Monday, October 31, 2016


Remember when Dick Cheney and Scooter Libby compromised our national security by deliberately exposing the the identity of an active CIA agent, and Republicans across the country demanded they be punished? Neither do I.

- Mark

Hat tip to Carter for the meme.

Friday, October 28, 2016


We always knew that premiums were going to go up, with or without Obamacare. The industry told us they were going to raise the rates. The OMB even created budget models around the anticipated hikes. Republicans, who sat on their hands before and did nothing about rising premiums (or junk policies, or pre-existing conditions, or yearly/lifetime limits, etc.) are rejoicing now that premiums are rising under Obamacare.

Yeah, rather than trying to fix things, they're now having a laugh at how Americans have to pay more to stay healthy.

My real concern isn't the Republican's lack of empathy, or even their lack of ideas. We all know about the Republican culture of hate and stonewalling.

What concerns me is what the GOP won't tell you: While premiums may be rising, so are the reimbursements, or subsidies, that help pay the premiums. From Mother Jones we get this article with graphs which explains what's happening:



In a few words, subsidies for eligible participants are rising faster than premium increases. So, for example, if your rates go up by 25% most Obamacare participents are eligible for a 30% increase in their subsidy to help pay their premiums (in the states listed above).

I'm betting you won't get that information on Fox News.

You're also not going to learn that healthcare costs are now rising at a slower rate than they did before Obamacare.

One more thing. We must not forget that GOP-led states that did not sign up for the Obamacare exchanges are deliberately keeping families off the Obamacare rolls, which make them ineligible for Obamacare subsidies. With the way supply and demand works this means these Republican-led states are partly to blame for rising premium costs since the insurance companies have to charge more to make up for fewer participants (the only way this logic doesn't work is if you don't believe in the market, and the forces of supply and demand ... which make you a communist, right?).

So, yeah, in the bizarre world we're living in today, we see the GOP deliberately sabotaging Obamacare, which keeps entire states out of the program, and then blaming President Obama because the system doesn't work.

I know conservatives didn't like it when Hillary Clinton called them "deplorables." Being characterized as a bunch of white nationalist loving Nazi bigots is an ugly characterization (even if it fits). So, I have another term.

How about national saboteurs? Rooting for America to fail is one thing; working to make it happen is, well, akin to treason.

- Mark

Thursday, October 27, 2016


In July, while responding to suggestions that he doesn't understand what "sacrifice" means, Donald Trump responded: "I think I've made a lot of sacrifices. I work very, very hard. I've created thousands and thousands of jobs, tens of thousands of jobs, built great structures ...".

In a few words, Trump has no idea what sacrifice entails. For those unclear on the concept, this ad is a powerful message that explains the concept.

It's also a wake up call for anyone who is still on the fence during this presidential election ...

- Mark


Below is an interesting Megyn Kelly interview with former Speaker of the House Newt Gingrich. Two things are abundantly clear: Megyn Kelly is not letting Donald Trump off the hook in the last weeks of the presidential election, and Newt Gingrich is not Megyn Kelly's intellectual equal.

- Mark

Wednesday, October 26, 2016


OK, there's a lot more to what's happening in Seattle than suggesting that "raising the minimum wage helps create more jobs" over the long term (nothing's that simple). But this also means the other side can't mindlessly argue that raising the minimum wage will kill jobs and undermine the economy.

For more on the minimum wage argument click here.

- Mark 

Monday, October 24, 2016


Are you tired of hearing all the anecdotal evidence coming from people who are suddenly paying higher health insurance premiums? If so, you might want to remind them why their policies may have been so cheap in the past.

Think about it.

Before Obamacare you could be rejected for treatment if you had a pre-existing condition, even if you were all paid up for your health insurance premiums.

How silly were pre-existing conditions? Pretty silly. Actually, they were pretty bad.

In many states a woman that was sent to the hospital because they got beat up by their husband could be denied health coverage. The thinking was if they had previously been beaten up by their spouse statistics show they are more likely to be beaten up again. Ergo, they should have known better, which made their subsequent injuries a product of a pre-existing condition.

So, yeah, spousal abuse could be grounds for denying health coverage to women.

What about those yearly or lifetime limits? If you had a crummy policy - and many Americans did before Obamacare - many people found themselves in situations where the insurance company simply said, "Too bad, your yearly (or lifetime) limit has been reached. We're not paying any more."

