The Future of Capitalism

The Huffington Post has excerpts of Steven Rattner's new book Overhaul: An Insider's Account of the Obama Administration's Emergency Rescue of the Auto Industry. Highlights? Rahm Emanuel brags that his office is bigger than Vice President Biden's. Mr. Rattner says that Senator Schumer had vouched for Hank Morris, the placement agent "indicted on 123 counts of fraud," as a "straight shooter." More:

Rattner reserves some of his harshest criticism for Sheila Bair, the respected head of the Federal Deposit Insurance Corporation, accusing her of getting in the way of a deal between GMAC and Chrysler Financial by stubbornly pursuing her own agenda and even lying to Tim Geithner.

The New York Times on the 'Pay Gap'

September 2, 2010 at 8:41 am

The New York Times has an editorial this morning supporting a provision in the Dodd-Frank financial "reform" legislation that requires companies to report a ratio of their CEO's pay to that of a typical employee.

"Without company-specific data, however, it is impossible to measure and judge the effect of pay structures on companies and the broader economy," the Times editorial says. "How does the pay gap between the boss and the workers figure into performance? Are companies efficiently providing goods and services or are they being run for the enrichment of the few? Disclosure of the gap could help provide answers."

Daniel Loeb on Taxes

September 2, 2010 at 8:25 am

In the Financial Times, John Gapper, in the course of a mostly but not entirely wrong-headed column on taxing partnerships and money managers, notices another capitalist speaking out against efforts by the Obama administration and the Democrat-controlled Congress to single out a group of fund managers for tax increases:

Daniel Loeb, founder of the hedge fund Third Point, described a proposed change in the taxation of sales or initial public offerings of such funds as an "arguably unconstitutional Bill of Attainder" that showed the Obama administration was "operating from a playbook quite different from the one we are used to as American business people."

Citibank Raises Fees

September 2, 2010 at 8:07 am

How is President Obama's financial "reform" affecting consumers? A good example can be found in an August 31, 2010 letter that Citibank sent to its customers and that has been obtained by FutureOfCapitalism.com. The letter says the bank is slapping a $240-a-year fee on accounts with balances of less than $6,000, and that it is raising fees for withdrawals at non-Citibank ATMs to $2 from $1.50.

From the letter: "Citibank Account Package customers will continue to earn a monthly maintenance fee waiver by maintaining a combined average monthly balance of $6,000 or more in linked accounts. If you do not meet the balance requirement for a waiver, the monthly maintenance fee for the Citibank Account Package will be $20."

More from the letter: "The Non-Citibank ATM Fee will change from $1.50 to $2.00 per withdrawal...For those accounts that previously received reimbursement of fees charged by other banks for using their ATMs. these reimbursements will be discontinued."

The letter gives no explanation for the fee increases.

George Packer on Iraq

September 1, 2010 at 10:39 am

The New Yorker's George Packer comments on President Obama's Iraq speech:

What President Obama called the end of the combat mission in Iraq is a meaningless milestone, constructed almost entirely out of thin air, and his second Oval Office speech marks a rare moment of dishonesty and disingenuousness on the part of a politician who usually resorts to rare candor at important moments.

"Rare," that is, unless one counts how he handled health care, as I described it earlier:

Rubin and Robertson on Estate Tax

September 1, 2010 at 9:09 am

Robert Rubin and Julian Robertson follow up the arguments they made in the conference call covered here July 21 with an op-ed piece in today's Wall Street Journal under the headline, "Bring Back the Estate Tax Now."

A few points in response. First, if people managed their personal finances the way that Robert Rubin managed Citigroup (whose market capitalization collapsed on his watch) and the Harvard University endowment (which also collapsed while he was involved in its management as a member of Harvard's governing Corporation), there'd be lot fewer estates subject to the tax, because everyone would have a lot less money.

A Global Tax

September 1, 2010 at 8:08 am

Under the headline "Small global taxes would make a big difference for world's 'bottom billion,'" the foreign minister of France, Bernard Kouchner; the foreign minister of Japan, Katsuya Okada, and the development cooperation minister of Belgium, Charles Michel, have an op-ed piece suggesting a tax on foreign currency exchanges to finance safe water, food, and education for poor countries. "A levy of five cents for each $1,000 exchanged could bring in more than $30 billion per year," they write.

