Town Hall Meeting

The settlement was for $285 million. Which is nothing compared to the billions they made on toxic mortgages they sold as AAA rated loans. This is fraud, and should be treated as a criminal lawsuit. Other than basic justice, trying this case and similar ones with other banks will help clean out the system of rot. This is from the AP article…

A judge on Monday used unusually harsh language to strike down a $285 million settlement between Citigroup and the Securities and Exchange Commission over toxic mortgage securities, saying he couldn’t tell whether the deal was fair and criticizing regulators for shielding the public from details of the firm’s wrongdoing.

U.S. District Judge Jed Rakoff said the public has a right to know what happens in cases that touch on “the transparency of financial markets whose gyrations have so depressed our economy and debilitated our lives.” In such cases, the SEC has a responsibility to ensure that the truth emerges, he wrote.

The settlement would have imposed penalties on Citigroup but allowed it to deny allegations that it misled investors.

Citigroup said in a statement that it disagreed with Rakoff because the proposed settlement was “a fair and reasonable resolution to the SEC’s allegation of negligence” and was consistent with long-established legal standards.

Adam Pritchard, a professor of securities law at the University of Michigan Law School, said courts could become clogged with cases that would normally be settled if other judges adopt Rakoff’s reasoning and deprive companies of their incentive to avoid trial.

The defense of Citigroup is preposterous – they are saying we love the deal we got to pay out $285 million! Now that you reject it, then we’ll say we are innocent! Some mental gymnastics are required to understand that one. And the UM law professor saying this is bad because it clogs up the courts. Wow, interesting legal point of view. We shouldn’t prosecute criminals because it’s too time consuming. How is this person an expert?

Read the full article here.

PS: Sorry I haven’t written in a while, my wife and I had a healthy baby boy and that has taken up about 99% of my time the past several weeks.

Thanks for the image K!

It’s nice to see someone who is sane running for the U.S. Senate. The best point she makes is that no one gets rich alone.

Nouriel Roubini has been explaining basic economics for years now, and gained national prominence in 2008 when he analyzed correctly the housing sector and predicted the housing price drops. People at the time of course called him crazy when he said house prices could fall 35%. Here he explains how capitalism can kill itself: if corporations cut labor and reduce wages, it then reduces demand because people don’t have money to spend, which then leads to more cuts. The downward spiral is reinforced until everyone loses.

You can watch the entire 22 minute interview here.

We now get to enjoy their economy, so this video gives thanks.

Just keeping score, I believe the economic accomplishments so far were extensions of the Bush tax cuts for 2 more years, including for millionaires and billionaires, and then slashing government spending (with only surface cuts to the bloated defense budget). Thank you so much, I can’t wait to see the unemployment rate after these changes!

That is not a typo. This was stated by Moore recently at a Wisconsin demonstration. It is true – it was fact checked by the organization Politifact. See the link below for the full explanation of how they verified it.

http://www.politifact.com/wisconsin/statements/2011/mar/10/michael-moore/michael-moore-says-400-americans-have-more-wealth-/

Make sure to keep this in mind when people talk about how to deal with the deficit.

“The report, “Failing its Families,” says at least 178 countries have national laws guaranteeing paid leave for new mothers, while the handful of exceptions include the U.S., Swaziland and Papua New Guinea. More than 50 nations, including most Western countries, also guarantee paid leave for new fathers.”

“Past efforts in Congress to enact a paid family leave law have floundered, drawing opposition from business lobbyists who say it would be a burden on employers. Instead, there is the 1993 Family and Medical Leave Act, which enables workers with new children or seriously ill family members to take up to 12 weeks of unpaid leave. By excluding companies with fewer than 50 employees, it covers only about half the work force, and many who are covered cannot afford to take unpaid leave.

“In the European Union, paid parental leave varies from 14 weeks in Malta to 16 months in Sweden, which reserves at least two months of its leave exclusively for fathers. Most EU countries have maintained the provisions of their programs despite the recession….the bid to expand paid leave in the U.S. was hampered by the clout of corporate lobbyists and the relatively weak status of the labor movement. ”

http://news.yahoo.com/s/ap/20110223/ap_on_re_us/us_paid_parental_leave

Unbelievable stuff…California and New Jersey are the ONLY states with paid leave programs, and its a meager 6 weeks. And before I hear the inevitable “well then move somewhere else,” remember that demanding more rights is how communities improve.

