Saturday, May 8, 2021

Jamie it Dimon or Demon?

(c) by Mark Dempsey

Willie Sutton told reporters he robbed banks because "that's where the money is," but Sutton was an amateur compared to Jamie Dimon. In his letter from its CEO, Jamie Dimon cloaks robbery in sanctimony. (Someone sent me that letter, calling it "brilliant," when truly it's just anodyne.) In a bizarre twist Dimon's letter even gives lip service to some progressive solutions to current problems. 

The letter itself is politically correct, even eloquent. Nevertheless, Dimon and his pals are parasites. Here's one less sanguine look at Dimon's tenure at the bank. Record fines for criminality are only the beginning of his bad behavior. Then there's the $12 billion bailout JP Morgan Chase got during the Great Recession.

One characteristic of parasites is that they disguise themselves as though they are the host itself, or even "brilliant." Dimon is the problem, no matter how enlightened is his letter--or, more likely, his ghost writer.

Don't get me wrong. He looks good! But let's remember, the traditional picture of evil is not some ugly, horned demon. Lucifer was the most beautiful of angels. Satan is the father of lies. Evil is seductive and deceptive, like Jamie Dimon, who talks pretty while he's picking our pockets.

In the decades since Newt Gingrich and Bill Clinton deregulated Wall St, culminating in the Great Recession in 2007, Dimon and his Wall St. pals pulled off what's arguably the biggest theft in human history. Some calculate $100 trillion for the cost of the subprime/derivatives meltdown, or, alternatively, a reduction in U.S. net worth of 40%. 

Ten million families lost their homes in that debacle. Republican pollster Frank Luntz reports the Obama administration, which got to handle the fallout from Dimon's behavior, was the first time he held focus groups where people wept, because Wall Street got the gold mine, while Main Street got the shaft. The Great Recession was the Great Depression revisited, this time--luckily--with social safety nets, although there's been a bipartisan, multi-generational political effort to defund those, too.

To truly appreciate the awfulness of Dimon's subprime/derivatives project, and especially Obama's public policy response to it, you have to compare it to the previous biggest-ever bank scandal, the Savings & Loans crisis. When it occurred, that scandal was, by orders of magnitude, the biggest political/financial scandal in U.S. history, costing $150 - $500 billion to cure. Nevertheless, the regulators under Reagan / Bush 41 did their jobs. They filed more than 30,000 referrals for criminal prosecution, and the Justice Dept. prosecuted more than 1200 cases with a 90% conviction rate. They got big fish, too, including Mike Milken and Charles Keating.

Now fast forward to the subprime/derivatives meltdown. In financial terms, the bank scandal itself was 70 times bigger than the S&Ls. Just bailing out a single, Southern California bank (IndyMAC) cost as much as the entire previous S&L bailout.

So... how many referrals for criminal prosecution from the Obama administration? Answer: zero! One of the crookedest attornies general in history, Eric Holder, prosecuted about a dozen cases, all small fish. Instead, the Justice Dept. elected to settle for dimes-on-the-dollar fines from Dimon and his criminal cohort's loot without any admission of guilt from the perps--something that makes the civil cases more difficult to prosecute. 

One example: Angelo Mozilo, who made nearly a half billion dollars looting Countrywide Mortgage, settled by paying fines of $20 - $65 million, a tiny fraction of his "earnings," with no admission of guilt. He's a free man now. The only big thief who was jailed was Bernie Madoff, and that was because he turned himself in.

That enabler of criminality, Obama, not only did not prosecute the Iraq war crimes of Bush / Cheney, he promoted the people who supervised torture, and prosecuted the whistleblowers. As truly despicable as Trump was, he is impossible to even imagine without the supine precedent set by Obama. In the 2016 presidential election, the electorate was so disgusted that the anti-Obama, Donald Trump, won. Even in 2020, Trump won 74 million votes, nearly five million more than any previous presidential candidate. Here's the best description of Trump's appeal I've read:

“Trump will not be defeated by educating voters, by exposing his many foibles and inadequacies. Highlighting what’s wrong with him is futile; his supporters didn’t elect him because they mistook him for a competent administrator or a decent man. They’re angry, not stupid. Trump is an agent of disruption — indeed, of revenge.....Workers now sense that economic justice — a condition in which labor and capital recognize and value each other — is permanently out of reach; the class war is over and it was an absolute rout: insatiable parasites control everything now [and write remorseful, self-deprecating letters to their shareholders, like Dimon], and even drain us gratuitously, as if exacting reparations for the money and effort they spent taming us. The economy itself, and the institutions protecting it, must be attacked, and actually crippled, to get the attention of the smug patricians in charge. Two decades of appealing to justice, proportion, and common decency have yielded nothing." -- (by Thomas Greene from Noteworthy):

As long as we credit Jamie Dimon with anything other than criminal behavior, we'll continue to get the "reign of the parasites" and the smug patricians who enable them. 

