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Bowdoin man makes good

Tuesday, June 23, 2015

The folks at the National Review, who specialize in giving racism a (very thin) veneer of intellectual respectability, have set their sights on DeRay McKesson. Here’s the intro:

Meet DeRay McKesson: Bowdoin ’07, a former Minneapolis-area school administrator — and now the public face of “Black Lives Matter.” Imagine Al Sharpton, circa the Crown Heights riot, with access to Twitter. That’s DeRay.

via National Review

Now, I come not to praise or defend Mr. McKesson, who can take care of himself. I merely point out the prominence accorded his alma mater, which, I flatter myself into believing, the National Review considers self evidently a bastion of liberal perfidy, just as it considers Al Sharpton self evidently representative of all that is evil. After all, Bowdoin has been certified the worst school in the nation by a group of right wing professors, so, I feel comfortable in asserting that the folks at the white shoe racist rag are sending a message by the reference to Bowdoin.

To paraphrase a Dartmouth man, which pains this Bowdoin alum a bit, Bowdoin is a small college. And yet there are those who love it!  I love it all the more knowing that it produced DeRay McKesson, and that he has disturbed the folks at the National Review. They wouldn’t bother attacking him if they weren’t afraid of him. A few more like him and we might finally live down the shame of Franklin Pierce.

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A corollary

Wednesday, June 17, 2015

Upton Sinclair once said: “It is difficult to get a man to understand something, when his salary depends on his not understanding it.”

Self evidently true.

I believe I have discovered an equally obvious corollary to Sinclair’s observation:

It is easy to get a man to believe something, when his salary depends on his believing it.

This is the most charitable explanation for the fact that there are people in New Hampshire (all, apparently, members of Trump’s staff) who claim that they actually want Donald Trump to not only run for president, but to win.

Speaking of Trump, I was briefly puzzled by the fact that he became an announced candidate. He surely does not expect to win, and unlike the Carsons and Santorums, he has no need to keep his name out there to get speaking fees from the yahoos. But, as I said, I was puzzled only briefly. The Donald may be the first person to run for president simply because he needs people to pay attention to him. It is surely a sign of the decline of our empire that not a single one of the announced Republican candidates is remotely qualified to be president. It will be a certain sign of our decline if one of them gets elected, which is not as unlikely as many people seem to think.

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History rhymes

Tuesday, June 16, 2015

Read this article before proceeding. If you find it a bit complicated or opaque, I think I can help by defining a few terms and giving a simple explanation of what’s going on here.

“Regulatory Capital Relief” refers to a method currently utilized by banks to skirt the Dodd-Frank requirement that they keep enough real assets to cover their losses if they make bad loans. The riskier the loan, the more cash they are supposed to keep in reserve.

“Credit default swaps” are insurance policies issued by hedge finds and other criminal enterprises that promise to pay a creditor if a borrower defaults on an insured loan. Banks buy credit default swaps instead of putting cash aside in case risky loans go bad. They do it because the cost for the insurance is less than the cost of putting the money aside, just as it’s cheaper for you to buy auto insurance than to put money in the bank to cover your liability should you cause a horrible accident. The difference between you and the banks is that you honestly expect your insurance company to make good if you cause an accident, while the banks have no such expectations about the crooks that issue credit default swaps. Also, the likelihood of you causing an accident pales in comparison to the likelihood that the banks will crash the economy.

Anyone can issue a credit default swap. I could do it if I wanted to, and the banks were willing to pay me a premium. Banks are well aware that credit default swap issuers will most likely not be able to pay up if the insured loans go bad, just like AIG wasn’t able to pay up in 2008. However, the banks don’t care because 1) pretending that the swaps are on the up and up frees up more money for them to play with, and 2) they know that if the loans go South the government will step in again and save their bacon.

It’s nice to know that the SEC has been aware of this issue for years; not so nice to know they have no intention of doing anything about it.

The more time passes after 2008, the more admiration I have for FDR and the folks who dealt with the fallout from the Depression. They made some mistakes for sure, but they at least learned from history. As soon as we could, we took steps to make sure that if history didn’t repeat itself, it would certainly rhyme.

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The rich are different than you and me

Monday, June 15, 2015

Polling proves it, just check out this article on Kos.

