The Senate Banking Committee had Jamie Dimon, the head of JP Morgan, as its chief witness today. Ostensibly, the hearing was held to investigate whether the risky investments that led to a near-financial collapse in 2007-08 are being continued in light of the least $2 billion (more likely $7 billion) loss experienced by JP Morgan this year on what it claims was a “hedge” investment. The idea that the Senate Banking Committee could investigate JP Morgan in any serious way is a sick joke: 16 of the 22 Senators on the committee received campaign contributions from the firm (2 current Senators are retiring and are therefore not collecting any campaign contributions). ProPublica did an investigation on how deeply in JP Morgan’s pocket the Committee actually is. This phase of American democracy is a sick farce.
Revolving Door
One current staffer on the Senate banking committee, Dwight Fettig, is a former lobbyist for JP Morgan. In 2009, the bank hired him to work on “financial services regulatory reform.” Meanwhile, JP Morgan is stacked thick with former committee staff.
· Naomi Camper – Currently a lobbyist for JP Morgan. Prior to that, from 2001-2004, she was an aide to Senator Johnson.
· Kate Childress –A JP Morgan lobbyist since 2008, she is also a former aide to Chuck Schumer, D-N.Y., who sits on both the Senate Banking and Finance committees.
· Steven Patterson –A JP Morgan lobbyist and formerly a staff director for economic policy for the Banking committee.
· Nate Gatten— A JP Morgan lobbyist based in London who was reportedly called back to Washington recently to help with the company’s damage control. He is a former lobbyist for Fannie Mae, and, in the 1990s, was a banking aide to former Senator Robert Bennett, R-Utah, who also sat on the committee.
· P. Michael Nielsen – A lobbyist with a firm run by former Senator Bennett, he hasbeen retained by JP Morgan for help with federal probes, according to Bloomberg. He was also a senior policy adviser to the committee from 2007 to 2010.
American Banker also reported that three other outside lobbyists currently working for JP Morgan were once affiliated with the committee:
· Jason Rosenberg – A lobbyist at The Glover Park Group and formerly an aide to Jon Tester, D-Mont., who sits on the committee.
· Jenn Fogel-Bublick – A lobbyist at McBee Strategic Consulting and formerly a Democratic counsel on the committee.
· Mike Chappell – A lobbyist for Fierce, Isakowitz & Blalock and a former press assistant to Senator Roger Wicker, R-Miss., another committee member.
A former senator on the committee, Mel Martinez, R-Fl., is also now the JP Morgan exec in charge of Florida, Central America, and the Caribbean. Martinez waselected to the Senate in 2004 and went to the bank in 2010. Bloomberg reported that he was called to Washington after the losses were reported.
Lobbyists for JP Morgan appear to be keeping busy. The bank spent $7.6 million on lobbying last year, according to the Center for Responsive Politics.
Campaign Contributions:
JP Morgan has also been a generous donor to banking committee members, both Republican and Democratic.
· JP Morgan is the second largest campaign contributor to Johnson, the committee chair, and to the top Republican on the committee, Richard Shelby of Alabama,over the past twenty years, according to a tally from American Banker.
· JP Morgan employees have donated more than $80,000 to Johnson since 1998 and more than $136,000 to Shelby since 1990.
· So far in 2012, Dimon has personally donated to committee members Bob Corker, R-Tenn., and Mark Warner, D-Va. In 2008, he gave $2,000 each to Johnson and Shelby.
· Six of the 22 members of the banking committee have not received any money from JP Morgan PACs or employees in recent election cycles. Two of those members are retiring and aren’t collecting campaign funds.
Despite tough new laws against political protests, the Russian people came out to protest against the government of Vladimir Putin. The people are still angry about what they regard as a stolen election, and the widespread belief that the government is corrupt. As I have indicated before, I believe that the many protests that are going on in the world are all loosely connected by a general dissatisfaction with the connection between governments and the people.
The sense that the European economy is poised toward a major crisis is growing, and it is precisely that belief that accelerates the process of collapse. The belief that Greece will be forced to leave the eurozone means that everyone who currently has Greek assets priced in euros wants to convert those assets into a currency that is beyond Greek control. If Greece drops the euro and converts to the drachma, the actual value of the drachma will be about 70% less than the value of the current euro. The desire to convert currency creates a process of capital flight, which simply makes the economy even weaker. So governments try to prevent capital flight by not allowing conversion. But as soon as those new controls are implemented, the desire of people to convert their assets becomes even more intense. We are currently witnessing the deepening of panic in Europe.
