Saturday, October 8, 2016

Natural Weekends - The Birds And The Bees

It was a beautiful week here in the Northeast and I took the opportunity yesterday to hop on over to Silver Sands State Park in Milford for a few photos. The seagull above had just caught dinner.

Friday, October 7, 2016

Paul Ryan Is Still Scheduled To Appear With Trump Tomorrow

Paul Ryan is still scheduled to make a campaign appearance with Donald Trump tomorrow in Wisconsin. The appearance comes on the heels of the appearance of a video from 2005 where Trump is overheard bragging about how he basically sexually assaults attractive females, especially stars. I wonder which excuse Ryan will use this time to forgive Trump's behavior and still show his support for Trump. His prior excuses have been "I didn't hear what Trump said", "Trump often says things I don't agree with and I will continue to speak up when he does", "these kind of statements have no place in this campaign", and "it sounds like a joke gone bad". Will Ryan stick to one of those old standards or come up with something new and different. Paul Ryan has somehow built this reputation that he is a policy guy who has principles. Paul Krugman has blown away his policy credibility by showing that every plan he has ever submitted benefits the wealthy and never adds up. And now we are seeing that he has no principles either. It must be sad to be so desperate to want to hold on to your job as Speaker of the House in order to launch your presidential ambitions in 2020 that you will allow yourself to go through with an appearance with Trump tomorrow.

Conservatives Ban Foreign Scholars From Advising On Brexit

Apparently the ruling Conservative party in Britain has caught the same prion disease that has infected the American Republican party for the last few decades. One of the symptoms of this disease is willful ignorance and the refusal to accept any advice from so-called experts. Incredibly, the Conservatives have decided that scholars who may happen not to be British citizens are not worthy of advising the government. The government informed the London School of Economics that scholars who were not British citizens would no longer be allowed to brief the government or do any government work related to Brexit. Apparently, even dual nationals are similarly barred. The Foreign Office claimed it was worried about sensitive material being made public during the negotiations. I think the Foreign Office may need to talk to Donald Trump who can brief them on something called a non-disclosure agreement. There is some question as to whether this violates UK law on public procurements. In any case, it is another exceedingly xenophobic move by the government that follows on the heels of the proposal by Amber Rudd, the Home Secretary, to force British companies to reveal the number of foreign worker they have in their employ.

It truly seems that the Conservative party is hell-bent on leading England toward becoming a truly insignificant power. French President Francois Hollande made it clear earlier today that the UK will pay a heavy price for leaving the EU. "Right now, Great Britain wants to leave, but not pay," he said. "That isn’t possible." This put even more pressure on the British pound which suffered a "flash crash" in overnight trading and it will put even more pressure on London's financial firms as it becomes clear that they will lose their place of primacy as well as easy access to Europe. And the uncertainty over Brexit will be a huge drag on the British economy until the "divorce" is eventually finalized. These xenophobic moves by the government also won't make it any easier for the economy as specialized talent will no longer view Britain as hospitable for work. And who knows how Scotland and Northern Ireland are going to react, but exiting the union is certainly a possibility. But I guess it will all be OK because, with these xenophobic moves, the Tories will have co-opted the UKIP voters and will then be able to maintain power in their diminished little country for the foreseeable future.

Another Good Unemployment Report

It was another decent but not overwhelming jobs report today. The total payroll number increased by 156,000 which includes the loss of 11,000 public sector jobs. The prior two months' numbers barely moved as the adjustment amounted to a reduction of just 7,000 jobs. The hourly earnings increased again by 6 cents. This is another good report but hardly the stuff that indicates the economy is overheating. It is just more positive jobs news as we plod along in our slow-motion recovery from the financial crisis. There is really nothing here that would indicate the need for an interest rate hike from the Fed. But it is becoming more and more obvious that some of those advocating a rate hike are more worried that they won't have any room to cut rates when the next slowdown comes as opposed to worrying about the economy overheating.

Hurricane Matthew Will Aid The Spread Of Zika

Charles Pierce makes an interesting point about one of the impacts of the devastating Hurricane Mathew in Florida that probably very few people have considered. The hurricane and its aftermath will result in the further spread of the Zika virus. There are really three ways the hurricane will help the virus spread. First, all the standing water left after the rain and the storm surge from the hurricane will offer great breeding grounds for the mosquito that carries the disease. Second, the evacuations of millions from the Florida coast will potentially move Zika-carrying people into other areas of the state or country where mosquitos can contract the virus and start to spread it. Third, people from outside the infected area will probably be coming into the area in order to help with the cleanup. These people can then get infected and carry the virus back home, wherever that may be, with them.

There is a precedent for this type of spread. In the aftermath of Hurricane Katrina that devastated New Orleans and the Gulf Coast, there was a significant spike in the number of West Nile virus cases. It is quite probable that we will see something similar in the aftermath of Matthew. Thankfully, the GOP Congress allocated money to fight the virus earlier this year so officials should be in a good position to deal with this potential problem. Oh wait, it seems they only passed that bill last week which is not really enough time to prepare for something like this. Thanks, Mitch.

Trump Manages To Be Sexist Even When Denying He's Sexist

Donald Trump manages to insult women even when he is trying to not to. Yesterday, in an interview in Nevada where he was asked about his treatment of women, he said, "A lot of that was done for the purpose of entertainment. I can tell you this: There is nobody — nobody — that has more respect for women than I do". The tone-deaf nature of this comment is just remarkable. I'm not sure saying that you're being sexist because it is good fun and entertainment is actually any less insulting than just being a sexist period. The former implies that you know it's insensitive but you don't really care. Considering he needs every vote he can get from suburban women, I'm not sure this is really going to help.

