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

Cut Social Security, Medicare, and Medicaid McConnell Says

After instituting a $1.5 trillion tax cut and after signing off on a $675 billion Defense budget, Senate Majority Leader Mitch McConnell said yesterday, Tuesday, October 16, 2016;

“The only way to lower the record-high federal deficit would be to cut entitlement programs like Medicare, Medicaid and Social Security.”

More McConnell: “It’s disappointing but it’s not a Republican problem.” The deficit, grew 17 percent to $779 billion in fiscal year 2018. “It is a bipartisan problem and a problem of the unwillingness to address the real drivers of the debt by doing anything to adjust those programs to the demographics of America in the future.”

The deficit has increased 77 percent since McConnell became majority leader in 2015.

A new Treasury Department analysis on Monday revealed that corporate tax cuts had a significant impact on the deficit this year. Federal revenue rose by 0.04 percent in 2018 which is a nearly 100 percent decrease from the previous year’s 1.5 percent. In fiscal year 2018, tax receipts on corporate income fell to $205 billion from $297 billion in 2017.

Still, McConnell insisted the change had nothing to do with a lack of revenue due to the tax break or increased spending resulting from new programs since 2015. Instead he insists the deficit increase is due to entitlement and welfare programs. Now he does the old switcheroo from the yearly deficit to the national debt.

McConnell said, the debt is very “disturbing and is driven by the three big entitlement programs that are very popular, Medicare, Social Security and Medicaid. There has been a bipartisan reluctance to tackle entitlement changes because of the popularity of those programs. Hopefully, at some point here, we’ll get serious about this.”

What McConnell does not tell you is 8 years out those tax decreases will go away for much of the population and many will see tax increases. McConnell and Republicans needed a way to keep the 60% of the total tax break going to the 1% of the Household Taxpayers making greater than $500,000 annually since this tax break was passed under Reconciliation rules (Democrats could not block it without 60 votes). Robert Reich has called this a Trojan Horse tax break.

Recently, Mitch McConnell has been considering his legacy. I think it would be adequate to paraphrase it as: “I saved the 2018 tax break for the 1 percenters. To hell with the rest of you.”

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Senate Dems put Republicans on the Spot Over Junk Healthcare Plans

Last March, U.S. Senator Tammy Baldwin of Wisconsin sponsored a bill (Fair Care Act) to block President Trump’s plan to allow insurers to sell short term or what is frequently called junk plans. Senator Baldwin bill would reverse all of what the Republicans attempted to do with short term plans by reinstating protections for pre-exiting conditions, maintaining the community benefit costing of the plans, blocking life-time cost limits, etc.

Senator Tammy Baldwin:

“As someone who was branded as a child with the words, ‘pre-existing condition,’ I want to make sure that no parent, foster parent or grandparent has to choose between helping their child get better or going bankrupt,” said Senator Baldwin. “Republicans pushed repeal, but promised they would protect people with pre-existing conditions. The Fair Care Act is an opportunity for lawmakers to keep their word on guaranteed protections for pre-existing conditions.”

The bill is more symbolic than anything as it will not get past Senate Republicans. Senator Baldwin was using it as a way of emphasizing the hypocrisy of Republicans promising constituents at home support of healthcare-for-all regardless of pre-existing conditions and then not supporting pre-exiting condition as we know it to be in healthcare while in Congress. As an example, the Republican AHCA which failed by one vote (McCain) would have established subsidized Risk Pools and insurance companies could have charged higher premiums for pre-exising conditions.

More on this beyond the 13 minute Risk Pool Part YouTube clip by Charles Gaba at ACA Signups which is an update to Why Republican Short Term Healthcare Plans “Suck”. In this version, Charles explores in depth what will happen when the Mandate is eliminated and people either drop out on healthcare altogether or go to short term plans. Charles also ads a solution to subsidies stopping at 400% FPL.

I am hoping you took the 13 minutes to view Charles Gaba review of the impact of the mandate elimination and short term plans implementation plus his solution to the needed relief for those beyond 400% FPL. In the end, we are back to where we were at pre-ACA.

Moving on to Tammy Baldwin’s Fair Care Act and the vote. Under the purview of the Congressional Review Act, which gives Congress the ability to reverse federal regulations within a certain time window; Senator Baldwin was able to introduce a resolution to unwind the Trump administration’s expansion (Executive Order) of short-term insurance plans. Senator Baldwin had the 30 votes needed to force a vote reversing the Executive Order on short term plans. Normally this vote would have never seen the light of day; but this time, McConnell could not stop it.

