Monday, January 31, 2011

Fox News weet niet waar Egypte ligt

That headline pretty much says it all, doesn't it? Oh wait, you don't speak Dutch? Well it's kind of unsettling to realize that folks who don't live in America and don't speak our language nevertheless notice our dumb mistakes. That's globalization, I reckon.

Sunday, January 30, 2011

FOX analyst: Obamacare, light bulbs leading to Egypt-like tyranny

"...the people have to get their power back. It's God's will," concluded FOX News Medical Contributor Dr. Keith Ablow on the reasons for the protests in Egypt.

Right. So health care reform and energy-saving light bulbs will turn us into Egypt, whereupon it will be God's will for us to violently overthrow our government.

This is definitely not another example of right-wing pundits inciting the angriest and craziest among their followers to violence against our government. Don't spread more blood libel!

[Editor's Note: As of late 2010, Media Matters receives funding from diabolical global puppet master George Soros, therefore any of its opinions expressed or links to factual articles or actual film footage cannot be accepted as real.]

January 28, 2011 | Media Matters

Um, yeah, about that union-snowplow thing I said, well, um....

Well, well, well. Looks like the teabagging NYC City Councilman who said five city workers came to him and revealed a union-orchestrated plot to stop plowing the snow made it all up.

Two of his alleged "snitches" deny it; and he refuses to name the other three, invoking bogus attorney-client privilege.

In other words, this evil nutjob made the whole thing up. The truth has finally put on its shoes, but his lie has already run around the world, and will probably remain lodged in many people's reptilian brains as indelible "fact."

By Russ Buettner and William K. Rashbaum
January 25, 2011 | New York Times

Maher: NFL is a socialist success story

I've noted before how the NFL exists thanks to socialism: From each according to its ability to generate revenue, to each according to its need for revenue.

Enjoy your Socialist Super Bowl next Sunday, comrades!

New Rule: Americans Must Realize What Makes NFL Football So Great: Socialism
By Bill Maher
January 28, 2011 | Huffington Post


Wednesday, January 26, 2011

Poll: Finally, everybody agrees on something!

Democrat, Republican, Independent, Tea Party, young, old, poor, rich -- everybody would rather raise the cap on Social Security payroll taxes than cut SS benefits, in order to keep the program financially solvent in this century.  

Of course, 20 percent of teabaggers would rather cut benefits, which is mighty generous of them, considering how old most of them are.  But still, 67 percent of them want to raise payroll taxes, which is kinda ironic, considering how they're Taxed Enough Already and all.

By kos
January 24, 2011 | Daily Kos

Tuesday, January 25, 2011

OH mom jailed for sending kids to white school

That'll teach a black mother for violating American apartheid!

Darnit, white people work their whole lives and pay huge taxes to live in school districts with top-notch schools; and doggonit if some out-of-district black mother is going to defraud her way into an education her kids didn't earn! Of course the real answer is school choice, so this kind of thing happens transparently.

In fact, white parents in expensive suburbs are just dying to give black parents the choice to send their kids to school with their white children, as long as it's via school vouchers.
You know, to diversify them and stuff. Not to mention to spur school competition, or something.

When is Big Gubument going to wake up and realize the solution to bad majority-minority schools is to give all those minorities the choice to study with white kids in the suburbs, preferably in exclusive private schools, via government vouchers? It's common sense! I feel like Todd Palin here, pointing out the blindingly obvious.

Black Mother Jailed For Sending Kids to White School District

By James Quin
January 24, 2011 | Anti-Kryptos


Ames: Jaded Russians hardly shaken by terror act

Compared to most of Russia's bloody and brutal 20th century, the last decade of so of Chechen terrorism in Russia has been a relatively peaceful period! Meanwhile, 10 years on, 9/11 still has us Americans frightened and on edge. Everything is relative, sure.

Nevertheless, a revival of our old-fashioned Western frontier stoicism might not be a bad thing.

By Mark Ames
January 24, 2011 | Vanity Fair

It takes a lot to terrorize a Russian. Compared to the truly spectacular acts of terrorism and violence that Russians have suffered over the past two decades, today's suicide bombing at Moscow's busiest airport, Domodedovo, is too small-time to have much of an effect besides pissing off an already-pissed-off population.

Back in 2004, two passenger jets that took off from this same airport were blown out of the sky by Chechen "black widows"—Chechen women widowed by the brutal war with Russia, and turned into suicide bombers. Shortly after that double-Lockerbie airplane bombing, opposition leader Eduard Limonov explained to me what he thought was behind the logic: "They understood that Russians wouldn't be moved if only one plane was blown up, so they blew up two planes simultaneously, just to get our attention," he said. Limonov used to write about Russian hard-heartedness, the result of their brutal experience with Communism, followed by the nihilistic Yeltsin Era, when the average male's life expectancy plunged from 68 years to just 56, in a free-market Babylon of corruption, plunder, and violence.

At a Moscow rock festival in 2003, two Chechen suicide bombers blew themselves up at the gated entrance, killing more than a dozen people and wounding scores more. Nevertheless, the 40,000 concert-goers were neither frightened nor particularly bothered; the festival went on for another six hours of vodka-and-beer-soaked revelry. Previous bombings of the Moscow metro, buses, and airlines have had no effect on public transport usage or travel. When suicide bombers attacked the popular Egyptian resort at Sharm-el-Sheikh in the summer of 2005, killing 88, most Europeans panicked and canceled their trips to the resort area—but not Russians.

Several years ago, Limonov—Russia's most famous living writer and leader of the anti-Putin opposition with Garry Kasparov—wrote a column for my defunct Moscow newspaper, The eXile, about how desensitized Russians have become:
Russians have a healthy attitude towards literature. As barbarians they expect it to shake them, to shock them, to thrill them. As Lolita didn't shock them, they throw it away with a deep contempt. The fact is that Russians are very insensitive people, with a low level of sensitivity. In order to move, to touch them, one must hurt their sensitivity, to wound their stone-made Russian souls. That is the task not for literature, but for mass-murderers, for the rapists of children, for the civil war, for the Hitler's invasion. Russians were not moved by "White House" massacre of 1993, they were not touched by [Chechen guerrilla leader] Basayev's assault on Budyonnovsk in 1995. Mass-murderer Andrei Chikatilo have winned their interest, yes, indeed Russian punk band call itself "Chikatilo Blues." But Russians were not moved at all by old-fashioned seduction of intellectual Humbert Humbert by teenager Lolita, as it is no shock for them, no big deal.
Russian news sites are already reporting stories about how the notorious taxi mafia at Domodedovo is taking advantage of the chaos by charging as much as 20,000 rubles, or nearly $700, for the ride into the city center. In the immediate aftermath, the airport's incoming passengers weren't told about the bombing, and were led to another part of the airport to get their bags, unaware that they were walking through the scene of a gruesome terror act. Online bloggers and commentators are already complaining about airport corruption and lack of security, how the suicide bomber was allowed to walk into the "green zone" in the baggage claim area to maximize his kill count.

In 2004 at the same airport, it took only $200 in bribes to get the two Chechen suicide bombers onto the two airlines which they destroyed in mid-air.

As appalling as it might seem, let's remember what America's far more sentimental reaction to 9/11 got us: two disastrous wars, tens of thousands of deaths, and the sorts of police-state measures once thought unimaginable. The difference may be more in our sentimentality than in our brutality.

Monday, January 24, 2011

There's no inciting violence here, folks! Nothing to see here, move along!

Just another example of how right-wing pundits definitely do not try to incite violence among the angriest and most unhinged of their followers. No sir, stop spreading more "blood libel!"

