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Obama urges banks to accept new sense of responsibility
Andrew Clark, The Guardian
President Barack Obama delivered a stern warning to Wall Street today that bankers must scrap “quick kills and bloated bonuses” in favour of a new sense of social responsibility as the first anniversary of Lehman Brothers’ spectacular bankruptcy dawns with a sense of fragile hope for an economic recovery.
On a visit to the heart of New York’s financial district a year on from the collapse of Wall Street’s fourth largest bank which threw the global financial system into disarray, President Obama expressed confidence to an audience of senior figures in the financial world that “the storms of the past two years are beginning to break”. But during an address inside a hall directly opposite the New York Stock Exchange which briefly quieted Wall Street’s usual hubbub, the White House incumbent ordered the financial community to move further in cleaning up its act.
“There are some in the financial industry who are misreading this moment. Instead of learning the lessons of Lehman and the crisis from which we are recovering, they are choosing to ignore them,” said Obama. “We will not go back to the days of reckless behaviour and unchecked excess that were at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses.”…
(14 Sept 2009)
Through the prism of fraud and poverty
ilargi, The Automatic Earth blog
I’ll try to take a slightly different approach today, while remembering the dead, and let someone else do the talking for a change.
Yesterday, I picked up the article below, written by an investment adviser named J. S. Kim, who puts his finger right where it hurts most. In my view, everybody needs to read it who can. Though I’ve never actually met Kim, and, since he charges about $3000 per hour for a private consultation, likely never will, I must say he has a remarkably sharp eye, and a pen that makes his analysis as good as probably anything I’ve seen recently.
Kim’s words appeal to me especially because at this point in time I feel it’s increasingly important to provide an appropriately sized counter-weight against the hollowed-out echo chamber of ultimately irrelevant here-and-gone exuberance that spreads around the world. It’s as false as it is dangerous. People, on an individual, community and societal basis, will make decisions based on the illusion that growth is back and the recession but an unpleasant memory. Resources that might still have been used to build some kind of shelter from the storm are instead incessantly being wasted not on building solid foundations but on decorative gargoylic elements for the rooftop, never mind that the supporting walls have crumbled beyond any call at recognition or redemption. Are you realy hungry enough for good tidings to set your own house on fire?…
(11 Sept 2009)
Keep banks on the straight and narrow
Nils Pratley, The Guardian
John Thain, former chairman and chief executive of Merrill Lynch, was on the radio yesterday advancing an argument that could appeal only to an investment banker. Merrill, he said, simply had to pay $3.6bn (£2.2bn) in bonuses to staff at the end of last year, even though the firm had reported colossal losses and had agreed to be taken over by Bank of America. To do otherwise was “just not practical,” argued Thain, because the losses had arisen in only one corner of the bank, namely the area dealing in mortgage-related assets.
There is (just) a scrap of internal logic there. If failure to pay the $3.6bn had, say, caused the entire staff in Merrill’s fund management division to walk out, thereby destroying a division worth a couple of tens of billions of dollars, then it might make sense to write the cheque.
But most people would probably draw the conclusion that Merrill’s structure was completely crazy in the first place. One small unit had the power to threaten the existence of the entire company; yet the healthy parts were unable to help in a crisis because the personal financial interests of the staff were uppermost. Merrill was a dysfunctional conglomerate with massive internal conflicts of interest.
This is why it is so troubling that the banking crisis has spawned new, and bigger, financial conglomerates, such as BoA/Merrill itself. Don’t we want fewer financial monsters, not more?…
(15 Sept 2009)
related: Taming the Financial Casino
A Critique of Ecological Economics
Frank Rotering, needsandlimits.org
While I praise ecological economics for its environmental strengths, I point to several areas that I believe are weak or erroneous. Specifically, I critically examine the field’s historical vision, its perspective on capitalism, its use of the term “natural capital,” its interpretations of value and cost, and its definition of “optimal scale”.
Ecological economics is an academic field of study that merges ecology with standard economics. Here I outline its faulty historical vision as well as its errors with respect to value, cost, and capitalism. I also suggest that the field, by rejecting the necessary shift to a new mode of civilization, could be contributing to ecological collapse. Ecological economics is a prominent example of Green Reformism, which I criticized sharply in my previous video. The present video is intended for ecological economists, for students of the subject, and for those who may be attracted by the field’s environmental strengths without appreciating its pronounced weaknesses.
