Still ironic after all these years

Posted by: stillironic | July 1, 2012

Finance Theory: Trying to Outfox the Guppy

If you’re in the mood for a few laughs, I recommend looking into financial history.

Actually, investigating the origin of the word “finance” itself is worthy of a smirk or two. You have “fin,” a body part that keeps sharks on target for the kill. And “nance,” a slow-growing shrub, whose branches can be, quote, cut into small pieces and thrown in streams to stupefy fish, unquote. This is most informative; outfoxing fish is a predicament we all face from time to time. I would be reluctant, however, to apply this technique when laboring to outfox one of your larger sharks.

The history of finance is full of many similar illuminating facts. Such as: “Much of economic and financial theory is based on the notion that individuals act rationally and consider all available information in the decision-making process.”

And: “Mounting evidence suggests that investors sometimes act irrationally.”

Which begs the question: How high will the evidence have to climb to push the afore-mentioned “theorists” into believing investors sometimes act irrationally? As high as the Empire State Building? As high as Mt. Everest?

What were economic and finance theorists thinking?

Are theories of aging based on the human body staying young forever?

Are theories of drug addiction based on people having no tolerance for addictive substances?

Are theories of intelligence based on all humans possessing a high IQ?

Imagine medical theory based on the human body never aging, getting sick, or being injured. That would pretty much limit MD specialties to plastic surgery and obstetrics. Few people would aspire to practicing medicine. Doctors might even be considered leeches on society. Like lawyers.

When people got sick or injured, they’d summon the local barber. When he wasn’t attending conferences at posh golf resorts. The mentally challenged of rational mind would seek out a philosopher; the irrationally inclined would visit a psychic. Wars would be fought over rational and irrational beliefs. World population would be at medieval levels; even the most skilled barber is no match for plagues and pestilence.

Even more disturbing, House would have to diss his team and their differential diagnoses between cutting hair and hawking Brylcreem.

Wake up economics and finance theorists. With your stupefying premise of rational and fully informed decision-making, you’d have trouble outfoxing a guppy in a fishbowl.

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Men have thingies, too

Oodles of condoms will soon be homeless

According to Rick Santorum, contraception functions as a “license to do things in a sexual realm that is counter to how things are supposed to be.”

I don’t know how “things” are supposed to be where he comes from. But here on planet Earth we at least expect our political candidates to articulate their beliefs more concretely than “thingy thing thing.” But what’s really important here is: why do Santorum and others of his ilk only want to restrict contraception use by women?

Men have thingies, too. And men practice birth control. Because their thingies do things the same as women’s do. To deal fully with the thingy thing, don’t we also need to address restraints on male contraception use.

Well, here’s an idea: have Congress pass a bill restricting the use of condoms and vasectomies. It could look like this:

First, condom use on the male thingy is prohibited. Other uses for condoms are legal because we wouldn’t want to bankrupt the condom industry, would we?

Other uses for condoms: Making a fashion statement!

Second, only unmarried men can have vasectomies. In Santorum World you can only have sex if you’re married, in which case unmarried men don’t need vasectomies. This logic should go over well in Congress.

How would you like this thug to reverse your vasectomy!

Third, when a formerly unwed man gets married, he must have his vasectomy reversed. And, of course, he must prove to the state that the reversal has taken place. Graphic photos of his sperms’ liberation during surgery should suffice.

This thug says "ready, set, go!"

Fourth, it’s not legal for married males to have a vasectomy. They must prove their compliance to the law by submitting yearly to an examination by a physician who then reports the results to the state. Action against men who defy the law will take place in the following way: Anti-birth control police will kidnap, drug, and transport the offender to a back alley. There, on a table with his feet in stirrups, he’ll be forced to undergo a vasectomy reversal performed by a street thug who has an on-again off-again relationship with soap and water.

Men can wear condoms even if it's illegal to use them!

Punishment for disobeying the law? Offenders will be forced to undergo “treatment” that involves probing.

