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Be afraid, be very afraid

Wednesday, September 24, 2014

Scott Brown, the New Hampshire carpetbagger, is attacking Jeanne Shaheen for failing to understand the existential threat posed by a relative handful of religious nut-jobs half a world away:

>“Radical Islamic terrorists are threatening to cause the collapse of our country,” Mr. Brown says. “President Obama and Senator Shaheen seem confused about the nature of the threat — not me.”

via Daily Kos

An agressive response would be something to the following effect (properly massaged, of course, by Shaheen’s ad men): Does Scott Brown really believe that a bunch of religous nutcases can bring down the United State of America?  Does he really think our country is so weak? We are the country that conquered Hitler and went to the moon, and we are more than capable of defending ourselves against some two bit terrorists. And we can do that without spending billions of dollars and thousands of lives in countries half a world away from us. Scott Brown thinks this country is weak, and he’s running scared; I think we are a strong country, and I don’t wet my pants every time some terrorist commits an act of violence somewhere in the world.

But, of course, her response is more likely to be that she does too totally understand that if we don’t  bomb everyone in Syria that we could be an Islamic state next week, and who is this Obama guy Brown keeps talking about.

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Signs of Hope

Wednesday, September 24, 2014

Every once in a while something happens that makes you think all hope is not lost. These days, that qualifies as good news, so this counts as a good news post.

Hundreds of Colorado high school students walked out of school Tuesday to protest a conservative history curriculum their town’s recently elected far-right school board is proposing:

The school board proposal that triggered the walkouts in Jefferson County calls for instructional materials that present positive aspects of the nation and its heritage. It would establish a committee to regularly review texts and course plans, starting with Advanced Placement history, to make sure materials “promote citizenship, patriotism, essentials and benefits of the free-market system, respect for authority and respect for individual rights” and don’t “encourage or condone civil disorder, social strife or disregard of the law.”

The student walkouts followed a sick-out by teachers that closed two schools.

It truly is heartening that these kids are refusing to submit to propaganda in the schoolroom. This experience may be one they never forget, that may permanently influence their political thinking, which is all to the good. 

Of course, there is a small cloud within this silver lining. It was their parents, among others, who put that school board in office. The acid test will come when those folks come up for re-election.

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Obvious Day

Monday, September 22, 2014

Today, a few observations on the obvious.

First, watch this relatively short video. 

[youtube=https://www.youtube.com/watch?v=CKCvf8E7V1g&w=560&h=315]

At Buzzflash they’re reporting that the folks at TED have pulled this video off their site on the grounds that his remarks were “too politically controversial”. Now, the fact is that any reasonably informed person watching this video would be convinced, because there’s not a single thing he says that is not obviously true, particularly given the way he presents it. For my own part, I don’t think the video was really censored because his views were too controversial. I think it was censored because those views were being endorsed by a card carrying member of the .01%, and are therefore harder to cast aside. After all, someone with that much money simply can’t be dismissed as a dirty hippie. He is, in effect, exposing the nakedness of his fellow emperors, and that can’t be tolerated.

Speaking of obvious. Many years ago I worked at Keney Park in Hartford as a lifeguard. The head guard was a guy named Manny Davison, who was a mountain of a man. He would get in the pool with the kids and play a game with them, the ostensible and unattainable object of which was for them to somehow dunk him. That never happened, but the kids kept at it because the real fun consisted of being thrown up and back into the water. All the time he was playing Manny would moan about the fact that he was “tired of winning”. 

Well, in  less benign context, did you ever find yourself feeling tired of being right?  I mean, isn’t it depressing to watch this country teeter at the edge of yet another unwinnable war, urged to it by the usual suspects, who are always wrong, and warned away from it by the other usual suspects, who are always right and to whom no one ever listens. Do you sometimes find yourself hoping that you’re not right this time, that this time we will go in, fight our war, win, exit, and leave behind a functioning democracy that respects human rights, instead of a dysfunctional country that will beget yet another revolutionary movement, using weapons we left behind in the last war, that will wage war against our “allies”, who, despite also being  loaded down with our weapons, are never capable of defending themselves without our help.

