January 2014 archive

Poor Gov. Chris Christie has a sad.

Does anyone truly believe that a deputy assistant director would take it upon herself to send this e-mail, if the governor, himself, had not been aware of it? Especially, a control freak, like Chris Christie, who is well known for be a bully and for the misuse of the power of his office?  

What is even more puzzling, why would any voter in his right mind consider this man a contender for the presidency of the US, let alone the governorship of a state (Oh, wait, GWB, but that was Texas)? What was the Democratic leadership thinking when they backed this blowhard, abusive epitome of dirty politics?

Does anyone believe that he only just learned about this yesterday? And, as far as he knew, it was a traffic study? Where has he been the last few weeks, Mars?

As Charles Pierce, rather politely out it, “what a fking poltroon”

He was the only victim here. Reading the smoking-gun e-mails, he felt “sad and betrayed” in his pajamas yesterday. (And, again, governor, please do not ever put that image in my head again and how is it that he hadn’t slept in 36 hours if he only learned about this yesterday morning?) He doesn’t know how this disloyal brood of vipers that he hired got the idea that he would be open to some indiscreet political bullying, because he doesn’t think he’s created a climate of bullying in his administration, hasn’t given that much thought at all because he’s spent all the time thinking about how he had come to such a terrible pass, his trust betrayed by Bridget Kelly, the Machiavellette who blindsided the poor dear. Under the bus, acushla. There’s still plenty of room.

And he didn’t even know David Wildstein in high school! He was too busy being the BMOC.

The basic theme of the press conference was that Big Chicken was responsible for one thing and one thing only — of trusting people who preyed on his well-known innocence and his extensively documented and deeply held faith in his fellow human beings. Hell, he didn’t even know the mayor of Fort Lee’s name! He searched his soul and that’s what he came up with — he, Chris Christie, was sold down the river and, because he, Chris Christie was sold down the river, the people of New Jersey, embodied by him, were also betrayed. He was humiliated. He was deceived. What a world it is when a man cannot trust the hacks whom he appoints to serve him. Jesus H. Christ in the HOV lane, Nixon threw Haldeman and Ehrlichman out the windows with more compassion and fellow feeling than Christie demonstrated yesterday.

He apologized to the people in Fort Lee for allowing this passel of Judases to do these terrible things to him. How, he asked, could they possibly look at him berate schoolteachers and reporters and act like a general jackass throughout his political career and think he possibly could sit still for such obvious thuggery? He was a maverick. He works with both sides. He took an oath. Why is he the only honest man in this whole mess? It’s a heavy burden he carries, a lonely road he walks, but he will do it on behalf of the people of New Jersey for what he’s done to them by allowing such terrible, awful, horrible things to be done to him. “This was the job I asked for, and I gotta do it!” What a man is this. Stay under the damn bus, Bridget.

And just for laughs, in the midst of an ongoing investigation by state and federal authorities, Gov. Christie nominated his Chief of Staff, Kevin O’Dowd, to be the next state attorney general. If confirmed by the Democratic Senate, Mr. O’Dowd would be in charge of the investigation that may well involve himself. He is scheduled to appear before the Senate Judiciary Committee on Tuesday.

Even as the controversy over lane closures at the George Washington Bridge continues to roil the Trenton waters, one man who has so far not been implicated could find his future altered.

Kevin O’Dowd, who served as Gov. Chris Christie’s chief of staff as so called ‘bridgegate’ unfolded last fall was nominated last month as the state’s new attorney general.  He is due to go before the Senate Judiciary Committee on Tuesday.

The problem for O’Dowd is that Deputy Chief of Staff Bridget Kelly, who was implicated today as part of the investigation into the flap, worked for him. To date none of the emails that have surfaced implicate O’Dowd, even as several other administration members have found themselves caught up in the controversy.

But Judiciary Committee Chairman Sen. Nicholas Scutari said late last night he doesn’t know what effect Kelly’s role in the growing scandal will have on O’Dowd, adding that he’ll wait to see what comes out of today’s Assembly Transportation Committee hearing before deciding what’s next.

The side show continues.

I should know better than to pay attention to the evening news on teevee.  It just ticks me off.  Not because I can’t handle the news, but because of the way that it’s slanted.

The other night I was watching the PBS Newshour’s feature on the 50th anniversary of LBJ’s “War on Poverty.”  Among the talking heads that appeared to discuss it was Glenn Hubbard, economist for hire and notable shill for the financial services industry.

