02/28/2013 archive

With sequestration looming, many Americans are still struggling to recover from the the 2008 recession that cost them billions in lost savings and jobs but not the banks who were the chief perpetrators for the housing crash. As a matter of fact, American tax payers are still bailing out the “Too Big To Jail” banks $83 billion a year:

So what if we told you that, by our calculations, the largest U.S. banks aren’t really profitable at all? What if the billions of dollars they allegedly earn for their shareholders were almost entirely a gift from U.S. taxpayers? [..]

Banks have a powerful incentive to get big and unwieldy. The larger they are, the more disastrous their failure would be and the more certain they can be of a government bailout in an emergency. The result is an implicit subsidy: The banks that are potentially the most dangerous can borrow at lower rates, because creditors perceive them as too big to fail. [..]

The top five banks — JPMorgan, Bank of America Corp., Citigroup Inc., Wells Fargo & Co. and Goldman Sachs Group Inc [..] with almost $9 trillion in assets, more than half the size of the U.S. economy — would just about break even in the absence of corporate welfare. In large part, the profits they report are essentially transfers from taxpayers to their shareholders.

It is outrageous that Americans are being bludgeoned with $85 billion in austerity cuts that will most likely halt any recovery while handing banking shareholders an $83 billion gift.

During his appearance before the Senate Banking Committee, Federal Reserve Chairman Ben Bernanke was asked by freshman Sen. Elizabeth Warren about about the risks and fairness of having banks that are “too big to fail”

Warren quizzed Bernanke on that study. “I understand that we’re all trying to get to the end of too big to fail, but my question, Mr. Chairman, is until we do, should those biggest financial institutions be repaying the American taxpayer that $83 billion subsidy that they’re getting?”

Bernanke responded, “The subsidy is coming because of market expectations that the government would bail out these firms if they failed. Those expectations are incorrect.”

After some back and forth, Warren countered, “$83 billion says there really will be a bailout for the largest institutions.”

“That’s the expectation of markets. But that doesn’t mean we have to do it,” Bernanke responded.

Warren insisted that the large banks should pay for the subsidy. “Ordinary folks pay for homeowners’ insurance, ordinary folks pay for car insurance, and these big financial institutions are getting cheaper borrowing to the tune of $83 billion in a single year simply because people believe that the government would step in and bail them out. I’m just saying, if they’re getting it, why shouldn’t they pay for it?” she said.

“I think we should get rid of it,” Bernanke said. He said he agreed with her that government should address the problem of “too big to fail.”

Meanwhile, as Chris in Paris at AMERICAblog points out these banking executives are the forefront of the attack on the social safety net:

You may recall Goldman Sachs CEO Lloyd Blankfein, the guy who Obama has a strange bromance with, adjusted bonus payout dates in both the US and UK to avoid paying taxes. You know, as in the taxes that saved his entire lifestyle.

Even worse is Blankfein’s insistence on bashing programs that are critical to middle class Americans. It’s the Blankfeins of the world that want to take your Medicare and Social Security away.  God forbid we ran out of money and there weren’t any left to bail out the banks next time, right?

Then there’s my other favorite bankster, good old Jamie Dimon of JPMorgan. Dimon is the delightful fellow who ignored the warnings and ended up costing the bank, and our taxpayers, billions.

Since these banks really aren’t turning a profit without government welfare, what would JPMorgan look like without those handouts? For Dimon, banking rules that help protect taxpayers from bailing out the gambling banks are “un-American.”

The major bank chiefs have been quite vocal about trashing the social system, just as they trashed our economy. But when it comes to helping Americans, the banks have little interest beyond their next bailout.

Speaking of Jamie, our favorite vampire capitalist, “thoughtfully” explained why he’s richer than anyone else” in this exchange with Mike Mayo, an analyst at CLSA and Dimon critic:

Mayo: I think what I hear UBS saying in the presentation is that if I’m an affluent customer I’ll feel a lot better going to UBS if they have 13.5 (percent) capital ratio than another big bank with a 10 percent ratio. Do you agree with that?

Dimon: You would go to UBS and not JPMorgan?