So, wouldn’t it be nice if you woke up some morning in, say, 2017 and said to yourself “Gosh darn, I was wrong and John McCain was right. Look at the incredible success we’ve had in Syria/Iran/Iraq/[your favorite Middle Eastern country here]! I guess I’ve learned something from this experience”.

Unfortunately, it’s that last sentence that’s the dead giveaway that that happy event will never occur,  for it’s a sentence never uttered by the likes of McCain, Graham, and their happily forgotten friend Joe. Unfortunately, the forces within our power center are such that the number of people migrating from the always right to the always wrong side of the ledger are growing, while those traveling in the other direction are thin on the ground. Consider John Kerry,  boasting a reputation made by being right when those in power were wrong, who, having assumed power himself, has chosen to advocate for a war his younger self would have recognized as hopeless and a waste of the lives of those sent to fight it. Consider our president, who I continue to believe knows full well it will be a mistake to put “boots on the ground” yet who is ineluctably being drawn to take exactly that step by the sheer power of mass beltway stupidity.

 It really is no fun seeing the obvious. Maybe that’s why so few of our politicians are able to see it. And I really am tired of being right. So here’s hoping I’m wrong this time.

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Hope Springs Eternal

Sunday, September 21, 2014

Over at Think Progress they want us to believe that the new Archbishop of Chicago is the harbinger of a new age for the Catholic Church in America. Don't believe it.

Francis himself has brought, and will bring, no substantive change to the Catholic Church. He is simply better at PR than his Nazi loving predecessor. There is nothing better in this world that to be the successor of a very easy act to follow, and Benedict was certainly that. Both Francis and the new guy in Chicago simply want you to believe that, if they could, they'd be more than happy to be in favor of women's rights, contraception, gay rights, etc., but, gosh darn it, god says they can't be, so what can moderate guys like them do, save speak a little more gently but continue to do god's work?

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A mystery

Wednesday, September 17, 2014

So, it looks like John McCain may get his war, inasmuch as the Congress has voted to authorize U.S. aid to the rebels in Syria. The rebels are the “good guys”. For the moment.

Anyway, this got me to thinking. It is an article of faith among Republicans that the government can’t do anything right. That is how they justify the lack of a decent health care system, the hollowing out of the middle class, and any other social ill that they prefer to do nothing to remedy. The government is, they assert, simply unable to do anything about the ills that bedevil our country.

Yet, these same people insist that this same government, impotent at home, is fully capable of improving the lives and societies in places which we know virtually nothing about. This, despite massive evidence that we are, in fact, quite capable of making things better here when we put our minds to it, but have been historically unable to impose our will on other people, at least not in a fashion that doesn’t inevitably blow up in our collective faces.

I remain somewhat hopeful that Obama will tread water until Election Day and then publicly abandon this whole idea. I mean, when even the CIA admits that it can’t succeed (it never does succeed, but rarely admits it in advance) you might think a president worried about his legacy would think twice before following the Bush example.

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California Dumps the Hedge Funds

Tuesday, September 16, 2014

I have to confess that my promised weekly “good news” posts have been infrequent of late. This is partly due to a slowdown in posting, but mostly due to a dearth of good news, what with the U.S. about to get itself embroiled in another unwinnable war and all. But, here is some good news: CALPERS, the agency that administers the State of California's pension system, is going to exit all hedge funds.

The decision, after months of deliberation by the pension fund’s investment committee, comes as public pensions across the United States are beginning to assess their exposure to hedge funds. It is likely to reverberate across the investment community in the United States, where large investment funds look to Calpers as a model because of its size and the sophistication of its investments.

..
A growing number of pension funds and institutional investors have expressed concern that the fees that hedge funds charge are too high. While there is a range, hedge funds typically follow a “2 and 20” model where investors pay management fees of 2 percent of the total assets under management and 20 percent of the profit.

via The New York Times

It must be good to be a hedge fund manager. When you fuck up, which they mostly do, based on historical performance, you make extremely good money. When you perform well (totally optional, of course) you make even better money. Meanwhile, unless you do extremely well, your client's get porked, but what of that?

