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 15, 2014 12:18 pm

Stressing the country out; or, Tim Geithner should have been fired about umpty-‘leven years ago

Tim Geithner, the guy President Obama inexplicably put in charge of the bank bailouts, has a new book out called “Stress Test.” (The term derives from the laughably phony “tests” endangered large banks were put through to see whether they had so many crap assets on their books that they needed to be liquidated; the fix was in, so not one large bank was broken apart of liquidated. Instead, we gave them bazillions of taxpayers’ dollars which they spent on bonuses for themselves instead of lending money to businesses to create jobs.)

The consensus seems to be — unsurprisingly, to me — that it sucks. Particularly, it’s incoherent where it’s not downright dishonest. The Washington Center for Equitable Growth rounds up some of the responses:

Glenn Hubbard:

About housing… I must say I split my side in laughter because Tim Geithner personally and actively opposed mortgage refinancing…. And now he’s claiming this would be a great idea…

David Dayen:

The guy who handed hundreds of billions of dollars over to banks with basically no strings attached [was] suddenly worried about fairness when homeowners get a break on their mortgage payments…. Even as he says in the book “I wish we had expanded our housing programs earlier,” he completely contradicts that to Andrew Ross Sorkin, saying [that his own] statement is “unicorny”…

Amir Sufi and Atif Mian:

Multiplying $700 billion by 0.18 gives us a spending boost to the economy in 2009 of $126 billion, which is 1.3% of PCE, 10 times larger than the estimate Secretary Geithner asserted in his book. So Mr. Geithner is off by an order of magnitude…

Economist Brad DeLong concludes:

In the “real world” Geithner did have full control over the GSEs and the FHA–because Paulson nationalized them in the summer of 2008.

In the “real world” Geithner submits his recommendation that Glenn Hubbard be nominated as head of the FHFA to President Obama on January 21, 2009, it is approved by the senate in February 2009, and thereafter there are no constraints on technocratic use of FHFA and the GSEs to rebalance the housing sector and aggregate demand.

Geithner should not say “I wanted the FHFA to act but I did not have the authority to get the FHFA to act” and at the same time say “having the FHFA act would have made no difference”; Geithner should to say “you cannot blame me because of the constraints” when we know that it was his own actions and inactions made those constraints.

Look: Tim Geithner did much better as a 2009-2010 finance minister than any of his peers. Look: the stress tests worked, and worked very well. (I disagree — Lex.) Look: Christina Romer and company say that if you need a bank rescued in 48 hours, Tim Geithner is your man. But the purpose of Stress Test is to explain to us what Tim Geithner thought and why he thought it, and thus why he did what he did.

And in Stress Test, on housing policy, he doesn’t.

Saturday, May 10, 2014 10:46 pm

An even more special kind of stupid

SpecialKindOfStupid

It takes a very special kind of stupid to inherit peace, prosperity and a budget surplus and explode the deficit, allow a horrific terrorist attack, launch a war both illegal and unnecessary (killing hundreds of thousands of innocent civilians in the process), order Americans to carry out exactly the same kind of torture for which we hanged Germans and Japanese after World War II AND push policies that allowed the worst economic crisis in three-quarters of a century.

But it takes an even more special kind of stupid to say, on the subject of George W. Bush, to intelligent Americans, “Who ya gonna believe, me or your lyin’ eyes?” Naturally, these days we do not lack for that very special kind of stupid; we need only turn to Matt Bai, formerly of the Times Almighty and now with Yahoo, to find it:

A graphic this week on FiveThirtyEight.com showed how fewer and fewer Americans blame Bush for the country’s economic morass, even though his successor, Barack Obama, won two presidential campaigns based on precisely that premise.

Bush’s critics will argue that this is testament to how quickly we forget the past. But it has more to do, really, with how we distort the present.

The truth is that Bush was never anything close to the ogre or the imbecile his most fevered detractors insisted he was. Read “Days of Fire,” the excellent and exhaustive book on Bush’s presidency by Peter Baker, my former colleague at the New York Times. Bush comes off there as compassionate and well-intentioned — a man who came into office underprepared and overly reliant on his wily vice president and who found his footing only after making some tragically bad decisions. Baker’s Bush is a flawed character you find yourself rooting for, even as you wince at his judgment.

Not just no, Matt, but hell, no.

I don’t need to read your buddy’s slobbery hagiography: I know what I saw and heard, out of the man’s own mouth, for eight long, painful, and disastrous years. For sheer incompetence, only Buchanan comes close, and in terms of the consequences of his stupidity, he is without peer or even parallel. America is vastly poorer, dumber, less free and yet more vulnerable today than it was in 2000, and the blame for that can be laid squarely at the feet of Li’l Boots McDrydrunk and the monsters he hired. I heard the man talk, so I know for a fact that he is an imbecile. I heard him admit on ABC News that he ordered torture, so I know for a fact that he is an ogre. And you, sir, can go straight to hell with him.

The only thing I’m rooting for where Bush is concerned is a seat in the dock at The Hague. And while oral sex is no longer a crime, public oral sex still is, so, Matt, buddy, next time you sit down to write about Bush 43, I’d look around for cops first.

 

The problem with the “new economy” — and how the media make it worse

Ed at Gin and Tacos:

Things like airbnb and Uber (a car sharing service, for those of us who don’t live in a city large enough to make the prospect of paying a stranger to drive you somewhere viable) are “building trust” among Americans, bringing them together and facilitating economic activity. Plus, they make the economy more efficient, partially eliminating the dead airtime in daily life. Why leave your house empty when you can get someone else to pay you to stay in it? Why sit around watching TV all evening when you could make money driving people around?

It all sounds great, at least according to the fawning sycophants who provide all of us out here in the provinces with such worshipful coverage of the amazing achievements of the Techno-Demigods. And it is great as long as you don’t bother to ask (or care) why people are suddenly employing themselves as improvised innkeepers and taxi drivers. After all, does anyone really want to let some strangers stay in their home for a few bucks? To drive some trust fund asshole to the airport on Saturday after a 45 hour week? I doubt it. People turn to the “Trust Economy” because they’re somewhere between financially stressed and desperate. They don’t make enough or they’re without any steady source of income at all. They do it for the same reason that people go to work at a temp agency or loiter in a Home Depot parking lot to do day labor: because they have no better options.

The tech media work hand in hand with the mainstream media to put the brightest and prettiest coats of paint on economic developments of this kind, but who really benefits from this kind of arrangement? Hold on to your hats, kids, but it isn’t you. The beneficiary is the guy who can get people like you to perform for pennies on the dollar all of the tasks that a driver, personal secretary, and butler would do. It’s remarkable how many of the recent Big Developments from the omniscient men of the Valley have managed to make the lives of the well-off easier without actually creating any jobs that pay a livable salary or have benefits. Oh, and they convince the media to cover these breakthroughs in a way that makes it sound like they’re doing you a favor. You’re free at last, free at last. Say goodbye to the chains of full time employment and hello to the boundless freedom of working piecemeal, making phone calls on Mechanical Turk for a quarter and driving Damon the Junior Content Developer to the airport so he can spend the weekend in Cozumel with his frat bros.

