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Wednesday, January 16, 2013

After WaMu

Posted by on Wed, Jan 16, 2013 at 8:09 AM

This passage, which is in a ST story that's not new and was reposted by Planetizen, caught my attention...

"Amazon's breathtaking growth — it has moved into about 2.7 million square feet in South Lake Union and the Denny Triangle since spring 2010 — has spearheaded the downtown office market's recovery from record-high vacancy rates brought on by the recession and Washington Mutual's demise," notes [Eric Pryne of Seattle Times]. "The company's contrarian decision to locate downtown could spur more tech and Internet companies to move in from the suburbs," Downtown Seattle Association President Kate Joncas says.

What caught my attention? "Washington Mutual's demise..." Why? Because it recalled this post from a year ago...

Christmas came early this year for four former executives of Washington Mutual (WaMu), a large US bank that failed in the autumn of 2008. The Federal Deposit Insurance Corporation (FDIC) had brought a lawsuit against the four for actions that included taking huge financial risks while "knowing that the real estate market was in a 'bubble'". The FDIC sought to recover $900m (£575m), but the executives have just settled for $64m, almost all of which will be paid by their insurers; their out-of-pockets costs are estimated at just $400,000.

To be sure, the executives lost their jobs and now must drop claims for additional compensation. But, according to the FDIC, the four still earned more than $95m from January 2005 through September 2008. So they are walking away with a great deal of cash. This is what happens when financial executives are compensated for "return on equity" unadjusted for risk. The executives get the upside when things go well; when the downside risks materialise, they lose nothing (or close to it).

At the same time, their actions – and similar actions by other bankers – are directly responsible for both the run-up in housing prices and the damaging collapse that followed. That collapse has impacted non-bankers in many negative ways, including through the loss of more than 8 million jobs.

It is also leading to austerity – taxes are increasing and government spending is falling at the local and state level around the country. A difficult fiscal conversation still lies ahead at the federal level, but cuts and contractions of various types seem likely.

What's missing in all this? Despite the social and economic damage these bankers caused, the lives they ruined, and the lies they told, not one of them ever faced what Aaron Swartz faced: the hard punishment of prison time...

“The thing that galls me is that I told Heymann the kid was a suicide risk,” [Swartz's former lawyer Andy Good] told the Globe. “His reaction was a standard reaction in that office, not unique to Steve. He said, ‘Fine, we’ll lock him up.’ I’m not saying they made Aaron kill himself. Aaron might have done this anyway. I’m saying they were aware of the risk, and they were heedless.”
Elliot Peters, Swartz's lawyer at the time of his death, said he encountered that same hardball attitude when prosecutors refused to negotiate a plea deal that would have resulted in no prison time for the 26-year-old, the Globe reported.
Peters says prosecutors demanded that Swartz plead guilty to 13 felonies and spend six months behind bars.
Swartz actually faced over 30 years in prison for the victimless crime of "data theft." Now back to the world of bankers:
JPMorgan Chase & Co.'s approximately $6 billion in losses from risky derivatives bets last year gave a black eye to Chairman and Chief Executive Jamie Dimon, who had emerged from the financial crisis as America's most respected banker.

Now, the losses — made by a trader nicknamed the "London Whale" — are costing Dimon financially.

JPMorgan's board cut Dimon's pay by 50%, citing failures of management that led to losses in the bank's chief investment office.

 

Comments (13) RSS

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watchout5 13
>Swartz actually faced over 30 years in prison for the victimless crime of "data theft."

