The New York Times, parent paper of The Boston Globe, has the article Bank Regulators Under Scrutiny in JPMorgan Loss. I found the article at Truth-Out.org.

Some politicians — including Senator Bernard Sanders, independent of Vermont, and Elizabeth Warren, a Democrat running for Senate in Massachusetts — argue that Mr. Dimon’s position at the New York Fed further compromises regulatory oversight. “Mr. Dimon should not be in a position to have such influence on a major regulator,” Ms. Warren said. When asked on PBS’s “NewsHour” last week about JPMorgan, Treasury Secretary Timothy F. Geithner said that regulators needed to “be above any political influence.” He did not say Mr. Dimon should resign from the Fed, but he acknowledged that the perception of a conflict was “a problem.”

I wonder if the junior Senator from Massachusetts has a position on this issue?  Maybe he is too busy doing genealogy on Elizabeth Warren.  That is certainly easier than understanding banking at the level that Warren does.

You and I know why The New York Times has not published Scott Brown’s opinion on JPMorgan.  Come to think of it, The Boston Globe hasn’t said much about his opinion either.  The Globe seem to have its own fish to fry, and it does not relate to the major concerns of its readers.

This is from the pit bull of a newspaper The Boston Globe, Menino criticizes Brown’s focus.  The subhead is, “Says Warren’s heritage is not important issue”

On a day when Senator Scott Brown sought to fan further questions about Elizabeth Warren’s professed Native American heritage, Boston Mayor Thomas M. Menino, who has not been shy about praising Brown, made clear he is fed up with the issue.

“I think she has come clean but nobody has let her off the hook,” Menino said. “It’s not relevant at all in the campaign. Let’s talk about the real issues: education, housing, crime. Those are the real issues we should be talking about. This is one of the issues that you [use to] try to divert as a candidate because you can’t deal with the real issues.”

At a time when JPMorgan is making losing bets with taxpayers money to the tune of perhaps $5 billion and might pose an existential threat to the world financial system, Elizabeth Warren focuses on trying to restrain JPMorgan and Scott Brown focuses on Native American heritage.

I think this must be a sign that Brown’s got nothing to run on.  If I were JPMorgan, I’d pour money into Brown’s campaign and perhaps even hire some private investigators to dig up dirt on Warren if they can find any.  It is clear to the big banks that Elizabeth Warren is a person who must be stopped from gaining any power.

You also have to wonder at the resources The Boston Globe is devoting to this story.  When was the last time they did any investigative reporting that turned up anything of importance on an issue of importance?  I realize that when you devote this much energy on investigating this story, that a newspaper has to get some return on it investment.  They have to try to turn this into a story with legs, or else admit that they have wasted their time and yours.  However, even if they can’t face the facts, their readers can.

If it weren’t for the funnies, I might give up my subscription to The Boston Globe.  Although maybe they are trying to feed my prime motive for subscribing by just extending the funny pages to their news section.

Of course, Scott Brown is not going to let this go. Fortunately, I am not in charge of the Elizabeth Warren campaign, or I would start asking Scott Brown why he refuses to name the person who, according to Brown’s book, molested him when he was at summer camp. He needs to come clean, and stop protecting a child molester.

MSNBC has the story ‘Fair and square’ pricing? That’ll never work, JC Penney. We like being shafted.

I might add that we like our politics that way, too.

To be a little less cynical, I’ll include this quote from the MSNBC story.

To oversimplify for a moment, here’s Penney’s problem. They told the world that retailers only offer their best prices during crazy sales, and Penney stores would no longer host them. Sensible consumers apparently took that information to heart and decided to simply wait for such sales at other stores. As an added benefit, Penney lowered consumers’ search costs, because they now knew they didn’t need to bother driving to a Penney’s store anymore.

I have seen successful attempts at carrying off the policy of un-“shrouded price tags”.  In Dallas, Texas there was a company called Three Day Tire Store.  It opened only three days per week.  It ran massive newspaper adds full of consumer advice on buying tires.  It drew massive crowds of customers, including me.  I was happy with my purchase as compared to the shrouded incompetence I experienced buying tires from Sears.  I am not so sure about the longevity of the company, though.  In the end, there may just not have been enough consumers that wanted an education.

USA Today has actually chosen a different sound bite to headline this story.  They use Obama: Romney offers ‘cowpie of distortion’.

I prefer the headline I chose.  According to President Obama, Mitt Romney went to Iowa and described the current slow down in government spending as a “Prairie Fire Of Debt”.  He then described Romney’s prescription as putting out the supposed prairie fire of debt by using the gasoline equivalent of an extra $5 trillion in tax cuts.

In describing the costs and benefits of Romney’s business practices, you can tell by all I have written about them on this blog, that I would not be and am not nearly as charitable about them as President Obama is.

The article by L. Randall Wray, Should Growth Drive Jobs, or Jobs Drive Growth?, is largely made up of a long quote from the article Jobsworth by Edward Hadas.  I give you links to both articles because I think each one adds something worthwhile reading.

Here is part of the quote that originates with Hadas.

Politicians and other leaders have watched the job destruction with something like horror. They shouldn’t have been surprised. The unending fight against inefficiency leads to a natural employment asymmetry. As technology advances, businesses and governments usually find it easier to cut than to add jobs. Some businesses can progressively expand headcount, but in tough times there are more employers looking for ways to use less labour.

Most politicians and economists believe that GDP growth is the cure. It is considered not only the highest economic good but also the best way to create jobs. In search of higher output, governments run huge deficits, while central banks pass out money for free. The policymakers often invoke the name of John Maynard Keynes. But they twist the great economist’s ideas. As Pavlina Tcherneva points out in a recent article in the Review of Social Economy, Keynes thought “the real problem” governments should address during the Great Depression was “to provide employment for everyone”. In Keynes’s view, output follows jobs, not the other way around.

Keynes’s own preferred solution was for governments to organise projects with a high “elasticity of employment”. “There are things to be done; there are men to do them,” he said. “Why not put the two together? Why not put the men to work?” The best way for governments to create jobs quickly is still to hire people directly. A look at the dilapidated infrastructure of the United States suggests that Keynes’ prescription is still relevant.

Enthusiasts for small government might want to privatise such programmes, but they should still agree with the true Keynesian principle: it is better to pay people to work than to pay them not to. Programmes which protect the unemployed and disabled serve a valuable social purpose and payments for early retirement may be defensible, but programmes which create jobs are far preferable to either.

The concept of “natural employment asymmetry” is a nice encapsulation of an idea that is kind of obvious when you are forced to think about it.  However, the encapsulation into a simple ideas allows us isolate the phenomenon so that we can focus on the causes and possible cures.  I am sure this isn’t news to many experts in the field, but it is eye opening for me.

The article is also a reminder of what John Maynard Keynes really thought was the most direct solution and exactly why he would think that way.  This is also eye opening to me who has a very minor undergraduate level understanding of  what Keynesian economics is all about.  In another 40 years of reading a bit here and a bit there, I might be able to get to a Ph.D. level understanding.  That doesn’t stop me from trying to explain things to people who are varying numbers of years behind me in understanding.

Oh, by the way, now that I have explained to you exactly what my opinion is worth, I can give you my  answer to the question, “Should Growth Drive Jobs, or Jobs Drive Growth?” I do not think it should be an either/or proposition.  I think the lesson learned should be that we ought to attack the problem from both directions.  The value of the article is to remind us of one of the directions that we seem to have left out of what we are trying.

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.”

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.

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.

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: