Monday, December 12, 2011

The end of the fossil fuel economy...a cartoon

This cartoon/ 5 minute documentary captures the challenges we face. The Post Carbon Institute was kind enough (and creative enough) to produce and share this youtube gem: "The Ultimate Roller Coaster Ride: An abbreviated history of fossil fuels."

So many of our economic problems are rooted in environmental problems. Bottom line: we consume faster than nature can replenish. We have an unsustainable economy. The next step?
1) Switch to the habit of just having and using less stuff. 2) Use bicycles instead of cars for short distance commutes. 3) Learn about our choices. We do have choices.

Saturday, December 10, 2011

If Fox News had a chance to rename Disney movies...

In its push to impose a neoconservative ideology on the United States, Fox News often interprets facts in a very colorful way. A study published this year showed that Fox viewers are the least informed of all viewers. Our neighbors to the north are more skeptical of the verbal pyrotechnics at Fox News.

Tabatha Southey, a columnist for Canada's second largest newspaper, the Globe and Mail, has conjured up a list of children's movies as they might be described by Fox News after a Fox News commentator denounced the new Muppet film for being anti-capitalist and ergo anti-American. [The film plot revolves around a greedy developer whose plans threaten the environment] I found the Foxification of Disney list brilliant. Please enjoy and feel free to share (but make sure to credit Ms. Southey).

The List

1. Charlotte's Web of Lies: A rat persuades a pig to take his place in the food chain, after an elitist spider who has far more children than she can reasonably afford tries to talk him into pursuing a liberal education instead.

2. Where the Wild Things Are Hunted to Extinction but Free-Market Capitalism Ensures that Housing is Built.

3. Mrs. Frisby Rats Out the Welfare Queens of Nim.

4. Cars!!!!!!!!!!!!!!!!!!!!

5. Monsters Inc. Busts a Union.

6. Snow White and the Seven – No, Six – Excellent Republican Nominee Hopefuls.

7. 101 Dalmatians Help Employ a Large Number of Furriers.

8. Night at the Creationist Museum: Although exhibits come to life, a man spends a restful night in the museum, because dinosaurs and humans existed together quite peacefully.

9. The Land Before All the Illegal Immigrants Ruined It.

10. Finding Nemo's Birth


11. Harry Potter and the Invisible Hand.

12. The Black Stallion Who Would Not Be There If Not for Affirmative Action.

13. The War on Christmas Story.

14. Robin Hood and His Entitled Men: The brave Prince John promotes stability by fighting unconstitutional wealth-distribution schemes.

15. Kung Fu. Panda Hardly Needs To Be On The Protected Species List, He Knows Kung Fu."

Tuesday, December 06, 2011

Occupy Wall Street Needs to Tweak the Soundtrack: The Revolution Needs a Bass Line

Every revolution needs a soundtrack.

Cultural movements often have songs that reflect their tone and spirit, that embody their message and rouse their members. The Civil Rights movement drew music from out of the southern gospel tradition and lifted hearts with its anthem: "We shall overcome". It was sung offkey by the protesters as they marched in front of angry crowds and police dogs, and luminaries such as Mahalia Jackson, Joan Baez and Louis Armstrong all gave that beautiful song their unique imprint.

Does anyone know of Occupy Wall Street songs? Artists seem to be playing it extremely safe with little ditties like Stephan Jenkin's "Meet me at Zuccotti Park." There's a pretty decent rap song "I Occupy Wall Street" but it's more of a monologue set to piano with a drum beat. The lyrics drive home anger at the price of food, unemployment, low wages, foreclosures and government patronage of big business.

Music that embodies a movement or captures the zeitgeist flows out of the anguish of its creators and their vision for the future. The music of change, the music of an era, taps deep into how people feel at their core.
The Tea Party had no such music.
Neither does Occupy Wall Street. But the latter has the potential. Occupy Wall Street's very purpose is to confront the complacency that gave rise to the financial corruption of government. Millions have lost their homes in foreclosures, usury by credit cards impoverishes average Americans, hundreds of billions of dollars have been diverted to the one percent (See Free Lunch and The Wrecking Crew for details), and protests have been met at times with brute force by government. These conditions warrant powerful music.

Music is one of the most potent tools of any social movement, but to have effect, it has to well up from the depths and cut into the hearts of listeners. Most attempts at Occupy Wall Street music borrow music from hippies and Woodstock. The hippies of the 1960s did their part. They gave us Bob Marley and the Jimi Hendrix Experience, the Civil Rights Act, the Clean Air Act, EPA, Head Start and the National Endowment for the Arts. They wanted civil rights, environmental protection, and respect for individual dignity - themes that continue today.
The music that truly taps into spiritual discontent has been put out there - by groups like Rage Against the Machine and Nine Inch Nails in the 1990s. Here are a few songs to get people started (although none of these are really singalong songs). These are weatherbeaten songs, but they have melody, lyric imagery, power, and flow.

