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Hurricane Rick

August 29th, 2011 Posted in Uncategorized

Aug, 29 2011

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Be afraid. Be very afraid.

In the aftermath of Hurricane Irene, there has been plenty of criticism directed at efforts by the media to amp-up the danger threat during the days before the storm made landfall. Despite the fact that eleven people were killed by the hurricane, a wide assortment of commentators has seen fit to complain about the “hurricane hype”. Here is a bit of what Howard Kurtz had to say at The Daily Beast:

But the tsunami of hype on this story was relentless, a Category 5 performance that was driven in large measure by ratings. Every producer knew that to abandon the coverage even briefly – say, to cover the continued fighting in Libya – was to risk driving viewers elsewhere. Websites, too, were running dramatic headlines even as it became apparent that the storm wasn’t as powerful as advertised.

The fact that New York, home to the nation’s top news outlets, was directly in the storm’s path clearly fed this story-on-steroids. Does anyone seriously believe the hurricane would have drawn the same level of coverage if it had been bearing down on, say, Ft. Lauderdale?

In fact, here in south Florida, we have become accustomed to the scare-mongering, which runs ahead of any tropical depression appearing west of the Cape Verde Islands. Our local newscasters have an incentive to overstate the threat: If they can scare the local politicians into ordering a mandatory evacuation – the story goes national and the networks provide some face time for the local correspondents. At The Weather Channel, the incessant drumbeat warns: Keep watching us or die! I would be more than happy to cooperate if only they would feature Stephanie Abrams as often as they have Jim Cantore or Bryan Norcross on camera.

A similar fear-mongering strategy is becoming apparent in the Presidential campaign. Before Rick Perry jumped into the race, disgruntled former Obama supporters saw the 2012 campaign as a choice between two nearly-indistinguishable corporatists. With the ever-increasing likelihood that Rick Perry could become the Republican nominee, those ex-Obama fans are being constantly bombarded with reasons to be afraid … be very afraid. Are you going to just sit back and watch when President Perry declares war on Switzerland?

The most-frequently quoted observation about Rick Perry came from Bruce Bartlett, who served as deputy assistant secretary for economic policy at the Treasury Department, in the administration of President George H.W. Bush. During a recent appearance on CNN’s American Morning, Bartlett remarked:

“Rick Perry is an idiot, and I don’t think anybody would disagree with that.”

At the Huffington Post, the fixation on Rick Perry’s intellectual limitations resulted in the publication of some information from the candidate’s college transcript:

A source in Texas passed The Huffington Post Perry’s transcripts from his years at Texas A&M University. The future politician did not distinguish himself much in the classroom. While he later became a student leader, he had to get out of academic probation to do so. He rarely earned anything above a C in his courses — earning a C in U.S. History, a D in Shakespeare, and a D in the principles of economics. Perry got a C in gym.

Perry also did poorly on classes within his animal science major. In fall semester 1970, he received a D in veterinary anatomy, a F in a second course on organic chemistry and a C in animal breeding. He did get an A in world military systems and “Improv. of Learning” — his only two As while at A&M.

Josh Harkinson wrote an article for Mother Jones, recounting some episodes from Perry’s tenure as Governor of Texas. In addition to discussing the infamous Trans-Texas Corridor fiasco, the essay provided these factoids:

In 2004, whistleblowers repeatedly informed Perry’s office that the Governor’s Texas Youth Commission hires and protects “known child abusers.”   His office ignored the warnings. Three years later, the story broke that top officials with the TYC had learned of and done nothing to stop widespread child molestation at a juvenile detention facility in West Texas.

*   *   *

Last year, Perry called the BP oil spill an “act of God.”

*   *   *

Perry has accepted $1.2 million from Texas billionaire Harold Simmons, who is building a nuclear waste dump in West Texas over the objections of some of the state’s own environmental regulators. In January, Texas’ Low-Level Radioactive Waste Disposal Compact Commission opened the door to allowing the dump to accept nuclear waste from around the country. Six of of the commission’s seven members were appointed by Perry.

The passage from Harkinson’s article, striking fear into the hearts of Democrats, concerns a bit of history, which might repeat itself in the event that progressives should decide to support a third-party candidate:

Perry’s political associates, including top adviser Dave Carney, have been repeatedly accused of helping the Green Party qualify for the ballot in order to siphon votes away from Democratic candidates.

Could something similar happen in November of 2012? Rick Perry is counting on it — and the media will incessantly remind you of that.

You’ve been warned!

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Barack Oblivious

August 11th, 2011 Posted in Uncategorized

Aug, 11 2011

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As I’ve been discussing here for quite a while, commentators from across the political spectrum have been busy criticizing the job performance of President Obama. The mood of most critics seems to have progressed from disappointment to shock. The situation eventually reached the point where, regardless of what one thought about the job Obama was doing – at least the President could provide us with a good speech. That changed on Monday, August 8 – when Obama delivered his infamous “debt downgrade” speech – in the wake of the controversial decision by Standard and Poor’s to lower America’s credit rating from AAA to AA+. This reaction from Joe Nocera of The New York Times was among the more restrained:

When did President Obama become such a lousy speech-maker? His remarks on Monday afternoon, aimed at calming the markets, were flat and uninspired — as they have consistently been throughout the debt ceiling crisis. “No matter what some agency may say,” he said, ”we’ve always been and always will be a triple-A country.” Is that really the best he could do? The markets, realizing he had little or nothing to offer, continued their swoon. What is particularly frustrating is that the president seems to have so little to say on the subject of job creation, which should be his most pressing concern.

Actually, President Obama should have been concerned about job creation back in January of 2009. For some reason, this President had been pushing ahead with his own agenda, while oblivious to the concerns of America’s middle class. His focus on what eventually became an enfeebled healthcare bill caused him to ignore this country’s most serious problem: unemployment. Our economy is 70% consumer-driven. Because the twenty-five million Americans who lost their jobs since the inception of the financial crisis have remained unemployed — goods aren’t being sold. This hurts manufacturers, retailers and shipping companies. With twenty-five million Americans persistently unemployed, the tax base is diminished – meaning that there is less money available to pay down America’s debt. The people Barry Ritholtz calls the “deficit chicken hawks” (politicians who oppose any government spending programs which don’t benefit their own constituents) refuse to allow the federal government to get involved in short-term “job creation”. This “savings” depletes taxable revenue and increases government debt. President Obama — the master debater from Harvard – has refused to challenge the “deficit chicken hawks” to debate the need for any sort of short-term jobs program.

Bond guru Bill Gross of PIMCO recently lamented this administration’s obliviousness to the need for government involvement in short-term job creation:

Additionally and immediately, however, government must take a leading role in job creation. Conservative or even liberal agendas that cede responsibility for job creation to the private sector over the next few years are simply dazed or perhaps crazed. The private sector is the source of long-term job creation but in the short term, no rational observer can believe that global or even small businesses will invest here when the labor over there is so much cheaper. That is why trillions of dollars of corporate cash rest impotently on balance sheets awaiting global – non-U.S. – investment opportunities. Our labor force is too expensive and poorly educated for today’s marketplace.

* * *

In the near term, then, we should not rely solely on job or corporate-directed payroll tax credits because corporations may not take enough of that bait, and they’re sitting pretty as it is. Government must step up to the plate, as it should have in early 2009.

