Hard News by Russell Brown

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Hard News: About Occupy Wall Street

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  • George Darroch,

    In NZ, with a conservative banking system and no financial markets tradition, these loans were provided by accountants in rural towns shovelling money at their mates, Elsewhere, more sophisticated stratagems were used. Either way, it was a bubble with the government, media and mainstream population wholeheartedly engaged. (How much of TVNZ's 2007 output was house pr0n?)

    Indeed. Friends in Labour are upset when I criticise their last Government as inflationary, reckless, and based in large part on a property bubble that was bound to collapse. Right until the end they were resisting slowing things down through direct and indirect measures. It wouldn't have been easy, but it would have been worth it (of course, you do such things before the bubble, not when it's ready to pop).

    The People's Republic of … • Since Nov 2006 • 2136 posts Report Reply

  • Russell Brown,

    Alan Grayson does an wonderful job of putting PJ O'Rourke in his place on the Bill maher show:

    Auckland • Since Nov 2006 • 18991 posts Report Reply

  • Russell Brown, in reply to Mandy S,

    I dunno, I find it a bit weird and confused to go looking for the outsiders and extremists in a mass grouping and try to extrapolate some meaning from what they say. Of course extremists like any number of Randians are going to be attracted to the chaos.

    But just one instance (and there are many) of that guy's video is the most-viewed OWS clip on YouTube that's not about police brutality. By that measure, he's becoming the face of it.

    Auckland • Since Nov 2006 • 18991 posts Report Reply

  • George Darroch,

    The first makes you a worthy philanthropist who came unstuck, the second an Evil Manipulator, right?

    To the extent that you use those derivatives to leverage (which is what they indeed became synonymous with), then you are creating a problem. It’s too hard to say no. In your case, refusing to lend because you’re not going to be able to cover your debts is going to see your customers walk down the street to the next bank, who will.

    If you start from the assumption that there’s not enough capital in the system, then leveraging derivatives is fine or even praiseworthy. If you think that there’s sufficient or too much, then they’re problematic from the get-go. I don’t blame banks too much for exploiting these arrangements for profit – that’s what they do. But I do blame governments for failing to regulate them. That is a difficult thing to do however when you have the kinds of collusion that Matt Taibbi has written extensively on, and the firm ideological convictions of academics and their institutional counterparts that the market is both strongly rational and works in society’s interest.

    The People's Republic of … • Since Nov 2006 • 2136 posts Report Reply

  • Sacha, in reply to George Darroch,

    But I do blame governments for failing to regulate them.

    Worse, for explicitly removing the regulations put in place to prevent systemic oversight failures after the previous Depression. Along with the ideological malaise Taibbi and others write of, the corrupt influence of corporate lobbyists in US politics completes the picture.

    Ak • Since May 2008 • 16794 posts Report Reply

  • Lucy Stewart,

    The first makes you a worthy philanthropist who came unstuck, the second an Evil Manipulator, right?

    Both make you culpable. The trouble with the banking crises is that they are emergent properties; you have thousands if not millions of people who weren’t knowingly doing anything wrong, but it added up to massive problems. Then, of course, there are the people who knew exactly what they were doing.

    “Hang the bankers” isn’t a useful response, but it’s still absolutely true that the banking and financial systems screwed up bigtime, that most of it was predictable, and that some people actively profited off it. Conspirators they may not have been, but they’re not exactly scapegoats, either.

    I don’t blame banks too much for exploiting these arrangements for profit – that’s what they do.

    When discussing American corporate bodies, it's always crucial to remember that American law dictates that their primary objective must be maximisation of profits for shareholders. Boards can be sued if they can be proven to have done things they knew would make profits smaller. It's not a peverse incentive per se, but it's tailor-made to inflate bubbles.

    Amherst, MA • Since Nov 2006 • 2093 posts Report Reply

  • Russell Brown, in reply to Lucy Stewart,

    "Hang the bankers" isn't a useful response, but it's still absolutely true that the banking and financial systems screwed up bigtime, that most of it was predictable, and that some people actively profited off it. Conspirators they may not have been, but they're not exactly scapegoats, either.

