Finance and Social Justice

Over the last year, it has become more evident that this site’s audience has become increasingly skewed, and that appears to be the result of different segments of readers seeing some topics as more “their topics” than others. But from our perspective (and here “our” is yours truly and Lambert, and not the executive “our”) this schism is at least in part due a big chunk of the audience seeing issues as discrete when they are in fact connected.

To put it in crude terms, we see a split between readers who are primarily interested in social justice issues, and ones that are more interested in the more technical aspects of finance and economics. For instance, we’ve had members of Occupy Wall Street complain to us about the amount of non-finance discussion in comments, that from their perspective, it made the comments section (which we’ve regarded as one of the strong features of the site) unusable for hard core finance types.

While the number of comments might suggest that readers are much more interested in the social justice articles, in fact, the traffic counts show much less disparity. And traffic is far from the only metric we care about. We know that regulators and journalists read our wonky finance posts. So perversely, for us to do any real good in social justice terms, we need to keep a strong anchor in the more technical aspects of finance.

Mind you, it’s not as if we haven’t been here before, but not to this degree. For instance, in 2009, we kept posting on CDOs even though we didn’t get much reader engagement. We had a strong instinct that they were an important driver of the crisis. And our plugging away did produce some concrete outcomes. For instance, we are convinced that our and Tom Adams’ posts showing how much information about AIG’s CDOs was already available to traders led Darryl Issa to release information about all of them.

That effort led two whistleblowers to come forward who helped us put together the massive role that the Magnetar trade had in turning what would otherwise have been a contained subprime crisis into a global financial crisis. And getting to understand the structure of those deals positioned us to get well down the curve on foreclosure fraud and chain of title abuses before that story broke into the mainstream.

But as the ripples from the crisis widen further and further, two things have happened. The big one is what Lambert calls narrative repression. The Fed’s efforts to fight the crisis along with some but not enough reform, has led many people to take less interest in finance. There was a sense of urgency and outrage after the crisis, but with the prospect of additional reform seemingly nil, it would seem that finance is no longer where the action is.

That attitude, unfortunately, is the foundation of crises. It is precisely at the times when risk is perceived to be low that investors and speculators pile into hazardous positions and eventually blow themselves up. But the conundrum is that “eventually” can be a while in coming. Record 2006 and 2007 Wall Street bonuses show that going along for the ride, even if you know better, is a rewarding strategy, provided you are playing with other people’s money.

And from a pure social justice perspective, many of the woes that are continuing to befall what is left of the middle class are the result of past and continuing financial looting. Consider, for instance, what Richard Smith calls the helotization of New Zealand. Via e-mail:

Chinese oligarchs buying up New Zealand farms (many crippled by GFC era interest rate derivatives deals, natch) via opaque offshore mechanisms. See Russians in London, and Manhattan also, for comparison.

And that is leading to political pressure to further weaken New Zealand’s environmental standards (waterways are already showing discoloration and groundwater is increasingly contaminated) in the name of growth, specifically, converting more land to dairy production. So while this might look like a foreign capital trumping local and national sovereignity, what produced the vulnerability were general and specific effects of the global financial crisis, namely, the lean post crisis years and the damage inflicted on farmers through derivative bets gone bad. Bear in mind this was not normal agricultural hedging gone awry. From NZFarmer:

In a war that has cost her a lifetime of work, former north Taranaki farmer Angela Potroz says she has finally won a battle.

The Commerce Commission announced today it intended to take ANZ, ASB and Westpac banks to court for “misrepresenting” sales of interest rate swap loans to rural customers.

Potroz and her husband John were some of the hundreds of farmers persuaded by The National Bank (now branded ANZ) to take the financial product in 2007 as a way to “beat” rising interest rates.

Nearly inexplicable to all but financial experts, the products were often sold to farmers as being fixed rate loans “with benefits”.

But when the global economy fell apart, interest rates on the swaps soared and fine print penalty clauses kicked in.

With the bank refusing to offer the Potrozes any relief and refinancing costs in the millions, the couple said they were doomed to fail.

In November 2012 they sold four sheep and beef farms valued at $18.85 million in 2010 for just $12.08m after the bank demanded their $11m swap be repaid in full.

“Someone said they did wrong. It wasn’t that we were stupid people who got greedy. This justifies that we were ripped off. For me that battle is won,” Potroz said of the commission’s decision…

“We have lost everything, our way of life, who we are. There is no good outcome. It’s too late for us but maybe not others.”

So our frustration is when we start explaining how the SEC has approved a raft of retail products with derivatives embedded in them, or how private equity firms abuse their limited partners, these are not as remote from you as you may think. There are tons of people who were never within hailing distance of a subprime loan who nevertheless suffered in ways small and large as a result of the global financial meltdown.

It thus remains a subject of considerable frustration that it is hard to marshall reader interest in what are clearly problematic and in many cases fraudulent practices. Mind you, it isn’t just that lack of reader engagement is demotivating to us. It’s that it sends the wrong message to regulators and investigators. If they see few comments on posts describing certain types of bad conduct on a site geared towards smarter, savvier readers, they may well assume that the public doesn’t care about this issue and thus they have little reason to stand up to financial services industry demands.

As Simon Johnson described in a seminal 2009 Atlantic article, The Quiet Coup, the financial crisis was not merely a massive transfer of wealth to financiers but allowed them to capture the US government. The banking industry also emerged more powerful in the Eurozone.

It is not obvious how to break the stranglehold of elite financiers. But remaining ignorant about how they operate guarantees that they will be able to improve upon their already advantaged position. Remember, as much as debating news stories on Ukraine may sharpen your resistance to propaganda, you can’t influence that course of events. By contrast, you can have an impact on the banking front, in ways small and large, from warning friends and colleagues about the dangers of various borrowing and investment products, to writing regulators about why you are opposed to yet more concessions to a bloated financial services industry. This is a front where citizens like you can take ground back, but only if you go to the effort to arm yourself with information.

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  1. David Lentini

    Hi, Yves!

    Interesting commentary. I had no idea that the comments had such important downstream effects. Personally, while I certainly agree that the financy stories are important, even crticial, I also
    feel there is little I can add to the discussion that is meaningful. Also, I admit to a certain amount of “battle fatigue” from reading these stories, which outside of the technical details have the same basic pattern, viz. that we’re all being reduced to sharecroppers by the unstoppable corrupt financiers, politicians, and mainstream press.

    Nevertheless, I appreciate how important these stories are and how much work you, Lambert, and your guest writers do to bring them to us. And I do try to keep remininding everyone how very litte has changed—and even gotten worse.

    But this mountain often seems quite daunting.

    1. Benedict@Large

      Yves ~ I hope your lurkers (from the Fed et al) understand that sometimes the low number of comments actually means that you’ve done such a bang-up job in your post that our comments would probably be trivial by comparison. I know more than a couple of times, I’ve come away from reading this or that post feeling completely exhausted by the mental effort needed to get that deep into these topics.

    2. ChrisPacific

      Agreed. I am always impressed by the NC authors’ ability not to give in to fatalism. Every time I encounter another deep-dive finance article, such as the ones in the PE series, my immediate reaction is “I bet this will appear to be admirable and above board while actually turning out to be a cleverly-disguised scheme for robbing customers and/or taxpayers blind.” Then I read to the end and surprise! That’s exactly what it is. After a while it’s hard not to become jaded.

      The New Zealand link is interesting. I think by and large, New Zealand is much less corrupt than the US and still enjoys a government that acts primarily in the interests of the people. But the forces at play in the global economy find their way here as well, and we could very easily end up heading in the same direction as the US if we are not careful. Any time a contentious issue comes up (offshore oil exploration, the farm sales etc.) I try to figure out who politicians are listening to. Very often it turns out that big business interests enjoy privileged access and get to shape the framework of the debate, while other voices (labor unions, the Greens, Greenpeace) are shut out or marginalized. The scandals involving the National government to date have, almost without exception, involved moneyed or business interests that were able to influence the system in their favor via personal connections. The scandal that Richard Smith documented is probably the worst example but I can think of at least half a dozen other, less serious cases. This is my biggest concern about the current government (which, for the benefit of observers, is led by the National party, which is right wing and traditionally the most sympathetic to big business and the wealthy).

      I also try to look at who is shaping the message and why. For example, many voters will agree that rising inequality is a problem, while writing off any policies that might address it (such as the Greens’ living wage) as lunacy on the grounds that they would destroy the economy. (This despite evidence suggesting that in fact the opposite might be true). Why do they think it would destroy the economy? Well, because of years of received wisdom from the economics profession and business community. Where did that wisdom originate? From global business leaders, media pundits, and the authors of the economics textbooks. Join the dots. Any time I see something that is counter-intuitive but nonetheless widely believed to be true (for example, the idea that enriching already vastly wealthy individuals and businesses helps the economy, while enriching the poor and those who most need it harms the economy) I get suspicious. If we have rising inequality now it’s because punters have been convinced to vote for it, or at least not vote against it.

      1. downunderer

        Well explained, ChrisPacific. But I am perhaps a bit more pessimistic than you.

        Consider the disaster that has befallen the ratepayers [rates = property taxes] of Kaipara District [think ‘county’], making us the equivalent of Crete, Greece, and Spain: placed in serious debt by secret dealings that bought a few of us us virtually nothing and the rest of us absolutely nothing, while enriching a few crooks. Residents of the town of Mangawhai got a partially completed sewage plant, and we in the rest of Kaipara will now share the bill (approximately $4,300 per person and growing). We are liable for the debt and with none to defend our “rights”, but quite the reverse.

        This National government even pushed a Bill through Parliament retroactively withdrawing the protection of the firm guarantees of public consultation and due process in the Local Government Act of 2002, and reaffirming both the validity of the illegally-entered-into debt and retroactively affirming the rates illegally set by the Councillors (now vanished along with the money). [The Validation of Kaipara Rates and Other Matters Act says “legal, and have always been legal” several times, thus changing the past and nullifying the case we already had before the High Court]

        Not only National, but Labour and even the Greens went along with this, explaining that as bad as it is, it would be even worse for the debt, however illegally incurred, and however far beyond the ability of the district to pay, not to be paid. As they explained, the banks would charge all of New Zealand’s local governments higher interest rates if the debt were liquidated by allowing the local council to declare bankruptcy. Which would have happened years ago, except that the Auditor General, whose required-by-law annual audits of the council’s books failed to pick up on this ridiculous situation despite heated inquiries from locals, including at least one Councillor who smelled a rat. So far,we have received an apology from the Auditor for a regrettably poor performance, and regrets from our lawyers, who tell us that the AG is well defended legally against lawsuits for such poor performance.

        Owned by the banks, that’s us. PM Key has managed to convince the suckers that the economy is doing fine and the budget is almost balanced, despite having added $60 billion to the debt during his terms ($15,000/person).

        But the media treatment you describe has ensured that very few are aware of the Kaipara situation in any detail, and nobody has done the math on the national debt. It is no wonder that Kiwis have been feeling fairly prosperous, with an extra $15,000 apiece flowing around and near zero awareness that this money will need to be repaid, with interest.

        And don’t even get me started on the undemocratic seizure of people’s rights by this government, which amalgamated hordes of unwilling rural people into the city of Auckland sans referendum, planning on putting their (now convicted and discredited) man into the Mayor’s seat. Or the debt that the Auckland “Supercity” is now laying on the unwilling ratepayers ($1million/day interest and counting), who find their votes for Councillors so diluted and the Councillors themselves so disempowered by the corporatized structure imposed on the city that all sense of democratic control is lost. Again, debt that the public cannot control, but will pay dearly for.

        There’s more and worse, but that’s enough for now.

    3. Mark

      I think that social justice is written by those with the money. For example, the big money boys in the middle 70’s became fed up with collective bargaining, forced high salaries, etc, so they got together and threw money through PACS at lawmakers and had the unions busted up in the early 80’s: Trucking, Airlines, Grocery, etc. Now more money goes into their pockets. Justice? Its blind, and the scale leans towards those with the wherewithal and the clout to gain peoples ear. Who will write laws for the poor? What is the financial benefit with those with money?

  2. proximity1

    It thus remains a subject of considerable frustration that it is hard to marshall reader interest in what are clearly problematic and in many cases fraudulent practices. Mind you, it isn’t just that lack of reader engagement is demotivating to us. It’s that it sends the wrong message to regulators and investigators. If they see few comments on posts describing certain types of bad conduct on a site geared towards smarter, savvier readers, they may well assume that the public doesn’t care about this issue and thus they have little reason to stand up to financial services industry demands.

    It’s a shame, really, that it’s demoralising to you or Lambert if relatively few comments follow the more technically-orientied posts. If you’re interested in my opinion–as a reader/commenter who is probably among those who tend to focus on the social justice aspects of things, for what it’s worth, I particularly value this site’s experts taking the trouble to expose and explain technical issues. A relative lack of comments in repsonse there may be, but I think that if regulators and investigators…” …” see[ing] few comments on posts describing certain types of bad conduct on a site geared towards smarter, savvier readers, … assume that [therefore] …”the public doesn’t care about this issue”…. well, they shouldn’t. Does it not help that their fault in that regard is neither your fault nor your responsibilty? And, on that point, is it ours, your readers’ fault that these bright people lack the imagination to suppose that a relative lack of reader-response to technical-issue posts implies an actual lack of interest?

    Not only do I appreciate the explanations of the technicalities of finance, as far as I’m concerned, you could do more of that. But, unless you devote time to explaining things to readers who aren’t themselves already rather advanced in their math and finance understanding, is it either fair or realistic to expect much in response from them? And, if you devote the time and space to explaining things to the uninitiated, won’t that, too, “turn off” the expertly-informed audience you already enjoy as regulars?

    For me, the social and moral implications of the reckless financial use of derivatives and their tendencies to hide rather than diminish real hazards of investment-risk could not be clearer. But, honestly, I came to that appreciation mainly through viewing the popular documentary, “Inside Job” and, even prior to that, through reading popular economists’ and other academics’ writings– Nassim Nicholas Taleb’s The Black Swan, Benoit Mandelbrot and Richard L. Hudson’s The (Mis)Behavior of Markets: A Fractal View of Risk, Ruin, and Reward and Pierre-Noel Giraud’s writings.

    What I’d find interesting is a level of explanation that I doubt you or others have the time or patience to offer. I know, for example, on a certain level, that neo-liberal finance—as recently mentioned by Philip Pilkington in his post here, “The Efficient Markets Hypothesis Has Been Proved Wrong But Economists Do Not Want to Listen”— is hokum which does not in fact “add up” when scrutinized at a detailed level–through the careful application of financial formulae. But I could not relate this to others in any technically respectable way because I lack that level of understanding. I’d find it would be great to understand these things at a very advanced level of math and finance theory but, for most purposes, is that deficiency really important? When non-specialists leave financially-technical posts relatively uncommented, I suspect that it’s for the same reasons that I do: I’m simply not qualified to say much of anything of interest on the matter–other than, that is, to comment, indeed, on just those social justice aspects which I may see entailed in the issues. I regret that you’re frustrated when in so many ways you’re doing exceptional work here.

