None Dare Call It Maize

Matt Taibbi has been on a roll with these “Everything is Rigged’ articles and blog posts on the RS site. And now he rolls out another doozy on the ratings agencies, which I would call corrupt if the word retained any meaning whatsoever:

Thanks to a mountain of evidence gathered for a pair of major lawsuits by the San Diego-based law firm Robbins Geller Rudman & Dowd, documents that for the most part have never been seen by the general public, we now know that the nation’s two top ratings companies, Moody’s and S&P, have for many years been shameless tools for the banks, willing to give just about anything a high rating in exchange for cash.

In incriminating e-mail after incriminating e-mail, executives and analysts from these companies are caught admitting their entire business model is crooked.

“Lord help our fucking scam?.?.?.?this has to be the stupidest place I have worked at,” writes one Standard & Poor’s executive. “As you know, I had difficulties explaining ‘HOW’ we got to those numbers since there is no science behind it,” confesses a high-ranking S&P analyst. “If we are just going to make it up in order to rate deals, then quants [quantitative analysts] are of precious little value,” complains another senior S&P man. “Let’s hope we are all wealthy and retired by the time this house of card[s] falters,” ruminates one more.

Ratings agencies are the glue that ostensibly holds the entire financial industry together. These gigantic companies – also known as Nationally Recognized Statistical Rating Organizations, or NRSROs – have teams of examiners who analyze companies, cities, towns, countries, mortgage borrowers, anybody or anything that takes on debt or creates an investment vehicle.

Their primary function is to help define what’s safe to buy, and what isn’t. A triple-A rating is to the financial world what the USDA seal of approval is to a meat-eater, or virginity is to a Catholic. It’s supposed to be sacrosanct, inviolable: According to Moody’s own reports, AAA investments “should survive the equivalent of the U.S. Great Depression.”

Late capitalism is about all you can say. Every single descriptor is one that paints the picture of this crazy ‘system’ only working alongside dynamic constraints on human weakness and greed. Absent those, and we are absent most of those, we get this. It’s as indefensible as a plantation wedding in 2013, and everyone involved knows it. Read and share, especially enjoyable alongside the high-value TV commercials for multinational financial services corporations that support most programming these days.

Budget Deficit: Disappearing

If you read Paul Krugman, and you really should read Paul Krugman, this will come as exactly no news at all to you. But it’s a good thing Republicans have found some fake scandals to spike their poutrage, becuase the thing they’ve been screaming about for the last three years is going away:

according to the Congressional Budget Office, the debt disaster that has obsessed the political class for the last three years is pretty much solved, at least for the next 10 years or so.

The last time the CBO estimated our future deficits was February– just four short months ago. Back then, the CBO thought deficits were falling and health-care costs were slowing. Today, the CBO thinks deficits are falling even faster and health-care costs are slowing by even more.

Here’s the short version: Washington’s most powerful budget nerds have cut their prediction for 2013 deficits by more than $200 billion. They’ve cut their projections for our deficits over the next decade by more than $600 billion. Add it all up and our 10-year deficits are looking downright manageable. Following are the highlights.

Charts and graphs at the link, but you get the picture. Jees, these people.


I hadn’t checked in with Adbusters in while, and when I did, saw this article on happiness, aka the modern blues:

I don’t get it. I was the first kid on my block to have a Nintendo. I got a car on my 16th birthday. I didn’t have to work a single day in college (unless you count selling homemade bongs at Phish concerts). My grandfather grew up with nothing. He had to drop out of high school during the Depression to help his family get by, earning money shining the shoes of drunks at a local saloon. Why is my generation, one of relative privilege and wealth, experiencing higher rates of depression than any previous generation?

I turned to French philosopher Jean Baudrillard for some illumination on this conundrum. It seems that in the 19th century, for the first time in history, humans began to require observable proof of happiness. According to Baudrillard, happiness became something that had to be measurable in terms of material gain, something that would be evident to the eye. But I’m surrounded by stuff and yet I’m still glum. At my age, my grandfather had fewer possessions and more happiness. So what do you make of that, Mr. Baudrillard?

