Monthly Archives: June 2014

Central bankers issue strong warning on asset bubbles

The Boston Globe has the article Central bankers issue strong warning on asset bubbles. I was looking for something sensible in this article.

The organization, which reflects a widespread view among central bankers that they are bearing more than their share of the burden of fixing the global economy, often uses its annual reports to send a message to political leaders, commercial bankers, and investors.

Well that certainly looked promising.  Monetary policy cannot fix what ails the world economy.  It needs some fiscal stimulus.  Let’s see what the central bankers recommend.

The organization said governments should do more to improve the performance of their economies, such as reducing restrictions on hiring and firing.

Well they missed that easy target by a mile.  Maybe they have some advice for corporations.

The organization also had harsh words for corporations, which it said were not taking advantage of booming stock markets to step up investment.

I wonder what part of the following scenario these bozos don’t understand.

Ms. CEO is pondering what to do next.  She responded to the economic crash by cutting back her corporation’s production, closed, plants, and laid off  workers because she wasn’t able to sell all the goods her  corporation was producing.

Now that she has reduced the production level to match the lowered demand, her corporation is making profits again.  In fact they are piling up.  She has already got research and development rolling to come up with new products that will make old products obsolete.  This is about the only way to get people to buy some more stuff because the people who have old stuff don’t need more, and the people who need more stuff don’t have the money to buy it.

Still the profits are piling up.  So Ms. CEO gives herself and her staff whopping income increases.  She ups the dividends to the stock holders, and investors flock to buy more shares so that they can get some level of earnings.

Still the profits are piling up.  Ms. CEO discovers that the corporation can play games with financial investments, derivatives, and financializing the company as an easy way to make even more profits.

She and her fellow CEO’s have trillions of dollars in liquid assets  that they don’t know what to do with.  Suddenly she makes a discovery.  The stock market is booming, her corporation is raking in money hand over fist, yet there is still no demand for more production output from her idle factories.  “I know” she says, “I’ll invest in cranking up my  factories so I can give stuff away for free.  That will fix my problem of too much profit piling up.”  Yeah, right!!!

So what is it that the central bankers expect corporations to invest in?  Does it take deep study of the latest theories in economics to understand the situation.  It’s as simple as “What part of no freakin’ customers do you not understand?”

Some experts are selling the idea that if we focus more wealth at the top of society, that will surely encourage more demand.  How many more  mansions, yachts, and private jets can one billionaire buy.  Eventually they run out of places to spend their money.  They certainly aren’t going to use their money to open up idle factories and hire workers when they already have factory output in balance with the now lowered consumer demand.

So central bankers and congressional experts of a right wing persuasion, I again ask,

“What part of no freakin’ customers do you not understand?”

Harris v. Quinn ruling: Unions hit, but not fatally, by SCOTUS

Politico has the story Harris v. Quinn ruling: Unions hit, but not fatally, by SCOTUS.

By a 5-4 vote, the justices ruled in Harris v. Quinn that home health care workers in Illinois cannot be compelled to pay dues to a union they don’t wish to join.
Union leaders had feared that the justices might strike down those state laws as unconstitutional. The justices did not go that far. They issued a more narrow ruling that the home health care workers at issue in the case are not “full-fledged public employees” because they are hired and fired by individual patients and work in private homes, though they are paid in part by the state, via Medicaid.

Apparently it is not enough that workers have a vote in what their unions do, if you don’t like how they represent you, then you can refuse to pay for the work they do even though the majority of other workers agree with the union.

Can I refuse to pay the government the taxes that they use for purposes that do not get my approval? Why just limit myself to the specific part of the taxes they use to carry out a policy I don’t like? Why can’t I just refuse to pay all taxes? This seems to be the logic that follows from this decision.

Perhaps only if I refuse to become a full-fledged resident can I avoid paying my taxes.

