2009 archive

This American Life explains how the Wall Street banks broke the banks, and, in the process, defines in plain language all the gibberish terms and acronyms that Wall Street bankers use to conceal their foolish greed. From the website:

The collapse of the banking system explained, in just 59 minutes. Our crack economics team, the guys who explained the mortgage crisis, Alex Blumberg and NPR’s Adam Davidson are back to help all of us understand the news. For instance, when we talk about an insolvent bank what does it actually mean, and why are we giving hundreds of billions of dollars to rich bankers who screwed up their own businesses. Also, two guys go to New Jersey to look at a toxic asset.

If you want to know what’s going on, listen to this show.

I’ll link to the audio when it is posted. The audio is available for streaming or downloading at the link above.

On the other side of the Big Pond (for perspective, one pound UK = a little less than one and a half dollars US):

The Guardian has revealed that the board of HBOS (the initials are apparently meaningless; it was a British Citigroup type thingee until it failed and got eated–ed.), which yesterday reported a £10.1bn loss for 2008, may have walked away with combined payments of up to £4.5m. None of the executives at HBOS were offered a place on the board of the merged group after Lloyds TSB rescued the collapsing bank.

Most of the focus last night was on Peter Cummings, the executive responsible for the HBOS division that caused huge losses. He is thought to have received one year’s salary and benefits of £800,000 when he left the bank last month and started receiving his £350,000-a-year pension at the age of 53. Executives close to 55 are entitled to have their pensions topped up, which suggests that Cummings’s £5.9m pension pot will have been enhanced.

The Booman reminds us of what tax rates used to be.

Note that he is not recommending returning to Eisenhower-era marginal tax rates; he is simply giving his other comments some perspective.

Nevertheless, this passage–almost an aside in the context of his larger article–illustrates why Republican Economic Theory (AKA the Laughable Curve), the theory that the cure-all for society’s ills is to make the rich richer, fails. The theory denies human nature.

The money doesn’t trickle down; it trickles out:

I want to ask you if you have ever looked at a chart of the highest marginal tax rates since the income tax was created in 1913? Take a look because it’s instructive. Obama has made some sweeping proposals, but he hasn’t proposed restoring tax rates to anything close to what they were for the first six years of Reagan’s administration, let alone the 91% rate that prevailed under Truman, Eisenhower, and Kennedy. Ask yourself a question. If every dollar a CEO made over $500,000 was taxed at 91%, would he or she bother asking for 20 million? Would any board even consider giving 18 million to the government just to give two million to their CEO? Of course not.

It’s the Republican way.

If they can’t make the rich richer, they will still shaft the poor.

This is not a commentary on the stimulus bill. Whether it will undo the damage of years of Republican rule is still a great unknown.

Rather, this points out what this kerfuffle reveals about Republicanism.

Deadender Republican Governors are talking about rejecting portions of the stimulus bill.

Not surprisingly, the portions they are talking about rejecting are the portions designed to help the unemployed.

Nothing better shows that the Republican Party does not care about working–or in this case, out-of-working–persons who are in that condition because of Republican Economic Theory.

John Cole sums it up.

The Republican Party–The Party of Privilege since 1868. A pox on the lot of ’em.