Tuesday, July 31, 2012

Mitt Romney Praises Israel's Socialized Healthcare System

"When our health care costs are completely out of control. Do you realize what health care spending is as a percentage of the GDP in Israel? 8 percent. You spend 8 percent of GDP on health care. And you’re a pretty healthy nation.” ~Mitt Romney praising Israel's socialized healthcare system, reported in FORBES

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Monday, July 23, 2012

Between $20 and $30 TRILLION are hidden offshore by the Super Rich

"The very existence of the global offshore industry, and the tax-free status of the enormous sums invested by their wealthy clients, is predicated on secrecy," according to James Henry, former chief economist for the global business consulting firm McKinsey.

This is the financial club Mitt Romney belongs to.

This story broke on the front pages of the British newspapers The Guardian and The Observer over the weekend. The articles discuss the burden wealthy tax evaders place on everyone else, not just by evading taxes but by removing their massive cash hoards from the economies where they earned them (and evaded taxes). The amount of hoarded cash is greater than the GDPs of Japan and the US combined. Need a reason for the global recession? This is it.

The summary in the Guardian

The details, in the Guardian

The world of private banks where our economy is being held hostage

Analysis of the problem

The white paper with all the numbers

Mitt Romney is the poster child for this elite group of super rich. They may have homes in this country, but their wealth is safely offshore where what they earn can't be touched to build roads or schools or hospitals. Or, for that matter, to pay the lifetime of healthcare for wounded veterans. They are above obligation to any country, especially the United States. We all try to minimize our tax bill, but for people like Romney it is a major effort of evasion that employs many banks and very complex schemes.

The article about Romney's tax havens in this month's Vanity Fair

The question then is: should Mitt Romney be running instead for the presidency of Bermuda?

Or the Cayman Islands? Or the Bahamas? Or Switzerland? It doesn't really matter what it says on his birth certificate. What matters is what it says on his tax returns. Where is he invested? Whose economy does he care about? Does he fulfill the basic duty of citizenship, the duty we all fulfill? Does he pay the taxes that pave the roads and educate our kids? Or does he evade them?

This matters.

The collusion of the big banks to rig global interest rates matters.

The involvement of major banks in money laundering for international terrorists and drug cartels matters too.

What's disturbing is they are laundering billions for ordinary American billionaires as well, helping them hide what they earn from the tax obligations that are a vital part of citizenship.

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Tuesday, July 17, 2012

David Brooks Explained

(David Brooks is the New York Times apologist for pure unregulated predatory capitalism, which is the Romney brand. Here's his most recent column, with explanatory footnotes.)


Published: July 16, 2012

Let’s say you are president in a time of a sustained economic slowdown. You initiated a series of big policies that you thought were going to turn the economy around, but they didn’t work — either because they were insufficient or ineffective (Or because your opposition and their clients and the trillions of bailout dollars hoarded by Wall Street were dedicated to making sure they didn't work). How do you run for re-election under these circumstances?

Do you spend the entire campaign saying that things would have been even worse if you hadn’t acted the way you did? No. That would be pathetic. (But it would be true. I guess the truth is pathetic if you don't like it.) You go on the attack. (Not an unreasonable thing to do since the Republican opposition has attacked and blocked and ridiculed and filibustered and evaded every proposal and every compromise you've tried in the past three and a half years.) Instead of defending your economic policies, you attack modern capitalism as it now exists. (Capitalism as it exists, as enabled by the extreme deregulation of the Bush years, is a gross distortion of the practical, regulated, moderate and egalitarian capitalism its inventor, Adam Smith, described in 1776.) You blame the system for the economy. (You blame the reckless greed and extreme inequality of wealth and power between Wall Street and Main Street, which is only fair. And honest.) You do this with double ferocity if your opponent (an affable, square jawed, handsome vulture capitalist and exporter of American jobs with unknown millions in secret bank accounts in Switzerland, the Cayman Islands, the Bahamas and Bermuda) happens to be the embodiment of that system.

This is what the Obama campaign appears to have done in recent months. (Finally!) Instead of defending the policies of the last four years (which had started a decent recovery until the GOP retook the House and were able to shut it down again), the campaign has begun a series of attacks on the things people don’t like about modern capitalism. (Why argue with the American people? Give them some credit for intelligence.)