Theranos Fraud Perhaps Reaching The End Of The Line

Yesterday, Theranos, the over-hyped company that promised a blood-testing device that would just need a few drops of blood, announced the layoff of almost half of its workers and that the company would now be focusing its efforts on miniature medical testing machines. In addition, the company announced it would be closing its blood-testing centers.

At this point, this move is as close to an admission that the whole company was built on a totally fraudulent product. Elizabeth Holmes, a Stanford University student, came up with the idea for a blood-testing machine that would need only a few drops of blood as opposed to the usual vial when she worked on drug delivery patch that would also wirelessly monitor changes in a patient's blood. By the end of 2004, the company had already raised about $45 million by 2006 and that amount had doubled by 2010. In 2011, Holmes started to recruit some heavy-hitting board members - including former Secretary of States George Schultz and war criminal Henry Kissinger, former Secretary of Defense William Perry, and former Senators Sam Nunn and Bill Frist. Of those, the only one with any real medical experience was Frist who had been a surgeon. 

In 2013, Theranos began offering its blood-testing services. The test were done using its Edison machine that only need a few drops of blood and provided results for basic tests in as little as 15 minutes. And the appeal to Silicon Valley was irresistible. Here was a company that was going to "disrupt" the $75 billion blood diagnostic business which was dominated by Quest Diagnostics and Laboratory Corporation Of America Holdings. It could provide the same basic services for far less money with a quicker turnaround time. With that story in hand and its powerhouse board, the company had raised around $400 million by 2014 and had signed a deal to do blood-testing with Walgreens. There was only one problem - the Edison machine never really worked. There were some warning signs. In 2013, Ian Gibbons, a biochemist who specialized in micro-fluids that Edison relied on in its analysis, committed suicide, although it is unclear whether that was related to his health or what was going on at Theranos. According to his wife, Gibbons admitted that the technology did not really work. In addition, in 2014, a whistleblower inside the company reported the NY State Health Department that the company may have manipulate the proficiency testing procedures that were required in order to get approval to do drug testing. In fact, the company was using traditional blood-testing devices and not its Edison machine to provide the results for the proficiency testing.

The scam came crashing down in late October of 2015, when the Wall Street Journal ran an expose on the company. It detailed how many of the blood tests came back with unreliable results and also reported that, by the end of 2014, hardly any tests were being run anymore using the Edison machine. Instead, the company would use a dilution method to increase the sample size that was needed for traditional blood-testing machines and then run the test on those machines. The dilution process created even more inaccurate results. Even in the face of these revelations, the company continued to deny that there were any real problems.  But the story prompted the FDA to order the company to stop using its flagship Edison machine entirely and in May, 2016 Theranos announced that two years worth of blood-test results by the machine were voided. Subsequently, certification was pulled for its lab testing facility in California where the Centers for Medicare Services found nearly 1 out of 3 tests were inaccurate and Theranos was barred from owning or operating a lab for two years.

Yesterday's announcement is probably the final unraveling for the company. Millions of dollars have been raised and the principals, including and especially Holmes, have probably made some nice money. But it was all a fraud. Incredibly, Holmes is still running the company and has really not accepted any responsibility for what has occurred. The SEC and federal prosecutors are investigating the company and there assuredly will be some penalty. The real question is will any of these people actually go to jail. Not only was this a clear case of fraud but it also impacted patient's health with its faulty lab results. Or will these white-collar criminals get off with just a slap on the wrist once more.

Thursday, October 6, 2016

Down-Ballot Republicans Getting Very Nervous

Donald Trump's disastrous debate performance, which was followed his continual self-inflicted wounds relating to his feud with former Miss Universe Alicia Machado as well as the continued focus on his taxes, could not have come at a worse time in the election for Republicans. Very often, especially when there is no incumbent running, the first debate sets the tone for race going forward. And with barely a month to go before the election, there is very little time to change the dynamic of the campaign. Trump will have another chance this Sunday when the second debate takes place in St. Louis.

Already, national polls are showing Clinton moving back to a six or seven point lead. And Trump's poor showing is really putting pressure on down-ballot Republicans, especially those have chosen the approach of "supporting"' their nominee while specifically refusing to endorse Trump. So far, they have mostly managed to get away with this kind of waffling but it becomes harder to pull that off as the election draws closer. New Hampshire's Republican Senator Kelly Ayotte found that out in a debate earlier this week where she was confronted with the question of whether Trump would be a good role model for children. Her response of "absolutely" was almost immediately retracted after the debate but it quickly became a campaign ad for her challenger Maggie Hassan. Even House Republicans are being challenged by ads that try to connect them to some of Trump's outrageous statements, especially for those members who have said good things about Trump in the past.

The trend in the generic Congressional vote that is a broad measurement of congressional preferences show the Democratic lead intensifying in the aftermath of the first debate and the days that followed. The two most recent surveys show Democratic leads of 4 and 6 points. If that kind of lead continues or even grows, it could spell disaster for Republicans, perhaps even threatening their control of the House. It is generally conceded that an 8 point generic lead for Democrats would almost assuredly result in the House changing hands.