October 10, 2018 the Senate voted on Senator Baldwin’s S.2494 – Fair Care Act. Forty-nine Democrats and one Republican voted for Baldwin’s resolution, while fifty Senate Republicans voted for an expansion of junk insurance plans that can deny coverage to people with pre-existing conditions and do not have to provide essential health services like prescription drugs, emergency room visits and maternity care. Senator Susan Collins was the lone Republican voting with Democrats. It failed in the Senate.

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Trump Administration Proposes Limiting Protests Near White House

The Trump administration has proposed changes to limit demonstrations near the White House and National Mall. The limits include closing 80% of the White House sidewalk, placing limits on spontaneous demonstrations, and imposing a “First Amendment fee” for protests (gotta make up for the deficits he created).

✓ The public has until October 15 to comment on the plans.

✓ Under current policy, the National Park Service charges fees for special events (e.g., concerts and weddings), but not for First Amendment demonstrations (e.g., marches and protests).

✓ The American Civil Liberties Union, NAACP, Hispanic Federation, National Coalition Against Censorship, National Women’s Law Center, Human Rights Campaign, Sierra Club and a number of other organizations oppose the change.

Trump clearly wants to limit protesting outside of and near the White House; but, it would not cover protests coming from inside the White House.

Donald Trump continued his tirade against the Federal Reserve in a late Wednesday television appearance, laying into the central bank’s policy decisions and suggesting it is to blame for Wednesday’s sharp market decline. Saying he is “not happy” with the Fed, Trump explained why he was not happy with the Fed in a broad based economic review of Fed policy of continuing increases in Fed Rates to stave off the threat of inflation.

“The problem I have is with the Fed. The Fed is going wild. I mean, I don’t know what their problem is that they are raising interest rates and it’s ridiculous. The problem [causing the market drop] in my opinion is the Treasury and the Fed. The Fed is going loco and there’s no reason for them to do it. I’m not happy about it.”

Earlier Wednesday, Trump suggested; “They are so tight. I think the Fed has gone crazy.”

To date, this has not been a wage driven inflationary spiral as YOY hourly income increases in nonsupervisory has been stuck at 2.7%. Trump does not appear to grasp that his and Republican policies have created the an inflationary spiral which the Fed is trying to slow and which constituents will suffer from soon enough.

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A Book Called “Eggshells”

Each morning, she awoke at 4:45 a.m., pulls on her blue janitor’s smock and heads over to the college to clean from 6 a.m. to 9:30 a.m. Then she returns home to take care of her 14-month-old daughter, Alice. The day she got the call over the summer telling her she had won a prize and Alice was being fussy.

“I’d been having a rough day — up early for my cleaning job, tearing home to mind the baby, baby wouldn’t nap and was making her feelings known,”

Caitriona Lally had written a book, a book called “Egg Shells.” As described to the Post,

“Eggshells’ is about a socially isolated misfit who walks around Dublin searching for patterns and meaning in graffiti or magical-sounding place names or small doors that could lead to another world.

I spent the guts of a year wandering around Dublin in 2011, the year I was unemployed. I had been laid off from my job in the recession and was walking the streets myself looking for ‘staff wanted’ signs, and came up with the idea of my character, Vivian, who’s just looking to belong, to connect with someone.”

This I can not describe better than she, having spent a year gaffing up trees in Wisconsin, cutting them down, and chipping the wood in a malfunctioning chipper which I had to clean the chute out by hand. I still have my fingers. For one year, I managed to keep home and family in a home until I found a better job.

Caitriona’s path to literary acclaim has been marked by plenty of rejection and job hopping.

Caitriona attended Trinity College Dublin as an undergraduate student and studied English. She worked as a custodian for the college when she was a student to offset expenses.

“I spent a couple of summers working as a cleaner in Trinity,” she wrote to The Post. “I spring-cleaned student residences after they vacated them, then worked as a chambermaid when guests came to stay in the college in the summer months. The spring cleaning was tough work — a year’s worth of grime doesn’t shift easily!”

Once Caitriona realized that she won the award and that it came with a 10,000 euro prize (about $11,500), she described it as “just pure magic.”