From the Syllabus of the decision, we have a discussion of a precedent here called Abood:

(3)Extending Abood’s boundaries to encompass partial public employees would invite problems. State regulations and benefits affecting such employees exist along a continuum, and it is unclear at what point, short of full-fledged public employment, Abood should apply. Under respondents’ view, a host of workers who currently receive payments from a government entity for some sort of service would become candidates for inclusion within Abood’s reach, and it would be hard to see where to draw the line. Pp. 27–29

To dig deeper, I’d have to learn exactly what service the union provides the workers. Is the Supreme Court making a value judgment on the service provided versus the payment that is mandated? Is this something a Supreme Court ought to decide?

This all reminds me of some of the lyrics to the song If I Were a Rich Man.

The most important men in town would come to fawn on me!
They would ask me to advise them,
Like a Solomon the Wise.
“If you please, Reb Tevye…”
“Pardon me, Reb Tevye…”
Posing problems that would cross a rabbi’s eyes!

Are the eyes of judges crossed yet?

The 8 Best Lines From Ginsburg’s Dissent on the Hobby Lobby Contraception Decision

Mother Jones has selected what they think are The 8 Best Lines From Ginsburg’s Dissent on the Hobby Lobby Contraception Decision. Here is an example of one of the 8.

“Approving some religious claims while deeming others unworthy of accommodation could be ‘perceived as favoring one religion over another,’ the very ‘risk the [Constitution’s] Establishment Clause was designed to preclude.”

If it is against your religious principles to hire someone who is not of the same religion, has the Supreme Court just given you the right to discriminate?

This is only one example of self-contradiction in the U.S. Constitution.

Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.

Or maybe not. This only says that Congress may not do it. Was the original intent that only the Supreme Court could establish religion and choose the ones that would be established? Otherwise, how can you make no law prohibiting the free exercise of religion without establishing what a religion is. Establishment must have the meaning I am attributing to it in this context, because the other meaning would not make any sense. Try the following substitution of words to see the problem – “Congress shall make no law respecting a church, or prohibiting the free exercise thereof;” How do you exercise a church?

Thanks to Jennifer Kaplan’s Facebook post for bringing the Mother Jones article to my attention.

#FreeTheNipple: This Bikini Top Sticks Two Fingers Up To Censorship

I don’t usually post links to Huffington Post articles, but this one, #FreeTheNipple: This Bikini Top Sticks Two Fingers Up To Censorship, is worth discussing. Also note that this is from the British edition of Huffington Post.

On their website the makers of the bikini, Robyn Graves and Michelle Lytle, write: “Why can’t girls be topless? If you really think about it, what’s the difference between a man’s nipples and a woman’s? Is it really just the extra breast tissue?

I have mused about the irony that the part of a woman’s breast that is most different from a man’s can be completely exposed without legal consequence. The only part that must not be shown is the part that is most similar to a man’s.

Picture of TaTa Top

Am I allowed to post this on my blog?

As part of “Finding the answers to life’s persistent questions”, you might wonder about the phrase “stick two fingers up”.

The answer is on the WikiPedia page V sign.

It is also used by people of the United Kingdom and related cultures as an offensive gesture (when displayed with the palm inward); and by many others simply to signal the number 2. Since the 1960s, when the “V sign” was widely adopted by the counterculture movement, it has come to be used as a symbol of peace (usually with palm outward).

Read the rest of the definition to see the connection with the phrase in the headline.

Randy Wray: The Rise of Monetary Cranks and Fixing What Ain’t Broke

Naked Capitalism has the article Randy Wray: The Rise of Monetary Cranks and Fixing What Ain’t Broke.  If I give you the conclusion, I run the risk that you won’t read the article.  However, at least you may have the seed of the idea planted in your head. I assure you that you will learn a lot more by reading the whole article. For instance you will learn why things that are bad when done to excess might be quite necessary when done in moderation.

The Role of Monetary Cranks

Yes, the rotting fish on Wall Street and in London stinks. We need downsizing. We need reform—not only of the financial system that exists, but also of the crisis response that we will need when the system fails next time. You can be sure there will be a next time.