Back in July of 2009 – five months after the economic stimulus bill was passed – I pointed out how many prominent economists – including at least one of Obama’s closest advisors, had been emphasizing that the stimulus was inadequate and that we could eventually face a double-dip recession:

A July 7 report by Shamim Adam for Bloomberg News quoted Laura Tyson, an economic advisor to President Obama, as stating that last February’s $787 billion economic stimulus package was “a bit too small”. Ms. Tyson gave this explanation:

“The economy is worse than we forecast on which the stimulus program was based,” Tyson, who is a member of Obama’s Economic Recovery Advisory board, told the Nomura Equity Forum. “We probably have already 2.5 million more job losses than anticipated.”

Economist Brad DeLong recently provided us with a little background on the thinking that had been taking place within the President’s inner circle during 2009:

In the late spring of 2009, Barack Obama had five economic policy principals: Tim Geithner, who thought Obama had done enough to boost demand and needed to turn to long-run deficit reduction; Ben Bernanke, who thought that the Fed had done enough to boost demand and that the administration needed to turn to deficit reduction; Peter Orszag, who thought the administration needed to turn to deficit reduction immediately and could also use that process to pass (small) further stimulus; Larry Summers, who thought that long-run deficit reduction could wait until the recovery was well-established and that the administration needed to push for more demand stimulus; and Christina Romer, who thought that long-run deficit reduction should wait until the recovery was well-established and that the administration needed to push for much more demand stimulus.

Now Romer, Summers, and Orszag are gone. Their successors – Goolsbee, Sperling, and Lew – are extraordinary capable civil servants but are not nearly as loud policy voices and lack the substantive issue knowledge of their predecessors. The two who are left, Geithner and Bernanke, are the two who did not see the world as it was in mid-2009. And they do not seem to have recalibrated their beliefs about how the world works – they still think that they were right in mid-2009, or should have been right, or something.

I fear that they still do not see the situation as it really is.

And I do not see anyone in the American government serving as a counterbalance.

Meanwhile, the dreaded “double-dip” recession is nearly at hand. Professor DeLong recently posted a chart on his blog, depicting daily Treasury real yield curve rates under the heading, “Treasury Real Interest Rates Now Negative Out to Ten Years…” He added this comment:

If this isn’t a market prediction of a double-dip and a lost decade (or more), I don’t know what would be. At least Hoover was undertaking interventions in financial markets–and not just blathering about how cutting spending was the way to call the Confidence Fairy…

President Obama has been oblivious to our nation’s true economic predicament since 2009. Even if there were any Hope that his attentiveness to this matter might Change – at this point, it’s probably too late.

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Drew Westen Nails It Again

August 8th, 2011 Posted in Uncategorized

Aug, 08 2011

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Dr. Drew Westen is a Professor of Psychology and Psychiatry at Emory University. After receiving his Bachelor of Arts degree at Harvard, Westen picked up a Master’s in Social and Political Thought from the University of Sussex in England. He earned his PhD in Clinical Psychology at the University of Michigan.

In 2007, Dr. Westen wrote a book entitled, The Political Brain. Here’s how the book was described by the publisher, PublicAffairs:

The idea of the mind as a cool calculator that makes decisions by weighing the evidence bears no relation to how the brain actually works. When political candidates assume voters dispassionately make decisions based on “the issues,” they lose. . . .

In politics, when reason and emotion collide, emotion invariably wins. Elections are decided in the marketplace of emotions, a marketplace filled with values, images, analogies, moral sentiments, and moving oratory, in which logic plays only a supporting role. . . . The evidence is overwhelming that three things determine how people vote, in this order: their feelings toward the parties and their principles, their feelings toward the candidates, and, if they haven’t decided by then, their feelings toward the candidates’ policy positions.

The people at Fox News have been operating from this premise for years. On Fox, the news is presented from an emotional perspective (i.e. fear and outrage about terrorism, indignation about government spending, patriotic devotion to whomever or whatever principle is singled out for such allegiance). Opposition political candidates (Democrats) are usually portrayed as contemptible, flawed individuals. As a result, Fox has enjoyed tremendous success at shaping public opinion and influencing the electorate. Dr. Westen’s book appears likely to help one understand why.

The 2008 candidacy of Barack Obama presented a unique challenge to Fox News: A Democrat finally had a campaign based on an emotional appeal, conveyed with the single word, “Hope”. Despite the rational campaign strategy developed by Mark Penn for Hillary Clinton, (and continued by the McCain campaign) which posed the question: “Who is Barack Obama?” – the voters followed their emotions and voted for “Hope”.

At this point in the Obama Presidency, people from across the political spectrum (especially the Left) are still pondering Mark Penn’s 2008 question: “Who is Barack Obama?” As I have frequently pointed out on this website, Obama has been repeatedly criticized (by his former supporters) as a cynical, narcissistic individual, who has carefully created a Rorschach-esqe public image, shaped by whatever characteristics the individual audience members would choose to project back onto their perception of the man himself. Obama has been able to conceal his flexible, mercenary agenda behind the Rorschach screen and until recently, few have bothered to peek behind it.

David Sirota recently wrote an insightful essay about Obama which began with these words:

Barack Obama is a lot of things – eloquent, dissembling, conniving, intelligent and above all, calm. But one thing he is not is weak.

I was particularly impressed by an essay about our President, written by the aforementioned Dr. Drew Westen, which appeared in The New York Times on August 6. The article was entitled, “What Happened to Obama?” and it was absolutely magnificent. Dr. Westen began by taking us back to January of 2009, when we were still in the depths of the financial crisis, shocked by the unemployment tsunami and looking to our new President for effective leadership through a gauntlet of bank bailout schemes and economic stimulus proposals. Unfortunately, what America heard from Barack Obama during his Inaugural Address was a big nothing. As Dr. Westen explained, the disappointment of Obama’s Inaugural Address was emblematic of the disappointment we experienced throughout the ensuing months:

The president is fond of referring to “the arc of history,” paraphrasing the Rev. Dr. Martin Luther King Jr.’s famous statement that “the arc of the moral universe is long, but it bends toward justice.” But with his deep-seated aversion to conflict and his profound failure to understand bully dynamics – in which conciliation is always the wrong course of action, because bullies perceive it as weakness and just punch harder the next time – he has broken that arc and has likely bent it backward for at least a generation.

* * *

When Dr. King spoke of the great arc bending toward justice, he did not mean that we should wait for it to bend.

* * *

IN contrast, when faced with the greatest economic crisis, the greatest levels of economic inequality, and the greatest levels of corporate influence on politics since the Depression, Barack Obama stared into the eyes of history and chose to avert his gaze. Instead of indicting the people whose recklessness wrecked the economy, he put them in charge of it. He never explained that decision to the public – a failure in storytelling as extraordinary as the failure in judgment behind it. Had the president chosen to bend the arc of history, he would have told the public the story of the destruction wrought by the dismantling of the New Deal regulations that had protected them for more than half a century. He would have offered them a counternarrative of how to fix the problem other than the politics of appeasement, one that emphasized creating economic demand and consumer confidence by putting consumers back to work. He would have had to stare down those who had wrecked the economy, and he would have had to tolerate their hatred if not welcome it. But the arc of his temperament just didn’t bend that far.

But why did Obama turn out to be such a disappointment? Is he simply weak – or is Obama actually the inverse Franklin Delano Roosevelt described by David Sirota as “Bizarro FDR”? From his unique perspective as a clinical psychologist, Dr. Westen is well-qualified to provide us with a valid opinion. After first expressing the requisite ethical disclaimer (rarely heard from TV and radio “shrinks”) that he would “resist the temptation to diagnose at a distance”, Westen put on his “strategic consultant” hat to “venture some hypotheses”:

The most charitable explanation is that he and his advisers have succumbed to a view of electoral success to which many Democrats succumb – that “centrist” voters like “centrist” politicians. Unfortunately, reality is more complicated. Centrist voters prefer honest politicians who help them solve their problems. A second possibility is that he is simply not up to the task by virtue of his lack of experience and a character defect that might not have been so debilitating at some other time in history. Those of us who were bewitched by his eloquence on the campaign trail chose to ignore some disquieting aspects of his biography: that he had accomplished very little before he ran for president, having never run a business or a state; that he had a singularly unremarkable career as a law professor, publishing nothing in 12 years at the University of Chicago other than an autobiography; and that, before joining the United States Senate, he had voted “present” (instead of “yea” or “nay”) 130 times, sometimes dodging difficult issues.