Caitriona hadn’t applied for the award; the prize committee selects the nominees. Winners over the years have become some of Ireland’s best-known writers, including Anne Enright and Frank McGuinness.

The benefactor of the prize is Peter Rooney, who took over from his uncle, Dan Rooney, former U.S. ambassador to Ireland and chairman of the Pittsburgh Steelers, who died last year.

Caitriona said her janitor job works for her schedule as a mother and is a great fit for writing. She’s finishing up her second novel, and she’s not planning on giving up her morning work.

The author who works as a janitor had won a prestigious literary prize from the university she cleans.

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Michigan Today

US Auto Sales Fell by 4 Percent in the Third Quarter

“Major automakers said Tuesday that U.S. sales fell 7 percent in September and 4 percent for the June-through-September quarter, compared with the same periods last year.

Weaker numbers for September and the third quarter wiped out a 1.8 percent gain during the first half of the year, and left auto sales on pace with 2017. Some analysts had cautioned that the first-half gains were driven by incentives and low-margin sales to fleet buyers like rental car companies.”

Auto makers are blaming this on the hurricanes. More likely, it is building to an inventory goal without adjustments to meet demands. Inventory costs money.

Michigan’s Gubernatorial Race: Whitmer Focuses on ‘Fundamentals’ Like Roads

“Democrat Gretchen Whitmer said she is focused on fixing Michigan’s ‘fundamentals’ like roads, water systems and schools in her run for governor, contending that not spending enough on core services under Republican leadership has still left residents paying more out of pocket for car repairs and other unexpected expenses.

She said her polling lead over GOP rival Bill Schuette since last month’s primary shows the problem-solving message is resonating, but “not for one second” will she let up less than two months until Election Day. She dismissed as ‘phony political talking points’ Schuette’s warning that she would be the next Jennifer Granholm, a Democrat who was governor during the state’s protracted economic decline.

‘It’s not working. Maybe they’re going to figure that out at some point during this campaign, that people want solutions to problems,’ Whitmer told The Associated Press in an interview.”

Michigan Repubs and the AFP are claiming Whitmer is trying to steal another decade from Michiganders by fixing infrastructure through increased revenues.

US House Candidate Arrested During Wage Protest in Detroit

“A U.S. House candidate was arrested Tuesday in Detroit during a protest for higher pay and the right to form unions.

Democrat Rashida Tlaib and more than a dozen other demonstrators sat at — and banged on — a long table that took up a lane of traffic in Detroit’s Midtown. They were part of a group of several hundred people who marched along the street before gathering outside a McDonalds. Management inside locked the doors as marchers approached.

The protest followed one Tuesday morning in Flint where eight people were injured after being struck by a pickup truck as they marched outside another fast-food restaurant. Flint Police Chief Tim Johnson said he doesn’t believe the crash was intentional and that the driver “seemed pretty shaken up” afterward.

Both protests were organized by Fight for $15, a national movement seeking to increase the minimum wage to $15 an hour for fast food.”

I do not believe we would see Kavanaugh out there protesting for a $15/hour wage. He would be to busy trying to explain away what he meant by “boofed” as a teen.

Major GOP Group Pulls Support for 2 Imperiled Congressmen

“In an ominous sign for the GOP’s bid to hold onto the House, the political group affiliated with Speaker Paul Ryan on Friday dropped its support of two incumbent congressmen, signaling how difficult November could be for the Republican majority.

The Congressional Leadership Fund canceled $3.1 million in ad spending in the districts of Michigan Rep. Mike Bishop and Colorado Rep. Mike Coffman. It’s CLF’s first act of triage ahead of the election and comes at the time of the cycle when major spenders cut their losses in races they think are no longer winnable.
The Congressional Leadership Fund canceled $3.1 million in ad spending in the districts of Michigan Rep. Mike Bishop and Colorado Rep. Mike Coffman. It’s CLF’s first act of triage ahead of the election and comes at the time of the cycle when major spenders cut their losses in races they think are no longer winnable.

Dropping Bishop is perhaps the more significant sign of the party’s prospects. President Donald Trump won the suburban Detroit district by 7 percentage points while narrowly winning Michigan overall. But Republicans in Michigan have struggled this year, and Bishop has been regularly outraised by his challenger Elissa Slotkin, a former CIA agent and defense official.

Jesse Hunt, a spokesman for the National Republican Congressional Committee, said the House GOP campaign arm has not canceled its ad reservations in either Bishop’s or Coffman’s district.”