Now, what is interesting about this is that on almost every question, the rich truly are different from you and me (considering you and me collectively). It would not be a stretch to say that they are more selfish and self-centered, with all that leavened by a smidgen of entitlement. Putting the causation question aside, there is something else about this poll that is quite striking. Public policy in this country closely tracks the opinion of the very rich, and where it doesn’t presently precisely align, the general drift is toward their preferences. Funny, that, as it seems inexplicable that in the world’s greatest democracy (we are, aren’t we?) the public policy preferences of the few should consistently trump the preferences of the many. After all, as Justice Kennedy has told us, there is absolutely no evidence that money is a corrupting influence in politics. One can only conclude that the policy preferences of the rich have been adopted because they are so self evidently the right positions, even if so many of them don’t work in practice.

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Having their cake, and eating it too

Tuesday, June 9, 2015

In this day and age, many a time honored adage has been proven untrue, among them that referred to in the title of this post. Against all reason, it appears that Hank Greenberg, the guy who drove AIG into the ground, will be getting a multi-billion dollar payday, because the American government bailed out his company, which would have collapsed without said bailout. It took some judge shopping, but…

…Greenberg is asking the court to award him and other AIG shareholders at least $23 billion from the Treasury. He says that’s to compensate them for the 80 percent of AIG stock that the Federal Reserve demanded as a condition for its bailout. Judge Thomas Wheeler has repeatedly signaled his agreement with Greenberg. A decision is expected any day.

…

Hank Greenberg had been forced out as chairman and chief executive in 2005 after state and federal regulators uncovered that the company had been engaged in sham transactions that allowed AIG and its corporate customers to manipulate reported earnings, avoid taxes, evade regulatory requirements and hide risks and liabilities from shareholders. Ever since, Greenberg has been on a mission to restore his reputation and regain control of the company that he had ruled over with an iron hand for 37 years.

Even in exile, Greenberg remained AIG’s most important shareholder, controlling 20 percent of the company’s stock. He successfully sued some AIG executives in court and recruited away others to build his own rival insurance company. He also agreed to pay $15 million to settle civil charges brought against him by the Securities and Exchange Commission, though he refused to acknowledge any wrongdoing.

Greenberg has repeatedly claimed that if he’d still been in charge, AIG would never have gotten into the mess it did. But that is impossible to know.

What is known, however, is that when Greenberg was in charge, he ran the company “as if it were a feudal state .?.?. disdainful of modern concepts of internal controls and regulatory compliance,” according to one person with intimate knowledge of the company’s management. After his firing, AIG paid $1.6 billion to settle multiple counts of accounting fraud brought by the SEC.

What is also known is that the two lines of business that were the source of AIG’s major problems during the 2008 crisis were launched on his watch. He helped to create their risky business models and strategies, which were based on playing one regulator off another and engaging in complex financial arrangements between regulated subsidiaries and a largely unregulated parent company. And both business lines took root in the same clever rules-bending corporate culture that had always been Greenberg’s trademark.

“The AIG which came begging to the Fed’s doorstep was the AIG that Hank Greenberg built,” said James Millstein, the Treasury official who oversaw AIG’s restructuring. “It’s capital structure was opaque, it was heavily dependent on short-term funding, with a highly leveraged financial products subsidiary that had been organized to evade effective regulatory oversight.” Greenberg, he said, “ran the parent company like a hedge fund with a triple A rating.”

As the financial crisis unfolded, AIG’s fundamental flaws were finally exposed. On the same week Lehman Brothers collapsed, desperate executives went to the Treasury and the Federal Reserve looking for a loan. Dozens of Fed officials were dispatched to AIG headquarters on Pine Street in lower Manhattan. Within days, they were convinced that without a substantial cash infusion, AIG would be forced to file for bankruptcy, threatening the solvency of a number of big banks in Europe and the United States.

