Free speech!

Hats off to some intrepid commentators

We are going through unprecedented troubled times and the way ahead looks very uncertain.  The whole world could be participating in the ‘lost decade’ that Japan experienced previously.

But this article is not about doom and gloom!  It is about recognising the commitment to open and honest reporting being undertaken by (at least) these three  individuals.  Three commentators that this author follows in admiration and awe.

Learning from Dogs has nothing like the following of James Kwak, Yves Smith and Karl Denninger but the LfD authors do have an inkling of the work involved in writing not one but often several articles each day.  It is a huge commitment.

James Kwak

First James Kwak of Baseline Scenario.  Simon Johnson is, perhaps, the more well-known of this duo that comprise Baseline Scenario but it is James that puts in the leg-work.  Here’s a taste of a recent article from James:

Radio Stories

I spend a lot of time in the car driving to and from school, so I end up listening to a lot of podcasts (mainly This American Life, Radio Lab, Fresh Air, and Planet Money). I was catching up recently and wanted to point out a few highlights.
Last week on Fresh Air, Terry Gross interviewed Scott Patterson, author of The Quants, and Ed Thorp, mathematician,  inventor of blackjack card counting (or, at least, the first person to publish his methods), and, according to the book, also the inventor of the market-neutral hedge fund.

Large chunk snipped ……

I finally got around to listening to Planet Money’s interview with Russ Roberts from December. Russ Roberts and I are pretty sure to disagree on almost any actual policy question. But what I liked about his interview was that he basically admitted that policy questions cannot be settled by looking at the empirical studies. On whether the minimum wage increases or decreases employment for example, he says that he can poke holes in the studies whose conclusions he doesn’t agree with, but other people can poke holes in the studies he agrees with. In Roberts’s view, people’s policy positions are determined by their prior normative commitments.

I don’t completely agree. I don’t think that these questions, like the one about the minimum wage, are inherently unanswerable in the sense that the answer does not exist. But I agree that empirical studies are unlikely to get to the truth, particularly on a politically charged question, because there are so many ways to fudge an empirical study. As one of my professors said, there are a million ways you can screw up a study, and only one way to do it right. But I agree with the general sentiment. We are living in an age of numbers, where people think that statistics can answer any question. Statistics can answer any question, but they can answer it in multiple ways depending on who is sitting at the keyboard.

By James Kwak

Yves Smith is responsible for Naked Capitalism.  It’s one of my daily ‘must-reads’ and her daily links often help this

Yves Smith

author find the inspiration for a Post on this Blog.  Her daily Antidote du jour often has me gasping out loud.  Here’s Yves Antidote du jour  from the 12th February, the day that I wrote this Post:

(hat tip reader Kevin)

Anyway, also on the 12th, Yves wrote a stunning article about Steve Schwarzman, founder of the Blackstone Group along with Peter Peterson.  Here’s a flavour of Yves Smith:

Schwartzman says kowtow to banks or they will strangle the economy!

Can someone shut these banking industry narcissists up?

The one and only time I met Steve Schwarzman was in 1986, when he and Pete Peterson had just started the Blackstone Group. I was a manager (meaning a mid level working oar) at McKinsey. We had teed up a deal and were assisting our foreign client in hiring an investment banker. This transaction was sufficiently sexy that Felix Rohatyn wound up working on it personally.

But what did we get when we presented the idea to Peterson and Schwarzman? We explained why we came to see them. We got 40 minutes (I kid you not, I checked my watch) of name-dropping by Peterson, of all the senior folks he knew in our client’s country. But that wasn’t why our client came to see him; had he bothered to listen, the matter at hand was in the US.

Then he and Schwarzman spent the next 20 minutes talking about Blackstone, and they make it abundantly clear how jealous they were of leveraged buyout king Henry Kravis (at the time, Peterson and Schwarzman were mere advisor types, their looting wealth creating opportunities were far more limited than if they had oddles of investor and bank money to play with).

Yves finishes off her article with this:

The last thing the public should do now is turn down the heat on bankers. We have just been through the greatest looting of the public purse in history. We cannot relent until we understand how it happened and have put new rules in place to prevent its recurrence. People like Schwarzman need to understand that the populace is increasingly understanding that what has been depicted up as reform is mere industry serving pablum. Even if Schwarzman is incapable of seeing it, continued pressure will lead some of his colleagues to recognize that they need to embrace change or else wind up in the dustbin of history.

