Monthly Archives: June 2015

The Birth of Fox News & the Rise of Right-Wing Media


This excellent piece of writing by Bruce Bartlett comes courtesy of our friends at the website “the best of the internets” (link on right). The entire piece is attached. Here’s where it all began:

In August 1987, under pressure from Ronald Reagan’s drive for deregulation, the FCC abolished the fairness doctrine. A local radio broadcaster in Sacramento, California, named Rush Limbaugh quickly recognized the opportunity this afforded. A strong conservative, he realized that he could now do an entire show consisting of nothing but controversial opinions, without the burden of offering equal time to other views. His program went national in 1988, based at WABC in New York City, which had a signal powerful enough to reach 200 miles beyond Manhattan.

Fox News

Naked Capitalism on Runaway Greed


The Bankruptcy of America’s Elites

If someone had used the word “elites” in 2006, they would have been seen as a hair-on-fire hysteric, long on conspiracy theories and short on sober understanding of How Things Work. But as the 1% and 0.1% amass more and more of total income and wealth, so too have they come to believe their interest diverge from those of the rest of us (and in a literal sense, they often do, since in too many cases, their wealth rests at least in part on predatory conduct). And now that that gap has become obvious, it has reshaped the role of the ruling class, as in the people who are in charge of the administrative apparatus of society. While some members of these top income groups play a direct role in running powerful organizations (CEOs of large an/or strategically important businesses, for instance), it also includes much less affluent individuals, like government officials and those who influence values and collective perceptions, like major publishers and public intellectuals.

Increasingly, these administrators, influencers, and top professionals seek to use their roles as an entry ticket to the top cohort. The prototype is the revolving door regulator, but there are plenty of other embodiments.

A recent example is Raj Date, who was the Deputy Director at the Consumer Financial Protection Bureau after having worked at Deutsche Bank, Capital One, and McKinsey. I’m told consumer groups were never comfortable with him; he was too slick to be seen as trustworthy. And he tried to elbow Elizabeth Warren aside and he grab the directorship of the new agency before Warren put a stop to that by throwing her weight behind Richard Cordray. Date founded Fenway Summer, a “venture investment firm focused on financial services.” It sought to compete with Promontory Group, a money and influence machine headed by former Comptroller of the Currency Gene Ludwig. Established readers may recall the prominent role that Promontory played in the Independent Foreclosure Review fiasco, in which Promontory walked away with over $600 million in fees for a job badly performed and never completed (for details, see Regulatory Looting, Promontory-Style: Botched Foreclosure Reviews Alone Generate More than Double Goldman’s Revenues per Employee, Bank of America Foreclosure Reviews: Why the OCC Overlooked “Independent” Reviewer Promontory’s Keystone Cops Act (Part VB)) and Bank of America Foreclosure Reviews: How Promontory Became a Shadow Regulator (Part VA).

Date just sold Fenway Summer to Promontory. As a well-recognized banking expert said via e-mail:

Not surprised. I read it as a failure of Fenway Summer. It was supposed to be a rival to Promontory, not bought out by it. I sure as hell wouldn’t pay for Raj’s advice.

But members of the elite like Raj manage to fail upwards, or at worst sideways. And that helps preserve the widening gap between them and everyone else.

This Real News Network interview with Robert Scheer, which is number six in a ten part series, discusses how the self-serving attitudes among the supposed leaders of our society became entrenched.

PAUL JAY, SENIOR EDITOR, TRNN: Welcome back to Reality Asserts Itself on The Real News Network. We’re continuing our discussion with Bob Scheer. Bob is a veteran U.S. journalist, currently the editor-in-chief of the Webby Award-winning online magazine Truthdig. And his whole biography you’ll find beneath the video player.

We’re just going to pick up where we were.

So here’s what I’m accusing you off, that you seem to be suggesting that there’s some rationality left in this system within the elites. And I’m not talking–of course there are some individuals that have some rational long-term view. I mean, even people like Soros has been crying about the lack of banking regulation. And there’s people in different sectors of the elites who realize this is a train wreck and about go over a cliff. But those voices are actually marginalized. Even somebody who’s got as much money as Soros within the banking and financial elite is completely marginalized. Nobody really listens to a word he says–people with power, at any rate. [1:07]


JAY: Let me finish the point.

SCHEER: They listen to Buffett.

JAY: Well, maybe. But Buffett doesn’t raise as much alarm as Soros does. But within there–they don’t even seem to be able to rule in their own interest. It would be in the interest of global capitalism to have more rational banking regulations as they introduced in the 1930s. It would be in the interest of global capitalism to deal with the threat of catastrophic climate change. It would be in the interest of any rationality not to let fossil fuel and the arms industry so dominate U.S. foreign policy, particularly in the Middle East, I mean, this fueling of a Saudi-Iranian conflict. The idea that, you know, could there be a United States without a massive military, yeah, there could, but not this United States, not this economic system, not this elite. These guys aren’t going to come around to some kind if view of we could be an equal, modest country.

SCHEER: Well, you’re absolutely right that the current configuration of power in America is irrational. We don’t have adults watching the store. And we go from one disastrous pursuit to another. I mean, there was no reason whatsoever, if we had adults watching the store, you’d go knock off Saddam Hussein in Iraq, who had nothing to do with al-Qaeda, was a force against Iran, which–you know, we backed him in his war with Iran. So the contradictions are obvious, that we don’t have adults watching the store, we don’t have rational policy.

