Laura Flanders

Is the SEC Up to the Job?

Laura Flanders on April 22, 2010 - 9:44 AM ET

One of the best kept secrets in Washington is the working of the Securities and Exchange Commission. Does it get the job done? Not even close.

Typically, Wall Street is awash in insider trading, accounting games, and let's not forget campaign contributions -- and SEC lawyers are outgunned and outmaneuvered. All this was known before the Bernard Madoff scandal put the SEC to shame and dozens of kiss-and-tell best sellers were published by ex-financiers who, having stashed away enough for themselves and their dynasty of future children, came forward with sordid tales of pocket stuffing.

The agency may have been weak thorughout the Bush years, but it's not just the way, it's the will. Back in '93, in Clintontimes, Mary Schapiro told an audience in Switzerland that "a more flexible regulatory paradigm" would benefit the financial world. And she wasn't alone: over at the White House, chief economist Bob Rubin was saying the same.

Rubin, who cashed out of Goldman Sachs with hundreds of millions of dollars, and his lieutenant, Larry Summers, who made millions at a hedge fund, went on to run the Treasury Department. There, this dynamic duo unleashed the forces not of regulation -- but its reverse -- laying the foundation for the awful mess we are familiar with -- speculation upon speculation and leverage upon leverage -- producing profits galore but few jobs.

Even the best intentioned SEC, under the the reformed and revitalized Mary Schapiro, can put but a dent in a system so skewed. The case against Goldman's juicy, but juicier to investors are the bank's first quarter returns -- which are up. It'll take more than Ms. Schapiro's lawsuit to topple the applecart of massive accumulation for some and next to nothing for the rest of us.

The F Word is a regular commentary by Laura Flanders, the host of GRITtv which broadcasts weekdays on satellite TV (Dish Network Ch. 9415 Free Speech TV) on cable, and online at GRITtv.org and TheNation.com. Support us by signing up for our podcast, and follow GRITtv or GRITlaura on Twitter.com.

Coal Company Shopping Spree

Laura Flanders on April 21, 2010 - 9:41 AM ET

Last week, I noted that rating agency Standard and Poors had upgraded Massey Energy from “hold” to a “buy.” Massey's the company that owns the mine where 29 miners were killed in an explosion recently.

Now we find out that Standard and Poors were right: Massey's prospects are only going up -- in fact, they're on a shopping spree!

Perhaps they're just taking George W. Bush's advice from 2001 to heart: the best way to deal with a tragedy is to go shopping. Anyway, the Wall Street Journal reports that Massey completed a purchase of U.S. coal producer Cumberland Resources Corp. for $640 million in cash and 6.5 million of its shares.

Now, we should be fair. Jeff Biggers pointed out on GRITtv that while Massey might be a particularly egregious union-buster and regular safety violator, they're hardly that far outside the norm for their industry. They're serving their investors and the politicians who benefit from their largesse, and they're taking advantage of opportunity -- the purchase of Cumberland was said to be part of a focus on underground mining for Massey in the face of expected federal regulations on surface mining.

One can't help feeling that while Massey's CEO may be on the outs -- there are mounting calls for his resignation -- the bigger problem's the coal industry itself. No fine's enough. And until we see some serious structural changes, the industry is going to continue doing what it has been doing: trading death for profit.

Economy is in the Eyes of the Beholder

Laura Flanders on April 20, 2010 - 9:47 AM ET

Beauty's in the eye of the beholder, especially, apparently, the beauty of bailouts. In the U.S. right now, some see robust growth, others a limping progress. Some see unemployment edging down, others see it spiking up. It's all about the beholder.

The U.S. Treasury is now estimating the cost of the bailout at $89 billion, considerably less than what's been reported since the fall of 2008. The $89 billion figure fits nicely into the vision of Treasury Secretary Tim Geithner who, as head of the New York Fed, was the point-man under Bush, overseeing the hand-out of dough to Wall Street.

But where Geithner sees gentle waves, New York Times business reporter Gretchen Morgenson sees tsunamis -- counting it all up in the $1 trillion range. For one, there's the cost of lending to banks at near zero interest rate set that against what banks charge us -- which is to say an average 14% on credit cards -- and what they pay back in interest to depositors -- far too little, most of us think.

Morgenson points to FDIC losses in taking over failed banks, including loss-sharing costs shouldered by taxpayers. That she puts at $400 billion. Against that, Geithner's $89 billion starts to fade fast.

There's just one more thing left out of Geithner's figures: implied government guarantees; what one bank analyst calls the "noxious byproduct" of systemic risk. A "deliberate low-balling that underestimates damage to the wider economy," that analyst observed, obscures $4 trillion in lost output globally, losses that can be permanent or persistent, in his words. So take your pick -- gentle waves or a global tsunami. Feel better yet?

