Tuesday, April 30, 2013

The CEO Manifesto

We, the CEOs of the United States, as the job creators, will always fully commit to (in no specific order):

Continue to primarily support Republicans, as they better protect the interests of the largest banks and multi-national corporate conglomerates (although, currently, the Democrats have done so likewise). Republicans also weaken worker's rights by sabotaging their representation in the Equal Employment Opportunity Commission, the Occupational Safety and Health Administration and the National Labor Relations Board (among others).

It's also worth noting that, as an added benefit, Republicans usually block meaningful regulatory litigation and they are also notorious for under-funding the IRS. This is good news for the CEOs and corporations, especially if they deliberately set up complicated tax structures using shell companies and offshore bank accounts to avoid paying taxes. This helps preserve corporate profits and allows for very generous executive compensation packages.

Both Republicans and Democrats give tax breaks to these banks and corporations, continually allowing them to pay a lower tax rate on company profits and executive compensation packages. So we will continue to give "contributions" to both political parties. That way, the CEOs (job creators) can continue to increase company profits and executive compensation packages (including, but not limited to, base salaries, stock option awards, bonuses and corporate "perks" --- such as company jets, limos, yachts, corporate "safe houses", etc.)

Continue to do anything and everything possible to influence State politicians to pass "right to work" laws to help bust labor unions and to drive down wages and employee benefits --- so that the CEOs and other executive board members (the job creators) can continue to strive for unlimited profit margins with exponential executive compensation packages --- always striving to exceed the previous year's, year after year after year.

Whenever possible, outsource to other countries to avoid paying fair wages and employees benefits, and to avoid as many regulatory and environmental laws as possible, so the CEOs (job creators) can increase profits and executive compensation packages.

No matter how cheaply we can produce goods and services, whether from out-sourcing, in-sourcing, layoffs, increased worker productivity, reduced wages and benefits, or automation (robotics), we will continually raise the prices on goods and services to consumers --- to further increase profits and executive compensation packages.

Use H-1B visas (and other guestworker programs) whenever possible to lower payroll costs, or use robots whenever possible (and always saying, "we have to be more competitive in the global marketplace", even when we have no other competitors at all), so that the CEOs (job creators) can increase their company profits and executive compensation packages.

Do everything possible to keep unemployment high so that the labor market remains saturated, making people more desperate and more willing to work harder for less pay (aka "increased worker productivity"), so the CEOs (job creators) can increase profits and executive compensation packages.

Be sure to have a very well organized public relations department. Some very good PR spin could make "fracking" sound like it's good for the environment (Remember: Always say it will "create jobs" because that's always a winning argument in the PR racket.) This will also help the CEOs (job creators) to increase profits and executive compensation packages.

Lobby Congress and donate to the political campaigns of both political parties for special laws, regulations, and tax breaks --- and promise good jobs (like as a lobbyist or a company VP) to members of Congress after they leave office --- so that the CEOs (job creators) can increase profits and executive compensation packages.

Continue to obtain any and all intellectual property, and patent any and all ideas, strictly for corporate use. Continue to use any and all government and college resources from research and development for the purpose of profit. Continue to use any and all military applications, space exploration, and any other scientific advances (e.g. medical research) for profit and executive compensation packages.

Always remember to protect "defense spending" in the name of "national defense" to protect our "national interests" abroad, while at the same time, promoting the privatization of Social Security and Medicare. Use cheaper labor abroad for any defense spending whenever possible --- to further increase company profits and executive compensation packages.

Use "jobs" as hostages whenever negotiating special tax breaks and regulations, or threaten to leave the host city, state or the country if the company's demands aren't met. This is another way the CEOs (job creators) can increase profits and executive compensation packages.

Continue to use the "divide and conquer" strategy to pit one class of worker against another, absolving us of any blame for the human misery. Pit the upper-class against the middle-class, the middle-class and against the lower-class --- and pit them all against the working poor, the unemployed and the abject poor. Always deflect blame by blaming others. This strategy has worked for a millennium. For over 2,000 years the bankers have used this strategy to increase their profits and executive compensation packages...so shall we.

Always "incorporate" every subsidiary of a subsidiary of your business to avoid any and all potential personal and criminal liability (and only pay small fines as a cost of doing business whenever or "if" any wrong-doing is ever discovered). This also helps the CEOs (job creators) to increase profits and executive compensation packages.

Use massively under-taxed company profits (that the company had lobbied Congress for) to buy out any potential business rivals to keep the cost of goods and services to consumers as high as the market can bear, so as to avoid any type of fair competition, by rigging the market to monopolize dominate the industry...so that the CEOs (job creators) can increase profits and executive compensation packages.

Always use the national and local media (and social networking websites) to promote corporate interests and to push political agendas (and to constantly show the company as a "good community leader"). Always say you have the interests of the neighborhood and your workers at heart. Say corporate governance is one of the company's top priorities. Say anything that the general public might believe, so the CEOs (job creators) can increase profits and executive compensation packages.

To spin a positive corporate image, instead of raising the employees wages, give 75% less of that cost in some form of philanthropy (e.g. a social cause such as "feeding the poor" or "saving the children", etc.). Or give to an institution such as a charity or church where your company also has a member on the same board of directors. It's also a good tax write-off (lowering the "effective" tax rate for corporations) and allows corporate officers to have better control of how corporate resources are used, despite what public opinion polls may indicate...so the CEOs (job creators) can increase profits and executive compensation packages.

Whenever publicly referring to your employees, refrain from using terms such as "the little people", "peons", "the 47%" or "my dogs". To be politically correct, call them "employees", "team members" or "associates". This will also have them believe that they belong to some kind of "family" and will help promote their loyalty to the company (while also increasing "worker productivity"). Convince them that what's good for the company is good for them...so the CEOs (job creators) can increase profits and executive compensation packages.

Continue to promote "wedge issues" (such as immigration reform, gay marriage, gun control, abortion and birth control, climate change, the environment, etc.) and foreign policy issues (Iran, Syria, North Korea, etc.) as distractions for the general public so they are far less focused on campaign reform, tax reform, congressional reform or Wall Street reform --- so they are a little less focused on our record profits and excessive executive compensation packages.

Do anything and everything possible (even bribing lobbying Congress to change laws so that no laws can be broken during the course of conducting business) so the CEOs (job creators) can increase profits and executive compensation packages. Nothing else matters - - - so long as the CEOs (job creators) can increase profits and executive compensation packages.

If anyone complains about unemployment, poor wages, lack of healthcare or wealth inequality, remind them that if it were not for the "job creators" they would not have TVs, toothpaste, cellphones or cheeseburgers. Remind them that they need us for everything, and that they should be grateful for us. Tell them that anything we may have to offer them should be gratefully accepted, no matter what. Always remind them that the CEOs and the their executive officers should be put on pedestals and idolized, not vilified. Remind them that corporations are also "people" and that the CEOs have feelings too. Ask them to stop waging a "class war" on you (play the victim).

And if anyone disagrees with the CEOs (and the other corporate board members) in their quest to increase their record profits and excessive executive compensation packages (at the expense of most American workers), use the national and local media (and social networking websites) to label them as "far left wing loons", "anti-American", "anti-freedom", "anti-free markets" and "Socialists". A good smear campaign is always the best campaign, and the best propaganda is best used often, repeatedly and liberally (Fox News is good at this). This helps CEOs (job creators) to increase profits and executive compensation packages.

Tell the masses that excessive profits and excessive CEO pay is what made America so great and exceptional. And always, always, remind them....you are the "job creators".

But if all else fails, then simply "eliminate" the dissenter, competitor or whistleblower. Crush them. Destroy them. Do whatever it takes (while also using our courts, police, and armies) so that the CEOs (job creators) can continue to increase their profits and executive compensation packages...

(...but for infinity?...without end?...forever?)

Can corporate profits and executive compensation packages ever be finite?

If a high school graduate turns 18 years old this year and can't find a part-time job at McDonald's when the U.S. population is only 315 million, what will they be doing 37 years from now when they are 55 years old when the U.S. population will be 438 million? What if the retirement age is 75 years old by then? What if there is no more Social Security? What jobs will there be in the year 2050?

And maybe by then, with new technology, McDonald's might not be hiring anyone at all. Robots might be working at their drive-thru windows. The CEO of McDonalds's will no longer be able to hold the esteemed title of "job creator". Where will people work? What will they all do? All Americans can't be engineers or CEOs. Without a job, who can buy Chicken McNuggets? This is the critical time when we reach the economic saturation threshold of zero sum.

