11/02/2011 archive

It appears that time is on the side of environmentalist groups opposed to the Keystone XL pipeline.

What is happening is that penalty clauses in TransCanada contracts are kicking in and refineries and other groups are withdrawing to seek other suppliers.

TransCanada predicts losses of up to $1 Million a day, however the Obama administration has already signaled that any final decision will be put off to next year at the earliest.

On Tuesday, TransCanada Chief Executive Russ Girling said another extended delay in the regulatory process would lead oil shippers and refiners to abandon support for the project, rendering it uneconomic to build.

We can certainly hope so.

dday at Firedog Lake has some more positive coverage from this morning-

The other day, White House Press Secretary Jay Carney tried to offload the decision on whether to go forward with the Keystone XL pipeline on the State Department. But President Obama himself was asked about the pipeline in a local news interview last night, and he took full responsibility for making the decision. In doing so, he related a full understanding of the public health risks, though he limited that to the immediate risks of a pipeline spill, rather than the extraction and burning of tar sands oil in general.

…

This is definitely encouraging, though as I said, it looks at the problem from a NIMBY standpoint rather than the main idea that burning tar sands oil is, as Bill McKibben put it over the weekend, the fuse to the biggest carbon bomb on the planet. Climate scientist James Hansen has said that if the pipeline goes through, the climate will basically never be stabilized. That’s the larger problem, though obviously the risk to the Ogalalla aquifer is a factor as well. Keep in mind that Obama actually won the single electoral vote in the Omaha area in Nebraska, and probably wants to win it again.

Bill McKibben’s White House protest of Keystone XL is scheduled for Sunday, November 6th.

 David Dayen may have hit the nail on the head when he wrote about the latest Super Committee’s wrangling over using Social Security to pay for the 1%’s tax cuts:

I don’t have to tell you about how Social Security never contributed one penny to the deficit. It holds a surplus of $2.6 trillion, and the elites just don’t want to pay off the trust fund because that might mean higher taxes on rich people. A bargain was made 30 years ago to build up the trust fund and pay for the baby boomers’ retirement, and now they want to renege on that deal and take the money out of the hides of old pensioners.

I assume that the effort here is to move to chained CPI, which will lead to a reduction in benefits. It’s also a regressive tax increase. If the leaders in Washington think that a public already out in the streets over inequality, Wall Street greed and corporate control of government will meekly accept that, they’re just wrong.

Of course, members of Congress won’t really have to worry about their benefits getting cut. That’s because they’re mostly fabulously wealthy and won’t be burdened as much as the other 99% by a more meager Social Security check every month.

The front page article in the Washington Post that got everyone’s dander up this week is so blatantly wrong that is a bold faced lie that has been debunked numerous times. Economist Dean Baker was much kinder saying that the “Washington Post Discards All Journalistic Standards In Attack on Social Security”:

The basic premise of the story, as expressed in the headline (“the debt fallout: how Social Security went ‘cash negative’ earlier than expected”) and the first paragraph (“Last year, as a debate over the runaway national debt gathered steam in Washington, Social Security passed a treacherous milestone. It went ‘cash negative.'”) is that Social Security faces some sort of crisis because it is paying out more in benefits than it collects in taxes. [The “runaway national debt” is also a Washington Post invention. The deficits have soared in recent years because of the economic downturn following the collapse of the housing bubble. No responsible newspaper would discuss this as problem of the budget as opposed to a problem with a horribly underemployed economy.]

This “treacherous milestone” is entirely the Post’s invention, it has absolutely nothing to do with the law that governs Social Security benefit payments. Under the law, as long as there is money in the trust fund, then Social Security is able to pay full benefits. There is literally no other possible interpretation of the law.

