Blog on the Run: Reloaded

Monday, June 23, 2014 6:31 pm

N.C. seeks to immunize pension-fund managers, banks from criminal liability

Really, that’s about the only way you can read this:

In the last few months, there has been increasingpressure on public officials to stop hiding the basic terms of the investment agreements being cemented between governments and Wall Street’s “alternative investment” industry.

That pressure has been intensified, in part, by twosets of recent leaks showing how these alternative investment companies (private equity, hedge funds, venture capital, etc.) are using the secret deals to make hundreds of millions of dollars off taxpayers. It is also in response to the Securities and Exchange Commission recently declaring that many of the stealth schemes may be illegal.

And yet, as the demands for transparency grow louder, a potentially precedent-setting push for even more secrecy is emerging. Pando has learned that legislators in North Carolina — whose $86 billion public pension fund is the 7th largest in America – are proposing to statutorily bar the public from seeing details of the state’s Wall Street transactions for at least a decade. That time frame is significant: according to experts, it would conceal the terms of the investment agreements for longer than the statute of limitations of various securities laws.

In other words, the legislation – which could serve as a model in state legislatures everywhere – would bar the disclosure of the state’s financial transactions until many existing securities laws against financial fraud become unenforceable.

A growing scandal in North Carolina

If the North Carolina Retirement System and its sole trustee, Treasurer Janet Cowell (D), seem familiar to tech readers, that is because the NC system is one of the lead plaintiffs in the class action suit surrounding Facebook’s initial public offering. Additionally, as part of her career in the financial sector, Cowell was the marketing director for the tech-focused VC firm, SJF Ventures.

Like other states, North Carolina has been redacting and/or refusing to release the contractual terms of its pension fund’s massive Wall Street investments, even though the contracts involve public money and a public agency.* In recent months, that practice exploded into a full-fledged political scandal when the State Employees Association of North Carolina released a 147-page report from former SEC investigator Ted Siedle.

The report asserted that under Cowell, up to $30 billion of state money is now being managed by high-risk, high-fee Wall Street firms, and that the state could soon be paying $1 billion a year in fees to those firms. The report also noted that the investment strategy “has underperformed the average public plan by $6.8 billion” and it alleged that Cowell has misled the public about how where exactly she is investing taxpayer dollars. The union has called for a federal investigation, while Cowell has publicly denied the allegations.

Note that it’s state employees, a majority of whom are presumably Democrats, calling for a federal investigation of a Democratic state official.

I don’t know whether the state’s Republicans just haven’t had this issue on their radar, or whether they see a payoff in insulating investment banks and other financial institutions with which the state does business from criminal liability. But either way, their silence is puzzling. And since banks are about as popular with Americans right now as strychnine, this down-low approach by the GOP doesn’t even make political sense.

*This practice appears to this layperson to be a clear violation of North Carolina’s Open Records Law. No exception recognized in the statute to the presumption that a record is public applies to this information. This practice appears to be the equivalent of your stockbroker refusing to tell you where and how he has invested your money: Would you find that arrangement acceptable?

Additional, deeply scary and infuriating background via Yves Smith at Naked Capitalism:

North Carolina’s investment performance in alternative investments is terrible. Of 23 reporting public pension funds, it ranked 21 in real estate and 23 in private equity. Whether due to corruption or incompetence, it is clear the state would have done better and at lower cost buying a mix of index funds. So the notion that these persistent bad results are due to payola is worth taking seriously.

However, the overwhelming majority of abuses Siedle cites [in the report linked above -- Lex], such as charging of dubious fees, pervasive broker-dealer violations, pension fund consultant conflicts of interest, various securities and tax law violations, also take place with investors who have no potential for pay to play to be operating, such as private pension funds, life insurers, and endowments like Harvard that also invest in private equity. We’ve written about many of these bad practices in earlier posts, and have had to stress the degree to which limited partners have deeply internalized the idea that they can get better returns from private equity than from other investment strategies, and therefore they can’t cavil about the terms, since otherwise they won’t be allowed into this club. In keeping, the SEC has said, with uncharacteristic bluntness, that supposedly sophisticated limited partners have entered into agreements which are vague on far too many key terms and weak on investor protections.

