“I feel that capitalism has a very bad press with the pseudo-leftists who clog our best college campuses and that in point of fact capitalism has produced modern individualism and feminism. Modern capitalism has allowed the birth of the independent woman who is no longer economically dependent on her husband. I despise the sneering that our liberal humanists do about capitalism even while they enjoy all of its pleasures and conveniences. I just despise it.”
— Camille Paglia
Just to show you that here at The Mind-Body Politic we truly are on a mission to do things differently, we’re happy to turn our X-ray vision on those who wear the same set of blinkers as we do (i.e., they call themselves libertarians).
You hear the right complain about George Soros’ funding of the Open Society and over groups like Move On.org. Fair enough. But behind many libertarian groups is an even richer man, one most people have never even heard of – Charles Koch. In 2008 Koch was the 37th richest man in the world, though he’s come down since. Koch’s business methods have had their share of criticism, from within the business – indeed, from within the family, from brother Bill.
The Kochtopus’ tentacles reach far and wide, as this map at Muckety shows.
The map isn’t clear when reduced for this blog, so I’ll mention some of the more important: The Cato Institute, Reason, The Heritage Foundation, The Federalist Society, the Acton Institute…. which doesn’t necessarily compromise everything these worthy institutions do or say (and I like a few of them a lot). But it’s worth keeping in mind when you find libertarians whom you otherwise like suddenly toeing the statist line on something. They could be speaking their minds, of course. But more likely, their funding is talking….
“Bernard Madoff’s brother Peter gets access to $10,000 a month for living expenses under an agreement approved Friday in a lawsuit accusing him of swindling a college student.”
“With a combined $2 trillion under management, the hedge fund industry is coming off its richest year ever — a feat all the more remarkable given the billions of dollars of losses suffered by major Wall Street banks.
In recent months, however, scores of hedge funds have quietly died or spectacularly imploded, wracked by bad investments, excess borrowing or leverage, and client redemptions — or a combination of those events.
“To some degree it’s a very gigantic version of Las Vegas,” said Gary Burtless, an economist at the Brookings Institution.
As Alpha’s list shows, managers who reap big gains one year can lose the next.
Edward Lampert, the founder of ESL Investments and a member of the 2007 Alpha list, was absent this year. His fund fell 27 percent last year, according to Alpha. About 60 percent of ESL’s equity portfolio is invested in Sears, whose shares plunged 40 percent last year. ESL is also a major holder of Citigroup, whose abysmal performance matched that of Sears.
A manager who ranked high in the 2007 list and fell off in 2008 was James Pallotta of the Tudor Investment Corporation, who was 17th last year and earned $300 million. Mr. Pallotta’s $5.7 billion Raptor Global Fund fell almost 8 percent last year, according to Alpha.
A few who did not make the cut still made buckets of money. Bruce Kovner of Caxton Associates and Barry Rosenstein at Jana Partners didn’t make the top 50. But Mr. Kovner earned $100 million, and Mr. Rothstein earned $170 million, according to Alpha. Spokesmen for the hedge fund managers either declined to comment on Tuesday or could not be reached.
Since 1913, the United States witnessed only one other year of such unequal wealth distribution — 1928, the year before the stock market crashed, according to Jared Bernstein, a senior fellow at the Economic Policy Institute in Washington. Such inequality is likely to impede an economic recovery, he said.”
More at the New York Times.
Comment
Inequality in a free market is the result (among other things, of course) of different levels of competence and of capitalization. It’s not the essential problem. If it’s increased tremendously, it’s because we’ve also been fiddling with the market tremendously, ostensibly to make things better, but with the opposite result.
But the crash has now given a lot of people a platform to vent.
The very people who called the market wrong (Citi, Goldman and their buddies in the regulatory business) are going to blame their incompetence on lack of regulation…. and make successful managers pay a price. (Note that it was Goldman and Citi managers in government who helped pushed many deregulatory initiatives and changes in leverage requirements, in the first place).
I’m all for transparency, following the rules, and proper regulation.
