Saturday, March 30, 2013

MORE INTERESTING READS



* Waiting for the run on the banks in Greece (International Herald Tribune / NY Times Rendezvous).

* When it comes to secrecy and press freedoms is President Obama worse than Nixon? (The Guardian).

* Bill Black has some interesting background information on one billionaire and the group that he funds (Third Way) that wants to destroy social security (Naked Capitalism).

* It's not a science. Economists are biased after all (Forbes), as I pointed out long ago.

* After doing little to prosecute major banks or their executives, the head of the Justice Department's criminal division, Lanny Breuer, is (re)hired by a law firm that defends Wall Street (POGO).

* Seriously, we don't have a free market. Check out the 2011 Government Accountability Office audit of the Federal Reserve's bailout programs (U.S. Government Accountability Office), plus ... 

* A quick look at the trillions in bailout dollars the U.S. taxpayer are now on the hook for (Sourcewatch).

* Wal-Mart customers flee empty shelves for Target, Costco (Bloomberg).

* 10 things you didn't know about the president's secret army (The Week).


SOME SILLY STUFF
* The ultimate friendship test (Facebook).

* The 10 worst products for men ever created (The Art of Manliness).

* These three wannabe James Bond villains blow it (gizmodo.com).

* How to use valet parking without looking like an idiot (The Art of Manliness).

CYPRUS & THE FUTURE OF EUROPE
* The nuts & bolts of the Cyprus situation, plus an overview of the impressively stupid handling of the Cyprus Bailout by the EU (Naked Capitalism).

* Larry Kotlikoff explains why the bank failures in Cyprus should open our eyes to our banking future here (PBS Newshour).

* More on Cyprus ... “there are three types of financial crises: crises of liquidity, crises of solvency, and crises of stupidity" (Bruegel).

* Speaking of Europe, "Assessing the Impact of EU Cohesion Policy" (Bruegel).

- Mark 

Thursday, March 28, 2013

THE $168 PER DAY WELFARE LIE ... AND OUR GROWING ZONE OF CYBER IGNORANCE

My God, there's a vein of stupidity that runs through our nation that never seems to end. 

If you Google "$168 per day" you will end up with page after page of links to numerous sites explaining how people receiving public assistance in America get $168 per day in free stuff. Seriously, Google "$168 per day" and watch the zone of cyber ignorance materialize before your eyes. 

While I've seen the claim that welfare recipients are getting up to $168 per day in different forums here's how I recently saw it from a Facebook friend  ... 


America's Death Spiral.
Interesting..
These 11 States now have More People on Welfare than they do Employed
Last month, the Senate Budget Committee reports that in fiscal year 2011, between food stamps, housing support, child care, Medicaid and other benefits, the average U.S. household below the poverty line received $168.00 a day in government support. What’s the problem with that much support? Well, the median household income in America is just over $50,000, which averages out to $137.13 a day. To put it another way, being on welfare now pays the equivalent of $30.00 an hour for a 40-hour week, while the average job pays $25.00 an hour.
 America's Death Spiral. Interesting ... These 11 States now have More People on  Welfare than they do Employed. Last month, the Senate Budget Committee reports that in fiscal year 2011, between food stamps, housing support, child care, Medicaid and other benefits, the average U.S. household below the poverty line received $168.00 a day in government support. What’s the problem with that much support? Well, the median household income in America is just over $50,000, which averages out to $137.13 a day. To put it another way, being on welfare now pays the  equivalent of $30.00 an hour for a 40-hour week, while the average job pays $25.00 an hour.

In this electronic chain letter the claim went beyond the $168 per day nonsense to argue that there are now 11 states with more people living on welfare than they have employed. There are plenty of people who believe this stuff.  But wait, it gets worse.

A progressive friend of mine recently posted this on his Facebook site ... 


This is what Troy, who apparently lives in cyber ignorance, had to say about the post ...

The govt spent 1.02 trillion on welfare not counting SS, medicaid and medicare in FY '12. Take 1 trillion divided by 310 million. It comes out to $3225 per American. What is it, 1 in 7 below the "poverty line"? So 3225 X 7? So $22575 dollars per poor person? Wow. If these programs worked so well, we wouldn't have any poor people. Tax cuts are NOT taking anything from the poor.

So, yeah, the $168 a day lie has grown into a trillion dollar monster for people like Troy (I'll explain the trillion dollar monster below). Not that the true believers like Troy will want to read beyond this point, but let's take a look at why the $168 per day in benefits lie has come to life.

