My Free Speech Political Quotations and Commentaries Directory and Log
Barack Obama beat Mitt Romney in the 2012 elections 65,909,451 Obama
60,932,176 Romney votes.
Among the 48 million people of food stamps, how many voted for Mitt Romney?
So when did the USA lawmakers ever want to impose their own laws (like
minimum wage) and professional ethics on themselves and their employees?
"Lawmakers, aides may get Obamacare exemption," by John Bresnahan and
Jake Sherman, Poliico, April 24, 2013 ---
What's that old saying ---
"Do as I say, not as I do."
NBC's prime time ratings stink and it's morning show is in turmoil ---
The academic community has in it the biggest
concentration of alarmists, cranks and extremists this side of the giggle house.
William F. Buckley
Preaching to Choir
According to the conservative group Young America’s
Foundation, liberal commencement speakers this year (2013) outnumber
conservative speakers by a ratio of 7-1.
This is horrible. Who invited those ignorant 12.5 percent? Must be the small
I did not confirm the alleged 7:1 ratio which I think is too close for comfort.
Actually, the outliers on the right and left are seldom invited to make
commencement speeches in front of parents.
Entitlements are two-thirds of the federal budget.
Entitlement spending has grown 100-fold over the past 50 years. Half of all
American households now rely on government handouts. When we hear statistics
like that, most of us shake our heads and mutter some sort of expletive. That’s
because nobody thinks they’re the problem. Nobody ever wants to think they’re
the problem. But that’s not the truth. The truth is, as long as we continue to
think of the rising entitlement culture in America as someone else’s problem,
someone else’s fault, we’ll never truly understand it and we’ll have absolutely
Steve Tobak ---
"Preserving the American Dream," Center for Innovation, Stanford
University Graduate School of Business, April 26, 2013 ---
Bob Jensen's Threads on the American Dream ---
"These Slides Show Why We Have Such A Huge Budget Deficit And Why Taxes
Need To Go Up," by Rob Wile, Business Insider, April 27, 2013 ---
This is a slide show based on a presentation by a Harvard Economics Professor.
Bob Jensen's threads on Entitlements ---
"Academic Cesspools," by Walter E. Williams, Townhall, April
24, 2013 ---
"Dartmouth College Calls a Timeout After Student Protest Draws Hostile
Reactions," by Ann Schnoebelen, Chronicle of Higher Education, April
24, 2013 ---
"Crony Capitalism at Work," by Scottie Hughes, Townhall, April
30, 2013 ---
"A Darkening Digital Future Authoritarian regimes want to set up separate,
ideological and religious versions of the Internet," The Wall Street
Journal, May 5, 2013 ---
Eric Schmidt lives a charmed life, not just because
of his success in running Google for over a decade, but also because his
company's mission is to make information more transparent and available.
This makes Mr. Schmidt a rare executive blessed with the freedom to speak
his mind, even if that includes offending powerful politicians.
In a new book, Mr. Schmidt says what many other
executives say only in private, especially about trying to do business in
China. In "The New Digital Age: Reshaping the Future of People, Nations
and Business," Mr. Schmidt and co-author Jared Cohen, a former State
Department official who runs a unit called Google Ideas, hope for the best
from the Internet, but warn to prepare for the worst.
They call the Internet "the world's largest
ungoverned space," for both better and worse. The best aspect of the
Internet is that it is a permissionless medium. In the U.S., government
plays only a modest role, with few regulations or licenses. That makes the
Internet a source of constant innovation. By 2025, they write, "the majority
of the world's population will, in one generation, have gone from having
virtually no access to unfiltered information to accessing all of the
world's information through a device that fits in the palm of the hand."
The bad news: Many authoritarian regimes dedicate
significant resources to limiting what their people can do online. The
authors predict a "Balkanization of the Internet" as more countries and
groups hive off their own corners, narrowing what has been a globally
connected network. The authors warn of separate ideological and religious
versions of the Internet. Countries like Saudi Arabia and Yemen could create
a "Sunni Web," especially now that the Internet domain system allows
characters from non-Roman alphabets, including Arabic. Iran says it plans to
build its own "halal Internet," then disconnect from the rest of the world.
The book classifies government Internet filtering
systems into three tiers: "the blatant, the sheepish, and the politically
and culturally acceptable." The most blatant is China, which they call "the
world's most active and enthusiastic filterer of information." Beijing
employs hundreds of thousands of functionaries to post pro-communist
comments, and it cuts off many websites from outside the country. The
authors confirm media reports that Beijing has even rerouted traffic: "More
than a few times, Google's web address has mysteriously directed people to
www.Baidu.com, China's local search competitor."
The Chinese firewall that suppresses information
about historic topics such as the 1989 Tiananmen Square massacre also
censors current events. When Mr. Schmidt went to Beijing in 2011, all traces
of his visit were instantly removed from the Web in China, showing "how
comprehensive and particular Chinese censorship authorities could be."
The authors do not think China can "survive the
transition to the new digital age in its current form." Going further than
U.S. government officials, they predict an unstable China "will experience
some kind of revolution in coming decades."
Google has publicly disclosed when it couldn't
protect its users from authoritarian governments. In 2009, the company
discovered that Beijing had broken into the Gmail accounts of human-rights
activists in China and the U.S.
"This led to the shutdown of its Google China
operations, the end of self-censorship of Chinese Internet content, and the
redirection of all incoming searches to Google in Hong Kong," the authors
note. The attacks targeted "dozens of other publicly listed companies," most
of which kept quiet. Many cyber attacks remain unreported.
The authors praise Vodafone for publicly refusing
Hosni Mubarak's government during the 2011
Egyptian uprising to send out propaganda messages over its mobile-phone
service. They note, however, that "there will always be some companies that
allow their desire for profit to supersede their responsibility to users,
though such companies will have a harder time achieving success in the
While the Internet threatens dictators, even the
most inspiring use of social media and other digital tools alone can't
revolutionize governments. The Arab Spring hasn't produced a decent
government in Cairo, because reformers have not yet had the chance to create
alternative social and political institutions. Messrs. Schmidt and Cohen
Henry Kissinger: "It is hard to imagine de Gaulles
and Churchills appealing in the world of
. Unique leadership is a human thing, and is not going to be produced by a
mass social community."
Set 01 of my favorite Vermont photographs ---
When Greens Fight It Isn't Pretty
Bernie Sanders, a declared socialist from Vermont, is arguably the most liberal
member of the U.S. Senate. Up here our television sets are being bombarded with
political advertisements paid for by environmentalists claiming that Bernie
wants to destroy the mountainous environment with windmills "taller than the
Statue of Liberty" linked by giant transmission towers to benefit "big
corporations" at the expense of little guy environmentalists. The TV adds in
April 2013 have become much more caustic than the article below. Bernie is being
drawn and quartered by environmentalists.
"Bernie Sanders, Vermont Senator, Opposes State Wind Power Moratorium,"
by Wilson Ring, Huffington Post, January 21, 2013 ---
This is just one of many examples where good intentions collide.
In this case, environmentalists who want to shut down the aging Vermont Yankee
Nuclear Power Plant are fighting like cats and dogs over how to do it optimally
from the standpoint of the environment. Emasculate the green forests by
cutting the trees for biofuel power plants? Never! Top the Green Mountains with
enormous wind mills and towering transmission poles? Never! Solar just is not
there yet for a relatively cloudy state like Vermont. Also efficiency of solar
power is not there yet? New gas and oil power plants in Vermont? Never! Hydro
power imported from Quebec? Not if those ugly 80-ft high transmission towers
have to traverse the forests and mountains of Vermont.
Similarly in cities like Chicago abortion rights advocates collide with
minorities who claim that too many minority babies are being denied life.
My point is that sometimes when we think that all the political wars are
between liberals and conservatives we overlook the fact that fights among
liberals or among conservatives are sometimes more intense than fights between
liberals and conservatives. Wind power is a good example where some extremist
liberal and conservative subsets are joining forces to fight other liberal and
conservative forces who have teamed up.
Set 01 of my favorite Vermont photographs ---
"The Experts: What Renewable Energy Source Has the Most Promise?"
The Wall Street Journal, April 17, 2013 ---
What renewable energy source, if any, has the
most promise for becoming a major energy source? The Wall Street Journal put
this question to The Experts, an exclusive group of industry and thought
leaders who engage in in-depth online discussions of topics from the print
Report. This question relates to articles in a
recent report which covered topics such
as nuclear energy, oil and fracking and formed the basis of a discussion in
The Experts stream on Monday, April 15.
The Experts will discuss topics raised in this
month's Big Issues: Energy Report and other Wall Street Journal Reports.
Find the energy Experts online at
be sure to watch
three energy thought leaders—Ed Begley
Margaret Walls of Resources for the Future and Kateri
Callahan of the Alliance to Save Energy—speak about living, working and
playing more sustainably in a live video chat that aired on April 15 at 3
Craig Pirrong: Nothing Beats Natural Gas
To put it provocatively, this question is a request
to handicap a race of the lame. All renewables are cursed with fundamental
problems that make their future stand-alone (i.e. unsubsidized) viability as
anything but a marginal energy source highly questionable.
With respect to electricity generation, the major
renewables (wind and solar) are both intermittent and diffuse. These are
obstacles inherent in the source of the energy that will be difficult to
surmount. One illustration. Here in Texas, when it gets hot—and the demand
for electricity spikes—the wind stops blowing. Given the fact that we need
generation most when it is hot, this is a serious deficiency. Solar has
greater potential, given the prospects for innovations that improve the
efficiency of solar panels and reduce the cost of producing them. But even
for solar, the vicissitudes of the sun (which vary by season and location)
and the diffusive nature of solar power limit its potential.
What's more, the revolution in natural gas
undermines the economics of these technologies.
Countries that have been quite aggressive in their
pursuit of wind and solar have realized that their aspirations greatly
outpaced the technology. Both Germany and Spain have announced that they
will substantially curtail their government support for wind and solar.
With respect to transportation fuels, the outlook
is even more problematic. Battery technology has proved a major constraint
on the ability to turn electricity (including electricity generated from
renewable sources) into an efficient transportation fuel. Ethanol produced
from food crops is an economic monstrosity that would require far more space
than available here to spell out in proper detail. Ethanol produced from
nonfood sources (e.g., non-celluosic ethanol) does not suffer from some of
the worst aspects of ethanol derived from corn, say, but has proved
stubbornly resistant to commercially economic production. The idea for
producing ethanol from wood dates from 1898. It was commercially
uneconomical then. It is commercially uneconomical now. It will remain
commercially uneconomical for the foreseeable future. That said, it is a
technology that has more attractions than the alternatives.
And again, the potential for natural gas as a
transportation fuel, and the revolution in natural-gas production, undermine
the economics of renewable motor fuels.
Insofar as renewables have desirable environmental
attributes (and some—notably corn-based ethanol—may not), the preferable
approach is to price these attributes and let the market choose the
technologies that produce the best balance between environmental and
Craig Pirrong (@streetwiseprof)
is professor of finance and energy markets director
for the Global Energy Management Institute at the Bauer College of Business
at University of Houston. He was previously Watson family professor of
commodity and financial risk management at Oklahoma State University and a
faculty member at University of Michigan, University of Chicago and
Robert Rapier: My Money Is on Solar PV
Two renewable energy sources are already major
energy sources. Hydropower currently provides about 16% of the world's
electricity, which is greater than the percentage produced by nuclear power,
and a far greater share than all other renewables combined. In fact, the
largest power plant by capacity in the world, as well as four of the five
largest power plants in the world are hydroelectric plants. However, most of
the world's best sites for hydropower have already been developed, so global
growth in new hydropower capacity is forecast to be slow.
