Tidbits Quotations
To Accompany July 15, 2014 edition of Tidbits
http://www.trinity.edu/rjensen/tidbits/2014/tidbits071514.htm  
Bob Jensen at Trinity University




My Free Speech Political Quotations and Commentaries Directory and Log ---
http://www.cs.trinity.edu/~rjensen/temp/Political/PoliticalQuotationsCommentaries.htm

We have enough lawyers, although it’s a fine profession,” he told the crowd. “I can say that because I’m a lawyer.
Barack Obama, President of the United States
http://www.the-american-interest.com/blog/2014/06/15/lawyer-in-chief-warns-against-law-school/
Warning:  This is one of those quotations that is easily taken out of context (USA law schools are certainly hoping this is the case)
http://taxprof.typepad.com/taxprof_blog/2014/06/president-obama-1.html

We must be willing to get rid of the life we've planned, so as to have the life that is waiting for us.
Joseph Campbell

If everyone is thinking alike, then somebody isn't thinking.
George S. Patton

It's better to walk alone than in a crowd going in the wrong direction.
Diane Grant

Taliban Cuts off Fingers of Those Who Voted in Afghan Elections ---
http://www.breitbart.com/Big-Peace/2014/06/16/Taliban-Cuts-Fingers-Off-Those-Who-Voted-In-Afghan-Elections

Did Federal Climate Scientists Fudge Temperature Data to Make It Warmer? ---
http://reason.com/archives/2014/07/03/did-federal-climate-scientists-fudge-tem

I bet Ed Snowden could find the lost Lerner e-mails! ---
http://www.freerepublic.com/focus/f-chat/3168952/posts

Democracy is Wrong for the World and Belgium is a Test Case ---
http://www.cbn.com/tv/embedplayer.aspx?bcid=1509282970001




"The Texas GOP Stands on a Platform of Ignorance," by Mac McCann, Reason Magazine, June 28, 2014 ---
http://reason.com/archives/2014/06/28/texas-republicans-pray-the-gay-away


Jensen Comment
I mistakenly envisioned the liberal state of California to be on top of data collection, analysis, and management of climate change as it affects cities, towns, agriculture, and other business operations in our "Golden State." According to an article in the most recent edition of Stanford Magazine, nothing could be further from the truth --- especially the pending disaster of water shortage.

The lack of information about the water stored in the state's aquifer system is a problem that Rosemary Knight, PhD '85, a professor of geophysics, has been working on for almost 30 years. Extending Thompson's bank metaphor, she says that our current pump-friendly system "would be like me saying, 'OK, I'm going to retire next week and live off my savings account.' And to see if that's viable, I go to the bank five days in a row and pull out $100—no problem. So I say, 'I'm going to retire and pull out $100 once a week for the rest of my life,' without any knowledge of where the bottom of my savings account is."

"Tapped Out?" by Kate Galbraith, Stanford Magazine, July-August, 2014 ---
http://alumni.stanford.edu/get/page/magazine/article/?article_id=71847

In recent years, drought has spread across California like a lengthening shadow, sapping farms and fish, fueling wildfires and forcing towns to scramble for extra water supplies lest taps run dry. It's not the first time, nor will it be the last.

In the coming decades, the situation may become even grimmer. If current models of climate change are borne out, the spring snowpack in the Sierra, a water source for tens of millions of Californians, likely will have dwindled to a shimmering semblance of its former self. Some of the massive aquifers that underlie the bountiful Central Valley croplands may falter from continued overuse. At the same time, California's population, now 38 million, is projected to swell to 46 million by 2035 and then to more than 50 million by 2050.

The Golden State, like much of the parched yet booming West, has reached a crossroads.

"In the past, we have developed a water system that does a great job of meeting our needs—the needs of growing cities, the needs of growing agricultural areas," says Barton "Buzz" Thompson, a Stanford law professor who has become one of the West's foremost authorities on water issues. "But the approaches that we used were not sustainable, and they are at risk of much more extreme drought conditions than we have today."

California has myriad natural advantages, and a few unnatural ones, when it comes to water. The long, high Sierra range serves as a vast reservoir for snow, and beneath much of the state lie rich repositories of groundwater—"drought insurance," as Thompson puts it. And due to sharp historical negotiating, California has first dibs on some of the water from the Colorado River, one of the West's greatest (and most contested) resources.

The state also enjoys the ability to move water around via a comprehensive network of rivers and reservoirs. "The plumbing system of California is incredible," says Terry Anderson, a Hoover Institution senior fellow focused on applying market concepts to environmental issues. "You can almost sit in an office and look at a board with lights flashing or a computer screen and, say, click that valve down three units and that one up three, and move water from Shasta to L.A."

Still, the problems of California and the West have become too pressing to brush aside. Last year was the driest since at least the Gold Rush era, when record keeping began. Even though desperately needed spring rains arrived, they could not make up the deficit. The Sierra snowpack, which comprises a third of the state's water supply, ended the season at just 18 percent of its average level.

More than a dozen small, mostly rural communities nearly ran out of drinking water. In some cases state and local governments had to intervene to help dig new wells or lengthen pipelines. Elsewhere, rivers used by migrating salmon shrank and scientists used boats to ferry struggling young fish to the ocean.

Farmers, who account for about 80 percent of the state's water usage, felt the drought just as acutely. Barred by the state and federal governments from drawing as large a portion of their customary allotment of surface water, many scrambled to salvage long-term investments in valuable crops like almonds and pistachios by pumping water from aquifers. Even so, California's Central Valley, the nation's most prolific producer of fruits, vegetables and nuts, was projected to lose about 6 percent of its irrigated cropland; the financial toll could exceed $1 billion.

Dramatic as this drought has been, with angry Central Valley billboards accusing Congress of creating a new Dust Bowl by favoring endangered species' water needs over farmers', it may merely be a prelude of battles in a future with more people and less water to go around. Across California and the West, "we have very high confidence that continued global warming will increase the likelihood of severely low snow years," says Noah Diffenbaugh, an associate professor in earth sciences and at the Woods Institute for the Environment. That is true, he says, even if the world's warming is held to 1 additional degree Celsius, the target agreed to by the United Nations.

Essentially, although precipitation is variable across the Western United States and has actually increased in recent decades in the Southern Sierra, in the coming decades the higher average temperatures predicted by even conservative climate models are likely to turn a larger portion of that snow into rain, as well as hastening melting and evaporation. A smaller snowpack means less of that water will make it into reservoirs and, ultimately, to taps.

The supply situation is worse when aquifers are taken into account. Most years, groundwater accounts for 40 percent of the state's water usage, much of that for agriculture, but in a drought the figure often rises to 60 percent. "We talk about bank accounts for a rainy day; groundwater is our bank account for a dry day," Thompson says. "And we're using up that bank account."

In contrast to most other Western states, groundwater use in California is essentially unregulated at the state level, and local restrictions are a patchwork. Landowners are entitled to draw water that flows beneath their property, but the collective drain can have far-reaching consequences. Overpumping depletes stores faster than they can recharge and can cause the ground to sink. If current practices continue, some experts have warned that California could run out of groundwater in just a few decades. What's more, as the aquifers are depleted, water quality could suffer due to saltwater intrusion.

This is a dreary prognosis, but such outcomes are not inevitable. Thompson, Anderson and other Stanford scholars across a range of disciplines have outlined a series of measures that California can take now to ensure that the water needs of cities, farms and wildlife are met.

The first step toward forestalling future droughts is to gather as much information as possible about water. This may sound obvious, but our knowledge of this invaluable resource has some significant gaps.

Cities are among the fastest-growing users of water, yet some can't accurately measure usage by individual customers. Statewide, some 255,000 homes and businesses in 42 communities lack water meters, according to an investigation of Department of Water Resources records by the San Jose Mercury News. (The newspaper also found that those areas use significantly more water per person than the state average.) In Sacramento, for example, where state lawmakers fret perpetually about water, only about half the homes and businesses have meters. In January, when local officials asked everyone to reduce their water usage by 20 percent, the city couldn't actually tell whether some residents were complying.

Back in 2004, then-Gov. Arnold Schwarzenegger signed a law mandating that all California cities must have meters fully installed by 2025. The intensifying drought has increased the sense of urgency, and some experts have called for accelerating the deadline.

Most farmers in California do not have meters on their groundwater wells, either—a situation mirrored in other large agricultural states like Texas, where meters are seen as not only expensive (costing a few thousand dollars each) but also a slippery slope to regulation. Apart from pumping costs, groundwater is generally free to farms, and lack of data on its use is a serious concern, says Leon Szeptycki, an attorney specializing in water use and management, and executive director of Stanford's Water in the West program.

Meters could help remedy that. Among other things, they would help with dispute resolution. "If everybody had a meter on their well, and you knew how much everybody was using, and you knew what the aquifer levels are, you could sort of calculate everybody's contribution to aquifer depletion," Szeptycki says. "But if you don't know any of those things, those just become things to fight about."

Farmers counter that they use other means, such as the amount of energy used for pumping, to estimate water use. "Contrary to popular belief, most farms do have some sort of measurement on the water supply," says Mike Wade, executive director of the California Farm Water Coalition. California farms also have been "very proactive in adopting high-efficiency irrigation systems over the last few decades," he adds.

Currently, the state delegates management of groundwater to local authorities, and few of the local bodies have taken aggressive measures to counter aquifers' decline. So despite its reputation as a regulatory minefield, California actually lags behind the rest of the West when it comes to groundwater management. "Most states have taken some action to deal with their most extreme groundwater overdraft," Thompson says. "California is probably the worst. We've probably done the least so far."

That could change, however, as legislation is gathering momentum in Sacramento to increase state oversight of aquifers—a notion that is gaining support even from farmers during this worryingly dry year. Tighter regulations could edge out marginal croplands, Thompson says, but he does not believe it will kill California's farming industry.

Even more basically, California and other states have only limited knowledge about the aquifers themselves. Whereas water in rivers and reservoirs can be measured with reasonable accuracy, we have only a vague idea of how much water lies beneath the Earth's surface, and where it is clean and where it is salty. If this information existed, California could construct a comprehensive map of groundwater resources just as it maps river systems and mountain snowpacks.

The lack of information about the water stored in the state's aquifer system is a problem that Rosemary Knight, PhD '85, a professor of geophysics, has been working on for almost 30 years. Extending Thompson's bank metaphor, she says that our current pump-friendly system "would be like me saying, 'OK, I'm going to retire next week and live off my savings account.' And to see if that's viable, I go to the bank five days in a row and pull out $100—no problem. So I say, 'I'm going to retire and pull out $100 once a week for the rest of my life,' without any knowledge of where the bottom of my savings account is."

Continued in article

 


"Job Openings Rise to 7-Year High, but Hiring Notches Scant Gains," by Josh Zumbrun, The Wall Street Journal, July 8, 2014 ---
http://blogs.wsj.com/economics/2014/07/08/job-openings-rise-to-7-year-high-but-hiring-notches-scant-gains/

Slightly more than 2.5 million people voluntarily left their job in May, the most since mid-2008, but still less than during the strongest points of the economic expansion from 2001 to 2007.

Continued in article

Jensen Comment
There are many reasons people quit their jobs, but a leading cause is the aging USA population of baby boomers. In the depth of the recession, when the stock markets collapsed and the Federal Reserve declared virtually no interest earnings on safe savings, these boomers carried on in the labor force because they could not afford to retire. The Federal Reserve is still not giving them relief on interest on lifetime savings, but the stock market reached new highs last week giving many of aging boomers enough retirement savings to at last quit their jobs. hit the road in motor homes, and eat lotus leaves.

