Tidbits Quotations
To Accompany October 15, 2014 edition of Tidbits
Bob Jensen at Trinity University

My Free Speech Political Quotations and Commentaries Directory and Log ---

Be brave enough to start a conversation that matters.
Margaret Wheatley,

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

"In Defense of Obama," by Paul Krugman, Rolling Stone, October 8, 2014 ---

When it comes to Barack Obama, I've always been out of sync. Back in 2008, when many liberals were wildly enthusiastic about his candidacy and his press was strongly favorable, I was skeptical. I worried that he was naive, that his talk about transcending the political divide was a dangerous illusion given the unyielding extremism of the modern American right. Furthermore, it seemed clear to me that, far from being the transformational figure his supporters imagined, he was rather conventional-minded: Even before taking office, he showed signs of paying far too much attention to what some of us would later take to calling Very Serious People, people who regarded cutting budget deficits and a willingness to slash Social Security as the very essence of political virtue.

And I wasn't wrong. Obama was indeed naive: He faced scorched-earth Republican opposition from Day One, and it took him years to start dealing with that opposition realistically. Furthermore, he came perilously close to doing terrible things to the U.S. safety net in pursuit of a budget Grand Bargain; we were saved from significant cuts to Social Security and a rise in the Medicare age only by Republican greed, the GOP's unwillingness to make even token concessions.

But now the shoe is on the other foot: Obama faces trash talk left, right and center – literally – and doesn't deserve it. Despite bitter opposition, despite having come close to self-inflicted disaster, Obama has emerged as one of the most consequential and, yes, successful presidents in American history. His health reform is imperfect but still a huge step forward – and it's working better than anyone expected. Financial reform fell far short of what should have happened, but it's much more effective than you'd think. Economic management has been half-crippled by Republican obstruction, but has nonetheless been much better than in other advanced countries. And environmental policy is starting to look like it could be a major legacy.

I'll go through those achievements shortly. First, however, let's take a moment to talk about the current wave of Obama-bashing. All Obama-bashing can be divided into three types. One, a constant of his time in office, is the onslaught from the right, which has never stopped portraying him as an Islamic atheist Marxist Kenyan. Nothing has changed on that front, and nothing will.

Continued in article

Jensen Comment
Questionable Integrity of Paul Krugman: How to Mislead With Statistics ---

President Obama blew it on ISIL
Former USA President Jimmy Carter

You have to have somebody on the ground to direct our missiles and to be sure you have the right target,” Carter said. “Then you have to have somebody to move in and be willing to fight ISIS after the strikes.
Former USA President Jimmy Carter

. . . our side viewed the White House as so eager to rid itself of Iraq that it was willing to withdraw rather than lock in arrangements that would preserve our influence and interests.
Former Defense Secretary Leon Panetta’s forthcoming memoir blaming President Obama for the collapse of Iraq ---

"Kleinbard: 'Competitiveness' Has Nothing to Do With Inversions," by Paul Caron, TaxProf Blog, August 7, 2014 ---

. . .

The recent surge in interest in inversion transactions is explained primarily by U.S. based multinational firms’ increasingly desperate efforts to find a use for their stockpiles of offshore cash (now totaling around $1 trillion), and by a desire to "strip" income from the U.S. domestic tax base through intragroup interest payments to a new parent company located in a lower-taxed foreign jurisdiction. These motives play out against a backdrop of corporate existential despair over the political prospects for tax reform, or for a second "repatriation tax holiday" of the sort offered by Congress in 2004.

Pentagon (but not the IRS) Says It’s Ready for Audit After Years of Delays ---

Bob Jensen's threads on the sad state of governmental accounting ---

The Eurozone's youth unemployment rate is eye-watering. Figures out Tuesday put the rate at 23.3% this August ---

"Northeast loses 40% of House seats as people flee high-tax states," by Paul Bedard, Washington Examiner, September 30, 2014 ---

The Northeast, once the nation’s political engine that produced presidents, House speakers and Senate giants including the late Edward M. Kennedy, is losing clout in Washington as citizens flee the high-tax region, according to experts worried about the trend.

The Census Bureau reports that population growth has shifted to the South and the result is that the 11 states that make up the Northeast are being bled dry of representation in Washington.

Critics blame rising taxes in states such as Massachusetts and Connecticut for limiting population growth in the Northeast to just 15 percent from 1983 to 2013, while the rest of the nation grew more than 41 percent.

The biggest impact comes in the loss of congressional representation.

Deep in a recent report, for example, the American Legislative Exchange Council tabulated how the drop in population relative to the rest of the nation cut the region’s power in Washington. While the states from Pennsylvania to Maine had 141 House members in 1950, they are down to 85 today, a drop of some 40 percent.

California and Texas combined have more House representatives..

“This result is one of the most dramatic demographic shifts in American history. This migration is shifting the power center of America right before our very eyes. The movement isn’t random or even about weather or resources. Economic freedom is the magnet and states ignore this force at their own peril,” said the report.

Jensen Comment
There are other attractions to moving south where labor unions have less clout and air conditioning cools off the sweat.

Technology change is also a factor. Many New England paper mills have closed as demand for paper is less in e-commerce than older forms of commerce. Also the paper mills that remain in the south have less labor strife.

Warmer winters are making hotels struggle more in the snow season.

How to Mislead With Statistics
Best and Worst Countries for Old People ---

Jensen Comment
I think including the USA and some other nations in the Top 10 is misleading if they have made promises for retirement benefits and medical care that are unsustainable. For example, Medicare will not pay for nursing homes but the largest single expense for Medicare are the hospital costs, often in an Intensive Care Unit, for oldsters who are dying and are being kept alive because relatives refuse permission for hospitals to let them die.

On November 22, 2009 CBS Sixty Minutes aired a video featuring experts (including physicians) explaining how the single largest drain on the Medicare insurance fund is keeping dying people hopelessly alive who could otherwise be allowed to die quicker and painlessly without artificially prolonging life on ICU machines.
"The Cost of Dying," CBS Sixty Minutes Video, November 22, 2009 ---

Medicare is unsustainable to a point where the USA should not be included in the Top 10 nations for old people.

