A LIVING WAGE, OR WELFARE? YOU MAKE THE CALL

If you say neither one, then you're part of the problem. Seriously. 

- Mark

SUNDAY READING (April 26, 2015)

A guide to the billionaires bankrolling the GOP candidates (The Atlantic).

Koch group sends envoy to Rome to convince the Pope to shut up about climate change (Addicting Info).

White fragility: Why it's so hard to talk to white people about racism (Good Men Project).

Scientists have found a 10 million gallon 'bath mat' of oil on the floor of the Gulf of Mexico (Oil Price).


JUST NOT RIGHT
Corporations now spend more money lobbying Congress than taxpayers spend funding Congress (Vox).

FBI admits flaws in hair analysis over decades (Washington Post).

Off the grid: Exonerated death-row inmate receives no compensation (Ora TV).

Some historical perspective ... Have you ever heard of the Ludlow Massacre? You might be shocked when you see what happened (AFL-CIO).


MARKET MYTHS IN AMERICA
The American Dream is a myth, says Nobel-prize winner (CNN Money).

How the new "flexible" economy is making workers' lives hell (Robert Reich).


SOME GOOD NEWS
Justice Department sues Quicken Loans over mortgages (NY Times).

Dahr Jamail: El Salvador farmers successfully defy Monsanto (Truth Out).

Right after announcing he was taking a pay cut to raise employees' salaries, business is booming (Upworthy).

Crackdown on Apple in Ireland opens front on tax avoidance war (Bloomberg Business).


WHAT YOU NEED TO KNOW ABOUT THE TRANS-PACIFIC PARTNERSHIP
Why the Trans-Pacific Partnership agreement is a pending disaster (Robert Reich).

AFL-CIO head Richard Trumka explains why labor unions hate Obama's trade deal (Vox).

The TPP: Toward Absolute Capitalism (Naked Capitalism).

Elizabeth Warren tells Obama to put up or shut up on trade deal (Huffington Post).

Bill Black: Obama & TPP - Everyone that doeth evil hateth the light (Naked Capitalism).

Joe Firestone: Another danger of the TPP: It sacrifices monetary sovereignty (Naked Capitalism).


FROM THE ANIMAL KINGDOM
Western black rhino officially declared extinct (11 Alive).

Bomb sniffing dogs detect prostrate cancer with more than 95% accuracy (IFL Science).

Protected wild horse dying for ranchers' profit (The Daily Beast).

Recently spotted 103-year-old orca is bad news for Sea World - Here's why (The Dodo).

Sick, starving sea lion pups wash up in record numbers on California coast (Sacramento Bee).

Dead dolphins in Fukushima stranding found with white radiated lungs (Your News Wire).


FROM THE CLOWN KINGDOM
Tony Perkins: Obama and gay rights movement inspire ISIS to murder Christians (Right Wing Watch).

Paul Ryan: Poor kids should go hungry so they know they're loved (Daily Kos).

Texas Senate votes to abolish renewable energy programs (Texas Vox).

Tennessee lawmaker (a female) tables abortion bill exceptions because rape and incest are 'not verifiable' (Raw Story).


WHAT'S REALLY UNDERMINING OUR REPUBLIC
The unholy alliance between Fox News and the 1 percent can no longer stand (Salon).

Republican religious fanatics pose a much bigger threat to our country than ISIS (Forward Progress).

What Texas voting laws really amount to, and what they defend: "We don't want Democrats to vote" (Daily Kos).

Mentally ill homeless man severely beaten by police because his beach umbrella was too big (The Free Thought Project).


MISCELLANEOUS
Hyper-accurate atomic clock won't lose a second in 15 billion years (Los Angeles Times).

Research linking autism to vaccines is even more bogus than you think (Vox).

The sun must go down on the Patriot Act (ACLU).

Anonymous declares cyber war on ISIS Twitter users (Russian Times).

- Mark

TWO SPIRITS ... IN AMERICA'S ANCIENT CULTURE

From PBS, and the Independent Lense ...

When people in traditional Navajo culture are categorized as gender-variant (or bi-sexual) those individuals are described as people of two-spirits. Of the culture's four basic genders, it's the two-spirited who are honored and considered spiritually gifted.

