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Entries by Nomi Prins (178)

Tuesday
Sep282010

Income Gap: Like Newton's First Law of Motion

About two weeks ago, the Census Bureau released their Income, Poverty, and Health Insurance Coverage in the United States: 2009 report. The cliff notes:

The poor are getting poorer quicker, and in greater numbers, than ever.

Earlier today, Hope Yen at the Associated Press ran a story noting that income inequality reached a record gap; 14.5 to 1 vs. vs. 1968’s low of 7.7 to 1. (Translation: for every slice of pie a poor person has, someone making over $100,000 has 14.5 slices). Her piece also cited a measure, called the Gini index that shows US income inequality at its widest level since the index began in 1967. The conclusion was examined in a subsequent piece by Timothy Noah who has written an excellent 10-part series on income inequality for Slate, pointing out that one of the measures used was based on adjusted figures, which show the gap getting wider more quickly. 

The sad fact is these figures are growing period. The sadder fact is that though this is nothing new, now, it is taking place in a country that has proven it can create trillions of dollars in a Washington minute, when the banking system needs help, but can't figure out how to create a more equitable economy.

The US poverty rate for 2009 is 14.3 percent, (POB – or post-bailout) up from 13.2 percent in 2008 (PB – pre-bailout). 43 million people lived in poverty in 2009 vs. 39.8 million in 2008. The number of people living in poverty is at a record high. The increase in poverty rates was the highest for Hispanics. The increase for families headed by single-women was higher than for married couples.

In terms of income, things weren’t that different in 2009 vs. 2008. In terms of health insurance, the percent of uninsured and number of people without insurance rose more quickly than ever. The percent rose to a record 16.7% or more than 50 million Americans in 2009 vs. 15.4% or 46 million in 2008. 

Take away all the stats and fancy index names and we’re left with a phenomenon that follows Newton’s First Law of Motion (yeah, that’s fancy too, sorry). A body in motion will remain in motion unless acted upon by an external force. The wealthy will remain holding a greater proportion of the nation's net worth, absent anything to get in their way, while the poor and middle class will continue to get less of the pie.

 

 

 

Friday
Sep242010

Wall Street 2: Money Never Sleeps & Lindsay Lohan

Another Friday and Gold's up, new home sales are flat at record lows, jobless claims were up (again) yesterday, and no, I'm not trying to get extra views by adding Lindsay to this title (wouldn't mind them though.)

It's just that, I was woken up this morning by a bunch of circling helicopters, which given past experience could only mean one thing - more certain than a blackberry alarm - Lindsay was heading back to court. I'm not sure what time she was slotted to appear, but the helicopters were hovering around 7 AM here in Hollywood.

I don't believe in jail except in the case of heinous crimes, those that can truly damage innocent people, so unlike most of the judgmental voices on the gossip sites (yes, I checked), I don't have a visceral feeling of wanting to see her behind bars so she'll 'learn her lesson.' I don't even care that Paris Hilton got busted for coke, and plead to a couple of misdemeanors, after frolicking on the Hawaiian shore, before sending lots of 'love' to her fans. There are multitudes of celebrities that do coke in Hollywood. But, I do care about the other people - the ones that can't afford $500 per hour lawyers, already facing life sans millions of dollars with far more limited future prospects, damaged further by a justice system that treats them much more harshly.

In other Hollywood news, I went to see a preview of Wall Street 2: Money Never Sleeps last night. Actually, my editor at the Daily Beast, Randall Lane, author of the engaging and brutally accurate book, The Zeroes, truly never sleeps, because at about 1AM his time, when I left the theatre in LA, he was putting the finishing touches on a piece, rounding up Wall Streeter opinions about the film, including mine. Read it.

Long story short - it was fun to match the characters to the real players - (only in the movies does a handsome hunk like Josh Brolin play a hybrid of Goldman CEO, Lloyd Blankfein and JPM Chase CEO, Jamie Dimon) - and the dramatized behind-the-scenes moments of the tension of 2008 (like some great NY Fed Scenes, where the hybrid Bear-Lehman firm run by Frank Lagella's character dies and the bailout begins).

Unfortunately, the film didn't reflect today's drama, as well as the original did of the 1980s - mostly due to the anguish between Shia LaBeouf's character (really? Shia? to follow-up Charlie Sheen's Bud Fox?) and Carey Mulligan's. That, and such an extensive spray of financial events and products that the plot struggled to connect their dots, rather than be their center. Michael Douglas, of course, was amazing. All in all, it's worth seeing, if only as a reminder of how far we haven't come - today's repercussion for the real toxic asset creating characters was a government bailout, back then - felonies and large fines. Maybe things have changed.

Tuesday
Sep212010

Bye Larry Summers - Thanks for The Hangover

The Daily Beast did a round-up about Larry Summers' Exit including my comments alongside those of Eliot Spitzer, Desiree Rogers, Jesse Jackson, Arianna Huffington and others.

 “The departure of Larry Summers from President Obama’s Economic Advisory Free-market Squad, is similar to that of the high-school degenerate who left the keg party after the last barrel was emptied and the place was demolished. Only it was the reckless financial deregulation he promoted through Glass Steagall repeal as Treasury Secretary in 1999 that brought about the Great Bailout Party of 2008 where Wall Street drank the federal subsidy barrel dry and left the general economy trashed. It’s good he’s finally leaving, but it should have happened long ago.”

But, let’s take a moment to reflect on his legacy. This is the man, who as Robert Rubin’s protégé, and successor as Bill Clinton’s Treasury Secretary (after Rubin left to reap millions of dollars at Citigroup, a firm that personified the post Glass-Steagall repeal mega-bank sect), carried his mentor’s deregulation mantle with zeal.

Recall, Summers’ remarks at the signing ceremony for Glass-Steagall repeal in November 1999: “Today Congress voted to update the rules that have governed financial services since the Great Depression and replace them with a system for the twenty-first century. This historic legislation will better enable American companies to compete in the new economy.”

And, since that all worked out so well – President Obama decided to have Summers lead his economic team. Now, if only, Obama hadn’t just credited Summers with helping to stabilize the as-yet unstable fallout of the banking crisis, it might even seem like somewhere along the way, he got a clue, that would signal instigate a full-fledge makeover of his economic team. But, it’s more like -  Summers executed his most important task; ensuring that the Dodd-Frank debacle of a financial reform bill didn't undo the most bank-friendly aspects of Glass-Steagall repeal (that would have meant separating commercial from investment banks), and so now he can fade into the sunset of University and speaking circuit life– until the next time he pops up again.

And, if only Treasury Secretary, Geithner, the man whose mind is so melded with Summers'  that he once said “we can finish each other’s sentences.” would follow suit.