To Accompany the June 15, 2015 edition of Tidbits
Bob Jensen at Trinity University
Only those who
will risk going too far can possibly find out how far one can go.
Be brave enough to start a conversation that matters.
We must be willing to get rid of the life we've planned, so as to have the life
that is waiting for us.
If everyone is thinking alike, then somebody isn't thinking.
George S. Patton
Happiness is like a butterfly: the more you chase it, the more it will elude
you, but if you turn your attention to other things, it will come and sit softly
on your shoulder.
Henry David Thoreau
you’re a star don’t think you’re bigger than the enterprise.
Bob Lefsetz --- http://www.ritholtz.com/blog/2015/05/recode-to-vox/
Put simply: Vox is not The Wall Street Journal and Yahoo News is not the New York Times
Once high-flying startups like the Huffington Post are "in decline."
growing empire is fueled by $4.9 billion in government subsidies.
Jerry Hirsch --- http://www.latimes.com/business/la-fi-hy-musk-subsidies-20150531-story.html#page=1
And you just thought it was capitalism at work.
Think of MSNBC's reaction if a Republican
candidate had written this
In a 1972 essay, presidential candidate Sen. Bernie Sanders (D-VT) opined that men fantasized about women being abused. He also claimed that women fantasized about being gang raped. In an article entitled "Men-And-Women," published in an alternative newspaper called the "Vermont Freeman" Sanders shared his thoughts on male and female sexuality in ways that would cause a media firestorm if it had been penned by any current GOP candidate. Even one with as little chance at grabbing his party's nomination as Sanders currently has. "A man goes home and masturbates his typical fantasy," wrote Sanders. "A woman on her knees....
Dan Joseph --- http://www.mrctv.org/blog/sanders-men-fantsize-about-women-being-abused
An estimated 8,000
Chinese students studying in America were expelled last year for cheating or for
extremely poor academic performance, a survey by a company catering to Chinese
students has found.
Blake Neff --- http://dailycaller.com/2015/05/29/massive-numbers-of-chinese-students-expelled-from-us-schools/
reduced tax rates in North Carolina increased tax revenues ---
We'd rather be obese on benefits than thin and
Janice and Amber Manzur
John Hill, http://www.telegraph.co.uk/news/uknews/11347454/Mother-and-daughter-weigh-a-total-of-43-stone-and-get-34k-a-year-handouts-but-refuse-to-diet.html
Moocher Hall of Fame --- https://danieljmitchell.wordpress.com/the-moocher-hall-of-fame/
"Bye, Bye, American History Professors and historians urged opposition to the College Board’s new curriculum for teaching AP U.S. History," by Daniel Henninger, The Wall Street Journal, June 10, 2015 ---
The memory hole, a creation of George Orwell’s novel “Nineteen Eighty-Four,” was a mechanism for separating a society’s disapproved ideas from its dominant ideas. The unfavored ideas disappeared, Orwell wrote, “on a current of warm air” into furnaces.
In the U.S., the memory-sorting machine may be the College Board’s final revision of the Advanced Placement examination for U.S. history, to be released later this summer.
The people responsible for the new AP curriculum really, really hate it when anyone says what they are doing to U.S. history is tendentious and destructive. In April, the nine authors of the “curriculum framework” published a relatively brief open letter to rebut “uninformed criticisms” of the revision.
Last week, 56 professors and historians published a petition on the website of the National Association of Scholars, urging opposition to the College Board’s framework. Pushback against the new AP U.S. history curriculum has also emerged in Texas, Colorado, Tennessee, Nebraska, North Carolina, Oklahoma and Georgia.
To one liberal newspaper columnist, doubts about the goodness of the new U.S. history curriculum are “claptrap.” New York magazine said a committee vote in Oklahoma’s legislature to defund AP history teaching sounded like something from “The Colbert Report.”
. . .
Comedian Jerry Seinfeld got attention this week for saying he understood why other comics such as Chris Rock have stopped performing on campuses beset by political correctness, trigger warnings and “microaggressions.” He said young people cry “racism,” “sexism” or “prejudice” without any idea of what they’re talking about.
How did that happen? It happened because weak school administrators and academics empowered tireless activists who forced all of American history and life through the four prisms of class, gender, ethnicity and identity. What emerged at the other end was one idea—guilt. I exist, therefore I must be guilty. Of something.
The College Board promises that what it produces next month will be “balanced.” We await the event.
Continued in article
Bob Jensen's threads on the rise of
liberal bias in education ---
Bob Jensen's threads on political
"The Foolish Socialism of Bernie
Sanders Let the presidential candidate have his way and watch the U.S. economy
implode. by A. Barton Hinkle, Reason Magazine, June 8, 2015 ---
But the superficial appeal quickly fades in the face of two competing considerations—one practical, the other principled.
For a peek at the practical argument, avail yourself of a fine little vignette from The Washington Post: “In an Online World, Cuba Remains a Stand-in-Line Society.” At Havana’s state-run retail hubs, reports Nick Miroff, “Customers with long shopping lists face no fewer than seven places to stand in line. One for butter. Another for cooking oil. A third for toothpaste. And so on.” The caption to a dismal accompanying photograph shows people waiting “hours for their government ration of chicken.”
This is what happens when central planners think they can allocate economic resources better than the unguided hand of individual free choice. Like any good scientific experiment, this one is easily replicated, and has been time and again. See, for example, Venezuela, which has now run out of toilet paper, tampons, and other basic necessities because some people there think they should make all the choices for other people. And yet for many, the repeated lesson still has not sunk in. In an unintentionally hilarious essay about Cuba not so long ago, one writer noted that “the people are hungry here. There are severe food shortages. I do not understand why a tropical island would lack fruits and vegetables . . . and my only assumption is that maybe they have to export it all.”
