Theodore Roosevelt on the Lawless Capitalist

by Nomad

Progress, Reality and Cynicism: Lessons We Learned From Millennium Development Goals

by Nomad

Back in 2000, the UN brought world leaders together to draw up a plan to make the world a better place. This year, fifteen years later, that effort was analyzed and the results might surprise you.

When the Paris Climate Change Summit came to its conclusion recently, it was easy to be a little skeptical about the level of commitment of the nations that pledged to address climate change. 

Preventing global destruction is not going to be a piece of cake.  

In fact, it will require nothing less than a re-tooling of the world's economy and the energy industry. 
Who knows if it is possible given the time constraints? It's easy to be cynical and defeatist when it comes to tackling such a huge problem. 

Critics claim this is all merely window-dressing. Just a bunch of timid self-serving bureaucrats making useless paperwork that's not even legally binding. There's no way, critics say, to confront and punish violators. 

Of course, this view automatically assumes that global progress can only be achieved by force, by a threat of punishment or by intimidation. 

But, to turn the tables on those critics, where is the evidence that that has ever worked? Simply because something is difficult shouldn't mean we ignore our responsibility. 

President John Kennedy, during one of the darkest periods of the Cold War, once warned about allowing hopelessness and defeatist to overwhelm us. (In this case, world peace.)

Thinking something is impossible makes it that much harder to address in a rational manner. In 1963, he told the graduating class at the American University that we must stop thinking war is inevitable. Mankind is not doomed, and we must not yield to the idea that we are gripped by forces we cannot control. 

"We need not accept that view. Our problems are man-made — therefore, they can be solved by man. And man can be as big as he wants.

No problem of human destiny is beyond human beings. Man's reason and spirit have often solved the seemingly unsolvable — and we believe they can do it again."

Even though the dream of world peace has not implemented universally even today, Kennedy's hard-nosed optimism is not wrong. Peace, he once said, is not a warm and fuzzy dream. It is a process. We make things harder by thinking that overnight we can solve all of the problems in the world, just by wishing and praying. 

While that may be a proper point to begin, just wishing for a better world isn't going to be enough.

It calls for a practical approach.

One of the problems is defining what it means when we say "a better world." What does that mean? Much better for a limited few, or slightly better for the majority?

In 2000, the UN General Assembly drafters of the Millennium Declaration had their specific notions and were determined to see progress in fifteen years. In that declaration, the representatives of all of the member nations recognized that:

"...in addition to our separate responsibilities to our individual societies, we have a collective responsibility to uphold the principles of human dignity, equality and equity at the global level. As leaders we have a duty therefore to all the world’s people, especially the most vulnerable and, in particular, the children of the world, to whom the future belongs."

Monstrous Ideas: How Ayn Rand's Pernicious Philosophy Allowed Conservatives to Destroy the US

by Nomad

No philosopher stirs the conservative heart like Ayn Rand. Yet, her warped philosophy of selfishness and the glorification of greed is today a major cause of the American malaise.

Back in 1979, Phil Donahue interviewed Ayn Rand, a person who was later to become "a major inspiration for the Tea Party movement."
If, for that reason alone, the oft-quoted Rand deserves a little of our attention. The interview came at a key moment in American political history, It was when the American voter rejected Carter and instead chose the conservative Ronald Reagan to lead us on a new path. 

In 1966, Ronald Reagan was, in fact, a fan and had written in a personal letter, "Am an admirer of Ayn Rand."

Born in St. Petersburg, Russia, on February 2, 1905, Alisa Zinov'yevna Rosenbaum was a novelist, playwright, screenwriter and a philosopher beloved by the free-market conservatives. Her brand of philosopher was called Objectivism. Among its other tenets. this philosophic system supports the idea that the proper moral purpose of one's life is the pursuit of one's own happiness (rational self-interest).  Thinking of others is something that should be avoided. It is, she said, a dangerous thing to do.