The loser in all of this is the government that will have to generate more cash flows for Social Security retirement payments, Medicare billings, and less tax revenue to the extent that the retirees were in the 52% of Americans that pay income taxes.

In many cases such as new retirees in the Postal Service the jobs will be lost rather than filled by younger workers. Many of private sector jobs will be filled by cheaper and more effective robots that do demand such employment benefits as medical insurance, maternity leave, paternity leave, paid vacations, and lifetime retirement fund contributions. Aging robots can be recycled in one form or another.


"Deportations of Immigrant Minors Have Plummeted Under Obama," by Nolan Feeney, Time Magazine, July 6, 2014 ---
http://time.com/2959887/obama-data-unaccompanied-minor-immigrants/?xid=newsletter-brief

A total of 8,143 immigrants under the age of 18 were deported in 2008, but last year that figure fell to 1,669.
Continued in article

Jensen Comment
Is it any mystery why nearly 100,000 children are crossing into the USA each month?


Where are governmental payments internal controls? What controls?

From the CPA Newsletter on July 9, 2014

Improper government payments reached $100B in 2013
By its own reckoning, the U.S. government made $100 billion in improper payments last year in the form of tax credits and unemployment benefits to people who didn't qualify, and medical payments for unnecessary procedures. Improper payments peaked in 2010, reaching $121 billion. The government has been trying to put controls in place to address this issue. The House Subcommittee on Government Operations is holding a hearing today on the matter. San Francisco Chronicle (free content)/The Associated Press (7/9

Bob Jensen's threads on the sad state of governmental accounting ---
http://www.trinity.edu/rjensen/Theory02.htm#GovernmentalAccounting


"Under-age and on the move:  A wave of unaccompanied children swamps the debate over immigration," The Economist, June 28, 2014 ---
http://www.economist.com/news/briefing/21605886-wave-unaccompanied-children-swamps-debate-over-immigration-under-age-and-move

. . .

The sudden influx of children into the United States has nearly overwhelmed the agencies that must deal with it. Detention facilities for children who cross the border illegally are horribly overcrowded. On June 5th Breitbart Texas, a conservative news site, published leaked photos showing dozens of children crammed into bare rooms. Barack Obama speaks of an “urgent humanitarian situation”.

The White House blames the influx on instability in Central America. A report by the UN High Commissioner for Refugees in March, based on interviews with around 300 Central American under-age detainees in the United States, put gang violence and domestic abuse high among the causes of flight—along with a desire to be reunited with relatives in America.

. . .

Why now?
El Salvador, Honduras and Guatemala have had shockingly high murder rates for years, however.
The reason so many of them have decided to leave at once is a widespread rumour that Mr Obama’s administration has relaxed the barriers against childrenand their mothers if the children are young enough—entering the United States. A leaked border-agency memo based on interviews with 230 women and children apprehended in the Rio Grande Valley concluded that they had crossed the border mainly because they expected to be allowed to stay.

. . .

In this environment, however, the prospects for comprehensive immigration reform, which might allow more temporary workers to move back and forth across the border, are not looking good. The Obama administration’s messages of discouragement may put some migrants off. But Ms Najar, her family and friends are all the more eager to set off again before the door shuts for good. “We have faith that we will make it. If we don’t, it is God’s will that we should remain in this hell of a country.”

 When will desperation turn into a strategy of extortion?

Number of unaccompanied children caught crossing has surged to about 52,000 so far this fiscal year (and increasing each day)
"The US Immigration Debate Has Been Transformed At The Borders," The Economist, June 29, 2014 ---
 http://www.businessinsider.com/child-migrants-swamp-the-immigration-debate-2014-6#ixzz3631zE0VN

A few weeks ago Helen Yovanna Mata, a 16-year-old Honduran girl, turned up at Corinto, a scruffy crossing on the border with Guatemala, with a backpack and a few papers. Two of the papers were death threats scribbled in scratchy ballpoint, another was a school document validating her story.

One of the notes said: "We’re not kidding. You now have seven days [to leave]. We don’t want to hurt you, but you have to believe us. Death." It was signed "M18", the name of a violent Central American street gang. Honduran officials let her through to Guatemala, her first stop on an arduous journey north to the United States. No one knows if she got there.

Rising numbers of children are following in Helen’s footsteps. Corinto is abuzz with wiry, menacing men carrying dirty wads of banknotes who arrange for coyotillos--local kids turned people-smugglers--to lead migrants without passports through the subtropical hills into Guatemala.

Since early this year, the vast majority of those migrants have been youngsters themselves, sometimes travelling alone, sometimes accompanied by their mothers.

At night, when the coyotillos get to work, hordes of them walk up the back lanes, mothers cradling babies in arms, teenage girls with pink backpacks. They travel in such numbers that the village dogs howl.

Over 1,300 miles (2,090km) north of Corinto, on the Texan side of the Rio Grande, a lone man is fishing. The Mexican side, less than 100 yards away, is more festive: dozens of children are splashing in the shallow water and a party barge floats by, blaring music.

A couple of US Border Patrol agents assess the scene. They spot several jet skis on the Mexican side as belonging to people-smugglers. And they point to a small group standing under a tree. "Black clothing in the summer?" says one. "Everyone else is in shorts, beach attire."

The Rio Grande Valley is now the hottest spot for illegal crossings of the 2,000-mile border between the United States and Mexico. And an increasing number of border-jumpers are children travelling without their parents.

The number of unaccompanied children caught crossing has surged to about 52,000 so far this fiscal year, which started in October, up from 15,700 in fiscal 2011. Most of them have come not from Mexico, but from Central America (see map). Of the youngsters caught so far this fiscal year, 15,000 are from Honduras, more than double last year’s number and five times the 2012 tally. (Plenty more get nabbed earlier in the journey: Fernando Lezama, the chief migration official in Corinto, says up to 5,000 unaccompanied Honduran kids have been deported from Mexico so far this year.)

The sudden influx of children into the United States has nearly overwhelmed the agencies that must deal with it. Detention facilities for children who cross the border illegally are horribly overcrowded. On June 5th Breitbart Texas, a conservative news site, published leaked photos showing dozens of children crammed into bare rooms. Barack Obama speaks of an "urgent humanitarian situation".

The White House blames the influx on instability in Central America. A report by the UN High Commissioner for Refugees in March, based on interviews with around 300 Central American under-age detainees in the United States, put gang violence and domestic abuse high among the causes of flight--along with a desire to be reunited with relatives in America.

The stories of those back in Corinto support that explanation. Marisa Najar, a single mother travelling with her two children, ten and six, and a 15-year-old niece, Faviana, set out this month with 25 other Honduran friends and neighbours.

Twice they reached Mexico before being deported, on one occasion riding "The Beast", an infamous cargo train, part of the way from Arriaga, in southern Mexico. Faviana recalls the moment when gangsters on the train started counting the children. "They wanted to kidnap us or rape us," she says matter-of-factly. The migrants hopped off and took a bus towards Mexico City, but were caught and sent home.

Faviana has left her unwed mother and six siblings behind because of street violence. She has not been to school for four years because, she says, gangs threaten to kill girls like her. Her uncle and aunt were recently murdered. Her mother is so poor, some days the family goes without food.

Rape is a word she uses frequently; it happens all around her. But she hopes to reach the United States to go back to school. "I have always wanted to be a doctor," she says. Her aunt, Ms Najar, has no home or job. She struggled to pay for books to keep her ten-year-old son, Zagdi, at school. When asked why he wants to go to America, Zagdi throws back his thin shoulders and says: "To work."

http://www.businessinsider.com/child-migrants-swamp-the-immigration-debate-2014-6#ixzz3632UVMjf

These Children are Not Part of President Obama's Dream (they are his nightmare) ---
http://en.wikipedia.org/wiki/DREAM_Act

"Obama to Seek Funds to Stem Border Crossings and Speed Deportations," by Julia Preston, The New York Times, June 28, 2014

President Obama will ask Congress to provide more than $2 billion in new funds to control the surge of illegal Central American migrants at the South Texas border, and to grant broader powers for immigration officials to speed deportations of children caught crossing without their parents, White House officials said on Saturday.

Mr. Obama will send a letter on Monday to alert Congress that he will seek an emergency appropriation for rapidly expanding border enforcement actions and humanitarian assistance programs to cope with the influx, which includes record numbers of unaccompanied minors and adults bringing children. The officials gave only a general estimate of the amount, saying the White House would send a detailed request for the funds when Congress returned after the Fourth of July recess that began Friday and ends July 7. Continue reading the main story Related Coverage

Snakes and Thorny Brush, and Children at the Border AloneJUNE 25, 2014 About 1,000 women and children, mainly from Central America, have been dropped off in Phoenix since Memorial Day weekend with little more than water, apples and potato chips. Faces of an Immigration System Overwhelmed by Women and ChildrenJUNE 5, 2014 Wave of Minors on Their Own Rush to Cross Southwest BorderJUNE 4, 2014

The president will also ask Congress to revise existing statutes to give the Homeland Security secretary, Jeh Johnson, new authorities to accelerate the screening and deportation of young unaccompanied migrants who are not from Mexico. Fast-track procedures are already in place to deport young migrants from Mexico because it shares a border with the United States.

Mr. Obama will also ask for tougher penalties for smugglers who bring children and other vulnerable migrants across the border illegally, the officials said.

“This is an urgent humanitarian situation,” Cecilia Muñoz, the director of the White House Domestic Policy Council, said in a telephone interview on Saturday. “We are being as aggressive as we can be, on both sides of the border,” she said. “We are dealing with smuggling networks that are exploiting people, and with the humanitarian treatment of migrants while also applying the law as appropriate.”

After the president declared a humanitarian crisis in early June, federal emergency management officials have been coordinating with the many federal agencies involved in finding detention shelters for the unaccompanied youths and in stepping up enforcement measures to deter more migrants from coming.

“The uptick in activity at the border and the steps the administration has put in place are extraordinary,” a White House official said. “We are maxing out our capacities within the existing appropriated monies.”

Federal officials have opened shelters to detain unaccompanied children at three military bases and are seeking facilities for other shelters. Border authorities are required to turn over unaccompanied minors within 72 hours to the Department of Health and Human Services, which oversees the shelters and seeks to locate family members in this country who can receive the youths.

While many unaccompanied children may qualify for some legal status here, many others would not. Authorities want to eliminate delays in deporting children determined to have no legal option to stay, the White House officials said.

On Thursday, Mr. Obama directed tough comments to Central American parents in an interview on ABC News. “Do not send your children to the borders,” the president said. “If they do make it, they’ll get sent back. More importantly, they may not make it.” Continue reading the main story Continue reading the main story Continue reading the main story

White House officials said they were not asking Congress to change other existing legal protections for children apprehended without their parents. The administration is working with the governments of the three countries that are home to most of the migrants — El Salvador, Guatemala and Honduras — to ensure the children are safe once they are returned, the officials said.

Representative Henry Cuellar, a Democrat whose district includes a long stretch of the South Texas border, on Saturday visited about 1,000 migrants detained at the Border Patrol station in McAllen. He urged Congress to approve quick changes to laws on the handling of unaccompanied minors.

“When it’s Central American countries, there is a different process,” Mr. Cuellar said. “One of the things we need to do is tweak the law, to give Border Patrol the power to treat anybody the same as we treat Mexicans.”

The influx in the Rio Grande Valley has also included many families, especially women with children. To discourage more families from embarking on the dangerous journey across Mexico, the administration is detaining more of them after they are caught.

