A friend of mine pointed out this interesting synthesis between capitalism and socialism in which capital is being distributed based on need rather than profit and yet still capable of making a sustainable profit: Muhammad Yunus - Nobel Lecture.
He described it as, "The use of capitalism to defeat its affect on the third world."
(It's just the kind of thing I've been looking for. Thanks, Jeff.)
Of course, it's only one example, and it's not a perfect one at that because only about 58% of borrowers have cross over the poverty line, but I think that it at least goes show that the system is not the entire problem. And as one person wisely pointed out, "[We] should not be too quick to write off experiments of this kind because they don't fit our own standard bias."
Personally, while I agree that capitalism itself often fosters greed and violence in the way that it's structured, especially considering the fact that profit is the bottom line, my opinion is that the problem isn't with capitalism as much as it's with the inclination of people to abuse it. The way I see it, socialism would help to limit the economic and societal conditions that foster things like greed and violence, and that's why I consider myself a socialist, but that's not the end of the struggle. It's just the beginning.
Others strongly disagree with this position, however. One person, for example, wrote to me saying, "Capitalism isn't abused by people. It abuses people."
That may very well be, but my view is that capitalism doesn't so anything on its own; it's simply an economic system that is utilized by certain people. And even though I agree that it often fosters greed and violence in the way that it is structured, I'm of the opinion that any economic system can be abused by greedy, selfish people.
As I said, I believe that socialism — and by "socialism" I mean a mass movement towards economic democracy — would help to limit the economic and societal conditions that foster things like greed and violence, but I don't think that it can eliminate them altogether. I don't buy the idea that capitalism is to blame for all the evils of the world, and that once capitalism is replaced people will all of a sudden stop being greedy and selfish. What I think is missing in discussions like this is the idea of personal responsibility. Yes, the capitalist system is unfair and set up to promote aggressive competition, but people also have to be willing to take responsibility for their own actions. We can't blame the system for everything.
I guess my point is that I don't think vilifying capitalism serves any purpose other than to antagonize people who self-identify themselves as capitalists or the average worker who currently supports the capitalist system in general. I'm more than willing to acknowledge and discuss the weak points of the capitalist system, the strong points of the socialist system and how to work towards implementing such a system, but I'm not willing to deny the places where capitalism has contributed to the development of society or the advancements made in areas like agriculture, medicine, science, etc. (I'm also a firm believer that a successful transition from capitalism to socialism requires a certain level of infrastructure and technological advancement.)
So even though I realize that capitalism has its limits, I think making enemies of the "capitalists" and their resources is counter-productive. What is more productive, in my opinion, is trying to get the majority of the working class to recognize and understand these limits, as well as the fact that there are viable alternatives available.
At least, that's where I currently stand. My position is always amenable to change.
Tuesday, May 12, 2009
support la teachers union
From the Associated Press:
So let me get this straight: staging a one-day walkout to protest planned layoffs and class-size increases is considered "illegal, disruptive and dangerous," but overcrowded schools with fewer teachers isn't? Bullshit. I think some civil disobedience is in order.
Even if it's true that the planned one-day protest would violate the terms of the contract the United Teachers of Los Angeles signed with the Los Angeles Unified School District, somebody has to stand up for the students and against the endless funding cuts, lay-offs and overcrowding.
Education should be a priority, not the first thing to get ransacked whenever states are short on cash.
A judge has forbidden Los Angeles teachers from staging a one-day walkout Friday to protest planned layoffs and class-size increases.
Los Angeles Superior Court Judge James Chalfant says the restraining order he issued Tuesday will protect the health and safety of students.
The layoffs and class-size increases were approved by the school board in hopes of closing a huge budget deficit facing the nation's second largest school district.
United Teachers Los Angeles President A.J. Duffy contends the walkout is a way of standing up for students.
District officials say a work stoppage would be illegal, disruptive and dangerous.
So let me get this straight: staging a one-day walkout to protest planned layoffs and class-size increases is considered "illegal, disruptive and dangerous," but overcrowded schools with fewer teachers isn't? Bullshit. I think some civil disobedience is in order.
Even if it's true that the planned one-day protest would violate the terms of the contract the United Teachers of Los Angeles signed with the Los Angeles Unified School District, somebody has to stand up for the students and against the endless funding cuts, lay-offs and overcrowding.
Education should be a priority, not the first thing to get ransacked whenever states are short on cash.
Monday, May 11, 2009
today's two tidbits
From today's New York Times:
Looks like the U.S. is finally catching up with China and Europe when it comes to enforcing antitrust laws.