What really caught my attention the other night was this part of Hubbard’s discussion of what means the government ought to employ in order to mitigate poverty. The whole discussion is here.

JEFFREY BROWN: Let me bring you back in, Glenn Hubbard — striking that of course a lot of these same issues are now very much still on the table and back on the table, right, questions of economic inequality, and raising the minimum wage. There are the kinds of debates that we have on this program where you and Angela Blackwell might disagree on some of the policies, but you are still agreeing that something more needs to be done.

GLENN HUBBARD: These are huge issues. And something definitely needs to be done.

I guess I wouldn’t think the things like supporting higher minimum wages are the answer. I don’t think that provides employment. We do need to support skills for people coming in. And we need to support their incomes, things like the Earned Income Tax Credit. If we as a society want to provide better opportunities for work, we need to pay for it. Neither side of the aisle is in my view bold enough on this.

JEFFREY BROWN: But what — what — go ahead, Angela Blackwell.

ANGELA GLOVER BLACKWELL: Yes.

If we raise the minimum wage to $10, five million people will be bought out of poverty. People who work shouldn’t be poor.

JEFFREY BROWN: Mr. Hubbard?

GLENN HUBBARD: I agree with that, but why use the minimum wage to do that, as opposed to the Earned Income Credit?

This is something that — as a society, if we want this, we should pay for it, not in terms of job loss for others, or higher prices, or lower profits. This is something we ought to pay for.

Hubbard’s 1% agenda is on full display here.

Looking at his claims in bold above:

Raising the minimum wage if done with enough rigor, will solve the problem of the millions of working poor people.  When people work, they should be paid enough to support themselves.

Supports like the earned income tax credit (for people who work but don’t get paid enough to support themselves or their family) or food stamps, housing allowances, heating assistance and medicaid have become welfare for corporations, subsidizing corporations who cut costs by paying workers too little to maintain themselves. These corporations dump those costs on us.

How much do they dump on us? Billions of dollars every year:

How you subsidize the minimum wage

According to a University of California Berkeley Labor Center and University of Illinois study out Tuesday, 52% of families of fast food workers receive assistance from a public program like Medicaid, food stamps, the Earned Income Tax Credit and Temporary Assistance for Needy Families. That’s compared to 25% of families in the workforce as a whole.

The report estimated that this public aid carries a $7 billion price tag for taxpayers each year. …

Public assistance isn’t just for those out of work, down on their luck, or in a short-term bind. It’s for those who are gainfully employed but earning such a low wage they can’t sustain themselves. Which is to say: The reason fast-food and other low-wage employers can get away with paying so little is because taxpayers subsidize the slack. The report estimates McDonald’s (ticker: MCD ) subsidy alone is worth $1.2 billion a year, which equates to more than a fifth of its 2012 profits.

If a corporation cannot afford to pay a living wage for a good or a service that it sells, we should not automatically subsidize it.  If society has a need that is not being met by an enterprising corporation, it has other means of availing itself of products and services.

Raising the minimum wage meaningfully will also create jobs.  As low wage worker pay rises, they will spend that money creating demand, which is the basis for the creation of jobs.

Recent research reveals that, despite skeptics’ claims, raising the minimum wage does not cause job loss.[6] In fact, throughout the nation, a minimum-wage increase under current labor market conditions would create jobs. Like unemployment insurance benefits or tax breaks for low- and middle-income workers, raising the minimum wage puts more money in the pockets of working families when they need it most, thereby augmenting their spending power. Economists generally recognize that low-wage workers are more likely than any other income group to spend any extra earnings immediately on previously unaffordable basic needs or services.

Increasing the federal minimum wage to $10.10 by July 1, 2015, would give an additional $51.5 billion over the phase-in period to directly and indirectly affected workers,[7] who would, in turn, spend those extra earnings. Indirectly affected workers-those earning close to, but still above, the proposed new minimum wage-would likely receive a boost in earnings due to the “spillover” effect (Shierholz 2009), giving them more to spend on necessities. [footnotes at link]

Hubbard’s proposal above amounts for a demand for welfare from the 1%; he wants us to subsidize their profits by paying part of their labor costs.

Just say no to the 1% when they start their poor-mouthing.