Disclosure: Never having worked as a public employee in North Carolina or anywhere else, I have no direct interest in the state’s pension fund; nor, so far as I know, do I have any indirect interest beyond being a North Carolina taxpayer.

Thursday, May 1, 2014 7:54 pm

One rookie-of-the-year teacher walks away

My friend Robert Bell once worked with me at the News & Record before becoming a middle-school teacher. He was, and remains, one hell of a writer. But he’s no longer a teacher. He posted on Facebook to that effect earlier today, and with his gracious permission I’m republishing his post in its entirety. I’ll add nothing except to say that when a teacher of this caliber walks away, our children lose, and too many teachers of this caliber — some of whom teach or have taught  my own kids — are walking away.

* * *

It is odd, surrounded by all this quiet. Oh sure, if you listen – I mean really listen – there’s noise. The hum of the air conditioner, the muted taps of a keyboard outside my office, the distant laugh down the hall. But for the most part there is nothing but quiet, and that is new to me.

There is no Elijah in my face, laughing so hard milk explodes from his nose. There is no Destiny or Tyra to ask me what a boy likes in a girl. I haven’t seen Ben or Brooke in three days. Who will I tell to pull up his drooping pants if there is no Wade? Where is Kevin to politely remind him to keep his feet to himself?

I resigned from my middle school job last month. Looking back, the only thing more difficult than leaving my students was the job itself. On my first day of teaching – an exhilarating, uplifting nine-hour whirlwind of joy – I wondered where this job had been all my life. On my last day, I sat fell into my chair wondering how I lasted so long.

This is not a rant against how teachers are treated like lepers by our governor. His actions and inactions speak for themselves. This is not a screed against our legislators. They are perfectly capable of explaining how, in one session, they cut funding to our children’s education and gave precious tax money to for-profit charter schools while my students are using science textbooks that claim Pluto as the ninth planet.

Instead, this is an elegy to the folks I left behind, the hardest working and least understood professionals I know – your child’s teacher.

Like most jobs, teaching has two versions: The chestnut Hollywood portrays and reality. I fell hard for the Hollywood version. You know, the one where the teacher walks in and instantly a hush falls over the classroom. This is followed by students dutifully pulling out their notebooks and, pencils in hand, wait for those pearls to tumble from my mouth.

Oh, the places we’ll go! The stories we’ll read. There will be lively discussions of Whitman and O. Henry and Poe. Hands will shimmy in the air, their owners eager to share their own wisdom and connections.

Then there’s the other version of teaching I like to call reality. On my first day at my middle school, a father choked his son for leaving his lunch at home. Another student whispered to me she wasn’t wearing any underwear – and that she didn’t have any for the new school year. A third raised his hand and asked me to pronounce the word on the whiteboard: Welcome!

Welcome, indeed. After that first day I realize Whitman and his friends might want to come back in a few months.

Someone a lot smarter than me once described teaching better than I ever could. Imagine a lawyer (or banker or accountant or doctor) showing up for work one morning and finding 32 clients in need of their services. Each client had a different problem and was unable to articulate it. Some were angry they had to be there. Others were thrilled to get away from their homes if only for eight hours a day. Some were quick to explain their needs and desires, but became frustrated when it took so long to get to them. Others were easily distracted. Ready? Learn!

Don’t get me wrong, teaching is not an impossible job, just an incredibly difficult one. I’ve worked with many wonderful teachers who meet the needs of their students every day. And while the high test scores and rookie-of-the-year award were nice, my heart told me I wasn’t one of those teachers.

I dreaded telling my students I was leaving. At the start of the school year I brought in a cake and candles for each class. We closed the blinds and turned off the lights and made a pact around the flickering candles: For better or worse, we were in this school year together. I told them some might grasp the lesson that day and were welcome to move forward. I told them others might need more time – and that was fine, too. But one thing was certain: We were in this together. Nobody was being left behind.

