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Little Sympathy For Bernie Madoff’s Family

Surely, it’s been a difficult time for the wife and son of Bernie Madoff,  the man now serving a 150-year prison sentence for running a $65 billion Ponzi  scheme and bilking investors out of their life savings. The couple’s other son,  Mark Madoff, committed suicide, hanging himself with a black dog leash while his  two-year-old son slept nearby. Ruth Madoff, Bernie’s wife, says she knew  nothing about her husband’s crimes while they were happening, but must endure  the harassment, shame, and upsetting newspaper headlines that have come as a  result of the scandal. And Andrew Madoff, the other son, feels betrayed.

They’ve been through an ordeal, no question about it. But  is this really the time to be making a mass appeal for sympathy?

It seems the Madoffs think so. In a new book, Truth and  Consequences: Life Inside the Madoff Family,  Ruth and Andrew Madoff, along  with Andrew’s fiancee, Catherine Hooper  tell all about their time  with Bernie Madoff. The book was written by  Laurie Sandell, but “arranged,”  CBS’s 60 Minutes reports, by Hooper. And the complaints about Bernie Madoff  are many.

Said Andrew Madoff to 60 Minutes:

It was one of the hardest things to come to grips with, in trying  to  get my head around this, was that feeling that I had been used—almost  as—as a human shield by him. He—it’s—it’s unforgivable. No—no father  should  do that to their sons.

A  “human shield”? He wasn’t in the middle of a revolution in Libya.  He was the  son of a crooked financier and involved in the family  business. And while he  may well not have known about his father’s  transgressions, he surely lived well  from the deception his father  engineered.

Ruth Madoff was allowed to keep $2.5 million of  the couple’s stash, an amount she acknowledged to 60 Minutes  is a lot of  money to some people. But she added quickly that she’s  spending a lot on legal  fees. And Andrew, while portraying himself as  something of a victim, was a bit  more coy with CBS’s Morley Safer:

Safer:  Let me ask a really intrusive question. How much are you worth as we speak?

Andrew:  Well, I was fortunate over the years, running the business  that Mark and I ran.  It generated many millions of dollars in profits  and enabled my brother and I  both to live a comfortable lifestyle.

Safer:  You haven’t answered the question.

Andrew:  I made, in—in good years—several million dollars. My life, at  this point,  is an ope—is an open book. The details of my financial  past have been laid  bare completely in the lawsuit against me. I  haven’t enjoyed it. But that’s the  reality that I live in.

Safer:  Do you fear ending up broke?

Andrew:  I think that it’s a very real possibility, but I am prepared to start over  again and build myself back up.

Think  of all the people who have been unemployed for many months,  even years. The  people who have lost their homes and actually still owe  money on the mortgage  because their houses are worth so much less than  they paid for them. The people  who don’t have health insurance, and  live in fear of developing some illness  they won’t be able to afford to  treat. Does Andrew Madoff think a few million  dollars a year is still  just “comfortable”?

The  Madoff family has indeed endured a great deal of upheaval. But  this is not the  time to ask the rest of the country for support.

By: Susan Milligan, U. S. News and World Report, October 31, 2011

November 2, 2011 Posted by | Class Warfare, Income Gap, Mortgages | , , , | Leave a comment

Soaring Inequality: “It’s Time To Take The Crony Out Of Capitalism”

Whenever I write about Occupy Wall Street, some readers ask me if the protesters really are half-naked Communists aiming to bring down the American economic system when they’re not doing drugs or having sex in public.

The answer is no. That alarmist view of the movement is a credit to the (prurient) imagination of its critics, and voyeurs of Occupy Wall Street will be disappointed. More important, while alarmists seem to think that the movement is a “mob” trying to overthrow capitalism, one can make a case that, on the contrary, it highlights the need to restore basic capitalist principles like accountability.

To put it another way, this is a chance to save capitalism from crony capitalists.

I’m as passionate a believer in capitalism as anyone. My Krzysztofowicz cousins (who didn’t shorten the family name) lived in Poland, and their experience with Communism taught me that the way to raise living standards is capitalism.