Frank Rotering is a Canadian economist who blogs at needsandlimits.org. This is just one is a series of videos that he has produced on alternative economics. -KS
(4 Sept 2009)
From job to handouts in six weeks
Emma Simpson, BBC news
It sounds hard to believe – and Peter, aged 42, can scarcely believe it himself.
Since 1983, he had worked on the railways in maintenance and installation. But he was let go from his current position at the end of July.
One week later, the income dried up and his life quickly began to unravel.
“It’s so hard to go down from earning to having nothing. I didn’t think I’d lose my job, it’s all such a bad dream,” he says, standing in his kitchen in a comfortable suburb of Haverhill in Suffolk.
Peter is literally counting out the pennies on the kitchen counter. The coins are from his kids’ piggy banks and cups of loose change around the house…
(15 Sept 2009)
US Census Bureau Confirms Rising Poverty, Falling Incomes, And Growing Numbers Of Uninsured
Stephen Lendman, countercurrents.org
In early September, The US Census Bureau released its new report titled, “Income, Poverty, and Health Insurance Coverage in the United States: 2008” showing disturbing data that portends much worse ahead under a president and Congress doing nothing to address it.
In 2008, poverty reached 13.2% of the population, its highest level in 11 years, the result of millions losing jobs during the first year of the gravest economic crisis since the 1930s. For blacks, the figure was nearly double at 24.7%, and 31% of all Americans were impoverished for at least two months between 2004 and 2007, years of economic expansion.
At yearend 2008, even by the Bureau’s conservative measures, 39.8 million people were impoverished, the highest level since 1960, and 17.1 million lived in extreme poverty at below one-half the official threshold. In addition, for the first time since the 1930s, median household income failed to increase over a 10-year period from 1999 – 2008.
The Census Bureau states that it “presents annual estimates of median household income and poverty by state and other smaller geographic units based on data collected in the American Community Survey (ACS)” covering population areas of 20,000 or more. The Bureau’s Small Area Income and Poverty Estimates (SAIPE) program also produces yearly figures “for states and all counties, as well as population and poverty estimates for school districts.” It uses data from a variety of sources, including surveys, administrative records, inter-censal population estimates, and personal income data published by the Bureau of Economic Analysis…
(14 Sept 2009)
The report can be downloaded here
Can he fix it? Sarkozy’s carbon-tax plan derided by environmentalists
John Lichfield, The Independent
A “carbon” tax on transport, homes and factories, intended to make France a “green” model for other large economies, was unveiled yesterday by President Nicolas Sarkozy.
But the convoluted proposals, including mechanisms to refund most of the new energy levies through tax breaks and “green cheques”, were condemned by critics as half-hearted and a bureaucratic nightmare.
President Sarkozy insisted, however, that the carbon tax or “climate contribution” would put France on track to fulfill its promise to reduce its carbon dioxide emissions to a quarter of their present levels in the next 40 years. In theory, the taxes will grow steeper in the years ahead but the proposals are already contested by two-thirds of French voters and by many politicians on the left and within the President’s own centre-right party…
(11 Sept 2009)
New York Faces Dramatic Consequences of Crisis
Klaus Brinkbäumer, spiegel online international
The global financial crisis began in Manhattan, and its effects are being felt far more strongly there than elsewhere. Mayor Michael Bloomberg says the situation is critical. Millions are fighting to keep their jobs. Is what is happening in New York today a harbinger of the fate of the rest of the world?
They still remember how things used to be. That’s part of the problem. New York’s heroes, the men and women who only yesterday considered themselves the knights and conquerors of Manhattan, remember all too well what New York was like in the 1970s — the era before seven-figure salaries came to the Big Apple.
They remember — and they see the signs. That’s why they’re afraid.
Cathy used to be a banker. Today she is homeless and living in Tompkins Square. She thinks about the heroin and the stench. In the 1970s, Cathy had a small apartment not far from here on Orchard Street. It was broken into three times. She remembers the burning cars and broken glass, the plumes of smoke and the cops who shouted “Fuck you!” every time they lashed out…
(11 Sept 2009)
