Greenberg’s Laws

Universal truths about the world around us.


Study: Social Security in REALLY bad shape

USA Today has the story Study: Social Security in REALLY bad shape.

“The projections developed by the Office of the Chief Actuary for the Trustees Reports are intended to reflect all aspects of future possible trends in demographic, economic, and programmatic factors, given current Social Security law,” Goss and other SSA officials wrote. King and Soneji’s projections “were within the range of reasonable uncertainty as specified in the Trustees Report, and therefore should cause no alarm.”
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“Fair, transparent and accurate forecasts give Congress more of a chance to consider of all the policy proposals to preserve the solvency of Social Security,” King said. “And it’s easier to make changes to Social Security now than in the future.”

The other unmentioned assumption has to do with the wealth and income distribution. Since income has been shifted from the middle class to the wealthy in the last 30 years or so, the level of social security contributions from the middle class has declined below previous expectations.

If the SSA actuaries disclosed the impact of income distribution on their calculations, then I would be all for increased transparency. The Republicans would ignore that issue, but one can only hope that at least one politician who was looking out for the middle class would keep harping on it. Who is going to be the politician to do it after Bernie Sanders finishes his term as President?

I have put this story in the category of Greenberg’s Law of the Media.

If a news item has a number in it, then it is probably misleading.

In this case, there are several things that are misleading.

  • The numbers they give you are intended to lead you to one of the solutions. If they had put in the numbers that they left out, it might lead you to think of other solutions.
  • When the article talk about using fiscal gap accounting methods they say, “Under this accounting system, SSA’s projected unfunded liabilities would be $24.9 trillion (instead of the $10.6 trillion projected in 2088).” They don’t explain that you cannot draw the same type of conclusions from a larger number calculated by a different method, than you would if that same larger number had been calculated by the traditional method. In fact the implication is that the larger number is more “truthful” in a sense. It makes no sense to imply that.

If I didn’t make clear the reasoning behind my judgment, tell me why you think I am wrong, and I will try to tell you what I left out of my explanation. I can’t guess all the things that were going through your mind when you read this compared to all the things that were going through my mind when I wrote it.


The Fed Could Have Also Helped Main Street Instead of Just Wall Street

In this post I am going to perform a little magic trick.  At the end, I will reveal how I did it.

The Federal Reserve Bank (FED) bailed out the banks with a program it called Quantitative Easing(QE). The QE progam bought toxic assets from the big banks to rescue them from insolvency.  These toxic assets were Collateralized Debt Obligations (CDOs).

A CDO is a financial intrument that Banks sold to the public.  It pays high rates of interest, which is why buyers wanted them so badly.  The flow of interest payments to the investors was funded by the mortgage payments of the package of mortgages that comprised the CDO.  They became toxic assets when enough of the mortgagees could no longer afford to make their payments.

The FED bought CDOs so that the Banks no longer had the obligation to pay the interest.

The Fed just created the money to buy these assets.

What if the FED had bought actual mortgages directly instead of buying packages of mortgages in the form of CDOs?  They could have told the mortgagees that they wouldn’t hold them responsible for payments if they couldn’t make them.  After all, some  of the mortgagees aren’t paying anyway.  The difference is that we wouldn’t have so many homeless people who were foreclosed upon, and we wouldn’t have vacant houses that are deteriorating before our very eyes as weather and vandalism take their toll.

As I tried to dig up references to justify what I wrote above, I came across a few surprises.

Forbes has the article Bernanke Admits To Congress: We Are Printing Money, Just ‘Not Literally’

“Where does the Fed get the money to buy [assets],” Congressman Keith Rothfus asked the Chairman.  “Do you create the reserves,” he queried in a follow up, receiving a simple “yes” from Bernanke.  And finally, the money shot: are you printing money? “Not literally,” the Fed Chairman surprisingly responded.

YouTube video of explanation of Bernanke’s Financing of the Asset Purchase

These securities purchases were financed by adding to the reserves held by the banks at the Fed; they did not significantly affect the amount of money in circulation.  The Fed has multiple ways to unwind the large-scale asset purchaes (LSAPs) including selling the securities back into the market.

If I left it there, I can use that as proof that the Fed just created the money to buy the toxic assets.  If you view the video, you will see some sleight of hand to prove that it did and it didn’t do what you think you just saw.