Sanders’ defenders will say he wants to redistribute wealth, not control the allocation of economic goods. But as Hungarian philosopher and economist Anthony de Jasay explained in The State, the two are inseparable. There is no point in taking money from A and giving it to B except to change the allocation of goods. The whole point is to get A to buy less champagne (or spend less money marketing new deodorants) and allow B to buy more of what she wants. Redistribution of wealth is meant to divert resources from “socially useless” goods to socially useful ones.
Which brings us to the principled objection: socially useless to whom? In a world of hungry children, Jones might think it’s idiocy to spend a single cent on one more song by Kanye or Taylor Swift (and Jones would be right!). But that isn’t Jones’ choice to make for anybody except Jones. If Smith wants to waste his money on a pop singer’s latest release, he has every right to do so, and nobody else has the right to force him to do otherwise. After all: If Smith has no right to decide how he will spend his own money, then by what means does Jones, whose money it isn’t, acquire such a right?
Granted, this can lead to great inequalities. But that is not synonymous with injustice, as Robert Nozick explained in his Wilt Chamberlain hypothetical. (Wilt Chamberlain was a famous basketball star.) If everyone entering the arena freely agrees to pay Chamberlain a dollar for the pleasure of watching him play, then at the end of the season he will be much richer than anyone else. But since the spectators actually wanted to participate in the exchange, then no harm has been done.
Sanders and his friends might reply that procedural fairness doesn’t matter much if the original distribution itself was unfair. If some people unjustly acquired large sums to waste on basketball games, then their free choices about how to spend it don’t make Chamberlain’s great wealth ethically pure.
Addressing that objection by adjusting the wealth of every person in the world to account for all previous injustices would be a prohibitively complex task. But we could address it in the U.S. by confiscating all the wealth and redistributing it evenly. The trouble there is that since we don’t know the entire back story of every person’s net worth, we can’t be sure this is any more fair than some other distribution we might impose, and so we’re back at square one.
On the bright side, once that’s done Sanders and Co. presumably would have no grounds to resent any subsequent inequalities resulting from free trade by willing traders. Perhaps then you could buy your Old Spice Denali Invisible Solid Antiperspirant & Deodorant with a clear conscience—and without any more tiresome lectures.
"Welfare for the One Percent," by
Ron Paul, Townhall, Jun 01, 2015 ---
This month Congress will consider whether to renew the charter of the Export-Import Bank (Ex-Im Bank). Ex-Im Bank is a New Deal-era federal program that uses taxpayer funds to subsidize the exports of American businesses. Foreign businesses, including state-owned corporations, also benefit from Ex-Im Bank. One country that has benefited from $1.5 billion of Ex-Im Bank loans is Russia. Venezuela, Pakistan, and China have also benefited from Ex-Im Bank loans.
With Ex-Im Bank's track record of supporting countries that supposedly represent a threat to the US, one might expect neoconservatives, hawkish liberals, and other supporters of foreign intervention to be leading the effort to kill Ex-Im Bank. Yet, in an act of hypocrisy remarkable even by DC standards, many hawkish politicians, journalists, and foreign policy experts oppose ending Ex-Im Bank.
Continued in article
This illustrates the complexities of USA federal government subsidies. Of course the Ex-Im bank is a transfer of taxpayer money to big USA manufacturers. I hesitate to say poor taxpayers since the poor don't pay income taxes in the USA and generally benefit themselves from other taxes like road taxes, SS taxes, Medicare, etc. But it's still a transfer payment from taxpayers that make a whole lot less money than bonus-bloated executives of big USA companies.
The complexity is that the the Ex-Im bank also subsidizes poor people outside the USA who really need financial help. Perhaps there are better and more direct and efficient ways of using taxpayer money to help these people such as direct grants to the United Nations, but most of those other ways are not politically feasible incrementally in Washington DC.
Academic Study Conclusion
Put bluntly, the study was rigged from the beginning, weighted to give a false and predetermined outcome that would hopefully generate higher Democrat voter turnout.
Obama’s FBI Lied About Mass Shooting In Attempt to Sway 2014 Mid-Term Elections ---
We’ve long known that the Department of Justice has been incredibly compromised during the Obama administration, with Eric Holder obstructing congressional oversight investigations at the top, and the Department of Alcohol, Tobacco, and Firearms running guns to drug cartels at the bottom.
Many had held out hope that the FBI hadn’t similarly been compromised. That was a mistake.
Last September the Obama administration produced an FBI report that said mass shooting attacks and deaths were up sharply—by an average annual rate of about 16% between 2000 and 2013. Moreover, the problem was worsening. “The findings establish an increasing frequency of incidents,” said the authors. “During the first 7 years included in the study, an average of 6.4 incidents occurred annually. In the last 7 years of the study, that average increased to 16.4 incidents annually.”
The White House could not possibly have been more pleased with the media reaction to these findings, which were prominently featured by the New York Times, USA Today, CNN, the Washington Post and other major outlets. The FBI report landed six weeks before the midterm elections, and the administration was hoping that the gun-control issue would help drive Democratic turnout.
But late last week, J. Pete Blair and M. Hunter Martaindale, two academics at Texas State University who co-authored the FBI report, acknowledged that “our data is imperfect.” They said that the news media “got it wrong” last year when they “mistakenly reported mass shootings were on the rise.”
Mind you, the authors did not issue this mea culpa in the major news outlets that supposedly misreported the original findings. Instead, the authors published it in ACJS Today, an academic journal published by the Academy of Criminal Justice Sciences. “Because official data did not contain the information we needed, we had to develop our own,” wrote Messrs. Blair and Martaindale. “This required choices between various options with various strengths and weaknesses.” You don’t say.
