I received an email from Alan Grayson, If you want a revolution, you’re going to have to do something about it.
Of course it is a fund raising email, and if you want to support Alan Grayson, I urge you to follow the link.
I mainly post this here as another explanation of what it takes to have a Bernie Sanders’ type of political revolution. You are going to have to do something about it.
New Economic Perspectives has several articles on this topic, the first is Announcing the Bank Whistleblowers United Initial Initiatives. The second one, An Explanation of the Bank Whistleblowers United 60-Day Plan, is included at the end of the first one. There are two other documents in the set.
Here is what William K. Black wrote in the introduction of the first document.
I am writing to announce the formation of a new pro bono group and a policy initiative that we hope many of our readers will support and help publicize. Gary Aguirre, Bill Black, Richard Bowen, and Michael Winston are the founding members of the Bank Whistleblowers United. We are all from the general field of finance and we are all whistleblowers who are unemployable in finance and financial regulation because we spoke truth to power and committed the one unforgivable sin in finance and in Washington, D.C. – being repeatedly proved correct when the powerful are repeatedly proved wrong.
This may be a good litmus test for Presidential hopefuls. If I were a betting person, I would bet that Sanders would back most of these proposals, and Hillary would claim her experts tell her not to. (Those experts being from the banking business.)
Naked Capitalism has the article Are Economists in Denial About What’s Driving the Inequality Trainwreck?
A new paper by economist Lance Taylor for the Institute For New Economic Thinking’s Working Group on the Political Economy of Distribution takes on the way economists have looked at wealth and income inequality.
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LT:The existing social order does not necessarily guarantee that the rich will get richer (remember Keynes on the essential uncertainty of the future). But even if they do, a stiff tax on capital gains could be used to build up a socially-oriented wealth fund that would help offset that.
Look at Norway’s “oil fund,” which takes a cut of petroleum revenues and invests the money while giving a small annual pay-out from its investment returns. An example closer to home is California’s CalPERS retirement fund. The key point is that such funds can save at a higher rate than wealthy households, amassing market power and potentially using capital income for social purposes.
In the labor market, real wages of employees have lagged productivity growth, which is why the profit share for the boss has gone up. Outsourcing has played some role, but policies and legal interpretations (think of so-called “right to work” legislation and attacks on public sector unions) that reduce labor’s bargaining power have been more important. Recreating that power could reverse the trends and slow the accumulation of wealth. Our studies and others suggest that simply raising taxes on the rich and transferring the proceeds downward in the income distribution will not have a large immediate effect on distribution, but the impacts could cumulate over time.
It’s possible to reduce U.S. wealth and income disparity, but reversing the trends of the past 30 or 40 years that got us there will not be easy or quick.
Of course I would like this article. It substantiates a lot of what I have been writing on this blog. Just because I suffer from confirmation bias, doesn’t mean that the article is wrong, though. It is just possible that my ideas really are close to correct.
The talk about Norway’s “oil fund” demonstrates what I think are the benefits of having large parts of the Social Security Trust Fund invested in the stock market. California’s CalPERS retirement fund is just another example. Admittedly CalPERS management has gone off the rails a bit in recent years as documented by the Naked Capitalism web site. That just means we need to develop better control mechanisms for the Social Security Trust Fund when it gets into stock market investing.
Search this website for the many articles I have posted on investing Social Security in the stock market.
Naked Capitalism has the article Investors Piling into Illiquid Assets to Avoid Discipline of Market Prices.
Now the entire point of illiquid investments is that they supposedly don’t go boom in such a dramatic way. But the crisis just past showed that they lead investors to underestimate the risks of those strategies and overdo them in a very big way. And the undue enthusiasm for investments with flattering valuations evident in the BlackRock survey suggests the odds of a recurrence of bad outcomes, meaning major losses, is high.
I was wise enough to resist the dot com bubble which took quite a few years to blow up in people’s faces. This article mentions one of the things that I observed at the time.
One of the factors that keeps pushing investors into greater risk taking is competitive pressure. If your performance lags, even if it is because you are making better risk/return decisions, you will lose assets (and if you are at a big firm, you will be replaced). Yet we see remarkably little impetus to change a system which rewards the fund managers and gatekeepers (who have a particularly powerful role in keeping this system intact) since they earn….annual fees! A classic “And where are the customers’ yachts?” problem.
It was so discouraging to see wise mutual fund managers being replaced by ones that were willing to take unwarranted risks.
I am not touting my enduring superior wisdom. In the real estate bubble I was fooled into thinking I was taking less risk than I was. It wasn’t disastrous for me because I did at least maintain some diversification. However, I am glad to see article like this one to remind me to stick to my plan, and not get drawn into false senses of security. The strategies that stand the test of time, are the ones that have passed that test for good reason. History has shown over and over again that strategies that claim to beat the market ultimately fail to do so. They usually fail in dramatic ways if you wait long enough for the final outcome. More importantly, you never know very much in advance when the final outcome is about to happen.
The ABA (American Bar Association) Journal has the article Will those who led the financial system into crisis ever face charges?
The article is about William K. Black.
Black’s expertise long preceded the scandal at hand, making his defense testimony in U.S. v. Charikov all the more ironic. He made his bones prosecuting fraud back in the savings and loan crisis during the 1980s and early ’90s. As a senior financial regulator, he was a leader in bringing criminal and civil cases against individuals to clean up a then-unprecedented scandal involving officials looting their own financial institutions, largely through self-dealing and extreme risk-taking. More than 1,000 were convicted, many of them high-level.