It is too early to declare a victory. Pour it on . . .

State of Michigan Rank amongst the 50 states?

Click on the picture to make it bigger.

Republicans have a lot to account for in Michigan. They have controlled the legislature and the governorship since 2011. Republicans have controlled the Senate since 1992. Republicans have controlled the House 18 years since 1992. Since 1992, the governorship has been controlled by a Democrat 8 years of 26 years. Yet, everything is former Governor Granholm and Senate leader Whitmer’s fault for infrastructure being in bad shape.

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Senator Jeff Flake Says He Will Vote to Confirm

As he retires from being a Senator; he has made many noises about being opposed to many things Trump has done as President. Except that is all it was, no action and just noise.

“In an announcement that many saw coming, Senator Jeff Flake, of Arizona, announced on Friday that he would retire from humanity, effective immediately.

Speaking to reporters at the Capitol, Flake said that the demands of being a human being had ‘taken their toll,’ and that it was time to move on.

‘Having empathy and compassion for other human beings has been a thoroughly draining experience,’ he said. ‘I for one am ready for something new.’

Flake said that, before making his decision, he consulted with others who had retired from humanity years earlier, such as Mitch McConnell, Lindsey Graham, and Donald Trump.

‘They all fully supported my decision,’ he said. ‘It’s great to be one of them now.'” Andy Borowitz, The New Yorker.

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In the News – Sunday Morning

Senator Grassley tweeting: “Five times now we hv granted extension for Dr Ford to decide if she wants to proceed w her desire stated one wk ago that she wants to tell senate her story Dr Ford if u changed ur mind say so so we can move on I want to hear ur testimony. Come to us or we to u,”

I like how tweeting brings out the intellect in people and especially our politicians. And Chuckie the tweeting senator does this on a public forum with Ford and Kavanaugh so everyone can read along with him.

In New Jersey’s 2019 ACA marketplace, fruits of reinsurance, individual mandate, and silver loading.

New Jersey’s Dept. of Banking and Insurance has posted individual market health plan prices for 2019. Thanks to the state’s new reinsurance program, state-based individual mandate, and silver loading (actively encouraged by DOBI), unsubsidized enrollees will see price drops from 2018. For the subsidized, it looks pretty much like status quo ante — although network changes and plan design changes could alter that picture.

As was the case last year, AmeriHealth has sewn up all the lowest price points. AmeriHealth and Oscar are offering discounted silver plans off-exchange — presumably because of silver loading (Cost Sharing Reduction, available only with silver plans and only on-exchange, is not priced into off-exchange silver). Horizon is not offering any off-exchange discounts, but it has dropped prices about 7% from last year. A few salient year-to-year comparisons below. Quoted premiums are for a 46 year-old — where they’re a clean 1.5 times the base rate posted by DOBI. Andrew Sprung at xpostfactoid

More states should follow New Jersey’s lead.

Further evidence that the tax cuts have not led to widespread bonuses, wage or compensation growth. Economics Policy Institute.

Newly released Bureau of Labor Statistics’ Employer Costs for Employee Compensation data allow us to examine nonproduction bonuses in the first two quarters of 2018 to assess the trends in bonuses in absolute dollars and as a share of compensation. The bottom line is that there has been very little increase in private sector compensation or W-2 wages since the end of 2017. The $0.03 per hour (inflation-adjusted) bump in bonuses between the fourth quarter of 2018 and the second quarter of 2018 is very small and not necessarily attributable to the tax cuts rather than employer efforts to recruit workers in a continued low unemployment environment.

Saving the Planet Doesn’t Mean Killing Economic Growth”

Noah Smith: Hickel cites analyses by the United Nations Environment Program and others showing that even big improvements in resource efficiency, encouraged by very high carbon taxes, will be unable to halt overall resource use or global carbon emissions. But this evidence doesn’t support Hickel’s conclusions, which rely on several misconceptions about the nature and the importance of growth.

Hickel doesn’t seem to grasp the fact of most economic growth happening in countries that are relatively poor. From 2010 to 2015 as determined by estimates by the IMF emerging markets, developing countries were responsible for about 70 percent of global output and consumption growth and advanced economies were responsible for the rest. World Bank’s forecasts for 2017-2019 are similar.

