Archive for the ‘Thieves’ category

Grifters All The Way Down

September 3, 2017

Here’s what I don’t get.  Trump’s Treasury Secretary, Steve Mnuchin, is a rich guy. Seriously rich: on the order of a half a billion in net worth, w. a cool $70 million in 2016 earnings.  If he wants to check out a cool event — a total eclipse, say, a desire I wholly understnd — he can afford to do so at any level of comfort he chooses, and never miss the lucre.

Instead, he scams:

Last week, Treasury Secretary Steve Mnuchin took Mitch McConnell, some other Republican lawmakers, and his wife, Louise Linton, to Kentucky, ostensibly to touch large piles of gold at Fort Knox. Coincidentally, Kentucky also happened to be one of the best places to watch the total solar eclipse, which happened to occur on the day of their trip.

This trip had already attracted a bit of unwanted attention (back in those halcyon days before Melania’s stiletto adventures) after Linton instagramed the following:

“Great #daytrip to #Kentucky! #nicest #people #countryside,” Linton wrote, according to a screenshot of the now-private post, before tagging the labels she was wearing “#rolandmouret pants, #tomford sunnies, #hermesscarf #valentinorockstudheels #valentino #usa.”

Nothing says populist like that kind of fashion profile, eh?

Now, however, it turns out that drawing eyes to the family outing might have been more than a mere PR flub:

The U.S. Treasury’s Office of Inspector General is reviewing the flight taken by Treasury Secretary Steven Mnuchin and his wife, Louise Linton, last week to Louisville and Fort Knox, Ky., following criticism of their use of a government plane on a trip that involved viewing the solar eclipse.

“We are reviewing the circumstances of the Secretary’s August 21 flight . . . to determine whether all applicable travel, ethics, and appropriation laws and policies were observed,” counsel Rich Delmar wrote in a statement to The Washington Post late Thursday.

“When our review is complete, we will advise the appropriate officials, in accordance with the Inspector General Act and established procedures,” Delmar added.

Yo! Mnuchin! Pay attention here.  The Air Force is not your personal air taxi service. You want to take a day off? Fine. You’re the boss. You can play hooky to join millions jazzing on the sun’s waltz with the moon.  And you can pay for it your own damn self, just like I did, my brothers, and everyone I know.

More seriously:  someone who actually takes public service as service knows not to give even the appearance of putting one’s hand in the cookie jar.  And it’s not as if this puts Mnuchin through any hardship.  As noted above, he is far and away rich enough to pay for all his pleasures; there’s no meaningful gain to him to sleaze a little grift off the top.  But apparently, he can’t help himself.

These guys: scum floats — but how can you tell when it’s scum all the way down?

Image: Elihu Vedder, Corrupt Legislation (detail), mural in the Library of Congress, 1896.

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Gas Up Your Tumbrels

December 22, 2015

I think that this has already been discussed in a comment thread or two, but today (a) The New York Times reminded us that it can do essential, truly top-notch journalism and (b) exposed truly grotesque practices within a “justice” system that offers scant justice to anyone that doesn’t sport “Inc.” as a last name:

Encore and rival debt buyers are using the courts to sue consumers and collect debt, then preventing those same consumers from using the courts to challenge the companies’ tactics. Consumer lawyers said this strategy was the legal equivalent of debt collectors having their cake and eating it, too.

The use of arbitration by the companies is the latest frontier in a legal strategy orchestrated by corporations in recent years. By insertingarbitration clauses into the fine print of consumer contracts, they have found a way to block access to the courts and ban class-action lawsuits, the only realistic way to bring a case against a deep-pocketed corporation.

Their strategy traces to a pair of Supreme Court decisions in 2011 and 2013 that enshrined the use of class-action bans in arbitration clauses.

The result, The New York Times found in an investigation last month, is that banks, car dealers, online retailers, cellphone service providers and scores of other companies have insulated themselves from challenges to illegal or deceptive business practices. Once a class action was dismantled, court and arbitration records showed, few if any of the individual plaintiffs pursued arbitration.

Bottom feeders buy old debt.  They sue to collect.  Doesn’t matter if the debt is too old legally to collect.  Doesn’t matter if the sharks don’t have proper documentation. Doesn’t matter if they string up little old ladies by their big toes.  (Hyperbole alert).

Rembrandt_Christ_Driving_the_Money_Changers_from_the_Temple (1)

Crappy judges at the trial court level, insulated — guided — by crappy justices with robes, lifetime appointments, and no moral compasses whatsoever, make sure the Man gets his cash:

In the cases that The Times examined, judges routinely sided with debt collectors on forcing the disputes into arbitration.

