05/16/2012 archive

The Liberal Party

DNC Shamed Into Helping Wisconsin Recall, Still Not Committing Funds

By: David Dayen, Firedog Lake

Wednesday May 16, 2012 9:35 am

After some controversy, the Democratic National Committee has agreed to help efforts with the Wisconsin recall. However, this will not include any of the DNC’s war chest of funds, which they are husbanding for the general election.

Debbie Wasserman Schultz, the DNC chair, committed to come to Wisconsin to attend a fundraiser and to recruit volunteers for Tom Barrett’s campaign to recall Scott Walker. In addition, DNC members have been encouraged to contribute to the recall effort. However, the DNC did not pledge funds that they plan to use to support the general election campaign of President Obama and other Democrats in the fall. They certainly have plenty; the President and the DNC just announced that they raised $44 million just in April.

The question becomes whether a recall failure would have consequences for the fall election. The DNC is clearly making the choice to sit out the recall financially, wait for everything to blow over, and come back in the fall. But there could be a ripple effect here, in a key swing state as well as a state with an open Senate seat and a hot contest there. The failure to keep up the recall energy and dispose of Walker could definitely have repercussions. And there are only three weeks to turn it around.

Electoral victory my ass.  What “Democrats” are really interested in-

The Pete Peterson Fiscal Summit and What It Says About Democrats

By: David Dayen, Firedog Lake

Wednesday May 16, 2012 1:03 pm

(I)t’s interesting to me to see who has been seduced by this power. Republicans are basically saying the same things in the era of Peterson that they have been saying for the past thirty years: they want low taxes and less wealth-redistributing programs to the lower classes. Sometimes they say they want “less spending” and a “smaller deficit,” but only when a Democrat is in office, and only in relation to those redistributive policies. The tax cuts blow holes in the deficit, so that’s not a preoccupation for them.

The only tax cuts they would entertain repealing are the ones that distribute funds to the lower classes. For example, in their budget bill, they replaced defense cuts with, among other things, a rollback of the child tax credit, which goes mostly to lower-class and middle-class families.

By contrast, Democrats have moved over the last several decades, under duress from Peterson on having to “be serious” about deficits. One after another at last night’s event, Democratic politicians took aim at so-called entitlements, which I prefer to describe as the social safety net.

I’d like to find the Democrats who are “reluctant to commit to longer-term health-care savings” and who “don’t want to touch Social Security.” Contrary to President Clinton’s remarks, they no longer exist. Even Nancy Pelosi is playing footsie with benefit cuts.

If this doesn’t happen in the near future, it’s because Peterson and his ilk failed to get Republicans to provide cover with any tax increases. But the idea that Democrats are somehow reluctant to get out the budget axe is just wrong. They are far more serious about so-called “fiscal responsibility” than Republicans. In fact, the President on that stage, Clinton, was the one who ended welfare as we know it. We now know, after the Great Recession, the terrible costs to that policy for millions of families. But Democrats haven’t learned from that experience.

So while Republicans are clearly insane about the fiscal future – and impervious to logic, as Tom Coburn showed – the country has drifted to the right because one party has become caught up in pleasing the likes of Pete Peterson rather than their own constituents.

“We have a lot of people in our party who will not be drummed out if they depart from the conventional wisdom,” Clinton said last night. That’s not true. For the conventional wisdom in the Democratic Party is now that “balanced” cuts are needed to the entire budget to move America forward. And if you depart from that… you hear the drums playing, right?

One party.  And it’s not the Republicans, they’ve always been about pleasing the likes of Pete Peterson.

Not Capitalism

Modern economic philosophy is generally considered to have started with Smith and Hobbes who were reacting against a system of monarchal merchantilism where favored courtiers were rewarded with monopolies in a planned economy enforced by a state claim of exclusive authority on violence.

Read that again because it’s important.

Their groundbreaking contribution was the concept that markets (individuals) could more efficiently allocate resources (capital) than corrupt cronyism.  You know, free market capitalism.

Compare and contrast-

End of the Affair?

The Editors of The New York Times

Published: May 14, 2012

There has been less buying and selling of stock, and there have been huge outflows of investor dollars from domestic stock mutual funds, as detailed recently by The Times’s Nathaniel Popper. If the trend continues, the result could be a less robust market, with fewer companies opting to raise money by issuing shares and fewer investors willing to put their retirement savings into stocks.

Policy makers should pay attention. Evidence suggests that investors are not merely reacting to tough conditions, but rather are staying away because they do not trust the market. Restoring trust is crucial to restoring the market.

