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from Breakingviews:

Even Predators’ Ball saves a dance for 99 pct

By Rob Cox The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

It’s easy to spot vestiges of the old Predators’ Ball at this year’s Milken Institute Global Conference. The Ferraris and Bentleys jamming the Beverly Hilton driveway, for example, are evocative of the annual shindigs that Michael Milken put on for his Drexel Burnham Lambert clients in the go-go 1980s. Yet there’s a consensus emerging even among this elite demimonde that the rising disparity between the rich and the rest is a problem in need of attention. They disagree, however, on the solutions.

At its heart, this gathering of some 3,000 folks is an opportunity for Milken to reunite former cronies and customers from the Drexel diaspora to talk business and big ideas - and maybe party a little (though the legendary exploits of its precursor have been replaced with the mellower tones of Lionel Richie). Among the more notable Friends of Mike are Leon Black, who went on to start private equity powerhouse Apollo after Drexel went under, and Joshua Friedman, who established hedge fund Canyon Capital.

Among the attendees, there are more successful bankers, traders and investors who worked for Drexel or one of its many offshoots - from Jefferies to DLJ to Credit Suisse - than there are valet parking spots. They’re clogging conference rooms to hear panels on “Easy Money: Consequences of the Global Liquidity Glut” or “The Art of Collecting: Los Angeles and the Global Art Market.”

Despite the concentration of wealth, the most talked-about event was a lunch panel entitled “What’s Happened to the American Dream?” Most surprising was the absence of any apparent disagreement over its premise: that a decline in economic mobility and rising wealth disparity creates risks that endanger the stability of the capitalist system that has been so kind to Milken’s adherents.

Panelists sparred over possible remedies. Congressman-turned-banker Harold Ford took issue with Harvard University fellow Niall Ferguson’s contention that government welfare programs bear much of the blame. And judging by the applause for Ferguson’s position, it’s safe to assume there’s little sympathy for the redistributive chants emanating from a revived Occupy Wall Street movement. Either way, it’s clear that these one-time predators aren’t comfortable with the idea that the status quo will make them prey.

from Chrystia Freeland:

Trickle-down consumption

We know now that trickle-down economics doesn't really work – the past decade in the United States has seen incomes at the very top soar, while the earnings of the middle class stagnated or declined. But a growing body of academic research is suggesting that this benign force’s wicked stepsister, a phenomenon two economists have dubbed ‘‘trickle-down consumption,’’ is having a powerful impact on the economy and politics of the United States.

The idea is that income inequality has a significant impact on the 99 percent: It drives the rest of us to consume more, whether we can afford to or not.

Robert H. Frank, an economist at Cornell University, is a pioneering student of this behavior who has been writing about the subject for nearly two decades, long before it became fashionable. Frank, who is the co-author of two economics textbooks with the Federal Reserve chairman, Ben Bernanke, believes that rising income inequality affects the rest of us through what he calls ‘‘expenditure cascades.’’

Rising income inequality, he notes, isn’t just about the gap between the 99 percent and the 1 percent; it is also about growing differences across the income distribution, including at the very top. The result is that all of us see people we think of as our peers earning – and spending – a lot more. As a consequence, we find ourselves spending more, too.

‘‘The main idea is that frames of reference are very local,’’ Frank said. ‘‘Bertrand Russell said beggars don’t envy millionaires, they envy other beggars who have a few more coins than they do. Expenditure cascades aren’t because the poor want to emulate the rich.’’

Instead, he argues, each of us imitates those near us – and the result is a cascade of unaffordable consumption.

‘‘There has been extraordinary growth in the 1 percent,’’ Frank said. ‘‘Ordinary people don’t want to emulate them, but what happens is that the people who are next to them want to emulate them, and so on. That social cascade ultimately explains why the middle-class home got 50 percent bigger in the past three decades.’’ (Frank says that the average U.S. house went from 1,570 square feet, or 146 square meters, in 1970 to 2,300 square feet in 2007.)

from Anthony De Rosa:

The revolution will not be televised, it will however be livestreamed.