But let’s face it. Where we are now, more regulation isn’t going to protect the little guy or a small business from fraud. The little guys are already crushed by rules and regulations….and they’re still being defrauded. It’s just going to give one set of big money managers yet another weapon they can use against another set of big managers. And since the guys who didn’t lose are obviously smarter than the losers, what makes anyone think they’re going to sit around and become targets?
The only reason we have such monster financial firms, anyway, is because of laws that enabled the growth of monopolies….and because we keep depreciating the cost of money through interest-rate manipulation.
“Most of the harm in the world is done by good people, and not by accident, lapse, or omission. It is the result of their deliberate actions, long persevered in, which they hold to be motivated by high ideals toward virtuous ends. . . .Certainly if the harm done by willful criminals were to be computed, the number of murders, the extent of damage and loss, would be found negligible in the sum total of death and devastation wrought upon human beings by their kind. Therefore it is obvious that in periods when millions are slaughtered, when torture is practiced, starvation enforced, oppression made a policy, as at present over a large part of the world, and as it has often been in the past, it must be at the behest of very many good people, and even by their direct action, for what they consider a worthy object. . . . Certainly the slaughter committed from time to time by barbarians invading settled regions, or the capricious cruelties of avowed tyrants, would not add up to one-tenth the horrors perpetrated by rulers with good intentions. . . .
It may be said, and it may be true, that [the Nazis and Communists] are vicious hypocrites; that their conscious objective was evil from the beginning; nonetheless, they could not have come by the power at all except with the consent and assistance of good people.
The Communist regime in Russia gained control by promising the peasants land, in terms the promisers knew to be a lie as understood. Having gained power, the Communists took from the peasants the land they already owned – and exterminated those who resisted. This was done by plan and intention; and the lie was praised as “social engineering,” by socialist admirers in America. . . .
The humanitarian in theory is the terrorist in action….
…If the full roll of sincere philanthropists were called, from the beginning of time, it would be found that all of them together by their strictly philanthropic activities have never conferred upon humanity one-tenth of the benefit derived from the normally self-interested efforts of Thomas Alva Edison, to say nothing of the greater minds who worked out the scientific principles which Edison applied. Innumerable speculative thinkers, inventors, and organizers, have contributed to the comfort, health, and happiness of their fellow men — because that was not their objective.
When Robert Owen tried to run a factory for efficient production, the process incidentally improved some very unpromising characters among his employees, who had been on relief, and were therefore sadly degraded; Owen made money for himself; and while so engaged, it occurred to him that if better wages were paid, production could be increased, having made its own market. That was sensible and true. But then Owen became inspired with a humanitarian ambition, to do good to everybody. He collected a lot of humanitarians, in an experimental colony; they were all so intent upon doing good to others that nobody did a lick of work; the colony dissolved acrimoniously; Owen went broke and died mildly crazy. So the important principle he had glimpsed had to wait a century to be rediscovered…”
“It should be noted that the MacArthur-funded Nation, for which Corn is a staff writer, has ties back to the CIA and its former director William Casey, and the Manhattan Institute, and Chief Editor Katrina vanden Heuval’s father was involved in “Operation Mockingbird”, a CIA project originating in the early days of the Cold War to buy influence behind the scenes at major media outlets and put reporters on the CIA payroll. Solomon is the Director of the Institute for Public Accuracy in Washington and is the ostensible head of FAIR (Fairness and Accuracy In Reporting), funded by the Ford and Rockefeller Foundations, Working Assets group, and the Schumann…”
— Charles Shaw in “The Gate-Keepers of the So-Called Left”
Comment
I originally included the part on Michael Ruppert in the excerpt above. But I haven’t read a lot of Ruppert, and his take on a number of things about which I do know a bit (such as, the bail-out) is very different from mine, so I decided not to include the reference, in case I should seem to be endorsing him.
Of course, I do post pieces on this blog, with which I don’t always agree. But usually they’re about things I can make a judgment on. I can tell if what I’m posting is completely off the wall, possible, plausible, or convincing.