A somewhat less charitable explanation is that we are a nation that is being held hostage not just by an extremist Republican Party but also by a president who either does not know what he believes or is willing to take whatever position he thinks will lead to his re-election.

* * *

Or perhaps, like so many politicians who come to Washington, he has already been consciously or unconsciously corrupted by a system that tests the souls even of people of tremendous integrity, by forcing them to dial for dollars – in the case of the modern presidency, for hundreds of millions of dollars.

With the passing of time, the likelihood that Barack Obama will be a single-term President increases dramatically because Americans are now scrutinizing him from a more judicious perspective. Who will become the Independent candidate to return that forgotten emotion of hope to the disillusioned electorate?

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Giving Centrism A Bad Name

July 28th, 2011 Posted in Uncategorized

Jul, 28 2011

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It seems as though every time some venal politician breaches a campaign promise while attempting to grab a payoff from a lobbyist, the excuse is always the same: “I’ve decided to tack toward the center on this issue.” “The Center” has become stigmatized as the dwelling place of those politicians who lack a moral compass.

I get particularly annoyed by those who persist in characterizing Barack Obama as a “centrist”, who is mimicking Bill Clinton’s “triangulation” strategy. During his campaign and throughout the early days of his Presidency, Obama successfully posed as a centrist. Nevertheless, his track record now demonstrates a policy of what Marshall Auerback described as “gutting the Democratic Party of its core social legacy.” I particularly enjoyed reading the comments to Auerback’s above-quoted piece about Obama entitled, “Worse Than Hoover”. Most of the commentators expressed the opinion that Auerback went way too easy on Obama. Here are some examples:

Sandra:

We have to stop comparing Obama to these iconic American figures. Obama is an opportunistic corporatist. There is no there there.

Rex:

I’m beginning to wonder if we are still giving Obummer too much credit. Common view seems to be trending toward he’s a manipulative scumbag.

Wasabi:

He’s very useful to the plutocracy. A Repub president could never persuade Dems to cut SS, Medicare, and Medicaid and all sorts of other essential programs.

He got the glory and the thrill of winning the election to become the 1st black president and I suspect that’s all the narcissio-path ever really wanted as far as the presidency is concerned. He certainly doesn’t look like he’s enjoying himself right now. I think he’s ready to cash out and is trying to create a scenario where he becomes an untenable candidate. He also wants to maintain his celebrity appeal so he’s going to try to posture as the adult of adults that was just too good for dc …

Steelhead23:

From a more technocratic perspective, I tend to see Obama as a consummate politician – able to inspire – but sadly lacking in intellectual curiosity and overflowing with ego, thus unable to quench his ignorance. This leaves him extremely susceptible to “experts” whom he parrots with enthusiasm. It was experts who helped him pick his advisers and now his expert advisers are misleading him and making him complicit in this quest toward neo-feudalism.

Keep in mind that those comments were not posted at Fox News or some right-wing website. They were posted at Naked Capitalism, where the publisher – Yves Smith – offered a comment of her own in reaction to Marshall Auerback’s “Worse Than Hoover” posting.

Yves Smith:

Obama is an authoritarian narcissist, an ugly combination.

He also seems unaware of the limits of his knowledge. That can render many otherwise intelligent people stupid in their decisions and actions in their blind spots.

Obama’s foremost critic from the Left is Glenn Greenwald of Salon. Mr. Greenwald has frequently opined that “… Obama wants to be attacked by liberals because of the perception that it politically benefits him by making him look centrist, non-partisan and independent . . . It’s not merely that he lacks a fear of liberal dissatisfaction; it’s that he affirmatively craves it.” Greenwald emphasized the foolishness of following such a course:

But that’s a dangerous strategy. U.S. presidential elections are very closely decided affairs, and alienating the Left even to some degree can be lethal for a national Democratic campaign; shouldn’t the 2000 election, along with 2010, have cemented that lesson forever?

I doubt that Obama is attempting to follow anything similar to Bill Clinton’s “triangulation” strategy. If Obama had been attempting such a plan, it has already backfired to an embarrassing degree, causing irreparable damage to the incumbent’s reelection prospects. Barack Obama has lost his credibility – and in the eyes of the electorate, there is no greater failing.

To get an appreciation for how much damage Obama has caused to his own “brand”, consider this article written by Columbia University economist Jeffrey Sachs for the Huffington Post:

Thus, at every crucial opportunity, Obama has failed to stand up for the poor and middle class. He refused to tax the banks and hedge funds properly on their outlandish profits; he refused to limit in a serious way the bankers’ mega-bonuses even when the bonuses were financed by taxpayer bailouts; and he even refused to stand up against extending the Bush tax cuts for the rich last December, though 60 percent of the electorate repeatedly and consistently demanded that the Bush tax cuts at the top should be ended. It’s not hard to understand why. Obama and Democratic Party politicians rely on Wall Street and the super-rich for campaign contributions the same way that the Republicans rely on oil and coal. In America today, only the rich have political power.

*   *   *

America is more militarily engaged under Obama than even under Bush. Amazing but true.

*   *   *

The stimulus legislation, pushed by Obama at the start of his term on the basis of antiquated economic theories, wasted the public’s money and also did something much worse. It discredited the vital role of public spending in solving real and long-term problems. Rather than thinking ahead and planning for long-term solutions, he simply spent money on short-term schemes.

Obama’s embrace of “shovel-ready” infrastructure, for example, left America with an economy based on shovels while China’s long-term strategy has given that country an economy based on 21st-century Maglev trains. Now that the resort to mega-deficits has run its course, Obama is on the verge of abandoning the poor and middle class, by agreeing with the plutocrats in Congress to cut spending on Medicaid, Medicare, Social Security, and discretionary civilian spending, while protecting the military and the low tax rates on the rich (if not lowering those top tax rates further according to the secret machinations of the Gang of Six, now endorsed by the president!)

*   *   *

America needs a third-party movement to break the hammerlock of the financial elites. Until that happens, the political class and the media conglomerates will continue to spew lies, American militarism will continue to destabilize a growing swath of the world, and the country will continue its economic decline.

The urgent need for a third-party movement was also the subject of this recent piece at The Economic Populist:

If the country had a legitimate third party to vote for, the Democrats and Republicans would be in serious trouble. Of course, the political system is geared to prevent third parties from emerging, so the country flounders about, looking for leadership from pusillanimous Democrats or ideological Republicans who consider raising taxes a mortal sin. The voters are probably a few steps away from concluding what is meant to be hidden but by now should be obvious: American democracy doesn’t exist, and the political system in Washington is beyond repair. What is worse: there are people and organizations who like things just the way they are and will fight any attempts at reform.