Unfortunately, this good news comes too late and from too far away for the pensioners of Rhode Island, who face the prospect of a Democratic governor (Gina Raimondo) who, as state treasurer cut their benefits while she handed their pension money over to hedge funds while refusing to release details about those investmentsmlz to the people of Rhode Island. As Dean Baker has repeatedly pointed out, it is passing strange that people like Raimondo believe it is perfectly okay to break contracts with retired workers but would never think of breaking contracts with, say, the hedge fund managers they are enriching.

Sorry, I'm veering away from the good news aspect. The good news is that the CALPERS decision may, indeed, mark the beginning of a shift away from hedge funds by institutional investors, which would be a good thing for the people those institutions are supposed to serve, such as retirees, and a profound hit on the hedge funds, which rely on the vast sums and onerous terms they extract from such investors. There is nothing the hedge funds offer that a large fund with billions of assets like CALPERS has can't do for itself. There is nothing to prevent CALPERS from devising it's own investment strategies that hedge against losses. You actually don't need to pay someone a billion dollars a year to get reasonably good investment advice.

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Fixed Delusions

Thursday, September 11, 2014

Without going into details, I have lately, in my role as an attorney, had a frustrating time trying to get a mental health agency to help a client deal with a tenant who is mentally ill, paranoid and delusional. We think she is at risk of harming herself, but they say that while she has a “fixed delusion”, she is otherwise high functioning and until she actually does harm herself, there's nothing they can do.

It has been frustrating, because we truly believe she is at risk, but as I said to my client, they may have a point. If we were going to seek some sort of protection for everyone with a fixed delusion, we'd need a caseworker for almost every Republican in the country.

Think about it. Birthers, tenthers, sovereign citizens, religious zealots and now, there's this:

From a post at Kos, an extended quote:

Tonight, at a local candidate forum, the Republican candidate for Pueblo County Commissioner essentially endorsed the Sandy Hook truther position.

…

The guy's name is Dr. Tom Ready, a dentist, and his Democratic opponent is the incumbent Sal Pace, who's served in various elected positions including the Colorado state legislature.

Ready began an answer to one of the moderator's questions by talking about the ludicrously high electric rates in Pueblo county (they are) and then stated his belief that we should go back to coal because “coal is clean” (eye roll). During his two minute statement, Ready declared that the reason rates were so high was that a bill Pace voted for at the state level forced the local utility to dump coal plants for natural gas. Pace explained that he spoke directly with representatives of the utility in question before he voted, and they told him that they were planning to close their coal plant anyway, so the switch to natural gas wouldn't alter their rate structure.

It was in Ready's back-and-forth rebuttal comments that he nuked his candidacy. Again he went after Pace for his vote on that bill, which also mandated a minimum percentage of electric generation from green sources, like solar or wind, which gave the utility an excuse forced the utility to raise its rates. (my strike)

At this point I thought, “Ruh roh, he's got Pace on that one.” It was going take a deft answer to squirm around that shot, since it's hard to tell low income folks that they must pay more for electricity so it will be cleaner. Further, the host of the debate, The Pueblo Chieftain (which is the local, decidedly conservative newspaper with massive market penetration) had been hammering that very point for months.

I was caught off guard when Pace completely ignored the expensive clean energy attack by stating that the two candidates had agreed to keep it clean before the debate started, but since Ready went there… Pace proceeded to ask him about stuff on Ready's Facebook page dealing with Sandy Hook being faked so a gun ban could be passed. Oh, and Pace pointed out that he has a connection to someone whose kid was murdered in that school shooting.

I expected Ready to deflect this easily with a quick, “Why are you talking about nonsense on Facebook, I asked you about voting to raise rates on low income Puebloans for the sake of "clean energy”. Explain that vote.“

But no.

Ready went for it, and began to claim that there is no proof that Sandy Hook actually happened. Unbelievable.

That was when the crowd erupted. There for a second I thought they were going to drag him out in the street and tar and feather him like he was a Wall Street banker. I've never seen spontaneous public outrage come out of left field like that.

