Month: July 2012

Whittling away at the taboos

by digby

Just as the open defense of torture during the Bush administration seems to have removed the taboo, I’m beginning to think that the Catholic Church’s child molestation scandal has done the same thing for pedophilia — at least to the degree important people are accused of it:

In January 2011, Joe Paterno learned prosecutors were investigating his longtime assistant coach Jerry Sandusky for sexually assaulting young boys. Soon, Mr. Paterno had testified before a grand jury, and the rough outlines of what would become a giant scandal had been published in a local newspaper.

That same month, Mr. Paterno, the football coach at Penn State, began negotiating with his superiors to amend his contract, with the timing something of a surprise because the contract was not set to expire until the end of 2012, according to university documents and people with knowledge of the discussions. By August, Mr. Paterno and the university’s president, both of whom were by then embroiled in the Sandusky investigation, had reached an agreement.

Mr. Paterno was to be paid $3 million at the end of the 2011 season if he agreed it would be his last. Interest-free loans totaling $350,000 that the university had made to Mr. Paterno over the years would be forgiven as part of the retirement package. He would also have the use of the university’s private plane and a luxury box at Beaver Stadium for him and his family to use over the next 25 years.

The university’s full board of trustees was kept in the dark about the arrangement until November, when Mr. Sandusky was arrested and the contract arrangements, along with so much else at Penn State, were upended. Mr. Paterno was fired, two of the university’s top officials were indicted in connection with the scandal, and the trustees, who held Mr. Paterno’s financial fate in their hands, came under verbal assault from the coach’s angry supporters.

Board members who raised questions about whether the university ought to go forward with the payments were quickly shut down, according to two people with direct knowledge of the negotiations.

In the end, the board of trustees — bombarded with hate mail and threatened with a defamation lawsuit by Mr. Paterno’s family — gave the family virtually everything it wanted, with a package worth roughly $5.5 million. Documents show that the board even tossed in some extras that the family demanded, like the use of specialized hydrotherapy massage equipment for Mr. Paterno’s wife at the university’s Lasch Building, where Mr. Sandusky had molested a number of his victims.

And why not? Everyone knows that the Catholic Church hierarchy was aware of molestation in its ranks and covered it up for decades and yet the Church maintains its high social status. I know of few high profile people who believed such an immoral practice was a bridge too far for them and left the church over it. So really, why should anyone think that Joe Paterno and his friends would be shocked by this or think it was worth making a fuss over?

Sure nobody wants some seedy child molester running around in their neighborhoods. But in general, many in our society have decided somehow that institutional cover-ups of the crime are understandable. And lord knows, it shouldn’t stand in the way of an important person’s financial rewards. That’s serious business.

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Friendly Reminder: keep it simple

“I never thought of what I do for a living as job creation,” said Marc B. Walpow, a former managing partner at Bain who worked closely with Romney for nine years before forming his own firm. “The primary goal of private equity is to create wealth for your investors.”

This is true, of course. And we can debate whether or not that’s a good thing for America in general. But it crashes headlong into Mitt’s “business” experience as a qualification for president.

I think the Obama campaign gets this:

“If you’re a head of a large private equity firm or hedge fund, your job is to make money,” Obama told CBS News. “It’s not to create jobs. It’s not even to create a successful business — it’s to make sure that you’re maximizing returns for your investor.”

Obama told Charlie Rose of CBS This Morning that private equity — which Romney practiced at Bain Capital — is “appropriate” work, “but that doesn’t necessarily make you qualified to think about the economy as a whole. Because, as president, my job is to think about the workers. My job is to think about communities, where jobs have been outsourced.”

Indeed. In fact, it’s a great opportunity to start pushing back in general on the idea that running the government is like running a business. (If we can persuade them to stop saying the government budget is like a typical household budget, we’ll really be getting somewhere.)

