Saturday, June 4, 2016

The Greatest!

(picture credit

Natural Weekends

The iris are all in full bloom in the garden this week.

And I think this is lobelia just about to pop.
(Update: I am reliably informed that this is actually salvia)

Friday, June 3, 2016

Koch Mind-Set Reflected In Florida School Scandal

An article in the NY Times yesterday gave us all a window into the mind-set of one of the Koch brothers - and, unfortunately, too many other Americans probably have the same view.  The story involved the investigation of improper behavior at the Oxbridge Academy of the Palm Beaches, a private high school that William Koch, a younger brother of the more well-known Charles and David Koch, had poured $75 million into building. According to the Times, the head of school, athletic director, and football coach were all fired "after a sexual harassment complaint and an internal investigation into accusations of kickbacks, grade-changing, excessive spending and violations of the rules governing high school sports".  The problem, as usual, really begins with the football team. It turned out that the football coach could actually overrule the admissions committee, resulting in a large number of students who really were not qualified to be there. The bigger problem turned out to be the head of school, Robert Parsons, who apparently made unwarranted sexual advances to female employees and gave bonuses of higher salaries to attractive women on the staff.  Needless to say, this environment created higher turnover, resulting in large severance packages for departing staff.

But more telling about William Koch's mentality, and probably that of his brothers, is how Mr. Parsons came to be head of school anyway. Parsons had been the chief financial officer at the US Naval Academy but was suspended from that job for 5 days in 2009 when an inspector general's report found that he had been operating a slush fund that paid for tailgate parties.  Now, if you know anything about our military services, you know that protecting their own is of utmost importance. So getting suspended for 5 days at the Naval Academy clearly indicates that a real problem existed. But William Koch didn't see this as a problem at all when he hired Mr. Parsons because, according to Koch, the government is "all screwed up". I guess if you have this absolute belief that government can never do anything correctly, even in the US military, then getting reprimanded or even fired by the government would certainly count as a qualification for future employment. Unfortunately, this unfounded mentality extends to way too many Americans these days.

Prosecutorial Misconduct In Florida Could Be Massive

It really has turned into a bad couple of days for government prosecutors. First, we had the revelations about the state Attorneys General in Florida and Texas dropping their investigations of Trump University and suddenly receiving campaign donations from Trump-related entities. And now it appears that the US Attorney's office in Miami has received CD copies of all defense attorneys' work product gleaned from discovery documents copied at a local copy shop. And all this has been happening since 2006, for the last 10 years!  Apparently an "agent" came into the copy shop owned by Ignacio Montero and told the office manager to forward all copies of discovery documents that were copied by defense attorneys.  The US Attorney's office had required defense attorney to use that copy shop in order to obtain discovery documents.  The "agent" turns out to have been FBI agent, Deanne Lindsey, who worked in the US Attorney's office.  Obviously, having prior knowledge of the areas of the discovery documents that defense attorneys are focused on certainly makes preparing for the prosecution much easier. The revelation came about in connection with a long-running Medicare fraud case. In a motion filed last week in that case, defense counsel states, "[c]overtly cloning defense counsel’s work-product to obtain a tactical advantage is nothing short of ‘shocking to the universal sense of justice’ mandated by the Due Process Clause of the Fifth Amendment". Of course, the US Attorney's office is claiming that it was unaware that it was actually receiving these copies and did not use them in any way. But, according to Kevin Drum, Lindsey has admitted to using these copied documents in at least four occasions to help prepare expert witnesses.

It really would boggle the mind to see prosecutorial malfeasance on such a widespread and egregious level if, in fact, it turns out that the US Attorney had been using these copies to help prepare cases for the last 10 years. And, if it does turn out to be true, there are probably hundreds, if not thousands, of cases that would be impacted. It would make the most recent outrageous scandal of police and prosecutor misconduct in Orange County, California pale in comparison.

Let's hope that the misconduct in the Miami US Attorney's office really only does relate to the four cases mentioned earlier.  But for far too long, prosecutors have abused their substantial powers with little fear of accountability. Until prosecutors have some fear of potentially long prison sentences, I'm afraid we will see this type of malfeasance occurring again and again.