Then he started talking about a video that showed the father of one of the "victims” walking into a meeting laughing and joking and coming out crying. “Explain to me why he would do that!” This yahoo actually tried to make the truther argument while his own people were jeering him.

Stunning.

When the moderator asked Pace if he had a rebuttal Pace quietly said, “I have no further comment.” I swear I saw him wag his tail as he swallowed a canary.

He's tried to back off, saying he was only “putting it out there for discussion”. Sort of the way you'd put the shape of the earth “out there for discussion”. The right wing local paper has covered for him as well, and if I had to bet, I'd say he'll still get elected. So there you have it. People with fixed delusions can continue to function quite well in this society, in fact they can thrive, so who were we to try to get the social service system to help an old lady who thinks there's someone under her floorboards? What we should have done is contact the Republican party to see if they want to nominate her for Congress.

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The Fed gives a gift to American corporations

Tuesday, September 9, 2014

This is a bit of a mashup from some recent posts from the ever valuable Wall Street on Parade blog.

Today's Fed may be more consumer friendly than it has been in the past 30 years, but that's apparently not saying much. The Fed has announced rules requiring the big banks to hold liquid assets, so that the next time they bring down the economy, they'll have some spare change left as a downpayment on the next bailout. The Fed has defined those assets which it considers to fit the bill. One of them is corporate bonds, with which Pam Martens of said blog has issues. You should read the whole thing. Suffice it to say that she argues convincingly that corporate bonds are not liquid in the Wall Street sense (easily convertable to cash with little or no loss of value at the time of sale) and that in the event of a market sell off, they are quite likely to spiral down in value. A taste:

Just six weeks before the Fed anointed non-exchange traded corporate bonds as liquid assets, all the way down to investment grade, the Financial Times ran this opening paragraph in an article by Tracy Alloway:

“The ease with which investors can trade corporate debt has declined sharply in the five years since the financial crisis according to research that is likely to feed fears over the prospect of an intensified sell-off in the $9.9 trillion US market.”

Then there is this 2010 paper by Jack Bao (Ohio State) Jun Pan and Jiang Wang (both of MIT Sloan School of Management), aptly titled “The Illiquidity of Corporate Bonds.” It starts off like this: “The illiquidity of the US corporate bond market has captured the interest and attention of researchers, practitioners and policy makers alike.” (Apparently, everybody but the researchers at the U.S. central bank.)

Meanwhile, the Fed has decided that municipal bonds are not sufficiently liquid to qualify.

This, rightfully, has state treasurers in an uproar. The five largest Wall Street banks control the majority of deposits in the country. By disqualifying municipal bonds from the category of liquid assets, the biggest banks are likely to trim back their holdings in munis which could raise the cost or limit the ability for states, counties, cities and school districts to issue muni bonds to build schools, roads, bridges and other infrastructure needs. This is a particularly strange position for a Fed that is worried about subpar economic growth.

Sure, there's been some municipal bankruptcies, but the fact of the matter is, those bonds are far safer than corporate debt.

So, the net effect of this is to push the bank’s money into those risky corporate bonds and out of municipal bonds. Borrowing costs will go up for cities and down for corporations. As Martens points out, this is the equivalent of the Fed imposing austerity budgets on towns and cities across America, which will likely have the same result, albeit not so starkly, as the imposition of those measures in Europe.

Martens can't understand why the economists at the Fed don't see what everyone else who has studied the corporate bond market is seeing.

Sinclair Lewis said that “It is difficult to get a man to understand something, when his salary depends on his not understanding it.”. I would submit that it is even harder for him to understand it when his hoped for future salary depends on him not understanding it.

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Charity begins at home, and stays there

Saturday, September 6, 2014

The rich certainly are different than you and me. When they give money to charity, they have the option of having their cake and eating it too. 

I stumbled on this article at the New York Review of Books (most of it is behind a paywall, I subscribe so could read the whole thing).