I haven’t mastered enough of the facts about 9-11 to make that kind of judgment. Ergo, no Ruppert.
But I certainly do resent the way discussions about 9-11 are censored, directed elsewhere, or regarded as disreputable or pointless. It’s one thing to decide you’re not the best person to discuss an issue. It’s another thing to stifle discussion from conformity, fear, or plain pig-headedness. Anyway, with or without Ruppert, the post was meant to bring up the issue of “gate-keeping” among progressive outlets.
(There’s no such thing among right-wing outlets? Discussion for another post..)
“The third approach is tougher, but just as valid. It is followed by people who have recognised the limitations of any form of engagement with mainstream employers, and who have created their own outlets for their work. Most countries have a number of small alternative papers and broadcasters, run voluntarily by people making their living by other means: part time jobs, grants or social security. These are, on the whole, people of tremendous courage and determination, who have placed their beliefs firmly ahead of their comforts. To work with them can be a great privilege and inspiration, for the simple reason that they – and, by implication, you – are free while others are not. All the money, all the prestige in the world will never make up for the loss of your freedom.
So my final piece of advice is this: when faced with the choice between engaging with reality or engaging with what Erich Fromm calls the “necrophiliac” world of wealth and power, choose life, whatever the apparent costs may be. Your peers might at first look down on you: poor Nina, she’s twenty-six and she still doesn’t own a car. But those who have put wealth and power above life are living in the world of death, in which the living put their tombstones – their framed certificates signifying acceptance to that world – upon their walls. Remember that even the editor of the Times, for all his income and prestige, is still a functionary, who must still take orders from his boss. He has less freedom than we do, and being the editor of the Times is as good as it gets.
You know you have only one life. You know it is a precious, extraordinary, unrepeatable thing: the product of billions of years of serendipity and evolution. So why waste it by handing it over to the living dead?”
Here’s the central argument of a long piece I wrote on media manipulation of the bail-out story, its effects on the policy debate and on the price of gold, “Nightmare on Wall Street.”
“Gold Underwhelms
By the end of the week, after a month of relentless international friction and spiraling financial and economic collapse exacerbated by make-shift and venal policies from the Treasury and the Federal Reserve, the Dow is actually at 7776.18, a full 700 points higher than at the beginning of March, Gold – the crisis commodity – is below the band of resistance and looking weak, and the Dollar Index is trading strongly over 85.
Gold’s underwhelming performance did not surprise everyone, of course. The Gold Anti-Trust Action Committee, the leading activist group on gold manipulation has alleged for many years that leading bullion banks (such as, Goldman Sachs and JP Morgan Chase) have been colluding secretively with central banks and world monetary authorities to sell gold whenever necessary, so that rising bullion prices don’t tip off the market to insidious currency debasement.
In fact, GATA is now pressing for an independent audit of US gold reserves at Fort Knox, something that hasn’t been done since President Eisenhower.
GATA’s efforts are commendable. But attention needs to go equally to another kind of manipulation – the manipulation of public perception.
Between the Lines
Take the nationalization debate.
On the face of things, nationalization versus private-public partnership seems to be a debate pitting the good guy, the People’s Pundit (Paul Krugman) against the bad guys, the Bankers’ Bozos (Geithner and Bernanke).
But these terms preempt thinking about more limited and nuanced approaches. And that makes you wonder if the public isn’t being set up to be patsies, no matter which of the two sides it picks.
Take Krugman’s March 1 op-ed, “The Revenge of the Glut,” which blames the crisis on Asian savers. It’s published on the Sunday just before the Fed Reserve begins stone-walling on AIG and before Bernanke and Greenspan also decry the Asian savings glut.
On that, the Pundit and the Bozos are singing from the same page.
Then, look at Krugman’s March 6 op-ed, “The Big Dither,” where he demands nationalization at once. His argument is that government is going to have pour trillions into the crisis anyway, so why not now and why not with government control, so the government gets the upside as well?
If that’s the extent of his reasoning, it’s clearly flawed.