TELL ME SWEET LITTLE LIES ... 
Let's get one thing straight. Implying that people on public assistance receive $168 per day in benefits is an outright lie. But it is understandable because many people want to believe the lie. They set themselves up to believe it.

Remember the "skewed polls" nonsense that Fox News sold their audience right before the 2012 election?  Conservatives wanted so badly to believe that Mitt Romney was going to win the presidential election. So they bought into the Fox News storyline that national polls were so skewed in President Obamas favor that no one should believe them.


According to Fox News and other conservative sources, Mitt Romney was either running neck and neck with President Obama, or pulling ahead. Conservative blogger Dean Chambers even created a "skewedpolls.com" website (currently off-line) that claimed Mitt Romney was ahead by 8-11 points a month before the election. Conservatives jumped on board (including many of my friends) and argued that Mitt Romney would be our next president.

Oops. 

WHAT'S IN A WORD (ALICE)?
Many conservatives are once again demonstrating that it's easier to believe what you want than it is to deal with reality. The $168 per day in public assistance lie is just one example. 

How can anyone make this claim? Easy. You call virtually every form of government support welfare, even if it isn't. 

It doesn't matter, for example, if government aid is offered to communities recovering from a natural disaster. It's welfare ... Job training programs? Welfare ... Education grants? Welfare ... Education for homeless children? Welfare ... Tax credits? Welfare ... Pell grants? Welfare ... Money to enforce child support orders? Welfare ... Money for the disabled? Welfare ... Aid to help rural communities upgrade their water system? Welfare. 

And the list goes on.

The categorization of welfare gets so ludicrous that one Forbes writer claimed that all government employees are "state dependent" and a drain on the system since their salaries are funded by tax dollars.

One is left to wonder how our Forbes writer would categorize our post-2008 bailed out financial sector. They are the beneficiaries of at least $17 trillion (and counting) in state assistance after the federal government put them on financial life support.

Expanding the categories of welfare programs explains how the almost $60 billion we spend on traditional welfare programs - like Temporary Assistance for Needy Families (TANF: $17.6 billion) and housing (HUD: $41.7 billion) - ballooned to over $700 billion, and then climbed past $1 trillion. If you turn every category of state funding into welfare it's not difficult to claim (as Troy claims) that we spend over a trillion dollars on welfare, or that welfare recipients receive $168 per day in assistance.

For these people it doesn't matter that every federal program cuts recipients off if they qualify for and receive aid in another area. This is why it shouldn't come as a surprise that the same people who bought into the "skewed poll" nonsense have also bought into the $168 per day stupidity. It's what they want to believe, so it must be true.

If dissecting the ignorance surrounding this kind of nonsense hurts your head you're not alone. Believe me, you're not alone. 
HOW THE LIE GOT STARTED
According to Alternet.org the $168 lie got started when the Heritage Foundation - a very political "think tank" with a decidedly conservative agenda - published a report saying that people who received public assistance aren't really that bad off, especially since they took in about $9,000 in tax free money and had luxury items like microwaves, air conditioning and LCD televisions. 

The report wasn't Heritages best work (then again, their standards aren't high), but it got the ball rolling. 

Then Forbes magazine jumped in (actually, they were already in). Writer William Baldwin played loose with his terms while describing who's "dependent on government" (government employees, pensioners, and welfare recipients). He followed this up with some Ayn Rand crazy talk about businesses being taxed to support the "takers" of society. Both allowed Baldwin to describe a financial "death spiral" in 11 states where there are more takers (anyone that works for the state) than workers (those who work in the private sector). 

Then, in spite of real evidence that provide some real numbers about public assistance in the state of California, Baldwin came up with this nonsense:
Let’s say you are a software entrepreneur with 100 on your payroll. If you stay in San Francisco, your crew will support 139 takers. 
This kind of lunacy should not be in the pages of Forbes. It really is Ayn Rand crazy talk run amok. 



Put another way, Baldwin is simply making stuff up. The average food stamp recipient in California gets about $149 per month, which disqualifies them from other services and programs. So, no matter how you stretch it, welfare recipients don't receive the equivalent of  $168 a day in free goodies. 

But none of this matters to those on the far right. As long as the electronic chain letter goes viral the point is made. 

THE $168 PER DAY WELFARE LIE THICKENS
After the $168 per day lie made the rounds from Heritage and Forbes to the conservative blogosphere Republican Senator Jeff Sessions (AL) decided to investigate. 