Nothing shocking here, especially right here. And the I-never-had-to-work-for-anything glumness is a bit self-indulgent. But the point about Baudrillard becoming somewhat passé is a good sign, I think. As this incomplete notion regarding material happiness increasingly slips into the common experience, people moving beyond it becomes more the norm. We’re at a strange stage in this evolution, that will be much clearer to look back on than it is to experience first-hand and make sense of. But corners are being turned, and this isn’t to sound overly hopeful or optimistic – it’s just a consequence of overconsumption. Even our tendency to want/have/own/possess lurches back toward balance. Thank your animal nature for rejecting your bourgeois tendencies.

Sustainability tie-ins

Ed Kilgore reflects on the First Earth Day and what he was able to learn about it, how it was discussed, way back in a super conservative county in Georgia. Weep for the past, cry for the present:

we had a big Earth Day program, complete with a speech by actor Hal Holbrook, who had identified with the environmentalist cause in some manner that eludes me today.

That amazes me, now that being identified as an “environmentalist” leads so many people to identify one as a secular-socialist elitist. On the first Earth Day, Georgia was governed by none other than Lester Maddox, and my home turf was about to be represented by Larry McDonald, soon to become president of the John Birch Society (with whom Lester was identified as well). But I don’t recall my school or its principal getting any serious flak for spending a good chunk of a taxpayer supported day talking about the damage we were doing to the environment and what we could collectively do about it.

Take this with Taibbi’s reporting on Wall Street feminine hygiene product Dan Loeb and you get an idea of how even the language of sustainability has been turned into a rationale for a revenue stream, completely separate from the very low bar of its environmental context. Fine. Language is free. Do with it what you will. Just know that this is happening:

In the age of Citizens United, it’s going to become more and more important for ordinary people everywhere to find out if their tax dollars or their retirement money is being used to fund political lobbying against their own interests. There are, after all, lots of people on Wall Street with obnoxious political interests who want to get their hands on your union or state retirement money, your federal social security benefits (just think of how screwed we’d all be now if they’d privatized Social Security before 2008), and, through bailouts, your tax dollars.

And now that some of them, like Loeb, have taken a hit for dabbling in politics while feeding at the retirement trough, Wall Street is panicking and crying foul. An editorial in the Wall Street Journal this morning stooped to accusing the American Federation of Teachers of “bullying hedge funds to cut off funding for kids in Harlem,” as if terminal greed patients like Dan Loeb or the editorial board of the Wall Street Journal gave even half a shit about kids in Harlem. They should be ashamed of themselves for even thinking about going there.

Hoaxes and Jokeses

The Mercatus Center at George Mason University informs us on such burning issues (though not burning itself) as:

The case for across-the-board spending cuts

The employments costs of regulation, and relatedly

The failure of risk-based capital regulation, and

The U.S. drops in global competitiveness

… The Mercatus Center at George Mason University: the world’s premier university source for market-oriented ideas—bridging the gap between academic ideas and real-world problems.

And how.

One treeellion dollars

Dr. K brings the Platinum wrath:

[President Obama] will, after all, be faced with a choice between two alternatives: one that’s silly but benign, the other that’s equally silly but both vile and disastrous. The decision should be obvious.

For those new to this, here’s the story. First of all, we have the weird and destructive institution of the debt ceiling; this lets Congress approve tax and spending bills that imply a large budget deficit — tax and spending bills the president is legally required to implement — and then lets Congress refuse to grant the president authority to borrow, preventing him from carrying out his legal duties and provoking a possibly catastrophic default.

And Republicans are openly threatening to use that potential for catastrophe to blackmail the president into implementing policies they can’t pass through normal constitutional processes.

Enter the platinum coin.