[Editor's Note: As of late 2010, Media Matters receives funding from diabolical global puppet master George Soros, therefore any of its opinions expressed or links to factual articles cannot be accepted as real.]

[Editor's P.S. - Let me take this opportunity to remind you alert readers to check the integrity of your tinfoil hats, just in case Major League Baseball's spy satellites are piercing your aluminum mind-reading shields. Oh, and Obama's going to take your guns away. You know what to do. Thank you.]

By Jamison Foser
January 24, 2011 | Media Matters

Saturday, January 22, 2011

Armed AZ responder shows 'more guns less crime' still a myth

By Timothy Egan
January 20, 2011 | New York Times

To many gun owners, the question of whether to arm even more people in a country that already has upwards of 300 million guns is as calcified as a Sonoran Desert petroglyph. It's written in stone, among the fiercest of firearms advocates, that more guns equals fewer deaths.

But before the Tucson tragedy fades into tired talking points, it's worth dissecting the crime scene once more to see how this idea fared in actual battle.

First, one bit of throat-clearing: I'm a third-generation Westerner, and grew up around guns, hunters of all possible fauna, and Second Amendment enthusiasts who wore camouflage nine months out of the year. Generally, I don't have a problem with any of that.

Back to Tucson. On the day of the shooting, a young man named Joseph Zamudio was leaving a drugstore when he saw the chaos at the Safeway parking lot. Zamudio was armed, carrying his 9-millimeter semiautomatic pistol. Heroically, he rushed to the scene, fingering his weapon, ready to fire.

Suppose, in the few seconds of confusion during the shootings, an armed bystander had fired at the wrong man.

Now, in the view of the more-guns proponents, Zamudio might have been able to prevent any carnage, or maybe even gotten off a shot before someone was killed.

"When everyone is carrying a firearm, nobody is going to be a victim," said Arizona state representative Jack Harper, after a gunman had claimed 19 victims.

"I wish there had been one more gun in Tucson," said an Arizona Congressman, Rep. Trent Franks, implying like Harper that if only someone had been armed at the scene, Jared Lee Loughner would not have been able to unload his rapid-fire Glock on innocent people.

In fact, several people were armed. So, what actually happened? As Zamudio said in numerous interviews, he never got a shot off at the gunman, but he nearly harmed the wrong person — one of those trying to control Loughner.

He saw people wrestling, including one man with the gun. "I kind of assumed he was the shooter," said Zamudio in an interview with MSNBC. Then, "everyone said, 'no, no — it's this guy,'" said Zamudio.

To his credit, he ultimately helped subdue Loughner. But suppose, in those few seconds of confusion, he had fired at the wrong man and killed a hero? "I was very lucky," Zamudio said.

It defies logic, as this case shows once again, that an average citizen with a gun is going to disarm a crazed killer. For one thing, these kinds of shootings happen far too suddenly for even the quickest marksman to get a draw. For another, your typical gun hobbyist lacks training in how to react in a violent scrum.

I don't think these are reasons to disarm the citizenry. That's never going to happen, nor should it. But the Tucson shootings should discredit the canard that we need more guns at school, in the workplace, even in Congress. Yes, Congress. The Texas Republican Rep. Louie Gohmert has proposed a bill to allow fellow members to carry firearms into the Capitol Building.

Gohmert has enough trouble carrying a coherent thought onto the House floor. God forbid he would try to bring a Glock to work. By his reasoning, the Middle East would be better off if every nation in the region had nuclear weapons.

At least two recent studies show that more guns equals more carnage to innocents. One survey by the University of Pennsylvania School of Medicine found that guns did not protect those who had them from being shot in an assault — just the opposite. Epidemiologists at Penn looked at hundreds of muggings and assaults. What they found was that those with guns were four times more likely to be shot when confronted by an armed assailant than those without guns. The unarmed person, in other words, is safer.

Other studies have found that states with the highest rates of gun ownership have much greater gun death rates than those where only a small percentage of the population is armed. So, Hawaii, where only 9.7 percent of residents own guns, has the lowest gun death rate in the country, while Louisiana, where 45 percent of the public is armed, has the highest.

Arizona, where people can carry guns into bars and almost anyone can get a concealed weapons permit, is one of the top 10 states for gun ownership and death rates by firearms. And in the wake of the shootings, some lawmakers want to flood public areas with even more lethal weapons.

Tuesday of this week was the first day of classes at Arizona State University, and William Jenkins, who teaches photography at the school, did not bring his weapon to campus. For the moment, it's still illegal for professors to pack heat while they talk Dante and quantum physics.

But that may soon change. Arizona legislators have been pushing a plan to allow college faculty and students to carry concealed weapons at school.

"That's insane," Jenkins told me. "On Mondays I give a lecture to 120 people. I can't imagine students coming into class with firearms. If something happened, it would be mayhem."

He's right. Jenkins is a lifelong gun owner and he carries a concealed weapon, by permit. He also carries a modicum of common sense. The two don't have to be mutually exclusive.

Friday, January 21, 2011

Unions bust into mortgage conference demanding answers

Nice activism. If only taxpayers would stand up and ask the same questions!

By Michael Whitney
January 19, 2011 | Firedoglake


MB360: Top 1% dismantling middle class since the 70s

How the financial elite have dismantled the American middle class – top 1 percent share of wealth at levels not seen since the Great Depression. Goldman Sachs offering average bonuses of $430,000 while a record 43,200,000 Americans receive food stamps.

Posted by mybudget360
January 21, 2011


Simon Johnson: TARP report on 'Citi weekend,' moral hazard of TBTF

As Johnson describes, countries which host TBTF banks become their hostages when those banks act irresponsibly and cause a crisis. This is TBTF's moral hazard:

"This [TBTF banks' global presence] is also a major problem for the 'just let 'em go bankrupt' philosophy. There is no framework for cross-border bankruptcy, in the sense of clear rules about who gets compensated with what kind of assets. The courts can presumably sort it out, but it would take many years and cost billions of dollars in legal and other fees. As a result, if a large bank is on the brink of failing, everyone will assume the worst around the world and run for the doors."


"Or we could also make the biggest banks smaller -- ideally, small enough to fail. This was the proposal of the Brown-Kaufman amendment to Dodd-Frank, which died on the Senate floor, largely because of opposition from Geithner and the Treasury Department. So we'll do nothing, it seems, except let these massive banks become bigger and even less well managed.

"Until next time, the people who run the country will again face the same choice as in November 2008: provide an unsavory bailout for management, shareholders and creditors that rewards failure and stupidity, or run the risk of causing a second Great Depression.

"If the big banks get large enough, we'll become like Ireland today -- saving those institutions will ruin us fiscally, destroy the dollar as a haven currency, and end financial life as we know it."

By Simon Johnson
January 18, 2011 | Bloomberg

Mayor Bloomberg: There is consensus on gun control

As a reasonable liberal, naturally I agree with Bloomberg's commonsense gun control proposals...but only as a push on America's back down the slippery slope toward confiscating all your guns!

Foolish moderates! Mwwa-ha-ha-ha-ha! [Diabolical liberal laughter]

By Michael R. Bloomberg
January 18, 2011 | Huffington Post

The shooting in Tucson, Arizona has affected our entire country. In the days since, as we have prayed for the victims and survivors, we have also reflected on the lessons we might learn.

Yesterday, again, many of us contemplated the tragedy of gun violence as we came together to mark the life and work of Dr. Martin Luther King, Jr., a champion of peace who was taken from us by a gun assassin.