Two spirits ... I like it.

- Mark

MOST HONEST POLITICAL AD, EVER (It's so good you could argue it's not a parody)

Now, this is political parody at its finest ...

- Mark 

THE TRANS-PACIFIC PARTNERSHIP IS NOT ABOUT FREE TRADE, OR EVEN FAIR TRADE

I wrote about the Trans-Pacific Partnership (TPP) over a year ago. Comparing the TPP to the North American Free Trade Agreement (NAFTA) - which I wrote about over 25 years ago (it's in Spanish) - I make it clear that the TPP is not about free trade. How can it be about free trade when one of the primary factors of production, labor, is no where near as mobile or exchange ready as the other two factors, land and capital?

In reality the TPP is all about going after and undermining the rights of labor, while subsidizing and protecting the profits of a global corporate class. The NY Times helps start the discussion on this point ...

An ambitious 12-nation trade accord pushed byPresident Obama would allow foreign corporations to sue the United States government for actions that undermine their investment “expectations” and hurt their business, according to a classified document.

How can the interests of foreign corporations trump U.S. law and state sovereignty, you ask? Very simple. According to Art. VI of the Constitution,

... This Constitution, and the laws of the United States which shall be made in pursuance thereof; and all treaties made, or which shall be made, under the authority of the United States, shall be the supreme law of the land; and the judges in every state shall be bound thereby, anything in the Constitution or laws of any State to the contrary notwithstanding.

You can read the NY Times piece here. There's a video on the topic here.

- Mark 

READING BEFORE THE WEEKEND (4-23-15)

'The blob' in Pacific Ocean might be to blame for California drought, erratic U.S. weather - studies suggest (Russian Times).

Republicans push for $269 billion handout for heirs and heiresses (Huffington Post).

The childhood Kevin Spacey endured under his American-Nazi father (Movie Pilot).

Jon Stewart goes after Dick Cheney, big time (Daily Kos).


WHAT'S WRONG WITH OUR MARKETS
Rise of the Crony Wars ... Bank of England asks why Buffet's Berkshire Hathaway is not too big to fail (Zero Hedge).

Corporate welfare in the federal budget (CATO Institute).

Walmart fined $4.8 million for failure to pay overtime (Inquisitr).

Walmart closed store that voted to unionize and now they must compensate the workers (ATTP).


CORPORATE SECRECY
At U.S. companies, time to coax the directors into talking (NY Times).

Despite federal regulation, CEO-worker pay gap data remains hidden (NY Times).


IDIOT WATCH
Bachmann: Rapture imminent thanks to gay marriage & Obama (Right Wing Watch).

Tony Perkins: Netanyahu defeat could have ushered in the end of times (Right Wing Watch).

James Dobson: Gay marriage will lead to civil war (Right Wing Watch).

Roy Moore compares anti-gay fight to resisting slavery & segregation (Right Wing Watch).

Marco Rubio's deranged religion, Ted Cruz's bizarre faith: Our would-be presidents are God-fearing clowns (Salon).


EURO CRISIS READY FOR CONTAGION?
Greek debt crisis coming to a head - Contagion (Zero Hedge)?

Europe has floated border and capital controls before ... just three years ago (Zero Hedge).

Lehman Brothers failed when it was leveraged at a 30 to 1 ratio ... which makes the suggestion that the European banking system is leveraged at a 26 to 1 ratio a serious matter (Graham Summers).


DOLLAR DENOMINATED COLLAPSE (via Zero Hedge)
The collapse of the petrodollar: Oil exporters are dumping U.S. assets at a record pace (Zero Hedge).

America, meet your brand new biggest creditor ... Japan (Zero Hedge).

China takes aim at dollar reserve status: Promotes Yuan in Investment Bank (Zero Hedge).


MISCELLANEOUS

Yes, energy companies did manipulate market prices during California blackouts ... U.S. top court allows antitrust claims over natural gas prices (Reuters).

Driver's license suspensions creates cycle of debt (NY Times).