Karl Denninger

Finally, I turn to Karl Denninger of The Market Ticker.  Karl’s prose is often pretty blunt but while my own English cultural background may cringe at times in the face of Karl’s powerful ‘americanism’, I very often find myself nodding in strong agreement with his opinions and conclusions.

I have long felt that the burdens foisted by Governments on the peoples of most of the free Nations has nothing to do with party politics – they all seem to display equal measures of arrogance, incompetence and self-serving interests!  So this particular piece from Karl (reproduced in full) had me metaphorically cheering from the rooftops.

Partisan Attacks WILL NOT Solve The Problem

Ann Coulter, one of the most-partisan commentators out there in the media, had this to say recently:

How about just punishing the guilty? The Democrats can’t do that because the list of Wall Street’s biggest offenders may turn out to be eerily similar to the list of Obama’s biggest campaign contributors.

How about punishing the guilty Ann?  How about punishing one JOHN JACKASS MCCAIN, who Henry Paulson personally credits for being the reason TARP passed?

“As he was falling behind in the polls it would have been very easy for him to demagogue that issue, playing the populist card,” he said. “And if he had come out against what he were trying to do we wouldn’t have got it I believe. We wouldn’t have had the TARP legislation passed and we would have been left defenseless.”

Oh wait!  Henry Paulson was a Republican Treasury Secretary too!

Employees from Goldman Sachs gave more to the Obama campaign than any other organization except the University of California — with Citigroup and JPMorgan Chase quickly following in sixth and seventh place.

Absolutely correct.  Goldman gave money to the winner.  Big stinking surprise – NOT.

Whatever Obama has in mind for punishing the financial industry, I promise you, he won’t punish his friends. After JPMorgan CEO Jamie Dimon took a $17 million bonus this week, and Goldman CEO Lloyd Blankfein got a $9 million bonus, Obama said he didn’t begrudge them their bonuses, saying, “I know both those guys.”

Well that may well be true, but can you point to anything that Republicans did in their eight years in office prior to President Obama that actually reined in the outrageous fraud and abuse served up upon the world’s investors – not to mention everyday Americans – by Wall Street?

Let’s see…. I think I’ll list a few things that the Rethuglicans have done to our nation, since Ann has done such a great job of bagging on the Democraps.

“Bankruptcy Reform” – but only for “the little people” – that is, you and I.  We can’t declare bust if we have a good income and discharge all our debts – but corporations still can!

State laws prohibiting predatory lending: Who directed their justice department to file suit to block these laws? That would be George W “I hope you get bit by a snake on your ranch” Bush, right?  Yep. Ann charges:

Obama, like the rest of his party, is an ideologue who doesn’t understand or particularly like the free market. He fundamentally believes in the efficacy of the welfare state, whether the beneficiary is a layabout single mother or a rich Wall Street banker.

Oh really?  Obama voted against the bankruptcy screw job Ann while he was a Senator.  You forget that, right?  Yes, he didn’t have much Senatorial record, but he did have that to his credit.

Further, “the free market” that Ann promotes under “Rethuglican” administrations turned into “I can rape you so long as I wear a ski mask and you can’t identify me.”

That’s the Republican’s view of a “free market.”

I’m not saying that the Democrats have a particularly better view of it, by the way.  They’ll just stick you up face-first, stuffing the gun up your nose while having their way.

In either case you get violated but at least with the Democrats it seems you get kissed first – even if the kiss is delivered by cold steel.

But instead of AIG going bankrupt and Goldman taking a hit, the U.S. taxpayer made good on AIG’s securities insurance. In a deal arranged by former Goldman CEO and current Obama BFF, Hank Paulson, Goldman ended up being paid — by you — an astonishing 100 cents on the dollar.

Uh, who’s Treasury Secretary was Henry Paulson again Ann?  Have you gone insane or did you just need to avoid bagging on the progenitor of this train wreck – George W. Bush?

More to the point, why didn’t Bush fire Paulson in September – or even sooner?  He was still President then, you know – two little words that he refused to speak Ann.  One can only conclude that Bush was perfectly happy with Hank’s looting – er – “performance.”

