Saturday, December 3, 2016

Income Inequality in the US Grows


· Globally, in 2006, prior to the Great Recession, one percent of the world’s population was believed to control 40 percent of the world’s wealth.[i] Inequality grew in the wake of the recession.[ii]

· In US, “total income reported on the top 400 individual tax returns rose 20% in 2014, according to Internal Revenue Service data released” Dec 1, 2016. Minimum adjusted gross income for this group was $126.8 million. Their average tax rate was 23.13%.[iii]

· Ownership of the world’s largest corporations is highly centralized in a core group of 1318 corporations with interlocking ownerships, according to a revealing network analysis of 43,000 global corporations published in 2011 by Stefania Vitali, James B. Glattfelder, and Stefano Battiston.[iv] Further analysis revealed a tightly linked “super entity” of 147 corporations, mainly in finance, with interconnected ownership. Consequently, less than one percent of corporations essentially controlled 40 percent of the entire network. Furthermore, the study found that 734 “top holders of stock accumulate 80% of the control over the value of all TNCs.”[v]

· Rising Impoverishment Threatens Basic Security: In 2012, one in seven Americans relied on food stamps.[vi] By 2013, one in five Americans relied on food stamps.[vii] Food banks faced record demand. Eligibility and demand for free lunches in public schools grew, straining school lunch programs nationally.[viii]






[i] “40% of world's wealth owned by 1% of population,” CBCNews, December 5, 2006, accessed January, 3 2012, http://www.cbc.ca/news/business/story/2006/12/05/globalwealth.html; and James Randerson, “World's richest 1% own 40% of All Wealth, UN Report Discovers,” The Guardian, December 6, 2006, accessed January 3, 2012, http://www.guardian.co.uk/money/2006/dec/06/business.internationalnews.

[ii] Simon Clark, “Credit Suisse Says Global Inequality Rose After Financial Crisis,” The Wall Street Journal, October 14, 2014, accessed September 17, 2015, http://blogs.wsj.com/moneybeat/2014/10/14/credit-suisse-says-global-inequality-rose-after-financial-crisis/.

[iii] Richard Rubin. (December 2, 2016). Tax Returns Show Rise for the Rich. The Wall Street Journal, A2.

[iv] Stefania Vitali, James B. Glattfelder, and Stefano Battiston, “The Network of Global Corporate Control,” PLOSone (2011), accessed December 3, 2011, doi: 10.1371/journal.pone.0025995.

[v] Vitali, Glattfelder, and Battiston, “The Network of Global,” 36.

[vi] Jim Abrams, "Ag Dept Unveils New Steps to Stop Food Stamp Fraud," Lake Country News Sun, August 13, 2012, accessed, August 14, 2012, http://newssun.suntimes.com/news/14448564-418/ag-dept-unveils-new-steps-to-stop-food-stamp-fraud.html.

[vii] Ali Meyer, "Record 20% of Households on Food Stamps in 2013," CNS news, January 21, 2014, accessed January 22, 2014, http://cnsnews.com/news/article/ali-meyer/record-20-households-food-stamps-2013.

[viii] Alan. Bjerga, "School Lunches Strained by Recession, Farm Panel Told, Bloomberg. com, March 4, 2010, http://www.bloomberg.com/apps/news?pid=20601103&sid=aPCZteEfTvaw&refer=u.

Friday, December 2, 2016

United States of Goldman Sachs: Wall Street's Revolving Door




It is truly amazing how often Goldman Sachs' former high level executives take positions in government regulating the financial industry.

There is a REVOLVING DOOR between the company and the US government, as illustrated in this article published in the Wall Street Journal:

Liz Hoffman November 30 2016. Another Link in Goldman’s DC Chain. The Wall Street Journal, A5.
“Donald Trump is set to name Steven Mnuchin, a Goldman alum, as Treasury Secretary. . . . Mr. Mnuchin work at the company for 17 years. Most of his time was spent in Goldman’s mortgage-trading business in the early 1990s, though he also oversaw its internet strategy, which resulted in a flopped online wealth-brokerage effort in the early 2000s. … he will be the third former Goldman banker to hold the position in less than 25 years” [following Robert Rubin and Henry Paulson both former Goldman execs)
OTHER former Goldman execs moving through revolving door cited in the article include:
Robert Steel as G. W. Bush’s 2nd term deputy

William Dudley President of Federal Reserve Bank of New York

Joshua Bolten Chief of Staff G. W. Bush

Steve Friedman senior economic counselor G. W. Bush

Gary Gensler head of the Commodity Futures Trading Commission under B. Obama

Mark Carney head of Canada’s central bank (previously)

Mario Darghi head of European Central Bank
The Wall Street Journal article notes in italics:
Goldman partners view public serve as an important coda to a finance career”
Goldman views the revolving door with favor and sacrifices key officers to it.
 
Trump's candidate for Treasury Secretary worked for Goldman in its mortgage division. I investigated mortgage fraud in derivatives in my past research on the financial crisis. 