Mass shootings and assassinations are shocking, and the sad truth is that America's history of gun murders is as repetitive as it is tragic. And what's more, much of its enormous toll never makes it into the national headlines: 34 Americans are murdered with guns each and every day.
As we remember those we have lost, we know that honoring their memory requires renewing our effort to overcome the threat of guns in the wrong hands. The aftermath of this tragedy is our nation's chance to challenge old assumptions about the politics of guns in this country.
One of the major old assumptions in the media and in Washington is that the gun issue is one that hopelessly divides Americans: Red versus Blue, urban versus rural, gun-owners versus those who don't own guns.

But a new poll shows a remarkable consensus among Americans on gun issues. The poll, conducted jointly by a Democratic and Republican polling firm, was released today by the bi-partisan coalition of Mayors Against Illegal Guns.

Among its key findings:

Americans overwhelmingly believe the Second Amendment protects the rights of law-abding individuals to buy guns: 79% of Americans believe that the Second Amendment protects an individual right to own guns and only 17% would support a proposal to ban all handgun sales.

Americans overwhelmingly believe that felons, drug abusers, and the mentally ill should not have access to guns and that more needs to be done to ensure that their records are in the federal background check system: 90% of Americans and 90% of gun owners support fixing gaps in government databases that are meant to prevent the mentally ill, drug abusers and others from buying guns. Likewise, 89% of Americans and 89% of gun owners support full funding of the law a unanimous Congress passed and President George W. Bush signed after the Virginia Tech massacre to put more records in the background check database.

Americans overwhelmingly believe that its time to close the loopholes that make it possible for people to buy guns without background checks: 86% of Americans and 81% of gun owners support requiring all gun buyers to pass a background check, no matter where they buy the gun and no matter who they buy it from.

It turns out there is a broad consensus on guns in America. Just consider that in less than five years, Mayors Against Illegal Guns has grown to include more than 550 mayors from across the country. We have come together around a simple idea: it's possible to respects the rights of responsible, law-abiding Americans and do more to keep guns from criminals, the mentally ill, and other dangerous people.

It is the job of the Mayors Against Illegal Guns to alert Washington that the conventional wisdom about guns is just not true.

Washington: are you listening?

Ratigan: FOMC minutes reveal anti-American conspiracy

The Federal Open Market Committee which decides interest rates and who gets money for the Federal Reserve just released minutes of its meetings from 2005, on a five-year lag.

Dylan Ratigan is livid that the FOMC seems to have engaged in a conspiracy to export jobs to China and promote imports to keep down inflation so that Wall Street could make more money.

By Dylan Ratigan
January 20, 2011 | Huffington Post

Wednesday, January 19, 2011

Study: Fastest-growing cities also the poorest

The results of this study may seem counterintuitive, but not if you reject that article of faith that says people in a given place enjoy the benefits of economic growth in equal measure. In other words, what we see at the national level is also true on the local level: the trickle down of wealth is not inevitable, or even likely.

If this is true it's scary because our policy makers and businessmen really have no new ideas for sustainable economic growth in their communities.

By Eben Fodor
January 14, 2011 | The Daly News

Most cities in the U.S. have operated on the assumption that growth is inherently beneficial and that more and faster growth will benefit local residents economically. Local growth is often cited as the cure for urban ailments, especially the need for local jobs. But where is the empirical evidence that growth is providing these benefits?

I have completed a new study examining the relationship between growth and prosperity in U.S. metro areas. I found that those metro areas with the most growth fared the worst in terms of basic measures of economic well-being.

The study looked at the 100 largest U.S. metro areas (representing 66% of the total U.S. population) using the latest federal data for the 2000-09 period. The average annual population growth rate of each metro area was compared with unemployment rate, per capita income, and poverty rate using graphical and statistical analysis.

Some of the remarkable findings:
  • Faster-growing areas did not have lower unemployment rates.
  • Faster-growing areas tended to have lower per capita income than slower-growing areas. Per capita income in 2009 tended to decline almost $2,500 for each 1% increase in growth rate.
  • Residents of faster-growing areas had greater income declines during the recession.
  • Faster-growing areas tended to have higher poverty rates.
I also compared the 25 slowest-growing and 25 fastest-growing areas. The 25 slowest-growing metro areas outperformed the 25 fastest-growing in every category and averaged $8,455 more in per capita personal income in 2009. They also had lower unemployment and poverty rates.

Another remarkable finding is that stable metro areas (those with little or no growth) did relatively well. Statistically speaking, residents of an area with no growth over the 9-year period tended to have 43% more income gain than an area growing at 3% per year. Undoubtedly these findings offer a ray of hope that stable, sustainable communities may be perfectly viable — even prosperous — within our current economic system.

Eben Fodor is the founder of Fodor & Associates, a consulting firm that specializes in community planning, land use, and environmental sustainability. Fodor is also the author of Better, Not Bigger: How to Take Control of Urban Growth and Improve Your Community.

State pension deficits to blame on Wall St.?

Here is how an international pensions expert responded to the blog post referenced below:

"This is partly true, although all can't be blamed on Wall Street.

"State schemes, although not the US Federal Public Service Thrift Plan, are defined benefit schemes which basically guarantee you a percentage of your final salary near retirement for every year you have contributed. This is paid till you die and often a reduced amount is also paid to your spouse till she dies. And all the time the amount is increased either by increases in inflation or wages.

"To fund this the pension fund takes advice as to what contribution rate is needed to be paid to meet the cost. There are a number of key variables but the most important one is the assumed investment return. And whilst Wall Street may do its bit in either meeting or failing to meet the assumptions, it will be interesting in the future, given the willingness of US residents to sue for everything, to see if somebody sues the trustee of the pension fund or the fund's actuary. The main reason for the debt is that assumptions used in most of these scheme have been totally unrealistic. Many States have has assumed rates of return, for every year, of around 7 or 8% above inflation. In the UK or Australia the most optimistic actuary would be saying no more than 4%, many would argue for 3 or less. The result of such high assumed returns is that the Actuary tells the employer that how much he needs to put into the scheme is much lower. And that is where the problem mainly lies. The true funding rate for many of these schemes should be nearly 30% of wages but of course they don't want to pay that much with the consequence that there is a huge deficit and that deficit is then made worse when Wall Street goes south.

"But it seems a very good source of information. Thanks for sending it to me."

January 17, 2011 | Pension Pulse

Rush: 'Establishment Republicans' holding party back

Who is the Republican "ruling class," according to Rush? Who are "establishment Republicans?" Any Republican (with half a brain) who acknowledges that Palin can't win in 2012? Rush throws out these terms but I really wish he'd get specific. Who is ruling us? Who exactly is the establishment? What do they retain control of? This sounds like something Democrats and non-establishment Republicans could unite against... right?

No, it's all B.S. As if Republicans were perennial underdogs. As if some stiff-collared Republicans were holding the party down. P-shaw! The GOP is all about stiff collars and established wealth! This is like Democrats lamenting "bad unions." Nobody would buy it for a second! But somehow Rush Limbaugh gets away with this crap.

He has no conscience. Do his listeners? Really, he ought to be ashamed. (But he's too damn rich at your expense to care, ha, ha, ha.....)

January 19, 2011 The Rush Limbaugh Show


RUSH: What did I tell you, cut 16? You've got to hear this. This is ruling class member David Frum who... (sigh) What would be the most descriptive and honest way to describe David Frum? David Frum remains a guest on Democrat talk shows because he wrote a phrase for a George Bush speech during the first term. It is said that David Frum came up with the slogan "axis of evil." So David Frum wrote three words, and for that he has guest emeritus status. Well, that plus he frequently rips conservatives. He's from the "Reagan is over" crowd, the "era of Reagan is over" crowd. So he was on a television network not to be named last night, and he was asked about something that Newt Gingrich said. It doesn't really matter what he was asked. It's his answer. Basically the question was: "What do you think is Gingrich's consideration here? Is he trying to get an edge on a possible rival?"