House Republican leaders chastised the president last week, saying his lax enforcement of immigration laws had unleashed the flow. “Word has spread to the Americas and beyond that the Obama administration has taken unprecedented and most likely unconstitutional steps to shut down the enforcement of our immigration laws,” Representative Robert W. Goodlatte, chairman of the House Judiciary Committee, said at a hearing. “It seems that Obama fiddles while our borders implode.”

Mr. Goodlatte said he would work with the White House to strengthen the administration’s enforcement powers.

The new proposals to deal with the border came as immigrant rights groups signaled in more than 40 coordinated protests in 23 states during the weekend that they were still hoping for action by the president to slow the pace of deportations.

Continued in article

Jensen Comment
The worry is that this strategy of using children will be used increasingly by nations south of the Rio Grande to extort more billions of dollars from the USA. When does it end?


Question
What do bankrupt cities in California have in common with Argentina?

Hint
It has more to do with the future than the past.

"Franklin, Calpers Clash on Stockton Pension Issue Investment Titans Disagree on Whether Stockton, Calif.'s Pension Payments Should Be Cut to Pay Back a Loan," by Dan Fitzpatrick, The Wall Street Journal, July 7, 2014 ---
http://online.wsj.com/articles/franklin-calpers-clash-on-stockton-pension-issue-1404772370?tesla=y&mod=djemCFO_h&mg=reno64-wsj

Two U.S. investment titans are clashing over whether public pensions should be protected in municipal bankruptcy, a major test that has implications for workers, investors and distressed cities across the country.

Payments into pension funds are usually considered sacrosanct, but fights are breaking out around the U.S. over who gets priority when a municipality seeks protection from creditors. The latest battle involves the bankruptcy of Stockton, Calif., and pits mutual-fund giant Franklin Templeton Investments against California Public Employees' Retirement System, the largest public pension fund in the U.S.

The firms disagree on whether Stockton's retirement contributions should be reduced to free up money for a loan repayment. U.S. Bankruptcy Court Judge Christopher Klein in Sacramento could rule on the dispute as early as Tuesday.

Many troubled municipalities are grappling with how to bring down pension costs while municipal-bond holders are trying to figure out how to protect their interests before or during a municipal insolvency. Franklin Templeton is separately challenging a new law in Puerto Rico allowing some troubled public agencies to restructure their debt, saying it violates the U.S. Constitution.

A ruling that Stockton's pensions can be curtailed could embolden more cities to use bankruptcy as a way to seek retirement concessions. In December the judge overseeing Detroit's bankruptcy case ruled that pensions aren't entitled to "extraordinary protection" despite state constitutional safeguards against benefit cuts. Calpers has argued in court that the ruling on Detroit's city-run retirement systems doesn't apply to California's state-run plan.

The outcome in Stockton "is being watched by everyone," said Suzanne Kelly, co-founder of Scottsdale, Ariz., pension strategy and restructuring firm Kelly Garfinkle Strategic Restructuring LLC. If the judge rules that pensions can be curtailed, Ms. Kelly added, it could push cities "on the brink" to see bankruptcy as a "feasible option."

Franklin Templeton, which manages assets of more than $908 billion, is the lone creditor challenging Stockton's plan to end a two-year run through bankruptcy, arguing the northern California port city wants to unfairly slice a debt repayment while leaving public pension contributions intact. The city is offering the San Mateo, Calif., firm about $350,000, or less than 1%, back on a $35 million loan that paid for fire stations, a police station, bridges, street improvements and parks.

"The meager recovery that the city is attempting to cram down," said a Franklin Templeton spokeswoman, "has left us with no choice but to object so that we can deliver a fair recovery for our investors."

The state's retirement system, known by the acronym Calpers, has responded by arguing pension payments are guaranteed by California law and can't be cut. Stockton contributes roughly $30 million a year to Calpers, which controls retirement money for municipal workers across California and has assets of roughly $300 billion.

A Calpers actuary testified in May that Stockton would be faced with a hefty fee if it chose to terminate its relationship with the retirement system. The amount would be $1.6 billion, according to Calpers. "How will that get Franklin more money?" said John Knox, an attorney representing the city of Stockton. "It boggles the mind."

The bankruptcy judge is expected to rule on the value of the collateral supporting Franklin Templeton's $35 million loan: two golf courses and a park. It isn't known if he also will rule on the larger question of whether pensions can be reduced.

Continued in article

Jensen Comment
Political leaders in Argentina stuck their middle fingers upwards toward hedge funds that invested billions in Argentina bonds. But the recent U.S. Supreme Court decision makes it harder for Argentina to borrow badly needed money from USA investors  without repaying former investors in failed Argentine bonds.

Similarly, bankrupt cities like Stockton that ignore obligations to municipal bond holders in favor of giving priorities to labor unions may find themselves having to pay soaring interest rates on bonds the city needs to borrow in the future. The problem of borrowing by California towns and cities is exacerbated by the gloomy forecast of long-term drought. Screwing former municipal bond investors may be the height of stupidity in drought-ridden California. Borrowing costs may soar into the clouds even when California towns and cities can find investors dumb enough to invest in the Golden State's municipal bonds. This does not bode well for a troubled state hoping to rebuild its school district, town, county, and state infrastructure.

Stockton is already becoming a high crime city due in to large measure by having to lay off so many police officers.


Paul Krugman's book review of Stress Test is almost longer than the book itself --- mostly a negative review

"Does He Pass the Test?" by Paul Krugman, The New York Review of Books, July 10, 2014 ---
http://www.nybooks.com/articles/archives/2014/jul/10/geithner-does-he-pass-test/

Bob Jensen's threads on the bailout are at
http://www.trinity.edu/rjensen/2008Bailout.htm


Clearly, replication by independent researchers would add confidence to the NCDC results. In the meantime, if Heller episode proves nothing else, it is that we can continue to expect confirmation bias to pervade nearly every aspect of the climate change debate.
"Did Federal Climate Scientists Fudge Temperature Data to Make It Warmer?" by Ronald Bailey, Reason Magazine, July 3, 2014 ---
http://reason.com/archives/2014/07/03/did-federal-climate-scientists-fudge-tem

"Right after the year 2000," climate change skeptic Tony Heller claimed last month, federal climate scientists "dramatically altered US climate history, making the past much colder and the present much warmer....This alteration turned a long term cooling trend since 1930 into a warming trend." Heller (nom de blog Steven Goddard) says that these adjustments " cooled 1934 and warmed 1998, to make 1998 the hottest year in US history instead of 1934."

Heller's assertions induced a frenzy of commentary, attracting the attention of The Drudge Report, the Telegraph, The Daily Caller, and Fox News. A few days later, the hullabaloo was further stoked by reports that scientists at the National Climatic Data Center (NCDC) had quietly reinstated July 1936 as the hottest month on record in the continental U.S. instead of July 2012. (For the record, the National Oceanic and Atmospheric Administration—the NCDC's parent agency—has declared 2012 the hottest year on record for the lower 48 states, and the months between August 2011 and July 2012 as the hottest 12-month period on record. The year 2012 was also the warmest year in the 36-year satellite temperature record.)

In response to the brouhaha, the NCDC press office sent out a rather defensive statement noting that its new U.S. temperature dataset based on climate division adjustments has, indeed, restored July 1936 to its hellish pinnacle. "We recalculate the entire period of record to ensure the most up-to-date information and to ensure proper comparison over time," said the press release (which, oddly, is not available online). "In this improved analysis, July 1936 is now slightly warmer than July 2012, by a similar very small margin." It added that this "did not significantly change overall trends for the national temperature time series" and that the "year 2012 is still easily the warmest on record."

But never mind the quibbling over which month in the past century was the hottest. Is Heller right when he claims that NCDC scientists are retrospectively fiddling with the national thermostat to bolster the case for man-made global warming?

The answer is complicated.

When Heller produced his temperature trend for the continental United States, he basically took the raw temperature data from the U.S. Historical Climatology Network from 1895 to the present and averaged them. He made no adjustments to the data to take into account such confounders as changes in location, equipment, time of observation, urban heat island effects, and so forth. Heller argues that these changes more or less randomly cancel out to reveal the real (and lower) trend in average U.S. temperatures.

In contrast, the researchers at the NCDC have spent years combing through U.S. temperature data records trying to figure out ways to adjust for confounders. In 2009, the NCDC researchers detailed how they go about adjusting the temperature data from the 1,218 stations in the Historical Climatology Network (HCN). They look for changes in the time of observation, station moves, instrument changes, and changes in conditions near the station sites (e.g., expanding cities). They filter the data through various algorithms to detect such problems as implausibly high or low temperatures or artifacts produced by lazy observers who just keep marking down the same daily temperatures for long periods.

They've clarified a lot this way. For example, simply shifting from liquid-in-glass thermometers to electronic maximum-minimum temperature systems "led to an average drop in maximum temperatures of about 0.4°C and to an average rise in minimum temperatures of 0.3°C." In addition, observers switched their time of observation afternoon to morning. Both of these changes would tend to artificially cool the U.S. temperature record.

Urban areas are warmer than the countryside, so previous NCDC researchers had to adjust temperature datasets account for the effects of urban growth around weather stations. The center's 2009 study conceded that many HCN stations are not ideally situated—that they now sit near parking lots, say, or building HVAC exhausts. Such effects tend to boost recorded temperatures. The researchers argue that they do not need to make any explicit adjustments for such effects because their algorithms can identify and correct for those errors in the temperature data.

Once all the calculating is done, the 2009 study concludes, the new adjusted data suggests that the "trend in maximum temperature is 0.064°C per decade, and the trend in minimum temperature is 0.075°C per decade" for the continental U.S. since 1895. The NCDC folks never rest in their search for greater precision. This year they recalculated the historical temperatures, this time by adjusting data in each of the 344 climate divisions into which the coterminous U.S. is divvied up. They now report a temperature trend of 0.067°C per decade.

The NCDC have also developed a procedure for infilling missing station data by comparing temperatures reported from the nearby stations. Why? Because as many as 25 percent of the original stations that comprised the HCN are no longer running. Essentially, the researchers create a temperature trend for each missing station by interpolating temperature data from nearby stations that are still operating. Skeptics like Heller argue that that the virtual "zombie stations" that infill missing data have been biased to report higher than actual temperatures.

Some sort of infilling procedure needs to be done. Let's say that there are records from five stations, all of which report time series of 1, 2, 3, 4, and 5. The average of each therefore comes to 3. If two stations fail to report on the second day, missing records of 2, then the average of their remaining four records is now 3.25 instead of 3. In trying to address the problem of missing data from closed stations, the NCDC folks average other stations to fill in the absent 2s. According to climate change skeptic blogger Brandon Shollenberger, what Heller does is the equivalent of averaging the raw data from the notional five stations to report 3, 3, 3, 3.25, and 3.25. "He'd then accuse the people of fraud if they said the right answer was 3, 3, 3, 3, 3," Shollenberger writes.

Let's assume that all of the NCDC's adjustments are correct. What do they reveal? The center's 2009 study concluded, “Overall, the collective effect of changes in observation practice in the U.S. HCN stations is the same order of magnitude as the background climate signal (e.g., artificial bias in maximum temperatures is about -0.04°C per decade compared to the background trend of about 0.06°C per decade). Consequently, bias adjustments are essential in reducing the uncertainty in climate trends.” In other words, the asserted bias is almost as big as the asserted trend. Even with the best intentions in the world, how can the NCDC be sure that it has accurately sorted the climate signal from the data noise such that it has in fact reduced the uncertainty in climate trends?

. . .

