INTERVIEW : IRA GLASS : PART I

Hello?

Hello?

Hi, Ira. How are you?

Hey, it’s Ira.

Hi, just to let you know this has already started recording.

Noted, we’re on the record. I’m prepared with my important answers to the national security and other public policy questions that will be presented.

Pretty much, have you ever been associated with a member of the Communist Party?

Have I been with the Communist Party? Not the Communist Party, no.

Thank you for making time to do this. We are all really big fans over here. First off, since you recently crossed the 500th episode mark, how has your selection process for topics evolved from the beginning and how do you search out new material for the show?

In the beginning, the premise of the show was that we we were going to apply the tools of journalism to things so small and personal that journalists don’t normally bother with them. We’re trying to have compelling characters and emotional moments and funny moments and, after doing that for a number of years, myself and the producers on the staff became very interested in trying that same kind of story but doing it for the news. More and more, I think, we’ve been tackling things that are in the news — things that other people try to cover in other ways but we do it with stories that are gripping and emotional and more narrative in a very traditional way and less like news features in that newsy news way.

Read More

Happy Anniversary Lehman Brothers, And What We Haven't Learned about Wall Street Over the Past Five Years

While attention is focused on Syria, the gambling addiction of Wall Street’s biggest banks is more dangerous than ever.

Five years ago this September, Lehman Brothers went bankrupt, and the Street hurtled toward the worst financial crisis in eighty years. Yet the biggest Wall Street banks are far larger now than they were then. And the Dodd-Frank rules designed to stop them from betting with the insured deposits of ordinary savers are still on the drawing boards — courtesy of the banks’ lobbying prowess. The so-called Volcker Rule has yet to see the light of day.

To be sure, the banks’ balance sheets are better than they were five years ago. The banks have raised lots of capital and written off many bad loans. (Their risk-weighted capital ratio is now about 60 percent higher than before the crisis.) 

But they’re back to too many of their old habits.

Consider JPMorgan Chase, the largest of the bunch. Last year it lost $6.2 billion by betting on credit default swaps tied to corporate debt — and then lied about it. Evidence shows the bank paid bribes to get certain counties to buy the swaps. The Justice Department is investigating the bank over improper energy trading. That follows the news that the anti-bribery unit of the Security and Exchange Commission is looking into whether JPMorgan hired the children of Chinese officials to help win business. The bank has also allegedly committed fraud in collecting credit card debt, used false and misleading means of foreclosing on mortgages, and misled credit-card customers in seeking to sell them identity-theft products. The list goes on.

JPMorgan’s most recent quarterly report lists its current legal imbroglios in nine pages of small print, and estimates resolving them all may cost as much as $6.8 billion. That’s not much more than a pittance for a company with total assets of $2.4 trillion and shareholder equity of $209 billion.

Which is precisely the point. No company, least of all a giant Wall Street bank, will eschew a chance to make a tidy profit unless the probability of getting caught and prosecuted, multiplied times the amount of any potential penalty, is greater than the expected profits.

Have we learned nothing since September, 2008? Five years ago this month Wall Street almost went under. We bailed it out. Millions of Americans are still suffering the consequences of the Street’s excesses. Yet the Street’s top guns and fat cats are still treating the economy as their own private casino, and raking in even more than before.

The fact is, the giant Wall Street banks are ungovernable — too big to fail, too big to jail, too big to curtail. They should be split up, and their size capped. There’s no need to wait for Congress to do it; the nation’s antitrust laws are adequate to the job. There is ample precedent. In 1911 we split up Standard Oil. In 1982 we split up Ma Bell. The Federal Reserve has authority to do it on its own in any event. (Would Larry Summers take such an initiative?)

Legislation is needed, however, to resurrect the Glass-Steagall Act that once separated commercial banking from casino capitalism. But don’t hold your breath.

Happy fifth anniversary, Wall Street.

Last weekend we watched the Oscars and, like most people, were pleased that “Twelve Years a Slave” won Best Picture. No previous film has so accurately captured the reality of enslaved people’s lives. Yet though Twelve Years shows us the labor of slavery, it omits the financial system — asset securitization — that made slavery possible.

