Cliff Mason on the real Class War.

Cliff Mason has a short but sweet article on CNBC.com about the real class war:

When it comes to the real class war, the stuff that matters, not just optics about CEO earnings, the rich are thrashing the rest of us, just like they always do.

It’s class war when Washington passes a $700 billion TARP bailout for Wall Street with feverish haste, but struggles to pass an $800 to $900 billion stimulus package for everybody else.

Think about that for a second.

Bail out the banks, no problem! But give a helping hand to poor, working class, and middle class people? That we have to debate endlessly. Washington knows how to bail out the rich, but our incredibly popular President is having trouble bailing out the other 99% of the country.

That, my friends, is class war. And it’s so institutionalized that we don’t even realize it’s going on. The establishment in this country is so tilted in favor of the folks at the top, that we scream “socialism” when executives at banks that have taken billions of dollars of bailout cash from the government because they ran their companies into the ground aren’t allowed to earn more than $500,000 a year.

Emphasis added. I’m less amazed that bailing out the rich is easy while bailing out the rest of us isn’t and more amazed by the fact that so many of “the rest of us” agree that’s how it should be. When you look at how many members of the Republican party aren’t obscenely wealthy rich people, but rather poor-as-dirt Walmart workers that are voting against their own self-interests, it boggles the mind. The average American has been taking it up the ass for so long they don’t even notice it anymore.

29 thoughts on “Cliff Mason on the real Class War.

  1. I’m pretty sure I’ve never taken it up the ass, Les. Um, if the rest of you have…well, more power to you I guess.

  2. Is the new bailout really going to help the average American?  Or is it going to be a bunch of pork as well as help for the wealthy?

    Based on the schedules I’ve seen, most of the money won’t even start to be spent until years from now.

    I just don’t think the bailout is any damn good.  I think it’s the national equivalent of getting a payday loan – you might get some cash now, but you sure will be paying for it later.

  3. I would go much, much, further than capping the bonuses. For starters how about sacking the people responsible for making all those loans that couldn’t ever be payed back.

    Then sack the people that thought it was a good idea to bundle up those loans with less risky loans and sell them on to unsuspecting third parties.

    Sack the people who didn’t know (or care or even understand what they were buying with other peoples money) what the risks of those bundled investments were as long as they got their bonuses and bought them anyway.

    Start class action law suits (by shareholders) against the executives of banks that were run into the ground, take all their assets off them.

    Then there are the regulators who went missing, where were they in all this?

    End of rant.

    Plenty of blame to go around.

    Peace out.

  4. Right, because what the economy really needs is a hefty dose of vengeance and to have anyone who might know what’s going on in a company to be run off. Fuck any real economic reasoning that might get us out of this mess, light the torches and hoist the pitchforks.

  5. Even a trillion dollars amounts to a few thousand bucks per person. The society is definitely class-aligned, but in this case, there’s sound reasoning for defusing a direct approach.

    That said, investment in developing technologies and an infrastructure to support them (esp. transit related) seems like a wise idea. We need to stop panicking and look ahead.

  6. Right, because what the economy really needs is a hefty dose of vengeance and to have anyone who might know what’s going on in a company to be run off. Fuck any real economic reasoning that might get us out of this mess, light the torches and hoist the pitchforks.

    It’s not about vengeance, it’s about not letting the people who are to blame continue to rake it in whilst everyone else picks up the bill.

    What’s the point in continuing to employ, in executive positions, the very people who either promoted the system that started the mess or didn’t know what was going on within their own banks and through their negligence allowed extremly risky practices to go on.

    The actions of some people within the financial sector are virging on the criminal.

    If a repeat of this isn’t to be allowed to occur again then the people responsible must be held to account, effective regulatory systems put in place and appropriate sanctions for those who transgress enacted.

  7. If it’s about assigning blame and running them off then it’s about vengeance, no matter how much you rationalize it.

    The fact that this crisis penetrated so deeply through the industries should be a tip-off that this wasn’t exactly something you wave at and say “these guys caused this.” If Congress hadn’t changed the rules over the course of twenty or thirty years, if online banking hadn’t gutted parts of the brokerage business, if Americans didn’t dodge a bullet from the last possible deep recession following 9/11, if oil speculation hadn’t became such a problem, if there wasn’t a war in Iraq…I mean I could go on and on. And even if we could put on our causality goggles and trace everything back to a handful of people?

