PROCÈS-VERBAL

“Speaking For Myself . . .”

In an earlier post, I expressed my feeling that the story of wealth inequality playing out across America was merely the tip of the iceberg. It is, in fact, little more than a soundbite. In various and subtle ways, the structural weaknesses and injustices (negative externalities) generated by free financial markets impose costs many of which remain off balance sheets but are, nonetheless, imposed on all either through market prices or through taxes. Simply leveling the playing field through measures like the financial transaction tax and Tobin tax, which I think are vital, does nothing to address other underlying problems which unregulated finance has inflicted upon us all. Today’s absentee landlords are known as shareholders, and include a huge proportion of working Americans, who know very little of where their money is being invested and nothing at all about who is managing their money or how they are managing it.

Fortunately for me, we have yet another example of Wall Street mismanagement: 150,000 is the number of investors, some of whom will have to wait for years before they see their money, directly affected by the MF Global collapse. I know these people, or people very much like them, and in the larger sense, almost all of us are these people. If you have a 401k or an IRA. If you have or are thinking of investing in financial markets, you are one of these people. You are those who largely accept the tenets of capitalism (I do, but with caveats): that if you work hard enough, you get a little lucky, and you get to reap the rewards of your efforts. If you are one of those who believes in the integrity and good faith of those you entrust to handle your money, do your accounting, and those who run the firms you invest in, you are one of those people. I believe markets are the most efficient means to determine value/price, though not always-witness the housing bubble. There is a very good case for wondering if this has been warped as well – take a good, cold hard look at securities markets today and ask yourself the degree to which greater fool theory determines value, because really, who is a value investor anymore? What else does technical analysis actually describe? Underlying value? Please. We treat the hard-work-yields-success paradigm as if it were a cause-and-effect dynamic, but the truth is, more than a little luck is needed. And to those who wish to throw the maxim that people make their own luck (through diligence and intelligence) at me, I’d have to say that luck plays a far greater part than you might think. One can fail through lack of effort at a crucial point or the flaw intellect has failed to detect, but neither hard work nor smarts will guarantee success either, because strength has limit, knowledge is not perfect and the state of the marketplace itself is dynamic. The markets at all levels, like life, really are a gamble.

We assume that the managers act with integrity (but we don’t know), and that the regulators are on the case making sure that forms are followed (which is hardly ever true).

So I admire the small business entrepreneurs, whether they make it or not. They makes the attempt knowing that they don’t know everything they need to know, and hope that flexibility, determination and thought will suffice to make up the shortfall; and they hope that the vagaries of pure chance and hazard pass them by.

About a year ago, a customer came up to me with a few books on how to start your own business. Her teen-aged daughter stood next to her. Dressed as a professional, she looked bright enough, and I took a deep breath then asked her if she was thinking of starting her own business. She said she was. I glanced over at her daughter, then looked her straight in the eye and told her that if she decided to go ahead with this, she should have the backing of her family beforehand, because she wasn’t going to be available for them for several years, and that was the case if all went well. She smiled and thanked me.

I saw her again a few weeks ago. I didn’t recognize her, but she knew me. She told me I was right. She said that her business was doing great and she had even been offered a publishing deal in the event she wanted to write a book. (If not a secondary profit generator, it is at least fabulous marketing opportunity.) She told me that she thought that she could control the business, rather than the reverse, but that plainly, business demands had trumped all other concerns.

Running a business is more absorbing, more demanding, than having a family. I know. I’ve been through the startup adventure five times.

For the record, about 66% of all startups fail within 36 months. Yet another reason to admire their grit, and the truth is that their hard work is rewarded with failure rather than success by a whopping margin.
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I don’t know how it began. I’ve seen AdBusters magazine but I admit I’ve never opened one up. I’m really hazy on when it began too. I’m a johnny-come-lately to the #Occupy movement, and if I hadn’t spent the past three to four years playing catch-up in economics and political economy, I’d probably be pissed off when a “Breaking News” segment about events taking place at an #Occupy site (which probably would only have been the result of a police raid) interrupted the ballgame or movie I was watching just like everyone else. As it turned out, targeting Wall Street was perfectly tailored to my concerns because in a quiet way, I’ve been examining some of the basic assumptions underlying our corporate economy for years myself.

