This documentary will be the talk of the town for a while, so I figured I better give those who wish to judge whether portions of this well done presentation are actually correct or not. There are some great insights presented in this documentary, but all too often people swallow the entire thing rather than parsing what is true in it and what is up for debate. I will start first by some resources I give via a discussion on Facebook I was involved in after the person who watched said, “[I am] done with conservatism.” I will follow that with some points I feel are important for the person who watched the documentary to know:
You would have to start something in order to quit it. It is funny because one of the most conservative radio hosts liked the movie… he isn’t done with conservatism. in fact, he even had the director, Charles H. Ferguson, on to talk about the movie: http://vimeo.com/23844840
- PART 1
Of course, I think that one of the most budget minded hawks in the Senate who could have been our President may have taken vastly more positive steps in ending this problem than Obama (http://religiopoliticaltalk.blogspot.com/2008/09/clinton-and-housing-mess.html), but that is neither here nor there.
- Clinton in his own words:
- Democrats in a hearing:
- And here is the link to my “tag” on my old site dealing with this issue:
- PART 2
I think this is a good response to some of the important miss-truths in the documentary Inside Job, which does reflect some truths in its presentation. This is a good series of commentary and there are not only the critiques I am listing below but also some points explaining some truths found in the documentary. However, for this presentation I cherry picked some of the more important points that needed to be dealt with:
Number 1 of 17:
Claim: “In 2008, the collapse of Lehman Brothers and AIG triggered the crisis.”
On the other hand: The origins of the crisis can be traced back even further, to the implosion of two Bear Stearns hedge funds run by Ralph Cioffi and Matthew Tannin, the Bear Stearns High Grade Structured Credit Strategies Fund and the Bear Stearns High Grade Structured Credit Strategies Enhanced Fund.
Cioffi and Tannin invested the funds’ $1.4 billion in CDOs backed by highly rated (meaning that they were meant to be safe, investment-grade) mortgages, aka the top tranch CDOs. In the last two weeks of June 2007, rising defaults by the least credit-worthy borrowers spread from the bottom tranches of CDOs to the top, triggering massive losses in the funds.
Many on Wall Street were surprised that the top tranches were affected, and they became aware of a crisis brewing in the mortgage market. Sophisticated investors became wary of investing in even AAA-rated mortgages, and firms that held them on their books began trying to offload them quickly before they went bad.
Number 3 of 17:
Claim: In the movie, deregulation is synonymous with the Gramm-Leach Bliley Act and the consolidation of the financial industry.
George Soros, for example, likens the consolidation to an oil rig that doesn’t hold oil in a number of separate compartments that will contain an oil spill to one compartment and help prevent draining of the whole supply.
On the other hand: Deregulation is an odd word to use to describe an act that allowed insurance firms, investment banks, and commercial banks to operate as one unit.
Deregulation implies that they’re not regulated as stringently as they were before. Financial firms need more regulation, but there was nothing in the GLB act that said to decrease regulation of these units. The only thing the GLB did about regulation was to establish the Federal Reserve as the regulator of all financial holding companies.
Number 4 of 17:
Claim: “Since deregulation began, banks have been caught cooking their books and defrauding investors again and again.”
On the other hand: Crime on Wall Street seems to have existed almost as long as Wall Street has. Author Steven Fraser writes that it dates back to William Duer in 1792.
According to the SEC, organized crime on Wall Street dates back to the 1970s, before the Gramm-Leach Bliley Act.
Number 7 of 17:
Claim: “Eliot Spitzer’s investigation found analysts were promoting companies that they knew were junk.”
Inside Job provides anecdotal evidence of Wall Street analysts promoting companies while writing emails that called those same companies, “junk.”
On the other hand: Analysts were accused of lying to clients based on edited emails that don’t tell the whole story. When taken in context, the full emails might have provided evidence that actually indicated that the analysts were analyzing the shape of the market and new research. And that might have been all they were doing in those emails: reacting to new research that said, this thing is “junk.” After which, they moved on to finding new evidence by doing their own research and proving it wrong. And THEN they promoted the companies.
Number 8 of 17:
Claim: “Derivatives have no value of their own, yet are a $50 trillion market. Using derivatives, traders can bet on anything.”
Inside Job argues that derivatives have no value of its own because its value is derived from another asset.
On the other hand: A Reuters special report on derivatives has a good argument: Big companies regularly use derivatives as a form of insurance to guard against jumps in the price of everything from cocoa to interest rates. An airline will buy jet fuel derivatives so that if prices spike, the contract helps to make up the difference in price, enabling the carrier to budget and plan ahead. If jet fuel prices fall, the loss made on the derivatives contract is canceled out by savings from cheaper refueling bills. It’s the same with barley for beer or aluminium for cans, or any other commodity you can think of.
Also, the OTC market is a $600 trillion industry, so if you’re going to take issue with something that should be regulated, you might want to take it up with OTC.
Number 9 of 17:
Claim: Derivatives are a destructive market, but no one regulates it.