Other nations like Scandinavian nations are more sensible about withdrawing life support.

Will it be a ten rounder? The Fed's Yellin versus the Senate's Warren
"ELIZABETH WARREN: The Secret New York Fed Tapes Confirm The Game Is Rigged
," ---

"Here's A Quick Guide To The Startling New Scandal Involving Goldman And The New York Fed," by Elena Holodny, Business Insider, September 26, 2014 ---

. . .

The report is driven by secret recordings that suggest that the NY Fed regulators were too soft on Goldman and therefore possibly other banks as well.

The recordings come from former New York Fed bank examiner Carmen Segarra, who was fired after just seven months on the job.

The article is nearly 6,000 words long, and the podcast runs for over an hour.

Continued in article

"Why the Fed Is So Wimpy," by Justin Fox, Harvard Business Review Blog, September 26, 2014 ---

Regulatory capture — when regulators come to act mainly in the interest of the industries they regulate — is a phenomenon that economists, political scientists, and legal scholars have been writing about for decades.  Bank regulators in particular have been depicted as captives for years, and have even taken to describing themselves as such.

Actually witnessing capture in the wild is different, though, and the new This American Life episode with secret recordings of bank examiners at the Federal Reserve Bank of New York going about their jobs is going to focus a lot more attention on the phenomenon. It’s really well done, and you should listen to it, read the transcript, and/or read the story by ProPublica reporter Jake Bernstein.

Still, there is some context that’s inevitably missing, and as a former banking-regulation reporter for the American Banker, I feel called to fill some of it in. Much of it has to do with the structure of bank regulation in the U.S., which actually seems designed to encourage capture. But to start, there are a couple of revelations about Goldman Sachs in the story that are treated as smoking guns. One seems to have fired a blank, while the other may be even more explosive than it’s made out to be.

In the first, Carmen Segarra, the former Fed bank examiner who made the tapes, tells of a Goldman Sachs executive saying in a meeting that “once clients were wealthy enough, certain consumer laws didn’t apply to them.”  Far from being a shocking admission, this is actually a pretty fair summary of American securities law. According to the Securities and Exchange Commission’s accredited investorguidelines, an individual with a net worth of more than $1 million or an income of more than $200,000 is exempt from many of the investor-protection rules that apply to people with less money. That’s why rich people can invest in hedge funds while, for the most part, regular folks can’t. Maybe there were some incriminating details behind the Goldman executive’s statement that alarmed Segarra and were left out of the story, but on the face of it there’s nothing to see here.

The other smoking gun is that Segarra pushed for a tough Fed line on Goldman’s lack of a substantive conflict of interest policy, and was rebuffed by her boss. This is a big deal, and for much more than the legal/compliance reasons discussed in the piece. That’s because, for the past two decades or so, not having a substantive conflict of interest policy has been Goldman’s business model. Representing both sides in mergers, betting alongside and against clients, and exploiting its informational edge wherever possible is simply how the firm makes its money. Forcing it to sharply reduce these conflicts would be potentially devastating.

Maybe, as a matter of policy, the United States government should ban such behavior. But asking bank examiners at the New York Fed to take an action on their own that might torpedo a leading bank’s profits is an awfully tall order. The regulators at the Fed and their counterparts at the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation correctly see their main job as ensuring the safety and soundness of the banking system. Over the decades, consumer protections and other rules have been added to their purview, but safety and soundness have remained paramount. Profitable banks are generally safer and sounder than unprofitable ones. So bank regulators are understandably wary of doing anything that might cut into profits.

The point here is that if bank regulators are captives who identify with the interests of the banks they regulate, it is partly by design. This is especially true of the Federal Reserve System, which was created by Congress in 1913 more as a friend to and creature of the banks than as a watchdog. Two-thirds of the board that governs the New York Fed is chosen by local bankers. And while amendments to the Federal Reserve Act in 1933 shifted the balance of power in the Federal Reserve System from the regional Federal Reserve Banks (and the New York Fed in particular) to the political appointees on the Board of Governors in Washington, bank regulation continues to reside at the regional banks. Which means that the bank regulators’ bosses report to a board chosen by … the banks.

Then there’s the fact that Goldman Sachs is a relative newcomer to Federal Reserve supervision — it and rival Morgan Stanley only agreed to become bank holding companies, giving them access to New York Fed loans, at the height of the financial crisis in 2008. While it’s a little hard to imagine Goldman choosing now to rejoin the ranks of mere securities firms, and even harder to see how it could leap to a different banking regulator, it is possible that some Fed examiners are afraid of scaring it away.

All this is meant not to excuse the extreme timidity apparent in the Fed tapes, but to explain why it’s been so hard for the New York Fed to adopt the more aggressive, questioning approach urged by Columbia Business School Professor David Beim in a formerly confidential internal Fed report that This American Life and ProPublica give a lot of play to. Bank regulation springs from much different roots than, say, environmental regulation.

So what is to be done? A lot of the classic regulatory capture literature tends toward the conclusion that we should just give up — shut down the regulators and allow competitive forces to work their magic. That means letting businesses fail. But with banks more than other businesses, failures tend to be contagious. It was to counteract this risk of systemic failure that Congress created the Fed and other bank regulators in the first place, and even if you think that was a big mistake, they’re really not going away.

Continued in article

Also see

Bob Jensen's Fraud Updates ---

"Why Monopolistic Pension Funds Undermine Capitalism," by Roger Martin, Harvard Business Review Blog, October 6, 2014 --- Click Here

Jensen Comment
Ideally, capitalism entails freedom of choice regarding careers and investments. Workers in the USA may choose among careers but, in most cases, not where to invest most of their pension savings.