[…]

Every year or two, somebody discovers that a famous bank on Wall Street profited from slavery. This discovery is always treated as if the relationship between slavery and the American financial system were some kind of odd accident, disconnected from the present. But it was not an accident. The cotton and slave trades were the biggest businesses in antebellum America, and then as now, American finance developed its most innovative products to finance the biggest businesses.

[…]

First, American planters organized new banks, usually in new states like Mississippi and Louisiana. Drawing up lists of slaves for collateral, the planters then mortgaged them to the banks they had created, enabling themselves to buy additional slaves to expand cotton production. To provide capital for those loans, the banks sold bonds to investors from around the globe — London, New York, Amsterdam, Paris. The bond buyers, many of whom lived in countries where slavery was illegal, didn’t own individual slaves — just bonds backed by their value. Planters’ mortgage payments paid the interest and the principle on these bond payments. Enslaved human beings had been, in modern financial lingo, “securitized.”

As slave-backed mortgages became paper bonds, everybody profited — except, obviously, enslaved African Americans whose forced labor repaid owners’ mortgages. But investors owed a piece of slave-earned income. Older slave states such as Maryland and Virginia sold slaves to the new cotton states, at securitization-inflated prices, resulting in slave asset bubble. Cotton factor firms like the now-defunct Lehman Brothers — founded in Alabama — became wildly successful. Lehman moved to Wall Street, and for all these firms, every transaction in slave-earned money flowing in and out of the U.S. earned Wall Street firms a fee.

How the Fed Let the World Blow Up in 2008

It was the day after Lehman failed, and the Federal Reserve was trying to decide what to do.

It had been fighting a credit crunch for over a year, and now the worst-case scenario was playing out. A too-big-to-fail bank had just failed, and the rest of the financial system was ready to get knocked over like dominos. The Fed didn’t have much room left to cut interest rates, but it still should have. The risk was just too great. That risk was what Fed Chair Ben Bernanke calls the “financial accelerator,” and what everyone else calls a depression: a weak economy and weak financial system making each other weaker in a never-ending doom loop. 

But the Fed was blinded. It had been all summer. That’s when high oil prices started distracting it from the slow-burning financial crisis. They kept distracting it in September, even though oil had fallen far below its July highs. And they’re the reason that the Fed decided to do nothing on September 16th. It kept interest rates at 2 percent, and intoned that “the downside risks to growth and the upside risks to inflation are both significant concerns.”

In other words, the Fed was just as worried about an inflation scare that was already passing as it was about a once-in-three-generations crisis.

Read more. [Image: Reuters]

Swiss bank UBS has admitted that its investment banking arm has lost around $2bn (£1.27bn) through "unauthorised trading".

(Guardian)

Shares in UBS fell by almost 10% in early trading after it reported the loss, which could push the bank into the red for the current financial quarter.

In a brief statement, issued on the third anniversary of Lehman Brothers, UBS said that the issue was still being investigated.

"UBS has discovered a loss due to unauthorized trading by a trader in its Investment Bank. The matter is still being investigated, but UBS’s current estimate of the loss on the trades is in the range of $2bn. It is possible that this could lead UBS to report a loss for the third quarter of 2011.

UBS added that “no client positions were affected.”

Simon Ballard, senior credit strategist at RBS capital markets, said the trading loss would add to public concern over the banking sector.

"At a time of greater regulation, it will raise questions about regulatory capital and whether ringfences are in place to stop this happening," Ballard told Bloomberg TV.

Daily Post #2: Financial Crisis Round 2?

8.11.2011

By Ellen

"Stocks are plummeting. The economy is slowing. Politicians are scrambling to find solutions but are mired in disagreement." Any of that sound familiar? Aside from being the opening of an article in the New York Times this morning, the picture it paints should remind us of the financial crisis back in 2008. Remember how that started because consumers were taking out more debt than they can afford to pay off? Pretty much the same deal now, but here’s the kicker: the debt now is government debt. Back then, it was consumer debt.

Another difference is this time, the problem originated overseas. Fear of the amount of exposure the European banks have to sovereign risk has the investors scared. And when floods of investors panic, stock prices tend to fall. European banks’ stocks have begun to plummet. Banks are starting to hoard cash and increase borrowing costs.

