One of the things that I suspect has brought many of you to Naked Capitalism is the hard lesson that conventional wisdom in finance and economics has been very costly to ordinary citizens around the world. If you had believed the prevailing world view of early 2007, that markets were efficient and bad actors would of course be found out and shunned, that were were in the midst of a Great Moderation and could expect to enjoy continued prosperity, punctuated by shallow recessions, and that financial innovation was a boon and therefore to be encouraged, you had an ugly awakening. The global financial crisis imposed tremendous costs on investors and society at large, via unemployment, a housing bust, plunging tax revenues, cuts in government services and increasing political discord.
Yet no one in power before the crisis has been punished or even suffered much. In fact, 2009 and 2010 Wall Street bonuses exceeded the record levels of 2007. As former IMF chief economist Simon Johnson described in a May 2009 Atlantic article, the US instead suffered a quiet coup, with the top end of the financial services industry becoming more concentrated, more powerful, even more concentrated and more firmly in charge of the political apparatus.
Most of you understand this. It’s awfully hard not to notice that we have a two-tier system of justice, in which the major financial firms get to flout the law and violate their own contracts, yet are able to get their agreements enforced against seemingly everyone, from credit card, mortgage, and student debt borrowers to municipalities who entered into risk-laden swaps they didn’t understand to nations like Greece, where a clearly insolvent borrower cannot get a deep enough restructuring out of fear of triggering payouts on credit default swaps. But complexity, leverage, and opacity have been the big banks’ best friends in executing this program of looting. You’ve come here to get educated so you won’t be so easily taken next time.
So the lies that the elite financiers have peddled appeared to be free, when in fact, many of them were sold via clever messaging and lobbying. Look at how the expression “free markets” is widely seen as positive. It stands for the presumption that less, better yet no, regulation is better. In fact, many fields of enterprise have a tendency to evolve to a concentrated format, which allows for monopoly/oligopoly pricing, which any economist will tell you is a Bad Thing. And unregulated markets also feature races to the bottom, where providers willing to cut corners to boost their profits drag their competitors with them. This tendency is particularly pernicious in fields like financial services, where many customers cannot evaluate the quality of the produce they are offered, and go on misleading proxies, like the demeanor of their salesman (any wonder why so many polished sociopaths wind up on Wall Street?)
But getting the truth is not free. It take time, effort, expertise, and resources. One of the great resources we have developed here at NC is an engaged and informed reader community. I learn a ton from comments (even when it is sometimes painful, as in when I’ve stepped in it in one of my posts). We’ve broken some significant stories thanks to input from our reader community, such as the so-called New York trust theory (which basically means the securitization industry has no clean fixes for the mess they created by their failure on a large scale to convey mortgages properly to securitization trust, and explains why they have been forced to resort to widespread fraud in the courtroom) and the Magnetar story (how a single hedge fund’s toxic CDO program played an major role in turning what would have otherwise been a contained subprime bubble into a global financial crisis) in ECONNED.
I want to keep spending more time on the blog. But that means I need your help. Some of it results from the fact that as the readership has grown, it takes more to support it: better hosting, more help with offloading tasks so I can respond to more input and leads via e-mail and the comment section. But it also comes about from the fact that the nature of blogging in the wake of the crisis has changed. As reader and sometimes guest blogger John Bougearel aptly described it, the crisis was like a massive rock landing in a seemingly placid pool. It was pretty simple to figure out what to follow during the crisis; I’d roll out of bed and see what new wheels were falling off the financial system.
But the rings from that initial impact keep widening. There are now more threads to follow, and many of them, like mortgage-related developments, take a certain amount of digging to get right. As I look over my archives over time, even though the number of posts per day is pretty much the same, they’ve become more analytically intensive over time. So I’m often juggling a tradeoff between more thorough investigation and getting posts out.