The good deal they once thought they had (on the premium side) was actually a bad deal (on the coverage side).

Here's the real fun part. The same idiots who are complaining about Obamacare costing too much were/are the same idiots who complained (or would have complained) because they were denied coverage, forced out of the hospital, or forced into bankruptcy because their coverage was either limited or maxed out. There's more (like yearly rebates under Obamacare) but you get the point.

Think about this the next time your friend tells you they don't like Obamacare.

- Mark 

Friday, October 21, 2016

WEEKEND READING (Oct. 21, 2016).

Cigar worker(s), Cuba.

Right wing extremists are a bigger threat to America than ISIS (Newsweek).

Stephen Hawking: Greed and stupidity are what will end the human race (The Intellectualist).

Germany reunified 26 years ago, but some divisions are still strong (Washington Post).

How Congress quietly overhauled its insider-trading law (NPR).

How America's $19.6 trillion debt would rise or fall under Trump or Clinton (Fiscal Times).

Hillary Clinton for President of the United States (Foreign Policy).

Comedian Jim Jefferies exposes the truth about Donald Trump (Policy.Mic).

Trump's one public service was exposing the misogyny of the GOP (NY Magazine).

The question no one is asking about Donald Trump (Washington Post).

The governing cancer of our time (David Brooks / NY Times).

Trump's refusal to accept the results of the election is not 'suspense' - it's treason (Reverb Press).

Bakersfield: the parallel-universe where Donald Trump is still surging (The Guardian).

The 7 stages of grief when a loved one supports Trump (Scary Mommy).

Why facts don't matter to Trump's supporters (Washington Post).

Donald Trump, the worst of America (NY Times).

Albert Einstein: The Negro Question (1946) (On Being).

What, Congressman Steve King asks, have nonwhites done for civilization (NY Times)?

White Americans long for the 1950s, when they didn't face so much discrimination (Washington Post).

Racism, conservatism, and low I.Q. go hand in hand, according to study (Psychology Today).

Dallas mayor calls Bulls**t on open carry: It didn't help during shooting, and made things worse (If You Only News).

Why black lives don't matter to the NRA (Think Progress).

Instead of arguing about guns on Twitter, Neil de Grasse Tyson just laid out the numbers (Upworthy).

Cops: Minnesota mom beat and starved enslaved nanny from China (USA Today).

Meet the for-profit company training police to shoot without hesitation (U.S. Uncut).

The 7 biggest deadbeat states who mooch off taxpayers all vote Republican (Politics USA).

History tells us what may happen next with Brexit & Trump (Medium)

Comcast fined $2.3 million for improperly charging customers (NPR).

- Mark


I'm not sure if I've posted this before, but it's funny enough to post again ...

- Mark 

Wednesday, October 19, 2016


In tonight's presidential debate several things stand out. First, Donald Trump is prepared to not honor the election results when Hillary Clinton wins. Second, Donald Trump believes Hillary Clinton is a "nasty woman" because she says things he doesn't like to hear. Finally, apart from not knowing what he's talking about when it comes to foreign affairs, Donald Trump is too gutless to say he'll cut Social Security benefits, even though he's made it clear that he would do so in the past. 

Prompting the discussion on Social Security was moderator Chris Wallace's misleading question/commentary that Social Security is an "entitlement" that's running out of money. Let's make two things perfectly clear: Social Security is not an "entitlement" (it's an insurance program) and it's not going broke (it has a surplus). 

Since the next news cycle is sure to focus on Donald Trump's decision to question either the results of the election when he loses, his fidgety posture and interruptions, and his "nasty woman" comment I want to set the record straight on Social Security. 

Posted below is a piece I wrote almost 4 years ago for the Bakersfield Californian: "The 'Social Security is going bankrupt' Lie." 

It's late so I'm not going to update the numbers. I'll do this in a later post, when I update the entire essay. But know one thing. Whatever issues Social Security has are exaggerated and, quite frankly, misleading. Enjoy ...