6 Comments

Posted in Ginny's Op-Ed Page | Tags: birth control, condoms, contraceptives, irony, Rick Santorum, satire, vasectomies

Posted by: stillironic | November 21, 2010

Nightmare on Plutonomy Street

In the movie Nightmare on Elm Street, Freddy Krueger is one POS. An unconvicted killer, he’s burned alive.

Unconvicted POS

He takes his revenge by invading the dreams of people enjoying the trite amenities of Elm Street. His MO is killing characters who appear in these dreams. Which turns the dreams into nightmares. Plus—and this seems more than a little gratuitous—the characters turn up dead in real life. Or as real as life gets in the movies.

In nightmare under plutonomy, Freddy Krueger is played by Ajay Kapur, a superstar global strategist at Deutsche Bank. He’s an as-yet unconvicted douchebag. Freddy/Ajay made a name for himself at Citigroup, owner of a bank that screws the American public for a living. (Hence, the need for a douchebag, presumably.)

Freddy/Ajay wrote two cheeky memos* to super wealthy Citigroup clients that said in so many words: the world of the super wealthy is the only world that matters. And if the super wealthy play their cards right, they won’t have to interact with anyone who isn’t as super wealthy as they are.

According to Freddy/Ajay, US economic growth is controlled by only 100K people. A cup of water in the Great Lakes. The economic growth is largely consumed by them, too. And this will continue, indefinitely. At least until the people who don’t count—the remaining 99+% of us nonsuper wealthy, evidently barely conscious most of the time—wake up and decide to revolt. Most likely using violence.

Unconvicted Douchebag

Not much difference between life on Elm or under plutonomy. Which is the economic form of plutocracy, illustrated in these pages some weeks back. To recap, take Pluto the dwarf-planet-that-once-was and Pluto the Disney dog with boomerang ears, put them in a bag, and shake them up good. Don’t forget to add in the passionate Pluto-is-so-a-planet folks and the folks that now insist Neptune’s not a planet either.

What you have when everything shakes out is rule by imaginary-dwarf-and-probably-rabid canines. Or, as the dictionary so mulishly maintains, rule by the rich.

Is plutonomy on the tips of everyone’s tongue? Are the media discussing this issue? Have people stopped holding tea parties and blaming imaginary demons and started confronting extreme income inequality, a danger to our democracy that’s actually real?

In the business of screwing the American public

In fact, there are some alert citizens out there.** Including Bill Moyers who recently delivered his “Welcome to the Plutocracy” speech. But few of us have been paying much attention to what plutonomy signifies. Freddy/Ajay makes this point: our ignorance is key. The great unwashed must remain blind to the ever-increasing national wealth. And especially to how almost none of this wealth lands in our bank accounts. Even if our labor produces it. You can almost hear the whooshing of dead Franklins passing us by. And landing in the bank accounts of the super wealthy. To pay for luxury goods and services. These, Freddy/Ajay says, are the growth industries of the future.

