Poor Us: The Great Depression 2.0

April 22, 2009

Oligarchs Rule! (But Not In A Good Way)

Crushing  the American Dream by discogangsta via DeviantArt.com

“President Bush announced his new economic plan. The centerpiece was a proposed repeal of the dividend tax on stocks, a boon that could be worth millions of dollars to average Americans. Well, average stock-owning Americans. Technically, Americans who own a significant amount of shares in dividend-dealing companies. Well, rich people, that’s what I’m trying to say. They’re going to do really well with this.” Jon Stewart, The Daily Show

Yesterday we learned (and isn’t it ironic?) that many of the really rich people at the pin-head-tiny top of the economic pyramid, the top 1% of US income getters, just happen to work for the banks and financial institutions whose Three-Card-Monty investment schemes wrought this fresh hell in which we now find ourselves.

Who are these privileged few? Some call them oligarchs, running the world with their cabal of elites.  Others say they’re plutocrats, the lucky few whose wealth gives them near total control.

One thing is clear, they think small d-democracy is a sucker’s game. One of the angry bankers Poor Us talked about yesterday complained about Obama’s tax increase, ranting that he already “supported 20 poor families” with his tax dollars. He’s absolutely convinced he’s not only entitled to a salary (plus bonuses!) big enough to maintain an entire village of serfs while allowing him to live like a king (a really rich king), he thinks the serfs are exploiting him. Whoa! Maybe he’s just an asshole.

Whatever you  want to call them, they are a breed most  serfers didn’t know too much about. Until they crashed the economy, that is.  Now, we’re obliged to get acquainted with these self-anointed Masters of the Universe so we won’t get fooled again. And your re-education starts here with the Poor Us Better-Know-Your-Oligarch Primer.  Coming soon: The Peasant’s Guide to Getting Even:

The Pirate Pose by Tom Wolfe, Portfolio Magazine, May 2007

Twenty years after The Bonfire of the Vanities, the author checks in on the new masters of the universe and finds them even coarser and ruder than their predecessors could have ever.

First, they have more money, infinitely more, than any of the various waves of new money that preceded them, with the possible exception of robber barons on the order of John D. Rockefeller, who, incidentally, was regarded as a rude Pocantico hillbilly Baptist by society in New York a hundred years ago. Hedge funds have what investment managers call “the greatest business plan of all time,” known as “2 and 20.” Each year the typical fund takes 20 percent of the return plus 2 percent of the

total investments. Some of the hottest managers, such as Icahn and Stevie Cohen, reportedly take 50 percent of the profits.  (read on)

The Quiet Coup by Simon Johnson, The Atlantic, May 2009

Johnson is a former economist with the International Monetary Fund, now writes the Baseline Scenario blog, is a contributor to NPR’s Planet Money and the New York Times.

American financial industry gained political power by amassing a kind of cultural capital—a belief system. Once, perhaps, what was good for General Motors was good for the country. Over the past decade, the attitude took hold that what was good for Wall Street was good for the country. The banking-and-securities industry has become one of the top contributors to political campaigns, but at the peak of its influence, it did not have to buy favors the way, for example, the tobacco companies or military contractors might have to. Instead, it benefited from the fact that Washington insiders already believed that large financial institutions and free-flowing capital markets were crucial to America’s position in the world. (read on)

The Big Takeover by Matt Taibbi, Rolling Stone Magazine, April 2009

So it’s time to admit it: We’re fools, protagonists in a kind of gruesome comedy about the marriage of greed and stupidity. And the worst part about it is that we’re still in denial — we still think this is some kind of unfortunate accident, not something that was created by the group of psychopaths on Wall Street whom we allowed to gang-rape the American Dream. (read on)

The Dirty Dozen, Rolling Stone Magazine, April 2009

Meet the bankers and brokers responsible for the financial crisis – and the officials who let them get away with it. (read on)

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March 2, 2009

Catch up on the crash:Planet Money guys on Bad Banks

Filed under: Wise up — Tags: , , , , — debacled @ 12:47 am

banks_in_need_by_smallgraybox

You should listen to this week’s episode of NPR’s This American Life. It’s  an hour devoted to helping us understanding the Bad Bank idea that I highly recommend even though I haven’t heard it yet myself.

I know it’s going to be worth your while because it’s put together by Alex Blumberg and Adam Davidson, two of the guys behind NPR’s Planet Money podcast and blog, which is the go-to source of information about this financial crisis for people like myself who have limited experience with money outside of collecting paychecks and paying bills, but who now find themselves victims of the huge,  financial vortex we scarcely knew existed until it started to suck the life savings directly out of our paltry,  direct deposit retirement “savings,” and then went after the actual paycheck.

I first encountered Davidson and Blumberg back in May 2008 when  I heard Giant Pool of Money, the jaw-dropping, mind-boggling episode of This American Life that explained the subprime mortgage mills that sold anything to anyone because Wall Street wanted more mortages to bundle and sell off to hungry investors. In October 2008  they came back with Another Frightening Show About the Economy that cleared up the mysteries of commercial paper and credit default swaps.

In this third installment, Bad Bank, they enlist the help of MIT economist Simon Johnson to explain what it means for a bank to be insolvent, and why we are bailing out bankers who caused their own businesses to fail in the first place.  Johnson who was an economist at the International Monetary Fund, also shows up on Planet Money, and has a very helpful blog The Baseline Scenario, which also provides a great primer: Financial Crisis for Beginners.

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