So after "globalization" is totally complete, after all the natural and human resources have been almost completely expended, when there are no longer any more "emerging markets", and after technology has superseded the need for human labor for most production and services, the CEOs will then have to prepare to exploit other planets...so that they (the job creators) can continue to increase their corporate profits and excessive executive compensation packages.

An Improbable (if not Impossible) Solution

If the western industrialized nations (or the G-8) could agree on a standard wage scale, a corporate tax rate and a cap on executive pay, these businesses would not need to increase profits "at any cost" to their workers and the consumers of their products and services.

Innovation and technology could still be applied to make their operations more efficient (such as displacing workers with robotics), but cheap labor would no longer be the "end all" solution for increasing profits for the purpose of just increasing executive pay or shareholder value.

The rate of a company's growth would be more natural as a long-term investment, rather than a quest for instant windfalls. If the western industrialized nations could agree on a ban for outsourcing jobs for cheaper labor, the wages they pay to foreign workers would be going to domestic workers as higher wages, which would in turn, be taxed for the benefit of their government.

Trade agreements would have to be re-written with countries that export to the western industrialized nations (or the G-8 countries), to include some of the same provisions for their businesses (such as a wage scale).

Otherwise, looking at the trend of the current labor participation rate in the U.S. suggests that by the year 2050, we might see a rate of 30% instead of 65%. And the CEO pay ratio might be 1,000-to-1 instead of the current 385-to-1. The U-6 unemployment rate might be 30% instead of the current 13.8%. And the top .001% might control 99% of all wealth instead of 40% (or whatever it currently is these days).

If profits and executive compensation is infinite, and the population continues to increase, there will not be enough resources left over for people to sustain life. The top 1% will have everything, the bottom 99% will have nothing. That is the current trend.

* Also posted at the Daily Kos

Monday, April 29, 2013

Congress Disses Long-Term Unemployed: "STFU!"

Actually, to be more accurate, Congress ignores everything that doesn't either pertain to themselves or their top campaign donors. Unfortunately for the long-term unemployed, they don't have lobbyists. Members of Congress only "talk" about the unemployed, but for years they have done absolutely NOTHING to help solve the problem.

Business Insider has the caption "This Photo Shows How Much Politicians Care About The Long-Term Unemployed" (photo below)

Long Term Unemployed

Last week a hearing on the long-term unemployed (photo above) was held before the 19-member Joint Economic Committee --- but just one member of Congress was in attendance when the meeting began. Senator Amy Klobuchar (D-Minn.), the committee's vice-chair, was the only one who showed up at the beginning of the 90-minute session.

Eventually, three more members of Congress casually dropped by, bringing the crowd to a total of four to solve the problems of millions of long-term unemployed Americans.

Chris Hayes on MSNBC did a segment about this and his guest, Congressman Keith Eillison (D-Minn.), suggested that there are those who might actually prefer a high unemployment rate because, for some of their constituents and campaign donors, it helps drives down wages in an over-saturated and very competitive job market.

Brad Plumer at the Washington Post notes that some companies won’t even look at the resumes of the long-term unemployed, and many of these stigmatized workers are simply dropping out of the labor force --- possibly for good. Paul Krugman worries that “we are indeed creating a permanent class of jobless Americans.”

Jared Bernstein of the Center on Budget and Policy Priorities writes that "recent research has found that the long-term unemployed, a group that became historically large in this downturn, have particular difficulty getting back into the workforce."

Fox Business has an article on the long-term unemployed and mentions a man named Joe Carbone who runs a program that focuses on retraining and placing “99ers” into internships with the possibility of getting a job. He said he was disheartened to realize that most workers over 50 are not given the chance to reinvent themselves in a new career, and that the job market, which has roughly 300 job applicants for every one job opening, was so stagnant. “We don’t see bread lines but that despair is there, it’s just behind closed doors."

The Atlantic also wrote about the long-term unemployed and says, "Long-term unemployment is our most urgent crisis, and we're doing nothing about it...For the first time since the 1930s, there are millions of people who want work who can't find it, no matter how long they look. That's what happens when a downturn goes too long and a recovery doesn't go far enough." The Atlantic also points out the statistical discrimination against the long-term unemployed.

Rob Valletta, a research advisor with the Federal Reserve Bank of San Francisco, thinks that long-term unemployment will likely be a problem for at least several more years. Of the long-term unemployed he says, "They’re a very diverse group [and] are long-term unemployed largely because of bad luck and a very hard labor market.”

But as Rome burned, and while the lives of the long-term unemployed continued to deteriorate, many members of Congress did find the time to party (once again) with the Hollywood and media elite at the annual White House Correspondence Dinner. Even Bill O'Reilly took some time off from bashing disabled Americans on Social Security to hobnob at a table with Supreme Court Justice Scalia.

The Bureau of Labor Statistics still counts more than 4.6 million Americans who have been jobless for a year or longer. Many were laid off in 2008 and have never found work again. The actual U-6 unemployment rate is 13.8% --- but www.shadowstats.com has that much higher.

The L.A. Times reports that the number of long-term unemployed has declined since reaching a high of 6.7 million in April 2010 --- but they also point out that much of the decline may be attributed to long-term job seekers abandoning the labor market entirely, and therefore no longer counted among the unemployed.

Long-time job seekers still represent nearly 40% of the nation’s 11.7 million unemployed. Job candidates who have been out of work for six months or longer are perceived as having outdated skills. As a result, they are often screened out early in the recruiting process. Long-term unemployment continues to be a major economical issue, but Congress still has done absolutely nothing about this ongoing problem for years.

Natural population growth (new graduates) over the past 4 years has all but wiped out all the new jobs created; so hypothetically, we could still have 8.7 million long-term unemployed --- those who were laid off during the recession from December 2007 to June 2009.

Mike Thornton, who often writes about the unemployed and is a contributing writer at the Huffington Post (as well as the creator of www.layofflist.org) wasn't very happy either. In a recent email he blasted both sides of the aisle in Congress --- which is reprinted here:

"While Democrats have generally been spineless advocates of the unemployed, since they have done little for the jobless besides extend unemployment benefits during the worst of the recession. The cruel and manipulative GOP have vilified the unemployed as lazy do-nothings who need to be drug tested on a regular basis.

With friends like that, it’s hard to get any group motivated to take to the streets. Americans, for the most part, are ambivalent about most matters. Wars that last 10+ years are given a shrug of the shoulders. Inequality is deemed ok, and not worth a street showing, since the main stream, corporate controlled media consider the wealthy the “job creators.” Besides the XL pipeline protests, that did garner some media attention, any large gathering is considered to be either events for far right wackos or far left extremists. Kids are more consumed by social media and find little to be concerned about. Occupy Wall Street was one bright light in the financial equality night, but that ended with a whimper as the police state cracked down on those activists.

Protests, sit-ins, and marches were once considered a right of passage as the younger generation forced change on the older generation. But now all generations are some brand of consumer that needs a marketing campaign, so they are not involved in campaigns for justice.

Until the American people realize that the two-party, corporate controlled and financed system no longer works for them, but actively works against them, nothing will change. Citizens United makes matters even worse. Big money has to be taken out of politics for the system to start working for the less fortunate, such as the long-term unemployed. Right now we have both parties, including Obama, who are talking about cutting Social Security benefits instead of demanding that the wealthy pay into the system after the $113,700 threshold. Both parties are willing to crush the elderly for the sake of keeping the wealthy from paying higher taxes."

Meanwhile, another year has come and gone with no jobs bills for the long-term unemployed, but yet, those in Congress still find the time to attend the annual White House Correspondence Dinner. But for the long-term unemployed, life drags on --- one miserable day at a time with no hope in sight.

And for those who are graduating from high school this year (and the years ahead) it might be even worse. Many who have already graduated last year from high school and college still have never found work. But our do-nothing Congress can pass a bill to cancel the FAA furloughs in record time when it comes time for them to take another one of their many vacations.

I too often wonder why the kids on college campuses aren't raising hell like they once did during the Vietnam War. If they don't protest in the streets, they might end up sleeping on them instead. They can't live with mom and dad forever. Or maybe they like working at McDonalds or some other minimum wage job (if they can find one), so long as they have their Twitter account.

But I also wonder where these young people will be in the next 40 or 50 years after the Boomers like me are long gone. I pity this generation of young people...they have no clue how they might end up when they are my age.

Maybe a few will run for Congress, and not have to worry about the unemployed.

Sunday, April 28, 2013

Seattle Times Lies about Social Security Disability

* This a rebuttal to an article in the Seattle Times by a "syndicated columnist" named Froma Harrop who lied in her biased, mean-spirited and misinformed article on Social Security disability.