They don’t like the way unsuccessful firms go bust. (Or fairly prosperous firms are seen as vulnerable by takeover artists like Romney, who use the companies' own cash to buy them, then load them up with debt to pay themselves huge bonuses, then plunder their pension funds, slash their workers' pay and benefits, break their unions and ship their jobs overseas, using the proceeds to buy a few more homes and show ponies.) Obama hit that with ads about a steel plant closure a few months ago. They don’t like C.E.O. salaries. (Why should the boss of a company earn more in a day or an hour than an average worker earns in a year by actually making stuff?) President Obama hits that regularly. (Amen!) They don’t like financial shenanigans. (Let's quit mincing words. Call it crime, fraud, looting, corrupt practice, creative tax evasion.) Obama hits that. They don’t like outsourcing and offshoring. (Explain to me how firing people and moving their jobs overseas where you can hire a 12 year-old for a dollar a day is patriotic.) This week, Obama has been hitting that.

The president is now running an ad showing Mitt Romney tunelessly singing “America the Beautiful,” while the text on screen blasts him for shipping jobs to China, India and Mexico. (The text quotes newspaper reports that are actually factual. The singing is Romney's own. This is Politics 101.)

The accuracy of the ad has been questioned by the various fact-checking outfits. (Questioned before new information emerged that indicate Romney either lied to American voters or lied to the SEC about whether he was running Bain Capital during the period it was aggressively shipping jobs to China and India. Or maybe he was lying to Massachusetts election officials about whether he was living in his his Utah home or his Massachusetts home and running Bain. And how many homes does he own? Six?) That need not detain us. (Let's hurry past this because Romney's financial statements are dubious at best.) It’s safest to assume that all the ads you see this year (most of which will be paid for by the billions flowing into Republican PACs) will be at least somewhat inaccurate because the ad-makers now take dishonesty as a mark of their professional toughness. (A standard set by Nixon a generation ago and perfected by the Bush family.)

What matters is the ideology behind the ad: the assumption that Bain Capital, the private-equity (vulture capitalist) firm founded by Romney, should not have invested in (and subsequently looted) companies that (under Romney's/Bain's firm direction) hired workers abroad (after firing their American workers and looting their pension funds and taking away their health insurance); the assumption that hiring Mexican or Indian workers is unpatriotic (it's jolly patriotic if you're Mexican or Indian); the assumption that no worthy person would do what most global business leaders have been doing for the past half-century. (Let's just say it: If you could get away with being completely ruthless and greedy and violate trust and obligations right and left and ruin a lot of lives and make yourself rich in the process, wouldn't you do it? Some wouldn't. Very few people would have the gall to run for president on such a record.)

This ad — and the rhetoric the campaign is using around it — challenges the entire logic of capitalism as it has existed over several decades. (Actually, David. No. Go reread your Adam Smith. Reread your Theodore Roosevelt. Reread your Dwight Eisenhower. I'd recommend you reread Keynes, but you won't.) It’s part of a comprehensive attack on the (utter corruption and destruction of the) economic system Romney personifies. (He's the poster boy for the corporate “shenanigans” that collapsed our economy in the last few months of the Bush administration.)

This shift of focus has been audacious. (And long overdue. Obama has been too polite, too reserved, and too trusting in the age-old democratic rules and traditions in Washington, old traditions like cooperation and polity, which the Republicans have been spitting on for years. A word about audacity: Washington and Ben Franklin were audacious confronting the largest empire in the world. TR was audacious to confront the great powers and monopolies on Wall Street. Audaciousness isn't always a bad thing. Calling Obama audacious is audacious, in the negative sense.) Over the years of his presidency, Obama has not been a critic of globalization. (Globalization isn't necessarily bad. Free trade can also be Fair Trade, benefiting all sides of the trade. When globalization is an excuse to exploit disorganized and unprotected workers in impoverished countries or steal their raw materials or to dismantle workers' rights in your own country, using the infrastructure and institutions and perverting the laws created as part of a fair society to do so, that is bad globalization. That is the Romney model.) There’s no real evidence that, when he’s off the campaign trail, he has any problem with outsourcing and offshoring. (He isn't in the offshoring business. Obama hasn't exported a single job, but none of us can avoid buying tennis shoes made by teenagers in Malaysia or the Philippines.) He has lavishly praised people like Steve Jobs who were prominent practitioners. (He praised their inventiveness and the quality of their products designed here. Like most of us, he no doubt wishes they were made here.) He has hired people like Jeffrey Immelt, the chief executive of General Electric, whose company embodies the upsides of globalization. (If you want someone to advise and manage a complex economy you hire somebody who has experience advising and managing complex international companies. It would be foolish not to hire the most competent people. Sometimes even when they don't entirely agree with you, as FDR did when he created the SEC.) His economic advisers have generally touted the benefits of globalization even as they worked to help those who are hurt by its downsides. (The point of Democratic policy has always been to strengthen our economy while not gutting the source of its energy which is a skilled and well-paid workforce, citizens who can afford to buy the products they manufacture. FDR's rich friends called him a traitor to his class for siding with working people. I'd call that patriotism.)