Mayo: I didn’t say that. That’s their argument.

Dimon: That’s why I’m richer than you. [..]

FDL New Desk‘s DSWright found Dimon’s response arrogant but indicative of something even more offensive:

Dimon is right, he did get rich having low capital ratios – which is why his form of banking is dangerous. It’s the precise reason the banks could not protect themselves during the crisis, they were over-leveraged.

   “The real issue isn’t who is rich, but rather whose interests are being fairly served and whose aren’t. Dimon’s approach gives short shrift to both shareholders and taxpayers. Taxpayers still carry substantial risks for which they are not being compensated, a state that will only change when regulations are tightened, and hopefully vastly simplified.

   Shareholders do badly because the kind of bank Dimon runs is prone to loss and volatility, leading markets to set a low value on the bank’s earnings.”

Mathematician Albert Einstein said that doing the same thing over and over expecting different results was the definition of insanity. Continuing to bail out these banks on tax payer’s “dime” when there is no evidence that breaking them up would harm the economy is just insane.

“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”.

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Glen Ford: Remember: Sequestration was Obama’s Idea

President Obama is a full partner with the Republicans in the latest episode of the manufactured disaster saga: sequestration. “The idea was to make every popular constituency in the country scream – and accept the inevitability of massive entitlement cuts.” It’s a goal shared by corporatists in both parties. [..]

Disaster capitalism is manifesting itself as disaster governance, and President Obama is fully complicit in the corporate-imposed charade. Indeed, Obama is most culpable for infecting the nation with austerity fever.

Robert Kuttner: The Sequestering of Barack Obama

President Obama has miscalculated both the tactical politics of the sequester and the depressive economic impact of budget cuts on the rest of his presidency. The sequester will cut economic growth in half this year. But it’s now clear, one way or another, that we will get cuts in the $85 billion range that the sequester mandates this fiscal year. All that remains are the details. [..]

Obama needs to do something that doesn’t come easily to him. He needs to demolish the previous terms of debate, some of them partly of his own making. He has warned Republicans that if they allow the sequester to destroy a fragile recovery, the burden will be on them. More broadly, he needs to disavow earlier mistaken policies that he embraced, such as the belief that targeting a lower debt ratio as an end in itself will produce a recovery. If he could embolden his thinking on such issues as same-sex marriage and gun control, he owes us no less on the economy. Otherwise, Obama will preside over the worst eight-year economic record of any Democratic president, and the steepest rate of decline in social spending. He will leave an economy even more unequal than the one that he inherited. He needs to find within himself the audacity to restore hope.

Well, if you’ve been following the news, it’s really kind of obvious that this was going to happen.

The Shell high tech, best in the industry effort is basically 1 Ship, 1 Rig, and a Barge.

The ship is the Noble Discoverer, an obsolete hunk of junk with barely the power to get out of its own stink when the engines are working which they seldom do.  They couldn’t even muster enough steam to get it out of the way of Alaskan property taxes.

The Coast Guard found a lack of preventive maintenance and “systematic failure” led the Discoverer to experience a loss of its propulsion system and an explosion in its exhaust system.

…

The Coast Guard reportedly found that the Discoverer is not able to maintain sufficient speed at sea to maneuver safely in all conditions without a tow; multiple dead end wires and improper wire splices in the engine room; main engine cooling water contaminated with oil and sludge.

In addition, the vessel experienced an abnormal propeller shaft vibration on the way back from the Arctic in November, requiring the crew to shut down the vessel’s main engines and have the rig towed to the Port of Seward.

Oh, and it catches fire all the time too.

The Coast Guard inquiry began after the ship had propulsion problems while pulling into Seward, Alaska last November. Earlier that month, a fire broke out in the rig stack on the vessel while it was in Dutch Harbor, Alaska. It was swiftly put out by personnel on board the Discoverer and no one was injured.

After exploding in flame in Dutch Harbor, missing the January 1st property tax deadline, and collecting 16 major Coast Guard citations for safety violations the ship is being floating drydocked to South Korea for repair since it’s too unseaworthy to sail there on its own.  It won’t arrive until late spring to say nothing of the time needed for repair (unless they determine that it’s fit only for razor blades).