How to Mislead With Statistics
"The Global Warming Statistical Meltdown:  Mounting evidence suggests that basic assumptions about climate change are mistaken: The numbers don’t add up," by Judith Curry, The Wall Street Journal, October 9, 2014 ---

"Obama Spokesman Responds to Leon Panetta’s Accusations by Calling Him Names," Pajamas Media, October 6, 2014 ---

Jimmy Carter: "President Obama blew it on ISIL" ---

"The Insiders: Panetta, Gates and Clinton are trying to tell us something about Obama," Ed Rogers, The Washington Post, October 7, 2014 ---

Much is being written about the revelations in former secretary of defense and CIA chief Leon Panetta’s new book, “Worthy Fights,” regarding President Obama’s inadequacies and mistakes as commander in chief. The Panetta revelations have provoked a fresh appraisal of similar disclosures from former secretary of defense Bob Gates in his book and the more gentle — but still direct — criticisms of the president found in former secretary of state Hillary Clinton’s book.

None of these individuals are amateurs. They were not manipulated into writing what they did by greedy publishers hoping to sell books. They are not a bunch of Scott McClellans, the now-forgotten White House press secretary under President George W. Bush, who shamed himself by using his so-called memoir to turn on Bush 43. Panetta, Gates and Clinton are not lightweights who are in over their heads, nor do they think they need to reveal secrets to get attention. They are all distinguished leaders who don’t shoot from the hip or have anything to prove. So when they agree on something, whatever they are telling us should be treated seriously. The world should take notice.

The explosive conclusions they all independently report about President Obama should not be seen as acts of disloyalty or selfishness, as The Post’s Dana Milbank suggests in his latest piece, “Leon Panetta, other former Obama subordinates show stunning disloyalty.”  What else could have motivated their so-called disloyalty? Maybe we should look at their revelations not as selfish, disloyal acts, but as sincere warnings from patriots. Are they trying to tell others still serving in this administration that President Obama has the wrong instincts and a misguided worldview? Do they think the president needs to be aggressively hounded into doing the right thing to protect America’s interests and not be left to his own devices? Perhaps Panetta, Gates and Clinton are telling those who still serve in government that President Obama’s biases and instincts need to be challenged. The few adults left in the administration should not roll over, and the Republican opposition needs to be constantly vigilant in order to try to shape a more protective American national security posture. Maybe Panetta, Gates and Clinton are putting loyalty to a country at risk ahead of deference to the president who appointed them.

All three knew their disclosures would be flashpoints in the media and that many would find fault in their decision to go public. Gates and Panetta have both held their last government jobs, they don’t need the money and they don’t have an agenda beyond contributing to the historical record.  Clinton may have a more tangled mix of motives behind her latest book, but the points she makes are still valid when reinforced by Gates and Panetta.

The bottom line is that all three have made it clear: There are problems within the Obama administration, and they saw those problems up close. As Louisiana Gov. Bobby Jindal told Milbank, “Secretary Panetta and others are echoing what is obvious from the outside, but it’s more powerful when it’s coming from people on the inside.”

Continued in article



New Inspector General Report on the IRS Scandal
"IRS withheld information from hundreds of FOIAs," by Sarah Westwood, Washington Examiner, October 2, 2014 ---

A review of the Internal Revenue Service's compliance with the Freedom of Information Act found the agency intentionally withheld or failed to "adequately search" for requested information in hundreds of cases.

In others, the IRS released more than it was authorized, dispensing "sensitive taxpayer information," including individuals' bank records.

The number of FOIA requests that had piled up in the agency's backlog jumped 84 percent at the end of fiscal year 2013, the Treasury Department Inspector General for Tax Administration found in a report made public Wednesday. As of June 2014, the agency's backlog of FOIA requests had grown by an additional 16 percent.

TIGTA attributed the spike in backlogged information requests to the "influx of exempt organization requests starting in June 2013." It was learned in May 2013 that the IRS had targeted and harassed hundreds of Tea Party and conservative nonprofit applicants during the 2010 and 2012 campaigns, sparking a national scandal that culminated in congressional and criminal investigations.

The IRS concealed information it should have released in response to an estimated 336 requests in 2013, according to the report.

Despite its findings, TIGTA did not issue any recommendations. The watchdog instead suggested IRS officials implement the recommendations laid out in last year's review before addressing its latest findings.

On Sept. 17, the non-partisan government watchdog group Judicial Watch filed a motion in its ongoing FOIA lawsuit against the IRS for documents related to the recovery of records the agency claims have been "lost and/or destroyed" since news of the conservative targeting scandal broke.

Judicial Watch claims the IRS has filed seven declarations omitting information it was required to release since the group first filed its FOIA requests in May 2013.

Go here to read the full TIGTA report ---


"The IRS Scandal, Day 515," by Paul Caron, TaxProf Blog, October 6, 2014


"In a First, Commercial Coal Plant Buries Its CO2:  A coal plant in Saskatchewan will capture most of its carbon pollution—and use it to extract oil from the ground," by David Talbot, MIT's Technology Review, October 3, 2014 ---

A coal plant that opened today in Saskatchewan captures and buries the carbon dioxide it emits—with two significant caveats: it still emits as much carbon dioxide as a natural gas power plant, and the carbon dioxide it buries is being used to force more oil out of the ground.

The 110-megawatt Boundary Dam project, operated by provincial power utility SaskPower, is a refurbished coal-fired generator. It includes new post-combustion technology designed to absorb and capture 90 percent of the carbon dioxide in the plant’s exhaust, one approach to so-called carbon capture and storage, or CCS.

Continued in article

"Carbon Sequestration: Too Little, Too Late? A few carbon capture and sequestration projects are under way, but economics and politics are holding the technology back," by David Talbot, MIT's Technology Review, October 13, 2014 ---

. . .

“We’re lucky we have these commercial units at all,” says Gary Rochelle, a chemical engineer at the University of Texas, Austin, who is working on a carbon capture project at a coal plant south of Houston. “A few folks have stepped out and are taking risks, and EOR enables them to do it.”