Clearly, replication by independent researchers would add confidence to the NCDC results. In the meantime, if Heller episode proves nothing else, it is that we can continue to expect confirmation bias to pervade nearly every aspect of the climate change debate.

Jensen Comment
Clearly this entire debate is omplex and political. The ice sheets in parts of the Antarctic have actually been increasing for years while there has been worrisome melting of glaciers. Now we're told that the glacier melt is cause, at least in part, by underground volcanic activity rather than man-made carbon pollution.

The phenomenon that is more difficult to explain away is the melting of the ice cover in Greenland.
"I Didn't Care About Climate Change Until I Visited Greenland — Now I'm Freaking Out About It," by Enric Sala, Business Insider, July 2, 2014 ---
http://www.businessinsider.com/greenland-made-me-care-about-climate-2014-7 

One of my knowledgeable friends, a physicist, does not dispute that carbon emissions from various sources, including industrial mankind, are a major cause of global warming in the long-term although the short-term is complicated by other factors. But he shrugs off the idea that spending trillions in the USA to reduce carbon issues would be cost beneficial. We may have reached a point of no return unless other natural phenomena like huge volcano eruptions in the world help to cool the planet.

In my opinion it's better to spend trillions in an attempt to deal with long-term global warming, including relocating coastal cities to higher ground and investing in enormous solar plants to desalinate ocean water for irrigation.


 When will desperation turn into a strategy of extortion?

Number of unaccompanied children caught crossing has surged to about 52,000 so far this fiscal year (and increasing each day)
"The US Immigration Debate Has Been Transformed At The Borders," The Economist, June 29, 2014 ---
 http://www.businessinsider.com/child-migrants-swamp-the-immigration-debate-2014-6#ixzz3631zE0VN

A few weeks ago Helen Yovanna Mata, a 16-year-old Honduran girl, turned up at Corinto, a scruffy crossing on the border with Guatemala, with a backpack and a few papers. Two of the papers were death threats scribbled in scratchy ballpoint, another was a school document validating her story.

One of the notes said: "We’re not kidding. You now have seven days [to leave]. We don’t want to hurt you, but you have to believe us. Death." It was signed "M18", the name of a violent Central American street gang. Honduran officials let her through to Guatemala, her first stop on an arduous journey north to the United States. No one knows if she got there.

Rising numbers of children are following in Helen’s footsteps. Corinto is abuzz with wiry, menacing men carrying dirty wads of banknotes who arrange for coyotillos--local kids turned people-smugglers--to lead migrants without passports through the subtropical hills into Guatemala.

Since early this year, the vast majority of those migrants have been youngsters themselves, sometimes travelling alone, sometimes accompanied by their mothers.

At night, when the coyotillos get to work, hordes of them walk up the back lanes, mothers cradling babies in arms, teenage girls with pink backpacks. They travel in such numbers that the village dogs howl.

Over 1,300 miles (2,090km) north of Corinto, on the Texan side of the Rio Grande, a lone man is fishing. The Mexican side, less than 100 yards away, is more festive: dozens of children are splashing in the shallow water and a party barge floats by, blaring music.

A couple of US Border Patrol agents assess the scene. They spot several jet skis on the Mexican side as belonging to people-smugglers. And they point to a small group standing under a tree. "Black clothing in the summer?" says one. "Everyone else is in shorts, beach attire."

The Rio Grande Valley is now the hottest spot for illegal crossings of the 2,000-mile border between the United States and Mexico. And an increasing number of border-jumpers are children travelling without their parents.

The number of unaccompanied children caught crossing has surged to about 52,000 so far this fiscal year, which started in October, up from 15,700 in fiscal 2011. Most of them have come not from Mexico, but from Central America (see map). Of the youngsters caught so far this fiscal year, 15,000 are from Honduras, more than double last year’s number and five times the 2012 tally. (Plenty more get nabbed earlier in the journey: Fernando Lezama, the chief migration official in Corinto, says up to 5,000 unaccompanied Honduran kids have been deported from Mexico so far this year.)

The sudden influx of children into the United States has nearly overwhelmed the agencies that must deal with it. Detention facilities for children who cross the border illegally are horribly overcrowded. On June 5th Breitbart Texas, a conservative news site, published leaked photos showing dozens of children crammed into bare rooms. Barack Obama speaks of an "urgent humanitarian situation".

The White House blames the influx on instability in Central America. A report by the UN High Commissioner for Refugees in March, based on interviews with around 300 Central American under-age detainees in the United States, put gang violence and domestic abuse high among the causes of flight--along with a desire to be reunited with relatives in America.

The stories of those back in Corinto support that explanation. Marisa Najar, a single mother travelling with her two children, ten and six, and a 15-year-old niece, Faviana, set out this month with 25 other Honduran friends and neighbours.

Twice they reached Mexico before being deported, on one occasion riding "The Beast", an infamous cargo train, part of the way from Arriaga, in southern Mexico. Faviana recalls the moment when gangsters on the train started counting the children. "They wanted to kidnap us or rape us," she says matter-of-factly. The migrants hopped off and took a bus towards Mexico City, but were caught and sent home.

Faviana has left her unwed mother and six siblings behind because of street violence. She has not been to school for four years because, she says, gangs threaten to kill girls like her. Her uncle and aunt were recently murdered. Her mother is so poor, some days the family goes without food.

Rape is a word she uses frequently; it happens all around her. But she hopes to reach the United States to go back to school. "I have always wanted to be a doctor," she says. Her aunt, Ms Najar, has no home or job. She struggled to pay for books to keep her ten-year-old son, Zagdi, at school. When asked why he wants to go to America, Zagdi throws back his thin shoulders and says: "To work."

http://www.businessinsider.com/child-migrants-swamp-the-immigration-debate-2014-6#ixzz3632UVMjf

These Children are Not Part of President Obama's Dream (they are his nightmare) ---
http://en.wikipedia.org/wiki/DREAM_Act

"Obama to Seek Funds to Stem Border Crossings and Speed Deportations," by Julia Preston, The New York Times, June 28, 2014

President Obama will ask Congress to provide more than $2 billion in new funds to control the surge of illegal Central American migrants at the South Texas border, and to grant broader powers for immigration officials to speed deportations of children caught crossing without their parents, White House officials said on Saturday.

Mr. Obama will send a letter on Monday to alert Congress that he will seek an emergency appropriation for rapidly expanding border enforcement actions and humanitarian assistance programs to cope with the influx, which includes record numbers of unaccompanied minors and adults bringing children. The officials gave only a general estimate of the amount, saying the White House would send a detailed request for the funds when Congress returned after the Fourth of July recess that began Friday and ends July 7. Continue reading the main story Related Coverage

Snakes and Thorny Brush, and Children at the Border AloneJUNE 25, 2014 About 1,000 women and children, mainly from Central America, have been dropped off in Phoenix since Memorial Day weekend with little more than water, apples and potato chips. Faces of an Immigration System Overwhelmed by Women and ChildrenJUNE 5, 2014 Wave of Minors on Their Own Rush to Cross Southwest BorderJUNE 4, 2014

The president will also ask Congress to revise existing statutes to give the Homeland Security secretary, Jeh Johnson, new authorities to accelerate the screening and deportation of young unaccompanied migrants who are not from Mexico. Fast-track procedures are already in place to deport young migrants from Mexico because it shares a border with the United States.

Mr. Obama will also ask for tougher penalties for smugglers who bring children and other vulnerable migrants across the border illegally, the officials said.

“This is an urgent humanitarian situation,” Cecilia Muñoz, the director of the White House Domestic Policy Council, said in a telephone interview on Saturday. “We are being as aggressive as we can be, on both sides of the border,” she said. “We are dealing with smuggling networks that are exploiting people, and with the humanitarian treatment of migrants while also applying the law as appropriate.”

After the president declared a humanitarian crisis in early June, federal emergency management officials have been coordinating with the many federal agencies involved in finding detention shelters for the unaccompanied youths and in stepping up enforcement measures to deter more migrants from coming.

“The uptick in activity at the border and the steps the administration has put in place are extraordinary,” a White House official said. “We are maxing out our capacities within the existing appropriated monies.”

Federal officials have opened shelters to detain unaccompanied children at three military bases and are seeking facilities for other shelters. Border authorities are required to turn over unaccompanied minors within 72 hours to the Department of Health and Human Services, which oversees the shelters and seeks to locate family members in this country who can receive the youths.

While many unaccompanied children may qualify for some legal status here, many others would not. Authorities want to eliminate delays in deporting children determined to have no legal option to stay, the White House officials said.

On Thursday, Mr. Obama directed tough comments to Central American parents in an interview on ABC News. “Do not send your children to the borders,” the president said. “If they do make it, they’ll get sent back. More importantly, they may not make it.” Continue reading the main story Continue reading the main story Continue reading the main story

White House officials said they were not asking Congress to change other existing legal protections for children apprehended without their parents. The administration is working with the governments of the three countries that are home to most of the migrants — El Salvador, Guatemala and Honduras — to ensure the children are safe once they are returned, the officials said.

Representative Henry Cuellar, a Democrat whose district includes a long stretch of the South Texas border, on Saturday visited about 1,000 migrants detained at the Border Patrol station in McAllen. He urged Congress to approve quick changes to laws on the handling of unaccompanied minors.

“When it’s Central American countries, there is a different process,” Mr. Cuellar said. “One of the things we need to do is tweak the law, to give Border Patrol the power to treat anybody the same as we treat Mexicans.”

The influx in the Rio Grande Valley has also included many families, especially women with children. To discourage more families from embarking on the dangerous journey across Mexico, the administration is detaining more of them after they are caught.

House Republican leaders chastised the president last week, saying his lax enforcement of immigration laws had unleashed the flow. “Word has spread to the Americas and beyond that the Obama administration has taken unprecedented and most likely unconstitutional steps to shut down the enforcement of our immigration laws,” Representative Robert W. Goodlatte, chairman of the House Judiciary Committee, said at a hearing. “It seems that Obama fiddles while our borders implode.”

Mr. Goodlatte said he would work with the White House to strengthen the administration’s enforcement powers.

The new proposals to deal with the border came as immigrant rights groups signaled in more than 40 coordinated protests in 23 states during the weekend that they were still hoping for action by the president to slow the pace of deportations.

Continued in article

Jensen Comment
The worry is that this strategy of using children will be used increasingly by nations south of the Rio Grande to extort more billions of dollars from the USA. When does it end?


"Canada pulls the plug on the U.S. Keystone Pipeline – will send oil to Asia,"  by Anthony Watts,  WatssUp[WithThat.com, June 28, 2014 ---
http://wattsupwiththat.com/2014/06/28/canada-pulls-the-plug-on-the-u-s-keystone-pipeline-will-send-oil-to-asia/


Hypocritical Whores Will Be Whores and Hypocrites
"Celebrities Pitching E-Cigarettes Make a Nightmare for Public Health Officials,
by John Tozz, Bloomberg Businessweek, June 30, 2014 ---
http://www.businessweek.com/articles/2014-06-30/lady-gagas-deal-to-promote-blu-ecigs-is-a-public-health-nightmare?campaign_id=DN063014


IRS ADMITS LEAKING CONFIDENTIAL INFORMATION Used Against Mitt Romney in 2012 Elections ---
http://www.thegatewaypundit.com/2014/06/irs-admits-leaking-confidential-information-used-against-mitt-romney-in-2012-elections/

The IRS admitted this week to leaking the National Organization for Marriage‘s confidential information to far left groups. The IRS will pay the National Organization for Marriage $50,000.