The Commodity Futures Modernization Act bans all regulation of financial derivatives and exempts them from anti-gambling laws, according to the movie.
On the other hand: S. 3217, which divides the regulation of OTC derivatives between the SEC and the CFTC, assigning the SEC regulatory authority over some – but not all – securities-related derivatives and the CFTC authority for others, such as indexes of those securities, passed the Senate this summer.
But there’s a counterpoint: These new regulations may not even pass, and a senior policy advisor at the SEC says “these regulations are begging to be gamed.” Click here to read more >
Number 10 of 17:
Claim: “The average salary of a Goldman Sachs employee is $600,000″
On the other hand: This year, the average salary of a Goldman employee was $431,000 this year.
Number 11 of 17:
Claim: Dick Fuld earned $485 million
On the other hand: Fuld says his total compensation from 2000 through 2007 was less than $310 million, not $485 million. He explained 85% of his pay was in Lehman stock that had become worthless. “I never sold my shares,” Fuld said at one point. At another, he said he had not sold the “vast majority” of them.
Number 14 of 17:
Claim: Wall Street compensation rewards short term goals that will ultimately bankrupt the company.
On the other hand: That’s an overstatement. It’s true that in past years, many employees of financial firms had contracts with their firm that entitled them to profit-sharing agreements. The contracts stipulated that they would earn a share of the profits they earned for the firm that year (encouraging short term profits).
However since the crisis, many firms have increased the proportion of an employee’s bonus that is paid in stock while decreasing the portion that is paid annually. Many employees must now wait around 3-5 years before cashing in their stock.
Research from Harvard, a school which the movie claims is perpetuating the culture of greed by employing teachers and Presidents whom are paid handsomely by the financial services sector via consultancies, suggests that rewarding employees with profits that pay out over the long-term are most beneficial.
Counterpoint: “Clawbacks,” when an executive has had to give back their bonus, have almost never happened. Click here to see 9 execs who had to give back their bonuses >
Numbewr 15 of 17:
Claim: The meltdown was not an accident.
Financiers knew they were selling junk, and knew they would ultimately come out on top and leave the rest of the world in a recession.
On the other hand: There is no proof that it was an accident (and no proof that it wasn’t).
There is a conspiracy theory we’ve heard that says that in the early 1990s, people on Wall Street discovered that triggering a bubble and then going “short” before it blew up could outearn any long-term investment, even investing in Coca-Cola or McDonald’s 50 years ago.
It remains a conspiracy theory for now, and the movie (thankfully) doesn’t touch on it
Number 16 of 17:
Also, unlike the movie suggests, Wall Street has changed a lot since the crisis.
But it’s all relative, considering how ridiculous it was before.
On Friday night a a photo surfaced on Congressman Weiner’s yfrog account and in his verified Twitter timeline of a man in tight underwear with a bulging erection. The photo was sent to one of the many young attractive coeds who Rep. Weiner “follows” on Twitter for his news and entertainment. The image was immediately deleted. Rep. Weiner claimed his account was hacked but the upstanding Congressman has not contacted the FBI or Capitol Police. However, he did lawyer up.
What you can do to help:
The humble Rep. Weiner may want to play down this criminal action but now you can help. We (Gateway Pundit Truth Alliance) are offering a $200 reward for anyone who offers information that leads to the arrest and conviction of the Weinergate penis hacker.
This is a cause we can all rally around. Hacking into a public official’s personal account is a crime and a national security threat. Be a patriot. Do your part.
Hot Air has a story about Hollywood’s blacklist of whom they lend work to and whom they do not. This is a beginning of short videos and I am sure interviews that will detail the negative effects towards those in Hollywood who are conservative and/or religious. This audio is from Barbara Fisher, VP at Hallmark Channel, explains the difference between an Obama t-shirt and a McCain t-shirt. The book this and other cases can be found in is entitled, Primetime Propaganda: The True Hollywood Story of How the Left Took Over Your TV.
It is the
not the preacher,
who has given us freedom of religion.
not the reporter,
who has given us freedom of the press.
not the poet,
who has given us freedom of speech.
not the campus organizer,
who has given us freedom to assemble.
not the lawyer,
who has given us the right to a fair trial.
not the politician,
Who has given us the right to vote.
who can at times lay
us down in green pastures.
not the televangelist,
Who can get people out of wheelchairs.
Never Forget Their Sacrifice
BigJournalism shows just how biased the NYTs is when they say things that aren’t actually true:
The Progressive newspaper of record, the New York Times headline proclaimed:
“Israelis See Netanyahu Trip as Diplomatic Failure.”
“Prime Minister Benjamin Netanyahu of Israel returned from Washington on Wednesday to a nearly unanimous assessment among Israelis that despite his forceful defense of Israel’s security interests, hopes were dashed that his visit might advance peace negotiations with the Palestinians.”
Two new polls prove the NY Times report about Israeli reaction was totally biased.
