Tag Archives: Business News

Paul Krugman slams Wall Street for “undermining our economy and our society”

Paul Krugman slams Wall Street for "undermining our economy and our society"

Paul Krugman (Credit: AP/Lai Seng Sin)

I know this is the second consecutive Salon article, but economist, Paul Krugman has something to say and I wanted to share it…

Salon

The New York Times columnist argues that America’s large financial sector has done more harm than good

In his latest column for the New York Times, best-selling author and award-winning economist Paul Krugman argues that the financial sector of the American economy is not only outsized but that it’s hurting the economy and making Americans’ lives worse.

Citing journalist Michael Lewis’ new book on high-frequency trading — which opens with a story about an expensive tunnel being drilled for fiber-optic cable to cut down the communication time between Chicago’s futures markets and the stock market in NYC by three milliseconds — Krugman argues that American public policy has become overly influenced by high finance, with inequality and economic instability as a result. “[American] society,” Krugman writes, “is devoting an ever-growing share of its resources to financial wheeling and dealing, while getting little or nothing in return.”

After claiming that the large financial sector in the U.S. doesn’t increase overall prosperity and doesn’t promote economic stability, Krugman writes that its primary function seems to be to prey off of less powerful economic actors. “[Wall Street's] playing small investors for suckers,” Krugman says, “causing them to waste huge sums in a vain effort to beat the market.” The result, Krugman posits, is a select few Wall Street players making a lot of private profits while contributing little to the overall public.

Krugman continues:



In short, we’re giving huge sums to the financial industry while receiving little or nothing — maybe less than nothing — in return. [NYU Professor Thomas] Philippon puts the waste at 2 percent of G.D.P. Yet even that figure, I’d argue, understates the true cost of our bloated financial industry. For there is a clear correlation between the rise of modern finance and America’s return to Gilded Age levels of inequality.

So never mind the debate about exactly how much damage high-frequency trading does. It’s the whole financial industry, not just that piece, that’s undermining our economy and our society.

 

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Filed under Paul Krugman, Economic Inequality

Paul Ryan Budget Reduces Spending To Lowest Levels Since 1948: Report

Paul Ryan Budget Spending

Paul Ryan’s “Ayn Randian”  economic philosophy has prompted him to put forth a budget that would affect the working class and very poor in the most adverse way, while giving the top 1% more tax breaks and other perks.

The Huffington Post

Rep. Paul Ryan’s (R-Wis.) proposed budget would reduce government spending outside of Social Security and interest on debt to its lowest levels in over six decades, Investor’s Business Daily reported Wednesday.

Ryan, the House Budget Committee chairman, unveiled his latest fiscal proposal on Tuesday, laying out $4.6 trillion in cuts over the next decade. The blueprint aims to balance the budget in 10 years by slashing Medicare, Medicaid and programs to aid the poor, including food stamps. Ryan’s plan would also repeal President Barack Obama’s health care reform law.

“This is not only a responsible, reasonable balanced plan,” Ryan said on Tuesday. “It’s also an invitation. This is an invitation to the president of the United States, to the Senate Democrats, to come together to fix these problems.”

Under the House GOP plan, government spending would hit its lowest levels in 65 years. Investor’s Business Daily’s Jed Graham reports:

By 2023, under Paul Ryan’s budget, the entirety of federal spending outside of Social Security and interest on the debt (16.4% of GDP in 2012) would shrink to 11.2% of GDP, a level not seen since 1948 — before ObamaCare, Medicare, Medicaid, NASA, the interstate highway system and almost before the first baby boomers were born.That is nearly 25% below the 14.6% of GDP average over the past 64 years. In the only three years over this span that saw spending on the main functions of government (outside of saving for retirement) dip just below 12% of GDP, the unemployment rate averaged 4.5% or less, shrinking safety net outlays while bolstering the spending capacity of state and local governments.

Graham also calculates that by leaving Medicare expenditures out as well as Social Security and interest, spending levels would shrink to 7.9 percent of GDP by 2023, the lowest level since 1938, before Social Security and Medicare programs were created.

Click here to read more on Ryan’s budget plan.

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Filed under Poverty, Rep. Paul Ryan

Paul Krugman Appears On ‘Newsnight,’ Battles British Conservatives On U.K. Austerity Policies (VIDEO)

The Huffington Post

For most Americans, a trip to London means drinking a few pints and maybe taking a picture of one of those guards with the hats. For Paul Krugman, it means critiquing the entire direction of Britain’s economic policy.

