The ‘socialist’ stock market rally

The next time our friends on the right say President Obama is leading us down the path to socialism (it’s early in the day, they should say it in the next hour or so), hit them with this (from Neil Irwin at Wonkblog):

We are living through the strongest stock market rally since the late 1990s–though this one has far, far more solid fundamentals underlying it.

The rise is a major, major reason that Americans’ household finances are looking better. …

The U.S. stock market has been on an absolute tear, rising back to near its pre-crisis level. Tuesday was a typical day in this long rally, which has proceeded with only a few interruptions since March 2009.

The above sentences were written on Tuesday, Jan. 23, and by the end of that day the Dow Jones Industrial Average closed at 13,774.33. As of the Feb. 1 close, it’s at 14,009.79.

Obama inherited a dying American economy (from Republican President George Bush the Dumber) when he took office in January 2009, and when things bottomed out on March 2, 2009, about a month and a half after Obama was inaugurated, the Dow stood at 6626.94.

Think about it. In less that four years, the Dow has gone from 6626.94 to 14,009.79. That’s a 111% gain.

Meanwhile a deluded GOP based its past presidential campaign on Obama’s “failed economic policies,” and how Mitt Romney, the capitalist champion, was going to lift us back to economic prosperity by essentially bringing back the policies of Bush.

Let’s take a look at the market since 1993, when Bill Clinton became president.

January 1993: 3310.00.
January 1997: 6813.09 (A 106% climb. End of Clinton’s first term.)
January 2001: 10,887.36 (A 60% gain. End of Clinton’s second term.)
January 2005: 10,489.94 (A 3.6% decline. End of Bush’s first term.)
January 2009: 8000.86 (A 24% drop. End of Bush’s second term.)
January 2013: 13,860.58 (A 73% rise. End of Obama’s first term.)

So, the right wing said Clinton and Obama were leading us down the path to socialism, and the stock market soared. They insisted that economic policies that prevailed during the Bush administration are the path to prosperity, and the stock market tanked.

Whose policies do you think Wall Street prefers?

Actually, don’t think about it. The numbers are the answer.

 

A Cheesehead follow up

Yesterday’s post on How much does it cost to buy a Cheesehead, drew the following response:

By your logic, then Obama bought the 2008 elections by outspending McCain?

Well, yeah. That’s the whole point.

It doesn’t matter what the candidates say. It doesn’t matter what the issues are. It doesn’t matter if voters despise a candidate on one side or the other on the political spectrum. Here’s reality: If 40% of the population hate one candidate, and 40% hate the other candidate, the remaining 20% of the population will decide the winner. So, in a general election, if one candidate has twice as much money as the other, the odds are with the one with the most money.

That’s where we’re going in the 2008 presidential election. May the best candidate be bought. If you want your side to win, your side better have the cash.

There’s a reason President Obama had fundraisers recently with Wall Street bigwigs. And there’s a reason why Wall Street types should be willing to contribute. While the rest of us saw our salaries decrease, the financial houses saw stocks hit record levels. And to top it off, they got government bailouts even though they threw us into near depression, or what we now seem to be experiencing, a never ending recession. The bailouts started with George W. Bush, but Obama didn’t do enough to push through tough financial regulations to prevent Wall Street abuses from happening again. All he did was say a few words that hurt brokers’ and bankers’ feelings (“They need to pay their fair share”), so he had to go repentantly to them for a handout. Because they have the money.

But let’s go back to the 2008 election. Here are the breakdowns in campaign funding:

John McCain

legend Individual contributions $199,275,171 54%
legend PAC contributions $1,407,959 0%
legend Candidate self-financing $0 0%
legend Federal Funds $84,103,800 23%
legend Other $83,306,833 23%

Barack Obama

legend Individual contributions $656,357,572 88%
legend PAC contributions $1,830 0%
legend Candidate self-financing $0 0%
legend Federal Funds $0 0%
legend Other $88,626,223 12%

Now, when you add all the numbers up, John McCain raised $368,093,763. Barack Obama raised $744,985,265. So how did that disparity happen?