A poll run by TrustLaw that asked almost 400 experts on gender equality about which countries have the highest degree of gender equality came up with this ranking: 1. Canada 2. Germany 3. Britain 4. Australia 5. France 6. United States 7. Japan 8. Italy 9. Argentina 10. South Korea 11. Brazil 12. Turkey 13. Russia 14. China 15. Mexico 16. South Africa 17. Indonesia 18. Saudi Arabia 19. India. Obviously, the poll emphasized the questions of legal definitions of gender equality, but the results are quite interesting.
I heard speeches by Madeline Albright and Hillary Clinton today at Wellesley College. It was the kickoff for the first summer institute of the Women in Public Service Project and it was truly inspiring. There were 50 women leaders from all over the world (although the majority were from the Middle East and North Africa) getting together for two weeks of workshops on leadership skills. The energy and commitment was palpable and powerful.
Leaving the conference, I heard about the report by the Federal Reserve on how the Great Recession of 2007-08 affected the American middle class and I went from high to low. In just 3 years (2007-2010), the American middle class lost about 40% of its wealth (income and assets, most importantly the value of a house). This precipitous loss was felt most acutely by younger middle class families. Unfortunately, the economic horizon remains cloudy for most Americans (and for most of the world right now).
And then tonight I read this report from the BBC on looming resource shortages in the world. It is a Malthusian analysis–that is, it assumes a straight line extrapolation of current trends–that I do not believe to be a valid frame of analysis (human systems are incredibly dynamic and ingenious). But much of the analysis deals with the next 20 years, which is a short time period to apply changes and fixes. Needless to say, the report is very depressing. I think it is just time to go to bed.
The climate change debate is pretty much settled, except for those individuals who have a financial interest in hydrocarbons. But getting accurate data on a global scale is admittedly very difficult. A new study suggests that the CO2 emissions from China have been significantly understated over the years, due to poor reporting at the local level. But a 20% underestimate is significant. It may be the case that the world is already past the tipping point toward a new climate.
Talks between Iran and the International Atomic Energy Agency yielded no tangible progress. The main issue in these talks concerned IAEA access to one of the nuclear facilities. Access to the Parchin facility is not required by the Non-Proliferation Treaty, but members of the UN Security Council believe that the facility is being used to test explosive devices that may be used in a nuclear warhead. I doubt that the end of negotiations will trigger any immediate action, but the upcoming June meeting in Moscow will unquestionably be a turning point.
Many countries have recently experienced economic slowdowns: Brazil. India, and China. In one of these cases, however, the cause of the slowdown seems to be profoundly political and not economic. The Economist analyzes the slowdown in India and places the blame squarely on the governance system.
The New York Times reports that the number of suicides in the military has, for the first time, been higher than the number of combat deaths. This legacy of the war in Afghanistan is one of the saddest, and symptomatic of the difficulties in fighting the war and the ambiguities of its mission. It is also an important indicator of the separation between the military and civilian life, a dangerous divide in any democracy.
The Russians are great chess players, and they checked the US in its efforts to organize international action with respect to Syria. The Russians proposed an international conference and insisted that Iran, a major ally of Syria’s President Assad, be invited to the conference. This gambit puts the US in an awkward situation: it desperately wants international action and needs Russian participation in an international conference, but it doesn’t recognize Iran and would be loathe to sit at the same table with the Iranians. Let’s see what move the US proposes to move forward.
As anticipated, Spain has asked for money to bailout its failing banks. It is asking for about $125 billion, and the request comes after repeated promises by the government that outside money was not necessary. We don’t yet know what the EU and the IMF are asking for in return for the line of credit,but it seems certain that the Spanish will be required to make even more sacrifices. With an unemployment rate of 25% it’s hard to imagine how difficult life in Spain will become.
The inability of the United Nations to intervene effectively in Syria has once again raised the question whether the Security Council can ever fulfill its mandate. Major changes are probably necessary in the structure of the Council, not surprisingly since it was created in 1945 when the world was a vastly different place. Here is an interesting analysis of the possibilities for change.