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For years the DOJ has come under withering criticism for not going after high-level executives and other officials in top banks and lending institutions. Black put it succinctly while discussing the Sacramento acquittals: “They’ve been chasing mice—in this case Russian-American mice—while watching the lions roam free.”
Even though I am a huge fan of William K. Black, I learned a lot about him and the 2008/2009 Financial crisis from reading this entertaining article. If you have not been following this as closely as I have, you might learn a lot about how the system is rigged, and which current Democratic Presidential candidate is likely to do something about this and which one is not.
There is a hint of an answer in my previous post Hillary’s Record on Regulating Wall Street Amounts to a Non-Confidence Vote. Bill Clinton’s statements to the S & L Regulators when Clinton took office is what convinced William K. Black to resign as a senior regulator.
The Real News Network has the interview Hillary’s Record on Regulating Wall Street Amounts to a Non-Confidence Vote.
Former regulator Bill Black and Public Banking Institute founder Ellen Brown say Hillary’s track record gives no indication that she will fulfill any promise in her 2016 campaign to implement regulations on Wall Street
If you don’t watch this video, you won’t fully appreciate the Clinton’s horrible record on bank regulation, bankruptcy, and shafting the middle-class.
When I tell people why I am so dead set against Hillary Clinton, there is no way I can tell people this information as well as Bill Black does.
Pay particular attention to what Bill Black says about his own, personal experience with what Bill Clinton told him. That certainly is more powerful than anything i could possibly say. Bill Black resigned his job as a bank regulator over what Clinton said.
Al Jazeera on YouTube has the video Bernie Sanders – Talk To Al Jazeera.
Published on Jan 15, 2016
Democratic presidential candidate, Senator Bernie Sanders spoke with Joie Chen about his thoughts on income inequality, the health care debate, and the political gridlock on Capitol Hill.
This is a great interview. I think it may have been recorded when Bernie Sanders was still the Chairman of the Senate Veterans Affairs Committee.
On an absolute scale the interviewer would be rated as passable, but compared to today’s corporate media interviewers, she is far superior. She is still laboring under the common misunderstanding of how money works and how the US government funds its work, and they never get to the promised explanation from Bernie Sanders, but what they do cover is terrific.
The Fiscal Times has the article What the Liberal Attacks on Bernie Sanders Are Really About.
“Those wondering why Warren hasn’t endorsed Hillary Clinton yet should consider whether it’s because Clinton and her minions are delivering a mortal wound to the cause of Warren’s life.”
When I have to have this argument in a meeting of the Sturbridge Democratic Town Committee, you have to know that even the wealthy Democrats hate to see the system get unrigged. When they supported Elizabeth Warren for Senator, maybe they thought her ideas would stay in Massachusetts where they could safely do no harm to the wealthy.
I am not wealthy, but whatever little harm Elizabeth Warren and Bernie Sanders’ ideas could do to me, they will be less painful than the pitchforks from the poor who mistake me for their enemy.
I was thinking of how Hillary Clinton might express herself about some of the same things that Martin Luther King, Jr. did. Here is just a sample of the possibilities. What quotes come to your mind, and how might Hillary Clinton turn them into something more practical?
I can’t find an article to point to that is written by an “authority” that will make the point I want to make. I’ll just have to write it myself.
To start a (political) negotiation, ask for at least as much as what you want. Asking for anything less is the road to failure. The discussion on single-payer health care is the current example that is most important.
It is easiest to discuss this in terms of the failure to negotiate that brought us to Obamacare. Many of the “experts” wanted a single-payer, Medicare-for-all system. Actually, the article Some Experts, Like Krugman, Supported Single Payer Until Bernie Sanders Put It in His Platform provides the evidence.
Apparently the political calculus was that we couldn’t get a single payer system passed into law. So let’s just go for a public option. Surely, even the Republicans couldn’t be against that. It is merely an option that would compete against private insurance. Republicans at least pay lip service to the idea of competition in the free market. Well, the Republicans fought tooth and nail against the public option. The opposition was so fierce that Obama dropped the public option very early in the campaign for health care reform. We didn’t end up with what we wanted, and we were even afraid to fight for our fall-back position.
So, to me, the lesson learned is not to negotiate with yourself before you even take the negotiation to the opposition. Just be brave enough to ask for at least what you actually want. Notice that I say “at least”. Even that is giving in before you start. You really need to ask for more than what you want to have any chance of getting what you want.
Here is an excerpt from the article mentioned above.
Ezra Klein, 2009, interview with Sanders
http://voices.washingtonpost.com/ezra-klein/2009/06/will_single_payer_supporters_h.html
[Klein] Lastly, you’re the author of one of my favorite pieces of legislation: The bill to create a prize process for pharmaceuticals. Want to say a word on that?
[Sanders] That makes single payer look like a conservative bill! [Laughs] All that that does is take on the entire pharmaceutical industry and say that everything they’ve been telling the world for many years is simply not true.
Bernie Sanders knows this lesson in Political Negotiation 101. Ask for something so outrageous, that what you actually want seems conservative by comparison.
The trouble with this knowledge of negotiation when it comes to a political negotiation where you need public support is that first you have to get public support. If, in this negotiation process, you already start to bargain down from what you want, you end up with an Obama type negotiator. The public has to learn the process of negotiation so that they don’t demand that their leadership bargain down just to get the public on board. Hillary Clinton and her team have already taken us too far down the road away from what we really want.
The mere fact that I have to explain this in public is already a step in the wrong direction. I’d rather not have to repeat this explanation in public.