So I don’t think buzz over #Occupy Wall Street and wealth inequality goes far enough, but that’s for another post. It is, nonetheless, a good place to start.

I have, on quite a few occasions, told tweeps that the #Occupy movement would trade the tents and sleeping bags in a heartbeat for CNBC, WSJ, Bloomberg’s cable channel and BusinessWeek, CNN Money, Barrons, and all the news slots devoted to the daily market news. A huge media behemoth devoted to, as the ads during the 70′s when individual investing began to take hold used to say, “making your money work for you.”  (As opposed to actually going out and earning a wage and surviving on that alone. In America, more than anything else, it matters where your income comes from.) All of which was concerned with “Your Money,” the insane antics of Washington and the European debt crisis, or whatever market moving news of the day turned out to be, along with business friendly commentary from the likes of Larry (“Lawrence of America”) Kudlow, who had at one point two prime time slots on CNBC. #Occupy has tents, and the intention of staying until . . . something happens.
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Speaking For Myself . . .

It’s not that I never intended to reach this point, because all this has been simmering within for years. The timing, however, is prompted by an short exchange on Twitter with @cspenn in response to his post on #occupyboston, noting (yet again) that the movement seems to lack focus:

• @cspenn: #the5: 3 takeaways I learned yesterday visiting #OccupyBoston: bit.ly/uN7RdP

• Me: @cspenn A closer look at all the items in your list tells me there’s more focus than you give the people you spoke with credit for. . . Many of those items are manifestations of crony-capitalism, for instance. Or just plain corruption . . . Note the comparative lack of cultural issues brought up, for instance. In this context, another effect of cronyism.

• @cspenn: @papicek I totally agree there are commonalities, but saying “end corporate greed and corrupt politics” isn’t quite a solution or focus.

• Me: @cspenn For my part, the solution is already out there: level the playing field through taxation & enforcement . . . Some effort needs to be given on the topic of legal doubt, which tax cheats depend on.

• @cspenn: @papicek That presumes the governing authority behind taxation/enforcement is not corrupt, however.

• Me: @cspenn See what happens? You introduced another topic which dissolves focus! It’s moot, however . . . Because once the taxes are in place, the desired effect is in process.

• @cspenn: @papicek the better question is: what is the linchpin, the shatterpoint, that holds much of the corrupt system in place? Break THAT.

• Me: @cspenn A systems view. You’re looking for a leverage point. But the problems permeate our society, from the Absentee landlordism of NYSE . . . to a quite demonstrable racial inequality in America. A single leverage point won’t suffice.

Poor guy. I hit him with a barrage of tweets (this recreation is pulled together to simulate the exchange as I saw it, and contains minor edits), replying to his in a somewhat random fashion. He must have thought I was as lacking in focus as he feels #Occupy Wall Street appears to him. Because his points are pertinent and well taken, I decided that now is an good time to pull together the earlier posts in this series and synthesize a program going forward.

A program, not a demand, please note.
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“Our soundness standards should be no more or no less stringent than those the market place would impose. If banks were unregulated, they would take on any amount of risk they wished, and the market would price their capital and debt accordingly. Ideally, banks should also face regulatory responses to their portfolio risks that simulate market signals. And these signals should be just as tough, but no tougher than market signals in an unregulated world. Perfection would occur if bankers had a genuinely difficult choice deciding if they really wanted their institutions to remain insured or become unregulated.”
— Alan Greenspan Banking in the Global Marketplace

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“The Class [A] through Class [C] Notes will be governed by, and construed in accordance with, the law of the State of New York. The Class [D] Notes will be governed by, and construed in accordance with, the laws of the Cayman Islands.”
— Goldman Sachs, ABACUS 2007 AC1, Indicative Terms, Page 20.

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@papicek you say borrowed, I say stole… The govt is way too big. It’s a beast that we should starve. Riddled with cancer.”
— @BrocktonDave

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“I’m down here to figure out what I think.”
— Governor Deval Patrick at #occupyboston, 15 October 2011

The events of the last six weeks have been exhilarating to follow on the ground and on Twitter. At last the grassroots have found a voice, and in targeting Wall Street, their aim is true.

