FOR MY STUDENTS ...

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- Mark

FUNNY MONEY

Jon Stewart demonstrates how congressional republicans think $47 billion in millionaire money is a "mere pittance" but that $363 million in Planned Parenthood money is somehow "a lot" of money.

The Daily Show
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- Mark

COSMIC JUSTICE

At the end of the day it's nice to see this kind of justice ...



Best line of the day on the this (from Kathy), "Lives up to the name BMW: Break My Windows" ... and kudos to Michael for the picture.

- Mark

THE SUPER RICH HAVE NOT EARNED THEIR MONEY ...

Those of you who read this blog regularly (or my book) won't find anything new in this piece, which I synopsize below. It says in plain English that favorable legislation, industry bailouts, market subsidies, wealth extraction, and simple greed are now the backbone behind modern markets in America. It just says it in another way.  

From Paul Buchheit at Common Dreams.org, we get five reasons that help explain how the super rich have not earned their money.


1. They've Taken All the Middle Class Wage Increases
In 1980 the richest 1% of America took one of every fifteen post-tax income dollars. Now, according to IRS figures, they take THREE of every fifteen (doc) post-tax income dollars. They've tripled their cut of America's income pie. That's a trillion extra dollars a year ...

2. They've Mismanaged Key American Industries
We have the most expensive health care system in the world. Failing banks have survived because of taxpayer bailouts. Management-approved shortcuts have led to workplace deaths and chemical leak disasters. Companies lobby for cap and trade laws so their profits can pay for their pollution ...

3. They've Benefited from 50 Years of Public Research
The very rich have made their fortunes in good part because of taxpayer-funded research at the Defense Advanced Research Projects Agency (the Internet), the National Institute of Health, the National Science Foundation, and numerous other government agencies ...

4. They've Increased Their Incomes By Not Paying Taxes
The richest 10% own 80% of the stock market, providing billions in "unearned income" that is taxed at less than half the rate of income earned through real work ...

5. They've Contributed Little to Society
The richest individuals and corporations have shown little regard for the majority of Americans who depend on sound financial management for their economic security. According to sources such as the New York Times and ProPublica, Wall Street firms including JPMorgan, Citigroup, Bank of America, and Goldman Sachs have been repeatedly charged with fraud only to avoid punishment by paying a fraction of their profits in fines ...


What all of this points to is that many of our modern "rugged individualists" do NOT represent the go-it-alone market entrepreneur many like to believe exists and dominate our market system. When it comes to making the magic of the market work, there are numerous (and I mean numerous) factors at work.

You can read Bruchheit's entire piece, with links, here.

- Mark

THE GOP'S STOOGE-LIKE CULTURE OF DECEPTION

Over a year ago I wrote an op-ed piece describing what Republicans believed were the causes behind the 2008 market collapse. I wrote how the GOP members of the Financial Crisis Inquiry Commission (FCIC) issued a "primer" that deliberately left out the words "Wall Street," "deregulation," "shadow banking," and "interconnection."

I then asked "can you imagine getting handed a welfare fraud case then deciding not to use the words 'welfare' or 'fraud' during the investigation"? This kind of thinking is a blueprint for disaster ...

What we learned from the GOP sponsored report is that republican FCIC commission members - which included Bakersfield's own Bill Thomas - are more interested in establishing a political narrative than finding the truth. Their report went out of its way to blame the government for the reckless gambling and greed pursued by private investors and Wall Street.

Simply put, the Republican report on the 2008 market collapse was a stooge-like hack job that was deliberately designed to mislead and confuse the public.

And the GOP members of the FCIC were more than happy to drive America into it's little cul-de-sac of ignorance.

Well, brace yourselves. We have it's functional equivalent; only this time it deals with the health care legislation passed by the Obama administration. And it involves another GOP attempt to deliberately confuse the issue.

In this case a Mr. Charles Blahous was appointed to serve as one of the Republican trustees of the Medicare and Social Security programs. As a board member of Medicare Mr. Blahous recently issued a report that said President Obama's health care program would cost more money than the CBO originally estimated. His report was published through the Mercatus Center (yes, another conservative Koch-funded center). Blahous claimed:

President Obama’s landmark health-care initiative, long touted as a means to control costs, will actually add more than $340 billion to the nation’s budget. 

Stop the presses ... heady stuff, don't you think? Think again.