But, in recent years, some financiers have chosen to live in a government-backed featherbed. Their platform seems to be socialism for tycoons and capitalism for the rest of us. They’re not evil at all. But when the system allows you more than your fair share, it’s human to grab. That’s what explains featherbedding by both unions and tycoons, and both are impediments to a well-functioning market economy.

When I lived in Asia and covered the financial crisis there in the late 1990s, American government officials spoke scathingly about “crony capitalism” in the region. As Lawrence Summers, then a deputy Treasury secretary, put it in a speech in August 1998: “In Asia, the problems related to ‘crony capitalism’ are at the heart of this crisis, and that is why structural reforms must be a major part” of the International Monetary Fund’s solution.

The American critique of the Asian crisis was correct. The countries involved were nominally capitalist but needed major reforms to create accountability and competitive markets.

Something similar is true today of the United States.

So I’d like to invite the finance ministers of Thailand, South Korea and Indonesia — whom I and other Americans deemed emblems of crony capitalism in the 1990s — to stand up and denounce American crony capitalism today.

Capitalism is so successful an economic system partly because of an internal discipline that allows for loss and even bankruptcy. It’s the possibility of failure that creates the opportunity for triumph. Yet many of America’s major banks are too big to fail, so they can privatize profits while socializing risk.

The upshot is that financial institutions boost leverage in search of supersize profits and bonuses. Banks pretend that risk is eliminated because it’s securitized. Rating agencies accept money to issue an imprimatur that turns out to be meaningless. The system teeters, and then the taxpayer rushes in to bail bankers out. Where’s the accountability?

It’s not just rabble-rousers at Occupy Wall Street who are seeking to put America’s capitalists on a more capitalist footing. “Structural change is necessary,” Paul Volcker, the former chairman of the Federal Reserve, said in an important speech last month that discussed many of these themes. He called for more curbs on big banks, possibly including trimming their size, and he warned that otherwise we’re on a path of “increasingly frequent, complex and dangerous financial breakdowns.”

Likewise, Mohamed El-Erian, another pillar of the financial world who is the chief executive of Pimco, one of the world’s largest money managers, is sympathetic to aspects of the Occupy movement. He told me that the economic system needs to move toward “inclusive capitalism” and embrace broad-based job creation while curbing excessive inequality.

“You cannot be a good house in a rapidly deteriorating neighborhood,” he told me. “The credibility and the fair functioning of the neighborhood matter a great deal. Without that, the integrity of the capitalist system will weaken further.”

Lawrence Katz, a Harvard economist, adds that some inequality is necessary to create incentives in a capitalist economy but that “too much inequality can harm the efficient operation of the economy.” In particular, he says, excessive inequality can have two perverse consequences: first, the very wealthy lobby for favors, contracts and bailouts that distort markets; and, second, growing inequality undermines the ability of the poorest to invest in their own education.

“These factors mean that high inequality can generate further high inequality and eventually poor economic growth,” Professor Katz said.

Does that ring a bell?

So, yes, we face a threat to our capitalist system. But it’s not coming from half-naked anarchists manning the barricades at Occupy Wall Street protests. Rather, it comes from pinstriped apologists for a financial system that glides along without enough of the discipline of failure and that produces soaring inequality, socialist bank bailouts and unaccountable executives.

It’s time to take the crony out of capitalism, right here at home.

By: Nicholas D. Kristof, Op-Ed Columnist, The New York Times, October 26, 2011

October 27, 2011 Posted by | Banks, Class Warfare, Conservatives, Consumers, Corporations, Economic Recovery, Financial Reform, GOP, GOP Presidential Candidates, Government, Income Gap, Lawmakers, Middle Class, Mortgages, Republicans, Unions | , , , , , , , , , | Leave a comment

Corporations Can Show Their Patriotism By Hiring

Former President Bush was roundly derided a decade ago for  urging Americans traumatized by the September 11 attacks to go shopping. He  may, in fact, have been onto something.

Certainly,  shopping on its own is a facile and   inadequate response to a tragedy that required a new assessment of our  national security  procedures and how much of our revered American civil  liberties we  were willing to give up to achieve security—or perhaps, a sense  of  security. That conversation needs to continue, especially in the area of   civil liberties retrenchment.