Dean rips apart the proposal by former Senator Alan Simpson and Morgan Stanley director Erskine Bowles that emerged form President Obama’s failed Cat Food Commission I:

Actually the plan put forward by Bowles and Simpson would have implied large cuts for most low-income workers who would not have met the work requirements needed for the higher benefit. The cut would have taken the form of a 0.3 percentage point reduction in the annual cost of living adjustment. This cut would be cumulative, after 15 years of retirement a beneficiary would be seeing a benefit that is roughly 4.5 percent lower as a result of the Bowles-Simpson plan. The plan also phased in an increase in the age for receiving full benefits to 69, which is also a benefit cut for lower income retirees.

For lower income retirees Social Security is the overwhelming majority of their income. This means that the benefit cut advocated by Bowles and Simpson would imply the loss of a much larger share of their income than the end of the Bush tax cuts would for the wealthy. However, the Post has never described the ending of these tax cuts as a “modest” or “small” tax increase.

Now the current version of the Cat Food Commission, the Congressional Super Committee is about to use cutting Social Security as a publicity stunt to show how serious they are about cutting the deficit. The cuts are on the table because, as Jeff Madrick points out, the stupid Democrats think that their Republican counterparts on the committee will agree to raising taxes. In his article makes it very clear that the burden of these “deficit reducing proposals” will fall on the backs of the most vulnerable in our society, the elderly:

So let’s be clear. The Social Security Administration projects that benefits will rise by one percent of GDP from five percent to six percent over the next 20 years or so and then stabilize or even fall a bit due to the rising elderly population. One percent. That’s what all this is about.

snip

Let me also remind us that Social Security is not very generous. The average payment is $14,000 a year. It is getting less generous. It used to replace 55 percent of retirement income, but benefits were reduced in the 1980s. It now covers on average 41 percent of retirement income. In 2031, it will cover 32 percent of retirement income.

We have already reduced the program’s generosity. Yet, Social Security provides nearly all income for one quarter of the elderly and more than half the income for more than half of the elderly.

The Super Committee will say it simply wants to make the inflation calculation more accurate. It will reduce benefits. But government research suggests elderly costs rise faster in price than the traditional measures of inflation.

snip

What will drive future budget deficits is Medicare and Medicaid, not Social Security, and for the umpteenth time, the reason is that overall health costs are expected to rise quickly. This means we have to reform our uniquely inefficient healthcare system. Congress is, as usual, diverting us from the real issues. No wonder Americans like Occupy Wall Street.

On of the biggest frauds that has been perpetrated in the housing collapse that has precipitated the foreclosure crisis has been robosigning especially done by MERS, Mortgage Electronic Registration Systems, a privately held company that operates an electronic registry designed to track servicing rights and ownership of mortgage loans in the United States. The current negotiations by the state attorney generals in conjunction with the Obama Justice Department will in all likelihood exonerate the banks of any criminal liability and allow them to continue using the fraudulent MERS to foreclose on homes that the banks may not legally own. Gretchen Morgensen wrote in the New York Times that “The deal being discussed now may also release the big banks that are members of MERS, the electronic mortgage registry, from the threat of some future legal liability for actions involving that organization.”  Matt Stoller and Mike Lux point to an even bigger issue, robosigning has not stopped:

What makes these discussions so utterly absurd, so ridiculous, and farcical, is that robo-signing, an abuse the banks have admitted to and clam they’ve ceased, is still going on. The AP reported this in July; mortgage servicers in Nevada have stopped foreclosing because of a law explicitly criminalizing robo-signing. Yes, the banks are asking for a release of claims on acts, or perhaps crimes, that are ongoing. And these abuses are extensive: lying to investors about the quality of the mortgages; violating their own contracts by failing to convey mortgages properly to securitization trusts; charging fees that are impermissible under Federal law and the contracts; making a mess of property records and engaging in deceptive consumer practices through the use of MERS; and engaging in document forgeries and fabrications in foreclosures. All these people trying to give the banks “a settlement” are in fact immunizing banks against acts they are committing and will commit going forward. Only in the future, when a voter complains to his or her state AG, that official will have to explain to that voter that his/her rights have been given away.

