Relevant and even prescient commentary on news, politics and the economy.

The “Brook Hill Dog” Lithograph

Some of AB’s regular readers might have picked up on the fact that I’m obsessed with animal rescue.  (Dan Crawford sure has!)  And since AB is mostly an economics/fiscal-policy blog, it probably has readers who buy art and antiques.

Soooo …. I thought I’d pass this along.  The key sentence is near the end of the article: “The ‘Brook Hill Dog’ print will be auctioned on eBay from April 3rd to April 10th by Braden River Antiques.”

And let’s hear it for Maureen Flaherty of Summerfield, Florida!

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The U.S.: Inept Diplomacy, Indispensable Currency

by Joseph Joyce

The U.S.: Inept Diplomacy, Indispensable Currency

The announcements by several European governments that they would join the new Asian Infrastructure Investment Bank (AIIB) have been widely seen as indicators of the declining position of the U.S.  The AIIB had been proposed by China for the purpose of funding much-needed infrastructure projects in Asian countries. The U.S. had discouraged other governments from joining, ostensibly on the grounds that the new institution would overlap with the World Bank and the Asian Development Bank. But the real reason seemed to be a concern that the Chinese would have a regional forum to wield power.

The New York Times held both the Congress and President Obama responsible for mishandling the issue. The U.S. claimed it sought to ensure better governance in the new institution, but gave no signal of being willing to work with the Chinese and others to make the AIIB an effective agency. The continuing refusal of Congress to approve reforms in the IMF’s governance structure gives the Chinese and other emerging markets ample cause to look elsewhere. The Economist put it starkly: “China has won, gaining the support of American allies not just in Asia but in Europe, and leaving America looking churlish and ineffectual.”

And yet: the same issue of The Economist stated that “In the world of economics, one policy maker towers above all others…,”, and named Federal Reserve Chair Janet Yellen as holder of that position due to the sheer size of the U.S. economy. The influence of the U.S. in financial flows extends far outside national borders. A study by Robert N.McCauley, Patrick McGuire and Vladyslav Sushko of the Bank for International Settlements estimated that the amount of dollar-denominated credit received by non-financial borrowers outside the U.S. totaled $9 trillion by mid-2014. Over two-thirds of the credit originated outside the U.S., with about $3.7 trillion coming from banks and $2.7 from bond investors. The report’s authors found that dollar credit extended to non-U.S. borrowers grew much more rapidly than did credit within the U.S. during the post-global financial crisis period.

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Nope! Was the response when Senator Warren was asked about Harry Reid’s job.

By happenstance I heard today, Senator Warren’s interview on Here and Now.

I just wonder, was the answer to the question about running for the Democratic Senate top position adamant enough for those who keep pushing to have her run for a leadership position?  How is it that some of the leadership in the progressing/liberal genre not get that she is already a leader?  She’s leading already!  Now, let’s get a few more please.

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Class Struggle In The USA

Noam Scheiber has a hard hitting article on the front page of www.nytimes.com “2016 Candidates and Wealthy Are Aligned on Inequality”

The content should be familiar to AngryBear readers. A majority of Americans are alarmed by high and increasing inequality and support government action to reduce inequality. However, none of the important 2016 candidates has expressed any willingness to raise taxes on the rich. The Republicans want to cut them and Clinton (and a spokesperson) dodge the question.

Rich individuals (who are willing to be interviewed) also express concern about inequality but generally oppose using higher taxes on the rich to fight it. Scheiber is very willing to bluntly state his guess (and everyone’s) that candidates are eager to please the rich, because they spend much of their time begging the rich for contributions.

No suprise to anyone who has been paying attention except for the fact that it is on the front page of www.nytimes.com and the article is printed in the business section not the opinion section. Do click the link — it is brief, to the point, solid, alarming and a must read.

I clicked one of the links and found weaker evidence than I expected for Scheiber’s view (which of course I share

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Good Reads on a Sunday while sipping your Coffee or Tea

“Two Cheers for Corruption” and Bill Black’s Response

Plunder has become a way of life for many elite Corporate CEOs, Bill Black argues in response to Deirdre McCloskey supposition:

But corruption can be efficient and just, too. It can be good for efficiency if, say, bribes are paid to get around bad laws (such as most of the building codes in American cities) or to smooth the course of sales by U.S. businesses to the Egyptian military. And the turkey at Christmas supplied by Tammany Hall justly helped the poor—if they voted right.