That makes the next debate even more critical for Trump and the Republicans. Second and third Presidential debates usually do not get as big an audience as the first, which makes it a little harder for the trailing candidate to make headway. Even if he has a good debate, there is a question of whether Trump can keep from going off the rails at some point between now and the election. But another disastrous performance like the first debate will probably seal Trump's fate. Either of those would put even more pressure on down-ballot Republicans. At this point, it would be very difficult for Republicans to run away from Trump without looking like just total opportunists and weasels. The Republican base does not kind kindly to "showing weakness" which is what a repudiation of Trump would mean. And those in tight re-election races can not afford to alienate that base of Trump supporters as they will need every Republican vote they can get.

So Republicans will be watching Sunday night's debate with some trepidation. But even a good showing by Trump will hardly allow them to relax until election day as they can never be sure that they won't wake up some morning to another Trump disaster. Democrats, on the other hand, will be hoping for another strong performance from Hillary Clinton that will just increase the pressure on down ballot Republicans.

One Graph That Shows Rising Inequality Over Last 35 Years

In my previous post, I talked about the new study from the Economic Policy Institute (EPI) that documents that African Americans continue to be paid significantly less than their white counterparts. But I also wanted to point to another graph in that report which sums up the incredible growth in economic inequality over the last 35 years.

Productivity has increased over 60% over the last 35 years. In the past, rising productivity translated into rising wages for workers. And that seems to be the case for women, but a lot of that is driven simply by the increase in the number of women in the work force and their career advancement. And we all know that women are also still paid less than their male counterparts and continue to face the "glass ceiling". For men, however, the median hourly wage has actually decreased even as productivity has grown. So where did all the gains from increased productivity go? According to the EPI, "Since 1979, wages have grown more slowly than productivity—a measure of the potential for wage growth—for everyone except the top 5 percent of workers, while wage growth for the top 1 percent has significantly exceeded the rate of productivity growth". Decreasing tax rates for the wealthy and the focus on corporate profitability at the expense of workers and communities have resulted in rising inequality. The obvious solution lies in higher taxes on the wealthy and greater income redistribution.

Study Confirms Institutional Racism

The Economic Policy Institute has a new paper out which looks at median hourly wages since 1979. The study's focus is on the changes in the wage-gap for African Americans over the last 35 years as it documents that African Americans continue to be paid less than their white counterparts. This discrepancy exists across both gender and education level.

The push for educational attainment has not decreased the wage gap for African Americans, although, as with all groups, college educated workers make more than those without a degree. According to the report, "Black college graduates have higher wages than African American high school graduates, but significant wage gaps between black and white college graduates have grown and persisted. It is wrong that as a society we send a message that you must get a college degree to obtain economic security, yet even then you will experience a sizeable earnings disadvantage. This erosion in opportunity started in the 1980s, but little has been done to address it."

The study also shows that this wage discrimination exists even among experienced workers:

The study reaches a number of conclusions which included collecting more fine-grained data but also has some specific political recommendations. "[W]e have to address the broader problem of stagnant wages by raising the federal minimum wage, creating new work scheduling standards, and rigorously enforcing wage laws aimed at preventing wage theft...We also need to strengthen the ability of workers to bargain with their employers, a right that has been substantially weakened since the 1980s through, for example, laws passed by state legislatures that restrict public employees’ collective bargaining rights or the ability to collect 'fair share' dues through payroll deductions. We need to push back against the proliferation of forced arbitration clauses that require workers, as a condition of employment, to give up their right to sue in public court. We need greater protections for freelancers and workers in 'gig' employment relationships."

Sadly, there are still people in this country who continue to deny that institutional racism continues to be a problem in this country. Data like this soundly refutes that idea and just shows how far we still have to go in order to have true equality in this country for African Americans. And the same discriminatory issues exist for women as well.

NPR's Corey Flintoff Talks About Putin's Russia

Corey Flintoff, the NPR reporter, gave a talk at the Fairfield Theatre Company last night about his four-year stint as a correspondent from Moscow. Flintoff detailed the incredible depths of Vladimir Putin's propaganda machine, showing their changing and literally incredible responses to the shootdown of MH17 over Ukraine and the staging of an attack on Ukrainian police forces during the Maidan demonstrations. He also focused on the virtual takeover of all Russian media outlets by the government and the heavy crackdown on internal dissent and the elimination of any potential rivals to Putin. All this has led to an over 70% approval rating for Putin across Russia, although that number may be slightly overstated merely because of the futility and danger of feeling otherwise. These moves by Putin mask a declining superpower and a collapsing economy that is feeling the strain of the crash in oil prices, Western financial sanctions, and an aging and shrinking population. Fueling Russian nationalism and an "us-against-the world" mentality also helps Putin in his primary short-term goal of ensuring his re-election to another six-year term in 2018.

Wednesday, October 5, 2016

The Myth Of The Fiduciary Duty To Maximize Shareholder Value

Donald Trump admitted at a rally the other day in Colorado that he had been a substantial beneficiary of tax laws but insisted he would "game the system" for the people if he is elected. This approach that Trump has worked the system so he will know how to fix it seems to be the campaign's response to the clear indications that Trump has not paid taxes for years. I'm sure his supporters will buy it hook, line, and sinker.