Now it's time for the millenial generation to throw down. I don't know what they will come up with -- but every revolution needs a soundstrack. Here's my playlist for #OWS.

1. Wake Up by Rage Against the Machine. RATM = soundtrack of the revolution. The songs may be old but they sound fresh, vivid, right and ripe for today. Their song titles alone (Calm Like a Bomb, Sleep Now in the Fire, Guerilla Radio, Born of a Broken Man, Take the Power Back) must make fascists nervous. RATM frontman Zack de la Rocha has recently dedicated a poem to the Occupy Wall Street movement.
2. [Bite] The Hand that Feeds by NIN (for the insiders who want out).
3. America by Nas (for a lesson in American history).
4. Don't Give Up by Peter Gabriel (a kinder, gentler anthem - a good song after your peaceful protest gets pepper-sprayed, or when you learn a credit card's law firm has just garnished 25 percent of your disposable income, or while packing up the house after the bank forecloses, or when there is no food left in the fridge.)
5. Your Time Has Come by Audioslave.
6. Talkin bout a Revolution by Tracy Chapman (for the romantics).

7.The Fire by the Roots (for everyone who believes).

Honorable Mention:
Promenade by the Street Sweeper Social Club - because of the bass line. Thank you Tom Morello, the sound genius behind RATM, Audioslave, The Nightwatchman, and The Street Sweepers Social Club. He's also been very active in supporting #OWS.

Thursday, December 01, 2011

What I'm listening to now...Gold

Dark Star

Is Occupy Wall Street Over: No, it's just begun

The violent eviction of campers in public parks around the country had many conservative pundits gloating that Occupy Wall Street has been effectively vanquished.

They want you to believe that Occupy Wall Street, and the many encampments nationwide,

have been ignored by average Americans as if they were stepping over homeless people sleeping on the sidewalk.

The Occupy Wall Street protesters are fighting greed and seeking legal and financial reforms that stop 1 percenters (and their trolls) from rigging the system.
They are working on:
1) Ousting corrupt politicians by getting money out of politics
2) Reforming laws that need change
3) Bringing the finance sector back under control

They are organizing marches against the military industrial complex, war profiteers, and irresponsible mass foreclosures by banks. Instead of camping out in public parks, they are occupying government buildings in Washington and Indiana and university offices and even a vacant bank in Santa Cruz, Calif. I call that an upgrade.

But it all started with the movement to reform big finance: Wall Street.

Many financial systems, of all different kinds, can work if operated with transparency and honesty. That stopped happening in the United States. Without rigorous and frequent public examination of financial institutions, they can easily subvert the democratic societies they intended to help prosper.

When people around the country began protesting against abuses by the largest actors in the financial sector, which they call "Wall Street," the street retaliated. The finance sectors pushed the politicians it owns to use the police to dismantle the protests. The police did what they were told: they donned ridiculous riot gear that made them look like space invaders and some tore into protesters with batons and pepper spray. The police officers who used brute violence may be unhinged individuals, but what was more troubling was that government had deployed police to fight against people who were protesting. Protest is at the heart of what makes democracy a democracy. Protest is self-expression and self-determination for the people of a nation. So when the politicians directed the police to violently suppress protest, they called attention to themselves. (Forbes tech blogger E.D. Kain writes that is more likely that the police themselves are responsible for the sheer brutality of the crackdown, not corporate overlords or political hacks.It's possible)

For clear evidence of how brutal the police repression has been, just watch the two minute video of police pepperspraying students at the University of California - Davis Campus. John Pike sprayed students quietly sitting on the ground three times point blank with military grade pepper spray (classified as a chemical weapon - something US soldiers don't use on the battle field).

Here's another video of an Oakland police officer beating up a protester who served in the US Marines. The soldier, who never retaliated, suffered a ruptured spleen.

But the politicians' willingness to use the domestic police force to quash dissent attracted enormous attention to the fact that politicians are willing and able to use force to suppress protest. That complicates US foreign relationships. How can we be a shining beacon of freedom when it is not permissible to protest in our own country. Police brutality toward protesters underscored the message the protesters had been trying to send. And this message is evident to everyone, including many who have never set foot in the Occupy protests or seen them firsthand.

The disbanded camps are now forced to reorganize around more specific goals. The violent evictions did not merely attract attention to Occupy Wall Street, but forced the protesters to organize and articulate more specific goals.