But, politically, this aggressive tactic has worked. (Americans are lied to a lot by FoxNews and talk radio, but at the end of the day they are not stupid.) It has shifted the focus of the race from being about big government, which Obama represents, (a government big enough to serve a big country and stand up to huge transnational corporations...and by the way, Obama has increased spending less than any president since Truman––look it up) to being about (predatory or vulture) capitalism, which Romney represents.

Just as Republicans spent years promising voters that they could have tax cuts forever (and never pay for anything again), now the Democrats are promising voters that they can have all the benefits of capitalism without the downsides (as their parents and grandparents had in the bad old days of Truman and Eisenhower and JFK, before corporations were people in all respects but personal responsibilities), like plant closures, rich C.E.O.’s and outsourcing. (Funny how productivity gains don't count unless they are paid upward to the people in the executive suite. Workers are greedy if they demand benefits like healthcare but CEOs are shrewd if they demand free dry cleaning, free limos and courtside tickets for life) Just as Republicans used to force Democrats into the eat-your-spinach posture (you need to have high taxes if you want your programs) (Historically, Republicans only wanted the streets paved to their homes, their country clubs, their factory, and, as Leona Helmsley said, thought taxes were for little people), now Democrats are casting Republicans into the eat-your-spinach posture (you need to accept outsourcing and the pains of creative destruction if you want your prosperity). (Creative destruction is what the mob called burning the factory to collect on the insurance.)

The Romney campaign doesn’t seem to know how to respond. (There is no plausible response. Maybe they know this.) For centuries, business leaders have been inept when writers, intellectuals and politicians attacked capitalism (which is why the billionaire class have spent billions buying writers, economists, academics, inviting creative people to their beach homes, creating “think tanks” and buying ad talent and mass-purchasing their dreadfully bad political books onto the bestseller list. It's called bribery.), and, so far, the Romney campaign is continuing that streak. (But how many billionaires can Romney loyalists fit into one 60,000 square foot Hamptons “cottage” for a fundraiser?)

One thing is for sure. As Arthur Brooks of the American Enterprise Institute (see "billionaire funded right wing think tank", above) has said again and again (to appreciative monied audiences who pay for his airfare), it’s not enough to say that capitalism will make you money. You can’t fight what is essentially a moral critique with economics. (Since when has money made you immune to moral considerations? I think Jesus had a few things to say about the morality of the rich. Adam Smith naively assumed the rich would submit to honest, fair regulation.)

Romney is going to have to define a vision of modern capitalism. (As a Bush Jr. advisor once said “We create our own reality.” In the new Republican universe reality can be bought, usually without inconveniencing rich friends with a tax bill.) He’s going to have to separate his vision from the scandals and excesses we’ve seen over the last few years. (Let's walk that back a couple of years and stipulate that the scandals were the most scandalous during the regime of your man George W. Bush. The Obama years have been about uncovering them and re-installing the regulations against scandalous behavior. Over fierce Republican objections.) He needs to define the kind of capitalist he is and why the country needs his virtues. (Assuming you don't mean the “virtues” of firing people and paying those wages to yourself and your fellow investors for your skill at firing people. Firing isn't the best word here. “Firing” assumes cause. Most of the people Romney fired were laid off for the “crime” of earning a living, for making things at a wage American companies used to pay when America's economy got its strength from workers who could afford to be consumers.)

Let’s face it, he’s not a heroic entrepreneur (except in his autobiography, his stump speeches, his reports to shareholders and his statements to the SEC). He’s an efficiency expert. (A CEO tends to define “efficiency” by how little he can pay his workers to work longer and harder and faster.) It has been the business of his life to take companies that were mediocre and sclerotic (or paid a fair wage for good work) and try to make them efficient (make them pay less for more work, by hiring Asian children if need be; slashing benefits) and dynamic (a word possibly adopted by McKinsey to project a robust image onto a company without it actually meaning anything). It has been his job to be the corporate version of a personal trainer: take people who are puffy and self-indulgent and whip them into shape. (Here's where David begins to sound like he's writing a brochure for the Hitler Youth. I don't think that is his intention.)

