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quickhits:

Wall Street just got a big raise, now how about Main Street?

Raw Story:

House Minority Leader Nancy Pelosi (D-CA) said Thursday that after witnessing Wall Street reach all-time highs this week, it’s time to raise the minimum wage to $10.10 an hour.

“This week, we saw something quite remarkable, the stock market soaring to record heights. At the same time, we see productivity keeping pace,” Pelosi said during a Thursday briefing at the Capitol, according to The Hill. “But we don’t see income for America’s middle class rising. In fact, it’s been about the same as since the end of the Clinton years.”

Pelosi’s proposal overshoots a similar one by President Barack Obama, who suggested raising the minimum wage to $9 an hour from the current rate of $7.25, which translates to just $15,080 a year for a full-time employee.

A House Democratic aide told Raw Story that Pelosi asked for more than Obama did because she wants to see working people receive a livable wage, not just a small raise. “The economy is recovering, corporate profits are rising, but wages for lower-income folks are stagnating,” the aide said. “So there’s a strong case to be made for a wage that will help people raise families.”

“If we are going to honor our commitment to the middle class, we have to reflect that intention in our public policy,” Pelosi told reporters.

While Pelosi’s $10.10 is better than the President’s $9.00 minimum wage, it’s still a little bit short of where it should be. Had the minimum wage kept pace with inflation over the years, it would be at $10.59. A living wage would be great. A fair wage would be even better.

“Sen. Tom Harkin (D-IA) and Rep. George Miller (D-CA) said Tuesday they are proposing legislation to raise the minimum wage and peg it to the rate of inflation, which they say would better ensure working class Americans don’t fall behind the curb as corporate and Wall Street keep the lion’s share of profits for themselves,” the report tells us.

An automated stock-trading program accidentally flooded the market with millions of trades Wednesday morning, spreading turmoil across Wall Street and drawing renewed attention to the fragility and instability of the nation’s stock markets.

While the markets quickly recovered, it was the latest black eye for the financial markets and suggests that regulators have not been able to curb the market disruptions that have led to frequent halts in trading and wild swings in shares.

Wednesday’s debacle follows the botched Facebook initial public offering on Nasdaq in May and the aborted effort by another exchange, BATS Global Markets, to bring its own stock public on its own exchange. The episodes have further rattled the confidence of investors and stoked suspicions that markets are unsafe for savings.

“The machines have taken over, right?” said Patrick Healy, the chief executive of the Issuer Advisory Group, a capital-markets consulting firm. “When events like this happen they just reaffirm that these aren’t investors, these are traders.”

In the latest incident, the errant trades began hitting exchanges almost as soon as the opening bell rang and came from a single New Jersey broker that specializes in computer-driven trading, the Knight Capital Group. More than 100 companies, including big names like Alcoa, Citigroup and Ford, saw the prices of their shares suddenly spike up or down. The New York Stock Exchange later said that it would cancel the trading in six stocks that saw especially extreme movements.

The trades placed by Knight may have left the firm with millions of shares of overpriced stock, but the company did not comment on its potential losses. The firm’s own shares ended the day down almost 25 percent. Knight is one of many companies that have seen their fortunes rise as regulators made a series of changes over the last 15 years that have opened up the markets to new exchanges and trading firms that use computer programs to execute thousands of trades a second.

But the regulatory changes have also introduced instability, first exposed to the public during the so-called “flash crash” of 2010 when hundreds of stock unexpectedly plunged in value for no apparent reason. After that event, regulators set out to add safety valves to the system, but the turbulence on Wednesday reinforced the belief that regulators have not been able to keep up with growing sophistication and speed of the market they are overseeing.

The New York Times, “Flood of Errant Trades Is A Black Eye for Wall Street.”

Yes, let’s rely more and more on Wall Street to police itself.

(via inothernews)

I think Bane just took over.

Mitt-I-Am.

robertreich:

Back from several days in Washington. The city still has all the disadvantages of being a one-industry town, with almost everyone working for the government or lobbying the government or reporting on the government or trying to influence the government or litigating on behalf of or against the government. It’s like LA and the entertainment industry, or downtown New York and finance. Everyone is in the same bubble, and every conversation begins sounding vaguely the similar.

The only difference this time is Washington feels under siege, as if marauding bands are closing in on it. Unlike Europe, with its long feudal history, America doesn’t have traditions that spun into right-wing fascism or left-wing communism. Our right and left are much closer to the center than are Europe’s.
But the American right — whose roots are found in Jeffersonian libertarianism, and the Jacksonian alliance of small southern farmers and northern white workers — is moving further right, and pulling the Republican Party with it. It’s fueled by economic fears combined with racism, anti-immigrant nativism, and southern white evangelicals.

The puzzle is why Wall Street and corporate America are going along with it when their interests are so different. The new Republican right is anti-Wall Street and protectionist. It distrusts big business and opposes the sorts of special tax cuts, subsidies, and big government contrast that big business has thrived on. The Obama administration has been far better to corporate America and Wall Street than the new Republican right would be.

I don’t get it, but the alliance is formidable, and Washington can feel it.

One of the characters in the classic 1939 film “Stagecoach” is a banker named Gatewood who lectures his captive audience on the evils of big government, especially bank regulation — “As if we bankers don’t know how to run our own banks!” he exclaims. As the film progresses, we learn that Gatewood is in fact skipping town with a satchel full of embezzled cash.