No wonder it became a founding principle of the conservative movement. 

When Black Friday Comes....

by Nomad

Frederick Douglass and the Hidden Truth about Slavery

by Nomad

A letter written while former slave Frederick Douglass toured England reveals a truth about the insults and attacks aimed him. What was the mindset of those that use this kind of language?
His observation gives us an insight into a half-hidden truth about slavery and the age that followed.

Exciting Hatred and Jealousy

The quote in the meme above comes from a letter sent to the abolitionist and newspaper mogul Horace Greeley in 1846. It had been sent from Great Britain, where Frederick Douglass was giving a series of anti-slavery speeches and recounting his own history. 

The Way Forward: Corporate Culture or Employee-Owned Business?

by Nomad

Isn't  there any better alternative to the classic corporate business model? With union membership in free-fall, where can the America worker turn to find a decent standard of living, job satisfaction and a more equal voice in the capitalist system? Could the Employee-owned business model be an answer? 

Everybody- except perhaps the 1%- would probably agree that the Capitalist structure is in need of an overhaul or at least a serious reconsideration. Unions- which have in the past provided a bulwark against corporate exploitation of labor and yet, a political power, a return of a influential organized labor  movement seems fairly unlikely. We all owe a lot to the existence of the unions. As The Nation pointed out:

Capitalism was “civilized” thanks to the unrelenting pressure of gritty working-class movements and the ever-present threat of strikes and even revolutions.

However, that may all be in the past.  That system has broken down. 

As the New York Times noted last year,  the long decline in the number of American workers belonging to labor unions accelerated sharply last year, sending the unionization rate to its lowest level in close to a century. States like Wisconsin, Indiana and others, with the help of corporate-funded ALEC enacted new laws that rolled back the power of unions. 
While it may be a bit soon to announce the deaths of labor union movement altogether, some would say this decline might be passed the point of no return. But there are reasons why of the unions haven't magically dissolved. If anything the original reasons for unions- low pay, poor working conditions, profits above all other considerations- are nearly as bad as the time before the rise of unions.

What then are the alternatives to union labor- besides throwing up one hands and leaving it to overpaid CEOs? Progressives often seem paralyzed. and Conservatives appear intend on pacifying the outrage of an imbalanced system where economic inequality and entitlements for the upper crust is the norm.

One possibility is a completely different model based not on union-company confrontation but on a model of participation between workers and the company. No, not a Kumbaya moment by the campfire with workers and management and owners all holding hands. 
I am speaking of employee-owned business model.

Koch Brothers Exposed: Film Trailer

by Nomad

Never in American history has there been a more organized and well-funded threat against the democratic process, the health and safety of all Americans and the impartiality of the Supreme Court. The Koch brothers have single handedly managed to corrupt two of the three branches of government and in the 2012, are seeking to make it three for three. Seriously. It makes all of the other threats America has faced small in comparison. 

 

The Uncomfortable Truth about Iran: How the US Lost a World

 by Nomad

Amid all the advertisements for gas-guzzling cars, there is an interesting editorial from LIFE magazine, dated May 21, 1951. The title:

"How to Lose a World: Our Government's Deplorable Performance in Iran Has Contributed To a Great Disaster."

At that time, because of its location and its petroleum, Iran was caught between two great millstones of conflicting ideologies, Capitalism and Communism.

Britain, heavily reliant on Iranian oil, had directly controlled the oil monopoly through the British Anglo-Iranian Oil company (later to become BP) but now, suddenly the rules of the game had changed.The author neatly summarized the lead-up to the foreign policy disaster like this:

LIFE Magazine Examines Wall Street and Banking in 1946

by Nomad

In light of the announcement by JP Morgan CEO Jamie Dimon that his firm has lost $2 billion investing in derivatives, I thought I'd take this opportunity to re-post this article, originally published in my general blog, Nomadic View.