Blahous achieves his smoke & mirrors report by using a simple accounting trick. Without getting into the details (it's quite confusing) the logic is akin to you leaving a job that pays $25,000 a year to go to college, then having your neighbor ignore the new better paying job you have lined up to say, "Look at how much money you lost out on by going to school ... going to college actually cost your money. You're a loser for throwing all that money away."

Yeah, the story is a bit more complicated, but the logic is really that silly.

But it doesn't matter. Blahous' report made the papers, which included the Washington Post. Mission accomplished. Time for a toast ...

At the end of the day, we all need to recognize that many policymakers on the right have had serious trouble with math, the truth, simple facts, understanding budgets, and even following the law. It's almost as if the laws of logic and math don't apply in their universe.

Then again, what do you expect from a political party that actually produced a budget with no numbers ...




- Mark

UPDATE: I received a comment on the health care claims of the Obama administration. In a few words, the commentator cites a conservative blog to make the claim that the Obama administration is double-counting. This explains why their savings projections over the long haul look so strong. Ergo, everyone deceives, including Obama. Two wrongs make a right (wrong?), so nobody wins. Yay. Obama lies.

However, there's a problem. The double counting argument is an old one and has been debunked on numerous occastions.

Perhaps the best way to explain how the math is done, and why someone might think they can make a double counting charge is that they don't understand that "when a baseball player hits a home run: it adds to his team's score and also improves his batting average. Neither situation involves double-counting."

Put another way, there's no sea legs to the double counting whale of a story used by the GOP and conservative pundits. It only has a shelf life because conservative blogs, the far right noise machine, and the GOP need ammo - true or false - to make sure President Obama is a failure and liar in the eyes of their audience and constituents.

Anyways, I'm not publishing the comment from the writer because the guy who wrote is actually a nice guy, and friend from another life. But here's my response to him.

... I could post your comments, but it has several problems. First, the CBO report you cite is from a 2009 conservative blog post. It's primary message says that a CBO memo, which is cited by the Chamber of Commerce, does not buy into President Obama's accounting methods. If you go to the link [on the blog you cite] the Chamber post is no longer available. Not good. But this isn't the real issue. One of the problems with relying on these blogs is that they don't tell you that what you're stating about the accounting is not - and has not been - unusual. Dems and Republicans have used these accounting methods for years, which the CBO has signed off on, and confirms. If you had a CBO report saying otherwise this would make a difference. Instead, you cite a blog that cites another blog, which no longer has the link to the 2009 Chamber of Commerce post (and link) it cites. If you want me to post your comments anyways, I'll do so.

ANOTHER SOURCE OF CORPORATE PROFITS ...

This is a follow up to my earlier (Tuesday) post "One Source of Corporate Profits" ...

Since the early-1980s the manufacturing sector in America has produced more and more with fewer workers.

Does this mean workers on the factory floor who are helping to produce more are making more money?

No ...

When you consider that the very adaptable guy on the shop floor has had as big a hand increasing the productivity of America's manufacturing sector (as other factors) one has to wonder why the American worker is not being compensated in a way that matches the productivity gains of their industry.

Put another way, someone has be be getting the financial gains the modern worker is helping to produce but is not seeing in their wages.

Throw in the fact that corporate America's percentage contribution to national revenue over the past 60 years has been drastically reduced, one really doesn't have to ask why corporate profits (and CEO salaries) are so high ...

- Mark

ONE SOURCE OF CORPORATE PROFITS ...

"... every shilling with which they overburden the inferior number, is a shilling saved to their own pockets."

- James Madison, Federalist #10.

- Mark

In the FYI Department: Corporate taxes as a percentage of government revenue actually started dropping (to 27.3%) by 1955. Corporate taxes as a percentage of GDP (yes, there's a difference) dropped from 6.1% in 1952  to about 1.3% in 2011. Guess who gets to make up the difference?

UPDATE: And let's not forget this ... 26 corporations paid no federal taxes between 2008 and 2010 in spite of $205 billion in pretax profits.

UPDATE II: For your friends who don't believe anything unless it's on Fox News, here's the amount of revenue by source since 1934. Be sure to have them explain to you why corporate tax receipts have effectively dropped (collapsed?) as a source of revenue while individual income tax receipts and social insurance/retirement receipts  have climbed over the years. Then ask them what affect this might have on corporate profits. Better yet, ask them how this might impact yearly budgets, and our national debt.

THESE REPUBLICANS UNDERSTAND FREE MARKET MYTHS

Get government off my back? Hardly (as I've pointed out previously). Check out what this republican business owner thinks of government supported Ex-Im Bank lending programs ...