That’s his selling point: rigor (forcing other people to be rail-thin and rigorous translates into his fat monthly paycheck) and productivity (again, other people's hard work and productivity can be paid directly to him for demanding it. This, if you can avoid throwing up, is called a “business model”.) If he can build a capitalist vision around that, he’ll thrive. (HE will thrive. Other people, not so much.) If not, he’s a punching bag. (Commence punching.)

Oh, heck...Bill Maher said it better than I can:

“America's rich aren't giving you money, they're taking your money. Between the years 1980 and 2005 80% of all new income generated in this country went to the richest 1%. Let me put that in terms that even you fatass teabaggers, I'm sorry, can understand.

“Say 100 Americans get together and order a 100 slice pizza. The pizza arrives and the first guy takes 80 slices. And if someone suggests, why don't you just take 79 slices, that's socialism! I know, I know. I know, I know, it's just a TV show. But it does reinforce the stupid idea people have that rich people would love us and share with us if only they got to walk a mile in our cheap plastic shoes.

“But they're the reason the shoe factory moved to China. We have this fantasy that our interests and the interests of the super rich are the same. Like somehow the rich will eventually get so full that they'll explode. And the candy will rain down on the rest of us.

“Like there's some kind of pinata of benevolence. But here's the thing about a pinata. It doesn't open on its own. You have to beat it with a stick.”

Eat that, David Brooks. Maybe they should hand his column to Bill Maher.

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The Poet of the Commons

George Monbiot wrote a clear, thoughtful essay in the Guardian about our common lands and common life and about the poet of those things, John Clare. Worth reading.

And Clare is worth finding and reading too. He was a poor man, and therefore worthless to middle class eyes. He was a simple man, so he was an easy mark, easily exploited, credulous, trusting, easily led, like a lot of ordinary people these days. We have a habit of trusting that "better people" know better, not smarter people but better as in richer, as if the easiest way to judge someone is trustworthy is to see how much they are worth.

I wouldn't vote for a John Clare for president or ask him to manage my pension fund, but it's worth listening to him, reading him. In a lot of ways, important ways, he is us. Us as we were. Us as we are becoming: vulnerable, homeless, herded, noting our precious world as we are losing it.

Here's a poem of John Clare's.


Up this green woodland-ride let’s softly rove,
And list the nightingale - she dwells just here.
Hush ! let the wood-gate softly clap, for fear
The noise might drive her from her home of love ;
For here I’ve heard her many a merry year -
At morn, at eve, nay, all the live-long day,
As though she lived on song. This very spot,
Just where that old-man’s-beard all wildly trails
Rude arbours o’er the road, and stops the way -
And where that child its blue-bell flowers hath got,
Laughing and creeping through the mossy rails -
There have I hunted like a very boy,
Creeping on hands and knees through matted thorn
To find her nest, and see her feed her young.
And vainly did I many hours employ :
All seemed as hidden as a thought unborn.
And where those crimping fern-leaves ramp among
The hazel’s under boughs, I’ve nestled down,
And watched her while she sung ; and her renown
Hath made me marvel that so famed a bird
Should have no better dress than russet brown.
Her wings would tremble in her ecstasy,
And feathers stand on end, as ’twere with joy,
And mouth wide open to release her heart
Of its out-sobbing songs. The happiest part
Of summer’s fame she shared, for so to me
Did happy fancies shapen her employ ;
But if I touched a bush, or scarcely stirred,
All in a moment stopt. I watched in vain :
The timid bird had left the hazel bush,
And at a distance hid to sing again.
Lost in a wilderness of listening leaves,
Rich Ecstasy would pour its luscious strain,
Till envy spurred the emulating thrush
To start less wild and scarce inferior songs ;
For while of half the year Care him bereaves,
To damp the ardour of his speckled breast ;
The nightingale to summer’s life belongs,
And naked trees, and winter’s nipping wrongs,
Are strangers to her music and her rest.
Her joys are evergreen, her world is wide -
Hark! there she is as usual - let’s be hush -
For in this black-thorn clump, if rightly guest,
Her curious house is hidden. Part aside
These hazel branches in a gentle way,
And stoop right cautious ’neath the rustling boughs,
For we will have another search to day,
And hunt this fern-strewn thorn-clump round and round ;
And where this reeded wood-grass idly bows,
We’ll wade right through, it is a likely nook :
In such like spots, and often on the ground,
They’ll build, where rude boys never think to look -
Aye, as I live ! her secret nest is here,
Upon this white-thorn stump ! I’ve searched about
For hours in vain. There! put that bramble by -
Nay, trample on its branches and get near.
How subtle is the bird ! she started out,
And raised a plaintive note of danger nigh,
Ere we were past the brambles ; and now, near
Her nest, she sudden stops - as choking fear,
That might betray her home. So even now
We’ll leave it as we found it : safety’s guard
Of pathless solitudes shall keep it still.
See there! she’s sitting on the old oak bough,
Mute in her fears ; our presence doth retard
Her joys, and doubt turns every rapture chill.
Sing on, sweet bird! may no worse hap befall
Thy visions, than the fear that now deceives.
We will not plunder music of its dower,
Nor turn this spot of happiness to thrall ;
For melody seems hid in every flower,
That blossoms near thy home. These harebells all
Seem bowing with the beautiful in song ;
And gaping cuckoo-flower, with spotted leaves,
Seems blushing of the singing it has heard.
How curious is the nest ; no other bird
Uses such loose materials, or weaves
Its dwelling in such spots : dead oaken leaves
Are placed without, and velvet moss within,
And little scraps of grass, and, scant and spare,
What scarcely seem materials, down and hair ;
For from men’s haunts she nothing seems to win.
Yet Nature is the builder, and contrives
Homes for her children’s comfort, even here ;
Where Solitude’s disciples spend their lives
Unseen, save when a wanderer passes near
That loves such pleasant places. Deep adown,
The nest is made a hermit’s mossy cell.
Snug lie her curious eggs in number five,
Of deadened green, or rather olive brown ;
And the old prickly thorn-bush guards them well.
So here we’ll leave them, still unknown to wrong,
As the old woodland’s legacy of song.
John Clare