Then there is the New Economic Perspectives article Where Did the Federal Reserve Get All that Money?

John Carney just wrote a very nice piece, showing that not only was the Fed able to find buyers for its assets but that markets actually bought them back at a premium. Bernanke addresses the second objection in his remarks below – idle balances don’t chase any goods – but it’s the financing of the asset purchases that I want readers to understand, because this is fundamental to understanding Modern Monetary Theory (MMT).

This article refers to the Bernanke video above.  The above link is to the relevant 5 minute excerpt of a lecture.  The Board of Governors of the Federal Reserve System has links to the full lecture The Aftermath of the Crisis.

When I saw the 5 minute snippet of the lecture, I saw some amazing sleight of hand.  As I was mulling that over, I came across the New Economic Perspectives article mentioned above, it looked like even experts whom I respect got taken in.  I was pleased to see that in the comment thread that followed that article, there were a few who caught the trick that I saw.

Here is only a part of the conversation that gives you an insight to the sleight of hand.

Right. But those were risky assets, and I’m saying that this is not a full accounting.

Do we know what kind of losses the Fed has yet to realize?

Say you paid $2 trillion in risky assets with a face value of $2.5 trillion, which may pay 10% interest or may pay nothing and lose 50% of its value. Say it’s 50-50, but you’re levered 20:1– owing $1.9 trillion in debt. You’re either going to make $200 billion or lose $200 billion… on your $100 billion gamble.

Now the Fed buys the stuff off you for $2 trillion and you pay off your debt. You realize no gain, but you weren’t expecting to, anyway. You’re more liquid than before, with far less risk.

The Fed, however, realizes $125 billion in interest on $1 trillion in assets, which it dutifully turns over to Treasury. What’s not mentioned is the $125 billion loss on the rest. Sure, the $125 billion would have gone to the you, and is now at Treasury. But there’s a $125 billion loss at the Fed that also would have gone to you.

And that assumes the Fed pays you fair value for those assets, which is pretty unlikely. Suppose the market price for your assets was falling– maybe you would have only realized $1.8 trillion if you sold to anyone else. That doesn’t matter to the private sector, but that’s still another $200 billion subsidy to the private sector.

And so on.

That drew another possibly more interesting response, but I can’t go on forever quoting everything I have read.

The trick I played is using some of Bernanke’s words that I believe to be true to prove a point, while asking you to ignore Bernanke’s words that at best are trying to avoid revealing the truth.  The meta-trick is that what I did is exactly what Ron Paul and Rand Paul do all the time.  They do it to make a false point, but I do it to reveal the truth, if you believe me.

Maybe I will write another blog post trying to explain where are all the mirrors in this house of mirrors.


Monsanto Lobbyist Says You Can Drink “A Whole Quart” of Roundup but Does This When Offered Some!

Nation of Change has the article Monsanto Lobbyist Says You Can Drink “A Whole Quart” of Roundup but Does This When Offered Some!

The video they show is on YouTube.

French television station Canal+ recently sat down with Dr. Patrick Moore for an upcoming documentary. Dr Moore, who claims to be an ecological expert and is currently the frontman for Ecosense Environmental, stated to the interviewer that Monsanto’s weed killer Roundup was not responsible for skyrocketing cancer rates in Argentina.

Note that I have put this post in the category of Greenberg’s Law of Idle Threats.

Greenberg’s Law of Idle Threats

Never make a threat you don’t intend to carry out. If you have any doubts about your ability to carry out the threat, do not make it.

Corollary:

If you never test the opposition about whether they make idle threats, then you enable them to ignore this law.


Ted Cruz says satellite data show the globe isn’t warming. This satellite scientist feels otherwise

The Washington Post has the article Ted Cruz says satellite data show the globe isn’t warming. This satellite scientist feels otherwise by Chris Mooney.

Mooney discusses the data that Cruz uses to come to the conclusions that he does.

