Posts
(Please consider making a contribution to Welcome to Pottersville2 or sending a link to your friends if you think the subjects discussed here are worth publicizing. Thank you for your support. I really appreciate it. Any contribution will make a huge difference in this blog's ability to survive.)
We're always the last to find out.
And the last it seems now to move towards greater equality of treatment (of the lower classes anyway).
Saturday, January 26, 2013
Europeans Move Forward On A Robin Hood Tax On Financial Transactions - U.K. And U.S. ... Dragging Their Feet
In December the European Parliament voted overwhelmingly in favor of the kind of financial transaction tax Wall Street has bribed conservatives in America to reject. And on Tuesday E.U. Finance Ministers OK-ed the new tax which will cover inter-bank trading in stocks, bonds and derivatives, something that's expected to bring in over $50 billion dollars in revenues in 2014 when it's up and rolling. There's a 0.1 per cent tax on stock and bond transactions and a 0.01 per cent tax on derivatives trades. David Cameron, who shares the distinction with Paul Ryan of being a deranged advocate of bone-crunching Austerity, has kept Britain from participating.
Just as David Cameron appeared to be grabbing his coat for an EU exit, other European countries took a step towards greater unity with agreement for eleven countries to implement a multi-billion pound tax on the banks.American efforts to do the same thing were defeated by Wall Street and their allies in 2011. But Pete DeFazio (D-OR) and Tom Harkin (D-IA) are going to try again, hoping to institute a minuscule o.o3% tax on some financial transactions that will yield something like $35 billion dollars a year.
Not tax rises on low income families, or cuts to public services to balance the books, but a tax on banks. It's not every day you get to write that. The eleven hope that the Financial Transaction Tax of between 0.1-0.01 per cent on stocks, bonds and derivatives could be implemented as early as next year and will raise around £30bn.
The FTT has for years stirred controversy. Banks, following the Mayan's lead, warned that the end of the world was nigh. As campaigners for a Robin Hood Tax we have often been told "you may have a nice video with Bill Nighy in it [see video above], but your idea won't wash in the complex world of finance, nor will it cut it at the coalface of Government."
Yet it has-- Europe's biggest economies including France, Germany, Italy and Spain are signed up. The group of eleven makes up an impressive 90 percent of Eurozone GDP. Other European nations agreed to let them press ahead. Yet there was one notable abstention, from the UK Government.
Why? It could be argued that a right of centre Government, a powerful financial sector and an economy struggling to return to growth would never add up to much of an appetite to take a chunk out of the banks. Yet all of this applies to Germany, one of the FTT's biggest champions.
The difference is that Germany sees the FTT as a necessary part of the economic equation. It too is implementing tough austerity measures. Germany understands the need to balance and indeed improve the economy by ensuring the financial sector pays its fair share. The richest sector in the world, paying a modest additional tax for causing the largest financial crisis of a generation: quid pro quo.
As Wolfgang Schauble, German finance minister said:
It’s in the interest of the financial sector itself that it should concentrate more on its proper role of financing the real economy and ensuring that capital is allocated in the most intelligent way, instead of banks conducting the bulk of their trading on their own account. That’s in the long-term interest of the financial sector.Cameron, conversely, opted to call the Financial Transaction Tax "madness," fighting hammer and tong to protect the hallowed elite in the City, whilst cutting benefits and services for the poorest. The Government's much touted bank levy, will raise a just £2.5bn a year and be offset by a lowering of Corporation Tax that Osborne has boasted will be the lowest of any major western economy.
Mervyn King, Governor of the Bank of England pointed out the irony that "the price of the financial crisis is being borne by people who did absolutely nothing to cause it," adding that he was "surprised that the degree of public anger has not been greater than it has."
But if the moral argument doesn't sway you, then the fiscal case should. Leading City figure Avinash Persaud has calculated that if the UK were to join in with the European Financial Transaction Tax it would raise the Exchequer at least £8bn a year. This could lift over three million people struggling on minimum pay above the living wage threshold.
