Over at Feral Scholar, we are having a tete-a-tete on rentier capitalism and how it is now the main weapon of US statecraft in our epoch of general decline. The only Dem candidate that even shows a glimmer of understanding about this, or who isn't in Wall Street's pocket, is Kucinich, and he has hired Michael Hudson, bearer of bad-but-honest news about the lemming-phase of the US Empire.
But "electability" is everything, and our fear and loathing of the Idiot Prince on the Hill is so profound that we'll perpetuate the lemming march under new leadership instead of interrupting it with the sober reality that the Democratic Party -- as an institution -- is a rotting corpse desperately in need of interment.
I'm posting two pieces here, one old one from the Financial Times on Senator Clinton's and Obama's fundraising activities (to promote the cognitive dissonance that seems to have taken flight among Panglossian Democrats everywhere), and one from Kucinich's new econ adviser, Dr. Hudson, that demystifies the Niagra Falls of bullshit surrounding the "subprime" crisis.
There's a lot of devils in these details.
Published: July 15 2007 22:01 | Last updated: July 15 2007 22:01
John Mack, Morgan Stanley's chief executive, is to invite senior staff to a fundraiser for Hillary Clinton on Monday, in a pointed endorsement of the Democratic presidential hopeful from an important backer of President George W. Bush in 2004.
Mrs Clinton, a New York senator, is scheduled to appear at the fundraiser on the 41st floor of Morgan Stanley's headquarters in Times Square.
The minimum donation for the event is $1,000 (€726, £492) per person but Mr Mack urged those attending to give $4,600, the maximum for the 2008 presidential campaign.
Mr Mack surprised many on Wall Street in the spring when he said he and his wife, Christy, would support Mrs Clinton's 2008 bid. The announcement was made after heavy courting by Mrs Clinton, who raised $27m in the second quarter.
That sum was well ahead of any of the prospective Republican candidates and not far behind the $32.5m raised by Barack Obama, the Illinois senator and Mrs Clinton's main rival for the Democratic nomination.
Mr Mack was a "Ranger" for Mr Bush in 2004, meaning he helped raise at least $200,000 for the president's re-election bid.
He helped organise a fundraising dinner in New York for Mrs Clinton in June featuring Warren Buffett, the billionaire investor. But he was not able to attend that dinner and this is the first event he has organised personally inside Morgan Stanley.
Mr Mack indicated in the e-mail that the event was "purely voluntary" and that Morgan Stanley employees remain free to give to any candidate or party they choose. He added that it was important for senior staff to be involved in the political process.
"When it comes to supporting political candidates, I have always looked beyond party labels to the person who I felt was best for the job and most able to lead the country forward. I personally believe that person is Hillary Clinton," Mr Mack wrote in the e-mail.
He also praised Mrs Clinton's efforts to reform healthcare and said she "has consistently demonstrated a truly global perspective, and also has a deep understanding of the financial services industry and issues important to Morgan Stanley".
Mr Mack's shift to Mrs Clinton means the balance of power among Wall Street chief executives has switched toward the Democrats in the 2008 presidential race. Lloyd Blankfein of Goldman Sachs, Jamie Dimon of JPMorgan and Richard Fuld of Lehman Brothers have all tended to give to Democrats.
Hank Paulson, former Goldman Sachs chief executive, Stan O'Neal of Merrill Lynch, and Jimmy Cayne of Bear Stearns were all big Bush fundraisers in 2004.
Mrs Clinton has other prominent supporters in the Wall Street financial community, including Alan Patricof, co-founder of Apax Partners, Steven Rattner of Quadrangle Group, Thomas H. Lee of Lee Equity Partners and Thomas Steyer of Farallon.
Mr Obama also has widespread Wall Street support, including from hedge fund managers George Soros, Eric Mindich, Paul Tudor Jones and Daniel Loeb.
* * *
This was published Saturday. I just got around to reading the Saturday paper to see it (I wrote it late Friday afternoon, so the FT people were fast.)
Online checks available to public could have set off warning lights about subprime dangers
By Michael Hudson
Published: August 11 2007 03:00 | Last updated: August 11 2007 03:00
From Prof Michael Hudson.
Sir, Your article on subprime real estate losses "Payback time" (August 9) attributes the main deception to borrowers misrepresenting their income and hence their ability to pay - helped by ambitious mortgage lenders who calculated the income needed to justify the amount being borrowed according to the prevalent formulas.
Until quite recently there was a check on this problem: real estate appraisals. The article acknowledges that "appraisers have lied about the value of the properties involved", but in today's internet world almost every property's value can be checked without difficulty online.
Housing prices normally vary from 75 to 125 per cent of the norm, based on reported sales values and local property assessments. But many loans in subprime neighbourhoods showed a variation in loan valuations up to 800 per cent, well beyond the tip of the normal bell-shaped curve of realistic market prices. A publicly available check could easily have been made. It would have set off warning lights. But ignorance evidently was bliss for the parties involved.
Most US cities traditionally have reappraised their real estate every two or three years. What is ironic is that the real estate industry, backed by mortgage lenders, brought political pressure to bear to discourage new appraisals. Their aim was to avoid tax increases keeping pace with rising property prices.
The result is that neither the tax collector nor lenders had a good idea of current market prices. This was an unanticipated blow-back effect of the market participants almost wilfully being in the dark, but making so much money that it did not seem to matter much.
Michael Hudson, Professor of Economics,
University of Missouri-Kansas City
Copyright The Financial Times Limited 2007