Here are a few notes about Goldman’s conduct in the mortgage arena leading up to the financial crisis that are excerpted from my book on liberal democracy (https://rowman.com/ISBN/9780739194959/Crisis-Communication-Liberal-Democracy-and-Ecological-Sustainability-The-Threat-of-Financial-and-Energy-Complexes-in-the-Twenty-First-Century):
 
Savvy financial players, such as Goldman Sachs, knew that many of the Collateralized Debt Obligations (CDOs) were backed by junk and yet they sold these to the staid institutional investors – particularly public pension funds – while betting on their default using credit default swaps (CDS). 

Goldman Sach’s Vice President Fabrice Tourre’s division developed Abacus, a synthetic CDO, sold to unwitting clients who had no idea mortgages making up the CDO were expected to default.[i] Worse, Goldman Sachs and the hedge fund, Paulson & Co collaborated in betting that Abacus would default by purchasing credit default swaps on Abacus from the Royal Bank of Scotland. 

The Royal Bank of Scotland suffered significant losses from its sales of credit default swaps, including an $850 million liability from backstopping securities designed by Goldman Sachs.[ii] The Royal Bank of Scotland was subsequently bailed out by the U.K. Government, illustrating the transfer of private losses to the public. 

In an email to his girlfriend, Goldman's Tourre referred to himself "fabulous Fab" and described creating "Frankenstein" products that were nothing more than "pure intellectual masturbation" sold to naive widows and orphans.[iii] Goldman Sachs profited from selling CDOs it knew were infused with fraud. After selling the fraud-infused CDOs, Goldman then bet the underlying debt would default, rendering the securities valueless, by purchasing credit default swaps. In 2007 and 2008 Goldman and other CDS holders were profiting as the CDOs lost value in the torrent of home foreclosures.

Although tepid, the market-recovery of 2010 allowed Wall Street executives to congratulate themselves with outrageous Christmas bonuses. Indeed, Wall Street bonuses soared 17 percent in 2009 while compensation at three leading firms—Goldman Sachs Group, Morgan Stanley, and J.P. Morgan Chase and Co.—rose 31 percent from 2008.[iv]

....
References
[i] Andrew Clark, "Lloyd Blankfein Admits Goldman Sachs Failed to Raise the Alarm," The Guardian, April 27, 2010, accessed April 28, 2010, http://www.guardian.co.uk/business/2010/apr/26/goldman-sachs-sec-senate-hearing.

[ii] Zachary A. Goldfarb and Tomoeh Murakami Tse, "SEC Sued Goldman Sachs to Break an Impasse," The Washington Post, April 20, 2010, A1.

[iii] Andrew Clark, "Goldman Sachs Banker Fabrice Tourre Faces the Music," The Guardian, April 27, 2010, accessed, May 1, 2010, http://www.guardian.co.uk/business/2010/apr/27/goldman-sachs-fabrice-tourre.
 
[iv] Nathaniel Popper, "Wall Street Bonuses Soar 17% in 2009, Even as Banks Reduce Pay for Top Executives," The Los Angeles Times, February 23, 2010, http://articles.latimes.com/2010/feb/23/business/la-fi-wall-street-jobs24-2010feb24.

Thursday, December 1, 2016

Wednesday, November 30, 2016

What is "real" and WHO decides and polices?


The war over truth is being waged out in the open as various groups vie to shape public opinion in the new Internet public sphere.

Here are several interesting articles that explore this war over truth.

The first article "Russian Propaganda Effort" published in the Washington Post promotes the neoconservative Cold-War 2.0 view that the Russians hacked the American election:


Craig Timberg November 24, 2016. Russian propaganda effort helped spread ‘fake news’ during election, experts say. The Washington Post, https://www.washingtonpost.com/business/economy/russian-propaganda-effort-helped-spread-fake-news-during-election-experts-say/2016/11/24/793903b6-8a40-4ca9-b712-716af66098fe_story.html

The flood of “fake news” this election season got support from a sophisticated Russian propaganda campaign that created and spread misleading articles online with the goal of punishing Democrat Hillary Clinton, helping Republican Donald Trump and undermining faith in American democracy, say independent researchers who tracked the operation.  Russia’s increasingly sophisticated propaganda machinery — including thousands of botnets, teams of paid human “trolls,” and networks of websites and social-media accounts — echoed and amplified right-wing sites across the Internet as they portrayed Clinton as a criminal hiding potentially fatal health problems and preparing to hand control of the nation to a shadowy cabal of global financiers. The effort also sought to heighten the appearance of international tensions and promote fear of looming hostilities with nuclear-armed Russia.
I've always said that Russians are master propagandists because their winning strategy has been to provide platforms for critical voices that resonate with targeted audiences as authentic, because they are in a sense "organic."