  3. McMike

    I think there’s a fair amount of Systemic Looting Fatigue.

    I mean, it’s not that the mechanisms of PE ripping off their pension fund “partners” is unimportant – it is important – it is more that in the context of a seemingly endless train of abuses, at some point, the specific abuses start to blur together. Same Story; Different Details.

    While you do important journalism in digging out actionable facts, what could your readers add in terms of commentary, to what amounts to a nearly decade long ticker of crime scrolling across our screens?

    As the latest scheme is exposed, the latest act of criminal impunity unveiled, and the documentation heaped into the fetid pile of unrequited injustice, what value can your readers add? Lacking specific proxy to the specific case, what is there to add? What more is there to say?

    (Your column does raise an interesting question as to why social justice coverage seems to continue to resonate and draw discussion).

    1. Banger

      Good comment McMike got right to the point and addressed it cleanly.

      As per my comment below–the issue is, ultimately moral. Capitalism is not just a bunch of markets with buyers and sellers–it is a deep moral philosophy based on radical selfishness and is, ultimately destructive to communities, families, and individuals as strong actors in our culture. Now, I believe that capitalism has done a service to humanity through creative destruction of old customs and nonsense–but it is utterly incapable of building anything to take the place of the more negative aspects of pre-modern society. Selfishness has had its day and now we need to move beyond that and dig deeper.

      That’s why you are right to say that we have atrocity fatigue–what is the next scam the finance oligarchs will put on us to rip yet more wealth from the rest of us–we become spectators to the collective looting of Western Civilization by the lowest scum of the earth–well, that’s nice. But at some point we have to take action and these discussions exist to remove, as they have, the many illusions of reform (it is structurally impossible for liberal/progressive reform to take place at this point in our history), false hopey changey narratives and the systematic lying that is the main staple of most of the MSM. By deconstructing these things we can, finally, begin to see clearly and then, at some point we need to change our lives. But that point has to be reached first or we fall for the next more clever scam.

    2. James Levy

      Yes, it seems to me, an outsider to financial instruments and their abuses, that I am reading the same story over and over again–that these abuses and frauds simply are back again as they were before the crash and are completely out of my control.

      Yesterday, a lawyer got on to the Salon comments section to tell us all how stupid we were to complain about Scalia’s belief that the Constitution doesn’t guarantee the right of innocent people not to be executed and judges can’t be bothered to worry about it if they sent an innocent man to the death house. You see, he was an expert! We were all dumbasses who thought “emotionally”; we didn’t understand the Law, which has nothing to do with justice (what a stupid concept–how ethereal, how sentimental and quaint!) and everything to do with procedure. If we were smart and a lawyer like him, we’d understand that “serious people” know innocents will die, but that’s the way the cookie crumbles. No need to blub over spilled milk.

      What I see in the financial press and stories surround these abuses is the same system–if you haven’t got a great lawyer to explain to you the derivatives contract, and you signed it, then it’s all your fault. No fraud, ever, just let the buyer beware. This attitude is so pervasive, and the courts are so attuned to it (as they represent that same way of looking at things) that reading about yet another CDO scam just makes my eyes glaze over. All I think is, “it’s so complicated they’ll never get in trouble for it because of the plausible deniability built in and the default caveat emptor bias of the law.” When you have a legal system that shrugs off the fact that it kills innocent people as a price of doing business, how are you going to get them to throw wealthy people in jail for tricking innocent people out of their money? Aren’t their antics, under the TBTF dictum, just another cost of keeping the banks afloat and the economy suffused with credit? Like innocent people sent to the electric chair, the victims of the financial system are simply a cost of maintaining our non-negotiable way of life.

      1. Brooklin Bridge

        Your cherished skill of clarity has made many of your recent comments into gems and this heartfelt one is no exception. To be fair however, I never got the sense that commenters with high technical experience in the specifically financial NC posts were -in the main- so callous or inhuman in their remarks as in your compelling example. Those that were tended to face ostracism pretty quickly by others or by Yves herself.

        That doesn’t detract from the truth of what you say.

      2. bluntobj

        It would also help if those of us who point out that the capture of the government is not limited to one party (both share in the looting), are not moderated out of existence.

        What happens then is that an echo chamber is created, and fatigue rapidly builds as there are no other ideas, challenges, or discussions taking place.

        This is the current political discussion system writ large, with ideological purity worthy of a jihadi being used by the owners of the forum to enforce the narrative that is desired. This is of course their prerogative. Less discussion should not be surprising at that point.

        Lively and active discussion should be respectful, but should be inclusive of divergent ideas if a wider base is desired as a mechanism to spread the truth about the financial elite and their pillaging of America.

    3. Ulysses

      “Systemic Looting Fatigue” is certainly understandable. I very much appreciate the expert analysis of high finance shenanigans that I find here at NC. What perhaps leads many readers, myself included, to comment less frequently on these issues than on others, is simply a feeling we have little to add to the discussion except outrage. The crimes are uncovered and explained in detail. Smart, courageous people, like Bill Black, try very hard to get something done about them. Nothing beyond window-dressing ever does get done, and the kleptocrats remain firmly in charge.

      While I can applaud the tenacity and keen investigative techniques of those on this bankster beat, I can’t provide more than anecdotal confirmation, that yes, indeed kleptocrats are ruining things for all kinds of people all over the place. What then is to be done? My answer to this question is to leave the exquisite agony– of ever-finer resolution being brought to the picture of bankster abuses– to those who have the most skills and experience to sharply define precisely how the kleptocrats are screwing over everyone else.

      Thus I’m a lot more likely to comment on attempts to push back against kleptocratic power: by labor, ecologists, indigenous groups– whoever has moved beyond the recognition that they’re being screwed to the point of taking concrete steps, from outside the narrow confines of official politics and high academia, to actually change things!

      I do try to frequently point out how much I appreciate the hard work of Yves Smith, David Dayen, Lori Wallach, Bill Black and many others that help us understand the machinations of our financial overlords. Maybe the site editors should take the vigorous discussion on social justice issues more as a compliment, to their own acuity in providing useful fodder for such discussion, than as a knock on the exceptionally high quality of their financial reportage.

    4. susan the other

      Yes, McMike. I’m particularly frustrated by your ‘unrequited injustice’ category of neglect. Our government is so neglectful it rises to the level of serious population abuse. And I’m glad Yves is back. When I read today’s post titles I knew there was a welcome change afoot. I’ve been meaning to say something about how important it is for us to keep a vigil. But social commentary is also useful. I have appreciated how everyone has made clear and thoughtful comment about how devious the MSM is; how perfidious our own government is; how wasteful and on the take they all are. How people in power refuse to address the real issues. This is not unconnected – this is the crux. Which translates directly in to the corrupt way money is used. Unfortunately for us, money is government. So that is the language we must use even if it gets arcane – because as Yves always says, “That’s a feature not a bug.” One thing I like to do is try to bridge the communication divide. And I am grateful that I can say as many naive things as I do on this sophisticated site where even the smartest are also trying to make sense of things.

    5. Oregoncharles

      Social justice issues are both more personal and more accessible.

      Ultimately, these issues, all of them, are POLITICAL. That’s how we deal, or fail to deal, with systemic problems, our established way of acting collectively. That’s my excuse for the occasional shameless plug for the Green Party; but it’s also a response to Yves’ dilemma. And it’s the reason nc has been pushing Zephyr Teachout’s campaign, yet another hopeless (we’ll find out by this evening) progressive crusade trapped inside the Democratic Party.

      The defects in finance capitalism that drive this site are pretty fundamental and call for pretty radical changes. For that, you’re going to need politicians and a party that aren’t committed to the status quo. You’re also going to need considerable popular indignation and passion, a feeling that we have nothing to lose. That’s still coming; its first wave was co-opted by “Hope” and “Change” – that’s the function of the Democratic Party in our system.

      So ultimately, this is another plug for the Green Party ( we have to step outside the duopoly if we hope to make real changes.

      1. McMike

        Roger that. We have exactly one little shred of power left within the system – our vote – and even that is under threat. But it is still powerful for now.

        I keep hoping that more Dems will get eventually tired of being Charlie Brown trying to kick the football.

        If enough people create a space by voting for it, then the power will move to it. Simple physics.

        And it is tremendously empowering to vote for a candidate you actually support.

  4. TMoney

    Stay strong Yves. The CDO posts are one of the few sources of any meaningful information of the creations of the finance sausage machine. Reading markit feeds on shortfalls didn’t really explain the mess.

  5. Ignacio

    FWIW, I usually do not comment on wonkish financial posts but I regularly read them. For instance I am shocked to see how a the new “industry” of rental backed securities was created overnigth and, more strikingly, that rent-seeking investors buy them without understanding properly the new product. I wonder if spanish collective funds are in this move.

  6. Banger

    Great post, Yves. I’ve been thinking about precisely the subject you are discussing. NC is not only a site for readers to become engaged and exchange information and see that they aren’t “crazy” for being dissenters from the mainstream not just in the conventional sense of the word but the mainstream left and right in all its little orthodoxies. We have an opportunity here to experiment and share perspectives with a variety of viewpoints.

    Now, for your concerns which I know are there and was waiting for one of you to say something direct and less obliquely. Your key point is that all this is connected. I, for one, have picked up a lot of information from this site on financial matters and I know y’all are heavy into the details and I know you believe that knowledge of those details for people outside the dissident community is your goal as well as influencing public policy. Now speaking for myself only, I don’t regard finance as particularly interesting except as a part of broader issues of the political economy and, ultimately, of our culture. The financial frauds of the finance oligarchs, whatever the detail is definite and deliberate and most of the regulatory bodies wink at these practices whether they use CDOs, sleazy accounting or insider trading (more prevalent than is reported) it comes to the same thing. The world of finance is politically powerful enough to commit massive and not so massive crimes without significant consequences.

    There really isn’t much to say about these financial shenanigans. I read about them and I nod my head–what can one say beyond tsk tsk or whtever? No offence, but finance and even economics are trivial issues compared to politics. We don’t live in an “economy” we live in a political economy. All this stuff you have witnessed and spoken about over the years is a result of politics not markets or even fraud within markets–it is a political issue and the remedies can only be political and no nudging of the market or minor procedural reform will do anything significant about the basic scenario, i.e., there is a class of oligarchs that seeks, through using power, to better their positions as a class and individually mainly without regards to its effects on the larger national and world community–and that, actually, strikes at the issue of morality, philosophy and meaning of what it is to be alive, that nature of what a human being is and so on.

    You call this site Naked Capitalism with a view towards exposing capitalism. Capitalism is not just a set of principles about collecting capital and producing pins efficiently. It is a moral order a deeply philosophical ideal that has evolved, at the present time (Adam Smith wouldn’t like it) into a shattering idea turning all fairy tales, religions and most philosophical ideas on its head by saying that we live to shop and produce goods for market–that there are no higher principles other than satisfying our desires and pursuing our individual self-interest. Family, community, friendships, civilization, the arts, love all these are, at best, commodities we can use when we like and discard when we like. There are no virtues other than being “productive.” Sure there are many people who claim to be religious and all that but that is, in the main, secondary. My observation of most religious people is that their religion is a commodity like any other–it gives them comfort and satisfaction and when push comes to shove they vote with their feet and stand with capitalism and fulfilling their desires for large houses, boats, vacations, mass quantities of goods.

    We are exploring here at NC. We are trying to make connections between finance oligarchs in NYC and City of London and terrorism, war, neo-colonialism and so on. Part of this is discussed by John Perkins and others. I’ve talked to special ops combat guy recently (retired due to injuries) who told me that part of what they were doing is to introduce the money economy and dependence on markets to the natives who were still bartering mainly usually to “bribe” them to join in to whatever side the West was supporting in various civil wars going on in the world (more than is reported).

    When you talk about financial fraud–you are talking about a failure of morality, a failure of the political order not just something that can be remedied with some law created by corrupt legislatures who are obviously and clearly for sale to the highest bidder–am I wrong? There is nothing wrong with revealing the details of fraud and systemic/institutional problems but to be effective we must build a political movement that will make the oligarchs pay and not just pay to having us complain and whine–but real action–not drumming in a park–real action like the French farmers take when things go south for them.

        1. LifelongLib

          “No markets without a political structure.”

          I post occasionally on a couple of blogs that lean libertarian, and people there always get upset when I point that out (although usually I put it more like, “no markets without guys with guns making sure people don’t just bash each others’ heads in and take the stuff”).

      1. mediacritic

        Lambert, what’s the quibble? “Hmm” isn’t exactly a cogent comment. So I and others would like to know your apparent concerns.
        It seems to me that Banger has “hit the nail on the head.” I love NC. I read it everyday. And I love the diversity of its subject matter–technical stuff I don’t always fully understand and the unusual pieces on conscious-changing herbs in the Amazon. It’s all about how we need to change/modify what’s going on.
        So, no matter how greatly informed we might be about technical issues (which I like to read), there needs to be some sense that we’re not just waiting for the right person to read our comments, but that we can/should start doing something ourselves.
        In my field, I now teach literature from the perspective of ‘political economy.’ It’s made a sea-change in how I view my subject matter and rate the figures I teach.

    1. dannyc

      “…finance and even economics are trivial issues compared to politics.”
      Banger, I like reading your comments — would defer to you on most subjects. But on this comment, I started reading Robert Skidelsky’s biography of John Maynard Keynes, thinking that in order to get a better understanding of economics, I’d read the life of the great economist. What I got, however, was a great history of the 20th century, wars and all. It’s the story of how one person with some really, good, big ideas, continuously runs up against stupid power in all its costumes. You’d love it.

    2. Gabriel

      Mr Banger –

      You’re right — it’s a matter of “moral order” and a “failure of morality,” among other basic failures in our financial — greed at any price, to be specific. And the greed is pretty widespread throughout the economy – viz. the healthcare sector.

      Yet we need to be careful about this. Because your next step will be to fix the financial or economic “system” so as to repair the broken morality. Fixing the system to fix the morals would lead the nation to a Whopping Marxist Fallacy. Fixing the system won’t raise the morals – see Prohibition and the old Soviet Union. Fixing the morals is known in a different set of books as spiritual development.

      By the way, there are alternatives to our current economic system. A commenter here mentioned There’s also Gar Alperovitz’s cooperative, regional economy. There are others.

