domingo, 25 de outubro de 2009

Public must learn to 'tolerate the inequality' of bonuses, says Goldman Sachs vice-chairman

We all know what happened the last time a "let them eat cake" strategy was employed.

Public must learn to 'tolerate the inequality' of bonuses, says Goldman Sachs vice-chairman

Bankers' soaring pay is an investment in the economy, Lord Griffiths tells public meeting on City morality

by Kathryn Hopkins, The Guardian, October 21, 2009

Brian Griffiths AKA Lord Griffiths of Fforestfach
Conservative peer Lord Griffiths said banks should not be ashamed of rewarding staff. Photograph: Rex Features

One of the City's leading figures has suggested that inequality created by bankers' huge salaries is a price worth paying for greater prosperity.

In remarks that will fuel the row around excessive pay, Lord Griffiths, vice-chairman of Goldman Sachs International and a former adviser to Margaret Thatcher, said banks should not be ashamed of rewarding their staff.

Speaking to an audience at St Paul's Cathedral in London about morality in the marketplace last night, Griffiths said the British public should "tolerate the inequality as a way to achieve greater prosperity for all."

He added that he knew what inequality felt like after spending his childhood in a mining town in Wales. Both his grandfathers were miners who had to retire from work through injury.

With public anger mounting at the forecast of bumper bonuses for bankers only a year after the industry was rescued by the taxpayer, he said bankers' bonuses should be seen as part of a longer-term investment in Britain's economy. "I believe that we should be thinking about the medium-term common good, not the short-term common good ... We should not, therefore, be ashamed of offering compensation in an internationally competitive market which ensures the bank businesses here and employs British people," he said.

Griffiths said that many banks would relocate abroad if the government cracked down on bonus culture. "If we said we're not going to have as big bonuses or the same bonuses as last year, I think then you'd find that lots of City firms could easily hive off their operations to Switzerland or the far east," he said.

Goldman Sachs is currently on track to pay the biggest ever bonuses to its 31,700 employees after raking in profits at a rate of $35m (£21m) a day.

The Centre for Economics and Business Research (CEBR) said today that City bonuses could soar to £6bn this year.

The chairman of the Financial Services Authority (FSA), Lord Turner, who was also present at the meeting, called once again for a global tax on financial transactions. He said that such a so-called "Tobin tax" could redistribute bank profits to help fight world poverty and climate change.

"The role of regulation is to bring a concordance between private actions and beneficial results," he said.


terça-feira, 13 de outubro de 2009

New York Times absence of journalistic integrity becomes ever more appalling -- now they shill for the health insurance industry, as well as ExxonMobil

Dear Readers,

It is getting to the point that the New York Times has become a simple prostitute for corporate interests (i.e., ExxonMobil, other fossil-fuel companies, and the health insurance industry, just for starters).

The NYTimes has so lost its journalistic integrity that it is hard to know which articles are puff pieces and which are not.

If the NYTimes believe they have a long-term future doing this, they are very mistaken.

All that remains is for Fox News to buy them out.

From the Naked Capitalism blog -- the best in describing what is really going on in the financial world. (Bold face emphases are mine.)

Naked Capitalism, Tuesday, October 13, 2009

New York Times: Missing in Action on Health Insurance Lobby Duplicity

In the early days of this blog, I would often wind up comparing coverage of news between the Financial Times and the Wall Street Journal because the offender (almost without exception the Journal) had done a job so poor or misleading that it merited comment. Then the credit crisis forced the Journal to up its game, and the FT appeared to slip a bit (I wondered if it was catering, as in pandering, to US readers).