CCS imposes big capital costs and energy penalties: the Saskatchewan plant’s CCS unit cost $800 million to build and consumes 21 percent of the coal plant’s power output in order to scrub out the carbon dioxide and compress it into a liquid for burial. Yet the work of Rochelle and others has steadily reduced the energy required to do this, and they are developing numerous new ways of removing carbon dioxide. Monea added that thanks to lessons learned from the pioneering facility, “the next carbon capture plant could be built for 20 percent to 30 percent less.”

China and the United States are responsible for about half of the world’s greenhouse gas emissions. While China has no commercial-scale CCS projects, like other nations it has several pilot projects under way. In the United States, a handful of projects of significant scale are nearing completion, including ones in Port Arthur, Texas, and Mobile, Alabama. The largest of the four is a 565-megawatt coal and CCS plant in Kemper, Mississippi. It is similar to Boundary Dam but is five times larger, and is nearing completion at nearly double its projected $2.5 billion cost. It will also use the carbon dioxide for oil recovery.

Some sort of policy that would put a price on carbon emissions seems to be needed to drive CCS forward. Nothing is forcing the fossil-fuel industry’s hand, and the coal industry is loath to see more costs imposed on its product.

Despite the inertia, Julio Friedmann, a deputy assistant secretary for clean coal in the Office of Fossil Energy at the U.S. Department of Energy, claims other policy tweaks could achieve a lot. Just as existing policies allow utilities to charge customers extra for installation of renewable energy sources such as wind and solar, future policies could do the same for carbon-sequestration projects. “A carbon price is not the only way to do this,” Friedmann said.

“In a way I am more optimistic for China,” says Jiemin Lu, a geologist at the University of Texas, Austin. “If the top level decides to do something at a larger scale, it will be quickly implemented and resources will be pulled together very swiftly. So to meet this kind of challenge at this scale, it will be more effective in that kind of political system. In the West, it’s always going to be a deadlock.”

Meanwhile, the facts on the ground—and in the air—are quite grim. “So far, we have achieved almost nothing in terms of mitigation of emissions, which are tracking at the upper limit for future emission scenarios. Indeed, in the last decade the world economy has actually recarbonized—shifted back to coal,” says David Victor, professor of international relations and director of the Laboratory on International Law and Regulation at the University of California, San Diego.



"Good News, Southern California: The Smog Is Going Away," by Eliana Dockterman, Time Magazine, October 2, 2014 ---

"The Imaginary Retirement-Income Crisis:  Politicians are stirring up alarm in order to raise Social Security benefits and reduce tax incentives for saving," by Andrew G. Biggs And Sylvester J. Schieber, The Wall Street Journal,  September 29, 2014 ---

Sen. Maria Cantwell (D., Wash.) claimed at a recent congressional hearing that 92% of Americans are unprepared for retirement. Other senators noted studies claiming that 53% to 84% of Americans will have inadequate income in old age. Progressives cite these statistics as grounds for increasing Social Security benefits, and the New America Foundation wants to curtail tax incentives for private retirement plans because it says these plans have failed.

These statistics are vast overstatements, generated by methods that range from flawed to bogus. Changing policy based on these fanciful claims would threaten government budgets, not to mention the income security of future American retirees.

Do Americans face a retirement crisis? One way to answer is to look at other wealthy, developed countries. In a 2013 study the Organization for Economic Cooperation and Development compared the incomes of a country's retirees with the average income in that country. The results are surprising. Despite a supposedly stingy Social Security program and ineffective retirement-savings vehicles, the average U.S. retiree has an income equal to 92% of the average American income, handily outpacing the Scandinavian countries (81%), Germany (85%), Belgium (77%) and many others.

In dollar terms, America's retirement incomes are 53% above the OECD average, second highest in the world. If there's a crisis in the U.S., the rest of the developed world must be a virtual retirement hellhole. No one truly believes that.

The OECD's figures actually understate the adequacy of Americans' retirement incomes. The more accurate measure of a retiree's ability to maintain his standard of living is to compare retirement income to that same individual's work earnings.

The Social Security Administration's Office of Retirement and Disability Policy has done that with a sophisticated computer model that simulates individuals' earnings, savings, pensions and Social Security benefits. The model shows that in 2012 the income of the median 67-year-old exceeded his career-average earnings, adjusted for inflation. Since the cost of living generally is lower in retirement, today's retirees typically have a real standard of living higher than during their working years.

This helps explain why most current retirees say they are doing well. A 2004 study by two Rand Corp. economists using data from the federally sponsored Health and Retirement Study found that 87% of retirees said their retirement years were "better" or "as good as" the years before they retired. Most current retirees, they noted, "seem to be pleasantly surprised by their level of resources." Even following the Great Recession, 75% of retirees told Gallup in June 2013 that they have enough money to live comfortably.

Will this be true in the future? SSA estimates that the typical Gen-X (born between 1966 and 1975) household will have a retirement income equal to 110% of its real average earnings during its working years. Depression-era birth cohorts, who supposedly enjoyed a golden age of traditional pensions and generous Social Security benefits, had an average income equal to 109% of their pre-retirement earnings. Yes, more retirees will depend on IRAs and 401(k) plans while fewer will have traditional pensions. But retirees care most about how much money they have; interest groups care about where that money comes from.

OECD data also tell us higher government pension benefits don't necessarily mean greater retirement income. U.S. Social Security is less generous than the average public pension plan, though it is on par with countries such as the U.K., Canada or New Zealand that more closely follow our political and economic traditions. But the OECD data show a strong negative relationship between the generosity of public pensions and the income that retirees collect from work and private saving.

For each additional dollar of benefits paid by a country's government pension, that country's retirees themselves generate 94 cents less income from personal savings or employment during retirement. This metric is important since work and saving contribute to a growing economy while government transfer programs almost certainly reduce economic output.

The statistics claiming that vast majorities of Americans are unprepared for retirement suffer from myriad methodological flaws. Some errors are simple, such as assuming that every individual should follow a precise but arbitrary schedule in determining how much to save for retirement each year. Others are more technical, such as how to project future earnings for individuals working today. Together, these factors cause studies to overstate how much income Americans will need in retirement and understate how much income they will have.