China’s contribution to global growth will be double the U.S. growth and India’s will be larger than the whole of the entire euro zone. The same is true of greenhouse gas emissions. Since about 1990, emissions from the U.S. and EU have fallen, while emissions from developing countries such as (and especially) China and India have exploded.

In 2017, the International Energy Agency estimated that the growth in energy-related carbon emissions in China and the rest of developing Asia was more than five times the growth in the European Union while U.S. emissions declined.

If Hickel and others succeed in stopping economic growth in developing countries, it will not be rich countries bearing the brunt of the change. It will be poor and middle-income countries such as India and China. The desperately poor African countries will not a chance at increased prosperity.

$600,000 in Debt and the Crisis is Worsening “The student loan default rate more than doubled between 2003 and 2011, and 40 percent of borrowers are expected to fall behind on their loans by 2023.”

There is a long history of Congress favoring financial institutions with laws and regulation blocking students from debt relief. Yet, our president can bankruptcy relief multiple times without any court or law blocking him. For him it is business as usual, getting a new loan to buy property and increase profits, pay the old loan with then new loan, and declaring bankruptcy when costs exceed cash inflow. Students do not have the luxury of gaming the system.

With the cost of an education in this country is only rising, borrowing is unlikely to slow. State funding for public colleges fell by $9 billion between 2008 and 2017, and the gap has been filled with tuition hikes. For the first time, half of all states relied more heavily on tuition last year than on government appropriations to fund higher public education. Americans now spend an approximate $30,000 per student a year to gain a college education or twice as much as the average developed country.

The IBR and Repaye programs put in place by well-meaning advocates has been a failure due to a lack of understanding in how to manage it yearly and with some servicers such as Naviente deliberating misleading students into multiple postponements of loans instead of into the income-driven repayment plans. The plans cap monthly payments at a percentage of the borrower’s income. It is not the first-time commercial interests have lied to students and taken a predatory approach on student loans. Naviente is being sued by five states and the CFPB.

Indian sailor Abhilash Tomy injured on disabled yacht.

A multinational rescue effort is underway to try to reach an injured sailor whose yacht is disabled in the South Indian Ocean.

Abhilash Tomy, a 39-year-old Indian naval commander, was competing in the 2018 Golden Globe Race. The race is a nonstop, 30,000-mile solo yachting competition that bars the use of modern technology. To me, this sounds like a lot of fun and a lot of work. I always like to sail as the quiet of the water is soothing.

Abhilash Tomy boat the “Thuriya,” hit a storm in the South Indian Ocean. The 36-foot boat was one of several hit by 80 mph winds and 46-foot seas midway across the South Indian Ocean on Friday, day 82 days of the race. Thuriya’s mast was broken about 1,900 miles southwest of Perth, Australia and “at the extreme limit of immediate rescue range,” according to media statements.

Organizers became concerned after Tomy sent a text message reading: “ROLLED. DISMASTED. SEVERE BACK INJURY. CANNOT GET UP,” and then was unheard from for nearly 15 hours. In a later satellite text message, the sailor gave his location and wrote: “ACTIVATED EPIRB (Emergency Position Indicating Radio Beacon). CANT WALK. MIGHT NEED STRETCHER.”

What is the White House Deflecting from Now?

It is no secret one of the strategies used by the White House is to deflect attacks on their agenda by creating another emer . . . spectacle . . . gency when the news and the opposition gets close to defeating their plans. The attack on Rosenstein as led by the NYT is just too easy, convenient, and laughable (almost). The deflections have happened too many times already. Trump holds Fire

Continuing on this path; “Kavanaugh Accuser Agrees to Testify” I am sure Grassley and other members of the Senate, Hatch, Cornyn, Cruz, Hannity, and the tier two Senators such as Flake, etc. will make this debacle into another shameful attack on Ford, women, and the truth. What, no women on the Repub side? I am sure the 4 women on the Dem side can support Ford and strike back.

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The Messenger Wore A Skirt

I had written this in 2009 and it also appeared in “the new agenda.” It is a decent piece about people who saw the coming crisis pre-2007/8 and those who opposed them.

Recently, Stanford Magazine did an article on one of the University’s former law review presidents who graduated at the top of the 1964 class. The first female to hold either distinction of graduating first in her class and also as president of the school’s Law Review. Prophet and Loss. Stanford Magazine, April 2009.