In a survey of photographs by major media, I see a lot more signs calling for the full reinstatement of Glass-Steagall, for the revocation of corporate personhood (a legal fiction created by the courts for convenience, not by legislation or the constitution), and a call for the revocation of Citizens United, a landmark Supreme Court ruling that allows corporations to spend unlimited amounts of money in political campaigns. There are further rumblings about increases to the capital gains tax (a move that would have a tremendous impact on the 1 percent).

Violence by police at the direction of politicians following the orders of their corporate leaders has added to the Occupy Wall Street agenda. (This is just my observation from reading OWS postings online). Now there is greater concern about addressing the militarization of the police, worry about standing armies in the United States used to subjugate the US citizens, and growing trepidation over the privatization of prisons. After all, if corporations can make money by sending people to jail, might they not lobby for more arrestable laws.

The American population is learning about the limits of its rights and freedom - and many do not like what they are learning. For that reason - this is not over.

I hope this post does not ruin anyone's day. These are real concerns, but we have to remember that life still consists of love, laughter, friendship, hopes and kindness. These are our foundation and based on them we can rest secure today while working toward a better future.

Monday, November 21, 2011

Why did police destroy computers at Occupy Wall Street?


I read here the grim news that the NYPD had taken the laptops in the media center at Zuccotti Park, lined them up, and smashed them.

Here are photos from

Have you ever tried to bend a metal laptop computer? Do you know how hard it is to inflict this kind of damage? On the's comment section, IT professionals debated over what it would take to inflict that level of damage. Most concluded that getting run over with a car would not damage the laptops that much.

Whoever did this to the laptops of Occupy Wall Street protesters must have been very determined to stop the protesters from using the computers. Perhaps it's time for donations. (Some of destroyed laptops had been donated by the public)

I find it fascinating that the police also treated the info tech specialists at Occupy Wall Street differently.

The NYPD seized Occupy Wall Street's signal corps, a team that provided free wireless Internet for Occupy Wall Street, and sequestered them in a separate part of the jail. A member of that team, Isaac Wilder, reported $5,000 missing from his confiscated items in the media tent - money that belonged to him. Something else was gone: a router tower that the Signal Corps used to provide Occupy Wall Street with free Internet service.

My conclusion: police aren't afraid of the protesters - they are afraid of political speech. They are afraid of people communicating. Whoever wanted the free internet gone and laptops destroyed wanted to destroy the protesters ability to 1) communicate to the outside world 2)organize.

Of course, the police must realize that when laptops are replaced, they will be replaced with more powerful models. This was a learning experience. The protesters are learning how to survive in a violent police state that fears free speech.

Sunday, November 20, 2011

Police and the Provocative Protester

I wrote about the Brandon Watts incident earlier and need to follow up with a clarification. First the name, some bloggers have written the name as Brendan, but major news publications used "Brandon," so I'll refer to him as Brandon Watts for now.
Based on photographs posted on Flickr, Watts acted in a manner to deliberately provoke hostility from police officers. He may not realize it, but his actions may be hurting the cause.

From what I gather: Brandon kicked barricades and needled officers, the police chased him, he fell,police piled on, he struggled, they piled on more, removed his pants, and when they got off him Brandon could not walk unassisted. Prior to Nov. 17, media reports show that Brandon had engaged in numerous fights and confrontations.

Photographs posted on Flickr by photographer "Alex Bucky Arbuckle"* show a protester (who the photographer says is Brendan Watts) staring at police, kicking a barricade and most bizarrely, leaving toothpaste on their gloves.
These are not illegal acts, but they 1) distract attention from the point of the protest - a broken economy and corrupt political system and 2) turn the police into the focus of the protest instead of the financiers, bankers and politicians and 3) are rude.
I can't condone any of that.

However, we count on police to maintain civility and order, to protect us from violence and chaos. To react with the level of violence they did toward Watts shows a lack of self-control that could easily spiral into even greater violence. I commend officers who act with self control. I urge protesters to treat police with civility and respect - just as you would with anyone. Police lose the moral high ground when they resort to excessive force over minor pranks. Is toothpaste and a knocked off cap really worthy of a skull fracture?
Combined with the acts of Sgt. Anthony "Tony" Bologna, who pepper sprayed innocent protesters like some madman in the streets, and other officers treating protesters as criminals, the police lose credibility and authority to act.
Brendan's blood tarnished their authority.