“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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Richard (RJ) Eskow: Now We Know: JPMorgan Chase Is Worse Than Enron

It’s beginning to look as if JPMorgan Chase has had a hand in every major banking scandal of the last decade. In fact, it’s the Zelig of Wall Street crime. Take a snapshot of any major bank fraud and chances are you’ll see JPMorgan Chase staring out at you from the frame.

Foreclosure fraud, investor fraud, cheating customers, market manipulation, LIBOR… and now, the coup de grace to JPM’s tattered reputation: a $2 billion fine for closing its eyes and covering up as Bernie Madoff literally bilked widows and orphans, along with a lot of other families and charities. (Here’s a list of investors.)

Does Jamie Dimon, the bank’s CEO, still think people don’t say enough nice things about him? Do his friends? More importantly, how does the largest bank in the country (measured in assets) get away with being worse than Enron?

That one’s easy: By being the largest bank in the country.

Robert Sheer; Exposing Public Wickedness Is More American Than Apple Pie

It’s the revolt of the geeks. Edward Snowden is John Peter Zenger digitized, a post-Internet free-press hero soaring above the security obsessions of the past decade to assert the inalienable requirements of individual sovereignty in a wired world.

It was Zenger whose journalistic efforts to expose the wrongdoing of a colonial governor appointed by the crown landed him in jail facing the charge of “seditious libel,” quite similar to that brought against Snowden for exposing the NSA’s illegal spying.

Their defense is the same: True patriotism demands a vigilant confrontation with government infamy. “I know not what reason is,” Zenger published in his defense back in 1734, “if sapping and betraying the liberties of a people be not treason.” After Zenger spent more than eight months in jail, a jury of his peers exonerated him and his cry for an unfettered free press came to be enshrined in the U.S. Constitution.

JP Morgan Will Not Be Criminally Prosecuted for Its Role in Madoff’s Ponzi Scheme

Transcript

Elizabeth Warren, Tom Coburn Introduce “Naked Capitalism Was Right About the Corruption of Financial Regulators Act” (Not Actually Called That)

by David Dayen, Naked Capitalism

Posted on January 9, 2014

I’ve been going out of my mind the past few days seeing the easily duped traditional media uncritically printing statistical analysis from JPMorgan Chase’s roundelay of get-out-of-jail-almost-free settlements. The gist of it, and this must have been in a Department of Justice release somewhere, is that JPM has “paid” $20 billion over the last calendar year to resolve a variety of disputes, the most recent being their admission that they knew the bogus nature of Bernie Madoff’s business and never generated any suspicious activity reports or raised red flags for regulators (the fact that they took their money out of Madoff feeder funds right before he was arrested being a smoking gun).

Peter Eavis at the New York Times scratches his head and wonders how the bank has “taken in stride” all this hemorrhaging of cash in fraud settlements. Well first of all, considering that shareholders effectively pay the fines and nobody in the executive suites has to go to jail, I’d say taking it in stride is a pretty proper reaction. But just as important is that $20 billion is a FAKE NUMBER.

…

That’s just one piece of the puzzle. Most of the aforementioned MBS settlement was tax-deductible. The big National Mortgage Settlement and others allowed JPM to write off their penalty with investors’ money. They’re suing the FDIC to stick them with the bill for WaMu losses even though they assumed them in the acquisition. The games are notable and legendary. JPMorgan Chase isn’t worried about paying $20 billion because there is no such number. That the media reports this speaks to their incurious nature, and allows the Justice Department and people like Eric Schneiderman to get away with claiming a “get tough” approach when the settlements look more like back-door bailouts.

Along comes Elizabeth Warren with a bill to attack this corruption directly. Warren and Tom Coburn introduced the Truth in Settlements Act, which uses disclosure to force these little games into the open.

Under the law, any settlement with federal agencies over $1 million would have to be completely disclosed to the public, with all relevant details out there, including how the topline number gets applied in reality.

…

Regulators are basically getting a free ride from the press for their inadequacy in enforcing the law, and this bipartisan bill puts a big red target on their back. Maybe they’ll think twice about the largesse given to banks in the form of a fake penalty; I’m skeptical, but at least they’ll feel the eyes on them. I am happy to see a Senator basically calling the regulatory agencies liars (on the call, she said “They shouldn’t be able to advertise a high sticker price that they know is untrue”), and moving to produce legislation to stop them from lying. Who knows where it will go – Congress doesn’t pass many laws anymore – but this is a case where the mere potential for embarrassment could spur better behavior.