This time, the dubious reporting object lesson is the New York Times, on what is supposedly its most prized beat: Washington, DC, political reporting. The Times ran two articles that verged on sycophantic in its coverage of the health insurance industry as it moved its chess pieces on the health care reform game board. The Times acted as close to a PR outlet. From an early August post:
A similar charade is in motion on the health care front. My bullshit meter went into high alert earlier this week with this New York Times story, “For Health Insurers’ Lobbyist, Good Will Is Tested,” which was clearly a PR plant. It featured Karen Ignagni, a $1.6 million-a-year earning lobbyist to the health insurance industry as a heroine (I started getting nauseaous as soon as I saw the deliberately low-key picture of her in her office). And why should we see a representative of one of the biggest forces undermining democracy in America, the usually-successful efforts of well-funded industry groups to steam-roll legislative process, as a good guy, or in this case, gal? Because she supposedly talked a mean and obstructionist industry into playing nice.
Towards the end of August, in “New York Times Runs Yet Another Fawning Story on Health Insurance Industry,” I noted:
The latest salvo in the health care industry charm offensive is another story humanizing the health insurance industry, this one on the front page of the New York Times website, “Dealing With Being the Health Care ‘Villains’
 So what is the story about? The author, Kevin Sack, interviewed a bunch of employees at Humana, the fourth-largest insurance company.
Let’s start with the basics. Why is this even a reasonable premise for a story? This is a perverse twist on a type of story the Times runs periodically, of dropping into a particular community, often in the heartland, to get the populace’s view on a pressing political or social issue.
Since when is it legitimate, much the less newsworthy, to get a company’s perception on its embattled status, at least without introducing either some contrary opinion or better yet, facts, to counter the views of people who will inevitably see what they are doing as right? I hate to draw an extreme comparison to make the point, but staff in Nazi concentration camps also thought they were good people. It is well documented that for all save the depressed, people’s assessments of their own behavior is biased in their favor.
Similarly, I don’t recall many examples of industries under attack having prominent members get flattering front page pieces. The now-famous AIG Financial Products “I Quit” letter was an op-ed. I will admit I could have missed it, but I did not see any New York Times front page pieces during the auto bailouts featuring GM or Chrysler execs and workers saying they were misunderstood. and were being maligned.
So what do we have here? You have a bunch of people whose livelihood depends on Humana. Of course they are gong to see the industry as benign.
And nowhere in this fawning piece do you see mention made of the ugly fact that as recently as the early 1990s, 95% of every dollar spent on insurance claims went to medical care. It is now only 80%. That is a simply stunning change, and shows how completely fact free the industry’s defenses are. The insurers are a major culprit in America’s high medical costs. But no, we are supposed to take the mere opinion of employees who are deeply vested in the current system as views worth considering.
Back in the days when I did M&A, one of my clients was a frighteningly good negotiator. He knew part of his reason for success was that he did not look the part: he was short, genial, a bit rotund, and bespectacled. He would (to those who he was certain would not spill the beans on him) describe himself as the Antichrist and say things like: “I rub their bellies and only years later do they realize what I have done to them.” And I have to say, he was masterful in getting people to think his self-serving view of things was the only sensible way to see a situation.

The insurance industry is not so adept, or more accurately, is less concerned about appearances than my old client. The Financial Times reports tonight that the health insurance industry, after its great show of making nice to the Obama administration, backstabbed it on the eve of a key vote. Do we see any coverage of this duplicity in the US media, much less the New York Times?

From “Health insurance lobby attacks reforms” in the Financial Times:
The White House and the health insurance industry on Monday descended into open conflict on the eve of a critical Senate vote that could determine the fortunes of Barack Obama’s healthcare reform plans.
Supporters of President Obama accused the health insurance industry of attempted “sabotage” after it issued a report by PwC, which estimated that premiums would rise much faster under the proposed reforms than they would have done otherwise.
The 26-page report marked an abrupt end to the unlikely alliance between Mr Obama and America’s Health Insurance Plans – the main industry lobby group, which has spent about $100m on advertising to support the reforms….
A spokesman for Max Baucus, chairman of the Senate Finance Committee, which is to hold a key vote on Tuesday on its $829bn, 10-year, healthcare reform plan, described the report as a “hatchet job, pure and simple.”
The Wall Street Journal did report on the insurer “push back” and indicated that the industry had cooperated earlier, “attracted to the effort, in part, by the prospect of gaining millions of new customers.” So the Journal’s staff recognized this as a mere marriage of convenience from the get-go.

Update 4:30 a.m.: Robert Reich is more optimistic about the implications than I am, see “The Audacity of Greed: How Private Health Insurers Just Blew Their Cover.”


sexta-feira, 2 de outubro de 2009

Thomas Friedman: Where did "we" go?