Put bluntly, the study was rigged from the beginning, weighted to give a false and predetermined outcome that would hopefully generate higher Democrat voter turnout.
Continued in article
"Dishonesty and cowardice in high places Exclusive: Ben Carson declares, 'real leaders inspire by doing what is right'," by Dr. Ben Carson, WND, May 27, 2015 ---
I have heard many people say that the level of dishonesty and corruption in our society is no worse today than it has been in the past. I have done a great deal of reading about American history, and I take issue with this assessment. I believe there has been a significant moral decline in our society based on the fact that many people now conclude that they themselves are the final arbiter of right and wrong.
By way of example, Harry Reid, the former Senate majority leader, was recently being interviewed on one of the cable networks, and he was asked about his claim during the previous election cycle that Mitt Romney had failed to pay income taxes for several years. That was proven false, but the damage had already been done to Mr. Romney. Mr. Reed’s response was: “Well, he didn’t win, did he?” It was a blatant and unsubstantiated claim made in a politically protected environment. The worst part of this story is that not a single one of Mr. Reed’s congressional Democratic colleagues condemned this prevarication, and other than Fox news, the story was largely ignored. It is extremely alarming that so many people are more loyal to their political party than they are to the reputation and moral standing of their nation.When party loyalty trumps a sense of morality, as a nation we are in great trouble. Such attitudes lead to bitter divisions and in many cases outright hatred, which causes people to viciously attempt to harm their perceived opponents. Such inappropriate internal warfare can only be met with glee by the jihadists and others wishing to destroy our nation and our culture. If we are trying to destroy each other, we are obviously making their jobs much easier. Because we are involved in a global struggle for survival, even though many of our leaders refuse to admit that, we must learn to stop fighting each other and recognize that many of the issues over which we constantly squabble are not Republican or Democratic issues, but rather are pro-American and anti-American issues – and we should be on the same side.
The IRS scandal, in which a feared government agency was used to harass and persecute political enemies of the administration, should horrify any American who loves freedom and the principles for which our ancestors died. In a situation where government agencies are stonewalling the congressional investigating committees and in which pertinent emails conveniently disappeared, honest people on either side of the political spectrum should be willing to admit that this kind of behavior cannot be tolerated under any circumstances and is a severe threat to our freedom and autonomy from the tethers of government intimidation. All of us should also remember that if one governmental department can escape responsibility for illegal actions by conveniently making emails disappear, others might be tempted to do the same. You have to wonder what kind of message this is sending to the next generations about honesty and integrity in the workplace and in life. Perhaps we are telling them that as long as you are slick and can cover up or redefine your transgressions, the truth doesn’t matter and you can still be very successful.
Read more at http://www.wnd.com/2015/05/dishonesty-and-cowardice-in-high-places/#GQ0hUfKADjpq4W13.99
Paul Krugman Rants About the Evils of Austerity
Why is Finland resorting to austerity?
"Finland is in a 'grave' situation." by Szu Ping Chan, The Telegraph
via Business Insider, June 13, 2015 ---
. . .
Faced with a bloated state, below-par growth, and prices and costs that have risen at a much faster pace than the rest of the eurozone, the medicine is a familiar one.
"The key to resolving the serious problems in the economy lies in structural reforms, fiscal consolidation and improved cost competitiveness," the Bank of Finland's latest health check of the economy said last week.
The phrase could have been taken from Greece's own long austerity prescription, but with an ageing population, state spending approaching 60pc of gross domestic product (GDP) and tax revenues far short of this, something has to change, and quickly.
Perhaps Liikanen's passion for marathon running will be a help because, like so many others in Finland, he knows he is in it for the long haul. "I ran 4 hours 35 minutes in December," he states, an impressive time, particularly for a sexagenarian.
Finland, which has become known as one of the eurozone's lead preachers of fiscal prudence, will embark on a €10bn (£7.2bn) round of belt tightening over five years .
All of Scandinavia is having economic troubles (with the highest prices in the world) and entering some types of austerity. Could it be that welfare states have been overspending on (gasp) welfare?
June 13, 2015 reply from Tom Selling
Here is Krugman’s version of the causes Finland’s woes:
The Eurozone prevents member states from individually reneging on debt by devaluing the currency. Before the Eurozone was invented Italy was Exhibit A and became a source of economic inspiration for Zimbabwe.But it's been a tough road on the other side of the pond. The biggest obstacles are differences in corruption, public employment, and debt among member states. Northern nations ended up having to carry southern nations like Greece, Portugal, Spain, and Italy.June 14, 2015 reply from Bob Jensen
Hi Tom,I thought Keynesian economics was Krugman's answer to everything.You may be correct in hindsight about the Eurozone. Early on, however, the Eurozone was an attempt to create a United States of Europe with free flow of commerce, labor, and one currency much like what happens among the 50 states if the USA.
The whole key to everything with or without the Eurozone is for a nation to "live within its means."
Here's how Krugman puts it at
So, about those Greek failings: Greece does indeed have a lot of corruption and a lot of tax evasion, and the Greek government has had a habit of living beyond its means. Beyond that, Greek labor productivity is low by European standards — about 25 percent below the European Union average. It’s worth noting, however, that labor productivity in, say, Mississippi is similarly low by American standards — and by about the same margin.
The most important admission is the phrase "living beyond its means." This is precisely the danger we are living in at the moment in the USA where naive politicians are now working toward free medical insurance and medications (with greatly expanded Medicaid and ACA subsidies), free college for everybody, and an income tax structure where half the taxpayers pay zero or negative income taxes and 20% of the taxpayers pay 80% of the income taxes collected.
Some deem this as "fair" in terms of egalitarianism. I call it living beyond your means.
The Greeks viewed their welfare system (it was called "working" for the government in Greece) as "fair" until it exploded in their faces.