After hearing that I was leaving, Elijah tearfully told me I was breaking up our secret club. I told him he was right. I told him I was sorry. I told him the only reason I would ever leave him was for Kate (a fixture during my after-school tutoring) and the rest of my family.

At the end of the day, Rion scribbled a note and put it on my desk before hurrying out the door to her bus: “Please don’t go, Mr. Bell. I know this letter is not fancy, but it was made with care. You were once like my white father to me. Now you’re like my father. I wish my mom had met you.”

CJ, who never met a lesson that couldn’t be put on pause so he could sketch, drew me a comic strip. I am swinging an oversized pencil at a dragon named Stupid. By the end, Stupid is sprawled out on the ground. Mr. Bell and his full head of hair are smiling and the children are cheering. “Do you get it? Do you get it? Mr. Bell! Met-a-phooor!”

I’m staring at his metaphor right now. It is in my office, my incredibly quiet office, next to the picture of the two of us at a school dance. CJ was nervous about going to the dance. He said the only way he would go was if I went with him. He clung by my side the first 15 minutes. Never saw him the rest of the night.

I knew I would miss CJ and the rest of the kids. I just didn’t think I would miss them this much.

When people asked me what I did for a living I gave them what they wanted to hear: “I’m a teacher,” I’d say.

What I wanted to say is, “What do I do for a living? Every day I walk into a classroom and discover worlds I never knew existed.”

Like CJ’s world, in which his mother keeps him home whenever she’s feeling lonely and depressed. Like Remy’s world, in which he came to this country after watching a warlord shoot his father to death back in Africa. Like Tyra’s world, in which she writes letters every week in class to her father in jail. She’s still waiting on him to write back. Like Angel’s world, in which he has a perfect attendance and regularly stays after school for tutoring – if only to escape going home to Mom and Dad’s arguing. Like Justin’s world, in which he and his two brothers and cousin take turns sleeping on a single bed each night.

A teacher is more than just someone who fills your child with knowledge and makes them “globally competitive,” whatever in the hell that means. They make many of their students happy, well-adjusted human beings and instill in them the audacity to believe they can be more then what they ever dreamed they could be.

Maya Angelou, whose stories we read in class this year, once wrote “of all the needs a lonely child has … the one that must be satisfied, if there is going to be hope and a hope of wholeness, is the unshaking need for an unshakable God.”

I’ll count those 19 months in a classroom a success if just one of my students thought I was their Kingdom Come.

Friday, March 28, 2014 8:57 pm

If only there were a solution; or, Why Pat McCrory and Art Pope need to be horsewhipped

From today’s News & Record print and e-edition (but apparently not from the website, so probably paywalled):

Gov. Pat McCrory on Thursday asked for more belt-tightening within state government as a pre-emptive move to protect the state from a Medicaid shortfall and a fuzzy revenue picture.

In a memorandum to state agencies and their leaders, McCrory said that while the state’s fiscal picture is much improved compared with “a year ago, “the state still needs to exercise restraint for the remainder of the fiscal year,” ending June 30. He wrote a similar directive in March 2013.

McCrory’s state budget office projected this week that Medicaid expenditures could be up to $140 million above the amount the General Assembly authorized.

First of all, “McCrory’s state budget office” is budget director Art Pope, the real governor. McCrory’s just the cabin boy.

Second, so the state might need to spend $140 million above what’s been authorized. Gee. Whocouldaknowed? And if only there some way the state could do something about that without eliminating raises for hard-working state employees, who have seen damn little in the way of raises since the Crash of ’08. There ought to be something we could do, y’know. Hmm. What could it be? And why didn’t the AP and/or the News & Record point that out?

But we continue:

While revenue projections are largely on track to cover this year’s budget, “there is revenue uncertainty for the remainder” of the year, McCrory wrote.

Stop right there, bubba. Both of those things cannot be true simultaneously. McCrory, by whom I mean Pope, is just flat-out lying here and hoping no one will notice. Certainly the AP and the News & Record didn’t.