Inflation for 2010 is about the same as it was in 2009. Remember to keep this in mind when dealing with wage increases at work, or returns on investments.

2010 Consumer Price Index: 1.5%
http://www.bls.gov/news.release/archives/cpi_01142011.htm

2010 Producer Price Index: 4.0%
http://www.bls.gov/news.release/archives/ppi_01132011.htm

It sounds odd and totally wrong, but there are downsides to social mobility. Some of the most famous philosophers in history have discussed it: Kant, Benthem, Aristotle. This article from BBC News discusses the downsides they give, such as physical dislocation (moving to where the jobs are), isolation from family and shallow relationships with friends due to short friendships. Also, if riches are based on merit, then you would only have yourself to blame for your own poverty. Another downside is the things that generate money may be terribly soul draining. For example a banker may make a lot of money putting them into the wealthy class, and an artist may end up poor. So assuming upward mobility is desirable, then the incentive is to have more bankers and fewer artists…is this the best possible world?

While I think that social mobility is very important and vital to human existence, it is an interesting and useful thought experiment.

It is the name given to the parliamentary republic of Germany from the years 1918-1933. Noam Chomsky gave some interviews in 2010 to The Progressive Magazine and Chris Hedges about the risk of U.S. fascism and mentioned “the Weimar Republic was the peak of Western civilization and was regarded as a model of democracy.” He went on to explain how quickly it failed and turned into Nazi Germany, drawing parallels to current situations in the U.S. One such parallel is Germans got sick of government wrangling and their service to the powerful. A fringe movement like the Nazi’s, who had 2% of the vote in 1928, took power by 1933. And one reason they got more support is because Germans figured they couldn’t be much worse than the leaders they had so far.

I personally don’t know much about the Weimar Republic, but it sounds like an important part of world history and the history of democracy, so the more people know about it the better. Chomsky’s explanation and this youtube video seem like a decent place to start.

Chomsky’s Weimar Republic Explanation with the Progressive Magazine

Chomsky’s Weimar Republic Explanation with Chris Hedges and Truthdig

Ding Dong School for Econ Majors (or financial “experts”):

I knew the Senate was called “the millionaires club,” but it looks like the House is becoming its own millionaires club too.

Study: Lawmakers’ Personal Wealth Increased 16% in 2008

A new study shows members of Congress saw a boost in personal wealth as the U.S. economy suffered the worst of the economic recession. According to the Center for Responsive Politics, lawmakers’ personal wealth increased an average 16 percent between 2008 and 2009. The number of millionaires rose to 261, nearly half the total members of Congress. The median wealth of a House member topped $765,000, while the average for a senator was more than $2.3 million.

That [number of millionaires] compares to about 1 percent of Americans who lay claim to the same lofty fiscal status.

When averaging lawmakers’ minimum and maximum potential wealth for 2009, Rep. Darrell Issa (R-Calif.) tops the list with holdings exceeding $303.5 million. Issa is followed by a fellow Californian, Rep. Jane Harman (D-Calif.), with $293.4 million. Sen. John Kerry (D-Mass.) places third at $238.8 million.

The most popular investment among congressional members reads as a who’s who list of the most powerful corporate political forces in Washington, D.C. — companies that each spend millions, if not tens of millions of dollars each year lobbying federal officials. Many of them likewise donate millions of dollars to federal candidates each election cycle through their top employees and political action committees.

With 82 current members of Congress invested, General Electric tops this list. It’s followed by Bank of America (63), Cisco Systems (61), Proctor & Gamble (61) and Microsoft (54).

Read the entire article here

Matt Taibbi’s latest articles on the Tea Party and the Financial Collapse have been excellent, this short article gives a flavor of his good work.

“By rallying behind dingbats like Palin and Michele Bachmann — the Minnesota congresswoman who thought the movie Aladdin promoted witchcraft and insisted global warming wasn’t a threat because “carbon dioxide is natural” — the Tea Party has made anti-intellectualism itself a rallying cry.”

“…her primary complaint with the deeply flawed reform bill sponsored by Senator Chris Dodd and Congressman Barney Frank was that it would “end free checking accounts.”

I thought 8 years of Dubya would have been enough simplicity for the century…based on the recent election, apparently a bunch of voting Americans want more of it. Sigh. Turnout appears to be about 40%, according to a GMU website.

Read the whole article here.

Taibbi’s latest on the foreclosure debacle can be found here.