Trump U Scam Morphing Into Campaign Bribery

It's looking more and more like the Trump University fraud is morphing into a campaign finance scandal as well. The University fraud was a pretty simple scam - put a Trump name on it and then hire high-pressure salespeople to mislead customers, prey on their emotions, and force them to sign up for the most expensive "seminars" and "mentorship programs" possible.  As bad as that was, what is potentially more explosive is the revelation that several states' Attorneys General began to investigate the fraud at Trump University but, after backing off pursuing those investigations, received significant campaign donations from Trump-related entities. Specifically, Florida Attorney General Pam Bondi received a $25,000 from the Donald J. Trump Foundation shortly after reports surfaced that she was investigating Trump University. Shortly thereafter, Bondi announced that there was insufficient grounds to proceed with the case. And in Texas, Attorney General opened a civil investigation but dropped the case when the University agreed to suspend all its operations in Texas. Again, shortly thereafter, Abbott received a $35,000 donation to his gubernatorial campaign. And today the former deputy director of Abbott's Consumer Protection Division plainly states that the decision was purely political, saying, "[t]he decision not to sue him was political. Had [Trump] not been involved in politics to the extent he was at the time, we would have gotten approval. Had he been just some other scam artist, we would have sued him.”

Of course, all sides will deny there was any quid-pro-quo involved, although Trump has been more honest than most (did I really just write that!) about his belief in the purely transactional nature of his campaign contributions. But if all it takes is a few tens of thousands of dollars to buy off an Attorney General, that is a pretty cheap price to pay for the cost of doing illegal business.  If only the rest of us could buy that kind of justice.  But, with our present campaign finance laws, that is what American justice looks like today.

CFPB Cracks Down On PayDay Lenders; Time To Restart Postal Bank

Yesterday's announcement by the CFPB to at least try to put some controls around payday lenders is a good step forward but it is really just a start. Offering usurious interest rates that can approach 400% and fees that sometimes exceed the amount being borrowed are intended to maintain the borrower's indebtedness.  As the industry privately admits and recent studies have confirmed, the majority of borrowers end up having to take out new loans in order to pay off the old loans plus interest and fees.  A CFPB study found that more than half of borrowers ended up in a string of 10 or more refinancing loans. The industry's business model is entirely based on luring people into their "debt trap".

Studies by Deloitte Financial Advisory Services and Charles River Associates show that the new CFPB rules could reduce payday lending volumes by nearly 75% which is why the industry is fighting these rules vigorously.  And you do have to wonder where those people who currently use payday lenders will go if these rules come to pass. One of the best alternatives out there is the restoration of the postal banking system in the United States.  Every other developed country in the world has a postal banking system and, believe it or not, postal banking was alive and well here in the US until its quiet death in 1966.  When banks began redlining and abandoning poorer communities in the 1970s, the void was filled by the payday loan lenders and check cashing services.  The banks are gone from those areas for good, but the Post Offices still remain. Resurrecting the Postal Bank would provide cheap and affordable banking services to millions of underserved citizens. Of course, Republicans in Congress have made sure the Post Office does not work efficiently as it is one of the most public faces of government and its poor operation "proves that government does not work". Needless to say, a law passed by the Republican Congress in 2006 required that Post Office health care benefits be fully funded for 75 years in the future - something no other corporate or government entity has ever been forced to do or has ever done. Because of that law, the majority of money that the Post Office makes actually goes to funding health care needs for its employees, some of who it will not have even hired yet, for the next 3/4 of a century. Is this not insane! For the last decade, the Post Office has had to set aside $5.6 billion dollars a year to prefund the retiree health care plan. And then the Republicans wonder why the Post Office does not run at a profit!

It's time to end the insanity of requiring the Post Office to prefund the health plan - that alone will restore it to profitability. And the next step is to restore the Postal Bank and provide the millions of Americans who are getting ripped off by payday lenders a cheap and responsible banking alternative.

Underwhelming Jobs Report May Put Rate Rise On Hold

The US economy only added 38,000 jobs in the month of May, badly below the consensus forecast of around 165,000 jobs.  Even accounting for the 35,000 Verizon workers on strike in May (whose numbers will be added back into the June report), this was a very weak number. In addition, revisions to the jobs numbers announced in March and April lowered the number of jobs created in those two months by nearly 60,000. The headline unemployment rate dropped to 4.7% but that number is dependent on the number of people who have jobs or are actively looking for work.  The good news was that hourly earnings rose again, up 5 cents, after a 9 cent gain in April.

Hopefully, this pretty weak report will force the Federal Reserve to reconsider its rather clear intentions to raise interest rates when they meet later this month or in July.  There is no sign that inflation is rising at a pace that the Fed could not handle - in fact it has still not reached the 2% target that the Fed has set. So it is hard to figure out the rationale behind the Fed's desire to raise rates.  I have speculated that it has more to do with giving them room to cut rates later if the economy contracts. But raising rates too early and too quickly could make that a self-fulfilling prophecy.  And there are a number of Fed members who clearly seem to want to return to "normalcy" and reduce the Fed's balance sheet as soon as possible, apparently for no good reason other than that's the way it should be. One final consideration the Fed may have is the upcoming November election - they are usually loathe to make a lot of moves immediately before an election for fear of being labeled political. That fear could be pushing some members to want to act now, thinking it will be more difficult later in the year.