Update:

President Obama proudly channels Elizabeth Warren

by David Atkins

The great right wing circus is going apoplectic over this Obama speech:

Well, first of all, like I said, the only way you can pay for that — if you’re actually saying you’re bringing down the deficit — is to cut transportation, cut education, cut basic research, voucherize Medicare, and you’re still going to end up having to raise taxes on middle-class families to pay for this $5 trillion tax cut. That’s not a deficit reduction plan. That’s a deficit expansion plan…

But you know what, I’m not going to see us gut the investments that grow our economy to give tax breaks to me or Mr. Romney or folks who don’t need them. So I’m going to reduce the deficit in a balanced way. We’ve already made a trillion dollars’ worth of cuts. We can make another trillion or trillion-two, and what we then do is ask for the wealthy to pay a little bit more. (Applause.) And, by the way, we’ve tried that before — a guy named Bill Clinton did it. We created 23 million new jobs, turned a deficit into a surplus, and rich people did just fine. We created a lot of millionaires.

There are a lot of wealthy, successful Americans who agree with me — because they want to give something back. They know they didn’t — look, if you’ve been successful, you didn’t get there on your own. You didn’t get there on your own. I’m always struck by people who think, well, it must be because I was just so smart. There are a lot of smart people out there. It must be because I worked harder than everybody else. Let me tell you something — there are a whole bunch of hardworking people out there. (Applause.)

If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you’ve got a business — you didn’t build that. Somebody else made that happen. The Internet didn’t get invented on its own. Government research created the Internet so that all the companies could make money off the Internet.

The point is, is that when we succeed, we succeed because of our individual initiative, but also because we do things together. There are some things, just like fighting fires, we don’t do on our own. I mean, imagine if everybody had their own fire service. That would be a hard way to organize fighting fires.

So we say to ourselves, ever since the founding of this country, you know what, there are some things we do better together. That’s how we funded the GI Bill. That’s how we created the middle class. That’s how we built the Golden Gate Bridge or the Hoover Dam. That’s how we invented the Internet. That’s how we sent a man to the moon. We rise or fall together as one nation and as one people, and that’s the reason I’m running for President — because I still believe in that idea. You’re not on your own, we’re in this together. (Applause.)

So all these issues go back to that first campaign that I talked about, because everything has to do with how do we help middle-class families, working people, strivers, doers — how do we help them succeed? How do we make sure that their hard work pays off? That’s what I’ve been thinking about the entire time I’ve been President.

Close readers will be reminded of this famous bit from Elizabeth Warren:

As a small business owner, I wholeheartedly agree with President Obama and future Senator Warren. Sure, I’ve worked hard to build a business and to stay afloat when many others in my profession have called it quits. But none of it would be possible without the framework of civilization that my taxes help to support. When I buy lunch, I depend on food safety regulators to make sure a corporation hasn’t tainted the ingredients. I depend on a national transportation infrastructure for business travel and for the shipping of necessities. I depend on the post office to deliver the mail. I depend on the government to assure the stability of the Internet through which I do the majority of my work. I depend on firefighters and police to protect my property, my safety and my community. I depend on educators to ensure that the American public remains educated and affluent enough to purchase products. I depend on the social safety net that ensures relative social stability, general prosperity and an absence of armed revolutionary warlords. My own education on full ride scholarship at a state university depended heavily on government assistance. And so on and so on.

Yes, I’ve worked hard to earn some modest success. But make no mistake: I haven’t built that. I merely stood on the shoulders of a vast network of civilization paid for by tax dollars, without which I would never have had the opportunity to succeed at all. Had I been born in Somalia or Burma, my fate would have been as dismal as the fates of most of my hypothetical compatriots.

To the right wing, the notion of collective responsibility and collective success is a dangerous idea. To the rest of us it’s just common sense.

I couldn’t be more thrilled that this argument is now the tip of the spear in our leaders’ political discourse, going straight to the heart of the Objectivist, parasitic vulture capitalist cabal. Fitting, that.

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Saturday Night at the Movies

Crimes and misdemeanors: Elena

By Dennis Hartley

Life is sustained by the grinding opposition of moral entities.
-Anthony Burgess

It quickly becomes apparent in the opening scenes of Russian director Andrei Zvyagintsev’s Elena that you are settling in to watch a film wherein nothing is going to quickly become apparent. He holds a static shot of a tree bathed in the cool light of dawn for what must be at least three minutes (an eternity in screen time). Aside from the cackling of crows, there doesn’t seem to be anything of particular significance going on. Wait a minute…is that a window, beyond the branches? It is, in fact, a balcony window, but we can’t quite see in; the glass only reflects the burgeoning sunrise. And (crows aside) it’s quiet…too quiet. This gives the viewer ample time to ponder a few questions: What’s going on behind that window? Are those crows supposed to be an omen? Are we about to be startled by something shockingly horrible that lies beyond the windowpanes?