    3. Kim Kaufman

      “No offence, but finance and even economics are trivial issues compared to politics.” There are puppets and there are puppetmasters. Politics and the people who play them are merely the puppets. Finance/economics is/are the puppetmasters. At the end of the day all anybody wants is the money; then they buy all the politicians they want. And, imo, there was a decision that a strong middle class was a threat to the 1% and they’ve been chipping away at it for 30 years (or more). Give us economic justice and there will be more social justice.

  7. Simon Gatt

    Thank you for this article, and for taking the time to point out the link between finance and social justice. To me, this is an obvious link but with the development of finance as a means in and of itself, the link has been obscured. My understanding is simple, really: finance is there as a support to the productive economy (in itself a possibly ambiguous term, but essentially people making things and supplying direct services), which in itself is a support for, and means of progress for society as a whole. Thus the link between finance and social justice, which with the development of the idea that finance is a business in and of itself, capable of directly producing wealth and value rather than providing a support for the “productive economy”.

  8. sufferin' succotash

    I could follow the more recondite financial posts better if I weren’t such a dummy about finance to begin with.
    That’s my fault, not yours.

  9. Steve H.

    Your clear explanations of the consequences of the underlying mindset of those who have power is well-executed, intriguing and important.

  10. trish

    I am an intellectual dwarf compared to many on this site and with economics rather a neophyte. one of the reasons I love it. so much to read and wrap my brain around (or at least attempt to), ponder, struggle at times to understand. and I like the “conversation” even if I feel like a bit of an eed-jit participating.
    My interest in global finance is certainly not personal. Below the poverty level; my stock consists of oats, rice and inexpensive wine in my pantry.

    I think many of us so very concerned about social issues can’t and don’t miss the obvious that the finance elite are a driving force of so much global harm. finance is neoliberalism’s very heart, blood, isn’t it? follow the money on so much that’s odious- and it can be boggling to me how complex the “money” can be- f*cking tentacles into everything!
    Even if I cannot fully understand a more econ post I get a better “sense” of what’s going on, a better sense of the big picture.
    After the 2008 crash I stumbled across writers like taibbi – opened my eyes to stuff of which I was totally ignorant- wow. And discovered this site. I used to see krugman as a worthwhile read and then I kept reading. and learning. I know I’m in a minority here- far more knowledgeable people, but I need that- to learn, stay on top of, cope- and also to enjoy- I find Lambert’s cutting humor posts like vicarious venting for me, and, again, the “conversation.” It helps to know there are like-minded people.
    so, thanks.

  11. Eclair

    Great and important conversation here. And it has to be on the morning I have a 7 am appointment (here in Mountain Time). Short: Yves, you and Lambert (and you commenters) keep me sane and angry. More later in the day, I hope.

  12. John Galt III

    the counterpart to this book:

    Consilience: The Unity of Knowledge Paperback – March 30, 1999 by Edward Osborne Wilson (Author)

    is that the conflicts of interest (of which your planet is a quagmire) have far-reaching connections and unity in much the same way that science does. from quarks to galaxies, dollars to donuts, neurochemistry to politics, it’s all transfer functions, all the time, all the way and and down the scales of length, angle, time and networks.

    this should not be read as an endorsement of Amazon spookworks. I don’t like dealing with them, except for the part where they are fast and cheap

  13. craazyman

    Several things about this post shock me:

    1. A dude in New Zealand with a $20 million dollar farm doesn’t have lawyers that help him see through the fine print spin. Man oh man. I can see Joe Blow getting muppetized, but there’s a point where you can afford “protection”. He’s not even on the “buy side” where you take what they give you as long as the bonus check clears at yearend. This is real money we’re talking about.

    2 DC politicians base policy perceptions on number of comments in the peanut gallery. Holy Smokes, this is worse than even I thought, even after all this time. Dudes and Ladies in your Red Jackets from that McLemore woman or whoever she is that designes your clothes that you could get for 1/20 the price and then tailor them. Nobody would know the difference: Here’s the drill: “Do the right thing!” That’s what should guide your thinking. It maybe all the finance saavy types with consciences are too stunned into a coma to be able to type.

    3. A lot of the 170+ comment threads are 3 or 4 commenters talking back and forth about Ukraine saying the same thing over and over. Who among us has ever been to Ukraine? If you subtract them, it’s like 20 comments, and they all say the same thing. You could reduce it all mathematically to one comment, but that would be no fun.

    4. A lot of the finance wonky stuff is unintelligible to a sentient human person. Not all by any stretch! but some of it is impossible to understand, some of it suffers from “ED” for which pills and medications aren’t always the best solution. There’s a need for another Mental Messiah to break open the clouds of heaven and let the sunshine of a clear-spoken cerebrality break the locks on the cage of our collective confusion: Andrew Dittmer seems to have left the scene on a more or less permanent basis so we need another who can explain why tri-party repo combined with derivatives and trading book hedging causes fictitious capital ratios floated like a drunken boat by liquidity to artificially convey a prudency undeserved by any conception of mathematical reality. Even typing this gets me confused, and it’s probably incoherent. How can anybody makes sense of this? Everybody is in a coma. That’s why there’s 1000 comments about Ukraine.

    1. proximity1

      Regarding my commenting on places I never visited–

      Craazyman– My views about Ukraine, or Russia or any other places I’ve never visited are based on the reports of people who do or have either lived in or extensively visited over extended periods. I chanced to meet a journalist–unaware of the fact that s/he was the correspondant for a major English-language periodical in Russia. Turns out s/he was Russian-born. Russian and “Western”- educated. Before learning what s/he did, we discussed the current events in Russia, the political circumstances, the public opinion, pro and con, concerning V.P. The view s/he related of the Russian people’s social and political prospects for freedom were, in a word, bleak and would remain that way for at least the present span of lifetime.

    2. washunate

      Yeah, I wonder where the Chinese oligarchs got the currency units to purchase the farmland?

      And four different farms valued at $19 million? Not exactly your local small business owner. Really makes you wonder why they thought they were buying. “Benefits” that don’t have accompanying downsides? What are we, 5 years old eating a whole box of candy and then wondering about a stomach ache? We’re not talking about elderly rural folks with no money here. We’re talking about people running multiple businesses worth millions of dollars. Financing is kinda a core component of such a job. It’s like feeding toxic food to the animals and then playing dumb about not being a microbiologist.

      “The ruling National Party’s growth plan relies on increasing export earnings from the dairy and fossil-fuel industries, which generate more than NZ$18 billion ($15 billion) a year and employ 60,000 people.”

      Ah, it’s almost like growth poses environmental and social challenges where there is no one ‘right’ course of action…

      1. susan the other

        And full circle back to “growth.” If we stop going around in circles and look at growth for what it is – just making money go around for the wretched rich at the expense of the environment and human labor – it would be a good start for new thinking on all subjects economic. China is the 800 lb. gorilla – but even gorillas are limited by reality. That project the Chinese are undertaking on a sandbar between Vietnam and the Philippines – making both a naval base and staking a claim to land so they can reclaim the oil – is just like that ginormous dam they built which changed the wobble of the earth. And they are changing “capitalism” because they don’t play by the old rules. They wanna do some giant, hideous thing? They just do it. At least the Chinese aren’t kidding themselves about “growth.” Mao always wanted to have a war just to thin out the population.

      2. tim s

        Two things to consider –

        One, perhaps they thought that they were part of the .01% and not just another patsy, and couldn’t possibly get scammed. After all, once the middle class carcass has been picked clean, the lower upper class must be next.

        Two, perhaps the obscurity of these new financial WMD’s is so good that even the financially savvy generation of one era ago cannot see the dangers within.

    3. Rostale

      While I agree that anyone handling a multi-million dollar operation should demonstrate better financial expertise, we are probably seeing the results of selection bias here; IE Are they really representative of the farmers being cheated, or simply the ones with the most resources to fight back and file a suit?

  14. just bill

    The corruption of finance is essentially no different that the corruption of politics, the corruption of business, the corruption of journalism, the corruption of damn near everything involving groups of people much larger than seven, in which damn neither every institution amounts to a conspiracy. It is all about looting, with any ignorant or unprotected or gullible victim class providing fare game, a Catch 22 world in which “they” can do anything “we” can’t stop them from doing.

    It has always mystified me that anyone would ever buy any derivative product more complicated than a stock option, although I confess I have spent considerable time and risked considerable capital selling those options, finally giving up only after I lost a bundle shorting Lehman options in 2006, when the stock ran from 120 to 148 (ultimately to 170) for no discernible reason and despite the fact that the company was probably already bankrupt if all the financial slight of hand had been properly unraveled.

    I have read everything I could get my hands on concerning the derivative mess, but the only comment I could ever muster was something like, ‘holy shit, who could have fallen for that?’ Does this help? Probably not.

  15. cnchal

    ‘holy shit, who could have fallen for that?’

    Lots, and lots and lots of “investors”, otherwise there wouldn’t be a whole big stinking heaping pile of it. Then there are the managers of the whole big stinking heaping pile, and they float their yachts for a con job well done.

  16. Tony

    Don’t stop. The comments may be an indicator of issue salience among the general populace, but I don’t think that’s the crucial metric.

    The real metric your wonky posts provide to whistleblowers and whistleblow-ees is a binary one. Someone with a platform and a potential audience “gets it,” and might be able to explain it coherently to those who don’t. And if there is one thing whistleblowers need and whistleblow-ees abhor, it’s a megaphone.

  17. Gabriel

    Much of NakedCap comes to be a recitation of the truth that our financial system is beyond hope and that no mere tinkering will repair it. Fix one corner and the smart “boys” will exploit another.

    Each article about some aspect of the financial system nails the point that the “boys” will find a new way to make more money – no matter the morals, damage and hurt done.

    For me NC is merely the latest chapter in a continuing book of woe that began with my reading of “Liars’ Poker,” went on to the dot-com bust and the large corporate fraudulencies then, the fall of Enron [Here accountants, corporate lawyers, and credit rating agencies eagerly cooperated and were shown to be buy-able.], and finally the Great Recession.

    So for me there is little new in NC but more trimmings to the sorry big picture.

    My guess is that NC’s biggest contribution can be to pinpoint specific corruptions and arouse enough anger to move to action. But what action?

    I’m way beyond that. It’s the whole financial system – and it’s broken.

  18. HotFlash

    My dear Yves and Lambert,

    I read the wonky posts very slowly, as I have to look up much and ponder more and try to work out how this actually works, that is, who is in the room with whom and who are giving each other high fives. After two years steady reading, including several re-readings of Econned, much of it is still way over my head, but I understand better what is happening and how. And even a bit of why, and am finding to my delight and astonishment that I can even predict a bit. I am encouraged that so many smart, knowledgeable people also think that the system is rotten to the core and can cite specifics, name names and draw the exploded diagrams. In short, I don’t have much to add to the financial posts, but there is much I take away. Thank you both, and if the policy and regulator folks are looking for comment volume to determine what readers/citizens think is important, they are clueless. Perhaps they should stick to Facebook, where the likes are even already counted for them.

  19. diptherio

    Here’s my suggestion for getting more comments on wonky financial-crime stories: At the end of each article, ask for punishment suggestions for the crooks involved and let us vote on ’em–Jaimie Dimonds, for instance: stoning or firing squad? Should Blankfiend get the zappy-chair or the eventually-lethal-injection?

    I think many of us might not feel like we’ve got the requisite background to chime in on the stinky details of the all the malfeasance that gets reported here–but we’re definitely qualified to discuss what should be done with the perpetrators. Just a thought.

    1. Banger

      I don’t like the whole “punishment” thing. I prefer penitentiaries in the old sense of the word–a chance for those characters to think about their evil deeds. But best, in my view, would be an isolation tank with a few doses of acid–that’ll straighten them up a bit.

      1. diptherio

        Well, that’s the beauty of my suggestion: you get to put forward your proposal as well and then we argue about the merits.

        You’re probably right that my knee-jerk “kill the bastards” recommendations are a touch anachronistic and ill-befitting a enlightened progressive such as myself–but can you really blame me?

        As for your proposal, I’m only going to vote for Jamie and Lloyd getting the isolation-tank + LSD treatment if everybody else gets a chance to do it too. It just doesn’t seem right that only the criminals should get the experience. And really, I’m not convinced that a massive psychedelic trip would, in fact, “straighten them out.” The tools aren’t magic, and as with psychotherapy the patient has to want to change, I think–at least on some level. If the banksters are truly sociopaths/psychopaths, I wouldn’t be surprised to find that the benefits of the trip don’t last much longer than the trip itself. And then we’ll have to decide, once again, whether we should make the guilty parties become scrubbers-of-public-toilets or Fukashima clean-up crew members….

        1. TheCatSaid

          I like the suggestion of requesting ideas for suitable penitence / restitution for the various perpetrators of frauds & cons revealed here on NC.

    2. craazyman

      Honestly, that imagery gets tiresome and off putting. Kill the Rain God, Kill the Rain God! Dismember his corpse and bury his bones under the stones. Wear his skin and dance drinking his blood.

      It’s atavistic, anachronistic, idiotic, embicilic, vigilantism. There’s so much of it in the peanut gallery it gets almost unbearable.

      Look at South Africa. They had a truth & reconciliation commission for crimes far worse than the financial crisis. Mandela became president. Justice and vengeance are dialectical opposites.

      First the truth has to be told, the culture has to tell the truth to itself, the politicians have to tell the truth to themselves. It has to start with the truth narrative. That’s the hardest part, with complexity. The truth narrative becomes 10,000 pounds, so heavy it can’t be told, and so everything reduces to a contest of will and power and consciousness receeds step by step down the hall of the ages until it’s an ape, a baboon beating his chest, again.

      1. MyLessThanPrimeBeef

        Still, I wouldn’t mind a truth and reconciliation commission on crimes we have committed in the name of Groaf.

      2. Doug Terpstra

        I wonder if SA had had a “truth and [retribution]” commision instead of a kumbaya celebration, the neolibs might not have captured it so completely. Punishment and purges have deterrent value. South Africa was featured in Shock Doctrine as a triumph of disaster capitalism. Not sure if it’s a good model for letting the banskters regroup and counterattack.

      3. ambrit

        You have to admit that that first part is the hard part. Especially with so many ‘accomplished’ persons working so hard to make sure that it does not come out.
        If justice and vengeance are dialectical opposites, what is the synthesis? I would aver that South Africa is just as corrupt as it ever was. The difference is that now it’s an equal opportunity corruption. Just like here.

        1. craazyman

          It probably is. I frankly do’t know aythig about south Africa, except it has lots of sharks and good surf and it had a truth commission. Other than that . . . not much.

          At least 40% of my comments contain embicillic statements, in some cases I’m well aware how embicillic they are but I don’t care, so nobody get mad or anything now. hahah.