But I want to point out a statement that Trump also made at that same rally. He said he had a "fiduciary responsibility" to make sure he pays as little taxes as possible. Now, a fiduciary responsibility using only applies to a company with stakeholders. It certainly does not apply to one's personal tax returns which is what Trump's scandal actually involves. But I really want to explore the idea that a fiduciary responsibility automatically means you have to take every tax break you possibly can, that fiduciary responsibility means that you MUST maximize shareholder value. This is a common theme among the business elites and they use it cover a multitude of sins, both legal and illegal. But the idea is totally false - it is a myth. A fiduciary responsibility means working in the best interests of both the shareholders and the company. That does not always entail maximizing profits. If it were true, then all the CEOs and board members of all those companies that continually advertise all the good things they do for charity would be taken to court for breaking their fiduciary responsibility because they weren't maximizing shareholder returns. But they aren't. In fact, as recently as the horrific Hobby Lobby decision in 2014, thee Supreme Court said, "Modern corporate law does not require for-profit corporations to pursue profit at the expense of everything else, and many do not."

It wasn't always this way. In the post World War II era, the focus for companies was certainly to make a profit but to also take care of its workers and the community the company was invested in. Way back in 1963, Thomas J. Watson, the founder and CEO of IBM said, "We acknowledge our obligation as a business institution to help improve the quality of the society we are part of." Even in 1981, the Business Round Table, a prominent business group, stated, "The long-term viability of the corporation depends upon its responsibility to the society of which it is a part".

So when did the focus for a corporation change from being a responsible citizen to prioritizing maximizing shareholder value. It all started with an article by renowned economist Milton Friedman in 1970 who said the "social responsibility of business is to increase its profits." Other economists picked up the ball and ran with it, declaring that executives and board members were essentially "employees" of the shareholders and worked for them. The idea certainly appealed to shareholders in the 1970s who were enduring a decade of a sluggish stock market. When the Reagan revolution came, deregulation and the idea that tax cuts for the wealthy would create investment and innovation only enhanced the supposed primacy of the shareholders. And then hedge funds and activist investors used and continue use the idea to pressure companies to maximize returns at all costs., primarily for their benefit. The idea also led to the ever-growing CEO pay as rewards for increasing shareholder returns and the counterproductive focus on quarterly earnings.

This one single myth, that the shareholders should be the primary concern of companies, has probably done more damage to the American economy over the last 40 years than any other single factor. It resulted in the destruction of unions, the off-shoring of jobs, the tax-abatement shopping, and an overwhelming focus on short-term results at the expense of long-term planning. Even Jack Welch, the former CEO of GE who was one of the biggest supporters of maximizing shareholder value, admitted in 2009, "On the face of it, shareholder value is the dumbest idea in the world. Shareholder value is a result, not a strategy… your main constituencies are your employees, your customers and your products. Managers and investors should not set share price increases as their overarching goal… Short-term profits should be allied with an increase in the long-term value of a company." And for once I can agree with Welch.

Incarceration Explosion Has Led To Fewer Men In Work Force

There are currently about 7 million men between the ages of 25 and 54 who are currently not in the labor force, meaning they do not have a job and are not actively looking for one. This number does not include men that are currently incarcerated. This number, which now has reached about 12% of that prime working age population of men, has been rising for decades. The reasons for that are varied - more women entering the work force, more students and stay-at-home dads, technological change, the loss of manufacturing jobs, etc. This trend has been occurring across most of the major industrialized countries but, for some reason, the numbers in the US have been trending higher than other countries for the last couple of decades.

Now a new book by Nicholas Eberstadt looks at why the trend in the US seems to run higher than elsewhere. And, after looking through the data, he comes up with a remarkable conclusion:

"A single variable -- having a criminal record -- is a key missing piece in explaining why work rates and LFPRs [labor-force participation rates] have collapsed much more dramatically in America than other affluent Western societies over the past two generations. This single variable also helps explain why the collapse has been so much greater for American men than women and why it has been so much more dramatic for African American men and men with low educational attainment than for other prime-age men in the United States."

Eberstadt references a study that show that as much as 12% of American men who are between the ages of 25 and 54 and are not currently incarcerated have been convicted of a felony. And these men have been released from prison without being provided any skills and into a job market that is not particularly thrilled about hiring them.

This is just another disaster that has resulted from the disastrous "war on drugs" and the "law and order" decisions over the last 30 or 40 years that essentially decided to lock people up and throwaway the key. It is a disaster for all those individuals and has now become a real drag on our economy.

Clinton Wants To End Forced Arbitration Clauses

Hillary Clinton has been pushing her liberal credentials in the last few days. Yesterday, she talked about putting some spine in antitrust enforcement, focusing on the undue market power of a handful of companies in a wide number of major industries in the US. And the day before, Clinton got firmly behind the effort to limit the use of forced arbitration clauses in the most mundane contracts for services we all use. Clinton highlighted the outrageous fraud that was committed at Wells Fargo but noted the second outrage was when the victims found they could not sue the bank but were forced into arbitration in order to resolve their claim. Arbitration has been shown to overwhelmingly favor companies at the expense of individuals. One study of credit card firms in California, determined that the companies won 95% of the cases brought to arbitration. Another drawback of arbitration is that it does not allow the individual to join a class; each person that has been a victim of the company must go to arbitration individually rather than being able to join a similar group of victims in a "group" arbitration that would work similarly to a typical class action. This requirement again benefits the companies as it requires the individual to take the time and effort to actually make it to the arbitration hearing, whereas the firm most likely has lawyers whose sole job is to deal with these cases. The CFPB has already proposed a rule, supported by Clinton, that would eliminate these forced arbitration clauses in financial contracts which would have been helpful to those victimized by Wells Fargo if it had actually been in effect. Of course, Republicans and big business are going to fight any attempt to restrict arbitration tooth and nail. But it is nice to see Hillary taking a strong stand in support of eliminating forced arbitration clauses across the board.

