Month: October 2011

Your Daily Grayson

by digby

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Moneybags Projection

by digby

Reuters should be roundly ripped for this ridiculous article which will have the effect of forever changing the way the Wall Street protests will be characterized. It starts off with this:

Hippie approval rating

by digby

It looks as though the worm has turned with public opinion. Here’s Greg Sargent:

Time released a new poll this morning finding that 54 percent view the Wall Street protests favorably, versus only 23 percent who think the opposite. Interestingly, only 23 percent say they don’t have an opinion, suggesting the protests have succeeded in punching through to the mainstream. Also: The most populist positions espoused by Occupy Wall Street — that the gap between rich and poor has grown too large; that taxes should be raised on the rich; that execs responsible for the meltdown should be prosecuted — all have strong support.

Meanwhile, the poll found that only 27 percent have a favorable view of the Tea Party. My handy Plum Line calculator tells me that this amounts to half the number of those who view Occupy Wall Street favorably.

Sargent points out that the Tea party has been around a lot longer and, therefore, made a clearer impression. But considering how amorphous the Occupy Wall Street movement is, I think one has to conclude that it’s the name and the target that people agree with. No surprise there.

Update: if they keep this up, I think they can expect the approval rating for OWS to rise:

“If the economy continues to slow … I expect companies probably to continue to keep payroll very lean and for the unemployment rate to bump to 9.25 percent, conceivably it could go to 9.5 percent,” said Michael Yoshikami, CEO of YCMNET Advisors a San Francisco investment house with $1 billion under management. “As CFOs and (human resources) managers are planning going forward, you can’t avoid the human dynamic here. And if the outlook is very uncertain, they’re going to be very, very hesitant to make broad hiring decisions. It’s not good timing because budgets are being set right now.”

One warning sign that more belt-tightening could be ahead is that profit growth seems to be slowing down. Most U.S. public companies report quarterly results in the coming weeks, and earnings season has gotten off to a weak start.

Analysts have lowered their growth forecasts for the companies of the S&P 500 and now look for overall profit for the group to rise 12.5 percent in the third quarter, less than the 17 percent they expected at the start of July.

So, unless these companies are getting a 17% quarterly profit they’re going to lay people off?

Can we say “disconnect”?

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Class Warfare
by David Atkins (“thereisnospoon”)

Benjy Sarlin at TPM has a great article on the Republican move to play class warfare in pitting the 53% who pay income taxes against the 47% who don’t. Digby and I have already gone into detail on why this supposed fault line is so bogus. Basically, the lower 47% of Americans are mostly poor, young, soliders, parents or some combination thereof. That 47% pay all sorts of other taxes besides income taxes that take up just as much or more of their total income as the total tax burden for other segments.

Sarlin’s thesis boils down to the fact that since Democrats are playing “class warfare,” Republicans have to as well. Democrats are trying to unite the poor and the middle class against the top 1%. In defense of the top 1% and their mostly ill-gotten gains, Republicans are attempting to united the 1% and the middle class against the poor.

The amorality of that stance aside, the fact that Republicans are forced to take this approach is remarkable in and of itself. Usually, Republicans simply scoff at Democratic attempts to point out the problems with income inequality. It’s something new for Republicans to actually play class warfare themselves.

What it proves is that even Republicans know that the status quo system is broken. People used to be able to aspire to the American Dream. Now that dream is a distant joke for most Americans. There used to be enough money to have nice things in this country. Now there isn’t. Somebody is to blame for that. Democrats know it. And even Republicans know it.

The new Republican push to raise taxes on 47% of the public is a clear admission by the GOP that the system isn’t working, and somebody is getting away with something. Conservatives are pushing one last hurrah of ethnic and class-based resentment to save the goose of the top 1%. But it’s a desperate gamble.

This isn’t politics as usual, and it proves that Dems and progressives have a golden opportunity to capitalize on a key turning point. Everyone knows that one class or another is getting away with something. And the politics of pointing out mass disparities in income inequality and putting the blame on the uber-wealthy of Wall Street is insanely easy. The politics to raising taxes on the poorer half of Americans while letting Wall Street crooks skate free is infinitely harder. The progressive side of the argument also has the added benefit of being true.