Interior shots reveal a decidedly less sinister scenario; a well-appointed luxury apartment, where a plain, unassuming middle-aged woman shuts off her alarm and gets out of bed. Again, the director takes his time, carefully documenting all the minutiae of her morning ablutions. Just when we are about to assume she lives alone, she enters a different bedroom, drawing the curtains open to awaken a gentleman who is a number of years her senior. There is minimal verbal exchange between them. As she proceeds to head for the kitchen, where she diligently begins to prepare breakfast, new questions arise. Is she the man’s live-in housekeeper? Is she acting as caregiver for an elderly relative? As it turns out, while arguably a bit of both, she’s technically neither. Despite their undemonstrative behavior, they are married. Vladmir (Andrey Smirnov) is an aloof, well-do-do patrician, and Elena (Nadezhda Markina), a retired nurse, hails from a working class background.

Mundane breakfast chat reveals that Vladmir and Elena each have an adult child from previous marriages. Vladmir has a daughter, with who he is rarely in contact with. According to him, she is a self-centered “hedonist”, who “takes after her mother”. Still, however, he’s forever spoiled her; sending her money to support her party girl lifestyle. Much to Vladmir’s chagrin, Elena is off after breakfast to visit her son Sergei (Aleksey Rosen). Sergei, who is unemployed, relies on the money Elena funnels him from her monthly pension check to support himself, his wife, infant and teenage son. Vladmir, despite his wealth, refuses to give Elena’s son financial support; to him, Sergei is a useless lay about who needs to “get his ass off the couch” and start providing for his family. Elena, who has obviously heard this all before, absorbs his tirade with quiet resignation and then proceeds to take a long slog (in real time, seemingly) via bus, train and shoe leather express to just beyond the outskirts of urban renewal, where Sergei and his family live in a drab, rundown beehive apartment complex (which, with its twitchy gang members on the stoop and trashed, graffiti-scrawled lobby, is quite reminiscent of the building where Alex and his droogs held their confabs in A Clockwork Orange).

The stark contrast in living quarters, along with Vladmir and Elena’s “mixed marriage” of disparate social backgrounds become metaphors for the central themes of Zvyagintsev’s screenplay (co-written by Oleg Negin): classism, the chasm between the “haves” and the “have nots”, and ultimately, instinct vs. morality (this particular device carries echoes of Kurosawa’s class warfare noir, High and Low). Without giving too much away, these subtexts all come to the fore when Vladmir suffers a sudden heart attack. While in the hospital, he is visited by his estranged daughter (Elena Lyadova, in a brief but standout turn). Despite her nihilist stance regarding Vladmir’s situation, father and daughter have an unexpected reconciliation, inspiring Vladmir to make changes in his will. In turn, this decision leads one character to make a moral choice that profoundly changes the family’s dynamics (extended and otherwise). When this decision occurs, it is so subtle and reflexive that you might miss it if you blink; but such is the banality of evil.

Zvyagintsev has served up a complexly flavored filet of dark Russian soul, spiced with a hint of Dostoyevsky, a sprig of Burgess and a dash of Hitchcock. I suppose you could describe his film as a “noir-ish thriller”, but not in the traditional sense. There are no suspenseful musical cues. In fact, save for a solitary Philip Glass piece that makes several brief appearances on the soundtrack, there’s no music to speak of (thankfully, the director is astute enough to realize that a little bit of Philip Glass goes a long, long way). The deliberate pacing could be a deal-breaker for some; I’ll admit I found myself struggling a bit through the first hour or so. But if you are patient, you will come to realize that there is a Kubrickian precision to the construct. And you will finally grok what’s going on behind that window…it’s a primordial dance as old and familiar as human nature itself.