The second major source of renewable energy is
traditional biomass, which accounts for two-thirds of the renewable energy
in the world. In developing countries, the overwhelming majority of the
energy consumed is provided by fuel wood (often unsustainably sourced),
which is generally the cheapest fuel option available. Fuel wood is the main
energy source for cooking for most of the developing world, and is the
primary source of energy for over 2 billion people.
Solar and wind power have both experienced
explosive growth over the past decade, but both still account for a very
small portion of the world's energy. Global wind power capacity grew from
under 5 gigawatts (GW) in 1996 to nearly 240 GW by 2011—a nearly 50-fold
increase. But that translated into only 2.8% of the electricity produced in
the U.S. and 1.6% of the electricity produced in China.
Likewise, since 2010 solar photovoltaic (PV)
capacity has been added in more than 100 countries, and the estimated global
capacity at the end of 2011 was 70 GW—a tenfold increase over the previous
five years. But this resulted in only 0.5% of the global electricity demand
Solar heating—consisting of solar water heating,
space heating for homes and industrial process heat—is often overlooked in
discussions of renewable energy. However, global capacity of solar heating
applications is far larger than that of solar PV. According to the REN21
Renewables Global Status Report, at the end of 2011 total global capacity of
solar hot water and space heating was 232 gigawatts of thermal energy (GWth)
(including a solar water heater on my own roof in Hawaii).
So there are some very-fast-growing renewable
energy options, and there are also some that are well-established. But if I
had to put my money on one option that will likely command a much larger
share of energy production in the future, it would be solar PV.
Robert Rapier (@RRapier)
is chief technology officer and executive vice president at Merica
International, a forestry and renewable energy company. He serves as
managing editor for
Energy Trends Insider and is chief energy
Iván Martén: Expect a Healthy Mix of Renewables
Several renewable-energy sources are
technologically mature. Several already are making a significant
contribution to energy generation, such as hydropower in Brazil, biomass in
Finland, onshore wind in Denmark, solar photovoltaic in Germany or
geothermal energy in Indonesia. Apart from hydropower, this strong footprint
so far has largely been accomplished through strong regulatory support.
Future growth of renewable energy will increasingly be driven by cost
competitiveness with fossil-fuel based generation: The cost of renewables
will continue to decline while the cost of fossil fuels is expected to
increase further. Today, solar and wind have already reached this point in
several countries that have abundant resources and high cost of electricity.
Moreover, an increasing share of fluctuating solar
and wind energy will drive higher demand for flexible and dispatchable
"green energy" sources. If electricity storage becomes cheap, as expected,
that could be a true game changer.
In general, adoption of a diversified mix of
different renewable energy sources including storage will benefit power
quality and overall security of supply.
Looking at the global picture, therefore, I do not
believe there will be one winning renewable technology. Rather, there will
be a healthy mix that depends on specific regional factors. We expect that
by 2020 there will be at least one major competitive renewable energy source
in most countries. The exact future mix will vary by region, depending on
the availability both of renewable resources and grid infrastructure and on
their contribution to the local economy. Germany for example, whose
government has defined a vision for the country's energy future that
strongly emphasizes renewable sources and energy efficiency, is currently
pioneering a total transformation of its energy sector.
Iván Martén is a senior partner at Boston
Consulting Group. He has been the global leader of BCG's energy practice
since 2008 and previously was the European leader of the practice.
Jerry Taylor: The Best Prediction: Who Knows?
The prospect of economically competitive renewable
energy is like the horizon; it continues to recede even as we march
double-time toward it.
Proponents argue—correctly—that production costs in
the electricity sector have declined markedly over time. But, alas, so have
the costs of gas-fired electricity, renewables' main competitor for new
plant orders. The revolution in hydraulic fracturing suggests that
renewables are unlikely to win the race against gas in the foreseeable
future. Wind energy would seem to be the most commercially viable renewable
energy source at present, but even so, it's not competitive with gas. Solar
energy is even less competitive either on a utility-scale or at the point of
In the transportation sector, we see something
similar; corn ethanol—the main renewable in play—has become less expensive
to produce over time but, alas, it is still substantially more expensive
than conventional gasoline in wholesale markets. Last week, for instance,
gasoline was selling for an average of $2.76 per gallon in U.S. wholesale
markets. To get the same energy content that a gallon of gasoline will get
you, one would have to pay $4.06 for ethanol in those same markets.
But past is not necessarily prologue. Technological
innovations are possible and scientists and engineers tell plausible stories
about how any number of R&D projects currently under way could radically
change the economics of renewable power. Of course, we've heard these
stories for years, but past failures to achieve breakthroughs don't
necessarily guarantee future failures.
Which renewable has the best chance of breaking
through? No one really knows because no one can reliably predict which of
the many ambitious R&D projects—if any—has the best chance of success. And
no one can confidently predict what will happen to conventional energy
prices…the other important factor in this equation. Confident predictions
have been offered in the past but, as Vaclav Smil demonstrates in his
excellent book "Energy at the Crossroads" (MIT Press, 2005), those
predictions have been, without exception, not worth the paper they've been
All we can say for certain is that the government
has no better crystal ball than the private sector so the former should not
be second-guessing investments made by the latter.
Jerry Taylor is a senior fellow at the Cato
Institute in Washington, D.C. He has written studies on energy taxes, the
oil market, electricity regulation, energy efficiency, renewable energy,
sustainable development and trade and the environment.
Michael Levi: Three Reasons Solar Will Succeed
If I had to bet on one renewable source ultimately
making a very large impact it would be solar. There are three big reasons to
look to solar over other renewable energy supplies.
Solar can take advantage of improvements in
materials, computing and nanotechnology in ways other technologies can't do
nearly as effectively. Energy innovation is at its most powerful when it can
leverage gains in other sectors. Solar also has a host of initial niches it
can grow in, from rooftop generation in places like California, to off-grid
and micro-grid energy in often-sunny developing countries that lack good
infrastructure. Having moderate-sized markets to grow in is critical to
scaling technology and bringing costs down. Solar is also a much better
match for our energy demand than wind is. Solar power peaks when it's
hot—exactly when people want to crank up their air conditioners. Wind power
peaks in the middle of the night when people are using a lot less power.
The biggest barrier for solar is probably the cost
of installing it—even if solar panels were free, the technology still would
often be uneconomical. That will need to change for solar to fully take off.
As I argue in a new book out in a couple of weeks, it would be unwise to bet
on any renewable energy technology as our energy savior, but it would also
be unwise to write renewables off.
Michael Levi (@levi_m)
is the David M. Rubenstein senior fellow for energy and the environment and
director of the program on energy security and climate change at the Council
on Foreign Relations. His book, "The
Power Surge: Energy, Opportunity, and the Battle for America's Future,"
will be published in April.
Mark Thurber: Look Out for Wild Cards
Wind and solar technology are already on a scale
where they can be considered "major" in some jurisdictions (e.g. wind
turbines in Denmark, solar PVs in Germany). However, almost all large
installations of these technologies have occurred only because of strong
(and costly) government incentives. Unsubsidized wind is borderline
cost-competitive where wind resources are good, but solar remains far out of
the money just about everywhere. (One mistake people sometimes make in
declaring solar to be at "grid parity" is to compare the levelized cost of
solar generation with the retail price of electricity, rather than to the
levelized costs of other energy technologies.) Parts of developing countries
that lack grid access and cheap fuel supplies may be an exception where
small solar can already find a viable economic niche even without big
Energy from intermittent renewable resources like
wind and solar will continue to be disadvantaged by the fact that they can't
be turned on whenever they are needed, at least until:
1) Electricity storage technologies become much
2) Regulators permit dynamic pricing of electricity
that sends price signals to consumers to conserve when intermittent
resources are unavailable.
Making progress in these two areas could help wind
and solar become more important contributors to our energy supply, as could
finding ways to expand transmission infrastructure from where renewable
energy resources are best (e.g., for wind, in the middle of the U.S.) to
where most people live.
The most intriguing renewable energy technologies
are those that have the most room to improve. Continued incremental
improvement in wind and solar PV technologies should keep adding up over
time, but the fact remains that these technologies have been around for a
long time and are comparatively mature. More surprises may come from wild
cards with which there is less experience. Perhaps concentrating solar power
can make significant strides as we learn from the first large installations.
Maybe the same subsurface expertise that has made unconventional oil and gas
economic can lead to breakthroughs in enhanced geothermal systems, in which
a hydraulic-fracturing-like process is used to create channels in rock
through which fluid is pumped to absorb the heat at greater depths.
Continued in article
"Preposterous Waste, Pentagon Style," by Daniel J. Mitchel,
Townhall, May 4, 2013 ---
Is Fed Chairman Ben Berrnanke a Junk Yard Dog?
"Yields on Junk Bonds Reach New Low As Investors Fight for Returns, Payout
on Debt From Weak Companies: Takes Its First Dip Below 5%," by Katy
Burne, The Wall Street Journal, May 8, 2013 ---
My parents were very conservative investors and put the bulk of their retirement
savings into certificates of deposits with FDIC banks that sometimes paid nearly
a 6% APR on government-insured long-term CDs. In retirement hey lived
largely on the interest on those savings.
If they were alive today they would be lucky to find a FDIC bank paying
something close to 1%. What many people in the USA do not understand is that
the Fed low-interest rate policy has become what is tantamount to a tax of
people who do not want to take equity risks with their savings. It is really
confiscation of their savings if they are burning capital rather than income on
capital. Who was it who promised no new taxes on middle income families and the
elderly? Yeah right!
"Fraudulent Food Stamp Nation," by Dan Holler , Townhall, May 6, 2013 ---
A 30-something graduate from the University of
Chicago turned part-time blogger boldly declared, “I’m sort of a foodie, and
I’m not going to do the ‘living off ramen’ thing.” He’d just finished
“roasted rabbit with butter, tarragon and sweet potatoes.” His friend, a
30-year old art school graduate acknowledged, “I’m eating better than I ever
The accounts come from the left-leaning Salon,
which published the friends’ food journey under the provocative headline:
Hipsters on food stamps.
That was in March 2010, when 44.5 million people
were part of the Supplemental Nutrition Assistance Program (SNAP). Now, more
than 47.7 million are receiving food stamps.
Recently, Ohio was targeted for participation in a
new federal program to curb abuse in the food stamp program. Last year,
according to The Courier (Findlay, Ohio), the state auditor “became aware of
scams involving electronic benefit cards and people selling them, then
seeking another one by claiming it was lost.” In 2011, 17,000 food stamp
recipients in Ohio received 10 or more reissued cards. The fear, of course,
is that those cards were not lost, but rather sold.
A November 2012 article from The Evening Times
(Little Falls, New York) reveals just how quickly the cost of food stamp
fraud accumulates. The local Welfare Fraud Task Force Team arrested nine
individuals for amassing $107,512.04 in “unentitled benefits.” Two of the
individuals, a husband and wife, “failed to report income on their
applications” and “received $13,465 in food stamp benefits” during “the time
period of March 2009 to April 2012.”
