June 27, 2012

Understanding Debt: As the Pendulum Swings

If Occupy is a movement and the movement has intellectuals, then David Graeber is primus inter pares. Below are two excerpts from a September 2011 interview which give nice overview of his thinking. With a mind-boggling $1,000,000,000,000 (trillion) dollars in student debt, countless home mortgages under water, and a government run for the benefit of the plutocracy, is it possible that his ideas, marginal though they may seem, will find an increasingly welcome reception over the next 5 to 10 years? Click here for the full article in The Brooklyn Rail.

[Interviewer]: There’s something about the quantitative aspect of debt, the way that it can impersonalize human relationships, that makes it such a powerful force in civilization.

David Graeber: Exactly: The turning of moral obligations into numbers and then using those numbers to justify things that could otherwise never be justified morally. And that’s the story of debt. That’s why I realized, when writing it, that this has been going on for a very long time. The IMF (International Monetary Fund) and what they did to countries in the Global South—which is, of course, exactly the same thing bankers are starting to do at home now—is just a modern version of this old story.

Graeber: One of the strange powers of the logic of debt, which pervaded first North Atlantic societies and then almost the rest of the world under the organizing principle of capitalism, is that people are under the pressure of the shame and humiliation that comes with being in debt. This causes a frenetic need to look and turn everything around them into a source of profit. And that’s what the industrious people are, the people who submit themselves to that logic.

Click here for the full article.

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January 19, 2012

The Plutocracy as Kleptocracy: Bankster Mortgage Fraud

To get the full background on the mortgage fraud front, I recommend Naked Capitalism. For now I highlight a post there today on a class action suit against JP Morgan. It begins:

To our knowledge, the suit filed by Ernest Michael Bakenie against JP Morgan is the first to accuse a major bank of widespread, systematic residential mortgage documentation and fraud…

We’ve reported repeatedly of widespread evidence of grotesque procedural abuses as servicers and foreclosure mill lawyers try to cover up for the fact that in many cases, mortgage notes were not transferred properly to securitization trusts, and the rigid way these deals were structured makes it impossible to remedy those failures at this juncture. Absent creating a time machine, the only fix is to fabricate documents that make it appear than things were done correctly. We’ve seen (as in in person) obvious forgeries submitted to the court (signatures obviously Photoshop shrunk to fit) and servicer personnel caught perjuring themselves, yet judges are remarkably unwilling to issue a ruling that hinges on finding that the plaintiff filed phony documents.

If this case moves forward, that reticence may change. Note that this case, which covers only the Central District of California, alleges that Chase engaged in over 7000 filings of motions of relief of stay in bankruptcy court using fabricated documents.

A faint hint of silver glimpsed through the clouds…

January 11, 2012

Annals of Banking Crime: Mafia now “Italy’s No.1 bank”

I tried to think up a comment on this, but, really, it speaks eloquently for itself.

ROME, Jan 10 (Reuters) – Organised crime has tightened its grip on the Italian economy during the economic crisis, making the Mafia the country’s biggest “bank” and squeezing the life out of thousands of small firms, according to a report on Tuesday.

Extortionate lending by criminal groups had become a “national emergency”, said the report by anti-crime group SOS Impresa.

Organised crime now generated annual turnover of about 140 billion euros ($178.89 billion) and profits of more than 100 billion euros, it added.

“With 65 billion euros in liquidity, the Mafia is Italy’s number one bank,” said a statement from the group, which was set up in Palermo a decade ago to oppose extortion rackets against small business.

Old style gangsters handing out cash in bars and pool halls had been replaced by apparently respectable bankers, lawyers or notaries, the report said.

“This is extortion with a clean face,” it added. “Through their professions, they know the mechanisms of the legal credit market and they often know the financial position of their victims perfectly.”

Click here for the full story.

May 13, 2011

Institutional Corruption: The 10 Minute and 40 Minute Intros

What is a corrupted institution? How do institutions get corrupted?  For a perspective to think about these questions I offer the videos below. Both are by Lawrence Lessig. The first he describes as “Ten minutes to explain corruption…” from a talk at the Harvard Thinks Big Forum. It’s dense in the way that haiku can be dense — much illuminated in a few words or, here, in a few minutes. The second video is the latest version of his expanded talk on this, “In Plain Sight Corruption,” given at a class at UC Berkeley. Useful, if not necessary, for understanding how government and other instutions actually operate. Includes recommendations for taking action to remedy this ruinous state of affairs.

The shorter course:

The longer course:

[Can’t see the video in your RSS reader or email? Click here.]