This is the time for monetary cranks.

No good ideas will come out of the mainstream. They never saw the crisis coming, indeed, their advice in the speculative run-up made the crash not only inevitable but much worse than it would have been. They were behind the bail-outs of Wall Street and London. Their rescue of the banksters will hasten and deepen the next crisis. Do not listen to them.

We need to remember two things, however, as we assess the proposals of our cranks.

First, there is no final solution. There is no magic reform that will prevent another crisis. As Minsky said, “stability is destabilizing”. Any successful reform will lead to the recreation of instability that will lead to another crisis.

Second, it is essential that the reform proposal is based on a coherent and valid theoretical framework.

One way to judge the monetary cranks that are proposing reforms is to ask: “Where were you a decade ago?” Did you see “it” (the crisis) coming? Did you have a coherent theory which explained why a financial crisis would occur? Is your proposal consistent with that theoretical framework? What the heck is your monetary framework?

I have seen the term “bankster” in many of the writings of William K. Black. Until this article pointed it out, I never got the intended similarity between “banksters” and “gangsters”.

Justices Appear Divided on a Sweeping Challenge to Public Workers’ Unions

The New York Times has the article Justices Appear Divided on a Sweeping Challenge to Public Workers’ Unions.

On Tuesday, Justice Stephen G. Breyer said there was no good reason to overturn the balance struck in 1977. He said he feared that “the courts of the United States are going to fashion, using the First Amendment as their weapon, a new special labor law for government employees.”

The article emphasizes that the arguments turn on First Amendment rights of workers to disagree with unions.

As Michael Horan has pointed out in conversations other than the one pointed to below, what the press reports about what the justices have to say does not always reflect the key arguments in the decisions even after the decisions have been handed down. In this case the decision won’t be handed down until tomorrow.

Nevertheless, Michael Horan has promised to bone up on this topic tonight so he can offer more informed comment. I hope he has a chance to read this article from The New York Times as it may contain the information he says he has not seen yet.

I wonder if anyone has considered that the workers join unions so that they can exercise their First Amendment rights to bargain for the terms of their employment? When you try to extend a right from an individual person to a group, such as a union or a corporation, you have to have some sense of balance. For instance, not everyone who works for or has a financial stake in Hobby Lobby has the same opinion about insurance payments for women’s health care. Wouldn’t it be ironic if it turned out that the Supreme Court had no concern for the First Amendment rights of some of the people in a corporation (whether they be a minority or even a majority), but they do care about those rights of a minority of the workers over the majority of the workers?

If a worker disagrees with an employer, she or he has the right not to work for that employer. If a worker disagrees with a union, she or he might be given the right, to put roadblocks in the way of the union expressing majority rule. The Supreme Court isn’t likely to say that they have the right not to work in the place where the union represents the workers.

Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.

I have not seen this amendment being interpreted as saying that if I don’t agree with a government policy, then I have a right not to pay my taxes. Isn’t there some similarity with a person being allowed to withhold payment to the union that bargains for them about the terms of their employment because of disagreements of political positions held by the union?

Press Release – Secret Trade in Services Agreement (TISA) – Financial Services Annex

Wiki Leaks has the Press Release – Secret Trade in Services Agreement (TISA) – Financial Services Annex.

Today, WikiLeaks released the secret draft text for the Trade in Services Agreement (TISA) Financial Services Annex, which covers 50 countries and 68.2% of world trade in services. The US and the EU are the main proponents of the agreement, and the authors of most joint changes, which also covers cross-border data flow. In a significant anti-transparency manoeuvre by the parties, the draft has been classified to keep it secret not just during the negotiations but for five years after the TISA enters into force.

Despite the failures in financial regulation evident during the 2007-2008 Global Financial Crisis and calls for improvement of relevant regulatory structures, proponents of TISA aim to further deregulate global financial services markets. The draft Financial Services Annex sets rules which would assist the expansion of financial multi-nationals – mainly headquartered in New York, London, Paris and Frankfurt – into other nations by preventing regulatory barriers. The leaked draft also shows that the US is particularly keen on boosting cross-border data flow, which would allow uninhibited exchange of personal and financial data.

