Tag: TMC Politics

Jul 06 2012

LIBOR Just Won’t Go Away

The huge LIBOR scandal that involves the manipulations of rates by the big banks is like a black hole that is sucking more and more into its center. Nor is this scandal victimless, as former former Barclay’s chief executive Bob Diamond would have the world believe.

Yes, Virginia, the Real Action in the Libor Scandal Was in the Derivatives

by Yves Smith at naked capitalism

As the Libor scandal has given an outlet for long-simmering anger against wanker bankers in the UK, there have been some efforts in the media to puzzle out who might have won or lost from the manipulations, as well as arguments that they were as “victimless” or helped people (as in reporting an artificially low Libor during the crisis led to lower interest rate resets on adjustable rate loans pegged to Libor; what’s not to like about that?)

What we have so far is a lot of drunk under the streetlight behavior: people trying to relate the scandal to the part that is most visible and easy to understand, meaning the loan market that keys off Libor. As much as that’s a really big number ($10 trillion), it is trivial compared to the relevant derivatives. From the FSA letter to Barclays:

   The Eurodollar futures contract traded on the CME in Chicago (which is the largest interest rate futures contract by volume in the world) has US dollar LIBOR as its reference rate. The value of volume of that contract traded in 2011 was over 564 trillion US dollars.[..]

Devil’s advocates have also argued that while Barclays submitted improper Libor rates, there’s no evidence they influenced the rates. I read the FSA document quite differently.

Recall that (so far) we have two phases of activity: one from 2005 to 2007, in which derivatives traders at Barclays would lean on the Submitters on a regular basis to place bids that would help improve the profits of positions they had on, and a later phase, during the crisis, where Barclays felt its peers were submitting lowball figures to the daily fixings and it was getting bad press for being an outlier, and it went to posting what it though were competitive, as in artificially low, data.

The Big Losers in the Libor Rate Manipulation

by Barry Ritholz at The Big Picture

Local Governments Which Entered Into Interest Rate Swaps Got Scalped

We know that the big banks conspired to manipulate Libor rates, with the approval of government authorities.

We know that the Libor manipulation effected the world’s largest market – interest rate derivatives.

But who are the biggest victims?

Sometimes the big banks manipulated the Libor rates up, and sometimes down.  Different groups of people got hurt depending which way the rates were gamed.

Atrios thinks that British Chancellor of the Exchequer George Osborne is Stupid

At one point in The Godfather Part III, Michael Corleone sagely remarks: “Never hate your enemies. It affects your judgment.” It was this lesson that George Osborne, as so often in his political career, forgot this week. After his aides were forced to “clarify” that he had never alleged that Ed Balls was personally involved in the Libor scandal (rather that he had “questions to answer”, a distinction without a difference if ever there was one), opinion is hardening among Conservative MPs that the Chancellor has overreached himself.

In a fascinating piece in today’s Times (£), Sam Coates and Roland Watson collate a series of off-the-record barbs from Tory backbenchers. One MP describes Osborne’s obsession with the alleged role of Balls and “Whitehall sources” in the scandal as a “red herring”, adding: “There was no smoking gun.” Another opines: “People want us to sort out the effing banks, not worry about what Ed Balls might have said four years ago.” Osborne’s dual role as Chancellor and chief Tory strategist is also called into question (the increasing view among Tory MPs is that he isn’t good at either job). One MP comments: “When are we going to get a Chancellor who is not part time? You can’t run the sixth largest economy in the world with a mate-ocracy.”

Hard to disagree with that.

Jul 05 2012

The SCOTUS Leaks & Leakers

I haven’t paid too much attention to this uproar since I feel it is a distraction to the issue of real health care reform. But since everyone seems to think it’s significant, I will let our readers decide.

CBS News’ reporter Jan Crawford reported that Chief Justice John Roberts had switched his vote on the individual mandate, supporting it under the right of Congress to levy taxes, allowing the Health Care Law to stand.

After the historic oral arguments in March, the two knowledgeable sources said, Roberts and the four conservatives were poised to strike down at least the individual mandate. There were other issues being argued – severability and the Medicaid extension – but the mandate was the ballgame. [..]

On this point – Congress’ commerce power – Roberts agreed. In the court’s private conference immediately after the arguments, he was aligned with the four conservatives to strike down the mandate.

Roberts was less clear on whether that also meant the rest of the law must fall, the source said. The other four conservatives believed that the mandate could not be lopped off from the rest of the law and that, since one key part was unconstitutional, the entire law must be struck down.

Because Roberts was the most senior justice in the majority to strike down the mandate, he got to choose which justice would write the court’s historic decision. He kept it for himself.

Over the next six weeks, as Roberts began to craft the decision striking down the mandate, the external pressure began to grow. Roberts almost certainly was aware of it. [..]

It is not known why Roberts changed his view on the mandate and decided to uphold the law. At least one conservative justice tried to get him to explain it, but was unsatisfied with the response, according to a source with knowledge of the conversation. [..]

Never mind the ramifications on the limits the ruling puts on Congress’ ability to regulate interstate commerce, it completely ignored precedent (Wickard v Filburn). Roberts’ siding with the conservatives drew the ire of Senator Charles Schumer (D-NY):

Although he upheld the health care law on another basis, Roberts sided with the court’s four conservatives in declaring that Congress may not, under the Commerce Clause, force people to engage in a market transaction. The five-member majority view effectively rewrites existing law. It’s the first time since before the 1942 case Wickard v. Filburn, a precedent that was affirmed in the 2005 case Gonzales v. Raich, that the Supreme Court has placed a limit on Congress’s authority make national economic regulation that substantially affects interstate commerce.

In 2005, during Roberts’ confirmation hearing, Schumer grilled the soon-to-be chief justice on whether he would support the legal framework established by Wickard.