From Occupy Wall Street in its various locations around the world, to Tahrir Square in Egypt and now to Syria, where few reporters are able to enter, livestreams from citizen journalists increasingly are becoming the only window into what's actually happening at any given moment during some of the biggest news events.

At the outset of the revolution in Egypt, a streaming video service called Bambuser allowed live video to be streamed directly from Tahrir Square. Ramy Raoof, human rights activist and editor for Egyptian Blog for Human Rights, regularly provided live video using nothing but his Nokia E90 camera phone.

This video, documenting a protest of the death and torture of Khaled Said, netted nearly 4,000 live viewers. The archive has been watched nearly 16,000 times.

Tim Pool has been written up in many publications, including Fast Company, Spin and Time Magazine for his livestreaming of Occupy Wall Street around the country and in particular in New York City. We spoke to Tim recently on Reuters TV's Tech Tonic about the equipment Tim uses to capture events on streams that last for days and days.

Now, livestreamers like William Gagan and Geoffrey Shively are taking their act overseas. The two citizen journalists crowdfunded a trip into Syria to attempt to livestream from within the borders many journalists have been unable to cross. Shively is an agent with Telecomix, a loosely networked group of hacktivists who provide the connective tissue for livestreamers like Shively, as they have for others around the world, in Egypt, Libya and anywhere else that a need for raw uninterrupted access arises.

from Tales from the Trail:

The 99 percent comes out to protest Romney in Seattle

Republican Mitt Romney has rarely faced a critical mass of protesters during his months-long campaign for the White House. But then, he doesn’t often visit the Left Coast. And protesters were out in force in Seattle on Thursday night when Romney held a fundraiser at a civic center in Bellevue, Washington, near Seattle, attended by the local political establishment and well-heeled locals.

The complex holding the event also contained the upscale “Shops at the Bravern” mall. After the event fund-raisers could have slipped out to pick up a few items at Hermes, Louis Vuitton or Jimmy Choo.

About 100 protesters turned up for a spirited but peaceful demonstration with signs, props and inventive chants, including some of those who have participated in the Occupy Wall Street movement. A cardboard cutout of the candidate was on the scene, holding a sign that said “Of the 1 percent, by the 1 percent, for the 1 percent.” Various protesters were dressed as buildings to illustrate Romney’s “corporations are people” meme.

Among the chants were “hey you millionaire – pay your fair share,” and “Mitt says cut back – we say fight back!” Jeanette Wenzel of Seattle held a sign that said, “if money is speech, speech isn’t free.” Other signs said “Mitts off our future” and “Money Talks; Supreme Court says so.”

“He’s having a fundraiser for some of the richest people in the country. And if he was elected he would do their bidding,” Sandra VanderVen, 44, a community organizer from Seattle, said of Romney. “It would be by and for the one percent.”

from The Great Debate:

Monetizing the marginalized

Five years ago, Ron Paul’s popularity was still surprising. Sometime in 2007, the former physician, longtime crank in Congress, and thoroughly fringe Republican had somehow turned his shtick into success -- at least monetarily. Paul raised more than $31 million in the 2008 Republican primary even though he never actually won a contest where actual delegates were at stake. For a longshot like Paul, it wasn’t the chance of his success that drove people to donate; on the contrary, all but the deluded knew he would fail.

Now, in 2012, the idea of his success among the fringe is mainstream. And Paul’s alchemy -- turning derision into dollars -- isn’t exclusive to his corner of the fringe. The powers that be -- politics, media, Corporate America -- have refused to embrace causes from Occupy Wall Street to Elizabeth Warren. And yet these underdogs still find a way to succeed because marginalization has become incredibly lucrative. How else to explain the $150 million that the DIY funding site Kickstarter is expected to help raise this year, even though many of the projects it funds will do no better than Ron Paul?

As always, credit the Internet. Since the earliest days of altnet message boards, we’ve known the Web can build just as well as it can destroy. Its vastness allows for connections both obscure and passionate, while its anonymity creates hate both entropic and cowardly. This new economy of the marginalized is the child of the first dynamic -- the one that can rally thousands to a cause with the smallest of sparks.