He also ordered his Cabinet-level agencies to discontinue most salary increases, limit purchases, reduce travel expenditures and reconsider contract work.

Translation: Basically, we’re not just going to screw up Medicaid, we’re going to screw up every other agency, too.

Jesus wept. What they’re doing (and refusing to do that could help) is bad enough. And the news media are giving them a free pass on top of that.

Dear Merciful God, I’ve had a pretty good life, all in all, and so I haven’t asked you for much. And much of what I have asked for, you’ve delivered. But even though you did my family and me quite a solid just today, I’m asking this: Please let Roy Cooper, or some other competent Democrat, run against McCrory in 2016 and whip him like a rented mule. I mean, whip him so badly he needs skin grafts to close all the bloody welts on his ass.

Now, Lord, I grant that’s pretty harsh. But your own son took a brutal flogging en route to saving humankind. Meanwhile, thousands of North Carolinians are doing without health insurance, and thus health care, who wouldn’t have to except that Pat McCrory and Art Pople hate the non-white guy in the White House. And a nontrivial number of those North Carolinians, research shows, are likely to die prematurely because McCrory and Pope are petty, racist sociopaths. So I figured that taking a beating like that wouldn’t fix the damage McCrory will do between now and January 2017. But it might make a lot of suffering people feel a little better and prevent a boatload more suffering in the future.

So if it wouldn’t be too much trouble …

Amen.

Thursday, March 6, 2014 7:57 pm

The effort to help the poor that even the GOP could love, once, is now in their sights

Tim Noah:

President Obama’s new budget increases spending on and expands eligibility for the Earned Income Tax Credit, the largest and most successful government assistance program for the working poor.

The much-praised House GOP tax reform introduced last week would cut the EITC, even though a House GOP report excoriating most federal assistance to the poor singled out the program for applause.

This new partisan difference over the EITC – a program that in the past has been a rare source of bipartisan agreement – speaks volumes about Republicans’ newfound ambivalence toward the working poor.

The EITC was created back in 1975 by Sen. Russell Long, who–despite being the son of populist Louisiana Gov. Huey “Every Man A King” Long – was fairly conservative. The idea was to use government assistance to reward work rather than indolence among the poor; you only got the money if you could show that you had worked.

This conceit had obvious appeal to President Ronald Reagan, who expanded the program, and later to President Bill Clinton, who expanded it much further even as he eliminated “welfare as we know it,” i.e., long-term, no-strings cash assistance to the poor. (The EITC was further expanded under Presidents George W. Bush and Barack Obama.)

Welfare reform should have ended the partisan scrimmage over welfare dependency. Instead, it merely shifted the goalposts. Previously, the GOP had praised the “deserving” (i.e., working) poor even as it derided the “dependent” (i.e., welfare-collecting) poor. But with Clinton’s abolition of long-term assistance and imposition of work requirements, it became more difficult to isolate a class of nonworking, government-dependent poor that Republicans could reliably scapegoat. So they gradually came to rebrand as “dependent” any low-income person who collected government assistance, even if that person also had a job. In effect, conservatives broadened their definition of “welfare” to the breaking point, including food stamps (most of which go to people with jobs), Medicaid (a benefit you collect only if you get sick), and even Pell Grants.

I don’t think the Republicans are “ambivalent” toward the working poor. I think they actively want to kick them harder. They may say otherwise, but by their works ye may know them. North Carolina already has killed its own version of the EITC because our legislature is controlled by sociopaths.

UPDATE, 9:37 p.m.: Forgot the link. It’s there now.

Do you want N.C.’s economic recruiters spending your tax money at Yankee Stadium?

Because if the state GOP’s plans to make the state’s economic-development efforts a public-private “partnership,” we may well have that and other shenanigans to look forward to. It certainly didn’t work out well for the taxpayer in Florida:

CBS 12 News spent hours reviewing 20 months worth of spending at Enterprise Florida and uncovered thousands of dollars spent on sky boxes, steakhouses and at fancy hotels.