The worry in Greece is that if the Greeks withdraw from the Eurozone and renege on their debts they will become another Zimbabwe.
As currency dies, Zimbabweans will get $5 for every 175 quadrillion local dollars ---
June 14. 2015 reply from Apostolos Ballas (in Greece)
You are badly misrepresenting the situation, probably because you don’t understand the context. It is problematic that you don’t read the numbers. Finland is considering a 10bn adjustment over the next 5 years. Greece had a 30bn adjustment over the past 5 years (notice that there is a huge difference between someone planning to do something and doing it) and will have a further 5bn adjustment over the next 2 years. The policy issue thus is when does it all end.
Nevertheless, the problem that no one ever considered was that history /memories never die (does Georgia still use a Confederation flag?). Greece suffered a brutal occupation from Germany and many people still alive do remember the events. The problem was buried using German money but when the music (cash) stopped, enmities resurfaced. The problem thus is not so much about the numbers but rather about perceptions. Greeks feel slighted by the comments on the German media; even conservative newspapers remind their readers that Germany did not pay reparations and defaulted on a loan from Greece. The argument is stupid given that German officials have made extraordinary efforts to defuse the situation. However, the “popular” media in both countries focus on cultural stereotypes and the situation cannot be rationally resolved especially since sooner or later the creditors will (need to) take a hit.
Last, but certainly not least, is your question regarding why Greece and / or Finland do not leave the euro zone. Simply, because it is like Hotel California: “you can check out anytime you like, but you can never leave”. The costs of leaving are unknowable but most certainly huge, the costs and benefits of staying predictable.
PS In the current situation, I think Greece’s problem is mainly what Bismarck said “three professors and the fatherland is lost”.
June 14, 2015 reply from Tom Selling
Hi, Apostolos:Thanks for providing important context and perspective.I didn’t understand what you meant by the quote you attributed Bismarck, so I spent 5 minutes on a google search. Permit me a technical addendum from this Wikipedia article about the composition of the German parliament in the 19th century:The Frankfurt Assembly (German: Frankfurter Nationalversammlung, literally Frankfurt National Assembly) was the first freely elected parliament for all of Germany, elected on 1 May 1848…Because of this composition [underrepresentation of the entrepreneurial class] the National Assembly was later often dismissively dubbed the Professorenparlament ("Professors' parliament") and ridiculed with verses such as „Dreimal 100 Advokaten – Vaterland, du bist verraten; dreimal 100 Professoren – Vaterland, du bist verloren!“ ("Three times 100 lawyers – Fatherland, you are betrayed; three times 100 professors – Fatherland, you are doomed”.)I think that you are saying that the Germans are adopting a posture that, in their eyes, may be theoretically sound, but will nonetheless fail. Am I correct?
You're correct in that I'm relying my readings of experts like Paul Krugman closer to problems in the Eurozone.
I do realize that Greece has had a vicious austerity program for the last five years that has added enormously to unemployment.
I think the issue now focuses on EU creditors throwing more billions into Greece without having an acceptable economic recovery plan that will not just waste those dollars on old corruption (we have a somewhat similar problem in Chicago and Detroit). Perhaps the recovery should be more "in kind" like building automobile assembly plants in Greece and labor relocation subsidies to go to other parts of Europe.
When North Dakota boomed unemployed welders and other workers from all over the USA bought heavy parkas and moved to a god forsaken place to live. Millions of Turks relocated and are still relocating in Germany under dire economic opportunities in their homeland. Boatloads of desperate people are now arriving into Europe from Africa. My son Marshall has worked for years in a Maine town that is nearly overrun with thousands of Somali immigrants seeking opportunity not available in their homeland ---
If WW II reparations enter into the picture, there were other people that suffered a lot more recovering from German destruction --- the Blitzkrieg of England. the Battle of Stalingrad, and the Holocaust come to mind. There's no amount of reparation that Germany could pay for their destructions of WW II.
Thanks for giving us a first-hand account,
Federal Court Issues Ruling Compelling IRS to Provide Answers on Lerner
IRS Emails, June 8, 2015 ---
More IRS Outrage: Agency Used 'Hundreds of Lawyers' to Hide Information from Congress
The IRS is Hard-Pressed for Money: Why Waste it On This?
"The IRS Scandal, Day 759," by Paul Caron, TaxProf Blog, June 7, 2015 ---
More IRS Outrage: Agency Used 'Hundreds of Lawyers' to Hide Information from Congress, by Jay Sekulow:
Continued in article
"Worse Than Illinois: Connecticut Democrats are raising taxes again after promising not to," The Wall Street Journal, May 29, 2015 ---
The Census Bureau says Connecticut was one of six states that lost population in fiscal 2013-2014, and a Gallup poll in the second half of 2013 found that about half of Nutmeg Staters would migrate if they could. Now the Democrats who run the state want to drive the other half out too.
That’s the best way to explain the frenzy by Governor Dannel Malloy and the legislature to raise taxes again and blow through a state constitutional spending cap. They’ve been negotiating behind closed-doors over the details of a two-year $40 billion budget that could be revealed this weekend, but it’s already clear that Connecticut residents will pay big time.
Mr. Malloy promised last year during his re-election campaign that he wouldn’t raise taxes, but that’s what he also said in 2010. In 2011 he signed a $2.6 billion tax hike promising that it would eliminate a budget deficit. Having won re-election he’s now back seeking another $650 million in tax hikes.
But that’s not enough for the legislature, which has floated $1.5 billion in tax increases. Add a state-wide municipal sales tax that some lawmakers want, and the total could hit $2.1 billion over two years.