The conservative group National Organization of Marriage accused the IRS of leaking documents to the Obama Campaign in 2012. A top Obama campaign official Joe Solomese used the information to attack Mitt Romney during the 2012 election. The Huffington Post used the leaked documents in a story questioning former Massachusetts Governor Mitt Romney’s support for traditional marriage. The document showed Romney donated $10,000 to NOM.

Continued in article


History Lesson on Professionalism:  Back When the IRS Agreed to Testify Under Oath About Political Hit Lists

"Johnnie Walters, RIP," by James Taranto, The Wall Street Journal, June 27, 2014 ---
http://online.wsj.com/articles/best-of-the-web-today-johnnie-walters-rip-1403898310?tesla=y&mod=djemBestOfTheWeb_h&mg=reno64-wsj

In the scandal involving the Internal Revenue Service, the IRS commissioner refused to play along with a corrupt administration, the New York Times reports. A White House aide handed him a list of 200 political "enemies" the president wanted investigated. In response, the aide asked: "Do you realize what you're doing?" Then, he answered his own rhetorical question: "If I did what you asked, it'd make Watergate look like a Sunday school picnic."

The White House aide's reply was "emphatic," according to the Times: ""The man I work for doesn't like somebody to say 'no.' "

The commissioner went to his boss, the Treasury secretary, "showed him the list and recommended that the I.R.S. do nothing." The secretary "told him to lock the list in his safe." Later, he retrieved the list and turned it over to congressional investigators.

It's enough to restore your trust in the government--except that it happened more than 40 years ago. The corrupt order was delivered by John Dean in September 1972. The commissioner, Johnnie Walters, eventually "testified to various committees investigating alleged Nixon misdeeds," the Times reports. "He left office in April 1973." He died Tuesday; the Times article we've been quoting is his obituary.

Walters wasn't the first IRS commissioner to resist President Nixon's political pressure. His predecessor, Randolph Thrower, was fired "for resisting White House pressure to punish political opponents," as the Times notes. Thrower died this March at 100. When Walters took office in 1971, "his stated goals were simplifying the tax process and catching tax cheats," but his job "had grown more complex" when Nixon imposed wage-and-price controls in an economically ignorant effort to curb inflation.

Continued in article

History Lesson in Non-Professionalism:  When an IRS Executive (Lois Lerner) Refuses to Testify About Political Hit Lists

"Lois Lerner of IRS sought audit of Grassley," The Des Moines Register, June 26, 2014 ---
http://www.desmoinesregister.com/story/news/politics/2014/06/25/chuck-grassley-lois-lerner-irs-audit/11371527/

Congressional investigators say they uncovered emails Wednesday showing that a former Internal Revenue Service official sought an audit involving U.S. Sen. Chuck Grassley of Iowa in 2012.

Republicans quickly viewed former IRS official Lois Lerner's actions as an attempt to initiate a baseless IRS examination against a sitting Republican senator. Grassley called the situation "very troubling" and said it's the kind of thing that fuels deep concerns about political targeting by the IRS.

The emails show Lerner mistakenly received an invitation to an event that was meant to go to Grassley, a Republican.

The event organizer apparently offered to pay for Grassley's wife to attend the event.

Instead of forwarding the invitation to Grassley's office, Lerner emailed another IRS official to suggest referring the matter for an audit, saying it might be inappropriate for the group to pay for his wife.

"Perhaps we should refer to exam?" Lerner wrote.

It was unclear from the emails whether Lerner was suggesting that Grassley or the group be audited — or both.

The other IRS official, Matthew Giuliano, waived her off, saying an audit would be premature because Grassley hadn't even accepted the invitation. "It would be Grassley who would need to report the income," Giuliano said in one of the emails.

The name of the event organizer was blacked out on copies of the emails released by the U.S. House Ways and Means Committee because they were considered confidential taxpayer information. Grassley and his wife signed waivers allowing their names to be released.

Lerner headed the IRS division that processes applications for tax-exempt status. The IRS has acknowledged that agents improperly scrutinized applications by tea party and other conservative groups before the 2010 and 2012 elections. Documents show that some liberal groups were singled out, too.

In a written statement about today's disclosure, Grassley said: "This kind of thing fuels the deep concerns many people have about political targeting by the IRS and by officials at the highest levels. It's very troubling that a simple clerical mix-up could get a taxpayer immediately referred for an IRS exam without any due diligence from agency officials."

Grassley learned of the emails from the Ways and Means Committee, aides said. He didn't accept the invitation referred to in the emails, and he didn't receive Lerner's invitation, they said.

The IRS said in a statement that it could not comment on the specifics of the case "due to taxpayer confidentiality provisions."

"As a general matter, the IRS has checks and balances in place to ensure the fairness and integrity of the audit process," the IRS statement said. "Audits cannot be initiated solely by personal requests or suggestions by any one individual inside the IRS."

The IRS says it has lost an untold numbers of Lerner's emails because her computer crashed in 2011, sparking outrage among Republican lawmakers who have accused the tax agency of a cover-up. The emails released Wednesday were among the thousands that have been turned over to congressional investigators.

"We have seen a lot of unbelievable things in this investigation, but the fact that Lois Lerner attempted to initiate an apparently baseless IRS examination against a sitting Republican United States senator is shocking," Rep. Dave Camp, R-Mich., chairman of the Ways and Means Committee, said. "At every turn, Lerner was using the IRS as a tool for political purposes in defiance of taxpayer rights."

Iowa Republican Joni Ernst sought to use the news to focus blame on her Democratic opponent in the U.S. Senate race, U.S. Rep. Bruce Braley. Ernst noted that Braley was one of the members of Congress who wrote a letter in 2012 to encourage the IRS to investigate whether any social welfare organizations were improperly engaged in political campaign activity.

Continued in article

Jensen Comment
Since Lois Lerner still refuses to testify under oath about political hit lists we may never know if there were other hit lists and who ordered her to do the hits


Dumb, Dumb, and Dumber
Bill Isaac Blamed the Economic Meltdown of over 1.000 banks on fair value accounting

"Former FDIC Chief: Fair Value Caused the Crisis " by David M. Katz, CFO Journal, October 29, 2014 ---
http://ww2.cfo.com/accounting-tax/2008/10/former-fdic-chief-fair-value-caused-the-crisis/

Things were fine before the accounting standards-setters barged in and "destroyed hundreds of billions of dollars of capital," he contends.

In perhaps the most sweeping indictment of fair-value accounting to date, the chairman of the Federal Deposit Insurance Corporation during the 1980s savings-and-loan debacle told the Securities and Exchange Commission today that mark-to-market accounting rules caused the current financial meltdown.

Speaking at an SEC panel on mark-to-market accounting and the recent period of market turmoil, William Isaac, FDIC chairman from 1978 to 1985 and now the chairman of a consulting firm that advises banks, said that before FAS 157, the controversial accounting standard issued in 2006 that spells out how companies should measure assets and liabilities that have been marked to market, took hold, subprime losses were “a little biddy problem.”

Isaac rhetorically asked the participants how the financial system could have come upon such hard times in under two years. “I gotta tell you that I can’t come up with any other answer than that the accounting system is destroying too much capital, and therefore diminishing bank lending capacity by some $5 trillion,” he asserted. “It’s due to the accounting system, and I can’t come up with any other explanation.”

As of late 2006, Isaac, now chairman of The Secura Group, a financial institutions consulting firm, argued, “inflation was under control, economic growth was good, unemployment was low, and there were no major credit problems in the banking system.” There were $1.2 trillion worth of U.S. subprime mortgages, with about $300 billion provided by FDIC-insured banks and the rest held by investors world-wide.

Since subprime losses were estimated to be about 20 percent in 2006, federally insured U.S. banks had lost about $60 billion in that market, according to Isaac. But those banks had recorded about $150 billion in after-tax earnings and had $1.4 trillion of capital.

The devastation that followed stemmed largely from the tendency of accounting standards-setters and regulators to force banks, by means of their litigation-shy auditors, to mark their illiquid assets down to “unrealistic fire-sale prices,” the former FDIC chief asserted. The fair-value rules “have destroyed hundreds of billions of dollars of capital in our financial system, causing lending capacity to be diminished by ten times that amount,” he said in his prepared remarks.

Noting that 157 was issued in 2006, Isaac noted that he wasn’t “asking that we change the whole system of accounting that has been developed for centuries.” Instead, he said, “I’m asking for a very bad rule to be suspended until we can think about this more and stop destroying so much capital in our financial system. I think that’s a basic step that needs to be taken immediately.”

Isaac added that it’s his “fervent hope that the SEC will recommend in its report to Congress that we abandon mark-to-market accounting altogether.” The panel was held as part of the commission’s effort to comply with a requirement in the Emergency Economic Stabilization Act signed earlier this month that the SEC complete a study of mark-to-market’s role in the current crisis by Jan. 2, 2009.

Continued in article

Update in 2014:  Researchers find fair value accounting was not to blame for financial crisis
"Fair Value Accounting’s Role in Financial Crisis Scrutinized," by Michael Cohn, Accounting Today, June 30, 2014 ---
http://www.accountingtoday.com/news/accounting_news/fair-value-accountings-role-in-financial-crisis-scrutinized-71129-1.html

A new academic study finds that fair value accounting was unfairly blamed for precipitating the 2008-2009 financial crisis, but acknowledges that some investors reacted positively to news that the rules would be relaxed in response to the crisis.

In the wake of the crisis, Congress convened hearings to examine the impact of mark-to-market accounting and fair value measurement on the shares of investment banks such as Bear Stearns, Lehman Brothers and Merrill Lynch that had difficulty valuing mortgage-based securities in illiquid markets, pressuring the Financial Accounting Standards Board to relax the requirements for writing down the value of such securities. One of the provisions of the economic stimulus legislation, the Emergency Economic Stabilization Act of 2008, was to require the Securities and Exchange Commission to release a report in December 2008 to examine the role of mark-to-market accounting. The SEC study largely defended the role of mark-to-market and fair value accounting, but also provided some recommendations for revising the standards, which FASB and the International Accounting Standards Board quickly began to do.

Now a new academic study by researchers at Columbia Business School also examines the role of fair value accounting in the financial crisis. The study, published in the Journal of Accounting and Public Policy, examines FVA’s role in the financial crisis and considers the advantages it offers relative to other methods of accounting.

“Fair value accounting has been blamed for the near collapse of the U.S. banking system,” said Urooj Khan, assistant professor of accounting at Columbia Business School and co-author of the research. “On one hand, FVA can provide timely and relevant information during crisis, but it can feel like ripping off a Band-Aid causing immediate pain as it accelerates the process of price adjustment and resource reallocation in times of financial turmoil. On the other hand, it can increase contagion among banks by potentially fueling fire sales. Our research demonstrates that investors’ concerns about FVA’s detrimental affect overshadowed the beneficial role it plays in promoting timely market information.”

The study, titled “Market reactions to policy deliberations on fair value accounting and impairment rules during the financial crisis of 2008-2009,” was co-authored by Professor Urooj Khan of Columbia Business School and Professor Robert M. Bowen of the University of San Diego’s School of Business Administration and the University of Washington’s Foster School of Business. The researchers explored stock market investors' and creditors' reactions to events such as policy deliberations, recommendations and decisions related to the relaxation of FVA rules during a period of extreme financial turmoil from September 2008 to April 2009.

The research found that while news about relaxing FVA rules generally led to positive stock market reactions, the results varied depending on a variety of bank characteristics. The research also revealed additional points that call into question FVA’s role in the recent financial crisis.