But that's the trouble with the current level of attention paid public policy. People are busy, or distracted. They don't have time or energy to inform themselves about the details. The Federal Reserve says 40% of Americans (Dimon's letter says 30%) can't manage a $400 emergency without selling something or borrowing. These people are too busy just surviving for a civics lesson. And apparently Dimon is lying just to keep in practice.

The idea that Dimon's letter should even mention our banana-republic level of income inequality, the tattered safety nets, the problems educating the population, or any of the other many ills he cites is cheap talk, but a good sign. It looks like accepted wisdom in even on Wall Street has finally calculated that the poor have been immiserated about as much as is possible without an insurrection. Our smug patricians (finally!) want to ease up on the torture inflicted by the financial sector in its pursuit of profit over all. 

Dimon's letter has the nerve to say "We are hampered by short-term thinking that’s never comprehensive"--a hilarious remark coming from someone whose annual report cites quarter over quarter growth in his bank's income. Gosh, I wonder where that short-term thinking originated? 

Dimon even issues a mea culpa: "But we are partly responsible – for we prioritized shareholder interests and sometimes narrow self-interests over creating broader opportunity for all in America. Successful businesses can literally and figuratively 'drive by' our worst problems (think inner cities) and still thrive."

He continues, decrying "Argentina, Cuba and Venezuela, to name a few – all countries with tremendous natural resources that allowed, in the name of their people, their economies to be destroyed." Let's see, Wall Street's vulture capitalists--perhaps even funded by the likes of Dimon's bank--killed a bond deal that might have let Argentina have some economic breathing room, and Cuba and Venezuela had the temerity to share their wealth with the poor rather than the plutocrats. Yep, it wasn't U.S. sanctions that destroyed the Cuban and Venezuelan economies, it was those crazy Latins who "allowed" it to happen.

What can one say when faced with such monstrous hypocrisy? I believe this picture of a spontaneous Chilean demonstration against the Chilean plutocrats Dimon supported answers that question:


View of the protest of an estimated 1.2 million people in Santiago, October 25, 2019.

Note the absence of signs.  No one had time to prepare them, the protest was that spontaneous. In India, a protest 200 times larger, a reported quarter billion people, filled the streets to protest the Modi government's abuses promoting the capitalism Dimon and JP Morgan Chase advocate.

Here's some reporting about Dimon's more recent public proclamations: "After scarfing up a whopping $12 billion public bailout for JPMorgan Chase, the bank’s CEO, Jamie Dimon, wants an itemized list of expenditures the Biden administration has in mind for a corporate tax increase.

'Just throwing money ... doesn’t work,' Dimon said in a taped interview posted Thursday for the Investment Company Institute’s general membership meeting. 'We already waste tremendous sums of money,' he noted, referring to President Joe Biden’s infrastructure plan." (from Huffington Post) 

Economic expert Yves Smith's comment about banking in general: "a banking industry that creates global crises [like the subprime/derivatives scandal] is negative value added from a societal standpoint. It is purely extractive. Even though we have described its activities as looting (as in paying themselves so much that they bankrupt the business), the wider consequences are vastly worse than in textbook looting."

His letter to stock holders indicates that maybe Dimon is having second thoughts about the purity of unregulated capitalism. Either way, calling him "brilliant" is beyond generous. It's delusional.

The issue of wages...


Sunday, May 2, 2021

Systemic Problems

 (c) by Mark Dempsey

If I throw nine bones out my back door, and release ten dogs to retrieve a bone, inevitably one dog is going to come back without a bone. This is a systemic problem. It doesn't matter how well-prepared, responsible, etc. that tenth dog is, he's going to come up short. No individual, not even the nine other dogs, can solve this problem. Solutions require system revisions.

The political right denies systemic problems exist....but all the big ones (unemployment, immigration, healthcare, education, etc.) are systemic, not amenable to individual solutions. Solving them requires a change to the system in which they're embedded.