Continued in article
Elizabeth Warren --- http://en.wikipedia.org/wiki/Elizabeth_Warren
Mary Jo White --- http://en.wikipedia.org/wiki/Mary_Jo_White
From the CFO Journal's Morning Ledger on June 3, 2015
Warren sharply criticizes SEC chairman in letter
Sen. Elizabeth Warren sharply criticized Mary Jo White, saying her tenure as chairman of the SEC has been “extremely disappointing” and that she appeared to have broken promises made to lawmakers during her confirmation hearings in early 2013. Ms. White, in a written statement, disputed Ms. Warren’s charges.
"Iceland put bankers in jail rather
than bailing them out — and it worked," by Matthew Yglesias, Vox, June 9,
Yesterday, Iceland's prime minister, Sigmundur Gunnlaugsson, announced a plan that will essentially close the books on his country's approach to handling the financial crisis — an approach that deviated greatly from the preferences of global financial elites and succeeded quite well. Instead of embracing the orthodoxy of bank bailouts, austerity, and low inflation, Iceland did just the opposite. And even though its economy was hammered by the banking crisis perhaps harder than any other in the world, its labor didn't deteriorate all that much, and it had a great recovery.
How great? Well, compare the evolution of Iceland's unemployment rate with what happened in Ireland, the star pupil of the Very Serious People:
Continued in article
Bankers bet with their
bank's capital, not their own. If the bet goes right, they get a huge bonus; if
it misfires, that's the shareholders' problem.
Sebastian Mallaby. Council on Foreign Relations, as quoted by Avital Louria Hahn, "Missing: How Poor Risk-Management Techniques Contributed to the Subprime Mess," CFO Magazine, March 2008, Page 53 --- http://www.cfo.com/article.
Now that the Fed is going to bail out these crooks with taxpayer funds makes it all the worse.
Remains Congress to the Core
The boom in corporate mergers is creating concern that
illicit trading ahead of deal announcements is becoming a systemic problem. It
is against the law to trade on inside information about an imminent merger, of
course. But an analysis of the nation’s biggest mergers over the last 12 months
indicates that the securities of 41 percent of the companies receiving buyout
bids exhibited abnormal and suspicious trading in the days and weeks before
those deals became public. For those who bought shares during these periods of
unusual trading, quick gains of as much as 40 percent were possible.
Gretchen Morgenson, "Whispers of Mergers Set Off Suspicious Trading," The New York Times, August 27, 2006 ---
Did Senator Warren go too far when publically lambasting Mary Jo White?
In this case I think Warren is correct, especially in terms of gutless former SEC chairs cushy treatment of bankers that manipulated markets.
The SEC has been too soft on charging crooks when they are bank executives. Mary Jo White purportedly has made progress but the proof is not in the pudding.
"Former SEC Chiefs Respond to Warren,"
Former SEC Chairs, The Wall Street Journal, June 10, 2015 ---
Regarding “Warren Rebukes SEC Chief on Oversight” (Money & Investing, June 3): Sen. Elizabeth Warren’s letter to SEC Chairman Mary Jo White reflects a misunderstanding of how the SEC operates, and how effectively Ms. White leads the agency. As a collegial agency, SEC actions require support from at least three of five commissioners, with the chair having only one vote. No SEC chairman can personally ensure adoption of any rule, or acceptance of any settlement. As is true of all collaborative bodies, the need to achieve effective results requires a willingness to accommodate views with which individual commissioners may not always agree.
In each of the instances Sen. Warren’s letter raises, Ms. White has helped move the agency forward, and demonstrated effective, thoughtful and creative leadership. It is frequently the case that individual senators may prefer different outcomes from those the SEC reaches collectively, but that should not be allowed to obfuscate that the commission under Ms. White’s leadership continues to enhance the interests of public investors and our capital markets.
Sen. Warren’s letter reflects a misunderstanding of how collegial agencies function. If the agency’s successes are not properly credited, the hard work of thousands of SEC employees will be unfairly minimized; together with all five commissioners, these individuals earnestly attempt to protect public investors and keep our capital markets the fairest and most efficient. The SEC can benefit from constructive suggestions regarding its effectiveness. But, it is important that any criticism that is offered take into account the dynamics of a multi-member regulatory body and the need for effective compromise.
David S. Ruder, Harvey L. Pitt, William H. Donaldson, Christopher Cox, Elisse B. Walter
The authors are all former chairmen of the SEC.
Sen. Warren’s letter portrays the SEC’s requirement for admissions of wrongdoing in only about 4% of enforcement settlements during Chairman White’s tenure as a failure of leadership.
Continued in article
Bob Jensen's threads on bankers and
investment bankers who are rotten to the core ---
Senator Elizabeth Warren on Wednesday outlined a sweeping college
affordability agenda to “dramatically reform” higher education.
"A Path to Debt-Free." by Michael Stratford, Inside Higher Ed, June 11, 2015 ---
Seeking to put some policy heft behind the progressive vision of debt-free college that is gaining steam on the campaign trail, Senator Elizabeth Warren on Wednesday outlined a sweeping college affordability agenda to “dramatically reform” higher education.
“While not every college needs to graduate every student debt-free, every kid needs a debt-free option” at a public university, Warren said in remarks at the American Federation of Teachers.
Making college more affordable, she said, would require a boost in federal spending but also greater accountability for how colleges and states use that money -- a “one-two punch” that she said should have bipartisan appeal. Warren wants a new federal program that would provide funds to states that make some public higher education options so inexpensive that borrowing would not be required, and she wants more federal funding to come with more strings attached.
“We can do it if Republicans admit that we will never have affordable college without investing more resources in education,” she said. “And if Democrats admit that we will never have affordable college without demanding real accountability in exchange for those investments.”
