Archive for January, 2012

DANGER: THE EROSION OF UNITY IN OUR COUNTRY. THE ELECTION OF NOVEMBER 2012 MAY NOT SLOW IT

Tuesday, January 24th, 2012

Major Underlying  Cause
The distribution of wealth and opportunity in the United States has become unfair and  unbalanced

Evidence
(1) The spread of the “Occupy” movement
(2) Two-thirds of Americans believe there are “strong conflicts” between rich and poor in the U.S. [source: Pew Research Center, poll dated 12/6-19/11]
(3) The financial services industry grew from 5%-6% of GDP in the 1980’s to 16%-17% in 2006. The top 1% of earners accounted for 24% of all income in 2011.
(4) Based on the 2010 census, personal consumer debt is about $2.4 trillion, or $7,800 for every adult and child in the U.S..  70% of the GDP in the U.S. is from consumer spending.

Moral Relevance of the Situation

(1) Fairness is a basic and universal moral principle, which concerns equal sharing of benefits and pains, within culturally variable limits. But the principle of fairness is violated when there is no sharing of the pain of an economic crisis. An example is the housing crisis where the lenders have little pain (because they do not modify the mortgages and can sell the foreclosed houses), and the borrowers have all the discomfort.
(2) Another example of unfairness is the reduced opportunity for upward mobility in the U.S. in comparison with Europe, because parental economic difficulties carry over to the educational access of the next generation.
(3) These problems lead to a reduction in public trust in government.

What  to Do

(1) Keep informed. Read the IPPA website (www.ippa.us). Do not be passive.

ADEQUATE FUNDING and TOUGHER LAWS NEEDED FOR THE SECUTITY AND EXCHANGE COMMISSION [SEC] TO INVESTIGATE AND PROSECUTE WRONG DOING BY FINANCIAL INSTITUTIONS

Monday, January 23rd, 2012

A front page New York Times [NYT] article by Edward Wyatt [1], on November 11, 2011, reported that the recent SEC settlement with Citigroup was rejected by federal judge Jed Rakoff because of a lack of any admission of guilt of fraud on the part of Citigroup. This has been a strategy in past cases with the SEC and other banks, because the SEC contends it must settle most of the cases without obtaining admissions of guilt. It does not have the necessary funding to battle the “deep pockets” of Wall Street firms, who will rarely admit wrong doing. Admission could be used against them in the case of an investor lawsuit.

 Judge Rakoff claimed that the SEC “has a duty, inherent in its statutory mission’ to see that truth emerges”. He also said” in any case like this that touches on the transparency of financial markets whose gyrations have so depressed our economy and debilitated our lives, there is an overriding public interest in knowing the truth”.

  Additional evidence addressing inadequate financing was reported by George Packer[2] in The New Yorker [6-27-11]. He stated that nearly three years after the financial crisis, “Wall Street still relies on reckless practices to create wealth”. He also stated that the SEC remains starved of resources. (more…)

BETTER REGULATION OF THE FINANCIAL RATING AGENCIES

Monday, January 23rd, 2012

The failure of the rating agencies to accurately audit the derivatives market played a role in the financial collapse of 2008. In spite of all available evidence of wrongdoing there has still not been adequate regulation, including in the Dodd-Frank bill passed by Congress last year. The cozy arrangement by which the rating agencies were paid by the institutions whose derivatives and other financial products they were rating is well known.
 One solution reported by Gretchen Mortenson [1] in October was suggested by Paul Volker, former head of the Federal Reserve. It was to rotate the rating agencies on a regular basis for each financial institution, which would provide a check and balance system. Another suggestion to solve the question of compensation for the rating agencies would be by taxing the banking/investment industry institutions themselves on their financial transactions. These funds would then be used by a newly formed independent Federal agency to compensate the rating agencies based on a set fee schedule, not in any way tied to a specific rating of a financial product.
  IPPA feels that both of these plans to correct insufficiencies in regulation of the rating agencies should be implemented in the very near future to ensure that both individual and institutional investors can have confidence in the audits of the rating agencies.