In other news, Dell has apparently unveiled a new website called Della, which is offering a new computer lineup targeting women. The website even offers tips on things that help simplify life such as an online task manager application aptly named "Remember the Milk."
Are you kidding me, Dell? First, you screw over the Irish workers who've been manufacturing your computers for Europe and the Middle East since 1990 by moving your manufacturing base to Poland because of the cheaper labour, and now you're marketing sexist computers? Lame.
President Obama’s top antitrust official announced on Monday that the administration would restore an aggressive enforcement policy against corporations that use their market dominance to elbow out competitors or to keep them from gaining market share.
The new enforcement policy reverses the Bush administration’s approach, which strongly favored defendants against antitrust claims. It returns to a policy that led to the landmark antitrust lawsuits against Microsoft and Intel in the 1990s.
The head of the Justice Department’s antitrust division, Christine A. Varney, announced the policy reversal in a speech on Monday before the Center for American Progress, a liberal policy research organization. She will deliver the same speech on Tuesday to the United States Chamber of Commerce.
Ms. Varney said that the Bush administration policy “lost sight of an ultimate goal of antitrust laws — the protection of consumer welfare.”
Looks like the U.S. is finally catching up with China and Europe when it comes to enforcing antitrust laws.
In other news, Dell has apparently unveiled a new website called Della, which is offering a new computer lineup targeting women. The website even offers tips on things that help simplify life such as an online task manager application aptly named "Remember the Milk."
Are you kidding me, Dell? First, you screw over the Irish workers who've been manufacturing your computers for Europe and the Middle East since 1990 by moving your manufacturing base to Poland because of the cheaper labour, and now you're marketing sexist computers? Lame.
Friday, May 8, 2009
re: 1 billion
In regard to 1 billion, I was asked by someone why I'm blaming capitalism when the Associated Press report itself states that:
The answer is simple. Because it seems to me that the system is inefficient when it comes addressing the needs of humanity.
According to one UNEP report, "over half of the food produced today is lost, wasted or discarded as a result of inefficiency in the human-managed food chain."
Just look at how much perfectly good food is thrown away by grocery stores, for example. People actually make a living out of cooking and eating the perfectly good food they throw away. Hell, even Giles Coren, restaurant critic for the British newspaper the The Times, did a segment about it on the The F Word. (He ate a banana right out of the garbage, and then proceeded to have a picnic with everything they collected.)
And what about the 30 million tons of unwanted fish currently discarded at sea per year? How many people could that feed?
In addition, food that could go to feeding people goes instead to things like feeding livestock and the production of biodiesel. The same UNEP report underscored the fact that "over one-third of the world’s cereal harvest is being used as animal feed" and cautioned that "continuing to feed cereals to growing numbers of livestock will aggravate poverty and environmental degradation," while Secretary-General Ban Ki-moon noted that "soaring food prices brought intense focus ... on the inflationary role of biofuel production."
The world as a whole — but especially wealthy, industrialized nations like Canada and the United States and other large producers like Brazil, China, the EU, India, etc. — has the capacity to produce enough food to feed those who can't produce enough on their own, but due to the lack of profit involved it doesn't.
As one article in Forbes illustrates, even though genetically modified seeds are the potential "saviors of the global hungry":
The bottom line is that under the current system, profit is the determining factor in agricultural advances, production, storage and distribution.
In the United States, for example, supply control policies were used to decrease overproduction until 1996 to control prices. Why? Because too much supply equaled lower prices, and lower prices equaled lower profit. And this "problem" isn't just limited to the United States.
The Economic Times had a story earlier this year about wheat oversupply and profits in India. It notes that, "To add to the problem of too much unsold stocks, India is poised to reap another good harvest this year. In short, Indian wheat prices look set to plummet in a market where customers—corporate and retail—will be wooed with a vengeance."
Of course many countries like Canada and the United States do distribute food aid to poor and famine-plagued countries, but not nearly enough. And it can be argued that they do so in order to get rid of surplus that might otherwise lower prices, and subsequently, profits. As Alan Maas puts it, "The effect is to keep food prices high at home and undercut competitors abroad, especially in developing countries—while the world's poor go hungry."
I may be wrong, but I'm convinced that the ICFI is right when they conclude that:
I'm not trying to vilify capitalism, I simply don't think that the capitalist system, at least the way that it's currently structured, will ever be able to address the needs of humanity as a whole. So even though I think capitalism has contributed a lot to the development of society — a contribution which I sincerely appreciate — it has its limits; and I think the fact that an estimated 1 billion people will go hunger illustrates that.
