The New York Times really throws it at us this morning. And why not? The warnings are nasty but they're useful.
Let's start with prosperity (not). We're back to 2006.
New rules to regulate derivatives, adopted last week by the Commodity Futures Trading Commission, are a victory for Wall Street and a setback for financial reform. They may also signal worse things to come.
The regulations, required under the Dodd-Frank reform law, are intended to impose transparency and competition on the notoriously opaque multitrillion-dollar market for derivatives, which is dominated by five banks: JPMorgan Chase, Goldman Sachs, Bank of America, Citigroup and Morgan Stanley. ...NYT editorial board
The original head/founder of the commission was, of course, Elizabeth Warren. Her successor, Gary Gensler, also a reformer, is at the end his term. He's like to be replaced by someone chosen -- not by you and me but by Wall Street.
That bodes ill for rules that have started out
weak and need to be shored up later. To lose a reformer would also
reflect poorly on President Obama, but he has not yet shown interest in
keeping Mr. Gensler in the government.
In addition, none of the derivatives rules that have been finalized so
far will make any real difference if they are not applied
internationally. Yet Mr. Gensler has met fierce resistance — from banks,
some C.F.T.C. commissioners and regulators at the Securities and
Exchange Commission — to his plan to extend domestic rules to foreign
affiliates of American banks and to foreign banks operating in the
United States. Anything less broad would make a sham of derivatives
reform. ...NYT editorial board
Get the picture? Back to square one.
There's a little hope. Tomorrow may bring some much needed reform to the management of JP Morgan and perhaps, by extension, to many more corporate boards. Maybe.
Jamie Dimon and the 10 other directors of JPMorgan Chase
take the stage in Tampa, Fla., on Tuesday, to face shareholders who can
take comfort in a rising stock price and a prospering bank.
But those same shareholders may also deliver a humbling rebuff to Mr. Dimon and the bank’s board.
If shareholders vote to separate the jobs of chairman and chief
executive — positions that Mr. Dimon has held since 2006 — it would
signal a shift in the balance of power in corporate America, an
inflection point in shareholders’ push for greater say in the boardroom. ...NYT
This is a good moment to remind ourselves that although being a minor shareholder in leviathans like Morgan isn't exactly a sign of big political power, it is a lot smarter than choosing not to be a shareholder. Shareholders have been gaining power. Slowly, for sure, but there are signs that the shift is taking place.
Still, we seem to embrace a culture of celebrity that neatly replaces any hope of equality and equally shared responsibility. This isn't something that a powerful board chairman does to us peons. We do it to ourselves. We love, love, love the celebrities. George Packer writes:
The obsession with celebrities goes far beyond supermarket tabloids,
gossip Web sites and reality TV. It obliterates old distinctions between
high and low culture, serious and trivial endeavors, profit making and
philanthropy, leading to the phenomenon of being famous for being
famous. An activist singer (Bono) is given a lucrative role in
Facebook’s initial public offering. A patrician politician (Al Gore)
becomes a plutocratic media executive and tech investor. One of
America’s richest men (Michael R. Bloomberg) rules its largest city....
As mindless diversions from a sluggish economy and chronic malaise, the
new aristocrats play a useful role. But their advent suggests that,
after decades of widening income gaps, unequal distributions of
opportunity and reward, and corroding public institutions, we have gone
back to Gatsby’s time — or something far more perverse. The celebrity
monuments of our age have grown so huge that they dwarf the aspirations
of ordinary people, who are asked to yield their dreams to the gods: to
flash their favorite singer’s corporate logo at concerts, to pour open
their lives (and data) on Facebook, to adopt Apple as a lifestyle. We
know our stars aren’t inviting us to think we can be just like them.
Their success is based on leaving the rest of us behind. ...George Packer, NYT
The left, says Timothy Noah, has not been doing its job. Inequality has increased while liberals "resist talking about the skills-based gap because they don’t
want to tell the working classes that they’re losing ground because they
didn’t study hard enough. Liberals prefer to focus on the 1
percent-based gap. Conceiving of inequality as something caused by the
very richest people has obvious political appeal, especially since (by
definition) nearly all of us belong to the 99 percent."
Where the left has lost it, Noah points out, is at the point when we allowed education to be under-supported and under-funded. And then there's the matter of labor unions.
The decline of labor unions is what connects the skills-based gap to the
1 percent-based gap. Although conservatives often insist that the 1
percent’s richesse doesn’t come out of the pockets of the 99
percent, that assertion ignores the fact that labor’s share of gross
domestic product is shrinking while capital’s share is growing. Since
1979, except for a brief period during the tech boom of the late 1990s,
labor’s share of corporate income has fallen. Pension funds have blurred
somewhat the venerable distinction between capital and labor. But
that’s easy to exaggerate, since only about one-sixth of all households
own stocks whose value exceeds $7,000. According to the left-leaning
Economic Policy Institute, the G.D.P. shift from labor to capital
explains fully one-third
of the 1 percent’s run-up in its share of national income. It couldn’t
have happened if private-sector unionism had remained strong. ...Timothy Noah, NYT
