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.

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.

Soldiers responsibile for slaughter get court martialed


According to the Globe & Mail’s website:

A 22-year-old soldier accused of taking a lead role in a brutal plot to murder Afghan civilians faces a military trial Wednesday in a case that involves some of the most serious criminal allegations to arise from the U.S. war in Afghanistan.

Spc. Jeremy Morlock, of Wasilla, Alaska, has agreed to plead guilty to three counts of murder, one count of conspiracy to commit assault and battery, and one count of illegal drug use in exchange for a maximum sentence of 24 years, said Geoffrey Nathan, one of his lawyers.

His client is one of five soldiers from Joint Base Lewis-McChord’s 5th Stryker Brigade charged in the killings of three unarmed Afghan men in Kandahar province in January, February and May 2010. Mr. Morlock is the first of the five men to face a trial, known in the military as a court-martial — which Mr. Nathan characterized as an advantage.

“The first up gets the best deal,” he said by phone Tuesday, noting that even under the maximum sentence, Mr. Morlock would serve no more than eight years before becoming eligible for parole.

According to a copy of the plea agreement, Mr. Morlock has agreed to testify against his co-defendants. In his plea deal, Mr. Morlock said he and others slaughtered the three civilians knowing that they were unarmed and posed no legitimate threat.

He also described lobbing a grenade at the civilian in the January incident while another soldier shot at him, and then lying about it to his squad leader.

The court-martial comes days after a German news organization, Der Spiegel, published three graphic photos showing Mr. Morlock and other soldiers posing with dead Afghans. One image features Mr. Morlock grinning as he lifts the head of a corpse by its hair.

Army officials had sought to strictly limit access to the photographs due to their sensitive nature. A spokesman for the magazine declined to say how it had obtained the pictures, citing the need to protect its sources.

Mr. Morlock told investigators the murder plot was led by Staff Sgt. Calvin Gibbs, of Billings, Montana, who is also charged in the case. Mr. Gibbs maintains the reasons behind the killings were legitimate.

Mr. Nathan said Mr. Morlock’s mother and hockey coach are among the witnesses who might testify on his behalf in court. He indicated the defence would argue that a lack of leadership in the unit contributed to the killings.

“He’s really a good kid. This is just a bad war at a bad time in our country’s history,” Mr. Nathan said. “There was a lack of supervision, a lack of command control, the environment was terrible. In his mind, he had no choice.”

After the January killing, platoon member Spc. Adam Winfield, of Cape Coral, Florida, sent Facebook messages to his parents saying that his fellow soldiers had murdered a civilian and were planning to kill more. Mr. Winfield said his colleagues warned him not to tell anyone.

Mr. Winfield’s father alerted a staff sergeant at Lewis-McChord, which is south of Seattle, but no action was taken until May, when a witness in a drug investigation in the unit also reported the deaths.

Mr. Winfield is accused of participating in the final murder. He admitted in a videotaped interview that he took part and said he feared the others might kill him if he didn’t.

Also charged in the murders are Pvt. 1st Class Andrew Holmes of Boise, Idaho, and Spc. Michael Wagnon II of Las Vegas.

Seven other soldiers in the platoon are charged with lesser crimes, including assaulting the witness in the drug investigation, drug use, firing on unarmed farmers and stabbing a corpse.

Afghan civilians slaughtered for sport


 

 

US Soldiers pose with their victims’ bodies

As reported by the U.K. Guardian’s Jon Boone:

The face of Jeremy Morlock, a young US soldier, grins at the camera, his hand holding up the head of the dead and bloodied youth he and his colleagues have just killed in an act military prosecutors say was premeditated murder.

Moments before the picture was taken in January last year, the unsuspecting victim had been waved over by a group of US soldiers who had driven to his village in Kandahar province in one of their armoured Stryker tanks.

According to testimony collected by Der Spiegel magazine the boy had, as a matter of routine, lifted up his shirt to reveal that he was not hiding a suicide bomb vest.