Investors acted as if FVA rules harmed banks and accelerated their decline, resulting in a favorable reaction to discussions about relaxing FVA rules, the study noted. The researchers found some evidence that banks that were more susceptible to contagion are the ones that benefited the most from the change in FVA rules. For banks without analyst coverage, investor reactions to relaxed FVA rules were less positive, suggesting that, in the absence of other information sources, investors perceive FVA data as providing timely and informative disclosures about banks’ financial soundness. Banks with a higher proportion of illiquid assets saw a more positive stock price reaction to potential relaxation of FVA rules.

For the study, Khan and Bowen examined investor and creditor reactions to 10 events—including policymaker deliberations, recommendations, and decisions—related to the relaxation of FVA and impairment rules in the banking industry.

To complement the event analysis, the study also investigated cross-sectional stock price reactions to bank-specific factors that potentially contributed to the financial crisis’ spread. Factors analyzed included whether banks were well capitalized, their proportion of fair value assets, and the availability of information sources other than FVA data.

Continued in article

Jensen Comment
At the time in 2008 I wrote that Bill Isaac was an ignorant advocate of horrible and dangerous bank accounting ---
"
Don't Blame Fair Value Accounting Standards (except in terms of executive bonus payments): This includes a bull crap case based on an article by the former head of the FDIC," Bob Jensen, 2008 ---
http://www.trinity.edu/rjensen/2008Bailout.htm#FairValue
Isaac blamed the subprime collapse of thousands of banks on the FASB requirements for fair value accounting (totally dumb) --- http://www.trinity.edu/rjensen/2008bailout.htm#FairValue

Isaac wanted the FASB to continued to grossly under estimate loan loss reserves (now that the FASB is finally trying to fix the problem)
“AccountingWEB Exclusive: Former FDIC Chief says FASB proposal is 'irresponsible'," AccountingWeb, June 3, 2010 ---
http://www.accountingweb.com/topic/accounting-auditing/aw-exclusive-former-fdic-chief-says-fasb-proposal-irresponsible


Louisiana Gives Away $1.3 Million in Food Stamps to Dead People ---
http://freebeacon.com/politics/louisiana-gives-away-1-3-million-in-food-stamps-to-dead-people/

Jensen Comment
It's easier to make such deliveries in Louisiana since most dead people are buried above ground. Those deliveries are slow and costly when the bodies are below ground. Food stamps are an added incentive not to be cremated.

Actually the annual tax refunds and Social Security payments are better deals, especially those that continue on for 30 or more years after death. Always remember to deposit a current Turbo Tax update into a casket slightly before April 15 each year. Norman Bates made it really easy by keeping his dead mother in an upstairs bedroom.


Ray Nagin --- http://en.wikipedia.org/wiki/Ray_Nagin

Clarence Ray Nagin, Jr. (born June 11, 1956), also known as C. Ray Nagin, was the 60th mayor of New Orleans, Louisiana from 2002 to 2010. He is a member of the Democratic Party. He became internationally known in 2005 in the aftermath of Hurricane Katrina, which devastated the New Orleans area. In 2014 Nagin was convicted of 20 out of 21 charges of wire fraud, bribery, and money laundering related to bribes from city contractors before and after Hurrican Katrina.

Continued in article

"Stacey Jackson pleads guilty, delivers another black eye to Ray Nagin's administration," by Richard Rainey, The Times-Picayune, July 2, 2014 ---
http://www.nola.com/crime/index.ssf/2014/07/stacey_jackson_pleads_guilty_d.html#incart_m-rpt-2 

With a few nods and a clear-voiced "yes, ma'am," Stacey Jackson on Wednesday ended her year-long resistance against accusations that she orchestrated an elaborate kickback scheme to rob a federally financed anti-blight program during now-disgraced Mayor Ray Nagin's tenure in City Hall. She struck a plea deal with prosecutors and admitted to U.S. District Judge Mary Ann Vial Lemmon that she was guilty of one count of conspiracy to receive kickbacks involving federal money.

She faces a maximum sentence of five years in prison and three years probation, although such a harsh sentence would be rare for first-time federal offenders. She also could be fined hundreds of thousands of dollars and ordered to pay restitution to any victims Lemmon identifies.

Assistant U.S. Attorney Fred Harper told Lemmon he plans to drop the three other charges against Jackson when she is sentenced. Jackson is scheduled to be sentenced Oct. 16.

Jackson's change of heart -- she had pleaded not guilty last year -- followed the collapse of her defense team's two-pronged strategy to have the case against her tossed. Attorney Eddie Castaing had accused prosecutors of filing the charges too late and of unjustly tainting the jury pool through anonymous disparaging comments posted to online stories about Jackson's alleged transgressions on NOLA.com.

But Lemmon ruled in April that prosecutors had timely indicted Jackson in June 2013 on four counts of conspiracy, theft, accepting a bribe and obstruction of justice. Then she and U.S. Magistrate Judge Joseph Wilkinson ruled in May that two former prosecutors who admitted making online comments on other cases while disguising their identities were not the commenters who attacked Jackson online.

Jackson, 47, was the focus of prosecutors' five-year investigation of the New Orleans Affordable Homeownership program, the troubled non-profit that she ran as its executive director. She eventually became another black eye for Nagin, whom a jury convicted of 20 corruption charges in February. He is scheduled to be sentenced July 9.

Federal agents stormed NOAH's offices in August 2008 as suspicions grew that little to no work had been done at hundreds of properties assigned to the agency. What followed led to guilty pleas from four contractors, including Jackson's cousin, Richard Hall. Hall stood accused of stealing $117,000 from NOAH while performing few of the house repairs he was hired to do. He admitted his guilt in 2012, but he did not admit kicking cash back to Jackson.

Prosecutors alleged that Jackson overpaid NOAH's contractors so that they could then shunt some of the extra cash back to her to keep the money flowing. A roofer, Jamon Dial pleaded guilty in July 2012. His wife, Shantrice, was a special projects coordinator for NOAH who struck a deal with prosecutors and entered a pretrial diversion program.

Continued in article

Meanwhile Ray Nagin himself gets 10 years in prison ---
http://www.newsmax.com/US/US-New-Orleans-Corruption/2014/07/09/id/581636/

Bob Jensen's Fraud Updates --- http://www.trinity.edu/rjensen/FraudUpdates.htm


Update:  Bill Powers was granted until June 2015 to retire and will not be fired immediately.

"Texas Admissions Brawl:  Charges of political favoritism depose the UT president," The Wall Street Journal, July 5, 2014 ---
http://online.wsj.com/articles/texas-admissions-brawl-1404947400?tesla=y&mod=djemMER_h&mg=reno64-wsj

You can't beat Texas for beef barbecue, job growth and political vendettas—and not necessarily in that order. The attempt to impeach University of Texas Regent Wallace Hall for daring to question admissions policy has now effloresced into a spectacle that has taken down University of Texas President Bill Powers.

Last week UT Chancellor Francisco Cigarroa asked Mr. Powers to resign or face a vote to oust him when the University regents meet Thursday. Mr. Powers submitted his resignation at the 11th hour on Wednesday, effective next June, but his departure will only increase the scrutiny of the growing evidence of political favoritism in UT admissions.

Mr. Cigarroa released an analysis in May of a sample of 86 letters from lawmakers to Mr. Powers seeking special consideration for friends and family. It showed that the most frequent favor seekers were Texas House Speaker Joe Straus and state Reps. Dan Branch and Jim Pitts, Republicans who have led the effort to oust Mr. Hall after he began digging into political favoritism on campus. (See our May 12, 2014 editorial.)

According to the review, Messrs. Straus, Pitts and Branch each wrote seven letters to Mr. Powers seeking special consideration for applicants. Undergrad applicants with recommendation letters from lawmakers had a 58.7% admission rate at UT between 2009 and 2013 compared to a 15.8% overall admission rate. Half of the law school applicants with special letters were admitted, compared to 22.5% overall, and some of the favored had scores well below average.

Mr. Straus told us in an email that he has been happy to write letters for "constituents" but "never asked or expected any school to alter its admissions policies." Mr. Branch said in a statement that it was his "duty" to send letters when requested by constituents, but that he later limited the practice to "avoid potential misperceptions." Mr. Pitts didn't return calls but he announced last year he would not seek re-election shortly after National Review reported he had lobbied UT law school on behalf of his son.

The May review said it found no evidence of "overt" pressure on admissions by Mr. Powers. But last month Mr. Cigarroa called for further investigation based on what he called "ongoing questions and additional input." We're told that a source of that new input is a whistleblower with first-hand knowledge of the UT Austin admissions process.

All of this relates to Mr. Hall, a Dallas businessman whose attempts at oversight as a regent inspired the attempt to impeach him for supposedly mishandling confidential documents and making burdensome document requests. Those charges have been debunked, but the impeachment effort has kept moving and has included attempts to protect Mr. Powers as UT president. In a July 2013 letter to Regents Vice Chairman Eugene Powell, a pair of state lawmakers investigating Mr. Hall wrote that to protect the "integrity" of their investigation, they ask "that no adverse employment action be taken against any proposed witness for the duration of the investigation." Top of the list: Mr. Powers.

Texas voters understandably don't like what they see. In late May they defeated Lt. Governor David Dewhurst's DWHT.LN +0.35% attempt for re-election after he made impeaching Mr. Hall central to his campaign. Mr. Branch, who led the charge to impeach Mr. Hall, lost his campaign to be state Attorney General and will leave the legislature. The voters seem to understand, even if some legislators don't, that college admissions are supposed to be based on merit, not political connections.

 

"Texas Celebrates Fourth of July By Ousting Corrupt UT Austin President," by Robby Soave, Reason Magazine, July 4, 2014 ---
http://reason.com/blog/2014/07/04/texas-celebrates-fourth-of-july-by-ousti

A major shakeup is coming to the University of Texas at Austin. President Bill Powers, who is believed to be involved in an admissions scandal, was given an ultimatum: resign by the next regents' meeting or be fired.

According to The Houston Chronicle, Powers has not yet accepted the offer:

UT System Chancellor Francisco Cigarroa asked Powers to resign before the regents meet again July 10, or be fired at the meeting, the source said. Powers told Cigarroa he will not resign, at least not under the terms that the chancellor laid out Friday. Powers told Cigarroa he would be open to discussing a timeline for his exit, the source said.

Powers' ouster follows the opening of an investigation into UT Law School. Numerous media outlets have reported that the law school was admitting vast numbers of unqualified students who had political connections. Powers was formerly dean of the law school.

The scandal may have remained unknown to the public if not for a personal investigation undertaken by UT Regent Wallace Hall, who filed numerous public records requests after coming across some suspicious documents. Powers' allies in the legislature retaliated by attempting to impeach Hall, though the motion was tabled by a legislative subcommittee.

The sudden downfall of Powers is a stunning vindication of the efforts of Hall and Texas Watchdog.org's Jon Cassidy, who provided an analysis of UT admissions that corroborated Hall's findings.

Thankfully, it looks like corrupt college administrators will no longer be able to keep the extent of their wrongdoing a secret from the public.

 

"Cronyism Blamed for Half of Univ. of Texas Law School Grads’ Inability to Pass the Bar," by Paul Caron, TaxProf Blog, May 23, 2014 ---
http://taxprof.typepad.com/taxprof_blog/2014/05/cronyism-blamed.html
Raw Story ---
http://www.rawstory.com/rs/2014/05/21/cronyism-blamed-for-half-of-univ-of-texas-law-school-grads-inability-to-pass-the-bar/ 

A mushrooming scandal at the University of Texas has exposed rampant favoritism in the admissions process of its nationally-respected School of Law.