“Now it was reaffirmed in the Raich case and that is a precedent of the court, just like Wickard, that I would apply like any other precedent,” Roberts said at the time. “I have no agenda to overturn it. I have no agenda to revisit it. It’s a precedent of the court.”

TPM asked Schumer whether Roberts went back on his word in the ‘Obamacare’ decision.

“Yes he did,” the senator said. “If you read his testimony about Wickard, about some of the other, more recent Commerce Clause cases at the hearing, and looked at what he said here, it’s quite different.”

But the news media and some pundits are far more interested in who leaked the story

But who are those two sources?

GWU Law professor Orin Kerr, the one who got the ball rolling on this discussion, notes that Crawford’s story has details “only the justices and their clerks would likely know.”

“The leaks go into what the justices were thinking and what signal they meant to send with their actions,” he argues (and provides evidence – but you should read the story because there’s plenty). “Further, I doubt Crawford would run with a story with that kind of detail that was sourced less directly. So my best guess would be that the two sources she relies on are from the among the justices and their clerks.”

But Kerr rules out the clerks, simply because a clerk would be “crazy” to leak. “A clerk who leaked this and is identified has likely made a career-ending move. … Even assuming a clerk or two was so extraordinarily dismissive of the confidentiality rules to leak this, it would be nuts to leak over the weekend when you have to show up at the court for work tomorrow.”

Then law professor Paul Campos wrote this piece for Salon.com suggesting that there us strong evidence that Roberts penned both decisions:

It’s notable that Crawford’s sources insist on the claim that the joint dissent was authored specifically in response to Roberts’ majority opinion, without any participation from him at any point in the drafting process that created it. It would, after all, be fairly preposterous for the four dissenters to jointly “author” an opinion that was in large part written originally by the author of the majority opinion to which the joint dissenters were now so flamboyantly objecting.

Yet that, I am told by a source within the court with direct knowledge of the drafting process, is exactly what happened. My source insists that “most of the material in the first three quarters of the joint dissent was drafted in Chief Justice Roberts’ chambers in April and May.” Only the last portion of what eventually became the joint dissent was drafted without any participation by the chief justice.

This source insists that the claim that the joint dissent was drafted from scratch in June is flatly untrue. Furthermore, the source characterizes claims by Crawford’s sources that “the fact that the joint dissent doesn’t mention [sic] Roberts’ majority …  was a signal the conservatives no longer wished to engage in debate with him” as “pure propagandistic spin,” meant to explain away the awkward fact that while the first 46 pages of the joint dissent never even mention Roberts’ opinion for the court (this is surely the first time in the court’s history that a dissent has gone on for 13,000 words before getting around to mentioning that it is, in fact, dissenting), the last 19 pages do so repeatedly.

University of Colorado law professor Paul Campos broke the news on the Last Word that, according to his sources inside the Supreme Court, Chief Justice John Roberts wrote both opinions in the case involving President Obama’s health care reform law. MSNBC host Lawrence O’Donnell is rejoined by Prof. Campos and author Glenn Greenwald to take about the leaks, Roberts’ vote and what it say about the institution of the Supreme Court.

So the right is flipping out because Roberts voted with the “liberal” justices to uphold the law based on a twisted view that the penalty for not buying health care insurance is a tax. The so-called “left” is cheering but totally misses the long term problems this ruling has created. I still say the “leaks and who did the leaking” is a tempest in a tea pot that is distracting from the main issue that this country needs universal health care.

Jul 05 2012

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”.

Follow us on Twitter @StarsHollowGzt

New York Times Editorial: A Gap in Health Coverage

The Supreme Court decision upholding the constitutionality of health care reform inadvertently opened a hole in health insurance coverage that could harm some of the nation’s poorest citizens. The problem arises from a mismatch between how the law was framed and how the court’s ruling will affect Medicaid, the joint state-federal health program for the poor. [..]

In states that choose not to expand Medicaid, substantial numbers of the very poor could be left out of coverage. The reform law provides tax credits to help people with incomes between 100 percent and 400 percent of the federal poverty level (about $23,000 to $92,000 for a family of four) buy private insurance. But the bill’s drafters made no provision to provide subsidies for anyone below the poverty line because they assumed that those people would be covered by expanded Medicaid.

Tina Rosenberg: In Rwanda, Health Care Coverage That Eludes the U.S.

Last week’s Supreme Court decision upholding of the constitutionality of President Obama’s health care law moves the United States closer to the goal of health coverage for all. All other developed countries have it. But so do some developing nations – Brazil, Thailand, Chile. These countries are mostly middle income. But one country on the list is among the poorest of the poor: Rwanda.

The point is not that Americans should envy Rwanda’s health system – far from it. But Rwanda’s experience illustrates the value of universal health insurance.  “Its health gains in the last decade are among the most dramatic the world has seen in the last 50 years,” said Peter Drobac, the director in Rwanda for the Boston-based Partners in Health, which works extensively with the Rwandan health system.

It couldn’t have happened without health insurance.

Dean Baker: Why Americans Should Work Less – The Way Germans Do

There is a solution to unemployment: if we worked the same shorter hours as Germany, we’d eliminate joblessness overnight

Nobel Laureate Paul Krugman and Richard Layard, a distinguished British economist, took the lead last week in drafting a sign-on “Manifesto for Economic Common Sense“, condemning the turn toward austerity in many countries. This manifesto seems destined to garner tens or even hundreds of thousands of signatures, including mine.

While the basic logic of the manifesto is solid, there is an important aspect to the argument that is overlooked. We can deal with unemployment every bit as effectively by having people work fewer hours, as we can by increasing demand.

The most important point to realize is that the problem facing wealthy countries at the moment is not that we are poor, as the stern proponents of austerity insist. The problem is that we are wealthy. We have tens of millions of people unemployed precisely because we can meet current demand without needing their labor.