See, it was Bush’s SEC that admitted Hank Paulson (while he was running Government Sachs) to their august chambers and then, at his request, removed the leverage limits that formerly constrained investment banks.  Bear Stearns and Lehman Brothers both collapsed due to this excessive leverage – they each had more than double the former legal limit when they blew up. But for the BUSH SEC decision, neither would have collapsed and, more importantly, the last three years of the Housing Bubble could not have occurred.

Those last three years, by the way, were the most toxic.  They also featured the famous Goldman “Abacus” CDOs that weren’t really backed by anything other than a hedge fund deciding it wanted to short residential subprime – of course that little fact wasn’t disclosed clearly and promiscuously to the poor bastards that were unfortunate enough to believe that Goldman was actually selling valuable securities to them in the form of those Abacus tranches!  They got violated too, courtesy of the great Republican “Free Market” that Ann feels is so defensible.

Now it’s a bit unfair to just bag on Goldman, although they’re certainly a popular whipping boy.  See, they were hardly alone.  Countrywide “Fast and Sleazy” Financial anyone?  Got a pulse?  Buy a house!  Lehman, Bear, Countrywide, New Century and dozens more – all ranged the American land, picking the pockets of millions through trickery, deceit and worse with explicit support and active legal interference run by The Bush White House.

How about Ben Bernanke?  Who appointed him?  Oh, that would be George W. Bush, right?  Do the limits of The Federal Reserve Act mean anything?  Apparently not – if you’re a Republican.

Ann finishes with this:

Republicans should defend any investment houses that never benefited from a government bailout. But anyone who took huge gambles, lost and got bailed out with taxpayer money should be tortured and then shot, miraculously brought back to life, tortured some more, then shot a few more times.

When Ann is prepared to begin her list with Hank Paulson and Ben Bernanke, along with John McCain (who Paulson asserts could have single-handled stopped the bailouts) I might tend to agree with her.

Her web page runs an ad for a T-shirt that says “I’d rather be waterboarding.”  I can’t agree more.  We can start with the aforementioned jackasses who destroyed The American Economy, beginning with the top of the pyramid – those regulators who, under the Bush White House, watched investors and ordinarily Americans alike be serially violated by every Wall Street Bankster and their minion scammers scattered across the “fruited plain”, denuding it to feed their yachts’ thirst for fuel – and the new house in The Hamptons.

Oh, and Ann might want to consider that had RINO McCain actually done this he’d have 1600 Pennsylvania Avenue stamped on his envelopes – as his return address.

We will not solve this problem until we put away the partiscam garbage that people like Coulter run and face reality: BOTH political parties are equally guilty in this regard.  Both embraced the mathematically impossible for more than two decades as a means of disguising and justifying their profligacy when it comes to public spending (Medicare Part D anyone?), either failing to understand or simply ignoring the realities of compound growth and interest.

Now, trapped in a box of their own design and construction Republicans and Democrats alike are trying to eat one another in a partisan flame-fest that accomplishes exactly nothing other than making the problem worse.  Neither is willing to accept that we have made promises we cannot keep – and thus we must be straight with The American People and tell them we are breaking them so they can prepare to be on their own in this regard.  Neither will cut the cord from Wall Street to Washington DC – there are 200+ year old fraud statutes that are more than sufficient as the predicates to bring charges for the most-egregious acts of these “Masters of The Universe” during the bubble years – we need no new laws, the existing, old-fashioned ones would do just fine.

No, President Obama’s plans, along with those of Harry Reid and Nancy Pelosi will not make things better.  But neither will claims that The Republicans have a “better idea.”

I’ve yet to hear either party stand up and say “if you ripped someone off during the last decade, no matter how you did it, you are going to jail!” as the central theme in their campaign, yet that is exactly what we need to hear – across this land – if we are to reclaim this nation from the brink of a financial collapse that still looms large to this day.

Well done the three of you – thank you for your efforts in educating so many thousands of people.

By Paul Handover

One thought on “Free speech!

  1. Many are the ants and work they do all day long. Many are the termites, and work they do all day long. Few are the anteaters, and they work less, but eat better. Few are the chimps, but they fish the termites.

    Never should we lose from sight that quality is all and quantity much less. BTW, that is what the shortcomings of empirical studies show. Ultimately being right is everything human, and being much is much less.

    The internet is a flood, and only great captains will sail that sea of mind to a port worth visiting.



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