Well this is the day that my sources pointed out as the beginning of a very sharp decline in the world economy…so far it looks like they were on the money (pun intended, but not very good.)
Bank of England Deputy Governor Charles Bean said Britain’s economy was still in the early days of weakness.
“This is a once in a lifetime crisis, and possibly the largest financial crisis of its kind in human history,” Bean told the Scarborough Evening News.
Russia has shut down their stock markets, bad news on earnings and unemployment etc, and so far the American markets are diving too. My virtual stocks are nearly a grand in the red. Of course, all stocks are virtual when the government is just printing money with nothing to back it up. I’m guessing that the DJIA will decline to the 4000 range before we hit the bottom.
As a random aside…in the past several days I’ve met a few African-Americans (why can’t I just say black people? wait, I’ll say black-Americans…is that okay?) who are not fans of Obama. Mostly these are military folks. The interesting thing is that they don’t seem willing to vote for McCain based on the perception that his running mate is a closet racist. Instead, they are mostly opting to vote for Nader. It will be interesting to see if Ralph exceeds expectations in the upcoming election.
For the first time since 2003 when I stopped being a stock broker, my virtual portfolio has gone into the red. Until a month ago I was continuously up more than $5000 on a virtual $20000 portfolio based on the stocks that I sold to my clients. Hopefully, someone told them to sell when the market reached a high. As of this morning, my virtual portfolio is down $84. Not bad really, I’ve been surprised it lasted this long. Maybe I should have stayed a broker…or a DJ, or a casting director, or an air traffic controller, or a bartender, or maybe I should stay a tour guide….nah…no regrets on leaving those or this job behind me and moving on…
While on the subject of the virtual, this story caught my attention this morning…
TOKYO – A 43-year-old Japanese woman whose sudden divorce in a virtual game world made her so angry that she killed her online husband’s digital persona has been arrested on suspicion of hacking, police said Thursday.
The woman, who is jailed on suspicion of illegally accessing a computer and manipulating electronic data, used his identification and password to log onto popular interactive game “Maple Story” to carry out the virtual murder in mid-May, a police official in northern Sapporo said on condition of anonymity, citing department policy.
“I was suddenly divorced, without a word of warning. That made me so angry,” the official quoted her as telling investigators and admitting the allegations.
The woman had not plotted any revenge in the real world, the official said.
She has not yet been formally charged, but if convicted could face a prison term of up to five years or a fine up to $5,000.
Players in “Maple Story” raise and manipulate digital images called “avatars” that represent themselves, while engaging in relationships, social activities and fighting against monsters and other obstacles.
The woman used login information she got from the 33-year-old office worker when their characters were happily married, and killed the character. The man complained to police when he discovered that his beloved online avatar was dead.
The woman was arrested Wednesday and was taken across the country, traveling 620 miles from her home in southern Miyazaki to be detained in Sappporo, where the man lives, the official said.
The police official said he did not know if she was married in the real world.
In recent years, virtual lives have had consequences in the real world. In August, a woman was charged in Delaware with plotting the real-life abduction of a boyfriend she met through “Second Life,” another virtual interactive world.
In Tokyo, police arrested a 16-year-old boy on charges of swindling virtual currency worth $360,000 in an interactive role playing game by manipulating another player’s portfolio using a stolen ID and password.
Virtual games are popular in Japan, and “Second Life” has drawn a fair number of Japanese participants. They rank third by nationality among users, after Americans and Brazilians.
I think the intersection of the virtual and ‘real’ is one of the most interesting phenomenon we are likely to experience in my lifetime. It is certainly more interesting than an election where the best candidates are ignored by the media…
Yesterday on the bus I heard an interesting exchange between two guys that seemed like average working guys:
Guy 1: We are about to elect the first non-white president!
Guy 2: I don’t care what his nationality is, he doesn’t have experience!
It’s nice to know that the voters are so well informed that they confuse race with nationality. As if black people aren’t citizens of the U.S. Actually, I think this is representative of a lot of McCain voters. They are racist, poorly educated, and they tend to get their information from prescription drug abusing right wing talk show hosts. What they forget is that those same sources were blasting McCain in the primaries. By the way, I love that McCain spent $150,000 to upgrade the Palin families wardrobe from the stuff they bought at Mervyns.