It is not just individuals gaming the system
though. Three days after Barack Obama was reelected as president, The
Enterprise (Brockton, Massachusetts) reported five local stores were accused
of making illegal food stamp transactions. The stores were operating a
cash-for-food stamps exchange. The Enterprise explained, if a food stamp
recipient “wanted $50 cash, the store owner would swipe the card for $100,
which would be credited to the store, and then give the customer the cash in
If it sounds like small ball, it’s not. Last April,
Eunice News (Louisiana) reported on brothers who own a pair of convenience
stores and “defrauded the food stamp program out of $2.7 million and allowed
customers to exchange their food stamps for alcohol, tobacco products, and
cash.” While that may not seem like a lot by Washington standards, it would
take a family of three at the current poverty level nearly 140 years to earn
that much money.
Despite the alarming frequency of news reports, the
United States Department of Agriculture insists fraud accounts for only 1%
of the total cost of the food stamp program. Since the program costs nearly
$80 billion, that is nearly $800 million a year in fraud. That’s enough to
buy nearly 4,500 single family homes.
Of course, none of this accounts for the hipsters,
who were heaping “Thai yellow curry with coconut milk and lemongrass,
Chinese gourd sautéed in hot chile sauce and sweet clementine juice” onto
their plates, “all of it courtesy of government assistance.”
It is difficult, if not impossible, to calculate
the exact degree of abuse. A Bush-era document says more than one-quarter of
all benefits go toward food items not considered “basic.” It’s unclear if
coconut milk and lemongrass would be considered basic, but if that ratio
holds true today, the abuse far outweighs the fraud. That’s $20 billion in
taxpayer money going for things like chips and soda, and maybe sweet
Continued in article
It's well documented that the welfare system in general discourages marriage
even in circumstances when one parent makes a good living in the labor market
and is financially responsible for the other parent and his/her children. But
staying unmarried is a way of the other supposedly "unemployed" parent cam
game the food stamp program and sometimes other alternatives for welfare. It's a
racket for a significant proportion of the 48 million people receiving food
The law does not pretend to punish everything that
is dishonest. That would seriously interfere with business.
Clarence Darrow ---
"Leniency for Offshore Cheats: Courts Hand Down Lighter
Sentences Than in Other Types of Tax-Shelter Cases," by Laura Saunders, The
Wall Street Journal, May 5, 2013 ---
U.S. courts are doling out more lenient punishment
to tax evaders hiding money offshore than to other tax cheats.
Despite a high-profile government crackdown on
secret offshore financial accounts since 2009, the average sentence in those
cases has been about half as long as in some other types of tax cases,
according to a comparison of Internal Revenue Service statistics and data
compiled by former U.S. Justice Department lawyer Jack Townsend. In many
cases, judges are also opting for shorter sentences than recommended under
Since U.S. officials began their intense campaign
four years ago, they have charged at least 71 taxpayers with crimes.
The average sentence handed down in offshore cases
has been less than 15 months, according to Mr. Townsend. In contrast, the
average sentence in tax-shelter schemes has been 30 months over the past
three fiscal years, according to IRS data.
Three-quarters of taxpayers charged in offshore
account cases have pleaded guilty. So far, judges have handed down prison
sentences about half the time.
"The cases involving offshore bank accounts are
drawing lighter sentences than other criminal tax cases," said Mr. Townsend,
who practices at Townsend & Jones LLP in Houston. He calls the discrepancy
"troubling, because cheating is cheating."
Experts say many factors have contributed to
lighter sentences in offshore cases. Among them: the IRS's successful
limited-amnesty programs, in which taxpayers admit having secret accounts;
cooperation by defendants; and light sentences in the first wave of cases in
the current campaign due to poor case selection.
Judges also may have been less harsh because of
huge penalties many defendants owe, including one equal to half the highest
balance in an account. Defendants so far have agreed to pay a total of more
than $170 million to resolve their cases. More than two dozen cases are
Spokesmen for the IRS and the Justice Department
declined to comment.
The latest lenient sentence, and the most dramatic,
came in the case of Mary Estelle Curran, a wealthy 79-year-old widow in Palm
Beach, Fla. On April 25, Federal District Court Judge Kenneth Ryskamp
scolded prosecutors for pursuing her and sentenced her to a year of
probation. Within a minute, he revoked the probation, making her a free
Ms. Curran had pleaded guilty to having secret
foreign accounts containing more than $40 million. Her lawyers said she
inherited the money from her husband and relied on European advisers who
told her not to declare it to the U.S. Ms. Curran tried to enter the IRS's
limited-amnesty program in 2009, but the agency turned her down. She was
indicted in late 2011 and faced up to 37 months in prison.
Prosecutors concurred in asking for probation for
Ms. Curran. Although she didn't go to prison, she agreed to pay the
government almost $22 million.
While experts called Ms. Curran's case an
"outlier," two other defendants recently received sentences that were below
On April 10, Sybil Nancy Upham, who pleaded guilty
in 2010 in connection with concealing about $11 million in accounts in
Switzerland and Liechtenstein, was sentenced to three years of probation
rather than a possible 30 to 37 months in prison. She agreed to pay more
than $5.5 million.
On April 25, Michael Canale, formerly a doctor at
the Veterans Administration, was sentenced to six months in prison in
connection with $1.5 million held in secret Swiss accounts, compared with a
possible 24 to 30 months under the guidelines.
Continued in article
Bob Jensen's threads on why white collar crime pays even if you know ahead
of time that you will probably get caught ---
Back in July,
2012 the Danish central bank,
lowered the deposit rate to -0.2
per cent. Back then we wrote
that it was going to be costly
for the banks, and that money
market rates were going deeper
into negative territory. With
comments last week, how did
that whole negative deposit rate
action turn out for Denmark?
Nordea had a
note out last week on that
very subject. Now, before we
move, let’s remember that Danish
monetary policy is tailored
FX peg. The deposit rate was
there to assure outflow because
of mounting pressure on the EUR/DKK
more (for a fee)
Read the comments at
"Martin Feldstein: The Federal Reserve's Policy Dead End:
Quantitative easing hasn't led to faster growth. A better recovery depends on
the White House and Congress," by Martin Feldstein, The Wall Street
Journal, May 9, 2013 ---
The Federal Reserve recently announced that it will
increase or decrease the size of its monthly bond-buying program in response
to changing economic conditions. This amounts to a policy of fine-tuning its
quantitative-easing program, a puzzling strategy since the evidence suggests
that the program has done little to raise economic growth while saddling the
Fed with an enormous balance sheet.
Quantitative easing, or what the Fed prefers to
call long-term asset purchases, is supposed to stimulate the economy by
increasing share prices, leading to higher household wealth and therefore to
increased consumer spending. Fed Chairman Ben Bernanke has described this as
the "portfolio-balance" effect of the Fed's purchase of long-term government
securities instead of the traditional open-market operations that were
restricted to buying and selling short-term government obligations.
Here's how it is supposed to work. When the Fed
buys long-term government bonds and mortgage-backed securities, private
investors are no longer able to buy those long-term assets. Investors who
want long-term securities therefore have to buy equities. That drives up the
price of equities, leading to more consumer spending.
But despite the Fed's current purchases of $85
billion a month and an accumulation of more than $2 trillion of long-term
assets, the economy is limping along with per capita gross domestic product
rising at less than 1% a year. Although it is impossible to know what would
happen without the central bank's asset purchases, the data imply that very
little increase in GDP can be attributed to the so-called portfolio-balance
effect of the Fed's actions.
Even if all of the rise in the value of household
equities since quantitative easing began could be attributed to the Fed
policy, the implied increase in consumer spending would be quite small.
According to the Federal Reserve's Flow of Funds data, the total value of
household stocks and mutual funds rose by $3.6 trillion between the end of
2009 and the end of 2012. Since past experience implies that each dollar of
increased wealth raises consumer spending by about four cents, the $3.6
trillion rise in the value of equities would raise the level of consumer
spending by about $144 billion over three years, equivalent to an annual
increase of $48 billion or 0.3% of nominal GDP.
This 0.3% overstates the potential contribution of
quantitative easing to the annual growth of GDP, since some of the increase
in the value of household equities resulted from new saving and the
resulting portfolio investment rather than from the rise in share prices.
More important, the rise in equity prices also reflected a general increase
in earnings per share and an increase in investor confidence after 2009 that
the economy would not slide back into recession.
Earnings per share of the Standard & Poor's 500
stocks rose 50% in 2010 and a further 9% in 2011, driving the increase in
share prices. The S&P price-earnings ratio actually fell to 17 at the start
of 2013 from 21 at the start of 2010, showing the importance of increased
earnings rather than an increased demand for equities.
In short, it isn't at all clear that the Fed's
long-term asset purchases have raised equity values as the portfolio balance
theory predicted. Even if it did account for the entire rise in equity
values, the increase in household equity wealth would have only a relatively
small effect on consumer spending and GDP growth.
There is one further puzzle about the
quantitative-easing program. The Fed's purchase of Treasury bonds and other
long-term securities has not been nearly as large as the increase in the
government debt during the same period. The Fed's balance sheet has grown by
less than $2.5 trillion since the summer of 2007, while the federal debt has
grown by more than twice that amount just since the beginning of 2009. As a
result, the public has had to absorb more than $2 trillion of net government
debt during the past three years. At best, the Fed's long-term asset
purchases reduced the extent to which the federal deficits crowded out
The Federal Reserve has rationalized its use of
long-term asset purchases and its explicit guidance about future values of
short-term interest rates by noting that conventional monetary
policy—lowering the federal-funds rate—is not possible now that the
fed-funds rate is very close to zero. With a dual mandate that includes
growth as well as price stability, the Federal Open Market Committee
apparently feels a compulsion to do something. Unfortunately, the evidence
suggests that it hasn't worked.
Mr. Bernanke has emphasized that the use of
unconventional monetary policy requires a cost-benefit analysis that
compares the gains that quantitative easing can achieve with the risks of
asset-price bubbles, future inflation, and the other potential effects of a
rapidly growing Fed balance sheet. I think the risks are now clear and the
benefits are doubtful. The time has come for the Fed to recognize that it
cannot stimulate growth and that a stronger recovery must depend on fiscal
actions and tax reform by the White House and Congress.
Mr. Feldstein, chairman of the Council of Economic Advisers under
President Ronald Reagan, is a professor at Harvard and a member of the
Journal's board of contributors.
Come on Marty! If our Zimbabwe-style government was not printing trillions of
dollars to pay its bills we would've had to (gasp) raise taxes or (gasp, gasp)
cut back on government spending.
And keeping interest rates at near-zero saves our government hundreds of
billions in interest payments on over $16 trillion of booked government debt. We
should be thanking Robert Mugabe for having a great idea on how to pay for
"Bernanke And Friends Are Setting The Stage For An Avalanche," John
Mauldin, Business Insider, May 4, 2013 ---
. . .
The Critical State
Something only a math nerd could love? Scientists
refer to this as a critical state. The term critical state can mean the
point at which water would go to ice or steam, or the moment that critical
mass induces a nuclear reaction, etc. It is the point at which something
triggers a change in the basic nature or character of the object or group.