After listening to congressional testimony from the Heritage Fund's Robert Rector Senator Sessions asked his staffers to get the Congressional Research Service (CRS) to look into the matter. First they asked the CRS to tally the expenditures of more than 80 government programs, and then threw in what state governments contribute in aid. 

And just like that Senator Sessions claimed to have found over a trillion dollars in public assistance for the "takers" of society. And he was able to do this, like Forbes and the Heritage Foundation did, without justifying his categories, or having to mention which programs exclude you from other services. Nice. 

After getting the CRS report back Senate Republican staffers then issued a report, which was picked up by The Weekly Standard, which inferred that every recipient of government assistance magically has their hand in every one of the 80-plus government programs reviewed. They don't. But they had to make this assumption because it's the only way they can make their $168 a day math work. 

It didn't matter that not a single welfare recipient gets $168 per day in "cash" or indirect payments from public assistance. And it certainly didn't matter that federal welfare recipients actually receive something like $24 a day in benefits (there are cutoff points for this assistance too). 

To be sure, if you were a recipient of the financial sectors bailout programs you got far more than this. But the people involved in peddling the $168 a day lie don't care to talk about Wall Street's public sector gravy train. 

What really matters is that the notoriously partisan Heritage Foundation, Forbes magazine and a Republican Senator play fast with the categories and methods. Worse, they then believe their own spin of the facts. 

That, my friends, is all the right wing noise machine needed to run with a "$168 per day" story that is now part of our growing zone of cyber ignorance.


- Mark

UPDATE (7-25-13): I want to call your attention to the comments from "anonymous" below.  It really says everything we need to know about the $168 per day crowd ... ancedotal evidence ... ignores the larger story of how conservatives want to believe whatever floats their political boats (Come on, skewed polls? Seriously?) ... ignores, or can't understand, evidence from the links provided ... pounds chest about the persuasive of his ancedotal evidence to suggest the guppies of America are the issue while ignoring reckless tax cuts and the whales on Wall Street who are dragging our nation into financial ruin ... 

So Mark, I noticed you did not say how much you think people on full assistance do receive. So what is the figure? I worked a temp job with a gal, she regularly works temp jobs, lives with her boyfriend who is well employed/well paid and she gets 200.00 a month in food stamps and free medical insurance. I know kids who get AFDC (cash side of EBT card), Section 8 housing, free medical, food stamps, free school breakfast and lunch, backpacks full of food to take home for the weekend, reduced rate utilities, free cell service. So....what do you calculate....or the Fed figure that is worth? Interesting, when some of the kids I know have parents who have cash only businesses....no income declared...no taxes paid.

UPDATE (9-4-13): In the FYI category, FactCheck.org did some fact checking on the claim that 11 states have more people on welfare than working. It's not pretty for for those who like to make the claim. Here's what FactCheck.org has to say ... 




Then we have the Fox News claim that there are more welfare recipients than there are people working in full time jobs. You can find the truth here and here.

Stay tuned for additional updates.


*******************

Here are some of the links so you can check this stuff out on your own ... 

http://www.cbpp.org/cms/index.cfm?fa=view&id=3886

http://www.cbpp.org/cms/?fa=view&id=3677

http://www.cbpp.org/cms/index.cfm?fa=view&id=3164

http://www.cbpp.org/cms/index.cfm?fa=view&id=3793

http://www.cbpp.org/cms/index.cfm?fa=view&id=3886

http://www.inthesetimes.com/article/14343/gop_trillion_dollar_lie_welfare


http://www.politifact.com/subjects/welfare/


http://prospect.org/article/truth-about-welfare


http://livingstingy.blogspot.com/2012/01/50-million-americans-on-welfare-not.html


http://www.ehow.com/info_8134012_myths-welfare.html


http://www.alternet.org/economy/how-astounding-new-right-wing-lie-about-economy-born

Tuesday, March 26, 2013

Monday, March 25, 2013

ORIGINAL INTENT vs. JUDICIAL ACTIVISM ... Where do you stand?


Recently Associate Supreme Court Justice Sandra Sotomayor wrote a long and thoughtful opinion to the Bongani Charles Calhoun v. United States case. Her opinion wasn't part of the decision, it was simply what she thought about some of the issues raised throughout the case.