Bill Black reviews the reviewer Deirdre McCloskey’s Wall Street Journal supposition of corruption being beneficial to the economy overall as it short circuits the law and government agencies by promoting economic growth. It is only ethical behavior and ethics, which can change the corporate culture. Firing back, Bill Black cites Frédéric Bastiat;

When plunder becomes a way of life for a group of men living together in society, they create for themselves in the course of time a legal system that authorizes it and a moral code that glorifies it.”,

and takes apart McCloskey’s review potentially (Deirdre denies it) favoring corporate bribery, fraud, and extortion through deregulation removing laws governing corporate behavior, desupervision by government watch dogs, and de facto decriminalization of actions by corporations and management. Without which or the subversion of such creates the environment for a corrupt corporate culture. A good back and forth by Bill and Deirdre in this and other posts on Bill’s site and worthy of a Sunday morning coffee.

Would a Car Which Can Read Speed Limit Signs Go Over in Michigan?

The speed-limiting tech can be activated via the steering wheel and briefly overridden by pressing firmly on the accelerator. Ford suggests the facility will help drivers avoid fines and could reduce the number of accidents.

Hmmm, many drivers in Michigan have no problem doing 80+ MPH on 96, 23, and 696, etc. marked at 70 MPH. The state was going to increase the speed limit to 80 MPH because of the claim the majority of drivers do 80 MPH. I guess I creep along at 72 -75 MPH. This more an effort to increase road revenue from gasoline purchases as cars and light trucks are less efficient the faster they go.

However, there is a plan afoot to beam speed limits to your car’s computer thereby giving control of the speed to the car rather than the driver. I can see a whole new industry developing, computer chips which would not be impacted by state speed-limit-beams. “No one is going to impede my speed on the highway!”

The new “Ford technology will become available to the public this August, when it launches the second generation of its S-Max cars in Europe.” This represents just a start in new auto-technology. It will progress to being able to identify humans and bike riders as well as animals in the way and apply the brakes as well as other areas such as heart attacks.

Banks may Not Donate to the Dems?

Banks are having temper tantrums over Senator Elizabeth Warren declaring banks should be broken up as they are a threat to the economy . . . no surprise there! The most recent compromise with the budget removed the barrier to banks making riskier investments and having them tied directly to the main bank. Dodd-Frank originally forced banks to spin those investments off to a 3rd party company to whichthe banks had no financial liability. Pres. Obama signed the legislation as developed by Jamie Dimon and staff allowing those investments to be associated directly to the banks. Hence, Main Street is liable for bank gambling again.

Citigroup, JPMorgan, Goldman Sachs (remember when Goldman Sachs was just an investment house?) and Bank of America recently had a meeting to discuss way in which to urge the Democrats to be kinder and gentler to TBTF. GS became a bank when it was poised to fall on its own sword from risky ventures and never went back as the Fed makes cheaper loans available to them now.

Senator Warren has openly stated Citigroup is one “banking-company” to be broken up under Dodd-Frank. She also blocked the appointment of banking friend Antonio Weiss which has angered bankers.

Suggested donation amounts by banks to political Senatorial candidates are said to be as low as $15,000.

Reducing the Prison Population . . . Duh!!!

In 1994, Newt Gingrich’s model legislation “Taking Back Our Streets Act” and Biden’s “Violent Crime Control and Law Enforcement Act” put into play a doubling of the prison population of which almost half are non-violent which I wrote about here; One in 31 in 2010.

Today Gingrich writes:

There is an urgent need to address the astronomical growth in the prison population, with its huge costs in dollars and lost human potential,”

I would wonder if it is more the former than the later? An odd consortium made up on Repubs, Dems, the ACLU, and the Koch Brothers(?) besides Gingrich are looking into reducing the prison population by 50% and agreeing it needs to be reduced.