Krugman, the Nobel Prize-winning economist and left-leaning New York Times columnist, appeared on the BBC program “Newsnight” this Wednesday, jousting with two British deficit hawks over the U.K.’s austerity agenda.

The Brits — venture capitalist Jon Moulton and Conservative Member of Parliament Andrea Leadsom — argued that the British government has to reduce spending if the country is to dig itself out of the economic slump it’s been in. Krugman countered that such a strategy could cause Britain’s economy to implode — since, he said, the public and private sectors need to circulate money to each other in order for anyone to prosper.Krugman Newsnight

“We are not a household. We are an economy,” said Krugman. “Your spending is my income, and my spending is your income.”

As Krugman pointed out during the “Newsnight” segment, and later in a NYTcolumn, the austerity question is one that extends beyond Great Britain. Eurozone countries are in the midst of their own austerity struggle right now, one whose effects have been felt most strongly in Greece, where government spending cuts have resulted in riots and strikes and boosted the political fortunes of the far-left, anti-austerity Syriza party.

And in the United States, economists and politicians are engaged in an ongoing debate over the best way to jump-start the lagging economy — and here, too, Krugman hasrepeatedly counseled against the kind of major government spending cuts that conservative policymakers have championed.

Krugman’s argument is that such cuts would cause a major contraction in the American economy, a point that even Mitt Romney, the presumptive Republican nominee for president, appeared to echo in an interview with Time a few days ago.

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Goldman Sachs Employees Told To Stay Away From Occupy Wall Street: Report

Goldman Sachs has told its employees not to enter Zucotti Park, as the Occupy Wall Street protests continue, CNBC reports.

This is outrageous, yet totally expected from the likes of Goldman Sachs

The Huffington Post

Goldman Sachs employees better not think of grabbing lunch or taking in the scenery at Zucotti Park. “The firm” as it’s known among its workers hasbanned employees from going to the site of the Occupy Wall Street protests for any reason, CNBC reports.

As the protests, which started September 17 continue into their fourth week, Goldman Sachs employees are being told to stay away from the park, at least six Goldman staffers told CNBC. The staffers said they didn’t know whether the policy was official.

The ban on entering the the park is just one of many policies Goldman uses to try to keep its employees — and itself — out of the public eye. As of January, the investment bank had banned the use of Facebook, despite its $450 million investment in the social networking site, according to Fast Company. Goldman also banned its employees from commenting on popular Wall Street site Dealbreakerin 2008.

Continue reading here…

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Behind the Story: Koch Industries Lobbying (Video)

Huffington Post

[...]

Charles and David Koch, the owners of the country’s second-largest private corporation, are libertarians of long standing, who contend that government regulations, taxes and subsidies stifle individual initiative and hamper American competitiveness. In recent years, the Kochs have played an increasingly public role as financial angels for conservative causes, politicians and foundations.

What’s not so well-known is the activity of Koch Industries in the trenches in Washington, where a Center for Public Integrity examination of lobbying disclosure files and federal regulatory records reveals a lobbying steamroller for the company’s interests, at times in conflict with its public pose.

The money that Koch (pronounced “coke”) has spent on lobbying in Washington has soared in recent years, from $857,000 in 2004 to $20 million in 2008. The Kochs then spent another $20.5 million over the next two years to influence federal policy, as the company’s lobbyists and officials sought to mold, gut or kill more than 100 prospective bills or regulations.       Continue reading here…

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Anonymous to Leak Bank of America Documents Monday

Photo of Bank of America ATM Machine by Brian ...
Image via Wikipedia

 Although Gawker is somewhat skeptical about this new offering of email leaks from “Anonymous”, apparently the activist group  is planning to expose Bank of America documents sometime today.   If I were those folks in the financial industry, I’d be very afraid of what may be about to hit the proverbial fan…

Gawker

A member of the activist collective Anonymous is claiming to be have emails and documents which prove “fraud” was committed by Bank of America employees, and the group says it’ll release them on Monday. The member, who goes by the Twitter handle OperationLeakS, has already posted an internal email from the formerly Bank of America-owned Balboa Insurance Company.

Anonymous to Leak Bank of America Documents Monday

The email is between Balboa Insurance vice president Peggy Johnson and other Balboa employees. (Click right to enlarge.) As far as we can tell, it doesn’t show anything suspicious, but was posted by OperationLeaks as a teaser. He also posted emails he claims are from the disgruntled employee who sent him the material. In one, the employee says he can “send you a copy of the certified letter sent to me by an AVP of BofA’s [HR department] telling me I am banned from stepping foot on BofA property or contacting their employee ever again.”

