Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.

Non-technical Commentary

by afew Tue Sep 16th, 2008 at 05:18:32 AM EST

The Financial Times has a cautious, hedgy (what else?) editorial up today about the banking crisis. This part caught my eye:

FT.com / Comment & analysis / Editorial comment - Kill or cure for the Wall Street malaise

There will now be renewed calls for more regulation, and understandably so. But it is naive to think that the right regulatory response is obvious. From poor governance to flawed incentives, incompetent risk management to foolish strategies, the failures of the financial system have been so widespread as to render a coherent regulatory riposte impossible. The likely outcome is that tight capital requirements will be forced to serve as a catch-all response to risk. If so, the banking system will look more like that of the 1960s a low-risk, low-return utility business.

How dull and how somehow useless they manage to make that sound. I'm tempted to quip (but is it a quip?) that, over the last quarter-century, just holding down an average job and earning a living has become a high-risk, low-return utility business. Too bad for bankers if they have to return to a humdrum existence, poor duckies.

One of the most important points made in the Anglo Disease op-ed below is that the high-profit financial sector imposes its criteria on all other forms of activity:

The result is an unrelenting focus on profits and shareholder value. Struggling to meet "return on capital" criteria, many non-financial activities experience yet further reductions in capital allocation, and relative decline.

Another aspect of the focus on higher returns is to be seen in the corporate strategies we've witnessed over the years: mergers and acquisitions, down-sizing, outsourcing, offshoring, layoffs. People with skills, people who've invested time, effort, talent and hope in gaining qualifications and learning to be productive in their jobs, have been rewarded with insecurity, stress, and the proposition that, if they lose their jobs, if their "careers" don't work out, well that is a personal failure, while the plate-balancers at the top who are sucking in a gutload of potentially toxic financial froth are "success stories".

Good for "the economy"? Bullshit. We don't even try to measure the amount of productive capacity, of know-how, of human capital destroyed since the nineteen-eighties on the altar of higher returns to satisfy investors and keep the froth bubbling. Good for society? Widening and more violent divisions, the creation of a ninteenth-century underclass, give the lie to that. Good for the individual human soul? The loss of a general sense of hopefulness only compensated for by the equal-chance illusion, alienation, isolation: it's a violent world that destroys individuals while lying to them about their supposed capacity to make it to the top, and while depriving them of the warmth of networks and solidarity.

The entire scheme reposes on an ideology built on lies. "The economy" equals GDP growth and financial markets, nothing real. Society: doesn't exist. The individual: rugged, Ayn Randish, maybe lucky, when-the-going-gets-tough-the-tough-get-going, Just Do It, ya know? Oh, and history? History? You mean you want to check out Dow variations over the past month?

This is the astonishing following sentence of the FT editorial:

The ambitious and the avaricious will no doubt seek more exciting hunting grounds with hedge funds and private equity groups.

Oh, there'll still be a casino that will sell itself as being vital to "the economy", and the FT will see nothing to object to in that situation?


Display:
The sooner we get back to (or move forward to?) a low-risk, low-return economy, the better?
by afew (afew(a in a circle)eurotrib_dot_com) on Tue Sep 16th, 2008 at 05:38:00 AM EST
The sooner we get back to (or move forward to?) a low-risk, low-return economy, the better?  

Only, we can't.  The resources are not there.  We have just entered the VISIBLE death of Capitalism.  

The process may take a while, but it is now in motion.  Think of an avalanche.  

The Fates are kind.

by Gaianne on Tue Sep 16th, 2008 at 05:52:21 AM EST
[ Parent ]
"Capitalism" under what definition?
by Colman (colman at eurotrib.com) on Tue Sep 16th, 2008 at 06:46:37 AM EST
[ Parent ]
The salient features I have in mind are:  

Return on investment
Growth

Neither is sustainable and both are going away.  

The Fates are kind.

by Gaianne on Tue Sep 16th, 2008 at 08:08:23 AM EST
[ Parent ]
well, there are lots of jobless financial high flyers...

surely they can grow food for export, like the third world tries to.

it's a cruel thing, that freedom not to give a fuck until you're in the shit too.

whatever it takes...

empires rise and fall, sure, but history will record this crumble as the most unnecessary, considering the communication technology there was at hand.

but perhaps the patient will rise from his sickbed coma and.... vote obama!

give the man the wheel, please.

he needs to read joe bageant, btw, and learn to get through to people who think that folks with no mud on their shoes are uppity interlexuals, black, white or cappucino.

er, that's cawfee, what am i thinking!

if barack could crack that nut, he's have it made in the shade.

time for some squirrel hunting? mud wrestling? monster truck rallies?

time to get a ranch down in ole bammee and raise quail or earthworms, chew baccy and go fishin' with the good ol' boys, discuss politics down at the feed store, and prove that he can get grittier-than-thou, the uptown sheen is alienating the zero-info, 'politics of bile' crowd.