We’re talking about an ongoing case of criminal theft of private property by mortgage servicers charging illegal fees and then using fraudulent documents to foreclose. Now, a settlement implies that this practice is over, and that the banks are remediating past wrongs. It isn’t over, but the AGs and Federal regulators are treating it as if it is. Think about this incentive – why should a bank change its mortgage servicing once it has immunity for robo-signing, origination, pyramiding of fees, etc? The last consent decrees weren’t enforced, why would this one be enforced?

   A dozen banks would contribute a grand total of $3.5 to 5 billion toward the settlement, pocket change for massive companies that apparently approved their foreclosure mill law firms likely committing over 1,000,000 counts of perjury in the robo-signing process. The rest of the money, about $20 billion, would come in the form of “credits” banks essentially give themselves if they agree to reduce a certain amount of the principal owed on mortgages. We don’t know the details yet, but given that all banks in the home lending industry write down some mortgages, unless the details are tough on the banks (a phrase not generally heard of among regulators in this era), this will be giving banks credit for mortgages they would be writing down anyway. And if they don’t end up writing down as much as they project, they probably won’t end up being penalized for it given the history of programs like HAMP […]

   If the administration rams through this ultimate in Wall Street sweetheart deals – a laughably pocket change fine combined with “credit” for what they would have done anyway, at the expense for a get out of jail free card for 1 million counts of perjury and a wide range of other potential fraud – they will have zero credibility to run as the tough on Wall Street candidate. ZERO.

   This makes no sense. For example, for the Obama administration to be leaning so hard on California Attorney General Kamala Harris to sign off on this is truly politically suicidal, both for them and for her after she so strongly announced she was pulling out a couple of weeks ago. Yet they continue to push her. Why are they pushing so hard for this? It all boils down to Treasury Secretary Tim Geithner. It is apparent that Geithner believes the only thing that matters in terms of fixing the economy is to keep the big banks in good financial shape, which is ironic given that in public he claims that everything is fine with the banking sector now.

Yves Smith at naked capitalism suggests we make some phone calls:

It’s important to keep the pressure up, particularly on state AGs who might walk from a too bank friendly deal. States whose AGs might decamp include Oregon, Washington, Arizona, and Colorado. It’s also key to let the AGs in states who have left the talks and are under pressure to return that voters are watching and will be unhappy if they reverse themselves. Those states are New York, Delaware, Massachusetts, Kentucky, Nevada, Minnesota, and of course, California. You can find their phone numbers here.

The Obama administration, congress and the state attorney generals who refuse to hold the banks to the letter of the law hold this country’s economic future. If this passes it will destroy the housing market and this economy for decades.

What you have to remember about them is that they’re not very good and they’re not very smart but they do have an overweening arrogance and sense of entitlement that makes them think that they’re better than you.

And they’re very, very afraid that some day some one will point out how stupid and wrong they are which is why they hate democracy so much.

Revenge of the Sovereign Nation

By Ambrose Evans-Pritchard, The Telegraph

November 1st, 2011

The Greek referendum – if it is not overtaken by a collapse of the government first – has left officials in Paris, Berlin, and Brussels speechless with rage. The ingratitude of them.

…

Every major claim by the inspectors at the outset of the Memorandum has turned out to be untrue. The facts are so far from the truth that it is hard to believe they ever thought it could work. The Greeks were made to suffer IMF austerity without the usual IMF cure. This was done for one purpose only, to buy time for banks and other Club Med states to beef up their defences.

It was not an unreasonable strategy (though a BIG LIE), and might not have failed entirely if the global economy recovered briskly this year and if the ECB had behaved with an ounce of common sense. Instead the ECB choose to tighten.

When the history books are written, I think scholarship will be very harsh on the handful of men running EMU monetary policy over the last three to four years. They are not as bad as the Chicago Fed of 1930 to 1932, but not much better.

…

Certain architects of EMU calculated that the single currency would itself become the catalyst for a quantum leap in integration that could not be achieved otherwise.

They were warned by the European Commission’s own economists and by the Bundesbank that the undertaking was unworkable without fiscal union, and probably catastrophic if extended to Southern Europe. Yet the ideological view was that any trauma would be a “beneficial crisis”, to be exploited to advance the Project.