However, I think you are not the only person that now knows that.

JAY: Oh, I’m sure lots of–I would say most ordinary people kind of know it.

SCHEER: No, I think even in those circles there’s an awareness that we’re not doing very well, and there are reminders that we’re not doing well. You know, our economy is stagnant. We’re up against some real problems in terms of our future. Income inequality is one. You don’t have to be some wild lefty liberal to see that. I mean, the whole foundation of our country was always on a stable middle class and an expanding middle class, opportunity, equal playing field. I’m not saying that was the reality, but that was always the expectation. You know. And, you know, whether it’s de Tocqueville or the founding fathers, there was always an assumption that at least for what you thought was the base population there would be this opportunity. You know. And we have been forced over the last couple of decades to recognize that no, it’s going alarmingly in a different direction.

Internationally, we know we’re not doing very well. I mean, we don’t produce a whole lot of products that everybody in the world is dying to get their hands on. The main thing that we’ve been effective on is this tech stuff, and our tech companies are the ones that are most concerned that our political model is not a good one. They’re the ones that are out there having to sell this stuff, and this stuff involves getting confidence and knowing the culture, caring about other people, winning their confidence. And that’s been endangered.

So the only thing I would–I don’t disagree with you at all as to whether our model is in trouble. It’s in trouble. I disagree with you only on whether–the number of people who know it’s in trouble.

JAY: I would say even most of them–I would probably think most of the elite know it’s in trouble. They’re just going to cash in on it, and it’s going to be someone else’s problem to do something about it.

SCHEER: Okay. You’re putting your finger on something that I feel is very critical. And I have spent my life interviewing people generally around power, in government and so forth. I’ve traveled with Nelson Rockefeller and David Rockefeller. You know, I have interviewed people who became president, from Richard Nixon, Clinton, and so forth and so on.

And if I were to try to explain, the big shift that I’ve seen is long-term as opposed to short-term, that most of the people I had interviewed in the first stage of my career, say somewhere up until 1970, were people that at least were concerned what their grandchildren might think. You know? There was either through family, inherited wealth, or going to certain schools, or there was some sense of social responsibility, you know, that you could find, that we have to leave our mark, we have to leave it a better place, we have to–and just for our place in history, that it mattered. Okay? So you could be concerned, oh, we’d better get with the civil rights movement, because otherwise we’re going to fall apart, or we’d better care about the economic condition of the rest of the world, because otherwise it will rebel, we’d better worry about the living condition of our own people here or they’ll rise up with pitchforks and toss you out.

I think what happened is we went into this madcap period of short-term greed.

JAY: And let me just–Bob wrote a book called The Great American Stickup: How Reagan Republicans and Clinton Democrats Enriched Wall Street While Mugging Main Street. And this was a kind of turning point you’re talking about.

SCHEER: Yeah, that’s really what my book is about, because you had sensible rules of the road that came out of the New Deal, and there was a recognition, because of the Great Depression, that you just can’t have this madcap, crazy, Gilded Age society. Again I overuse this concept of adults watching the store, but I remember going back to just being a kid in the Bronx, and you didn’t leave the children to run the fruit stand, ’cause they’d give everything away or they’d go off themselves and play stickball. Somebody had to be there to make sure the stuff got sold and money was paid and things. And you lost that. You got people coming out of the law schools and the business schools that were shysters. You know, they just wanted some hustle, some scam. That’s how you got into credit default swaps and collateralized debt obligations.

JAY: Yeah, but the bubbles are euphoric,–


JAY: –if you’re in on cashing in on the bubble.

SCHEER: And anybody who looked at that knew. I mean, I was interviewing people during those years, and they’d say, this is, you know, as Buffett said, financial instruments of mass destruction. You know, how could you believe in any of this stuff? How could anybody believe if you–this is what my book was about–you take all these loans and you redefine them and you talk about the risk in stupid ways and you give loans to people who can’t support it, and somehow, okay, and whether you were in Fannie Mae, Freddie Mac, or whether you were in the private sector, ’cause Fannie Mae and Freddie Mac were being traded on the stock market, you had to know that this was going to explode. They knew it. And they got the laws to change to make it legal. It should have been illegal.

You know. I mean, the Commodity Futures Modernization Act, which Bill Clinton signed off as a lame duck president in 2000, after it was already–you know, the election was over, he was now a lame duck, and he signed this bill. What was the purpose of it? It was to make all of this garbage legal. It said–I think it was Section 3 of the Commodity Futures Modernization Act–a Republican-Democratic bipartisan bill–said no existing law or regulatory agency will have jurisdiction over credit default swaps or collateralized debt obligations or any of these new financial mechanisms. Why? Because they said this is modern. We have to compete with Europe. You have to be able to do these things. We can’t let–we have to give legal certainty–Lawrence Summers, you know, secretary of the Treasury–we have to have legal certainty for these financial instruments; otherwise, they won’t be effective. Right? Legal certainty meant no one’s going to look at it, no one’s going to challenge it, no one’s going to set any standards, no existing regulatory agency or law will apply. So it was a license to steal.