I contacted Arbuckle to find out what actually happened with Brandon Watts. Here is what Arbuckle wrote back verbatim:
"I can personally confirm that the protestor kicking the barricades in this photo and being arrested by police in this photo and bleeding from the head in this photo is the one whose picture was on many news sites and reportedly identified himself as Watts. I wish I had been shooting with a faster or wider lens (the rainy conditions were very difficult) because I was standing near this particular protestor and watching him very deliberately provoke police officers. First he blew cigarette smoke in the face of one officer, and kicked the barricades several times. Then I saw him produce a tube of toothpaste. Had I known what he intended to do with it, I would have been ready, but before I knew it he quickly squirted some of it on the officer's glove when the officer was looking away. When the officer noticed the toothpaste, he very politely smiled and removed his gloves. Watts continued forcefully kicking the barricades towards the sidewalk, which also pushed the police officers who were leaning against them. Soon a small crowd of photographers and chanting protestors had formed, and several police officers showed up to put the barricades back in place. Out of the corner of my eye, I saw Watts quickly lunge forward and knock the cap off an officer's head.

The officer recoiled, and then lunged forward and began climbing over the barricade as Watts ran away toward the east end of the park. The officer and several additional cops gave chase and tackled him near a flower bed. I ran and got there as they were attempting to put handcuffs on him. Bear in mind that it is raining steadily at this point, the ground is slippery, and we are near a flowerbed which has been producing muddy footprints in the area. I took pictures of Watts' face as he attempted to crawl away from officers -- he actually got a few feet in the chaos that began to erupt after the hatless officer fell on his back and a gigantic, rowdy crowd completely surrounded the officers. From there my view of Watts disappeared as I was jostled by protestors, photographers, and cops in what felt like the beginning of a riot. As you can see in this photo , the officers were surrounded by angry protestors and they looked terrified. After what felt like several minutes of pushing back and forth, the officers managed to get out, and I walked off, slightly shaken and with a broken lens hood and missing flash cord. I am still amazed that the police did not resort to pepper spray or some other extreme force while they were surrounded like that. A few minutes later I (and many other photographers) spotted the cops leading Watts out with his head bloodied. I got a picture and that was that.

I wholeheartedly support the protestors, and I'm proud of the way they've shifted the media narrative in this country. But I also believe that the vast majority of the NYPD are ordinary people doing a thankless job which (in the case of controlling rowdy crowds) many of them have very little experience with. In this case I feel that Watts very intentionally provoked the officers, and resisted arrest by running away. Had the conditions in the park -- rainy, slippery, filled with agitated people -- not been so volatile, I think he could have been arrested without incident. As it is, I do not know for sure if his head wound was the result of an intentional blow from a baton or an accident in the melee.

I know my photos are far from forensic quality, but that's my testimony as someone who was there."

I really appreciate that Arbuckle tried to make sure the public received the full story.

Here's what another blogger, Che (What You Call Your) Pasa, wrote after reviewing video of the melee:

"At about 3:25 in the video, Brendan is seen being thrown out of the planter and onto the granite (?) surface of the Plaza. He's obviously badly injured. It's clear to me at any rate that the police recognize Brendan is badly hurt and it looks like they are calling for assistance. Then Brendan starts struggling, and it looks like the police are getting very rough with him. I don't know whether any medical assistance was called. It should have been, immediately, but we've seen over and over many incidents of demonstrators being injured by police being left to fend for themselves or being arrested and taken away in a severely injured state only to be neglected once in custody until their situation worsens.

It's obvious that once the police get Brendan under "control" he can't walk. They continue to rough him up"

Brandon had gotten several doses of media publicity. Maybe he learned that provoking police is guarantied to get you media attention. I would say that doing so is buying publicity at a very high price, protestors who provoke police buy media attention with bruises, broken bones, and burned eyes. Police lose credibility and legitimacy, making their jobs much more difficult and dangerous in the future. They need the public's cooperation to do their jobs. Inviting violence is risky for both police and protesters.

What police appeared to do is use a hammer to swat a fly. Excessive force undermines the legitimacy of authority. Brandon Watts may have been provocative, but he appears to not have the maturity and self-restraint to do otherwise, nor did he harm anyone. We need the police and protesters to help de-escalate situations. This movement has the potential to catalyze real reforms in finance. Why lose that to needless violence?

*Arbuckle's photos are for sale through Getty.

