Tuesday Reads

Posted: January 7, 2014 | Author: | Filed under: Barack Obama, morning reads, U.S. Economy, U.S. Politics | Tags: , , , , , , , , | 107 Comments

Matisse

Good Morning!!

This is going to be another quick post, because my mom is having an emergency that I need to help her with. She lost her internet, TV, and phone, and Comcast is saying they can’t do anything till Friday! She told them she is 88 years old, so maybe they’ll get off their duffs sooner.

Meanwhile, she just has her cell phone and only 100 minutes. She can afford to pay if she goes over, but she’s Great Depression survivor and often panics over “wasting money.”

So let’s see what’s happening in the headlines.

NBC News: Janet Yellen confirmed as first female Fed chair. Another glass ceiling shattered!

Vice chair of the Fed since 2010, Yellen begins her four-year term as leader of the century-old bank on Feb. 1. With the economy rebounding from the depths of the recession but only modestly so far, many economists expect her to focus on how to nurture growth without putting it into overdrive, which could risk fueling inflation….

Under Bernanke, the Fed has driven short-term interest rates down to near zero and flushed money into the economy with huge bond purchases, which it has just started to ease. Yellen, a strong Bernanke ally, has supported those policies and is expected to continue them until concrete signs emerge of sustained improvement of the economy and job market.

In a written statement, President Barack Obama said Yellen’s approval means “the American people will have a fierce champion” who will protect them.

On the other hand,

Lobbyists for the banking and financial services sectors issued statements pledging to work with Yellen. Both industries have led a fight to water down restrictions imposed by Obama’s 2010 law overhauling how the nation’s financial system is regulated.

I hope Dakinikat will weigh in on this later on. My guess is she will pooh pooh the notion that anything is going to suddenly create inflation in this economy.

CNN on the latest media meme: The Polar Vortex.

From Boston to Washington to Atlanta, the polar vortex kept swinging Tuesday, a frozen ice chest hovering over more than 100 million people.

Temperatures in many areas were in the single digits, and well below zero with wind chills.

In the Deep South, hard freeze warnings were in effect from eastern Texas to the Florida Panhandle….

It’s even too cold for polar bears and penguins. At Chicago’s Lincoln Park Zoo, Anana — a polar bear who never grew the thick layer of fat that bears in the Arctic do — had to be brought inside Monday. And at the National Aviary in Pittsburgh, bald eagles and African penguins, “who are used to temperate climates,” were taken off exhibit until the weather warms up, the facility reported.

And from Think Progress: Everything You Wanted To Know About The ‘Polar Vortex’

the Arctic air that usually sits on top of our planet is “taking an excursion” south for a couple of days, leaving the North Pole “relatively warm” and our temperate region not-so-temperate. “Go Home Arctic, You’re Drunk,” he titledthe explanation.

“The Polar Vortex, a huge system of moving swirling air that normally contains the polar cold air, has shifted so it is not sitting right on the pole as it usually does,” Laden writes. “We are not seeing an expansion of cold, an ice age, or an anti-global warming phenomenon. We are seeing the usual cold polar air taking an excursion. So, this cold weather we are having does not disprove global warming.”

In fact, some scientists have theorized that the influx of extreme cold is actually fueled by effects of climate change. Jennifer Francis, a research professor at Rutgers University’s Institute of Marine and Coastal Science, told ClimateProgress on Monday that it’s not the Arctic who is drunk. It’s the jet stream.

“The drunk part is that the jet stream is in this wavy pattern, like a drunk walking along,” Francis, who primarily studies Arctic links to global weather patterns, said. “In other places, you could see the tropics are drunk.”

Basically, places that are usually cold are warmer and places that are usually warm are getting the cold air. Lots more at the link.

Here’s scary headline for you: Republicans Really Could Win It All This Year, by Larry Sabato. But take it with a grain of salt, because it’s a Politico story.

Another midterm election beckons, and over the next 10 months we’ll see headlines about a thousand supposedly critical developments—the “game changers” and the “tipping points.” But we all know there aren’t a thousand powerful drivers of the vote. I’d argue that three factors are paramount: the president, the economy and the election playing field. And, at least preliminarily, those three factors seem to be pointing toward Republican gains in both houses in the 2014 midterms.

Read all about it at the link. As a side note, Joseph Cannon has a post up about Sabato and his recent book on the JFK assassination. As usual, when Cannon writes about this subject, it’s highly enlightening. Check it out if you like connecting dots.

Here’s a wacky story from Oklahoma that Dakinicat sent me last night: Student Expelled for Casting a Spell.

An Oklahoma high school suspended a

15-year-old student after accusing her of casting a magic spell

that caused a teacher to become sick, lawyers for the student

said on Friday.

The American Civil Liberties Union said it had filed a lawsuit in the U.S. District Court in Tulsa, Oklahoma, on behalf of student Brandi Blackbear, charging that the assistant principal of Union Intermediate High School in Broken Arrow, Oklahoma, suspended her for 15 days last December for supposedly casting a spell.