This one should be a cakewalk for Democrats, if they only have the guts to ignore the fifth column that is the Third Way, and go for broke with a progressive populist message.

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The zeitgeist is officially radical

I’m thinking maybe there really is a problem with beards.

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Dissonance among the peasants

by digby

Class warfare? Nah…

How did that happen?

[P]rofit margins have reached levels not seen in decades. The challenge, which we have discussed many times before: what is driving these margins. One useful way to deconstruct profits is to measure them from peak to peak, and analyze what changed. As shown in the first chart, S&P 500 profit margins increased by ~1.3% from 2000 to 2007. There are a lot of moving parts in the margin equation, but as shown in the second chart, reductions in wages and benefits explain the majority of the net improvement in margins. This trend has continued; as we have shown several times over the last two years, US labor compensation is now at a 50-year low relative to both company sales and US GDP.

That was JP Morgan last summer. Here’s CityGroup from a few years back:

The World is dividing into two blocs – the Plutonomy and the rest. The U.S., UK, and Canada are the key Plutonomies – economies powered by the wealthy.The world is dividing into two blocs – the plutonomies, where economic growth is powered by and largely consumed by the wealthy few, and the rest. Plutonomies have occurred before in sixteenth century Spain, in seventeenth century Holland, the Gilded Age and the Roaring Twenties in the U.S. What are the common drivers of Plutonomy? Disruptive technology-driven productivity gains, creative financial innovation, capitalist friendly cooperative governments, an international dimension of immigrants and overseas conquests invigorating wealth creation, the rule of law, and patenting inventions. Often these wealth waves involve great complexity, exploited best by the rich and educated of the time.

We project that the plutonomies (the U.S., UK, and Canada) will likely see even more income inequality, disproportionately feeding off a further rise in the profit share in their economies, capitalist-friendly governments, more technology-driven productivity, and globalization.

Most “Global Imbalances” (high current account deficits and low savings rates, high consumer debt levels in the Anglo-Saxon world, etc) that continue to (unprofitably) preoccupy the world’s intelligentsia look a lot less threatening when examined through the prism of plutonomy. The risk premium on equities that might derive from the dyspeptic “global imbalance” school is unwarranted – the earth is not going to be shaken off its axis, and sucked into the cosmos by these “imbalances”. The earth is being held up by the muscular arms of its entrepreneur-plutocrats, like it, or not.

I think it would have been hard for Americans to adjust to the idea of the whole world competing with them in any case. In the post war years, we had it made. But these plutocrats are so blatantly gluttonous that they’ve drawn attention to themselves. I don’t know what they expected, but they are supposed to be the smartest people in the world. I don’t think it takes a genius to see that the chart above might just cause a little dissonance among the peasants.

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Poor widdle babies
by David Atkins (“thereisnospoon”)

If the media wants to know what the protesters are upset about, this should provide a clue:

Wall Street executives, facing demonstrators camped for a fourth week in New York’s financial district, say they’re anxious and angry for other reasons.

An era of decline and disappointment for bankers may not end for years, according to interviews with more than two dozen executives and investors. Blaming government interference and persecution, they say there isn’t enough global stability, leverage or risk appetite to triumph in the current slump.

Wait, what? Aren’t these the same guys whose bonuses shot up dramatically in 2010 just two years after they crashed the world’s economy and then got bailed out by taxpayers?

Well, yes. As it turns out, bonuses are going back down this year. How far down? The lowest point since the crash. Which, apparently, is still pretty darn sweet:

The declines in pay will be widespread, with the average managing director taking home $1 million in compensation, down from $1.5 million in 2010, according to Alan Johnson, managing director of Johnson Associates Inc., a New York-based pay consultant.