Oddly I think I’m more pissed off California Prop 19 (Legalize It!) failed than anything because that would have had a direct and pretty immediate positive impact on all of us by shrinking the prisons. Here is a good analysis on what happened by Glenn Greenwald who is an excellent writer and thinker.

Pundit sloth: Blaming the left
By Glenn Greenwald

Ten minutes was the absolute maximum I could endure of any one television news outlet last night without having to switch channels in the futile search for something more bearable, but almost every time I had MNSBC on, there was Lawrence O’Donnell trying to blame “the Left” and “liberalism” for the Democrats’ political woes. Alan Grayson’s loss was proof that outspoken liberalism fails. Blanche Lincoln’s loss was the fault of the Left for mounting a serious primary challenge against her. Russ Feingold’s defeat proved that voters reject liberalism in favor of conservatism, etc. etc. It sounded as though he was reading from some crusty script jointly prepared in 1995 by The New Republic, Lanny Davis and the DLC.

There are so many obvious reasons why this “analysis” is false: Grayson represents a highly conservative district that hadn’t been Democratic for decades before he won in 2008 and he made serious mistakes during the campaign; Lincoln was behind the GOP challenger by more than 20 points back in January, before Bill Halter even announced his candidacy; Feingold was far from a conventional liberal, having repeatedly opposed his own party on multiple issues, and he ran in a
state saddled with a Democratic governor who was unpopular in the extreme. Beyond that, numerous liberals who were alleged to be in serious electoral trouble kept their seats: Barney Frank, John Dingell, Rush Holt, Raul Grijalva, and many others. But there’s one glaring, steadfastly ignored fact destroying O’Donnell’s attempt — which is merely the standard pundit storyline that has been baking for months and will now be served en masse — to blame The Left and declare liberalism dead. It’s this little inconvenient fact:

Read the Rest Here

I only have this video to add, maybe this explains it all better. All you wacky liberals “HAVE MEDDLED WITH THE PRIMAL FORCES OF NATURE…AND YOU…WILL…ATONE!”

Network is such a good film, despite its not so subtle way of making Arabs seems scary. It’s funny because I can see Howard Beale (the one being yelled at) as Pelosi or Obama at the end of election day yesterday, and I can also see him as a Tea Bagger upstart like Rand Paul the day he is sworn in.

Banksy is a graffiti artist from the UK. Check out some of his work here. I don’t know how long Fox will let this intro last on youtube, so check it out while you can. I’m amazed this was allowed to air in the first place. Props to “The Simpsons” for still doing edgy stuff after 22 seasons.

This clip by Al Franken and and Wes Ball is hilarious. It goes back to see what Jesus would be like if he was a supply sider, the economic theory that says giving to the rich helps money “trickle down” to the poor through their purchases of products and pedicures.

Check out Larry Lessig’s TED talk about American problems and a solution. One such example is obesity, and one of it’s main causes: the artist formerly known as high fructose corn syrup. He talks about how corruption and the flood of money in politics have directly led to the corn abundance in America. Prices of vegetables between 1997 and 2000, went up 17%, while a coke has gone down 35%! He then moves into the financial collapse and the BP oil disaster. He goes on to explain how, why, and what we can do about all of it.

He includes a quote from President Abraham Lincoln in 1864:

“I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. As a result of the war, corporations have been enthroned, and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands and the Republic is destroyed.”

Yesterday, September 7, the French had a general strike and shutdown large parts of the French system. The result is the French President is now willing to concede to some of their demands and start to negotiate. Ironically, this occurred one day after America’s “Labor Day.” However, American labor is at the end of a 50 year decline and is in such a weak state that Wall Street can take all our private and public money and very little has been done. Although that one sit down strike at Republic Windows and Doors in Chicago was a shining moment during the 2008 crash. Labor has been beaten down in America for a long time, perhaps getting its biggest defeat when the Taft-Hartley Act was passed in 1947 over Harry Truman’s veto, making among other things, general strikes like yesterday’s French one, illegal. The only way I see to balance the power in America is for workers to organize and coordinate. Workers have been thrown under the bus for 50+ years and today’s terrible wealth gap, shrinking middle class, and no power to stop it, is the result.

Check out this discussion on the American system and comments on the French strike. The segment is about 20 minutes.
Letters to Washington
September 8, 2010 at 10:00am

Click to listen or download

Here is one photo of the strike. From my brief research, size estimates of the protests range from a low of 800,000 (from police) to 2,500,000 (from organizers). This of course is on top of all those that participated in the general strike.

