The Pujo Committee and today's Banker's Senate Committee

History is so much fun.--SS     

The Pujo Committee and today's Banker's Senate Committee:

JP MorganChase CEO Jamie Dimon testifies before the
Senate Banking Committee (Larry Downing/Reuters)

When J.P. Morgan's CEO Jamie Dimon testified before the Senate Banking Committee last week, many articles reporting the hearing noted how kindly the super-banker was treated by the committee. Dimon flaunted his presidential cufflinks, presumably given to him by President Obama (who has also praised Dimon publicly). The senators heaped accolades upon Dimon while asking very little about how he blew up to $7 billion of his depositors' money. After watching what this nation has gone through with its top bankers over the last four years, the reception Mr. Dimon received could not have been made up by Kafka. It stands as a near perfect example of institutional failure of a democratically elected institution and the supremacy of financial corporations as their replacement.

But it wasn't always like this.

Prior to FDR and his reforms (during the 50 years of which there was not a single American financial panic), panics were quite common. Every few years, a massive loss of confidence in financial institutions would take place, destroying massive amounts of wealth and ruining the economy. In 1907, there was a massive financial panic much like in 2008. Prior to the crash, speculators began to make risky side bets with the assets of insurance companies (like speculators do with pension funds these days). One such company, one could say the equivalent of Lehman Brothers, was the Knickerbocker Trust Company. Knickerbocker was a high flyer, with plenty of its traders and executives enjoying lavish lifestyles much like our investment bankers today. Knickerbocker, backed up by a syndicate of the nation's top banks, engaged in an elaborate bet to corner the market on copper. A massive amount of debt was run up against bank deposits and insurance company reserves in an attempt at monopoly. This didn't work out, naturally, so the trust collapsed and took the entire banking system down with it. There were bank runs. Industrial companies that depended on credit lines were ruined. Insurance companies failed to pay claims. Nationwide panic ensued.

J.P. Morgan (Wikimedia Commons)

Into the breach stepped one John Pierpont Morgan. Morgan had some experience with panics over his long career in finance, notably the Great Panic of 1893, a financial crisis brought about by railroad stock speculators. A massive depression followed. In the 1907 disaster, Morgan organized the response to contain the financial damage to prevent a depression.  He secured a huge deposit from the United States Treasury Secretary, as well as additional funds from John D. Rockefeller and Lord Rothschild of the famed European banking house. Morgan even pledged half his own personal fortune to guarantee the United States's credit to prevent loss of confidence in the Treasury's bonds. While Morgan contained the panic and even managed to make a slight profit for his trouble, he was not pleased with having to deal with things in such a risky way:

Even if Morgan made money after the fact in 1907, the expectation of higher default risk made the possibility of lending in future panics unattractive. Perhaps this is what was realized by the New York bankers, causing them to abandon their role as de facto lenders of last resort and setting the groundwork for the establishment of the Federal Reserve System.

After many years of study initiated by Morgan, the Federal Reserve was established to mitigate the risks of financial panic. The New York branch of the bank welcomed its first president,  a Mr. Benjamin Strong, longtime assistant to Morgan. While President Roosevelt was pleased with Morgan's intervention, he was no fan of any one person having that much power. Nor was he any friend of Morgan's after having beaten him in the Supreme Court during TR's successful breakup of Morgan's western railroad trust. Still, despite all this, Roosevelt and his hand picked successor Taft went on to give a great deal of latitude to Morgan and his allies in setting up the basic structure for the Federal Reserve.

Rep. Arsene Pujo (D-LA), c. 1919

All of this seems so familiar to us, doesn't it? We too have had a financial crisis brought about by the speculation of bankers. Our Treasury officials are cozy with the big banks just like in 1907. But last week's hearing before the Senate Banking Committee stands in stark contrast to what happened in Congress to a J.P. Morgan leader over 100 years ago. The Pujo Committee was formed as a subcommittee of the House Banking Committee and was headed by Louisiana Democratic lawyer and congressman Arsene Pujo.
The Pujo Committee was the father of the more famous Pecora Commission, which looked into the causes of the Great Depression. Needless to say, J.P. Morgan himself was not welcomed into the hearing room and heaped with praise as Dimon was. In fact, he endured a torrent of tough questioning at the hands of the Committee, and derision and scorn on the House and Senate floor. Pujo's report is absolutely scathing in its takedown of Morgan and the big banks. The committee's lawyer lit into Morgan over and over again during several brutal days of testimony. In the end, some of Morgan's friends speculated that the stress of the hearings may have killed him.