To avoid such a meltdown, the Fed agreed under its emergency authority to act as a lender of last resort, lending AIG an initial $85 billion. The terms were to be the same as AIG’s investment bankers had offered the previous week, without success, to private lenders — a 14 percent interest rate and ownership of 80 percent of the company. With lawyers sitting in the next room ready to file a bankruptcy petition, AIG directors reluctantly agreed to the terms.

via The Washington Post

This story has been around for a while, but it’s worth reminding ourselves that this did not have to be. Had we played our cards right, people like Greenberg would either have jumped out of windows or would be dealing with having their mansions foreclosed even as we speak. (Well, we’re not speaking, but you know what I mean.) There were those among us, myself included, who did not buy into the “too big to fail” talk. There were other ways, besides bailouts, to deal with the fallout from the collapse of Wall Street. A bit of creativity would have done the trick. A side benefit: had we let Wall Street collapse, we would more than likely have faced up to the reality of the Depression that is still with us. Since the people like Greenberg that own the government are doing well, thanks to that massive handout, we have, as a nation, simply pretended that the destruction visited on ordinary people didn’t happen, and isn’t continuing. It is, unfortunately, an article of faith on much of the left and the right (always beware of bi-partisan agreement) that we simply had no choice but to rescue the criminals and con men that control our financial system. I’ll always be proud of my Congressman, Joe Courtney, for voting against the bailout. Had his side (and my side) prevailed, Hank Greenberg might not have the money to pay his expensive legal talent to pull off this final heist.

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Word for the day: Sphexishness

Saturday, June 6, 2015

If you’re a Paul Krugman fan, you have no doubt read more than one column or blog post about the fact that the right refuses to learn from experience. I think the latest example he cited is the failure of Sam Brownback’s Kansas “experiment”. That experiment has decidedly failed, but Sam and the rest of the right have learned no lesson, and continue to believe (or say they believe) that throwing money at the rich in the form of lopsided tax cuts will deliver an economic Nirvana.

I’m currently reading Intuition Pumps and Other Tools for Thinking by Daniel Dennett, and was reminded of Krugman’s frequent complaint when I read Dennett’s description of the Sphex moth. (As a side note, Apple’s auto suggest feature knows all about “Sphexishness”) The moth feeds its young by paralyzing a cricket, bringing it to its nest, checking the nest to make sure all is well, dragging the cricket into the nest, laying its eggs, and then leaving the larvae to fend for themselves, with the still living, but paralyzed cricket as food. However, if someone moves the cricket by a few inches while the Sphex is checking its nest, it will move the cricket back to the nest entrance and re-check the nest, ad infinitum if one keeps moving the cricket. At least, that was the initial knock on the Sphex, until it was discovered that not all of them were quite that stupid. The liberals among them learned their lesson, while the conservatives among them never seemed to do so.

Now, at first glance it might seem that stupid Sphexes (not sure if that’s the plural) and Republicans are completely analogous, but that’s not really so, for reasons to which Krugman has alluded. It may be quite true that tax cuts for the rich don’t benefit the rest of us, but they do benefit the folks to whom politicians such as Brownback are beholden, so unlike the Sphex, the Brownbacks and their billionaire backers achieve their real objective with every seeming failure. The real Sphexes are the mass of people who keep voting for the Brownbacks of the world.

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Hillary tips her hand

Saturday, June 6, 2015

Hillary Clinton and the other Democratic candidates are vying for the endorsement of the American Federation of Teachers. The fix is probably in, because the leader of the AFT is a Hillary supporter, but questions remain. Per usual, no one actually knows where Hillary stands on issues critical to teachers, such as the charter school (read “corporatization”) movement. As with TPP, Hillary is busy listening because apparently she hasn’t been around long enough to know anything about these issues.

But sometimes reality leaks through:

Ann O’Leary, the campaign’s top policy adviser, told the New York Times earlier this year that Clinton would be engaging with leaders on both sides of the debate more than [the] Obama administration has: “both the teachers union and the reformers will really feel like they have her ear in a way they haven’t. (Emphasis added)”

Here are the pertinent definitions of “reform” from my American Heritage Dictionary:

1 obsolete : RESTORE, RENEW
2 a) : to restore to a former good state : bring from bad to good

b) : to amend or improve by change of form or by removal of faults or abuses
c) : to put or change into a new and improved form or condition

3 : to put an end to (an evil) by enforcing or introducing a better method or course of action or behavior
<~ the abuses of political patronage>
4 : to induce or cause to abandon an evil manner of living and follow a good one : change from worse to better