If U.S. Social Security benefits are increased, the country will very likely experience lower employment and saving. This in turn will undercut the economic strength upon which government entitlements depend. Social Security does need reform, both to ensure solvency and to better serve low-income retirees. And we should improve access to and the use of private saving plans. But the retirement crisis narrative will lead the country down the wrong policy path.

Mr. Biggs, a former principal deputy commissioner of the Social Security Administration, is a resident scholar at the American Enterprise Institute. Mr. Schieber, a former chairman of the Social Security Advisory Board, is an independent pension consultant.

Jensen Comment
This article overlooks how badly underfunded state public retirement funds are underfunded. It also overlook the entitlements disasters of promises made for Social Security and Medicare payments that will one day only be paid off with highly inflated dollars ---

Adding additional benefits to Social Security retirements will only make the entitlements disasters worse.

rom the CPA Newsletter on September 26, 2014

Public pension finances still deteriorating ---

Unfunded liabilities of American public pension funds are continuing to grow despite reforms and rising returns on investments, Moody's Investors Service said in a report. Unfunded liabilities tripled to about $1.99 trillion between 2004 and 2012, the firm said. Pensions & Investments (free access for SmartBrief readers) (9/25)

Bob Jensen's threads on pension accounting are at

"California drought and climate warming: Studies find no clear link," by Bettina Boxall, Los Angeles Times, September 29, 2014 ---

Global warming contributed to extreme heat waves in many parts of the world last year, but cannot be definitively linked to the California drought, according to a report released Monday.

The third annual analysis of extreme weather events underscored the continuing difficulty of teasing out the influence of human-caused climate change on precipitation patterns.

One of three studies examining the California drought in 2013 found that the kind of high-pressure systems that blocked winter storms last year have increased with global warming.

But another study concluded that a long-term rise in sea surface temperatures in the western Pacific did not contribute substantially to the drought. And researchers noted that California precipitation since 1895 has "exhibited no appreciable downward trend."

Overall, the report editors concluded that the papers didn't demonstrate that global warming clearly influenced the drought, which is one of the worst in the state record. lRelated L.A., Houston, Philadelphia mayors vow more action on climate change

Science Now L.A., Houston, Philadelphia mayors vow more action on climate change

See all related 8

In the report, published in the Bulletin of the American Meteorological Society, 20 research teams explored the causes of 16 extreme weather events recorded in 2013, including torrential downpours in Colorado, heat waves in Korea and Australia and a blizzard in South Dakota.

The studies overwhelmingly showed that human-caused climate change played a role in the heat waves, in some cases making them 10 times more likely.

But the report editors wrote that "natural variability likely played a much larger role in the extreme precipitation events," whether it was flooding in India, deep snow in the Spanish Pyrenees Mountains or the California drought.

Continued in article

Jensen Comment
California had worse droughts 100 years ago.

"Judge rules (hypotheically) Stockton can sever CalPERS pensions," by Dale Kassier, Sacramento Bee, October 1, 2014 ---

A bankruptcy judge handed CalPERS and organized labor a decision they’ve long feared Wednesday, declaring the city of Stockton has the right to reduce pension payments and even sever ties with the powerful pension fund.

The verbal ruling from U.S. Bankruptcy Judge Christopher Klein was groundbreaking. It pierced CalPERS’ aura of invincibility and made clear, for the first time, that public employee pensions in California aren’t sacred. Two years after Stockton filed for bankruptcy protection, buried under more than $200 million in bond debt, a judge has declared that a municipality can walk away from its obligations to the California Public Employees’ Retirement System.

Klein’s ruling was prompted by a legal protest from Franklin Templeton Investments, which is due to be repaid just $4 million on a $36 million loan it made to the city during better economic times. Franklin wants a better deal from Stockton even if it comes at the expense of the pensions.

The practical effect of Klein’s ruling is unclear. It depends in large part on whether Klein will accept Stockton’s financial reorganization plan – a plan under which the city promises to keep making its annual $29 million pension payments in order to retain its relationship with CalPERS.

If Stockton gets Klein’s approval and can resolve its bankruptcy without slashing pensions, the impact of Klein’s ruling is blunted somewhat. But Klein won’t rule on the city’s plan until Oct. 30.

Wall Street applauded the ruling. Moody’s Investors Service today called the decision “a positive sign for investors that pension obligations will not be given preferential treatment over debt in a municipal bankruptcy.” Moody’s added that it could prompt other stressed municipalities to “consider bankruptcy as a way of trimming unaffordable and growing pension burdens.

. . .

In declining to rule right away on the city’s plan, Klein said “I need to reflect more carefully.” But he also signaled that he expects the city and Franklin to make another stab at settling their differences before he rules.

“It’s still open season,” the judge said.

Levinson said the city could offer Franklin a “contingent note” that would give the investment firm a 22 percent share of any tax revenue above a certain threshold.

CalPERS has always fought any attempt by a city to reduce its pension obligations. When Vallejo went bankrupt in 2008 and hinted it might try to lower its annual payments, CalPERS said it could take the city to court.

San Bernardino, the other California city in bankruptcy, actually suspended its payments to CalPERS for several months, and some city officials suggested they would fight CalPERS in court. But earlier this summer, San Bernardino worked out a settlement plan with the pension fund. The details haven’t yet been disclosed.

Read more here: http://www.sacbee.com/2014/10/01/6752346/calpers-bankruptcy-stockton.html#storylink=cpy


Continued in article


"Job Woes Linger in 29 States as U.S. Recovers Unevenly," by Steve Matthews and Alex Tanzi, Bloomberg, September 30, 2014 ---
Note the graph.

Jensen Comment
Reasons for slow or high growth rates vary quite a lot for different reasons. States with gas production and/or low taxes (e.g. Texas) tend to do better than states with tourism dependencies and/or high taxes. But there are exceptions with California being Exhibit A. California seems to do fairly well in spite of virtually not allowing new oil wells and refineries, coupled with very high taxes and the worst drought in over 100 years. There are signs that California cannot sustain job growth rates. Much depends on the weather (read that rain and snow)  and discoveries for producing low-cost energy sources like hydrogen that could make desalinization of sea water feasible.