The suit also charged the Tulsa-area Union Public Schools with repeatedly violating Blackbear’s civil rights by seizing notebooks she used to write horror stories and barring her from drawing or wearing signs of the pagan religion Wicca.

“It’s hard for me to believe that in the year 2000 I am walking into court to defend my daughter against charges of witchcraft brought by her own school,” said Timothy Blackbear, Brandi’s father.

WTF?! So what we’re learning is that at least a teacher and presumably members of the administration of a school in Oklahoma believes it is possible to cast magic spells that make people sick? What century is this again?

Angela Merkel has broken her pelvis in a skiing accident. From CNN:

German Chancellor Angela Merkel fractured her pelvis in a skiing accident in Switzerland over the holidays, her spokesman told reporters Monday.
Merkel was cross-country skiing when the accident occurred. Spokesman Steffen Seibert did not disclose the date of the incident, but said her injuries are not thought to be serious and it is thought she will make a full recovery.

Merkel, who has been Chancellor of Germany since 2005, will need aid to walk over the next few weeks and will be canceling some of her commitments, Seibert said.

Merkel’s Christian Democratic Union (CDU) said it will delay its party retreat, originally slated for January 10-11, as a result of her accident.

From The New York Times: JPMorgan Settles With Federal Authorities in Madoff Case

Before Bernard L. Madoff stole billions of dollars from his clients, and before he received a 150-year prison sentence for those crimes, JPMorgan Chase had a chance to warn federal authorities about his Ponzi scheme but never did.

On Tuesday, five years after Mr. Madoff’s arrest set off a panic on Wall Street and Washington, Mr. Madoff’s primary bank received a punishment of its own.

Federal prosecutors in Manhattan imposed a $1.7 billion penalty on JPMorgan, striking a criminal settlement deal involving two felony violations. The prosecutors, essentially accusing the nation’s biggest bank of turning a blind eye to Mr. Madoff’s fraud, will force JPMorgan to pay the sum to his victims.

Later on Tuesday, federal regulators are expected to announce their own rebuke of the bank in a civil case. All told, JPMorgan is likely to pay some $2 billion to resolve the Madoff investigations, which will be fully detailed at a press conference scheduled for Tuesday afternoon at the United States attorney’s office in Manhattan.

Some bankers are going to lose some money and are being embarrassed. It’s something anyway. I’ll end on that positive note.

So . . . what stories are you following today? Please share your links in the comment thread.

Tuesday Reads: Romney and Zingers, Environmental Activism, and A Bit of Schadenfreude

Posted: October 2, 2012 | Author: | Filed under: 2012 presidential campaign, Banksters, Barack Obama, Environment, Environmentalists, Mitt Romney, morning reads, U.S. Politics | Tags: , , , , , , , , , , , | 76 Comments

Good Morning!!

I have some interesting links today–some of them a couple of days old, but even if you’ve seen them, they bear repeating.

First up, there’s just one more day until the first presidential debate. I just can’t wait to hear those “zingers” Mitt Romney’s advisers told the NYT he has been practicing for months.

Mr. Romney’s team has concluded that debates are about creating moments and has equipped him with a series of zingers that he has memorized and has been practicing on aides since August. His strategy includes luring the president into appearing smug or evasive about his responsibility for the economy.

Since August? I hope they haven’t gotten stale. Apparently they’re hoping Obama will have another “likable enough” moment. I doubt that will happen, but we’ll see.

Frankly, as Ezra Klein writes at HuffPo, Romney would be better off to forget the zingers and develop more popular policies.

Behind in the polls and facing mounting panic among his donors, Mitt Romney is readying his secret weapon for the debates: Zingers….Pro tip: If your strategy to turn the presidential election around relies on Romney’s sense of comic timing, you might want to prepare a Plan B, as well.

The idea that this election can be reshaped by a zinger speaks to a deeper problem in the Romney campaign’s fundamental view of the race. As they see it, Obama’s record is an obvious disaster and their job entails little more than pointing that out over and over again. That the polls haven’t seemed responsive to this theory hasn’t dissuaded them. The new explanation for Romney’s difficulties is that the media are in the tank for Obama and that’s why the Romney campaign’s message isn’t breaking through.

But, Klein says, Americans know the economy is bad, but they also think it would have been worse if John McCain had been elected, rather than Barack Obama. Check out the chart.

Anna Marie Cox also addressed the “zingers” story at the Guardian.

The Romney campaign, having already proven able to discover impressive new ways for a nomination to blunder (my jaw still involuntarily drops a little when I hear the phrase “47%”), they have now added yet another type of podiatric wound to their catalogue. According to a report in the New York Times on Saturday, Romney’s staff “has equipped him with a series of zingers that he has memorized and has been practicing on aides since August.”

Already an awkward presence, Romney seems particularly susceptible to the tense stillness and deathless pathos that accompanies a dud punchline. Picturing the forced jocularity around the campaign headquarters has its pleasures, specifically the idea of Mitt trotting out well-worn jokes with the panache of a Catskills stand-up:

“Take my economic policy … please!”

