Here’s a little more about SF Pride at Work:

San Francisco Pride at Work is an organization of queers for economic and social justice. We are the LGBTQ arm of the labor movement, actively campaigning to protect workers’ rights to organize and defending queer justice in the workplace. Our group also organizes to build tenant power in San Francisco, to ward off the gentrification of queer neighborhoods and stop the displacement of communities. We participate in coalitions to resist attacks on immigrant communities in hopes that our city will one day be a safe place for all people, and we have also instigated groundbreaking protests for transgender rights. SF Pride at Work stands up for the rights of all workers, tenants, immigrants and queers in the spirit of the union movement’s historic motto: An Injury to One is An Injury to All.

We normally say that a company “went bankrupt,” implying that it had no choice. But when, recently, American Airlines filed for bankruptcy, it did so deliberately. The airline had four billion dollars in the bank and could have kept paying its bills. But it has been losing money for a while, and its board decided that it was foolish to keep throwing good money after bad. Declaring bankruptcy will trim American’s debt load and allow it to break its union contracts, so that it can slim down and cut costs.

American wasn’t stigmatized for the move. Instead, analysts hailed it as “very smart.” It is now generally accepted that when it’s economically irrational for a company to keep paying its debts it will try to renegotiate them or, failing that, default. For creditors, that’s just the price of business. But when it comes to another set of borrowers the norms are very different. The bursting of the housing bubble has left millions of homeowners across the country owing more than their homes are worth. In some areas, well over half of mortgages are underwater, many so deeply that people owe forty or fifty per cent more than the value of their homes. In other words, a good percentage of Americans are in much the same position as American Airlines: they can still pay their debts, but doing so is like setting a pile of money on fire every month.…

Paying your debts is, as a rule, a good thing. But the double standard here is obvious and offensive. Homeowners are getting lambasted for doing what companies do on a regular basis. Walking away from real-estate obligations in particular is common in the corporate world, and real-estate developers are notorious for abandoning properties that no longer make economic sense. Sometimes the hypocrisy is staggering: last winter, the Mortgage Bankers Association—the very body whose president attacked defaulters for betraying their families and their communities—got its creditors to let it do a short sale of its headquarters, dumping it for thirty-four million dollars less than the value of the building’s mortgage.

When it comes to debt, then, the corporate attitude is do as I say, not as I do.

Surowiecki says this double standard isn’t just wrong, it’s also bad economics.

Of course, many borrowers made bad decisions and acted irresponsibly. But so did lenders—by handing out too much money and not requiring sensible down payments. So far, banks have been partially insulated from the consequences of those bad decisions, because Americans have been so obliging about paying off overinflated mortgages. Strategic defaults would help distribute the pain more evenly and, if they became more common, would force lenders to be more responsible in the future. It’s also possible that a wave of strategic defaults—a De-Occupy Your House movement—would get banks to take mortgage modification more seriously, which would be all for the better.

Hmmm, where have we heard that idea before?

“It is tragic what we do in the poorest neighborhoods, entrapping children in, first of all, child laws, which are truly stupid.

“You say to somebody, you shouldn’t go to work before you’re what, 14, 16 years of age, fine. You’re totally poor. You’re in a school that is failing with a teacher that is failing. I’ve tried for years to have a very simple model,” he said. “Most of these schools ought to get rid of the unionized janitors, have one master janitor and pay local students to take care of the school. The kids would actually do work, they would have cash, they would have pride in the schools, they’d begin the process of rising.”…

“What do we say to poor kids in poor neighborhoods? Don’t do it. Remember all that stuff about don’t get a hamburger flipping job? The worst possible advice you could give to poor children. Get any job that teaches you to show up on Monday. Get any job that teaches you to stay all day even if you are in a fight with your girlfriend. The whole process of making work worthwhile is central.”

Let’s put aside for the moment that, as Corporation for Enterprise Development’s Andrea Levere pointed out, “in many low-income families, not only do their parents work one job, but many of these families work two jobs and three jobs.”

And let’s put aside what message our society sends poor kids when many have parents who have the phenomenal work ethic to work two or three jobs and yet are barely keeping their heads above water.

If you were worried about society’s values, why at a time when everyone but the 1% are struggling to find a job if they’re out of work would you be focusing on poor kids?