Thursday, November 17, 2011

Cry the Beloved Country: Blood on "Wall Street"

As blood trickled down the forehead of Brendan Watts,
the integrity of the New York City Police Department collapsed in ashes. The police justified their actions by accusing the young protester of grand larceny (for knocking off an officer's cap) and assault (the basis for this charge is unclear - unless the police dreamed this one up to defend charges of excessive force and police brutality.)
There's more to this story. Photographs posted on Flickr by someone going by "Alex Bucky Arbuckle" show a protester (who the photographer says is Brendan Watts) staring at police, kicking a barricade and most bizarrely, leaving toothpaste on their gloves. These are not illegal acts, but they 1) distract attention from the point of the protest - a broken economy and corrupt political system and 2) turn the police into the focus of the protest instead of the financiers, bankers and politicians and 3) are rude.
I can't condone any of that.
However, we count on police to maintain civility and order, to protect us from violence and chaos. To react with the level of violence they did toward Watts shows a lack of self-control that could easily spiral into even greater violence. I commend officers who act with self control. I urge protesters to treat police with civility and respect - just as you would with anyone. Police lose the moral high ground when they resort to excessive force over minor pranks. Is toothpaste and a knocked off cap really worthy of a skull fracture?
Combined with the acts of Sgt. Anthony "Tony" Bologna, who pepper sprayed innocent protesters like some madman in the streets, and other officers treating protesters as criminals, the police lose credibility and authority to act.
Brendan's blood tarnished their authority.

It's over for the NYPD. It's over for Bloomberg, a mayor whose name will be remembered for what amounts to a betrayal of public trust. This mayor has no claim to acting in the public interest, no defense in acting for the public safety.
Bloomberg and his personal police department have become a threat to public safety.
They have trampled on the Bill of Rights.

Brendan Watts, 20, of Philadelphia, is a young protestor who represents American frustration with corruption in politics, crony capitalism and the heartlessness of our institutions. He was part of the Nov. 17th march and protest in New York. For doing his duty as an American citizen with much on his mind, police beat Brendan with batons, fractured his skull and arrested him and charged him with crimes he denies.

They should have arrested themselves for assault and battery. They arrested two city councilors, injuring one in the process. I wonder how their actions will be remembered those councilors deliberate on the how much the city should set aside for police pensions. Their actions will be long remembered.

There is another group that lost their honor as the blood of protestors soaked in the dirty streets of New York City. The do-nothings. As much as the lazy and the complacent may resent it, these protests have not gone away. The persistence of the protesters casts judgment on those of us who stand idly by doing nothing. Many who insult and slam these protesters are probably trying to justify their own inaction.

The attacks on the Wall Street protesters - across the country - should provoke sharp self-examination on the parts of those responsible for attacks.

No one can be considered a keeper of the peace if he or she is ordering or carrying out assaults on people for exercising political free speech.

It is time for the apathetic and disengaged to become politically active - join town councils, run for office, actively support progressive candidates running for office. The United States will not be a free country until protesters are safe to exercise their right to free speech and peaceable assembly. To those that say the protesters don't have jobs - hello - that's why they are protesting.
They carry signs that say: I will never pay off my debt, I will never own a home, I will never get a job in this economy. That's why they are at the protests.

The first photograph was taken by Andrew Burton for AFP/Getty Images, the second by Craig Warga of the New York Daily News. The third, from the Washington Post, is of Brendan Watts prior to Nov. 17.
The fourth by Karen Zraick at the New York Daily News is of New York City Council Member Ydanis Rodriguez, a protestor, injured by police officers trying to stop the protest with force.

Other photos are also from the New York Daily News.
I'd like to thank the New York Daily News for its excellent presence and boots-on-the-ground coverage of the Nov. 17th protest.

Saturday, November 12, 2011

Bring back All of Glass-Steagall!

Signs at Occupy Wall Street demonstrations around the nation often call for the reinstatement of the Glass-Steagall Act. They want commercial banks to stop acting like investment banks and hedge funds. Only part of Glass-Steagall was repealed by Congress in 1999, but it was an important part - the provision that kept commercial banks out of investment banking and investment banks out of commercial banking. Commercial banks take deposits and issue loans; investment banks issue bets, more commonly known as stocks, bonds, derivatives and other financial products.

Just what is the Glass-Steagall Act? Glass-Steagall is also known as the Banking Act of 1933, it was the second of two laws passed during the Great Depression to strengthen the economy by creating the Federal Deposit Insurance Corporation, setting limits on bank speculation, and banning commercial banks that accept FDIC-insured deposits from owning investment banks that issue securities and make money through speculation.

Glass-Steagall also prohibited investment bankers from acting as officers from commercial banks. A commercial bank is supposed to be a safe place for money. An investment banker, on the other hand, gets bonuses by maximizing profits-- and the way to do that is to take the biggest, riskiest bets possible. The fat deposits sitting in commercial banks tantalized investment bankers. They looted the commercial banks in the 1920s until Glass-Steagall went into effect.

Glass-Steagall worked. The commercial banks grew sound, jobs rebounded, the middle class boomed and the country grew strong. Glass-Steagall created a firewall between high risk investment banks (Wall Street) and low risk commercial banks.