FRUM: I do think that there is a lot of concern in senior levels of the Republican Party. People in that kind of orbit are worried about the down-ballot effect of a Palin candidacy. 2012 is shaping up to be a very good year for Republicans in senatorial races. It maybe in the Republican interest to have 2012 be a rather lower-intensity year rather than a higher-intensity year. If it's a lower-intensity year, you're gonna lose the presidency anyway, but your more educated, older, more affluent voters are coming out as a bigger part of the electorate then you can have even bigger gains in the Senate.

RUSH: That, by the way, in tone is the "new civility." That is ruling class-speak. But what he's saying here is that establishment Republicans, if Palin's anywhere near the presidential candidacy -- if she's anywhere near this run -- that that's just too divisive to try to beat Obama in 2012. They may as well just cede the presidential election in 2012 and try to pick up a few Senate seats, is what the erudite and brilliant ruling class (I don't know if he's a member or wannabe) David Frum suggests. It's just gonna be too volatile. Beating Obama, especially if Palin's around, is not possible.

Just don't even think about doing that. Just go for the down-ballot wins and forget the presidency. And he says, "[T]here is a lot of concern in senior levels of the Republican Party. People in that kind of orbit are worried about the down-ballot effect of a Palin candidacy." So it's a great year. In other words: "The Republican leadership, we gotta great chance to pick up Senate seats, not so much the presidency. Let's not even focus on that. We'll just cede that." Now, I don't know that that's true. I don't know that that's the establishment Republican view, but this is what the exalted, celebrated, erudite, ruling class member, David Frum, says. Just FYI.

Saturday, January 15, 2011

Politico: White Americans have been duped before

The more things change the more they stay the same? You'd think folks would wise up.

By Robert McElvaine
January 13, 2011 | Politico

Mississippi seceded from the Union 150 years ago this week (Jan. 9). But the intermittent, sometimes bitter, argument over whether the Civil War was "about slavery" again is the focus of public debate.

Actually, both sides are right. And deciphering this paradox can go a long way toward explaining a perplexing aspect of our current political struggles.

Many have been puzzling over why so many middle-class Americans were persuaded to demonstrate and vote against their own interests — supporting low taxes for the very rich.

Here in Mississippi, we have a lot of experience with that sort of thing.

On one side of the debate over whether the South seceded and fought because of slavery is irrefutable evidence. "Our position is thoroughly identified with the institution of slavery," the Declaration of the Immediate Causes which Induce and Justify the Secession of the State of Mississippi from the Federal Union begins, "the greatest material interest of the world."

The sentiment in the Union, the declaration complains, "denies the right of property in slaves."

On the other side are those Mississippians who point out that their great-to-x-power granddaddy, who fought valiantly for the Rebel cause, owned no slaves — so clearly, he was not fighting for slavery.

Obviously, Mississippi and the other Southern states seceded and fought the Civil War to protect their "peculiar institution" — as they plainly stated in their documents of secession. When South Carolina seceded, three weeks before Mississippi, its declaration focused on the North's attacks on slavery and the "election of a man to the high office of president of the United States whose opinions and purposes are hostile to slavery."

The Confederate Constitution contained a provision that no law denying "the right of property in negro [sic] slaves" could ever be passed.

Yet it should be almost equally obvious that the vast majority of those who fought on the Confederate side but owned no slaves were not fighting to defend slavery. Rather, they were duped by the planter aristocracy into fighting to protect the slave "property" of the rich.

Slaveholders riled the region's less affluent whites by talk of a struggle to maintain their freedom from the federal government that, the planters told them, wanted to take away their liberty.

The slaveholders were able to persuade other white Southerners to fight, kill and die for a cause that was, in fact, against their own interests. Slavery worked against whites who owned no slaves. They had to compete with those who had this cheap source of labor. Protecting slavery also made the South hostile to other reforms, including industrialization, that could have benefited less affluent whites.

This story line should sound familiar to us now.

What is happening in the nation's political economy today is all too similar to what transpired a century and a half ago. The benefits now accruing to middle-class Americans from concentrating more and more wealth and power at the very top — like the benefits 150 years ago of slavery to non-slaveholding whites — can be measured in negative numbers. Unemployment remains high in large part because a consumption-based economy is dependent on a less inequitable distribution of income.

Once again, talk about putative threats to "freedom" and "liberty" is being used to scare ordinary citizens into acting in the interests of the wealthy, who are focused on their own concerns, not on behalf of the people they are stirring to anger.

As was true 150 years ago, one way less affluent people are being misled into acting against their own interest is through the argument that the threat to their well-being comes from people with darker skins — now Latino immigrants — rather than from those with much greater wealth.

To my knowledge, slaveholders never thought of the brilliant marketing ploy of using something like the tea party as their symbol. But they found it expedient to identify their cause with that of the American War for Independence. They sold their undertaking as the War for Southern Independence — in which the Confederates were fighting for freedom against the federal government in the same way that Americans had fought for freedom against the British.

"For far less cause than this," the Mississippi declaration asserts, "our fathers separated from the Crown of England. ... We follow their footsteps."

The Civil War, however, was far from a "war for Southern independence." It was a "war to maintain Southern dependence." Its objective, for the members of the white Southern elite who had engineered secession, was to preserve their dependence on slaves to work their land.

Unlike the Spirit of '76, the Spirit of '61 saw no contradiction between liberty and slavery. Rather, it defined liberty in terms of the right to deny liberty to others. It was not about states' rights but about states' wrongs.

Slaveholders lost on the battlefields in the 1860s. But the cause of the top 2 percent of the nation won at the polls in 2010, when politicians opposed to any increase in top tax rates and any meaningful regulation of financial institutions were victorious. For less affluent people, who voted against their interests last year, the cause remains what it was for the less affluent people deceived into fighting against their own interests 150 years ago: a Lost Cause.

Robert McElvaine is Elizabeth Chisholm professor of arts and letters at Millsaps College. He is the author of "The Great Depression: America 1929-1941" and is finishing a book, "'Oh, Freedom!' — The Young '60s."

Pre-Tea Party dead conservatives decide to donate

The estate tax ('death tax') is even more necessary than I thought: somehow Republicans are managing to donate money from beyond the grave. I guess they're upset they died before the whole Tea Party craze took off and don't want to be left out. That means we have to take all their money away before they die and then make sure they don't somehow take it back, or at least qualify for a major credit card.

I've heard myths of dead Democrats managing to vote, but really, the act of getting online and paying with a credit card from the great beyond is really a bigger feat than trudging to a polling station. (Lots of polling stations are in churches, churches are near graveyards... you get the picture).

I would chalk this phenomenon up to zombie conservatives rising from their graves, but apparently this woman was cremated so we're talking about a ghost here.

Ghostbusters 3 has long been in the works and it will come out not a moment too soon!....

Alternatively, this just goes to show what we already know: Tea Partiers are old. So old, in fact, they're dead.

By Arthur Delaney
January 14, 2011 | Huffington Post

Wednesday, January 12, 2011

Newt and the truth about USPS

Newt Gingrich (see excerpt from his e-newsletter below) is trying to fill our heads with more crap, till they're as bloated and puffy as his is. This time about the U.S. Postal Service, a government service mentioned in Newt's beloved U.S. Constitution.