As I've said before, perhaps socialism is the next evolution of economics that will lead the world to a wonderful new level of prosperity and cooperation, and then again, perhaps not. But ultimately, I think it all depends on what direction we want to take our global society.
I suspect that Adam Smith, the "father of capitalism," was right in that the pursuit of self-interest will improve the general welfare, but only when we realize, as a collective whole, that we are all in this together. Otherwise, with the focus of production always on profit rather than need, I don't see how anything will ever change.
Systemic problems — such as weak infrastructure and dependence on rain — are to blame for poor nations' near-stagnant production. Bad roads in rural areas, lack of proper food storage facilities and a lack of irrigation infrastructure continue to keep farmers in poor countries from producing more, Diouf said.
The answer is simple. Because it seems to me that the system is inefficient when it comes addressing the needs of humanity.
According to one UNEP report, "over half of the food produced today is lost, wasted or discarded as a result of inefficiency in the human-managed food chain."
Just look at how much perfectly good food is thrown away by grocery stores, for example. People actually make a living out of cooking and eating the perfectly good food they throw away. Hell, even Giles Coren, restaurant critic for the British newspaper the The Times, did a segment about it on the The F Word. (He ate a banana right out of the garbage, and then proceeded to have a picnic with everything they collected.)
And what about the 30 million tons of unwanted fish currently discarded at sea per year? How many people could that feed?
In addition, food that could go to feeding people goes instead to things like feeding livestock and the production of biodiesel. The same UNEP report underscored the fact that "over one-third of the world’s cereal harvest is being used as animal feed" and cautioned that "continuing to feed cereals to growing numbers of livestock will aggravate poverty and environmental degradation," while Secretary-General Ban Ki-moon noted that "soaring food prices brought intense focus ... on the inflationary role of biofuel production."
The world as a whole — but especially wealthy, industrialized nations like Canada and the United States and other large producers like Brazil, China, the EU, India, etc. — has the capacity to produce enough food to feed those who can't produce enough on their own, but due to the lack of profit involved it doesn't.
As one article in Forbes illustrates, even though genetically modified seeds are the potential "saviors of the global hungry":
In the past, there's been little incentive to develop this new lab-grown abundance. Demand in the U.S. grows mostly in step with the population, which hardly grows at all. This led to the industry taking a bad rap for overproduction--for stuffing calories into Twinkies or letting crops rot in silos.
The bottom line is that under the current system, profit is the determining factor in agricultural advances, production, storage and distribution.
In the United States, for example, supply control policies were used to decrease overproduction until 1996 to control prices. Why? Because too much supply equaled lower prices, and lower prices equaled lower profit. And this "problem" isn't just limited to the United States.
The Economic Times had a story earlier this year about wheat oversupply and profits in India. It notes that, "To add to the problem of too much unsold stocks, India is poised to reap another good harvest this year. In short, Indian wheat prices look set to plummet in a market where customers—corporate and retail—will be wooed with a vengeance."
Of course many countries like Canada and the United States do distribute food aid to poor and famine-plagued countries, but not nearly enough. And it can be argued that they do so in order to get rid of surplus that might otherwise lower prices, and subsequently, profits. As Alan Maas puts it, "The effect is to keep food prices high at home and undercut competitors abroad, especially in developing countries—while the world's poor go hungry."
I may be wrong, but I'm convinced that the ICFI is right when they conclude that:
There is no solution to the farm crisis, however, within the framework of the capitalist market. A fundamental contradiction under the profit system is the accumulation of vast surpluses of agricultural commodities which cannot be sold at a profit, side by side with, on a world scale, enormous unmet social needs for food, clothing, and raw materials. Children starve in Africa and India while American farmers go bankrupt for lack of buyers. This contradiction can only be resolved when agriculture is integrated into a reorganized world economic system in which rational planning, not private profit, is the driving force.
I'm not trying to vilify capitalism, I simply don't think that the capitalist system, at least the way that it's currently structured, will ever be able to address the needs of humanity as a whole. So even though I think capitalism has contributed a lot to the development of society — a contribution which I sincerely appreciate — it has its limits; and I think the fact that an estimated 1 billion people will go hunger illustrates that.
As I've said before, perhaps socialism is the next evolution of economics that will lead the world to a wonderful new level of prosperity and cooperation, and then again, perhaps not. But ultimately, I think it all depends on what direction we want to take our global society.