Over at Naked Capitalism our old pal dday has a couple of thought provoking pieces I’d like to draw your attention to.

The first one is a reprint of an article by Chris Mayer that has also appeared at New Economic Perspectives.  Chris is no deficit dove, in fact he used to be an Austrian which is the school of Weber, Mises, and Hayek and heavily influnced the thinking of the ‘Freshwater’ University of Chicago style of economics with its theories of perfect markets and concerns about inflation.

In it he describes a simple thought experiment proposed by Warren Mosler (considered the father of neo-Chartalism or as we know it more familiarly now- Modern Monetary Theory) to describe how fiat currency, which is to say sovereign currency unbacked by any fixed convertibility into commodities or currency other than that of the state that issues it, works.

Chris Mayer: How Fiat Money Works

by David Dayen, Naked Capitalism

Posted on January 9, 2014

Imagine parents create coupons they use to pay their kids for doing chores around the house. They “tax” the kids 10 coupons per week. If the kids don’t have 10 coupons, the parents punish them. “This closely replicates taxation in the real economy, where we have to pay our taxes or face penalties,” Mosler writes.

So now our household has its own currency. This is much like the U.S. government, which issues dollars, a fiat currency. (Meaning Uncle Sam doesn’t have to give you something else for it. Say, like a certain weight in gold.) If you think through this simple analogy, all kinds of interesting insights emerge.

For example, do the parents have to get coupons from their kids before they can pay them to do any chores? Obviously not. In fact, the parents have to spend their coupons first by paying their children to do chores before they can collect the tax. “How else can the children get the coupons they owe to the parents?” Mosler writes.

“Likewise,” he continues, “in the real economy, the federal government, just like this household with its own coupons, doesn’t have to get the dollars it spends from taxing or borrowing or anywhere else to be able to spend them.”

The government creates dollars. It doesn’t even have to print them. The vast majority of spending is simply done by adding electronic dollars to bank accounts. Therefore, the U.S. government can’t go bankrupt. It pays all its bills in U.S. dollars, of which it is the sole issuer.

This sounds really obvious, but it is amazing how many people – even very smart people – forget this simple fact. They get hysterical about the fiscal deficit or the national debt. (This is not to say there aren’t bad consequences from issuing too many coupons, or from government spending in general.) The only way the U.S. government can default is if it chooses to do so.

Going back to Mosler’s example, let’s ask another question: How can the kids “save” coupons in excess of the weekly tax? Well, they can only do that if the parents spend more than they tax. There is no other way to hoard coupons. In the real economy, the same is true. The private sector can save dollars only if the government spends more than it taxes. Spending pours fiat money into an economy; tax payments drain it away.

Another question: Do the parents have fewer coupons if they spend more than they tax? No. The parents make the coupons. They don’t even need physical coupons. They can simply track them on a piece of paper or in a spreadsheet. Likewise, the U.S. government doesn’t have any fewer dollars after running deficits. It can’t run out. (There are real-world restraints on how much government spends.) To borrow from another Mosler analogy, the U.S. government can no more run out of dollars than a scorekeeper can run out of points.

You don’t have to like this. (I don’t.) It’s merely a description of how a fiat currency system works. That’s the world we live in.

…

One great story Mosler tells in both books is how he cleaned up on another free lunch in lira-denominated bonds in the early ’90s. This was before the euro and back when there was worry over a default by Italy’s government. Italy’s national debt was 110% of GDP and interest rates were high on its bonds.

But Mosler knew that it was the sole issuer of lira. Italy could not default unless it wanted to. Mosler actually met with senior officials in Rome to let them in on the “secret.” Long story short, Italy didn’t default. Mosler’s fund made over $100 million.

For an investor, macroeconomics has limited uses most of the time. Mosler’s career shows this can be otherwise. But then again, you have to study economics that actually describe the real world. And Mosler’s economics, or MMT, does that rather well.

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.

January 9 is the ninth day of the year in the Gregorian calendar. There are 356 days remaining until the end of the year (357 in leap years).

On this day in 1493, Italian explorer Christopher Columbus, sailing near the Dominican Republic, sees three “mermaids”–in reality manatees–and describes them as “not half as beautiful as they are painted.” Six months earlier, Columbus (1451-1506) set off from Spain across the Atlantic Ocean with the Nina, Pinta and Santa Maria, hoping to find a western trade route to Asia. Instead, his voyage, the first of four he would make, led him to the Americas, or “New World.”