OperationLeaks, which runs the anti-Bank of America site BankofAmericasuck.com, says the employee contacted the group to blow the whistle on Bank of America’s shady business practices. “I seen some of the emails… I can tell you Grade A Fraud in its purest form…” read one tweet. “He Just told me he have GMAC emails showing BoA order to mix loan numbers to not match it’s Documents.. to foreclose on Americans.. Shame.”

An Anonymous insider told us he believes the leak is real. “From what I know and have been told, it’s legit,” he said. “Should be a round of emails, then some files, possible some more emails to follow that.” The documents should be released Monday on Anonleaks.ch, the same site where Anonymous posted thousands of internal emails from hacked security company HBGary last month. That leak exposed a legally-questionable plot to attack Wikileaks and ultimately led to the resignation of HBGary CEO Aaron Barr.

There are lots of reasons to be skeptical about this latest supposed leak. For now, it’s a guy who hates Bank of America and posted a single internal Balboa email and some seriously outrageous claims to Twitter. (When emailed for comment he posted our email to Twitter with “Fuck you, Gawker.”) It’s unclear what he’s actually got. And the whole incident echoes the time Wikileaks claimed to have its own Bank of America bombshell leak, which turned out to be a dud.

But those we’ve spoken to in Anonymous are convinced there’s something to this. Anonymous has a proven track record with leaks, and Bank of America has been in their crosshairs since they cut off payments to Wikileaks in December. If it’s real, it could be big. Keep your eye on anonleaks.ch: It should hit Monday.

Update: The leak will drop at 12:00am on Monday morning. According to Reuters, a Bank of America spokesman has confirmed the existence of a leak, saying it consists of “non-foreclosure related clerical and administrative documents stolen by a former Balboa Insurance employee.” The spokesman told Reuters, “We are confident that his extravagant assertions are untrue.”

UPDATE: It appears some of the emails may have been leaked already.
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Filed under U.S. Politics

Report: Feds Preparing Massive Sweep Of Insider Trading In Financial Sector

It’s about damn time!  I’m hoping that the aftermath will weed out a few crooked Congressmen and Senators on both sides of the aisle, as well. 

This is the sort of thing that allows me to maintain a little faith in the Obama administration.  Just when you think those guys have muddled so many things in the name of “bi-partisanship”, they surprise us with this bit of news.  I’m thinking, masterful chess move by the Feds and Obama.

The mortgage and foreclosure bankster scams should be next! 

It goes back to John Kenneth Gailbraith and Jack Clark’s words…

ALL YOU NEED TO KNOW

The modern conservative is engaged in one of man’s oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness.
John Kenneth Galbraith

THE JACK CLARK COROLLARY –

The Rational Radical

Everything the right-wing does is designed to accomplish one of two things, either:
(a) transfer wealth from everyone else to the rich, or,
(b) distract everyone else from the fact that (a) is occurring.

Wall Street Journal

Federal authorities, capping a three-year investigation, are preparing insider-trading charges that could ensnare consultants, investment bankers, hedge-fund and mutual-fund traders and analysts across the nation, according to people familiar with the matter.

The criminal and civil probes, which authorities say could eclipse the impact on the financial industry of any previous such investigation, are examining whether multiple insider-trading rings reaped illegal profits totaling tens of millions of dollars, the people say. Some charges could be brought before year-end, they say.

The investigations, if they bear fruit, have the potential to expose a culture of pervasive insider trading in U.S. financial markets, including new ways non-public information is passed to traders through experts tied to specific industries or companies, federal authorities say.

Read the whole story: Wall Street Journal

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Is The United States Now A “Banana Republic”?

In most Banana Republics, only 1 or 2%  of the population own almost every commodity in the country…while the “people” own nothing.  Essentially making those countries plutocracies.

Sound familiar? 

New York Times – Nicholas Kristoff

In my reporting, I regularly travel to banana republics notorious for their inequality. In some of these plutocracies, the richest 1 percent of the population gobbles up 20 percent of the national pie.

But guess what? You no longer need to travel to distant and dangerous countries to observe such rapacious inequality. We now have it right here at home — and in the aftermath of Tuesday’s election, it may get worse.

The richest 1 percent of Americans now take home almost 24 percent of income, up from almost 9 percent in 1976. As Timothy Noah of Slate noted in an excellent series on inequality, the United States now arguably has a more unequal distribution of wealth than traditional banana republics like Nicaragua, Venezuela and Guyana. 