And what consumes our attention: Looking for work. Finding a second job to pay for the kids’ education. Stretching the food budget. Putting off dental care. Figuring out how to pay off a mortgage that outstrips the value of the house. And my personal favorite, deciding which bills to stuff in the old desk drawer.

~~~

*Memo, part 1 http://www.scribd.com/doc/6674234/Citigroup-Oct-16-2005-Plutonomy-Report-Part-1

Memo, part 2 CitigroupPlutonony Part 2

** Three things characterize a plutonomy, which the Wall Street Journal’s Robert Frank explains in his “The Wealth Report” blog at http://blogs.wsj.com/wealth/2007/01/08/plutonomics/

The entire blog is worth reading, but the 3 characterizations of plutonomies, according to Frank, are:

1. They are all created by “disruptive technology-driven productivity gains, creative financial innovation, capitalist friendly cooperative governments, immigrants…the rule of law and patenting inventions. Often these wealth waves involve great complexity exploited best by the rich and educated of the time.”

2. There is no “average” consumer in Plutonomies. There is only the rich “and everyone else.” The rich account for a disproportionate chunk of the economy, while the non-rich account for “surprisingly small bites of the national pie.” Kapur estimates that in 2005, the richest 20% may have been responsible for 60% of total spending.

3. Plutonomies are likely to grow in the future, fed by capitalist-friendly governments, more technology-driven productivity and globalization.

13 Comments

Posted in Ginny's Op-Ed Page | Tags: Ajay Kapur, Citigroup, Freddy Krueger, income inequality, Nightmare on Elm Street, plutocracy, plutonomy

Posted by: stillironic | November 8, 2010

Finance Theory or Outfoxing a Guppy

If you’re in the mood for a few laughs, I recommend looking into financial history.

Shark unsuitable for stupefying or outfoxing

And: “Mounting evidence suggests that investors sometimes act irrationally.”

Which begs the question: How high will evidence have to be mounted to push the afore-mentioned “theorists” into believing it demonstrates investors sometimes act irrationally? Are we talking as high as the Empire State Building? As high as Everest? As high as the distance between Earth and the Ursa Minor Dwarf galaxy? This discussion could become totally irritating with the insertion of metric measurements. The topic, the history of finance, however, is irritating enough.

What were economic and finance theorists thinking?

Are theories of aging based on the human body staying young forever?

Are theories of drug addiction based on people having no tolerance for addictive substances?

Are theories of intelligence based on all humans possessing a high IQ?

Metric system: Almost as irritating as history of finance

Even more disturbing, House would have to diss his team and their differential diagnoses between cutting hair and hawking Brylcreem.

Having failed to stupefy a guppy, these finance theorists are in deep thought about how to outfox it

Wake up economics and finance theorists. With your stupefying premise of rational and fully informed decision-making, you’d have trouble outfoxing a guppy in a fishbowl.

Guppy in no danger of being outfoxed or stupefied

6 Comments

Posted in Ginny's Op-Ed Page | Tags: finance history, finance theory, guppy, shark

Posted by: stillironic | November 3, 2010

Monster Under the Bed (with Apologies to the Financially Literate)

Remember that monster that lived under the bed when we were little? If we got out of bed he was certain to latch onto our legs and yank us under. Where we’d be tortured, or eaten, or worse.

What we didn’t know was we’d still have to deal with the monster as adults. He has a day job as compound interest.

He seems harmless enough, on the surface. If we have a savings account, own mutual funds, or buy stocks that pay dividends that we reinvest, compound interest is actually a good friend. Especially when we keep money in the account a long time.

Monster by night. Credit card compound interest by day.

But if we use credit cards and are financially illiterate, the monster can grab us by the throat—or the balls if we’re of the male persuasion—and torture us, or worse.

We’re citizens of a democracy and consumers in a mixed capitalist economy. Citizenship has responsibilities: voting, paying taxes, understanding our Constitutional rights. And not just the right that inexplicably leads to fantasies of high-powered assault rifles. Consumers who use credit cards that charge interest on an unpaid balance have responsibilities, too. We can’t just fly on the fantasy that a closetful of designer shoes is ours with MasterCard. Banks profit hugely when we don’t pay off the balance each month.

There are consequences to carrying assault rifles. We can’t expect a dude whose skull contains nothing but a brainstem to weigh the effects of shooting a high-powered weapon. Without firearms training (and a brain), someone could get hurt.

By the same token, we need to know the consequences of using MasterCard and Visa. And to understand that the compound interest we wrack up can lead to financial ruin. If we’re not financially literate,* we’re like the dude with the empty skull. And the someone who could get hurt is us.

Monster brushing up on his counting skills

If we lack financial literacy two things can happen:

1) We employ the assault rifle—or any firearm for that matter—to steal designer shoes and whatever other consumer products we fancy. Then we say fuck the credit cards, except the ones we steal using our firearm; those we sell on the black market. You can quickly see the downside of this situation, especially if you lack black market connections. Sad to say, this is actually the more positive scenario.

2) We end up with 9 maxed-out credit cards. And swear a debt-burdened life is a small price to pay for a closet filled with designer shoes. And dresses and bags. Or suits and man purses. We know that credit card companies charge interest on any unpaid balance. What we’ve failed to learn: If we don’t pay at least the accumulated interest each month, Bank of America or First National of Sioux City will take that interest and compound it daily. Till death do us part. Or we pay off the balance. Whichever comes first.

Like all financial illiterates, we figure what paying off the cards will end up costing us: the total of the amounts due, plus the straight interest—at 13 or whatever percent—on that amount. If we hold 3 cards and owe $26K, we add 13% and get $29,900.

But that’s not how it works. The banks that issue the cards charge compound interest, which means we’re paying interest on interest. Say we have 3 cards and the amounts we owe are $8K, $6K, and $12K, all at 13%. And we only pay the minimum balance due each month.

Monster cocky over all the debt that’s mounted up in his name

Here’s why the monster’s licking his chops: Using the Federal Reserve’s Credit Card Repayment Calculator, even if we don’t charge another cent on these cards, it’ll take between 22 and 29 years to pay off the debt, depending on the card. And we’ll end up paying $28,528 in interest alone. (The amount of interest is higher or lower depending on the interest rate.) That’s more than the $26K we currently owe. Which is considerably more than the cost of all the items we’ve charged. Fuck you, compound interest.

Of course if we pay more money each month, depending on how much more, we can dramatically reduce the length of payback time and the amount of interest due. The bank holding the card will probably start whimpering. People in debt make bankers fat and happy. Ever see an illustration of a banker with a waistline and a frown?