    Firing the people most familiar with a situation as a method of alleviating the situation isn’t good business unless there’s something intrinsically faulty about them – and judging from the responses here I suppose these guys are simply too greedy to run a business? How the fuck does that track? You want your business leaders to be greedy, amoral bastards. That’s what they’re being paid for, their purpose in employment. A better recourse would be to channel their greed to paths that serve the rest of us no matter how lacking in charity they really are. You don’t do that by restricting the rewards, you do that by restricting and encouraging the actions that reap those rewards.

  8. So don’t change anything because it can’t ever happen again.

    Don’t bother changing the regulations governing how financial institutions operate because obviously they worked so well so far.

    OK, wash your hands of all knowledge as to why it happened, change nothing, don’t hold anyone to account … then just wait for it to happen again, just don’t be surprised when the next time it happens, and you can count on it happening again, it makes this time round look like a tea party.

    If you get the chance I would recommend you watch The Ascent of Money, gives a pretty good perspective on how financial institutions came about, how they work and why the same problems arise time and again.

  9. Haven’t been listening? I never said things shouldn’t change, I said they shouldn’t change in ways that won’t help the overall economy, or worse in ways that will actually disrupt and damage the economy further. Knocking those in charge down a peg, punishing them, removing them from authority; and adding additional onerous difficulties to companies that are explicitly damaged already setting them in a state apart from other companies that may or may not have performed the same activities you’re wanting to punish the others for except with greater success?

    A lot of the financial mess that led up to this disaster were normal activities like trading securities that just so happened to have rotten cores only because other financial crisis affected the ability of lenders and the people they loaned money to to repay at the same time because they had a similar root cause, which was unrelated to the financial industry and had its roots in oil speculation. Putting on our what-if hats and looking backwards, we can see that these activities weren’t exactly hugely risky things three or five or ten years ago. And without the nature of the people that were getting loans the oil speculation spike wouldn’t be all that big a deal either, because if everyone had been renting then they’d ease into shittier housing without anyone being the wiser except for the poverty index. And credit default swaps sound like a bad idea now, but when the economy is even marginally sweeping upwards they’re not some poison pill that topples the house of cards. And the other companies outside the financial industry? Sure, maybe they could be run a little leaner but the peak gasoline prices that knocked the feet out from under the American auto industry weren’t exactly the sort of thing an auto manufacturer was in the position to react to – they happened too fast and large businesses are exactly light on their feet. It’s even hard to blame the oil speculators, because if you could turn your ten dollars into fifteen with a phone call and it only got crazier and more profitable for one blazing few months you’d have gotten in to ride that train into the station too.

    Politicians? We already ran most of the last batch out, and some of the legislative conspirators to the perfect economic storm have been out of power for decades because you have to look pretty far back for some of the deregulation that’s come back to bite us. That’s not even acknowledging that even as we chastise what they did, in the short term a lot of what they did wrong was probably good for the economy. Every single regulation they cut probably stopped the economy from slowing for at least several months, which is not a small thing given things like our batshit crazy war funding, 9/11, and the Dot-com collapse.

    This is a simplistic non-solution. It’s meant to make people feel better who are angry without knowing exactly who they should be angry at and why. It’s the equivalent of hanging a random guy with a criminal record for a murder, because someone has to pay.

  10. “Bankers who hire money hungry geniuses should not always express surprise and amazement when some of them turn around with brilliant, creative, and illegal means of making money.”

    Linda Davies

  11. judging from the responses here I suppose these guys are simply too greedy to run a business? How the fuck does that track?

    that tracks the fuck that these guys should be greedy for themselves and the company they are running, not just for themselves.

    “And credit default swaps sound like a bad idea now, but when the economy is even marginally sweeping upwards they’re not some poison pill that topples the house of cards.”

    but the economy doesn’t constantly sweep upward. econ 101 fer christsake.