“How lazy is half America? So lazy …”

“Any car-elevator owners in the audience tonight?”

But there’s an awful flipside: my God, what if he actually tries one of them?

Whether you wince or guffaw at the image of Romney attempting and failing to “zing” the president, probably says more about your tolerance for the humiliation of others than your political sensibilities. You’d think covering politics would have inured me to it by now, but in real life, I can’t even watch “American Idol”. I will view the debate on Wednesday through the spaces between my fingers, with a desk nearby to bang my head against.

What I really wish is that Romney would follow Donald Trump’s advice. According to TPM, Trump tweeted that Romney “should ask Obama why autobiography states “born in Kenya, raised in Indonesia.”

Romney will definitely have to watch his tone though, based on the results of a focus group study that TPM reported today. And Republicans will have a hard time saying this one is biased, because it was done by Haley Barbour’s company.

Barbour’s firm Resurgent Republic conducted focus groups of blue collar voters in Ohio and suburban women in Virginia who supported Obama in 2008 but are now undecided. Both are swing demographics that Romney is working to win over in order to flip each state from blue to red.

Their findings? Voters are a lot more willing to believe attacks based around Romney quotes than they are on Obama quotes.

“Whenever we showed direct quotes from President Obama over the last few years, voters consistently say that this is probably taken out of context and they don’t seem to hold that same standard with Governor Romney,” pollster Linda DiVall, who conducted the Virginia focus groups, said in a conference call announcing the findings Monday.

She added that while their reaction struck her as “a little bit unfair,” it was nonetheless “American voters’ right to do that.”

Pollster Ed Goeas said his own Ohio focus groups elicited similar responses, which could make things harder for Romney as he seeks to reverse his comments that 47 percent of Americans consider themselves “victims.”

It sounds like these swing state voters have figured out that Romney is a lying liar who only cares about the needs of the top .01 percent. Voters just aren’t as stupid as the Romney campaign thinks.

Did you see the tough op-ed Harry Reid wrote for the Las Vegas Sun on Sunday? He really ripped Romney a new one.

We learn the most about someone’s character not from what he does when he knows others are watching but from what he does when he thinks they aren’t.

We’ve learned an awful lot of troubling things about Mitt Romney recently. First, his sweeping, closed-door condemnation of President Barack Obama’s supporters revealed the disdain he has for half the population he hopes to serve. Then, the limited tax returns Romney selectively released confirmed that he’s willing to share information about the time he’s been in the public eye and running for president, but not the time he was running the corporation he touts as his sole qualifying credential for the highest office in the land.

When he thought no one was listening, Romney accused 47 percent of Americans of not taking responsibility for their lives, painting them as lounging in government dependency — a conclusion he reached because, for various legitimate reasons, they are exempt from paying federal income taxes.

Romney stands not only on shaky ethical grounds in making that indiscriminate generalization — he’s also on flimsy factual footing. The 47 percent Romney derides as self-pitying “victims” includes seniors who live on a fixed income thanks to the Social Security they paid into and earned over a lifetime of hard work, our troops in combat zones and veterans who have fought for our country. It includes students studying to get the skills that will win them the jobs of the future and decent Americans actively looking for work because their jobs were outsourced by companies such as those Romney specialized in developing. Most of them pay plenty of payroll, property, local and state taxes.

Reid goes on to beat Romney over the head with his secret tax returns one more time. Go read the whole thing if you haven’t already. Reid is turning out to be the Democratic attack dog of the 2012 campaign season.

Just one more Romney link: Romney would put states in charge of federal lands. James Bruggers, a Kentucky reporter who covers environmental issues full-time writes:

Our public lands are a birthright, held in trust for each one of us and managed by a set of laws that were worked out through compromise by Congress and various presidential administrations going back generations.

They provide places for us to hike, ride our mountain bikes, horses, camp, hunt and fish. Many are managed for multiple uses, and they also allow for cattle grazing, timber harvesting, oil and gas development, mining and skiing.

Romney, however, has said he would change all this, putting states in control of lands now under the stewardship of such agencies as the U.S. Forest Service and the Bureau of Land Management, who are charged with making sure all Americans have a say in their management. Often this gets reported simply as an expansion of oil and gas development on public lands, a simplification that fails to acknowledge just how radical of a shift in public policy it would be to turn over federal lands to state control.

From a Romney white paper:

States will be empowered to establish processes to oversee the development and production of all forms of energy on federal lands within their borders, excluding only lands specially designated off-limits;
• State regulatory processes and permitting programs for all forms of energy development will be deemed to satisfy all requirements of federal law;
• Federal agencies will certify state processes as adequate, according to established criteria that are sufficiently broad, to afford the states maximum flexibility to ascertain what is
most appropriate.

I still remember how shocked I was when I heard Romney say this in the Nevada primary debate. This is a huge issue as far as I’m concerned. American is still a beautiful country with many unspoiled wilderness areas. It is vital that we protect those public lands–they belong to all Americans, not to individual state governments.