Thus, (and very casually for all you physicists) we refer to something being
in a critical state (or use the term critical mass) when there is the
opportunity for significant change.
"But to physicists, [the critical state] has always
been seen as a kind of theoretical freak and sideshow, a devilishly unstable
and unusual condition that arises only under the most exceptional
circumstances [in highly controlled experiments]… In the sandpile game,
however, a critical state seemed to arise naturally through the mindless
sprinkling of grains."
Thus, they asked themselves, could this phenomenon
show up elsewhere? In the earth's crust triggering earthquakes, or as
wholesale changes in an ecosystem – or as a stock market crash? "Could the
special organization of the critical state explain why the world at large
seems so susceptible to unpredictable upheavals?" Could it help us
understand not just earthquakes, but why cartoons in a third rate paper in
Denmark could cause world-wide riots?
Buchanan concludes in his opening chapter: "There
are many subtleties and twists in the story … but the basic message, roughly
speaking, is simple: The peculiar and exceptionally unstable organization
of the critical state does indeed seem to be ubiquitous in our world.
Researchers in the past few years have found its mathematical fingerprints
in the workings of all the upheavals I've mentioned so far [earthquakes,
eco-disasters, market crashes], as well as in the spreading of epidemics,
the flaring of traffic jams, the patterns by which instructions trickle down
from managers to workers in the office, and in many other things. At the
heart of our story, then, lies the discovery that networks of things of all
kinds – atoms, molecules, species, people, and even ideas – have a marked
tendency to organize themselves along similar lines. On the basis of this
insight, scientists are finally beginning to fathom what lies behind
tumultuous events of all sorts, and to see patterns at work where they have
never seen them before."
Now, let's think about this for a moment. Going
back to the sandpile game, you find that as you double the number of grains
of sand involved in an avalanche, the probability of an avalanche becomes
2.14 times more likely. We find something similar in earthquakes. In terms
of energy, the data indicate that earthquakes become four times less likely
each time you double the energy they release. Mathematicians refer to this
as a "power law," a special mathematical pattern that stands out in contrast
to the overall complexity of the earthquake process.
Fingers of Instability
So what happens in our game? "…after the pile
evolves into a critical state, many grains rest just on the verge of
tumbling, and these grains link up into 'fingers of instability' of all
possible lengths. While many are short, others slice through the pile from
one end to the other. So the chain reaction triggered by a single grain
might lead to an avalanche of any size whatsoever, depending on whether that
grain fell on a short, intermediate or long finger of instability."
Now, we come to a critical point in our discussion
of the critical state. Again, read this with the markets in mind (again,
"In this simplified setting of the sandpile, the
power law also points to something else: the surprising conclusion that even
the greatest of events have no special or exceptional causes. After
all, every avalanche large or small starts out the same way, when a single
grain falls and makes the pile just slightly too steep at one point.
What makes one avalanche much larger than another has nothing to do with its
original cause, and nothing to do with some special situation in the pile
just before it starts. Rather, it has to do with the perpetually
unstable organization of the critical state, which makes it always possible
for the next grain to trigger an avalanche of any size."
Now, let's couple this idea with a few other
concepts. First, Hyman Minsky (who should have been a Nobel laureate) points
out that stability leads to instability. The more comfortable we get with a
given condition or trend, the longer it will persist and then when the trend
fails, the more dramatic the correction. The problem with long term
macroeconomic stability is that it tends to produce unstable financial
arrangements. If we believe that tomorrow and next year will be the same as
last week and last year, we are more willing to add debt or postpone savings
in favor of current consumption. Thus, says Minsky, the longer the period of
stability, the higher the potential risk for even greater instability when
market participants must change their behavior.
Relating this to our sandpile, the longer that a
critical state builds up in an economy, or in other words, the more "fingers
of instability" that are allowed to develop a connection to other fingers of
instability, the greater the potential for a serious "avalanche."
We Are Managing Uncertainty
Or, maybe a series of smaller shocks lessens the
long reach of the fingers of instability, giving a paradoxical rise to even
more apparent stability. As the late Hunt Taylor wrote:
"Let us start with what we know. First, these
markets look nothing like anything I've ever encountered before. Their
stunning complexity, the staggering number of tradable instruments and their
interconnectedness, the light-speed at which information moves, the degree
to which the movement of one instrument triggers nonlinear reactions along
chains of related derivatives, and the requisite level of mathematics
necessary to price them speak to the reality that we are now sailing in
"I've had 30-plus years of learning experiences in
markets, all of which tell me that technology and telecommunications will
not do away with human greed and ignorance. I think we will drive the car
faster and faster until something bad happens. And I think it will come,
like a comet, from that part of the night sky where we least expect it. This
is something old.
"I think shocks will come, but they will be
shallower, shorter. They will be harder to predict, because we are not
really managing risk anymore. We are managing uncertainty –
too many new variables, plus leverage on a scale we have never encountered
(something borrowed). And, when the inevitable occurs, the buying
opportunities that result will be won by the technologically enabled swift."
Another way to think about it is the way Didier
Sornette, a French geophysicist, has described financial crashes in his
wonderful book Why Stock Markets Crash (the math, though, was far
beyond me!). He wrote, "[T]he specific manner by which prices collapsed is
not the most important problem: a crash occurs because the market has
entered an unstable phase and any small disturbance or process may have
triggered the instability. Think of a ruler held up vertically on your
finger: this very unstable position will lead eventually to its collapse, as
a result of a small (or an absence of adequate) motion of your hand or due
to any tiny whiff of air. The collapse is fundamentally due to the unstable
position; the instantaneous cause of the collapse is secondary."
When things are unstable, it isn't the last grain
of sand that causes the pile to collapse or the slight breeze that causes
the ruler on your fingertip to fall. Those are the "proximate" causes.
They're the closest reasons at hand for the collapse. The real reason,
though, is the "remote" cause, the farthest reason. The farthest reason is
the underlying instability of the system itself.
A fundamentally unstable system is exactly what we
saw in the recent credit crisis. Consumers all through the world's largest
economies borrowed money for all sorts of things, because times were good.
Home prices would always go up and the stock market was back to its old
trick of making 15% a year. And borrowing money was relatively cheap. You
could get 2% short-term loans on homes, which seemingly rose in value 15% a
year, so why not buy now and sell a few years down the road?
Greed took over. Those risky loans were sold to
investors by the tens and hundreds of billions of dollars, all over the
world. And as with all debt sandpiles, the fault lines started to appear.
Maybe it was that one loan in Las Vegas that was the critical piece
of sand; we don't know, but the avalanche was triggered.
You may not remember this, but I was writing about
the problems with subprime debt way back in 2005 and 2006. But as the
problem actually emerged, respected people like Ben Bernanke (the chairman
of the Fed) said that the problem was not all that big and that the fallout
would be "contained." (I bet he wishes he could have that statement back!)
But it wasn't contained. It caused banks to realize
that what they thought was AAA credit was actually a total loss. And as
banks looked at what was on their books, they wondered about their fellow
banks. How bad were they? Who knew? Since no one did, they stopped lending
to each other. Credit simply froze. They stopped taking each other's letters
of credit, and that hurt world trade. Because banks were losing money, they
stopped lending to smaller businesses. Commercial paper dried up. All those
"safe" off-balance-sheet funds that banks created were now folding (what my
friend Paul McCulley first labeled as the Shadow Banking System). Everyone
sold what they could, not what they wanted to, to cover their debts. It was
a true panic. Businesses started laying off people, who in turn stopped
spending as much.
As I read through this again, I think I have an
insight. It is one of the reasons we get "fat tails." In theory, returns on
investment should look like a smooth bell curve, with the ends tapering off
into nothing. According to the theoretical distribution, events that deviate
from the mean by five or more standard deviations ("5-sigma events") are
extremely rare, with 10 or more sigma being practically impossible – at
least in theory. However, under certain circumstances, such events are more
common than expected; 15-sigma or even rarer events have happened in the
world of investments. Examples of such unlikely events include Long Term
Capital in the late '90s and any of a dozen bubbles in history. Because the
real-world commonality of high-sigma events is much greater than in theory,
the distribution is "fatter" at the extremes ("tails") than a truly normal
Thus, the build-up of critical states, those
fingers of instability, is perpetuated even as, and precisely because, we
hedge risks. We try to "stabilize" the risks we see, shoring them up with
derivatives, emergency plans, insurance, and all manner of risk-control
procedures. And by doing so, the economic system can absorb body blows that
would have been severe only a few decades ago. We distribute the risks and
the effects of the risk throughout the system.
Yet as we reduce the known risks, we sow the seeds
for the next 10-sigma event. It is the improbable risks that we do not yet
see that will create the next real crisis. It is not that the fingers of
instability have been removed from the equation, it is that they are in
different places and are not yet visible.
A second related concept is from game theory. The
Nash equilibrium (named after John Nash, he of The
Beautiful Mind) is a kind of optimal strategy for games involving two
or more players, whereby the players reach an outcome to mutual advantage.
If there is a set of strategies for a game with the property that no player
can benefit by changing his strategy while (if) the other players keep their
strategies unchanged, then that set of strategies and the corresponding
payoffs constitute a Nash equilibrium.
A Stable Disequilibrium
So we end up in a critical state of what Paul
McCulley calls a "stable disequilibrium." We have "players" of this game
from all over the world tied inextricably together in a vast dance through
investment, debt, derivatives, trade, globalization, international business,
and finance. Each player works hard to maximize their own personal outcome
and to reduce their exposure to "fingers of instability."
But the longer we go on, asserts Minsky, the more
likely and violent an "avalanche" is. The more the fingers of instability
can build. The more that state of stable disequilibrium can go critical on
Go back to 1997. Thailand began to experience
trouble. The debt explosion in Asia began to unravel. Russia was defaulting
on its bonds. (Astounding. Was it less than ten years ago? Now Russian is
awash in capital. Who could anticipate such a dramatic turn of events?)
Things on the periphery, small fingers of instability, began to impinge on
fault lines in the major world economies. Something that had not been seen
before happened: the historically sound and logical relationship between 29-
and 30-year bonds broke down. Then country after country suddenly and
inexplicably saw that relationship in their bonds begin to correlate, an
unheard-of event. A diversified pool of debt was suddenly no longer
The fingers of instability reached into Long Term
Capital Management and nearly brought the financial world to its knees.
If it were not for the fact that we are coming to
the closing innings of the Debt Supercycle, we would already be in a robust
recovery. But we are not. And sadly, we have a long way to go with this
deleveraging process. It will take years.
You can't borrow your way out of a debt crisis,
whether you are a family or a nation. And, as too many families are finding
out today, if you lose your job you can lose your home. People who were once
very creditworthy are now filing for bankruptcy and walking away from homes.
All those subprime loans going bad put huges numbers of homes back onto the
market, which caused prices to fall on all homes, which caused an entire
home-construction industry to collapse, which hurt all sorts of ancillary
businesses, which caused more people to lose their jobs and give up their
homes, and on and on. The connections in the housing part of the sandpile
were long and deep.
It's all connected. We built a very unstable sand
pile and it came crashing down, and now we have to dig out from the problem.