As to "older workers", I am one of those older workers who worked labor intensive jobs for 37 years before applying for SSDI. I can tell you first hand that your article is nothing but a lot of garbage. You are not a writer, a reporter, or even a good person with noble character. People like you hurt other people like me who need these benefits. We paid in to this system all our working lives and that's why we also expect Social Security retirement and Medicare when we get too old and/or sick to work any longer.

SSDI, for the VAST MAJORITY of recipients, is NOT "welfare".

And if I were you, I would hope that you are independently wealthy, in the event that you might also become disabled. Otherwise, I hope you reap what you sow.

And please, do us all a favor, and stop peddling your mean and despicable lies. How a miserable example of a writer such as yourself can become a "syndicated columnist" is well beyond my comprehension skills.

Froma Harrop uses the email address fharrop@projo.com ---her blog is at http://www.fromaharrop.com/

Everything Is Rigged: The Biggest Price-Fixing Scandal Ever

By Matt Taibbi on April 25, 2013 for Rolling Stone

The Illuminati were amateurs. The second huge financial scandal of the year reveals the real international conspiracy: There's no price the big banks can't fix

Conspiracy theorists of the world, believers in the hidden hands of the Rothschilds and the Masons and the Illuminati, we skeptics owe you an apology. You were right. The players may be a little different, but your basic premise is correct: The world is a rigged game. We found this out in recent months, when a series of related corruption stories spilled out of the financial sector, suggesting the world's largest banks may be fixing the prices of, well, just about everything.

You may have heard of the Libor scandal, in which at least three – and perhaps as many as 16 – of the name-brand too-big-to-fail banks have been manipulating global interest rates, in the process messing around with the prices of upward of $500 trillion (that's trillion, with a "t") worth of financial instruments. When that sprawling con burst into public view last year, it was easily the biggest financial scandal in history – MIT professor Andrew Lo even said it "dwarfs by orders of magnitude any financial scam in the history of markets."

That was bad enough, but now Libor may have a twin brother. Word has leaked out that the London-based firm ICAP, the world's largest broker of interest-rate swaps, is being investigated by American authorities for behavior that sounds eerily reminiscent of the Libor mess. Regulators are looking into whether or not a small group of brokers at ICAP may have worked with up to 15 of the world's largest banks to manipulate ISDAfix, a benchmark number used around the world to calculate the prices of interest-rate swaps.

Interest-rate swaps are a tool used by big cities, major corporations and sovereign governments to manage their debt, and the scale of their use is almost unimaginably massive. It's about a $379 trillion market, meaning that any manipulation would affect a pile of assets about 100 times the size of the United States federal budget.

It should surprise no one that among the players implicated in this scheme to fix the prices of interest-rate swaps are the same megabanks – including Barclays, UBS, Bank of America, JPMorgan Chase and the Royal Bank of Scotland – that serve on the Libor panel that sets global interest rates. In fact, in recent years many of these banks have already paid multimillion-dollar settlements for anti-competitive manipulation of one form or another (in addition to Libor, some were caught up in an anti-competitive scheme, detailed in Rolling Stone last year, to rig municipal-debt service auctions). Though the jumble of financial acronyms sounds like gibberish to the layperson, the fact that there may now be price-fixing scandals involving both Libor and ISDAfix suggests a single, giant mushrooming conspiracy of collusion and price-fixing hovering under the ostensibly competitive veneer of Wall Street culture.

The Scam Wall Street Learned From the Mafia

Why? Because Libor already affects the prices of interest-rate swaps, making this a manipulation-on-manipulation situation. If the allegations prove to be right, that will mean that swap customers have been paying for two different layers of price-fixing corruption. If you can imagine paying 20 bucks for a crappy PB&J because some evil cabal of agribusiness companies colluded to fix the prices of both peanuts and peanut butter, you come close to grasping the lunacy of financial markets where both interest rates and interest-rate swaps are being manipulated at the same time, often by the same banks.

"It's a double conspiracy," says an amazed Michael Greenberger, a former director of the trading and markets division at the Commodity Futures Trading Commission and now a professor at the University of Maryland. "It's the height of criminality."

The bad news didn't stop with swaps and interest rates. In March, it also came out that two regulators – the CFTC here in the U.S. and the Madrid-based International Organization of Securities Commissions – were spurred by the Libor revelations to investigate the possibility of collusive manipulation of gold and silver prices. "Given the clubby manipulation efforts we saw in Libor benchmarks, I assume other benchmarks – many other benchmarks – are legit areas of inquiry," CFTC Commissioner Bart Chilton said.

But the biggest shock came out of a federal courtroom at the end of March – though if you follow these matters closely, it may not have been so shocking at all – when a landmark class-action civil lawsuit against the banks for Libor-related offenses was dismissed. In that case, a federal judge accepted the banker-defendants' incredible argument: If cities and towns and other investors lost money because of Libor manipulation, that was their own fault for ever thinking the banks were competing in the first place.

"A farce," was one antitrust lawyer's response to the eyebrow-raising dismissal.

"Incredible," says Sylvia Sokol, an attorney for Constantine Cannon, a firm that specializes in antitrust cases.

All of these stories collectively pointed to the same thing: These banks, which already possess enormous power just by virtue of their financial holdings – in the United States, the top six banks, many of them the same names you see on the Libor and ISDAfix panels, own assets equivalent to 60 percent of the nation's GDP – are beginning to realize the awesome possibilities for increased profit and political might that would come with colluding instead of competing. Moreover, it's increasingly clear that both the criminal justice system and the civil courts may be impotent to stop them, even when they do get caught working together to game the system.

If true, that would leave us living in an era of undisguised, real-world conspiracy, in which the prices of currencies, commodities like gold and silver, even interest rates and the value of money itself, can be and may already have been dictated from above. And those who are doing it can get away with it. Forget the Illuminati – this is the real thing, and it's no secret. You can stare right at it, anytime you want.

The banks found a loophole, a basic flaw in the machine. Across the financial system, there are places where prices or official indices are set based upon unverified data sent in by private banks and financial companies. In other words, we gave the players with incentives to game the system institutional roles in the economic infrastructure.

Libor, which measures the prices banks charge one another to borrow money, is a perfect example, not only of this basic flaw in the price-setting system but of the weakness in the regulatory framework supposedly policing it. Couple a voluntary reporting scheme with too-big-to-fail status and a revolving-door legal system, and what you get is unstoppable corruption.

Every morning, 18 of the world's biggest banks submit data to an office in London about how much they believe they would have to pay to borrow from other banks. The 18 banks together are called the "Libor panel," and when all of these data from all 18 panelist banks are collected, the numbers are averaged out. What emerges, every morning at 11:30 London time, are the daily Libor figures.

Banks submit numbers about borrowing in 10 different currencies across 15 different time periods, e.g., loans as short as one day and as long as one year. This mountain of bank-submitted data is used every day to create benchmark rates that affect the prices of everything from credit cards to mortgages to currencies to commercial loans (both short- and long-term) to swaps.

Gangster Bankers Broke Every Law in the Book

Dating back perhaps as far as the early Nineties, traders and others inside these banks were sometimes calling up the company geeks responsible for submitting the daily Libor numbers (the "Libor submitters") and asking them to fudge the numbers. Usually, the gimmick was the trader had made a bet on something – a swap, currencies, something – and he wanted the Libor submitter to make the numbers look lower (or, occasionally, higher) to help his bet pay off.

Famously, one Barclays trader monkeyed with Libor submissions in exchange for a bottle of Bollinger champagne, but in some cases, it was even lamer than that. This is from an exchange between a trader and a Libor submitter at the Royal Bank of Scotland:

SWISS FRANC TRADER: can u put 6m swiss libor in low pls?...
PRIMARY SUBMITTER: Whats it worth
SWSISS FRANC TRADER: ive got some sushi rolls from yesterday?...
PRIMARY SUBMITTER: ok low 6m, just for u
SWISS FRANC TRADER: wooooooohooooooo...thatd be awesome

Screwing around with world interest rates that affect billions of people in exchange for day-old sushi – it's hard to imagine an image that better captures the moral insanity of the modern financial-services sector.

Hundreds of similar exchanges were uncovered when regulators like Britain's Financial Services Authority and the U.S. Justice Department started burrowing into the befouled entrails of Libor. The documentary evidence of anti-competitive manipulation they found was so overwhelming that, to read it, one almost becomes embarrassed for the banks. "It's just amazing how Libor fixing can make you that much money," chirped one yen trader. "Pure manipulation going on," wrote another.