Notice a common thread there? Now, one could argue that the terms “reform” and “reformers” have been so misused in our times that they no longer necessarily have positive connotations. The press often dutifully calls someone a reformer if that person or entity calls itself a reformer. But the fact is that the word is used as a term of self description precisely because it still has a positive connotation. There’s an imbalance between the neutral (or, nowadays, pejorative) term “teacher’s union” and the positive term “reformers” that tells us all we need to know. Once Hillary is safely elected, Arne Duncan need have no fear that a Clinton presidency will try to undo his “reforms” or stop the corporatization of our public schools. It’s a bi-partisan push, and in this day and age, that’s all you need to know to tell you that you need to hide your wallet and duck for cover.

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Friday Night Rant

Friday, June 5, 2015

For one reason or another I’ve had no time for blogging this week, so the links to various items of interest (to me, at least) have stacked up on my Pinboard, awaiting comment. So, this post will be devoted to various and disparate hobbyhorses of mine.

First up, the folks at Disney are following in the footsteps of other great American corporations by using H-1B visas to replace American workers with lower paid and probably exploited foreign workers. You may recall that such visas are available only when American workers lack the unique and special skills the foreign workers allegedly possess. As is usual in these situation, the American workers were required to train their allegedly highly skilled replacements before they were shown the door. Only in America would this not be considered conclusive evidence that the program was being abused. But putting that obvious point aside, I believe in olden times (prior to 1980, let’s say) if an American corporation lacked workers with the skills needed for a specific job, that corporation would train the local talent to do that job. In any event, as Dean Baker has pointed out endlessly on his blog, if there really were a skills gap in this country, the price for in-demand skilled labor would be rising, but it isn’t. As with everything else in our economy, this is all about transferring wealth to the already wealthy.

Speaking of transferring wealth to the wealthy, our private pension system is quite busy doing just that. Those of us who must decide for ourselves which offered fund should hold our 401k money can be forgiven for getting fleeced; it’s built into the system and most of us are too busy trying to survive to make really informed choices, and even if we make the attempt we have no bargaining power. The money managers make their money on outrageously high fees, which we can’t avoid. But you would think that CalPers, the agency that manages the Californian Pension system would have both the smarts and the bargaining power to at least know what it is paying in fees for its investments in private equity. You’d think, but you’d be totally wrong:

But surely limited partners like private equity investor heavyweight CalPERS know what they are paying in contractually specified fees, namely the annual management fee and the so-called carried interest fee, which is a profit share (usually 20%) which usually kicks in after a hurdle rate has been met (historically, 8%), right?

Think again. Private equity firms simply remit whatever they realize upon the sale of a company, net all those lovely fees and expenses (which include hefty legal fees) and any carry fee they think they are entitled to take.

…

We’ve found it hard to convey how badly captured limited partners are, and this example hopefully provides a sufficiently vivid illustration. Here, CalPERS, supposedly the most seasoned and savvy investor in private equity, is flying blind on how much it pays in carry, while going through the empty exercise of meticulously tracking its woefully incomplete tally of visible charges. This is a garbage in, garbage out exercise as far as private equity is concerned. Moreover PE real (as opposed to visible) fees and costs are so high that it means that CalPERS claims about its fees and costs across its entire portfolio are rubbish.

via Naked Capitalism

So, the teachers and other public servants in California are slaving away to enrich private equity managers, who make money on their backs whether the underlying investments make money or not. People love to slam personal injury lawyers. But they only make money if the also make money for their clients. Not so with the people who are depriving American workers of a comfortable retirement. But then, as Jeb Bush would point out, who are we to think we should be able to retire.

Next up, religion. It seems that Hasidic Jews have become a majority of the citizens of Rockland County, New York. This may just be a sort of foretaste of what we have in store as a slightly different scenario plays itself out as the rent seekers suck the life out of the public school system:

There’s a scandalous division in the community between public schools and Orthodox Jewish and Hasidic schools (yeshivas). There are only 2 Catholic schools, and yeshivas outnumber Christian private schools about thirty to one. There are also four nonreligious private schools. When the Hasids were first building their community in the area there was some discontent that they were paying property taxes to fund public schools that their kids don’t attend– at the same time they were funding the yeshivas for their own kids. They started taking over the school board. 