Where Did ‘We’ Go?

Published: New York Times, September 29, 2009
I hate to write about this, but I have actually been to this play before and it is really disturbing.
Fred R. Conrad/The New York Times
Thomas L. Friedman

Readers' Comments

Readers shared their thoughts on this article.
I was in Israel interviewing Prime Minister Yitzhak Rabin just before he was assassinated in 1995. We had a beer in his office. He needed one. I remember the ugly mood in Israel then — a mood in which extreme right-wing settlers and politicians were doing all they could to delegitimize Rabin, who was committed to trading land for peace as part of the Oslo accords. They questioned his authority. They accused him of treason. They created pictures depicting him as a Nazi SS officer, and they shouted death threats at rallies. His political opponents winked at it all.

And in so doing they created a poisonous political environment that was interpreted by one right-wing Jewish nationalist as a license to kill Rabin — he must have heard, “God will be on your side” — and so he did.

Others have already remarked on this analogy, but I want to add my voice because the parallels to Israel then and America today turn my stomach: I have no problem with any of the substantive criticism of President Obama from the right or left. But something very dangerous is happening. Criticism from the far right has begun tipping over into delegitimation and creating the same kind of climate here that existed in Israel on the eve of the Rabin assassination.

What kind of madness is it that someone would create a poll on Facebook asking respondents, “Should Obama be killed?” The choices were: “No, Maybe, Yes, and Yes if he cuts my health care.” The Secret Service is now investigating. I hope they put the jerk in jail and throw away the key because this is exactly what was being done to Rabin.

Even if you are not worried that someone might draw from these vitriolic attacks a license to try to hurt the president, you have to be worried about what is happening to American politics more broadly.

Our leaders, even the president, can no longer utter the word “we” with a straight face. There is no more “we” in American politics at a time when “we” have these huge problems — the deficit, the recession, health care, climate change and wars in Iraq and Afghanistan — that “we” can only manage, let alone fix, if there is a collective “we” at work.

Sometimes I wonder whether George H.W. Bush, president “41,” will be remembered as our last “legitimate” president. The right impeached Bill Clinton and hounded him from Day 1 with the bogus Whitewater “scandal.” George W. Bush was elected under a cloud because of the Florida voting mess, and his critics on the left never let him forget it.

And Mr. Obama is now having his legitimacy attacked by a concerted campaign from the right fringe. They are using everything from smears that he is a closet “socialist” to calling him a “liar” in the middle of a joint session of Congress to fabricating doubts about his birth in America and whether he is even a citizen. And these attacks are not just coming from the fringe. Now they come from Lou Dobbs on CNN and from members of the House of Representatives.

Again, hack away at the man’s policies and even his character all you want. I know politics is a tough business. But if we destroy the legitimacy of another president to lead or to pull the country together for what most Americans want most right now — nation-building at home — we are in serious trouble. We can’t go 24 years without a legitimate president — not without being swamped by the problems that we will end up postponing because we can’t address them rationally.

The American political system was, as the saying goes, “designed by geniuses so it could be run by idiots.” But a cocktail of political and technological trends have converged in the last decade that are making it possible for the idiots of all political stripes to overwhelm and paralyze the genius of our system.

Those factors are: the wild excess of money in politics; the gerrymandering of political districts, making them permanently Republican or Democratic and erasing the political middle; a 24/7 cable news cycle that makes all politics a daily battle of tactics that overwhelm strategic thinking; and a blogosphere that at its best enriches our debates, adding new checks on the establishment, and at its worst coarsens our debates to a whole new level, giving a new power to anonymous slanderers to send lies around the world. Finally, on top of it all, we now have a permanent presidential campaign that encourages all partisanship, all the time among our leading politicians.

I would argue that together these changes add up to a difference of degree that is a difference in kind — a different kind of American political scene that makes me wonder whether we can seriously discuss serious issues any longer and make decisions on the basis of the national interest.
We can’t change this overnight, but what we can change, and must change, is people crossing the line between criticizing the president and tacitly encouraging the unthinkable and the unforgivable.