In the Calhoun case the defendant Charles Calhoun argued that the drug charges against him should be dropped because of a racially charged question presented by the prosecutor. During the original trial Calhoun argued that he had nothing to do with the drug deal, which was entirely plausible given the details of the case. Still, the prosecutor tried to prove that Calhoun's presence with the other defendants during a drug deal made him an accomplice. To help make his point the prosecutor asked:

“You’ve got African-Americans, you’ve got Hispanics, you’ve got a bag full of money. Does that tell you—a light bulb doesn’t go off in your head and say, This is a drug deal?” 

Calhoun's appeal was denied - a ruling Justice Sotomayor agreed with - because Calhoun (or his attorneys) didn't object to the language used by the prosecutor during the trial.

There's more to the story, but the key here is that Justice Sotomayor - like all Supreme Court justices do from time to time - issued her opinion on the case after the decision was made. Opinions like this are referred to as "Term Opinions Relating to Orders" and don't affect the outcome. They simply register what the justices think about the issues surrounding the case.

This is important because while we would like to think that our Supreme Court justices have no opinions (i.e. "justice is blind"), or simply rule on the constitutionality of a case, the reality is our Supreme Court justices have strong opinions. Our Supreme Court has been full of politically charged jurists, who regularly brought (and continue to bring) their political views to the bench.

The question is How much do they allow their opinions to inform their decisions?

We discuss this and other issues in my Introduction to American Politics class, where I discuss how SC judges should rule on each case. Should they base their opinions on the "facts" of the case, then use the Constitution to apply what is called the "Original Intent" of the Founding Fathers?

Or should they look at the evidence and process, and then take into consideration contemporary standards and belief systems that turn our justices into what critics call "Judicial Activists"?



Original Intent versus Judicial Activism. This is one of the more interesting discussion topics we have when I lecture on our court system. In the case of the former (Original Intent) it's argued that our SC justices should take a case and apply what the Constitution says (also called the "Strict Constructionist" argument). End of story.


The latter view suggests that we have a living Constitution and that justices are there to interpret the Constitution according to the times. This position, according to critics of the decisions that are made, turn our SC justices into activists because of how they advocate or read things into a case that simply is not there.

In the modern era Antonin Scalia and Clarence Thomas are viewed as "activist" judges while Chief Justice Earl Warren was viewed as an activist judge in the 1950s and 1960s. In all cases those charged with being judicial activists are accused of cutting off the other branches of government, and turning them into deadwood.



I bring this up because the LA Times' Eric J. Segall argues in "Supreme Court justices: The case for hanging it up" that Supreme Court justices become increasingly activist judges the longer they sit on the bench. As such, they should be given time limits of 20 years instead of life terms. His argument is that SC justices have gone beyond simply issuing "term opinions" - like the one made by Sotomayor - and increasingly inject their political views into their rulings.

As I see it where you stand on the issue depends on where you sit.

If you like the opinion there is no activism involved. For example, those who support the Affordable Care Act (Obamacare) saw nothing wrong with the Supreme Court decision that upheld the AFA. Similarly, if you're opposed to corporations being viewed as people (as I do) you probably saw an activist court with the Citizens United decision. Those who were opposed desegregation in the 1950s saw an activist court after the Brown v. Board of Education case in 1954. And on it goes ...

So, what do you think? Original Intent or Judicial Activism? Wherever you fall on the issue, Do you believe our SC justices should have 20 year (or any) limits?

- Mark

Here's the case where Sotomayor issued her opinion ...

http://www.supremecourt.gov/opinions/12pdf/12-6142_2co3.pdf

2012 Term Opinions Relating to Orders (or "Comments from the Bench")

The opinions included here are those written by individual Justices to comment on the summary disposition of cases by orders. Such an opinion might, for example, dissent from the denial of certiorari or concur in that denial. The opinions here include those written during October Term 2012 (October 1, 2012, through October 6, 2013). These opinions were posted here on the day of their issuance. They will remain posted until the opinions for the entire Term are published in the bound volumes of the United States Reports. For further information, see Column Header Definitions.


2/25/1312-6142Calhoun v. United StatesSS568/2



Saturday, March 23, 2013

THE CYPRUS MESS IN FIVE EASY BULLET POINTS



While the post on this is rather long - and requires some background - I've broken down the Cyprus mess into five easy to understand bullet points. From Cyprus.com ...