Previous posts with related themes:

The Housemaid/The Servant
Hipsters/The Women on the 6th Floor
Elles

Saturday Night at the Movies review archive

Oh snap!

by digby

This one’s got to sting:

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Are you sure you want to talk about “free stuff” Mitt?

by digby

Susie makes a great point about Mitt’s repulsive “free lunch” comments after the NAACP speech. Of course it was disgusting for its race baiting. That goes without saying. But I think most of us missed the humongous irony in what this privileged jerk was saying. Susie caught it:

As far as free lunches go, we of course just witnessed the biggest government handout in history, one that Romney himself endorsed. Four and a half trillion dollars in bailout money already disbursed, trillions more still at risk in guarantees and loans, sixteen trillion dollars in emergency lending from the Federal Reserve, two trillion in quantitative easing, etc. etc. All of this money went to Romney’s pals in the Wall Street banks that for years helped Romney take over companies with mountains of borrowed cash. Now, after these banks crashed, executives at those same firms used those public funds to pay themselves massive salaries, which is exactly the opposite of “helping those who need help,” if you’re keeping score.

You’d think old Mitt would be a little bit cautious about condemning people for taking “free money” but, as usual, it’s only the average Joe in a bind who needs to be taught a lesson in personal responsibility. The Big Money Boyz are just “playing the game”, as Huckleberry Graham likes to say, and we’d all think less of them if they voluntarily left that money on the table when it could go into their pockets, wouldn’t we? That would be a loser move, and these guys aren’t losers like those parasites who need food stamps or unemployment insurance in a moribund economy.

Be sure to click over and read Susie’s entertaining assessment of Mitt’s character.

(And drop a buck or two in the kitty if you think of it. Blogga’s gotta pay rent. On a place with no car elevator. Imagine that.)

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In-depth TV news coverage is too LIBOR-ious

by digby

In case you are still wondering, here’s an informative discussion of the LIBOR scandal from Eliot Spitzer:

According to Media Matters,with the exception of Spitzer and Chris Hayes, TV news has pretty much avoided even mentioning this scandal, much less trying to explain it.

The papers are getting a little bit more aggressive. This is the top headline story in the dead tree version of theNew York Times today:

New York Fed Knew of False Barclays Reports on Rates

By MICHAEL J. DE LA MERCED and BEN PROTESS

The Federal Reserve Bank of New York learned in April 2008, as the financial crisis was brewing, that at least one bank was reporting false interest rates.

At the time, a Barclays employee told a New York Fed official that “we know that we’re not posting um, an honest” rate, according to documents released by the regulator on Friday. The employee indicated that other big banks made similarly bogus reports, saying that the British institution wanted to “fit in with the rest of the crowd.”

Although the New York Fed conferred with Britain and American regulators about the problems and recommended reforms, it failed to stop the illegal activity, which persisted through 2009.

British regulators have said that they did not have explicit proof then of wrongdoing by banks. But the Fed’s documents, which were released at the request of lawmakers, appear to undermine those claims.

The revelations fuel concerns that regulators are ill-equipped to police big banks and that financial institutions can game the system for their own purposes.

Ya think?

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A tale of two scandals

by digby

Dave Johnson gives us a timely reminder of a previous personal financial “scandal” that absorbed the nation for years and which was considered by the entire Village evidence of disgusting greed and corruption. Those of you who are old enough surely remember this?

Hillary Clinton Futures Trades Detailed

By Charles R. Babcock

Washington Post Staff Writer

Friday, May 27, 1994; Page A01

Hillary Rodham Clinton was allowed to order 10 cattle futures contracts, normally a $12,000 investment, in her first commodity trade in 1978 although she had only $1,000 in her account at the time, according to trade records the White House released yesterday.

The computerized records of her trades, which the White House obtained from the Chicago Mercantile Exchange, show for the first time how she was able to turn her initial investment into $6,300 overnight. In about 10 months of trading, she made nearly $100,000, relying heavily on advice from her friend James B. Blair, an experienced futures trader.

The new records also raise the possibility that some of her profits — as much as $40,000 – came from larger trades ordered by someone else and then shifted to her account, Leo Melamed, a former chairman of the Merc who reviewed the records for the White House, said in an interview. He said the discrepancies in Clinton’s records also could have been caused by human error.

Even allocated trades would not necessarily have benefited Clinton, Melamed added. “I have no reason to change my original assessment. Mrs. Clinton violated no rules in the course of her transactions,” he said.