  12. It seems the decision to cap executive pay is already paying off: Goldman Sachs CFO seeks to repay TARP funds

    NEW YORK (Reuters) – Goldman Sachs Group Inc (GS.N) Chief Financial Officer David Viniar said the bank is keen to avoid restrictions it agreed to after receiving funds from the U.S. government late last year and it is looking to pay the money back as soon as possible.

    The investment bank, which received a $10 billion capital injection from the U.S. Treasury’s Troubled Asset Relief Program in October, is not happy with the strings that came attached to the money.

    Compensation restrictions and certain capital requirements were part of the original injection, and extra limitations may be in store after U.S. President Barack Obama imposed tough new rules limiting pay for companies receiving government aid.

    “We would like to get out from under that,” Viniar said, adding that the bank aims to pay back the $10 billion this year.

    Consider it a proper motivation not to take taxpayer money unless you really need it and if you do really need it then it’s further motivation to pay it back as soon as possible.

    Works for me.

  13. Consider it a proper motivation not to take taxpayer money unless you really need it and if you do really need it then it’s further motivation to pay it back as soon as possible.

    Works for me.

    Here in the UK the banks that have had government cash have still come under fire for not lending and for their over aggressive stance on mortgage borrowers who fall behind on payments.
    Not forgetting bonus payments.

    Posted by The Independent

      * Monday, 9 February 2009 at 02:59 pm

    Published: 2009-02-09 14:04:03
    Author: By Andrew Woodcock, Press Association

    No rewards for failure, insists Brown

    His comments came as the Treasury launched a long-term review of City remuneration policies, amid public anger at reports that banks are planning to pay hundreds of millions in bonuses to senior staff despite their massive losses over the last year.

    Speaking to an audience of economists in London, Mr Brown promised that he would “sweep aside” the short-term bonus culture in banks and ensure that rewards are provided only for long-term sustainable success, with “penalties” for those who take irresponsible risks.

    The policy of “no rewards for failure” would be pursued “aggressively”, said the Prime Minister, adding that banks in which the state now holds a majority stake would pay no bonuses to board members and no dividends to shareholders this year.

    Mr Brown said: “I believe, as a society, we should support hard work, effort, enterprise and responsible risk-taking.

    “We should not in any way condone, but should punish, irresponsible and excessive risk-taking.”

    He said the Government’s actions were intended to show that “the old short-term bonus culture is gone; that there are no rewards for failure, but penalties for failure; that in the future there must be rewards for success – but long-term sustainable success and not just short-term gains.

  14. I agree with Mook, incompetence should not be punished, neither should unethical actions. People put in positions of power should not be expected to have foresight, nor should they be expected to be moral.

    I think the real problem here is all the confusing laws around the economy. This is a problem that started way back in 1863, that required the entrepreneur to become more clever with his employment practices. We should just get rid of them and let the free economy reign.

    Long live the free economy! Right? RIGHT!?!

    Well, right after we give these useless bastards some money, to get them back on track.

  15. *sigh*

    The problem isn’t with cleverness, it’s with lack of cleverness and capping the reward for cleverness as a punitive measure. It’s about taking something good in socialism and transforming it into one of the key reasons Communism never worked. You want every genius amoral bastard you can get, and you want to cage them in with regulations and subsidies and free beer and whatever else you can think of to steer them from shitting in the wading pool – but you don’t arbitrarily cripple a few of them for “poor performance” if you’re handing them a handout to succeed for the good of the drone workers underneath them. It’s not like high finance is one of those low stress, easy bucks sort of careers, despite the publics’ twisted perceptions from paying too much attention to the play hard aspect of the work hard-party hard equation. Crippling the brain trust of a company as a measure to ensure its success is stupid.

    As for foresight? I’m pretty sure the only people with crystal balls they’re gazing into are those guys Les talks up with their perpetually reseting doomsday clock. Sure, you pay people to tell you what’s coming, but nearly all of the time what you’re really getting is some dude cherry picking their guesses and mining them like they’re Nostradamus. No one can tell you the future, especially when you’re talking about slow-moving financial trends coupled with poor legislation, international politics and natural disasters to align like the snake room in Indiana Jones and shine a burning light across the economy.