Tens of thousands of dollars were spent on credit cards. We weren’t provided the detail on what was purchased.

Our investigation found leaders at Enterprise Florida, the state’s public-private economic development machine, spent more than $21,000 at Yankee Stadium in New York.

They also paid a visit to Cowboys Stadium in Arlington, TX where they dropped more than $7,100. The stadium tour also stopped off in Atlanta, GA for a cost of $4,400. …

Enterprise Florida is tasked with handing out tax dollars to recruit multi-national and global corporations to our area.

A CBS 12 News investigation last November found hundreds of millions of dollars spent by Enterprise Florida since its inception created less than half of the 200,000 jobs initially promised.

State data we reviewed also found millions of dollars in incentives handed over to companies who have employees that sit on the board of directors.

And it turns out, this public private partnership is more of a publicly funded partnership. …

Our review of the records found more than half-a-million dollars charged on American Express and thousands of dollars spent at steak houses, seafood restaurants and lavish hotels.

The “partnership” Gov. Pat McCrory wants is nothing more or less than a license to steal from the poor and the middle class. And I am confident that if our arrangement looks anything like Florida’s, we’ll get the same result Florida did.

(h/t: Billy)

Tuesday, December 10, 2013 7:41 pm

Giving a [bleep] about kids: Dems vs. GOP edition

Mistermix at Balloon Juice:

My dad is a lifelong Democrat because his family felt that Roosevelt and the Democrats gave a [bleep] about their kids during the Depresssion. I’m a Democrat because it’s clear who gives a [bleep] about my kid, and none of them have an R after their name.

They don’t give a [bleep] that hating gays leads to teen suicide.

They don’t give a [bleep] if kids go hungry because food stamps were cut.

They don’t give a [bleep] if teenagers can’t get birth control.

And they certainly don’t give a [bleep] that a kid who has epilepsy, or Crohn’s, will be saddled with a life of worry over whether she’ll be able to buy insurance.

After all the noise over the website dies down, after the Republicans try to shut down the government three more times and vote to repeal another dozen times, this is what’s going to be left for thousands of American families: a man and a party that gave enough of a [bleep] about them to endure a five year temper tantrum from a party that clearly has a broken give-a-[bleep]er when it comes to children.

It’s fine to talk in principle about limited government. (It must be — I do it, although I often mean something by “limited” that is different from what the RWNJs mean.) But when the real-life results of your actions carry an actual and nontrivial body count, you either change your positions or you mark yourself as a sociopath.

Moreover, the real reason why the GOP has carried on a five-year temper tantrum about Obamacare is that they know that if it works — and it is working, even if the website still has bugs — people will embrace it like Social Security and Medicare and the party will be screwed politically for at least a generation.

 

Tuesday, April 2, 2013 10:53 pm

I was right, bitches; or, A Dominionist theocracy is coming to a legislature near you, so GET DRESSED.

Back when Michelle Goldberg’s book “Kingdom Coming,” about the rise of Christian Nationalism in America, was published, I reviewed it for the News & Record and the blog I then wrote for the paper, The Lex Files. As you can see from the comments, as well as from this site, I took a lot of grief for stating, on the basis of my own reporting on the subject and my familiarity with some of Goldberg’s original sources, that there were significant numbers of people in America who wished to turn this country from a secular, constitutional democratic republic to a Dominionist theocracy; that is, a country where the law is based strictly on the Christian Bible.

Impossible, they said.

(You’ll also note that they accused me of saying all evangelical Christians want this. Rather, I said a certain subset of evangelical Christians adhered to that ideology. I didn’t believe all of them did then, I don’t believe that all of them do now, and I said so at the time specifically, not least because Goldberg herself was very careful to draw that distinction.)

Well, as it happens, down in Salisbury, the Rowan County commissioners want to be able to pray to Jesus in their official capacities, and so a bill, House Joint Resolution 494, has been introduced in the N.C. legislature that would allow that and much more besides.