As far as we know, Jamie Dimon, the chairman and C.E.O. of JPMorgan Chase, isn’t planning anything similar. He has, however, been fond of giving Gatewood-like speeches about how he and his colleagues know what they’re doing, and don’t need the government looking over their shoulders. So there’s a large heap of poetic justice — and a major policy lesson — in JPMorgan’s shock announcement that it somehow managed to lose $2 billion in a failed bit of financial wheeling-dealing.

Just to be clear, businessmen are human — although the lords of finance have a tendency to forget that — and they make money-losing mistakes all the time. That in itself is no reason for the government to get involved. But banks are special, because the risks they take are borne, in large part, by taxpayers and the economy as a whole. And what JPMorgan has just demonstrated is that even supposedly smart bankers must be sharply limited in the kinds of risk they’re allowed to take on.

… What did JPMorgan actually do? As far as we can tell, it used the market for derivatives — complex financial instruments — to make a huge bet on the safety of corporate debt, something like the bets that the insurer A.I.G. made on housing debt a few years ago. The key point is not that the bet went bad; it is that institutions playing a key role in the financial system have no business making such bets, least of all when those institutions are backed by taxpayer guarantees.

For the moment Mr. Dimon seems chastened, even admitting that maybe the proponents of stronger regulation have a point. It probably won’t last; I expect Wall Street to be back to its usual arrogance within weeks if not days.

But the truth is that we’ve just seen an object demonstration of why Wall Street does, in fact, need to be regulated. Thank you, Mr. Dimon.

"But the truth is that we’ve just seen an object demonstration of why Wall Street does, in fact, need to be regulated. Thank you, Mr. Dimon."

Paul Krugman, writing in the New York Times, “Why We Regulate.”

Yep.

(via inothernews)

theatlantic:

Is Wall Street Full of Psychopaths?

While the common perception of a psychopath is an axe-wielding serial killer, that is not usually the case. Psychopaths are not all violent criminals (though some are). Psychopathy is a psychological condition based on well-established diagnostic criteria, including superficial charm, conning, and manipulative behavior, lack of empathy and remorse, and a willingness to take risks.

Determining whether a person is a psychopath is usually done by using a test like the Psychopathy Checklist - Revised (PCL-R), developed by Robert Hare and his colleagues. People are rated on a scale of 0 to 40 points; presumably, everyone scores a few points, and true psychopaths score in the top 25 percent of the scale. Using such formal diagnostic criteria, researchers have estimated that about three million Americans (one percent of the population) are psychopaths. Based on this statistic alone, there are psychopaths on Wall Street.

And, it would make sense that a disproportionate number might work on Wall Street. Certain maladaptive personality traits (a lack of empathy, an increased willingness to take risks) might be considered desirable in some settings (a cautious person overly concerned with the feelings of others might not be the best fit at an investment firm).

Read more. [Image: Wikimedia Commons]

robertreich:

Greg Smith, a Goldman Sachs vice president, resigned his post Wednesday with a stinging public rebuke of the firm on the oped page of the New York Times — accusing it of no longer putting its clients before its own pecuniary goals.

But if Mr. Smith believes his experience at Goldman is…

People who don’t have money don’t understand the stress.

Cue the smallest violin in the world.

Actual quote from a partner at an accounting firm for the wealthy

Well then. We cover other injustices endured by Wall Street traders over on Pinterest.

(via think-progress)

Explanations for why so many Ivy League graduates rush into finance — along with law and consulting — tend to fall into two camps.

The economic determinists say this is no mystery. Finance, law and consulting pay high salaries — much higher than most other options on the table. It would be strange, given the financial incentives, if these graduates weren’t going into such high-paying fields.

The social determinists say these students are simply following their tribe. Finance, law and consulting employ smart, high-status individuals in desirable urban locales. Because Ivy League graduates are smart, high-status individuals who generally want to work and live among people like themselves, it makes sense that they take the road more traveled.

These two camps are not mutually exclusive. You can follow the money while you follow your friends. But I’m young enough to know a lot of these graduates, or at least a lot of their recent predecessors. In conversations with them, I’ve come to favor another explanation: Their educations are failing them.

In effect, Wall Street — like a few other professions, including law, management consulting and Teach for America — is taking advantage of the weakness of liberal arts education.

To sum up… Romney thinks gripes about income inequality reflect nothing but envy, and that such topics should only be discussed in “quiet rooms.” What Romney is saying is, maybe we can debate income inequality and the abuses of Wall Street, if you insist on it, but it’s nothing to get upset about.

This is not a gaffe, really, just a particularly stark reflection of Romney’s true beliefs as he’s repeatedly expressed them.

Yeah right, we’re all jealous and we mustn’t upset the 1%’s delicate sensibilities. Fuck you, Mitt.

The House Republicans just left town and left us holding the bag.

That’s right. After the Senate overwhelming passed a bi-partisan extension of the payroll tax cut, which gives us an extra $1,000 a year or $40 a paycheck, the House GOP rejected the plan outright. So now, thanks to the Republicans in the House, all of us could see our taxes increase come Jan. 1. What a great holiday present.

We can’t let that happen. We’ve appreciated everything you’ve done this year and now we have one last favor to ask before the end of the year.

Maybe $40 isn’t a lot to those who have Wall Street and big banks writing them checks or the millionaires who get their own tax breaks, but for the rest of us, 160 million of us, it can really make a difference.

So we want you to let Congress know how you would use that $40 dollars.

And after you contact your representative, if you have a Twitter account, use it to let everyone else know. You can find what others are saying under the #40dollars.

Let’s put aside partisan politics for the New Year and urge Congress to help the middle class.

Happy Holidays and Happy New Year,

Jeremy Funk

Americans United for Change