The problem with the fact that the economy created a robust 288,000 jobs in April is that it needs to keep doing that for many, many more months to begin to undo the damage wrought by the Crash of ’08. And in the meantime, people are doing whatever they have to do to get by. Ignore it if you like, sociopaths of the world, but for God’s sake do not try to romanticize it. There is some shit even Americans won’t eat.

The future is here, and it blows.

 

Thursday, May 1, 2014 8:30 pm

War, huh! Good God, y’all. What is it good for? Gun sellers’ bottom lines.

Well, that and right-wing seditionists.

At its convention in 1977, the NRA rejected its history as a club for hunters and marksmen and embraced activism on behalf Second Amendment absolutism. Rejecting background checks and allowing “convicted violent felons, mentally deranged people, violently addicted to narcotics” easier access to guns was, said the executive vice president that year, “a price we pay for freedom.” In 2014, 500 days after Newtown and after a year of repeated legislative and judicial victories, the NRA has explicitly expanded its scope to the culture at large.

The NRA is no longer concerned with merely protecting the Second Amendment’s right to bear arms – the gun lobby wants to use those arms on its fellow citizens. Or, as the NRA thinks of them: “the bad guys”.

It is useless to argue that the NRA is only targeting criminals with that line, because the NRA has defined “good guys” so narrowly as to only include the NRA itself. What does that make everyone else?

I’m actually a gun guy. Grew up with long guns, did target shooting. Carried concealed earlier in my career when I was covering some people I was worried were serious bad guys, and I still support the right of law-abiding citizens to carry concealed — if they’ve been properly trained in the use of a firearm. Problem is, a serious percentage of gun-holding Americans either have not or have decided not to care what they were taught; as several years of covering the Knife & Gun Club for various newspapers taught me quite well, the American public is in no way, shape or form a well-regulated militia.

Now, that position puts me well to the right of pretty much all my liberal/Democratic friends and not even on the absolute left fringe of the pro-gun crowd. (Some people support gun ownership but want strict limits on concealed carry, for example.) But to Wayne LaPierre and his minions, it makes me the enemy, someone they’re trying desperately to find a way to shoot legally — not me personally, understand, but people like me, anyone who disagrees with them.

You can call that Second Amendment absolutism. You can call it fanaticism. You can call it irrationality. I call it batshit freaking insane, flirting with treason. And if you want to know why police chiefs historically have favored gun control, it’s because they have to clean up after the messes that the Wayne LaPierre disciples of the world, whether or not they are, in fact, NRA members, tend to create.

LaPierre has decided to use this nightmare apocalyptic vision he outlined in his speech at the convention to get people to buy more guns, grow more paranoid, be prepared to see any reversal as an existential threat, to be met with deadly force, even in the teeth of the lowest homicide rate in decades. This is the behavior of a man who is neither sane nor law-abiding, and more innocent Americans are going to die because of it.

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.

Tuesday, April 8, 2014 7:09 pm

If you’re having trouble understanding why Citizens United and McCutcheon were such bad decisions, it’s because Nixon would have loved them.

Chief Justice John Roberts, author of the majority opinion in McCutcheon, and Associate Justice Anthony Kennedy, who wrote the majority opinion in McCutcheon, live in a fantasy world, Ian Millhiser explains:

In 1974, a Senate Select Committee on Presidential Campaign Activities chaired by Sen. Sam Ervin (D-NC) revealed activities that nearly anyone other than the five justices who signed on to Roberts’ decision in McCutcheon v. FEC would unreservedly describe as corruption. In the early 1970s, for example, the dairy industry desired increased price supports from the federal government, but Secretary of Agriculture Clifford Hardin has decided not to give these price supports to the milk producers. In response, various dairy industry organizations pledged $2 million to Nixon’s reelection campaign — and then developed a complicated scheme to launder the money through various small donations to “hundreds of committees in various states which could then hold the money for the President’s reelection campaign, so as to permit the producers to meet independent reporting requirements without disclosure.”

President Nixon later agreed to a meeting with industry representatives, and he decided to overrule his Agriculture Secretary. The milk producers got their price supports.

The Ervin report “identified over $1.8 million in Presidential campaign contributions as ascribable, in whole or in part, to 31 persons holding ambassadorial appointments from President Nixon, and stated that six other large contributors, accounting for $3 million, appear to have been actively seeking such appointment at the time of their contributions.” Outside of the White House, the report uncovered “lavish contributions” to members of Congress from both political parties. The chairman of one oil company testified that executives perceived campaign donations as a “calling card” that would “get us in the door and make our point of view heard.” American Airlines’ former chair testified that many companies funneled money to politicians “in response to pressure for fear of a competitive disadvantage that might result” if they did not buy off lawmakers. In essence, businesses feared that if they did not give money to elected officials, but their competitors did, then their competition could use their enhanced access to politicians in order to gain a competitive advantage in the marketplace.

And yet, according to Chief Justice Roberts and his fellow conservative justices, hardly any of this activity amounts to “corruption.”

Even the Court’s 1976 ruling in Buckley v. Valeo, which famously created the law that money = speech (but also largely upheld post-Watergate campaign-finance reforms), conceded that Congress could regulate campaign contributions to prevent corruption or its appearance. But Kennedy and Roberts have gone much, much farther than that:*

Roberts’ opinion in McCutcheon, however, defines the word “corruption” so narrowly that it is practically meaningless. In order to survive constitutional review, Roberts writes, a campaign finance regulation must “target what we have called “quid pro quo” corruption or its appearance. That Latin phrase captures the notion of a direct exchange of an official act for money.” Thus, unless a donor offers “dollars for political favors,” no corruption exists.

Lest there be any doubt, this narrow understanding of the word “corruption” does not capture cases where a donor pays off a politician in order to buy access. To the contrary, as the conservative justices held in Citizens United v. FEC, “[t]he fact that speakers may have influence over or access to elected officials does not mean that these officials are corrupt” (The word “speakers,” in this context, is used to refer to what most people describe as “donors”). Indeed, Citizens United goes much further than simply claiming that dollars-for-access arrangements must be tolerated. At one point, it seems to view them as an objective good:

Favoritism and influence are not . . . avoidable in representative politics. It is in the nature of an elected representative to favor certain policies, and, by necessary corollary, to favor the voters and contributors who support those policies. It is well understood that a substantial and legitimate reason, if not the only reason, to cast a vote for, or to make a contribution to, one candidate over another is that the candidate will respond by producing those political outcomes the supporter favors. Democracy is premised on responsiveness.

Democracy certainly is premised on responsiveness. Though it is a strange definition of democracy that offers enhanced responsiveness to those who can afford to pay for it.