Yet despite so many instances of at least attempted manipulation, the banks mostly skated. Barclays got off with a relatively minor fine in the $450 million range, UBS was stuck with $1.5 billion in penalties, and RBS was forced to give up $615 million. Apart from a few low-level flunkies overseas, no individual involved in this scam that impacted nearly everyone in the industrialized world was even threatened with criminal prosecution.

Two of America's top law-enforcement officials, Attorney General Eric Holder and former Justice Department Criminal Division chief Lanny Breuer, confessed that it's dangerous to prosecute offending banks because they are simply too big. Making arrests, they say, might lead to "collateral consequences" in the economy.

The relatively small sums of money extracted in these settlements did not go toward reparations for the cities, towns and other victims who lost money due to Libor manipulation. Instead, it flowed mindlessly into government coffers. So it was left to towns and cities like Baltimore (which lost money due to fluctuations in their municipal investments caused by Libor movements), pensions like the New Britain, Connecticut, Firefighters' and Police Benefit Fund, and other foundations – and even individuals (billionaire real-estate developer Sheldon Solow, who filed his own suit in February, claims that his company lost $450 million because of Libor manipulation) – to sue the banks for damages.

One of the biggest Libor suits was proceeding on schedule when, early in March, an army of superstar lawyers working on behalf of the banks descended upon federal judge Naomi Buchwald in the Southern District of New York to argue an extraordinary motion to dismiss. The banks' legal dream team drew from heavyweight Beltway-connected firms like Boies Schiller (you remember David Boies represented Al Gore), Davis Polk (home of top ex-regulators like former SEC enforcement chief Linda Thomsen) and Covington & Burling, the onetime private-practice home of both Holder and Breuer.

The presence of Covington & Burling in the suit – representing, of all companies, Citigroup, the former employer of current Treasury Secretary Jack Lew – was particularly galling. Right as the Libor case was being dismissed, the firm had hired none other than Lanny Breuer, the same Lanny Breuer who, just a few months before, was the assistant attorney general who had balked at criminally prosecuting UBS over Libor because, he said, "Our goal here is not to destroy a major financial institution."

In any case, this all-star squad of white-shoe lawyers came before Buchwald and made the mother of all audacious arguments. Robert Wise of Davis Polk, representing Bank of America, told Buchwald that the banks could not possibly be guilty of anti- competitive collusion because nobody ever said that the creation of Libor was competitive. "It is essential to our argument that this is not a competitive process," he said. "The banks do not compete with one another in the submission of Libor."

If you squint incredibly hard and look at the issue through a mirror, maybe while standing on your head, you can sort of see what Wise is saying. In a very theoretical, technical sense, the actual process by which banks submit Libor data – 18 geeks sending numbers to the British Bankers' Association offices in London once every morning – is not competitive per se.

But these numbers are supposed to reflect interbank-loan prices derived in a real, competitive market. Saying the Libor submission process is not competitive is sort of like pointing out that bank robbers obeyed the speed limit on the way to the heist. It's the silliest kind of legal sophistry.

But Wise eventually outdid even that argument, essentially saying that while the banks may have lied to or cheated their customers, they weren't guilty of the particular crime of antitrust collusion. This is like the old joke about the lawyer who gets up in court and claims his client had to be innocent, because his client was committing a crime in a different state at the time of the offense.

"The plaintiffs, I believe, are confusing a claim of being perhaps deceived," he said, "with a claim for harm to competition."

Judge Buchwald swallowed this lunatic argument whole and dismissed most of the case. Libor, she said, was a "cooperative endeavor" that was "never intended to be competitive." Her decision "does not reflect the reality of this business, where all of these banks were acting as competitors throughout the process," said the antitrust lawyer Sokol. Buchwald made this ruling despite the fact that both the U.S. and British governments had already settled with three banks for billions of dollars for improper manipulation, manipulation that these companies admitted to in their settlements.

Michael Hausfeld of Hausfeld LLP, one of the lead lawyers for the plaintiffs in this Libor suit, declined to comment specifically on the dismissal. But he did talk about the significance of the Libor case and other manipulation cases now in the pipeline.

"It's now evident that there is a ubiquitous culture among the banks to collude and cheat their customers as many times as they can in as many forms as they can conceive," he said. "And that's not just surmising. This is just based upon what they've been caught at."

Greenberger says the lack of serious consequences for the Libor scandal has only made other kinds of manipulation more inevitable. "There's no therapy like sending those who are used to wearing Gucci shoes to jail," he says. "But when the attorney general says, 'I don't want to indict people,' it's the Wild West. There's no law."

The problem is, a number of markets feature the same infrastructural weakness that failed in the Libor mess. In the case of interest-rate swaps and the ISDAfix benchmark, the system is very similar to Libor, although the investigation into these markets reportedly focuses on some different types of improprieties.

Though interest-rate swaps are not widely understood outside the finance world, the root concept actually isn't that hard. If you can imagine taking out a variable-rate mortgage and then paying a bank to make your loan payments fixed, you've got the basic idea of an interest-rate swap.

In practice, it might be a country like Greece or a regional government like Jefferson County, Alabama, that borrows money at a variable rate of interest, then later goes to a bank to "swap" that loan to a more predictable fixed rate. In its simplest form, the customer in a swap deal is usually paying a premium for the safety and security of fixed interest rates, while the firm selling the swap is usually betting that it knows more about future movements in interest rates than its customers.

Prices for interest-rate swaps are often based on ISDAfix, which, like Libor, is yet another of these privately calculated benchmarks. ISDAfix's U.S. dollar rates are published every day, at 11:30 a.m. and 3:30 p.m., after a gang of the same usual-suspect megabanks (Bank of America, RBS, Deutsche, JPMorgan Chase, Barclays, etc.) submits information about bids and offers for swaps.

And here's what we know so far: The CFTC has sent subpoenas to ICAP and to as many as 15 of those member banks, and plans to interview about a dozen ICAP employees from the company's office in Jersey City, New Jersey. Moreover, the International Swaps and Derivatives Association, or ISDA, which works together with ICAP (for U.S. dollar transactions) and Thomson Reuters to compute the ISDAfix benchmark, has hired the consulting firm Oliver Wyman to review the process by which ISDAfix is calculated. Oliver Wyman is the same company that the British Bankers' Association hired to review the Libor submission process after that scandal broke last year. The upshot of all of this is that it looks very much like ISDAfix could be Libor all over again.

"It's obviously reminiscent of the Libor manipulation issue," Darrell Duffie, a finance professor at Stanford University, told reporters. "People may have been naive that simply reporting these rates was enough to avoid manipulation."

And just like in Libor, the potential losers in an interest-rate-swap manipulation scandal would be the same sad-sack collection of cities, towns, companies and other nonbank entities that have no way of knowing if they're paying the real price for swaps or a price being manipulated by bank insiders for profit. Moreover, ISDAfix is not only used to calculate prices for interest-rate swaps, it's also used to set values for about $550 billion worth of bonds tied to commercial real estate, and also affects the payouts on some state-pension annuities.

So although it's not quite as widespread as Libor, ISDAfix is sufficiently power-jammed into the world financial infrastructure that any manipulation of the rate would be catastrophic – and a huge class of victims that could include everyone from state pensioners to big cities to wealthy investors in structured notes would have no idea they were being robbed.

"How is some municipality in Cleveland or wherever going to know if it's getting ripped off?" asks Michael Masters of Masters Capital Management, a fund manager who has long been an advocate of greater transparency in the derivatives world. "The answer is, they won't know."

Worse still, the CFTC investigation apparently isn't limited to possible manipulation of swap prices by monkeying around with ISDAfix. According to reports, the commission is also looking at whether or not employees at ICAP may have intentionally delayed publication of swap prices, which in theory could give someone (bankers, cough, cough) a chance to trade ahead of the information.

Swap prices are published when ICAP employees manually enter the data on a computer screen called "19901." Some 6,000 customers subscribe to a service that allows them to access the data appearing on the 19901 screen.

The key here is that unlike a more transparent, regulated market like the New York Stock Exchange, where the results of stock trades are computed more or less instantly and everyone in theory can immediately see the impact of trading on the prices of stocks, in the swap market the whole world is dependent upon a handful of brokers quickly and honestly entering data about trades by hand into a computer terminal.

Any delay in entering price data would provide the banks involved in the transactions with a rare opportunity to trade ahead of the information. One way to imagine it would be to picture a racetrack where a giant curtain is pulled over the track as the horses come down the stretch – and the gallery is only told two minutes later which horse actually won. Anyone on the right side of the curtain could make a lot of smart bets before the audience saw the results of the race.