You can't steal something you already own. Aaron paid his taxes like many Americans do, therefore these studies he downloaded were already public domain property and by extension we all own at least part of the documents. His crime is that of stealing something that was already open to the public at least in title, the prosecutors here are locking up government funded science by throwing people in jail and asking that we should be grateful for such generosity. They're like the church guarding with armed guards books because the peons aren't allowed knowledge even though their funds pay for it. The amount of shame doesn't even begin to announce the stunning lack of human scientific progress that can be linked to the actions of this single prosecutor, his vendetta of defending the walled gardens that we tried to break down will go down in the history books as one of the greediest moves someone ever made. For whatever personal gain this person might thinks comes from an action like this, he's currently most famous for defending public domain information. I hope he's proud of himself, because as far as humanity is concerned he's likely the biggest challenge we face for human progress in the 21st century, and to his family and friends I'm really sorry it's not your fault and please stop buying him gifts.
Posted by watchout5 http://www.overclockeddrama.com on January 17, 2013 at 3:56 AM · Report this
Supreme Ruler Of The Universe 12
So a company with negative profits, who built its audience by delivering goods to the suburbs electronically, putting bricks and mortar stores out of business, then plays the Seattle Card and crams all its employees into an urban vacuum, all the while they are being eaten by taxes and by those same bricks and mortar guys who finally figured out, heck, I can sell this stuff on a computer!
Posted by Supreme Ruler Of The Universe http://www.you-read-it-here-first.com on January 16, 2013 at 11:47 AM · Report this
Urgutha Forka 11
@7,
I think we agree though.

Your third paragraph suggests capitalism isn't great for the little people because look at low wages, lack of health care, etc. But I'm arguing that the U.S. is not truly capitalist, so I agree that we have low wages and prison labor and so forth, but it can't be due to capitalism, because we're not running a capitalist marketplace.
The consumers don't have the choice to buy from a competitor that offers better wages and healthcare, because that competitor doesn't exist: The big, low wage, no healthcare competitor bought them out. You even describe it in your fourth paragraph. You suggest it is what capitalism will become; I suggest it's already there (and completely agree with your final paragraph).

I also agree with your initial paragraph. Capitalism doesn't stop monopolies, indeed, the ultimate end result of capitalism IS a monopoly. Only government regulations can curb capitalism by restricting the growth of big companies and fostering/subsudizing the growth of small ones. Obviously, that IS terrible for the big companies though. If it wasn't for government regs, unfettered, free-market capitalism would allow Disney, or Microsoft, or Time-Warner, or whoever, to buy out ALL their competitors and control everything, at which point it very naturally shifts from being capitalist to being monopolistic. Consumers drive competition, but eventually, one competitor gains a little advantage, buys some of the smaller ones, and then it becomes a compound interest problem from there. The consumers lose choices rapidly and are left with just one (or a couple).

Capitalism can only survive with regulations... with government. Without them, without government, capitalism will inevitably lead to a single business controlling all: Monopoly. The government forcing businesses to remain capitalistic - by breaking up monopolies and putting regs on big companies - is bad for companies who want to control everything.

The problem is, our government isn't doing it nearly enough.
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Posted by Urgutha Forka on January 16, 2013 at 11:14 AM · Report this
10
Aaron Swartz, R.I.P.

There is nothing more sad, more disheartening, than the death of a decent person.

I didn't know Aaron Swartz, although I had communicated with him online on several occasions; a highly intelligent young man with a prodigious mind and noble spirit.

Aaron evidently reached the decision, to spare his family and friends future pain, he would forfeit his own life; in ancient Rome they referred to it as "Falling on one's sword."

Yet another fatality of Obama's War On Whistleblowers, the dramatic extension and expansion from the Bush administration.

Today, Gov. Don Siegelman sits in a penitentiary, his only "crime" was wishing to increase educational access for the many; an authentic democrat, so very rare today.

Today, an Iraqi immigrant, Shakir Hamoodi, who sent small sums of money to his close relatives back home for medical and food emergencies, also sits in a penitentiary, yet another humanist, or "criminal" in America?

Today, a brave CIA whistleblower of the criminal and barbaric torture taking place, John Kiriakou, faces two years in jail, thanks to Obama and life in the land of the lawless.

Aaron Swartz, Bradley Manning, Gov. Don Siegelman, Shakir Hamoodi, John Kiriakou and others, too many others, a roster of the best of America, wasted lives in others pursuit of never-ending corruption.

A bizarre BBC report the other day --- and bizarre is the only accurate description for both BBC and their news report --- ran an attack piece on WikiLeaks' Julian Assange, nonsensically juxtaposed against the newspaper strike in China!

They --- the BBC and Australian news --- once again perpetrated lies of "sexual assault of two women" against Assange?