As has been the case for years now, the downside risks to raising rates far outweigh the risks of an overheated economy and runaway inflation. As was the case with the French after World War I, our economic generals seem to keep on wanting to fight the 1970s all over again. But, as the French learned when the Maginot Line fell, times change.  Wages are finally going up after stagnating for years and years and inflation is firmly under control and under the already low 2% target.  There's no reason to raise rates and risk an economic slump right now.

Thursday, June 2, 2016

Ryan Succumbs To Trump's Inevitability

Paul Ryan, having kept up the pretense that he is a serious, policy-oriented Republican, has finally decided to get on the Trump bandwagon.  From his budget proposals full of magic asterisks, to displaying his concern for the poor by cutting programs in order to help them, to his short-lived holdouts from accepting the position of Speaker of the House and endorsing Donald Trump, has there ever been a bigger empty suit attempting to display gravitas than Paul Ryan. Well, actually, there is Donald Trump...

Obama Gets Behind Increasing Social Security Benefits

In yet another example of Obama's liberal streak finally coming out, yesterday he endorsed the idea of increasing benefits that Social Security pays out. This is an idea that both Hillary Clinton and Bernie Sanders support and now, with Obama on board, it will hopefully be an issue that Democrats can run on effectively in the fall.  And this is just another example of this Democratic President positioning the party to the left in anticipation of an election as opposed to trying to fudge the differences with Republicans as has happened too often in the past. It is also a way for Obama to help solidify his legacy in the future if he can help Democrats win a solid victory in November. And he should be able to carry that message around the country during the campaign as his approval ratings are above 50%.

Only six years ago, Obama was essentially offering to cut Social Security by changing to a "chained CPI" formula that Republicans, thankfully, rejected with the failure of the Grand Bargain in 2011. The change in the Democratic position started with just the one lone voice of Atrios on the blog Eschaton. So, anytime you ever think that you can't make a difference, please think of Atrios and how his one simple idea that went against the grain of established opinion could end up benefitting the lives of millions of Americans both now and in the future. Thanks Atrios!!

New Yorker Comment Blatant Example Of Free Pass To Trump

The June 6 & 13 issue of the New Yorker arrived on my doorstep yesterday and it contains perhaps one of the most blatant examples of the free pass the media continually gives Donald Trump. Yes, even the New Yorker(!) has been infected with this terrible disease. Amy Davidson, writing in the lead comment in the "Talk of the Town" section (which sadly I cannot provide a link to), seems to want Hillary to specifically lay out what Bill Clinton's role would be in her administration while at the same time worrying that all the baggage that Bill apparently carries makes it difficult for voters to pull the lever for Hillary in November. Noting that Trump campaign does not really care about the truth of what they say, Ms. Davidson then gives us the full recital of the 1990s - Whitewater, Vince Foster, Monica Lewinksy, Paula Jones, and Juanita Broderick's 1999 accusation of being raped by Bill in 1978 which Trump brought up on Fox News in mid-May in a classic use of the Karl Rove playbook.  Her only statement regarding Trump's own vulnerabilities in his treatment of women is simply that "there are serious allegations against Trump regarding the treatment of women". You think it might be worth mentioning at some point in the article that, besides the countless reports of inappropriate behavior, Trump himself has been accused, under oath, by two women, one of whom was his wife, of rape. But apparently Ms. Davidson did not think that was worth reporting. She finishes her comment worrying that once again going over all these "old and tired" allegations against Bill Clinton will leave voters "feeling exhausted", "demoralized", and "disaffected". Actually no, what demoralizes and exhausts me is constantly having the press focus on the failings of someone who is not even on the ballot and ignore the lies, lack of substance, and serious allegations against a candidate who is.

Trump Loses Golf Tourney To Mexico - Rory Rocks

There is incredible irony in the PGA's decision to move the World Golf Championship from the Trump-branded Doral course in Miami to Mexico City. The first irony is that the PGA could apparently not find a major sponsor to replace Cadillac whose sponsorship ended this year.  Surely, this is something a great dealmaker like Trump should have been able to resolve. The greater irony, of course, is that the event is moving to Mexico City with the sponsorship of Grupo Salinas. Of course, this gave Trump another opportunity to rail against the PGA for putting profits ahead of American workers, although it's hard to imagine one golf tournament creates any jobs at all. All of this irony was not lost on current world #3 Rory McIlroy who had the quote of the day, saying, "It's quite ironic that we are going to Mexico after being at Doral. We just jump over the wall." Way to go Rory!

