Quote of the day, on government providing hammocks for millionaires

The government’s social safety net, which has long existed to catch those who are down and help them get back up, is now being used as a hammock by some millionaires, some who are paying less taxes than average middle class families.

After reading that, one might be tempted to think it came from one of the Occupy Wall Street people, or The Nation magazine, or any one of the left-leaning faculty.

Guess again.

It is from a report titled The Subsidies of the Rich and Famous from, get this, Senator Coburn, who has solid conservative credentials and a strong conservative voting record.  On this issue, I suppose he will be in good company with Ralph Nader, which, I would have assumed, will never ever happen :)

Americans are generous and do not want to see their fellow citizens go without basic necessities. Likewise, we expect everyone to contribute and to demonstrate personal responsibility. Government policies intended to mainstream wealth redistribution are undermining these principles. The tragic irony is the wealth in these cases is trickling up rather than down the economic ladder. The cost of this largess will thus be shared by those struggling today and the next generation who will inherit $15 trillion of debt that threatens the future of the American Dream. These consequences are the results of shortsighted spending and tax policies like those outlined in this report that should be eliminated.

When even Coburn worries that wealth is trickling up, hey, there ought to be something seriously wrong here.

Ron Paul is no Coriolanus. And, no media coverage even when he gets votes!

The presidential primary season has begun, and I am yet again reminded of Shakespeare's Coriolanus.

Coriolanus was one of the plays that I watched at Ashland, with freshmen--during my years as the Director of the Honors Program.  I had no clue about the play. My colleague, the theatre faculty, said that it was an absolutely perfect play to watch and think about, given the war and election season at that time--seems like it is always war and elections, eh! :(

As always, the folks at Ashland did a great job. (When the play ended, I was thankful that they did not adapt it to any other time period, as they occasionally do with Shakespearean plays.) Once again, Shakespeare punched the lights out of me--how did that guy manage to do all that fantastic stuff? And such profound dramas!

Even as the play was progressing, it was difficult not to compare it with contemporary American social and political events.  Politicians pretending to be one of the commoners so that they can get their approval--which Coriolanus resisted doing not because he was idealistic, but because he thought he was too good to seek approval from the masses.

Contemporary politicians know all too well that if they behaved like how Coriolanus did, well, they wouldn't get elected even as a dog catcher.  So, they put on different roles.  Last time around, it was Obama droppin' the "g" or not mentioning arugula after one mishap, in order to relate to the commoners. Similarly, the hilarious attempts by McCain to relate to Joe the Plumbers, and the "betcha" folksy Palin .... well, Shakespeare portrays these so well in Coriolanus.

Here is a neat essay on Coriolanus, from the New English Review (once again, thanks to AL Daily). The author notes that:

Has political life really changed very much since Shakespeare’s day, at least as portrayed in Coriolanus? If anything, it seems to have regressed towards it, having perhaps (but only perhaps) have moved away from it for an interlude of a century or two.

Demagogues and war heroes we have with us still, while discernable principles seem very few and far between. The crowds are still demanding that the candidates display their war wounds: when Mrs Clinton ‘mis-spoke’ she was trying to demonstrate that she, too, knew what it was to be under fire. The desire and willingness to present others in the worst possible light, as a sufficient argument in itself, is still with us.

Unfortunately, demagogues and demagoguery are alive and well.

Except with one guy--Ron Paul.

Paul doesn't seem to care about saying things that people might prefer to hear so that they will, in turn, approve of his candidacy.  Though I don't agree with a few of what Paul says, I find it absolutely refreshing that he mostly says what he means, and means what he says.  And he behaves that way not out of contempt for the public either.

But, the guy gets practically no media coverage.  Why so? (ht)

Mostly because the mainstream media and the Republican establishment wish he would just go away.
One reason the bipartisan establishment finds Paul so obnoxious is how much the past four years have proven him correct -- on the housing bubble, on the economy, on our foreign misadventures, and on our national debt.

The Daily Show also correctly points out this systematic exclusion of Ran Paul--doesn't it remind us of how Ralph Nader used to complain that the two parties and the media have rigged the system?

The Daily Show - Indecision 2012 - Corn Polled Edition - Ron Paul & the Top Tier
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Corporations serve us, or do we serve corporations?

Many years ago, while still a high school kid reading every potboiler novel around, I read The "R" Document, by Irwing Wallace.  (I confess that as a teenager, whose biology was rapidly changing, I was way more fascinated by his "The Seven Minutes"!)

The novel, which my cousin from the big city of Madras had loaned me, was set in an America of chaos and violence, and a near breakdown of law and order.  The answer to this was going to be a constitutional amendment that would suspend the first ten amendments to the Constitution--the Bill of Rights.  And, of course, there is a much deeper conspiracy driving all these, and one of the conspirators is an all powerful multinational corporation, "Supranat Co." (at least, this is how much I recall from memory, which is fading by the day!)

Fast forward a few years, and I was among the audience at USC to listen to Ralph Nader who was critiquing the powerful rights that the government and the Supreme Court had awarded to corporations.  Nader was worried that scheming corporations will subvert civics and the Constitution.

Over the years, I have had my own love-hate relationship with mega corporations.  The one thing I know for sure that I hate is their ability to participate in elections.  If democracy is for, of, and by the people, only humans can participate in governance.  Yet, time and again, the Court re-affirms corporations as individuals, which is one hell of a screw-up.  Now, after reading this interview with Joseph Stiglitz, who is no dunce, I am really, really concerned:

"Corporations are a legal entity," Stiglitz explained. "We create them. And when we create them we create all kinds of rules. They can go bankrupt. And that means they owe more money and they get away scot-free. They can create an environmental disaster, and then go bankrupt and again go away scot-free. So, as legal entities we have the right to make the rules that govern them."