First, let's remember that the USPS receives zero federal support. That's right. Zero. If you're worried about massive potential federal bailouts, turn your sights back onto the TBTF mega-banks on Wall Street. As usual, the Right is trying to distract you from the real villains.

Second, unlike any other public or private corporation in the U.S., it is mandated by Congress to fully fund its future pension obligations -- $5.5 billion a year for future retirees. The USPS reported a net loss of $8.5 billion for the fiscal year ending Sep. 30, 2010. The USPS's forecast "bankruptcy" is due mainly to its announcement that it cannot make its required $5.5 billion payment for future retiree health benefits due in September 2011. The USPS projects another $1.5 billion in costs it cannot cover in 2011.

Meanwhile, according to an audit conducted by the Postal Service Office of Inspector General, the Postal Service has been overcharged $75 billion to its Civil Service Retirement System pension fund. It already has $35 billion set aside in its retiree pension fund, enough to last decades.

Next, can "free-market" guy Newt really say that 44 cents is the market price to send a letter anywhere in the 50 states that has a mailbox within 2-5 days? What do you think the market price of sending a letter via FedEx, UPS, or DHL is? The answer is, "It depends," but for the USPS, which is mandated by Congress to provide universal delivery service across the USA, including on Saturdays, and at the same time requires Congressional approval to change its prices, the answer is, "It cannot depend." The USPS is allowed to raise the price of first-class stamps in line with inflation, so it could raise the price to 45 cents this year without Congressional approval. Congress declined a 2-cent increase in Fall 2010. Moreover, the USPS estimates that if it was allowed to make adjustable delivery schedules it could save $3.1 billion per year, but it needs Congressional approval to do so.

The USPS also had to request Congress's approval to innovate and expand its services into non-postal areas, but that hasn't been approved yet. In other countries the post office is allowed to process payments like a bank, for example. In Japan, the post office is the country's biggest deposit bank. This would be especially nice in the U.S., where 17 million adults are unbanked and 43 million adults are underbanked because they can't get an FDIC-insured bank account. You wouldn't have to build expensive new branches in poor and underserved areas: the post office is already there.

Gingrich conveniently failed to mention that postal workers are not allowed to strike when labor negotations are at an impasse, as private unions are. That's mandated by Congress.

Next, Gingrich failed to mention that the USPS cut back staff by 12 percent from 2008-2010. Yes, they had to pay out inducements to convince some staff to retire early, but it will realize more savings as time goes on. Labor costs have dropped about 6 percent since the 1970s, while the cost of postage has stayed below the inflation rate and taxpayer help has been totally phased out.

Next, Gingrich failed to mention that as the economy goes, so goes postal volume. Since the USPS is dependent on sales for all its revenue, it's having a revenue crisis. At the same time, yes, its "standby hours" rule has required it to pay employees who would otherwise be busy with normal mail volume: $50 million in 2010, which is still 40 percent less standby pay than in 2009.

Finally, Gingrich failed to mention that there are 4 different unions which represent different types of USPS workers, not one.

The bottom line is that Newt Gingrich is a political hack posing as a "big thinker" who loves nothing more than taking a complicated problem and boiling it down to one thing: a greedy union. People like Gingrich abhor complexity and have no patience for facts. Gingrich really does make you dumber.

This week, U.S. Postmaster General Patrick Donahue plans to announce that all future stamps sales will be so-called "forever stamps," which can still be used even if postage rates go up.

Anyone who has had to hunt around for 1 or 2 cent stamps to add to their old stamps after an increase may consider this good news.

However, consider the implications of this action. The Post Office is currently experiencing a severe budget deficit and has been unable to gain approval for a postal rate increase. In addition, they are threatening to stop delivering mail on Saturdays as a way to cut costs. As Peter Schiff astutely points out in this interview with The Daily Bell, the Post Office is trying to solve their short term revenue problems at the cost of even bigger problems down the road.

The Post Office will try to use any short term increase in sales from these forever stamps to solve their immediate fiscal problems. But if the Post Office is already having trouble operating at full capacity with current prices, imagine how difficult it will be to do so in five or ten years after inflation has pushed their costs up AND they are selling even fewer stamps because so many people already purchased them in the past.

In fact, this move is setting the stage for a future taxpayer bailout of the Post Office because it virtually guarantees its future bankruptcy.

The low price of stamps is not the reason why the Post Office is facing such huge deficits. The Post Office is seeking a 5.6% increase in the price of stamps despite an inflation rate of just 0.6%.

Instead, the Post Office is facing budget shortfalls because it is unwilling to engage in the necessary reform of its operations necessary in the modern economy.

As I discussed in To Save America, which is now out in an updated paperback version, the Post Office's union work rules require it to pay a large group of employees more than a million dollars a week to do nothing. Instead of being able to lay off redundant workers, the Post Office (and by extension, every American who uses the mail) keeps them on salary through a program called "standby time."

If the Post Office really wants to solve its fiscal challenges, it needs to engage in the difficult work of reforming its operating procedures, including its suffocating and costly union work rules like "standby time."
Congress should block the Post Office from implementing this genuinely dumb move and force it to confront the true cause of its budget woes and implement real reform.

Your friend [No, enemy! - J],

Monday, January 10, 2011

KY: Raiders of the Lost Park

Two Tennessee cities didn't see any financial sense in building a Bible Park, but doggoneit, that's not going to stop Kentucky from encountering an Ark!

Who needs financial sense when you've got horse sense and Yahweh as your pitchman? $37 million in state support shall be done. God shall provide! (Philippians 4:19).

(With the benefit of 4,000 to 10,000 years of hindsight, it's amazing to think the original Ark even got off the ground without a generous subsidy, municipal bond, or at least a greenfield industrial park. It truly was a miracle!)

By Nick Wing
January 10, 2011 | Huffington Post

2010 Ft. Hood suicides set record, out-kill Hasan

So it seems that PTSD has been a much more prolific and enduring killer at Ft. Hood than Maj. Nidal Malik Hasan.

But we can't arrest, try and execute PTSD. It's intangible, depressing and glum. It's an unspeakable wussy downer in a nation that tells us to "get over it."

Despite outreach, self-inflicted deaths hit record

By Gregg Zoroya
January 9, 2010 | USA Today

Tea Parties are ending with a neocon hangover

This article is long but very cogent and well documented.

I said before that if the Tea Parties won't agree on what they stand for, they'll fall for all the old GOP canards.

Exhibit A, perhaps, was when the Tea Parties went after their small-government libertarian spiritual father, Rep. Ron Paul of Texas.

We're now down to like Exhibit W: one of the new Congressional Tea Party Caucus's first actions was a resolution "explicitly endorsing Israel's right to strike Iran's nuclear program."

Exhibit X: Michael Prell, ghost writer for Israeli PM Benjamin Netanyahu and a member of the Tea Party Patriots (TPP), has written a book called Underdogma about, in part, criticizing the "underdog" Palestinians's grievances. It's been called "the first great Tea Party book" and endorsed by old school neocons like Amb. John Bolton and pundit Charles Krauthammer, not to mention Palin and Gingrinch.

Really?!? Is this what all you teabaggers signed up for?

If all you fiscal conservatives believe the GOP got away from you at some point, realize that the Tea Parties are slipping from your grasp even faster. Do something about it.

January 7, 2011 | Veterans Today

Sunday, January 9, 2011

Conservative scientists confirm MMGW

MIT professor Kerry Emanuel is among a rare breed of conservative scientists who are sounding the alarm for climate change and criticizing Republicans' 'agenda of denial' and 'anti-science stance.'