          Why is it so hard? It seems ridiculous to me, why it’s so hard. Marvin Gaye was shot to death by his own father. It seems incredible but it’s true. This is the man who wrote and sang “Whats Goin On” . . . If that can happen, anything can happen. Why does it happen like that? Master Po does’t even know.

          1. ambrit

            Don’t sweat it craazyman. One of my uncles lived in Port Elizabeth during the apartheid and after. He made that remark several years ago. People will be people. As for imbecilic, no way, out of the mouths of babes and all that.
            Master Po knows that he doesn’t know. That’s why he’s the master and we’re the minors.
            Peace and love.

          2. jonboinAR

            That’s true. Anything can happen, and does. Man’s capacity to be full of shit knows no bounds, near as I can tell.

  20. GlassHammer

    At some point, individual cases of financial chicanery can only be viewed as systemic looting.
    When that point is reached, the impact of each case is slightly diminished.
    The cases just become smaller and smaller pieces of one big scam.

    Eventually you sit there and ask yourself “What part of this system is even worth keeping?”

    1. Gabriel

      Yes to both points.

      Embroidery of a piece doesn’t alter the nature of the piece – a good illustration of the Infinite Variety Hypothesis. That is, there’s no end to the varied embroideries of a single vice, say greed.

      Agree also to point two.

    2. susan the other

      The replacement is the thing. What do we replace it with. Certainly something that doesn’t flame out and make everybody nuts enough to start bombing each other. Capitalism is a finite solution to an infinite problem. It flames out regularly because it is an incomplete mechanism for social relationships and progress. We can’t continue like this. The best suggestions all have to do with environmentalism and sustainability imo. And making looting pointless.

      1. Lambert Strether

        But the identical argument applies to, say, Ukraine. I mean, where do we go from there?

        And yet Ukraine is complicated, intricate, impossible to understand, has an arcane vocabulary… Everything that people say is a barrier to commenting on finance. I can’t help but think there are other factors at play.

        1. MyLessThanPrimeBeef

          I know more equations will not help.

          They say, for every equation you include, you lose a certain number or percentage of readers.

        2. GlassHammer

          I agree that expose pieces on the Ukraine crisis would fall under the same argument but it would probably take a bit longer for readers to suffer from the “another brick in the wall” effect. I would wager that few readers really know the inner workings of that country and most only have 30,000 foot view. Basically it takes longer for readers to view a story as “yet another brick in the wall” when they were just handed their first few bricks.

          The reason my interest in financial articles has diminished is that my inner Howard Beale is constantly saying “The story doesn’t need to tell you things are bad. You already know things are bad.” That said, without the financial exposes on this site I wouldn’t have enough knowledge to even have that inner monologue. So keep up the good work guys.

        3. susan the other

          Well, I’ll just I definitely agree there is something else at play. Oil. Former Amb. Bremmer (Iraq) did an interview on CNBC a couple a days ago and virtually said it – that Ukraine and Syria and Iraq are all the same war in different pockets. I think we’ve already formed some kind of alliance with Iran on where the whole thing is going. Remember The Prize. It’s gotta be the Caspian. Maybe.

          1. TheCatSaid

            The Real News had a video in which the interviewee explained Ukraine’s going to be fracked in a big way. The main Ukrainian oil company that will do the fracking has recently brought VP Joe Biden’s son, Hunter Biden, onto their board.

            (I missed all those posts with comments about Ukraine, so I may as well get one in.)

        4. jonboinAR

          No, Ukraine is a lot less technical, easier to babble about, than finance which uses abstruse language such as found in physics or engineering discussions. At least to me. I often read the financial ones several times and only end up with maybe a glimmering of what y’all were talking about. The only way I can tell that over time I’ve learned a thing or two is by listening to people around me try to talk about financial issues and can tell instantly they’re complete ignoramouses.

  21. TarheelDem

    The combination of clear explanation of how the technical aspects of finance affect social justice and environmental aspects of public policy are why I continue to check out the articles and links on the this site. And post them through Facebook to friends who have worked in banking who would not otherwise encounter them and friends who are outside the FIRE sector who need the translation of the finance mumbo-jumbo to understand national issues. I continue to be thankful for the work that Yves and Lambert do here. IMO, it hits exactly the right balance and I participate in comments to the limits of (some might say beyond) my technical competence in economics.

  22. Bunk McNulty

    I read NC every day.

    In the early 1980s, I took a course called “Financial Markets” taught by the late Arnold Sametz. Nearly everything I learned in that course has long since become obsolete. Reading Econned was an eye-opener. I’m not an economist or a financial professional, but I do want to understand the impact that economists and financial professionals have on the world I live in. So even if I don’t comment on the financial reporting, I sure do read it. And in a world where it seems everything has a price tag, it seems to me that financial issues and social issues are really one issue: When everything has been priced, then the whole notion of morality becomes sort of quaint: Is it right? Is it wrong? If you have the money, you don’t have to answer the question.

    1. Carla

      Great comment, Bunk.

      “Is it right? Is it wrong? If you have the money, you don’t have to answer the question.”

      Excepting we know: if you don’t have the money, YOU’RE wrong.

  23. Uahsenaa

    Speaking for myself, having been trained in a field also known for its obfuscating jargon (literary criticism/theory), I appreciate the hardcore technical details but am not in a position to critique or add much to what is being said. I do also appreciate the connect-the-dots aspect of NC that “business news” sites are often loath to do much of, which seems to be by design, since the net result, vast and widespread ignorance, favors those who can manipulate the finer points all the while spouting meaningless platitudes like “engine of the economy,” “job creators,” and what not. I regard NC as a necessary if diffuse education in what this all means and how it works. My hope is that those in policy circles, who often exhibit the very ignorance I refer to earlier, take it the same way.

  24. grayslady

    Yves, you’ve been absent for the past two weeks, other than occasionally appearing in comments. Lambert’s strength isn’t finance, and neither is Dave Dayen’s, except for mortgage related issues. You are the one who has made financial issues accessible to many readers on this site. I think if you look at discussions of your own articles, you will see more engagement. Michael Hudson and Bill Black are also writers capable of making complex subjects not just accessible, but meaningful, although even Michael Hudson has been devoting a fair amount of his recent writings to Ukraine–possibly because of the economic impact that’s likely to occur in the EU through trade restrictions.

    Personally, I think you are on to something with your pursuit of lurking pension fund risk and mismanagement, but, as you said with the lead up to the 2008 crisis, sometimes it takes a series of articles and exposes before others perceive the risks of certain behavior. I have a very rusty MBA in Finance, so these topics are not totally foreign to me, but, in reading any article, whether here or elsewhere, I’m always evaluating how the information translates into future repercussions. Bastardizing the mortgage market had implications many could quickly understand; Chinese real estate transactions in New Zealand–not so much.

    1. susan the other

      Clearly Yves’ pension fund expose has had an impact. None other than CNBC had a headline today about Chris Christy handing over NJ pension funds to some hedge funders (no mention of PE funds but who knows?) and a blurb on how NJ’s finances have been downgraded.

    2. susan the other

      Also about Chinese real estate transactions in NZ. They are here too and going full steam ahead building homes and condos mostly for Chinese buyers. They are going to undercut our languishing construction industry companies in no time flat. The only comments have to do with the fact that our real estate market is ripe for the picking and a great deal, etc. Amazing.

  25. OMF

    Heads up on using the term “Social Justice”. I think it’s a great term, but you should know that the internet appears to have kicked up a massive crap-hurricane over the term and its proponents.

    There’s something called “gamergate” going on where so called “social justice warriors” are fighting misogynist gamers for control of video games or something. You’ll see a lot of news articles about the death of the old gamer culture if you do a search, but there’s also some other “notyourshield” thing where minority gamers actually defend it. If you go deeper into the background, you’ll find that this kind of battle has resulted in a lot of bitterness in other online communities, from atheists to even OccupyWallStreet.

    The bottom line is, “Social Justice” appears to have become a loaded term on the Internet. You might want to think up of a backup description for socially just policies and narratives. Think is this as internet enabled devolution of terminology, or a reverse euphemism treadmill on steroids.

    1. jrs

      How about “economic justice”? Then again if “social justice” is scary I hear if you use “economic justice” you fall off the left edge of the world. Is that true?

  26. Demeter

    Dear Yves and Lambert:

    I am a lowly, self-taught student in this field of high (or low) finance, and you are my principal teachers. So I don’t have much to say on technical issues, other than shock, dismay and indignation, which I will spare us all the reading.

    But social change is the tool of democracy, available to all who give a care. Anybody can play, even in these post-United Citizens times.

    Your technical posts tell us where to dig, to undermine the criminals. Keep up the good work, on both sides! (I didn’t need the explanation of the link…it was obvious to me what you are doing, and why. But others might benefit from having their eyes opened…so just put it out there. We take what we need, and come back for more.)

  27. Ned Ludd

    I think people are more likely to comment on stories with uncertainty, where people are sorting through and disagreeing on a shifting landscape of evidence.

    When a post is well-written, thorough, and dispositive; there is not much left, other than to shake your head in agreement.

    Also, there is Parkinson’s law of triviality, which is called “bikeshedding” by software developers:

    Although discussion can meander in any topic, the probability of meandering goes up as the technical difficulty of the topic goes down. After all, the greater the technical difficulty, the fewer participants can really follow what’s going on. Those who can are likely to be the most experienced developers, who have already taken part in such discussions thousands of times before, and know what sort of behavior is likely to lead to a consensus everyone can live with.

    1. MyLessThanPrimeBeef

      So true.

      Thus one way to get more comments, among many other ways, is to talk about religion or baseball stats.

    2. Gabriel

      Ned –

      Let’s not ignore the “bikeshedders” since they are the ones who badly need to be involved here, even if only to read or scan the articles.

      A lot of “echo-chamber” talkers won’t get a lot done except to agree with each other. So let’s leave some welcome room for such “meanderers.”

      1. Ned Ludd

        The quote about meandering is written from a software development perspective, where proposals are derailed by aimless questioning and endless second-guessing. This also happens in activist groups.

        The concept of “bikeshedding” is not a perfect fit for what happens in comments – since we are not a team trying to complete a project – but it reveals why certain topics get discussion, while, for others, people have little to say.

        Parkinson shows how you can go in to the board of directors and
        get approval for building a multi-million or even billion dollar
        atomic power plant, but if you want to build a bike shed you will
        be tangled up in endless discussions.

        Parkinson explains that this is because an atomic plant is so vast,
        so expensive and so complicated that people cannot grasp it, and
        rather than try, they fall back on the assumption that somebody
        else checked all the details before it got this far. Richard P.
        Feynmann [sic] gives a couple of interesting, and very much to the point,
        examples relating to Los Alamos in his books.

        A bike shed on the other hand. Anyone can build one of those over
        a weekend, and still have time to watch the game on TV.

        There are many topics, especially on the daily Links page, where readers understand the issue and can contribute additional knowledge and insight. On more technical posts, however, people who are not familiar with the topic may learn a lot, but they may not know of anything to add in the comments.

  28. cnchal

    Finance and social justice?

    The federal government appears to operate on an MMT principle, where money for what it prioritizes comes from thin air. Much of that thin air is turned into a self feeding military force that flies around the planet, destroying everything in it’s path. It’s garbage ends up at the local police department, for when another Ferguson happens.

    Socialism, as practised lately actually means welfare for the rich. What can explain the acceptance that multi national corporations are entitled to be bribed by local politicians to locate their plants there? This has to stop. Why do I never hear a politician propose there be “no bribery” treaty with other jurisdictions?

    Capitalism, as practiced lately is for you and me. We get to fight for the crumbs that fall off the socialist’s table.

    1. Illegal Country

      Local “bribery” was only made possible due to the cabinet’s need to pimp king dollar. Propping up king dollar exports jobs. When both parties focus on propping up the currency vs. jobs then local governments are forced to get into the game due to pure survival. One has to wonder if the Fed has this as their game plan…shifting the burden to local governments. It unfairly dumps the unemployment burden to local governments.

  29. ambrit

    I too was amazed at the idea that policy wonks would consider the volume of comments on esoteric stuff to be important. Don’t they know how to sieve quality from quantity? Certain commenters here are obviously experts in the field. We all read their comments and try to understand. Are they fleeing this site due to an aversion of mixing in with “lower orders?” (As far as that goes, the very segregation of comment volumes over posts would tend to concentrate ‘wonkish’ commenters in exactly those posts that are more technical.) As for the pure economic vs. social justice divide, I would say that the two can never be decoupled. Each informs the other.
    Narrative suppression there undoubtedly is, but not here. That is one major reason people of all stripes congregate at this site. You all do an excellent job of screening spam and other junk. What is left is still ore, to be mined for paydirt. The trends that pop up here are significant in and of themselves. They tell mover and shaker readers just what is engaging the attentions of the more involved cohort of the population. Consider it a version of “the wisdom of crowds.”
    Finally, don’t underestimate your, Yves and Lamberts, “brand” strength. Many people come here just to read the economic posts. Others come to hang around the ‘Water Cooler.’ The two groups mix it up occasionally, but that’s just the nature of the beast.
    Apropos of that: David Bromberg – “Sharon”

  30. H. Alexander Ivey

    NC, too technical? The technical posts report the same old, same old – looting and stealing as always, so MEGO?

    Nonsense. I’ve been reading NC since the summer of 2007 and have learned a lot by reading the technical posting. Not to brag, but now not only my wife rolls her eyes and avoid any mention of finance, but my dearest friends and family do too! (haha).

    But seriously, it is the techical details that I think have made the most impact in my world. More than one person I know has stopped cold when I warned them about buying a house in the USA (I’m in Singapore and there were plenty of adverts about US home purchasing last year). My argument rests not on the price of the house, but the lack of clear title and the abuse the service providers will subject the home buyer to, and those reasons I got from NC wonky posts.

    So keep the wonky posting coming, and I’ll try to keep up.

    ps. And a big AMEN to craazyman’s point #2 – but not just to DC regulators, but state and local ones too, do all of them have no friends or neighbors being stripped by their lack of action?

  31. MikeNY

    I generally read the finance posts. Sometimes, when I don’t comment, it’s because I’ve said my piece 100 times already (e.g., my views of the Fed, or on the lifespan of bubbles) and I don’t want bore people with it again. I think your PE pieces are very valuable, because PE is an object lesson in oligarchy and crony capitalism, 3G and Burger King being a case in point. And the action in PE drives a big part of the loan and bond markets. PE is a primary vector for the infection and necrosis in modern capitalism.

  32. SoCal Rhino

    I read this site daily too. I have an MBA, a math degree, and work in a backwater of the financial services industry in IT and Ops. I’ve learned a lot here, including other voices worth paying attention to, but leave the commenting to those with clearly more immediate expertise.