Here’s another environmental story on the attempts to block the Keystone XL pipeline: BREAKING: Blockader Locks to Underground Capsule to Protect a Family Farm. It’s a live blog of the “Tar Sands blockade.” Here’s their Facebook page.

From Firedoglake blogger Kevin Gosztola:

A Tar Sands Blockader, Alejandro de la Torre, locked his body in a concrete capsule buried in the path of TransCanada’s Keystone XL pipeline to stop a small family farm in East Texas from being destroyed by construction. He blocked demolition for at least six hours before police were able to break off a chunk of concrete is arm was in and arrest him.

Police confiscated cameras of Blockaders that were there to film for Torre’s safety. Tar Sands Blockade spokesperson Ramsey Sprague reported they wanted to keep cameras on him as long as possible but police intimidated observers and took the cameras.

Last week, TransCanada supervisors encouraged police to use torture tactics on protesters to stop their nonviolent direct action.

Sprague recounted the brutality, which was “astounding.” Shannon “Rain” Beebe and Benjamin Franklin locked themselves to TransCanada machinery to stop clear-cutting. The police hung them with their arms behind their backs. They put pressure on their shoulder with their arms twisted. They pepper sprayed a tube connecting their arms. They twisted a tube cutting off circulation to their hands. (One protester is seeking medical attention for nerve damage.)

The police used tasers and planned to keep using tasers on Beebe and Franklin until they released. Cameras were supposed to be on the scene to film the action, but police were directed by TransCanada supervisors to run off those with cameras so they could commit brutality without people seeing video evidence on the evening news.

Continuing the environmental theme, pioneering environmental activist Barry Commoner died on Sunday.

Scientist and activist Barry Commoner, who raised early concerns about the effects of radioactive fallout and was one of the pioneers of the environmental movement, has died at age 95.
Commoner died Sunday afternoon at a Manhattan hospital, where he had been since Friday, said his wife, Lisa Feiner. He lived in Brooklyn.

Commoner was an outspoken advocate for environmental issues. He was one of the founders of a well-known survey of baby teeth in St. Louis that started in the late 1950s. The survey assessed the levels of strontium-90 in the teeth and showed how children were absorbing radioactive fallout from nuclear bombs that were being tested.

The survey helped persuade government officials to partially ban some kinds of nuclear testing.
Feiner said Commoner had “a very strong belief that scientists had a social responsibility, that the discoveries would be used for social good and that scientists also had an obligation to educate the public about scientific issues so that the public could make informed political decisions.”

Commoner took on that role of educating the public, writing books on environmental issues. Among his works were “Making Peace with the Planet” and “Science and Survival.” He made the cover of Time magazine in early 1970 and ran for president as a third-party candidate in 1980.

Finally, here’s a little bit of schadenfreude for you. Bloomberg reports that New York is “suing JP Morgan for fraud over mortgages securities.”

JPMorgan Chase & Co. (JPM), the biggest U.S. bank, was sued by New York Attorney General Eric Schneiderman over claims that the Bear Stearns business the bank took over in 2008 defrauded mortgage-bond investors.

Investors were deceived about the defective loans backing securities they bought, leading to “monumental losses,” Schneiderman said in a complaint filed today in New York State Supreme Court.

“Defendants systematically failed to fully evaluate the loans, largely ignored the defects that their limited review did uncover, and kept investors in the dark about both the inadequacy of their review procedures and the defects in the underlying loans,” Schneiderman’s office said.

Schneiderman in January was named co-chairman of a state- federal group formed to investigate misconduct in bundling of mortgage loans into securities leading up to the financial crisis. The group includes officials from the U.S. Justice Department, the Securities and Exchange Commission, the FBI and other federal and state officials.

Poor Jamie Dimon. Why don’t people respect his “success?”

Those are my suggestions for today. What are you reading and blogging about?

Tuesday Reads

Posted: May 29, 2012 | Author: | Filed under: morning reads | Tags: , , , , , , , , | 27 Comments

Good Morning!

I am back in New Orleans and looking forward to less–hopefully no–major events in my life.  I’m exhausted!  There are parts of corporate finance that are actually more interesting than you would think.  We’ve talked some about moral hazard.  This is part of the principal agent problem. This problem happens when you have a senior manager that is hired to run a firm who is an “agent” for the owners.  One of the related topics is corporate governance and the role that the board of directors plays in watching the agents.  JP Morgan has some classic problems as outlined in this Bloomberg article.

The three directors who oversee risk at JPMorgan Chase & Co. (JPM) include a museum head who sat on American International Group Inc.’s governance committee in 2008, the grandson of a billionaire and the chief executive officer of a company that makes flight controls and work boots.

What the risk committee of the biggest U.S. lender lacks, and what the five next largest competitors have, are directors who worked at a bank or as financial risk managers. The only member with any Wall Street experience, James Crown, hasn’t been employed in the industry for more than 25 years.

“It seems hard to believe that this is good enough,” said Anat Admati, a professor of finance at Stanford University who studies corporate governance. “It’s a massive task to watch the risk of JPMorgan.”

