Notes and Links on the Democratic Primaries

A round-up of some of the best things I’ve seen on the battle so far between Clinton and Sanders:

Gerald Friedman, What Would Sanders Do.  We have posted the research report by Friedman that is the basis of his two columns for us, What Would Sanders Do?, Part 1: The Dynamic Effects of Seven Sanders Initiatives, and What Would Sanders Do?, Part 2: Wages, Poverty, and Inequality. Soon we will post Friedman’s column for our March/April issue, “Bernie Sanders’s Health Care Revolution,” with the numbers behind Sanders’s “Improved Medicare for All.” We have already posted the research report behind that: Friedman Response to Thorpe. (Meanwhile, the Times mentioned Jerry Friedman in Left-Leaning Economists Question Cost of Bernie Sanders’s Plans, but didn’t bother to interview him. They seem to have scoured the universe for left critics of Sanders; as Lambert Strether of Naked Capitalism says, “When Jared Bernstein is at the far left, you know you’re looking at establishment stenography.” And I loved Matt Taibbi’s tweets about this article: “The hysterical concern over how to pay for Bernie’s plans is hilarious. Nobody worries about how we afford the F-35. Nor do we ask how we afford non-negotiated Medicare drugs, the Littoral Combat Ship, the carried interest tax break, or other idiocies.”)  And a reminder:  the whole point is that single-payer would cost less than the current system, and provide health care to many more people.

Holly Wood, The Village VoiceFeeling the Yern: Why One Millennial Woman Would Rather Go to Hell than Vote for Hillary. A hilarious riposte to Madeleine Albright’s “there’s a special place in Hell” remark. Best parts: “Capitalism, as Vonnegut explained, is ‘what the people with all our money, drunk or sober, sane or insane, decided to do today.” And: “there’s a special place in Hell for war criminals who launch hedge funds.”

Bhaskar Sunkara, Aljazeera America: Enter the Sanders Democrat:
Whether or not he defeats Hillary Clinton, Bernie Sanders has awakened a powerful new constituency. Excellent analysis from the founding editor of Jacobin.

Benjamin Studebaker, at his blog, Why Bernie vs Hillary Matters More Than People Think (also at HuffPo). A great blog post that has a bigger historical perspective, with some economics.

Benjamin Studebaker, at his blog, Why Bernie Sanders Is More Electable than People Think.  A follow-up, also very good.

Jeff Spross, The Week: How class could eventually remake the Democratic Party. Similar to Sunkara’s article.

Jedediah Purdy, Huffington Post: Dismissing Sanders: Democratic Condescension and the Mythic Political Grown-up.  Takes on Paul Krugman and the New Yorker‘s Alexandra Schwartz.

Thomas Piketty in the Guardian (originally in Le Monde): Thomas Piketty on the rise of Bernie Sanders: the US enters a new political era.  More recent than the others; similar points.

Greenmountainboy, Daily Kos, Crossover Appeal: Bernie Sanders Wins 2,095 Write In Votes in Republican Primary – Washington Post.  The WashPo article is Bernie Sanders won 2,095 votes in the New Hampshire Republican primary; the headline sums it up. Find the official NH results from the Secretary of State here (for the Republican side) and here (for the Democrat side).  This on top of his having gotten more NH primary votes than any candidate in either party ever, and having won by a larger margin, than in any contested NH primary in either party in history.