By Neela Banerjee
January 5, 2011 | Los Angeles Times

Dumbing down Muslims to a template we understand

Lately I've been seeing some dumb "theories" propagated, claiming to explain why the world's 1.2 billion Muslims are so darn violent, backward, what have you.

Both the conclusions and the explanations are utter bunk.  Why?  In a word: complexity.  When we try to explain 1.2 billion people around the world with phrases like "sexual rage" or "masochism" we're really doing a disservice to the human race, and our own intelligence.  As Mishra points out:

"It is no doubt comforting to cover a vast socioeconomic terrain and its baffling particularities, oddities, and discontinuities with a blanket explanation like "Muslim rage".  But in a multilayered world of restless identities, the vocabulary of description and analysis must expand.  This is less difficult than it sounds.

"Most of us have an instinctive understanding of how our own societies work: how differences in ability, income and status play out in public life, how material interests are negotiated and racial-religious conflicts managed, or how Lib Dems come to work with Tories.  It may not be asking too much to credit other societies with at least some internal complexity while acknowledging that they might do things differently out there.  The only other option seems to consist of an unattractive moral narcissism, and a rather weird obsession with headscarfs."

By Pankaj Mishra
January 6, 2010 | Guardian

Fitness clubs went from a fad to a con

I bet this op-ed will make a lot of people, especially Americans, angry. But there's a lot of truthful reminders in here, as many of us make our New Year's health resolutions. Just like we Americans and Britons do not understand what food to put in our bodies anymore, (best advice: eat all the stuff your grandmother did), we also don't understand what kind of physical activity our bodies need. Driving to the gym every day to exercise for an hour only to spend the rest of the day inert and eating a lot of junk food is not productive. Indeed, that 1 hour at the gym may stimulate an unhealthy appetite.

Our bodies evolved to walk, stand, and crouch for most of the day; when we sit or recline for longer than an hour, our ancient metabolism declines to nearly nothing -- because our ancestors had to work for every calorie, and then conserve each calorie as long as possible. So I'd bet that doing no exercise but having a standing work station would be more healthy -- and burn more calories -- than going to the gym for an hour every day only to spend the other 23 hours sitting or lying down.

By Zoe Williams
January 5, 2010 | Guardian

It's January and everybody's on a diet, except that diets are undignified and nobody will admit to them, so instead they're going to the gym. It's an unimpeachable activity, sound from every angle. It is entirely logical: calories out exceed calories in (it's so simple, fatty. Can't you even count?) It is socially beneficial: think how much you save the NHS, with that cocktail of sweat, determination and foresight. It's not vanity, it's self-improvement. It's not a hobby, it's a moral act.

Except that all this is a total swindle. The gym is so much greater a capitalist con than the casino, and yet so much more acceptable, so legitimate. How do they get away with it?

Outdoor pursuits, from ladies jumping in Hampstead pond to adolescents running off their primal urges – anything that could be filed under "fresh air" – have always had exponents. But the bizarre fascinations of the gym – the airless, repetitive flexing and relaxing, the determined pointlessness, the feverish generation of sweat – none of this was even conceived of until the 60s. It was a fad. By the 80s, sensible people played racquet sports, and the only people who wore Lycra and star-jumped at random were fast-living young women who wanted to be Jane Fonda. Bill Clinton's treadmill habit was weird in 1992; now, imagine how weird it would be if Barack Obama didn't go to the gym.

It has taken fewer than 20 years for aerobic (or, if you prefer to sound less girly, cardio) exercise to go from an urban fad to the very core of medical orthodoxy. Fruit, vegetables, gym: these are now the musketeers of good health. The fitness market was worth £682m in 1996, £1.6bn in 2001 and is now stable at £2.5bn (these are Mintel figures). In the UK, 5.2 million adults have membership of a private gym. That market penetration is phenomenal. I don't want to labour the point about how this correlates with obesity, because some people – myself, for instance – have membership and don't use it. But put it this way: whether we're using the gym or not, as a cohort, it's not making us any thinner.

One of the reasons for this is that vigorous exercise stimulates your appetite. So a 20-minute run might use up 200 calories, but your hunger won't necessarily – indeed, almost certainly won't – restrain itself to that amount of extra food. Well then, use willpower to overcome the appetite. That might work, except that willpower is like a muscle (or, as Oliver Burkeman described it, "a unitary, depletable resource"). You've already used your day's determination going to the gym in the first place: your ability to resist the temptations of your appetite is already diminished, even before that appetite has increased. Some doctors happily bandy about the importance of rigorous exercise, but experts on the obesity "epidemic" have been questioning this advice for ages, and rarely recommend anything more demanding than walking and cycling.

This vexed area yields my favourite anti-capitalist conspiracy from a mainstream source. Steven Gortmaker, who heads the Harvard Prevention Research Centre on nutrition and physical activity, said this about playgrounds at fast-food restaurants: "Why would they build those? … if a kid plays five minutes and burns 50 calories, he might then go inside and consume 500 calories."

Studies come out all the time showing that exercise doesn't make you thin. But gyms have become so central to our idea of what it means to take responsibility for oneself that sensible people write this evidence off as crank stuff emanating from academic troublemakers. In fact, sensible people should never even see the word "gym" without mentally ending the sentence "stimulates appetite". They are a good answer for elite athletes with specific muscular needs. Everybody else should just go for a walk, or – if that too seems pointless – take a walk to a particular destination.

In one way, it doesn't matter. It is possible to be fit but fat, and exercise improves health – it's good for your heart, it has a prophylactic effect against a number of cancers. And yet the raison d'ĂȘtre of the private health club is the body beautiful. These places would have got nowhere had they flogged themselves as a long-term preventative measure against future heart attack. They had to appeal to vanity: the genius of gym culture was to dress up personal vanity in the sackcloth of good health, and thereby overcome all the natural, decent reservations we would have had about blowing 94 quid a month on a beauty regime that didn't even work.

We should really be ashamed. There is no more obvious profligacy than spending money to pump out energy on treadmills, just to force us to consume more energy, none of which has any result that couldn't be replicated by taking a turn around the block. Never mind the Earth's resources, we should have more respect for our own resources. We ought to see the waste of our toil in the same terms as wasting food. As we set off for the gym, we should be able to hear the echo of our mums shouting: "There are children in Africa who have to jog five miles up an incline every day!"

I hope they don't revoke my membership for saying this. I still like the sauna.

Saturday, January 8, 2011

Shot Congresswoman threatened before, targeted by Palin (literally)

I thought it was going to be Obama first, but I guess a defenseless woman at a supermarket was an easier target.

Shame on Palin and all those who incited this violence. Don't believe me? Check out the link below.

You thought it was all fun and games and Glenn Beck's crocodile tears, but now you have blood on your hands. Enjoy.

Friday, January 7, 2011

Desperate Facebook suicides: OMG! 4COL!

Another last cry for help in vain on Facebook. Sad.

Here's a thought: next National UnFriend Day, maybe you should perform a little test by posting your intention to kill yourself and see which of your hundreds of "friends" bothers to try and stop you. Anybody that doesn't post at least a lazy "Stop! LOL," "Oh no! LMFAO" or "2BZ4UQT" should be un-friended that very day.

Or better yet, stop using Facebook and Twitter altogether. As I've said before, I just don't get them. And if I don't get it, it must not be that cool.

January 5, 2011 | Huffington Post

Reich: Anti-union rhetoric is class warfare

Great points by Reich. I would add only two things. First, if you want to cut salaries and benefits of public employees, then get ready to receive worse public services. That is, if you want to pay them like fry cooks at McDonald's, then that's the calibre of employee you're going to get. This truth should be self-evident to "free-market" types who believe that people respond to incentives.

