You can think of this as an open thread. Feel free to say anything about anything.
UPDATE — This is an open thread, so I thought I'd throw in this little goodie because I will use it to make some points in the 4th Flatland essay (i.e., I will make a mockery of it).
And check out the authors too.
They should have called it The Flatland Manifesto. For example, the prefix technolog {y,ies} occurs — wait for it! — 51 times in 23 printed pages.
It is still early in 2015 but the media is already setting up the Clinton/Bush presidential campaign in 2016. I remember voting for a Clinton (Bill) running against a Bush (George the 1st) in 1992. If we get the predicted pairing, we will have the following sequence:
a Bush (1988-1992)
a Clinton (1992-2000)
a Bush (2000-2008)
Hopey-Changey (2008-2016)
a Clinton or a Bush (2016 - ?)
That's what I love about democracy! (America has no elite running the show )
Anyway, I see that Elizabeth Warren has staked out the high ground. This was easy to do since the high ground has been a vacant lot since 1975.
I ran across Bloomberg's Why Elizabeth Warren Makes Bankers So Uneasy, and So Quiet. With a title like that, I had to read it.
Let’s assume that when he woke up on the morning of Dec. 12, Michael Corbat, CEO of Citigroup, was feeling pretty good. The day before, the House of Representatives had passed a bill that would save his bank and others lots of money and headaches. The trouble was, Elizabeth Warren, the senior senator from Massachusetts, was getting ready to speak on the Senate floor. She had his bank on her mind.
What Warren wanted to talk about was an item tucked into page 615 of a 1,603-page spending package: the repeal of section 716 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Known as the swaps push-out rule, section 716 required banks to set up separate subsidiaries, not backed by the government, to trade certain derivatives. If the rule stood, it would generate huge administrative costs for the big banks.
Citi had fought hard on this. The bank’s lobbyists had worked on lawmakers and helped draft language for the repeal. Getting it into a big spending package Congress was sure to pass was a coup. In the ongoing wars between Wall Street and the forces of government regulation, this repeal was a big win for the banks.
I love this next part.
“Today I am coming to the floor not to talk about Democrats or Republicans,” Warren began her speech, “but to talk about a third group that also wields tremendous power in Washington—Citigroup.” With that, Warren turned Citi into exactly the kind of villain so many people suspect lurks in the backrooms of the Capitol. In one particularly striking moment, she connected nine top government officials—including Treasury Secretary Jacob J. Lew—directly to the megabank.
See my earlier remarks about democracy and elites.
She invoked Teddy Roosevelt, her favorite trust-busting president, who took on the big corporations of his day. “There is a lot of talk coming from Citigroup about how Dodd-Frank isn’t perfect,” Warren continued.
“So let me say this to anyone who is listening at Citi. I agree with you, Dodd-Frank isn’t perfect.” She paused, then spoke very slowly and emphatically: “It should have broken you into pieces.”
Yes! Exactly! Unfortunately—
Warren didn’t succeed in blocking the bill. It passed the Senate the next day, and on Dec. 16, President Barack Obama Hopey-Changey signed it into law...
Despite this unhappy outcome, the Bloomberg writer has a story to tell, so she is not concerned with outcomes. (If you want to understand Flatland, pay attention to outcomes and ignore the bullshit.) And Warren has had one small success.
In January, Warren’s protests effectively blocked Obama from appointing Antonio Weiss, a banker at Lazard, to the No. 3 position at the Treasury Department.
In February, she took on Federal Reserve Chair Janet Yellen, calling out the central banker for the conduct of Scott Alvarez, the Fed’s top lawyer, who criticized the swaps push-out rule in a speech.
For months, she’s been attacking the Trans-Pacific Partnership, a treaty intended to regulate trade between North America and Asian countries outside of China. The White House wants the agreement badly; Warren casts it as a giveaway to multinational corporations.
Perhaps Warren should conserve her energy for fights she might win because there is certainly no dearth of Evil to fight here in the Greatest Nation On Earth. How do things stack up for Warren?
You're either FOR Elizabeth Warren...
Or you're AGAINST her...
Hmmm...
On the FOR side I see actors Susan Sarandon, Mark Ruffalo and Ed Norton, some dead people (Ted Kennedy, Teddy Roosevelt) and some living but not influential people (Paul Volcker, John McCain, Dick Durbin).
On the AGAINST side, I see a few of the people WHO ACTUALLY RUN THE WORLD, including some who did so until very recently (Ben Bernanke, Tim Geithner). Only one banker is shown (Jaime Dimon) but there's lots of other bankers who are AGAINST Warren. I should also mention that Bernanke, following in the footsteps of Geithner, who now works at private equity firm Warburgh Pincus, has become an adviser for the hedge fund management company Citadel.
And speaking of that upcoming presidential campaign, I will quote the New York Times.
How neighborhoods affect children “has been David B. Grusky, director of the Center on Poverty and Inequality at Stanford University, who was not involved in the research. “This delivers the most compelling evidence yet that neighborhoods matter in a really big way.”
Raj Chetty, one of the study’s authors, has presented the findings to members of the Obama administration, as well as to Hillary Rodham Clinton and Jeb Bush, both of whom have signaled that mobility will be central themes of their 2016 presidential campaigns.
After more than 15 years of mostly mediocre economic growth and rising income inequality, many families say they are frustrated and anxious about trying to get ahead.
Focusing on mobility instead of inequality is of course more status quo bullshit. But both Raj and the Times know whose asses must be kissed. Warren opted out of the circus, presumably because she knows the writing is on the wall.
I suppose I ought to mention self-described socialist Bernie Sanders. (He is always referred to that way, for example, here.)
OK, I mentioned him
Later.
Dave - unfortunately, it doesn't matter whether the swaps are "pushed out" or remain "in" under FDIC insurance. The US taxpayer is always implicitly on the hook for these products as long as they are part of the largest banks.
Even if "pushed out" into subsidiaries of the major banks, the banks are still ultimately (and legally) on the hook for the failures of their subsidiaries. And, if the failure of subsidiaries would create a solvency problem for any of the largest banks (which are the primary traders of these products), the government would once again have to bailout the largest banks - regardless of FDIC protection (as we saw in the last crisis with the AIG bailout).
Frankly, Warren is taking up the wrong cause and pointing fingers at the target du jour (Citibank) while notably ignoring the same issues at the other major banks (Bank of America, JP Morgan (ahem, Jamie Dimon), and Goldman).
The only real solution here is breaking up the banks into small enough entities where the failure of one isn't so catastrophic that it takes down all of its counterparties (i.e. other financial institutions).
Posted by: Kevin | 05/05/2015 at 01:57 PM