Simple. John McCain ran a bad campaign.

Let’s ignore the selection of Sarah Palin as vice president. Or the fact that McCain embarrassed himself with the mavericky move of saying he was going to suspend his campaign while the 2008 financial crisis was being worked out. Or the fact that McCain didn’t have a suggestion for dealing with the 2008 financial crisis when he and Obama and the bankers and the government officials were gathered to figure out what steps to take, while Obama was offering recommendations. Or the fact that McCain wasn’t offering anything new to the American people other than what the lame duck incumbent had offered for the previous eight years.

McCain didn’t have money to compete because:

[Since] McCain opted into the public financing system during the general election, he faced an $84 million limit on what he could spend, putting him at a huge disadvantage compared to Obama, who raised $66 million more than that in September alone. Although McCain lost the race, he came a long way from the early days of the campaign, when he appeared to be nearly broke.

Look at the line for federal funds: McCain ($84,103,800). Obama ($0)

While you’re at it, look at the lines for PAC contributions. McCain raised more than 750 times the PAC money that Obama did. This is why the Citizens United ruling, made by GOP-appointed justices, matters.

When you take the total amount of money raised and the total number of votes received in 2008, Obama got 69,494,428 votes, which averages out to $15.05 per vote; McCain got 59,950,323 votes, or $6.14 per vote. A big disparity, but nothing approaching Scott Walker’s $35.22 compared with Tom Barrett’s $16.34. Obama’s per vote cost was less than Barrett’s.

Obama had a 2.45 to 1 ratio against McCain. Walker had a 2.16 to 1 ratio against Barrett. But there’s almost a $20 per vote advantage for Walker over his opponent compared with a $9 advantage for Obama.

Obviously, Obama and Mitt Romney are going to opt out of the public financing system. McCain showed how stupid it was to limit the amount of money you can get to campaign. And Romney has the advantage here, as we’ve seen from May fundraising. Conservative and corporate investors will shell out the big bucks to get a guy in the White House who knows how to reduce a payroll and return huge dividends. The rich will get more and the rest of us will see our paychecks continue to shrink. And we are already seeing what the influence of PAC money is going to be in this election.

If the candidates spend an equal amount of money by Election Day, then what will matter is how they used the money in their television campaigns. More cash for corporations. More pundocracy from TV talking heads — who’ll tell us why the middle class voted for whomever they’re going to select — pulling down salaries in the high-six or low-seven figure range. Always great to hear the 1% explaining the actions of the 99%.

And by the way: My logic in 2008 was that there was no way Obama was going to win the election, because I really believed Americans weren’t going to vote for a black president. I made a 50 euro bet (I was out of the country at the time) that Obama wouldn’t win. (Sorry, I’m not like Mitt Romney, who can make a $50,000 bet. But if I had that kind of cash, I would have made it. And I would have allocated a chunk of the rest of my money as investment capital in a new president.) All that said, I was still going to vote for Obama despite my belief that it was a lost cause. But I didn’t pay attention to the political money. It turns out “my side” had the money because my candidate didn’t limit the amount of money he could use.

I still say McCain would have won that election if he hadn’t run such a terrible campaign, as noted above. Let’s say he didn’t commit the fatal fundraising mistake and collected an amount equal to what Obama raised. He still would have lost because picking Sarah Palin — instead of choosing ANY OTHER REPUBLICAN WOMAN — was a killer. Elizabeth Dole, Kay Bailey Hutchison, Olympia Snow, Susan Collins. You’ve heard of them. All Republican women. All serving in Congress. All respected, well known names. All extremely qualified. I haven’t even named the other female GOP governors who had more political cred that Palin, who ended up galvanizing the left as much as she did the right. None of the Republican women mentioned would have continually fed red meat to a rabid base, leaving everyone else to say “If John McCain died in office, there’s no way you’d want her as president.”

The message of the Occupy Wall Street protests

While police in various parts of the U.S. are pepper spraying 84-year-old women and using sound cannons designed for wartime combat on non-violent 99% protesters, here’s a video explainer on what the Occupy Wall Street protests are all about from the Guardian:

Is it really 99% v 1%? It has become the rallying cry of the Occupy Wall Street movement – and the Occupy protests around the world. But is it true?