Second, it's also self-evident that some people make the rational choice to forgo a higher salary in the private sector in exchange for greater job security and a secure pension (or any kind of pension, nowadays) in the public sector. That is, if public-sector jobs were as low-paying and insecure as private-sector jobs, there would be little or no incentive for people to man our gov't bureaucracy. Going down that path, we'd end up lowering standards and hiring fry cooks simply to staff our gov't agencies.

By Robert Reich
January 5, 2011 | Huffington Post

In 1968, 1,300 sanitation workers in Memphis went on strike. The Rev. Martin Luther King, Jr. came to support them. That was where he lost his life. Eventually Memphis heard the grievances of its sanitation workers. And in subsequent years millions of public employees across the nation have benefited from the job protections they've earned.

But now the right is going after public employees.

Public servants are convenient scapegoats. Republicans would rather deflect attention from corporate executive pay that continues to rise as corporate profits soar, even as corporations refuse to hire more workers. They don't want stories about Wall Street bonuses, now higher than before taxpayers bailed out the Street. And they'd like to avoid a spotlight on the billions raked in by hedge-fund and private-equity managers whose income is treated as capital gains and subject to only a 15 percent tax, due to a loophole in the tax laws designed specifically for them.

It's far more convenient to go after people who are doing the public's work -- sanitation workers, police officers, fire fighters, teachers, social workers, federal employees -- to call them "faceless bureaucrats" and portray them as hooligans who are making off with your money and crippling federal and state budgets. The story fits better with the Republican's Big Lie that our problems are due to a government that's too big.

Above all, Republicans don't want to have to justify continued tax cuts for the rich. As quietly as possible, they want to make them permanent.

But the right's argument is shot-through with bad data, twisted evidence, and unsupported assertions.

They say public employees earn far more than private-sector workers. That's untrue when you take account of level of education. Matched by education, public sector workers actually earn less than their private-sector counterparts.

The Republican trick is to compare apples with oranges -- the average wage of public employees with the average wage of all private-sector employees. But only 23 percent of private-sector employees have college degrees; 48 percent of government workers do. Teachers, social workers, public lawyers who bring companies to justice, government accountants who try to make sure money is spent as it should be -- all need at least four years of college.

Compare apples to apples and and you'd see that over the last fifteen years the pay of public sector workers has dropped relative to private-sector employees with the same level of education. Public sector workers now earn 11 percent less than comparable workers in the private sector, and local workers 12 percent less. (Even if you include health and retirement benefits, government employees still earn less than their private-sector counterparts with similar educations.)

Here's another whopper. Republicans say public-sector pensions are crippling the nation. They say politicians have given in to the demands of public unions who want only to fatten their members' retirement benefits without the public noticing. They charge that public-employee pensions obligations are out of control.

Some reforms do need to be made. Loopholes that allow public sector workers to "spike" their final salaries in order to get higher annuities must be closed. And no retired public employee should be allowed to "double dip," collecting more than one public pension.

But these are the exceptions. Most public employees don't have generous pensions. After a career with annual pay averaging less than $45,000, the typical newly-retired public employee receives a pension of $19,000 a year. Few would call that overly generous.

And most of that $19,000 isn't even on taxpayers' shoulders. While they're working, most public employees contribute a portion of their salaries into their pension plans. Taxpayers are directly responsible for only about 14 percent of public retirement benefits. Remember also that many public workers aren't covered by Social Security, so the government isn't contributing 6.25 of their pay into the Social Security fund as private employers would.

Yes, there's cause for concern about unfunded pension liabilities in future years. They're way too big. But it's much the same in the private sector. The main reason for underfunded pensions in both public and private sectors is investment losses that occurred during the Great Recession. Before then, public pension funds had an average of 86 percent of all the assets they needed to pay future benefits -- better than many private pension plans.
The solution is no less to slash public pensions than it is to slash private ones. It's for all employers to fully fund their pension plans.

The final Republican canard is that bargaining rights for public employees have caused state deficits to explode. In fact there's no relationship between states whose employees have bargaining rights and states with big deficits. Some states that deny their employees bargaining rights -- Nevada, North Carolina, and Arizona, for example, are running giant deficits of over 30 percent of spending. Many that give employees bargaining rights -- Massachusetts, New Mexico, and Montana -- have small deficits of less than 10 percent.

Public employees should have the right to bargain for better wages and working conditions, just like all employees do. They shouldn't have the right to strike if striking would imperil the public, but they should at least have a voice. They often know more about whether public programs are working, or how to make them work better, than political appointees who hold their offices for only a few years.

Don't get me wrong. When times are tough, public employees should have to make the same sacrifices as everyone else. And they are right now. Pay has been frozen for federal workers, and for many state workers across the country as well.

But isn't it curious that when it comes to sacrifice, Republicans don't include the richest people in America? To the contrary, they insist the rich should sacrifice even less, enjoying even larger tax cuts that expand public-sector deficits. That means fewer public services, and even more pressure on the wages and benefits of public employees.

It's only average workers -- both in the public and the private sectors -- who are being called upon to sacrifice.

This is what the current Republican attack on public-sector workers is really all about. Their version of class warfare is to pit private-sector workers against public servants. They'd rather set average working people against one another -- comparing one group's modest incomes and benefits with another group's modest incomes and benefits -- than have Americans see that the top 1 percent is now raking in a bigger share of national income than at any time since 1928, and paying at a lower tax rate. And Republicans would rather you didn't know they want to cut taxes on the rich even more.

This post originally appeared at

Simon Johnson: Goldman creating new bubble with taxpayer cash

"Goldman is not a venture capital fund or primarily an equity-financed investment fund. It is a highly leveraged bank, meaning that it borrows through the capital markets most of the money that it puts to work." And where does Goldman borrow that money? From you and me -- the Fed Reserve.

Some people say Goldman is the smartest. I say they're the most brazen. They pay off whom they can, and bully the rest.

By Simon Johnson
January 6, 2011 | New York Times

Goldman Sachs is investing $450 million of its own money in Facebook, at a valuation that implies the social-networking company is now worth $50 billion. Goldman is also creating a fund that will offer its high-net-worth clients an opportunity to invest in Facebook.

On the face of it, this might seem just like what the financial sector is supposed to be doing – channeling money into productive enterprise. The Securities and Exchange Commission is reportedly looking at the way private investors will be involved, but there are more deeply unsettling factors at work here.

Remember that Goldman Sachs is now a bank-holding company – a status it received in September 2008, at the height of the financial crisis, in order to avoid collapse (see Andrew Ross Sorkin's blow-by-blow account in "Too Big to Fail" for the details.)

This means that it has essentially unfettered access to the Federal Reserve's discount window – that is, it can borrow against all kinds of assets in its portfolio, effectively ensuring it has government-provided liquidity at any time.

Any financial institution with such access to such government support is likely to take on excessive risk – this is the heart of what is commonly referred to as the problem of "moral hazard." If you are fully insured against adverse events, you will be less careful.

Goldman Sachs is undoubtedly too big to fail – in the sense that if it were on the brink of failure now or in the near future, it would receive extraordinary government support and its creditors (at the very least) would be fully protected.

In all likelihood, under the current administration and its foreseeable successors, shareholders, executives, and traders would also receive generous help at the moment of duress. No one wants to experience another "Lehman moment."

This means that Goldman Sachs's cost of financing is cheaper than it would be otherwise – because creditors feel that they have substantial "downside protection" from the government.

How much cheaper is a matter of some debate, but estimates by my colleague James Kwak (in a paper presented at a Fordham Law School conference last February) put this at around 50 basis points (0.5 percentage points), for banks with more than $100 billion in total assets.