One example of a systemic solution: Single payer healthcare is roughly half as expensive as the U.S. system and has better outcomes. At the turn of the century, the World Health Organization did a study ranking health care systems by a variety of measures of outcomes (life expectancy, infant mortality, vaccination rates, patient satisfaction, etc.). The top systems were all single-payer. The U.S. ranked 37th between Slovenia and Costa Rica. McClatchy papers said it was as though the U.S. had the health care of Costa Rica, but paid six times more for the privilege. 


As a bonus, Canadians, who happen to be demographically identical to the U.S, have adopted single payer, and have no bankruptcies caused by medical expenses. The U.S. has about a half million such bankruptcies every year.

Meanwhile, one founding philosopher of the political right, Margaret Thatcher, said "There's no such thing as society, only individuals and families." Roughly equivalent to saying "You have no body, only cells and organs" effect, denying societies, and their systemic problems even exist.


In considering problems in education, right-leaning reformers are eager to deny anything but individual schools and teachers are responsible for problems in America's education system.  The recently deceased Eli Broad funded Michelle Rhee's "Student's First" organization which promoted this idea and several tactics to remedy the problem. The tactics: (union-busting) charter schools, merit pay (because teachers are so motivated by money!), and testing, testing, testing (because measurable "value added" is the target, as every MBA knows).


They even funded a propaganda film--Waiting for Superman--that praised Rhee's  draconian tenure as superintendent of Washington D. C. schools, where she fired teachers whose classes didn't test better.  


Waiting for Superman touts the schools in Finland as the ones to emulate. The film omits mentioning Finnish teachers are well paid, tenured, and unionized.


Does science validate the charter-merit-pay-test strategy to produce better educational outcomes? Nope. Test scores vary so widely, even week-to-week, that they don't produce useful information. As an added bonus, after Rhee initiated this practice, teachers started cheating so their classes would score better. 


What does actually correlate with better educational outcomes? Childhood poverty. In Finland, two percent of children are poor. In the U.S. it's 14.4%. 


That too is a systemic problem. Just as we could take the dogs to bone retrieval school, we could double down on testing...but it wouldn't help. 

Denial is a funny thing, denying its practitioners access to what we like to call "reality." Time to wake up. Sleepwalking is not a winning life strategy.

Tuesday, April 20, 2021

How to (really) pay off student debt

(c) by Mark Dempsey

Recently, a student authored an opinion piece for the Davis Vanguard, saying that instead of forgiving, or the government paying off, student debt, the U.S. should work to lower tuition. Sadly, this is the state of play about this issue: even students believe student debt forgiveness is not necessarily a good thing. "It would be unfair to those who did pay debt, too!" is another common reaction.

Discussing debt alone ignores one origin of the student debt crisis, too. Investigative reporter David Cay Johnston says that federal grants for higher education have declined 55% since 1972. States have cut their funding for higher education even more sharply. Gosh, I wonder why tuition is so high? 

It looks like the fix is in. Ignoring this is agrees with then-governor Reagan eliminating civics education in California's high schools, and congress' self-lobotomy, when Newt Gingrich fired its expert staff.

Meanwhile, only mortgage debt exceeds student debt in the U.S, so student loans are a significant problem. Solving that problem has not been helped by the recent bipartisan legislation which says courts can no longer retire student debt in bankruptcy. Members of both parties, Joe Biden and Hillary Clinton included, voted for this change to the law. That change means that in the U.S. now, we're literally garnishing Social Security checks to pay off student debt.

Another source of the problem is mathematically baked into the way debt compounds. When someone asked Einstein what was the most powerful force in the universe, "compound interest" was his reply. The problem is that in compounding, interest inevitably makes the amount owed head toward infinity. 

On the other hand, the real economy that provides the means of repayment is finite. Even ancient societies in Israel and Babylon knew debts would inevitably become unpayable, and had periodic "clean slates" (jubilees) during which debts were forgiven, not as something revolutionary, rather as a way of ensuring stability in their societies.

Yet when I've mentioned clean slates as a potential solution, I've even had people suggest that since ancient times, the economy hasn’t really “leveled out” so repaying loans whose interest compounds might be possible today. But interest compounding is up to the task of making loans unpayable. Says one website about "The Explosive Effect Of Compound Interest: If you had invested [a penny] at the time of the birth of Jesus, with a compound interest of 5%, it would have a value today of the number of pure gold balls, each the size of the Earth, shown below:


So...I’ll stick to my original story: Some loans inevitably become unpayable because it’s impossible for the real economy to keep up with the demands of compound interest owed. Jubilees for societies and bankruptcies for individuals aren’t optional if you want to prevent effectively enslaving debtors.

