Daily Archives: May 23, 2012


Romney Has Public And Private Morality Upside Down

Romney Has Public And Private Morality Upside Down is another great little video from Robert Reich.

He’s got private and public morality upside down. He doesn’t want to regulate where regulation is necessary — at the highest reaches of the economy, where public immorality has cost us dearly, and will cost even more unless boardroom behavior is constrained. Yet he wants to regulate where regulation is least appropriate — at the level of the individual, in bedrooms and other intimate spaces, where private morality should govern.



The way I have always put it is “Republicans don’t want the government to touch their money, but their sex life is fair game. Democrats feel ok with the government touching their money, but they want their private parts left alone.”


How Did Mitt Make So Much Money And Pay So Little in Taxes?

Well here is the video I promised in my previous post, Why Obama Should Be Attacking Casino Capitalism — Both Romney’s Bain and JPMorgan. It’s not quite what I had in mind, but it is darned close.

In the post How Did Mitt Make So Much Money And Pay So Little in Taxes?, Robert Reich says:

Because the magic of private equity reveals a lot about how and why our economic system has become so distorted and lopsided – why all the gains are going to the very top while the rest of us aren’t going anywhere.

The magic of private equity isn’t really magic at all. It’s a magic trick – and it’s played on you and me.


Here is the note I sent to Robert Reich about this video, and how it compares to the video I’d like to see.

I liked the video “How Did Mitt Make So Much Money And Pay So Little in Taxes? “, but I was hoping for a video with just a slightly different emphasis.

This video would show how Mitt Romney takes over failing or nearly failing companies, strips out their assets, and then lets them go bankrupt. It is the same point you made, but I would show a bully forcing his way to the head of the line. He gets in front of the legitimate creditors and steals all the assets. He leaves them nothing when the bankruptcy judge gets to them.

You might even show how this theft from the legitimate creditors forces some of them into bankruptcy, so Romney can ride to the rescue and strip them bare too, the big bully.



Why Obama Should Be Attacking Casino Capitalism — Both Romney’s Bain and JPMorgan

I was thinking that Robert Reich would be the perfect person to come up with a demonstration animation to describe vulture capitalism.  I went to his web site to make the suggestion, and came across the interesting post, Why Obama Should Be Attacking Casino Capitalism — Both Romney’s Bain and JPMorgan.

I wish President Obama would draw the obvious connection between Bain Capital and JPMorgan Chase.

That way his so-called “attack” on private equity is neither a personal attack on Mitt Romney nor a generalized attack on American business.

It’s an attack on a particular kind of capitalism that Romney and JPMorgan both practice: Using other peoples’ money to make big bets which, if they go wrong, can wreak havoc on the economy.

It’s the substitution of casino capitalism for real capitalism, the dominance of the betting parlor over the real business of America, financial innovation rather than product innovation.

It’s been terrible for the American economy and for our democracy.

It is nice to know that he is on the same wavelength that I am, or vice-versa.  Independently, I have been writing furiously over the past few days on this very topic, trying to explain these very ideas.

There are hints on his blog that he might even have already made the animation, I seek.  Well, off to check those out.


Obama Campaign Misses The Point Of Its Own Attack Ads

The Boston Globe has the article, Obama campaign got donations from Bain employees.  This time, I am not going to take The Boston Globe to task for the article.  My complaint is with the Obama administration.

Once again the Obama campaign misses its own point in attacking Romney’s business practices.

“We’re not challenging the virtues of the private equity business, or Romney’s right to run his business as he saw fit, or even his right to run other businesses into the ground while turning a profit for himself and his investors,” Obama campaign spokesman Michael Czin said.

It is not an attack on the virtues of private equity that the ad attacks. It is the particular crimes that Bain has perpetrated in some well documented cases. They buy failing companies to strip out all the assets, such as pension funds, health care funds, and any hard assets that they can sell, and turn these assets into cash which they then pay to themselves. In other words they bully their way to the head of the line in front of the legitimate creditors in order to take the assets and leave only the liabilities.