~~~

*Financial literacy is understanding: the basics of saving, investing, and planning; credit and compound interest; types of available loans.

4 Comments

Posted in Ginny's Op-Ed Page | Tags: banks, compound interest, credit card debt, financial literacy, monster under the bed

Posted by: stillironic | October 26, 2010

Capitalism? Socialism? Pass the Salt Shaker

Could those zany Tea Partiers be any more fixated on socialism? As if it’s a communicable disease like the Ebola virus and a black hole in space. All wrapped into one tidy but lethal package.

I’ve been in countries the Tea Party considers socialist. And when I stepped onto the soil I’m almost certain I didn’t start bleeding from every orifice. Not that one remembers every detail while suffering from jetlag. But I didn’t wake up on my thin socialist mattress in a pool of blood. So I’ll take that as confirmation. I also have serious doubts that after contact with socialism we are forced to watch in horror as all our favorite capitalist products—cell phones, iPods, flat screen TVs—are sucked into a black hole. Destroyed for all time. Or until Judgment Day. Whichever comes first.

First in her class for eloquence

The president, says the Tea Party, is a socialist. Or the anti-Christ. One of those, if not both at the same time. I happen to have been to Hawaii, folks, and I’ve seen a copy of his birth certificate. Poor Hawaii has almost gone broke fulfilling requests for copies. At any rate, “anti-Christ” doesn’t appear anywhere on the document, which itself is entitled “certificate of live birth.” I know it doesn’t say “birth certificate,” but please indulge me when I say the titles are equivalent.

The Tea Party also gives the impression that anyone who believes in social welfare programs has been infected by socialism. We’re talking a lot of people here—50 million are currently on Social Security alone. Call me crazy, but I think we would notice if people were bleeding like zombies while lamenting their lost capitalist products. The Tea Party would do well to stop stuffing its arsenal with flyers promoting unconcealed weapons. Takes up room necessary to fit in thoughts that require logic.

Socialism is bad. Except when it benefits me. Then it's capitalism.

There does seem to be one form of socialism Tea Partiers seem too shy to talk about. The form benefiting businesses and corporations. The libertarian Cato Institute, to cite a conservative source, put corporate welfare from the federal government in fiscal 2006 at $92 billion in direct and indirect subsidies. For comparison, that same fiscal year the Temporary Assistance for Needy Families cash assistance program paid out $9.9 billion in state and federal money to recipients that included 3.2 million children. The Tea Party is itching to dismantle programs like TANF. But corporate socialism? Tea Partiers are just perceptive in recognizing the sensitive side of business and industry. There are enough hurt feelings in this world as it is. I’m certain that tales of TP’ers who work for companies on the corporate welfare dole while self-righteously condemning folks on welfare as frauds are urban myths.