Currently, the Federal Reserve reports that 40% of the population in the U.S. can't afford a $400 emergency without borrowing or selling something. This means that creditors are in the driver's seat.

Creditors control the popular narrative about debt, too, so it's not surprising that one often hears "everyone should pay their debts." But that statement ignores the context in which previously covered expenses are no longer paid by government, and the fact that, inevitably, compounding makes repayment of some loans impossible. 

We cannot count on lenders' kindness, either. For one example, Mr. Potter, the villain in It's a Wonderful Life, was interested in enslaving the population, not empowering them with what they borrowed. 

That "everyone should pay their debts" sentiment also ignores the responsibility of the lender. If I have a hot tip on a horse in the fourth race, and persuade a bank to lend me the money for a bet, does the sheriff need to honor that lender's decision and make me forfeit any security for the debt? If a dictator borrows from the World Bank, embezzles the money, then absconds to Switzerland, should the population still be obliged to pay that (odious) debt? Looser bankruptcy makes for better loan underwriting, and believe it or not, sometimes deception and less-than-honest motives make lenders deceive borrowers so they take on more debt than they can possibly afford (see Confessions of an Economic Hit Man by Tom Perkins).

Borrowing is not always fair. Repayment is not always virtuous, and financializing all decisions in pursuit of profit is not always healthy, or even ethical. Ignoring that is at the root of many problems, including student debt. 

This is a systemic problem, too, amenable to systemic solutions only. Protesting that individual virtue will save the day is a distraction, not a solution.

Update: Naked Capitalism covers the accounting shenanigans that make the student loan problem even worse.

Monday, April 19, 2021

Maybe America Is Racist

Michael Harriot 4/12/21   

A few years ago, while covering a story on Republican New Hampshire legislator Werner Horn, I summoned the best and brightest scholars that America had to offer. Horn, who represents his 95.9 percent white hometown in his state’s House of Representatives, confounded people who actually know things by stating that “owning slaves doesn’t make you racist.” During an interview with The Root, Horn doubled down by insisting that the Founding Fathers were not racist.

A Republican Legislator Said Slavery Wasn't Racist Because Slave Owners 'Were Making Money.&...

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In an attempt to disprove the premise of Horn’s statement, I called on Dr. Henry Louis Gates, perhaps the most well-known historian in America (and co-founder of The Root). Gates began with an explanation of America’s history of racism by citing David Hume’s racist footnote to his essay Of National Characters, in which he claimed that in all of Africa, there were no arts, no sciences. He noted that Immanuel Kant’s Observations on the Feeling of the Beautiful and the Sublime also expounded on the racial differences between white and Black people. He explained that Thomas Jefferson’s Notes on the State of Virginia, which was written the same year as the Constitution, was classical racism defined.

But Gates was just a world-famous historian and Werner Horn was a white man. So, to make sure that I had all the bases covered, I called professor, historian, and widely recognized super-genius, Dr. Greg Carr, who heads the Howard University Afro-American Studies Department, teaches at Howard University School of Law and instructs the largest Africana Studies classroom in the world. Before launching into a history of racism, Carr swatted down Horn’s thesis with one request:

“Show me the white slaves.” [Actually, the Slavs were slaves to the Romans...hence the similarity between their ethnic designation...and one good reason europeans were reluctant to have slavery after the fall of Rome]

Carr (who may or may not be an actual human-like android from the future loaded with all the knowledge that ever existed) was using the concept known as Occam’s Razor. In the fields of science, economics, or any reason-based pursuit of understanding, researchers adhere to this time-honored principle which states:

Of two competing theories, the simpler explanation of an entity is to be preferred.

Engineers know it as KISS, or “Keep it simple, stupid.” In research, the concept is called ontological parsimony. Medical researcher Theodore Woodward said: “When you hear hoofbeats, think of horses, not zebras.” Scientists from Stephen Hawking to Albert Einstein to Sir Isaac Newton, accept the premise that whenever there are two different possibilities, the simpler one is usually the correct one.

Unless, of course, white people are talking about racism.

There are a lot of things we know.