If Obama loses, it would be easier to live with it if it’s due to racism rather than if it’s stolen. If it’s racism, I can say, “Okay, we lost, but at least it’s a democracy. Sure, it’s a democracy inhabited by a majority of disgusting, reprehensible turds, but at least it’s a democracy.” If he loses because it’s stolen, that will be much worse. Call me crazy, but I’d rather live in a democratic racist country than a non-democratic non-racist one.
Now, as to Radio Raheem, I was talking with my brother yesterday and he told me that big boom boxes aka Ghetto Blasters are going for inflated prices on ebay, apparently we are on the eve of a boombox revival. The timing is about right for the return of the 80’s by a generation that never was there.
Waikiki Beach is a fascinating mish-mosh of types – locals and tourists, homeless and loaded. On Saturday the grassy fringe of the beach was littered with the usual mix of sunburned tourists seeking shade under the palms and homeless guys catching some sleep. At the Duke Kahanamoku statue, a tiny gathering of three added to the variety – this was the Ralph Nader rally. Not a screaming success, but then it was announced just the day before. Ralph did draw a substantial crowd during his Hawaii visit, most of which stayed for nearly four hours to listen to him answer questions. And I mean really answer them, not just work back around to a canned message. Is that so much to ask from our political leaders?
The World Bank predicts that high food and fuel prices will increase the number of malnourished people in the world by 44 million this year to reach a total of 967 million.
Economists have also warned that the world’s poor would be the most vulnerable to a global economic downturn.
ST. LOUIS — Independent presidential candidate Ralph Nader is furious over the federal government’s $700 billion attempted bailout of the nation’s troubled financial system.
And he’s just as mad about the fact that he’s not allowed to make his points in any of the televised presidential debates between Republican John McCain and Democrat Barack Obama.
But one wouldn’t guess Nader’s ire from his calm demeanor Thursday.
“I’m angrier than I sound,” Nader said at the Renaissance Grand hotel, where he stopped for a brief campaign pitch.
Nader and his running mate, Matt Gonzalez, will be on the Nov. 4 ballot in Missouri, Illinois and 43 other states.
Nader’s chief message during Thursday’s stop: The $700 billion bailout package for Wall Street should instead have been used for an infrastructure bailout around the country.
Nader is calling for a national program to “renovate, repair and upgrade” schools, clinics, bridges, sewers, levees, public transportation, libraries and the nation’s drinking water system.
“Instead of our government making war in the Middle East, we should be making strong levees in the Midwest,” Nader said, citing studies showing that the nation’s public structures need $1.7 trillion of work.
Such programs would put average people back to work and do more to relieve the nation’s fiscal ills — by attacking it from the ground up — than the top-down approach of aiding the nation’s private financial network, Nader added.
The Wall Street bailout, he said, represented “gross misplacement of priorities by the federal government.”
This is the third presidential bid for Nader, 74, who made his name over the past 40 years as an activist against corporate misdeeds.
Nader said he recognizes that he has little chance of winning the White House. But he emphasized that he’s not running for himself.
“My concern is only building a political movement for social justice,” he said. “My closet is full, but I don’t have a white flag in it.”
This article gives a little bit of the silver lining that could come from the mess we are currently in. Pass it on and change the conversation in the Presidential debates. Incidentally, this article came to me from the Nader campaign while Obama and McCain are spouting meaningless platitudes.
Big Banks Go Bust: Time to Reform Wall Street
Monday, September 15, 2008
With the demise of Fannie Mae, Freddie Mac, IndyMac, Bear Stearns and now Lehman Brothers, we’ve been treated to the failure of more major financial firms than during any year since the Great Depression. The sight of rich bankers getting the boot might be lots of fun if it were just a spectator sport. Unfortunately, we are in the game with these clowns.
As a result of their incompetence, irresponsibility and greed, the housing bubble was allowed to grow to dangerous proportions. Its collapse threw the economy into recession, putting millions of people out of work and lowering the wages of those who still have their jobs. The plunge in house prices has destroyed much of the life savings for tens of millions of people nearing retirement.