I don’t get what kind of machine you would drop such a coin into but, as is well documented, I don’t understand a lot things.

Snob culture + open-mindedness

Okay, back to videos. I’m doing some prep for two interviews next week and one led me this Matthew Collings video series. I used to read him in Modern Painters and he’s a very funny writer. Then Modern Painters stopped having any painting in it. I tried to read nothing into it, and I hope they didn’t either when I cancelled my subscription.

Anyway, here’s one part of this cool series he did that’s now on YT.

Smoking the Wrong End

I couldn’t write anything for a couple of days, but not because I couldn’t top ‘pinyon’ in the subject line, thank you very much.

With all the gloating about Romney’s Doofus Act this far out from the election, we should remember not to play in their hands. The reality of Romney, the entire dimensions of its scandalous fraudulence, is the fault of the Republican Party and its insanity refineries around the southern parts of the country, as much if not more than any of it actually belongs to him. Pierce:

The biggest problem with Romney’s campaign is its utter incoherence, which stems from the fact that he had to romance a Republican primary electorate that is clearly demented. The root of the campaign’s fundamental dishonesty, which is what has led to its incoherence in the first place, is the fact that the Republican primary electorate forced Romney to renounce the only real achievement he has as an elected politician — the Massachusetts health-care reform. Once you find you have to lie about all the good you did, what does the rest of it really matter?

Yes, do tell. And now, in a bit of very hopeful convergence, what I would really like is for some reporter to ask the President what he thinks about the NFL right about now. And I would like for the President to say that, of course he likes the NFL, likes to drink beer and watch it like some others do, and so he hates what is going on now with the owners trying to turn the refs’ pensions into 401(k)s but that this sort of thing has been happening for a while now. Let’s let that discussion burst out into the open now, too, while we’re at it.

That’s what I would like.

Social Impact Bonds

Okay, so this is so… questionable. In their thirst to find news ways of making money, the cunning quants at Goldman Sachs have hit upon an ingenious scheme in which New York City is:

embracing an experimental mechanism for financing social services that has excited and worried government reformers around the world, will allow Goldman Sachs to invest nearly $10 million in a jail program, with the pledge that the financial services giant would profit if the program succeeded in significantly reducing recidivism rates.

The city will be the first in the United States to test “social impact bonds,” also called pay-for-success bonds, which are an effort to find new ways to finance initiatives that might save governments money over the long term.

Alright, I’m going to slow pitch this one under-hand. See the ball, here it comes:

If you are going to do this, there are other ways to make money that will save a lot more than save governments money over the long run. More, as in shorelines and aquifers. How about financial incentives for people to use less energy? For power companies to sell less energy? For regions to pump less carbon into the atmosphere? Is this that difficult? I know you can get there GS, come on.

The more you read the article, the more obscene it gets, private equity dabbling in social programs. At its essence, truly obscene. But if it works, they are going to do this, rather than provide any actual societal goods, they are going to fund them through profit-taking. Fine. Whatever. It is a kind a evolution, I guess. Better than incentivizing our destruction, which is exactly what has led us so close to it. But there are all kinds of other problems to which this could be readily applied. Get ready for a very twisted society, in which late-term capitalism comes around to save itself by incentivizing positive social and environmental outcomes.

Actually, who cares why we do it, as long as we do it.  It’ll be a boon for philosophy book publishers.

The nugget:

“This will get attention as perhaps the most interesting government contract written anywhere in the world this year,” Dr. Liebman said. “People will study the contract terms, and the New York City deal will become a model for other jurisdictions.”

But social impact bonds have also worried some people in the nonprofit and philanthropy field, who say monetary incentives could distort the programs or their evaluations.

“I’m not saying that the market is evil,” said Mark Rosenman, a professor emeritus at Union Institute and University in Cincinnati, “but I am saying when we get into a situation where we are encouraging investment in order to generate private profit as a substitute for government responsibility, we’re making a big mistake.”

Mmmm. Why would you think the market is evil?