…

JPMorgan, with $1.13 trillion of deposits, is the only one of the six largest U.S. lenders that doesn’t have a former banker, regulator or finance professor on its risk committee.

Susan Bies, who served as a Federal Reserve governor for six years and risk manager at First Horizon National Corp., sits on Bank of America Corp.’s panel. Morgan Stanley’s includes Masaaki Tanaka, CEO for the Americas at Bank of Tokyo-Mitsubishi UFJ Ltd., while Robert Joss, a former U.S. Treasury Department official who ran Westpac Banking Corp., is on Citigroup Inc.’s. Nicholas Moore, a former PricewaterhouseCoopers LLP chairman and CEO of its U.S. unit, is one of six directors on Wells Fargo & Co. (WFC)’s risk committee.

Only Bank of America’s risk committee is as small as JPMorgan’s. Goldman Sachs’s has eight members, including Stephen Friedman, a former chairman of the firm who advised President George W. Bush on economic policy, and James Schiro, a former CEO of Zurich Financial Services AG.

This is a big wow.

A Bloomberg Op Ed also caught my eye. Albert R Hunt writes that “Bush’s Terror Overreach Becomes ’New Normal’ Under Obama”.

Critics of President George W. Bush’s anti-terrorism efforts, mainly Democrats and some Republicans, rejoiced when Barack Obama was elected. They were convinced that what they considered the post-Sept. 11 trampling of constitutional rights and civil liberties would end.

As a candidate, Obama, a former constitutional law professor, promised to close the prison at Guantanamo Bay, Cuba, as well as to end indefinite detention and the rendition of terrorism suspects to other countries, where they often were tortured. He also vowed greater accountability and transparency in the conduct of war.

Things look different today. In his new book, “Power and Constraint: The Accountable Presidency After 9/11,” Jack Goldsmith, a Harvard Law School professor who served in the Office of Legal Counsel under Bush and objected to some of that administration’s tactics, writes: “The Obama administration would continue almost all of its predecessor’s policies, transforming what had seemed extraordinary under the Bush regime into the ‘new normal’ of American counter-terrorism policy.” That seems only a slight exaggeration.

Soraya Chemaly writes at Alternet about the 6 Absurdly Demeaning Conservative Attacks on Women.  Language plays an important role in right wing attacks on women.

Everyone does it, using language that renders women as animals;the list is endless. This culturally ingrained misogyny, as reflected in acceptable language that dehumanizes half the world’s population, is not limited to any one country or religion, or followers of one or another ideology.

 But in U.S. politics, a particular trend has emerged among a certain set of conservatives: that of equating a woman with a farm animal. When, last week, Safeway Senior Vice President General Counsel Bob Gordon stood before a shareholders’ meeting telling a “joke” that portrayed Secretary of State Hillary Clinton and House Minority Leader Nancy Pelosi as being worth less than a pair of hogs,he clearly had no reservations about publicly making this joke and obviously thought it was funny. After all, he was only elaborating on a meme that’s been evolving among right-wing Republican politicians in state legislatures.

Let’s see. There’s state Rep. Terry England, the infamous Georgia legislator comparing pregnant hogs and cows to women while debating a proposal that became known as the “women as livestock bill,” which would hold pregnant women to the animal husbandry standard of carrying a dead fetus to term.

Then there’s Missouri House Majority Leader Tim Jones, explaining that he was well-prepared to propose restrictions on women’s health options because his “father’s a veterinarian.”

And Arizona state Sen. Russell Pearce’s sexist and racist reasoning that immigrant women come here to “drop a child” during their “breeding season.”

Montana Rep. Keith Regier recently explained the higher value of “preg-tested” cows, forcing his opposition to point out that “We do not place price tags on women in the same way that we do on cattle.”

State Rep. Mary Franson of Minnesota created a video to explain, as a context for discussing food stamps, that “animals may grow dependent and not learn to take care of themselves.” That was similar to South Carolina Lieutenant Gov. Andre Bauer’s explanation of welfare mothers as “stray animals” who will “breed”because they don’t “know any better.”

Last but not least, there’s the sexualized bitch category to which Georgetown student Sandra Fluke was dragged, in a sort of gender-bending mode, when Republican state representative Krayton Kerns, an actual “cow doctor,” compared herto a rutting bulldog paid stud fees for sex at Kern’s veterinary school.

These right-wing politicians and legislators obviously favor pigs, cows and livestock in their “women are not quite human” metaphors and analogies. What does this tell us about how conservatives like their womenfolk? What do these animals share?

The USS Illinois will be the first Navy submarine to be staffed by an all-female crew. The sub will be sponsored by First Lady Michelle Obama.

On Monday, First Lady Michelle Obama officially sponsored the Virginia-class submarine, which will be one of the newest nuclear-powered boats scheduled to enter the fleet by 2015, according to a White House statement.

“It’s an honor and a privilege to serve as sponsor of the USS Illinois,” the first lady said, according to the statement. “This submarine is a tribute to the strength, courage, and determination that our Navy families exhibit every day.”