When people suggest taxes, they always start out "small." But once the door is opened to the idea of "global taxes," you can bet they won't end small. Never mind all the issues about whether development aid actually helps poor countries or just winds up empowering corrupt local dictators and their cronies.

Big Government, Big Business, Big Labor

September 1, 2010 at 7:49 am

Michael Barone has a new column up:

The Obama Democrats, faced with a grave economic crisis, responded with policies appropriate to the Big Unit America that was disappearing during the president's childhood.
Their financial policy has been to freeze the big banks into place. Their industrial policy was to preserve as much as they could of General Motors and Chrysler for the benefit of the United Auto Workers. Their health care policy was designed to benefit Big Pharma and other big players. Their housing policy has been to try to maintain existing prices. Their macroeconomic economic policy was to increase the size and scope of existing government agencies to what looks to be the bursting point.
What we see is Big Government colluding with Big Business and trying to breathe life into Big Labor.

Party of the Rich

September 1, 2010 at 7:46 am

The Washington Examiner's Timothy Carney notices that of the 12 richest members of Congress, only three are Republicans, and puts that together with some other data points to argue that the stereotype of Republicans as the "party of the rich" is inaccurate.

1 Reader Comment

Steven Rattner's Horse Farm

August 31, 2010 at 11:39 am

Steven Rattner, who worked for the Obama administration restructuring the auto industry and who reportedly has the Securities and Exchange Commission on his case for the Chooch situation, lands on the front page of today's Vineyard Gazette (the last Tuesday issue before the paper reverts to weekly publication until next summer). The issue now is a horse farm, Crow Hollow Farm, that Mr. Rattner, according to the Gazette article, recently bought for $2.3 million.

Financing the Ground Zero Mosque-Swimming Pool

August 31, 2010 at 10:43 am

A piece in the American Thinker wonders how tax-exempt bond financing for the ground zero mosque-swimming pool is going to be squared with the Islamic legal prohibition against interest. There are ways around it. Maybe a tax-exempt municipal Islamic bond?

Even so, it's got to be galling for those people out there trying to raise or borrow money without being able to offer tax-exempt interest to see a collection of characters like those putting together the ground zero mosque-swimming pool considered for tax-free financing.

Thanks to reader-participant-community member-watchdog-content co-creator E. for sending the tip.

1 Reader Comment

Israel's Energy Power Grab

August 31, 2010 at 10:23 am

Now that some natural gas reserves have been privately discovered off the coast of Israel, there are noises about the Israeli government making a power grab for the revenues. The Washington Post reports:

the initial euphoria over the prospect of energy independence for Israel is being overshadowed by the dispute between Israeli officials who want to increase the state's share of the profits and U.S. and Israeli investors who say the government's stance threatens Israel's status as a safe place to invest....
Under current law, Israel would be eligible to claim royalties of 12.5 percent of the value of the gas, along with some additional charges....

The Post quotes Rabbi Michael Melchior:

State Tax Competition

August 31, 2010 at 10:15 am

Amity Shlaes has a new column up at Bloomberg about the tax competition between states, including that between New Hampshire and Massachusetts and between Connecticut and New York.

Taxes and the Depression

August 30, 2010 at 11:04 pm

During a congressional debate between candidates in New York's 20th District, the candidates clashed over taxes, according to a report by the Albany Times-Union's Jimmy Vielkind. The Republican candidate, Chris Gibson, said letting the Bush tax cuts expire would be a bad idea:

It's not a good idea. You know what happened in 1929? They raised taxes twice and went from 6.5 percent unemployment to 13 percent unemployment, and then to 25 percent unemployment. That's the real truth of what happened. All that, by the way, was a year after the crash of the stock market."

When Mr. Vielkind asked Mr. Gibson about it after the debate, Mr. Gibson answered:

Another Right-Winger For Soaking the 'Rich'

August 30, 2010 at 10:44 pm

The other day we mentioned that one of the surprising things in the battle of ideas these days is the degree to which the center-right of the political spectrum wants to make government tax and spending policy tilt more away from the "rich." The latest to pile on is a resident scholar at the American Enterprise Institute, Andrew G. Biggs, who "was the principal deputy commissioner of the Social Security Administration and, in 2005 ... worked at the White House National Economic Council on Social Security reform."