C.E.O.’s of the largest American companies earned an average of 42 times as much as the average worker in 1980, but 531 times as much in 2001. Perhaps the most astounding statistic is this: From 1980 to 2005, more than four-fifths of the total increase in American incomes went to the richest 1 percent.

That’s the backdrop for one of the first big postelection fights in Washington — how far to extend the Bush tax cuts to the most affluent 2 percent of Americans. Both parties agree on extending tax cuts on the first $250,000 of incomes, even for billionaires. Republicans would also cut taxes above that.

The richest 0.1 percent of taxpayers would get a tax cut of $61,000 from President Obama. They would get $370,000 from Republicans, according to the nonpartisan Tax Policy Center. And that provides only a modest economic stimulus, because the rich are less likely to spend their tax savings.

At a time of 9.6 percent unemployment, wouldn’t it make more sense to finance a jobs program? For example, the money could be used to avoid laying off teachers and undermining American schools.   Continue readng…

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Filed under Tax Policy, U.S Is A Banana Republic

Bloomberg: ‘THEY CAN’T READ’

Bloomberg: Congress ‘Can’t Read’ And Some Members Don’t Know What, Or Where China Is

Huffington Post

New York City Mayor Michael Bloomberg said Saturday that some newly elected members of Congress “can’t read” and don’t know what or where China is.

Bloomberg delivered his stinging assessment of Washington’s newcomers during an interview with The Wall Street Journal.

“If you look at the U.S., you look at who we’re electing to Congress, to the Senate–they can’t read,” he said. “I’ll bet you a bunch of these people don’t have passports.”

The three-term, billionaire mayor warned against a trade war with China — something both major parties found politically helpful in last Tuesday’s election — and suggested that America assess its policies for answers:

“I think in America, we’ve got to stop blaming the Chinese and blaming everybody else and take a look at ourselves,” he said.

Last month, The New York Times reported that at least 29 candidates on both sides of the aisle ran ads critical of China and opponents who would support policies that help foreign workers–not Americans.

In one of its last acts before the midterm elections, Congress passed legislation retaliating against China, contending that the nation is undervaluing its currency.

Time‘s Zachary Karabell believes Americans are wrong.  Continue reading…

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Filed under Trade Deficit, U.S. Currency, United States Congress

‘Foreclosure Mill’ Employees Got Gifts For Altering Documents, Witness Says

This story should require Congressional and Senate investigations when congress convenes after the midterms.  However, it appears all the Republicans want to do, if they gain the majority is investigate housing loans to poor people and impeach Obama.

Huffington Post

At a large Florida “foreclosure mill,” a manager signed up to 1,000 documents a day without reading them and employees were given gifts to speed up foreclosure paperwork, according to depositions released today by the Florida Attorney General’s Office.

The news, also reported by Tampa Online, comes as Bank of America, the nation’s largest bank by assets, announcement that it would resume more than 100,000 foreclosures in 23 states after an internal investigation of its practices.

Florida authorities are investigating the law offices of David J. Stern over how it handled foreclosure paperwork. As the AP notes, Cheryl Salmons, an office manager at the law offices of David Stern, “would sign 500 files in the morning and another 500 files in the afternoon without reviewing them and with no witnesses,” according to Kelly Scott, a former assistant at the firm.

The perks for good performance were considerable, according to Scott’s statement. Tampa Online notes office employees were lavished with gifts:

“As a perk of Samons’ [sic.] job, Stern’s office would routinely pay her personal mortgage, a car payment, her electric bills and her cell phone bill, according to Scott, who told investigators Stern also bought Samons [sic.] a new BMW sport utility vehicle every year and gave her and other employees jewelry. Additionally, Stern purchased employee David Vargas a house, a car and a cell phone, Scott claims in her statement.”

According to Kelly Scott’s statement, Cheryl Ramos’s marathon document signing sessions took place in an office conference room and would leave her wearied. From Scott’s deposition:

They would [be] stacked amongst each other, side by side, and Cheryl would come twice a day, in the morning and mid-afternoon, around two or three o’clock and she would sign all of them, every single one of them…
Cheryl would give certain paralegals rights to sign her name, because most of the time she was very tired exhausted from signing her name numerous times per day. You had to understand it was more than five hundred files that she’s signing morning and afternoon.

David Stern had an especially close relationship with the mortgage giants Fannie Mae and Freddie Mac, Scott said in her statement. The lenders were “considered his babies,” Scott said and employees would change codes to hide files when their representatives visited the office.

Continue reading…

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