JAY: Now, for people that don’t understand the concept, quickly.

SCHEER: Well, quickly, what happens is they developed all these new financial gimmicks. You know, a credit default swap was something that was an insurance policy, but it was not an insurance policy. It’s what AIG did and got into so much trouble. They said, you do these collateralized debt obligations, you take all these different loans, subprime mortgages–.

JAY: Which were invented in Baltimore, by the way.

SCHEER: Yeah, auto loans, or any of these things, and then they don’t make sense on their own and they all seem quite risky, but we’ll put them into a pool and we’ll assess their value and we’ll get these credit rating agencies that have a stake in saying, yeah, they’re all good to go because they’re going to get money from it. So there was no regulation. And then you pass a law that says you’re allowed to do this, no one will look at it carefully, no existing regulatory agency will have control. So you’ve got a license to steal. Go knock yourself out. You know? And they, selling all these loans, packaging them, and then reselling them to people over the world. Right? And we can predict, you know, get this income and so forth. And then, if it looks shaky, we’re going to give you these phony insurance policies, right, that will seem to back them up. But there’s no money behind it. It’s not like a real insurance policy. Nobody’s putting any resources.

So, suddenly, you’ve got this thing that’s going to explode, and AIG, which is supposed to be backing up the insurance, says, hey, we can’t do that; we have no money for that. So now your housing bubble has collapsed and AIG can’t support it. And it’s nothing more than the mafia doing a scam, only you have passed laws that say that’s all legal, that’s all legal.

Now, you’re absolutely right. You wouldn’t do that if you were worried about how even you would appear to your grandchildren. Okay? People looking back now know these people were crooks, whether they went to–they didn’t go to jail, ’cause they they get the law passed to make it that it’s not a crime to defraud people. It’s legal. It wipes out half of the wealth of African Americans in this country, wipes out the economic gains of the civil rights movement, ’cause they were particularly a group that was particularly victimized. It wipes out two-thirds–these are Pew Research Center figures–wipes out two-thirds of the wealth, the collected wealth over generations of Hispanics in this country because they were subject to these subprime. They lose everything when they lose their house. But the guys putting it all together, they escape with their billions. They don’t go to jail. So, yes, if what you mean by your opening statement was we don’t have solid, responsible people who even care how they will appear to their grandchildren–.

You’ve got a guy like Robert Rubin, okay? Robert Rubin was secretary of the Treasury under Bill Clinton. He had come from Goldman Sachs. He had convinced Clinton you could do all this stuff, this is all great, we’ll do all this crap. He brings in Lawrence Summers. Timothy Geithner, who’s a younger person working in there, he becomes the Treasury secretary under Obama. They do all this stuff. They get Clinton to sign off on it. He does it with Phil Gramm, the Republican, so it’s bipartisan. Very few people challenge it. You know, now, I think if you ask anybody about Robert Rubin, they say, God, yeah, he wasn’t too good for it. I’ll bet you his own family members think he got his–you know, what happens? He leaves the Clinton administration; he goes to work for a bank that he makes legal, right? The merger of Citibank and Travelers Insurance they make legal with their reversal of Glass-Steagall, the Financial Services Modernization Act, and then they got the Commodity Futures [Modernization Act], which makes these gimmicks legal. He gets $10 million a year for the next decade. Sure, he’s got money salted away. But I don’t think he’s got a reputation that’s worth anything. I don’t know. Lawrence Summers, again, I don’t think people particularly treat those with respect. But they have money. You know, they can take care of their nephews and nieces. But I think it’s generally accepted they caused a lot of damage to the economy.

JAY: But it’s not, like, that it’s just a bad group of people happened to get into power. And I’m not suggesting you’re suggesting that.

SCHEER: No, it’s the best and the brightest that Halberstam wrote about in Vietnam. These are very well educated people who know what they’re doing and, I believe, have to know it’s going to destroy the lives of millions of people, and they go ahead and do it. It’s just like–.

JAY: Yeah, ’cause they say if it ain’t me doing it, it’s going to be him doing it, or her.

SCHEER: Whatever their rationalizations, they surround themselves with lawyers and PR people who tell them this is all wonderful, and they get away with it.

JAY: But it’s the way the system has evolved that so much money is in so few hands. There’s not much else for them to do with it than bet and gamble against each other, create this massive speculative sector of the economy, which is financializing everything. Even when they talk about climate change, all they really have in mind is a way to financialize it. So whether it’s this group or the other group, the sort of system itself is created where there’s–so much capital has become completely parasitical.

SCHEER: Yes, but they could also be decent people. They could actually wonder about what would Jesus do. They could actually think about what does their lives mean.

JAY: I think some do and drop out.

SCHEER: A few.

JAY: Some do, and they can’t take it anymore, and they drop out.


JAY: But they’re not in any position to change the course of the ship.

SCHEER: Well, but also the question you should ask is why aren’t they being observed in doing this. And the reason is because they can buy off everyone.

JAY: Especially the media.

SCHEER: The media, but the universities, the grants of–you know, build buildings at universities. Come on.