Under Roberts’ definition of “corruption” most of the corrupt activities of the Nixon era would be viewed as completely benign. Though an isolated incident, where a Nixon fundraiser promised that the president would make a donor Ambassador to Trinidad in return for $100,000, would qualify as an explicit “dollars for political favors,” arrangement, politicians who give greater access to their donors are not “corrupt” under McCutcheon and Citizens United unless they offer to exchange votes or similar favors in return for campaign donations. Indeed, even the dairy industry’s $2 million bid for a meeting with President Nixon may not qualify as “corruption,” as Roberts understands the word, because there is some uncertainty as to whether the $2 million donation was “conditioned upon or ‘linked’ to” the President agreeing to make specific changes to the administration’s policies. According to Roberts’ opinion in McCutcheon,

Spending large sums of money in connection with elections, but not in connection with an effort to control the exercise of an officeholder’s official duties, does not give rise to such quid pro quo corruption. Nor does the possibility that an individual who spends large sums may garner “influence over or access to” elected officials or political parties. And because the Government’s interest in preventing the appearance of corruption is equally confined to the appearance of of quid pro quo corruption, the Government may not seek to limit the appearance of mere influence or access.

So what Nixon likely would have gone to prison for in the 1970s had he attempted to stay in office is now the law of the land, per five Republican justices who no doubt also believe they are Tsars of All the Russias, to borrow a phrase from Charlie Pierce.

And the American people know it, Millhiser concludes:

Very few Americans agree with Roberts’ view of what constitutes corruption. Indeed, a 2012 poll determined that 69 percent of Americans believed that the rule emerging from cases likeCitizens United allowing “corporations, unions and people give unlimited money to Super PACs will lead to corruption.” Just 15 percent disagreed.

To put that number in perspective, another poll found that fully 19 percent of Americans believe in “spells or witchcraft” — a full four percentage points more …

Myself, I’m wondering, given how many presumably sensible Americans have, since 2000, been willing to give away so many of their own rights and to refuse to hold accountable a generation of the most corrupt and wicked pols and business leaders since the Harding administration, whether more Americans ought to believe in witchcraft.

*I’m “conservatives oppose judicial activism” years old.

 

Thursday, April 3, 2014 7:21 pm

The Supreme Court’s McCutcheon ruling: Of the money, by the money, for the money.

In a sane country, the Supreme Court would recognize that the right of the people to a government free of undue influence by a tiny minority of the wealthy elite dramatically outweighs the right of one person to spend as much as he damn well pleases supporting political candidates, particularly when the spending creates at least the appearance, and almost definitely the certainty, of corruption: corruption in which the donor’s interest outweighs the public’s and the candidate, once elected, votes accordingly.

But we do not live in a sane country.

Associate Justice Anthony Kennedy, in the Citizens United ruling, 2010: “We now conclude that independent expenditures, including those made by corporations, do not give rise to corruption or the appearance of corruption.” 

Chief Justice John Roberts, in the McCutcheon ruling, just this week: “The aggregate limits do not further the permissible governmental interest in preventing quid pro quo corruption or its appearance.

To both gentlemen: Are you farking blind?

Of course independent expenditures give rise to the appearance of corruption — and to the real thing. Of course aggregate limits would make it harder for apparent or actual corruption to occur. If it ain’t the money that’s causing it, gentlemen, then, pray tell, what is?

You morons have just declared as a matter of both fact and law that water is dry, that the sky is chartreuse with emerald-polka dots, and that the country and the public interest are but offal to be fed to the nation’s honeybadgers. Because honeybadgers don’t … well, you know:

UPDATE: Actually, this metaphor might do a disservice to honeybadgers, which at least do useful things like killing and eating cobras. I thought about substituting jackals, but then, generally, they only eat the dead, while our nation’s sociopath elite are at least metaphorically feasting upon the living as we speak. I don’t know what the appropriate animal would be for this metaphor, but I know what it does: It feeds on the living, particularly the poor, brown, female, and otherwise vulnerable, and it pees fracking chemicals and defecates coal ash.

Sunday, March 23, 2014 9:09 pm

America, land of free markets. … Oh. Wait.

It would appear that up to several dozen tech companies have been conspiring to artificially suppress wages for their employees. In other words, they’ve been stealing from their employees, although because they used email instead of a knife or gun no one will go to prison. At first it was just Apple, Google and Intel that we knew of; now, well …:

Confidential internal Google and Apple memos, buried within piles of court dockets and reviewed by PandoDaily, clearly show that what began as a secret cartel agreement between Apple’s Steve Jobs and Google’s Eric Schmidt to illegally fix the labor market for hi-tech workers, expanded within a few years to include companies ranging from Dell, IBM, eBay and Microsoft, to Comcast, Clear Channel, Dreamworks, and London-based public relations behemoth WPP. All told, the combined workforces of the companies involved totals well over a million employees.

At the link you can also find embedded court documents bearing out the claims.

This is money that went to a very few officers and directors at these companies. It is money that was taken from hard-working employees and will never be returned. And do not kid yourself that tech is the only sector in which this is happening. One reason the government has been so easygoing on monopolies and near-monopolies the past 30 years is that they make this kind of thing easier. In other words, if you’re a CEO, this is a delightfully profitable feature, not a bug.

Worse, this conspiracy to suppress wages likely is going on in every major sector of American private industry. I can’t prove it, but I’m certain of it right now, because if there’s one thing I learned from investigative reporting, it’s that corrupt organizations are almost never just a little bit corrupt. Indeed, I would not be surprised to find that this phenomenon, along with daisy chains of CEOs sitting on each other’s board compensation committees, is a significant driver behind the fact that the overwhelming majority of profits from productivity gains are going to the top 1 or 2 percent of earners in the work force.

The CEOs involved knew that what they were doing was wrong, that it involved the permanent, unlawful taking of the property of others. They should be doing at least as much time as your run-of-the-mill bank robber, in facilities no more luxurious. But they won’t. And that’s why we can’t have nice things.

Wednesday, March 19, 2014 8:35 pm

Today’s prayer of gratitude …

… courtesy of Esquire’s Charlie Pierce:

… thank you again, Anthony Kennedy, for telling us that “independent expenditures do not lead to, or create the appearance of, quid pro quo corruption,” a statement that should rank with Roger Taney’s disquistion on the rights of black folk as the leading examples of what abject meatheads Supreme Court justices can be.

This is just one example of how, in Buckley v. Valeo and Citizens United, the Supremes’ insistence that black is white and up is down keeps bumping up against inconvenient truths. Our government is thoroughly corrupted at the federal and state levels by corporate campaign contributions, a fact that might send Mr. Justice Kennedy to his fainting couch but is fact nonetheless. (And if you liked how that worked out, you’ll no doubt love how it works out at the county and municipal levels, too.)

Thursday, March 6, 2014 7:45 pm

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, February 11, 2014 8:11 pm

“State secrets” and the erosion of the Bill of Rights

Time after time, in case after case in the So-Called War on Terror, we have seen the government invoke “state secrets,” as a means of denying defendants access to potentially exculpatory information in the government’s possession or as a means of denying civil plaintiffs access to information that would strengthen their own case at the government’s expense. As a result, some potentially innocent people have remained in custody for years, in many cases without trial or even charge. As a result, some meritorious lawsuits against government overreach have been tossed.

As a result, the country has both weakened and betrayed its own values. That’s bad enough.