At ICAP, the interest-rate swap desk, and the 19901 screen, were reportedly controlled by a small group of 20 or so brokers, some of whom were making millions of dollars. These brokers made so much money for themselves the unit was nicknamed "Treasure Island."

Already, there are some reports that brokers of Treasure Island did create such intentional delays. Bloomberg interviewed a former broker who claims that he watched ICAP brokers delay the reporting of swap prices. "That allows dealers to tell the brokers to delay putting trades into the system instead of in real time," Bloomberg wrote, noting the former broker had "witnessed such activity firsthand." An ICAP spokesman has no comment on the story, though the company has released a statement saying that it is "cooperating" with the CFTC's inquiry and that it "maintains policies that prohibit" the improper behavior alleged in news reports.

The idea that prices in a $379 trillion market could be dependent on a desk of about 20 guys in New Jersey should tell you a lot about the absurdity of our financial infrastructure. The whole thing, in fact, has a darkly comic element to it. "It's almost hilarious in the irony," says David Frenk, director of research for Better Markets, a financial-reform advocacy group, "that they called it ISDAfix."

After scandals involving libor and, perhaps, ISDAfix, the question that should have everyone freaked out is this: What other markets out there carry the same potential for manipulation? The answer to that question is far from reassuring, because the potential is almost everywhere. From gold to gas to swaps to interest rates, prices all over the world are dependent upon little private cabals of cigar-chomping insiders we're forced to trust.

"In all the over-the-counter markets, you don't really have pricing except by a bunch of guys getting together," Masters notes glumly.

That includes the markets for gold (where prices are set by five banks in a Libor-ish teleconferencing process that, ironically, was created in part by N M Rothschild & Sons) and silver (whose price is set by just three banks), as well as benchmark rates in numerous other commodities – jet fuel, diesel, electric power, coal, you name it. The problem in each of these markets is the same: We all have to rely upon the honesty of companies like Barclays (already caught and fined $453 million for rigging Libor) or JPMorgan Chase (paid a $228 million settlement for rigging municipal-bond auctions) or UBS (fined a collective $1.66 billion for both muni-bond rigging and Libor manipulation) to faithfully report the real prices of things like interest rates, swaps, currencies and commodities.

All of these benchmarks based on voluntary reporting are now being looked at by regulators around the world, and God knows what they'll find. The European Federation of Financial Services Users wrote in an official EU survey last summer that all of these systems are ripe targets for manipulation. "In general," it wrote, "those markets which are based on non-attested, voluntary submission of data from agents whose benefits depend on such benchmarks are especially vulnerable of market abuse and distortion."

Translation: When prices are set by companies that can profit by manipulating them, we're fucked.

"You name it," says Frenk. "Any of these benchmarks is a possibility for corruption."

The only reason this problem has not received the attention it deserves is because the scale of it is so enormous that ordinary people simply cannot see it. It's not just stealing by reaching a hand into your pocket and taking out money, but stealing in which banks can hit a few keystrokes and magically make whatever's in your pocket worth less. This is corruption at the molecular level of the economy, Space Age stealing – and it's only just coming into view.

Friday, April 26, 2013

Technology is Replacing all Jobs

The United States is now well into a de-industrialized, information age in which the economy is not producing enough good jobs to sustain a strong middle class.

Think of technology replacing workers and what comes to mind are low-skilled workers who are bumped aside by relatively simple machines: Subway clerks replaced by Metrocard machines, toll workers rendered obsolete by E-Zpass, banker tellers replaced by ATMs, assembly line workers replaced by robots, and so on.

Yet as technology advances, the range of human jobs that can be turned over to machines also advances. Exhibit A: Morgan Stanley's move to replace bond traders with computers, as reported in the Wall Street Journal:

Morgan Stanley's head of interest-rate trading, Glenn Hadden, has told colleagues in recent months and that the trading floor of the future will surround a few traders with the hum of powerful machines. The unit, which has at least 200 staff according to industry estimates, has cut about 10% of staff on some trading desks. Morgan Stanley declines to discuss employment levels, but there according to these estimates the company employs more than 1,000 traders.

We are not talking here about clerks making $25,000 a year losing their jobs to machines. We're talking about college-educated professionals making six-figures with big houses in Westchester and New Jersey.

And why are these peoples' lives being derailed? Because Morgan Stanley, a publicly-traded company, needs to boost its profit margins and technology offers a way to do that. Under our current form of capitalism, in which shareholder value is all-important, few CEOs feel they are really in control of the choices public companies make. That mechanistic and amoral economic trend has long been teaming up with technological change to create outcomes that are extremely harsh for human beings -- only now the damage is moving up the socio-economic ladder.

Bond traders aren't the only white-collar workers being displaced by new technology. Corporate lawyers -- who've long had the fanciest degrees and fattest salaries in their profession -- are also being squeezed as new computer programs automate the review of large numbers of legal documents. Today, teams of young associates, billing $600 an hour, still pore over documents for weeks or months as part of the discovery process in complex legal cases. Already, though, it is possible in some cases for one lawyer to do this same job sitting in front of a computer screen searching for keywords.

Likewise, some doctors -- particularly radiologists -- may find themselves with less work as computer programs are designed to handle complex diagnostic tasks that once required the veteran eye of a well-trained physician.

These emerging technological threats to high paying jobs come on top of a threat that has already materialized: The Internet and other communications technology has made it much easier to outsource white-collar jobs to India and other low-wage economies. So it is that Indian radiologists, who are able to instantly access images from U.S. hospitals, have long been taking the jobs of U.S. radiologists.

The counter-point to my pessimism here is that technological advances are generally a good thing and new jobs are created by this form of "creative destruction." There may be fewer bank tellers, for instance, but they are many more people with jobs designing and servicing ATMs. Also, the productivity advances from technological change create more wealth overall and that wealth ends up being invested, creating jobs.

All that sounds good in theory, and it's hard to think of many technological advances one would roll back just to have the jobs. Do we want to get rid of container ports so that vast armies of longshoremen are once more needed to unload cargo ships by hand? I don't think so.

Still, the United States is now well into a de-industrialized, information age in which the economy is not producing enough good jobs to sustain a strong middle class, and a greater slice of national wealth is being captured by the top 1 percent. As of yet, we have not re-ordered public policy to adjust to this new reality -- and so it's frightening to see even more jobs disappearing and even more gains from productivity increases go to a tiny elite. There is no consensus among our political elites about how to handle the very real possibility of not a jobless future, exactly, but rather a future with many fewer jobs.

Low-wage workers tend to have little voice in our democracy, and so it's been easy to ignore their job losses to machines. Maybe now, with Wall Street bond traders losing their jobs, somebody will pay attention.

Originally posted as Smart Machines, Dispensable Workers: A Jobless Future? | David Callahan

Wednesday, April 24, 2013

America's Bleak Job Outlook

The trend has continued for the past 5 years, as there aren't enough jobs to keep pace with natural population growth for high school and college graduates. And of the new jobs being created, an ever increasing number are part-time low-wage jobs without benefits in the service and retail industries.

The better jobs might be found in the healthcare industry with an aging population; but more and more of the high-tech jobs seem to be going to H-B1 visa applicants.

Older workers who were laid off during the recession may never work again, as those jobs are going to younger workers.

And there doesn't appear to be any change in the future, as China's middle-class continues to grow. For America, the job market looks very bleak for this, and the next generation of U.S. workers.

40 years ago we could graduate (or drop out) of high school and get a job in a local factory paying a "living wage" --- and if we so chose, could work there all our life. And most college graduate were almost guaranteed to succeed. But those days are long gone.

Unemployment & Stocks (December 2007 to April 2013)

I super-imposed (scaled to fit) an unemployment chart from the Bureau of Labor Statistics to a Google Finance chart of the Dow Jones to show the correlation of the stock market to the unemployment rate from the start of the recession to the present --- CHART HERE.

Also, there are links below (related to the numbers in the time-line on the chart) for new Social Security recipients (both for disability and retirements) and for new high school graduates during that same period of time (from December 2007 to April 2013).

Quick facts that are noted in the time-line of the chart:

  • The U.S. Bureau of Labor Statistics currently reports 11.7 million Americans as unemployed. The U-3 unemployment rate is 7.6%.

  • There are 7.6 million who are working part time because their hours were cut or they were unable to find a full-time job. The U-6 unemployment rate is 13.8%.

  • According to an article in the New York Times, there are 5.8 million fewer Americans working full time since the start of the recession in December 2007 (About the same number as jobs created since June 2010).