JAY: I want to stress the media ’cause they have this theatrical show going in the elections–I’m not saying there isn’t a real contention for power, but when you have unlimited contributions, unlimited spending, what are they spending it on? They’re spending it on TV advertising.

SCHEER: Yeah, and they’re spending it on candidates who will not give them a hard time. There’s no question about it.

But it’s not just the media. I mean, I don’t want to exonerate the media, but you–you know, in the day of the internet, you should have more critical voices, right, ’cause–but even there you look at where could–you know, okay, to understand the economy or foreign policy requires a little brainwork, okay? Most people have got to take care of their job and their family and pick the kid up and how do I pay this bill and am I going to lose my job and/or how am I going to make that sale. And so their lives are taken up. And then we have a group of people, whether they’re called journalists or professors or consultants or what have you who actually have the time and are really charged with figuring stuff out.

Now, most of this stuff is not all that difficult to figure out. So then you have to ask yourself the question, why didn’t you figure it out? I mean, why didn’t the media–in my book I describe how The New York Times was a cheerleader for this radical deregulation. They used words like modernization. They said long overdue. Now, why? You know, because they were living in a culture and benefiting from a culture that was benefiting from the ripoff. These are the people who advertise. These are the people who invest in your venture, in your media. These are the people who buy chairs at the schools where you’re teaching. These are people who support the charities or political causes that you happen to agree with. There is a culture of corruption, I mean, ’cause anyone else looking at this, they say, wait a minute, this is nonsensical, this is bad. Why are you selling–I remember writing about this stuff. I would go out to what they call the Inland Empire in California where they’re building all of these–. I said, who’s going to live here? How are they going to get to work? Who’s paying for this? Why are they making the loans? And then you realize there is no there there. Don’t confuse the thing–I remember an old advertising [incompr.] don’t confuse the thing being sold with the thing itself. They’re not selling a house to somebody who needs a house and is going to live and be able to afford the payment; they’re selling this collateralized debt obligation that’s 1,000 of those houses that you have made and chopped up and iced and diced and everything and sliced, and then you’re going to make that seem like a good bet to somebody. Where? In Saudi Arabia or in France or–.

JAY: Knowing it’s all going to default.

SCHEER: Yeah, but you’re going to get in and out before it defaults.

Humor: The Borowitz Report

Number of G.O.P. Candidates Now Thirteen, Says C.D.C.



(The Borowitz Report)—The number of official candidates for the 2016 Republican Presidential nomination has risen to thirteen, according to officials at the Centers for Disease Control.

The count had stood at twelve since the announcement last week by the reality-show host Donald Trump, leading many at the C.D.C. to privately hope that the epidemic was losing steam.

But with the entry of Louisiana Gov. Bobby Jindal into the race on Wednesday, the C.D.C. was forced to hold a press conference to announce the worrisome news that the number of candidates had increased yet again.

“It might have been misplaced optimism on our part, but we had started to believe that this thing had been contained,” said the C.D.C. spokesman Dr. Harland Dorrinson. “Regrettably, it has not.”

While scientists disagree about how running for President spreads from person to person, most epidemiologists believe that a candidacy needs an environment rich in narcissism and delusion—plus a host to feed on, ideally a sociopathic billionaire.

The C.D.C. spokesman refused to address speculation that Wisconsin Gov. Scott Walker would soon enter the race, bringing the number of candidates to fourteen. “I don’t want to say anything that might cause the public to panic,” he said.

Voting Records on Financial Reform

voting record




Naked Capitalism: American Exceptionalism and Empire Building


“If You Are Not Building a Nation, Then What the Fuck Are You Doing?”

Yves here. Earlier this week, we features a post from TomDispatch, The Geopolitics of American Global Decline: Washington Versus China in the Twenty-First Century, which elicited a lot of thoughtful reader comments.

I’m hoisting a particularly insightful, broad ranging response from Tony Wikrent, who has sometimes posted on Corrente. Wikrent took aim at the post’s reliance on the geographical theory of dominance of Sir Halford Mackinder:

By turning the globe away from America to place central Asia at the planet’s epicenter, and then tilting the Earth’s axis northward just a bit beyond Mercator’s equatorial projection, Mackinder redrew and thus reconceptualized the world map.

His new map showed Africa, Asia, and Europe not as three separate continents, but as a unitary land mass, a veritable “world island.” Its broad, deep “heartland” — 4,000 miles from the Persian Gulf to the Siberian Sea — was so enormous that it could only be controlled from its “rimlands” in Eastern Europe or what he called its maritime “marginal” in the surrounding seas….the “heartland” of this vast landmass, a “pivot area” stretching from the Persian Gulf to China’s Yangtze River, remained nothing less than the Archimedean fulcrum for future world power. “Who rules the Heartland commands the World-Island,” went Mackinder’s later summary of the situation. “Who rules the World-Island commands the world.”

The post then seeks to frame British imperialism, 20th century geopolitics, and China’s Silk road as confirmation of the proof of Mackinder’s thesis of the importance of control of key geographies in large-scale political dominance.