Then there is the Kulluk which when last we checked was doing a pretty good job of grinding itself to razors near Kodiak after it broke it’s tow.  It’s headed to South Korea too though it’s still a Keystone(XL) Cops comedy of errors.

The Corbin Foss, one of Seattle-based Foss Maritimes’ tugboats, hit the port side of the Ocean Wave, a Crowley Marine Services tug, around 5:30 p.m. Friday in Killiuida Bay on the eastern side of Kodiak Island, where the Kulluk is anchored while awaiting Coast Guard approval to leave, said Petty Officer David Mosley.

It won’t get there or be fixed any time sooner than the Noble Discoverer.

And then there was the Arctic Challenger a useless dockside Queen, an “Ice Breaking Barge” with no utility except as a floating hole which on a calm tranquil September day in Puget Sound had its super high tech blowout containment unit crushed like a beer can at half its rated depth.

So-

Shell Vessels Sidelined, Imperiling Arctic Plans

By CLIFFORD KRAUSS, The New York Times

Published: February 11, 2013

The new potential delay in drilling does not necessarily doom Shell’s seven-year, $4.5 billion quest to open a new oil frontier in the far north, but it may strengthen the position of environmentalists who have repeatedly sued to stop or postpone exploration that they claim carries the risks of a spill nearly impossible to clean up.

It may also give the Obama administration considerably more time to decide whether to allow Shell to continue operations in two Arctic seas after repeated accidents, failed inspections and mechanical problems that have called into question the company’s safety management

And today-

Shell Suspends Drilling for Arctic Ocean in 2013

By DAN JOLING Associated Press

ANCHORAGE, Alaska February 27, 2013 (AP)

Royal Dutch Shell PLC says it will not drill for petroleum in the Arctic Ocean in 2013.

The problem with our elites is that they’re massive morons and inbred idiots.

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.

February 28 is the 59th day of the year in the Gregorian calendar. There are 306 days remaining until the end of the year (307 in leap years)

On this day in 1953, Cambridge University scientists James D. Watson and Frances H.C. Crick announce that they have determined the double-helix structure of DNA, the molecule containing human genes.

History of DNA research

DNA was first isolated by the Swiss physician Friedrich Miescher who, in 1869, discovered a microscopic substance in the pus of discarded surgical bandages. As it resided in the nuclei of cells, he called it “nuclein”. In 1919, Phoebus Levene identified the base, sugar and phosphate nucleotide unit. Levene suggested that DNA consisted of a string of nucleotide units linked together through the phosphate groups. However, Levene thought the chain was short and the bases repeated in a fixed order. In 1937 William Astbury produced the first X-ray diffraction patterns that showed that DNA had a regular structure.

In 1928, Frederick Griffith discovered that traits of the “smooth” form of the Pneumococcus could be transferred to the “rough” form of the same bacteria by mixing killed “smooth” bacteria with the live “rough” form. This system provided the first clear suggestion that DNA carries genetic information, the Avery-MacLeod-McCarty experiment, when Oswald Avery, along with coworkers Colin MacLeod and Maclyn McCarty, identified DNA as the transforming principle in 1943. DNA’s role in heredity was confirmed in 1952, when Alfred Hershey and Martha Chase in the Hershey-Chase experiment showed that DNA is the genetic material of the T2 phage.

In 1953, James D. Watson and Francis Crick suggested what is now accepted as the first correct double-helix model of DNA structure in the journal Nature. Their double-helix, molecular model of DNA was then based on a single X-ray diffraction image (labeled as “Photo 51”) taken by Rosalind Franklin and Raymond Gosling in May 1952, as well as the information that the DNA bases are paired – also obtained through private communications from Erwin Chargaff in the previous years. Chargaff’s rules played a very important role in establishing double-helix configurations for B-DNA as well as A-DNA.