According to Watchdog.org, Democratic and Republican elected officials stand accused of calling in favors and using their clout to obtain admission to the law school for less-than-qualified but well-connected applicants.

The prestigious program boasts a meager 59 percent of recent graduates who were able to pass the Texas bar exam. Those numbers rank UT “dead last among Texas’ nine law schools despite it being by far the most highly regarded school of the nine,” wrote Erik Telford at FoxNews.com.

“Every law school — even Harvard and Yale — turns out the occasional disappointing alum who cannot pass the bar,” said Telford. “In Texas, however, a disturbing number of these failed graduates are directly connected to the politicians who oversee the university’s source of funding.”

Telford singled out State Sen. Judith Zaffirini (D) and State House Speaker Joe Straus (R) as particularly egregious offenders. A series of Zaffirini emails showed that the state Senator was more than willing to pull strings in applicants’ favor. Another six recent graduates who failed the bar exam twice each have connections to Straus’ office.

“None of the emails published so far explicitly mention any sort of quid pro quo, but none need do so,” wrote Watchdog.org’s Jon Cassidy, “as the recipients all know Zaffirini is the most powerful voice on higher education funding in the Texas Legislature. Even so, in one of the emails, Zaffirini mentions how much funding she’s secured for the university before switching topics to the applicant.”

Furthermore, the children of three Texas lawmakers, including Zaffirini’s son, have graduated from UT Law School and failed the bar exam eight times between them. In addition to Zaffirini, State Sen. John Carona (R) and House Appropriations Committee Chairman Jim Pitts (R) each sent their sons to the program, neither of whom has passed the bar to this day.

Continued in article

 

Feb. 2014 Texas Bar (1st Time Takers)

Rank

School

Number

Pass Rate

1

Texas Tech

24

91.7%

2

Baylor

37

89.2%

3

Texas A&M

48

87.5%

4

Houston

32

84.4%

5

South Texas

111

83.8%

6

SMU

25

72.0%

7

St. Mary’s

42

66.7%

8

Texas Southern

24

66.7%

9

Texas

17

58.8%

 

Jensen Comment
Bill Powers became famous (some might argue infamous) while Dean at the UT Law School when he was also Chairman of the Board of Directors of Enron when Enron imploded. However, in my opinion Enron's top executives were adept at hiding their illegal and unethical behavior from the Board and the Audit Committee. Bill Powers commissioned the very long and informative Powers Report about the underhanded dealings of Enron executives, most of whom eventually served short prison terms ---
http://www.trinity.edu/rjensen/FraudEnron.htm

Enron:  Bankruptcy Court Link http://www.nysb.uscourts.gov/ 

The 208 Page February 2, 2002 Special Investigative Committee of the Board of Directors (Powers) Report--- http://news.findlaw.com/hdocs/docs/enron/sicreport/ 
Alternative 2:  http://nytimes.com/images/2002/02/03/business/03powers.pdf 
Alternative 3:  http://i.cnn.net/cnn/2002/LAW/02/02/enron.report/powers.report.pdf 
Alternative 4:  Part One | Part Two | Part Three | Part Four

 

Bob Jensen's threads on the decline of jobs in the law profession and the decline of law school enrollments are at
http://www.trinity.edu/rjensen/HigherEdControversies.htm#OverstuffedLawSchools


"Governance, Tax and Folk Tales," by Kevin Morrell and Penelope Tuck, SSRN 2014, Accounting, Organizations and Society, 39(2), 134-147, 2014 ---
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2460297

Abstract:
This paper develops a particular narratological approach to analyse a common category of narratives: individuals’ accounts of their organization’s context and purpose. In two phases of interview research with 45 senior UK accounting professionals (tax officials, tax advisors to, and tax directors of, multinational companies) we focus on a pivotal period in the governance of UK taxation. We advocate analysing what ordinarily could be called 'real world' narratives about this context as if they were folk tales. This approach draws on an influential analysis of folk tales by Propp. Our theoretical contribution is to show how features of strong or dominant plots, of the kind that structure folk tales, also help accounting professionals to make sense of this complex governance environment. This helps us understand personal projects of sense making in a context that is technically, legally and morally complex and has implications for governance, for policy and for accounting as a professional project.


"Does Big 4 Consulting Revenue Impair Audit Quality?" by Ling Lei Lisic, Robert J. Pawlewicz, and Timothy A. Seidel, SSRN, June 1, 2014 ---
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2460102

Abstract:
Over the past decade, the Big 4 public accounting firms have steadily increased the proportion of their revenue generated from consulting services (consulting revenue hereafter), primarily from nonaudit clients. Regulators and investors have expressed concerns about the potential implications of accounting firms’ expansion of consulting services on audit quality. We examine the associations between Big 4 audit firm consulting revenue and various measures of audit quality, including auditor going concern reporting errors, client misstatements, and client probability of meeting or just beating analyst earnings forecasts. Overall, our results suggest that a higher proportion of firm-level consulting revenue is not associated with impaired audit quality for the Big 4 firms. However, results of earnings response coefficient tests suggest that investors perceive a deterioration of audit quality when a higher proportion of the firms’ revenue is generated by consulting services.

Jensen Comment
Given the repeated deficiencies in Big Four audits as reported in PCAOB inspection reports year after year perhaps cost cutting is more of a problem in Big 4 audit professionalism than independence. In some cases the Big Four firms are flagged for poor audit supervision of inexperienced staff auditors. In most instances, however, the problem is one of failure to do enough detail testing.

Bob Jensen's threads on audit firm independence and professionalism ---
http://www.trinity.edu/rjensen/Fraud001c.htm


"The Number That Explains Why Hillary Is Distancing Herself From Obama," by Joshua Green, Bloomberg Businessweek, July 7, 2014 ---
http://www.businessweek.com/articles/2014-07-07/the-number-that-explains-why-hillary-is-distancing-herself-from-obama?campaign_id=DN070714

Two-thirds of voters say they want the next president, whoever he-or she!-may be, to offer policies different than Obama's.

The Wall Street Journal reports today what anyone with a pair of eyes and even a vague interest in national politics has already figured out: Hillary Clinton is distancing herself from President Obama ahead of her likely presidential campaign. She’s signaled that she’d do a better job of attracting Republicans. That she’d be more assertive abroad. That she’s better attuned to the economic pains of the middle class. “They don’t think the economy has recovered in a way that has helped them or their families,” Clinton said last week in Aspen, to an audience of plutocrats.

With Obama’s approval rating stuck in the low 40s and Americans souring on his presidency, it’s no shock that Clinton isn’t waving the banner for a third Obama term. Yet the real number driving her conscious uncoupling from the president isn’t his approval rating, but what voters say they want in their next president. A Pew poll in April captured this nicely:

Two-thirds of voters say they want the next president, whoever he—or she!—may be, to offer policies different than Obama’s. As a former member of his cabinet who agrees with him on the overwhelming majority of issues, this is Clinton’s single greatest liability as a presidential candidate. The surprise to me isn’t that she’s subtly distancing herself from Obama. It’s that she isn’t being more overt about it.

 


Marxism --- http://en.wikipedia.org/wiki/Marxism

Capitalism is Doomed:  Long Live Marxism

"Mapping a New Economy:  The geographer David Harvey says fixing inequality will take more than tinkering," by Scott Carlson, Chronicle of Higher Education's Chronicle Review, May 12, 2014 ---
http://chronicle.com/article/Mapping-a-New-Economy/146433/

. . .

Seventeen Contradictions and the End of Capitalism may be the book that introduces Harvey to a wider audience. After all, it lands at an auspicious moment. Dealing with income inequality is at the top of President Obama’s agenda for the year. Since the Occupy movement’s stand in New York’s Zuccotti Park, the public has had more awareness of the consolidation of power among the "1 percent"—a term the protesters popularized. Marx has made a comeback among young intellectuals, who came of age during the economic meltdown; Benjamin Kunkel, in Utopia or Bust (Verso Books), his new exploration of contemporary Marxism, spends his first chapter discussing Harvey.

"If you had to pick one person who is the expositor of Marx for this generation, it would be David Harvey," says Timothy Shenk, a doctoral student in history at Columbia University who has studied prominent Marxists and recently wrote about "millennial Marxists" for The Nation. "It’s his gift for lucid prose that distinguishes him. I can’t think of anyone who is better at laying out, clearly and crisply, a distinctive interpretation of Marx."

The American stage has recently been set for questioning capitalism, with the U.S. tour of academe’s rock star of the moment, Thomas Piketty. The French economist’s Capital in the Twenty-First Century has highlighted capitalism’s drift toward inequality and criticized economists’ focus on pure theory.

While Harvey appreciates the way that Piketty has "brought back some of that humanistic tradition" in economics, he believes the book focuses too much on the social inequities that capital produces, not the complicated root causes of its problems.

"Piketty has a fantastic source of information in terms of the history of inequality of wealth and income, and that is very useful, but you could read that book and have no idea what happened in 2007 and 2008—why Lehman Brothers went bankrupt, where crises come from," he says. "What I tried to show in Seventeen Contradictions is that capital is a multifaceted system, with interlocking contradictions that are very rich."

The book begins with the very thing that sparked the 2008 crisis: the conflict between use values and exchange values, particularly in housing, and the way that people have been deprived of homes because real estate has become a speculative investment. Increasingly, he points out, more necessities are defined and dominated by their exchange value, as capital looks for new fields in which to play. "For this reason, many categories of use values that were hitherto supplied free of charge by the state have been privatized and commodified—housing, education, health care and public utilities have all gone in this direction in many parts of the world," he writes. "The political choice is between a commodified system that serves the rich well enough and a system that focuses on the production and democratic provision of use values for all without any mediations of the market."

The rest of the contradictions unfurl from there: For example, the value of money, especially when it is not tied to any tangible metal standard; the relationship between capital and labor, in which capital is trying to increase profits and productivity while labor seeks to increase its standard of living; capital’s rhetoric of freedom versus reality, in which it dominates labor and the poor.

Toward the end, Harvey explores the "dangerous contradictions": capital’s requirement of endless compound growth, the ecological destruction it wreaks, and, in the last chapter, "universal alienation," in which he explores the forces that hamper meaningful work and promote vapid consumerism. Capital can survive its contradictions, he writes, as long as it heaps more burdens—in the form of class inequality, degradation of the environment, and curtailing of human freedom—on the people and institutions already holding it up.

The key question is, where do things go from here? Harvey calls for a "revolutionary humanism that can ally with those religious-based humanisms … to counter alienation in its many forms and to radically change the world from its capitalist ways." He asks readers to imagine an economy in which the necessities of food, housing, and education don’t go through a profit-maximizing market system; in which money "rots," so it can’t be hoarded; in which the pace of work slows down to accommodate creative endeavors and social life; and in which a "zero growth" economy is a desirable stasis, not a national emergency.

It might sound far-fetched, and Harvey does not offer a road map for setting up such a world. Pollin, the UMass economist, says this is one of his main frustrations with Harvey’s work: "He is much like Karl Marx in that he is much stronger on the critique than he is on thinking through viable paths forward. If you truly care about solutions, you should not just write your treatise and not think seriously about what is to be done."

Harvey, for his part, says that any revolution would have to start by "changing mental conceptions of what the good life is," and that you do so in part by changing the language. Occupy started this work by defining the "1 percent."

"We saw it in the civil-rights movement and in the gay-and-lesbian movement," he says. "When you change the language, you can change the way people think and their mental conceptions. And when that changes, you can start to push in new politics."