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Saturday, July 14, 2012

The Scandal About Global Warming

The big scandal about global warming isn't over whether it's happening. It's happening, and the effects are horrendous.

The scandal is that in most American living rooms the term "global warming" is taboo, Off limits. Censored. We get alarming reports about the latest storms, the vast wildfires, the horrible drought conditions, the deaths from the heat, but NOT ONE TV OR RADIO WEATHER REPORTER SAYS A WORD ABOUT GLOBAL WARMING.

Newspaper stories in Europe are linking the summer's powerful storms to global warming.

The New Scientist is connecting the dots between superstorms and climate change.

Business journals are beginning to track what business journals track: the huge economic downside of our doing nothing. If the climate doesn't kill us with weather events it will make us poorer and hungrier. I suppose the upside of that is there are business moguls who will find a way to profit from misery.

Global warming (surprise) causes inconveniences like power outages.

Scientists warn that global warming is killing off the world's coral reefs, which protect millions of coastal dwellers from being washed away by the ocean. Reefs also support the populations of fish we eat. Here's a trenchant and frightening analysis from the New York Times.

Still, there is a coordinated embargo of broadcast discussion of global warming. You won't hear about the embargo on TV, but you can read about it in print. Which means only people patient enough to read are aware of the censorship.

Inside Climate News sums it up.

The Houston Chronicle created a storm of controversy when it raised the issue in the newspaper. Houston's weather guys replied, basically claiming they believed in global warming, but thought it might be rude to discuss it on the air.

I've read articles about the heat waves across the U.S. and watched reports about catastrophic superstorms in middle America and millenial floods in Duluth and across Europe...

The Guardian reports.

But I have yet to hear ONE television meteorologist mention global warming or global climate change. Not one. Not once. Scientists, yes; weathercasters, no. Not once. Never. And when a scientist is brought on to discuss the issue a fossil fuel flunky is usually there to rebut it. We have facts and evidence on one side but, apparently, it's only fair to give enormous profits equal time. After all, they pay for it.

I'm not the only one who's noticing this, but an embargoed idea doesn't get discussed. That's the point of embargoes.

Why is the discussion of the embargo confined to sciency and lefty websites?

Is there an organized ban on broadcast meteorologists discussing global warming? TV weather forecasters are where most people learn about what's happening in the atmosphere. Most people think it's the best science there is.

If there is a TV ban on climate change talk (and it appears there is) why aren't major print media outlets reporting on it?

Who is behind it? Who is enforcing it? Why does a weathercaster on TV need to be "brave" to report consensus science in the first place?