at the same time as dragging his squawling base out to vote, no matter how centrist a line he softshoe shuffles.

it's going to need an academy awards performance, maybe he could get the cohn brothers as coaches!

he could probably crack it, as he is a very accomplished man.

but will he? or gracefully concede, like kerry?

i choose to trust him, no skull and bones background.

events are swirling up at a right rate, and mcpalin looks like it might crash onto the media reef.

hurricane season, obama needs to stay calm, and use that great sense of humour to bounce back from the increasingly transparent tissue of lies campaign that is the only remaining tool in the repug toolbox.

maybe we have been roved into a new awareness of modern propaganda, i'd like to think that's why the media is shifting to a new level and direction of criticism.

there is no new boy genius to take his place, now his cover's blown, and he's last election's model, whose ploys are seen through, save by that 25-30% out shootin' dinner.

get 'em pannelled, windmilled and gridded, give them a sense of pride, that's what they eat, breathe and weep tears for... a national mission for energy self-sufficiency.

it's the noble thing to do, while practicing the mechanical bull, natch. there aren't too many bodysurfers in the barbell belt.

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Tue Sep 16th, 2008 at 06:51:09 AM EST
[ Parent ]
well, there are lots of jobless financial high flyers...
Most of whom are working class, in any meaningful definition of the word.
by Colman (colman at eurotrib.com) on Tue Sep 16th, 2008 at 06:51:53 AM EST
[ Parent ]
You mean by your meaningful definition, which is that they depend for their living on selling their work for a salary? That they are therefore members of the proletariat?
by afew (afew(a in a circle)eurotrib_dot_com) on Tue Sep 16th, 2008 at 07:27:49 AM EST
[ Parent ]
Pretty much. Most of the people losing jobs are, though they've been persuaded otherwise.
by Colman (colman at eurotrib.com) on Tue Sep 16th, 2008 at 07:30:19 AM EST
[ Parent ]
They and everyone else have been persuaded, which makes a very considerable difference in terms of perception and prestige.

And does their proletarian classification alter the fact that the sector they've been working for has been the cuckoo in the nest for nearly thirty years, and has deprived many other sectors and salary-earners of sustenance?

by afew (afew(a in a circle)eurotrib_dot_com) on Tue Sep 16th, 2008 at 07:44:03 AM EST
[ Parent ]
you have to have FU money to exit the proles.

by the definition of selling your energy, being beholden, surely anyone who's signed a contract is a prole.

maybe the concept of proletariat is over, it only had resonance when it was in the form of lumpenproletariat. which has to be one of the most onomatapeic words/sounds ever!

those guys with their cardboard boxes are the modern equivalent of hod-carriers building the great pyramid (scam).

what does it matter if their from upper, middle or working class backgrounds? the financial services environment gives the appearance of being quite democratic, less of an old boys' club than it used to be a century ago.

glorified barrow boys? ex etonian wankers? everything in between?

not lumpen though...

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Tue Sep 16th, 2008 at 09:55:53 AM EST
[ Parent ]
5000 jobs gone in London today apparently. Most of whom will be ordinary people working in ordinary jobs for relatively ordinary wages. A small number will be in the top 10% of earners and even fewer in the top 5%. How many do you think are in the top 1%?
by Colman (colman at eurotrib.com) on Tue Sep 16th, 2008 at 06:57:46 AM EST
[ Parent ]
Most jobs would go, and the payroll was not protected - with the next pay cheque due this Friday.
(FT.com)

5000 London mortgages to become 'distressed'? (And Lehman employs 25 thousand people globally... what's the size of the hit in Manhattan?)

Like the Enron critters, many of these people had large portions of their savings in Lehman shares.

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith

by Migeru (migeru at eurotrib dot com) on Tue Sep 16th, 2008 at 07:05:11 AM EST
[ Parent ]
I don't think most of the people at Canary Wharf were ordinary working stiffs, and with entry level salaries of £45k and a notoriously flat and entrepreneurial structure I'm finding it hard to be completely sympathetic.

These people always had the choice to do something useful with their lives. But no - they decided to follow the herd and work in the City.

How many companies have these idiots bankrupted? How many little people have they put out of work by concentrating on profit at the expense of social context? How much damage have they done to the international economy?

It was a Lehman VP who helped put the final nails in the coffin of de-regulation.

I hope they spend some time in the real world, grow up and get proper jobs doing something useful.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Tue Sep 16th, 2008 at 07:19:15 AM EST
[ Parent ]
Let me tell you what I want Santa to bring ME for Christmas.

i.e. that'll be the day.