  • Since the start of the recession, there has been an increase of 2.8 million Americans working part time. And a loophole in ObamaCare® might only make it worse, creating many more part-time jobs.

  • According to the Center on Budget and Policy Priorities, 8.7 million jobs were already lost between the start of the recession in December of 2007 and June of 2009.

  • According to the U.S. Department of Labor, only 5.87 million new jobs were created since March 2010 to the present (when the U.S. finally began adding "net new jobs" after continued monthly losses).

  • The unemployed rate peaked at 10.2% in October 2009 when 15.9 million Americans were reported as unemployed.

  • The U.S. Bureau of Labor Statistics currently counts 26 million Americans as either unemployed, involuntarily working part-time, or those who stopped looking for work within the last year. The current national U-6 rate is 13.8% and can be found here.

  • According to the Social Security Administration, from April 2010 to April 2013 an estimated 6 million Americans either went on either Social Security disability or took a regular Social Security retirement.

  • When the unemployment rate had peaked the Bureau of Labor Statistics reported in October 2010 that 4.5 million Americans were unemployed for one year or longer (and made up 31 percent of all those who were reported unemployed). Today they report (April 2013) that the long-term unemployed (those jobless for 27 weeks or more) is 4.6 million and account for 39.6 percent of the unemployed --- almost the same as it was 3½ years ago.

  • According to the Social Security Administration, 50% of the U.S. workforce takes home an after-tax weekly paycheck of $520 or less (which is $27,000 a year net income).

  • According to the National Center for Education Statistics, a record 3.4 million students are expected to graduate from high school in the 2012-13 year. Now add to that, what the colleges and universities are also expected to award in degrees. That would total an estimated 7 million NEW PEOPLE if everyone decided to look for a new job by the end of this year.

The chart shows these statistics from the beginning of the recession (December 2007) to the present (April 2013) as these events relate to the stock market (The Dow Jones Industrial Average).

The Long-Term Unemployed

Paul Krugman recently wrote in the New York Times, "Our worst fears about the damage from long-term unemployment are being confirmed. What’s really striking is the huge number of long-term unemployed, with 4.6 million unemployed more than six months and more than three million who have been jobless for a year or more. Oh, and these numbers don’t count those who have given up looking for work. Workers who have been unemployed for a long time eventually come to be seen as unemployable, tainted goods that nobody will buy."

In another New York Times article: Part-Time Work Becomes Full-Time Wait for Better Job - Part-timers generally earn less per hour than their full-time counterparts. The senior economist at the Center for Economic and Policy Research says, “The only remaining legal form of discrimination in the labor market is against part-time workers. You can hire part-time workers and full-time workers doing the same job, and you’re allowed to pay them different money and different benefits.”

The Times article also notes that, since the economy began to recover almost four years ago, hiring has been concentrated in relatively low-wage service sectors...nearly one out of every 13 jobs is at a restaurant, bar or other food-service establishment, a record high. (I mentioned this in another post at the Daily Kos.)

Darden Restaurants, which operates brands like Red Lobster and Olive Garden, suggested last year that they might seek to limit full-time staff to avoid activating the [ObamaCare®] mandate.

From the Bureau of Labor Statistics about The Working Poor: "More than 10 million Americans worked, but nevertheless, had annual incomes below the federal poverty line. One-third of them worked in the service industry. The Census Bureau reported that 28.6 million households had a median income of only $19,315 a year." (Excel file)

Meanwhile, H-1B visas will expand --- even though we will need another 3.4 million more jobs this year just for natural population growth.

But China is Doing Well

According to the Wall Street Journal: China's rapidly expanding middle and upper classes have discarded old cellphones for new smartphones in surging numbers over the past two years, scooping up expensive smartphones made by Apple. Almost 300 million Chinese are subscribing to high-end mobile services. Apple is trying to reach a deal with China's largest carrier, China Mobile Ltd, which would allow Apple to sell to the carrier's more than 700 million customers. Apple CEO Tim Cook said the company would double the 11 Apple stores in Greater China within the next two years.

Also from the Wall Street Journal: There were 2.04 million vehicles sold in China last month, up from 1.84 million a year earlier.

The Wall Street Journal also reports: Dell Inc. plans to expand into smaller cities and double its sales outlets in China over the next two to three years to help cushion the U.S.-based company against the steep fall in global personal-computer shipments.

According to the New York Times, the wealthy in America continue to do better: "The top one-tenth of 1 percent received about one-thirteenth of the nation’s income, while they received only one-fiftieth in the 1960s and 1970s."

But despite all this bleak news for America's workers, they still cling to the belief that a poor person has a chance of becoming rich; and that a rich person has a chance of dying penniless. Dream on.

Sunday, April 21, 2013

Obama's Right-Hand Man Votes Against Obama

Senate Majority Leader Harry Reid (D-Nevada) is my U.S. Senator, who barely beat the Tea Party radical Sharron Angle in the last election. And thank you for that, as Angle would have been a total disaster for Nevada.

By all accounts, Harry Reid should have lost. He was a dead politician walking. His approval had ratings dropped as low as the Las Vegas housing market, and he polled below 40 percent in some polls. The unemployment, poverty, homeless, suicide and foreclosure rates were (and still are) some of the highest in the nation. But in 2010 Republicans had a weak field of candidates challenging Reid, and Sharron Angle was their eventual choice.

Harry Reid won re-election only because, in Nevada, we can select “none of these candidates” --- which split the anti-Harry Reid vote. Reid was only the better of two evils, but that's all. I don't think Harry can count on that again in another election...not after his latest episodes.

As Obama's right-hand man, Harry Reid voted with the Republicans AGAINST background checks for gun purchases. The vote would have needed all Democrats and just one Republican to meet the 60-vote threshold to break a filibuster. (Harry Reid also never reformed the filibuster, deciding not to after he vehemently vowed that he would --- just one day before.)

Harry Reid had called the weapons bill ‘anti-gun legislation’. Harry Reid voted against President Obama AND John McCain (R-AZ), who was one of only four Republicans to vote FOR gun background checks. (It was also Harry Reid and John McCain who co-sponsored the filibuster reform bill.).

Summary of the bill: "To protect Second Amendment rights, ensure that all individuals who should be prohibited from buying a firearm are listed in the National Instant Criminal Background Check System, and provide a responsible and consistent background check process."

That's all. This bill did not even include a ban on assault-styled rifles or 30-round magazines; nor did it require gun registrations or the elimination of the "gun show loophole" for private sells. The Manchin-Toomey amendment was JUST for background checks. (e.g. Are you a convicted felon? Are you wanted on bench warrants? Have you recently been released from a mental facility? Are you addicted to meth? Have you recently sent threatening letters to the President? Do you take prescribed medications that make you hallucinate?)

But Harry Reid caved in to the NRA, making similar excuses for changing his vote on background checks as he made excuses for not reforming the filibuster. He "talks the talk" but he doesn't "walk the walk". But talk is cheap. If you ask my Uncle Harry, he might tell you, "Money talks, bullshit walks." (So why isn't Harry walking when he's full of it?)

The Manchin-Toomey background check proposal that died in the Senate this week had everything going for it: Bipartisan sponsorship by two centrist senators, the support of 90 percent of Americans, President Obama's full-throated support, and sadly, the momentum for reform created by the tragedy in Newtown. But still the bill failed to pass.

The bill had won a 54-vote majority, but fell short of the Senate's 60-vote threshold to pass. The bill had needed every single Democrat and just one Republican to pass --- but 5 Democrats voted "nay" while 4 Republicans actually voted with the Democrats.

Just as it is with the 2nd Amendment, under the 5th Amendment the "RIGHT" to travel is also a liberty of which the Citizen "cannot be deprived" without due process of the law. But when someone buys a car, all States require that they must have a title (or loan agreement to purchase); they must register it with the DMV; they must buy auto liability insurance; and they must have a license to operate it (and pass an eye examine).

But the Manchin-Toomey amendment (for background checks) required none of those things - - - it was JUST for background checks. Yet, still the bill failed because the NRA (the gun lobby) has unrivaled political power. Neither Mayor Bloomberg's money nor Obama's political machine could beat the NRA (and neither does public opinion ever equal political power).

At $200 million, the NRA's budget is massive and is one of the biggest among major lobbying groups. And for decades it has deployed its money and manpower to defeat its "enemies" in Congress and replace them with "allies" like Harry Reid. Today, all 10 leaders of both the Republican House and the Senate are A-rated by the NRA.