Put it another way: is it Harlem’s or Wall Street’s values we should be trying to fix right now?

I think Gingrich has the right general idea. It just needs a little tweaking. Instead of improving poor kids’ values by having them clean toilets, let’s make bankers and hedge fund managers do it.

But we don’t want to take away jobs from janitors. So instead of cleaning school toilets, our morally bankrupt friends could go to the homes of elderly janitors and housekeepers and clean their toilets.

Because right now there are an awful lot of elderly janitors and housekeepers who make places like New York City run smoothly that could really use some help — they can’t afford to retire because of what Wall Streeters and Banksters did.

Think of the moral and spiritual message President Bush could have sent in 2008 when he bailed out the banks. He could’ve told the banks that they wouldn’t be getting a free ride. They would have to earn it by cleaning toilets in the poorest working families’ apartments so they could see firsthand the damage they had done to our communities. Talk about cleaning up your moral hazards.

We could even use it to help revitalize poor neighborhoods. If we are providing all of this valuable moral training, why shouldn’t morally fallen pay for it? For every session hedge fund managers and banksters spent cleaning elderly janitors and housekeepers bathrooms, they could pay these hard-working folks for the privilege. And they could pay clergy in the neighborhood to meet with them after each session to talk about how to rebuild their moral values and live a more righteous life. In doing so they would not only rebuild their moral core, they would also infuse a much-needed stimulus into poor communities and the overall economy. And taxpayers wouldn’t have to pay a cent.

If Newt wants to send a clear-cut moral message to poor kids, I can’t think of a better way to do it.

 
P.S. Newt, if you need more help with fleshing out this idea, including a valuable historical perspective, my rates are very reasonable.

The fairness of taxing more lightly income from wages, salaries or from investments is beyond question. In the first case, the income is uncertain and limited in duration; sickness or death destroys it and old age diminishes it; in the other, the source of income continues; the income may be disposed of during a man’s life and it descends to his heirs.

Surely we can afford to make a distinction between the people whose only capital is their mental and physical energy and the people whose income is derived from investments. Such a distinction would mean much to millions of American workers and would be an added inspiration to the man who must provide a competence during his few productive years to care for himself and his family when his earnings capacity is at an end.

My how times have changed.

Gretchen Morgenstern wrote a piece on the fall of MF Global, which she blamed in part on credit default swaps (CDS). The International Swaps and Derivatives Association media.comment blog smacked back:

MF’s European sovereign debt holdings were just that, bond positions financed via repo transactions. Repos, of course, are NOT OTC derivatives. (They’re also not listed derivatives.) They are basic tools of corporate finance commonly used to finance cash bond positions.

We would have thought that, with a little checking, this point would be pretty obvious to one and all.

Salmon replied:

Obviously, ISDA wins this particular argument: it’s right, and the NYT is wrong. But don’t hold your breath waiting for a correction: Morgenson is one of those reporters who sees CDS beneath every rock, and even blamed CDS for Greece’s fiscal problems — twice. Neither of those columns received a correction.

In the Greece case, Morgenson saw CDS when she was actually looking at currency swaps, which are at least derivatives. In the MF Global case, she’s seeing CDS when she was actually looking at bog-standard repos, which aren’t derivatives at all.

But here’s the thing: the really annoying part of this episode is not that Morgenson is wrong. It’s that with a little bit of honesty and a little less derivaphobia, she might actually be on to something.
Here’s Morgenson:

MF Global’s debacle was a result of complex swaps deals it had struck with trading partners. While those partners owned the underlying assets — in this case, government debt — MF Global held the risk relating to both market price and default.

These arrangements at MF Global underscore two big problems in the credit derivatives market: risks that can be hidden from view, and risks that are not backed by adequate postings of collateral.

And here’s ISDA:
Because MF Global was an SEC registered Broker-Dealer and CFTC registered Futures Commission Merchant, regulators at all times had full transparency into the nature and extent of MF Global’s trading and risk positions.

In short, there were no derivatives, no opaque financial instruments and no hidden risks in the story of MF Global’s downfall.