American stocks have doubled in price since the market hit bottom three years ago. But trading in the United States stock market has not only failed to recover since the 2008 financial crash, it has continued to fall. In April, average daily trades stood at 6.5 billion, about half their peak four years ago. By comparison, after the market busts of 1987 and 2001, trading recovered within two years. In fact, going back to 1960, trading had never declined for three consecutive years, let alone four and counting.

Investors haven’t just hunkered down, they have headed for the exits. Since the start of 2008, domestic stock mutual funds, a common way for individuals to invest, were drained of more than $400 billion, compared with an inflow of $52 billion in the four years before that.

There is also the feeling that the market has become increasingly unfair to investors. For example, Mr. Popper also reported recently on rebates to brokers from stock exchanges. In general, brokers are required to find the best prices for clients who pay them to buy and sell shares. But with the nation’s 13 exchanges now paying brokers for sending them business, brokers may have an incentive to search for the biggest rebate rather than the best price. A new study has estimated that rebates could be costing mutual funds, pension funds and individual investors as much as $5 billion a year.

Also known as “maker-taker” pricing, the rebates have caught the attention of market researchers and investor advocates, including two former economists for the Securities and Exchange Commission who issued a report in 2010 saying that “in other contexts, these payments would be recognized as illegal kickbacks.”

I realize citation of major media outlets is considered but a quaint remnant of irrelevant reality by sycophants and ‘bots, but I thought I’d draw this to your attention.

Punting the Pundits

“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”.

Wednesday is Ladies’ Day

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Katrina vanden Heuvel: It’s time to break up the big banks

Consider $2 billion lost on a bad bet, plus billions more as investors dumped the stock, a providential warning. When Jamie Dimon, the imperious head of JPMorgan Chase, revealed that the bank had lost so much on a derivatives trade gone bad, it was clear warning that, four years after blowing up the economy, the big banks are still playing with bombs. [..]

When Dimon testified before the Financial Crisis Inquiry Commission in 2010, he said that when his daughter asked him what a financial crisis was, he told her “it’s something that happens every five to seven years.” He seems intent on validating his prediction.

But the United States went for decades without a financial crisis after the New Deal regulations shackled the banks. It was only with deregulation under Reagan and Clinton that financial crises have been inflicted on us regularly. Now Dimon’s bank’s bad bets have given us one last warning: It is time to break up the big banks

Maira Sutton: Internet Freedom Activists Protest Secret Trade Agreement Being Negotiated This Week

The U.S. content industry will try anything to preserve its profit margin and power over the creative content market at the expense of the Internet. They will use any tactic that circumvents democratic processes to make new rules for the Internet that favor their interests and not the interests of Internet users or the technical community that actually builds the Internet as we know it. The Trans-Pacific Partnership (TPP) is yet another example of these tactics.

The TPP is a secretive plurilateral1 agreement that includes provisions dealing with intellectual property, including online copyright enforcement, anti-circumvention measures, and Internet intermediary liability. Due to the secrecy of the negotiations, we do not know what is in the current version of the TPP’s IP chapter; the general public has only seen a leaked February 2011 version of the U.S. IP chapter proposal pdf. Based on the one-sided nature of the groups directly involved, and the content of what has already leaked, we should all be concerned about the prospect of the TPP including provisions that will harm online expression, privacy and innovation on the Internet.

Alexis Goldstein: Perhaps It’s Jamie Dimon Who Needs a Psychiatrist

J.P. Morgan’s CEO Jamie Dimon once sarcastically complained that all his traders would need to talk to a psychiatrist in order to comply with regulations. Now, in the absence of strict regulations, every trader on the street is psychoanalyzing Dimon’s every word in order to try to make money off J.P. Morgan’s very large mistake.

Back in February, Dimon famously told Fox Business that because of the Volcker Rule for “every trader, we are going to have to have a lawyer, a compliance officer, a doctor to see what their testosterone levels are, and a shrink, ‘what is your intent?’ ” But now it is J.P. Morgan’s intent in a $100 billion bet that has sent the financial media abuzz with questions. The $2 billion loss that J.P. Morgan has incurred related to this position has only further fueled the speculations about what, exactly, J.P. Morgan was trying to do with this trade.

Robin Wells: German voters must break the Merkel mindset that got them into this

Greece’s euro membership was as much the German elite’s fault as anyone’s. Can it find the leadership to resolve the crisis?