The 'Social Security is going bankrupt' lie

Here we go again. The Republicans are using debt and tax negotiations as cover to push a dystopian market dream that includes erasing Social Security as we know it from our economic lives. To do so, the GOP is trying to convince America that Social Security contributes to our national debt and is, in the words of Paul Ryan, "going bankrupt."
Both are flat-out lies. Here's why.
Let's remember that Social Security is a self-funding program. It has contributed absolutely nothing to our debt load. In fact, over the years we've contributed so much to our nation's Social Security account a $2.7 trillion surplus now exists.
Congress has raided these surpluses every year. In return we get government security notes. According to the GOP, because these securities are "just IOUs" -- and we're running budget deficits -- we don't have to pay our nation's retirees back. 
Put another way, congressional Republicans are saying America no longer has a legal or moral responsibility to honor its financial obligations.
Anyone who's read the U.S. Constitution (specifically, Article VI) knows we have a constitutional duty to pay our bills. We've done it since the American Revolution. We did it during the Civil War, the Great Depression, and even through the world wars. Still, the GOP argues that since we don't have $2.7 trillion on hand we don't have to honor our Social Security deal, and should cut back on promised benefits.

Hey, I have an idea. Since we don't have $16.3 trillion on hand to pay our national debt, let's not pay our creditors either. Take that China -- and Saudi Arabia -- and Japan -- and everyone else who's lent us money. Or let's cut a deal and pay our creditors 75 cents on the dollar.
As silly as this sounds, it's essentially the argument congressional Republicans are making when it comes to the $2.7 trillion we borrowed from Social Security. 
And the silliness continues.
After the 2008 market collapse, Congress did virtually nothing as the Federal Reserve and the Treasury Department forked over more than $4 trillion to Wall Street and America's financial sector. But that's not all.

Via an alphabet soup of new loan, credit and guarantee programs (TALF, TSLF, PPIP, Legacy Assets, etc.), the American taxpayer is on the hook for an additional $13 trillion. That's right. More than $17 trillion has been made available to bailout, backstop and pay off the bad bets of the crony capitalists on Wall Street. 
Yet, congressional Republicans say we can't find $2.7 trillion to pay back the seniors who helped fund and build the American Century.
The irony here is that the GOP not only believes it's OK if we don't honor our financial obligations, but many argue we need to "privatize" Social Security if we want to fix it. Huh? 
In real simple terms, "privatization" is GOP-speak for sending the trillions of dollars now running through Social Security accounts to Wall Street (which makes privatization a backdoor bailout in perpetuity, on so many levels).

What gets lost in all the "cut back" and "privatization" double talk is one simple fact. There's no problem with Social Security if we simply honor the Constitution, and respect the contract we made with our nation's seniors.
Still, let's say the GOP gets its way. We become a banana republic, and pick and choose which debts we honor. At worst, our seniors get 75 cents on the dollar after 2033. 

However, as I argued more than six years ago, Social Security isn't in trouble if we:

* Rescind the Bush tax cuts. Rescinding all Bush-era tax cuts brings in around $4 trillion over the next 10 years. It's almost $1 trillion if we target just the top 2 percent. Projected Social Security shortfalls disappear under these scenarios.
* Remove the payroll tax cap. No one pays a dime into Social Security after they earn $110,100. Removing the cap keeps Social Security solvent into the 22nd century.

Rather than discuss these issues, congressional Republicans prefer to scare America about Social Security's future "insolvency" so they can cut back on senior benefits today. Not so coincidentally, they also get to argue that government programs, like Social Security, don't work, while maintaining tax cuts for the rich.
An added bonus for the GOP and its financial backers is how this story line lays the groundwork to sell America on a Wall Street Social Security privatization scheme -- a bailout in perpetuity.

Social Security isn't headed for bankruptcy. What's bankrupt is the moral code of congressional Republicans. It's why they're putting ideology and the interests of Wall Street above the Constitution, and our promise to America's seniors.
Mark A. Martinez, Ph.D., is the author of "The Myth of the Free Market" and a professor of political science at California State University, Bakersfield.


Finally, in case you missed it, Hillary Clinton gave an adult answer when it came to outlining what needs to be done if Social Security does run into trouble.

- Mark

Tuesday, October 18, 2016


Dolores Huerta co-founded the UFW with Cesar Chavez. She's still fighting for justice and the ideas that make the American experience come to life ...
- Mark 

Monday, October 17, 2016


My friend and former colleague from the department of economics here at CSUB, Dr. David Berri, makes an interesting observation about the role of the state in society. While pointing us to this interesting Bloomberg article on libertarianism - a utopian philosophy that argues for minimal state intervention - he makes it clear that "libertarianism's time has come and gone."