Economists generally agree that the heady speculation of the 1920s led to the crash of 1929 that preceded the Great Depression. (Unless you're a neocon-- in that case you might blame the Great Depression on the shift from a gold standard and blame the Depression's poor for being poor.) For the record, the US went officially on the gold standard in 1900 and muddled off the gold standard in 1934, well after the Depression started.*

Glass-Steagall was instrumental in bringing the country's banks onto firm financial ground.

For decades, strict regulation kept the banking sector sound. But memories fade. By the 1980s, a handful of bankers were clamoring for deregulation. Commercial banks, sitting on mountains of deposits from trusting customers, looked over at the bonuses raked in by their counterparts at investment banks, hedge funds and financial services companies and glowered with envy. The Glass-Steagall Act had kept them on a sound investment course- which led to those mountains of deposits accumulated over decades - but they wanted the higher yields that fast, high-risk trades could yield. Those engaged in the high risk game called themselves market makers. They would "make markets" by lending money when sound investors refused to take the risk. True, they created liquidity, but the market makers (investment banks) did it without using FDIC-backed funds or taxpayer money. Commercial banks decided they wanted a cut of the profits, regardless of the risk to their customers, the institutions themselves, or the economy. The retail and commercial bank executives wanted the kind of bonuses they saw at investment banks. They could afford the lobbyists to change Congress' mind. They argued that banks in foreign countries could own investment banks and commercial banks and insurance companies all at the same time. They argued that Glass-Steagall kept American banks too small to compete on a global scale. Congress came through with the Gramm-Leach-Bliley Act aka The Financial Modernization Act of 1999. The law was proposed by a trifecta of Republicans, passed with a veto-proof majority, and signed by Clinton.

Sen. Phil Gramm of Texas, unsatisfied with this coup against common sense regulation, also pushed for the complete deregulation of derivatives through the Commodities Futures Modernization Act in 2000, also signed by Clinton. That law, which declared the Commodities Futures Trading Commission could NOT regulate derivatives, led directly to the implosion of 2008 when many of these derivatives went belly up. The 2008 implosion was a toxic stew of Mortgage-backed securities (backed by pieces of actual mortgages), credit default swaps that referenced loan performance but were not backed by any assets, and CDOS. Derivatives were extremely high risk securities that relied on fractional lending. They were bets without backing but that came with ironclad obligations.

From what I understand of the bankruptcy code 11 USC 546(e)(f) and (g), even if an investment banking firm files for bankruptcy, the trustee that must pay the creditors with the firm's assets may not avoid (take back for the bankrupt estate) payments on those derivatives for margin payments, repos or swaps - although the trustee can avoid most other types of preferential payments close to the bankruptcy filing (so that creditors get their money back). Derivatives, in a sense, are obligations with little or no value or consideration backing them - except in some cases, a bet that a tranche of high-risk mortgage might be paid on time. Why do these derivative dealers get preferential treatment in bankruptcy? It's as if they wrote the code themselves. The bottom line - the bankruptcy code helps turn assetless bets - derivatives- into ironclad obligations. This is all the more reason for commercial banks to avoid derivatives. But to truly avoid derivatives, commercial banks needs to stop acting like, or owning, or being part of, investment banks. The commercial and investment banks perform two fundamentally different functions in an economy, and their interests are often at odds.

What happened as a result of the repeal of Glass-Steagall. Financial junkies created a derivatives dealer (called Financial Products) and placed in the belly of the nation's largest insurance company (AIG) where it would have NO capitalization requirements, but could sell the right to banks to offload some of their credit risk for their most toxic assets to itself. AIG, one of the richest companies in the world, almost went insolvent over obligations to pay for losses derivatives that no actual backing in value. The people who perpetrated this monstrosity were never punished. AIG's Financial Products unit made a few people insanely rich, but it never produced anything of value - except for giving banks to disguise the high risk loads they were bearing through asset-backed securities. This was the endgame. It was a scam. The best description I've read of it yet is in "All the Devils are Here: The Hidden History of the Financial Crisis" by Bethany McLean and Joe Nocera. AIG could never have created FP as part of itself had Glass-Stegall not been repealed.

We need Glass-Steagall back. We need to separate the functions of market-making and commercial banking. The profits will be lower in the short-term, but profits in a Glass-Steagall governed financial sector will be durable and sustainable over the decades.

I propose we repeal the Gramm-Leach-Bliley Financial Modernization Act of 1999 AND the Commodities Futures Modernization Act of 2000. They were not acts of modernization but of regression into deregulation when regulation was needed most.

How do we do get this done? That's my question to you.