Jim Hightower: Supreme Court’s Plutocratic Political Hacks Rule Against the People in Montana

“Two wrongs don’t make a right,” as my old Texas momma used to instruct my brothers and me. But apparently, five of the justices on our Supreme Court didn’t have mommas with such ethical sensibilities – or perhaps they’re just ignoring their mommas’ wisdom now in order to impose their extremist political agenda on you and me.

That agenda became startlingly clear in 2010, when the black-robed cabal of Clarence Thomas, Anthony Kennedy, John Roberts, Antonin Scalia and Sam Alito hung their infamous Citizens United edict around America’s neck. It allowed unlimited sums of corporate cash to spew into our elections, effectively legalizing the wholesale purchase of America’s elected officials. In his majority decision, Supreme joker Kennedy drew from his deep well of political ignorance and judicial arrogance to declare that these gushers of special interest money “do not give rise to corruption or the appearance of corruption.”

Is he on the court – or in a comedy club? Not only were Kennedy and his fellow corporatists wrong on the substance of their decree, but also ridiculously wrong on the politics. You don’t need a law degree to see that CEOs are presently flooding this year’s presidential and congressional races with hundreds of millions of corporate campaign dollars, gleefully perverting the political process to buy government policy for their own gain. That not only gives the appearance of corruption, it is corrupt.

Laura Flanders: Workers vs. Investors: Famous Windows Factory in Danger of Liquidation

A workers’ cooperative in the Goose Island area of Chicago is desperately trying to stop the liquidation of a windows and doors factory the sale of which will scuttle their plans but benefit some well-connected investors.

Union members who put their bodies on the line not once but twice to save their windows and doors factory in Chicago found out Sunday that their former employer has broken a pledge to give workers a fair chance to buy factory equipment and plans instead to sell off machines as soon as Friday rather than let a Black and Latino-led workers’ cooperative buy and keep the plant in operation.

The workers, members of the United Electrical and Machine Workers of America Local 1110, sat in and briefly occupied their plant this February after owner, Serious Energy of California, announced a shut-down and a plan to move jobs out of state. Many of the same workers occupied the same factory in December 2008, becoming a cause-celebre at the height of the unemployment crisis.

Jules Boykoff and Alan Tomlinson: Olympian Arrogance

While Europe roils in economic turmoil, London is preparing for a lavish jamboree of international good will: in a few weeks, the city will host the 2012 Summer Olympics.

But behind the spectacle of athletic prowess and global harmony, brass-knuckle politics and brute economics reign. At this nexus sits the International Olympic Committee, which promotes the games and decides where they will be held. Though the I.O.C. has been periodically tarnished by scandal – usually involving the bribing and illegitimate wooing of delegates – those embarrassments divert us from a deeper problem: the organization is elitist, domineering and crassly commercial at its core.

The I.O.C., which champions itself as a democratic “catalyst for collaboration between all parties of the Olympic family,” is nonetheless run by a privileged sliver of the global 1 percent. This has always been the case: when Baron Pierre de Coubertin revived the Olympics in the 1890s, he assembled a hodgepodge of princes, barons, counts and lords to coordinate the games. Eventually the I.O.C. opened its hallowed halls to wealthy business leaders and former Olympians. Not until 1981 were women allowed in.

Jul 04 2012

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.

Follow us on Twitter @StarsHollowGzt

Katrina vanden Heuvel: A court of, by and for the 1%

The highest court in the land has spoken. That’s how President Obama characterized the Supreme Court’s surprising – and welcome – decision to uphold the Affordable Care Act, the signature domestic achievement of Obama’s first term. With its divided and bitterly contested 5 to 4 ruling, the arch-conservative Roberts Court spared a major piece of progressive legislation and, in the process, rescued the 35 million uninsured Americans who would have suffered, had the law been struck down. [..]

Right after the highest court in the land spoke, however, one of the lowest forces in the land spoke, too.

Americans for Prosperity, the shadowy conservative super PAC, announced that it would run $8.2 million worth of attack ads to slam health-care reform in nearly a dozen key swing states. No doubt many more of the GOP’s secretive sugar daddies will soon follow suit.

Lori Wallach: NAFTA on Steroids

While the Occupy movement has forced a public discussion of extreme corporate influence on every aspect of our lives, behind closed doors corporate America is implementing a stealth strategy to formalize its rule in a truly horrifying manner. The mechanism is the Trans-Pacific Partnership. Negotiations have been conducted in extreme secrecy, so you are in good company if you have never heard of it. But the thirteenth round of negotiations between the United States and eight Pacific Rim nations will be held in San Diego in early July. [..]

Think of the TPP as a stealthy delivery mechanism for policies that could not survive public scrutiny. Indeed, only two of the twenty-six chapters of this corporate Trojan horse cover traditional trade matters. The rest embody the most florid dreams of the 1 percent-grandiose new rights and privileges for corporations and permanent constraints on government regulation. They include new investor safeguards to ease job offshoring and assert control over natural resources, and severely limit the regulation of financial services, land use, food safety, natural resources, energy, tobacco, healthcare and more.

Amy Goodman: Climate Change: ‘This Is Just the Beginning’

Evidence supporting the existence of climate change is pummeling the United States this summer, from the mountain wildfires of Colorado to the recent “derecho” storm that left at least 23 dead and 1.4 million people without power from Illinois to Virginia. The phrase “extreme weather” flashes across television screens from coast to coast, but its connection to climate change is consistently ignored, if not outright mocked. If our news media, including-or especially-the meteorologists, continue to ignore the essential link between extreme weather and climate change, then we as a nation, the greatest per capita polluters on the planet, may not act in time to avert even greater catastrophe. [..]

Add drought to fire and violent thunderstorms. According to Dr. Jeff Masters, one of the few meteorologists who frequently makes the connection between extreme weather and climate change, “across the entire Continental U.S., 72 percent of the land area was classified as being in dry or drought conditions” last week. “We’re going to be seeing a lot more weather like this, a lot more impacts like we’re seeing from this series of heat waves, fires and storms. … This is just the beginning.”