1. Mortenson, Gretchen NY Times 10/22, 2011

CLOSE-MINDEDNESS, RIGID IDEOLOGY AND MIND CONTROL RESULT IN UNWORKABLE DEMOCRACY

Wednesday, January 11th, 2012

IPPA has become increasingly concerned about the inability of the federal government to efficiently and effectively address our country’s severe economic, social and environmental problems. It is our belief that almost all progressive policy proposals intended to address these problems are met with obstruction in Congress as a direct result of one party’s rigid ideology and close-mindedness. We believe this can only be overcome through electing new members of congress who will be willing to compromise on our country’s important issues for the common good. This is our best hope to insure our country’s future.
One of the fine things about the United States is that since its founding, both the legal structure and the popular culture have approved some forms of the competition of ideas, speech, and action. Our assumption has been that the best solutions to problems emerge from the interaction of ideas and from the citizens’ learning from the interchange. This spirit has been strengthened by the fact that most scientific inquiry is social, involving many people. Note the number of author’s on the first page of a scientific journal paper. Authority is shared and not located in a single source. Open criticism is key, as the inquiry unfolds.
A foreign enemy of this approach is the Communist Party of China, which is Leninist in form. Leninism assumes that senior Party officials have knowledge that trumps the ideas and policy proposals of citizens and of the law courts. Dissent may be permitted in controlled situations, but when the Party speaks, at the local and central level, that is supposed to be the end of discussion. Equivocation, deviation, and dissent are dangerous. Tens of thousands of popular uprisings in China each year attest to the fact that many dissenters  do not agree with the Party’s positions.
Now our own culture is threatened by Leninists in Republican dress. Grover Norquist’s  Americans for Tax Reform (ATR) opposes all tax increases as a matter of principle. It pressures candidates for congressional office to take a “Taxpayer Protection Pledge.” If they do not, ATR attacks their candidacy and stirs up voters to do so. The pledge is that the candidate will “oppose any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates.” By November, 2011, 238 of 242 House Republicans and 47 Senate Republicans had signed the pledge.  Senate Majority leader Harry Reid describes Congressional Republicans as “being led like puppets by Grover Norquist.” Hence note the failure of the Deficit Reduction Joint Select Committee. Norquist is the Party voice, and it trumps individual opinion and discussion.  And further damages hopes for our economy to recover.
Not only is economic policy being captured by these single minded Leninists. The same is true for the Republicans’ position on women’s reproductive health. The Susan B. Anthony (SBA) List is their attempt to squash a variety of positions on the Life/Choice debate. To gain their support and avoid being attacked by the SBA List, candidates should sign the Pro-Life Citizen’s Pledge. In addition to pledging support for vague restrictions on the appointment of federal judges and for the requirement that those selected for Federal Cabinet and Executive Branch positions be pro-life, there is a third item in the pledge. A candidate is to agree to “…defund Planned Parenthood and all other contractors and recipients of federal funds with affiliates that perform or fund abortions.” Again, the Party can see to it that open discussion ends if a candidate wants its support. The citizens lose the chance to learn from the debate.
Our use of “Leninism” accurately identifies a practice that, in matters of key national policies, the Republican Party shares with the authoritarian Chinese Communist Party and the departed Soviet one.  This stifling of multiple voices damages our democracy.

FOCUS for IPPA in 2012

Sunday, January 8th, 2012

At this moment in our country’s history a movement, now referred to as the Occupy Movement, has arisen on Wall Street in New York City and has spread across the country and beyond our shores. The motivating energy for the movement appears to be outrage over the severe economic inequality existing between the upper 1% and the remaining 99% of our population. The long-term mission of the movement is not yet clear or spelled out, but it appears to enjoy widespread support from many divergent groups within our country. They include the unemployed, labor unions, university students including many with massive educational debt and other citizens of all ages and walks of life. They are angered and energized by the seeming lack of interest and impotence of our government or the private economic sector to acknowledge or address the many underlying causes of this glaring inequality.
 IPPA believes that to address the complex aspects of social and economic malfunction and to better serve the “99%” it will take the implementation of a variety of significant government, private sector and cultural changes and innovative new policies. We also recognize the enormous resistance that exists in all the power centers of this country to the types of changes that will be necessary. IPPA plans to suggest on this blog site such policies that will emphasize not only economic issues but ethical considerations as well. Economic policies should be guided by more than the search for short term profit. They should also be consistent with our ethical standards: maximizing the health and psychological well-being of our families, local communities and our nation’s citizens. Call this value “social benefit”.

We recognize that such policies will not be implemented quickly or easily but for the future success of our country we believe they should be seriously considered on merit and receive honest and open debate. Our goal is also to inform the voting public of its right to expect candidates for election as well as appointed officials to embrace the value of social benefit to individuals and communities along economic considerations in the conduct of government.