In private, I have suggested to leading members of the Obama administration and Congress that the "too big to fail" subsidy be studied and measured more officially and in a transparent manner that is open to public scrutiny – for example, as a key parameter to be monitored by the newly established Financial Stability Oversight Council.

Unfortunately, so far no one has taken up this approach.

However, there is consensus that the implicit government backing afforded to Fannie Mae and Freddie Mac in recent decades allowed them to borrow at least 25 basis points (0.25 percent) below what they would otherwise have had to pay – a significant difference in modern financial markets.

In "13 Bankers," Mr. Kwak and I refuted the view that these government sponsored enterprises were the primary drivers of subprime lending and the 2007-8 financial crisis – that debacle was much more about extreme deregulation and private-sector financial institutions seeking to take on crazy risks.

Nonetheless, Fannie and Freddie were badly mismanaged – and followed the market in 2005-7 with bad bets based on excessive leverage – in large part because they had an implicit government subsidy. Those institutions should be euthanized as soon as possible.

Goldman Sachs now enjoys exactly the same kind of unfair, nontransparent and dangerous subsidy: it has effectively become a new form of government-sponsored enterprise. Goldman is not a venture capital fund or primarily an equity-financed investment fund. It is a highly leveraged bank, meaning that it borrows through the capital markets most of the money that it puts to work.

As Anat Admati of Stanford University and her colleagues tirelessly point out, the central vulnerability in our modern financial system is excessive reliance on borrowed money, particularly by the biggest players.

Goldman Sachs is a perfect example. Most of its operations could be funded with equity – after all, it is not in the retail deposit business. But issuing debt is attractive to shareholders because of the subsidies associated with debt financing for banks and to bank executives because their compensation is based on return on equity — as measured, that increases with leverage.

If banks have more debt relative to equity, this increases the potential upside for investors. It also increases the probability that the firm could fail — unless you believe, as the market does, that Goldman is too big to fail.

Social-networking companies should be able to attract risk capital and compete intensely. They do not need subsidies in the form of cheaper financing, or in any other form.

Social networking is a bubble in the sense that e-mail was a bubble. The technology will without doubt change forever how we communicate with each other, and this may have profound effects on the nature of our society. But investors will get carried away, valuations will become too high and some people will lose a lot of money.

If those losses are entirely equity-financed, there may be negative effects, but they are likely be small – in the revised data after the 2001 dot-com crash, there isn't even a recession (there were not two consecutive negative quarters for gross domestic product).

But if the losses follow the broader Goldman Sachs structure and are largely debt-financed, then the American taxpayer will have helped create another major financial crisis.

And if you think that sophisticated investors at the heart of our financial system can't get carried away and lose money on Internet-related investments, remember Webvan: "During the dot-com bubble, Goldman invested about $100 million in Webvan, the online grocer that never got off the ground and eventually collapsed in bankruptcy."

MB360: Bailed-out mega-banks destroying U.S. middle class

If you can't see this charts then follow the headline link becaue they're worth studying. If the Tea Parties would mobilize against this kind of thing then they might be relevant and useful.

Posted by mybudget360
January 6, 2010

The US banking system is largely a system based on consumer confidence. You would require the confidence of Zeus if you had $13.3 trillion in assets backed by an FDIC Deposit Insurance Fund (DIF) that is practically insolvent. Even as the stock market solidly recovers to the green the state of the average American's financial health is in jeopardy. 1 out of 3 Americans has zero in retirement savings so the hope is that somehow Social Security will be around or maybe there is no longer term strategy since they are merely struggling with daily financial existence. There seems to be this premature joy about the preliminary jobs report but much of this was based on low wage temporary retail hiring for the holidays. Not much a surprise there and did they not get the memo that 14 million Americans are still unemployed? However the banking industry is still in serious problems. Over 11 percent of all US banks are considered "troubled financial institutions" based on the optimistic FDIC quarterly report. The numbers are of course a lot worse but thanks to the suspension of mark to market banks can pretend empty shopping malls in the barren desert or flailing condos are somehow valuable assets. The FDIC just like much of the big banking industry players is performing a dance of economic delusion.

First, take a look at the number of problem institutions:

fdic problem institutions

Source: FDIC

The US currently has 7,760 active banks. So that would put nominally 11 percent of all banks as troubled institutions. This is on par with the number of Americans in the foreclosure process (though there is no correlation but no one is saying that things are healthy when 11 percent of all American mortgages are in some state of foreclosure or have stopped making payments). What is even more disturbing is much of the $13 trillion in "assets" is still in the hands of the too big to fail with a disproportionate of assets in real estate:


Notice how the big five banks actually increased their assets over a time when the financial worth of average Americans has declined? The big banks really do not serve the retail customer anymore which is odd since it is the retail taxpayer that bailed these banks out. Each one of the above banks received financial assistance in some shape or form.

All of this comes when banks are announcing record profits and consumer bankruptcies are up to record highs posing a stark dichotomy.

Bankruptcies would be even higher but for the 2005 bankruptcy legislation that has made it much harder to file. Even with a tighter collar on the finances of Americans bankruptcies are soaring because there is only so much you can squeeze from a shrinking middle class turnip.

The era of the mega bank is still alive and well:


Over 45 US banks have $20 billion or more in assets. And keep in mind what banks consider as assets. For a bank a toxic multi-million dollar loan on a failed strip mall with potholes the size of large dogs in the parking lot is an asset:

banking data

Of the $13 trillion in assets $4.3 trillion is in real estate. Now would it then not be logical to assume with such a horrible real estate market that there would be a major impact here in terms of valuation? Of course it would but suspending prudent accounting practices is the necessary spice to keep this charade up. Banks continue to value real estate at optimistic levels to continue a pretend game that they are solvent while draining taxpayer dollars. The Federal Reserve continues to offer quantitative easing because the economy is solid? Of course not, they are trying to reflate the balance sheet of banks through the slow wealth transfer from the middle class to the top 1 percent.

If you want to see how generous FDIC insured banks are to average Americans just look at the amount of credit being extended:


Yet the Federal Reserve is extending unprecedented credit to the banks. There are two financial worlds in the US and many are starting to wake up as to which one they are living in. Americans still have a lot of hard earned money in banks:


Over $7.4 trillion in deposits are on the banking balance sheets. Keep in mind these are liabilities to banks, not assets. Yet the FDIC with an insolvent fund is backing these up. Banks are also offering close to zero percent in interest rates on savings accounts so this idle money is being slowly devoured by inflation which is a hidden tax by the Federal Reserve. Notice how gas is up over $3 a gallon? Notice how grocery food isn't getting cheaper? How about college costs? Healthcare? Housing has gotten cheaper but it is still too expensive given the amount of money Americans have with 100 million Americans making $39,999 or less a year:


Source: Social Security

Even more disturbing is the fact that 72 million Americans make $25,000 or less a year. If you want to know what your global business leaders are thinking after the generous bailouts here is a recent comment at a CEO roundtable:

"(MotherJones) His point was that if the transformation of the world economy lifts four people in China and India out of poverty and into the middle class, and meanwhile means one American drops out of the middle class, that's not such a bad trade," the CEO recalled."

This coming from leaders who were in industries that were saved by American taxpayers. Those retail sales that many are clamoring about came because of a middle class in the US. Yet to these companies the only thing that matters is customers even if it means they have to leverage the American middle class and destroy the wealth of Americans in order to gain more customers around the globe. Politicians never brought this up during the election cycle but they continue to protect these industries because politicians are merely another line item for many of these companies.