This was the Monnet Method of fait accompli and facts on the ground. These great manipulators of Europe’s destiny may yet succeed, but so far the crisis is not been remotely beneficial.

…

And as my old friend Gideon Rachman at the FT writes this morning: the Greek vote is “a hammer blow aimed at the most sensitive spot of the whole European construction – its lacks of popular support and legitimacy.”

Austerity Faces Test as Greeks Question Their Ties to Euro

By STEVEN ERLANGER, The New York Times

Published: November 1, 2011

“This is clearly the return of politics,” said Jean Pisani-Ferry, director of Bruegel, an economic research institution in Brussels. “The management of all this by the Europeans has been fairly technocratic. But now we see the gamble of a politician, which creates uncertainty again, but in a different form. But it was bound to come at some point.”

Mr. Papandreou’s decision to press for a popular referendum on the bailout was the inevitable result of Greece’s loss of sovereignty to Brussels and the International Monetary Fund, said Jean-Paul Fitoussi, professor of economics at the Institute of Political Studies in Paris. Chancellor Angela Merkel of Germany and President Nicolas Sarkozy of France were acting as if they were the real government of Greece, he said.

“It’s as if the Europeans – or Merkel and Sarkozy alone – believed that they were in control of the people of Greece,” Mr. Fitoussi said. “But this is a democracy. In Greece, and even in Italy, you cannot expect to rule without the support and consent of the people. And you can’t impose an austerity program for a decade on a country, and even choose for them the austerity measures that country must implement.”

…

Mrs. Merkel and Mr. Sarkozy are clearly irritated with Greece, but so far they insist that the restructuring deal agreed upon Thursday in Brussels remains, as Mr. Sarkozy said Tuesday, “the only possible path to resolve the Greek debt problem.”

But Greece’s turmoil has the makings of a turning point. Greek elections during a deep economic slump would be likely to usher in a government that would, at a minimum, to try to renegotiate the bailout deal with European and foreign lenders, a messy process that would force Germany and other European lenders to decide how strictly to stick to their austerity formula. The uncertainty would undermine confidence in other indebted countries like Italy at a time they can ill afford it.

There is also the possibility that an election or a popular referendum would pose the question more bluntly, with Greeks essentially deciding whether they want to stick with the euro or not – if they want to put sovereignty over their own affairs ahead of membership in the common currency. That could mean the fraying, or at least the shrinking, of the euro zone.

Mr. Fitoussi believes that Greeks had no choice but to ask themselves that question. “There are only two possibilities in a democracy: the government has to resign or consult the people,” he said. “Of course, I don’t know which is the worst for Europe.”

Crats, Maybe, But Not Much Techno

Paul Krugman, The New York Times

November 2, 2011, 11:15 am

Atrios complains, rightly, about the description of the policies being followed in Europe as technocratic. His point is that

we’ve conjured up images of very sensible highly educated wonky people doing the right thing, even as they destroy the world.

But it’s more than that: these alleged technocrats have in fact systematically ignored both textbook macroeconomics and the lessons of history in favor of fantasies. The European Central Bank has placed its faith in the confidence fairy, while imagining that it can run policy in a way that has never worked in several centuries of central bank experience. Meanwhile, the European policy elite has simply wished away the clear evidence that the euro zone needs to make an adjustment that is virtually impossible unless inflation targets are raised.

The point is that I know technocrats, and these people aren’t – they’re faith healers who are making stuff up to suit their prejudices.

You can say something similar, although a bit less pointed, about the Obama administration. The line from people there, including the president, has been that it was too technocratic. But the real technocrats – people like Christy Romer and, well, me – were saying right from the beginning that the stimulus was too small, etc.; people like Geithner who opposed stronger action were basing their position on gut feelings about confidence, not number-crunching.

See also Progressive Realists.