This is the data behind this animation, produced by Guardian interactive designer Mariana Santos. And that data does show some people have done better out of America’s economic booms of the last 20 years than others – as this report from the Congressional Budget Office shows too.

When Americans are asked how US wealth is distributed, they think the very richest fifth should own up to 40% of the national wealth – and that includes 90% of Republicans surveyed. In fact, that richest group owns 85% of the nation’s wealth. Those surveyed also thought the bottom 120 million people should own around 10% of the national wealth. The reality: 0.3%

Go to the Guardian link for more details, including an interactive map of poverty levels in various states.

More tea party nonsense in Massachusetts

A teabagger showed up at an Elizabeth Warren event Wednesday and in the course of yelling at her because he’d been out of work for a year and a half, called her a “socialist whore” for her support of the Occupy Wall Street movement. He also referred to the president as Warren’s “foreign-born” boss.

Her response:

“I actually felt sorry for the guy. I really genuinely did,” Warren later told the Huffington Post. “He’s been out of work now for a year and a half. And bless his heart, I mean, he thought somehow it would help to come here and yell names.”

She also added: “I’m not angry with him, but he didn’t come up with the idea that his biggest problem was Occupy Wall Street. There’s someone else pre-packaging that poison — and that’s who makes me angry.”

I wonder who’s pre-packaging the poison to an uninformed member of the electorate? Could their initials be G-O-P or F-O-X-N-E-W-S?

Who are the 99%?

Who are the 99%?

They seem to be spreading in various cities. They’ve been in Wall Street for several weeks. Word is, they’ve moved into Washington Square Park in New York.

They’re in Washington as Occupy DC. They were in McPherson Square and Freedom Square, not far from the White House. And they were on the Mall this weekend. Here’s one sign bearer in the middle of the street in front of packed stairs of protesters at the National Air and Space Museum on Saturday:

And they’re occupying a number of other cities across America.

So what’s the story? They’re telling you if you are willing to listen. They aren’t encouraging. In a lot of cases, they’re pretty desperate. And they’ve gotten that way because the economic system has collapsed and the future is looking dark. They blame corporate greed, political indifference and media neglect.

Click here for a look.

Speaking of sociopaths

There have been demonstrations against Wall Street for more than a week now. Some people have been arrested. But this cop was really out of line.

Oh, you didn’t catch what happened? Let’s slow things down for you.

The women are penned off. They are not providing any resistance. They present absolutely no threat or danger. They’re just yelling. And the cop in the white shirt (a white shirt signifies a supervising officer) pepper sprays them.

What does the NYPD say about this? Here’s the New York Times:

The Police Department’s chief spokesman, Paul J. Browne, said the police had used the pepper spray “appropriately.”

Pepper spray was used once,” he added, “after individuals confronted officers and tried to prevent them from deploying a mesh barrier — something that was edited out or otherwise not captured in the video.

Well, there’s the video. What the spokesman is saying about them trying to prevent the police from deploying a mesh barrier just isn’t true. As is the case in many news stories these days, you have to go to another source to check out if any relevant details are missing. Here’s the Guardian of London.

A senior New York police officer accused of pepper-spraying young women on the “Occupy Wall Street” demonstrations is the subject of a pending legal action over his conduct at another protest in the city.

The Guardian has learned that the officer, named by activists as deputy inspector Anthony Bologna, stands accused of false arrest and civil rights violations in a claim brought by a protester involved in the 2004 demonstrations at the Republican national convention.

Police departments across the country are arresting people who videotape them in action. That’s unconstitutional (at least until the U.S. Supreme Court says it isn’t). Using pepper spray on the defenseless is the reason videotaping should remain legal. But the arrests continue.

Arrested for filming

You can disagree. Maybe you think the demonstrators got what they deserved. This will probably be the audience cheering moment at the next GOP debate. But you’ll sing a different tune when you get stopped and this happens to you.