Vice Presidential Debate Analysis

The Vice Presidential debate happened last night in case you were watching the American League play-in game. To be honest, it was kind of a mess. I'd say Tim Kaine and Mike Pence spent at least the first 20 or 30 minutes basically talking over each other so that neither could really score any points, largely because Kaine kept on interrupting and the moderator was useless. Pence did as good a job as possible, focusing his attacks on Hillary by tying her to the disastrous situation in Syria and the increased belligerence of Putin. He managed to hit her on the email server and even on the Clinton Foundation. But, when Kaine started quoting  the outrageous statements made by Trump or Pence and asking Pence to defend those comments, Pence either did not answer Kaine or simply denied that they had ever said what Kaine claimed. This will not go over well in the post-debate analysis because the clips will be played showing Trump or Pence saying these things and then Pence denying they had said it. Kaine was relentless in going after Trump's taxes, his Russian ties and fondness for Putin, and his belief that Saudi Arabia, Japan, and South Korea should get nuclear weapons. All in all, the debate was kind of a wash with perhaps the advantage going to Pence simply because He was smoother and  Kaine was a little over-aggressive. I doubt this debate will have any influence on the broader campaign, because, in the end it's just the Vice Presidential debate and not many people probably watched or cared.

Tuesday, October 4, 2016

Time For Obama To Call The GOP On Its Obstruction

Republican Senator Jeff Flake from Arizona admitted what everyone already knew, that the GOP refusal to even give Obama's Supreme Court nominee Merrick Garland a hearing is purely political. "Our position shouldn’t be that the next president ought to decide. Nobody really believes that, because if this were the last year of a Republican presidency nobody would say that," said Flake.  Flake continued, "If we come to a point where we've lost the election, and we can get a centrist like Garland in there as opposed to someone like Hillary Clinton might appoint then I'd go for it."

The Republican party keeps on breaking the norms of governance in a desperate bid to hold on to power rather than move the country forward with any real agenda. The impeachment of a President over an extra-marital affair, the government shutdowns, the lying about the need for war, the illegal torture, the refusal to even consider a Supreme Court nominee, and now the refusal of the party's nominee to release his taxes, the GOP has spent the last two decades destroying the institutions of governance. Republicans have happily admitted that they believe an ineffective government works to their political advantage. And one reason that they have been able to get away with this for so long is that they know on really important issues the adults in the room, i.e. Democrats, will do the right thing for the country. That is why Boehner had to rely on Democratic votes to pass a budget that eventually cost him his job. That is why Bill Clinton wasn't convicted of impeachment. That is why Democrats, unaware of the extent of the lies, stood behind Bush when he said he needed to go to war with Iraq.

For once, I would love to see Obama turn the tables, though he is probably too interested in playing the long game and being a statesman to do it. The day after Hillary Clinton is elected, he should pull the nomination of Merrick Garland and, since the Republicans have always said the next President should decide who should be the next Supreme Court justice, ask Hillary who she would like to nominate. And Hillary should go for the most liberal justice she can find. And what will the GOP's excuse be then - that they really wanted to vote for Merrick Garland. Well, they had their chance and they didn't even try. They wanted to have their cake and eat it too, being able to run on controlling the Supreme Court with the knowledge that they could always confirm a centrist in the lame duck session if they lost. It is time for the Republicans to pay a real price for the partisan politics that breaks all the norms of governance and rely on Democrats to bail them out. Perhaps this might teach them a lesson. I'm under no illusion this would work and have stated before that if the GOP holds the Senate there will be a large block of GOP Senators who will want to continue to block Garland and then anyone else Hillary nominates. But it would put the reasonable Senators in the GOP caucus on notice that Democrats won't put up with these shenanigans any longer.

Ayotte's Game Ends As She Declares Trump A Role Model

Kelly Ayotte's game of not endorsing Donald Trump but not repudiating him either probably came to an end last night. During a debate, she once again refused to endorse Trump, saying she "has disagreements" with him and that this somehow shows she is willing to fight for the people of New Hampshire. A subsequent question was then whether she considered Trump a good role model for children and this was her answer, "I think that certainly there are many role models that we have. I believe he can serve as president, so absolutely, I would". It is pretty easy to see the next ad her opponent Maggie Hassan would be running, showing clips of Trump's outrageous statements and behavior followed by Ayotte's statement that Trump sets a good example for children. So it only took an hour or so before Ayotte's campaign pulled a complete 180 and put out the following statement, "I misspoke tonight. While I would hope all of our children would aspire to be president, neither Donald Trump nor Hillary Clinton have set a good example and I wouldn’t hold up either of them as role models for my kids." It's never good to have to retract what you have said during a live debate almost immediately afterward and she should still be pressed to explain her original statement.

This type of questioning needs to be hammered home with all the vulnerable Senate Republicans who maintain the same position of not endorsing Trump but not repudiating him either. Is he good role model? Does he have the qualities and temperament to be President? The elections in all the tight Senate races will probably hinge on how many suburban Republican women who will probably not vote for Trump will still pull the Republican lever for Senate. Democrats need to do everything they can to peel those voters away.