They tried to assimilate me. They failed.

by THE Twank (yatta blah blah @ blah.com) on Tue Sep 16th, 2008 at 07:22:21 AM EST
[ Parent ]
What, they pay cleaners and secretaries 45k? I'm very tempted to ask what constitutes a proper job ...
by Colman (colman at eurotrib.com) on Tue Sep 16th, 2008 at 07:24:03 AM EST
[ Parent ]
Why not ignore the substantive part of the post to try to score an imaginary cheap point?

Do you really think those proverbial cleaners and secretaries aren't going to be able find new jobs in a city with millions of businesses?

How about the cleaners and secretaries in the companies which the City has put under over the last twenty five years? Does working outside of Canary Wharf mean they don't get a sympathy vote?

Bah.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Tue Sep 16th, 2008 at 07:44:25 AM EST
[ Parent ]
And there's me thinking we'd been decrying the destruction of those jobs for ages here. It doesn't mean we should be jumping up and down with joy at the destruction of other jobs. Do we get to hate everyone who works for a bank?
by Colman (colman at eurotrib.com) on Tue Sep 16th, 2008 at 07:48:54 AM EST
[ Parent ]
This is really excessive, Colman. No one is jumping up and down for joy or hating.

I think this has now become a thread hi-jack ! :-)

by afew (afew(a in a circle)eurotrib_dot_com) on Tue Sep 16th, 2008 at 08:06:37 AM EST
[ Parent ]
...Because a company like Lehman will be keeping cleaners on its corporate payroll, and not subcontracting the work to a diversified service company with contracts throughout Canary Wharf and the City?

Not really, no.

You're looking in the wrong place. The temps will move on, the cleaners will be redeployed (as the phrase goes) one way or another.

It's the PAs and IT people who will have a harder time finding new work after this.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Tue Sep 16th, 2008 at 08:12:20 AM EST
[ Parent ]
It's the PAs and IT people who will have a harder time finding new work after this.

And they're a suitable target for Schadenfreude.

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith

by Migeru (migeru at eurotrib dot com) on Tue Sep 16th, 2008 at 08:15:49 AM EST
[ Parent ]
And they're a suitable target for Schadenfreude.

Don't knock schadenfreude:  It's about the only kind of freude we get these days.  

We should laugh now, while we can.  We have long predicted this moment, and long known what follows:  It does not end with the lay-offs of 4000 drones.  

The Fates are kind.

by Gaianne on Tue Sep 16th, 2008 at 08:29:16 AM EST
[ Parent ]
Actually, I was expecting to see a lot of schadenfreude in the London free commuter press (like there was when Bear crashed), but I find very little - mostly shock.

The "drones" had it coming, but the ones that won't be out of a job are these people.

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith

by Migeru (migeru at eurotrib dot com) on Tue Sep 16th, 2008 at 08:33:49 AM EST
[ Parent ]
No, we had not forgotten about that.  

The Fates are kind.
by Gaianne on Tue Sep 16th, 2008 at 08:38:23 AM EST
[ Parent ]
How many people did Lehman have at VP level? a couple hundred?

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
by Migeru (migeru at eurotrib dot com) on Tue Sep 16th, 2008 at 07:35:11 AM EST
[ Parent ]
I'm trying to figure out how many of the three words apply to me, for instance.

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
by Migeru (migeru at eurotrib dot com) on Tue Sep 16th, 2008 at 07:37:46 AM EST
[ Parent ]
Never "ordinary".

paul spencer
by paul spencer (spencerinthegorge AT yahoo DOT com) on Tue Sep 16th, 2008 at 12:45:45 PM EST
[ Parent ]
Actually, what useful things were they to do, given the dominance of the financial sector in London? Where were the good honest jobs that they could have taken?
by Colman (colman at eurotrib.com) on Tue Sep 16th, 2008 at 07:40:51 AM EST
[ Parent ]
In London you can work in Legal or financial services, hairdressers, restaurants, real estate agents, teaching, the Met and the NHS.

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
by Migeru (migeru at eurotrib dot com) on Tue Sep 16th, 2008 at 07:43:34 AM EST
[ Parent ]
There's also engineering and consultancy out at the edges, here and there. Occasionally it looks like real industry.

Ofxord and Cambridge have research parks.

No one is forced to live or work in London. The UK does have an economy of sorts elsewhere too.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Tue Sep 16th, 2008 at 07:47:32 AM EST
[ Parent ]
What? I thought the point being pushed by you, among others, was precisely that the whole UK economy was pretty much shoehorned into London and that prospects elsewhere were borderline. Suddenly this isn't true?
by Colman (colman at eurotrib.com) on Tue Sep 16th, 2008 at 07:57:16 AM EST
[ Parent ]
It's true if you're willing to accept challenging and useful work which doesn't promise city-sized bonus packages.

That seems to have been a personal sacrifice too far for too many people.

So - here we are.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Tue Sep 16th, 2008 at 08:17:22 AM EST
[ Parent ]
Um, for a year I didn't get any offers of challenging and useful work which doesn't promise city-sized bonus packages.