In the past, the spark has been all that was necessary, especially in politics. Remember when Joe Wilson yelled “You Lie!” to President Obama at the State of the Union in 2009? Until then Wilson had been a meek Republican congressman best known for his determination to support Strom Thurmond and keep the Confederate flag flying at the South Carolina statehouse. The media made him into a symbol of all that was wrong with Washington. Just as quickly, supporters made him -- or his campaign war chest -- rich. He raised $2 million in the week after the State of the Union. The Washington Post dubbed it, and every other controversial sound bite that takes on a life of its own, a moneyblurt.

But this most recent crop of marginalized parties is taking part in a more nuanced process than Wilson. These parties have used more than just controversy to raise money. They’ve used the promise of reversal.

Clay Shirky, the author-thinker-smart guy who spends more time pondering the Internet than you do surfing it, told me it takes two things for a mass, financial mobilization: coordination and leverage. On the Internet, plenty of groups can gather en masse. But they won’t be moved to act, let alone donate, unless they think their support is actually going to do something. Shirky points out, for example, that there are plenty of people who want to legalize marijuana, but all their efforts have been focused on changing state law. They know there’s no use pouring their money into a national campaign if the White House isn’t going to acknowledge their issue.

from Anthony De Rosa:

Tim Pool: Occupy Wall Street’s mobile journalist – Tech Tonic

If you were to stop independent journalist Tim Pool on the street, you may think he's just a bike messenger, with his skull cap, hoodie and shoulder strap bag. What you may miss is that Pool has transformed himself into a mobile journalist. He broadcast live videos in the midst of the Occupy movement using just an iPhone, a solar powered backpack and even a drone to an audience of thousands.

from The Great Debate:

My tweets refuse to be subpoenaed

When I saw an email from Twitter Legal in my inbox, I figured it was spam. Data phishers use those kind of emails to steal user passwords, but this was a genuine warning from the social media giant. The New York District Attorney's office had filed a subpoena requesting my account information and all of my tweets from last September to the end of the year. Twitter had attached the subpoena, and there was my handle, called by the County of New York to testify against me, the person it represents.

My tweets were being called to testify against their creator because on Oct. 1 of last year I was one of more than 700 people arrested on the Brooklyn Bridge as part of an Occupy Wall Street action. We had planned to march over the pedestrian walkway, but the crowd was too large. The police retreated and allowed us to cross half the bridge before kettling and arresting the entire crowd. I had my phone with me and was using Twitter to spread information to people following at home, as well as people behind me in the march. After a short stint in a cell, I was charged with disorderly conduct and released. I pleaded not guilty, not because I didn't block traffic, but because I believe the march across the bridge was a constitutionally protected form of political speech.

To try to prepare a convincing case that I intended to block traffic, the district attorney has requested over three months of my tweets, as well as any information attached to my account, including my password and email address. The scope of the request extends back to Sept. 15, two days before the occupation of Zuccotti Park began. Since the subpoena is related only to the disorderly conduct charge, the prosecutors want to look through my tweets -- preferably without me knowing -- for content from weeks before and months after Oct. 1. That wastes taxpayer dollars and some poor trial prep assistant’s time for what amounts to little more than a politically motivated traffic ticket. My attorney soon informed Twitter of his intention to file a motion to quash the subpoena on four different grounds, and they have agreed not to disclose anything for the time being, at least until a judge rules on the motion later this month.

To anyone who has seen a single episode of Law and Order, this looks like a clear misuse of prosecutorial power, using trial preparation for investigative ends. The surreal subpoena calls for a witness named “Twitter, Inc.” to appear in court and produce the documents or face up to a year in prison and a $1,000 fine, and ends with a gag request attempting to cajole Twitter into not disclosing the search to, well, me. Thankfully Twitter did not abide by that last part. They don’t comment on specific cases (even to those involved in one, like me), but Twitter’s official policy is to inform users when their information is requested unless legally required not to. In this case, they were smart not to take the prosecutors’ word as gospel; the gag request wasn’t binding.