It’s be Lewis B. Cullen, a seriously rich individual who has given a lot of money away, and is a little incensed that his peers aren’t following suit, but are getting charitable deductions anyway, at our expense, of course:

Writing in The New York Review back in 2003,1 I explained how a donor gets a tax deduction for all of the money put into a private foundation, yet the foundation is required to spend only 5 percent of its assets per year. That doesn’t mean “donate 5 percent to charity”—it means the 5 percent can be used for “administrative costs.” And I’ve commented on how these administrative costs may include generous salaries for family members and lavish all-expenses-paid tours to foreign countries for board members and administrators, all in the name of “research.” A recent article by Pablo Eisenberg in The Chronicle of Philanthropy disclosed payments made by the Otto Bremer Foundation to three of its board members amounting to over $1.2 million. Operating charities like the New York Public Library and the Metropolitan Museum of Art, on whose boards I serve, pay no trustee fees

So, if I’m rich enough, I can create a foundation, and hire Junior to run it at an inflated salary and never actually funnel a dime to good works of any sort.

But here’s a scam I can’t quite understand, as I can’t see what’s in it for the donor, though the Wall Street types (here they are again) make out like the bandits they are:

The more aggressive game in philanthropy I have in mind, one with a soothing but misleading name, is called Donor-Advised Funds (DAFs). Back in 1991, the Boston-based Fidelity Investments applied to the Brooklyn IRS and got a ruling that drastically changed the tax landscape governing charitable donations. Donors get the same tax benefits when they give to a DAF that they would get by contributing to a museum, soup kitchen, university, or any other federally accepted charity. But rather than having the gift made directly to a charity, the funds can simply sit in the account awaiting instructions from the donor. If the donor never gets around to making distributions, they stay in the account earning substantial fees for investment managers. Recently, mutual fund management companies such as Fidelity, Vanguard, and Charles Schwab have set up separate charity accounts to compete for funds. 

 These funds can provide such tax benefits because the donor must give up all legal control over his or her money when the transfer is made to a DAF. The control is transferred to the administrators of the DAF. Here’s a good example of what can happen. I’m a considerable supporter of a major cultural institution, and on its board of trustees. That institution had been receiving a sizable donation each year from a particular donor. When that donor had died, he had given his money to a DAF administered by a community trust. When the institution in question paid a call to the community trust, seeking confirmation about the continuation of the annual donation, it was told, “We’re not necessarily continuing to give that gift.” Note the use of the word “we”—nothing to do with the past practices of the late donor

So I can’t figure out that one, unless the people setting up these DAFs have far more money than brains. Then again, it’s primarily the rich that are being fleeced by the hedge fund managers. 

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Doomed to repeat?

Thursday, September 4, 2014

The New York Times reported yesterday morning that the latest beheading of an American journalist “raised the pressure on the president to order military strikes on the group in its sanctuary in Syria.” The Boston Globe had an article that made a similar point.

I've criticized Obama quite often, but on foreign policy he has generally done a good job, as he has up to now, kept us out of major conflicts. (Has anyone kept count of the number of wars we'd be in right now if we we're fighting everywhere John McCain and Lindsay Graham think we should?) Hopefully, Obama will resist the calls to get us involved in Syria. The desire for war may be intense among the punditocracy and the calls for action popular with Republicans in Congress (although they are of course resisting a vote on the issue), but the American people don't seem especially hot to send their sons and daughters over there.

If we do go, then they'll have fooled us twice, by a charitable count. Osama bin Laden couldn't have gotten a better reaction from the U.S. had he written the script himself. We spent billions of dollars, thousands of lives and for our trouble we got an Iraq headed toward partnership with Iran or worse and, in the Arab world, enhanced reputations for the people we are now being pressured to attack. Are they shaking in their boots? No, all the signs are that they want us to attack. Sure some of them might be killed, but they don't care about that. In the long run, they win by provoking us into attacking them, and we lose, by getting mired in yet another un-winnable war. Let them fight each other to the death. We should stay on the sidelines.

As to the journalists, the beheadings are of course barbaric. But journalists who go into those areas assume certain risks. We can't let the fate of individual Americans who put themselves in harm's way dictate our foreign policy. The fact is, the most effective way to deal with these people is to ignore them. That may not be entirely possible, but the closer we can come to that policy the better off we'll be.

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