The Palestinian Authority has indicated that it is willing to accept “non-member state” status in the United Nations. It had earlier tried to obtain member status, but that effort died because of the threat of a US veto. Non-member status is a step up from the PA’s current observer status and requires only a majority vote within the General Assembly, side-stepping the veto threat in the Security Council. The US and Israel will fight this move, but I suspect that the PA has the votes.
There are reports that Spain will ask the EU to bail out its banking system. This step is unprecedented and contrary to eurozone rules. The reports are that the request will be made on Saturday and we’ll see how Germany responds. There has been a softening of the German position in recent weeks, but bailing out the banking system in a member state opens up a real can of worms as far as sovereignty is concerned. We live in interesting times.
The opposition forces in Syria appear to be well-armed, but we don”t know who supplies them. Most have assumed that the arms are smuggled in and paid for by Saudi Arabia and/or sympathetic Western governments. The truth, however, is a little more mundane: the weapons are purchased through prisoner ransoms from the Syrian army itself. The greed of the individuals keeps the violence going. The price is paid by innocent lives.
Some countries are called “The” as in The United States. Others, like Ukraine and Congo, don’t have the definite article in their name. A curious feature of language and the BBC explores how the difference evolved.
US-Pakistani relations are about as bad as they ever have been. There are numerous reasons why this state of affairs exists, but it seems as if matters are reaching a breaking point. Pakistan is counting on the US needing Pakistani logistical support for the war in Afghanistan, but that dependence is lessening every day. It’s hard to imagine a complete rupture of relations, but it is probably safe to say that the special relationship is over.
Another massacre is being reported in Syria, with many noncombatants killed, some by stabbing. After 15 months of violence, it seems as if Syria is entering into a full-fledged civil war, although the opposition movement still seems to be incoherent and uncoordinated. The number of platitudinous statements coming out of the diplomatic corps is reaching an all-time high, but effective action still seems quite remote.
National Public Radio interviewed Joseph Stiglitz on his new book on income inequality in the United States. Stiglitz (an Amherst grad) is a Nobel Prize winner who has been a persistent critic of contemporary economic policy. The interview is intelligent and compelling.
The BBC has done a review of the policy positions taken by the two candidates in the Egyptian presidential election. Ahmed Shafiq, an official from the Mubarak regime, is one of the candidates, although it is hard to believe that someone with his background could have the confidence of those who participated in the revolution against Mubarak. Muhammed Mursi is the candidate of the Muslim Brotherhood. The second round of the election is scheduled for 16-17 June–the Greek elections are also on the 17th. It should be an interesting day.
Armenian and Azerbaijani forces have exchanged fire across their border. Relations between the two states have historically been tense, and the two states fought a war over the status of the Nagorno-Karabakh region in Azerbaijan in the 1990s. There has been a formal cease fire, but it has been spotty at best, and it appears as if tensions are on the rise again.
Russian leader Vladimir Putin is in China and the Chinese leadership has received him warmly. Russia and China have apparently closed ranks on the issue of Syria, arguing that there should be no UN intervention in that state. The refusal of the two countries to even consider humanitarian intervention in what is now a full-fledged civil war means that there is little hope to bring aid to the Syrian people.
Stephen Walt has reported on a 20-country survey of what content is being taught in the field of international relations at the college level. His review is fascinating, noting some of the regional variations in the courses. But the 3500 scholars surveyed generally cover the field in a manner consistent with how the subject is taught in the 5 College system.
The number of issues raised by Greek economic turmoil is virtually impossible to tally. Insurance companies have now refused to insure Greek contracts to exporters, so Greece, heavily dependent on imports, is running out of a number of important items. These shortages make it impossible for the Greek economy to function, and thus the debt situation simply deepens. We are witnessing a vicious spiral downward from which there seems to be no escape other than for Greece to leave the euro.
According to the German journal, Der Spiegel, Israel is fitting nuclear warheads on missiles carried by submarines built by Germany to Israeli specifications. The revelation is extraordinary, since Israel will neither confirm or deny that it possesses nuclear weapons. The news has yet to be carried by any American media source, and it certainly complicates the strong non-proliferation stand the US has taken with Iran.
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