Republican Utopia In Kansas Ends In Total Disaster

In a prior post about Iceland's strong recovery vis-à-vis the rest of Europe, I mentioned how you rarely get differing economic theories to play out in the real world at exactly the same time. Here is the US, it is most clearly displayed the utter failure of supply-side, trickle-down economics in the state of Kansas. Governor Sam Brownback was elected in 2010 along with a Republican majority in both houses of the Kansas legislature. In 2013, Kansas passed the largest tax cut in Kansas history, reducing taxes on the wealthy and eliminating taxes for over 100,000 businesses. It privatized the delivery of Medicaid, cut the education budget and eliminated four state agencies and reduced the government payroll by 2,000 employees. As Brownback told the Wall Street Journal at the time, "My focus is to create a red-state model that allows the Republican ticket to say, 'See, we've got a different way, and it works.' ".  Well that would require a different meaning to the word "works".  The usual rosy forecasts of all these tax cuts expanding the economy turned out to be the usual fairy tales. Expectations of over $300 million in new revenue by 2018 were somewhat dwarfed by the nearly $700 million deficit that the state ran up in just the first year after the tax cuts. All the jobs that were supposed to be created by the elimination of the business taxes never materialized as Kansas trailed its neighbors in Missouri and Colorado in job and income growth. And the decline in revenue just keeps on coming with the latest announcement that revenue for the month of May alone will be nearly $75 million below projections. 

Last year, facing another massive deficit, Brownback and the legislature cut K-12 spending by 1.5% and changed the education funding formula to an old Republican chestnut, the block grant. Unfortunately, this resulted in six school districts in the state having to end their year early simply because they had run out of money. In addition, in February the State Supreme Court ruled that this change ran afoul of the constitutional requirement that the legislature fund public schools in the state equitably. It gave the legislature until June 30th to rectify the situation or face a school shutdown. And last Friday the Court ruled Brownback's proposal to accommodate the Court was not satisfactory. The legislature adjourned its shortest session in 32 years on Wednesday without addressing the issue which probably means a special session will be called sometime soon.

Brownback built the Republican dream of a low tax, small government utopia and it has been a complete and utter disaster for the state. Brownback's approval rating is somewhere in the mid-20s and as the deficits keep rolling in and more cuts need to be made, it's hard to see that number going anywhere but down. Fortunately for Brownback, he will not have to face the voters again as he has reached the end of his term limit. Now, having implemented the Republican policy platform, which both Mitch McConnell and Paul Ryan pointed to as a signpost for where they wanted to take the country when it passed in 2013, and then seen it devastating effects, you would think that the Republican presidential contenders would at least have to answer why the policies they propose to implement wouldn't have the same effect on the country as they did on Kansas. But no. Kansas was a word that went unspoken throughout the entire primary process.  Let's hope the Democrats make sure that every knows the story in Kansas by the time November rolls around.

Meme For Only Eight Justices Builds

Swing state Republican Senators are expected to be under great pressure in the upcoming election and one of the prime issues Democrats hope to use against them is the unwillingness of Senate Republicans to even consider replacing the recently deceased Antonin Scalia on the Supreme Court.  Now, it looks like we can see the Republican counter-argument taking place - that the country works just fine with only eight justices.  It all started with an op-ed piece by Barry MacDonald, a law professor at Pepperdine Law School just last week. And today, we have an article in Huffington Post of all places giving more credence to this point of view and adding the voice of "self described liberal" Eric Segall of Georgia State University College of Law. Segall's rationale for only eight justices is that the usual deciding vote in these contentious 5-4 decisions by the Court usually comes from Anthony Kennedy and he then asks the question, "[d]o you want to live in Justice Kennedy's America?". Apparently, Mr. Segall would prefer not. Of course, if a more liberal justice does end up replacing Scalia, Justice Kennedy would probably no longer be the swing vote as the liberal bloc would have five members, but Mr. Segall carefully elides that fact. Mr. Segall then goes on to posit that only having eight members will force the Court to come up with reasonable compromises that can be crafted into majority decisions. Thankfully, the article goes on to debunk this specific idea, pointing out that, in recent contentious cases, the court has essentially split 4-4 or just punted on the case entirely, leaving the law to be interpreted differently in certain Appeals Court Districts. And, as Ms. Wydra of the Constitutional Accountability Center so forcefully puts it, "[w]e expect our court to be able to provide answers to questions of exceptional national importance that come before it."  We certainly do not expect the law to be applied differently from one part of the country to another.

Yes, there is no constitutional requirement that the Supreme Court have nine justices but it has been that way since 1869. And it only makes sense that you have an odd number so that decisions can actually be made - it's like that in virtually every other court in our country. As with Mr. Macdonald, I do not know Mr. Segall but have no reason to doubt the sincerity of his views.  But you really have to wonder about the timing of this meme. Liberals, like me, lived with the disastrous results of Bush v. Gore, Citizens United, Hobby Lobby, and many others. We didn't like it but we accepted it and worked hard to change it. And now, when it finally looks like that opportunity is ours, it seems that Republicans, the usual champions of tradition and continuity, want to change the rules of the game. 