Drought states like New Mexico, Arizona, and Nevada have huge job loss rates, but California, Utah, and Colorado are doing relatively well. Go figure!

Many people naively think new jobs are gushing from the north to the south. But the southeaster states are seeing net job losses except for Tennessee.

Illinois and Ohio are big losers, but their losses are not nearly as great percentagewise as Alabama, Mississippi, New Jersey, New Mexico, Arizona, and Nevada.

"Which States Make You Pay an Amazon Sales Tax?" by Greg Bessinger, The Wall Street Journal, October 1, 2014 ---

Jensen Comment
The title of this article is misleading. I think that legally Amazon sales are taxable in any USA state having a sales tax. However, collection is unlikely unless Amazon collects the sales tax at the time of the sale and sends it to the state where the goods are being shipped.

The USA map in the article shows which states persuaded Amazon and other online vendors to collect sales taxes at the point of sale.

The yellow states in the map with no sales tax in this map include New Hampshire, Montana, Oregon, and Alaska.

The white states in the map that do not yet require collection of sales taxes for online sales in their states include Maine, Ver,mont, Michigan, Ohio, Alabama, Mississippi, Illinois, Iowa, Missouri, Arkansas, Louisiana, Oklahoma, Nebraska, South Dakota, Wyoming, Colorado, New Mexico, Utah, Idaho, and Hawaii.

The article is not clear about differences in online vendors. If online vendors have sales outlets or other physical presence within a state in most instances it must collect a sales tax. For example, if there is a Wal-Mart store in the state Iowa or Idaho then Wal-Mart then Wal-Mart collects sales tax on online sales whereas Amazon having no sales outlet or warehousing collects no sales tax.

It's not clear whether some online vendors are still refusing to collect sales tax based on the LL Bean U.S. Supreme Court victory ---

U.S. Supreme Court Passes on Tax Case From Online Merchants ---
Taking it further to where the Supreme Court takes up such a case is a risk for states in fear of losing what they have gained to date.

"'I am not a spy. I am a philosopher.' 125 days in an Iranian prison ‘I am not a spy. I am a philosopher.’ by Ramin Jahanbegloo, Chronicle of Higher Education's Chronicle Review, October 3, 2014 ---

. . .

Council of the European Union at the time, had brought a "gift" for me. Solana had offered a deal to the Iranian government regarding its nuclear program and had demanded my release as part of the agreement. As a result of this pressure, I would not be put on trial. Negotiations with my family were under way. My wife and my mother had put up their apartments for my bail, and all that was left was the paperwork. After that, my interrogator said indifferently, I would be released. This would happen by August 30.

That night, I dreamt about seeing my family the next day. Instead I had to endure 24 hours of silence—probably the heaviest hours I spent in prison. But at last, the following day, my cell door was opened, and I was told that I had been freed.

Ramin Jahanbegloo is an associate professor of political science and holds the York-Noor Visiting Chair in Islamic Studies at York University, in Toronto. This essay is adapted from his new book, Time Will Say Nothing: A Philosopher Survives an Iranian Prison, just out from the University of Regina Press.

Also see

Rate at Which Louisiana is Sinking ---

"Why Hospitals Want Patients to Pay Upfront," by John Tozz, Bloomberg Businessweek, September 25, 2014 ---

Melody Rempe spends much of her day telling people who are about to go into the hospital how much they’ll have to pay. As a patient financial counselor at Nebraska Methodist Health System, she calls patients about a week before they go in for procedures with estimates of their bills and what portion insurance will cover. Although many are grateful, some cry or yell. “Sometimes you’re talking to them about the biggest thing in their life,” she says. Rempe says most calls end well when she walks patients through the hospital’s payment-plan options or other financial assistance.

Hospitals have good reason to be concerned about their patients’ finances: Even people with insurance are increasingly responsible for a big portion of their medical bills. Among Americans who get health coverage at work, 41 percent have deductibles of at least $1,000 they must meet before insurance starts paying. That’s up from 10 percent in 2006, according to the Kaiser Family Foundation. Those with employer coverage are joined by 7 million new enrollees in Obamacare plans, which typically make patients share a large chunk of costs. The average deductible in the most popular “silver” tier of coverage is $2,267, according to an analysis by the Robert Wood Johnson Foundation.

Raising deductibles helps employers and insurers limit premium hikes. It also shifts more of the risk onto individuals. That in turn boosts the chances that doctors and hospitals won’t get paid. If a patient has a $2,900 deductible, “it’s far more difficult to get that $2,900 from an individual patient than it is from the Medicare program or from Blue Cross Blue Shield,” says Richard Gundling, vice president of the Healthcare Financial Management Association, a trade group. A March report on hospitals from Moody’s (MCO), the credit-rating firm, was blunt: “Today’s high deductibles are tomorrow’s bad debt.”

Story: Medicaid Expansion Is a Windfall for Hospitals ---

Hospitals’ total cost of uncompensated care reached $46 billion in 2012, equal to about 6 percent of their expenses, the American Hospital Association says. Large for-profit chains such as LifePoint Hospitals (LPNT), which operates more than 60 medical centers in 20 states, have felt the impact of rising deductibles. LifePoint’s bad debt related to copays and deductibles is running at $25 million per quarter this year, up from $15 million per quarter in 2013, Leif Murphy, the company’s chief financial officer, said on an earnings call in July. He blamed the increase in part on the growing prevalence of high-deductible plans.

As the mechanics of insurance policies become more complicated, Americans are having a harder time understanding how their plan choices will affect their finances. Only 14 percent of insured adults correctly understand insurance jargon such as deductibles, coinsurance, copays, and out-of-pocket maximums, according to a 2013 study published in the Journal of Health Economics.

