It looks like the Monsters of the Universe are raking in big bucks for their Wall Street firms, and rewarding each other with massive bonuses once again, despite the ongoing recession in the economy. And how are those saints, heroes and geniuses doing this? By making sound loans to U.S. consumers? By making shrewd investments in existing U.S. companies, new firms, new technologies and small businesses? Not based on what you read. My guess, based on history, is that they are merely taking advantage of the ultra-low interest rate policy of the Federal Reserve, and using the money to buy U.S. Treasury Bonds, making money off the spread.

Keeping short-term rates low, at the expense of savers, future inflation, and asset price distortions, to increase that spread is a common way for central bankers to help banks get out of trouble. One only need look back to the early 1990s to see this, with the help of the New York Times archive (no I didn’t pay for it; sorry about the wage cuts and layoffs guys). In late 1992 this source reported that in “a dramatic turnaround for the banking industry from the gloomy forecasts of just 12 months ago, Federal regulators said today that 1992 would be the most profitable year ever for the nation's banks. As a consequence, they said, fewer institutions would fail in 1993 than had been expected, even though new regulations that go into effect next week require officials to seize weak, but solvent, institutions.” A Congressman named Chuck Schumer responded as follows: “the banks' heavy reliance on Treasury instruments reflected the fact that there were few other long-term investments strong enough for investing insured deposits… ‘Any idiot can make money by taking in money at 3 percent and lending it at 7 percent…But anyone who looks at the last four quarters and thinks the banking industry is back on track is making a mistake.’"

On Monday, I read about Rudy Giuliani’s speech in support of Mike Bloomberg

I wonder when the white liberal State Senators Tom Duane, Eric Scheneiderman & Dan Squadron will let us know their feeling about whether of not Hiram Monserrate (D-R-D-Thug) should remain in office? All you progressive activists in their district – aren't you curious?

If the Bloomberg or Thompson campaigns have bothered to read my prior two posts in this series, I can imagine what they think of them. Who is this nobody to critique our leadership, when the one organization he has ever led was the Park Slope-Windsor Terrace babysitting co-op, and even that for just one term? Who is this nobody to critique our management, when he has never hired anyone, only once led a work team (and found the experience sufficiently frustrating that he would probably not wish to repeat it), and has probably spent less than $500 lifetime on behalf of anyone other than himself, in stamps, paper clips and photocopies as treasurer of the local chapter of the American Planning Association? Well I haven’t been a manager but I have been managed, though I’ll admit to being not much of a follower as well as not a leader. So take my views for what they are worth.

I am, however, an expert in state and local policy, and I did run for (or rather against) the state legislature, for what is (or should be) primarily a public policy position. When doing so, I set out four themes I promised to guided by on every issue without exception, in opposition to a state government that was and is doing the opposite: equity and simplicity in government (against special deals for some but not others), generation equity (in opposition to added privileges for older generations and a diminished future for those who follow), personal and social responsibility (in opposition to something for nothing pandering), and fair value in public services for taxes paid (in opposition to officials whose campaigns are funded by producer interests). It is against these principles, my principles, that I will evaluate the policies of the Bloomberg Administration.

As I’ve reported previously, Jimmy McMillan, the Mayoral. candidate and sole proprietor of the “Rent is Too Damn High Party (now DBA as the “Rent is Too High Party”) is a certifiable, frothing at the mouth, anti-Semitic lunatic who blames the Reform and Conservative branches of Judaism for the tragedy of 9/11.

Yet, in spite of this fact, McMillan is enjoying an unprecedented run of free and largely favorable publicity, much of which portrays him as a feisty but lovable eccentric.

I got a call from Alma Mater last night, and once again offered to substantially increase our modest contribution if it would only hold its cost increase to the rate of inflation. Yes costs are going up less this year, but that is because inflation is zero, and they are once again going up by three percent over that.

What I told the student caller is that we are all going to die, because some powerful interest is going to capture 100% of GDP, leaving the rest of us no money for food. The race is between housing costs, the health care sector, executive pay, public employee pensions and other retirement benefits, debt service, and the cost of higher eduation. Each thinks it get more and more without limit, until they get all there is, but they can't all be right, even if the rest of us are dead. Housing costs have already become winded, keeled over, and dropped out, although not everyone in NY knows it yet. Any bets on what is next?

I haven’t done a “grapevines” column in ages so here goes. Too many people are saying that David Paterson needs to step gingerly out of the upcoming gubernatorial race: too many people. I wonder why? If I were David I would be gearing up to run by giving them all the finger; which I suppose he is doing right now. This whole mess was handled wrong from the day Eliot Spitzer selected him for LG. Even though I am not sure David Paterson will get elected as governor, I still think he should run.

I hate it when the so-called “powers that be”, stifle competition amongst candidates and leave the voters with little or no choice (like they have now done with Senator Kirsten Gillibrand).  By the way, do you know what Paterson said when he found out that he was selected to be Lieutenant Governor on Spitzer’s ticket?  In his trademark jocular manner, I am told he said something to the effect: “surely, they couldn’t have vetted me”.  He was right, wasn’t he? LOL. 

The Atlantic Antic had been a triumph for six year old Dybbuk.

Already having persuaded Domestic Partner to buy him $50 worth of toy MTA trains, he climaxed the afternoon by sneaking behind the Police barriers in front of the Waterfront Alehouse, treating those watching the second set by the Black Coffee Blues Band (featuring Popa Chubby, whose is to French Blues fanatics what Jerry Lewis is to their cinemaphiles, but with far more justification) to a half-hour demonstration of exotic dancing which drove the audience into a frenzy and got Dybbuk at least one invitation to join a comely cougar for a nite-cap (“every woman is watching him,” she told Domestic Partner, “and every man is jealous”).

I happen to like Bill Thompson just fine; he’s a smart and thoughtful guy who has served our city well at the Board of Education and as Comptroller.

To the extent that Mike Bloomberg’s educational policies have been about unclogging the deteriorated arteries of 110 Livingston to do an emergency bypass (as opposed to being about absolute power providing proof of the validity of the theorem propounded by Lord Acton), Bill Thompson pretty much served as Bloomberg’s John the Baptist.

Before Thompson-initiated reforms set the stage for Mayoral control, one could not get there from here. With Mayoral Control now having gotten us to a somewhat different destination than reformers anticipated, Bill Thompson may be one of the dozen or so people in the City who has some idea how to mend this beast in the manner real reformers intended.