Financial Entitlement in the US


Robert Lenzner, Forbes —

Don’t blame David Sokol’s  craving to make a fortune  and become a philanthropist on Warren Buffett’s understandable confidence  that  his leading heir-apparent would do nothing to embarass him and Berkshire Hathaway.

It was  David Sokol’s personal responsibility to tell Buffett on January 25th latest  that he  owned 96,000 shares of Lubrizol worth $10 million that, excuse me , he had  purchased  the first week of January, 2011, ahem, just 18 days before the Jan. 25th  decision to go ahead and  negotiate for Lubrizol.

Then, Buffett would have realized he had to reveal this stock activity in the merger materials, which was going to be an embarassment– even if he had ordered  Sokol to sell the shares before ANY negotiations.

This  is not an issue of corporate governance, that mushy concept that obfuscates what you should be born with– an ingrained sense of what is right and what is wrong.  Unfortunately, our celebrity culture has placed a priority on public excess, the insatiable need to be richer than the next guy,  keep up with the private equity billionaires, the hip-hop entrepreneurs with diamonds in their ear lobes, the Donald Trumps of the world.

Read today about the Fannie Mae and Freddie Mac execs who were paid multiple  millions personally and presided over public  losses of billions. It’s  time to pull “The Rich And The Super Rich, A Study of  Money & Power And Who Really Owns America” out of the bookcase and  remind  myself of  the prevailing culture.

The Oscar-winning  documentary “Inside Job,” is deep-down a narrative of the insidious culture of financial entitlement, an invisible virus  at work  in the culture.  Cut the school budget, layoff policemen, cannibalize  training programs for the unemployed, don’t make GE pay any taxes etc. is  the dark side of the  culture of  financial entitlement.

Here  are some of the many examples of the virus at work in our recent history. The leading investment banker who  is also chairman of the investment bank’s regulator who buys shares of the investment bank at a  depressed price during the financial crisis  with full insight as to public  policy support for the  institution, and never has his wrist slapped.  Supported by his former  partner, who once held a high cabinet post, who assured me there  w as nothing wrong in taking advantage of inside knowledge to make an extra buck or two.

The  leading executive of a  public-private housing finance institution who brags to me that she got out just in time without being stained by the  crisis, her extraordinary small fortune  intact.

The phenomenon of a leading  bank, JP Morgan Chase allowing  $100 billion to be transferred back and forth between  the crook of the century, Bernie Madoff and another major client of the bank.  Or my alma mater, Goldman Sachs letting a  hedge fund  maven client pick out the lousy mortgages to go short  in a public offering.  Or Credit Suisse having to pay a fine of $535 million to  the government for violating the  sanctions against  doing business with knave nations  like Iran and the Sudan.

Just have a look at hedge fund biggie Raj Rajaratnam, blithley protesting  his innocence  of criminality  in the  biggest inside information trial ever, despite 19 guilty pleas  by others caught in his dishonest web.  Absurd.

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The disappearing American middle class


BREAKING NEWS — “Too few American families are living in economically secure households, with most workers unable to stretch their incomes over basic expenses and savings,” said Joan Kuriansky, Wider Opportunities for Women’s Executive Director.  “The American Dream of working hard to support your family is being re-written by the growth of low-paying industries and rising expenses.”

According to the BEST report released by the Wider Opportunities for Women (WOW) organization, “…jobs created in the coming years will not provide economic security wages to the majority of workers who do not have 4-year college degrees.  Fewer than 13% of jobs the US Department of Labor expects to be created by 2018 are likely to provide economic security to a single parent raising two or more children.  A small majority of new jobs are expected to pay economic security wages for single workers without children, and approximately 43% of the new jobs will pay economic security wages for two workers raising two young children.”