What follows might be read by some as an attack on free markets, open markets and the freedom of contract, and to some extent this is true, yet this is not entirely so. Early on, the question, “why do you occupy?” was asked and for me, the short answer is: I know too much not to sympathize and support the Occupy movement. So what follows is essentially some of that longer answer, which only touches on the myriad reasons to demand real change in American society. What follows is a mixture of personal and reported experience with a macro view of what this means to everyone.
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Crossposted to Antemedius.

A nice summation of the NotW scandal, as it has unfolded thus far, is here, courtest of Robert Zeliger over at FP’s Passport: A Sophie’s Choice For Murdoch:

As far as announcements go, Rebekah Brooks’s resignation today shocked just about no one. The chief executive of News International and a former editor of the disgraced and defunct News of the World had some initial support from Papa Rupert after the scandal first blew up, but as it snowballed this week — crushing everything in its path — her hara-kiri seemed impossible to avoid.

But will she be the last to fall on the sword? The knives are still out for Murdoch and his business empire. And focus has shifted to two important people in Rupert’s inner sanctum. He might find the need to sacrifice one of them. But who will it be: the son and heir apparent, or one of his closest confidantes who has been with him for 50 years?

Well, we already know the answer to that question. Even though son James Murdoch’s hands are far from clean, Les Hinton got the ax yesterday. In the Murdoch family, blood is thicker than water.
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How I spend my day off. I do some housekeeping here at home as well as on the various places on the web where I reside. A little organization to make life easier. It’s a regularly recurring task, because I normally use three browsers: one for news, another for blogs, and a third to touch base with various online foreign policy journals.

Using multiple tabs, opening a browser is an exercise in patience for me.

Later on today, I’ll scroll through the twenty or so studies and white papers I downloaded last night. My idea of a fun time.

One thing I did was to gather all my news links into one place so Firefox opens a bit faster than it did: my *Daily Readswas the target of some cleanup. Hopefully, while the rest of the political blogosphere moans and groans over things like the failed debt limit vote in the House (why this is news isn’t exactly clear to me, the GOP telegraphed their intentions months ago and the markets have ignored the kabuki), I will attempt a quick news roundup of stories of note which go unremarked in the lefty blogosphere:
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Well, if you didn’t believe me when I posted Regime Change is the Official Coalition Goal, here you go. The road we started down when we first decided to intervene has now reached it’s logical conclusion.

Well. It was inevitable, wasn’t it? Does anyone remember when this was billed to us, the UN and the world as a no-fly zone?

Published in three newspapers, Presidents Obama, Sarkozy and Prime Minister Cameron have now publicly admit what many believed (me included) was always their agenda.

Actually, there was no “road” as I’ve described it here. We arrived at this destination in the first two weeks of March, and this is where we’ve remained ever since.
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No, not me. I’m well posted today.

I’m talking about 1,100 missing children from the Second World War. The US Holocaust Memorial Museum has posted 1,100 photos of children taken by relief workers after the war in the hope someone would recognize them and facilitate reuniting them with their families:

By publicizing these 1,100 photographs, the Museum hopes to identify these children, piece together information about their wartime and postwar experiences, and facilitate renewed connections among these young survivors, their families, and other individuals who were involved in their care during and after the war.

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One step forward, one step back. It seems that reports that the Supreme Military Council in Egypt was as eager to crush the peaceful protests in Tahrir Square could very well been true, that the thugs are still hard at work suppressing dissent.

Freedom House reports that Maikel Nabil Sanad, and Egyptian blogger has been arrested:

by Egyptian military police on March 28 on charges that he allegedly defamed the armed forces

To the generals running Egypt: civil societies are NOT subject to military discipline. Military enrollment is a contract under which an enlistee agrees to accept such discipline. Civilians, by definition, have not agreed to accept being treated like raw recruits. That’s their job.

One wonders when they’ll get that. One also wonders when our own officials will understand that expanding military and police powers does exactly the same damned thing.
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