Wednesday, June 1, 2016

Will Bernie Lead A Re-Evaluation Of US-Israeli Relations

The "third rail" of American politics has always been known as Social Security. In that regard, I would offer that the third rail of American foreign policy is our relationship with Israel.  But I wonder if Bernie Sanders is finally going to help Democrats kill the power of this issue.  I had mentioned back in April how Bernie had seemingly moved the conversation on the Isreali-Palestinian question without the normal outrage that his views normally produced. Back then, he had called Israel's action in Gaza "disproportionate" and he had done that in New York of all places. And now it looks like Bernie is going to push for a more even-handed approach that emphasizes that the Palestinians "need to be treated with dignity and respect" in the upcoming Democratic platform. In a concession by the Clinton campaign, Sanders is able to appoint five members to the 15 member platform committee and one of his appointees is Cornel West who has made his own provocative statements in the past, saying in 2014 that "[t]he rockets of Hamas indeed are morally wrong and politically ineffective – but these crimes pale in the face of the U.S. supported Israeli slaughters of innocent civilians".  On the other hand, Hillary Clinton has long been a strong supporter of Israel, both as the Senator from New York and as Secretary of State. So it is quite possible that there might be a significant platform fight over this issue.

All this comes as the dynamics of US-Israeli relations have changed dramatically over the last couple of years. First, the Republicans in Congress conspired with Israeli Prime Minister Netanyahu to allow him to come and give a speech to a joint session of Congress, without seeking administration approval, opposing the Iranian nuclear agreement. That speech backfired in a tremendous way as many Americans felt that Netanyahu was interfering in US domestic politics.  Subsequently, the failure of AIPAC, one of the most powerful lobbying organizations in the US, to stop the Iranian nuclear accord severely damaged that powerhouse.  In addition, the rise of J Street, a more progressive lobby that is firmly committed to a two-state solution put further pressure on the established Israel lobby. Additionally, Netanyahu himself has moved farther and farther to the right in order to maintain a coalition that will keep him in power.  And only a couple of weeks ago, Israel's defense minister, Moshe Yaalon, quit, warning that the country was being overrun by "extremist and dangerous elements".  Netanyahu filled his post with Avigdor Lieberman, a man who only last year suggested that Arab citizens of Israel that were deemed disloyal should be beheaded. The increasing rise of the hard right in Israel and the building of settlements, both legal and illegal, on the West Bank that increasingly looks like South African apartheid are additional cause for a re-evaluation of US-Israeli relations. The final important change is that the continuing thaw in US relations with Iran, our decreasing reliance on Mideast oil, and Obama's general reluctance to get drawn into the quagmire that is the Middle East, have all made our relationship with Israel significantly less strategic.

Sanders, as a member of the Jewish faith and someone who spent months on an Israeli kibbutz in his youth, is perfectly positioned to push this debate forward, not only in the platform committee but also during the convention proper. Yes, Republicans will jump all over it as another indication of Democratic weakness. But it is a discussion the country needs to have - let's hope Bernie pushes the issue.

House Republican Dysfunction On Display Again

Last week provided a couple of vivid examples of the dysfunction not only within the House Republican Caucus but also how that dysfunction spills over into coordination with Senate Republicans. When John Boehner resigned, one of the demands the caucus had for the new Majority Leader was the establishment of regular order which would allow individual members to introduce amendments. Needless to say, this also meant that Democrats could also offer amendments, something some Republicans apparently failed to consider. On Wednesday night, 43 Republicans joined Democrats in passing an amendment attached to an energy bill that would have codified into law President Obama's 2014 executive order barring federal contractors from discriminating against workers based on sexual orientation. Unfortunately, this amendment proved too much for the other members of the Republican caucus who then refused to vote for their own bill which, without full Democratic support, went down to defeat by a large margin.  Apparently, the defeat of their own energy bill even caught the leadership off guard, first announcing passage of that bill before having to pull that news release. This disaster had followed another incident earlier in the week when the very same amendment seemed to have passed with limited Republican support but the vote was held open well beyond the time limit in order to allow Republicans to change their votes in order to defeat the amendment, infuriating Democrats.

Another failure that exposed the divisions between the House and Senate Republicans is reflected in the inability to come to an agreement to appropriate funds to combat the Zika virus. The House passed a version of the bill that agreed to fund only about half of what the Senate bill had allocated to fight the Zika virus.  In addition, the House required that all the money allocated must be offset by other cuts in the budget, something that is not contained in the Senate bill. Negotiations to resolve these differences will probably take a significant period of time and may turn out to be impossible.  With that in mind, Republicans left the negotiations unfinished and headed off for a two week Memorial Day break, allowing Democrats to blast them for leaving town with so much "unfinished business".