As Congress debates how to make ends meet, the following cuts are on the chopping block:

  • Cuts to virtually all funding for Department of Labor job training programs this year, from the Workforce Investment Act to on-the job training for older workers.
  • Cuts to the Community Services Block Grant, which provides access to employment, nutrition and other vital services that help low-income people find jobs and move into the middle class.
  • Cuts to Medicaid, which covers health care for low-income families across the generations and is the major source of funding for long-term care. If turned into a block grant, as has been suggested by some, such cuts could result in loss of health care jobs as well as services for patients of all ages.

At the same time, Brian Williams from NBC Nightly News stated that the pay raises of some top CEOs received last year were nearly identical to the pay raises they received BEFORE the recession.  Ouch.

Transparency concerns raised during first Doherty-Donoghue debate, part 1


Tuesday’s debate between Chris Doherty and Eileen Donoghue, both Democrats from Lowell, was surprisingly fair to both candidates. Radio station WCAP, or 980 AM, allowed both Doherty and Donoghue equal time to respond to the questions though both occasionally exceeded the allotted time. This was the first of several debates that has been scheduled before the primary.

On most of the issues, both candidates gave similar, if not identical, answers to the questions they were asked. On the issue of illegal immigration, both candidates went on the record as not supporting illegal immigration. Both stated that they would enforce current laws. In regards to the recent $35 million loan that went to Lawrence, both candidates expressed support as it included safeguards to ensure that the Commonwealth was paid back.

Both candidates spoke out against allowing cities and towns raising local taxes above Proposition 2 ½ allowances. This is an important issue in light of the state reducing local aid by 4%, which means that cities and towns will need to find creative ways to solve their budget problems.

However, Doherty and Donoghue did not completely see eye to eye on every issue.

When the candidates were asked whether or not they supported Patrick’s recent CORI reform bill, Doherty said he doesn’t support the legislation, while Donoghue’s answer wasn’t as straightforward. Donoghue seems to support some, but not all, of the provisions as she claimed her response wasn’t exactly a yes or no answer.

When asked about what they would do to stimulate the economy, Donoghue stressed the importance of helping to lower health care costs for small businesses and that state regulations are tough on small businesses. Doherty talked about promoting science, technology, engineering and mathematics courses, which comprise the STEM program.

To keep reading, click here.

First Doherty-Donoghue debate on 8/16


In the race for the 1st Middlesex district, Chris Doherty (D-Lowell) and Eileen Donoghue (D-Lowell) will face off in their first debate tonight.

The debate is scheduled to take place today in Lowell. It is to be aired on radio station 980 AM from 7:00 pm to 9:00 pm. Be sure to tune in as it is bound to get very interesting very quickly.

Both candidates have slightly different stances on the issues, so tonight will be the first chance for voters to discover what makes each candidate unique. So far, both are courting small business owners in an effort to win their vote. To that end, Doherty would likely support measures that would allow small businesses to delay payment of their filing fees in order to help them get off the ground. Donoghue is slightly more focused on helping local businesses by working with small businesses to drive down their costs associated with health insurance. In this sense, Doherty seems to follow more of a hands off approach (he seems to prefer small businesses work together on their own to increase competition), whereas Donoghue appears to take a more proactive role.

July political developments, part 2


With the immigration debate being a big issue, protesters took action across Massachusetts.  Opponents of Arizona law S.B. 1070 marched at the National Governors Association meeting that was held in Boston.  The Boston City council backed off of its boycott of Arizona-based businesses after receiving heat.  A poll conducted by the Boston Herald revealed that many residents were frustrated by the boycott.

July also saw the burgeoning Tea Party movement split in half.  This division came to pass after several groups within the movement were associated with outspoken critics of the president and current policy. Mass.-based chapters seem determined to carry on despite the criticism the movement has received.

July also saw the expansion of unemployment benefits.  For Massachusetts, that meant that approximately 70, 000 residents gained financial help for a few more months. The bill passed by a vote of 272-152 in the House.  Senator Brown proposed an alternative funding source for the measure but his amendment was not passed.