The press release has a link to the leaked document Secret Trade in Services Agreement (TISA) – Financial Services Annex.

The press release also has a link to an analysis of the document Memorandum on Leaked TISA Financial Services Text by Professor Jane Kelsey, Faculty of Law, University of Auckland, New Zealand.

This memorandum provides a preliminary analysis of the leaked financial services chapter of the Trade in Services Agreement dated 14 April 2014. It makes the following points:

  • The secrecy of negotiating documents exceeds even the Trans-Pacific Partnership Agreement (TPPA) and runs counter to moves in the WTO towards greater openness.
  • The TISA is being promoted by the same governments that installed the failed model of financial (de)regulation in the WTO and which has been blamed for helping to fuel the Global Financial Crisis (GFC).
  • The same states shut down moves by other WTO Members to critically debate these rules following the GFC with a view to reform.
  • They want to expand and deepen the existing regime through TISA, bypassing the stalled Doha round at the WTO and creating a new template for future free trade agreements and ultimately for the WTO.
  • TISA is designed for and in close consultation with the global finance industry, whose greed and recklessness has been blamed for successive crises and who continue to capture rulemaking in global institutions.
  • A sample of provisions from this leaked text show that governments signing on to TISA will: be expected to lock in and extend their current levels of financial deregulation and liberalisation; lose the right to require data to be held onshore; face pressure to authorise potentially toxic insurance products; and risk a legal challenge if they adopt measures to prevent or respond to another crisis.

Without the full TISA text, any analysis is necessarily tentative. The draft TISA text and the background documents need to be released to enable informed analysis and decision-making.

If you don’t keep your eye on these things, then you won’t know when administration spokespeople are lying in their public statements. See my previous post Is America More Financially Stable after Dodd-Frank Wall Street Reform?

Is America More Financially Stable after Dodd-Frank Wall Street Reform?

The Real News Network has the video Is America More Financially Stable after Dodd-Frank Wall Street Reform?.

The video starts off with a hearing in which Senator Elizabeth Warren is questioning Treasury Secretary Jack Lew.

SEN. ELIZABETH WARREN (D-MA): You said yesterday in testimony before the House that we won’t really know whether we solved the too-big-to-fail until there’s a new crisis. I hope that doesn’t mean that nothing will change your mind on the question of addressing the fact the biggest financial institutions in this country are getting bigger by the day and that size intersects with risk. And believing that we are using only one tool, and that is trying to regulate the risk without paying attention to size I think runs some enormous risks. I know I don’t have to remind you we can’t afford another financial meltdown, and these big banks pose a risk to the entire economy.

Later in his response to her questioning he lies unconscionably with the statement:

We’re keeping a lot of pressure on the international system to meet U.S. capital standards so our exposure is not so great in our complex global financial system. And I look forward to continuing to look at all these issues.

See my previous post Obama’s Latest Betrayal of America and Americans in Favor of the Big Banks: TISA, (Trade in Services Agreement) where I quote William K. Black as saying,

The first paradox is that Obama, who cannot claim that he does not know better given the unanimous findings of his own FCIC appointees who investigated the causes of the crisis, is trying to recreate those causes, spur a race to the bottom among financial regulators, and make the causes of the past crisis global (rather than primarily limited to the U.S. and the EU). Obama, in the TISA draft, proposes to do everything that his own FCIC experts, white-collar criminologists, the top economists on the subject of criminogenic environments, and effective regulators with a track record of success have been telling Obama not to do for his entire term in office.

I have begun unsubscribing from the email lists for anything having to do with Barack Obama or Nancy Pelosi. I am not throwing good money after bad to support these people who are trying to secretly work against me while publicly saying they are working for me.

Harris v. Quinn: Will the Supreme Court Abolish Public Sector Unions on Monday

Naked Capitalism has the article Harris v. Quinn: Will the Supreme Court Abolish Public Sector Unions on Monday.

