Category Archives: Social values

More Public Infrastructure Sale Tales of Woe

Coming to a state or city near you, and quite possibly the one you are in….bankers bearing promises of solving budget woes by selling public infrastructure to private investors. This is in best case scenario makes about as much sense as using your house as an ATM to pay expenses, and in a worst-case scenario, is more like burning your furniture to heat the house. But desperate times lead to desperate and often short sighted measures.

Reader May Sage pointed us to this Truthout article, which we recommend reading in full. Key extracts:

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McKinsey, the Insider Trading Scandal, and the Problems With Consulting

I’m not easily shocked these days, but I have to confess I gasped out loud when I read that the former managing director of McKinsey, and until recently board member of Goldman and Procter & Gamble, Rajat Gupta, had been charged by the SEC for insider trading. Why would someone with one of the most blue chip reputations in Corporate America, who has clearly done very well financially, risk it all to make a bit more? Not only is the downside considerable, but it also isn’t as if these moves would have made a meaningful difference in his lifestyle. He already had status others would kill for. And passing profitable tips to Raj Rajaratnam was never going to be a ticket to Hedgistan levels of wealth.

But the next interesting bit was to watch the reaction in terms of what this scandal meant for McKinsey. This event was a Rorschach tests on the firm, often with a bit of schadenfreude at another elite name being shown to have feet of clay. And even though I worked for McKinsey over 20 years ago and think the firm has a lot to answer for, some of the charges are a bit barmy.

So let’s dispatch with the uninformed inflammatory stuff first and get to the real dirt.

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Aljazeera: Empire – Hollywood and the war machine

I thought readers would enjoy this program, which was broadcast late last year but is still relevant particularly now that the State Department has acknowledged that Aljazeera is beating US newscasters. From Hillary Clinton in testimony before the Senate Foreign Relations Committee, as reported by the Associated Press:

“Like it or hate it, it is really effective,” Clinton said. “In fact, viewership of Al-Jazeera is going up in the United States because it is real news.”

“You may not agree with it, but you feel like you’re getting real news around the clock instead of a million commercials and, you know, arguments between talking heads and the kind of stuff that we do on our news that is not providing information to us, let alone foreigners.”

This program focuses on how the Pentagon has been able to get Hollywood to, um, cooperate with its efforts to present a positive image of the military (hat tip reader Scott A). I must confess I enjoyed the action footage.

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A Straightforward Criminal Case Against Wall Street CEOs and Senior Executives

Various people who ought to know better, such as the New York Times’ Joe Nocera, haven taken to playing up the party line of the banking industry and I am told, the SEC, that we should resign ourselves to letting senior financial services industry members get away with having looted their firms and leaving the rest of us with a very large bill.

It is one thing to point out a sorry reality, that the rich and powerful often get away with abuses while ordinary citizens seldom do. It’s quite another to present it as inevitable. It would be far more productive to isolate what are the key failings in our legal, prosecutorial, and regulatory regime are and demand changes.

The fact that financial fraud cases are often difficult does not mean they are unwinnable. And a prosecutor does not need to prevail in all, or even most, to serve as an effective cop on the beat.

Contrary to prevailing propaganda, there is a fairly straightforward case that could be launched against the CEOs and CFOs of pretty much every US bank with major trading operations.

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Guest Post: Amity Shlaes Forgotten History – When Unions Go Bust, We All Do

By Lynn Parramore, Media Fellow at the Roosevelt Institute. Cross posted from New Deal 2.0.

Busting unions gave Calvin Coolidge the White House, but it gave America the Great Depression.

For years, American workers’ wages have stagnated even as they produced more. Since 2008, they have been socked with staggering new bills for bank bailouts and hammered by a Great Recession brought on by the very same banks. Now public sector workers are confronted by a new crop of Republican governors who want to put an end to unions. Union workers in Wisconsin have already conceded all of Governor Walker’s draconian demands. But they want to hold on to their right to bargain so that they won’t be at the mercy of the whims of political appointees or rogue school boards. Tens of thousands have swarmed Madison to show their support for the working people of Wisconsin.

Conservatives are tasked with coming up with a narrative that makes villains out of these working folks and heroes out of the powerful people who aim to squeeze them for what’s left of their economic security.

This is not easy. And you have to admire their ingenuity.

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Matt Stoller: A Very Political Oscars – “Not a single executive has gone to jail”

By Matt Stoller, a fellow at the Roosevelt Institute. His Twitter feed is http://www.twitter.com/matthewstoller

Obama had a brief appearance on the Oscars, and received no applause from an audience that surely would have treated him differently two years ago. The politics of the night belonged to Charles Ferguson, who won the Oscar for Best Documentary for Inside Job. He said at the end of his acceptance speech:

Forgive me, I must start by pointing out that three years after a horrific financial crisis caused by massive fraud, not a single financial executive has gone to jail and that’s wrong.”

Ferguson has a very mild manner, but he is utterly fearless.