    Some key takeaways: the opacity that makes finance mind numbing is the key feature not a bug; politicians and regulators haven’t recently become more stupid, most everyone just wants their share of the spoils.

    We have many sources to turn to on questions of media manipulation and foreign policy, but I think it’s the rigor of analysis here that makes this site special.

  33. washunate

    Fantastic article and fantastic comments. That pretty much is why NC is awesome.

    I guess for my two cents, I’d call it selection bias.

    Fraud is an epidemic. The FBI even said so. Publicly. A decade ago now. What is there to add as a comment, either witty or thought provoking, on the more detailed financial posts? The financial system is a casino, except that that is an insult to casinos, which are far more transparent and rules-based and customer-friendly.

    I guess where I might quibble a bit is this sentiment: “It is precisely at the times when risk is perceived to be low that investors and speculators pile into hazardous positions and eventually blow themselves up. But the conundrum is that “eventually” can be a while in coming.”

    Who perceives risk to be low? Who thinks catastrophe is coming eventually? We are in a depression right now, have been in a depression for a decade and a half, give or take, depending on exactly when you start it. And who cares if investors and speculators blow themselves up? The bottom 80% of households have very little stock market equity. They have little net worth in general. And many of our most vulnerable citizens would directly benefit from cheaper housing, not more expensive housing.

  34. JEHR

    I was educated in English literature and adult education. When the financial crisis hit, I wondered about the details of what went wrong and started reading and commenting on various blogs. At one point, I was asked to compile daily articles in a blog based on one bank’s fraudulent behaviour which helped me understand that institution. One of the links on that blog was to NC and I began to read it every day.

    I know more about how finance works, about derivatives, and about MMT than I thought I could ever absorb. Now I have reached the point where the fraud of the banks and the inequality between the rich and poor have become a numbing influence on me. Locally, I am supporting the politics of the greens and social democrats. Every day I think I will stop doing any more financial reading because it is so depressing (except for Black’s ability to persuade a jury that the borrowers he spoke for were not perpetrators but victims of the financial industry ).

    I have the greatest admiration for those who continue to slog away at presenting the truth and revealing all the lies that define the financial industry worldwide. Please continue to present your financial analyses and I will read them and continue to learn.

  35. The Infamous Oregon Lawhobbit

    This is a daily stop for me in the ol’ “broaden the education” department. For posts and links that are educational or agreeable, I see no need to add my two cents to any “piling on” that may be occurring. For the posts or links that I disagree with, I am here as a guest on someone’s blog and it behooves me to behave politely. I’m not going to change anyone’s thinking or feeling on topics, so it’s simpler and easier to sit back and watch. Less annoying, too, since I am self-relieved of any interest in preaching….. ;-)

  36. steelhead23

    Yves, I sense a bit of frustration in this post. That frustration comes from working hard to educate the ignorant but interested readers in the Wall Street Shenanigan Circus. Sometimes I have had to Google concepts like “interest rate swap” to actually get the message, but I must say, your coverage of Magnetar and its ilk was excellent and clear. Reminded me of The Sting, where the marks thought they were making easy money (those mezzanine tranches paid very well) only to watch their value evaporate. And, when it comes to discussions of MMT and government emission of currency to meet social needs, the idea clashes with things we have been taught (indoctrinated), so we dither.

    If I might be so bold, I would love to read an article or two about the demand-killing effect of economic uncertainty. You see, after watching the Wall Street Shenanigan Circus, and reading your detailed accounts of their criminality, I have basically pulled out of the markets (and missed the 200% runup in stocks), but that is not all. I am increasingly reluctant to spend, worried about what our future has in store. I don’t think I am alone. If elite lawbreaking is broadly diminishing folks buying habits, demand would surely be hurt, and with it, any potential for recovery. Don’t mean to hijack this thread, but I think the influence of publicly recognized fraud on demand is an unheralded cause of our current stagnation. Might someone you know be looking at this issue?

    Again, I think you and Lambert, et al. do us all a favor every day, and one heck of a good job. Thanks.

  37. trinity river

    Yves, I for one come to this site only because you combine social justice and the details of finance. I may not add comments when you discuss CDOs because I am not working in that field. Yet I want to understand the details of what is happening. I don’t want opinions; I come for facts, specific facts, documented facts. I come to your site because you combine the two. If I wanted one or the other, I would go to other sites. I have been interested in this perspective since I worked in this industry for 2 years 25 yrs ago. I found I was not qualified ethically to do the work I was asked to do. The whole industry is built on too many lies. What I saw then was bad enough and things have only gotten worse.
    I do not know but highly suspect that the people who could comment on the details of the situations you discuss are afraid that their comments would out them to their colleagues and get them fired. The rest of us do not have enough facts to comment intelligently.
    “It is not obvious how to break the stranglehold of elite financiers. But remaining ignorant about how they operate guarantees that they will be able to improve upon their already advantaged position.”
    I wholeheartedly agree. Please, please continue. Only don’t try to do too much so that you are with us for the long haul.
    Maybe all your readers should stand alert to how the political power brokers are reading you and comment accordingly. Like you, I hope people on the inside of the situations you describe will change their behavior. Your readers are now watching and will strike the first chance we get.

  38. EmilianoZ

    I think most of us find finance boring. Without the 2008 meltdown, I wouldn’t even be reading a blog called “Naked Capitalism”. Unfortunately that seems to be the industry’s greatest asset, that few people understand it.

    Finance has become rocket science. Should it be so? Has financial innovation contributed anything positive to society? Has the positive (if any) outweighed the negative?

    There should be a major effort to simplify finance to the point where most people can understand it. Plain vanilla everywhere. We should be able to discuss finance like we’re discussing our sewers.

    1. nony mouse

      I’m for this sentiment.

      a great many of the posts get so lost in the minutiae and explicating it. and almost nearly I feel like even an idiot like me can sum them up with “a mighty contract was written with so many clauses and obscure verbiage, that it was guaranteed that the ConMan (seller) would triumph, and the EarningsSeeker (buyer) would lose.” sometimes I really feel like they are all one article, describing one con game and all of which is over my head. eventually, given enough ConMen and enough lawyers willing to write contracts, they will have all of the money and all that will be left for us is to do more of the “how did it come to this” which is what these articles allow us to do.

      I think the strength in these articles is almost NOT in the explaining of things (that’s just the dirty work that must be done in order to get to the real point) but in revealing why the Con worked. why did the buyer need that money? and many times, it seems that mere greed is not enough to explain it (as it might be in Vegas, or with the weekly lottery). also, how can “we” little people change this? reading and understanding it isn’t enough. actually, the more of them I attempt to understand, the more it occurs to me that these obscure contracts and financial instruments –were written with the express purpose to obscure understanding, and thus rob the buyer– in the first place. as someone posts above, at what point do we all just come to one unitary conclusion: the whole thing must be dumped, and we have to start over with the ‘real’ purpose of having a financial sector to begin with.

      regulators making a little tweak here, and a little subclause requirement there is not going to cut it. tinker all they might, that Dam is eventually going to collapse on all our heads.

  39. JCC

    I’m at at 5:00 AM (Pacific) every day though I don’t have to be at work until 7:00 AM. I’m often late for work, and NakedCap is to blame. I read every article, and many of the links. I’ve learned more in the last 7 years on how the system “works” today reading the articles here on finance, as well as the comments, then I learned in my previous 40 years of college and work experience combined! The comments I occasionally post are primarily anecdotal, I’m no policy wonk, but the occasional replies are often helpful in focusing (or justifying) my attitude and beliefs

    I’m often still a little baffled by some of the financial postings (my formal education is limited to a few accounting, basic classical economic, and finance courses), but the combination of the “wonkish” articles and social justice articles along with the many PolySci and History courses I’ve taken, and books I’ve read, over the years has helped me a great deal in solidifying my understanding what has happened over the last 40 years or so to our entire U.S. social/economic fabric, as well as what I believe is possible as far as fixes are concerned.

    I also find many of the comments to be enlightening. One great thing about all the articles here is that t has forced me to jump off to other areas, on-line and off-line, in order to get more background for understanding some of the basics of finance as well as various theories of economics and money in general, as well as getting a better idea of how our new version of capitalism affects every aspect of our social environment.

    I must admit I’m a little frightened and, again, NakedCap is to blame :)

    Although I firmly believe that the average citizen is nearly powerless relative to national U.S. domestic issues, and particularly foreign policy issues, the information I gain here that shows me what I can contribute through things like voting and private discussions (I forward many of the articles to friends) and maybe it helps.

    Keep up the great work; I trust the judgement of all that post here as to what you all believe to be the important issues.

  40. Brooklin Bridge

    I wonder if Stuart and/or Colbert ever contemplated re-focusing on comedy rather than on the paradox of being “the only news in town” ? Of course, while comedy may have permitted them a little freedom under the radar that other propaganda outlets didn’t have, in their case “the news” was still mostly propaganda with a veneer or gloss. Arguably, remarks about occasional comedy breaking out in a Stuart or Colbert news program were even officially sanctioned because at the end of the day it was mostly pure pap and thus where any comparison with NC would break down.

    Still, the analogous irony of a wonkish site dedicated to highly technical economic discussion being a bit of a radar cover for a hot bed of scholarly and intellectually rigorous posts on more general economic, political and social world affairs as well as civil rights has certainly been noticed by many and indeed perhaps the comments have either led this phenomenon of generalization, followed it, or perhaps a bit of both. Certainly events have had the heavier hand in topic selection as you have frequently made clear at the beginning of posts with such intros as, “Normally NC doesn’t cover this…., but the seriousness of the event…”

    The fact is you carry over to pretty much any direction you choose. It is not just regulators who read the posts and/or the comments. But that is perhaps beside the points you raise and the mission of NC and the way to get there is not just obviously but deservedly yours to call.

  41. economicminor

    None of the financial shenanigans make sense in the long run or from the big picture. Capitalism has produced a lot of progress and products but in the end it is destroying freedom and is creating conditions that are degrading humanity and the environment. Capitalism is destroying its own customer base. In the current stage of Capitalistic evolution, it is swallowing up all its competitors and supply chains. Projecting this to its apex will mean there will be no government and only Corporation. And we will not have Capitalism any longer, only dictator.

    Government’s job as defined in our Constitution was suppose to be Of the People, By the People and For the People which means its job was to limit the destructive forces of pure unfettered Capitalism. It was inevitable that this failed as more and more money and power were allowed to consolidate in the hands of fewer and fewer people.

    When a group of people only talk to themselves, they reinforce each others view of the world. If this goes on long enough, their view can become quite distorted and they don’t know it. I believe that those at the top, especially the FED but in most corporate board rooms have this very distorted view of the world. They only look at numbers that reinforce their view. I keep expecting another *mistake* where one of the big players, who makes a big bet on ? currencies or derivatives or something, and doesn’t see the real picture again, and one day we wake up to a huge financial crisis that is bigger than the last one. The mistake could be a force of nature too. Something totally outside their realm of thinking or influence.

    So the question is whether we should continue to pay attention to the process or what? Become Ostriches?

    I think the saying “Ignorance is Bliss” is apropos here except that none of us are ignorant and once a person starts to look around and wonder, it is hard to become an Ostrich.

    But does it do us any good to pay attention every day or week? Not really. But in my case, I can’t help myself. I want to know what is going on and I appreciate NC and other sites like ZeroHedge and many others for keeping me entertained, I mean informed. Nothing we can do until this phase of Crony Capitalism runs its course and dies from malfeasance.

  42. Paul Niemi

    Will finance and social justice be justice for the financial types? I have noticed people are jumpy, grumpier than usual, perhaps unduly pessimistic. It is as if they sense something big and bad is going to happen. Perhaps it will. Since 2009, there has been a financial bailout, QE, ZIRP, and Dodd-Frank. Now the derivatives are back in the stratosphere, all intertwined, leverage everywhere, and global economies tottering. I’m still watching copper, which is again falling this morning. Just now, I realized that the end of QE in October is right before the election. I’m one who still thinks elections matter. Since I think QE has been the wind in the sails of just about all the financial shenanigans outlined in the wonkish posts at NC, I’m wondering what kind of October surprise the end of QE will be? Certainly the timing goes against every rule about not rocking the boat before an election. Considering the damage the crash in 2008 did, I’m still privately hoping that if QE gave them the rope, and Dodd-Frank erected the scaffold, then the financial tricksters have all they need to hang themselves. With the Fed ending QE, I think ZIRP will not be sustainable. It will be too expensive, and interest rates will float. Taken together, those two changes pull the rug out from under China, for example, and the developing economies. I think it is good for Yves to have documented what has gone on financially, few comments or not, because after the dust settles from what is coming, we will be able to go back and understand the antecedents.

  43. tim s

    Jeez, Yves, gimme a break – I’m just addicted to the cute critters you keep posting ;)

    Seriously though, keep your head up and keep plugging away. I’ve learned a lot since the crash and that it no small part is due to your efforts. I was completely ignorant about finance until middle age (pitiful) but no more – now I’m only greatly ignorant, which is a great improvement!!

    I see the interconnectedness and that is more my thing than the technical details of deep finance. That being said, I still just don’t understand them all, hence the lack of comments, but I know much more than before.

    Many others are in my boat. It is a much shorter leap (albeit still very challenging for many) for many of us to wrap our minds around Machiavellian leadership and international intrigue as the scales fall slowly from our eyes, than it is to fully comprehend the schemes of international banksters. This obscurity is their strongest feature, and still works quite well.

    You can’t see the lights slowly turning on in the many minds who follow NC, but that doesn’t mean that they don’t exist. They are simply not strong enough yet. Give it time….

    THANK YOU x100.

  44. Brindle

    As one who tends to just engage in the non-finance comment threads something that would help me is an onsite list of acronyms used with brief definitions. That would help me feel more competent in joining discussions.

  45. scraping_by

    Truth is an important quantity in an environment of lies. Lies cost time, money, and effort especially when they’re aimed at fooling a large number of people.

    Truths have a way of passing from person to person, moreso now that we’ve networked into the Web. Specific contradictions of political slogans and sales patter are important to hold your own against the blizzard of granfalloons. They are nuggets that experience can coalesce around as opposed to a general sense that you’re being shopped.

    So even though the effect of telling the truth might be subtle, distant, and slow, it moves the interconnected sense of the world away from the fantasy we’re being sold and anchors us in a more practical stance. There’s little credit and less honor in telling the truth, but there are signs there’s an effect. The echos of truth move through the network and the direction of the world is righted.

    Thank you for speaking true to those of us outside that world. Your band of admirers are better off, and the rest of the lump is leavened.