Wikrent didn’t just shred this thesis but gave one of the most compelling short overviews of America’s period of dominance in the 20th century and the seeds of its decline. I have to underscore two points that I mention from time to time. One is the revisionist history regarding how America lost its industrial dominance. Having read the business press at the end of the 1970s, the fulcrum point, it had nothing to do with now widely demonized (and then much more powerful) labor. As Wikrent points out, Germans and Japanese had an advantage by virtue of having better infrastructure, most important, newer factories. He also alludes to the fact that the comparative poverty of Japan (it had been reduced to third world status) forced them to be frugal with materials, and over time, that disadvantage was a spur to all sorts of innovation, such as just in time manufacturing. But just as obvious in the 1970s was how sclerotic American management had become, particularly in the auto industry. And rather than respond to the competitive challenge, more and more companies began to run on brand fumes and rely on cost-cutting and financial engineering as leveraged buyout artists showed that that could enrich managements more quickly and easily that doing the hard work of competing the marketplace.

Wikrent also mentions in passing the role that government has played in sponsoring new technologies. It’s even bigger than he suggests, as we discussed in this post: Government, Not the Private Sector, Leads Innovation.

By Tony Wikrent

Mackinder’s theory is bullshit. His theory completely ignores the crucial roles of human knowledge in the forms of technology, and of systems of belief.

But Yves is on the right track when she observes we have “a deceleration of technology advances (the fact that money is being poured into ventures like Uber and Lyft, whose source of return is using network effects to extract rents from laborers…” The aggregate power of any society is ultimately determined by its collective capacity to extract and process raw materials and transport and distribute the products thereof. In other words, the productive powers of labor. This is something surprisingly few world leaders have grasped. Fortunately for USA, its economy was designed by Alexander Hamilton, who thoroughly understood the need to promote and expand the productive powers of labor (through the use of machinery, i.e. technology). Note that the second section of Hamilton’s Report on Manufactures is devoted to a discussion of “An extension of the use of Machinery.”

Were Mackinder correct, the Soviet Union would have conquered the west and the Soviet bloc would never have collapsed. The USSR had control of about half of Germany (though it was, admittedly, not the half that contained the mighty industrial potentials of the Ruhr Valley; NATO commanders always expected and planned for the main thrust of a Soviet military advance to be through the Fulda Gap and into the Ruhr). And after the 1979 Iranian Revolution, the West was in grave danger of losing the pivot south to the Indian Ocean. I suspect that Brzezinski’s Operation Cyclone was in response to “losing” Iran. Finally, Africa has never been completely locked down by the West. The Soviets and the Chinese gave the West serious competition. Nasser in Egypt drove the Dulles brothers, and the Bundy brothers, into fits of apoplexy.

Again, Yves is pointing to the actual dynamics that run the world. The conventional wisdom is the USA emerged as a superpower after World War 2 because the industrial bases in Europe and Japan had been destroyed. This is an extremely superficial reading of history. The most important post-war result of the war-time destruction was the building of a new industrial base in Europe and Japan, more modernized and more productive than the USA, where investment in new plant and equipment was already beginning to be dragged down in the 1960s by the emerging boom in mergers and acquisitions fueled in no small part by dirty money from organized crime. Anyone familiar with Taiichi Ohno and the Toyota Production System, knows that the amazing productivity gains of the Japanese economy were based precisely on the need to get as much productivity and squeeze out as much waste as possible from the surviving capital plant after the USA bombing campaigns and the Surrender.

USA power and superiority after World War Two is mostly based on the electronic and computer technologies which, it should be noted, came out of the war research laboratories. The idea for Silicon Valley itself – originally Stanford Industrial Park – came from Stanford University’s engineering dean Frederick Terman’s war experiences just a few years earlier directing a staff of over 800 scientists and engineers at Harvard University’s Radio Research Laboratory, creating the technology and designing and building electronic jammers to block enemy radar, tunable receivers to detect radar signals, and other countermeasures to anti-aircraft fire.

The new electronic and computer technologies spawned entire new industries, and, most importantly, a new pool of wealth, countervailing the old pool of wealth of Wall Street and its inclination toward speculation, usury, and extracting rent. Electronics and computers, and all their economic were thus the key to USA’s post-war leadership. Note the size of the spill-over effects: for example, the rapid populating and build-up of California, which doubled in population from 10.6 million in 1950, to 20.0 million in 1970, while the USA population increased by only a third in the same period, from 151.3 million to 203.2 million. For other examples, think of the way electronic and computer technologies have impacted transformed many other industries: numerically controlled machine tools; process instrumentation; communications; medical devices, aircraft and aerospace.

And let us be clear here: the development of electronic and computer technologies was NOT driven entirely by market forces. There was no small amount of direction and support provided by the national government.

The U.S. has been coasting on the tidal wave of wealth from the computer and electronics revolution. That the economy is shifting, for the worse, is indicated by the fact that in 2011, Apple and Google spent more on legal fees</a (largely for patent fights) than on research and development. This bad trend portends even worse, because we are near the end of Moore’s Law. Intel is now producing chips built on its new 14-nanometer manufacturing process, supplanting its older 22-nanometer technology. Intel CFO Stacy Smith says the company has “an early look” at seven nanometers, but is not willing to discuss the next milestone, five nanometers, about twice the size of a strand of DNA. After that, humanity will have reached the physical limit of micro-circuitry. Robert Colwell, director of the microsystems group at the Defense Advanced Research Projects Agency, and a former Intel manager of Pentium-class processor design, says there are 30 possible alternatives to the CMOS technology that has been ruled by Moore’s Law. “My personal take is there are two or three promising ones and they are not very promising”.