Ellen Brown: Europe’s Shock Doctrine: Government by the Banks, for the Banks

The ESM Coup D’Etat in Europe

On Friday, June 29th, German Chancellor Angela Merkel acquiesced to changes to a permanent Eurozone bailout fund-“before the ink was dry,” as critics complained.  Besides easing the conditions under which bailouts would be given, the concessions included an agreement that funds intended for indebted governments could be funneled  directly to stressed banks.

According to Gavin Hewitt, Europe editor for BBC News, the concessions mean that:

   [T]he eurozone’s bailout fund (backed by taxpayers’ money) will be taking a stake in failed banks.

   Risk has been increased. German taxpayers have increased their liabilities. In future a bank crash will no longer fall on the shoulders of national treasuries but on the European Stability Mechanism (ESM), a fund to which Germany contributes the most.

   In the short term, these measures will ease pressure in the markets. However there is currently only 500bn euros assigned to the ESM. That may get swallowed up quickly and the markets may demand more. It is still unclear just how deep the holes in the eurozone’s banks are.

The ESM is now a permanent bailout fund for private banks, a sort of permanent “welfare for the rich.”  There is no ceiling set on the obligations to be underwritten by the taxpayers, no room to negotiate, and no recourse in court.

Rebekah Wilce: WTO Not So COOL: Rules Against Popular U.S. Meat Labeling Law

The World Trade Organization (WTO) issued a final ruling today against the U.S. country-of-origin labeling (COOL) law. This popular pro-consumer policy, which informs shoppers where meat and other foods were raised or grown, enjoys the support of 93% of Americans, according to a 2010 Consumers Union poll. Now Congress must gut or change the law to avoid the application of punitive trade sanctions.

The original meat labeling law passed as part of the 2002 farm bill and was expanded in the 2008 farm bill to apply to other foods like fresh fruits, nuts, and vegetables. Canada, Mexico, and several other countries filed a complaint regarding the policy with the WTO in December 2008 calling the popular consumer measure a “disguised” barrier to trade. The organization initially ruled in their favor in November 2011, but the U.S. filed an appeal in March 2012. Today, a WTO  tribunal made up of three trade officials ruled that the U.S. law is a violation of the WTO’s legally binding “Technical Barrier to Trade” agreement. The ruling is final. If the United States does not gut or change the law, the WTO can apply punitive sanctions, usually in the form of tariffs on U.S. exports. The ruling also casts into doubt the WT0-legality of other popular labeling laws.

Michelle Chen: New Orleans Teachers Get Justice, but Schools Still Under Attack

After Hurricane Katrina washed over New Orleans, many survivors had virtually nothing left to lose. But the city’s teachers were then hit by the storm’s ripple effect: the loss of thousands of jobs in the tattered school system. Recently, a civil district court ruled that the state had effectively robbed thousands of school employees of funds that were supposed to help tide them over as the city recovered.

After Katrina, the New York Times reports, most New Orleans schools were taken over by the state’s Recovery School District, which absorbed a stream of federal aid while the local school board was left impoverished:

   In December 2005, the local school board, with few schools and little money in its control, passed a resolution firing 7,500 school employees, who at that time had been on “disaster leave without pay,” an employment status that Judge Julien found in her decision to be “fictional.” She concluded that the state was liable for rendering the local board unable to fulfill its contractual obligations to its workers.

The ruling could lead to major payments to teachers whose careers and wages were upended by the purge. But aside from recompense for “disaster leave,” New Orleans public schools will remain adrift in a flood of drastic reforms. After Katrina, the city became an incubator for non-unionized charter schools and “experimental” restructuring plans.

Lisa Savage: At Afghanistan Summit This Week, Will Afghan Women Be at the Table?

When rich countries like the U.S., Japan, and NATO nations get together periodically to discuss the future of development funding for Afghanistan, who represents the interests of women and children who actually live there? Mostly men.

Even though research shows that durable security accords responsive to real conditions for civilians in war zones require women’s participation in the planning stages. Even though United Nations Security Council Resolution 1325 recognized this reality, and called for significant numbers of women to be present in all security talks.

On July 8-9 in Tokyo governments, international organizations, and other major donors will meet to discuss and take on financial commitments for a ten year period after 2014. As global players discuss funding Afghanistan’s future development, will they continue the pattern of devoting 90% of funds to building the Afghan army and police forces? If they really want peace, they will invite Afghan women to the table and listen to their expert testimony on how to make Afghanistan a safe place for them and their families.

Jul 03 2012

The Surveillance State of America

NSA EagleIn 2005 while George W. Bush still sat in the Oval Office, James Bamford penned this article for the New York Times Week in Review titled The Agency That Could Be Big Brother. Mr. Bamford, the author of “Puzzle Palace” and “Body of Secrets: Anatomy of the Ultra-Secret National Security Agency“, wrote about the National Security Agency which was created in absolute secrecy in 1952 by President Harry S. Truman. This agency is now the largest of the security agencies surpassing the CIA and other spy organizations. And it is still growing. The agency now has sites all over the US and around the globe and we have no idea what their budget is or for that matter what they are doing with all that information. In 2005, controversy over whether the Pres. Bush broke the law when he secretly ordered the N.S.A. to bypass a special court (FISA) and conduct warrantless eavesdropping on American citizens had provoked some Democrats to call for his impeachment. Now today, Pres. Barack Obama, a Democrat, expands the NSA’a power and there is not silence, but support from the Democrats. We don’t even know how much is spent by the NSA since their budget is classified. Heh, Congress doesn’t know either. But I digress.

Columnist David Sirota wrote in the Seattle Times that the NSA now claims that “it can’t tell Congress about its activities violating the privacy of Americans because doing so might violate Americans’ privacy”.

In a letter to senators Ron Wyden, D-Ore., and Mark Udall, D-Colo., the agency wrote: “(A) review of the sort suggested would itself violate the privacy of U.S. persons.” [..]