* THE PLAYERS: Of all the banks in Cyprus, it's the two major Cyprus banks that are in trouble, Laiki Bank and the Bank of Cyprus. Both are exposed to the Greek financial mess, but Laiki is the real problem.
* BACKGROUND: Laiki is owned by a private Greek group called Marfin Investment Group, which is also backed with Gulf money. The Bank of Cyprus is "locally" owned. The Marfin group abandoned long standing conservative investment policies and pushed for an "aggressive" (when do we start calling this "stupid and greedy") investment strategy, which led the bank to purchase high yield but incredibly risky Greek bonds. This is what got them in trouble.
* THE (incredibly stupid) DEAL: Cyprus' new president Nicos Anastasiades went to the European Union and accepted a bailout package that included "taxing" the bank deposits of ordinary Cypriots. So, yeah, to pay for the stupid investment decisions of private bankers the idea is to slap insured depositors across the face by making them pay for the bank bailout (in the process taking 6-10 percent out of every checking, payroll, escrow, pension, trust, payment-in-transit and any other account held in a Cyprus bank).
* THE RUSSIAN ANGLE: Private Russian interests, who are notorious for escaping taxes in Russia by laundering their money through Cyprus ("tax arbitrage"), have billions in an independent Cyprus bank that is Russian owned. They are ticked off that their incredibly solvent bank (laundering money is a lucrative business), which has billions on hand, could be forced to pay for the bailout.
* THE BANK RUN THREAT: Whether or not Cyprus goes through with the threat of "taxing" insured bank deposit accounts, the threat is going to lead to a bank run when the banks open on Tuesday. This "will severely cramp Cyprus’s main economic driver the last 2 years (selling real estate, tourism and accounting services to Russians)." 

So, if we go by these primary points, the real issue is whether the EU and Cyprus want to bailout private banks - who stupidly over bought Greek bonds - and Russian money launderers, who want to escape paying taxes in Russia



There's more to the story, but one thing is clear: We need to create a global and transparent tax and investment treaty that doesn't encourage global market players to focus on "tax arbitrage" and depend on bailout profits as their preferred business strategy

- Mark 

Thursday, March 21, 2013

FIVE GRAPHS THAT WILL BLOW YOU AWAY (and why Alan Greenspan is a fool)

So everyone knows that the economy and stock market was in a death spiral at the beginning of 2009, right? Then Congress and the Federal Reserve came to the rescue and pumped trillions back into the economy with bail out cash and other guarantees for market players.

Check out what pumping trillions of dollars into the economy (with TARP, the stimulus, and regular money dumps) has done for the S&P 500 over the past four years ...



What we learn here is that after more than 1,230 days of market interventions by Congress and the Federal Reserve (what market players like to call "quantitative easing") the S&P 500 has soared to record highs, again.

Now that's the magic of the market at work for you [wink, wink] ...

Anyways, staying with our narrative, we know that pumping up Wall Street began long before the 2008 market collapse. In fact, ever since Alan Greenspan became chair of the Federal Reserve in 1987 - and came to the rescue of LTCM - the Federal Reserve has propped up market players on Wall Street on a regular basis. We even have a name for using the resources of the Federal Reserve to backstop and support Wall Street every time it gets a headache: The Greenspan Put.

And it's done wonders over the past 30 years to bloat profits and help insulate Wall Street from their own recklessness and stupidity. Check out what's been happening on the New York Stock Exchange (NYSE) since Alan Greenspan hit the scene ...


So, yeah, in just 25 years since the arrival of Alan Greenspan the NYSE has gone from hovering around 2,000 in the late 1980s to over 14,000 today. With these type of money dump guarantees a monkey picking stocks with darts could have made money in our market over the past 25 years.

Again, that's the magic of the market at work for you ...

But this isn't the end of the story. After making so much (cheap) money available to corporate America the Federal Reserve has watched over a system that has seen the size of our money (dollar) supply grow like the Octomom after fertility treatments. Check it out ...



In real simple terms M-1 (blue line) represents the amount of money Main Streeters (you and me) have in our collective pockets and checking accounts. By 2010 this was about $1.8 trillion. M-3 (green line) represents the amount of money Wall Street and corporate America's biggest financial players have to spend, or have a claim on. By 2006 this amounted to roughly $10.29 trillion (over the past 7 years M-3 has hovered between $13 trillion to $15 trillion).

Here's what the increase in the money supply looks like since the Fed really started pumping money into the system immediately after the 2008 market collapse ...



So, just what has all of these Fed-led market interventions meant for corporate America?

Pretty simple. Record profits (blue line).