In Mr. Cain’s case, Midland Funding, the unit of Encore Capital, persevered despite originally lacking a copy of a Citibank arbitration agreement they said he signed in 2003. Instead, the debt collector presented as evidence a Citibank contract that one of Encore’s lawyers signed when he opened an account.

In Mississippi, Midland Funding won a court judgment to compel Wanda Thompson to pay more than $4,700 on a debt that was too old to be collected under state law, court records show.

When Ms. Thompson filed a class-action suit on behalf of other state residents, Encore invoked an arbitration clause to have the lawsuit dismissed. Ms. Thompson’s lawyers argued that the company had clearly chosen court over arbitration when it sued her to collect the debt. By going to court, the lawyers said, Encore waived its right to compel arbitration.

Unpersuaded, the judge ruled that Encore’s lawsuit to collect the debt was separate from Ms. Thompson’s case accusing the company of violating the law.

I can’t put into words my revulsion for the people who steal from the weakest in our system, except to note that my loathing of those who enable these pen-armed robbers is far greater.  The GOP  hopes most people will be too scared of Syrians, gun-grabbers, and the Kenyan in the White House to notice who’s doing what to whom.  There’s an opening here for our side — and an obligation to take it.

Image:  Rembrandt van Rijn, Christ driving the money changers from the temple, 1626.

Pretty Boy Floyd Had Nothing On These Guys

October 18, 2011

Towards the end of last week, John pointed out the clueless sociopathy of Jay John Carney’s view of insider trading as a victimless crime.  (Here, the string “Jay John Carney” should be read as “your liberal media at work.”) [Update:  oops.  Apologies to the distinguished White House press sect’y.  How do you spell brain bubbles, anyone?]

I just want to add that John’s reaction — that someone using private information to gain an advantage in a two-party trade has got a victim all lined up — is not merely obvious; it’s been studied.

That is: you can imagine a hand waving argument that because each party has their own reasons to enter a transaction, then even the “outsider” on an insider trade gains what he or she desires from the exchange, otherwise they wouldn’t make the deal.   Since that motivation is untouched by the knowledge that the counterparty possesses and they do not, what’s the problem?  That’s my rough approximation of the glibtard case, at least.*

The problems with this crayon-level argument are pretty plain, I’d say, the most glaring, to me, is that assumes that each choice exists only within the narrowest possible slice of time.  Or, as an economist friend of mine put it in response to Carney’s “reasoning” (sic!):

The argument that trades are voluntary so everyone benefits is clearly only true ex ante – that is to say on the basis of the original biased information.  The guy who gets stiffed clearly wouldn’t have made the trade if he’d had the same information as the insider.  You might as well make this argument to justify dodgy second hand car sales or street trading swindles.  The guy who buys a lemon from the dealer who has hidden its faults expected to make a gain but that doesn’t mean he actually does or that the dealer isn’t a crook.

Beyond any mere ridicule of the rich-people-can-do-no-wrong that defines the Village view, the point I think John was making is that insider trading has both individual victims — those who were cheated out of what they would have gained had there been full knowledge of what was going on for both parties to a trade — and systemic costs that we all bear.

Surprise! That turns out to be something people actually know something about

I’m not going to claim that the clutch of papers I turned up in a swift surf through the literature  is anything remotely like an authoritative review of the current state of research on insider trading.  But what struck me is how easy to come up with a bunch of different angles on the problems insider trading produces for markets as well as individual investors.  Here’s an old analysis — it dates from 1991, which amounts to not much more than a mathematical formalization of a penetrating glimpse of the obvious:

In the absence of insider trading, and as long as managers’ salaries arepositively corelated with their firms results,managers will make such choices efficiently, and consequently such choices have previously received little attention, we show that, in the presence of insider trading, managers may make such choices inefficiently…More generally, the analysis of this paper suggests that the extent to which insiders may trade in their firm’s shares has considerable effects on the agency problem in corporations….

…ya think?  Snark aside, the important point is that an insider’s actions don’t begin and end with the transaction. One set of victims in an insider trade are those who hold some share in whatever enterprise or instrument is being traded.  It’s not just that insiders have more information than a counterparty, but that they have power to affect what their companies do — which means their incentives no longer align with everyone else connected to that enterprise.  In other words:  direct victims of insider trades include not just counterparties, but shareholders (or analogous parties-of-interest) in any given setting.