Having read all the legal documents, in both English and Swedish, I observed NO verification of such lies, only that Sofia Wilen, the younger woman who first approached Julian Assange, wanted nothing to do with such false allegations, and that the government-affiliated Anna Ardin (one of her many aliases), appears to have been the driving force in stirring up such vicious stories! (When the publicity became too much for Anna Ardin, she was spirited off to Israel, where a member of the Bonnier family was ambassador at that time.)

http://www.nnn.se/nordic/assange/suspici…

The one common factor, known to Americans, which is evident in both the attacks on Wikileaks/Assange and the illegitimate and amoral incarceration of Gov. Siegelman, is Karl Rove.

Rove appears again and again in the background, as the puppet master pulling the strings to take out Gov. Siegelman, and was financed in his multiple trips to Sweden, around the beginning of the WikiLeaks' episode, financed by the Bonnier family, one of the media giant families of Europe and among the top ten media corporations in existence. (Virtually everyone on the Swedish side who has been attacking Julian Assange is financially connected to the Bonnier family: the attorneys, Anna Ardin, the Bonnier-employed reporters, the Justice Minister, etc., the only exception would be Sofia Wilen, the young lady who quickly distanced herself from the horrendously unfolding events.)

Aaron Swartz, both believed in, and fought for, free speech and freedom of the press, an incredibly shrinking freedom which has been all but co-opted by the ruling oligarchs through their corporations today --- does anyone really know who owns AT&T, after all?

Recently, some technically astute friends ran a series of tests, and observed that the most heavily censored sites: Huffington Post, boingboing.net, Naked Capitalism, The Guardian, etc., are considered to be some of the more "liberal" sites on the 'net --- nothing could be further from the truth!

The most heavily censored English-speaking countries on the Web? Canada, the UK and the USA.

Most despicably, network neutrality appears as dead as Aaron Swartz --- and we should all mourn the passing of both noble personages.

In Memoriam

Aaron Swartz

November 8, 1986 – January 11, 2013

http://upload.wikimedia.org/wikipedia/co…


Notes and Sources

http://www.guardian.co.uk/world/2012/oct…

"Kiriakou was a CIA veteran who played a role in the agency's capture of the al-Qaida terrorist Abu Zubaydah in Pakistan in 2002. Abu Zubaydah was waterboarded by government interrogators and eventually revealed information that led to the arrest of the "dirty bomb" plotter Jose Padilla and exposed Khalid Sheikh Mohamed as the mastermind of the 9/11 terror attacks. Accounts conflict over whether the waterboarding was helpful in getting intelligence from Zubaydah."

. . . .

"The CIA director, David Petraeus, sent a memo to agency employees noting Kiriakou's conviction, saying: "It marks an important victory for our agency, for our intelligence community, and for our country. Oaths do matter, and there are indeed consequences for those who believe they are above the laws that protect our fellow officers and enable American intelligence agencies to operate with the requisite degree of secrecy."

(Tell that to the wifey, Davey boy! --- sgt_doom)

http://www.democracynow.org/2012/9/11/fo…

http://www.donsiegelman.org/

http://news.silobreaker.com/the-case-of-…

http://www.theawl.com/2011/08/was-aaron-…

http://arstechnica.com/security/2013/01/…

http://cdn.arstechnica.net/wp-content/up…
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Posted by sgt_doom on January 16, 2013 at 11:10 AM · Report this
9
The WaMu Employment Bubble of Evil

During the congressional investigations, circa 2009, it came out that WaMu had long kept a blacklist of honest brokers, that is, ethical real estate assessors and estimators, so as not to contractually employ any of them but instead, WaMu would only employ the dishonest ones who would follow their lead and advice in illegally pumping up house and property valuations.

This situation existed from the late 1990s over the preceding first decade of the 21st century.

Crooked, crooked, crooked, and the WaMu banksters financially aided their fellow crooks, while screwing honest and ethical workers; the usual American scene.

Posted by sgt_doom on January 16, 2013 at 11:08 AM · Report this
Will in Seattle 8
Sounds like we should have used drones against them.
Posted by Will in Seattle http://www.facebook.com/WillSeattle on January 16, 2013 at 10:59 AM · Report this
treacle 7
@6 - I will disagree with you again: Capitalism isn't terrible for big corporations, and capitalism doesn't stop monopolies... Government intervention and regulation stops monopolies from forming. That newcomers are crushed or absorbed by the big boys doesn't go against any capitalist "ruleset" that I know of. It may be ethically questionable to us, but capitalism has only one ethical rule: profit. It is a machine, with machine logic. Everything else is rationalization.