We know police disproportionately kill Black people. Although some people attempt to explain that the discrepancy is a function of the disproportionate Black crime rate, research shows that does not hold true. Again, research shows that is a lie. Once more for the people in the back (I’m talking to you, Matt Walsh) every peer-reviewed study that finds police shoot and kill Black people at disproportionate rates and “the only thing that was significant in predicting whether someone shot and killed by police was unarmed was whether or not they were Black,” according to Justin Nix, a criminal justice researcher at the University of Louisville, who noted that police shootings do not correlate with crime rate, the neighborhood violence, age or mental illness.

Maybe it’s racism.

In any other area of sociology, criminology or statistical analysis, this would be accepted as fact. But when it comes to racial data, the big brains in academia and scientific research will break their graphic calculators trying to explain away the outcomes of systemic inequality. They never can.

We know even the poorest majority-white school districts are better funded than the wealthiest non-white school districts. It is an indisputable fact that majority-Black schools offer fewer advanced-level courses. No serious person can argue against the fact that Black students are punished more harshly than white students. Yet, the idea that the education system is racist at its core is somehow seen as incendiary, even though it is the simplest explanation.

It’s easy for me to call the criminal justice system racist. Or, perhaps there’s another reason why Black male offenders receive sentences that are, on average, 19.1 percent longer than white male offenders who commit the same crimes and have the same criminal history, according to the United States Sentencing Commission. Explain why white people use illegal drugs, possess illegal narcotics and sell illegal substances at higher rates than Black people but Black people are six-and-a-half times more likely to be arrested and convicted for drugs. The Stanford Open Policing Project—the largest police stop project that ever existed—found that Black people are 2.5 times more likely to be stopped and 4 times more likely to be searched than white drivers even though white drivers were more likely to have contraband.

Police are twice as likely to use force on Black people versus white suspects, according to a 2015 report from the Bureau of Justice Statistics. Black defendants get charged with harsher crimes, receive higher bail and are offered fewer plea deals according to Harvard researchers...and researchers in Wisconsin...and Philadelphia...and Maryland.

A study by the National Registry of Exonerations found that “African Americans are only 13% of the American population but...They constitute 47% of the 1,900 exonerations listed in the National Registry of Exonerations (as of October 2016), and the great majority of more than 1,800 additional innocent defendants who were framed and convicted of crimes in 15 large-scale police scandals and later cleared in ‘group exonerations.’”

Racists love to point out the FBI crime data as an explanation, even though the stats only refer to arrests. Even knowing that most crimes go unsolved, we’re supposed to believe that the cops who use force on, shoot, kill, stop, frisk, search, sentence, and wrongfully incarcerate Black people at disproportionate rates somehow have it right when it comes to arresting Black people.

Maybe it’s poverty.

We know that crime is related to poverty, socioeconomic conditions and access to education. But Black people are not three times as poor or less educated. In fact, a Black child born to wealthy Black parents is just as likely to end up poor or in jail as a poor white child. A home in a Black neighborhood is worth $48,000 less than the exact same home in a white neighborhood, even if the crime rate and neighborhood amenities are exactly the same. A white high school dropout is more likely to find a job than a Black college student. Of all the manufactured hypotheses that attempt to explain these racial disparities, none of them even comes close to the simplest explanation.

It’s racism.

Perhaps racism is the reason that these valiant scholarly attempts at whitesplaining away America’s racial toxicity exist in the first place. In any other scientific discipline, the general consensus would adhere to the tried and true methodologies found in every other field of research. Maybe white people genuinely cannot fathom that white supremacy is responsible for these racial incongruities because, by proxy, it would also mean that they benefit from these inequities.

Maybe that’s why most white people “are satisfied with the way Blacks are treated in society.” Perhaps that’s why two out of every three white people believe Black people have “as good a chance as whites to get any kind of job for which they are qualified.” The majority of white people do not believe Black people face discrimination in voting, medical treatment or when applying for a loan or mortgage, even though numerous studies have documented these systemic issues.

Of course, there is another possibility. Perhaps Black people are inherently dumber, lazier and more prone to violence. While this assumption is also racist, it is a more logical explanation than believing that—despite the history of slavery, Jim Crow, redlining, voter suppression and employment discrimination —this country made an about-face from its past and spontaneously regenerated itself into a bastion of equality and impartiality.

So either America is racist or America is racist.

Or maybe it’s zebras.

Michael Harriot is a world-renowned wypipologist. Getter and doer of "it." Never reneged, never will. Last real negus alive.

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Jamie it Dimon or Demon?

(c) by Mark Dempsey Willie Sutton told reporters he robbed banks because "that's where the money is," but Sutton was an amateu...