Mike Burry is a doctor who decided to become a hedge fund manager in 2000. He is one of the highlighted characters in Michael Lewis’ new book, The Big Short, who called the housing crash well before it started in June 2007. He recently wrote an article that was published in the NY Times back in April of 2010. For those that say “no one saw this coming,” he proves that not only was this not true, but he was trying to tell anyone who would listen that it was happening. He also lays out Alan Greenspan’s complicity, such as when he said in February 2004, just when the Fed was going to stop lowering interest rates and start RAISING them: “American consumers might benefit if lenders provided greater mortgage product alternatives to the traditional fixed-rate mortgage.” Wow!

I Saw the Crisis Coming. Why Didn’t the Fed?
By MICHAEL J. BURRY
Published: April 3, 2010

ALAN GREENSPAN, the former chairman of the Federal Reserve, proclaimed last month that no one could have predicted the housing bubble. “Everybody missed it,” he said, “academia, the Federal Reserve, all regulators.”

But that is not how I remember it. Back in 2005 and 2006, I argued as forcefully as I could, in letters to clients of my investment firm, Scion Capital, that the mortgage market would melt down in the second half of 2007, causing substantial damage to the economy. My prediction was based on my research into the residential mortgage market and mortgage-backed securities. After studying the regulatory filings related to those securities, I waited for the lenders to offer the most risky mortgages conceivable to the least qualified buyers. I knew that would mark the beginning of the end of the housing bubble; it would mean that prices had risen — with the expansion of easy mortgage lending — as high as they could go.

Read Burry’s entire article here.

First thanks to Congressman Markey for getting the video feed up (on May 12, 3 weeks after the leak started!) so we can all see with our own eyes the horrible leak.

Second, this leak is believed to have started April 22, 2010, which is Earth Day, and two days after the oil rig exploded killing 11 workers.

Third, BP claimed it has been leaking 1,000 barrels per day (then upped to 5,000), while independent scientists are saying its between 70,000 and 90,000 barrels per day. The US govt has now upped their estimate to the most conservative of the independent scientists: 12,000 to 19,000 barrels per day. Note that 1 barrel = 42 gallons. So if we take the conservative estimate of 19,000 bpd, that means 29.52 million gallons of oil have leaked into the ocean, so far, minimum!

Lots of pictures and info can be found at Markey’s site.

When will Americans stop using money as the only way to value things? There are costs to what people do, that aren’t ever (let alone immediately) costly. One easy example to explain is when you buy a TV. You pay for the materials and labor for that item, but what about disposal of this toxic junk 10 years later when it breaks or becomes obsolete? In California, there is now a $16 recycling fee charged to the consumer for this problem of hidden costs of TV’s. Good job California, but this is not applied in numerous other cases. For example, freakin oil! Oil is barely taxed, and in fact is subsidized greatly by giving oil companies huge tax breaks and for building up the worlds largest military force to make sure oil flows cheaply and quickly to America and their allies. Consumers are not charged for oil spills, for climate change due to burning oil, for the wars and military buildup, or for blowback for such wars, such as 9/11 or the USS Cole bombing. I started with a question, so I’ll end with one…If you were offered $1 million dollars, but your child would have to live with crippling Asthma, what would you do?

As for the Bush-Katrina, Oil Spill-Obama comparison. I have no special allegiance to Obama, and this site should prove that. But this comparison is utter madness. Katrina was a NATURAL DISASTER, which the government does and should evacuate and do emergency management. This oil spill is a CORPORATE DISASTER, perpetrated by a company in their greedy pursuit of ever more profit. This is their problem and their horrific mistake. If you want to complain about govt for this one, it’s terribly weak regulations, allowing deep water oil drilling in the first place, corruption, etc. Now the damage is done, and BP is screwing up the cleanup royally, so I can see why the entire US should help fix this, but a hurricane and this couldn’t be more different.

The only minor justice to come of this is if BP is forced into bankruptcy and all their assets liquidated to pay for the cleanup and job losses due to this disaster.

Rant out.

And this is one view of a hidden cost of oil…don’t forget about the illnesses suffered by the people trying to clean up this mess, similar to the World Trade Center workers and volunteers after 9/11. That dispersant stuff is horribly toxic.