Insanity and its Malcontents
I keep doing the same basic post over and over, hoping something will change. I know what that makes me, so this is one of the last posts I’m going to do in this blog (though you can still find me over here occasionally). It’s had a reasonably good run, made its point. Time to move on.
But still. Holy crap, every day. Here are three more stories that, once again, underscore the, uh, score. The Times comes out with this piece taking stock of the wages necessary for any kind of decent life in the United States of America. It surely won’t surprise many to learn that the figure for a single adult is about $30,000. The official poverty line, by contrast, is just north of $10,000.
But the higher figure, ginned up by the nonprofit group Wider Opportunities for Women, includes such extravagances as savings—you know, for the future?—of $1,776. If we eliminate those, and arbitrarily remove “taxes” from the equation (‘cause everyone knows the poor don’t actually pay taxes—everyone on the right anyway), we arrive at a figure of $24,000 per annum, still considerably more than twice the poverty rate.
What percentage of working Americans currently earn at least that much? According to the Economic Policy Institute, approximately 75 percent, as of 2009.
Which means that, in the U.S.A., the real poverty rate is something close to 25 percent—not the 12-16 percent usually reported. My figures are very conservative, of course, as they do not include the unemployed and other welfare cheats who are obviously undeserving of prosperity. Or food. Or housing. Since they don’t pay any taxes.
And speaking of taxes, you may have heard, as recently reported, that General Electric not only pays none, but gets billions in tax refunds, owing to its mad accounting skillz. What you may not know (unless you’re self-employed) is that paying zero taxes, mostly by salting away cash for the future, is a game even relative paupers (earning just $150k a year–i.e., the top 5 percent of U.S. earners) can play—if they take the trouble to incorporate. So says the Wall Street Journal’s Brett Arends, anyway. As he points out, the proper response to GE’s good fortune is anything but outrage:
But if you’re like a lot of people, your first reaction was probably: “Hmmm. How can I get that kind of deal?”
With billions of taxpayer dollars used to prop up GE and rest of the financial industry, folks rightly wonder who got the money, and what collateral it was lent against. As we reported, Bloomberg fought to get the Federal Reserve to divulge that information, won the fight (at the Supreme Court, no less), and yesterday released the first bit of that informational bounty.
The headline news: Yes, of course we lent money against for worthless, defaulted debt.
The biggest borrower was Morgan Stanley:
. . . on Sept. 29, 2008, totaling $61.3 billion, the data show. The New York-based firm pledged $66.5 billion in collateral, including $21.5 billion in equities, $19.4 billion in unknown rated securities and $6.7 billion in junk or defaulted debt.
Also, Libya’s central bank got bailed out. Really.
More info is certainly still buried in the released documents, Bloomberg notes:
The records — 894 files in PDF form with 29,346 pages — reveal for the first time the names of financial institutions that borrowed directly from the central bank through the so- called discount window. The Fed provided the documents after the U.S. Supreme Court this month rejected a banking industry group’s attempt to shield them from public view.
Yves Smith points out why the work being done by Bloomberg’s people on this is harder than it should be:
A further remark: the fact that Bloomberg can say anything intelligent at this juncture is a testament to the cleverness of its reporters. The central bank quite deliberately responded to the request by providing the information in the most disaggregated, difficult to work with form imaginable. The central bank did a version of the same trick with its data on Maiden Lane II. The holdings of that asset management vehicle were various real estate exposures, some of which were hedged. The hedges were reported separately from the bonds and loans. Clearly, Blackrock, the asset manager, had far more useful and understandable reports that they used internally and provided to the New York Fed, but those were withheld. This data will presumably be as enticing as the Wikileaks cables, so enough eyeballs on it will eventually overcome the Fed’s efforts to hinder analysis.
And the result of that will be?