  46. RudyM

    I have been telling myself for the past eight years–at least–that I absolutely have to get a grasp on economics, and especially finance and monetary issues. However, I have to admit that I feel I have hardly gotten anywhere with these subjects. It’s as if my mind resists the language of finance, with its peculiar mix of very abstract sounding terms (that contain words which looks familiar, but seem to end up meaning something unexpected) and concrete, mundane referents. I have to keep starting over and over again. And for reasons beyond my control (so far), my ability to sustain intellectual focus for extended periods of time has become much more limited over the last decade.

    If I am tired, as I often am, it’s not even worth trying to read an article about the intricacies of finance. Many other issues don’t pose the same mental challenge, so I may end up reading about them more, even while thinking I absolutely must focus more on economic issues.

  47. Zane Zodrow

    FWIW, I have been checking NC nearly every day for 3 or 4 years, have read hundreds of articles, thousands of links, and constantly shared things all over FB, Twitter, emails, personal recommendations, etc. But I have only commented a handful of times over this span. I should read the comments section more, as they are always enlightening, but the day is only so long. Econ geek stuff is appreciated and needed, links for social justice / breaking news always good. Don’t pay too much attention to the ‘stats’. My social media, journalism, and political / activism “Careers” all started with OWS, went from zero to insane. Keep up the incredibly good work.

  48. Steve13565

    I use the technical finance articles to inform my investment strategy. I think there was an article on such things as rental backed debt obligations and other such foolishness. That article reinforced my determination to stay away from such “investment” products. Before the article, I didn’t know much about the details, but if Mortgage Backed Securities turned out to be unsafe, I couldn’t see how securities backed by even less commitment from the borrowers would be better.

    With respect to the fatigue factor, I feel it too. Unfortunately for all of us, it is easier to recount the misdeeds than it is to suggest a way to fix the problems in the current socio-political environment. How are we to wrest the power from the oligarchs who wield it against us? Right now these oligarchs are very successful at a divide and conquer approach to keeping us peons in line. What will it take for we 99%ers to unite against the common enemy?

    I don’t know if this is the answer, but a very progressive candidate for governor in Massachusetts, Don Berwick, thinks that it all depends on the muckraking press to increase the pressure. Very little of the MSM wants to muddy the waters with any muckraking. The internet and web sites like Naked Capitalism might set us free if we can protect net neutrality.

  49. Paul Tioxon

    This is good to read. The consciousness raising of self awareness is an important part of working towards some practical political objectives. It is politics and economics combined, along with the perspective of time that only knowing history brings, that can create a comprehensive radical faculty of perception that will bring about any deliberate and lasting social change. I find the political confusion on this site by some of the commentators worthless to my ability to learn anything useful.

    And I am not talking about what I call right wing reactionaries and stubbornly ideological bourgeoisie capitalist socialized everyday people. It is more than academic to see what is going on and correctly name it for it is: capitalism. At the highest theoretical levels of analysis, this is a simple proposition, not to be confused with fascism, which is really a sub feature of capitalism, that may or may not appear in the future and has very little intellectual foundation. The use of violence by the state and its appointed institutional violence, police, does make a police state or a fascist police state. Police and armed forces of the military are common patterns of formal politically organized territories. How wide spread the abuse of this power, as a feature or a bug does not mean that the over arching organizing social relationship of people to markets and money is less or more than capitalism. The national security apparatus, domestic and across territorial boundaries, will be wielded more less, but never to the contradiction of the pursuit of profits by the most utilitarian and efficient means, at the highest velocity commercially available. There are profits generated by capitalism under Nazi Germany in the industrial cartels as well as profits generated under the Treaty of Detroit at the apex of the Welfare State, where the common man became the middle class and the unwashed masses became the shopping mall denizens of Black Friday bargain hunting.

    Capitalism is strong, because it is adaptable, it has people who are willing to learn how to learn, in order to make a profit by any means necessary, even if it elevates a middle class into a long enduring prosperity, if not unbreachable affluence. And it is the profits that the market based economies produce, only in the form of currency, an abstract concept of the price extracted by the capitalists in excess of the cost of production. The material products can not exist as profits, only money can. A car can not be a car plus 30% of the same or another car as profit, it must be converted into the abstract value of a national currency, and skimmed out of the economy. This is the financial dimension that is so mystifying. That money is one of something, it is one of an idea, of a social construct of a unit of accounting of what is produced, but NOT WHAT IS PRODUCED. It is further mystified by converting again into a commodity, really, an infinite regression or logical RAA, reductio ad absurdum. We can not produce an infinite of material commodities because the earth’s resources are not infinite, but our ability to count is.

    There lies the problem of capitalism and its political power. By owning the profit making machine, a machine that can produce an infinite amount of money, and using money as the controlling mechanism of political power, whoever has the most money has the most power, as opposed to whoever has the most votes in a democratically organized polity. The schemes of monied people, in particular the bankers and the financiers, shows the structure of their political power, capitalism. It has a name, it has well observed processes. And it learns and grows from the past to adapt and enable a new social world for it thrive and control. It is called capitalism, even if it at times fascism is a useful tool, capital will never be replaced by violence. Someone needs to produce the wealth and a sickly, beaten down people, constantly in revolt, will not produce as much as world where a measure of wealth is re-distributed to keep most people satisfied, most of the time, in most of the place.

    We seem to be moving too quickly where too many of the people are too dispossessed and ripped off and foreclosed and abused by the police and the banks, and the corporations, too much of the time, in more and more places, that the social order will break down into a violent mess.

    Nakedcapitalism lays bare the political power of the infinite money making machine of Wall St Finance and banking, how it works to enrich the few, while starving the rest or at least ignoring them and leaving them to their own local devices to build whatever life they can, in the absence of the support of what was once a mighty nation pulling everyone up a bit at a time to a better material life. The capacity of finance to work for the good of the people most of the time is there, in public banks and government New Deal and Great Society social insurance and jobs programs. It is not hidden or mystical knowledge, but political attacked and discredited by a vast right opposition to anything but capitalism with almost no government interference. This is the exact opposite of what we know to be true because we have seen it work before in the country and in the recovery of German and Japan after complete military surrender to the American government and the Allies. It is a political-economy that functions with state and the market in concert. The balance that must be achieved is to replace the subservient position of a democratically controlled republic to one of dominating the market as instrument of prosperity for the people. The state must never be in the service of the market, because then only a few wealthy will have a political voice and the ability to choose what kind of life to lead that should be the right of everyone. Money can not replace each and everyone agreeing to have a say and agreeing to go along with the majority position of what is proposed. A hand full of profit and loss statements of a plutocracy can not be the policy statements for nation of 310,000,000 people.

  50. kevinearick

    Global City Hall: Juveniles Lost in Space

    The law is juvenile, always has been, always will be, because predicting the future based upon a biased past as the basis of present action can only result in repeating the past, more efficiently relative to the environment. Critters imprisoning their children to poverty to collect toys, as a means of assuaging their own fear, should have been a clue.

    If the empire busy workers could reach ‘escape velocity’ of their own volition, they would have already done so. Printing more money and adding more laws changes nothing. You don’t have to protect your children from the juvenile majority, its own worst enemy. Just set your distance.

    There is nothing wrong with the economy that cannot be fixed if the critters would eat sensibly, get some exercise, and go to bed at a decent time, so they are ready to work. You don’t free yourself by doing 100mph in a 65mph zone during rush hour. Always replace the return line, before installing the motor.

    You exist on a fulcrum of your own creation, unless you choose to walk across and join the herd, which is the point of public education. There are as many dimensions of distance as there are people, and many more, which is why the critters seek the electron by process of elimination.

    Gravity is like clay, but you have to build your own guidance system, and the assets required present themselves in the process, to be recycled accordingly. The empire is just a resistor, burning busy work, as the break. Release the brake, and make the switch.

    Civil marriage competes to own the past. It’s like a multiplexer with concentric queues, of consumers standing in line to collect a check, to pass along so-exploited natural resources. Legacy is the small circle, the lower middle class is the large circle, and the upper middle class likes to think of itself as the benevolent accounting fulcrum.

    Empire proffers a replacement for your spouse in every instance, in the form of another, a job, a car, your own children, whatever, to liquidate your equity with a promise. Life is choosing your spouse. Whether your children follow the example is up to them. If they don’t, others will.

    Family Law outcomes, not the process or the technology, are now being dismantled, for all but the most pernicious cases, by judges closing the cases outright, credit bureaus erasing false arrears, and education suddenly finding your credentials. The process of elimination continues however. (call your case county CSS to flip the bits representing flags on your account in the system)

    For now, Putin is pursuing the best defense by presenting a good offense, to place the battlefield beyond his own artificial civil borders, and the empire is awash in imploding borders, across which the critters are competing to become the most barbaric. Whether the sea encapsulates or is encapsulated depends upon perspective.

    The critters always view preemptive strike as the most viable option. If it comes down to an argument between Court and City Manager, who do you suppose wins?

    Always present yourself to Court, except in cases of jurisdiction, unless you want to be surrounded, when you are ready to walk through the imploding gravity. The Teslas are partially correct. With resonance, you can blow up the entire solar system, but why would you want to?

    You don’t need to government to break the stranglehold its healthcare industry has on the global economy. How much gravity you care to carry depends upon your development. If you let the critters steal your second derivative, the will soon be bidding up your first, which is the second relative to your children.

    There is no reliable external measure of character, and you are a whole lot closer to the horizon of creation than the majority. Only a pessimist looks at gravity and sees a prison, only to replicate it more efficiently, expecting the prison not to shrink.

    Without individual responsibility, the majority has no past and no future; printing can only result in lost purchasing power. Government is like a $5 meter from Wal-Mart. What you can do with it is surprising, but you don’t want to bet your life on it.

    Why would you cede your collateral and relatively negative interest rates, a bank, to Warren Buffet or anyone else, much less a majority inherently incapable of consideration, and expect anything other than a FILO bankruptcy queue, with a boom and bust entitlement ponzi, masquerading passive aggressive war as public education?

    Only a derivative Nazi comes up with something like thought leadership, competing to lead a parade of like-minded automatons. At the end of an empire cycle, its world is awash in short-term thinkers, examining their history as the path to the future, and calculating probabilities accordingly. This too shall pass, as you install the motor.

    It really doesn’t matter whether the juveniles begin with democratic, autocratic, or hierarchical currency, because an emotional majority will always debase the currency, to devalue the individual and community, in favor of the global city where it resides, and perversely enforce the outcome with autocratic scapegoat practice, employing an increasingly inelastic education system for the purpose, calling itself manifest destiny.

    Character is what you want to value. Discount the empire by reducing rent in your community. Funny, even the medicinal pot growers have a union, to increase rent, creating a moat. Bring on the next passive aggressive couple Bob, for another round of Eliminate Your Isolated Neighbor, to the benefit of empire.

    Congress taxes the present, the Fed taxes the future, currency is not money, civil marriage is the bait and swap, and the pendulum is part of a system.

    “There is no point of contact in our social organization where temptation to moral wrong is so pronounced, so active, so potent, or so strong, as in the misuse of measurements.”

    All this nonsense based upon a duebill strike price by labor with local character…the snowball effect of derivatives…moats or dominoes depends upon perspective. Labor has no interest in equality under the ponzi water line. That much Putin learned from Lenin, relationships in a closed system.

    Just because labor is nowhere to be found on the Titanic does not mean that it cannot build and navigate a ship, at will. Answer C: Step forward and leave the Bell Curve juveniles behind, with increasing pressure on decreasing volume, under dc conditions, the physics of morality, irrespective of time.

  51. paul

    I put social justice as the reason for signing this

    My brother, David Clapson, a diabetic ex-soldier, died starving and destitute because he was penalised by the Job Centre for missing a meeting.

    David had his £71.70 weekly allowance stopped meaning that he couldn’t afford food or electricity. He was penniless, starving and alone. His electricity card was out of credit meaning the fridge where he should have kept his diabetes insulin chilled was not working. Three weeks after his benefits were stopped he died from diabetic ­ketoacidosis – caused by not taking his insulin:

  52. Oregoncharles

    I’m a fairly recent but devoted reader and occasional commenter; as one of the “social justice” types, maybe I can offer some insight (before reading the other comments) – and one very specific proposal.

    I certainly experience the dilemma: the wonkier financial exposes are the site’s raison d’etre, and ultimately my reason for being here, but sometimes pretty challenging for those of us who aren’t actually in finance. I’m afraid I’m suggesting you dumb them down a little, or better, provide more introductory material about the broader application. Yeah, I know, more work. But it might be worthwhile to broaden your readership and give some of us a better entry into the subject. It’s hard to comment on something we barely understand (untranslated acronyms are NOT your friend.)

    I’m here because I totally agree that finance is the driving force behind our worst problems – even a lot of the foreign affairs ones (though a lot of that isn’t really new.) I actually think we’re well beyond “reform” and need pretty radical changes in the financial system. In other words, it’s political. Pretty radical politics.

    To my proposal: As some shameless plugs have revealed, I’m a Green Party activist, mainly in the Oregon party. I think your work has direct relevance for, for instance, our national platform committee (the state party depends on the US party for the larger issues). I’d be very interested in putting you, both of you, in touch with them. At the minimum, I’ll recommend your site to them; I think some will be very interested, if they don’t already follow it. But I think a direct contact would be fruitful. At the least, it’s another outlet for your insights; I don’t think you’re going to have much effect on the Democrats, let alone the Republicans. At the most, it could be a driver for Green Party campaigns, notably in New York. And maybe even Maine.

    I won’t try to dig up the right contacts in the party if you aren’t interested (I don’t presently know who they are), so I’m asking: is this something you’d be willing to do? And since you may not see this, down at the end of the string, you’ll also be getting an email, with my contact information.

    PS: if you make it to Portland, or better yet Eugene, I’ll do my best to show up.

  53. Whine Country

    Yves, your frustration is understandable. I personally enjoy your articles on finance immensely. Having spent my career in public accounting as a CPA, it is noteworthy that none of this, and I mean none of this, could have been done without the assistance of others in my profession (I only worked in the area of taxation, so I can only confess to conspiring to cripple the administration of tax collections in the US). One point that never gets close to enough print is the fact that almost literally one day we had the top public accounting firms in the country certifying that the top financial companies’ financial statements were “fairly presented in accordance with generally accepted accounting principles” only to find out the next day that they were insolvent. Yet, the result to accountants was, if you work with us and make accounting what we want it to be, we’ll pretend that you did nothing wrong. Bank financial statements are now nothing more than pure bullshit. Like the old joke about accountants: When asked by his client what time it is, the accountant replies in a hushed tone, “What time do you want it to be?” I can tell stories of financial crooks (some in my family, sad to say) that go back to the beginning of my career (1970s). If you think you are frustrated, I can’t imagine how frustrated Bill Black is. I was there watching while the S&L looters did their magic years ago. But guys like Bill made them pay. Now I stand watching while in this round, the banksters just read the old play book, dressed it up a little and literally did the same things, but were rewarded for their crimes.