If you simply delete the terms “complex swaps” and “credit derivatives” from Morgenson’s column, here, she’s actually right, while ISDA’s statement is a little misleading. This is the tragedy of Morgenson: because she’s incapable of getting her facts straight, she needlessly destroys arguments which are fundamentally sound.

MF Global did indeed hide its European sovereign risk from view — it was held off balance sheet, for no good reason. ISDA is, narrowly, right when it says that regulators knew exactly what MF Global was doing — but investors certainly didn’t. And so, contra ISDA, it’s entirely reasonable to consider MF Global’s European bond position to be a “hidden risk in the story of MF Global’s downfall”.

The real problem at MF Global wasn’t CDS, of course, or even derivatives — as ISDA points out, those were non-issues. Instead, it was simply leverage. It’s possible to get overlevered using CDS — just look at AIG. On the other hand, it’s equally possible to get overlevered the old-fashioned way, using nothing but simple repos. And that’s what MF Global did….

There will always be risk in the markets — without risk, markets are nothing. It’s good to regulate that risk, so that it doesn’t get out of hand, in whatever form it takes. But let’s not kid ourselves that the risk is always in the form of credit default swaps. CDS didn’t bring down Bear Stearns, or Lehman Brothers, or Washington Mutual, or Wachovia, or for that matter any of the Icelandic banks, or RBS, or Fortis, or now Dexia. Or MF Global. Which is why it’s important to concentrate on the things which do cause systemic risk, rather than simply blaming CDS all the time.

And that’s why you shouldn’t worry too much about remembering the geeky details about Finance. It’s not that they don’t matter — it’s pretty appalling that Gretchen Morgenstern doesn’t get them right. It’s that at the end of the day, the real issue isn’t any one particular shiny Finance toy, it’s systemic problems as a whole. The Boys and Girls on Wall Street are very good at coming up with new & improved ways of hosting other people and creating messes that get dumped at somebody else’s doorstep. If one of these Finance toys becomes a symbol of what’s wrong with Wall Street, we’ll fix that hole without doing anything about the rest of the crumbling dyke.

1) Borrow a teddy bear and hug it out.

2) If that doesn’t work, check out Investing in Chicago Communities: A Jobs Fund for a Future That Works. This report, put out by Stand Up Chicago! and the Chicago Political Economy Group just before today’s large Occupy Chicago rally, lays out a plan for starting to make Chicago work again for the 99%:

Under the plan, 40,000 jobs would be created by adding a $.25 per contract speculation fee to be collected from traders who engage in speculation on Chicago’s two main exchanges: the Chicago Mercantile Exchange (CME) and the Chicago Board Options Exchange (CBOE). This fee would create $1.4 billion in annual revenue.

“This is a tax whose time has come,” said William Barclay, an adjunct professor at UIC’s Liautaud Graduate School of Business and a board member of the Illinois Finance Authority, who pointed out that the UK and Hong Kong have similar transaction taxes in place….

“The so-called ‘job creators’ are not creating jobs but rather collecting interest on $1.6 trillion in cash that is not being invested in the real economy,” said Baiman [Director of Budget and Policy Analysis at the Center for Tax and Budget Accountability].

“If you play with something that doesn’t belong to you and you break it, you have to pay for it,” said Barclay. “The same investment banks that caused the jobs crisis are now thriving — but they’re not hiring workers. So our jobs plan is looking for these financial institutions — these big gamblers — to pay for what they broke.

Smart work, and just the beginning of many policy geek conversations about what we could fight for. So print it out or download it, and bring it along to read at your local Occupy event!

Another good sign for Occupy Wall Street’s future: a new group called “Occupy the Hood.”

Founded by Malik Rhasaan, 39 of Queens, N.Y., and Ife Johari Uhuru, 35, based in Detroit, @OccupyTheHood has close to 3,500 followers on Twitter, the growing support of notable figures and a cadre of volunteers devoted to getting the word out about the cause of the protests to African Americans and Latinos.

Rhasaan told Loop 21, Occupy The Hood has six core volunteers, but he’s already seen “Occupy The Hood” carried by people he’s never met

Like many others, he was initially just curious about the protests.

“It was a news story and I’ve always been interested in what’s going on in our country,” Rhassan said via phone from the protests, where a police officer had asked him to move along. “I was just going down and really, just being nosy to see how honest it was. I realized there was a solid movement but that there weren’t enough black and Latinos.”