And the problem was too much debt. It will take years, as banks write off
home loans and commercial real estate and more, and we get down to a more
reasonable level of debt as a country and as a world.
And, bringing this tale of instability up to date,
we find that Ben Bernanke and his central bank colleagues worldwide have
taken much of the burden of sovereign debt upon their mighty shoulders. But
as they push their Sisyphean, quantitative easing boulders up the
ever-steepening sandpile of the global economy, which side of the pile will
collapse first? Will it be the European side, already dangerously unstable?
Or the Japanese side, where the QE boulder is about to grow into a real
whopper? Or could it happen over on the China slope, which is riddled with
fiscal and financial crevasses?
And lest we be complacent here in the US, we only
Niall Ferguson to remind us, as he did here at the
conference this morning, that the US may be in the grip of a profound
structural malaise that neither easing nor austerity can relieve. I'll have
much more to say about Niall's presentation and those of our other speakers
in coming weeks. We were treated to some world-class thinking and
synthesizing of views here today, with much more to come tomorrow! And I'll
keep on asking everyone who comes to the stage, "But what about Japan?"
Our 10th Annual Strategic Investment
Conference is definitely shaping up as our best ever. And with intellects
like Niall Ferguson, Lacy Hunt, and Nouriel Roubini, as well as premier
investment managers that include the entire partner team from GaveKal (Louis
and Charles Gave and Anatole Kaletsky), Jeffrey Gundlach,
Kyle Bass, and Mohamed El-Erian, how could it not
be the best? In his afternoon presentation, Mohamed did a beautiful job of
tying together the themes we focused on today – and he was introduced by his
best friend (and early-morning walking and debating partner), the
irrepressible and incorrigible Paul McCulley, who was also our keynote
speaker last night.
The conference is turning out to be everything that
my co-host, Altegris, and I hoped and expected it would be. We are already
working hard to get the conference videos ready, in order to send them to
the attendees and all Mauldin Circle members over the coming weeks. In the
meantime, here is a great montage from last year's conference for you to
enjoy. If you are not yet a Mauldin Circle member, let
this clip remind you of the unique benefits
offered to those who join my inner circle.
Criminals in Charge: Rampant Fraud in New York Government
"Corruption in Albany," by the NYT Editorial Board," The New
York Times, May 6, 2013 ---
For all the talk among Gov. Andrew Cuomo and other
leaders about cleaning up New York’s rancid state government, it is the
F.B.I. that is doing the cleaning — indictment by indictment. State Senator
John Sampson is the latest Albany politician to face corruption charges. On
Monday, he was taken into custody by federal agents on charges of embezzling
about $440,000 from the sale of foreclosed properties, obstruction of
justice and witness tampering.
¶ Mr. Sampson, who pleaded not guilty, is the
former leader of the Democratic caucus in the Senate, a big catch for
prosecutors and another huge embarrassment for New Yorkers. He also becomes
the 32nd state politician to be indicted or convicted of a crime, censured
or otherwise accused of misbehaving in the last seven years. Alan Hevesi,
the former state comptroller, went to jail as part of a pension scandal.
Former Gov. Eliot Spitzer resigned in disgrace. Nearly two dozen state
senators and Assembly members have been accused and convicted. Assemblyman
Vito Lopez, once the Democratic power broker in Brooklyn, was censured for
harassing young women on his staff.
¶ Mr. Sampson, who led the Senate Democrats from
June 2009 to December 2012, is the fourth top Senate power broker to be
indicted on a charge of misusing his office. The others were: Joseph Bruno,
the Republican leader who is being retried on public corruption charges;
Pedro Espada Jr., a Democrat, who was convicted of stealing from his
nonprofit health care network; and, most recently, Malcolm Smith, a
Democrat, who is now fighting charges of trying to bribe Republicans to put
his name on their ballot for New York City mayor.
¶ New York’s ever-expanding gallery of rogue
politicians makes one wonder what can be done to keep the remaining
unindicted lawmakers in line. The numerous arrests and convictions are
certainly one way to weed out the worst of the bunch. No less helpfully, at
least two former legislators in trouble with federal investigators — Nelson
Castro, a Bronx assemblyman, and Shirley Huntley, a Queens senator — were
secretly taping their colleagues. Wiring politicians as part of a plea deal
is an unsavory business. But it may be exactly what is required to create an
atmosphere of fear and paranoia necessary to break the cycle of temptation.
¶ The indictment in Mr. Sampson’s case outlines a
scheme to embezzle money from the sale of forfeited property in Brooklyn
where he had been appointed a court referee. He is also accused of trying to
conceal the public records involving this scheme.
¶ It will take more than public shaming to get the
Albany crowd to do things right. Our list of proposals includes, foremost,
the public financing of campaigns in order to provide competition for those
entrenched in state office. That would be especially helpful in New York
City, where voters have elected too many of the worst malefactors in Albany.
Meanwhile, we encourage the prosecutors to keep probing — and listening
Bob Jensen's Fraud Updates ---
Justification for the Boston Bombing: Hopes That More Terror in the
USA Will Take Place
Richard A. Falk ---
Richard Anderson Falk (born 1930) is an American
professor emeritus of international law at Princeton University, the
author or co-author of 20 books and the editor or co-editor of another 20
books, speaker, activist on world affairs, and an appointee to two United
Nations positions on the Palestinian territories.
Continued in article
His Excellency Mr. Ban Ki-Moon
The United Nations
New York, NY 10017
cc: Ambassador Susan E. Rice, U.S. Permanent Representative to the United
Nations Via Fax
22 April 2013
Dear Mr. Secretary-General,
We write to express our outrage over yesterday’s statement by Richard Falk—a
top official of the United Nations Human Rights Council—in which he
justifies the Boston terrorist attacks as due “retribution” for American
sins, warns of “worse blowbacks” unless America changes its foreign policy,
blames “Tel Aviv” and exploits a moment of tragedy and mourning to advance a
disturbing political agenda.
We urge you to condemn Mr. Falk, the UNHRC’s permanent investigator of
Israel’s violations of the bases and principles of international law, for
his affront to the memory of those who were killed last week, to the
injured, and to the people of Boston. His remarks are a violation of your
own policy that UN experts live up to the highest standards, which you set
forth two years ago when you admirably rebuked Mr. Falk for spreading 9/11
conspiracy theories on his blog.
Falk’s Foreign Policy Journal article entitled “A Commentary on the Marathon
Murders,” dated April 22, 2013, and annexed here, makes three ignominious
First, it's thesis is that Americans to blame for last week’s atrocity. Falk
approvingly cites comments justifying the Boston Marathon bombings as
“retribution” for the actions of the U.S.military in
Afghanistan,IraqandPakistan. “The American global domination project,” says
Falk, bears responsibility for provoking “all kinds of resistance” in the
post-colonial world. He calls for “courage” to “connect some of these dots.”
Crystallizing his justification of the terrorist attacks, he writes: “Those
to whom evil is done, do evil in return.”
Terrorism will target Americans until they reflect upon and change their
action, says Falk. Lamenting a “taboo” on “self-scrutiny,” he predicts
“adjustments” that will come either from “a voluntary process of
self-reflection” or “through the force of unpleasant events.” America’s
“military prowess” and “hard power diplomacy” make the country “a menace to
the world and to itself.”
“How many canaries will have to die,” asks Falk, “before we awaken from our
geopolitical fantasy of global domination?”
Second, Falk conjures up the sinister specter of another global menace by
blaming the Boston bombings on the Jewish state: “[A]s long as Tel Aviv has
the compliant ear of the American political establishment those who wish for
peace and justice in the world should not rest easy.”
President Obama is accused of having delivered “a love letter to the Israeli
public” during his recent trip there, and of practicing “obsequious
diplomacy.” Falk predicts “worse blowbacks” if the U.S.does not change its
Middle East policy.
Third, the essay alludes to the same 9/11 conspiracy theories that caused
you and other world leaders to condemn him in 2011. Falk speaks of “holy war
fevers espoused by national leaders, the media, and a vengeful public after
the 9/11 attacks” which “embraced Islamophobic falsehoods.” This was
exploited by Bush White House officials “openly seeking a pretext to launch
a regime-changing war against Saddam Hussein’s Iraq.” According to Falk,
“[T]he 9/11 events, as interpreted and spun, provided just the supportive
domestic climate needed for launching an aggressive war against the Baghdad
Excellency, Mr. Falk’s odious and preposterous remarks insult last week’s
victims and discredit the cause of human rights and the founding principles
of the United Nations. We urge you to speak out.
Hillel C. Neuer
"'Black Jails' in China, by Steven Mintz, Ethics Sage, April
22, 2013 ---
The New Rosy Intangibles GDP Index
When reading and math scores were showing how NYC schools were failing, the
NYC teachers reacted by increasing the number of A and B grades to 97% until bad
publicity forced them to retreat just a little. When California students were
performing worse on achievement tests, the State elected to make the tests
When economic tracking statistic performances are bad, the government
paints a brighter picture by changing the definition of indices like inflation
and GDP to paint a brighter, albeit deceptive, picture of itself.
In the case of inflation, the government took out price changes in things
like fuel and food to make inflation not appear to be so bad.
Here's what's happening with a similar change in the GDP index.
"Changing the Conversation," by Peter Schiff, Townhall, April 27, 2013
Peter Schiff is about the only analyst in 2006 to warn that the real estate
bubble was going to burst. Virtually all the other analysts thought he was nuts
until the housing market crashed under the weight of tens of millions of
"The Coming Racial Shift In The US Will Have A Huge Impact On National
Elections " by Jeffrey Skelley, Business Insider, April 27, 2013 ---
"Everything Is Rigged: The Biggest Price-Fixing Scandal Ever:
The Illuminati were amateurs. The second huge financial scandal of the year
reveals the real international conspiracy: There's no price the big banks can't
fix," by Matt Taibbi, Rolling Stone, April 25, 2013 ---
Conspiracy theorists of the world, believers in the
hidden hands of the Rothschilds and the Masons and the Illuminati, we
skeptics owe you an apology. You were right. The players may be a little
different, but your basic premise is correct: The world is a rigged game. We
found this out in recent months, when a series of related corruption stories
spilled out of the financial sector, suggesting the world's largest banks
may be fixing the prices of, well, just about everything.
You may have heard of the Libor scandal, in which
at least three – and perhaps as many as 16 – of the name-brand
too-big-to-fail banks have been manipulating global interest rates, in the
process messing around with the prices of upward of $500 trillion (that's
trillion, with a "t") worth of financial instruments. When that sprawling
con burst into public view last year, it was easily the biggest financial
scandal in history – MIT professor Andrew Lo even said it "dwarfs by orders
of magnitude any financial scam in the history of markets."
That was bad enough, but now Libor may have a twin
brother. Word has leaked out that the London-based firm ICAP, the world's
largest broker of interest-rate swaps, is being investigated by American
authorities for behavior that sounds eerily reminiscent of the Libor mess.
Regulators are looking into whether or not a small group of brokers at ICAP
may have worked with up to 15 of the world's largest banks to manipulate
ISDAfix, a benchmark number used around the world to calculate the prices of
Interest-rate swaps are a tool used by big cities,
major corporations and sovereign governments to manage their debt, and the
scale of their use is almost unimaginably massive. It's about a $379
trillion market, meaning that any manipulation would affect a pile of assets
about 100 times the size of the United States federal budget.