Specifically, Berri writes:

Great discussion of why libertarianism -- as a governing philosophy -- doesn't work. 
I tend to believe that those who like this idea -- much like Marxists -- tend to see the world as either/or. But the answer to most problems is "it depends". Sometimes the solution to a problem is more government. Sometimes it is less. Sometimes it is hard to tell. Life is complicated and simplistic answers (i.e. "we don't want government' and "we don't want capitalism") really don't work very well.

Put more simply, as I wrote in my book, "The idea that the state has been, should be, or can be simply an umpire in society is supported neither by history or market experience" (p. 8). Ultimately the state creates the conditions under which wealth is created. Period.

The moment we get back to understanding this simple point will be the moment we start moving to a better place as a society.

- Mark

Here's a classic YouTube clip, which I've shared previously, that provides insight into what the Libertarian Paradise in Somalia looks like ...


Bill Maher has some thoughtful comments on the presidential election ...

- Mark"

Thursday, October 13, 2016


The NY Times was asked by Donald Trump's legal team to retract the article, Two Women Say Donald Trump Touched Them Inappropriately, which appeared in their paper yesterday (Oct. 12, 2016).

Here's their response to Team Trump's Demand for Retraction ...


I'm not sure about you, but I think the NY Times just did this ...

- Mark

Hat tip to Jose for the NY Times link.

Tuesday, October 11, 2016


With Bakersfield native and House Majority Whip, Kevin McCarthy, saying he still backs Donald Trump, and GOP leaders Paul Ryan and Mitch McConnell maintaining their support for Trump's presidential candidacy, one thing is clear: the GOP is made up of political sheep who have been beat up and cowed by the the political monster they created, Donald Trump.

Think about how bad it's gotten for these muted Republicans.

Donald Trump took credit for - and delight in - Kevin McCarthy removing himself from the Speakership sweepstakes (even though his evidence was flimsy). For their part, Mitch McConnell and Paul Ryan have been alternately ignored and condemned by Donald Trump for their waffling commitment to his candidacy.

Yet, today, Trump is still their guy.

And forget the GOP's recent empty finger wagging gestures at Donald Trump for his misogynistic ways. In Trump's world it's all background noise. It doesn't matter. They don't matter.

In Trump's world, Mitch McConnell, Paul Ryan, and Kevin McCarthy are political eunuchs. They have no voice, until Trump tells them they have one.

It's the silence of the Republican lambs, and it's a national embarrassment.

Sigh ...

- Mark


So Donald Trump has promised to continue dragging Hillary Clinton, and the American political system, through the mud if more indiscreet tapes of him are released.

Well, get ready for the mud run. It looks like more tapes are out there.

The producer of seasons 1 & 2 of The Apprentice tweeted, "I assure you: when it comes to the [Trump tapes] there are far worse"

The issue is the people who worked on the set of The Apprentice and Celebrity Apprentice signed non-disclosure forms, with a $5 million 'leak fee' for sharing footage of Donald Trump while on these programs.

Here's where it gets fun.

The head of a Clinton SuperPAC is indicating that he will cover the fees and legal expenses for show staffers who leak the tapes.

So, yeah, this presidential campaign season might get even lower.

Sigh ...

- Mark

Monday, October 10, 2016


We had our nation's second presidential debate last night. So this morning Cathy Abernathy and I did another post-presidential debate analysis for KGET's Sunrise program. As you can imagine, given Donald Trump's recent comments about kissing and grabbing women by their p***y - whether they want him to or not - our analysis was bound to be more spirited than normal. 

And spirited it was ...

I got it started by pointing out that most normal guys don't talk like Donald Trump did with Billy Bush, primarily because most of us know "we don't live in a Porky's movie" (3:04). 

Image result for porky's movie poster

The lead in for my "Porky's" reference started when I said "this whole notion of locker room banter ... sure that happens, but not every guy is comfortable with this stuff" (2:51). This is definitely the case once we leave high school, or get families ... and most men definitely abandon this mentality by the time we're 59 years old, which is how old Trump was when he made his groping comments.

Later, Cathy would try to claim that the only reason I support Hillary Clinton is because I agree with her on the issues, which is only partially true (I've never been a NAFTA or TPP fan). But there's more. I'm supporting Hillary, and NOT supporting Donald Trump, because as I pointed out at 4:35 into our discussion "Donald Trump's a pig." 

