Sockeye Blog Archives

As the heat turns up on the Occupy Wall Street movement—including the Occupy Portland kickoff today—there’ve been a few opportunities in the last couple of weeks to peek inside the minds of the Wall Street investors who tanked our economy and then profited from the crisis.

As it turns out, they see the economic crisis as another opportunity to make money, and they’re not going to be helping to create any jobs any time soon, no matter how many tax breaks we give them.

You may have seen a video circulating recently of a Wall Street trader named Alessio Rastani giving an eye-opening interview to the BBC. The BBC hosts were asking Rastani about efforts by European governments to fix the Euro economy. His bold, direct answers left the newsroom (and everyone else who’s seen the video) speechless. Here's the video, with partial transcript below:

BBC: We keep hearing whatever the politicians are suggesting admittedly it’s all been rather wooly so far, it’s right. Can you pin down exactly what would keep investors happy and make them feel more confident?

Alessio Rastani: Ah, that’s a tough one. Ahhh – Personally, it doesn’t matter. That’s see – see – You see I’m a trader. I don’t really care about that kind of stuff. I got with – if I see an opportunity to make money, I go with that. So, for most traders it's not about…we don’t really care that much how they’re gonna to fix – how they are gonna fix the economy, how they’re going to fix the whole situation. Our job is to make money from it. And, personally, I’ve been dreaming of this moment for 3 yrs. I – I – I have a confession, which is: I go to bed every night, I dream of another recession. I dream of another moment like this. Why? Because, ahh people don’t seem to maybe remember, the 30s depression, the depression in the 1930s wasn’t just about a market crash. There were some people who were prepared to make money from that crash. And I think anybody can do that. It isn’t just for some people in the elite. Anybody can actually make money its an opportunity. When the market crashes. When the euro and the big stock markets crash, if you know what to do, ahh if you have the right plan set up, you can make a lot of money from this. For example, Hedging strategies is one, ahh then investing in bonds, treasury bonds, that sort of stuff.

…This is not a time right now to – wishful thinking, that the government is gonna sort things out. The government doesn’t rule the world. Goldman Sachs rules the world. Goldman Sachs does not care about this rescue package, neither does the big funds. So, actually what I would – I would actually tell people, I want to help people. People can make money from this, its not just traders. What they need to do is learn how to make money from a downward market.

Then, earlier this week, venture capitalist (and “free market” advocate) Bill Frezza gave an interview to NPR in which he spoke frankly about the fact that investors don’t actually want to create any jobs. In fact, investors want to create as few jobs as possible to maximize their profits. By admitting this, Frezza is exposing the lie behind the claims that tax breaks for the rich will lead to more jobs.
Here’s an excerpt (but I highly recommend reading/listening to the whole jaw-dropping interview):

BILL FREZZA: Nobody wakes up in the morning and says, I wanted to increase my payroll because I think it's good for the American economy. People run businesses because they want to satisfy their customers, they want to grow, and they want to make money. Jobs are an input. Rent is an input. The raw materials are an input. Those are all the things that you put into your products and services, and your goal is to have the highest quality at the lowest cost.

Your goal is not to increase one segment of your cost because somebody tells you it aligns with social policy. So - and even though we're in the business of creating new companies, as a venture capitalist, you know, the first question we ask in every board meeting is, what's your head count? And we watch it like a hawk because head count is an expense that will eat you alive if the business isn't large enough to support it.

...

NEARY: So what responsibility does business have in getting the economy on track so people can find work?

FREZZA: Well, businesses have the responsibility to build the best product at the best price for their customers. That's what businesses are in business for. They do not own a responsibility to put people to work. For example, if you were to make that the major goal, you would outlaw word processors or bring back the typing pool. I remember typing pools with hundreds of people in them. They were mostly women back then, but that created a lot of jobs.

So there are a lot of ways to create jobs if that's your goal. And if you follow any of those approaches, you will do more to hurt the economy than you will do to help it.

…

You know, each business is run for the benefit of its owners, its shareholders, its customers and its employees. It's not run for the benefit of the country. That's not why people run businesses.

Yesterday, occupants of the Chicago Board of Trade building had a little message for the Occupy Chicago protestors. In the windows of the building appeared this message: "WE ARE THE 1%."

Image Credit: USAanon/"T"/OccupyChicago

The last two years have been littered with terrible editorial writing about Measures 66 and 67. The Oregonian—under the direction of publisher N. Christian Anderson III—has taken the cake, but they’re getting some competition today from the Salem Statesman Journal.

The SSJ’s editorial board published an opinion today critical of Measures 66 and 67, arguing against national efforts to increase the marginal taxes on millionaires.