Are we sensing a theme here? Socialism is bad, except when it benefits individual Tea Partiers. Then it’s capitalism.

"Separation of church and state is unconstitutional"

For example, two people the Tea Party adores are Sharron Angle of Nevada and Michelle Bachman of Minnesota. Each is engaged in a political slugfest. Ms. Angle’s running for the U.S. Senate against Senate majority leader Harry Reid and Ms. Bachman’s up for reelection to the House. Both ladies graduated from public high schools and public universities. Angle’s alma mater, University of Nevada at Reno, is one of the 70 or so land-grant colleges and universities originally made possible with federal funds. Could these ladies have been infected by the socialism bug!

Well, Ms. Angle wants to abolish the Department of Education as unconstitutional. How it’s unconstitutional is apparently not relevant, and you were rude to ask. Ditto her belief that separation of church and state is unconstitutional. If stating something’s unconstitutional makes her sound smart can you blame her for saying it? Even if she’s pulling her statement out of her butt? (If not her derriere, where else does it, and her other whoppers, come from?) According to Harvard Business Review research, people tend to trust an eloquently stated lie more than a not-so-elegantly-stated truth. Seems not to matter where the eloquent statement originated or what it might be covered with.

Ms. Angle, who wants to privatize Social Security and transition out Medicare, speaks proudly of her grandfather. He refused to take Social Security because he thought it was welfare. She’s as proud of her grandfather’s ignorance as her followers are of hers!!! It’s funny but following Angle doesn’t seem to lead you anywhere. Brings to mind what it must be like following a trail of slime. Funny how it leads only to the slug itself.

Her followers know where to find her

As for the madcap Ms. Bachman, she’s dead set on putting an end to public education. Her form of schooling will feature intelligent design taught as science. After all, she claims, “There are hundreds and hundreds of scientists, many of them holding Nobel Prizes, who believe in intelligent design.” If only she could remember to add “just not here on planet Earth.”

Where’s a box of salt when you really need one.

A salt shaker when you really need one

Anyway, we all know socialism is what plagues those misguided Europeans, across the ocean living lives of quiet desperation. Wait. We capitalists are the ones out there perfecting all work and no play. But by choice. Because we love to be up before dawn and home after dark. We’ll take a two-week vacation if we must. But one week is preferable. Actually, a long weekend will do. All right, all we really need is a short break every now and then to run to the Coke machine. Or Starbucks, if we have a line of credit from the bank. Come on, we’re capitalists!

24 Comments

Posted in Ginny's Op-Ed Page | Tags: capitalism, Michelle Bachman, Sharron Angle, slugs, socialism, Tea Party

Posted by: stillironic | October 17, 2010

Beware of Bankers: Zombies in Disguise

What is it with all the finance geeks, government hacks, and media sluts? Why is it only a few geniuses around here understand who—or what—the true villains of the ongoing financial crisis are. Yes, ongoing. The weather may look sunny and clear. But the middle class continues to shrink. The fabulously rich continue to grow even more fabulously rich. And the political dialogue has been corrupted by truthiness. Which means the crisis will only end in a not good way.

The big 6 bankers in response to being compared to 3rd-world oligarchs

So who are the villains? They’re the banks too big to fail. The monster banks: Bank of America, JP Morgan Chase, Citigroup, Wells Fargo, Goldman Sachs, and Morgan Stanley.

One of the geniuses, Simon Johnson, a past IMF chief economist, recently co-wrote 13 Bankers: The Wall Street Takeover and the Next Financial Meltdown. According to Johnson, the big guys who run these behemoth banks have the same effect on our country as third-world oligarchs have on theirs. That pretty much makes these guys zombies.

Now all the hip people out there think they know what zombies are. Besides not attending to their wardrobes and looking like shit, zombies are not copasetic with chatting and sharing feelings. They tend to attack and annihilate first and ask questions later. Except for the ask questions later part. And they’re fully prepped for the impending zombie apocalypse, whereby humans who escape alive are forced to roam the then-decimated countryside, eluding covert zombie assaults, and foraging for scraps even a dog would reject.

Sounds a lot like when your house is in foreclosure.