I suspect that Adam Smith, the "father of capitalism," was right in that the pursuit of self-interest will improve the general welfare, but only when we realize, as a collective whole, that we are all in this together. Otherwise, with the focus of production always on profit rather than need, I don't see how anything will ever change.
1 billion
On May 6th, the Associated Press reported that, according to the U.N. food aid organization, "The number of hungry people in the world could soon hit a record 1 billion, despite a recent drop in food prices."
What a truly depressing statistic. In fact, it's statistics like this that have made me lose faith in the ability of capitalism to ever address the needs of humanity. With all of the wealth and resources at our disposal, it's a travesty that so many people are going hungry; and with the focus of production always on profit rather than need, it's a travesty that will continue for the foreseeable future.
What a truly depressing statistic. In fact, it's statistics like this that have made me lose faith in the ability of capitalism to ever address the needs of humanity. With all of the wealth and resources at our disposal, it's a travesty that so many people are going hungry; and with the focus of production always on profit rather than need, it's a travesty that will continue for the foreseeable future.
in the news today (5/8/09)
There's a lot of interesting stories in the news today, which I happened to have time to read at Chez Machin, a lovely little place on SE Hawthorne in Portland, during lunch. (I recommend their breakfast special w/coffee and creme brulee.)
One of the headlines is President Obama's new budget proposal. On Thursday, Obama sent Congress a detailed budget outlining various cuts in funding for certain programs while increasing it for others. While I agree with some of his decisions, I disagree with him on others.
Of the proposals that I agree with, one is his plan to end $26 billion in oil and gas industry tax breaks," which he called "unjustifiable loopholes" in the tax system that other industries do not get (Obama touts $17 billion 'lot of money' budget cuts). I think the reasons why this is a good thing are self-explanatory.
His proposals to (1) eliminate federal support for a $35 million-a-year radio-based marine navigation system rendered obsolete by the satellite-based Global Positioning System, (2) increase child nutrition programs by $1 billion, (3) set up a $1 billion program to develop or rehabilitate housing for the poor and (4) stop paying states and counties that keep illegal immigrants in their jails also seem like good ideas.
Of the proposals that I disagree with, the main ones are his plan to slash the benefits program for families of slain police and safety officers from $110 million to $60 million and his plan to put $2 billion more into merit-based teacher pay.
The reason for the latter is that while it sounds like a good idea to pay well-performing teachers more, the main criteria for judging teacher performance under No Child Left Behind is standardized testing. This essentially means that teachers are being rewarded more for "teaching to the test" than quality teaching, which ultimately undermines the quality of teaching (especially in reading and math) and leads to a potential decline in the teaching of higher-order thinking (No Child Left Behind's Emphasis on 'Teaching to the Test' Undermines Quality Teaching).
I'm also not happy with his plan to scrap a $142 million program to help states pay to clean up abandoned mines.
Another big story concerns Speaker Pelosi and the newly released report issued by the Office of the Director of National Intelligence and the Central Intelligence Agency.
According to the Washington Post, the report says that Pelosi was "briefed in September 2002 about the use of harsh interrogation tactics against al-Qaeda suspects, seeming to contradict her repeated statements that she was never told the techniques were actually being used." The memo notes that the Pelosi-Goss briefing apparently covered "EITs [enhanced interrogation technique] including the use of EITs" on Abu Zubaida.
Looks like Speaker Pelosi isn't going to be able to sweep this issue under the rug anytime soon.
In economic news, the Associated Press reports that:
Hmm. Inflation sucks, but I'm not sure that the fact workers are too afraid to demand higher wages — even though weekly wages are said to be below levels achieved in the 60s when adjusted for inflation — is a good thing. To me, this illustrates the glaring lack of worker protection and job security more than anything else.
Also being reported is the public release of the government's stress test findings. According to the Oregonian, Federal regulators "ordered 10 of the nation's 19 largest banks to raise a total of $75 billion in new capital to ensure their survival should the economic downturn worsen." Unfortunately, the Oregonian also noted that, "For consumers, the results could mean it will be even harder to borrow during the next 18 months."
I seem to remember that the original purpose of the government's $700 billion bailout of the financial sector, which funnelled massive amounts of tax-payer money to the major banks while slashing interest rates, was to stimulate more lending. So now we're being told that not only has the government's $700 billion bailout failed to unfreeze the credit market and stimulate lending, but its new stress test results and subsequent new capital requirements will make it even harder to borrow in the next 18 months!