So far there have only been a handful of these electronic subpoenas, all of which (including mine), have been aggregated by Anonymous hackers as part of what they’ve named “#opsubpoenathis.” Local police in Boston subpoenaed two accounts (including @occupyboston) and -- bizarrely -- two hashtags. In Plano, Texas, authorities subpoenaed the WordPress blog records of Occupy Plano. What we can see across the country is the modest beginning of a national move toward the use of activists’ legal electronic communications against them. Treating it as the serious threat to Internet freedom and political speech that it is, the National Lawyers Guild, Electronic Frontiers Foundation and American Civil Liberties Union have all lent their assistance in the legal efforts.

When students used Twitter to coordinate protests in Iran in 2009, The U.S. State Department applauded and intervened to keep the service online, but local prosecutors in cooperation with the police have tried to access user records to build cases against Anonymous members and Occupy activists. As far as I or the ACLU know, mine is the first Twitter subpoena related specifically to offline Occupy activities, and though I'm surprised to be singled out, I'm not surprised that officials at different levels can't make up their minds about Twitter.

from Chrystia Freeland:

George Soros: I’m a “traitor to my class”

Watch as the billionaire investor tells Chrystia why the hedge fund community has abandoned President Obama and why there's not a huge gap between the views of the president and Republican front-runner Mitt Romney.

from Unstructured Finance:

Hedge fund faithful descend on Boca Raton

By Svea Herbst-Bayliss and Katya Wachtel

Balmy temperatures and sunny skies greeted hedge fund industry managers, investors and lawyers as they gathered in Boca Raton, Florida, for 2012's first prominent industry conference.

Despite clear skies overhead, the mood was decidedly grimmer at the GAIM 2012 USA meeting, held at the swanky Boca Raton Resort and Club, as the industry faces dramatic regulatory changes after having ended 2011 on a losing note.

As managers drifted between sessions that promised "unique insights" from top traders about where to make money to how regulation will affect the industry, many quietly shared tales of woe about last year's losses, when the average fund lost 5 percent. Top investors conceded that times would be tough in the months ahead but that hedge funds are still the way to go for pension funds and others that need to boost investment returns with strong performance.

Prominent managers like Marathon Asset Management's Bruce Richards and Oak Hill Advisors President Glenn August mingled with investment chiefs for the states of Florida and Wisconsin.

For the first time ever the organizers of this conference had invited media to attend, but then reversed the decision at the last minute saying many of the sessions were closed to the press, which is not uncommon in the historically secretive industry.

Some 500 people came to Boca Raton in search of ideas and more critically money -- many investors said they were inundated with requests for meetings from tiny newcomers.

from Unstructured Finance:

When (and where) the 1% talk about 99%

By Jennifer Ablan and Matthew Goldstein

The last place you'd think a group of Wall Street financiers and ex-politicians would convene to come up with a master plan for fixing the housing crisis is a luxury lodge overlooking the Golden Gate Bridge. But in November, during the height of the Occupy Wall Street protests, that's where 30 rich and powerful people assembled to "do a good thing" for America.

The meeting at Cavallo Point in Sausalito, Calif., aimed to "hammer out a business plan and chart a course through 2012" for an investment vehicle that intends to buy up troubled mortgages and help out the homeowners all the while making a 20 percent annual return. You can read the details here

The group is led by Phil Angelides, the California politician, land developer and most recently, the chairman of a federal commission who led investigations into why the financial markets collapsed. The Federal Crisis Inquiry Commission was criticized for failing to come up with any real proposals preventing another crisis. Yet it seems to have inspired Angelides (his tenure at the FCIC ended last February) and others to come up with a market-based solution to the housing debacle.

Now that may be part of the answer. But once again, it seems to be a case of the well-off and powerful talking to themselves. In a letter to potential investors of Angelides's Gordian Sword LLC, there's lots of talk about doing good for America and its disastrous housing market. What's missing at times, however, is the focus on the people hurting the most: Millions of Americans are struggling to keep up on their mortgage payments.

Consider this self-congratulatory remark in the letter

This narrative ends with a restored community: home prices level off, labor is free to move, consumer confidence returns, and perhaps the recovery can commence. Everyone involved -- local government agencies and politicians, Servicers and even Wall Street -- can take credit for neighborhood recovery.