Head of JP Morgan Chase savoring a quiet moment

As only zombie aficionados know, escapees also ditch their names, taking on the names of their hometowns. Which isn’t so bad if you live in a cool-sounding place like Wichita or Tallahassee. But totally sucks if you live in Nimrod, Possum Trot, or Deadhorse. (Tip: If you happen to live in a locale with a cringe-worthy name, take my advice. Set up camp elsewhere now. Unless you won’t mind spending the post-zombie apocalypse answering to the likes of Intercourse, Lickskillet, or worse.)

At any rate, zombies are not to be toyed with.

The big 6 major league zombie banks, along with the banks they swallowed after the 2007-08 crash, at one time controlled only 16% of our country’s gross domestic product. That was in the mid-1990s. Now, these same banks control around 63% of our GDP. Hello!!! That means the nonzombie banks, along with all nonfinancial businesses, control a mere 37%! Where are the financial experts and government-official types who should be educating the public about the significance of this fiasco. And its similarity to earlier events in U.S. history. Plus its ominous implications for the future.

Heads of BofA & Citigroup. Notice lack of attention to wardrobe.

In the 1980s the financial services industry was only consuming around 15% of all U.S. profits. Right before the crash, major and minor league zombie banks were gobbling up 40+% of all profits.

Even Larry Summers says 40% is too high. Even individual CEOs of nonfinancial companies find this percentage crazy scary. But the business community stands tight with the zombies. As does the Chamber of Commerce, which swears on a stack of bibles that it represents small-business people.

What we have to look forward to in the post-zombie apocalypse

Where are the media who should be digging into what’s happening, raising questions, and searching for answers? Out reviewing zombie movies? This is bullshit! There are real zombies out there on the prey.

There’s no good economic reason for these zombies to be so voracious. They simply refuse to control their appetites. The fatter and more bloated they get, the richer they are. And the harder they attack us taxpayers and pillage our homes. Forcing those of us from small towns to live out our days going by Toad Suck, Spunky Puddle, Big Beaver, and Dicktown. That’s if we’re unlucky enough to survive the zombie apocalypse.

13 Comments

Posted in Ginny's Op-Ed Page | Tags: 13 Bankers, Bank of America, Citigroup, Goldman Sachs, JP Morgan Chase, Morgan Stanley, Simon Johnson, Wells Fargo, zombie apocalypse, zombies

Posted by: stillironic | October 5, 2010

Foreclosure Exposure

Has the best job in the world

It’s time to look in on some of our big mortgage lenders, JP Morgan Chase, GMAC, and Bank of America. They’ve temporarily stopped processing home foreclosures. What’s the matter with these guys? Don’t they realize they have the best job in the world? For a dickhead.

I mean here’s a case of bankers pretending to lend people money to buy a house. Then when they can’t make the payments, dickheads get to seize the house back and say, “No! It’s not yours, anymore. It’s mine!”

Beluga caviar ≠ following the rules

Like a two-year-old, a dickhead’s favorite words are “no” and “mine,” each followed by its own exclamation point. (If this is the only lesson you learn about high finance, you’re way ahead of the game.)

The reason foreclosures have been halted? These institutions haven’t been following foreclosure procedure. To foreclose properly and legally involves making sure the mortgage is actually in default!!!

Chocolate éclair Ø you from following rules

Following rules isn’t a top priority, though, for a person busy dining on beluga caviar or a chocolate éclair, or both—preferably not simultaneously—between sets of tennis or rounds of golf.

And if croquet’s your game, there’s also the extra time it takes to keep the lawn up to snuff—the rolling and brushing and raking, etc.

Perhaps it would have helped some if the government—pronounced, in true Reaganesque fashion, “govment”—had been a tad more specific about what it expected these lenders to do. Other than, of course, make sure the loans weren’t in fact actually, totally, completely paid up, in full.

Croquet lawn takes high maintenance from rich people

Instead, the government kinda, sorta hoped lenders would evaluate the defaulted mortgage loans, modify them if possible, and, as a last resort, foreclose. The government also kinda, sorta suggested that lenders who didn’t make good faith efforts to avoid foreclosure would worry about incurring possible penalties.