So why would the NSA nonetheless refuse to provide one? Most likely because such an estimate would be a number so big as to become a political problem for the national-security establishment.

According to the nonpartisan Electronic Frontier Foundation, “The U.S. government, with assistance from major telecommunications carriers including AT&T, has engaged in a massive program of illegal dragnet surveillance of domestic communications and communications records of millions of ordinary Americans since at least 2001.”

That’s right, millions – and that’s merely what happened with one of many programs over the last decade.

Moving forward, Wired notes that the NSA is building the “Utah Data Center” – “a project of immense secrecy” designed “to intercept, decipher, analyze, and store vast swaths of the world’s communications as they zap down from satellites and zip through the underground and undersea cables of international, foreign, and domestic networks.”

Appearing at the Socialism 2012 conference in Chicago, Salon.com contributing editor and civil rights lawyer, Glenn Greenwald gave a speech on Challenging the Surveillance State. Glen suggests that if you can’t watch all four videos the last one about the harms from ubiquitous surveillance is the most important one. He also points out FDL’s Kevin Gosztola’s excellent commentary and summation of the speech.

Jul 03 2012

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”.

Follow us on Twitter @StarsHollowGzt

New York Times Editorial: Rigged Rates, Rigged Markets

Marcus Agius, the chairman of Barclays, resigned on Monday, saying “the buck stops with me.” His was the first departure since the British bank agreed last week to pay $450 million to settle findings that, from 2005 to 2009, it had tried to rig benchmark interest rates to benefit its own bottom line. [..]

The rates in question – the London interbank offered rate, or Libor, and the Euro interbank offered rate, or Euribor – are used to determine the borrowing rates for consumers and companies, including some $10 trillion in mortgages, student loans and credit cards. The rates are also linked to an estimated $700 trillion market in derivatives, which banks buy and sell on a daily basis. If these rates are rigged, markets are rigged – against bank customers, like everyday borrowers, and against parties on the other side of a bank’s derivatives deals, like pension funds.

Robert Kuttner: Mitigating Merkel’s Mischief

If Europe continues its steady march to financial depression and collapse of the Euro, no politician will be more to blame than German Chancellor Angela Merkel. Last week, Merkel repeated the same pattern that has characterized her behavior since the sovereign debt crisis began — resisting sensible reforms until the costs of delay became overwhelming, and then reversing course 180 degrees only after the damage was far greater than necessary. [..]

Merkel, characteristically, still opposes any respite for the suffering Greeks. It is up to the rest of Europe to isolate her again so that she can reverse course citing changed circumstances. Nor is Merkel willing to seriously rein in the financial speculation against government bonds that turns moderate budgetary problems into dire crisis. This, too, will take the resolve of wiser leaders.

Robert Reich: Mitt Romney and the New Gilded Age

The election of 2012 raises two perplexing questions. The first is how the GOP could put up someone for president who so brazenly epitomizes the excesses of casino capitalism that have nearly destroyed the economy and overwhelmed our democracy. The second is why the Democrats have failed to point this out. [..]

Part of the answer, surely, is that elected Democrats are still almost as beholden to the wealthy for campaign funds as the Republicans, and don’t want to bite the hand that feeds them. Wall Street can give most of its largesse to Romney this year and still have enough left over to tame many influential Democrats (look at the outcry from some of them when the White House took on Bain Capital).

Dean Baker: A Wall Street Gambling Tax: The Remedy to Inequality

As the presidential election builds up steam, the Washington elites in both parties are actively scheming to find ways to cut Social Security and Medicare benefits for retired workers. The media have widely reported on efforts to slip through a version of the deficit reduction plan developed by Morgan Stanley director Erskine Bowles and former Senator Alan Simpson. Since the vast majority of voters across the political spectrum reject cuts to these programs, the Washington insiders hope to spring this one on us after the election, when the public will have no say.

That is the sort of anti-democratic behavior we expect from elites who naturally want to protect their own interests. Of course, the rest of us are more concerned about the well-being of the country as a whole rather than preserving the wealth of the richest 1 percent.

Mark Weisbrot: For Mexicans, It Was the Economy, Stupid

IF ever there were an election preordained as a result of economic performance, it would be Mexico’s election on Sunday. The ruling National Action Party, or PAN, was destined to lose because it had presided over profound economic failure for 11 years. Almost any government in world would have lost under such circumstances.

Commentators, focused on the six-year-old drug war, have largely neglected to note the depth of Mexico’s economic problems. Let’s start with the basics: Since 2000, when the PAN was first elected, income per person in Mexico has grown by just 0.9 percent annually. This is terrible for a developing country, and less than half the rate of growth of the Latin American region during this period – which was itself not stellar. If we just look at per capita growth since the last election, in 2006, Mexico finishes dead last of all the countries in Latin America.

George Zornick: Tea Party Govs Say ‘No’ to Medicaid Expansion

Nearly 1 million Floridians will be denied access to Medicaid they would have otherwise received under the Affordable Care Act if Governor Rick Scott gets his way. The Supreme Court ruling last week on the law made it easier for states to opt out of an expansion, and Sunday night the governor’s office e-mailed a statement from Scott that “since Florida is legally allowed to opt out, that’s the right decision for our citizens.” [..]

But now hospitals in South Carolina and Florida are looking at a rate reduction without the corresponding increase in Medicaid coverage.

Hospital lobbies are always powerful in state politics, and could yet convince state legislators to buck the ideological governors and support an expansion. Combine the big industry money with a powerful narrative about denying coverage to hundreds of thousands of people, plus the diminishing returns of rallying against Obamacare-particularly after the fall elections-and by 2014 it’s possible Florida, South Carolina and other states will end up participating. They’re just going to make a lot of noise first.