    This whole thing’s been building for several decades. Who’s the cheeky bastard who’s going to raise their hand and say “I saw this coming. I saw it coming in 1983.” I’ll tell you: No one. Not unless you’re one of those tinfoil hat types suggesting a bunch of rich old men in dark suits conspire regularly to plan on how to shit on the little people.

    Class warfare is an anthropomorphism. Giving a nefarious identity with suggestive overtones to something that’s less planned mayhem and more tragic accident of normal economy. It’s a setup, next in line: Blame the homosexuals for hurricanes. Seriously, as an atheist I’m disappointed in the very religious overtones and clucking moralism a lot of you have on these subjects.

  16. As for foresight? I’m pretty sure the only people with crystal balls they’re gazing into are those guys Les talks up with their perpetually reseting doomsday clock.

    The only people who didn’t see this coming are the ones who were perfectly happy profiting off the short term gains it was providing. That being said, it did take a lot longer than most people predicted. The inevitability of a financial collapse is one of those things I remember a commerce prof discussing back in the late 90’s. It is one of the predicted failures of central banking.

    Seriously, as an atheist I’m disappointed in the very religious overtones and clucking moralism a lot of you have on these subjects.

    I’m actually offended that you think morality is solely for the religious. Are you one of those hardcore people who think child labour in 3rd world countries is a good idea? You know what they call it when you pay people just enough to live?

  17. Mister Mook:  If “clucking moralism” you mean not rewarding sociopaths by subsidizing their kleptocratic behavior, count me ever-so-unapologetically in with the moralists.  I emphatically do NOT want any “genius amoral bastard” making decisions that affect thousands, if not millions of people.  Not to mention pissing away amounts of money that some third world countries would kill to have as their GDPs.

    Funny, how we pay a guy, what? $300K or so per year to run the most powerful nation on the planet, but we somehow can’t expect someone remotely competent to show up for work for a paltry half-million.  I call bull$#!+.

    Sorry dude, but I damn sure don’t recall seeing the government bailing out Silicon Valley when the dot com bust wiped out billions of paper wealth.  Those companies either went under or learned how to make a profit in a hot hurry.  And those who did survive learned how to swallow their pride—without expecting a case of 1982 Chateau Lafitte Rothchild to wash it down, thank you very much. 

    Oh, but not this tribe.

    You seem to be missing the essential point that the same people who scoffed at the government’s ability to do, well, anything, really, are reflexively turning to it for help.  Hmmm…funny how suddenly the free market isn’t the answer to everything, after all.  And I think I have every goddamned right in the world to be pissed at the sheer hypocrisy. To say nothing of the fact that I’ll be sharing a disproportionate cost, because I’m (so far) “lucky” enough to still be employed.

    If the alpha-suits want to run their corporate fiefdoms as Ponzi schemes, too bad on those stupid enough to work for them.  (The fact that the “poor legislation” you blame was largely bought and paid for by these same folks seems to be swept under the rug…)  And when they expect me to finance further arrogance/incompetence, you’re @#$%ing-A right I’m gonna be huffy.  When the same companies receiving bailout money turn lobby to make unionization more difficult, I’m definitely considering it a moral issue. Real lives are affected.  The jobs market always lags behind any uptick, so the misery for the average American will continue well after these “geniuses” start skimming the fat off the top again on the next uptick.

    In any other context, that sort of sociopathy would be institutionalized, medicated, or jailed.  Where you get the idea that people like this deserve to be lionized with I cannot fathom.

  18. The only people who didn’t see this coming are the ones who were perfectly happy profiting off the short term gains it was providing.

    Oh please… Again, you’re just like some religious whacko predicting a crisis every day of the week and then one pops up and you go “Jesus told me it was coming!” You had decade a decade to stop all those people from losing their jobs and dying in Hurricanes and oil refineries and wars in Iraq why didn’t you fix it, Cassandra?

    I’m actually offended that you think morality is solely for the religious.

    No Terrance, I’m talking about the blind rage of the righteous martyr kool-aid you’ve been sipping. I want the stimulus plan to work, not to sort out all the disenfranchisement rage you’ve been apparently been holding in waiting for them to draw the barricades and pull out the guillotines. You’re offended? Cry me a river and break out the tiny violins.