Today, we have a situation where the majority whip of the Senate famously noted, speaking of Congress, that the bankers "own the place." Which is interesting considering the largest financial contributor to that Senate committee is...whaddayaknow...JP Morgan. Perhaps there needs to be a committee to investigate how that came about. You'd think a sitting Senator who is bold enough to admit that a private group of bankers owns a democratic institution would call at least one day of public hearings into the matter. Maybe then we could get to the root cause of why we have had three financial panics since the government began dismantling FDR's reforms. Maybe some sort of congressional committee concerned with banking could investigate the matter.
Perhaps one day someone on the Senate Banking Committee Banker's Senate Committee will figure out that it is their job to supervise banks and not the other way around.

As unions decline, inequality rises | Economic Policy Institute

Such a simple chart.--SS       

As unions decline, inequality rises | Economic Policy Institute:

"To a remarkable extent, inequality, which fell during the New Deal but has risen dramatically since the late 1970s, corresponds to the rise and fall of unionization in the United States."



Go read the whole thing.

IATSE Local 33 Stagehand Died at Gibson Amphitheater

My attempt to make a little sense out of a senseless death.--SS     

IATSE Local 33 Stagehand Died at Gibson Amphitheater:

Jose Lucero was only 22 years old. I didn't know him, as I left IATSE Local 33 before he got in. But when I heard he had fallen to his death from the "ozone" in the grid at the Gibson Amphitheater, formerly the Universal Amphitheater, I immediately remembered my great fear the one time I had to go out on one of those steel beams. I never said anything to anyone I worked with, because I really needed the work at the time, but it scared the hell out of me. Back then, we never wore safety harnesses hooked to fall-arresters, like you're supposed to now (and the investigation is underway to determine if Jose was wearing his), and it was scary as shit to go out on those beams. After that one time, I avoided rigging because I could handle working in grids from catwalks with rails, or working in grids with "ribbon" floors (meaning small gaps between steel beams that you could maybe get your foot stuck in but not fall through), but I just couldn't overcome my fear of heights when I was on one of those beams with nothing but air and floor on either side of me.

But there are guys I've worked with who, like Mohawk Indians on the high steel of sky-scrapers, would just saunter right out on those beams, like they were walking down the sidewalk. Of all the different specialist stagehands I worked with, I always had a huge respect for the riggers. They take big chances to make slightly more money than the guys on the floor, and they do it with gusto.

To put this incident in context, I was shocked to learn yesterday that more people died on the job in the US in 2009 than the total amount of Americans who died in the entire Iraq war:

...4,551 people killed on the job in America in 2009, carnage that eclipsed the total number of U.S. fatalities in the nine-year Iraq war. Combine the victims of traumatic injuries with the estimated 50,000 people who die annually of work-related diseases and it’s as if a fully loaded Boeing 737-700 crashed every day. Yet the typical fine for a worker death is about $7,900.

If you'd really like to get an idea of what a huge problem workplace safety is in this country, check out the AFL-CIO's Death on the Job Report.

In 2010, according to data from the U.S. Bureau of Labor Statistics, 4,690 workers were killed on the job—an average of 13 workers every day—and an estimated 50,000 died from occupational diseases. Workers suffer an additional 7.6 million to 11.4 million job injuries and illnesses each year. The cost of job injuries and illnesses is enormous—estimated at $250 billion to $300 billion a year.

We have a much higher worker fatality rate than other industrialized nations, and Republicans would like to cut OSHA and other workplace safety programs. Insanity. It reminds me of a poster we had back at Arkansas Explosives Inc, where I occasionally worked when I was in college: "OSHA is not a small town in Kansas." I guess if the GOP gets their way, it would be.

Turning Our Backs on Unions - NYTimes.com

Go read this whole thing from Joe Nocera.--SS     

Turning Our Backs on Unions - NYTimes.com:

“Draw one line on a graph charting the decline in union membership, then superimpose a second line charting the decline in middle-class income share,” writes Noah, “and you will find that the two lines are nearly identical.” 

Union Households' Middling Support for Pro-Union Politics

Union members who vote Republican must not like their unions much.--SS    

Union Households' Middling Support for Pro-Union Politics:

Last night on Twitter, labor journalist Mike Elk brought to my attention what I think is the single most telling result from last night's Wisconsin exit polls namely that 33 percent of Wisconsin voters said someone in their household is a union member and 38 percent of those voters pulled the lever for Scott Walker. Those unionists for Walker are only 12.5 percent of the electorate, but that's still pretty big compared to the overall margin. Certainly it's much more common in Wisconsin to see a member of a union household voting Republican than to see an African-American doing the same.

And the results seem fairly typical. Walker got 37 percent of the union vote in his original 2010 election and nationally 37 percent of people in union households voted for a GOP House candidate in 2010. Again, those aren't huge numbers. But they're not tiny numbers either. And the contrast with African-Americans is telling, as is the fact that Walker espousing an explicitly anti-union agenda in a high profile way didn't really move the dial.