Ad Policy

Taxes, Spending, or Race?

Laura Flanders on April 16, 2010 - 9:53 AM ET

The latest in a spate of polls about the Tea Partiers comes from the New York Times and CBS and it raises some questions about just what's fueling the protests: is it all about taxes or something else?

Of those self described Tea Partiers polled by the Times most considered their taxes “fair.” They send their kids to public schools and despite opposing health care reform, think that Social Security and Medicare are worth the cost.

So what's driving them to the streets in a rage? It's not money per se, it's something else. Usefully, the pollsters asked Tea Partiers other questions too. Surprise surprise, they believe that Obama “does not share the values most Americans live by and that he does not understand the problems of people like themselves.” Half think the administration favors the poor, and a quarter say it favors blacks over whites — compared with 11 percent of the general public."

Where did they get such ideas? In this case, mostly from the Fox News network, but the coded language is clear as ice. It's not about taxes or spending per se, it's about spending on them...(other people.)

And that's how self-interested politicians and spinmeisters have stirred up people to slash government since Reconstruction. As one Social Security-receiving tea partier tells the Times: "I didn't look at from the perspective of losing things I need" [emphasis added]

And that's the genius of this kind of talk. By painting assistance to the poor as only a "black" thing, poor whites have consistently been encouraged to support doing away with the only safety net they'd ever had. That's part of what brought us to this spot.

An honest debate about taxes? It'd be helpful. But what we really need to do is grapple with post-apartheid racial resentments. And that makes the whole tax debate look easy.

Tax Grousing Tells Half The Story

Laura Flanders on April 14, 2010 - 9:08 PM ET

It's tax time again, the time of year when Americans grouse about forking over part of their hard-earned cash to the dear old government.

These days, there's a whole movement dedicated to grumbling about taxes full time -- I'm talking, of course, about the Right's latest incarnation -- tea partiers, who are gearing up for another round of protests.

One of the complaints heard a lot among those stirring up people's rage is that 47 percent of households owe no income taxes this year. That's apparently a sign that that 47 percent is a bunch of freeloaders, and the rich shouldn't be asked to make up the difference.

But take a closer look and you'll find that the only reason taxes are going up at all on the wealthy is that they've seen their tax rates fall and their incomes skyrocket over the last 3 decades. In other words, the tiny tax increase they may see won't even begin to balance their compensation.

And at the other end, state and local taxes, not to mention sales taxes, are actually regressive — they burden the poor more than the rich. Reporter David Leonhardt lays out the facts in a recent story. Then there's the fact that the working class and poor tend to pay more in payroll taxes. And the fact that what we really should be screaming about is that almost half our population's earning so little.

Covering their taxes is the least of our worries. Who's going to buy our products? This is what jobless recovery looks like. Poverty for most and a tiny influential minority stirring up a
movement to fight any responsibility. It sounds like a recipe for a failed state to me.

So why the rampant anger on talk radio and cable news? Leonhardt has an answer for that: “it’s hard not to notice that the talk show hosts themselves tend to be among the very wealthy.”

Unifying Labor Post-Stern

Laura Flanders on April 14, 2010 - 9:39 AM ET

The announcement this week that labor's maverick leader, Andy Stern, is stepping down -- "very soon" in the words of a colleague --will create a void in the country's labor movement at an awkward time.

The 59-year-old Stern has led the Service Employees International Union since 1996 and made it the country's most politically active labor organization. Stern is very close to President Obama and like the president called the health care bill a victory for working Americans.

Stern's tenure has been marked by controversy: it was under Stern that the SEIU separated from the AFL-CIO, which Stern believed had dropped the ball on organizing. A heated, high-profile trial against union insurgents in California is on-going; and charges that Stern is too quick to make concessions have dogged him for years.

Loyalists point to the union's growth-- to 1.9 million workers--and other gains: the recent appointment of a labor lawyer to the National Labor Relations Board and a former SEIU officer serves as political director in the White House today.

But what labor needs most is unity, especially at a time when pressure on working people in America is mounting. And that should be the highest priority as the SEIU considers who will fill the shoes of Andy Stern.

Solving a Problem Like Stupak

Laura Flanders on April 13, 2010 - 10:09 AM ET

Bart Stupak is retiring.

The man who earned the enmity of pro-choicers across America--and earned himself a primary challenge--with his grandstanding over the rights of women in health care reform has decided not to run for reelection, stating as his reason that the bill he did his best to kill got passed.

Is it time to celebrate? Rep. Stupak, from upper Michigan, represents a chunk of rural residents who tended, before him, to elect Republicans. He's now found himself in the unenviable position of being hated by women's rights advocates AND the criminalization crowd, both.