The unsettling part here is that profits are growing at a rate that far outpaces what we produce (GDP) every year nationally (this is what Peter Drucker was talking about more than 25 years ago when he discussed how the real economy was increasingly being separated or decoupled from the "symbolic" economy ).

If you've read this far, and understand this stuff, then you should be ready for the next level. So I have a recommendation. Check out how printing money by the Federal Reserve actually works ...





To be sure, there are a few areas in the clip that I don't agree with, but the concept is clear. We're doing it wrong, on so many levels.

At the end of the day, after dumping trillions of dollars into the economy, the market jubilation we're seeing on Wall Street is really nothing to get excited about ... that is, unless you're one of the big corporate money players in America.

- Mark

Wednesday, March 20, 2013

BE HAPPY (but only today)

I have to think that this is going to piss off the cynics, the emotionally depressed and the UN conspiracy theorists. Also, if we are to believe Solon's counsel to Croesus I'm not so sure that it's worth the effort.



But what the heck ...

The United Nations has declared today (March 20th) the first ever International Day of Happiness. You are officially encouraged to take part in activities to spread happiness for humanity.

Now go out and spread some sunshine.

- Mark

Saturday, March 16, 2013

INTERESTING WEEKEND READS (for 3-15-13)


MISCELANEOUS / INTERESTING

* Man of the Year Award? Woman mauled to death by lion as she made love to her boyfriend, who fled once the attack began, (The Telegraph).
* Great news, I think. Saudi Arabia might stop public beheadings ... due to a shortage of qualified swordsmen, (Mailonline).
* The truth behind the charter school movement, (Salon).
* We're #1, we're #1 ... the U.S. is ranked #1 when it comes to death by violence, (Ranking America).
* Modern gun owners are just scared? Security passes hunting as the top reason to own a gun, (Talking Points Memo).


POLITICS & COMMENTARY

* How the Iraq War has hurt Republicans, (Washington Post).
* Paul Ryan's budget proposal screws the middle class by redistributing wealth upward, again, (Robert Reich).
* A timeline of Paul Ryan's Medicare flip flops, (TPM).
* I'm no fan of Ben Bernanke, but our GOP-led Congress looks clueless when they try to grandstand on their knowledge of the economy, (The Economic Populist). 
* Another case of the right wing echo chamber spewing hate and getting it wrong, big time (addictinginfo.com). 
* With GOP filibuster, the Consumer Financial Protection Bureau is in trouble, (Talking Points Memo). 
* Why is the FDIC helping financial institutions do their PR work by hiding "scores" of bank settlements from the public (nakedcapitalism). But, wait, it gets worse ...
* Attorney General Eric Holder says we can't prosecute big banks because it would negatively impact the global economy ... effectively telling the world that banks are immune from their reckless stupidity and greed (The Economic Populist). 
* OK, this one also helps explain why our gangster banks don't get prosecuted, (nakedcapitalism).



MARKETS/ECONOMICS

* Economist Mark Thoma does a good job of explaining why Paul Krugman trumps Jeff Sachs, (Economist's View).
* How high frequency trading (HFT) has become more predatory, extractive and contributes to Wall Street's on-going casino mentality, (nakedcapitalism).
* All you wanted to know about the current jobs report, in seven graphs, (Wonkblog, Washington Post).
* And in the "It's time for the GOP to stop complaining" category: We have yet another month of private sector job growth in America, which makes for 36 months straight ...





- Mark 

Friday, March 15, 2013

NO SHOCK HERE ... ONE MORE REASON WHY OUR FINANCIAL SYSTEM WILL COLLAPSE (AGAIN)


Over three years ago I wrote how "surprised" I was that failed AIG executives would keep bonuses that were paid for and backstopped with U.S. taxpayer funded bailout cash. Months before AIG executives had claimed that they would return the bonuses, which were tied to the casino-like bets AIG had made before the 2008 market crash.

Like "Casablanca's" Captain Renault, who was "stunned" to learn about illegal gambling activities at Rick's Cafe, I too was "shocked, shocked" [wink, wink] to learn that AIG executives would choose to keep their ill-gotten gains.





As I've written about numerous times, the problems associated with AIGs arrogance were not isolated to AIG. Our private banking problems are systemic, and have actually gotten worse since 2008. 

So, yeah, this means we should prepare ourselves for another financial shocker.