Stock market psychopaths and other supposed realities

Cover of "The Big Short: Inside the Dooms...

Cover via Amazon

There are plenty of bad things you can say about Wall Street (I know, I’ve said them), but sometimes, the anti-stockbroker armies go to far.

For example, this story ran in the German magazine Der Spiegel recently in an analysis of rogue traders who lose billions at banks:

According to a new study at the University of St. Gallen seen by SPIEGEL, one contributing factor may be that stockbrokers’ behavior is more reckless and manipulative than that of psychopaths. Researchers at the Swiss research university measured the readiness to cooperate and the egotism of 28 professional traders who took part in computer simulations and intelligence tests. The results, compared with the behavior of psychopaths, exceeded the expectations of the study’s co-authors, forensic expert Pascal Scherrer, and Thomas Noll, a lead administrator at the Pöschwies prison north of Zürich.

“Naturally one can’t characterize the traders as deranged,” Noll told SPIEGEL. “But for example, they behaved more egotistically and were more willing to take risks than a group of psychopaths who took the same test.”

Now, the study sounds interesting, and it would be nice to actually see the document and find out if the findings are being taken out of context since the guys being quoted don’t appear to be with the university, but with a prison in Zurich. But Der Spiegel doesn’t bother to link to the study, so we’re expected to take their word for it.

I can’t do that. Sociopathic behavior, maybe. Psychopath? I need more proof. Maybe this study does exist, and maybe it clearly documents the testing and the results. But if there’s no link to see this for ourselves, why should we believe it? Even if we really want to?

But it doesn’t end there. The BBC this week ran an interview with a “day trader” named Alessio Rastani, who had some candid comments on why stock brokers are looking forward to the collapse of global stock markets:

Now this, too, borders on the edge of psychopath, but stands firmly in the sociopath world. This guy seems to have his act together. Or does he? He’s not shown to be affiliated with any major brokerage house. In stockbroker land, these are the kinds of statements that are more likely to be said in the comfort of a trading floor with like minded sociopaths, but never on live television with millions of listeners. At the least, if this guy’s with a real financial institution, saying this would be a firing offense. So anyone watching this should, after the initial revulsion and self-satisfied feeling of being right about Wall Street all along should think, “Wait a minute. Is this guy real?”

The Daily Telegraph in London followed up and is reporting this:

In the interview Mr Rastani described himself as an independent trader. Elsewhere he claims he’s an “investment speaker”. Instead of operating from a plush office in Canary Wharf Mr Rastani works and lives with his partner Anita Eader in a £200,000 semi in Bexleyheath, south London. The house, complete with a mortgage from Royal Bank of Scotland, belongs to her not him.

He is a business owner, a 99pc shareholder in public speaking venture Santoro Projects. Its most recent accounts show cash in the bank of £985. After four years trading net assets are £10,048 – in the red.

Canary Wharf and “The City” are London’s two financial districts of London. Rastani doesn’t appear to work in either of them. Two hundred thousand pounds, which in the real world is seen as a lot of money, doesn’t get you anything more than a modest flat in London. And “broker” living in South London, is probably like a Charles Schwab specialist living in Hoboken, N.J. Not saying that’s poverty stricken, but it definitely isn’t where the movers and shakers live. So the guy really has no basis for speaking as a “Wall Street” or “City” or “Canary Wharf” insider. He doesn’t make money trading. He doesn’t move markets. As the Telegraph story says:

How a man who has never been authorised by the Financial Services Authority and has no discernible history working for a City institution ended up being interviewed by the BBC remains a mystery.

So far, we’re just getting examples of shoddy reporting based on lame background checks.

We already have enough reasons to condemn Wall Street practices and to demand action against banking institutions for getting us in the financial mess we’re already in. But even if we want to believe in the stories about psychopaths and guys who get off on market collapses because it means more money for them (and just to emphasize, people do get extremely rich when financial products collapse. Read Michael Lewis’s “The Big Short” on the meltdown in the subprime mortgage market), we need bulletproof documentation on these “accepted truths.”

Otherwise, it’s just another group of people making up crap. And we already have enough of that.