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
by Migeru (migeru at eurotrib dot com) on Tue Sep 16th, 2008 at 08:22:57 AM EST
[ Parent ]
There's some of that, but remember that chart Jerome had of government spending across the UK under Blair (think it was from the FT).  A lot of what was going on out in the Provinces revealed quite a bit of weakness in the private economy.  I think everything from the Midlands up had pretty much stagnated if you deducted the government's contribution.

Which isn't a bad thing.  Gotta put people to work.  But I think most of the private-sector stuff is in the South generally and Southeast in particular.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Tue Sep 16th, 2008 at 08:41:37 AM EST
[ Parent ]
A quote from our Anglo Disease piece below:

European Tribune - Community, Politics & Progress.

In the UK, where the sector's share of GDP rose to 9.4% in 2006, from 5.5% in 2001, City-dominated London received 50% of total foreign investment. Per capita Gross Valued Added rose by between 8% and 9% over the last decade in London while, in all other regions of the UK, it stagnated or fell.
by afew (afew(a in a circle)eurotrib_dot_com) on Tue Sep 16th, 2008 at 08:53:40 AM EST
[ Parent ]
Yep, and if you take out the hairdressers, restaurant workers, teachers and doctors, you're left with the people who can actually afford to live anywhere near London.

Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Tue Sep 16th, 2008 at 08:36:01 AM EST
[ Parent ]
By "the Met," do you mean the cops?  If so, add that to my list of people to take out.

Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Tue Sep 16th, 2008 at 08:42:32 AM EST
[ Parent ]
I'm not terribly sympathetic, but obviously not everybody down at the Wharf or in the City is apart of the criminally insane peddler culture (just most of them).

I have more sympathy for the neighborhood financial planner-types, whose jobs actually involve working for normal people, than I do for the ones on the trading floors.

And, yes, GBP45k is a lot of money.  Hell, that's an entry-level salary of more than most people will ever see.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Tue Sep 16th, 2008 at 08:33:54 AM EST
[ Parent ]
they were part of a scam?  

Like the Enron critters, many of these people had large portions of their savings in Lehman shares.

I mean, you don't shit where you eat, and--more to the point--you don't eat where you shit.  

Much learning to occur in the next few months!  

The Fates are kind.

by Gaianne on Tue Sep 16th, 2008 at 08:19:04 AM EST
[ Parent ]
I'm just now wondering what fraction of the "bonus packages" was deferred compensation in the form of Lehman shares...

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
by Migeru (migeru at eurotrib dot com) on Tue Sep 16th, 2008 at 08:21:24 AM EST
[ Parent ]
Like working for the Mafia!  

Maybe worse.  

The Fates are kind.

by Gaianne on Tue Sep 16th, 2008 at 08:35:08 AM EST
[ Parent ]
Well if you're buying and selling worthless junk then you're at least a willing footsoldier in the mob.

Any idiot can face a crisis - it's day to day living that wears you out.
by ceebs (ceebs (at) eurotrib (dot) com) on Tue Sep 16th, 2008 at 08:44:07 AM EST
[ Parent ]
Canada.com: Bankruptcy filing leaves Lehman Brothers employees confused, angry (September 15, 2008)
They said they had each lost about $50,000 in cash they had invested in Lehman's now nearly worthless stock.

"I'm young enough to bounce back," Ruiz-Mata said optimistically.

"Who I really feel for are the people who've been with the company for many, many years, and who've been getting paid much of their compensation in stock. Those folks face losing fortunes."

Again, just like the Enron critters

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
by Migeru (migeru at eurotrib dot com) on Tue Sep 16th, 2008 at 09:08:09 AM EST
[ Parent ]
Like the Enron critters, many of these people had large portions of their savings in Lehman shares.

Somebody forgot to tell those unfortunates that working many years for one company and having one's life savings in the company's stock is probably not a good diversification strategy.

Well, none of them could have anticipated that the company would go under. After all, they only worked at an investment firm.

Getting laid off, and seeing your retirement money disappear on the same day: priceless.

 

by Ralph on Wed Sep 17th, 2008 at 09:51:46 PM EST
[ Parent ]
I think you're exaggerating, especially with the use of "wages". Next you'll be saying they're cloth-cap?

But it's a sideshow compared to what I'm talking about above: the brutal destruction of the working lives and useful know-how of far more people over a much longer period. And of course when I attack the financial sector, it's the guys at the top I'm thinking of.

by afew (afew(a in a circle)eurotrib_dot_com) on Tue Sep 16th, 2008 at 07:33:56 AM EST
[ Parent ]
And of course when I attack the financial sector, it's the guys at the top I'm thinking of.
Not something that's clear in some other comments here ...
by Colman (colman at eurotrib.com) on Tue Sep 16th, 2008 at 07:38:40 AM EST
[ Parent ]
Your reaction to one comment by melo.