Continued in article
Senator Warren brags that Democrats want accountability for the colleges that will be getting more government funding. What she fails to mention is that Democrats historically resist accountability (read that competency testing) of students who benefit from that funding. Her proposal will get cheers from teachers unions and faculty unions in higher education, but I fear that it will be wasted money in an effort to get watered down diplomas to students who have neither the aptitude nor the intelligence for respected college diplomas.
Virtually all parts of the world outside the USA seem to realize this and restrict college education to less than half the K-12 students. For example, Germany only allows 25%-28% of the students into college. The others either drop out of the labor force or are highly trained for trade skills like mechanics, machinists, bricklayers, carpenters, electricians, etc.
I think we can do more to fund the top students in higher education, but costs of doing so should be controlled by limiting access. More funds should be available for training in the trades, but this is often easier to do since much of that training is on-the-job apprenticeships where customers pay for much of that training in product and service fee structures.
Only in the USA do we want everyone to have a college diploma even though those diplomas are becoming more and more worthless in the labor market. College graduates in the USA will be the laughing stock of the rest of the world.
Welcome to Lake Wobegone --- http://en.wikipedia.org/wiki/Lake_Wobegon
Sort of Makes You Want to Buy an
Even Al Gore admitted in public that his support for ethanol was strictly political when he ran for president
"Dirty Rotten Ethanol Scoundrels: The feds admit defeat on the mandate but pile on a new subsidy," The Wall Street Journal, June 7, 2015 ---
Mark down May 29 as the date when the last tether connecting ethanol subsidies to reality came unhitched, and the fuel made from corn and tax dollars achieved a kind of postmodern perfection. On the same day the Obama Administration conceded that the U.S. auto fleet cannot practically consume enough ethanol to fulfill Congress’s quotas, it announced a new program so motorists can consume more ethanol.
In other words, the point of the subsidy is the subsidy, and therefore the U.S. must subsidize ethanol because the U.S. already subsidizes ethanol. Once in place, such self-referential mandates appear to be eternal.
The 2007 energy bill’s renewable fuel standard requires certain annual volumes of ethanol to be bootlegged into the U.S. gasoline supply, but for years the mandate has crashed into the “blend wall.” Ethanol is corrosive, and gallons of conventional gas with concentrations of the stuff higher than 10% damage the engines and fuel systems of most of the cars and trucks on the road today.
The problem is that Americans aren’t guzzling enough gallons to achieve Congress’s mandates at E-10—that is, 10% ethanol, 90% gas. Either we need to drive more in less fuel-efficient cars, consuming more overall. Or the concentration of ethanol in a given gallon needs to rise, risking accidents, breakdowns and valve, pump, cylinder and injector replacements rarely covered by consumer warranties. For model years 2001 through 2011, no car makers allow blends above E-10, and a little fewer than half say it is safe to fill up with E-15 for the last two model years.
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The IRS is Still Doing Favors for Democrats
"The Clinton ‘Charity’ Begins at Home:
Employment rolls for the Clinton Foundation show scads of political
operatives—but this doesn’t seem to bother the IRS," by Kimberley A. Strassel,
The Wall Street Journal, June 4, 2015 ---
The scandal of the century at the IRS was that agency’s secret targeting of conservative nonprofits. Perhaps a close second is the scandal of what the IRS hasn’t been investigating: the Clinton Foundation.
The media’s focus is on Hillary Clinton’s time as secretary of state, and whether she took official actions to benefit her family’s global charity. But the mistake is starting from the premise that the Clinton Foundation is a “charity.” What’s clear by now is that this family enterprise was set up as a global shakedown operation, designed to finance and nurture the Clintons’ continued political ambitions. It’s a Hillary super PAC that throws in the occasional good deed.
That much is made obvious by looking at the foundation’s employment rolls. Most charities are staffed by folks who have spent a lifetime in nonprofits, writing grants or doing overseas field work. The Clinton Foundation is staffed by political operatives. It has been basically a parking lot for Clinton campaign workers—a comfy place to draw a big check as they geared up for Hillary’s presidential run.
The revolving door is spinning quickly these days. There’s Dennis Cheng, a finance director for Mrs. Clinton’s 2008 bid, who went to the Clinton Foundation as its chief development officer. There he built a giant donor file, which he earlier this year took with him to head up fundraising for the Clinton 2016 campaign. There’s Katie Dowd, who raised $100 million as Mrs. Clinton’s new media director in 2008, then went to a Clinton PAC, then to the State Department, then to the foundation as a “tech adviser.” She’s now at Clinton 2016 as digital director.
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From the CPA Newsletter on May 28, 2015
USA Retirement savings, pensions lacking among workers
Nearly one-third of U.S. workers have no pension or retirement savings, according to a Federal Reserve survey. Of more than 5,800 respondents, 38% intend to work as long as possible or do not plan to retire. Reuters (5/27)
Indian Heat-Wave Death Toll Tops 1,800 ---
Loretta Lynch --- http://en.wikipedia.org/wiki/Loretta_Lynch
IRS Scandal Political Targeting
Controversy on Day 751 ---
"One More Chance for Justice at the IRS: Republicans ask the new U.S. attorney general—who has a reputation for battling corruption—to investigate IRS targeting of conservative groups," by Kimberly A. Strassel, The Wall Street Journal, May 28, 2015 ---
One More Chance for Justice at the IRS Republicans ask the new U.S. attorney general—who has a reputation for battling corruption—to investigate IRS targeting of conservative groups.
Paul Ryan on Thursday sent his first official letter to Loretta Lynch, the new U.S. attorney general. With luck, Ms. Lynch will take a few moments out of her international soccer crackdown to give it a glance.
Signed by every Republican member of the House Ways and Means Committee, which Mr. Ryan heads, the letter is a forceful request that Ms. Lynch channel just a smidgen of her famed prosecutorial skill into the largest abuse of government power in decades: the IRS targeting scandal. It’s now been two full years since a little-known IRS bureaucrat named Lois Lerner admitted that her agency systematically collected the names of conservative groups, harassed them, and denied their right to participate in elections. It’s been two full years since the Justice Department opened an investigation. And it’s been two full years of crickets.