Harry Reid is well known for his close ties with the NRA. Reid has twice opposed the assault weapons ban back in 1992 and 2004. And Reid even slipped in a provision into the 2010 ObamaCare® plan that restricts the government from collecting data on gun ownership (which by me, is ok). Reid has received many "donations" from the NRA all throughout his long career.

As an aside (since I'm on the subject of good-ole Uncle Harry): Harry Reid pals around with the big casino bosses in Nevada. He has even been seen (below) attending prize fights with MGM owner Kirk Kerkorian. Why? Does someone pal around with people they're suppose to regulate?

It's no wonder Nevada has the lowest gaming taxes in the world. So people like Sheldon Adelson can rake in billions to give millions to Republican super PACs. Billionaire casino owners such as Kirk Kerkorian, Sheldon Adelson and Steve Wynn only pay a minuscule 6.75% gaming tax on gross winnings in Las Vegas, but they pay a whopping 39% tax on gaming revenues from their Chinese casinos. And these same Las Vegas casino owners also earn most of their revenues from China. The low taxes on these "job creators" didn't save any casino jobs (not mine at least).

The Kerkorian and Adelson also have ties to the Chinese mafia. But yet people like them complain about the "effective" corporate tax rate they pay. Uncle Harry won't eliminate their tax loopholes or tax their capital gains as regular wages.

And Obama repeatedly railed against subsidies for gas and oil companies, but Harry Reid wanted to give them $72 billion. Harry, like most in Congress, are bought and paid for. Harry Reid is proof that $$$ corrupts democracy.

But I digress: My main beef with this whole thing on the "gun control" aka "gun safety" debate is... I'm just personally against all corporate lobbying to influence public policy. Get money out of politics. The NRA or any lobbying group shouldn't have a strangle-hold over the voice of the majority of The People and control (what's left) of our democracy. Congress is already corrupt, so why corrupt them more? The only thing the NRA hasn't done yet is, pass out envelopes stuffed with cash on the floor of Congress (or have they?)

I wouldn't propose a ban on a Bushmaster® anymore than I would ban a pressure cooker or an automobile. But a simple background check wouldn't have violated anybody's rights. Shame on Harry Reid.

Miscellaneous Gun Statistics

A 2010 report from the Violence Policy Center finds that 2.7 percent (230) of gun-related homicides were committed in self-defense and 97.3 percent (8,275) were criminal homicides.

The FBI website says (for that same year in 2010) that private citizens justifiably killed 278 people during the commission of a crime and they list 12,996* murder victims in 2010. Of the homicides for which the FBI received weapons data, most of them (67.5 percent) involved the use of firearms and most of those were hand guns. (*67.5 percent of 12,996 is 8,902).

The gun lobby (NRA) claims that firearms are used for self-defense approximately 2.5 million times a year. But according to the Department of Justice's National Crime Victimization Survey, the actual number from 2007 to 2011 was only 338,500 (or 67,700 times a year).

Other notes from the study --- Guns are used for self defense (both successfully and unsuccessfully) by less than 1 percent of all violent crime victims --- and the typical gun is more likely to be stolen than to be used in an attempt to stop a crime.

Nobody is coming for your guns. (Read 6 gun myths). The National Firearms Act of 1934 requires the owners of machine guns and sawed-off shotguns to register with the federal government (and that did not lead to any government round up of guns). When the bill passed, the law was endorsed by the NRA. When the Brady Bill was still in force, nobody took your guns away. Why is this issue still being raised?

Does anyone really need an assault-styled rifle with a 30-round magazine to defend their home? Rifles, with the longer barrels, are primarily designed for distance, not for close up self-defense. How may women carry a Bushmaster® in their purses to keep from being raped? The NRA's Wayne LaPierre is implying that all women should have one for self defense.

And a hand gun, such as a .357 magnum revolver, is much more reliable for home or personal defense (it won't jam) and the rounds have much more stopping power than a Bushmaster®.

The "revisionist view" of Second Amendment rights gained momentum in 1982 when a Senate judiciary subcommittee issued a report about the discovery of "long lost proof" of an individual's constitutional right to bear arms. The chair of the subcommittee was Utah Senator Orrin Hatch. The "proof" has never surfaced.

But the recent Manchin-Toomey amendment that was recently voted down wasn't about BANNING ANY guns --- it was just to require background checks for people like Ted Nuget (who has a huge compound with plenty of open space to conduct paramilitary drills and play "Rambo". But for most of us, who live in a crowed city, the situation is much different.)

Thursday, April 18, 2013

Crocodile Dundee's Tax Shelter _̴ı̴̴̡̡̡ ̡͌l̡̡̡ ̡͌l̡*̡̡ ̴̡ı̴̴̡ ̡̡͡|̲̲̲͡͡͡ ̲▫̲͡ ̲̲̲͡͡π̲̲͡͡ ̲̲͡▫̲̲͡͡ ̲|̡̡̡ ̡ ̴̡ı̴̡̡ ̡͌l̡̡̡̡._

The real life Crocodile Dundee writer/actor Paul Hogan is almost as famous in tax circles as Willie Nelson. Hogan had been feuding with Aussie tax authorities over more than $150 million in taxes and penalties dating back to the Crocodile Dundee days of the 1980s.

Although Hogan lives in the U.S., his residence was questioned. In 2010, Hogan learned Aussie tax collectors had teeth after leaving his Los Angeles home to attend his mother’s funeral in Australia. When tax authorities found him they wouldn’t let him leave!

After years of legal battles, Hogan finally settled with the Tax Office on confidential terms.

Now the Crocodile Dundee star is accusing his tax attorney of stealing $34 million that he helped Hogan hide in a Swiss bank account.

Throughout last year, Hogan and his U.S. advisers became increasingly anxious after his tax attorney (a British-born Swiss resident) refused to provide any bank statements or accounts relating to the millions in the account.

The account was set up for Hogan to stream revenue from his Crocodile Dundee franchise into offshore accounts and thereby avoid paying tax. Hogan disputes this.

Hogan tried to sue for the money in a California court, but because his tax advisor (and his imprisoned partner) were not U.S. citizens, the judge said, "Given the dearth of connections … to California, the 'long arm of the law' is simply too short to reach them."

Paul Hogan (now 73) left his wife in the late 1980s to eventually marry his Crocodile Dundee co-star Linda Kozlowski. They've been married for 23 years as of January 2013.

Paul Hogan and his wife are now selling their stunning Malibu beach-front mansion for $5.25 million.

Wednesday, April 17, 2013

Corporate Bankruptcy: Over $2 Trillion in 25 years

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Just in the past 25 years alone, there were over $2.22 trillion in corporate bankruptcies --- and that's just for U.S. corporations filing for $10 billion or more (If you care to peruse the data at www.bankruptcydata.com, you can come up with a more accurate total. There are a lot more with bankruptcies of $1 billion and more).

But when compared to past U.S. corporate bankruptcies, Solyndra is barely a blip on the radar; but yet, it has garnered a lot of publicity. But why? Compared to the bank "bailouts" ($700 billion TARP + $187 billion for Fannie Mae and Freddie Mac), a ½ billion dollar loss from Solyndra should be nothing more than an annoying fly. In the entire scheme of things, compared to the $691 billion Lehman Brothers bankruptcy, Solyndra is a pittance.

U.S. Bankruptcy law changed dramatically in 2005 with the passage of BAPCPA, which made it more difficult for consumer debtors to file bankruptcy. Corporate lobbyists pushing for BAPCPA claimed that its passage would reduce losses to creditors such as credit card companies, and that those creditors would then "pass on the savings to other borrowers in the form of lower interest rates".

Consumer advocates, on the other hand, assert that these claims turned out to be false by observing that, while although credit card company losses decreased after passage of the Act, the prices they charged to their customers increased --- and credit card company profits have since soared.

According to a study by Harvard researchers, as of 2007, medical problems caused 62% of all personal bankruptcies filed in the U.S. (0% for corporate bankruptcies) --- but even despite the recession, according to a BABCPA report, from 2010 to 2011 there has been an 11% drop in personal bankruptcy filings; and bankruptcy filings for the 12-month period ending June 30, 2012 was down 14% than those filed in the previous 12-month period.

But what about corporate bankruptcies?

Let's just look at Solyndra first. According to Bloomberg, the private equity firms of Argonaut Ventures I LLC and Madrone Capital Partners LP owns a company called 360 Degree Solar Holdings Inc. (which is the parent company of Solyndra) and recently exited bankruptcy court with a $975 million "net operating loss for carry-forwards" (which it may use against any future income). The potential tax breaks may be as much as $341 million. The Wall Street Journal confirms that these two venture capital firms could actually profit from Solyndra losses.

