Personally, I’ve worked my butt off my whole life to pay my way through college, to save for our house purchase, to run my own business, to afford to stay home with my child. Through my own life and folks in my own family, I have a keen appreciation of what it means to have very little, and the comfort that having a little more can bring. And I believe firmly that working hard to earn your own way can make any success all the sweeter.
In my family, work ethic is everything. As is giving back to those less fortunate because it’s the right thing to do.
What I don’t like? Stealing. Graft. And outright bilking. I’ll let Krugman explain:
The financial services industry has claimed an ever-growing share of the nation’s income over the past generation, making the people who run the industry incredibly rich. Yet, at this point, it looks as if much of the industry has been destroying value, not creating it. And it’s not just a matter of money: the vast riches achieved by those who managed other people’s money have had a corrupting effect on our society as a whole.
Let’s start with those paychecks. Last year, the average salary of employees in “securities, commodity contracts, and investments” was more than four times the average salary in the rest of the economy. Earning a million dollars was nothing special, and even incomes of $20 million or more were fairly common. The incomes of the richest Americans have exploded over the past generation, even as wages of ordinary workers have stagnated; high pay on Wall Street was a major cause of that divergence.
But surely those financial superstars must have been earning their millions, right? No, not necessarily. The pay system on Wall Street lavishly rewards the appearance of profit, even if that appearance later turns out to have been an illusion….
At the crudest level, Wall Street’s ill-gotten gains corrupted and continue to corrupt politics, in a nicely bipartisan way. From Bush administration officials like Christopher Cox, chairman of the Securities and Exchange Commission, who looked the other way as evidence of financial fraud mounted, to Democrats who still haven’t closed the outrageous tax loophole that benefits executives at hedge funds and private equity firms (hello, Senator Schumer), politicians have walked when money talked….
At a time when people like to throw the word "values" around as a hollow PR ploy, how about instead we start living like we have some? Last I checked, rampant greed, avarice and theft were still wrong — even for the "haves" among us. "Free money makes you stupid" is no excuse.
And for those elected officials who prop it up just to fill their election coffers? The shame ought to be even larger. You have a fiduciary obligation to the public’s interest — the whole public, not just the folks who lavish trips and planes on you. It’s about damned time you started doing your jobs.
The rest of us have to work hard to survive. Maybe it’s time a whole lot of the so-called leaders among us re-learned what that’s like.
(YouTube — Topol sings "If I Were A Rich Man" from Fiddler On The Roof. H/T to reader Bill.)
Related posts:
- Concern Trolling from NYT’s Spokesman for The Rich
- Taxing the Rich Will Make Them Go Galt! Um, No
- More Innovation from Wall Street: Securitized Viaticals
- Hey Blue Dogs: It’s Time For The Rich to Pay Back Those Tax Loans
- Offshore Banking Business: Obama’s Rich Donors Threaten Him over Closing Foreign Tax Havens
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Christopher Cox should be in prison.
This Madoff thing is just the beginning, I think. There will be many more stories like it.
Of course Christopher Cox should be in jail. You don’t think it’s an accident that his name is Cox, do you?
Thanks Christy.
digg
Seconded, enthusiastically.
biddy, biddy, bum!
I don’t expect anything to be done about this except sound bite protestations by the likes of Chuckie “Is this angle good?” Schumer and the other whores in Congress.
Anyone hear any talk of doing away with the onerous restrictions on working families trying to declare Chapter 7? How about reinstating usury laws? I ain’t holding my breath.
Sorry, Boo, I think this is the digg that took ahold up top.
These stories come out at the end of a bubble. In my town, we have been seeing this stuff for the last year or two. I’ve seen at least 6 involving at least a million dollars.
My theory is that around 1999 some smart as “conservatives” looked around at building home equity, pensions and the baby boomers. They thought:how can I get my hands on this capital?
How they did it:
1. deregulate banking
2. corrupt the population with easy credit, hook them on it
3. make education extremely costly and charge unreasonable interest on student loans. create a captured/indentured work force.
4. make health care very profitable and expensive and hard to get. the added benefit is that you can start to kill off and/or scare the crap out of people and make money at the same time.