May 8, 2011

Sign of the Times: The Rise of McJobs in the Plutocracy

For some time I’ve hewed to Cszlew Milosz’s characterization of America as “a moderately corrupt republic.” Now I would argue for a shorter tag, plutocracy. One of the consequences of governance by the rich (via their agents, Congress) is spelled out in “How the McEconomy Bombed the American Worker: The Hollowing Out of the Middle Class” by Andy Kroll in Tomdispatch.com. The attention grabbing opening paragraph:

Think of it as a parable for these grim economic times. On April 19th, McDonald’s launched its first-ever national hiring day, signing up 62,000 new workers at stores throughout the country. For some context, that’s more jobs created by one company in a single day than the net job creation of the entire U.S. economy in 2009. And if that boggles the mind, consider how many workers applied to local McDonald’s franchises that day and left empty-handed: 938,000 of them. With a 6.2% acceptance rate in its spring hiring blitz, McDonald’s was more selective than the Princeton, Stanford, or Yale University admission offices.

The article gives an account of rise of the McEconomy. Read it here.

May 1, 2011

Nuclear Power: Who Can You Trust?

The report below highlights the possibly terminal foolishness of trusting governments and utilities to behave with the prudence required to manage the operation of nuclear power facilities.

In response to a question on whether sufficient safety measures had been taken, (Japan’s Prime Minister Naoto) Kan said nuclear plants operate on the assumption that emergency diesel generators will maintain a reactor’s cooling functions when outside power is cut off.

He said the fact that such a back-up system failed to work properly has serious implications.

Kan said measures were not taken despite previous accidents and warnings, and that he must admit that the utility and the government failed to fully deal with the situation.

Emphasis added. From NHK World via The Raw Story.

April 3, 2011

Annals of Greed: The $100 Million Pied-à-Terre

A tale of the 1% or, more accurately, the 1% of 1%. Not much to be said here. The story of Russian billionaire Yuri Milner’s Silicon Valley “foot on the ground” is making the media rounds. One wonders how much is enough. I am fond of Epicurus’s take: ‘Nothing is enough for the man to whom enough is too little.’ More photos where this one is from: Business Insider.

March 31, 2011

Annals of Greed: The Ever Fattening of the 1%

One of the problems with greed is that it knows no bounds. In 1985 the top 1% of the Americans received 12% of the income and controlled 33% of the wealth. Now the figures are 25% and 40%. respectively. This is not a good thing…and not only from a notion of fairness. It’s a bad thing, also, because of what happens to nations when the distribution of wealth is so skewed.

Such is the warning that Joseph Stiglitz brings us in his article, “Of the 1%, by the 1%, for the 1%,” in the current issue of Vanity Fair. One of several money quotes in a money article:

The more divided a society becomes in terms of wealth, the more reluctant the wealthy become to spend money on common needs. The rich don’t need to rely on government for parks or education or medical care or personal security—they can buy all these things for themselves. In the process, they become more distant from ordinary people, losing whatever empathy they may once have had. They also worry about strong government—one that could use its powers to adjust the balance, take some of their wealth, and invest it for the common good. The top 1 percent may complain about the kind of government we have in America, but in truth they like it just fine: too gridlocked to re-distribute, too divided to do anything but lower taxes.

And the consequences? Continue reading

March 27, 2011

Digital Piracy: The Beginning of the End

Ok, you can steal my e-books. Well, it’s not actually stealing, because if you don’t want to pay for one, you can have it. So goes Tim O’Reilly’s approach to digital rights management (DRM). This, of course stands directly opposite the rigidly proprietary copyright practices of major media publishers. But O’Reilly runs a $100 million media business. What gives? Is he a throwback to the 60′? (Shades of Abbie Hoffman and Steal This Book.) Or do we see an early adopter of an approach to publishing and copyright management that puts more emphasis on the good to the community? And one which, of course, is also economically viable.

From “Steal This E-Book” by Jon Bruner in Forbes Focus, an abridged interview with Tim O’Reilly. The unabridged version (and worth the read) is here.

Jon Bruner: On all your titles you’ve dropped digital-rights management (DRM), which limits file sharing and copying. Aren’t you worried about piracy?

Tim O’Reilly: No. And so what? Let’s say my goal is to sell 10,000 copies of something. And let’s say that if by putting DRM in it I sell 10,000 copies and I make my money, and if by having no DRM 100,000 copies go into circulation and I still sell 10,000 copies. Which of those is the better outcome? I think having 100,000 in circulation and selling 10,000 is way better than having just the 10,000 that are paid for and nobody else benefits.

People who don’t pay you generally wouldn’t have paid you anyway. We’re delighted when people who can’t afford our books don’t pay us for them, if they go out and do something useful with that information.

I think having faith in that basic logic of the market is important. Besides, DRM interferes with the user experience. It makes it much harder to have people adopt your product.

March 25, 2011

Signs of the Times: Gay Marriage

Reliable political bellwether of white American middle-class sensibilities, Chuck Schumer, Senator from New York, has joined the ever growing chorus in the call for equal marriage rights for same sex couples, i.e., gay marriage. His protegé, junior New York Senator Kristen Gillibrand, joined him in climbing aboard the history train. The unfolding of an inevitable continues. Raw Story brings us the news here.