But now? We come to find that for seven years, the government has been invoking “state secrets” to cover up a simple, understandable, and easy-to-fix paperwork error, albeit one with significant consequences. That error, compounded by the massive cover-up on the part of high-ranking officials in both the Bush 43 and Obama administrations, particularly Director of National Intelligence James Clapper and Attorney General Eric Holder, kept an innocent woman named Rahinah Ibrahim on the U.S. government’s no-fly list for that period. For much of that period, the defense was invoked merely to prevent her from learning whether she was even on the list, let alone being able to do something about it.

Holder went so far as to tell the judge presiding over the case that this assertion of the state secrets privilege was fully in keeping with Obama’s much-ballyhooed 2009 executive branch reforms of the privilege, which stated the administration would invoke state secrets sparingly.

“Under this policy, the Department of Justice will defend an assertion of the state secrets privilege in litigation, and seek dismissal of a claim on that basis, only when necessary to protect against the risk of significant harm to national security,” reads an April signed declaration from the attorney general to U.S. District Judge William Alsup, who presided over the Ibrahim litigation in San Francisco.

The state secrets privilege was first upheld by the Supreme Court in a McCarthy-era case and generally requires judges to dismiss lawsuits against the United States when the government asserts a trial threatens national security.

In his declaration, Holder assured Judge Alsup that the government would not be claiming national security to conceal “administrative error” or to “prevent embarrassment” — an assertion that is now nearly impossible to square with the facts.

Way I read that, “now nearly impossible to square with the facts” means “a stone lie.”

Finally, her case was allowed to come to trial, a month before which the presiding judge, during a pretrial conference, told lawyers, “I feel like I have been had by the government.”

Time was, lawyers who intentionally misled judges suffered serious consequences to their cases, if not to themselves personally. As it was, after a five-day nonjury trial, the judge ruled for Ibrahim.

Here’s my question: If the government would illegally invoke “state secrets” for seven years, under both Republican and Democratic administrations, to cover up a bloody paperwork error, what else is it covering up under the “state secrets” defense? Prosecution and/or punishment of innocent people? Ongoing torture? Extrajudicial assassinations? Massive waste, fraud and abuse in the national intelligence apparatus? At this point you’d have to be an idiot to bet on anything except all these and more.

Classification of material to cover up evidence of a crime is, itself, a federal crime. And it’s one with which not nearly enough people have been charged. But beyond that, judges who get played by the government this way should, when they figure out what’s going on, bring the gavel down on the government officials and lawyers involved so viciously that a century from now such officials and lawyers will speak of it only behind closed doors, with hushed voices, in the dark of night, the elderly cautioning the young.

Monday, January 27, 2014 10:19 pm

The price of experience

Today is observed internationally as Holocaust Remembrance Day (it’s the anniversary of the day Soviet troops liberated the Auschwitz death camp in 1945). Earlier this evening, I attended a screening of the movie “Jakob the Liar,” about the lives of Jews in Poland’s Lodz ghetto in 1944, followed by recitations of the Male HaRachamim and the Kaddish.

The event also included a reading of a meditation, “The Price of Experience,” written by Adrian Mitchell and Kate Westbrook. Two lines in particular struck me:

It is an easy thing to talk of patience to the afflicted/To speak the laws of prudence to the homeless wanderer

It must be, because we do so much of it in America today. We have one major party (and, frankly, some members of the other) actively working against universal access to  health care. We accuse the poor of deserving to be poor because of moral flaws or failure to exert sufficient effort to pull themselves up by their own bootstraps, never mind the fact that increasing numbers of Americans have no boots and no immediate prospects of being able to find a job that pays well enough to buy them.

What is going on in America today is by no means, of course, morally equivalent to the Holocaust, and I do not mean to imply otherwise. But it is bad nonetheless: For more than 30 years the wealthy have waged war on the middle class, and that war has only accelerated with and since the Crash of ’08. Meanwhile, the hyperwealthy who attend Davos moan about the bad things the less fortunate say about them. One moron, venture capitalist Tom Perkins, writing in The Wall Street Journal — and you can’t make this crap up — even compared complaints about the wealthy to attitudes of Nazi Germany toward Jews. On a slightly less offensive level, neither Congress nor the Beltway media talk much about this problem, let alone consult with some of the people who know how to fix it. One can only assume that things are this way because the wealthy and powerful want them this way. That’s bad enough. But the victim blaming is a sign of advanced moral rot. And when moral rot in a society’s leadership expands to this point, perhaps a Holocaust is not inevitable. But a French Revolution certainly isn’t out of the question — nor should it be.   

Wednesday, January 15, 2014 7:31 pm

Quote of the Day, shooting-a-guy-in-a-movie-theater-for-texting-during-the-previews edition

David Eggert in a comments section at Esquire.com:

We are ruled by a gun-society minority. We are not free as long as our security depends on the goodwill and peace of mind of the self-selected persons among us who feel a need, due to their own insecurities, to walk among us carrying lethal weapons.

Amen.

I believe in gun rights. I grew up with guns. I once carried one on the job. I am perfectly OK with concealed carry even today.

But.

It is still far, far too easy for guns to get into the hands of criminals and the mentally disturbed. It is still far too easy for people who have no business possessing firearms to have them. And it is still far too easy for people who make money off guns, and their shills in the NRA, to shout down such reasonable proposals as background checks and mandatory training for gun owners, or limits on sales of large-magazine semiautomatic weapons, whose only purpose is to kill other human beings.

Any cops reporter in America can vouch for the fact that the American public is not in any way, shape, or form a well-regulated militia, especially on Saturday nights and long holiday weekends. And there are more guns in this country than ever even as fewer people own guns. A shrill and irrational minority is actively making the rest of us less safe. And we need to stop that. We have enough real dangers to face without also being forced to confront the imaginary fears of the elderly, the paranoid, and the people who have questions about their own masculinity.

 

Tuesday, January 14, 2014 9:13 pm

The problem with Republicans is that they want to make the whole country like Texas.

And how’s that working out?

When the U.S. Environmental Protection Agency declared that a group of Texas homes near a gas-drilling operation didn’t have dangerous levels of methane in their water, it relied on tests conducted by the driller itself.

Now, independent tests from Duke University researchers have found combustible levels of methane in some of the wells, and homeowners want the EPA to re-open the case.

The previously undisclosed Duke testing illustrate the complaints of critics who say the agency is reluctant to sanction a booming industry that has pushed down energy prices for consumers, created thousands of jobs and buoyed the economy.

“I don’t understand why they would let the company that was accused of doing the wrongdoing conduct the tests,” said Shelly Perdue, who lives near the two wells in Weatherford, 60 miles (97 kilometers) west of Dallas. “It doesn’t make sense.”

Obviously Shelly Perdue is not fit material to run for office as a Republican.