5. prime an election by impeaching a president for a sexual indulgence
6. steal an election
7. allow a dramic and horrible terrorist attach and make sure it is on the teevee over and over
8. break the unions
9. start a war
10. bailout a failing economy to get your hands on the last bit of money left.
rinse, repeat and plunder the treasury.
simple.
There is a really easy way to solve this problem. We quit paying our credit card bills. Now, we don’t have the money to pay the fucking credit card bills but I don’t feel too much distress about it. The 30 phones calls a day are rather bothersome but we have the phone set to ring just once.
It was good to see Krugman write this. Perhaps fdl is rubbing off on him some since we have been writing for some time about how all the money that goes to the rich gets siphoned off in the destructive bubbles of the paper economy.
Yup, Mary — that was the recipe.
Saw a local newscast telling people about the bothersome calls. For instance, did you know that they can only call you twice in a seven-day period in California? And they can’t threaten to tell your family or boss.
I did not know that. I think I will start telling them that. over and over again.
He’s the fine gentleman who gave us the Cox Report, which was part of the “Chinagate” prong of the hydra-headed and bogus Vast Right Wing Conspiracy attacks on the Clintons in the 1990s.
The whole point of Chinagate was to accuse Bill Clinton of giving away key defense-related technology to the Chinese, which is why it was so ironic that the Cox Report was itself accused of revealing classified nuclear-weapons information. (And three weeks after its release, Chris Cox voted for releasing important computer technology to China.)
whispering very softly….
its ok if a r… does it.
ssshhhh…
Christopher Cox was in office when wealthy Orange County went bankrupt from crooked investment of the public cofers including retirement funds. It was no accident he looked the other way while his Neocon ilk raided the nations invesment capital. Capital collected by the investment banks we are now bailing out. He was led by the Bush administration their minion.
Dang it, I keep forgetting! Just like it’s not OK for Clinton to pardon Marc Rich for doing a one-time oil deal with Iran back when I was in high school, but it’s perfectly OK for Cheney’s Halliburton to conduct oil business with Iran through a shell company, in spite of Clinton’s 1995 executive order forbidding this.
Oooh! Got linkies?
teddy upstairs
Published: July 29, 2005
THE lawyer solemnly told regulators it would be far too costly for a mutual fund to seek appraisals of its assets, and no appraisals were made. When employees of the investment firm suspected something was amiss, they were reassured when a government auditor pored over the books and concluded that all was well.
And so the fraud continued for more than a decade. It later turned out that the assets sold to investors were largely fictitious, and that the supposed auditor, who presented credentials showing she worked for the California Department of Corporations, was in reality an actress hired by the man running the fraud.
Thanks very muchly!
A spectacular investment fund melt-down in 1994 led to the criminal prosecution of County of Orange treasurer Robert Citron. The county lost at least $1.5 billion through high-risk investments in derivatives.[4] On December 6, 1994, the County of Orange declared Chapter 9 bankruptcy,[4] from which it emerged in June 1995. The Orange County bankruptcy was the largest municipal bankruptcy in U.S. history.[4]
Sound familiar?
Robert Lafee Citron is a Democratic Party politician who was the longtime Treasurer-Tax Collector of Orange County, California when Orange County declared Chapter 9 bankruptcy on December 6, 1994. Citron was the only Democrat to hold office in otherwise Conservative/Republican Orange County at the time. The bankruptcy was brought on by Citron’s investment strategies that left the county with inadequate capital to allow for any raise in interest rates for its trading positions. A cash crunch occurred when interest rates increased and financiers for the county required increased collateral from the county.
Citron controlled several Orange County funds including the General Fund, the Investment Pool, and the treasury Commingled Pool. He sent out the county’s tax bills with rhyming slogans, such as “Taxes paid on time never draw fines.”[1] He won re-election seven times; in his last election victory, his opponent, John Moorlach, charged that his handsome gains were the result of risky betting.[1]
As controller of the various Orange County funds, Citron had taken a highly leveraged position using repurchase agreements (repos) and Floating Rate Notes (FRNs). The loss incurred by the usage of these financial instruments reached the amount of $2 billion and was caused by being too highly leveraged for rising federal interest rates.[1] In other words, if federal interest rates had not risen, the massive trading position would have been a substantially profitable position; if interest rates did rise, the trading position would result in substantial losses. In fact, rates rose.