The Illinois is the second ship the First Lady has sponsored since coming to the White House. She sponsored the Coast Guard Cutter Stratton, based in Alameda, California, earlier this year, according to administration officials.

Former First Lady Laura Bush sponsored another Virginia-class attack sub, named the USS Texas, in 2004. In 1994, then First Lady Hillary Clinton sponsored the Los Angeles-class sub USS Columbia.

Obama’s endorsement of the Illinois, particularly its all-female crew, comes as women in the military are pushing the Pentagon for a larger role in combat operations.

The Pentagon announced in February that it was opening up 14,000 new positions, most in the Army, to women after a review of its policies on women in combat.

How cool is that?

What’s on your reading and blogging list this morning?

Friday Reads

Posted: May 18, 2012 | Author: | Filed under: morning reads | Tags: , , , , , , | 19 Comments

Good Morning!!

I’m headed up to LSU this morning for baby daughter’s graduation.  She’s getting a degree in finance.  She wants to work for a high tech company and isn’t headed to Wall Street.  Next weekend is Doctor Daughter’s wedding in Colorado.  I’m getting all fitted up in a Sari for her big fat Bollywood wedding.  I’m not thrilled about having a bare midriff.  Needless to say, I’m a wreck.

Barbara Ehrenreich writes a fascinating post at TruthDig on how our various state and local  governments are looting the poor.

Local governments are discovering that they can partially make up for declining tax revenues through fines, fees, and other costs imposed on indigent defendants, often for crimes no more dastardly than driving with a suspended license. And if that seems like an inefficient way to make money, given the high cost of locking people up, a growing number of jurisdictions have taken to charging defendants for their court costs and even the price of occupying a jail cell. The poster case for government persecution of the down-and-out would have to be Edwina Nowlin, a homeless Michigan woman who was jailed in 2009for failing to pay $104 a month to cover the room-and-board charges for her 16-year-old son’s incarceration. When she received a back paycheck, she thought it would allow her to pay for her son’s jail stay. Instead, it was confiscated and applied to the cost of her own incarceration.

You might think that policymakers would take a keen interest in the amounts that are stolen, coerced, or extorted from the poor, but there are no official efforts to track such figures. Instead, we have to turn to independent investigators, like Kim Bobo, author of Wage Theft in America, who estimates that wage theft nets employers at least $100 billion a year and possibly twice that. As for the profits extracted by the lending industry, Gary Rivlin, who wrote Broke USA: From Pawnshops to Poverty, Inc.—How the Working Poor Became Big Business, says the poor pay an effective surcharge of about $30 billion a year for the financial products they consume and more than twice that if you include subprime credit cards, subprime auto loans, and subprime mortgages.

These are not, of course, trivial amounts.

Martha Rosenberg writes about ” How Big Pharma and the Psychiatric Establishment Drugged Up Our Kids” over at Alternet.  You think bald heads, limp dicks, and wrinkles are the new gravy train?  Well, check this out.  “Pediatric psychopharmacology is a billion-dollar business that sustains Pharma and Pharma investors on Wall Street.” This isn’t St. Joseph’s baby aspirin we’re talking about.  Gotta kid that’s acting a little eccentric?  Well, just take her to the doctor!  There’s a pill for that!

In his book Psychiatryland, psychiatrist Phillip Sinaikin recounts reading a scientific article in which it was debated whether a three-year-old girl who ran out into traffic had oppositional-defiant disorder or bipolar disorder, the latter marked by “grandiose delusions” that she was special and cars could not harm her.1

How did the once modest medical specialty of child psychiatry become the aggressive “pediatric psychopharmacology” that finds ADHD, pediatric conduct disorder, depression, bipolar disorder, oppositional defiant disorder, mood disorders, obsessive-compulsive disorders, mixed manias, social phobia, anxiety, sleep disorders, borderline disorders, assorted “spectrum” disorders, irritability, aggression, pervasive development disorders, personality disorders, and even schizophrenia under every rock? And how did this branch of psychiatry come to find the answer to the “psychopathologies” in the name of the discipline itself: pediatric psychopharmacology? Just good marketing. Pharma is wooing the pediatric patient because that’s where the money is. Just like country and western songs about finding love where you can when there is no love to be found at home. Pharma has stopped finding “love” in the form of the new blockbuster drugs that catapulted it through the 1990s and 2000s. According to the Wall Street Journal, new drugs made Pharma only $4.3 billion in 2010 compared with $11.8 billion in 2005—a two-thirds drop.2

The finance/econ twitter wonks were all on this WSJ story called “Inside J.P.Morgan’s Blunder”.  Their insider says that Jamie in the Sky with Dimon actually approved all those disastrous trades.  Oopssssss…..

This behind-the-scenes account of the disaster—based on interviews with numerous J.P. Morgan executives and with officials on Wall Street and in Washington—provides new details about the drama inside the bank as executives sought to understand the scope of the losses and decide what to do about them.