The failure of the energy bill and inability to deal with the Zika threat are just minor, but indicative, failures for House Republicans. They have not been able to pass a number of appropriation bills or, for that matter, a budget, because they can not come to agreement within their own caucus, despite having the largest Republican majority in the House in nearly 100 years. As the vote for the Democratic amendment shows, there is a majority in the House made up of Democrats and a smaller number of reasonable Republicans who still believe in an effective government.  But Democrats are under no obligation to help Republicans push through their own bills, especially when Republicans have such a large majority.  But without Democratic support, no majority can hold. This is what got Boehner into such trouble with his own party, because he allowed Democrats to help him pass some bills that couldn't pass with Republicans alone.

All of this, especially the inability to pass a budget, does not bode well for the fall, where even the Senate's #2 Republican, John Cornyn, is already raising the possibility of a government shutdown in October, primarily due to the dysfunction in the House. It is rare that I ever agree with what Cornyn says, but in this case he is right on target, saying "it's a terrible way to govern". I think we can all agree with that sentiment.

Reaction To Overtime Rule Exposes The Decay In Workers' Rights

Maybe I'm being a little sensitive but I really found the tone of some of the people quoted in the Times article yesterday about the effect of the new overtime rule a little hard to take. Please read the entire article and see what you think.

I just about burst out laughing when Dan Reynolds, the chief executive of Workman's Publishing, said, "[y]ou really want to bump into the boss at 8 o'clock at night". Actually, no, I'd rather be home with my family and/or friends at that hour. And, Mr. Reynolds aside, at most of the firms I know, the boss is long gone while the employees are still slaving away. Yes, many times the boss is out wining and dining, trying to round up new business rather than lounging at home - but that's why he is getting paid the big bucks.  More disturbing was the seeming assumption that the job was so good that working the extra 10 or 20 hours a week was "worth it". And even more disturbing was the approach of Fox Searchlight which apparently reverse engineers the salary based on a 12-hour day, leaving workers with a base rate of only $8.93 an hour. It is tactics like this that demand a raise in the minimum wage.

When did it become acceptable to hire people with a 40-hour salary and expect 60 hours of work? When did it become OK to essentially not pay people for 30% of the work they do? I guess I know the answer - it was the late 1970s and 1980s when very explicit political choices crushed the bargaining power of workers.  Hopefully, with the raise in the minimum wage, these new overtime rules, and recent gains by organized labor, the tide is turning in workers' favor.

Kristol's French Will Get Fried

Well, Bill Kristol's "impressive", well-known, and respected third party candidate is a veteran, staff writer at National Review, constitutional lawyer, and resident on Tennessee whose name is...David French. Yes, I've never heard him of him either, and I follow politics pretty closely. As I noted in an earlier post, it would take an enormous financial and organizational effort to get on the ballot in more than a handful of states, and a little bit of name recognition would also help in that regard. Unfortunately, Mr. French brings nothing to help in any of these areas.  In fact, today's news buzz about Mr. French will probably be the high-water mark in exposure for Kristol's candidate.

Tuesday, May 31, 2016

Cameron's Shameless Embrace Of Kahn Smacks of Desperation

Do I sense a slight bit of desperation in David Cameron's warm embrace of Sadiq Khan in opposing Britain's exit from the EU? Only a couple of weeks ago, Cameron and his Conservatives were smearing Labour candidate Khan, attempting to link him to Muslim extremists, in his winning campaign to become Mayor of London.  Now, Cameron is calling Khan a "proud Muslim, a proud Brit, and a proud Londoner" because Khan also opposes Britain's exit from the EU. Yes, this is simply typical of all shameless politicians, but I think in this case it speaks to a real fear that the country will vote to leave the EU, which would mean the end of Cameron's political career.

Iceland's Recovery Highlights Europe's Failure

It is rare that you get to see the effects of differing economic theories played out in concurrent real world scenarios, but that is exactly what we have been able to observe when we compare the response to the 2008 financial crises of Iceland and the European Union.  Iceland did everything that the Davos elites said not to do - it prosecuted bank executives, nationalized its big banks, and let all those that did not serve the domestic economy fail; it imposed capital controls, restricting the ability of foreign investors to withdraw money from the country while at the same time restricting local banks and pension funds from investing overseas; it raised interest rates up to nearly 18% and devalued its currency but offset that tight monetary policy with loose fiscal policy that relieved households of debt incurred by the financial crisis. Contrast this with the EU which did everything in its power to keep its banks afloat; let the bankers off scot free; cut interest rates to zero; insisted on strict fiscal austerity; and, because of the common currency, made it impossible for countries like Greece to devalue the currency and reduce its debt burden. 