Iran nuclear deal: A definitive guide (Harvard Kennedy School).

The crowning glory of Keynesianism (Zero Hedge).

- Mark

FINANCIAL ADVISERS & BROKER-DEALERS STILL RIPPING OFF CLIENTS? IT WOULD APPEAR THAT WAY

So I'm reading the Securities and Exchange Commission's (SEC) 2011 "Study on Investment Advisers and Broker-Dealers." After 2008 so many shady deals and self-serving transactions were discovered on the part of Wall Street that one of the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 was for the SEC to produce a study on how broker-dealers (traders) and investment advisers operated.

The goal of the study is help guide Congress as it works to protect the American consumer from traders and advisers who might be inclined to put their interests ahead of their clients. Before discussing what caught my eye in the 2011 SEC study a little history explaining why traders and advisers need to be regulated is in order here.

What's presented below offers us some jargon free historical perspective, and is drawn from a post I did on the topic more than 3 years ago.

WHEN BROKER-DEALERS GO BAD
Once upon a time there was a big problem on Wall Street. But it wasn't 1929. It was 1968. And the problem would persist until 1970. More than 40 years ago broker-dealers who over saw individual investment portfolios decided that it would be a good idea to use the assets in client accounts as collateral for their personal business deals.

So, for example, if you had $500,000 invested with a Wall Street firm they would use your assets (mostly securities) as collateral for their own investment purposes.

The idea was that they would put up your assets as collateral, take out a loan, invest that money, make a quick killing, and then return the asset before anyone knew what happened. Shear brilliance, wouldn't you say?

Anyways, in part because of the increased number of trades being made at the time, major market players - but especially the broker-dealers - found it difficult to keep track of all the transactions (it was before computers and automation dominated the day). No one really knew who had what. This was OK by many broker-dealers because they didn't really want their clients (or the Feds) to know what they were up to (proprietary information, you know).

Because market players weren't offering up their own assets as collateral they made big bets. Needles to say, they were also reckless. As the brilliant schemes of broker-dealers began to collapse, a large number of their client's assets (i.e. securities) were seized and sold. After the dust settled it was discovered that big chunks of customer accounts - many of whose assets were stuffed with fully paid securities - had disappeared.

Wow. As Yogi Berra might have said, it could be déjà vu all over again.

THE AFTERMATH ... MORE TOOTHLESS REGULATION (again)?
Banks who had granted loans to broker-dealers had cashed in the collateral. Broker-dealer clients lost millions. Many Wall Street firms who had either participated or winked and nodded at the activities crashed too.

In fact, more than a dozen New York Stock Exchange firms failed (many because their "back offices" couldn't keep up). Losses exceeded $100 million. To stop the bleeding of public confidence swift action was taken to prop up the securities industry. Funds were pooled from industry survivors to help compensate clients who had been cheated. But this was just the beginning.

To protect the public Congress enacted the Securities Investment Protection Act (SIPA) in 1970 which, generally speaking, is the cornerstone of Rule 15c3-3 for the Securities Exchange Commission (SEC).

Among the changes that Rule 15c3-3 did was:

* Segregate Accounts: SIPA mandated that fully paid off securities in a customer's account be kept separate from client assets that have been used as collateral, or that have not been fully paid off (i.e. purchased on margin).
* Reserve Requirement / Net Capital Rule: SIPA mandated that accounts have enough liquid assets on hand. This meant implementing a requirement that broker-dealers had to tabulate how much a client's portfolio was worth in the market, and then limited how much could be borrowed against those assets (about 8-15 times the total value; this is the "net capital" rule).
* Securities Investor Protection Corporation (SIPC): SIPC is a federally mandated, member-funded, corporation that protects securities investors if their broker-dealer cheats them or goes under. In many ways, SIPC is an insurance program for holders of securities.

Well, guess what? Because of deregulation (especially with reference to reserve requirements in 2004), much of what SIPA was supposed to do was undermined. To be sure, SIPA is still there. But the spirit of the law was - and has been - turned into a cruel joke. This is what makes the SEC's 2011 study so interesting.