Harvey Katz, an Orthodox Jew who served as a school board member, said, “Just because my children are not in the public schools doesn’t mean I don’t care about all the children. Children are our future, wherever they may be.” The district was one of five districts in New York State where more students were enrolled in private school than in public school due to religious reasons. But events didn’t indicate that the religious extremists did care about the future of non-Orthodox/Hasidic children. By 2005, when they took over the school board, they began reducing the budget and lowering taxes, much to the chagrin of the non-Hasidic members of the community. 

The reduced budgets, in fact, were draconian, forcing students to take five- and six-year graduation plans instead of four-year plans, and in 2010 the school board of the East Ramapo Central School District voted to sell its Hillcrest Elementary School, which they had forced it close with massive budget cuts, to the Hasidic Jewish congregation Yeshiva Avir Yakov of New Square. In an official response to an investigation of the sale, New York State Education Commissioner David Steiner stated that the East Ramapo board “abused its discretion by hastily approving the sale.” The 12-acre campus, assessed at $10.2 million (market value) by the Assessor’s Office of Clarkstown, was given only a $3.2 million appraisal by the school board’s own attorney, Albert D’Agostino. A year later, the State Education Commissioner halted the sale of the building, saying the board failed its fiduciary responsibility to the district when it approved the $3.2 million deal.

via Down with Tyranny!

Give the otherwise loathsome Andrew Cuomo credit: he’s trying to put the brakes on this budding theocracy. Give the wider Jewish community credit as well, as there has been a lot of criticism of the East Ramapo situation by the Jewish community, such as the Orthodox Jewish publication, the Jewish Daily Forward. Not that it excuses this attempt at instituting a theocracy in New York, but nothing the Hasids are doing is much different than what prevails virtually unchallenged in our Southern School systems, where prayers to Jesus are said before football games and teachers are punished for teaching that evolution is scientific fact and Creationism is taught as science, despite the clear (until Scalia gets his hands on it) case law barring such teaching.

Finally, I have nothing against the choices Caitlyn Jenner has made, but I agree wholeheartedly with this:
  
End of rant. A weeks worth of blogging condensed into one post.

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A novel idea: give the people what they want

Wednesday, June 3, 2015

So, it seems that Jeb Bush doesn’t know how many years the lower 99 have to work before getting their share of crumbs from the table, though he knows he wants to increase the number of years and decrease the number of crumbs:

If you missed Face the Nation on Sunday, you missed Jeb Bush proving yet again he’s not ready for prime time. In this case, following up on his idea that Social Security has to be cut in order to save it.

“But we need to look over the horizon and begin to phase in over an extended period of time going from 65 to 68 or 70. And that by itself will help sustain the retirement system for anybody under the age of 40.”

Jeb Bush, who would be president of the United States, doesn’t know that the retirement age already has been raised and that it isn’t 65 for anyone retiring anymore. Right now the age is 66. For people born in 1959 and later, it’s 67. What RJ Eskow says: “The retirement age is a fundamental part of American working life. If you’re running for president and don’t know what it is, you’re privileged and out of touch.”

via Daily Kos

Well, unless I am gravely mistaken, we don’t need to worry about Jeb in the White House, no matter how much money his PAC salts away. If he goes out with a bang rather than a whimper that’s all to the good, but either way will do.

But Jeb’s promise to impoverish retirees raises a broader question than his incompetence. Standard political theory would predict that in a party system, the parties would compete, and one way they would compete is by promising voters things that they want. Yet, such promises are oddly missing. True, the Republican Party promises its slack jawed voters that it will keep “them” in their place, but beyond that it offers nothing that anyone but billionaires actually want. The Democrats offer Republican light. Unlike Republicans they’re not totally against raising the minimum wage, but they’re certainly not interested in even promising to raise it to an acceptable level. Neither party raises anything but isolated voices against the TPP, although almost everyone in the country is against it. If there’s a small but devoted group of people (Jeb’s friends and supporters) who want to cut social security, their numbers, if not their cash, are more than offset by the vast numbers of people who would like to see benefits increased, retirement ages decreased, all paid for out of the swollen incomes of the 1%, thank you very much. One would think that one could harvest enough votes by promising that, as well as free higher education, etc. to at least partially offset the kleptocrat’s money advantage. The fact is that we haven’t had a politician running a national campaign promising to give the mass of people anything, except around the margins, since LBJ, or maybe the much maligned George McGovern. The major difference between the two parties is this: one can tolerate chipping away at government benefits slowly but ineluctably; the other would prefer to proceed full speed ahead, while blaming the other party when the electoral shit hits the fan. Given Democratic timidity, the Republicans are gradually delivering everything the plutocrats could want, while they are successfully changing the rules to make sure that only the slack jawed and the rich get to vote.

