Archive for the ‘Class Warfare’ category

March 17, 2015

Via The New York Times an essential article on the ways Big Finance screws serving troops — and the rest of us:

Charles Beard, a sergeant in the Army National Guard, says he was on duty in the Iraqi city of Tikrit when men came to his California home to repossess the family car. Unless his wife handed over the keys, she would go to jail, they said.

The men took the car, even though federal law requires lenders to obtain court orders before seizing the vehicles of active duty service members.

Sergeant Beard had no redress in court: His lawsuit against the auto lender was thrown out because of a clause in his contract that forced any dispute into mandatory arbitration, a private system for resolving complaints where the courtroom rules of evidence do not apply. In the cloistered legal universe of mandatory arbitration, the companies sometimes pick the arbiters, and the results, which cannot be appealed, are almost never made public….

The kicker in that already insufferable situation:

Over the years, Congress has given service members a number of protections — some dating to the Civil War — from repossessions and foreclosures.

Efforts to maintain that special status for service members has run into resistance from the financial industry, including many of the same banks that promote the work they do for veterans. While using mandatory arbitration, some companies repeatedly violate the federal protections, leaving troops and their families vulnerable to predatory lending, the military lawyers and government officials say….

…The Government Accountability Office, for example, found in 2012 that financial institutions had failed to abide by the law more than 15,000 times.

V0017699 A fortune-teller reading the palm of a soldier. Oil painting

Efforts in Congress to block financial companies’ efforts to weaken any vestige of legal protection met the subterranean death favored by the scumsuckers for whom light is poison:

Last year, a bipartisan bill that would have allowed service members to opt out of arbitration and file a lawsuit met with opposition from the U.S. Chamber of Commerce and Wall Street’s major trade group, the Securities Industry and Financial Markets Association, or Sifma.

“While we remain very supportive of the troops, we see no empirical or other evidence that service members are being harmed by or require relief from arbitration clauses,” Kevin Carroll, a managing director and associate general counsel at Sifma, said in a statement.

Here’s what they mean by “support.”

In lobbying against the bill, several financial industry groups and a large phone company visited with the staff of Senator Lindsey Graham, Republican of South Carolina, who sponsored the legislation along with Senator Jack Reed, a Rhode Island Democrat.

The trade groups told Mr. Graham’s office that they were already working to make their arbitration procedure more accommodating to service members, according to a person briefed on those discussions who would speak only on the condition of anonymity.

“The message was, ‘Let us fix this internally,’ ” the person said. “Don’t upset the apple cart with a new law.”

Whether or not that line was believed, the result was as desired:

The bill never made it out of committee last year, though Mr. Graham plans to reintroduce it this year.

Committees:  where money talks so effectively — and almost silently.

This at once an infuriating abuse of people doing what their political leaders have tasked them to do, at risk to themselves and costs to their families — and a sign of how bad the system is rigged against all of us.  Realize this:  serving troops at least have some legal protection that, however abused can still be invoked.  Everyone else:  suck it up, face mandatory arbitration, and say “Thank you, sir, may I have another” everytime we have to bend over and take one for the greater good of modern American financial capitalism.

Also: kudos to Senators Graham and Reed for making an attempt.  But let’s be clear:  Republicans — the party that claims the flag and the troops as their personal property — control both houses of Congress and have unfettered control of the agenda there.  So this is a test:  if they can’t fix this — now — then it’s incumbent on those of us on the other side to hang their betrayal of the troops around every member.

Image:  Pietro Muttoni called della Vecchia, A fortune-teller reading the palm of a soldier, before 1678.  I can’t help but thinking the fortune teller is telling the soldier that he sees the future, and the his client is f**ked.

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Inequality Kills. Policy Drives Inequality. Elections Matter

March 16, 2014

Annie Lowrey in The New York Times today:

Fairfax is a place of the haves, and McDowell of the have-nots. Just outside of Washington, fat government contracts and a growing technology sector buoy the median household income in Fairfax County up to $107,000, one of the highest in the nation. McDowell, with the decline of coal, has little in the way of industry. Unemployment is high. Drug abuse is rampant. Median household income is about one-fifth that of Fairfax.

One of the starkest consequences of that divide is seen in the life expectancies of the people there. Residents of Fairfax County are among the longest-lived in the country: Men have an average life expectancy of 82 years and women, 85, about the same as in Sweden. In McDowell, the averages are 64 and 73, about the same as in Iraq.