To explore Mears’s views further, I did one thing journalists can do when covering the climate views of presidential candidates — I contacted the researcher. And his response was quite critical of Cruz’s approach to the evidence on this issue:

Mr. Cruz (and others who seek to minimize the threat posed by climate change) likes to cite statistics about the last 17 years because 17 years ago, the Earth was experiencing a large ENSO [El Nino-Southern Oscillation] event and the observed temperatures were substantially above normal, and above any long-term trend line a reasonable person would draw. When one starts their analysis on an extraordinarily warm year, the resulting trend is below the true long term trend. It’s like a pro baseball player deciding he’s having a batting slump three weeks after a game when he hit three homers because he’s only considering those three weeks instead of the whole season.

So if you have been tempted to fall for this meme that there hasn’t been global warning recently, remember this is the trick that has been played to come to this conclusion.

They could have mentioned the President Reagan fans measuring the performance of the economy from the depths of the Reagan induced depression to the end of his term to convince you that Reagan was wonderful on the economy.

I have categorized this post as an example of Greenberg’s Law of The Media – “If a news item has a number in it, then it is probably misleading”. Actually it is probably a counter example. In this case the news article debunks one of the common techniques of misleading.


The Lessons Richard Bowen’s FCIC Testimony Should Have Taught the Nation 1

William K. Black has written another astounding piece on the New Economic Perspectives web site.  The piece is titled The Lessons Richard Bowen’s FCIC Testimony Should Have Taught the Nation.

The financial crisis was driven by history’s three most destructive epidemics of financial fraud:  appraisal fraud, liar’s loans, and the sale of fraudulently originated mortgages to the secondary market through fraudulent reps and warranties.  One cannot understand, effectively investigate, or prosecute the senior financial officers who led these fraud epidemics without a detailed technical understanding of the fraud schemes and the financial markets. This first column is intended as a resource for those willing and able to make the investment towards achieving that understanding.  Because people like me and Bowen no longer train FBI agents and prosecutors, and because the Obama administration’s most senior officials have been unremittingly opposed to prosecuting the financial officers that led the three fraud epidemics, no FBI agent or prosecutor has the necessary technical understanding.  My second column explains why this makes the FBI, the SEC, and the Department of Justice’s (DOJ) failure to draw on Bowen’s expertise all the more harmful and indefensible.

No spoiler alert is required either about Holder’s reaction to Bowen providing the Department of Justice (DOJ) with a criminal case against Citi’s controlling officers on a platinum platter.  Holder, as always, refused to prosecute the banksters whose frauds drove the financial crisis.  He eventually brought a civil action to get some useless fines from Citi rather than from the Citi officers who looted Citi, Fannie and Freddie, and Treasury.  Holder also failed to thank Bowen when Holder announced the civil settlement with Citigroup and refused to use the golden opportunity of the press conference announcing the settlement to ask other whistleblowers to come forward.  All of this, of course, is SOP for Holder and Loretta Lynch, President Obama’s choice to be his successor.  Lynch failed to prosecute HSBC or its responsible officers for its extraordinary crimes on behalf of genocidal regimes, terrorism sanction busters, and massive money laundering for the Sinaloa drug cartel.  You can only read it in right wing publications, but she is also accused of not speaking to either of the two key whistleblowers about HSBC.  Lynch’s nomination is being held hostage by the Republicans for all the wrong reasons.

The piece is long, and I must admit I had to stop before the end and before I vomited.  However, the piece is not that technical.  I understood it fully and I am no accountant nor an economist.  Why even a Nobel Prize winning economist could understand this article if they would only deign to read it.  The trouble is that these prize winning economists make their theories about how an honest market would work, while having no appreciation that massive fraud is actually how many markets work.  It never occurs to them to listen to the law enforcement people who understand fraud when they see it.  They also don’t listen to banks’ own experienced bank enforcement executives who shout out about the fraud, and are summarily crushed by their fraudulent bosses.

I included in my excerpt the paragraph that mentions Loretta Lynch so that I can refer back to it anytime I need to explain why I am dead set against her nomination for Attorney General.

You’ll have to read at least enough of the article to understand why I categorized this article under Greenberg’s Law of Counterproductive Behavior. You won’t have to read much to be hit over the head by the figurative 2 by 4 of the reasons.


Obama Official: Congress Should Freeze Its Iran Penalties

ABC “News” has the AP story Obama Official: Congress Should Freeze Its Iran Penalties.