"As individuals we have certain basic rights," Stiglitz continued. "We aren't created by the law. We exist by nature. But corporations are man-made. They are supposed to serve our interest, our society's interests. And we are creating them with powers that are not serving our society's interests."

Brother, can you spare me a dime?

[The] idea of $25 billion for Africa suddenly doesn’t sound like so much after a $700 billion bailout in the United States or $2 trillion in bank guarantees in Europe. We’ve just been making choices to ignore the poor rather than calculations based on real resources available. We made a choice to let millions of people die and not honor our commitments. The crisis doesn’t change our quantitative ability to follow through. And now, I think everyone is more of a macroeconomist than they were before. They can evaluate for themselves that it’s just not a lot of money compared to the amounts mobilized in recent weeks.

In that argument, Jeffrey Sachs makes a fantastic point--we always offered excuses that we didn't have $25 billion to help out the poor in Africa. Anti-malarial medication, mosquito nets, TB medication, .... any of these was met with the same argument that we can't keep throwing money in Africa.

Well, hello, and we now have consensus that Uncle Sam is ready to spend 800 billion dollars to bail out banks and their bankers? The hypocrisy is too damn evident. But, as Ralph Nader likes to point out, as long we play a game of going back and forth between tweedledum and tweedledee, there will be only one message for the poor, whether they are in Africa or anywhere else: so long, suckers :-(

Enron was the canary in the coal mine

Hey, the more commentaries I read, the more Ralph Nader comes across as one we ought to have listened to; maybe I simply should vote for Nader, eh! Here is Bethany McLean, who is a contributing editor at Vanity Fair, and co-author of The Smartest Guys in the Room:

After Enron's implosion, everyone talked about how important it was to be able to understand how a company makes money. Now raise your hand if you understand how a modern financial services firm makes money. No hands? The truth is, there is no way to understand. These companies are as opaque as Enron. Just as Enron had off balance-sheet vehicles - SIVs - that allowed it to book earnings and hide debt, Citigroup and other financial institutions had structured investment vehicles that did the same. Indeed, Citigroup had to take almost $50bn of SIVs back on to its balance sheet after they ran into trouble. It would be nice if the accounting rule-makers would grasp this basic tenet: if they want to hide it, we want to know about it.
Of course, SIVs are only a small manifestation of the deeper problem, which is the evolution of financial engineering into a dark art. Enron now seems like the canary in the coal mine. After its bankruptcy, Steve Cooper, who was in charge of restructuring it, told the Wall Street Journal his task might leave him "in a wheelchair and drooling" due to the complexity of its financial structures and the "unbelievable amount of debt accumulated around the company". Doesn't that sound like our entire financial system?
Just as Enron packaged bad investments into a private equity fund run by its chief financial officer, Wall Street packaged mortgages given to people who couldn't afford the payments into sleek new instruments called RMBS and CDOs.

"The Martingale" on Wall Street

Here's how to make money flipping a coin. Bet 100 bucks on heads. If you win, you walk away $100 richer. If you lose, no problem; on the next flip, bet $200 on heads, and if you win this time, take your $100 profit and quit. If you lose, you're down $300 on the day; so you double down again and bet $400. The coin can't come up tails forever! Eventually, you've got to win your $100 back.
This doubling game, sometimes called "the martingale," offers something for nothing—certain profits, with no risk. You can see why it's so appealing to gamblers. ....
The carefully synthesized financial instruments now seeping toxically from the hulls of Lehman Bros. and Washington Mutual are vastly more complicated than the martingale. But they suffer the same fundamental flaw: They claim to create returns out of nothing, with no attendant risk.

That was a pretty good piece by Jordan Ellenberg. And, again, I was reminded of Ralph Nader's warnings about derivatives and the various games that these "financial experts" were playing with borrowed money.

Ralph Nader and the "Obama girl"?

Ralph Nader warned about derivatives

It was way back in the mid-1990s, I think, that I went to listen to Ralph Nader. This was in California--in LA. I had expected him to talk in the language of us mortals about corporations, environment, labor, .... Instead, he went all technical and it felt like I was in a graduate-level economics course. His focus was on derivatives and how they were being abused by Wall Street financial experts. The audience, not too large to begin with, almost fell asleep. But, it turns out that, as always, Nader was on target.
Unfortunately for him and for us, nobody paid any attention to Nader.
Then Enron happened. And even then nobody paid attention to the complexities in derivatives that these MBAs were concocting. The traders, on the other hand, started coming up with even more crazy schemes to essentially gamble with other people's money.
When Bear Sterns tanked last March--six months ago--that apparently still didn't wake up those who were supposed to safeguard the "public interest."
Oh well .... I guess I should feel better that if Congress passes a 700-billion dollar bailout, I will literally own a share of America's real estate--more than my own home that we pay for with blood, sweat, and tears!

9/26 update: Nader has a terrific commentary at Cockburn's Counterpunch. His postscript there is something that the "investor nation" should pay attention to:

Shareholders also have some work to do. They should have listened when Warren Buffett called securities derivatives a "time bomb" and "financial weapons of mass destruction.” The Wall Street crooks and unscrupulous speculators use and draining of “other people’s money” out of pension funds and mutual funds should motivate painfully passive shareholders to organize to gain greater authority to control the companies they own. Where is the shareholder uprising?