Thursday, January 2, 2014 5:30 pm

Stuff I missed while having a life over the holidays, Too Big to Jail edition

It’s official: Big banks are now Too Big to Jail and therefore will never be held accountable, nor their executives jailed, under the Racketeering-Influenced and Corrupt Organizations (RICO) Act:

(Assistant Attorney General Lanny) Breuer this week signed off on a settlement deal with the British banking giant HSBC that is the ultimate insult to every ordinary person who’s ever had his life altered by a narcotics charge. Despite the fact that HSBC admitted to laundering billions of dollars for Colombian and Mexican drug cartels (among others) and violating a host of important banking laws (from the Bank Secrecy Act to the Trading With the Enemy Act), Breuer and his Justice Department elected not to pursue criminal prosecutions of the bank, opting instead for a “record” financial settlement of $1.9 billion, which as one analyst noted is about five weeks of income for the bank.

The banks’ laundering transactions were so brazen that the NSA probably could have spotted them from space. Breuer admitted that drug dealers would sometimes come to HSBC’s Mexican branches and “deposit hundreds of thousands of dollars in cash, in a single day, into a single account, using boxes designed to fit the precise dimensions of the teller windows.” …

Though this was not stated explicitly, the government’s rationale in not pursuing criminal prosecutions against the bank was apparently rooted in concerns that putting executives from a “systemically important institution” in jail for drug laundering would threaten the stability of the financial system. The New York Times put it this way:

Federal and state authorities have chosen not to indict HSBC, the London-based bank, on charges of vast and prolonged money laundering, for fear that criminal prosecution would topple the bank and, in the process, endanger the financial system.

It doesn’t take a genius to see that the reasoning here is beyond flawed. When you decide not to prosecute bankers for billion-dollar crimes connected to drug-dealing and terrorism (some of HSBC’s Saudi and Bangladeshi clients had terrorist ties, according to a Senate investigation), it doesn’t protect the banking system, it does exactly the opposite. It terrifies investors and depositors everywhere, leaving them with the clear impression that even the most “reputable” banks may in fact be captured institutions whose senior executives are in the employ of (this can’t be repeated often enough) murderers and terrorists. Even more shocking, the Justice Department’s response to learning about all of this was to do exactly the same thing that the HSBC executives did in the first place to get themselves in trouble – they took money to look the other way.

And not only did they sell out to drug dealers, they sold out cheap. You’ll hear bragging this week by the Obama administration that they wrested a record penalty from HSBC, but it’s a joke. Some of the penalties involved will literally make you laugh out loud. This is from Breuer’s announcement:

As a result of the government’s investigation, HSBC has . . . “clawed back” deferred compensation bonuses given to some of its most senior U.S. anti-money laundering and compliance officers, and agreed to partially defer bonus compensation for its most senior officials during the five-year period of the deferred prosecution agreement.

Wow. So the executives who spent a decade laundering billions of dollars will have to partially defer their bonuses during the five-year deferred prosecution agreement? Are you [bleeping] kidding me? That’s the punishment? The government’s negotiators couldn’t hold firm on forcing HSBC officials to completely wait to receive their ill-gotten bonuses? They had to settle on making them “partially” wait? Every honest prosecutor in America has to be puking his guts out at such bargaining tactics. What was the Justice Department’s opening offer – asking executives to restrict their Caribbean vacation time to nine weeks a year?

So you might ask, what’s the appropriate financial penalty for a bank in HSBC’s position? Exactly how much money should one extract from a firm that has been shamelessly profiting from business with criminals for years and years? Remember, we’re talking about a company that has admitted to a smorgasbord of serious banking crimes. If you’re the prosecutor, you’ve got this bank by the balls. So how much money should you take?

How about all of it? How about every last dollar the bank has made since it started its illegal activity? How about you dive into every bank account of every single executive involved in this mess and take every last bonus dollar they’ve ever earned? Then take their houses, their cars, the paintings they bought at Sotheby’s auctions, the clothes in their closets, the loose change in the jars on their kitchen counters, every last freaking thing. Take it all and don’t think twice. And then throw them in jail.

Sound harsh? It does, doesn’t it? The only problem is, that’s exactly what the government does just about every day to ordinary people involved in ordinary drug cases.

It’s worth remembering, particularly for those of us who grew up along with Wachovia Bank here in North Carolina, that that bank, now part of Wells Fargo, settled with the Feds in 2010 for $110 million in forfeiture and a $50 million fine for laundering $378.4 billion — an amount equivalent to a third of Mexico’s GDP at the time. Then as now, no bank executives were charged; indeed, the bank hung its senior anti-money-laundering officer, Martin Woods, out to dry.

I get that there are good reasons (though not, in my personal opinion, a clearly convincing case) to keep, say, marijuana illegal for recreational use. But even if all laws banning marijuana use in the U.S. were scrapped today, the damage, though enormous in some individual cases, would be nowhere near the damage that is being done, right now, by decisions like this, to confidence in the U.S. finance system and, even more importantly, to the rule of law. Lanny Breuer ought to be named somewhere as an unindicted co-conspirator, at the least, and so should his boss, Attorney General Eric Holder. If Congress wants to impeach someone — and the GOP House, at least, certainly does — it could start with Holder without a peep of complaint from me as long as the charges pertained to his overwhelming failure to even try to rein in the banks during his term.

Friday, December 27, 2013 12:57 pm

And you thought the bursting of the housing bubble was bad …

From the Nov. 11 New Yorker (paywall) on a company called Climate Corporation that uses big data to project crop sizes for every field in the country and insures crops on the basis of that data:

(CEO David) Friedberg is convinced that climate change has the potential to alter land values dramatically, and soon. “We had this economic bubble because of a major housing crisis,” he said. [Strictly speaking, that's backward -- we had an economic crisis because of a (burst) housing bubble -- but forget it; he's rolling. -- Lex] “Residential real-estate values dropped, and the debt-equity ratio was so high that there were massive economic consequences for the nation. There is almost certainly a much more significant devaluation that needs to occur with land affected by climate change.” In Kansas, he noted, real estate trades at prices that make sense only if a farmer gets the kind of yield on an acre of corn that is now rare. “In parts of Kansas, farmers should simply not be growing corn,” Friedberg said. “Historically, you would have a heat wave every 20 years there. Now it happens every three years or so, and in those years the crops die.”

The Climate Corporation charges roughly forty dollars an acre to insure crops, and its customers farm more than ten million acres. Many of them give little credence to terms like “climate change” and “global warming.” That doesn’t bother Friedberg. “You don’t need to talk about climate change per se,” he told me. “Statistically, you are looking at a series of numbers. If it were a roulette wheel, you could say, ‘It’s coming up black more and more frequently.’ Can I attribute that to black being overweighted by the croupier? Or to the pit boss, or to the machine being broken? It doesn’t matter. Some people will argue that ice ages have waxed and waned for tens of millennia and that this is part of a natural cycle. That doesn’t change the fact that black is coming up more frequently and you will get less out of an acre of corn than you used to. The price for that land simply cannot be justified by the income it can generate.”

He went on, “It’s going to take a few climatic events in a row, I guess, and then everyone will say, ‘I’m not going to keep buying Kansas real estate at this price,’ or, ‘I’m not going to keep developing in this harbor zone in Florida.’ If you mark down all the stuff to what the discounted value should be — holy shit.” He practically shouted, “It is bad. I am convinced it is going to happen because, the math says it has to happen in at least one or two or three parts of the world. And if it happens at any of them at any point in the next ten years, it will make the housing crisis look small.”