There have long been stark economic differences between Fairfax County and McDowell. But as their fortunes have diverged even further over the past generation, their life expectancies have diverged, too. In McDowell, women’s life expectancy has actually fallen by two years since 1985; it grew five years in Fairfax. [Links in the original]

Albrecht_Dürer_013

Lowrey is careful to note that the causal connection between poverty and longevity (or its absence) is hard to establish, and the data are both incomplete and fraught with co- and confounding factors.  But such caution does not in the end distract her from the basic point of her reporting:

It is hard to prove causality with the available information. County-level data is the most detailed available, but it is not perfect. People move, and that is a confounding factor. McDowell’s population has dropped by more than half since the late 1970s, whereas Fairfax’s has roughly doubled. Perhaps more educated and healthier people have been relocating from places like McDowell to places like Fairfax. In that case, life expectancy would not have changed; how Americans arrange themselves geographically would have.

“These things are not nearly as clear as they seem, or as clear as epidemiologists seem to think,” said Angus Deaton, an economist at Princeton.

Further, there is nothing to suggest that, for a given individual, getting a raise in pay or moving between counties would mean outliving her peers.

“The statistical term is the ecological fallacy,” Mr. Kindig said. “We can’t apply aggregate data to an individual, and that’s underappreciated when you’re looking at these numbers.” But, “having said that, I still think that the averages and the variation across counties tells us a lot,” he added. “We don’t want to let the perfect be the enemy of the good here.”

Despite the statistical murk, many epidemiologists, economists and other researchers say that rising income inequality may be playing into the rising disparity in health and longevity. “We can’t say that there is no effect, just because we don’t have clear methods to test the effect,” said Hui Zheng, a sociologist at Ohio State University…

Mr. Zheng has also posited that inequality, by socially disenfranchising certain groups and making them distrustful of public systems, may have a long-range effect on health.

To some extent, the broad expansion of health insurance to low-income communities, as called for under Obamacare, may help to mitigate this stark divide, experts say. And it is encouraging that both Republicans and Democrats have recently elevated the issues of poverty, economic mobility and inequality, But the contrast between McDowell and Fairfax shows just how deeply entrenched these trends are, with consequences reaching all the way from people’s pocketbooks to their graves.

I’ll mostly pass over Lowrey’s seeming willingness to take as hopeful recent Republican rhetoric on poverty absent any policy proposals that would do anything about it, whilst continuing to propose, inter alia, the destruction of Obamacare, the one program she cites as having the potential to help.  This kind of both-sides-ism seems to be an ineradicable MSM pathology.

What matters much more is the basic point to draw from the evidence within Lowrey’s piece:  poverty kills — or perhaps better, wealth saves. Increases in inequality correlate with an increasing gap between rich and poor on the most basic of measures, how long we all get to enjoy the pursuits of life, liberty and happiness.  Policies that drive such inequality, or do nothing to mitigate, are implicated in those lost years, in deaths before time.  Those policies are the current program of the Republican Party.

Literally:  Vote like your live depends on it.

Image: Albrecht Dürer, The Death of Crescentia Pirckheimer, 1504.

Abby Normal on Wall St.

August 4, 2012

Joe Nocera has a mostly perfectly OK column in today’s New York Times on the trading glitch that led Knight Capital to launch a rapid-fire spree of unsought trades that screwed up the stock exchange this past Wednesday.  The failure was the third major technology-mediated muddle in recent times.  The most famous of these f**k ups was the 2010 Flash Crash, after which academic researchers introduced the broader public to  the delightful phrase, “order flow toxicity,” which Wikipedia handily tells us “can be measured as the probability that informed traders (e.g., hedge funds) adversely select uninformed traders.”

Nocera’s main point that the continuing series of market failures is ruining investor confidence in the market as an institution.  He points out that not all the problems are technical — he points to the Facebook IPO as an example of insider treachery that had nothing to do with any computer jiggery-pokery.

But he still goes off the rails in one passage — and the way he does so is illustrative of the larger problem in both the exchanges themselves and in the VSP/elite framing of market society.  He writes:

Most rapid-fire trading has nothing to do with the core idea that drew people to the market in the first place — that if you picked good companies, and did your homework, you could make money.

No! No! No!

Or rather — Irrelevant! Move to strike!

Here’s the problem:  Nocera may be right in the narrow sense.  When I put my 401K (actually a 403B, but that’s a distinction without a difference) into mutual funds, I do hope that I’ve picked good securities, that my homework has extracted more or less accurate information, and that I’ll ultimately be able to retire in comfort.  Individual investors do indeed go to the exchanges to make a smaller pile of cash larger.