Over the past five years I've read more and more progressive lamentations of the decline of organized labor in the United States, but typically in narratives that seem to deny agency to the union leaders themselves. But part of what you see in Wisconsin is labor leaders paying the price for inability to deliver their own members.

Seriously, Romney Isn't a Moderate

Now if Willard would just nominate Dick "Deficits Don't Matter" Cheney to be his VP, the return of the Bushies would be complete.--SS       

Seriously, Romney Isn't a Moderate:

I try not to pay as much attention to politics over the weekend—it’s how I keep my sanity—but I couldn’t help but notice this when it popped in my inbox yesterday morning:

[Eric] Fehnrstrom, pressed by George Will on Romney’s view of House Budget Chairman Paul Ryan’s budget: ‘He’s for the Ryan plan. He believes it goes in the right direction. … At least the Paul Ryan plan puts us on a path toward a balanced budget. It gets those annual deficits down, in a way that this president has been unable to do.’

In case you missed it, Mitt Romney’s chief advisor just told a national audience that Romney is “for” the most regressive economic plan to ever come out of Congress. Remember, the actual Ryan plan—as opposed to the one described by Fehnrstrom—will reduce taxes on the wealthy Americans, add trillions to the debt, and make sharp cuts to existing social services.

According to the Center on Budget and Policy Priorities, social spending accounts for nearly two-thirds of Ryan’s budget cuts. Ryan would elimiate subsidies for health insurance under the Affordable Care Act, and make sharp cuts to food stamps, low-income housing, Pell Grants and aid to poor women and children. What’s more, over the next decade, he would cut more than $700 billion from Medicaid and convert the program into an underfunded block grant to the states.

Far from dealing with the debt, the “savings” from shredding the social safety net would fund further tax cuts for the rich; the Ryan plan would give millionaires an additional $265,000 in tax relief, on top of the $129,000 saved from the Bush tax cuts. Overall, the taxes would go down for those on the top, and increase for those on the botom:




The Ryan plan is a massive reduction in government—and a massive giveaway to rich people—that dwarfs anything proposed by George W. Bush or Ronald Reagan. There is no way in which you could plausibly describe this as “moderate.” Even still, pundits will continue to identify Romney as a moderate Republican, and continue to ignore the extent to which he has promised policies which would exacerbate our current economic problems.

Why? I have no idea. For whatever reason, the national media is unconcerned with Romney’s commitment to radical, right-wing economic policies. It’s completely baffling.

Krugman: Reagan Was More Keynesian Than Obama

St. Ronnie wouldn't like his GOP today.--SS      

Krugman: Reagan Was More Keynesian Than Obama:

President Reagan's policies embraced anti-austerity Keynesian economics to a greater degree than President Obama has, and that's why Obama is in trouble, argues Nobel Prize-winning economist Paul Krugman.

Appearing Sunday on ABC's "This Week," the New York Times columnist and Princeton professor argued that Reagan was able to reduce unemployment after taking office in part because he grew government jobs -- unlike Obama, who has significantly cut them.

"If you actually look at the actual track record of government spending, government employment, Reagan is the Keynesian and Obama -- mostly because of political constraints, although a little bit of lack of conviction on the part of his own people -- has been the anti-Keynesian," Krugman said. "He's been the one who's been doing what Republicans say is the right answer."

Just over three years into Reagan's first term, government jobs grew by 3.1 percent; at the same time during Obama's tenure, they've been cut by 2.7 percent. Hundreds of thousands of public sector jobs have been shed in recent years. Government jobs also grew under President George W. Bush, which helped keep unemployment down during most of his two terms.

"After there was a recession under Ronald Reagan, government employment went way up. It went up after the recessions under the first George Bush and the second George Bush," Obama said last month on the campaign trail. "So each time there was a recession with a Republican president, compensated -- we compensated by making sure that government didn't see a drastic reduction in employment. The only time government employment has gone down during a recession has been under me."

More broadly, federal spending growth under Obama has been remarkably low by historical standards. The pressure from the GOP and D.C. political elites, who have been hostile to Keynesian economics in recent years, has put the administration in a tough spot.

The Keynesian theory holds that government spending is necessary help lift the economy when it's under-performing. Data shows that Republicans tend to accept it when they're in power and that they benefit from it. But they've relentlessly attacked Obama's efforts to stimulate the economy in the wake of the Great Recession, and have led the charge against financially helping cash-strapped states avert layoffs of public employees like teachers and police.

And that has fueled economic struggles across the nation, which were confirmed by the lousy jobs report last Friday which saw the unemployment rate tick up to 8.2 percent.

The irony of the situation wasn't lost on Krugman.

"We're actually practicing government austerity on a scale that we haven't seen in 60 years. It's not the president's policy," he said Sunday. "In effect, we've already got the policies that Republicans say they will impose if they take the election, and yet, of course, it may lead to the defeat of this president."