    But let me try to make a comment that may add to the discussion. As I stated above, professional accountants are pretty much always ignored in the discussions about our financial mess. Bill Black coined the expression “accounting control fraud” and uses it repeatedly to describe the essence of what is really going on. I think this point is lost on most of the readers and can’t help note that there seems to be a dearth of people with accounting expertise who contribute to the discussion. How do you have “accounting control fraud” without the assistance of accountants? From my perspective, everything you speak of that is wrong with the financial system can be traced to the concept of accounting control fraud. I don’t think you don’t have to be financially literate to understand that there is accounting malfeasance, control malfeasance and those two add up to fraud. But accountants (with Enron being the notable exception) have not been held to account in any manner when it comes to the GFC.

    Accounting control fraud begins and ends with mark to market accounting. Jeff Skiling, having previously worked for a bank, was the first to try out the concept of mark to market accounting on a company other than a bank. His stroke of genius was simply that he was able to sell (actually I think he bought off) his accountants on the concept of allowing it to be used by a non-financial company. What Skilling did in essence was to turn Enron into a bank holding company and use bank mark to market accounting to perform accounting control fraud.

    Most people consider accounting and accountants to “experts” that do something that regular people have little understanding of or much desire to learn. It is not rocket science! In the early years of my career, companies were valued based on their earnings, which to more simple minded people meant their Income Statement. Little regard was paid to their Balance Sheets because one of the bedrock principles of accounting was that no asset other than gold could be “market to market”. (Although a loss for impairment of an asset could be recognized) So you could write down an asset but not write one up. Then the biz schools began teaching the likes of Skilling about the interrelationship between the balance sheet and the income statement: Any increase in the asset meant a corresponding increase in income and any decrease in a liability meant a corresponding decrease in expenses, which increased earnings . Banks took this knowledge and conspired with the accounting profession to change the rules, and away we go. In Enron’s case, it would enter into a contract to sell gas (or anything) over a future period, and all of the income less an estimate of the expenses would be recognized as an asset, booked to the balance sheet, and therefore be booked immediately as income. It is like the day you were hired for your first job, you toted up all the money you were going to make in your life, discounted it a little, estimated your future business expenses and, voila, you are know a millionaire! No cash flow – no problem – take the contract to the bank and borrow against it. And in terms of structuring the company, we had Andrew Fastow, who was the accounting genius who set up all of the dummy corporations like the banks do to create more opportunities to manipulate the balance sheet numbers so that, at the end of the day, there was a corporate structure that was incomprehensible to anyone living on earth. (Even Lay and Skilling did not know that Fastow had done!) Accounting Control Fruad = Balance sheet manipulation under the supervision of management, with the assistance of accountants and lawyers who can provide plausible deniability. That is not really that hard to understand. The problem is that no one wants to because there is just too much money to be made by the players.

    Why did Enron go broke and the major players prosecuted when all they did was try to be a bank? Bad timing. They were Lehman Brothers at the time and they were not in a position to set off a chain reaction. But today, we have a financial industry that has developed their mark-to-market scam to a level several orders of magnitude beyond Enron. There are liabilities for derivative contracts that are incomprehensible and therefore cannot possibly be quantified properly. Oh well, they are necessary because we say so. At the end of the day, we will find that the banks have transferred risk (read manipulated their balance sheet) from their left pocket to their right pocket.

    I don’t post a lot because I am an old retired guy who just can’t believe what happened to my previously honorable profession, and I had a bad experience recently when my post was greeted by a savage personal attack by someone that doesn’t post here anymore (or changed her name). But more than my disbelief about my profession, I am struck that so many people can accept Mr. Black’s very accurate description of the problem while seemingly not having a clue specifically what he is talking about. I’d like to hear from some other accountants. Put your case out why I’m FOS if you can. (Please don’t make it personal though) On the subject of posting comments regarding financial matters, with no disrespect to anyone intended, I have refrained because I see the problem from such a different perspective and feel like the little boy who is too afraid to mention the Emperor’s clothes.

    Let me close with a little accounting exercise based on some of the things I’ve discussed. Mark to market accounting provides that bank assets (which are debts owed to them, like bonds) are valued based on the prevailing interest rate (now very, very low). And (I think) we all know that bond market values vary inversely with interest rates. So it follows that with interest at extremely low rates, bank assets are valued at virtually their maximum potential value just now. And with bank assets valued at close to their maximum potential value and capital at slightly higher than extreme lows, the question is: How much of an increase in interest rates has to occur before bank capital is non-existent? It is absolutely incredible that no one (at least to my knowledge) has made public this simple calculation. I really think no one wants to know the answer to this simple question.

    1. cnchal

      Thank you for your accounting lesson, and your comment.

      How much of an increase in interest rates has to occur before bank capital is non-existent?

      Wouldn’t it be ironic if it was 1% or less?

    2. Julia

      Your paragraph on exactly what Enron did (and how) was extremely enlightening — succinct, clear, compelling. I am grateful. And though you don’t want things to be personal, from one human being to another, I thank you, sir.

    3. lyman alpha blob

      Another accountant here although not a CPA and you probably have much more experience but I do wholeheartedly agree with you. I studied math and physics among other things and sort of fell into accounting and as you say, it’s not rocket science. It’s addition and subtraction, that’s pretty much it, and it can be as simple or as complicated as you want it to be. And it appears to me anyway that the more complicated a company makes their books, the more likely it is they are trying to hide something.

    4. TheCatSaid

      Thanks for this great comment.
      Accounting (and indeed bookkeeping) are things that can should never be taken for granted. The basics are simple but there is plenty of gray area in real-word scenarios in which I have personal experience. Well-paid professionals can make big errors even on things that one would think straightforward. Pricing assets (especially intangible ones) can be particularly tricky in the best of situations.

  54. EmilianoZ

    I think it also has to do with the way history is taught to us in school. We are taught history in a cartoonish way, with big men doing this, deciding that. So we feel entitled to comment on politics. We think we understand the narrative. Big men want to go to war with Russia. We were never taught the invisible stuff, like lower class income being progressively diverted towards the higher classes. I knew about Caesar and how he conquered a mighty empire, … I learned about debt jubilees reading this blog.

    1. MyLessThanPrimeBeef

      The result of not having enough financial stuff in Shakespeare, perhaps.

      It’s the same challenge with making popular (craved by subjects themselves) propaganda films – we need a lot of sound and fury.

      I will try to spend more time reading the technical posts – each might demand the same total amount of time I spend here daily, but I can’t break it up like I can commenting on antidotes/plantidotes. And it’s harder to me to set aside a certain block of time every day. They demand of my body at irregular intervals.

      Like others have commented, please don’t stop.

        1. MyLessThanPrimeBeef

          Love it, Lambert.


          They want your flesh and your soul. It’s not enough until we also worship them, wanting to be also like them, the moneyed demigods.

          Maybe one day we can put on that play with our graceful hosts and regulars in it.

  55. lyman alpha blob

    I mostly lurk but check this site pretty much every day and the first posts I read are those related to financial shenanigans.

    As others mentioned above, sometimes those are so well written that there isn’t much to add by commenting. One can only express their rage at these clowns in the finance industry so many times before it gets a bit repetitive ;)

    And if regulators are basing their decisions on who to go after based on how many comments a post on the internet has…. well, we already know the vast majority of them need to be replaced and/or jailed along with the bankers they enable.

  56. RUKidding


    I am one of the econ/finance/accounting dummies who reads your finance posts with interest when time permits or skims them, at least, when in a hurry. I am learning slowly. I feel like, to put it simplistically & very basically, you & others who post here validate my idea that it’s all crooked, rigged, chimera, smoke & mirrors. But you do so in a way that traces what is actually happening, why & how.

    I probably comment more on what’s termed “Social Justice” bc that is more my field of expertise. I’ve been involved in Social Justice “stuff” for decades both in terms of participating in protests organized by others, being involved in and/or starting community services, organizing protests, govt Advocacy in various ways and at all levels of govt, etc. I have some good grounding and direct knowledge, but I have always “followed the money” bc that’s the underlying basis of it all.

    I also have my own investments (being lucky enough to have such a thing) and one has to figure out where the eff to park stuff these days. My dear old dad taught me my original investing advice. He was a Warren Buffet guy. Well Warren’s “buy & hold” advice was sort of “ok” back in the day. Dad did well as lone, do it yourself, investor. These days it’s a whole different playing field, and those techniques don’t work as well.

    So I Know a little but not a lot. NC is VERY important to me on a personal level for different reasons.

    Finally your hassle of CalPERS is most appreciated, since potentially I will get a CalPers pension some day. I have sent your CalPers investigations both to my staff and my board, and they have been made afraid but grateful for your work and insights. I do believe that your hassling them has led to some changes at CalPers firstly for somewhat better transparency (I hope) and for other changes to make them better investors (I hope). Time will tell, but please keep the heat turned WAY UP on CalPers. Plus, it puts the heat on other large govt Pension funds, as well.

    Thanks for all that you do. I rarely comment on the more technical financial posts bc I simply have nothing to add, but perhaps I can chime in with: I READ this in detail and THANK YOU for providing the information.

    I do feel that, over time, I am absorbing more information and somewhat understanding it better.

  57. Irrational

    From the other side of the pond: Even if NC looks mostly at the US, financial techniques spread. Even if it seems a thankless task, making more people aware is a good thing. On a personal level, I have learned a lot both from the site and Econned, since I wondered at the increasingly creative, but allegedly almost vanilla, structures being offered to me when I was managing an exceedingly conservative fixed income portfolio. Also, it teaches you to be on the lookout for agency problems elsewhere – always asks: who benefits? Keep up the good work.

  58. Horatio Parker

    I read this blog to learn more about economics and finance; I’m not very learned in either subject. I think this is the first time I’ve commented.

    I’m grateful for the technical posts even though I’ve never felt that I had anything to contribute in the form of comments. This blog is a valuable counter balance to the MSM. At the very least I know there is another side to the story. There seems to be less tolerance for alternative economic views in the MSM.

    To my mind, the most important contribution NC makes wrt to social justice is precisely those posts which illustrate how finance and govt combine against the interests of the 99%.

    I don’t find much here to illustrate problems such as Ferguson, the Ukraine, ISIS and other issues. But there other sources for these issues, sources whom I don’t go to for what I can get here.

  59. Tom Bradford

    I generally spend three hours a day reading through the articles and comments at NC and have been doing so since at least 2009, and every day of those five years something somewhere be it an article or a comment or simply a link has changed, broadened or enlightened some aspect of my thinking or world-view.

    This the Internet can do like nothing else there has ever been in the history of mankind. The only remotely equivalent forces to exist previously able to take large numbers outside their immediate day-to-day experiences of life-in-the-raw were religious tomes like the Bible, which were fixed, immutable and unchallengeable. Sure most of the Internet might be porn, spam emails and ‘what I had for breakfast’ Twitterings, but even in ten years it has grown and changed as it has stretched its muscles, evolution has been hard at work and some sites like NC have gone from strength to strength while many, many others languish or fall by the wayside.

    Revolutionaries in the past were limited to spreading the word to small meetings in backroom or distributing a few broadsheets in the streets. The internet can reach, educate, inform and co-ordinate millions. Let’s see what another 10 years can do.

  60. Gabriel

    Several commenters here bemoan their lack of financial or economic literacy.

    I wonder if this is the result of the financial sector’s intentional confusion – keep them puzzled while I empty the till. [It’s clear Wall Street doesn’t want us to know how the various structured debt products work. Nor do the WS firms want us to know how exactly they make the stock trades – see dark pools and high frequency trading.

    This illiteracy may also reflect economists’ failure to properly teach us about our economy – or their fear that if we really know the score, we won’t be happy with the game we’re forced to play.

    So if nothing else, NakedCap can educate us about how the financial sector really works and how the economy really works. And if enough people know, then maybe that’s the first step to changing it.

    1. TheCatSaid

      Yes. If we don’t understand it better, we won’t know what aspects of the system we want to keep (if anything) and what needs a revamp and why.

  61. The Dork of Cork

    I will continue to point towards the irish petri dish as so much can be learned from such a controlled bankers ecosystem.
    The CSO (irish stat agency) has recently published continual wage declines.
    A -1.1 % annual change
    A quarter to a third of 20 somerthings has disappeare somewhere else
    Irish M1 after a recovery in the first half of the year is now showing signs of decline again with M1 Y2014Q7 now 1.3 billion euros below M1 Y2013q7
    Irish energy consumption has stablized recently but much of this is a result of a surge in tourist numbers as the rest of the world seems to be going up in flames therefore driving these consumer soldiers into the irish banking conduit.

    Yet we are experiencing a massive asset price inflation – again as outside credit looks for a yield.
    Internal private credit creation continues to tank.
    I spent me summer in South Kerry.
    Its a land of empty or under occupied houses as far as the eye can see………..

    The banks who control us simply have no other programme other then the creation of artificial scarcity.
    A landscape filled with houses that is unaffordable for the young.
    Simply so that some Dutch duid can fly back and forth into his irish seaside mansion where at max he might stay for a month or two and spend very little in the pub.
    The costs of living within a closed banking experiment – see Iceland.
    Is only exceeded by a one living in a open banking experiment – see ireland.

  62. TheCatSaid

    I am grateful for the information on this site. It has helped to educate me.
    While I can’t contribute much to complex technical posts other than occasional questions, I have put the information to actual use. For example, I contacted several congress-people with a well-prepared, clear list of reasons for objecting to the proposed trade agreements. A young relative is thinking of studying economics. I suggested they also start reading NC, because everything they’d be taught in Econ 101 would probably be the same old bunk about markets, growth etc.

  63. Ché Pasa

    For instance, we’ve had members of Occupy Wall Street complain to us about the amount of non-finance discussion in comments, that from their perspective, it made the comments section (which we’ve regarded as one of the strong features of the site) unusable for hard core finance types.

    Hard to believe that “members of Occupy Wall Street” (?) have been complaining about too much social justice chatter in comments here.

    It doesn’t scan, sorry.

    Occupy Wall Street and its many, many offshoots have typically been about social justice and achieving the better world that’s possible. Of course getting there involves understanding and doing something about an out-of-control and off-kilter finance sector. This site has been tremendously informative and beneficial in that regard in main posts and in comments.

    It’s not either/or, it’s both. Understanding the finance sector and knowing about the criminality that infests it is one of the fundamentals that can lead to greater social justice. The more we know about it, the more we can do to bring the change we need. At the same time, the change we need isn’t by any means confined to the finance sector…

    And I can’t imagine that any “member of Occupy Wall Street” would complain about commentary here that focuses on social justice.