Jul 03 2012

The 1st Amendemnt v United States Government

The past Sunday constitutional lawyer and contributing editor at Salon.com Glenn Greenwald appeared with Chris Hayes on MSNBC’s “Up with Chis Hayes”to discuss the history of anonymous speech in politics and debate whether spending money is an exercise of free speech. The other guests on the panel are Maria Hinojosa, anchor of NPR’s Latino USA and president of Futuro Media Group; Rep. Peter Welch, Democrat of Vermont and member of the House Oversight and Government Reform Committee; and Heather McGhee, vice president of policy and research at the progressive think tank Demos.

Glenn also penned a scathing piece on Sen. Diane Feinstein’s (D-CA) attack on our First Amendment rights using, oh noes!, Terror! as an excuse. Glenn makes the point that Feinstein’s outrage over Julian Assange and Wikileaks is tantamount to an attack of freedom of the press.

Dianne Feinstein targets press freedom

The supreme Senate defender of state secrecy and the Surveillance State, California Democrat Dianne Feinstein, yesterday issued a statement to Australia’s largest newspaper, The Sydney Morning Herald, demanding (once again) the prosecution of WikiLeaks and Julian Assange. To see how hostile Feinstein is to basic press freedoms, permit me to change “Assange” each time it appears in her statement to “The New York Times“:

   The head of the US Senate’s powerful intelligence oversight committee has renewed calls for [The New York Times] to be prosecuted for espionage. . . .

   “I believe [The New York Times] has knowingly obtained and disseminated classified information which could cause injury to the United States,” the chairwoman of the Senate Select Committee on Intelligence, Dianne Feinstein, said in a written statement provided to the Herald. “[It] has caused serious harm to US national security, and [] should be prosecuted accordingly.”

As EFF’s Trevor Timm noted, there is no sense in which Feinstein’s denunciation applies to WikiLeaks but not to The New York Times (and, for that matter, senior Obama officials). Indeed, unlike WikiLeaks, which has never done so, The New York Times has repeatedly published Top Secret information. That’s why the prosecution that Feinstein demands for WikiLeaks would be the gravest threat to press freedom and basic transparency in decades. Feinstein’s decades-long record in the Senate strongly suggest that she would perceive these severe threats to press freedom as a benefit rather than drawback to her prosecution designs.

Under Sen. Feinstein’s premise we should have prosecuted Woodward and Bernstein and every other reporter who has exposed government wrong doing. I wonder is she would like to take on Dick Cheney for outing a CIA agent to get us into a war based on a lie, the consequences of which we will never know.  

Jul 02 2012

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”.

Follow us on Twitter @StarsHollowGzt

New York Times Editorial: The Radical Supreme Court

The Supreme Court’s landmark decision upholding the Affordable Care Act was a deft turn by Chief Justice John Roberts Jr., who voted with the court’s four moderate liberals for the first time in a 5-to-4 ruling. Yet, while they upheld the law’s mandate for individuals to buy insurance under Congress’s taxing power, the chief justice joined the four other conservatives to reject that provision under the Constitution’s commerce clause.

That rejection underscores the aggressiveness of the majority’s conservatism and marks a stunning departure from the long-established legal consensus that Congress has broad power to regulate the economy.

Paul Krugman: Europe’s Great Illusion

Over the past few months I’ve read a number of optimistic assessments of the prospects for Europe. Oddly, however, none of these assessments argue that Europe’s German-dictated formula of redemption through suffering has any chance of working. Instead, the case for optimism is that failure – in particular, a breakup of the euro – would be a disaster for everyone, including the Germans, and that in the end this prospect will induce European leaders to do whatever it takes to save the situation.

I hope this argument is right. But every time I read an article along these lines, I find myself thinking about Norman Angell.

Who? Back in 1910 Angell published a famous book titled “The Great Illusion,” arguing that war had become obsolete. Trade and industry, he pointed out, not the exploitation of subject peoples, were the keys to national wealth, so there was nothing to be gained from the vast costs of military conquest.

Joseph E. Stiglitz: How policy has contributed to the great economic divide

The United States is in the midst of a vicious cycle of inequality and recession: Inequality prolongs the downturn, and the downturn exacerbates inequality. Unfortunately, the austerity agenda advocated by conservatives will make matters worse on both counts.

The seriousness of America’s growing problem of inequality was highlighted by Federal Reserve data released this month showing the recession’s devastating effect on the wealth and income of those at the bottom and in the middle. The decline in median wealth, down almost 40 percent in just three years, wiped out two decades of wealth accumulation for most Americans. If the average American had actually shared in the country’s seeming prosperity the past two decades, his wealth, instead of stagnating, would have increased by some three-fourths.

In some ways the data confirmed what was already known, but the numbers still shocked. We knew that house prices – the principal source of saving for most Americans – had declined precipitously and that trillions of dollars in home equity had been wiped out. But unless we understand the link between inequality and economic performance, we risk pursuing policies that will worsen both.

Devon G. Peña: Fear & Loathing in Texas: State Republican Party Seeks to Ban Critical Thinking in Public Schools

Platform Prohibits Teach Higher Order Thinking Skills

What is it about the political rightwing in the Lone Star State? It seems like they are now competing with Arizona to take the lead as the nation’s most anti-education and anti-intellectual state.

Here is the actual language from a position statement in the 2012 Texas Republican Party Platform:

   “Knowledge-Based Education – We oppose the teaching of Higher Order Thinking Skills (HOTS) (values clarification), critical thinking skills and similar programs that are simply a relabeling of Outcome-Based Education (OBE) (mastery learning) which focus on behavior modification and have the purpose of challenging the student’s fixed beliefs and undermining parental authority.”

Where does this Republican fear of critical thinking come from? One would have to surmise it may be derived from two sources: Either (1) they learned some nifty reactionary ideas from the Arizona struggle against HB2281, the law banning the teaching of Chicana/o Studies in public schools, or (2) they understand that Texas public schools are now filled with a majority of minority [sic] students, most of them Mexican-origin, and it may not be a good idea to encourage them to become anything other than servants of the 1% by denying them anything but rote learning and vocational educations.