Ironically, Government also creates monopolies with state-owned enterprises, but those make sense when the good or service provided is a "public good"; like electricity, roads, the post office, transit, healthcare, police force, firefighters, and more, because a single publically-owned service provider can provide the service more cost-effectively than multiple competing enterprises (where the 'race to the bottom' of cheapness results in shoddy products and low wages. (Cf. Michigan: when it privatized state road maintenance in the late 90s, it cost over 2x more and resulted in worse roads.)

I don't think capitalism is particularly great for the little people: look at the low wages, use of prison labor (in the US, I mean), widespread lack of healthcare, valuing of bankers over teachers, and a marketplace flooded with cheap plastic shit, dubious products and planned obsolescence. Sure, "lap of luxury" and "living in the future" is great, and we are lucky, and capitalism shares part of the honor for that.

But left to its own devices --ie. without careful government (Public) regulation and oversight-- capitalism will happily build oligopolies and monopolies without thinking twice about it. They are a very natural extension of the core doctrine.

The project to dismantle government "intervention" and regulation has been underway since the late 70s (if not earlier), and the revolving doors between corporations and government have been constructed everywhere. We are, in fact, becoming quite fascist -- a system characterized by the close interweaving of the state (muscle) and business (money).
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Posted by treacle on January 16, 2013 at 10:47 AM · Report this
Urgutha Forka 6
@5,
You're correct, I'm interchanging an economic system with a system of rule.

However, I'd still say we're not capitalist, most industries and markets in this country seem more like oligopolies. Any newcomers are quickly crushed or absorbed.

Capitalism is great for consumers, for the individual little people, but it's terrible for the big corporations. Big corporations want to be monopolies (more specifically, they want to be THE monopoly), and they're slowly getting there with every politician they buy who agrees to dismantle all regulations.
Posted by Urgutha Forka on January 16, 2013 at 9:05 AM · Report this
treacle 5
It's clearly about power. If you are a huge company, you can outsource your workers' jobs, you are lauded by the market and reap the savings. If you are an individual who outsources your own job and reaps the savings, you get shitcanned for it. Same story, different page.

@3 - Capitalism is so not dead. Capitalism LOVES totalitarianism, they are best friends --(also, "capitalism" is an economic system, "totalitarianism" is a form of government. Don't let the "-isms" on the end confuse)--. If the gov't keeps the workers in line and hungry, then business has a handy pool of highly motivated wage-slaves to pick from. Companies like to deal with nice, clean lines and hierarchical decision makers. Things can move fast, efficiently, when decisions are made from the top, and enforced all the way down.

Democracy is slow and messy. Profit hates messy, it wants clean, "frictionless" efficiency.

Now where's my damn train..?
Posted by treacle on January 16, 2013 at 8:56 AM · Report this
Pope Peabrain 4
People who can afford million dollar lawyers don't ever pay the real price of their crimes. And government seldom tries to dare.
Posted by Pope Peabrain on January 16, 2013 at 8:29 AM · Report this
Urgutha Forka 3
Yes, banks and corporate powerhouses not only lie, cheat, and steal, but they are congratulated for it.

Meanwhile, college-age nobodies are prosecuted by the recording industry for downloading songs.

Capitalism is dead. This country is not an example of free-market, capitalist democracy. It is more totalitarian than capitalist. Individuals are meaningless, only existing to be bought and sold, over and over again, and used by politicians - who are nothing but shills for the corporations - to gain more and more power.

What year is it? 2013? Could have fooled me... it feels more like 1984.
Posted by Urgutha Forka on January 16, 2013 at 8:29 AM · Report this
2
Which felonies were the WaMu bankers guilty of?
Posted by GermanSausage on January 16, 2013 at 8:25 AM · Report this
Rotten666 1
You can deflect by talking about all the great injustices in the world but it doesn't make a difference. Everyone is talking about malicious prosecution but at the end of the day the guy was never convicted of anything. He never had his day in court. Who the fuck knows what would have happened.

Posted by Rotten666 on January 16, 2013 at 8:21 AM · Report this

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