Cathy seemed a little shocked by the characterization, but she shouldn't have been. Trump's long history of bragging about his sexual conquests, his cheating, his comments about women, the lawsuits, etc. make it abundantly clear that Donald Trump has issues. His behavior towards women is not normal. 

Later I tried to establish how Trump's presence on America's presidential stage "was not America's best moment" (5:25) and that suffering through Trump during this election cycle is a kind of political "water torture" for America (6:01).

At the end of the day, what we're learning this election cycle is that by backing a buffoon of a man like Donald Trump the GOP is showing the nation they "hate the Clinton's more than they love this country." They're ready to throw this country towards a man like Trump for no better reason than they despise Bill and Hillary Clinton. 

Whether this makes them part of a basket of deplorables I'm not sure. But one thing is clear: Trump's presence on our presidential stage is a national embarrassment, and we're all going to be better off the farther we get away from this election.

- Mark

Addendum: For those of you in the Kern County and Bakersfield region, Cathy and I will be on tonight's (Oct. 10) program, at 5 pm. 

Friday, October 7, 2016


For reasons tied to stubbornness in the Republican Party, and questions about immediate costs, the United States has not embraced high-speed rail (HSR). This is so in spite of the fact many small town and middle class Americans would benefit immensely from an infrastructure project that has paid dividends around the world. The World Bank recently took a look at HSR projects around the world and, while they acknowledge the start up costs, they summarized:

... high-speed rail is now a tried and tested technology that delivers real transport benefits and can dominate market share against road and airline transport over the medium distances that many inter-city travelers confront.

Unfortunately, while other nations have thousands of miles of HSR lines (with China leading the way), the United States doesn't have a viable or comprehensive HSR program underway. Apart from issues tied to start up costs, the real issue in America is largely political, which is made clear by the actions of Republicans across the country. In the process they have turned hatred for government into opposition to virtually every infrastructure project, like HSR, even if they have demonstrated potential.

The tone of those who oppose HSR has been visceral and in your face, as you can see from the sign below.

Anti-High-Speed Rail sign in Corcoran, California.

Whatever one thinks of the cost of the HSR project, the animated map below shows how HSR would both change and improve travel n the United States ...

- Mark

Wednesday, October 5, 2016


If you watched last night's vice presidential debate you probably (1) saw Sen. Tim Kaine interrupt Gov. Mike Pence early on (kind of a distraction), (2) Gov. Mike Pence run away from Donald Trump and the ugly things that he's said in the past, and (3) learned what most of us already know: vice presidential debates don't change minds, and are largely a waste of time for those who aren't political junkies.

That said (I know, great lead in), Republican Cathy Abernathy and I took a look at last night's vice presidential debate on KGET's Sunrise program this morning.

After I pointed out that "Donald Trump has a Man Crush for Putin" (2:10 into the clip; another "man crush" moment at 5:10) you'll learn from our discussion that Cathy Abernathy still believes Donald Trump wasn't trying to disparage Mexicans when he said most of those crossing the border were rapists and criminals. Cathy's parsing words (hers and Trump's), of course. But doing so allows her to walk past the larger message Trump is sending with his outlandish comments about Mexicans and other outsiders.

And just what is Trump's larger message? Simple. Mexicans, Muslims, and people of color are swarming hoards who are invading America.

Worse, we should all be afraid of these people.

It's this kind of thinking that helps explain why the GOP has such a difficult time recruiting people of color into their political tent.

All of this goes a long way to help explain why Trump's supporters have no problem with Trump's Man Crush on Putin. Simply put, if Trump is OK with Putin, in a strange way, it allows them to accept how Putin's governing style and penchant for going after those that don't fit into his world (journalists, LGBT community, etc.) are just what America needs.

Donald's infatuation with the political strongman in Russia signals to Trump's followers that he's seen a path to righteous nationalism, and America can be saved if we follow him down that path. We just need to trust The Donald.

At the end of the day, most of us see how Trump's Man Crush is really Trump channeling his inner dictator. Unfortunately, for many of Trump's supporters, his inner dictator is seen as a good thing because it means he will put the scary people of color in their place - wherever that might be.

Stay tuned.

- Mark 

Monday, October 3, 2016


This is great. For those of you who missed it, Alec Baldwin nailed it on SNL's Donald Trump vs. Hillary Clinton debate ...

- Mark


So Donald Trump lost almost a billion dollars 1995. He then used that "bad year" in a complex tax shelter scheme to avoid paying taxes on things like profits, salary, and interest income in subsequent years.