“Punting the Pundits” is an Open Thread. It is a selection of editorials and opinions from around the news medium and the internet blogs. The intent is to provide a forum for your reactions and opinions, not just to the opinions presented, but to what ever you find important.

Thanks to ek hornbeck, click on the link and you can access all the past “Punting the Pundits”.

Maureen Dowd: Cain Not Able

We have the starchy guy – tall, handsome, intelligent and rich, with a baronial estate – who’s hard to warm up to. And we have the spontaneous guy, who’s charming and easy to warm up to – until it turns out that he has an unsavory pattern with young women and a suspect relationship with facts.

It’s the Republican primary. Or “Pride and Prejudice.” Take your pick.

It is a truth universally acknowledged that it’s not the scandal that kills you; it’s the cover-up. Herman Cain has added a corollary: It’s not the cover-up that kills you; it’s the cascade of malarkey that spills out when you try to cover up the cover-up.

Sure, the dalliance with the grandfather, gospel singer, motivational speaker and self-made millionaire in the black cowboy hat was fun while it lasted, just as it was with Ross Perot, Donald Trump, Sarah Palin and The-Rent-Is-Too-Damn-High dude.

Katrina vanden Heuvel,: Why the supercommittee should disband

Congress has now achieved the remarkable feat of making itself less popular than Wall Street bankers.

And the way it is heading, it hasn’t hit bottom yet – there’s still 9 percent of the public that approves of the job the legislators are doing.

The entire country is terrified about the economy. There are 24 million people in need of full time work, wages are declining, one in four homes is under water, workers entering the workforce outnumber the jobs being created, Europe and China’s economies are slowing. People understandably want Congress to focus on jobs and the economy.

So how is it that after a few weeks of inching toward talk about jobs (with the president proposing a modest jobs plan and Republicans filibustering to block even a discussion of it), some members of Congress have turned their attention back to cutting spending and raising taxes – both actions guaranteed to destroy jobs, not to create them?

Occupy Wall Street NYC now has a web site for its General Assembly  with up dates and information. Very informative and user friendly. It has information about events, a bulletin board, groups and minutes of the GA meetings.

On November 1st, Israel organized a general strike to fight back against global neoliberal machine.

On November 2nd, Oakland will join the month of global uprising with a city-wide general strike during which the people will converge on downtown Oakland to shut down the city and its port.

While these assemblies are calling for general strikes, they are also calling for much more. Schools, community organizations, affinity groups, workplaces and families are encouraged to self-organize to shut down their cities and rebuild their communities in whatever manner they are comfortable with and capable of.

Following Israel and Oakland’s example, we join this month of global uprising. We stand in solidarity with those who are organizing the actions that are creating the fabric of our new movement.

It is time for us to come together and build a new world through the power of the individual and the community. We are not here to make requests of a corrupt political system – we are here to take our lives back into our own hands. We are not acknowledging subservience. There is no higher power than the power of the people. We are not asking for assistance. We are declaring independence. Our demand is not to those in power, it is to those individuals still silenced. Join us.

We are the 99%. We are not afraid. We are not waiting. We are working to make a better world.

Occupy Wall Street. Occupy Everywhere

1 November 2011 – Oakland, Ca.

We represent the 645 police officers who work hard every day to protect the citizens of Oakland. We, too, are the 99% fighting for better working conditions, fair treatment and the ability to provide a living for our children and families. We are severely understaffed with many City beats remaining unprotected by police during the day and evening hours.

As your police officers, we are confused.

Read more . .

The Occupy movement has a new goal – shut down the Iowa caucuses.

The state’s protesters are inviting fellow Occupiers from across the country to “occupy” the campaign offices of the Republican presidential candidates and President Barack Obama in the first-in-the-nation presidential caucus state, The Des Moines Register reports.

“You go inside, or if they won’t let you in, you shut ’em down. You sit in front of their doors,” Frank Cordaro of Des Moines, the man credited for the idea of the “First in the Nation Caucus Occupation,” told the Register. “Who knows? It could be a very big deal.”