Lisa Caputo, Clinton’s spokeswoman, said the documents were released yesterday “to give as complete a picture as possible” of her trades. She said Clinton had never before seen them.

Dave writes:

Take a look at the 350,000-or-so web references to cattle futures trades made by Hillary Clinton way back in the 1970s. This might give you an idea of how big a deal it was back in the mid-90’s that Hillary Clinton had made $100,000 (!!!) on speculative investments back in the 1970s. (The number of stories located online is possibly reduced by the fact that the media swarm happened in the mid-1990s — largely before the Internet.)

Look at the outlets that assigned teams of reporters to investigate: All the TV networks, the Washington Post, New York Times, Newsweek, and all of the rest of the jouranilmalism crowd were all over what was considered to be a major story.

This story was investigated, written about, investigated, written about, and investigated. No evidence of any wrongdoing was ever found — which many in the media took as clear proof that there had been a massive cover-up.

And he makes a comparison:

Compare the magnitude of Hillary’s $100,000 profit to the recent disclosure of as much as $100,000,000 — one hundred million dollars — turning up in Mitt Romney’s IRA which is a personal retirement investment vehicle that is limited to a few thousand in contributions each year. (Remember, the gains made in an IRA are not taxed.) Romney is already retired, and the one completed tax return he has disclosed shows that he currently has an income of approx. $450,000 per week.

So how did $100 million end up an an IRA that is limited to deposits of a maximum $6,000 a year (after you reach a certain age)? How many reporters has each major news organization assigned to find out why he has up to $100 million in an IRA?

(read on…)

This is the one that gets me too. It’s all horrific, the off-shore accounts, the refusal to release his tax returns, all of it. But this one — the hundred million dollar IRA — just slays me.

Dave’s got a point about the media double standards. When the futures trades scandal broke the press corps went nuts. But I think there are some other factors at work here as well.

The first is that what made the Clinton cattle futures trade so exciting was the fact that it was a mere woman who had been dabbling in high finance and it was ridiculous to believe that she could have done it herself. Moreover, it was a woman the Villagers all considered to be a bitch, so they were happy to see her her alleged intelligence assailed as phony. It’s taken for granted that Mitt, on the other hand, is considered to be some sort of financial genius so it’s to be expected that he’d make zillions even in the most ludicrous situations. He’s a Master of the Universe after all.

Second, the numbers are so big that nobody can wrap their mind around them. Hillary’s little venture into trading was something everyone could relate to and presented a simple scenario. Mitt’s shenanigans are complicated and, frankly, kind of awe-inspiring to the Villagers. These are not gothic, southern small town intrigues — it’s the Big Time featuring the Very Important Rich People. They are impressed by the grandeur of it all.

Finally, the country has changed. Over the course of the last two decades we’ve seen a rather dramatic degradation of political norms, generally. We’ve had partisan impeachments, stolen elections, bogus wars and massive financial failure. People are a lot more cynical. There was a time when it would have been a reckless act of chutzpah to nominate a Vulture capitalist in the wake of the 2008 meltdown, but now it’s just par for the course.

Still, it’s an interesting contrast. The Whitewater scandals were all parochial, small bore plotlines that served to reinforce the notion that the president and his wife were backwoods operators out of their depth in the glittering world of the big city.The Villagers relished it (as did a good part of the nation.) This is different. Mitt’s a certified member of the .001%, the ultimate winners circle, the Big Club. While I’m sure they may a tiny element of fear involved in going after him, there’s also the sense that he’s entitled to game the system. That’s what one in his position does in this era. Why, we couldn’t really respect him if he didn’t, could we?

It’s much different for the lower orders who must be restrained lest they start thinking they are better than they ought to be. A penny-ante land deal, some cattle futures trades showed a couple who had no money, attempting to run with people who did. In the movies that might be considered plucky American ambition. In the Village, one simply doesn’t let those seams show.

“It’s really American to avoid paying taxes, legally”

by David Atkins

David Firestone at the New York Times:

Republicans aren’t just in favor of lowering taxes; now they’re applauding wildly complex efforts by the wealthiest Americans to avoid paying billions in taxes by shipping capital to other countries.