Among other things, Mr. Dimon initially resisted ousting the executive at the center of the mess, confided in his wife that he had “missed something bad,” and expressed regrets with his colleagues one night over vodka about how they had all let the firm down.

“The big lesson I learned: Don’t get complacent despite a successful track record,” Mr. Dimon said in an interview Wednesday. “No one or no unit can get a free pass.”

The debacle has raised broad questions on Wall Street and in Washington about whether any executive can properly oversee such a large financial institution, whether new regulatory rules will do anything to prevent another financial crisis and whether tougher regulation is needed to further rein in risky bank trading, particularly at financial behemoths that are viewed as too big to fail.

The bank has ousted the executive in charge of its Chief Investment Office, a huge trading unit at the heart of the scandal that has contributed more than $4 billion of net income over the past three years—nearly 10% of J.P. Morgan’s overall profit during that period.

The stakes are high. Mr. Dimon personally approved the concept behind the disastrous trades, according to people familiar with the matter. But he didn’t monitor how they were executed, triggering some resentment among other business chiefs who say the activities of their units are routinely and vigorously scrutinized.

I see lean and hungry mean and we’ve just passed the Ides of May. It’s not just our banks.  It looks like Greek Banks are experiencing bank runs.  They really didn’t fix that global financial melt down thingie, did they? Greek capital is fleeing the country.  Gold bullion any one?  Picasso paintings?  Bullets?

Greeks have withdrawn €3bn (£2.4bn) from the banking system since the country’s inconclusive elections on 6 May, with tellers saying savers were making two or three visits a day to local banks.

Savers fear Greece leaving the eurozone and returning to the drachma. An aide to the outgoing prime minister, Lucas Papademos, said there were “serious fears that the banks were running out of money”.

Greece’s president, Karolos Papoulias, warned on Monday that €700m had been withdrawn but said he had been assured by the governor of the Greek central bank, George Provopoulous, that there was no panic yet.

According to minutes of a meeting on Monday, Papoulias said: “Withdrawals and outflows by 4pm when I called him [Provopoulous] exceeded €600m and reached €700m. He expects total outflows of about €800m, including conversions into German bunds [bonds] and other such things.”

Greeks have been slowly withdrawing cash from the banking system ever since the country first needed a bailout two years ago. Nearly a third of bank deposits were withdrawn between January 2010 and March 2012.

A crucial €18bn cash injection to stabilise Greece’s banks has been held up at the European financial stability fund’s Greek offshoot, the Hellenic financial stability fund (HFSF), for nearly two weeks with officials in Brussels refusing to release the funds because of the political instability in the wake of the elections. That had still not been released by tonight and is now not expected to be released for another four days despite the efforts of the Papademos government to expedite the recapitalisation of Greek banks.

Dimon will be facing a Senate Committe shortly.  I watched the Goldman Sachs hearings awhile ago.  I’m convinced the entire Senate Banking Committe wouldn’t know a bull flattener from a contango.  (Oh, ask him about his naked shorts! I’ll watch  any way.

Johnson announced Thursday that the panel’s investigation of the botched trade had “made it clear” that lawmakers needed to “hear directly” from the head of the bank.

The Banking Committee is currently set to hold two hearings on the implementation of the Wall Street reform law, which has been a dominant topic on Capitol Hill ever since JPMorgan announced it had lost at least $2 billion thanks to a complex bet on corporate debt. The New York Times reported Thursday the losses had actually climbed to $3 billion.

On May 22, the committee will hear from regulators at the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) on the financial overhaul. The SEC is reportedly investigating the JPMorgan trade, and the CFTC is responsible for implementing new restrictions on financial derivatives, which played a key role in the bank’s bad bet.

On June 6, the committee will hear from regulators with the Federal Reserve, Federal Deposit Insurance Corporation, Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency and the Treasury Department.

This last link is somewhat unusual for me.  The Saint’s bounty scandal continues to be big news down here. Vilma is going to take Goodell to court.  This could be popcorn worthy.

New Orleans Saints linebacker Jonathan Vilma sued National Football League Commissioner Roger Goodell for defamation in reports about the team’s “bounty” program.

Vilma accused the commissioner of making false statements about him in reports about the bounties allegedly paid to players for intentionally hurting opponents during games, according to a filing in federal court today in New Orleans.

“Goodell’s statements forever falsely taint and permanently damage Vilma, in the eyes of NFL clubs, media, fans and sponsors, as a player who brazenly disregards NFL rules and intentionally attempts to injure his opponents,” according to the complaint.

Vilma was banned in March for the 2012 season without pay for his role in the Saints’ bounty program. His penalty was the most severe of the four players who were suspended. The league’s investigation concluded that as captain of the defense, Vilma assisted then-defensive coordinator Gregg Williams in establishing and funding the program that offered money to players who knocked specific opponents out of a game.

That’s my offerings this morning.  I may not see you around much for the next few weeks.  Be assured I’m not having a lot of fun and leaving you out of it.  What’s on your reading and blogging list today?