Meanwhile, the bankers who messed up and destroyed the companies who hired them are still multimillionaires. Most of them are still in their old jobs getting multimillion-dollar pay packages. This is a sector that badly cries out for reform, and there is no better time than now to put it into place.
The first target for reform should be the outrageous salaries drawn by the top executives at financial firms. The crew that lost tens of billions at Citigroup, Merrill Lynch and the rest have received tens of millions, possibly even hundreds of millions, in compensation for their “work” over the last few years.
There is a general problem in corporate America of stockholders being unable to effectively organize to rein in top management. This problem is most serious in the financial industry.
Thankfully, the credit crisis gives us the tools we need to rein in executive pay. Currently, the major surviving investment banks (e.g. Merrill Lynch, Morgan Stanley, Goldman Sachs) are operating on life support. They are drawing money at below-market interest rates from the Federal Reserve Board’s discount window. This privilege (for which they pay nothing) can easily be worth billions of dollars a year.
These banks are also operating with an explicit guarantee from Fed Chairman Ben Bernanke to their creditors that he will honor their loans in the event that an investment bank, like Bear Stearns, goes belly up. This guarantee is enormously valuable. Investors who make loans to Merrill Lynch or Morgan Stanley don’t have to worry about the health of these companies because Bernanke has said that, if necessary, he will use public money to pay them back.
While we don’t want a chain reaction of banking collapses on Wall Street, the public should get something in exchange for Bernanke’s generosity. Specifically, he can demand a cap on executive compensation (all compensation) of $2 million a year, in exchange for getting bailed out. For any bank that is not on board, Bernanke could make an explicit promise to their creditors – if the bank goes under, you will get zero from the Fed.
This can be an effective way to restore sanity to the salaries paid on Wall Street. And, this can be a good example for setting executive pay more generally. Any time a company comes to the public for a handout, like tax breaks for oil companies or low-interest loans for auto companies, the $2 million cap on all compensation goes into effect.
This is important directly because much of the country’s wealth has been steered into these folks’ pockets, but also because the outrageous compensation packages on Wall Street distorted pay structures throughout the economy. Presidents of universities often get over $1 million a year, and even top executives at private charities can often earn near $1 million a year. These salaries seem low when compared to their counterparts in the corporate world, but they are outrageous when compared to the paychecks of typical workers.
Of course, we must go further in fixing the financial sector – most importantly by downsizing it. The financial sector accounted for more than 30 percent of corporate profits in 2004. Back in the 1950’s and 1960’s, the country’s period of most rapid growth, the financial sector accounted for less than 10 percent of corporate profit.
The financial sector performs an incredibly important function in allocating savings to those who want to invest in businesses, buy homes or borrow money for other purposes. But shuffling money is not an end in itself. The explosion of the financial sector over the last three decades has led to a proliferation of complex financial instruments, many of which are not even understood by the companies who sell them, as we have painfully discovered.
The best way to bring the sector into line is with a modest financial-transactions tax. Such taxes have long existed in other countries. For example, the United Kingdom charges a tax of 0.25 percent on the purchase or sale of share of stock. This is not a big deal to someone who holds their shares for ten years, but it could be a considerable cost for the folks who buy stocks in the morning that they sell in the afternoon.
Comparable taxes on the transfer of all financial instruments (e.g. options, futures, credit default swaps, etc.) could go a long way in reducing speculation and the volume of trading in financial markets. Such a tax could also raise an enormous amount of money – easily more than $100 billion a year. This would go a long way toward funding national health care insurance or a major green infrastructure project.
And, this tax would be hugely progressive. Middle-income shareholders might take a small hit; but it would be comparable to raising the capital gains tax rate back to 20 percent, where it was before it was cut to 15 percent in 2003. The real hit would be on the big speculators and the Wall Street boys, the folks who gave us the housing crisis. Given what the Wall Street crew has done for us, this is change that we can believe in.
Dean Baker is the co-director of the Center for Economic and Policy Research (CEPR). He is the author of “The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer” (www.conservativenannystate.org). He also has a blog, “Beat the Press,” where he discusses the media’s coverage of economic issues. You can find it at the American Prospect’s web site.