* * *

None of this suggests that Barack Obama is even considering abandoning his servitude to corporate interests. He’s merrily going along from one fundraiser to the next, raising millions of dollars each week from hedge fund managers and corporate lobbyists, so that he can get reelected as a “centrist” and bipartisan deal maker. This is based on his reading of what The People want – an end to the divisiveness in Washington – but Obama is fundamentally misreading the problem in Washington. It isn’t the rancor, name-calling, and petulance that is constantly on display which worries the American people. It is the backroom deals, the hidden bailouts, the tax evasions, the deregulation initiatives, the lack of prosecution for criminal behavior, that is more than frustrating Americans, because the beneficiaries of all this are wealthy people and corporations who have shifted power and money to themselves. Voters want this system overthrown – even the Tea Party voters, who keep searching for Republicans who will finally say no to corporate money.

In the mean time, we are stuck witnessing America’s demise. If you think that Obama’s critics from the Left are the only people voicing a dispirited attitude about our country’s future, be sure to read this essay at Counterpunch, “An Economy Destroyed”, written by Paul Craig Roberts – Assistant Secretary of the Treasury during the Reagan Administration and the co-creator of Reaganomics:

Recently, the bond rating agencies that gave junk derivatives triple-A ratings threatened to downgrade US Treasury bonds if the White House and Congress did not reach a deficit reduction deal and debt ceiling increase. The downgrade threat is not credible, and neither is the default threat. Both are make-believe crises that are being hyped in order to force cutbacks in Medicare, Medicaid, and Social Security.

* * *

The US economy is driven by consumer demand, but with 22.3 per cent unemployment, stagnant and declining wages and salaries, and consumer debt burdens so high that consumers cannot borrow to spend, there is nothing to drive the economy.

Washington’s response to this dilemma is to increase the austerity! Cutting back Medicare, Medicaid, and Social Security, forcing down wages by destroying unions and offshoring jobs (which results in a labor surplus and lower wages), and driving up the prices of food and energy by depreciating the dollar further erodes consumer purchasing power. The Federal Reserve can print money to rescue the crooked financial institutions, but it cannot rescue the American consumer.

As a final point, confront the fact that you are even lied to about “deficit reduction.” Even if Obama gets his $4 trillion “deficit reduction” over the next decade, it does not mean that the current national debt will be $4 trillion less than it currently is. The “reduction” merely means that the growth in the national debt will be $4 trillion less than otherwise. Regardless of any “deficit reduction,” the national debt ten years from now will be much higher than it presently is.

The longer you think about it – the more obvious it becomes: We really need to sweep all of those bastards out of Washington as quickly as possible and replace them with intelligent, honest individuals who are willing to represent this country’s human inhabitants – rather than its corporations, lobbies and “special interests”.

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Looking Beyond The Smokescreen

July 7th, 2011 Posted in Uncategorized

Jul, 07 2011

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We bloggers have the mainstream news outlets to thank for our readership. The inane, single-minded focus on a particular story, simply because it brings a huge audience to one’s competitors, regularly provides the driving force behind programming decisions made by those news producers. As a result, America’s more discerning, critical thinkers have turned to internet-based news sources (and blogs) to familiarize themselves with the more important stories of these turbulent times.

Robert Oak, at The Economic Populist website, recently expressed his outrage concerning the fact that a certain over-publicized murder trial has eclipsed coverage of more important matters:

For over a week we’ve heard nothing else by the press but Casey Anthony. Imagine what would happen if Nancy Grace used her never ending tape loop rants of hatred against tot mom to spew and prattle about the U.S. economy? Instead of some bizarre post traumatic public stress disorder, stuck in a rut, obsessive thought mantra, repeating ad nauseum, she’s guilty, we might hear our politicians are selling this nation down the river.

* * *

Folks, don’t you think the economy is just a little more important and actually impacts your lives than one crime and trial? The reality is any story which really impacts the daily lives of working America is not covered or spun to fiction.

The fact that “our politicians are selling this nation down the river” has not been overlooked by Brett Arends at MarketWatch. He recently wrote a great essay entitled, “The Next, Worse Financial Crisis”, wherein he discussed ten reasons “why we are doomed to repeat 2008”. Of the ten reasons, my favorite was number 7, “The ancient regime is in the saddle”:

I have to laugh whenever I hear Republicans ranting that Barack Obama is a “liberal” or a “socialist” or a communist. Are you kidding me? Obama is Bush 44. He’s a bit more like the old man than the younger one. But look at who’s still running the economy: Bernanke. Geithner. Summers. Goldman Sachs. J.P. Morgan Chase. We’ve had the same establishment in charge since at least 1987, when Paul Volcker stood down as Fed chairman. Change? What “change”? (And even the little we had was too much for Wall Street, which bought itself a new, more compliant Congress in 2010.)

As the 2012 campaign season begins, one need not look too far to find criticism of President Obama. Nevertheless, as Brett Arends explained, most of that criticism is a re-hash of the same, tired talking points we have been hearing since Obama took office. We are only now beginning to hear a broader chorus of pushback from commentators who see Obama as the President I have often described as the “Dissapointer-In-Chief”. Marshall Auerback wasn’t so restrained in his recent appraisal of Obama’s maladroit response to our economic crisis, choosing instead to ratify a well-deserved putdown, which most commentators felt obligated to denounce:

It may not have been the most felicitous choice of phrase, but Mark Halperin’s characterization of Barack Obama was not far off the mark, even if he did get suspended for it.  The President is a dick, at least as far as his understanding of basic economics goes. Obama’s perverse fixation with deficit reduction uber alles takes him to areas where even George W. Bush and Ronald Reagan dared not to venture. Medicare and Social Security are now on the table. In fact entitlements of all kinds (excluding the myriad of subsidies still present to Wall Street) are all deemed fair game.

To what end? Deficit control and deficit reduction, despite the fact that at present, the US has massive excess capacity including millions of unemployed and underemployed, a negative contribution from net exports, and a stagnant private spending growth horizon. Yet the President marches on, oblivious to the harm his policies would introduce to an already bleeding economy, using the tired analogy between a household and a sovereign government to support his tired arguments. It may have been impolitic, but “dick” is what immediately sprang to mind as one listened incredulously to the President’s press conference, which went from the sublime to the ridiculous.

*   *   *

Let’s state it again: households do not have the power to levy taxes, to issue the currency we use, and to demand that those taxes are paid in the currency it issues. Rather, households are users of the currency issued by the sovereign government. Here the same distinction applies to private businesses, which are also users of the currency. There’s a big difference, as all us on this blog have repeatedly stressed: Users of a currency do face an external constraint in a way that a sovereign issuer of its currency does not.

*   *   *

The President has the causation here totally backward. A growing economy, characterized by rising employment, rising incomes and rising capacity utilization causes the deficit to shrink, not the other way around. Rising prosperity means rising tax revenues and reduced social welfare payments, whereas there is an overwhelming body of evidence to support the opposite – cutting budget deficits when there is slack private spending growth and external deficits will erode growth and destroy net jobs.

The increasing, widespread awareness of Obama’s mishandling of the economic crisis has resulted in a great cover story for New York Magazine by Frank Rich, entitled, “Obama’s Original Sin”. While discussing Rich’s article, Yves Smith of Naked Capitalism lamented the fact that Obama is – again – the beneficiary of undeserved restraint:

Even Rich’s solid piece treats Obama more kindly that he should be. He depicts the President as too easily won over by “the best and the brightest” in the guise of folks like Robert Rubin and his protégé Timothy Geithner.

We think this characterization is far too charitable. Obama had a window in time in which he could have acted, decisively, to rein the financial services in, and he and his aides chose to let it pass and throw their lot in with the banksters. That fatal decision has severely constrained their freedom of action, as we explain . . .

Miscreants such as Casey Anthony serve as convenient decoys for public anger. Hopefully, by Election Day, the voters will realize that Casey Anthony isn’t to blame for the pathetic state of America’s economy and they will vote accordingly.