My guess is that the fossil fuel billionaire Koch brothers and their paid and programmed pseudo-scientists have ordered the silencing of TV weathermen and weatherwomen. They've frightened program directors to obey their commands. They have successfully cast global warming as dangerously controversial, as something that will threaten friendships and endanger jobs.

This ban on climate change reporting is being enforced despite the fact that most Americans link the extreme weather with climate change. A new Washington Post/Stanford University poll backs this up.

But despite the evidence of our science and the direct experience of most Americans, the science is being censored, suppressed, silenced. This takes money, and the fossil fuel industry has it. Science groups are fighting back. Remember this organization: Forecast The Facts––forecastthefacts.org.

Sadly, good science has become risky for the first time since the Enlightenment.

Good science that helps the global population reduce and plan for risks is considered a risk itself. That's ironic. It's also big story. And it's another story that's too risky to report on.

George Will is intelligent enough to know when a fool is running for the Republican presidential nomination, but he has not mastered the basic Venn Diagram. What contains what? Climate contains weather, weather is or can be evidence of climate change but understanding of weather patterns and being able to predict rain a week in advance doesn't imply a mastery of the much greater complexity of climate. Weather is a wholly owned subsidiary of climate just as one company's finances are a tiny portion of the larger economy. And the big worry among climate scientists is that global warming will trigger, is already triggering, larger, more frequent, more powerful more sudden changes in weather.

Media Matters, discussing George Will's lame climate change denial commentary, uses an economics analogy, and it's apt. Because all economics is based on climate. All civilization is based on climate. And the ability of households and companies and economies and societies to survive is predicated on an ability to predict relevant trends, their specific climate, from one season to the next. An economy that gyrates, as ours did prior to the New Deal regulations that steadied and moderated it, is a hard environment to survive in. You would hope economists and corporations would appreciate that and want to ensure against volatility, but sadly short term profits, the weather that rains millions on CEOs, is all that matters to them.

During the winter, when heat sounds like a blessing, climate advocates argue back that "weather is not climate". They are trying to communicate that weather variability doesn't stop and cold weather doesn't entirely disappear just because the planet is heating up on average. It's crucial to note that they are saying this in response to those who claim a snowstorm or a cold snap refutes global warming. Big snowstorms are part of the climate change volatility too. The evidence of a single moment tends to convince most people, and the fossil fuel billionaires use that kind of persuasion. Weathermen also think short term; if their weekly forecast is off, they lose credibility. But climate science is a longer and more complex game than that, and what takes more than a soundbite to explain is usually too complex for Americans to understand. This shortness of attention span may kill us. It will kill our economy first.

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Tuesday, July 10, 2012

Why LIBOR Matters

“Fraud is a crime in ordinary business — why shouldn’t it be so in banking?” ~George Osborne, British Chancellor of the Exchequer

An enormous fraud has come to light in London, affecting trillions of dollars quietly stolen from bank accounts and loan accounts worldwide. Money stolen from you. It involves a rate formula called LIBOR. The L stands for London, but the London rate sets bank to bank lending worldwide, and bankers have been rigging that rate, fiddling it, manipulating it to earn themselves trillions of illegal gains over the past decade. It helped trigger the financial collapse of 2007-2008 by phonying the numbers and hiding the weaknesses in large banks. This is the kind of corruption enabled by the relaxing of financial regulation ushered in by George W. Bush and by Republican power brokers like Senator Phil Gramm.

From The Economist:

"[Referring to LIBOR, the rating system that establishes interest rates for everyone who uses credit] "In reality, the system is rotten. First, it is based on banks’ estimates, rather than the actual prices at which banks have lent to or borrowed from one another. “There is no reporting of transactions, no one really knows what’s going on in the market,” says a former senior trader closely involved in setting LIBOR at a large bank. “You have this vast overhang of financial instruments that hang their own fixes off a rate that doesn’t actually exist.”

"A second problem is that those involved in setting the rates have often had every incentive to lie, since their banks stood to profit or lose money depending on the level at which LIBOR was set each day. Worse still, transparency in the mechanism of setting rates may well have exacerbated the tendency to lie, rather than suppressed it. Banks that were weak would not have wanted to signal that fact widely in markets by submitting honest estimates of the high price they would have to pay to borrow, if they could borrow at all."

In other words, only oversight and regulation (which Wall Street and the banks say they don't need) will keep them from stealing trillions from us.