So the wealth-producing dynamo that was computer and electronics is spinning down. Is there anything that can replace it? China has already set out to integrate Mackinder’s central land mass with its New Silk Road projects. But in USA and the West, elites fiddle while the planet literally burns. The obvious answer is the $100 trillion in new investment needed to stop climate change by building an new world economy that does not require fossil fuels.

Ironically, Hamilton’s understanding of the need to drive forward the productive powers of labor were forgotten by all USA leaders after the war (except for small groups mostly centered in the military services and in the labor unions) while it was put into practice by the leaders of Japan, Korea, and the Asian Tigers. On this point, see James Fallow’s important December 1993 article, “How the World Works.” It’s much more than just a diatribe against free trade.:

The sheer imbecility of American leaders is brought into glaring light by Kissinger’s praise for George Dubya Bush’s attempt at “transformation of Iraq from among the Middle East’s most repressive states to a multiparty democracy.” I can pinpoint the exact day and event that the Iraq war was lost, thanks to George Packer’s 2005 book The Assassin’s Gate: America in Iraq, On pages 110 to 112, Packer discusses the November 15, 2002 meeting of Condoleezza Rice and Steve Hadley of Bush’s National Security Council, with representatives from various conservative stink tanks to review plans for rebuilding Iraq after the USA invasion. The meeting ended when Chris DeMuth, then president of the American Enterprise Institute, cut off discussion. QUOTE “Wait a minute. What’s all this planning and thinking about postwar Iraq?” He turned to Rice. “This is nation building, and you said you were against that. In the campaign you said it, the president has said it. Does he know you’re doing this? Does Karl Rove know?” END QUOTE

OK, one fucking simple question here: if you are NOT building a nation, then what the fuck ARE you doing? Because of Demuth personally, and the conservative fetish against government planning generally, the USA war effort in Iraq was foredoomed from that meeting onward. We are still living with the consequences of DeMuth’s arrogant ignorance today. It is this type of arrogant ignorance which is squandering the US position of world leadership.

If you don’t have a positive vision of forward action to build a nation, then you simply do not belong in government. Period. End of discussion. And reliance on the free market is not a positive vision: Conservative Christians be warned. “Where there is no vision, the people perish.”


Prison U.S. Style


Naked Capitalism on Taxing the Wealthy

Even Affluent American Strongly Support Higher Taxes on the Rich

By Robert Waldmann. Originally published at Angry Bear

Via Steve Benen and Greg Sargent.

The Washington Post/ABC News pollsters asked “Do you think the federal government should or should not pursue policies that try to reduce the gap between wealthy and less well-off Americans?”. 62% of respondents answered yes. This should be very unsurprising as it is roughly the same as the fraction who have been telling Gallup that high income people pay less than their fair of taxes for two decades now. It is also similar to the number who support higher taxes on high incomes to pay for the ACA and (in another poll) to prevent exaustion of the social security trust fund.

I have been, partly ironically, referring to this solid majority opinion as “class war” but Benen mentioned something which tends to unermine the class war interpretation/joke

What’s more, support for action in this area is quite broad. A majority of Americans regardless of race, for example, support actions to reduce the wealth gap. A majority of Americans regardless of age agree. Indeed, across the board – gender, level of education, household income, geographic region – there’s a broad consensus that this is an issue worthy of national action.

Wait a majority in the highest income sub group (income over $ 100 thousand a year) answered yes ? That sure doesn’t sound like class war does it ?

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In fact, 63% of those respondents answered yes which is actually a tiny insignificant 1% higher than the overall fraction 62%.

Now I think the class war hypothesis can be saved if the vast majority of even the highest income subset don’t consider themselves “wealthy”. I sure wouldn’t consider a family of 5 with income of $101,000 and a mortgage wealthy (even though they are by world standards and very wealthy by the standards of almost all of human history). The class interest based struggle could be between the bottom 99% and the top 1% who are too few to show up noticeably in polls.

update: the vast majority of households with income over $ 100K are not in the top 1%. In fact almost 22% of US households had income over $ 100K back in 2012. What I meant to type is that the results of the poll can be reconciled with the idea that we are all selfish if the vast majority of houeholds with income over 100K don’t think they are “wealthy” but rather think the wealthy are the top 1%. To get in the top 1% a family needed $388,905 already in 2011. The idea I was trying to present is that someone struggling along with $ 120k might want to take from the wealth with $ 400k per year. I’d rather think that people who consider themselves wealthy are willing to share their wealth with the rest of the US (provided other wealthy people do too).

end update

Still the result is nice and potentially very useful to Democratic candidates who can argue that they are not advocating class warfare but proposing that we deal with a national problem as a majority of Americans regardless of their income think we should.

The strategy has the additional advantage that Republican candidates and operatives will have trouble resisting the argument that the poll is meaningless because many people with income over $ 100K* are absurdly poor takers and not like the job creators at all. Some will not hide the fact that families with income of $110,000 per year are much too poor to be in the class whose interests they serve.