Just by adding up corporate bankruptcies (of $10 billon or more per company) for U.S. corporations and financial companies over the last 25 years (from 1987 to 2012), corporate American has had over $2.22 trillion in bankruptcies (Chart below with link to source. Many firms such as Kodak and Blockbuster with $1 billion aren't even on the list.)

But unlike corporations that have "limited liability" protections for their corporate executives, the CEOs and their board of directors aren't being forced to sell their personal property because of mismanagement, reckless gambling or greed. They aren't being forced to sell their home to pay off a medical bill. No banker even has to go on trial for breaking the law.

So what is it about "free markets" and "crony capitalism" that's supposed to make our country "exceptional", because it is well beyond my understanding of free enterprise. When I hear the Republicans complain of Obama's "socialism" or hear the Tea Party espouse the virtues of "free markets", or hear U.S. manufacturers speak about "emerging markets", it makes me wonder --- just exactly whose economy are they referring to? Surely not mine.

Today I received an email from Occupy Wall Street with the subject line "Learn how to occupy your workplace". While I have no workplace (I've been unemployed since 2008), I did read their notice and it mentioned "syndicalist union".

Besides "free enterprise", I have no idea what syndicalism is either. Wiki says, "Syndicalism is a type of economic system proposed as a replacement for capitalism and an alternative to state socialism, which uses Confederations of collectivized trade unions or industrial unions."

The way I see it, anything else might be better than our current economic system of free enterprise. Our democracy is corrupted and capitalism has failed too many people.

50% of the U.S. workforce earns $27,000 a year or less --- 30 million Americans are unemployed --- 8 million want full-time work but only work part-time --- 4.4 million Americans currently earn the federal minimum wage of $7.25 or less. (The minimum wage has not kept up with the cost of living. After adjusting for inflation, the minimum wage is lower today than it was in 1956. But Congress won't change this.)

Many who might otherwise qualify for disability are being denied for budget concerns. Those who are retired or can no longer work are having their Social Security incomes cut with chained-CPI. The GOP wants to raise eligibility for Medicare and Social Security to age 70, saying Americans are living longer, when it's the rich who are mostly living longer. But the GOP would rather eliminate those programs all together.

With increasing technological advances and robotics, their won't be enough jobs for a growing population. This year alone over 3 million more jobs will be needed for high school graduates. Out-sourcing and in- sourcing for cheaper labor further decimates the ranks of the unemployed.

While although our American patriots continually say that our system is the best in the world..."lifting millions out of poverty and creating a middle-class" --- that was then, this is now. It doesn't necessarily mean that our system of government and economics was ever the best that it could ever be, or that it could never break down, or that it could never become corrupt and/or obsolete like it might now be.

Our country hasn't properly evolved and economically adjusted for globalization. The multi-nationals did well (even if they go bankrupt), but not the American workers. I think it's time for a major change, and not just an Obama-style "change" --- as in just a change of faces in the White House --- but a drastic change, from the top down.

Let's try something new (syndicalism?). Capitalism was good for a while, but nothing ever lasts forever. The current system needs some major tweaks, but with our corrupt election system, The People can't get ever congress to make ANY changes at all --- changing anything that the majority of The People have been asking for a very long time. (I would list the American people's demands here, but the list is far too lengthily.)

But if Congress won't ever change anything, what is left for The People do? Just continue to let things get worse? Voting doesn't seem to help much. Petitions don't help much. Calls and letters to Congress are literally ignored. To have real "change", first Congress will have to reform itself. Which means, it's going to be a very long wait --- and it certainly won't be in my lifetime.

GM is supposed to be the number one automaker again. But why did they need a bailout...again?

Before the outbreak of World War II General Motors produced vast quantities of armaments, vehicles, and aircraft for both the Allied and Axis customers. By the spring of 1939, the German government had assumed day-to-day control of American owned factories in Germany, but decided against nationalizing them.

During World War II the U.S. auto companies were still concerned that Nazi Germany would nationalize American-owned factories, so GM later declared it had abandoned its Nazi subsidiary, and took a complete tax write-off, of which they received a tax reduction from U.S. taxes of approximately $22.7 million.

After the war GM collected another $33 million in "war reparations" because the Allies had bombed its German facilities for which they had earlier declared a complete tax write-off, and had received tax a reduction (GM's total bail out back then was worth about $285 billion in today's money.)

While General Motors has claimed its German (Opel) operations were outside its control during World War II, this assertion appears to be contradicted by available evidence. General Motors was not just a car company that happened to have factories in Germany; GM management from the top down had extensive connections with the Nazi Party.

So what do we have now (or still)? Capitalism? Crony capitalism? Free markets? Free enterprise? Socialism? We tax people, so isn't taxation just another form of "re-distributing the wealth"? How many corporations are subsidized every year while hoarding over $2 trillion in offshore banks?

And taxpayers pay for corporate losses and bailed- out banks; even though analysts predict that breaking up the big banks might actually increase their profitability. And technically speaking, aren't many U.S. corporations and banks already "nationalized? 

So let's not do things halfway, let's also nationalize the oil companies as well. After all, it's The People's oil --- a natural resource that's under our federal lands. And besides, I doubt ExxonMobil will ever file for bankruptcy.

* See my post: Murder and Betrayal of the Rich and Famous and scroll down to "Typical Wall Street Greed and Betrayal" for a partial list of the financial Ponzi Schemers.

Corporate bankruptcy filings of $10 billion or more in U.S. from 1987 to 2012

Company Date $ Billions
Lehman Brothers Holdings, Inc. 9/15/2008 691.06
Worldcom, Inc. 7/21/2002 103.91
Enron Corp. 12/2/2001 65.50
Conesco, Inc. 12/17/2002 61.39
Pacific Gas and Electric Co. 4/06/2001 36.15
Texaco, Inc. 4/12/1987 34.94
Financial Corp. of America 9/9/1988 33.86
Refco Inc. 10/17/2005 33.33
IndyMac Bancorp, Inc. 7/31/2008 32.73
Global Crossing Ltd. 1/28/2002 30.18
Bank of New England Corp. 1/7/1991 29.77
Calpine Corp. 12/20/2005 27.21
New Century Financial Corp. 4/2/2007 26.14
UAL Corp. 12/9/2002 25.19
Delta Air Lines, Inc. 9/14/2005 21.80
Adelphia Communications 6/25/2002 21.49
MCorp. 3/31/1989 20.22
Mirant Corp. 7/14/2003 19.41
American Home Mortgage Investment Corp. 8/6/2007 18.82
NTL, Inc. 5/8/2002 16.83
Washington Mutual 9/26/2008 327.9
Chrysler LLC 4/30/2009 39.3
CIT 11/1/2009 80.4
General Motors 6/1/2009 91.0
Thornburg Mortgage 5/1/2009 36.5
General Growth Properties 4/16/2009 29.6
Lyondell Chemical Co. 1/6/2009 27.4
Colonial BancGroup, Inc. 8/25/2009 25.8
Capmark Financial Group, Inc. 10/25/2009 20.6
Guaranty Financial Group, Inc. 8/27/2009 16.8
Bank United Financial Corp. 5/21/2009 15.0
Charter Communications, Inc. 3/27/2009 13.9
UCBH Holdings, Inc. 11/24/2009 13.5
R.H. Donnelley Corp. 5/28/2009 11.9
AmTrust Financial Corp. 5/28/2009 11.7
Ambac Financial Group 11/08/2010 18.9
MF Global 10/31/2011 40.5
American Airlines (AMR) 11/29/2011 25.1
Dynegy 11/07/2011 9.9
Residential Capital, LLC 5/14/2012 15.7
Total - Over $10 billion or more per company from 1987 to the
present --- and doesn't include all bankruptcies or any bank
bailouts
- $2.22 trillion

* Source: http://www.bankruptcydata.com/ (Right column of page)

Added notes:

Bankruptcy in the United States is governed under the United States Constitution (Article 1, Section 8, Clause 4) which authorizes Congress to enact "uniform Laws on the subject of Bankruptcies throughout the United States."

Congress has exercised this authority several times since 1801. The first modern Bankruptcy Act in America, sometimes called the "Nelson Act", was initially entered into force in 1898.

The Chandler Act of 1938 gave unprecedented authority to the Securities and Exchange Commission in the administration of bankruptcy filings.

The current Bankruptcy Code was enacted in 1978 by § 101 of the Bankruptcy Reform Act of 1978, and generally became effective on October 1, 1979. The current Code completely replaced the Chandler Act.

The current Code has been amended numerous times since 1978. (See the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.)