ACA Insurance Companies Hurt By Employers Not Dropping Coverage

Dean Baker makes another good point about the misleading reporting that is going on relative to insurance companies dropping out of Obamacare. The standard trope is that not enough healthy, young people are signing up and that this is making it harder for the insurance companies to make money. While that statement may technically be correct, the stated or unstated reason for this in most of the articles is that these people are just opting to go without insurance. As Baker points out, whether they are young or not is irrelevant. In fact, insurance companies make more from the healthy, older people who sign up. But, when you look at the actual numbers, there are many more uninsured people signing up for Obamacare then was originally anticipated. In fact, it is estimated there are about 4 million more people insured at the beginning of this year then was originally predicted. So if the number of uninsured has dropped even below what was predicted, how can there not be enough enrollees for the insurance companies to make money? The answer is that far fewer employers gave up their coverage and moved their employees to Obamacare. It is the lack of those employee-covered individuals to move to the exchanges that has put pressure on insurance companies. It might be useful if the reporting could focus on why employers have been so loathe to give up their coverage rather than spinning fairy tales about missing young, healthy workers.

May Vision For Brexit Defies Reality As EU Will Determine Terms Of Separation

Over the weekend, Theresa May took the occasion of the Conservative Party Congress to finally announce her intentions about proceeding with Brexit. And she made it clear as day that she would be pushing for a clean and near total break with Europe. In addition to the usual and expected comments about "taking control of our borders", there were also declarations about "making our own decisions about how we label food", and that the European Court of Justice would have no power over British courts. She also promised to introduce a bill for the next session of Parliament that would repeal the European Communities Act, the law that took the country into the EU. Interestingly, the law would be passed next year but would not take effect until Britain formally leaves the EU. All these statements by May point to the rejection of the single market and a Britain standing firmly on its own outside the EU.

May continually says she does not want to tip her hand in negotiations with the Europeans, which she expects to take about two years. But that is exactly what her comments at the Congress did. And then she went on the BBC and said Britain would invoke Article 50 sometime before March of 2017 and hoped preliminary talks could begin beforehand. So not only do the Europeans know May's negotiating positions at this point, they also know her preferred timing as well. An indication of how the Europeans feel about negotiating with Britain and May came from Donald Tusk, President of the European Council, who summarily dismissed any preliminary negotiations with a tweet stating, "PM May's declaration brings welcome clarity on start of Brexit talks. Once Article 50's triggered, EU27 will engage to safeguard its interests." And, despite what May believes, those interests do not line up with May's goals at all. And when she does invoke Article 50, all the power and leverage in these negotiations shift to the Europeans - they will end up dictating the terms.

The idea that Britain can negotiate a break from the EU and manage to somehow reinstate trade deals with all 27 Euro members does defy belief. The trade issue is massive on its own. If May assumes that Britain can replicate the free flow of goods from Britain to the EU without tariffs that currently exists under the EU and do that in two years, she is sadly mistaken. That would require ratification of each of the 27 states and, in some countries, ratification of even local authorities. To get that deal completed and ratified in two years is fantasy. One option would be to leave the existing trade infrastructure in place until that deal could be ratified but it is doubtful the Europeans would currently agree to that and May has now lost pretty much all leverage to seek it. And if no deal can be struck, then Britain will have a host of issues to deal with regarding the World Trade Organization as their membership in that organization is currently contingent on the EU.

Needless to say, the pro-Brexit members of the Conservative Party just loved May's speech and roared with approval. Sometimes I think that the pro-Brexit crowd lives in this bubble where they sincerely believe that Europe needs Britain more than Britain needs Europe. I doubt they will be cheering so loudly when they discover that is not true. May's speech will speed the flight of the financial industry out of London (some may feel that is a good thing) as she has made it clear that a clean break with the EU is coming. The coming two years of uncertainty and the increasing isolation of Britain will be a severe drain on their economy. The probable loss of easy access to the country's largest market will be another devastating blow to that same economy. And you have to wonder how Scotland, Northern Ireland, and even Gibraltar will react to May's announced vision. When you realize what lies ahead for Britain, it is hard to understand why they are all cheering.

Monday, October 3, 2016

Americans Finally Win Ryder Cup

The US finally won another Ryder Cup on Sunday with a dominating 17-11 victory at Hazeltine Golf Course just outside Minneapolis. The Americans took a commanding 3 point lead into the final day of singles and won the day 7-1/2 to 4-1/2. There were a couple of great matches early on as European captain Darren Clarke front-loaded his inexperienced lineup with as many veterans as possible in an attempt to create some early momentum for the Euros. And to some degree, it worked. Patrick Reed and Rory McIlroy both played fantastic front nines but, in this Ryder Cup, Reed was not to be denied, winning the match 1 up. Reed was clearly the Americans MVP as he won 3-1/2 points in the five matches he played. Phil Mickelson and Sergio Garcia also played another barn-burner as both had nine birdies on the day to halve their back-and-forth match. It was a fitting end for both players who played so well that neither deserved to lose. The Euros took 3-1/2 points out of the first six matches but the inexperienced rookies on the back end could not keep pace with the Americans, as the US won 5 of the last 6 matches to wrap up their big win.

The US has been pointing to this Ryder Cup for the last four years, even getting the USGA to set up a committee on how to improve the US performance which had resulted in 8 losses in the previous 10 Cups. Some of this push was driven by Phil Mickelson's vocal dissatisfaction with how the American teams prepared and were led in past competitions. And with this edition being held on home soil, it was imperative for the Americans to win. Based on the harassment the Europeans were taking on the course with numerous spectators being ejected for verbally abusing the competitors or shouting during their swing, I'm not sure the Euros would have gotten out of there alive if they had actually won. The Americans made the most of their home-court advantage, making sure the rough on the Hazeltine course was not penal. This pretty much made the competition a putting competition, as there was no fear in driving the ball as far as possible. Wherever you ended up, you usually had a shot to the green for your par or birdie. In addition, the Euros were fielding one of the most inexperienced teams in ages. There were six rookies who constituted half the team. So the Americans were clear favorites even before the competition began.