The Big Hedge Snafu

Posted: May 12, 2012 | Author: | Filed under: Banksters | Tags: , , | 8 Comments

Okay, I can’t resist getting wonky again.  I have to say that Robert Reich made me do it.  Well, that’s not completely true.  It’s just that the banking industry has become so concentrated that it’s frightening. Plus,  J.P. Morgan managed to lose $17.5 Billion this week.  I’m still trying to wrap my mind around this.  An organization this big has its tentacles in everything. Could JP Morgan become  another Lehman?

JPMorgan Chase (JPM) lost $17.5 billion this week. It all springs from a bad trade that’s still going bad — to the tune of $2 billion and potentially $3 billion. But then there’s the 9.3% plunge in JPMorgan’s market capitalization — adding another $14.5 billion in shareholder losses. And of course, there’s the additional capital it may need to raise in light of  S&P’s and Fitch’s concerns about its creditworthiness.

In my conversations Friday with reporters from Smart Money and the Boston Globe, I could not answer a basic question: What happened? According to the May 12th New York Times, JPMorgan decided to make a bet on a very obscure corner of the derivatives market. And due to the scale of JPMorgan’s trading, hedge funds figured out its identity and placed bets against the bank that are continuing to make profits for them at JPMorgan’s expense.

So, let me get back to why Robert Reich has me thinking. He’s offered up what we’ve been thinking here for sometime.  Basically, he’s arguing that this kind of thing is exactly why we need to break up the big banks and head back to an updated and effective version of Glass-Stegall.  The most ironic thing is that the catalyst for this is the same Jamie Dimon who insists that Wall Street doesn’t need any more stinking regulations.  We’ve got a tight oligopoly now in the financial sector and the rules are different for this market structure than in a market where a bunch of little banks compete.  We can survive the bad decision making of a few regional banks or community banks that collapse.  Bad decision making at JP Morgan can take down the global financial markets.  We’ve learned that already, haven’t we?

Ever since the start of the banking crisis in 2008, Dimon has been arguing that more government regulation of Wall Street is unnecessary. Last year he vehemently and loudly opposed the so-called Volcker rule, itself a watered-down version of the old Glass-Steagall Act that used to separate commercial from investment banking before it was repealed in 1999, saying it would unnecessarily impinge on derivative trading (the lucrative practice of making bets on bets) and hedging (using some bets to offset the risks of other bets).

Dimon argued that the financial system could be trusted; that the near-meltdown of 2008 was a perfect storm that would never happen again.

Since then, J.P. Morgan’s lobbyists and lawyers have done everything in their power to eviscerate the Volcker rule — creating exceptions, exemptions, and loopholes that effectively allow any big bank to go on doing most of the derivative trading it was doing before the near-meltdown.

And now — only a few years after the banking crisis that forced American taxpayers to bail out the Street, caused home values to plunge by more than 30 percent and pushed millions of homeowners underwater, threatened or diminished the savings of millions more, and sent the entire American economy hurtling into the worst downturn since the Great Depression — J.P. Morgan Chase recapitulates the whole debacle with the same kind of errors, sloppiness, bad judgment, excessively risky trades poorly-executed and poorly-monitored, that caused the crisis in the first place.

In light of all this, Jamie Dimon’s promise that J.P. Morgan will “fix it and move on” is not reassuring.

The most revealing thing is that this entire gaffe was supposed to be part of a hedging action which is a risk management tool.  Not every one is convinced that this was simply the fault of a dated-model with bad assumptions. Here’s some wonky FT analysis.

So what was JPMorgan’s hedge and how did it go wrong?

The precise nature of JPMorgan’s hedging is not known. One possibility was that the bank engaged in a trade known as a “flattener”. Such a trade would profit if the credits began to sour in the near-term and within certain limits. But such a trade must be rebalanced – meaning additional positions would need to be taken simply to maintain the original investment thesis behind the trade. This can be tricky once the trade becomes supersized and if liquidity in the derivatives market dries up. Some market participants believe recent publicity surrounding JPMorgan’s position may have made rebalancing the trade impossible, or simply unpalatable.

Isn’t that a bet more than a hedge? Aren’t those banned now?

JPMorgan has described its trading as a hedge – not a “proprietary” trade, or bet, made to boost the bank’s own profit. However, the size of the position and subsequent losses look likely to set off renewed speculation about the nature of banks’ hedging activities. Some analysts have warned that banks are becoming extremely creative with their hedging strategies, often in an effort to boost their bottom line at a time when new regulations are crimping traditional profitmaking capabilities. JPMorgan says it plans to manage the trade over the course of 2012 but noted that losses “could easily get worse” and possibly total another $1bn in the second quarter of this year. Indeed, one of the instruments that may be involved matures in December, lending an urgency to managing the position down.

There better be some serious regulator and oversight action on this before it gets out of control. It also would seem to be a good time for a few good senators to start looking into bringing back the wall between corporations that have fiduciary responsibilities because of their depositors and investment banks and brokerage firms.  Robert Reich’s got the right idea.   We need to break up these behemoths.  Then, we need to take a serious look at which parts of deregulation keep coming back to haunt us.

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