    Nicely put.

    Auckland • Since Nov 2006 • 18991 posts Report Reply

  • George Darroch,

    Speaking of overlap...

    Simon Power is going to head Westpac Private Bank

    Patrick Gower, Twitter, about 10 minutes ago.

    The People's Republic of … • Since Nov 2006 • 2136 posts Report Reply

  • Bart Janssen, in reply to Lucy Stewart,

    "Hang the bankers" isn't a useful response, but it's still absolutely true that the banking and financial systems screwed up bigtime, that most of it was predictable, and that some people actively profited off it. Conspirators they may not have been, but they're not exactly scapegoats, either.

    The problem, as I see it, is that the people running those businesses are rewarded for very specific behaviours. Sometimes those behaviours are required by law eg shareholder will sue and win if the managers don't maximise profit.

    But fundamentally some of those behaviours actually damage the long term viability of the business and ultimately the economy. So you have a situation where very smart management teams know full well that what they are doing will screw things up horribly long term, but they still do them because the short term benefits are too great.

    A similar problem exists when businesses are encouraged to view the world as someone else's problem and only focus on their own narrow gains. Again sometimes that narrow focus is demanded by Boards of Directors and shareholders. But the cost is actions that harm the majority while still benefiting the individual business.

    I don't think we should scrap capitalism but I do think we need to identify where it becomes so extreme that it does more harm than good and at that point I think regulation by governments is the only option. That becomes very hard when businesses essentially pay for politicians election campaigns.

    Either that or we must figure out a way of teaching management to behave differently.

    Auckland • Since Nov 2006 • 3426 posts Report Reply

  • George Darroch,

    I should note, for fairness, that the former Finance Minister chairs the board of a bank, and many other similar examples. Skilled people need challenging jobs, and that's fine. However, the differentiation should be clearly marked - and it's up to the public to enforce that. I would say media, but the purpose of the media is to sell real-estate advertising.

    The People's Republic of … • Since Nov 2006 • 2136 posts Report Reply

  • BenWilson, in reply to Russell Brown,

    Alan Grayson does an wonderful job of putting PJ O'Rourke in his place on the Bill maher show:

    Nice. O'Rourke was funny in the 80s. But bongo drums? That joke isn't a Twinkie - when you open the packaging now it's actually fossilized.

    Auckland • Since Nov 2006 • 8598 posts Report Reply

  • Craig Ranapia, in reply to Russell Brown,

    I really hope so. I just get twitchy about things that look even a little like John Birch-style banking conspiracies.

    Yeah, and I guess it's not wise to ask the 99% how many of them were willing to gorge on cheap credit fuelled by a shell game of breathtaking proportions. I'd also risk suggesting that there are might be people in the world looking at the Occupy Palookaville folks and muttering "Welcome to the club, gringos."

    North Shore, Auckland • Since Nov 2006 • 12040 posts Report Reply

  • Lucy Stewart, in reply to Bart Janssen,

    Either that or we must figure out a way of teaching management to behave differently.

    To do that you'd need a way to make the consequences for management relative to the long-term, rather than the short-term, results of a company, because you're right - it's really hard to lay the finger on individuals for doing what made most sense for them (and their companies) *at the time*, but overall and over time was disastrous. And that's hard to regulate. Making corporations (and boards) liable for their failings in more serious ways than relatively small fines would be an excellent start.

    Amherst, MA • Since Nov 2006 • 2093 posts Report Reply

  • Sacha, in reply to Craig Ranapia,

    willing to gorge

    student loans mostly, it seems.
    hardly an impulsive splurge

    Ak • Since May 2008 • 16794 posts Report Reply

  • Mandy S, in reply to Russell Brown,

    Hmmm.... I would have serious doubts as to the validity of the number of youtube hits as a measure. If that is the case everyone should go and upvote Jesse LaGreca, of whom Jon Stewart said "motherf*$ker brought game" as he throughly shoots-down Fox news reporter looking for someone inarticulate and "radical" to say something outrageous.