“It’s really American to avoid paying taxes, legally,” said Senator Lindsey Graham, Republican of South Carolina, on Tuesday. [Emphasis added] He was defending Mitt Romney, who, as this morning’s editorial in The Times notes, appears to have the most elaborate history of tax avoidance – offshore tax havens, disputed sheltering mechanisms, complex trusts – of any major presidential candidate in history.

Invest in the Cayman Islands, Mr. Graham seems to be saying. It’s the patriotic thing to do.

That peculiar vision of the American way doesn’t go back very far. Mr. Romney’s financial practices aren’t unusual just because he is one of the wealthiest candidates ever to run; it’s because previous well-to-do candidates would have been embarrassed to admit they had gone so far to enrich themselves at the public treasury’s expense.

As Steve Rattner, the financier who has helped manage Mayor Bloomberg’s money, put it on ABC’s This Week last Sunday, “I actually was with a very prominent private equity guy last night who said he’d never heard of some of the things Mitt Romney has done in terms of putting money offshore, in terms of having a $100 million I.R.A., basically getting an interest-free loan from Uncle Sam on the taxes, on all that money, until he brings it home…”

The $5 trillion in assets held by offshore tax havens costs the federal government $100 billion a year, according to the I.R.S. But when tax-writing committees try to end such practices, they are often shut down by powerful financial lobbyists.

If Mr. Romney were to be elected, it would be his Treasury Department that would be hurt by such tax-avoidance practices, and his I.R.S. that would have to crack down on them. Based on even the little we know about his financial practices, it’s hard to see how he could look his I.R.S. commissioner in the eye.

Digby brought up earlier the fact that it wasn’t so long ago that doing everything in one’s power to avoid paying for civilization and one’s country was deemed unpatriotic. Krugman reinforces the point:

The first thing you need to know is that America wasn’t always like this. When John F. Kennedy was elected president, the top 0.01 percent was only about a quarter as rich compared with the typical family as it is now — and members of that class paid much higher taxes than they do today. Yet somehow we managed to have a dynamic, innovative economy that was the envy of the world. The superrich may imagine that their wealth makes the world go round, but history says otherwise.

To this historical observation we should add another note: quite a few of today’s superrich, Mr. Romney included, make or made their money in the financial sector, buying and selling assets rather than building businesses in the old-fashioned sense. Indeed, the soaring share of the wealthy in national income went hand in hand with the explosive growth of Wall Street.

Not long ago, we were told that all this wheeling and dealing was good for everyone, that it was making the economy both more efficient and more stable. Instead, it turned out that modern finance was laying the foundation for a severe economic crisis whose fallout continues to afflict millions of Americans, and that taxpayers had to bail out many of those supposedly brilliant bankers to prevent an even worse crisis. So at least some members of the top 0.01 percent are best viewed as job destroyers rather than job creators.

Did I mention that those bailed-out bankers are now overwhelmingly backing Mr. Romney, who promises to reverse the mild financial reforms introduced after the crisis?

To be sure, many and probably most of the rich do, in fact, contribute positively to the economy. However, they also receive large monetary rewards. Yet somehow $20 million-plus in annual income isn’t enough. They want to be revered, too, and given special treatment in the form of low taxes. And that is more than they deserve. After all, the “common person” also makes a positive contribution to the economy. Why single out the rich for extra praise and perks?

What about the argument that we must keep taxes on the rich low lest we remove their incentive to create wealth? The answer is that we have a lot of historical evidence, going all the way back to the 1920s, on the effects of tax increases on the rich, and none of it supports the view that the kinds of tax-rate changes for the rich currently on the table — President Obama’s proposal for a modest rise, Mr. Romney’s call for further cuts — would have any major effect on incentives. Remember when all the usual suspects claimed that the economy would crash when Bill Clinton raised taxes in 1993?

Republicans have defined blind jingoism as patriotism for so long that they’ve forgotten what patriotism actually means. Someone should remind Lindsey Graham and Mitt Romney that this is what patriotism used to look like, particularly during wartime:

That’s still the true face of wartime patriotism. Back in the 1940s, a super-rich vulture capitalist who hid all his money from Uncle Sam in offshore island accounts without actually producing anything of value wouldn’t be considered a candidate for President. He’d be a candidate for a punch in the nose from a World World II vet and his/her family.

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