Wednesday, December 25, 2013 12:58 am

The Gospel According to Pierce; or, A Christmas Prayer, With Carrion

And Pierce wrote, saying:

But this is the argument in season over these holidays. That the poor must suffer in order to be redeemed. That hunger is a moral test to be endured. That only through pain can we hope. What doesn’t destroy you, etc. Santa Nietzsche is coming to town. The idea that we should — hell, that we must — act out of charity for each other through the institutions of self-government is lost in the din of a frontal system of moral thunderation aimed at everyone except the person who is out there thunderatin’ on behalf of personal-trainer Jesus, who wants us to work, work, work on that core. That was the way that government operated once before; the specific institutions that Scrooge mentions, and with which the Spirit eventually reproaches him in his own words – the prisons, the union workhouses, the treadmill, and the Poor Laws – were all government institutions based on the same basic philosophy that drives the debate over the food stamp program today.(We even seem to be going back to debtor’s prisons.) We have speeches on self-reliance given by government employees to people who increasingly have only themselves on whom to rely, day after grinding day. It is a way to keep the poor from having a voice in their own self-government. It is a way to keep the wrath of the boy at bay. There will be a reckoning, one way or another. But it can be staved off by platitudes, and by verses from Scripture wrenched from the obvious context of the Gospels. The sepulchers brighten whitely while the bones inside grow increasingly corrupt. This is what this Congress believes, as it goes home proud of itself and its members dress themselves to sing the midnight carols with no conscience sounding in counterpoint, and this is Christmas in America, and it is the year of our Lord, 2013.

Merry Christmas to all, and tonight, God bless us, every one. But forgive me, Lord, in advance, for hoping and praying that the year of our Lord 2014 brings plague and pestilence upon those who would force the suffering to suffer further, those who would insist upon morality tests for the poor that they themselves could not pass, those who would require that many of our fellow Americans be denied a voice with which to insist anything. Bring on the plagues for them, turn their fruit into locust husks, their wine and water into blood, and their foie gras to feces, and let their corrupt bones and those of their first born be cast out from the whitely brightened sepulchers to be feasted upon by jackals and vultures.

Except for those who repent and atone. Always except for those.

Amen. And Amen.

Wednesday, November 27, 2013 5:11 pm

Happy Thanksgiving, coming Chinese crash edition

Filed under: I want my country back.,We're so screwed — Lex @ 5:11 pm
Tags: ,

Hooboy:

China’s shadow banking system is out of control and under mounting stress as borrowers struggle to roll over short-term debts, Fitch Ratings has warned.

The agency said the scale of credit was so extreme that the country would find it very hard to grow its way out of the excesses as in past episodes, implying tougher times ahead.

“The credit-driven growth model is clearly falling apart. This could feed into a massive over-capacity problem, and potentially into a Japanese-style deflation,” said Charlene Chu, the agency’s senior director in Beijing.

“There is no transparency in the shadow banking system, and systemic risk is rising. We have no idea who the borrowers are, who the lenders are, and what the quality of assets is, and this undermines signalling,” she told The Daily Telegraph.

While the non-performing loan rate of the banks may look benign at just 1pc, this has become irrelevant as trusts, wealth-management funds, offshore vehicles and other forms of irregular lending make up over half of all new credit. “It means nothing if you can off-load any bad asset you want. A lot of the banking exposure to property is not booked as property,” she said.

Concerns are rising after a string of upsets in Quingdao, Ordos, Jilin and elsewhere, in so-called trust products, a $1.4 trillion (£0.9 trillion) segment of the shadow banking system. …

Fitch warned that wealth products worth $2 trillion of lending are in reality a “hidden second balance sheet” for banks, allowing them to circumvent loan curbs and dodge efforts by regulators to halt the excesses. …

Overall credit has jumped from $9 trillion to $23 trillion since the Lehman crisis. “They have replicated the entire US commercial banking system in five years,” she said.

The ratio of credit to GDP has jumped by 75 percentage points to 200pc of GDP, compared to roughly 40 points in the US over five years leading up to the subprime bubble, or in Japan before the Nikkei bubble burst in 1990. “This is beyond anything we have ever seen before in a large economy. We don’t know how this will play out. The next six months will be crucial,” she said.

This makes a systemic Chinese crash on the order of what we had here in 2008-09 look likely. What the effects will be on the global economy I can’t say, but I imagine it can’t be good.

And this, folks, is why we need a transparent, well-regulated banking and investment system. Yet “too big to fail” and a huge, unregulated segment of the financial markets are still standard policy here in the U.S. If the system breaks again, the hyperrich won’t suffer, but you and I will. Big time.

Happy Thanksgiving.

(h/t: Fec)

 

 

Tuesday, October 29, 2013 7:03 pm

Just-World Theory; or, Bad Things Don’t Happen to Good People! Really!

Ed at Gin & Tacos:

Post-1980 America is a land in which it is impossible to engage in a discussion about a System with college-aged people without inevitably and almost immediately devolving into mini-soliloquies on Good and Bad choices. Why have so many kids? Why did he start drinking? And they signed a contract without reading the whole thing! Everyone knows not to do that.

This is what I mean when I describe college students, when I’m forced to generalize, as extremely conservative. They aren’t necessarily hardcore political conservatives in the context of Washington politics, but they have thoroughly internalized the message that their parents and the media have been hammering them with since birth: everything that happens to you is your fault. There are no innocent victims of anything. This is a coping mechanism / cognitive bias called the Just World Phenomenon, wherein people victim-blame as a means of coping with the random cruelty of the world. Rather than accept that horrible things happen to good people – and, thus, that a horrible fate could befall them at any moment – people choose to retreat into the comforts of believing that everyone Had It Coming.

These are young adults who believe sincerely that since they have made Good Choices, nothing bad can happen to them for reasons beyond their control. The idea of being unemployed is literally incomprehensible to many of them – I’m in college and I even get decent grades, of course someone is going to hire me. This is where, as critics both liberal and conservative have often moaned, the constant self-esteem building of kids born in the 1990s shows its ugly side. Each student tends to believe that he or she is special and smart and the world, being a meritocracy, cannot fail to recognize this. Some of this simply is the normal naivety of youth that only life experience can erase. I honestly believe, strictly as a matter of opinion, that the hyper-individualism that dominates post-Carter politics is influential as well.

Yeah, how could bad things happen to people who make good choices when:

  • … right now 1.2 million students that attend public schools in America are homeless.  That number has risen by 72 percent since the start of the last recession. …
  • According to the U.S. Census Bureau, approximately one out of every six Americans is now living in poverty.  The number of Americans living in poverty is now at a level not seen since the 1960s. …
  • The “working poor” is one of the fastest growing segments of the U.S. population.  At this point, approximately one out of every four part-time workers in America is living below the poverty line.
  • The stock market may be doing great (for the moment), but incomes for average Americans continue to decline.  In fact, median household income in the United States has fallen for five years in a row. …
  • The quality of the jobs in America has been steadily dropping for years.  At this point, one out of every four American workers has a job that pays $10 an hour or less. …

Yeah, what could possibly go wrong and cause you any harm, kid?