And the results couldn't be more striking. Iceland's GDP is expected to grow by about 4% this year and next. Its external debt has been reduced to easily manageable levels, interest rates are down to below 6%, and it is running a current account surplus. Its official unemployment rate is down to 3.7% as of April of this year.  Any country in Europe would give its eye teeth for results like that. Compare that to poor Greece whose debt burden will consume about 60% of its GDP by 2040 and whose current unemployment rate is 25% and is not expected to get below 10% for another 25 years. Think about those numbers - they are staggering.

Now the elites' response to Iceland's success has been to say that things will go horribly wrong when the capital controls are lifted. Foreigners will take their money out of the country as quickly as possible, devaluing the currency and forcing interest rates to rise and making it more difficult for the country to service its debts while creating runaway inflation as imports become more expensive. Rather, it looks like the opposite may in fact occur. Foreigners are interested in investing in Iceland, attracted by higher interest rates and growth prospects. We will have a pretty definitive answer as to which of these scenarios will come to pass shortly as Iceland plans to lift the capital controls in the next few months. But I'm betting foreign capital will return to Iceland quite readily - where else can you earn over 5% on your money these days.

Assuming the lifting of capital controls goes relatively smoothly, you have to wonder when the citizens of the EU will look at Iceland's success and say why not us.  The EU is already under enormous strain and Iceland's success further highlights the failures of the EU economic elites to provide any effective recovery from the 2008 collapse.

Unlike Libertarians, Kristol's Candidate Will Be No Factor

Like Donald Trump, I am still waiting with baited breath to hear who Bill Kristol's "impressive" third party candidate will be. Of course, whoever it is will probably have very little bearing on the outcome in November mainly because of the difficulty in getting onto the ballot in many states at this late date.  In Texas, for example, the deadline for getting on the ballot has already passed and in North Carolina, around 90,000 signatures need to be filed by June 9th - that's not going to happen since we don't even know who the candidate is yet.  Many other states have large signature requirements and filing dates in early August so it will take a pretty substantial financial and organizational effort to  get that done.  The reality is that, whoever Kristol's candidate is, they will probably only be on the ballot in a handful of states at best. The Libertarian party, on the other hand, is virtually assured of being on the ballot in all 50 states, which is why that party's ticket of Gary Johnson and William Weld actually poses a significant threat to take votes away from Trump.  Kristol, as usual, is just blowing smoke - his candidate, whoever that is, will be essentially irrelevant.

Unions Win Big In Verizon Settlement

As I surmised, it looks like a real win for the unions as the details of the settlement with Verizon come out. Despite the headline from the Times, the unions secured almost all of what they were demanding going into the strike.  Verizon caved on pension cuts and the percentage of work that could be outsourced as well as providing an 11% raise, as opposed to the 6.5% they had offered before the strike. The unions also won additional unionized call center jobs as well as covering unionized workers at Verizon Wireless stores, an area that had traditionally not been unionized.  The inclusion of Verizon Wireless employees could potentially set a precedent for other wireless carriers.  The only clear victory for the company was in significant savings in health care costs, something the unions had largely signaled they were on board with before the strike.

This is clearly a big win for the unions, although it remains to be seen whether this will be a boost to other union struggles around the country or whether this progress will just be limited to Verizon.  But, in these times of declining union bargaining power and membership, any kind of win in a union negotiation or, especially, a strike is a big win.

Bridgeport Passes Budget; Mil Rate Up 30%

In an uncannily well-timed announcement on the Friday before the Memorial Day weekend, Mayor Joe Ganim announced the signing of a $552 million dollar budget for the city of Bridgeport.  Included in that budget is the new mil rate for real estate and personal property taxes of 54.37, a nearly 30% increase from the prior rate.  The actual tax an individual would pay would be subject to the revaluation that went into effect this year after being delayed by the Finch administration.  Ganim claims that only 35% of homeowners will actually se an increase in their tax bill as the revaluation will largely offset the increase in the mil rate. The budget had to deal with an approximately $20 million deficit also inherited from the Finch era as well as cuts in the state budget that impacted Bridgeport.

Monday, May 30, 2016

Credible Libertarian Ticket Is Another Hurdle For Trump

The Libertarian Party gathered in Florida this weekend in order to choose its ticket for the presidential campaign.  As of now, the party is the only third party that looks to be on the ballot in all 50 states come November and the ticket it chose probably strengthens the party's bid even more. Gary Johnson, the former two-term governor of New Mexico, was chosen as the Presidential candidate. And William Weld, the former two-term governor of Massachusetts and Johnson's preferred choice as running mate, was selected for the Vice Presidential spot. Both men required a second ballot to become the nominee.  Johnson and Weld at least have the gravitas of having held elected office and are seasoned politicians and could have some impact on this election, especially if they manage to get into the debates in the fall. In addition, the Koch brothers have long supported the Libertarian Party which means that the ticket may have nearly unlimited financial resources.

