Thursday, March 25, 2010
Monday, March 22, 2010
Sunday, March 21, 2010
No illusions please: This bill will not be repealed. Even if Republicans scored a 1994 style landslide in November, how many votes could we muster to re-open the “doughnut hole” and charge seniors more for prescription drugs? How many votes to re-allow insurers to rescind policies when they discover a pre-existing condition? How many votes to banish 25 year olds from their parents’ insurance coverage? And even if the votes were there – would President Obama sign such a repeal?Republicans losses are America's gains, and we need to hold them to their promise of running on a repeal.
We followed the most radical voices in the party and the movement, and they led us to abject and irreversible defeat.
There were leaders who knew better, who would have liked to deal. But they were trapped. Conservative talkers on Fox and talk radio had whipped the Republican voting base into such a frenzy that deal-making was rendered impossible. How do you negotiate with somebody who wants to murder your grandmother? Or – more exactly – with somebody whom your voters have been persuaded to believe wants to murder their grandmother?
There is no question that the Democrats will lose seats in the November election (Reagan never recovered the 26 House seats he lost in the 82 midterms). And there is also no question that the lack of leadership in Congress and from the White House in the last year will be reflected in these losses. But passing the Health Care bill will shore up Democratic majorities in both Houses and hopefully taught some much needed lessons in leadership to all involved.
For many years Wall Street served a public function privately raising the capital necessary for economic expansion -- allowing Proctor & Gamble to build a new factory -- for example. But starting in the 1990s, Lowenstein argues, Wall Street started inventing new derivative securities that essentially allowed the Goldman Sachs of the world to bet for or against markets as a way of making money versus the old fashion way of actually investing in something real. Now infamous mortgage backed securities is an example of these exotic derivatives. Wall Street banks were selling to their client investors these securities while at the same time betting against those same securities out of their own trading accounts with (now infamous) credit default swaps.
Asked about mortgage securities [before the Financial Crisis Inquiry Comm] that Goldman both sold to clients and bet against, [Goldman CEOI] Blankfein, while expressing regret for what he admitted was improper behavior, added: “In our market-making function, we are a principal. We represent the other side of what people want to do.” He went on to say that when Goldman sells a security that subsequently goes up (i.e., on which the other party makes money), “we wish we hadn’t sold it.” So much for putting the customer first.Author Michael Lewis in his new book -- The Big Short -- explains how the big Wall Street banks invented a market by turning junk bonds into triple A rated bonds to sell to their clients for a profit and then profit a second time by betting against the junk they sold, but I digress,...
For much of Wall Street, capital-raising is now a sideshow. At Goldman, trading and investing for the firm’s account produced 76 percent of revenue last year. Investment banking, which raises capital for productive enterprise, accounted for a mere 11 percent. Other than that, it could have been a hedge fund.
Lowenstein sees the constant trading that is now so common in all markets (look at the ever shifting price of crude oil as another example) a problem that should be curbed. One way to curb speculative trading is to impose a transfer tax on major trades. The idea of such a tax is gaining traction in Europe. Maybe it's time we thought about it too.