Mermaids, mythical half-female, half-fish creatures, have existed in seafaring cultures at least since the time of the ancient Greeks. Typically depicted as having a woman’s head and torso, a fishtail instead of legs and holding a mirror and comb, mermaids live in the ocean and, according to some legends, can take on a human shape and marry mortal men. Mermaids are closely linked to sirens, another folkloric figure, part-woman, part-bird, who live on islands and sing seductive songs to lure sailors to their deaths.

West Indian manatees are large, gray aquatic mammals with bodies that taper to a flat, paddle-shaped tail. They have two forelimbs, called flippers, with three to four nails on each flipper. Their head and face are wrinkled with whiskers on the snout.

Manatees can be found in shallow, slow-moving rivers, estuaries, saltwater bays, canals, and coastal areas – particularly where seagrass beds or freshwater vegetation flourish. Manatees are a migratory species. Within the United States, they are concentrated in Florida in the winter. In summer months, they can be found as far west as Texas and as far north as Massachusetts, but summer sightings in Alabama, Georgia and South Carolina are more common. West Indian manatees can also be found in the coastal and inland waterways of Central America and along the northern coast of South America, although distribution in these areas may be discontinuous.

Manatees are gentle and slow-moving animals. Most of their time is spent eating, resting, and traveling. Manatees are completely herbivorous.

West Indian manatees have no natural enemies, and it is believed they can live 60 years or more. As with all wild animal populations, a certain percentage of manatee mortality is attributed to natural causes of death such as cold stress, gastrointestinal disease, pneumonia, and other diseases. A high number of additional fatalities are from human-related causes. Most human-related manatee fatalities occur from collisions with watercraft.

I think I might tell you some more about this research company that I have in the past and my brother currently works for, but what’s relevant today is that one of his most frequent pieces of field work is observing cars to collect statistics on how many people are texting while driving.

Yup.  I expect they’ll turn themselves in now and serve their time.

Just like Ed Snowden.

“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.

Follow us on Twitter @StarsHollowGzt

Katrina vanden Heuvel: 2014 promises plenty of positive change

Will 2014 feature more of the same Washington gridlock, austerity, partisan posturing and just plain stupidity that made 2013 so miserable? The dysfunction got so bad that the media celebrated Congress merely for agreeing on a budget, one that will damage the economy but not as much as last year. That Congress could pass something, anything, made it seem like carping to note that legislators cruelly cut off emergency jobless benefits for workers unable to find work and stupidly killed the wind energy production tax credit, essential to that vital industry.

But the widespread predictions that 2014 will witness only more of the same ignore the growing reality that, outside the Beltway, people are beginning to stir and change is in the air. [..]

Currents such as these aren’t yet a tidal wave. The citizens in motion aren’t yet a consolidated movement. But 2014 begins not only with change in the air but also with change taking place on the ground. Washington may continue to be gridlocked. Across the country, however, people are starting to move.

Heidi Moore: The GOP couldn’t be more wrong about cutting unemployment insurance

If the government has any responsibility to its people, it’s not to force them into poverty when they have no other financial options

How do you improve the economy? If you ask some Republican members of Congress, the best way is to throw 1.3 million people into deeper poverty, starting this week.

For some time, right-wing think tanks and conservative politicians have held on to a number of arguments that they believe prove it’s a good idea to let unemployment benefits lapse for 1.3 million people. None of those arguments holds up under the least bit of scrutiny. America’s economy would be far better off if Congress extended unemployment benefits.

To look at their points, one by one, is to understand that the Republican opposition to extending unemployment benefits is dishonest. It also stands to alienate many Republican voters, particularly in the south, where poverty is widespread.

Why are these two tales of fraud not the same in the eyes of the law?

Charges for 106 in Huge Fraud Over Disability

By William K. Rashbaum and James C. McKinley Jr.JAN. 7, 2014

The retired New York City police officers and firefighters showed up for their psychiatric exams disheveled and disoriented, most following a nearly identical script.

They had been coached on how to fail memory tests, feign panic attacks and, if they had worked during the Sept. 11, 2001, terrorist attacks, to talk about their fear of airplanes and entering skyscrapers, prosecutors said. And they were told to make it clear they could not leave the house, much less find a job. [..]

Former police officers who had told government doctors they were too mentally scarred to leave home had posted photographs of themselves fishing, riding motorcycles, driving water scooters, flying helicopters and playing basketball.