Sunday, October 6, 2013 1:41 pm

How to restore confidence in the economy

Commenter Christobal Juanes in John Burns’s feed on Facebook:

Man, you know what would really help restore confidence in the economy? Investors not having to worry that the US is going to default on its obligations every couple of months because a political minority that can’t accomplish its myopic, selfish goals through the traditional, constitutionally-designed process holds the economy hostage.

Friday, October 4, 2013 7:04 pm

Quote of the Day, shutdown edition

Commenter Snarki, child of Loki, at Balloon Juice:

House Tea Partiers “have nailed their [penises] to the table, and are threatening to set the table on fire if they don’t get their way.”

 

Wednesday, October 2, 2013 6:50 pm

Unquestionably

So in an attempt to figure out why we’re in this government-shutdown mess, I went to the Magic 8-Ball and posed a question. The following dialogue ensued:

Q: Is John Boehner’s head in his descending colon, his transverse colon or his ascending colon?

A: Very doubtful.

Q: So is it up in his small bowel?

A: Very doubtful.

Q: So is it, um, up in his stomach?

A: No.

Q: Oh, wow. So it’s all the way up in his esophagus, you mean?

A: Yes.

Well, that would explain a lot.

Tuesday, October 1, 2013 7:47 pm

Digby explains it all for you …

… in less than a paragraph:

Boehner’s caucus won’t do what he wants them to do! He can’t make a deal they don’t want him to make unless he’s willing to commit hara-kiri and pass a clean CR with Democratic votes. Does he think Obama will agree to defund Obamacare?

Now, by “commit hara-kiri,” Digby means that if Boehner agreed to pass a clean continuing resolution with Democratic votes, he’d be voted out as Speaker. And, frankly, with the full faith and credit of the United States on the line in just a little over two weeks, a guy who cared about serving the country would take that deal. But the weeping Cheeto wants to hold onto the speakership, even though he’s a bad Speaker of historic proportions, so he’s going to let the Crazy Caucus dictate the GOP’s position. And Obama won’t back off on the Affordable Care Act (nor should he, what with it having been approved by Congress, signed into law, pronounced constitutional by the Supreme Court and effectively ratified by voters nationwide in 2012 and all).

The Crazy Caucus is threatening to blow up the government. And it’s not just a tantrum, it’s something they’ve been planning since January. They need to be reminded of something:

The United States does not negotiate with terrorists.

Why default on Oct. 17 shouldn’t necessarily create an economic crisis but probably will anyway

Shorter Dean Baker: because bankers are f—— stupid:

… it is interesting to look at the fundamentals here. The vast majority of bonds … will not have defaulted. Even the ones that are technically in default will have only lost a small fraction of their value. Think it through. You have a government bond that was supposed to have a coupon payment on October 17th which was not made because of the debt ceiling standoff. How much less are you willing to sell this bond for on October 18th? (If you say 3 percent or more, send me a note.)

While this set of events could possibly undermine the system as it functions today, if the bankers could not develop a workaround pretty quickly, they are a lot dumber than people give them credit for. …

In the current situation, does anyone really doubt that at some point the government will make the interest and principle payments on its debt? …

[But] the Wall Street boys really don’t seem to be very good with numbers. Put to the test, they may well fail.

My predictions: 1) If it comes to that, they will fail, and 2) even if they do fail, they’ll still collect big bonuses while we taxpayers clean up their mess. Again.

James Fallows’s thought experiment on government shutdown

Fallows shows your liberal media at work:

2) Thought experiment. Let’s suppose it’s the fall of 2005. Suppose George W. Bush has been reelected, as he was in real life. Let’s suppose, also as in reality, the Senate remained in Republican hands. But then suppose that Nancy Pelosi and her Democrats had already won control of the House, rather than doing so two years later. So suppose that the lineup as of 2005 had been:

  • Reelected Republican president;
  • The president’s Republican party retaining control of the Senate; and
  • Democrats controlling only one chamber, the House.

Then suppose further that Pelosi’s newly empowered House Democrats announced that unless George W. Bush agreed to reverse the sweeping tax cuts that had been the signature legislative achievement of his first term, they would refuse to pass a budget so that the federal government could operate, and would threaten a default on U.S. sovereign debt. Alternatively, that unless Bush immediately withdrew from Iraq, federal government funding would cease and the debt ceiling would be frozen.

In this imagined world, I contend:

  • “respectable” opinion would be all over Pelosi and the Democrats for their “shrill,” “extreme” demands, especially given their lack of broad electoral mandate;
  • hand-wringing editorials would point out that if you want to change policy, there’s an established route to do so, which involves passing new bills and getting them signed into law, rather than issuing “otherwise we blow up the government” ultimatums;
  • no one would be saying that the “grownups in the room” had to resolve the crisis by giving away, say, half of the president’s tax cuts. (Even though, to my taste, that would have been a positive step.)

The circumstances are the mirror image now. A party that within the past year has:

  • lost the presidency by 5 million votes;
  • lost the Senate by a total of 10 million votes;
  • held onto control of the House through favorable districting, while losing the overall House vote by 1.7 million nationwide

… is nonetheless dictating terms to the rest of the government. This would have been called extreme and unreasonable under an imagined Nancy Pelosi House in 2005. It is extreme and unreasonable now.

Yup. But apparently IOKIYAR, because the Washington Post and other outlets of its out-of-touch ilk are suggesting that the “grownups in the room” have to compromise now. Uh, not just no, but hell, no. The Crazy Caucus must be forced back into its cage, and until it is (which likely won’t be until the 2022 elections) it should be held up to public shame and opprobrium at every possible opportunity by the “grownups in the room,” which ought to include, but does not and has not for years, the Washington Post.

What do you do when the government is in the hands of people who don’t believe in government?

Commenter David Nangle at Charlie Pierce’s place has it about right:

This Congress should only be flown by pilots that don’t believe in flight. They should only be treated by doctors that don’t believe in medicine, or the efficacy of surgery. They should live in houses built by people that don’t believe in carpentry. And they should eat only food prepared by people that don’t believe in cooking, or the germ theory of disease.

Woulda, coulda, shoulda. All those Democrats who pitched hissy fits and stayed home in 2010 have allowed the creation of a disaster that has no serious chance of being stopped before the demographic trends that will turn up in the 2020 Census offer the possibility of redistricting sufficient to give voters at least the chance to cleanse the government in 2022.

The Crazy Caucus can do a lot of damage in a decade-plus. They already have. And don’t think they won’t do more.