Ten thousand teachers lost their jobs in 2010/2011 and there are 5,780 fewer nurses than at the time of the last general election-- in eleven days an FTT could raise enough revenue to re-employ every one. In just a single day the tax could raise enough money to reinstate Sure Start centres for 25,000 children.
A financial transactions tax would slow down high-frequency trading, which has exploded in the last five years. Such trading “has absolutely no social value,” according to one of its pioneers, and only increases volatility in the market. The tax would have little effect on normal traders.And in response to Wall Street traders claiming "businesses" would move elsewhere-- Dubai? Beijing? Somalia?-- DeFazio has pointed out that 52 financial executives have endorsed the tax and rejected the scare tactics. “For 50 years we had a tax that was about seven times larger than this when the country was seeing the greatest growth in its history, post-World War II,” he said. “So we’ve proven this will not have a detrimental impact on growth. In fact, it perhaps is beneficial to growth. It’s not necessarily beneficial to salaries of hedge fund managers on Wall Street.”
And, it turns out, DeFazio and Harkin aren't the only Members of Congress talking about a financial transaction tax. Boehner pawn Dave Camp (R-MI), chairman of the House Ways and Means Committee is reportedly about to introduce some kind of twisted, partisan version of the tax, that smacks of Republican revenge against businessmen asking them to cooperate with Democrats for the sake of the country.
The draft legislation, which may get significant revision before it's presented to a congressional committee, would be vehemently opposed by Wall Street and other major corporations that trade heavily in derivative securities.
Sleazy Boehner ally Dave Camp (R-MI)
They may have only themselves to blame. Congressional Republicans have been furious at top corporate executives lobbying heavily for a "grand bargain" that would include tax hikes and cuts to Social Security, Medicare and Medicaid, according to congressional GOP insiders. Republican leaders were further piqued when business executives began lobbying for certain corporate tax reforms, leading to a sharply worded letter from Camp to the Business Roundtable, a lobbying group of corporate CEOs.
One Republican operative told HuffPost that Camp's bill is political payback for the CEOs collaborating with the Fix the Debt coalition, which worked with corporate chiefs who had pressured Republicans to accept tax increases as part of a deal to avert the so-called fiscal cliff at the close of 2012.
"This transaction tax was only a matter of time after Camp's letter to the Business Roundtable," the GOP operative said. "In just a few months, their lobbying campaign has resulted in Republicans initiating new revenues on their backs. Maybe the CEOs can kill it by Democrats insisting the taxes aren't high enough."
...Camp's new bill would harvest government revenues from complex financial transactions involving derivatives, some of which figured prominently in the 2008 banking collapse. Although the 2010 financial reform legislation would curb some excesses in the derivatives market, the legislation isn't yet fully implemented, and leaves much of the market unregulated. Financial reform advocates have urged new taxes on derivatives to deter excessive risk-taking by big banks.
...Camp's bill would establish a new tax regime for derivatives, requiring banks to declare the fair market value of the products at the end of each year. Any increase in value would be considered corporate income, subject to taxation. It's a more aggressive tax treatment than Wall Street enjoys for either derivatives or for trading in more traditional securities.
...The bill would significantly strengthen the Volcker Rule, which bans banks from speculating in securities markets with taxpayer money. The Volcker Rule's implementation has been delayed as bank lobbyists have flooded regulatory agencies in Washington, pillorying the ban with loopholes. Hefty tax burdens for proprietary trading would reduce bank incentives to engage in the risky activity.
Camp's legislation also would permanently establish a homeowner aid plan advocated by former Rep. Brad Miller (D-N.C.), who retired this month. When banks grant homeowners mortgage relief, the IRS considers the debt-reduction taxable income. As a result, struggling homeowners can face an unmanageable tax burden. A $50,000 debt reduction can spark an $18,000 tax bill-- money that borrowers struggling to avoid foreclosure simply do not have. Miller successfully lobbied to include a one-year fix on the tax policy in the fiscal cliff deal. Camp's legislation would permanently end the tax policy.
I couldn't believe how the MSM was able so easily to portray this traitor as god's gift to progressive government.
Maybe their god.