“The brazenness is shocking,” Cyrus R. Vance Jr., the Manhattan district attorney, said on Tuesday.

While those fraudsters were being indicted, arrested and arraigned, these fraudster were planning their next rip off of their investors.

JPMorgan Is Penalized $2 Billion Over Madoff

By Ben Protess and Jessica Silver-Greenberg

Preet Bharara, the United States attorney in Manhattan, and Jamie Dimon, the chief executive of JPMorgan Chase, gathered in Lower Manhattan as Mr. Bharara’s prosecutors were considering criminal charges against Mr. Dimon’s bank for turning a blind eye to the Ponzi scheme run by Bernard L. Madoff. Mr. Dimon and his lawyers outlined the bank’s defense in the hopes of securing a lesser civil case, according to people briefed on the meeting. [..]

Within weeks of meeting Mr. Bharara and recognizing their limited bargaining power, JPMorgan’s lawyers accepted the $1.7 billion penalty, the people briefed on the meeting said, which was within the range that prosecutors initially proposed. The bank also agreed to pay $350 million to the Office of the Comptroller of the Currency, accepting the agency’s only offer, one of the people said.

It could have been worse for the bank. At one point, prosecutors were weighing whether to demand that the bank plead guilty to a criminal charge, a move that senior executives feared could have devastating ripple effects. Rather than extracting a guilty plea, prosecutors struck a so-called deferred-prosecution agreement, suspending an indictment for two years as long as JPMorgan overhauls its controls against money-laundering. [..]

For JPMorgan, the Madoff case is the bank’s latest steep payout to the government. In November, JPMorgan paid a record $13 billion to the Justice Department and other authorities over its sale of questionable mortgage securities in the lead-up to the financial crisis. All told, after paying these settlements, JPMorgan will have paid out some $20 billion to resolve government investigations over the last 12 months. [..]

And critics of Wall Street are unsatisfied, noting that Mr. Bharara’s office opted to defer prosecution and did not charge any JPMorgan employees with wrongdoing.

“Banks do not commit crimes; bankers do,” said Dennis M. Kelleher, the head of Better Markets, an advocacy group.

A United States District Judge for the Southern District of New York, Jed Rakoff, wants to know why have no high-level executives been prosecuted for the financial crisis

Five years have passed since the onset of what is sometimes called the Great Recession. While the economy has slowly improved, there are still millions of Americans leading lives of quiet desperation: without jobs, without resources, without hope.

Who was to blame? Was it simply a result of negligence, of the kind of inordinate risk-taking commonly called a “bubble,” of an imprudent but innocent failure to maintain adequate reserves for a rainy day? Or was it the result, at least in part, of fraudulent practices, of dubious mortgages portrayed as sound risks and packaged into ever more esoteric financial instruments, the fundamental weaknesses of which were intentionally obscured?

If it was the former – if the recession was due, at worst, to a lack of caution – then the criminal law has no role to play in the aftermath. [..]

But if, by contrast, the Great Recession was in material part the product of intentional fraud, the failure to prosecute those responsible must be judged one of the more egregious failures of the criminal justice system in many years. [..]

In striking contrast with these past prosecutions, not a single high-level executive has been successfully prosecuted in connection with the recent financial crisis, and given the fact that most of the relevant criminal provisions are governed by a five-year statute of limitations, it appears likely that none will be. It may not be too soon, therefore, to ask why. [..]

But the stated opinion of those government entities asked to examine the financial crisis overall is not that no fraud was committed. Quite the contrary. For example, the Financial Crisis Inquiry Commission, in its final report, uses variants of the word “fraud” no fewer than 157 times in describing what led to the crisis, concluding that there was a “systemic breakdown,” not just in accountability, but also in ethical behavior. [..]

Without giving further examples, the point is that, in the aftermath of the financial crisis, the prevailing view of many government officials (as well as others) was that the crisis was in material respects the product of intentional fraud. In a nutshell, the fraud, they argued, was a simple one. Subprime mortgages, i.e., mortgages of dubious creditworthiness, increasingly provided the chief collateral for highly leveraged securities that were marketed as AAA, i.e., securities of very low risk. How could this transformation of a sow’s ear into a silk purse be accomplished unless someone dissembled along the way? [..]

Thus, Attorney General Eric Holder himself told Congress:

   It does become difficult for us to prosecute them when we are hit with indications that if you do prosecute-if you do bring a criminal charge-it will have a negative impact on the national economy, perhaps even the world economy.