I agree that the votes he got in the Republican primary is a good sign for Sanders’s crossover appeal (about four times as many as Clinton got, by the way).  But as someone who lives in NH and who canvassed for Sanders here, I don’t think it is quite as good a sign as some people are making it out to be.  As most people know, NH is an “open primary” state, which means that you don’t have to be a party member to vote in a party’s primary. But I think most people don’t know the mechanics of how it works here:  you can only vote in (e.g.) the Democratic Party’s primary if, when you walk into the polls, you are registered as a Democrat or if you are unaffiliated, in which case, on the day of voting, you can switch your registration to Democrat. If you walk into the polls registered as a Republican, you can only vote in the Republican primary. (I think you can switch your affiliation up to two weeks before the primary.)  Also, many NH voters strategically switch their party affiliation (switching it back to “unaffiliated” or to the other party after they vote) depending on where they think they can have a meaningful impact. But some people forget to switch their affiliation back. Given all this, I think it’s likely that many of the people who wrote in Sanders (or Clinton) in the Republican primary may have been Democratic-leaning unaffiliated voters, or even people who are “really” Democrats (i.e., that’s where their heart is and they are usually registered as Democrats), but who had forgotten to switch their affiliation back after some previous election.  Still, I think it’s true that there’s great crossover appeal for Sanders among Republicans.  Evidence: a relative of mine, who is normally a registered Republican and went into the primary intending to vote for Chris Christie, discovered when she walked in that she was still registered as a Democrat from some previous election. So she voted for Bernie. (Don’t ask me how she can support both Christie and Bernie, but I still think it’s a good sign for Bernie that there are people like this out there.)

Siding with Wall Street’s “Winners”

A piece by William D. Cohan in the current issue of Vanity FairWall Street Executives from the Financial Crisis of 2008: Where Are They Now?, is pretty harsh on the bankers who lost their top positions in the 2008 meltdown (Jimmy Cayne of Bear Stearns, Stan O’Neil and John Thain of Merrill Lynch, Ken Lewis of BoA, Angelo Mozilo of Countrywide, Dick Fuld of Lehman), chronicling their downfalls, their enormous severance packages, much smaller amounts in fines and penalties they had to pay, the ginormous mansions or penthouses they now live in, and their refusal to speak with Cohan about the financial crisis. In contrast, the “survivors” of the meltdown (Gary Cohn and Lloyd Blankfein of Goldman Sachs and Jamie Dimon of JPMorgan) did speak with Cohan, and Cohan is a bit easier on them. Cohan quotes Dimon in ways that make him sound wise and high-minded, e.g., when he says that there was a better approach than TARP and the bailout of the banks, which tarnished the whole banking industry:

In retrospect, Dimon says, a better way to rescue the system may have been to dismantle the banks that screwed things up. “If management ruined their companies, their boards should have been fired, management should have been fired,” he continues. “I support the clawbacks. I think that’s perfectly fine. The American public would have received some sense of justice being done.” He thinks there should have been some differentiation between well-run banks and poorly run banks: “If you said to me, how do I feel about some of these C.E.O.’s who walked away with $50, $100, $150 million and their company blew up? Terrible. It’s outrageous. I agree with them. Everyone says that’s bad. If this company went bankrupt, we should all give back the money we earned in the last five years or more. You wouldn’t have to ask me.”

And the article ends with an account of how “Dimon’s world was turned upside down last June” when he was diagnosed with throat cancer and underwent treatment, including radiation:

He also had six full days of chemotherapy. He lost 35 pounds. His body was burning some 4,000 calories a day because of the treatment. “It was hard to eat,” he says. “Your throat hurts. You have no appetite. Everything tastes just absolutely terrible. So you literally just search for the foods that you can get down.” Into this group fell oatmeal, scrambled eggs, and milk shakes.

By December, he was declared cancer-free. Whew!  But the experience made him confront his own death:

He is not yet sure how the bout with cancer has changed him. He believes the way he can still make the most difference for the world is at JPMorgan. “I really mean that,” he says. He talks about jobs that can be created through providing capital to companies. He talks about how the firm has hired 8,000 military veterans and is investing in Detroit.

So what started as a piece about how various Masters of the Universe have weathered the financial crisis (and what looked like it would be about how many of them made a killing and ended up quite comfortable, despite fraud, recklessness, malfeasance) ended up as a sympathetic piece about the “survivors” (i.e., the winners) of the crisis.  (The URL for the of the online version of the piece even reflects this shift, mentioning Dimon’s cancer when the title of the article doesn’t: It’s a little surprising, since Cohan has been harsher on Dimon and the bankers (e.g., in this NYT Opinionater piece from May 2011, which anticipates the Occupy movement, in which he speaks favorably of Nicholas Sarkosy’s excoriation of Dimon at Davos that year).