Obama Puts Fox In Charge of Henhouse
25 January 13
was shocked when I heard that Mary Jo White, a former U.S. Attorney and a partner for the white-shoe Wall Street defense firm Debevoise and Plimpton, had been named the new head of the SEC.
I thought to myself: Couldn't they have found someone who wasn't a key figure in one of the most notorious scandals to hit the SEC in the past two decades? And couldn't they have found someone who isn't a perfect symbol of the revolving-door culture under which regulators go soft on suspected Wall Street criminals, knowing they have million-dollar jobs waiting for them at hotshot defense firms as long as they play nice with the banks while still in office?
I'll leave it to others to chronicle the other highlights and lowlights of Mary Jo White's career, and focus only on the one incident I know very well: her role in the squelching of then-SEC investigator Gary Aguirre's investigation into an insider trading incident involving future Morgan Stanley CEO John Mack. While representing Morgan Stanley at Debevoise and Plimpton, White played a key role in this inexcusable episode.
As I explained a few years ago in my story, "Why Isn't Wall Street in Jail?": The attorney Aguirre joined the SEC in 2004, and two days into his job was asked to look into reports of suspicious trading activity involving a hedge fund called Pequot Capital, and specifically its megastar trader, Art Samberg. Samberg had made suspiciously prescient trades ahead of the acquisition of a firm called Heller Financial by General Electric, pocketing about $18 million in a period of weeks by buying up Heller shares before the merger, among other things.
"It was as if Art Samberg woke up one morning and a voice from the heavens told him to start buying Heller," Aguirre recalled. "And he wasn't just buying shares - there were some days when he was trying to buy three times as many shares as were being traded that day."
Aguirre did some digging and found that Samberg had been in contact with his old friend John Mack before making those trades. Mack had just stepped down as president of Morgan Stanley and had just flown to Switzerland, where he'd interviewed for a top job at Credit Suisse First Boston, the company that happened to be the investment banker for . . . Heller Financial.
Now, Mack had been on Samberg's case to cut him in on a deal involving a spinoff of Lucent. "Mack is busting my chops" to let him in on the Lucent deal, Samberg told a co-worker.
So when Mack returned from Switzerland, he called Samberg. Samberg, having done no other research on Heller Financial, suddenly decided to buy every Heller share in sight. Then he cut Mack into the Lucent deal, a favor that was worth $10 million to Mack.
Aguirre thought there was clear reason to investigate the matter further and pressed the SEC for permission to interview Mack. Not arrest the man, mind you, or hand him over to the CIA for rendition to Egypt, but merely to interview the guy. He was denied, his boss telling him that Mack had "powerful political connections" (Mack was a fundraising Ranger for President Bush).
But that wasn't all. Morgan Stanley, which by then was thinking of bringing Mack back as CEO, started trying to backdoor Aguirre and scuttle his investigation by going over his head. Who was doing that exactly? Mary Jo White. This is from the piece I mentioned, "Why Isn't Wall Street In Jail?":
It didn't take long for Morgan Stanley to work its way up the SEC chain of command. Within three days, another of the firm's lawyers, Mary Jo White, was on the phone with the SEC's director of enforcement. In a shocking move that was later singled out by Senate investigators, the director actually appeared to reassure White, dismissing the case against Mack as "smoke" rather than "fire." White, incidentally, was herself the former U.S. attorney of the Southern District of New York — one of the top cops on Wall Street . . .
Aguirre didn't stand a chance. A month after he complained to his supervisors that he was being blocked from interviewing Mack, he was summarily fired, without notice. The case against Mack was immediately dropped: all depositions canceled, no further subpoenas issued. "It all happened so fast, I needed a seat belt," recalls Aguirre, who had just received a stellar performance review from his bosses. The SEC eventually paid Aguirre a settlement of $755,000 for wrongful dismissal.
It got worse. Not only did the SEC ultimately delay the interview of Mack until after the statute of limitations had expired, and not only did the agency demand an investigation into possible alternative sources for Samberg's tip (what Aguirre jokes was like "O.J.'s search for the real killers"), but the SEC official who had quashed the Mack investigation, Paul Berger, took a lucrative job working for Morgan Stanley's law firm, Debevoise and Plimpton, just nine months after Aguirre was fired.