To a federal judge, who takes an oath to apply the law equally to rich and to poor, this excuse-sometimes labeled the “too big to jail” excuse-is disturbing, frankly, in what it says about the department’s apparent disregard for equality under the law.

There is an apocryphal story about a trial where the defendant is accused of gambling and his defense was that he was playing Poker, which is not gambling at all.

In Poker one of your strongest tools is the Bluff, where you make a strong hand appear weak and a weak hand appear strong (through we generally only think of the latter).  As Joanne Woodward says in Big Hand for a Little Lady– “It’s not cheating, it’s entirely in the spirit of the game.”

Administration Peddling Increasing Blatant Canards on Proposed “Trade” Deals

by Yves Smith, Naked Capitalism

Posted on January 6, 2014

One of the tricks of dealmaking and legislating is to try to create the impression that the negotiations/vote herding are going well, even when they aren’t. That tactic was fully on display with the Administration’s failed effort to get Congressional approval for intervention in Syria. The White House kept messaging that it was getting support lined up even when whip counts showed that putting the measure to a vote would result in an overwhelming rejection.

Now while things are not as clear cut on the trade deals, they were already in trouble last year. Foreign news reports indicated that various proposed signatories to the TransPacific Partnership simply weren’t on board with provisions that the Americans regarded as critical. A State Department press conference after talks in Bali was so out of tune and arrogant that the press representatives there were openly skeptical. And that was before the Wikileaks disclosure of the text of one of the draft chapters, on intellectual property. It both showed how extreme the American position is and how much opposition it was getting from the other supposed “partners”. We don’t know as much about where the European deal stands, but there’s reason to believe that those potential signatories have much less reason to make the world safer for US IT companies in the wake of ongoing revelations about NSA snooping.

So what line is the Administration, via the Financial Times, pushing? (Note my surmise is this article comes directly or from sources close to the US Trade Representative’s office; it very mildly complains that Obama hasn’t spoken forcefully enough about trade, as if that’s going to make any difference).

In the article, Obama challenge on selling trade deals to resurgent left, there is astonishingly no mention of the issues the prospective partners have with the deal or how the Wikileaks publication showed that the critics if anything had understated how bad the deal is. And the headline pretty accurately reflects the spin of the article: Obama’s is supposedly those damned pinkos, as opposed to his lame duck status and the increasingly obvious outrageousness of the deal. But to an uninformed reader, it’s easy to sell the prejudice that only Luddite lefties are against the motherhood and apple pie of economists and the business community, “free trade”.

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Puhleeze. First, these “allies” that the Administration must manfully contend with are wusses. They make a show of opposition and let Team Dem carry on catering to powerful monied interests as usual.

Second, the notice how opposition to the deals are subtly presented as uninformed, as mere prejudice? The resistance is based on mere “belief”. In fact, NAFTA led to nearly a million lost jobs, and as we recounted in a weekend post, also wrecked much of the agricultural sector in Mexico. Tell me exactly how that helped regular people? And further notice the subtle bias in “ordinary workers”. To an FT reader, those are not part of their cohort, which are those directly connected to capital and the technocratic elite (executives, senior managers, policy wonks).

Third, the resistance extends well beyond the usual toothless leftie suspects. Over 200 Representatives, including some Republicans, have signed letters or otherwise voiced reservations about the trade deals. and another 30 to 40 are believed to be concerned. The opposition goes well beyond the small cohort of “progressives”.

Fourth, the Financial Times, rather than doing actual journalism (as in investigating) runs the blatant lie that the Administration is working to get tougher regulations via these deals. The most fundamental provisions of both pacts involve gutting regulations via strengthening the rights of foreign investors to sue governments at all level for anticipated losses (mind you, they don’t even have to prove they’d occurred) before secret international tribunals. As the group Public Citizen has documented in considerable detail, these panels are corrupt and bend over backwards to issue pro-investor rulings.

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The Senate Finance Committee is gearing up to move a Trade Promotion Authority, which is just another term of art for what is also called “fast track”. Fast track give Congress a limited amount of time to respond to a tabled trade deal with a simple up or down vote. This is just the old effort to move the pacts forward.

But this messaging means the Administration is still keen to get these deals done, which means it is also incumbent to keep the pushback going. Please call or e-mail your representative and tell them “Hell no!”