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Solar Mix

June 20th, 2011 Posted in Uncategorized

Jun, 20 2011

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The debate over global warming is about to heat up once again. The politicians, pundits and scientists who get paid-off by the carbon-based fuel industry to debunk research demonstrating that climate change is caused by human activity – finally have some exciting news. The upcoming period of increased sunspot activity, which has been the subject of so many scientific articles – solar max – is now expected to be even more disappointing than the downgraded, 2009 forecast. (Back in 2006, NASA was reporting expectations of “the most intense solar maximum in fifty years”.) Beyond that, many scientists are suggesting that once our current sunspot cycle ends, there might not be any sunspot activity for the following 20-30 years. Some commentators believe that the consequences for earth could involve global cooling – or as some have discussed – a “mini ice age”.

This press release from the National Solar Observatory seems to be a stark departure from last week’s National Geographic report concerning an enormous coronal mass ejection (CME) which resulted from a solar flare on June 7. However, it’s important to keep in mind that our current sunspot cycle won’t end until 2018. The National Geographic piece included remarks by Phillip Chamberlin, an astrophysicist involved with NASA’s Solar Dynamics Observatory (SDO), one of several spacecraft which recorded the CME event. Here is a passage concerning some of what Chamberlin had to say:

But he warned space-weather experts are concerned about future solar events.

The sun’s 11-year cycle of activity, driven by tangled surface magnetic fields, will hit its maximum in late 2013 or early 2014. Magnetic messiness will peak around that time and prompt nasty solar storms.

“We’ll probably see [extreme] flares every couple of months instead of years,” Chamberlin said.

If one of these powerful flares – and its coronal mass ejection – faces Earth, the particles will pound satellite components with charged particles, short some out, and potentially cripple them.

The recent report from the National Solar Observatory reveals that astrophysicists are now making a 180-degree turn away from prior forecasts about solar activity:

A missing jet stream, fading spots, and slower activity near the poles say that our Sun is heading for a rest period even as it is acting up for the first time in years, according to scientists at the National Solar Observatory (NSO) and the Air Force Research Laboratory (AFRL).

As the current sunspot cycle, Cycle 24, begins to ramp up toward maximum, independent studies of the solar interior, visible surface, and the corona indicate that the next 11-year solar sunspot cycle, Cycle 25, will be greatly reduced or may not happen at all.

* * *

“This is highly unusual and unexpected,” Dr. Frank Hill, associate director of the NSO’s Solar Synoptic Network, said of the results. “But the fact that three completely different views of the Sun point in the same direction is a powerful indicator that the sunspot cycle may be going into hibernation.”

* * *

“If we are right,” Hill concluded, “this could be the last solar maximum we’ll see for a few decades. That would affect everything from space exploration to Earth’s climate.”

In response to news inquiries and stories, Dr. Frank Hill issued a follow-up statement:

“We are NOT predicting a mini-ice age. We are predicting the behavior of the solar cycle. In my opinion, it is a huge leap from that to an abrupt global cooling, since the connections between solar activity and climate are still very poorly understood. My understanding is that current calculations suggest only a 0.3 degree C decrease from a Maunder-like minimum, too small for an ice age. It is unfortunate that the global warming/cooling studies have become so politically polarizing.”

So what can we expect here on earth? Two years ago, NASA was predicting that our current sunspot cycle (Cycle 24) would have the lowest peak number of sunspots since Cycle 16, which peaked in 1928. The peak sunspot activity for our current cycle will occur in 2013. The May 29, 2009 report from NASA included this admonition from Doug Biesecker of the NOAA Space Weather Prediction Center:

“Even a below-average cycle is capable of producing severe space weather,” points out Biesecker. “The great geomagnetic storm of 1859, for instance, occurred during a solar cycle of about the same size we’re predicting for 2013.”

The 1859 storm–known as the “Carrington Event” after astronomer Richard Carrington who witnessed the instigating solar flare–electrified transmission cables, set fires in telegraph offices, and produced Northern Lights so bright that people could read newspapers by their red and green glow. A recent report by the National Academy of Sciences found that if a similar storm occurred today, it could cause $1 to 2 trillion in damages to society’s high-tech infrastructure and require four to ten years for complete recovery. For comparison, Hurricane Katrina caused “only” $80 to 125 billion in damage.

So I guess we aren’t really getting “off the hook” just because our current sunspot cycle is turning out to be “below average”. From the “climate change” standpoint, the new debate should concern the extent to which permanent damage can be inflicted upon the Earth before the anticipated “global cooling” begins. The May, 2009 NASA article also told us what we can expect during periods of “low solar activity”:

Low solar activity has a profound effect on Earth’s atmosphere, allowing it to cool and contract. Space junk accumulates in Earth orbit because there is less aerodynamic drag. The becalmed solar wind whips up fewer magnetic storms around Earth’s poles. Cosmic rays that are normally pushed back by solar wind instead intrude on the near-Earth environment. There are other side-effects, too, that can be studied only so long as the sun remains quiet.

Regardless of what particular events are directly caused by solar activity (or the lack thereof) one thing is for certain: We will be hearing a great deal about the latest National Solar Observatory report from the outspoken opponents to theories of human-caused climate change.

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Magic Numbers

April 4th, 2011 Posted in Uncategorized

Apr, 04 2011

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As soon as I got a look at the March Nonfarm Payrolls Report from the Bureau of Labor Statistics on April 1, I knew that the cheerleaders from the “rose-colored glasses” crowd would be trumpeting the onset of some sort of new era, or “golden age”. I wasn’t too far off. My own reaction to the BLS report was similar to that expressed by Bill McBride of Calculated Risk:

The March employment report was another small step in the right direction, but the overall employment situation remains grim: There are 7.25 million fewer payroll jobs now than before the recession started in 2007 with 13.5 million Americans currently unemployed. Another 8.4 million are working part time for economic reasons, and about 4 million more workers have left the labor force. Of those unemployed, 6.1 million have been unemployed for six months or more.

Nevertheless, the opening words of the BLS report, asserting that nonfarm payroll employment increased by 216,000 in March, were all that the cheerleaders wanted to hear. My cynicism about the unjustified enthusiasm was shared by economist Dean Baker:

Okay, this celebration around the jobs report is really getting out of hand. Both the Post and Times had front page pieces touting the good news. The Post gets the award for being the more breathless of the two . . .

Brad DeLong had some fun letting the air out of the party balloons floating around in a brief piece by Gregory Ip of The Economist. Mr. Ip began with this happy thought:

TURN off the alarms. After several weeks when the data pointed to a recovery still struggling to achieve escape velocity, the March employment report provided reassuring evidence that, at a minimum, it is still gaining altitude.

After completely deconstructing Mr. Ip’s essay by emphasizing the painfully not-so-happy undercurrents lurking within the piece (apparently included out of concern that the Federal Reserve might take away the Quantitative Easing crack pipe) Professor DeLong re-visited Ip’s initial statement in the sobering light of day:

There is “recovery” in a sense that the output gap and the employment gap are no longer shrinking — and so that real GDP is growing at the rate of growth of potential output. But this is not reason to “turn off the alarms.” This is not reason to talk about “pieces [of recovery] … falling into place.” And I am not sure I would describe this as “gaining altitude” with respect to the state of the business cycle.

The exploitation of the March Nonfarm Payrolls Report for bolstering claims that economic conditions are better than they really are is just the latest example of how the beauty of a given statistic can exist in the eye of the beholder – depending on the context in which that statistic is presented. Economist David J. Merkel recently wrote an interesting essay, which concluded with this important admonition:

Be wary. Look at a broader range of statistics, and take apart the existing statistics. Don’t just take the pronouncements of our government at face value. They are experts in saying what is technically true, while implying what is false. Be wary.