Then there’s this study from 2003.  Here, Julan Du of the Chinese University of Hong Kong and Columbia’s Shang-Jin Wei report on the impact of insider trading on market volatility — basically how insider trades affect how fast (and how much) prices change on a market.

They conclude:

More insider trading is found to be associated a higher market volatility even after one controls for the volatility of the real output growth, volatility of monetary and fiscal policies, and maturity of the stock market. Moreover, the quantitative effect of insider trading on market volatility is also big when compared with the effect of the volatility of other fundamentals.

But who cares, or who should?

All of us. Wild changes in prices driven by insiders taking advantage of their privileged position undermine the entire purpose of capital markets.  Du and Wei again:

Market volatility affects the incentive to save and to invest. In almost any model with a representative agent maximizing utility under uncertainty, the more volatile the asset market, holding the average return constant, the less the agent will save, and hence the less the investment will be. A certain degree of market volatility is unavoidable, even desirable, as one would like the stock price fluctuation to indicate changing values across economic activities so that resources can be better allocated. However, precisely because stock prices are supposed to serve as signals for resource allocation, excessive volatility that is not related to economic fundamentals would diminish the signaling function and impede resource allocation.

Or, to translate out of econ-geek speech:  markets are supposed to allocate capital, sending investor cash to support productive investment.  Mess with that, and the sorting function of the market, “the invisible hand,” to steal a phrase, starts to fail.  Investment decisions are distorted and we end up with a less productive economy as a whole than we would have without the thumb on the scales applied by greedhead wealthy corporate insiders seeking yet more loot than they already possess.

__

All this is the long way ’round of saying that when our Galtian overlords f**k with market mechanisms in any of the splendid variety of ways they have schemed innovated, there are certainly individual losers involved.  But the more consequential reality is that messing with the financial markets threatens the real economy — and that’s where all of us live.  The foreclosure crisis begins as a financial disaster.  It brings us to ruin because now 15 million actual homes are underwater in cities and towns across the United States…and that guts the whole damn country.

It’s not that eleven years in jail is too much for one misunderstood genius.  Rather: just one financial felon behind bars is orders of magnitude too few.

*Here’s that case from the horse’s ass mouth — which would be Jay John Carney himself, from the piece to which John originally linked:

But are they [insider trader Raj Rajaratnam’s opposite numbers) really harmed? Of course not. No investor was ever induced by Rajaratnam to sell a stock. Stock market transactions take place impersonally, without regard to who is on the other side of a trade.

Saying that investors wouldn’t have sold if they had Rajaratnam’s information doesn’t make the sellers victims of Rajaratnam’s trading. Even if Rajaratnam hadn’t bought the stock, they still would have sold while being in a position of relative ignorance compared to him.

Oy.

Images:  Francisco de Goya, Robbery, c. 1794

Jan Provoost, Death and the Miser, before 1529.

Won’t Get Fooled Again…and Again.

August 3, 2011

As readers of this blog know all too well, the debt ceiling “cuts” just passed are, for the most part, much less than meets the eye, particularly in the immediate future.  But, of course, the debt isn’t the issue and never was.*

No. Not even in a little bit.

Rather, all of the last month or so was a set up for this:

Thousands of Tea Party movement activists are expected to descend this month on town hall meetings across key battleground states as part of an intensifying campaign ahead of the 2012 presidential and congressional elections.

Their priority is a plan to slash Medicare costs proposed by House of Representatives Budget Committee Chairman Paul Ryan, which could gain momentum now that a debt-limit deal between President Barack Obama and Congress has made potential Medicare cuts a centerpiece of the deficit debate.

A new congressional committee charged with finding $1.5 trillion in spending cuts by November 23 is expected to focus on Medicare, and the program would see automatic cuts if the committee failed to reach agreement, or if Congress did not approve its recommendations by December 23. Market values of companies that depend on Medicare spending fell more than 10 percent in a sell-off on Wall Street after the agreement.

“The August town halls are going to be, potentially, a referendum on Democrats who don’t care and Republicans who’ve dared to offer real policy solutions, particularly on things like entitlements,” said Matt Kibbe, president of FreedomWorks, the small-government advocacy group organizing the initiative.

Freedom works is, of course, this grass-roots organization.

Which means that one can readily translate the phrase, “real policy solutions” as “transfer payments from most of America to the richest few.”

But of course, these are the serious people in this discussion.  Just ask them:

“The Ryan plan is the only one out there so far, and what we need is an adult conversation with all politicians talking about the real issues,” [said Kibbe]

Yeah:  like those adult conversations that attended the discussion of health care last time around.