While Ms. Lynch was this week orchestrating a dramatic dawn raid and the arrest of seven international soccer officials, the IRS’s offices continued to operate as if nothing ever happened. Two years ago, in the days following the targeting revelations, the administration sacked Acting IRS Commissioner Steven Miller only because it had to. Ms. Lerner, who had led the exempt organizations division, was allowed to retire with full pension benefits. Holly Paz, her effective deputy, was put on administrative leave. Everyone else is still at their desks. Not a single official—there or gone—has faced prosecution.
If you think Loretta Lynch is going to investigate the White House for ordering the IRS to target conservative groups (prior to the 2012 election for president) that gave her the AG post then George Strait and I have some ocean front property in Arizona to sell you at a reasonable price ---
The IRS already apologized for abuse of power in this regard but refuses to link this abuse to orders from the White House.
Education in Mexico
"A bad lesson The government sets a poor example by caving in to lawless teachers, The Economist, June 3, 2015 ---
AMID mounting protests by rebellious teachers the Mexican government has taken a risky gamble. On May 29th, just days before mid-term elections scheduled for June 7th, it “indefinitely suspended” the most important part of its landmark education reform. Officials whisper that they are just trying to ensure a trouble-free day of voting and that they will reverse the move later. If that is true, the government is being deeply cynical. If it is not, it is undermining what some consider its most important policy, and may be breaking the law to boot.
Acting like a guilty schoolboy, the education ministry issued a curt, 33-word statement saying it was suspending examinations of teachers. The exams were due to take place for the first time in July as part of the education reform approved by Congress in 2013. For two years, President Enrique Peña Nieto’s government has argued that the tests are the lynchpin of the constitutional reform, because they will eventually weed out bad teachers from Mexico’s woefully underperforming schools. The explanation for this sudden change? There were "new elements to consider", the statement said.
Officials later elaborated that the announcement was an attempt to placate teachers from the CNTE, their most radical union, who loathe the notion of testing, and have threatened to boycott the elections—to choose 500 congressmen, nine governors and hundreds of mayors—in the southern states where they hold sway. "It’s temporary," an official said, adding that there was a "99% chance" that the move would be reversed after the election.
But the CNTE saw straight through the ploy. Instead of quieting down, it has stepped up its protests. On June 1st it launched a indefinite strike that has kept more than 1m children out of school. Its members have occupied election offices in the southern state of Oaxaca, burnt tens of thousands of ballot papers and seized petrol stations and threatened airports. One of its main demands is that 43 teacher-trainees who went missing last year in the neighbouring state of Guerrero be returned alive to their families, though the government insists they are dead—murdered last year by police in the pay of drug traffickers. The union also wants the whole education reform abolished.
"We knew from the start that the promise about the evaluations was a temporary one," says Mohamed Otaqui, the teachers’ spokesman in Oaxaca, where the CNTE is most militant. He added that unless the government agreed to all their demands in the next few days (including the Lazarus-like return of the 43), "We will stop the elections from taking place in Oaxaca."
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Capacity Accounting --- http://maaw.info/CapacityRelatedMain.htm
Electric Power Company Dilemma: Those Pesky Capacity Costs
"Frank Wolak: How to Keep Green Policies from Crashing the Electricity Grid As California embarks on “cap and trade,” Stanford researchers employ advanced trading games to head off nasty surprises," by Edmund Andrews, Stanford University Graduate School of Business, May 13, 2015 --- Click Here
. . .
The games also highlight what is perhaps the biggest long-term conundrum tied to regulatory mandates for solar and wind power: a pricing dynamic that sends spot-market electricity prices crashing to almost zero at times when sunlight and wind are abundant, which can make it hard for other electricity providers that are essential during periods of peak demand to recover their fixed costs.
Price crashes have already become a serious issue in Germany, where government-supported mechanisms have propelled renewables to the point that, during a few hours of the year, renewables are the nation’s largest source of electricity. Germany has actually experienced negative spot prices on days in the summer when solar output is high and electricity demand is relatively low. Negative prices also occur in US electricity markets with substantial renewable energy shares, such as California and Texas.
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This topic should be great for student projects in both cost accounting and environmental accounting.
"The existence of these billionaires proves Thomas Piketty is wrong about wealth," by Frank Holmes, U.S. Global Investors, Business Insider, June 4, 2015 ---
Many of us are aware that 400 billionaires appear on Forbes’ list of the wealthiest Americans. But if you had to guess what percentage of them is self-made, what would you say? A quarter? A third?
Before I give you the answer, let me posit which way Thomas Piketty might lean.
If you’re unfamiliar with the name, Piketty is the socialist economist whose book Capital in the Twenty-First Century was published a little over a year ago. It was an instant bestseller and elicited much debate not just in academic circles but also the popular media.
In the book, Piketty argues that capitalist societies naturally incubate wealth inequality, leading to a scenario in which a small minority of the population owns most of the wealth. Because rich families can assume a greater amount of investment risk, their return on capital multiplies at a much faster clip than the general economic growth rate. To offset the effects of what he sees as rising inequality around the globe, Piketty—in typical socialist fashion—therefore prescribes a global wealth tax, with rates as steep as 80 percent.
So back to the initial question: What percentage of American billionaires are self-made? Piketty might guess only a very small fraction, pointing to the progenies of vast family fortunes—the Waltons, the Koch brothers, the Mars family. With so much wealth accumulated at the very top of the pyramid, he might say, there’s no room left for new money.
He would be sorely mistaken.