But he acknowledges myriad challenges. Most of us, he says, have been "neoliberalized"—we have come to believe the tenets of a well-funded campaign that exalts the individual, privatizes social services and public institutions, and scorns the potential of government. The left, he says, deals in "a politics that rests on narratives of victimization," which doesn’t inspire solidarity. Nongovernmental organizations, a main tool now used to address inequities, are supported by the rich and therefore cannot criticize the wealth and accumulation of wealth that feeds them.

Personal debt, which has emerged as a major burden in recent decades, may be the most crucial challenge. "One of the things about debt is that it tends to foreclose the future—you have already spent the future," Harvey says. "It is very difficult to have an imagination of something radically different when your future is already pinned to some continuation of capital."

At some point, he believes, the system can’t continue. In the final pages of Seventeen Contradictions, he raises the specter of violence as a potential response to the inequities of capital—the riots and protests in Turkey, Egypt, Brazil, and Sweden last year "look more and more like the prior tremors for a coming earthquake that will make the postcolonial revolutionary struggles of the 1960s look like child’s play."

"The longer it goes on," Harvey says quietly in his New York office, "the less I think that there is a possibility that it will be a peaceful transition."

Jensen Comment
No mention is made of the contradictions of Marxism, the big one being value of labor and how to motivate people innovate and/or work for the common good when there's no incentive to do so when there are no special rewards for doing things they don't enjoy doing.

David Harvey highlights the major criticisms of capitalism but does not address the major limitations of Marxism and how Marxism is to zoom to save the world ---
http://en.wikipedia.org/wiki/Marxism#Criticisms


"Hillary vs. Piketty Mrs. Clinton agrees income inequality is a problem and then explains why it's not," by James Freeman, The Wall Street Journal, July 9, 2014 ---
http://online.wsj.com/articles/hillary-vs-piketty-1404910205?tesla=y&mod=djemMER_h&mg=reno64-wsj




"Obamacare: The Story So Far A linktastic round-up of Reason's coverage of the president's health care law," by Peter Suderman, Reason Magazine, July 1, 2014---
http://reason.com/archives/2014/07/01/obamacare-story-so-far

Reason has been covering the march toward health care reform for so long, we remember when the Affordable Care Act was just a glimmer in President Barack Obama’s eye. As the package of health care laws that would eventually become known as Obamacare stumbled through debate, passage, and early implementation, our crack team of writers and reporters was there, chronicling the twists, turns, and dramatic reversals. And now, in honor of our special Obamacare issue, we have stitched together that coverage into a single handy, linktastic narrative. Enjoy!

 

The Pre-Debate:

Barack Obama campaigned on the promise of health care reform, and the moment he was elected president the push for a major overhaul began. But how to reform the system? In December 2008, Ronald Bailey took a look at "Tom Daschle’s Plan for Health Care Rationing"—an unsparing assessment of the proposals of the president’s initial nominee to run the Department of Health and Human Services (HHS). Daschle’s big idea, a Federal Health Board, was supposed to produce health care savings by making comparative effectiveness determinations about different medical procedures. But Bailey concluded that the Fed Board "would be able to cut costs only by limiting access to care."

What might work better? In March 2009, Bailey argued that free markets can provide health security through "health status insurance"—basically, a form of life-long insurance against catastrophic changes in an individual’s current health level. "Creating and selling separate health-status insurance policies would mean that medical insurance companies would no longer have an incentive to offload sick people," he wrote. "Instead, because those with pre-existing conditions would have the funds to pay higher premiums, insurers would compete for their business."

The Debate, Part 1:

Before long, the push for health care reform was consuming Washington. President Obama, now settled into the Oval Office, was making it an early top priority, and congressional staffers were beavering away on options to expand coverage, often citing the health systems of European countries as models.

Continued in article


Huge Medicaid Fraud:  The Biggest Drain on State Budgets in Medicaid
The Biggest Drain in the Federal Budget is Medicaid, Medicare, and Social Security
"The Medicaid Black Hole That Costs Taxpayers Billions," by John Tozzi, Bloomberg Businessweek, June 23, 2014 ---
http://www.businessweek.com/articles/2014-06-23/the-medicaid-black-hole-that-costs-taxpayers-billions?campaign_id=DN062314

Here’s some cheerful news: States and the federal government are doing little to stop a costly form of Medicaid fraud, according to a government report released last week.

Medicaid, the federal-state health insurance program for poor Americans, now covers more than half its members through what’s known as Medicaid managed care. States pay private companies a fixed rate to insure Medicaid patients. It has become more popular in recent years than the traditional “fee for service” arrangement, in which Medicaid programs reimburse doctors and hospitals directly for each service they provide.

Despite the growth of managed care in recent decades, officials responsible for policing Medicaid “did not closely examine Medicaid managed-care payments, but instead primarily focused their program integrity efforts on [fee-for-service] claims,” according to the Government Accountability Office, the investigative arm of Congress. The managed-care programs made up about 27 percent of federal spending on Medicaid, according to the GAO. The nonpartisan investigators interviewed authorities in California, Florida, Maryland, New Jersey, New York, Ohio, and Texas over the past 12 months.

Funded jointly by the federal government and the states, Medicaid provided health insurance to about 72 million low-income Americans at a cost of $431 billion last year, according to the report. By the Medicaid agency’s own reckoning, $14.4 billion of federal spending on Medicaid constituted “improper payments,” which include both overpayments and underpayments. That’s 5.8 percent of what the federal government spends on the program. The $14 billion figure doesn’t tally what states lose to bad payments.

The fraud risk for managed care is twofold. Doctors or other health-care providers could be bilking the managed-care companies, which pass on those fraudulent costs to the government. Or the managed-care companies themselves could be perpetrating schemes that cost taxpayers money and harm patients.

What does this look like in practice? New York Times reporter Nina Bernstein wrote a Dickensian report last month detailing the competition among managed-care companies in New York to find the most profitable Medicaid clients:

“Many frail people with greater needs were dropped, and providers jockeying for business bought, sold or steered cases according to the new system’s calculus: the more enrollees, and the less spent on services, the more money the companies can keep.

“Adult home residents, like those caught in the hotel, had long been victimized under the old fee-for-service Medicaid system, in which providers were paid for services rendered. Now, under managed care, they find themselves prey to new versions of old tactics, including intimidation to accept services they do not need.

“’They came like vultures—”Sign here, sign here!”—with their doughnuts and cookies,” recalled Robert Rosenberg, 61, who has a spinal disorder and Crohn’s disease, and, at 4 feet 4 inches tall, had waded through hip-high water to escape the flood at Belle Harbor Manor in Queens. ‘They coerced people. They told residents they would lose their Medicaid if they didn’t sign.’”

Even well-meaning managed-care companies may not have an incentive to stop fraud by medical providers, the GAO says. “If [managed-care organizations] are making payments that are too high, or have some waste, fraud, and abuse, sometimes those payments then get put into the calculation for next year’s rates,” says Carolyn Yocom, director of health care at the GAO and author of the report.

The Department of Health and Human Services, in a five-page written response to the GAO included with the report, says the agency periodically assesses states’ managed-care programs, promotes best practices, and offers training for state leaders. The agency’s “comprehensive reviews have identified findings and vulnerabilities related to managed care program integrity,” according to the response. The agency also noted that managed-care audits can be more complex than policing traditional Medicaid payments, so “states can benefit from more direct support.” A spokeswoman for the department declined provide additional comment.

Part of the problem is that Medicaid in general “has not traditionally been very transparent, nor has it been very easy to see where the money goes,” the GAO’s Yocom says. Managed-care arrangements are even more difficult to monitor. “The visibility of what happens is once-removed, because of the managed-care entity itself.”

Craziest of all, states aren’t required to audit the payments they make to managed-care companies, or the payments those companies make to medical providers. The GAO, in its drily ascerbic way, recommends they start.

Continued in article

Jensen Comment
An even bigger fraud arises when Medicaid coverage granted to people who are really not eligible for Medicaid.

"Audit reveals half of people enrolled in Illinois Medicaid program not eligible," by Craig Cheatham, KMOV Television, November 4, 2013 ---
http://www.kmov.com/news/just-posted/Audit-reveals-half-of-people-enrolled-in-IL-Medicaid-program-not-eligible-230586321.html?utm_content=buffer824ba&utm_source=buffer&utm_medium=twitter&utm_campaign=Buffer

 




Bob Jensen's universal health care messaging --- http://www.trinity.edu/rjensen/Health.htm

Bob Jensen's Tidbits Archives ---
http://www.trinity.edu/rjensen/tidbitsdirectory.htm 

Bob Jensen's Pictures and Stories
http://www.trinity.edu/rjensen/Pictures.htm

Summary of Major Accounting Scandals --- http://en.wikipedia.org/wiki/Accounting_scandals

Bob Jensen's threads on such scandals:

Bob Jensen's threads on audit firm litigation and negligence ---
http://www.trinity.edu/rjensen/Fraud001.htm

Current and past editions of my newsletter called Fraud Updates ---
http://www.trinity.edu/rjensen/FraudUpdates.htm

Enron --- http://www.trinity.edu/rjensen/FraudEnron.htm

Rotten to the Core --- http://www.trinity.edu/rjensen/FraudRotten.htm

American History of Fraud --- http://www.trinity.edu/rjensen/FraudAmericanHistory.htm

Bob Jensen's fraud conclusions ---
http://www.trinity.edu/rjensen/FraudConclusion.htm

Bob Jensen's threads on auditor professionalism and independence are at
http://www.trinity.edu/rjensen/Fraud001c.htm

Bob Jensen's threads on corporate governance are at
http://www.trinity.edu/rjensen/Fraud001.htm#Governance 

 

Shielding Against Validity Challenges in Plato's Cave ---
http://www.trinity.edu/rjensen/TheoryTAR.htm

·     With a Rejoinder from the 2010 Senior Editor of The Accounting Review (TAR), Steven J. Kachelmeier

·     With Replies in Appendix 4 to Professor Kachemeier by Professors Jagdish Gangolly and Paul Williams

·     With Added Conjectures in Appendix 1 as to Why the Profession of Accountancy Ignores TAR

·     With Suggestions in Appendix 2 for Incorporating Accounting Research into Undergraduate Accounting Courses

Shielding Against Validity Challenges in Plato's Cave  --- http://www.trinity.edu/rjensen/TheoryTAR.htm
By Bob Jensen

What went wrong in accounting/accountics research?  ---
http://www.trinity.edu/rjensen/theory01.htm#WhatWentWrong

The Sad State of Accountancy Doctoral Programs That Do Not Appeal to Most Accountants ---
http://www.trinity.edu/rjensen/theory01.htm#DoctoralPrograms

AN ANALYSIS OF THE EVOLUTION OF RESEARCH CONTRIBUTIONS BY THE ACCOUNTING REVIEW: 1926-2005 ---
http://www.trinity.edu/rjensen/395wpTAR/Web/TAR395wp.htm#_msocom_1

Bob Jensen's threads on accounting theory ---
http://www.trinity.edu/rjensen/theory01.htm

Tom Lehrer on Mathematical Models and Statistics ---
http://www.youtube.com/watch?v=gfZWyUXn3So

Systemic problems of accountancy (especially the vegetable nutrition paradox) that probably will never be solved ---
http://www.trinity.edu/rjensen/FraudConclusion.htm#BadNews

Bob Jensen's economic crisis messaging http://www.trinity.edu/rjensen/2008Bailout.htm

Bob Jensen's threads --- http://www.trinity.edu/rjensen/threads.htm

Bob Jensen's Home Page --- http://www.trinity.edu/rjensen/