    Auckland • Since Mar 2011 • 7 posts Report Reply

  • BenWilson, in reply to Bart Janssen,

    I don't think we should scrap capitalism

    I'm undecided on that in the long term, but for now, definitely not. It should be reformed piece by piece. But this reform could be very rapid, at least it could be in this country.

    One thing that I think that anti-banking sentiment fails to capture at the moment is that the problem is way bigger than just bad banking. A systematic decline in the value of Western economies through the outsourcing of everything that could possibly be outsourced is not just the fault of bankers, it's the entire globalization mentality, for which the blame is considerably more diffuse. In fact, from an outside perspective, it's not even necessarily that bad for the world. Did we actually deserve to be so rich for so long? I don't think so. But what we also don't deserve is to become more inequitable just because we are (by processes that seem inevitable to me) less rich. For that, the banking sector has a lot to answer.

    Auckland • Since Nov 2006 • 8598 posts Report Reply

  • George Darroch,

    student loans mostly, it seems.
    hardly an impulsive splurge

    And all the subprime lendees, with the temerity to try and buy for themselves houses.

    The People's Republic of … • Since Nov 2006 • 2136 posts Report Reply

  • Stephen Judd, in reply to BenWilson,

    I was reading up on their policies and thinking it sounded quite reasonable, until it hit the whole antisemitic part.

    And yet...

    (Maybe I misunderstood who Ben meant by "they").

    Wellington • Since Nov 2006 • 2968 posts Report Reply

  • Russell Brown, in reply to Mandy S,

    Hmmm.... I would have serious doubts as to the validity of the number of youtube hits as a measure.

    Yeah, it's a measure of, well, YouTube hits. But it's some sort of proxy for visibility and that guy has tons of it.

    Auckland • Since Nov 2006 • 18991 posts Report Reply

  • Stephen Judd,

    Incidentally, the forgiveness from mistaken oaths inherent in Yom Kippur is interesting in the light of what I’ve been reading recently by David Graeber about the origins of money and debt in bonds of moral/religious/social obligation.

    Wellington • Since Nov 2006 • 2968 posts Report Reply

  • BenWilson, in reply to Stephen Judd,

    (Maybe I misunderstood who Ben meant by "they").

    Oh, crap. You did, but it was my fault. I meant Social Credit, for some reason, I got my wires completely crossed there, about who John Birch was. Silly me, apologies. I've got no time at all for John Birch.

    Auckland • Since Nov 2006 • 8598 posts Report Reply

  • Sacha, in reply to Mandy S,

    motherf*$ker brought game

    word

    Ak • Since May 2008 • 16794 posts Report Reply

  • Craig Ranapia, in reply to Sacha,

    hardly an impulsive splurge

    No, but you didn't exactly have to be Ron Paul at his ding-battiest worse to ask whether eye-watering levels of low-quality-debt-fuelled consumption -- cheerfully enabled by banks who I can't believe didn't know better -- wasn't going to leave one hell of an bitter aftertaste. I don't think that's all on the Evil Trolls of Wall Street.

    North Shore, Auckland • Since Nov 2006 • 12040 posts Report Reply

  • DCBCauchi, in reply to BenWilson,

    I’m undecided on that in the long term, but for now, definitely not. It should be reformed piece by piece. But this reform could be very rapid, at least it could be in this country.

    I do not think anyone is asking for revolution. What I see people asking for is reform of our existing institutions through non-violent protest. What we need to negotiate is the nature of that reform. Reform them so they work as intended, are fit for purpose.

    Isn’t that kind of how democracy works?

    Since Feb 2011 • 320 posts Report Reply

  • Sacha, in reply to Craig Ranapia,

    I'd say most would lump the banks in with Wall St.

    Ak • Since May 2008 • 16794 posts Report Reply

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