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

Consumer Financial Protection Bureau update

David Dayen at The Intercept points us to the latest on the Consumer Financial Protection Bureau:

On Tuesday night, he (Trump)stood before the nation and boasted about the lowest unemployment rate on record for African-Americans. But just hours before his State of the Union address, his lieutenant and handpicked head of the Consumer Financial Protection Bureau, Mick Mulvaney, told staff in an email that he was seizing control of the unit responsible for policing anti-lending-discrimination laws.

CFPB Acting Director Mulvaney, in a previously unreported move, said that he would be putting the Office of Fair Lending and Equal Opportunity, or OFLEO, under his direct control, startling consumer protection and civil rights advocates, and raising concerns that the office would be unable to carry out its mission — and that, indeed, that was the very purpose of the shift.

Dailykos also reports:

There’s your clue right there. It’s the Consumer Financial Protection Bureau, not the Chase Bank Protection agency. Redefining the Bureau is part and parcel of Mulvaney’s job—he’s been put in charge of destroying it. Moving the Fair Lending office under Mulvaney’s direct control is clearly a move to neuter any enforcement power.

This is after he zeroed out the Bureau’s budget. Literally. He sent a funding request for $0 to the Federal Reserve. Clearly, he’s intending to bankrupt the agency, using up the $177 million it currently has on hand and to let it wither away. So that the consumers of this country—with a special emphasis on people of color—can be preyed upon by lenders again.

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Glenn Greenwald & the Nunes memo

I’m not sure this is of general interest, but I would like to argue (again) with Glenn Greenwald. In this tweet, he asks an interesting and important question

The FBI, and many Democrats, insisted vehemently that release of the Nunes Memo would endanger national security. Now that we’ve all read it, is there anyone who believes that this argument was even remotely true or honest?

Yes. This has been another episode of simple answers to simple questions. Now I will bore you by explaining at length.

1) One can’t conclude that something wasn’t endangered because, it the end, it wasn’t harmed. It is reckless to drive 150 mph drunk even if some people have done so and arrived alive. I don’t recall anyone saying that releasing the memo would certainly harm national security.

2) Importantly, the expressions of alarm (including the DOJ not FBI use of “extremely reckless”) came from people who had not seen the memo, who had requested a chance to examine it and whose requests had been denied by the committee. They didn’t know what was in the memo, but they knew it had been written by people who had access to classified information, that they didn’t know what was in the memo, and that it was proposed that it be released so everyone knew as soon as they did.

The argument that this violates normal procedures which are required to protect national security is clearly conventional — almost so conventional that it goes without saying. The procedures are followed not because every deviation has catastrophic consequences. That’t the way standard procedures are.

I don’t recall all the alarmed statements by Democrats, but many were made by Senators and such who had not been allowed to see the memo.

3) Finally releasing the memo clearly harmed US National Security. I get the impression that almost everyone but I has the impression that the memo didn’t contain information which was supposed to be kept secret (according to normal rules which are enforced on people who aren’t President or the majority of a House committee by the threat of prison).

There are two data in the memo which had been secret and which were kept secret for excellent reasons
a) October 21 2016 — the date of the application for a FISA warrant to surveil Carter Page. This was not a request for a renewal. Now, but not last week, I can infer that Page was not under FISA surveilance say in September 2016. I didn’t know that before. If I had conspired with Page on the phone during September 2016, was asked about it by the FBI and had to decide whether to lie to them, this information would be very useful to me. it is discussed only as proof that the fall 2016 FISA surveillance of Page was *not* surveillance of the Trump-Pence 2016 campaign, since he had severed all formal links with the campaign in September. But it would also be useful if there were someone who really wants to know that the FBI knows about his or her communications with Carter Page before October 21 2016.

b) The warrant was renewed at least three times. This is discussed becuase one of the requests for renewal was approved by Rod Rosenstein and because the fact that four requests were approved is strong evidence that the surveillance revealed Page’s participation in foreign intelligence efforts. But the information would be very useful to me if I had conspired on the phone with Page in December 2016. I would know that they know about it, so I would risk prison were I to lie and deny the activity.

In spy vs spy intelligence and counter-intelligence hiding all sorts of information from the other side is key. Who is being wiretapped is a closely held secret for obvious reasons. My point is that there are similar reasons to hide who has been wiretapped (including Page as was known before the memo was released) and when they were wiretapped, If one is under investigation, it very important to know what the investigators know. If one is not supposed to obstruct justice, one should not make that information public in the name of transparency.

OK so what is going on ? I think that Greenwald has become a knee jerk critique of Democrats. Also he has long had a very sincere extremely negative view of the FBI. I think his reflexive opposition to state surveillance has caused him to automatically reject arguments based on the idea that FBI investigations are sometimes in some ways socially useful.

He isn’t a consistent anarchist, but he seems to automatically oppose state power. Thus he seems to actually support complete trasnparency in investigations. This would make wire taps worthless. I think Greenwald automatically opposes them.

On the other hand, he is a brilliant lawyer. He should understand why the facts revealed in the memo had been kept secret. Almost everyone agrees with him that no secrets were revealed by the memo. I’d guess most people just don’t understand the issue. But I guess that he understands it and is so opposed to serveillance of any kind that he genuinely can’t see how anyone would see any disadvantage in hampering it.

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Distractions, Distractions

Distractions,  Distractions

Wow!  We have a great controversy!  A squib of a memo by the House Intel Comm has completely devoured the media.  A constitutional crisis!  Egad!  In two weeks, or maybe two months, it will be nothing.  But for now, well, very very very serious. At a minimum it has distracted everybody from Trump’s gloriously successful State of the Union speech, which was so well received until this distraction that he thinks will bring about the end of that nasty Mueller investigation.