On the contrary, 70 percent of those who show up on Forbes’ 2014 list created their own wealth. Nearly three out of every four billionaires, then, are self-made entrepreneurs and innovators, far from being born with a silver spoon in their mouths.
What’s more, this figure is actually up from 1984, when fewer than half were self-made. If Piketty’s theory held any water, we would expect to see the same powerful families dominating the Forbes 400 decade after decade—the Rockefellers, the Carnegies, the Vanderbilts—with few new entrants.
"Fewer Young (64%) People Say I Do -- to Any Relationship," by Lydia Saad, Gallup, June 8, 2015 ---
Along with the decline in marriages among 18- to 29-year-olds in the U.S. in recent years, Gallup trends on Americans' living arrangements reveal that the percentage of young adults "living together" has hardly budged. This means that not only are fewer young adults married, but also that fewer are in committed relationships. As a result, the percentage of young adults who report being single and not living with someone has risen dramatically in the past decade, from 52% in 2004 to 64% in 2014.
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Especially note the graphs
Among college graduates this begs the question of how unpaid student loans and other outstanding debts discourage entering into relationships --- those fears of having to pay off somebody else's debt.
Externalities of Aging (More Disease and More Entitlements Expense)
World's Population Is Getting Sicker, Study Shows ---
Entitlements Actuarial Lies
A trillion lie here and a trillion lie there and pretty soon you're talking about an unsustainable future covered up by lying in politics.
Entitlements --- http://en.wikipedia.org/wiki/Entitlement
Harvard, Dartmouth: Social
Security forecasts have been too optimistic — and increasingly biased ---
"Hospitals Expected More of a Boost
From Health Law Expansion of Medicaid hasn’t had the financial impact that was
anticipated," by Christian Weaver, The Wall Street Journal, June 3,
The health law’s expansion of Medicaid in many states hasn’t benefited nonprofit hospitals in those states as expected, according to a new report by Moody’s Investors Service.
Hospitals in the mostly blue states that expanded Medicaid were largely expected to benefit from fewer unpaid bills and more paying customers, but that hasn’t generally translated into better operating margins or cash flow, Moody’s found.
Performance improved across the board—including in the mostly Republican-led states that opted out of the law’s Medicaid expansion—as the economy gained steam last year and unemployment declined.
In expansion states, hospitals’ unpaid bills fell 13% on average last year compared with 2013, the report found. But, their 2014 operating margins didn’t increase any more than hospitals in the 22 states that have sat out the expansion, the report shows.
“Clearly, reducing bad debt is positive, but it is not this silver bullet,” said Daniel Steingart, a Moody’s analyst and author of the report. He said the findings call into question “a narrative out there that Medicaid expansion has lowered bad debt and that is driving [financial] improvements at hospitals.”
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When I lived in San Antonio, over $1,000 of my property tax billing went to the Bexar County Hospital to cover charity medicine and bad debts of people who were treated but did not pay for the treatments. As a rule there's at least one hospital in larger cities, usually the largest non-profit hospital, that receives local tax dollars to contribute toward the hospital's bad debts.
Obamacare's promise of relieving the burden of local taxpayers for charity medicine turned into another one of the lies. Indeed there are fewer bad debts due to expanded Medicaid coverage such that more Federal dollars are pouring into hospitals who accept Medicaid patients. However, the bad news is that Medicaid only covers (according to the article) about half the cost of treating Medicaid patients in hospitals. This leaves hospitals with tow choices. Provide lower-cost care or ask for more dollars from local taxpayers to cover the added losses of the expanded Medicaid coverage.
It turns out that states who refused to expand Medicaid coverage are better off for having refused.
"Overhead costs exploding under ObamaCare, study finds," by Sarah Ferris, The Hill, May 27, 2015 ---
Five years after the passage of ObamaCare, there is one expense that’s still causing sticker shock across the healthcare industry: overhead costs.
The administrative costs for healthcare plans are expected to explode by more than a quarter of a trillion dollars over the next decade, according to a new study published by the Health Affairs blog.
The $270 billion in new costs, for both private insurance companies and government programs, will be “over and above what would have been expected had the law not been enacted,” one of the authors, David Himmelstein, wrote Wednesday.Those costs will be particularly high this year, when overhead is expected to make up 45 percent of all federal spending related to the Affordable Care Act. By 2022, that ratio will decrease to about 20 percent of federal spending related to the law.
The study is based on data from both the government’s National Health Expenditure Projections and the Congressional Budget Office. Both authors are members of Physicians for a National Health Program, which advocates for a single-payer system.
"This number – 22.5 percent of all new spending going into overheard – is shocking even to me, to be honest. It’s almost one out of every four dollars is just going to bureaucracy," the study's other author, Steffie Woolhandler, said Wednesday.
She said private insurers have been expanding their administrative overhead despite some regulations from the Obama administration to control those costs, such as the medical loss ratio, which requires a certain amount of premium dollars to be spent directly on healthcare. She argues that a better approach would be a type of Medicare-for-all system.
The extra administrative costs amount to the equivalent of $1,375 per newly insured person per year, the authors write.
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Bob Jensen's universal health care messaging --- http://www.trinity.edu/rjensen/Health.htm
Bob Jensen's threads on
The Atlantic: Health: Family --- http://www.theatlantic.com/health/category/family/
Tidbits Archives ---
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
Bob Jensen's threads on
auditor professionalism and independence are at
Bob Jensen's threads on
corporate governance are at
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
Against Validity Challenges in Plato's Cave ---
By Bob Jensen
wrong in accounting/accountics research? ---
The Sad State of Accountancy Doctoral Programs That Do Not Appeal to Most
AN ANALYSIS OF THE EVOLUTION OF RESEARCH CONTRIBUTIONS BY THE ACCOUNTING REVIEW:
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/