So I also feel fortune to have a cadre of talented and expert guest bloggers like Matt Stoller, Philip Pilkington, Michael Hudson, Richard Smith (who also does a great deal of behind the scenes work, like troll patrol), Satyajit Das, Marshall Auerback and Rob Parenteau, who cover certain beats in these expanding circles of interest better than I can. We are also glad to have well-regarded fellow bloggers like Ed Harrison, Steve Keen, George Washington, and Bill Black cross posting on Naked Capitalism.
What you get here is something I honestly believe you do not find anywhere else on the Web in the finance and economics sphere, and certainly not in the mainstream media, which is a willingness to question institutions and individuals in power, and get behind skillful sloganeering to uncover sloppy thinking, bad practices, intellectual capture, corruption, and destructive policies. We name names and get granular when their conduct is not on the up and up. This is a role that traditional journalists aspire to play, but shrinking news budgets, accelerating news cycles, the native complexity of finance-related material, and the collusive game of access journalism have defanged the press. We know this sort of hard-hitting, skeptical coverage is something many of you value; the caliber and thoughtfulness of the comments section proves it. So we hope that those of you who are able will invest in this site in a more tangible way.
So here is how the fundraiser will work. Our target is 750 donors over the next week. We’ve already had nearly 80 generously make contributions as a result of our discussing a possible fundraiser, and we are grateful for your early action.
We are looking to get broad-based participation from the NC community. So if you are a student or took a financial setback in the crisis and can only make a small contribution, we’d still appreciate that, because we also have readers such as successful private investors, attorneys, executives, entrepreneurs, and fund managers, who cam make much bigger donations.
We will also put forward specific things we intend to do with your donations and will tell you when we’ve hit each of these monetary goals.
The first one is to upgrade our hosting and tech support. Our current webhost MEV Inc. has been graciously giving us free hosting (we do pay for our mirror website) as a result of a pretty rough transition from Blogger. We also get a break on regular tech support in return for being on a non-priority basis.
As traffic has grown, they’ve had to be pretty enterprising to keep load times from being annoyingly slow, but on busy days, the site can be sluggish. And on big news days, or when we have very popular posts, traffic spikes can and do take the site down. The last thing we want to have happen is to have the site be offline when a crisis break loose (which give the state of affairs in Europe, is a matter of when not if) and you want to get information and communicate with each other, and I want to get posts out. So we need to move to a heavy duty host. Given the state of technology, that is not foolproof, but a service upgrade will considerable increase responsiveness and greatly reduce the incidence and duration of site outages. In addition, we’d also like to get faster turnaround from MEV on other matters, which necessitates an upgrade with them as well. The two combined is roughly $4700, which is our first target. Once we’ve hit that, we’ll let you know what our next item is.
There are multiple channels for donating. The first are here on the blog, the “Donate” and “Subscribe” buttons in the upper right, both of which take you to PayPal. If you are allergic to PayPal, you can send a check (or multiple post dated checks, if you want to spread out payments) in the name of Aurora Advisors Incorporated to Aurora Advisors Incorporated, 903 Park Avenue, 8th Floor, New York, NY 10075. Please also send an e-mail to email@example.com with the headline “Check is in the mail” (and just the $ en route in the message) so we can count your contribution in the total number of donations.
If neither of these work for you (say for people outside the US who are PayPal averse, since my non-TBTF bank gives appallingly bad foreign exchange rates on non-dollar checks), please use this link. I very much encourage you to use PayPal or a check, since donations via the link must be processed manually by reader James B, who graciously offered this service (the “Bicycle, Inc.” comes from his venture to manufacture and sell an improved bicycle seat he designed. The e-mail address in the form will not be retained, it’s there in case we need to communicate with you about the transaction. Separately, I feel guilty that the volume of donations means that I won’t be sending individual “thank you” messages. This is symptomatic of the state of my life. I hope this fundraiser will help me to a place where I have the bandwidth to express my gratitude formally).
Thanks again for your interest and generous support!