*Some accounts argue that the United States had a bimetallic standard from Colonial Times until 1933 and others claim the gold standard was in place from 1879 to 1933. The US Congressional Research Service in A Brief History of the Gold Standard in the United States, reports that the official gold standard was in place from 1900 to 1934. Prior to the gold standard, US currency was backed by silver from colonial times. Silver was demonetized in 1873 making gold a de facto standard until 1900 and official standard until 1934). Bottom line, the Depression was in full swing long before the United States went off the gold standard.

Sunday, November 06, 2011

Systemic Change: Lessons from South Africa

Around 2005, a newspaper sent me on a trip to write about the revival of tourism in South Africa after the fall of apartheid. Many people in the United States, at the time, still squirmed at the thought of doing any kind of business with South Africa. The very name connoted state-sponsored terrorism against citizens. How could South Africa be forgiven for what happened in Soweto, for black children slaughtered by police during riots (which caused further riots), for the imprisonment for black leaders for decades, as western countries grew rich on their investments in South Africa.

It took great effort to divest, we were cautious about renewing ties. The airline served wine from a coop that paid fair wages. That should have been my first clue that South Africa had changed. My trip took me to a series of spectacular hotels - places with views of the sea from cliffs, or settled in the back of lagoons where monkeys called from the trees at dusk.

Johannesburg looked like every major city in the world. Big, sprawling, with lots of concrete towers and posh night spots. The further we got away from Jo'berg, the better I understood the country. Afrikaners there were in love with Africa. Wherever they may have come from, England or the Netherlands, there seemed no kinship. They loved their adopted land. To Africans who told them to go back where they came from, they gave a different version of the history of immigration to Africa's southernmost tip. Their opponents there were the Xhosa, tall, powerful, organized fighters. The Xhosa, according to Afrikaner historians (and my tour guide), arrived at the same time their ancestors did. The Xhosa, they asserted, pushed their way down to the tip of Africa looking for fertile land. The original inhabitants were the bushmen - made famous in The Gods Must Be Crazy.

Indeed, the Bushmen, labeled colored in the infamous apartheid system, are tiny compared to the towering Xhosa. The one I conversed with at length wore a greeter's uniform, and in front of blacks and whites, proceeded to denounce both groups as racist against the coloreds. He was aggressive but adorable, and others smiled as he spoke. The power struggle in the country had left out his people. The struggle had been vicious and ugly at times. The white minority had fought to keep its elite status and adopted an anything goes mentality. What now?

The change in South Africa became apparent to me when I spent the night with other travel writers at a posh hotel on a lake. I was exhausted from day's activity but the others went on boat to explore the lake. The boat got stuck in the middle of the lake for hours. A rescue team was called in to pull the boat in. One of the curly-haired police men/rescue workers carried a couple of black journalists to shore. They giggled at being rescued by manly men in merely waist deep water. The hotel rewarded the rescue team with free drinks with the writers. Some called their wives to join us for the evening. We finally had a chance to mingle with people who were not part of the tourism industry. I felt talking to them would give me a clearer idea as to what had happened in South Africa since the end of apartheid. (It had been a long process. All races were able to vote only since 1994.) And then one of them, the curly-haired police officer with a mustache and a bright smile, saw me - a mixed race American and beamed. He was more than a chatterbox. When he shared he was a police officer and soldier during aparthied I said that must have been hard. Perhaps my voice betrayed the anger and judgment I strove to contain, or perhaps he was ready to tell his story.

Although he was a police officer, he had to serve in the army for several weeks at a time on a regular basis. The war against Angola was terrifying, but when he returned home, he took out his rage on black South Africans. In his mind, they became the same. Rioters looked like enemy soldiers. Youth running away looked threatening. "I shot black children," he said, his face stricken. He said that he responded to small crimes, like shoplifting, with his gun. I was going crazy, he said, the soldiers on the front and the black youth at home - they all seemed the same. He always felt like they were trying to kill him. Even when they were running away, I asked. He shrugged helplessly.

You must have felt horrible, I said. He said he coped by drinking heavily and beating his wife, as did the others. Isn't it true, he said, turning to his blonde wife. She nodded uncomfortably. This was a party atmosphere at a posh hotel, and he was sharing their family secrets with strangers. Only we weren't strangers.
We all drank and beat our families, we were angry all the time, he said. Apartheid had us, it was like a demon, there was a demon that took over our minds, he said. We don't want to be racists now, we want to be free. We want our children to marry black children. We want to be one people. We want all to be mixed, he said. Now his wife smiled. The sincerity and passion in his voice was unmistakable. In me he saw a peaceful future for South Africa. In him, I saw a peaceful future for America. Change is possible, even the people committing atrocities are capable of deepest change rooted in the soul.