The plan, Cordaro told CNN, is “people coming to Iowa, occupying every presidential [candidate’s] office, shutting them down until they start talking real turkey about what’s going on in this country, where the 99 percent of the people who are not benefiting, at the expense of the 1 percent who are getting away with murder.”

   The Chapter of St Paul’s Cathedral has unanimously agreed to suspend its current legal action against the protest camp outside the church, following meetings with Dr Richard Chartres, the Bishop of London, late last night and early this morning.

   The resignation of the Dean, the Rt Rev Graeme Knowles, has given the opportunity to reassess the situation, involving fresh input from the bishop. Members of Chapter this morning have met with representatives from the protest camp to demonstrate that St Paul’s intends to engage directly and constructively with both the protesters and the moral and ethical issues they wish to address, without the threat of forcible eviction hanging over both the camp and the church.

   It is being widely reported that the Corporation of London plans to ask protesters to leave imminently. The Chapter of course recognises the Corporation’s right to take such action on Corporation land.

   The bishop has invited investment banker Ken Costa formerly chair of UBS Europe and chairman of Lazard International, to spearhead an initiative reconnecting the financial with the ethical. Mr Costa will be supported by a number of City, Church and public figures, including Giles Fraser, who although no longer a member of Chapter, will help ensure that the diverse voices of the protest are involved in this.

   The Bishop of London, Dr Richard Chartres, said: “The alarm bells are ringing all over the world. St Paul’s has now heard that call. Today’s decision means that the doors are most emphatically open to engage with matters concerning not only those encamped around the cathedral but millions of others in this country and around the globe. I am delighted that Ken Costa has agreed to spearhead this new initiative which has the opportunity to make a profound difference.”

   The Rt Rev Michael Colclough, Canon Pastor of St Paul’s Cathedral and a member of Chapter, added: “This has been an enormously difficult time for the Cathedral but the Chapter is unanimous in its desire to engage constructively with the protest and the serious issues that have been raised, without the threat of legal action hanging over us. Legal concerns have been at the forefront in recent weeks but now is the time for the moral, the spiritual and the theological to come to the fore.”

This is your morning Open Thread. Pour your favorite beverage and review the past and comment on the future.

Find the past “On This Day in History” here.

November 2 is the 306th day of the year (307th in leap years) in the Gregorian calendar. There are 59 days remaining until the end of the year.

On this day in 1777, the USS Ranger, with a crew of 140 men under the command of John Paul Jones, leaves Portsmouth, New Hampshire, for the naval port at Brest, France, where it will stop before heading toward the Irish Sea to begin raids on British warships. This was the first mission of its kind during the Revolutionary War.

After departing Brest, Jones successfully executed raids on two forts in England’s Whitehaven Harbor, despite a disgruntled crew more interested in “gain than honor.” Jones then continued to his home territory of Kirkcudbright Bay, Scotland, where he intended to abduct the earl of Selkirk and then exchange him for American sailors held captive by Britain. Although he did not find the earl at home, Jones’ crew was able to steal all his silver, including his wife’s teapot, still containing her breakfast tea. From Scotland, Jones sailed across the Irish Sea to Carrickfergus, where the Ranger captured the HMS Drake after delivering fatal wounds to the British ship’s captain and lieutenant.

In September 1779, Jones fought one of the fiercest battles in naval history when he led the USS Bonhomme Richard frigate, named for Benjamin Franklin, in an engagement with the 50-gun British warship HMS Serapis. After the Bonhomme Richard was struck, it began taking on water and caught fire. When the British captain of the Serapis ordered Jones to surrender, he famously replied, “I have not yet begun to fight!” A few hours later, the captain and crew of the Serapis admitted defeat and Jones took command of the British ship.

John Paul Jones (July 6, 1747 – July 18, 1792) was the United States’ first well-known naval fighter in the American Revolutionary War. Although he made enemies among America’s political elites, his actions in British waters during the Revolution earned him an international reputation which persists to this day.

Captain Jones’s is interred at the US Naval Academy in a marble and bronze sarcophagus.