It later came out that Berger had expressed interest in working for the firm during the exact time that Aguirre was being dismissed and the Mack investigation was being quashed. A Senate investigation later uncovered an email to Berger from another SEC official, Lawrence West, who was also interviewing with Debevoise and Plimpton at the time. This is from the Senate report on the Aguirre affair:
The e-mail was dated September 8, 2005 and addressed to Paul Berger with the subject line, "Debevoise.'' The body of the message read, "Mary Jo [White] just called. I mentioned your interest.''
So Berger was passing notes in class to Mary Jo White about wanting to work for Morgan Stanley's law firm while he was in the middle of quashing an investigation into a major insider trading case involving the C.E.O. of the bank. After the case dies, Berger later gets the multimillion-dollar posting and the circle is closed.
This whole episode highlights everything that's wrong with modern Wall Street. First of all, everybody's buddies with each other - cops and robbers, no adversarial system at all. As Bill Murray would say, it's dogs and cats, living together.
Here, a line investigator gets a good lead, it's quickly taken out of his hands and the whole thing is negotiated at 50,000 feet by friends and former co-workers of the top regulators now working at hotshot firms.
If Barack Obama wanted to send a signal that he's getting tougher on Wall Street, he sure picked a funny way to do it, nominating the woman who helped John Mack get off on the slam-dunkiest insider trading case ever to cross an SEC investigator's desk.
When I contacted Gary today, his take on it was simple. "Obama is not going to clean up financial corruption," he said, "by pinning a sheriff's badge on Wall Street's protector-in-chief."
Karen Garcia at Sardonicky always sees (and writes) so clearly. Who could disagree with her judgment?
A Sharp Tool With a Smooth Handle
Karen Garcia at Sardonicky
The Inaugural bullshit is over. Long live the eternal campaign bullshit. It's time to forget about Selma and Seneca Falls and Stonewall. It's time, once again, to dust off the whips and chains and scolds' bridles for the little people, and call them *gifts*. In this week's radio address, your President signals whose side he is really on. (Hint: it ain't yours.) Just pretend you're a fly on the wall in the boardroom of Goldman Sachs, and that he's talking directly to the annual convention of the Plutocratic Mafia. *Hi, everybody. Here in America, we know the free market is the greate... more »
Charlie Pierce knows where this neoliberalism disguised as progressivism leads.
Right. It's all coming out of our ground (notice the middle east corollary?) and going to China (or the highest bidder).
Get Ready for the Pipeline
26 January 13
President Obama rejected the Keystone XL oil pipeline this time last year, a result that Canada had every reason to be dismayed by, as did Americans whom the project would have employed. The issue is coming back, and the president has even less reason to nix the project than he did last time.(Actually, "Canada" is as split over this environmentally calamitous project as we are, and TransCanada, because it is a large energy company, has been lying about the jobs the pipeline would create from the very start of the project. This should give the president pause.)
After years of federal review, there was little question last year that construction of the pipeline, which would transport heavy, oil-like bitumen from Alberta to the Gulf of Mexico coast, should proceed. Thousands of miles of pipeline already crisscross this country. An environmental analysis had concluded that the risks of adding this new stretch were low. An economic review had found that Canada would get its bitumen to the world market - if not via pipeline to the gulf, then very likely by ship to China. Supply would make it to demand, one way or another.(A fair-minded analysis would explain precisely what "heavy, oil-like bitumen" really is, and what it takes to remove it from the ground, and what it does to various lifeforms, including human beings. It also would point out that the thousands of miles of pipelines across the country already leak like sieves, including another Keystone pipeline run by TransCanada. It also would note that the pipeline was dreamed up in the first place because getting the gunk to China via, say Vancouver would put the project crossways with Canadian environmental laws and various treaties with indigenous tribes. Also, too; The Rocky Mountains. They thought up the pipeline because they knew our environmental regulations were lax and that we hadn't given a damn what the Indians thought since 1620. I am so very proud to be an American.)