Problem is the government only kinda, sorta suggested how the lenders should act. Anti-foreclosure efforts were made, in true Reaganesque fashion, voluntary. With penalties practically nonexistent. So, evidently, Chase and GMAC started robo-signing an avalanche of foreclosures (10K a month) without even any knowledge of the facts. (Robo-signing has an upside if you consider all those well maintained croquet lawns.)

Pen the robot will use to robo-sign documents

Robot ready to begin the day robo-signing foreclosures

The government should’ve been more specific, yes? On the other hand, why would government officials think to give orders to their past and future selves? Now that the government is an employment revolving door for the world of high finance and vice versa.

Friends don’t force friends to do stuff. Friends suggest.

6 Comments

Posted in Ginny's Op-Ed Page | Tags: Bank of America, croquet, foreclosure, GMAC, JP Morgan Chase, lawn, robo-signing

Posted by: stillironic | September 25, 2010

Income Disparity or Too Many Anchovies on the Pizza (Don’t Blame Pluto)

The super filthy rich

I don’t know how you feel about anchovies, but I find one torn up on a slice of pizza to be quite tasty. But I don’t want to eat a whole tin. That would probably make me throw up. Which is kind of how I feel about the super filthy rich. One exceedingly rich person in the group spices things up. But a whole tin of them mashed together and smothered in anchovy oil is bound to test anyone’s gag reflex.

It wouldn’t be so bad if everyone in the U.S. had a fighting chance to become super filthy rich or just rich. Or even just almost rich. But ever since the 1980s, for a combination of reasons, the middle class’s standard of living has stagnated like a fetid pond. Meanwhile growth of U.S. income has become increasingly concentrated in the hands of the anchovies.

According to Slate Magazine, anchovies (the wealthiest one percent of our population) took in more than 80% of the total increase in U.S. income between 1980 and 2005.

So during decades when the government failed to raise the minimum wage one lousy cent, the president and Congress—home to 237 millionaires—allowed? directed? sat by and watched while? wealth flowed like anchovy oil into the bank accounts of … well, the anchovies.

Richest 10% of our population

According to the University of California at Santa Cruz, anchovies:

“at the top one percent of households have 38.3% of all privately held stock, 60.6% of financial securities, and 62.4% of business equity”; and

“at the top 10% have 80% to 90% of stocks, bonds, trust funds, and business equity, and over 75% of nonhome real estate.”

Pretty disgusting. What would such small fish with such large mouths do with all those trust funds? Filet them?

Anchovy swimming toward his trust fund

As we know, however, money equals power. This begs the question: is the U.S. turning into an anchovy republic?

Some say it’s turning us into a plutocracy.

Now, my high school may have been third rate—half my teachers were alcoholics is only a slight exaggeration—but I did learn about our solar system. So, using my stealth powers of deduction, I figured out that plutocracy would be government by Plutonians.

View from cold, dark surface of Pluto

Thing is, astronomers have pretty much decided that Pluto’s too dark, cold, and full of nasty methane to support inhabitants. Probably a good thing, too. Pluto’s been downgraded to a dwarf planet. Be quite a bummer for anyone living there.

Pluto with bone; happy from licking black spots off the pavement

Plutocracy could refer to government by Pluto, Mickey’s faithful furry friend. Now dogs may be known for their skills ruling a pack. So we can’t rule out their ability to lead and to govern. But in all frankness, they’d rather lick black spots off the pavement than wheel and deal behind closed doors. Can you imagine dogs figuring out how to circumvent campaign finance laws? They have no idea what “circumvent” means, for starters.

Besides, Pluto is from a cartoon. Could a cartoon character possibly respond to a natural disaster with this level of astuteness: “Brownie, you’re doing a heckuva job!”

On the other hand, living in a cartoonocracy would probably be a better deal for the middle class than living in an anchovy republic.