Compared to what I say in the story above, I don't understand this ardent defence of financial sector workers, sorry.

by afew (afew(a in a circle)eurotrib_dot_com) on Tue Sep 16th, 2008 at 08:00:39 AM EST
[ Parent ]
Um, 5000 jobs is 5000 jobs, surely?

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
by Migeru (migeru at eurotrib dot com) on Tue Sep 16th, 2008 at 08:06:34 AM EST
[ Parent ]
And this is what you and Colman have decided is the issue?

I can't offer a ready-made figure like that for the destruction caused, as I say above, by the return-on-capital requirements of the financial industry over the decades.

by afew (afew(a in a circle)eurotrib_dot_com) on Tue Sep 16th, 2008 at 08:10:43 AM EST
[ Parent ]
exaggerating, especially with the use of "wages"

Huh?

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith

by Migeru (migeru at eurotrib dot com) on Tue Sep 16th, 2008 at 07:41:56 AM EST
[ Parent ]
How many people working in the City call their earnings "wages"? Perhaps some of the cleaning and maintenance staff, but no one else.
by afew (afew(a in a circle)eurotrib_dot_com) on Tue Sep 16th, 2008 at 07:47:11 AM EST
[ Parent ]
Okay, "salaries".

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
by Migeru (migeru at eurotrib dot com) on Tue Sep 16th, 2008 at 07:49:13 AM EST
[ Parent ]
My point was Colman's use of "wages" which tends to "proletarize" the issue:

Wage - Wikipedia, the free encyclopedia

In labor and finance settings, a wage may be defined to include cash paid for some specified quantity (measured in units of time) of labor. Wages may be contrasted with salaries, with wages being paid at a wage rate (based on units of time worked) while salaries are paid periodically without reference to a specified number of hours worked.
by afew (afew(a in a circle)eurotrib_dot_com) on Tue Sep 16th, 2008 at 08:03:32 AM EST
[ Parent ]
Well, I object to the use of "proletarians" to describe most Lehman employees, but are we hailing the destruction of the middle class, here?

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
by Migeru (migeru at eurotrib dot com) on Tue Sep 16th, 2008 at 08:05:44 AM EST
[ Parent ]
Sorry? The destruction of the middle class because a bank goes bust? They've been destroying the middle class for decades. That's what matters.
by afew (afew(a in a circle)eurotrib_dot_com) on Tue Sep 16th, 2008 at 08:12:18 AM EST
[ Parent ]
Yes, that's true.

The point is that it appears because these 5000 people are not proletarians it's okay that they're losing their jobs.

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith

by Migeru (migeru at eurotrib dot com) on Tue Sep 16th, 2008 at 08:16:44 AM EST
[ Parent ]
Not all jobs are equally valuable. Some are toxic and destructive.

Personally I'll be happy to see more of the latter go, because if they don't, there will be even more poverty and wealth destruction happening elsewhere regardless.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Tue Sep 16th, 2008 at 08:30:03 AM EST
[ Parent ]
Absolutely. Fuck the clerical staff, the IT folks, and all the service jobs that depend on the banks. All just parasites, the world will be better off if they suffer. We could say the same of course of the coal miners, the SUV makers, etc - right?

The big difference between I-banking and most everything else is that the employees get a pretty huge chunk of their value-added. You've got enterprises with relatively low numbers of employees and huge revenues. Add in a highly competitive hiring market and relative ease of starting small new companies in good times and you get big bucks for the workers and a relatively flat salary structure. The only thing that approaches it is the high end legal market. Last I heard, about a year or two ago, going rate for the first salary out of law school was 165K plus bonus. Your typical partner makes about ten times that at most, the top handful of rainmakers maybe forty times. Contrast with the salary structure in most other sectors.

by MarekNYC on Wed Sep 17th, 2008 at 01:42:44 AM EST
[ Parent ]
Why "it appears"?

According to Colman's "only meaningful definition", they are working-class or proletarian. I don't mind if one accepts that definition or not. I can see the point in talking about the salaried middle class (considering, with TBG, that the cleaners etc are working for subcontractors, are temps, etc).

But I haven't read anyone here arguing that because people are middle class it's OK they're losing their jobs. I feel no schadenfreude about this, there's nothing joyful in any of it that I can see.

What I disagree with is making this job loss the central point of what's happening. Or, put it this way, it could be discussed in a diary dedicated to it. I feel that what I'm writing about above over-reaches this issue in scope, and over time. What's important, in my view, is the damage done by the financial industry acting as a pump for a new-and-old money plutocracy, since the Thatcher-Reagan years.

by afew (afew(a in a circle)eurotrib_dot_com) on Tue Sep 16th, 2008 at 08:33:54 AM EST
[ Parent ]
    melo
maybe we have been roved into a new awareness of modern propaganda, i'd like to think that's why the media is shifting to a new level and direction of criticism.
With even Faux Noise and Rove himself criticizing the McCain Campaign for their campaign of lies and distractions, with Rupert himself publicly telling Bill'O to get used to Olberman's criticisms, perhaps we are at an inflection point in public perception.  