@OccupytheHood is Rhassan’s first Twitter account, and since he created it he has linked with thousands of followers, including Cornel West. He said he wants to use the account “as a springboard to address other things, whether it be crime or health issues in our communities. But we in the inner-city doesn’t know how this pertains to us. We don’t tie our issues to Wall Street.”

It’s depressing and infuriating that in 2011, our side still doesn’t take diversity & racism seriously enough that a group like Occupy the Hood was needed. But the fact that this early in Occupy Wall Street’s history two guys who are not, as far as I can tell, hard-core professional organizers could make something like this happen so quickly is an encouraging indicator of where this movement/happening might go.

After a few days, I switched to Doug Henwood’s position:

I’m not here to disparage Occupy Wall Street; I admire the tenacity and nerve of the occupiers, and hope it grows. But I’m both curious and frustrated by the inability of the organizers, whoever they are exactly, or the participants, an endlessly shifting population, to say clearly and succinctly why they’re there. Yes, I know that certain liberals are using that to malign the protesters. I’m not. I desperately hope that something comes of this. But there’s a serious problem with this speechlessness.…

Occupiers: I love you, I’m glad you’re there, the people I talked to were inspiring—but you really have to move beyond this. Neoliberalism couldn’t ask for a less threatening kind of dissent.

But in the last few days, as the protesters have repeatedly shown solidarity for striking union workers and as Occupy Wall Street has spread to other cities, Mr. Curmudgeon has completely left the building. In an interview with Ezra Klein, organizing guru Stephen Lerner nicely captures where I’ve ended up:

EK: One criticism of the protests has been that they don’t really have any demands, that there’s not a clear and achievable vision of what success looks like, nor of how to achieve it. Do you worry these efforts will just burn themselves out?

SL: I think that’s an interesting question. I don’t know the answer because we’re in uncharted waters as a country. But it’s important to realize it’s not the only thing happening. There are lots of people with concrete demands about principal reduction and closing corporate loopholes. We haven’t had a shortage of demands and solutions. We’ve had a shortage of mass movements that are courageous and heroic and driven by a sense of right and wrong. So if we can get more and more people into the streets and activism, that will give more force and energy to the demands.

I have no idea if Occupy Wall Street is going to be the beginning of “the Movement.” But even if it isn’t, this many people getting up on their feet and saying, “I’m mad as hell, I’m not to take it anymore – and I’m not going to go away” is a very good thing.

A few months agoI heard a young Egyptian activist explain how Tahir Square occurred. Tahir Square, he said, wasn’t the start of something. It was the culmination of years of many different organizing efforts, some of which succeeded, some of which failed miserably. So maybe Occupy Wall St won’t end up being Tahir Square. But maybe it’s the next step on the road.

Or to paraphrase an old joke: how do you get to Tahir Square? Organize, organize, organize.

While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks. Some of us are investment managers who earn billions from our daily labors but are allowed to classify our income as “carried interest,” thereby getting a bargain 15 percent tax rate. Others own stock index futures for 10 minutes and have 60 percent of their gain taxed at 15 percent, as if they’d been long-term investors….

Last year my federal tax bill — the income tax I paid, as well as payroll taxes paid by me and on my behalf — was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent….

Back in the 1980s and 1990s, tax rates for the rich were far higher, and my percentage rate was in the middle of the pack. According to a theory I sometimes hear, I should have thrown a fit and refused to invest because of the elevated tax rates on capital gains and dividends.

I didn’t refuse, nor did others….

for those making more than $1 million — there were 236,883 such households in 2009 — I would raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains. And for those who make $10 million or more — there were 8,274 in 2009 — I would suggest an additional increase in rate.

My friends and I have been coddled long enough by a billionaire-friendly Congress. It’s time for our government to get serious about shared sacrifice.

I have worked with investors for 60 years and I have yet to see anyone — not even when capital gains rates were 39.9 percent in 1976-77 — shy away from a sensible investment because of the tax rate on the potential gain. People invest to make money, and potential taxes have never scared them off.

If you need some fancy math to back up Buffet, Jared Bernstein’s got some for you.