What in the hell are these people doing? Who are they really trying to help? Why aren't we doing more about it like firing our banks and putting our money into local credit unions?
Finally, I read three interesting letters to the editor in today's Oregonian. The first is an open letter to President Obama by G.R. Johnson:
The second is by DR. Herman M. Frankel concerning H.R. 676:
And last but not least, the third is about America's "awful moral turning" since WW II by Chuck Hillestad:
One of the headlines is President Obama's new budget proposal. On Thursday, Obama sent Congress a detailed budget outlining various cuts in funding for certain programs while increasing it for others. While I agree with some of his decisions, I disagree with him on others.
Of the proposals that I agree with, one is his plan to end $26 billion in oil and gas industry tax breaks," which he called "unjustifiable loopholes" in the tax system that other industries do not get (Obama touts $17 billion 'lot of money' budget cuts). I think the reasons why this is a good thing are self-explanatory.
His proposals to (1) eliminate federal support for a $35 million-a-year radio-based marine navigation system rendered obsolete by the satellite-based Global Positioning System, (2) increase child nutrition programs by $1 billion, (3) set up a $1 billion program to develop or rehabilitate housing for the poor and (4) stop paying states and counties that keep illegal immigrants in their jails also seem like good ideas.
Of the proposals that I disagree with, the main ones are his plan to slash the benefits program for families of slain police and safety officers from $110 million to $60 million and his plan to put $2 billion more into merit-based teacher pay.
The reason for the latter is that while it sounds like a good idea to pay well-performing teachers more, the main criteria for judging teacher performance under No Child Left Behind is standardized testing. This essentially means that teachers are being rewarded more for "teaching to the test" than quality teaching, which ultimately undermines the quality of teaching (especially in reading and math) and leads to a potential decline in the teaching of higher-order thinking (No Child Left Behind's Emphasis on 'Teaching to the Test' Undermines Quality Teaching).
I'm also not happy with his plan to scrap a $142 million program to help states pay to clean up abandoned mines.
Another big story concerns Speaker Pelosi and the newly released report issued by the Office of the Director of National Intelligence and the Central Intelligence Agency.
According to the Washington Post, the report says that Pelosi was "briefed in September 2002 about the use of harsh interrogation tactics against al-Qaeda suspects, seeming to contradict her repeated statements that she was never told the techniques were actually being used." The memo notes that the Pelosi-Goss briefing apparently covered "EITs [enhanced interrogation technique] including the use of EITs" on Abu Zubaida.
Looks like Speaker Pelosi isn't going to be able to sweep this issue under the rug anytime soon.
In economic news, the Associated Press reports that:
The Labor Department reported Thursday that the number newly laid off workers applying for benefits dropped to 601,000 last week. That was far better than the rise to 635,000 claims that economists expected.
But the total number of people receiving jobless benefits climbed to 6.35 million, a 14th straight record.
The four-week moving average of initial jobless claims, which smooths out volatility, totaled 623,500 last week, a decrease of more than 30,000 from the high in early April. Goldman Sachs economists have said a decline of 30,000 to 40,000 in the four-week average is needed to signal a peak.
Meanwhile, retailers' business last month was helped by warmer weather, tax refunds, and a shift in the Easter holiday, helping Wal-Mart and many mall clothing chains post better-than-expected results.
But consumer sentiment and business in many areas remains weak, and analysts expect a drawn-out recovery as unemployment remains high and other economic woes persist. Warehouse store operator Costco Wholesale Corp. reported a deeper-than-expected same-store sales drop, hurt by the closing of its stores on Easter.
In a separate report, the government said that productivity, the key ingredient to rising living standards, grew at a 0.8 percent annual rate in the January-March quarter, slightly better than the 0.6 percent increase that economists had expected. Wage pressures, as measured by unit labor costs, increased at a 3.3 percent rate, down from a 5.7 percent spike in the fourth quarter.
While wage pressures outpacing productivity normally would raise alarm bells about inflation, the threat of any price spikes is seen as remote. Regulators and economists are not worried about inflation since many workers are more concerned about keeping their jobs in the recession than demanding higher wages.
Hmm. Inflation sucks, but I'm not sure that the fact workers are too afraid to demand higher wages — even though weekly wages are said to be below levels achieved in the 60s when adjusted for inflation — is a good thing. To me, this illustrates the glaring lack of worker protection and job security more than anything else.