But acknowledging Russian expertise with propaganda does not mean that I believe the Russians hacked the election. Matt Taibbi chastises the Washington Post appropriately, in my opinion, for inflammatory rhetoric:
Matt Taibbi (2016, November 28). The 'Washington Post' 'Blacklist' Story Is Shameful and Disgusting. The Rolling Stone, http://www.rollingstone.com/politics/features/washington-post-blacklist-story-is-shameful-disgusting-w452543

The capital's paper of record crashes legacy media on an iceberg. Last week, a technology reporter for the Washington Post named Craig Timberg ran an incredible story. It has no analog that I can think of in modern times. Headlined "Russian propaganda effort helped spread 'fake news' during election, experts say," the piece promotes the work of a shadowy group that smears some 200 alternative news outlets as either knowing or unwitting agents of a foreign power, including popular sites like Truthdig and Naked Capitalism…

…The meat of the story relied on a report by unnamed analysts from a single mysterious "organization" called PropOrNot – we don't know if it's one person or, as it claims, over 30 – a "group" that seems to have been in existence for just a few months.  It was PropOrNot's report that identified what it calls "the list" of 200 offending sites. Outlets as diverse as AntiWar.com, LewRockwell.com and the Ron Paul Institute were described as either knowingly directed by Russian intelligence, or "useful idiots" who unwittingly did the bidding of foreign masters.

Forget that the Post offered no information about the "PropOrNot" group beyond that they were "a collection of researchers with foreign policy, military and technology backgrounds." Forget also that the group offered zero concrete evidence of coordination with Russian intelligence agencies, even offering this remarkable disclaimer about its analytic methods
The battle over the truth of the election is waged while newly elected Trump promises to cut social services and public education in a not-so-veiled attack against the very people who elected him.

Trump's authoritarian turn - not a good time to burn the flag people - coincides with more overt efforts to police truth by American companies:
Mike Isaac. November 22, 2016. Facebook Said to Create Censorship Tool to Get Back Into China. The New York Times, http://www.nytimes.com/2016/11/22/technology/facebook-censorship-tool-china.html?_r=2

Inside Facebook, the work to enter China runs far deeper. The social network has quietly developed software to suppress posts from appearing in people’s news feeds in specific geographic areas, according to three current and former Facebook employees, who asked for anonymity because the tool is confidential. The feature was created to help Facebook get into China, a market where the social network has been blocked, these people said. Mr. Zuckerberg has supported and defended the effort, the people added.

Facebook has restricted content in other countries before, such as Pakistan, Russia and Turkey, in keeping with the typical practice of American internet companies that generally comply with government requests to block certain content after it is posted. Facebook blocked roughly 55,000 pieces of content in about 20 countries between July 2015 and December 2015, for example. But the new feature takes that a step further by preventing content from appearing in feeds in China in the first place.

Facebook does not intend to suppress the posts itself. Instead, it would offer the software to enable a third party — in this case, most likely a partner Chinese company — to monitor popular stories and topics that bubble up as users share them across the social network, the people said. Facebook’s partner would then have full control to decide whether those posts should show up in users’ feeds.

The current and former Facebook employees caution that the software is one of many ideas the company has discussed with respect to entering China and, like many experiments inside Facebook, it may never see the light of day
One has to wonder what forms of censorship and propaganda warfare are being deployed by companies operating in the US? 

Of course, we all know that every blog post, every comment, every tracking cookie is recorded somewhere in Utah in vast servers that promise to map the passage of every Internet electron.

Intrusive surveillance and excessive policing are the way of the future unless rapid change occurs. Unfortunately, the change that Trump is delivering will only accelerate that course:
Are Trump's Plans to Expand Obama's Surveillance State & Activate Muslim Registry Unconstitutional? Democracy Now https://www.democracynow.org/2016/11/23/are_trumps_plans_to_expand_obamas
In the near-term future, the war over truth will go underground as "mass media" once again is monopolized by the few, for the few. The public sphere created by the Internet will have been policed into conformity around truths that promote the interests of those few.



Tuesday, November 29, 2016

Fukushima Looks Terrible and Japan Will Re-Start Reactors at the Sendai Plant


November 30, 2016 00.09


November 30, 2016 4:44


No coverage of the ice-wall anywhere.

Even after last week's very significant earthquakes, it looks as if the Sendai plant is going to be re-started:
Governor under fire as Sendai nuclear reactor likely to restart. The Asahi Shimbun, http://www.asahi.com/ajw/articles/AJ201611290066.html

KAGOSHIMA—Anti-nuclear activists are castigating Governor Satoshi Mitazono, saying the politician has retreated from his campaign promises regarding the planned restart of a nuclear reactor in the prefecture. Despite stressing that he would take a hard look at safety issues, Mitazono’s actions on Nov. 28 indicate that Kyushu Electric Power Co. will be allowed to restart the No. 1 reactor at its Sendai plant on Dec. 8 as was expected
This is really tragic. Japan has the opportunity to lead energy innovation but is choosing to re-start reactors during a sustained period of very high earthquake activity.