I couldn’t figure out exactly how to choose quotes from the article to convey the seriousness of the issue without overstepping copyright bounds and depriving them of your going to their web site to actually read the story.  Below I  have chosen both quotes of quotes and some original content from the article without making clear which is which.

Possibly the most bloody attack on unionists was Ludlow, Colorado in 1913 where J.D. Rockefeller and his Colorado Fuel and Iron Company had state militia and hired special deputies attack and try to crush coal miners there. Conflict ranged for months until the militia opened machine-fire on a tent city of mineworkers family and then soaked tents in oil and put them to the torch. Women and children huddled in pits to escape the falmes; in one, eleven children and two women were found burned to death at the hands of the militia.
[Harris vs. Quinn] asks whether a state may compel even those public employees who elect not to join a union to pay fees to the union, since they benefit from the collective bargaining agreements it negotiates.

A “yes” answer would compromise the rights of workers to disassociate themselves from a union, rights grounded in the freedoms of speech and association. A “no” answer would compromise the rights of workers to form a union that can robustly defend their most fundamental interests.
UPDATE We hear about Hobby Lobby v. Burwell from Democrats because it’s framed as an issue in “identity politics.” We don’t hear about Harris v. Quinn from Democrats because that’s an issue of economic justice. Never mind that home health workers are overwhelmingly female, or that public sector unions are disproportionately female and minority. So here the Democrats have placed themselves in the ludicrous position of defending women’s right to contraception with Hobby Lobby, while not defending women’s ability to pay for it with Harris v. Quinn. That won’t stop them from fundraising on it, or course. I mean, come on.

The point of the Naked Capitalism article is that we could be on a  short path back to our nation’s brutal history of trying to suppress unions.  In this age of the internet and instant communication, it may be harder to hide this brutality.  It could lead to an early end to the brutality, or it could lead to outright civil war.  Does this seem like an experiment it is worthwhile to try?  Is this what our Constitution is all about?  Does our Supreme Court lack the wisdom to sort this out in a way that preserves the nation?

Refer back to my previous post Nick Hanauer: The Pitchforks Are Coming For Us Plutocrats to envision one of the possible outcomes.

Reader MardyS posted a link to the Mother Jones article Unions Should Brace Themselves for a Major Supreme Court Loss.

I posted the following comment on the article:

The unions should negotiate in their contracts that non-union employees must receive no more than union wages minus the cost of union dues. The employer does not need to give the difference to the unions, they just keep the money. Next the unions should negotiate for union discounts at many merchants. With enough of this enacted, it would be costly to not be a union member. However, people would be free to decide for themselves whether or not to join the union.

Some other possibilities come to mind.

To prevent cheating, union discounts from merchants should go through the credit card companies who would make sure the recipient was actually a union member. This might be more secure than having to show a union membership card that could be counterfeited.

Union dues should be tax deductible as a business expense, if they aren’t already deductible.

Nick Hanauer: The Pitchforks Are Coming For Us Plutocrats

Politico has the article The Pitchforks Are Coming For Us Plutocrats.

The most ironic thing about rising inequality is how completely unnecessary and self-defeating it is. If we do something about it, if we adjust our policies in the way that, say, Franklin D. Roosevelt did during the Great Depression—so that we help the 99 percent and preempt the revolutionaries and crazies, the ones with the pitchforks—that will be the best thing possible for us rich folks, too. It’s not just that we’ll escape with our lives; it’s that we’ll most certainly get even richer.

So there are some zillionaires that see this coming, too.  They even see the same solution that I do.  Well, his solution may not go far enough, depending on how you interpret “help the 99 percent”, but it may be enough to “preempt the revolutionaries and crazies”.

Now if he can put his money where his mouth is in politics and in convincing fellow zillionaires, perhaps we can save this country after all.  If saving your country from disaster isn’t patriotic, then I don’t know what patriotism is.