The most amazing thing about a casual look through the back pages of LIFE magazine is how relevant the articles can sometimes be. For example, take the January 7 1946 issue about Wall street "the Citadel to US Capitalism."

One of the side articles details the more conservative approach to banking following the world war and its origins. The story provides quite an education in the varied aspects of banking.

On Wall Street there are two principal kinds of bankers: Commercial bankers and investment bankers. The commercial banks, such as Chase and National City, make loans, accept deposits, finance foreign credits, buy government and state bonds. They also usually have a trust department which executes wills and acts as trustee. The investment bankers, such as Morgan Stanley and Kuhn, Loeb underwrite and distribute new security issues for corporations. They also have a brokerage department which buys and sells securities.

The Banking Act of 1933 made it illegal for one firm to act both as a commercial act and investment banking house. Until then, the two were often combined. In his triumphant days, J.P. Morgan, a banker, merged railroads and steel companies into nationwide corporations. In the 1920s, Wall Street made idols of men like Charlie Mitchell, chairman of National City Bank, who was also the greatest securities salesman in history and an adroit market manipulator. The 1929 crash exposed the dangers of these dual functions, With one hand, banks were taking deposits. With the other, they were financing new securities. When the business they were promoting failed, the depositors, security holder and the bank itself were in trouble.

Today the very nature of Wall street bankers has changed. In place of the speculators and market manipulator there are sound, deliberate investors who by choice as well as by law are more interested in government bonds than in a flier in market.

The Banking Act of 1933, also known as the Glass-Steagall Act, introduced banking reform and safeguards on deposits following the crash of 1929. Many of the provisions were also designed to reduce the amount of wild market speculation which was thought to be contributing factor to the collapse.

The Glass-Steagall Act passed after an ambitious former New York prosecutor, collected enough popular support for stronger regulation by bringing bank officials before the Senate Banking and Currency Committee to answer for the role in the crash.

In addition to the Banking Act of 1933, the Bank Holding Company Act was passed in 1956 and extended the restrictions on banks. According to this, bank holding companies owning two or more banks could no longer engage in non-banking activity and could not buy banks in another state.

Altogether, an impressive bit of banking regulation. The Banking Act of 1933 reduced the amount of free-wheeling risk-taking- with depositor's assets, I mean. And the Bank Holding Company Act clearly defined the role of banks and kept bank holding companies from becoming "too big to fail."

And you know something? It actually worked. Nations, which adopted such regulations and stuck to them when the rest of the world began to de-regulate, such as China and Turkey, have emerged from the latest crash, jolted but not devastated.

Another Fine Mess

So what happened? How did we come back in a full circle? Through a careful whittling away of the legislation through intensive and sustained lobbying by special interest groups, starting as far back as 1980 with the Depository Institutions Deregulation and Monetary Control Act.

This allowed banks to merge. Subsequent decisions by the Federal Reserve Board in 1986 and 1987, after the Board heard proposals from Citicorp, J.P. Morgan and Bankers Trust advocating the loosening of Glass-Steagall restrictions, further undermined the regulatory effects of the the Banking Act of 1933. 
For a full account of the various steps, see HERE. (The link is very enlightening)

The record shows a Federal Reserve Board, at the very least, flawed by its willingness to accept the demands of institutions to circumvent the laws were designed to regulate and control precisely those sectors.

Finally- perhaps inevitably- the Banking Act of 1933 was repealed in 1999 by the Gramm-Leach-Bliley Act. The legislation was signed into law by President Bill Clinton on November 12, 1999. (The role that Senator Phil Gramm played in this dismantling of regulatory protection has been cover extensively in another post.)
From there, it was a slow predictable march to the sorry mess of 2009.

Greed is Good?

What on earth could have persuaded, sensible people with all the wisdom a chastising experience as the Great Depression, to lift restrictions and to deregulate and repeal? The only answer seems to be the temptation of tremendous profits that de-regulation allowed financial institutions. In short, greed.

