The above chart from the Federal Reserve tells two amazing stories about California and money. As you can see, per capita personal income — all income in the state at a given time, divided by the population at that time — moved on an ever-ascending upward trajectory from the Great Depression on, right through numerous postwar recessions, until...
The financial crisis of 2008-09, when it fell off a cliff, pretty much for the first time since the Fed started keeping track of this data. Personal income is now recovering, but it still hasn't returned to trend.
So California incomes aren't as recession-proof as they once were. And if a new trend asserts itself, with incomes falling with each new recession, life in the Golden State will be a lot bumpier than it has been in the past. But the drama in the chart is really all about what happened up to 2008. California was a good place to go, if you wanted you income to go up, up, up.
Hundreds of Occupy protesters gathered in downtown L.A. for a march through the financial district.
Here's a real barn-burner of an opinion essay from David Coates, a professor at Wake Forest who harbors no love for the global banking class — the financial elites who brought us the financial crisis, as well as the eurozone crisis, and who are currently getting rid of elected leaders in Europe at a brisk clip while doing whatever it takes to stall reform in the U.S. Not surprisingly, Coates sees Occupy Wall Street — which in recent weeks has come under siege from authorities — as being a populist movement that's trying to push back against the bankers.
This a taste of his lash, from the Huffington Post:
We live in troubled and ironic times. The times are certainly troubled. The IMF's Managing Director has recently spoken with some justification of a looming "lost decade" for the global economy — warning of "dark clouds" blocking the capacity of the world's leading economies to deliver a renewed bout of economic growth and generalized prosperity. The times are also deeply ironic: since the governing solution to those dark clouds — in countries as substantial as Italy and Greece, and in institutions as powerful as the IMF — would currently appear to be the replacement of elected leaders by appointed technocrats. The solution favored by the powerful is the transfer of state authority from democratically chosen leaders to governors drawn predominantly from the ranks of the very bankers whose inadequate supervision of their own industry darkened the skies in the first place. In this manner, a global financial crisis that initially discredited bankers has incrementally morphed into one to be settled on terms directly specified by bankers themselves. A crisis of economics has been turned into a crisis of democracy. It is an outrage.
Emanuel Derman is a professor of finance at Columbia University and also a physicist. But what' he's probably best known for is his years at Goldman Sachs in the lead-up to the financial crisis and his role as one of the pre-eminent Wall Street "quants" — investment professionals who attempted to use complex quantitative models to drive risk out of making money. These days, some critics blame the quants for nearly destroying the global financial system.
Derman chronicled his Wall Street days in a 2004 book, "My Life as A Quant: Reflections on Physics and Finance" — a full four years before the financial crisis truly took hold in late-2008. He's now followed that title up with "Models. Behaving. Badly," in which he looks back on both his life and his life's work and...finds fault with the world that he in part helped to engineer.
Well, since Lloyd Blankfein became CEO, anyway, and the financial crisis began to seriously mess with the legendary investment bank's magical, mystical fortunes.
This e-book on Goldman Sachs from Reuters BreakingViews just landed in my in-box. It's free and it's a quick and extremely informative read, a collection of five years' worth of columns.
Very good stuff on Goldman culture, Goldman envy, Goldman hating, Goldman compensation (not as much money as you might think), and the big changes that the firm has faced since the financial crisis.
This is from Anthony Currie's introduction:
The articles selected for this book chronicle Goldman’s bumpy ride underBlankfein over the last ?ve years from virtually untouchable to basicallyunremarkable. It might even be a candidate for a breakup. Of course, Goldman has been here before. The question is not just whether Goldmancan rise again, but whether in the face of a new regulatory regime it can do sowithout a change to its corporate structure – and perhaps its management.
As the economic downturn grinds on, with really pitiful GDP growth and really high unemployment — it's 12.4 percent in L.A. county — a debate about whether the vaunted American middle class is being obliterated has gained momentum. Elizabeth Warren, now running for Senate in Massachusetts, has been hammering on this for years. So have many other left-leaning and progressive economists. Others are asking questions. Stephen Rose points out that the problem with the middle class is that there's a structural shift in the work that's available to less-educated men.
KPCC's Patt Morrison Show recently took a look at the situation, indirectly, with a segment on the "New Normal" in the economy and so-called "two tier" wage structures that have been adopted in unionized industries, most prominently the car business. UCLA's David Lewin said that the two-tier gambit, in which new workers are hired at lower wages or with less lavish benefits that older workers, can be used to establish the lower tier as the only tier, as older workers are phased out.