“Well, you probably will always believe there should be laws against fraud, and I don’t think there is any need for a law against fraud,” Alan Greenspan

“I thought it was counterproductive. If you want to move forward . . . you engage with parties in a constructive way,” Rubin told the Washington Post. “My recollection was . . . this was done in a more strident way.”

“characterized as being abrasive.” Arthur Levitt

It would seem the three coupled with Larry Summers’s push back in Congress on the regulation of derivatives, had the problem and not Brooksley Born. Since then, all three men have suggested there should have been more regulation of the derivatives market Greenspan has called its recent collapse a “once in-a-century credit tsunami.” Called a modern-day Cassandra by Stanford Magazine, one could only wonder where we would be today if the economic and financial wizards had taken heed of Brooksley’s warning.

Short histories on CDO/CDS . . . Collateral Debt Obligations (CDO) were invented by Drexel Burnham Lambert (Milken) as a way to package asset-based securities. The CDO was tranched into similar asset backed securities of the same rating allowing investors to concentrate on the rating rather than the issuer of the bond. Ten years later, JP Morgan invented Credit Default Swaps (CDS) which was used as a mechanism to bet on a 3rd party default. In 2000, CDS were made legal with the passage of the Commodity Futures Modernization Act and any regulation of them was stymied with this bills passage. Later on, an investment firm decided to team CDS and CDO together, transferring the risk from the CDO to the issuer of the CDS, and creating a synthetic CDO. Few CDS if any and their counters naked CDS had the reserves set aside to payout a claim against a failed CDO.

It was 1994, Bankers Trust lost ~$800 million from various derivative investments. The chief losers were P&G and Gibson Greetings. Bankers Trust was formed by a consortium of banks, shedding the loan image for conducting trades. Bankers Trust was successfully sued by P&G for its losses by claiming racketeering and fraud. Bankers Trust also became known for its remarks about Gibson Greetings not knowing what Bankers Trust was doing. In 1998, Bankers Trust pled guilty to institutional fraud due to the failure of certain members of senior management to escheat abandoned property to the State of New York and other states.

In 1998, LCTM was struck by a downturn in the market when Russia defaulted on government bonds, a security LCTM was holding. To make a significant profit on small differences in value, the hedge fund took high-leveraged positions. At the start of 1998, the fund had assets of about $5 billion and had borrowed about $125 billion. When investors panicked and sold Japanese and European bonds and bought US treasuries, the spreads between LCTM holdings increased, resulting in a loss of ~$1.8 billion by August 1998. LCTM was saved by an orchestrated Fed bailout utilizing private investors.

In both cases, the history was there to call for more regulation.

It was in 1998, Brooksley Born testified to Congress about the dangers of the unregulated derivatives market referencing the LCTM losses as a recent example. It was then deputy Treasurer Larry Summers testified to Congress that Born’s desire to regulate is “casting a shadow of regulatory uncertainty over an otherwise thriving market.” Larry’s testimony set the stage for Congress to rein in the power of the Brooksley Born’s and the CFTC with the passage of Phil Gramm’s Financial Service Modernization Act of 1999 prohibiting the regulation of the derivatives market (In 2005, the revised bankruptcy laws would place derivatives outside of the laws making it the first in line to receive compensation). Wall Street and banks had clear unregulated sailing in the sea of laissez faire in 2000 with a closing of the door for debtors in 2005. It was little better than a roach motel, you could check in but you could never check out.

In 1999 in the Senate, opposition arose to the passage of the Financial Services Act in the form of North Dakota’s Senator Dorgan. An excerpt from the Senator’s speech the day before the bill was passed:

I, obviously, am in a minority here. We have people who dressed in their best suits and they just think this is the greatest piece of legislation that has ever been given to Congress. We have choruses of folks standing outside this Chamber who spent their lifetimes working to get this done, to say: Would you just forget all that nonsense back in the 1930s about bank failures and Glass-Steagall and the requirement to separate risk from banking enterprises; just forget all that. Time has moved on. Let’s understand that. Change with the times.

We have folks outside who have worked on this very hard and who very much want this to happen. We have a lot of folks in here who are very compliant to say: Absolutely, let me be the lead singer. And here we are. We have this bill, which I will bet, in 5, 10, 15 years from now, we will be back thinking of this bill like we thought of the bill passed in the late 1970s and early 1980s, in which this Congress unhitched the savings and loans so some sleepy little Texas institution could gather brokered deposits from all around America and, like a giant rocket, become a huge enterprise. And guess what. With all the speculation in the S&Ls and brokered deposits and all the things that went with it that this Congress allowed, what did it cost the American taxpayer to bail out that bunch of failures? What did it cost? Hundreds of billions of dollars. I will bet one day somebody is going to look back at this and they are going to say: How on Earth could we have thought it made sense to allow the banking industry to concentrate, through merger and acquisition, to become bigger and bigger and bigger; far more firms in the category of too big to fail?