David Merkel’s posting focused on the positive spin provided by a representative of Morgan Stanley concerning 4th Quarter 2010 Gross Domestic Product. Merkel’s analysis of this statistic included some good advice:

In 4Q 2010 real GDP rose 3.1%, while real Gross Domestic Purchases fell 0.2%. Why? Energy and other import costs rose which depressed the price indexes for GDP versus Gross Domestic Purchases.

Over the long haul, the two series are close to equal, but when they diverge, they tell a story. The current story is that average consumers in the US are doing badly, while those benefiting from high corporate profits, and increasing exports are doing well.

In general, I am not impressed with statistics collected by our government, or how they use them. But it’s useful to understand what they mean — to understand the limitations of the statistics, so that when naive/conniving politicians use them wrongly, one can see through the error.

David Merkel’s point about “understanding the limitations of the statistics” is something that a good commentator should “fess up to” when discussing particular stats. Michael Shedlock’s analysis of the March Nonfarm Payrolls Report provides a refreshing example of that type of candor:

Given the total distortions of reality with respect to not counting people who allegedly dropped out of the work force, it is hard to discuss the numbers.

The official unemployment rate is 8.8%. However, if you start counting all the people that want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped off the unemployment rolls because their unemployment benefits ran out, etc., you get a closer picture of what the unemployment rate is. That number is in the last row labeled U-6.

While the “official” unemployment rate is an unacceptable 8.8%, U-6 is much higher at 15.7%.

Things are much worse than the reported numbers would have you believe.

That said, this was a solid jobs report, not as measured by the typical recovery, but one of the better reports we have seen for years.

On the negative side, wages are not keeping up with the CPI, wage growth is skewed to the top end, and full time jobs are hard to come by.

At the current pace, the unemployment number would ordinarily drop, but not fast. However, many of those millions who dropped out of the workforce could start looking if they think jobs may be out there. Should that happen, the unemployment rate could rise, even if the economy adds jobs at this pace. It is very questionable if this pace of jobs keeps up.

In other words, if a significant number of those people the BLS has ignored as having “dropped out of the workforce” prove the BLS wrong by actually applying for new job opportunities as they appear, the BLS will have to reconcile their reporting with that “new reality”. Perhaps many of those “phantom people” were really there all along and the only thing preventing their detection was the absence of job opportunities. As those “workforce dropouts” return to the BLS radar screen by applying for new job opportunities, the BLS will report it as a “rise” in the unemployment rate. In reality, that updated statistic will reflect what the unemployment rate had been all along. An improving job market will just make it easier to face the truth.

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Abundance Of Goofiness

March 28th, 2011 Posted in Uncategorized

Mar, 28 2011

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The world is beset by a plague of goofiness. I thought it was limited to the United States until recent events demonstrated that goofiness has become a worldwide phenomenon. Premature European austerity programs, commenced before unemployment subsided, have led to higher deficits, elevated bond yields and more recession. Although sober-minded economists warned against implementation of austerity measures until justified by economic circumstances, there was this itch that politicians had to scratch. Now they have a nice infection.

In America, everyone had some good laughs of this video clip of President Obama’s discovery that he was locked out of the White House upon his return from Brazil. Although it was widely reported that the White House staff was “caught off guard” by the First Family’s early return from their Brazilian vacation, I don’t believe it. Such things don’t happen by accident. My suspicion is that Chief of Staff, Bill Daley and his real boss, The Dimon Dog, deliberately locked Obama out of the White House as an admonition against cracking down on the megabanks, increasing taxes on the rich and empowering Elizabeth Warren.

Our President has been busy puzzling over the situation in Libya, where he (with authorization from the United Nations) has joined in on the “kinda-sorta” invasion. Few people have dared to suggest that interloping in the Libyan civil war is sheer goofiness. Many Republicans, such as Newt Gingrich, were in favor of intervention until Obama made the decision to launch air strikes. Gingrich and his contrarian cohorts suddenly found it necessary to do a 180 on the issue. Meanwhile, the smart conservative, George Will, was asking all the right questions. I’ll reprint just a few of them here – but be sure to read his complete list. These questions are among those that remain unanswered:

The world would be better without Gaddafi. But is that a vital U.S. national interest? If it is, when did it become so? A month ago, no one thought it was.

* * *

Presumably we would coordinate aid with the leaders of the anti-Gaddafi forces. Who are they?

Libya is a tribal society. What concerning our Iraq and Afghanistan experiences justifies confidence that we understand Libyan dynamics?

More recently, George Will wrote an essay raising the question, “Is it America’s duty to intervene wherever regime change is needed?” Consider this point:

. . . America has intervened in a civil war in a tribal society, the dynamics of which America does not understand. And America is supporting one faction, the nature of which it does not know. “We are standing with the people of Libya,” says Secretary of State Hillary Clinton, evidently confident that “the” people are a harmonious unit. Many in the media call Moammar Gaddafi’s opponents “freedom fighters,” and perhaps they are, but no one calling them that really knows how the insurgents regard one another, or understand freedom, or if freedom, however understood, is their priority.

While many commentators have been busy condemning Bradley Manning as a “terrorist” and the worst American traitor since John Anthony Walker, few of those hypocrites would admit that the “people power” revolutions now taking place throughout the Middle East have resulted from the publication of Manning’s purloined files by WikiLeaks. Beyond that, few – if any – of those self-righteous journalists have hesitated to quote from those leaked documents in their own essays. A look at one of those leaked cables (dated February 15, 2008 and originating from the American Embassy in Tripoli) gives us a better understanding of who some of those Libyan “freedom fighters” really are:

xxxxxxxxxxxx partly attributed the fierce mindset in Benghazi and Derna to the message preached by imams in eastern Libyan mosques, which he said is markedly more radical than that heard in other parts of the country. xxxxxxxxxxxx makes a point of frequenting mosques whenever he visits Libya as a means to connect with neighbors and relatives and take the political pulse. Sermons in eastern mosques, particularly the Friday ‘khutba’, are laced with “coded phrases” urging worshippers to support jihad in Iraq and elsewhere through direct participation or financial contributions. The language is often ambiguous enough to be plausibly denied, he said, but for devout Muslims it is clear, incendiary and unambiguously supportive of jihad. Direct and indirect references to “martyrdom operations” were not uncommon. By contrast with mosques in Tripoli and elsewhere in the country, where references to jihad are extremely rare, in Benghazi and Derna they are fairly frequent subjects.

The foregoing cable was discussed in a recent piece by Alexander Cockburn of CounterPunch. Mr. Cockburn also focused on some information contained in the so-called Sinjar Records, which American forces retrieved from an Al Qaeda stronghold in northern Iraq during 2007:

The West Point study of the Iraqi Sinjar Records calculates that of the 440 foreign al-Qaeda recruits whose hometowns are known, 21 came from Benghazi, thereby making it the fourth most common hometown listed in the records. Fifty-three of the al-Qaeda recruits came from Darnah, the highest total of any of the hometowns listed in the records. The second highest number, 51, came from Riyadh, Saudi Arabia. Darnah (80,000) has less than 2 per cent the population of Riyadh. Darnah contributed “far and away the largest per capita number of fighters.”

The Embassy cable from February of 2008 and the Sinjar Records provide some useful information to consider when pondering the questions raised by George Will. Is Team Obama “up to speed” on any of this?