Sunday’s regional German elections offer a small ray of hope. Merkel’s party received a thrashing in North Rhine-Westphalia, home to nearly one in five Germans. Rejecting the conservatives’ hard-line platform of more austerity and finger-pointing, German voters instead voted for the Social Democrats, for a platform of more spending and, shockingly, for more debt. This caps a series of defeats in state elections for Merkel and makes it increasingly clear that her government is in serious jeopardy.

Perhaps, just perhaps, German voters are waking up. And therein lies the possibility that the euro can be saved.

But it’s a race against time at this point. Precious time, credibility and resources have been lost. Lives have been up-ended and shattered, voters are angry and restive, markets are in a hostile and unforgiving mood. It is said that leaders are born of great crises. It is now or never for Germany.

Jessica Valenti: Year of the (Young) Woman

Komen. Sandra Fluke. Transvaginal. The reason these words are instantly recognizable-the reason the “war on women” is now part of the national conversation-is largely thanks to younger women and online organizing. Behind every recent battle against the onslaught of sexism has been the energy and activism of young people-on blogs, Twitter, Tumblr and Faebook. And in a long-overdue but welcome change of message, the mainstream feminist movement that once claimed young women didn’t care about feminism is finally catching on. Some are even walking the walk.

Last week, NARAL Pro-Choice America President Nancy Keenan announced that she would be stepping down from her role to make way for younger activists. She told Sarah Kliff at the Washington Post, “There’s an opportunity for a new and younger leader.”

“People give a lot of lip service to how we’re going to engage the next generation, but we can’t just assume it will happen on its own.”

Sarah Anderson: Nurses Push Tax on Trades to Help Sick

Of all the street actions leading up to the NATO summit, the one that might seem most perplexing is a nurses’ rally for a tax on securities trades. Financial markets are pretty remote from hospital bedsides, you might think.

Why would nurses get mixed up in an issue like that?

RoseAnn DeMoro, executive director of National Nurses United, says there’s a simple explanation: “The big banks, investment firms and other financial institutions, which ruined the economy with trillion-dollar trades on people’s homes and pensions and similar reckless gambling, should pay for the recovery.”

Nurses have been on the front lines of the crisis, seeing firsthand the health impacts of skyrocketing poverty and record high rates of uninsured Americans.

On This Day In History May 16

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.

Click on image to enlarge

May 16 is the 136th day of the year (137th in leap years) in the Gregorian calendar. There are 229 days remaining until the end of the year.

On this day in 1868, the U.S. Senate votes against impeaching President Andrew Johnson and acquits him of committing “high crimes and misdemeanors.”

In February 1868, the House of Representatives charged Johnson with 11 articles of impeachment for vague “high crimes and misdemeanors.” (For comparison, in 1998, President Bill Clinton was charged with two articles of impeachment for obstruction of justice during an investigation into his inappropriate sexual behavior in the White House Oval Office. In 1974, Nixon faced three charges for his involvement in the Watergate scandal.) The main issue in Johnson’s trial was his staunch resistance to implementing Congress’ Civil War Reconstruction policies. The War Department was the federal agency responsible for carrying out Reconstruction programs in the war-ravaged southern states and when Johnson fired the agency’s head, Edwin Stanton, Congress retaliated with calls for his impeachment.

Of the 11 counts, several went to the core of the conflict between Johnson and Congress. The House charged Johnson with illegally removing the secretary of war from office and for violating several Reconstruction Acts. The House also accused the president of hurling slanderous “inflammatory and scandalous harangues” against Congressional members. On February 24, the House passed all 11 articles of impeachment and the process moved into a Senate trial.

Why the $2 Billion Chase Loss Matters to Everyone

Felix Salmon, finance blogger at Reuters and Matt Taibbi, of ‘vampire squid” fame from “Rolling Stone“, were guests on “View Point with Eliot Spitzer“, discussing the implications JPMorgan’s $2 billion trading loss and why it should matter to anyone with a banking account at Chase, or any other to big to fail bank.

Taibbi and Salmon agree JPMorgan’s risk-taking has broad implications. “JPMorgan Chase takes deposits in from every single mom and pop, and small business and large business, in the world, and the President of the United States,” Salmon says. “They’re a utility bank and it is their job and their duty … to take those deposits and lend them out into the economy. And what do they do instead? They take $360 billion and put it in a hedge fund in London.”