But  Bush was right about something, and that is that ours is a  consumer-driven  economy. This is arguably a bad basis for a modern  economy; there is only so  much we can consume (the obesity epidemic is  only one sign of our  over-indulgence). And people were foolishly taking  out home equity loans on  wildly over-valued properties and then using  the money not to improve the  property (thus, theoretically, increasing  its value), but to buy other things.  This is not sensible. But the  reality is, our economy runs on people buying  things, and with the  economy in the state it’s in, people aren’t shopping  anymore. Since  people aren’t buying, companies aren’t creating jobs. Many  corporations  are making record profits and holding huge amounts of cash, but  they  don’t want to take on more workers because the demand is not there.

So,  here’s a 10-years-after tweak of Bush’s suggestion: if corporate  America wants  to shows its collective patriotism, its leaders should  hire someone. Hire even  a dozen people, if you run a large company, or  even one employee, if you own a  small business. Some public officials  are worried about raising taxes on the  wealthy, arguing that the  well-off are job creators. Well, create some jobs,  first, and that  argument will have more merit. And remember: taking on another  employee  isn’t a cash loss, ultimately, because it creates a new customer (and  a  taxpayer who won’t be getting unemployment  insurance anymore, either). If  shopping was the answer a decade ago,  hiring someone is the answer now. It’s  the patriotic thing to do.

 

By: Susan Milligan, U. S. News and World Report, September 12, 2011

September 12, 2011 Posted by | Businesses, Class Warfare, Conservatives, Consumers, Corporations, Economic Recovery, Economy, GOP, Jobs, Labor, Middle Class, Mortgages, Politics, Public, Republicans, Right Wing, Taxes, Unemployed, Wealthy | , , , , , , | Leave a comment

Out Of The Shadows: Bush And Cheney Remind Us How We Got Into This Mess

Thank you, George W. Bush and Dick Cheney, for emerging from your secure, undisclosed locations to remind us how we got into this mess: It didn’t happen by accident.

The important thing isn’t what Bush says in his interview with National Geographic or what scores Cheney tries to settle in his memoir. What matters is that as they return to the public eye, they highlight their record of wrongheaded policy choices that helped bring the nation to a sour, penurious state.

Questions about whether President Obama has been combative enough in dealing with the Republican opposition — or sufficiently ambitious in framing his progressive agenda — seem trivial when viewed in this larger context. Obama is tackling enormous problems that took many years to create. His presidential style is important insofar as it boosts or lessens his effectiveness, but its importance pales beside the generally righteous substance of what he’s trying to accomplish.

It was the Bush administration, you will recall, that sent the national debt into the stratosphere and choked off federal revenue to the point of asphyxiation. Bush and Cheney decided to fight two wars without even accounting — let alone paying — for them. Rather than raise taxes to cover the cost of military campaigns in Afghanistan and Iraq, Bush opted to maintain unreasonable and unnecessary tax cuts.

So far, the wars and the tax cuts have cost the Treasury between $4 trillion and $5 trillion. If Bush had just left income tax rates alone, nobody except Ron Paul would be talking about the debt.

My aim isn’t to attack Bush but to attack his philosophy. When he was campaigning for the White House in 2000, the government was anticipating a projected surplus of roughly $6 trillion over the following decade. Bush said repeatedly that he thought this was too much and wanted to bring the surplus down — hence, in 2001, the first of his two big tax cuts.

Bush was hewing to what had already become Republican dogma and by now has become something akin to scripture: Taxes must always be cut because government must always be starved.

The party ascribes this golden rule to Ronald Reagan — conveniently forgetting that Reagan, in his eight years as president, raised taxes 11 times. Reagan may have believed in small government, but he did believe in government itself. Today’s Republicans have perverted Reagan’s philosophy into a kind of anti-government nihilism — an irresponsible, almost childish insistence that the basic laws of arithmetic can be suspended at their will.