It should surprise no one that among the players
implicated in this scheme to fix the prices of interest-rate swaps are the
same megabanks – including Barclays, UBS, Bank of America, JPMorgan Chase
and the Royal Bank of Scotland – that serve on the Libor panel that sets
global interest rates. In fact, in recent years many of these banks have
already paid multimillion-dollar settlements for anti-competitive
manipulation of one form or another (in addition to Libor, some were caught
up in an anti-competitive scheme,
detailed in Rolling Stone last year, to
rig municipal-debt service auctions). Though the jumble of financial
acronyms sounds like gibberish to the layperson, the fact that there may now
be price-fixing scandals involving both Libor and ISDAfix suggests a single,
giant mushrooming conspiracy of collusion and price-fixing hovering under
the ostensibly competitive veneer of Wall Street culture.
The Scam Wall Street Learned From the Mafia
Why? Because Libor already affects the prices of
interest-rate swaps, making this a manipulation-on-manipulation situation.
If the allegations prove to be right, that will mean that swap customers
have been paying for two different layers of price-fixing corruption. If you
can imagine paying 20 bucks for a crappy PB&J because some evil cabal of
agribusiness companies colluded to fix the prices of both peanuts and peanut
butter, you come close to grasping the lunacy of financial markets where
both interest rates and interest-rate swaps are being manipulated at the
same time, often by the same banks.
"It's a double conspiracy," says an amazed Michael
Greenberger, a former director of the trading and markets division at the
Commodity Futures Trading Commission and now a professor at the University
of Maryland. "It's the height of criminality."
The bad news didn't stop with swaps and interest
rates. In March, it also came out that two regulators – the CFTC here in the
U.S. and the Madrid-based International Organization of Securities
Commissions – were spurred by the Libor revelations to investigate the
possibility of collusive manipulation of gold and silver prices. "Given the
clubby manipulation efforts we saw in Libor benchmarks, I assume other
benchmarks – many other benchmarks – are legit areas of inquiry," CFTC
Commissioner Bart Chilton said.
But the biggest shock came out of a federal
courtroom at the end of March – though if you follow these matters closely,
it may not have been so shocking at all – when a landmark class-action civil
lawsuit against the banks for Libor-related offenses was dismissed. In that
case, a federal judge accepted the banker-defendants' incredible argument:
If cities and towns and other investors lost money because of Libor
manipulation, that was their own fault for ever thinking the banks were
competing in the first place.
"A farce," was one antitrust lawyer's response to
the eyebrow-raising dismissal.
"Incredible," says Sylvia Sokol, an attorney for
Constantine Cannon, a firm that specializes in antitrust cases.
All of these stories collectively pointed to the
same thing: These banks, which already possess enormous power just by virtue
of their financial holdings – in the United States, the top six banks, many
of them the same names you see on the Libor and ISDAfix panels, own assets
equivalent to 60 percent of the nation's GDP – are beginning to realize the
awesome possibilities for increased profit and political might that would
come with colluding instead of competing. Moreover, it's increasingly clear
that both the criminal justice system and the civil courts may be impotent
to stop them, even when they do get caught working together to game the
If true, that would leave us living in an era of
undisguised, real-world conspiracy, in which the prices of currencies,
commodities like gold and silver, even interest rates and the value of money
itself, can be and may already have been dictated from above. And those who
are doing it can get away with it. Forget the Illuminati – this is the real
thing, and it's no secret. You can stare right at it, anytime you want.
Continued in article
Bob Jensen's Rotten to the Core threads on the banking industry ---
From the CFO.com Morning Ledger on April 29, 2013
Debate grows over corporate tax havens.
FT takes a deep dive
into the growing global anger over corporate tax avoidance. There has been a
blurring of the distinctions between tax havens and larger industrialized
countries that use fiscal measures as a source of competitive advantage to
secure investment, jobs and revenues,
writes Vanessa Houlder. Economies such as
the Netherlands and Ireland have sucked up corporate investment by helping
companies avoid—entirely legally—hefty tax bills at home. The Netherlands
and Luxembourg had booked foreign direct investment of $5.8 trillion by the
end of 2012—more than the U.S., U.K. and Germany combined. Meanwhile, the
OECD is warning of a “race to the bottom” on corporate taxes.
"Canada Wants to Join the Government Stupidity Contest," Daniel J.
Mitchell, Townhall, April 29, 2013 ---
. . .
First some background, courtesy of
a story from the Guardian. It seems that
the provincial government actually has language police.
They are known as the language police, a unit
within the regional Quebec government that seeks to protect French from
the rising tide of English. It deploys inspectors to rein in recidivist
anglophones, take on big corporate transgressors such as Guess, the Gap
and Costco and conduct spot checks to follow up thousands of public
But sometimes, these tax-funded Keystone Cops go
On top of that up in Quebec these people are allowed to have babies.
How to Lie With Statistics
White Paper ---
A Dishonest White Paper from Dell ---
Link to the Suspicious White Paper ---
How to Lie With Statistics: This one Cost Billions of Taxpayer Dollars
"New York Times: : Breitbart was right about Pigford," by Ed
Morrissey, HotAir, April 26, 2013 ---
It’s rare to get this kind of vindication, so let’s
enjoy it in memory of Andrew Breitbart for as long as possible. For
more than two years, Andrew and
Lee Stranahan have investigated the Pigford
settlement and the fraudulent claims that not only have cost taxpayers
billions, but have left the original black farmers who sued the USDA over
discrimination in the lurch. Today
the New York Times reports what Andrew and Lee
have been saying all along — that the Pigford settlement was a political
hack job by Tom Vilsack’s Department of Agriculture, and that it’s a magnet
for fraud (via
The compensation effort
sprang from a desire to redress what the government and a federal judge
agreed was a painful legacy of bias against African-Americans by the
Agriculture Department. But an examination by The New York Times shows
that it became a runaway train, driven by racial politics, pressure from
influential members of Congress and law firms that stand to gain more
than $130 million in fees. In the past five years, it has grown to
encompass a second group of African-Americans as well as Hispanic,
female and Native American farmers. In all, more than 90,000 people have
filed claims. The total cost could top $4.4 billion.
From the start, the
claims process prompted allegations of widespread fraud and criticism
that its very design encouraged people to lie: because relatively few
records remained to verify accusations, claimants were not required to
present documentary evidence that they had been unfairly treated or had
even tried to farm. Agriculture Department reviewers found reams of
suspicious claims, from nursery-school-age children and pockets of urban
dwellers, sometimes in the same handwriting with nearly identical
accounts of discrimination.
Yet those concerns were
played down as the compensation effort grew. Though the government has
started requiring more evidence to support some claims, even now people
who say they were unfairly denied loans can collect up to $50,000 with
As a senator, Barack
Obama supported expanding compensation for
black farmers, and then as president he pressed for $1.15 billion to pay
those new claims. Other groups quickly escalated their demands for
similar treatment. In a letter to the White House in September 2009,
Senator Robert Menendez of New Jersey, a leading Hispanic Democrat,
threatened to mount a campaign “outside the Beltway” if Hispanic farmers
were not compensated.
Career litigators, who had
successfully defended the Agriculture Department all the way to the Supreme
Court, were aghast:
The payouts pitted Mr.
Vilsack and other political appointees against career lawyers and agency
officials, who argued that the legal risks did not justify the costs.
Beyond that, they said
it was legally questionable to sidestep Congress and compensate the
Hispanic and female farmers out of a special Treasury Department
account, known as the Judgment Fund. The fund is restricted to payments
of court-approved judgments and settlements, as well as to out-of-court
settlements in cases where the government faces imminent litigation that
it could lose. Some officials argued that tapping the fund for the
farmers set a bad precedent, since most had arguably never contemplated
suing and might not have won if they had.
Be sure to read it all, but
it’s difficult to argue with Byron York’s assessment of the story:
Perhaps now that the New
York Times has exposed this, a few lawmakers might get shamed into doing
something about it. That would really put a smile on Andrew’s face.
Fraud Updates ---
Teaching Case from The Wall Street Journal Accounting
Weekly Review on April 26, 2013
Attention Online Shoppers: Senate Weighs Sales-Tax Bill
John McKinnon and Siobhan Hughes
Apr 22, 2013
Click here to view the full article on WSJ.com
Click here to view the video on WSJ.com
TOPICS: sales tax
SUMMARY: "The Senate is expected to vote as soon as this week on
legislation allowing states to require Internet retailers to collect sales
taxes.... Online retail sales totaled $169 billion in 2010, about 4.4% of
total retail sales.... From 2002 to 2010, such sales rose at an average
annual rate of 18%, compared with 2.6% for total retail sales. " States are
therefore focusing on Internet sales rather than catalogue retailers because
the Internet sales are growing so much faster.
CLASSROOM APPLICATION: The article may be used in a tax class, in a
financial accounting class covering sales taxes, or in an MBA class.
1. (Advanced) Who is responsible for paying sales taxes? How are
sales taxes collected and remitted? To what governing authorities in the
U.S. are they remitted?
2. (Introductory) What proposed new tax law related to online sales
has been moving through the U.S. Senate this week?
3. (Advanced) Why has the Senate proposed this bill with an
exemption for smaller retailers? In your answer, include the definition of
"smaller retailer" that is included in the Senate proposed legislation.
4. (Introductory) Why does online retailer Amazon support the
5. (Advanced) Why do you think this Senate bill focuses on online
retail sales but not catalogue retailers?
SMALL GROUP ASSIGNMENT:
Group discussion (may vary according to the mix of in-state, out-of-state,
and international students in the class): 1. Compare the sales tax rates
applied in your home state or home country. 2. How would your state
legislator estimate the amount of tax losses being incurred in your home
state or country because of untaxed internet sales?
Reviewed By: Judy Beckman, University of Rhode Island
"Attention Online Shoppers: Senate Weighs Sales-Tax Bill,"
by John McKinnon and Siobhan Hughes, The Wall Street Journal, April 22, 2013 ---
The Senate is expected to vote as
soon as this week on legislation allowing states to require Internet
retailers to collect sales taxes, opening up a battle over a tax break that
consumers love but that states say costs millions.
The outcome is uncertain, largely because of
opposition from some conservatives who see the move as a new tax and an
unfair burden on business, and from lawmakers from states that don't tax
But Senate Majority Leader Harry Reid's decision to
move to a procedural vote on the proposal suggests its prospects are
improving. In a nonbinding vote last month, senators approved a broadly
worded resolution of support for the idea by a wide margin, 75-24.
Conservative opposition has appeared to splinter, as more lawmakers see the
growth in online sales as a major source of revenue.
A 1992 U.S. Supreme Court ruling held that states
can't force retailers to collect sales tax unless they have a physical
presence—such as a warehouse or store—within their borders. Consumers are
supposed to pay tax themselves, but few do; states seldom pursue those who
State officials say catalog sales by out-of-state
merchants also cost them revenue, but online sales are a bigger worry.
Online retail sales totaled $169 billion in 2010, about 4.4% of total retail
sales, according to the U.S. Census Bureau. From 2002 to 2010, such sales
rose at an average annual rate of 18%, compared with 2.6% for total retail
Governors estimate state and local governments lose
about $20 billion a year in sales-tax revenue because of online sales.