The Orange County funds, managed by Citron, were worth $20 billion.[1] However, Citron went out to the repo market and leveraged the County Pools to amounts ranging from 158% to over 292%. To obtain this degree of leverage he used Treasury bonds as collateral. Profits of the fund were excessive for a period of time and Citron resorted to concealing the excess earnings. He pleaded guilty to improperly transferring securities from the Orange County General Fund to the Orange County treasury Commingled Pool.
The county’s finances were not suspect until February 1994. The Federal Reserve Bank began to raise US interest rates, causing many securities in Orange County’s investment pools to fall in value. As a result, dealers were requesting extra margin payments from Orange County. These extra margin payments were funded in part by another bond issue made by Orange County; the size of that bond issue was $600 million. However, this fix proved to be only temporary. In December 1994, Credit Suisse First Boston (CSFB) realized what was going on and blocked the “rolling over” of $1.25 billion in repos (”rollover” essentially means issuing of another repo when the previous one ends, but, at the new prevailing interest rate). At that point Orange County was left with no recourse other than to file for bankruptcy.
Citron pled guilty to six felony counts and three special enhancements. Charges also included filing a false and misleading financial summary to participants purchasing securities in the Orange County Treasury Investment Pool.
While in bankruptcy, every county program budget was cut, about 3,000 public employees were discharged and all services were reduced. Citron was ordered to serve five years of supervised probation, and to perform 1000 hours of community service. Citron did not serve any time in prison.
‘Cox to the Rescue’
Bush and Cheney retreated to their “Enron reflex” by naming Cox—who proudly declares that he believes there should be virtually no government regulations—to be the chief regulator of the collapsing securities industry. Cox was perhaps best known for his leadership of the Cox Commission on China, which was used as part of the impeachment campaign against President Bill Clinton, lying that the Clinton Administration was illegally selling “sensitive” technology to China in exchange for campaign contributions—a campaign LaRouche described at the time as a “scientifically illiterate hoax.”
But Cox has also made a name for himself as a defender of speculators. As a lawyer in California in the 1980s, specializing in venture capital, Cox was named in a lawsuit brought by investors for fraud. The plaintiffs accused Cox of misleading regulators and investors about the conditions of a real estate investment. Although he was ultimately dropped from that suit before his firm settled out of court, he admits that he learned from that experience to “sympathize with people who are victimized in these lawsuits.”
This sympathy for speculators led Cox in 1995—by then a Congressman—to write the “Private Securities Litigation Reform Act,” which restricted the ability of clients to sue their brokers for securities fraud. As part of the “Gingrich Revolution” after the 1994 mid-term election—the “Contract on America”—Cox’s bill became the only legislation to become law over a veto by President Clinton. (Cox’s callous view of investors who get swindled by speculators did not hold him back from demanding a government bailout when his own Orange County, California, went bankrupt as a result of bad derivatives investments!)
PW…
Cox is the “Majic Hand” that Naomi Klien refers to no regs free market ala caveat Emptor. Please read the story which is well documented. Orange is one of the mosy affluent counties in California if not the US. Cox was elected by them to congress after he supported the mismanagement. Double speak…plausable deniability is the method operandi.
This has brought us to the brink of a global depression. We already have 20% uf the USA population in a depression.
Hedge-Funds Crisis
Breaks Into the Open
Since the May 5 downgrade of General Motors’ and Ford’s corporate debt to “junk” status by Standard & Poor’s, the signs of a catastrophe in the hedge-funds markets has exploded into public view. Hedge funds are a form of mutual fund for the super-rich, which are permitted to engage in aggressive speculative activities prohibited to ordinary mutual funds; a substantial amount of betting in derivatives is done through hedge funds, with no government regulation whatsoever. An estimated $2 quadrillion in derivatives is traded per year—although nobody really knows the full dimensions of this house of cards.
For a month now, the financial press has been warning of an imminent blowout; Federal Reserve Chairman Alan Greenspan admitted on June 6 that “the hedge fund industry could temporarily shrink, and many wealthy fund managers and investors could become less wealthy”; and a battle royal has broken out at the U.S. Securities and Exchange Commission.