    If “clucking moralism” you mean not rewarding sociopaths by subsidizing their kleptocratic behavior, count me ever-so-unapologetically in with the moralists

    Obviously that’s not what I mean, or that’s what I’d say. Even with the obvious hyperbole cut out, I think my points are fairly concise and simple, even excepting for everyone’s proletariat rage and hardon for dragging down the bourgeoisie apparently making the paragraphs distill into “the heathen disagrees with me!”

    Perhaps I’m wrong. Do you think I should use shorter sentences for clarity?

    I think I have every goddamned right in the world to be pissed at the sheer hypocrisy.

    Yes, you do. But being pissed off and fucking your mother to kill your cat are different things. All of you’ve got your mad on so deep that you’re falling into classic Marxist stupidity, and I say that emphatically as an avowed socialist.

    The free market is no gold medal winner in my book, but you don’t sustain a market economy by killing off the merchants, and you can’t fault the merchants for abusing the economy within the limits you place, and you don’t blame the farmer when the winter stays too long. As for that market economy, if you’re going to kill it off then then common sense says you should have something there to take it’s place. Otherwise you’re shooting the horse because the cart won’t go and then wondering why you’re not moving down the road. While you’re at it you might want to fix the national health crisis by outlawing doctors – they make a lot of money too, and according to House they’re sometimes dicks.

    But anyways, now you all don’t have to worry about the rich people. There’s clearly someone else who’s much more to blame: Terrance. Terrance says he knew all about all of this, way back in the 90s. If anyone could have stopped this, it was Terrance and apparently he gave a big fuck you to the rest of the world when he was deciding not draw up some sort of outline for world leaders when the long list of economic indicators for this started rolling in. I don’t know about you, but I’m personally very pissed that he didn’t stop 9/11. Shame on you Terrance.

    And by the way, you’re the one lionizing these guys. I’m the one saying I could care less about their personalities or their fast cars or their salaries as long as we’ve get someone who knows a thing or two about managing a company so that it makes money while the aforementioned companies are on life support.

    I’m like NASA, as long as they get the rocket motors running I’ll tolerate just about anything. If everyone wants to storm the castle afterwards, at some point in the future when the chest wound isn’t burping at everyone, I won’t stand in the way except for the snickering and eye-rolling. But Terrance can probably tell you all about it, including what you’ll be wearing ten years from now. Just don’t trust Terrance to tell you if your fly is open, he’s a sadistic mean-spirited prophet.

  19. MisterMook – you have a completely appropriate name (I am assuming, of course, that you are male). Congratulations!

  20. Now there’s no need to resort to purely ad hominem attacks here. I disagree with MM’s stance, but that doesn’t make him a bad guy in my mind. There’s plenty yet the two of us agree on.

    For all I know he may even be correct in his position. I’m not an economist by any stretch of the imagination.

  21. no ad hominem attack here, boss.

    ad hominem defined: “consists of replying to an argument or factual claim by attacking or appealing to a characteristic or belief of the source making the argument or claim, rather than by addressing the substance of the argument or producing evidence against the claim” (thanks wikipedia.)

    MisterMook never engaged in argument with my points and i am in no way replying to any point he made concerning class war.i am simply stating an opinion on his screenname based upon his attitude (through what i have seen written here in this thread): “Mister” (again, i am assuming MisterMook is a male) and Mook (foolish).

    i apologize for breaking any rules you may have laid out (and which i was too lazy to read beforehand) and will henceforth keep my comments and opinions to myself while still enjoying the posts that you put out for us to read.

  22. I don’t have any hard and fast rules for commenting (they’re more like guidelines) and I don’t want to discourage folks from commenting.

    That said, I do step in from time to time when I think a conversation is faltering and I’d prefer it not to.

  23. Oh please… Again, you’re just like some religious whacko predicting a crisis every day of the week and then one pops up and you go “Jesus told me it was coming!”

    Do you honestly believe that? At least I can provide very accurate predictions that occurred 2+ years before the collapse. Maybe I was just naive enough to believe the people who made the claims. However, to me, the reasons they provided seemed logical.