In tax speak what Trump experienced in 1995 was a "capital loss" which - because of our generous tax laws for the rich - he's able to "carry forward" as a tax credit in subsequent years.

In plain speak, Donald Trump was granted something akin to a perpetual "get out of jail free" tax card. He was granted this for no other reason than our tax laws and favorable legislation tolerates and even coddles bad and incompetent behavior in the market place.

So this is what we have. Donald Trump made bad business decisions (Trump acknowledges paying too much for things like "trophy properties" and airplanes before 1995). Favorable legislation and subsequent tax law allowed him to use his losses to avoid paying taxes in the years that followed. So, yeah, a tax code that was written to help businesses survive a bad year or two, with tax credits and write-offs, morphed into something that became Donald Trump's tax hammock in perpetuity (David Cay Johnston explains the process here, in "The Art of the Steal").

The reality is we shouldn't be surprised by any of this. Donald Trump is a con man. His wealth is a product of inheritance and privilege. The inheritance we understand. The privilege is a bit more complex, but in real simple terms it's exemplified by how Trump can swindle small businesses while taking advantage of generous tax laws that are only available for those big enough to get Congress to write special financial legislation for them.

What this means is that Donald Trump is the poster child of an economy where gaming the system through shady tax write-offs, stiffing suppliers, legal shell games, and bailouts are accepted practices. Wealth creation is replaced by wealth extraction. This is not how private markets are supposed to work.

I wrote about how markets are supposed to work and how they actually work 5 years ago. I'm re-posting it below, with a few small edits to account for The Donald. Enjoy.


We hear it all the time. Don't interfere with the marketplace. Deregulate. Get the government out of the market. Unfettered competition leads to the best possible outcome for everyone because people rationally pursuing profit will enhance both productivity and quality in the marketplace. Like an "invisible hand" the needs of society would be met. In the end consumers get better products. Producers get more money. Workers earn better wages. Everyone wins. 

At least this was the message many believe Adam Smith, the intellectual godfather of capitalism, told us in The Wealth of Nations (1776). It's this belief system that has fed the free market and deregulation push we've seen over the past 35 years. It's what's pushing us today. Unfortunately, much of what Adam Smith wrote was often misrepresented and taken out of context by many of his followers, including Milton Friedman. It's also one of the reasons I wrote The Myth of the Free Market.

To be sure, Adam Smith argued that the state should stay out of the marketplace. But not because he believed market players should be free to do what they wanted. Rather, Smith believed the government should stay out of the market because it usually intervened on behalf of monopoly and privilege. Smith's message was that we shouldn't allow market players run herd over the rest of us. 

Many of today's market players have no clue about any of this. And it shows. In fact, contrary to popular belief, market players like Donald Trump and those on post-bailout Wall Street ignore - or don't recognize - how they have pushed and benefited from the very visible hand of government supports and subsidies, which Adam Smith feared would happen. 

The bailouts, artificially cheap money, and favorable legislation discussed below are just a small peak into the number of supports the state provides "private" market players so they can be successful in the market place.

Talk about a lack of accountability. One of the cornerstones of a competitive market system is the idea that there would be retribution for stupid decision making. In a real market economy you're supposed to go bankrupt and/or lose your business if you make dumb decisions (like gambling, or paying too much for a casino and old planes). Guess what? Increasingly, for America's biggest market players, it's simply not happening. 

Anyone who argues otherwise is either clueless or on crack

Here's a short list of the bailouts Americans have yawned at or supported since Ronald Reagan's "free market" revolution began in 1980:
* Wall Street / Mexico in 1982.
* Continental Illinois in 1984.
* The Discount Window intervention to save floundering banks in the late 1980s.
* Market support after the October 1987 crash.
* The Savings & Loan debacle of 1989-1992.
* Intervention to save the Bank of New England and Citibank.
* The 1994-1995 Wall Street / Mexico rescue.
* The Asian Currency rescue in the late 1990s.
* The Fed-organized LTCM bailout.

Impressive, isn't it? But know one thing. This list is incomplete. 

In virtually every case above we were told, in one way or another, by the Chicken Little's of the financial world (and Washington) that bailouts and subsidies were necessary, or else "prosperity in our time" could end. Markets would collapse, and middle class Americans would be hurt. So we propped up the stupidity with bailouts, rather than "let the market work." We were saved. 