Daily KOS, Senator Dorgan’s Speech, November 4, 1999 on “Gramm-Leach – Bliley Act” also known as the Financial Services Modernization Act (you can hear the 16-minute speech here or read it)

Larry Summers has been present throughout much of this change, supporting it, denigrating the opposition, and claiming his experience at D. E Shaw gave him an insider’ knowledge as to how the derivatives market works. While President of Harvard University; Larry received a letter (May 12, 2002) from Iris Mack, a new employee of the Harvard Management Company managing Harvard’s endowment funds. A Doctorate in Mathematics from Harvard and a former employee of Enron who dealt in derivative trades, she expressed concern about the trades (swaps and other complex financial instruments) being made by the funds and the lack of understanding of the trades by the traders. On July 1, Iris was called into the office of Jack Meyer, the chief manager of Harvard Management. On July 2, Iris was fired for making what Harvard Management termed as: ‘baseless allegations against HMC to individuals outside of HMC.”Ex-Employee Says She Warned Harvard of Risky Moves” Boston Globe, April 3, 2009. While Harvard Management Company claims above normal returns on its endowment funds, it has spent much of last year selling off private equity and investments to raise cash to pay for losses.

The attitude expressed by the head of the Economic Council was one of “trust me now” as I have all of the experience necessary to fix the current economic and financial problems. Instead he has promulgated the issues of the collapse by denigrating Brooksley Born’s request to Congress for regulatory power, ignoring the advice of Iris Mack at Harvard University, by consulting to D.E. Shaw (hedge fund) making ~$5.2 million as the financial engineer’s engineer following a model Buffet called Financial Weapons of Destruction, and he has been repeatedly wrong in his direction and advice to Congress and Industry.

In the game of deregulation and global efficiency, Larry Summers was its cheer leader signing off on a letter encouraging the dumping of toxic wastes in Asia at the World Bank. He helped to shepherd China into the WTO claiming:

The agreement with China is a one-way street. China opens its markets to an unprecedented degree, while in return the United States simply maintains its current market access policies.
‘It is difficult to discern any disadvantage to the United States in passing this legislation.
Larry Summers and Senator Dorgan, Angry Bear blog.

Personality, ego, and a blind belief in the ability of the market place to dictate the proper path and the correction has gotten in front of common sense. Maybe it was time to sideline Greenspan, Summers and his protégé Geithner beliefs in favor of Born, Mack, and Dorgan’s?. The latter has shown more foresight into how today’s problems and issues were created and how to resolve them. SEC head Arthur Levitt later recanted his decision to support the Commodity Futures and Modernization Act calling it one of the worst decision he ever made.

I certainly am not pleased with the results. I think the market grew so enormously, with so little oversight and regulation, that it made the financial crisis much deeper and more pervasive than it otherwise would have been.” Brooksley Born, Stanford Magazine, April 2009

*’The messenger wore a skirt,’ says Marna Tucker, a Washington lawyer and a longtime friend of Born. ‘Could Alan Greenspan take that?’”

run75441@ Angry Bear Blog
revised Sept. 20, 2018

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Sunday Snark

Sunday Morning “New Yorker

WASHINGTON (The Borowitz Report)—Millions of Americans do not want Donald J. Trump to text them that there is an emergency, but “very strongly” want Robert Mueller to text them when this current emergency is over, a new poll shows.

FEMA’s about-to-be-launched “Presidential alert” system drew a sharply negative reaction in the poll, with a majority of Americans saying that they would burn, smash, or otherwise pulverize their phones in advance of the first text that Trump attempts to send them.

By contrast, and by a wide margin, Americans said that they wanted an alert system that would enable Mueller to text them “the second he knows this shit show is over,” the poll indicates.
Poll respondents were amenable to a broad array of methods by which Mueller might deliver such news, including the one-word text “FINITO,” the phrase “ORANGE CRUSHED,” and emojis depicting a thumbs-up or smiley face.

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