I would suspect it is more the rising cost to house a prisoner in state and federal prisons which is ~$30,000 and growing. I would also suspect the Koch Brothers (they have a concern about prisoners?) and the law and order crowd could give two hoots about “lost human potential.” Prisons are typically placed in out of the way places like Muskegon, Kingsley, and Iona Michigan and employ the locals as guards and in other occupations. Close a prison and you affect the local economy and that costs votes in traditional Rep districts. I also suspect this prison population is getting older and the government has to take care of them beyond yanking a tooth needing a new filling. Those interested in reducing the prison population are more concerned about the aging of the prison population, the need for healthcare, and the associated costs.

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Awaiting the 2015 Social Security Report (not holding breath)

FEDERAL OLD-AGE AND SURVIVORS INSURANCE TRUST FUND AND FEDERAL DISABILITY INSURANCE TRUST FUND

(c) With respect to the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund (hereinafter in this title called the “Trust Funds”) there is hereby created a body to be known as the Board of Trustees of the Trust Funds (hereinafter in this title called the “Board of Trustees”) which Board of Trustees shall be composed of the Commissioner of Social Security, the Secretary of the Treasury, the Secretary of Labor, and the Secretary of Health and Human Services, all ex officio, and of two members of the public (both of whom may not be from the same political party), who shall be nominated by the President for a term of four years and subject to confirmation by the Senate. A member of the Board of Trustees serving as a member of the public and nominated and confirmed to fill a vacancy occurring during a term shall be nominated and confirmed only for the remainder of such term. An individual nominated and confirmed as a member of the public may serve in such position after the expiration of such member’s term until the earlier of the time at which the member’s successor takes office or the time at which a report of the Board is first issued under paragraph (2) after the expiration of the member’s term. The Secretary of the Treasury shall be the Managing Trustee of the Board of Trustees (hereinafter in this title called the “Managing Trustee”). The Deputy Commissioner of Social Security shall serve as Secretary of the Board of Trustees. The Board of Trustees shall meet not less frequently than once each calendar year. It shall be the duty of the Board of Trustees to—

(1) Hold the Trust Funds;

(2)[11] Report to the Congress not later than the first day of April of each year on the operation and status of the Trust Funds during the preceding fiscal year and on their expected operation and status during the next ensuing five fiscal years;

(3) Report immediately to the Congress whenever the Board of Trustees is of the opinion that the amount of either of the Trust Funds is unduly small;

(4) Recommend improvements in administrative procedures and policies designed to effectuate the proper coordination of the old-age and survivors insurance and Federal-State unemployment compensation program; and

(5) Review the general policies followed in managing the Trust Funds, and recommend changes in such policies, including necessary changes in the provisions of the law which govern the way in which the Trust Funds are to be managed.

The Social Security Trustees’ Report used to come out like clockwork on March 31. In fact I used to put up links to the most important Tables and Figures based on the URL’s of the previous year’s Report on my own Social Security blog in the confident and proven belief that my readers (both of them) would have instant access to the Report literally the second it was released to the web in accordance with the plain text of the Act. Well in the last two (?) years of the Bush Administration the Report came late, for reasons that seemed, well reasons. But then Bush hated Social Security and had established a Commission to transform it to a privatized system. Surely the Obama Administration would just start issuing the Report on time and consistent with the requirements of the Act. Well no. They never have. And have never explained why they didn’t comply with the plain text of the law. And never explained why certain parties including avowed opponents of Social Security somehow got advance knowledge of a text which historically has been strictly embargoed.

So who knows. Perhaps eager beavers who have bookmarked http://www.ssa.gov/oact/tr/2015/index.html and who link to it around 10AM EDT next Tuesday March 31st will get the same jump on the Report that I did back in the day. It being the law and such. But the Obama Administration has never issued the Report on time or explained the delay. Probably because someone on the inside said “let’s screw with that Social Security fanatic Bruce Webb’s head and delay the Report for any or no reason at all”. Because why not.

Non-paranoid comments on any aspect of Social Security welcome (even Dale and BK)

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“Run Elizabeth Run” : for Majority Leader

Well quite the interesting news twist this morning as Senate Democratic Minority Leader Harry Reid announces he will not be running for re-election. Which of course launched the standard narrative of which current lieutenant would move up, giving us the rather stultifying debate of “Schumer vs Durbin”. Or Clinton’s former senior colleague vs Obama’s former senior colleage. Or Chicago vs Wall Street.