However, it now appears that this follows an older pattern.  When really serious stuff shows up in Trump World, the world is easily distracted by some much more minor scandal that gobbles up media and public attention.  So, during the campaign there was an important moment when it was reported that emails of the DNC had been hacked by Russians and handed over to Julian Assange and publicly leaked, with these memos being drip drip drip leaked day by day through the campaign.  But did this rather serious report get any public attention?  No no no. We had a much more important scandal to distract us with its outstanding shockingness.  It was the Grab ’em by the Pussy tapes, that, shock! were supposedly going to completely upend and end Trump’s campaign.  Within a few weeks again it was no big deal, distracted by further scandals, but in the meantime the more serious matter of Russian serious intervention in the US election barely ever made it to any public attention at all, although we have been living with that attention to it ever since.

So what might this soon-to-be-forgotten memo be distracting us from (and I recognize that it is more serious than the grab ’em distraction)?  Well, buried on the inner pages of WaPo yesterday and scattered across secondary parts of the internet is a curious story that looks a lot more important than this nothing memo. Not only did Trump on the day befor his SOTU speech violate the Constitution by failing to obey a 515-5 vote in Congress to impose further sanctions on Russia for interfering in the US 2016 presidential election, but this astounding action was preceded by an apparently historically unprecedented event, the visit to Washington by the directors of all three of the top Russian intel agencies prior to his decision to ignore the mandate of the Congress.  Is anybody paying attention to this ultimate payoff to Putin for all the barely hidden Russian money in his unreleased tax returns?  Not with this wonderful distraction of this squib memo.

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Amazon business model

Via Naked Capitalism:

In a scoop, Business Insider reports on how Amazon is creating massive turnover and pointless misery at Whole Food by imposing a reign of terror impossible and misguided productivity targets.

Anyone who has paid the slightest attention to Amazon will see its abuse of out of Whole Foods workers as confirmation of an established pattern. And even more tellingly, despite Whole Foods supposedly being a retail business that Bezos would understand, the unrealistic Whole Foods metrics aren’t making the shopping experience better.

As we’ll discuss below, we’d already expressed doubts about how relevant Bezos’ hyped Amazon model would be to Whole Foods. Proof is surfacing even faster than we expected.

The Business Insider story on Amazon, ‘Seeing someone cry at work is becoming normal’: Employees say Whole Foods is using ‘scorecards’ to punish them, is another window on how Bezos thinks whipping his workers is the best way to get results from them:

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What’s behind the big Q4 decline in real median weekly wages?

What’s behind the big Q4 decline in real median weekly wages?

[Note: This is a post I was working on last week. I hypothesized that the employment cost index would validate the analysis. Well, I didn’t get around to posting it, and the ECI came out this morning. So, how did I do? ]

Last week the Bureau of Labor Statistics reported that real weekly median wages declined by over 2% in the 4th quarter of last year!  This is quite the anomaly in the face of generally good data that has been reported in the last few months.
Dean Baker put it in context, noting that for the year 2017, real weekly median wages rose signficantly over 2016:
But I thought I would dig deeper to see why the anomaly had occurred.  So I took a detailed look at each of the three qualifiers: “real,” “median,” and “weekly.”  Where did the downturn come from?

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Lawrence Summers on Those Employee Bonuses – a Redux of the 1990’s?

Lawrence Summers on Those Employee Bonuses – a Redux of the 1990’s?

Lawrence Summers made an interesting comments during a CNBC interview:

Former Treasury Secretary and Obama administration economic advisor Larry Summers said Friday that recent employee bonuses are stunts and not reflective of long-term hopes for prosperity that tax cuts are supposed to bring. “I think it’s a gimmick,” Summers told CNBC’s “Squawk Alley.” “I think in many cases the firms have to raise wages because labor markets are tight, and so why not curry some favor with the White House by linking it to the tax cuts.”

During the late 1990’s we saw a temporary surge in demand for R&D personal that was driven by the internet revolution. A lot of the compensation for these employees came in the form of employee stock options. One possible rational for this form of compensation is had these companies raised their employee wages then it might be difficult to curtail compensation if the demand for their products and services fell. In fact we know the internet revolution did have a crash at the turn of the century and the issuance and value of these employee stock options took a hit.

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Focus Economics top 101 economics blogs

Angry Bear maintains its status as one of FocusEconomics Top Economics and Finance Blogs of 2018. Econospeak is on the list as well, whose authors contribute to Angry Bear.

Angry Bear

The Angry Bear blog is a multi-author blog that covers news, politics and economics. The contributors to the blog are some of the best in the business such as emeritus professors, tax law experts, historians, business consultants, economics PhDs, finance professionals and many more. The articles on Angry Bear cover just about everything under the sun related to economic and political issues, yet the coverage of each issue does not suffer in quality. Each article is deep, well-researched, well-written, and also engaging. Topics covered on Angry Bear include global and U.S. economics, public policy, healthcare, law and politics.

FocusEconomics Top Economics Finance BloggersAngry Bear 2018

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Is the economy partying like it’s 1999?

Is the economy partying like it’s 1999 ?

Suddenly I have a lot to say about the economy. My sense is that we are on to a new phase after the 2015 shallow oil-patch centered recession and 2016-17 rebound. The data has a feel to it of a late cycle blowoff.
Let’s start with this morning’s personal income and spending.  In the last 4 months, personal consumption expenditures, like retail sales, have taken off:
Typically after mid-cycle personal consumption expenditures outpace retail sales (10 of the 11 previous cycles, to be precise). This is so regular that it is a primary mid-cycle indicator for me.

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