Some see the fluctuations in the stock market as a sign of what is to come, mainly a crisis like the one three years ago. Others are a bit more hopeful. In the United States at least, financial institutions have more capital and less risk and debt. But by no means does this mean everything’s going to be fine and dandy. Political leaders in Europe are having a hard time deciding which course of action to take. Hopefully, they reach an agreement soon.

Un-lost in Translation: Our Take on the Story

What we understand out of this article: It hasn’t hit the fan yet. The signs suggest if the governments (both U.S. and European) continue to leave the market to its own devices, we may end up where we were three years ago. Even though the problem didn’t originate in the States this time, in this highly interconnected world, if one institution goes down, everyone should be really careful where they step.

What we learned from this: Those who cannot learn from history are doomed to repeat it.

For the full story, click here.

[Markets] do seize up. Here’s the thing, though. A UBS trader is now in jail for losing a few billion dollars. That’s probably reasonable. In Lehman’s case, no one went to jail, and Dick Fuld is a multi-millionaire, even though the losses run into the trillions. Moral of the story: Make sure your losses are authorized.

Five years on: The lessons of Lehman

On Sept. 15, 2008, Lehman Brothers — the fourth-largest investment bank in the U.S. at the time — filed for bankruptcy, accelerating the worst financial crisis since the Great Depression.

Five years later, has the American economy recovered? Not unless you consider the Dow Jones Industrial Average to be the one true marker of health. Unemployment remains high, construction moribund, growth sluggish, foreclosures rife. Meanwhile the wider so-called “advanced” (the better word would be “decaying”) world divides between large countries that have at best stabilized, and the other ones — Cyprus, Greece, Portugal, Ireland, and perhaps Spain — that verge on collapse.

Read more at Al Jazeera America

Photo: Oli Scarff/Getty Images

Krugman isn’t trying to get the Democrats to push hard for additional stimulus, although the logical extension of his ‘back of the envelope calculation’ would lead to that position. Krugman seems totally resigned to a continued stalemate in Washington: where the GOP tells outright lies and the Democrats respond with half truths.

Paul Krugman:

Set aside the politics for a moment, and ask what the past five years would have looked like if the U.S. government had actually been able and willing to do what textbook macroeconomics says it should have done — namely, make a big enough push for job creation to offset the effects of the financial crunch and the housing bust, postponing fiscal austerity and tax increases until the private sector was ready to take up the slack.I’ve done a back-of-the-envelope calculation of what such a program would have entailed: It would have been about three times as big as the stimulus we actually got, and would have been much more focused on spending rather than tax cuts.

'By any objective standard, U.S. economic policy since Lehman has been an astonishing, horrifying failure.'

Would such a policy have worked? All the evidence of the past five years says yes. The Obama stimulus, inadequate as it was, stopped the economy’s plunge in 2009Europe’s experiment in anti-stimulus — the harsh spending cuts imposed on debtor nations — didn’t produce the promised surge in private-sector confidence. Instead, it produced severe economic contraction, just as textbook economics predicted. Government spending on job creation would, indeed, have created jobs.

But wouldn’t the kind of spending program I’m suggesting have meant more debt? Yes — according to my rough calculation, at this point federal debt held by the public would have been about $1 trillion more than it actually is. But alarmist warnings about the dangers of modestly higher debt have proved false. Meanwhile, the economy would also have been stronger, so that the ratio of debt to G.D.P. — the usual measure of a country’s fiscal position — would have been only a few points higher. Does anyone seriously think that this difference would have provoked a fiscal crisis?

And, on the other side of the ledger, we would be a richer nation, with a brighter future — not a nation where millions of discouraged Americans have probably dropped permanently out of the labor force, where millions of young Americans have probably seen their lifetime career prospects permanently damaged, where cuts in public investment have inflicted long-term damage on our infrastructure and our educational system.

Look, I know that as a political matter an adequate job-creation program was never a real possibility. And it’s not just the politicians who fell short: Many economists, instead of pointing the way toward a solution of the jobs crisis, became part of the problem, fueling exaggerated fears of inflation and debt.