The Bush administration also pushed forward Reagan’s policy of deregulation — ignoring, for example, critics who said the ballooning market in mortgage-backed securities needed more oversight. When the 2008 financial crisis hit, Bush did regain his faith in government long enough to throw together the $800 billion TARP bailout for the banks. But he failed to use the leverage of an aid package to exact reforms that would ensure that the financial system served the economy, rather than the other way around.

Faced with similar circumstances, would today’s Republican leadership react at all? Or is it the party’s view that the proper role of government would be to stand aside and watch the world’s financial system crash and burn?

This is a serious question. Just a few weeks ago, the Republican majority in the House threatened to force the United States government to default on its debt obligations — a previously unthinkable act of brinkmanship. Everything is thinkable now.

The Bush administration took Reagan’s tax-cutting, government-starving philosophy much too far. Today’s Republican Party takes it well beyond, into a rigid absolutism that would be comical if it were not so consequential.

We face devastating unemployment. Many conservative economists have joined the chorus calling for more short-term spending by the federal government as a way to boost growth. But the radical Republicans don’t pay attention to conservative economists anymore. The Republicans’ idea of a cure for cancer would be to cut spending and cut taxes.

Perhaps they’re just cynically trying to keep the economy in the doldrums through next year to hurt Obama’s chances of reelection. I worry that their fanaticism is sincere — that one of our major parties has gone completely off the rails. If so, things will get worse before they get better.

Having Bush and Cheney reappear is a reminder to step back and look at what Obama is up against. You might want to cut him a little slack.

By: Eugene Robinson, Opinion Writer, The Washington Post, September 1, 2011

September 3, 2011 Posted by | Class Warfare, Congress, Conservatives, Debt Crisis, Deficits, Economic Recovery, Economy, Elections, Federal Budget, Financial Institutions, GOP, Government, Government Shut Down, Ideologues, Ideology, Jobs, Lawmakers, Middle Class, Mortgages, Neo-Cons, Politics, President Obama, Public, Regulations, Republicans, Right Wing, Tax Increases, Tax Loopholes, Taxes, Teaparty, Unemployed, War, Wealthy | , , , , , , , , , , , , , , | Leave a comment

Blame For The Debt Ceiling Crisis Rests With Republicans

Are you watching your 401(k) drop? Are you seeing your retirement tank? Are you waiting for higher interest rates on your credit cards and mortgages? Are you nervous about another recession?

Well, thank the Republicans.

This debt crisis is totally of the Republicans’ making. From the beginning we should have had a clean vote—up or down—on the debt ceiling, just as Ronald Reagan and other presidents have done.

If Speaker John Boehner and the Republicans allow a default with  their last minute antics things are only going to get worse. That is  clear.

And the very notion of revisiting this silly scenario in six months  is absurd. For the life of me I can think of no quicker way to sink our  economy. Will that give confidence to the markets? Not a chance. Will it  result in a downgrading of our credit rating? In all likelihood it  will.

The sad truth is that without the Bush tax cuts for the wealthy,  without the oil and gas loopholes and, most important, without two wars  that the Republicans and Bush failed to pay for, we would be in the  black right now, or close to it.

Democrats will have to come up with a grand compromise, hurting many  segments of our society, to bail out the Republicans, much the way Bill  Clinton did in the 1990s. Revenues will have to be part of that package.  Hopefully, that can happen when cooler heads prevail and the Tea Party  stops their nonsense.

In the meantime, if the stock market continues to drop and Americans  are taken to the cleaners, pick up the phone and thank John Boehner and  the Tea Party Republicans for what they have done to your bank accounts  and your savings.

All this sound and fury comes out of the majority in the House and  not one bill on jobs, not one piece of legislation to help our economy.  Sad.

 

By: Peter Fenn, U. S. News and World Report, July 28, 2011

July 28, 2011 Posted by | Budget, Class Warfare, Congress, Conservatives, Consumer Credit, Consumers, Debt Ceiling, Debt Crisis, Deficits, Democracy, Democrats, Economy, GOP, Government, Government Shut Down, Ideologues, Ideology, Jobs, Lawmakers, Middle Class, Mortgages, Politics, Public, Public Opinion, Republicans, Right Wing, Teaparty, Wealthy | , , , , , , , , , , | Leave a comment

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