They were wrong on all the facts a year and a half ago when they endorsed a No vote, and they’re wrong on all the facts today. It’s disappointing that 21 months after the measures passed, opponents are still ignoring the facts in order to score political points with the corporate lobby.

So, without spending too much time knocking down every one of the SSJ’s tired, inaccurate claims and straw men arguments, here are the basic reasons why they’re wrong:

Fact 1. Since December 2009, just before the passage of Measures 66 & 67, Oregon has added 35,140 jobs.  Unemployment dropped from a high of 11.6% in May 2009 to around 9.6% in August. The numbers would be even better, except that budget cuts to schools and critical services have led to a large number of layoffs of teachers and other public employees.

Frankly, the cumulative impact of state and local budget cuts across the country is what is threatening our economic recovery. And now, the U.S. Congress is guaranteeing the status quo by derailing jobs plans that would put people back to work.

Fact 2. Oregon’s budget crisis would be hundreds of millions of dollars worse if not for the passage of Measures 66 and 67. The measures raised between $600 million and $700 million for the budget cycle. Combined with the federal funds we would have lost from those budget cuts, Oregon’s schools and critical services would have faced additional budget cuts of up to $1 billion on top of already deep cuts.

If you think our state budget is in crisis now, try taking another $1 billion out of it.

Fact 3. We still have the fifth lowest business taxes in the nation.

Fact 4. Measures 66 and 67 had nothing to do with the Republican gains in the state legislature last November. Perhaps Dick Hughes and company are unaware of this, but November 2010 saw a gigantic Republican surge across the country. Nineteen state legislative bodies around the U.S. switched hands from Democratic to Republican—and not a single one of them had anything that resembled Measures 66 and 67. By contrast, Oregon Democrats fared well. Democrats won the governorship, kept a majority in the State Senate, and held the House to a tie.

The reason Republicans made gains? They beat Democrats in voter turnout by 4.5 percentage points, fueled by a nationwide surge in GOP enthusiasm.

Fact 5. Businesses have not left the state. And why would they? 97.5% of Oregon businesses either saw no change in their corporate taxes or are paying just $150 per year (up from $10). The remaining businesses are either paying slightly more in taxes on their profits above $250,000, or are paying one tenth of one percent of their sales—a miniscule fraction of what they’d pay in other states, like Washington. 

In direct contrast to the Statesman, the Medford Mail Tribune’s editorial board—which opposed both measures in 2010—recently looked at the facts and admitted that there was no evidence that businesses left. In fact, they chastised business owner Bruce Hough and his partner, GOP Rep. Sal Esquivel, for their apparently empty threats to move to Nevada.

Fact 6. A wide majority of Oregonians voted in favor of Measures 66 and 67—by a margin of about 8 percentage points. There’s exactly zero evidence to suggest that Oregonians now believe we should lower taxes for large corporations and the richest 2%. In fact, national opinion polls show exactly the opposite. The Statesman’s vague, unsubstantiated comment about what “many Oregonians” think says more about who the writers spend time with (corporate lobbyists, Republican leaders, and the rich) than what Oregonians actually believe. 

Editorial boards are certainly entitled to their opinions, even when we disagree with them. But it’s simply irresponsible for editors to use their opinion page to regurgitate false talking points just to score political points.

If we can offer a word of advice to the editorial boards of Oregon’s major newspapers: Perhaps if you spent less time golfing and back-slapping with your friends in the corporate lobby, and more time interacting with members of the community you’re actually obliged to represent, you might stop the flow of readers away from your paper. And you might be able to speak with authority on what “many Oregonians” believe. Just a thought.

It's October! And it's Monday!

The Medford Mail Tribune editorial board, which opposed Measures 66 & 67, tries to shine a light on claims that the measures caused businesses to leave. There's no evidence, the editorial writers say, and "Oregon remains a hospitable place to live and to do business, despite overheated rhetoric from some in the business community."

As the Commission on Public Safety begins its examination of Oregon's sentencing laws (and their associated costs), the Oregonian reports that the state is on track to add 2,000 more inmates over the next decade.

Meanwhile, the impacts of the recession and budget cuts continue to be felt on the local level. Need for food bank services is at a record high, while the real world effects of cuts to programs that aid families living in poverty are becoming apparent.

Happy Friday!

Today, we posted the last post in our series on Americans Elect, examining the motives of the group.

Meanwhile, the Oregon Food Bank is experiencing record need for its services, and a columnist for the Atlanta Journal has an interesting take on the results of the differing approaches undertaken by Oregon and Georgia in response to the recession.