    1. Ulysses

      I’ve been hanging out with OWSers since September 2011, and I have to agree with your point. Although many disillusioned financial industry people, were attracted to OWS, any of them who would be miffed by too much discussion on broader issues like homelessness, etc., would have quickly selected themselves out of engagement with this movement. A movement that is very definitely not about elitist, closed worlds of arcane communication among self-professed experts.

  64. RBHoughton

    I should like to quote the late Dr David Servan-Schreiber – “our wounded planet … (is) … no longer capable of providing us with an environment that sustains our health.”

    I attribute this planetary injury to the financial and economic system primarily and secondarily to those economists and lawyers and financial journalists who mindlessly promote it for reward.

    1. Eclair

      Yes. And here is where we find the ‘intersectionality’ of social and economic and environmental and climate justice.

      Who suffers most from environmental destruction? Usually, the economically dispossessed. No refineries and chemical plants built in millionaire’s backyards. Indigenous tribes ‘own’ their reservations, until gold or uranium or coal or tar sands are discovered. And, then, investors get the enormous profits and the locals get cancer.

      Our .01%, under the aegis of Capitalism, has overturned governments and raped the planet in search of profit: pineapple plantations in Hawaii, sugar cane fields in Cuba, bananas in Nicaragua, copper in Peru, oil in the Middle East, de-forestation in Brazil. And huge unimaginable fortunes made just from creating and trading financial instruments.

      I read last week a comment that societies always have their individual psychopaths and sociopaths, but that ‘healthy’ cultures restrain or neutralize them through the use of cultural norms, social pressure or … as a last resort … ‘burning their tipi’ and purging them to ensure the continuing health of society as a whole.

      Our culture, on the other hand, has been warped so as to reward the psycho/sociopaths. In a big way. The entire System is psychopathic. And Yves documents this pathology, day in and day out until we become disturbed, then angry and, finally, almost numb with despair.

      What are our choices? Heal the current System. Disband the System, non-violently or violently. Create an alternative healthy System and bit by bit disengage from the psychopathic one that is ruining lives and the planet. I frankly don’t know which way to go but I do know that we have to start doing something. We’re the jury that has been presented with massive amounts of unassailable evidence and we have voted to convict. We need to take the next step.

  65. Chagri Lama

    Ms. Smith – you make a succinct point about segmentation of readership and the reasons for it, as well the good reason that it should NOT be that way, that readers from the “financial side” should connect inextricably the other, boring side of injustices to their own economic side. They are just two sides of the same coin. In their minds, the coin revolves, but very very slowly, so they believe the effect on them will be long in coming. The reality is that the coin rotates very rapidly.

    The problem of how to get readers engaged in both sides persists. Let me tell you my own experience with Naked Capitalism: I find the economic-centric articles rather obtuse in many cases. Of course, after I batter my brains at the article for some time I DO become more enlightened – I do indeed, the content is there, the reasoning is there, the theory is there. But the writing lamentably is so often times dense, heavy and makes a thousand assumptions about what the reader knows and does not know. Sometimes it is the measure of arrogance of the authors who write in the fashion of my maths professor who flew on the blackboard in the university deriving, proving, hypothesizing, and scribbling furiously the proof, then, at a critical moment, as we all sat riveted at the edge of our seats, he blurted “the remaining trivial derivation I leave for you to work out on your own!” and off we were into the next topic altogether.

    Trivial? My foot! I almost always slaved my hind part to the bone with less than mediocre results, along with the rest of the class. The arrogant bastard simply went about the proofs in the wrong manner usually and there was no way to get to the proof along the paths he had taken us, but he had no cohones to admit his arrogance and faults. Thankfully, other professors stepped in and bailed us out from much tedious and useless work.

    Some of the articles here took inadmirable lessons from that professor.

    At other time the topic is simply hard as nails, and breaking up one long-winded, complex topic into three articles or so would do a great favor to readers who are not finance and theoretical economics post-doctoral hotshots. Let’s not lose sight of your stated goal – get the folks tune with social justice to chime in on the economics side and the economics theoreticians and financial whizkids to soak up the social justice!

    And for the opposite side the picture may be similar – all brimstone and fire and protestation about injustices with an astounding lack of “frinstances” and examples to demonstrate how the injustice actually happens and how it affects us ALL!

    Is it surprising the financial types could not care less for sermons?

    Anyway, perhaps a collaboration on articles by authors from each side of the house (so to speak) would do more to attract commentary and engagement. I am not advocating dumbing down, but also not advocating smarting people out of here.

    Hopefully this contribution is helpful.


  66. tommy strange

    You all touched on this muchly, but I would like to add my voice too. I read most of the heavy wonky stuff, but never comment on it. I have a few far left friends that find this site so important for wonky. Then I have MANY friends far left that take their friends word for it….and read some of the essential books, whether ecconned, griftopia, takes a pillage etc. …but don’t read this or hudson, or wolf etc.
    I think you both should do what you have been doing. Just because I don’t have the grammar or grip too comment on your more in-depth financial revelations, doesn’t mean they are not essential to me….I pass much of it along via common speech and people I am trying organize bottom up with.
    Maybe my comment is no good,….but I can’t see how such a vital and amazing site should change in one bit.
    Perhaps the social justice stuff is so more commented on cuz….well we are ‘social’…and the only way to overthrow this horrible system is by being more social, and face to face.
    I personally am dedicating the next 20 years or so of my life I have left to bottom up radical change. Doubt I’ll see it. Whoop de do! But people on NC are essential to reassure me…..that I am not just a crazy angry ‘educated’ working class person. There ARE actually many upper class people that are just as pissed off, and want real ‘people solutions’.
    sorry I rambled. I’m a social person ….Heh.

  67. dbk

    Coming late to this excellent OP and equally excellent discussion, which raised an important point about NC’s “mixed” readership.

    Having now read nearly all the comments, one thing that emerges is that the SJ (or if you prefer, EJ) readers have piped up to say that they actually do read the wonkish pieces. I’m one of them, and like many other commenters of this ilk, I don’t feel competent to comment on your recent investigative projects (CALPers – PE, RBS [they just seem to me like a replay at a lower, more rapacious level of MBS]). This doesn’t mean I don’t read them, and wonkish readers from the regulatory and financial industry – and government – are gravely mistaken to take a lack of comments as equivalent to a lack of interest.

    What does emerge is that there doesn’t appear to be much cross-over by your wonkish readers into the SJ/EJ-focused posts. This would suggest – purely on the basis of readers’ comments – that the problem is not so much lack of non-wonkish readers’ interest in wonkish posts, but the very disappointing and disheartening – but not really surprising, given the lessons we non-wonk readers have taken away from this site’s work over the years – absence of interest on the part of financial industry experts in social issues.

    1. proximity1

      “What does emerge is that there doesn’t appear to be much cross-over by your wonkish readers into the SJ/EJ-focused posts. This would suggest – purely on the basis of readers’ comments – that the problem is not so much lack of non-wonkish readers’ interest in wonkish posts, but the very disappointing and disheartening – but not really surprising, given the lessons we non-wonk readers have taken away from this site’s work over the years – absence of interest on the part of financial industry experts in social issues.”

      True, but similar reasons might explain their “absence” on SJ matters–they, too, might reason, “What can I add to that?” Financial “quants” are probably roughly in one of two camps–those who are sensible and sympathetic to SJ issues–in which case, they’d comment only annonymously; or those who aren’t sympathetic to them–in which case, they’d also comment only annonymously (and critically, finding themselves in a minority position vis-a-vis the majority of participants. Not that there’s anything wrong with that.

      Al Jazeera had a recent “Inside Story” program on the Scottish referendum. In it, one of the three guests made an interesting observation that might be pertinent here. He noted that in all the contentious argument over the issue, he’d never seen any presentation of the precise matters over which the two major campaigns agree–and that undecided voters would find such a presentation interesting and useful.

      That insight could be usefully adopted and adapted to fractious issues here, I think.

  68. tawal

    We tried to appeal to the rule of law for the felonies done by the Bush Jr administration. We were ignored by both the democratic congress in both houses, and the democratic president who promised justice to the voters. Then we rallied the people in every major city but were met with tear gas and brutalization by the police and home land security at every node. Our only hope is for our progeny to decimate the oligarch’s offices, mansions and private schools.

  69. Vatch

    For what it’s worth, over the past few years, I have occasionally written to my Senators and Representative in Congress about the Glass Steagall Act, credit default swaps, and the dismal failure of the Obama administration to prosecute major financial criminals. I probably would not have done any of that without the information that I have gained from Naked Capitalism. If anyone feels some epistolary inspiration, here are a couple of sites for you:

    It only takes a few minutes.

  70. SJB

    Yves and Lambert, I think you are doing a great job! My only regret is that I don’t have more time to read all your articles. You have helped me understand so much of what is going on in the financial world, and I really appreciate it.

    And I think you are spot on in your conclusion that it is the financial shenanigans that we need to understand because that is the cause of so many of the social and political problems we are now having, here in the US and abroad. Information is the only power we have right now.

    Thanks so much for your dedicated efforts!

  71. Ping

    I deeply respect the ‘warriors’ Yves, Lambert et al. Naked Capitalism has educated me a great deal (along with extensive reading including Econned) and even without sophisticated financial background, I have been able to follow a good portion of the comments and articles. I post occasionally to let off steam although my posts are sometimes edited out for not being on point.

    What is most depressing to me is our entire financial and global architecture is now structured for looting and as a species we are in the final stages in a mad dash for what is left of the environment.
    It seems the system filters out or sidelines anyone with moral integrity, empathy and who genuinely intends to act responsibility on behalf of fellow man and the world we live in while those who readily comply with destruction and depravity are advanced.

    I do what I can to protest but don’t think we can avoid the next major crisis which will likely dwarf anything before. While many elites also profiteer on chaos, these ‘masters of the universe’ must be utterly disconnected or simply don’t care thinking they can insulate themselves from the consequences of a ravaged environment and collapse.

  72. Fool

    Here’s my two cents…

    I’ve been financially “literate” for almost two years — much of that is thanks to Naked Capitalism. In my experience, what have been the most compelling and informative posts were the ones on the private equity industry, namely regarding your ongoing(?) suit against CalPERS. Unlike other (financial) literatures, the quality of the content was such that the intellectual stimulation invigorated the requisite focus to understand the complexity. Maybe this is the former English major in me talking, but isn’t the best kind of journalism — in terms of both quality and potential outreach — investigative or anecdotal (i.e. “literary nonfiction”)? Example: in reading about your suit against CalPERS, I have the anticipation of how it will unfold being reinforced by the concurrent learning curve of pensions funds, the byzantine diction of LP agreements, etc.. In English: the learning was exciting. (But it was exciting because I was *learning something*.)

    Alas, you’re only one person — and there’s only so much of your own experience to offer. With that said, I would hope that NC could find a way to leverage the experiences of its readers in providing content that is at once informative, socially/civically valuable, and compelling (which, at its best, this blog accomplishes). Granted, this is especially difficult to do with financial content, as the modus operandi of most financial professional is one of “willful ignorance” with respect to industry wrongdoing and corruption — if not outright omertà. But still, certainly there are readers who have encountered anecdotally some of the issues you’ve addressed….

    Perhaps the most significant social-value of the blogosphere is the many ways that it democratizes media. The content of NC is indicative of this; yet, I think more can be done. For every article in the WSJ blowing smoke about some excessively valued startup, there are (ex)employees thereof who could comment on ambiguous or legally-questionable determinations of valuation; for every article in the NYT style/real-estate section beaming about how Bed-Stuy is nu-Williamsburg (is nu-Soho), there are locals who have dealt with exploitive landlords or transplants who have dealt with duplicitous brokers. “Journalism” from our most esteemed media is too often a filtration of the PR-version of facts — as opposed to an investigated or diligently researched one — and this is seen as a crowding-out of access to stories instead of an opportunity to assume the mantle of producing good ones.

    This being America and all, I suppose producing this quality of content and at a consistent output would be predicated on at least some commercial profitability. Something worth considering.

  73. Carl

    “… sends the wrong message to regulators and investigators. They may well assume that the public doesn’t care about this issue and thus they have little reason to stand up to financial services industry demands.” Jesus, that’s our ass, right there.

  74. Sanford Calef

    I’m more on the social justice issue side of the ledger.
    But read and enjoy the other topics.
    The ones on financial minutiae over my head but I read em anyway.
    To know my enemy.
    Cockroaches and crooks need shadows.
    Light shone into dark places leaves less room to hide.

    I also consider this site very important for world news links and commentary.
    All in all, Naked Capitalism covers a lot of ground.
    Probably too much for any individual reader.
    yet there are plenty of nuggets for anyone of specific interests.

    So why change or worry?
    Cast a wide a net as you can.

  75. Fiver

    I read the piece by Nomi Prins yesterday, and intended to watch the interview featured tonight and comment – I saw this story had 151 comments, somewhat more than my intended destination (9x). So I come here, only to be too late on a subject important to the NC organism all around.

    It’s only natural, I think, for people who’ve ‘been around’ NC (or anywhere else) for some time to react with the flow of events – and we are not short on important ones of late. I read plenty of financial and economics pieces here, and in fact believe sources like NC are to be credited with a huge role in delineating the immense footprint of financialization gone mad, the key instrumental incarnations of financial madness in enabling systemically dangerous fraud, and the all but universal failure of Officialdom to do anything other than make fraud Official Policy.

    The emergence into the educated awareness that endemic criminal conduct from top to bottom is what lay beneath the pathetic circus of MSM’s and Officialdom’s versions of events has been crucial to the formation of the kind of critical thinking that then unlocks possibilities for a wider, more encompassing critique. Other forms of miscreant behaviour are made more evident. It turns out to be not a little relevant who knows who, and from where, for instance, as for example, when Joe Biden’s son sinks his teeth into Ukraine’s loin.

    Here’s a financial/economic question:

    I see it raised in different ways, but comes down to what happens if ‘markets’ never go down substantially again? Supposing a Federal Reserve prepared to ‘do what it takes’ decides to so order its own interventions as to create some idealized balancing model among asset classes – in the current case, the effort to force investors into always-rising stocks, which, aside from its purported purpose (to generate a ‘wealth effect’) has as a 100% authentic coincidence the creation of huge ‘profits’ for large holders of stock who repeatedly sell their shares of giant corporations back to those entities, who issue debt to buy those shares back? It creates a ‘wealth effect’ all right, and we know who collects, which ought to be conspiracy to defraud or racketeering or something. You’ll know the right legal phrase, I’m sure. And if data-impaired ‘growth’ flickers and fades again, reverse asset flow for a credible ‘correction’ like 2011 and then throw more QE at it ’til it stays lit?

    Do they think they even need a Plan B when they already know they will break whatever law or convention or political opposition needs breaking? Do they have the operational ability to do so, and what would that mean?

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