Many Americans aren’t prepared for a medical emergency. Dr. Marilyn Peitso, a pediatrician in St. Cloud, Minn., says parents often can’t afford $300 to $400 for antibiotics to treat an ear infection. “For young working families, this can get to be a real financial burden, and it can make them less likely to seek needed care,” she says. About 44 percent of households have less than three months of savings, according to an analysis by the Corporation for Enterprise Development, an antipoverty group. “Tell me what 28-year-old is going to be able to provide, especially in this economy, $6,000 of their own money?” says Jan Grigsby, chief financial officer at Springhill Medical Center in Mobile, Ala.

Story: The Vanishing Difference Between Hospitals and Insurance Companies ---

Like Nebraska Methodist, Springhill reaches out to patients before scheduled procedures with an estimate of what they’ll owe, Grigsby says. For those who can’t pay immediately, the hospital works with lenders to arrange no-interest payment plans of as long as two years. Staff members also check whether patients are eligible for charity care from the hospital or if they qualify for Medicaid.

Continued in article

Obamacare's Bronz Plans are Lousy Plans for All Involved ---

"Underinsured ACA enrollees strain community health centers," by Virgil Dickson, Modern Healtcare, September 25, 2014 ---

Obamacare enrollees are straining the finances of community health centers around the country, some health center leaders say.

The issue is that many lower-income patients with insurance coverage through the federal and state exchanges bought bronze-tier plans with lower premiums but high deductibles, coinsurance and copayments and no federal cost-sharing subsidies. When these patients face high out-of-pocket costs for care that falls below the deductible, they can't afford it.

So the centers are subsidizing that care by offering them means-tested sliding-scale fees. When the centers, which are not allowed to turn away patients for inability to pay, try to get the insurers to pay, the claims are usually denied, and the centers have
to write it off as uncompensated care..

“People bought what they could afford and healthcare centers are in effect subsidizing these policies,” said José Camacho, executive director of the Texas Association of Community Health Centers.

There had been uncertainty about whether community health centers, which receive federal funding and serve 22 million Americans at 9,000 sites around the country, were allowed to offer sliding-scale fees to patients with private insurance plans. On Monday,
HHS released a guidance clarifying that the centers can offer these reduced fees to patients with incomes under 200% of the federal poverty level.

Of the 7.3 million people who purchased and paid for coverage on the federal and states exchanges for 2014, about 20% selected bronze-tier plans, which feature deductibles as high as $5,500 a person. Those plans lack a key affordability feature of silver plans, which generally have higher premiums. Under the Patient Protection and Affordable Care Act, people with incomes of up to 250% of the federal poverty level who buy silver plans
qualify for cost-sharing subsidies that reduce their out-of-pocket costs for care. Purchasers of bronze plans do not qualify for those subsidies.

While all health plans that comply with Obamacare standards must cover a range of primary-care and preventive services on a first-dollar basis, deductibles and coinsurance apply when patients are diagnosed and treated for sickness, injuries or chronic illness.

“With the Affordable Care Act, while the number of uninsured may be dropping, there's a new challenge in that there is now a huge cadre of underinsured people,” said Sara Rosenbaum, chair of the health policy department at George Washington University.

Continued in article

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

"The Krugman Conundrum," by Eric Peters, Townhall, October 4, 2014 ---

The Congressional Budget Office recently released an update to their 2014-2024 budget projections, sending the Washington Budget wonks into a frenzy. With deficits projected to reach heights not seen since World War Two, the spin doctors have been out in full force trying to turn around recent report. One such man is New York Times columnist Paul Krugman. Armed with a Nobel Prize in New Trade Theory, Mr. Krugman’s opinion column carries extraordinary weight in intellectual circles however his latest on Medicare doesn’t pass the smell test upon closer examination.

Krugman recently wrote of the “Medicare Miracleabout how the growth of Medicare spending had slowed compared to earlier projections. This slowdown he argued shows that entitlement spending and America’s long term fiscal outlook is not as bleak as previously anticipated. The problem with Krugman’s analysis is that it’s incredibly narrow in focus and fails to account for healthcare and mandatory spending as a whole. His rationale took a further hit when CBO announced that tax receipts would be $2 trillion less than expected by 2023 and the Medicare savings he championed just a week ago would be erased five times over.

According to the CBO, spending on major health care programs “will jump by 67 billion (or about 9 percent) in 2014”, this spending is primarily due to costly expansion of Medicaid as well as costly subsidies to for individuals who signed up for Obamacare. Contrary to the opinion of Mr. Krugman, this trend of increased healthcare spending is unlikely to decline anytime in the near future. Overall Health Care Spending is projected to increase from $935 billion in 2014 to $1.7 trillion in 2024. Medicaid spending increased by 15 percent while spending on Obamacare subsidies increased from $1 billion to $17 billion from 2013. While therate of growth for one program may have slowed, Medicaid and Obamacare spending has certainly picked up the slack at total healthcare spending will increase from 4.9 percent of GDP to 5.9 percent of GDP by 2024. By telling only one third of the overall spending on health care one could be forgiven thinking that Mr. Krugman is simply peddling talking points for ideological reasons.

Continued in article

Jensen Comment
Two of the things that created enormous drains on the Medicare insurance plan were: (1) the addition Medicare coverage to disabled people of any age coupled with (2) the Medicare D program enacted by George W. Bush. The lifetime disability program is costing hundreds of billions annually, much of it for lifetime frauds. Medicare D is costing hundreds of billions for medications for older folks like us that could be using some of our retirement savings for such medications.

Surely nobody who has studied the future of Medicare, including Professor Krugman, thinks the program is sustainable as currently written. Whereas Social Security entitlements can be paid off, if necessary, with inflation in the future, it's not possible to pay off Medicare obligations with inflation as the law is currently written. As written Medicare is just not sustainable. Either future benefits have to be limited or recipients will have to pay much larger deductibles to the extent they can afford paying for medical services and drugs out of their retirement savings.