THE SEC's 2011 STUDY
What caught my eye in the SEC's 2011 study is very simple. Here it is, from page 165 in the conclusion:

Retail customers should not have to parse through legal distinctions to determine whether the advice they receive was provided in accordance with their expectations. Instead, retail customers should be protected uniformly when receiving personalized investment advice or recommendations about securities regardless of whether they choose to work with an investment adviser or a broker-dealer. 

In plain English, the above is SEC-speak for, "you as a client shouldn't have to worry that your broker-dealer or investment adviser might actually be using your account for their own benefit; nor should you have to worry if they're taking your money and using it to purchase the toxic instruments and financial crap that other, bigger, clients are trying to dump on to other portfolios."

Yeah, that's right. Even after 2008 the SEC is still concerned that broker-dealers and financial advisers - hiding behind legal walls created and maintained by Congress - might be ripping off unsuspecting clients who know little about how market structures, or how market players operate. And, yes, those unsuspecting clients include people like you and me.

Worse, what they're doing is happening on a colossal level.

- Mark

The SEC's 2011 study ...

  913 Study Final

THE UGLY SIDE OF CORPORATE WELFARE

Via Huffington Post ...

WELFARE: THE DIRTY SIDE OF CORPORATE AMERICA

When you hear the term "welfare" or "welfare reform" what comes to mind? If you are like most people, you conjure up images of people who are getting checks or food assistance each month. You may think of the many children who get assistance, or the millions of working families that get some sort of financial aid to help make ends meet each month. But what you may be surprised to know is that a heck of a lot of money gets spent in this country each year in the form of corporate welfare.

Corporate welfare takes a big bite out of our country's finances each year. In fact, it's estimated by the CATO Institute, that $100 billion per year is spent on corporate welfare in America. Yes, that's billion. It's a big problem that the country faces, and yet it's one you barely ever hear about.

Why does corporate welfare pose such a problem? There are a lot of reasons, including:

• Corporate welfare goes to businesses that are usually failing or being mismanaged somewhere along the pipeline. Just because money is being thrown at a business to help it stay afloat does not mean that those issues are going to be addressed so that the problem doesn't happen again. Case in point - Enron. They received billions in corporate welfare, and we all know how that story ended.
• We as a people usually have no say over which companies deserve the corporate welfare. How many people were excited to bail out the banks when the mortgage crisis hit? The banks were bailed out with billions in corporate welfare. Meanwhile, millions of homeowners got foreclosure notices. Nobody came along to bail all those people out of the same mess.
• When it comes to what businesses will get corporate welfare, there may also be some race issues. There are questions of whether or not the corporate welfare being given out is race-neutral or if particular races and ethnic groups are being overlooked for the funding.
• When people talk about making cuts in welfare, especially during an election year, they are usually talking about social programs. Those social programs are in place to help the people, just like you and I, who are trying to make their way in America and need a little extra help. Rarely do you hear someone suggest that corporate welfare allocations should be cut, or even examined. It's as if it is a given that businesses deserve a financial crutch to stay afloat. Seems to me like this may be in direct conflict with the free enterprise business system that our country is known for.

Can the country afford to keep spending $100 billion per year to keep certain businesses afloat? No, not when we have the financial issues we do and need to make cuts to the budget wherever we can. Rather than focusing on making cuts to social programs, which actually help the people, politicians need to start taking a look at the cuts they can make in corporate welfare. Many of the businesses they are giving it to are making poor choices to begin with, have CEO's making millions per year, and are wasting the funds left and right.

Corporate welfare is something we rarely see, but that we all feel. It puts a strain on our society and does not always come back to help the little people. This is an issue that both political parties need to take into account and think about the people, rather than the big businesses that will go on to provide them with large contributions later, or will spend a lot of money lobbying.

The next time you hear someone talking about making cuts in welfare or discussing "welfare reform," ask them if they are referring to those in corporate America to keep mismanaged and failing businesses afloat, or the ones that are helping the people of America to survive. There's a good chance, like most people, their mind will not have even thought of the corporate welfare. But by putting the thought in their head, perhaps we can begin to make some positive changes in this area.