You wouldn’t know, from Cohan’s piece, that JPMorgan has been fined more than $35 billion in the three-and-a-half-year period ending at the end of 2014, according to (JP Morgan’s Fines to Date: A Brief History), or that “[n]early all of the penalties were tied to the financial crisis and the company’s promotion and use of mortgage-backed securities.” Maybe Cohan assumes that his readers know or remember this, but wouldn’t it have been a good rejoinder to Dimon’s high-minded claim that the poorly-run banks should have been dismantled and their executives punished? (As the LA TImes‘ Michael Hiltzik points out (The Myth of the Obama ‘Attack’ on JPMorgan’s Jamie Dimon), it is pretty rich that Dimon whines about being persecuted by the Obama administration when the fines have come from many directions besides the federal government, including “several state attorneys general, the European Commission, the British Financial Services Authority and the government of Switzerland” (for LIBOR manipulation), the British Financial Services Authority and other regulators (for the “London Whale” losses), the Madoff securities estate (for complicity in Madoff’s Ponzi scheme), and from the California Independent Independent System Operator, the government of the city of Milan, and the attorneys general of New York and Florida. And this is putting aside any disagreement we might have with what appears to be the Obama administration’s policy of pursuing fines against the banks instead of criminal prosecution of the bankers.

And you wouldn’t know, from Cohan’s piece, that Dimon told the Federal Crisis Inquiry Committee in 2011 that “In mortgage underwriting, somehow we just missed, you know, that home prices don’t go up forever and that it’s not sufficient to have stated income.” As Bill Black puts it in a great recent blog post, we’re supposed to think that “JPM just forgot that lenders need to underwrite their loans and that financial bubbles cannot continue indefinitely.  JPM is the world’s largest bank.  Tens of thousands of people would have to simultaneously forget the same points that had been drilled into them over the course of their education and professional employment.  Tens of thousands of JPM employees would also have to forget that their loan manuals existed.  Dimon’s claim is the stuff of bad science fiction.” As Black points out, on 2012, in JPM’s annual letter to shareholders (where he seems to say different things than what he says to financial journalists and government commissions), Dimon indicates that he understands underwriting a little better than that:  “Low-quality revenue is easy to produce, particularly in financial services.  Poorly underwritten loans represent income today and losses tomorrow.” Black again: “Dimon’s statement is pithy and captures the essence of the fraud recipe and its sure things.”

An extreme case of celebrating and sympathizing with the victors is the recent scandal of SEC offical Andrew “Drew” Bowden, who was caught on camera issuing fawning praise for the private equity industry and even joking that he’s encouraging his teenage son to go into the industry (see video above, or here). The story was broken by Yves Smith at Naked Capitalism (The SEC’s Andrew Bowden: A Regulator for Sale?), and covered by Matt Taibbi at Rolling Stone (Regulatory Capture, Captured on Video) and by the LA TImes‘ Hiltzig (Bankers Are Complaining Again–About Too Much Regulation).

The remarks he made at Stanford are bad enough on their own; joking about his son entering the field was bad, but it’s the attitude toward Wall Street’s wrongdoing vs. its “success” that is really appalling. Bowen said:

Like what, who else out there is in a business that’s that good? And I reckon, it’s sort of interesting for me for private equity in terms of all we’ve seen, and what we have seen, where we have seen some misconduct and things like that, ’cause I always think like, to my simple mind, that the people in private equity, they’re the greatest, they’re actually adding value to their clients, they’re getting paid really really well, you know…

Taibbi remarks: “it reveals an attitude that’s absolutely poisonous among regulators, this fawning worship of people on Wall Street who maybe break a few rules, but that’s okay, because they make tons of money! Can you imagine Elliott Ness giving a speech gushing over what nice cars Al Capone drives? It’s revolting.”

And what is especially damaging for Bowen is that he was highly critical of the private equity industry just last May (see Spreading Sunshine in Private Equity), especially about the industry’s fees (something Yves Smith at Naked Capitalism has been hammering home on), and told Gretchen Morgenson of the New York Times that “[i]n some instances, investors’ pockets are being picked.” But since then Bowen has backpedaled (e.g., in the interview he did for this piece for Private Equity International), so that the Stanford remarks look like a complete turnaround–which is why the charge of regulatory capture fits so well.

 –Chris Sturr