Bob Jensen's threads on the Entitlements Disaster ---

Some national health plans economize by not funding medical and pharmaceutical research in anticipation that other nations will make the new discoveries. These and others also economize with delays in service, such as waiting what seems like forever for a new hip in Canada, Sweden, or Denmark. But there are some that have taken on new services (such as dialysis for the elderly) that are not adequately funded.

"Britain's Health System Is 'At Breaking Point' Over A $48 Billion Funding Black Hole," by Tomas Hirst, Business Insider, October 6, 2014 ---
Also see http://www.businessinsider.com/nhs-is-at-breaking-point-over-a-30-billion-funding-black-hole-2014-10#ixzz3FMwz0jBP

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

There's No Accounting for the Pricing Differences of Health Care Services
Why does an upper back MRI scan cost three times as much in one reputable Boston-area hospital as in a nearby reputable hospital?

"Price Tags On Health Care? Only In Massachusetts," by Martha Bebinger, WBUI, October 8, 2014 ---

Without much fanfare, Massachusetts launched a new era of health care shopping last week.

Anyone with private health insurance in the state can now go to his or her health insurer’s website and find the price of everything from an office visit to an MRI to a Cesarean section. For the first time, health care prices are public.

It’s a seismic event. Ten years ago, I filed Freedom of Information Act requests to get cost information in Massachusetts—nothing. Occasionally over the years, I’d receive manila envelopes with no return address, or secure .zip files with pricing spreadsheets from one hospital or another.

Then two years ago, Massachusetts passed a law that pushed health insurers and hospitals to start making this once-vigorously guarded information more public. Now as of Oct. 1, Massachusetts is the first state to require that insurers offer real-time prices by provider in consumer-friendly formats.

“This is a very big deal,” said Undersecretary for Consumer Affairs and Business Regulation Barbara Anthony. “Let the light shine in on health care prices.”

There are caveats.

1.) Prices are not standard, they vary from one insurer and provider to the next. I shopped for a bone density test. The low price was $16 at Tufts Health Plan, $87 on the Harvard-Pilgrim Health Care site and $190 at Blue Cross Blue Shield of Massachusetts. Why? Insurers negotiate their own rates with physicians and hospitals, and these vary too. Some of the prices include all charges related to your test, others don’t (see No. 2).

2.) Posted prices may or may not include all charges, for example the cost of reading a test or a facility fee. Each insurer is defining “price” as it sees fit. Read the fine print.

3.) Prices seem to change frequently. The first time I shopped for a bone density test at Blue Cross, the low price was $120. Five days later it had gone up to $190.

4.) There is no standard list of priced tests and procedures. I found the price of an MRI for the upper back through Harvard Pilgrim’s Now iKnow tool. That test is “not found” through the Blue Cross “Find a Doc” tool.

5.) Information about the quality of care is weak. Most of what you’ll see are patient satisfaction scores. There is little hard data about where you’ll get better care. This is not necessarily the insurer’s fault, because the data simply doesn’t exist for many tests.

6.) There are very few prices for inpatient care, such as a surgery or an illness that would keep you in the hospital overnight. Most of the prices you’ll find are for outpatient care.

These tools are not perfect, but they are unlike anything else in the country. While a few states are moving toward more health care price transparency, none have gone as far as Massachusetts to make the information accessible to consumers. Tufts Health Plan Director of Commercial Product Strategy Athelstan Bellerand said the new tools "are a major step in the right direction.” Bellerand added: “They will help patients become more informed consumers of health care.”

Patients can finally have a sense of how much a test or procedure will cost in advance. They can see that some doctors and hospitals are a lot more expensive than others. For me, a bone density test would cost $190 at Harvard Vanguard and $445 at Brigham and Women’s Hospital.

The most frequent early users of the newly disclosed data are probably providers. Anthony says some of the more expensive physicians and hospitals react with, “I don’t want to be the highest priced provider on your website. I thought I was lower than my competitors.”

Anthony is hoping that will generate more competition and drive down prices.

“I’m just talking about sensible rational pricing, which health prices are anything but,” she added.

Take, for example, the cost of an upper back MRI.

“The range here is $614 to $1,800, so three times,” said Sue Amsel, searching “Now I Know,” the tool she manages at Harvard Pilgrim. “That to me is a very big range.” 

In this case, the most expensive MRI is at Boston Children’s Hospital and the lowest cost option is at New England Baptist, with no apparent difference in quality. 

“It’s not just for choosing. It’s primarily for getting you the information, about whatever you’re having done, so you can plan for it,” she said.

Most of us don’t have to plan for anything except our co-pay. But about 15 percent of commercial insurance plans have high deductible plans, in which patients pay the full cost of an office visit or test up to the amount of their deductible, and that number is growing.

Continued in article

$4,878 Room and Board Charge for One Night in the Hospital:  Those meals must've been fantastic
"This $55,000 Bill Is The Perfect Example Of Our Broken Hospital System," by Lauren F. Friedman, Business Insider, December 30, 2013 ---
See a copy of the bill itself (note how the charge for aspirin is now hidden)

Jensen Comment
Cost Accounting Student Assignment:  Backflush the line items on this bill to identify possible components and justify the charges
Hint:  Don't forget hospital bad debts and executive salaries and subtle kickbacks to doctors.
For example, it's common for physicians in the Emergency Room to recommend at least one night at $10,000 in ICU when a $4,878 room for one night would probably suffice. This recently happened to my wife.

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



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

Bob Jensen's Tidbits Archives ---

Bob Jensen's Pictures and Stories

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 ---

Current and past editions of my newsletter called Fraud Updates ---

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 ---

Bob Jensen's threads on auditor professionalism and independence are at

Bob Jensen's threads on corporate governance are at


Shielding Against Validity Challenges in Plato's Cave ---

·     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?  ---

The Sad State of Accountancy Doctoral Programs That Do Not Appeal to Most Accountants ---


Bob Jensen's threads on accounting theory ---

Tom Lehrer on Mathematical Models and Statistics ---

Systemic problems of accountancy (especially the vegetable nutrition paradox) that probably will never be solved ---

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/