Robert Sheer: Supreme Court Leaves Romney in the Cold

Mitt Romney is an idiot or, even worse, is pretending to be one. His tantrum of a response on Thursday to the Supreme Court’s health care decision was pure playground: As president I will own the ball, and the game will be played by rules that leave me a winner.

That game has already been called in a decision written by the top-ranking conservative jurist, and shorn of the constitutional objection; Barack Obama’s health care plan now will be judged by its practical outcomes. Romney’s promise that “I will act to repeal Obamacare” from “my first day as president of the United States” is a prescription of destructive gridlock for a program already well under way.

By immediately committing to reverse a health care reform based on the very program he implemented as governor of Massachusetts, Romney has gone to war with himself. Obviously, neither he nor his advisers has yet grasped that the decision written by Chief Justice John Roberts has changed the terms of the debate.

Roger Bybee: Dems Paint Romney as “Outsourcer-In-Chief,” But Will Obama’s Trade Deal Blow It?

The Obama administration and Democrats have been busily puncturing Mitt Romney’s record as an experienced “job creator,” with a multi-pronged attack on Romney’s role as a “pioneer” in offshoring jobs while heading up the private-equity fund Bain Capital.

Backed up by an ever-mounting supply of evidence from the New York Times, Boston Globe, and the Washington Post, Obama and the Democrats have shredded Rommey’s arguments that he is the man to restore employment.

Yet recent leaks reveal that the Obama administration has been secretly negotiating with Pacific Rim nations the Trans-Pacific Partnership (TPP) trade deal, based on the job-destroying NAFTA model. Obama-as with his trade deals last year with South Korea, Panama, and human-rights pariah Colombia-is once more falling into line behind CEOs in promoting what he as a candidate fiercely denounced in 2008 as “trade deals like NAFTA and China [that] have been signed with plenty of protections for corporations and their profits, but none for our environment or our workers who’ve seen factories shut their doors and millions of jobs disappear.

Jul 01 2012

Punting the Pundits: Sunday Preview Edition

“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”.

Follow us on Twitter @StarsHollowGzt

The Sunday Talking Heads:

Up with Chris Hayes: Joining Chris at 8AM ET will be: Gov. Brian Schweitzer (@brianschweitzer), Democrat of Montana; Rep. Peter Welch, Democrat of Vermont and member of the House Oversight and Government Reform Committee; Kansas Secretary of State Kris Kobach, Republican and co-architect of Arizona’s controversial immigration statute, SB 1070; Heather McGhee (@hmcghee), vice president of policy and research at the progressive think tank Demos; Maria Hinojosa (@Maria_Hinojosa), anchor of NPR’s Latino USA and president of Futuro Media Group; and Glenn Greenwald (@ggreenwald), former Constitutional and civil rights litigator, contributor at Salon.com.

The Melissa Harris-Perry Show: The guest list was not announced.

This Week with George Stephanopolis: This Week’s guests are Vicki Kennedy, the widow of the late Sen. Ted Kennedy; White House chief of staff Jack Lew and House Budget Committee chair Paul Ryan, R-Wis.

The roundtable debates the Supreme Court’s key health care and immigration decisions and all the week’s politics, with Keith Olbermann, ABC News’ George Will, Democratic strategist and ABC News contributor Donna Brazile, former Rep. Artur Davis, and “Nightline” co-anchor Terry Moran, who covers the Supreme Court for ABC News.

Face the Nation with Bob Schieffer: Mr. Schieffer’s guests are Sen. Chuck Schumer, D-N.Y., and Sen. Tom Coburn, R-Okla.; , Gov. Martin O’Malley, D-Md., and Gov. Scott Walker, R-Wisc.

The roundtable breaks down the political and legal implications of this week’s Supreme Court decisions: POLITICO‘s John Harris, National Journal‘s Major Garrett, CBS News’ John Dickerson and Jan Crawford.

The Chris Matthews Show: This Week’s Guests Joan Biskupic, Reuters Supreme Court Correspondent; John Heilemann, New York Magazine National Political Correspondent; Katty Kay, BBC Washington Correspondent; and Pete Williams, NBC News Justice Correspondent.

Meet the Press with David Gregory: MTP’s guests are House Minority Leader Rep. Nancy Pelosi (D-CA); Obama supporter former Gov. Howard Dean (D-VT) and Romney Supporter Gov. Bobby Jindal (R-LA).

The roundtable guests are NBC’s Savannah Guthrie and Chuck Todd; Washington Post columnist Eugene Robinson; and the National Review‘s Rich Lowry.

State of the Union with Candy Crowley: The SoU’s guests this Sunday are Jack Lew, President Obama’s Chief of Staff; Jennifer Granholm, the former Michigan Governor; Carly Fiorina, the former Hewlett Packard CEO; CNN”s White House Correspondent Dan Lothian, and USA Today‘s Washington Bureau Chief Susan Page; and Colorado Gov. John Hickenlooper.

Jun 29 2012

Federal Reserve Lies About Foreclosures

While the attention was on the SCOTUS ruling on the affordable Care Act, this is what was going on under the radar at the Federal Reserve:

Federal Reserve, Regulators Arguing for More, Quicker Foreclosures

by David Dayen

The Federal Reserve has decided to put their thumbs on the scales of justice, explicitly attempting to overturn state-based anti-foreclosure laws on the spurious grounds that they hurt the economy.

This story by Tim Reid in Reuters cites the Fed arguing against the kind of laws in states like Nevada – and soon, California – that have saved hundreds of thousands of homes from foreclosure.

   “State and federal laws enacted to protect homeowners from eviction in the wake of the 2008 housing crash may be extending the slump, according to a growing number of economists and industry experts.