Experimental evidence supporting the Watson and Crick model were published in a series of five articles in the same issue of Nature. Of these, Franklin and Gosling’s paper was the first publication of their own X-ray diffraction data and original analysis method that partially supported the Watson and Crick model; this issue also contained an article on DNA structure by Maurice Wilkins and two of his colleagues, whose analysis and in vivo B-DNA X-ray patterns also supported the presence in vivo of the double-helical DNA configurations as proposed by Crick and Watson for their double-helix molecular model of DNA in the previous two pages of Nature. In 1962, after Franklin’s death, Watson, Crick, and Wilkins jointly received the Nobel Prize in Physiology or Medicine. However, Nobel rules of the time allowed only living recipients, but a vigorous debate continues on who should receive credit for the discovery.

President Barack Obama’s campaign organization, “Obama for America” (OFA), is being reinvented as as a 501(c)(4) tax-exempt “social welfare group” that is not subject to federal contribution limits, laws that bar White House officials from soliciting contributions, or the stringent reporting requirements for campaigns. The goal is to raise $50 million  support of Mr. Obama’s second-term policy priorities, including efforts to curb gun violence and climate change and overhaul immigration procedures. Much like the alleged “grassroots” organizations, The Tea Party and Freedom Works, the new organization, now known as “Organizing for Action” (still OFA, so as not to confuse Obama supports), will derive most of its budget from a select group of donors who will each contribute or raise $500,000 or more. Sounds harmless? But wait, there’s more, as reported in The New York Times

But those contributions will also translate into access, according to donors courted by the president’s aides. Next month, Organizing for Action will hold a “founders summit” at a hotel near the White House, where donors paying $50,000 each will mingle with Mr. Obama’s former campaign manager, Jim Messina, and Mr. Carson, who previously led the White House Office of Public Engagement.

Giving or raising $500,000 or more puts donors on a national advisory board for Mr. Obama’s group and the privilege of attending quarterly meetings with the president, along with other meetings at the White House. Moreover, the new cash demands on Mr. Obama’s top donors and bundlers come as many of them are angling for appointments to administration jobs or ambassadorships. [..]

Many traditional advocacy organizations, including the Sierra Club and the National Rifle Association, are set up as social welfare groups, or 501(c)(4)’s in tax parlance. But unlike those groups, Organizing for Action appears to be an extension of the administration, stocked with alumni of Mr. Obama’s White House and campaign teams and devoted solely to the president’s second-term agenda.

The new OFA, which would be among the largest lobbying groups in Washington, will supposedly stay out of electoral politics, advocating only for progressive issues which as the article notes may be easier said than done as the 2014 midterm elections near. It’s already drawing fire from Democrats and watch dog groups that are accusing the group of selling access to President Barack Obama. Cole Leystra, executive director of former Sen. Russ Feingold’s Progressives United group said in a blog post http://www.huffingtonpost.com/…

(I)t was exactly “what selling access looks like.”

“It’s embarrassing that the largest grassroots organization in history would abandon its own beliefs,” wrote Leystra.

“Organizing for Action should embrace its base of grassroots donors as a model of participatory democracy, not shun them in the dash to rake in huge contributions from a wealthy and powerful few,” he added. “We cannot return to the days of soft money — when unlimited corporate contributions blurred the differences between the two political parties, and resulted in policies that slammed average working families while rewarding Wall Street.”

In an interview with Amy Goodman and Nermeen Shaikh, the president of the watch dog group Common Cause, Bob Edgar raised the main objections to the new and “improved” OFA:

The watchdog group Common Cause called on President Obama on Tuesday to shut down the nonprofit spinoff of his campaign committee, saying that the group effectively puts access to the president up “for sale.”

“If President Obama is serious about his often-expressed desire to rein in big money in politics, he should shut down Organizing for Action and disavow any plan to schedule regular meetings with its major donors,” said Bob Edgar, president of Common Cause. “Access to the President should never be for sale.”

Apparently Pres. Obama thinks that since the Koch Brothers and Pete Peterson can get away with influencing and misinforming voters with massive media campaigns and its paid shills on every talk show spouting the company line, so can he. Don’t be fooled, these groups are all the same: certainly not “grass roots” and definitely not for the people, unless they’re the rich ones.