But Nocera misses the larger issue, and he does so in a very telling way.  The classical understanding of what a stock exchange is supposed to do is to allocate capital efficiently, driving investment to what will be, for the economy as a whole, its most productive uses.  Obviously, this is a mission often honored in the breach in the current markets in securities of all types (another post on that coming soon), but still, if we’re going to talk about market failures and their consequences, what trading scandals like this one reveal is the way our current pathological form of financial capitalism steals the life blood of a productive economy and transfers it to thieves. (Cough, cough, RMoney)

In that context the real fecklessness of high frequency trading and other tech-driven tactics becomes clear.  Trades entered and exited in seconds aren’t about capital allocation.  They are just a form of rent-seeking, trying to exploit some momentary imprecision in the markets to take a few bucks out of each transaction…and hence out of productive use, at least for a while.

I’m not an anti-capitalist.  I believe, and will argue in the book I’m just starting to write, that the invention of financial capitalism is one of the great goods human society has produced ever.  It is also prone to failure in predictable ways and depends acutely on a society’s willingness to enforce norms of public behavior.  Absent such a framework, you get what we’ve got: a system that the little guy has damn good reason not to trust — as Nocera says — and one that cannot do the single thing it is supposed to achieve:  organize society’s resources to the ends that deliver the most reward not just to given investors or owners, but to the economic life of the country or the world as a whole.

If we’re going to complain about crappy software and cheated investors, we should remember the full tally of what’s at stake in a market system transformed from public utility to rigged casino.

Oh — and one last thought:  if you want to talk about the middle class paying to provide the very wealthy a little bit more, Romney’s tax plans are trivial compared to the wealth transfer a vampire-ridden, corrupted financial system can achieve.

[Bonus link.  The perfect video for this title/topic]

Image:  Claude Vignon, Croesus Receiving Tribute from a Lydian Peasant, 1629.

A Stranger in a Strange Land

August 22, 2011

I’m not saying Mitt Romney won’t be the Republican nominee next year — though if I were a betting man, I’d lay a small wager (pizza scale, not rent money) that he’ll fall short.

But I do believe that planners at the DOD see Romney’s ear as the US Strategic Tin Reserve — and that can’t be good for either a potentially (faux) populist-dominated primary battle, nor for a general election against someone who has some experience in running against the clueless rich.

The latest gaffe? Romney, like McCain, has a housing fetish:

The San Diego Union-Tribunebroke the story of Romney’s California plans this weekend:

“Romney has filed an application with the city to bulldoze his 3,009-square-foot, single-story home at 311 Dunemere Dr. and replace it with a two-story, 11,062-square-foot structure. No date has been set to consider the proposed coastal development and site development permits, which must be approved by the city.”

Three years ago, Romney bought the “oceanfront manse in La Jolla” for $12 million. His campaign says the house on the property is too small for Romney’s large extended family…

Oh, and one more thing:  what’s up with a resident (and former governor of) Massachusetts plunking down hogsheads of cash to buy sand in La Jolla in the first place?  Must be that old sailor-down-to-the-sea thing:

SanDiego.com reports Romney said last year that the oceanfront property stirred up memories of his (also fabulously wealthy) childhood:

At a book signing in nearby University City last year, Romney explained why he bought the house.

“I wanted to be where I could hear the waves,” he said. “As a boy, we spent summers on Lake Huron [in his native Michigan] and I could hear the crashing waves at night. It was one of my favorite things in the world. Being near the water and the waves was something I badly wanted to experience again.'”

Ah.  The soul of a Romney.

One thing, though.  Last time I checked, Massachusetts had a pretty nice coastlineWaves too, and tides, and oysters — and even famous rich people with compounds and all.

The moral of this story: it’s not that Romney has more scratch than you and me and all our friends that makes him suspect.  It’s that he’s rootless, a citizen not of a place but of a class.  His passport is green, issued by the sovereign meta-state of Richistan.

And fine — he’s a wealthy man; it’s a truism that this fact does not as a necessary corollary render him a bad person (though it does amplify his capacity for evil if he swings that way, of course).  But there’s rich and rich, and for some, Romney clearly included, an utterly secure material condition renders the experience of most of those the former one-term governor would seek to govern simply inaccessible. And that’s not good, either for a candidate or the country.

Image:  Titian and workshop, The Vendramin Family, venerating a Relic of the True Cross, before 1576.  Bonus points to those who spot the Romney-specific family reference in the grouping.