I don't know what ever happened to that man - never kept in touch - can't remember his name. My notes from back then must be around somewhere. I wrote a glowing review of tourism in South Africa, but the glow came from meeting a police officer who was filled with hope. I was skeptical of Mandela's policy of forgiveness toward the people who committed atrocities during apartheid, and his emphasis on simply confessing and telling the truth. To me, that seemed weak, pointless. Why would hardened racists change? Meeting that police officer changed my view - he felt freed by the fall of apartheid, he felt human again, he felt hope. He could talk about his problems, his grief, his self loathing. There were so many different elements in his story. Race. Substance Abuse. Violence. Power. Individual Responsiblity. Confusion. Rage. Forgiveness. Hope. And the incredible power of simply telling the truth, about yourself, about your society.

Change is possible. Today, when I see videos of American police officers beating peaceful protesters, I feel such deep resentment. How can they betray the First Amendments's guaranty of Americans' right to peaceable assembly. If we handle police brutality in the right way, perhaps someday, they too will feel liberated from the institutional system that drives them to such cruelty.

Tuesday, November 01, 2011

Rich people say - tax us! Some of the 1 percent who stand with the 99 percent.

Occupy Wall Street may not have a specific list of goals or demands, but they have catalyzed public dialogue about income disparity that has been desperately needed for a long time. Among the new dialogue participants - rich people who feel that the American economic system has been rigged and support redistribution through a fair tax system.
I saw a new blog that reminded me of why I love America so much: We are the 1 percent. Some of our 1 percenters, those that lucked out to own and control much of the nation's income and resources, are standing with the Occupy Wall Streeters in spirit. I want to hug them. They have been adding their stories to a blog called "We are the 1 percent." The blog was started rich youth working with Wealth for the Common Good and Resource Generation. They aren't simply buying into rich/poor dualistic thinking - they seem to understand the need for long-term sustainability in a true democracy where the human spirit can flourish.

Taxes in themselves aren't evil - they represent a sharing economy. They do redistribute wealth, but they also prevent gross distortions that leave some people starving or unable to afford medicine or operations. There are millions of people in the United States without health care, and millions losing their homes because mortgage companies refused to modify terms. Taxes fund teachers, police, space exploration, and medical research. Taxes represent our priorities as a nation, and they are collectively established by representatives we elect. Some people don't like to share and have effectively rigged the system to break it.

I encourage everyone to check out the one percent blog - and encourage the one percenters to OCCUPY WALL STREET and everywhere else. We are the 1 percent has an amazing trove of personal photographs. One gentleman writes "The system is rigged to protect and enrich the wealthy. The American dream is becoming a fantasy. It needs to be renewed. Raise my taxes."

A girl writes "Tax me - because health care shouldn't be a privilege, it should be a right. " The self-described daughter of "trust fund baby" writes "100 percent of us deserve to enjoy life. 100 percent of us deserve a fair shot." One man wrote that he had retired at 46, his wife planned to retire before 45, he stands to inherit a lot of money that would not be taxed, and his wife earns more than $100K annually. In conclusion he writes "The 1 percent should pay their share. I stand with the 99 percent."

Another woman noted that "some days the clothes I wear and the stuff I tote around come up to several times the monthly wages of the chauffers and maids in my neighborhood. It's obscene. We need more reciprocal social responsibility, not just individually, but systemically and institutionally. It's not just about taxing the rich's about adopting forms of corporate governance that don't screw over regular workers so that top executives can take home more money than they could ever possibly know what to do with."

I would love it if these rich one percenters would have a march on Wall Street of their own - without permits - and exercise their constitutional right to assemble. Would the police launch tear gas and flash bombs on a march by the rich in favor of higher taxes. I highly doubt it.
It takes 100 percent to make our country whole. Why can't Congress see our unity? If Congress won't, let's replace them with Congress members who will fix the economy, end preferential tax rates for the rich, and enact fair share taxes.

We need a significant increase to the capital gains tax (since the Bush tax cuts, the capital gains tax has sat at 15 percent for high income individuals - and it is scheduled to increase to a 20 percent in 2012. Right now it's cheaper to make money off money than to make money by working. The government subjects wages to a host of taxes, many of them necessary. In comparison to wage earnings, capital gains earnings - off the appreciation or sale of stock, bonds, or other financial instruments, offer the rich a virtual tax shelter. This is one reason why Warren Buffet pays lower taxes than his secretary and why Bill Gates, the perennial richest man in the world, advocates higher taxes for the rich.

Sunday, October 30, 2011

Signs from Occupy Wall Street (In NY and around the country)

I was especially moved by the photograph of the police officer with the sign "I'm choosing the people. Whose side are you on." God bless him. Some of photos have been borrowed from the Facebook collections of friends, Occupy blogs, and around Google. Enjoy and please share.
Let's spread the word.