Senior management—whose pay is tied closely to performance—could see their compensation plunge as the KBW Bank Index, a collection of large banking stocks, has fallen by nearly one-fifth over the past 12 months. Investment banks have shared the pain as shares of Morgan Stanley are down 42% year-to-date, and Goldman Sachs has plunged 41%.

Even professionals who work in areas that have fared better this year, including some commodities and emerging-markets businesses, are still likely to take home pay that’s flat to down slightly from a year earlier.

How ever will the poor babies be able to survive on an average of $1 million a year? Why, that level of pay is almost insulting. If it comes down much farther, these Masters of the Universe are going to have to take the jobs of those lazy teachers.

In all seriousness, given the downturn in the stock market and the poor performance of many financial sector firms, this shouldn’t have come as much of a shock. Except it did: Wall street professionals were actually counting on increased bonuses this year:

Most Wall Streeters are eternally optimistic about their bonuses. World markets may be sputtering, but maybe their firm is hanging in just fine. Or their department – didn’t it get a co-advisor role on that deal nobody remembers back in April?

This mentality may help explain why 41% of Wall Street employees say they expect a bigger bonus this year than in 2010. Only 30% saw their bonuses headed south, while 21% took the “unch” option and 8% said they don’t expect to get a bonus, according to a survey released today by online recruiting site eFinancialCareers.com.

That’s despite the worrying earnings outlook described in today’s WSJ.

The biggest reason people thought their bonus might be going up: “personal performance,” cited by 45% of survey respondents.

The average Wall Streeter is essentially a narcissist who believes that he’s really that much smarter and harder working than everyone else. It doesn’t matter if he contributes anything of value to society; it doesn’t matter if his company is failing or succeeding. It doesn’t matter if his actions crash the entire world’s economy. He’s worth it, because he just is. And if he doesn’t get his God-given right to make millions of dollars, there’s something wrong with the world and the parasites in government and society who are stopping him from getting his due.

The whining is simply phenomenal:

The new rules are the result of “societal objectives of a populist administration in Washington,” private-equity investor Wilbur Ross said in an e-mail. John Phelan, co-founder of MSD Capital LP, a New York-based fund that manages assets for billionaire Michael Dell, said “the whole capitalist system is being called into question…”

“This is the first time that people don’t necessarily believe it will get better,” said Weinstein, whose Third Avenue office has two exits “like a high-end plastic surgeon” to assure discretion. “Compensation has been recalibrated…”

Phelan said he’s worried about “social unrest.”

“My taxes are going up,” he said. “Everybody hates me. I have two friends who bought land in New Zealand. They’re trying to convince me to go…”

This one is my favorite:

Bankers aren’t optimistic about those gains. Options Group’s Karp said he met last month over tea at the Gramercy Park Hotel in New York with a trader who made $500,000 last year at one of the six largest U.S. banks.

The trader, a 27-year-old Ivy League graduate, complained that he has worked harder this year and will be paid less. The headhunter told him to stay put and collect his bonus.

“This is very demoralizing to people,” Karp said. “Especially young guys who have gone to college and wanted to come onto the Street, having dreams of becoming millionaires.”

I can see the headlines now: oppressed 27-year-old Ivy League graduate makes $500,000 a year after just three years on the job at a big financial firm. Now, all of a sudden he may make only 3/5 that amount. How ever will he survive? When will society give him what he deserves?

What he deserves, in reality, is to spend a few years living like these people. Or, if that’s too harsh for a person of his educational attainment, he deserves to live like any other 27-year-old who graduated from a decent school with a degree, but didn’t sell their soul to manipulate other people’s money on Wall Street. The average starting salary for college graduates in this country is $27,000. The median salary for the very small percentage of young Americans with a Masters degree? $60,000. Poor widdle baby.

For too long, taking massive risks with other people’s money has been a golden ticket to insane riches not encountered in other segments of society. As a summa cum laude student at UCLA in the early aughts, I saw first-hand the ridiculous recruiting bonanzas from financial firms. No other industry was making the same promises, and no other industry was recruiting remotely as heavily from the academic elite.