    There’s clearly someone else who’s much more to blame: Terrance. Terrance says he knew all about all of this, way back in the 90s.

    a very good possibility.

    In a very strange way this is true. I did bitch a lot about where the economy was heading for years. It turns out, people thought I was an idiot then. Regardless, I was an idiot then, and I still am. But, at least I was right on this subject.

    Yes, you do. But being pissed off and fucking your mother to kill your cat are different things.

    This is just pointlessly crass. Also very bizarre.

    Obviously MM you know a lot about the market than myself. I don’t know what your expertise is or if you are just an all around know it all. More power to you, either way.
    I just want to comment in closing. The market isn’t a supernatural thing. There is plenty of history and evidence to make accurate predictions on what happens when you allow specific actions to occur.

    To claim that nobody saw this coming seems ludicrous. And, I know that hindsight being 20/20, it is easy to say, “why did this happen, or why didn’t that happen?” However, please don’t piss all over people who are simply inquisitive or even misguided in their ethical indignation.

    I know I am wrong about a lot of things, but it is wrong to suggest I am wrong about everything.

  24. P.S. – I also predicted, in late 2004, that Feist would be hugely successful. So as far as you know, I am batting 100, IN YOUR FACE !!!!

    (Obviously making a vain attempt at satire)

  25. Nouriel Roubini

    The Anglo-Saxon model of supervision and regulation of the financial system has failed, Nouriel Roubini, chairman of RGE Monitor and professor of economics at New York University, told the Financial Times on Monday.

    Answering questions from FT.com readers, Prof Roubini, who is widely credited with having predicted the current financial crisis, said the supervisory system “relied on self-regulation that, in effect, meant no regulation; on market discipline that does not exist when there is euphoria and irrational exuberance; on internal risk management models that fail because – as a former chief executive of Citi put it – when the music is playing you gotta stand up and dance.”

    And in the UK:
    HBOS sacked and gagged bank risk whistleblower

    HBOS sacked and gagged a senior executive who four years ago warned the board of the bank that they were taking excessive risks, according to evidence given in Parliament this morning.

    MPs on the Treasury Select Committee were given details of a submission from the former head of risk at HBOS who claimed that he warned the board repeatedly that they were taking risks with financial stability and consumer protection.

    Paul Moore, a former partner of KMPG and head of group regulatory risk at HBOS between 2002 and 2005, accused the bank of “a total failure of all key aspects of corporate governance” and said that he was repeatedly rebuffed and thwarted when he tried to register concern.

  26. While it doesn’t matter much, to me, what’s in a name, a line of published economists, experienced traders, and nobel laureates might count for something.

    http://news.bbc.co.uk/2/hi/business/davos/7859179.stm

    The same problem I see, here, is the problem I see with communism – if people need a governing system to look after themselves, then how can those at the top be trusted?

    We left them to self-regulate many years ago, in the Clinton era, and never reversed that process. It was bound to happen, in hindsight. Human beings just aren’t that good.

  27. And let it be restated: I’m all in favor of regulation. I just don’t want to regulate things overly aggressively simply because the people involved are assholes. Keeping industries from engaging in overly risky behavior, limiting explicitly destructive expressions of corporate greed, oversight in the form of auditing agencies and investment into fraud prevention, and subsidization for corporate activities that you want the companies to engage in is great stuff. Then actively engage the assholes as they adapt, force loopholes and try to break the system.

    That’s good financial governing, and it doesn’t rely on some emotional argument that the assholes are making too much money. Everyone wants to make money, right?

    Salary capping the Lions way below everyone else isn’t how the Lions win the Super Bowl. We’re investing heavily in these assholes, the least we can do is operate as if we want them to get better and one day return our investment in them.

  28. Living in NC most of those around me are Republicans.  The die hard Noecon, bible beating with every breath kind.  They scream socialism at the mere mention of Obama’s name.  The real kick in the ass is MOST, not a few, or some, but MOST are former blue collar, construction working, NASCAR ass-hats receiving unemployment.  They preach hard against the rewards they reap. 

    If they have such a problem with taxes and social welfare programs I say let’s go ahead and exempt them from paying taxes and end their unemployment payments with immediate effect.

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