Much to their credit, Republican Senator McCain of Arizona and Democratic Senator Cantwell of Washington made a proposal for a return to the Glass-Steagall Act, specifically the distinction between commercial and investment banking. Ironically this regulation rollback to the 1930s is being called "Obama's banking reform", making it sound untested and potentially risky when a stronger case of risk by deregulation of the banking industry in the 1980s could- and should- have been made at that time.

Despite the crisis of 2008, banks, which have continued to rake in vast profits, have been strongly opposed to a return to the restrains of the Banking Act of 1933. Not surprising, is it?

As The New York Times reports:

The outlines of the Volcker Rule, one of the flagship provisions of the sweeping financial regulatory overhaul passed last year, will begin to take shape this week as regulators propose rules to limit the ability of most banks and Wall Street firms to use their own funds to buy and sell stocks, corporate bonds and derivatives.

For more information about the Volcker Rule, NYT gives a concise explanation of the reform.  
Wall Street will simply have to choose between being a source of dependable investment or a free-wheeling casino, but, it is a shame that we have to learn these lessons twice.

Update:

Mitt Romney has gone on record as wanting to repeal much of the reform legislation that President Obama and Congress enacted in light of the financial crisis of 2008. The Boston Globe reported in August of 2011:

Republican presidential candidate Mitt Romney has sharpened his critique of the financial regulatory overhaul signed by President Obama.

In response to the financial meltdown, Obama and Congress passed the Dodd-Frank bill, Wall Street reform legislation that enacted consumer protections, reformed some derivatives trading, and imposed new regulations on mortgage lenders and hedge funds.

In the past, Romney has criticized the bill for creating uncertainty in the financial industry and causing bankers and the financial service employees to pull back.

The lobbyist for the banking industry worked hard at watering down the legislation in any case and as a result, left many loopholes for financial institution to skate around regulations and oversight. 

From TalkingPointsMemo:

Dimon claims that the investment in question wouldn’t have violated the rule had it been in effect — he says the bets JPM made were meant to hedge against potential losses in other investments. But finance experts have cast doubt on that claim, and Dimon himself admitted that the incident will provide ammunition for the Volcker Rule supporters.

Politically, the latest financial disaster could create more doubt in the minds of the voters that the Republicans (in the form of Mitt Romney) is a little too eager to win the support of Big Banks and Wall Street and are setting up a repeat of the 2008 meltdown of the economy. 

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Related articles

• Volcker Rule To Restrict Banks' Proprietary Trading Contains Loopholes, Experts Say (huffingtonpost.com)
• Volcker Rule gets FDIC approval (money.cnn.com)
• AND NOW WE KNOW THE TRUTH ABOUT WALL STREET: It's Just Kids Playing With Dynamite (businessinsider.com)
• How J.P. Morgan Chase Has Made Case For Breaking Up Big Banks And Resurrecting Glass-Steagall - OpEd (eurasiareview.com)
• JP Morgan $2 billion loss stirs memories of 2008 crisis (csmonitor.com)
• Banks' Glass-Steagall Walls Quietly Rebuilt (Update 1) (jhaines6.wordpress.com)
• Wall Street, Romney, and Obama (crooksandliars.com)
• One Last Chance To Get Wall Street Reform Right (tpmdc.talkingpointsmemo.com)

The Sudden Death of the Living Wage : Mitt Romney Flip-Flop 1/3

by Nomad

Romney’s Double Back Flip

Last week Republican front-runner, Mitt Romney somehow managed to flip-flop from the frying pan into the political fire when he told reporters that he didn't fret about the poor because of the social safety net. He explained to a CNN reporter:

“I'm not concerned about the very poor. We have a safety net there. If it needs repair, I'll fix it.”

President as handy-man? Naturally, like every politician who finds himself in a pickle, he blamed the media for taking his statement out of context. Like his “corporations are people too” remark, Romney once again seemed unable to hear how out of touch he actually sounds. Until everybody else notices.