Jamie Dimon’s failure

by Felix Salmon

Drew’s Chief Investment Office quadrupled in size between 2006 and 2011, reaching $356 billion in total, and it’s easy to see how that happened. On the one hand, it was incredibly profitable, with the London team alone, which oversaw some $200 billion, making $5 billion of profit in 2010, more than 25% of JP Morgan’s net income for the year. At the same time JP Morgan accumulated enormous new deposits in the wake of the financial crisis, both by acquiring banks and by attracting big new clients wanting the safety of a too-big-to-fail bank. Historically, JP Morgan has served big corporations by lending them money, but nowadays, as the cash balances on corporate balance sheets get ever more enormous, the main thing these companies want from JP Morgan is a simple checking account – one where they can be sure that their money is safe.

With lots of deposits coming in, and little corporate demand for loans, it was easy for all that money to find its way to the Chief Investment Office, which could take any amount of liabilities (deposits are liabilities, for a bank) and turn them into assets generating billions of dollars in profits.

Never mind the weak tea Volker rule, what is needed is a new, revised Glass-Steagal, the break up the TBTF and protection for investors and the economy.

The Wild West Is Where I Want To Be

“He seldom has any point to make except obvious ones” – The Christian Science Monitor

DocuDharma Digest



Seven Pillars of Wisdom

Strategy and tactics of guerrilla warfare tend to focus around the use of a small, mobile force competing against a large, unwieldy one. The guerrilla focuses on organising in small units, dependent on the support of the local population. Tactically, the guerrilla army attacks its enemy in small, repetitive attacks from the opponent’s center of gravity with a view to reducing casualties and becoming an intensive, repetitive strain on the enemy’s resources, forcing an over-eager response which will both anger their own supporters and increase support for the guerrilla, thus forcing the enemy to withdraw.

Fourteenth Edition of the Encyclopedia Britannica (1929)

This seemed unlike the ritual of war of which Foch had been priest, and so it seemed that there was a difference of kind. Foch called his modern war “absolute.” In it two nations professing incompatible philosophies set out to try them in the light of force. A struggle of two immaterial principles could only end when the supporters of one had no more means of resistance. An opinion can be argued with: a conviction is best shot. The logical end of a war of creeds is the final destruction of one, and Salammbo the classical textbook-instance. These were the lines of the struggle between France and Germany, but not, perhaps, between Germany and England, for all efforts to make the British soldier hate the enemy simply made him hate war. Thus the “absolute war” seemed only a variety of war; and beside it other sorts could be discerned, as Clausewitz had numbered them, personal wars for dynastic reasons, expulsive wars for party reasons, commercial wars for trading reasons.

Now the Arab aim was unmistakably geographical, to occupy all Arabic-speaking lands in Asia. In the doing of it Turks might be killed, yet “killing Turks” would never be an excuse or aim. If they would go quietly, the war would end. If not, they must be driven out: but at the cheapest possible price, since the Arabs were fighting for freedom, a pleasure only to be tasted by a man alive.

In the Arab case the algebraic factor would take first account of the area to be conquered. A casual calculation indicated perhaps 140,000 square miles. How would the Turks defend all that-no doubt by a trench line across the bottom, if the Arabs were an army attacking with banners displayed . . . but suppose they were an influence, a thing invulnerable, intangible, without front or back, drifting about like a gas? Armies were like plants, immobile as a whole, firm-rooted, and nourished through long stems to the head. The Arabs might be a vapour, blowing where they listed.  …  It seemed that the assets in this sphere were with the Arabs, and climate, railways, deserts, technical weapons could also be attached to their interests. The Turk was stupid and would believe that rebellion was absolute, like war, and deal with it on the analogy of absolute warfare.

The Arab army just then was equally chary of men and materials: of men because they being irregulars were not units, but individuals, and an individual casualty is like a pebble dropped in water: each may make only a brief hole, but rings of sorrow widen out from them. The Arab army could not afford casualties.

The Arab war should be a war of detachment: to contain the enemy by the silent threat of a vast unknown desert, not disclosing themselves till the moment of attack. This attack need be only nominal, directed not against his men, but against his materials: so it should not seek for his main strength or his weaknesses, but for his most accessible material.

The printing press is the greatest weapon in the armoury of the modern commander, and the commanders of the Arab army being amateurs in the art, began their war in the atmosphere of the 20th century, and thought of their weapons without prejudice, not distinguishing one from another socially. The regular officer has the tradition of 40 generations of serving soldiers behind him, and to him the old weapons are the most honoured. The Arab command had seldom to concern itself with what its men did, but much with what they thought, and to it the diathetic was more than half command. In Europe it was set a little aside and entrusted to men outside the General Staff. But the Arab army was so weak physically that it could not let the metaphysical weapon rust unused. It had won a province when the civilians in it had been taught to die for the ideal of freedom: the presence or absence of the enemy was a secondary matter.