Also, note the big lie at the heart of this claim:  (a) that the Ryan is a “policy solution” despite the fact that it neither saves any real money on either the budget nor in health care spending society-wide  (as opposed to federal spending on health care);  (b) that it is the only plan out there; and (c) that it has anything to do with fiscal prudence.

Not exactly, as Jon Chait writes at the link above,

…this more modest deficit reduction would mask a very large redistribution of wealth–and not the kind Republicans always accuse Democrats of trying. The tax cuts, which include reductions in the top rate, would overwhelmingly benefit the rich. The spending cuts, which include a huge reduction in Medicaid spending, would primarily affect the poor.

So calling the House Republican plan a deficit reduction scheme is a very misleading description of its likely effect for the first decade. You’re better off calling it a regressive redistribution plan that happens, as a side effect, to reduce deficits by a small amount. Or you can just call it “flimflam,” like Paul Krugman did.

And, of course, that’s what has always been the goal:  to repeal the New Deal, and transfer to the kind of folks funding Greedhead Freedom Works all the wealth thus no longer wasted on the undeserving poor, the middle class, and, hell, just about everybody.

So: our job is to show up, and shout — in person, in letters to the editor, and in communication to our representatives, relevant committee chairs and the White House:  no tax cuts in any deal.  Tax reform as a 1-1 or better fix for the deficit reduction to which we are now, sadly and prematurely, committee;  and touch neither Medicare/Medicaid nor Social Security.

We need to say it over and over again:  cost controls as part of a Medicare reform package are fine (as Krugman himself argued for in the first round of Ryan nonsense).  Amazingly, that’s just what happens to be one of the major ideas within the one truly serious policy plan out there on this subject, the health care reform package already passed.  It’s why IPAB exists, for one thing, and it’s why, as David Leonhardt pointed out, President Obama and his allies constructed a health care approach that turns on taxation of the rich to cover the cost of a program vital to the middle class and the poor.**

I urge everyone who has raced to conclude that Obama is no better than the GOP alternatives to go back to that Leonhardt piece and remember why that’s simply bullsh*t.

Obama, for all his errors and his damnably frustrating inability to make the bully pulpit ring, believes in the New Deal.  He grasps the importance of economic equity not simply as a matter of justice, but as a hard pragmatic necessity if we are to create a sustainably wealthy society.  He has defended the importance of government and governance in the maintenance of truly civil society.  Your modern GOP does not accept any of that.

I remember trying and failing to talk Naderite friends out of their “the two parties are the same” nonsense in 2000.  We cannot survive doing that to ourselves in 2012.  And, just to get started, this summer we’ve got to shout down those who shout to sell out our parents, our children, our communities and ourselves to fund the mansions of the rootless rich.

*except for the truly credulous.

**BTW — one of the best pieces of media news of the last several years is that Leonhardt will take over the Washington bureau of The New York Times as of this fall.  He’s in the Village but not of it, and if he leads the Washington coverage of the Times as well as he’s performed on his own economic beat, that’s a very good thing.

Image Ernst Ludwig Kirchner, Schlemihls [A Loser] in the loneliness of the room, before 1938

We Live In Hope

June 2, 2011

From Bloomberg (via TPM):

Goldman Sachs Group Inc. (GS), the fifth- biggest U.S. bank by assets, received a subpoena from the Manhattan District Attorney’s office seeking information on the firm’s activities leading into the credit crisis, according to two people familiar with the matter.

“We don’t comment on specific regulatory or legal issues, but subpoenas are a normal part of the information request process and, of course, when we receive them we cooperate fully,” said David Wells, a company spokesman.

It warms the cockles of my uncharitable heart that Goldman is taking at least a trivial hit where it hurts them next-to-most:

Goldman Sachs dropped 2.3 percent to $133.04 in New York Stock Exchange composite trading at 9:57 a.m., after falling as much as 3.4 percent following news of the subpoena.

The stock has slid 17 percent since the Senate subcommittee, led by Michigan Democrat Carl M. Levin, used the firm as a case study in a 640-page report on its findings released in April.

Alas, though, I haz a sad over this:

A subpoena is a request for information and doesn’t mean the company is a target of a criminal investigation. Analysts including Sanford C. Bernstein’s Brad Hintz have said they don’t expect the firm to be criminally prosecuted.

If they’ll nail individuals within the firm — enough of them — I’d be satisfied.  I live in hope.

Image:  Charles Wauters Der beim Diebstahl ertappte Hausdiener, (very loosely — the thieving servant, caught in the act), 1845