For starters, it’s perfectly possible for the government to do nothing now and also nothing later. It could just stick to prosecuting wrong-doers and ensuring a safety net and redress for victims. Throw a few more jail terms at the problem, and some of the money we think has vanished might reappear. Bottom line: There’s no need for the public to absorb the bad debt of banks at all…with subsidized loans or anything else. Just let the bank’s bond-holders take the losses.
Secondly, with such a crooked set of players, why wouldn’t nationalization just put more power into the hands of the banking cartel?
Thirdly, whatever upside potential remaining bank assets might have, they might not cover the explicit and hidden costs of a full-scale government take-over.
Fourthly, the Swedish solution that Krugman likes to push turns out not to have been nationalization at all. In Sweden in the 1990s, only one bank, Gota Bank, was taken over and that only after it had collapsed. So says William Isaac, the only one in the debate who’s actually nationalized a bank (“Bank Nationalization is Not the Answer,” Wall Street Journal, February 24, 2009).
Isaac points out that Sweden’s largest bank was about a tenth as big as any one of the three largest banks in the US. Unlike Sweden, the ten largest banking companies in the US hold two-thirds of the nation’s banking assets.
If what’s needed is to put some institutions into receivership and to make sure bondholders take losses that the public’s now taking, why not just say that? Why use the term nationalization, which has much broader implications and can set precedents we don’t want in other areas?”
More at Gold Seek.
Most damning may be Galvin’s allegations that Madoff prepared top executives at Fairfield in 2005 on how they should respond to federal securities regulators‘ questions about him. The move came after a whistleblower told officials that he suspected Madoff was running a fraud.
“Obviously, first of all, this conversation never took place, Mark, OK?” Madoff told Fairfield Greenwich General Counsel Mark McKeefrey and Chief Risk Officer Amit Vijayvergiya, according to a transcript Galvin included in his complaint.
At one point on the call Madoff tells the men: “I mean, the idea is that it’s — is that we’re not the one that’s making the decision how much to — I mean, you know – you know, we’re not the one that’s operating the fraud.”
A spokesman for Fairfield Greenwich said the firm is reviewing the complaint and has no immediate comment.
“These are obviously very serious allegations when one starts accusing parties of colluding with respect to coordinating testimony to give to the Securities and Exchange Commission,” said Brenda Sharton, who works on Madoff-related cases as a partner at law firm Goodwin Procter.
Galvin, one of the first state regulators to pursue the Madoff case aggressively, has long been concentrating on the so-called feeder funds and said he was looking at others as well.
His lawsuit came one day after a Connecticut judge froze the assets of Madoff’s sons and five top hedge fund industry officials, including three Fairfield Greenwich executives.
Also on Wednesday, U.S. officials seized Madoff’s 56-foot fishing yacht, named “Bull,” in Florida…”
More here.
“Goldman Sachs now says it expects the gold price to average $930 this year.”
Comment
Well, well. They must be reading us.
Because readers of our humble blog will note that holding to our guns staunchly we’ve said the gold is not performing as well as it might….and unlike Goldman, we didn’t wait for a drop to say that… We’ve been saying that right through even when gold looked like it was going to take out $1000 (Of course, we wish we’d bought a little and taken a quick ride too)
We’ll change our tune in a hurry if we have to, but our own experience over the past year has been that it’s better to wait for the dips.
Quote:
“Gold has gone sharply down below 900. Already I feel better, although it puts my SLV nibble in the red.I held off buying because I thought GLD showed more strengths on its down side moves – but recently I was just wondering if I was wrong after all and whether it was making a solid base at around 900-920. Good thing I held off. That plunge down was sharp and shows that the corrective thrust is stronger than the upthrust still….”
That’s from an earlier post, “Gold Below 885” (March 18) Also check out “Dollar Index Imponderable” (March 20)
You can check them, and others, by using the search function on the right…..or just search “gold” and you’ll get my take on it over the past year…I’m long term bullish but bearish in the short term, and possibly also in the midterm.