But DFA and the PCCC decided to throw a hand grenade in the mix. Progressives push for Warren as next Senate Democratic leader And this might just fly. Certainly it gives an outlet for the Ready for Warren folk and allows them to align with those people (like me) who always thought Elizabeth Warren could do more from the Senate. The beauty of this particular gambit is that Warren really doesn’t have to do anything different except double down on efforts to elect progressive Senators. Something she would naturally be doing anyway. With the bonus that this gives an outlet for frustrated progressives.

Can the Democrats retake the Senate? Well in a good turn-out year sure, we could reasonably expect Clinton coattails. But if you could energize that turnout among progressives who don’t exactly trill to Clintonian magic by showing that pushing for your own Senator could have big impacts should that translate into a Warren leadership that could indeed be a Big Biden Deal (hey this is a family blog). At a minimum it could strengthen Warren’s hand in leadership even if she didn’t nab the top spot.

Something to think about and kick around if you like.

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Wikileaks releases Trans-Pacific Partnerhip investment chapter

Via Daily Kos, we learn that Wikileaks has released the investment chapter of the Trans-Pacific Partnership (TPP). This is a critical chapter, as it was in the North American Free Trade Agreement (NAFTA), because it establishes investor-state dispute settlement (ISDS) mechanisms.

Despite its neutral-sounding name, ISDS is actually a radical concept. Instead of using the courts to settle disputes, which have appeals procedures and build up case law via precedent, ISDS allows companies to take governments to arbitration, where neither precedent nor appeals exist.

Susan Sell gave several examples of ISDS in her guest post in February, which illustrate the dangers well. Eli Lilly had two of its pharmaceutical patents invalidated in Canada; the company appealed both of these decisions to the Canadian Supreme Court, and lost both times. Then the company turned to investor-state dispute settlement under NAFTA to receive $500 million in compensation for the Supreme Court decisions. That case is still ongoing.

In an example also noted by Wikileaks, Sell points out that U.S. tobacco maker is using ISDS against Australia because the country mandated plain packaging on cigarettes to make them look less attractive. This should not be possible, because the U.S.-Australia Free Trade Agreement does not include investor-state dispute settlement provisions. Instead, the company is using a subsidiary in Hong Kong, which has a free trade agreement with Australia that does include ISDS, to bring the complaint. Indeed, the government alleges that Philip Morris Asia bought the Australian subsidiary, already owned by the parent company, so that it could bring this complaint.

Unsurprisingly, Australia is opposed to including ISDS in the TPP agreement, and in the current draft has excluded itself completely from ISDS. However, the draft also shows that Australia might end its objection “subject to certain conditions.” Since the negotiation is being conducted in strict secrecy, there is no way to find out what those conditions might be, unless someone leaks them to the press.

The Obama administration continues to seek “fast track” negotiating authority from Congress for the TPP. This would allow the agreement to be voted on only as negotiated, with no amendments allowed. Note that this also means that the TPP would be incorporated as a U.S. law rather than as a treaty. As a law, it only needs a majority in both Houses of Congress. If it were to be offered for approval as a treaty, it would need a 2/3 majority in the Senate, with no House vote. Both NAFTA and the World Trade Organization agreements were passed as laws rather than treaties.

Don’t forget that ISDS is also on the negotiating table in the Transatlantic Trade and Investment Partnership (TTIP) with the European Union. ISDS is also under fire in the European Union. In an ironic twist of events, the European Commission, a supporter of ISDS (h/t Washington Post) so far in the negotiations, has ruled in a state aid case involving Romania that paying an ISDS award (Micula v. Romania) to a company whose subsidies were terminated due to EU law, would itself be an illegal state aid! The Commission’s effort to effectively nullify the decision (further irony: brought under the Sweden-Romania bilateral investment treaty, so both EU members) is not sitting well with proponents of ISDS. Too bad!

If we’re lucky, the combined opposition of Germany, a large part of the EU public, some parts of the European Commission, and a growing portion of the U.S. public will kill off ISDS in the TTIP. We need to make sure it disappears from the TPP as well, even if that means rejecting the TPP. And we may well want to reject the TPP anyway over its provisions on medicines and other intellectual property issues.

Cross-posted from Middle Class Political Economist.

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