People who went to work on Wall Street were making six figures their first day on the job, while everyone else struggled to find employment at mediocre pay. Wall Street and their allies have been on a campaign for years if not decades to “normalize” that fundamental imbalance. They expect that imbalance to continue even after crashing the world’s economy and receiving no-interest loans from taxpayers.

That 27-year-old trader should be making no more and no less than any other graduate from a similar school in a different field. The fact that they’ve been making a killing isn’t a reflection of their inherent worth, nor of the natural order. It’s the product of a system deliberately rigged to allow them to do so on the backs of everyone else. It’s high time that the cream of the crop of our academic institutions produce professionals devoted to actually improving society, rather than destroying it for no other purpose but their own enrichment.

That’s what the protests are about, and they will continue until that imbalance is corrected.

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Still uterus obsessed

by digby

Well ladies, if the House of Representatives has their way today, you’ll soon find that your insurance plan will no longer offer full reproductive coverage and if something happens in which you require an abortion in an emergency situation, be sure to have a list of hospitals that have agreed to save your life if you are pregnant or you may just wind up dead.

Attacking women’s ability to obtain reproductive health care services remains one of Speaker Boehner’s top priorities. Boehner and the House leadership will bring to a vote a dangerous bill that will undermine women’s health and even put women’s lives at risk.

H.R. 358 is dangerous to women’s health. It is so extreme that some women facing pregnancy complications could die. Some of its most dangerous provisions include:

Preventing purchase of health insurance that includes abortion care: Millions of women would either be prevented from purchasing insurance plans that cover abortion or would lose the coverage they currently have.

Allowing hospitals to refuse to perform emergency abortions: H.R. 358 would allow hospitals to deny emergency abortions to women whose life or health could be saved by the procedure.

Taking away existing health insurance coverage: H.R. 358 opens an enormous loophole in the new health care law that would allow states to broaden refusal laws, which would mean that insurance companies could deny women access to contraceptives without co-pays that we secured, with your help, over the summer.

Instead of working to create jobs and help the struggling economy, Speaker Boehner is instead continuing his attack on women’s health. But he isn’t stopping at abortion. H.R. 358 could also limit women’s ability to have access to affordable birth control.

You can go here to register your complaints.

It’s somewhat unfashionable in the current moment to care about such things, but the truth is that the very people who will be the most impacted by this legislation are also the one’s who are the most economically deprived — young women, many already with young children. They are the very people hit hardest by this bad economy and nobody should forget that this form of oppression goes hand in hand with all the others.

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Codpiece Memories

by digby

I missed the GOP debate last night but from what I hear, Rick Perry pretty much proved once and for all that he’s not the sharpest tool in the shed. After all, he prepped hard for this one and he still blew it.

A lot of his cratering has to do with his position on immigration, to be sure. Failing to properly hate on “illegals” is up there with being an atheist or an abortion doctor as a GOP primary disqualifiers. But I really think he just reminds everyone a little bit too much of George W. Bush.

There was a time when an inarticulate good old boy was a shoo-in among the faithful. But Bush’s mien lost its luster somewhere around 2006, even among his most fervent supporters — and there is nothing like a fanboy scorned. I think that at some subconscious level Perry reminds them of their folly.

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Fighting 47%ers

by digby

Yesterday I wrote about the 47% who don’t pay federal income taxes due to the fact that they are able to make so little money (a shameful statistic in the wealthiest country in the world.)I pointed out that this number was mostly made up of single mothers with kids and the elderly poor. I got a note from a reader reminding me of this little factoid as well:

Among the 47% are US military personnel, military civilians, and other civilian agency personnel deployed forward including Iraq and Afghanistan. As you know if one is abroad for a year (actually a little over 11 months), the first $89k or so of income is exempt from income tax.

Are they and their families “whiners” who should “suck it up” too? Normally, I would have said that nobody would think that, but after they booed an active duty soldier at one of their debates, I assume the whole “support the troops” thing is no longer entirely operative with Republicans.

h/t to AS