tent. The crash of the economy has concentrated the minds of Americans on other things. Moral conflict just isn’t what it used to be.

[NYT] HERBERT: Holding On to Our Humanity.
“It is so much easier to look away from victims,” said Mr. Wiesel, in a speech at the White House in 1999. “It is so much easier to avoid such rude interruptions to our work, our dreams, our hopes.” But indifference to the suffering of others “is what makes the human being inhuman,” he said, adding: “The political prisoner in his cell, the hungry children, the homeless refugees — not to respond to their plight, not to relieve their solitude by offering them a spark of hope is to exile them from human memory. And in denying their humanity, we betray our own.”

[WASH POST] ALEC MACGILLIS: Red State Booster Shot.
Health-care reform may be overdue in a country with 45 million uninsured and soaring medical costs, but it will also represent a substantial wealth transfer from the North and the East to the South and the West. The Northeast and the Midwest have much higher rates of coverage than the rest of the country, led by Massachusetts, where all but 3 percent of residents are insured. The disproportionate share of uninsured is in the South and the West, the result of employment patterns, weak unions and stingy state governments. Texas leads the way, with a quarter of its population uninsured; it would be at the top even without its many illegal immigrants.

[NYT] TIANANMEN SQUARE, 20 YEARS LATER.
Two decades ago, China’s largest pro-democracy protests ended when military tanks rolled toward Tiananmen Square and troops opened fire on the crowds. For this anniversary, the Op-Ed editors asked four writers, who were students or working at the time, to reflect back on the event.

What a surprise. The banks want to return to business as usual and are trying to stop the overhaul of the market. This was said by Brooksley Born in an interview on Bloomberg, the CFTC Chairwoman in 1998 who warned against not regulating those derivatives. She was unfortunately sidelined by Clinton, Greenspan, Rubin and Summers.

“Special interests in the financial-services industry are beginning to advocate a return to business as usual and to argue against any need for serious reform,” Born said today as she accepted a Profile in Courage award from the John F. Kennedy Library. If changes aren’t made “we will be haunted by our failure for years to come,” she said.

Read more about that Brooksley Born and the story of a missed chance here.

Well, why would they want changes at all, they have no incentive to. In fact they have every incentive no to want any changes. They profited handsomely from this crash. Even in the face of total failure and collapse of the economy and with the prospect of the ensuing collaps of societies before us, they continue to be rewared for their utter failure. Or maybe they didn’t fail?

It looks like someone is trying very hard to destroy the US, and it’s not OBL.