The administration argues that congressional action now would scuttle delicate international negotiations underway in Switzerland to reach an agreement that would prevent Iran from being able to develop nuclear weapons.

“If we are able to secure a comprehensive understanding, we will structure the nuclear-related sanctions relief in a way that is phased, proportionate and reversible,” said Adam Szubin, acting undersecretary of treasury for terrorism and financial intelligence. “We will need to see verified steps on Iran’s part before sanctions are lifted and we believe that powerful U.S. legislative sanctions should not be terminated for years to come so that we continue to retain important leverage years into a deal.”

He said if a deal is not reached, the administration would work with Congress to ratchet up sanctions pressure on Iran.

Well, this shows that the Obama Administration is only half as insane as the Republicans (and too many Democrats) in Congress.

Iran came to the table despite sanctions, not because of them.  Do we want them to back out of the deal just to prove what I said (and Fareed Zakaria said)?

See my previous post Netanyahu enters never-never land.

Iran proposed to cap its centrifuges at very low levels, keep enrichment levels well below those that could be used for weapons and convert its existing enriched uranium into fuel rods (which could not be put to military use). Peter Jenkins, the British representative to the International Atomic Energy Agency, told the Inter Press Service , “All of us were impressed by the proposal.” But the talks collapsed because the Bush administration, acting through the British government, vetoed it. It was certain, Jenkins explained, that if the West could “scare” the Iranians, “they would give in.”

What was the result? Did Iran return to the table and capitulate? No, the country withstood the sanctions and, unimpeded by any inspections, massively expanded its nuclear infrastructure. Iran went from 164 centrifuges to 19,000, accumulated more than 17,000 pounds of enriched uranium gas and ramped up construction of a heavy water reactor at Arak that could be used to produce weapons-grade plutonium.

As I have  said before, the truth must be told at least as often (if not 10 or 100 times as often) as the lie.  I can’t do it all by myself, but I can do my share.

Iran is currently helping Iraq (and us) by fighting against ISIS in Iraq. To show our appreciation for the help, we threaten to impose tougher sanctions. If there were anything we could do to convince Iran that they needed nuclear weapons to get any respect from us, the Congress seems hellbent on doing it.

So I categorized this current post under Greenberg’s Law of Counterproductive Behavior – “If you see a behavior that seems to you to be counterproductive, perhaps you have misunderstood what the behavior was trying to produce.”

Perhaps a comment on the ABC story on the ABC web site has the answer:

The Republicans want to scuttle any possibility of a deal with Iran, because then they can say that Obama failed. Worse, the Millenialists and Christer nuts in the Republican Party want Iran to develop the Bomb, and use it as an excuse for Armageddon.

 


Are the Republicans and Netanyahu Actually Heroes?

I read this response to an article on The Daily Kos.  I’ll call it Are the Republicans and Netanyahu Actually Heroes?  I think the following paragraph excerpted from the comment best summarizes the point the commenter was making:

When a segment of the Iranian ruling establishment thinks that the correct strategic choice is always on the opposite side of what the Jewish guy thinks, or in this case what the conservative Christian Republicans think, it’s not that hard to picture them being maneuvered into accepting whatever Rouhani’s guys agree to in Geneva.  Picture Rouhani sending a trusted emissary to talk to the Majlis hardliners and all he’ll have to say is “you should support this deal because the Republicans and the evil Jooz are against it.”  As soon as they hear “Jooz,” half of those hardliners will all be falling over each other to support the deal. (using the mis-spelled version of the word to convey the very real and very dispiriting but also very predictable anti-Semitism involved).

My response to this possible ploy was  the following:

Should we Forgive The Republicans and Netanyahu

This convoluted strategy almost sounds plausible.  If the Senate, the House, and Netanyahu are all part of a carefully orchestrated scheme from the Whitehouse to get the Iranians to accept the deal, will it even be possible to make this public after the deal is signed?

If it can’t be made public for fear of losing the deal, will the Republicans and Netanyahu have sacrificed their careers for the good of the nation and the world?

If the Republicans are willing to sit in prison for three years for violating the Logan Act just to achieve a deal on nuclear proliferation, they will deserve secret medals of freedom from Obama.

This definitely puts this idea in the class of examples of Greenberg’s Law of Counterproductive Behavior.