Could it be that even Murdoch suspects that pirate capitalism has gone too far and that the carnage and the stench from dead and dying "financial sector" enterprises is poisoning the atmosphere of the entire Anglo world in which his own enterprises are based?  Can even he see the need to reposition the tone of his enterprise to better fit new realities?

We can hope so.  Why else would his presenters be actively undermining memes of the McPalin campaign?  Perhaps he just doesn't want his news organization to be the last dog barking at a phantom.  Perhaps he it trying to tell that campaign that it is time for something new, that their inanity is becoming embarrassing even to him.  Time will tell. But it has to be unsettling to that campaign.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Sep 16th, 2008 at 10:16:54 AM EST
[ Parent ]
If certain aspects of Capitalism (banks, the media, etc.) are now run by the equivalent of "drug addicts" (I'll say anything, do anything, I NEED THAT NEXT FIX, screw the body), what practical, let's-get-it-going-NOW alternative, do you propose?  Or do we need more death/destruction before people will listen?

They tried to assimilate me. They failed.
by THE Twank (yatta blah blah @ blah.com) on Tue Sep 16th, 2008 at 06:53:33 AM EST
Example: Right now on Squawk Box, almost 7 A.M. EST they had Steve Forbes, McCain SUPPORTER being interviewed; volume off, don't need that shit in the early A.M..

Question: Why is the Squawker NOT interviewing ... oh, I don't know ... Jerome!

They tried to assimilate me. They failed.

by THE Twank (yatta blah blah @ blah.com) on Tue Sep 16th, 2008 at 07:00:27 AM EST
[ Parent ]
Here's a little continuation from yesterday's carnage; quote from Squawk Box.

Dow-Jones Futures have worsened as AIG situation has worsened.

Wonder what the commentary on Democracy Now/Amy Goodman will be this A.M.  Yesterday it was all some author; boring considering what the financial channel was showing.

They tried to assimilate me. They failed.

by THE Twank (yatta blah blah @ blah.com) on Tue Sep 16th, 2008 at 07:19:50 AM EST
[ Parent ]
This is SO FUCKING FUNNY!!

CSPAN Washington Journal, some financial guy from NY Times.

"The govt. is worried that they'll have to spend EVERY WEEKEND bailing out a new company."

Hilarious!!

They tried to assimilate me. They failed.

by THE Twank (yatta blah blah @ blah.com) on Tue Sep 16th, 2008 at 07:38:12 AM EST
[ Parent ]
I would worry about spending EVERY DAY.

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
by Migeru (migeru at eurotrib dot com) on Tue Sep 16th, 2008 at 07:39:56 AM EST
[ Parent ]
and GOOD MORNING to you!!!

They tried to assimilate me. They failed.
by THE Twank (yatta blah blah @ blah.com) on Tue Sep 16th, 2008 at 08:00:09 AM EST
[ Parent ]
A question for the financial experts:

When will the day come when, instead of going to the US govt. for a bail-out/whatever, companies go to the RED CHINESE govt. for the same bail-out?

THAT will be the WATERSHED day!

They tried to assimilate me. They failed.

by THE Twank (yatta blah blah @ blah.com) on Tue Sep 16th, 2008 at 08:35:22 AM EST
[ Parent ]


The Fates are kind.
by Gaianne on Tue Sep 16th, 2008 at 08:48:08 AM EST
[ Parent ]
Please elaborate. (n/t ?)

They tried to assimilate me. They failed.
by THE Twank (yatta blah blah @ blah.com) on Tue Sep 16th, 2008 at 08:50:59 AM EST
[ Parent ]
the Chinese-are-your-banker day.  

Jerome should post a thread.  

The Fates are kind.

by Gaianne on Tue Sep 16th, 2008 at 09:02:21 AM EST
[ Parent ]
Just look at the federal government deficit data and at the interest-rate increases on U.S. bond auctions. China, Saudi Arabia and the various emirates, Japan; and, increasingly (the Feds can only hope), Russia, Malaysia, and Venezuela are the recycling fountains where U$D flow.

paul spencer
by paul spencer (spencerinthegorge AT yahoo DOT com) on Tue Sep 16th, 2008 at 12:57:16 PM EST
[ Parent ]
Here's another question:

Since it's only a matter of time (could be VERY SOON) until Red China is in the "driver seat" that the US, with all its bombs, now has, what is the Red Chinese equivalent of ET?  I might as well join that crowd in the early phases; beat the rush.