Still, I think it’s important to realize how badly policy failed and continues to fail. Right now, Washington seems divided between Republicans who denounce any kind of government action — who insist that all the policies and programs that mitigated the crisis actually made it worse — and Obama loyalists who insist that they did a great job because the world didn’t totally melt down.

Obviously, the Obama people are less wrong than the Republicans. But, by any objective standard, U.S. economic policy since Lehman has been an astonishing, horrifying failure.

And appointing the anti-regulatory Summers as chair of the Federal Reserve would be a perfect capstone for this litany of stupid missteps.

2

Margin Call, 2011

<Be First, Be Smarter or Be Cheat> 누군가에겐 이런 것들이 삶의 좌우명일지도 모르겠다. 어쨌거나 성공해서 대기업 CEO가 되는 것이 꿈인 사람도 있을 것이다. 하지만 돈이 아무리 많아도 우리는 돈이 더 필요하다. 연봉 10억을 받건 연봉 5천을 받건 부족한건 매한가지다. 로또를 맞으면 죽을 때까지 일 안하고 행복하게 살 수 있을 것 같지만, 아이러니하게도 수많은 벼락부자들은 오히려 불행한 삶을 살았다. 돈이라는 종이쪼가리 앞에서 인간은 참으로 추악하고 잔인한 존재가 된다. 자본주의라는 거대한 울타리안에서 우리는 정녕 ‘어쩔 수 없는’ 이기적인 개인이 될 수 밖에 없나?

2008년 세계 금융 위기의 시작을 알린 리먼 브라더스 사건을 다루고 있는 이 영화는 금융, 주식, 경제에 대한 지식이 없더라도 우리가 이 사회에서 존경하고 갈망하는 소위 ‘성공’한 사람들이 얼마나 더럽고 치사한 방법으로 그 자리를 지키고 있는지 여실히 보여준다. 회사 직원들의 커리어가 산산조각이 나던, 수십년을 함께 일한 동료가 백수 빚쟁이가 되던, 심지어 전세계 경제가 패닉에 빠지던, 윤리나 상식이나 그 어떤 것도 그들에겐 손실을 감수할 이유가 되지 못한다. 그들은 그저 살기 위해 이윤을 추구하고 이윤을 위해 살아갈 뿐이다.

이에 반해 주인공이라고 할 수 있는 케빈 스파이시는 이 사회에 남아있는 실낱같은 양심을 상징한다. 회사의 일방적인 구조조정은 어찌하지 못하지만 적어도 모든 불합리에 있어 자신의 부하직원들에게 다시 일어설 수 있는 희망을 주는 인물이다. 그러나 선택의 순간, 돈과 양심 사이에서 갈등하던 하던 그도 결국엔 돈을 택한다. 영화는 그를 절대악인 기업 회장에 반하는 주인공으로 그리고 있지만, 사실 그의 모든 행동은 그저 최후의 선택에 대한 자기 면죄부에 불과했을지도 모른다. 씁쓸하지만 자본주의란 그런 것이 아닌가. 기승전’돈’이 되는 세상. 아 그러고보니 절대악은 기업 회장님이 아니라 케빈 스파이시 본인이었을지도 모르겠다.

힘겨웠던 하루가 지나고 이제 케빈 스파이시 앞에 놓인 탄탄대로와는 달리, 영화는 그가 자신의 애완견 시체를 땅에 파뭍는 것으로 끝이 난다. 그것도 전처의 집 앞에다가… 뭐하는 짓이야 이 양반아. 엔딩 크레딧이 올라가면서도 배경음악 대신에 그의 삽질소리가 이어진다. “푸쉭 퍽 푸쉭 퍽” 돈이 아무리 많아도 죽음이라는 순리 앞에서, 돌아갈 수 없는 행복했던 시간들 앞에서 한없이 무력하기만한 중년의 인생이 그렇게 땅에 뭍힌다. 자본주의의 현실 앞에 ‘어쩔 수 없는’ 우리들의 양심과 함께. 

Text
Photo
Quote
Link
Chat
Audio
Video