A poll conduced by the liberal Israeli newspaper Ha’aretz which reported the positive Israeli reaction to Netanyahu’s trip.
“Ha’aretz Poll: Netanyahu’s Popularity Soaring Following Washington Trip”
“A new poll conducted by Dialog, under the supervision of Prof. Camil Fuchs of the Tel Aviv University Statistics Department, showed that 47% of the Israeli public believes Netanyahu’s U.S. trip was a success, while only 10% viewed it as a failure.”
In fact the poll seems to indicate the D.C. trip reversed Netanyahu’s decline in approval:
While in a Haaretz poll five weeks ago Netanyahu seemed to be in hot water with the public, with 38 percent expressing satisfaction with his performance and 53 percent disappointed with it, in yesterday’s poll the results were essentially reversed: 51 percent were satisfied, while 36 percent were not.
The moderate Jerusalem Post conducted its own poll conducted after Obama’s Speech to AIPAC:
When asked in the poll whether they saw Obama’s administration as more pro-Israel, more pro-Palestinian or neutral, just 12 percent of Israeli Jews surveyed said more pro-Israel, while 40% said more pro-Palestinian, 34% said neutral and 13% did not express an opinion.
Other polls taken after the Netanyahu trip agree with the other two:
A Telesker poll published in Ma’ariv on Wednesday found that the Likud had strengthened against Kadima. The poll predicted that the Likud would rise from 27 to 30 Knesset seats, while Kadima would fall from 28 to 27.
Asked who was more fit to be prime minister, 36.9% said Netanyahu; 28.3% said Kadima leader Tzipi Livni; 9.2% said Foreign Minister Avigdor Lieberman of Israel Beiteinu; 2.6% said Defense Minister Ehud Barak on Independence; and 18.2% answered none of the above.
A Sarid Institute poll broadcast on Channel 2 Tuesday night found that 38% of Israelis found Netanyahu most fit to be prime minister, and 35% Livni. The poll found that the Likud had grown in support at Kadima’s expense.
Since the last poll taken by the institute during a crisis over gas prices, Kadima fell by five seats and Likud rose by four.
The poll found that if an election were held now, Likud would win 34 seats (up seven from the last election in February 2009); and Kadima 29 (up one).
A Geocartographic Institute poll broadcast on Channel 1 Tuesday night predicted that the Likud would win 33 seats, and Kadima 22. According to that survey, 61% of Jewish Israelis oppose Obama’s formula of the 1967 lines with land swaps as a basis for an agreement with the Palestinians, while only 27% favor it.
From the Wall Street Journal:
Media reports in recent weeks say that Senate Democrats are considering a 3% surtax on income over $1 million to raise federal revenues. This would come on top of the higher income tax rates that President Obama has already proposed through the cancellation of the Bush era tax-rate reductions.
If the Democrats’ millionaire surtax were to happen—and were added to other tax increases already enacted last year and other leading tax hike ideas on the table this year—this could leave the U.S. with a combined federal and state top tax rate on earnings of 62%. That’s more than double the highest federal marginal rate of 28% when President Reagan left office in 1989. Welcome back to the 1970s.
Here’s the math behind that depressing calculation. Today’s top federal income tax rate is 35%. Almost all Democrats in Washington want to repeal the Bush tax cuts on those who make more than $250,000 and phase out certain deductions, so the effective income tax rate would rise to about 41.5%. The 3% millionaire surtax raises that rate to 44.5%.
But payroll taxes, which are income taxes on wages and salaries, must also be included in the equation. So we have to add about 2.5 percentage points for the payroll tax for Medicare (employee and employer share after business deductions), which was applied to all income without a ceiling in 1993 as part of the Clinton tax hike. I am including in this analysis the employer share of all payroll taxes because it is a direct tax on a worker’s salary and most economists agree that though employers are responsible for collecting this tax, it is ultimately borne by the employee. That brings the tax rate to 47%.
Then last year, as part of the down payment for ObamaCare, Congress snuck in an extra 0.9% Medicare surtax on “high-income earners,” meaning any individual earning more than $200,000 or couples earning more than $250,000. This brings the total tax rate to 47.9%.
But that’s not all. Several weeks ago, Mr. Obama raised the possibility of eliminating the income ceiling on the Social Security tax, now capped at $106,800 of earnings a year. (Never mind that the program was designed to operate as an insurance system, with each individual’s payment tied to the benefits paid out at retirement.) Subjecting all wage and salary income to Social Security taxes would add roughly 10.1 percentage points to the top tax rate. This takes the grand total tax rate on each additional dollar earned in America to about 58%.
Then we have to factor in state income taxes, which on average add after the deductions from the federal income tax roughly another four percentage points to the tax burden. So now on average we are at a tax rate of close to 62%.
Democrats have repeatedly stated they only intend to restore the tax rates that existed during the Clinton years. But after all these taxes on the “rich,” we’re headed back to the taxes that prevailed under Jimmy Carter, when the highest tax rate was 70%.