Then 2008 came along. Oops.

The "Greenspan Put" is perhaps the greatest guaranteed money flood in human history. It all began when Alan Greenspan became chair of the Federal Reserve (1987-2006). Instead of letting market players pay for their market stupidity, Greenspan made the decision to push money into Wall Street - the Greenspan Put - every time things looked bleak, or Wall Street created a mess of things. And he did it by making money available at a cheap price (all the while claiming free market principles). 

Coupled with deregulation, this helped to accelerate the markets appetites for bigger and bigger market bets. It didn't matter to Alan Greenspan that the vast majority of trading isn't done by humans buying and selling shares, but by computers and high frequency traders dealing in ever more complex financial instruments). 

With cheap money so readily available accountability on Wall Street took a back seat to the mentality that the The House was backing the markets bets, so why not bet more. The Greenspan Put continued under Ben Bernanke (with QE I and QE II) and, now, under Janet Yellen

If markets are logical, and market players are rational, someone needs to explain why market players need the very visible hand of the government for this: 

You're not smart enough so ... The 401k was created in 1978 by Congress to encourage workers to invest in the market (by allowing employees to defer paying taxes on income they invest). The rules impose strict penalties for early withdrawal (why do we have penalties if market players are rational?). By enticing investors with tax breaks our financial markets have been given an artificial boost, which is good for portfolio and wealth managers who get paid based on fees and volume managed. Don't believe me? Check out what's happened to market activity and volume traded since the 401k and other "invisible hand" of the market tools were invented by Congress ...

The Helmet Laws for brokers ... NYSE circuit breaks are designed to maintain confidence when markets tank by putting a stop to all trading. Apart from this circuit breaker, market players are also allowed to suspend redemption's - which means not allowing clients to sell their investments - in order to stabilize markets that are in a panic. Both make a travesty of market logic and the code of rationality that we're told dominates the market. It rewards gambling and stupidity by telling brokers "we'll control the panic, even if your incompetence starts it."
The "socialize the losses" law (deduction) ... If you sell a stock at a loss you can deduct it (as a "capital loss") from your tax bill. Nice.

The "carry it forward" tax law (deduction) ... Stock losses can be carried forward for tax purposes. Specifically, a banking stock that collapse can be used to offset gains from more successful ventures, or even a portion of your everyday income. 

From propping up the market with the creation of the 401k, to creating market circuit breakers and suspended redemptions, to socializing market losses over a period of years, one thing is certain: market players don't always have to take it on the chin when they make stupid investment decisions. 

There are many more of these legislative and political gifts. The point is it's hard to argue that people like Donald Trump and the millionaire wunderkinds on Wall Street are rugged individualists going it alone in a jungle-like market environment when we look at all the government created, and taxpayer funded, market supports that are out there. 

In fact, in many ways people like Donald Trump and those working on Wall Street have become a walled off, protected, wards of the state. 

Unfortunately, there are plenty of market players like Donald Trump who are delusional and arrogant enough to believe they're actually market giants, slaying market dragons. In reality, monkeys picking stocks randomly could have made money in this state subsidized market environment, as you can read about here

In fact, in our state supported market environment Donald Trump would probably be worth more than he claims if he had just put his money into an index fund.  

Whether Donald Trump would be worth more if he simply invested in an index fund is not as important as understanding this: If Trump had invested in an index fund he would have saved many creditors and small businesses (that he stiffed) the trouble of having to deal with his bankruptcies and the legal threats he regularly uses to avoid paying his bills.

At the end of the day, people like Donald Trump (and the financial mandarins on Wall Street) are the beneficiaries of a massive legislative and financial group hug that's been provided by Washington over the past 35 years. 

When market players like Donald Trump say "Get government off my back" know one thing: It's a hollow battle cry made by people who realize how the state creates the conditions under which wealth is created, but hope you never find out. 


People like Donald Trump don't want the "government off their back" as Ronald Reagan famously cried. After benefiting from generous tax breaks and trillions in bailout cash, it's clear that Donald Trump and others depend on the state for favorable legislation and economic sustenance.

Without favorable legislation and state subsidies, it's difficult to see them as the "successful" businessmen they claim to be. Donald Trump is the poster child for wealth extraction, not wealth creation.

- Mark

UPDATE: "How a simple rule let Donald Trump turn a $916 million loss into a plus" from the NY Times.