In terms of gains for Democrats, Michael Moore has noted that Stupak hasn't been all bad -- he's supported gun control legislation, taking on the NRA -- Moore calls him a "decent guy." Now he's politically defunct.

Stupak, in other words, is the most prominent face of a big problem for progressives within the Democratic party: what to do about the conservadems? They may snatch a seat from the GOP, but what's the good, if they spend most of their time in office fighting against the party and wearing down the supposedly Democratic agenda while they're at it.

The good news in this case, is there's no longer any reason for Democrats in Michigan not to support prochoice former schoolteacher Connie Saltonstall for Stupak's seat.

But the bigger question's this. What's politics? If you're a party that claims to have beliefs, do you go to where the voters are, perfecting the art of the easy road to a graspable majority? Or is politics, rather, the effort to shift opinion towards what you believe is right? The worst outcome of all is Stupak's -- falling victim to a bit of both.

Gaming Your Brain For Violence

Laura Flanders on April 9, 2010 - 11:55 AM ET

The WikiLeaks video of civilian killings by U.S. forces in Iraq has inspired some soul-searching this week. The New York Times ran a story on the dehumanizing effect of military training. The reporter wrote of the leaked video:

"One reason that the soldiers seemed as if they were playing a video game is that, in a morbid but necessary sense, they were."

Sure enough, it turns out, according to a story on violent video games in The Escapist magazine, that during World War II, only 15 percent of soldiers in that conflict who were unsupervised by an officer actually fired their weapons at people. The military had to learn how to train people to shoot others -- teach them to not recognize the enemy as human. And modern video games do in part train our brains to override the instinct not to kill.

Oddly the Times story includes nary a note of worry; what about those who not only shoot at human-shaped targets on a screen, but who have actually taken the next step to killing? Do they stop? How about when they come home?

There's no discussion of that in the Times news piece, but turn to the so-called arts section of the same day's paper and there is a seemingly oblivious front page review of two "hard core first person combat shooter games" that prospective shooters might enjoy. We're all "reaping the benefits of the arms race" writes the reviewer -- meaning the competition between the game makers.

Advertising revenues may be benefiting, but the rest of us? Amazingly that's the big unanswered -- and even unasked -- question at the Times.

Impossible to Ignore Wikileaks Tape

Laura Flanders on April 7, 2010 - 11:56 AM ET

"Well, it's their fault bringing their kids to a battle."

Those words, spoken by a faceless soldier, echo from a classified US military video released by the site Wikileaks.org. The release comes on the heels of the revelation of a cover-up in Afghanistan—and the anniversary of the death of Dr. Martin Luther King, as well as the anniversary of his “Beyond Vietnam” speech.

King spoke to the Clergy and Laity Concerned about Vietnam, saying “It should be incandescently clear that no one who has any concern for the integrity and life of America today can ignore the present war. If America's soul becomes totally poisoned, part of the autopsy must read Vietnam."

Hearing allegations that special forces troops in Afghanistan may have dug the bullets out of their pregnant victims bodies to hide evidence, hearing airmen on the Wikileaks tape begging “Come on, let us shoot!” and hearing the editor of Wikileaks say that the shooters talked in the way that people do when they're playing video games--it reminded me of King's words.

He told the truth about war: that it is horrible, that it does poison your soul. Dr. King also said, in a different speech, that there is such a thing as being too late when it comes to speaking up against your goverment doing wrong.

Shaky Foundations for the Economy

Laura Flanders on April 6, 2010 - 10:41 AM ET

Two earthquakes, two vastly different consequences. If anything makes you appreciate solid foundations (not to mention building codes), it's the sight of those San Diego buildings swaying -- but not falling -- in Sunday's 7.0 quake; the same size quake that devastated Haiti.

When it comes to our economy, however, the foundations look anything but secure.

Last week Tim Geithner told steelworkers in Pittsburgh that unemployment is to remain "unacceptably high" for some time. He blamed what he called "the recession". But on the very same day, it emerged that what had been a recession for many had hardly been recession for all.

In 2009, a year of decline for most of us, the top 25 hedge fund managers made an average of $1 billion each. There was, said investor Carl Icahn (who made $1.6 billion), "a great opportunity in debt" last year. It's a stunning admission from a guy who spent the 80s as a corporate raider. He spent that decade laying people off.

In the 2000s he and the country's other top earners – speculators -- are making out, not from making widgets or giving people jobs, but from making wagers -- that people (and companies, even counties) will or won't default. Think about it. The White House staff fanned out this weekend talking up job creation and a bright future for all, but where's the incentive for creating jobs when the fattest fat cats are getting fatter by the day on how indebted we all are?

It makes you queasy, but not in a good way. The foundations of our economy seem more Haiti than San Diego, sad to say...