They tried to assimilate me. They failed.

by THE Twank (yatta blah blah @ blah.com) on Tue Sep 16th, 2008 at 09:09:02 AM EST
[ Parent ]
Out of habit or for snark effect?

paul spencer
by paul spencer (spencerinthegorge AT yahoo DOT com) on Tue Sep 16th, 2008 at 12:58:14 PM EST
[ Parent ]
I'm an old fuck.  That's what we called the Communist Chinese mainland the last time I took a history course, late '60s.  What's it called today?  When did it change?  I know the capital WAS Peking but that's changed.  Did they just rename the city?

No shit.  I'm a biochemist/chemist/problem solver, not a historian.

They tried to assimilate me. They failed.

by THE Twank (yatta blah blah @ blah.com) on Tue Sep 16th, 2008 at 01:10:28 PM EST
[ Parent ]
European Tribune - Non-technical Commentary
more exciting hunting grounds

Perhaps they could try Alaska.

I'm sensing hints of a major political shift here. A majority still haven't realised how badly they've been had, and the extent to which the economic changes of the last few decades have been an extended episode of piracy and brigandage which were always going to impoverish them.

But sooner or later it's going to become obvious that the 'serious people' are nothing more than self-important, self-aggrandising punks in suits, no more worthy of respect than the local teenager who burgles houses to feed his meth habit.

There's a real opportunity now to change the narrative by getting this fact out to as many people as possible.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Tue Sep 16th, 2008 at 06:57:36 AM EST
Yep.
by afew (afew(a in a circle)eurotrib_dot_com) on Tue Sep 16th, 2008 at 07:30:07 AM EST
[ Parent ]
I only hope that the realization comes before November.  Most US citizens are still trying to figure out why the death of Lehman matters to them.  I think the media are starting to fear that the collapse will really now matter to them---declining advertising for starters.  Too many are only just beginning to realize what is happening.

It is the old saw:

When your neighbor loses his job, it is a recession.

When you lose yours, it is a depression.

Given the popular ambivalence about the "Bondfire of the Vanities--Master of the Universe" financial types on Wall Street it is easy for most to just think that these guys are getting what they deserve.  It still has to sink in that they themselves may be "getting what they paid for" in terms of the quality of life brought to them by the leaders they have elected.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Sep 16th, 2008 at 10:30:35 AM EST
[ Parent ]
are seeing it. Obama's strategy of waiting for McCain to implode again seems to be working well IMO.

The new neo-con move should be to say, "See - we told you that the media is liberal. Look at what they're trying to do to undermine McCain's campaign." Should be their new meme in about the next 2 - 3 days - unless Murdoch really has fears about the current debacle.

paul spencer

by paul spencer (spencerinthegorge AT yahoo DOT com) on Tue Sep 16th, 2008 at 01:03:38 PM EST
[ Parent ]
Too bad for bankers if they have to return to a humdrum existence, poor duckies.

Where did the Idea come from that Banking was meant to be fun?

Any idiot can face a crisis - it's day to day living that wears you out.

by ceebs (ceebs (at) eurotrib (dot) com) on Tue Sep 16th, 2008 at 08:28:59 AM EST
As Europe Watches Wall Street Fall, Schadenfreude Gives Way to Worry

most of all, the events of the weekend and Monday capped months of growing doubt about the so-called American model of investment banking.

"In Europe, there's a prevailing sense that the business model of the free-standing, highly leveraged investment bank that funds itself in the wholesale financial markets is virtually kaput," said Willem H. Buiter, a professor at the London School of Economics.

"The pure investment bank was an American specialty," he added. "But we've now seen three major American investment banks go down, so this model looks like a weakness, not a strength in a down market." [...]

"The average European has a view that Wall Street is an extremely powerful center, and thinks finance is a pejorative word," said Charles Wyplosz, director of the International Center for Monetary and Banking Studies in Geneva. "A number of people will use it to say the U.S. model of capitalism isn't working."

Within the world of banking itself, there have been longstanding differences between the European and American approaches.

While traditional "universal" banks like Deutsche Bank and UBS have long dominated the Continent, brash independent Wall Street investment banks like Lehman, Bear Stearns and Merrill Lynch muscled in on more profitable sectors like trading and underwriting in recent years, both in the United States and around the globe.

Over the last two decades, the European banks have made costly attempts to emulate the investment banking model. UBS bought Dillon Read and Paine Webber and Deutsche Bank acquired Bankers Trust.

With the disappearance of Bear and Lehman, and the absorption of Merrill into Bank of America, it appears that the European model has triumphed for the time being.

In the wake of the events this weekend, "I've heard people saying, `I told you so,' arguing the European universal model is better," Mr. Wyplosz said.

A Sense That Wall St.'s Boom Times Are Over

Borrowed money kept the lights on at investment banks like Lehman, because such pure investment banks do not have the consumer deposit base. [...]