Ali Soufan: Torture contractors shocked CIA interrogators

MSNBC has the segment from The Rachel Maddow Show, Ali Soufan: Torture contractors shocked CIA interrogators.

Ali Soufan, former FBI special agent who took part in the interrogation of Abu Zubaydah, talks with Rachel Maddow about how the Senate torture report squares with his experience and why the CIA switched to torture interrogations they knew don’t work.


For a long time I have known about the claim from professional interrogators that torture is a counterproductive technique. This is the reason why I am categorizing this blog post under Greenberg’s Law of Counterproductive behavior “If you see a behavior that seems to you to be counterproductive, perhaps you have misunderstood what the behavior was trying to produce.”

This especially applies to the ordinary citizens who still want to torture suspects. Are they just ignorant of the facts about torture, or do they have some ulterior motive that I cannot even guess?

And now that I think about it, what about people in the Bush White House? What were their motives? Were they actually trying to silence the suspects lest they implicate the Bush administration or its allies?


Boston scientists say triglycerides play key role in heart health

The Boston Globe has the article Boston scientists say triglycerides play key role in heart health.

A massive genetic study led by a Boston cardiologist has identified a subset of people who carry rare mutations that cause them to have dramatically lower levels of triglycerides in their blood. Those people, in turn, were 40 percent less likely to have heart disease than people who didn’t have the mutation.
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The findings suggest that scientists should be looking for a way to mimic what the body does in those people with naturally low levels of triglycerides.

I posted my comments to the article on the newspaper’s web site.

Another example of the innumeracy of the press. By now there are hundreds of thousands of statisticians crying out “Correlation does not mean causation.”

It could very well be that the mutation’s side effect of lowering triglycerides may have nothing to do with causing a lower heart disease rate. It might also be that attempting to lower triglycerides by artificial means will have damaging unintended consequences. What countervailing mechanisms will the normal human body bring into play as a consequence of an artificial lowering of triglycerides? It may be that such a lowering without the gene mutation could be fatal.

Is anybody asking these obvious questions? If the doctors involved in this study aren’t aware enough to ask these questions, maybe it is too much to expect the “medical experts” in the news media to think of asking these questions.  Maybe it takes a person like myself with no degree in anything medical to see the forest among the trees.

It may be time for everybody to take another look at RichardH’s post on this blog Diversion–Highway Fatalities and Lemons.


Important Revelations In New Leaks of CIA Torture Report

The Real News Network has the video Important Revelations In New Leaks of CIA Torture Report.

On top of all of that, you have all these investigations now going on of everyone except a criminal investigation of the people involved in the torture. So CIA has referred the staffers, the people who work for Senator Feinstein and the committee, to the Department of Justice for investigation under the CIA’s what apparently is a [completely] bogus claim, that the staffers somehow took material off of a computer that they were authorized to use for the purposes of this preparation of the report. But the CIA, really as a way of intimidating the committee and Senator Feinstein, has said, we want the Senate staffers investigated. One investigation.

So now we know what the argument between the CIA and Senator Dianne Feinstein is all about.

So let’s talk about some of the findings that have come out. One–and these are from Al Jazeera that I’ve taken these, as well as some other sources. The CIA lied to Congress and to journalists about the results of the torture they carried out on over 100 of these what they called high-value detainees but were not that in fact in many cases. They claimed that the torture resulted in plots being broken up. In other words, the torture works narrative, and it’s completely false. And then they then solve the plots with torture, supposedly. Of course, that’s the story of the film about how they got bin Laden, and part through torture, Zero Dark Thirty, all apparently a pack of lies. So that’s one thing that will be in this report. The CIA apparently took on–I mean, he Senate committee took on these narratives and prove them to be false.

So now we know how much credence Dick Cheney has when he says how useful the torture was.


Perhaps other revelations in the video explain why George W. Bush is staying out of the limelight and has take up painting. He’s hoping he can avoid prosecution for his war crimes.

Perhaps Obama’s deference to the CIA is consistent with his warlike foreign policy. Is the CIA in complete control of foreign policy? If they start a war, the President is obligated to see it through. It has nothing to do with proving “manhood” and everything to do with protecting his family from the CIA. See my previous post Foreign policy and the definition of ‘manhood’.