To help us understand all of this Josh Rosner, co-author of "Reckless Endangerment," has written a series of articles about crony capitalism and JP Morgan. They outline how JP Morgan continues to benefit financially from corrupt and unethical practices that allow them to profit from derivative-laced gambling activities (no, what they do with derivatives is neither investing nor hedging). 

The key to JP Morgans brand of crony capitalism - as the Intro makes clear - is how they cozy up to elected officials, dominate trade associations, and use their financial resources to create a layer of legal, political and media protections that insulate them from their own  greed and stupidity.

Several of the case stories are long (as blog posts go), so I'm borrowing from Barry Ritholtz and posting the links to each piece in the series. Together they paint a nauseating picture of privilege, arrogance and greed.

Intro:  Poor Risk Controls
Part 2:  JPM wants FDIC (read taxpayer) to cover WaMu’s mortgage losses
Part 3:  Segregated Accounts
Part 4:  London Whale
part 5:  MF Global-like Segregation of Client Funds

My primary concern is that JP Morgan is just one of several Too Big To Fail casinos on our Vegas-like financial strip.



Given the bailout and legal protections that surround them, no one should be able to say with a straight face that they are "shocked, shocked" when our giant gambling dens collapse like a house of cards, again.

- Mark 

FYI: Here's the Wall Street Journal report - "Senate Slams Bank on 'Whale'" - on the U.S. Senates investigation into how JP Morgan deliberately misled investors and regulators about their activities and losses. 

Then we have Barry Ritholtz' analysis of "Bankistan" America. It's not pretty.

And, yes, bringing back Glass-Steagall would help.

Wednesday, March 13, 2013

REPEAL OBAMACARE? THREE SIMPLE QUESTIONS TO ASK YOUR "I HATE OBAMACARE" FRIENDS


Are your friends and colleagues like Paul Ryan (R-WI)? Are they still trying to fight the last health care battle? Do they whine and complain about Obamacare? If so ask them the following 3 simple questions ...


~~~~~~~ ****~~~~~~

Question #1
If you support and embrace abolishing a fully funded Obamacare program ...



... why didn't you have anything to say (and still don't say anything) about President Bush's unfunded Medicare Part "D" giveaway?

Here's your argument: Medicare Part D ...
1. Forbids Medicare (in anti-market like fashion) from negotiating prices with the pharmaceutical industry, which produced billions in additional profits for drug manufacturers in its first two years (2006 and 2007), and ...
2. Is projected to cost our nation about $1.08 trillion more between 2012 and 2021, (2012 Annual Report of the Board of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds, p. 122, "Table III.D3-Operations of the Part D Account ...").
Seriously, why say something about a program that is paid for (even if the wealthy and the "moochers" aren't happy about it) and then turn around and say nothing about a trillion dollar program that was not?

Think about what this means.

Medicare "Part D" is unfunded and forbids the government from negotiating prices with the pharmaceutical industry, which Medicaid and the Veteran's Administration are allowed to do. The argument is that the insurance industry is supposed to negotiate prices. If this is the case, they're not even doing as good a job as the Veteran's Administration and Medicaid, which can negotiate prices. Check it out.

The VA pays between 40% and 58% less for similar drugs than Medicare (e.g. the VA pays about $782 for a year's supply of Lipitor but Medicare pays between $1120 and $1340 per year), while Medicaid pays substantially less too (about $112 billion less over ten years). Score one for the government.

So, yeah, let's get rid of Obamacare and say nothing about Medicare Part D.

~~~~~~~ ****~~~~~~

Question #2
Why do you want to repeal Obamacare today but stood by and said nothing while health care premiums went through the roof and ate away at the wages of workers during the Clinton and Bush Administration?


Here's your argument: Those opposed to Obamacare did absolutely nothing to stem the rising tide of health care costs, instead, choosing to rely on the "let the market work" mentality. This allowed the United States to become the most expensive health care provider in world while, at the same time, producing outcomes that don't give us the "bang for the buck" so many like to talk about when discussing market efficiency (so, no, we're not #1 when it comes to health care outcomes).


 ~~~~~~~ ****~~~~~~

Question #3
Why don't you say anything about the Obamacare requirement that mandates that the insurance industry spend at least 80 cents of every dollar they take in on patient care or else the insurance company must issue rebate checks to its customers?



Here's your argument: The Obamacare rebate requirement has already led to over $1 billion in rebate checks being sent out. In addition to putting downward pressure on premiums (all insurance companies aren't cooperating because of concerns over profit levels) new Congressional Budget Office (CBO) projections tell us that both current spending and the long terms costs of health care costs are going down.

And they are projected to continue going down long into the future.