Follow Matthew Lynch, Ed.D. on Twitter: www.twitter.com/lynch39083

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For more on the issue, you can take a look at what I wrote about corporate welfare almost two years ago. It's one of my most popular posts.

- Mark

CABRILLO COLLEGE PROJECT ... ENGINEERING ABROAD, JUST CLICK AND "LIKE"

This is a great project that deserves support. 

My nephew spent some time in Guatemala during fall 2014 with his engineering colleagues from Cabrillo College (Santa Cruz County). This is what they did ...

The Engineering Abroad Program at Cabrillo College is in a contest to win funds for their program. All they need is for you to "like" their Guatemala 2014 project, which you can access and like here. 

In the FYI department, I started my college career at Cabrillo College in 1979. So, please, like the video, and like often :-)

- Mark

WALL STREET: From "L'État, c'est moi" to "L'État est le mien"

Back in January, when the House of Representatives passed a GOP-led bill that crippled Wall Street reforms, I thought back to an earlier post of mine. In that post I wrote about Wall Street gaining so much control over Congress that it has effectively assumed the prerogatives of the state. Worse, like France's Louis XIV, Wall Street now acts as if it is the state. It's time to update that post.

During his reign as the King of France (1643-1715) Louis XIV is said to have remarked, "L'État, c'est moi" ... or "I am the State." The implications were clear: Bestowed with the divine right to rule, as head of state Louis XIV could draw on the resources of the nation to do what he wanted because his best interests, it was believed, served France's best interests.

There were no countervailing powers to speak of domestically. Merchants vied for royal favors. Commoners sought out the benefits of the royal touch. Because there were few checks on his actions, whether he actually uttered the words "L'État, c'est moi"  or not, Louis XIV was the French state.

Fast forward almost 300 years and we find ourselves in a not too dissimilar - albeit twisted - situation. Today our Too Big To Fail (TBTF) financial institutions can draw on the resources of the state, almost at will. This has especially been the case when they make poor decisions. From legislated bailouts and long-standing subsidies, to trillion dollar market guarantees and relentless tax breaks, Wall Street is running the show in Washington.

We should kid ourselves no longer. Wall Street effectively owns the state.

The ability of our TBTF institutions to push Congress around, and to secure what they want after making a mess of things, is clear from this past winter's GOP-led legislation. From delaying the Volcker Rule (again), to watering down private equity rules and loosening rules on derivative markets, Wall Street is acting as if the U.S. Congress is staffed by their errand boys. As I discussed at the end of chapter 10 in The Myth of the Free Market:

It’s at this point [America's financial institutions] have the power to “raise revenue” by imposing on the state ... taxing it's resources through credit extensions, bailouts, transfer payments, and favorable legislation, among others. This type of control and influence over the state ... is akin to the systematic poaching of state prerogatives. History and common sense tell us this should not happen. Recent developments, however, tell us it is now an accepted practice that raises few eyebrows.

Think about it. Wall Street now has the power to raise revenue (from bailouts), tax our resources (through subsidies & write-offs), and to secure favorable legislation (from legal protections to off-shore gimmicks and other market guarantees).

Worse, they can now scare off legislation designed to reign in their excesses because members of Congress are afraid of Wall Street's moneyed wrath. Citizen's United has helped to insure this reality. Campaign donations withheld, or sent to political opponents, is a powerful weapon.

It really doesn't matter how many times the President or members of Congress say "never again." We all know they're lying to themselves, and to America.

Under the current mind-set, any TBTF financial institution can tax the resources of the state to serve their interests. While American families saw their homes and jobs go up in smoke during the 2008 market meltdown Wall Street and our TBTF banks were rescued and showered with taxpayer-backed credits and loans.

The threat of economic meltdown has become a politically accepted form of financial extortion for America's financial sector. This helps explain why we've embraced market subsidizing debt and other market activities that do little more than extract wealth from the economy, while putting the nation deeper into a debt-drenched mud pit.

The demands of Wall Street, and their TBTF financial institutions, have moved beyond the control of the modern nation-state. In many respects, Wall Street can now declare "L'État, c'est moi" ... and perhaps even "l'état est le mien."

- Mark