Also being reported is the public release of the government's stress test findings. According to the Oregonian, Federal regulators "ordered 10 of the nation's 19 largest banks to raise a total of $75 billion in new capital to ensure their survival should the economic downturn worsen." Unfortunately, the Oregonian also noted that, "For consumers, the results could mean it will be even harder to borrow during the next 18 months."
I seem to remember that the original purpose of the government's $700 billion bailout of the financial sector, which funnelled massive amounts of tax-payer money to the major banks while slashing interest rates, was to stimulate more lending. So now we're being told that not only has the government's $700 billion bailout failed to unfreeze the credit market and stimulate lending, but its new stress test results and subsequent new capital requirements will make it even harder to borrow in the next 18 months!
What in the hell are these people doing? Who are they really trying to help? Why aren't we doing more about it like firing our banks and putting our money into local credit unions?
Finally, I read three interesting letters to the editor in today's Oregonian. The first is an open letter to President Obama by G.R. Johnson:
As a parent and grandparent, I urgently suggest that you prepare a special address to the high school seniors in the graduating Class of 2009. The purpose would be twofold:
First, to review that each student's share of the national debt is $36,667 and rising, according to statements by the GAO, the OMB and U.S. Budget Watch. Add in $56 trillion for the unfunded entitlements (Social Security, Medicare, etc.) and you get a total commitment of $67.2 trillion, or $220,409 per person, including around 33 million kids under the age of 18.
Second, to explain the ethical and moral considerations that justify borrowing several trillion dollars from future generations without their approval and without advising them how the magnitude of this debt will impact their entire lives.
I hope you will agree that it is a matter of honor and decency that these questions are answered by those who authorized borrowing at a rate never before seen in our history. It would seem you would welcome the opportunity to explain these things to those who will be burdened with the payments for as long as they live.
The second is by DR. Herman M. Frankel concerning H.R. 676:
It's refreshing to read the truth!
"A public plan would drive private insurance companies of out of business," ("Health Secretary: No single-payer plan," May 7, Page A7).
Exactly. Private insurance companies are in the business of generating earnings by standing between patients and their doctors. Too often, they obstruct access and decrease quality by preventing patients from seeing their doctors (through exclusions, high co-pays and deductibles, and low annual maximums), withholding approval for needed medical tests or procedures and delaying or denying payment.
Is this why so many Americans and a many practicing physicians favor the single-payer program described in H.R. 676, the bill introduced by Rep. John Conyers (D-Mich.), and 75 co-sponsors, the U.S. Conference of Mayors, the Oregon AFL-CIO, 38 other state AFL-CIOs, and more than 450 other union organizations, including 20 Oregon unions, and more than 40 state, county, and city governments?
And last but not least, the third is about America's "awful moral turning" since WW II by Chuck Hillestad:
Looks like the creators and promoters of our American torture chambers get to escape punishment after all. Our grandfathers and fathers who died in WWII must be turning over in their graves. They gave their lives to protect us from the Nazis and we ended up not just using Nazi techniques, but justifying their use.
How did the Greatest Generation manage to spawn the Worst Generation?
Thursday, May 7, 2009
see ya, steph
From the USA Today:
Cheers to the Wall Street Journal, among others, for bringing up the potential conflict of interest posed by New York Federal Reserve Chairman Stephen Friedman's relationship with Goldman Sachs, forcing him to resign.
Stephen Friedman, chairman of the board of the Federal Reserve Bank of New York, resigned Thursday, over questions about his ties to financial powerhouse Goldman Sachs.
In a letter to Fed officials, Friedman said, "Today, although I have been in compliance with the rules, my public service motivated continuation on the Reserve Bank Board is being mischaracterized as improper. The Federal Reserve System has important work to do and does not need this distraction."
Earlier this week, The Wall Street Journal raised questions about the influence of Goldman Sachs, whose board Friedman sits on, in shaping Washington's response to the financial crisis.
"The Federal Reserve Bank of New York shaped Washington's response to the financial crisis late last year, which buoyed Goldman Sachs Group Inc. and other Wall Street firms. Goldman received speedy approval to become a bank holding company in September and a $10 billion capital injection soon after.
"During that time, the New York Fed's chairman, Stephen Friedman, sat on Goldman's board and had a large holding in Goldman stock, which because of Goldman's new status as a bank holding company was a violation of Federal Reserve policy," the Journal story said.
Cheers to the Wall Street Journal, among others, for bringing up the potential conflict of interest posed by New York Federal Reserve Chairman Stephen Friedman's relationship with Goldman Sachs, forcing him to resign.
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