On the casino gambling front, state legislators that supported the bill faced firm opposition.  The problem seemed to have begun over the House’s introduction of slot machines at all of the race tracks, or “racinos”, which both Patrick and the Senate refused.  The stalemate lasted until the last possible moment when the House and Senate agreed to slot machines at only two of the racetracks.  Though that version passed just before the end of the session, its fate is not yet determined because Patrick doesn’t support the current version.

Just as the legislature was wrapping up its current session, both the House and the Senate passed measures in favor of a national popular vote.  As a result, Massachusetts is now part of a “pact” with five other states to give all of their votes to the candidate that wins the national popular vote.  A major sticking point, according to opponents, is that it ignores the stated amendment process contained within the U.S. Constitution.

July political developments, part 1


The month of July started with president approval ratings holding steady at 46% for the first few weeks.  By the second half of the month, President Obama’s ratings dropped down one percentage point.  His disapproval ratings fluctuated throughout the month and ended at 47%, which was two percentage points higher than at the beginning of July.

According to Gallup editor Frank Newport, Obama’s 6th quarter ratings stood at 47.3%, which is on par with previous president’s ratings at the same point in their administration.  In fact, Clinton’s (D) approval ratings for the 6th quarter were 46.1%, Reagan’s (R) was 44.2% and Ford’s (R) was 43.2%.  Historically speaking, most presidents lose popularity the longer they are in office with a handful of exceptions.  The most notable include JFK (D), Eisenhower (R) and Johnson (D).  So much for the supposed “Obama paradox” which stated that President Obama was loosing popularity despite the legislation that was passed.

In Massachusetts, Obama’s approval ratings seems to be around 56%.  This number seems to show a correlation between Democrats and Independents support of Obama and the local voting population.  What this means is that the Bay state has one of the highest populations of independent voters in the country.

Congress fared worse than President Obama given that it’s ratings hit an all time record low.  Though recent controversies might have probably played a role in these figures, chances are that this could be more due to political trends.  Midterms elections are usually somewhat painful for the party in power, irrespective of whether it’s the Republicans or Democrats.

To keep reading, click here.

Supporters of 1st Middlesex district demonstrate loyalty


In the race for the 1st Middlesex district, Eileen Donoghue (D-Lowell) is a familiar face with supporters from all walks of life as demonstrated two nights ago.  Donoghue made an appearance at the home of Carolyn and Bob Gregoire, who hosted a party to recognize her bid for state senate.  She is competing against new-comer Chris Doherty (D-Lowell) to get their party’s nomination.

“I support Eileen because not only does she stand up for what she believes in, but because she is very easy to connect with,” remarked Dorine Dupont.  “I’ve known Eileen for many years and I know that she’ll do good things for the state.”

A former prosecutor, Doherty voluntarily left his job in order to work full-time on his campaign.  Doherty collaborated with District Attorney Leone to advocate for legislation to strengthen the voices of concerned citizens with regard to protecting children from sexual predators.  Before that, Doherty worked with former Congressman Marty Meehan.  Doherty’s supporters call him a reliable candidate that focused on helping voters.

There are subtle nuances between the candidates’ health care policies.  Voters could probably expect Donoghue to support legislation designed to put a cap on health insurance costs.  This might mean reducing paperwork in order to decrease administrative overhead, which is one aspect of rising insurance costs.  Alternatively, Doherty seems likely to support a small business consortium so that competition can drive down prices.

So far, the candidates have scheduled three debates.  According to the campaigns, the first debate is scheduled for Monday, August 16th, which will be broadcast live on radio station 980 AM from 7 pm to 9 pm.  A second debate will be held on Tuesday, August 31st, which is sponsored by the Democratic town committees of Groton, Dunstable and Pepperell.  The Lowell Sun and the Westford League of Women Voters have agreed to hold one in Westford on Thursday, September 9th.

Former mayor Bill Martin apparently concurs with Dupont’s point of view.  “When I worked with Eileen, she proved to be capable and effective in office,” stated Martin.  “She’s been good to the City of Lowell so I know she’ll be good for the state.”