Already, Wall Street firms are reducing their debt levels, and regulators are expected to create new rules about leverage, liquidity and capital levels. The rules, if strict, could force Goldman and Morgan Stanley [the two remaining major American investment banks] to merge with a bank that has customer deposits, a steady source of capital, and thus is buffered from collapse.



A bomb, H bomb, Minuteman / The names get more attractive / The decisions are made by NATO / The press call it British opinion -- The Three Johns
by Alexander on Tue Sep 16th, 2008 at 11:11:10 AM EST
Thanks, Alexander. The NYT article seems to me to show several kinds of spin, the main point of which is to affirm as conventional wisdom that all or "average" Europeans (one supposes the UK is not included?) distrust and oppose the United States (in the economic field in this case).

Yet (one of the kinds of spin) it seems from the article that the American financial system boils down to the local speciality of the stand-alone investment bank. This is damage limitation: keep the discussion limited to the one specific sector you can't deny is screwed, and don't wander off it (if another sector goes bust tomorrow, do the same). Anyway, the difference between Europe and America in the matter of finance is the stand-alone investment bank.

The main thrust of the comments from Europeans comes from raging neo-liberal* Charles Wyplosz:

Despite the possibility of more pain to come, the news from New York also confirmed some of the darker suspicions many ordinary Europeans have long held about Wall Street and its outsize influence.

"The average European has a view that Wall Street is an extremely powerful center, and thinks finance is a pejorative word," said Charles Wyplosz, director of the International Center for Monetary and Banking Studies in Geneva. "A number of people will use it to say the U.S. model of capitalism isn't working."

We have it on Wyplosz' word that there is such a thing as an average European, and that s/he considers Wall St a powerful centre, well whaddayou know. Ah, but darkly hates and mistrusts "finance". Next, an apparent non-sequitur: "will use it", what does "it" mean? Use the crisis of US capitalism to say it isn't working?

With the disappearance of Bear and Lehman, and the absorption of Merrill into Bank of America, it appears that the European model has triumphed for the time being.

In the wake of the events this weekend, "I've heard people saying, `I told you so,' arguing the European universal model is better," Mr. Wyplosz said. "I'm not sure I buy that."

Here, Wyplosz serves to qualify, throw doubt on, the possibility that the European model (of investment banking, let's not get carried away) might appear to be "triumphing". Wyplosz doesn't buy it of course. Because, once again, this article is about pretending there's a pissing-match going on, while limiting the damage due to the fact that one of the adversaries has suffered an amputation.

* And Charles Wyplosz, if you want to get an idea, was an advisor to the French Prime Minister when he wrote this hit-piece about Europe in 2005.

by afew (afew(a in a circle)eurotrib_dot_com) on Tue Sep 16th, 2008 at 12:28:33 PM EST
[ Parent ]
Thanks for putting that into context, afew: I wasn't familiar with Wyplosz, but suspected he is a neoliberal, given his "I'm not sure I buy that."

As you show, the article aims to minimize damage done to perceptions of the Anglo-Saxon model. Still, I find it interesting that it does mention that an alternative (European) model exists, even if it gives the impression that that only applies to banking. As far as I know, the British business press has for some time not considered the Continental model as even worth mentioning, except to berate the few hold-outs for not getting with the program. For example, the FT article you quote from observes:

one thing is now quite clear: the banking system as we know it has failed.

The banking system as the Anglophone business press knows it has failed. The still-extant "traditional" European banking system has not. But unlike the NY Times, the FT doesn't bother to note that.

If anyone has run across articles in the British press noting that the disappearance of three out of five independent American investment banks might mean that the European (banking) model is superior, I'd be interested to see that.

A bomb, H bomb, Minuteman / The names get more attractive / The decisions are made by NATO / The press call it British opinion -- The Three Johns

by Alexander on Tue Sep 16th, 2008 at 01:07:52 PM EST
[ Parent ]
The Financial Times has a cautious, hedgy (what else?) editorial up today about the banking crisis.
What we need is an Anti-FT, an Anit-WSJ and an Anti-Economist.  Roubini is very good, but he is basically one guy and ET cannot be a for profit enterprise and seems to be largely a part time effort done out of love.

Nothing would do so much good as a weekly and a daily that feature economic depth, insight and comprehensive coverage of the issues ET touches on with something like the humanistic perspective so evident on ET.  Something  that reliably counters the noxious neo-con/neo-classical world view so relentlessly pressed by the MSM.

A mega angel would be required to get something like this off the ground, but I suspect an audience for such  a publication is building as you read this.  Huffington Post is a start, but is focused almost exclusively on US Politics.  It would almost have to be privately held or it would be bought up and shut down by those hostile to sane world views.  

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Sep 16th, 2008 at 07:48:31 PM EST


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