Brick-and-mortar retailers have argued that tax-free sales give online
retailers an unfair edge.
Supporters of the legislation—which would affect
some mail-order sales as well—say it would help states collect taxes that
are already owed.
Backing by high-profile former and current GOP
governors, including Haley Barbour of Mississippi and Bob McDonnell of
Virginia, has given the measure a boost. "As we started getting some
Republican governors…Republican senators got more comfortable," said Dan
Crippen, executive director of the National Governors Association.
Support from a few big online retailers, notably
Amazon.com Inc., AMZN -7.81% also has helped. Amazon has said it supports a
national online sales tax, and a spokesman said the company is in favor of
the Senate bill, known as the Marketplace Fairness Act. The company often
has opposed state-by-state legislation, instead brokering deals to build new
distribution centers in certain states.
But some online retailers warn the legislation
could create significant new regulatory burdens on small businesses that
sell over the Internet. EBay Inc. EBAY +0.34% on Sunday said it sent tens of
millions of emails urging its active U.S. sellers to push for changes to
Congress's sales-tax bill. EBay said the bill's sales threshold for
triggering the tax is too low.
"The legislation treats you and big multi-billion
dollar online retailers—such as Amazon—exactly the same," said John Donahoe,
eBay's chief executive, in one of the emails. He said only businesses with
at least $10 million in annual out-of-state sales, or 50 or more employees,
should qualify for sales tax, compared with the $1 million sales threshold
in the bill.
Forcing businesses to comply with tax laws of other
states "is an incredible precedent to set right now," said Jim DeMint, a
former Republican senator from South Carolina who now is president of the
conservative Heritage Foundation. He added, "it violates federalism" to
require businesses in one state to collect taxes for another.
Sen. Max Baucus (D., Mont.), Finance Committee
chairman, said he opposes the bill because it could hurt businesses in his
state, which has no sales tax. He said in an interview he hopes it can be
improved through amendments. The decision to vote on the measure without
full consideration by Mr. Baucus's committee could generate opposition.
A top Senate Democratic aide predicted that the
legislation would pass the Senate, but even supporters worry that opposition
could grow if the bill remains pending too long. Sixty votes would be needed
to overcome a filibuster threat.
Continued in article
Non-governmental organization (NGO) ---
"Global NGOs Spend More on Accounting Than Multinationals," by Jeri
Eckhart Queenan, Harvard Business Review Blog, April 23, 2013 ---
Benchmark data isn't sexy stuff, but occasionally
the numbers reveal surprising findings. Who, for instance, would have
guessed that global NGOs spend nearly 80% more to track their finances and
employ nearly twice as many finance staff as comparable for-profit
This hardly seems right given that multinationals
are thought to be awash in money and NGOs have the image of cash-strapped,
waste averse organizations — which they are. But the data, gathered in our
new study "Stop
Starving Scale" and compared against benchmarks
Productivity & Quality Center), hint at a little-known story: most global
NGOs today struggle to master the complexities of managing efficient,
integrated operations in large part due to restrictions placed on them by
In that regard, NGOs find themselves facing the
same issues that vexed multinational corporations as they began to master
globalized operations several decades ago. While their missions couldn't be
more different, the organizational challenges are strikingly similar.
As globalization began to shift into high gear in
the 1980s, corporations grew by opening international outposts to access new
markets. But they soon realized that dotting the globe with factories and
staff led to fragmentation that begged for better integration and
coordination. In time, corporations learned to build the administrative and
technical infrastructure needed to manage their sprawling operations.
Today, NGOs are struggling to do the same — with
one key difference. Multinationals are masters of their own fate when it
comes to investing in people and infrastructure. By contrast, NGOs rely on
the generosity of funders who, for the most part, restrict their investments
to specific programs, leaving NGOs starved for general operating support.
Continued in article
The New Yorker:
From maids to roofers to drug dealers the underground economy resulted in an
estimated $2 Trillion (with a T) of underreported taxable income in 2012
Unemployment and Welfare Fraud
"The Underground Recovery," by James Surowiecki," The New Yorker,
April 29, 2013 ---
When we all finished filing our tax returns last
week, there was a little something missing: two trillion dollars. That’s how
much money Americans may have made in the past year that didn’t get reported
to the I.R.S., according to a recent study by the economist Edgar Feige,
who’s been investigating the so-called underground, or gray, economy for
thirty-five years. It’s a huge number: if the government managed to collect
taxes on all that income, the deficit would be trivial. This unreported
income is being earned, for the most part, not by drug dealers or Mob bosses
but by tens of millions of people with run-of-the-mill jobs—nannies,
barbers, Web-site designers, and construction workers—who are getting paid
off the books. Ordinary Americans have gone underground, and, as the
recovery continues to limp along, they seem to be doing it more and more.
Measuring an unreported economy is obviously
tricky. But look closely and you can see the traces of a booming informal
economy everywhere. As Feige said to me, “The best footprint left in the
sand by this economy that doesn’t want to be observed is the use of cash.”
His studies show that, while economists talk about the advent of a cashless
society, Americans still hold an enormous amount of cold, hard cash—as much
as seven hundred and fifty billion dollars. The percentage of Americans who
don’t use banks is surprisingly high, and on the rise. Off-the-books
activity also helps explain a mystery about the current economy: even though
the percentage of Americans officially working has dropped dramatically, and
even though household income is still well below what it was in 2007,
personal consumption is higher than it was before the recession, and retail
sales have been growing briskly (despite a dip in March). Bernard Baumohl,
an economist at the Economic Outlook Group, estimates that, based on
historical patterns, current retail sales are actually what you’d expect if
the unemployment rate were around five or six per cent, rather than the 7.6
per cent we’re stuck with. The difference, he argues, probably reflects
workers migrating into the shadow economy. “It’s typical that during
recessions people work on the side while collecting unemployment,” Baumohl
told me. “But the severity of the recession and the profound weakness of
this recovery may mean that a lot more people have entered the underground
economy, and have had to stay there longer.”
The increasing importance of the gray economy isn’t
only a reaction to the downturn: studies suggest that the sector has been
growing steadily over the years. In 1992, the I.R.S. estimated that the
government was losing $80 billion a year in income-tax revenue. Its estimate
for 2006 was $385 billion—almost five times as much (and still an
underestimate, according to Feige’s numbers). The U.S. is certainly a long
way from, say, Greece, where tax evasion is a national sport and the shadow
economy accounts for twenty-seven per cent of G.D.P. But the forces pushing
people to work off the books are powerful. Feige points to the growing
distrust of government as one important factor. The desire to avoid
licensing regulations, which force people to jump through elaborate hoops
just to get a job, is another. Most important, perhaps, are changes in the
way we work. As Baumohl put it, “For businesses, the calculus of hiring has
fundamentally changed.” Companies have got used to bringing people on as
needed and then dropping them when the job is over, and they save on
benefits and payroll taxes by treating even full-time employees as
independent contractors. Casual employment often becomes under-the-table
work; the arrangement has become a way of life in the construction industry.
In a recent California survey of three hundred thousand contractors,
two-thirds said they had no direct employees, meaning that they did not need
to pay workers’-compensation insurance or payroll taxes. In other words, for
lots of people off-the-books work is the only job available.
Sudhir Venkatesh, a sociologist at Columbia and the
author of a study of the underground economy, thinks that many workers,
particularly younger ones, have become comfortable with casual work
arrangements. “We have seen the rise of a new generation of people who are
much more used to doing things in a freelance way,” he said. “That makes
them more amenable to unregulated work. And they seem less concerned about
security, which they equate with rigidity.” The growing importance of
services in the economy is also crucial. Tutors, nannies, yoga teachers,
housecleaners, and the like are often paid in cash, which is hard for the
I.R.S. to track. In a 2006 study, the economist Catherine Haskins found that
between eighty and ninety-seven per cent of nannies were paid under the
Continued in article
Case Studies in Gaming the Income Tax Laws ---
Credit Default Swaps (CDS) ---
"Global Financial Stability Report: Old Risks, New Challenges"
International Monetary Fund
The Global Financial Stability Report (GFSR)
assesses key risks facing the global financial system. In normal times, the
report seeks to play a role in preventing crises by highlighting policies
that may mitigate systemic risks, thereby contributing to global financial
stability and the sustained economic growth of the IMF’s member countries.
Risks to financial stability have declined since the October 2012 GFSR,
providing support to the economy and prompting a rally in risk assets. These
favorable conditions reflect a combination of deeper policy commitments,
renewed monetary stimulus, and continued liquidity support. The current
report analyzes the key challenges facing financial and nonfinancial firms
as they continue to repair their balance sheets and unwind debt overhangs.
The report also takes a closer look at the sovereign credit default swaps
market to determine its usefulness and its susceptibility to speculative
excesses. Lastly, the report examines the issue of unconventional monetary
policy (“MP-plus”) and its potential side effects, and suggests the use of
macroprudential policies, as needed, to lessen vulnerabilities, allowing
country authorities to continue using MP-plus to support growth while
protecting financial stability.
The analysis in this report has been coordinated by
the Monetary and Capital Markets (MCM) Department under the general
direction of José Viñals, Financial Counsellor and Director. The project has
been directed by Jan Brockmeijer and Robert Sheehy, both Deputy Directors;
Peter Dattels and Laura Kodres, Assistant Directors; and Matthew Jones,
Advisor. It has benefited from comments and suggestions from the senior
staff in the MCM department.
Individual contributors to the report are: Ali Al-Eyd,
Sergei Antoshin, Serkan Arslanalp, Craig Botham, Jorge A. Chan-Lau, Yingyuan
Chen, Ken Chikada, Julian Chow, Nehad Chowdhury, Sean Craig, Reinout De
Bock, Jennifer Elliott, Michaela Erbenova, Jeanne Gobat, Brenda González-Hermosillo,
Dale Gray, Sanjay Hazarika, Heiko Hesse, Changchun Hua, Anna Ilyina, Tommaso
Mancini-Griffoli, S. Erik Oppers, Bradley Jones, Marcel Kasumovich, William
Kerry, John Kiff, Frederic Lambert, Rebecca McCaughrin, Peter Lindner, André
Meier, Paul Mills, Nada Oulidi, Hiroko Oura, Evan Papageorgiou, Vladimir
Pillonca, Jaume Puig, Jochen Schmittmann, Miguel Segoviano, Jongsoon Shin,
Stephen Smith, Nobuyasu Sugimoto, Narayan Suryakumar, Takahiro Tsuda,
Kenichi Ueda, Nico Valckx, and Chris Walker. Martin Edmonds, Mustafa Jamal,
Oksana Khadarina, and Yoon Sook Kim provided analytical support. Gerald
Gloria, Nirmaleen Jayawardane, Juan Rigat, Adriana Rota, and Ramanjeet Singh
were responsible for word processing. Eugenio Cerutti, Ali Sharifkhani, and
Hui Tong provided database and programming support. Joanne Johnson and Gregg
Forte of the External Relations Department edited the manuscript and the
External Relations Department coordinated production of the publication.
This particular issue draws, in part, on a series
of discussions with banks, clearing organizations, securities firms, asset
management companies, hedge funds, standards setters, financial consultants,
pension funds, central banks, national treasuries, and academic researchers.
The report reflects information available up to April 2, 2013.