Naked Capitalism: Banksters Doing God’s Work


Bill Black: Sorkin on the Street’s Surge of Suicides – Ignoring the Obvious

By Bill Black, the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. Jointly published with New Economic Perspectives

Andrew Ross Sorkin wrote two related columns only two weeks apart, but ignored his first column in writing his second. The May 15, 2015 report by the University of Notre Dame on the results of its survey of financial sector participants in the U.S. and the UK was the subject of Sorkin’s May 18, 2015 column entitled Many on Wall Street Say It Remains Untamed. “Untamed” is a word with a positive connotation that Sorkin chose as his euphemism in his self-appointed role as apologist-in-chief for the banksters. Here is the report’s summary.

Nearly seven years after the global financial crisis rocked investors’ confidence in the markets and financial services in general, our survey clearly shows that a culture of integrity has failed to take hold. Numerous individuals continue to believe that engaging in illegal or unethical activity is part and parcel of succeeding in this highly competitive field. With legal and regulatory sanctions coming out on almost a daily basis, the industry has a long way to go to regain the confidence of the public. 47% of respondents find it likely that their competitors have engaged in unethical or illegal activity in order to gain an edge in the market. This represents a spike from the 39% who reported as such when surveyed in 2012. This figure jumps to 51% for individuals earning $500,000 or more per year. More than one-third (34%) of those earning $500,000 or more annually have witnessed or have first-hand knowledge of wrongdoing in the workplace. 23% of respondents believe it is likely that fellow employees have engaged in illegal or unethical activity in order to gain an edge, nearly double the 12% that reported as such in 2012. 25% would likely use non-public information to make a guaranteed $10 million if there was no chance of getting arrested for insider trading. Employees with less than 10 years’ experience are more than two times as likely as those with over 20 years’ experience, reporting 32% and 14% respectively.

In the UK, 32% of individuals said they would likely engage in insider trading to earn $10 million if there was no chance of getting arrested, compared to 24% of respondents from the US. Nearly one in five respondents feel financial services professionals must at least sometimes engage in illegal or unethical activity to be successful. 27% of those surveyed disagree that the financial services industry puts the best interests of clients first. This figure rises to 38% for those earning $500,000 or more per year. Nearly one-third of respondents (32%) believe compensation structures or bonus plans in place at their company could incentivize employees to compromise ethics or violate the law. 33% of financial services professionals feel the industry hasn’t changed for the better since the financial crisis.

Sorkin’s column on the Notre Dame report was poor and will be the subject of a later column by me. For the purposes of my current column I simply want to establish that Sorkin was aware of the report’s finding and their obvious relevance to his second column. Sorkin’s second column is on a subject that people in finance have been whispering about for the last several years – the many apparent suicides among finance participants. In the trade, this subject often sparks discussions of dark conspiracies.

Sorkin entitles his June 1, 2015 column Reflections on Stress and Long Hours on Wall Street. He writes about the “numerous unexpected deaths or suicides” on Wall Street and the City of London:

Mr. Gupta’s death, one of numerous unexpected deaths or suicides of young bankers over the last year, has caused a new round of reflection and re-evaluation by Goldman and other Wall Street firms about their work policies just two weeks before a new class of college interns descend on the industry for the summer.

But Sorkin never examines the sources of “stress” or even why so many young bankers are “overwhelmed by the all-nighters and 100-hour workweeks.” I know well the rigors of this schedule. I am one of many people who have maintained that schedule for nearly 40 years. (Abandon your biases against American financial regulators and academics if this fact startles you. Our hours are obscene, the deadlines frequent, and the support that is so abundant on the Street and in the City is nearly non-existent in our professions. The advantage we have is flexibility – I can often decide when and where to work my 100 hours each week.) Sorkin reports that Gupta was one of the skilled good guys.

The firm held a small memorial service for Mr. Gupta, who was universally liked by his colleagues and whom several said was so good at his job that he had become one of the “go-to” analysts. Indeed, his proficiency and work ethic appear to have led to him to take on a large workload.

Here is Sorkin’s catalog of things that could explain Gupta’s death (if it were a suicide).

Of course, it is always difficult to directly link a death or possible suicide to work conditions. Other factors can be in play, like family problems, medical issues or a history of depression. And in Mr. Gupta’s case, the cause of his death remains undetermined.

Still, the string of deaths on Wall Street appears to rise above the level of simple coincidence. Last February, Fortune ran an article titled: “Is there a suicide contagion on Wall Street?”

There’s something obviously missing from this catalog – the thing Sorkin wrote about only two weeks earlier and which is synonymous with Goldman Sachs – the intense pressure on its people to act unethically and even criminally. As the Notre Dame report documented, this pressure is not unique to Goldman, but criticisms that the firm repeatedly follows an unethical approach to business are well known to Sorkin.

Sorkin’s column shows that Goldman treated Gupta’s death in an ethics-free manner, implicitly assuming that his only source of stress was “work-life balance.”

For more than a month, Mr. Gupta’s death has largely remained held in confidence among a small group of his colleagues and family. After Mr. Gupta’s death, David Solomon, Goldman’s co-head of investment banking, and John S. Weinberg, a vice chairman, flew to San Francisco to speak with a small group of the bank’s employees and discuss the firm’s approach to work-life balance.

