Friday READ – 4 October 2013
Posted by greydogg, 99GetSmart
* TALKING JAMIE DIMON WITH SAM SEDER OF ‘THE MAJORITY REPORT’
By Matt Taibbi, Rolling Stone
Yesterday, I had the pleasure of joining old friend Sam Seder on The Majority Report. Among other topics, we talked about the surreal exchange between CNBC dingbat Maria Bartiromo and Salon‘s amazed and incredulous Alex Pareene about Chase CEO Jamie Dimon. Pareene hilariously told the CNBC panel that anybody could do Jamie Dimon’s job as badly as he’s done it, offered himself in half-seriousness as an option and made the absolutely accurate point that any other boss in any other industry who had overseen the regulatory problems that took place at Chase under Dimon would be looking for work.
“If you managed a restaurant, and it got the biggest health department fine in the history of restaurants,” Pareene said sensibly, “no one would say ‘Yeah, but the restaurant’s making a lot of money. There’s only a little bit of poison in the food.'”
I hadn’t seen the exchange until yesterday when Sam played it on his show. It’s an amazing piece of tape that tells you everything about why the financial press constantly misses major scandals – their only sources of information are bank spokestools and they have no clue about even the most obvious things, like the fact that the whole country north of TriBeCa and south of Battery Park cringes at the sound of Dimon’s name. Maria really cranked up a shameless-even-for-her CNBC toady act with her constant, “Leaving regulatory problems aside. . .” refrains – it’s an amazing clip. […]
* THIS SOCIOLOGICAL THEROY EXPLAINS WHY WALL STREET IS RIGGED FOR CRISIS
In giant, complex systems like global financial markets, terrible accidents are inevitable.
By Bill Davidow, The Atlantic
[…] The recent rogues’ gallery of accidents is impressive. It includes what traders are calling the “Flash Freeze,” when the NASDAQ was shut down for three hours on August 22. Just three days before, a programming error in an internal system that Goldman used to generate option orders malfunctioned, causing stock options with ticker symbols beginning with H through L to trade at just $1. On August 1, 2012, a similar glitch cost Knight Capital $390 million. On May 6, 2010, a Flash Crash triggered a momentary decline of 998.5 points in the Dow. The market recovered in a few hours.
Further back, in a harbinger of what was to come in the financial crisis of 2008, we can look to the 1998 failure of Long Term Capital Management. The hedge fund had made a bad bet on derivatives tied to the Russian market, and its collapse threatened to cause a chain reaction throughout the world financial system. The traders at Long Term Capital were no rookies. Among their advisors were Myron Scholes and Robert Merton, 1997 winners of the Nobel Prize in Economics for their path-breaking work on a “new method to determine the value of derivatives.”
Normal accidents, like these, occur because two or more independent failures happen and interact in unpredictable ways. After studying calamities such as the Three Mile Island meltdown, explosions at chemical plants, and ships colliding in the open sea, Perrow observed that safety mechanisms put in place to make the systems safer in fact frequently trigger the final failure.
The August 22 Flash Freeze is a textbook example. Arca, a pan European trading system, experienced problems connecting to the NASDAQ stock exchange (independent failure one). In attempting to reconnect, numerous orders were sent that flooded the NASDAQ systems causing them to breakdown (independent failure 2). To cope with the breakdown, backup systems were brought online. A flaw in the backup safety system software forced the shutdown (independent failure 3). […]
* DOES CAPITALISM EQUAL HUMAN NATURE?
Capitalism is preferentially identified by its euphemisms: “Free Enterprise,” “market system,” “private enterprise.” “the American Way,” etc. Overt and pervasive partisanship in support of capitalism is not regarded by the American media as an ideological bias negating professional “objectivity” but rather as something akin to the serene acceptance of natural law.
By Patrice Greanville, Greanville Post
THIS PROPAGANDA EQUATION, making capitalism and “human nature” inseparable, is one of the oldest and most effective ideological weapons utilized in the defense of capitalism. It pays off handsomely in a number of important ways. First, if capitalism is congruent with “human nature,” then the capitalist system must be the most “natural” and “logical” form of social organization, as people will have a built-in tendency to observe its basic rules. Second, “human nature,” as defined in bourgeois terms (which the press of course follows) is characterized by two significant traits:immutability and unalterable egoism.
The first “fact” automatically discourages most efforts at seriously reforming, let alone revolutionizing, society. Why should anyone bother if in the end the stubborn intractability of human nature will render all schemes for change and improvement of social conditions worthless and utopian? It’s evident that when sufficient numbers of people are made to believe that an eternal, immutable and invincible “human nature” will time and again scuttle the best-laid plans for social improvement and the costliest sacrifices for change, then most threats to the status quo will be defanged at the outset. They will be stillborn, which is certainly good news for those who live like kings under the current arrangement.
The second “fact,” addressing the supposed individualistic nature of people, provides a convenient justification for the harsh, dog-eat-dog conditions that prevail under the so-called free-enterprise system. In this vision, all human motivation is supposed to flow from the desire for pecuniary gain and self-aggrandisement, the overwhelming egoism celebrated by Ayn Rand and her ilk. Individuals are perceived uni-dimensionally as simple atoms of unrelenting hedonism, constantly pursuing the calculus of profit and loss, pain and pleasure, as they irrepressibly “maximize” their options to fulfill the dictates of hopelessly greedy natures. This is the fabled “homo economicus” of free market literature; the heroic “rugged individualist” so dear to conservatives, and supposedly the creature on which all human progress and wealth depend. But why do the media–and especially the wilier corporate apologists– embrace this tack with so much fervor? As suggested above, the very possibility of changing things is a highly contested ideological area. Radicals argue that society can and should be drastically changed. Conservatives (and the media, which incorporates the mildly reformist liberaloid viewpoints) contend that nothing basic can or should be changed because our behavior is rooted in an unchanging human nature true for all epochs, systems, and states of human evolution, and, besides, the system is quite sound as it is. (More on this below.) […]
* OUTSOURCING AMERICA EXPOSED
* THE REIGN OF MORONS IS HERE
By Charles P. Pierce, Esquire
Only the truly child-like can have expected anything else.
In the year of our Lord 2010, the voters of the United States elected the worst Congress in the history of the Republic. There have been Congresses more dilatory. There have been Congresses more irresponsible, though not many of them. There have been lazier Congresses, more vicious Congresses, and Congresses less capable of seeing forests for trees. But there has never been in a single Congress — or, more precisely, in a single House of the Congress — a more lethal combination of political ambition, political stupidity, and political vainglory than exists in this one, which has arranged to shut down the federal government because it disapproves of a law passed by a previous Congress, signed by the president, and upheld by the Supreme Court, a law that does nothing more than extend the possibility of health insurance to the millions of Americans who do not presently have it, a law based on a proposal from a conservative think-tank and taken out on the test track in Massachusetts by a Republican governor who also happens to have been the party’s 2012 nominee for president of the United States. That is why the government of the United States is, in large measure, closed this morning.
We have elected the people sitting on hold, waiting for their moment on an evening drive-time radio talk show.
We have elected an ungovernable collection of snake-handlers, Bible-bangers, ignorami, bagmen and outright frauds, a collection so ungovernable that it insists the nation be ungovernable, too. We have elected people to govern us who do not believe in government. […]