The report benefited from comments and suggestions
from staff in other IMF departments, as well as from Executive Directors
following their discussion of the Global Financial Stability Report on April
1, 2013. However, the analysis and policy considerations are those of the
contributing staff and should not be attributed to the Executive Directors,
their national authorities, or the IMF.
Note that much of this report deals with the state of Credit Default Swaps.
Bob Jensen’s threads on the CDO and CDS scandals ---
Reforming Immigration Policy: Where are the economic scholars?
"Reforming Immigration Policy," by Nobel Laureate Gary Becker, The
Becker-Posner Blog, April 21, 2013 ---
American immigration policy is simply a mess!
Skills of potential immigrants receive a lower weight in determining
priority for legal immigration than in any other developed country. This
year, the 65,000 places under the H-1B program that gives firms the
opportunity to get temporary visas for skilled immigrants (up to two terms
of 3 years each) were fully subscribed five days after the program opened.
Approximately 11 million illegal immigrants are in the country. They are
highly unlikely ever to be deported, yet have an insecure and restless
future. And these are just some of the highlights of the U.S.’ immigration
Any sensible immigration reform would greatly
increase the opportunities for skilled immigrants to come to this country on
a permanent basis. Once that were accomplished, there would be no need for
an H-1B program, or any other program of temporary visas for skilled
workers. The millions of illegal immigrants in the United States will not
disappear, so like it or not, ultimately most of them will have to be
offered a pathway to citizenship. The years of waiting in one’s home country
before receiving a green card should end, and be replaced by a process where
legal entry into this country is quick and efficient.
A group of senators from both political parties has
introduced a bill for major immigration reform. This bill includes a
substantial expansion in the H-1B temporary visa program from 65,000 to
110,000, expanded opportunities for skilled immigrants, a pathway to
citizenship for many illegal immigrants, and further tightening of the
border with Mexico. The bill also proposes a “merit-based” point system,
already used by some other countries, that would award points to immigrants
based on their education, employment prospects, and family ties. For
example, young skilled immigrants would get many points, whereas older
individuals not closely related to residents here would get very few points.
Potential immigrants with greater number of points would have higher
priority in the immigration queue.
This bill is a clear improvement in most respects
over the current immigration system. Yet this is an easy criterion, given
how bad current policies, and the bill has several major drawbacks. The
pathway to citizenship for illegal immigrants would be contingent on first
creating a more effective border fence and greater border policing activity.
One major problem with that approach is that the pressure to enter from
Mexico may be greatly declining. Net illegal immigration from Mexico during
the past half dozen years has been minor, and possibly even negative. Of
course, this is partly the result of the weak American labor market for low
skilled workers due to the recession and its aftermath.
I believe, however, that the recession is not the
only reason for the drying up of illegal immigration from Mexico. Since
Mexican birth rates have plummeted during the past couple of decades, the
number of young Mexicans looking for work in Mexico or the US has declined
considerably. In addition, the Mexican economy has done well during the past
decade, despite the American recession, so that many more jobs are available
in the Mexican labor market. It is likely that even when the American labor
market fully recovers, many fewer illegal immigrants will want to come from
Mexico than had been the case in earlier decades. The sections of the
Senators’ bill designed to limit entry of illegal immigrants may be in
effect fighting an old battle that is no longer so relevant.
The second big problem with the Senators’
immigration bill is that it contains many arbitrary rules and quotas for
different groups. It would allow so many to be admitted under temporary
skill visas, another batch would be admitted under the merit-based point
system, a certain number would be accepted because they have advanced
degrees in math, engineering, and the sciences, a sizable number of lesser
skilled workers can come in as guest workers under a new “W” visa, and so
on. These are arbitrary limits due to political compromises between
different factions and the different political parties.
Continued in article
"Reforming Immigration Policy," by Richard Posner, The Becker-Posner Blog,
April 21, 2013 ---
I completely agree with Becker that the bill
introduced last week in the Senate—the “Border Security, Economic
Opportunity, and Immigration Modernization Act of 2013”—would if enacted as
written be a big step in the direction of reforming our immigration policy,
a policy that Becker rightly calls “simply a mess!” However, the bill is
unlikely to be enacted as written. To be passed by Congress in this era of
ferocious partisanship will doubtless require numerous compromises that may
frustrate many of the sponsors’ aspirations for reform.
Even if enacted without change, the proposed law
would leave much to be desired. It is an unreadable 880 pages in length
(legislation has become obese in tandem with the increasing obesity of the
population). There is fortunately a very helpful 17-page summary, see
http://www.aila.org/content/default.aspx?bc=25667|44052 (visited Apr. 21,
2013)—yet, helpful as it is, were it the proposed law rather than the
880-page monstrosity, it would still be too complicated—a bureaucratic
nightmare. At a time of legitimate or at least widespread concern with the
growth of government bureaucracy, the proposed law if enacted as written
would substantially expand the bureaucracy (or rather bureaucracies)
involved in the enforcement of the immigration laws. Doubtless the changes
made to the bill as it runs the congressional gauntlet will increase its
bureaucratic complexity and opacity.
One respect in which the bill would expand
bureaucracy is its ambitious, expensive effort to make our long border with
Mexico impermeable to illegal immigration. The effort probably is Quixotic,
like all previous efforts to seal the border, and so will fail. And Becker
points out that given the decline in recent years in illegal immigration
from Mexico, the effort to “secure the border” may also be superfluous—a
waste of money designed to assuage, though admittedly for what may be
imperative political reasons (democratic politics is an art of compromise),
the paranoia of citizens of the states that abut the border.
It’s difficult to understand why illegal
immigration from Mexico is considered by so many Americans a very serious
problem. The idea that illegal Mexican immigrants take jobs away from
Americans appears to be largely false, as it seems that most of the jobs
they get in the United States, notably in agriculture, are not attractive to
Americans. And the idea that they are moochers, who have crossed the border
to take advantage of our social welfare policies, seems wrong because they
have far fewer entitlements to social welfare than lawful residents of the
United States have. The estimated 11 million illegal immigrants (mostly from
Mexico and other Central American countries) are a large and productive
component of the supply of labor in the United States (Mexicans are famously
hard workers—“to work like a Mexican” is a California expression for working
too hard), usually earn only modest wages, and do not partake largely of
social welfare largesse.
It is desirable that they be allowed to become
citizens, and the proposed law provides a “path to citizenship” for them,
provided they are not criminals or otherwise undesirable. The path is
expensive for low-wage workers, however, and also long—10 years or more:
thus steep and long. And actually longer than it seems, because the “path”
is not to open until the burder with Mexico is “secured,” which it may never
be. Many illegal immigrants may therefore prefer to remain in their illegal
status, since few illegal immigrants are actually deported, provided they
are law abiding and keep a low profile. The length and gradient of the path
to citizenship are designed to rebut charges that the new law will proide
“amnesty” for illegal immigrants; the fear is that amnestry operates to
increase illegal immigration by implying that future illegal immigrants will
be the beneficiaries of a future amnesty. Some current or future illegal
immigrants may be motivated by hope of a future amnesty; but for many, and I
would guess for most, such a hope would not be decisive in persuading a
person considering immigrating illegally to take the plunge. However,
although I don’t expect the enhanced border security to have much of an
effect on illegal immigration, it should at least offset the lure that hopes
of a future amnesty would create for some foreigners contemplating
immigrating to the United States illegally.
Continued in article
One thing I've noticed is that respected economic scholars on the left (e.g.,
Paul Krugman) and right (e.g., Michael Boskin) have not provided a great deal of
help on the immigration debate from an economic standpoint. The giant fires of
this debate, at least in academia, are more in political science and sociology
where there is great sympathy for the plight of 12 million (probably much more)
undocumented residents and their descendants who bypassed the legal hurdles of
taking turns to become documented citizens.
If the USA does not want to be destroyed by opening its borders to all people
of the world who would enter this country in a New York minute if we did not
impose some constraints on immigration. The quotas are somewhere between a
million a year and a billion a year. But where do we set the limits? And how do
we enforce those limits?
I'm in favor of raising the quotas with some form of fairness to undocumented
residents who have been here for years. At the same time I think we should
rewrite the 14th amendment that keeps women from all parts of the world sneaking
into this nation just to have their babies become automatic U.S. citizens. Are
there other nations with such legal rights of making citizenship a birthright?
We keep looking for an optimal solution when there is no optimal solution
given the poverty of the world. At best we have to saticsfice here --- and
that's the ugly game of politics when it comes to immigration policy.
One thing the short-term decline in border infiltration has shown us is that
"illegal immigration" is highly correlated with economic opportunity. When
undocumented workers cannot find jobs it discourages others from following in
In the long-run the problem is self correcting. Eventually citizens of the
USA will be sneaking across the borders of the BRIC nations affording them
greater economic opportunity --- Brazil, Russia, India, and China.
"The Failure of Crits and Leftist Law Professors to Defend Progressive
Causes," by Brian Z. Tamanaha, SSRN, April 25, 2013 ---
Future generations will look back at the first decade of the twenty-first
century as a pivotal time when a huge economic barrier was erected to
encumber the path to a legal career. The symbolic announcement of this
barrier rang out when annual tuition crossed the $50,000 threshold, now
exceeded at a dozen or so law schools. Including fees and living expenses,
it costs well in excess of $200,000 to obtain a law degree at most of the
nation’s highly regarded law schools and at a number of non-elite ones as
well. Law schools thus impose a formidable entry fee on anyone who wishes to
follow what, until recently, has long served as a means of upward mobility
and access to power in American society.
The pricing structure of legal education has
profound class implications. High tuition will inhibit people from
middle-class and poor families more than it will deter the offspring of the
rich with ample resources. Law school scholarship policies, for reasons I
will explain, in effect channel students with financial means to higher
ranked law schools, reaping better opportunities, while sending students
without money to lower law schools. A growing proportion of elite legal
positions will be held by people from wealthy backgrounds as a result. For
students who rely on borrowing to finance their legal education, the heavy
debt they carry will dictate the types of jobs they seek and constrain the
career they go on to have.
Liberal law professors often express concerns about
class in American society — championing access to the legal profession and
the provision of legal services for underserved communities. Yet as law
school tuition rose to its current extraordinary heights, progressive law
professors did nothing to resist it. This Article explores what happened and
This is offered in the spirit of critical legal
studies — as a critical self-examination of the failure of leftist law
professors. The Crits were highly critical of complacent liberal academics
of their day, arguing that they had a hand in perpetuating an unjust legal
system; here I charge liberal legal academia — including the Crits — with
perpetuating the profoundly warped and harmful economics of legal education.
What follows will offend many of my fellow liberals. It may even lose me
some friends. Liberal law professors must see past their anger to reflect on
whether there is a core truth to my arguments, to take personal
responsibility for what has happened, and to engage in collective action to
do something to alter the economics of our operation. If not, the current
economic barrier to a legal career may become permanent.
Bob Jensen's threads on liberal bias in higher education ---
So when did the USA lawmakers ever want to impose their own laws (like
minimum wage) and professional ethics on themselves and their employees?
"Lawmakers, aides may get Obamacare exemption," by John Bresnahan and
Jake Sherman, Poliico, April 24, 2013 ---
What's that old saying ---
"Do as I say, not as I do."