14 Comments

Posted in Ginny's Op-Ed Page | Tags: anchovies, anchovy republic, cartoon, dogs, income, income disparity, Pluto, plutocracy, the rich

Posted by: stillironic | September 17, 2010

Derivatives or the lint in your pants pocket, Part 3 (the last)

Dick Cheney, Bedlam, and Feng Shui

We’ve cleared up what lint is derivatives are. Now it’s time to understand why we the taxpayers need to wrestle control of the gazillion-dollar derivatives market from the big investment banking firms. Of particular concern are Goldman Sachs, JP Morgan Chase, and Morgan Stanley, which in 2008, as we all know, managed to edge out Dick Cheney in the greatest-forces-of-evil category.

Was edged out as greatest force of evil

First we have to give a nod to Congress. It recently passed a financial reform bill meant to remove the derivatives market from its current state of bedlam. I happen to think the application of feng shui worth a try. But what do I know.

More important, however, is how in the name of Mary mother of Jesus was this Congress able to do anything coherent, let alone pass major financial legislation? Drugs? Exorcisms? Tantric yoga? Mud wrestling? Or did some Congressperson threaten to read the Iliad, out loud, and in the original Greek?

But hectoring Congress, though entertaining, is fruitless. The battle is what’s important. And it’s over whether the U.S. derivatives market should continue to be the exclusive $300-trillion private clubhouse of Goldman Sachs et al. Or should it be regulated and democratized and lose its restricted access. So it can change from a private club to, say, an upscale restaurant open to the public.

In a private dining club, only a few top members know the cost of the food and beverages. There’s no inventory. Or menu. The diners make up dishes to suit their needs. Foie gras foam on thyme biscuits. Peacock tongues on a bed of watercress. Uni with raw quail egg. Payment is made by slipping wads of cash to the maitre d’. Two people can order the same dish and be charged wildly different prices; checks are printed in invisible ink.

If too many people order the same dish but the kitchen is out of ingredients, chaos ensues. Top members all play golf at restricted golf clubs with top government officials and captains of industry. Who say the club can’t fail. And make us, the taxpayer, bail it out.

In the restaurant, on the other hand, the day’s offerings and their prices are listed for all to see. Anyone who can pay can order. The check is presented, paid, recorded, and made public. Competition among diners keeps a small cadre of them from having exclusive access to the food and drink. The menu reflects what’s in the kitchen. If inventory runs low, the menu is updated.

Just to qualify for membership in the club, diners have to hold a billion or two or more of net capital. The golf-playing restricted club members argue that this restriction brings the club stability. Ha!!! That’s hardly what we learned from the crash. We who try to stay grounded on planet Earth.

On the restricted club’s side is much of corporate America. And for some bizarre reason the Chamber of Commerce. Funny that it bills itself as representing businesses of all sizes, 96% of which have 100 or fewer employees.

The reason all this craziness can happen isn’t just that practically no one understands the issue. Practically no one knows there is an issue.

Even the value of the derivatives market baffles the Earth bound.

The global market value is $600 trillion, give or take whole bunches of billions. That number is called notional value. It doesn’t really represent the worth of all the derivatives out there. That’s because notional means “existing in the mind only.” The minds belonging to the golf-playing restricted club members and their well-heeled lackeys. Ha!!!

What the $600 trillion represents is the value of the underlying assets.

Think of 5 fish in a lake spawning 8,000 eggs each. Each fish is worth $100. So the value of the fishes’ derivatives, the eggs, is $100 x 5 fish x 8,000 eggs = $4 million. But the 40K eggs come from only 5 fish. Those same fish, or underlying assets, are counted over and over again. And added up to create the notional—imaginary—value.

The true market value of the derivatives out there is something like $15 trillion, not $600 trillion. Just like the true market value of the eggs is only 5 fish x $100 = $500. But Goldman Sachs et al. can make billions and pay fines of hundreds of millions without flinching. All because of derivatives based on assets used over and over.

Who’s fighting for the U.S. taxpayer against the restricted club members? The regulators who already failed us.

Is there a chance in hell for reform? In hell, yes. Here on earth? Maybe.

The End

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Posted in Ginny's Op-Ed Page | Tags: Congress, derivatives, Dick Cheney, Goldman Sachs

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