The US should probably not put too much stake in their new approach to this event - I'm not sure it made much difference at all. It certainly helped that the US got off to an incredible 4-0 start in the Friday morning session. That hadn't happened since 1975. But by Saturday afternoon, they had already squandered the entire lead but won the last 3 matches of the day to get their 3 point lead going into Sunday. For the Euros, captain's pick Lee Westwood was a bitter disappointment as he lost all three matches he played. His poor play on Friday morning meant he sat the next two session. On Saturday afternoon, his poor putting from short range cost Europe a critical point and on Sunday he also blew a 2 up lead with 3 to play to lose the match outright. But you can hardly blame Clarke for selecting him as he needed as much veteran leadership as he could get. On the bright side for the Euros, they may have found some new stars with rookies Thomas Pieters and Rafa Cabrera-Bello. Pieters won 4 points in the 5 matches he played and was the European MVP. Cabrera-Bello won 2-1/2 points in the 3 matches he played. And they also had the 22 year old Matthew Fitzpatrick on the team who will surely be a player for them for years to come. Two years from now, when the Ryder Cup is in Paris, the road is bound to be more difficult for the Americans and a much truer test of the new American approach to the competition.

One last word about the NBC coverage. I understand the desire to highlight the stars of the game, focusing on the McIlroy-Reed, Stenson-Speith, and Garcia-Mickelson matches. But they spent so much of their coverage on those matches that all you saw of a lot of the other matches, especially early on, were putts that either won or lost holes. I understand that it is difficult to follow all 12 matches at once and that the coverage wants to focus on the tight matches. But I can honestly say that I hardly saw any other shots other than putts by Andy Sullivan, Danny Willett, or the aforementioned Fitzpatrick until they were simply the last matches out there or the point they lost put the Americans over the top. Admittedly, they were all getting smoked but NBC should have been able to show something. Finally, I don't know if NBC didn't sell enough advertising for the event but there was nothing more ridiculous than having coverage for the event interrupted by an ad promoting the very event it was interrupting, even if it had the "playing through" box that still showed the live coverage.

Supreme Court Will Not Review Ruling On NCAA Antitrust Violations

The Supreme Court refused to review a lower court's decision that the current NCAA rules on amateurism violate antitrust law. The case revolved around a suit by former UCLA basketball star Ed O'Bannon who objected to the NCAA profiting off his image in a video basketball game. The original decision by a district court ruled that the use of the names, images, and likenesses of college players without any compensation violated antitrust law. This was a huge win for college athletes who are regularly exploited in order to fill the coffers of the NCAA and its universities. The judge recommended that the NCAA could pay the college football and basketball players up to $5,000 on a voluntary basis. The money would go into a trust fund that could be accessed by the athletes after they left school. Unfortunately, an appeals court overturned that part of the decision, ruling that the athletes should not get paid but still upholding the antitrust violation. In order to remedy at least part of the violation, the NCAA has already agreed to increase the amount of student aid athletes can receive so that it now matches each school's cost of attendance numbers, which include costs above and beyond tuition such as travel, clothing, and food.

There are still other suits coming against the NCAA that look to somehow get the athletes compensated for the tremendous dollars they bring into the NCAA and the universities. This decision does nothing to stop those cases but does provide additional time for the NCAA to adjust its policies in order to come into compliance with antitrust law.

NY AG Orders Trump Foundation To Stop Fundraising In NY

New York Attorney General Eric Schneiderman  has ordered that the Trump Foundation cease and desist from soliciting donations from anyone in New York state. This is a result of the revelations in the Washington Post that the Foundation had not filed the necessary paperwork to fundraise in New York. The action shows that Scheiderman's office is taking their inquiry into the Trump Foundation seriously. And it is hard to say what other directions that investigation might lead them, but none of them are probably good for Trump, his businesses, and even his family. The self-dealing by the Foundation may start a line of inquiry that extends into Trump's personal taxes that he is so desperate for the American people not to see. And there are already indications from the person who runs Eric Trump's foundation that it may not be fully complying with the law.

Thoughts On NY Times' Story Of Trump's Tax Avoidance

The New York Times' revelation that Donald Trump had incurred nearly a billion dollars in loss carry forward by 1995 and therefore was likely to have not paid any taxes for the subsequent 15 years blows two big holes in the Trump persona. First, it supports the impression that Trump does not pay any taxes which has only been reinforced by Trump's statement during the debate and by the lack of any kind of denial by the Trump campaign after this story broke. Even his surrogates are saying that the fact that he may have used the tax code to avoid paying taxes shows that he is smart and the only one capable of fixing the current tax laws because of his familiarity with them. Of course, nothing in Trump's proposed tax plan does anything to close this type of loophole and, in fact, would probably widen it by cutting business taxes to 15%. The second blow to the Trump "brand" is that this story destroys the idea that he is this hugely successful businessman, having managed to accumulate nearly a billion dollars in losses by 1995. He may be "smart" to have used the tax code to avoid paying taxes, but he obviously wasn't very savvy to have lost the billion dollars in the first place.