This has been going on so long that our national punditocracy doesn’t know what to make of it when a politician goes off the reservation. They are desperately hoping that Bernie Sanders will precede Jeb Bush into oblivion, but don’t bet on it. He doesn’t have much money, so he won’t have the world’s biggest megaphone, but he’s the only one selling what the people want. We may be in for some surprises.

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The Bronze Rule 

Friday, May 29, 2015

Many years ago I read an article in Scientific American that has stuck with me through the years. The thrust of it was as follows: If you want to change someone’s (or a group of someones, e.g., the Republican Party) behavior, the best approach is tit-for-tat. That is, neither the golden rule (do unto others as you would have them do unto you) nor the silver rule (Do not do unto other what you would not have them do unto you), however noble the sentiment behind them, is particularly efficacious. What works is what you might call the bronze rule (modeling ourselves on the Olympics here): do unto others what they have done unto you. No more and no less mind you. According to that long ago article, this strategy works, and the author, whoever it might have been, made a compelling case.

What brings this to mind is the recent actions of one of the more prominent riders in the Republican clown car:

There is just no way to square this circle. None whatsoever. After witnessing the serious destruction that major flooding just caused in his home state of Texas, Republican Sen. Ted Cruz made an iron-clad promise to his constituents:

“Today, Texans are hurting. They’re hurting here in San Marcos. They’re hurting in Wimberley. They’re hurting in Houston. They’re hurting across the state.

“Democrats and Republicans in the congressional delegation will stand as one in support of the federal government meeting its statutory obligations to provide the relief to help the Texans who are hurting.”

It would be an eminently reasonable assurance to make, if only Ted Cruz were a reasonable man. But he’s not. We all know he’s not. When Hurricane Sandy wreaked even greater damage across the Northeast in 2012, Cruz told his suffering fellow citizens to get bent:

“This bill is symptomatic of a larger problem in Washington—an addiction to spending money we do not have. The United States Senate should not be in the business of exploiting victims of natural disasters to fund pork projects that further expand our debt.”

Cruz voted against Sandy aid, of course, but now that it’s his own backyard that’s under water—and not some wretched blue states half a country away—he’s all for federal disaster assistance. There’s absolutely no way to reconcile these two stances, even if you were to violate the laws of physics.

via Daily Kos

Now, unfortunately, in situations like this, Democrats and other reasonable people almost reflexively follow either the golden rule or the silver rule, doing unto others what they would like those people to do unto them, even knowing full well that those very people won’t do so unto them when the tables turn. Clearly the wrong way to go. This situation calls for some tit-for-tat. Our congresscritters could be snarky about it, perhaps, and tell the good people of Texas that they would hate to be complicit in making them compromise their ruggedly individualistic principles and lower them to the level of us addicted to federal funds northerners who still, by the way, manage to export a good deal of our tax money to the go it aloners down South. But they truly needn’t go that far. They could just filibuster the money until Cruz apologizes to the Sandy victims and admits that he was wrong. I would be willing to bet that the next time our region is hit by a natural disaster we wouldn’t be getting any more lectures from Cruz or his ilk. Obama, by the way, could probably achieve this on his own; he could, after all, simply refuse to designate the state as a disaster area until Cruz and Abbot make a request that includes language that amounts to a recognition that they were wrong.

Some might say that it is wrong to punish the people of Texas for the actions of their Senator and governor. At this point the proper response to that is to point out that the people of Texas voted for these people with the full knowledge of where they stood on issues precisely like this. They should be happy to get what they voted for.

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