Gretchen Morgensen of the New York Times: "Manipulating the Libor is a big deal because it affects the cost of money for almost everyone. The Libor is used to set rates on mortgages, credit cards and all manner of loans, personal and commercial. The amount of money affected by the phony rates is at least $500 trillion, British regulators have estimated."

Five hundred TRILLION.

"“We’re clean but we’re dirty-clean, rather than clean-clean,” an executive said in a phone conversation. Talk about defining deviancy down.

“Dirty clean” versus “clean clean” pretty much sums up Wall Street’s view of cheating. If everybody does it, nobody should be held accountable if caught. Alas, many United States regulators and prosecutors seem to have bought into this argument."

Interviewed in The Independent, Nobel Prize economist Joseph Stiglitz puts the scandal in its proper context. Isn't this what bankers do? Aren't bankers supposed to try to make money and profits? Yes, but... Corruption destroys the strength of an economy by diverting investments and activity away from producing goods and services and infrastructure to theft, to gaming weaknesses, to rigged gambling on rigged numbers.

"It's a textbook illustration," Stiglitz said. "Where there are these asymmetries a lot of these activities are directed at rent seeking [appropriating resources from someone else rather than creating new wealth]. That was one of my original points. It wasn't about productivity, it was taking advantage."

Elliot Spitzer knows this territory well. He used to investigate and prosecute these guys.

The Financial Times is by no means a leftist newspaper, but it is reporting this scandal very aggressively.

Gary Gensler, one of Obama's regulators, is one of the Good Guys trying to clean up the financial sector: “I don’t think the public should be left at risk of a trade association, with the most sophisticated, largest banks, setting a rate that’s so critical to our credit cards, our student loans, our mortgages... These benchmarks matter; we all lose if the markets aren’t reporting accurate information.”

One Financial Times columnist calls for getting rid of the current generation of leaders in the financial industry. He also calls for breaking up the big banks, because "Too Big To Fail" is also "Too Big To Jail."

Robert Reich does a good job of explaining why this should matter to average Americans, in The Guardian (a reliably good source of information on the corruption in markets. They also broke the story about how Rupert Murdoch's papers hacked into thousands of phones and corrupted Scotland Yard and the British government.)

"The typical saver or borrower on both sides of the Atlantic trusts that the banking system is setting today's rate based on its best guess about the future worth of the money. And we assume that the banks' guess is based, in turn, on the cumulative market predictions of countless lenders and borrowers all over the world about the future supply and demand for money.

"But if that assumption is wrong – if the bankers are manipulating the interest rate so they can place bets with the money we lend or repay them, bets that will pay off big for them because they have inside information on what the market is really predicting which they're not sharing with the rest of us – it's a different story altogether.

"It would amount to a rip-off of almost cosmic proportions – trillions of dollars that average people would otherwise have received or saved on their lending and borrowing that have been going to the bankers instead."

"It would make the other abuses of trust Americans have witnessed in recent years – predatory lending, fraud, excessively risky derivative trading with commercial deposits, and cozy relationships with credit-rating agencies – look like child's play by comparison."

Every honest economist, every honest banker, every honest politician, every honest journalist and reporter is taking this rigging of the financial markets, this enormous fraud, very seriously. The ones who are brushing it off or minimizing it or defending it or ignoring it are probably owned by the corrupt financiers themselves.

This fraud isn't confined to the London market. It affected trillions of transactions and resulted in many trillions of dollars defrauded from average households worldwide. It helped cause the financial collapse of 2007-2008, and has continued after that. The wizards of Wall Street continue to use this fraud to pay themselves billions in bonuses to this day.

“It is clear that what happened in Barclays and potentially other banks was completely unacceptable, was symptomatic of a financial system that elevated greed above all other concerns and brought our economy to its knees. Punish wrongdoing. Right the wrong of the age of irresponsibility.” ~George Osborne, British Chancellor of the Exchequer

It's an age of irresponsibility Obama is trying to end, and which the Republicans are determined to protect and extend.

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Thursday, July 05, 2012

The Anti-American Business Model of Mitt Romney

Tom Hamburger, reporting in the Washington Post, tells how Mitt Romney earned his millions. He did it pushing the sharp end of the job exporting business model that's destroyed our jobs base in the last few decades. He continues to earn millions a year from his anti-working-man investments in Bain Capital. Tom Hamburger:

"Mitt Romney’s financial company, Bain Capital, invested in a series of firms that specialized in relocating jobs done by American workers to new facilities in low-wage countries like China and India.