Now, most credible third party candidacies like this one start out with high hopes but usually end up getting single digits when the election is actually held.  Most people just don't want to waste their vote on a sure loser and only register a protest vote when they know that their state is going to overwhelmingly vote for one of the two establishment parties.  But I do think Trump is the candidate that will be hurt the most by the emergence of this ticket. For those disaffected Republicans who abhor Trump's racist rhetoric, distrust his commitment to free trade, and disdain his lack of interest in reducing the size and scope of government, the Libertarians offer a refuge. Already, Mr. Johnson has assailed Trump for his position on immigration, explicitly calling it "racist - it's just racist!".

In the end, even in this year of high disaffection with both traditional party candidates, I don't expect the Libertarians to exceed 5% of the popular vote but the votes they do get in a few swing states could be decisive - we all should remember Ralph Nader in Florida in 2000. But anywhere close to 5% is still a huge number and is within reach with two serious, responsible politicians on the ticket and funding from the Koch brothers and other right wing groups not enamored with Trump. The electoral map for Trump is already quite difficult and it becomes even more so if some of the traditional Republican support gets siphoned off to this Johnson-Weld ticket.

Stanley Cup Finals Prediction

The Stanley Cup finals begin tonight with the Pittsburgh Penguins facing off against the San Jose Sharks.  This is the Sharks first appearance in the finals in the relatively brief 25 year history of the franchise.  In this year's playoffs, these two teams are virtually mirror images of each other. Both have relatively inexperienced goaltenders - Matt Murray for the Pens and Martin Jones for the Sharks; both have big defensive studs - Brett Burns for the Sharks and Kris Letang for the Pens; both have grizzled veteran star forwards - Crosby and Malkin for the Pens and Thornton and Marleau for the Sharks; and both teams have young, up-and-coming coaches in Mike Sullivan and Pete DeBoer.  And both teams have gotten to the finals with a stifling team defense.

I'd give the goaltending edge to the Penguins as Matt Murray has been spectacular at times and, if he falters, they have Marc Andre Fleury on the bench.  Martin Jones has looked a little shaky at times but has made the saves he should have - and that's all he's really needed to do because of San Jose's swarming defense.  The Sharks have more depth along the blue line - besides the aforementioned Burns, they also have standouts Paul Martin and Marc-Edouard Vlasic, while the Penguins look to be without the injured Trevor Daley for the duration of the series.  In addition to Crosby and Malkin, Pittsburgh also has sniper Phil Kessel and big-body Patric Hornqvist up front.  But San Jose can do even better in support of Thornton and Marleau with Logan Couture and the man who no team has been able to hold down this post-season, Joe Pavelski.

There really is not much to choose from with these two teams and this has the potential to be a fabulous series that will go the full seven games. While Pittsburgh has the edge in the nets, the Sharks have just a little more depth in scoring and on defense. The Sharks have had a history of not showing up in the playoffs and this will be the first finals appearance for most of their players, while the heart of the Penguins lineup has been here before, having won it all in 2009. In addition, Pittsburgh will have home ice advantage.

As I said, there is an excellent case to be made for both teams, which is why they are both here in the finals.  But I think this is the Sharks' year - I'm picking San Jose in seven thrilling games.

Natural Weekends

More of our two-legged neigbors

Mallards out for a stroll

Coming in for a landing

Another unidentified beauty

Memorial Day Memory

Growing up, I guess I always knew that my father was in the Navy in World War II - it was the USS Lexington (or was it Enterprise?) ashtray in the house that was the giveaway.  But he never talked about the war - never.  Sure, occasionally he may have mentioned people that he had met during his time in service but it never included any details of combat. So it wasn't until I was in grade school that I discovered he was actually a minor war hero, serving on the carriers Lexington and then Enterprise. I was reading a book on the history of the war and the book mentioned a man whose name was exactly the same as my father's.  When I asked him whether the person in the book was, in fact, him, I can remember his reply as clear as day even now. "Yes", he said, that was him. "But the only thing you need to know is that war is greatest waste of men and resources". And, with that, he essentially ended the discussion and I never really heard him talk about the war again.

To be clear, he certainly believed that some wars may need to be fought - he certainly felt that way about WWII.  But his larger point is that war is the most wasteful and worst way to resolve conflict. And that truth has stuck with me ever since. If only leaders around the world paid a little more heed to my father's words, we would all have far fewer comrades to remember on this Memorial Day.