These revelations raise even more questions about Trump's taxes. In the mid-1990s, Trump's hotel and casino businesses were cratering and Trump only survived by getting his creditors to take significant haircuts. Any haircuts that Trump got from those creditors should count as income for Trump. But there are apparently aggressive accounting measures that may have allowed Trump to avoid reporting that income. The Times suggests that one avenue would be to use an apparent rule that the income would not have to be reported if Trump was insolvent. Josh Marshall also floats the idea that the debt could be "parked" in a separate entity that Trump would still owe money to, but that would never make a real effort to collect on that debt. For Trump, there would be no debt forgiveness that would be treated as income as the debt would still exist. It should also be noted that that it is possible that a portion of this huge loss carry forward may not have been allowed by tax authorities and the returns were revised. But all these questions do is get into the weeds of whether Trump's tax avoidance somehow crossed the line into tax evasion. And that is a question that will only be answered by the release of his returns which is clearly not going to happen at this point. They shouldn't, however, obscure the two main points that it shows he is not a good businessman and he has likely not paid any tax for a number of years.

The real outrage is clearly that the tax code is so tilted toward giving incredible advantages to real estate development, with many deductions not available to other individuals or businesses. And it is another clear example of what Bernie Sanders called "a corrupt political system in this country". But Democrats need to be careful of what they wish for because this could lead to a big push for "tax simplification". And for Republicans, tax simplification means a flat tax or certainly reducing the number of tax brackets from what we have currently. All that does is reduce taxes on the rich even more. Rather that attacking the tax code per se, Democrats need to focus on making sure the rich pay their fair share. That is entirely different from tax simplification.

I'll just make one note about the Times' story. On Friday, I had actually written a post berating the media and especially the New York Times for the lack of any real investigative reporting on Trump. Besides David Farenthold at the Washington Post and Newsweek, there has really been very little. So when I heard about the Times' story, my first impression was they had finally broken new ground. But it appears that this story was actually handed to them by a Trump insider who leaked the documents to the paper. The only real reporting that the Times did was to track down the accountant who signed the returns. Good work, yes, but the paper itself was not the driver of the story. And I see the front page of today's Times shows the paper's incomprehensible desire to show balance, if not anti-Hillary bias, with a rehash of Hillary's reactions to Bill Clinton's affairs.

Lastly, I will leave you with one thought and perhaps it is one that Hillary could use in the next debate. Donald Trump keeps on saying that America is constantly getting ripped off. And maybe that's the way he views the country, because he has spent his entire working life ripping us off, not paying taxes, avoiding military service, and not paying his bill or his creditors.

Sunday, October 2, 2016

Natural Weekends - Wildlife

College Football - Does Anyone In The Big 12 Play Defense?

There were a couple of big college football games over the weekend that had national championship implications... and then there were the wild and crazy games in the Big 12. On Friday night, an injury-riddled 7tth-ranked Stanford went up north to play 10th-ranked Washington. And the Huskies showed that they just might be BCS contenders, dominating on both the offensive and defensive lines in a 44-6 rout of the Cardinal. Saturday afternoon, 8th-ranked Wisconsin faced 4th-ranked Michigan in what turned out to be an old-time Big 10 defensive struggle. A fourth-quarter 46-yard touchdown pass by Michigan was the difference in their 14-7 victory. Saturday night, 5th-ranked Louisville traveled to Death Valley to take on 3rd-ranked Clemson in a battle for ACC supremacy. Clemson bottled up Heisman candidate Lamar Jackson in the first half and, on the strength of three touchdown passes, took a seemingly safe 28-10 lead into halftime. But Louisville roared back in the second half scoring 26 unanswered points to take a 36-28 lead midway through the fourth quarter. Clemson responded with two late touchdown passes, the latter a 31-yard strike with just a little over three minutes remaining to take a 42-36 lead. Louisville had one last drive to win the game but came up just short of a first down at the Clemson 2-yard line on fourth down with under a minute remaining. Louisville's defensive backs were just unable to contain the Clemson receivers. And, after being held in check in the first half, Lamar Jackson came alive, ending up with 162 yards rushing and 27 of 44 through the air for 295 yards. Clemson's Deshaun Watson was just as good, racking up 397 total yards.

Clemson and Michigan have solidified their places in the top 5 and Washington should move up close to that position as well, considering how dominant they were.

It was also the opening weekend in the Big 12 and just take a look at some of these scores and numbers:
  • Texas Tech 55 - Kansas 19;  917 total yards
  • Oklahoma St. 49 - Texas 31;  1,123 total yards
  • Baylor 45 - Iowa State 42;  1,112 total yards
  • Oklahoma 52 - TCU 46;  1,048
Ok, there was one other game in the conference and West Virginia beat Kansas State 17-16, but even in that low-scoring game there was a respectable 708 yards in total offense. I'm not complaining - these are great games to watch; no lead is safe. But it might also explain why the Big 12 will probably be excluded for the BCS again this year, just as they were two years ago. What's more interesting is how the conference ended up this way. It is really driven by the perennial doormats of the league, TCU, Baylor, and to some degree Texas Tech, deciding to convert to a run-and-gun style of football in order to recruit better players and improve fan interest. Their success has made pretty much all the other teams in the conference, with the exception of the two Kansas teams, adopt the same style. And it will only get more crazy if Houston joins the conference as it is rumored to want to do. It may not win national championships, but it sure makes for exciting football.