~~~~~~~ ****~~~~~~

To be sure, you might have friends complaining about rising health-drug plan costs. This is real in many cases. There are several responses here.

First, average premium costs for Medicare Part D are going up, and will continue to go up. The reason? Congress has forbidden Medicare from negotiating price reductions (Q#1 above). See how that works?

Second (and relatedly), during Obamacare negotiations Congress turned down an amendment that would have allowed imported drugs (from Canada, no less) to compete with price rigged drugs here in the U.S. Nice (for the drug companies, that is).

Third, in 2009 America's Health Insurance Plans (AHIP) commissioned a report from Price Waterhouse (notorious for helping clients hide money) which they used in a thinly veiled threat to raise premiums if Obamacare became the law of the land. What they don't say is that the health care insurance industry planned to raise rates all along (they were predicted to rise by 6% per year anyways) but now enjoy using Obamacare as their reason for raising rates.

At the end of the day we want to keep one thing in mind. Health care costs over the long term are projected to slow down, significantly. This is something no one could say before the Affordable Care Act was enacted.

- Mark

UPDATE: For the serious students of Obamacare, check out Forbes', "Proof That Obamacare 'Rate Shock' Is An Ugly Insurance Company Deception." The comment section, with author Rick Ungar responding to the party hacks, is especially good.

Tuesday, March 12, 2013

THIS IS HOW OUR CONGRESS SHOULD WORK

Elizabeth Warren (D-MA) shows the world what a member of Congress should be doing on the job ...


In case you're wondering, this is one part"Western banks 'reaping billions from Colombian cocaine trade'" - of what Senator Warren is asking about.

- Mark


Sunday, March 10, 2013

OBAMA'S SECRET PLAN TO CONFISCATE GUNS

Did you know that the Obama Administration has a secret plan to confiscate guns? It does if you believe the information coming out of the National Rifle Association (NRA). After "obtaining" a Department of Justice memo - "Summary of Select Firearm Violence Prevention Strategies" - the NRA claimed that the memo called "for national gun registration and confiscation."

The NRA's finding appeared in the Redflag blog like this ...

Leaked DOJ Memo: Outlaw and 
Confiscate All Guns ...


The headline sounds pretty serious. That is, until you read the DOJ memo. It doesn't actually say that the Obama Administration is going to confiscate guns. Not even close. It's what the NRA claimed the DOJ memo said. It's what the NRA wants you to believe.

What the NRA is trying to do is get gun enthusiasts riled up over President Obama "secret plan" to confiscate guns (which is kind of a surprise since President Clinton was supposed to have confiscated them all years ago). It's the kind of paranoid driven nonsense that Dale Gribble ("King of the Hill") would buy into.


Unfortunately, this stuff actually works.

In fact I first came across the Obama Administrations secret plan to confiscate guns on a friends Facebook site. Several paranoid comments about President Obama being "a liar" and coming to "your house to take your kids" followed. The real problem though is that no one bothered to read the actual memo.

After reading the actual DOJ memo, and checking out the source of the secret plan, I jumped in to set the record straight:

The memo doesn't actually say this. It's what the NRA claims the memo says. Even the decidedly right wing Washington Times' opening paragraph on the NRA ad makes this clear ... "The National Rifle Association is using a Justice Department memo it obtained to argue in ads that the Obama administration believes its gun control plans won’t work unless the government seizes firearms and requires national gun registration — ideas the White House has not proposed and does not support."

The response to my post was classic. I was told that just because the President hasn't actually proposed it doesn't mean it won't happen. Why? Because someone or something ...

prompted it's writing ... It did not just occur without some prompting. It appears that someone asked "how do we take away peoples guns", 2nd Amendment Rights. Why would they ask this question if it was not something they wanted to do. I know there are no real answers just questions. If one adds this to everything else that is going on......... President did not support same sex marriage at one time either but he "evolved." Maybe he is "evolving" into gun control?

In a few words, this person is arguing that because the President changed his tune on same sex marriage we can't trust him on anything, so the NRA ad must be true. Huh? Forget the false equivalency here. Forget that the President always supported civil unions (in various forms). The fact of the matter is the President's coming to take your guns because these people want to believe it.

How do you argue with this? Actually, you can't.

The real concern here is that the NRA is now making stuff up. And the people who the lies are directed at don't care.

This is the state of politics in America.

- Mark