Environmentalists nevertheless made Keystone XL a rallying issue. Among other things, they pointed to disquiet in Nebraska about the pipeline's proposed route, objecting that it would traverse environmentally sensitive areas, such as the state's Sand Hills.(Regular readers of the blog know of our devotion here to the Oglalla aquifer, which is based on my long-held belief that we can do without having the Gobi Desert recreated between St. Louis and Denver. You will note that the Post here is limiting the "disquiet" in Nebraska to concern about the Sand Hills. This is the same bait-and-switch Governor Dave Heineman pulled the other day when he approved the revised pipeline route that avoids the Sand Hills but still crosses a piece of the aquifer. Also, a good part of the "disquiet" - nice word, Post - in Nebraska was occasioned because TransCanada was granted the power of eminent domain and has every intention of taking people's land away, which would "disquiet" me.)
The election is past, TransCanada has reapplied with a new proposed route, and this week Nebraska Gov. Dave Heineman (R) signed off on the plan, following an analysis from the state's Department of Environmental Quality. The regulators found that the new route would avoid the Sand Hills and other areas of concern. Though there is always some risk of spill, they said, "impacts on aquifers from a release should be localized, and Keystone would be responsible for any cleanup." TransCanada will have to buy at least $200 million in insurance to cover any cleanup costs.(We have discussed Heineman's bait-and-switch already. The survey he relied on is mischaracterized here. The aquifer is certainly an "area of concern," as we have said. And, applied to an energy company, the last two sentences are a joke, as half-a-million pelicans in the Gulf will testify. TransCanada found the $200 million for insurance under the cushions of the sofa.)
Mr. Obama should ignore the activists who have bizarrely chosen to make Keystone XL a line-in-the-sand issue, when there are dozens more of far greater environmental import. He knows that the way to cut oil use is to reduce demand for the stuff, and he has begun to put that knowledge into practice, setting tough new fuel-efficiency standards for cars and trucks. That will actually make a difference, unlike blocking a pipeline here or there.(Ah, and now we come to the Post's main point - hippie punching. It has made no serious attempt to address the legitimate environmental concerns regarding tar sands development and its implementation, the legitimate environmental concerns about the pipeline itself, or the legitimate environmental concerns regarding investing any trust in the good faith of an oil company.
All it's really concerned about is that "activists" - to whom it condescends to explain what issues should be of "far greater environmental import" - somehow got in the way of The Way Things Are Supposed To Work. They have inconvenienced the Very Serious People with whom Fred Hiatt lunches between editing George F. Will's latest defense of climate-change denial. That's all the paper has here. The Post's dedication to actual democracy would embarrass the Plantagenets.)
Alas, though, the fix seems to be in. The wheels of the giant Not Giving A Damn machine in our nation's capital seem thoroughly greased. You can tell because the 53 senators - including two utterly useless Democrats - aren't even trying to come up with good lies anymore.At a news conference Wednesday, senators from both parties said the Nebraska decision leaves Obama with no other choice but to approve the pipeline, which would carry up to 800,000 barrels of oil a day from tar sands in western Canada to refineries in Houston and other Texas ports. The pipeline also would travel though Montana, South Dakota, Nebraska, Kansas and Oklahoma. "No more excuses. It's time to put people to work," Baucus said. "Back home, we call this a no-brainer," added Sen. Joe Manchin, D-W.Va. Hoeven, of North Dakota, said the tar sands oil will be produced whether or not the U.S. approves the project. "Our choice is, the oil comes to us or it's going to China," he said.You're only putting a very few people to work, and that's if you count the strippers. "No-brainer" is not a word Joe Manchin should toss around idly. And Hoeven's just lying. Either that, or he's too stupid to understand the phrase, "the world market." In actual fact, the gunk comes through us to refineries in Texas, whence it's just as likely to go to China as it would be if it sailed there from Vancouver, which it never would because the Canadians aren't as reckless with their land as we are with ours. You can pretend to be with this project because of jobs, or because of a spurious claim of energy independence. But, if you are in favor of this pipeline, and the gunk it will carry, you cannot claim to be serious about climate change. That, Joe, is a no-brainer.(Charlie has been a working journalist since 1976. He is the author of four books, most recently "Idiot America.")
No comments:
Post a Comment