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Arrests Starting in Wisconsin

‘ve gotten messages but don’t see any news items yet (you can apparently find confirmation on Twitter, @AndrewKroll, @ddayen, and PRNewswatch for instance) that the police in Wisconsin have announced they will begin arrests to clear the capitol building. It’s to start at 4:00 PM Central, so it is now in process.

Hundreds have said they are willing to be arrested. Human chains were formed around the capitol.

Wonder what happens when they run out of local jail space.

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Anonymous Speaks With Westboro Baptist Church

This may strike some readers as off topic (you’ve been warned!), but I find this exchange intriguing in a perverse way.

I have featured some of this story in Links. By way of background, various news sites reported that the internet group Anonymous had said it was going to mount cyber attacks on the Westboro Baptist Church, which among other things hosts the website GodHatesFags. Anonymous is best known for making life difficult for various players who have undermined Wikileaks, such as banks that have stopped processing donations to Wikileaks, but it has also played a role in supporting the rebellion in Tunisia by attacking non-essential government websites.

A couple of weeks ago, a letter was published, supposedly by Anonymous, warning that if the Westboro Baptist Church didn’t shut down its public website, they would be targeted. It turns out Anonymous not did issue that letter, begging the question of whether it actually came from the church itself, as some have speculated, or a third party.

David Parkman arranged for representatives of the church and Anonymous to interact with each other.

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Matt Stoller: The Liquidation of Society versus the Global Labor Revival

By Matt Stoller, a fellow at the Roosevelt Institute. His Twitter feed is http://www.twitter.com/matthewstoller.

Today, the city of Providence, Rhode Island sent out layoff notices to every single teacher in the city. Every single one of them. If you want to understand why this is happening, why wages in the US keep getting cut, this chart tells the story.

That’s the number of strikes since 1947. What you’ll notice is that people in America just don’t strike anymore. Why? Well, their jobs have been shipped off to factory countries, their unions have been broken, and their salaries until recently have been supplemented by credit. It’s part of a giant labor arbitrage game, that the Federal Reserve and elites in both parties are happy to play. Strike, and you’re fired. Don’t strike, and your pay is probably going to be cut. Don’t like it? Sorry, we can open a plant abroad. And we have institutions, like the IMF, to make sure that we get goods from those factory-countries, and get them cheap.

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More Reasons to Be Leery of Infrastructure Sales: Abuses of Rights for Fun and Profit

Yesterday, we discussed a mundane reason to be leery of the sale of assets owned by the public to private parties: the outcome, almost without exception, is a ripoff. Even if the owners manage to orchestrate the bidding well enough to assure that the entity fetches a decent price, the cost of doing the deal and the investors’ return requirements assure that charges to the public will rise faster than if the property was left in government hands (and this does not preclude the owner scrimping on maintenance and service levels). Macquarie Bank has been the world leader in this business, and reader Crocodile Chuck gave some useful examples:

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SEC Expert on Why It is a Wuss at Litigation

As readers may have noticed, I grumbled over the weekend about the decision by federal prosecutors not to bring charges against Countrywide’s Angelo Mozilo. I attributed it to two causes: extreme deregulation (you can’t prosecute if virtually nothing is a crime) and timid prosecutors. A lively debate arose in comments, with our Richard Kline contending that the real reason no Big Name had been brought to justice is that a trial would make it all too evident that there were plenty of other powerful people who had committed equally heinous acts. Can’t expose how widespread corruption is, now can we?

Other readers argued the revolving door issue, which was (in essence) don’t ruffle the law firms that will be your prospective employers. I begged to differ, in that tough, effective prosecutors were magnets for new law school grads precisely because they were great training grounds. Someone who came out of those boot camps would be more valuable than a largely untested staff member at a regulatory agency.

I got this e-mail from someone who has seen the SEC from the inside:

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Wisconsin Union Battle: A Convenient Distraction From the Real Culprit in State Budget Woes

It is a tribute to the messaging skills of the American corpocracy that a phony budget crisis in Wisconsin has been used to scapegoat unions. This row serves as a very convenient way to shift attention from the real cause of fiscal stress in states that have serious budget gaps (yes, there are a very few states like New Jersey that have gaping pension shortfalls, thanks to years of government use of wildly optimistic return assumptions as an excuse to underfund them, but contrary to the railing of Chris Christie, his state’s problem is an outliers).

First, let’s debunk a couple of issues thrown out by Wisconsin governor Walker’s camp before turning to the real culprit in state budget’s supposed tsuris. The state budget is not in any kind of real peril. The Wisconsin Legislative Fiscal Bureau estimated that the state would end fiscal year 2011 with a gross positive balance of $121. 4 million and a net balance (after mandated reserves) of $56.4 million. Walker asserts there is actually a $137 million deficit. But where did that change come from? Lee Sheppard of Forbes estimated that Walker’s tax cuts for businesses would cost at the bare minimum $100 million over the state’s biennial budget cycle. Other sources put a firmer stake in the ground and estimate the costs at at $140 million. Viola! Being nice to your best buddies means you need to go after someone else.

The second major canard is that Wisconsin state employees are overpaid.

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