"During the nearly 15 years that Romney was actively involved in running Bain, a private equity firm that he founded, it owned companies that were pioneers in the practice of shipping work from the United States to overseas call centers and factories making computer components, according to filings with the Securities and Exchange Commission."

Hamburger's carefully reported article describes Romney's harshly anti-American business model. He made his pile by impoverishing and unemploying thousands of American workers, and, perhaps more importantly, by showing other business leaders how to do it. What other business leaders hesitated to do, Romney did. If other businesses were too patriotic to ship American jobs overseas, Romney and his like would beat them by doing so. A very cynical kind of leadership. A race to the bottom, toward the ultimate business model based upon fearful, impoverished workers with no rights and no voice.

Worse still, once Romney has earned his millions where do those millions go to live? He carefully shields them from taxation that might build roads and schools here in the U.S., hiding them in secretive offshore banks in the Cayman Islands, the Bahamas and Switzerland, as reported in the August Vanity Fair magazine. Not only has he offshored American jobs, he has offshored the wealth he earned by breaking down the American industrial base.

"To give but one example, there is a Bermuda-based entity called Sankaty High Yield Asset Investors Ltd., which has been described in securities filings as “a Bermuda corporation wholly owned by W. Mitt Romney.” It could be that Sankaty is an old vehicle with little importance, but Romney appears to have treated it rather carefully. He set it up in 1997, then transferred it to his wife’s newly created blind trust on January 1, 2003, the day before he was inaugurated as Massachusetts’s governor. The director and president of this entity is R. Bradford Malt, the trustee of the blind trust and Romney’s personal lawyer. Romney failed to list this entity on several financial disclosures, even though such a closely held entity would not qualify as an “excepted investment fund” that would not need to be on his disclosure forms. He finally included it on his 2010 tax return. Even after examining that return, we have no idea what is in this company, but it could be valuable, meaning that it is possible Romney’s wealth is even greater than previous estimates. While the Romneys’ spokespeople insist that the couple has paid all the taxes required by law, investments in tax havens such as Bermuda raise many questions, because they are in “jurisdictions where there is virtually no tax and virtually no compliance,” as one Miami-based offshore lawyer put it.

"That’s not the only money Romney has in tax havens. Because of his retirement deal with Bain Capital, his finances are still deeply entangled with the private-equity firm that he founded and spun off from Bain and Co. in 1984. Though he left the firm in 1999, Romney has continued to receive large payments from it—in early June he revealed more than $2 million in new Bain income. The firm today has at least 138 funds organized in the Cayman Islands, and Romney himself has personal interests in at least 12, worth as much as $30 million, hidden behind controversial confidentiality disclaimers."

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Monday, July 02, 2012

Only In America

Political observers are predicting an armed insurrection against Obama's Affordable Care Act. Only in America would you find overweight, diabetic, out of work militants willing to die barricaded in their homes rather than have private healthcare provided to them by law.

Is it the paying for it part they dislike? If they can't pay, other Americans will help them pay.

Is it the concept of the helplessly ill being assisted by the society that irks them to the point of violence? Are Americans that uncaring?

Are they simply nuts?

Or are they dangerously, violently misinformed? Like the Tea Partiers who showed up at protests in 2010 with signs demanding the government get its hands off their Medicare... which is and always has been a government program, run, I might add, at a much greater rate of efficiency than private medical programs. (It was the private companies trying to poach patients from Medicare who spread this disinformation.)

According to a Kaiser Foundation study, Medicare dedicates more than 97% of its dollars to actual medical care, compared to private healthcare companies which bridle at the idea of spending more than half of their revenues on the care of patients.

One of the most alarmingly funny memes that came in the aftermath of the SCOTUS decision to uphold ObamaCare were the many who spoke angrily about moving to Canada to escape the ObamaCare tyranny.

Canada has full universal healthcare run by the government, and it's very popular. In a recent poll the Canadian of the 20th Century voted by all Canadians (and it was no contest apparently) was the politician who was the father of their socialized system. Oh, Canada.

Rush Limbaugh threatened to move to Costa Rica, which also has universal healthcare.

And every Republican who voted and filibustered and threatened to shut down the government to prevent government from providing or requiring healthcare for everyone, every one of them, has government paid healthcare themselves.

They are ginning up a rebellion against a benefit they enjoy. What's good enough for them is apparently too good for everyone else.

Rick Ungar, who writes about healthcare for Forbes, presents a particularly good analysis of the Republican hypocrisy.

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