   Foreclosures have all but ground to a halt in Nevada, which passed one of the stiffest borrower-protection laws in the country last year. Yet the housing market is further than ever from recovery, local real estate agents say, with a lack of inventory feeding a “mini-bubble” in prices that few believe is sustainable.

   A recent U.S. Federal Reserve study found that in states requiring a judicial review for foreclosure, delays associated with the process had no measurable long-term benefits and often prolonged the problems with the housing market.”

There’s been a concerted effort to overturn due process in these judicial foreclosure states, on the theory that foreclosures must be quickly flushed through the system so the market can “clear.” Incredibly, house organs like the Fed still express this opinion even after years of documented evidence of illegal foreclosures using false and forged documents in court. The explicit recommendation from the Federal Reserve is to react to systematic foreclosure fraud by closing the courthouse doors to troubled borrowers.

The entire premise that judicial foreclosure states are prolonging the housing slump is completely spurious. Nothing furthers the housing slump more than a spate of foreclosures flooding the market, increasing the supply of distressed homes that sell cheaply and bringing down property values in a particular area. That’s what the Fed is arguing for.

Yes, they’re serious. This is basically siding with the banks, giving fraud as pass and screwing the homeowners and housing market with a flood of foreclosures. And Reuters and other trade publications have decided to publish the propaganda that keeping people in their homes is causing the market to slump and the solution is more foreclosures.

Freelance writer and attorney who helped expose the foreclosure fraud, Abigail Field takes on the Reuters “b.S.” sentence by sentence, shredding the propaganda that the housing crisis was caused by homeowners but by the banks themselves who created the shadow market of foreclosed homes and the underwater crisis. She makes these four points:

  • First, en route to committing mass securities fraud the banks dishonored their contracts and failed to document the mortgage loans as they promised investors they would. As a result, they’ve had to fabricate nonsensical, obviously fraudulent and often sworn statements to try to foreclose. It’s that swamp of fraud that’s causing the delays.
  • Second, banks are manipulating housing market inventory, letting properties they own rot, not listing them for sale, and when auctioning them, sometimes outbidding third parties.
  • Third, bankers’ securities fraud broke the secondary market for non-government backed mortgages. As a result, there’s a lot less capital to lend wannabe homeowners.
  • Fourth, lender-driven appraisal fraud led to such inflated prices that the underwater problem is directly attributable to them.

    • Rather than deal in the reality that our housing crisis is banker driven and dare push the meme that bankers must be held accountable, Reuters is helping bankers (and their government allies) push the idea that if only we made it easy for bankers to use their fraudulent documents, the housing market would heal quickly.

    There’s even more that exposes not just the Federal Reserve’s pass on bank fraud but the how the Obama administration’s so called homeowner bail out is just more hand outs to the banks:

    Sentences ten and eleven:

    “The increasing doubt about the impact of anti-foreclosure laws on the long-term health of the housing market calls into question a basic principle of the Obama Administration’s approach to the housing crisis.

    Many Democrats, including Obama, say struggling homeowners should get more time to make good on their mortgage arrears, or have the breathing room to renegotiate their loans with lenders, especially in the wake of the “robo-signing” scandal in which banks were found to have falsified foreclosure paperwork.”

    How I wish the Obama Administration’s approach had really been about helping struggling homeowners. Instead it has been mostly theatrics with gifts to the banks thrown in. Most recent example – the latest refinancing program has become a fee/profit center for the big banks. Moreover, if homeowners did “make good”, that would be better for everyone involved, including the broader market, but in the era of maximally predatory servicing, it’s not easy. Ditto with mortgage mods that work – and when they include principal reduction that’s meaningful, they work.

    Hey, look! In sentence 11 we get the first whiff of banker wrongdoing. And wow, he not only uses the misleading “robo-signing“, but he also says “falsified foreclosure paperwork.” Foreclosure “paperwork” doesn’t sound that serious, though, does it? How about “falsified documents affecting property title”? Or, “lied under oath about how much borrowers owed and to whom?”

    And as Yves Smith at naked capitalism notes in her article the lies get repeated ad nauseum:

    The way Big Lies get sold is by dint of relentless repetition. In the wake of the heinous mortgage settlement, foreclosure fatigue has set in. A lot of policy people want to move on because the topic has no upside for them. Nothing got fixed, the negotiation process took a lot of political capital (meaning, as we pointed out, it forestalls any large national initiatives in the near-to-medium term), and Good Dems don’t want to dwell on a crass Obama sellout (not that that should be a surprise by now). But the fact that this issue, which ought to be front burner given its importance both to individuals and the economy, is being relegated to background status creates the perfect setting for hammering away at bank-friendly memes. When people are less engaged, they read stories in a cursory fashion, or just glance at the headline, and don’t bother to think whether the storyline makes sense or the claims are substantiated.

    Just look at the headline: “Evidence suggests anti-foreclosure laws may backfire.” First, it says there are such things as “anti-foreclosure laws.” In fact, the laws under discussion are more accurately called “Foreclose legally, damnit” laws. Servicers and their foreclosure mill arms and legs have so flagrantly violated long-standing real estate laws in how they execute foreclosures that some states have decided to up the ante in terms of penalties to get the miscreants to cut it out. [..]

    And that is perhaps the most remarkable bit, the failure to consider that gutting the protections to the parties to a contract undermines commerce. Borrowers in judicial foreclosure states paid higher interest rates due to the greater difficulty of foreclosure. So now they are to be denied what they paid for because the banks recklessly disregarded the procedures they set up and committed to perform? What kind of incentive system is it when we reward massive institutional failure with a bank-favoring settlement and supportive messaging from central bank economists? As Dayen stated:

       “So when these officials argue against laws like those in Nevada, which merely criminalize a criminal practice, or California, which provides due process for people having their homes taken from them, they’re arguing in favor of what amounts to a dissolution of justice.”

    I don’t think you’ll read anything like this at Reuters. Shameful

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