Monday, September 30, 2013 7:33 pm

Shutdown primer

James Fallows at The Atlantic explains the only parts that really matter:

  • As a matter of substance, constant-shutdown, permanent-emergency governance is so destructive that no other serious country engages in or could tolerate it. The United States can afford it only because we are — still — so rich, with so much margin for waste and error. Details on this and other items below.*
  • As a matter of politics, this is different from anything we learned about in classrooms or expected until the past few years. We’re used to thinking that the most important disagreements are between the major parties, not within one party; and that disagreements over policies, goals, tactics can be addressed by negotiation or compromise.This time, the fight that matters is within the Republican party, and that fight is over whether compromise itself is legitimate.** Outsiders to this struggle — the president and his administration, Democratic legislators as a group, voters or “opinion leaders” outside the generally safe districts that elected the new House majority — have essentially no leverage over the outcome. I can’t recall any situation like this in my own experience, and the only even-approximate historic parallel (with obvious differences) is the inability of Northern/free-state opinion to affect the debate within the slave-state South from the 1840s onward. Nor is there a conceivable “compromise” the Democrats could offer that would placate the other side.
  • As a matter of journalism, any story that presents the disagreements as a “standoff,” a “showdown,” a “failure of leadership,” a sign of “partisan gridlock,” or any of the other usual terms for political disagreement,represents a failure of journalism*** and an inability to see or describe what is going on. …This isn’t “gridlock.” It is a ferocious struggle within one party, between its traditionalists and its radical factions, with results that unfortunately can harm all the rest of us — and, should there be a debt default, could harm the rest of the world too. …

* The FAA, the FDA, our research organizations, all other public programs from monitoring air quality to modernizing computer systems to staffing the military — they’re all wasting time and money now because of indiscriminate “sequester” cuts and preparations for possible shut-down. For the foreseeable future, the air traffic will keep moving and other functions will go on — just more stupidly and wastefully. We have that much social capital still to burn. …

** The debt-ceiling vote, of course, is not about future spending decisions. It is about whether to cover expenditures the Congress has already authorized. There is no sane reason for subjecting this to a repeated vote. … [And] in case the point is not clear yet: there is no post-Civil War precedent for what the House GOP is doing now. …

*** For examples of coverage that plainly states what is going on, here is a small sampling: Greg SargentDerek ThompsonJohn Gilmour (on why Ronald Reagan believed in compromise), Jonathan RauchBrian BeutlerJonathan ChaitAndrew Sullivan (also here), Ezra Klein and Evan SoltasDan Froomkin.

The failure of mainstream media to report accurately on this subject is perhaps its biggest fail since its coverage of the runup to the Iraq invasion in 2003. And although the number of lives immediately at risk is far lower, the worldwide economic damage that could result is far higher.

As for what actually will happen, I don’t have any insider knowledge. But I do know that the Tea Party wing of the House GOP (egged on by Sen. Ted Cruz of Texas) is full-throttle, turn-it-up-to-11 crazy. The reason the GOP is split is because they think House Speaker John Boehner and his allies aren’t being conservative enough. They have learned nothing from their recent failures, and they think the biggest problem with the government shutdown that resulted from disputes between Democratic President Bill Clinton and Newt Gingrich’s Republicans in Congress was that the Republicans, who finally caved after about three weeks, gave in too soon. So I’m projecting a 95% chance of a government shutdown, an 80% chance that the shutdown will last more than two weeks, and at least a 40% chance that they will force the U.S., for the first time in history, to default on its debt.

They just want to blow government up. They don’t care about collateral damage — the millions, here and abroad, who would be harmed if the full faith and credit of the United States were to be called into question. But the only way for that NOT to happen is for the Crazy Caucus to suddenly start acting less crazy. And there’s nothing in the caucus’s history to suggest the slightest likelihood that that will happen.

Thursday, August 29, 2013 6:18 pm

Because you looked too damn secure for my taste, chemical explosions edition

Apparently the Dallas Morning News, bless it, is not dead yet:

Even the best national data on chemical accidents is wrong nine times out of 10.

Dallas Morning News analysis of more than 750,000 federal records found pervasive inaccuracies and holes in data on chemical accidents, such as the one in West that killed 15 people and injured more than 300.

In fact, no one at any level of government knows how often serious chemical accidents occur each year in the United States. And there is no plan in place for federal agencies to gather more accurate information.

As a result, the kind of data sharing ordered by President Barack Obama in response to West is unlikely to improve the government’s ability to answer even the most basic questions about chemical safety.

“We can track Gross National Product to the second and third decimal, but there is no reliable way of tracking even simple things like how many [chemical] accidents happen,” said Sam Mannan, a nationally recognized expert on chemical safety who recently testified before a congressional hearing on West.

“This is just scandalous.”

h/t Erik Loomis at Lawyers, Guns & Money, who adds, quite accurately:

Let’s be clear, this is intentional. Corporations don’t want you to know where things are produced or under what conditions. Business has ensured that the relevant government agencies that could effectively track this information remain chronically underfunded. We can blame government and there’s no question that it isn’t enough of a priority for either political party. But one party is opposed to the sheer existence of these agencies and that makes it awfully hard to craft an effective regulatory system.

To put it even more bluntly, the operators of these chemical plants don’t give two hoots in hell whether you live or die, because they don’t have to: If you die, your death is just a tax-deductible cost of doing business for them — if it costs them anything at all. And this degree of lethality will continue as long as corporations are allowed any say, direct or financial, in how we are governed. There’s a word for it, and all the Tea Partiers in the world to the contrary, that word is not “socialism.”

 

Friday, August 2, 2013 6:03 pm

From beyond the grave, Doghouse Riley edition:

Riley, nee Douglas Case, proprietor of the blog Bats Left, Throws Right, died a few days ago at age 59:

The contemporary Republican party was born in 1964, not coincidentally the same year the Johnson administration decided that black people could have some rights. It’s the party of Bill Buckley’s racism, and of Pat Buchanan’s, as well as Steve King’s, of Carl McIntire’s religious mania and Pat Robertson’s, as well as Rick Santorum’s. It’s the party which wrapped every little adventurist foreign excursion from Korea to Iraq II in patriotic fervor, and which found it necessary to rewrite the history of every last one (excepting, maybe, the Glorious Liberation of Grenada); Nixon’s traitor hunt of 1946 was little different than Andrew Sullivan’s in 2001, and, no, he’s one of yours. No one with eyes and ears could possibly have missed this, apart, somehow, from the DLC and today’s tiny island leper colony of sadder-but-wiser centrists. …

Okay, sure: the Republican party has become increasingly dilatory and obtuse in the halls of power, but that’s not a change of the last four years. Had Republicans had the power in 1981 they would have dispensed with all the Reagan sainthood bullshit and just rammed through their radical agenda, instead of getting Democrats to agree to do it for them. And there’s no question this has been facilitated, both by a venal and cowardly Democratic party, and a venal and cowardly Press. But, really, enough of this stuff. I’m not gonna make common cause with Democrats, or rueful Republican centrists, who suddenly notice what the GOP has become, and expect a medal for saying so. The time to speak up was thirty years ago, when this stuff was just as plain, and was being covered by a transparent rewrite of unpleasant history, and a clear retrenchment on individual rights. Y’know, when Reaganism was the Wave of the Future the Republican platform had no more chance of actually governing than it does today. David Stockman was just as big a liar as Paul Ryan. I’m going to settle for having been right about this shit all along, and hope we don’t kill too many innocents when it all blows up. Don’t offer to help me shovel now. You’ve already done enough.

RIP.

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