This bill claims that the First Amendment’s ban on government making law “respecting an establishment of religion” applies only to the federal government, not the states, because in the minds of the (blessedly few) 11 sponsors signing on so far, the Fourteenth Amendment, whose equal protection  clause extends the protection of federal law to every citizen of the country, never happened.

It’s tempting to call these people batshit crazy and let it go at that. Tempting though that approach is, however, it lets them off too lightly. This is an attempt to turn one state among 50 in a constitutionally established secular democratic republic into a Dominionist theocracy in violation of the very Constitution the legislators have sworn an oath to uphold. They should be impeached and removed from office. Unfortunately, we don’t impeach legislators in North Carolina because we can’t. The best we could hope for would be for the House to vote to expel the offending members. But it won’t, because whether they’re ready to admit it or not, a majority of the N.C. House, or very close to a majority, thinks this is a great idea.

It would never stand up in court, I’d like to think. But “never” is a long time, and the Dominionists are playing the long game. They must be called out and they must be stopped, if for no other reason that Jesus had very specific notions about where one ought to do one’s praying and it would be a shame if our fellow North Carolinians went to hell for disregarding that directive.

(edited to remove duplicate grad)

Thursday, March 21, 2013 7:35 pm

An imagination beyond one’s tribe

Quote of the day, from Sir Charles at Cogitamus:

I have been a liberal for a long time as have many of the people I’ve known.  And let me assure you, it wasn’t because back in 1980 or 1984 or 1988 all of the cool kids were doing the liberal thing and supporting food stamps.  It was because I — like most people who hung in there during the Reagan years — had the moral imagination to consider what life might have been like if I lost the lottery and was born poor.  It was because a study of history led me to understand how tenuous the climb to middle class status had been for so many people and how much the government giving people a hand up had meant to vast swaths of society.  I was a white male middle class kid, but I understood that the world was bigger than my tribe, a spirit that continues to animate most people on the left.  I did not grow up in an ideological household.  … [My parents] were both very devoted to overall notions of fairness.  (Neither has voted for a Republican since 1976 — I take some of the credit.)  I took that overall spirit of fairness and constructed a political view that struck me as consistent with it — a kind of Rawlsian view of the world long before I ever heard of John Rawls.

Emphasis added, because the concepts included therein are so critically important for a society to function.

“Moral imagination” is just another word for empathy. Without it, we are nothing more or less than sociopaths, we have way too many of those already and we are making more by the day.

The notion of life as lottery is something many conservatives and so-called libertarians find risible. But when you compare social mobility in the U.S. with that of other wealthy Western countries, you find something interesting and disturbing: Only the U.K. has less social mobility than we do.* Parents’ wealth is the biggest single predictor of offspring’s financial success. I suppose it was only coincidence that I learned today that Gov. Pat McCrory’s proposed budget would ax the state’s inheritance tax completely.

History does indeed show that a lot of people are middle-class today only because their ancestors who were not fought to be. The labor movement of the ’30s, the right of women to vote, the civil-rights movement, and perhaps most importantly the desegregation of K-12 schools and higher education in the face of bitter resistance, all played a part in helping to increase the size of the middle class. And it’s no coincidence that all these efforts are under attack today, or that those attacks are funded by a very small number of very wealthy people who think the Constitution mandates a plutocracy. I suppose it is only coincidence, then, that the same gov I mentioned a graf ago is attacking teaching the liberal arts (such as, oh, say, history) in the UNC system.

Yes, by hook and by crook, the gov and the thugs who fund him seem bent on keeping the proles proles and turning more non-proles into proles. Sir Charles suggests above that they do not understand that the world is bigger than their tribe. I think the problem is bigger than that. I think they understand and actively seek to screw everyone who is not part of their tribe, because this hypothesis is the simplest explanation for what is otherwise a set of decisions difficult to justify on grounds of fairness, practicality or public good.

Evidence to the contrary is welcome, but I’m not holding my breath.

*Corak, Miles. 2006. “Do Poor Children Become Poor Adults? Lessons from a Cross Country Comparison of Generational Earnings Mobility.” Research on Economic Inequality, 13 no. 1: 143-188.

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