Sorkin presents this paragraph as if we are supposed to take it seriously. He runs DealBook. He knows that Goldman’s “approach to work-life balance” is that “work” trumps “life” – full stop. That’s the same “approach” taken by every top investment bank on the Street and in the City.

Sorkin, being Sorkin, proceeds to claim that the Street and the City’s worst traits represent “success.”
Wall Street has always thrived, in part, on its eat-or-be-eaten culture. Would curbing its competitive nature cut into its success?

Earth to Sorkin: Wall Street and the City of London represent horrific failures, not “success.” You do recall that they blew up the global financial economy, right? You recall that they did so by leading the three most destructive epidemics of accounting control fraud in history? You recall that they engaged in at least three massive cartels, two of which were, by three orders of magnitude, the largest cartels in history? You recall that they committed over a million felonies collectively in money laundering/illegal sanction busting for the most violent drug cartels, regimes engaged in genocide, regimes believed by the U.S. and EU leaders to be developing nuclear weapons? You recall that even DealBook now admits that the banksters engage in rampant recidivism and commit massive new felonies even as they settle old felonies without any personal accountability? You recall that in the course of blowing up the global economy they systematically misallocated capital causing waste? You recall the Notre Dame study that shows that Wall Street and City of London finance participants are frequently – and increasingly – convinced that they need to cheat to counter their rival’s cheating in order to avoid being “eaten” in the corrupt “culture” of these two giant financial sectors? Sorkin could, of course, be right that the Wall Street banksters “thrive” in an inherently unethical “eat-or-be eaten culture,” but he has defined a moral and economic failure rather than a “success.”

Sorkin is willing, even with everything that has been made public, to openly call the pressure to cheat to avoid being “eaten” the source of Wall Street “success” – and to caution against changing that “culture.” Sorkin’s columns serve as unintentional admissions of his contempt for ethics and his ignoring and even serving as an apologist for the catastrophic harms that result from the corrupt culture of finance.

Consider the terrible choices that confront a skilled analyst at Goldman like Gupta who is known for being moral. He knows, as Sorkin quoted from the Notre Dame study, that many of his competitors within the firm, and competitive rivals outside the firm, will act unethically to win the client. Gupta had three choices. He could leave Goldman and the corrupt culture of finance. (Sorkin relates that Gupta made a serious effort to leave, but was dissuaded by his father.)

Gupta’s second choice was to cheat. To quote from Sorkin’s first article about the findings of the 2015 Notre Dame study.

In the study, to be released Tuesday, about a third of the people who said they made more than $500,000 annually contend that they “have witnessed or have firsthand knowledge of wrongdoing in the workplace.”

Just as bad: “Nearly one in five respondents feel financial service professionals must sometimes engage in unethical or illegal activity to be successful in the current financial environment.”
One in 10 said they had directly felt pressure “to compromise ethical standards or violate the law.”
What the study results are reporting is a “Gresham’s” dynamic in which bad ethics tends to drive good ethics out of the marketplace.

Gupta’s third choice was to try to be so far beyond outstanding – without cheating – that he could succeed at Goldman. This could have led him to take on a workload so hellish that it produced a breakdown. Note that this is not a “work-life balance” issue but an ethics issue. Goldman’s corrupt culture can cause those who are highly ethical and ambitious to take on hellish amounts of work. That will cause some people to break down.

But let us be frank – there was no fourth choice for Gupta at Goldman or its major rivals. Gupta could not choose being ethical and adopting a work schedule that actually favored “life” in the “work-life balance.” He would have been removed from the firm if he actually choose “life” no matter how good his analytical skills were.

Sorkin implicitly acknowledges the lack of a fourth path.

[A]s long as young analysts are expected to work 80 to 100 hours a week, invariably some run the risk of finding themselves in a situation they cannot handle. With new classes of such analysts arriving each year, it is incumbent on the industry to make sure it is doing everything possible to make sure that no one is too overwhelmed.

It would be even more “incumbent” to ensure that “no one” feels pressured to act unethically or to work obscene hours to try to overcome the advantage the cheats have within the firm because they are willing to act unethically or unlawfully.


None of us knows whether it was the Grehsam’s dynamic that Goldman’s controlling officers created in order to pressure employees to act unethically that led to Gupta’s death. But Sorkin deliberately omitted what he knows is the worst source of “stress” borne by financial sector personnel on Wall Street and in the City. Any solution to the plague of deaths needs to start with ending the corrupt culture of finance produced by the regulatory “race to the bottom” and the financial sectors’ perverse compensation systems designed by the CEOs to spread that corrupt culture throughout the bank. Financial CEO knows how to craft the non-perverse incentives that would lead to ethical behavior, a financial system that was a “success” for the world rather than the controlling officers of the corrupt banks, and a vastly more humane place to work. Financial CEOs craft the perverse incentives because fraud is the “sure thing” guaranteed to make them wealthy (often at the expense of the firm). That’s why they never react even to the deaths of their employees by ending the perverse compensation and promotion incentives that create the Gresham’s dynamic. No one expects Goldman to live up to its blasphemous lie of its leader that it was “doing God’s work,” but it should at least stop doing the Grim Reaper’s work.