“There’s not a bank in the United States that’s going to loan money to that customer of mine in Argentina to buy my airplane,” said David Ickert, vice president of finance at Air Tractor, which makes crop-dusting and firefighting airplanes in Olney, Tex. “There is not a free-market system that operates like that. It does not exist. We need the Ex-Im Bank, period.”

Long story short? Industry, Wall Street and all types of business owners work the system in order to make an extra buck. From subsidies to favorable legislation and bailouts, they all work to sustain our "free market" system. Getting certified as a certain type of business helps too. Here's a partial list of what helps qualify you as a small businesses, which are necessary for government subsidies.

Read what other private sector republicans really think of government assistance, when it comes to their business interests, here.

- Mark

RYAN'S BUDGET "MAGIC" ... IT'S REALLY MORE GOP BUDGET NONSENSE

First we had Ronald Reagan’s budget projections. It relied on budget math that resembled - as George H.W. Bush (President #41) so eloquently put it - "voodoo, economics." It was some serious voodoo.

Reagan nearly tripled our national debt, and cleared the path for the gradual deregulation of Wall Street.

Then we had George W. Bush (President #43). He low-balled the actual cost of tax cuts, lied about the costs of the Medicare Part "D" programs, and misled everyone about the costs for his reckless wars of choice. He liked to pretend the costs would not be permanent, then stood by as they became permanent. He left office playing possum while a deregulated Wall Street ran herd over America in 2008.

We're still paying the price. Nice.

Then we had the GOP's infamous budget with no numbers in 2010. Yeah, that's right. A budget with no numbers. Perhaps it's because they can't do the math. At least it was balanced, right?

Anyways, now we have Congressman Paul Ryan, who has a long history of living in a financial dream world. Once again he's proposed a completely irresponsible budget based on Alice in Wonderland projections. To be sure, Ryan claims to have a secret plan to raise trillions of dollars in revenue. But then - like Joe McCarthy during the 1950s - he refuses to let the rest of America in on his top secret information.

The suspense is killing me.

Still, our Republican-led Congress went along with Paul Ryan's budget nonsense, and passed his make believe budget along party lines. Incredible.

No wonder President Obama is calling Ryan's budget plan a Trojan horse. Like the GOP's plan from last year, its designed to transfer more money to the rich (with more tax cuts), while gutting America's social contract with the middle class (the same one that allowed Rep. Ryan to accumulate enough social security money from his Father's death to fund his years at a public college).

You can read all about Ryan's budget nonsense here. Or, to save you some time, you can just read this ...

My question is this: Why does anyone take these guys seriously when it comes to budgets?

- Mark

FEDERAL RESERVE SUPPORTS MASK LARGER PROBLEM(S)

I've been saying this for some time now. The Federal Reserve has been helping to manage and keep our economy afloat for years. In the modern era, when the Federal Reserve (i.e. the Fed) intervenes in the economy it does so in ways that props up the market, which helps keep our economy moving along. It did so with trillion dollar money dumps immediately after the market collapse of 2008. It continues to do so with other market supporting tools today.

The problem with their actions is that they are not being done to clean out the market imperfections that brought us the 2008 market collapse. Instead, we're getting market infected band aids that are simply masking larger problems.

This is a distinct shift from the #1 job of any central bank, which is to guard the integrity of the currency.

Helping us to understand the Fed's actions is this article, "Measuring the Effect of the Zero Lower Bound on Medium- and Longer-Term Interest Rates." In the article, authors Eric Swanson and John Williams demonstrate that Fed interest rate policies, and their purchases of bonds and securities, have been very effective at managing market expectations. This has worked to keep our economy moving along, as I've pointed out many times (with the Fed's Quantitative Easing I, Quantitative Easing II, and Quantitative Easing III  programs).  
 
These activities have worked so well that ordinary Americans not only can't see that there is no real free market, but they no longer care to look for the man behind the curtain.
 

 
   
The problem with this is that we now have the appearance of normalcy, so we keep on dancing towards Emerald City, as if everything is fine. 
 
 

 
But things aren't OK. We're living off of borrowed time. History's whispering in our ear, but we don't seem to see or care about the coming calamity.

I'll have more to say about this in a coming post, later this week.

- Mark

UPDATE: The CEO and co-CIO of PIMCO, Mohamed A. El-Erian, agrees with me that market valuations are dependent on central bank policies. Specifically, what's been helping to keep markets afloat are the money dumps (or, as El-Erian puts it, the "aggressive provision of liquidity") from the Federal Reserve and the European Central Bank.