The legitimate creditors who would receive 50 to 90 cents on the dollar in an ordinary bankruptcy proceeding get nothing after Bain Capital’s interference. Bain Capital walks off with the money that should have gone to the legitimate creditors. Bain Capital drives many of those creditors into bankruptcy, but probably not before Bain strips some of them bare, too.

Talking about all the crimes Bain did not commit does not absolve it of criminal responsibility for the ones it did commit. Even one serious crime in a life full of virtue, which is not Bain’s situation, is enough to land ordinary folk in jail.

It is too bad that the Obama campaign can’t make a straightforward explanation of this important point. I wonder if The Boston Globe can take any notice of what I point out above.

I have posted the above as a comment to the article on The Boston Globe’s web site.

I think that this act of the Obama campaign deserves the following merit badge:

My motto



Why Progressive Austerians do the Greatest Damage

In William Black’s excellent blog, New Economic Perspectives, he has written the post, Why Progressive Austerians do the Greatest Damage.

To many people, it seems paradoxical that conservatives target not the worst social programs, but the best.  There is no paradox.  Bad government programs are desirable from the right’s perspective – they discredit government intervention.  Good government programs pose an existential challenge to conservative memes, so they are the prime target for attack.

This is exactly the kind of paradox that falls under Greenberg’s Law Of Counterproductive Behavior, which states:

If you see a behavior that seems to you to be counterproductive, perhaps you have misunderstood what the actor was trying to produce.

I recommend Black’s article to you because it has many other interesting things to say besides the one I focused on above.

As an exercise to the reader, I suggest seeing if you can name the politicians who are most guilty of being progressive auterians.  Also ask yourself if you are guilty of being a progressive auterian.


JPMorgan’s “Wild, Crazy Insane Gamble” Puts Global Economy at Risk: Bill Black

The Daily Ticker on Yahoo his another segment with William Black.  This one is headlined JPMorgan’s “Wild, Crazy Insane Gamble” Puts Global Economy at Risk: Bill Black.

More importantly, Black notes JPMorgan is betting on “derivatives of derivatives” and is by far the largest player in the market for the CDX Investment Grade 9 and CDX High Yield 11, the derivatives underlying the trade that earned Bruno Michel Iksil the nickname ‘the London Whale.’

“They didn’t just gamble, this was a wild, crazy insane gamble,” says Black, who calls JPMorgan “the world’s largest gambling operation in financial derivatives” in his latest blog at New Economic Perspectives.

To be sure, a $2 billion loss is just 0.1% of JPMorgan’s assets, as of March 31. JPMorgan has suspended its share buyback program and would appear to have ample resources to cover the losses, even if they were to double or triple or even quadruple.

But that’s not the point, according to Black.

“We don’t want any federal insured entity…to be speculating in financial derivatives. That’s just nuts,” he says. “It’s really disastrous when you’re talking about an institution like JPMorgan. It will sooner or later have a really bad year…when it has the really bad year, we will all end up having to bail them out or having another global crisis.”

Given its size and outsized bets on credit derivatives, “JPMorgan poses a clear and present danger to the global economy,” according to Black.

I don’t suppose William Black could have put it in any more stark terms than that last sentence above, emphasis added by me.


Greece Is Tearing Europe Apart Politically, Socially and Economically: William Black

The Daily Ticker on Yahoo has the story and interview headlined Greece Is Tearing Europe Apart Politically, Socially and Economically: William Black.

I think the headline is slightly off in that it might give you the impression that William Black thinks Greece is at fault here.  More to his point is the remark:

“Austerity…is an inconceivably awful policy,” Black says. The European periphery nations are suffering great depressions — not recessions – he notes, and the region’s best and brightest are emigrating from Europe because of high unemployment and economic uncertainty.

One thing about William Black, a former senior financial regulator and author of the book The Best Way to Rob a Bank is to Own One, he doesn’t mince words.