The Turkish army was an accident, not a target. Our true strategic aim was to seek its weakest link, and bear only on that till time made the mass of it fall. The Arab army must impose the longest possible passive defence on the Turks (this being the most materially expensive form of war) by extending its own front to the maximum.

The contest was not physical, but moral, and so battles were a mistake. All that could be won in a battle was the ammunition the enemy fired off.  …  Battles are impositions on the side which believes itself weaker, made unavoidable either by lack of land-room, or by the need to defend a material property dearer than the lives of soldiers. The Arabs had nothing material to lose, so they were to defend nothing and to shoot nothing. Their cards were speed and time, not hitting power, and these gave them strategical rather than tactical strength.

The Desert and the Sea. In character these operations were like naval warfare, in their mobility, their ubiquity, their independence of bases and communications, in their ignoring of ground features, of strategic areas, of fixed directions, of fixed points. “He who commands the sea is at great liberty, and may take as much or as little of the war as he will”  …  The Arab army never tried to maintain or improve an advantage, but to move off and strike again somewhere else. It used the smallest force in the quickest time at the farthest place. To continue the action till the enemy had changed his dispositions to resist it would have been to break the spirit of the fundamental rule of denying him targets.

An Undisciplined Army. The internal economy of the raiding parties was equally curious. Maximum irregularity and articulation were the aims. Diversity threw the enemy intelligence off the track. By the regular organization in identical battalions and divisions information builds itself up, until the presence of a corps can be inferred on corpses from three companies. The Arabs, again, were serving a common ideal, without tribal emulation, and so could not hope for any esprit de corps. Soldiers are made a caste either by being given great pay and rewards in money, uniform or political privileges; or, as in England, by being made outcasts, cut off from the mass of their fellow-citizens. There have been many armies enlisted voluntarily: there have been few armies serving voluntarily under such trying conditions, for so long a war as the Arab revolt. Any of the Arabs could go home whenever the conviction failed him. Their only contract was honour.

Consequently the Arab army had no discipline, in the sense in which it is restrictive, submergent of individuality, the Lowest Common Denominator of men. In regular armies in peace it means the limit of energy attainable by everybody present: it is the hunt not of an average, but of an absolute, a 100-per-cent standard, in which the 99 stronger men are played down to the level of the worst. The aim is to render the unit a unit, and the man a type, in order that their effort shall be calculable, their collective output even in grain and in bulk. The deeper the discipline, the lower the individual efficiency, and the more sure the performance. It is a deliberate sacrifice of capacity in order to reduce the uncertain element.  …  In irregular war if two men are together one is being wasted. The moral strain of isolated action makes this simple form of war very hard on the individual soldier, and exacts from him special initiative, endurance and enthusiasm. Here the ideal was to make action a series of single combats to make the ranks a happy alliance of commanders-in-chief. The value of the Arab army depended entirely on quality, not on quantity. The members had to keep always cool, for the excitement of a blood-lust would impair their science, and their victory depended on a just use of speed, concealment, accuracy of fire. Guerrilla war is far more intellectual than a bayonet charge.

Here is the thesis:

Rebellion must have an unassailable base, something guarded not merely from attack, but from the fear of it: such a base as the Arab revolt had in the Red Sea ports, the desert, or in the minds of men converted to its creed. It must have a sophisticated alien enemy, in the form of a disciplined army of occupation too small to fulfill the doctrine of acreage: too few to adjust number to space, in order to dominate the whole area effectively from fortified posts.

It must have a friendly population, not actively friendly, but sympathetic to the point of not betraying rebel movements to the enemy.

Rebellions can be made by 2% active in a striking force, and 98% passively sympathetic. The few active rebels must have the qualities of speed and endurance, ubiquity and independence of arteries of supply. They must have the technical equipment to destroy or paralyze the enemy’s organized communications, for irregular war is fairly Willisen’s definition of strategy, “the study of communication,” in its extreme degree, of attack where the enemy is not.

In 50 words: Granted mobility, security (in the form of denying targets to the enemy), time, and doctrine (the idea to convert every subject to friendliness), victory will rest with the insurgents, for the algebraical factors are in the end decisive, and against them perfections of means and spirit struggle quite in vain.