That was the moment Morlock, according to a pre-arranged plan, threw a grenade at the boy that exploded while other members of the rogue group who called themselves the “kill team” opened fire.

They would later tell military investigators that the boy, a farmer’s son, had threatened them with the grenade.

The pictures include a similar photograph of a different soldier posing with the same victim and a photograph of two other civilians killed by the unit.

There was no sign on Monday of the anticipated public outrage. But withAfghanistan on holiday for the Persian new year celebrations, and media outlets initially unable to get hold of the images, anger may yet build.

The US ambassador to Afghanistan, Karl Eikenberry, recently confided to officials that he feared it might trigger the same kind of scandal as that at Abu Ghraib in Iraq, where images of prisoners being abused by US soldiers sparked anti-American protests.

For weeks the US government has been working to pre-empt any outrage, with top officials, including the US vice president Joe Biden, in talks with Hamid Karzai, the Afghan president.

Despite being a setback in the propaganda war between the western coalition and its insurgent enemies, Nato will be relieved that for the time being only a tiny sample of a total collection of roughly 4,000 images and video clips have found their way into the public domain.

The publication of the photos will also mark the ultimate disgrace of the group of young US soldiers, who are currently facing military justice for killing innocent civilians for sport and mutilating their bodies by cutting off fingers and ripping out teeth to keep as trophies.

Morlock has turned on his former colleagues, agreeing to testify against them in return for a reduced jail sentence. Some of the activities of the group are already public, with 12 men currently on trial in Seattle for their role in the killing of three civilians. Morlock has told investigators that Staff Sergeant Calvin Gibbs was the ringleader. In videotaped evidence, he has said Gibbs would pick out a possible target with a comment such as: “You guys wanna wax this guy or what?”

Gibbs, if found guilty, could receive a life sentence.

Hans-Ulrich Stoldt, a spokesman for Der Spiegel, said the magazine had other, more graphic photos.

“We published three but not others, and we even pixilated those we did print so that the victims could not be identified,” Stoldt said. “We needed to document [the accusations] in some form, and were as restrained as possible.”

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.

Unemployment benefits extended


On Thursday, Niki Tsongas (D-Lowell) signed a bill which extends unemployment benefits. According to many critics, the legislation will add another $34 million to the federal deficit. The measure passed which means that thousands of Massachusetts residents could see their benefits restored.

By a vote of 272-152, the House passed their version of an unemployment benefits package which was promptly sent to President Obama. Obama signed the House bill the same day and appears confident that the funds will be distributed as quickly as possible. Before the package was passed, an estimated 70, 000 local Massachusetts residents were slated to lose coverage by the end of November.

“‘I have always had a very good job, I work hard, PAY TAXES and I certainly have not been living in excess. Last July my company had to cut staff and my entire team was let go. I have never had a problem finding a job but this search has been extremely difficult…Unemployment benefits helped me to stay on track with life’s basic necessities such as food, gas, insurance, etc,'” explained one of Tsongas’s constituents. Such sentiments were read aloud by Tsongas as she advocated on behalf of her district.

Critics, including Sen. Scott Brown, point out that while extending benefits are necessary alternative funding should be considered. Brown contends that unspent stimulus resources should be utilized because they are, “…just waiting to be used…and what to better way to use them today, then to return them directly to the unemployed Americans who need them most. That is real stimulus, which can help the economy – instead of just letting the money sit around for years without being spent.”

Jon Golnik and Sam Meas, two of Tsongas’s conservative challengers, favor legislation to extend benefits without adding to the deficit. While crafting a “deficit-neutral” bill is laudable, a potential problem is that it could take a long time to frame it and gain majority support. Thursday’s bill took months to resolve before any semblance of a package could be passed. Given the high demand for benefits, it seems unlikely that the public would wait a long time for a solution. The problem for any candidate right now is to create popular economic solutions in as little time possible.