The aforementioned CounterPunch article by Alexander Cockburn covered another episode of tragic goofiness – the Fukushima power plant disaster. As I previously discussed here and here, the feeble information flow concerning this crisis has been downright sleazy. Mr. Cockburn provided a must read critique of how this critical situation has been mishandled and misrepresented by the media:

Amid reasonable suspicions that leading news media might have been in receipt of informal government advisories to stop creating panic, it became much harder to find credible bulletins on what was actually happening. In fact careful perusal of the daily briefings at the Vienna hq of the UN’s International Atomic Energy Agency in Vienna disclosed absolutely no substantive progress and indeed discreet admissions that “[this was on March 23) the “Agency still lacks data on water levels and temperatures in the spent fuel pools at Units 1, 2, 3 and 4.”

* * *

On our own website, by contrast, several articles and interviews stressed what Hirose Takashi said:

“All of the information media are at fault here I think. They are saying stupid things like, why, we are exposed to radiation all the time in our daily life, we get radiation from outer space. But that’s one millisievert per year. A year has 365 days, a day has 24 hours; multiply 365 by 24, you get 8760. Multiply the 400 millisieverts by that, you get 3,500,000 the normal dose. You call that safe? And what media have reported this? None. They compare it to a CT scan, which is over in an instant; that has nothing to do with it. The reason radioactivity can be measured is that radioactive material is escaping. What is dangerous is when that material enters your body and irradiates it from inside. . . .”

Allow me to repeat Hirose Takashi’s question: “And what media have reported this? None.” That’s because the media are incapable of covering serious (non-goofy) subjects. Unfortunately, those vested with positions of responsibility and authority all over the world are impaired by a degree of goofiness, leaving them incapable of making the right decisions or taking the necessary steps to protect public safety and welfare. Is this a permanent situation or just a temporary condition?

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An Army Of Lobbyists For The Middle Class

March 3rd, 2011 Posted in Uncategorized

Mar, 03 2011

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Federal Reserve Chairman, Ben Bernanke appeared before the Senate Banking Committee this week to testify about the Fed’s monetary policy. Scot Kersgaard of The American Independent focused our attention on a five-minute exchange between Colorado Senator Michael Bennett and The Ben Bernank, with an embedded video clip. Senator Bennett asked Bernanke to share his opinions concerning the recommendations made by President Obama’s bipartisan deficit commission. Bernanke initially attempted to dodge the question with the disclaimer that the Fed’s authority extends to only monetary policy rather than fiscal policy – such as the work conducted by the deficit commission. If Congressman Ron Paul had been watching the hearing take place, I’m sure he had a good, hard laugh at that statement. Nevertheless, Bernanke couldn’t restrain himself from concurring with the effort to place the cost of Wall Street’s larceny on the backs of middle-class taxpayers.

The chant for “entitlement reform” continues to reverberate throughout the mainstream media as it has for the past year. Last May, economist Dean Baker exposed this latest effort toward upward wealth redistribution:

Emboldened by the fact that none of them have gone to jail for their role in the financial crisis, the Wall Street gang is now gunning for Social Security and Medicare, the country’s most important safety net programs. Led by investment banker Pete Peterson, this crew is spending more than a billion dollars to convince the public that slashing these programs is the only way to protect our children and grandchildren from poverty.

A key propaganda tactic used by the “entitlement reform” crusaders is to characterize Social Security as an “entitlement” even though it is not (as I discussed here). Phil Davis, avowed capitalist and self-described “serial entrepreneur”, wrote a great essay, which refuted the claim that Social Security is “broken” while explaining why it is not an “entitlement”. Unfortunately, there are very few politicians who are willing to step forward to provide the simple explanation that Social Security is not an entitlement. Senator Richard Blumenthal (D-Conn.) recently made a statement to that effect before a senior citizens’ group in East Haven, Connecticut – without really providing an explanation why it is not an entitlement. Susan Feiner wrote a great commentary on the subject last fall for womensenews.org. Here is some of what she said:

Moreover, Social Security is not an entitlement program as it’s paid for entirely by payroll taxes. It is an insurance program, not an entitlement. Not one penny of anyone’s Social Security comes out of the federal government’s general fund.

Social Security is, by law, wholly self-financing. It has no legal authority to borrow, so it never has.

If this incredibly successful and direly needed program hasn’t ever borrowed a dime, why is the president and his hand-picked commissioners putting Social Security cuts (and/or increases in the retirement age) in the same sentence as deficit reduction?

The attempt to mischaracterize Social Security as an “entitlement” is not a “Right vs. Left” dispute — It’s a class warfare issue. There have been commentaries from across the political spectrum emphasizing the same fact: Social Security is not an “entitlement”. The assertion has appeared on the conservative patriotsteaparty.net website, the DailyKos on the Left and in a piece by independent commentator, Marti Oakley.

The battle for “entitlement reform” is just one front in the larger war being waged by Wall Street against the middle class. Kevin Drum discussed this conflict in a recent posting at his Plutocracy Now blog for Mother Jones:

It’s about the loss of a countervailing power robust enough to stand up to the influence of business interests and the rich on equal terms. With that gone, the response to every new crisis and every new change in the economic landscape has inevitably pointed in the same direction. And after three decades, the cumulative effect of all those individual responses is an economy focused almost exclusively on the demands of business and finance. In theory, that’s supposed to produce rapid economic growth that serves us all, and 30 years of free-market evangelism have convinced nearly everyone — even middle-class voters who keep getting the short end of the economic stick — that the policy preferences of the business community are good for everyone. But in practice, the benefits have gone almost entirely to the very wealthy.

One of my favorite commentators, Paul Farrell of MarketWatch made this observation on March 1:

Wall Street’s corrupt banks have lost their moral compass … their insatiable greed has become a deadly virus destroying its host nation … their campaign billions buy senate votes, stop regulators’ actions, manipulate presidential decisions. Wall Street money controls voters, runs America, both parties. Yes, Wall Street is bankrupting America.

Wake up America, listen:

“Our country is bankrupt. It’s not bankrupt in 30 years or five years,” warns economist Larry Kotlikoff, “it’s bankrupt today.”

Economist Peter Morici: “Capitalism is broken, America’s government is two bankrupt political parties bankrupting the country.”

David Stockman, Reagan’s budget director: “If there were such a thing as Chapter 11 for politicians” the “tax cuts would amount to a bankruptcy filing.”

BusinessWeek recently asked analyst Mary Meeker to run the numbers. How bad is it? America really is bankrupt, with a “net worth of a negative $44 trillion.” Bankrupt.

And it will get worse. Unfortunately, nothing can stop America’s self-destructive Wall Street bankers. They simply do not care that their “doomsday capitalism” is destroying themselves from within, and is bankrupting America too.

On February 21, I quoted a statement made by bond guru Bill Gross of PIMCO, which included this thought:

America requires more than a makeover or a facelift. It needs a heart transplant absent the contagious antibodies of money and finance filtering through the system. It needs a Congress that cannot be bought and sold by lobbyists on K Street, whose pockets in turn are stuffed with corporate and special interest group payola.

That essay by Bill Gross became the subject of an article by Terrence Keeley of Bloomberg News. Mr. Keeley’s reaction to the suggestions made by Bill Gross was this:

To redeem Wall Street’s soul, radical solutions are clearly needed, but advocating the eradication of profit-based markets that have served humanity well on balance without a viable replacement is fanciful. Gross deserves an “A” for intent — but something more practical than a “heart transplant” is required to restore trust and efficacy to our banking system.

* * *

But an economy based on something other than profit risks misery and injustice of another sort. The antibodies now needed aren’t those that negate profitability. Rather, they are the ones that bind financial engineering to value creation and advancement of society.

Perhaps the most constructive solution to the problem is my suggestion from February 10: Recruit and employ an army of lobbyists to represent and advance the interests of the middle class on Capitol Hill. Some type of non-partisan, “citizens’ lobby” could be created as an online community. Once its lobbying goals are developed and articulated, an online funding drive would begin. The basic mission would be to defend middle-class taxpayers from the tyranny of the plutocracy that is destroying not just the middle class – but the entire nation. Fight lobbyists with lobbyists!

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License To Steal

February 28th, 2011 Posted in Uncategorized

Feb, 28 2011

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People are finally beginning to understand how our elected officials are benefiting from a system of “legalized graft” in the form of campaign contributions. Voters have seen so many politicians breach their campaign promises while providing new meaning to the expression “follow the money”, that there now seems to be a resigned acceptance that political payoffs are an uncomfortable fact of life. Worse yet, most people aren’t aware of another loophole in the law allowing Congress-cretins to make real money.

On January 26, 2009, Congressman Brian Baird introduced H.R.682, the “Stop Trading on Congressional Knowledge Act” (STOCK Act). The bill was intended to resolve the situation concerning one of the more sleazy “perks” of serving in Congress. As it presently stands, the law prohibiting “insider trading” (e.g. acting on confidential corporate information when making a transaction involving that company’s publicly-traded stock) does not apply to members of Congress. Remember how Martha Stewart went to prison? Well, if she had been representing Connecticut in Congress, she might have been able to interpose the defense that she was inspired to sell her ImClone stock based on information she acquired in the exercise of her official duties. In that scenario, Ms. Stewart’s sale of the ImClone stock would have been entirely legal. That’s because the laws which apply to you and I do not apply to those in Congress. Needless to say, within six months of its introduction, H.R.682 was referred to the Subcommittee on the Constitution, Civil Rights, and Civil Liberties where it died of neglect. Since that time, there have been no further efforts to propose similar legislation.

Here is a summary of the most important provisions of the “Stop Trading on Congressional Knowledge Act”:

Amends the Securities Exchange Act of 1934 and the Commodities Exchange Act to direct both the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) to prohibit purchase or sale of either securities or commodities for future delivery by a person in possession of material nonpublic information regarding pending or prospective legislative action if the information was obtained: (1) knowingly from a Member or employee of Congress; (2) by reason of being a Member or employee of Congress; and (3) other federal employees.

Amends the Code of Official Conduct of the Rules of the House of Representatives to prohibit designated House personnel from disclosing material nonpublic information relating to any pending or prospective legislative action relating to either securities of a publicly-traded company or a commodity if such personnel has reason to believe that the information will be used to buy or sell the securities or commodity based on such information.

Back in September of 2009, a report by American Public Media’s Steve Henn discussed the investment transactions made by some Senators in September of 2008, after having been informed by former Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernanke, that our financial system was on the verge of a meltdown. After quoting then GOP House Minority Leader John Boehner’s public acknowledgement that:

We clearly have an unprecedented crisis in our financial system. . . .

On behalf of the American people our job is to put our partisan differences aside and to work together to help solve this crisis.

Mr. Henn proceeded to explain how swift Senatorial action resulted in a bipartisan exercise of greed:

The next day, according to personal financial disclosures, Boehner cashed out of a fund designed to profit from inflation. Since he sold, it’s lost more than half its value.

Sen. Dick Durbin, an Illinois Democrat, who was also at that meeting sold more than $40,000 in mutual funds and reinvested it all with Warren Buffett.

Durbin said like millions of others he was worried about his retirement. Boehner says his stock broker acted alone without even talking to him. Both lawmakers say they didn’t benefit from any special tips.

But over time members of Congress do much better than the rest of us when playing the stock market.

* * *

The value of information that flows from the inner workings of Washington isn’t lost on Wall Street professionals.

Michael Bagley is a former congressional staffer who now runs the OSINT Group. Bagley sells access and research. His clients are hedge funds, and he makes it his business to mine Congress and the rest of Washington for tips.

MICHAEL Bagley: The power center of finance has moved from Wall Street to Washington.

His firm is just one recent entry into Washington’s newest growth industry.

CRAIG HOLMAN: It’s called political intelligence.

Craig Holman is at Public Citizen, a consumer watchdog. Holman believes lobbyists shouldn’t be allowed to sell tips to hedge funds and members of Congress shouldn’t trade on non-public information. But right now it’s legal.

HOLMAN: It’s absolutely incredible, but the Securities and Exchange Act does not apply to members of Congress, congressional staff or even lobbyists.

That law bans corporate insiders, from executives to their bankers and lawyers, from trading on inside information. But it doesn’t apply to political intelligence. That makes this business lucrative. Bagley says firms can charge hedge funds $25,000 a month just to follow a hot issue.

BAGLEY: So information is a commodity in Washington.

Inside information on dozens of issues, from bank capitol requirements to new student loan rules, can move markets. Consumer advocate Craig Holman is backing a bill called the STOCK Act. Introduced in the House, it would force political-intelligence firms to disclose their clients and it would ban lawmakers, staffers, and lobbyists from profiting on non-public knowledge.

Mr. Henn’s report went on to raise concern over the fact that there is nothing to stop members of Congress from acting on such information to the detriment of their constituents in favor of their own portfolios.

Take a look at the list below from opensecrets.org concerning the wealthiest members of Congress. In light of the fact that these knaves are able to trade on “inside information” you now have the answer to the following question from the opensecrets website:

Congressional members’ personal wealth keeps expanding year after year, typically at rates well beyond inflation and any tax increases. The same cannot be said for most Americans. Are your representatives getting rich in Congress and, if so, how?

Here is the Top Ten List of the Richest Members of Congress from opensecrets.org:

NAME               MINIMUM NET WORTH   AVERAGE   MAXIMUM NET WORTH

Darrell Issa (R-Calif) $156,050,022      $303,575,011    $451,100,000

Jane Harman (D-Calif) $151,480,522    $293,454,761 $435,429,001

John Kerry (D-Mass)    $182,755,534     $238,812,296 $294,869,059

Mark Warner (D-Va)     $65,692,210      $174,385,102   $283,077,995

Jared Polis (D-Colo)     $36,694,140       $160,909,068   $285,123,996

Herb Kohl (D-Wis)        $89,358,027           $160,302,011   $231,245,995

Vernon Buchanan (R-Fla)$-69,434,661    $148,373,160 $366,180,982

Michael McCaul (R-Texas) $73,685,086 $137,611,043 $201,537,000

Jay Rockefeller (D-WVa) $61,446,018      $98,832,010   $136,218,002

Dianne Feinstein (D-Calif) $46,055,250    $77,082,134   $108,109,018

Jay Rockefeller’s position on the list is easy to understand, given the fact that he is the great-grandson of John D. Rockefeller. How the first eight people on the list were able to become more wealthy than Jay Rockefeller should be matter of interest to the voting public. In the case of #10 — California Senator Dianne Feinstein — we have an interesting situation. As chair of the Senate Military Construction Appropriations subcommittee, she helped her husband, Iraq war profiteer Richard C. Blum, benefit from decisions she made as chair of that subcommittee. In an article for bohemian.com, Peter Byrne discussed how Senator Feinstein was routinely informed about specific federal projects coming before her in which one of her husband’s businesses had a stake. As Byrne’s article explained, the inside information Feinstein received was intended to help the senator avoid conflicts of interest, although it had the effect of exacerbating such conflicts.

“Inside information” empowers the party in possession of that knowledge with something known as “information asymmetry”, allowing that person to take advantage of (or steal from) the less-informed person on the other side of the trade. Because membership in Congress includes a license to steal, can we ever expect those same individuals to surrender those licenses? Well, if they were honest . . .

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